Full text of Federal Reserve Bulletin : April 1984
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VOLUME 7 0 •
NUMBER 4 •
APRIL 1984
FEDERAL RESERVE
BULLETIN
Board of Governors of the Federal Reserve System
Washington, D.C.
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield • S. David Frost
Griffith L. Garwood • James L. Kichline • Edwin M. Truman
Naomi P. Salus,
Coordinator
The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for
opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Unit headed by Mendelle T. Berenson,
the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Helen L. Hulen.
Table of Contents
269 U.S. INTERNATIONAL
IN 1983
The U.S. merchandise trade and current
account deficits widened considerably during 1983.
279 REVISIONS
TO THE MONEY
STOCK
Annual revisions to the money stock, which
were published recently, on balance were
larger than normal, especially for Ml.
286 INDUSTRIAL
PRODUCTION
Output rose about 0.4 percent in March.
288 STATEMENTS
TO
structure the law governing bank and thrift
holding company activities, before the Senate Committee on Banking, Housing, and
Urban Affairs, March 27, 1984.
TRANSACTIONS
CONGRESS
Preston Martin, Vice Chairman, Board of
Governors, discusses title I of the Secondary Mortgage Market Enhancement Act of
1983, before the Subcommittee on Telecommunications, Consumer Protection,
and Finance of the House Committee on
Energy and Finance, March 14, 1984.
291 Lyle E. Gramley, Member, Board of Governors, presents the views of the Board on
fully insured brokered deposits, before the
Subcommittee on Commerce, Consumer,
and Monetary Affairs of the House Government Operations Committee, March 14,
1984.
309 Nancy H. Teeters, Member, Board of Governors, presents the views of the Board on
the issue of whether the Truth in Lending
Act should prohibit merchants from charging higher prices to credit card purchasers
than to cash purchasers through use of a
"surcharge," before the Subcommittee on
Consumer Affairs and Coinage of the House
Committee on Banking, Finance and Urban
Affairs, March 27, 1984.
312 Chairman Volcker reviews a wide range of
issues affecting developments in markets
for banking and other financial services,
before the Subcommittee on Telecommunications, Consumer Protection and Finance
of the House Committee on Energy and
Commerce, April 4, 1984.
319 Vice Chairman Martin discusses the views
of the Board on the issue of delayed availability, the practice of imposing "holds" on
funds representing checks deposited by
customers, before the Subcommittee on Financial Institutions Supervision, Regulation, and Insurance of the House Committee on Banking, Finance and Urban Affairs,
April 4, 1984.
294 Henry C. Wallich, Member, Board of Governors, discusses the causes of the U.S.
merchandise and current account deficits
and says that the strong dollar and large
external deficits are partly symptoms of
large budget deficits, before the Senate
Committee on Finance, March 23, 1984.
324 Chairman Volcker reviews some of the issues surrounding the large and growing
U.S. trade and current account deficits and
says that decisive action to deal with the
internal deficit is needed to restore better
balance in the external accounts, before the
Subcommittee on Trade of the House Committee on Ways and Means, April 10, 1984.
298 Paul A. Volcker, Chairman, Board of Governors, emphasizes the urgent need for definitive congressional action on legislative
proposals now before the Congress to re-
329
ANNOUNCEMENTS
Change in the discount rate.
Measures to reduce risk in large electronic
fund transfers.
Revision to the private sector adjustment
factor.
Adoption of rules regarding fees on international loans.
Discontinuance of use of bankers acceptances by the FOMC.
Amendment to Regulation T.
Deferment of effective date for revised Regulation T.
Update to staff commentary on Regulation Z.
Changes in Board staff.
Policy statement on multi-rate time deposits.
Proposed actions.
Availability of Supplement 10 to the Compliance Handbook.
maintaining the existing degree of restraint
on reserve positions. The members expected such a policy to be associated with
growth of both M2 and M3 at an annual rate
of around 8 percent for the period from
December to March and growth of Ml at an
annual rate of about 7 percent over the
three-month period. The rate of expansion
in total domestic nonfinancial debt was
thought likely to be within the Committee's
monitoring range for 1984. Lesser restraint
would be acceptable in the event of a shortfall in monetary and credit growth from
current expectations, while somewhat
greater restraint might be acceptable with
more rapid growth in the aggregates, both
viewed in the context of the strength of the
business expansion and of inflationary pressures. It was agreed that the intermeeting
range for the federal funds rate, which
provides a mechanism for initiating consultation of the Committee, would remain at 6
to 10 percent.
Availability of report on priced services.
Admission of five state banks to membership in the Federal Reserve System.
335 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET
COMMITTEE
At its meeting on January 30-31, 1984, the
Committee established growth ranges for
the broader aggregates of 6 to 9 percent for
both M2 and M3 for the period from the
fourth quarter of 1983 to the fourth quarter
of 1984. The Committee also considered
that a range of 4 to 8 percent for Ml would
be appropriate for the same period, taking
account of the possibility that, in the light of
the changed composition of M l , its relationship to GNP over time may be shifting.
Pending further experience, growth in that
aggregate will need to be interpreted in the
light of the growth in the other monetary
aggregates, which for the time being would
continue to receive substantial weight. The
associated range for total domestic nonfinancial debt was set at 8 to 11 percent for
the year 1984.
For the short run, the members indicated
their acceptance of a policy directed at
343 LEGAL
DEVELOPMENTS
Amendments to Regulation K; amendments
to Regulation T; various bank holding company and bank merger orders; and pending
cases.
A i FINANCIAL
AND BUSINESS
STATISTICS
A3 Domestic Financial Statistics
A42 Domestic Nonfinancial Statistics
A50 International Statistics
A 6 5 GUIDE TO TABULAR
PRESENTATION,
STATISTICAL RELEASES, AND
SPECIAL
TABLES
A 6 6 BOARD
OF GOVERNORS
AND
STAFF
A 6 8 FEDERAL OPEN MARKET
COMMITTEE
AND STAFF; ADVISORY
COUNCILS
A 7 0 FEDERAL RESERVE
PUBLICATIONS
A 7 3 INDEX
BOARD
TO STATISTICAL
A 7 5 FEDERAL RESERVE
MID
OFFICES
A 7 6 MAP OF FEDERAL
TABLES
BANKS,
RESERVE
BRANCHES,
SYSTEM
U.S. International Transactions in 1983
Peter Isard of the Board's Division of International Finance prepared this article.
The U.S. merchandise trade and current account
deficits widened considerably during 1983. For
1983 as a whole, the trade deficit exceeded $60
billion, while the current account deficit reached
$40 billion. These deficits, which are projected to
be substantially larger in 1984, have raised concerns about the state of U.S. tradable goods
industries. In addition, the prospect that a significant fraction of the saving of foreign countries
will continue to flow into the United States in
conjunction with large U.S. current account deficits has raised questions about how long large
deficits can be sustained.
MAJOR
INFLUENCES
INTERNATIONAL
ON
U.S.
TRANSACTIONS
U.S. current account transactions in recent years
have responded to many factors, including the
movement of exchange rates, the growth of
economic activity in the United States and the
rest of the world, the decline in the dollar price of
oil, and the sharp reductions in the imports of
debt-ridden countries. Each of these factors has
been influenced in turn by economic policies in
the United States and abroad.
U.S. capital account transactions are sensitive
to a somewhat different set of factors ex ante,
although apart from errors and omissions in
reporting, the current account and capital account balances must be equal (but opposite in
sign) ex post. Among the factors that induced
large net capital inflows in 1983 were relatively
high U.S. interest rates, the relatively attractive
outlook for U.S. economic growth and inflation,
and the view of the United States as a relatively
safe haven for investments. These factors were,
also, influenced in turn by economic policies in
the United States and abroad.
Shifts in U.S. fiscal policy since 1980 have had
major impacts on the factors that influence U.S.
current and capital account transactions. Following the introduction of staged reductions in U.S.
income taxes, reductions in nondefense spending, and increases in defense spending, the U.S.
federal budget deficit expanded from about $60
billion in 1980 and 1981 to more than $180 billion
in calendar-year 1983 (chart 1). The current
account deficit is linked to the budget deficit in
the national income accounts. Whenever one
sector of the economy runs a deficit, other
sectors must, on balance, show a matching surplus. In the case of the federal government
budget deficit, some of the counterpart surplus
has been supplied by an excess of private domestic saving over private domestic investment,
including the surplus of state and local governments. The remainder has come from a net
capital inflow from abroad, which is essentially
the counterpart of the current account deficit.
The surpluses that private domestic residents
and foreign residents together must provide to
match a federal budget deficit do not develop
automatically. Historically, moreover, the current account and federal budget balances have
1. U.S. federal budget and current account balances
Billions of dollars, seasonally adjusted annual rate
National income accounts basis.
The private domestic surplus equals private domestic saving, including the surplus of state and local governments, less private
domestic investment.
SOURCE. U.S. Department of Commerce, Bureau of Economic
Analysis.
270 Federal Reserve Bulletin • April 1984
2. Real gross national product
1980=100
Seasonally adjusted quarterly data.
The GNP of foreign industrial countries is the weighted-average
GNP for the Group of Ten countries and Switzerland. Weights are
proportional to each country's share in world exports plus imports
during 1972-76. The same countries and weights are used throughout
this article in weighted-average indexes of consumer prices and
interest rates in foreign industrial countries and in indexes of the
exchange value of the dollar against the currencies of foreign industrial
economies.
not moved closely in parallel, as is evident from
the fact that U.S. current account positions over
the past have accumulated to an international net
creditor position, while federal budget imbalances have led to a large public debt. Over recent
years, however, the widening of the structural
deficit in the U.S. federal budget has put pressures on interest rates, exchange rates, economic
activity, and other factors, which in turn have
helped induce the widening of the current account deficit.
The behavior of the U.S. current account
during the 1980s is attributable partly to the
differences in cyclical behavior of the U.S. and
foreign industrial economies (chart 2) and the
adjustment of imports by developing countries
(chart 3). The U.S. current account remained
close to balance from mid-1981 through mid3. Imports of developing countries
1982, a period when the U.S. economy went into
a deep recession. The rapid widening of the U.S.
current account deficit during 1983 came about
largely because the rapid recovery of the U.S.
economy stimulated imports at a time when the
growth of exports was depressed both by the
slow expansion of economic activity in foreign
industrial economies and by the contraction of
imports into developing countries in response to
severe foreign exchange constraints.
The net impact of these factors on the U.S.
current account since the last quarter of 1980 has
been outweighed, however, by the impact of
exchange rate developments. From the fourth
quarter of 1980 through March 1984, the dollar
appreciated in nominal terms nearly 45 percent
on average against the currencies of the foreign
industrial countries (chart 4). Some of the appreciation reflected the fact that in recent years
inflation was less rapid in the United States than
it was on average in foreign countries: U.S.
consumer prices rose 18 percent from the fourth
4. Average exchange values of the U.S. dollar
1980:4=100
Monthly data.
The nominal dollar is a weighted-average index of the nominal
exchange values of the U.S. dollar against the currencies of the
foreign industrial countries. The price-adjusted dollar is the nominal
dollar multiplied by relative consumer prices (the U.S. consumer price
index divided by a weighted-average index of foreign consumer
prices). For a further description, see the note to chart 2.
Billions of dollars
Annual data.
quarter of 1980 through the fourth quarter of
1983, while foreign consumer prices rose 24
percent on average. But even in real, or priceadjusted, terms, the weighted average value of
the dollar rose almost 40 percent in those three
years to a level roughly 25 percent above its
average value for the entire eleven-year period of
floating rates. The dollar appreciated 30 percent
in real terms against the Swiss franc, 45 percent
against the German mark, 55 percent against the
British pound, and 20 percent against the Japa-
U.S. International Transactions in 1983 271
5. U.S. and foreign inflation rates
Percent change from year earlier
Seasonally adjusted quarterly data.
Based on consumer price data. For a further description, see the
note to chart 2.
nese yen, while against the Canadian dollar it
depreciated slightly on a price-adjusted basis.
To the extent that it can be explained, the
dollar's real appreciation since the fourth quarter
of 1980 has been associated mainly with two
factors: first, the decline in U.S. inflation rates
relative to foreign inflation rates (chart 5), which
has lowered expected levels of future U.S. inflation rates relative to expected levels of future
foreign inflation rates; and second, the attractiveness of investing in the United States, partly
because of the outlook for the U.S. economy,
and partly because the United States is perceived
to be a relatively safe haven for funds. Differentials between nominal interest rates on dollardenominated assets and on assets denominated
in foreign currencies have shown little net
change since the fourth quarter of 1980 (chart 6).
Chart 7 shows that during much of the floatingrate period, swings in the price-adjusted weighted average value of the dollar have been correlated with changes in the differential between longterm real U.S. interest rates and a weighted
6. U.S. and foreign long-term nominal interest rates
Annual rate, percent
average of comparable foreign interest rates. The
chart also shows that the real exchange value of
the dollar has varied about 20 percent on each
side of its March 1973 level, while the real longterm interest differential (measured in percent
per annum) has varied from about 4 percentage
points below its level at the beginning of the
floating-rate period to around 2Vi percentage
points above that level. The magnitudes of these
ranges of variation suggest that exchange market
participants, however short their actual investment horizons, have bid spot exchange rates to
levels that implicitly compound changes in interest rates and inflation expectations over horizons
much longer than a year.
7. Price-adjusted dollar and long-term real
interest differential
Percentage points
Quarterly data. The long-term real interest rate for each country is a
government bond yield or nearest equivalent minus an assumed
measure of inflation expectations constructed as a 12-quarter centered
moving average of changes in the country's consumer price index. For
a further description, see the note to chart 2.
The correlation and relative ranges of variation
shown in the chart are only moderately sensitive
to the assumed measure of long-term inflation
expectations. A large part of the variation in
exchange rates since 1973 has been associated
with changes in the differential between longterm real interest rates, but those changes have
certainly not explained all of the variation. Since
the middle of 1982, in particular, the dollar has
appreciated more than 10 percent, while the real
interest differential has declined 1 percentage
point.
MERCHANDISE
Quarterly data. Government bond yields or nearest equivalents. For
a further description, see the note to chart 2.
March 1973=100
TRADE
The U.S. merchandise trade deficit exceeded $60
billion in 1983, following a 1982 deficit of $36
272
Federal Reserve Bulletin • April 1984
1. U.S. merchandise trade and current accounts
Billions of dollars, seasonally adjusted annual rates
Year or quarter
Trade
balance
Exports
Agricultural
Imports
Nonagricultural
Oil
Non-oil
Current
account
balance
1980
1981
1982
1983
-26
-28
-36
-61
42
44
37
37
182
193
174
164
79
78
61
54
171
187
186
207
0
5
-11
-41
1982:4
1983:1
2
3
-45
-36
-59
-73
-75
33
36
35
37
39
160
162
160
164
168
61
42
52
66
56
178
191
202
209
226
-27
-15
-39
-48
-61
SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis.
billion (table 1). On the export side, shipments of
nonagricultural goods began to rise during the
second half of 1983, and by the fourth quarter
they were nearly 5 percent above their level in
the fourth quarter of 1982. However, the volume
of these exports in the fourth quarter of 1983 was
still about 20 percent below the average quarterly
level in 1980 (chart 8). About half of the rise in
the volume of nonagricultural exports during
1983 was accounted for by increases in shipments to Canada of automotive products, most
of which were parts that were to be assembled
into cars and sent back to the United States. The
weak growth of other nonagricultural exports
reflected the sluggishness of economic activity in
most foreign industrial countries, the foreign
exchange constraints on countries burdened by
debt, and the continuing impact of the appreciation of the dollar on the price competitiveness of
U.S. goods.
The volume of agricultural exports showed
little net change from the fourth quarter of 1982
8. Volume of U.S. exports
Seasonally adjusted quarterly data.
SOURCES. U.S. Department of Commerce, Bureau of Economic
Analysis and Bureau of the Census.
9. U.S. export unit values
Ratio scale, 1980=100
Seasonally adjusted quarterly data.
SOURCE. U.S. Department of Commerce, Bureau of the Census.
to the fourth quarter of 1983, remaining more
than 10 percent below the average quarterly
volume in 1980. These exports have been held
down by generally good harvests abroad, and by
the damping effects on foreign demand of slow
growth in the industrial countries, debt problems
in the developing countries, and the translation
of the appreciation of the dollar into increases in
prices in foreign currencies. At the end of 1983,
the volume of agricultural exports was also restrained by low U.S. supplies of several major
crops, reflecting both the influence of the payments-in-kind program on crop acreage and the
impact of drought on yields per acre.
Prices of nonagricultural exports showed little
change during 1983 (chart 9), reflecting the moderate rise in U.S. producer prices combined with
the restraint that the dollar's appreciation exerted on the prices U.S. exporters charged. Prices
of agricultural exports rose more than 15 percent
from the fourth quarter of 1982 to the fourth
quarter of 1983, as droughts in the northern
hemisphere helped force up corn and soybean
prices about 40 percent.
U.S. International Transactions in 1983 273
On the import side, the rapid growth of the
U.S. economy and the continuing appreciation of
the dollar led to a surge in the volume of non-oil
imports during 1983 to a fourth-quarter level that
was 30 percent higher than the average quarterly
volume in 1980 (chart 10). The price of non-oil
imports held virtually stable during the year as
the effects of the dollar's appreciation offset the
effects of foreign inflation.
Oil imports were $1Vi billion, or 12 percent,
lower in 1983 than in 1982 (table 2). The unit
value of oil imports declined nearly 10 percent;
but the volume was relatively constant, as unusually warm weather largely counterbalanced
the stimulus from the strong U.S. recovery.
Consumption of oil in the United States from
October 1982 through March 1983 was 5 percent
below that of the previous winter, a result of both
the depressed level of economic activity and mild
weather. Consequently, the volume of imports
dropped to 3.9 million barrels per day during the
first quarter of 1983. Demand in other major oilconsuming regions was depressed at the start of
the year by the same factors, as well as by the
lagged responses to the increase in oil prices
during 1979-80 and to the effect of the dollar's
appreciation on oil prices in foreign currencies.
This state of depressed demand induced price
reductions, which began in mid-February when
the United Kingdom and Norway—two major oil
producers that are not members of the Organization of Petroleum Exporting Countries—endeavored to expand their sales by reducing prices $3
to $5.50 per barrel. After Nigeria cut its prices,
fears of a price war mounted. Around the middle
of March, however, the OPEC cartel reached an
10. Non-oil imports
Ratio scale, 1980=100
Volume X
Unit value
1
1980
1
198J
i
1982
1983
Seasonally adjusted quarterly data.
SOURCES. U.S. Department of Commerce, Bureau of Economic
Analysis and Bureau of the Census.
2. Oil imports, consumption, and prices
Seasonally adjusted data
Value of
Imports
Consumption
(millions of (millions of Average import imports
price
(dollars
(billions of
barrels per
barrels per
per barrel)
dollars)
day)
day)
Year or
quarter
1980
1981
1982
1983
....
....
....
....
1982:4
1983:1
2
3
4
..
..
..
..
..
17.1
16.1
15.3
15.2
7.1
6.3
5.4
5.2
30.6
34.0
31.2
28.4
79.3
77.8
61.2
53.8
14.7
14.6
15.2
15.5
15.4
5.4
3.9
5.1
6.4
5.5
31.0
29.4
27.7
28.3
28.3
60.5
41.5
51.6
65.8
56.3
SOURCES. U.S. Department of Commerce, Bureau of Economic
Analysis, and U.S. Department of Energy.
agreement on production and prices (benchmarked at $29 per barrel for Saudi light crude
oil), and the non-OPEC producers stabilized
their prices in line with the OPEC benchmark.
Since March 1983 the OPEC producers (Saudi
Arabia in particular) have allowed their production to vary in order to prevent substantial price
variation. The volume of U.S. imports expanded
rapidly in the second and third quarters of 1983,
stimulated by surging economic activity. Unusually warm weather reappeared in October and
November and, along with a drawdown in private inventories of oil, contributed to a sharp
reduction in the volume of oil imports. In the first
quarter of 1984, oil imports remained at relatively low volumes, despite increased levels of domestic oil consumption, as private inventories
were drawn down further.
As an alternative to focusing on exports and
imports separately, table 3 shows balances of
exports over imports for major commodity
groups. At the end of World War II, the United
States had a net export position in virtually every
commodity category. With the subsequent reconstruction and expansion of capacity abroad,
the United States expanded its net exports of
agricultural goods, capital goods, and chemicals,
while becoming a large net importer of fuels,
automotive products, and other consumer goods.
During the period from 1973 to 1980, U.S. net
exports of capital goods and of agricultural products benefited considerably from the large increase in the revenues of oil-exporting countries
and the access of developing countries to international credit. Thus, while net imports of fuels
274
Federal Reserve Bulletin • April 1984
3. Commodity trade balances
Billions of dollars
Change in
balance
Balance
Commodity or
aggregate balance
Commodity
balance1
Agricultural goods
Capital goods
Chemicals
Fuels
Automotive products .
Consumer goods 2
Other3
Aggregate
balance
Merchandise t r a d e . . . .
Other current account
transactions
Current account
1947
2
3
1
1
1
1
1
1973
1980
1983
1973
1980
to
to
1980
1983
9
14
3
-7
-4
-8
-6
24
43
12
-76
-11
-18
0
18
26
10
-49
-25
-31
-10
15
29
9
-69
-7
-10
6
-6
-17
-2
27
-14
-13
-10
10
1
-26
-61
-27
-35
-1
9
6
7
26
0
20
-41
20
-7
-6
-41
1. Commodity balances are exports less imports.
2. Excludes fuels, foods, and automotive products.
3. Mainly industrial supplies other than fuels and chemicals.
SOURCE: U.S. Department of Commerce, Bureau of Economic
Analysis.
expanded $69 billion, net exports of capital
goods increased $29 billion, and net exports of
agricultural products rose $15 billion. As it
turned out, the U.S. trade balance swung into
deficit, while the surplus on other current account transactions increased almost as much.
From 1980 to 1983, net imports of fuel declined
$27 billion, and net exports of capital goods and
of agricultural products again changed in the
same direction. In part, this correlation reflects
the positive association of both U.S. exports and
the price of oil with the strength of world eco-
nomic activity. In addition, it reflects a direct
link between the export revenues and imports of
oil-exporting countries, and perhaps a link between the imports of non-oil developing countries and the surplus that, in the past, oil-exporting countries chose to invest in international
financial markets.
The decline in U.S. exports during recent
years has not been uniform across geographic
regions (table 4). About half the $24 billion
decline in exports from 1980 to 1983 was accounted for by a 35 percent contraction of shipments to Latin America, reflecting the marked
slowdown in international lending to countries
burdened with debt. Among the industrial areas,
the Western European countries reduced their
purchases of U.S. goods 20 percent. By contrast,
exports to Canada and Japan increased from
1980 to 1983, partly because of the moderate
expansion of economic activity in those regions
and partly because the value of the dollar
changed less against the Canadian dollar and the
Japanese yen than against the Western European
currencies.
The geographic pattern of changes in imports
between 1980 and 1983 reflected geographical
differences in the sources of non-oil imports,
which increased $36 billion in total, and oil
imports, which declined $26 billion in total. The
large decline in U.S. imports of oil mainly affected imports from the group of "all other" countries (table 4, last column). Canada, Japan, and
4. U.S. merchandise trade, by area
Billions of dollars
Item
All areas
Canada
Western
Europe
Japan
Other
Asian
countries
Latin
America 1
All other
countries 2
Exports
1980
1983
Non-oil
224.2
200.2
41.6
43.8
67.6
54.9
20.8
21.7
21.0
23.0
38.8
25.6
34.4
31.2
170.5
206.9
38.8
49.1
42.7
47.3
31.2
41.3
23.0
33.7
18.9
21.9
15.9
13.6
79.3
53.8
4.1
5.1
4.6
6.5
5.4
4.5
18.6
20.0
46.6
17.7
-25.5
-60.6
-1.3
-10.4
20.3
1.0
-7.4
-15.2
1.3
-16.3
-28.1
-.1
imports
1980
1983
Oil imports
1980
1983
Trade
*
*
balance
1980
1983
1. Western Hemisphere except United States and Canada.
2. Includes Australia, N e w Zealand, the Middle East, Africa, and
Communist countries.
-10.4
-19.6
*Less than $50 million.
SOURCE. U.S. Department of Commerce, Bureau of Economic
Analysis.
U.S. International Transactions in 1983
the group of other Asian countries each accounted for nearly 30 percent of the total increase in
non-oil imports, while Western Europe accounted for somewhat more than 10 percent. The
relatively small increase in the value of non-oil
imports from Western Europe presumably resulted in part from a relatively large decline in
the unit value of these imports (on which data are
not collected by area), since the European currencies depreciated against the dollar on a priceadjusted basis considerably more than did the
Canadian dollar and the Japanese yen.
NONTRADE CURRENT
TRANSACTIONS
ACCOUNT
The surplus from nontrade current account
transactions declined to $19.8 billion in 1983,
reflecting changes in a number of categories of
service receipts and payments (table 5). Both
receipts and payments of portfolio investment
5. Nontrade current account transactions
Item
1979-81
average
1982
1983
Services receipts
Portfolio investment income . . .
Direct investment income
Military sales
' Exports of other services
38.3
35.9
8.1
36.8
61.3
22.9
12.1
40.9
55.9
22.2
12.7
43.3
Services
payments
Portfolio investment i n c o m e 1 . . .
Direct investment income
Military expenditures
Imports of other services
35.1
7.8
10.0
31.5
52.0
4.8
11.9
35.1
47.3
7.1
12.2
39.0
Services balance
34.9
33.2
28.4
Unilateral transfers, net
-6.6
-8.0
-8.6
Total, nontrade current account
28.4
25.2
19.8
1. Includes interest paid on U.S. government obligations.
income declined from 1982 to 1983, largely because of the declines in dollar interest rates after
midyear 1982. Direct investment income receipts
remained depressed in 1983 as economic activity
abroad remained sluggish, while direct investment income payments picked up with the strong
rise in business profits in the United States.
Military sales and expenditures both increased
somewhat in 1983, as did exports and imports of
other services.
OFFICIAL
CAPITAL
275
FLOWS
Net foreign official reserve assets in the United
States increased more than $6 billion in 1983
after increasing about $3 billion in 1982 (table 6).
Holdings of OPEC members in the United States
declined $81/2 billion as the combined current
account deficit of the member countries approached an estimated $25 billion. Foreign industrial countries as a group added more than $10
billion to their reserve holdings in the United
States last year, despite substantial net intervention sales of dollars. The difference between the
buildup of reserve holdings in the United States
and the net intervention sales of dollars reflected
interest earnings, borrowings, and perhaps a
reduction in foreign official holdings of dollardenominated assets outside the United States.
U.S. official assets increased $6.1 billion net in
1983, of which $1.2 billion was a net increase in
U.S. official reserve assets and $4.9 billion represented a net increase in U.S. government loans
and other nonreserve assets. The U.S. reserve
position in the International Monetary Fund increased $4.4 billion, reflecting the IMF's provision of dollars in connection with members'
drawings, along with a U.S. reserve-asset subscription of $1.4 billion equivalent in connection
with the increase in IMF quotas. The increase in
the reserve position in the IMF was largely offset
by decreases in U.S. holdings of foreign currencies and special drawing rights. Holdings of
foreign currencies fell partly as a result of repayments by Mexico of its earlier drawings on swap
facilities with the Federal Reserve and the U.S.
Treasury, and repayments by Brazil of drawings
on its swap facilities with the Treasury. In addition, the last outstanding Carter notes reached
maturity and were redeemed during the year,
which reduced both U.S. official reserve assets
and Treasury liabilities denominated in marks
and Swiss francs.
PRIVATE
CAPITAL
FLOWS
Recorded private capital transactions swung
from a net outflow of $22.7 billion in 1982 to a net
inflow of $33.7 billion in 1983. The change was
more than accounted for by flows through U.S.
276
Federal Reserve Bulletin • April 1984
6. U.S. international transactions
Billions of dollars, not seasonally adjusted; + = net inflow
1983
Item
Current account balance
Official capital flows
Foreign official assets in the United States, net
Industrial countries
OPEC
Other countries
U.S. official assets, net1
Reserve assets
Other U.S. government assets
Private capital flows
Net flows into U.S. banking offices
Foreign net purchases of U.S. securities
U.S. Treasury securities
Corporate bonds
Equities
U.S. net purchases of foreign securities 1
Foreign net direct investment in the United States
U.S. net direct investment abroad1
Other recorded capital flows, net
Statistical discrepancy
1. - = increase (outflow).
banking offices (including international banking
facilities), which shifted from a net outflow of
$45.1 billion in 1982 to a net inflow of $26.3
billion in 1983.
The shift in banking transactions did not begin
until the second quarter. In the first quarter, $5.3
billion net flowed out of U.S. banking offices,
which experienced a rapid buildup of newly
introduced money market deposit accounts and
placed some of the deposited funds with related
banking offices in other countries. In the second
quarter, an incentive for U.S. banking offices to
reduce their net claims on foreign residents was
provided by the response of interest differentials
to relatively strong credit demands in the United
States fostered by the rapid growth in economic
activity and the Treasury's borrowing needs. In
particular, yields on placements in the Eurodollar market declined during 1983 relative to yields
on domestic money market instruments. At the
same time, interest rates offered on Eurodollar
deposits rose relative to foreign-currency interest rates, motivating foreign residents to acquire
dollar-denominated deposits with banks in the
Euromarket.
Reported private foreign net purchases of U.S.
securities increased from $13.1 billion in 1982 to
1982
1983
1
2
3
4
-40.8
-3.4
-8.9
-14.1
-14.4
-7.5
.0
-1.9
.8
-3.2
4.3
3.2
-6.5
7.4
2.3
-10.7
-5.0
-5.7
6.1
10.3
-8.6
4.3
-6.1
-1.2
-4.9
.0
.3
-1.4
1.2
-2.0
-.8
-1.2
2.0
3.7
-3.4
1.7
-1.1
.0
-1.2
-2.6
.5
-2.1
-1.0
-.7
.5
-1.2
6.6
5.9
-1.7
2.4
-2.3
-1.0
-1.4
-22.7
33.7
-3.7
9.5
14.2
13.7
-45.1
13.1
7.0
2.5
3.6
-8.0
10.4
3.0
3.9
26.3
17.2
8.6
2.2
6.4
-7.5
9.5
-7.6
-4.2
-5.3
5.9
2.9
.1
2.9
-1.8
2.1
-.0
-4.5
6.1
5.7
3.1
.9
1.8
-3.2
2.2
-1.0
-.3
13.0
2.9
1.0
.5
1.3
-1.5
3.2
-3.9
.6
12.5
2.7
1.6
.7
.4
-.9
2.1
-2.7
n.a.
41.4
7.1
9.0
-1.4
3.1
-3.7
-11.2
SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis.
$17.2 billion in 1983. Net acquisitions of U.S.
Treasury securities rose to a record level of $8.6
billion, despite $1.3 billion in redemptions of
Carter notes, while net acquisitions of U.S.
corporate stocks reached a record $6.4 billion.
U.S. net purchases of foreign securities declined
from $8.0 billion in 1982 to $7.5 billion in 1983.
Foreign net direct investment in the United
States was recorded at $9.5 billion in 1983,
compared with $10.4 billion in 1982. U.S. net
direct investment abroad increased to an outflow
of $7.6 billion after an unusual net inflow of $3.0
billion in 1982. Several factors figured in this
reversal of U.S. direct investment flows. More
rapid economic growth abroad contributed to an
increase in reinvested earnings; less reliance by
U.S. corporations on the Eurobond markets as a
source of funds led to lower inflows of intercompany account funds from Netherlands Antilles
finance affiliates; and finally, net inflows of intercompany trade credits declined sharply.
THE STA TISTICAL DISCREPANC
Y
The errors and omissions in the balance of payments accounts netted to an unrecorded inflow
U.S. International Transactions in 1983 277
of $7.1 billion in 1983, considerably less than the
$41.4 billion statistical discrepancy in 1982. This
item includes both unrecorded merchandise
trade and services transactions and unrecorded
capital flows. Presumably, the accuracy in recording current account transactions does not
shift abruptly from year to year, so most of the
decline in the statistical discrepancy from 1982 to
1983 probably centered in unrecorded capital
flows. Part of the decline may have reflected a
change in the composition of capital flows. Capital flows through U.S. banking offices are regarded as more accurately reported than capital flows
that bypass banks and that in principle should be
reported by nonbanks.
THE
OUTLOOK
The U.S. trade and current account deficits for
1984 seem likely to exceed their 1983 levels
considerably, even if the dollar were to depreciate substantially. One factor in this outlook is a
continuing lagged response of import and export
volumes to the substantial appreciation of the
dollar over the past several years. A second
factor is the expectation that economic activity
will continue to expand more rapidly in the
United States than in the rest of the world, and
thus will support a higher percentage growth rate
of U.S. imports than of U.S. exports. A third
factor is the initial deficit positions of the trade
and current accounts. When the external accounts begin in deficit, the trade deficit tends to
increase even if exports expand at as rapid a
percentage rate as imports; and the current account deficit tends to increase still more as
reductions in U.S. net claims on foreigners lead
to reductions in net investment income receipts.
A depreciation of the dollar, of course, would
reduce the U.S. trade and current account deficits, other things equal, but with a lag of perhaps
several quarters. Such lags, or "J curve" effects,
develop in the trade balance if the rise in the
dollar price of imports in response to a depreciation initially outweighs the more gradual decline
in the volume of imports and increase in the
volume of exports.
The strong dollar and growing external deficits
have raised concerns about the state of U.S.
tradable goods industries. These industries have
lost a substantial volume of sales in foreign
markets and at home have faced strong competition from imports. The effects have been felt by
the manufacturing sector, agriculture, and some
of the service industries. At the same time,
however, most tradable goods industries have
benefited from the rapid expansion of the American economy since the end of 1982. Thus in
February 1984 the industrial production index for
manufacturing was IVi percent above its level at
the end of 1980, when the dollar was beginning to
appreciate. The increase in manufacturing production was accompanied by rapid productivity
growth, however, so that employment in the
manufacturing sector declined about V/i percent
over the same period. This experience extended
the negative trend in the share of manufacturing
employment in total private employment; over
the past several decades, relatively rapid productivity growth in the manufacturing sector has
enabled a diminishing share of the nation's work
force to produce a relatively constant share of
the nation's output.
Questions have also been raised about the
sustainability of the large external deficits and
the strong dollar. The prospect of a rapidly
expanding U.S. net external indebtedness position has contributed to sentiment that a substantial depreciation of the dollar is likely unless the
external deficits are reduced significantly
through other channels. From this perspective,
the outlook for the external deficits and the
dollar hinges on whether the structural deficits in
the U.S. federal budget are reduced substantially
and on how rapidly economic activity expands
abroad.
One scenario, if U.S. budget deficits are reduced significantly, is that the dollar may depreciate somewhat as real interest rates in the
United States decline. The short-run contractionary effects on U.S. economic activity of the
measures taken to reduce the government deficits would then be cushioned by the stimulus to
the domestic production of tradable goods from
the dollar's depreciation, together with the general stimulus to private domestic spending from
the decline in real interest rates.
In the absence of actions to reduce the structural budget deficits, the dollar may depreciate
278 Federal Reserve Bulletin • April 1984
without a decline in real interest rates. Indeed, if
the dollar depreciated by enough to reduce the
current account deficit substantially, with no
reduction in the budget deficit, a rise in real
interest rates in the United States would likely be
required to induce the increase in the excess of
private domestic saving over private domestic
investment that would be needed to replace the
lost net capital inflow from abroad. In this case,
the tradable goods sectors of the U.S. economy
would benefit from the lower dollar, but interestsensitive sectors would suffer. Moreover, the
discouragement of private capital formation ultimately could leave the United States with permanently lower levels of aggregate output and income.
•
279
Annual Revisions to the Money Stock
Thomas D. Simpson prepared this article with
substantial contributions from Wayne Smith.
Messrs. Simpson and Smith are in the Board's
Division of Research and Statistics. Footnotes
appear at the end of the article.
Annual revisions to the money stock published in
February 1984 were, on balance, larger than
normal, especially for Ml. These revisions consisted of seasonal adjustment and benchmark
revisions and a change in the definition of M3 to
include term Eurodollar deposits held by U.S.
residents. With this latter change, term Eurodollar deposits, domestically issued large denomination time deposits, and term repurchase agreements are treated on a more consistent basis.
Procedures used in making seasonal and
benchmark revisions were similar to those employed in recent years. Seasonal factors were
updated using the X-ll ARIMA procedure
adopted in 1982. In a departure from the past, the
nontransactions portions of M2 and M3 were not
built up from seasonally adjusted components.
The non-Mi portion of M2 was seasonally
adjusted as a whole to reduce distortions to
seasonal factors caused by substantial portfolio
shifts in recent years, most notably the shifts to
money market deposit accounts in 1983; and a
similar procedure was used to seasonally adjust
the remaining portion of M3.1 A comparable
method had been adopted in 1982 to reduce
distortions to the deposit component of Ml
caused by shifts to NOW accounts, primarily the
shift that occurred in 1981.
In the past two years, the impact of revisions
to seasonal factors for monthly and quarterly Ml
growth rates has been large, reflecting distortions in the behavior of deposits in 1980 caused
by credit controls and by shifts in the pattern of
transactions deposit holdings as payment practices changed and the menu of monetary assets
expanded. Such circumstances make it difficult
for any seasonal adjustment procedure to identify underlying variations in deposits, and relative
ly large revisions to seasonal factors can be
expected.
Benchmark revisions were also quite large.
Typically, benchmark revisions apply to the deposits of institutions that do not submit deposit
reports on a frequent and timely basis (such as
weekly); estimates of their deposits are used
until reported data from these institutions become available. Such standard revisions—that
is, differences between the amounts reported and
previous estimates—tend to be fairly uniform
over any particular period. However, unusual
revisions affecting deposit growth, many of a
one-time nature, arose from reporting changes
made during 1983. Also, some banking institutions—New York Investment Companies—had
been reporting their demand deposit data incorrectly for some time, and the coin element of the
currency component had been incomplete. The
impact of these three types of revisions need not
be as uniform as the more conventional type. In
1983, benchmark revisions in effect boosted
growth of all measures of the money stock; the
stronger growth of Ml was concentrated in the
second half of the year.
This article discusses in more detail recent
seasonal and benchmark revisions and their effects on monetary growth in 1983, with particular
emphasis on the growth of Ml. Tables in the
appendix illustrate these effects.
SEASONAL
FACTOR
REVISIONS
The basic time unit for seasonal adjustment
continues to be the month. The X-ll ARIMA
procedure used to update monthly seasonal adjustment factors conforms to a recommendation
made in 1981 by the Committee of Experts on
Seasonal Adjustment. 2 When seasonal factors
were reviewed in 1982, a combination of an X-ll
and an ARIMA procedure replaced the previous
X-ll procedure. As shown in table 1, the effects
of revisions to seasonal factors on monthly and
280 Federal Reserve Bulletin • April 1984
1. Annual revisions to growth rates of the money stock: mean absolute changes1
Percent, annual rates
Monthly revision
Quarterly revision
Semiannual revision
Year and monetary aggregate
Total
Seasonal
Total
Seasonal
19782
Ml
M2
1.39
.65
1.33
.43
.43
.48
.43
.10
.18
.48
.18
.00
1980
Ml
M2
M3
1.66
1.27
.86
1.67
1.32
1.09
.68
.88
.28
.55
.78
.62
.30
.63
.28
.38
.68
.62
1981
Ml
M2
M3
2.68
1.54
1.57
2.09
1.16
1.32
.35
.95
.83
.23
.73
.80
.10
.30
.13
.03
.53
.20
1982
Ml
M2
M3
3.73
1.75
1.57
3.84
1.67
1.39
1.48
1.25
.95
1.63
.88
.68
.08
1.25
.95
.13
.88
.68
1983
Ml
M2
M3
3.06
2.07
1.66
3.07
1.77
1.72
1.30
.78
.98
1.10
.65
.68
1.30
.33
.53
1.00
MEMO: Average 3
Ml
M2
M3
2.50
1.66
1.42
2.40
1.48
1.38
.85
.96
.76
.79
.76
.70
.39
.63
.47
.34
.55
.40
Total
Seasonal
.10
.08
1. First revisions to growth rates are published in the year following
the revision. N o revisions are shown for the year 1979, as seasonal
and benchmark revisions to that year that were made in 1980 applied
to a redefined set of monetary aggregates.
Total revisions include the effects of minor definitional changes.
These changes are: the inclusion of travelers checks of nonbank
issuers in 1981 that affected growth in 1980; the inclusion in M2 of
retail purchase agreements and the removal from M2 of institution-
only money market mutual funds in 1982; the inclusion of tax-exempt
money market mutual funds in M2 and M3 and the removal of
Individual Retirement Accounts and Keogh accounts from balances in
M2 and M3 in 1983; and the inclusion of term Eurodollars in M3 in
1984.
2. Old definitions of Ml and M2.
3. For M l , the averages apply to 1978 and 1980-83. For M2 and
M3, the data apply only to 1980-83.
quarterly growth rates of M1 have been especially large in the past two years, with revisions to
growth in 1982 (made in early 1983) being the
largest. Seasonal revisions on semi-annual
growth of Ml had the greatest impact in 1983
because of the unusual tendency for monthly
revisions during the first and second halves of
the year to cumulate. 3 In general, revisions to
individual seasonal factors tended to be largest in
the spring (April and May).
Staff analysis suggests that difficulties in identifying evolving seasonal patterns were compounded in recent years by the effects of the
credit control program in 1980. Despite efforts to
minimize distortions to computed seasonal factors, evidence suggests that it took about two
years of subsequent data for the procedure to
identify evolving patterns. 4 Also contributing to
changing seasonal patterns were recent changes
in the composition of money stock measures and
accompanying changes in the way the public
manages its holdings of liquid assets. As a result,
revisions to seasonal factors can be expected to
be unusually large as the behavior of the money
stock adapts, and even after a new pattern
emerges, because statistical procedures require
ample historical experience to estimate reliably
the new seasonal variations.
A somewhat different picture emerges for the
broader measures of the money stock. 5 The
impact of revisions to seasonal factors on monthly growth rates of M2 and M3 in 1983 was much
smaller than for Ml, although large by the experience of recent years (see table). The impact on
quarterly growth of M2 and M3 was much more
in line with that of past experience; the impact on
semi-annual growth was considerably below that
of earlier years, especially revisions to 1982.
BENCHMARK
REVISIONS
Effects of benchmark revisions on monetary
growth in 1983 were also quite large, especially
Annual Revisions to the Money Stock
for Ml. Moreover, benchmark revisions to Ml
tended to reinforce seasonal revisions, thereby
causing a larger boost to monetary growth in the
second half of 1983. In addition to ordinary
benchmarks to call reports, there were a number
of extraordinary revisions to deposits. 6
Changes
in Reporting
Requirements
These extraordinary revisions arose from
changes in deposit reporting that were implemented during the year, many of which were
associated with reduced deposit reporting mandated by the Garn-St Germain Act of 1982. The
act specifies that the first $2 million of reservable
liabilities at each depository institution be exempt from reserve requirements (with this exemption being indexed each year to the growth of
reservable liabilities); it also mandates a reduction in the reporting burden of those institutions
totally exempt from reserve requirements.
In response, the Board cut back the frequency
of reports due to it from fully exempt institutions. 7 Previously, depository institutions with
more than $15 million in total deposits (regardless of the amount of their reservable liabilities)
were required to report weekly, and those with
deposits between $2 million (as of December
1979) and $15 million were to report quarterly. 8
Because so many institutions reported on a quarterly basis, they were divided into three panels,
with one panel reporting each month. The only
time when all three panels reported simultaneously was January 1981; the relationship implied in those data formed the basis of estimates
of total deposits for all these institutions using
subsequent staggered monthly reports. With the
new reduced reporting procedures, those institutions with reservable liabilities below the exemption level that had been reporting weekly—that
is, those whose deposits totaled more than $15
million—started submitting an abbreviated quarterly report. Those with reservable liabilities
below the exemption level that had been reporting quarterly generally were switched to a reduced annual report.
In addition, depositories that had not been
reporting to the Federal Reserve on either a
weekly or quarterly basis were asked to report
deposits and other reservable liabilities as of
281
mid-year 1983, unless it could be determined
from other reports that they were well below the
exemption level. The subsequent reporting status of these institutions was determined by those
reported levels; in some cases, institutions that
had not done so previously began reporting detailed deposit data—and maintaining reserves—
on a weekly or quarterly basis.
These reporting changes were implemented
around mid-year 1983. At the same time, the
staggered system for institutions that reported
quarterly ended, and the Board established a
single "as-of" date for all institutions that report
quarterly. However, in view of the large number
of institutions involved and the limited experience of many institutions with the content and
procedures of the reports, processing, editing,
and revision times were very long, extending
toward the end of the year. 9
Effects of Benchmark
Revisions
on Ml
These changes in reporting procedures affected
the growth of deposits in several ways in 1983.
First, it was discovered that a sizable number of
institutions had not been included in previous
estimates and that deposits at these institutions
had grown rather rapidly. Second, some of these
institutions, assumed to have been quarterly
reporters based on Board criteria, in fact had not
been included in aggregated total deposit figures
that were being transmitted to the Board. Third,
several other institutions, some of which were
rapidly growing de novo banks, had not previously been incorporated into deposit estimates.
Fourth, simultaneous reporting of deposits by all
three panels of quarterly reporters indicated that
those institutions as a group held more deposits
than had been estimated previously under staggered reporting. As shown on the first line of
table 2, the net effect of revisions from all of
these sources was a $1.1 billion boost in Ml in
1983, with the bulk of this increase occurring in
the second half of the year. 10
Fifth, special edits revealed that New York
Investment Companies (banking institutions that
do not report on the same basis as other depositors) included balances due to own foreign offices in their reported figures for demand deposits. Revisions to historical data for these
282 Federal Reserve Bulletin • April 1984
2. Contribution of benchmark revisions to increases
in the monetary aggregates in 1983
Quarterly averages, millions of dollars
Monetary aggregate
1983:H 1
1983:H2
Total, 1983
Ml
1. Deposits at nonreporters and
quarterly reporters
2. Deposits at N e w York
investment companies
3. Deposits at weekly reporters...
4. Currency
5. Other
6. Total Ml
400
700
1,100
100
-700
300
0
100
100
700
300
-100
1,700
200
0
600
-100
1,800
M2
7. Savings, small time deposits,
and MMDAs (gross)
8. IRAs and retail RPs
9. Overnight Eurodollars
10. Other
11. Total M2
400
1,400
-500
500
1,900
1,400
400
100
-800
2,800
1,800
1,800
-400
-300
4,700
400
900
700
300
1,100
1,200
200
200
3,600
1,300
600
5,700
1,500
800
9,300
M3
12. Large time deposits (gross) . . . .
13. Consolidation
14. Term RPs at thrift
institutions
15. Other1
16. Total M31
1. Excluding redefinition to include term Eurodollars.
institutions were available in time for the benchmark. As shown in the second line of the table,
revisions of this type raised Ml growth in 1983,
even though they lowered the level of demand
deposits, as deposit levels in the fourth quarter of
1982 were reduced by more than those in fourth
quarter of 1983.
Revisions associated with money market deposit accounts (MMDAs) significantly affected
the pattern of Ml growth during 1983, although
growth for the year as a whole was not affected.
MMDAs were authorized by the Garn-St Germain Act of 1982. The surge in MMDAs following their introduction occasioned other changes
in procedures for reporting deposits, which were
implemented in the spring of 1983. At that time,
these accounts were added to the body of the
weekly (and quarterly) deposit reports; previously, they had been reported on a special slip sheet
to the regular deposit report.
Editing of the revised deposit reports revealed
that a large number of institutions had incorrectly included MMDAs in their demand deposits or
other checkable deposit accounts as well as in
their MMDA totals. Since these miscalculations
were concentrated in the first half of the year,
Ml balances were lower during that period,
causing a larger increase in the second half of the
year (see line 3, table 2). In addition, the curren
cy series was revised upward during 1983 and for"
earlier years because of incomplete reporting of
the coin component by the mints. Table 2 shows
that benchmark revisions as a whole boosted Ml
growth in 1983 by $1.8 billion, virtually all of
which came in the second half of the year.
Effects of Benchmark
on M2 and M3
Revisions
Benchmark revisions to M2 and M3 were larger
in dollar amounts than they were for Ml. Revisions to growth rates for the year as a whole were
smaller for M2 than for Ml because of the much
larger size of the former. Deposits in nontransactions M2 were boosted, mainly in the second half
of the year (line 7 of table 2). This revision
stemmed largely from the reporting changes noted above that affected deposits in Ml. 1 1
Benchmark revisions to Individual Retirement
Accounts (IRAs) and Keogh accounts and retail
repurchase agreements (RPs) (line 8 of table 2)
swelled M2 in 1983, especially in the first half of
the year. IRA and Keogh account balances are
removed from small time deposits in M2, while
retail RPs are added to this component. Call
report data on IRA and Keogh balances indicated that previous estimates had been too large; a
revision to reported data of retail RPs at thrift
institutions indicated that previous estimates of
such balances had also been too large, which
reduced the net effect of the IRA and Keoghretail RP revision. The overnight Eurodollar series (line 9) was also revised, owing to a change
in the reporting panel that raised the level of such
balances in 1982.12
Revisions to M3 were larger than for M2, both
in dollar amounts and in relative terms. Large
time deposits on a gross basis (line 12 of table 2)
were revised upward for the same reasons that
deposits in Ml and M2 were. Shown on line 13 is
the impact on the expansion of M3 of revisions to
consolidation items—mostly large time deposits
held by thrift institutions and, to a lesser degree,
M3 assets held by money market mutual funds,
both of which are subtracted from gross large
time deposits to avoid double counting. The table
indicates that these netting items had previously
been overestimated.
Another substantial change reflected revisions
Annual Revisions to the Money Stock
to term RPs at thrift institutions (line 14 of the
table). A portion of this revision resulted from
updated benchmarks to call reports from savings
and loan associations, and the remainder was
due to temporary disruptions in the flow of data
that arose when a number of savings and loans
converted to federal savings banks.
283
which like seasonal revisions had an unusually
large impact on growth in 1983—stemmed from
recent changes in reporting. To the degree that
the pace of reporting changes subsides, which
depends on regulatory and other financial
changes, future benchmark revisions will probably have a smaller impact on the measures of the
monetary aggregates.
CONCLUSION
The above discussion suggests that many of the
benchmark revisions to money stock measures—
FOOTNOTES
1. In the past, not all components of nontransactions M2
and M3 had been seasonally adjusted. In view of data
difficulties, money market mutual funds, repurchase agreements, money market deposit accounts, and overnight Eurodollars entered these measures on a not-seasonally adjusted
basis.
2. Seasonal Adjustment of the Monetary Aggregates: Report of the Committee of Experts on Seasonal
Adjustment
Techniques (Board of Governors of the Federal Reserve
System, 1981), p. 2.
3. The effect of revisions to monthly growth rates of the
Board's published experimental Ml series, which uses model-based seasonal factors, were also relatively large. Growth
in the first half of 1983 was similarly reduced and growth in
the second half boosted by these revisions, but to a lesser
extent than for the X - l l ARIMA procedure.
4. See Thomas D. Simpson and John R. Williams, "Recent
Revisions in the Money Stock: Benchmark, Seasonal Adjustment and Calculations of Shift-Adjusted M l - B , " F E D E R A L
R E S E R V E B U L L E T I N , vol. 67 (July 1981), pp. 539-42. For a
more detailed description of the statistical methodology used
for distortions during the credit control period, see David
Pierce and William Cleveland, "Intervention Analysis and
Seasonal Adjustment of the Monetary Aggregates," Special
Studies Paper 163 (Board of Governors of the Federal Reserve System, Division of Research and Statistics, 1981; processed).
5. As noted above, the non-Mi portion of M2 and the nonM2 portion of M3 were seasonally adjusted as a whole. To
reduce the distortion to seasonal factors caused by shifts at
the end of 1982 and throughout 1983 from outside M2 to
money market deposit accounts, the level of nontransactions
M2 was adjusted downward by the amount of balances in
money market deposit accounts estimated to have come from
other sources (20 percent). Similarly, in view of the tendency
for depository institutions to react to the swelling of inflows
to core deposits by reducing their large time deposits, the
non-M2 portion of M3 was adjusted upward by the amount
that large time deposits were estimated to be depressed by
money market deposit accounts (14 percent).
6. Commercial bank deposits were benchmarked to the
September 1982, December 1982, March 1983, and June 1983
call reports.
7. Edge Act and Agreement Corporations and U.S.
branches and agencies of foreign banks were deemed ineligible for reduced reporting, however.
8. The quarterly panel also included member banks with
deposits below $2 million. Other banks with deposits below
$2 million were not initially required to report regularly.
Reserve Banks were to monitor deposit growth at such
institutions and provide the Board with information on institutions whose deposits had grown to more than $15 million, at
which time they were to report regularly.
9. In view of the massive amount of work involved in
completing edits of reports and subsequent benchmarking,
not all deposits were benchmarked to the new reports. In
particular, the benchmarking of savings and time deposits at
thrift insitutions was not completed in time for this benchmark, but it will be incorporated later.
10. Some of the increase in the second half of the year
reflected benchmarking to the September and December
deposit reports of the quarterly reporters; unusual delays in
these benchmarks were caused by difficulties in converting to
the new reporting panel.
11. These deposit revisions were primarily to deposits of
commercial banks, as revisions to deposits at thrift institutions have not been completed.
12. Contributing to other revisions (line 10) were changes
to average monthly levels of certain items reported as of a
single day each week (such as money market mutual funds)
because of a change occasioned by contemporaneous reserve
requirements. Previously, levels reported on Wednesdays
were treated as weekly averages for the weeks ending on
Wednesday. Under the revised procedures, Wednesday levels are treated as weekly averages for weeks ending on the
following Monday. Average monthly levels constructed from
the prorated weeks were therefore revised.
284
A.l.
Federal Reserve Bulletin • April 1984
Comparison of revised and old growth rates of Ml, October 1982-January 1984
Percent changes, annual rates
Period
Revised
Ml
Old
Ml
Difference
(1 - 2)
Difference
Benchmark
Seasonals
(1)
(2)
(3)
(4)
(5)
Monthly
1982—October
November
December
1983—January
February
March
April
May
June
July
August
September
October
November
December
1984—January
17.3
15.8
10.3
11.5
14.8
13.0
3.6
21.0
10.2
9.4
5.8
3.5
6.2
3.2
5.3
10.7
14.2
13.6
10.6
9.8
22.4
15.9
-2.7
26.3
10.2
8.9
2.8
.9
1.9
.9
6.5
7.4
3.1
2.2
-.3
1.7
-7.6
-2.9
6.3
-5.3
0
.5
3.0
2.6
4.3
2.3
-1.2
3.3
.5
.8
-.4
-2.4
.2
0
1.7
.5
1.4
.9
0
.6
1.6
0
-1.0
.5
2.6
1.4
.1
4.1
-7.8
-2.9
4.6
-5.8
-1.4
-.4
3.0
2.0
2.7
2.3
-.2
2.8
Quarterly
1982:4
1983:1
2
3
4
15.4
12.8
11.6
9.5
4.8
13.1
14.1
12.2
8.9
2.1
2.3
-1.3
-.6
.6
2.7
.2
-.7
.8
.8
.6
2.1
-.6
-1.4
-.2
2.1
Annual
1982:4-1983:4
10.0
9.6
.4
.4
0
Semiannual
1982:4-1983:2
1983:2-1983:4
12.4
7.2
13.3
5.5
-.9
1.7
0
.7
-.9
1.0
A.2. Comparison of revised and old growth rates of M2, October 1982-January 1984
Percent changes, annual rates
Period
Revised
M2
Old
M2
Difference
(1 - 2)
Difference
Benchmark
Seasonals
(1)
(2)
(3)
(4)
(5)
Monthly
1982—October
November
December
1983—January
February
March
April
May
June
July
August
September
October
November
December
1984—January
9.3
10.5
12.1
31.9
21.7
7.8
8.4
11.8
8.4
5.4
4.9
7.1
10.8
8.3
7.7
5.6
7.9
9.5
8.9
30.9
24.4
11.2
2.8
12.4
10.4
6.8
6.0
4.8
9.1
7.3
5.0
4.9
1.4
1.0
3.2
1.0
-2.7
-3.4
5.6
-.6
-2.0
-1.4
-1.1
2.3
1.7
1.0
2.7
.7
-.1
.4
.5
-.6
-.9
0
1.9
.1
-.1
0
0
.6
.9
0
.3
.6
1.5
.6
2.7
1.6
-1.8
-3.4
3.7
-.7
-1.9
-1.4
-1.1
1.7
.8
1.0
2.4
.1
Quarterly
1982:4
1983:1
2
3
4
10.6
20.5
10.6
6.9
8.5
9.3
20.3
10.1
7.8
7.0
1.3
.2
.5
-.9
1.5
.3
-.2
.5
.1
.4
1.0
.4
0
-1.0
1.1
Annual
1982:4-1983:4
February/March 1983-1983:4
12.1
8.3
11.7
7.8
.4
.5
.3
.6
.1
-.1
Annual Revisions to the Money Stock
285
A.3. Comparison of revised and old growth rates of M3, October 1982-January 19841
Percent changes, annual rates
Period
Revised
M3
Old
M3
Difference
(1 ~ 2)
Difference
Benchmark
Seasonals
(1)
(2)
(3)
(4)
(5)
Monthly
1982—October
November
December
1983—January
February
March
April
May
June
July
August
September
October
November
December
1984—January
11.7
7.7
5.7
14.4
13.1
7.2
8.7
9.6
10.3
5.1
6.1
8.8
9.4
14.4
8.3
6.0
9.3
9.3
3.7
13.0
13.7
8.1
3.3
10.9
11.0
5.5
8.8
7.6
8.6
12.2
6.2
5.6
2.4
-1.6
2.0
1.4
-.6
-.9
5.4
-1.3
-.7
-.4
-2.7
1.2
.8
2.2
2.1
.4
0
-.8
-.3
-1.2
1.4
1.2
2.8
.5
.2
-.2
-.3
-.5
-1.0
2.7
.2
-1.4
2.4
-.8
2.3
2.6
-2.0
-2.1
2.6
-1.8
-.9
-.2
-2.4
1.7
1.8
-.5
1.9
1.8
Quarterly
1982:4
1983:1
2
3
4
10.0
10.8
9.3
7.4
10.0
9.5
10.2
8.1
8.4
9.0
.5
.6
1.2
-1.0
1.0
-.3
-.1
1.5
-.1
.1
.8
.7
-.3
-.9
.9
9.7
9.2
.5
.5
0
Annual
1982:4-1983:4
1. Revised M3 includes term Eurodollars; the inclusion of term Eurodollars boosted M3 growth in 1983 by no more than 0.1 percentage point.
286
Industrial Production
than 4 percent above its earlier peak reached in
July 1981.
In market groupings, output of consumer
goods increased 0.3 percent in March, the same
as the revised gain for February but substantially
below the gains in other recent months. Production of autos and trucks for consumer use rose
moderately; however, output of home goods
edged downward. Autos were assembled at an
Released for publication April 13
Industrial production increased an estimated 0.4
percent in March following revised increases in
January and February of 1.4 and 1.0 percent
respectively. Gains in output were widespread
among most materials and products. After 16
consecutive monthly increases, the March index
at 160.7 percent of the 1967 average was more
1967 = 100
170
FINAL PRODUCTS
190
Consumer goods
MATERIALS
Nondurable
170
170
150
150
130
Defense and space
130
110
110
CONSUMER GOODS
\
°
r
N
Durable \ /
1969—70=100
180 AUTOS
140
/ \
J
/
Annual rate, millions of units
18
Domestic assemblies
I
1978
I
1980
i
1982
1984
All series are seasonally adjusted and are plotted on a ratio scale.
190
Auto sales and stocks include imports. Latest figures
287
1967 = 100
Percentage change from preceding month
1984
Grouping
Feb.
1984
1983
Mar.
Nov.
Dec.
Jan.
Feb.
Mar.
Percentage
change,
Mar. 1983
to Mar.
1984
Major market groupings
Total industrial production
160.0
160.7
.2
.6
1.4
1.0
.4
14.8
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment
Defense and space
Intermediate products
Construction supplies
Materials
160.7
158.4
159.9
163.2
158.6
172.5
129.0
169.3
157.6
158.9
161.2
159.0
160.3
163.8
158'.9
173.3
129.9
169.6
158.0
159.8
.1
.3
-.5
-.5
-.6
1.7
.9
-.6
-.5
.3
1.0
1.3
1.0
1.7
.8
2.0
1.4
-.1
-.1
.0
1.5
1.5
1.1
3.0
.4
2.2
1.5
1.5
2.6
1.3
.6
.6
.3
-.1
.4
.9
1.1
.9
1.4
1.5
.3
.4
.3
.4
.2
.5
.7
.2
.3
.6
13.8
13.7
11.1
20.2
7.7
20.6
1.3
1.7
1.0
.0
-2.2
.4
.5
.2
-.6
1.0
15.5
20.0
10.3
10.0
7.8
11.0
14.7
18.7
16.1
Major industry groupings
Manufacturing
Durable
Nondurable
Mining
Utilities
161.4
150.7
177.0
124.6
177.0
162.1
151.5
177.3
123.9
178.8
.1
.6
-.5
2.4
-.1
.3
1.0
-.5
2.1
3.5
1.6
2.2
.8
.7
-.8
NOTE. Indexes are seasonally adjusted.
annual rate of 8.2 million units, up more than 1
percent from February; current industry schedules indicate a seasonally adjusted annual rate of
7.8 million units for April. Production of business
equipment, which had reached a low in February
1983, showed average monthly increases of
about 1.8 percent through January 1984. The
advances in March and February were more
moderate, as sizable declines occurred in oil and
gas well drilling activity in both months. However, production increases remained strong in manufacturing and commercial equipment. Production of defense and space equipment continued
to expand in March. Output of construction
supplies increased only an estimated 0.3 percent
following very large gains in January and February.
Production of materials rose 0.6 percent in
March. Durable materials increased 0.8 percent,
with a large gain in output of equipment parts.
Production of nondurable materials increased 0.3
percent and energy materials, 0.4 percent.
In industry groupings, manufacturing output
rose 0.4 percent, with a gain of 0.5 percent in
durable manufacturing and 0.2 percent in nondurables. Utility output increased 1.0 percent, but
mining activity was reduced 0.6 percent.
288
Statements to Congress
Statement by Preston Martin, Vice Chairman,
Board of Governors of the Federal Reserve System, before the Subcommittee on Telecommunications, Consumer Protection, and Finance of
the Committee on Energy and Commerce, of the
U.S. House of Representatives, March 14, 1984.
I appreciate the opportunity to appear before this
subcommittee on behalf of the Federal Reserve
Board to discuss title I of H.R. 4557—the Secondary Mortgage Market Enhancement Act of
1983. This legislation is intended to encourage
and facilitate wider participation by private institutions in the markets for mortgage-backed securities, primarily by amending federal securities
laws and by preempting certain state securities
and investment statutes.
You have indicated that your subcommittee is
concerned primarily about the implications of
such measures for investor protection. You also
have raised questions about the impact of the
proposed legislation on the sectoral allocation of
capital and on the performance of the economy
as a whole. After briefly reviewing the status of
the markets for private mortgage-backed securities, I will turn to the issues of investor protection and economic impact raised by the legislation under consideration. Let me say at the
outset, however, that your emphasis on investor
protection is well placed. It is a vital public
policy concern that the emerging market for
private mortage-backed securities be subject to
adequate degrees of federal supervision and regulation. Abuses early in the game not only could
compromise the interests of individual investors
but also could seriously undermine the process
of development of this market.
Mortgage securities markets, of course, have
been an important component of the housing
finance system during the past decade. Furthermore, the need for such markets is likely to
increase in the future, particularly if thrift institutions utilize the expanded asset powers recently
provided to them by law and regulation. To
better match the duration and interest rate sensitivity of assets with liabilities, thrifts and other
mortgage originators with predominantly shortterm debts may move more and more long-term
mortgages to investors through the secondary
markets. Mortgage pass-through securities,
which represent ownership interests in pools of
residential loans, can be the most efficient secondary market instruments to accomplish this
shift.
Since the early 1970s, the thrust of public
policy has been to encourage development and
growth of markets for mortgage pass-through
securities guaranteed by federal agencies and
federally sponsored enterprises. By the end of
last year, outstanding pass-through securities
guaranteed by the Government National Mortgage Association (GNMA), the Federal Home
Loan Mortgage Corporation (FHLMC), or the
Federal National Mortgage Association (FNMA)
totaled $243 billion—equivalent to nearly a fifth
of all residential mortgage debt outstanding.
By contrast, development of markets for fully
private mortgage pass-through securities—that
is, securities without federal sponsorship issued
against pools of conventional loans—has been
quite modest. While a fair number of banks,
thrift institutions, mortgage companies, insurance companies, and so-called conduit organizations have issued private pass-throughs, available estimates suggest that the total amount
outstanding is only about $10 billion. To date,
private institutions have been successful mainly
in the market space left by FNMA and FHLMC.
Most issues have been private placements tailored to the needs or preferences of individual
investors, or public offerings issued against pools
of those mortgage loans that are individually
larger in amount than those that may be purchased by the federally sponsored enterprises
under limits established by the Congress.
Private pass-through securities generally have
been unable to compete, head to head, against
those issued or guaranteed by federal agencies
289
and federally sponsored enterprises, largely because of the market benefits enjoyed by these
federally related entities. But development of the
private market also has been hampered by state
and federal laws and regulations that have increased the cost of issuing private securities or
have constrained investment in private passthroughs by various types of institutions. The
President's Commission on Housing, on which I
served as a member before being appointed to
the Federal Reserve Board, identified a host of
legal and regulatory impediments in its 1982
report.
The Federal Reserve Board traditionally supports measures that promise to improve the
efficiency of private financial markets. In this
case, we believe that changes in laws and regulations that encourage a broadening of the mortgage pass-through securities markets through
more extensive involvement of the private sector
would constitute sound public policy, so long as
other legitimate public policy objectives are not
compromised in the process. It certainly seems
appropriate to adjust laws and regulations that
have disadvantaged the competitive position of
private mortgage securities in our financial markets with inadvertent or unintended constraints
and obstacles. Indeed, some technical problems
have been caused by state or federal statutes or
regulations written long before mortgage-backed
securities were a significant market factor, and
some impediments have arisen because of inadequate understanding of the unique nature of
these securities.
Some of these types of technical constraints
recently have been alleviated by regulatory
changes at the federal level. For example, last
year the Securities and Exchange Commission
(SEC) tailored some of its registration and disclosure requirements to the special characteristics
of private mortgage pass-through securities, recognizing the need for both shelf registration
procedures and sales of these securities on a
"blind pool" basis. At the Federal Reserve
Board, we have amended Regulation T—which
governs margin credit extended by brokers and
dealers for the purpose of purchasing or carrying
securities—to specify that private mortgagebacked securities are eligible collateral for such
credit. We also have tailored the Regulation T
criterion to fit special features of the mortgage
instruments—that is, the amortizing or depreciating nature of mortgage securities.
Some components of title I of H.R. 4557 also
constitute technical amendments designed to
properly accommodate private mortgage securities. Section 108, which would require the Securities and Exchange Commission (SEC) to provide a permanent procedure for the delayed or
continuous registration of private mortgagebacked securities, falls into this category. These
types of registration procedures, which are vital
to the success of a public market in mortgage
securities, currently are available under an administrative rule of the Commission. A legislative mandate to the SEC would remove any
market uncertainty over the future of these flexible registration procedures.
The removal of statutory limitations on investment in mortgage pass-through securities by federally chartered financial institutions, leaving the
regulators to specify investment limits as well as
factors relating to the diversity of underlying
mortgage pools, is another appropriate technical
adjustment (section 106). The current law for
national banks, for example, limits investment in
the securities of any one issuer to a percentage of
unimpaired capital stock and surplus and, in
effect, treats private mortgage pass-through securities as obligations of the issuer rather than as
shares in pools of loans constituting the obligations of many mortgage borrowers. The current
treatment for banks is a good example of law that
does not properly accommodate the true nature
of mortgage pass-through securities.
I understand that this subcommittee is concerned that some of the provisions of title I of
H.R. 4557 may go beyond technical adjustments
to law and regulation. Any provisions that involve trade-offs of policy objectives, of course,
need to be considered carefully. As a general
principle, caution should be exercised whenever
federal or state laws that were intended to protect savers, investors, or financial institutions
are amended, or preempted, in order to further
the development of a particular market. Several
provisions of the proposed legislation raise issues along these lines: the exemption of sales of
private mortgage-backed securities from federal
registration and disclosure requirements; the federal preemption of state legal-investment and
blue-sky laws applicable to private mortgage-
290 Federal Reserve Bulletin • April 1984
backed securities; and the provisions that seek to
facilitate development of forward-delivery markets for such securities by amending federal laws
relating to the extension of margin credit by
securities brokers or dealers.
The proposed exemption from securities registration requirements (section 101)—applicable
only to large sales (those over $250,000) of
"investment grade," mortgage-backed securities
(those rated in one of the top four categories by a
nationally recognized statistical rating organization) by financial institutions to investors for
their own accounts—generally appears to be a
desirable extension of the current transactional
exemption for mortgages and mortgage participations contained in federal securities law. Such
large transactions presumably involve investors
with a high level of sophistication and thus do not
require all of the normal investor protections
provided by the 1933 act.
The Congress, however, should recognize the
implications of several aspects of the proposed
exemption. First, reliance would be placed upon
private rating organizations to set market standards. There is no assurance that these organizations will retain their current rating schemes or
will not adjust their rating categories in a manner
inconsistent with the risk levels anticipated by
the Congress. Second, the exemption would be
extended to all mortgagees approved by the
Department of Housing and Urban Development, including mortgage companies that are not
subject to the same levels of supervision, regulation, and examination applicable to depository
institutions. These factors raise questions about
two important aspects of consumer protection in
the private market for pass-through securities:
adequate information about the quality of mortgages in the underlying pools, and adequate
assurance of performance by the issuer-servicer
over the life of the pass-through security. It may
be appropriate to design a simplified, specialpurpose set of SEC registration requirements for
the types of transactions envisioned in section
101, specifying pertinent characteristics of the
pooled mortgages as well as the responsibilities
of the issuer-servicer.
Federal preemption of state blue-sky and legalinvestment laws for large sales of investmentgrade-mortgage-backed securities (section 107)
raises further questions about investor protec
tion as well as about the interests of savers in
state-chartered depository institutions, life insurance companies, and pension funds. Investment
grade is not a particularly strict standard, and in
fact, most public offerings of private mortgage
pass-through securities have been rated in the
top two categories. It may be questionable public
policy to require the states to treat all mortgagebacked securities rated in the top four categories
by any nationally recognized rating organization
as if they were Treasury or federal agency securities, even though the proposed legislation would
give the states three years to opt out of the
federal preemption. Some states eventually may
feel that it is appropriate to apply more stringent
legal investment standards than federal law
would permit or to require more complete disclosure with respect to the character of the underlying mortgage pools. Thus, it may be preferable to
allow the states an unlimited amount of time to
override federal preemption of their blue-sky and
legal-investment statutes rather than to incorporate private rating service standards in federal
law and to set a time limit on the state override.
The provisions that would facilitate development of forward-delivery markets in private
mortgage-backed securities, by specifying that
contracts made by brokers and dealers for delayed delivery of such securities (within 180
days) do not involve extensions of credit (section
103-105), appear to constitute sound public policy. Forward-delivery arrangements currently are
an integral part of the markets for federally
related mortgage pass-through securities, and
such arrangements clearly are essential to the
success of private markets. Furthermore, under
these provisions both the Federal Reserve Board
and the Securities and Exchange Commission
would have the authority to institute remedial
measures if the need should arise, by shortening
the forward-delivery period. The SEC also
would retain its regulatory authority over selfregulatory broker-dealer organizations to ensure
that these organizations maintain adequate margin deposit rules for forward contracts in private
mortgage-backed securities. And, of course, the
SEC would retain authority to establish minimum net capital requirements that reflect exposure of a broker-dealer in the forward-trading
market. These types of controls should prevent
repetition of some of the problems that arose in
Statements
to Congress
291
the unregulated forward market for securities
guaranteed by the GNMA several years ago.
The potential impact of the package of measures contained in title I on the allocation of
capital among the housing sector and other sectors of the economy, and on the growth of the
economy as a whole, is difficult to judge in
quantitative terms. It seems safe to say, however, that changes in law that reduce the costs of
issuing private mortgage pass-through securities
or enhance the attractiveness of these securities
to investors should translate into lower costs of
mortgage credit for the ultimate borrowers
whose loans are in the pools behind the securities. Thus, enactment of title I should encourage
more capital to flow into the housing sector and
less to flow to other private sectors. If this
process altered capital allocation away from
plant and equipment, there could be some impact
on business productivity growth over time.
These types of conclusions assume, of course,
that the provisions in the proposed legislation are
the only adjustments that are made to the structure of the secondary mortgage markets. If the
measures designed to enhance the development
of the private secondary markets were coupled
with measures designed to limit the secondary
market activities of the federally sponsored enterprises, any potential impacts of the legislation
currently under consideration on capital allocation and economic growth could be altered.
A shift of secondary market functions from the
public to the private sector may now be a proper
course for public policy, after more than a decade of valuable demonstration and market development by the federally related entities. Both
FNMA and FHLMC have done pathbreaking
work by helping to standardize the conventional
home mortgage instrument and by moving large
amounts of pass-through securities issued
against pools of such loans into a capital market
that had been unaccustomed to conventional
pass-throughs. We have now reached a point
when conventional mortgage documents are
standardized nationally, when mortgage passthrough securities are a familiar instrument in
national financial markets, and when the private
mortgage insurance industry is capable of providing mortgage pool insurance necessary to
secure high ratings for a large volume of conventional pass-throughs. These foundations, coupled with the types of legal adjustments contained in title I of H.R. 4557—and perhaps with
the creation of more flexible mortgage investment trusts under federal tax law—can provide
the basis for a viable private secondary mortgage
market that can serve the needs of the housing
industry during the years ahead.
•
Statement by Lyle E. Gramley, Member, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Commerce, Consumer, and Monetary Affairs of the Government
Operations Committee, U.S. House of Representatives, March 14, 1984.
Board would not object to the proposal published
for comment by the Federal Deposit Insurance
Corporation (FDIC) and the Federal Savings and
Loan Insurance Corporation (FSLIC) to limit
insurance coverage to $100,000 per brokerage
firm.
Insured brokered deposits are a relatively new
source of funds to the nation's depository institutions. Reliable data on how large the activity
presently is, and how fast it is growing, are
sparse. We know, however, that total brokered
deposits at federally insured savings and loan
associations (S&Ls) rose from less than $2 billion at the end of 1979 to something like $25
billion to $30 billion at the end of last year. At
commercial banks, brokered deposits at the end
of 1983 amounted to about $22 billion.
It appears from available data that S&Ls rely
more heavily on brokered deposits than do com-
I am happy to have the opportunity to present
the views of the Board of Governors of the
Federal Reserve System on proposals to limit the
use of fully insured brokered deposits. Briefly,
the Board's position is that brokered deposits
serve a useful function. Excessive reliance on
insured brokered deposits, however, poses serious risks to individual depository institutions, to
the financial system, and to the federal deposit
insurance funds. The Board believes that legislation to limit the use of such deposits is needed.
Until the necessary legislation is passed, the
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Federal Reserve Bulletin • April 1984
mercial banks. Not surprisingly, smaller institutions rely more heavily on such deposits than do
larger institutions that have ready access to the
market for large-denomination negotiable certificates of deposit. We know, also, that a few
individual S&Ls obtain half or more of their total
deposits through brokers. Moreover, among
those institutions that rely heavily on brokered
deposits are a number with relatively low ratios
of net worth to total liabilities—that is, ratios of
less than 3 percent. Such deposits constituted
approximately one-sixth of total deposits held by
banks that failed in the past two years and, in a
few of those cases, they amounted to more than
one-half of total deposits of the failing institution.
This development suggests that there is a tendency for the marketing process to direct brokered
deposits toward financially weaker institutions—
and, in extreme cases, to failing institutions.
The volume of fully insured brokered deposits
is still very small in relation to total deposits.
Apparently, however, the proportion is rising
rapidly, and no one can be sure what the limits of
this market may be. The effects of some of the
factors giving rise to the recent growth of the
industry—such as regulatory actions permitting
payment of finder fees to brokers and the effective deregulation by the Depository Institutions
Deregulation Committee (DIDC) of interest rate
ceilings on most time deposits—may be less of a
catalyst to growth in the future. Nationwide
marketing of brokered deposits, however, stems
more generally from a process of financial innovation—driven by both deregulation and rapid
technological advances—that is changing financial practices dramatically, and the impact of
those forces on financial markets and institutions
is far from over. Moreover, the element of subsidy contained in federal deposit insurance will
provide a continuing incentive to growth of insured deposits channeled through brokerage arrangements.
Brokered deposits would be less of a problem
from the standpoint of public policy if they were
not fully insured. Uncertainties prevailing in
financial markets in recent years, however, have
caused depositors to place a high value on safety
of principal. For example, the failure and liquidation of Penn Square National Bank in July 1982,
in which many depositors incurred losses, served
as an important catalyst to the practice of break
ing up large brokered deposits into amounts of
$100,000 or less to achieve fully insured status.
Federal insurance, in such cases, removes the
incentive for depositors to seek strong, wellmanaged depository institutions in which to
place their funds. This lack of market discipline
can have unfortunate consequences.
Brokered deposits, the Board believes, provide economic benefits to individual depository
institutions and to the nation as a whole—benefits that should be preserved. They serve as a
conduit—although by no means the only one—
for transferring funds from capital-rich to capitalshort areas. They permit smaller depository institutions to compete on more equal grounds
with larger ones in the attraction of funds. They
provide an additional source of liquidity to the
individual depository institutions in time of need.
And they increase the options open to depositors—institutions as well as individuals—in the
placement of funds, and often increase the yields
available to them.
I know of no empirical studies that seek to put
quantitative dimensions on such benefits. But we
must recognize that brokered deposits give rise
to costs as well as benefits, particularly when
they are fully insured. For example, facilitating
easy movement of funds from one market to
another through full insurance for brokered deposits loosens the links between depositors and
consumers and their local institutions. The competitive position of some smaller depository institutions improves, but that of other small institutions may deteriorate, reducing their ability to
meet local needs for credit. Heavy reliance on
brokered deposits as a source of funds may
encourage some institutions to move away from
their traditional community orientation, with effects that are hard to predict on the economic
welfare of those communities. Indeed, it is not
entirely clear that economic efficiency is increased when funds are transferred from one use
to another solely because brokered deposits are
fully insured. The element of subsidy contained
in federal deposit insurance may, in fact, lead to
the opposite result because it erodes market
discipline as regards risktaking.
While the economic and social benefits of
brokered deposits are mixed, the Board believes
that, on balance, continued use of this financial
instrument is desirable. The Board also believes,
Statements
however, that excessive reliance on fully insured
brokered funds results in risks that are sufficiently serious to warrant prudential measures by the
Congress and the federal regulatory authorities.
First, there are risks created for individual
financial institutions that may not be capable of
safely employing brokered funds on a large scale,
especially when the attraction of brokered funds
permits an institution to grow at a spectacular
pace, as sometimes happens. To attract brokered
deposits, an institution often pays above-market
rates to depositors and a fee to the broker. In
order to employ the funds profitably, the institution must invest them in assets that earn a
relatively high rate of return. Methods by which
such higher rates of return are earned may include taking credit risks that are greater than
normal and mismatching of maturities.
Over time, an institution may become overly
dependent on brokered deposits as a source of
funding. Despite efforts to diversify sources of
deposits, this dependency may make the institution susceptible to pressures from the principal
funding source, including suggestions that it
make credit available to particular borrowers.
Failure to make good credit judgements is particularly likely when an institution obtains funds on
a scale that exceeds its capacity to document
properly and control its credit decisions. Experience has indicated that this can prove to be
troublesome.
Brokered deposits, it is sometimes argued,
provide individual depository institutions with
the opportunity to restructure their assets and
liabilities in ways that lead to a better match of
maturities. That is true. But unfortunately, it is
also true that the opportunity is provided to
create a serious mismatch by borrowing short
and lending long.
When an activity such as brokered deposits
grows as rapidly as it has in recent years, there is
a danger that the problems of individual financial
institutions may become so widespread as to
warrant concern for the stability of financial
markets more generally. That is probably not a
concern at the moment, but the prospect that
even larger numbers of small depository institutions might become heavily dependent on a relatively higher-cost, and potentially a highly volatile, source of deposits to finance their lending
activities is clearly worrisome.
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Troubled institutions may end up with relatively large volumes of insured brokered deposits
because once an institution is facing difficulties,
this may be one of the few sources of funds it can
still attract. Brokered deposits can be used to
replace uninsured funds that are being withdrawn by wary depositors, or to finance additional asset growth in the hope that the earnings
generated will offset losses in existing operations. Unfortunately, all too often the effort is
futile, and the end result is to prolong the life of a
failing institution, increase its overall size and in
particular the volume of insured deposits, and
add to the liabilities faced by the federal insurance funds.
The danger to the federal deposit insurance
system is a clear and present one. The potential
liability to the federal insurance funds is growing
at a disturbing rate as the reliance on fully
insured brokered funds increases, particularly
when such deposits are concentrated among financially weak institutions.
The proposal published for comment by the
FDIC and FSLIC, limiting federal insurance to
$100,000 per broker, would severely limit the use
of brokered deposits. A less disruptive means of
addressing this problem would be to impose a
limit on the total amount of insured brokered
deposits that may be accepted by a depository
institution. This limitation could take the form of
a "cap," calculated as a percentage of insured
brokered deposits to total deposits, of, say, 5
percent. Alternatively, the proportion of such
deposits to the total could be made to depend, to
some degree, on the ratio of an institution's
capital to its assets. Although the limit should be
clearly set, it would be desirable for the regulatory authorities to have the flexibility to grant
exceptions in special situations.
Effective implementation of a cap on insured
brokered deposits on a Systemwide basis could
best be done with new legislation. The regulatory
agencies do have the authority through ceaseand-desist powers to proceed on an institutionby-institution basis. However, using this authority requires proving for each situation a direct
relationship between safety and soundness and a
specific level of fully insured brokered deposits,
a process that could bog down in litigation and
delay.
The Congress faced a similar problem in the
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Federal Reserve Bulletin • April 1984
field of capital adequacy, and it provided the
regulators with new authority to require specific
levels of capital in connection with the recent
legislation concerning the International Monetary Fund. Similar action is needed in the case of
fully insured brokered deposits. Because of the
inevitable pressures that would be brought to
bear on agencies to broaden and make more
flexible any administratively established levels
pursuant to a general grant of authority provided
by the Congress, we believe that in this instance
it would be desirable for the Congress to set a
specific legislative cap.
Legislative caps have the advantage of allowing reasonable use of insured brokered deposits,
while maintaining such use within limits that
institutions should be able to manage. In view of
the inherent incentive for fully insured brokered
funds to gravitate to those institutions that are
prepared to take the greatest risks and to pay the
highest rates, the cap approach takes the prudent
course of limiting access and thus avoiding the
necessity of attempting to correct, with ceaseand-desist action, a dangerous situation after it
has occurred.
In the design of enabling legislation, thought
must be given as to how such a cap should be
phased in to avoid disruptive effects on individual institutions whose ratio of fully insured brokered deposits to the total exceeds the cap. (The
Board does not believe that grandfathering existing ratios would be appropriate.) It would also be
desirable to discourage increases in reliance on
such deposits before the effective date of the cap.
The Board would be happy to work with the
Congress in developing legislative language that
would achieve such results.
The Board recognizes that congressional authorization may take some time to enact and
implement. In view of the need to take action
now to prevent problems from developing later,
the Board would not object to implementation of
the proposal made by the FDIC and FSLIC in its
current rulemaking process pending the enactment of legislation. As with implementation of a
legislated cap, it would be desirable if their
proposal included arrangements for an orderly
phasedown of insured brokered deposits for
those institutions already significantly dependent
on this source of funding.
If the Congress is disposed to enact new
legislation imposing a cap on fully insured brokered deposits, it would be desirable for such
legislation to be enacted promptly and to take
effect before October 1, 1984, when the FDICFSLIC proposal is scheduled to take effect.
Depository institutions dependent on such funds
and brokerage firms engaged in this activity
would then be disrupted less by regulatory
change.
•
Statement by Henry C. Wallich, Member, Board
of Governors of the Federal Reserve System,
before the Committee on Finance, U.S. Senate,
March 23, 1984.
CAUSES
The U.S. merchandise trade and current account
deficits widened considerably during 1983. For
1983 as a whole, the trade deficit exceeded $60
billion, and by the fourth quarter it had reached
an annual rate of $75 billion. The current account
was in deficit by more than $40 billion for the
year as a whole, and reached an annual rate of
$60 billion in the fourth quarter. Many are predicting that the current account deficit will be
about $80 billion for 1984 as a whole and the
trade deficit will be about $100 billion.
OF THE EXTERNAL
DEFICITS
It is customary to analyze changes in the external
deficits by focusing on proximate causes, such as
changes in exchange rates and the growth of
economic activity at home and abroad. In that
tradition, the widening of the external deficits
can be related first and foremost to the substantial appreciation of the dollar and the conditions
that have given rise to the appreciation. On a
weighted-average basis against the currencies of
the other major industrial countries, the dollar
has appreciated more than 45 percent since the
fourth quarter of 1980, when our current account
balance was showing a small surplus. Some of
the appreciation reflects our relatively good in-
Statements
flation performance, but even in real terms—
adjusted for changes in consumer price levels—
the weighted-average value of the dollar is now
nearly 40 percent higher than it was at the end of
1980, and roughly 25 percent higher than its
average for the entire floating-rate period since
1973. Against the European currencies, the appreciation in real terms has come to 30 percent
against the Swiss franc, 45 percent against the
German mark, and higher amounts against the
weaker currencies. Against the Japanese yen the
dollar has risen 20 percent in real terms; against
the Canadian dollar it has depreciated slightly.
The cyclical behavior of the U.S. and foreign
economies has been a second factor contributing
both to the time profile and to the widening of the
U.S. trade deficit. The U.S. recession held down
imports and thus delayed the rise in the trade
deficit until after the middle of 1982, and the
relatively rapid expansion of the U.S. economy
in 1983 was a dominant element in last year's
trade developments, accounting for more than
half the $30 billion increase in the U.S. trade
deficit from the fourth quarter of 1982 to the
fourth quarter of 1983.
As a third factor, the external financing problems of some countries, especially of our neighbors in Latin America, have resulted in lower
exports to these countries.
A fourth factor has been the failure in the past
of some of our industries to adjust adequately to
the pressures of international competition.
While the strong dollar and large external
deficits reflect, in part, our improved macroeconomic performance and the greater return on
financial investment in this country, in a more
fundamental sense they are related to the budget
deficit. When the U.S. government runs a deficit, other sectors must, on balance, finance it.
Part of the financing has been provided by foreigners in the form of the net capital inflow that is
the counterpart of the current account deficit.
The remainder of the financing has been provided by private domestic residents and state and
local governments, which has diverted resources
from productive domestic capital formation.
Naturally, the net capital inflow and the surplus
of private domestic saving over private domestic
investment have not arisen automatically, but
have had to be induced. As a result, real interest
rates have been higher then they would other
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295
wise have been. In addition, the higher real
interest rates have been associated with upward
pressure on the dollar: such upward pressure has
prevailed over whatever downward pressure
may have emanated from the external deficit,
which usually is a negative element in the market's evaluation of a currency. Thus the dollar
has risen. In this way, high real interest rates, the
strong dollar, and large external deficits are all
linked to large federal budget deficits.
CONSEQUENCES
OF THE DEFICITS
AND THE STRONG
DOLLAR
Some of the damaging consequences of the deficits and the strong dollar are reflected in the
decline in our exports. In value terms, exports
declined about $25 billion from the fourth quarter
of 1980 to the fourth quarter of 1983, with twothirds of the drop accounted for by a 40 percent
contraction of shipments to Latin America,
mainly to Mexico, and the other third reflecting a
15 percent reduction in shipments to Western
Europe. It is noteworthy that exports to both
Japan and Canada expanded somewhat from
1980 to 1983.
In volume terms, our merchandise exports
were more than 15 percent lower in the fourth
quarter of 1983 than in the fourth quarter of 1980.
Exports of capital goods declined more than 25
percent in volume terms, exports of nonagricultural industrial supplies more than 20 percent,
and exports of agricultural products about 10
percent. The longer exports remain depressed,
the more difficult it becomes to maintain marketing networks and the more costly and difficult it
becomes to recover foreign sales.
If our current account deficit were to continue
for long at the rate of about $80 billion that is
likely to be recorded in 1984, the United States
would soon become an international debtor
country. At the end of 1983, the United States
had an estimated international net creditor position of about $125 billion. This balance could be
pushed to the minus side in little more than one
year. Our position as an international creditor
has been a major support to our balance of
payments so far. Thanks to the very productive
character of some of our foreign assets, the
United States had a surplus of investment income that averaged more than $30 billion annual-
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Federal Reserve Bulletin • April 1984
ly from 1979 through 1981. This surplus has
meant that we have been able to tolerate a
sizable trade deficit without incurring a deficit in
the current account, which combines services
and trade. If our international position shifts to
that of a debtor country, this advantage will be
eroded; indeed, it is estimated that our surplus of
investment income fell below $25 billion in 1983.
Eventually, the United States might find itself in
the position of having to earn a surplus in the
trade balance to cover a deficit on investment
income. Other things being equal, the larger the
net debtor position we build up, the lower will be
the value of the dollar necessary in the long run
to generate the required trade balance.
In addition, I might say that, for one of the
richest countries in the world, it seems hardly
appropriate either to be borrowing currently on a
massive scale from the rest of the world or to be
a net debtor to it.
The external deficit also has a strong bearing
on the future of the dollar. I have noted the
severe appreciation the dollar has experienced
against a number of currencies, which has been
one—but only one—of the reasons for the trade
deficit. As the United States continues to borrow
abroad and moves toward net debtor status,
causing the rest of the world to hold ever-larger
amounts of dollar-denominated assets, the good
acceptance that our currency has had in the
world may wear out. Nobody can predict the
timing, but in the longer run it seems probable
that the dollar-depressing effect of the external
deficit will begin to overwhelm the dollar-supporting effect of higher interest rates.
I do not believe, therefore, that the current
value of the dollar is sustainable, although it is
impossible to predict the sequence or timing of
events that will bring it down. If the dollar does
decline substantially while the budget deficit
remains unchanged, the external deficit will,
with a lag, also decline. That would reduce, in a
sense, the magnitude of the problem that this
committee is addressing. It would also, however,
intensify other problems created by the budget
deficit. With a return of the external sector
toward balance, the foreign financing of the
budget deficit would cease. It would have to be
financed entirely at home, absorbing a still-higher fraction of scarce available savings, thereby
raising interest rates. The "crowding out" result
ing from the budget deficit, which now goes in
part against the foreign trade-related sectors of
the U.S. economy and in part only against other
sectors of the economy, would then be directed
fully against the other sectors. This result needs
to be emphasized in order to make clear that a
reduction or ending in the external deficit, without a reduction in the budget deficit, would only
shift the impact of our nation's budget problems
without resolving them.
The impacts of the external deficit and of the
strong dollar have been felt by our manufacturing
industries, the agricultural sector, and some of
our service industries. The effects are adverse
not only for exports but also for domestic importcompeting sectors. On the whole, nevertheless,
these impacts have been quite well absorbed.
The American economy has expanded strongly.
This has offset some of the pressure of mounting
import competition that derives from a strong
dollar. Moreover, some of the industries that
have suffered from import competition are in that
condition more because of factors specific to
their industry than because of the high dollar.
Industries that have failed to invest and reduce
costs, that have not kept up with modern technology, and that in some cases have paid wages
far above the national average for production
workers are bound to suffer even at a lower level
of the dollar.
Aside from such industry-specific problems, I
do not see the United States being deindustrialized. The combined domestic and foreign demand for U.S. industrial output has increased
since 1980. In particular, the industrial production index for manufacturing is currently almost
IVi percent higher than its level at the end of
1980, when the dollar began to appreciate. Employment in the manufacturing sector, on the
other hand, is currently Vh percent below its
level at the end of 1980, partly reflecting relatively rapid productivity growth in the manufacturing sector, which historically has contributed
to a negative trend in the share of manufacturing
employment in total private employment.
ARGUMENTS
AGAINST
RESTRICTIONS
IMPORT
My purpose in citing these statistics is to counsel
strongly against additional import restrictions at
Statements
this juncture as a means of dealing with the trade
deficit. The type of import-restricting actions
authorized by section 122 of the Trade Act,
which would apply on a broad and uniform basis,
are certainly contrary to the national interest of
the United States. Thanks to the strong economic recovery last year, our tradable-goods industries as a group have not been severely injured on
balance. Their circumstances cannot justify additional import restrictions, except when foreign
competition is judged to be unfair as defined by
our trade acts.
The costs of import protection are well known.
The decision to protect one industry invariably
imposes costs elsewhere in the economy. It is
costly to other industries if foreign countries
retaliate against U.S. exports, or if import restrictions lead to higher dollar exchange rates
than would otherwise prevail, or if the prices
U.S. firms must pay for inputs rise. Protection
typically leads also to higher prices and less
choice for consumers. An example of the consequences of protection for consumers we now
observe in the recent high profits of the automobile industry, which is protected by "voluntary"
export restraints in Japan. Finally, protected
industries typically delay making the adjustments that are necessary if they are ever to stand
on their own feet. These costs should make us
hesitant even to reciprocate against foreign protectionist actions. Retaliatory measures taken by
us damage our own interests, whatever they
may do to foreigners.
Reducing the trade deficit by protectionist
methods without reducing the budget deficit
would not resolve our problems. It would certainly not ease the pressures on our export
industries, which, thanks to the discipline of
international competition, are bound to be
among our most efficient.
OTHER POLICY
OPTIONS
The appropriate policy prescription for dealing
with the trade deficit and the excessively strong
dollar, in my view, is to reduce the structural
deficit in our federal budget. Controls on trade or
on capital inflows, or any other proposals for
reducing the external deficits without reducing
the budget deficit, would only shift the impact of
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297
our nation's budget problems by pushing up real
interest rates.
You have asked, as well, for an analysis of
whether the system of floating exchange rates
itself may have contributed to our problems. In
my view, the floating-rate system has served us
fairly well. Swings in exchange rates over the
past decade, to be sure, have been extremely
wide. But many of these swings can be related
mainly to changes in the relative outlooks for
interest rates, inflation, and real growth in different countries. A good part of the changes in
relative economic outlooks in turn can be related
to changes in monetary and fiscal policies. Given
the stances of monetary and fiscal policies in the
United States and abroad during the past four or
five years, it is hard to believe that the Bretton
Woods system of pegged exchange rates would
have survived, and certainly not without major
upward adjustments in the exchange value of the
dollar. Greater stability of exchange rates, which
is greatly to be desired, must be founded in the
first place on greater domestic stability in all
countries and on policies supporting this stability.
Finally, you raised the question of whether the
dollar is overvalued. In my view, the meaningful
answer to this question is yes. It is sometimes
argued, to be sure, that whatever exchange rate
prevails in the market at any moment balances
demand and supply and therefore cannot be
overvalued or undervalued. That argument,
however, begs the question. Interpreting the
question as referring to the effect of the exchange
rate on the economic magnitudes in which this
committee is interested, such as the trade balance or the current account, it seems evident that
the recent value of the dollar has been clearly
inconsistent with even approximate balance in
either the trade or the current account and that
therefore, in this sense, the dollar is overvalued.
Given this interpretation of our situation, the
right policy prescription for dealing with the
trade deficit is to deal with the circumstance that
is at the root of the high dollar. This brings me
back to the need to reduce the structural deficit
in our federal budget. Such action, of course,
would not cure all the diverse problems encountered in the various sectors of our economy. But
a substantial adjustment of the budget toward
balance, other things equal, would lead to de-
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Federal Reserve Bulletin • April 1984
clines in real interest rates, a depreciation of the
dollar in exchange markets, and (with some lag) a
reduction in the external deficits. Recent statements by the President and members of the
Congress, such as the one by the chairman of this
committee announcing these hearings, give hope
that some progress may be made in that direc-
tion. I hope that my remarks have conveyed the
message that the strong dollar and large external
deficits are partly symptoms, themselves damaging, of large budget deficits. I hope as well that
the Congress and the administration will resist
temptations to try to suppress the symptoms
without curing the disease.
•
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Committee on Banking, Housing, and
Urban Affairs, U.S. Senate, March 27, 1984.
latory protection against undue risk, and by
policies to discourage conflicts of interest and
undue concentration of banking resources. As a
corollary to these concerns, and as a result of our
practical experience in regulating bank holding
companies, we also believe that these basic
policies must, to a degree, apply to the holding
companies of which banks and other depository
institutions are a part; banking institutions cannot be wholly separated from the fortunes of
their affiliates and from the success or failure of
their business objectives.
A review of the testimony before this committee indicates that these principles are broadly
accepted. Progress has been made toward
achieving some convergence of views on the
definitions of a bank and a thrift institution, on
the scope of regulatory authority, and on possible simplification of regulatory approaches toward bank holding companies.
In my testimony in January in Salt Lake City, I
suggested new legislation is urgently needed
dealing with the following areas: (1) a strengthened definition of bank; (2) a definition of a
qualified thrift; (3) new procedures to streamline
application of the bank and thrift holding company acts; (4) the powers of depository institution
holding companies; and (5) statutory guidelines
to govern the division of state and federal authority in the area of banking organization powers.
There are a growing number of issues about
interstate banking that soon will need to be dealt
with as well, but, with one exception, those
questions could be deferred to later legislation.
The exception concerns congressional policy toward the present movement toward regional interstate banking arrangements.
Our analysis of the bills and much of the
testimony that have been placed before this
committee indicates elements of agreement in
several of the necessary areas. There appears to
I am pleased to come before you as one of the
concluding witnesses in what has been a thorough and searching examination of proposals to
restructure the law governing bank and thrift
holding company activities. These hearings are a
culmination of a long process of evaluation of
legislative proposals to simplify regulatory procedures and to assure a competitive environment
for the provision of financial services.
Hearings on various bills of this kind began in
the fall of 1981. Since then, this committee has
held 44 days of hearings, has heard more than
235 witnesses, and has before it more than 7,000
pages of testimony. This extensive record—including analysis of historical problems, present
difficulties, and future solutions—provides a solid foundation on which to build legislative decisions at this session of the Congress.
I have on several occasions emphasized to this
committee the basic framework within which we
in the Federal Reserve approach these questions.
We want to see a competitive and innovative
banking and financial system, providing economical and efficient services to consumers. At the
same time, we believe that banks, and depository
institutions generally, perform a unique and critical role in the financial system and the economy—as operators of the payments system, as
custodians of the bulk of liquid savings, as unbiased suppliers of short-term credit, and as the
link between monetary policy and the economy.
This unique role implies continued government
concerns about the stability and impartiality of
these institutions—concerns that are reflected in
the federal "safety net" long provided by the
discount window and deposit insurance, by regu
Statements
be an emerging consensus on defining what is a
bank—a fundamental building block for any legislation to clarify the role of banks and bank
holding companies within our financial and economic system. New procedures for applying the
Bank Holding Company Act and simplifying
regulation seem to be broadly accepted. Some
convergence on the appropriate role of thrift
institutions and their holding companies may be
developing, as well as on the need to rewrite
guidelines for state-federal relationships. Equally clear, substantial differences in defining the
appropriate range of powers for bank holding
companies remain apparent.
It seems to me the time has come to consolidate areas of agreement, to consider objections
to the proposals before the committee, and to
test alternative approaches to bridging the remaining differences. Today, I would like to share
with you our further thinking on the five key
problem areas and, in particular, address some
possible solutions to the remaining problems.
DEFINITION
OF
BANK
The definition of "bank" is a crucial provision of
the Bank Holding Company Act. It defines those
institutions that are covered by the act, and for
them the boundaries for the safeguards against
excessive risk, conflicts of interest, and concentration of resources deemed appropriate as a
matter of public policy. The application of these
policies depends upon a meaningful definition
that encompasses all depository institutions that
perform essential banking functions.
Marketplace, technological, and regulatory developments have seriously undermined the present definition, which defines a bank as an institution that accepts demand deposits and makes
commercial loans. Functional evasion of the
purpose of the act is becoming the rule rather
than the rare exception through the creation of
"nonbank banks" and other devices that permit
combinations of banking activity and commercial, retail, insurance, and securities firms. As a
result, established policies on conflicts of interest and concentration of resources are undercut
or jeopardized. The same techniques are being
used to undermine the congressional prohibition
on interstate banking. The haphazard exploitation of "loopholes" in existing law is reflected in
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299
an understandable sense of competitive unfairness and could, in time, jeopardize the safety and
soundness of the banking and payments system.
The developments are broad in scope, as reflected in the tabulation in appendix A. 1
To deal with this situation, last year we suggested a redefinition of the term " b a n k " to
include any depository institution (other than an
institution insured by the Federal Savings and
Loan Insurance Corporation (FSLIC)) that (1) is
insured by the Federal Deposit Insurance Corporation, (2) is eligible for FDIC insurance, or (3)
takes transaction accounts and makes commercial loans. This definition was included in the
proposed financial institutions deregulation act
(FIDA) and was adopted in Senator Proxmire's
bill (S. 2134) and a number of bills introduced in
the House.
Our review of this proposal in the light of
comments made at the hearing suggests consideration should be given to three changes. First,
industrial banks that are not federally insured
and do not offer deposit accounts with checking
or other third-party transaction capabilities
should be excluded. Appendix B describes these
institutions and the scope of their activities.
Second, state-chartered thrift institutions (also
described in appendix B), which are not federally
insured and which would have been covered by
the definition of bank described above, should be
encompassed within the same holding company
rules as federally insured savings and loan associations because of the focus of many of these
state institutions on home lending. These institutions could be exempted from coverage by the
Bank Holding Company Act if the relevant state
regulator certified their activities were appropriately confined.
Third, the nonfederally insured thrifts and
industrial banks that would be excluded from the
coverage of the Bank Holding Company Act
should be subject to rules that would prevent
"tandem" operation—that is, joint sale of banking or thrift products or integrated operations—
of these institutions with owners engaged in
impermissible activities for bank holding companies. This limitation, on which we place considerable importance, is explained in detail in ap1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
300
Federal Reserve Bulletin • April 1984
pendix C. Its basic objective is to prevent the
kinds of tying that are judged to be unfair or
unsound for depository institutions, including
joint offerings of deposit products or loans with
other products of affiliated industrial and commercial firms.
We believe that the Congress should not exempt the so-called consumer bank from the definition of a bank. Such a proposal is contained in
section 104 of S. 2181, which would allow a
consumer bank to take all forms of deposits,
including transaction accounts, and make consumer loans, as well as a wide variety of other
types of credit extensions, including some commercial loans.
Such an approach would permit commercial
and industrial firms to enter into essential depository institution activities, including access to the
payments system, in a manner that would inevitably undermine public policy objectives incorporated in the Bank Holding Company Act generally, and there would be the appearance of
unfair competition with banks subject to the act.
In such circumstances, the regulated banking
sector would inevitably wither and much of the
banking business would take place in institutions
not subject to the policy restrictions on risk,
conflicts of interest, and concentration of resources. The lengthening list of nonbank bank
acquisitions demonstrates that we are beginning
to see that migration today. In this connection, I
would point out that 19 percent of commercial
banks now have commercial loan portfolios (narrowly defined) equal to not more than 5 percent
of assets and that 47 percent have 10 percent or
less of their assets in this form. Thus, almost half
of the number of commercial banks in this country could, with some minor restructuring of their
portfolios, conduct basically the same activities
as they do today and escape application of the
policies of the Bank Holding Company Act.
Finally, I believe competitive equality requires
that the recent and current proliferation of nonbank banks not be blessed by grandfather provisions, subject to a reasonable period of time to
permit divestiture when this is necessary.
DEFINITION
OF QUALIFIED
THRIFT
Essentially the same problems of consistency
with the public policy objectives of the Bank
Holding Company Act arise when commercial
and industrial firms acquire thrift institutions,
particularly in the light of the broader powers
provided such institutions in recent legislation.
Indeed some state initiatives have provided
state-chartered thrifts essentially the full panoply
of banking powers and more. At the same time,
there may be institutions with no restrictions on
the activities of the parent firm, an ability to
obtain long-term government-sponsored credit,
favorable tax treatment, and a freedom to branch
intrastate and interstate—privileges that are denied commercial banks. As in the case of nonbank banks, there has been increasingly clear
recognition of the need to adopt rules to assure
equality of treatment of various kinds of depository institutions exercising similar or overlapping
powers. The need for action is reflected in the
strong interest of a variety of financial and nonfinancial businesses in the acquisition of thrifts in
order to benefit from thrifts' bank-like powers, to
gain access to federal deposit insurance, and to
participate in the payments mechanism.
The administration proposals attempt to deal
with this question by requiring all thrifts, with
certain exceptions for grandfathered service corporations, to meet the requirements of bank
holding companies. This approach has been opposed mainly on the grounds that it is not necessary to apply the same rules applicable to bank
holding companies to those thrifts that concentrate their assets in home mortgages. In an
attempt to recognize these concerns, the concept
of a "qualified thrift" has been developed, reflected in the proposals of both Senators Garn
and Proxmire, to exclude thrifts truly specializing in residential mortgage credit from comparable rules to those limiting the scope of activities
of bank holding companies.
