Full text of Federal Reserve Bulletin : April 1987
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VOLUME 73 •
NUMBER 4 •
APRIL 1987
FEDERAL RESERVE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost
• Griffith L. Garwood • James L. Kichline • Edwin M. Truman
T h e FEDERAL RESERVE BULLETIN is i s s u e d m o n t h l y u n d e r the d i r e c t i o n o f the staff p u b l i c a t i o n s c o m m i t t e e . T h i s c r
• n i t t e e is r e s p o n s i b l e f o r
o p i n i o n s e x p r e s s e d e x c e p t in official s t a t e m e n t s a n d s i g n e d articles. It is a s s i s t e d b y the E c o n o m i c Editing S e c t i o n h e a d e d b y M e n d e l l e T .
B e r e n s o n , the G r a p h i c C o m m u n i c a t i o n s S e c t i o n u n d e r the direction o f P e t e r G . T h o m a s , a n d P u b l i c a t i o n s S e r v i c e s s u p e r v i s e d b y L i n d a C . K y l e s .
Table of Contents
239 MONETARY POLICY
TO THE CONGRESS
REPORT
The current economic expansion has entered its fifth year, ranking it among the
longest of the postwar period; monetary
expansion, while adequate to support orderly economic growth, needs to be consistent with continuing progress over time in
reducing the underlying rate of inflation.
255 BASIC
BANKING
On October 2, 1986, the Federal Financial
Institutions Examination Council approved
a policy statement that endorses and encourages private sector efforts to offer basic
banking services. This article focuses on
the basic banking issue, its origins, and
recent developments.
270 STAFF
STUDIES
"Determinants of Corporate Merger Activity: A Review of the Literature" reviews the
relevant theoretical literature regarding the
major determinants of corporate merger activity and examines the empirical evidence
bearing on the aptness of the suggested
explanations.
272 INDUSTRIAL
PRODUCTION
Industrial production increased an estimated 0.4 percent in January.
275 STATEMENTS
TO
CONGRESS
Paul A. Volcker, Chairman, Board of Governors, discusses domestic and international economic policies and says that although
much more remains to be done, there is
some evidence that the needed economic
adjustments are beginning, before the Joint
Economic Committee of the U.S. Congress, February 2, 1987.
279 Wayne D. Angell, Member, Board of Governors, provides the views of the Board on
the issue of delayed availability, and specifically on S. 344, the Fair Deposit Availability Act of 1987, before the Senate Committee on Banking, Housing, and Urban
Affairs, February 5, 1987.
282 Chairman Volcker reviews the conduct of
monetary policy against the background of
economic and financial developments here
and abroad, concentrating on more general
considerations underlying the policy approaches of the Federal Reserve, and says
that these approaches must fit into a broader pattern of complementary action both in
the United States and in other countries if
the common objective of sustained economic expansion and price stability is to be
reached, before the Senate Committee on
Banking, Housing, and Urban Affairs, February 19, 1987. [Chairman Volcker presented identical testimony before the House
Committee on Banking, Finance and Urban
Affairs, February 26, 1987.]
290 Chairman Volcker discusses recent and
prospective developments in domestic and
international economic policies and says
that what is required in dealing with the
distortions and imbalances within our economy and internationally is complementary
actions, here and abroad, on budgets, on
monetary policies, and on maintaining appropriate exchange rates and an open trading order, before the Senate Committee on
the Budget, February 24, 1987.
296
ANNOUNCEMENTS
Meeting of Consumer Advisory Council.
New edition of Bank Holding
Supervision Manual available.
Company
Comments requested on proposed riskbased capital framework for banks and
bank holding companies; comment requested on two notices to be used by financial
institutions to notify federal regulators of
their status under the Government Securities Act of 1986; comment period extended
on proposals to reduce the risks on largedollar payment systems and on proposed
rulemaking to permit bank holding companies to engage in limited real estate investment activities.
