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CONFIDENTIAL (FR)
CLASS II
December 17, 1976
- FOMC
SUPPLEMENT
CURRENT ECONOMIC AND FINANCIAL CONDITIONS
Prepared for the
Federal Open Market Committee
By the Staff
Board of Governors
of the Federal Reserve System
TABL
OF CONTENTS
Page
THE DOMESTIC NONFINANCIAL ECONOMY
Industrial production.....................................
Private housing starts..................................
Personal income.........................................
Price of crude oil........ ................ . .............
1
2
4
5
TABLES:
Industrial production....................................
2
Private housing starts and
residential building permits............................
3
Personal income.......................................
4
THE DOMESTIC FINANCIAL ECONOMY
Mortgage market..........................................
5
TABLES:
Average rates and yields on new-home
mortgages ........................... ........... .........
......................
Interest rates ....................
6
7
INTERNATIONAL DEVELOPMENTS
Deutsche Bundesbank announces 1977
central bank money growth target........................
8
ERRATUM
Part I....................................................
9
APPENDICES
Changes in bank lending practices .........................
Changes in offering terms of small time and
savings deposits in response to declining market
rates of interest.....................................
A-1
B-1
Business loan expansion by industry.......................
C-l
U.K. economic package ....................................
D-
SUPPLEMENTAL NOTES
The Domestic Nonfinancial Economy
Industrial production increased by an estimated 1.2 per cent
in November to 132.0 per cent of the 1967 average, fractionally above
the record high of 131.9 per cent reached in June 1974.
The increase
followed declines in the index for both September and October.
than half of the November increase resulted from
More
resumption of produc-
tion following the settlement of strikes, but additional moderate
increases were widespread among consumer goods, business equipment,
and nondurable materials.
PRODUCTS.
Output of consumer goods advanced sharply in
November primarily because of a post-strike rebound in motor vehicle
production, but moderate increases occurred in other industries also.
Auto assemblies, up 14 per cent, were at an 8.8 million unit annual
rate and at their pre-strike level.
indicate a further rise in December.
Current production schedules
Production of home goods last
month increased moderately, as did output of consumer nondurables,
including clothing and consumer staples.
Business equipment produc-
tion increased more than 2 per cent, the result mainly of the resolution of strikes affecting farm equipment and truck production.
At
139.3 per cent of the 1967 average, business equipment remains 5 per
cent below its 1974 high.
increased somewhat.
Output of construction and business supplies
- 2 The production of durable materials rose sharply
MATERIALS.
in November, but this was mainly in the auto supplying industries.
Output of other durable materials rose slightly.
Production of non-
durable materials advanced moderately.
INDUSTRIAL PRODUCTION
(Seasonally adjusted)
Aug.
1976
Sept. Oct.
Nov.
Per cent changes
Month Year QII to
(P)
(e)
ago
ago
QIII
1.2
131.3
130.9
130.4
132.0
1.2
6.9
130.3
130.0
129.6
131.5
1.5
6.2
.9
128.3
137.5
143.7
134.9
137.7
127.5
136.2
138.5
135.3
137.6
127.3
136.5
138.1
135.8
136.4
129.5
138.9
144.6
136.6
139.3
1.7
1.8
4.7
.6
2.1
5.9
5.9
9.1
4.6
7.5
.6
-.2
-1.1
.2
2.1
Intermediate products
137.8
Construction supplies 134.1
139.0
138.3
139.2
134.3
133.9
134.9
.7
.7
7.7
9.6
2.1
2.8
132.4
131.7
133.0
1.0
8.0
1.7
Total
Products, total
Final products
Consumer goods
Durable goods
Nondurable goods
Business equipment
Materials
133.0
p--preliminary
e--esestimated
Private housing starts declined 6 per cent further in November
to a seasonally adjusted annual rate of 1.71 million units.
Despite
this decline, indications are that starts in the fourth quarter, as a
whole, will average a tenth above the third quarter figure.
the November decline was in the single-family sector.
Most of
Even so, at a
- 3rate of 1.24 million units, such starts continued near the cyclical
peak recorded in early 1973.
Multifamily starts, which have been
bolstered in recent months by federal subsidy programs, edged down
1 per cent in November.
The decline in total starts was shared by three of the four
Census regions.
However, in the Northeast, where starts had been quite
low for nearly 2 years, the rate jumped more than 50 per cent above
the October figure.
In contrast to housing starts, residential building permits
rose 6 per cent in November to a seasonally adjusted annual rate of
1.59 million units--the highest rate in more than 3 years.
Permits for
all types of units increased.
PRIVATE HOUSING STARTS AND
RESIDENTIAL BUILDING PERMITS
Sept.
Nov.
Oct.
(r)
(r)
(Thousands of units, SAAR)
Per cent
October
change from
November
1975
I
STARTS
1,840
1,813
1,735
1976
-6
1 - family
2 - or more - family
1,280
1,340
560
473
1,237
468
-8
-1
+18
+41
164
503
708
465
175
478
548
264
365
571
505
+51
-24
-7
-8
+51
+8
+7
+51
1,504
1,492
1,585
+6
441
1 - family
2-- or more - family
926
578
998
494
1,085
500
+9
+1
+33
+60
Northeast
North Central
South
164
395
478
467
185
381
429
497
163
361
452
609
-12
-5
+5
+23
+14
+25
+30
+75
269
244
-9
Northeast
North Central
South
West
PERMITS
West
MEMO:
Mobile home shipments
NOTE:
NOTE:
r == revised,
r
revised,
612
255
preliminary,
p
p -= preliminary, ---
+24
means change is less than 1 per cent.
means change is
less than 1 per cent.
-4
-
Total personal income rose $14.9 billion at a seasonally
adjusted annual rate in November compared to an upward revised increase
of $11.2 billion in October.
Wage and salary disbursements increased $10.2 billion in
November, comsiderably more than in October.
This reflected a $4.5
billion increase in manufacturing payrolls in November, compared to
only $0.3 billion in October, as employment, average weekly hours,
and average hourly earnings all increased.
The largest increase was
in the transportation equipment industry reflecting the first full
month of operation since the Ford strike.
Farm proprietors' income leveled out after having declined
since mid-year.
PERSONAL INCOME
billions of dollars seasonally
change,
monthly
(Average
adjusted at an annual rate)
Jully 75-*
Jul
ly 76
Total Personal Income
] 0.7
Labor and Nonfarm
Proprietors' Income
8.8
7.5
.7
.7
Wage and Salary Disbursements
Other Labor Income
Nonfarm Proprietors' Income
July 76Nov. 76p
Sept. 76Oct. 76r
Oct. 76Nov. 76p
11.2
14.9
8.5
9.0
11.8
7.2
.7
.6
7.8
.7
.5
10.2
-.9
-.1
9.3
-2.2
.8
.8
Farm Proprietors' Income
-.2
Transfer Payments
1.2
1.4
1.5
2.3
Rents, Dividends, and
Personal Interest
1.4
2.0
1.8
1.6
*
July 1975 was the specific low for deflated wage and salary disbursements.
p -r --
preliminary
revised
- 5 -
An increase of 5 per cent in the price of crude oil was
announced today (December 17) by Saudi Arabia and the United Emirates, who
account for about one-third of OPEC production.
The other 11
countries raised prices by 10 per cent and intend to add another 5
per cent in six months.
the oil cartel.
This is the first open break in ranks in
Saudi Arabia's oil minister has announced that his
country will lift its self-imposed limit on oil production in an
effort to meet demands at the lower price level.
The staff estimated a 15 per cent increase would have had
an impact of 0.6 per cent on the fix-weighted price index for Gross
Domestic Final Purchases.
A 5 per cent increase thus would tend to
raise these prices by 0.2 per cent in 1977.
The Domestic Financial Economy
Mortgage market.
The average interest rate on new commit-
ments for conventional new-home loans in the primary market was
reported by HUD to be 8.85 per cent in November--down 5 basis points
from the October rate.
The rate spread between these mortgages and
new issues of Aaa utility bonds is the largest since October 1973,
reflecting the declining bond rates of recent weeks.
The rate on
new commitments for existing home loans remained at 9.00 per cent
for the second consecutive week.
In the private secondary market for FHA-insured new home
mortgages, the yield declined to 8.45 per cent--its lowest level
since July 1973.
- 6 -
AVERAGE RATES AND YIELDS ON NEW-HOME MORTGAGES
(HUD-FHA Field Office Opinion Survey)
Primary market
Conventional loans
Level 2/
Spread 4/
(per cent) (basis points)
End
of
Month
1975-Low
High
1976-Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept
Oct.
Nov.
I/
2/
3/
4/
8.90(Mar.)
9.25(Sept.,
Oct.)
9.05
9.00
8.95
8.90
9.00
9.05
9.05
9.05
9.00
9.00
8.95
Secondary market 1/
FHA-insured loans
Level 3/
(per cent)
-70 (Mar.)
+15 (Jan.)
8.69 (Mar.)
+39
442
+42
+32
+5
+35
+33
+58
+77
+71
+90
9.06
9.04
n.a.
8.82
9.03
9.74(Sept.)
9.05
8.99
8.93
8.82
8.55
8.45
Spread 4/
(basis points)
Discounts
(points)
-91 (Mar.)
+31 (Oct.)
2.4 (Dec.)
6.2 (Aug.)
440
-46
n.a.
+24
+8
+35
2.4
2.2
n.a.
2.5
4.1
4.2
3.8
3.3
2.5
4.3
3.6
+27
+46
+59
+26
+40
Any gaps in data are due to periods of adjustment to changes in maximum
permissible contract rates on FHA-insured loans.