We would support this general approach.
Thrifts that meet an adequate "specialization"
test rooted in the public policy concern of support for residential mortgage lending could be
owned by commercial or industrial firms as unitary thrifts are now.
In developing the specifics of such an approach, we would endorse the recommendation
of the Federal Home Loan Bank Board that an
underwriter of corporate debt and equity not be
permitted to own a thrift, whether or not it meets
the qualifying assets test. We would also rely
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upon a single direct test of the proportion of
assets held in residential mortgages or mortgagebacked securities. An optional test of limited
commercial lending, such as not more than 25
percent of its assets in certain qualifying commercial loans, as proposed in S. 2181, would
leave open the clear possibility that institutions
not engaged substantially in home mortgage
lending would retain the liberal treatment with
respect to permissible activities now accorded to
unitary savings and loans. For example, with
such a test, 75 percent of all commercial banks
today could be treated as thrifts because they
have less than 25 percent of their assets in
qualifying commercial loans; only six commercial banks would qualify under the part of the
dual test of S. 2181 that requires 60 percent of
assets in residential mortgages.
We believe an appropriate test would require
that to be eligible for unitary savings and loan
holding company treatment, institutions must
devote at least 65 percent of their assets to
residential mortgages or mortgage-backed securities. For this purpose, mortgages would include
those on both one- to four-family and multifamily
dwellings, mortgage-backed securities, mobile
home loans, and loans for home improvements,
including participation interests in such instruments. Based on this definition, according to our
calculations, almost three-fourths of FSLIC institutions would currently meet this test. We also
believe the limits on commercial lending set in
the Garn-St Germain Act remain appropriate for
federally chartered institutions, and in the light
of the much wider powers provided by some
states for commercial lending, a supplementary
(not optional) limit on commercial lending could
be considered for eligibility of these state-chartered institutions.
We recognize some S&Ls and mutual savings
banks that could not meet the qualified thrift test
currently, but that still wish to emphasize home
lending and to retain the privilege of "unitary"
S&L treatment, should be permitted a substantial period in which to conform their activities.
During this transition period, which could be five
to ten years, milestones should be set in terms of
measuring progress toward achieving the required asset composition. While ownership by an
industrial or commercial firm could be retained
during the transition period and thereafter, we do
to Congress
301
not believe such thrifts should be permitted to
operate in tandem with the parent commercial or
industrial firms. (The details of this suggestion
are outlined in the form of legislative language in
appendix D. The description of the limitations on
tandem operations is, as noted above, contained
in appendix C.)
In general, under this approach, those thrifts
(and their service corporations) not meeting the
asset test (or in transition toward it) would have
to conform to the limitations on ownership of,
and powers provided to, bank holding companies
generally. Special tax benefits and the access to
long-term credit from the Home Loan Banks for
these nonqualifying institutions should be reviewed. At the same time, methods should be
developed to permit mutual institutions to take
advantage of powers permitted bank or thrift
holding companies in stock form.
BANK
HOLDING
COMPANY
PROCEDURES
The third core element of legislation is the provisions on bank holding company procedures.
S. 2181, S. 2134, and FIDA contain essentially
identical provisions on this point, and I believe
that this similarity reflects widespread support
for procedural simplification.
These provisions make improvements in two
major areas: they change the present, somewhat
complex applications process into a notice procedure; and they put bank holding companies on
more equal footing with their competitors by
changing the "benefits vs. adverse effects" test
and formal hearings requirements. Instead, new
activities could go forward, after notice to the
Federal Reserve Board, unless the Board found
grounds for disapproval under specific statutory
criteria. Those statutory tests include adequacy
of financial and managerial resources, protection
of impartiality in the provision of credit, and
avoidance of adverse effects on bank safety and
soundness.
The thrust of these provisions, and a provision
reducing the scope for judicial review by competitors, is intended to reduce the burden placed
upon bank holding companies by government
regulation to a minimum level consistent with
protection of the public policy interests embod-
302
Federal Reserve Bulletin • April 1984
ied in the specified criteria. Agency procedures
would not be burdened by formal hearings and
judicial review at the instance of competitors.
Formal rulemaking procedures would, of course,
remain necessary before decisions to add new
activities to the list of permissible holding company powers, and the Board could continue to
request comment on notices and hold informal
hearings, where necessary, to obtain information
necessary to make decisions.
We also believe the new procedures set out in
S. 2181, S. 2134, and FID A provide the Board
with adequate supervisory authority over the
activities of the holding company and its nonbank subsidiaries after they are in operation.
Those procedures would emphasize the desirability of relying upon other regulatory agencies,
such as the Commodity Futures Trading Commission in the area of commodity brokerage and
the Securities and Exchange Commission in the
case of securities activities, for supervisory and
reporting requirements in order to avoid unnecessary duplication of effort. However, the statute
provides adequate authority to take whatever
regulatory or data-gathering steps may be necessary to ensure compliance with the Bank Holding
Company Act.
My conclusion is that these provisions adequately balance the need for reducing unnecessary regulatory burdens with the requirements
for adequate supervision to enforce fully the
provisions of the Bank Holding Company Act.
These provisions seem to me ready for inclusion
in legislation.
NEW ACTIVITIES
COMPANIES
OF BANK
HOLDING
The fourth element of needed legislation is expanded powers for holding companies. S. 2181
provides new authority for holding companies to
do the following: (1) sponsor and distribute mutual funds and underwrite and distribute revenue
bonds and mortgage-backed securities, (2) engage in real estate brokerage and development,
(3) provide insurance brokerage and underwriting, (4) own a thrift institution, and (5) take part
in other services of a financial nature.
Considerations of competitive equality and
potential benefits to consumers of a broader
range of suppliers of financial services strongly
suggest a presumption broadening the range of
powers permitted bank holding companies. The
point is reinforced by technological developments that enhance the options in the delivery of
such services. However, as I stressed at the
outset, those objectives must be balanced against
other public policy concerns: assurance of fair
and open competition in the provision of credit
and other services, maintenance of impartiality
of banks in credit judgments, and avoidance of
practices that can undermine the strength of the
bank itself. Balancing these objectives is surely
the most difficult task before you.
Certain of the proposed activities, including
those involving essentially "agency" activities,
such as real estate and insurance brokerage,
raise few questions of safety and soundness. In
certain other areas, such as real estate development, much more significant risks to the holding
company, and potentially to the bank itself,
arise. Questions about conflicts of interest and
tying for a number of the activities have been
discussed in detail by the witnesses that have
preceded me in recent weeks.
Review of comments made during these hearings and other information has suggested a number of areas in which the committee might bridge
differences by modifying or limiting earlier proposals. In particular, we have attempted to address carefully the safety and soundness and the
competitive fairness considerations that appear
to stand in the way of broad agreement on a
substantial broadening of bank holding company
powers. In my testimony today I would like to
review each of the categories of proposed new
activities in light of those considerations.
Securities Activities—Underwriting
Municipal
Revenue Bonds and Mortgage-Backed
Securities, and Sponsoring and Distributing Mutual
Funds. Both S. 2181 and S. 2134 would authorize
bank holding companies to underwrite municipal
revenue bonds and similar instruments and to
sponsor and distribute mutual funds. The Board
supports both of these activities, based on a
considerable period of experience with bank
underwriting of general obligation bonds and
managing trust assets. The Board believes that
these activities involve a manageable degree of
risk for banking organizations and there is poten-
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tial for substantial gain for customers in terms of
a variety of services and lower costs.
At the same time, bank performance of these
services has been opposed because of several
concerns. One line of concern suggests that the
provision of credit by a bank affiliate, or guarantees of underwritten obligations by bank affiliates, would provide a distinct advantage to bankaffiliated underwriters, or that temptations to
link underwriting and loan business would be
strong, to the potential detriment of the bank or
its customers. It is alleged that investment flows
might be influenced by the bank's interests, or
that poor investment or underwriting performance by a holding company affiliate might reflect
adversely on the bank itself.
We approach these arguments with some care,
taking account of the fact that bank underwriting
of corporate securities is not proposed and of the
rather successful coexistence of bank-affiliated
and independent underwriters of municipal general obligation bonds. Moreover, S. 2181 and
S. 2134 already contain a number of provisions
specifically designed to promote competitive equity and limit risk to affiliated banks.
Those bills already require that all securities
activities of the holding company, including its
subsidiary banks, be conducted in a separate
holding company affiliate. The affiliate must be
separately capitalized in a manner comparable to
similar firms not affiliated with a bank holding
company. The present rules contained in section
23A of the Federal Reserve Act, and the proposed new section 23B, would limit intercompany transactions and require that they be on
market terms. All these provisions provide fundamental protections against conflicts of interest
and unequal tax and regulatory treatment.
Nevertheless, a cautious approach in this area
is justified, and a number of suggestions proposed by others to assure competitive equity and
avoid conflicts deserve attention. Thus, it may
be reasonable to prohibit a securities or investment company affiliate of a bank holding company from using the name of an affiliated bank or
bank holding company (in the interest of appropriate disclosure, an indication of company affiliation should be permissible). It may also be
desirable to require that the officers and employees of a securities affiliate or investment company advisor be separate from those that operate an
to Congress
303
affiliated bank, and that information on the financial activities of the bank's customers not be
made available to the securities affiliate and vice
versa. Banks might be prohibited from guaranteeing or providing letters of credit to support
obligations that are underwritten by a securities
affiliate.
So far as mutual funds are concerned, the
existing provisions of the Investment Company
Act, together with the applicable suggestions
above, appear generally adequate to assure independent investment judgment. However, those
provisions could be reviewed to determine if any
other special provisions are necessary to assure
independence from the bank affiliate.
I have noted in earlier testimony a trend toward conglomerates of financial services, and
toward the explicit or implicit tying of various
financial products by financial conglomerates not
including banks. To assure competitive equality,
I believe that restrictions of the kind I have
described above, if adopted, would need to be
accompanied by provisions giving the Board
certain discretion in their application should nonbank conglomerates develop combinations of
services prohibited bank holding companies.
Questions have also arisen over bank holding
company participation in brokerage services.
The Federal Reserve, as you know, has permitted "discount" brokerage—that is, the passive
provision of brokerage services without investment advice—under present law. Because that
ruling is under court challenge, we believe it
should be explicitly provided for in the proposed
legislation. You may wish to review, however,
the further question of the appropriateness of
combining such services with investment advice—that is, providing a full range of brokerage
services—within the framework of a bank holding company.
The mortgage market is being transformed by
innovations in communications technology and
in marketing techniques. Banking organizations
are major mortgage lenders and are familiar with
the credit analysis and have other expertise
necessary to establish mortgage pools and evaluate the underlying risks of the constituent elements in the pool. They can already underwrite
mortgage bonds guaranteed by the government
or sold by government-related agencies.
What is at issue here is whether a bank affiliate
304
Federal Reserve Bulletin • April 1984
should be permitted to underwrite private securities. Should the authority be confined to securities backed by one- to four-family mortgages,
potential risks would be substantially defused.
Risks and conflicts of interest in bank holding
company participation in underwriting in those
circumstances would appear to be manageable
within the confines of the antitying rules already
contained in present law and in S. 2181. As in
other areas, however, questions of competitive
equity have been raised, particularly in view of
the ability of depository institution holding companies to provide, through their subsidiary
banks, guarantees or letters of credit to support
mortgage pools established and underwritten by
securities affiliates. The appropriateness of combining those two aspects of financing services
could be reexamined.
In summary, we believe adequate techniques
are available to satisfy legitimate concerns about
bank holding company activity in the securities
area, so long as corporate security underwriting
remains prohibited. The potential benefits to
competition in terms of reducing underwriting
costs, in these circumstances, point to action
along the lines proposed by the administration,
and by Senators Garn and Proxmire.
Real Estate Brokerage and Development. As I
suggested earlier, the main issue in providing
authority for bank holding companies to engage
in real estate brokerage is not risk but potential
conflicts of interest and problems of competitive
equity. It has been suggested that the ability of a
real estate broker affiliated with a bank holding
company to offer assured bank financing, or even
the impression that such assured financing is
available because of the ownership tie between
affiliated broker and bank lender, could be sufficient to divert business away from the independent and toward the bank or thrift-affiliated broker.
As with the case of securities affiliates, limiting
use by a holding company broker of the same
name as the holding company or its subsidiary
bank, strengthening the already strict rules
against explicit or implicit tying, and enhancing
enforcement through providing a private right of
action could provide considerable protection
against abuse. Possibly, a further step could be
taken by prohibiting any mortgage loans by a
subsidiary bank or thrift of a depository holding
company to any customer of an affiliated real
estate brokerage firm.
It should not be necessary—nor would it seem
fair—to limit loans by a mortgage banking subsidiary of a holding company to the customers of
the affiliated broker. Nondepository firms are
today permitted to combine ownership of brokerage and mortgage banking subsidiaries. Of
course, appropriate supervisory steps would and
could be taken to prevent reciprocal lending
arrangements or other steps to evade this limitation.
Smaller banks, without mortgage banking subsidiaries, might be put in a difficult competitive
position by such a limitation. Consequently,
such an approach might be accompanied by an
exemption for smaller banks, reasonably related
to a relative unavailability of competing brokerage services. It should be possible, for instance,
to draw an analogy to provisions of title VI of
the Garn-St Germain Depository Institutions
Act of 1982, which permits bank holding companies to offer insurance brokerage services when
they would otherwise be impermissible if their
consolidated assets were $50 million or less, or in
towns of under 5,000, provided a brokerage
affiliate is required to permit or encourage a
home purchaser to explore other possible
sources of credit.
Technology is providing both independent brokers and those now associated with financial and
retail conglomerates almost instant access to an
array of providers of mortgage credit, enabling
their customers to compare terms and conditions. In these circumstances, real estate brokerage appears to be an area in which bank holding
companies can draw on relevant experience,
undertake little additional risk (particularly if tieins are avoided), and increase competitive outlets.
In my past appearances before this committee,
I have expressed serious concern about the potential risks and conflicts for bank holding companies under the general rubric of "real estate
development." Those concerns remain.
Present proposals deal with those risks by
limiting the capital a bank holding company
could apply to real estate development activities
or by prohibiting construction activity—limitations that should be reinforced by also limiting
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the leverage of the real estate development subsidiary. I would go further by urging you to
consider: (1) confining "real estate development" to passive equity participation in projects
or developments managed by others, and (2)
limiting bank loans to projects sponsored by
affiliates of a bank holding company.
The first change would be consistent with what
we understand to be the basic objective of most
bank holding companies in the real estate development area—to participate in the potential
benefits accruing only to equity participants in a
real estate project. To achieve this goal, the
rather broad scope of the authorization for real
estate development activities contained in FIDA
or S. 2181 could well be narrower; for example,
participation could be confined to investment
vehicles such as nonvoting common stock, preferred stock, or limited partnership interests.
Some of those testifying have expressed concern about the competitive and risk implications
of a bank, as lender, participating in a project in
which an affiliate has an equity interest. They
suggest that a bank in those circumstances will
be more willing to extend credit, and to carry a
weaker credit longer, to one of its " o w n " projects and perhaps be less willing to extend credit
to competing projects, than if no equity interest
is involved. To deal with this situation, it might
be useful to provide the Board with clear discretionary authority to impose an aggregate or particular limitation on loans by a bank to projects in
which a real estate affiliate of a bank is an equity
participant.
Insurance Brokerage and Underwriting. Insurance brokerage by bank holding companies, as is
the case with real estate brokerage, does not
involve major issues of risk; rather, the focus of
the testimony has been on assuring competitive
equity between bank-affiliated brokers and independent distributors of insurance products.
Thrift institutions already have unlimited authority to engage in insurance brokerage, and the
broadening of this activity for bank holding companies should provide competitive benefits so
long as abuse of the bank relationship is avoided.
S. 2181, in section 107, contains a number of
new provisions that attempt to reduce tying and
competitive inequity problems. It would, for
example, require banks to inform their custom
to Congress
305
ers of the availability of insurance products elsewhere, allow customers purchasing insurance
products from bank holding subsidiaries an adequate opportunity to reject their contracts, and
prohibit banks and their holding companies from
offering insurance until the customer is given a
commitment that credit will be extended. It does
not seem practically feasible to go much further
in this area without destroying completely the
ability of holding company organizations to participate in this activity. We would, however,
suggest that to the extent the Congress deems
these provisions necessary when financial institutions sell insurance, they should also be applied to thrift institutions and their holding companies, which are permitted to broker insurance
without restrictions such as contained in title VI
of the Garn-St Germain Act.
Consideration could also be given to possible
approaches for phasing in greater bank participation in the insurance brokerage area. Again, it
might be useful to build upon title VI of the
Garn-St Germain Act, which permits bank holding company participation in insurance brokerage activities in cases when the holding company's consolidated assets are $50 million or less,
in towns of 5,000 or less, or otherwise when the
holding company demonstrates that existing insurance agency facilities are inadequate. For
instance, those limitations might be gradually
increased over time by some amount up to a
limit, which would provide an occasion for further congressional review.
If bank holding companies are permitted to
engage in underwriting, careful attention will
have to be given to containing risk, avoiding
concentration of resources, and more subtle conflicts of interest. For example, there may be
particular lines of insurance underwriting that
raise issues of risk that require special safeguards
and limitations on such matters as the amount of
capital investment. Moreover, I have earlier suggested that banks not be permitted to lend to
companies in which their holding company affiliates had very substantial equity interests.
In order to limit the potential for concentration
of resources associated with large bank holding
companies acquiring large insurance firms or
vice versa, S. 2181 would limit bank holding
company investment in nonbanking activities to
not more than 25 percent of the holding compa-
306 Federal Reserve Bulletin • April 1984
ny's capital if the holding company's consolidated assets amount to more than 0.3 percent of
total domestic deposits. However, our review of
the data indicates that this test does not effectively limit the ability of some of the largest bank
holding companies to acquire control of some of
the largest insurance companies.
I recognize that our attempt to devise a numerical test of that kind must be arbitrary at the
margin. However, an alternative approach could
be to provide specific criteria on the size of bank
holding company participation in insurance underwriting and insurance underwriter participation in banking. This could be done by requiring
that bank holding companies enter insurance
underwriting de novo or through relatively small
acquisitions. Similarly, insurance underwriters
would also be confined to de novo or foothold
acquisition of banks. This approach would deal
with the concentration issues, and it would provide time for the participants, the Board, and
state insurance regulators to gain experience in
dealing with combined insurance and banking
entities.
An alternative approach would be to expand
bank holding company participation in insurance
underwriting in directions that flow naturally
from existing bank functions. For example, it
would seem appropriate for bank holding companies to participate in insuring or guaranteeing the
credit risk in home mortgages and in real estate
title insurance. Dollar limits on individual creditrelated property and casualty insurance policies
underwritten by bank holding company nonbank
affiliates could be lifted. After some experience,
the Congress could then consider other areas of
insurance underwriting activity that might be
appropriate as part of a gradual evolution of bank
holding company insurance underwriting.
Ownership of Thrifts. S. 2181 specifically permits bank holding companies to acquire thrifts
insured by the FSLIC, subject to the same kind
of limitations on interstate acquisitions as are
written in the Douglas Amendment and the same
kind of branching restrictions on the acquired
thrift as are contained in the McFadden Act. The
Board has supported bank holding company acquisition of thrift institutions as a reasonable
extension of the presently authorized scope of
bank holding company activities. We recognize,
however, that acquisition of thrifts by bank holding companies on an interstate basis may, in
some situations, not be fully consistent with the
prohibition on interstate banking contained in the
Douglas Amendment. The Board has indicated
its views that the Congress should, in the future,
address the overall question of interstate banking
in comprehensive legislation. However, pending
congressional action on the overall question, the
Board believes it is reasonable to incorporate
Douglas- and McFadden-type limitations on
thrift acquisitions that are proposed in S. 2181.
Financial Services. S. 2181 authorizes holding
companies to engage in "services of a financial
nature." This provision gives useful flexibility
for the Board to deal with uncertain and unknown circumstances in the future. We recommend its inclusion in legislation.
The decision of the Congress on the inclusion
or exclusion of the various activities that have
been discussed above will provide some guidance on the intended scope of this provision.
Additional guidance would be desirable with
respect to other activities that the Congress
might consider to be within the scope of this
authorization.
ACTIVITIES
OF STATE-CHARTERED
BANKS
Much concern has been expressed about possible authorizations to state-chartered banks of
new authorities to conduct nonbanking businesses that would not be permitted to bank
holding companies under present or new federal
laws. It is reasonable to ask the question whether
it makes sense for the Congress to work out
carefully balanced arrangements for the conduct
of nonbanking activities of bank holding companies only to see far different and inconsistent
arrangements established for state banks under
state law.
Some states have adopted, and others are
considering, legislation to authorize state-chartered banks to engage in insurance, securities,
and real estate development activities; and others have authorized state-chartered thrifts to
engage in virtually unlimited activities. Last
year, South Dakota authorized state-chartered
banks to engage in insurance-related activities
essentially in all of the states of the Union except
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South Dakota. The states are motivated in part
by a desire to make their financial institutions
competitive with those in other states and in part
by a desire to obtain new employment and revenues—inevitably at the expense of others. As the
process gains momentum, more and more states
will feel themselves forced, in self-defense, to
take similar steps. The threat is obvious—any
sense of congressional or federal control over the
evolution of the banking and financial system
will be lost.
S. 2181 attempts to deal with this problem by
requiring that insurance activities be conducted
in the state and outside the state on the same
terms. S. 2134 would go considerably further by
requiring that states may only authorize activities for state-chartered banks to be conducted
within the state and for residents of that state.
In the light of current developments, it now
appears desirable to go somewhat further than
the provisions of S. 2134, while still maintaining
flexibility for state experimentation and innovation. In balancing these considerations, perhaps
it is desirable to distinguish between those activities that the Congress may decide to prohibit or
limit for banking organizations because of safety
and soundness problems, and those that arise
from conflicts of interest that are particularly
important for the protection of local customers.
For example, if the Congress reaffirms its
decision to exclude banking organizations from
participating in underwriting corporate debt and
equity, and limits the participation of these organizations in real estate development, it would not
seem to be desirable for the states to have the
authority to overrule the judgment of the Congress and expose the insured depository system
to the greater risks of these activities. On the
other hand, if the Congress decides not to authorize real estate or insurance brokerage because
of reasons of consumer protection and competitive equity, it would not seem inconsistent with
the federal interests if state legislatures authorize
banking organizations to participate in these activities within the confines of their own state.
Here the state may be in the best position to
make the judgment about what is necessary to
protect local customers and local interests.
Thus, the balance between federal and state
interest could be struck as follows: states may
not authorize activities that the Congress has
to Congress
307
ruled out of bounds for safety and soundness
reasons; the states may optionally authorize other activities but only if they are conducted within
their borders. We would be prepared to assist the
committee in drafting such a provision.
OTHER PROVISIONS
OF S.
2181
My comments today have focused only on title I
of S. 2181 as I believe it is that title that requires
the priority attention of the Congress. Before my
concluding remarks, I would like to comment
specifically on the provisions contained in title X
on regional interstate banking.
Title X provides specific authority, for a fiveyear period, for states to authorize regional interstate banking acquisitions. Such legislation
would presumably resolve the question of the
constitutionality of regional arrangements that
have been authorized in New England and have
been proposed in a number of other areas of the
country. Yesterday, the Board approved two
bank holding company mergers under the reciprocal arrangements of Massachusetts and Connecticut. Although there is a strong argument
that these state laws are not consistent with the
prohibitions against discriminatory burdens on
interstate commerce established by the Commerce Clause of the Constitution, there is an
absence of clear and unequivocal evidence to
that effect. Consequently, the Board proceeded
on the assumption of constitutionality and applied the criteria of the Bank Holding Company
Act. But plainly, the differing constitutional interpretations raised by parties to merger applications demonstrate the need for congressional
action to clarify this issue at this time.
We believe this is all the more important
because of our concern about the permanent
establishment of regional banking areas. If the
Congress should decide to endorse regional arrangements, in our view it would be desirable to
limit them to a transitional period. We would also
urge you to consider the interstate banking question more broadly at an early date, once the
powers issues are settled.
CONCLUSION
I cannot emphasize strongly enough the urgent
need for definitive congressional action on the
308
Federal Reserve Bulletin • April 1984
legislation now before you during the current
session. Decisions cannot be postponed—the
failure to act only means that others have acted
and will continue to act, to markedly restructure
the financial system without the participation of
the Congress. These actions, arising out of market initiatives, state legislation, court decisions,
and new federal regulatory rules, are pushing at
the outer boundaries of the legal framework
established by the Congress for the banking and
financial systems. In my judgment, they are
pushing beyond the basic policies established by
the Congress in setting out a broad distinction
between banking and commerce.
I am not speaking about theoretical concerns.
The policies of the Bank Holding Company Act
against excessive risk, conflicts of interest, impartiality in the credit-granting process, and concentration of resources have long been considered essential parts of our financial system. They
are now being undermined by a haphazard pattern of interindustry and interstate acquisitions
and by new combinations of banking, securities,
insurance, and commercial products.
The Bank Holding Company and Glass-Steagall Acts were intended to prevent combinations
of firms that underwrite securities and take deposits. Yet today there are 32 securities firms
that own so-called nonbank banks that can perform many of the essential functions of banks.
Court and regulatory decisions are opening new
avenues for bank holding companies to undertake securities functions without clear legislative
guidance.
The Bank Holding Company Act was intended
to prevent combinations of commercial or industrial firms from owning banks, yet today there
are retailers, diversified industrial-commercial
conglomerates, and insurance firms that own
either nonbank banks or thrifts with banking
powers.
The states are rapidly considering and adopting legislation granting state-chartered banks
powers that, in some cases, have not even been
contemplated under federal law for banks and
bank holding companies, in large part reflecting
interstate competition for jobs and tax revenue
rather than any judgment of the national interest
in a stable banking structure.
The federal financial regulators are also pressing against the outer boundaries of their delegat
ed authority. The Board has adopted the broadest definition of the term bank that it felt was
feasible under existing law in an effort to carry
out what it believes to be congressional intent
and to preserve the ability of the Congress to act
without being faced with a fait accompli. That
action is being challenged in the courts with, thus
far, unfavorable results. The SEC has before it a
proposal to consider banks as broker-dealers
when they engage in discount brokerage, despite
the exclusion of banks from the securities laws
because of the comprehensive system of bank
regulation. Under existing law, the FDIC is
considering the question of whether state nonmember banks should be authorized by regulation to underwrite corporate debt and equity,
despite long-presumed congressional intent to
separate commercial banking and corporate underwriting. The Comptroller has before it a wellknown proposal to authorize a family of "nonbank" national banks in 25 states. We have been
compelled to approve the establishment by a
New York bank holding company of a nonbank
bank in Florida, which would take demand deposits but not make commercial loans as we have
broadly defined them.
As things now stand, many of these specific
issues will be decided on a case-by-case basis in
the courts—but we cannot expect those decisions to be guided by a policy perspective on
how the financial system as a whole should
evolve. That, in the end, is the task of the
legislature, not of the courts, which must struggle to adapt today's circumstances to yesterday's
laws. Until all of us—the regulators, the banks,
other competing industries, and the courts—
have more congressional guidance, every new
decision will be subject to legal challenge.
If the Congress does not decide, decisions will
still be made. But they seem certain to be conflicting, and not to fit into a coherent whole. One
clear risk is that the overriding public interest in
a strong, stable, and competitive financial system will be lost.
The time for action is here. Many elements of
comprehensive legislation are already broadly
accepted. I believe the remaining elements and
the necessary compromises can be put together
soon. I hope and believe this committee can be
the vehicle for moving ahead.
•
Statements
Statement by Nancy H. Teeters, Member, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Consumer Affairs
and Coinage of the Committee on Banking,
Finance and Urban Affairs, U.S. House of Representatives, March 27', 1984.
I am pleased to appear before you this morning
to present the views of the Board of Governors
on the issue of whether the Truth in Lending Act
should prohibit merchants from charging higher
prices to credit card purchasers than to cash
purchasers through the use of a "surcharge."
As you know, the purpose of the Truth in
Lending law, which was passed in 1968, is to
provide for a uniform disclosure of the cost of
credit to consumers through the identified "finance charge" and "annual percentage rate." As
a result, the act originally required that any
differential between the price charged in a cash
transaction and that charged in a credit transaction be treated as a cost of credit and included in
the finance charge and annual percentage rate.
This requirement, as well as state disclosure
and usury laws, however, was viewed in subsequent years as an obstacle to merchants wishing
to implement two-tiered pricing systems for cash
and credit card customers—that is, establishing
two prices for property or services, a lower price
for customers paying cash and a higher price for
customers paying with a credit card. Consumer
groups argued that the fee imposed on merchants
by credit card companies was being passed on in
higher prices to all customers. 1 As a result, it was
argued that cash customers were being forced to
subsidize credit customers when they were required to pay the same price for an item. Twotiered pricing systems were thus viewed as potentially beneficial to consumers as a means of
eliminating the subsidy.
The Congress responded to this concern and
sought to eliminate this subsidy by removing the
Truth in Lending and state law obstacles to
merchants offering lower prices to cash customers. It amended the federal act in 1974 to provide
1. The charge assessed by a credit card company on a
merchant's credit card transactions is often referred to as the
"merchant discount." If a merchant accepts a credit card for
a $100 purchase, for example, the merchant might be assessed a 3 percent fee, thus receiving only $97 when the
transaction is processed by the credit card company.
to Congress
309
that discounts for cash need not be considered
finance charges for purposes of Truth in Lending. There was, however, a great deal of uncertainty after that action as to whether the Congress intended to permit additions to prices for
credit card customers (surcharges) as well as
reductions in prices for cash customers (discounts). In response, the Congress in 1976 prohibited the imposition of surcharges—that is,
adding an amount to the regular price of an item
when it was sold to credit card customers. 2 At
the same time, the Congress responded to the
concern that state disclosure and usury laws
presented an obstacle to discount programs by
preempting them to the extent that those laws
treated discounts as finance charges.
However, because of some uncertainty as to
the effect of the surcharge prohibition, it was
originally scheduled to expire on February 27,
1979. Subsequently, the ban was extended until
February 27, 1984. The principal reason for the
temporary nature of the surcharge prohibition
was to allow the Congress to study the issue
more thoroughly. The Congress wanted to determine whether there is, in fact, a higher cost
associated with the use of credit cards; whether
cash customers do, as a result, subsidize credit
customers; and whether it is necessary to allow
surcharges as well as discounts in order to eliminate any subsidization. When the prohibition
was last extended in 1981, the Board was directed to prepare a report on the effects of credit
cards so that the Congress would have a basis for
making a permanent decision regarding surcharges. The report was to discuss the impact of
credit cards on the costs that merchants incur, on
the pricing of goods and services, and on retail
sales volume.
The Board submitted its report in July 1983.
Appendix A contains a more detailed summary
of the results, but these are the main findings:3
• The costs to retailers of credit card transactions (including point-of-sale, security-related,
2. In amending the act the Congress defined a discount as a
reduction in the regular price and a surcharge as an addition
to the regular price. The "regular price" was not defined,
however. In order to allow merchants to determine whether
their programs involved discounts or surcharges, the Board
by regulation defined "regular price." This definition was
made part of the act in 1981.
3. The appendixes to this statement are available from
Publications Services, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551.
310
Federal Reserve Bulletin • April 1984
and financial costs) are higher than the costs for
other types of transactions. The extra cost is
about 2 to 3 percent of the transaction amount.
• There is little evidence that credit card usage
increases overall retail sales volume. Since credit
cards are so widely accepted, retailers as a whole
do not recover the added cost of credit card
transactions through increased sales.
• The extra cost of credit card transactions (to
the extent it is not recovered directly from credit
card users) is reflected in retail prices. It appears
that on average the price of a given item is
increased by something less than 1 percent.
• About 25 percent of gasoline stations and 6
percent of other retailers offer discounts. Approximately 40 percent of all retailers surveyed
believed that discounts for cash are " a good
idea."
In finding that credit card transactions cost
most retailers more than cash or check transactions, and that the additional cost is generally not
offset by higher sales volume but is reflected in
the price level, the report supports the conclusion that cash buyers, at least to some extent,
subsidize credit card users when all customers
pay the same price.
The finding that credit card transactions cost
more than cash or check transactions is based on
a survey of retailers about the relative costs
associated with cash, check, and credit card
transactions, as well as a review of other studies
dealing with the costs of various means of payment. Two of the other studies, one by Payment
Systems, Inc., (PSI) and one by Robert M.
Grant, could be viewed as indicating that credit
card transactions do not cost more than cash and
check transactions. 4 We believe, however, that
drawing this conclusion from these studies would
be incorrect because of the limited cost factors
considered in one of the studies and the assumptions made in the other. The PSI study looked at
only point-of-sale and other handling costs
among the three means of payment—cash,
check, and credit card—and did not consider
other costs associated with the transactions,
most notably the merchant discount in credit
card transactions. The Grant study, in order to
conclude that the additional cost of credit card
transactions was offset by a reduction in fixed
costs due to increased sales, assumed that credit
cards had resulted in a 20 to 30 percent increase
in incremental sales revenues, an assumption
that we find without basis and a position with
which we disagree in our study.
The Board's study found that the additional
cost of credit card transactions was between 2
and 3 percent of the transaction amount, and
estimates the typical size of the subsidy to be
between Vi percent and VA percent of the total
price. These findings appear to confirm the belief
held by the Congress in 1974 that cash customers
subsidize credit card customers. At the same
time, the size of the subsidy may be smaller than
many people had assumed, since the additional
cost of credit card transactions is spread over all
sales—both cash and credit. The relatively small
size of the subsidy, as a percent of the price of a
particular item, may help to explain why few
retailers have seen fit to adopt two-tiered pricing
systems; at the same time, the total amount of
the additional cost due to credit card transactions
and the total amount of the subsidy, in the
economy as a whole, are probably large.
Of the many options available to the Congress,
two are currently being considered in pending
bills. One bill, H.R. 5026, would make the surcharge prohibition permanent, necessitating that
two-tiered pricing be accomplished through discounts for cash. Under this approach, existing
discount programs would be expected to continue, but there would be little reason to expect
more to be offered in the future. The other bill,
S. 2336, would discontinue the characterization
of certain price differences as "discounts" and
others as "surcharges." At the same time, by
excluding the price differences from treatment as
a cost of credit under federal and state laws, it
would continue to encourage merchants to offer
price differences to induce payment by cash
instead of by credit card. The Board supports
this approach, which, by no longer distinguishing
between a "discount" and a "surcharge," might
promote additional two-tiered pricing.
4. Payment Systems, Inc., Cost of Cash: A Strategic
Analysis, Atlanta, 1981; Grant, Robert M., "Transaction
Costs to Retailers of Different Methods of Payment. Result of
a Pilot Study." Processed. Report prepared at The City
University, London, 1982.
Our position is based on the proposition that
discounts and surcharges are fundamentally
equivalent, as well as on a number of practical
considerations. First, while advocates of dis-
Statements
counts have claimed that discount programs result only in price reductions for cash buyers,
without penalizing credit card users, economic
reality is such that prices generally will be restructured so that the " n e w " credit price is
above—and the discounted cash price only
somewhat below—the "old" single price. The
Board's study indicates that if discount programs
are to be economically feasible, most are likely
to involve some increase in the price, from which
discounts to cash customers are calculated. In
fact, two-tiered pricing through discounts ordinarily would result in essentially the same level
of credit and cash prices as would a surcharge
program. (This is discussed in more detail in
Appendix B.)
Second, allowing two alternative methods of
pricing may provide merchants the flexibility
they need to offer more of the two-tiered pricing
that the Congress is trying to encourage. Although 40 percent of the retailers surveyed by
the Board considered cash discounts a good idea,
only 6 percent actually offered them. This low
figure may mean that merchants find discount
programs too difficult to administer. Another
possible explanation is that the similarity between discounts and surcharges has caused confusion among merchants about the difference
between a permissible discount and an illegal
surcharge—as evidenced by many inquiries the
Board has received about the distinction. This
uncertainty about the law may have discouraged
merchants from offering discounts. If the lack of
two-tiered pricing is related to either or both of
these factors, then there is some hope that permitting both pricing schemes might promote the
result the Congress originally hoped to achieve.
A third consideration concerns the claim made
by some opponents of surcharges that allowing
both types of two-tiered pricing will lead to
consumer confusion in a marketplace in which
some merchants offer discounts and others impose surcharges. While the possibility of some
initial confusion certainly exists (much like the
confusion that accompanied the introduction of
discount programs at service stations), we do not
think the problem would be major because merchants would still be required to disclose their
policies. In addition, the Board believes that
competition and the merchants' desire for customer goodwill would lead them to make clear to
to Congress
311
their customers what their pricing practices are.
Furthermore, there is at least one type of problem with discount programs that would not exist
with surcharges. Some reports indicate that cash
customers have not always received the discounts to which they were entitled; this has
occurred, for example, when customers believed
that the posted price reflected the discount,
when in fact it did not.
Although the Board believes that merchants
should be free to charge different prices without
having to characterize the difference as a cash
discount instead of a surcharge (a requirement
imposed by the previous ban on surcharges), it
believes that the limitations found in the Senate
bill are appropriate. First, the Board agrees that,
in any two-tiered pricing system, the price difference that is excluded from truth in lending requirements and state disclosure and usury laws
should be limited to 5 percent of the cash price of
the property or service. Any difference in the
price charged to cash customers and to credit
customers is a cost of credit and normally would
be viewed as a finance charge. In the case of a
price difference to induce customers to pay by
cash instead of by credit card, however, the
Congress chose to make an exception to encourage merchants to eliminate the cash customers'
subsidization of credit card customers, even
though it sacrificed some accuracy in the credit
cost disclosures and in the protection offered by
state usury laws. Since this provision involves a
trade-off with the goals of the Truth in Lending
Act and state laws, we think some limits are
appropriate. Furthermore, we think the 5 percent
limit would not keep merchants from offering
price differences related to the extra cost of
credit card transactions. The Board's study indicates that the fee imposed by credit card companies on merchants averages 3.1 percent (with an
average of 4.1 percent for small businesses), well
within the 5 percent limit. In addition, most cash
discounts now being offered are in the neighborhood of 3 to 5 percent.
Second, we agree that the two-tiered pricing
provision should be limited to credit cards as it is
in the Senate bill. The purpose of the original
exception, in fact the only focus of the discussions over the years, was to provide a means to
remove the extra cost of credit card transactions
from the price charged to the cash customer.
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Federal Reserve Bulletin • April 1984
However, in 1981 the Congress changed the
language of the act to provide special treatment
for discounts not only in credit card transactions,
but in all open-end credit transactions. The
Board believes that since open-end credit transactions not involving a credit card do not generally result in a "merchant discount," this special
treatment for discounts may have been an un-
warranted extension of the provision and could
further undercut the accuracy of the Truth in
Lending disclosures and the effectiveness of
state laws.
I appreciate the opportunity to address the
subcommittee and hope that our testimony will
be of assistance in your efforts to deal with this
difficult question.
•
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Telecommunications, Consumer Protection, and Finance of the
Committee on Energy and Commerce,
U.S.
House of Representatives, April 4, 1984.
What is so disturbing is not that change is
taking place. Rather it is that much of the activity
we see is forced into "unnatural" organizational
forms by provisions of existing law and regulation, and that some of the fundamental concerns
that motivated those laws and regulations are
being lost or overlooked without considered
judgment about the continued validity of those
concerns. The old laws and rules may or may not
serve today's purposes; in some instances, they
may themselves be a source of distortions, competitive imbalance, and weakness. But deregulation by fiat, by exploitation of loopholes, and by
diverse actions taken by individual states is
hardly an appropriate response, and threatens to
undermine and render ineffective federal oversight of banking. For all these reasons, I appreciate the opportunity to review with you some
general considerations that we at the Federal
Reserve feel are relevant in assessing what legislative steps are necessary and desirable.
I appreciate the opportunity to appear before this
subcommittee to review with you a wide range of
issues affecting developments in markets for
banking and other financial services.
I have repeatedly expressed my conviction
that the Congress should move with a sense of
urgency to reform the existing legislative framework governing banking organizations. We need
assurance that the powerful forces of change in
the marketplace for financial services are channeled in a manner consistent with the broad
public interests at stake—the need to maintain a
safe and sound financial system, to assure equitable and competitive access to financial services
and credit by businesses and consumers, and to
preserve an effective mechanism for transmitting
the influence of monetary, credit, and other
policies to the economy. The simple fact is that
assurance is lacking today. Quite to the contrary,
we have a system that is changing, helter-skelter,
in response to a variety of economic and other
forces, but with little sense of the public policy
issues at stake.
The process has emerged over a number of
years, but it is accelerating. Much of the change
is, in fact, a constructive response to technological and market pressures and the opportunities
made possible by deregulation. New combinations of firms in the financial area, new services,
and new packaging of older services can be
vehicles for responding more effectively to consumer needs and new communications technology.
THE CURRENT
SITUATION
The accelerated pace of change in the structure
of our financial system grows out of several
developments. New technology has led to computerization of banking services and has made it
easier for institutions to provide those services
or to combine several services. Business and
consumer experience with inflation and related
high interest rates of the late 1970s and early
1980s has increased the premium on moving
money flexibly. Deregulation of interest rate
ceilings on liabilities of depository institutions
has spurred efforts by those institutions to attain
new asset powers and new sources of income.
Nonbanks have sought ways to enter the banking
business to gain access to insured deposits and
the payments mechanism.
Statements
There have been numerous reactions to the
forces driving change I have just mentioned. We
see new combinations of financial institutions
and new services—the rapid growth of the money market mutual fund and, more recently, an
explosion in brokerage of insured deposits, are
leading cases in point. There is the phenomenon
of so-called "nonbank banks," providing a vehicle by which financial and nonfinancial firms can
enter the banking business outside the framework of law and regulation surrounding bank
holding companies, and actually or potentially
violating the policy proscriptions of combinations of banking and commerce. There is a
blurring of distinctions among depository institutions themselves, with some thrift institutions
increasingly assuming the characteristics of commercial banks. At the same time, states are
enacting banking and thrift legislation that is
much more permissive than federal law; a narrow purpose is often evident—to attract institutions and new employment opportunities—rather
than broader judgments about sound national
policy.
New and sometimes conflicting federal regulatory initiatives seek to facilitate changes or to
maintain congressional intent, but those approaches are circumscribed and often rendered
ineffective by the outmoded character of the
basic legislation. As a result, legal challenges
through the courts to stop or speed the process,
depending upon the particular private interest
concerned, are proliferating, and the court rulings themselves are not guided and informed by
any fresh indications of congressional intent.
All of this has naturally been reflected in an
unusual sense of uncertainty and uneasiness
among the affected institutions themselves. After
decades of stability in the relative position of
commercial banks in our financial system, owners and managers of those institutions feel their
position threatened by a situation in which they
remain heavily regulated but in which other
financial or nonfinancial firms can perform basic
banking functions. That is one reason why banks
are driven to exploit "loopholes" in legislation
designed to limit their activities or to turn to state
legislatures.
Concerns of the thrifts as to how they could
survive in the highly competitive environment
have also been acute. In part because of the large
to Congress
313
portfolios of fixed rate mortgages acquired at
lower interest rates, they have been under particularly strong earnings pressure and their capital
positions have eroded. With their future prospects seeming in jeopardy, the whole orientation
of the industry is in a state of flux. Some individual institutions respond to immediate concerns
and earnings pressures by taking greater risks,
and others are turning away from their traditional
role oriented toward housing finance—a role that
through the years has been the justification for
special benefits provided by federal law.
Deposit-like instruments and payments services are springing up in significant volume partially or wholly outside the framework of governmentally protected and supervised depository
institutions. Depository institutions themselves
have today—in this highly competitive environment—a potentially more volatile structure of
liabilities and smaller capital cushions than in the
past, and there are strong incentives to take
advantage of the most liberal (or least binding)
legal and regulatory philosophies and frameworks—between thrifts and banks, between federal and state laws, and potentially even among
federal regulatory authorities. Such anomalies in
the structure of our regulatory system—and challenges to long-standing regulatory and legal interpretations—are quickly eroding traditional constraints intended to separate deposit taking from
other activities.
As regulators and legislators concerned with
the public interest, our task is not to block
responses to real needs in the marketplace. But I
do believe we have a responsibility to see that
change is channeled along constructive lines and
sensitive to abiding and valid concerns of the
public interest.
Left unattended, there is no assurance that the
process of change now under way will adequately address these concerns. In fact, it is clear that
some of these concerns are being violated as
market pressures and competitive instincts play
against an outmoded legal and regulatory structure. The longer we postpone difficult decisions
about the direction in which change should be
encouraged or discouraged by public policy the
more difficult those decisions will ultimately become, and the greater the risk that continuing
policy concerns—including the safety and soundness of the banking system—will be undermined.
314
Federal Reserve Bulletin • April 1984
GENERAL
CONSIDERATIONS
The continuing goals of public policy in this area
are easy to summarize:
• We want to encourage competition in the
provision of banking and financial services;
• We want to promote efficiency and minimal
cost;
• We want to protect against discrimination,
conflicts of interest, and other potential abuses;
• We want equitable and consistent treatment of
competing financial institutions; and
• We want a strong and stable banking system,
implying continuing attention to safety and
soundness of banks.
These "core" goals in some circumstances
may be in conflict or point to different approaches. In normal circumstances—and in most industries—it may be enough to look to the marketplace to promote competition and efficiency. But
when safety and soundness, broad confidence in
banking institutions, and continuity in the provision of money and payments services are at
stake, competition alone cannot be relied upon to
achieve the goals. In recognition of that fact, the
creation of the Federal Reserve and federal deposit insurance systems—both the Federal Deposit Insurance Corporation (FDIC) and the Federal Savings and Loan Insurance Corporation
(FSLIC)—have long been accepted as important
elements in a "safety net" supporting depository
institutions. And the existence of that safety net,
and the special privileges it implies, is naturally
matched by burdens and responsibilities not
shared by other institutions in our society.
The need to protect the integrity of the payments system deserves special attention. In
seeking an overall balance between protections
and restrictions for banking institutions, we can
and should avoid placing depository institutions
at a competitive disadvantage relative to others.
To do otherwise would be to erode the vitality
and strength of the very sector of the financial
system deemed of special importance to the
economy. To the extent that other institutions—
financial or nonfinancial—operating outside the
protected, regulated framework nonetheless tend
to perform the essential function of banks, there
are several alternatives. We can encompass
those institutions within a basic framework of
supervision and regulation designed to assure
safety and soundness and competitive equality
(such as regulation as bank holding companies or
application of reserve requirements on all types
of transaction balances). We can, if consistent
with other objectives, relieve the regulatory burden on banks (such as streamlining bank holding
company applications procedures and paying interest on reserves). Or, we can confine the
performance of essential banking functions (such
as third party payments and direct access to the
clearing mechanism or the coverage, implicit or
explicit, of deposit insurance) to banks alone. In
practice, some or all those approaches can be
adopted.
BANKS
AND THEIR
REGULATION
The regulation of banks, and the related "safety
net," has long reflected their critical role as
operators of the payments system, as custodians
of the bulk of the liquid savings of the country, as
essential suppliers of credit, and as the link
between monetary policy and the economy. In
that connection, I must emphasize that individual components of the banking and payments
systems are, to a large extent, dependent on the
health of other elements. Adverse developments
here or abroad affecting one institution, particularly of substantial size, can dramatically and
suddenly affect other institutions, some of whom
may not even have a business relationship with
the institution in difficulty. While secondary and
tertiary effects are, of course, present in some
degree in the failure of any business firm, seldom
will the effects be so potentially contagious or so
disruptive as when the stability of the banking
system or the payments mechanism is at stake.
At such times, serious implications for overall
output, employment, and prices—indeed, for the
entire fabric of the economy—are apparent.
The first and most important line of defense is
the interest of banking institutions themselves in
maintaining the confidence of their customers.
But long ago, in establishing the Federal Reserve
System, the FDIC, and the FSLIC, the government determined that normal market incentives
and protections needed to be supplemented by
an official support apparatus. Ironically, the confidence and related competitive advantages engendered in the public by that support apparatus
Statements
can, over time, induce greater risk-taking by the
depository institutions that benefit from it. That
is one reason why I believe a comprehensive
system of examination, supervision and regulation, limitations on permissible activities, and
insurance premiums will remain necessary.
The practical and ongoing issues in this area, it
seems to me, do not involve a wholesale revolution in past approaches, but a reexamination of
the appropriate balance—the balance between
desirable risk-taking and safety, and the balance
among competing depository and nondepository
institutions—in today's market circumstances.
One important area that is beginning to receive
attention is the appropriate structure of deposit
insurance. The insurance agencies are rightly
concerned about the proliferation of insured brokered deposits, which have been particularly
important in the case of a number of failing
institutions and those characterized by aggressive risk-taking, and the unintended effect such
activity may have on both the insurance funds
and structure of depository institutions. I share
the concerns of the FDIC and FSLIC. The
Federal Reserve Board has taken the position
that legislation to permit regulatory agencies to
set a cap on such deposits—at a low level tied to
some ratio of deposits or capital—would be an
appropriate approach. Absent such legislation, I
support the action taken recently by the insurance agencies to limit severely insurance protection of brokered deposits. Developments in this
area are one example of how the marketplace can
respond to one element of government intervention—in this case deposit insurance—in a manner that can, despite some immediate benefits,
have unintended and undesirable effects on the
banking system or the regulatory system generally. More generally, recognizing that deposit insurance has become such an important element
in the support apparatus for depository institutions, substantial change requires careful assessment of the possible consequences.
BANK
HOLDING
COMPANY
REGULATION
Concern with the activities of organizations encompassing banks cannot stop with the bank
itself. The restrictions long applied to bank holding companies are importantly rooted in pruden
to Congress
315
tial considerations; experience strongly suggests
the difficulty of insulating a bank from the problems of a company affiliated with a bank through
a holding company. To be sure, the fortunes of
the bank and its affiliates can be (and are) separated to a degree by restrictions on the transactions among them. But I doubt that the insulation
can ever be made so complete—at least without
defeating the business purpose in the affiliation—
as to rely on those rules alone. The holding
companies themselves, the securities markets,
and the general public tend to look upon affiliates
as part of a larger whole.
Other concerns—potential conflicts of interest
and concentration of resources, particularly
through extensions of credit by the bank to
customers of the nonbanking subsidiaries—can
also be addressed by law or regulation. But
again, insulation is not likely to be complete at all
times.
At the same time, segregating nonbanking activities of a bank holding company outside the
bank itself can provide important advantages. To
some degree, the bank may be shielded from the
activities of other elements of the holding company. Segregation from the banks should, in any
event, make it easier to assure regulatory consistency and competitive equity between nonbanking affiliates of a bank holding company and
other businesses providing comparable services.
Regulations specific to nonbanking activities
may not always reflect certain important prudential concerns of bank supervision; to that degree,
nonbanking activities conducted by banking organizations may appropriately be subject to rules
or surveillance by banking regulators. Conversely, when bank holding companies engage in
nonbanking activities, we should seek to avoid
competitive advantages arising simply from the
association with a banking institution able, implicitly or explicitly, to draw upon government
support. One consideration in this regard is the
capitalization of the nonbanking activity. The
higher degree of leverage common in banking
should not automatically extend to nonbanking
activities; capitalization of the nonbank subsidiaries should broadly reflect that required of
nongovernmental protected competitors by market forces and other regulatory agencies, federal
and state. Indeed, adequate capitalization of a
bank holding company as a whole, taking ac-
316
Federal Reserve Bulletin • April 1984
count of the particular nature of the nonbanking
activities, is important to the safety and soundness of the bank.
In the end, the appropriate range of activities
for a bank holding company should remain, in
my judgment, a matter for determination by a
balance of public policy considerations; it should
not be solely a matter of market incentives, and
some degree of supervisory oversight over the
activities of the holding company as a whole will
remain important. The traditional presumption
has been that there should be some separation of
banks from businesses engaged in a general
range of commercial and industrial activities, and
vice versa. That presumption still seems to me a
reasonable starting point in approaching particular questions. At the margin, that separation will
be arbitrary, but in a broad way it reflects
legitimate and lasting concerns about risk, about
potential conflicts of interest between a bank as
owner of a nonfinancial firm and as an impartial
provider of credit to the community, and about
the dangers of excessive concentration of economic power. Moreover, to the degree that affiliation with a bank implies the need for some
regulatory or supervisory oversight, practical
and desirable limitations on the reach of such
regulation into industrial and commercial activities implies some limitation on the scope of bank
holding company affiliations.
Within this general framework, the precise line
dividing what ought to be permissible for banking
organizations to do and what should be proscribed does need reexamination in the light of
current market conditions, changes in technology, consumer needs, and the regulatory and
economic environment. Some activities now denied banks would seem natural extensions of
what these institutions currently do, involving
little additional risk or new conflicts of interest,
and potentially yielding significant benefits to
consumers in the form of increased convenience
and lower costs. For some time, for instance, the
Federal Reserve has suggested that banking organizations be allowed to underwrite municipal
revenue bonds and establish and distribute mutual funds. Certain brokerage activities have already been approved within existing law, as have
a wide range of data processing services.
Other activities seem ripe for and are being
given consideration by other congressional com
mittees. One general category would be further
extension of "brokerage" or "agency" activities, including sales of a variety of real estate,
insurance, and travel products. Insurance underwriting, currently limited largely to credit-related
insurance, is being considered within a framework that limits concentration of resources and
risk to the banking organization taken as a
whole.
Some activities that have been discussed raise
considerably greater questions in my mind primarily because of risk, but also because possibilities of conflicts of interest or concentration of
economic resources might not be contained without the most elaborate and self-defeating kinds of
regulation. Corporate securities underwriting,
some forms of real estate development, and,
more generally, significant equity positions in
unrelated nonfinancial activities fall into that
category.
In any event, to the extent that regulation is
needed, the goal should be to minimize the costs
and burdens of regulation, consistent with the
public interest. For example, experience has
convinced us that some of the present procedural
requirements for bank holding company applications under the Bank Holding Company Act can
lead to unnecessary delay. The Federal Reserve
Board has gone as far as it feels it can, consistent
with present law, to speed up procedures and
lessen regulatory burden. Specifically, present
statutory requirements for approval of nonbanking activities could be modified to permit simpler
"notice" procedures, with a presumption of approval unless there is a judgment that "safety
and soundness" and similar considerations are
adverse. Such recommendations have been
made in legislation supported by the administration and in bills already introduced in the Senate,
and they appear to have broad support.
CONSISTENCY
REGULATIONS
IN
BANK-THRIFT
The observation that thrift institutions have essentially become bank-like institutions is indisputable with respect to the powers they are
allowed to exercise and increasingly accurate
with respect to the powers they do exercise.
Moreover, in important instances powers avail-
Statements
able to thrift institutions extend well beyond
those available to banks and call into question
the separation of banking and commerce now
applicable to banks. Considerations of competitive equity alone would seem to dictate that the
special privileges and restrictions of banks and
thrifts be brought into a more coherent relationship.
Anomalies go beyond considerations of competitive equity. The kind of considerations I just
reviewed with respect to the powers of banking
organizations cannot be valid for commercial
banks alone; limitations on bank holding companies could not be effective to the extent thrift
institutions could simply substitute as a vehicle
for combining various activities. I recognize that
there are difficult questions posed by the firms
that already have operations on both sides of the
line between commerce and "thrift banking,"
but some way needs to be found to resolve these
questions and establish a firmer policy for the
future if we are to bring about a rational structure
in this regard.
The implication is not that all thrifts and their
holding companies must be regulated in all ways
like commercial banking organizations. There
are ways of adequately defining a thrift institution that would allow us to achieve necessary
functional consistency and assure the integrity of
our policy intent, while still permitting the special benefits provided by law for institutions truly
concentrating on residential mortgage lending.
Various asset tests have been suggested for
eligibility for treatment as a "unitary" savings
and loan holding company—a minimum percentage of assets in residential mortgages and mortgage-backed securities or such a test in combination with a supplemental test of a maximum of
assets in commercial loans.
The interest of investment companies, securities firms, and commercial companies in acquiring savings and loans suggests that an asset
limitation too broad in nature would not deter
substantial nondepository participation in deposit taking and payments services. Specific
limitations on such acquisitions—similar to those
limiting their acquisitions of banks—appear
necessary if the basic prohibitions of the GlassSteagall Act against combining commercial
banking and the underwriting of corporate securities are to remain valid.
FEDERAL-STA
TE
to Congress
317
REGULATIONS
For over a century this country has maintained a
dual system for the regulation and supervision of
banking. On the whole, this dual banking system
has played a useful and constructive role in
encouraging innovation in the financial regulatory environment and in helping to accommodate
local differences in the needs of banking organizations and their customers.
The system has worked as well as it has
because the goals and techniques of regulation
were commonly shared, and the divergences
between federal and state systems were kept
within tolerable bounds. As I mentioned earlier,
this commonality of goals appears to be breaking
down, as states consider expansions of powers
for banks and thrifts—to attract institutions and
jobs—that go far beyond standards allowed by
federal law. Yet, they would still rely on the
federal safety net for their state-chartered institutions.
Recent developments strongly point to the
need to provide a new framework for the dual
banking system. We need an arrangement for the
exercise of the discretion of states in authorizing
new powers for state-chartered banking institutions without that discretion being pushed to the
point of undercutting vital national policies. Otherwise, to the extent the Congress, in the national interest, finds it necessary to circumscribe the
activities of depository institutions and their
holding companies, such limitations will be rendered null and void over time by unrestrained
state action.
For example, we at the Board, in view of
existing law and expressions of congressional
intent, and with the knowledge that the matter is
currently under intensive congressional review,
have recently indicated that we could not approve the acquisition of state-chartered banks by
bank holding companies with the apparent intent
of undertaking, under relevant state law, widespread insurance activities beyond the state in
which the bank is chartered. This is one illustration of an area in which the Board needs congressional direction in setting appropriate guidelines.
In the area of securities powers, the GlassSteagall Act presumably was originally intended
to apply to virtually all banks. However, even in
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Federal Reserve Bulletin • April 1984
this case the statutory framework needs to be
examined because, as a result of changes in law
in the late 1930s regarding the requirement of
Federal Reserve membership for all insured
banks, the question has arisen whether certain
sections cover state-chartered nonmember
banks. In fact, the FDIC has a proposed rule that
would permit holding companies with state nonmember banks to engage in securities activities
that are generally prohibited for banks or bank
holding companies.
INTERSTATE
BANKING
The geographic scope of depository institutions
has long been a key question of federal-state
relations. The proliferation of nonbank affiliates
of bank holding companies operating across state
lines, loan production and "Edge Act" offices,
integrated national markets for money and credit
at the wholesale level, the current action of some
states themselves to permit entry of out-of-state
banking organizations, and the broadened power
of thrift institutions able to operate interstate
have by now led to interstate banking de facto for
many banking services. But, as a general matter,
we have still prohibited on an interstate basis the
provision of an integrated range of services in a
single office, and we force particular activities
into "unnatural," and less efficient, channels.
Even in the consumer area, restrictions are rapidly breaking down. Recently, we were compelled by existing law to approve the acquisition
of a Florida "nonbank bank," designed to engage in a full range of deposit-taking and consumer lending, by an out-of-state bank. We simply,
under the provisions of the Bank Holding Company Act, felt we had no alternative.
We sorely need a fresh congressional review of
our entire policy toward interstate banking.
While most of the issues in this controversial
area will need to be held over to a later Congress,
the present movement toward regional interstate
banking arrangements does need to be dealt with
now. Just last week the Board approved two
bank holding company mergers under the reciprocal arrangements of Massachusetts and Connecticut, even though there are serious questions
both about the constitutionality of such arrange
ments and their implications for public policy. If
the Congress wishes to support these regional
arrangements, appropriately limited to a transitional period, legislation explicitly authorizing
that approach should be enacted.
CONCLUSION
The legislative framework governing the banking
system is sorely in need of change—change that
can take account of the vast changes in the
environment for the conduct of banking and our
future needs. After long discussion and debate,
the time is ripe for action. I believe there is a
wide area of "conceptual" consensus, and
agreement on a critical " c o r e " of legislation—on
the definition of a bank and a qualified thrift and
on regulatory simplification—is clearly within
grasp. The remaining issues surrounding the particular powers of a bank holding company are
inevitably more controversial, but nonetheless
ready for decision. We should not confuse lack
of agreement among affected industry interests
with absence of necessary information and argumentation. Workable approaches responsive to
the various concerns elicited by months of debate and study can be developed in this legislative session.
I know of the potential difficulties in completing legislation this year. But the simple fact is we
don't have much time. A failure of the Congress
to act only means that the decisionmaking about
the evolution of the banking and financial system
will fall to others, without congressional direction. The current framework and intent of banking law cannot hold in the face of technological
change, intense market pressures, competition
among states, and potentially conflicting decisions of courts attempting to apply old law to
today's circumstances. Regulators are being
pushed to and beyond the outer boundaries of
the legal framework established by the Congress.
None of this will stop in the absence of congressional action. The system will change, but not in
ways that fit into a coherent whole, responsive to
national policy. The clear risk is that the overriding public interest in a strong, stable, and competitive financial system will be lost.
We want competition, and the benefits to the
Statements
to Congress
319
consumer inherent in competition. We also want
a safe and sound banking system, stable in itself,
and contributing to a larger economic stability.
If we act—and act promptly—we can further
both those aims. We want to cooperate with you
actively in working toward that end.
•
Statement by Preston Martin, Vice Chairman,
Board of Governors of the Federal Reserve System, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance
of the Committee on Banking, Finance and Urban Affairs, U.S. House of
Representatives,
April 4, 1984.
less we fully understand the nature of the problem and the potential effects of the legislative
proposals put forward to date, particularly upon
smaller depository institutions, we may find that
future Congresses are still having to deal with
this question.
I am pleased to appear before this subcommittee
to present the views of the Federal Reserve
Board on the issue of delayed availability—the
practice of some depository institutions (and
other intermediaries such as money market
funds) to impose "holds" on funds representing
checks deposited by customers. There is no
subject in consumer banking today that has generated more consumer interest and controversy.
This topic is an extremely complex one, and has
been the subject of several congressional hearings in the past few years. While there are no
easy solutions to this sometimes frustrating problem, I believe that we have begun to see some
progress in the area, as witnessed by the recently
issued joint policy statement of the federal regulators and our own recent experience in experimenting with ways to speed up the return of
dishonored checks. Recent legislation in the
states of New York and California as well as
proposed legislation now pending before both
Houses of Congress have also addressed this
problem.
We at the Federal Reserve recognize that
delayed availability can be a source of confusion,
annoyance, inconvenience, and even embarrassment to consumers. Let me reaffirm our position
that we do not sanction the practice of undue
delays in providing collected funds to depositors.
We are concerned, however, that some solutions
proposed to date may have results that could be
conceivably worse than the problem itself. That
is why we have spent a considerable amount of
time studying this issue—easy solutions are just
not forthcoming. Even the legislative solutions
put forth so far may not be entirely successful in
resolving the problem. I am concerned that un-
SOURCES
OF THE
PROBLEM
While I do not believe it necessary to dwell at
great length about how checks are collected in
this country, I think it desirable to review the
mechanics of how they are collected in order to
comment on the problem. The use of checks is
universally accepted in our society as a means of
making payments of all sorts in large part due to
the efficiency of our payments mechanism. A
customer accepts a check as payment and deposits the check into his or her account at a depository institution. The sooner the check is presented for payment, the sooner the collecting
institution has use of the funds, which it then is
able to pass back to its customer. Institutions
may give immediate availability to known customers. Consequently, it is in the best interests
of the institution to move that check as quickly
as possible through the collection process in
order to obtain "good funds." Before that happens, however, the check may pass through
several hands—the institution where it is first
deposited, a correspondent bank, one or more
Federal Reserve Banks, the payor institution's
correspondent bank, and finally, the payor bank.
Although cumbersome at times, our nation's
check collection system works quite effectively.
Almost 40 billion checks are collected annually,
and 99 percent of them are collected in one or
two business days. We estimate that the financial
industry, including small and large banks, savings and loan associations, and credit unions,
spends approximately $2 billion in operating expenses every year to collect these checks. More
than $1 billion of society's capital is tied up in
equipment and other capital resources required
320
Federal Reserve Bulletin • April 1984
to process and deliver checks to the payor institution.
The Federal Reserve accepts its responsibility
to improve the payments system over time. We
have introduced programs, such as "noon presentment," that have resulted in improved collection times and faster availability for billions of
dollars worth of checks. While we will continue
to introduce refinements into the system, I must
advise you that given the existing legal and
procedural requirements, it is unlikely that the
speed with which checks are being collected can
be dramatically improved in the short run. As
long as the requirement for the physical presentation of checks continues, there will always be a
justification for at least a short delay in availability.
REASONS
FOR
DELAYS
The basic reason that depository institutions
delay availability beyond the one or two days it
takes to clear the check is the concern that the
institution will not be able to recover the funds
from its depositor, often a new depositor or a
very large deposit, in the event that the check is
returned unpaid. We recognize that depository
institutions point to the operational problems
associated with the return check process as the
basis for lengthy delays some of them impose.
However, 99 percent of all checks are paid the
first time through the collection process. Furthermore, over 60 percent of the checks that are
returned are for amounts of less than $100.
Finally, about half of the 1 percent of checks that
are returned are paid when they are presented for
payment the second time. It is important to
recognize that all of these returns do not actually
result in a loss since in most instances the
institution is able to recover the funds from its
depositor. This is why we and the other agencies
have focused our joint policy statement released
on March 22 on measures depository institutions
can take to reduce delays in availability without
increasing the likelihood that they will incur
losses.
Our statement urges that institutions utilizing
the practice of delayed availability should take
steps to reduce further the delays they impose,
consistent with prudent banking practices. This
means that an institution should carefully consider the actual risk of loss that it faces should a
check a customer deposited be returned unpaid.
We believe that before, say a teller, imposes a
delay in availability, he or she should take into
account the length of time the depositor has been
a customer, past experience with the depositor,
whether the depositor has other deposit accounts
or an overdraft line of credit that could be relied
upon, the identity of the drawer, and the type of
check. Further, we advise that institutions
should not impose delays on U.S. government
checks beyond the time required to receive credit from their correspondent or from the Federal
Reserve. At the same time, the statement reminds institutions to disclose their hold policies
to customers when the account is opened and,
when practical, frequently when a check is deposited if a hold is to be placed.
In any event if an institution imposes a delay in
availability on a customer's deposit in an interest-bearing account, we believe it appropriate for
the institution to begin paying interest at least
from the time it receives credit from its correspondent bank or from the Federal Reserve
Bank. In fact, we understand that many institutions pay interest from the date of deposit.
We have had extensive discussions concerning
these matters with the financial institution trade
associations and have received their unqualified
endorsement and support. We believe that this
approach has considerable merit and is the best
way to proceed at this time.
ONE POSSIBLE
SOLUTION
I believe that the most feasible way to eliminate
the problem of delayed availability once and for
all is to move toward electronic payments and
reduce substantially the requirement of moving
paper from place to place. We have made great
strides in this country in introducing electronics
into virtually every phase of our lives—from
communications to home entertainment, but we
still have not overcome the customer's need for
physically moving pieces of paper from depository institution to depository institution until
they reach the payor. If a check is not paid, it
then follows the same path back to the institution
of first deposit.
Statements
The customer in the "wholesale" side of banking has moved into the electronic funds transfers
in a big way. It is estimated that in 1980 electronic transfers moved $117 trillion in payments, six
times the $19 trillion moved by checks. Clearly
the large balance transfer sector is on to something to which consumers should be alert. In
fact, I believe there is strong evidence that
consumers are making greater use of electronics
in their financial affairs and I think it would be
wrong to underestimate the receptivity of consumers to electronic improvements in banking.
Automated teller machines are intensively used
on a 24-hour basis. Indeed, many customers
report that they prefer to use an automated teller
at their convenience any time during the day or
night rather than having to go to the bank during
normal banking hours.
The rapid growth of automated clearinghouse
payments is also an indication of the consumer's
responsiveness to electronic fund transfers.
Each month millions of Americans receive their
Social Security and other U.S. government payments through direct deposit into their accounts.
These payments are never subject to a delay in
availability. Other efforts toward electronic delivery of checks seem very promising. The Federal Reserve and the banking industry have begun experiments with various ways of delivering
checks electronically. While these procedures
are in an early stage, we believe that such
innovations have the long-run potential of totally
eliminating the need for delays in availability and
for saving considerable amounts of society's
resources devoted to check collection.
Consumers have been responsive to programs
that eliminate the return of checks. In fact,
federal credit unions are required by regulation
not to return share drafts to customers. By
eliminating the need to return the paper check
and through the increased use of electronic collection, we can improve the efficiency of the
payments system quite dramatically. Informed of
the faster availability of funds and potentially
lower fees due to cost savings, I believe that
consumers will be willing to accept over time,
indeed some will even demand, changes in the
way in which checks are collected. We would be
pleased to determine for the Congress if you so
desire the feasibility, benefits, potential consequences, and operational aspects of greater uses
to Congress
321
of electronics to make payments and collect
checks. In all of this, however, I think that it is
important to recognize that checks will most
likely continue to be the principal method used
by consumers for the foreseeable future. Therefore, efforts to continue to improve collection
procedures and funds availability to depositors
are certainly worthwhile.
THE DALLAS
RETURN-ITEM
PILOT
We are also experimenting with programs to
speed up the return of unpaid checks. Under the
generally used return-item procedure, a check
that is dishonored for whatever reason by a
payor bank retraces the collection steps that it
followed. By law, the payor bank and each
institution that receives it has until its midnight
deadline to pass the check back to the institution
from whom it was received. I need not dwell at
great length on the process other than to indicate
that it presently is highly labor intensive, as the
return-item process has not as yet benefited from
the advantages of automation. Further, many
institutions merely place the dishonored items in
the mail rather than using the courier services
used to collect checks. All of these lead to a
sometimes long and tedious procedure for the
return of an unpaid check.
The Federal Reserve Bank of Dallas has been
conducting a pilot program designed to speed up
the return process. The ultimate objective is to
reduce the potential risk of loss to depository
institutions due to dishonored checks. One approach that we have been implementing is to
return dishonored checks directly to the institution of first deposit rather than through each
institution in the collection chain. Another approach that appears to have considerable merit is
to ensure that the institution of first deposit
promptly receives wire notice of a returned
check. The Dallas Reserve Bank has approached
this objective in stages. We have now gained
considerable experience with returning unpaid
checks directly to the institution of first deposit
within the Dallas Reserve Bank's District, and
we are now preparing to move to the next stage
of the pilot. Returning the dishonored check
directly to the institution of first deposit has
speeded up the return process by more than one
322 Federal Reserve Bulletin • April 1984
day for those checks handled by the Dallas
Reserve Bank.
During our next phase, Dallas intends to expand the process to include returned checks from
payor banks, regardless of whether or not the
check originally cleared through the Reserve
Bank. This will require additional operational
adjustments at the Reserve Bank and at depository institutions.
State laws, however, may present a barrier to
the nationwide implementation of direct returns.
Several jurisdictions (the District of Columbia,
Nebraska, Nevada, New Jersey, Oregon, and
Wisconsin) have not adopted a provision in the
Uniform Commercial Code that permits the direct return of dishonored checks. We have discussed with state officials the desirability of
changing their state law to add the direct return
option to their state codes. Until these laws are
changed, or unless the Congress authorizes the
direct return of unpaid checks to the institution
of first deposit, many of the benefits envisioned
for programs such as the Dallas pilot could not be
achieved nationwide because institutions would
be uncertain as to whether the institution they
send checks to will return the unpaid checks
directly to them or through each institution in the
collection chain.
stances, the notice of dishonor must be passed
on by telephone, a cumbersome and costly process. We are making great strides in establishing
additional automated communication linkages
with small institutions. We anticipate that additional experience with the wire advice of nonpayment procedure will result in a low-cost method
for providing more timely information about returned checks to the institution of first deposit.
Based upon what we have learned to date, we
believe that there are several possibilities for
providing wire notices for all types of returns,
including those of amounts below $2,500. Wire
advice, however, may not be cost effective for
small-denomination checks. Because smallamount checks do not seem to present the same
risks that large-amount checks present, it may be
easier to handle the question of these checks by
extending the deadline for returns to provide
additional time for drawers to cover these
checks. This could be accomplished through
legislation at the state or federal level. The
expanded use of wire advice for large-amount
checks in combination with an extended return
deadline could serve to reduce almost all the
risks of unpaid checks.
STANDARD
WIRE NOTICE
OF RETURNED
ITEMS
Another procedure that appears to have significant potential for further reducing the risk of
return items is the expansion of the Federal
Reserve's wire notice of return items service to
speed up notification of dishonored checks to the
institution of first deposit. Under our existing
procedures, a depository institution is to provide
a wire notice if it dishonors a check of $2,500 or
more. Unfortunately it is difficult to enforce this
standard, particularly since the payor institution
is required to incur the expense of providing the
notice. Further, the provision does not apply to
checks collected outside of the Federal Reserve.
Our Dallas pilot provides for the notification of
nonpayment on all returns of $2,500 or more by
the Reserve Bank to the institution of first deposit. Of course not every institution in the Dallas
District is linked to the Reserve Bank by a
computer terminal. Consequently, in many in
ENDORSEMENTS
There has been a considerable amount of attention devoted to the development of a standard
form of endorsement for the financial industry.
In 1981 the American National Standards Institute (ANSI) developed a specification for check
endorsements in conjunction with the financial
industry and other providers of payment services
and equipment. Our experience with trying to
decipher first endorsements in Dallas indicates
that considerable time and effort could be saved
by the industry if it implemented this standard.
However, formal legislation to require this standard may not be in the best interests of the
financial system.
We are concerned that adoption of the ANSI
standard may require extensive investment in
new check processing equipment and make the
current equipment obsolete. Given the already
heavy investment in capital equipment of many
financial institutions, we would expect that mandating the adoption of the ANSI standard would
Statements
result in additional unnecessary expenses that
would likely be passed along to depositors in the
form of higher service charges. This is of particular concern to smaller institutions that may not
have the resources to afford new, expensive
equipment. A more reasonable approach, therefore, would be to provide some kind of incentives and encourage the gradual phase-in of the
ANSI standard as old check processing equipment becomes obsolete and as new equipment is
purchased. Mr. Chairman, the language contained in your bill, which would have the Board
consider whether to require the ANSI standard,
in my view is consistent with this approach.
CURRENT
LEGISLATIVE
EFFORTS
We believe that the efforts I have outlined
above—the joint agency policy statement, continued improvements in the procedure for returning unpaid checks and further efforts toward
electronic presentments—are moving the industry in the direction of reducing delays in availability. Let me emphasize that not all institutions
impose delays in availability. A study performed
for us in 1983 indicated that 89 percent of respondents who had checking, savings, or money
market accounts did not experience delays in
funds availability and 64 percent of the respondents to our 1983 survey indicated that their
banks do not delay availability. While legislative
efforts may force some in the industry to reduce
delays they now impose, a mandated availability
schedule may exacerbate the problem by encouraging institutions that do not delay availability to
impose delays. I believe that the New York and
California experiences can provide us with a
basis for making an informed judgment on this
issue, and I encourage you to review the results
of these efforts at the state level before decisions
are made on federal legislation.
It is difficult to estimate what the appropriate
availability periods should be. The New York
Banking Board regulations establish a schedule
ranging from one business day for checks drawn
in a face amount of $100 or less to six business
days for checks drawn on another institution
located outside New York State. Is this the
appropriate range? Should institutions be encouraged to reduce the outside range to less than
to Congress
323
six business days if possible, as they are urged to
do by our policy statement? Should the proposed
legislation be limited only to consumer accounts?
After all, small businesses often experience delays in availability also. Given the potential risks
and special factors associated with business accounts, should different standards apply? Should
small depository institutions be treated differently, particularly if they use a correspondent bank
for their collection services? Should the legislation apply to money market mutual funds and
other intermediaries, many of which also delay
availability? Should the legislation override conflicting or more restrictive state legislation? Who
would make the determination as to whether
state legislation is in conflict with any federal
laws? I believe that these and other fundamental
questions raised by any legislation should be
carefully addressed to ensure that the problem is
addressed in a deliberate fashion.
CONCLUSION
The Congress has charged the Federal Reserve
with the responsibility for overseeing the continued smooth functioning of the payments mechanism. We are all working toward the common
goal of improving the efficiency of the payments
system and providing depositors with the lowestcost methods of making payments. We are now
making considerable progress, in conjunction
with the financial industry and the other federal
supervisors, toward reducing the problems associated with delayed availability. We believe that
the current efforts supported by the financial
industry are well-suited to solving the problem of
delayed availability.
Some legislative proposals under consideration would mandate operational improvements,
such as wire advice of nonpayment, that are now
being actively considered by the Federal Reserve
and by the industry. As I have indicated, we
have been considering several approaches toward improving collection times and the returnitems process through technological means, and
we may find it necessary to seek legislation in the
future to facilitate these changes. We believe
operational improvements such as those actively
being considered are quite promising and will
enable institutions to provide better availability
324
Federal Reserve Bulletin • April 1984
of funds to depositors than through legislated
schedules. This cooperative effort between the
industry and the Federal Reserve will provide
greater benefits to depositors and result in a
more competitive and efficient payments mechanism.
•
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Trade of the Committee on Ways and Means, U.S. House of
Representatives, April 10, 1984.
analyzed at two different levels. The most direct
approach is to explain trends in the trade balance
in terms of such proximate causes as the behavior of exchange rates, the strength of economic
activity at home and abroad, and relative rates of
inflation. But a full explanation must look beyond those considerations to factors determining
exchange rates, economic activity, and inflation.
That naturally brings us to a consideration of
economic policies both in the United States and
abroad.
For purposes of analysis, it may be convenient
to assess the change in the trade balance from a
base period of late 1980 when our current account was roughly in balance. U.S. trade, during
that period, was in deficit at a rate of about $25
billion. The difference reflected in large part a
sizable surplus of net investment income—income built up as a result of net investment
abroad over many years, but which may be
dwindling away in the future as a result of our
heavy borrowing abroad. Indeed, available statistics suggest that the net creditor position of the
United States vis-a-vis other countries—a position built up over many years—is being reversed:
we will shortly be a net debtor.
The deterioration in our trade balance since
the base period of roughly $75 billion took place
despite a sizable reduction of about $25 billion in
our imports of oil. There has been an adverse
swing of about $100 billion in the "non-oil balance"—that is, the difference between our payments for non-oil imports and our export revenues. (See the table attached to my statement. 1 )
To put that figure in perspective, the entire
residential building sector of the GNP, which
attracts much attention, is some $150 billion; the
change in the non-oil trade balance over little
more than three years was equivalent to twothirds the size of that whole industry. Plainly, the
deterioration in our trade position has had pro-
I am pleased to have this opportunity to discuss
some of the issues surrounding our large and
growing trade and current account deficits. As
always, the flows of trade and other payments
with the rest of the world reflect a variety of
forces here and abroad. A substantial disequilibrium, such as at present, can usually be traced to
other difficulties and imbalances in domestic
economies or economic policies. That is the case
now.
To summarize my basic point, our external
deficits currently are linked—not exclusively but
importantly—to the internal budget deficit. To
restore better balance in our external accounts
consistent with a healthy and noninflationary
economy at home, we cannot, in my judgment,
escape the need for decisive action to deal with
our internal deficit. Policies aimed directly at the
external deficit that cut against market forces—
for example, import restrictions or other controls—are likely to have limited effects at best on
the overall trade or current account balance or
would work at cross-purposes to other objectives. In the end, I believe they would be counterproductive.
Our trade deficit reached the unprecedented
magnitude of more than $60 billion last year—$75
billion at an annual rate in the fourth quarter. It is
now generally expected that our merchandise
imports will exceed our exports by at least $100
billion this year—already in January and February the deficit averaged more than $100 billion at
an annual rate. Consistent with that trade deficit,
the entire current account is likely to be in deficit
by about $80 billion in 1984, or more than 2
percent of the gross national product. That percentage is nearly twice as large as any U.S.
historical experience since World War I.
The causes of our large external deficits can be
1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
Statements to Congress
found effects spread through many firms in all
parts of the United States. Those engaged in
foreign trade or competing with imports have not
shared proportionately in the strong expansion in
economic activity generally, and some important
industries are still operating well below 1980
levels.
One factor that has contributed importantly to
the widening of the U.S. deficit has, in fact, been
the relatively stronger expansion of the U.S.
economy relative to foreign industrial economies. In that sense, part of the deterioration is
cyclical, and reflects not loss of markets at home
or abroad but absence of proportionate gains. In
addition, exports have dropped sharply to developing countries that are burdened with large
external debts and are in the midst of readjusting
their own economies and balance of payments.
That is particularly true with respect to our
neighbors in Latin America; exports to that area
have dropped $13 billion since the base period.
These two factors appear to explain a third to a
half of the adverse swing in the non-oil trade
balance.
The third factor directly affecting our non-oil
trade balance has been the dramatic appreciation
of the dollar over the past three years. Starting at
a relatively low level historically, the value of the
dollar against the currencies of foreign industrial
countries has risen about 45 percent in nominal
terms since the end of 1980. Over the same
period, U.S. price performance has been somewhat better than the average in foreign industrial
economies; U.S. consumer prices, for instance,
rose 18 percent from the fourth quarter of 1980
through the fourth quarter of 1983, while consumer prices in the foreign industrial countries
rose almost 25 percent on average. But even
allowing for the differential in inflation, the dollar
has appreciated substantially, and it is now
roughly 25 percent higher than its average level
for the entire 11-year period of floating exchange
rates. Some calculations suggest that more than
half the $100 billion change in the non-oil trade
balance from the base period can be traced to the
dollar's appreciation.
Such calculations concern only the proximate
causes of the growing U.S. trade deficit. The
more relevant questions concern what lay behind
those developments and what are the prospects.
We know economic recovery in other industrial
325
ized countries has been quite moderate, reflecting in part relatively restrained fiscal policies—in
the sense of working toward reduced government deficits. That approach has been motivated
in large part out of concern about inflation, as
well as the size of deficits carried over from
earlier years. To some extent the depreciation of
their currencies relative to the dollar—in which
important import commodities are denominated—added to price pressures in those countries,
and some of them probably were constrained to
maintain relatively restrictive monetary as well
as fiscal policies in the light of those pressures.
By now, increased exports to the United
States, among other factors, have helped encourage recovery in the foreign industrial countries
and expansionary momentum now appears more
firmly established. Moreover, the process of
adjustment in some of the deeply indebted developing countries has reached the point at which
some resumption of import growth appears to be
developing, although imports will not reach the
levels of a few years ago for some time. As a
consequence, prospects for U.S. exports during
the remainder of 1984 and beyond are improving,
albeit moderately.
For the time being, the strength of our own
expansion—which is still proceeding more rapidly than abroad—may continue to be reflected in
imports growing as fast or faster than exports. In
these conditions, and because imports are now
so much larger than exports, significant progress
in closing the trade deficit cannot be anticipated
for some quarters.
At the same time, stronger growth abroad may
well mean that savings in other countries will be
more fully utilized at home so that, other things
being equal, capital will flow less freely to the
United States. That could pose a problem because we are bound to be dependent upon capital
inflows from abroad for some time to finance our
trade and current account deficits, and those
inflows are moderating pressures on our financial
markets.
There can be little doubt that the ready availability of imports and the strength of the dollar—
together with the related capital inflow—have
had some short-run beneficial effects during the
past year in support of relatively noninflationary
expansion. With the huge federal deficit feeding
purchasing power into the economy, domestic
326
Federal Reserve Bulletin • April 1984
demand—reflected in consumption, domestic investment, and government spending—is estimated to have grown over the past five quarters at an
annual rate of about 8 percent, faster than during
the equivalent period of any earlier postwar
recovery. Some of that demand was absorbed by
imports; as a consequence, GNP—a comprehensive measure of U.S. production—grew more
slowly than demand. But that growth was still
large, at a rate of 6V2 percent over the period; and
the availability of imports has been a key factor
in keeping inflation in check and in avoiding
strong pressures on capacity in some industries.
At the same time, the capital necessary to finance the current account deficit has also increasingly supplemented the supply of domestic
savings. In historical terms, interest rates have
remained high in the United States; they would
have been higher still had we been required to
finance our domestic growth and the budget
deficit from internal sources alone.
That point is illustrated in the chart attached to
my statement showing the demands for, and the
sources of, savings in recent years and, prospectively, in 1984. The combination of rising private
investment and the high level of the budget
deficit exceeds our savings domestically by an
increasing margin. The difference is increasingly
made up by savings from abroad, supplementing
domestic savings this year by perhaps 25 percent, or about 2 percent of the GNP.
Whatever their benefits at the moment for the
economy as a whole—and they are very real—
rising trade deficits and capital inflows are not
sustainable indefinitely. And, of course, those
industries most exposed to foreign competition
do not share in the benefits, and they increasingly demand protection. In effect, our trade problems do, in my judgment, signal deep-seated
imbalances in the world economy and in economic policies.
The central thrust of my remarks is that these
imbalances must be dealt with in a constructive
way—by going to the source—rather than by
protectionist measures. The latter are like medical tourniquets; they may sometimes seem justified to stop bleeding, but applied too long and too
strongly they cripple the limb and threaten the
recovery and good health of the whole body.
Many have pointed to an "over-valued" or
"artificially high" dollar as a major source of the
difficulty. In terms of the trade balance, the point
is understandable. But the dollar is where it is
because of a balance of forces in the market,
reflecting capital as well as trade flows. There is
not, in my judgment, evidence that the value has
been manipulated, in any significant way, by our
trading partners, through intervention in the exchange markets or otherwise. Instead, appreciation of the dollar over the past three years in the
face of larger trade deficits reflects the strength
of incentives to place capital in the United
States.
While capital flows do not always closely
reflect changing interest rate differentials, there
can be no doubt that the persistence of high real
interest rates in the United States, relative to
those prevailing in most other major countries,
contributed importantly to attracting money
from abroad. That was particularly true during a
period when, in relative terms, political and
economic confidence in the United States has
been strong. In an uncertain world, many individuals and businesses in both developed and
developing countries have looked upon the United States as a "safe haven" for their liquid funds
and for their capital. At the same time, U.S.
banks and others have curtailed their net lending
abroad, in the light of stronger demands for
credit in the United States and of political and
economic uncertainties in some other countries.
It cannot be in our interest to curtail capital
inflows and to precipitate a fall in the dollar by
taking actions that undermine confidence in our
economic policies and outlook—specifically by
undermining the progress against inflation or
prospects for sustained growth. Moreover, as I
emphasized a few moments ago, we are, for the
time being, dependent on capital inflows to help
finance both domestic growth and the trade
deficit; neither the budgetary nor the trade deficit
will end suddenly.
There is, however, a positive and constructive
way to approach the problem—a way entirely
consistent with maintaining and indeed reinforcing confidence in our economic outlook and our
domestic needs. Specifically, forceful action to
reduce the federal budget deficit would directly
reduce pressures on our financial markets by
restoring a better balance between domestic
sources and uses of credit and capital. The
restraining effects on economic activity of the
Statements
lower deficits should be wholly or partially offset
by lower interest rates than would otherwise
prevail, and as interest rates moved lower relative to those abroad, we would be weaned from
our dependence on foreign capital. In that context, prospects for foreign growth could improve, helping our exports, and exchange rates
should in time reflect a better long-run competitive equilibrium. As we move to restore a sustainable international trading position, the improved trade balance will also help maintain
domestic growth.
No doubt that process will proceed more unevenly, and perhaps more slowly, than we would
like. But there are enormous dangers in an effort
to short-circuit the process through more direct
measures to curtail imports or inflows of capital,
both of which would work at cross-purposes with
the basic requirements for growth and stability in
the United States and elsewhere.
Beware, in particular, of those arguments that
suggest import restrictions designed to benefit
one industry or another will produce more jobs
for the economy as a whole. To a particular firm
or industry, shutting off import competition offers immediate advantages; more generally, it is
argued that—other things equal—each reduction
of $1 billion of the trade deficit represents an
added $1 billion of domestic output. Given the
rule of thumb that each $1 billion worth of
domestic output requires about 25,000 workers,
calculations are made that, say, cutting the trade
deficit in half, or $50 billion, would produce
nearly VA million jobs. But, from the standpoint
of the whole economy, the pitfalls in such reasoning at a time when the economy is already
expanding strongly should be clear.
If we should actually succeed in reducing our
trade and current account deficits by means of
import controls, we would also lose the capital
inflow and undoubtedly experience stronger inflationary pressures. Both of those factors would
tend to push interest rates higher, curtailing jobs
in interest-sensitive sectors of the economy, including both homebuilding and long-term business investment. Alternatively, jobs might be
created in those industries directly benefiting
from the controls, but the exchange rate would
be driven still higher than otherwise, hurting
other import-competing industries and exporters, including farmers, and multiplying the de
to Congress
327
mands for protection or subsidies. No doubt,
pressed very far, there would be a mixture of
effects, further complicated by retaliation abroad
and international political antagonisms.
That is the case—and it seems to me overwhelming—for not yielding to generalized demands for import protection. So long as we fail to
deal with the underlying causes, our action will
not only be ineffective in dealing with the trade
problem, but also will undermine the broader
goal of sustained, noninflationary growth.
The hard fact is that, even if trade restrictions
could be pressed far enough to be successful in
reducing our current account deficit, they would
only redistribute the strains and imbalances in
the economy so long as we cannot finance rising
domestic investment from domestic savings. We
would assist some industries at the expense of
others more sensitive to interest rates, and in the
process open the way for renewed inflation and
undercut efforts to improve productivity and
efficiency.
No doubt there may be specific instances in
which trade restrictions have been, or are, justified to counter subsidies or other unfair competitive practices abroad; carefully assessed and
monitored, such action can be consistent with
encouraging fairer and open trading practices
around the world. But there are areas where
existing restrictions can no longer be justified
and run the risk of encouraging pricing and wage
bargaining inconsistent with the longer-run competitive health of the industries directly affected.
Another approach that has been proposed to
reduce our external deficit is to intervene in
foreign exchange markets to bring about a depreciation of the dollar and subsequent improvement in our trade balance. In my judgment,
exchange market intervention can occasionally
play a useful role in dealing with disturbed market conditions or even in signaling the desires or
policy intent of the financial authorities in various countries, particularly when the approach is
coordinated among them. But its role is subsidiary; experience strongly suggests that intervention alone is a limited tool that cannot itself,
greatly or for long, change the market results
unless accompanied by changes in more basic
policies. And if those policies are appropriate,
continuing intervention on any large scale is not
likely to be necessary.
328
Federal Reserve Bulletin • April 1984
In that light, some might suggest that monetary
policy should be directed at bringing about lower
nominal interest rates and a depreciation of the
dollar by accelerating growth in money and credit. But in the United States, with the economy
growing strongly and credit growth already large,
such an effort would be counterproductive. It
could only rekindle expectations of rising inflation, with the clear associated danger of a perverse influence on interest rates as potential
lenders withhold funds because of fears of more
inflation. In those circumstances, confidence
could all too easily be undermined to the point
that declines in the dollar would cumulate on
themselves in a manner reminiscent of some
earlier years, reinforcing inflationary pressures.
We have come a long way in bringing down
inflation and inflationary expectations in the
United States and in laying the foundations for
sustained expansion. We are beginning to enjoy
the fruits of that effort. But it is also clear that
our trade accounts, and our external position
generally, reflect basic imbalances in our economy and in our policies that must be dealt with
promptly and effectively. The main direction
those efforts should take is clear enough, and I
can only be encouraged by the efforts of your
committee and of many others in the Congress to
take steps necessary to deal with our budget
deficit.
Equally important, we must avoid striking out
in the wrong directions—toward renewed inflation or toward controls and protectionism. Those
paths would only encourage more instability here
and abroad. We would risk substituting new, and
even more intransigent, problems for those now
before us—problems that were all too familiar a
few years ago.
Finally, I would like to comment briefly about
the general instability of exchange rates during
the past decade and more since the breakdown of
the Bretton Woods system. This is not the time
or place, were I capable, of reviewing all the
possibilities for thoroughgoing reform of the international monetary system. But I do believe
the amplitude of the swings we have seen in
exchange rates over that period are excessive
and potentially damaging in terms of maintaining
an open world economy.
In approaching that problem, I believe we
must keep in the forefront of our minds the
evidence that the instability and uncertainty in
international markets can in large part be traced
back to instability in domestic economies and
policies, and to lack of coordination in the mix of
policies among countries.
With great difficulty and pain, we have made
progress here and abroad in dealing with inflation, and now growth has been restored. We
must, and we can, deal with the remaining imbalances in ways that contribute to those fundamental goals. As we do so—and only if we do so—we
should be able to look forward to greater stability
in exchange markets.
In that connection, as we develop our "mix"
of economic policies in the United States, and as
other countries approach their economic policy
decisions, the desirability of greater stability in
exchange rates seems to me to deserve real
weight. More often than not, disturbances in
exchange markets, and misalignments of currency values and trade balances, are symptomatic of
more fundamental problems of economic policy.
That seems to me to have been the case over a
number of years. We should learn from that
experience—and the current situation seems to
me an apt case in point.
•
329
Announcements
CHANGE
IN THE DISCOUNT
RATE
The Federal Reserve Board announced an increase in the discount rate from 8V2 percent to 9
percent, effective April 9, 1984. The discount
rate is the interest rate that is charged for borrowings from the District Federal Reserve
Banks.
The change—the first since late 1982—was
undertaken in the light of the relatively wide
spread that has developed in recent weeks between short-term market rates and the discount
rate.
In announcing the change, the Board voted on
requests submitted by the directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Chicago, St. Louis, Minneapolis, and Dallas.
(Subsequently, the Board approved similar
actions by the directors of the Federal Reserve
Banks of Cleveland and Atlanta, effective April
10, 1984, and Kansas City and San Francisco,
effective April 13, 1984.)
MEASURES TO REDUCE RISK IN
LARGE ELECTRONIC FUND
TRANSFERS
The Federal Reserve Board, on March 29, 1984,
announced the following actions as part of its
continuing effort to reduce risks involved in the
electronic movement of hundreds of billions of
dollars a day:
• The Board requested public comment on a
wide variety of possible measures for reducing
risk in the operations of large-dollar wire transfer
systems.
• At the same time, the Board issued a policy
statement designed to ensure that depository
institutions do not use the Federal Reserve's
wire transfer network to avoid the efforts that are
under consideration to reduce Federal Reserve
or private sector risk.
There are at present four large-dollar electronic fund transfer systems that together handle
more than $500 billion in wire transfers a day:
Fedwire—the Federal Reserve's wire transfer
system; CHIPS (Clearing House Interbank Payments System) operated by the New York Clearing House; Cash Wire, operated by a consortium
of banks; and CHESS (Clearing House Electronic Settlement System) operated by the Chicago
Clearing House. On Fedwire, average daily volume was about $355 billion in 1983, involving
some 150,000 transactions a day.
In taking its actions, the Board said, vis-a-vis
the risks involved:
If a transfer is made over Fedwire [the Board's rules]
provide that the transfer is final when the receiver's
Reserve Bank credits the receiver's account or sends
advice of credit; at that point the transfer is irrevocable. . . .If the sender's Reserve Bank processes the
transfer when the sender did not have sufficient funds
in its account to cover the amount of the transfer, the
sender incurs a "daylight overdraft" in its account
with the Federal Reserve. The Federal Reserve bears
the risk of loss if the sender is unable to cover the
overdraft. The failure of an institution to cover overdrafts on Fedwire, therefore, would by itself have no
effect on other institutions, including the receiver; all
of the loss would be absorbed by the Federal Reserve.
Private wire networks (those other than Fedwire)
however, are typically net settlement networks; that
is, they operate by the transmission of payment messages throughout the day, with settlement of net
positions at the end of the day. The (time) gap between
the sending of payment messages and their settlement
gives rise to intra-day credit exposures among participants in private networks. These exposures are often
quite large. Should a participant be unwilling or unable
to settle a large net debit position (which could be due
to its funds transfer activities, to other activities, or
even to circumstances such as political developments,
that are beyond its control) its corresponding net
creditors could experience a sudden, rapid deterioration in their financial position. . . .The failure of one
participant to settle could affect not only other network participants, but also the full range of creditors
of network participants, including bank and nonbank
depositors. Sudden, large changes in the financial
conditions of both network participants and their
creditors could ultimately lead to serious disruptions
in money and other financial markets, as well as to the
disruption of trade and commercial activities.
330 Federal Reserve Bulletin • April 1984
The Board said that it is concerned with the
possibility of developments that could destabilize financial markets and noted that the Federal
Reserve has already taken a number of actions
designed to minimize risks associated with daylight overdrafts on Fedwire. These and a number
of other actions by the Federal Reserve and by
the private sector during the past several years,
aimed at identifying and minimizing risks of this
nature, are described in the notice requesting
public comment. The Board said that these developments show a widespread recognition of
risks that makes it appropriate for the Board to
solicit comment on possible methods for reducing wire transfer risks.
In issuing its request for comment, the Board
stated four policy goals that it seeks to achieve:
(1) containment of the effects of settlement failure; (2) reduction of the volume of intra-day
credit exposures; (3) control of remaining credit
risk; and (4) smooth operation of the payments
system.
The Board identified the following three methods of reducing risks as deserving the most
serious consideration and requested comment on
them by July 27, 1984.
Sender Net Debit Caps. This would be a limit
imposing a maximum ceiling or cap on the aggregate net debit position that an individual sending
financial institution could incur during the day.
(This cap could be applied to the sender's payments made over a particular network or a single
cap could be applied to all its transfer activities.)
Bilateral Net Credit Limits. Each receiving
financial institution would determine the maximum amount it is willing to receive from any
sender.
Finality of Payments. Under this arrangement,
the receiving financial institution would guarantee that it will promptly provide the beneficiaries
of funds transfers with irrevocable credit for
funds transfers.
The Board noted that each of these methods
could be used singly or in concert with others
and requested commenters to suggest optimum
combinations of risk reduction with respect to
each of these three possible risk-reduction meth
ods. The Board posed a series of questions in
connection with each of these methods for the
consideration and reaction of commenters. The
Board also requested comment on certain specific issues (such as how policies should apply to
Edge Act and Agreement corporations and to
U.S. branches and agencies of foreign banks),
and invited commenters to suggest alternative
methods for reducing risks and to comment on
any related topic.
The Board's policy statement is aimed at ensuring that institutions do not use Fedwire to
avoid Federal Reserve or private sector risk
reduction policies. The Board said that the most
likely vehicle for such avoidance would be the
use of periodic settlement between depository
institutions (probably at the end of the day)
through the exchange of Fedwire transfers.
The Board lifted a current moratorium on
private network access to Federal Reserve net
settlement facilities over the Fedwire, but established the following interim conditions for eligibility for such access: (1) all participants must set
bilateral net credit limits; (2) each network must
adopt a sender cap of 50 percent of capital for
each participant, applied to transfers sent over
that network; (3) each network must agree to
provide the Federal Reserve with transaction
data.
As the Board's requirements for access to net
settlement services by large-dollar transfer networks evolve over time, such policies would
apply to both existing networks and to those
given access under the interim requirements.
The statement sets forth measures to enforce
the Board's view that it is inappropriate to use
Fedwire to avoid Federal Reserve or other risk
reduction measures. The enforcement measures
include the following: (1) ex post monitoring of
Fedwire transactions to detect patterns indicating inappropriate use of the Federal Reserve
network; (2) counseling of institutions observed
using Fedwire to avoid risk-reduction measures;
(3) removal of institutions from direct, on-line,
access to Fedwire if they repeatedly abuse use of
the wire, or barring an offending institution from
use of the Federal Reserve network.
The Board said it anticipates cooperation from
financial institutions in achieving the objectives
of this policy.
Announcements
REVISION TO THE
PRIVATE SECTOR ADJUSTMENT
FACTOR
The Federal Reserve Board, on March 21, 1984,
approved revisions to its procedure for calculation of the private sector adjustment factor
(PSAF). The PSAF is an allowance for the taxes
that would have been paid and the return on
capital that would have been provided had the
Federal Reserve's priced services been furnished
by a private sector firm.
The revisions to the procedure used in calculating the PSAF for 1984 are listed below:
• Expansion of the sample used to calculate the
PSAF from the 12 to the 25 largest bank holding
companies. The bank holding company with the
highest and the lowest return on equity in the
sample will be excluded.
• Employment of the direct determination
methodology for establishing the asset base used
for computing the PSAF.
• Inclusion of the net effect of those assets
expected to be acquired and disposed of during
1984 in the priced services asset base.
• Recovery of the estimated sales taxes that
would have been paid on the purchases of certain
goods and services if the Reserve Banks were
subject to such taxes.
• Inclusion of those portions of expenses and
fixed assets of the Board of Governors related to
the development of priced services.
• Inclusion of an imputation for the assessment
of Federal Deposit Insurance Corporation insurance.
• Removal of the financing costs of net adjustment float from the asset base because such float
is not priced explicitly.
In addition, the tax rate used in the PSAF
calculation will be based on the ratio of current
federal, state, and local income taxes to total
taxable income of the bank holding companies
included in the sample.
FEES ON INTERNATIONAL
ADOPTION OF RULES
LOANS.-
The Federal Reserve Board, on April 5, 1984,
announced adoption of rules to establish uniform
requirements for accounting for fees on international loans. The rules implement a part of the
International Lending Supervision Act of 1983.
331
The other federal banking regulators—the
Federal Deposit Insurance Corporation and the
Office of the Comptroller of the Currency—have
issued similar regulations for institutions they
supervise as one facet of a joint program under
the act to strengthen the supervision and regulation of foreign lending by U.S. banking organizations. The Board's rules apply to state chartered
banks that are members of the Federal Reserve
System and to bank holding companies and Edge
and Agreement corporations engaged in banking.
Nonmember banks and national banks are covered by the rules of the other agencies.
The rules as adopted by the three agencies are
effective June 30, 1984, except for those dealing
with restructured international loans, which are
effective immediately.
The rules deal with the following: (1) section
906(a) of the act, which prohibits a banking
institution from charging any fee in connection
with a restructuring of an international loan that
exceeds the administrative cost of the restructuring; and (2) section 906(b), which provides that
the agencies shall establish rules for accounting
for other fees charged in connection with international loans to ensure that appropriate portions
are accrued into income over the life of the loan.
The Board adopted its rules in final form after
consideration of comment received on proposals
published in February. The final rules incorporate significant changes based on the comment
received. The principal provisions of the feeaccounting rules as adopted are the following:
1. The proposed rules did not differentiate
among types of international loans. In light of the
comment received and the legislative history of
the act, the final rules distinguish between restructured and all other international loans in
establishing accounting treatment for fees.
2. A "restructured international loan" is defined as a loan that meets the following criteria:
• The borrower cannot service an existing
loan and is a resident of a foreign country
experiencing a generalized inability to service
external debt due to lack of foreign exchange
in the country; and either
• The loan terms are amended to reduce
stated interest or extend the schedule of payments; or a new loan is made to or for the
benefit of the borrower enabling the borrower
to service or refinance the existing debt.
332 Federal Reserve Bulletin • April 1984
3. No banking institution may charge any fee
in connection with a restructured international
loan unless the portion of the fee exceeding
administrative costs is deferred and amortized
over the effective life of the loan.
4. Administrative costs are defined to include
only specifically identified direct costs. Supervisory and administrative expenses or other indirect expenses such as occupancy may not be
included.
5. In an international syndicated loan, a banking institution may not take into income immediately that portion of a syndication fee that represents an interest yield adjustment, but must
recognize the yield adjustment over the life of the
loan. For the managing banks of an international
syndicated loan, the final rule adopts a presumption that the yield adjustment portion of the fee is
at least equal to the largest fee received by a
nonmanaging loan participant on a pro rata basis.
6. The remainder of any fee received by a
managing bank in an international syndicated
loan may be taken into income immediately only
if the bank can identify and document the services for which it received the fee. Such documentation would at a minimum include the loan
agreement signed by all parties to the loan.
7. Commitment fees may be taken into income
over the commitment period. Commitment fees
must be recognized as income over the combined
commitment and loan period only when it is not
practicable to identify that portion of the fee
related to making the commitment as compared
with any portion related to lending funds.
DISCONTINUANCE
OF USE
OF BANKERS ACCEPTANCES
BY THE
FOMC
The Federal Open Market Committee on April 9,
1984, announced that as of July 2, 1984, it will
discontinue use of repurchase agreements on
bankers acceptances in open market operations
to manage reserves. The Federal Reserve Bank
of New York will continue to serve as agent in
buying and selling acceptances for the accounts
of foreign central banks.
In taking the action, the Committee noted that
the use of repurchase agreements on acceptances
for reserve management has declined in relative
importance in recent years. In 1983, about 7
percent of System repurchase agreements was
arranged against bankers acceptances compared
with an average of about 16 percent in the
previous three years.
The Committee's action also recognizes that
the market for bankers acceptances has reached
a scale of activity that does not require or justify
continuing Federal Reserve support. It continues
the disengagement from the market begun in
1977, when the Federal Reserve ceased buying
these private instruments on an outright basis.
Since then, the System's involvement has been
limited to the use of repurchase agreements on
acceptances for managing bank reserves as a
modest supplement to operations in Treasury
and federal agency securities.