299 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET COMMITTEE
At its meeting on December 15-16, 1986, all
of the members of the Committee indicated
that they favored a directive that called for
no change in the degree of pressure on
reserve positions. The members expected
this approach to policy implementation to
be consistent with growth of both M2 and
M3 at an annual rate of about 7 percent over
the four-month period from November to
March. Because the behavior of Ml remained subject to unusual uncertainty, the
members decided they would continue to
evaluate this aggregate in the light of the
performance of the broader monetary aggregates and other factors. The members
indicated that slightly greater reserve restraint or somewhat lesser reserve restraint
would be acceptable over the intermeeting
period depending on the behavior of the
monetary aggregates, taking into account
the strength of the business expansion, the
performance of the dollar in foreign ex-
change markets, progress against inflation,
and conditions in domestic and international credit markets. The members agreed that
the intermeeting range for the federal funds
rate, which provides a mechanism for initiating consultation of the Committee when
its boundaries are persistently exceeded,
should be left unchanged at 4 to 8 percent.
305 LEGAL
DEVELOPMENTS
Various bank holding company, bank service corporation, and bank merger orders;
and pending cases.
AI FINANCIAL AND BUSINESS
STATISTICS
A3 Domestic Financial Statistics
A44 Domestic Nonfinancial Statistics
A53 International Statistics
A69 GUIDE TO TABULAR PRESENTATION,
STATISTICAL RELEASES, AND SPECIAL
TABLES
A70 BOARD OF GOVERNORS AND STAFF
All
FEDERAL OPEN MARKET COMMITTEE
AND STAFF; ADVISORY COUNCILS
A74 FEDERAL RESERVE
PUBLICATIONS
BOARD
AH INDEX TO STATISTICAL
TABLES
A19 FEDERAL RESERVE BANKS,
AND OFFICES
BRANCHES,
A80 MAP OF FEDERAL RESERVE
SYSTEM
Monetary Policy Report to the Congress
Report submitted to the Congress on February
19, 1987, pursuant to the Full Employment and
Balanced Growth Act of 1978.1
MONETAR Y POLIC Y AND THE
ECONOMIC OUTLOOK FOR 1987
The current economic expansion in the United
States has entered its fifth year, ranking it among
the longest of the postwar period. While substantial imbalances and risks that must be dealt with
forcefully and effectively have emerged in the
course of the expansion, important groundwork
also has been laid for continued growth through
1987 and beyond. Significantly, price trends thus
far have remained favorable, reflecting not only
the dramatic drop in crude oil prices in early 1986
but also continued restraint on labor costs in
many sectors. Interest rates have moved lower
and stock prices higher, reducing the cost of
capital for investment and enhancing wealth.
Furthermore, processes are in train that should
help correct the major imbalances that have been
plaguing the economy: action has been taken to
cut the deficit in the federal budget, and the
foreign exchange value of the dollar has moved
to levels that have made U.S. firms more competitive in world markets and that should help
correct the imbalance in the U.S. external accounts.
While the potential for further economic progress thus appears considerable, those gains will
be secured only if there is timely and constructive action by decisionmakers in the public and
private sectors. The Congress and the administration must follow up the steps already taken
and make basic programmatic changes that will
ensure continuing movement toward budgetary
1. The charts for the report are available on request from
Publications Services, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551.
balance; failure to do so would be damaging to
confidence and disruptive to the financial markets. Many of our major trading partners, which
have depended greatly on external surpluses to
buoy their economies over the past few years,
must act to open their markets more fully and to
foster sustained growth in domestic demand;
without such action, prospects for world growth
as well as for reducing our own trade deficit
would be impaired, the risks of protectionism
would rise, and prospects for the dollar would be
more uncertain. And, if we are to capitalize on
those trading opportunities and promote economic and financial stability at home, labor and
management must avoid a return to the inflationary behavior of the past. Oil prices have firmed
recently, and the sizable decline in the dollar is
likely to exert upward pressure on other prices in
the months ahead; the challenge is to prevent
such developments from triggering a cumulative
price-wage spiral.
In that context, Federal Reserve policy has a
critical role to play. Monetary expansion, while
adequate to support orderly economic growth,
needs to be consistent with continuing progress
over time in reducing the underlying rate of
inflation. As the experience of recent years has
demonstrated, such a policy—in part by bolstering confidence in financial markets and providing
a framework of greater certainty for private
decisionmaking—can make a substantial contribution to the maintenance of expansion and the
reduction of unemployment. In the short run, a
variety of factors—such as interest rate movements, regulatory changes, and institutional innovations, among others—may alter considerably the amount of funds the public wishes to hold
in monetary form. Over time, however, expansion of the money stock measures clearly must
moderate from recent rates if destabilizing pressures are to be avoided. The Federal Open
Market Committee has established targets for
1987 with that fact in mind, but it will continue to
240
Federal Reserve Bulletin • April 1987
interpret the movements in the monetary aggregates in light of developments in the economy
and in domestic and international financial markets and the potential for inflationary pressures.