Average contract rates (excluding fees or points) on commitments for
conventional first mortgage loans, rounded to the nearest 5 basis points.
Average gross yield (before deducting servicing costs) to investors on
30-year minimum-downpayment FHA-insured first mortgages for immediate
delivery in the private secondary market (excluding FNMA), assuming
prepayment in 15 years.
Average mortgage rate minus average yield on new issues of Aaa utility
bonds in the last week of the month.
-7INTEREST RATES
(One day quotes - in per cent)
1976
Highs
Lows
Nov. 15
Dec. 16
Short-Term Rates
Federal funds (wkly. avg.)
5.58(6/30)
4.67(12/8)
5.02(11/17)
4.68(12/14)
3-month
Treasury bills (bid)
Comm. paper (90-119 day)
Bankers' acceptances
Euro-dollars
CD's (NYC) 90 days
Most often quoted new
5.57(6/2)
6.00(6/15)
5.95(6/2)
6.81(6/1)
4.33(12/16)
4.63(12/14)
4.58(12/3)
4.90
5.13
4.33
4.81(12/8)
5.38
4.75
4.63
5.06
5.75(6/16)
4.50(12/15)
5.06(11/10)
4.50(12/15)
5.96(5/27)
6.00(6/22)
6.42(5/27)
4.49(12/10)
5.02
5.13
5.32
4.56
4.63(12/7)
4.82(12/10)
6.50(6/2)
4.60(12/15)
5.30(11/10)
4.60(12/15)
6.39(5/27)
6.86(5/28)
4.61(12/3)
5.12(12/10)
5.16
5.70
4.67
5.12(12/10)
6.75(6/16)
3.70(5/28)
4.80(12/15)
2.50(12/10)
5.50(11/10)
2.95(11/12)
4.80(12/15)
7.82(5/27)
8.20(5/21)
5.99(11/26)
7.30(12/10)
6.70
7.73
6.14(12/15)
7.34(12/15)
7.99(12/7)
9.01(12/15)
8.31
9.14
8.01(12/15)
9.01(12/15)
8.95(5/28)
7.93(12/10)
8.31(11/12)
7.95p(12/17)
Municipal
Bond Buyer Index
7.13(1/8)
5.95(12/16)
6.39(11/11)
5.95
Mortgage--average yield
in FNMA auction
9.20(6/1)
8.51(12/13)
8.68
8.51(12/13)
6-month
Treasury bills (bid)
Comm. paper (4-6 mo.)
Federal agencies
CD's (NYC) 180 day
Most often quoted new
1-year
Treasury bills (bid)
Federal agencies
CD's (NYC)
Most often quoted new
Prime municipals
5.00
4.75
4.82(12/10)
2.50(12/10)
Intermediate and Long-Term
Treasury coupon issues
5-years
20-years
Corporate
Seasoned Aaa
Baa
New Issue Aaa Utility
8.66(1/2)
10.34(1/2)
-8
-
International Developments
Deutsche Bundesbank announces 1977 central bank money growth
target.
On December 16 the Deutsche Bundesbank set a target of 8 per
cent for the growth of central bank money (CBM), in annual average
terms, during 1977.1/
This is the third year the Bundesbank has put forth a central
bank money growth target, which on each occasion has been 8 per cent,
and on the last two occasions
average growth.
has been stated in terms of annual
The 8 per cent selected for 1977 is higher than the
figure recently recommended by the major German economic institutes
(6-1/2 per cent).
Most observers also had expected the 1977 target
to be somewhat lower because in 1976 central bank money will increase
by about 9.2 per cent, overshooting this year's target.
The Bundes-
bank's choice of 8 per cent for 1977 thus appears to validate the
excess CBM growth in 1976, and may be interpreted as a sign of continued
monetary accommodation in the coming year.
In its announcement on next year's growth target, the
Bundesbank set out an additional guideline relating to CBM growth:
that between the fourth quarter of 1976 and the fourth quarter of 1977
CBM should not grow by more than 6-7 per cent.
This additional objec-
tive suggests that during 1977 the Bundesbank will endeavor to keep
monthly and quarterly CBM growth on a smoother path than has been the
case during the past two years.
1/
Central bank money in Germany is defined as currency in circulation
plus minimum reserves (at January 1974 reserve ratios) on banks'
domestic liabilities.
-9-
Erratum
Part I; Table: U.S. Net Exports and Related Items
page 1-22, line 2,
1976p
19 77 p
(6.5)
(4.4)
Net Exports of Goods and Services
(GNP basis of net exports) 1/
A1
SUPPLEMENTAL APPENDIX A*
CHANGES IN BANK LENDING PRACTICES
The Survey of Changes in Bank Lending Practices for November 15,
1976, indicates that commercial and industrial loan demand at the responding banks was essentially unchanged as compared to three months earlier.
Further, since the last survey, the respondents as a group have become
considerably less optimistic about an upturn in loan demand over the near
future.
A large number of respondents report moderately easier policies
on interest rates and compensating balance requirements while a somewhat
smaller number relaxed other terms of lending. Finally, the number of
respondents reporting an increased willingness to make various specified
types of loans has increased further.
Two-thirds of the 121 respondents reported that demand for
commercial and industrial loans in mid-November was about unchanged as
compared to three months earlier, while one-fifth reported a strengthening
and the remainder a weakening in demand over the period. Looking ahead,
optimism about an impending upturn in business loan demand apparently has
waned somewhat since the previous survey.
Only about 35 per cent of the
banks now anticipate moderately stronger demand in the next three months,
with most of the rest predicting unchanged demand.
In contrast, about
half of the banks in the August survey expected moderately stronger
demand between then and mid-November.1/ The tendency for the respondents
to overpredict the strength of loan demand is not uncommon as is illustrated
in Chart 1, which shows that in every one of the past six surveys this has
occurred.
The respondents' evaluation of the strength of commercial and
industrial demand in mid-November is similar to their mid-August evaluation.
In both surveys about [80]per cent of the banks in the sample reported no
upturn in demand, while approximately [20] per cent reported modest strengthening.
For the most part the strength was at different banks in the two
surveys.
Further, slightly fewer banks reported weaker demands in the
November survey. Taken together, the mid-August and mid-November surveys
suggest that about 30 per cent of the sample experienced an unambiguous
strengthening in demand over the 6-month period, while about 23 per cent
1/ Of these previously optimistic banks, a majority (37 of 64) are no
longer predicting an upturn in commercial and industrial loan demand in
the near future. This perhaps reflects the fact that only 25 per cent
of these previously optimistic banks actually reported any strength in
loan demand in the November survey.
* Prepared by John Scott, Economist, Banking Section, Division of Research
and Statistics.
A-2
found unambiguous weakening.2/
Respondents to the November survey report further modest concessions on the terms of lending to nonfinancial businesses. A majority of
the banks report moderately easier policy with regard to interest rates.3/
There has also been an increase in the number of banks making moderate
concessions on compensating balance requirements.
In the August survey,
about 10 per cent (12 banks) reported moderately easier policy. The
November survey shows that 9 of these same banks report further modest
concessions on balances and that 20 per cent of those reporting no change
in policy in August had initiated a moderately easier policy on such
balances. Considering the August and November surveys together, slightly
over one-fourth of the respondents have eased their compensating balance
requirements. Chart 2 provides a longer run perspective of the gradual
move toward easier policy on compensating balances since August 1975.
Over 80 per cent of the respondents reported no change in policy on all
other price and nonprice terms of lending to nonfinancial businesses.
The prolonged weakness of business loan demand may explain
much of the increased willingness of banks to make other types of loans
included in the survey. The respondents were particularly interested in
making consumer instalment loans, and participation loans with correspondent
banks. With regard to commercial and industrial loans, they expressed
increased willingness to make term loans. For the two most recent surveys
together, 45 per cent of the respondents reported an increased willingness
to make term loans to business, 35 per cent were more willing to make
consumer instalment loans, and 29 per cent were more willing to make
participation loans.
The essentially unchanged loan demand indicated by the November
survey is somewhat surprising in view of observed increases in commercial
and industrial loan volume since August. Comparison of the survey responses
2/ Unambiguous strength (weakness) means that strengthening (weakening)
demands were reported in either or both periods and that no weakening
(strengthening) was reported.
3/ Comments from the survey forms indicate that many respondents equate
the recent cuts in the prime rate with easier policy while others do not,
apparently believing that lowering the prime rate along with market rates
implies no change in policy.
A-3
of respondents with their weekly outstandings for commercial and industrial
loans shows that for some respondents outstandings increased while their
survey responses indicated weaker or unchanged demands. Since the increase
in outstandings resulted largely from increases in holdings of bankers'
acceptances, some respondents probably are not considering such acceptances
when assessing the strength of loan demand.4/
4/ Of course, it is possible that demand weakened somewhat or remained
unchanged while banks' willingness to supply funds increased. If this
occurred, we would observe an increase in outstanding loans and lower
rates.