Repurchase agreements are used by the Federal Reserve to meet short-term reserve needs. In
these transactions, the System purchases government securities, federal agency issues, or
bankers acceptances from dealers under an
agreement that requires the dealer to buy back
the securities after a fixed period, usually one to
seven days. Interest rates in these transactions
are determined by competitive bidding.
The market for bankers acceptances has continued to grow since 1977. The outstanding volume of acceptances at the end of 1983 was $78
billion compared with $23 billion at the end of
1976, and $642 million at the end of 1955 when
the Federal Reserve resumed operations in acceptances after a lapse of more than 20 years.
Bankers acceptances are negotiable instruments generally drawn to finance the export,
import, shipment, or storage of goods. They are
termed ""accepted" when a bank agrees to pay
the draft at maturity.
REGULATION
T:
AMENDMENT
The Federal Reserve Board, on March 12, 1984,
amended Regulation T (Credit by Brokers and
Dealers) to permit an options clearing agency to
accept margin securities to meet its deposit requirements. The new rule becomes effective
April 13, 1984.
The Board acted to facilitate regulatory coordination with the recent Securities and Exchange
Commission (SEC) approval of an options clearing corporation program. An options clearing
Announcements
corporation issues options contracts and guarantees their performance.
The Board's amendment, in concert with the
related action taken by the SEC, will generally
permit brokers and dealers to use the same
securities for the clearing deposit as they now
use at banks in connection with loans secured by
customer securities.
REVISED REGULATION
T:
DEFERMENT OF EFFECTIVE
DATE
The Federal Reserve Board, on March 26, 1984,
announced that it is deferring the effective date
for compliance with the completely revised Regulation T to June 30, 1984.
The Board said it deferred the effective date of
the completely revised regulation in response to
requests by broker-dealers encountering operational problems in conforming their computer
systems to the requirements of the revised regulation. The effective date had previously been
deferred from November 21, 1983, to March 31,
1984.
The revised regulation governing credit extended by brokers and dealers was adopted by
the Board on May 16, 1983.
REGULATION Z:
UPDATE
TO STAFF
COMMENTARY
The Federal Reserve Board, on April 3, 1984,
made public an update to the official staff commentary on Regulation Z (Truth in Lending).
This interpretation represents final action on
proposed changes in the commentary published
in November 1983, and takes account of comment received.
CHANGES
IN BOARD
STAFF
The Board of Governors has announced the
following changes in its official staff in the Division of Data Processing:
Neal H. Hillerman, Assistant Director, has
transferred from the Software Applications
Branch to the Data Applications Branch in the
Division of Data Processing.
333
Elizabeth B. Riggs has been promoted to Assistant Director of the Software Applications
Branch.
Ms. Riggs came to the Board as an Applications Analyst in October 1967, having worked
previously as a Computer Specialist at the National Bureau of Standards and as an AnalystProgrammer and Management Intern for the Department of the Navy. She assumed her present
position as Chief, International Finance-Business Conditions Section, in July 1981. Ms. Riggs
has B.A. and M.A. degrees in Economics from
the University of Michigan.
POLICY STATEMENT
MULTI-RATE
TIME
ON
DEPOSITS
The Federal Reserve Board, on March 23, 1984,
issued a policy statement concerning advertisements for time deposits that pay more than one
fixed rate over the term of the account.
At the same time, the Board published for
public comment a proposal to amend its Regulation Q (Interest on Deposits) that would incorporate the substance of the policy statement into
the regulation. The Board requested comment by
May 22, 1984, on alternatives to the policy
statement and on other advertising and disclosure issues that may warrant consideration under
Regulation Q.
The policy statement provides that advertisements for time deposits that pay more than one
fixed interest rate should set forth, in equal size
type, each rate of interest to be paid together
with the length of time each rate will be paid and
the average effective annual yield for the entire
term of the account. Further, advertisements for
deposits to be used in connection with Individual
Retirement Accounts (IRAs) should not refer to
such accounts as being tax-free or tax-exempt.
The Board's action was taken in response to
recent advertisements in which an initial high
rate of interest appears in large print while a
lower rate to be paid for the predominant part of
the account appears in much smaller type. The
Board expressed concern that such advertisements are potentially misleading and confusing
to depositors. The Board anticipates that the
Federal Deposit Insurance Corporation, the Federal Home Loan Bank Board, and the Comptrol-
334
Federal Reserve Bulletin • April 1984
ler of the Currency will issue similar policy
statements in the near future.
PROPOSED
ACTIONS
The Federal Reserve Board, on March 12, 1984,
published for public comment a proposal that
would automatically permit brokers and dealers
to lend on over-the-counter securities designated
for trading in the National Market System portion of NASDAQ (the National Association of
Securities Dealers Automated Quotation System) in conformance with the Board's margin
requirements. The proposal would amend the
Board's margin regulations (Regulations G, T,
and U). Comment is requested by April 27.
REPORT
ON PRICED
SERVICES
The Federal Reserve Board issued on April 9,
1984, a report summarizing developments in the
priced services areas for 1983 and providing
detailed financial results of providing those services. The report is available on request from
Publications Services, Board of Governors of the
Federal Reserve System, Washington, D.C.
20551.
A report on priced services is expected to be
issued annually, and a financial statement consisting of the Federal Reserve's priced service
balance sheet and income statement will be issued quarterly. The pro forma financial statements are designed to reflect standard accounting practices, taking into account the nature of
the Federal Reserve's activities and its unique
position in this field.
AVAILABILITY OF SUPPLEMENT
10
TO THE COMPLIANCE
HANDBOOK
Supplement 10 to the Board's Compliance Handbook is now available from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. It replaces pages in Part I that discuss Regulation Z
and pages in Part II that describe workpapers for
consumer compliance examinations. This supplement also contains new and revised workpapers. The new workpapers include a checklist
for disclosures in deposit contracts, a worksheet
for use in checking interest calculation and early
withdrawal penalties, an applicant profile
spreadsheet, and a worksheet for checking interest for savings and time deposit accounts. A list
of the pages that have been replaced by the new
supplement is also available from Publications
Services.
SYSTEM
MEMBERSHIP:
ADMISSION OF STATE
BANKS
The following banks were admitted to membership in the Federal Reserve System during the
period March 10 through April 10, 1984:
California
Anaheim
Pacific Inland Bank
Hollister
San Benito Bank
Illinois
Fairview Heights
Midamerica Bank and
Trust Company of Fairview Heights
Mascoutah
Midamerica Bank and Trust
Company
Pennsylvania
Claysburg
Central Bank
335
Record of Policy Actions of the
Federal Open Market Committee
MEETING
HELD ON JANUARY30-31,
1984
Domestic Policy Directive
The information reviewed at this meeting indicated that growth in real gross national product had
moderated to an annual rate of about AVI percent
in the fourth quarter of 1983, following expansion
at annual rates of about 93A percent and IV.2
percent in the second and third quarters respectively. Strength in personal consumption expenditures and further substantial expansion in business fixed investment in the fourth quarter were
major factors in the continued growth of economic activity. Price and wage increases generally remained moderate, though advances in some
indexes were somewhat larger than in the spring
and summer.
The index of industrial production increased V2
percent in December, following gains of about 3A
percent in October and November. Production of
consumer durable goods strengthened in December, as auto assemblies increased substantially,
and output of business equipment continued to
rise at a relatively rapid pace; production
changed little in most other major market groupings.
Nonfarm payroll employment advanced about
230,000 further in December, compared with an
average monthly increase of about 325,000 since
the first quarter. Employment gains continued to
be widespread across industry groupings and
were particularly marked in manufacturing and
service industries. The civilian unemployment
rate declined 0.2 percentage point further to 8.2
percent.
The nominal value of retail sales was reported
to have changed little in December, after large
gains in preceding months. Sales at furniture and
appliance stores and at automotive outlets remained strong, but were about offset by declines
at food and apparel stores and gasoline stations.
Although the reported data for retail sales in the
pre-holiday weeks proved weaker than had been
suggested by qualitative reports, real personal
consumption expenditures for the fourth quarter
as a whole rose at an annual rate of about 6V2
percent. One factor in that rise was a strengthening in automobile demand; sales of new domestic
autos rose to an annual rate of about 13A million
units in December, after averaging about 7 million units in other recent months. In the last 20
days of December, auto sales were at an annual
rate of nearly 8 million units, a selling pace that
was maintained through the first 20 days of
January.
Private housing starts declined about 5 percent
in December, but for the fourth quarter were at a
rate close to the 1.7 million units recorded for the
year as a whole. Sales of new and existing
homes, which had changed little in November,
rose about 28 percent and 8V2 percent respectively in December. The exceptional rise in sales of
new homes reflected a record volume of activity
in the South; sales in other regions held steady or
declined.
Recent data indicate very considerable
strength in business capital spending. Shipments
of nondefense capital goods increased markedly
in November and December. Real expenditures
on equipment rose at an exceptionally rapid pace
in the fourth quarter, when they registered one of
the largest quarterly increases in the postwar
period. Strong sales of heavy industrial machinery and communications equipment and a continued brisk pace of truck sales contributed to the
fourth-quarter gain.
The producer price index for finished goods
was unchanged on balance in November and
December. For the year 1983 the index increased
about V2 percent. The consumer price index rose
marginally less in November and December than
the 33/4 percent rate recorded for the year as a
whole. The rise in the index of average hourly
336
Federal Reserve Bulletin • April 1984
earnings was somewhat larger in the fourth quarter than in the preceding two quarters, but over
1983 the index rose a little less than 4 percent,
compared with 6 percent over 1982.
In foreign exchange markets the trade-weighted value of the dollar against major foreign
currencies had appreciated on balance by about 1
percent further since the latter part of December,
with most of the rise occurring in early January.
After mid-January the dollar receded from its
peak and then moved somewhat erratically, partly reflecting uncertainties among market participants regarding the outlook for economic activity
and interest rates in the United States. The U.S.
foreign trade deficit was higher in the fourth
quarter than in the third; a sharp rise in non-oil
imports accounted for the increase, as oil imports declined and exports changed little.
At its meeting on December 19-20, 1983, the
Federal Open Market Committee had decided
that in the short run, open market operations
should be directed toward maintaining at least
the existing degree of reserve restraint. The
members anticipated that such a policy would be
associated with growth of both M2 and M3 at
annual rates of around 8 percent from November
to March, and that growth of Ml at an annual
rate of around 6 percent over the four-month
period was likely to be consistent with the objectives for the broader aggregates. Expansion in
total domestic nonfinancial debt was expected to
be within the tentative range of 8 to 11 percent
established for the year 1984. It was agreed that,
depending on evidence about the continuing
strength of economic recovery and other factors
bearing on the business and inflation outlook,
somewhat greater restraint would be acceptable
should the aggregates expand more rapidly.
M2 and M3 expanded at annual rates of about
8 percent and 8V2 percent respectively in December and apparently continued to grow at moderate rates in January. 1 Expansion in Ml accelerated in January, after several months of reduced
1. The growth rates cited are based on revised data for the
monetary aggregates, reflecting new benchmarks and revised
seasonal factors and a minor change in the definition of
M3 to include term Eurodollars that U.S. residents hold in
Canada and the United Kingdom and at foreign branches of
U.S. banks elsewhere.
The monetary aggregates are defined as follows: Ml comprises demand deposits at commercial banks and thrift institutions, currency in circulation, travelers checks of nonbank
growth. By the fourth quarter of 1983, M2 was at
a level close to the midpoint of the Committee's
range for the year, M3 was around the upper
limit of its range, and Ml was near the middle of
the Committee's monitoring range for the second
half of the year.
The debt of domestic nonfinancial sectors expanded at an annual rate of about 10 percent in
both November and December. For the year
ending December 1983, debt grew 10'/2 percent,
well within the Committee's monitoring range of
8V2 percent to IIV2 percent. Growth in total
credit at U.S. commercial banks remained strong
in December, at an annual rate of about 13
percent, as additional lending activity offset a
reduced pace of securities acquisition. The increased loan demand reflected a further pickup
in all major categories of loans—business, consumer, and real estate. Businesses continued to
rely heavily on external financing as expenditures for inventories and fixed investment evidently began to outpace growth in internally
generated funds. In addition to the expansion in
borrowing from banks, commercial paper issued
by nonfinancial corporations rose sharply in December.
Nonborrowed reserves expanded at a modest
rate on average in December and January while
total reserves grew only slightly, as the average
level of adjustment plus seasonal borrowing declined somewhat. Borrowing temporarily bulged
to $1.3 billion in the reserve statement week that
encompassed the year-end statement date, but
averaged about $650 million during the other
weeks of the intermeeting interval.
The federal funds rate averaged close to 9'/2
percent over the intermeeting period, little
changed from the level prevailing just before the
issuers, negotiable order of withdrawal (NOW) and automatic
transfer service (ATS) accounts at banks and thrift institutions, and credit union share draft accounts. M2 contains Ml
and savings and small-denomination time deposits (including
money market deposit accounts (MMDAs)) at all depository
institutions, overnight repurchase agreements (RPs) at commercial banks, overnight Eurodollars held at foreign
branches of U.S. banks by U.S. residents other than banks,
and money market mutual fund shares other than those
restricted to institutions. M3 is M2 plus large-denomination
time deposits at all depository institutions, large-denomination term RPs at commercial banks and savings and loan
associations, institution-only money market mutual funds,
and term Eurodollars held by U.S. residents in Canada and
the United Kingdom and at foreign branches of U.S. banks
elsewhere.
Record of Policy Actions of the Federal Open Market Committee
December meeting. Most other market rates
moved somewhat lower, reflecting a perception
of a slowing in the economic expansion and an
abatement of seasonal pressures after the midDecember tax date. Yields on private short-term
debt and on corporate and municipal bonds declined about Vi to 5/s percentage point while
yields on most Treasury securities fell about XA
percentage point. Average rates on new commitments for fixed-rate conventional home mortgage loans also fell slightly over the intermeeting
period.
The staff projections presented at this meeting
continued to indicate that real GNP would grow
at a moderate pace in 1984. Consumption expenditures, new residential construction, and business inventory investment were projected to
expand at reduced rates in 1984. Business fixed
investment was expected to remain a source of
strength, and export demand was believed likely
to improve in conjunction with rising world economic activity and an expected drop in the
foreign exchange value of the dollar. A decline in
the unemployment rate was anticipated over the
projection period. Prices were expected to increase marginally more than in 1983.
In the Committee's discussion of the economic
situation and outlook, the members agreed that
growth in real GNP was likely to moderate in
1984 and that the rate of unemployment would
probably fall somewhat further by year-end. The
members referred to the performance of real
G N P in the fourth quarter and to other recent
data that suggested slower economic expansion.
On the other hand, it was observed that domestic
final demands were well maintained in the fourth
quarter and that economic activity would continue to be sustained by a stimulative fiscal
policy.
Most of the members expected prices to rise
somewhat faster on average in 1984 than in 1983,
reflecting growing cost pressures likely to be
associated with the cyclical rise in capacity utilization rates and declining unemployment and
special circumstances such as the impact of
adverse weather conditions on food prices. Concern was also expressed that a possible decline in
the foreign exchange value of the dollar could
also tend to have some inflationary impact on the
domestic economy; that impact, one member
commented, would be greater if it occurred at a
337
time when the economy had a reduced margin of
idle capacity.
For this meeting, the individual members of
the Committee had prepared specific projections
of economic activity, the rate of unemployment,
and average prices. For the period from the
fourth quarter of 1983 to the fourth quarter of
1984, the central tendency of the members' projections for growth in real GNP was in a range of
4 to 43A percent, while the range for all members
was 3V2 to 5 percent. The central tendency for
the GNP deflator was a range of 4l/> to 5 percent,
and for growth in nominal GNP it was a range of
9 to 10 percent. Projections for the rate of
unemployment in the fourth quarter of 1984
varied from 7lA to 8 percent, with a central
tendency of 7lA to 73A percent. These projections
were based on the Committee's objectives for
monetary and credit growth established at this
meeting, and on the assumption that any legislation to reduce substantially the deficit in the
federal budget would affect mainly the years
beyond 1984.
The members expressed a great deal of concern at this meeting about the risks that unprecedented deficits in the federal budget posed for the
sustainability of the economic expansion and the
stability of financial markets, domestic and international. Unless decisive action were taken to
reduce the deficits, federal financing needs
would continue to absorb a large part of available
net savings in the economy and curtail the availability of credit to private borrowers at a time in
the cyclical expansion when business credit demands were likely to be growing. The result
would be to increase pressures in financial markets with potentially adverse consequences for
interest-sensitive sectors of the economy such as
housing and long-term business investment.
Moreover, unprecedented net capital inflows
from abroad, which helped to finance domestic
credit needs, might well prove to be unsustainable and their eventual diminution or reversal
could have highly unsettling effects on domestic
credit markets. Concern was also expressed
about the risks to the domestic economy and
financial markets from other international conditions, such as the severe debt-servicing problems
of several developing countries.
At this meeting the Committee completed the
review, begun at the December meeting, of the
338
Federal Reserve Bulletin • April 1984
1984 growth ranges for the monetary and credit
aggregates that it had tentatively set in July
within the framework of the Full Employment
and Balanced Growth Act of 1978 (the Humphrey-Hawkins Act). Those tentative ranges included growth of 6V2 to 9Vi percent for M2 and 6
to 9 percent for M3 during the period from the
fourth quarter of 1983 to the fourth quarter of
1984. The Committee had indicated that growth
of Ml in a range of 4 to 8 percent over the same
period was likely to be consistent with the ranges
for the broader aggregates. The associated range
for total domestic nonfinancial debt was provisionally set at 8 to 11 percent for 1984.
In the Committee's discussion, nearly all the
members indicated that the ranges tentatively
established for 1984 remained acceptable, although some expressed a preference for slightly
lower ranges for one or more of the aggregates.
The members viewed the various ranges under
consideration as broadly consistent with the objectives of promoting sustainable growth in economic activity and encouraging progress toward
price stability. While all of the tentative ranges
for 1984 represented reductions from the 1983
ranges, slight further reductions would, in the
view of some members, help to underscore the
Committee's commitment to an anti-inflationary
policy. With regard to the range for M2, a small
additional reduction was also favored on technical grounds to make the resulting range for 1984
more consistent with the reduced ranges contemplated for the other monetary aggregates. The
1983 range for M2 had been set slightly on the
high side to allow for some residual shifting of
funds into that aggregate associated with the
introduction of money market deposit accounts;
those shifts had in fact occurred to about the
extent expected, but they now appeared to have
been virtually completed.
The ranges under consideration for 1984 assumed that the relationships between the monetary aggregates and nominal GNP—the velocity
of money—would be broadly consistent with
past trends and cyclical patterns following atypical behavior in 1982 and early 1983. A tendency
for velocity to rise as 1983 progressed suggested
a return toward earlier velocity patterns, but
several Committee members believed that more
experience was needed before that trend was
confirmed. Accordingly, they emphasized the
desirability of interpreting actual monetary
growth in the context of the emerging performance of the economy, the outlook for inflation,
and conditions in domestic and international
financial markets. The members also recognized
that recent regulatory and institutional developments might be reflected in some permanent
changes in the underlying trends of velocity,
particularly that of Ml. Those changes were not
yet knowable, given the limited experience under
the deregulated institutional structure.
In this situation most members agreed that for
the time being substantial weight should continue
to be placed on M2 and M3 in policy implementation, while growth in Ml should be evaluated in
light of the performance of the broader aggregates. The view was expressed that emphasis on
the broader aggregates appropriately recognized
the remaining uncertainties with respect to the
relationship between Ml and economic activity,
and it was also observed that the use of a
relatively wide range for Ml tended to work in
the same direction. However, one member urged
placing primary emphasis on Ml and also supported a narrower range for that aggregate, noting that the introduction of contemporaneous
reserve accounting provided an opportunity to
exert closer control over its short-run behavior.
A number of other members supported giving Ml
greater weight, if not primary emphasis, in light
of what they viewed as the emergence of a more
predictable pattern in its velocity, at least in
relation to that of M2 and of M3. Still other
members were not prepared to increase the policy role of M l , at least at this time. In the view of
these members, the prospective behavior of Ml
velocity remained subject to unusual uncertainties, in part because of the institutional changes
reflected in the increased role in Ml of NOW
(negotiable order of withdrawal account) and
Super NOW components, which bear interest
and serve both a transactions and a longer-term
savings function. These and related changes
made it difficult to anticipate the public's demand
for cash balances under varying circumstances
or the response of depository institutions in
altering terms on the newer components of Ml.
Nearly all the members agreed that the Committee should not increase the weight given to
the behavior of total domestic nonfinancial debt
but should continue to monitor the expansion in
Record of Policy Actions of the Federal Open Market Committee
such debt. However, one member favored giving
primary emphasis to this variable. Most of the
members endorsed a reduction in its range for
1984 in light of its historical relationship with
nominal GNP. The upper part of the tentative
range allowed for the possibility that its growth
might outpace that of nominal GNP in 1984 as
had often occurred in the second year of past
cyclical recoveries.
After further discussion most of the members
indicated that they favored or found acceptable
the reduced ranges for monetary and credit
growth that the Committee had tentatively approved in July for 1984, subject to a further
reduction of xh percentage point in the range for
M2. A few members would have preferred an
additional reduction of Vi percentage point in the
range for Ml. It was anticipated that actual
growth of the broader aggregates and total debt
of domestic nonfinancial sectors might fluctuate
in the upper part of their ranges. For Ml, growth
around the midpoint of its range appeared likely
on the assumption of relatively normal growth in
its velocity, but if velocity growth remained
weak compared with historical experience, Ml
expansion might appropriately be higher in the
range. The actual growth of M2 and M3 would be
affected by the aggressiveness with which depository institutions sought to influence their share
of total credit growth in an environment where
interest rate ceilings had largely been deregulated. Growth in the broader aggregates was also
thought likely to be affected by inflows of capital
from abroad. In particular, a portion of bank
credit expansion during 1984 might be funded
through nonresident placements in the Eurodollar market rather than directly in domestic deposits. Such expansion would not be reflected in
M2 or M3, and growth in those aggregates would
therefore tend to be somewhat restrained relative
to growth in bank credit and nominal GNP.
At the conclusion of its discussion the Committee adopted the ranges for monetary and
credit growth in 1984 that had been tentatively
approved in July, but with a reduction of Vi
percentage point in the range for M2 from the
tentative target. The behavior of all of the aggregates would be interpreted against the background of economic and financial developments,
including conditions in domestic credit and international markets. The Committee did not antici
339
pate any further regulatory or statutory changes
that would significantly affect monetary growth
rates in 1984. However, if some outstanding
proposals for change were enacted and took
effect in 1984, such as the payment of interest on
demand deposits and/or on reserve balances, the
Committee would have to reconsider its monetary growth ranges, especially for Ml.
The following paragraphs relating to the longer-run ranges were approved:
The Committee established growth ranges for the
broader aggregates of 6 to 9 percent for both M2 and
M3 for the period from the fourth quarter of 1983 to the
fourth quarter of 1984. The Committee also considered
that a range of 4 to 8 percent for Ml would be
appropriate for the same period, taking account of the
possibility that, in the light of the changed composition
of Ml, its relationship to GNP over time may be
shifting. Pending further experience, growth in that
aggregate will need to be interpreted in the light of the
growth in the other monetary aggregates, which for the
time being would continue to receive substantial
weight. The associated range for total domestic nonfinancial debt was set at 8 to 11 percent for the year
1984.
The Committee understood that policy implementation would require continuing appraisal of the relationships not only among the various measures of money
and credit but also between those aggregates and
nominal GNP, including evaluation of conditions in
domestic credit and foreign exchange markets.
Votes for this action: Messrs. Volcker, Solomon,
Gramley, Guffey, Keehn, Martin, Partee, Rice,
Roberts, Mrs. Teeters, and Mr. Wallich. Vote
against this action: Mr. Morris.
Mr. Morris dissented from this action because
he believed that regulatory changes and financial
innovations had made M l , M2, and M3 unsuitable targets for monetary policy since, in his
view, they were no longer predictably related to
nominal GNP. Accordingly, he preferrred to
focus on total domestic nonfinancial debt and
total liquid assets as intermediate targets for
monetary policy.
In the Committee's discussion of policy for the
short run, all of the members indicated that they
could support a policy directed toward maintaining essentially the existing degree of restraint on
reserve positions. Such a policy was thought
likely to be associated with short-run growth in
the monetary aggregates consistent with the
Committee's objectives for the year. With regard
340
Federal Reserve Bulletin • April 1984
to deviations in pressure on reserve positions
toward lesser or greater restraint in response to
incoming information, many members endorsed
a symmetrical approach that would relate any
deviation in either direction to the behavior of
the monetary aggregates and to emerging indications of the strength of the business expansion
and inflationary pressures in the economy. Other
members preferred somewhat more asymmetrical approaches. A few members would give more
weight to the potential need for easing of reserve
conditions should monetary growth prove weaker than anticipated, while being a bit more tolerant, up to a point, of some tendency for the
aggregates to strengthen. Other members believed the Committee should be prepared to
move promptly toward restraint if monetary
growth should accelerate, particularly in the context of a more ebullient economy. No member
anticipated developments that would call for a
substantial change in the degree of reserve pressure over the weeks ahead.
In their discussion the members took note of
uncertainties associated with the introduction of
contemporaneous reserve accounting on February 2. The members agreed that no substantial
changes would be made in open market operating
procedures at this time, but they anticipated the
passage of some time before depository institutions fully adjusted their reserve management to
the new accounting system. In that interval, for
instance, depository institutions might want to
hold more excess reserves than usual. The members agreed that such developments would need
to be accommodated by adjustments to reserve
paths.
At the conclusion of the Committee's discussion, the members indicated their acceptance of
a short-run policy directed at maintaining the
existing degree of restraint on reserve positions.
The members expected such a policy to be
associated with growth of both M2 and M3 at an
annual rate of around 8 percent for the period
from December to March and growth of M1 at an
annual rate of about 7 percent over the threemonth period. The rate of expansion in total
domestic nonfinancial debt was thought likely to
be within the Committee's monitoring range for
1984. The members agreed that lesser restraint
on reserve conditions would be acceptable in the
event of a significant shortfall in the growth of
the aggregates over the period ahead, while
somewhat greater restraint might be acceptable
in the context of more rapid growth in the
aggregates. In either case, the need for lesser or
greater restraint on reserves would also be evaluated against the background of developments
relating to the strength of the business expansion
and of inflationary pressures. It was agreed that
the intermeeting range for the federal funds rate,
which provides a mechanism for initiating consultation of the Committee, would remain at 6 to
10 percent.
The following directive, embodying the Committee's longer-run ranges and its short-run operating instructions, was issued to the Federal
Reserve Bank of New York:
The information reviewed at this meeting indicates
that the advance in real GNP moderated in the fourth
quarter, following rapid expansion in the spring and
summer. In December, industrial production and nonfarm payroll employment increased somewhat further
and the civilian unemployment rate declined 0.2 percentage point to 8.2 percent. Retail sales were reported to have changed little in December following sizable gains in preceding months. Housing starts
declined in December but for the fourth quarter as a
whole were close to their average for the year. Recent
data indicate substantial strength in business capital
spending. Producer prices were about unchanged on
average in November and December, and consumer
prices increased at about the moderate pace recorded
for the year as a whole. The index of average hourly
earnings rose somewhat faster in the fourth quarter
than in the previous quarter, but for the year 1983 the
index increased more slowly than in 1982.
The foreign exchange value of the dollar against a
trade-weighted average of major foreign currencies
has appreciated somewhat further since the latter part
of December, with most of the rise occurring in early
January. In the fourth quarter the U.S. foreign trade
deficit was markedly higher than in the third quarter,
reflecting a sharp rise in non-oil imports.
M2 and M3 have expanded at moderate rates over
the past two months. Expansion in Ml apparently
accelerated in January, following several months of
reduced growth. By the fourth quarter M2 was at a
level close to the midpoint of the Committee's range
for 1983, M3 was around the upper limit of its range,
and Ml was around the middle of the Committee's
monitoring range for the second half of the year. Most
interest rates have declined somewhat since the latter
part of December.
The Federal Open Market Committee seeks to foster monetary and financial conditions that will help to
reduce inflation further, promote growth in output on a
sustainable basis, and contribute to an improved pattern of international transactions. The Committee es-
Record of Policy Actions of the Federal Open Market Committee
tablished growth ranges for the broader aggregates of 6
to 9 percent for both M2 and M3 for the period from
the fourth quarter of 1983 to the fourth quarter of 1984.
The Committee also considered that a range of 4 to 8
percent for Ml would be appropriate for the same
period, taking account of the possibility that, in the
light of the changed composition of M l , its relationship to GNP over time may be shifting. Pending
further experience, growth in that aggregate will need
to be interpreted in the light of the growth in the other
monetary aggregates, which for the time being would
continue to receive substantial weight. The associated
range for total domestic nonfinancial debt was set at 8
to 11 percent for the year 1984.
The Committee understood that policy implementation would require continuing appraisal of the relationships not only among the various measures of money
and credit but also between those aggregates and
nominal GNP, including evaluation of conditions in
domestic credit and foreign exchange markets.
In the short run, the Committee seeks to maintain
the existing degree of pressure on bank reserve positions, anticipating that approach will be consistent
with growth of M2 and M3 each at annual rates of
about 8 percent and Ml at an annual rate of about 7
percent during the period from December to March.
Growth in nonfinancial debt is expected to be within
the range established for the year. Lesser restraint
would be acceptable in the context of a shortfall in
monetary and credit growth from current expectations, while somewhat greater restraint might be acceptable with more rapid expansion of the aggregates,
both viewed in the context of the strength of the
business expansion and inflationary pressures.
In implementing policy in the weeks ahead, the
Manager was instructed to take account of the uncertainties associated with the introduction of the system
of more contemporaneous reserve requirements, particularly including the possibility that depository institutions, during a transition period, may desire to hold
more excess reserves.
341
The Chairman may call for Committee consultation
if it appears to the Manager for Domestic Operations
that pursuit of the monetary objectives and related
reserve paths during the period before the next meeting is likely to be associated with a federal funds rate
persistently outside a range of 6 to 10 percent.
Votes for the short-run operational paragraphs:
Messrs. Volcker, Solomon, Gramley, Guffey,
Keehn, Martin, Morris, Partee, Rice, Roberts,
Mrs. Teeters, and Mr. Wallich. Votes against this
action: None.
On March 20, the Committee held a telephone
conference to review monetary and economic
developments following the January 30-31 meeting, including some increase in interest rates
over the period. It was noted that economic
activity in most sectors was rising with considerable momentum, helping to generate strong demands for credit. While measures of monetary
growth have remained broadly in line with objectives for the year, it was also felt that, in the light
of current and prospective developments, the
Committee would need to remain alert to the
possibility of excessive growth in credit and
money. Against that background, it was the
consensus of the Committee that, in the short
interval until the next scheduled meeting, pursuit
of the degree of reserve restraint and associated
reserve paths, consistent with the money and
credit objectives set at the January 30-31 meeting, should not be constrained by a federal funds
rate at or above the monitoring range set at that
meeting.
343
Legal Developments
AMENDMENTS
TO REGULATION
K
The Board of Governors has amended 12 CFR Part
211, Regulation K, to establish uniform requirements
for the accounting for fees associated with the restructuring of international lending arrangements and nonrefundable fees charged by banking institutions in
connection with other international loans. These regulations implement one aspect of the joint program of
the Federal banking agencies to strengthen the supervisory and regulatory framework relating to foreign
lending by U.S. banking institutions, incorporated in
section 906 of the International Lending Supervision
Act of 1983.
The effective date of the regulations is June 30, 1984,
except for subsection 211.45(a) which is effective
March 29, 1984. The Board has amended 12 CFR Part
211, Subpart D, as follows:
Part 211—International Banking
2. By adding a new section 211.45, to read as follows:
Section 211.45—Accounting for Fees on
International Loans
Operations
1. By redesignating paragraph 211.42(d) as 211.42(h)
and by adding new paragraphs 211.42(d), (e), (f) and
(g), to read as follows:
Section 211.42—Definitions
(d) "International loan" means a loan as defined in the
instructions to the "Report of Condition and Income"
for the respective banking institution (FFIEC Nos.
031, 032, 033 and 034) and made to a foreign government, or to an individual, a corporation, or other entity
not a citizen of, resident in, or organized or incorporated in the United States.
(e) "International syndicated loan" means a loan
characterized by the formation of a group of "managing" banking institutions and, in the usual case, assumption by them of underwriting commitments and
participation in the loan by other banking institutions.
(f) "Loan agreement" means the documents signed by
all of the parties to a loan, containing the amount,
terms and conditions of the loan, and the interest and
fees to be paid by the borrower.
(g) "Restructured international loan" means a loan
that meets the following criteria:
(1) The borrower is unable to service the existing
loan according to its terms and is a resident of a
foreign country in which there is a generalized
inability of public and private sector obligors to
meet their external debt obligations on a timely basis
because of a lack of, or restraints on the availability
of, needed foreign exchange in the country; and
(2) the terms of the existing loan are amended to
reduce stated interest or extend the schedule of
payments; or
(3) a new loan is made to, or for the benefit of, the
borrower, enabling the borrower to service or refinance the existing debt.
(a) Restrictions on fees for restructured
international
loans. N o banking institution shall charge any fee in
connection with a restructured international loan unless all fees exceeding the banking institution's administrative costs, as described in subsection (c)(2) of this
section, are deferred and recognized over the term of
the loan as an interest yield adjustment.
(b) Amortizing fees. Except as otherwise provided by
this section, fees received on international loans shall
be deferred and amortized over the term of the loan.
The interest method should be used during the loan
period to recognize the deferred fee revenue in relation
to the outstanding loan balance. If it is not practicable
to apply the interest method during the loan period,
the straight-line method shall be used.
(c) Accounting treatment of international loan or
syndication administrative
costs and
corresponding
fees.
(1) Administrative costs of originating, restructuring, or syndicating an international loan shall be
expensed as incurred. A portion of the fee income
equal to the banking institution's administrative
costs may be recognized as income in the same
period such costs are expensed.
(2) The administrative costs of originating, restructuring, or syndicating an international loan include
those costs which are specifically identified with
344
Federal Reserve Bulletin • April 1984
negotiating, processing and consummating the loan.
These costs include, but are not necessarily limited
to: legal fees; costs of preparing and processing loan
documents; and an allocable portion of salaries and
related benefits of employees engaged in the international lending function and, where applicable, the
syndication function. N o portion of supervisory and
administrative expenses or other indirect expenses
such as occupancy and other similar overhead costs
shall be included.
(d) Fees received by managing banking institutions in
an international syndicated loan. Fees received on
international syndicated loans representing an adjustment of the yield on the loan shall be recognized over
the loan period using the interest method. If the
interest yield portion of a fee received on an international syndicated loan by a managing banking institution is unstated or differs materially from the pro rata
portion of fees paid other participants in the syndication, an amount necessary for an interest yield adjustment shall be recognized. This amount shall at least be
equivalent (on a pro rata basis) to the largest fee
received by a loan participant in the syndication that is
not a managing banking institution. The remaining
portion of the syndication fee may be recognized as
income at the loan closing date to the extent that it is
identified and documented as compensation for services in arranging the loan. Such documentation shall
include the loan agreement. Otherwise, the fee shall be
deemed an adjustment of yield.
(e) Loan commitment fees.
(1) Fees which are based upon the unfunded portion
of a credit for the period until it is drawn and
represent compensation for a binding commitment
to provide funds or for rendering a service in issuing
the commitment shall be recognized as income over
the term of the commitment period using the
straight-line method of amortization. Such fees for
revolving credit arrangements, where the fees are
received periodically in arrears and are based on the
amount of the unused loan commitment, may be
recognized as income when received provided the
income result would not be materially different.
(2) If it is not practicable to separate the commitment portion from other components of the fee, the
entire fee shall be amortized over the term of the
combined commitment and expected loan period.
The straight-line method of amortization should be
used during the commitment period to recognize the
fee revenue. The interest method should be used
during the loan period to recognize the remaining fee
revenue in relation to the outstanding loan balance.
If the loan is funded before the end of the commitment period, any unamortized commitment fees
shall be recognized as revenue at that time.
(f) Agency fees. Fees paid to an agent banking institution for administrative services in an international
syndicated loan shall be recognized at the time of the
loan closing or as the service is performed, if later.
AMENDMENTS
TO REGULATION
T
The Board of Governors has amended 12 CFR Part
220—Credit By Brokers and Dealers to permit an
options clearing agency to accept margin securitites to
meet its deposit requirements. This action is being
taken to facilitate regulatory coordination with the
recent SEC approval of an Options Clearing Corporation program whereby the class of securities eligible
for the options clearing agency's deposit requirements
were expanded.
Effective April 13, 1984, Regulation T is amended by
removing paragraphs 220.14(b)(3) and (4), and adding a
new paragraph 3 as set forth below:
Part 220—Credit By Brokers and Dealers
Section 220.14—Clearance of Securities
(b)***
(3) The deposit consists of any margin security and
complies with the rules of the clearing agency which
have been approved by the SEC.
BANK HOLDING COMPANY, BANK MERGER, AND
BANK SERVICE CORPORATION
ORDERS
ISSUED
BY THE BOARD OF GOVERNORS
Orders Issued under Section 3 of Bank Holding
Company Act
Avenue Financial Corporation
Oak Park, Illinois
Order Approving Formation of Bank
Holding Company
Avenue Financial Corporation, Oak Park, Illinois, has
applied for the Board's approval under section 3(a)(1)
of the Bank Holding Company Act ("Act")(12 U.S.C.
§ 1842(a)(1)) to become a bank holding company by
acquiring Transworld Corporation, Lake Forest, Illinois ("Transworld"), and thereby acquiring Transworld's subsidiary banks, Dempster Plaza State Bank,
Niles, Illinois ("Dempster Bank"), and Northlake
Bank, Northlake, Illinois ("Northlake Bank"). Applicant also proposes to acquire Avenue Bank of Elk
Legal Developments
Grove, Elk Grove Village, Illinois ("Elk Grove
Bank").
Notice of the application, affording an opportunity
for interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant is a nonoperating corporation formed to
acquire Transworld and Avenue Bank. Upon consummation of this proposal, Applicant would control 0.05
percent of total commercial bank deposits in Illinois,
and thus consummation of the proposal would not
have a significant effect on the concentration of banking resources in the state. Principals of Applicant are
affiliated with First National Bank of Deerfield, Deerfield, Illinois ("Deerfield Bank"), and with Avenue
Bank and Trust Company, Oak Park, Illinois ("Oak
Park Bank").
Dempster Bank, Northlake Bank, Elk Grove Bank,
Deerfield Bank, and Oak Park Bank all compete in the
Chicago banking market.1 Dempster Bank controls
total deposits of $24.6 million, representing 0.04 percent of total deposits in commercial banks in the
market.2 Northlake Bank controls total deposits of
$13.6 million, or 0.02 percent of market deposits, and
Elk Grove Bank controls total deposits of $10.1 million, which also represents approximately 0.02 percent
of market deposits. Thus, upon consummation of this
proposal, Applicant will control total deposits of $48.3
million, representing 0.08 of market deposits. Deerfield Bank controls total deposits of $48.5 million, or
0.08 percent of market deposits, and Oak Park Bank
2>41
The financial and managerial resources and future
prospects of the companies and banks involved in this
proposal are generally satisfactory, and considerations
relating to banking factors under the Act are consistent
with approval of Applicant's proposal. Applicant has
proposed no new services for any of the banks involved in its proposal. However, there is no evidence
that the banking needs of the community to be served
are not being met. Accordingly, considerations relating to the convenience and needs of the communities
to be served are consistent with approval of Applicant's proposal.
Based on the foregoing, and other facts of record, it
is the Board's judgment that consummation of this
transaction is consistent with the public interest and
that the application should be approved. On the basis
of the record, the application is approved for the
reasons summarized above. The transaction shall not
be consummated before the thirtieth calendar day
following the effective date of this Order, or later than
three months following the effective date of this Order,
unless such latter period is extended for good cause by
the Board or by the Federal Reserve Bank of Chicago,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
March 16, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Teeters, Rice, and Gramley. Absent and not
voting: Governor Wallich.
JAMES MCAFEE,
[SEAL]
Associate
Secretary
of the Board
c o n t r o l s total d e p o s i t s o f $ 1 1 9 . 2 million, or 0 . 2 0 per-
cent of market deposits. The five banks combined
control total deposits of $216 million, representing 0.36
percent of total deposits in commercial banks in the
market.
The Chicago banking market is not highly concentrated and there are numerous competitors in the
market significantly larger than the combination of
these five banks. In view of the small relative and
absolute size of the banks involved and other facts of
record, the Board finds that consummation of this
proposal would not have a significant effect on existing
competition, nor would it adversely affect the concentration of banking resources in any relevant area.
Accordingly, considerations relating to competitive
factors under the Act are consistent with approval of
Applicant's proposal.
1. The Chicago banking market is defined as Cook, Lake, and
DuPage Counties, Illinois.
2. Banking data are as of June 30, 1983.
Bankers' Bancorporation of Wisconsin, Inc.
Madison, Wisconsin
Order Approving Formation of a
Bank Holding Company
Bankers' Bancorporation of Wisconsin, Inc., Madison, Wisconsin, has applied for the Board's approval
under section 3(a)(1) of the Bank Holding Company
Act ("Act") (12 U.S.C. § 1842(a)(1)) to become a bank
holding company by acquiring all of the voting shares
of Wisconsin Independent Bank, Madison, Wisconsin
("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments and views, has
been given in accordance with section 3(b) of the Act.
The time for filing comments and views has expired,
and the Board has considered the application and all
comments received in light of the factors set forth in
section 3(c) of the Act (12 U.S.C. § 1842(c)).
346
Federal Reserve Bulletin • April 1984
Applicant is a nonoperating corporation organized
for the purpose of acquiring Bank, with total deposits
of $4 million.1 Bank, a Wisconsin-chartered "bankers'
bank," is owned by 122 Wisconsin state and national
banks and may only engage in providing banking and
banking-related services to other banks. 2
Bank does not do business with the general public;
instead, it operates as a correspondent bank for 122
Wisconsin community banks, providing services including cash letter clearing, loan participations, shortterm investment services, and coin and currency operations. Accordingly, Bank only competes with other
banks that offer correspondent banking services in
Wisconsin. Based on total deposits in commercial
banks in the state, Bank is the smallest of 12 Wisconsin banks that offer correspondent banking services in
the state. 3 Further, Applicant's proposal is essentially
a corporate reorganization. The Board has determined
that consummation of this proposal will have no
significant effect on competition, either existing or
potential, and will not affect the concentration of
banking resources in Wisconsin.
The financial and managerial resources of Applicant
and Bank are considered generally satisfactory, in
view of the nature of the activities of a bankers' bank,
and the prospects of each appear favorable. Although
Applicant has proposed no new correspondent activities for Bank upon consummation of this proposal,
acquisition of Bank by Applicant would allow greater
flexibility in providing the services that Bank's competitors deliver through their nonbank affiliates. Moreover, a bank holding company structure would expand
the sources of capital available to Bank and any future
nonbank affiliates, and could make Bank more competitive with other banks offering correspondent banking services in Wisconsin. Accordingly, factors relating to the convenience and needs of the community to
be served are consistent with approval of this proposal.
Based on the foregoing and other facts of record, the
Board has determined that this application should be
and hereby is approved. This transaction shall not be
1. Banking data are as of June 30, 1983.
2. Wisconsin law allows the establishment of "bankers' banks,"
provided all of their stock is owned by two or more state or national
banks whose home offices are located in Wisconsin or by a bank
holding company owned by two or more state or national banks whose
home offices are located in Wisconsin. Wis. Stat. §§ 221.04(4g) and
221.57. "Bankers' banks" have all the powers of other Wisconsin
state banks, except that their activities are restricted solely to
providing banking and banking-related services to other banks. Wis.
Stat. § 221.57. "Bankers' banks" are defined in section 2(c) of the Act
as "banks" for the purposes of the Act. 12 U.S.C. § 1841(c).
3. In addition, several money center banks located in New York,
Chicago, and Minneapolis offer correspondent banking services to
Wisconsin banks.
consummated before the thirtieth calendar day following the effective date of this Order or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
the Federal Reserve Bank of Chicago, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
March 8, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, and Gramley. Absent and not voting:
Governors Martin and Teeters.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary
of the Board
Concord Bancshares, Inc.
Overland Park, Kansas
Order Approving
Company
Formation of a Bank Holding
Concord Bancshares, Inc., Overland Park, Kansas,
has applied for the Board's approval under section
3(a)(1) of the Bank Holding Company Act of 1956, as
amended ("Act")(12 U.S.C. § 1842(a)(1)), to become a
bank holding company by acquiring all of the voting
shares of College Boulevard National Bank, Overland
Park, Kansas.
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant, a nonoperating company, was organized
for the purpose of becoming a bank holding company
by acquiring Bank. Bank, with deposits of $4.5 million, is one of the smallest banks in Kansas, holding
0.03 percent of the total deposits in commercial banks
in the state. 1 Bank is the smallest of 134 banks in the
Kansas City banking market 2 and controls less than
0.01 percent of the total deposits in commercial banks
in that market. One of Applicant's principals is also
affiliated with two other banking organizations that
operate in the market. On a combined basis, the three
organizations control 0.4 percent of the total deposits
in commercial banks in the market. In light of these
facts, the Board concludes that consummation of this
1. Banking data are as of December 31, 1982.
2. The Kansas City banking market is defined as the Kansas City,
Missouri, Ranally Metro Area.
Legal Developments
transaction would not result in any significant adverse
effects upon competition or increase the concentration
of banking resources in any relevant area.
The financial and managerial resources of Applicant
and Bank are considered satisfactory and their prospects appear favorable. Although Applicant will incur
some debt in connection with the proposed acquisition, it appears that Applicant will have sufficient
resources to service the debt without adversely affecting Bank. Considerations relating to the convenience
and needs of the community to be served are also
consistent with approval.
On the basis of these and other facts of record, it is
the Board's judgment that the application should be,
and hereby is, approved for the reasons summarized
above. The transaction shall not be consummated
before the thirtieth calendar day following the effective
date of this Order, or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board, or by the
Federal Reserve Bank of Kansas City pursuant to
delegated authority.
By order of the Board of Governors, effective
March 8, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, and Gramley. Absent and not voting:
Governors Martin and Teeters.
JAMES MCAFEE,
[SEAL]
Associate
Secretary
of the Board
Dacotah Bank Holding Company
Aberdeen, South Dakota
Order Denying Acquisition
of Bank
Dacotah Bank Holding Company, Aberdeen, South
Dakota, a bank holding company within the meaning
of the Bank Holding Company Act ("Act") (12 U.S.C.
§ 1841 et seq.), has applied for the Board's approval
under section 3(a)(3) of the Act (12 U.S.C.
§ 1842(a)(3)) to acquire 100 percent of the voting
shares of The First National Bank of Selby, Selby,
South Dakota ("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments and views, has
been given in accordance with section 3(b) of the Act.
The time for filing comments and views has expired,
and the Board has considered the application and all
comments received in light of the factors set forth in
section 3(c) of the Act (12 U.S.C. § 1842(c)).
Applicant, the fourth largest banking organization in
South Dakota, controls seven banks with total depos
2>41
its of $186.8 million, representing 3.5 percent of the
total deposits in commercial banks in the state. 1 Upon
acquisition of Bank, with deposits of $18.6 million,
Applicant's share of deposits in commercial banks in
South Dakota would increase by only 0.4 percent.
Accordingly, consummation of this proposal would
not have an appreciable effect upon the concentration
of commercial banking resources in South Dakota.
Bank is located in Walworth County, South Dakota.
Applicant currently has one banking subsidiary located in Walworth County, Citizens Bank of Mobridge,
Mobridge, South Dakota ("Mobridge Bank"). Walworth County and the counties surrounding it are
sparsely populated, rural areas in the north-central
part of South Dakota. The primary industry in the
counties is agriculture.
Applicant contends that Walworth County should
be divided into two separate banking markets, with the
eastern three-fourths of the county, where Bank is
located, plus the adjoining southern one-half of Campbell County, less the western one-fourth of that county, regarded as the relevant geographic banking market for the purposes of analyzing the competitive
effects of the proposed transaction. Applicant's proposed market would exclude the northwestern onefourth of Walworth County, including the town of
Mobridge where Mobridge Bank is located, and the
southeastern one-fifth of the county. Bank would be
the only commercial bank located in this geographic
market proposed by Applicant. Applicant bases its
contention on the lack of significant primary service
area overlap between Bank and Mobridge Bank, and
the absence of characteristics that encourage commercial interaction between the towns of Mobridge and
Selby.
Alternatively, Applicant asserts that, if the Board
were to find that Bank and Mobridge Bank were in the
same banking market, then the relevant banking market would have to be expanded to include the city of
Aberdeen, South Dakota,—80 miles from Selby—and
all of the five intervening rural counties of Walworth,
Potter, Campbell, McPherson, and Edmunds, as well
as the western one-half of Brown County, South
Dakota, where Aberdeen is located. Applicant bases
its contention on the reasoning that Selby residents
could turn to banks as far away as Aberdeen for
banking services because there is some evidence that
Selby and Mobridge residents occasionally travel to
Aberdeen, primarily for the purpose of shopping.
The Board has indicated that the relevant geographic banking market must reflect commercial and bank-
1. All state banking data are as of March 31, 1983.
348
Federal Reserve Bulletin • April 1984
ing realities and be economically significant.2 In situations such as presented by this application, the Board
has stated that the relevant geographic market consists
of the area in which the banks involved offer their
services and to which their customers can practicably
turn for alternatives. 3 As the Supreme Court has
stated, "the proper question is not where the parties to
the merger do business or even where they compete,
but where, within the area of competitive overlap, the
effect of the merger on competition will be direct and
immediate." United States v. Philadelphia
National
Bank, 374 U.S. 321, 357 (1963). This area "must be
charted by careful selection of the market area in
which the seller operates and to which the purchaser
can practicably turn for supplies." Id. at 359.
Applying these principles to the facts of this case,
the Board concludes that the relevant geographic
market within which to evaluate the competitive effects of this proposal consists of Walworth and Campbell Counties, South Dakota, plus the northern onehalf of Potter County, the eastern three-fourths of
Dewey County, and the eastern one-half of Corson
County, all in South Dakota.
This market delineation is supported in part by a
study done in 1966 by South Dakota State University
which identified Mobridge as a trade center with a
trade area that included the relevant banking market.4
In addition, the facts show that Mobridge and Selby
are located 21 miles apart with no intervening geographic barriers, and that Mobridge is the primary
population center for Walworth County and the surrounding areas included in the relevant geographic
market.5 The closest towns of at least similar size in
South Dakota with at least comparable commercial
alternatives to Mobridge are Pierre and Aberdeen,
which were identified in the South Dakota State University study as the nearest alternative trade areas.
Pierre is approximately 109 road miles from Mobridge
and 88 road miles from Selby, while Aberdeen is about
101 road miles from Mobridge and 80 road miles from
Selby.
2. St.
Joseph
Valley
( 1 9 8 2 ) ; Pennbancorp,
3. E . g . , Wyoming
Bank,
6 8 FEDERAL RESERVE B U L L E T I N 6 7 3
6 9 F E D E R A L RESERVE B U L L E T I N 5 4 8 ( 1 9 8 3 ) .
Bancorporation,
6 8 FEDERAL RESERVE B U L L E -
TIN 313 (1982), afFd sub nom., Wyoming Bancorporation v. Board of
Governors, No. 82-1634, slip op. (10th Cir. Mar. 12, 1984). Independent Bank Corporation, 67 FEDERAL RESERVE BULLETIN 436 (1981).
4. Some Guidelines for Organizing Economic Development
Efforts
in South Dakota Along Trade Area Lines, by John T. Stone, Cooperative Extension Service, South Dakota State University, Extension
Circular 651 (1966). The Mobridge trade area was larger than the
relevant banking market, as defined by the Board. However, the
localized nature of banking services suggests that the radius of a
banking market should be smaller than that of a trade area.
5. Mobridge has a population of 4,174. Selby has a population of
884.
The towns of Mobridge and Selby are connected by
U.S. Route 12, a direct and well-maintained highway
which is the main east-west route in northern South
Dakota. South Dakota Department of Transportation
statistics show that the average daily traffic count on
the road between Selby and Mobridge is approximately 1,635 vehicles, but only 910 vehicles west of Mobridge and 1,425 east of Selby. 6
A survey commissioned by Applicant and conducted in July 1983 showed that over 50 percent of the
Mobridge respondents had made at least one visit to
Selby in the past 12 months, and all of the Selby
respondents had visited Mobridge at least once during
that period.
In addition, each town has characteristics that encourage commercial interaction between them. Mobridge offers medical services that Selby lacks, including a hospital, medical clinics, doctors and
optometrists. Mobridge, which is situated on the Missouri River, offers recreational opportunities, such as
fishing, boating, and other sports associated with the
Missouri River and Lake Oahe to the south of Mobridge. Mobridge has certain commercial facilities that
are not available in Selby. Selby is the Walworth
County seat and, therefore, is the center for government facilities in the county. A number of county
offices, on the other hand, are located in Mobridge,
including the State's Attorney's office, the circuit
judge's office, and a courtroom. 7 Selby has the only
Farmers Home Administration office in Walworth
County, while Mobridge has the county's only Federal
Land Bank office. Finally, Walworth County's only
radio station is located in Mobridge.
A study of checks and other cash items conducted
by Applicant at both Bank and Mobridge Bank during
a nine-day period in June 1983 shows that an average
of 125.4 cash items per day flow from Bank to both the
Mobridge Bank and the only other commercial bank
located in Mobridge, Norwest Bank-Mobridge. The
study also reveals that an average of 77.4 cash items
per day flow from Mobridge Bank alone to Bank.
Assuming that Bank receives cash items from Norwest
Bank-Mobridge in proportion to that bank's deposits,
Bank would have received an additional 95.2 cash
items per day from Norwest Bank-Mobridge, or a total
average of 172.6 cash items per day from both Mobridge banks. In view of the fact that there are only
6. Applicant disputed the reliability of the traffic count, primarily
on the basis that U.S. Route 84 joins U.S. Route 12 from the north
about three miles northwest of Selby. Although the Board recognizes
that exact data for traffic flow between Mobridge and Selby cannot be
obtained, the traffic counts available indicate that a substantial
amount of traffic passes between Mobridge and Selby on a daily basis.
7. The record indicates that most sessions of the circuit court are
held in Mobridge.
Legal Developments
about 884 residents of Selby, this activity indicates a
substantial reliance on Mobridge by residents of Selby
for goods and services. The data also indicate a
smaller, but significant, reliance on Selby by Mobridge
residents for goods and services.
The Board has also considered the areas from which
Bank and Mobridge Bank derive their business. Applicant has indicated that Bank derives 3.0 percent of its
deposits and 2.1 percent of its loans from Mobridge
Bank's primary service area, while Mobridge Bank
derives 8.8 percent of its deposits and 3.4 percent of its
loans from Selby Bank's primary service area. These
statistics demonstrate that some customers in each
town have found it practical to do banking business in
the other town and that there is existing competition
between the two banks. 8 This evidence also indicates
that neither Bank nor Mobridge Bank has regarded the
other town as being so far removed from its major
service area as to warrant a refusal to extend credit to
borrowers there. 9
Applicant argues that neither Bank nor Mobridge
Bank solicits business from the other's service area, as
evidenced by the fact that neither bank advertises in
the newspaper outside of the town where it is located.
In addition, Applicant asserts that, because the percentage of the total circulation that the Selby and
Mobridge weekly newspapers each have in the other
town is less than five percent, advertising in one paper
does not reach a significant portion of households in
the other town. While the Board believes that these
data show that a relatively insignificant proportion of
Mobridge residents read the Selby newspaper, they
reveal that a substantial percentage of Selby residents
read the Mobridge paper. Although Applicant correctly points out that the percentage of the Mobridge
newspaper's total circulation in Selby is less than five
percent, the percentage of Selby residents in terms of
population that read the Mobridge newspaper is at
least 23.4 percent. This number, in itself not insignificant, would be much higher if taken as a proportion of
Selby households. Consequently, the Board concludes
that advertising in the Mobridge paper reaches a
significant portion of Selby households. Finally, it
appears that the radio station broadcasting from Mobridge is received in Selby, so that advertising on the
Mobridge radio station reaches residents of both
towns.
8. It is likely that Norwest Bank-Mobridge and the only other
financial institution in Mobridge, a thrift institution, also obtain a
significant percentage of their deposits from Selby Bank's service
area.
9. Applicant itself has previously indicated that Mobridge Bank's
"local community" for purposes of the Community Reinvestment Act
includes the town of Selby. Delineation of a bank's "local community" for this purpose involves many of the same considerations
involved in delineating a geographic market.
2>41
Applicant contends that the differences in interest
rates charged on loans by Bank and Mobridge Bank
over the 12 months of 1983 indicate a lack of competition between the two banks. Numerous other factors
also affect interest rates, however, such as the maturity of a loan, the level of monthly or other payments,
the amount of collateral required, and the level of any
compensating balances required. Applicant's contention that the relative interest rates prove a lack of
competition between Bank and Mobridge Bank is
inconclusive and not supported by the evidence.
In the Board's judgment, based on the relative
proximity of Selby and Mobridge, the ready accessibility of each to the other, their relative positions as the
economic, recreational, trade and governmental centers of the Walworth County region, the substantial
distance to other comparable commercial centers, and
the interaction between the two towns, each town
offers to residents of the other an available and practical alternative for a variety of services, including
banking services. These facts contradict Applicant's
thesis that Selby and Mobridge are located in two
separate banking markets, each of which is sufficiently
isolated from competitive forces in the other such that
residents of one would not turn to the other nearby
community for banking services. In the Board's view,
Applicant's proposed market definition disregards the
economic reality and market forces presently existing
between the towns of Selby and Mobridge and
throughout the Walworth County, South Dakota, area.
Based on these and all of the other facts of record,
the Board concludes that the towns of Selby and
Mobridge are part of the same relevant geographic
market and that this area includes Walworth and
Campbell Counties, South Dakota, the northern onehalf of Potter County, the eastern three-fourths of
Dewey County, and the eastern one-half of Corson
County, all in South Dakota.
With respect to Applicant's alternative contention
that, if the Board finds that Bank and Mobridge Bank
are in the same banking market, then the market
should be expanded to include the city of Aberdeen,
South Dakota, and all or part of six intervening rural
counties, the Board believes that Applicant's alternative expanded market definition is unrealistically large
and not supported by substantial evidence. The Supreme Court has indicated that banking is a localized
activity and that customers "find it impractical to
conduct their banking business at a distance." United
States v. Philadelphia National Bank, 374 U.S. 321, at
357-58 (1963).
While Bank, which is 21 miles from Mobridge,
represents a "practicable alternative" for Mobridge
Bank customers, the Board concludes that Aberdeen
banks, which are about 101 miles from Mobridge and
350
Federal Reserve Bulletin • April 1984
80 miles from Selby, do not represent practicable
banking alternatives for Mobridge and Selby residents.
Applicant submitted the results of a telephone survey
which indicated that the 15 Selby respondents traveled
as frequently to Aberdeen as to Mobridge during a
one-year period. However, the Board does not believe
that this fact indicates that Aberdeen and Mobridge
are in the same geographic banking market. While
occasional travel over distances as great as 80 to 100
miles for shopping trips may be reasonable in a rural,
sparsely-populated area, the Board believes that it is
unlikely that people would maintain their primary
banking relationships at institutions located at distances of that magnitude.
There are a total of seven banking organizations in
the geographic banking market delineated by the
Board; these provide customers of Bank and Mobridge
Bank with more convenient and accessible alternatives than the banks in Aberdeen. The Board also
notes that available evidence indicates that Aberdeen
and Mobridge are two separate trade centers.
Finally, Applicant submitted evidence showing that
banks in Aberdeen have some loan customers in the
geographic banking market defined by the Board.
However, Applicant provided no relevant deposit
data, and the number of loans and loan customers are
too few to substantiate the existence of meaningful
competition. 10
Accordingly, the Board concludes that the relevant
geographic market within which to evaluate the competitive effects of this proposal consists of Walworth
and Campbell Counties, South Dakota, the northern
one-half of Potter County, the eastern three-fourths of
Dewey County, and the eastern one-half of" Corson
County, all in South Dakota.
Within the relevant banking market, Applicant is the
second largest of seven banking organizations, with
total deposits of about $29.5 million, which represents
21.5 percent of the total deposits in commercial banks
in the market.11 Bank is the fourth largest banking
organization in the market, controlling 12.2 percent of
the total deposits in commercial banks in the market.
As a result of the proposed acquisition of Bank,
Applicant would become the largest commercial banking organization in the market, and its share of market
deposits would increase from 21.5 percent to 33.7
percent. The share of deposits held by the four largest
10. The Board notes that Applicant's large alternative market
definition excludes three of Applicant's banking subsidiaries that are
located within a radius of about 40 miles from Aberdeen, even though
it includes Mobridge 101 miles to the west.
11. All market data are as of June 30, 1982.
commercial banking organizations in the market would
increase from 73.0 percent to 84.3 percent, and the
Herfindahl-Hirschman Index ("HHI") would increase by 526 points to 2251. Thus, the relevant
banking market would become highly concentrated
upon consummation of this proposal, and would be
subject to challenge under the United States Department of Justice Merger Guidelines (June 14, 1982).12
In its evaluation in previous cases of the competitive
effects of a proposal, the Board has indicated that
thrift institutions have become, or at least have the
potential to become, major competitors of commercial
banks. 13 In this case, only one thrift institution competes in the relevant banking market. It is the smallest
of all the financial institutions in the market and
controls deposits of $9.2 million, which represents
only 6.3 percent 14 of the total deposits in commercial
banks and thrift institutions in the market. 15
Based upon the foregoing and all the facts of record,
the Board concludes that the effect of consummation
of this proposal may be substantially to lessen competition in the relevant banking market, 16 and that the
inclusion of the single thrift institution as a competitor
in the market does not significantly mitigate the anticompetitive effects of the proposal.
The financial and managerial resources of Applicant, its subsidiaries and Bank are generally satisfactory and consistent with approval. The record of this
application indicates that Applicant would increase
Bank's lending limit, expand the types of loans offered
by Bank, and offer Bank's customers various trust
services not currently available through Bank. In the
Board's view, these considerations do not outweigh
the substantially adverse competitive effects of this
proposal.
12. Under these Merger Guidelines, a market in which the postmerger HHI is above 1800 is considered highly concentrated. In such
markets, the Justice Department is likely to challenge a merger that
produces an increase in the HHI of 100 points or more, as in this case.
13. Comerica, Inc. (Bank of Commonwealth), 69 FEDERAL RESERVE BULLETIN 797 (1983); General Bancshares Corporation, 69
FEDERAL RESERVE BULLETIN 802 (1983); First Tennessee
National
Corporation,
6 9 FEDERAL RESERVE B U L L E T I N 2 9 8 ( 1 9 8 3 ) .
14. Thrift data are as of September 30, 1982.
15. If the deposits of the one thrift institution were taken into
account in computing market shares, Applicant and Bank's combined
market share would be 31.9 percent, the HHI would increase 461
points to 2016, and the share of deposits held by the four largest
financial institutions in the market would be 79.0 percent.
16. The Board notes that the Justice Department has analyzed the
proposed transaction and, using Walworth County, South Dakota, as
the relevant banking market, has determined that the proposed
transaction would have a significantly adverse effect on competition.
Under the Justice Department geographic market definition, Applicant and Bank's combined market share would be 56.1 percent, and
the HHI would increase 1455 points to 5074. While the Board
disagrees with the Justice Department's definition of the relevant
banking market, the Board agrees with the conclusion that the
proposal would have a significantly adverse effect on competition.
Legal Developments 2>41
Based on the foregoing and other considerations
reflected in the record, it is the Board's judgment that
the proposed acquisition is not in the public interest
and that the application should be, and hereby is,
denied.
By order of the Board of Governors, effective
March 23, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich and Partee. Voting against this action: Governors
Martin and Rice. Absent and not voting: Governors Teeters
and Gramley.
in the market. In our view, permitting acquisitions and
mergers among smaller competitors in markets dominated by large organizations is essential in order to
maintain a competitive environment in such markets.
Accordingly, we dissent from the Board's decision
to deny this application.
March 23, 1984
First Chicago Corporation
Chicago, Illinois
JAMES M C A F E E ,
ISEAL]
Dissenting Statement
and Governor Rice
Associate
Secretary of the Board
of Vice Chairman
Martin
We agree with the Board's definition of the relevant
banking market in this case. However, we would
approve this application because we believe that,
notwithstanding the substantial market shares that
would result from consummation of this proposal, the
anticompetitive effects of the transaction are substantially mitigated by the presence in the relevant banking
market of the largest commercial banking organization
operating in South Dakota, Norwest Bancorporation
("Norwest"), which commands total assets of nearly
$18 billion. Norwest controls the largest commercial
bank in the market, Norwest Bank-Mobridge, with
$36.3 million in deposits, representing 26.4 percent of
the total deposits in commercial banks in the market.
In our view, this bank's competitive influence in the
relevant market is much greater than its market share
would suggest because of its affiliation with Norwest.
Specifically, Norwest can and does provide to all its
subsidiary banks, including Norwest Bank-Mobridge,
a substantial array of consumer and business banking
services, as well as a central pricing system for those
services determined by prices offered in the competitive Minneapolis-St. Paul banking market, where Norwest is headquartered. Similarly, we believe that the
presence in a banking market of a large organization,
such as Norwest, prevents banking organizations of
limited size and resources, such as Applicant and The
First National Bank of Selby, from using their market
power to take advantage of their customers through
higher prices or other anticompetitive practices. Consequently, in our view, the degree of anticompetitive
effect that might normally be expected to result from a
combination of banking organizations with market
shares of the size involved here is not likely to result
upon consummation of this proposal. Indeed, we
believe that the smaller banking organizations in the
market, such as Applicant, are placed at a competitive
disadvantage relative to Norwest's banking subsidiary
Order Approving Acquisition of Bank Holding
Company and its Subsidiary Banks
First Chicago Corporation, Chicago, Illinois ("Applicant"), a bank holding company within the meaning of
the Bank Holding Company Act of 1956, as amended
(12 U.S.C. § 1841 et seq.) ("Act"), has applied for the
Board's approval under section 3(a)(3) of the Act
(12 U.S.C. § 1842(a)(3)) to acquire 100 percent of the
voting shares of American National Corporation, Chicago, Illinois ("Company"), and thereby indirectly to
acquire Company's five subsidiary banks: American
National Bank and Trust Company of Chicago, Chicago, Illinois ("ANB"); First American Bank of Bensenville, Bensenville, Illinois; First National Bank of
Libertyville, Libertyville, Illinois; First Arlington National Bank, Arlington Heights, Illinois ("Arlington
Bank");1 and Elgin National Bank, Elgin, Illinois
("Elgin Bank"). 2
Notice of the application, affording opportunity for
interested persons to submit comments and views, has
been given in accordance with section 3(b) of the Act.
The time for filing comments and views has expired,
and the Board has considered the application and all
comments received in light of the factors set forth in
section 3(c) of the Act.
Applicant, the largest commercial banking organization in Illinois, controls one banking subsidiary with
total domestic deposits of approximately $13.3 billion,
representing 13.6 percent of the total deposits in
commercial banks in the state. 3 Company, with total
domestic deposits of approximately $2.0 billion, is the
1. Upon consummation of this proposal, Arlington Bank's name
would be changed to American National Bank of Arlington Heights,
Arlington Heights, Illinois.
2. ANB, one of Company's bank subsidiaries, acquired 90.8 percent of the voting shares of Arlington Bank and 80 percent of the
voting shares of Elgin Bank in satisfaction of debts previously
contracted. In connection with the acquisition of Company by Applicant, Company intends to acquire these voting shares of the Arlington
and Elgin Banks.
3. All banking data are as of June 30, 1983.
352
Federal Reserve Bulletin • April 1984
fifth largest commercial banking organization in Illinois and controls 2.0 percent of the total deposits in
commercial banks in the state. Upon consummation of
this transaction, Applicant would remain the largest
commercial banking organization in Illinois and would
control 15.6 percent of the total deposits in commercial banks in the state. Although the Board is concerned about the effect of the combination of the first
and fifth largest banking organizations in Illinois on the
concentration of banking resources within the state,
certain conditions that would exist after the proposed
acquisition mitigate that concern. A number of other
large bank holding companies would remain in the
state upon consummation of this proposal. In addition,
the share of commercial bank deposits held by the four
largest banking organizations in Illinois would increase
to only 36.8 percent after consummation of the proposed merger, and Illinois would remain one of the
least concentrated states in the United States. Accordingly, it is the Board's view that consummation of this
transaction would not have any significantly adverse
effects on the concentration of commercial banking
resources in Illinois.
Both Applicant and Company compete in the Chicago banking market. 4 Applicant holds 19.9 percent of
the total deposits in commercial banks in the market,
and Company holds 2.9 percent of the total deposits in
commercial banks in the market. Upon consummation
of this transaction, Applicant's share of the total
deposits in commercial banks in the market would
increase to 22.8 percent.
This proposal represents an acquisition by the largest commercial banking organization in the Chicago
banking market to acquire the fifth largest organization
in the market and involves a combination of competitors having significant shares of the total deposits in
commercial banks in the market. As a general matter,
the Board is concerned about proposals that would
result in the largest competitors in a market acquiring
banking organizations with a significant share of the
total deposits in commercial banks in the market. In
the absence of the mitigating circumstances discussed
below, the competitive effects of such an acquisition
could well be so adverse as to warrant denial of the
proposal and the Board will carefully scrutinize the
effect of any such proposal on competition and the
concentration of banking resources in the market.
The Chicago banking market is not concentrated
now and would not become concentrated after consummation of this transaction. The share of deposits
held by the four largest commercial banking organiza-
4. The Chicago banking market is approximated by Cook, DuPage,
and Lake Counties, all in Illinois.
tions in the market is 50.6 percent and would increase
to 53.5 percent upon consummation of the proposal.
The Herfindahl-Hirschman Index ("HHI") in the
market is 862 and would increase by 116 points to 978
upon consummation of the transaction. 5 In addition,
numerous commercial banking organizations, including four of the state's five largest, would remain in the
market after consummation of the proposal.
Finally, in its evaluation of the competitive effects of
previous proposals, the Board has indicated that thrift
institutions have become, or at least have the potential
to become, major competitors of commercial banks. 6
On this basis, in a number of cases the Board has
accorded substantial weight to the influence of thrift
institutions in its evaluation of the competitive effects
of a proposal. In this case, the anticompetitive effects
of this transaction in the Chicago banking market are
further mitigated by the presence of 140 thrift institutions in the market, controlling $26.5 billion in deposits, which represents approximately 28.4 percent of
the total deposits in the market.7 Four of these thrift
institutions are among the ten largest financial institutions in the Chicago banking market with over $1
billion in deposits. The record indicates that most of
the thrift institutions in the market currently offer a full
range of consumer services, NOW accounts and other
transaction accounts, and some of them are currently
involved in commercial lending activities. 8 On the
basis of these and other facts of record, the Board
concludes that the effects of consummation of the
proposal on existing competition in the Chicago banking market would not be significantly adverse. 9
Company also competes in the Elgin banking market
where Applicant is not represented. 10 Because the
5. Under the United States Department of Justice Merger Guidelines (June 14, 1982), a market in which the post-merger HHI is below
1000 is considered unconcentrated, and the Department is unlikely to
challenge mergers in such markets.
6. Comerica Inc. (Bank of the Commonwealth), 69 FEDERAL
RESERVE BULLETIN 797 (1983); General Bancshares Corporation, 69
FEDERAL RESERVE BULLETIN 802 (1983); First Tennessee
National
Corporation,
6 9 FEDERAL RESERVE B U L L E T I N 2 9 8 ( 1 9 8 3 ) .
7. All deposit data for thrifts are as of September 30, 1982.
8. Under the provisions of the Thrift Institutions Restructuring Act,
Title III of the Garn-St Germain Depository Institutions Act of 1982,
96 Stat. 1469, 1499-1500, the commercial lending powers of federally
chartered thrift institutions were significantly expanded. A provision
in Illinois law grants state-chartered thrift institutions the same
lending powers accorded to federal thrift institutions. 32 111. Stat. Ann.
§ 706(c)(1970).
9. If thrift institutions in the Chicago banking market are included
in the calculation of market concentration, the share of total deposits
held by the four largest organizations in the market (one of which is a
thrift institution) would be 39.7 percent, the HHI would be 540, and
the combined market share of Applicant and Company would be 16.3
percent.
10. The Elgin banking market is approximated by the southern half
of McHenry County, Illinois, excluding the town of Woodstock, and
by the northern third of Kane County, Illinois, including the town of
Elgin.
Legal Developments
Elgin banking market is not highly concentrated (the
four largest banking organizations in the market hold
47.5 percent of the total deposits in commercial banks
in the market) and there are numerous other probable
future entrants into the market, the Board concludes
that consummation of this proposal would not have
any significant adverse effects on probable future
competition in any relevant market.11
The financial and managerial resources of Applicant, Company and their subsidiaries are regarded as
generally satisfactory and their future prospects appear favorable. The record of this application indicates
that Company's existing commercial customers, typically small and mid-sized businesses, would benefit
from a number of products and services not conveniently available to them now. These new products
include advanced cash management services, capital
market and financial advisory services, and export
trading services. Applicant also proposes to increase
the percentage of its income that it devotes to neighborhood development projects. Consequently, considerations relating to the convenience and needs of the
community to be served lend weight toward approval
of the application and outweigh any anticompetitive
effects that may result from consummation of this
proposal. Accordingly, the Board has determined that
consummation of the transaction would be consistent
with the public interest and that the application should
be approved.
On the basis of the record, this application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth
calendar day following the effective date of this Order,
or later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
Chicago, acting pursuant to delegated authority.
By order of the Board of Governors, effective
March 23, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, and Rice. Absent and not voting:
Governors Teeters and Gramley.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
11. Elgin Bank is the tenth largest banking organization in the Elgin
banking market, controlling $27.5 million in deposits, which represents 3.8 percent of the total deposits in commercial banks in the
market.
2>41
Hartford National Corporation
Hartford, Connecticut
Order Approving Acquisition
Company
of a Bank Holding
Hartford National Corporation, Hartford, Connecticut
("HNC"), a bank holding company within the meaning of the Bank Holding Company Act of 1956, as
amended (12 U.S.C. § 1841 et seq.) ("BHC Act"), has
applied for the Board's approval under section 3(a)(3)
of the Act (12 U.S.C. § 1842(a)(3)), to acquire Arltru
Bancorporation, Lawrence, Massachusetts ("Arltru"), also a bank holding company, and thereby to
acquire indirectly The Arlington Trust Company,
Lawrence, Massachusetts.
Notice of this application, affording an opportunity
for interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)), including the comments
of Citicorp, New York, New York.
HNC, the second largest commercial banking organization in Connecticut, has consolidated assets of
$5.9 billion.1 Its sole subsidiary bank, The Connecticut
National Bank ("CNB"), has deposits of $3.1 billion,
representing 23.8 percent of the total deposits in
commercial banks in the state. 2 Arltru, which has total
assets of $819 million and total deposits of $689
million, is the eighth largest bank holding company in
Massachusetts. Arltru holds 2.4 percent of all deposits
in commercial banks in Massachusetts.
Section 3(d) of the Act (12 U.S.C. 1842(d)), the
Douglas Amendment, prohibits the Board from approving any application by a bank holding company to
acquire any bank located outside of the state in which
operations of the bank holding company's banking
subsidiaries are principally conducted, unless such
acquisition is "specifically authorized by the statute
laws of the state in which such bank is located, by
language to that effect and not merely by implication."
The statute laws of Massachusetts authorize the acquisition of a banking institution in Massachusetts by a
bank holding company that controls a bank located in
another New England state, if that other New England
1. Banking data are as of September 30, 1983.
2. These figures do not reflect the mergers of CNB with The
Mattatuck Bank and Trust Company, Waterbury, Connecticut, or
with the three subsidiary banks of First Bancorp, Inc., New Haven,
Connecticut, which would increase CNB's deposits by approximately
$825 million and make HNC the largest commercial banking organization in Connecticut, with 29 percent of the deposits in commercial
banks in the state.
354
Federal Reserve Bulletin • April 1984
state authorizes on a reciprocal basis the acquisition of
a bank in that state by a Massachusetts bank holding
company. 3 Connecticut has passed such a reciprocal
statute. 4
The Massachusetts Board of Bank Incorporation
has approved the proposed merger pursuant to these
reciprocal Interstate Banking Acts, thus finding that
the transaction satisfies the reciprocity requirements
of the respective statutes authorizing the interstate
acquisition of banks. Based upon its review of the
Massachusetts Interstate Banking Act, the Board concludes that Massachusetts has by statute expressly
authorized a Connecticut bank holding company, such
as HNC, to acquire a Massachusetts bank or bank
holding company, such as Arltru. Thus, the Massachusetts Act meets the requirement of express authorization for interstate bank acquisitions imposed by section 3(d) of the Bank Holding Company Act.
Citicorp has protested this application and has challenged the constitutionality of the Massachusetts Interstate Banking Act, in particular, its provision that
allows only New England bank holding companies 5 to
acquire banks or bank holding companies located in
Massachusetts.
The Board has stated that in the absence of clear and
unequivocal evidence of the inconsistency of a state
law with the United States Constitution, it will not
hold the state statute to be unconstitutional. 6 In the
Board's Order issued today with respect to the application of Bank of New England Corporation, Boston,
Massachusetts, to merge with CBT Corporation, Hartford, Connecticut, the Board considered the validity of
the Connecticut Interstate Banking Act under the
Commerce Clause, Compact Clause, and Equal Protection Clause of the United States Constitution and
did not find there to be clear and unequivocal evidence
that the Connecticut statute was unconstitutional.
In language and effect, the challenged provisions of
the Massachusetts statute parallel the provisions of the
Connecticut Interstate Banking Act, and the legislative history of both acts confirms that the two states
intended complementary statutes. 7 The Board thus
3. Mass. Ann. Laws Ch. 167A ("Massachusetts Interstate Banking
Act"), § 2.
4. 1983 Conn. Acts 411 (Reg. Sess.) entitled "An Act Concerning
Interstate Banking" ("Connecticut Interstate Banking Act"), § 2.
5. New England bank holding companies include those located in
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island,
and Vermont.
6. Bank of New England Corporation,
Federal Reserve Board
Order of March 26, 1984; NCNB Corp., 68 FEDERAL RESERVE
BULLETIN 5 4 ( 1 9 8 2 ) .
7. Massachusetts State Senator John A. Brennan, Jr., the primary
sponsor of the Massachusetts Interstate Banking Act, stated, in
believes that its reasoning with respect to the Connecticut Act's constitutionality applies directly to the
Massachusetts Interstate Banking Act. Therefore, for
the reasons set forth in detail in the Appendix to the
Board's Order approving the application of Bank of
New England Corporation, the Board concludes that
the Massachusetts Interstate Banking Act is not unconstitutional. Accordingly, the Board will not deny
this application on the grounds of unconstitutionality
urged by protestant.
In addition to determining that the merger of HNC
and Arltru is expressly authorized by a valid statute,
as required by section 3(d) of the Bank Holding
Company Act, the Board must decide whether this
acquisition is consistent with the statutory standards
of section 3 of the Act. Arltru's single banking subsidiary, The Arlington Trust Company, operates in the
Boston banking market, 8 the largest and the least
concentrated of the banking markets in Massachusetts. Arltru is the sixth largest of sixty-four commercial banking organizations in the Boston market and
controls 3.1 percent of the total deposits in commercial
banks in that market. 9 Inasmuch as none of HNC's
banking subsidiaries operates in Massachusetts and
Arltru's banking subsidiary does not operate in Connecticut, the proposed transaction would not eliminate
any significant existing competition in any relevant
banking market. HNC does control a loan production
office that operates in the Boston market, but it
opened in April 1983, and is not a significant competitor.
The Board has considered the effects of this proposal on probable future competition and has also examined the proposal in light of its proposed guidelines for
testimony before the Connecticut Senate Banking Committee, that the
proposed Connecticut bill bore a "remarkable similarity" to the
Massachusetts Act. Transcript of Hearings before the Connecticut
Joint Standing Committee on Banks, March 3, 1983, at 14. Further,
the committee summary of the revised Senate bill that became the
Massachusetts Interstate Banking Act stated that the purpose of the
legislation was "to establish the necessary authority . . . for a
regional, N e w England, banking system" and that the bill's revision
was meant to "ensure that only N e w England based financial institutions can avail themselves of this authority." Massachusetts Joint
Standing Committee on Banks & Banking, Research Staff Summary at
1 (November 9, 1982).
8. The Boston banking market includes all of Suffolk and Essex
Counties, most of Middlesex, Norfolk, and Plymouth Counties, and
small parts of Bristol and Worcester Counties. The market extends
over the entire eastern coast of Massachusetts, excluding Cape Cod,
and also includes 13 towns in southern N e w Hampshire.
9. Market deposit data are as of June 30, 1982. Over 200 thrift
institutions compete in the market. Arltru is the tenth largest depository institution in the market and it controls only 1.4 percent of all
deposits in financial institutions in the market.
Legal Developments
assessing the competitive effects of market-extension
mergers or acquisitions. 10 In evaluating the effects of a
proposal on probable future competition, the Board
considers market concentration, the number of probable future entrants into the market, the size of the bank
to be acquired, and the attractiveness of the market for
entry on a de novo or foothold basis absent approval of
the acquisition. After consideration of these factors in
the context of the specific facts of this case, the Board
concludes that consummation of this proposal would
not have any significant adverse effects on probable
future competition in any relevant market.
The record shows that the Boston banking market,
in which Arltru operates, is not highly concentrated.
In view of this consideration and other facts of record,
the Board concludes that elimination of HNC as a
probable future entrant into the Boston market would
not have a substantial anticompetitive effect in that
market. HNC's banking subsidiaries operate in the ten
Connecticut banking markets. 11 There are numerous
probable future entrants into nine of these markets,
since bank holding companies located in Rhode Island
and Massachusetts are now eligible for entry. The
tenth market is not highly concentrated.
Based on the foregoing and other facts of record, the
Board concludes that consummation of the proposed
acquisition of Arltru's banking subsidiary would not
have any significant adverse effects on existing or
probable future competition and would not increase
the concentration of banking resources in any relevant
area.
The financial and managerial resources of HNC and
Arltru are considered satisfactory and their prospects
appear favorable. HNC has made a commitment, as a
part of this transaction, to increase the capital of
Arltru's subsidiary, The Arlington Trust Company.
The Board considers financial considerations to be
positive.
With respect to convenience and needs considerations, both HNC and Arltru have a satisfactory
record of Community Reinvestment Act compliance.
Consummation of this merger would permit Arltru to
provide additional credit capacity to serve more and
larger commercial customers. HNC also proposes to
10. "Proposed Policy Statement of the Board of Governors of the
Federal Reserve System for Assessing Competitive Factors under the
Bank Merger Act and the Bank Holding Company Act," 47 Federal
Register 9017 (March 3, 1982). Although the proposed policy statement has not been adopted by the Board, the Board is using the policy
guidelines in its analysis of the effects of a proposal on probable future
competition.
11. The ten Connecticut banking markets are Hartford, New Haven, Bridgeport, Waterbury, New London, Danbury, Torrington,
Danielson, Willimantic, and Old Saybrook.
2>41
expand The Arlington Trust Company's trust department as well as its mortgage lending, municipal financing, and commercial banking services. The considerations related to the convenience and needs of the
communities to be served weigh in favor of approval.
Based on the foregoing and other facts of record, the
Board concludes that the proposed acquisition is in the
public interest and that the application should be and
hereby is approved. The acquisition shall not be made
before the thirtieth calendar day following the effective
date of this Order or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Boston, pursuant to delegated authority.
By order of the Board of Governors, effective
March 26, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Teeters, Rice, and Gramley.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
Independent Financial, Inc.
Lubbock, Texas
Order Approving Formation of a Bank Holding
Company
Independent Financial, In^., Lubbock, Texas, has
applied for the Board's approval under section 3(a)(1)
of the Bank Holding Company Act of 1956, as amended ("Act") (12 U.S.C. § 1842(a)(1)), to become a bank
holding company by acquiring all of the voting shares
of Whisperwood National Bank, Lubbock, Texas.
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant, a nonoperating company, was organized
for the purpose of becoming a bank holding company
by acquiring Bank. Bank, with deposits of $10.3
million, is the 935th largest of 1129 commercial banking organizations in Texas, holding 0.01 percent of the
total deposits in commercial banks in the state. 1 Bank
is the 14th largest of 15 banks in the Lubbock, Texas,
1. Banking data are as of June 30, 1983.
356
Federal Reserve Bulletin • April 1984
banking market and controls 0.6 percent of the total
deposits in commercial banks in that market. 2 None of
Applicant's principals are affiliated with any other
banking organizations that operate in the market. In
light of these facts, the Board concludes that consummation of this transaction would not result in any
significant adverse eifects upon competition or increase the concentration of banking resources in any
relevant area.
The financial and managerial resources of Applicant
and Bank are considered satisfactory and their prospects appear favorable. Although Applicant will incur
some debt in connection with the proposed acquisition, in light of certain commitments made by Applicant, it appears that Applicant will have sufficient
resources to service the debt without adversely affecting Bank. Considerations relating to the convenience
and needs of the community to be served are also
consistent with approval.
On the basis of these and other facts of record, it is
the Board's judgment that the application should be,
and hereby is, approved for the reasons summarized
above. The transaction shall not be consummated
before the thirtieth calendar day following the effective
date of this Order, or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board, or by the
Federal Reserve Bank of Dallas pursuant to delegated
authority.
By order of the Board of Governors, effective
March 21, 1984.
V o t i n g for this action: Chairman V o l c k e r and G o v e r n o r s
Martin, Wallich, Partee, and R i c e . A b s e n t and not voting:
G o v e r n o r s T e e t e r s and G r a m l e y .
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
Kansas Bancorp II, Inc.
Concordia, Kansas
nonvoting preferred shares of First Glasco Bancshares, Inc., Glasco, Kansas ("Glasco"), and thereby
indirectly to acquire an interest in First National Bank
of Glasco, Glasco, Kansas ("Glasco Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the BHC Act.
The time for filing comments has expired, and the
Board has considered the application and all comments received in light of the factors set forth in
section 3(c) of the BHC Act.
Applicant's investment in the nonvoting preferred
shares of Glasco amounts to $450,000 and will represent approximately 84 percent of the total equity of
Glasco. Applicant's principals will become officers
and directors of Glasco and Glasco Bank. In addition,
Applicant's principals will purchase all of the voting
shares of Glasco. 1
Applicant, the 79th largest commercial banking organization in Kansas, controls First Bank and Trust,
Concordia, Kansas, with deposits of $50.7 million,
representing 0.3 percent of the total deposits in commercial bank in the state. 2 Glasco Bank, the 414th
largest commercial banking organization in the state,
holds $10.9 million in deposits. After consummation of
the proposal, Applicant's share of the total deposits in
commercial banks in the state would increase to 0.4
percent. Accordingly, consummation of the proposed
transaction would not have a significant effect on the
concentration of banking resources in Kansas.
Glasco Bank competes in the Mitchell County banking market,3 where it is the fourth largest bank in the
market, with 10.7 percent of the total deposits in
commercial banks. Applicant's subsidiary bank is located in a separate banking market and is prohibited
from branching into the Mitchell County banking
market by state law. 4 Accordingly, consummation of
the proposal would not have any significant effect on
competition in the relevant banking markets.
The financial and managerial resources of these
organizations are regarded as generally satisfactory,
Order Approving Acquisition of Shares
of a Bank Holding Company
Kansas Bancorp II, Inc., Corcordia, Kansas, a bank
holding company within the meaning of the Bank
Holding Company Act of 1956, as amended, 12 U.S.C.
§ 1841 et seq. ("BHC Act"), has applied for the
Board's approval under section 3(a)(3) of the BHC
Act, 12 U.S.C. § 1842(a)(3), to acquire all of the
2. The Lubbock banking market is defined as the Lubbock, Texas,
Metropolitan Statistical Area.
1. Glasco proposes to redeem 89 percent of its current outstanding
voting shares before consummation of this transaction. Applicant's
principals propose to acquire the remaining 11 percent of Glasco's
shares, effecting a complete change in the control of Glasco. Applicant
will not extend funds or in any way guarantee the principals' purchase
of Glasco's shares. For the reasons discussed in the Board's Order
approving the application of Fourth Financial Corporation, 69 FEDERAL RESERVE BULLETIN 95 (1983), the Board has determined that this
proposal would not violate Kansas Law.
2. All banking data are as of June 30, 1983.
3. The Mitchell County banking market is defined as Mitchell
County and the southwestern portion of Cloud County, including the
town of Glasco.
4. Kan. Stat. Ann. section 9-1111.
Legal Developments
and their prospects appear favorable. Considerations
relating to the convenience and needs of the communities involved are also consistent with approval.
On the basis of the record, and for the reasons
discussed above, the application is hereby approved.
The transaction shall not be made before the thirtieth
day following the effective date of this Order or later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
Kansas City, pursuant to delegated authority.
By order of the Board of Governors, effective
March 7, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, and Gramley. Absent and not voting:
Governors Martin and Teeters.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary
of the Board
McKeesport National Corporation
McKeesport, Pennsylvania
Order Approving
Company
tion in the market. 2 Accordingly, consummation of
this proposal would have no significant effect on
competition or the concentration of banking resources
in any relevant area.
The financial and managerial resources of Applicant
and Bank are regarded as generally satisfactory and
their prospects appear favorable, particularly in light
of certain financial commitments by Applicant's principals. Considerations relating to the convenience and
needs of the community to be served also are consistent with approval of the proposal.
On the basis of the record, the application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth
calender day following the effective date of this Order,
or later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
Cleveland, acting pursuant to delegated authority.
By order of the Board of Governors, effective
March 16, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Teeters, Rice, and Gramley. Absent and not
voting: Governor Wallich.
Formation of a Bank Holding
McKeesport National Corporation, McKeesport,
Pennsylvania, has applied for the Board's approval
under section 3(a)(1) of the Bank Holding Company
Act ("Act"), 12 U.S.C. § 1842(a)(1), to become a bank
holding company by acquiring McKeesport National
Bank, McKeesport, Pennsylvania ("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act.
Applicant is a nonoperating Pennsylvania corporation organized for the purpose of becoming a bank
holding company by acquiring Bank. Bank, which
holds deposits of approximately $86 million, is one of
the smaller banks in Pennsylvania. 1 This proposal
involves the restructuring of Bank's ownership from
individuals to a corporation owned by the same individuals. Bank operates in the Pittsburgh banking market and neither Applicant nor any of its principals has
an ownership interest in any other banking organiza-
1. Deposit data are as of December 31, 1983.
2>41
JAMES M C A F E E ,
[SEAL]
Associate
Secretary
of the Board
Med Center Bancshares, Inc.
Houston, Texas
Order Approving
Formation of Bank Holding
Company
Med Center Bancshares, Inc., Houston, Texas, has
applied for the Board's approval pursuant to section
3(a)(1) of the Bank Holding Company Act (12 U.S.C.
§ 1842(a)(1)) to become a bank holding company by
acquiring Medical Center Bank, Houston, Texas
("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
2. The Pittsburgh banking market consists of all of Allegheny
County and adjoining portions of Butler, Armstrong, Westmoreland,
Washington, and Beaver Counties, all in Pennsylvania.
358
Federal Reserve Bulletin • April 1984
Applicant, a nonoperating corporation, was organized for the purpose of acquiring Bank. Bank, with
deposits of $133.4 million, is the 51st largest banking
organization in Texas and controls 0.11 percent of the
total deposits in commercial banks in the state. 1
Principals of Applicant are associated with another
banking organization in Texas, United Bancshares,
Inc., Rosenburg, Texas, a one-bank holding company
with respect to Rosenburg Bank and Trust ("Rosenburg Bank"). Both Bank and Rosenburg Bank operate
in the Houston banking market. 2 Bank is the 20th
largest bank in the Houston banking market, controlling 0.42 percent of the total deposits in commercial
banks in the market. Rosenburg Bank is the 67th
largest banking organization in that market, controlling 0.10 percent of the total deposits in commercial
banks in the market. In light of the small share of the
market's deposits held by Bank and Rosenburg Bank,
the Board concludes that consummation of the proposed transaction would not have a significant effect
on existing competition in any relevant area. The
Board also concludes that consummation of the proposal would not have any significant effects on the
concentration of banking resources in any relevant
area.
The financial and managerial resources and future
prospects of Applicant and Bank are generally satisfactory. Although no new services would result from
consummation of this proposal, considerations with
respect to the convenience and needs of the community to be served are consistent with approval.
On the basis of the record, this application is approved for the reasons summarized above. The transaction shall not be made before the thirtieth calendar
day following the effective date of this Order or later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
Dallas, acting pursuant to delegated authority.
By order of the Board of Governors, effective,
March 26, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Teeters, Rice, and Gramley.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
1. All banking data are as of December 31, 1982.
2. The Houston banking market is approximated by the Houston
RMA.
Midland Bancorp, Inc.
Chicago, Illinois
Order Approving Acquisition
of a Bank
Midland Bancorp, Inc., Chicago, Illinois, a bank holding company within the meaning of the Bank Holding
Company Act ("Act"), has applied for the Board's
approval under section 3(a)(3) of the Act (12 U.S.C.
§ 1842(a)(3)) to acquire all of the voting shares of
Hawthorne Bank of Wheaton, Wheaton, Illinois.
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant controls one bank subsidiary with deposits of $385.1 million, representing 0.4 percent of the
total deposits in commercial banks in Illinois.1 Applicant seeks to acquire Bank, with deposits of $36.3
million, representing 0.04 percent of statewide deposits. Consummation of this proposal would not have a
significant effect on the concentration of commercial
bank deposits in the state.
Applicant and Bank are both represented in the
Chicago banking market. Applicant is the 14th largest
banking organization in the market, controlling 0.6
percent of commercial bank deposits in the market;
Bank is the 252nd largest banking organization in the
market, controlling 0.06 percent of market deposits.
Upon consummation of this proposal, Applicant
would become the twelfth largest banking organization
in the Chicago banking market, controlling 0.66 percent of deposits. It is the Board's view that consummation of this proposal would not have a significant
adverse effect upon competition in the market.
The financial and managerial resources and prospects of Applicant and Bank are consistent with approval of this application, in light of certain financial
commitments made by Applicant. Although Bank will
provide no new services as a result of this transaction,
there is no evidence that the needs of the relevant
community are not being met, and considerations
relating to convenience and needs of the community to
be served are consistent with approval.
Based on the foregoing and all of the other facts of
record, the Board has determined that the application
should be, and hereby is, approved. The transaction
shall not be consummated before the thirtieth day
1. All banking data are as of March 31, 1983.
Legal Developments
following the effective date of this Order, or later than
three months after the effective date of this Order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Chicago,
pursuant to delegated authority.
By order of the Board of Governors, effective
March 7, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, and Gramley. Absent and not voting:
Governors Martin and Teeters.
2>41
The transaction may be consummated immediately
but in no event later than three months after the
effective date of this Order unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Chicago acting pursuant to
delegated authority.
By order of the Secretary of the Board, acting
pursuant to delegated authority for the Board of Governors, effective March 9, 1984.
JAMES MCAFEE,
[SEAL]
Associate
Secretary
of the Board
JAMES MCAFEE,
[SEAL]
Associate
Secretary of the Board
The One Bancorp
Portland, Maine
NBD Bancorp, Inc.
Detroit, Michigan
Order Approving Acquisition
Order Approving Formation of a Bank Holding
Company
of Bank
NBD Bancorp, Inc., Detroit, Michigan, a bank holding
company within the meaning of the Bank Holding
Company Act, has applied for the Board's approval
under section 3(a)(3) of the Act (12 U.S.C.
§ 1842(a)(3)) to acquire National Bank & Trust Company of Traverse City, Traverse City, Michigan.
Public notice of the application before the Board is
not required by the Act, and in view of the emergency
situation, the Board has not followed its normal practice of affording interested parties the opportunity to
submit comments and views. In view of the emergency
situation involving Bank, the Comptroller of the Currency has recommended immediate action by the
Board to prevent the probable failure of Bank.
In connection with the application, the Secretary of
the Board has taken into consideration the competitive
effects of the proposed transaction, the financial and
managerial resources and future prospects of the
banks concerned, and the convenience and needs of
the communities to be served. On the basis of the
information before the Board, the Secretary of the
Board finds that an emergency situation exists so as to
require that the Secretary of the Board act immediately pursuant to the provisions of section 3(b) of the Act
(12 U.S.C. § 1842(b)) in order to safeguard depositors
of Bank. Having considered the record of this application in light of the factors contained in the Act, the
Secretary of the Board has determined that consummation of the transaction would be in the public
interest and that the application should be approved on
a basis that would not preclude immediate consummation of the proposal. On the basis of these considerations, the application is approved.
The One Bancorp, Portland, Maine, has applied for
the Board's approval under section 3(a)(1) of the Bank
Holding Company Act ("BHC Act") (12 U.S.C.
§ 1841(a)(1)) to become a bank holding company
through acquisition of all of the voting shares of the
Maine Savings Bank, Portland, Maine. The Maine
Savings Bank ("Bank") is an FDIC insured statechartered mutual savings bank that, in connection with
this proposal, will convert to a stock savings bank.
Notice of the application, affording opportunity for
interested persons to submit comments and views, has
been given in accordance with section 3(b) of the Act.
The time for filing comments has expired, and the
Board has considered the application and all comments received.
The Board has previously determined that a state
guaranty savings bank is a "bank" for purposes of the
BHC Act if that state savings bank accepts demand
deposits (which includes NOW accounts), engages in
the business of making commercial loans, and is not
covered by the exemption created by the Garn-St
Germain Depository Institutions Deregulation Act of
1982 for FSLIC insured thrift institutions.1 Bank accepts demand deposits and NOW accounts and engages in the business of making commercial loans. Its
deposits are not insured by the FSLIC. Accordingly,
Bank is a "bank" for purposes of the BHC Act. The
1. Amoskeag
8 6 0 ( 1 9 8 3 ) ; First
874 (1983).
Bank
Shares,
NH
Banks,
Inc.,
Inc.,
6 9 F E D E R A L RESERVE B U L L E T I N
6 9 F E D E R A L RESERVE B U L L E T I N
360
Federal Reserve Bulletin • April 1984
application has therefore been considered in light of
the requirements of section 3 of the Act pertaining to
the acquisition of banks.
Applicant is a recently organized corporation
formed for the purpose of becoming a bank holding
company through the acquisition of Bank. Bank,
which holds $722.3 million in total deposits, is the
second largest depository institution in Maine, controlling 10.9 percent of the total deposits in all depository institutions in the state. Bank is the largest
depository institution in the Portland banking market,
holding 22.3 percent of total deposits in all depository
institutions in the banking market. 2 Neither Applicant
nor any of its principals is affiliated with any other
banking organization in the market or any other relevant market. Applicant's proposal represents simply a
corporate reorganization and will not result in any
adverse effects upon competition in any relevant area.
The financial and managerial resources and future
prospects of Applicant and Bank are regarded as
satisfactory and consistent with approval. Considerations relating to the convenience and needs of the
community to be served are also consistent with
approval.
Based on the foregoing and other facts of record, the
Board has determined that consummation of the proposed transaction would be in the public interest and
that the application should be, and hereby is, approved. The transaction shall not be consummated
before the thirtieth calendar day following the effective
date of this Order or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Boston, acting pursuant to
delegated authority.
By order of the Board of Governors, effective
March 28, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, and Rice. Abstaining from this
action: Governor Gramley. Absent and not voting: Governor
Teeters.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
2. All banking data are as of December 31, 1983. The Portland
banking market is approximated by the Portland, Maine MSA, as well
as the cities of Kennebunk, North Kennebunk Port, Kennebunk Port,
Lyman, Dayton, Limington, Baldwin, Sebago, Naples, Casco, Pawnal, Saco, and Biddeford, all in Maine.
Shickley State Company
Shickley, Nebraska
Order Approving Formation of a Bank Holding
Company
Shickley State Company, Shickley, Nebraska, has
applied for the Board's approval under section 3(a)(1)
of the Bank Holding Company Act ("BHC Act")
12 U.S.C. § 1842(a)(1), to become a bank holding
company by acquiring at least 80 percent of the voting
shares of Shickley State Bank, Shickley, Nebraska
("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act.
Applicant is a nonoperating Nebraska corporation
organized for the purpose of becoming a bank holding
company by acquiring Bank, which holds deposits of
$7.5 million.1 Upon acquisition of Bank, Applicant
would control the 336th largest of 461 commercial
banking organizations in Nebraska and approximately
0.1 percent of the total deposits in commercial banks
in the state. This proposal involves a restructuring of
Bank's ownership from individuals to a corporation
owned by the same individuals. Accordingly, consummation of this proposal would have no significant
effect on the concentration of banking resources in
Nebraska.
Bank is located in the Fillmore County banking
market.2 Applicant's principals, who control 61 percent of Bank's outstanding shares, also control two
other banks in the market: Geneva State Bank, Geneva, Nebraska ("Geneva Bank") and Farmers State
Bank, Fairmont, Nebraska, ("Fairmont Bank"). Bank
is currently the fourth largest of seven banking organizations in the Fillmore County banking market, with
total deposits of $7.5 million, representing 8.1 percent
of the total deposits in commercial banks in the
market. Geneva Bank is the largest commercial bank
in the market, with total deposits of $44.9 million,
representing 48.2 percent of the total deposits in
commercial banks in the market. Fairmont Bank is the
1. Deposit data are as of December 31, 1982.
2. The Fillmore County banking market is defined as Fillmore
County, Nebraska.
Legal Developments 2>41
sixth largest bank in the market, with total deposits of
$5.5 million, representing 6.0 percent of the total
deposits in commercial banks in the market. Together,
these three banks control $57.9 million in deposits,
representing 62.2 percent of the total deposits in
commercial banks in the market.
Section 3(c) of the Act precludes the Board from
approving any proposed acquisition that may tend to
create a monopoly or may substantially lessen competition or be in restraint of trade in any part of the
United States, unless the Board finds that such anticompetitive effects are clearly outweighed by the
convenience and needs of the community to be served.
In analyzing a case under these standards where, as
here, the principals of an applicant control another
banking organization in the same market as the bank to
be placed in the holding company, the Board considers
the competitive effects of the transaction whereby
common control of the formerly competing institutions
was established. 3
Bank and Geneva Bank came under common control in 1945. At that time, Bank was the fifth largest
and Geneva Bank was the largest bank in the Fillmore
County market, and together the banks controlled 58.8
percent of the total deposits in the market. Fairmont
Bank became affiliated with Bank and Geneva Bank in
1947. At that time, Fairmont Bank was the fifth largest
commercial bank in the market and controlled $907.0
thousand in deposits, representing 9.6 percent of the
total deposits of commercial banks in the market.
Geneva Bank was the largest of the six commercial
banks in the market, with deposits of $4.4 million,
representing 46.5 percent of the market's deposits, and
Bank was the fourth largest bank in the market, with
deposits of $982.0 thousand, representing 10.4 percent
of the total deposits in commercial banks in the
market. Together, the three banks held 66.5 percent of
the total deposits in commercial banks in the market.
Ordinarily, a proposal of this type would raise
significant concerns under the standards in section 3(c)
of the Act. However, in its consideration of recent
applications involving affiliated banks in the same
market, the Board approved the formation of a bank
holding company for one of the affiliated banks relying
on the small absolute size of the banks at the time of
affiliation, the substantial number of years that the
institutions had been affiliated, and the existence of
the affiliation before the application of certain of the
antitrust laws to bank mergers. 4 On the Board's judg-
ment, consideration of these factors mitigate the competitive effects of this proposal.
At the time of their affiliation, Bank, Geneva Bank
and Fairmont Bank were relatively small, with the
deposits in two of the banks being less than $1 million.
Currently, the banks continue to be among the smaller
banking organizations in the state. The affiliation in
this case has been in existence for 36 years and did not
represent an attempt to evade the antitrust laws.
Common control was effected in 1947, before the
enactment of the Celler-Kefauver Antimerger Act of
1950 and before the enactment of the Bank Merger Act
of 1960, which required regulatory agencies to take
competitive factors into account in approving proposed mergers.
After considering the facts of record, including the
length of the affiliation of Bank, Geneva Bank and
Fairmont Bank, the Board concludes that competitive
considerations are consistent with approval of the
application.
Where principals of an applicant are engaged in
operating a chain of banking organizations, the Board,
in addition to analyzing the one-bank holding company
proposal before it, also considers the entire chain and
analyzes the financial and managerial resources and
future prospects of the chain under the Board's Capital
Adequacy Guidelines. Based upon such analysis in
this case, the financial and managerial resources and
future prospects of Applicant, Bank and the chain
banking organization appear to be satisfactory. Therefore, considerations relating to banking factors are
consistent with approval of the application. Considerations relating to convenience and needs of the community to be served also are consistent with approval
of this application. Accordingly, it is the Board's
judgment that the proposed acquisition is in the public
interest and that the application should be approved.
On the basis of the record, the application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth
calendar day following the effective date of this Order
or later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
Kansas City acting pursuant to delegated authority.
By order of the Board of Governors, effective
March 2, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Rice, and Gramley. Absent and not
voting: Governor Teeters.
3. Mid-Nebraska Bankshares, Inc., v. Board of Governors of the
Federal Reserve System, 627 F.2d 266 (D.C. Cir. 1980).