A Brief Review
of the Past
Year
Economic activity continued to expand moderately in 1986, at about the pace that has prevailed, on average, since mid-1984. This growth
was sufficient to create 2Vi million new payroll
jobs, and the unemployment rate drifted down to
the area of 63A percent at year-end.
Further progress was made in 1986 toward the
objective of overall price stability. Wage and
price behavior continued to be influenced by the
anti-inflationary thrust of policies put in place
some time ago—and by the ongoing adjustment
of expectations to the new environment. Thus,
while the plunge in world crude oil prices contributed importantly to the sharp slowing in
inflation last year, prices outside the energy area
also decelerated on average. Running counter to
past cyclical patterns, labor cost pressures remained subdued, with nominal wage gains across
a broad range of occupations and industries
continuing to move toward less inflationary
rates—rates that are more consistent with trends
in labor productivity.
The Federal Reserve encouraged continued
economic expansion last year by supplying ample reserves for the banking system and reducing
the discount rate four times, by a total of 2
percentage points. A large portion of the reserves provided were to accommodate the strong
demand for Ml-type deposits. Last year, Ml
grew in excess of 15 percent, and its velocity—
the ratio of nominal gross national product to
money—declined more than 9 percent, unprecedented during the postwar years. In part, this
rapid money growth reflected the public's response to changes in interest rates, which made
it more attractive to hold negotiable order of
withdrawal (NOW) accounts and demand deposits. However, last year's growth was well in
excess of what would be expected based on past
relationships among money, interest rates, and
income. Growth in the broader aggregates was
more in line with past experience, taking account
of interest rate movements. Both M2 and M3
expanded almost 9 percent last year, ending 1986
just within the upper bound of their annual target
ranges.
In the credit markets, short-term rates of interest declined about 2 percentage points through
the first three quarters of the year. Since that
time, short-term rates have backed up some, first
reflecting pressure around the end of the year
from a huge volume of tax-related transactions
and more recently from investors' response to
stronger-than-anticipated economic news and
concerns about weakness in the dollar. Longerterm bond rates have fallen more than 2 percentage points since the end of 1985, with most of the
decline occurring in the first four months of 1986
in response to an improved inflation outlook and
sluggish growth in economic activity. After midApril, Treasury bond rates fluctuated in a relatively narrow range, but corporate and municipal
bond rates trended lower—reaching the lowest
levels since the late 1970s.
The declines in interest rates contributed to
the vigorous pace of household spending last
year by reducing borrowing costs and boosting
asset values. Housing starts, which are particularly sensitive to interest rate developments, rose
a bit, despite the drag of a depressed economy in
regions heavily dependent on oil and agriculture.
In contrast, capital spending declined over the
course of the year, largely because of the sharp
cutback in oil drilling; more broadly, investment
was restrained by an overhang of office and other
commercial space and the weak pace of activity
in major segments of the manufacturing sector.
The disparity between household spending and
business investment is indicative of the imbalances that characterized the U.S. economy in
1986. Indeed, economic performance throughout
the current expansion has varied considerably
across industries and regions of the country. In
some cases, such as agriculture, special circumstances have played a role. But more fundamentally, the imbalances are rooted in the enormous—and partly related—deficits in our
external accounts and in the federal budget.
Although the foreign exchange value of the
dollar has fallen sharply from its peak in early
1985—at least relative to the currencies of the
major industrialized countries—the nation's
Monetary Policy Report to the Congress
trade deficit deepened last year. The increased
price competitiveness of U.S. producers contributed to a sizable improvement in real export
growth, but the pickup was damped by the
relatively slow pace of economic activity abroad.