NOT FOR
QUOTATION OR
PUBLICATION
(STATUS OF
TABLE
1
QUARTERLY SURVEY OF CHANGES IN BANK LENDING PRACTICES
AT SELECTED LARGE BANKS IN THE U.S. 1/
NOVEMBER 15, 1976 COMPARED TO THREE MONTHS EARLIER)
POLICY ON
(NUMBER OF BANKS & PERCENT OF TOTAL BANKS REPORTING)
MUCH
STRONGER
TOTAL
BANKS
PCT
BANKS
PCT
MODERATELY
STRONGER
ESSENTIALLY
UNCHANGED
MODERATELY
WEAKER
BANKS
BANKS
BANKS
PCT
PCT
PCT
MUCH
WEAKER
BANKS
PCT
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS (AFTER ALLOWANCE FOR
BANK'S USUAL SEASONAL VARIATION)
COMPARED TO THREE MONTHS AGO
121
100.0
23
19.0
81
67.0
15
12.4
1
0.8
ANTICIPATED DEMAND
121
100.0
43
35.5
69
57.1
9
7.4
0
0.0
IN NEXT
3 MONTHS
ANSWERING
QUESTION
BANKS
PCT
MUCH
FIRMER
POLICY
BANKS
PCT
MODERATELY
FIRMER
POLICY
ESSENTIALLY
UNCHANGED
POLICY
MODERATELY
EASIER
POLICY
BANKS
BANKS
BANKS
PCT
PCT
PCT
MUCH
EASIER
POLICY
BANKS
PC
LENDING TO NONFINANCIAL BUSINESSES
TERMS AND CONDITIONS:
INTEREST RATES CHARGED
121
100.0
0
0.0
2
1.7
57
47.1
62
51.2
0
0.0
COMPENSATING OR SUPPORTING BALANCES
121
100.0
0
0.0
1
0.B
90
74.4
27
22.3
3
2.5
STANDARDS OF
121
100.0
1
0.8
1
0.t
117 196.7
2
1.7
0
0.0
121
100.0
0
0.0
2
1.7
100
82.6
19
15.7
0
0.0
ESTABLISHED CUSTOMERS
121
100.0
0
0.0
2
1.7
105
86.7
14
11.6
0
0.0
NEW CUSTOMERS
121
100.0
1
0.8
3
2.5
103
85.1
14
11.6
0
0.0
LOCAL
121
100.0
0
0.0
2
1.7
112
92.5
7
5.8
0
0.0
121
100.0
2
1.7
5
4.1
103
85.1
9.1
0
0.0
MATURITY OF
REVIEWING
CREDIT WORTHINESS
TERM LOANS
CREDIT LINES OR LOAN APPLICATIONS
SERVICE AREA CUSTOMERS
NONLOCAL SERVICE AREA
CUSTOMERS
1/ SURVEY OF LENDING PRACTICES AT 121
AS OF
NOVEMBER 15, 1976.
LARGE BANKS REPORTING IN THE FEDERAL RESERVE
QUARTERLY
INTEREST
11
RATE
SURVEY
NOT
QUOTATION
FOR
OR
PUBLICATION
TABLE
ANSWERING
QUESTION
BANKS
PCT
ITINUED)
MUCH
FIRMER
POLICY
BANKS
MODERATELY
FIRMER
POLICY
PCT
BANKS
PCT
ESSENTIALLY
UNCHANGED
POLICY
MODERATELY
EASIER
POLICY
BANKS
BANKS
PCT
PCT
MUCH
EASIER
POLICY
BANKS
PCT
FACTORS RELATING TO APPLICANT 2/
VALUE AS DEPOSITOR OR
SOURCE OF COLLATERAL BUSINESS
121
100.0
98
81.0
10.7
INTENDED USE OF THE LOAN
121
100.0
106
89.3
9.9
INTEREST RATES CHARGED
100.0
95
78.5
19.0
COMPENSATING OR SUPPORTING BALANCES
100.0
115
95.0
3.3
ENFORCEMENT OF BALANCE REQUIREMENTS
100.0
114
94.2
3.3
ESTABLISHING NEW OR LARGER CREDIT LINES
100.0
96
81.0
LENDING TO "NONCAPTIVE" FINANCE COMPANIES
TERMS AND CONDITIONS:
ANSWERING
QUESTION
BANKS
PCT
CONSIDERABLY
LESS
WILLING
BANKS
PCT
13.2
MODERATELY
LESS
WILLING
ESSENTIALLY
UNCHANGED
MODERATELY
MORE
WILLING
BANKS
BANKS
BANKS
PCT
PCT
PCT
WILLINGNESS TO MAKE OTHER TYPES OF LOANS
TERM LOANS TO BUSINESSES
100.0
73
60.3
36.4
CONSUMER INSTALMENT LOANS
100.0
90
75.0
21.7
SINGLE
100.0
98
81.7
13.3
MULTI-FAMILY MORTGAGE LOANS
100.0
117
97.5
0.8
ALL OTHER MORTGAGE
100.0
108
90.7
7.6
FAMILY MORTGAGE LOANS
LOANS
PARTICIPATION LOANS WITH
CORRESPONDENT BANKS
120
100.0
91
75.8
21.7
LOANS TO BROKERS
121
100.0
100
82.7
13.2
2/ FOR THESE FACTORS, FIRMER MEANS THE FACTORS WERE CONSIDERED MORE
CREDIT REQUESTS, AND EASIER MEANS THEY WERE LESS IMPORTANT.
IMPORTANT
IN MAKING DECISIONS FOR APPROVING
CONSIDERABLY
MORE
WILLING
BANKS
PCT
NOT
FOR QUOTATION OR
PUBLICATION
COMPARISON
TABLE 2
QUARTERLY CHANGES IN BANK LENDING PRACTICES AT BANKS GROUPED BY SIZE OF TOTAL DEPOSITS
NOVEMBER 15, 1976, COMPARED TO THREE MONTHS EARLIER)
(STATUS OF POLICY ON
(NUMBER OF BANKS IN EACH COLUMN AS PER CENT OF TOTAL BANKS ANSWERING QUESTION)
OF
SIZE
TOTAL
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS (AFIER ALLOWANCE FOR
BANK'S USUAL SEASONAL VARIATION)
COMPARED
TO THREE
ANTICIPATED
MONTHS
DFMAND
TOTAL DEPOSITS IN BILLIONS
--
MODERATELY
STRONGER
MUCH
STRONGER
$1 E
OVER
UNOERk
I
ESSENTIALLY
UNCHANGED
11
.iVER
UNDER
I1
MODERATELY
WEAKER
$1 C
OVER
UNDER
$1
MUCH
WEAKER
$1 L
OVER
UNDER
$1
t$ (L
OViR
NDEH
21
oo
10t0
0
1
19
19
73
63
8
16
0
1
100
100
0
(I
37
35
61
53
2
12
0
0
AGO
IN NEXT
OF BANK
1/
3 MONTHS
TOTAL
$I i;
OVER
UNDER
''.l
MUCH
FIRMER
MODERATELY
FIRMER
ESSENTIALLY
UNCHANGED
MODERATELY
EASIER
II
L
OVER
UNDER
$1
s1 E
OVER
$1 £
OVER
MUCH
EASIER
a
11 E
OVkR
LENDING
TO NONFINANCIAL
IUJDER
$1
$I1 &
OVER
uNDR
$1
UNDER
$1
UNDER
$1
$1 £
OVER
UNDER
$1
BUSINESSES
TERMS AND CONDIIIOIS:
INTEREST RATES
LIARGED
100
100
O
0
2
1
48
47
50
52
0
0
COMPENSATING
OR SUPPORTING BALANCLS
100
100
0
0
0
1
67
81
33
14
0
4
STANDARDS OF
CRELIT WORTIIINESS
100
1
0
1
0
1
98
97
2
1
0
0
100
100
0
0
2
1
86
80
12
19
0
0
100U
100ii
0
0
3
BB
85
12
12
0
0
1o)0
lt
0
1
0
4
92
81
8
14
0
0
100
100
0
0
94
91
6
6
0
0
100
100
0
3
90
81
10
9
0
0
MATURITY
OF TERM LOANS
REVIEWING CREDIT LINES OR
ESTABLISHED
LOAN APPLICATIONS
CUSIOMERS
NEW CUSTOMERS
LOCAL
SERVICE
AREA
CUSTOMES
NONLOCAL SERVICE AREA CUSTOMERS
0
a
0
7
1/ SURVEY OF LENDING PRACTICES AT
52 LARGE BANKS (UEPOSITS OF I1 BILLION OR MORE) AND
69 SMALL BANKS (DEPOSITS OF LESS THAN
$1 BILLION) REPORTING IN THE FEDERAL RESERVE QUARTERLY INTEREST RATE SURVEY AS OF
NOVEMBER 15, 1976.
NOT
QUOTATION OR
FOR
PUBLIICATION
2
IAbLE
(
IiJED)
OF BANK
MUCH
FIRMER
POLICY
51Lt
NUMBER
ANSWERING
QUESTION
II
i
IIH-iLR
It &
OVER
UNDER
$1
TOTAL DEPOSITS IN BILLION S
MODERATELY
ESSENTIALLY
MODERATELY
EASIER
UNCHANGED
FIRMER
POLICY
POLICY
POLICY
UNDER
1I
$1 L
OVER
I$ C
OVER
OVER
$1
VALUE AS DEPOSITOR OR
SOURCE OF COLLATERAL BUSINESS
100
100
12
63
INTENDED USE OF THE
100
',30
1
85
100
100
$1 &
OVER
UNDER
$1
$1 C
OVER
UNDER
Sl
2/
RELATING TO APPLICANT
FACTORS
UNDER
$1
MUCH
EASIER
POLICY
LOAN
LENDING TO "NONCAPTIVE" FINANCE COMPANIES
TERMS AND CONDITIONS:
INTEREST
CHARGED
RATES
COMPENSATING OR
SUPPORTING
BALANCES
3
0
3
ENFORCEMENT OF BALANCE REQUIREMENTS
100
100
0
4
ESTABLISHING NEW OR LARGER
100
100
2
6
CREDIT LINES
NUMBER
ANSWERING
QUE ST ION
11 O
OVER
TO MAKE
WILLINGNESS
TERM
LOANS
CONSUMER
SINGLE
TO
FAMILY
ALL OTHER
TYPES OF
MORTGAGE
LOANS
BANKS
TO BROKERS
I1 E
OVER
lri;Et
S1
UNDER
$1
MODERATELY
LESS
WILLING
ESSENTIALLY
UNCHANGED
$1 &
OVER
$1 C
OVER
UNDER
S1
UNDER
$1
MODERATELY
MORE
WILLING
$1 C
OVER
UNDER
$1
LO(u
100
LOANS
MORTGAGE
CONSIDERABLY
LESS
WILLING
LOANS
BUSINESSES
MORTGAGE
PARTICIPATION
CORRESPONDENT
LOANS
OTHER
INSTALMENT
MULTI-FAMILY
2/
2
106
LOANS
100
LOANS
LOANS
100
WITH
100
ioo
FIRMER MFANS THE FACTORS
FOR THESE FACDOPS,
CREDIT REQUESTS, AND EASIER MEANS THEY WERE
ioo
o10
wERE
LFSS
0
1
0
85
0
1
1
87
CONSIDERED MORE
IMPORTANT.