4 . Texas
( 1 9 8 3 ) ; First
East
Monco
Bancorp,
Bancshares,
TIN 2 9 3 ( 1 9 8 3 ) .
69
FEDERAL
Inc.,
RESERVE
BULLETIN
636
WILLIAM W . WILES,
6 9 FEDERAL RESERVE B U L L E -
[SEAL]
Secretary
of the
Board
362 Federal Reserve Bulletin • April 1984
Southwest Bancshares, Inc.
Houston, Texas
Order Approving Acquisition of a
Bank Holding Company and Banks
Southwest Bancshares, Inc., Houston, Texas, a bank
holding company within the meaning of the Bank
Holding Company Act (12 U.S.C. § 1841 et seq.)
("Act"), has applied under section 3(a)(3) of the Act
(12 U.S.C. § 1842(a)(3)) to acquire Southwest Texas
Bankers, Inc., San Antonio, Texas ("Bankers"), and
thereby indirectly acquire San Antonio Bank and
Trust, San Antonio, Texas ("San Antonio Bank").
Applicant also has applied under section 3(a)(3) of the
Act to acquire Bank of the Southwest, N.A., Los
Colinas, Irving, Texas ("Los Colinas Bank").
Notice of the applications, affording an opportunity
for interested persons to submit comments and views,
has been given in accordance with section 3(b) of the
Act. The time for filing comments and views has
expired, and the Board has considered the applications
and all comments received in light of the factors set
forth in section 3(c) of the Act (12 U.S.C. § 1842(c)).
Applicant is the sixth largest commercial banking
organization in Texas, controlling 37 banks with total
deposits of $5.71 billion, representing 4.7 percent of
total deposits in commercial banks in the state. 1 Bankers controls one bank, San Antonio Bank, with total
deposits of $119 million, representing 0.10 percent of
deposits in commercial banks in Texas and ranking it
as the 64th largest commercial banking organization in
the state. Los Colinas Bank is a de novo bank being
organized by Applicant.
Upon consummation of these proposals, Applicant's share of statewide deposits in commercial banks
will increase by .10 percent to 4.8 percent and its
statewide ranking will remain unchanged. Accordingly, consummation of these proposals will have no
significant effect on the concentration of banking resources in Texas.
San Antonio Bank is the ninth largest of 37 commercial banks in the San Antonio banking market, 2 controlling 2.0 percent of total deposits in commercial
banks in the market. Applicant does not compete in
the San Antonio banking market. Accordingly, the
proposal would not result in the elimination of any
existing competition in this market.
1. Banking data are as of December 31, 1982.
2. The San Antonio banking market is defined as the San Antonio
Ranally Metro Area.
The Board also has considered the effects of Applicant's proposal on probable future competition in the
San Antonio market in light of its proposed guidelines
for determining whether an intensive examination of a
proposed market extension merger or acquisition is
warranted.3 The proposal does not trigger an intensive
analysis under the Board's proposed guidelines because San Antonio Bank is not a leader in the San
Antonio market and the market is only moderately
concentrated. Accordingly, consummation of this proposal will have no significant effect on probable future
competition in the San Antonio banking market.
Los Colinas Bank will compete in the Dallas banking market.4 Applicant is the seventh largest of 113
banking organizations in the Dallas banking market,
controlling eight banks holding 3.34 percent of total
deposits in commercial banks in the market. As a
de novo bank, Los Colinas Bank represents a new
source of competition in the Dallas banking market.
Consummation of this proposal thus will increase
competition in the Dallas banking market.
The financial and managerial resources of Applicant
are considered to be consistent with approval of these
proposals. The financial and managerial resources of
Bankers will be improved as a result of its acquisition
by Applicant. The future prospects of Los Colinas
Bank are favorable. Affiliation between Applicant and
San Antonio Bank will permit San Antonio Bank to
offer additional services to its customers through Applicant. Los Colinas Bank, as a de novo bank, represents a new source of banking services in the Dallas
banking market. Accordingly, considerations relating
to the convenience and needs of the communities to be
served are consistent with approval of the proposals.
Based on the foregoing, and other facts of record, it
is the Board's judgment that the proposed transactions
would be in the public interest and that the applications should be and are hereby approved. The proposed transactions shall not be consummated before
the thirtieth calendar day following the effective date
of this Order, or later than three months after the
effective date of this Order, unless such period is
3. "Proposed Policy Statement of the Board of Governors of the
Federal Reserve System for Assessing Competitive Factors Under the
Bank Merger Act and the Bank Holding Company Act," 47 Federal
Register 9017 (March 3, 1982).
4. The Dallas banking market is defined as Dallas County, the
southeast quadrant of Denton County (including Denton and Lewisville), the southwest quadrant of Collin County (including McKinney
and Piano), the northern half of Rockwall County, the communities of
Forney and Terrell in Kaufman County, Midlothian, Waxahatchie,
and Ferris in Ellis County, and Grapevine and Arlington in Tarrant
County, Texas.
Legal Developments
extended for good cause by the Board or the Federal
Reserve Bank of Dallas, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
March 16, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Teeters, Rice, and Gramley. Absent and not
voting: Governor Wallich.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary
of the Board
Texas Commerce Bancshares, Inc.
Houston, Texas
Order Approving Acquisition
of Banks
Texas Commerce Bancshares, Inc., Houston, Texas,
has applied for the Board's approval under section
3(a)(3) of the Bank Holding Company Act (12 U.S.C.
§ 1842(a)(3)) to acquire all of the voting shares of
Texas Commerce Bank-Richardson, N.A., Richardson, Texas ("Richardson Bank"); and Texas Commerce Bank-Brookhollow, N.A., Dallas, Texas
("Brookhollow Bank").
Notice of these applications, affording interested
persons an opportunity to submit comments and
views, has been given in accordance with section 3(b)
of the Act. The time for filing comments and views has
expired and the Board has considered the applications
and all comments received in light of the factors set
forth in section 3(c) of the Act (12 U.S.C. § 1842(c)).
Applicant, the third largest commercial banking
organization in Texas, controlling 65 banks with total
deposits of $11.7 billion, representing 9.7 percent of
total deposits in commercial banks in the state, has
applied to acquire Richardson Bank and Brookhollow
Bank, both newly chartered institutions. 1 Consummation of these proposals would not immediately increase Applicant's share of deposits in commercial
banks in Texas.
Both Richardson Bank and Brookhollow Bank will
compete in the Dallas banking market, where Applicant also competes. 2 Applicant is the fifth largest of
113 commercial banking organizations in the Dallas
1. Banking data are as of December 31, 1982.
2. The Dallas banking market is defined as Dallas County; the
southeast quadrant of Denton County (including Denton and Lewisville); the southwest quadrant of Collin County (including McKinney
and Piano); the northern half of Rockwall County; the communities of
Forney and Terrell in Kaufman County; Midlothian, Waxahachie, and
Ferris in Ellis County; and Grapevine and Arlington in Tarrant
County, Texas.
2>41
banking market, controlling 11 banks with total deposits of $1.1 billion, representing 4.2 percent of total
deposits in commercial banks in the market. Richardson Bank and Brookhollow Bank, as de novo banks,
would represent new sources of competition in the
Dallas banking market. Accordingly, considerations
relating to competitive factors under the Act lend
weight toward approval of these proposals.
The financial and managerial resources of Applicant, its subsidiary banks, Richardson Bank, and
Brookhollow Bank are generally satisfactory, and the
future prospects of each appear favorable. Accordingly, considerations relating to banking factors under the
Act are consistent with approval of these proposals.
Richardson Bank and Brookhollow Bank, as de novo
banks, represent new sources of a full range of banking
services in the Dallas banking market. Accordingly,
considerations relating to the convenience and needs
of the community to be served lend weight toward
approval of these proposals.
On the basis of the record and for the reasons
discussed above, the Board has determined that these
applications should be and hereby are approved. The
transactions shall not be consummated before the
thirtieth calendar day following the effective date of
this Order or not later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Dallas, acting pursuant to
delegated authority.
By order of the Board of Governors, effective
March 6, 1984.
Voting for this action: Vice Chairman Martin and Governors Wallich, Partee, Rice, and Gramley. Absent and not
voting: Chairman Volcker and Governor Teeters.
WILLIAM W . WILES,
[SEAL]
Secretary
of the
Board
Orders Issued Under Section 4 of Bank Holding
Company Act
A.S.B. Bancshares, Inc.
Archie, Missouri
Order Approving Application
Activities
to Engage in Insurance
A.S.B. Bancshares, Inc., Archie, Missouri, a bank
holding company within the meaning of the Bank
Holding Company Act ("Act"), has applied for the
Board's approval under section 4(c)(8) of the Act
(12 U.S.C. § 1843(c)(8)) and section 225.25 of the
Board's Regulation Y (12 CFR § 225.25), to engage
364
Federal Reserve Bulletin • April 1984
de novo, through a proposed subsidiary, in general
insurance agency activities (except the sale of life
insurance and annuities) in a community with a population greater than 5,000. Applicant, as a bank holding
company with total assets under $50 million, relies on
the statutory language contained in section 601(F) of
the Garn-St Germain Depository Institutions Act of
1982 as authorization for this activity. 1
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been duly published. (49 Federal Register
4039 (Feb. 1, 1984)). The time for filing comments has
expired and the Board has considered the application
in light of the public interest factors set forth in section
4(c)(8) of the Act.
Applicant, with total assets of $13.8 million as of
September 30, 1983, proposes to engage in general
insurance agency activities in Harrisonville, Missouri,
a community with a population of approximately 6,300
as of the 1980 census. Applicant states that the activities will be conducted from offices to be located in
Applicant's subsidiary bank, the Archie State Bank,
Harrisonville, Missouri (total deposits of $12.39 million as of September 30, 1983), and that its service area
will be Bates, Cass and adjacent counties in the State
of Missouri.
In order to approve an application under section
4(c)(8) of the Act, the Board is required to determine
that a proposed activity is "so closely related to
banking or managing or controlling banks as to be a
proper incident thereto . . ." 1 2 U . S . C . § 1843(c)(8).
In this regard, the Board has recently found that the
sale of general insurance by bank holding companies
with total assets of $50 million or less is an activity
closely related to banking within the meaning of section 4(c)(8). Whitewater Bancorp, Inc., 69 FEDERAL
in the provision of insurance services in the geographic
area to be served. Given the relative ease of entry into
the market for insurance agency activities, possible
adverse effects, such as undue concentration of resources or decreased or unfair competition, appear to
be limited.
Based upon the foregoing and all the facts of record,
the Board has determined that the public benefits
associated with consummation of this proposal can
reasonably be expected to outweigh possible adverse
effects, and that the balance of the public interest
factors favors approval of this application. Accordingly, the application is hereby approved.
This determination is subject to all of the conditions
set forth in Regulation Y, including sections 225.4(d)
and 225.23(b), and the Board's authority to require
such modification or termination of the activities of a
holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with the
provisions and purposes of the Act and the Board's
regulations and orders issued thereunder, or to prevent evasion thereof.
The proposed activities shall commence not later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
Kansas City.
By order of the Board of Governors, effective
March 19, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Teeters, Rice, and Gramley. Absent and not
voting: Governor Wallich.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary
of the Board
RESERVE BULLETIN 815 (1983).
Under section 4(c)(8), the Board also must determine that the proposed activity's performance by an
individual applicant "can reasonably be expected to
produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking
practices." 12 U.S.C. § 1843(c)(8). Upon a review of
the record of this application, the Board views Applicant's proposal as procompetitive and in the public
interest because de novo entry will provide greater
convenience to the public and increased competition
1. Applicant has committed to divest itself of such activities if its
assets exceed the statutory limitation of $50 million.
BankAmerica Corporation
San Francisco, California
Order Approving the Sale and Issuance of
Payment Instruments and Related
Activities
BankAmerica Corporation, San Francisco, California,
a bank holding company within the meaning of the
Bank Holding Company Act ("Act"), has applied for
the Board's approval under section 4(c)(8) of the Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 CFR § 225.23) to engage
de novo in the issuance and sale of variably denominated payment instruments with a maximum face
value of $10,000. These instruments will be sold by
BankAmerica's subsidiaries and unaffiliated financial
institutions. In connection with this application, BankAmerica has applied to engage, through its subsidiary,
Legal Developments
BA Cheque Corporation, in certain management consulting, data processing, marketing, and other services
related to the issuance and sale of the payment instruments.
Notice of the application, affording interested persons an opportunity to submit comments on the relatedness of the proposed activity to banking, and on the
balance of public interest factors regarding the application, has been published (48 Federal Register 52077
(1983)). The time for filing comments has expired, and
the Board has considered the application and all
comments received in light of the public interest
factors set forth in section 4(c)(8) of the Act.
BankAmerica is a bank holding company by virtue
of its control of Bank of America NT & SA, San
Francisco, California, the largest commercial banking
organization in California. With total assets of $121
billion as of December 31, 1983, BankAmerica is the
second largest bank holding company in the United
States. BankAmerica also engages in certain nonbanking activities, including mortgage banking, commercial
lending and leasing, credit-related insurance activities,
investment advisory activities, and management consulting to depository institutions.
BankAmerica proposes to engage de novo in the
issuance and sale of variably denominated payment
instruments with a face value of up to $10,000. These
instruments will include domestic and international
money orders and official checks. BankAmerica also
proposes to use these instruments for certain internal
transactions, such as payroll. These instruments will
be issued in U.S. and foreign currency and will be sold
by BankAmerica's subsidiaries, unaffiliated banks,
savings and loan associations, and other financial
institutions. The Board has approved the sale and
issuance of these types of instruments with a face
value not exceeding $1,000.' The Board also has
recently amended Regulation Y to include the issuance
or sale of money orders and other similar consumertype payment instruments with a face value not exceeding $1,000 on the list of permissible nonbanking
activities. 2 Banks have historically been in the business of issuing money orders and similar payment
instruments such as cashier's checks. An increase in
the denomination of such instruments would not effect
their fundamental nature, and the Board concludes
that the issuance and sale of the proposed instruments
is closely related to banking.
2>41
proposed activity by a nonbank affiliate of Applicant
"can reasonably be expected to produce benefits to
the public such as greater convenience, increased
competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."
The facts of record on this proposal indicate that
official checks and consumer-type payment instruments, such as traditional money orders, are marketed
nationally on the wholesale level by a few large
organizations and locally on a retail level by a wide
variety of financial and nonfinancial institutions. On
the national scale, the market is concentrated, being
dominated by only a few large organizations. 3 Entry
into this business on a national scale involves overcoming significant barriers because a potential entrant
must possess the capability for managing the extensive
sales and servicing operation necessary for handling a
low unit price, high volume product. Such capabilities
frequently are associated with banking organizations
of significant size such as BankAmerica. BankAmerica's entry into this market would result in increased
competition in this industry and may be expected
ultimately to result in increased prospects for some
deconcentration of the industry in the future. Accordingly, the Board views BankAmerica's proposal as
procompetitive and in the public interest insofar as it
relates to the issuance of instruments that are intended
primarily for use by consumers.
In its past consideration of the issuance of variably
denominated payment instruments, the Board has
been concerned that the issuance of such instruments
with a face value of over $1,000 would result in an
adverse effect on the reserve base. Because reserve
requirements serve as an essential tool of monetary
policy, the Board is concerned that this proposal may
result in adverse effects due to the erosion of the
reservable deposits of the banking system.
However, in order to assess the effects of the
proposal on the reserve base, the Board has determined to approve the application and to closely monitor the effects of this proposal and any other similar
proposals by bank holding companies on the Board's
conduct of monetary policy. To this end, the Board
will require BankAmerica and any other bank holding
company that receives approval to engage in this
In order to approve the subject application, the
Board must also find that the performance of the
1. Citicorp,
of Texas
6 3 FEDERAL RESERVE B U L L E T I N 4 1 6 ( 1 9 7 7 ) ;
Corporation,
Republic
6 3 FEDERAL RESERVE B U L L E T I N 4 1 4 ( 1 9 7 7 ) .
2. 49 Federal Register
§ 225.25(b)(12)).
828 (1984) (to be codified at 12 CFR
3. Money orders are primarily used to transmit money by members
of the consumer public who do not or cannot maintain checking
accounts. Official checks can be used as a substitute for a variety of
payment instruments, such as cashier's checks, and could be used by
businesses as part of their cash management strategy. Traditionally,
money orders have a maximum face value printed on the instrument,
which is generally at or lower than the limit set by Regulation Y.
366
Federal Reserve Bulletin • April 1984
activity to file with the Board weekly reports of daily
data on this activity. If it later appears that the result of
this proposal is a significant reduction in the reserve
base or other adverse effect on the conduct of monetary policy, the Board may impose reserve requirements on such transactions, pursuant to section 19 of
the Federal Reserve Act, (12 U.S.C. § 461 (a)) and the
Board's Regulation D, (12 CFR Part 204).
In addition to increased competition, BankAmerica
states that its proposal should provide benefits to the
public through reduced costs and increased convenience to the purchaser. BankAmerica states that it
will provide telephone access to customer service
centers, reissue lost or stolen instruments, provide
photocopying of paid instruments, and the selling
institution will be required to disclose to purchasers if
a right to stop payment exists and how that right can
be exercised. The Board believes that such services
would benefit the purchasers of these instruments. In
summary, the Board finds that these instruments,
which will be issued by a large financial organization
and will enjoy ready acceptability, will offer greater
convenience and benefits to the public and foster
increased competition in the industry.
BankAmerica also has applied to engage, though its
subsidiary, BA Cheque, in marketing and servicing
support for its payment instruments. These services
will include the training of personnel in marketing,
sales and consumer service procedures, and certain
data processing activities, such as computerized tracking of instruments from issuance to storage, account
reconciliation and audit, and the preparation of activity reports. Ongoing support also will include marketing services, such as processing consumer requests for
stop payments and for photocopies of paid instruments. The Board believes that these activities are
either permissible under Regulation Y or may be
performed as incidental to the principal activity of
issuing and selling payment instruments. 4
Based upon the foregoing and other considerations
reflected in the record, the Board has determined that
the balance of the public interest factors the Board is
required to consider under section 4(c)(8) is favorable
with respect to the activity of issuing consumeroriented payment instruments. This determination is
subject to all of the conditions set forth in Regulation
Y, including section 225.4(d) and 225.23(b), and to the
Board's authority to require such modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
4. 12 CFR § 225.4(a)(8) and (a)(12) (1983). See also 49 Federal
Register 827-28 (1984) (to be codified at 12 CFR § 225.25(a)(7) and
(a)(ll)).
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
The activities approved hereby shall be commenced
not later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
San Francisco.
By order of the Board of Governors, effective
March 16, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Teeters, and Gramley. Voting against this
action: Governor Rice. Absent and not voting: Governor
Wallich.
JAMES MCAFEE,
[SEAL]
Dissenting Statement
Associate
Secretary of the Board
of Governor
Rice
I dissent from the Board's action regarding this application. The Board's decision to allow BankAmerica to
issue money orders and official checks in denominations up to $10,000 will enable BankAmerica, and
ultimately other banking organizations, to transfer a
significant amount of money orders and official checks
to a nonbank subsidiary that would not be subject to
reserve requirements. Reserve requirements serve as
a basic device for the implementation of monetary
policy, and I am reluctant to take any step that
diminishes the effectiveness of this device unless there
are persuasive reasons to do so. The Board has
previously recognized the potential adverse effects on
the reserve base that would be associated with permitting bank holding companies to issue money orders
without any denominational limits, and has imposed a
$1,000 ceiling on such instruments. Although I believe
that the amount of inflation that has occurred since
that ceiling was initially imposed in 1977 would justify
a moderate increase of that limitation, perhaps to
$2,000, no further increase appears appropriate.
The adverse effect on the reserve base that is
associated with this particular application is certainly
not large, and even if other bank holding companies
follow BankAmerica's example the resulting diminution of the Board's ability to conduct monetary policy
is not likely to be overwhelming, at least on the basis
of the current uses for money orders and official
checks. A ten-fold increase in the ceiling for such
instruments may, however, encourage other uses for
these instruments that could enhance the adverse
effect on reserve requirements. In addition, the exception to reserve requirements that the Board has effectively authorized by its action is only one in a series of
Legal Developments
events and developments resulting in erosion of the
reserve base. I believe that the cumulative effect of
these exceptions could possibly undermine the
Board's ability to conduct monetary policy, and for
this reason I would approve BankAmerica's application only if a much smaller increase in the ceiling for
these instruments were involved.
March 16, 1984
Lawton Financial Corporation
Lawton, Oklahoma
First Frederick Corporation
Frederick, Oklahoma
Order Approving
Southwest Data
Retention of Interest in
Management
Lawton Financial Corporation, Lawton, Oklahoma
("Lawton"), and First Frederick Corporation, Frederick, Oklahoma ("First Frederick") (together "Applicants"), bank holding companies within the meaning
of the Bank Holding Company Act of 1956, as amended ("Act") (12 U.S.C. §§ 1841 et seq.), have applied
for the Board's approval under section 4(c)(8) of the
Act (12 U.S.C. § 1843(c)(8)) and section 225.21(a) of
the Board's Regulation Y (12 CFR § 225.21(a)), for
each to retain a 50 percent ownership interest in
Southwest Data Management, Chattanooga, Oklahoma ("Southwest"). Southwest was formed as a
de novo joint venture by Applicant to provide data
processing services, such as check and deposit posting; computation and posting of interest and other
credits and charges; preparation of statements, notices, and similar items; and other clerical, bookkeeping, accounting, or similar functions for financial institutions in Oklahoma. Such activities have been
determined by the Board to be closely related to
banking and permissible for bank holding companies.
12 CFR § 225.25(b)(7).
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published. The time for filing comments has
expired, and the Board has considered the application
and all comments received in light of the public
interest factors set forth in section 4(c)(8) of the Act. 1
1. The Board has received comments from The Association of Data
Processing Service Organizations ("ADAPSO") requesting that the
Board suspend action on this application pending the outcome of
ADAPSO v. Board of Governors of the Federal Reserve System, Nos.
82-1910 and 82-2108 (D.C. Cir. filed August 6, 1982). The Board does
not believe that such suspension is appropriate. If any of Applicants'
activities are found to be improper as a result of that litigation, the
Board is authorized to take whatever action is necessary to ensure
Applicants comply with the court's order.
2>41
Lawton (assets of $53.5 million) is a bank holding
company by virtue of its control of Citizens Bank,
Lawton, Oklahoma ("Bank"). 2 First Frederick (assets
of $82.1 million), also controls one bank, The First
National Bank and Trust Company, Frederick, Oklahoma ("Frederick Bank"). Neither Lawton nor First
Frederick engages in any other nonbanking activities.
Lawton and First Frederick initially formed Southwest de novo as a general partnership in August 1982
to better serve the data processing needs of Bank and
Frederick Bank. Applicant is now providing data
processing services for another bank in the area and
proposes to offer its services to the other banks in the
state. 3
In its consideration of this proposal, the Board
regards the standards of section 4(c)(8) for the retention of shares in a nonbanking company to be the same
as the standards for a proposed acquisition. The extent
to which this joint venture eliminated competition is
determined by the facts at the time the co-venturers
entered into the activity. In this case, Southwest was
begun de novo and thus did not eliminate any existing
competition in any relevant market. Accordingly, consummation of this proposal would have no adverse
effects upon existing competition in any relevant market.
With respect to potential competition, the Board
finds that, absent the joint venture, neither Lawton
nor First Frederick is likely to engage in data processing activities independently because both companies
lack the financial resources to enter the data processing market separately. Thus, the Board concludes that
consummation of this proposal would not have significantly adverse effects upon competition in any market.
In addition, in view of the small size of the coventurers and the limited nature of the proposed
activity, retention of Southwest would not result in an
undue concentration of economic resources.
Retention of Southwest may be expected to result in
public benefits because the joint venture will provide
an additional source of data processing services to
Oklahoma financial institutions and offer services that
will enable such institutions to reduce the costs associated with processing loans, checks, deposits, and
other similar functions. Further, there is no evidence
in the record to indicate that retention of Southwest
2. Banking data are as of September 30, 1983.
3. Lawton and First Frederick failed to secure the Board's approval
before acquiring Southwest. After reviewing the relevant facts, the
Board concludes that this failure was inadvertent, and in view of
certain assurances provided by Lawton and First Frederick, the
Board has determined that it should not be regarded as reflecting
adversely on the management of Applicants.
368
Federal Reserve Bulletin • April 1984
would result in any conflicts of interests, unsound
banking practices, or other adverse effects.
Based upon the foregoing and certain commitments
by Applicants that are reflected in the record, the
Board has determined that the balance of the public
interest factors it is required to consider under section
4(c)(8) is favorable. Accordingly, the application is
hereby approved. This determination is subject to all
of the conditions set forth in Regulation Y, including
those contained in sections 225.4(d) and 225.23(b), and
to the Board's authority to require such modification
or termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions of and purposes
of the Act, and the Board's regulations and orders
issued thereunder, or to prevent evasion thereof.
By order of the Board of Governors, effective
March 27, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Teeters, and Rice. Abstaining from this
action: Governors Wallich and Gramley.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
Fidelcor, Inc.
Rosemont, Pennsylvania
Order Approving Application to Broker
Options in Foreign Currency
Fidelcor, Inc., Rosemont, Pennsylvania, a bank holding company within the meaning of the Bank Holding
Company Act, 12 U.S.C. § 1841 et seq. ("BHC Act"),
has applied pursuant to section 4(c)(8) of the BHC Act
and section 225.21(a) of the Board's Regulation Y, 49
Federal Register 794 (1984) (to be codified at 12 CFR
§ 225.21(a)), to engage de novo through its wholly
owned subsidiary, Fidelcor Trading Inc., in executing
and clearing options in foreign currency.
Notice of the application, affording interested persons an opportunity to submit comments on the relation of the proposed activity to banking and on the
balance of the public interest factors regarding the
application, has been duly published, 48 Federal Register 52634 (1983). The time for filing comments has
expired and the Board has considered the application
and all comments received in light of the public
interest factors set forth in section 4(c)(8) of the BHC
Act.
Applicant is a bank holding company by virtue of its
control of Fidelity Bank and Southeast National Bank
of Pennsylvania. Applicant's total assets approximate
$5.2 billion.1 Applicant, through its subsidiaries, engages in various permissible nonbanking activities.
The capitalization of Fidelcor Trading is adequate for
it to engage in these nonbanking activities.
In order to approve an application submitted pursuant to section 4(c)(8) of the BHC Act, the Board is first
required to determine that the proposed activities are
closely related to banking or managing or controlling
banks. In this case Applicant proposes to broker
options in foreign currency on exchanges regulated by
the Securities and Exchange Commission ("SEC"). 2
The Board has previously determined by order that the
brokering of options on certain financial physicals,
i.e., securities issued or guaranteed by the U.S. government and on money market instruments is closely
related to banking. 3 The rationale for the Board's prior
action is equally applicable to brokerage of options in
foreign exchange. Moreover, the record indicates that
Fidelity Bank has been active in the cash and forward
markets for foreign currency and has the expertise to
provide the proposed services to customers. Accordingly, the Board concludes that in the manner proposed, Applicant's proposal to broker options in foreign currency is closely related to banking.
In order to approve this application, the Board is
also required to determine that the performance of the
proposed activities by Applicant "can reasonably be
expected to produce benefits to the public, such as
greater convenience, increased competition, or gains
in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased
or unfair competition, conflicts of interests, or unsound banking practices" (12 U.S.C. § 1843(c)(8)).
Consummation of Applicant's proposal would provide added convenience to those clients of Applicant
and its subsidiaries that trade in the cash, forward and
futures markets for these instruments. The Board
expects that the de novo entry of Applicant into the
market for these services would increase the level of
competition among providers of these services already
in operation. Accordingly, the Board concludes that
the performance of the proposed activities by Applicant can reasonably be expected to produce benefits to
the public.
1. All banking data are as of June 30, 1983.
2. Pursuant to an accord between the SEC and the Commodity
Futures Trading Commission ("CFTC"), the substance of which was
adopted by Congress (Pub. L. No. 97-444, 96 Stat. 2294 (codified as
amended at 7 U.S.C. § 2(a) January 11, 1982) and Pub. L. No. 97-303,
% Stat. 1409 (codified as amended at 15 U.S.C. § 77b (October 13,
1982)), options on securities are regulated by the SEC while options
on futures and commodities are regulated by the CFTC. Although
foreign exchange options may be traded on either commodity or
security exchanges, Applicant's proposal is limited to brokering
options in foreign currency on SEC-regulated exchanges.
3 . Security
53 (1984).
Pacific
Corporation,
7 0 F E D E R A L RESERVE BULLETIN
Legal Developments
The Board has also considered the potential for
adverse effects that may be associated with this proposal. In particular, the Board has taken into account
and has relied on the regulatory framework established
pursuant to law by the SEC for the trading of options.
Moreover, the Board notes that Applicant will not
trade for its own account any of the options involved.
Based on the foregoing and all the facts of record, the
Board concludes there is no evidence in the record
that consummation of the proposal would result in any
effects that would be adverse to the public interest.
Based upon a consideration of all the relevant facts,
the Board concludes that the balance of the public
interest factors that the Board is required to consider
under section 4(c)(8) is favorable. Accordingly, the
application is hereby approved. This determination is
subject to all of the conditions set forth in Regulation
Y, including section 225.4(d) and 225.23(b), and to the
Board's authority to require such modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with the provisions
and purposes of the Act and the Board's regulations
and orders issued thereunder, or to prevent evasion
thereof.
The transaction shall be made not later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Philadelphia pursuant
to delegated authority.
By order of the Board of Governors, effective
March 19, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, and Rice. Absent and not voting:
Governors Teeters and Gramley.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
Manufacturers Hanover Corporation
New York, New York
Order Approving Application to Engage in
Certain Futures Commission
Merchant
and Futures Advisory
Activities
Manufacturers Hanover Corporation, New York,
New York, a bank holding company within the meaning of the Bank Holding Company Act, has applied
pursuant to section 4(c)(8) of the Act (12 U.S.C. § 1843
(c)(8)) and section 225.21(a) of the Board's Regulation
Y (49 Federal Register 794, to be codified at 12 CFR
§ 225.21(a)) to engage through its wholly owned sub-
2>41
sidiary, Manufacturers Hanover Futures, Inc., in acting as a futures commission merchant ("FCM") with
respect to certain financial futures. These activities,
subject to certain conditions, have been determined by
the Board to be permissible for bank holding companies under section 225.25(b)(18) of Regulation Y. Applicant has also applied for the Board's approval to
provide certain futures advisory services to both its
FCM customers and others.
Notice of the application, affording interested persons an opportunity to submit comments on the relation of the proposed activities to banking and on the
balance of the public interest factors has been duly
published (48 Federal Register 52643 (1983)). The time
for filing comments has expired and the Board has
considered the application and all comments received
in light of the public interest factors set forth in section
4(c)(8) of the Act.
Applicant is a bank holding company by virtue of its
control of Manufacturers Hanover Trust Company,
New York, New York ("Bank"). Bank holds deposits
of approximately $42 billion and is the third largest
banking organization in New York. 1 Applicant,
through its subsidiaries, engages in various permissible nonbanking activities. Applicant's financial and
managerial resources, and, in particular, its capitalization, are adequate for it to engage in additional nonbanking activities.
Applicant proposes to engage through Futures in
FCM activities to the extent these activities are generally permissible for bank holding companies in the
Board's Regulation Y (12 CFR § 225.25(b)(18)). 2 In
connection with its FCM activities, Applicant also
proposes to offer investment advice to its FCM customers. In addition, Applicant proposes to provide
certain advisory services to non-FCM customers. Applicant indicates that it will charge a separate fee to its
FCM customers and to non-FCM customers for its
advisory services.
The Board has previously determined that the provision of investment advice to FCM customers on a
nonfee basis and as part of an integrated package is
incidental to FCM activities. 3 The Board's decision
was based on the record which, at that time, indicated
that customers generally expected FCM to provide
investment advice, making the offering of investment
advice necessary to the performance of FCM activi-
1. All banking data are as of December 31, 1983.
2. Specifically, Applicant intends to execute and clear futures
contracts in securities issued or guaranteed by the U.S. government,
money market instruments and foreign exchange, and options on
futures contracts for U.S. government securities.
3. E . g . , Citicorp,
6 8 F E D E R A L RESERVE B U L L E T I N 7 7 6 , 7 7 8 ( 1 9 8 2 ) .
370 Federal Reserve Bulletin • April 1984
ties. At this time, there is evidence that while many
customers expect advice, a significant number no
longer do. It is not necessary to resolve at this time the
issue of whether the provision of investment advice is
incidental to permissible FCM activities if the provision of such advice is otherwise closely related to
banking.
Under section 4(c)(8) of the Act, bank holding
companies may engage in activities that the Board
determines to be so closely related to banking as to be
a proper incident thereto. The record demonstrates
that banks, including Applicant's lead bank, create
certain types of financial futures-based hedging strategies for their internal use. The record also indicates
that banks have established subsidiaries which provide
futures advisory services exclusive of any FCM services. Moreover, the proposed advisory services appear to be functionally similar to the investment advisory activities the Board has approved for bank holding
companies generally in section 225.25(b)(4) of Regulation Y. Based on the foregoing, the Board concludes
that, in the manner proposed by Applicant, the provision of futures advisory services is closely related to
banking.
The Board has also considered whether adverse
effects may be associated with the provision of investment advice in connection with futures transactions.
The Board believes a number of factors reduce the
incentive for conflicts in this case: Applicant and its
subsidiary bank are authorized to hold and deal in both
the underlying financial instruments as well as the
futures on these instruments, Applicant will charge a
separate fee for its advice, Applicant will not be a
principal with respect to any of the instruments involved, and Applicant will deal solely with major
corporations and other financial institutions. The
Board is of the view that charging a separate fee for
advice reduces the possibility for churning because it
reduces the incentive to recommend additional trades
to generate fees. Moreover, the possibility for other
conflicts is reduced because Applicant will not be a
principal or dealer with respect to any of the instruments involved and, therefore, would not benefit if
any one futures or option contract was selected over
another. In addition, Applicant's customers will be
major corporations and financial institutions that are
experienced in dealing in the underlying financial
instruments. Moreover, there is no evidence that
consummation would result in any other adverse effects within the meaning of section 4(c)(8).
Finally, the record indicates that consummation is
reasonably likely to result in public benefits. Applicant's performance of these activities would result in
an added competitor in the market, providing additional services to existing customers of Applicant and
would enable Applicant to compete with other FCMs
which provide these services.
Based on the foregoing and other considerations
reflected in the record, the Board has determined that
the balance of the public benefits associated with
consummation of this proposal can reasonably be
expected to outweigh possible adverse effects, and
that the balance of the public interest factors which the
Board is required to consider under section 4(c)(8) is
favorable. Accordingly, the application is hereby approved.
This determination is subject to the conditions set
forth in the Board's Regulation Y and the Board's
authority to require such modification or termination
of the activities of a holding company or any of its
subsidiaries as the Board finds necessary to assure
compliance with the provisions and purposes of the
Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
The proposed activities shall not commence later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of New
York acting pursuant to delegated authority.
By order of the Board of Governors effective March
8, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, and Gramley. Absent and not voting:
Governors Martin and Teeters.
JAMES MCAFEE,
[SEAL]
Associate
Secretary
of the Board
Security Pacific Corporation
Los Angeles, California
Order Approving Acquisition
of Factoring
Assets
Security Pacific Corporation, Los Angeles, California,
a bank holding company within the meaning of the
Bank Holding Company Act (12 U.S.C. § 1841, et
seq.), has applied for the Board's approval under
section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and
section 225.23(a)(2) of the Board's Regulation Y
(12 CFR § 225.23(a)(2)) to acquire, through its subsidiary, Security Pacific Business Credit Inc., Los Angeles, California ("SPBCI"), the factoring assets of:
Citicorp Industrial Credit, Inc., Harrison, New York;
Citicorp Business Credit, Inc., New York, New York;
and Citibank, N.A., New York, New York (collectively "Companies"). This activity has been determined
by the Board to be closely related to banking (12 CFR
§ 225.25(b)(1)).
Legal Developments 2>41
Notice of the application, affording opportunity for
interested persons to submit comments on the public
interest factors, has been duly published (49 Federal
Register 4150 (1984)). The time for filing comments
has expired, and the Board has considered the application and all comments received in light of the factors
set forth in section 4(c)(8) of the Act.
Applicant is a bank holding company by virtue of its
control of Security Pacific National Bank, Los Angeles, California, the second largest commercial bank in
California, with domestic deposits of $20.9 billion,
representing 12.7 percent of the total deposits in
commercial banks in the state. 1 Applicant also engages
in a number of nonbanking activities, including discount brokerage, commercial leasing, mortgage banking, and insurance activities.
The Board has determined that the relevant market
for factoring activities is national.2 On the basis of the
total volume of factoring in 1982, Applicant factored
$370 million in receivables, or 1.26 percent of the total
of factored receivables in the United States, while
Companies handled a volume of $700 million, or 2.38
percent of the total of factored receivables. 3 Upon
consummation of the proposal, Applicant would rank
as the 10th largest factoring firm in the United States,
with 3.64 percent of the total volume of factored
receivables. 4 There are numerous firms engaged in
factoring activities and the market for these activities
is unconcentrated. In view of the number of factoring
firms competing nationwide and the small market
share that would result from consummation of this
proposal, the Board concludes that the consummation
of the proposal would not have any adverse effects on
existing competition.
Recently, Companies announced their intention to
withdraw from the factoring business and thus, they
have not been vigorous competitors in the provision of
factoring services. This acquisition would enable
SPBCI to continue to serve Companies' current factoring customers. In addition, the acquisition of Companies by SPBCI would result in lower overhead costs
and permit it to expand its customer base geographically and in terms of the type of customers that it
serves.
1. Deposit data are as of March 31, 1983.
2. Barclays Bank Limited, 66 FEDERAL RESERVE BULLETIN 980
(1980).
3. Daily News Record, February 14, 1983.
4. Based on the amount of factored receivables held by the 29
largest factoring firms as of December 31, 1982, Applicant, through its
subsidiary SPBCI, is the 23rd largest factoring firm, holding receivables of approximately $45 million, representing 1.08 percent of the
total factored receivables in the United States. Companies held
receivables of $70 million, representing 1.68 percent of all factored
receivables in the United States. Based on these data, upon consummation of the proposal, SPBCI would become the 15th largest
factoring firm in the country.
On the basis of these and other facts of record, the
Board concludes that the benefits to the public that
would result from Applicant's acquisition of Companies are consistent with approval. Moreover, there is
no evidence in the record that consummation of the
proposal would result in any undue concentration of
resources, decreased or unfair competition, conflicts
of interests, unsound banking practices, or other adverse effects.
Based upon the foregoing and other considerations
reflected in the record, the Board has determined that
the balance of the public interest factors it is required
to consider under section 4(c)(8) is favorable. Accordingly, the application is hereby approved. This determination is subject to the conditions set forth in
§ 225.23(b)(3) of Regulation Y and to the Board's
authority to require such modification or termination
of the activities of a holding company or any of its
subsidiaries as the Board finds necessary to assure
compliance with the provisions and purposes of the
Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof. The transaction shall not be made later than three months after
the effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of San Francisco, acting pursuant to delegated authority.
By order of the Board of Governors, effective
March 8, 1984.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, and Gramley. Absent and not voting:
Governors Martin and Teeters.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary
of the Board
U . S . Trust Corporation
N e w York, N e w York
Order Approving Expansion of Activities of Trust
Company to Include Checking Accounts
and Consumer Lending
U.S. Trust Corporation, New York, New York, a
bank holding company within the meaning of the Bank
Holding Company Act (12 U.S.C. § 1841 et seq.)
("Act"), has applied for approval under section 4(c)(8)
of the Act (12 U.S.C. § 1843(c)(8)) and section
225.23(a)(1) of the Board's Regulation Y (12 CFR
§ 225.23(a)(1)) to expand the activities of its subsidiary, U.S. Trust Company, Palm Beach, Florida
("Trust Company"), to include the acceptance of time
and demand deposits, including checking accounts,
and the making of consumer loans. These activities
372
Federal Reserve Bulletin • April 1984
have been previously determined by the Board to be
closely related to banking. 12 CFR § 225.25(b)(1); First
Bancorporation (Beehive Thrift & Loan), 68 FEDERAL
RESERVE BULLETIN 253 (1982); Citizens Fidelity Corporation,
69 FEDERAL RESERVE BULLETIN 556 (1983).
Notice of the application, affording opportunity for
interested persons to comment, has been duly published (48 Federal Register 55178 (1983)). The time for
filing comments and views has expired and the Board
has considered the application and all comments received, including those submitted by the State of
Florida, the Florida Bankers Association, the Conference of State Bank Supervisors, and Sun Bank/Palm
Beach ("Protestants") in opposition to the proposal,
in light of the factors set forth in section 4(c)(8) of the
Act (12 U.S.C. § 1843(c)(8)).
Applicant is the 19th largest commercial banking
organization in New York, with total consolidated
assets of $1.8 billion. Applicant operates one subsidiary bank with total deposits of $1.2 billion.1
Trust Company at present is a state chartered nondepository trust company that engages in the provision
of fiduciary, investment advisory, agency, and custody services for local customers in Florida. Applicant
has stated that Trust Company will convert to a
national bank charter prior to engaging in the proposed
activities and will obtain FDIC insurance for its deposits. Trust Company proposes to olfer a number of
different types of deposit accounts to the general
public, including checking accounts with a minimum
deposit of $10,000. Trust Company also will offer loans
to individuals for personal, family, household, or
charitable purposes.
Applicant has stated that Trust Company will not
engage in the business of making commercial loans,
including the purchase of commercial paper or certificates of deposit, the sale of federal funds, or any
transactions that the Board has defined as commercial
loans in its recent revisions to Regulation Y. Applicant
states that Trust Company's excess funds will be
invested in investment securities permitted for national banks under 12 U.S.C. section 24 (seventh). Applicant does not currently engage in any commercial
lending activities or operate any other subsidiaries in
Florida and has stated that it will seek the Board's
prior approval before engaging in any commercial
lending activities in Florida. Moreover, Applicant has
stated that trust company will not channel funds to any
commercial lending affiliate or engage in any transactions with affiliates without the Board's approval.
Accordingly, it appears that Trust Company will not
engage in the business of making commercial loans
either directly or indirectly.
"Bank" Definition
This proposal raises a significant issue as to whether
the acceptance of demand deposits through an FDIC
insured national bank can be regarded as a permissible
nonbanking activity under the Act. The Board on a
number of occasions has expressed its views that an
institution that is chartered as a bank and that accepts
transaction accounts from the public should be subject
to the policies that Congress has established for banks
in the BHC Act. 2 Nevertheless, although the Board
believes that approval of this proposal presents a
serious potential for undermining the policies of the
Act, the Board is constrained by the definition of bank
in the Act to approve the application.
The Act defines a "bank" as an institution that both
accepts demand deposits and engages in the business
of making commercial loans. (12 U.S.C. § 1841(c)). In
its recent action defining the term "bank," (12 CFR
§ 225.2(a)(1)), the Board acted to the extent possible
consistent with the language, legislative history and
policies of the Act to bring within the scope of the Act
those institutions that the Board believes Congress
intended to subject to the Act's limitations on conflicts
of interests, concentration of resources, and excessive
risk. It was the Board's intention, in part, to bring
within the scope of the policies of the Bank Holding
Company Act those institutions that engage in essential banking functions that the Board believes Congress intended to be covered by these policies.
The activities proposed by Trust Company have
been tested against this definition of bank. As noted
above, Trust Company will accept demand deposits
but not make commercial loans as defined by the
Board in Regulation Y. Thus, Trust Company will not
be a bank within the meaning of the Bank Holding
Company Act. In this situation, where the applicant
will not make commercial loans in Florida either
directly or indirectly through any affiliate, the Board
does not have the discretion to find that the proposal
falls within the prohibitions on interstate acquisitions contained in section 3(d) of the Act (12 U.S.C.
§ 1842(d)), which only applies to the acquisition of
banks as defined in section 2(c) of the Act.
The Board also has considered that companies other
than bank holding companies have acquired banks that
offer transaction accounts without being subject to the
Act. The Board believes that it would be ineffective
and inequitable to impose a competitive limitation only
on bank holding companies by denying this proposal.
2. Citizens Fidelity Corporation,
supra. See also Citicorp,70
ERAL RESERVE B U L L E T I N 2 3 1 ( 1 9 8 4 ) ; Mellon
1. Deposit data are as of September 30, 1983.
7 0 FEDERAL RESERVE B U L L E T I N 2 3 4 ( 1 9 8 4 ) .
National
FED-
Corporation,
Legal Developments
Protestants'
Comments
Protestants argue, however, that the Board should
view U.S. Trust Corporation as a single entity engaged
in commercial banking operations by accepting demand deposits through U.S. Trust Company and in
commercial lending through other subsidiaries in Florida in violation of section 3(d) of the Act. As noted,
however, Applicant does not directly or indirectly
engage in commercial lending through any subsidiary
in Florida. Under these circumstances, the Board
cannot conclude that Trust Company is a bank under
the Act subject to the restrictions of section 3(d).
Protestants also argue that the proposal would violate the provision in Florida law that prohibits an outof-state bank holding company from acquiring "any
bank or trust company having a place of business in
[Florida] where the business of banking or trust business or functions are conducted." Florida Statutes,
§ 658.29(1). It is the Board's general policy to presume
the constitutionality of state statutes unless there is
clear and unequivocal evidence of the inconsistency of
the state law with the federal Constitution. 3 In this
case, the Supreme Court has held a predecessor to the
Florida statute unconstitutional to the extent that it
prohibited out-of-state bank holding companies from
offering investment advisory services. 4 Moreover, a
U.S. district court has recently held that the very
Florida statute at issue in this case constitutes an
unconstitutional burden on interstate commerce to the
extent that it seeks to prevent out-of-state bank holding companies from operating in Florida entities that
do not meet the definition of "bank" in the Bank
Holding Company Act. 5 Accordingly, the proposal
does not appear to be barred by any valid provision of
state law.
Need for Congressional
Action
The requirement of Board approval of this application
under the provisions of existing law is one of a number
of recent developments that underscore the critical
need for Congressional action on legislation to apply
the policies of the Bank Holding Company Act to
institutions that are chartered as banks and that offer
3 . NCNB
Corp.,68
F E D E R A L RESERVE B U L L E T I N 5 4 , 5 6
(1982).
The Board has previously stated that it is doubtful that a state has the
authority to impose a more stringent burden on interstate commerce
than that contained in section 3(d). KSAD, Inc., 70 FEDERAL RESERVE
BULLETIN 4 4 (1984).
4. Lewis v. B.T. Investment Managers, All U.S. 27 (1980).
5. Continental Illinois Corporation v. Lewis, TCA 81-0944-WS
(slip opinion dated December 13, 1983).
6. First Bancorporation v. Board of Governors, (10th Cir. 1984, slip
opinion dated February 21, 1984). The Board is seeking a rehearing of
the case before the Tenth Circuit.
2>41
transaction accounts to the public. The recent decision
of the Tenth Circuit Court of Appeals reversing the
Board's interpretation of NOW accounts as demand
deposits in connection with a bank holding company
acquisition of a Utah industrial loan company, 6 and
the continued acquisition of nonbank banks by securities, insurance, and other nonbanking organizations
present the potential for a significant, haphazard, and
possibly dangerous alteration of the banking structure
without Congressional action on the underlying policy
issues.
If the nonbank bank concept, particularly as expanded by the interpretation of demand deposit adopted by the Tenth Circuit, becomes broadly generalized,
a bank holding company or commercial or industrial
company, through exploitation of an unintended loophole, could operate "banks" that offer NOW accounts
and make commercial loans in every state, thus defeating Congressional policies on commingling of banking
and commerce, conflicts of interest, concentration of
resources and excessive risk, or with respect to limitations on interstate banking. Congressional action thus
is urgently needed to ensure that the policies of the Act
are maintained. In this regard, the Board does not
believe that any public policy would be served by
grandfathering proposals such as this that occur subsequent to the introduction of legislation that would
otherwise prohibit such transactions.
Other
Considerations
There is no evidence that consummation of this proposal would result in any conflicts of interest, unsound
banking practices, or other adverse effects. The Board
believes it is appropriate, however, to take action to
ensure that Trust Company is not used by Applicant as
a vehicle for evasion of section 3(d). Accordingly, the
Board has determined to make its approval subject to
the conditions that:
(1) Applicant will not operate Trust Company's
demand deposit taking activities in tandem with any
other subsidiary or other financial institutions;
(2) Applicant will not link in any way the demand
deposit and commercial lending services that define
a bank under the Act; and
(3) Trust Company will not engage in any transactions with affiliates, other than the payment of
dividends to Applicant or the infusion of capital by
Applicant into Trust Company, without the Board's
approval.
Protestants have requested a hearing because of the
serious policy issues raised by the subject proposal
and because they claim that there are certain factual
questions that need clarification. The Board has concluded that the issues in this case are legal in nature
374
Federal Reserve Bulletin • April 1984
and that there are no material factual issues in dispute
that would warrant a hearing on the application.
Accordingly, Protestants' hearing request is denied.
Based upon the foregoing and all the facts of record,
the Board has determined that the balance of public
interest factors it is required to consider under section
4(c)(8) is favorable. Accordingly, the application is
hereby approved. This determination is subject to the
conditions set forth in this Order with respect to
transactions and operations in tandem with any other
subsidiary of Applicant or other financial institutions
and the conditions set forth in section 225.23(b) of
Regulation Y (12 CFR § 225.23(b)). The approval is
also subject to the Board's authority to require modification or termination of the activities of the holding
company or any of its subsidiaries as the Board finds
necessary to assure compliance with the provisions
and purposes of the Act and the Board's regulations
and orders issued thereunder, or to prevent evasion
thereof.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
March 23, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, and Partee. Voting against this action:
Governor Rice. Absent and not voting: Governors Teeters
and Gramley.
JAMES MCAFEE,
[SEAL]
Dissenting Statement
Associate
Secretary
of Governor
of the Board
Rice
I agree with the Board's order to the extent that it
recognizes the serious implications of this proposal
and makes strong recommendations for Congressional
action. Although the majority feels compelled to approve the application on grounds that U.S. Trust
Company does not come within the Board's broad
definition of "bank," I would deny the proposal
because it would have the practical effect of permitting
a bank holding company to engage in interstate banking without express authorization of state law in a
manner that would otherwise be prohibited by the
Douglas Amendment. It also provides a precedent for
acquisitions of national banks that accept demand
deposits by nonbanking organizations without regard
to the fundamental policy of the Bank Holding Company Act against commingling of banking and commerce.
In my view, the Board is not limited by the technical
definition of "bank" and has authority to deny this
application using its broad discretionary powers to
take appropriate action to prevent evasions of the Act.
Moreover, under section 4(c)(8) of the Act, the Board
may deny a proposal if it determines that the adverse
effects of the proposal are not outweighed by any
public benefits associated with the proposal. I believe
that the adverse effects of this proposal are so seriously adverse as to outweigh any public benefits. Accordingly, I would deny the proposal.
March 23, 1984
Orders Issued Under Sections 3 and 4 of the
Bank Holding Company Act
Bank of New England Corporation
Boston, Massachusetts
Order Approving Merger of Bank Holding
Companies and Acquisition of Companies Engaged
in Commercial Finance, Leasing, Real Estate
Lending, Factoring and General Trust Company
Activities
Bank of New England Corporation, Boston, Massachusetts ("BNE"), a bank holding company within the
meaning of the Bank Holding Company Act of 1956, as
amended (12 U.S.C. § 1841 et seq.) ("BHC Act"), has
applied for the Board's approval under section 3(a)(5)
of the Act (12 U.S.C. § 1842(a)(5)), to merge with CBT
Corporation, Hartford, Connecticut ("CBT"), also a
bank holding company, and thereby to acquire indirectly The Connecticut Bank and Trust Company,
N.A., Hartford, Connecticut. In addition, BNE has
applied for the Board's approval under section 4(c)(8)
of the Act (12 U.S.C. § 1843(c)(8)) and section
225.23(a)(2) of the Board's Regulation Y (12 U.S.C.
§ 225.23(a)(2)) to acquire CBT's nonbanking subsidiaries: CBT Trust Company of Florida, N.A., West Palm
Beach, Florida ("CBT Trust"); Lazere Financial Corporation, New York, New York ("Lazere"); CBT
Business Credit Corporation, Hartford, Connecticut
("BCC"); CBT Factors Corporation, New York, New
York ("Factors"): CBT Realty Corporation, Hartford, Connecticut ("Realty"); and General Discount
Corporation, Boston, Massachusetts ("GDC"). These
companies, with the exception of CBT Trust, are
subsidiaries of CBT Financial Corporation, Hartford,
Connecticut, a company organized as a holding company for CBT's nonbanking subsidiaries. CBT Trust
engages in general trust company activities in Florida.
Lazere and BCC offer accounts receivable, inventory
Legal Developments
and equipment financing. Factors engages in "advance" and "maturity" factoring, and Realty in real
estate lending. GDC, with subsidiaries in Maine, Massachusetts and Canada, engages in capital equipment
financing through lending and leasing, and its Canadian subsidiary, CBT Leasing Limited, conducts such
lending and leasing activities outside the United States
pursuant to section 4(c)(13) of the Act (12 U.S.C.
§ 1843(c)(13)). All of these activities have been determined by the Board to be closely related to banking
under sections 225.25(b)(1), (3) and (5) of Regulation Y
(12 CFR § 225.25(b)(1), (3) and (5)).
Notice of these applications, affording an opportunity for interested persons to submit comments, has
been given in accordance with sections 3 and 4 of the
Act (48 Federal Register 41524). The time for filing
comments has expired and the Board has considered
the applications and all comments received in light of
the factors set forth in section 3(c) (12 U.S.C.
§ 1842(c)) and the considerations specified in section
4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). In particular, the Board has considered the comments of Citicorp, New York, New York, and Northeast Bancorp,
Inc., New Haven, Connecticut, as well as the comments of several community groups located in Hartford, Connecticut.
BNE, with twelve bank subsidiaries, has consolidated assets of $5.9 billion and deposits of $3.7 billion,
representing 13.3 percent of the total deposits in
commercial banks in Massachusetts. 1 BNE is the
fourth largest commercial banking organization in
Massachusetts. CBT, which has total assets of $5.9
billion and total deposits of $3.4 billion, is the largest
bank holding company in Connecticut. CBT holds 24.8
percent of all deposits in commercial banks in Connecticut. Upon consummation of the proposed merger, BNE would become the second largest bank holding company in New England in terms of assets and
the largest in terms of domestic deposits.
Section 3(d) of the Act (12 U.S.C. 1842(d)), the
Douglas Amendment, prohibits the Board from approving any application by a bank holding company to
acquire any bank located outside of the state in which
the operations of the bank holding company's banking
subsidiaries are principally conducted, unless such
acquisition is "specifically authorized by the statute
laws of the State in which such bank is located, by
language to that effect and not merely by implication."
The statute laws of Connecticut authorize the acquisition of a banking institution in Connecticut by a bank
holding company that controls a bank located in
1. Banking data are as of June 30, 1983.
2>41
another New England state, if that other New England
state authorizes on a reciprocal basis the acquisition of
a bank in that state by a Connecticut bank holding
company. 2 Massachusetts has passed a reciprocal
statute that authorizes such an acquisition. 3
The Banking Commissioner of Connecticut and the
Massachusetts Board of Bank Incorporation have approved this proposed merger pursuant to these reciprocal Interstate Banking Acts, thus finding that the
transaction satisfies the requirements of the respective
statutes authorizing the interstate acquisition of banks.
Based upon its review of the Connecticut Interstate
Banking Act ("CIBA"), the Board concludes that
Connecticut has by statute expressly authorized a
Massachusetts bank holding company, such as BNE,
to acquire a Connecticut bank or a Connecticut bank
holding company, such as CBT. Thus, the Connecticut
Act meets the requirement of express authorization for
interstate bank acquisitions imposed by section 3(d) of
the Bank Holding Company Act.
The Connecticut and Massachusetts statutes are the
first to be enacted that provide explicitly for limited
interstate banking on a regional basis. Rhode Island
has also enacted regional interstate banking legislation
that limits entry into Rhode Island to bank holding
companies located in New England. 4 The restriction in
the Rhode Island statute, however, is of limited duration. After two years the Rhode Island statute provides for national reciprocity, permitting entry of bank
holding companies from any state that will admit
Rhode Island bank holding companies.
The regional interstate banking system developing
in New England raises issues of considerable importance because no fewer than 15 state legislatures are
considering proposals that, if enacted, would create
regional banking systems in every part of the country.
The Georgia legislature has already passed a regional
interstate banking statute, and there are proposals for
regional banking systems in the Southeast (Florida and
Georgia and a combination of other states as far north
as Virginia), the Northwest (Washington, Oregon and
Idaho), the Mid-Atlantic (New Jersey, Pennsylvania
and several other states as far south as Virginia) and
the Mid-West (several different regional groupings
under discussion). Both the increasing number of
states considering such proposals and the progress of
the proposed legislation toward enactment suggest
2. 1983 Conn. Acts 411 (Reg. Sess.) entitled "An Act Concerning
Interstate Banking" ("Connecticut Interstate Banking Act" or
"CIBA"), § 2.
3. Mass. Ann. Laws ch. 167A ("Massachusetts Interstate Banking
Act"), § 2.
4. R.I. Gen. Laws §§ 19-30-1, 19-30-2 (Supp. 1983).
376
Federal Reserve Bulletin • April 1984
that, should the New England interstate banking zone
be upheld, a system of regional zones may develop
involving major areas of the nation.5
The Constitutionality
of the Connecticut
Statute
Protestants, Citicorp and Northeast Bancorp, Inc.,
have challenged the constitutionality of the Connecticut Interstate Banking Act 6 and, in particular, the
provisions of CIBA that allow only New England bank
holding companies 7 to acquire banks or bank holding
companies located in Connecticut. The Protestants
assert that such discriminatory legislation is unconstitutional under the provisions of the Compact Clause, 8
the Equal Protection Clause 9 and the Commerce
Clause 10 of the United States Constitution.
The requirement that the Board address these issues
derives from a series of judicial decisions beginning
with Whitney National Bank in Jefferson Parish v.
Bank of New Orleans and Trust Company, 379 U.S.
411 (1965), which required that the Board make a
finding in the first instance on the applicability and
validity of state laws that purport to authorize the
particular transaction before the Board.11 The United
States Court of Appeals for the District of Columbia
Circuit confirmed that this requirement applied to
constitutional issues when it stated in Iowa Independent Bankers Association v. Board of Governors of the
Federal Reserve System, 511 F.2d 1288, 1293 n.4
5. To date, only Maine (Me. Rev. Stat. Ann. tit. 9-B, § 1013 (as
amended February 7, 1984)) and Alaska (Alaska Stat. § 06.05.235
(Supp. 1983)) permit interstate banking without restriction, although
New York permits entry of bank holding companies from any state on
a reciprocal basis (N.Y. Banking Law § 142-b (McKinney Supp.
1983)).
6. By letter of November 16, 1983, counsel for BNE asserts that
Citicorp is not a party in interest to this proceeding with standing to
raise issues concerning the constitutionality of CIBA. Pursuant to
section 105 of the BHC Act, 12 U.S.C. § 1850, Northeast clearly will
become a competitor to BNE upon consummation of this acquisition.
Moreover, the Board believes that Citicorp, too, is a party in interest
for purposes of this proceeding before the Board since Citicorp
competes in Connecticut and Massachusetts with BNE and CBT,
although on a somewhat limited basis, and, except for the restrictions
contained in the very statute it challenges, it has the potential to
become a more substantial competitor.
7. New England bank holding companies include those with their
principal place of business in Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, and Vermont. The Connecticut
statute further restricts the definition of "New England bank holding
company" to exclude bank holding companies directly or indirectly
controlled by bank holding companies outside of New England. CIBA
thus prohibits non-New England bank holding companies from "leapfrogging" into the Connecticut market through Maine or other New
England states that may enact interstate banking statutes without
regional restrictions.
8. U. S. Const., Article I, section 10, clause 3.
9. U. S. Const., Amendment XIV, section 1.
10. U. S. Const., Article I, section 8, clause 3.
11. Justice Douglas in his dissent in Whitney noted that the specific
issue with respect to the Louisiana statute at issue in that case would
require the Board to decide a "bare, bald question o f . . . constitution-
(1975), that it felt constrained "to register . . . substantial doubt that the Board can continue to presume
conclusively the constitutional validity of state or
federal laws in light of the Supreme Court's opinion in
[Whitney]
While in cases prior to Iowa Independent
Bankers,
supra, the Board declined to consider constitutional
issues, NCNB
Corp.,
59 FEDERAL RESERVE BULLE-
TIN 305, 307 (1973), 12 the reservations about this
course of action expressed by the D.C. Circuit in that
case has led the Board to review the constitutionality
of state statutes, although the Board has decided that it
will not "hold a state statute to be unconstitutional
without clear and unequivocal evidence of the inconsistency of the state law with the federal Constitution." NCNB
Corp.,
68 FEDERAL RESERVE BULLETIN
54, 56 (1982).13 The Board believes this standard to be
consistent with the principle of statutory construction
that legislatures are presumed to have acted within
constitutional limits, 14 as well as with the historic role
of the judicial branch of government in balancing state
and federal interests in construing the scope of the
constitutional powers of the states. This approach is
also consistent with the Board's primary expertise and
delegated responsibility under the Act—to review
bank holding company expansion proposals for compliance with the public benefits test of section 4(c)(8)
of the Act, including financial, competitive and community convenience and needs criteria.
Thus, the Board will require evidence of a clear
conflict with the United States Constitution before the
Board will find that CIBA constitutes an invalid authorization for the interstate merger of bank holding
companies proposed in this case.
The Board has examined carefully the arguments
advanced by Protestants and the unique and fundamental constitutional issues presented by CIBA in the
context of the extensive record before the Board.
After review of the record, the Board concludes that,
ality." 379 U.S. at 431. See also First State Bank ofClute v. Board of
Governors, 553 F.2d 950 (5th Cir. 1977), and Gravois Bank v. Board of
Governors, 478 F.2d 546 (8th Cir. 1973), which do not deal with
constitutional issues but require a decision by the Board as to the
applicability of state laws to bank holding company acquisitions.
12. See also Bankers Trust New York Corp. ,59 FEDERAL RESERVE
BULLETIN 364 (1973) and Northwest Bancorporation,
38 Federal
Register 21530 (1973).
13. See also Florida Coast Banks, Inc., 68 FEDERAL RESERVE
BULLETIN 781 (1982); Florida Coast Banks, Inc., 69 FEDERAL RESERVE BULLETIN 454 (1983). Moreover, the Board has indicated on
one occasion that were it to follow the interpretation of a state statute
urged by a party to an application it would be compelled to declare the
statute to be unconstitutional. KSAD, Inc., 70 FEDERAL RESERVE
BULLETIN 4 4 ( 1 9 8 4 ) .
14. See Clements v. Fashing, 102 S. Ct. 2836, 2843 (1982); South
Carolina State Highway Department v. Barnwell Bros., Inc., 303 U.S.
177, 195 (1938); Atchison, Topeka & Santa Fe Ry. Co. v. Matthews,
174 U.S. 96 (1899).
Legal Developments
while the issue is not free from doubt, there is no clear
and unequivocal basis for a determination that CIB A is
inconsistent with the Commerce Clause, Compact
Clause or Equal Protection Clause of the United States
Constitution. 15 Accordingly, the Board will not deny
this application on the grounds urged by Protestants
that CIB A is unconstitutional. The analysis of this
proposal under sections 3 and 4 of the Bank Holding
Company Act is based upon this finding.
Considerations Under Sections 3 and 4 of the
Bank Holding Company Act
In addition to determining that the merger of BNE and
CBT is expressly authorized by a valid statute as
required by section 3(d) of the BHC Act, the Board
must decide whether this acquisition is consistent with
the standards of sections 3 and 4 of the Act.
Section 3 Considerations.
BNE's twelve banking
subsidiaries operate in nine of the fourteen Massachusetts banking markets, 16 while CBT's single bank
subsidiary operates in each of the ten Connecticut
banking markets. 17 Since BNE's banking subsidiaries
do not operate in Connecticut and CBT's banking
subsidiary does not operate in Massachusetts, the
proposed transaction would not eliminate any significant existing competition in any relevant banking
market.
The Board also has considered the effects of this
proposal on probable future competition in light of its
proposed guidelines for assessing the competitive effects of market-extension mergers or acquisitions. 18 In
evaluating the effects of a proposal on probable future
competition, the Board considers market concentration, the number of probable future entrants into the
market, the size of the bank to be acquired, and the
15. The staff analysis of the constitutional issues raised by Protestants is contained in an appendix to this Order and is made a part of
the Board's findings in this case.
16. These Massachusetts banking markets include Boston, Springfield, Cape Cod, Fall River, N e w Bedford, Amherst-Northhampton,
Greenfield, North Adams-Williamstown and Athol. B N E also operates in the Massachusetts portion of the Providence, Rhode Island,
banking market.
17. These Connecticut banking markets include Hartford, New
Haven, Bridgeport, Waterbury, N e w London, Danbury, Torrington,
Danielson, Willimantic and Old Saybrook. CBT also operates in the
Connecticut portion of the N e w York market.
18. "Proposed Policy Statement of the Board of Governors of the
Federal Reserve System for Assessing Competitive Factors under the
Bank Merger Act and the Bank Holding Company Act," 47 Federal
Register 9017 (March 3, 1982). Although the proposed policy statement has not been adopted by the Board, the Board is using the policy
guidelines in its analysis of the effects of a proposal on probable future
competition.
2>41
attractiveness of the market for entry on a de novo or
foothold basis absent approval of the acquisition.
With respect to the ten banking markets in Connecticut in which CBT operates, the record shows that
either the markets are not highly concentrated or there
are numerous other probable future entrants into the
markets. Connecticut permits the acquisition of banks
in Connecticut by bank holding companies located in
other New England states, and there are a number of
commercial banking organizations, including five in
Massachusetts (other than BNE) and three in Rhode
Island, with assets over $1 billion each that can be
identified as probable future entrants into the Connecticut banking markets. Moreover, the Board notes that
market concentration ratios and CBT's rank and market share drop significantly in each Connecticut market when deposits of thrift institutions are considered.
In view of these considerations and other facts of
record, the Board concludes that elimination of B N E
as a probable future entrant into markets served by
CBT would not have a substantial anticompetitive
effect in those markets.
With respect to the nine Massachusetts 19 banking
markets in which BNE operates, the record shows that
there are a number of commercial banking organizations, including three commercial banking organizations in Connecticut (other than CBT) and three in
Rhode Island with assets over $1 billion each, that can
be identified as probable future entrants into each of
the nine relevant markets. The markets with the
fewest number of potential entrants, Boston and Cape
Cod, are also not concentrated. Moreover, BNE is not
a market leader in several markets, particularly when
the deposits of thrift institutions are considered. On
the basis of these and other facts of record, the Board
concludes that the elimination of CBT as a probable
future entrant would not have a substantial anticompetitive effect in the nine markets served by BNE.
The financial and managerial resources of BNE,
CBT, and their subsidiaries are considered satisfactory and their prospects appear favorable. This finding
is based, in part, on the fact that BNE has committed
to a program to raise additional capital through a
common stock offering and, in particular, to improve
the capital position of its lead bank, Bank of New
England, N.A., Boston, Massachusetts.
19. BNE has less than a one percent market share in the Providence, Rhode Island, banking market and CBT has less than a one
percent market share in the N e w York, N e w York, banking market.
As a result, only Massachusetts and Connecticut markets are discussed in this Order.
378
Federal Reserve Bulletin • April 1984
The Board has considered the convenience and
needs of the communities to be served. Although both
BNE and CBT offer a complete range of banking
services, consummation of this merger would provide
more favorable access to the capital markets and
thereby permit BNE to provide expanded access to
consumer banking services in Connecticut and Massachusetts, additional credit capacity for growing commercial customers and the presence of a substantial
New England based competitor to meet growing competition from nonbanking financial conglomerates in
the financial services industry.
In considering the convenience and needs of the
communities to be served, the Board has also examined the record of BNE and CBT and their banking
subsidiaries in meeting the credit needs of their communities, as provided in the Community Reinvestment
Act of 1977 (12 U.S.C. §§ 2901-05)("CRA") and the
Board's Regulation BB (12 CFR § 228). The CRA and
Regulation BB require the Board to assess the record
of the banking subsidiaries of any applicant in meeting
the credit needs of their local communities, including
low- and moderate-income neighborhoods, consistent
with safe and sound operations. Although the Board
does not ordinarily consider the CRA record of the
acquiree, the Board, for purposes of this case, has
considered the CRA records not only of BNE's banking subsidiaries but also that of CBT because this
merger involves two bank holding companies of approximately equal size.
Three Hartford, Connecticut, neighborhood citizens
associations, Frog Hollow Residents Coalition, Concerned Citizens of Southwest and Behind the Rocks
Neighborhood Association, have protested this application on the basis of an alleged failure of CBT to meet
the housing financing needs of the low- and moderateincome neighborhoods of Hartford.20 In addition, the
Frog Hollow Residents Coalition alleged that CBT has
failed to honor a commitment made in July 1982 to
provide a special fund for mortgage, home improvement and housing rehabilitation loans to owner-occupants of the Frog Hollow community.
The community group Protestants have failed to
present any substantial evidence to support their position. Nevertheless, the Board has considered the
20. The Small Business Association of New England requested a
hearing on the application to explore a concern that the merger of
major New England banks would result in larger institutions that
might not be responsive to the credit needs of small business enterprises. After a meeting with officials of CBT and BNE, the Small
Business Association of N e w England was satisfied and it withdrew
its request for a hearing.
issues raised by Protestants and the extensive response CBT has provided with respect to its lending
history and practices in Protestants' neighborhoods.
The record demonstrates that, pursuant to a July 1982
commitment, CBT has established a special housingrelated lending program for the Frog Hollow community and has made a significant commitment of funds at
favorable rates and without ancillary costs. CBT has
also documented its commitment to meet the housing
needs of low- and moderate-income neighborhoods
through housing ventures with other companies and
neighborhood groups.
In the neighborhoods of the other two Protestants,
Behind the Rocks and Southwest, CBT has a strong
record of home improvement loans and it ranks among
the leading lending institutions in those areas in terms
of the number of home improvement loans. CBT has
also documented a low demand for first mortgages in
these two areas. CBT has made a commitment to
increase its efforts to make residents of Protestants'
communities aware of its loan programs. Based on the
foregoing and other facts in the record, the Board
concludes that CBT and BNE have satisfactory records of compliance with the CRA. The considerations
relating to the convenience and needs of the communities to be served weigh in favor of approval.
Section 4(c)(8) Considerations. B N E has also applied under section 4(c)(8) of the BHC Act to acquire
the nonbanking subsidiaries of CBT, including Lazere,
BCC, Factors, GDC and Realty, which are all organized as subsidiaries of CBT Financial. 21 BNE has
only one active nonbanking subsidiary operating pursuant to section 4(c)(8). 22 CBT's only nonbanking
subsidiary that operates in Massachusetts is GDC,
which is engaged in leasing and lending activities.
GDC derives approximately $14 million in commercial
loans and leasing activities from the entire state of
Massachusetts.
This proposal would have only minimal impact on
actual competition among nonbanking subsidiaries of
BNE and CBT. Moreover, this proposal will have no
significant impact on existing competition between
BNE's subsidiary banks and GDC. Given the size of
CBT's equipment financing subsidiary and the limited
21. CBT's nonbanking subsidiaries will represent less than two
percent of the consolidated assets of the merged corporation.
22. BNE received approval after the filing of this application to
acquire de novo a subsidiary to engage in leasing activities. That
subsidiary, BNE Capital Corporation, Boston, Massachusetts, began
operations on December 28, 1983.
Legal Developments
scope of its activities in Massachusetts, the Board
does not believe this transaction will result in any
significant decreased competition.
There is no evidence in the record that this transaction will result in any undue concentration of resources, unfair competition, unsound banking practices, conflicts of interest or other adverse effects.
Based upon these and other considerations reflected in
the record, the Board has determined that the balance
of public interest factors that it is required to consider
under section 4(c)(8) of the Act is favorable.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
section 3 and 4 of the Act should be and hereby are
approved for the reasons set forth above.
In approving this application the Board does not
intend to express any conclusion concerning the desirability, as a matter of national policy, of the regional
arrangements provided for by CIBA. The Board recognizes that interstate banking is a highly complex
issue that unavoidably involves the balancing of a
number of different considerations. However, if the
New England regional approach to interstate banking
is emulated in other parts of the country, there is a
potential danger that the result could be to divide the
country into a number of banking regions. The Board
believes that the public policy issues that are raised by
the regional approach are inherently national and
would be best resolved by Congressional action.
The acquisition of CBT's banking subsidiaries pursuant to section 3 of the Act shall not be made before
the thirtieth calendar day following the effective date
of this Order or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Boston, pursuant to delegated authority. The approval of BNE's proposal to
acquire CBT's nonbank subsidiaries and to engage in
equipment financing, leasing, real estate lending, factoring, and accounts receivable financing is subject to
all the conditions set forth in Regulation Y, including
section 225.4(d) and section 225.23(b), and to the
Board's authority to require modification or termination of the activities of a holding company or any of its
subsidiaries as the Board finds necessary to assure
compliance with the provisions and purposes of the
Act and Board's regulations and orders issued thereunder, or to prevent evasion thereof.
By order of the Board of Governors, effective
March 26, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Teeters, Rice, and Gramley.
JAMES M C A F E E ,
[SEAL]
Associate
Secretary of the Board
2>41
Appendix to the Order Approving the Application of
Bank of New England Corporation,
Boston,
Massachusetts, to Merge with CBT Corporation,
Hartford,
Connecticut
Citicorp, New York, New York, and Northeast Bancorp, Inc., New Haven, Connecticut, have protested
the application of Bank of New England Corporation,
Boston, Massachusetts, to merge with CBT Corporation, Hartford, Connecticut. Citicorp and Northeast
argue that the application should be denied because
the Connecticut Interstate Banking Act ("CIBA") is
unconstitutional and therefore insufficient to authorize
the proposed merger. Protestants challenge the provisions of CIBA that allow only New England bank
holding companies 1 to acquire banks or bank holding
companies located in Connecticut. The Protestants
assert that such discriminatory legislation is unconstitutional under the provisions of the Compact Clause, 2
the Equal Protection Clause 3 and the Commerce
Clause4 of the United States Constitution.
CIBA (and the similar statute enacted in Massachusetts) raises unique constitutional issues. There are
many decided cases defining the permissible scope of
state regulations favoring their own residents against
those of all other states, but apparently no judicial
decisions testing the constitutionality of state regulatory arrangements which discriminate in favor of residents of selected regional groupings of states and
exclude residents of all other states from the benefits
provided to the regional groups. 5
1. New England bank holding companies include those with their
principal place of business in Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, and Vermont. The Connecticut
statute further restricts the definition of "New England bank holding
company" to exclude bank holding companies directly or indirectly
controlled by bank holding companies outside of New England. CIBA
thus prohibits non-New England bank holding companies from "leapfrogging" into the Connecticut market through Maine or other New
England states that may enact interstate banking statutes without
regional restrictions.
2. U.S. Const., Article I, section 10, clause 3.
3. U.S. Const., Amendment XIV, section 1.
4. U.S. Const., Article I, section 8, clause 3.
5. While there are judicial decisions upholding interstate agreements, these agreements have not had the objective of discrimination
but rather that of cooperation on a subject matter of exclusive interest
to the states that are parties to these agreements. See, e.g., Washington Metropolitan Area Transit Authority v. One Parcel of Land, 706
F.2d 1312, 1314 (4th Cir.), cert, denied, 104 S. Ct. 238 (1983);
Jacobson v. Tahoe Regional Planning Agency, 566 F.2d 1353, 1357
(9th Cir. 1977), afiTd in part and rev'd in part sub nom. Lake Country
Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391
(1979).
380 Federal Reserve Bulletin • April 1984
Considerations
Under the Compact
Clause
The Compact Clause of the United States Constitution
states that "[n]o State shall, without the Consent of
Congress . . . enter into any Agreement or Compact
with another State, or with a foreign Power. . . ." 6
The Supreme Court has indicated that an interstate
agreement is within the parameters of the Compact
Clause and thus subject to the requirement of congressional consent only when: (1) an interstate compact or
agreement exists, (2) that tends to increase the power
of the compacting states in such a manner as to
interfere with federal supremacy. 7
CIBA, when considered in light of its legislative
history and the actions of other New England states, is
part of an effort to create a regional banking zone. The
regional banking acts of Connecticut, Massachusetts
and Rhode Island contain very similar provisions, and
they were enacted within a six-month period between
December, 1982, and June, 1983. Passage of the acts
was preceded during a four-month period by a formal
meeting of representatives of the New England states
to discuss regional interstate banking, by the formation of a New England Committee to Study and
Promote Regional Interstate Banking, by testimony of
legislators at hearings on the issue before legislative
committees in other New England states, and by
apparent review and comments on the proposed Connecticut legislation by the Massachusetts Banking
Department. The debate on the Connecticut bill refers
to an "agreement" or "compact" on regional interstate banking.8
The Supreme Court in Virginia v. Tennessee, 148
U.S. 503, 517-518 (1893), stated that the terms "agreement" and "compact" as used in the Compact Clause
are "sufficiently comprehensive to embrace all forms
of stipulation, written or verbal, and relating to all
kinds of subjects." In United States Steel Corp. v.
Multistate Tax Commission, 434 U.S. 452, 470 (1978),
the Court specifically addressed the issue of reciprocal
statutes and stated that "agreements effected through
6. Art. I, § 10, cl. 3. This clause has been invoked infrequently,
particularly in recent years when expanded interpretation of what
constitutes interstate commerce has meant that agreements among
states more frequently might be invalidated as burdening interstate
commerce in violation of the Commerce Clause.
7. See United States Steel Corporation v. Multistate Tax Commission, 434 U.S. 452 (1978); Virginia v. Tennessee, 148 U.S. 503 (1893).
8. See Transcripts of Connecticut Senate Debate, May 18, 1983
("Conn. Sen. Debate") at 61, 96 (Sen. Sullivan); Transcripts of
Connecticut House of Representatives Debate, May 26, 1983 ("Conn.
House Debate") at 224, 234, 236 (Rep. Onorato) and 276, 277 (Rep.
Jaekle).
reciprocal legislation may present opportunities for
enhancement of state power at the expense of the
federal supremacy similar to the threats inherent in a
more formalized 'compact'. . . . " The Court emphasized that the federal impact rather than the form of
the agreement is the critical inquiry under the Compact Clause. Accordingly, while in form CIBA can be
considered to be part of an implicit compact or agreement that has never been approved or authorized by
Congress, as the cases cited above indicate, CIBA
would violate the Compact Clause only if it constitutes
an enhancement of state powers at the expense of
federal supremacy.
No such claim of infringement upon federal supremacy could be maintained, however, if CIBA has been
authorized by Congress in the Douglas Amendment.
The compatibility of CIBA with the Compact Clause
turns on whether Congress in the Douglas Amendment
granted the states plenary power to regulate entry of
out-of-state bank holding companies, thereby renouncing a federal interest in such regulation for
purposes of the Compact Clause. The intent of Congress in enacting the Douglas Amendment is more
fully discussed below, infra at 15-27, and, for reasons
stated therein, the Douglas Amendment should be
read as a renunciation of federal interest in regulating
the interstate acquisition of banks by bank holding
companies. As a result CIBA does not appear to
violate the Compact Clause.
Considerations
Under the Equal Protection
Clause
Protestants also challenge the constitutionality of
CIBA as a violation of the Equal Protection Clause of
the Fourteenth Amendment, which provides "[n]o
State shall . . . deny to any person within its jurisdiction the equal protection of the laws." Protestants
argue that CIBA's exclusion of non-New England
bank holding companies is an arbitrary restriction
unrelated to any legitimate state purpose.
The Supreme Court in New Orleans v. Dukes, All
U.S. 297, 303 (1976) (per curiam), articulated the
following, frequently cited standard of judicial scrutiny under the Equal Protection Clause: 9
Unless a classification trammels fundamental personal rights
or is drawn upon inherently suspect distinctions such as race,
religion, or alienage, our decisions presume the constitutionality of the statutory distinctions and require only that the
classification challenged be rationally related to a legitimate
state purpose.
9. See also Dandridge v. Williams, 397 U.S. 471, 484-486 (1971);
Iowa Independent Bankers Association v. Board of Governors, supra.
Legal Developments
Application of the test of whether economic legislation is "rationally related to a legitimate state purpose" involves two inquiries: (1) whether the challenged statute has a legitimate purpose, and (2)
whether it was reasonable for the legislature to believe
the challenged classification would promote that purpose. 10
In answering these inquiries, the Supreme Court has
afforded great deference to a state's statements of
legislative purpose and its statutory classifications to
achieve those purposes. The Supreme Court has ordinarily been willing to uphold any classification based
"upon a state of facts that reasonably can be conceived to constitute a distinction, or difference in state
policy. . . " Allied Stores of Ohio, Inc. v. Bowers, 358
U.S. 522, 530 (1959). The court will sustain economic
legislation "if any set of facts reasonably may be
conceived to justify it." McGowan v. Maryland, 366
U.S. 420, 426 (1961).
For the purpose of analysis under the Equal Protection Clause, CIB A appears to be rationally related to
an attempt to maintain a banking system responsive to
local needs in New England. The Hebb Report, a
report prepared by a Commission appointed by the
Connecticut legislature to study interstate banking,
indicates that the purposes of CIBA include avoiding
undue concentration of resources, maintaining the
responsiveness of the banking system to local credit
needs and providing an opportunity for a limited
interstate banking experiment. 11 A finding of a rational
basis for CIBA is consistent with the decision of the
Court of Appeals for the District of Columbia Circuit
in Iowa Independent Bankers, supra, upholding an
Iowa statute against an Equal Protection Clause argument although that statute permitted only one out-ofstate bank holding company to operate in Iowa. This
case held that state statutes, such as CIBA, governing
admission of out-of-state bank holding companies into
a particular state, such as Connecticut, involve essentially economic legislation and do not raise issues of
fundamental rights or draw upon suspect classifications. Since CIBA does not impinge those rights found
to be fundamental by the Supreme Court or employ
inherently suspect classifications, it will not be closely
scrutinized by the courts under the Equal Protection
Clause.
Thus, Connecticut can advance a sufficiently rational purpose in enacting CIBA to meet the less strin-
10. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456,
461-463(1981); Western and Southern Life Insurance Co.,451 U.S. at
668.
11. ' 'The Report to the General Assembly of the State of Connecticut of The Commission to Study Legislation to Limit the Conduct of
Business in Connecticut by Subsidiaries of Bank Holding Companies," January 5, 1983 ("The Hebb Report"), pp. 10, 12-13.
2>41
gent scrutiny of the courts under the "rational purpose" test. On this basis, CIBA does not appear to
violate the Equal Protection Clause of the Fourteenth
Amendment.
Considerations
Under the Commerce
Clause
BNE and CBT assert that Congress, in the Douglas
Amendment, conferred upon each state complete authority to permit, regulate or condition the entry into
the state by out-of-state bank holding companies for
the purpose of engaging in banking activities. BNE
and CBT argue that Congress authorized the states not
only to determine whether to permit acquisitions of
banks across state lines but also to determine the
extent to which to permit such acquisitions. Protestants, on the other hand, assert that the Douglas
Amendment does not authorize states to place discriminatory restrictions on the admission of out-ofstate bank holding companies, particularly on a stateby-state basis.
1. CIBA Under the Commerce Clause. Absent congressional authorization of CIBA in the Douglas
Amendment, it appears that CIBA would be inconsistent with the standards for state action under the
Commerce Clause as established by the Supreme
Court. The central concern behind the Commerce
Clause, according to the Court, is a desire "to avoid
the tendencies toward economic Balkanization that
had plagued relations between the Colonies and later
among the States under the Articles of Confederation," Hughes v. Oklahoma, 441 U.S. 322, 325-326
(1978), and to create a "federal free trade unit" based
on a principle that "our economic unit is the Nation"
and that "the states are not separable economic
units." H. P. Hood & Sons, Inc. v. DuMond, 336 U.S.
525, 537-538 (1947).
The Court has applied the Commerce Clause as
granting Congress the power "[to] regulate commerce
. . . among the several states," 12 and also as a limitation on the power of the states to impose barriers to or
burdens on interstate commerce. 13 The basic rationale
for this interpretation is both economic and political,
and these concerns are particularly applicable to state
statutes that selectively confer benefits on one or more
other states and deny these same benefits to still other
states. The Court has forcefully stated these core
concerns:
12. U. S. Const., Art. I, § 8, cl. 3.
13. Great Atlantic and Pacific Tea Company
366, 370-71 (1976).
v. Cottrell, 424 U.S.
382
Federal Reserve Bulletin • April 1984
This Court has not only recognized this disability of the state
to isolate its own economy as a basis for striking down
parochial legislative policies designed to do so, but it has
recognized the incapacity of the state to protect its own
inhabitants from competition as a reason for sustaining
particular exercises of the commerce power of Congress to
reach matters in which states were so disabled.
The material success that has come to inhabitants of the
states which make up this federal free trade unit has been the
most impressive in the history of commerce, but the established interdependence of the states only emphasizes the
necessity of protecting interstate movement of goods against
local burdens and repressions. We need only consider the
consequences if each of the few states that produce copper,
lead, high-grade iron ore, timber, cotton, oil or gas should
decree that industries located in that state shall have priority.
What fantastic rivalries and dislocations and reprisals would
ensue if such practices were begun!
Our system, fostered by the Commerce Clause, is that
every farmer and every craftsman shall be encouraged to
produce by the certainty that he will have free access to every
market in the Nation, that no home embargoes will withhold
his exports, and no foreign state will by customs, duties or
regulations exclude them. Likewise, every consumer may
look to the free competition from every producing area in the
Nation to protect him from exploitation by any. Such was the
vision of the Founders; such has been the doctrine of this
Court which has given it reality.
H. P. Hood & Sons, 336 U.S. at 538-39 (citations omitted).
The states retain the authority, particularly pursuant
to their powers to safeguard the health and safety of
their residents, to regulate matters of legitimate local
concern in such a way as may impose incidental
burdens on interstate commerce. However, the states
may not regulate in a manner that imposes more than
an incidental burden on interstate commerce 14 or that
discriminates against articles of commerce from outside a given state unless there is some reason apart
from their origin to treat them differently. 15
In those instances where the states have acted to
effect purposes of simple economic protectionism or in
a manner that is patently discriminatory, the Supreme
Court has held such state statutes to be per se unconstitutional.16 In those cases where the states credibly
advance a legitimate state purpose other than protection of local business, the Court has applied a balancing test, weighing whether the statute in question
serves a legitimate state purpose and whether it could
accomplish that purpose in a manner less burdensome
to interstate commerce. 17
14. Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978).
15. Lewis v. BTInvestment Managers, Inc., 447 U.S. at 27, (1980).
See also Philadelphia v. New Jersey, supra, at 626-627.
16. Philadelphia v. New Jersey, supra, at 624.
17. Hughes v. Oklahoma, 441 U.S. 322, 336 (1979); Pike v. Bruce
Church, Inc., 397 U.S. 137, 142 (1970).
Absent authorization by the Douglas Amendment, it
would appear that, under the standards applied by the
Court,18 CIBA imposes a burden on interstate commerce of the type that would be found by the courts to
violate the Commerce Clause. CIBA permits only
bank holding companies located in New England to
engage in banking activities in Connecticut while denying that right to bank holding companies located
elsewhere. The discriminatory nature of CIBA is apparent from its legislative history, which demonstrates
the intention of the Connecticut legislature to permit
Connecticut banks and bank holding companies to
develop and consolidate on a regional basis before
having to compete with banks outside the region. 19
BNE and CBT contend that CIBA does not conflict
with the Commerce Clause decisions of the Supreme
Court because CIBA relieves the ban or burden on
interstate commerce imposed by Congress to the extent that it would replace six different banking zones in
the individual New England states with a single barrier-free New England zone. They argue that Congress
has imposed a restriction on interstate banking in the
Douglas Amendment and that it has permitted the
states to lift that ban by a specific statutory enactment.
In support of this position, BNE and CBT cite
Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 815—
816 (Stevens, J. concurring)(1976). In Alexandria
Scrap, the Supreme Court upheld a Maryland statute
that paid a bounty for destruction of any junked car
formerly titled in Maryland despite a challenge that the
statute made it easier for Maryland scrap processors to
prove that a vehicle had been titled in Maryland than it
did for out-of-state processors. The Court held that
where a state acted as a market participant the Commerce Clause did not apply. 20 The Connecticut regional banking zone at issue in this case is clearly an
18. See Dean Milk Co. v. Madison, 340 U.S. 349 (1951) (ordinance
of the City of Madison, Wisconsin, requiring all milk sold in Madison
to be processed and bottled at a plant within five miles of the city);
Pennsylvania v. West Virginia, 262 U.S. 553 (1923) (West Virginia
requirement that all local needs for natural gas be met before natural
gas could be shipped out of the state); H. P. Hood & Sons v. DuMond,
336 U.S. 525 (1949) (denial of a milk receiving plant in N e w York to a
Massachusetts distributor because it would injure local competition);
Philadelphia v. New Jersey, 437 U.S. 617 (1978) (New Jersey law
prohibiting the import of liquid or solid waste which originated or was
collected outside the State of N e w Jersey); Lewis v. BT Investment
Managers, Inc., 447 U.S. 27 (1980) (Florida law prohibiting out-ofstate bank holding companies from engaging in investment advisory
activities).
19. The Hebb Report, supra, at 12. See also Conn. Sen. Debate,
supra, at 60, 64, 70 (Statement of Senator Sullivan) and Conn. House
Debate at 241, 258 (Statement of Representative Onorato).
20. In his concurring opinion, Justice Stevens suggested that the
decision in effect held that, since Maryland "created a market that did
not previously exist," it could not be found to burden commerce. 426
U.S. at 815-816.
Legal Developments
example of the regulatory rather than proprietary
function of the State of Connecticut, and Connecticut
is not itself creating commerce by its own direct
intervention in the marketplace. The reliance of BNE
and CBT on the Alexandria Scrap rationale thus
appears to be misplaced and, in fact, succeeding
Supreme Court decisions seem to limit the Alexandria
Scrap reasoning to those situations where the states
are "market participants" rather than "market regulators." See Reeves, Inc. v. Stake, 447 U.S. 429, 436
(1980).21
Even if CIBA were not to be considered a per se
unconstitutional burden on interstate commerce, the
disparate treatment of non-New England bank holding
companies does not appear to be justified "as an
incidental burden necessitated by legitimate local concerns." Lewis v. BT Investment Managers, supra, 447
U.S. at 42. The Supreme Court suggested in the Lewis
case that with respect to banking there are legitimate
state interests in "discouraging undue economic concentration," "maximizing local control" and "regulating financial practices presumably to protect local
residents from fraud." Id. at 43. The Court, however,
found in that case that a complete ban on out-of-state
entry into the trust business in Florida could not be
justified as an incidental burden necessitated by legitimate local concerns. The Court noted that there were
other regulatory techniques available to deal with local
concerns that non-resident bank holding companies
were more likely to be sources of monopoly power or
fraud than local companies.
Similarly, in this case, there are less restrictive
means than a discriminatory geographic restriction to
accomplish the objectives of the Connecticut legislature. There is no indication that all New York or New
Jersey companies, for example, raise greater problems
with respect to local control and economic concentration than those of Massachusetts and Rhode Island. To
accomplish the objective of avoiding concentration of
resources in a non-discriminatory manner limitations
could be placed on total banking assets or total deposits that a bank holding company may hold in order to
qualify for additional acquisitions within Connecticut.
These and other less discriminatory alternatives suggest that CIBA would not be viewed as an incidental
burden on interstate commerce necessitated by legiti-
21. "[T]he Commerce Clause responds principally to state taxes
and regulatory measures impeding private trade in the national
marketplace. . . . There is no indication of a constitutional plan to
limit the ability of the States themselves to operate freely in the free
market." Id. at 436-437 (citations omitted). See also White v. Massachusetts Council of Construction Employers, 103 S. Ct. 1042 (1983);
United Building & Construction Trades Council v. Mayor & Council
of Camden, 52 U.S.L.W. 4187 (U.S. Feb. 21, 1984).
2>41
mate local concerns. This conclusion is consistent
with the Supreme Court's finding in the Lewis case
that Florida's interest in local control did not justify a
prohibition on entry of non-resident trust companies
because of the discriminatory burden which the limitation imposed on interstate commerce. Thus, CIBA
does not appear to be consistent with the prohibition in
the Commerce Clause on discrimination against interstate commerce by the states. 22
2. Discrimination Authorized by the Douglas Amendment. BNE and CBT, however, contend that the
Douglas Amendment authorizes the discrimination
provided for by CIBA. The Douglas Amendment
provides:
Notwithstanding any other provision of this section, no
application shall be approved under this section which will
permit any bank holding company or any subsidiary thereof
to acquire, directly or indirectly, any voting shares of,
interest in, or all or substantially all of the assets of any
additional bank located outside of the State in which the
operations of such bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date
on which such company became a bank holding company,
whichever is later, unless the acquisition of such shares or
assets of a State bank by an out-of-State bank holding
company is specifically authorized by the statute laws of the
State in which such bank is located, by language to that effect
and not merely by implication. For the purposes of this
section, the State in which the operations of a bank holding
company's subsidiaries are principally conducted is that
State in which total deposits of all such banking subsidiaries
are largest.
12 U.S.C. § 1842(d)(1).
The Supreme Court in Lewis, supra, 447 U.S. at 47,
described this language as establishing a general federal prohibition on acquisition or expansion of banking
subsidiaries across state lines and as conferring on the
states only "authority to create exceptions to this
general prohibition.''
It is clear that if Congress, in the Douglas Amendment, authorized discriminatory state action, CIBA
would not be unconstitutional under the Commerce
Clause. In the specific context of the Douglas Amendment, the Supreme Court has stated that Congress
may prohibit as well as promote commerce 23 and may
22. In Northeast Bancorp v. Wolf, (Civil Action H-83-654), the
U.S. District Court for the District of Connecticut in an opinion issued
December 16, 1983, dismissed a challenge to the Connecticut Act on
standing grounds but it described the Act as ". . . statutory provisions
that discriminate between N e w England and non-New England
banks. . . . "
23. See Prudential Insurance Company v. Benjamin, 328 U.S. 408,
434 (1946).
384 Federal Reserve Bulletin • April 1984
exercise its plenary power under the Commerce
Clause "by conferring upon the States an ability to
restrict the flow of interstate commerce that they
would not otherwise enjoy." Lewis v. BT Investment
Managers, Inc., 447 U.S. 27, 44 (1980).24 The issue
presented by CIBA is the extent of a state's powers
when it decides to lift the Douglas Amendment prohibition. Does the Douglas Amendment, which establishes a total prohibition on acquisitions by out-ofstate bank holding companies, authorize a state to
discriminate among the states when it permits entry?
Does the Douglas Amendment permit Connecticut to
admit bank holding companies from neighboring Massachusetts and other New England States meeting
certain qualifications regarding reciprocity but not
from other states even if they were to meet the
reciprocity qualifications?
It is, therefore, necessary to determine the scope of
authorization, if any, for states to discriminate among
other states in lifting the Douglas Amendment's ban
against interstate acquisition of banks by bank holding
companies. This task is more difficult because, as
noted above, this case involves an unusual form of
discrimination. There is a long history of decisions of
the Supreme Court and lower federal courts involving
the application of the Commerce Clause to state laws
that provide a preference for their own residents as
against those of all other states. N o case has been
found under the Commerce Clause or generally in the
literature on this Clause, in which a state has provided
for preferential treatment of its own citizens and those
of selected other states, while excluding the residents
of all other states from this favored treatment.
In deciding cases where the differential treatment is
applied against all other states equally, the Supreme
Court requires, in order to find an authorization for
discrimination in federal statutes, that such authorization be "expressly" 25 or "explicitly" 26 or "specifically" 27 stated in federal law. In Sporhase v. Nebraska,
458 U.S. 941, 960 (1982), defendants challenged a
Nebraska law restricting the export of ground water as
an impermissible burden on interstate commerce. Nebraska argued in defense of its statute that the congressional intent to authorize otherwise impermissible
burdens on interstate commerce was demonstrated by
24. See also Prudential Insurance Company at 423-24.
25. New England Power Co. v. New Hampshire, 455 U.S. 331,
340-41 (1982).
26. Western and Southern Life Insurance Co. v. State Board of
Equalization, 451 U.S. 648, 653-654 (1981).
27. White v. Massachusetts
Council of Construction
Employers,
103 S. Ct. 1042 (1983).
37 federal statutes in which Congress had indicated its
intent not to preempt state water laws and by congressional authorization of certain interstate surface water
compacts. The Court rejected this argument, holding
that these federal statutes did not show an "expressly
stated" intention to remove Commerce Clause restraints on state water laws. Similarly, in New England Power Company v. New Hampshire, 455 U.S.
331, 341 (1982), and in Lewis, supra, the Court held
that federal statutes reserving to the states residual
authority over export of electricity or over bank
holding companies were in no sense affirmative grants
of power to the states to impose undue burdens on
interstate commerce. The Court may have relaxed this
high standard somewhat in White v.
Massachusetts
Council of Construction Employers, 103 S. Ct. 1042
(1983), where it approved geographic restrictions on
the hiring of non-resident workers for city-funded
construction projects, relying upon the explicit regulations of the Department of Housing and Urban Development and a general, unspecific authorization in
federal statute for such regulations.
Based on these requirements for specificity, the
Douglas Amendment does not appear on its face to
authorize discrimination by Connecticut in favor of its
own residents and those of Massachusetts and other
New England states having reciprocal laws, but
against all other states. The Douglas Amendment's
general authorization to the Board of Governors to
permit interstate acquisitions if they are " . . . specifically authorized by the statute laws of the State in
which such bank is located, by language to that effect
and not merely by implication," does not appear to
meet the stringent test of explicitness laid down by the
Supreme Court.
BNE and CBT argue, however, that the legislative
history of the Douglas Amendment indicates the intention of the Congress to give the states complete
discretion in setting the terms of entry of out-of-state
bank holding companies without the limitations imposed by the Commerce Clause. While reliance on the
legislative history is a valid method of determining that
Congress authorized the lifting of Commerce Clause
restrictions with respect to a particular state enactment, the Supreme Court has expressed reluctance to
place undue weight on this type of inquiry in an
attempt to find authority from Congress for states to
discriminate against the residents of other states. The
Court has stated:
Reliance on . . . isolated fragments of legislative history in
divining the intent of Congress is an exercise fraught with
hazards, and "a step to be taken cautiously."
New England Power, 455 U.S. at 341, quoting Piper v. Chris-Craft
Industries, Inc., 430 U.S. 1, 26 (1976).
Legal Developments
When Congress has not expressly stated an intent to
permit state legislation otherwise inconsistent with the
Commerce Clause, the Court has no authority to
rewrite the legislation "based on mere speculation of
what Congress probably had in mind." Id. at 343. 28
The Douglas Amendment was proposed during the
debate on the Senate floor and there is no committee
report or other significant legislative history to clarify
its meaning. 29 There was very little discussion of the
power of the states to override the interstate banking
ban imposed by the Douglas Amendment and no
discussion of the power of the states to discriminate
among potential out-of-state entrants. 30 Congress was
clearly more concerned with the federal prohibition on
interstate acquisitions than on terms under which the
states could lift this ban.
In his remarks during the Senate debate, Senator
Douglas, sponsor of the Amendment, referred to the
ability of the states to permit the entry of out-of-state
bank holding companies "only to the degree that state
laws expressly permit them." 31 He also stated that the
Amendment paralleled the McFadden Act restrictions
on the power of national banks to branch intrastate
and interstate "in a way contrary to State policy." 32
Thus it can be persuasively argued that Senator Douglas construed his amendment as granting plenary power to the states to set their own policies and to permit
entry of out-of-state bank holding companies to the
degree that they chose. However, there is also an
argument that the excerpts from the Senate debate are
too fragmentary and unspecific to show congressional
intent to authorize discrimination otherwise contrary
28. The Court has allowed discrimination against other states
generally based upon a clear statement of congressional intent contained in the legislative history of a federal statute. Relying on the
clearly expressed intention of Congress, derived from the legislative
history, to leave insurance regulation exclusively to the states, the
Court has found the McCarran-Ferguson Act, 15 U.S.C. § 1011 et
seq., to authorize discriminatory state statutes that would otherwise
offend the Commerce Clause. Prudential Insurance Company v.
Benjamin, 328 U.S. 408, 427-432 (1946), and Western and Southern
Life Insurance Co., supra, 451 U.S. at 465.
29. The pertinent debates are found at 102 Cong. Record 6750-58
and 6854-62 (1956).
30. See Iowa Independent Bankers v. Board of Governors of the
Federal Reserve System, 511 F.2d 1288 (D.C. Cir.), cert, denied 423
U.S. 875 (1975).
31. "[W]hat our amendment aims to do is to carry over into the
field of holding companies the same provisions which already apply
for branch banking under the McFadden Act—namely, our amendment will permit out-of-State holding companies to acquire banks in
other States only to the degree that State laws expressly permit them;
and that is the provision of the McFadden Act." 102 Cong. Record
6858 (1956).
32. "[The amendment] is a logical continuation of the principles of
the McFadden Act, which tried to prevent the Federal power from
being used to permit national banks to expand across State lines in a
way contrary to State policy and, of course, under the McFadden Act,
even to expand within a State." 102 Cong. Record 6860 (1956).
2>41
to the Commerce Clause, especially where the Supreme Court has required such explicit and clear
authorization of discrimination by the Congress because of the fundamental implications of such discrimination for the federal union.
The Board has a limited amount of judicial guidance
on this issue. The only court to consider the legislative
history of the Douglas Amendment has been the U.S.
Court of Appeals for the District of Columbia Circuit
in Iowa Independent Bankers Association v. Board of
Governors, 511 F.2d 1288, 1293 (1975). The case
involved, in part, a challenge under the Equal Protection Clause of the Fourteenth Amendment to the Iowa
statute that permitted, on the basis of their location in
the state prior to the enactment of the Bank Holding
Company Act Amendments of 1970, out-of-state bank
holding companies operating two or more banks in
Iowa to continue to expand and to acquire new banks
in Iowa on the same basis as a local bank holding
company.
A less stringent standard applies to state action
under the Equal Protection Clause than under the
Commerce Clause. Under the former provision a state
need only show that its economic legislation, presuming it does not affect fundamental rights or create a
suspect classification, bears a rational relationship to a
legitimate state purpose. Under the Commerce
Clause, however, discrimination is disabling per se,
and even when a statute only imposes an incidental
burden on interstate commerce it will be struck down
if such burden is clearly excessive in relation to
expected local benefits. The Court upheld the constitutionality of the Iowa statute under the Equal Protection Clause on the basis that it was actually a statute
that conferred grandfather rights on the only out-ofstate bank holding company operating in Iowa.
The Court then turned to petitioners argument that
the Iowa statute conflicted with federal law, specifically with the Douglas Amendment. Petitioners in Iowa
Independent Bankers advanced the argument that the
Iowa statute conflicted with "implicit . . . prohibition
against discrimination between out-of-state bank holding companies," 33 which, they asserted, was intended
by Congress in the Douglas Amendment. They argued
that under the Douglas Amendment states may only
decide "whether to extend the right to acquire in-state
banks to all out-of-state bank holding companies or to
prohibit such acquisitions entirely." 34 The Court then
reviewed the limited legislative history of the Douglas
Amendment and these arguments, finding that Congress did not intend to bar discrimination like that
33. Iowa Independent
34. Ibid.
Bankers, supra, 511 F.2d at 1296.
386 Federal Reserve Bulletin • April 1984
embodied in the Iowa statute. The Court also stated
that the Douglas Amendment conferred on the states a
right to control the expansion of interstate banking "so
that such expansion would not contravene state
policy." 35
The Court's review of the legislative history of the
Douglas Amendment in Iowa Independent
Bankers
was not conducted for purposes of determining the
validity of the Iowa statute under the Commerce
Clause. Therefore, the Court did not focus on the
Supreme Court's standard of review under the Clause
and did not consider whether the alleged legislative
authorization by the Douglas Amendment is express
and unambiguous so as to sanction discrimination
against interstate commerce that would otherwise run
afoul of the Commerce Clause.
The actions of the states and the Board in interpreting and applying the Douglas Amendment also lend
some support to the position that the Amendment
authorizes the states to permit restricted or conditional
entry of out-of-state bank holding companies such as
sanctioned by CIBA. As early as 1972, Iowa enacted a
statute that accorded certain grandfather rights to
expand and to make additional acquisitions to out-ofstate bank holding companies already controlling two
or more banks in Iowa 36 —establishing, in fact, a
preference for a particular out-of-state bank holding
company against all other non-resident companies.
Recently, Nebraska enacted a similar statute. 37 In
addition, Delaware, 38 Maryland, 39 Virginia40 and Nebraska41 have permitted out-of-state bank holding
companies to acquire local banks under certain conditions, including limitations on activities, number of
offices and home office location, which are not imposed on in-state bank holding companies. One of the
major purposes of such legislation is to gain employment for local residents and tax revenues for the state
without seriously affecting competing local banking
businesses; the statutes accomplish this by permitting
out-of-state bank holding companies to export their
credit card operations to states with less restrictive
usury laws. Similarly, South Dakota has recently
permitted the entry of out-of-state bank holding companies on a limited basis to acquire a state bank with a
35. Id. at 1297. In Conference of State Bank Supervisors
v.