At the same time, the volume of imports continued to rise rapidly through most of last year, in
part because the pass-through of the dollar depreciation into import prices was limited by the
ability of foreign exporters and U.S. distributors
to absorb much of the exchange rate swing in
their profit margins. Also, American buyers apparently have developed strong preferences for
certain foreign goods, and the newly industrialized and developing countries continued to rely
disproportionately on U.S. markets. With import
penetration remaining on an uptrend, domestic
production continued to expand less rapidly than
domestic demand.
The federal budget deficit also remains huge,
despite substantial deficit-reducing actions taken
by the administration and the Congress. Official
estimates suggest that the deficit for fiscal 1987
will be in the range of $175 billion—a good deal
less than the record $221 billion figure of a year
earlier but still equal to a historically high 4
percent of GNP. Further cuts in the federal
deficit are essential, in the context of movement
toward better external balance, to ensure that an
adequate flow of domestic saving is available to
support needed domestic investment.
Monetary
Policy for 1987
As noted above, the members of the Federal
Open Market Committee (FOMC) believe that a
reduction in the growth of the money supply
measures, over time, will be needed if the economy is to achieve noninflationary growth and
external equilibrium. The precise timing and
degree of that moderation in monetary expansion
will depend on prevailing circumstances in the
U.S. economy and in domestic and international
financial markets. The Committee has established target ranges for M2 and M3 of 5YI to 8V2
percent from the fourth quarter of 1986 to the
fourth quarter of 1987, the same as those tentatively agreed upon in July. The ranges for M2
and M3 are V2 percentage point below those in
241
Ranges of growth for monetary and debt aggregates
Percent change, fourth quarter to fourth quarter
Aggregate
M2
M3
Debt
1987
1986
5 Vi t o 8V4
to
8 to 11
5Vt
m
6 to 9
6 to 9
8 t o 11
effect for 1986 and are below the actual growth
rates last year. Indeed, in an environment without the dramatic movements in interest rates of
recent years, only small changes in the velocity
of these aggregates would be anticipated. Accordingly, the Committee now expects growth of
M2 and M3 this year to be in the middle parts of
their ranges.
The FOMC elected not to establish a specific
target range for Ml at this time because of
uncertainties about its underlying relationship to
the behavior of the economy and its sensitivity to
a variety of economic and financial circumstances and assumptions at particular points in
time. With the deregulation of deposit rates and
the attendant changes in the composition of M l ,
the narrow money measure has become much
more responsive in the short run to changes in
interest rates, and possibly to other factors affecting the portfolio decisions of households.
Moreover, only with the passage of time will it
become possible to assess with any precision the
longer-term trend in growth of M l , under current
institutional arrangements, relative to nominal
GNP. Given these circumstances, the appropriateness of different rates of growth of Ml cannot
be assessed in isolation; rather, the movement of
this aggregate necessarily will be evaluated in the
light of expansion in M2 and M3, growth of the
domestic economy, and emerging price pressures, which in turn are partly related to changes
in the value of the dollar.
Clearly, there are circumstances in which
much slower growth of Ml would be appropriate. For example, if, in the context of an expanding economy, inflationary forces appeared
threatening, the dollar was exhibiting significant
weakness on exchange markets, and the broader
aggregates were growing rapidly, a less accommodative approach to reserve provision would
be necessary. In those circumstances, monetary
velocity likely would accelerate, and much slow-
242
Federal Reserve Bulletin • April 1987
er growth of Ml would be both a natural and
essential development. Conversely, it could be
appropriate to accommodate, in the short run,
further sizable increases in Ml in circumstances
characterized by sluggish business activity and
maintenance of progress toward underlying price
stability and international equilibrium. As this
implies, the Committee will continue to monitor
Ml behavior carefully, assessing the growth of
the aggregate in the context of other financial and
economic developments. And, depending on circumstances, it is possible that at some time in the
year the Committee might set more specific
objectives for Ml.