IMPORTANT
IN
MAKING DECISIONS
FOR APPROVING
CONSIDERABLY
MORE
WILLING
.
UNDER
OVER
$1
$1
NOT FOR
QUOTATION
OR
PUBLICATION
TABLE 3
QUARTERLY SURVEY OF CHANGES IN BANK LENDING PRACTICES AT SELECTED LARGE BANKS IN THE U.S.
STATUS OF POLICY ON NOVEMBER 15, 1976
COMPARED TO THREE MONTHS EARLIER
(NUMBER OF BANKS)
BOSTON
ALL
DSTS
NEW YORK
TOTAL CITY OUTSIDE
PHILADEL.
CLEVE- RICHMOND
LAND
ATLAN- CHICAGO
TA
ST.
LOUIS
1/
MINNE- KANS.
APOLIS
CITY
DALLAS
SAN
FRAN
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS (AFTER ALLOWANCE FOR
BANK'S USUAL SEASONAL VARIATION)
COMPARED TO 3 MONTHS AGO
121
MUCH STRONGER
MODERATELY STRONGER
ESSENTIALLY UNCHANGED
MODERATELY WEAKER
MUCH WEAKER
1
23
81
15
1
ANTICIPATED DEMAND NEXT
THREE MONTHS
121
MUCH STRONGER
MODERATELY STRONGER
ESSENTIALLY UNCHANGED
MODERATELY WEAKER
MUCH WEAKER
0
43
69
9
0
0
1
7
0
0
O
2
12
2
0
0
1
6
1
0
O
1
6
1
0
O
2
3
1
0
0
1
9
1
0
0
3
7
1
1
0
1
6
3
0
0
2
11
2
0
0
2
6
1
0
0
0
3
0
0
1
3
3
2
0
O
2
5
2
0
O
4
9
0
0
0
3
5
0
0
0
5
11
0
0
0
2
6
0
0
0
3
5
0
0
0
4
2
0
0
0
2
9
0
0
0
5
5
2
0
0
4
5
1
0
0
5
9
1
0
0
2
7
0
0
0
1
2
0
0
0
4
2
3
0
0
2
5
2
0
0
6
7
0
0
0
0
4
4
0
0
0
9
7
0
0
0
4
4
0
0
0
5
3
0
0
0
4
Z
0
0
0
6
5
0
0
0
3
9
0
0
0
6
4
0
0
0
8
7
0
0
0
3
6
0
0
0
2
1
0
0
1
2
6
0
0
1
6
2
0
0
0
4
9
0
0
0
7
1
0
0
0
9
7
0
0
0
3
5
0
0
0
6
2
0
0
0
3
3
0
0
0
9
1
1
0
0
9
2
1
0
0
9
1
0
0
0
12
3
0
0
1
4
3
I
0
0
2
1
0
0
0
8
1
0
0
0
8
1
0
0
0
10
3
0
LENDING TO NONFINANCIAL
BUSINESSES
TERMS AND CONDITIONS
INTEREST RATES
CHARGED
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
COMPENSATING BALANCES
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
1/ SURVEY OF LENDING PRACTICES AT
AS OF
NOVEMBER 15, 1976.
121
0
2
57
62
0
121
0
1
90
27
3
121
LARGE BANKS
REPORTING IN THE FEDERAL RESERVE
QUARTERLY
INTEREST
RATE SURVEY
NOT FOR
QUOTATION
OR
PUBLICATION
TABLE 3
ALL
DSTS
(C
ATLANTA
CLEVE- RICHLAND
MOND
PHILADEL.
NEW YORK
BOSTON
TOTAL CITY OUTSIDE
ST.
CHICLOUIS
AGO
MINNE- KANS.
CITY
APOLIS
DALLAS
SAN
FRAN
LENDING TO NONFINANCIAL
BUSINESSES
TERMS
AND CONDITIONS
STANDARDS OF CREDIT WORTHINESS
121
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
1
1
117
2
0
MATURITY OF TERM LOANS
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
0
1
7
0
0
0
0
16
0
0
0
0
8
0
0
0
0
8
0
0
0
0
7
1
0
0
0
15
1
0
0
0
7
1
0
0
8
0
0
0
O
8
0
0
0
0
12
4
0
0
0
5
3
0
0
0
7
1
0
0
0
12
4
0
0
6
0
0
0
0
11
0
0
0
0
11
1
0
1
0
8
1
0
0
0
15
0
0
00
0
9
0
0
0
3
0
0
0
0
9
0
0
00
0
9
0
0
0
0
13
0
0
0
0
6
0
0
0
10
1
0
0
0
9
3
0
0
0
9
1
0
0
0
14
1
0
0
0
5
4
0
0
0
3
0
0
0
1
b
2
0
0
1
5
3
0
0
0
11
2
0
0
0
7
1
0
0
0
4
2
0
0
0
10
1
0
0
0
11
1
0
0
0
9
1
0
0
0
14
1
0
0
1
7
1
0
0
0
3
0
0
0
1
7
1
0
0
0
7
2
0
0
0
13
0
0
0
0
5
3
0
0
0
7
1
00
0
0
6
0
0
0
9
2
0
0
0
11
1
1
1
8
0
0
0
13
2
0
0
1
6
2
0
0
0
2
1
0
1
U
0
0
0
0
8
1
0
0
0
13
0
0
0
0
7
1
0
0
0
8
0
0
0
0
5
1
0
0
0
10
1
0
0
0
11
1
0
0
0
3
0
0
0
1
7
1
0
0
0
e
i
0
0
0
13
0
0
121
0
2
100
19
0
0
0
REVIEWING CRFOIT LINES OR LOANS
ESTABLISHED CUSTOMERS
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
0
2
105
14
0
121
NEW CUSTOMERS
MUCH FIRMER
MODERATELY
ESSENTIALLY
MODERATELY
MUCH EASIER
121
POLICY
FIRMER POLICY
UNCHANGED POLICY
EASIER POLICY
POLICY
LOCAL SERVICE AREA
CUSTOMERS
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
1
3
103
14
0
0
0
0
0
121
0
2
112
7
0
0
0
8
0
0
0
0
15
1
0
0
0
10
0
0
0
0
14
1
0
0
1
6
0
0
FORQUOTATION OR
NOT
TABLE .
PUBLICATION
ALL
DSTS
BOSTON
NEW YORK
TOTAL CITY OUTSIDE
4TINUED)
PHILADEL.
CLEVE- RICHMOND
LAND
ATLAN- CHICAGO
TA
ST.
LOUIS
MINNE- KANS.
CITY
APOLIS
DALLAS
SAN
FRAN
LENDING TO NONFINANCIAL
BUSINESSES
REVIEWING CREDIT LINES OR LOANS
NONLOCAL
SERVICE AREA
CUST
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
121
2
5
103
11
0
0
0
7
1
0
0
0
15
1
0
0
0
7
1
0
0
0
8
0
0
0
0
5
1
0
0
1
9
1
0
0
11
1
0
1
1
8
0
0
0
0
13
2
0
0
1
7
1
U
0
0
3
0
0
1
1
7
0
0
0
0
7
2
O
0
1
11
1
O
0
0
8
0
0
0
2
11
3
0
0
0
6
2
0
0
2
5
1
0
0
1
5
0
0
0
0
9
2
0
0
0
11
1
0
0
2
8
0
0
0
2
12
1
0
0
0
6
3
0
0
0
3
0
0
0
3
6
0
0
0
0
7
2
0
0
0
12
1
0
0
0
7
1
0
0
0
13
3
0
0
0
6
2
0
0
7
1
0
0
6
0
0
0
11
0
0
0
0
12
0
0
0
0
10
0
0
0
14
1
0
0
0
8
1
0
0
3
0
0
0
1
7
1
0
0
0
8
1
0
0
0
9
4
0
0
0
0
0
c
i
0
13
2
0
0
8
1
0
0
3
0
0
0
6
3
0
1
7
1
0
0
8
5
0
FACTORS RELATING TO APPLICANT 2/
VALUE AS DEPOSITOR OR SOURCE
OF COLLATERAL BUSINESS
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
INTENDED USE OF LOAN
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
LENDING
FINANCE
121
0
10
98
13
0
121
O
1
10b
12
0
TO "NONCAPTIvE"
COMPANIES
TERMS AND LONDITIONS
INTEREST
RATES CHARGED
M'.H FIRMER POLICY
MODERATELY FIRMtR POLICY
ESSENTIALLY .IUNCHANGED POLICY
MODERATELY EASIER POLICY
P
MUCH EASIF
P'f!