Conover, 715 F.2d 604, 615 (1983). The Court of Appeals for the D.C.
Circuit restated its conclusion that the legislative history of the
Douglas Amendment allowed a state "to discriminate in admitting
bank holding companies."
36. Iowa Code Ann. § 524.1805.
37. Neb. Rev. Stat. § 8-903 (Supp. 1983).
38. Del. Code Ann., title 5, § 803.
39. Md. Fin. Inst. Code Ann. § 5-901.
40. Va. Code § 6.1-390 to 6.1-397.
41. Neb. Rev. Stat. §§ 8-905, 8-906 (Supp. 1983).
broad range of insurance powers. 42 The Board has
approved a number of applications by out-of-state
bank holding companies to acquire local banks under
the credit card or grandfather statutes 43 and, as noted
above, the U.S. Court of Appeals for the District of
Columbia has upheld a Board order under the Iowa
statute. 44
These statutes obviously result in some burdens on
interstate commerce and appear to assume that the
states have full discretion to set the terms of entry of
out-of-state bank holding companies. 45 Nothing in the
history of the Douglas Amendment suggests that the
states were to be permitted only to choose between
not allowing out-of-state bank holding companies to
enter, and allowing completely free entry. 46 In approving applications under these statutes, the Board appears to have accepted at least some measure of
discretion rather than requiring a simple "on and off
switch." A contrary conclusion would seem to raise
some questions about the validity of the state statutes
cited above, although it would appear that such statutes might be viewed as imposing substantially less of
a burden on commerce in the furtherance of legitimate
state objectives than CIBA imposes.
Home Bancshares, Inc.
Erie, Kansas
Order Approving Formation of a Bank Holding
Company and Application to Engage in CreditRelated Insurance Activities
Home Bancshares, Inc., Erie, Kansas, has applied for
the Board's approval under section 3(a)(1) of the Bank
Holding Company Act (12 U.S.C. § 1842(a)(1)) to
42. S.D. Codified Laws Ann. §§ 51-16-40 to 51-16-44 (supp. 1984).
4 3 . S e e , e . g . , Citicorp,
J.P.
Morgan
& Company,
6 7 FEDERAL RESERVE B U L L E T I N 181 ( 1 9 8 1 ) ;
Inc.,
6 7 F E D E R A L RESERVE B U L L E T I N 9 1 7
(1981); Northwest Bancorporation, 38 Federal Register 21530 (1973).
44. Iowa Independent Bankers Association,
supra.
45. To a lesser degree state statutes that permit limited out-of-state
acquisition only in the case of a troubled bank in need of financial
assistance also allow the states to condition entry. See, for example,
Wash. Rev. Code Ann. § 30.04.230.
46. Senator Robertson, Chairman of the Senate Committee on
Banking and Currency, suggested by his comments in the 1956 debate
on the Bank Holding Company Act that Congress may have intended
to give the states more authority than merely to allow unrestricted
entry of out-of-state bank holding companies. Senator Robertson
suggested that states should be permitted to retain the authority to
permit acquisitions by out-of-state bank holding companies in the
limited case where a troubled bank might require financial assistance.
102 Cong. Record 6572 (1956).
Legal Developments
become a bank holding company by acquiring 80
percent of the voting shares of Erie Bancshares, Erie,
Kansas ("Erie"), and, indirectly, its subsidiary, Home
State Bank, Erie, Kansas ("Bank").
Applicant has also applied for the Board's approval
under section 4(c)(8) of the Act (12 U.S.C.
§ 1843(c)(8)) and section 225.4(b)(2) of the Board's
Regulation Y (now codified in the revised Regulation
Y at 12 CFR § 225.23(a)(2)) to engage, through Erie, in
the sale of life, health and accident insurance related to
credit extended by Bank. This activity has been determined by the Board to be closely related to banking
under section 225.25(b)(8)(i) of Regulation Y (12 CFR
§ 225.25(b)(8)(i)).
Notice of these applications, affording an opportunity for interested persons to submit comments and
views has been given in accordance with sections 3
and 4 of the Act (48 Federal Register 56851 (1983)).
The time for filing comments and views has expired
and the Board has considered the applications and all
comments received in light of the factors set forth in
section 3(c) of the Act (12 U.S.C. § 1842(c)) and the
considerations specified in section 4(c)(8) of the Act.
Applicant, a non-operating corporation with no subsidiaries, was organized for the purpose of acquiring
Erie, and thereby, indirectly acquiring Bank. Upon
acquisition of Bank (total deposits of $17.3 million),
Applicant would control the 285th largest of 620 banking organizations in Kansas, and would hold 0.1 percent of total deposits in commercial banks in the
state. 1 Consummation of the transaction would not
have any significant adverse effects upon the concentration of banking resources in the state.
Bank is the third largest of six banks in the Neosho
County banking market, controlling 10.2 percent of
deposits in commercial banks in the market. 2 Neither
Applicant nor any of its principals is a principal of any
other banking organization in the market. Thus, consummation of the proposal would have no adverse
effects upon competition or increase the concentration
of banking resources in any relevant area.
The financial and managerial resources of Applicant, Erie and Bank are considered generally satisfactory and the future prospects for each appear favorable. Although Applicant proposes to incur debt in
connection with its proposal, it appears that Applicant
will be able to service its debt while maintaining
2>41
required capital within the Board's guidelines. 3 Although consummation of the proposal would effect no
anticipated changes in the services offered by Bank,
considerations relating to the convenience and needs
of the community to be served are consistent with
approval. Accordingly, the Board has determined that
consummation of the transaction would be in the
public interest and the application to acquire Bank
should be approved.
Applicant has also applied, pursuant to section
4(c)(8) of the Act, to engage, through Erie, in the sale
of life, health and accident insurance related to extensions of credit by Bank. There is no evidence in the
record to indicate that approval of this proposal would
result in undue concentration of resources, decreased
or unfair competition, conflicts of interest, unsound
banking practices or other adverse effects on the
public interest. Accordingly, the Board has determined that the balance of public interest factors it must
consider under section 4(c)(8) of the Act is favorable
and consistent with approval of this application.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
sections 3(a)(1) and 4(c)(8) of the Act should be and
hereby are approved. The transaction shall not be
made before the thirtieth calendar day following the
effective date of this Order or later than three months
after the effective date of this Order, unless such
period is extended for good cause by the Board or by
the Federal Reserve Bank of Kansas City acting
pursuant to delegated authority.
By order of the Board of Governors, effective
March 5, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Partee, Rice, and Gramley. Absent and not voting:
Governor Teeters. Governor Wallich abstains from voting on
the application to engage in credit-related insurance activities.
WILLIAM W . WILES,
[SEAL]
Secretary
of the
Board
3. The Board has analyzed the financial factors of this proposal
under the Board's "Policy Statement for Assessing Financial Factors
in the Formation of Small One-Bank Holding Companies," 66 FEDERAL RESERVE B U L L E T I N 3 2 0 ( 1 9 8 0 ) , a s a m e n d e d b y t h e B o a r d , " C a p i t a l
A d e q u a c y G u i d e l i n e s , " 6 8 F E D E R A L RESERVE B U L L E T I N 3 3 ( 1 9 8 2 ) .
1. All deposit data are as of December 31, 1982, unless otherwise
noted.
2. The Neosho County banking market is approximated by Neosho
County, Kansas.
The guidelines in the policy statement were developed in order to
facilitate the transfer of ownership of small, community banks,
thereby promoting service to the convenience and needs of the
community. The Board has determined that these guidelines are
appropriately applied in this instance because this application involves
a restructuring of ownership and control from Erie's principal to his
four adult children, who together will acquire all of the shares of
Applicant and will be involved in the management of Applicant, Erie,
and Bank, through their positions as directors and/or officers of these
entities.
388 Federal Reserve Bulletin • April 1984
Society Corporation
Cleveland, Ohio
Order Approving Merger of Bank Holding
Companies, Acquisition of Companies Engaged in
Data Processing and Insurance Activities, and
Operation of a Savings and Loan Association
Society Corporation, Cleveland, Ohio, a bank holding
company within the meaning of the Bank Holding
Company Act ("Act"), has applied for the Board's
approval under section 3(a)(5) of the Act (12 U.S.C.
§ 1842) to acquire Interstate Financial Corporation,
Dayton, Ohio ("Interstate"). As a result of the acquisition, Applicant would acquire indirectly Interstate's
two subsidiary banks.
Applicant also has applied for the Board's approval
under section 4(c)(8) of the Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 CFR § 225.23) to acquire Interstate's
nonbanking subsidiaries, which include Scioto Savings
Association, Columbus, Ohio ("Scioto"), a savings
and loan association controlled by Interstate as a
result of a supervisory acquisition. 1 The operation of a
savings and loan association has previously been
found by Board order to be closely related to banking.2
Applicant also has applied under section 4(c)(8) to
acquire shares of the Green Machine Network Corporation, Dayton, Ohio, a joint venture engaged in the
operation of an automated teller machine ("ATM")
network interchange and related data processing activities. Finally, Applicant has applied under section
4(c)(8) to acquire Interstate's subsidiary which engages in the reinsurance of credit life and credit
accident and health insurance with respect to extensions of credit by its affiliates. These data processing
and reinsurance activities have been determined by
the Board to be closely related to banking and permissible for bank holding companies. 3
Notice of the applications, affording opportunity for
interested persons to submit comments and views, has
been given in accordance with sections 3 and 4 of the
Act (49 Federal Register 3529 (Jan. 27, 1984)). The
time for filing comments and views has expired, and
1. See Interstate
Financial
Corporation
(Scioto Savings Associa-
t i o n ) , 6 8 F E D E R A L RESERVE B U L L E T I N 3 1 6 ( 1 9 8 2 ) ( " I n t e r s t a t e / S c i o t o
Order").
2 . S e e e . g . , Old
Stone
Corporation,
6 9 FEDERAL RESERVE B U L L E -
TIN 812 (1983) ("Old Stone Order"), Interstate!Scioto
Order, supra;
Citicorp (Fidelity Federal Savings and Loan Association), 68 FEDERAL RESERVE BULLETIN 656 (1982)("Citicorp Order").
3. See 12 CFR §§ 225.25(b)(7) and (9); Interstate Financial Corporation (Green Machine Network Corporation), 69 FEDERAL RESERVE
BULLETIN 560 (1983) ("Interstate/Green Machine Order").
the Board has considered the applications and all
comments received in light of the factors set forth in
section 3(c) of the Act (12 U.S.C. § 1842(c)) and the
considerations specified in section 4(c)(8) of the Act.
Applicant is the sixth largest banking organization in
Ohio, with 11 subsidiary banks that control deposits of
$3.2 billion, representing 6.5 percent of total deposits
in commercial banks in the state. 4 Interstate, with two
banking subsidiaries and total deposits of $775 million,
ranks as Ohio's thirteenth largest banking organization, representing 1.6 percent of total commercial bank
deposits in the state. Upon consummation of the
proposed acquisition and all planned divestitures, Applicant's share of total deposits in commercial banks in
the state would increase only to 8.1 percent, and it
would become Ohio's fifth largest banking organization. Accordingly, this merger would have little effect
on Ohio's banking structure, and it is the Board's view
that consummation of the acquisition would not have
any significantly adverse effects on the concentration
of commercial banking resources in Ohio.
Subsidiary banks of both Applicant and Interstate
compete directly in the Dayton, Ohio, banking market.5 Interstate's lead bank, Third National Bank and
Trust Company, is the market's second largest organization, controlling $530 million of the market's commercial bank deposits, representing a market share of
21.3 percent. Offices of Applicant's Springfield, Ohio,
affiliate, Society National Bank of Miami Valley
("Springfield Bank"), hold combined market deposits
of $40.1 million, representing 1.6 percent of total
commercial bank deposits in the market. Consummation of this proposal would result in a single banking
organization controlling 22.9 percent of total deposits
in commercial banks in the market and an increase in
the market's Herfindahl-Hirschman Index ("HHI")
by 68 points to 1925.6
Applicant, however, has committed to divest two of
its three offices in the market prior to, or contemporaneously with, consummation of the proposed merger.7
Applicant will retain one office in the market (with
4. Unless otherwise indicated, deposit data are as of June 30, 1983.
5. The Dayton banking market comprises Montgomery, Greene,
and Miami Counties; the townships of Bethel and Mad River in
western Clark County; and the townships of Clear Creek and Massie
in northern Warren County.
6. Under the Department of Justice's Merger Guidelines, in a
market where the post-merger HHI is 1800 or more, the Department
more likely than not would challenge a merger that produces an
increase in the HHI of more than 50 points.
7. The Board's policy with regard to competitive divestitures
requires that divestitures intended to cure the anticompetitive effects
resulting from a merger or acquisition occur on or before the date of
consummation of the merger, to avoid the existence of anticompetitive effects. Barnett Banks of Florida, Inc. (First Marine Banks, Inc.),
68
FEDERAL
Corporation,
RESERVE
BULLETIN
190 (1982).
See
also
6 8 F E D E R A L RESERVE B U L L E T I N 2 4 3 ( 1 9 8 2 ) .
InterFirst
Legal Developments
deposits of $1 million), which functions as an operations center for its southwestern Ohio affiliates. Accordingly, Applicant's presence in the Dayton banking
market will be de minimis. The combination of Interstate and Applicant's remaining office in the Dayton
market would increase commercial bank deposit concentration by only 0.04 percent, and would raise the
post-merger HHI by only two points to 1859. Based
upon the foregoing, the Board concludes that consummation of the proposal, with the attendant divestitures, will not have any substantial adverse effects on
existing competition.
Scioto, Interstate's thrift subsidiary, and one of
Applicant's commercial banking subsidiaries operate
in the Columbus, Ohio, banking market.8 Neither
institution is a significant competitor in this market.
Although Applicant's affiliate bank is the sixth largest
bank in this market (deposits of $124.9 million), it
controls only 2.4 percent of total commercial bank
deposits in the market. Scioto is the 19th largest of 21
thrifts in the Columbus market, holding 2.8 percent of
total thrift deposits. Thrifts as a whole control 44
percent of combined thrift and commercial bank deposits in this market. In view of these facts, the Board
concludes that consummation of this proposal would
have no significant effects on the Columbus, Ohio,
market's competitive structure.
There are 23 markets in Ohio in which either Applicant or Interstate, but not both, competes. 9 The Board
has considered the effects of the proposal on probable
future competition in these markets and has also
examined the proposal in light of the Board's proposed
guidelines for assessing the competitive effects of
market-extension mergers and acquisitions. 10
In view of Applicant's size and Interstate's operational history, both may be considered likely entrants
into the other's markets. None of the 23 markets in
8. The Columbus market is situated in central Ohio and is comprised of all of Franklin, Fairfield, Delaware, and Licking Counties,
all Pickaway County except Perry and Salt Creek Townships, the
southern two-thirds of Madison County, and Thorn Township in
northwestern Perry County.
9. The 8 SMSA markets in which only Applicant operates are: the
Akron, Canton, Cincinnati, Cleveland, Columbus, Springfield, Toledo, and Youngstown/Warren SMSA's. Applicant also competes in the
following 12 non-SMSA banking markets: Ashtabula, Carrollton,
Crawford, Findlay, Fremont, Huron, Mt. Gilead, Oxford, Port Clinton, Salem, Sandusky, and Seneca. The three markets in which only
Interstate competes are the Dayton, Mercer County, and Wapakoneta
banking markets Applicant has been analyzed as if it were a potential
entrant in the Dayton market, in view of its proposed divestitures in
that market.
10. "Proposed Policy Statement of the Board of Governors of the
Federal Reserve System for Assessing Competitive Factors Under the
Bank Merger Act and the Bank Holding Company Act," 47 Federal
Register 9017 (March 3, 1982) ("Guidelines"). While the proposed
policy statement has not been approved by the Board, the Board is
using the Guidelines in its analysis of the effects of a proposal on
probable future competition.
2>41
which Applicant and Interstate separately compete
meets all four of the proposed guidelines and thus
intensive investigation of the proposal in any of these
markets is not called for. Interstate operates in three
markets in which Applicant does not operate. The
Dayton banking market is not highly concentrated;
and the other two markets have numerous other
potential entrants.
Applicant operates in twenty markets in which
Interstate does not compete. Twelve are rural nonSMSA markets into which there are numerous probable future entrants other than Interstate. Moreover,
five of these twelve markets are not highly concentrated. Six of Applicant's eight SMSA markets are not
highly concentrated and thus the doctrine of potential
competition is not applicable;" in the seventh market,
Applicant possesses an insignificant market share; and
in the remaining market, there are numerous potential
entrants. Based on the foregoing and other facts of
record, the Board concludes that consummation of the
proposal would not have any significant adverse effects on probable future competition in any relevant
market.
The financial and managerial resources of Applicant
and its subsidiaries are regarded as generally satisfactory, and their prospects appear favorable. Moreover,
acquisition of Interstate will not have any adverse
effect on Applicant's financial resources. Financial
and managerial considerations are, therefore, consistent with approval of the application. Consummation
of the proposed transaction would provide an expanded range of consumer and corporate banking services
to the public in Interstate's markets. Considerations
relating to the convenience and needs of the communities to be served, therefore, lend weight toward approval of the application.
Applicant has applied, pursuant to section 4(c)(8) of
the Act, to acquire Scioto, Interstate's thrift subsidiary. Section 4(c)(8) authorizes a bank holding company to acquire a nonbank company if the activities of
the nonbank company are determined by the Board to
be "so closely related to banking or managing or
controlling banks as to be a proper incident thereto."
The Board has determined previously that the operation of a thrift institution is "closely related" to
banking.12 Although the Board has determined, as a
11. United States v. Marine Bancorp, Inc. 418 U.S. 602, 630 (1974).
12. Newport Savings and Loan Ass'n, 58 FEDERAL RESERVE
BULLETIN 313 (1972); Old Colony Cooperative Bank, 58 FEDERAL
RESERVE BULLETIN 417 (1972); American Fletcher Corp., 60 FEDERAL RESERVE B U L L E T I N 8 6 8 ( 1 9 7 4 ) ; Profile
Bancshares,
RESERVE B U L L E T I N 9 0 1 ( 1 9 7 5 ) ; D. H. Baldwin
RESERVE B U L L E T I N 2 8 0 ( 1 9 7 7 ) ; Heritage
Inc.,
& Co.,
Banks,
FEDERAL
6 3 , 6 1 FEDERAL
Inc.,
6 6 FEDERAL
RESERVE BULLETIN 590 (1980); First Financial Group, 66 FEDERAL
RESERVE BULLETIN 594 (1980); and BankEast Corporation, 68 FEDERAL RESERVE B U L L E T I N 1 1 6 ( 1 9 8 2 ) .
390 Federal Reserve Bulletin • April 1984
general matter, that operating a thrift institution is not
a proper incident to banking, the Board has determined in several instances involving failing thrift institutions that such activities are a proper incident to
banking.13
On April 4, 1982, the Board approved Interstate's
acquisition of Scioto, 14 then a failing institution, after
determining that the operation of Scioto by Interstate
was a "proper incident" to banking. That determination was based on the Board's finding in that case that
the substantial benefits to the public associated with
saving Scioto as a thrift competitor were sufficient to
outweigh the generalized adverse effects of thrift acquisitions previously found by the Board. 15
This proposal involves a merger of bank holding
companies, as a result of which Applicant will acquire
all of the assets and succeed to all of the rights and
obligations of Interstate. Under these circumstances,
the Board believes that Applicant should be entitled to
retain and operate Scioto to the same extent and in the
same manner as Interstate. In that regard, Applicant
has agreed to abide by commitments made by Interstate in connection with its acquisition of Scioto
concerning the separation of its thrift and banking
operations. Accordingly, the Board does not believe
that it would be appropriate or consistent with its
policy regarding bank/thrift affiliation to require divestiture of Scioto.
It does not appear that Applicant's acquisition of
Scioto would have any significant adverse effects upon
existing or potential competition. Furthermore, there
is no evidence in the record to indicate that approval of
this proposal would result in undue concentration of
resources, decreased or unfair competition, conflicts
of interests, unsound banking practices or other adverse effects on the public interest.
Applicant also has applied pursuant to section
4(c)(8) of the Act to acquire Interstate's shares of the
Green Machine Network Corporation, Dayton, Ohio
("Green Machine"), a joint venture which operates an
ATM network interchange and related data processing
services in Ohio. Applicant has agreed to abide by the
terms governing the Board's approval of Interstate's
acquisition of an interest in Green Machine. See
Interstate/Green Machine Order, supra. Finally, Applicant has applied under section 4(c)(8) to acquire
Interstate's subsidiary which engages in the reinsurance of credit life and credit accident and health
insurance with respect to extensions of credit by its
affiliates. It does not appear that Applicant's acquisition of these subsidiaries would have any significant
adverse effects upon existing or potential competition.
Furthermore, there is no evidence in the record to
indicate that approval of this proposal would result in
undue concentration of resources, decreased or unfair
competition, conflicts of interest, unsound banking
practices, or other adverse effects on the public interest. Accordingly, the Board has determined that the
balance of the public interest factors it must consider
under section 4(c)(8) of the Act is favorable and
consistent with approval of the applications to acquire
Scioto, Green Machine, and Interstate's reinsurance
subsidiary.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
sections 3(a)(5) and 4(c)(8) of the Act should be and
hereby are approved, subject to the conditions that:
complete divestiture of Applicant's two Xenia, Ohio,
branch offices of its Springfield Bank subsidiary take
place on or before the date of consummation of the
merger; that Applicant abide by commitments made
by Interstate in connection with its acquisition of
Scioto; that the merger shall not be consummated
before the thirtieth calendar day following the effective
date of this Order; and that neither the merger nor the
acquisition of the nonbanking subsidiaries shall occur
later than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
Cleveland pursuant to delegated authority. The determinations as to Applicant's nonbanking activities are
subject to all of the conditions set forth in Regulation
Y, including sections 225.4(d) and 225.23(b), and the
Board's authority to require such modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
By order of the Board of Governors, effective
March 28, 1984.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Teeters, Rice, and Gramley. Governors Wallich and Gramley abstain from voting on the application to engage in the activities of Green Machine Network
Corporation. Governor Wallich also abstains from voting on
the application to engage in insurance activities.
13. See e.g., Old Stone Order, supra; Citicorp Order, supra.
14. Interstate/Scioto Order, supra.
15. D. H. Baldwin & Co., supra.
JAMES MCAFEE,
[SEAL]
Associate
Secretary
of the Board
Legal Developments
ORDERS APPROVED
By the Board
of
UNDER BANK
HOLDING
COMPANY
2>41
ACT
Governors
During March 1984 the Board of Governors approved the applications listed below. Copies are available upon
request to Publications Services, Division of Support Services, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
Section 3
Concord Bancshares, Inc.,
Overland Park, Kansas
Independent Financial, Inc.,
Lubbock, Texas
McKeesport National Corporation,
McKeesport, Pennsylvania
Med Center Bancshares, Inc.,
Houston, Texas
Midland Bancorp, Inc.,
Chicago, Illinois
NBD Bancorp, Inc.,
Detroit, Michigan
Texas Commerce Bancshares, Inc.
Houston, Texas
By Federal
Reserve
Board action
(effective
date)
Bank(s)
Applicant
College Boulevard National Bank,
Overland Park, Kansas
Whisperwood National Bank,
Lubbock, Texas
McKeesport National Bank,
McKeesport, Pennsylvania
Medical Center Bank,
Houston, Texas
Hawthorne Bank of Wheaton,
Wheaton, Illinois
National Bank and Trust Company of
Traverse City,
Traverse City, Michigan
Texas Commerce Bank-Richardson,
N.A.,
Richardson, Texas
Texas Commerce-Brookhollow, N.A.,
Dallas, Texas
March 8, 1984
March 21, 1984
March 16, 1984
March 26, 1984
March 7, 1984
March 9, 1984
March 6, 1984
Banks
Recent applications have been approved by the Federal Reserve Banks as listed below, copies of the orders are
available upon request to the Reserve Banks.
Section 3
Applicant
Amboy-Madison Bancorporation,
Old Bridge, New Jersey
American Bank Corporation,
Denver, Colorado
American Bank Shares, Inc.,
Great Bend, Kansas
American National Agency,
Inc.,
Nashwauk, Minnesota
Bank(s)
Reserve
Bank
Effective
date
Amboy-Madison National Bank,
Old Bridge, New Jersey
New York
March 16, 1984
First State Bank of Afton,
Afton, Wyoming
American State Bank & Trust
Company,
Great Bend, Kansas
American Shares, Inc.,
Great Bend, Kansas
American National Bank,
Nashwauk, Minnesota
Kansas City
March 16, 1984
Kansas City
March 12, 1984
Minneapolis
February 29, 1984
392 Federal Reserve Bulletin • April 1984
Section 3—Continued
Applicant
Arrow Bank Corp.,
Glens Falls, New York
Bath County Banking Company,
Owingsville, Kentucky
BOJ Bancshares, Inc.,
Jackson, Louisiana
BSB Financial Corporation,
Trenton, New Jersey
Bonner Springs Bancshares,
Inc.,
Bonner Springs, Kansas
Brazosport Corporation,
Freeport, Texas
Bunkie Bancshares, Inc.,
Bunkie, Louisiana
Burlingame Bancorp,
Burlingame, California
Chester County Bancshares,
Inc.,
Henderson, Tennessee
Citizens Dimension Bancorp,
Inc.,
Muskogee, Oklahoma
City National Bancshares, Inc.,
Carroll ton, Texas
Commercial Grayson Bancshares, Inc.,
Grayson, Kentucky
Commonwealth Trust Bancorp,
Inc.,
Covington, Kentucky
CNB Bancshares, Inc.,
Sevierville, Tennessee
CNBO Bancorp, Inc.,
Pryor, Oklahoma
Decatur Financial, Inc.,
Decatur, Indiana
Del Rio Bancshares, Inc.,
Del Rio, Texas
Delta Bancshares Company,
St. Louis, Missouri
Downstate Bancshares, Inc.,
Murphysboro, Illinois
Bank(s)
Reserve
Bank
Effective
date
The Essex County-Champlain
National Bank,
Willsboro, New York
Owingsville Banking Company,
Owingsville, Kentucky
Bank of Jackson,
Jackson, Louisiana
The Broad Street National Bank
of Trenton,
Trenton, New Jersey
Commercial State Bank of Bonner Springs,
Bonner Springs, Kansas
Mercantile National Bank of
Corpus Christi,
Corpus Christi, Texas
Bunkie Bank and Trust
Company,
Bunkie, Louisiana
Burlingame Bank and Trust Co.,
Burlingame, California
Chester County Bank,
Henderson, Tennessee
New York
March 16, 1984
Cleveland
March 8, 1984
Atlanta
February 24, 1984
Philadelphia
March 13, 1984
Kansas City
February 23, 1984
Dallas
February 24, 1984
Atlanta
February 27, 1984
San Francisco
March 6, 1984
St. Louis
March 8, 1984
Charter Bancshares, Inc.,
Oklahoma City, Oklahoma
Kansas City
March 13, 1984
Trinity Mills National Bank,
Carrollton, Texas
The Commercial Bank of Grayson,
Grayson, Kentucky
Covington Trust & Banking
Company,
Covington, Kentucky
Citizens National Bank,
Sevierville, Tennessee
Century National Bank of Oklahoma,
Pryor, Oklahoma
Decatur Bank and Trust
Company,
Decatur, Indiana
Plaza National Bank,
Del Rio, Texas
Eureka Bank,
Eureka, Missouri
The First National Bank of
Altamont,
Altamont, Illinois
Dallas
February 27, 1984
Cleveland
March 30, 1984
Cleveland
March 7, 1984
Atlanta
March 9, 1984
Kansas City
March 28, 1984
Chicago
March 1, 1984
Dallas
March 15, 1984
St. Louis
March 19, 1984
St. Louis
February 24, 1984
Legal Developments
2>41
Section 3—Continued
Applicant
Elkton Bancshares, Inc.
Elkton, Minnesota
F&M Bank Corp.,
Timberville, Virginia
FCB Corp.,
Collinsville, Illinois
FSB Bancshares, Inc.,
Waco, Texas
Farmers Bancorp of Nicholasville, Inc.,
Nicholasville, Kentucky
Farmers Bancshares of Georgetown, Inc.,
Georgetown, Kentucky
Financial Holdings, Inc.,
Boulder, Colorado
First Arkansas Bankstock Corporation,
Little Rock, Arkansas
First Colonial Bankshares Corporation,
Chicago, Illinois
First Grayson Bancshares, Inc.,
Dallas, Texas
First Jersey National Corporation,
Jersey City, New Jersey
First Latimer Corporation,
Wilburton, Oklahoma
First Laurel Security Co.,
Laurel, Nebraska
First National Ban Corp of Versailles,
Versailles, Kentucky
First National Bank of the
South, Inc.,
Opp, Alabama
Bank(s)
Farmers State Bank of Elkton,
Elkton, Minnesota
Farmers and Merchants Bank of
Rockingham,
Timberville, Virginia
First County Bank,
Maryville, Illinois
First State Bank of Morrisonville,
Morrisonville, Illinois
First State Bank,
Coolidge, Texas
First State Bank,
Mount Calm, Texas
First State Bank,
Italy, Texas
The Farmers Bank of Nicholasville,
Nicholasville, Kentucky
Farmers Bank & Trust Company,
Georgetown, Kentucky
OMNIBANK Louisville,
Louisville, Colorado
First National Bank,
Batesville, Arkansas
Bank of Newark,
Newark, Arkansas
Northwest American Bankshares
Corporation,
Chicago, Illinois
Security National Bank of
Whitesboro,
Whitesboro, Texas
Collinsville State Bank,
Collinsville, Texas
The Peoples National Bank of
Central Jersey,
Piscataway, New Jersey
Latimer State Bank,
Wilburton, Oklahoma
Security State Bank,
Allen, Nebraska
First National Bank of Versailles,
Versailles, Kentucky
First National Bank of Andalusia,
Andalusia, Alabama
Reserve
Bank
Effective
date
Minneapolis
February 27, 1984
Richmond
March 1, 1984
St. Louis
Dallas
March 16, 1984
March 13, 1984
Cleveland
March 16, 1984
Cleveland
March 14, 1984
Kansas City
March 5, 1984
St. Louis
March 7, 1984
Chicago
February 23, 1984
Dallas
March 27, 1984
New York
March 28, 1984
Kansas City
March 5, 1984
Kansas City
February 15, 1984
Cleveland
March 16, 1984
Atlanta
March 14, 1984
394 Federal Reserve Bulletin • April 1984
Section 3—Continued
Applicant
First Place Financial Corporation,
Farmington, New Mexico
First United Bancshares, Inc.,
Houston, Texas
Franklin National Bank shares,
Inc.,
Mount Vernon, Texas
Fresnos Bancshares, Inc.,
Los Fresnos, Texas
FSC Bancshares, Inc.,
Cameron, Missouri
Gary-Wheaton Corporation,
Wheaton, Illinois
General Bancshares Corporation
of Indiana,
Fort Wayne, Indiana
Georgia Bancshares, Inc.,
Macon, Georgia
Greencastle Bancorp, Inc.,
Greencastle, Indiana
Greenville Bancshares, Inc.,
Greenville, Missouri
Gulf Southwest Bancorp, Inc.,
Houston, Texas
Hanover Financial Corporation,
Plantation, Florida
Harvest Bancshares, Inc.,
Footville, Wisconsin
Hastings State Company,
Hastings, Nebraska
Independent Bancorp, Inc.,
Channel view, Texas
Iowa First Bancshares Corp.,
Muscatine, Iowa
Bank(s)
The First National Bank of
Farmington,
Farmington, New Mexico
Farmington Interim National
Bank,
Farmington, New Mexico
United National Bank of
Houston,
Houston, Texas
Franklin National Bank,
Mount Vernon, Texas
Reserve
Bank
Effective
date
Kansas City
March 5, 1984
Dallas
March 7, 1984
Dallas
March 7, 1984
Sunrise Bank,
Brownsville, Texas
Farmers State Bank,
Cameron, Missouri
First Security Bank of
Fox Valley,
Aurora, Illinois
Anthony Wayne Bank,
Fort Wayne, Indiana
Dallas
February 29, 1984
Kansas City
March 6, 1984
Chicago
March 12, 1984
Chicago
March 5, 1984
The First State Bank of
Fitzgerald,
Fitzgerald, Georgia
Greencastle Investment Corporation,
Greencastle, Indiana
First Citizens Bank and Trust
Company,
Greencastle, Indiana
State Bank of Greenville,
Greenville, Missouri
Atascocita State Bank,
Atascocita, Texas
Hanover Bank of Florida,
Plantation, Florida
The Footville State Bank,
Footville, Wisconsin
First Savings Company of
Hastings, Inc.,
Hastings, Nebraska
Channelview Bank,
Channelview, Texas
First National Bank of Muscatine,
Muscatine, Iowa
First National Bank in Fairfield,
Fairfield, Iowa
Atlanta
February 24, 1984
Chicago
February 29, 1984
St. Louis
March 29, 1984
Dallas
March 29, 1984
Atlanta
March 28, 1984
Chicago
March 9, 1984
Kansas City
March 9, 1984
Dallas
March 7, 1984
Chicago
March 1, 1984
Legal Developments
2>41
Section 3—Continued
Applicant
Kiamichi Bancshares, Inc.,
Hugo, Oklahoma
Kimball Bancorp, Inc.,
Kimball, Nebraska
Kirbyville Bancshares, Inc.,
Beaumont, Texas
Landmark Banking Corporation
of Florida,
Fort Lauderdale, Florida
Preferred Equity Investors
of Florida,
Knoxville, Tennessee
LCB Corporation, Inc.,
Fayetteville, Tennessee
Liberty Bancorp, Inc.,
Charleston, South Carolina
Maple Lake Bancorporation,
Minneapolis, Minnesota
Mercantile Bancorporation,
Inc.,
St. Louis, Missouri
Mercantile Texas Corporation,
Dallas, Texas
Midlantic Banks, Inc.,
Edison, New Jersey
Midwest Banco Corporation,
Cozad, Nebraska
Nebraska Bancorporation, Inc.
Alliance, Nebraska
Newton Bancshares, Inc.,
Beaumont, Texas
Northwest American Bankshares Corporation,
Chicago, Illinois
Pioneer Bancorp,
Fullerton, California
Plaquemine Bancshares Corporation,
Plaquemine, Louisiana
Prosperity Bancshares, Inc.,
Edna, Texas
_ , ,N
Bank(s)
The Citizens State Bank,
Hugo, Oklahoma
American National Bank of
Kimball,
Kimball, Nebraska
Allied Kirbyville Bank,
Kirbyville, Texas
Landmark Bank of Palm Beach
County,
Boca Raton, Florida
Lincoln County Bank,
Fayetteville, Tennessee
Liberty National Bank,
Charleston, South Carolina
Maple Lake Bancshares, Inc.,
Maple Lake, Minnesota
Security State Bank of
Maple Lake,
Maple Lake, Minnesota
First County Bank,
Bloomfield, Missouri
Corpus Christi National BankSouth,
Corpus Christi, Texas
Union Trust Company of
Wild wood,
Wildwood, New Jersey
Wilber State Company,
Wilber, Nebraska
Alliance National Bank and Trust
Company,
Alliance, Nebraska
Allied First National Bank.
Newton, Texas
All American Bank of Chicago,
Chicago, Illinois
Northwest Commerce Bank,
Rosemont, Illinois
Pioneer Bank,
Fullerton, California
Plaquemine Bank & Trust
Company,
Plaquemine, Louisiana
Allied First Bank,
Edna, Texas
Reserve
Effective
BanR
datg
Dallas
March 9, 1984
Kansas City
March 28, 1984
Dallas
March 15, 1984
Atlanta
February 23, 1984
Atlanta
February 24, 1984
Richmond
February 28, 1984
Minneapolis
March 13, 1984
St. Louis
February 23, 1984
Dallas
March 16, 1984
New York
March 28, 1984
Kansas City
March 9, 1984
Kansas City
February 22, 1984
Dallas
March 15, 1984
Chicago
February 23, 1984
San Francisco
March 19, 1984
Atlanta
March 29, 1984
Dallas
February 29, 1984
396
Federal Reserve Bulletin • April 1984
Section 3—Continued
Applicant
Provident Bancorp, Inc.
Dallas, Texas
Rake Bancorporation,
Rake, Iowa
Rio Salado Bancorp,
Tempe, Arizona
S.B. Corporation,
Wisconsin Rapids, Wisconsin
S.B.T. Bancshares, Inc.,
Arab, Alabama
Security Corporation,
Duncan, Oklahoma
Security Financial Services,
Inc.,
Hibbing, Minnesota
South Louisiana Financial Corporation,
Houma, Louisiana
Southern Minnesota Bancshares, Inc.,
Wells, Minnesota
Southland Bank Corp.,
Butler, Georgia
Spectrum Financial Corporation,
Wheeling, West Virginia
Bank(s)
Reserve
Bank
Effective
date
Celina Bancorp Inc.,
Dallas, Texas
First State Bank,
Wylie, Texas
The Security State Bank of Commerce,
Commerce, Texas
Provident Bank-Dallas,
Dallas, Texas
DeSoto State Bank,
DeSoto, Texas
State Savings Bank,
Rake, Iowa
Rio Salado Bank,
Tempe, Arizona
WCN Bancorp, Inc.,
Wisconsin Rapids, Wisconsin
The Bank of Fort Atkinson,
Fort Atkinson, Wisconsin
The Wood County National Bank
of Wisconsin Rapids,
Wisconsin Rapids, Wisconsin
Security Bank & Trust Company,
Arab, Alabama
Cache Road National Bank of
Lawton,
Lawton, Oklahoma
Security State Bank of Hibbing,
Hibbing, Minnesota
Dallas
March 9, 1984
Chicago
February 23, 1984
San Francisco
March 16, 1984
Chicago
February 28, 1984
Atlanta
March 5, 1984
Kansas City
March 1, 1984
Minneapolis
March 6, 1984
South Louisiana Bank,
Houma, Louisiana
Atlanta
March 9, 1984
Security State Bank of Wells,
Wells, Minnesota
Minneapolis
February 24, 1984
Citizens State Bank,
Butler, Georgia
Coffee County Bank,
Douglas, Georgia
Security National Bank &
Trust Co.,
Wheeling, West Virginia
Atlanta
March 5, 1984
Cleveland
March 8, 1984
Legal Developments
2>41
Section 3—Continued
Applicant
St. Anthony Bancorporation,
Inc.,
Omaha, Nebraska
State Financial Bankshares,
Inc.,
Richmond, Kentucky
Sterling Bancorp, Inc.,
Eleanor, West Virginia
Summit Bancshares, Inc.,
Fort Worth, Texas
Tascosa Financial Corporation,
Amarillo, Texas
TCBankshares, Inc.,
North Little Rock, Arkansas
Terre Du Lac Bancshares, Inc.,
Chesterfield, Missouri
The First Freeman Corporation,
Freeman, South Dakota
Third National Corporation,
Nashville, Tennessee
Thunderbird Bank,
Phoenix, Arizona
Two Rivers Bancorp, Inc.,
Prophetstown, Illinois
Unicorp Bancshares, Inc.,
Houston, Texas
United City Corporation,
Piano, Texas
United Security Bancshares,
Inc.,
Canton, Georgia
United Security Bancshares,
Inc.,
Thomasville, Alabama
United Vermont Bancorporation,
Rutland, Vermont
Upper Valley Bancorp, Inc.,
Olyphant, Pennsylvania
Bank(s)
Reserve
Bank
Effective
date
St. Anthony National Bank,
St. Anthony, Minnesota
Minneapolis
February 24, 1984
State Bank and Trust Company
of Richmond,
Richmond, Kentucky
Peoples Bank of Richwood, Inc.,
Rich wood, West Virginia
Camp Bowie National Bank,
Fort Worth, Texas
Tascosa National Bank South,
Amarillo, Texas
Peoples Bancshares, Inc.,
Van Buren, Arkansas
The Bank of Steele,
Steele, Missouri
The First National Bank of
Freeman,
Freeman, South Dakota
First National Bank of Rutherford
County,
Smyrna, Tennessee
Thunderbird Equities, Inc.,
Phoenix, Arizona
The Farmers National Bank of
Prophetstown,
Prophetstown, Illinois
The First National Bank of
Manlius,
Manlius, Illinois
Tampico National Bank,
Tampico, Illinois
Unicorp Bancshares-Houston,
Inc.,
Houston, Texas
First State Bank of McKinney,
McKinney, Texas
United Security Bank,
Sparta, Georgia
Cleveland
March 30, 1984
Richmond
March 16, 1984
Dallas
March 28, 1984
Dallas
March 9, 1984
St. Louis
March 29, 1984
St. Louis
March 14, 1984
Minneapolis
March 12, 1984
Atlanta
March 13, 1984
San Francisco
March 29, 1984
Chicago
March 19, 1984
Dallas
March 6, 1984
Dallas
March 9, 1984
Atlanta
February 29, 1984
Bank of Thomasville,
Thomasville, Alabama
Atlanta
February 23, 1984
First Twin-State Bank,
White River Junction, Vermont
Boston
March 9, 1984
The National Bank of Olyphant,
Olyphant, Pennsylvania
Philadelphia
February 28, 1984
398 Federal Reserve Bulletin • April 1984
Section 3—Continued
Applicant
Bank(s)
Victory Bancorp, Inc.,
Nowata, Oklahoma
WCN Bancorp, Inc.,
Wisconsin Rapids, Wisconsin
Victory Bancshares, Inc.,
Nowata, Oklahoma
The Wood County National Bank
of Wisconsin Rapids,
Wisconsin Rapids, Wisconsin
Woburn National Bank,
Woburn, Massachusetts
Woburn National Corporation,
Woburn, Massachusetts
Reserve
Bank
Effective
date
Kansas City
March 14, 1984
Chicago
February 28, 1984
Boston
February 27, 1984
Section 4
Applicant
Fifth Third Bancorp,
Cincinnati, Ohio
Hawarden Bancshares, Inc.
Hawarden, Iowa
Security Pacific Corporation,
Los Angeles, California
Northern Trust Corporation,
Chicago, Illinois
Northern Wisconsin Bank Holding Company,
Laona, Wisconsin
Nonbanking
company
Money Station, Inc.,
Cincinnati, Ohio
Gearhart Insurance Agency,
Hawarden, Iowa
Williams Insurance Agency,
Hawarden, Iowa
Security Pacific Brokers, Inc.,
Los Angeles, California
Jerome Hickey Associates, Inc.
Chicago, Illinois
Laona Agency, Inc.,
Laona, Wisconsin
Reserve
Bank
Effective
date
Cleveland
March 6, 1984
Chicago
March 6, 1984
San Francisco
February 22, 1984
Chicago
March 7, 1984
Minneapolis
February 24, 1984
Sections 3 and 4
. . .
Pacific Inland Bancorp,
Anaheim, California
Bank(s)/Nonbanking
Company
Reserve
Bank
Pacific Inland Bank,
Anaheim, California
Pacific Inland Management, Inc.,
Anaheim, California
San Francisco
Effective
date
February 22, 1984
Legal Developments
PENDING
CASES INVOLVING
THE BOARD
OF
2>41
GOVERNORS
This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of
Governors is not named a party.
Colorado Industrial Bankers Association v. Board of
Governors, filed January 1984, U.S.C.A. for the
Tenth Circuit.
Financial Institutions Assurance Corp. v. Board of
Governors, filed January 1984, U.S.C.A. for the
Fourth Circuit.
First Bancorporation
v. Board of Governors, filed
January 1984, U.S.C.A. for the Tenth Circuit.
Thomas H. Huston v. Board of Governors, filed
January 1984, U.S.C.A. for the Eighth Circuit.
Ohio Deposit Guarantee Fund v. Board of Governors,
filed January 1984, U.S.C.A. for the Tenth Circuit.
State of Ohio, et al. v. Board of Governors, filed
January 1984, for the Tenth Circuit.
Dimension Financial Corporation, et al. v. Board of
Governors, filed December 1983, U.S.C.A. for the
Tenth Circuit.
Oklahoma Bankers Association v. Federal Reserve
Board, filed December 1983, U.S.C. A. for the Tenth
Circuit.
Independent Insurance Agents of America, Inc. and
Independent Insurance Agents of Missouri, Inc. v.
Board of Governors, filed June 1983, U.S.C.A. for
the Eighth Circuit (two cases).
The Committee for Monetary Reform, et al., v. Board
of Governors, filed June 1983, U.S.D.C. for the
District of Columbia Circuit.
Securities Industry Association v. Board of Governors, et al., filed February 1983, Supreme Court.
Association of Data Processing Service
Organizations, et al. v. Board of Governors, filed August
1982, U.S.C.A. for the District of Columbia Circuit.
Wyoming Bancorporation v. Board of Governors, filed
May 1982, U.S.C.A. for the Tenth Circuit.
Edwin F. Gordon v. Board of Governors, et al., filed
October 1981, U.S.C.A. for the Eleventh Circuit
(two consolidated cases).
Edwin F. Gordon v. John Heimann, et al., filed
September 1981, U.S.C.A. for the Eleventh Circuit.
Allen Wolfson v. Board of Governors, filed September
1981, U.S.D.C. for the Middle District of Florida.
Public Interest Bounty Hunters v. Board of Governors, et al., filed June 1981, U.S.C.A. for the
Eleventh Circuit.
First Bank & Trust Company v. Board of Governors,
filed February 1981, U.S.D.C. for the Eastern District of Kentucky.
9 to 5 Organization for Women Office Workers v.
Board of Governors,
filed D e c e m b e r 1980,
U.S.C.A. for the First Circuit.
A. G. Becker, Inc. v. Board of Governors, et al., filed
October 1980, U.S.C.A. for the District of Columbia.
A. G. Becker, Inc. v. Board of Governors, et al., filed
August 1980, Supreme Court.
A1
Financial and Business Statistics
WEEKLY REPORTING COMMERCIAL BANKS
CONTENTS
Domestic Financial
A3
A4
A5
A5
Statistics
Monetary aggregates and interest rates
Reserves of depository institutions, Reserve
Bank credit
Reserves and borrowings of depository
institutions
Federal funds and repurchase agreements of
large member banks
POLICY INSTRUMENTS
A6
A7
A8
A9
Federal Reserve Bank interest rates
Reserve requirements of depository institutions
Maximum interest rates payable on time and
savings deposits at federally insured institutions
Federal Reserve open market transactions
Assets and liabilities
A18
All reporting banks
A19
Banks in N e w York City
A20
Balance sheet memoranda
A20
Branches and agencies of foreign banks
A21 Gross demand deposits of individuals,
partnerships, and corporations
FINANCIAL MARKETS
A22 Commercial paper and bankers dollar
acceptances outstanding
A22 Prime rate charged by banks on short-term
business loans
A23 Terms of lending at commercial banks
A24 Interest rates in money and capital markets
A25 Stock market—Selected statistics
A26 Selected financial institutions—Selected assets
and liabilities
FEDERAL RESERVE BANKS
FEDERAL FINANCE
A10 Condition and Federal Reserve note statements
A l l Maturity distribution of loan and security
holdings
MONETARY AND CREDIT AGGREGATES
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock measures and components
A14 Bank debits and deposit turnover
A15 Loans and securities of all commercial banks
COMMERCIAL BANKING INSTITUTIONS
A16 Major nondeposit funds
A17 Assets and liabilities, last-Wednesday-of-month
series
All
A28
A29
A29
Federal fiscal and financing operations
U.S. Budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types and
ownership
A30 U.S. government securities dealers—
Transactions, positions, and financing
A31 Federal and federally sponsored credit
agencies—Debt outstanding
2
Federal Reserve Bulletin • April 1984
International
SECURITIES MARKETS AND
CORPORATE FINANCE
A32 New security issues—State and local
governments and corporations
A33 Open-end investment companies—Net sales and
asset position
A3 3 Corporate profits and their distribution
A34 Nonfinancial corporations—Assets and
liabilities
A34 Total nonfarm business expenditures on new
plant and equipment
A35 Domestic finance companies—Assets and
liabilities and business credit
REAL ESTATE
A36 Mortgage markets
A37 Mortgage debt outstanding
CONSUMER INSTALLMENT CREDIT
A38 Total outstanding and net change
A39 Terms
A40 Funds raised in U.S. credit markets
A41 Direct and indirect sources of funds to credit
markets
Statistics
A42 Nonfinancial business activity—Selected
measures
A42 Output, capacity, and capacity utilization
A43 Labor force, employment, and unemployment
A44 Industrial production—Indexes and gross value
A46 Housing and construction
A47 Consumer and producer prices
A48 Gross national product and income
A49 Personal income and saving
A50
A51
A51
A51
U.S. international transactions—Summary
U.S. foreign trade
U.S. reserve assets
Foreign official assets held at Federal Reserve
Banks
A52 Foreign branches of U.S. banks—Balance sheet
data
A54 Selected U.S. liabilities to foreign official
institutions
REPORTED BY BANKS IN THE UNITED STATES
A54
A55
A57
A58
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A58 Banks' own claims on unaffiliated foreigners
A59 Claims on foreign countries—Combined
domestic offices and foreign branches
REPORTED BY NONBANKING BUSINESS
ENTERPRISES IN THE UNITED STATES
A60 Liabilities to unaffiliated foreigners
A61 Claims on unaffiliated foreigners
FLOW OF FUNDS
Domestic Nonfinancial
Statistics
SECURITIES HOLDINGS AND TRANSACTIONS
A62 Foreign transactions in securities
A63 Marketable U.S. Treasury bonds and notes—
Foreign holdings and transactions
INTEREST AND EXCHANGE RATES
A63 Discount rates of foreign central banks
A64 Foreign short-term interest rates
A64 Foreign exchange rates
A65 Guide to Tabular Presentation,
Statistical Releases, and Special
Tables
Domestic Financial Statistics
1.10
A3
RESERVES, MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Monetary and credit aggregates
(annual rates of change, seasonally adjusted in percent) 1
Item
1983
Q2
Q1
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
6
7
8
9
Concepts
Ml
M2
M3
L
Debt
components
Time and savings
deposits
Commercial banks
Savings'
Small-denomination time 8
Large-denomination time 9 ' 1 0
Thrift institutions
15
Savings 7
Small-denomination time
16
17
Large-denomination time 9
12
13
14
Debt
components4
18 Federal
19 Nonfederal
Oct.
Nov.
Dec.
Jan.
Feb.
5.5
5.1
4.9
9.3
11.8
12.0
5.2
10.2
6.0
5.9
2.9
8.2
.5
-.1
8.0
7.8
.3
.1
21.5
7.1
-2.4
-3.3
-4.6
7.2
1.2
.1
5.8
6.7
7.6
5.9
9.8
12.8
19.1
8.1
24.6
10.6
12.8
20.5
10.8
10.7
8.8
11.6
10.6
9.3
10.3
12.1
9.5
6.9
7.4
9.6
10.1
4.8
8.5
9.9
8.9
10.6
6.2
10.8
9.4
6.5
9.8
3.2
8.3
14.4
12.7
9.6
5.3
7.7
8.0
10.7
12.3
10.7
5.5
6.0
n.a.
12.3
6.6
8.6
10.0
n.a.
n.a.
23.0
27.1
10.2
3.8
6.1
9.8
9.6
16.3
12.2
2.9
9.9
41.4
8.4
9.5
3.9
8.5
9.2
16.1
-47.4
-48.7
-48.8
-14.8
-21.2
-14.6
-6.3
13.7
-4.6
-6.4
19.3
-.4
-3.5
23.4
-11.3
-7.9
18.1
13.5
13.2
10.6
7.0
-22.3
-.7
5.9
-18.2
-.3
5.8
-28.6
-51.5
.6
-1.3
-17.0
51.2
-2.2
12.3
63.5
-4.4
18.8
57.6
-2.0
21.4
60.4
-6.7
20.5
34.5
-6.7
12.4
46.0
-3.4
11.2
69.4
-8.8
11.3
63.3
19.4
5.9
25.9
8.2
15.2
8.7
10.1
10.8
14.6
8.4
7.0
10.3
8.4
13.4
27.4
8.0
n.a.
n.a.
and debt*
.
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. T o adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. The monetary base not adjusted for discontinuities consists of total
reserves plus required clearing balances and adjustments to compensate for float
at Federal Reserve Banks plus the currency component of the money stock less
the amount of vault cash holdings of thrift institutions that is included in the
currency component of the money stock plus, for institutions not having required
reserve balances, the excess of current vault cash over the amount applied to
satisfy current reserve requirements. After the introduction of contemporaneous
reserve requirements (CRR), currency and vault cash figures are measured over
the weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock plus the remaining items seasonally
adjusted as a whole.
4. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their O C D liabilities.
M2: M l plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U . S . banks worldwide, M M D A s , savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of
less than $100,000), and balances in both taxable and tax-exempt general purpose
and broker/dealer money market mutual funds. Excludes individual retirement
accounts (IRA) and Keogh balances at depository institutions and money market
Q4
Q3
institutions2
of money, liquid assets,
Nontransaction
10 In M2 5
11 In M3 only 6
1984
1983
funds. Also excludes all balances held by U.S. commercial banks, money market
funds (general purpose and broker/dealer), foreign governments and commercial
banks, and the U.S. government. Also subtracted is a consolidation adjustment
that represents the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposits.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt
data Eire on an end-of-month basis. Growth rates for debt reflect adjustments for
discontinuities over time in the levels of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker/dealer), M M D A s , and savings and small time
deposits less the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposit liabilities.
6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents,
money market fund balances (institution-only), less a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by
institution-only money market mutual funds.
7. Excludes MMDAs.
8. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All IRA and Keogh accounts at commercial
banks and thrifts are subtracted from small time deposits.
9. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
10. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.
A4
1.11
DomesticNonfinancialStatistics • April 1983
RESERVE BALANCES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT
Millions of dollars
Monthly averages of
daily figures
Weekly averages of daily figures for week ending
1984
1984
Factors
Jan.
Feb.
Mar.P
172,027
166,904
168,738
167,033
166,805
166,408
152.481
151.482
999
8,709
8,630
79
76
726
1,282
8,753
11,120
4,618
15,757
148,137
148,137
0
8,573
8,573
0
0
588
1,100
8,506
11,118
4,618
15,813
149,546
149,128
418
8,604
8,562
42
14
905
1,002
8,667
11,115
4,618
15,863
147,720
147,720
0
8,570
8,570
0
0
753
1,071
8,918
11,119
4,618
15,808
148,641
148,641
0
8,568
8,568
0
0
634
1,002
7,961
11,117
4,618
15,822
147,673
147,673
0
8,568
8,568
0
0
507
1,537
8,124
11,116
4,618
15,835
168,976
478
167,179
485
168,317
488
167,435
482
167,427
489
4,479
216
1,941
4,669
214
1,452
4,012
229
1,940
4,398
218
1,574
Feb. 15
Feb. 22
Feb. 29
Mar. 7
Mar. 14
Mar. 21P
Mar. 28p
167,085
169,028
169,316
168,956
149,196
149,196
0
8,568
8,568
0
0
493
459
8,369
11,116
4,618
15,843
149,174
148,318
856
8,610
8,564
46
I
886
1,775
8,581
11,116
4,618
15,855
149,897
149,897
0
8,558
8,558
0
0
1,077
1,091
8,692
11,114
4,618
15,867
149,620
148,623
997
8,698
8,558
140
59
1,195
481
8,902
11,114
4,618
15,879
166,996
485
167,578
482
168,598
481
168,634
485
168,263
494
4,864
215
1,311
4,415
220
1,372
3,557
258
1,457
2,825
224
1,553
5,327
225
1,596
4,358
210
1,548
SUPPLYING RESERVE F U N D S
1 Reserve Bank credit
2
U.S. government securities 1
3
Bought outright
4
Held under repurchase a g r e e m e n t s . . . .
5
Federal agency obligations
6
Bought outright
7
Held under repurchase a g r e e m e n t s . . . .
8
Acceptances
9
Loans
10
Float
11
Other Federal Reserve assets
12 Gold stock
13 Special drawing rights certificate a c c o u n t . . . .
14 Treasury currency outstanding
ABSORBING RESERVE F U N D S
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17
Treasury
18
Foreign
19 Service-related balances and adjustments . . . .
20
Other
21 Other Federal Reserve liabilities and
capital
22 Reserve balances with Federal
Reserve Banks 2
489
549
579
630
566
599
605
525
667
537
5,617
5,492
5,705
5,497
5,420
537
5,719
5,634
5,570
5,832
21,325
18,414
19,066
18,344
18,070
18,353
19,004
20,776
18,411
19,325
Mar. 21 p
Mar. 28?
End-of-month figures
Wednesday figures
1984
1984
Jan.
Feb.
Mar.P
Feb. 15
Feb. 22
Feb. 29
Mar. 7
Mar. 14
SUPPLYING RESERVE F U N D S
169,225
161,971
170,168
168,462
167,459
161,971
165,964
174,644
170,957
165,262
U.S. government securities 1
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Federal agency obligations
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Acceptances
Loans
Float
Other Federal Reserve assets
150,254
150,254
0
8,605
8,605
0
0
418
846
9,102
140,847
140,847
0
8,568
8,568
0
0
1,020
3,193
8,343
150,814
150,814
0
8,558
8,558
0
0
8%
787
9,113
147,571
147,571
0
8,568
8,568
0
0
2,218
2,087
8,018
148,903
148,903
0
8,568
8,568
0
0
376
1,527
8,085
140,847
140,847
0
8,568
8,568
0
0
1,020
3,193
8,343
148,280
148,280
0
8,568
8,568
0
0
414
-1,181
8,883
151,465
148,570
2,895
8,713
8,558
155
5
2,449
3,108
8,904
150,968
150,968
0
8,558
8,558
0
0
935
1,655
8,841
145,670
145,670
0
8,558
8,558
0
0
718
1,240
9,076
34 Gold stock
35 Special drawing rights certificate account .
36 Treasury currency outstanding
11,120
4,618
15,782
11,116
4,618
15,841
11,111
4,618
15,889
11,118
4,618
15,814
11,117
4,618
15,827
11,116
4,618
15,841
11,116
4,618
15,853
11,116
4,618
15,865
11,114
4,618
15,877
11,114
4,618
15,889
166,501
492
167,206
484
168,737
503
167,725
489
167,633
486
167,206
484
168,206
482
168,863
484
168,528
493
168,488
503
7,153
252
1,047
410
3,226
247
1,070
498
3,684
221
1,103
562
4,877
260
1,072
607
5,693
195
1,073
524
3,226
247
1,070
498
3,564
294
1,091
519
2,575
283
1,093
502
5,545
241
1,104
550
3,838
187
1,103
506
23 Reserve Bank credit
24
25
26
27
28
29
30
31
32
33
ABSORBING RESERVE F U N D S
37 Currency in circulation
38 Treasury cash holdings
Deposits, other than reserve balances with
Federal Reserve Banks
39
Treasury
40
Foreign
41 Service-related balances and adjustments .
42
Other
43 Other Federal Reserve liabilities and
capital
44 Reserve balances with Federal
Reserve Banks 2
5,625
5,555
5,912
5,289
5,280
5,555
5,430
5,625
5,409
5,595
19,263
15,260
21,064
19,694
18,136
15,260
17,966
26,819
20,696
16,663
1. Includes securities loaned—fully guaranteed by U . S government securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Excludes required clearing balances and adjustments to compensate for
float.
NOTE. F o r amounts of currency and coin held as reserves, see table 1.12.
Depository Institutions
1.12
RESERVES A N D BORROWINGS
A5
Depository Institutions
Millions of dollars
Monthly averages of daily figures
Reserve classification
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks'
Total vault cash 2
Vault cash used to satisfy reserve requirements 3 .
Surplus vault cash 4
Total reserves 5
Required reserves
Excess reserve balances at Reserve Banks 6
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks 7
1984
1981
1982
1983
Dec.
Dec.
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.P
26,163
19,538
15,755
3,783
41,918
41,606
312
642
53
149
24,804
20,392
17,049
3,343
41,853
41,353
500
697
33
187
22,139
20,413
16,808
3,605
38,947
38,440
507
1,382
172
572
21,965
20,035
16,695
3,340
38,660
38,214
446
1,573
198
490
20,585
20,798
17,331
3,467
37,916
37,418
498
1,441
191
515
21,059
20,471
17,078
3,393
38,137
37,632
505
837
142
255
20,943
20,558
17,201
3,357
38,144
37,615
529
912
119
6
20,986
20,755
17,908
2,847
38,894
38,333
561
745
96
2
21,325
22,578
18,795
3,782
40,120
39,507
613
715
86
4
18,414
22,269
17,951
4,318
36,365
35,423
942
567
103
5
Weekly and biweekly averages of daily figures for week ending 8
1984
1983
11
12
13
14
15
16
17
18
19
20
Reserve balances with Reserve Banks'
Total vault cash 2
Vault cash used to satisfy reserve requirements 3 .
Surplus vault cash 4
Total reserves 5
Required reserves
Excess reserve balances at Reserve Banks 6
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks 7
Dec. 28
Jan. 4
Jan. 11
Jan. 18
Jan. 25
Feb. 1
Feb. 15P
Feb. 29p
Mar. 14 p
Mar. 28P
20,854
21,292
18,149
3,143
39,003
38,567
436
753
115
3
22,305
20,912
17,835
3,077
40,140
39,182
958
1,291
75
5
21,443
21,508
18,219
3,289
39,662
38,980
682
563
69
2
21,466
24,027
19,617
4,410
41,083
40,608
475
781
79
4
20,956
23,238
19,294
3,944
40,250
39,670
580
505
%
6
20,798
22,475
18,567
3,908
39,365
38,862
503
677
109
3
18,445
22,774
18,406
4,368
36,851
35,656
1,195
556
90
3
18,212
21,750
17,452
4,298
35,664
34,943
721
571
116
7
19,874
19,981
16,460
3,521
36,334
35,640
694
690
118
22
18,879
20,935
17,091
3,844
35,970
35,297
672
1,136
149
31
1. Excludes required clearing balances and adjustments to compensate for
float.
2. Dates refer to the maintenance periods in which the vault cash can be used to
satisfy reserve requirements. Under contemporaneous reserve requirements,
maintenance periods end 30 days after the lagged computation periods in which
the balances are held.
3. Equal to all vault cash held during the lagged computation period by
institutions having required reserve balances at Federal Reserve Banks plus the
amount of vault cash equal to required reserves during the maintenance period at
institutions having no required reserve balances.
4. Total vault cash at institutions having no required reserve balances less the
amount of vault cash equal to their required reserves during the maintenance
period.
5. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
1.13
adjustments to compensate for float plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy
reserve requirements less required reserves.
7. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
8. Biweekly averages beginning Feb. 15, 1984.
FEDERAL F U N D S A N D REPURCHASE AGREEMENTS
Large Member Banks 1
Averages of daily figures, in millions of dollars
1984 week ending Monday
By maturity and source
Feb. 1
One day and continuing
contract
1 Commercial banks in United States
2 Other depository institutions, foreign banks and foreign
official institutions, and U.S. government agencies .
3 Nonbank securities dealers
4 All other
All other maturities
5 Commercial banks in United States
6 Other depository institutions, foreign banks and foreign
official institutions, and U.S. government agencies .
7 Nonbank securities dealers
8 All other
MEMO: Federal f u n d s and resale agreement loans in
maturities of one day or continuing contract
9 Commercial banks in United States
10 Nonbank securities dealers
1. Banks with assets of $1 billion or more as of Dec. 31, 1977.
Feb. 6
Feb. 13
Feb. 20
Feb. 27'
Mar. 5
Mar. 12
Mar. 19
Mar. 26
53,310
57,860
59,207'
58,037
53,719
57,784
58,444
55,056
53,253
23,324
5,231
27,630
23,998
5,228
26,411
26,065
5,318
26,569
25,325
6,278
28,316
24,739
5,746
27,196
24,028
5,334
26,400
24,534
5,596
26,646
24,542
5,383
26,538
24,458
6,223
25,928
6,522
6,163
6,821
6,273
6,889
7,236
7,787
7,732
7,454
9,303
7,603
9,830
9,097
7,464'
9,811
9,614
8,059'
10,314
9,065
7,115'
9,182
9,367
7,637
9,535
9,476
8,097
9,080
10,010
8,021
9,169
10,710
8,035
8,991
10,670
8,209
9,303
23,646
5,871
24,918
6,230
24,067
5,371
23,013
5,293
23,285
4,404
23,819
4,784
25,799
5,057
26,397
5,254
27,598
6,798
A6 DomesticNonfinancialStatistics • April 1983
1.14
FEDERAL RESERVE BANK INTEREST RATES
Percent per annum
C u r r e n t and p r e v i o u s levels
Extended credit'
S h o r t - t e r m a d j u s t m e n t credit
a n d s e a s o n a l credit
Federal Reserve
Bank
First 60 d a y s
of b o r r o w i n g
N e x t 90 d a y s
of b o r r o w i n g
Rate on
3/31/84
Effective
date
Previous
rate
Rate on
3/31/84
Previous
rate
8'/5
12/14/82
12/15/82
12/17/82
12/15/82
12/15/82
12/14/82
9
8'/!
9
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. L o u i s
Minneapolis
K a n s a s City . . . .
Dallas
San F r a n c i s c o . . .
12/14/82
12/14/82
12/14/82
12/15/82
12/14/82
12/14/82
9
8V5
9
Rate on
3/31/84
9Vi
m
R a n g e of r a t e s in r e c e n t y e a r s
Effective d a t e
In effect D e c . 31, 1973
1974— A p r . 25
30
Dec. 9
16
1975— J a n .
6
10
24
Feb. 5
7
M a r . 10
14
M a y 16
23
1976— J a n .
19
23
N o v . 22
26
1977— A u g . 30
31
Sept. 2
O c t . 26
1978— J a n .
May
9
20
11
12
R a n g e (or
level)—
All F . R .
Banks
F.R.
Bank
of
N.Y.
m
Vh-Z
m
8
7 3 /4-8
73/4
7'A-7 3 A
VM-VM
IVA
6 3 /4-7'/4
6 3 /4
6'/4-6 3 /4
6'/4
7 3 /4
7 3 /4
7 3 /4
7'/4
Effective date
1978— July
3
10
A u g . 21
S e p t . 22
O c t . 16
20
Nov. 1
3
1 9 7 9 — J u l y 20
A u g . 17
20
S e p t . 19
21
Oct.
8
10
6
6
51/2-6
51/2
5'/5
5'/5
51/4
51/4
1980— F e b .
5 'A
5'/4-5.3/4
5'/4-5 3 /4
51/4
53/4
June
5 3 /4
July
5 3 /4
6
May
6
6-61/5
61/2
61/2
6V5-7
7
7
7
6'/5
Sept.
Nov.
Dec.
15
19
29
30
13
16
28
29
26
17
5
1. Applicable t o a d v a n c e s w h e n e x c e p t i o n a l c i r c u m s t a n c e s or p r a c t i c e s involve
only a particular d e p o s i t o r y institution a n d to a d v a n c e s w h e n a n institution is
u n d e r sustained liquidity p r e s s u r e s . S e e section 201.3(b)(2) of R e g u l a t i o n A .
2. R a t e s f o r s h o r t - t e r m a d j u s t m e n t credit. F o r description a n d earlier d a t a s e e
the following p u b l i c a t i o n s of t h e B o a r d of G o v e r n o r s : Banking and
Monetary
Statistics, 1914-1941, a n d 1941-1970; Annual Statistical Digest, 1970-1979,
1980,
1981, and 1982.
Rate on
3/31/84
Previous
rate
10
101/2
11
101/2
F.R.
Bank
of
N.Y.
7'/4
71/4
73/4
8
m
81/5
9V5
91/2
Effective date
1981— M a y
Nov.
Dec.
5
8
2
6
4
1982— July
10
lO-lO'/i
101/5
10^-11
11
11-12
12
12/14/82
12/15/82
12/17/82
12/15/82
12/15/82
12/14/82
12/14/82
12/14/82
12/14/82
12/15/82
12/14/82
12/14/82
1
10
10'/2
10'/>
11
11
12
12
12-13
13
12-13
12
11-12
13
13
13
12
11
10-11
10
11
12
12-13
13
10
10
11
12
13
13
R a n g e (or
level)—
All F . R .
Banks
13-14
14
13-14
13
12
F.R.
Bank
of
N.Y.
14
14
13
13
12
20
23
2
3
16
27
30
O c t . 12
13
N o v . 22
26
D e c . 14
15
17
11V2-12
11'/5
11-11V5
11
101/2
10-10V2
10
91/2-10
9'/5
9-91/2
9
81/2-9
81/5-9
81/2
11V5
111/2
11
11
10'/5
10
10
9V5
91/2
9
9
9
81/2
8V5
In effect M a r . 31, 1984
8'/5
8'/2
Aug.
6-6'/4
6
5'/4-5'/2
Previous
rate
10
71/4
6 3 /4
6 3 /4
6'/4
6'/4
Effective date
for current rates
2
R a n g e (or
level)—
All F . R .
Banks
7-7'/4
71/4
m
8
8-8'/I
Wi
8V5-9l/2
9'/5
A f t e r 150 d a y s
In 1980 and 1981, the F e d e r a l R e s e r v e applied a s u r c h a r g e to s h o r t - t e r m
a d j u s t m e n t credit b o r r o w i n g s by institutions with d e p o s i t s of $500 million or m o r e
that h a d b o r r o w e d in s u c c e s s i v e w e e k s or in m o r e t h a n 4 w e e k s in a c a l e n d a r
q u a r t e r . A 3 p e r c e n t s u r c h a r g e w a s in effect f r o m M a r . 17, 1980, t h r o u g h M a y 7,
1980. T h e r e w a s no s u r c h a r g e until N o v . 17, 1980, w h e n a 2 p e r c e n t s u r c h a r g e w a s
a d o p t e d ; the s u r c h a r g e w a s s u b s e q u e n t l y raised to 3 p e r c e n t on D e c . 5, 1980, a n d
to 4 p e r c e n t o n M a y 5, 1981. T h e s u r c h a r g e w a s r e d u c e d to 3 p e r c e n t effective
S e p t . 22, 1981, and to 2 p e r c e n t effective O c t . 12. A s of O c t . 1, the f o r m u l a f o r
applying the s u r c h a r g e w a s c h a n g e d f r o m a c a l e n d a r q u a r t e r to a moving 13-week
p e r i o d . T h e s u r c h a r g e w a s eliminated on N o v . 17, 1981.
Policy Instruments
1.15
Al
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS'
Percent of deposits
Type of deposit, and
deposit interval
Member bank requirements
before implementation of the
Monetary Control Act
Percent
Net
Effective date
demand
Time and
Savings
7
91/2
115/4
123/4
16'/4
12/30/76
12/30/76
12/30/76
12/30/76
12/30/76
savings2-3
Time 4
$0 million-$5 million, by maturity
30-179 days
180 days to 4 years
4 years or more
Over $5 million, by maturity
30-179 days
180 days to 4 years
4 years or more
3
Effective date
3
12
12/29/83
12/29/83
Nonpersonal time deposits9
By original maturity
Less than 1 Vi years
1V2 years or more
3
0
10/6/83
10/6/83
Eurocurrency
All types
3
11/13/80
Net transaction accounts
$0-$28.9 million
Over $28.9 million
8
-
3/16/67
3
2'/2
1
3/16/67
1/8/76
10/30/75
6
2'/2
1
12/12/74
1/8/76
10/30/75
1. For changes in reserve requirements beginning 1963, see Board's Annual
Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report
for 1976, table 13. Under provisions of the Monetary Control Act, depository
institutions include commercial banks, mutual savings banks, savings and loan
associations, credit unions, agencies and branches of foreign banks, and Edge Act
corporations.
2. Requirement schedules are graduated, and each deposit interval applies to
that part of the deposits of each bank. Demand deposits subject to reserve
requirements were gross demand deposits minus cash items in process of
collection and demand balances due from domestic banks.
The Federal Reserve Act as amended through 1978 specified different ranges of
requirements for reserve city banks and for other banks. Reserve cities were
designated under a criterion adopted effective Nov. 9, 1972, by which a bank
having net demand deposits of more than $400 million was considered to have the
character of business of a reserve city bank. The presence of the head office of
such a bank constituted designation of that place as a reserve city. Cities in which
there were Federal Reserve Banks or branches were also reserve cities. Any
banks having net demand deposits of $400 million or less were considered to have
the character of business of banks outside of reserve cities and were permitted to
maintain reserves at ratios set for banks not in reserve cities.
Effective Aug. 24, 1978. the Regulation M reserve requirements on net balances
due from domestic banks to their foreign branches and on deposits that foreign
branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent
respectively. The Regulation D reserve requirement of borrowings from unrelated
banks abroad was also reduced to zero f r o m 4 percent.
Effective with the reserve computation period beginning Nov. 16, 1978,
domestic deposits of Edge corporations were subject to the same reserve
requirements as deposits of member banks.
3. Negotiable order of withdrawal (NOW) accounts and time deposits such as
Christmas and vacation club accounts were subject to the same requirements as
savings deposits.
The average reserve requirement on savings and other time deposits before
implementation of the Monetary Control Act had to be at least 3 percent, the
minimum specified by law.
4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent
was imposed on large time deposits of $100,000 or more, obligations of affiliates,
and ineligible acceptances. This supplementary requirement was eliminated with
the maintenance period beginning July 24, 1980.
Effective with the reserve maintenance period beginning Oct. 25, 1979, a
marginal reserve requirement of 8 percent was added to managed liabilities in
excess of a base amount. This marginal requirement was increased to 10 percent
beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and
was eliminated beginning July 24, 1980. Managed liabilities are defined as large
time deposits, Eurodollar borrowings, repurchase agreements against U.S.
government and federal agency securities, federal funds borrowings from nonmember institutions, and certain other obligations. In general, the base for the
marginal reserve requirement was originally the greater of (a) $100 million or (b)
the average amount of the managed liabilities held by a member bank, Edge
corporation, or family of U.S. branches and agencies of a foreign bank for the two
reserve computation periods ending Sept. 26, 1979. F o r the computation period
beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease
in an institution's U . S . office gross loans to foreigners and gross balances due
from foreign offices of other institutions between the base period (Sept. 13-26,
1979) and the week ending Mar. 12, 1980, whichever was greater. For the
computation period beginning May 29, 1980, the base was increased by 7Vi
percent above the base used to calculate the marginal reserve in the statement
week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was
reduced to the extent that foreign loans and balances declined.
Depository institution requirements
after implementation of the
Monetary Control Act 6
Percent
1
2
$10 million-$100 million
$100 million-$400 million
Over $400 million
Type of deposit, and
deposit interval 5
liabilities
5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 9 7 320) provides that $2 million of reservable liabilities (transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities) of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabilities subject to this zero percent reserve requirement each year for the next succeeding calendar year by 80 percent of the
percentage increase in the total reservable liabilities of all depository institutions,
measured on an annual basis as of June 30. No corresponding adjustment is to be
made in the event of a decrease. Effective Dec. 9, 1982, the amount of the
exemption was established at $2.1 million. Effective with the reserve maintenance
period beginning Jan. 12, 1984, the amount of the exemption is $2.2 million. In
determining the reserve requirements of a depository institution, the exemption
shall apply in the following order: (1) nonpersonal money market deposit accounts
(MMDAs) authorized under 12 C F R section 1204.122; (2) net N O W accounts
(NOW accounts less allowable deductions); (3) net other transaction accounts;
and (4) nonpersonal time deposits or Eurocurrency liabilities starting with those
with the highest reserve ratio. With respect to N O W accounts and other
transaction accounts, the exemption applies only to such accounts that would be
subject to a 3 percent reserve requirement.
6. For nonmember banks and thrift institutions that were not members of the
Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3,
1987. For banks that were members on or after July 1, 1979, but withdrew on or
before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends
on Oct. 24, 1985. For existing member banks the phase-in period of about three
years was completed on Feb. 2, 1984. All new institutions will have a two-year
phase-in beginning with the date that they open for business, except for those
institutions that have total reservable liabilities of $50 million or more.
7. Transaction accounts include all deposits on which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers (in excess
of three per month) for the purpose of making payments to third persons or others.
However, M M D A s and similar accounts offered by institutions not subject to the
rules of the Depository Institutions Deregulation Committee (DIDC) that permit
no more than six preauthorized, automatic, or other transfers per month of which
no more than three can be checks—are not transaction accounts (such accounts
are savings deposits subject to time deposit reserve requirements.)
8. The Monetary Control Act of 1980 requires that the amount of transaction
accounts against which the 3 percent reserve requirement applies be modified
annually by 80 percent of the percentage increase in transaction accounts held by
all depository institutions determined as of June 30 each year. Effective Dec. 31,
1981, the amount was increased accordingly from $25 million to $26 million; and
effective Dec. 30, 1982, to $26.3 million; and effective Dec. 29, 1983, to $28.9
million.
9. In general, nonpersonal time deposits are time deposits, including savings
deposits, that are not transaction accounts and in which a beneficial interest is
held by a depositor that is not a natural person. Also included are certain
transferable time deposits held by natural persons, and certain obligations issued
to depository institution offices located outside the United States. F o r details, see
section 204.2 of Regulation D.
NOTE. Required reserves must be held in the form of deposits with Federal
Reserve Banks or vault cash. N o n m e m b e r s may maintain reserve balances with a
Federal Reserve Bank indirectly on a pass-through basis with certain approved
institutions.
A8
1.16
DomesticNonfinancialStatistics • April 1983
MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions'
Percent per annum
Type of deposit
Commercial banks
Savings and loan associations and
mutual savings banks (thrift institutions)'
In effect Mar. 31, 1984
In effect Mar. 31, 1984
Percent
1
2
3
4
Savings
Negotiable order of withdrawal accounts
Negotiable order of withdrawal accounts of $2,500 or more 2
Money market deposit account 2
Time accounts by maturity
5 7-31 days of less than $2,500 4
6 7-31 days of $2,500 or more 2
7 More than 31 days
1. Effective Oct. 1, 1983, restrictions on the maximum rates of interest payable
by commercial banks and thrift institutions on various categories of deposits were
removed. For information regarding previous interest rate ceilings on all categories of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the
Federal Home Loan Bank Board Journal, and the Annual Report of the Federal
Deposit Insurance Corporation before N o v e m b e r 1983.
2. Effective Dec. 1, 1983, IRA/Keogh (HR10) Plan accounts are not subject to
minimum deposit requirements.
3. Effective Dec. 14, 1982, depository institutions are authorized to offer a new
account with a required initial balance of $2,500 and an average maintenance
balance of $2,500 not subject to interest rate restrictions. N o minimum maturity
5'/2
51/4
51/5
Effective date
Effective date
1/1/84
12/31/80
1/5/83
12/14/82
5'/>
1/1/84
1/5/83
10/1/83
5'/2
5'/4
7/1/79
12/31/80
1/5/83
12/14/82
9/1/82
1/5/83
10/1/83
period is required for this account, but depository institutions must reserve the
right to require seven days notice before withdrawals. When the average balance
is less than $2,500, the account is subject to the maximum ceiling rate of interest
for N O W accounts; compliance with the average balance requirement may be
determined over a period of one month. Depository institutions may not guarantee
a rate of interest for this account for a period longer than one month or condition
the payment of a rate on a requirement that the funds remain on deposit for longer
than one month.
4. Deposits of less than $2,500 issued to governmental units continue t o be
subject to an interest rate ceiling of 8 percent.
Policy Instruments
1.17
A9
FEDERAL RESERVE OPEN MARKET TRANSACTIONS
Millions of dollars
1984
1983
Type of transaction
1981
1982
1983
Sept.
Aug.
Nov.
Oct.
Dec.
Jan.
Feb.
U . S . GOVERNMENT SECURITIES
Outright transactions (excluding matched
transactions)
1
2
3
4
Treasury bills
Gross purchases
Gross sales
Exchange
Redemptions
5
6
7
8
9
13,899
6,746
0
1,816
17,067
8,369
0
3,000
18,888
3,420
0
2,400
1,768
289
0
0
3,184
214
0
500
309
0
0
0
1,435
0
0
700
3,695
0
0
0
0
1,967
0
1,300
368
828
0
600
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
317
23
13,794
-12,869
0
312
0
17,295
-14,164
0
484
0
18,887
-16,553
87
0
0
2,212
-5,344
0
0
0
902
-753
0
0
0
529
-636
0
155
0
2,828
-2,930
0
0
0
915
0
0
0
0
573
1,530
0
0
0
-2,488
-4,574
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
1,702
0
-10,299
10,117
1,797
0
-14,524
11,804
1,896
0
-15,533
11,641
0
0
-2,212
3,130
0
0
-902
753
0
0
-256
636
820
0
-1,684
1,796
0
0
-915
0
0
0
-487
1,530
0
0
2,488
2,861
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
393
0
-3,495
1,500
388
0
-2,172
2,128
890
0
-2,450
2,950
0
0
516
1,300
0
0
0
0
0
0
-273
0
349
0
-250
700
0
0
0
0
0
300
-86
0
0
0
97
1,000
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
379
0
0
1,253
307
0
-601
234
383
0
-904
1,962
0
0
-516
914
0
0
0
0
0
0
0
0
151
0
-894
434
0
0
0
0
0
0
0
0
0
0
-97
713
22
23
24
All maturities
Gross purchases
Gross sales
Redemptions
16,690
6,769
1,816
19,870
8,369
3,000
22,540
3,420
2,487
1,768
289
0
3,184
214
500
309
0
0
2,909
0
700
3,695
0
0
0
2,267
1,300
368
828
600
25
26
Matched transactions
Gross sales
Gross purchases
589,312
589,647
543,804
543,173
578,591
576,908
45,989
44,480
48,193
47,667
53,751
53,367
56,858
57,991
58,979
56,404
54,833
58,096
55,656
47,310
27
28
Repurchase agreements
Gross purchases
Gross sales
79,920
78,733
130,774
130,286
105,971
108,291
2,263
0
37,211
30,223
19,247
28,499
3,257
3,257
3,644
2,260
14,245
15,629
0
0
9,626
8,358
12,631
2,234
8,933
-9,326
3,342
2,504
-1,688
-9,407
494
0
108
0
0
189
0
0
292
0
0
138
0
0
5
0
0
6
0
0
84
0
0
2
0
0
40
0
0
38
13,320
13,576
18,957
18,638
8,833
9,213
189
0
2,871
2,510
1,960
2,510
497
497
634
426
931
1,139
0
0
130
130
-672
51
356
-557
-84
206
-248
-38
36 Repurchase agreements, net
-582
1,285
-1,062
209
913
-1,122
0
418
-418
0
37 Total net change in System Open Market
Account
9,175
9,773
10,897
2,493
10,203
-11,005
3,258
3,128
-2,354
-9,444
29 Net change in U.S. government securities
FEDERAL A G E N C Y OBLIGATIONS
Outright transactions
30
Gross purchaises
31
Gross sales
32
Redemptions
33
34
Repurchase agreements
Gross purchases
Gross sales
35 Net change in federal agency obligations
BANKERS ACCEPTANCES
NOTE: Sales, redemptions, and negative figures reduce holdings of the System
Open Market Account; all other figures increase such holdings. Details may not
add to totals because of rounding.
A10
1.18
DomesticNonfinancialStatistics • April 1983
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements
Millions of dollars
Account
Mar. 7
Feb. 29
Wednesday
End of month
1984
1984
Mar. 21
Mar. 14
Mar. 28
Jan.
Feb.
Mar.
Consolidated condition statement
ASSETS
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4
To depository institutions
5
Other
Acceptances—Bought outright
6
Held under repurchase agreements
Federal agency obligations
7
Bought outright
8
Held under repurchase agreements
U.S. government securities
Bought outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright 1
13
Held under repurchase agreements
14 Total U.S. government securities
15 Total loans and securities
16 Cash items in process of collection
17 Bank premises
Other assets
18
Denominated in foreign currencies 2
19
All other 3
20 Total assets
11,116
4,618
534
11,116
4,618
533
11,116
4,618
529
11,114
4,618
521
11,114
4,618
515
11,120
4,618
498
11,116
4,618
534
11,111
4,618
520
1,020
0
414
2,449
0
935
0
718
0
418
0
1,020
0
896
0
0
0
0
5
0
0
0
0
0
8,568
0
8,568
0
8,558
155
8,558
0
8,558
0
8,605
0
8,568
0
8,558
0
56,399
62,921
21,527
140,847
0
140,847
64,832
62,921
21,527
149,280
0
149,280
64,122
62,921
21,527
148,570
2,895
151,465
66,520
62,921
21,527
150,968
0
150,968
61,222
62,921
21,527
145,670
0
145,670
65,806
63,634
20,814
150,254
0
150,254
56,399
62,921
21,527
140,847
0
140,847
66,366
62,921
21,527
150,814
0
150,814
150,435
158,262
162,632
160,461
154,946
159,277
150,435
160,268
11,193
549
5,943
549
10,180
549
8,838
549
8,181
549
10,383
548
11,193
549
7,698
549
3,915
3,879
3,918
4,416
3,936
4,419
3,937
4,355
3,942
4,585
3,700
4,854
3,915
3,879
4,011
4,553
186,239
189,355
197,979
194,393
188,450
194,998
186,239
193,328
152,383
153,367
154,010
153,665
153,617
151,711
152,383
153,871
16,330
3,226
247
498
19,057
3,564
294
519
27,912
2,575
283
502
21,800
5,545
241
550
17,766
3,838
187
506
20,361
7,153
252
359
16,330
3,226
247
498
22,167
3,684
221
562
20,301
23,434
31,272
28,136
22,297
28,125
20,301
26,634
8,000
2,099
7,124
2,159
7,072
2,335
7,183
2,124
6,941
2,301
9,537
2,188
8,000
2,099
6,911
2,427
182,783
186,084
194,689
191,108
185,156
191,561
182,783
189,843
1,482
1,465
509
1,493
1,465
313
1,495
1,465
330
1,496
1,465
324
1,498
1,465
331
1,468
1,465
504
1,482
1,465
509
1,499
1,465
521
186,239
189,355
197,979
194,393
188,450
194,998
186,239
193,328
119,391
117,970
116,645
114,867
117,565
112,311
119,391
113,547
LIABILITIES
21 Federal Reserve notes
Deposits
22
To depository institutions
23
U.S. Treasury—General account
24
Foreign Official accounts
25
Other
26 Total deposits
27 Deferred availability cash items
28 Other liabilities and accrued dividends 4
29 Total liabilities
CAPITAL A C C O U N T S
30 Capital paid in
31 Surplus
32 Other capital accounts
33 Total liabilities and capital accounts
34 MEMO: Marketable U.S. government securities held in
custody for foreign and international account
Federal Reserve note statement
35 Federal Reserve notes outstanding
36
LESS: Held bv bank 5
37
Federal Reserve notes, net
Collateral held against notes net:
38
Gold certificate account
39
Special drawing rights certificate account
40
Other eligible assets
41
U.S. government and agency securities
182,185
29,838
152,347
182,499
29,132
153,367
182,742
28,732
154,010
183,088
29,423
153,665
183,081
29,464
153,617
180,570
28,859
151,711
182,185
29,838
152,347
183,132
29,261
153,871
11,116
4,618
0
136,613
11,116
4,618
0
137,633
11,116
4,618
0
138,276
11,114
4,618
0
137,933
11,114
4,618
0
137,885
11,120
4,618
0
135,973
11,116
4,618
0
136,613
11,111
4,618
0
138,142
42 Total collateral
152,347
153,367
154,010
153,665
153,617
151,711
152,347
153,871
1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Assets shown in this line are revalued monthly at market exchange rates.
3. Includes special investment account at Chicago of Treasury bills maturing
within 90 days.
4. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
5. Beginning September 1980, Federal Reserve notes held by the Reserve Bank
are exempt from the collateral requirement.
Reserve Banks; Banking Aggregates
1.19
FEDERAL RESERVE BANKS
Maturity Distribution of Loan and Security Holdings
Millions of dollars
End of month
Wednesday
1984
Type and maturity groupings
Feb. 29
Feb. 29
1 Loans—Total
2
Within 15 days
3
16 days to 90 days
4
91 days to 1 year
1,020
941
79
0
414
365
49
2,449
2,394
55
0
0
935
910
25
7)8
678
40
418
387
31
1,020
941
79
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9 U.S. government securities—Total
10
Within 15 days'
11
16 days to 90 days
12
91 days to 1 year
13
Over 1 year to 5 years
14
Over 5 years to 10 years
15
Over 10 years
140,847
4,499
25,076
43,925
34,521
14,196
18,630
149,280
9,284
29,061
43,587
34,522
14,196
18,630
151,465
10.195
30,285
43,637
34,522
14.196
18,630
150,968
10,251
31,510
41,859
34,522
14,196
18,630
145,670
5,045
29,318
43,959
34,522
14,196
18,630
150,254
6,295
35,451
43,246
34,149
13,099
18,014
140,847
4,499
25,076
43,925
34,521
14,196
18,630
16 Federal agency obligations—Total.
17
Within 15 days'
18
16 days to 90 days
19
91 days to 1 year
20
Over 1 year to 5 years
21
Over 5 years to 10 years
22
Over 10 years
8,568
162
688
1,587
4,378
1,350
403
8,568
61
761
1,627
4,356
1,360
403
8,7)3
159
844
1,701
4,246
1,360
403
8,558
155
693
1,701
4,246
1,360
403
8,558
8,605
212
685
1,696
4,290
1,319
403
8,568
162
688
1,587
4,378
1,350
403
5 Acceptances—Total
6
Within 15 days
7
16 days to 90 days
8
91 days to 1 year
5
5
188
763
1,668
4,176
1,360
403
1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements.
A11
A12
1.20
DomesticNonfinancialStatistics • April 1983
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE
Billions of dollars, averages of daily figures
1983
Item
1980
Dec.
1981
Dec.
1982
Dec.
July
1 Total reserves 2
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Seasonally adjusted
A D J U S T E D FOR
CHANGES IN RESERVE REQUIREMENTS'
2
3
4
5
1984
1983
Dec.
30.64
31.51
33.63
35.28
35.19
35.22
35.31
35.32
35.25
35.28
35.50
36.07
28.95
28.95
30.13
150.11
30.88
31.03
31.20
157.82
33.00
33.18
33.13
169.81
34.51
34.51
34.72
184.97
33.74
34.32
34.69
179.31
33.67
34.16
34.77
180.13
33.87
34.38
34.81
181.78
34.47
34.73
34.81
182.85
34.34
34.35
34.72
183.95
34.51
34.51
34.72
184.97
34.79
34.79
34.89
186.94
35.50
35.50
35.12
188.58
Not seasonally adjusted
6 Total reserves 2
7
8
9
10
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
31.34
32.23
34.35
36.00
34.98
34.71
35.01
35.31
35.35
36.00
37.30
35.65
29.65
29.65
30.82
152.80
31.59
31.74
31.91
160.65
33.71
33.90
33.85
172.83
35.22
35.23
35.44
188.23
33.53
34.10
34.47
180.18
33.17
33.66
34.27
180.14
33.57
34.08
34.51
181.24
34.47
34.73
34.81
182.67
34.45
34.45
34.82
185.04
35.22
35.23
35.44
188.23
36.59
36.59
36.69
188.10
35.09
35.09
34.71
185.93
N O T A D J U S T E D FOR
CHANGES IN RESERVE REQUIREMENTS 5
11 Total reserves 2
12
13
14
15
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
40.66
41.93
41.85
38.89
38.95
38.66
37.92
38.14
38.14
38.89
40.12
36.37
38.97
38.97
40.15
163.00
41.29
41.44
41.61
170.47
41.22
41.41
41.35
180.52
38.12
38.12
38.33
192.36
37.50
38.07
38.44
185.30
37.11
37.61
38.21
185.40
36.48
36.99
37.42
185.11
37.29
37.55
37.63
186.60
37.24
37.25
37.62
188.97
38.12
38.12
38.33
192.36
39.41
39.41
39.41
192.30
35.80
35.80
35.42
186.67
1. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted f r o m the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted f r o m the actual series.
2. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
3. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need t o repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
4. The monetary base not adjusted for discontinuities consists of total reserves
plus required clearing balances and adjustments to compensate for float at Federal
Reserve Banks and the currency component of the money stock less the amount
of vault cash holdings of thrift institutions that is included in the currency
component of the money stock plus, for institutions not having required reserve
balances, the excess of current vault cash over the amount applied to satisfy
current reserve requirements. After the introduction of contemporaneous reserve
requirements (CRR), currency and vault cash figures are measured over the
weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After C R R , the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock and the remaining items seasonally
adjusted as a whole.
5. Reflects actual reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated
with implementation of the Monetary Control Act or other regulatory changes to
reserve requirements.
NOTE. Latest monthly and biweekly figures are available f r o m the B o a r d ' s
H.3(502) statistical release. Historical data and estimates of the impact on
required reserves of changes in reserve requirements are available f r o m the
Banking Section, Division of Research and Statistics, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.
Monetary Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Billions of dollars, averages of daily figures
1984
1983
1980
Dec.
1981
Dec.
1982
Dec.
1983
Dec.
Nov.
Dec.
Jan.
Feb.
Seasonally adjusted
1 Ml
2 M2
M3
4 L
5 Debt 2
414.9
1,632.6
1,989.8
2,326.0
3,946.9
441.9
1,796.6
2,236.7
2,598.4
4,323.8
480.5
1,965.3
2,460.3
2,868.7
4,710.1
525.3
2,196.1
2,706.8
3,175.5
5,219.0
523.0
2,182.1
2,688.9
3,147.4
5,166.1
525.3
2,196.1
2,706.8
3,175.5
5,219.0
523.0
2,206.2
2,720.5
n.a.
5,271.9
532.9
2,222.0
2,743.2
n.a.
n.a.
116.7
4.2
266.5
27.6
124.0
4.3
236.2
77.4
134.1
4.3
239.7
102.4
148.0
4.9
243.7
128.8
147.2
4.9
242.8
128.2
148.0
4.9
243.7
128.8
149.9
4.9
244.5
130.7
150.2
5.0
243.8
133.9
1,217.7
357.2
1,354.6
440.2
1,484.8
495.0
1,670.8
510.7
1,659.2
506.7
1,670.8
510.7
1,676.2
514.3
1,689.1
521.2
6
7
8
9
M l components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
10
11
Nontransactions components
In M2 6
In M3 only 7
12
13
Savings deposits 9
Commercial Banks
Thrift Institutions
185.9
215.6
159.7
186.1
164.9
197.2
134.6
178.2
136.1
179.2
134.6
178.2
132.1
177.7
130.1
176.4
14
15
Small denomination time deposits 9
Commerical Banks
Thrift Institutions
287.5
443.9
349.6
477.7
382.2
474.7
353.1
440.0
350.0
435.5
353.1
440.0
352.9
444.1
352.8
448.3
16
17
Money market mutual f u n d s
General purpose and broker/dealer
Institution-only
61.6
15.0
150.6
36.2
185.2
48.4
138.2
40.3
138.8
40.6
138.2
40.3
137.9
40.6
142.2
41.6
18
19
Large denomination time deposits 1 0
Commercial B a n k s "
Thrift Institutions
213.9
44.6
247.3
54.3
261.8
66.1
225.5
100.3
224.2
96.6
225.5
100.3
227.7
106.1
227.7
111.7
20
21
Debt components
Federal debt
Non-federal debt
742.8
3,204.1
830.1
3,493.7
991.4
3,718.7
1,177.9
4,041.0
1,169.7
3,996.4
1,177.9
4,041.0
1204.8
4067.1
n.a.
n.a.
Not seasonally adjusted
424.8
1,635.4
1,996.1
2,332.8
3,946.9
452.3
1,798.7
2,242.7
2,605.6
4,323.8
491.9
1,967.4
2,466.6
2,876.5
4,710.1
537.8
2,198.0
2,712.9
3,183.3
5,219.0
526.7
2,181.2
2,689.9
3,148.6
5,153.7
537.8
2,198.0
2,712.9
3,183.3
5,219.0
534.8
2,210.0
2,726.3
n.a.
5,259.9
521.9
2,211.8
2,735.9
n.a.
n.a.
118.8
3.9
274.7
27.4
126.1
4.1
243.6
78.5
136.4
4.1
247.3
104.1
150.5
4.6
251.6
131.2
147.9
4.6
245.2
128.9
150.5
4.6
251.6
131.2
148.4
4.6
249.4
132.5
148.3
4.7
237.9
130.9
1,210.6
360.7
1,346.3
444.1
1,475.5
499.2
1,660.1
515.0
1,654.5
508.8
1,660.1
515.0
1,675.1
516.4
1,689.9
524.1
Money market deposit accounts
Commercial banks
Thrift institutions
n.a.
n.a.
n.a.
n.a.
26.3
16.6
230.1
146.0
227.1
145.8
230.1
146.0
234.2
146.3
238.3
147.9
35
36
Savings deposits 8
Commercial Banks
Thrift Institutions
183.8
214.4
157.5
184.7
162.1
195.5
132.0
176.5
133.7
178.3
132.0
176.5
131.3
176.1
129.9
175.2
37
38
Small denomination time deposits 9
Commercial Banks
Thrift Institutions
286.0
442.3
347.7
475.6
380.1
472.4
351.0
437.6
348.9
434.2
351.0
437.6
353.7
445.7
355.3
450.2
39
40
Money market mutual funds
General purpose and broker/dealer
Institution-only
61.6
15.0
150.6
36.2
185.2
48.4
138.2
40.3
138.8
40.6
138.2
40.3
137.9
40.6
142.2
41.6
41
42
Large denomination time deposits 1 0
Commercial B a n k s "
Thrift Institutions
218.5
44.3
252.1
54.3
266.2
66.2
228.9
100.7
225.5
98.3
228.9
100.7
228.8
105.5
229.1
110.9
43
44
Debt components
Federal debt
Non-federal debt
742.8
3,204.1
830.1
3,943.7
991.4
3,718.7
1,177.9
4,041.0
1,169.7
3,996.4
1,177.9
4,041.0
1,204.8
4,067.1
22
23
24
25
26
Ml
M2
M3
L
Debt 2
27
28
29
30
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
31
32
Nontransactions components
M2 6
M3 only 7
33
34
For notes see bottom of next page.
n.a.
n.a.
A14
1.22
DomesticNonfinancialStatistics • April 1983
B A N K DEBITS A N D DEPOSIT T U R N O V E R
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
1983
Aug.
1
2
3
4
5
6
7
8
9
10
Demand deposits 2
All insured banks
Major N e w York City banks
Other banks
A T S - N O W accounts 3
Savings deposits 4
Oct.
Nov.
Dec/
Jan.
Seasonally adjusted
D E B I T S TO
Demand deposits 2
All insured banks
Major N e w York City banks
Other banks
A T S - N O W accounts 3
Savings deposits 4
Sept.
1984
80,858.7
33,891.9
46,966.9
743.4
672.7
90,914.4
37,932.9
52,981.6
1,036.2
721.4
109,642.5
47,769.4
61,873.1
1,405.5
741.4
111,538.1
48,373.3
63,164.9
1,679.5
706.3
110,700.7
46,903.7
63,796.9
1,495.9
712.7
118,407.2
52,639.9
65,767.3
1,392.8
643.7
114,466.6
49,715.8
64,750.8
1,447.4
674.9
115,381.5
48,255.7
67,125.8
1,499.6
661.4
120,954.6
51,952.5
69,002.2
1,345.1
620.8
285.8
1,105.1
186.2
14.0
4.1
324.2
1,287.6
211.1
14.5
4.5
380.5
1,528.0
240.9
15.6
5.4
385.7
1,526.7
245.3
17.9
5.2
384.7
1,508.8
248.6
15.9
5.3
409.6
1,703.8
254.7
14.9
4.9
398.3
1,645.6
251.8
15.5
5.1
395.7
1,541.4
257.9
15.9
5.0
414.2
1,650.9
264.9
13.8
4.7
DEPOSIT T U R N O V E R
Not seasonally adjusted
D E B I T S TO
2
Demand deposits
All insured banks
11
12
Major N e w York City banks
Other banks
13
14 A T S - N O W accounts 3
15 MMDA 5
16 Savings deposits 4
81,197.9
34,032.0
47,165.9
737.6
0
672.9
91,031.9
38,001.0
53,030.9
1,027.1
0
720.0
109,517.7
47,707.4
61,810.3
1,397.8
573.5
742.0
115,776.6
49,788.2
65,988.3
1,468.9
655.5
694.3
111,741.3
48,276.1
63,465.2
1,388.3
641.4
688.9
114,191.9
49,910.9
64,280.9
1,373.2
700.3
672.9
110,963.9
47.508.1
63,455.8
1,327.2
639.1
635.3
122,558.3
52,418.5
70,139.7
1,465.4
745.8
647.1
123,567.2
52,895.2
70,672.0
1,601.5
793.4
672.5
286.1
1,114.2
186.2
14.0
0
4.1
325.0
1,295.7
211.5
14.3
0
4.5
379.9
1,526.6
240.5
15.5
2.8
5.4
406.7
1,621.6
259.8
16.0
3.0
5.1
387.2
1,574.5
246.1
15.0
2.9
5.2
391.1
1,595.5
246.6
14.6
3.2
5.1
381.7
1,553.4
244.0
14.0
2.8
4.8
407.0
1,613.6
261.1
15.1
3.3
4.9
412.3
1,581.5
265.4
16.2
3.4
5.2
DEPOSIT T U R N O V E R
17
18
19
20
21
22
Demand deposits 2
All insured banks
Major New York City banks
Other banks
A T S - N O W accounts 3
MMDA 5
Savings deposits 4
1. Annual averages of monthly figures.
2. Represents accounts of individuals, partnerships, and corporations and of
states and political subdivisions.
3. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data
availability starts with December 1978.
4. Excludes ATS and N O W accounts, M M D A and special club accounts, such
as Christmas and vacation clubs.
5. Money market deposit accounts.
NOTE. Historical data for demand deposits are available back to 1970 estimated
in part from the debits series for 233 SMSAs that were available through June
1977. Historical data for A T S - N O W and savings deposits are available back to
July 1977. Back data are available on request f r o m the Banking Section, Division
of Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
N O T E S TO T A B L E 1.21
1. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their O C D liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, MMDAs, savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of
less than $100,000), and balances in both taxable and tax-exempt general purpose
and broker/dealer money market mutual funds. Excludes individual retirement
accounts (IRA) and Keogh balances at depository institutions and money market
funds. Also excludes all balances held by U.S. commercial banks, money market
funds (general purpose and broker/dealer), foreign governments and commercial
banks, and the U.S. government. Also subtracted is a consolidation adjustment
that represents the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposits.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve B o a r d ' s flow of funds accounts. Debt
data are on an end-of-month basis.
2. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of
commercial banks. Excludes the estimated amount of vault cash held by thrift
institutions to service their O C D liabilities.
3. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in
demand deposits.
4. Demand deposits at commercial banks and foreign-related institutions other
than those due to domestic banks, the U.S. government, and foreign banks and
official institutions less cash items in the process of collection and Federal
Reserve float. Excludes the estimated amount of demand deposits held at
commercial banks by thrift institutions to service their O C D liabilities.
5. Consists of N O W and ATS balances at all depository institutions, credit
union share draft balances, and demand deposits at thrift institutions. Other
checkable deposits seasonally adjusted equals the difference between the seasonally adjusted sum of demand deposits plus O C D and seasonally adjusted demand
deposits. Included are all ceiling free " S u p e r N O W s , " authorized by the
Depository Institutions Deregulation committee to be offered beginning Jan. 5,
1983.
6. Sum of overnight RPs and overnight Eurodollars, money market fund
balances (general purpose and broker/dealer), MMDAs, and savings and small
time deposits, less the consolidation adjustment that represents the estimated
amount of demand deposits and vault cash held by thrift institutions to service
their time and savings deposits liabilities.
7. Sum of large time deposits, term RPs and term Eurodollars of U . S .
residents, money market fund balances (institution-only), less a consolidation
adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds.
8. Savings deposits exclude M M D A s .
9. Small-denomination time deposits—including retail RPs— are those issued
in amounts of less than $100,000. All individual retirement accounts (IRA) and
Keogh accounts at commercial banks and thrifts are subtracted f r o m small time
deposits.
10. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
11. Large-denomination time deposits at commercial banks less those held by
money market mutual f u n d s , depository institutions, and foreign banks and
official institutions.
NOTE: Latest monthly and weekly figures are available from the Board's H.6
(508) release. Historical data are available from the Banking Section, Division of
Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Commercial Banks
1.23
A15
LOANS A N D SECURITIES All Commercial Banks 1
Billions of dollars; averages of Wednesday figures
1981
1982
Dec.2
Dec.
1983
Oct.
Nov.
Dec/
1984
1981
1982
Jan.
Dec.2
Dec.
Seasonally a d j u s t e d
1 Total loans and securities
3
2 U . S . T r e a s u r y securities
3 O t h e r securities
4 Total loans and leases 3
5
C o m m e r c i a l and industrial
loans
6
Real estate loans
7
L o a n s t o individuals
8
Security loans
9
L o a n s t o n o n b a n k financial
institutions
10
Agricultural loans
11
L e a s e financing r e c e i v a b l e s . . . .
12
All other loans
1984
1983
Oct/
Nov/
Dec/
Jan.