The Committee will continue to monitor the
growth of debt. Growth of domestic nonfinancial
sector debt in recent years consistently has exceeded both the Committee's expectations and,
more important, the expansion of income by a
wide margin. This is a matter of concern, for it
has resulted in potential fragilities in the nation's
financial structure. Although the range for the
debt measure has been kept at 8 to 11 percent,
the same as in 1986, that range implies a significant slowing from the pace of almost 13 percent
last year—but to a rate still in excess of that
expected for income. With a reduced federal
deficit, borrowing by the federal government will
slow. Also, new constraints imposed by tax
reform legislation should reduce the presence of
state and local governments in the financial markets. Borrowing by nonfinancial business firms is
expected to grow at about the same rate as last
year. Tax reform should result in some reduction
in the volume of equity shares retired in connection with mergers and other corporate restructurings, but such activity—and the attendant borrowing—appears likely to remain significant, in
some cases undermining the financial strength of
corporations as they become more highly leveraged. Moreover, firms may have a wider gap
than they did last year between internally generated funds and investment expenditures, owing
in part to higher corporate tax bills.
Growth of household debt also is expected to
be about the same as last year. Growth of
consumer installment credit clearly is decelerating, but growth of mortgage debt should be
robust, reflecting both a good housing market
and the substitution of home equity lines of
credit for installment borrowing.
Economic
Projections
The Committee believes that its monetary objectives are consistent with continued moderate
growth in economic activity and a relatively
modest upturn in inflation in 1987 that would be
attributable almost entirely to higher import
prices and a rebound in energy costs. As indicated in the table, the central tendency of the
forecasts of Committee members and other Reserve Bank Presidents is for growth in real GNP
of about 21/2 to 3 percent. Such an increase in
output would be expected to generate substantial
gains in employment, and the jobless rate is
projected to drift down a bit over the year.
Prices, as measured by the implicit deflator for
GNP, are expected to rise 3 to V/i percent. It
should be noted that the rise in energy and
import prices likely will have a somewhat greater
effect on consumer prices, so that measures such
as the CPI may rise faster than the GNP deflator—a pattern that emerged in the second half of
1986.
Economic projections for 1987
Percent
F O M C members and other
F R B Presidents
Item
Change, fourth quarter to fourth
Nominal G N P
Real G N P
Implicit deflator for G N P
Average level in the fourth
U n e m p l o y m e n t rate
Congressional
Budget Office
6.5
3.0
3.4
Range
4>/2 to 7'/:
2 to 4
2V2 to 4
53/4 to 6V2
2^2 to 3
3to3V2
6.9
3.2
3.6
6V2 t o 6V41
6V2 to 63/4i
6.5
quarter
quarter
1. Civilian u n e m p l o y m e n t rate.
Administration
Central
tendency
6.6 1
Monetary Policy Report to the Congress
The forecasts of the Committee members and
the other Reserve Bank Presidents assume that
the Congress will make further progress in reducing the federal budget deficit. Continuing evidence of fiscal restraint is viewed as crucial in
maintaining financial conditions that are conducive to balanced growth and an improved pattern
of international transactions.
In the Committee's view, orderly growth in
GNP has become increasingly dependent upon a
substantial improvement in real net exports. The
international competitiveness of U.S. firms
clearly has benefited from the decline in the
dollar, and this should bolster export growth and
help curb the expansion in imports. But there
still is considerable uncertainty about some of
the other factors affecting the external sector. In
particular, the increase in exports is contingent
on a satisfactory pace of economic activity
abroad over time, on continued progress in handling international debt problems, and on enhanced access to foreign markets. On the import
side, the improvement is predicated on a substantial rise in the relative price of foreign goods.
That unfortunately carries with it some domestic
inflationary risks, underscoring the need for prudent fiscal and monetary policies.
Slower growth of domestic demand is expected to release resources to the external sector in
1987. Consumer spending is projected to rise less
rapidly than in 1986, given that the saving rate
has fallen to an extremely low level and real
income gains in 1987 are likely to be damped by
rising energy and nonpetroleum import prices.
And while the sharp rise in the value of financial
assets should continue to buoy household spending, debt burdens remain troublesome for many
families. Housing activity overall is expected to
be well maintained, even though multifamily
building will be inhibited by high vacancy rates
and adverse tax changes. Nonresidential construction also will be depressed by a sizable
overhang of office space; the recent firming in oil
prices may well signal an end to the sharp
contraction in oil drilling, but relatively little
improvement seems likely at current price levels.
In contrast, equipment spending by industry
generally is anticipated to be supported by the
continuing need to modernize and to cut costs, as
well as by the improved sales prospects associated with a more positive foreign trade outlook.