ICY
121
o
U
0
C
0
O
0
0
0
3
95
23
O
7
1
0
0
14
2
0
7
1
0
0
7
1
0
0
6
0
0
0
10
1
0
8
4
0
2
5
3
0
0
2/ FOR THESE FAC1ORS, FIRMER MEANS THE FACTORS WERE CONSIDERED MORE
CREDIT REQUFIT*,
fNO EASIER MEANS THEY WERE LESS IMPORTANT.
IMPORIANT IN MAKING DECISIONS
FOR APPROVING
NOT
FOR
QUOTATION OR
PUBLICATION
TABLE
ALL
DSTS
NEW YORK
BOSTON
TOTAL CITY OUTSIDE
3 (CONTINUED)
PHILADEL.
CLEVELAND
RICHMOND
ST.
ATLAN- CHICAGO
LOUIS
TA
MINNE- KANS.
CITY
APOLIS
DALLAS
SAN
FRAN
LENDING TO "NONCAPTIVE"
FINANCE COMPANIES
TERMS AND CONDITIONS:
SIZE OF COMPENSATING
BALANCES
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
ENFORCEMENT OF
BALANCE REQUIREMENT
MUCh FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
ESTABLISHING NEW OR LARGER
CREDIT LINES
MUCH FIRMER POLICY
MODERATELY FIRMER POLICY
ESSENTIALLY UNCHANGED POLICY
MODERATELY EASIER POLICY
MUCH EASIER POLICY
121
O
2
115
4
O
0
0
8
O
0
0
0
15
I
0
0
0
8
0
0
0
0
7
1
0
0
0
6
0
O
0
0
11
0
0
0
0
12
0
G
0
2
8
0
O
0
0
14
1
0
0
0
8
1
O
0
0
3
0
O
0
0
8
1
0
0
0
9
0
0
0
0
13
0
O
0
0
8
0
0
0
0
14
2
0
0
0
8
0
0
0
0
6
2
0
0
0
6
0
0
0
0
11
0
0
0
0
II
1
0
0
2
8
0
0
0
0
15
0
0
0
0
9
0
0
0
0
3
0
0
0
1
7
1
0
0
0
9
0
0
0
0
13
C
0
0
0
8
0
0
0
0
9
6
0
6
2
0
0
1
3
4
0
0
0
6
0
0
0
0
10
1
0
0
0
10
2
0
1
1
8
0
0
0
0
12
3
0
0
0
8
1
0
1
0
1
1
0
0
2
6
1
0
0
0
9
0
0
0
1
11
1
0
0
0
5
3
0
0
0
8
8
0
0
0
5
3
0
0
0
3
5
0
0
0
5
1
0
0
0
10
1
0
0
0
7
4
1
0
0
10
0
0
0
0
8
7
0
0
0
4
5
0
0
0
1
2
0
0
2
4
3
0
0
1
4
4
0
0
0
7
6
0
0
0
8
0
0
0
0
13
2
0
0
0
6
1
0
0
0
7
1
0
0
0
5
1
0
0
0
9
2
0
0
0
8
3
1
0
0
7
2
1
0
0
10
5
0
0
0
5
4
0
0
0
3
0
0
0
0
6
3
0
0
0
7
2
0
0
1
v
2
1
121
0
3
114
4
O
121
2
5
98
16
0
1
WILLINGNESS TO MAKE OTHER
TYPES GF LOANS
TERM LOANS TO BUSINESSES
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
CONSUMER
INSTALMENT LOANS
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
121
O
3
73
44
1
120
0
1
90
26
3
NOT FOR QUOTATION OR
PUBLICATION
TABLE 3 (CONTINUED)
ALL
DSTS
BOSTON
NEW YORK
TOTAL CITY OUTSIDE
PHILADEL.
CLEVE- RICHLAND MOND
ATLAN- CHICTA
AGO
ST.
LOUIS
MINNEAPOLIS
KANS.
CITY
DALLAS
SAN
FRAN
WILLINGNESS TO MAKE OTHER
TYPES OF LOANS
SINGLE FAMILY MORTGAGE LOANS
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
MULTIFAMILY MORTGAGE LOANS
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
ALL OTHER MORTGAGE
LOANS
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
PARTICIPATION
CORRESPONDENT
LOANS WITH
BANKS
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
LOANS TO BROKERS
CONSIDERABLY LESS WILLING
MODERATELY LESS WILLING
ESSENTIALLY UNCHANGED
MODERATELY MORE WILLING
CONSIDERABLY MORE WILLING
NUMBER OF BANKS
120
0
4
98
16
2
1
11
3
0
0
0
6
1
0
0
1
5
2
0
0
0
4
1
1
0
0
10
1
0
0
1
10
1
0
0
0
10
0
0
0
0
13
2
0
0
0
9
0
0
0
0
3
0
0
0
1
6
2
0
0
0
8
1
0
0
1
8
3
1
0
0
8
0
0
0
0
15
0
0
0
0
7
0
0
0
0
8
0
0
0
0
6
0
0
0
0
11
0
0
0
0
12
0
0
0
0
10
0
0
0
0
15
0
O
0
0
9
0
O
0
0
3
0
O
0
1
8
0
C
0
0
9
0
O
0
1
11
1
O
0
0
8
0
0
0
0
13
2
0
0
0
7
0
0
0
0
6
2
0
0
0
6
0
0
0
0
11
0
0
0
0
11
1
0
0
0
9
0
0
0
0
13
2
0
0
0
8
1
0
0
0
3
0
0
0
1
h
0
0
0
0
9
0
O
0
1
V
3
0
0
0
5
3
0
0
0
11
5
0
0
0
7
1
0
0
0
4
4
0
0
0
6
0
0
0
0
10
1
0
0
0
9
1
2
1
0
6
2
0
0
0
14
1
0
0
0
4
5
0
0
0
3
0
0
0
0
8
1
0
0
0
4
5
0
0
0
11
2
0
0
0
7
0
1
0
0
13
3
0
0
0
7
1
0
0
0
6
2
0
0
0
6
0
0
0
0
10
1
0
0
0
10
0
2
1
0
8
1
0
0
0
14
1
0
0
0
7
2
0
0
0
2
1
0
0
0
6
3
0
0
0
7
2
0
0
1
10
2
0
0
0
6
2
0
0
0
120
0
2
117
1
0
119
0
2
108
9
0
120
1
0
91
26
2
121
1
1
100
16
3
121
NOT FOR QUOTATION OR
TABLE 4
PUBLICATION
COMPARISON OF SELECTED
AUGUST
RESPONSES IN THE
AUG.
15,
1976
NUMBER
OF BANKS
NOVEMBER
AND
NOVEMBER
15,
SURVEYS
1976
NUMBER OF BANKS
STRONGER
UNCHANGED
WEAKER
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS
COMPARED TO THREE MONTHS AGO
STRONGER
UNCHANGED
WEAKER
24
73
24
6
15
3
15
51
15
3
7
6
ANTICIPATED DEMAND THREE MONTHS HENCE
STRONGER
UNCHANGED
WEAKER
64
54
3
27
15
36
32
1
1
7
1
ANTICIPATED DEMAND THREE MONTHS HENCE
STRONGER
UNCHANGED
WEAKER
b4
54
3
FIRMER
LENDING TO NONFINANCIAL BUSINESSES
INTEREST
RATES CHARGED
FIRMER
UNCHANGED
EASIER
COMPARED
16
7
1
10 THREE MONTHS AGO
42
6
38
9
1
1
UNCHANGED
EASIER
3
93
25
0
2
0
0
48
9
3
43
16
COMPENSATING OR SUPPORTING BALANCES
FIRMER
UNCHANGED
EASIER
2
107
12
0
1
0
2
85
3
0
21
9
STANDARDS OF CREDIT WORTHINESS
FIRMER
UNCHANGED
EASIER
4
117
0
0
2
0
4
113
0
0
2
0
MATURITY OF TERM LOANS
FIRMER
UNCHANGED
EASIER
5
104
12
2
O
0
3
90
7
0
14
5
NOT FOR QUOTATION OR PUBLICATION
TABLE 4 (CONTINUED)
AUG. 15,
1976
NUMBER
OF BANKS
NOVEMBER
15,
1976
NUMBER OF BANKS
FIRMER
UNCHANGED
EASIER
REVIEWING CREDIT LINES OR LOAN APPLICATION
ESTABLISHED CUSTOMERS
FIRMER
UNCHANGED
EASIER
2
112
7
0
2
0
2
98
5
0
12
2
FIRMER
UNCHANGED
EASIER
6
111
4
1
3
0
5
96
2
0
12
2
AREA CUSTOMERS
FIRMER
UNCHANGED
EASIER
3
112
6
0
2
0
3
105
4
0
5
2
5
109
7
1
6
0
4
95
4
0
8
3
VALUE AS DEPOSITOR OR
SOURCE OF COLLATERAL BUSINESS
FIRMER
UNCHANGED
EASIER
10
105
6
5
5
0
5
91
2
0
9
4
INTENDED USE OF THE LOAN
FIRMER
UNCHANGED
EASIER
4
109
8
1
0
0
2
102
4
1
7
4
8
108
5
1
2
0
4
91
0
3
15
5
4
116
1
1
1
0
3
111
1
0
4
0
NEW CUSTOMERS
LOCAL SERVICE
NONLOCAL SERVICE AREA CUSTOMERS
FIRMER
UNCHANGED
EASIER
FACTORS RELATING TO APPLICANT
LENDING TO "NONCAPTIVE"
FINANCE COMPANIES
TERMS AND CONDITIONS:
INTEREST
RATES CHARGED
FIRMER
UNCHANGED
EASIER
COMPENSATING OR SUPPORTING BALANCES
FIRMER
UNCHANGED
EASIER
FOR
NOT
QUOTATION OR
PUBLICATION
TABL
AUG.