N o t seasonally adjusted
1,316.3
1,412.1
1,532.9
1,548.9
1,567.6
1,582.8
1,326.1
1,422.5
1,538.0
1,556.1
1,579.0
1,585.1
111.0
231.4
973.9
130.9
239.1
1,042.0
182.3
246.5
1,104.1
186.2
247.1
1,115.7
188.0
247.5
1,132.1
189.2
251.2
1,142.4
111.4
232.8
981.8
131.5
240.6
1,050.4
180.9
246.8
1,110.3
185.0
247.6
1,123.5
188.8
249.0
1,141.1
188.4
251.4
1,145.2
358.0
285.7
185.1
21.9
392.4
303.2
191.8
24.7
404.7
329.2
212.0
25.2
407.8
332.1
215.4
26.2
413.0
335.6
219.7
27.3
417.6
340.5
224.3
27.5
360.1
286.8
186.4
22.7
394.7
304.1
193.1
25.5
405.4
330.5
213.7
25.0
409.7
333.4
216.7
26.7
415.4
336.6
221.2
28.2
416.2
341.2
225.0
27.6
30.2
33.0
12.7
47.2
31.1
36.1
13.1
49.5
30.4
39.1
13.0
50.6
29.8
39.3
13.0
52.1
29.7
39.6
13.1
54.1
30.8
39.8
13.4
48.4
31.2
33.0
12.7
49.2
32.1
36.1
13.1
51.5
30.6
39.6
13.0
52.6
30.2
39.6
13.0
54.1
30.6
39.6
13.1
56.4
30.9
39.6
13.4
51.2
1,319.1
1,415.0
1,535.5
1,551.4
1,570.0
1,585.2
1,328.9
1,425.4
1,540.5
1,558.6
1,581.4
1,587.5
976.7
2.8
1,045.0
2.9
1,106.7
2.6
1,118.2
2.5
1,134.5
2.4
1,144.9
2.4
984.7
2.8
1,053.3
2.9
1,112.9
2.6
1,126.0
2.5
1,143.5
2.4
1,147.7
2.4
360.2
394.6
406.7
409.7
414.9
419.4
362.3
396.9
407.4
411.6
417.3
418.1
2.2
8.9
2.3
8.5
2.0
8.9
1.9
8.6
1.8
8.3
1.9
8.2
2.2
9.8
2.3
9.5
2.0
8.8
1.9
8.9
1.8
9.1
1.9
8.6
349.1
334.9
14.2
19.0
383.8
373.5
10.3
13.5
395.8
383.2
12.7
14.7
399.2
386.9
12.3
14.5
404.8
394.7
10.1
12.7
409.4
397.0
12.4
12.4
350.3
334.3
16.1
20.0
385.2
372.7
12.4
14.5
396.6
383.9
12.8
14.8
400.8
388.0
12.7
14.5
406.4
393.9
12.5
13.6
407.7
395.5
12.2
12.9
MEMO
13 Total loans and securities plus
loans sold 3 4
3 4
14 Total loans plus loans sold
15 Total loans sold t o affiliates 3 4 . . . .
16 C o m m e r c i a l and industrial loans
4
17
18
19
20
21
22
plus loans sold
C o m m e r c i a l and industrial
loans sold 4
A c c e p t a n c e s held
O t h e r commercial and industrial loans
To U.S. addressees5
To non-U.S. addressees
L o a n s to foreign b a n k s
1. Includes domestically c h a r t e r e d b a n k s ; U . S . b r a n c h e s and agencies of
foreign b a n k s , N e w Y o r k investment c o m p a n i e s majority o w n e d by foreign
b a n k s , and E d g e A c t c o r p o r a t i o n s o w n e d by domestically c h a r t e r e d and foreign
banks.
2. Beginning D e c e m b e r 1981, shifts of foreign loans and securities f r o m U . S .
banking offices to international banking facilities (IBFs) reduced the levels of
several items. Seasonally a d j u s t e d d a t a that include a d j u s t m e n t s f o r the a m o u n t s
shifted f r o m d o m e s t i c offices t o I B F s are available in the B o a r d ' s G . 7 (407)
statistical release (available f r o m Publications Services, Board of G o v e r n o r s of
the Federal R e s e r v e S y s t e m , W a s h i n g t o n , D . C . 20551).
3. E x c l u d e s loans to commercial b a n k s in the United States.
4. L o a n s sold are those sold outright to a b a n k ' s o w n foreign b r a n c h e s ,
nonconsolidated n o n b a n k affiliates of the bank, the b a n k ' s holding c o m p a n y (if
not a bank), and nonconsolidated n o n b a n k subsidiaries of the holding c o m p a n y .
5. United States includes the 50 states and the District of C o l u m b i a .
NOTE. D a t a are p r o r a t e d a v e r a g e s of W e d n e s d a y e s t i m a t e s for domestically
chartered b a n k s , based on weekly reports of a sample of domestically c h a r t e r e d
b a n k s and quarterly r e p o r t s of all domestically c h a r t e r e d b a n k s . F o r foreignrelated institutions, d a t a are averages of m o n t h - e n d e s t i m a t e s based on weekly
reports f r o m large agencies and b r a n c h e s and quarterly r e p o r t s f r o m all agencies,
b r a n c h e s , investment c o m p a n i e s , and E d g e Act c o r p o r a t i o n s engaged in banking.
A16
1.24
DomesticNonfinancialStatistics • April 1983
MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS'
Monthly averages, billions of dollars
1981
1982
Dec.
Dec.
1983
1984
source
1
2
3
4
5
6
Total nondeposit f u n d s
Seasonally adjusted 2
Not seasonally adjusted
Federal f u n d s , RPs, and other
borrowings from nonbanks 3
Seasonally adjusted
Not seasonally adjusted
Net balances due to foreign-related
institutions, not seasonally
adjusted
Loans sold to affiliates, not
seasonally adjusted 4
Apr.
May
June
July
Oct.
Nov.
Dec.
Jan.
Feb.
83.3
84.9
80.3
79.0
90.9
90.5
88.4
90.1
76.5
78.6
82.6
87.0
83.4
86.1
80.2
82.8
97.1
99.4
100.9'
102.4'
97.4'
99.1'
100.4
101.4
111.8
113.5
128.1
129.7
139.9
138.5
146.0
145.6
140.9
142.6
132.8
134.9
130.9
135.3
132.3
135.1
133.5
136.0
141.6
143.9
141.2 r
142.7
138.6'
140.3'
139.2
140.2
-18.1
-47.7
-62.5
-57.8
-55.2
-59.9
-50.9
-51.5
-55.8
-47.0
-42.7'
-43.4'
-41.3
2.8
2.9
3.0
2.8
2.7
2.7
2.6
2.6
2.6
2.5
2.4
2.4
2.5
€
-22.4
54.9
32.4
-39.6
72.2
32.6
-52.7
80.3
27.6
-48.7
76.3
27.6
-49.2
75.8
26.6
-50.9
77.4
26.5
-45.3
73.6
28.3
-46.3
74.7
28.3
-48.5
76.4
27.9
-42.9
76.5
33.6
-39.7
75.2
35.5
-38.6
73.0
34.5
-37.4
71.9
34.5
4.3
48.1
52.4
-8.1
54.7
46.6
-9.8
55.9
46.1
-9.1
55.8
46.7
-6.0
53.9
47.9
-8.0
55.2
47.2
-6.6
53.5
47.0
-5.1
53.5
48.3
-7.3
55.4
48.0
-4.1
53.1
49.0
-3.0
53.5
50.6
-4.8
52.9
48.0
-3.9
50.6
46.7
59.0
59.2
71.2
71.2
79.3
76.3
84.7
82.7
81.4
81.5
75.7
76.2
74.3
77.0
76.1
77.3
78.2
79.1
84.0
84.6
85.2
85.1
84.6
84.6
87.3
86.6
12.2
11.1
11.9
10.8
13.5
14.2
11.3
12.5
13.0
13.2
24.0
21.8
20.6
16.4
16.5
17.9
21.7
24.7
9.9
7.5
11.9
10.8
18.9
19.6
19.4
22.3
325.4
330.4
350.3
354.6
293.3
296.9
287.7
285.5
287.4
284.0
285.1
281.5
284.7
284.4
283.9
284.7
279.0
280.3
281.8
283.0
285.1
288.1
283.6
287.1
281.9
285.0
1. Commercial banks are those in the 50 states and the District of Columbia
with national or state charters plus agencies and branches of foreign banks, N e w
York investment companies majority o w n e d by foreign banks, and Edge Act
corporations owned by domestically chartered and foreign banks.
2. Includes seasonally adjusted federal f u n d s , RPs, and other borrowings f r o m
nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates.
Includes averages of Wednesday data for domestically chartered banks and
averages of current and previous month-end data for foreign-related institutions.
3. Other borrowings are borrowings on any instrument, such as a promissory
note or due bill, given for the purpose of borrowing money for the banking
business. This includes borrowings f r o m Federal Reserve Banks and from foreign
Sept.
96.3
98.1
MEMO
7 Domestically chartered banks' net
positions with own foreign
branches, not seasonally
adjusted 5
8
Gross due f r o m balances
9
Gross due t o balances
10 Foreign-related institutions' net
positions with directly related
institutions, not seasonally
adjusted 6
11
Gross due from balances
12
Gross due to balances
Security R P borrowings
13
Seasonally a d j u s t e d '
14
Not seasonally adjusted
U.S. Treasury demand balances 8
15
Seasonally adjusted
16
Not seasonally adjusted
Time deposits, $100,000 or more 9
17
Seasonally adjusted
18
Not seasonally adjusted
Aug.
banks, term federal funds, overdrawn due from bank balances, loan RPs, and
participations in pooled loans. Includes averages of daily figures for member
banks and averages of current and previous month-end data for foreign-related
institutions.
4. Loans initially booked by the bank and later sold to affiliates that are still
held by affiliates. Averages of Wednesday data.
5. Averages of daily figures for member and n o n m e m b e r banks.
6. Averages of daily data.
7. Based on daily average data reported by 122 large banks.
8. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at
commercial banks. Averages of daily data.
9. Averages of Wednesday figures.
Banking Institutions
1.25
ASSETS A N D LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS
A17
Last-Wednesday-of-Month Series
Billions of dollars except for number of banks
1983
1982
Dec.
Mar.
Apr.
June
May
July
Aug.
Sept.
Oct.
Nov.
Dec.
DOMESTICALLY CHARTERED
COMMERCIAL B A N K S 1
1
2
3
4
5
6
Loans and securities, excluding
interbank
Loans, excluding interbank
Commercial and industrial
Other
U.S. Treasury securities
Other securities
7
8
9
10
11
Cash assets, total
Currency and coin
Reserves with Federal Reserve Banks
Balances with depository institutions .
Cash items in process of collection . . .
12
Other assets 2
13
14
15
16
17
18
19
20
Borrowings
Other liabilities
Residual (assets less liabilities)
1,370.3
1,000.7
356.7
644.0
129.0
240.5
1,392.2
1,001.7
358.0
643.7
150.6
239.9
1,403.8
1,005.1
357.9
647.2
155.5
243.3
1,411.9
1,007.5
356.7
650.8
160.9
243.5
1,435.1
1,025.6
360.1
665.6
166.0
243.5
1,437.4
1,029.1
361.1
668.0
165.1
243.3
1,457.0
1,043.4
363.0
680.4
167.5
246.1
1,466.1
1,049.7
364.0
685.7
171.2
245.2
1,483.0
1,060.3
367.0
693.3
176.8
245.9
1,502.3
1,075.5
372.8
702.7
180.4
246.4
1,525.2
1,095.1
380.8
714.4
181.4
248.7
184.4
23.0
25.4
67.6
68.4
168.9
19.9
20.5
67.1
61.5
170.1
20.4
23.9
66.1
59.6
164.5
20.3
22.4
65.6
56.3
176.9
21.3
18.8
69.7
67.1
168.7
20.7
20.6
67.1
60.3
176.9
21.0
22.5
69.0
64.4
160.0
20.8
15.4
66.7
56.9
164.0
20.5
19.7
67.1
56.6
179.0
22.3
17.6
70.9
69.0
190.5
23.3
18.6
75.6
73.0
265.3
257.9
252.4
248.3
253.2
254.5
257.2
252.3
253.0
261.9
253.8
Total assets/total liabilities and capital . . .
1,820.0
1,818.9
1,826.3
1,824.8
1,865.2
1,860.6
1,891.0
1,878.4
1,900.0
1,943.9
1,969.5
Deposits
Demand
Savings
Time
1,361.8
363.9
296.4
701.5
1,374.2
333.4
419.2
621.6
1,368.0
329.2
426.9
611.9
1,370.8
324.5
440.2
606.1
1,402.7
344.4
445.3
613.1
1,396.5
334.2
447.5
614.8
1,420.1
344.7
449.0
626.4
1,408.1
328.1
448.8
631.2
1,419.5
331.3
451.5
636.8
1,459.2
358.1
458.3
642.8
1,482.6
371.0
460.7
650.8
215.1
109.2
133.8
211.3
103.5
130.0
224.0
102.3
132.0
214.1
104.7
135.1
221.2
104.3
137.0
217.5
105.5
141.0
217.2
107.6
146.1
217.8
107.1
145.4
226.8
106.5
147.2
219.7
112.6
152.4
216.3
117.9
152.8
10.7
14,787
9.6
14,819
17.8
14,823
2.7
14,817
19.3
14,826
19.3
14,785
14.8
14,795
20.8
14,804
22.5
14,800
2.8
14,799
8.8
14,796
1,429.7
1,054.8
395.3
659.5
132.8
242.1
1,451.3
1,054.5
395.9
658.6
155.3
241.5
1,460.8
1,055.7
393.5
662.2
160.2
244.9
1,467.6
1,056.4
391.7
664.7
166.1
245.2
1,491.5
1,075.2
395.3
679.9
171.3
245.1
1,494.1
1,078.8
397.7
681.2
170.3
245.0
1,515.4
1,094.9
400.6
694.3
172.7
247.8
1,525.4
1,102.5
402.7
699.8
176.1
246.9
1,541.8
1,112.2
405.3
706.8
182.0
247.7
1,563.2
1,129.2
412.0
717.2
185.9
248.1
1,586.8
1,149.3
420.1
729.2
186.9
250.6
200.7
23.0
26.8
81.4
69.4
185.5
19.9
22.0
81.0
62.6
186.3
20.4
25.4
79.8
60.7
180.3
20.3
23.8
78.9
57.3
193.5
21.3
20.0
84.0
68.2
185.2
20.7
21.9
81.2
61.4
193.3
21.1
24.0
82.8
65.4
174.7
20.9
16.6
79.3
58.0
178.4
20.5
20.8
79.5
57.6
195.0
22.3
19.1
83.6
70.0
205.0
23.4
19.7
88.0
74.0
MEMO
21
22
U.S. Treasury note balances included in
borrowing
Number of banks
A L L COMMERCIAL B A N K I N G
INSTITUTIONS 3
24
25
26
27
28
Loans and securities, excluding
interbank
Loans, excluding interbank
Commercial and industrial
Other
U.S. Treasury securities
Other securities
29
30
31
32
33
Cash assets, total
Currency and coin
Reserves with Federal Reserve Banks
Balances with depository institutions .
Cash items in process of collection . . .
34
Other assets 2
341.7
325.4
317.8
309.5
318.1
318.7
324.6
320.9
318.8
329.7
321.3
35
Total assets/total liabilities and capital . . .
1,972.1
1,962.2
1,964.9
1,957.4
2,003.2
1,998.0
2,033.3
2,021.0
2,039.1
2,088.0
2,113.1
36
37
38
39
Deposits
Demand
Savings
Time
1,409.7
376.2
296.7
736.7
1,419.5
345.7
419.7
654.1
1,411.0
341.1
427.3
642.6
1,413.1
336.4
440.7
636.0
1,443.8
356.4
445.7
641.6
1,438.1
346.4
448.0
643.8
1,461.4
356.6
449.5
655.3
1,448.9
340.0
449.3
659.5
1,459.0
343.2
452.0
663.8
1,499.4
369.9
458.8
670.6
1,524.8
383.2
461.3
680.4
40
41
42
Borrowings
Other liabilities
Residual (assets less liabilities)
278.3
148.4
135.7
269.9
141.1
131.9
281.3
138.6
133.9
269.5
137.9
137.0
278.2
142.3
138.9
277.9
139.1
142.9
280.5
143.4
148.0
282.6
142.3
147.3
289.6
141.5
149.1
282.5
151.9
154.2
275.1
158.6
154.7
10.7
15,329
9.6
15,376
17.8
15,390
2.7
15,385
19.3
15,396
19.3
15,359
14.8
15,370
20.8
15,382
22.5
15,383
2.8
15,382
8.8
15,380
23
MEMO
43
44
U.S. Treasury note balances included in
borrowing
Number of banks
1. Domestically chartered commercial banks include all commercial banks in
the United States except branches of foreign banks; included are member and
nonmember banks, stock savings banks, and nondeposit trust companies.
2. Other assets include loans to U . S . commercial banks.
3. Commercial banking institutions include domestically chartered commercial
banks, branches and agencies of foreign banks, Edge Act and Agreement
corporations, and N e w York State foreign investment corporations.
NOTE. Figures are partly estimated. They include all bank-premises subsidiaries and other significant majority-owned domestic subsidiaries. Data for domestically chartered commercial banks are for the last Wednesday of the month. Data
for other banking institutions are estimates made on the last Wednesday of the
month based on a weekly reporting sample of foreign-related institutions and
quarter-end condition report data.
A18
1.26
DomesticNonfinancialStatistics • April 1983
ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1.4 Billion or More on
December 31, 1982, Assets and Liabilities
Millions of dollars, Wednesday figures
1984
Account
Jan. 4
Jan. 11
Jan. 18
Jan. 25
Feb. 1
Feb. 8
Feb. 15
Feb. 22
Feb. 29
1 Cash and balances due f r o m depository
institutions
116,438
99,215
99,369
89,700
93,576
81,813
92,277
92,602
86,729
2 Total loans, leases and securities, net
740,333
730,856
730,922
722,645
736,777
731,002
743,989
733,411
742,720
79,837
8,895
70,942
19,679
38,040
13,222
51,222
4,372
46,850
42,628
5,488
37,140
4,222
2,118
79,302
9,538
69,763
19,371
37,450
12,942
50,691
3,834
46,858
42,728
5,426
37,302
4,130
2,043
78,872
10,346
68,525
18,418
37,326
12,781
50,257
3,410
46,847
42,676
5,365
37,311
4,170
2,439
78,127
10,196
67,931
17,868
37,194
12,870
49,972
3,226
46,746
42,602
5,321
37,281
4,144
2,484
80,238
11,860
68,378
18,202
37,303
12,872
49,770
3,208
46,562
42,386
5,356
37,030
4,176
2,318
79,633
10,534
69,099
18,659
37,428
13,012
49,218
2,778
46,440
42,214
5,218
36,996
4,226
2,137
81,381
12,358
69,022
18,376
37,727
12,919
49,376
3,001
46,375
42,164
5,173
36,991
4,211
1,955
77,388
8,894
68,494
18,089
37,878
12,527
49,332
3,045
46,288
42,107
5,202
36,905
4,181
1,861
80,176
10,951
69,224
18,121
38,705
12,399
49,343
3,214
46,129
41,950
5,088
36,862
4,179
1,853
46,638
34,208
8,684
3,747
574,821
563,379
223,874
3,492
220,382
213,147
7,235
143,536
92,390
42,608
8,912
7,858
25,838
14,644
7,540
20,010
4,548
14,229
11,441
5,178
9,125
560,517
148,079
43,957
31,752
7,960
4,244
569,211
557,748
221,358
2,932
218,426
211,185
7,242
143,916
92,207
41,038
8,612
7,049
25,378
14,653
7,379
20,205
4,533
12,457
11,463
5,184
9,163
554,864
139,260
44,258
32,663
7,813
3,782
569,434
557,988
220,955
3,112
217,842
210,662
7,180
144,177
92,361
41,198
9,137
7,163
24,898
14,352
7,314
20,371
4,527
12,732
11,446
5,197
9,140
555,097
138,176
39,683
27,670
8,151
3,862
566,740
555,324
220,014
2,932
217,082
210,018
7,065
144,341
92,570
39,948
8,658
6,731
24,559
14,165
7,318
20,282
4,637
12,048
11,417
5,185
9,176
552,379
132,033
46,687
32,826
8,911
4,950
572,277
560,826
221,218
3,137
218,081
211,061
7,020
144,608
92,563
41,304
8,434
7,054
25,816
15,298
7,310
20,575
4,678
13,271
11,450
5,147
9,366
557,763
136,816
43,191
30,620
8,657
3,913
571,508
560,036
222,717
3,330
219,387
212,382
7,005
144,796
92,602
40,069
8,317
6,602
25,150
15,190
7,312
20,559
4,644
12,146
11,472
5,163
9,522
556,823
136,472
50,005
36,476
9,689
3,840
575,933
564,402
222,555
3,200
219,355
212,314
7,041
145,162
92,762
40,871
8,399
7,256
25,216
16,752
7,338
20,624
4,655
13,682
11,531
5,167
9,493
561,273
135,295
42,896
29,150
9,722
4,024
576,647
565,174
223,861
3,369
220,492
213,477
7,016
145,314
92,963
41,354
8,788
7,743
24,824
15,406
7,355
21,063
4,644
13,216
11,472
5,182
9,531
561,933
132,322
46,880
31,653
9,409
5,818
579,239
567,753
226,991
3,517
223,473
216,579
6,894
145,438
93,454
40,704
8,616
7,316
24,771
15,699
7,367
20,869
4,499
12,732
11,486
5,197
9,575
564,468
138,080
1,004,851
969,332
968,467
944,378
967,169
949,287
971,561
958,336
967,529
213,775
160,892
5,642
1,630
27,983
7,320
906
9,402
187,113
143,320
4,900
2,248
21,151
6,322
942
8,227
184,334
138,862
5,107
3,647
21,583
5,992
789
8,354
172,377
131,903
4,916
1,730
20,360
5,421
858
7,189
186,119
139,128
5,453
1,106
23,980
6,536
877
9,040
170.397
130,562
4,542
2,207
19,193
5,620
788
7,485
188,776
142,646
4,968
2,730
22,131
6,689
880
8,732
180,736
136,129
5,077
1,295
23,363
6,922
998
6,951
185,689
140,468
5,448
2,446
22,622
6,376
969
7,360
35,133
412,001
382,576
17,020
339
8,986
3,081
184,367
769
10,222
173,376
94,544
34,403
412,206
382,474
17,500
353
8,903
2,974
179,039
1,925
8,473
168,641
91,395
33,476
408,723
380,350
17,296
348
7,803
2,927
188,072
2,954
11,781
173,337
88,991
31,944
408,336
379,935
17,562
389
7,583
2,866
180,937
48
16,182
164,707
86,045
32,910
408,916
380,501
17,554
392
7,662
2,807
186,142
983
16,254
168,904
87,929
33,080
408,684
380,142
17,822
395
7,515
2,811
183,721
40
10,629
173,052
88,415
32,755
409,277
380,568
18,157
394
7,352
2,806
186,209
959
13,279
171,970
89,499
32,435
409,387
380,582
18,321
418
7,252
2,814
183,480
12
16,436
167,031
87,340
32,754
411,118
382,536
18,245
409
7,145
2,784
181,489
486
16,207
164,796
91,073
939,819
904,155
903,598
879,640
902,017
884,298
906,515
893,378
902,123
65,031
65,177
64,869
64,738
65,152
64,990
65,046
64,958
65,406
Securities
3 U.S. Treasury and govt, agency
4
Trading account
5
Investment account, by maturity
6
One year or less
7
Over one through five years
8
Over five years
9 Other securities
10
Trading account
11
Investment account
12
States & political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks and securities
16 Other trading account assets
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Loans and leases
Federal funds sold 1
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers' acceptances and commercial paper . . . .
All other
U.S. addressees
N o n - U . S . addressees
Real estate loans
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the U.S
Banks in foreign countries
Nonbank depository and other financial institutions.
F o r purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions . . . .
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans and leases, net
All other assets
44 Total assets
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in U . S
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
(ATS, N O W , Super N O W , telephone transfers)..
Nontransaction balances
Individuals, partnerships and corporations
States & political subdivisions
U.S. government
Depository institutions in U . S
Foreign governments, official institutions and banks . .
Liabilities for borrowed money
Borrowings f r o m federal reserve banks
Treasury tax-and-loan notes
All other liabilities for borrowed money 2
Other liabilities and subordinated note and debentures
65 Total liabilities
66 Residual (total assets minus total liabilities) 3
1. Includes securities purchased under agreements to resell.
2. Includes federal f u n d s purchased and securities sold under agreements to
repurchase; for information on these liabilities at banks with assets of $1 billion or
more on Dec. 31, 1977, see table 1.13.
1.27
3. This is not a measure of equity capital for use in capital adequacy analysis or
for other analytic uses,
LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1 Billion or More on
December 31, 1977, Assets and LiabilitiesA
ASeries Discontinued.
Weekly Reporting Banks
1.28
A19
LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities
Millions of dollars, Wednesday figures
1984
Account
Jan. 4
Jan. 11
Jan. 18
Jan. 25
Feb. 1
Feb. 8
Feb. 15
Feb. 22
Feb. 29
29,659
29,059
27,457
22,425
25,048
20,218
24,624
20,189
19,057
155,041
152,527
153,043
150,166
155,528
152,719
158,072
156,430
156,706
11,376
2,611
7,230
1,535
10,718
2,440
6,778
1,500
10,713
2,289
6,968
1,456
10,541
2,103
6,973
1,465
10,463
2,121
6,886
1,456
10,749
2,512
6,777
1,460
10,601
2,142
7,079
1,379
10,430
1,964
7,324
1,142
10,868
1,885
7,796
1,186
9,600
8,864
1,457
7,406
736
9,643
8,905
1,487
7,418
738
9,628
8,881
1,486
7,396
746
9,577
8,828
1,441
7,388
748
9,542
8,759
1,394
7,365
783
9,521
8,725
1,346
7,379
796
9,566
8,748
1,318
7,430
818
9,560
8,741
1,318
7,423
819
9,543
8,718
1,292
7,425
826
10,830
4,696
4,114
2,021
127,364
125,283
58,752
1,046
57,706
55,833
1,873
20,640
13,312
13,663
2,365
2,821
8,477
7,258
605
6,017
935
4,101
2,081
1,453
2,677
123,234
63,224
10,821
5,057
3,280
2,484
125,508
123,416
57,771
683
57,087
55,285
1,803
20,671
13,270
13,144
2,278
2,626
8,240
7,679
602
6,032
911
3,336
2,092
1,442
2,722
121,344
60,847
11,321
5,504
3,696
2,121
125,544
123,451
57,583
870
56,713
54,954
1,759
20,704
13,222
13,203
2,406
2,729
8,068
7,678
603
6,060
870
3,528
2,092
1,450
2,712
121,382
60,517
10,041
4,172
3,608
2,261
124,183
122,092
57,337
811
56,526
54,718
1,808
20,749
13,217
12,500
2,205
2,351
7,944
7,445
628
6,052
910
3,253
2,091
1,448
2,728
120,007
57,571
13,422
6,296
4,139
2,986
126,289
124,191
57,464
1,019
56,445
54,684
1,760
20,754
13,189
13,275
2,010
2,698
8,567
8,192
598
6,114
870
3,735
2,099
1,428
2,760
122,101
62,004
11,312
5,152
4,176
1,984
125,394
123,314
58,236
1,066
57,169
55,432
1,737
20,881
13,260
12,522
1,833
2,418
8,270
7,729
602
6,091
889
3,104
2,080
1,434
2,823
121,137
60,375
14,137
7,115
4,990
2,032
128,010
125,929
57,762
870
56,892
55,261
1,630
20,931
13,283
13,222
1,848
3,015
8,358
9,119
612
6,133
902
3,965
2,080
1,439
2,803
123,768
61,912
13,513
5,987
5,372
2,153
127,198
125,174
58,006
908
57,098
55,510
1,588
21,054
13,285
13,402
1,748
3,360
8,295
7,670
624
6,303
920
3,910
2,025
1,446
2,825
122,928
56,181
12,902
6,206
4,208
2,489
127,684
125,665
59,544
876
58,668
57,124
1,544
21,065
13,337
12,746
1,524
2,897
8,325
8,045
621
6,148
735
3,424
2,019
1,441
2,849
123,393
61,843
247,924
239,433
241,017
230,163
242,579
233,312
244,608
232,800
237,607
55,768
38,560
725
366
6,056
5,624
697
3,740
48,607
32,973
691
584
5,114
4,877
762
3,605
49,498
33,021
823
934
5,434
4,688
595
4,004
45,778
31,871
782
408
4,751
4,113
669
3,184
50,489
33,078
755
161
6,586
5,217
683
4,008
42,976
29,701
596
502
4,188
4,288
596
3,104
51,326
34,346
785
466
5,498
5,311
684
4,236
46,401
31,400
637
303
4,962
5,428
795
2,876
48,254
32,850
764
632
5,362
5,048
800
2,796
3,926
71,493
65,606
1,889
24
2,819
1,155
59,683
3,744
70,352
64,541
1,766
16
2,905
1,124
63,147
1,696
3,082
58,369
33,308
3,605
69,839
64,052
1,850
15
2,803
1,118
58,083
3,675
70,144
64,370
1,844
18
2,830
1,082
64,026
800
3,984
59,242
33,107
3,700
70,032
64,126
1,908
21
2,901
1,076
61,389
3,651
71,268
65,526
2,194
18
2,482
1,048
57,207
2,673
58,716
34,282
3,670
70,630
64,734
2,090
22
2,722
1,063
62,637
600
3,287
58,749
35,261
3,623
70,114
64,244
2,199
20
2,596
1,056
57,486
2,615
57,068
36,108
3,906
71,879
65,907
1,832
15
2,975
1,151
59,263
1,225
2,245
55,793
34,799
3,985
53,502
34,089
3,984
53,223
36,074
226,978
218,454
220,050
209,240
221,441
212,380
223,524
211,715
216,455
20,946
20,979
20,968
20,923
21,138
20,932
21,083
21,086
21,153
1 Cash and balances due f r o m depository institutions . . . .
2 Total loans, leases and securities, net 1
Securities
<\
5
6
7
8
Investment
One year
Over one
Over five
account, by maturity
or less
through five years
years
Q
10
11
12
13
14
15
16
Investment account
States and political subdivisions, by maturity
One year or less
Over one year
Other bonds, corporate stocks and securities
Loans and leases
Federal funds sold 3
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers' acceptances and commercial paper . . . .
All other
U.S. addressees
N o n - U . S . addressees
Real estate loans
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions.
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions . . . .
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
4 ? Other loans and leases, net
43 All other assets 4
17
18
19
20
71
??
73
24
75
76
77
28
29
30
31
32
33
34
35
36
37
38
39
40
41
44
45
46
47
48
49
SO
51
52
53
54
55
56
57
58
59
60
Total assets
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
ATS, N O W , Super N O W , telephone transfers) . .
Nontransaction balances
Individuals, partnerships and corporations
States and political subdivisions
U.S. Government
Depository institutions in United States
Foreign governments, official institutions and banks . .
Liabilities for borrowed money
Treasury tax-and-loan notes
62
63
All other liabilities for borrowed money 5
64 Other liabilities and subordinated note and d e b e n t u r e s . .
65 Total liabilities
66 Residual (total assets minus total liabilities) 6
1.
2.
3.
4.
Excludes trading account securities.
Not available due to confidentiality.
Includes securities purchased under agreements to resell.
Includes trading account securities.
3,984
54,099
31,934
5. Includes federal funds purchased and securities sold under agreements to
repurchase.
6. Not a measure of equity capital for use in capital adequacy analysis or for
other analytic uses.
A20
1.29
DomesticNonfinancialStatistics • April 1983
LARGE WEEKLY REPORTING COMMERCIAL BANKS
Millions of dollars, Wednesday figures
Balance Sheet Memoranda
1984
Jan. 11
Jan. 18
Jan. 25
Feb. 1
Feb.
Feb. 15
Feb. 22
Feb. 29
B A N K S WITH A S S E T S OF $ 1 . 4 B I L L I O N OR MORE
1
2
3
4
5
6
7
Total loans and leases (gross) and investments adjusted
Total loans and leases (gross) a d j u s t e d '
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates—total 2
Commercial and industrial
Other
Nontransaction savings deposits (including M M D A ) . . .
711,517
578,339
147,435
2,390
1,783
607
150,691
704,840
572,804
146,811
2,530
1,931
599
150,796
703,460
571,892
143,526
2,457
152,110
131,133
30,785
149,354
128,993
30,779
595
150,263
700,678
570,095
142,589
2,418
1,827
592
150,199
710,030
577,703
142,080
2,417
1,839
577
151,114
706,750
575,762
140,779
2,425
1,825
600
151,680
713,774
581,063
140,617
2,478
1,869
610
152,414
710,186
581,604
141,352
2,531
1,900
631
152,495
717,222
585,850
141,545
2,538
1,912
626
153,206
149,295
128,954
29,242
147,965
127,847
28,617
151,409
131,405
28,360
149,991
129,721
28,345
153,351
133,183
28,599
152,966
132,976
28,361
153,268
132,857
28,717
1,861
B A N K S IN N E W YORK C I T Y
8 Total loans and leases (gross) and investments adjusted 1 - 3 .
9 Total loans and leases (gross) adjusted 1
10 Time deposits in amounts of $100,000 or more
1. Exclusive of loans and federal funds transactions with domestic commercial
banks.
2. Loans sold are those sold outright to a bank's own foreign branches.
1.30
nonconsolidated nonbank affiliates of the bank, the bank's holding company (if
not a bank), and nonconsolidated nonbank subsidiaries of the holding c o m p a n y .
3. Excludes trading account securities.
LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS WITH ASSETS OF
$1.4 BILLION OR MORE ON JUNE 30, 1980 Assets and Liabilities
Millions of dollars, Wednesday figures
1984
Account
Jan. 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Cash and due f r o m depository institutions .
Total loans and securities
U.S. Treasury and govt, agency securities'
Other securities'
Federal funds sold 2
To commercial banks in the United States
To others
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial
paper
All other
U.S. addressees
Non-U.S. addressees
T o financial institutions
Commercial banks in the United States .
Banks in foreign countries
Nonbank financial institutions
To foreign govts, and official institutions 3 . .
F o r purchasing and carrying securities . .
All other 3
Other assets (claims on nonrelated
parties)
Net due f r o m related institutions
Total assets
Deposits or credit balances due to
other than directly related
institutions
Credit balances
Demand deposits
Individuals, partnerships, and
corporations
Other
Time and savings deposits
Individuals, partnerships, and
corporations
Other
Borrowings from other than directly
related institutions
Federal funds purchased 4
From commercial banks in the
United States
From others
Other liabilities for borrowed m o n e y . . . .
To commercial banks in the
United States
To others
Other liabilities to nonrelated parties
Net due to related institutions
Total liabilities
Jan. 11
Jan. 18
Jan. 25
Feb. 1
Feb. 8
Feb. 15
Feb. 22
Feb. 29
6,185
43,985
5,186
657
4,243
4,179
64
33,900
19,153
6,300
41,600
4,786
626
2,003
1,754
248
34,185
18,979
6,392
41,215
4,545
617
2,547
2,416
131
33,506
18,459
6,165
43,230
4,456
613
4,398
4,203
194
33,764
17,950
5,812
41,873
4,592
605
3,020
2,752
269
33,656
17,724
5,730
41,646
4,495
616
2,401
2,191
210
34,134
18,289
6,296
43,640
4,664
610
2,369
2,126
242
35,996
20,544
6,243
43,631
4,544
621
3,094
2,918
176
35,373
19,995
6,662
44,619
4,666
741
3,933
3,488
445
35,278
20,212
3,398
15,755
14,016
1,739
10,254
7,956
1,591
707
753
790
2,950
3,216
15,763
14,064
1,699
10,498
8,179
1,656
663
859
904
2,944
3,002
15,456
13,901
1,555
10,372
8,084
1,640
648
764
887
3,024
2,869
15,080
13,529
1,551
10,693
8,279
1,628
786
751
1,090
3,280
2,738
14,986
13,404
1,582
10,256
8,048
1,521
687
730
1,535
3,410
2,842
15,447
13,845
1,602
10,146
7,904
1,571
671
763
1,693
3,243
2,970
17,574
15,964
1,610
9,687
7,454
1,561
672
779
1,675
3,311
2,948
17,047
15,390
1,657
9,746
7,659
1,528
559
729
1,609
3,294
2,966
17,245
15,488
1,757
10,069
7,791
1,592
685
744
924
3,330
12,388
10,816
73,374
12,664
11,419
71,982
13,001
11,478
72,086
13,306
10,338
73,039
13,409
11,590
72,685
13,423
10,943
71,743
13,513
11,049
74,498
13,731
8,826
72,431
13,863
8,713
73,856
20,972
176
1,907
19,857
139
1,671
19,479
153
1,854
19,060
159
1,708
18,832
117
1,830
18,656
126
1,632
19,030
167
1,788
19,278
155
1,758
19,678
192
1,779
936
971
18,889
810
861
18,047
828
1,026
17,472
824
884
17,194
829
1,002
16,884
855
777
16,898
844
944
17,076
804
954
17,364
896
883
17,707
16,100
2,789
15,295
2,751
14,777
2,695
14,519
2,675
14,307
2,577
14,391
2,507
14,577
2,499
14,902
2,462
15,165
2,541
31,801
9,960
32,688
10,886
32,384
10,331
32,635
10,725
33,044
11,671
32,576
11,299
33,981
12,908
31,860
10,730
31,792
10,848
7,926
2,034
21,841
8,978
1,908
21,801
8,570
1,761
22,053
8,248
2,477
21,909
9,142
2,529
21,373
8,936
2,363
21,277
10,304
2,604
21,073
8,053
2,677
21,130
9,159
1,689
20,943
18,218
3,623
13,216
7,385
73,374
18,267
3,534
13,520
5,918
71,982
18,402
3,650
13,833
6,389
72,086
18,328
3,582
14,083
7,260
73,039
17,796
3,576
14,292
6,517
72,685
17,777
3,500
14,177
6,333
71,743
17,698
3,375
14,186
7,300
74,498
17,700
3,431
14,235
7,058
72,431
17,712
3,231
14,581
7,806
73,856
31,850
26,008
31,666
26,254
30,715
25,553
30,748
25,679
31,074
25,877
31,551
26,441
34,059
28,784
33,053
27,889
33,339
27,932
MEMO
42 Total loans (gross) and securities adjusted 5
43 Total loans (gross) adjusted 5
1. Prior to Jan. 4, 1984 U.S. Government Agency securities were included in
other securities.
2. Includes securities purchased under agreements to resell.
3. As of Jan. 4, 1984 loans to foreign governments and official institutions is
reported as a separate item. Before that date it was included in all other loans.
4. Includes securities sold under agreements to repurchase.
5. Exclusive of loans to and federal funds sold to commercial banks in the
United States.
IPC Demand Deposits
1.31
A21
GROSS D E M A N D DEPOSITS of Individuals, Partnerships, and Corporations1
Billions of dollars, estimated daily-average balances
Commercial banks
Type of holder
1982
1978
19792
1980
1981
Dec.
Dec.
Dec.
Dec.
Mar.
1983
Sept.
June
Dec.
Mar.
June
1 All holders—Individuals, partnerships, and
corporations
294.6
302.2
315.5
288.9
268.9
271.5
276.7
295.4
283.5
289.5
2
3
4
5
6
27.8
152.7
97.4
2.7
14.1
27.1
157.7
99.2
3.1
15.1
29.8
162.8
102.4
3.3
17.2
28.0
154.8
86.6
2.9
16.7
27.8
138.7
84.6
3.1
14.6
28.6
141.4
83.7
2.9
15.0
31.9
142.9
83.3
2.9
15.7
35.5
151.7
88.1
3.0
17.1
34.0
144.4
85.5
3.2
16.4
35.1
147.7
86.9
3.0
16.8
Financial business
Nonfinancial business
Consumer
Foreign
Other
Weekly reporting banks
1982
1978
19794
1980
1981
Dec.
Dec.
Dec.
Dec.
Mar.
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial business
Nonfinancial business
Consumer
Foreign
Other
Sept.
Dec.
Mar.
June
147.0
139.3
147.4
137.5
126.8
127.9
132.1
144.0
140.7
141.9
19.8
79.0
38.2
2.5
7.5
20.1
74.1
34.3
3.0
7.8
21.8
78.3
35.6
3.1
8.6
21.0
75.2
30.4
2.8
8.0
20.2
67.1
29.2
2.9
7.3
20.2
67.7
29.7
2.8
7.5
23.4
68.7
29.6
2.7
7.7
26.7
74.2
31.9
2.9
8.4
25.2
72.7
31.2
3.0
8.6
26.3
73.1
30.4
2.9
9.3
1. Figures include cash items in process of collection. Estimates of gross
deposits are based on reports supplied by a sample of commercial banks. Types of
depositors in each category are described in the June 1971 BULLETIN, p. 466.
2. Beginning with the March 1979 survey, the demand deposit ownership
survey sample was reduced to 232 banks from 349 banks, and the estimation
procedure was modified slightly. T o aid in comparing estimates based on the old
and new reporting sample, the following estimates in billions of dollars for
December 1978 have been constructed using the new smaller sample; financial
business, 27.0; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and
other, 15.1.
June
1983
3. After the end of 1978 the large weekly reporting bank panel was changed to
170 large commercial banks, each of which had total assets in domestic offices
exceeding $750 million as of Dec. 31, 1977. See " A n n o u n c e m e n t s , " p. 408 in the
May 1978 BULLETIN. Beginning in March 1979, demand deposit ownership
estimates for these large banks are constructed quarterly on the basis of 97 sample
banks and are not comparable with earlier data. The following estimates in billions
of dollars for December 1978 have been constructed for the new large-bank panel;
financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5;
other, 6.8.
A22
1.32
DomesticNonfinancialStatistics • April 1983
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1983
1978
Dec.
Instrument
19791
Dec.
1980
Dec.
1981
Dec.
1982
Dec. 2
Sept.
Oct.
1984
Nov.
Dec.
Jan.
Feb.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
2
3
4
5
6
Financial companies 3
Dealer-placed
paper*
Total
Bank-related (not seasonally
adjusted)
Directly placed paper5
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies 6
83,438
112,803
124,374
165,455
166,208
176,775
175,924
180,206
185,202'
182,801'
190,700
12,181
17,359
19,599
29,904
34,067
39,963
37,323
40,890
40,994
39,775
41,674
3,521
2,784
3,561
6,045
2,516
2,303
2,195
2,341
2,441
2,087
51,647
64,757
67,854
81,715
84,183
91,600
92,819
93,820
96,487'
97,403'
102,556
12,314
19,610
17,598
30,687
22,382
36,921
26,914
53,836
32,034
47,958
34,856
45,212
34,622
44,977
35,001
45,496
35,566
47,721
37,560
45,623'
36,975
46,470
1,765
Bankers dollar acceptances (not seasonally adjusted)
7 Total
Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others
Basis
14 Imports into United States
15 Exports from United States
16 All other
8
9
10
11
12
13
33,700
45,321
54,744
69,226
79,543
73,569
72,902
77,919
78,309
73,450
74,367
8,579
7,653
927
9,865
8,327
1,538
10,564
8,963
1,601
10,857
9,743
1,115
10,910
9,471
1,439
9,205
7,986
1,219
9,501
8,212
1,289
10,894
9,558
1,337
9,355
8,125
1,230
9,546
7,814
1,732
9,237
7,897
1,340
587
664
24,456
704
1,382
33,370
776
1,791
41,614
195
1,442
56,731
1,480
949
66,204
0
622
64,942
0
483
62,917
0
573
66,452
418
729
68,225
0
729
63,174
0
777
64,353
8,574
7,586
17,541
10,270
9,640
25,411
11,776
12,712
30,257
14,765
15,400
39,060
17,683
16,328
45,531
14,653
16,215
42,701
14,829
16,036
42,036
14,906
17,209
45,806
15,649
16,880
45,781
15,028
16,159
42,262
15,495
15,818
43,055
1. A change in reporting instructions results in offsetting shifts in the dealerplaced and directly placed financial company paper in October 1979.
2. Effective Dec. 1, 1982, there was a break in the commercial paper series. The
key changes in the content of the data involved additions to the reporting panel,
the exclusion of broker or dealer placed borrowings under any master note
agreements from the reported data, and the reclassification of a large portion of
bank-related paper from dealer-placed to directly placed.
3. Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
1.33
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
4. Includes all financial company paper sold by dealers in the open market.
5. As reported by financial companies that place their paper directly with
investors.
6. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per annum
Effective Date
Rate
16.00
15.75
1982—Oct. 14
Nov.22
12.00
11.50
17.00
16.50
16.00
15.50
15.00
14.50
14.00
13.50
13.00
1983—Jan. 11
Feb. 28
Aug. 8
11.00
1984—Mar. 19
Apr. 5
11.50
12.00
1982—Jan.. . .
Feb. . .
15.75
16.56
10.50
11.00
Month
1982-—Mar
Apr
May
June
July
Aug
Sept
Oct
Dec
1983-—Jan
Feb
Average
rate
16.50
16.50
16.50
16.50
16.26
14.39
13.50
12.52
11.85
11.50
11.16
10.98
Month
1983—Mar
Apr
July
Aug
Sept
Oct
Dec
1984—Jan
Feb
Business Lending
1.34
A23
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 6-10, 1984
Size of loan (in thousands of dollars)
Item
All
sizes
1-24
50-99
25-49
100-499
500-999
and o v e r
SHORT-TERM COMMERCIAL A N D INDUSTRIAL LOANS
1
2
3
4
5
6
7
8
9
10
11
12
13
Amount of loans (thousands of dollars)
N u m b e r of loans
Weighted-average maturity (months)
With fixed rates
With floating rates
Weighted-average interest rate (percent per annum) . .
Interquartile range 1
With fixed rates
With floating rates
Percentage of amount of loans
With floating rate
Made under commitment
With no stated maturity
With one-day maturity
38,330,316
171,352
1.1
.7
2.2
11.06
10.45-11.24
10.93
11.35
991,513
125,356
4.6
4.0
6.1
14.13
13.24-14.93
14.44
13.53
549,652
16,856
4.2
3.8
4.9
13.45
12.55-14.20
13.70
13.13
709,274
10,749
3.5
2.0
5.1
13.33
12.13-14.54
13.89
12.76
2,247,241
12,402
4.2
2.5
5.2
12.66
11.57-13.80
13.03
12.49
972,939
1,483
3.1
1.5
4.1
11.99
11.46-12.68
11.45
12.20
32,859,696
4,507
.7
.5
1.3
10.75
10.40-10.89
10.68
10.91
32.6
63.7
10.4
40.3
33.9
33.8
11.6
.1
44.7
37.8
12.5
.1
49.6
44.5
27.4
.2
69.3
58.7
22.7
.6
72.4
69.8
35.4
2.2
28.3
65.6
8.4
46.9
1-99
LONG-TERM COMMERCIAL A N D INDUSTRIAL LOANS
14
15
16
17
18
19
20
21
22
Amount of loans (thousands of dollars)
N u m b e r of loans
Weighted-average maturity (months)
With fixed rates
With floating rates
Weighted-average interest rate (percent per annum) . .
Interquartile range 1
With fixed rates
With floating rates
Percentage of amount of loans
23 With floating rate
24 Made under commitment
3,705,613
29,580
48.0
48.5
47.9
11.92
10.86-12.69
12.33
11.78
473,173
26,742
40.4
36.5
43.7
14.21
13.00-14.93
15.24
13.31
351,506
1,980
39.6
37.0
40.9
12.13
11.46-13.10
11.29
12.53
206,780
309
42.2
38.2
43.2
12.18
11.57-12.96
12.15
12.18
2,674,153
548
50.9
57.0
49.5
11.46
10.65-12.28
11.33
11.49
76.0
73.9
53.5
31.1
68.1
69.3
80.5
81.1
80.7
81.5
1-24
CONSTRUCTION A N D L A N D DEVELOPMENT L O A N S
25
26
27
28
29
30
31
32
33
Amount of loans (thousands of dollars)
N u m b e r of loans
Weighted-average maturity (months)
With fixed rates
With floating rates
Weighted-average interest rate (percent per annum) . .
Interquartile range 1
With fixed rates
With floating rates
34
35
36
37
38
Percentage of amount of loans
With floating rate
Secured by real estate
Made under commitment
With no stated maturity
With one-day maturity
Type of construction
39 1- to 4-family
40 Multifamily
41 Nonresidential
L O A N S TO FARMERS
42
43
44
45
46
Amount of loans (thousands of dollars)
Number of loans
Weighted-average maturity (months)
Weighted-average interest rate (percent per annum) . .
Interquartile range 1
47
48
49
50
51
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Other
2,278,565
43,012
8.9
4.3
13.5
13.34
12.00-14.20
14.13
12.60
51.3
91.3
61.6
49.9
6.0
44.1
2.3
.0
All sizes
500 and over
358,574
10,406
9.9
7.6
12.0
13.38
12.37-14.50
13.75
13.05
249,161
3,977
5.8
5.0
7.5
13.80
12.92-14.76
14.29
12.73
909,700
4,978
11.2
3.2
20.1
13.77
12.00-14.21
15.05
12.42
571,282
279
7.2
2.2
9.3
12.22
11.57-12.69
11.74
12.41
26.7
80.8
36.7
47.9
10.6
53.6
99.5
76.5
44.0
.5
31.5
96.2
65.2
51.9
18.8
48.5
97.8
46.1
73.4
4.3
71.3
77.1
83.8
15.9
5.3
41.6
2.7
.0
55.5
1.5
.0
29.4
1.5
.0
22.3
2.8
.0
78.8
2.2
.0
10-24
1-9
25-49
100-249
50-99
250 and over
1,352,194
64,008
8.5
13.50
12.63-14.45
158,661
42,006
8.6
14.12
13.50-14.75
161,008
11,116
9.5
14.22
13.66-14.76
194,352
5,719
8.9
14.12
13.51-14.93
199,351
3,212
8.6
13.90
13.24-14.38
216,433
1,516
10.6
14.00
13.08-14.45
422,389
438
6.7
12.27
11.53-12.75
12.68
13.62
13.81
13.86
13.47
14.29
13.92
14.09
14.05
14.42
14.24
14.06
14.19
14.04
14.56
13.61
13.86
14.15
13.74
14.05
14.05
(2)
(2)
11.96
13.04
11.94
14.42
(2)
(2)
13.71
13.91
14.13
12.69
1. Interest rate range that covers the middle 50 percent of the total dollar
amount of loans made.
2. Fewer than 10 sample loans.
50-99
25-49
189,847
23,372
5.3
5.4
5.1
14.03
13.27-14.45
14.12
13.79
(2)
NOTE. For more detail, see the B o a r d ' s E.2 (111) statistical release,
(2)
A24
1.35
DomesticNonfinancialStatistics • April 1983
I N T E R E S T R A T E S M o n e y and Capital M a r k e t s
Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted.
1981
1982
1984, week ending
1984
1983
Instrument
1983
Dec.
Jan.
Feb.
Mar.
Mar. 2
Mar. 9
Mar. 16
Mar. 23
Mar. 30
MONEY MARKET RATES
1
2
3
4
5
6
7
8
9
10
11
17
N
14
15
16
17
18
19
20
Federal funds 1 - 2
Discount w i n d o w b o r r o w i n g 1 2 - 3
Commercial paper 4 - 5
1-month
3-month
6-month
Finance p a p e r , directly placed 4 - 5
1-month
3-month
6-month
B a n k e r s acceptances 5 - 6
3-month
6-month
Certificates of deposit, secondary market 7
1-month
3-month
6-month
Eurodollar deposits, 3 - m o n t h 8
U . S . T r e a s u r y bills 5
Secondary market9
3-month
6-month
1-year
Auction average 1 0
3-month
6-month
1 year
16.38
13.42
12.26
11.02
9.09
8.50
9.47
8.50
9.56
8.50
9.59
8.50
9.91
8.50
9.62
8.50
9.74
8.50
9.79
8.50
10.04
8.50
9.97
8.50
15.69
15.32
14.76
11.83
11.89
11.89
8.87
8.88
8.89
9.56
9.53
9.50
9.23
9.20
9.18
9.35
9.32
9.31
9.81
9.83
9.86
9.42
9.43
9.44
9.54
9.56
9.58
9.73
9.77
9.82
10.06
10.07
10.09
10.04
10.09
10.11
15.30
14.08
13.73
11.64
11.23
11.20
8.80
8.70
8.69
9.51
9.16
9.11
9.20
9.08
9.02
9.34
9.14
9.06
9.76
9.54
9.38
9.36
9.18
9.12
9.55
9.32
9.19
9.67
9.45
9.29
10.06
9.81
9.53
9.95
9.74
9.60
15.32
14.66
11.89
11.83
8.90
8.91
9.52
9.45
9.23
9.19
9.38
9.35
9.88
9.91
9.51
9.52
9.63
9.63
9.79
9.88
10.11
10.15
10.12
10.15
15.91
15.91
15.77
16.79
12.04
12.27
12.57
13.12
8.96
9.07
9.27
9.56
9.67
9.69
9.85
10.08
9.33
9.42
9.56
9.78
9.43
9.54
9.73
9.91
9.91
10.08
10.37
10.40
9.57
9.69
9.95
10.09
9.67
9.84
10.08
10.18
9.80
9.99
10.35
10.31
10.11
10.31
10.62
10.61
10.18
10.34
10.59
10.61
14.03
13.80
13.14
10.61
11.07
11.07
8.61
8.73
8.80
9.00
9.17
9.24
8.90
9.02
9.07
9.09
9.18
9.20
9.52
9.66
9.67
9.18
9.33
9.37
9.29
9.43
9.45
9.43
9.59
9.60
9.76
9.88
9.90
9.72
9.85
9.86
14.029
13.776
13.159
10.686
11.084
11.099
8.63
8.75
8.86
8.96
9.14
9.16
8.93
9.06
9.04
9.03
9.13
9.24
9.44
9.58
9.68
9.20
9.33
9.24
9.37
9.37
9.52
9.65
9.79
9.68
9.76
9.88
14.78
14.56
12.27
12.80
9.57
10.21
10.11
10.84
9.90
10.64
10.04
10.79
10.59
11.31
10.24
11.00
10.53
11.24
10.85
11.52
11.65
10.79
11.54
14.44
14.24
14.06
13.91
13.72
12.92
13.01
13.06
13.00
10.45
10.80
11.02
11.10
11.13
11.54
10.93
11.05
11.54
11.77
13.44
12.92
12.76
12.87
CAPITAL MARKET R A T E S
U . S . T r e a s u r y notes and b o n d s "
C o n s t a n t maturities 1 2
21
1-year
2?
2-year
">3
24
25
26
27
28
29
30
31
3?
33
34
35
36
37
38
39
40
41
3-year
5-year
7-year
10-year
20-year
30-year
Composite14
O v e r 10 y e a r s (long-term)
State and local notes and b o n d s
M o o d y ' s series 1 5
Aaa
Baa
Bond Buyer series 1 6
C o r p o r a t e bonds
S e a s o n e d issues 1 7
All industries
Aaa
Aa
A
Baa
A-rated, recently-offered utility
bond18
MEMO: Dividend/price ratio
Preferred s t o c k s
Common stocks
11.24
10.33
11.09
11.25
11.38
11.75
11.85
11.97
12.05
12.09
12.18
11.53
11.98
12.22
12.29
12.17
12.40
12.46
11.80
12.20
12.39
12.46
12.45
12.38
12.21
12.15
12.35
12.27
12.46
12.38
12.60
12.52
12.51
12.47
11.44
11.90
11.65
11.78
11.89
12.02
12.00
9.00
10.10
9.63
9.04
9.94
9.64
9.41
10.22
9.94
9.30
10.10
9.86
9.40
10.20
9.94
9.45
10.25
9.98
9.50
10.30
10.01
9.40
10.25
9.93
13.07
12.57
12.76
13.21
13.75
12.92
12.20
12.71
13.13
13.65
12.88
12.08
12.70
13.11
13.59
13.33
12.57
13.22
13.54
13.99
13.09
12.30
12.96
13.31
13.78
13.19
12.46
13.08
13.39
13.84
13.32
12.58
13.24
13.50
13.97
13.44
12.65
13.34
13.65
14.10
13.48
12.71
13.33
13.70
14.15
12.73
13.29
12.99
13.05
13.63
13.41
13.55
13.60
13.81
13.80
11.2 P
4.40
11.49
4.32
11.35
4.27
11.16
4.59
11.39
4.63
11.19
4.62
11.30
4.70
11.32
4.64
11.40
4.63
11.52
4.57
11.37
11.58
11.68
11.82
11.75
11.84
11.59
12.02
12.25
12.32
11.34
11.18
11.78
11.83
12.02
11.88
12.00
11.95
12.23
10.84
11.44
11.29
10.43
11.76
11.33
10.88
12.48
11.66
8.80
10.17
9.51
9.34
10.29
9.89
15.06
14.17
14.75
15.29
16.04
14.94
13.79
14.41
15.43
16.11
12.78
12.04
12.42
13.10
13.55
16.63
15.49
12.36
5.20
12.53
5.81
19
1. Weekly and monthly figures are a v e r a g e s of all calendar d a y s , w h e r e t h e
rate for a w e e k e n d o r holiday is t a k e n to be the rate prevailing on the preceding
business d a y . T h e daily rate is the average of the rates on a given day weighted by
the volume of transactions at these rates.
2. Weekly figures are a v e r a g e s f o r s t a t e m e n t week ending W e d n e s d a y .
3. Rate for the F e d e r a l R e s e r v e Bank of N e w York.
4. Unweighted average of offering rates quoted by at least five dealers (in the
case of commercial paper), or finance c o m p a n i e s (in the c a s e of finance paper).
Before N o v e m b e r 1979, maturities for data s h o w n are 30-59 d a y s , 90—119 d a y s ,
and 120-179 d a y s for commercial p a p e r ; and 30-59 d a y s , 90-119 d a y s , and 150179 d a y s f o r finance paper.
5. Yields are quoted on a b a n k - d i s c o u n t basis, rather than an investment yield
basis (which would give a higher figure).
6. Dealer closing offered rates f o r top-rated b a n k s . Most r e p r e s e n t a t i v e rate
(which m a y be, but need not be, the a v e r a g e of the rates q u o t e d by the dealers).
7. Unweighted average of offered rates q u o t e d by at least five dealers early in
the d a y .
8. Calendar w e e k a v e r a g e . F o r indication p u r p o s e s o n l y .
9. U n w e i g h t e d a v e r a g e of closing bid rates quoted by at least five dealers.
10. Rates are r e c o r d e d in the w e e k in which bills are issued. Beginning with the
T r e a s u r y bill auction held on A p r . 18, 1983, b i d d e r s w e r e required to state the
percentage yield (on a bank d i s c o u n t basis) that they would a c c e p t t o two decimal
places. T h u s , average issuing rates in bill a u c t i o n s will be reported using t w o
rather than t h r e e decimal places.
11. Yields are based on closing bid prices q u o t e d by at least five dealers.
11.75
12. Yields a d j u s t e d to c o n s t a n t maturities by the U . S . T r e a s u r y . T h a t is, yields
are read f r o m a yield c u r v e at fixed maturities. Based on only recently issued,
actively traded securities.
13. E a c h biweekly figure is the a v e r a g e of five business d a y s ending on the
M o n d a y following the d a t e indicated. Until M a r . 31, 1983, the biweekly rate
determined the m a x i m u m interest rate p a y a b l e in the following t w o - w e e k period
on 2-'/2-year small saver certificates. (See table 1.16.)
14. A v e r a g e s (to maturity or call) f o r all outstanding b o n d s neither d u e nor
callable in less than 10 y e a r s , including several very low yielding " f l o w e r " b o n d s .
15. General obligations based on T h u r s d a y figures; M o o d y ' s I n v e s t o r s Service.
16. General obligations only, with 20 y e a r s t o maturity, issued by 20 state and
local governmental units of mixed quality. Based on figures for T h u r s d a y .
17. Daily figures f r o m M o o d y ' s I n v e s t o r s Service. Based on yields to maturity
on selected long-term b o n d s .
18. Compilation of the F e d e r a l R e s e r v e . This series is an estimate of the yield
on recently-offered, A-rated utility b o n d s with a 30-year maturity and 5 y e a r s of
call protection. Weekly d a t a are based on Friday quotations. T h e F e d e r a l R e s e r v e
previously published interest rate series on both newly-issued and recentlyoffered Aaa utility b o n d s , but discontinued these series in J a n u a r y 1984 owing to
the lack of Aaa issues.
19. Standard and P o o r ' s c o r p o r a t e series. P r e f e r r e d stock ratio based on a
sample of ten issues: f o u r public utilities, f o u r industrials, o n e financial, a n d o n e
transportation. C o m m o n stock ratios on the 500 stocks in the price index.
Securities Markets
1.36
STOCK MARKET
A25
Selected Statistics
1983
Indicator
1982
1981
1984
1983
July
Aug.
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
Mar.
Prices and trading (averages of daily figures)
Common stock prices
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance
6 Standard & P o o r ' s Corporation (1941-43 = 10)1 . . .
7 American Stock Exchange 2
(Aug. 31, 1973 = 100)
74.02
85.44
72.61
38.90
73.52
128.05
68.93
78.18
60.41
39.75
71.99
119.71
92.63
107.45
89.36
47.00
95.34
160.41
96.74
113.21
92.91
46.61
99.60
166.96
93.96
109.50
88.06
46.94
95.76
162.42
96.70
112.76
94.56
48.16
97.00
167.16
96.78
112.87
95.41
48.73
94.79
167.65
95.36
110.77
97.68
48.50
94.48
165.23
94.92
110.60
98.79
47.00
94.25
164.36
96.16
112.16
97.98
47.43
95.79
166.39
90.60
105.44
86.33
45.67
89.95
157.70
90.66
105.92
86.10
44.83
89.50
157.44
171.79
141.31
216.48
244.03
230.10
234.36
223.76
218.42
221.31
224.83
207.95
210.09
Volume of trading (thousands
8 New York Stock Exchange
9 American Stock Exchange
46,967
5,346
64,617
5,283
85,418
8,215
79,508
8,199
74,191
6,329
82,866
6,629
85,445
7,751
86,405
6,160
88,041
6,939
105,518
7,167
96,641
6,431
84,328
5,382
of shares)
Customer financing (end-of-period balances, in millions of dollars)
10 Regulated margin credit at brokers-dealers 3
14,411
13,325
23,000
19,218
19,437
20,124
21,030
22,075
23,000
23,132
22,557
11 Margin stock 4
12 Convertible bonds
13 Subscription issues
14,150
259
2
12,980
344
1
22,720
279
1
18,870
347
1
19,090
346
1
19,760
363
1
20,690
339
1
21,790
285
1
22,720
279
1
22,870
261
1
22,330
226
1
3,515
7,150
5,735
8,390
6,620
8,430
6,275
8,145
6,350
8,035
6,550
7,930
6,630
7,695
6,512
7,599
6,620
8,430
6,510'
8,230'
6,420
8,420
Free credit balances
14 Margin-account
15 Cash-account
at
f
1
n a.
brokers5
Margin-account debt at brokers (percentage distribution, end of period)
16 Total
1/
18
19
20
21
22
By equity class (in
Under 40
40-49
50-59
60-69
70-79
80 or more
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
37.0
24.0
17.0
10.0
6.0
6.0
21.0
24.0
24.0
14.0
9.0
8.0
41.0
22.0
16.0
9.0
6.0
6.0
21.0
28.0
21.0
14.0
9.0
7.0
23.0
28.0
20.0
13.0
9.0
7.0
24.0
27.0
21.0
12.0
9.0
7.0
35.0
24.0
17.0
10.0
7.0
7.0
48.0
22.0
17.0
10.0
7.0
6.0
41.0
22.0
16.0
9.0
6.0
6.0
43.0
21.0
15.0
9.0
6.0
6.0
48.0
20.0
13.0
8.0
6.0
5.0
percent)6
n a.
1
t
Special miscellaneous-account balances at brokers (end of period)
23 Total balances (millions of dollars)
Distribution by equity status
24 Net credit status
Debt status, equity of
25
60 percent or more
26
Less than 60 percent
7
25,870
35,598
58,329
50,580
50,267
51,211
54,029
57,490
58,329
62,670
63,411
58.0
62.0
63.0
62.0
62.0
64.0
63.0
63,0
63.0
61.0
59.0
31.0
29.0
9.0
28.0
9.0
31.0
6.0
31.0
7.0
29.0
7.0
28.0
9.0
29.0
8.0
28.0
9.0
29.0
10.0
29.0
12.0
(percent)
11.0
[
n.a.
1
1
t
Margin requirements (percent of market value and effective date) 8
Mar. 11, 1968
27 Margin stocks
28 Convertible bonds
29 Short sales
June 8, 1968
70
50
70
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Margin credit includes all credit extended to purchase or carry stocks or
related equity instruments and secured at least in part by stock. Credit extended is
end-of-month data for member firms of the New York Stock Exhange.
Besides assigning a current loan value to margin stock generally, Regulations T
and U permit special loan values for convertible bonds and stock acquired through
exercise of subscription rights.
4. A distribution of this total by equity class is shown on lines 17-22.
5. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
80
60
80
May 6, 1970
65
50
65
Dec. 6, 1971
Nov. 24, 1972
Jan. 3, 1974
55
50
55
65
50
65
50
50
50
6. Each customer's equity in his collateral (market value of collateral less net
debit balance) is expressed as a percentage of current collateral values.
7. Balances that may be used by customers as the margin deposit required for
additional purchases. Balances may arise as transfers based on loan values of
other collateral in the customer's margin account or deposits of cash (usually sales
proceeds) occur.
8. Regulations G, T , and U of the Federal Reserve Board of G o v e r n o r s ,
prescribed in accordance with the Securities Exchange Act of 1934, limit the
amount of credit to purchase and carry margin stocks that may be extended on
securities as collateral by prescribing a maximum loan value, which is a specified
percentage of the market value of the collateral at the time the credit is extended.
Margin requirements are the difference between the market value (100 percent)
and the maximum loan value. The term "margin s t o c k s " is defined in the
corresponding regulation.
A26
1.37
DomesticNonfinancialStatistics • April 1983
SELECTED FINANCIAL INSTITUTIONS
Selected Assets and Liabilities
Millions of dollars, end of period
1983
Account
1984
1981
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
756,953
485,366
101,553
170,034
763,365
489,720
101,553
172,259
771,705
493,432
103,395
174,878
772,723'
494,682'
101,883'
176,158'
Feb.P
Savings and loan associations
733,074
474,510
102,063
156,501
741,416
479,322
102,546
159,548
746,998
483,178
99,812
164,008
748,491
482,305
100,243
165,943
780,614
498,418
103,859
178,337
664,167
518,547
63,123
82,497
707,646
483,614
85,438
138,594
730,211
477,593
99,973
152,645
664,167
707,646
730,211
729,920
733,074
741,416
746,998
748,491
756,953
763,365
771,705 772,723'
780,614
525,061
88,782
62,794
25,988
6,385
15,544
567,961
97,850
63,861
33,989
9,934
15,602
603,187
83,623
55,933
27,690
13,478
15,853
601.731
82,731
54,392
28,339
14,548
17,936
605,282
84,342
54,234
30,108
15,998
15,140
610,826
84,694
53,579
31,115
17,094
17,527
615,369
84,267
52,182
32,085
17,967
18,615
618,002
85,976
52,179
33,797
18,812
15,496
622,577
87,367
52,678
34,689
19,209
17,458
625,013
89,235
51,735
37,500
19,728
19,179
634,076 639,694'
91,443 86,322'
52,626 50,880'
38,817 35,442'
21,117 21,498'
15,275 15,777'
645,026
86,493
50,506
35,987
21,960
17,581
12 Net worth 3
28,395
26,233
27,548
27,522
28,310
28,369
28,626
29,017
29,551
29,938
30,911
30,930'
31,514
13 MEMO: Mortgage loan commitments
outstanding 4
15,225
18,054
27,968
30,148
30,691
31,733
32,415
32,483
32,798
34,780
32,996
33,504'
36,120
1
2
3
4
Assets
Mortgages
Cash and investment securities 1
Other
5 Liabilities and net worth
6
7
8
9
10
11
Savings capital
Borrowed money
FHLBB
Other
Loans in process 2
Other
729,920
473,481
104,245
152,194
Mutual savings banks
5
175,728
174,197
178,826
180,071
181,975
182,822
183,612
186,041
188,021
189,146
99,997
14,753
94,091
16,957
93,311
18,353
93,587
17,893
94,000
17,438
93,998
18,134
93,941
17,929
94,831
17,830
95,181
18,860
95,600
19,674
97,368
19,120
97,699
20,467
9,810
2,288
37,791
5,442
5,649
9,743
2,470
36,161
6,919
7,855
12,364
2,311
38,342
6,039
8,107
13,110
2,260
39,142
5,960
8,118
13,572
2,257
40,206
6,224
8,276
13,931
2,248
40,667
5,322
8,522
14,484
2,247
41,045
5,168
8,799
14,794
2,244
41,889
5,560
8,893
14,774
2,189
41,907
4,940
9,051
15,090
2,194
42,625
4,990
8,973
15,349
2,177
43,589
6,252
9,662
15,169
2,180
43,547
4,785
10,378
22 Liabilities
175,728
174,197
178,826
180,071
181,975
182,822
183,612
186,041
188,021
189,146
193,517 194,225
23
24
25
26
27
28
29
30
155,110
153,003
49,425
103,578
2,108
10,632
9,986
155,196
152,777
46,862
96,369
2,419
8,336
9,235
161,262
158,760
40,379
84,593
2,502
7,631
9,352
162,287
159,840
40,467
83,506
2,447
3,114
9,377
163,990
161,573
40,451
84,705
2,417
7,754
9,575
164,848
162,271
39,983
85,445
2,577
7,596
9,684
165,087
162,600
39,360
86,446
2,487
7,884
9,932
165,887
162,998
39,768
85,603
2,889
9,475
9,879
166,260
163,782
38,129
90,639
2,478
8,988
12,245
169,334
166,984
38,448
93,051
2,350
9,192
10,314
172,639 171,603
170,105 171,109
38,553 37,999
95,107 96,520
2,534
494
10,174 11,974
18,759 10,333
1,293
1,285
1,882
1,860
1,884
1,969
2,046
2,023
2,210
2,418
14 Assets
15
16
17
18
19
20
21
Loans
Mortgage
Other
Securities
U.S. government 6
State and local government
Corporate and other 7
Cash
Other assets
Deposits
Regular 8
Ordinary savings
Time
Other
Other liabilities
General reserve accounts
MEMO: Mortgage loan commitments
outstanding 9
193,517 194,225
2,387
n a.
n.a.
Life insurance companies
31 Assets
Securities
32
Government
33
United States 1 0
34
State and local
37
38
39
40
41
42
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
525,803
588,163
609,298
620,572
628,224
633,569
638,826
644,295
647,149
652,904
658,979 663,013
25,209
8,167
7,151
9,891
255,769
208,099
47,670
137,747
40,094
48,706
35,815
36,499
16,529
8,664
11,306
287,126
231,406
55,720
141,989
20,264
52,961
48,571
39,210
19,746
8,524
10,940
300,558
238,689
61,869
143,011
21,352
53,715
51,452
42,523
20,706
10,053
11,764
309,254
245,833
63,421
143,758
21,344
53,804
48,889
43,348
21,141
10,355
11,852
313,510
248,248
65,262
144,725
21,629
53,914
51,098
44,751
22,228
10,504
12,019
316,934
252,397
64,537
145,086
21,690
53,972
51,136
45,700
22,817
10,695
12,188
318,584
253,977
64,607
146,400
21,749
54,063
52,330
46,109
23,134
10,739
12,236
321,568
256,131
65,437
147,356
21,903
54,165
53,194
47,767
24,380
10,791
12,596
320,964
256,332
64,632
148,256
22,141
54,255
53,765
47,170
24,232
10,686
12,252
325,787
260,432
65,355
148,947
22,278
54,362
54,360
49,417 49,690
26,364 26,659
10,796 10,673
12,257
12,358
325,015 329,697
259,591 264,430
65,424 65,267
151,599 151,878
22,683 22,700
54,518 54,559
55,747 54,474
n.a.
Credit unions 1 2
43 Total assets/liabilities and capital
45
State
46 Loans outstanding
47
Federal
48
State
49 Savings
50
Federal (shares)
51
State (shares and deposits)
60,611
39,181
21,430
69,572
45,483
24,089
74,896
48,986
25,910
76,851
50,275
26,576
78,467
51,430
27,037
79,084
51,844
27,240
79,595
52,224
27,371
80,678
53,033
27,645
81,033
53,222
27,811
81,845
53,710
28,135
82,854
54,372
28,482
83,182
54,657
28,525
84,801
55,753
29,048
42,333
27,096
15,237
54,152
35,25C
18,902
43,223
27,941
15,282
62,977
41,341
21,636
43,530
28,133
15,397
68,663
45,165
23,498
44,055
28,512
15,543
70,221
46,192
24,029
45,001
29,175
15,826
71,712
47,145
24,567
45,616
29,577
16,039
72,438
47,713
24,725
46,880
30,384
16,496
72,550
47,874
24,676
47,744
30,912
16,832
73,697
48,709
24,988
48,345
31,287
17,058
74,187
49,044
25,143
49,102
31,789
17,313
74,685
49,400
25,285
49,923
32,304
17,619
75,435
49,839
25,596
50,306
32,631
17,675
76,068
50,387
25,681
51,861
33,878
17,983
77,233
51,218
26,015
Federal Finance
1.37
All
Continued
1984
1983
Account
1981
1982
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
59,422
35,637
9,587
14,198
61,717
37,166
9,653
14,898
64,969
38,698
10,436
15,835
69,835
41,754
11,243
16,838
Feb.P
FSLIC-insured federal savings banks
6,859
3,353
22,713
14,345
4,310
4.058
33,667
21,248
5,901
6,518
39,660
25,236
6,675
7,749
41,763
26,494
6,890
8,379
46,191
28,086
7,514
10,591
57,496
34,814
9,245
13,437
56 Liabilities and net worth .
6,859
22,713
33,667
39,660
41,763
46,191
57,496
59,422
61,717
64,969
69,835
57
58
59
60
61
62
5,877
18,598
2,719
1,979
740
453
943
27,419
4,146
2,755
1,391
759
1,343
32,446
4,831
3,094
1,737
755
1,628
34,108
5,008
3,131
1,877
919
1,728
37,284
5,445
3,572
1,873
1,142
2,320
47,058
6,598
4,192
2,406
1,089
2,751
48,544
6,775
4,323
2,452
1,293
2,810
50,384
6,981
4,381
2,600
1,428
2,924
53,227
7,477
4,640
2,837
1,157
3,108
57,195
8,048
4,751
3,297
1,347
3,245
52
53
54
55
Assets
Mortgages
Cash and investment securities'
Other
Savings and capital
Borrowed money . .
FHLBB
Other
Other
Net worth 3
MEMO
63 Loans in process 2
64 Mortgage loan committments
outstanding 4
335
650
791
828
934
1,120
1,181
1,222
1,264
1,387
722
1,113
1,438
1,743
1,774
2,130
2,064
2,230
2,151
2,974
11. Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
12. As of June 1982, data include only federal or federally insured state credit
unions serving natural persons.
1. Holdings of stock of the Federal Home Loan Banks are in " o t h e r a s s e t s . "
2. Beginning in 1982, loans in process are classified as contra-assets and are
not included in total liabilities and net worth. Total assets are net of loans in
process.
3. Includes net undistributed income accrued by most associations.
4. Excludes figures for loans in process.
5. The National Council reports data on member mutual savings banks and on
savings banks that have converted to stock institutions, and to federal savings
banks.
6. Beginning April 1979, includes obligations of U.S. government agencies.
Before that date, this item was included in " C o r p o r a t e and o t h e r . "
7. Includes securities of foreign governments and international organizations
and, before April 1979, nonguaranteed issues of U.S. government agencies.
8. Excludes checking, club, and school accounts.
9. Commitments outstanding (including loans in process) of banks in N e w
York State as reported to the Savings Banks Association of the State of New
York.
10. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under " B u s i n e s s " securities.
1.38
FEDERAL FISCAL A N D FINANCING
NOTE. Savings and loan associations:
Estimates by the F H L B B for all
associations in the United States. Data are based on monthly reports of federally
insured associations and annual reports of other associations. Even when revised,
data for current and preceding year are subject to further revision.
Mutual savings banks: Estimates of National Council of Savings Institutions for
all savings banks in the United States.
Life insurance companies: Estimates of the American Council of Life Insurance
for all life insurance companies in the United States. Annual figures are annualstatement asset values, with bonds carried on an amortized basis and stocks at
year-end market value. Adjustments for interest due and accrued and for
differences between market and book values are not made on each item separately
but are included, in total, in " o t h e r a s s e t s . "
Credit unions: Estimates by the National Credit Union Administration for a
group of federal and federally insured state credit unions serving natural persons.
Figures are preliminary and revised annually to incorporate recent data.
OPERATIONS
Millions of dollars
Calendar year
Fiscal
year
1981
Type of account or operation
Fiscal
year
1982
Fiscal
year
1983
1982
HI
U.S. budget
1 Receipts'
2 Outlays'
3 Surplus, or deficit ( - )
4
Trust funds
5
Federal funds 2 3
Off-budget entities (surplus, or deficit
6 Federal Financing Bank outlays
7 Other 3 4
H2
1983
1983
HI
Dec.
1984
Jan.
Feb.
599,272
657,204
-57,932
6,817
-64,749
617,766
728,375
-110,609
5,456
-116,065
600,562
795,917
-195,355
23,056
-218,410
322,478
348,678
-26,200
-17,690
-43,889
286,338
390,846
-104,508
-6,576
-97,934
306,331
396,477
-90,146
22,680
-112,822
58,041
74,702
-16,661
3,921
-20,579
62,537
68,052
-5,515
1,043
-6,558
47,886
68,267
-20,381
557
-20,938
-20,769
-236
-14,142
-3,190
-10,404
-1,953
-7,942
227
-4,923
-2,267
-5,418
-528
-312
400
-121
-129
-8
-198
-78,936
-127,940
-207,711
-33,914
-111,699
-96,094
-16,572
-5,762
-20,588
79,329
134,993
212,425
41,728
119,609
102,538
15,501
23,686
18,172
-1,878
1,485
-11,911
4,858
-9,889
5,176
-408
-7,405
-9,057
1,146
-9,664
3,222
-6,092
7,164
-21,127
3,202
8,722
-6,306
18,670
3,520
15,150
29,164
10,975
18,189
37,057
16,557
20,500
10,999
4,099
6,900
19,773
5,033
14,740
100,243
19,442
72,037
11,817
3,661
8,157
28,544
7,153
21,392
23,758
3,226
20,531
(-))
U.S. budget plus off-budget,
including
Federal Financing Bank
8 Surplus, or deficit ( - )
Source or financing
9
Borrowing from the public
10
Cash and monetary assets (decrease, or
increase ( - ) ) 4
11
Other 5
MEMO
12 Treasury operating balance (level, end of
period)
13
Federal Reserve Banks
14
Tax and loan accounts
1. Effective Feb. 8, 1982, supplemental medical insurance premiums and
voluntary hospital insurance premiums, previously included in other insurance
receipts, have been reclassified as offsetting receipts in the health function.
2. Half-year figures are calculated as a residual (total surplus/deficit less trust
fund surplus/deficit).
3. Other off-budget includes Postal Service Fund; Rural Electrification and
Telephone Revolving Fund; Rural Telephone Bank; and petroleum acquisition
and transportation and strategic petroleum reserve effective N o v e m b e r 1981.
4. Includes U.S. Treasury operating cash accounts; SDRs; gold tranche
drawing rights; loans to International Monetary Fund; and other cash and
monetary assets.
5. Includes accrued interest payable to the public; allocations of special
drawing rights; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S.
currency valuation adjustment; net gain/loss for I M F valuation adjustment; and
profit on the sale of gold.
SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S.
G o v e r n m e n t . " Treasury Bulletin, and the Budget of the United States
Government, Fiscal Year 1985.
A28
1.39
DomesticNonfinancialStatistics • April 1983
U.S. BUDGET RECEIPTS A N D OUTLAYS
Millions of dollars
Calendar year
Source or type
Fiscal
year
1981
Fiscal
year
1982
Fiscal
year
1983
1982
HI
1983
1983
H2
HI
Dec.
1984
Jan.
Feb.
RECEIPTS
1 All sources
599,272
617,766
600,563
322,478
286,338
306,331
58,041
62,537
47,886
285,917
256,332
41
76,844
47,299
297,744
267,513
39
84,691
54,498
288,938
266,010
36
83,586
60,692
150,565
133,575
34
66,174
49,217
145,676
131,567
5
20,040
5,938
144,550
135,531
30
63,014
54,024
25,577
24,482
0
1,948
854
33,881
21,070
0
12,728
-82
22,190
23,523
4
1,501
2,838
73,733
12,596
65,991
16,784
61,780
24,758
37,836
8,028
25,661
11,467
33,522
13,809
11,558
636
2,985
1,366
1,892
1,833
182,720
201,498
209,001
108,079
94,278
110,521
16,120
21,462
19,972
156,932
172,744
179,010
88,795
85,063
90,912
15,435
19,446
16,774
6,041
15,763
3,984
7,941
16,600
4,212
6,756
18,799
4,436
7,357
9,809
2,119
177
6,857
2,181
6,427
11,146
2,1%
0
289
396
478
1,112
427
523
2,308
369
40,839
8,083
6,787
13,790
36,311
8,854
7,991
16,161
35,300
8,655
6,053
15,594
17,525
4,310
4,208
7,984
16,556
4,299
3,445
7,891
16,904
4,010
2,883
7,751
3,011
855
484
1,072
3,148
776
488
1,163
2,693
839
570
1,613
18 All types
657,204
728,424
795,917
348,683
390,847
396,477
74,702
68,052
68,267
19
20
21
22
23
24
National defense
International affairs
General science, space, and technology . . .
Energy
Natural resources and environment
Agriculture
159,765
11,130
6,359
10,277
13,525
5,572
187,418
9,982
7,070
4,674
12,934
14,875
210,461
8,927
7,777
4,035
12,676
22,173
93,154
5,183
3,370
2,946
5,636
7,087
100,419
4,406
3,903
2,059
6,940
13,260
105,072
4,705
3,486
2,073
5,892
10,154
19,576
2,647
480
534
1,221
1,452
18,283
709
503
255
963
1,835
18,515
780
721
34
790
1,737
25
26
27
28
Commerce and housing credit
Transportation
Community and regional development . . . .
Education, training, employment, social
services
3,946
23,381
9,394
3,865
20,560
7,165
4,721
21,231
7,302
1,408
9,915
3,055
2,244
10,686
4,186
2,164
9,918
3,124
565
2,030
752
709
1,953
434
-648
1,517
524
2 Individual income taxes, net
Withheld
3
4
Presidential Election Campaign Fund . . .
5
N on withheld
6
Refunds
Corporation income taxes
Gross receipts
7
8
Refunds
9 Social insurance taxes and contributions,
net
10
Payroll employment taxes and
contributions 1
11
Self-employment taxes and
contributions 2
12
Unemployment insurance
13
Other net receipts 3
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts 4
OUTLAYS
29 Health
30 Social security and medicare
31 Income security
32
33
34
35
36
37
Veterans benefits and services
Administration of justice
General government
General-purpose fiscal assistance
Net interest"
Undistributed offsetting receipts 7
31,402
26,300
25,726
12,607
12,187
12,801
2,214
2,476
2,305
26,858
178,733
85,514
27,435
202,531
92,084
28,655]
223,311f
106,21lj
150,001 s
172,852
184,207
31,189
30,456
753
21,101
8,585
22,988
4,696
4,614
6,856
68,726
-16,509
23,955
4,671
4,726
6,393
84,697
-13,270
24,845
5,014
4,991
6,287
89,774
-21,424
112,782
2,334
2,400
3,325
41,883
-6,490
13,241
2,373
2,322
3,152
44,948
-8,333
11,334
2,522
2,434
3,124
42,358
-8,885
3,336
448
364
64
8,712
-889
1,202
487
88
1,153
7,808
-1,263
2,108
505
495
201
9,651
-1,407
1. Old-age, disability, and hospital insurance, and railroad retirement accounts.
2. Old-age, disability, and hospital insurance.
3. Federal employee retirement contributions and civil service retirement and
disability fund.
4. Deposits of earnings by Federal Reserve Banks and other miscellaneous
receipts.
5. In accordance with the Social Security Amendments Act of 1983, the
Treasury now provides social security and medicare outlays as a separate
function. Before February 1984, these outlays were included in the income
security and health functions.
6. Net interest function includes interest received by trust funds.
7. Consists of rents and royalties on the outer continental shelf and U . S .
government contributions for employee retirement.
SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S.
G o v e r n m e n t " and the Budget of the U.S. Government, Fiscal Year 1985.
Federal Finance All
1.40
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1983
1982
1984
Item
Mar. 31
June 30
Sept. 30
Dec. 31
June 30
Mar. 31
Sept. 30
Dec. 31
Mar. 31
1 Federal debt outstanding
1,066.4
1,084.7
1,147.0
1,201.9
1,249.3
1,324.3
1,381.9
1415.3
n.a.
2 Public debt securities
3
Held by public
4
Held by agencies
1,061.3
858.9
202.4
1,079.6
867.9
211.7
1,142.0
925.6
216.4
1,197.1
987.7
209.4
1,244.5
1,043.3
201.2
1,319.6
1,090.3
229.3
1,377.2
1,138.2
239.0
1,410.7
1174.4
236.3
1,463.7
4
5.1
3.9
1.2
5.0
3.9
1.2
5.0
3.7
1.2
4.8
3.7
1.2
4.8
3.7
1.1
4.7
3.6
1.1
4.7
3.6
1.1
4.6
3.5
1.1
1,062.2
1,080.5
1,142.9
1,197.9
1,245.3
1,320.4
1,378.0
1,411.4
1,464.5
9 Public debt securities
10 Other debt 1
1,060.7
1.5
1,079.0
1.5
1,141.4
1.5
1,196.5
1.4
1,243.9
1.4
1,319.0
1.4
1,376.6
1.3
1,410.1
1.3
1,463.1
1.3
11 MEMO: Statutory debt limit
1,079.8
1,143.1
1,143.1
1,290.2
1,290.2
1,389.0
1,389.0
1,490.0
1,490.0
5 Agency securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
1. Includes guaranteed debt of government agencies, specified participation
certificates, notes to international lending organizations, and District of Columbia
stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
i
n.a.
1
t
NOTE. Data from Treasury Bulletin (U.S. Treasury Department),
Types and Ownership
Billions of dollars, end of period
1983
Type and holder
1979
1980
1981
Nov.
1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
14
By type
Interest-bearing debt
Marketable
Bills
Notes
Bonds
Nonmarketable 1
State and local government series
Foreign issues 3
Government
Public
Savings bonds and notes
Government account series 4
1984
1982
Dec.
930.2
1,028.7
1,197.1
1.389.2
1,410.7
1,437.4
1,457.5
1,463.7
844.0
530.7
172.6
283.4
74.7
313.2
2.2
24.6
28.8
23.6
5.3
79.9
177.5
928.9
623.2
216.1
321.6
85.4
305.7
1,027.3
720.3
245.0
375.3
99.9
307.0
1,195.5
881.5
311.8
465.0
104.6
314.0
1,387.9
1.044.3
335.3
575.3
133.8
343.5
1,400.9
1,050.9
343.8
573.4
633.7
350.0
1,435.6
1,081.9
346.9
597.6
137.4
353.7
1,455.8
1,100.1
349.5
608.0
142.6
355.7
1,452.1
1,097.7
350.2
604.9
142.6
354.4
23.8
24.0
17.6
6.4
72.5
185.1
23.0
19.0
14.9
4.1
68.1
196.7
25.7
14.7
13.0
1.7
68.0
205.4
35.7
10.5
10.5
.0
70.9
226.2
36.1
10.4
10.4
0
70.7
231.9
36.7
10.8
10.8
.0
71.0
235.0
37.5
9.8
9.8
.0
71.2
237.0
38.1
9.9
9.9
.0
71.6
234.6
1.8
1.8
1.6
1.2
1.3
1.4
1.6
1.3
9.8
16
17
18
19
20
21
22
23
187.1
117.5
540.5
96.4
4.7
16.7
22.9
69.9
192.5
121.3
616.4
116.0
5.4
20.1
25.7
78.8
203.3
131.0
694.5
109.4
5.2
19.1
37.8
85.6
209.4
139.3
848.4
131.4
n.a.
38.7
n.a.
113.4
230.4
149.4
236.3
151.9
1022.6
188.9
n.a.
48.9
n.a.
n.a.
24
25
26
27
Individuals
Savings bonds
Other securities
Foreign and international 6
Other miscellaneous investors 7
79.9
36.2
124.4
90.1
72.5
56.7
127.7
106.9
68.0
75.6
141.4
152.3
68.3
48.2
149.4
233.2
1. Includes (not shown separately): Securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual
retirement bonds.
2. These nonmarketable bonds, also known as Investment Series B Bonds,
may be exchanged (or converted) at the o w n e r ' s option for 1 Vi percent, 5-year
marketable Treasury notes. Convertible bonds that have been so exchanged are
removed f r o m this category and recorded in the notes category (line 5).
3. Nonmarketable dollar-denominated and foreign currency-denominated
series held by foreigners.
4. Held almost entirely by U . S . government agencies and trust funds.
Mar.
845.1
By holder5
U . S . government agencies and trust f u n d s
Federal Reserve Banks
Private investors
Commercial b a n k s
Mutual savings banks
Insurance companies
Other companies
State and local governments
15 Non-interest-bearing debt
Feb.
Jan.
n a.
n a.
n a.
n a.
71.5
61.9
168.9
n.a.
5. Data for Federal Reserve Banks and U . S . government agencies and trust
funds are actual holdings; data for other groups are Treasury estimates.
6. Consists of investments of foreign balances and international accounts in the
United States.
7. Includes savings and loan associations, nonprofit institutions, corporate
pension trust funds, dealers and brokers, certain government deposit accounts,
and government sponsored agencies.
NOTE. Gross public debt excludes guaranteed agency securities.
Data by type of security from Monthly Statement of the Public Debt of the
United States (U.S. Treasury Department); data by holder f r o m Treasury
Bulletin.
A30
1.42
DomesticNonfinancialStatistics • April 1983
U.S. GOVERNMENT SECURITIES DEALERS
Transactions
Par value; averages of daily figures, in millions of dollars
1984
Item
1980
1981
1984 week ending Wednesday
1982
Jan/
Feb/
Mar.
Jan. 25
Feb. 1
Feb. 8
Feb. 15
Feb. 22
Feb. 29
1
1
Immediate delivery
U.S. government securities
By maturity
Bills
Other within 1 year
1-5 years
5 - 1 0 years
Over 10 years
2
3
4
5
6
By type of customer
U.S. government securities
dealers
U.S. government securities
brokers
All others 2
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures transactions 3
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions 4
U.S. government securities
Federal agency securities
7
8
9
10
11
12
13
14
15
16
17
18
18,331
24,728
32,271
45,623
52,445
50,344
38,623'
44,574'
50,989
55,197
51,037
55,040
11,413
421
3,330
1,464
1,704
14,768
621
4,360
2,451
2,528
18,398
810
6,272
3,557
3,234
23,140
1,119
9,615
5,647
6,102
24,937
895
11,827
8,052
6,734
23,278
906
11,038
7,798
7,324
20,407'
865
7,593
5,118
4,641
21,978'
1,080
11,418'
5,052
5,046
24,364
801
13,163
6,767
5,894
23,127
805
11,602
10,186
9,479
28,165
909
10,053
6,262
5,648
25,033
999
12,653
9,714
6,641
1,484
1,640
1,769
2,751
4,164
2,050
2,386
2,876
3,907
5,288
4,662
3,345
7,610
9,237
3,258
2,472
11,750
11,337
3,306
4,477
1,807
6,128
15,659
15,344
4,142
5,001
2,502
7,595
21,066
21,806
6,541
4,886
3,119
8,891
24,952
23,329
7,577
5,324
2,702
8,114
27,263
21,031
7,097
4,572
2,481
8,124
17,944'
18,293
6,187'
3,765
2,595
7,333
20,002'
21,695'
6,565
4,338
2,937
8,397
24,645
22,437
7,448
4,678
2,475
7,697
24,898
25,011
9,161
5,346
2,405
8,671
23,275
23,100
6,064
5,870
2,795
8,327
27,787
23,907
7,437
5,780
3,175
7,883
3,523
1,330
234
5,031
1,490
259
5,431
2,625
157
6,984
3,561
302
8,557
4,630
437
4,784
2,491
159
4,031
1,964
140
7,549
3,402
208
6,067
3,369
296
7,341
2,986
232
7,319
4,733
398
365
1,370
835
982
713
2,147
1,616
2,595
1,373
2,586
772
1,584
842
1,962'
2,178
3,077
1,748
2,863
1,020
2,656
1,484
1,985
n a.
1. Before 1981, data for immediate transactions include forward transactions.
2. Includes, among others, all other dealers and brokers in commodities and
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal Reserve System.
3. Futures contracts are standardized agreements arranged on an organized
exchange in which parties commit to purchase or sell securities for delivery at a
future date.
4. Forward transactions are agreements arranged in the over-the-counter
market in which securities are purchased (sold) for delivery after 5 business days
1.43
U.S. GOVERNMENT SECURITIES DEALERS
from the date of the transaction for government securities (Treasury bills, notes,
and bonds) or after 30 days for mortgage-backed agency issues.
NOTE. Averages for transactions are based on number of trading days in the
period.
Transactions are market purchases and sales of U.S. government securities
dealers reporting to the Federal Reserve Bank of N e w York. The figures exclude
allotments of, and exchanges for, new U.S. government securities, redemptions
of called or matured securities, purchases or sales of securities under repurchase
agreement, reverse repurchase (resale), or similar contracts.
Positions and Financing
Averages of daily figures, in millions of dollars
1984
Item
1980
1981
Jan.
I
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Net immediate 1
U.S. government securities
Bills
Other within 1 year
1-5 years
5 - 1 0 years
Over 10 years
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
Treasury bills
Treasury coupons
Federal agency securities
Forward positions
U.S. government securities
Federal agency securities
4,306
4,103
-1,062
434
166
665
797
3,115
n a.
1984 week ending Wednesday
1982
Feb/
Mar.
Jan. 18
Jan. 25
Feb. 1
Feb. 8
Feb. 15
9,033
6,485
-1,526
1,488
292
2,294
2,277
3,435
1,746
2,658
9,328
4,837
-199
2,932
-341
2,001
3,712
5,531
2,832
3,317
3,130
2,730
-158
1,552
-705
-288
11,236
6,528
3,494
2,754
1,290
3,226
-227
-428
-1,610
328
12,386
7,323
3,243
2,771
-4,215
-1,055
-362
-1,959
-326
-514
16,076
6,913
2,819
3,012
4,060
2,869
22
1,611
-506
64
11,773
6,588
4,061
2,900
4,943
5,821
-182
729
-1,246
-180
10,890
6,417
3,153
2,110
6,504
6,7%
-21
1,725
-1,683
-313
11,173
6,747
3,273
2,708
4,113
5,722
97
1,159
-2,270
-596
12,035
7,029
3,434
3,331
1,434
2,565
-235
181
-1,519
441
13,160
6,983
3,265
2,722
-8,934
-2,733
522
-2,508
-2,361
-224
-10,286
758
38
-7,796
1,254
-174
-1,128
2,053
201
-10,106
554
10
-11,852
533
-92
-11,177
675
-185
-11,163
456
-383
-11,076
1,185
-326
-603
-451
-788
-1,190
-1,454
-7,506
-2,257
-8,019
-714
-9,747
-1,595
-8,033
-1,818
-7,282
-1,577
-7,037
-3,383
-7,828
-2,728
-8,214
|
37,467
60,245
34,989
60,250
37,919
61,547
38,052
62,529
41,957
57,976
t
67,326
52,197
63,540
54,778
70,333
53,255
69,337
53,771
69,935
51,448
Financing 2
Reverse repurchase agreements 3
Overnight and continuing
Term agreements
Repurchase agreements 4
18
Overnight and continuing
19
Term agreements
16
17
F o r notes see opposite page.
A
|
n.a.
1
7
14,568
32,048
35,919
29,449
26,754
48,247
49,695
43,410
37,309
60,280
67,685
51,123
39,798
60,666
70,126
52,109
A
n.a.
1
Federal Finance All
1.44
FEDERAL A N D FEDERALLY SPONSORED CREDIT AGENCIES
Debt Outstanding
Millions of dollars, end of period
1984
1983
1980.
Agency
1 Federal and federally sponsored agencies
2 Federal agencies
3
Defense Department 1
4
Export-Import Bank 2 ' 3
5
Federal Housing Administration 4
6
Government National Mortgage Association
participation certificates 5
7
Postal Service 6
8
Tennessee Valley Authority
9
United States Railway Association 6
10 Federally sponsored agencies 7
Federal H o m e L o a n Banks
11
12
Federal H o m e L o a n Mortgage Corporation
13
Federal National Mortgage Association
14
Farm Credit Banks
15
Student L o a n Marketing Association
188,665
1982
1981
221,946
237,085
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
236,610
239,121
240,177
239,716
239,872
241,628
33,919
234
14,852
173
33,785
215
14,846
169
28,606
610
11,250
477
31,806
484
13,339
413
33,055
354
14,218
288
33,744
264
14,740
206
33,735
258
14,740
203
33,813
253
14,740
197
33,940
243
14,853
194
2,817
1,770
11,190
492
2,715
1,538
13,115
202
2,165
1,471
14,365
194
2,165
1,404
14,840
125
2,165
1,404
14,840
125
2,165
1,404
14,945
109
2,165
1,404
14,970
111
2,165
1,404
14,980
111
2,165
1,404
14,875
111
160,059
37,268
4,686
55,182
62,923
(8)
190,140
54,131
5,480
58,749
71,359
421
204,030
55,967
4,524
70,052
71,896
1,591
202,866
49,283
6,134
71,258
73,046
3,145
205,386
49,956
6,950
71,965
73,465
3,050
206,364
49,285
7,024
73,531
73,474
3,050
205,776
48,930
6,793
74,594
72,409
3,050
205,953
48,344
6,679
74,676
73,023
3,231
207,843
48,224
7,556
75,865
72,856
3,342
87,460
110,698
126,424
136,081
134,799
135,361
135,791
135,940
135,859
10,654
1,520
2,720
9,465
492
12,741
1,288
5,400
11,390
202
14,177
1,221
5,000
12,640
194
14,676
1,154
5,000
13,115
125
14,676
1,154
5,000
13,175
125
14,676
1,154
5,000
13,220
109
14,789
1,154
5,000
13,245
111
14,789
1,154
5,000
13,255
111
14,789
1,154
5,000
13,150
111
39,431
9,196
11,262
48,821
13,516
12,740
53,261
17,157
22,774
55,691
18,936
27,384
55,916
19,093
25,660
55,916
19,216
26,070
55,266
19,766
26,460
54,776
19,927
26,928
54,471
19,982
27,202
MEMO
16 Federal Financing Bank debt
Lending to federal
17
18
19
20
21
and federally
sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
Other Lending10
22 Farmers H o m e Administration
23 Rural Electrification Administration
24 Other
1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. Once issued, these securities may be sold privately on the
securities market.
5. Certificates of participation issued before fiscal 1969 by the Government
National Mortgage Association acting as trustee for the Farmers H o m e Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
N O T E S T O T A B L E 1.43
1. Immediate positions are net amounts (in terms of par values) of securities
owned by nonbank dealer firms and dealer departments of commercial banks on a
commitment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase (RPs). The maturities of some
repurchase agreements are sufficiently long, however, to suggest that the securities involved are not available for trading purposes. Securities owned, and hence
dealer positions, do not include securities to resell (reverse RPs). Before 1981,
data for immediate positions include forward positions.
2. Figures cover financing involving U.S. government and federal agency
securities, negotiable CDs, bankers acceptances, and commercial paper.
7. Includes outstanding noncontingent liabilities: N o t e s , bonds, and debentures.
8. Before late 1981, the Association obtained financing through the Federal
Financing Bank.
9. The F F B , which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since F F B
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
10. Includes F F B purchases of agency assets and guaranteed loans; the latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular agency being generally small. The Farmers Home Administration item
consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans.
3. Includes all reverse repurchase agreements, including
arranged to make delivery on short sales and those for
obtained have been used as collateral on borrowings, that is,
4. Includes both repurchase agreements undertaken to
" m a t c h e d b o o k " repurchase agreements.
those that have been
which the securities
matched agreements.
finance positions and
NOTE. Data for positions are averages of daily figures, in terms of par value,
based on the number of trading days in the period. Positions are shown net and are
on a commitment basis. Data for financing are based on Wednesday figures, in
terms of actual money borrowed or lent.
A32
1.45
DomesticNonfinancialStatistics • April 1983
NEW SECURITY ISSUES of State and Local Governments
Millions of dollars
1983
Type of issue or issuer,
or use
1981
1982
June
1 All issues, new and refunding 1
1984
1983
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
47,732
78,950
85,092
7,555
4,370
6,194
6,160
6,650
5,829
8,854
5,024
12,394
34
35,338
55
21,088
225
57,862
461
21,470
96
63,622
253
1,550
7
6,005
16
860
7
3,510
26
1,614
9
4,580
29
1,266
14
4,894
35
1,935
15
4,715
39
1,679
15
4,150
39
1,134
15
7,720
39
1,109
0
3,915
1
Type of issuer
6 State
7 Special district and statutory authority
8 Municipalities, counties, townships, school districts
5,288
27,499
14,945
8,406
45,000
25,544
7,135
50,632
27,325
277
4,260
3,018
484
3,009
877
673
3,357
2,164
452
4,199
1,509
856
4,387
1,407
405
3,318
2,106
198
5,790
2,866
325
3,482
1,217
9 Issues for new capital, total
46,530
74,613
71,120
6,049
3,884
4,612
5,512
5,187
5,333
8,438
4,037
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
4,547
3,447
10,037
12,729
7,651
8,119
6,444
6,256
14,254
26,605
8,256
12,797
8,170
4,353
13,547
26,378
7,088
11,584
887
229
939
2,120
669
1,205
535
274
268
1,920
393
494
714
261
285
2,139
254
959
527
195
1,238
2,334
494
724
457
250
605
2,580
323
972
515
336
1,101
2,080
516
785
744
421
1,230
2,676
2,317
1,050
397
125
2,027
787
125
576
2
3
4
5
10
11
12
13
14
15
Type of issue
General obligation
U.S. government loans 2
Revenue
U.S. government loans 2
1. Par amounts of long-term issues based on date of sale.
2. Consists of tax-exempt issues guaranteed by the Farmers Home Administration.
1.46
SOURCE. Public Securities Association.
NEW SECURITY ISSUES of Corporations
Millions of dollars
1983
Type of issue or issuer,
or use
1981
1982
1984
1983
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
1 All issues1'J
70,441
84,198
98,845
8,165
6,474
5,941
6,568
6,592
8,103
6,812
7,691'
2 Bonds
45,092
53,636
47,266
2,244
2,550
2,547
2,865
3,055
4,075
3,173
5,648'
Type of offering
3 Public
4 Private placement
38,103
6,989
43,838
9,798
47,266
n.a.
2,244
n.a.
2,550
n.a.
2,547
n.a.
2,865
n.a.
3,055
n.a.
4,075
n.a.
3,173
n.a.
5,648'
n.a.
12,325
5,229
2,052
8,963
4,280
12,243
13,123
5,681
1,474
12,155
2,265
18,938
8,133
5,374
1,086
7,066
3,380
22,227
706
425
115
363
250
385
60
228
148
322
1,100
692
200
458
0
355
0
1,534
282
353
0
590
100
1,540
367
114
0
510
50
2,014
22
23
111
910
0
3,009
423
201
105
120
0
2,324
179
976'
10
325
2KK
3,948
11 Stocks 3
25,349
30,562
51,579
5,921
3,924
3,394
3,703
3,842
4,028
3,639
2,043
Type
12 Preferred
13 Common
1,797
23,552
5,113
25,449
7,213
44,366
665
5,256
290
3,634
247
3,147
644
3,059
300
3,542
433
3,595
253
3,386
305
1,738
5,074
7,557
779
5,577
1,778
4,584
5,649
7,770
709
7,517
2,227
6,690
14,135
13,112
2,729
5,001
1,822
14,780
2,449
1,358
109
550
138
1,317
1,015
1,415
337
72
20
1,065
1,309
743
145
263
236
698
962
997
165
200
0
1,379
744
868
305
588
36
1,301
458
1,598
192
622
13
1,145
649
852
413
245
12
1,468
427
465
54
225
30
842
5
6
7
8
9
10
14
15
16
17
18
19
Industry group
Manufacturing
Commercial and miscellaneous.
Transportation
Public utility
Communication
Real estate and financial
Industry group
Manufacturing
Commercial and miscellaneous,
Transportation
Public utility
Communication
Real estate and financial
1. Figures, which represent gross proceeds of issues maturing in more than one
year, sold for cash in the United States, are principal amount or number of units
multiplied by offering price. Excludes offerings of less than $100,000, secondary
offerings, undefined or exempted issues as defined in the Securities Act of 1933,
employee stock plans, investment companies other than closed-end, intracorporate transactions, and sales to foreigners.