ONTINUED)
15,
1976
NUMBER
OF BANKS
NOVEMBER 15, 1976
NUMBER OF BANKS
EASIER
UNCHANGED
FIRMER
LENDING TO "NONCAPTIVE" FINANCE COMPANIES
TERMS AND CONDITIONS:
ENFORCEMENT OF BALANCE REQUIREMENTS
FIRMER
UNCHANGED
EASIER
7
113
I
ESTABLISHING NEW OR LARGER CREDIT
FIRMER
UNCHANGED
EASIER
8
105
8
LINES
WILLINGNESS TO MAKE OTHER TYPES OF LOANS
TERM LOANS TO BUSINESSES
LESS
UNCHANGED
MORE
CONSUMER
INSTALMENT LOANS
LESS
UNCHANGED
MORE
LESS
5
87
29
1
85
34
SINGLE FAMILY MORTGAGE LOANS
LESS
UNCHANGED
MORE
3
102
15
MULTI-FAMILY MORTGAGE LOANS
LESS
UNCHANGED
MORE
I
114
4
ALL OTHER MORTGAGE LOANS
LESS
UNCHANGED
MORE
2
108
10
PARTICIPATION LOANS WITH CORRESPONDENT BANKS
LtSS
3
96
UNCHANGED
MORE
22
LOANS TO BROKERS
LESS
IINCHA'-. FD
MORE
UNCHANGED
MORE
NOT FOR QUOTATION OR
PUBLICATION
TABLE 5
CROSS-CLASSIFICATION OF SELECTED RESPONSES
NOV.
15,
1976
NUMBER
OF BANKS
IN THE
NOVEMBER SURVEY
NOVEMBER
15,
1976
NUMBER OF BANKS
ESSENTIALLY
FIRMER
UNCHANGED
EASIER
LENDING TO NONFINANCIAL BUSINESSES
INTEREST RATES CHARGED
FIRMER
ESSENTIALLY UNCHANGED
EASIER
COMPENSATING OR SUPPORTING BALANCES
O
2
0
1
50
b
24
38
0
NEW CUSTOMERS
ESTABLISHED CUSTOMERS
3
1
96
1
0
6
0
6
8
INTENDED USE OF THE
9
1
0
91
O
8
0
7
5
FIRMER
ESSENTIALLY UNCHANGED
EASIER
VALUE AS DEPOSITOR OR
SOURCE OF COLLATERAL BUSINESS
FIRMER
ESSENTIALLY UNCHANGED
EASIER
LOAN
LENDING TO "NONCAPTIVE" FINANCE COMPANIES
INTEREST
RATES CHARGED
FIRMER
ESSENTIALLY UNCHANGED
EASIER
COMPENSATING OR SUPPORTING BALANCES
0
1
2
O
93
2
O
21
2
COMPENSATING OR SUPPORTING BALANCES
FIRMER
ESSENTIALLY UNCHANGED
EASIER
ENFORCEMENT OF BALANCE REQUIREMENTS
2
0
0
1
112
2
2
2
O
COMPENSATING OR SUPPORTING BALANCES
FIRMER
ESSENTIALLY UNCHANGED
EASIER
ESTABLISHING NEW OR LARGER CREDIT LINES
2
0
0
5
98
12
4
0
0
NOT
FOR QUOTATION OR
PUBLICATION
TABLE 5 (CONTINUED)
CROSS-CLASSIFICATION OF
SELECTED RESPONSES
NOV.
15,
1976
NUMBER
OF BANKS
IN THE
NOVEMBER SURVEY
NOVEMBER
15, 1976
NUMBER OF BANKS
ESSENTIALLY
UNCHANGED
LESS
MORE
WILLINGNESS TO MAKE OTHER TYPES OF LOANS
TERM LOANS TO BUSINESSES
LESS
ESSENTIALLY UNCHANGED
MORE
MATURITY OF TERM LOANS
2
1
68
0
0
31
SINGLE FAMILY MORTGAGE LOANS
LESS
ESSENTIALLY UNCHANGED
MORE
MULTI-FAMILY MORTGAGE LOANS
2
2
0
0
98
O
0
17
1
SINGLE FAMILY
MORTGAGE LOANS
LESS
ESSENTIALLY UNCHANGED
MORE
0
5
14
ALL OTHER MORTGAGE LOANS
0
2
2
5
92
0
4
14
0
TERM
LOANS TO BUSINESSES
LESS
ESSENTIALLY UNCHANGED
MORE
CONSUMER
O
0
1
TERM
LOANS TO BUSINESSES
LESS
ESSENTIALLY UNCHANGED
MORE
PARTICIPATION LOANS WITH
CORRESPONDENT BANKS
0
2
1
1
66
5
0
23
22
TERM LOANS TO BUSINESSES
LESS
ESSENTIALLY UNCHANGED
MORE
INSTALMENT LOANS
2
1
61
11
17
27
LOANS TO BROKERS
0
2
2
68
O
30
1
3
15
NOT FOR QUOTATION OR PUBLICATION
TABLE 5 (CONTINUED)
CROSS-CLASSIFICATION OF SELECTED RESPONSES IN THE
NOV. 15,
1976
NUMBER
OF BANKS
NOVEMBER SURVEY
NOVEMBER
15,
1976
NUMBER OF BANKS
ESSENTIALLY
FIRMER
UNCHANGED
EASIER
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS
COMPARED
TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
INTEREST RATES CHARGED
TO NONFINANCIAL BUSINESSES
2
13
9
0
38
43
0
6
10
COMPARED
TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
COMPENSATING
0
1
0
OR SUPPORTING BALANCES
18
6
20
60
12
4
THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
STANDARDS OF
O
1
1
CREDIT WORTHINESS
23
1
0
80
1
14
COMPARED TO
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
MATURITY
2
0
0
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
NEW
OF TERM LOANS
17
70
13
5
11
3
CUSTOMERS
I
2
1
22
68
13
I
II
2
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
I"NONCAPTIVE FINANCE COMPANIES")
ENFORCEMENT OF BALANCE REQUIREMENTS
0
23
I
1
78
2
2
13
1
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
("NONCAPTIVE
ESTABLISHING
2
4
1
FINANCE COMPANIES")
NEW OR LARGER CREDIT LINES
20
2
66
11
12
3
NOT FOR
QUOTATION OR
PUBLICATION
TABLE 5 (CONTINUED)
A CROSS-CLASSIFICATION OF SELECTED RESPONSES
NOV.
15,
1976
NUMBER
OF BANKS
IN THE
NOVEMBER SURVEY
NOVEMBER 15, 1976
NUMBER OF BANKS
ESSENTIALLY
LESS
UNCHANGED
MORE
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
WILLINGNESS TO MAKE
TERM LOANS TO BUSINESSES
14
3
O
51
0
8
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
WILLINGNESS TO MAKE
CONSUMER INSTALMENT LOANS
0
19
5
19
60
1
11
0
5
COMPARED TO
THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
WILLINGNESS TO MAKE
SINGLE FAMILY MORTGAGE LOANS
2
19
3
WILLINGNESS TO MAKE
MULTI-FAMILY MORTGAGE LOANS
21
1
2
80
0
0
0
THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
WILLINGNESS TO MAKE
ALL OTHER MORTGAGE LOANS
20
2
74
0
14
0
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
WILLINGNESS TO MAKE
PARTICIPATION LOANS WITH
CORRESPONDENT BANKS
0
17
0
65
1
9
COMPARED TO
COMPARED TO THREE MONTHS AGO
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
WILLINGNESS TO MAKE
LOANS TO BROKERS
17
1
0
72
NOT FOR QUOTATION OR
PUBLICATION
TABLE 5 (CONTINUED)
CROSS-CLASSIFICATION OF SELECTED RESPONSES
NOV.
15,
1976
NUMBER
OF BANKS
IN THE
SURVEY
NOVEMBER
NOVEMBER
15,
1976
NUMBER OF BANKS
ESSENTIALLY
FIRMER
UNCHANGED
EASIER
STRENGTH OF DEMAND FOR COMMERCIAL AND
INDUSTRIAL LOANS
ANTICIPATED DEMAND IN NEXT 3 MONTHS
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
COMPENSATING OR SUPPORTING BALANCES
0
34
9
20
48
1
0
8
1
ANTICIPATED DEMAND IN NEXT 3 MONTHS
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
STANDARDS OF CREDIT WORTHINESS
1
41
1
1
68
0
1
8
0
ANTICIPATED DEMAND IN NEXT 3 MONTHS
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
MATURITY OF TERM LOANS
35
2
0
59
0
6
ANTICIPATED DEMAND IN NEXT 3 MONTHS
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
NEW CUSTOMERS
2
37
1
59
1
7
ANTICIPATED DEMAND IN NEXT 3 MONTHS
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
ESTABLISHING
4
2
1
("NUNCAPTIVE
LESS
ANTICIPATED DEMAND IN NEXT 3 MONTHS
STRONGER
ESSENTIALLY UNCHANGED
WEAKER
b
10
3
4
9
1
FINANCE COMPANIES")
NEW OR LARGER CREDIT
34
5
58
9
6
2
ESSENTIALLY
UNCHANGED
MORE
WILLINGNESS TO MAKE
TERM LOANS TO BUSINESSES
3
20
20
0
48
21
0
5
4
LINES
CHART 1:
of Commercial and Industrial Loan Demand*
Anticipated versus Realized Stre.
6100
490
- 80
SI
F1
ri1
n1
Realized
I
Strength
I
Nov -
74
Feb
75
Feb -
May
1975
May - Aug
1975
Aug - Nov
1975
I--
Nov - Feb
75
76
I
'
I
I
II
I
47
- ---Feb - May
1976
May -
Aug
1976
Aug -
Nov
1976
* On each survey, respondents provide their expectations about the strength of commercial and
industrial loan demand over th' next three months. "Anticipated strength" is defined here
as the percentage of respondctcs expecting stronger demand. The succeeding survey provides
"realized strength" which is defined here as the percentage of the sample reporting stronger
demand.
-- 4 0
Nov-Feb
76 77
CHART 2:
Policy Regarding Compensating Balances
An Index of the Net Change in
(% of Respondents Reporting Firmer Policy Minus % Reporting Easier Policy)
+(Net:Firmer)
100 -
75 -
50
25-
Aug 15
1974
25 1-
50 -
75 -
100 -(Net:Easier)
-
H 77
F-1
' ---- '~
Nov 15
1974
Feb 15
1975
S
Fi
F-1
May 15
1975
I
ug 15
1975
Nov 15
1975
Feb 15
1976
May 15
1976-
Aug 15
1976
Nov 15
1976
APPENDIX B*
Changes in Offering Terms of Small Time and Savings Deposits
in Response to Declining Market Rates of Interest
With the approval of the FDIC and the FHLBB, staffs of all
Reserve Banks were asked in mid-November to contact a number of commercial
banks (CB's), savings and loan associations (S&L's), and mutual savings
banks (MSB's) in their Districts to determine whether depository institutions had begun to lower offering rates on deposits subject to Federal
ceilings in response to declining market rates of interest. Institutions
were asked if they had cut rates on any such deposits or planned to cut
rates in the next 60 days and if they had eliminated any type of deposits
from their schedule of offerings. Officials at the institutions also were
asked whether they had reduced promotional activity to attract deposits.
The results of the survey were received at the Board by December 3, and
the table summarizes the principal findings.1/
Both rate cutting and dropping of certain maturities of time
deposits are indeed evident at banks and thrift institutions, but, as
shown by item 2 in the table, such activity was found to be more common
at thrift institutions than at banks. About 20 per cent of the banks
contacted reported that they had either cut rates or ceased offering
selected maturities of time deposits, compared to half of the S&L's and
three-fourths of the MSB's. The pattern of heavier rate cutting and withdrawing of maturities of time deposits by thrift institutions was found
throughout the country, although somewhat more of this activity was noted
in the Southeast, and less in the Northeast than prevailed elsewhere.
1/ It should be cautioned that though an attempt was made to contact a
cross-section of institutions by size, the survey was informal and
was not a scientific sample of banks and thrift institutions. Consequently, inferences about the comparative rate cutting and other
activities of the various classes of institutions or by institutions
in various regions can only be made in the broadest terms.
*Prepared by Paul Boltz, Banking Section, Division of Research and
Statistics
B - 2
Preliminary tabulations have just become available this week
from the universe survey of offering rates at S&L's taken in early October
by the Federal Home Loan Bank Board and they indicate that relatively little
rate cutting or dropping of maturities of deposits had occurred by that
time. This is not inconsistent with the results of our informal survey
which shows that more than half of the rate cutting and dropping of maturities at S&L's occurred after the FHLBB survey date. The practice of rate
cutting thus appeared to be accelerating in November and probably by now
has spread to many more institutions than is suggested by our survey. Indeed, many officers of S&L's,as well as of MSB's and CB's who did not have
firm plans for lowering rates, nonetheless reported that they were watching
the course of market rates closely and would take action if rates declined
further.
Items 3 and 4 of the table show that rate cutting has been more
prevalent in the longer-term certificate accounts (with maturities 4 years
and over) at thrift institutions than in shorter-term time deposits. Although some institutions reported paying below the ceiling rate on savings
deposits, rate cutting on savings accounts is not shown separately because
no institution of any type contacted reported that it had cut its savings
deposit rate in the preceding six months. Unlike the thrift institutions,
banks reported more rate cutting on short as opposed to longer-term time
deposits, but relatively few banks reported any rate cutting of time
deposits.
Rate cutting was not the method preferred by thrift institutions
for slowing inflows of longer-term time deposits, as shown in item 5. In
the last six months, almost one-half of the mutual savings banks contacted
and almost one-third of the S&L's have ceased offering longer term time
accounts with an original maturity of four years or more.
In contrast,
only 1 in 10 banks stopped offering such maturities during the same period.
Relatively few institutions reported that they had reduced advertising and other promotional activity in the preceding six months, as
shown by item 6. Indeed, some have increased year-end advertising in an
effort to attract IRA and Keogh accounts. On the other hand, some of the
bank and thrift institution executives reported that advertising had been
cut back more than six months ago, as market rates edged down to and fell
below offering rates on their deposits.
B - 3
The more widespread rate cutting by thrift institutions may reflect the fact that the initial offering rates at such institutions
generally exceeded rates offered by commercial banks by one-fourth of one
per cent--the Congressionally mandated differential--and the effects of
declining rates of interest may have been felt more promptly by thrift
institutions than by banks. The rate cutting by thrift institutions
reduces or eliminates the advantage of the differential as long as competing banks elect to pay ceiling rates.
These developments clearly have a long-run importance in any
discussion of the rate differential accorded thrift institutions. In
recent years, banks have increased their market share of savings deposits
and shorter- term time deposits, while their market share of long-term
deposits has declined. On balance, the banks' share of total small
deposits has been stable. The differing patterns of rate cutting at CB's
and thrifts found in the survey may reflect their reluctance to lower
offering rates on deposits where there has not been much growth. Banks
and thrifts generally have cut rates in those maturities where they have
enjoyed the most success and already have the strongest market position:
short-term time deposits for banks and long-term time deposits for thrifts.
RESULTS OF INFORMAL SURVEY OF OFFERING RATES AND PROMOTIONAL ACTIVITY ON SMALL (under $100,000) TIME AND SAVINGS DEPOSITS
November 1976
All Districts
Number
% of Total
Northeast
(Districts 1,2,3)
Number
% of Total
Southeast
(Districts 5,6)
Number
% of Total
Upper Midwest
(Districts 4,7,9)
Number
% of Total
Lower Midwest
(Districts 8,10,11)
Number
West
(District 12)
% of Total IN umber
% of Total
1. Institutions contacted
CBs
MSBs
S&Ls
2. Dropped maturities or cut offering rates in last 6 momths
CBs
25
6.7
20.7
2
MSBs
25
73.5
15
63.0
S&Ls
50
3
20.0
48.5
3. Reduced offering rates on short-term time deposits in last 6 months
CBs
11
9.1
0
0.0
40.0
100.0
76.2
2
MSBs
4
11.8
2
8.3
0
S&Ls
7
6.8
0
0.0
3
10.0
0.0
14.3
13.3
100.0
40.0
23.3
6.7
0.0
3.3
13.3
4. Reduced offering rates on long-term (4 years and over) time deposits in ]ast 6 months
CBs
3
2.5
1
3.3
1
5.0
MSBs
9
26.5
5
20.8
0
0.0
S&Ls
17
16.5
1
6.7
8
38.1
0.0
60.0
13.3
5. Stopped offering some maturityI/of deposit in last 6 months
CBs
12
9.9
1
3.3
MSBs
15
44.1
8
33.3
S&Ls
31
30.0
2
13.3
6.7
60.0
23.3
6. Reduced
CBs
MSBs
S&Ls
6
3
9
30.0
100.0
42.9
60.0
8.0
3.3
12.0
6.7
40.0
36.4
100.0
33.3
27.3
100.0
8.3
0.0
50.0
8.3
9.1
50.0
25.0
promotional activity to attract deposits in last 6 months
12
3
14
9.9
8.8
13.6
1
1
1
3.3
4.2
6.7
0
0
2
7. Began directing depositors away from long-term deposits in last 6 months
CBs
8
6.6
1
3.3
0
MSBs
2
5.9
0
0.0
0
S&Ls
18
17.5
1
6.7
1
0.0
0.0
9.5
6.7
40.0
3.3
23.3
0.0
0.0
4.8
20.0
40.0
3.3
33.3
24.0
1/ In nearly all cases, the maturities of deposits withdrawn were the 4 year and over time deposit accounts.
32.0
18.2
0.0
16.6
0.0
0.0
0.0
APPENDIX C*
BUSINESS LOAN EXPANSION BY INDUSTRY
As noted in the Greenbook, business loans have increased over
the last three months, even after exclusion of large acquisitions of
bankers' acceptances by a few of the leading banks.1/ This recent loan
expansion is in marked contrast to reductions in business loans in the
first eight months of the year. Examination of the distribution of
business loans reveals that the increase in loans was concentrated at
large banks and widespread among industries.
In this appendix, some
preliminary results of a staff study of loans by industry are presented.
Industry breakdowns of business loans are reported currently by about 160
of the largest weekly reporting banks. The seasonal adjustments employed
in this analysis are preliminary.
Table I provides an indication that the recent loan expansion
reflects not only temporary increases in holdings of bankers' acceptances,
but also major shifts in the trend of loans in most industry categories.
As shown by the figures in parenthesis in the upper portion of the table,
there was a substantial increase in business loans other than acceptances
in the latest three months, in contrast to a net contraction earlier in
the year.