2. Data for 1983 include only public offerings.
3. Beginning in August 1981, gross stock offerings include new equity volume
from swaps of debt for equity.
SOURCE. Securities and Exchange Commission and the Board of G o v e r n o r s of
the Federal Reserve System.
Corporate Finance
1.47
OPEN-END INVESTMENT COMPANIES
A33
Net Sales and Asset Position
Millions of dollars
1984
1983
1982
Item
1983
Aug.
July
Sept.
Oct.
Nov.
Jan/
Dec.
Feb.
INVESTMENT COMPANIES'
1 Sales of own shares 2
2 Redemptions of own shares 3
3 Net sales
4
5
6
Assets 4
Cash position 5
Other
45,675
30,078
15,597
84,793
57,120
27,673
6,944
4,500
2,444
6,032
4,885
1,147
5,915
4,412
1,503
6,532
4,264
2,268
6,341
3,920
2,421
6,846
5,946
900
10,274
5,544
4,730
8,229
5,161
3,068
76,841
6,040
70,801
113,599
8,343
105,256
104,279
8,815
95,464
104,494
8,045
93,449
109,455
8,868
100,587
107,314
8,256
99,058
113,052
9,395
103,657
113,599
8,343
105,256
114,839
8,963
105,876
111,040
9,264
101,766
5. Also includes all U.S. government securities and other short-term debt
securities.
1. Excluding money market funds.
2. Includes reinvestment of investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund to
another in the same group.
3. Excludes share redemption resulting from conversions from one fund to
another in the same group.
4. Market value at end of period, less current liabilities.
1.48
NOTE. Investment Company Institute data based on reports of members, which
comprise substantially all open-end investment companies registered with the
Securities and Exchange Commission. Data reflect newly formed companies after
their initial offering of securities.
CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1982
1981
Account
1982
1983
1983''
Ql
Q2
Q3
Q4
Ql
Q2
Q3
Q4 p
1 Corporate profits with inventory valuation and
capital consumption adjustment
Profits before tax
Profits tax liability
Profits after tax
Dividends
Undistributed profits
192.3
227.0
82.8
144.1
64.7
79.4
164.8
174.2
59.1
115.1
68.7
46.4
229.1
207.6
76.9
130.6
73.2
57.3
162.0
173.2
60.3
112.9
67.7
45.2
166.8
178.8
61.4
117.4
67.8
49.5
168.5
177.3
60.8
116.5
68.8
47.7
161.9
167.5
54.0
113.5
70.4
43.1
181.8
169.7
61.5
108.2
71.4
36.7
218.2
203.3
76.0
127.2
72.0
55.2
248.4
229.1
84.9
144.1
73.7
70.4
268.1
228.1
85.3
142.9
75.9
67.0
7
8
-23.6
-11.0
-8.3
-1.1
-9.2
30.8
-5.5
-5.6
-8.5
-3.5
-9.0
.1
-10.3
4.7
-1.7
13.9
-10.6
25.6
-18.3
37.6
-6.3
46.2
2
3
4
5
6
Inventory valuation
Capital consumption adjustment
SOURCE. Survey of Current Business
(Department of Commerce).
A34
1.49
DomesticNonfinancialStatistics • April 1983
NONFINANCIAL CORPORATIONS
Current Assets and Liabilities
Billions of dollars, except for ratio
1982
1977
Account
1978
1979
1980
1983
1981
Q3
Q4
Q1
Q2
Q3
1 Current assets
912.7
1,043.7
1,214.8
1,327.0
1,419.3
1,441.8
1,425.4
1,436.5
1,464.2
1,522.4
2
3
4
5
6
97.2
18.2
330.3
376.9
90.1
105.5
17.2
388.0
431.8
101.1
118.0
16.7
459.0
505.1
116.0
126.9
18.7
506.8
542.8
131.8
131.8
17.4
530.3
585.1
154.6
126.9
18.9
534.2
596.5
165.3
144.0
22.4
511.0
575.2
172.6
139.7
25.8
517.9
573.2
179.9
145.7
27.5
534.3
570.5
186.2
148.4
26.3
562.7
591.1
193.8
7 Current liabilities
557.1
669.5
807.3
889.3
976.3
1,007.6
977.8
986.3
997.7
1,038.6
8 N o t e s and a c c o u n t s p a y a b l e
9 Other
317.6
239.6
383.0
286.5
460.8
346.5
513.6
375.7
558.8
417.5
562.7
444.9
552.8
425.0
543.2
443.1
551.6
446.1
578.8
459.9
10 Net working capital
355.5
374.3
407.5
437.8
442.9
434.2
447.6
450.2
466.5
483.7
11 MEMO: C u r r e n t ratio 1
1.638
1.559
1.505
1.492
1.454
1.431
1.458
1.456
1.468
1.466
Cash
U . S . g o v e r n m e n t securities
N o t e s and a c c o u n t s r e c e i v a b l e
Inventories
Other
1. Ratio of total c u r r e n t a s s e t s t o total c u r r e n t liabilities.
All data in this table reflect the most c u r r e n t b e n c h m a r k s . C o m p l e t e d a t a are
available u p o n r e q u e s t f r o m the F l o w of F u n d s S e c t i o n , Division of R e s e a r c h and
Statistics, B o a r d of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m , W a s h i n g t o n , D . C .
NOTE. F o r a description of this series, see " W o r k i n g Capital of Nonfinancial
C o r p o r a t i o n s " in the July 1978 BULLETIN, pp. 533-37.
20551.
SOURCE. Federal T r a d e C o m m i s s i o n and B u r e a u of the C e n s u s .
1.50
TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1982
Industry 1
1 Total nonfarm business
Manufacturing
2 Durable goods industries
3 N o n d u r a b l e goods industries
Nonmanufacturing
4 Mining
Transportation
5
Railroad
6
Air
7
Other
Public utilities
8
Electric
9
G a s and o t h e r
10 T r a d e and services
11 C o m m u n i c a t i o n and o t h e r 2
1982
1983
1984
Q3'
Q4
Ql
Q2
Q3
Q4
Ql1
Q2 1
316.43
302.50
343.57
313.76
303.18
293.03
293.46
304.70
318.83
332.66
335.40
56.44
63.23
51.78
59.75
62.78
66.93
56.61
61.65
50.51
59.72
50.74
59.12
48.48
60.31
53.06
58.06
54.85
61.50
59.21
65.49
59.01
67.25
15.45
11.83
14.34
14.57
13.41
12.03
10.91
11.93
12.43
13.57
13.87
4.38
3.93
3.64
3.92
3.77
3.50
4.73
2.78
4.49
4.01
4.07
3.21
4.35
4.76
3.22
3.35
4.09
3.60
3.64
4.10
3.14
4.07
3.57
3.36
4.63
3.32
3.91
4.09
2.42
4.57
4.85
2.82
4.31
33.40
8.55
86.95
40.46
34.99
7.00
87.94
38.02
35.54
9.24
100.25
42.47
34.73
8.29
86.88
39.75
35.15
7.85
84.36
39.84
33.97
7.64
82.38
36.11
34.86
6.62
85.85
35.54
35.84
6.38
91.06
37.38
35.31
7.37
92.44
43.05
35.51
8.21
98.56
41.03
35.72
8.95
97.93
40.68
1. Anticipated by b u s i n e s s .
2. " O t h e r " consists of c o n s t r u c t i o n ; social services and m e m b e r s h i p organizations; and f o r e s t r y , fisheries, and agricultural services.
1983
19841
SOURCE. Survey of Current Business
( D e p a r t m e n t of C o m m e r c e ) .
Corporate Finance
1.51
DOMESTIC FINANCE COMPANIES
A35
Assets and Liabilities
Billions of dollars, end of period
1983
Account
1977
1978
1979
1980
1981
1982
Q2
QL
Q4
Q3
ASSETS
1
2
3
4
5
6
7
8
Accounts receivable, gross
Consumer
Business
Total
LESS: Reserves for unearned income and losses
Accounts receivable, net
Cash and bank deposits
Securities
All other
9 Total assets
52.6
63.3
116.0
15.6
100.4
3.5 1
1.3 \
17.3
65.7
70.3
136.0
20.0
116.0
73.6
72.3
145.9
23.3
122.6
85.5
80.6
166.1
28.9
137.2
89.5
81.0
170.4
30.5
139.8
89.9
82.2
172.1
29.7
142.4
91.3
84.9
176.2
30.4
145.8
92.3
86.8
179.0
30.1
148.9
92.8
95.2
188.0
30.6
157.4
24.9'
27.5
34.2
39.7
42.8
44.3
45.0
45.3
104.3
122.4
140.9
150.1
171.4
179.5
185.2
190.2
193.9
202.7
5.9
29.6
6.5
34.5
8.5
43.3
13.2
43.4
15.4
51.2
18.6
45.8
16.6
45.2
16.3
49.0
17.0
49.7
19.1
53.6
6.2
36.0
11.5
8.1
43.6
12.6
8.2
46.7
14.2
7.5
52.4
14.3
9.6
54.8
17.8
8.7
63.5
18.7
9.8
64.7
22.8
9.6
64.5
24.0
8.7
66.2
24.4
11.3
65.4
27.1
44.0
55.2
99.2
12.7
86.5
2.6
.9
14.3
J
LIABILITIES
10 Bank loans
11 Commercial paper
Debt
12
Short-term, n.e.c
13
Long-term, n.e.c
14
Other
15 Capital, surplus, and undivided profits
16 Total liabilities and capital
15.1
17.2
19.9
19.4
22.8
24.2
26.0
26.7
27.9
26.2
104.3
122.4
140.9
150.1
171.4
179.5
185.2
190.2
193.9
202.7
1. Beginning Q l 1979, asset items on lines 6, 7, and 8 are combined.
NOTE. Components may not add to totals due to rounding.
1.52
DOMESTIC FINANCE COMPANIES
Business Credit
Millions of dollars, seasonally adjusted except as noted
Changes in accounts
receivable
Type
Accounts
receivable
outstanding
Jan. 31,
1984"
1983
Nov.
Extensions
1984
Dec.
Jan.
1983
Repayments
1984
1984
1983
Nov.
Dec.
Jan.
Nov.
Dec.
Jan.
1 Total
96,728
1,793
2,721
2,973
29,988
27,338
30,660
28,195
24,617
27,687
2
3
4
5
22,030
15,331
28,946
1,320
662
-198
485
583
602
959
625
449
2,592
8,516
1,504
1,836
7,690
1,610
2,347
9,392
1,525
1,272
7,854
1,702
1,351
7,107
1,008
1,388
8,767
1,076
10,656
19,765
17
-8
121
930
1,037
-97
15,344
2,032
13,441
2,761
14,787
2,609
15,327
2,040
13,320
1,831
13,750
2,706
Retail automotive (commercial vehicles)
Wholesale automotive
Retail paper.on business, industrial, and farm equipment
Loans on commercial accounts receivable and factored commercial accounts receivable
6 All other business credit
1. Not seasonally adjusted.
A36
1.53
DomesticNonfinancialStatistics • April 1983
MORTGAGE MARKETS
Millions of dollars; exceptions noted.
1983
1981
Item
1982
1984
1983
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
6
Conventional mortgages on new homes
Terms1
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan/price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount) 2
Contract rate (percent per annum)
Yield (percent per
7 F H L B B series 5
8 H U D series 4
90.4
65.3
74.8
27.7
2.67
14.16
94.6
69.8
76.6
27.6
2.95
14.47
92.8'
69.6'
77. 1'
26.7
2.40
12.20
94.4
67.3
73.3
25.7
14.74
16.52
15.12
15.79
16.31
15.29
15.31
14.68
95.8
72.5
78.4
26.9
2.33
12.01
100.7
76.5
78.5
27.2
2.45
12.08
11.80
11.82
94.8
73.3
79.1
27.3
2.56
11.94
12.66
13.43
12.38
13.90
12.54
13.60
12.25
13.52
12.34
13.48
12.42
13.41
13.11
12.26
13.78
13.01
13.55
12.73
13.23
12.42
13.23
12.51
13.25
12.49
1.%
98.0
76.7
80.5
26.5
2.54
annum)
S E C O N D A R Y MARKETS
Yield (percent per annum)
9 F H A mortgages ( H U D series) 5 .
10 G N M A securities 6
Activity in secondary markets
F E D E R A L N A T I O N A L MORTGAGE ASSOCIATION
Mortgage holdings (end of
11 Total
12
FHA/VA-insured
Conventional
13
Mortgage transactions
14 Purchases
15 Sales
period)
(during
58,675
39,341
19,334
66,031
39,718
26,312
74,847
37,393
37,454
75,057
36,894
38,163
75,174
36,670
38,505
75,665
36,455
39,210
76,714
36,349
40,365
78,256
36,211
42,045
79,049
40,873
38,177
79,350
35,420
43,930
6,112
2
15,116
2
17,554
3,528
1,213
121
1,203
464
1,244
257
1,348
0
2,204
250
1,285
20
1,507
723
9,331
3,717
22,105
7,606
18,607
5.461
1,282
5,165
2,739
6,684
1,882
7,182
997
6,493
1,471
5,461
1,772
5,470
1,930
5,872
period)
Mortgage
commitments7
16 Contracted (during period)
17 Outstanding (end of period)
F E D E R A L H O M E L O A N MORTGAGE CORPORATION
Mortgage holdings (end of period)*
18 Total
19
FHA/VA
20
Conventional
5,231'
1,065'
4,166'
5,131'
1,027'
4,102'
5,9%
974
5,022
6,149
964
5,185
6,857
961
5,8%
6,971'
955'
6,016
7,093
940
6,153
7,633
941
6,691
8,049
940
7,109
Mortgage transactions
71 Purchases
22
3,80c
3,531
23,673'
24,170'
23,089
19,686
1,621
1,588
2,263
1,556
2,886
2,750
1,287
1,143
1,685
1,115
1,419
984
6,896'
3,518
28,179'
7,549
32,852
16,964
6,367
15,519
3,283
16,512
2,598
16,198
2,093
16,994
1,704
16,964
1,470
16,994
(during
Mortgage
commitments9
23 Contracted (during period)
24 Outstanding (end of period)
period)
1. Weighted averages based on sample surveys of mortgages originated by
major institutional lender groups; compiled by the Federal H o m e Loan Bank
Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and " p o i n t s " paid (by the
borrower or the seller) to obtain a loan.
3. Average effective interest rates on loans closed, assuming prepayment at the
end of 10 years.
4. Average contract rates on new commitments for conventional first mortgages; from Department of Housing and Urban Development.
5. Average gross yields on 30-year, minimum-downpayment, Federal Housing
Administration-insured first mortgages for immediate delivery in the private
secondary market. Any gaps in data are due to periods of adjustment to changes in
maximum permissible contract rates.
n.a.
6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities, assuming prepayment in 12 years on pools of 30-year F H A / V A mortgages carrying the
prevailing ceiling rate. Monthly figures are unweighted averages of Monday
quotations for the month.
7. Includes some multifamily and nonprofit hospital loan commitments in
addition to 1- to 4-family loan commitments accepted in F N M A ' s free market
auction system, and through the F N M A - G N M A tandem plans.
8. Includes participation as well as whole loans.
9. Includes conventional and government-underwritten loans. F H L M C ' s mortgage commitments and mortgage transactions include activity under mortgage/
securities swap programs, while the corresponding data for F N M A exclude swap
activity.
Real Estate Debt
1.54
A37
MORTGAGE DEBT OUTSTANDING
Millions of dollars, end of period
1982
Type of holder, and type of property
1981
1982
Q4
1
2
3
4
5
All holders
1- to 4-family
Multifamily
Commercial
Farm
6 Major financial institutions
7
Commercial banks'
8
1- to 4-family
9
Multifamily
10
Commercial
11
Farm
1983
1983
Ql
Q2
Q3
Q4
1,583,264
1,065,294
136,354
279,889
101,727
1,655,013''
1,105,756'
140,542'
302,009'
106,706'
1,824,071''
1,214,249'
150,822'
349,539'
109,461'
1,655,013'
1,105,756'
140,542'
302,009'
106,706'
1,681,63c
1,122,111'
141,500'
311,107'
106,912
1,723,052'
1,146,926'
144,731'
323,427'
107,968
1,775,117'
1,182,356'
147,052'
336,697'
109,012
1,824,071'
1,214,249'
150,822'
349,539'
109,461'
1,040,827
284,536
170,013
15,132
91,026
8,365
1,023,541'
300,203
173,157
16,421
102,219
8,406
1,108,101'
329,745
182,679
17,971
119,862
9,233
1,023,541'
300,203
173,157
16,421
102,219
8,406
1,028,802'
303,371
172,346
16,230
106,301
8,494
1,048,688'
310,217
174,032
16,876
110,437
8,872
1,079,605'
320,299
178,054
17,424
115,692
9,129
1,108,101'
329,745
182,679
17,971
119,862
9,233
99,997
68,187
15,960
15,810
40
97,805
66,777
15,305
15,694
29
133,325
95,249
17,964
20,083
29
97,805
66,777
15,305
15,694
29
105,378
73,240
15,587
16,522
29
119,236
84,349
16,667
18,192
28
129,645
92,467
17,588
19,562
28
133,325
95,249
17,964
20,083
29
12
13
14
15
16
Mutual savings banks
1- to 4-family
Multifamily
Commercial
Farm
17
18
19
20
Savings and loan associations
1- to 4-family
Multifamily
Commercial
518,547
433,142
37,699
47,706
483,614'
393,323'
38,979'
51,312'
493,432'
389,811'
42,435'
61,186'
483,614'
393,323'
38,979'
51,312'
477,022'
384,718'
39,259'
53,045'
474,510'
377,947'
39,954'
56,609'
482,305'
381,744'
41,334'
59,227'
493,432'
389,811'
42,435'
61,186'
21
22
23
24
25
Life insurance companies
1- to 4-family
Multifamily
Commercial
Farm
137,747
17,201
19,283
88,163
13,100
141,919
16,743
18,847
93,501
12,828
151,599'
15,385'
19,189'
104,279'
12,746'
141,919
16,743
18,847
93,501
12,828
143,031
16,388
18,825
95,158
12,660
144,725
15,860
18,778
97,416
12,671
147,356
15,534
18,857
100,209
12,756
151,599'
15,385'
19,189'
104,279'
12,746'
126,094
4,765
693
4,072
138,185
4,227
676
3,551
147,269'
3,395
630
2,765
138,185
4,227
676
3,551
140,028
3,753
665
3,088
142,094
3,643
651
2,992
142,224
3,475
639
2,836
147,269'
3,395
630
2,765
26 Federal and related agencies
27
Government National Mortgage Association
28
1- to 4-family
29
Multifamily
30
31
32
33
34
Farmers Home Administration
1- to 4-family
Multifamily
Commercial
Farm
2,235
914
473
506
342
1,786
783
218
377
408
2,141
1,159
173
409
400
1,786
783
218
377
408
2,077
707
380
337
653
1,605
381
555
248
421
600
211
32
113
244
2,141
1,159
173
409
400
35
36
37
Federal Housing and Veterans
Administration
1- to 4-family
Multifamily
5,999
2,289
3,710
5,228
1,980
3,248
4,792
1,863
2,929
5,228
1,980
3,248
5,138
1,867
3,271
5,084
1,911
3,173
5,050
2,061
2,989
4,792
1,863
2,929
38
39
40
Federal National Mortgage Association
1- to 4-family
Multifamily
61,412
55,986
5,426
71,814
66,500
5,314
78,256
73,045
5,211
71,814
66,500
5,314
73,666
68,370
5,296
74,669
69,396
5,273
75,174
69,938
5,236
78,256
73,045
5,211
41
42
43
Federal Land Banks
1- to 4-family
Farm
46,446
2,788
43,658
50,350
3,068
47,282
51,052'
3,000'
48,052'
50,350
3,068
47,282
50,544
3,059
47,485
50,858
3,030
47,828
51,069
3,008
48,061
51,052'
3,000'
48,052'
44
45
46
Federal Home Loan Mortgage Corporation
1- to 4-family
Multifamily
5,237
5,181
56
4,780
4,733
47
7,633'
7,576'
57'
4,780
4,733
47
4,850
4,795
55
6,235
6,119
116
6,856
6,799
57
7,633'
7,576'
57'
163,000
105,790
103,007
2,783
216,654
118,940
115,831
3,109
285,021'
159,850'
155,801'
4,049
216,654
118,940
115,831
3,109
234,596
127,939
124,482
3,457
252,665
139,276
135,628
3,648
272,611
151,597
147,761
3,836
285,021'
159,850'
155,801'
4,049'
19,853
19,501
352
42,964
42,560
404
57,843'
57,206'
637'
42,964
42,560
404
48,008
47,575
433
50,934
50,446
488
54,152
53,539
613
57,843'
57,206'
637'
717
717
14,450
14,450
25,121
25,121
14,450
14,450
18,157
18,157
20,933
20,933
23,819
23,819
25,121
25,121
36,640
18,378
3,426
6,161
8,675
40,300
20,005
4,344
7,011
8,940
42,207
20,404
5,090
7,351
9,362
40,300
20,005
4,344
7,011
8,940
40,492
20,263
4,344
7,115
8,770
41,522
20,728
4,343
7,303
9,148
43,043
21,083
5,042
7,542
9,376
42,207
20,404
5,090
7,351
9,362
253,343
167,297
27,982
30,517
27,547
276,633
185,170
30,755
31,895
28,813
283,680
185,320
32,352
36,369
29,639
276,633
185,170
30,755
31,895
28,813
278,204
185,479
31,275
32,629
28,821
279,605
185,515
31,868
33,222
29,000
280,677
185,699
31,208
34,352
29,418
283,680
185,320
32,352
36,369
29,639
47 Mortgage pools or trusts 2
48
Government National Mortgage Association
49
1- to 4-family
50
Multifamily
51
52
53
Federal Home Loan Mortgage Corporation
1- to 4-family
Multifamily
54
55
Federal National Mortgage Association 3
1- to 4-family
56
57
58
59
60
Farmers Home Administration
1- to 4-family
Multifamily
Commercial
Farm
61 Individual and others 4
62
1- to 4-family 5
63
Multifamily
64
Commercial
65
Farm
1. Includes loans held by nondeposit trust companies but not bank trust
departments.
2. Outstanding principal balances of mortgages backing securities insured or
guaranteed by the agency indicated.
3. Outstanding balances on F N M A ' s issues of securities backed by pools of
conventional mortgages held in trust. The program was implemented by FNMA in
October 1981.
4. Other holders include mortgage companies, real estate investment trusts,
state and local credit agencies, state and local retirement funds, noninsured
pension funds, credit unions, and U.S. agencies for which amounts are small or
for which separate data are not readily available.
5. Includes a new estimate of residential mortgage credit provided by individuals.
NOTE. Based on data from various institutional and governmental sources, with
some quarters estimated in part by the Federal Reserve in conjunction with the
Federal Home Loan Bank Board and the Department of Commerce. Separation of
nonfarm mortgage debt by type of property, if not reported directly, and
interpolations and extrapolations when required, are estimated mainly by the
Federal Reserve. Multifamily debt refers to loans on structures of five or more
units.
A38
DomesticNonfinancialStatistics • April 1983
CONSUMER INSTALLMENT CREDIT 1 Total Outstanding, and Net ChangeA
1.55
Millions of dollars
1983
Holder, and type of credit
1980
1981
1984
1982'
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Amounts outstanding (end of period)
1 Total
313,472
331,697
344,798
353,012
358,020
363,662
367,604
371,561
376,390
387,927
386,448
147,013
76,756
44,041
28,448
9,911
4,468
2,835
147,622
89,818
45,954
29,551
11,598
4,403
2,751
152,069
94,322
47,253
30,202
13,891
4,063
2,998
156,603
96,349
48,652
27,804
16,207
4,159
3,238
159,666
97,319
49,139
27,900
16,369
4,356
3,271
163,313
97,708
50,121
28,067
16,615
4,457
3,381
165,971
97,274
51,123
28,319
17,130
4,338
3,449
168,352
97,370
51,767
28,713
17,624
4,243
3,492
170,823
97,522
52,578
29,668
18,080
4,157
3,562
177,252
97,688
53,471
33,183
18,568
4,131
3,634
177,641
96,471
53,882
31,859
18,646
4,300
3,649
By major type of credit
9 Automobile
10
Commercial b a n k s . .
11
Indirect paper. . . .
12
Direct loans
13
Credit unions
14
Finance companies .
116,838
61,536
35,233
26,303
21,060
34,242
125,331
58,081
34,375
23,706
21,975
45,275
130,227
58,851
35,178
23,673
22,596
48,780
136,183
61,870
138,689
63,425
141,677
66,065
142,477
67,413
143,621
68,828
144,663
70,034
146,078
71,778
146,842
73,042
23,269
51,044
23,502
51,762
23,972
51,640
24,451
50,613
24,759
50,034
25,147
49,482
25,574
48,726
48,029
25,771
15 Revolving
16
Commercial b a n k s . . .
17
Retailers
18
Gasoline companies .
58,352
29,765
24,119
4,468
62,819
32,880
25,536
4,403
67,184
36,688
26,433
4,063
64,899
36,515
24,225
4,159
65,856
37,173
24,327
4,356
66,913
37,973
24,483
4,457
67,904
38,848
24,718
4,338
68,921
39,576
25,102
4,243
70,742
40,573
26,012
4,157
77,467
43,965
29,371
4,131
75,652
43,262
28,090
4,300
19 Mobile home
20
Commercial b a n k s . . .
21
Finance companies . .
22
Savings and loans . . .
23
Credit unions
17,322
10,371
3.745
2,737
469
18,373
10,187
4,494
3,203
489
18,988
9,684
4,965
3,836
503
19,647
9,651
4,995
4,485
516
19,750
9,717
4,982
4,530
521
19,882
9,741
5,012
4,598
531
20,087
9,766
5,038
4,741
542
20,256
9,767
5,062
4,878
549
20,366
9,761
5,043
5,004
558
20,471
9,732
5,033
5,139
567
20,468
9,718
5,018
5,161
571
24 Other
25
Commercial b a n k s . . .
26
Finance companies . .
27
Credit unions
28
Retailers
29
Savings and loans . . .
30
Mutual savings banks
120,960
45,341
38,769
22,512
4,329
7,174
2,835
125,174
46,474
40,049
23,490
4,015
8,395
2,751
128,399
46,846
40,577
24,154
3,769
10,055
2,998
132,283
48,567
40,310
24,867
3,579
11,722
3,238
133,725
49,351
40,575
25,116
3,573
11,839
3,271
135,190
49,534
41,056
25,618
3,584
12,017
3,381
137,136
49,944
41,623
26,130
3,601
12,389
3,449
138,763
50,181
42,274
26,459
3,611
12,746
3,492
140,619
50,455
42,997
26,873
3,656
13,076
3,562
143,911
51,777
43,929
27,330
3,812
13,429
3,634
143,486
51,619
43,424
27,540
3,769
13,485
3,649
2
3
4
5
6
7
8
By major holder
Commercial b a n k s
Finance companies
Credit unions
Retailers 2
Savings and loans
Gasoline companies . . .
Mutual savings b a n k s . .
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
Net change (during period) 4
31 Total
1,448
18,217
13,096
4,406
4,840
3,388
2,375
4,885
4,671
6,614
4,343
By major holder
Commercial banks
Finance companies . . . .
Credit unions
Retailers 2
Savings and loans
Gasoline companies . . .
Mutual savings banks . .
-7,163
8,438
-2,475
329
1,485
739
95
607
13,062
1,913
1,103
1,682
-65
-85
4,442
4,504
1,298
651
2,290
-340
251
2,422
470
573
368
456
77
40
2,766
909
662
272
188
5
38
2,317
239
510
5
147
65
105
1,829
-721
646
245
507
-167
36
2,629
620
942
150
376
131
37
2,749
205
912
251
438
58
58
4,688
-24
731
659
513
-31
78
2,656
89
916
338
217
72
55
By major type of credit
39 Automobile
40
Commercial b a n k s . . .
41
Indirect paper
42
Direct loans
43
Credit unions
44
Finance companies . .
477
-5,830
-3,104
-2,726
-1,184
7,491
8,495
-3,455
-858
-2,597
914
11,033
4,898
770
803
-33
622
3,505
1,973
1,284
2,421
1,482
2,521
2,359
285
1,243
1,772
1,499
1,238
1,302
2,019
2,131
2,555
2,042
275
414
328
611
232
-70
309
-1,267
451
-178
436
-500
349
-461
85
428
45 Revolving
46
Commercial b a n k s . . .
47
Retailers
48
Gasoline companies .
1,415
-97
773
739
4,467
3,115
1,417
-65
4,365
3,808
897
-340
1,210
806
327
77
821
556
260
5
313
217
31
65
479
404
242
-167
1,145
856
158
131
1,300
999
243
58
1,723
1,148
606
-31
487
100
315
72
49 Mobile home
50
Commercial b a n k s . . .
51
Finance companies . .
52
Savings and loans . . .
53
Credit unions
483
-276
355
430
-25
1,049
-186
749
466
20
609
-508
471
633
14
151
28
-6
123
6
141
68
7
59
7
70
-14
15
64
5
150
8
1
134
7
102
-10
-16
118
10
107
0
-14
111
10
136
18
-25
135
8
166
49
50
58
9
54 Other
55
Commercial b a n k s . . .
56
Finance companies . .
57
Credit unions
58
Retailers
59
Savings and loans . . .
60
Mutual savings banks
-927
-960
592
-1,266
-444
1,056
95
4,206
1,133
1,280
975
-314
1,217
-85
3,224
372
528
662
-246
1,657
251
1,072
304
62
292
41
333
40
1,457
660
291
327
12
129
38
484
-245
294
273
-26
83
105
1,461
174
545
330
3
373
36
1,866
284
814
481
-8
258
37
2,026
448
719
466
8
327
58
2,736
1,391
462
374
53
378
78
1,135
465
-46
479
23
159
55
32
33
34
35
36
37
38
• These data have been revised f r o m D e c e m b e r 1980 through February 1983.
1. The Board's series cover most short- and intermediate-term credit extended
to individuals through regular business channels, usually to finance the purchase
of consumer goods and services or to refinance debts incurred for such purposes,
and scheduled to be repaid (or with the option of repayment) in two or more
installments.
2. Includes auto dealers and excludes 30-day charge credit held by travel and
entertainment companies.
3. Not reported after D e c e m b e r 1982.
<3)
(3)
(3)
(3)
<3)
(3)
(3)
(3>
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
4. For 1982 and earlier, net change equals extensions, seasonally adjusted less
liquidations, seasonally adjusted. Beginning 1983, net change equals outstandings,
seasonally adjusted less outstandings of the previous period, seasonally adjusted.
NOTE: Total consumer noninstallment credit outstanding—credit scheduled to
be repaid in a lump sum, including single-payment loans, charge accounts, and
service credit—amounted to, not seasonally adjusted, $80.7 billion at the end of
1981, $85.9 billion at the end of 1982, and $96.9 billion at the end of 1983.
Consumer Debt
1.56
TERMS OF CONSUMER INSTALLMENT CREDIT
Percent unless noted otherwise
Aug.
Sept
Oct.
Dec.
INTEREST R A T E S
1
2
3
4
5
6
Commercial b a n k s '
48-month new car 2
24-month personal
120-month mobile home 2
Credit card
Auto finance companies
New car
Used car
16.54
18.09
17.45
17.78
16.83
18.65
18.05
18.51
13.92
16.68
15.91
18.73
13.50
16.28
15.58
18.75
16.17
20.00
16.15
20.75
12.58
18.74
12.77
18.25
13.62
18.21
13.54
18.15
13.50
18.16
13.92
18.06
45.4
35.8
46.0
34.0
45.9
37.9
45.9
38.0
46.2
38.0
46.2
38.0
46.3
38.0
46.3
37.9
86.1
91.8
85.3
90.3
86.0
92.0
7,339
4,343
8,178
4,746
8,787
5,033
8,724
5,103
8,792
5,144
8,982
5,213
9,118
5,316
9,167
5,401
13.46
16.39
15.47
18.75
OTHER TERMS3
7
8
9
10
11
12
Maturity (months)
N e w car
Used car
Loan-to-value ratio
New car
Used car
Amount financed (dollars)
New car
Used car
1. Data for midmonth of quarter only.
2. Before 1983 the maturity for new car loans was 36 months, and for mobile
home loans was 84 months.
3. At auto finance companies.
A39
A40
1.57
DomesticNonfinancialStatistics • April 1983
F U N D S RAISED IN U.S. CREDIT MARKETS
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1981
HI
1982
1983
H2
HI
H2
HI'
H2
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors . . . .
By sector and instrument
2 U.S. government
Treasury securities
J
4
Agency issues and mortgages
369.8
386.0
343.2
377.2
395.3
509.5
392.4
362.0
356.8
434.8
497.3
521.7
53.7
55.1
-1.4
37.4
38.8
-1.4
79.2
79.8
-.6
87.4
87.8
-.5
161.3
162.1
-.9
186.6
186.7
-.1
87.8
88.3
-.5
86.9
87.3
-.4
106.9
108.3
-1.4
215.5
215.9
-.4
231.1
231.2
-.1
142.1
142.2
-.1
5 Private domestic nonfinancial sectors
6
Debt capital instruments
7
Tax-exempt obligations
8
Corporate bonds
9
Mortgages
10
Home mortgages
11
Multifamily residential
12
Commercial
13
Farm
316.2
199.7
28.4
21.1
150.2
112.2
9.2
21.7
7.2
348.6
211.2
30.3
17.3
163.6
120.0
7.8
23.9
11.8
264.0
192.0
30.3
26.7
135.1
96.7
8.8
20.2
9.3
289.8
158.4
21.9
22.1
114.5
75.9
4.3
24.6
9.7
234.1
152.4
50.5
18.8
83.0
56.6
1.3
20.0
5.2
322.9
227.9
44.3
15.0
168.6
111.4
9.2
45.2
2.9
304.6
179.3
21.1
26.1
132.0
92.6
4.9
25.2
9.3
275.1
137.5
22.6
18.0
96.9
59.2
3.7
23.9
10.1
249.9
139.7
41.7
10.8
87.3
55.8
4.2
21.4
5.9
219.3
166.1
59.4
26.9
79.9
58.6
-1.7
18.6
4.4
266.2
221.1
59.8
21.1
140.2
92.9
6.2
40.1
1.0
379.7
234.7
28.8
9.0
196.9
129.8
12.1
50.3
4.7
14
15
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
116.5
48.8
37.4
5.2
25.1
137.5
45.4
51.2
11.1
29.7
72.0
4.9
36.7
5.7
24.8
131.5
24.1
54.7
19.2
33.4
81.6
18.3
54.4
-3.3
12.2
95.0
54.2
19.1
-1.2
23.0
125.3
28.9
45.5
12.0
38.9
137.6
19.3
63.9
26.3
28.0
110.1
19.3
70.1
6.5
14.3
53.2
17.4
38.8
-13.0
10.2
45.1
39.8
6.6
-16.3
15.0
145.0
68.6
31.6
14.0
30.9
19
20
21
22
23
24
By borrowing sector
State and local governments
Households
Farm
Nonfarm noncorporate
Corporate
316.2
19.1
169.4
14.6
32.4
80.6
348.6
20.5
176.4
21.4
34.4
96.0
264.0
20.3
117.5
14.4
33.7
78.1
289.8
9.7
120.6
16.3
39.6
103.7
234.1
36.3
86.3
9.0
29.8
72.7
322.9
35.9
163.6
3.9
62.0
57.4
304.6
9.1
139.8
20.1
39.8
95.8
275.1
10.2
101.3
12.5
39.5
111.5
249.9
29.3
87.6
9.0
34.6
89.3
219.3
43.3
86.1
9.1
24.9
56.0
266.2
50.3
128.5
-.4
51.3
36.5
379.7
21.6
198.7
8.2
72.7
78.4
33.8
4.2
19.1
6.6
3.9
20.2
3.9
2.3
11.2
2.9
27.2
.8
11.5
10.1
4.7
27.2
5.4
3.7
13.9
4.2
15.7
6.6
-6.2
10.7
4.5
19.2
3.3
5.9
6.0
4.0
31.9
3.3
3.1
20.6
4.9
22.5
7.6
4.2
7.1
3.5
12.8
2.4
-5.1
12.5
3.0
18.6
10.8
-7.2
9.0
6.0
18.5
4.4
14.7
-4.6
4.0
19.9
2.2
-2.8
16.5
4.0
403.6
406.2
370.4
404.4
411.0
528.7
424.4
384.5
369.6
453.4
515.7
541.6
25 Foreign net borrowing in United States
26
Bonds
27
Bank loans n.e.c
Open
market paper
28
29
U.S. government loans
30 Total domestic plus foreign
Financial sectors
31 Total net borrowing by financial sectors
By instrument
32 U.S. government related
33
Sponsored credit agency securities
34
Mortgage pool securities
36 Private financial sectors
37
Corporate bonds
38
Mortgages
Bank loans n.e.c
39
40
Open market paper
41
Loans from Federal H o m e L o a n Banks
By sector
42 Sponsored credit agencies
43 Mortgage pools
44 Private financial sectors
45
Commercial banks
Bank affiliates
46
47
Savings and loan associations
48
Finance companies
49
REITs
74.6
82.5
63.3
85.4
69.3
88.6
87.4
83.4
89.8
48.7
74.1
103.2
37.1
23.1
13.6
.4
37.5
7.5
.1
2.8
14.6
12.5
47.9
24.3
23.1
.6
34.6
7.8
47.4
30.5
15.0
1.9
38.0
-.8
-.5
2.2
20.9
16.2
64.9
14.9
49.5
.4
4.4
2.3
.1
3.2
-2.0
.8
68.1
1.6
66.5
49.6
32.1
15.1
2.4
33.8
-1.4
-.2
1.1
18.4
15.8
61.3
23.6
37.0
g
28.5
-1.2
.1
5.2
14.0
10.4
68.0
-2.4
70.4
68.3
5.7
62.5
20.5
17.2
.1
-2.9
13.2
-7.0
45.2
28.9
14.9
1.4
42.2
-.3
-.8
3.2
23.5
16.7
68.4
6.3
62.1
-.4
18.0
9.2
44.8
24.4
19.2
1.2
18.5
7.1
-.1
-.4
4.8
7.1
-19.7
5.8
.1
1.2
-18.0
-8.8
6.1
15.3
.1
-5.2
8.8
-12.9
35.0
19.2
.1
-.7
17.6
-1.2
23.5
13.6
37.5
1.3
7.2
13.5
18.1
-1.4
24.8
23.1
34.6
1.6
6.5
12.6
16.6
-1.3
25.6
19.2
18.5
.5
6.9
7.4
6.3
-2.2
32.4
15.0
38.0
.4
8.3
15.5
14.1
.2
15.3
49.5
4.4
1.2
1.9
-3.0
4.9
.1
1.6
66.5
20.5
.6
8.6
-5.2
17.2
.1
30.3
14.9
42.2
.2
6.9
16.8
18.5
.2
34.5
15.1
33.8
.5
9.7
14.1
9.7
.2
24.4
37.0
28.5
.7
9.7
9.1
9.5
.1
6.3
62.1
-19.7
1.7
-5.8
-15.2
.2
.1
-2.4
70.4
6.1
.8
6.1
-10.8
10.7
.1
5.7
62.5
35.0
.5
11.1
.3
23.7
.1
467.9
134.3
22.6
24.2
96.6
19.3
69.3
51.9
49.7
459.4
167.6
41.7
12.0
87.3
19.3
70.2
33.0
28.4
502.1
284.0
59.4
43.5
79.8
17.4
32.8
-22.1
7.4
589.8
299.1
59.8
40.7
140.2
39.8
16.1
-12.1
6.1
644.8
210.4
28.8
30.3
197.0
68.6
28.0
48.0
33.7
47.0
24.0
23.0
15.8
4.4
2.9
87.1
38.7
48.3
38.2
4.4
5.7
51.3
26.4
24.9
18.4
4.5
2.0
*
All sectors
50 Total net borrowing
51
U.S. government securities
52
State and local obligations
53
Corporate and foreign bonds
54
Mortgages
55
Consumer credit
Bank loans n.e.c
56
Open market paper
57
Other loans
58
478.2
90.5
28.4
32.8
150.2
48.8
59.3
26.4
41.9
488.7
84.8
30.3
29.0
163.5
45.4
53.0
40.3
42.4
433.7
122.9
30.3
34.6
134.9
4.9
47.8
20.6
37.8
489.8
133.0
21.9
26.7
113.9
24.1
60.6
54.0
55.8
480.3
225.9
50.5
27.7
83.0
18.3
51.4
5.4
17.9
617.3
254.7
44.3
35.5
168.6
54.2
22.1
18.0
19.9
511.8
131.8
21.1
29.1
131.1
28.9
51.8
56.1
61.8
External corporate equity funds raised in United States
59 Total new share issues
60
Mutual funds
All other
61
62
Nonfinancial corporations
63
Financial corporations
64
Foreign shares purchased in United States
1.9
-.1
1.9
-.1
2.5
-.5
-3.8
.1
-3.9
-7.8
3.2
.8
22.2
5.2
17.1
12.9
2.1
2.1
-3.7
6.8
-10.6
-11.5
.9
*
35.4
18.6
16.8
11.4
4.1
1.3
69.2
32.6
36.6
28.3
4.4
3.9
10.2
8.1
2.1
.9
.5
.7
-17.7
5.6
-23.2
-23.8
1.2
-.7
23.7
13.2
10.6
7.0
3.8
-.2
Flow of Funds
1.58
A41
DIRECT A N D I N D I R E C T S O U R C E S O F F U N D S TO CREDIT M A R K E T S
Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates.
1982
1981
Transaction category, or sector
1 Total funds advanced in credit markets to domestic
nonfinancial sectors
By public agencies and foreign
Total net advances
U.S. government securities
Residential mortgages
F H L B advances to savings and loans
Other loans and securities
7
3
4
5
6
1978
1979
1980
1981
1982
1983
1983
HI
H2
HI
H2
HI
H2
369.8
386.0
343.2
377.2
395.3
509.5
392.4
362.0
356.8
434.8
497.3
521.7
102.3
36.1
25.7
12.5
28.0
75.2
-6.3
35.8
9.2
36.5
97.0
15.7
31.7
7.1
42.4
97.4
17.2
23.4
16.2
40.6
109.3
17.9
61.1
.8
29.5
114.8
27.7
75.9
-7.0
18.3
113.8
31.2
21.9
16.7
44.1
81.0
3.1
25.0
15.8
37.1
107.9
17.7
48.1
10.4
31.7
110.8
18.2
74.0
-8.8
27.4
129.5
51.2
80.7
-12.9
10.4
100.0
4.2
71.0
-1.2
26.1
7
8
9
10
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
17.1
40.3
7.0
38.0
19.0
53.0
7.7
-4.6
23.7
45.6
4.5
23.2
24.1
48.2
9.2
16.0
16.7
65.3
9.8
17.6
9.8
68.9
10.9
25.2
27.9
47.2
2.4
36.4
20.3
49.2
16.0
-4.4
14.2
62.5
.1
31.1
19.1
68.1
19.5
4.1
8.2
69.1
12.1
40.1
11.3
68.7
9.7
10.3
11
12
Agency and foreign borrowing not in line 1
Sponsored credit agencies and mortgage pools
Foreign
37.1
33.8
47.9
20.2
44.8
27.2
47.4
27.2
64.9
15.7
68.1
19.2
45.2
31.9
49.6
22.5
61.3
12.8
68.4
18.6
68.0
18.5
68.3
19.9
Private domestic funds
advanced
Total net advances
U.S. government securities
State and local obligations
Corporate and foreign bonds
Residential mortgages
Other mortgages and loans
LESS: Federal H o m e L o a n Bank advances
338.4
54.3
28.4
23.4
95.6
149.3
12.5
379.0
91.1
30.3
18.5
91.9
156.3
9.2
318.2
107.2
30.3
19.3
73.7
94.8
7.1
354.4
115.9
21.9
19.4
56.7
156.9
16.2
366.6
207.9
50.5
15.4
-3.3
96.8
.8
482.0
227.0
44.3
12.1
44.6
146.9
-7.0
355.7
100.6
21.1
20.9
75.5
154.3
16.7
353.1
131.1
22.6
17.9
37.9
159.5
15.8
323.0
149.9
41.7
-1.7
11.7
131.7
10.4
411.0
265.8
59.4
32.4
-17.2
62.0
-8.8
454.2
247.9
59.8
19.9
18.3
95.3
-12.9
509.8
206.2
28.8
4.4
70.9
198.4
-1.2
Private financial intermediation
20 Credit market funds advanced by private financial institutions
71
Commercial banking
72
Savings institutions
23
Insurance and pension f u n d s
24
Other finance
302.3
129.0
72.8
75.0
25.5
294.7
123.1
56.7
66.4
48.5
262.3
101.1
54.9
74.4
32.0
305.2
103.6
27.2
79.3
95.2
271.2
108.5
30.6
94.2
37.9
368.5
135.3
128.6
102.1
2.6
317.3
99.6
41.5
75.3
101.0
293.1
107.6
12.8
83.4
89.4
272.8
109.7
29.5
95.4
38.1
268.9
107.1
31.0
93.0
37.8
347.5
127.6
130.6
107.4
-18.0
389.5
143.0
126.6
96.8
23.1
302.3
141.0
37.5
294.7
142.0
34.6
262.3
168.6
18.5
305.2
211.7
38.0
271.2
173.4
4.4
368.5
200.3
20.5
317.3
213.8
42.2
293.1
209.6
33.8
272.8
163.4
28.5
268.9
182.7
-19.7
347.5
211.6
6.1
389.5
189.0
35.0
123.8
6.5
6.8
62.2
48.4
118.1
27.6
.4
49.1
41.0
75.2
-21.7
-2.6
65.4
34.0
55.5
-8.7
-1.1
73.2
-7.9
93.5
-27.7
85.9
29.2
147.7
17.2
-6.0
88.0
48.4
61.3
-8.7
6.5
62.7
.8
49.8
-8.7
-8.7
83.8
-16.7
80.8
-30.1
-2.1
85.4
27.6
105.9
-25.4
14.1
86.4
30.7
129.8
-18.9
8.4
93.1
47.2
165.5
53.4
-20.4
82.9
49.6
Private domestic nonfinancial
investors
33 Direct lending in credit markets
34
U.S. government securities
35
State and local obligations
36
Corporate and foreign bonds
37
Open market paper
38
Other
73.6
36.3
3.6
-1.8
15.6
19.9
118.9
61.4
9.9
5.7
12.1
29.8
74.4
38.3
7.0
.6
-4.3
32.9
87.2
47.4
9.6
-8.9
3.7
35.4
99.7
58.1
30.9
-9.4
-2.0
22.1
134.0
89.8
31.9
-6.1
7.7
10.8
80.6
37.2
9.5
-5.5
-3.3
42.7
93.8
57.6
9.7
-12.4
10.7
28.2
78.7
43.1
28.4
-26.3
6.7
26.8
122.4
72.7
33.4
7.4
-10.7
19.6
112.8
88.0
47.7
-19.1
-11.2
7.4
155.3
91.5
16.1
6.8
26.6
14.2
39 Deposits and currency
40
Currency
41
Checkable deposits
42
Small time and savings accounts
43
Money market fund shares
44
Large time deposits
45
Security RPs
46
Deposits in foreign countries
152.2
9.3
16.2
65.9
6.9
44.4
7.5
2.0
151.4
7.9
18.7
59.2
34.4
23.0
6.6
1.5
180.0
10.3
5.0
83.1
29.2
44.7
6.5
1.1
221.7
9.5
18.1
47.2
107.5
36.4
2.5
.5
179.4
8.4
13.0
137.0
24.7
-5.2
3.8
-2.4
217.5
13.9
22.5
216.6
-44.1
-2.3
7.5
3.3
222.6
8.0
29.8
30.7
104.1
41.6
7.7
.8
220.7
11.0
6.5
63.6
110.8
31.2
-2.6
.2
166.2
4.5
6.7
95.1
39.4
21.2
1.1
-1.8
192.1
12.3
19.1
178.6
10.0
-31.6
6.6
-2.9
231.9
14.1
53.1
295.8
-84.0
-64.4
11.0
6.1
203.2
13.8
-8.0
137.4
-4.2
59.8
4.0
.4
47 Total of credit market instruments, deposits and
currency
225.8
270.3
254.4
308.9
279.1
351.6
303.3
314.5
244.9
314.5
344.7
358.5
25.3
89.3
44.6
18.5
77.7
23.0
26.2
82.4
1.5
24.1
86.1
7.3
26.6
74.0
-10.2
21.7
76.5
42.5
26.8
89.2
27.8
21.1
83.0
-13.1
29.2
84.4
1.0
24.4
65.4
-21.3
25.1
76.5
21.2
18.5
76.4
63.7
1.9
-.1
1.9
-3.8
.1
-3.9
22.2
5.2
17.1
-3.7
6.8
-10.6
35.4
18.6
16.8
69.2
32.6
36.6
10.2
8.1
2.1
-17.7
5.6
-23.2
23.7
13.2
10.6
47.0
24.0
23.0
87.1
38.7
48.3
51.3
26.4
24.9
4.5
-2.7
9.7
-13.5
16.8
5.4
22.1
-25.9
27.9
7.5
54.4
14.8
25.3
-15.1
18.9
-36.6
19.3
4.4
36.4
10.6
68.4
18.6
40.3
N
14
15
16
17
18
19
Sources of f u n d s
Private domestic deposits and RPs
Credit market borrowing
25
26
27
28
29
30
31
32
Other sources
Foreign funds
Treasury balances
Insurance and pension reserves
Other, net
48
49
50
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
MEMO: Corporate equities not included above
51 Total net issues
5?
Mutual fund shares
53
Other equities
54 Acquisitions by financial institutions
55 Other net purchases
N O T E S BY LINE N U M B E R .
1.
2.
6.
11.
13.
18.
26.
27.
29.
30.
31.
Line 1 of table 1.58.
Sum of lines 3 - 6 or 7-10.
Includes farm and commercial mortgages.
Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also
sum of lines 28 and 47 less lines 40 and 46.
Includes farm and commercial mortgages.
Line 39 less lines 40 and 46.
Excludes equity issues and investment company shares. Includes line 19.
Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates.
Demand deposits at commercial banks.
Excludes net investment of these reserves in corporate equities.
6.1
11.0
32. Mainly retained earnings and net miscellaneous liabilities.
33. Line 12 less line 20 plus line 27.
34-38. Lines 14-18 less amounts acquired by private finance. Line 38 includes
mortgages.
40. Mainly an offset to line 9.
47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46.
48. Line 2/1 ine 1.
49. Line 20/line 13.
50. Sum of lines 10 and 29.
51. 53. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types in flows and in amounts
outstanding may be obtained from Flow of F u n d s Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.
A42
2.10
Domestic Nonfinancial Statistics • April 1983
N O N F I N A N C I A L BUSINESS ACTIVITY
Selected Measures
1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1983
Measure
1981
1982
Aug.
July
1 Industrial production
2
3
4
5
6
7
1
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
Industry groupings
8 Manufacturing
Capacity utilization (percent) 1 ' 2
9
Manufacturing
10
Industrial materials industries
11 Construction contracts (1977 = I00) 3
1984
1983
Sept.
Oct.
Nov.
Dec.
Jan.'
Feb.'
151.0
138.6
147.6
149.7
151.8
153.8
155.0
155.3
156.2'
158.4
160.0
160.7
150.6
149.5
147.9
151.5
154.4
151.6
141.8
141.5
142.6
139.8
143.3
133.7
149.2'
147.1
151.7
140.8
156.6
145.2
150.9
149.0
154.8
141.0
158.1
147.8
153.2
150.7
156.3
143.1
162.2
149.7
154.9
152.1
157.3
144.9
165.4
152.2
155.6
152.7
156.9
147.0
166.5
154.0
155.8
153.2
156.1
149.1
165.5
154.5
157.4'
155.2'
157.7'
151.8'
165.4'
154.5'
159.7
157.5
159.5
154.7
167.8
156.5
160.7
158.4
159.9
156.3
169.3
158.9
161.2
159.0
160.3
157.1
169.6
159.8
150.4
137.6
148.2'
150.6
152.8
155.1
156.2
156.4
156.8'
159.3
161.4
162.1
79.4
80.7
71.1
70.1
75.2
75.2
76.4
76.5
77.3
77.4
78.4
78.6
78.9
79.5
78.8
79.6
78.9'
79.6'
80.0
80.5
80.9
81.6
111.0
111.0
138.0
137.0
154.0
143.0
139.0
145.0
134.0
150.0
150.0
12
13
14
15
16
17
18
19
20
21
Nonagricultural employment, total 4
Goods-producing, total
Manufacturing, total
Manufacturing, production-worker . . .
Service-producing
Personal income, total
Wages and salary disbursements
Manufacturing
Disposable personal income 5
Retail sales"
138.5
109.4
103.7
98.0
154.4
386.5
349.7
287.3
373.7
330.6
136.2
102.6
96.9
89.4
154.6
409.3
367.2
286.2
397.3
326.0
136.8
101.5
96.0
88.7
156.1
453.3
389.8
300.4
426.3
1123
137.0
101.8
96.3
89.2
156.3
436.1
391.9
302.6
429.0
380.3
136.4
102.2
96.6
89.5
155.1
437.5
393.6
304.6
430.1
373.7
138.1
102.7
97.0
89.9
157.5
441.5
396.2
308.2
434.1
379.1
138.4
103.7
98.0
91.2
157.5
446.5
400.6
310.2
438.8'
385.3
138.8
104.3
98.6
91.9
157.8
450.0
401.7
312.8
442.1'
389.8
139.2
104.7
99.1
92.5
158.1
453.7
404.1
314.3
446.2
390.3
139.7
105.6
99.7
93.1
158.4
460.6
409.4
320.1
453.2'
399.0
140.3
106.3
100.2
93.7
159.0
463.9
411.5
323.4
456.5'
22
23
Prices 7
Consumer
Producer finished goods
272.4
269.8
289.1
280.7
298.4
285.2
299.3
285.7
300.3
286.1
301.8
285.1
302.6
287.9
303.1
286.8
303.5
287.1
305.2
289.4
306.6
290.6
1. The capacity utilization series has been revised back to January 1967.
2. Ratios of indexes of production to indexes of capacity. Based on data from
Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential,
nonresidential and heavy engineering, from McGraw-Hill Information Systems
Company, F. W. Dodge Division.
4. Based on data in Employment and Earnings (U.S. Department of Labor).
Series covers employees only, excluding personnel in the Armed Forces.
5. Based on data in Survey of Current Business (U.S. Department of Commerce).
2.11
Mar.
81.1
81.9
140.6
106.3
100.5
94.0
159.3
n a,
6. Based on Bureau of Census data published in Survey of Current Business.
7. Data without seasonal adjustment, as published in Monthly Labor Review.
Seasonally adjusted data for changes in the price indexes may be obtained from
the Bureau of Labor Statistics, U.S. Department of Labor.
NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6,
and indexes for series mentioned in notes 3 and 7 may also be found in the Survey
of Current Business.
Figures for industrial production for the last two months are preliminary and
estimated, respectively.
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION
Seasonally adjusted
1983
1984
1983
1984
1984
1983
Series
Q2
Q3
Q4'
Ql
Output (1967 = 100)
Q2
Q3
Q4'
Ql
Capacity (percent of 1967 output)
Q2
Q3
Q4
Ql
Utilization rate (percent)
1 Total industry
2 Mining
3 Utilities
144.5
112.3
169.6
151.8
116.1
178.2
155.5
121.0
178.4
159.7
124.4
178.9
195.5
165.3
209.8
196.4
165.4
211.1
197.3
165.5
212.4
198.3
165.7
213.8
73.9
67.9
80.8
77.3
70.2
84.4
78.8
73.1
84.C
80.5
75.1
83.7
4 Manufacturing
5 Primary processing
6 Advanced processing
145.2
145.2
145.1
152.8
152.8
152.8
156.5
156.4
156.1
160.9
159.9
161.8
196.6
194.8
197.6
197.5
195.3
198.6
198.4
195.8
199.7
199.5
196.4
201.0
73.8
74.6
73.5
77.4
78.3
76.9
78.9
79.9
78.2
80.7
81.4
80.5
7 Materials
141.7
149.9
154.3
158.4
192.9
193.4
194.0
194.7
73.5
77.5
79.6
81.3
8 Durable goods
9
Metal materials
10 Nondurable goods
11
Textile, paper, and chemical
12
Paper
Chemical
13
134.7
84.9
171.7
179.6
153.4
219.4
144.2
89.3
179.1
188.0
162.8
227.8
150.3
93.8
183.5
193.2
167.4
235.0
157.3
97.0
182.3
191.8
167.1
233.3
195.6
139.9
218.8
230.7
166.1
296.6
196.0
139.8
219.6
231.6
166.9
298.3
196.5
139.6
220.6
232.7
167.7
300.1
197.1
139.1
221.8
234.2
168.5
302.3
68.9
60.7
78.5
77.9
92.3
74.0
73.6
63.9
81.5
81.2
97.5
76.4
76.5
67.2
83.2'
83.C
99.8'
78.3'
79.8
69.7
82.2
81.9
99.1
77.1
14 Energy materials
121.5
127.4
127.8
131.5
154.3
154.7
155.3
155.8
78.7
82.3
82.3'
84.4
Labor Market
2.11
A43
Continued
Previous cycle 1
High
Low
Latest cycle 2
1983
Low
Mar.
High
1984
1983
July
Aug.
Sept.
Oct.
Nov.
Dec/
Jan/
Feb/
Mar.
Capacity utilization rate (percent)
15 Total industry
16 Mining
17 Utilities
88.4
91.8
94.9
71.1
86.0
82.0
87.3
88.5
86.7
76.5
84.0
83.8
71.8
68.1
79.4
76.3
69.5
83.5
77.3
70.2
85.0
78.2
70.8
84.8
78.7
71.5
83.3
78.7
73.2
83.0
79.1
74.7
85.7
80.0
75.2
84.8
80.7
75.2
82.8
80.9
74.7
83.4
18 Manufacturing
87.9
69.0
87.5
75.5
71.6
76.4
77.3
78.4
78.9
78.8
78.9
80.0
80.9
81.1
19
20
93.7
85.5
68.2
69.4
91.4
85.9
72.6
77.0
72.1
71.5
77.1
76.0
78.1
76.9
79.7
77.8
80.4
77.9
80.0
78.0
79.2
78.6
80.4
79.8
81.6
80.5
81.7
80.8
92.6
91.4
97.8
69.3
63.5
68.0
88.9
88.4
95.4
74.2
68.4
59.4
71.5
66.0
58.8
76.5
72.1
62.3
77.4
73.6
64.0
78.6
75.2
65.5
79.5
76.1
68.0
79.6
76.5
66.8
79.6
77.0
66.8
80.5
78.5
67.3
81.6
80.2
70.6
81.9
80.7
71.3
Primary processing
Advanced p r o c e s s i n g . . . .
21 Materials
22
Durable goods
23
Metal materials
94.4
67.4
91.7
77.5
76.8
80.7
81.1
82.9
84.1
83.8
81.6
81.8
82.4
82.4
26
27
Nondurable goods
Textile, paper, and
chemical
Paper
Chemical
95.1
99.4
95.5
65.4
72.4
64.2
92.3
97.9
91.3
75.5
89.8
70.7
75.8
90.3
71.9
80.4
96.7
75.9
80.5
96.9
75.5
82.6
99.0
77.8
84.1
99.4
79.7
83.7
101.3
79.0
81.2
98.8
76.2
81.4
99.3
76.5
82.0
99.1
77.4
82.1
n.a.
n.a.
28
Energy materials
94.5
84.4
88.7
84.4
79.2
82.6
82.8
81.6
81.4
81.8
83.6
84.2
84.4
84.6
24
25
1. Monthly high 1973; monthly low 1975.
2.12
2. Preliminary; monthly highs December 1978 through January 1980; monthly
lows July through October 1980.
LABOR FORCE, EMPLOYMENT, A N D
UNEMPLOYMENT
Thousands of persons; monthly data are seasonally adjusted. Exceptions noted.
1984
1983
Category
1981
1982
1983
Aug.
Sept.
Oct.
Nov.
Dec.
Jan/
Feb.
Mar.
HOUSEHOLD SURVEY DATA
1 Noninstitutional population 1
172,272
174,450
176,414
176,648
176,811
176,990
177,151
177,325
177,733
177,882
178,033
2 Labor force (including Armed Forces) 1
3
Civilian labor force
110,812
108,670
112,383
110,204
113,749
111,550
114,325
112,117
114,438
112,229
114,077
111,866
114,235
112,035
114,340
112,136
114,415
112,215
114,8%
112,693
115,121
112,912
97,030
3,368
96,125
3,401
97,450
3,383
98,035
3,449
98,568
3,308
98,730
3,240
99,349
3,257
99,585
3,356
99,918
3,271
100,496
3,395
100,859
3,281
8,273
7.6
61,460
10,678
9.7
62,067
10,717
9.6
62,665
10,633
9.5
62,323
10,353
9.2
62,373
9,8%
8.8
62,913
9,429
8.4
62,916
9,195
8.2
62,985
9,026
8.0
63,318
8,801
7.8
62,986
8,772
7.8
62,912
9 Nonagricultural payroll employment 3
91,156
89,596
89,986
89,748
90,851
91,084
91,355
91,599
91,930
92,347
92,490
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
20,170
1,132
4,176
5,157
20,551
5,301
20,547
16,024
18,853
1,143
3,911
5,081
20,401
5,340
19,064
15,803
18,678
1,021
3,949
4,943
20,508
5,456
19,685
15,747
18,793
1,023
4,014
4,341
20,580
5,488
19,835
15,674
18,871
1,026
4,038
5,031
20,612
5,499
19,913
15,861
19,064
1,044
4,060
5,019
20,666
5,503
19,956
15,775
19,172
1,045
4,094
5,019
20,718
5,515
20,016
15,776
19,280
1,047
4,088
5,015
20,781
5,525
20,093
15,770
19,389
1,051
4,177
5,057
20,860
5,553
20,101
15,742
19,491
1,053
4,228
5,067
20,925
5,566
20,241
15,776
19,551
1,053
4,178
5,069
20,941
5,571
20,365
15,762
Nonagricultural industries 2
Agriculture
Unemployment
6
Number
7
Rate (percent of civilian labor force) . . .
8 Not in labor force
4
5
ESTABLISHMENT S U R V E Y D A T A
10
II
12
13
14
15
16
17
1. Persons 16 years of age and over. Monthly figures, which are based on
sample data, relate to the calendar week that contains the 12th day; annual data
are averages of monthly figures. By definition, seasonality does not exist in
population figures. Based on data f r o m Employment and Earnings (U.S. Department of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.
3. Data include all full- and part-time employees who worked during, or
received pay for, the pay period that includes the 12th day of the month, and
exclude proprietors, self-employed persons, domestic servants, unpaid family
workers, and members of the Armed Forces. Data are adjusted to the March 1983
benchmark and only seasonally adjusted data are available at this time. Based on
data from Employment and Earnings (U.S. Department of Labor).
A44
2.13
Domestic Nonfinancial Statistics • April 1983
INDUSTRIAL PRODUCTION
Indexes and Gross Value
Monthly data are seasonally adjusted
1967
proportion
1983
1983
avg/
Mar.
Apr.
May
June
July
1984
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
Feb.?
Index (1967 = 100)
MAJOR M A R K E T
1 Total index
100.00
147.6
140.0
142.6
144.4
146.4
149.7
151.8
153.8
155.0
155.3
156.2
158.4
160.0
60.71
47.82
27.68
20.14
12.89
39.29
149.2
147.1
151.7
140.8
156.6
145.2
141.6
139.9
144.3
133.8
147.8
137.6
144.5
142.8
147.7
136.2
150.8
139.7
146.2
144.5
150.4
136.5
152.2
141.7
148.1
146.4
152.4
138.2
154.5
143.7
150.9
149.0
154.8
141.0
158.1
147.8
153.2
150.7
156.3
143.1
162.2
149.7
154.9
152.1
157.4
144.9
165.3
152.3
155.6
152.7
156.9
147.0
166.5
154.0
155.8
153.2
156.1
149.1
165.5
154.5
157.4
155.2
157.7
151.8
165.4
154.5
159.7
157.5
159.5
154.7
167.8
156.5
160.7
158.4
159.9
156.3
169.3
158.9
7.89
2.83
2.03
1.90
.80
5.06
1.40
1.33
1.07
2.59
147.5
158.2
134.0
117.4
219.6
141.4
116.4
120.1
178.1
139.9
136.3
142.6
116.4
99.9
209.3
132.8
105.0
108.5
168.3
133.3
140.5
144.9
117.8
102.7
213.6
138.1
106.1
109.7
180.5
137.9
145.5
152.2
124.9
107.4
221.5
141.8
112.8
116.1
181.9
140.9
149.2
160.0
135.4
118.3
222.6
143.2
114.4
118.4
185.6
141.3
152.9
167.0
145.4
129.8
221.9
144.9
116.2
119.7
187.3
143.0
154.2
168.1
147.0
132.0
221.8
146.4
121.2
125.0
187.5
143.2
157.4
172.9
153.1
135.0
223.1
148.7
125.2
129.7
186.3
145.9
156.7
171.3
149.2
129.6
227.4
148.4
129.2
133.3
185.5
143.6
155.9
171.5
149.2
129.4
228.2
147.2
127.0
131.3
182.7
143.4
158.6
178.4
157.8
137.4
230.7
147.5
126.3
130.2
184.0
143.9
163.3
184.3
163.3
140.7
237.4
151.6
136.4
140.0
183.6
146.7
163.2
183.1
162.9
141.2
234.4
152.1
137.1
140.6
179.6
148.9
19.79
4.29
15.50
8.33
7.17
2.63
1.92
2.62
1.45
153.4
147.5
150.5
152.3
153.6
155.6
157.1
157.5
157.1
156.1
157.3
158.0
158.6
163.7
153.5
175.4
231.0
132.7
150.9
173.4
158.1
148.4
169.4
225.6
128.1
143.3
166.1
161.1
150.9
172.9
225.5
129.2
152.2
175.5
162.8
153.2
174.0
227.8
128.6
153.4
174.3
164.3
155.9
174.1
229.0
130.1
151.2
170.5
166.1
156.6
177.2
233.8
132.6
153.2
173.2
168.0
156.3
181.6
239.7
137.4
155.7
179.9
168.0
154.9
183.2
241.5
138.2
157.7
182.8
167.2
156.0
180.3
238.7
137.6
153.0
174.5
165.4
154.5
178.1
232.4
136.6
154.1
175.8
166.0
155.4
178.3
229.9
137.2
156.5
185.2
166.5
156.5
178.2
231.6
138.8
153.3
180.0
167.1
12.63
6.77
1.44
3.85
1.47
153.3
120.4
159.3
107.1
117.1
143.7
113.1
145.3
99.7
116.2
146.9
113.5
141.8
101.7
116.6
147.7
114.5
146.2
102.5
115.0
150.2
116.3
148.7
105.0
114.1
153.3
119.9
154.4
108.9
114.6
156.6
124.3
159.2
113.3
119.0
158.8
125.6
160.8
115.0
118.8
161.3
126.6
166.9
114.6
118.5
164.1
128.6
175.8
114.3
119.4
167.3
130.8
185.3
115.1
118.4
170.9
133.4
185.6
118.9
120.0
172.5
134.3
181.1
121.5
121.9
5.86
3.26
1.93
.67
191.3
273.2
95.2
69.5
179.2
255.7
90.1
63.4
185.4
264.3
92.0
70.2
186.1
265.0
92.6
71.3
189.5
270.9
93.2
70.4
191.9
276.0
92.0
70.8
194.0
277.4
95.9
70.8
196.7
281.2
97.6
71.0
201.3
288.1
100.0
70.9
205.1
292.5
103.2
73.5
209.6
298.9
106.0
73.5
214.2
304.1
111.1
73.6
216.7
308.0
111.4
75.7
36 Defense and space
7.51
119.9
117.0
118.2
117.6
118.0
120.4
120.2
121.8
122.9
124.0
125.7
127.6
129.0
Intermediate
products
37 Construction supplies
38 Business supplies
39
Commercial energy products
6.42
6.47
1.14
142.5
170.7
184.3
133.1
162.3
180.3
136.4
165.2
183.3
138.4
166.0
183.1
142.1
166.8
181.4
145.8
170.4
185.2
149.0
175.3
186.9
151.1
179.3
190.2
152.3
180.6
187.0
151.6
179.4
187.6
151.5
179.3
188.0
155.5
180.0
192.1
157.6
180.8
190.9
20.35
4.58
5.44
10.34
5.57
138.6
113.6
176.4
129.9
90.2
128.7
104.0
162.5
121.9
86.0
132.4
106.5
167.2
125.4
87.8
134.7
108.5
170.6
127.5
89.3
137.0
109.5
175.8
128.7
89.6
141.1
115.6
180.8
131.5
90.8
144.2
119.9
183.6
134.2
93.1
147.2
123.1
186.0
137.4
94.5
149.4
124.9
188.3
139.8
98.0
150.3
125.0
192.5
139.3
97.1
151.3
127.9
193.4
139.5
96.9
154.5
131.4
198.2
141.7
97.7
158.1
132.9
203.8
145.2
102.1
10.47
174.5
167.5
168.7
172.1
174.3
177.0
178.0
183.4
185.3
184.8
180.3
181.0
182.7
7.62
1.85
1.62
4.15
1.70
1.14
182.6
116.2
158.2
221.7
167.9
130.5
174.3
110.6
149.5
212.5
163.8
127.7
175.9
110.6
150.8
214.9
163.2
129.1
180.2
114.6
154.4
219.6
164.3
129.7
182.8
116.0
155.0
223.6
166.1
129.9
186.1
119.0
161.1
225.9
166.5
131.3
186.4
121.5
161.8
225.1
170.6
133.0
192.0
123.1
165.4
233.1
179.1
132.6
195.4
124.0
166.3
238.7
175.9
131.9
194.7
121.9
169.8
237.0
176.6
130.6
189.6
121.3
166.0
229.3
173.0
129.5
190.3
119.9
166.9
230.8
173.4
130.0
192.2
120.6
166.9
234.0
173.1
134.0
52 Energy materials
53
Primary energy
54
Converted fuel materials
8.48
4.65
3.82
124.8
114.7
137.0
121.9
114.4
131.1
121.6
113.9
131.0
121.1
113.8
129.9
121.8
112.6
132.9
127.7
115.4
142.7
128.0
113.9
145.2
126.4
112.8
142.8
126.3
114.1
141.2
127.1
115.5
141.1
130.0
117.6
145.1
131.1
119.1
145.7
131.5
119.8
145.7
Supplementary
groups
55 Home goods and clothing
Energy,
total
56
57
Products
58
Materials
9.35
12.23
3.76
8.48
129.9
135.9
161.0
124.8
122.0
131.9
154.5
121.9
126.3
133.9
161.7
121.6
129.2
133.8
162.4
121.1
130.2
133.6
160.4
121.8
132.3
138.5
162.9
127.7
133.3
139.4
165.2
128.0
135.2
139.0
167.5
126.4
135.5
137.7
163.3
126.3
135.9
138.5
164.3
127.1
137.6
141.1
166.0
130.0
140.4
141.5
165.1
131.1
141.0
141.4
163.7
131.5
2 Products
3
Final products
4
Consumer goods
5
Equipment
6
Intermediate products
7 Materials
Consumer goods
8 Durable consumer goods
9
Automotive products
10
Autos and utility vehicles
11
Autos
12
Auto parts and allied goods
13
Home goods
14
Appliances, A/C, and TV
15
Appliances and TV
16
Carpeting and furniture
17
Miscellaneous home goods
18 Nondurable consumer goods
19
Clothing
20
Consumer staples
?1
22
23
24
25
26
Nonfood staples
Consumer chemical products . . . .
Consumer paper products
Consumer energy products
Equipment
27 Business
Industrial
28
29
Building and mining
Manufacturing
30
31
Power
32
33
34
35
Commercial transit, farm
Commercial
Transit
Farm
Materials
40 Durable goods materials
41
Durable consumer parts
42
Equipment parts
43
Durable materials n.e.c
44
Basic metal materials
45 Nondurable goods materials
46
Textile, paper, and chemical
materials
47
Textile materials
Paper materials
48
49
Chemical materials
50
Containers, nondurable
51
Nondurable materials n.e.c
178.6
233.7
139.5
151.9
Output
2.13
A45
Continued
Grouping
SIC
code
1967
proportion
1984
1983
1983
avg/
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
Feb.?
Mar/
Index (1967 = 100)
MAJOR I N D U S T R Y
12.05
6.36
5.69
3.88
87.95
35.97
51.98
142.9
116.6
172.4
196.0
148.2
168.1
134.5
137.7
112.6
165.8
188.2
140.4
160.7
126.3
138.9
111.6
169.3
192.7
143.1
163.3
129.1
139.7
112.8
169.7
192.9
145.1
165.4
131.0
139.6
112.6
169.8
192.0
147.4
167.8
133.2
143.8
115.0
176.0
200.9
150.6
170.6
136.8
146.0
116.1
179.3
205.4
152.8
172.9
138.8
146.5
117.1
179.3
204.5
155.1
174.6
141.6
145.8
118.3
176.5
200.7
156.2
175.6
142.8
147.2
121.1
176.3
200.2
156.4
174.8
143.6
151.5
123.7
182.5
208.0
156.8
173.9
145.0
151.3
124.6
181.0
206.8
159.3
175.3
148.2
149.3
124.6
177.0
200.6
161.4
177.0
150.7
149.8
123.9
178.8
202.9
162.1
177.3
151.5
10
11.12
13
14
.51
.69
4.40
.75
80.9
136.3
116.6
122.8
75.2
127.3
114.4
114.0
79.8
125.3
112.2
117.7
84.4
125.6
112.5
122.5
82.9
124.6
112.6
121.7
82.5
139.9
113.9
121.2
80.9
141.2
114.7
125.0
78.7
140.5
116.3
126.5
81.0
142.7
117.3
127.4
84.6
144.8
119.8
132.2
82.3
145.2
123.4
133.9
89.4
151.5
122.8
135.0
101.7
163.2
119.4
135.2
164.2
117.8
1 Mining and utilities
2
Mining
3
Utilities
4
Electric
5 Manufacturing
6
Nondurable
7
Durable
8
9
10
11
Mining
Metal
Coal
Oil and gas extraction
Stone and earth minerals
12
13
14
15
16
Nondurable
manufactures
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
20
21
22
23
26
8.75
.67
2.68
3.31
3.21
156.4
112.1
140.8
152.0
113.4
131.9
153.7
114.8
136.6
155.6
112.9
139.6
157.7
120.0
141.8
159.9
112.9
146.7
159.3
117.1
147.4
158.2
112.7
148.7
157.6
109.1
148.7
157.1
109.5
145.8
157.7
112.3
145.0
159.9
116.4
143.9
144.0
164.3
156.3
157.0
161.5
163.0
165.1
168.6
170.4
171.5
172.1
170.1
172.1
175.0
176.0
17
18
19
20
21
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastic products
Leather and products
27
28
29
30
31
4.72
7.74
1.79
2.24
.86
152.5
215.0
120.3
291.9
61.9
145.9
205.7
114.8
272.0
59.4
145.7
208.5
120.6
283.0
58.7
145.2
211.0
123.8
288.0
59.6
147.4
214.7
123.0
293.8
60.1
152.0
218.3
124.3
296.1
62.3
157.8
220.3
123.2
306.9
64.4
161.7
224.1
125.1
310.9
64.2
162.7
228.4
123.6
310.8
64.0
162.0
225.6
125.4
309.1
63.2
161.7
221.1
114.4
314.4
66.0
163.4
221.8
118.8
315.0
63.6
163.9
224.2
126.5
318.5
65.5
164.7
22
23
24
25
Durable
manufactures
Ordnance, private and government
L u m b e r and products
Furniture and fixtures
Clay, glass, stone products
19.91
24
25
32
3.64
1.64
1.37
2.74
95.4
137.2
170.5
143.4
91.9
128.7
161.0
135.6
93.2
132.1
167.7
138.3
92.6
135.8
169.6
139.2
93.3
137.4
173.1
141.7
95.2
141.3
175.2
145.8
96.8
141.6
179.0
147.9
98.0
142.3
180.7
151.7
98.8
141.7
181.0
151.9
99.3
141.0
177.5
152.7
99.8
143.8
177.9
153.8
99.7
146.4
181.8
157.0
99.9
148.2
183.4
160.1
26
27
28
29
30
Primary metals
Iron and steel
Fabricated metal products
Nonelectrical machinery
Electrical machinery
33
331.2
34
35
36
6.57
4.21
5.93
9.15
8.05
85.4
71.5
120.2
150.6
185.5
81.2
66.9
113.9
138.6
173.8
83.1
68.5
115.3
143.1
177.2
84.9
69.5
115.5
146.1
180.1
84.8
69.7
118.5
149.5
182.4
85.5
71.8
122.7
154.2
188.3
87.5
75.1
126.0
157.3
189.2
90.6
78.2
127.4
158.3
195.8
95.3
84.3
26.9
159.2
198.4
92.2
79.2
128.5
161.8
200.1
90.4
74.1
129.2
164.3
201.5
93.2
80.7
131.7
168.8
206.2
97.5
86.1
133.5
172.2
210.0
134.1
173.7
212.5
37
371
9.27
4.50
117.8
137.1
110.1
123.2
111.4
125.5
113.8
130.4
116.6
136.2
119.7
142.3
121.1
144.3
124.7
150.9
125.5
150.9
127.3
152.9
130.8
158.9
134.2
164.9
135.1
165.2
135.8
166.7
372-9
38
39
4.77
2.11
1.51
99.6
158.7
146.2
97.7
154.0
136.9
98.1
155.1
145.0
98.1
156.0
149.0
98.1
156.1
151.0
98.5
159.3
153.7
99.2
161.6
153.1
100.0
163.6
151.7
101.6
163.0
149.1
103.2
163.0
148.9
104.3
164.6
149.3
105.3
167.0
150.1
106.7
168.4
152.5
106.7
168.7
151.9
31 Transportation equipment
32
Motor vehicles and parts
33
Aerospace and miscellaneous
transportation e q u i p m e n t . . .
34 Instruments
35 Miscellaneous manufactures
127.9
100.0
97.3
Gross value (billions of 1972 dollars, annual rates)
MAJOR M A R K E T
36 Products, total
507.4
612.6
584.1
592.6
601.8
610.5
620.5
626.6
637.0
637.8
638.4
645.4
654.0
658.6
659.9
37 Final
38
Consumer goods .
39
Equipment
40 Intermediate
390.9
277.5
113.4
116.6
472.6
328.7
144.0
140.0
451.3
313.8
137.5
132.8
457.7
318.8
138.9
134.9
465.6
325.6
140.0
136.2
471.8
330.4
141.4
138.7
478.2
333.7
144.5
142.3
481.8
336.7
145.1
144.8
489.9
341.6
148.4
147.1
490.7
340.2
150.5
147.1
490.8
338.3
152.5
147.6
497.8
341.9
155.9
147.6
504.3
344.8
159.4
149.8
507.7
346.6
161.1
150.9
508.6
347.2
161.4
151.4
1. 1972 dollar value.
A46
2.14
Domestic Nonfinancial Statistics • April 1983
HOUSING A N D CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1983
1981
Item
1982
1984
1983'
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec/
Jan/
Feb.
Private residential real estate activity (thousands of units)
N E W UNITS
1 Permits authorized
2
1-family
3
2-or-more-family
986
564
421
1,001
546
454
1,590
891
699
1,635
940
695
1,761
1,013
748
1,782
920
862
1,652
874
778
1,506
837
669
1,630
880
750
1,642
911
731
1,549
898
651
1,817
1,001
816
1,941
1,111
830
4 Started
5
1-family
6
2-or-more-family
1,084
705
379
1,062
663
400
1,703
1,068
636
1,779
1,150
629
1,743
1,124
619
1,793
1,048
745
1,873
1,124
749
1,679
1,038
641
1,672
1,017
655
1,730
1,074
656
1,694
1,021
673
1,976
1,307
669
2,197
1,360
837
682
382
301
720
400
320
1,006
525
482
900
518
382
933
532
400
963
537
425
977
542
435
988
542
446
987
536
450
1,011
543
468
1,023
543
479
1,044
557
487
1,266
818
447
1,006
631
374
1,390
924
466
1,353
851
502
1,386
959
427
1,432
1,000
432
1,729
1,050
679
1,476
966
510
1,567'
1,028'
539'
1,445
994
451
1,479
986
493
1,560
985
575
241
239
295
289
299
296
307
305
308
313
310
314
436
278
413
255
622
303
654
273
655
283
606
289
558
296
597
299
624
301
636
304
748
303
669
303
721
301
68.8
69.3
75.5
74.5
75.8
75.2
76.8
81.0
75.9
75.9
76.3
76.5
79.d
83.1
83.8
89.9
88.8
90.9
89.2
91.3
97.8
89.5
91.4
92.4
92.4
94.1
2,418
1,991
2,719
2,840
2,820
2,780
2,760
2,770
2,720
2,700
2,850
2,890
2,870
66.1
78.0
67.7
80.4
69.8
82.5
69.2
81.7
71.4
84.7
71.8
84.2
71.5
84.7
69.9
82.8
69.8
83.0
70.4
83.4
69.9
82.9
71.3
84.8
71.0
84.3
7 Under construction, end of period 1
8
1-family
9
2-or-more-family
10 Completed
11
1-family
12
2-or-more-family
13 Mobile homes shipped
Merchant builder activity in I-family
14 Number sold
15 N u m b e r for sale, end of period 1
Price (thousands
Median
16
Units sold
Average
17
Units sold
of
n a.
units
dollars)2
EXISTING U N I T S ( 1 - f a m i l y )
18 N u m b e r sold
Price of units sold (thousands
19 Median
20 Average
of
1
dollars)
Value of new construction 3 (millions of dollars)
CONSTRUCTION
21 Total put in place
239,418 232,048 262,668 254,763 264,321
27 Private
Residential
73
Nonresidential, total
24
Buildings
75
Industrial
Commercial
76
Other
77
Public utilities and other
28
186,069
86,567
99,502
79 Public
Military
30
Highway
31
Conservation and development
32
Other
33
180,979 212,287
74,809 110,708
106,170 101,579
206,029 214,729
107,494 113,524
98,535 101,205
285,384 265,626' 265,780 265,319 276,033 295,013
222,759 228,529 232,561 216,976' 214,920 215,497 225,320 242,770
122,297 127,136 129,142 116,478' 110,385 107,973 116,963 128,495
100,462 101,393 103,419 100,498' 104,535 107,524 108,357 114,275
17,031
34,243
9,543
38,685
17,346
37,281
10,507
41,036
13,143
36,267
11,705
40,464
13,047
33,291
11,237
40,960
13,136
35,898
10,974
41,197
12,227
35,871
11,250
41,114
14,227
36,277
12,038
38,851
13,166
36,901
12,564
40,788
10,532
36,118
12,279
41,569'
12,280
38,081
12,001
42,173
12,921
38,955
12,121
43,527
13,091
40,874
13,062
41,330
14,857
44,790
136,311
40,997
53,346
1,966
13,599
5,300
32,481
51,068
2,205
13,521
5,029
30,313
50,380
2,536
14,178
4,823
28,843
48,734
2,255
13,044
4,548
28,887
49,592
1,894
12,925
4,853
29,920
51,446
2,655
14,091
5,608
29,092
53,469
2,258
15,906
5,210
30,095
52,823
2,705
15,896
5,048
29,174
48,649'
2,458'
14,644
4,253'
27,294'
50,860
3,192
14,360
3,902
29,406
49,821
2,977
14,780
4,8%
27,168
50,713
2,821
13,738
4,259
29,895
52,243
2,716
15,439
4,653
29,435
1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in prior periods because of changes by the Bureau of the
Census in its estimating techniques. F o r a description of these changes see
Construction Reports (C-30-76-5), issued by the Bureau in July 1976.
274,205 281,997
NOTE. Census Bureau estimates for all series except (a) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of
existing units, which are published by the National Association of Realtors. All
back and current figures are available from originating agency. Permit authorizations are those reported to the Census Bureau from 16,000jurisdictions beginning
with 1978.
Prices
2.15
A47
C O N S U M E R A N D PRODUCER PRICES
Percentage changes based on seasonally adjusted data, except as noted
Change f r o m 12
months earlier
Change from 3 months earlier
(at annual rate)
Item
Change f r o m 1 month earlier
1984
1983
1983
1983
Feb.
Index
level
Feb.
1984
(1967
= 100)1
1984
Feb.
Mar.
June
Sept.
Dec.
Nov.
Oct.
Dec.
Feb.
Jan.
C O N S U M E R PRICES 2
1 All items
7
3 Energy items
4 All items less food and energy
Commodities
6
Services
3.5
4.6
1.2
5.4
4.5
4.0
.4
.4
.2
.6
.4
306.6
2.0
-1.5
4.6
6.0
3.4
4.5
3.3
4.8
4.5
5.0
3.2
-23.3
4.2
5.7
4.3
1.7
19.1
4.2
3.2
4.8
1.1
3.4
5.9
6.8
5.2
4.3
-1.7
4.9
4.6
5.3
.4
-.2
.4
.4
.5
.2
.1
.5
.4
.5
.4
-.3
.3
.3
.3
1.6
-.4
.5
.2
.7
.7
.2
.3
.2
.4
302.1
420.2
295.5
248.5
349.5
2.2
1.1
-5.4
4.1
3.9
2.3
5.2
-3.6
2.3
2.4
-3.2
2.3
-32.3
1.0
2.1
2.6
-.9
12.9
2.2
1.7
2.0
2.5
-1.3
2.7
2.1
1.0
5.4
-9.5
1.2
2.1
.2
1.0
-.5
-.1
.0
-.1
-.4
-1.0
.2
.2
.1
.7
-1.0
.2
.2
.6
2.7
-1.2
.2
.1
.4
.7
.4
.2
.5
290.6
274.7
759.3
244.0
292.5
-.4
.8
2.2
2.8
-3.4
1.5
2.8
2.8
4.0
3.6
2.7
3.3
.3
.3
.2
.2
.1'
.3
.0
.2
.2
.2
322.1
300.7
.4
.4
-4.8
4.6
-1.6
14.0
13.3
-9.2
-1.5
-5.8
-5.1
49.1
15.6
-1.7
16.6
12.4
-2.1
3.4
.8
-1.0
-.2
.6
.3
.0
1.5
.2
.6
2.2
.4
-3.6
-3.1
.0
.8
260.7
786.8
271.1
PRODUCER PRICES
7 Finished goods
Consumer foods
8
9
Consumer energy
Other consumer goods
10
Capital equipment
11
1? Intermediate materials 3
Excluding energy
13
Crude materials
14
15
16
Energy
Other
1. Not seasonally adjusted.
2. Figures for consumer prices are those for all urban consumers and reflect a
rental equivalence measure of homeownership after 1982.
3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds,
SOURCE. Bureau of L a b o r Statistics.
A48
2.16
Domestic Nonfinancial Statistics • April 1983
GROSS NATIONAL PRODUCT A N D INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.
1983
1983'
Q4
Q1
Q2
Q3
GROSS N A T I O N A L P R O D U C T
2,954.1
3,073.0
3,310.5
3,109.6
3,171.5
3,272.0
3,362.2
1,857.2
236.1
733.9
887.1
1,991.9
244.5
761.0
986.4
2,158.0
279.4
804.1
1,074.5
2,046.9
252.1
773.0
1,021.8
2,073.0
258.5
777.1
1,037.4
2,147.0
277.7
799.6
1,069.7
2,181.1
282.8
814.8
1,083.5
474.9
456.5
352.2
133.4
218.8
104.3
99.8
414.5
439.1
348.3
141.9
206.4
90.8
86.0
471.9
478.4
348.4
131.1
217.2
130.0
124.9
377.4
433.8
337.0
138.6
198.4
96.8
91.2
404.1
443.5
332.1
132.9
199.3
111.3
106.7
450.1
464.6
336.3
127.4
208.8
128.4
123.3
501.1
492.5
351.0
130.9
220.2
141.5
136.3
18.4
10.9
-24.5
-23.1
-6.4
-2.8
-56.4
-53.7
-39.4
-39.0
-14.5
-10.3
8.5
18.4
15 N e t e x p o r t s of g o o d s a n d s e r v i c e s
16
Exports
17
Imports
26.3
368.8
342.5
17.4
347.6
330.2
-9.0
335.4
344.4
5.6
321.6
316.1
17.0
326.9
309.9
-8.5
327.1
335.6
-18.3
341.1
359.4
18 G o v e r n m e n t p u r c h a s e s of g o o d s a n d s e r v i c e s . . .
19
Federal
20
State a n d local
595.7
229.2
366.5
649.2
258.7
390.5
689.5
274.8
414.7
679.7
279.2
400.5
677.4
273.5
404.0
683.4
273.7
409.7
698.3
278.1
420.2
2,935.6
1,291.8
528.0
763.9
1,374.2
288.0
3,097.5
1,280.8
500.8
780.1
1,511.2
281.0
3,316.9
1.366.5
548.7
817.8
1.635.6
308.4
3,165.9
1,264.8
474.0
790.8
1,560.5
284.3
3,210.9
1,292.2
482.7
809.5
1,588.4
290.9
3,286.6
1,346.8
536.8
810.0
1,623.4
301.9
3,353.7
1,388.9
568.9
820.0
1,651.0
322.3
18.4
3.6
14.8
-24.5
-15.5
-9.1
-6.4
-3.9
-2.5
-56.4
-45.0
-11.4
-39.4
-38.2
-1.2
-14.5
-8.9
-5.7
8.5
13.1
-4.5
1,513.8
1,485.4
1,535.3
1,480.7
1,490.1
1,525.1
1,553.4
31 Total
2,373.0
2,450.4
2.650.1
2,474.0
2.528.5
2,612.8
2,686.9
32 C o m p e n s a t i o n of e m p l o y e e s
33
W a g e s a n d salaries
34
Government and government e n t e r p r i s e s . . .
35
Other
36
S u p p l e m e n t t o w a g e s a n d salaries
37
E m p l o y e r c o n t r i b u t i o n s f o r social i n s u r a n c e
38
O t h e r labor i n c o m e
1,769.2
1,493.2
284.4
1.990.2
326.2
1,338.4
326.1
152.7
173.4
1,889.0
1,586.0
314.5
1,271.5
302.9
142.5
160.4
1,923.7
1.610.6
319.2
1,291.5
313.1
148.8
164.3
1.968.7
1,647.1
323.3
1.323.8
321.6
151.5
170.1
2,011.8
276.0
132.5
143.5
1,865.7
1,568.1
306.0
1,262.1
297.6
140.9
156.6
120.2
89.7
30.5
109.0
87.4
21.5
128.5
107.6
20.9
116.2
90.2
26.0
120.6
98.4
22.2
127.2
106.2
126.7
21.0
15.5
41.4
49.9
54.8
52.3
54.1
54.8
53.9
43 C o r p o r a t e p r o f i t s '
44
Profits b e f o r e t a x 3
45
Inventory valuation adjustment
46
Capital c o n s u m p t i o n a d j u s t m e n t
192.3
227.0
-23.6
164.8
174.2
-8.4
169.7
-1.7
13.9
218.2
203.3
-1.1
161.9
167.5
-10.3
4.7
-10.6
-11.0
229.1
207.5
-9.2
30.8
25.6
248.4
229.1
-18.3
37.6
47 N e t interest
249.9
261.1
247.5
254.7
248.3
243.8
246.1
1 Total
2
3
4
5
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
6 Gross private domestic investment
7
Fixed i n v e s t m e n t
8
Nonresidential
Structures
9
10
Producers' durable equipment
11
Residential s t r u c t u r e s
12
Nonfarm
13
14
C h a n g e in b u s i n e s s i n v e n t o r i e s
Nonfarm
By major type of
21 Final sales, total
22
Goods
23
Durable
24
Nondurable
25
Services
26
Structures
product
27 C h a n g e in b u s i n e s s i n v e n t o r i e s
28
Durable goods
29
Nondurable goods
30 MEMO: Total G N P in 1972 dollars
N A T I O N A L INCOME
39 P r o p r i e t o r s ' i n c o m e 1
40
Business and professional1
41
Farm1
42 Rental i n c o m e of p e r s o n s 2
1. With i n v e n t o r y v a l u a t i o n a n d capital c o n s u m p t i o n a d j u s t m e n t s .
2. W i t h capital c o n s u m p t i o n a d j u s t m e n t .
1,208.8
1,664.1
181.8
1,681.5
328.4
1,353.1
330.3
153.9
176.4
111.2
3. F o r a f t e r - t a x profits, d i v i d e n d s , and the like, see table 1.48.
SOURCE. Survey
of Current
Business
( D e p a r t m e n t of C o m m e r c e ) .
National Income Accounts
2.17
PERSONAL INCOME AND
A49
SAVING
Billions of current dollars; quarterly data are at s e a s o n a l l y adjusted annual rates. E x c e p t i o n s n o t e d .
1983
1982
Account
1981
1982
1983r
Q4
Q2
Q1
Q4'
Q3
PERSONAL INCOME A N D S A V I N G
1 Total personal income
2,435.0
2,578.6
2,742.1
2,632.0
2,657.7
2,713.6
2,761.9
2,835.2
? Wage and salary disbursements
3
Commodity-producing industries
4
Manufacturing
Distributive industries
6
Service industries
Government and government enterprises
7
1,493.2
509.5
385.3
361.6
337.7
284.4
1,568.1
509.2
383.8
378.8
374.1
306.0
1,664.6
529.7
402.8
397.2
411.5
326.2
1,586.0
499.5
377.4
383.5
388.5
314.5
1,610.7
508.6
385.4
386.4
396.4
319.2
1,648.4
522.2
397.4
394.3
407.3
324.6
1,681.9
537.8
409.2
398.9
416.4
328.8
1,717.3
550.0
419.0
409.3
425.8
332.1
156.6
109.0
87.4
21.5
49.9
66.4
366.2
374.6
204.5
173.4
128.5
107.6
20.9
54.8
70.5
366.3
403.6
222.8
160.4
116.2
90.2
26.0
52.3
67.9
363.1
399.0
216.5
164.3
120.6
98.4
22.2
54.1
68.8
357.2
398.5
217.4
170.1
127.2
106.2
21.0
54.8
69.3
357.1
405.3
221.1
176.4
126.7
111.2
15.5
53.9
70.9
369.9
402.6
223.8
182.7
139.4
114.5
25.0
56.2
72.9
381.1
408.1
228.8
112.0
119.5
112.9
116.5
118.6
120.5
122.5
2,761.9
2,835.2
16
Old-age survivors, disability, and health insurance b e n e f i t s . . . .
143.5
120.2
89.7
30.5
41.4
62.8
341.3
337.2
182.0
17
LESS: Personal contributions for social insurance
104.6
8
9 Proprietors' income 1
10
Business and professional 1
11
1? Rental income of persons 2
13
14 Personal interest income
IS
18 EQUALS: Personal income
19
LESS: Personal tax and nontax payments
20 EQUALS: Disposable personal income
21
LESS: Personal outlays
2,435.0
2,578.6
2,742.1
2,632.0
2,657.7
2,713.6
387.4
402.1
406.5
404.1
401.8
412.6
400.1
411.4
2,301.0
2,361.7
2,423.9
2,209.5
2,245.9
2,298.3
125.6
2,047.6
2,176.5
2,335.6
2,227.8
2,255.9
1,912.4
2,051.1
2,222.0
2,107.0
2,134.2
135.3
125.4
113.6
120.8
121.7
91.5
115.8
6,584.1
4,161.5
4,587.0
6.6
6,399.3
4,179.8
4,567.0
5.8
6,552.8
4,316.7
4,672.0
4.9
6,355.2
4,204.5
4,576.0
5.4
6,381.5
4,225.7
4,599.0
5.4
6,518.0
4,319.1
4,629.0
4.0
6,622.5
4,331.4
4,690.0
4.9
6,687.5
4,389.8
4,769.0
5.2
483.8
405.8
439.6
351.3
398.5
420.6
455.4
483.8
509.6
135.3
44.8
-23.6
521.6
125.4
37.0
-8.4
569.8
113.6
78.9
-9.2
526.6
120.8
37.5
-10.3
541.5
121.7
48.9
-1.7
535.0
91.5
70.1
-10.6
587.2
115.8
89.7
-18.3
615.7
125.6
106.9
-6.3
Capital consumption
allowances
3?
33 Noncorporate
34 Wage accruals less disbursements
202.9
126.6
.0
222.0
137.2
.0
231.6
145.7
.0
227.7
140.5
.0
228.3
142.6
.0
229.8
143.5
.0
233.1
148.6
.0
235.2
148.0
.0
35 Government surplus, or deficit ( - ) , national income and
product accounts
36
37
State and local
-26.9
-62.2
35.3
-115.8
-147.1
31.3
—130.2
-181.6
51.4
-175.3
-208.2
32.9
-142.9
-183.3
40.4
-114.4
-166.1
51.7
-131.8
-187.3
55.5
-131.8
-189.9
58.1
22 EQUALS: Personal saving
MEMO
Per capita (1972 dollars)
Gross national product
73
74
Personal consumption expenditures
75
Disposable personal income
26 Saving rate (percent)
GROSS S A V I N G
27 Gross saving
7.8
79
30
31
Gross private saving
Personal saving
Undistributed corporate profits 1
Corporate inventory valuation adjustment
1.1
.0
.0
.0
.0
.0
.0
.0
39 Gross investment
478.9
406.2
437.4
355.5
397.4
417.1
457.9
477.1
40 Gross private domestic
41 Net foreign
474.9
4.0
414.5
-8.3
471.9
-34.6
377.4
-21.9
404.1
-6.7
450.1
-33.0
501.1
-43.2
532.5
-55.3
-4.9
.5
-2.2
4.2
-1.2
-3.5
2.5
-6.7
38 Capital grants received by the United States, net
42 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
SOURCE. Survey of Current Business (Department of Commerce).
A50
International Statistics • April 1984
3.10
U.S. INTERNATIONAL TRANSACTIONS
Summary
Millions of dollars; quarterly data are seasonally adjusted except as noted. 1
1982
Item credits or debits
1981
1982
1983
1983P
Q4
QK
Q4 P
Q3
Q2'
4,592
-11,211
-40,776
-6,621
-5,546
-3,665
-3,395
-9,747
-8,898
-12,074
-14,101
-15,291
-14,382
-28,067
237,019
-265,086
-1,355
33,484
7,462
-36,389
211,217
-247,606
179
27,304
5,729
-60,550
200,203
-260,753
483
23,581
4,309
-11,354
48,344
-59,698
-26
6,008
1,182
-8,856
49,350
-58,206
516
5,036
1,200
-14,705
48,757
-63,462
117
5,630
1,034
-18,178
50,429
-68,607
-132
6,881
1,470
-18,811
51,667
-70,478
-17
6,032
604
-2,382
-4,549
-2,621
-5,413
-2,631
-5,967
-661
-1,770
-608
-953
-636
-1,187
-662
-1,453
-724
-2,375
11 Change in U . S . g o v e r n m e n t assets, other than official
reserve assets, net (increase, - )
-5,078
-5,732
-4,897
-934
-1,053
-1,162
-1,206
-1,476
12 Change in U . S . official r e s e r v e assets (increase, - )
13
Gold
14
Special drawing rights (SDRs)
15
Reserve position in International Monetary F u n d
16
Foreign currencies
-5,175
0
-1,823
-2,491
-861
-4,965
0
-1,371
-2,552
-1,041
-1,196
0
-66
-4,434
3,304
-1,949
0
-297
-732
-920
-787
0
-98
-2,139
1,450
16
0
-303
-212
531
529
0
-209
-88
826
-953
0
545
-1,996
498
17 Change in U . S . private assets a b r o a d (increase, - ) 3
18
Bank-reported claims
19
Nonbank-reported claims
20
U.S. purchase of foreign securities, net
21
U.S. direct investments a b r o a d , net 3
-100,348
-83,851
-1,181
-5,636
-9,680
-107,348
-109,346
6,976
-7,986
3,008
-43,204
-24,966
-3,146
-7,484
-7,608
-16,670
-17,511
2,337
-3,527
2,031
-19,793
-15,935
-2,374
-1,808
324
570
5,166
-440
-3,222
-934
-8,449
-2,025
-332
-1,543
-4,549
-15,532
-12,172
n.a.
-912
-2,448
5,430
4,983
1,289
-28
-3,479
2,665
3,172
5,759
-670
504
-2,054
-367
6,083
7,140
-464
318
877
-1,788
1,661
4,346
-556
130
-1,717
-542
49
3,008
-371
-270
-1,939
-379
1,973
1,955
-170
403
611
-826
-2,581
-538
-363
207
-1,425
-462
6,642
2,715
440
-22
3,630
-121
28 Change in foreign private assets in the United States
(increase, + ) 3
29
U.S. bank-reported liabilities
30
U.S. nonbank-reported liabilities
31
Foreign private purchases of U . S . T r e a s u r y securities, net
32
Foreign purchases of other U.S. securities, net
33
Foreign direct investments in the United States, net 3
75,248
42,154
942
2,982
7,171
21,998
84,693
64,263
-3,104
7,004
6,141
10,390
76,935
51,295
-1,060
8,599
8,587
9,514
9,856
2,823
20
2,257
1,975
2,781
16,404
10,588
-2,136
2,912
2,986
2,054
8,984
919
134
3,072
2,628
2,231
22,028
15,068
942
1,011
1,842
3,165
29,521
24,720
n.a.
1,604
1,132
2,065
34 Allocation of SDRs
35 Discrepancy
1,093
24,238
0
41,390
0
7,054
0
14,657
1,042
0
8,845
-200
0
-634
802
0
1,753
-1,361
0
-2,911
758
24,238
41,390
7,054
13,615
9,045
-1,436
3,114
-3,669
-5,175
-4,965
-1,196
-1,949
-787
16
529
-953
5,458
2,668
5,765
1,531
319
1,570
-2,788
6,664
13,581
7,420
-8,591
-1,162
-1,397
-3,433
-2,104
-1,657
680
644
209
158
42
30
49
88
1 Balance on current a c c o u n t
3
4
5
6
7
8
9
10
Merchandise trade balance 2
Merchandise e x p o r t s
Merchandise imports
Military transactions, net
Investment income, net 3
Other service transactions, net
Remittances, pensions, and o t h e r transfers
U.S. government grants (excluding military)
22 Change in foreign official assets in the United States
(increase, + )
23
U.S. Treasury securities
24
Other U . S . government obligations
25
Other U.S. government liabilities 4
26
Other U . S . liabilities reported by U . S . banks
27
Other foreign official assets 5
37
Statistical discrepancy in recorded data b e f o r e seasonal
adjustment
MEMO
Changes in official assets
U . S . official reserve assets (increase, - )
Foreign official assets in the United States
(increase, + )
40 Change in Organization of Petroleum Exporting Countries
official assets in the United States (part of line 22
above)
41 Transfers under military grant programs (excluded f r o m
lines 4, 6, and 10 above)
38
39
1. Seasonal factors are no longer calculated for lines 12 through 41.
2. D a t a are on an international accounts (IA) basis. Differs f r o m the C e n s u s
basis data, shown in table 3.11, for reasons of coverage and timing; military
exports are excluded f r o m merchandise data and are included in line 6.
3. Includes reinvested earnings of incorporated affiliates.
4. Primarily associated with military sales contracts and other transactions
arranged with or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of
private corporations and state and local g o v e r n m e n t s .
NOTE. Data are from Bureau of E c o n o m i c Analysis, Survey of Current
(Department of Commerce).
Business
Trade and Reserve and Official Assets
3.11
A51
U.S. FOREIGN TRADE
Millions of dollars; m o n t h l y data are s e a s o n a l l y a d j u s t e d .
1984
1983
1981
Item
1982
1983
Sept.
Aug.
Nov.
Oct.
Dec.
Feb.
Jan.
1
EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments
2
G E N E R A L IMPORTS including merchandise for immediate consumption plus entries into bonded
warehouses
261,305
243,952
258,048
22,714
22,451
24,333
23,115
22,976
26,586
26,147
3
Trade balance
-27,628
-31,759
-57,562
-6,132
-5,195
-7,300
-6,052
-5,678
-8,260
-8,935
233,677
212,193
200,486
17,063
17,033
17,298
18,326
17,212
not covered in Census statistics, and (2) the exclusion of military sales (which are
combined with other military transactions and reported separately in the "service
account" in table 3.10, line 6). On the import side, additions are made for gold,
ship purchases, imports of electricity from Canada, and other transactions;
military payments are excluded and shown separately as indicated above.
NOTE. The data through 1981 in this table are reported by the Bureau of Census
data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of
export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in
the Census basis trade data; this adjustment has been made for all data shown in
the table. Beginning with 1982 data, the value of imports are on a customs
valuation basis.
The Census basis data differ from merchandise trade data shown in table 3.10,
U.S. International Transactions Summary, for reasons of coverage and timing. On
the export side, the largest adjustments are: (1) the addition of exports to Canada
3.12
17,257
16,582
SOURCE. FT900 "Summary of U.S. Export and Import Merchandise T r a d e "
(Department of Commerce, Bureau of the Census).
U.S. RESERVE ASSETS
Millions of dollars, e n d of period
1984
1983
1980
Type
1981
1982
Sept.
1
Total
2
Gold stock, including Exchange Stabilization Fund 1
2 3
3
Special drawing rights
4
Reserve position in International Monetary Fund 2
5
Foreign currencies 4 5
Dec.
Feb.
Jan.
Mar.
26,756
30,075
33,958
33,066
33,273
33,655
33,747
33,887
34,823
34,978
11,160
11,151
11,148
11,128
11,126
11,123
11,121
11,120
11,116
11,111
2,610
4,095
5,250
5,628
5,641
5,735
5,025
5,050
5,320
5,341
11,422
11,710
11,709
6,677
6,817
2,852
5,055
7,348
9,399
9,554
9,883
11,312
10,134
9,774
10,212
6,911
6,952
6,914
6,289
6,295'
3. Includes allocations by the International Monetary Fund of SDRs as follows:
$867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1,
1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093
million on Jan. 1, 1981; plus transactions in SDRs.
4. Valued at current market exchange rates.
5. Includes U.S. government securities held under repurchase agreement
against receipt of foreign currencies in 1979 and 1980.
1. Gold held under earmark at Federal Reserve Banks for foreign and international accounts is not included in the gold stock of the United States; see table
3.13. Gold stock is valued at $42.22 per fine troy ounce.
2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based
on a weighted average of exchange rates for the currencies of member countries.
From July 1974 through December 1980, 16 currencies were used; from January
1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in
the IMF also are valued on this basis beginning July 1974.
3.13
Nov.
Oct.
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS
Millions o f dollars, e n d of period
1984
1983
Assets
1980
1981
1982
Sept.
1 Deposits
Assets held in custody
2 U.S. Treasury securities'
3 Earmarked gold 2
Nov.
Dec.
Jan.
Feb.
Mar.
411
505
328
297
339
360
190
251
246
222
102,417
14,965
104,680
14,804
112,544
14,716
113,498
14,621
116,327
14,550
116,398
14,475
117,670
14,414
117,076
14,347
119,499
14,291
116,768
14,278
1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S.
Treasury securities payable in dollars and in foreign currencies.
2. Earmarked gold is valued at $42.22 per fine troy ounce.
Oct.
NOTE. Excludes deposits and U.S. Treasury securities held for international
and regional organizations. Earmarked gold is gold held for foreign and international accounts and is not included in the gold stock of the United States.
A52
3.14
International Statistics • April 1984
FOREIGN BRANCHES OF U.S. BANKS
Balance Sheet Data
Millions o f d o l l a r s , e n d o f p e r i o d
1983
1984
lyoZ
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.?
All foreign countries
1 Total, all currencies
2 Claims on United States
Parent bank
3
4
Other
5 Claims on foreigners
Other branches of parent bank
6
7
Banks
8
Public borrowers
Nonbank foreigners
9
10 Other assets
11 Total payable in U.S. dollars
12 Claims on United States
Parent bank
13
Other
14
15 Claims on foreigners
16
Other branches of parent bank
17
Banks
18
Public borrowers
19
Nonbank foreigners
20 Other assets
401,135
462,847
469,432
455,850
452,5%
460,261
458,894
463,467
475,683
453,900
28,460
20,202
8,258
63,743
43,267
20,476
91,768
61,629
30,139
96,963
67,731
29,232
99,484
67,137
32,347
101,356
65,561
35,795
102,497
69,655
32,842
109,511
75,521 r
33,99C
114,902
81,004
33,898
110,969
76,430
34,539
354,960
77,019
146,448
28,033
103,460
378,954
87,821
150,763
28,197
112,173
358,258
91,143
133,640
24,090
109,385
340,994
84,872
123,536
25,876
106,710
335,036
84,572
119,288
25,147
106,029
340,413
89,304
120,177
24,982
105,950
337,848
87,543
117,631
25,061
107,613
335,518
89,447
114,495
24,256
107,320
342,162
92,682
117,538
24,450
107,492
323,890
86,662
106,885
23,943
106,400
17,715
20,150
19,406
17,893
18,076
18,492
18,549
18,438
18,619
19,041
291,798
350,735
361,712
350,507
348,330
354,595
351,483
358,204
370,557
348,380
27,191
19,896
7,295
62,142
42,721
19,421
90,048
60,973
29,075
94,549
66,303
28,246
%,995
65,711
31,284
98,510
63,716
34,794
99.938
68.126
31,812
107,015
73,999'
33,016'
112,748
79,866
32,882
108,866
75,283
33,583
255,391
58,541
117,342
23,491
56,017
276,937
69,398
122,110
22,877
62,552
259,646
73,512
106,338
18,374
61,422
245,188
67,163
97,194
19,108
61,723
241,063
66,609
93,806
18,804
61,844
245,541
71,273
95,113
18,455
60,700
241,221
69,324
92,048
18.644
61,205
240,768
71,451
90,143
17,752
61,422
247,224
75,153
93,236
17,907
60,928
228,845
68,802
82,561
17,670
59,812
9,216
11,656
12,018
10,770
10,272
10,544
10,324
10,421
10,585
10,669
155,964
158,807
155,016
34,405
29,111
5,294
35,634
29,759
5,875
119,398
36,565
43,362
5,988
33,483
114,083
34,638
40,126
6,056
33,263
United Kingdom
21 Total, all currencies
22 Claims on United States
Parent bank
23
24
Other
25 Claims on foreigners
Other branches of parent bank
26
27
Banks
Public borrowers
28
Nonbank foreigners
29
30 Other assets
31 Total payable in U.S. dollars
32 Claims on United States
Parent bank
33
Other
34
35 Claims on foreigners
36
Other branches of parent bank
37
Banks
38
Public borrowers
39
Nonbank foreigners
40 Other assets
144,717
157,229
161,067
153,209
154,865
156,048
156,803
7,509
5,275
2,234
11,823
7,885
3,938
27,354
23,017
4,337
26,012
20,849
5,163
29,722
22,169
7,553
28,947
20,816
8,131
30,853
25,507
5,346
131,142
34,760
58,741
6,688
30,953
138,888
41,367
56,315
7,490
33,716
127,734
37,000
50.767
6,240
33,727
121,757
35,632
46,643
6,440
33,042
119,672
35,555
44,303
6,342
33,472
121,518
36,382
45,451
6,274
33,411
120,660
36,556
43,888
6,280
33,936
32,352
26,872'
5,480'
118,275
35,642
42,683
6,307
33,643
6,066
6,518
5,979
5,440
5,471
5,583
5,290
5,337
5,004
5,299
99,699
115,188
123,740
116,526
119,377
121,238
121,817
121,744
126,087
121,115
7,116
5,229
1,887
11,246
7,721
3,525
26,761
22,756
4,005
25,180
20,434
4,746
28,905
21,720
7,185
27,837
20,036
7,801
30,095
25,084
5,011
31,671
26,537'
5,134'
33,728
28,756
4,972
34,917
29,414
5,503
89,723
28,268
42,073
4,911
14,471
99,850
35,439
40,703
5,595
18,113
92,228
31,648
36,717
4,329
19,534
87,450
30,122
33,159
4,420
19,749
86,868
30,053
31,718
4,410
20,687
89,530
31,409
33,237
4,329
20,555
88,253
31,414
31,796
4,346
20,697
86,614
30,371
31,158
4,377
20,708
89,035
31,838
32,198
4,284
20,715
82,957
29,537
28,756
4,349
20,315
2,860
4,092
4,751
3,8%
3,604
3,871
3,469
3,459
3,324
3,241
Bahamas and Caymans
41 Total, all currencies
42 Claims on United States
Parent bank
43
44
Other
45 Claims on foreigners
46
Other branches of parent bank
47
Banks
48
Public borrowers
Nonbank foreigners
49
50 Other assets
51 Total payable in U.S. dollars
123,837
149,108
145,156
142,432
139,699
143,148
141,311
147,257
151,463
141,293
17,751
12,631
5,120
46,546
31,643
14,903
59,403
34,653
24,750
66,032
42,946
23,086
63,923
40,308
23,615
66,547
40,152
26,395
66,253
40,105
26,148
71,363
44,414
26,949
74,702
47,703
26,999
70,459
43,174
27,285
101,926
13,342
54,861
12,577
21,146
98,057
12,951
55,151
10,010
19,945
81,450
18,720
42,699
6,413
13,618
72,683
15,568
37,381
6,538
13,196
72,021
15,354
37,350
6,404
12,913
72,826
16,789
36,609
6,461
12,967
71,268
15,817
35,964
6,643
12,844
71,995
17,993
35,353
5,890
12,759
72,814
17,343
36,764
6,084
12,623
66,916
15,989
32,451
5,992
12,484
4,160
4,505
4,303
3,717
3,755
3,775
3,790
3,899
3,947
3,918
117,654
143,743
139,605
136,301
133,233
136,851
134,684
140,841
144,969
134,881
Overseas Branches
3.14
A53
Continued
1984
1983
Liability account
1980
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan .P
All foreign countries
52 Total, all currencies
53 To United States
Parent bank
54
55
Other banks in United States
56
Nonbanks
57 To foreigners
58
Other branches of parent bank
59
Banks
60
Official institutions
61
Nonbank foreigners
62 Other liabilities
63 Total payable in U.S. dollars
64 To United States
65
Parent bank
66
Other banks in United States
Nonbanks
67
68 To foreigners
69
Other branches of parent bank
70
Banks
71
Official institutions
Nonbank foreigners
72
73 Other liabilities
401,135
462,847
469,432
455,850
452,596
460,261
458,894
463,467
475,683
453,900
91,079
39,286
14,473
37,275
137,767
56,344
19,197
62,226
178,918
75,561
33,368
69,989
187,713
81,752
31,489
74,472
183,864
77,556
29,880
76,428
182,664
78,027
30,982
73,655
185,599
85,028'
27,094'
73,477'
184,257
79,574'
26,264'
78,419'
187,243
80,256
29,157
77,830
179,305
76,848
26,725
75,732
295,411
75,773
132,116
32,473
55,049
305,630
86,396
124,906
25,997
68,331
270,678
90,148
96,739
19,614
64,177
249,823
83,911
84,649
18,287
62,976
250,563
82,871
85,433
17,830
64,429
259,449
88,055
86,550
20,513
64,331
254,634
85,566
84,533
19,403
65,132
260,280
88,346
88,023
18,377
65,534
269,293
90,860
92,903
18,801
66,729
255,728
81,983
86,436
19,507
67,802
14,690
19,450
19,836
18,314
18,169
18,148
18,661
18,930
19,147
18,867
303,281
364,447
379,003
368,650
365,583
373,060
369,935
374,425
387,376
365,082
88,157
37,528
14,203
36,426
134,700
54,492
18,883
61,325
175,431
73,235
33,003
69,193
184,215
79,496
31,115
73,604
180,173
75,244
29,334
75,595
178,889
75,742
30,415
72,732
181,692
82,660
26,538'
72,494'
180,260
77,126
25,773'
77,361'
183,516
78,042
28,623
76,851
175,486
74,503
26,224
74,759
206,883
58,172
87,497
24,697
36,517
217,602
69,299
79,594
20,288
48,421
192,348
72,878
57,355
15,055
47,060
174,836
67,228
48,062
13,517
46,029
175,616
65,679
49,522
13,029
47,386
184,354
70,649
50,862
15,400
47,443
178,895
68,064
48,264
14,630
47,937
184,223
71,011
52,072
13,453
47,687
194,131
73,867
57,116
13,852
49,296
180,558
64,926
50,490
14,686
50,456
8,241
12,145
11,224
9,599
9,794
9,817
9,348
9,942
9,729
9,038
United Kingdom
74 Total, all currencies
75 To United States
76
Parent bank
Other banks in United States
77
Nonbanks
78
79 To foreigners
Other branches of parent bank
80
81
Banks
8?
Official institutions
Nonbank foreigners
83
144,717
157,229
161,067
153,209
154,865
156,048
156,803
155,964
158,807
155,016
21,785
4,225
5,716
11,844
38,022
5,444
7,502
25,076
53,954
13,091
12,205
28,658
56,959
15,011
12,993
28,955
58,347
16,145
12,462
29,740
56,924
16,852
12,174
27,898
60,903
21,385
10,751
28,767
57,095
17,312
10,176
29,607
55,799
14,021
11,328
30,450
55,623
17,080
10,640
27,903
117,438
15,384
56,262
21,412
24,380
112,255
16,545
51,336
16,517
27,857
99,567
18,361
44,020
11,504
25,682
89,198
17,544
37,192
10,146
24,316
89,458
17,595
37,571
9,588
24,704
92,122
19,365
37,122
11,448
24,187
88,727
18,288
35,847
10,611
23,981
91,714
18,841
38,888
10,071
23,914
95,944
19,045
41,714
10.151
25,034
92,268
18,526
38,812
10,530
24,400
5,494
6,952
7,546
7,052
7,060
7,002
7,173
7,155
7,064
7,125
103,440
120,277
130,261
123,265
125,656
127,868
128,600
127,234
131,242
126,907
86 To United States
Parent bank
87
Other banks in United States
88
Nonbanks
89
21,080
4,078
5,626
11,376
37,332
5,350
7,249
24,733
53,029
12,814
12,026
28,189
56,081
14,812
12,833
28,436
57,359
15,829
12,223
29,307
55,931
16,673
11,886
27,372
59,824
21,145
10,523
28,156
55,907
17,094
9,880
28,933
54,691
13,839
11,044
29,808
54,540
16,843
10,406
27,291
90 To foreigners
91
Other branches of parent bank
9?
Banks
93
Official institutions
94
Nonbank foreigners
79,636
10,474
35,388
17,024
16,750
79,034
12,048
32,298
13,612
21,076
73,477
14,300
28,810
9,668
20,699
63,818
13,386
23,453
8,065
18,914
64,801
13,421
24,447
7,630
19,303
68,252
15,166
24,478
9,381
19,227
65,347
14,542
23,136
8,742
18,927
68,011
15,044
26,343
8,029
18,595
73,376
15,410
29,410
8,279
20,277
69,557
14,758
26,386
8,594
19,819
2,724
3,911
3,755
3,366
3,496
3,685
3,429
3,316
3,175
2,850
84 Other liabilities
85 Total payable in U.S. dollars
95 Other liabilities
Bahamas and Caymans
123,837
149,108
145,156
142,432
139,699
143,148
141,311
147,257
151,463
141,293
97 To United States
98
Parent bank
99
Other banks in United States
Nonbanks
100
59,666
28,181
7,379
24,106
85,759
39,451
10,474
35,834
104,425
47,081
18,466
38,878
108,623
50,777
15,494
42,352
104,470
46,491
14,560
43,419
104,666
45,493
16,191
42,982
104,198
48,235'
14,322'
41,641'
106,688
46,676'
14,117'
45,895'
110,727
50,187
15,693
44,847
103,943
44,604
14,398
44,941
101 To foreigners
10?
Other branches of parent bank
103
Banks
Official institutions
104
Nonbank foreigners
105
61,218
17,040
29,895
4,361
9,922
60,012
20,641
23,202
3,498
12,671
38,274
15,796
10,166
1,967
10,345
31,560
12,262
8,012
2,101
9,185
32,875
12,778
8,737
2,170
9,190
36,163
14,698
9,506
2,237
9,722
34,734
14,196
9,059
1,976
9,503
38,109
17,075
9,618
1,624
9,792
38,397
15,123
11,882
1,916
9,476
35,110
12,253
9,877
2,309
10,671
96 Total, all currencies
106 Other liabilities
107 Total payable in U.S. dollars
2,953
3,337
2,457
2,249
2,354
2,319
2,379
2,460
2,339
2,240
119,657
145,284
141,908
139,246
136,227
139,854
137,513
143,603
147,657
137,428
A54
International Statistics • April 1984
3.15
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions o f dollars, e n d o f period
1983
Item
1 Total
2
3
4
5
6
7
8
9
10
11
12
1
By type
Liabilities reported by banks in the United States 2
U.S. Treasury bills and certificates 3
U.S. Treasury bonds and notes
Marketable
Nonmarketable 4
U.S. securities other than U.S. Treasury securities 5
By area
Western Europe 1
Canada
Latin America and Caribbean
Asia
Africa
Other countries 6
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
Feb.''
169,735
172,718
172,799
171,550
173,272
173,915
177,906
176,316
176,826
26,737
52,389
24,989
46,658
22,239
50,965
21,914
50,374
22,057
51,618
22,816
52,558
25,422
54,341
22,829
55,327
23,133
56,084
53,186
11,791
25,632
67,733
8,750
24,588
69,295
7,950
22,350
69,300
7,950
22,012
69,769
7,950
21,878
68,995
7,250
22,2%
68,594
7,250
22,299
69,106
7,250
21,804
69,151
6,600
21,858
65,699
2,403
6,953
91,607
1,829
1,244
61,298
2,070
6,057
96,034
1,350
5,909
64,427
2,755
5,676
93,183
1,173
5,585
63,845
2,712
5,501
92,876
1,1%
5,420
64,835
2,816
5,629
92,415
1,023
6,554
65,588
2,670
6,468
91,566
798
6,825
67,608
2,443
6,217
92,589
958
8,092
66,113
2,516
6,504
92,286
1,051
7,846
67,852
2,334
7,600
90,626
1,013
7,401
5. Debt securities of U.S. government corporations and federally sponsored
agencies, and U.S. corporate stocks and bonds.
6. Includes countries in Oceania and Eastern Europe.
1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness (including those payable in foreign currencies through 1974) and Treasury bills issued to official
institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes
bonds and notes payable in foreign currencies.
3.16
1984
1982
1981
NOTE. Based on Treasury Department data and on data reported to the
Treasury Department by banks (including Federal Reserve Banks) and securities
dealers in the United States.
LIABILITIES TO A N D CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, e n d o f period
1983
Item
1980
1981
1982
Mar.
1 Banks' own liabilities
2 Banks' own claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers'
1. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the accounts
of their domestic customers.
3,748
4,206
2,507
1,699
962
3,523
4,980
3,398
1,582
971
4,844
7,707
4,251
3,456
676
5,075
8,097
3,725
4,372
637
June
5,867
7,851
3,911
3,940
684
Sept.
5,943
7,919
3,063
4,856
717
Dec.
5,205
7,256
2,838
4,418
1,059
NOTE. Data on claims exclude foreign currencies held by U.S. monetary
authorities,
Nonbank-Reported
3.17
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Data
Reported by Banks in the United States
Millions o f dollars, e n d o f period
1983
Holder and type of liability
1980
1981A
1984
1982
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
Feb .P
1 AH foreigners
205,297
243,889
307,056
334,931
337,910
337,766
351,499
371,775
358,626
367,967
2 Banks' own liabilities
Demand deposits
3
4
Time deposits'
5
Other 2
6
Own foreign offices 3
124,791
23,462
15,076
17,583
68,670
163,817
19,631
29,039
17,647
97,500
227,089
15,889
68,035
23,946
119,219
248,250
15,672
77,888
23,905
130,785
251,421
16,375
81,091
24,956
129,000
248,888
17,094
80,468
22,565
128,760
262,343
17,198
84,308
23,149
137,688
281,193
17,594
90,090
26,100
147,408
264,621
16,142
87,644
23,178
137,658
270,990
16,625
91,036
23,964
139,365
80,506
57,595
80,072
55,315
79,967
55,628
86,682
63,939
86,488
64,062
88,878
65,735
89,156
66,746
90,582
68,669
94,006
71,083
96,977
74,248
20,079
2,832
18,788
5,970
20,636
3,702
17,977
4,765
17,292
5,135
17,182
5,961
17,721
4,690
17,529
4,385
18,061
4,862
17,843
4,886
2,344
2,721
4,922
5,555
5,308
4,619
6,321
5,957
4,759
6,781
444
146
85
212
638
262
58
318
1,909
106
1,664
139
3,433
325
2,507
601
3,024
252
2,168
605
3,294
452
2,487
355
4,897
437
4,079
381
4,632
297
3,885
449
2,867
271
2,235
361
2,267
347
1,611
310
1,900
254
2,083
541
3,013
1,621
2,121
1,294
2,284
1,442
1,325
441
1,424
484
1,325
463
1,892
1,045
4,514
3,416
1,646
0
1,542
0
1,392
0
828
0
842
0
884
0
939
0
862
0
847
0
1,098
0
Banks' custody liabilities 4
U.S. Treasury bills and certificates 5
Other negotiable and readily transferable
instruments 6
10
Other
1
8
9
11 Nonmonetary international and regional
organizations7
12 Banks' own liabilities
Demand deposits
13
14
Time deposits'
15
Other 2
16 Banks' custody liabilities 4
17
U.S. Treasury bills and certificates
18
Other negotiable and readily transferable
instruments 6
19
Other
20 Official institutions8
86,624
79,126
71,647
73,205
72,289
73,675
75,374
79,764
78,156
79,217
21 Banks' own liabilities
22
Demand deposits
23
Time deposits'
24
Other 2
17,826
3,771
3,612
10,443
17,109
2,564
4,230
10,315
16,640
1,899
5,528
9,212
16,014
1,685
5,990
8,340
16,147
1,930
6,185
8,033
16,532
1,818
6,657
8,057
16,673
2,023
6,709
7,940
19,315
1,837
7,294
10,184
16,549
1,777
7,328
7,444
17,476
1,663
7,578
8,235
25 Banks' custody liabilities 4
26
U.S. Treasury bills and certificates 5
27
Other negotiable and readily transferable
instruments 6
28
Other
68,798
56,243
62,018
52,389
55,008
46,658
57,191
50,965
56,142
50,374
57,144
51,618
58,701
52,558
60,448
54,341
61,607
55,327
61,741
56,084
12,501
54
9,581
47
8,321
28
6,186
39
5,735
32
5,489
36
6,115
28
6,082
25
6,257
23
5,623
34
29 Banks'
96,415
136,008
185,881
203,153
205,879
203,637
214,169
229,034
218,004
221,837
30 Banks' own liabilities
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits'
34
Other 2
35
Own foreign offices 3
90,456
21,786
14,188
1,703
5,895
68,670
124,312
26,812
11,614
8,720
6,477
97,500
169,449
50,230
8,675
28,386
13,169
119,219
182,700
51,914
8,302
29,300
14,312
130,785
184,811
55,811
8,618
31,468
15,725
129,000
181,696
52,936
9,102
30,329
13,505
128,760
192,731
55,043
8,770
32,265
14,008
137,688
207,494
60,086
8,756
36,726
14,604
147,408
195,429
57,772
8,150
34,980
14,642
137,658
199,324
59,959
8,384
37,040
14,535
139,365
5,959
623
11,696
1,685
16,432
5,809
20,454
9,028
21,069
9,440
21,941
10,036
21,438
9,967
21,540
10,178
22,575
10,776
22,513
10,750
2,748
2,588
4,400
5,611
7,857
2,766
7,581
3,845
7,553
4,075
7,542
4,363
7,251
4,221
7,485
3,877
7,414
4,384
7,395
4,368
40 Other foreigners
19,914
26,035
44,606
53,018
54,433
55,834
55,635
57,021
57,707
60,132
41 Banks' own liabilities
42
Demand deposits
43
Time deposits
44
Other 2
16,065
5,356
9,676
1,033
21,759
5,191
16,030
537
39,092
5,209
32,457
1,426
46,103
5,360
40,091
652
47,439
5,575
41,270
594
47,366
5,723
40,995
648
48,042
5,968
41,255
819
49,751
6,703
42,185
863
49,775
5,944
43,101
730
51,923
6,231
44,807
884
3,849
474
4,276
699
5,514
1,540
6,916
2,652
6,995
2,805
8,468
3,640
7,593
3,737
7,269
3,686
7,932
3,935
8,209
3,998
3,185
190
3,265
312
3,065
908
3,383
881
3,162
1,028
3,267
1,562
3,415
441
3,100
483
3,542
455
3,727
484
10,745
10,747
14,307
10,720
10,336
9,995
10,385
10,407
10,307
9,380
36 Banks' custody liabilities 4
37
U.S. Treasury bills and certificates
38
Other negotiable and readily transferable
instruments 6
39
Other
45 Banks' custody liabilities 4
46
U.S. Treasury bills and certificates
47
Other negotiable and readily transferable
instruments 6
48
Other
49 MEMO: Negotiable time certificates of
deposit in custody for foreigners
1. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
2. Includes borrowing under repurchase agreements.
3. U.S. banks: includes amounts due to own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due to head office or parent foreign bank, and
foreign branches, agencies or wholly owned subsidiaries of head office or parent
foreign bank.
4. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
5. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
6. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
7. Principally the International Bank for Reconstruction and Development, and
the Inter-American and Asian Development Banks.
8. Foreign central banks and foreign central governments, and the Bank for
International Settlements.
9. Excludes central banks, which are included in "Official institutions."
• Liabilities and claims of banks in the United States were increased,
beginning in December 1981, by the shift from foreign branches to international
banking facilities in the United States of liabilities to, and claims on, foreign
residents.
A55
A56
3.17
International Statistics • April 1984
Continued
1983
Area and country
1980
1981 •
1984
1982
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.P
1 Total
205,297
243,889
307,056
334,931
337,910
337,766
351,499
371,775'
358,626
367,967
2 Foreign countries
202,953
241,168
302,134
329,377
332,601
333,147
345,178
365,818'
353,867
361,186
90,897
523
4,019
497
455
12,125
9,973
670
7,572
2,441
1,344
374
1,500
1,737
16,689
242
22,680
681
6,939
68
370
91,275
596
4,117
333
296
8,486
7,645
463
7,267
2,823
1,457
354
916
1,545
18,716
518
28,286
375
6,541
49
493
117,756
519
2,517
509
748
8,171
5,351
537
5,626
3,362
1,567
388
1,405
1,390
29,066
296
48,172
499
7,006
50
576
123,607
556
3,116
573
459
8,488
3,537
636
7,277
3,633
1,044
315
1,585
1,204
29,877
315
53,768
462
6,347
31
384
125,850
659
2,795
593
373
8,827
3,438
604
6,931
3,892
1,457
302
1,678
1,337
29,938
333
55,602
506
6,038
23
525
126,694
570
2,853
544
372
8,638
4,307
595
7,703
3,735
1,072
297
1,592
1,489
30,725
277
54,746
464
6,102
37
576
130,091
641
2,465
538
375
8,083
4,337
544
7,819
3,701
1,531
306
1,534
1,652
30,482
319
58,007
552
6,660
27
518
138,006'
585
2,709
466
531
9,441'
3,599'
520
8,459
4,290
1,673
373
1,603'
1,799
32,117'
467
60,658'
562
7,493'
65
596'
134,858
745
2,979
372
298
8,117
3,820
513
7,622
4,008
1,481
377
1,645
1,843
32,008
334
61,772
505
5,872
62
485
140,227
756
3,176
385
400
10,094
4,582
512
7,640
4,200
1,452
351
1,663
1,767
32,220
400
64,538
477
5,015
94
506
3 Europe :
4
Austria
5
Belgium-Luxembourg
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
11
Italy
12
Netherlands
13
Norway
14
Portugal
15
Spain
Sweden
16
17
Switzerland
18
Turkey
19
United Kingdom
20
Yugoslavia
21
Other Western Europe 1
22
U.S.S.R
23
Other Eastern Europe 2
24 Canada
10,031
10,250
12,232
17,918
16,470
16,325
16,349
16,025
16,268
17,681
25 Latin America and Caribbean
26
Argentina
27
Bahamas
28
Bermuda
Brazil
29
30
British West Indies
31
Chile
32
Colombia
Cuba
33
34
Ecuador
35
Guatemala
36
Jamaica
37
Mexico
38
Netherlands Antilles
39
Panama
40
Peru
41
Uruguay
42
Venezuela
43
Other Latin America and Caribbean
53,170
2,132
16,381
670
1,216
12,766
460
3,077
6
371
367
97
4,547
413
4,718
403
254
3,170
2,123
85,223
2,445
34,856
765
1,568
17,794
664
2,993
9
434
479
87
7,235
3,182
4,857
694
367
4,245
2,548
114,163
3,578
44,744
1,572
2,014
26,381
1,626
2,594
9
455
670
126
8,377
3,597
4,805
1,147
759
8,417
3,291
126,631
4,249
51,992
2,849
3,046
26,967
1,472
1,674
12
601
718
106
9,445
3,486
5,934
1,129
1,033
8,587
3,331
127,077
4,148
49,859
2,833
3,406
28,442
1,613
1,611
10
670
758
109
9,697
3,581
6,079
1,203
1,116
8,382
3,561
127,237
4,018
51,180
2,632
3,818
27,410
1,697
1,617
10
825
750
105
9,449
3,858
5,902
1,049
1,202
8,202
3,513
135,056
4,377
53,551
2,582
4,150
31,695
1,783
1,645
10
1,003
766
234
9,463
3,941
5,944
1,090
1,173
8,024
3,626
142,583'
4,011
55,870'
2,328'
3,364
36,781'
1,842
1,689
8
1,047
788
109'
10,389'
3,879'
5,924'
1,166
1,232'
8,603'
3,551'
135,624
4,303
52,306
2,745
2,997
32,489
1,811
1,584
9
828
800
113
10,994
3,773
5,574
1,130
1,278
9,313
3,576
137,365
4,537
52,114
3,163
3,449
32,211
1,934
1,824
16
825
816
131
10,689
4,501
5,540
1,140
1,317
9,436
3,722
44 Asia
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle-East oil-exporting countries 3
Other Asia
42,420
49,822
48,716
52,649
54,583
53,370
54,121
58,351'
56,221
55,391
49
1,662
2,548
416
730
883
16,281
1,528
919
464
14,453
2,487
158
2,082
3,950
385
640
592
20,750
2,013
874
534
12,992
4,853
203
2,761
4,465
433
857
606
16,078
1,692
770
629
13,433
6,789
176
4,086
5,614
528
839
823
16,922
1,553
933
531
11,764
8,877
190
3,852
6,582
712
622
848
17,418
1,478
1,181
581
12,661
8,458
216
3,992
6,507
830
871
812
17,103
1,353
747
522
12,410
8,007
183
4,063
6,971
725
661
808
17,138
1,591
1,012
569
12,492
7,907
249
3,997
6,610
464
997
1,722
18,079'
1,648
1,234
716
12,960'
9,676'
249
4,264
6,201
670
1,093
850
17,250
1,614
1,235
776
12,491
9,528
168
4,294
5,886
749
859
728
17,613
1,542
1,280
622
11,667
9,982
57 Africa
58
Egypt
59
Morocco
South Africa
60
61
Zaire
62
Oil-exporting countries 4
Other Africa
63
5,187
485
33
288
57
3,540
783
3,180
360
32
420
26
1,395
946
3,124
432
81
292
23
1,280
1,016
2,853
465
48
452
29
934
926
3,132
488
84
520
34
963
1,042
2,845
576
73
394
43
736
1,023
2,694
589
96
389
32
679
909
2,800'
645
84
449
87
620
917'
2,917
572
109
486
61
869
821
3,070
568
138
502
66
839
957
64 Other countries
65
Australia
66
All other
1,247
950
297
1,419
1,223
196
6,143
5,904
239
5,719
5,512
208
5,490
5,284
206
6,675
6,461
214
6,868
6,666
202
8,053'
7,857
196'
7,979
7,742
237
7,452
7,197
255
67 Nonmonetary international and regional
organizations
68
International
69
Latin American regional
Other regional 5
70
2,344
1,157
890
296
2,721
1,661
710
350
4,922
4,049
517
357
5,555
4,861
441
252
5,308
4,674
445
189
4,619
3,944
437
238
6,321
5,556
415
350
5,957'
5,273'
419
265
4,759
4,174
433
152
6,781
6,139
457
186
45
46
47
48
49
50
51
52
53
54
55
56
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Asian, African, Middle Eastern, and E u r o p e a n regional organizations,
except the Bank for International Settlements, which is included in " O t h e r
Western E u r o p e . "
A Liabilities and claims of banks in the United States were increased, beginning
in December 1981, by the shift from foreign branches to international banking
facilities in the United States of liabilities to, and claims on, foreign residents.
Nonbank-Reported
3.18
Data
A57
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
M i l l i o n s of dollars, e n d o f p e r i o d
1984
1983
Area and country
1980
1981A
1982
Aug.
Sept.
Nov.
Oct.
Dec.'
Jan.
Feb.p
1 Total
172,592
251,589
355,705
372,387
375,536
372,790
374,597'
388,699
371,183
376,043
2 Foreign countries
172,514
251,533
355,636
372,068
374,939
372,730
374,527'
388,535
371,119
375,879
32,108
236
1,621
127
460
2,958
948
256
3,364
575
227
331
993
783
1,446
145
14,917
853
179
281
1,410
49,262
121
2,849
187
546
4,127
940
333
5,240
682
384
529
2,095
1,205
2,213
424
23,849
1,225
211
377
1,725
85,584
229
5,138
554
990
7,251
1,876
452
7,560
1,425
572
950
3,744
3,038
1,639
560
45,781
1,430
368
263
1,762
87,996
338
5,898
1,124
637
8,589
1,168
375
7,412
1,048
634
848
3,373
2,836
1,630
594
47,863
1,351
406
232
1,640
90,522
351
5,650
1,131
697
7,869
1,428
408
7,038
1,189
550
861
3,389
3,081
1,765
616
50,780
1,369
529
215
1,606
88,718
334
5,503
1,103
789
7,390
1,095
369
7,686
1,071
575
893
3,128
3,059
1,579
660
49,841
1,468
394
206
1,575
89,976'
395
5,548
1,272
822
7,885
1,256
412
8,432
1,390
590
891
3,634
3,249'
2,112
693
47,607'
1,582
426'
176
1,603'
91,148
401
5,667
1,295
1,044
8,769
1,294
476
9,256
1,302
690
939
3,630
3,378
1,856
812
46,372
1,694
477
192
1,603
89,485
354
5,900
1,296
945
7,979
1,058
508
7,864
1,407
652
954
3,381
3,373
1,452
795
47,621
1,718
493
163
1,573
91,161
416
6,146
1,240
972
8,333
1,009
549
7,826
1,324
648
944
3,304
3,316
1,300
880
49,040
1,704
547
169
1,494
3
4
5
6
7
8
9
in
n
l?
n
14
11
16
17
18
19
70
21
??
23
Austria
Belgium-Luxembourg
Denmark
Germany
Italy
Netherlands
Norway
Portugal
Sweden
Switzerland
Turkey
United Kingdom
Yugoslavia
Other Western Europe 1
U.S.S.R
Other Eastern Europe 2
4,810
9,193
13,678
17,501
16,525
15,885
16,379'
16,330
15,874
15,964
71 Latin America and Caribbean
76
Argentina
77
78
Bermuda
79
30
British West Indies
31
Chile
3?
Colombia
33
Cuba
34
35
Guatemala 3
36
Jamaica 3
37
Mexico
38
Netherlands Antilles
39
Panama
40
Peru
41
Uruguay
4?
Venezuela
43
Other Latin America and Caribbean
92,992
5,689
29,419
218
10,496
15,663
1,951
1,752
3
1,190
137
36
12,595
821
4,974
890
137
5,438
1,583
138,347
7,527
43,542
346
16,926
21,981
3,690
2,018
3
1,531
124
62
22,439
1,076
6,794
1,218
157
7,069
1,844
187,969
10,974
56,649
603
23,271
29,101
5,513
3,211
3
2,062
124
181
29,552
839
10,210
2,357
686
10,643
1,991
195,281
11,334
54,687
390
24,231
32,266
5,404
3,592
0
2,014
100
204
33,689
838
10,093
2,421
820
11,045
2,152
194,391
11,444
55,009
578
24,282
30,877
5,792
3,665
0
2,020
112
214
33,740
897
9,189
2,470
857
11,037
2,209
195,109
11,618
56,220
489
24,202
30,796
5,740
3,648
3
2,154
115
203
33,521
988
8,835
2,434
883
10,881
2,379
197,629'
11,899
56,071'
620'
24,532'
32,180'
5,860
3,734
0
2,262
122
210
33,722'
1,164
8,336
2,469
903
11,088
2,457
203,827
11,854
58,351
566
24,593
34,921
6,112
3,785
0
2,353
129
215
34,836
1,053
7,857
2,593
978
11,343
2,290
193,913
11,747
52,287
941
24,821
31,240
6,163
3,652
0
2,367
189
218
34,544
971
7,847
2,467
982
11,247
2,230
197,144
11,753
53,124
450
24,928
32,922
6,285
3,534
195
2,354
127
219
34,655
1,043
8,805
2,418
908
11,169
2,255
44
39,078
49,851
60,952
62,585
64,751
63,772
61,212'
67,677
62,575
61,780
195
2,469
2,247
142
245
1,172
21,361
5,697
989
876
1,432
2,252
107
2,461
4,132
123
352
179
1,644
8,022
275
635
227
1,829
8,704
259
688
295
1,618
8,287
324
697
249
1,574'
8,753'
305
711
292
1,908
8,429
330
805
420
1,812
8,211
344
853
337
1,700
7,391
253
899
1,648
1,726
1,780
1,795
1,557
1,478
26,797
7,340
1,819
565
1,581
3,009
214
2,288
6,787
222
348
2,029
28,379
9,387
2,625
643
3,087
4,943
27,438
9,696
2,540
735
4,654
5,119
28,563
9,634
2,777
806
4,142
5,395
28,239
9,314
2,369
831
4,630
5,388
25,783'
9,629'
2,427
867
4,255'
4,843'
30,573
9,909
2,105
1,021
4,939
5,571
27,174
9,489
2,408
1,016
4,636
4,656
27,787
9,439
2,349
1,035
4,261
4,850
2,377
151
223
370
94
805
734
3,503
238
284
1,011
112
657
1,201
5,346
322
353
2,012
57
801
1,802
6,527
529
444
2,630
40
1,052
1,832
6,482
596
444
2,719
38
964
1,722
6,889
623
462
2,582
38
1,481
1,703
6,808
670
461
2,892
37
1,039
1,709
6,649
725
440
2,634
33
1,091
1,727
6,571
738
435
2,684
29
1,052
1,631
7,153
709
481
2,867
16
1,125
1,955
1,150
859
290
1,376
1,203
172
2,107
1,713
394
2,178
1,637
542
2,267
1,675
593
2,357
1,692
664
2,522
1,899
624
2,904
2,272
632
2,702
2,105
597
2,676
2,008
669
78
56
68
319
598
60
70
164
64
164
24 Canada
45
46
47
48
49
50
51
5?
53
54
55
56
57
58
59
60
61
6?
63
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Philippines
Middle East oil-exporting countries 4
Other Asia
Egypt
South Africa
Oil-exporting countries 5
Other
64 Other countries
65
66
All other
67 Nonmonetary international and regional
organizations 6
1,567
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in "Other Latin America and Caribbean" through March 1978.
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
1,817
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in
"Other Western E u r o p e . "
NOTE. Data for period before April 1978 include claims of banks' domestic
customers on foreigners.
A Liabilities and claims of banks in the United States were increased,
beginning in December 1981, by the shift from foreign branches to international
banking facilities in the United States of liabilities to, and claims on, foreign
residents.
A58
3.19
International Statistics • April 1984
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
Millions of dollars, end of period
1983
Type of claim
1980
1981A
1984
1982
Aug.
Sept.
Oct.
Nov.'
372,790
54,770
141,971
114,390
44,613
69,777
61,658
374,597
56,026
137,464
118,150
44,503
73,647
62,956
Dec.'
Jan.
1 Total
198,698
287,557
396,015
2
3
4
5
6
7
8
Banks' own claims on foreigners ,
Foreign public borrowers
Own foreign offices 1
Unaffiliated foreign banks
Deposits
Other
All other foreigners
172,592
20,882
65,084
50,168
8,254
41,914
36,459
251,589
31,260
96,653
74,704
23,381
51,322
48,972
355,705
45,422
127,293
121,377
44,223
77,153
61,614
9 Claims of banks' domestic customers 2
10 Deposits
11 Negotiable and readily transferable
26,106
885
35,968
1,378
40,310
2,491
36,102
2,654
33,943
2,969
15,574
26,352
30,763
27,550
25,104
9,648
8,238
7,056
5,898
5,870
22,714
29,952
38,153
34,585
37,324
24,468
40,369'
42,186'
411,639
372,387
52,009
137,166
120,732
47,345
73,386
62,480
375,536
53,699
137,382
121,900
48,179
73,721
62,556
Feb.P
422,642
388,699
57,830
143,978
123,080
46,402
76,678
63,811
371,183
57,941
138,266
114,447
42,313
72,134
60,529
376,043
58,530
140,845
115,690
44,393
71,297
60,978
44,788
n.a.
12 Outstanding collections and other
13 MEMO: Customer liability on
Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 4 . . .
42,504'
1. U.S. banks: includes amounts due from own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due from head office or parent foreign bank,
and foreign branches, agencies, or wholly owned subsidiaries of head office or
parent foreign bank.
2. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the account
of their domestic customers.
3. Principally negotiable time certificates of deposit and bankers acceptances.
3.20
42,529'
45,160'
47,905'
44,366'
4. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad. For
description of changes in data reported by nonbanks, see July 1979 BULLETIN,
p. 550.
A Liabilities and claims of banks in the United States were increased,
beginning in December 1981, by the shift from foreign branches to international
banking facilities in the United States of liabilities to, and claims on, foreign
residents.
NOTE. Beginning April 1978, data for banks' own claims are given on a monthly
basis, but the data for claims of banks' own domestic customers are available on a
quarterly basis only.
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1983
Maturity; by borrower and area
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
By borrower
Maturity of 1 year or less 1
Foreign public borrowers
All other foreigners
Maturity of over 1 year 1
Foreign public borrowers . . . .
All other foreigners
By area
Maturity of 1 year or less 1
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 2
Maturity of over 1 year 1
Europe
Canada
Latin America and Caribbean
Asia
Africa
Allother 2
1. Remaining time to maturity.
2. Includes nonmonetary international and regional organizations.
1981A
June
Sept.
Dec.
106,748
154,590
228,150
230,112
232,126
233,676
243,935
82,555
9,974
72,581
24,193
10,152
14,041
116,394
15,142
101,252
38,197
15,589
173,917
21,256
152,661
54,233
23,137
31,095
174,152
21,768
151,384
55,960
24,859
31,100
174,570
23,030
151,541
57,556
31,349
174,629
25,519
149,111
59,046
27,077
31,970
176,293
24,310
151,983
67,642
33,006
34,636
18,715
2,723
32,034
28,130
4,662
48,717
31,485
2,457
943
54,109
52,039
7,055
74,768
35,327
3,854
1,527
52,665
6,443
76,031
33,442
4,657
1,391
55.550
12,238
11,613
1,756
38,254
4,581
1,734
13,571
1,857
43,868
4,859
2,296
1,191
26,686
1,757
640
5,118
1,448
15,075
1,865
507
179
22,608
8,100
1,808
25,209
1,907
900
272
50,500
7,642
73,291
37,578
3,680
6,861
1,226
75,122
32,753
3,872
1,435
11,636
1,931
35,247
3,185
1,494
740
11,986
1,924
35,842
3,573
1,485
1,150
26,206
1,861
36,671
4,053
1,667
1,066
1,108
6,200
74,287
34.551
4,206
1,499
• Liabilities and claims of banks in the United States were increased
beginning in December 1981, by the shift from foreign branches to international
banking facilities in the United States of liabilities to, and claims on, foreign
residents.
Nonbank-Reported
3.21
C L A I M S O N F O R E I G N C O U N T R I E S Held by U . S . Offices and Foreign Branches of U.S.-Chartered
Data
Banks'
Billions of dollars, end of period
1982
Area or country
1 Total
2 G-10 countries and Switzerland
3
Belgium-Luxembourg
4
France
5
Germany
6
Italy
7
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan
Mar.
June
Sept.
Dec
Mar.
June
303.9
352.0
415.2
419.6
435.3
438.2
438.6
440.6
436.5
138.4
162.1
13.0
14.1
175.5
13.3
15.3
12.9
9.6
4.0
3.7
5.5
70.1
10.9
30.2
174.5
13.2
16.0
12.5
9.0
4.0
4.1
5.3
70.3
11.6
28.5
176.3
14.1
16.5
12.7
9.0
4.1
4.0
5.1
69.4
11.4
29.9
175.4
13.6
15.8
12.2
9.7
3.8
4.7
5.1
70.3
182.1
13.7
17.1
13.4
176.7
13.3
17.1
12.6
10.5
4.0
4.7
4.8
70.2
29.3
179.7
13.1
17.1
12.7
10.3
3.6
5.0
5.0
72.1
10.4
30.2
11.1
11.7
12.2
6.4
4.8
2.4
4.7
56.4
6.3
22.4
12.1
8.2
4.4
2.9
5.0
67.4
8.4
26.5
11.0
10.2
4.3
4.3
4.6
72.9
12.4
29.2
10.8
19.9
2.0
2.2
1.2
2.4
2.3
.7
3.5
1.4
1.4
1.3
1.3
21.6
1.9
2.3
1.4
2.8
2.6
.6
4.4
1.5
1.7
1.1
1.3
28.4
1.9
2.3
1.7
2.8
3.1
1.1
6.6
1.4
2.1
2.8
2.5
30.7
2.1
2.5
1.6
2.9
3.2
1.2
7.2
1.6
2.1
3.3
3.0
32.1
2.1
2.6
1.6
2.7
3.2
1.5
7.3
1.5
2.2
3.5
4.0
32.7
2.0
2.5
1.8
2.6
3.4
1.6
7.7
1.5
2.1
3.6
4.0
33.7
1.9
2.4
2.2
3.0
3.3
1.5
7.5
1.4
2.3
3.7
4.4
33.9
2.1
3.3
2.1
2.9
3.3
1.4
7.0
1.5
2.2
3.6
4.6
34.4
2.1
3.4
25 OPEC countries 2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
22.9
1.7
8.7
1.9
8.0
2.6
22.7
2.1
9.1
1.8
6.9
2.8
24.8
2.2
9.9
2.6
7.5
2.5
25.4
2.3
10.0
2.7
8.2
2.2
26.4
2.4
10.1
2.8
8.7
2.5
27.3
2.3
10.4
2.9
9.0
2.7
27.4
2.2
10.5
3.2
8.7
2.8
28.5
2.2
10.4
3.5
9.3
3.0
28.2
2.2
10.4
3.2
9.5
3.0
31 Non-OPEC developing countries
63.0
77.4
96.3
97.5
103.6
104.0
107.0
107.6
108.2
5.0
15.2
2.5
2.2
12.0
1.5
3.7
7.9
16.2
3.7
2.6
15.9
1.8
3.9
9.4
19.1
5.8
2.6
21.6
2.0
4.1
10.0
19.7
6.0
2.3
22.9
1.9
4.1
9.6
21.4
6.4
2.6
25.2
2.5
4.0
9.2
22.4
6.2
2.8
25.0
2.6
4.3
8.9
22.9
6.3
3.1
24.5
2.6
4.0
9.0
23.1
6.0
2.9
25.1
2.4
4.2
9.4
22.5
5.8
3.2
25.2
2.6
4.3
.2
4.9
.5
1.9
9.3
1.8
6.0
1.3
1.3
.2
5.2
.6
2.3
10.8
2.1
6.3
1.6
1.1
.2
5.1
.4
2.0
10.8
2.5
6.6
1.6
1.4
5.1
.5
2.3
10.8
2.6
6.4
1.8
1.2
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
Asia
China
Mainland
Taiwan
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 3
52 Eastern Europe
53
U.S.S.R
54
Yugoslavia
55
Other
.6
.6
.2
1.7
7.3
.7
1.8
4.8
1.3
.7
.2
2.3
.1
2.2
1.2
.7
.1
2.4
.1
2.3
2.2
7.4
.4
2.3
4.6
7.8
.6
2.5
4.7
7.2
.4
2.5
4.3
6.7
.4
2.4
3.9
6.3
.3
2.2
3.8
6.2
.3
2.2
3.7
5.8
.3
2.2
3.3
5.7
.4
2.3
3.0
63.7
19.0
.7
12.4
3.2
7.7
.2
72.0
24.1
.7
12.3
3.0
7.4
.2
14.3
9.9
.1
72.1
21.4
.8
13.6
3.3
8.1
.1
15.0
9.8
.0
66.8
19.0
.9
12.9
3.3
7.6
.1
13.9
9.1
.0
66.1
17.3
1.0
11.9
3.1
7.1
.1
15.2
10.3
.0
67.3
19.5
8.7
.1
65.7
20.2
.7
12.1
3.2
7.2
.2
12.9
9.3
.1
18.8
18.5
18.4
20.3
17.9
16.7
16.1
4.3
.2
6.0
4.5
.4
66 Miscellaneous and unallocated 6
11.7
14.0
.2
1.3
.7
.2
2.3
47.0
13.7
.6
10.6
2.1
5.4
.2
8.1
5.9
.3
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2.9
3.4
1.4
7.2
1.4
2.0
3.9
4.5
1.1
.7
.2
2.3
56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama 4
62
Lebanon
63
Hong Kong
64
Singapore
65
Others 5
1.2
2.1
.7
.2
2.1
40.4
13.7
.8
9.4
11.8
Dec
28.7
13 Other developed countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other Latin America
Sept.
.1
.8
12.1
2.6
6.6
.1
14.5
11.0
.0
2. Besides the Organization of Petroleum Exporting Countries shown individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well
as Bahrain and Oman (not formally members of OPEC).
3. Excludes Liberia.
4. Includes Canal Zone beginning December 1979.
5. Foreign branch claims only.
6. Includes New Zealand, Liberia, and international and regional organizations.
A59
A60
International Statistics • April 1984
3.22
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States'
Millions o f dollars, e n d o f period
1982
Type, and area or country
1979
1980
1983
1981
Sept.
Dec/
Mar/
June
Sept.
1 Total
17,433
29,434
28,618
25,149
25,568
23,285
22,531r
24,595'
2 Payable in dollars
3 Payable in foreign currencies
14,323
3,110
25,689
3,745
24,909
3,709
22,051
3,099
22,375
3,193
20,302
2,983
19,625'
2,906'
21,728'
2,867'
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
7,523
5,223
2,300
11,330
8,528
2,802
12,157
9,499
2,658
10,855
8,565
2,291
10,906
8,734
2,172
10,831
8,795
2,036
10,866'
8,823'
2,043'
10,779'
8,809'
1,971'
7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities
9,910
4,591
5,320
18,104
12,201
5,903
16,461
10,818
5,643
14,294
8,084
6,209
14,662
7,707
6,955
12,454
5,627
6,827
11,665'
6,026'
5,640
13,815'
7,056'
6,760
9,100
811
17,161
943
15,409
1,052
13,486
808
13,641
1,021
11,507
947
10,802'
864'
12,919
896
4,665
338
175
497
829
170
2,477
6,481
479
327
582
681
354
3,923
6,825
471
709
491
748
715
3,565
6,389
494
672
446
759
670
3,212
6,369
505
731
470
711
753
3,070
6,233
410
725
487
699
702
3,081
6,220'
436
756'
460
728
621'
3,069'
10
11
12
13
14
15
16
17
18
Payable in dollars
Payable in foreign currencies
By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
19
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
27
28
29
Asia
Japan
Middle East oil-exporting countries 2
30
31
Africa
Oil-exporting countries 3
32
33
34
35
36
37
38
39
All other
4
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
40
Canada
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
48
49
50
Asia
Japan
Middle East oil-exporting countries 2
51
52
53
5,978'
379
785'
454'
730
530'
2,943'
532
964
963
753
746
733
865'
788'
1,514
404
81
18
516
121
72
3,136
964
1
23
1,452
99
81
3,356
1,279
7
22
1,241
102
98
2,969
938
9
28
981
85
104
2,724
899
14
28
1,010
121
114
2,707
827
18
39
1,009
149
121
2,435
695
10
34
932
151
124
2,658'
771'
13
32
972r
185'
117
804
726
31
723
644
38
976
792
75
714
479
67
1,039
715
169
1,124
781
168
1,319
943
205
1,322
957
201
4
1
11
1
14
0
17
0
17
0
20
0
17
0
19
0
4
15
24
13
12
13
9
15
3,709
137
467
545
227
316
1,080
4,402
90
582
679
219
499
1,209
3,770
71
573
545
220
424
880
3,957
50
762
436
277
358
1,001
3,649
52
597
467
346
363
850
3,443
45
578
455
351
354
679
3,368'
41
617'
439'
342
357
633'
1.465
3,384
Al
506
461
243
448
786
924
888
897
1,197
1,490
1,433
1,325
69
32
203
21
257
301
1,300
8
75
111
35
367
319
1,044
2
67
67
2
340
276
1,235
6
48
128
3
499
269
1,008
16
89
60
32
379
165
1,066
4
117
51
4
355
198
2,991
583
1,014
10,242
802
8,098
9,384
1,094
7,008
6,641
1,192
4,178
7,160
1,226
4,531
5,437
1,235
2,803
4,799
1,236
2,294
6,852
1,294
4,072
Africa
Oil-exporting countries 3
728
384
817
517
703
344
669
248
704
277
497
158
492
167
506
204
All other 4
233
456
664
595
651
578
518
600
5
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
1024'
1
76
49
22
399'
236'
1,407
1,067
1
76
48
14
429
217
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
Nonbank-Reported
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
United States 1
Data
A61
Reported by Nonbanking Business Enterprises in the
M i l l i o n s of dollars, e n d o f period
1982
Type, and area or country
1979
1980
Sept.
1 Total
31,299
1983
1981
34,482
36,185
Dec.
Mar.
Sept.
June
30,232
28,411''
31,189'
31,421'
31,649'
28,472'
2,718'
28,778'
2,643
28,773'
2,877'
28,096
3,203
31,528
2,955
32,582
3,603
27,571
2,661
25,784'
2,628
By type
4 Financial claims
5
Deposits
6
Payable in dollars
7
Payable in foreign currencies
8
Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
18,398
12,858
11,936
923
5,540
3,714
1,826
19,763
14,166
13,381
785
5,597
3,914
1,683
21,142
15,081
14,456
625
6,061
3,599
2,462
18,356
13,241
12,828
413
5,115
3,419
1,696
17,429'
12,893'
12,467'
426
4,536
2,895
1,641
20,220'
15,569'
15,092'
478
4,651
3,006
1,645
20,812'
15,976'
15,549'
426
4,836'
3,238'
1,598
20,831'
15,987'
15,542'
445'
4,845'
3,019'
1,826
11 Commercial claims
12
Trade receivables
13
Advance payments and other claims
12,901
12,185
716
14,720
13,960
759
15,043
14,007
1,036
11,877
10,770
1,106
10,982'
9,973'
1,010
10,969'
9,765'
1,203
10,609
9,241
1,367
10,818
9,519
1,299
14
15
12,447
454
14,233
487
14,527
516
11,324
552
10,422'
561
10,374'
595'
9,991
618
10,212
606
6,179
32
177
409
53
73
5,099
6,069
145
298
230
51
54
4,987
4,596
43
285
224
50
117
3,546
4,967
16
326
215
119
60
3,859
4,835'
10
134
178
97
107
4,044'
6,196'
58
98'
127
140
107'
5,414'
6,817'
12
140'
217'
136
37'
6,040'
6,202'
25
135'
151
89'
34'
5,547'
2 Payable in dollars
3 Payable in foreign currencies
16
17
18
19
20
21
22
Payable in dollars
Payable in foreign currencies
By area or country
Financial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
5,003
5,036
6,755
4,386
4,287
4,613'
4,881'
4,958'
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
6,312
2,773
30
163
2,011
157
143
7,811
3,477
135
96
2,755
208
137
8,812
3,650
18
30
3,971
313
148
7,948
3,435
16
76
3,411
268
133
7,420'
3,236'
32'
62
3,161'
274
139
8,520
3,806'
21'
50
3,365'
352
156
8,040'
3,244
93'
48
3,339'
348
152
8,609'
3,389'
62
49'
3,932'
315
137'
601
199
16
607
189
20
758
366
37
846
268
30
698
153
15
712
233
18
772'
288
14
764'
257'
8
258
49
208
26
173
46
165
50
158
48
153
45
154
48
151
45'
44
32
48
44
31
25
149
148
4,922
202
727
593
298
272
901
5,544
233
1,129
599
318
354
929
5,405
234
776
561
299
431
985
4,231
178
646
427
268
291
1,035
3,594'
140
489
424'
309
227
754
3,410
144
499
364
242
303
739
3,349
131
486
378
282
270
734
31
32
33
Japan
Middle East oil-exporting countries 2
34
35
Africa
Oil-exporting countries 3
36
All other 4
37
38
39
40
41
42
43
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
52
53
54
Japan
Middle East oil-exporting countries 2
3,777'
150
473
356
347
339
808'
859
914
967
666
632'
648'
716
788
2,879
21
197
645
16
708
343
3,766
21
108
861
34
1,102
410
3,479
12
223
668
12
1,022
424
2,772
19
154
481
7
869
373
2,521'
21
259
258
12
774'
351
2,699'
30
172
402'
21
894'
288
2,722
30
108
512
21
956
273
2,864
15
242
611
12
897
282
3,451
1,177
765
3,522
1,052
825
3,959
1,245
905
3,098
973
777
3,048'
1,047'
751'
3,128'
1,115
702'
2,871
949
700
2,929
1,037
719
55
56
Africa
Oil-exporting countries 3
551
130
653
153
772
152
661
148
588
140
559
131
528
130
562
131
57
All other 4
240
321
461
448
417'
342
361
326
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
A62
International Statistics • April 1984
3.24
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1984
Transactions, and area or country
1982
1983
1984
1983
Jan.Feb.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.''
U.S. corporate securities
STOCKS
1 Foreign purchases
2 Foreign sales
41,881
37,981
69,890
64,472
3 Net purchases, or sales ( - )
3,901
4 Foreign countries
3,816
2,530
-143
333
-63
-579
3,117
222
317
366
247
2
131
3,980
-100
1054
-110
1,313
1,808
1,149
531
-807'
403
42
24
5
6
7
8
9
10
11
12
13
14
15
16
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East>
Other Asia
Africa
Other countries
17 Nonmonetary international and
regional organizations
11,683
11,625
5,181
5,168
5,516
5,116
5,530
5,392
4,849'
4,785'
6,020
5,745
5,442
5,798
6,241
5,826
5,418
58
13
400
138
64'
275
-357
414
5,320
138
14
392
134
64
28Y
-346
484
-13
-168
211
0
190
-255
407
167
-405
-12
14
-19
71
-77
54
-13
56
79
75
-98
-88
75
7
-28
261
-10
48
-49
123
171
154
106
-178
51
4
-6
-99
-36
55
-15
-18
-136
124
-41
49
103
-1
-1
- 1
8
4
0
2,537
2,492
2,039
1,304
-59'
-66
53
24
-97
21
-1'
17
45'
63
1
-3
-278
-64
-51
13
-208
51
183
239
13
122'
2
1
-160
-71
95
0
-92
-87
83
124
-365
-48
5
16
147
-96
116
1
282
-168
324
43
-41
36
10
-34
- 7
-11
-70
1,661
1,493
1,766
1,800
2,113
1,867
85
98
-81
21,639
20,188
23,966
23,076
3,879
3,666
2,141
1,995
1,888
1,960
20 Net purchases, or sales ( - )
1,451
890
213
146
-72
45
735
168
-33
246
21 Foreign countries
1,479
875
136
44
-77
142
715
I6<y
-23
158
22
23
24
25
26
27
28
29
30
31
32
33
2,082
305
2,110
33
157
-589
24
159
-752
-22
-19
7
51
-6
-71
28
16
161
-34
25
4
93
-1
-3
115
-6
25
-3
-1
112
-3
-21
-121
74
0
0
14
0
41
1
-19
32
-10
4
-105
19
2
-2
303
2
66
11
7
136
22
24
-249
45
0
-4
458
-31
53
5
15
390
46
-6
116
101
0
0
2
-1
-38
3
12
59
-24
9
-26
18
-1
0
49
-5
-32
25
5
101
-10
16
30
75
0
-2
102
6
BONDS2
18 Foreign purchases
19 Foreign sales
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle E a s t '
Other Asia
Africa
Other countries
34 Nonmonetary international and
regional organizations
-28
892
-89
286
51
632
429
123
100
-1,134'
841
0
52
15
-77
-97
20
-87
-4
-10
3
78
-126
-22
20
42'
207
0
0
7
-11
87
-190
1,126'
1,317
-122
1,201
1,323
311
1,453
1,141
-689
3,072
3,761
154
3,272
3,118
-53
3,901
3,954
-879
Foreign securities
35 Stocks, net purchases, or sales ( - )
36
Foreign purchases
37
Foreign sales
-1,341
7,163
8,504
-3,849'
13,124
16,973
189
2,653
2,464
-214
1,032
1,246
-106
1,297
1,403
-14
1,140
1,154
-17
906
923
38 Bonds, net purchases, or sales ( - )
39
Foreign purchases
40
Foreign sales
-6,631
27,167
33,798
-3,677
35,626
39,302
100
7,173
7,072
-463
2,708
3,171
-54
3,714
3,768
-172
3,902
4,075
173
3,113
2,940
155
41 Net purchases, or sales (—), of stocks and bonds . . . .
-7,972
-7,526'
290
-677
-160
-186
42
43
44
45
46
47
48
49
-6,806
-7,028
211
-684
-146
-235
-2,584
-2,363
336
-1,822
-9
-364
-5,630
-1,582
1,120
-912
141
-164
-444
78
302
288
-16
3
-301
-97
62
23
14
-385
124
-355
23
105
16
-59
-338
6
5
90
11
-10
79
7
Foreign countries
Europe
Canada
Latin America and Caribbean
Asia
Africa
Other countries
Nonmonetary international and
regional organizations
-1,165
-498
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
-14
49
51
-417
37
135
160
1
135
105
32
258
-719'
3
207
-448
-64
17
-81'
0
-143
-39
-105
113
37
-5
2
-161
28
-405
183
188
252
-11
1
50
2. Includes state and local government securities, and securities of U . S .
government agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments
abroad.
Investment Transactions and Discount Rates
3.25
MARKETABLE U.S. TREASURY BONDS A N D NOTES
A63
Foreign Holdings and Transactions
M i l l i o n s of dollars
1984
1982
Country or area
1983
1984
1983
Jan.Feb.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb. p
Holdings (end of period) 1
1 Estimated total2
85,220
88,990
87,483
88,661
90,988
89,559'
88,990
2 Foreign countries 2
80,637
83,895
82,790
82,763
84,358
83,743'
83,895
3 Europe 2
4
Belgium-Luxembourg
5
Germany 2
6
Netherlands
7
Sweden
8
Switzerland 2
9
United Kingdom
10
Other Western Europe
11
Eastern Europe
12 Canada
29,284
447
14,841
2,754
677
1,540
6,549
2,476
35,482
16
17,290
3,129
842
32,996
95
16,119
3,234
644
965
8,270
3,669
33,370
58
16,156
3,034
666
1,087
8,289
4,081
34,415
18
16,570
2,987
714
1,177
8.629
4,321
35,051'
2
17,092
3,048
758
1,064
8,626
4,461'
35,482
16
17,290
3,129
842
602
1,301
1,063
1,265
1,225
1,301
13
14
15
16
17
18
19
20
1,076
188
656
232
49,543
11,578
77
55
863'
64
716
83
46,129
13,910
79
40
800
62
622
116
47,733
13,007
79
94
774
65
631
78
47,430
13,210
79
48
695
66
540
89
47,849
13,446
79
56
914
64
674
176
46,430'
13,600
79
43
863'
64
716
83
46,129
13,910
79
40
4,583
4,186
6
5,095
4,404
6
4,693
4,086
6
5,898
5,421
6
6.630
6,094
6
5,816
5,030
5,095
4,404
6
1,118
8,524
4,563
0
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
All other
21 Nonmonetary international and regional organizations
22
International
23
Latin American regional
0
0
0
0
0
0
1,118
8,524
4,563
0
Transactions (net purchases, or sales ( - ) during period)
24 Total2
25 Foreign countries 2
26
Official institutions
27
Other foreign 2
28 Nonmonetary international and regional organizations
MEMO: Oil-exporting countries
29 Middle East 3
30 Africa 4
14,972
3,769
1,288
-1,350
1,178
2,327
16,072
14,550
1,518
-1,097
3,258
578
559
20
708
-826
-26
-885
59
-523
5
-31
1,205
1,595
468
1,126
731
-615
-774
159
152'
-401'
554'
-729
7,575
-552
-5,397
-1,316
-1,764
-305
-373
-968
-60
2,414'
506
-1
1. Estimated official and private holdings of marketable U.S. Treasury securities with an original maturity of more than 1 year. Data are based on a benchmark
survey of holdings as of Jan. 31, 1971, and monthly transactions reports. Excludes
nonmarketable U.S. Treasury bonds and notes held by official institutions of
foreign countries.
3.26
0
0
0
-1,422
0
0
-576'
0
2. Beginning December 1978, includes U.S. Treasury notes publicly issued to
private foreign residents denominated in foreign currencies.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Rate on Mar. 31, 1984
Percent
Austria..
Belgium .
Brazil...
Canada..
Denmark
Rate on Mar. 31, 1984
Country
Country
4.25
11.0
49.0
10.78
7.0
Month
effective
Mar.
Feb.
Mar.
Mar.
Oct.
1984
1984
1981
1984
1983
France 1
Germany, Fed. Rep. of
Italy
Japan
Netherlands
1. As of the end of February 1981, the rate is that at which the Bank of France
discounts Treasury bills for 7 to 10 days.
2. Minimum lending rate suspended as of Aug. 20, 1981.
NOTE. Rates shown are mainly those at which the central bank either discounts
Rate on Mar. 31, 1984
Country
Percent
Month
effective
12.0
4.0
16.0
5.0
5.0
Dec. 1983
Mar. 1983
Feb. 1984
Oct. 1983
Sept. 1983
Norway
Switzerland
United Kingdom 2 .
Venezuela
Percent
Month
effective
8.0
4.0
June 1979
Mar. 1983
May 1983
or makeS advances against eligible commercial paper and/or government commercial banks or brokers. For countries with more than one rate applicable to such
discounts or advances, the rate shown is the one at which it is understood the
central bank transacts the largest proportion of its credit operations.
A64
3.27
International Statistics • April 1984
FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1983
C o u n t r y , or type
1
2
3
4
5
6
7
8
9
10
1981
1982
1984
1983
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Eurodollars
United Kingdom
Canada
Germany
Switzerland
16.79
13.86
18.84
12.05
9.15
12.24
12.21
14.38
8.81
5.04
9.57
10.06
9.48
5.73
4.11
9.82
9.63
9.35
5.83
4.40
9.54
9.34
9.31
6.13
4.07
9.79
9.26
9.40
6.26
4.11
10.08
9.34
9.83
6.43
4.29
9.78
9.40
9.84
6.07
3.65
9.91
9.35
9.85
5.91
3.47
10.40
8.90
10.40
5.82
3.60
Netherlands
France
Italy
Belgium
Japan
11.52
15.28
19.98
15.28
7.58
8.26
14.61
19.99
14.10
6.84
5.58
12.44
18.95
10.51
6.49
6.15
12.42
17.42
9.25
6.68
6.07
12.42
17.51
9.44
6.52
6.17
12.31
17.71
9.89
6.35
6.20
12.16
17.75
10.50
6.45
6.01
12.22
17.75
10.68
6.35
5.95
12.36
17.40
11.43
6.34
6.09
12.53
17.28
12.02
6.41
NOTE. Rates are for 3-month interbank loans except for C a n a d a , finance company paper; Belgium, 3-month Treasury bills; and J a p a n , Gensaki rate.
3.28
FOREIGN EXCHANGE RATES
Currency units per dollar
1983
Country/currency
1981
1982
1984
1983
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Australia/dollar 1
Austria/schilling
Belgium/franc
Brazil/cruzeiro
Canada/dollar
China, P.R./yuan
Denmark/krone
114.95
15.948
37.194
92.374
1.1990
1.7031
7.1350
101.65
17.060
45.780
179.22
1.2344
1.8978
8.3443
90.14
17.968
51.121
573.27
1.2325
1.9809
9.1483
91.37
18.305
53.034
784.35
1.2320
1.9664
9.4172
91.59
18.900
54.538
870.21
1.2367
1.9940
9.6791
90.04
19.383
55.939
943.43
1.2469
1.9920
9.9530
90.60
19.815
57.354
1022.81
1.2484
2.0490
10.1793
93.48
19.028
55.279
1131.37
1.2480
2.0628
9.8549
95.13
18.285
53.135
1266.64
1.2697
2.0646
9.5175
8
9
10
11
12
13
14
15
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/pound 1
Israel/shekel
4.3128
5.4396
2.2631
n.a.
5.5678
8.6807
161.32
n.a.
4.8086
6.5793
2.428
66.872
6.0697
9.4846
142.05
24.407
5.5636
7.6203
2.5539
87.895
7.2569
10.1040
124.81
55.865
5.6390
7.9526
2.6032
92.968
8.0947
10.229
119.15
77.808
5.7468
8.1646
2.6846
96.229
7.8120
10.378
115.85
89.344
5.8515
8.3839
2.7500
98.815
7.8044
10.4895
112.91
100.599
5.9385
8.5948
2.8110
102.601
7.7968
10.7152
110.20
116.728
5.7892
8.3051
2.6984
101.80
7.7883
10.744
114.21
130.21
5.6136
8.0022
2.5973
102.40
7.7942
10.714
117.88
146.40
16
17
18
19
20
21
22
23
24
Italy/lira
Japan/yen
Malay sia/ringgit
Mexico/peso
Netherlands/guilder
N e w Zealand/dollar 1
Norway/krone
Philippines/peso
Portugal/escudo
1138.60
220.63
2.3048
24.547
2.4998
86.848
5.7430
7.8113
61.739
1354.00
249.06
2.3395
72.990
2.6719
75.101
6.4567
8.5324
80.101
1519.30
237.55
2.3204
155.01
2.8543
66.790
7.3012
11.0940
111.610
1582.81
232.89
2.3451
157.18
2.9206
66.162
7.3244
13.750
124.41
1625.79
235.03
2.3450
162.36
3.0078
65.854
7.4696
14.050
127.82
1666.88
234.46
2.3407
164.84
3.0856
65.120
7.7237
14.050
131.91
1706.63
233.80
2.3411
166.33
3.1602
64.860
7.8763
14.050
136.29
1666.39
233.60
2.3363
168.49
3.0455
65.810
7.6937
14.050
135.01
1614.17
225.27
2.2933
172.93
2.9326
66.714
7.5028
14.186
131.70
25
26
27
28
29
30
31
32
33
34
35
Singapore/dollar
South Africa/rand 1
South Korea/won
Spain/peseta
Sri L a n k a / r u p e e
Sweden/krona
Switzerland/franc
Taiwan/Dollar
Thailand/baht
United K i n g d o m / p o u n d 1
Venezuela/bolivar
2.1053
114.77
n.a.
92.396
18.967
5.0659
1.9674
n.a.
21.731
202.43
4.2781
2.1406
92.297
731.93
110.09
20.756
6.2838
2.0327
n.a.
23.014
174.80
4.2981
2.1136
89.85
776.04
143.500
23.510
7.6717
2.1006
n.a.
22.991
151.59
10.6840
2.1350
88.82
791.37
151.30
24.410
7.7844
2.1122
39.420
22.990
149.69
13.088
2.1334
84.23
796.32
154.66
24.572
7.9201
2.1701
38.780
22.990
147.66
12.782
2.1317
82.15
799.23
158.01
24.767
8.0608
2.1983
39.613
22.992
143.38
12.834
2.1309
79.54
800.33
159.832
25.181
8.1782
2.2380
40.202
23.006
140.76
13.021
2.1279
81.31
799.06
154.20
25.270
7.9976
2.2050
40.236
23.000
144.17
13.023
2.0893
82.10
794.51
149.68
25.177
7.7323
2.1490
40.078
23.004
145.57
13.470
102.94
116.57
125.34
127.50
130.26
132.84
135.07
131.71
128.07
1
2
3
4
5
6
7
MEMO
United States/dollar 2
1. Value in U . S . cents.
2. Index of weighted-average exchange value of U.S. dollar against currencies
of other G-10 countries plus Switzerland. M a r c h 1973 = 100. Weights are 1972-76
global trade of each of the 10 countries. Series revised as of August 1978. F o r
description and back data, see " I n d e x of the Weighted-Average E x c h a n g e Value
of the U . S . Dollar: Rev i s i o n " on p. 700 of the August 1978 BULLETIN.
NOTE. Averages of certified noon buying rates in N e w York for cable tranfers.
A65
Guide to Tabular Presentation,
Statistical Releases, and Special Tables
GUIDE
TO TABULAR
Symbols and
c
e
p
r
*
PRESENTATION
Abbreviations
Corrected
Estimated
Preliminary
Revised (Notation appears on column heading when
about half of the figures in that column are changed.)
Amounts insignificant in terms of the last decimal place
shown in the table (for example, less than 500,000
when the smallest unit given is millions)
General
0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs
Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable
Information
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed
issues of U.S. government agencies (the flow of funds figures
also include not fully guaranteed issues) as well as direct
STATISTICAL
obligations of the Treasury. "State and local government"
also includes municipalities, special districts, and other political subdivisions.
In some of the tables details do not add to totals because of
rounding.
RELEASES
List Published Semiannually,
with Latest Bulletin
Reference
Anticipated schedule of release dates for periodic releases
SPECIAL
and
and
and
and
and
and
and
and
Page
A84
April
August
December
March
April
August
December
March
A70
A70
A68
A68
A76
A76
A74
A74
TABLES
Published Irregularly, with Latest Bulletin
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Issue
December 1983
liabilities
liabilities
liabilities
liabilities
liabilities
liabilities
liabilities
liabilities
of
of
of
of
of
of
of
of
commercial banks,
commercial banks,
commercial banks,
commercial banks,
U.S. branches and
U.S. branches and
U.S. branches and
U.S. branches and
Reference
December 31, 1982
March 31, 1983
June 30, 1983
September 30, 1983
agencies of foreign banks,
agencies of foreign banks,
agencies of foreign banks,
agencies of foreign banks,
December 31, 1982
March 31, 1983
June 30, 1983
September 30, 1983
1983
1983
1983
1984
1983
1983
1983
1984
A66
Federal Reserve Board of Governors
PRESTON M A R T I N ,
Chairman
Vice Chairman
OFFICE OF BOARD
MEMBERS
PAUL A . VOLCKER,
JOSEPH R. COYNE, Assistant
to the Board
DONALD J. WINN, Assistant
to the Board
STEVEN M . ROBERTS, Assistant
to the
Chairman
FRANK O'BRIEN, JR., Deputy Assistant to the Board
ANTHONY F. COLE, Special Assistant to the Board
WILLIAM R. JONES, Special Assistant to the Board
NAOMI P. SALUS, Special Assistant to the Board
HENRY C . WALLICH
J . CHARLES PARTEE
OFFICE OF STAFF DIRECTOR
MONETARY AND FINANCIAL
STEPHEN H . AXILROD, Staff
DIVISION
STANLEY J. SIGEL, Assistant
MICHAEL BRADFIELD, General
Counsel
OFFICE OF THE
SECRETARY
WILLIAM W . WILES,
Secretary
BARBARA R. LOWREY, Associate
Secretary
JAMES MCAFEE, Associate
Secretary
OF RESEARCH
AND
Director
DIVISION OF BANKING
SUPERVISION AND
REGULATION
Director
Director
FREDERICK R. DAHL, Associate
Director
DON E. KLINE, Associate
Director
JACK M. EGERTSON, Assistant
Director
ROBERT S. PLOTKIN, Assistant
SIDNEY M. SUSSAN, Assistant
LAURA M. HOMER, Securities
STATISTICS
DAVID E. LINDSEY, Deputy Associate
Director
FREDERICK M. STRUBLE, Deputy Associate
Director
HELMUT F. WENDEL, Deputy Associate
Director
MARTHA BETHEA, Assistant
Director
ROBERT M . FISHER, Assistant
Director
SUSAN J. LEPPER, Assistant
Director
THOMAS D . SIMPSON, Assistant
Director
LAWRENCE SLIFMAN, Assistant
Director
STEPHEN P. TAYLOR, Assistant
Director
Director
Director
(Administration)
JERAULD C. KLUCKMAN, Associate
Director
GLENN E . LONEY, Assistant
Director
DOLORES S. SMITH, Assistant
Director
WILLIAM TAYLOR, Deputy
to the Board
Director
LEVON H . GARABEDIAN, Assistant
DIVISION OF
CONSUMER
AND COMMUNITY
AFFAIRS
JOHN E . R Y A N ,
Board
EDWARD C. ETTIN, Deputy
Director
MICHAEL J. PRELL, Deputy
Director
JOSEPH S. ZEISEL, Deputy
Director
JARED J. ENZLER, Associate
Director
ELEANOR J. STOCKWELL, Associate
Director
PETER A. TINSLEY, Assistant
GRIFFITH L . G A R W O O D ,
Director
to the
NORMAND R.V. BERNARD, Special Assistant
JAMES L . KICHLINE,
J. VIRGIL MATTINGLY, JR., Associate General Counsel
GILBERT T. SCHWARTZ, Associate General Counsel
RICHARD M. ASHTON, Assistant General Counsel
NANCY P. JACKLIN, Assistant General Counsel
MARYELLEN A. BROWN, Assistant to the General Counsel
Director
DONALD L. KOHN, Deputy Staff
DIVISION
LEGAL
FOR
POLICY
Director
Director
Credit Officer
DIVISION
OF INTERNATIONAL
EDWIN M . TRUMAN,
FINANCE
Director
ROBERT F. GEMMILL, Senior Associate
Director
CHARLES J. SIEGMAN, Senior Associate
Director
LARRY J. PROMISEL, Associate
Director
DALE W. HENDERSON, Deputy Associate
Director
SAMUEL PIZER, Staff
Adviser
RALPH W. SMITH, JR., Assistant
Director
A67
and Official Staff
LYLE E . GRAMLEY
NANCY H . TEETERS
EMMETT J. RICE
OFFICE OF
STAFF DIRECTOR
FOR
S. DAVID FROST, Staff
MANAGEMENT
Director
EDWARD T. MULRENIN, Assistant
STEPHEN R. MALPHRUS, Assistant
Automation and Technology
DIVISION
OF DATA
Staff Director
Staff Director for Office
PROCESSING
CHARLES L . HAMPTON,
Director
BRUCE M. BEARDSLEY, Deputy
GLENN L. CUMMINS, Assistant
NEAL H. HILLERMAN, Assistant
OFFICE OF STAFF DIRECTOR FOR
FEDERAL RESERVE BANK
ACTIVITIES
THEODORE E. ALLISON, Staff Director
JOSEPH W. DANIELS, SR., Advisor, Equal
Opportunity
Programs
DIVISION OF FEDERAL
BANK
OPERATIONS
RICHARD J. MANASSERI, Assistant
Director
ELIZABETH B. RIGGS, Assistant
Director
WILLIAM C. SCHNEIDER, JR., Assistant
Director
ROBERT J. ZEMEL, Assistant
Director
ELLIOTT C. MCENTEE, Associate
DAVID L. ROBINSON, Associate
* JOHN F. SOBALA, Assistant
OF
PERSONNEL
DAVID L . S H A N N O N ,
Director
JOHN R. WEIS, Assistant
Director
CHARLES W. WOOD, Assistant
OFFICE OF THE
Director
CONTROLLER
GEORGE E . LIVINGSTON,
Controller
BRENT L. BOWEN, Assistant
DIVISION
OF SUPPORT
ROBERT E . FRAZIER,
Controller
SERVICES
Director
WALTER W. KREIMANN, Associate
Director
*On loan from the Federal Reserve Bank of N e w York.
Director
Director
Director
C. WILLIAM SCHLEICHER, JR., Associate
Director
WALTER ALTHAUSEN, Assistant
Director
CHARLES W . BENNETT, Assistant
Director
ANNE M. DEBEER, Assistant
Director
JACK DENNIS, JR., Assistant
Director
EARL G. HAMILTON, Assistant
DIVISION
RESERVE
CLYDE H . FARNSWORTH, JR.,
Director
Director
Director
Employment
Director
Director
68
Federal Reserve Bulletin • April 1984
Federal Open Market Committee
FEDERAL
OPEN MARKET
COMMITTEE
PAUL A . VOLCKER, Chairman
A N T H O N Y M . SOLOMON, Vice
E D W A R D G . BOEHNE
ROBERT H . BOYKIN
E . GERALD CORRIGAN
LYLE E . GRAMLEY
KAREN N . HORN
PRESTON MARTIN
STEPHEN H. AXILROD, Staff Director and
Secretary
NORMAND R . V . BERNARD, Assistant
Secretary
NANCY M. STEELE, Deputy Assistant
Secretary
MICHAEL BRADFIELD, General
Counsel
JAMES H. OLTMAN, Deputy General
JAMES L . KICHLINE,
Counsel
Economist
EDWIN M. TRUMAN, Economist
(International)
JOSEPH E. BURNS, Associate
Economist
JOHN M. DAVIS, Associate
Economist
J. CHARLES PARTEE
EMMETT J. RICE
NANCY H . TEETERS
HENRY C . WALLICH
RICHARD G. DAVIS, Associate
Economist
DONALD L. KOHN, Associate
Economist
RICHARD W . LANG, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
MICHAEL J. PRELL, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
GARY H . STERN, Associate
Economist
JOSEPH S. ZEISEL, Associate
Economist
PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account
SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account
FEDERAL
ADVISORY
COUNCIL
JOHN G . M C C O Y ,
President
JOSEPH J. PINOLA, Vice
President
VINCENT C . BURKE, JR., N . BERNE HART, AND LEWIS T . PRESTON,
ROBERT L. NEWELL, First District
LEWIS T. PRESTON, Second District
GEORGE A. BUTLER, Third District
JOHN G. MCCOY, Fourth District
VINCENT C. BURKE, JR., Fifth District
PHILIP F. SEARLE, Sixth District
Directors
ROGER E. ANDERSON, Seventh District
WILLIAM H. BOWEN, Eighth District
E. PETER GILLETTE, JR., Ninth District
N. BERNE HART, Tenth District
NAT S. ROGERS, Eleventh District
JOSEPH J. PINOLA, Twelfth District
HERBERT V . PROCHNOW,
WILLIAM J. KORSVIK, Associate
Secretary
Secretary
Chairman
A69
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
WILLARD P. OGBURN, Boston, Massachusetts, Chairman
TIMOTHY D. MARRINAN, Minneapolis, Minnesota, Vice Chairman
RACHEL G . BRATT, M e d f o r d , M a s s a c h u s e t t s
JAMES G . BOYLE, A u s t i n , T e x a s
GERALD R. CHRISTENSEN, Salt Lake City, Utah
THOMAS L . CLARK, JR., N e w Y o r k , N e w Y o r k
JEAN A . CROCKETT, P h i l a d e l p h i a , P e n n s y l v a n i a
MEREDITH FERNSTROM, N e w Y o r k , N e w Y o r k
ALLEN J. FISHBEIN, W a s h i n g t o n , D . C .
E.C.A. FORSBERG, SR., Atlanta, Georgia
STEVEN M. GEARY, Jefferson City, Missouri
RICHARD F. HALLIBURTON, Kansas City, Missouri
LOUISE MCCARREN HERRING, C i n c i n n a t i , O h i o
CHARLES C . HOLT, A u s t i n , T e x a s
HARRY N . JACKSON, M i n n e a p o l i s , M i n n e s o t a
KENNETH V . LARKIN, S a n F r a n c i s c o , C a l i f o r n i a
THRIFT INSTITUTIONS
ADVISORY
FREDERICK H . MILLER, N o r m a n , O k l a h o m a
MARGARET M . MURPHY, C o l u m b i a , M a r y l a n d
ROBERT F . MURPHY, D e t r o i t , M i c h i g a n
LAWRENCE S . OKINAGA, H o n o l u l u , H a w a i i
ELVA QUIJANO, S a n A n t o n i o , T e x a s
JANET J. RATHE, P o r t l a n d , O r e g o n
JANET SCACCIOTTI, Providence, Rhode Island
GLENDA G . SLOANE, W a s h i n g t o n , D . C .
HENRY J. SOMMER, P h i l a d e l p h i a , P e n n s y l v a n i a
W I N N I E F . TAYLOR, G a i n e s v i l l e , F l o r i d a
MICHAEL M . V A N BUSKIRK, C o l u m b u s , O h i o
CLINTON W A R N E , C l e v e l a n d , O h i o
FREDERICK T . WEIMER, C h i c a g o , I l l i n o i s
MERVIN WINSTON, M i n n e a p o l i s , M i n n e s o t a
COUNCIL
THOMAS R. BOMAR, Miami, Florida, President
RICHARD H. DEIHL, LOS Angeles, California, Vice President
JAMES A. ALIBER, Detroit, Michigan
NORMAN M. JONES, Fargo, North Dakota
GENE R . ARTEMENKO, C h i c a g o , I l l i n o i s
J. MICHAEL CORNWALL, D a l l a s , T e x a s
ROBERT R . MASTERTON, P o r t l a n d , M a i n e
JOHN T . MORGAN, N e w Y o r k , N e w Y o r k
JOHN R. EPPINGER, Villanova, Pennsylvania
FRED A. PARKER, Monroe, North Carolina
SARAH R . WALLACE, N e w a r k , O h i o
A70
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PROCESSING BANK HOLDING COMPANY AND MERGER APPLICATIONS
SUSTAINABLE RECOVERY: SETTING THE STAGE, N o v e m b e r
1982.
REMARKS BY CHAIRMAN PAUL A . VOLCKER, AT A N N U A L
H U M A N RELATIONS A W A R D DINNER, D e c e m b e r 1982.
REMARKS BY CHAIRMAN PAUL A . VOLCKER, AT DEDICATION
CEREMONIES: FEDERAL RESERVE BANK OF SAN FRAN-
Truth in Leasing
U.S. Currency
What Truth in Lending Means to You
STAFF STUDIES:
Bulletin
Summaries Only Printed in the
Studies and papers on economic and financial subjects that
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113. BELOW THE BOTTOM LINE: THE USE OF CONTINGENCIES AND COMMITMENTS BY COMMERCIAL BANKS, b y
Benjamin Wolkowitz and others. Jan. 1982. 186 pp.
114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ON COMPETITION AND PERFORMANCE IN
BANKING MARKETS, by Timothy J. Curry and John T.
Rose. Jan. 1982. 9 pp.
115. COSTS, SCALE ECONOMIES, COMPETITION, AND PRODUCT MIX IN THE U . S . PAYMENTS MECHANISM, b y
David B. Humphrey. Apr. 1982. 18 pp.
116. DIVISIA MONETARY AGGREGATES: COMPILATION,
DATA, AND HISTORICAL BEHAVIOR, b y W i l l i a m A .
Barnett and Paul A. Spindt. May 1982. 82 pp.
CISCO, March 1983.
RESTORING STABILITY. REMARKS BY CHAIRMAN PAUL A .
117. THE COMMUNITY REINVESTMENT ACT AND CREDIT
ALLOCATION, by Glenn Canner. June 1982. 8 pp.
VOLCKER, April 1983.
CREDIT CARDS IN THE U . S . ECONOMY: THEIR IMPACT ON
COSTS, PRICES, AND RETAIL SALES, J u l y 1983. 114 p p .
118. INTEREST
RATES
AND
TERMS
ON
CONSTRUCTION
LOANS AT COMMERCIAL BANKS, by D a v i d F. S e i d e r s .
July 1982. 14 pp.
119. STRUCTURE-PERFORMANCE STUDIES IN BANKING:
A N UPDATED SUMMARY AND EVALUATION, b y S t e -
phen A. Rhoades. Aug. 1982. 15 pp.
120. FOREIGN SUBSIDIARIES OF U . S . BANKING ORGANIZA-
CONSUMER EDUCATION
PAMPHLETS
Short pamphlets suitable for classroom use. Multiple
available without charge.
TIONS, by James V. Houpt and Michael G. Martinson.
Oct. 1982. 18 pp.
copies
121. REDLINING: RESEARCH A N D FEDERAL LEGISLATIVE
RESPONSE, by Glenn B. Canner. Oct. 1982. 20 pp.
122. BANK CAPITAL TRENDS AND FINANCING, b y S a m u e l
H. Talley. Feb. 1983. 19 pp. Out of print.
Alice in Debitland
Consumer Handbook to Credit Protection Laws
The Equal Credit Opportunity Act and . . . Age
The Equal Credit Opportunity Act and . . . Credit Rights in
Housing
The Equal Credit Opportunity Act and . . . Doctors, Lawyers, Small Retailers, and Others Who May Provide Incidental Credit
The Equal Credit Opportunity Act and . . . Women
Fair Credit Billing
Federal Reserve Glossary
Guide to Federal Reserve Regulations
How to File A Consumer Credit Complaint
If You Borrow To Buy Stock
If You Use A Credit Card
Instructional Materials of the Federal Reserve System
Series on the Structure of the Federal Reserve System
The Board of Governors of the Federal Reserve System
The Federal Open Market Committee
Federal Reserve Bank Board of Directors
Federal Reserve Banks
Organization and Advisory Committees
123. FINANCIAL TRANSACTIONS WITHIN BANK HOLDING
COMPANIES, by John T. Rose and Samuel H. Talley.
May 1983. 11 pp.
124. INTERNATIONAL BANKING FACILITIES AND THE E U -
RODOLLAR MARKET, by Henry S. Terrell and Rodney
H. Mills. August 1983. 14 pp.
125. SEASONAL ADJUSTMENT OF THE WEEKLY MONETARY
AGGREGATES: A MODEL-BASED APPROACH, b y D a v i d
A. Pierce, Michael R. Grupe, and William P. Cleveland. August 1983. 23 pp.
126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR-
KET INTERVENTION, by Donald B. Adams and Dale
W. Henderson. August 1983. 5 pp.
* 1 2 7 . U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: JANUARY-MARCH 1975, b y M a r g a r e t L .
Greene.
*128. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: SEPTEMBER 1 9 7 7 - O c T O B E R 1981, b y M a r g a -
ret L. Greene.
* 1 2 9 . U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1981, b y M a r g a r e t
L. Greene.
All
130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTERNATIONAL TRADE AND OTHER ECONOMIC VARIABLES: A REVIEW OF THE LITERATURE, b y V i c t o r i a S .
Farrell with Dean A. DeRosa and T. Ashby McCown.
January 1984. 21 pp.
131. CALCULATIONS OF PROFITABILITY FOR U . S . D O L L A R DEUTSCHE MARK INTERVENTION, b y L a u r e n c e R .
Jacobson. October 1983. 8 pp.
132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES AND INTERVENTION: A
REVIEW OF THE TECHNIQUES AND LITERATURE, b y
Kenneth Rogoff. October 1983. 15 pp.
133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVENTION, A N D INTEREST RATES: A N EMPIRICAL IN-
VESTIGATION, by Bonnie E. Loopesko. November
1983. 20 pp.
134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: A REVIEW OF THE LITERATURE, b y
Ralph W. Tryon. October 1983. 14 pp.
* 1 3 5 . SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: APPLICATIONS TO C A N A D A , GERMA-
NY, AND JAPAN, by Deborah J. Danker, Richard A.
Haas, Dale W. Henderson, Steven A. Symansky, and
Ralph W. Tryon.
136. T H E EFFECTS OF FISCAL POLICY ON THE U . S . ECONO-
MY, by Darrell Cohen and Peter B. Clark. January
1984. 16 pp.
137. THE IMPLICATIONS FOR B A N K MERGER POLICY OF
FINANCIAL DEREGULATION, INTERSTATE BANKING,
AND FINANCIAL SUPERMARKETS, b y S t e p h e n A .
Rhoades. February 1984. 8 pp.
*The availability of these studies will be announced in a
forthcoming BULLETIN.
REPRINTS OF BULLETIN
ARTICLES
Most of the articles reprinted do not exceed 12 pages.
Survey of Finance Companies. 1980. 5/81.
Bank Lending in Developing Countries. 9/81.
The Commercial Paper Market since the Mid-Seventies. 6/82.
Applying the Theory of Probable Future Competition. 9/82.
International Banking Facilities. 10/82.
U.S. International Transactions in 1982. 4/83.
New Federal Reserve Measures of Capacity and Capacity
Utilization. 7/83.
Foreign Experience with Targets for Money Growth. 10/83.
Intervention in Foreign Exchange Markets: A Summary of
Ten Staff Studies. 11/83.
A Financial Perspective on Agriculture. 1/84.
A73
Index to Statistical Tables
References are to pages A3 through A64 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers, 9, 22, 24
Agricultural loans, commercial banks, 18, 19, 23
Assets and liabilities (See also Foreigners)
Banks, by classes, 17-19
Domestic finance companies, 35
Federal Reserve Banks, 10
Foreign banks, U.S. branches and agencies, 20
Nonfinancial corporations, 34
Savings institutions, 26
Automobiles
Consumer installment credit, 38, 39
Production, 44, 45
BANKERS acceptances, 9, 22, 24
Bankers balances, 17-19 (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 32
Rates 3
Branch banks, 14, 20, 52
Business activity, nonfinancial, 42
Business expenditures on new plant and equipment, 34
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 42
Capital accounts
Banks, by classes, 17
Federal Reserve Banks, 10
Central banks, discount rates, 63
Certificates of deposit, 20, 24
Commercial and industrial loans
Commercial banks, 15, 20, 23
Weekly reporting banks, 18-20
Commercial banks
Assets and liabilities, 17-19
Business loans, 23
Commercial and industrial loans, 15, 20, 23
Consumer loans held, by type, and terms, 38, 39
Loans sold outright, 19
Nondeposit fund, 16
Number, by classes, 17
Real estate mortgages held, by holder and property, 37
Time and savings deposits, 3
Commercial paper, 3, 22, 24, 35
Condition statements (See Assets and liabilites)
Construction, 42, 46
Consumer installment credit, 38, 39
Consumer prices, 42, 47
Consumption expenditures, 48, 49
Corporations
Profits and their distribution, 33
Security issues, 32, 62
Cost of living (See Consumer prices)
Credit unions, 26, 38 (See also Thrift institutions)
Currency and coin, 17
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 14
Debt (See specific types of debt or
Demand deposits
Adjusted, commercial banks, 14
Banks, by classes, 17-20
securities)
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 21
Turnover, 14
Depository institutions
Reserve requirements, 7
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 17-20, 26
Federal Reserve Banks, 4, 10
Turnover, 14
Discount rates at Reserve Banks and at foreign central
banks (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 33
EMPLOYMENT, 42, 43
Eurodollars, 24
FARM mortgage loans, 37
Federal agency obligations, 4, 9, 10, 11, 30
Federal credit agencies, 31
Federal finance
Debt subject to statutory limitation and types and
ownership of gross debt, 29
Receipts and outlays, 27, 28
Treasury financing of surplus, or deficit, 27
Treasury operating balance, 27
Federal Financing Bank, 27, 31
Federal funds, 3, 5, 16, 18, 19, 20, 24, 27
Federal Home Loan Banks, 31
Federal Home Loan Mortgage Corporation, 31, 36, 37
Federal Housing Administration, 31, 36, 37
Federal Land Banks, 37
Federal National Mortgage Association, 31, 36, 37
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 4, 10, 11, 29
Federal Reserve credit, 4, 5, 10, 11
Federal Reserve notes, 10
Federally sponsored credit agencies, 31
Finance companies
Assets and liabilities, 35
Business credit, 35
Loans, 18, 38, 39
Paper, 22, 24
Financial institutions
Loans to, 18, 19, 20
Selected assets and liabilities, 26
Float, 4
Flow of funds, 40, 41
Foreign banks, assets and liabilities of U.S. branches and
agencies, 20
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4, 10, 18, 19
Foreign exchange rates, 64
Foreign trade, 51
Foreigners
Claims on, 52, 54, 57, 58, 59, 61
Liabilities to, 19, 51, 52-56, 60, 62, 63
A74
GOLD
Certificate account, 10
Stock, 4, 51
Government National Mortgage Association, 31, 36, 37
Gross national product, 48, 49
HOUSING, new and existing units, 46
INCOME, personal and national, 42, 48, 49
Industrial production, 42, 44
Installment loans, 38, 39
Insurance companies, 26, 29, 37
Interbank loans and deposits, 17
Interest rates
Bonds, 3
Business loans of banks, 23
Federal Reserve Banks, 3, 6
Foreign central banks and foreign countries, 63, 64
Money and capital markets, 3, 24
Mortgages, 3, 36
Prime rate, commercial banks, 22
Time and savings deposits, 8
International capital transactions of United States, 50-63
International organizations, 54, 55-57, 60-63
Inventories, 48
Investment companies, issues and assets, 33
Investments (See also specific types)
Banks, by classes, 17, 19, 26
Commercial banks, 3, 15, 17-19, 20, 37
Federal Reserve Banks, 10, 11
Savings institutions, 26, 37
LABOR force, 43
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 17-19
Commercial banks, 3, 15, 17-19, 20, 23
Federal Reserve Banks, 4, 5, 6, 10, 11
Insured or guaranteed by United States, 36, 37
Savings institutions, 26, 37
MANUFACTURING
Capacity utilization, 42
Production, 42, 45
Margin requirements, 25
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 5
Reserve requirements, 7
Mining production, 45
Mobile homes shipped, 46
Monetary and credit aggregates, 3, 12
Money and capital market rates (See Interest rates)
Money stock measures and components, 3, 13
Mortgages (See Real estate loans)
Mutual funds (See Investment companies)
Mutual savings banks, 8, 18-19, 26, 29, 37, 38 (See also
Thrift institutions)
NATIONAL defense outlays, 28
National income, 48
OPEN market transactions, 9
PERSONAL income, 49
Prices
Consumer and producer, 42, 47
Stock market, 25
Prime rate, commercial banks, 22
Producer prices, 42, 47
Production, 42, 44
Profits, corporate, 33
REAL estate loans
Banks, by classes, 15, 18, 19, 37
Rates, terms, yields, and activity, 3, 36
Savings institutions, 26
Type of holder and property mortgaged, 37
Repurchase agreements, 5, 16, 18, 19, 20
Reserve requirements, 7
Reserves
Commercial banks, 17
Depository institutions, 3, 4, 5, 12
Federal Reserve Banks, 10
U.S. reserve assets, 51
Residential mortgage loans, 36
Retail credit and retail sales, 38, 39, 42
SAVING
Flow of funds, 40, 41
National income accounts, 49
Savings and loan associations, 8, 26, 37, 38, 40 (See also
Thrift institutions)
Savings deposits (See Time and savings deposits)
Securities (See specific types)
Federal and federally sponsored credit agencies, 31
Foreign transactions, 62
New issues, 32
Prices, 25
Special drawing rights, 4, 10, 50, 51
State and local governments
Deposits, 18, 19
Holdings of U.S. government securities, 29
New security issues, 32
Ownership of securities issued by, 18, 19, 26
Rates on securities, 3
Stock market, 25
Stocks (See also Securities)
New issues, 32
Prices, 25
Student Loan Marketing Association, 31
TAX receipts, federal, 28
Thrift institutions, 3 (See also Credit unions, Mutual
savings banks, and Savings and loan associations)
Time and savings deposits, 3, 8, 13, 16, 17-20
Trade, foreign, 51
Treasury currency, Treasury cash, 4
Treasury deposits, 4, 10, 27
Treasury operating balance, 27
UNEMPLOYMENT, 43
U.S. government balances
Commercial bank holdings, 17, 18, 19
Treasury deposits at Reserve Banks, 4, 10, 27
U.S. government securities
Bank holdings, 16, 17-19, 20, 29
Dealer transactions, positions, and financing, 30
Federal Reserve Bank holdings, 4, 10, 11, 29
Foreign and international holdings and transactions, 10,
29, 63
Open market transactions, 9
Outstanding, by type and holder, 26, 29
Rates, 3, 24
U.S. international transactions, 50-63
Utilities, production, 45
VETERANS Administration, 36, 37
WEEKLY reporting banks, 18-20
Wholesale (producer) prices, 42, 47
YIELDS (See Interest rates)
A75
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK,
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Robert P. Henderson
Thomas I. Atkins
Frank E. Morris
James A. Mcintosh
NEW YORK*
10045
John Brademas
Gertrude G. Michelson
M. Jane Dickman
Anthony M. Solomon
Thomas M. Timlen
Buffalo
14240
John T. Keane
PHILADELPHIA
19105
Robert M. Landis
Nevius M. Curtis
Edward G. Boehne
Richard L. Smoot
CLEVELAND*
44101
William H. Knoell
E. Mandell de Windt
Vacant
Milton G. Hulme, Jr.
Karen N. Horn
William H. Hendricks
William S. Lee
Leroy T. Canoles, Jr.
Robert L. Tate
Henry Ponder
Robert P. Black
Jimmie R. Monhollon
John H. Weitnauer, Jr.
Bradley Currey, Jr.
Martha A. Mclnnis
Jerome P. Keuper
Sue McCourt Cobb
C. Warren Neel
Sharon A. Perlis
Robert P. Forrestal
Jack Guynn
Stanton R. Cook
Edward F. Brabec
Russell G. Mawby
Silas Keehn
Daniel M. Doyle
W.L. Hadley Griffin
Mary P. Holt
Sheffield Nelson
Sister Eileen M. Egan
Patricia W. Shaw
Theodore H. Roberts
Joseph P. Garbarini
William G. Phillips
John B. Davis, Jr.
Ernest B. Corrick
E. Gerald Corrigan
Thomas E. Gainor
Doris M. Drury
Irvine O. Hockaday, Jr.
James E. Nielson
Patience Latting
Robert G. Lueder
Roger Guffey
Henry R. Czerwinski
Robert D. Rogers
John V. James
Mary Carmen Saucedo
Paul N. Howell
Lawrence L. Crum
Robert H. Boy kin
William H. Wallace
Caroline L. Ahmanson
Alan C. Furth
Bruce M. Schwaegler
Paul E. Bragdon
Wendell J. Ashton
John W. Ellis
John J. Balles
Richard T. Griffith
Cincinnati
Pittsburgh
45201
15230
RICHMOND*
23219
Baltimore
21203
Charlotte
28230
Culpeper Communications
and Records Center 22701
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
30301
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
59601
64198
80217
73125
68102
75222
79999
77252
78295
SAN FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino
Harold J. Swart
Robert D. McTeer, Jr.
Albert D. Tinkelenberg
John G. Stoides
Fred R. HenJames D. Hawkins
Patrick K. Barron
Jeffrey J. Wells
Henry H. Bourgaux
William C. Conrad
John F. Breen
James E. Conrad
Paul I. Black, Jr.
Robert F. McNellis
Wayne W. Martin
William G. Evans
Robert D. Hamilton
Joel L. Koonce, Jr.
J.Z. Rowe
Thomas H. Robertson
Richard C. Dunn
Angelo S. Carella
A. Grant Holman
Gerald R. Kelly
*Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016;
Jericho, N e w York 11753; Utica at Oriskany, N e w York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West
Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202.
A76
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
yorfc
January 1978
ALASKA
©
mmhkw
\
YYP
LEGEND
Boundaries of Federal Reserve Districts
®
Federal R e s e r v e Bank Cities
Boundaries of Federal Reserve Branch
Territories
•
Federal R e s e r v e Branch Cities
Federal R e s e r v e Bank Facility
Q
Board of G o v e r n o r s of the Federal Reserve
System
Xv
Publications of Interest
FEDERAL
RESERVE
CONSUMER
CREDIT
PUBLICATIONS
The Federal Reserve Board publishes a series of
pamphlets covering individual credit laws and topics,
as pictured below. The series includes such subjects as
how the Equal Credit Opportunity Act protects women against discrimination in their credit dealings, how
to use a credit card, and how to use Truth in Lending
information to compare credit costs.
The Board also publishes the Consumer
Handbook
to Credit
Protection
Laws,
a c o m p l e t e guide to con-
sumer credit protections. This 44-page booklet explains how to use the credit laws to shop for credit,
apply for it, keep up credit ratings, and complain about
an unfair deal.
Protections offered by the Electronic Fund Transfer
Act are explained in Alice in Debitland. This booklet
offers tips for those using the new "paperless" systems for transferring money.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 138,
Board of Governors of the Federal Reserve System,
Washington, D.C. 20551. Multiple copies for classroom use are also available free of charge.
LGCMO
LE4SING
LE4SMG
LE4SMG
TRUTH IN LE4SING
I The
I' Equal Credit
I Opportunity
Act and
Credit Rights
' In Housing
The Equal Credit
Opportunity Act
and . . .
What
Thithln
Lending
Means
To You
The
Equal
Credit
Opportunity
Act
and...
WOMEN
The
Equal
Credit
Opportunity
Actr~
...andI
Publications of Interest
FEDERAL RESERVE
REGULATORY
SERVICE
To promote public understanding of its regulatory
functions, the Board publishes the Federal Reserve
Regulatory Service, a three-volume looseleaf service
containing all Board regulations and related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are
published separately as handbooks pertaining to monetary policy, securities credit, and consumer affairs.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each
contains conversion tables, citation indexes, and a
subject index.
The Monetary Policy and Reserve
Requirements
Handbook contains Regulations A, D, and Q plus
related materials. For convenient reference, it also
contains the rules of the Depository Institutions
Deregulation Committee.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with all related statutes, Board interpretations, rulings, and staff opinions. Also included is the Board's
list of OTC margin stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, and BB and
associated materials.
For domestic subscribers, the annual rate is $175 for
the Federal Reserve Regulatory Service and $60 for
each handbook. For subscribers outside the United
States, the price including additional air mail costs is
$225 for the Service and $75 for each Handbook. All
subscription requests must be accompanied by a check
or money order payable to Board of Governors of the
Federal Reserve System. Orders should be addressed
to Publications Services, Mail Stop 138, Federal Reserve Board, 20th Street and Constitution Avenue,
N.W., Washington, D.C. 20551.
@FedFRASER