The smaller banks have experienced relatively steady loan growth
throughout the year.
Thus, the shift from a 3.5 per cent annual rate of
decline to an 8.6 per cent rate of expansion (excluding bankers' acceptances) reflects mainly a reversal of trend at the large weekly reporting
banks.
These banks usually dominate trends in business loans, as they
account for about two-thirds of total business loans at commercial banks.
Nearly all industry categories--8 of the 10 major groupings
shown in Table 1--contributed to the recent turnaround in business loans
at large banks.
Some major groupings, such as durable goods manufacturing
services, and loans not elsewhere classified turned from conttaction in
outstandings to expansion. Nondurable goods manufacturing, mining, and
foreign business loans all extended earlier growth at accelerated rates;
1/ A few banks have increased their acceptance holdings sharply since
August in order to expand their loan portfolios and provide for greater
It is expected that
loan loss allowances for tax purposes at year end.
this increase in acceptance holdings will be reversed early in 1977,
following a similar pattern in 1975-76.
*Prepared by Edward R. Fry, Senior Economist, Banking Section, Division of
Research and Statistics
C-
2
while the sharp contraction in loans to the construction industry abated.
Two categories--trade and the transportation, communications, and other
public utilities group--continued about on the paths observed earlier in
the year, with trade firms still borrowing relatively heavily and the
latter group further reducing bank borrowings sharply.
As was noted in the Greenbook, this general improvement in bank
lending to businesses may reflect some inventory financing, perhaps involuntary, and some abatement of balance sheet restructuring, as well as
increasing interest by banks in expanding loan portfolios. The latest
information on inventories indicates substantial inventory expansion in
October, suggesting a possible explanation for renewed loan growth. Also,
long-term financing by leading firms that have access to the public market
has been relatively small in recent months, as corporate liquidity has
improved considerably, especially in manufacturing industries.
Table 2 focuses on business loans in the manufacturing industries
Most manufacturing industries for which current business loan data are
available have contributed heavily to the recent turnaround. Only the transportation equipment and food, liquor, and tobacco groups have reduced their
borrowings at banks in recent months. The metals group shows a dramatic
shift from reduction to expansion in bank borrowings. These industries
also experienced substantial inventory accumulation in September and
October.
Among nondurable goods manufacturing industries, the most rapid
loan expansion also was in industries that experienced relatively large inventory investment. The petroleum refining industry stands out as the
leading borrower in this period, probably reflecting heavy imports and
stockpiling of petroleum products in anticipation of expected price
increases. Manufacturers of chemicals and rubber also increased their
bank borrowing while experiencing inventory accumulation.
Increases in loans to the trade group (total shown in Table 1)
also may reflect inventory investment to some extent. Wholesale firms
have borrowed more heavily than retail firms from banks throughout this
year, and wholesale inventories also have increased more than retail. Most
recently, retail sales have strengthened and retail inventories have declined. The acceleration in loan extensions to mining firms (also shown in
Table 1) probably reflects stepped-up exploration and mining of energyrelated resources, especially crude petroleum.
C-
3
Table 1
Distribution of Business Loans by Major Industry Groups--1976
Seasonally Adjusted
Changes (% annual rate) Outstanding
nding
Latest 3
First 8
($ mil Lions)
mos. 1976
C&I loans, all commercial banks
Large Banks
Other banks
C&I loans by industry
(selected large banks)
Durable goods manufacturing
mos. 1976
11/2 4/76
13.3(8.6)*
-4.3(-3.5)*
17( 5,700
17.1(9.8)*
-10.6(-9.8)*
11 5,976
6.4
9.3
6(),724
18.7
-10.7
95,830
5.8
-22.2
14,414
Nondurable goods manufacturing
12.4
Mining
37.5
22.2
7,343
Trade
11.2
13.7
14,357
Transportation, communication,
and other public utilities
Construction
Services
0.9
13,764
-17.4
-19.6
12,151
-2.7
-30.1
4,096
3.3
-2.9
10,511
279.8
-34.1
5,428
Foreign C&I loans
25.7
7.0
5,939
Not elsewhere classified
43.2
-45.4
7,959
7.3
-5.6
19,973
Bankers acceptances
C&I loans of large banks not
classifying loans
* Figures in parentheses reflect growth rates in business loans other
than bankers acceptances.
C -4
Table 2
Distribution of Business Loans to Manufacturing Industries-- 1976
Seasonally Adjusted
Changes (% annual rate Outstanding
.ng
Latest 3
First 8 ($ millio ns)
mos. 1976
mos. 1976
11/24/7 6
DDurable goods manufacturing
5.8
-22.2
14,414
Primary metals
29.6
-8.1
2,132
Machinery
11.9
-31.2
4,818
-36.0
-29.2
2,224
22.2
-28.6
1,768
5.5
-8.1
3,444
12.4
0.9
13,764
Transportation equipment
Other fabricated metal products
Other durable goods
Nondurable goods manufacturing
Food, liquor, and tobacco
Textiles, apparel, and leather
-44.5
11.7
3,246
8.8
15.3
3,355
Petroleum refining
94.6
-13.1
2,603
Chemicals and rubber
21.0
-12.9
2,663
Other nondurable goods
20.6
3.6
1,960
APPENDIX D*
U.K. ECONOMIC PACKAGE
On December 15, the U.K. government announced policy measures
in connection with its application to the IMF for a $3.9 billion loan.
Chancellor of the Exchequer Denis Healey announced reductions in public
spending plans (in 1976 prices) of £1 billion in fiscal 1977/78 (U.K.
fiscal years begin April 1) and 1.5 billion in fiscal 1978/79. These
cuts, supplemented by a 10 per cent increase in duties on tobacco and
alcoholic drinks and some sales of government-held shares of British
Petroleum, are expected to help reduce the public sector borrowing
requirement from its present (1976/77) estimated level of [£11.2
billion -- 9 per cent of GDP -- to -8 .7 billion in 1977/78 and about
£8.6 billion] in 1978/79 -- 6 per cent and 5.25 per cent of GDP,
respectively. The Chancellor indicated that income taxes may be cut
next year if a satisfactory agreement is worked out on the next phase
of the pay policy. The Chancellor also indicated that if forecasts
available at the time when fiscal policy for 1978/79 is being formulated
show that real GDP for 1978 and 1979 is likely to grow at an average
rate of more than 3.5 per cent per year, the budget deficit will be
cut further by up to £ billion.
The Chancellor also announced targets for domestic credit
expansion (DCE) and made it clear that hitting such targets, rather than
money supply targets, will be the main goal of monetary policy in the
foreseeable future. Roughly, DCE in the United Kingdom equals the
change in M3 plus the external deficit. The DCE targets are: £9 billion
for 1976/773/; £7.7
billion for 1977/78; and £6 billion for 1978/79. Using
reasonable estimates of what the external deficits are likely to be
suggests that the DCE targets announced are roughly equivalent to an
annual growth rate of M3 of around 12 per cent during the next two fiscal
years. (For the current fiscal year the target for M3 growth is 12 per
cent). DCE targets are a standard feature in IMF credit agreements.
The Chancellor's Letter of Intent to the IMF sets out a schedule of
quarterly limits to the sizes of both DCE and the public sector borrowing requirement in order to help ensure that the fiscal year targets
for those two variables will be achieved.
Chancellor Healey stated that Johannes Witteveen, IMF
Managing Director, supports the U.K. measures and is prepared to
recommend IMF approval of the U.K.'s request for the $3.9 billion standby
arrangement. The IMF is expected to approve Britain's loan application
in early January. Britain will then be able to draw $1.15 billion
immediately and another $1 billion before the end of 1977. The availability of a $500 million swap with the United States ($250 million each
*
Prepared by David H. Howard, Economist, World Payments and Economic
Activity Section, Division of International Finance.
D- 2
with the Federal Reserve System and the U.S. Treasury) and a $350
million standby with the Bundesbank were also announced. Any drawings
on the U.S. and German facilities are to be repaid during the course
of 1977. The Chancellor also said that he believes that there will
be an agreement on the sterling balance problem "before long."
The specific measures announced include:
Public expenditure. Public sector spending reductions of £1
billion for fiscal 1977/78 and £1.5 billion for 1978/79 (both in 1976
prices) were announced. The areas affected by the cuts include central
and local government capital expenditure, acquisitions under the
Community Land Act, food subsidies, defense, foreign aid, civil service
staff, public service pensions, the regional employment premium, and the
refinancing by government of fixed-rate export credit. Although full
details are not yet available, preliminary reports indicate that cuts
in construction programs will be £270 million in 1977/78 and £300
million in 1978/79, cuts in housing programs will save £300 million in
1978/79, acceleration of the phasing-out of food subsidies will save
£60 million in 1977/78, and defense will be cut £100 million in 1977/78
and £ 2 0 0 million in 1978/79 (about 2 per cent and 4 per cent of the
1976/77 defense budget, respectively).
Taxation. A 10 per cent increase in the revenue duty on
imported leaf tobacco was imposed as of midnight, December 15, and a
similar increase in the duty on other tobacco products and alcoholic
liquor is to go into effect on January 1. These taxes should increase
revenue in the current 1976/77 fiscal year by £50 million and in a full
year by 280 million. These tax increases are intended to finance
measures to aid employment and investment involving some £200 million
in each of the next two fiscal years.
Sale of British Petroleum shares. The U.K. government will
sell part of its holding of British Petroleum shares, which should
yield some £500 million. The government intends to retain a majority
of the outstanding shares, however.
@FedFRASER