243
The effect of the dollar depreciation on prices
is likely to be felt more strongly in 1987. In
addition, crude oil prices have rebounded in the
past few months, reversing part of the sharp drop
that occurred early last year. However, the favorable trend in wages and other costs, combined with sizable productivity gains in manufacturing, provides the opportunity for absorbing
these short-run price shocks while maintaining a
sense of progress toward greater underlying
price stability. The Committee's projections anticipate that neither significant capacity constraints nor strong labor market pressures will
develop and that domestic firms will not squander the opportunity to regain markets in a shortsighted effort to expand profit margins unduly as
demand for their products increases.
The central tendency projections of real GNP
and inflation are slightly lower than the forecasts
of the administration. However, given the uncertainty of economic forecasting, the differences
are not significant, and, in fact, the administration's projections are well within the full range of
expectations among Committee members and
other Reserve Bank Presidents.
THE PERFORMANCE OF THE
DURING THE PAST YEAR
ECONOMY
The economy completed a fourth consecutive
year of expansion in 1986, with real gross national product increasing about 2lA percent. The rise
in overall activity last year was similar to the
gains that have been recorded, on balance, since
mid-1984 and was sufficient to create 2Vi million
new payroll jobs. The jobless rate for civilians
continued to edge down and, at year-end, was
63/4 percent.
Inflation slowed sharply in 1986, with virtually
all broad measures of price trends showing their
smallest increases in many years. Although the
sharpness of the deceleration owed much to
specific developments in the markets for oil and
other commodities, the favorable inflation performance also represented at a fundamental level
the continuation of trends in wage and price
behavior fostered by policies in place since the
early part of the decade.
Although output continued to grow in 1986,
the economy still was characterized by pro-
244
Federal Reserve Bulletin • April 1987
nounced imbalances. These were reflected in
marked disparities in economic performance
across industries and regions of the country. In
particular, domestic oil exploration and investment was cut back sharply, and only massive
federal subsidies sustained many farm enterprises faced with sharply lower crop prices. In
addition, major segments of the industrial sector
continued to struggle with intense foreign competition, and relatively low rates of capacity
utilization—along with a glut of office space—
depressed capital spending.
The most serious imbalances continue to be in
the external sector and in the federal budget—
developments that are linked. Although the foreign exchange value of the dollar against the
other G-10 currencies has declined roughly 40
percent over the past two years, the nation's
trade balance continued to deteriorate in 1986.
Growth in the volume of exports did pick up in
response to the enhanced international competitiveness of U.S. firms, although the rebound was
damped somewhat by the relatively slow growth
of the economies of our major trading partners.
However, import volumes continued to expand
rapidly through most of the year, in part because
much of the swing in exchange rates apparently
was absorbed in the profit margins of foreign
exporters and U.S. distributors, thereby limiting
increases in the prices of imported goods. As a
result, the current account deficit continued to
widen, reaching the $150 billion range in 1986.
The federal budget deficit also increased, hitting $221 billion in fiscal 1986; the deficit vastly
exceeded official targets, as underestimates of
program costs and shortfalls in revenues offset
the deficit-reducing actions taken by the administration and the Congress. Recent estimates suggest that the deficit for fiscal year 1987 will
decline to the neighborhood of $175 billion,
which is a good deal less than that of a year
earlier, but considerably more than the GrammRudman-Hollings target of $144 billion.
The Household
Sector
The household sector was the major contributor
to overall growth again last year. Consumer
spending increased a robust 4 percent in real
terms, even though income growth was only
moderate, on average, for the second year in a
row. Real disposable income soared in the first
half because of the plunge in energy prices, but
dropped after midyear, as wage and salary gains
remained sluggish and farm and interest income
declined. Consequently, the personal saving rate
fell to about 4 percent, the lowest annual average
in nearly 40 years.
Consumer spending has been bolstered by
lower interest rates, which have reduced borrowing costs and boosted asset values. Rising stock
prices alone have added several hundred billions
of dollars to household wealth since late 1985.
Household debt also increased further last year,
in part reflecting the desire of consumers to
liquify the gains in their asset values. The rise in
debt was somewhat smaller than in the preceding
few years, but still large enough to push measures of debt burdens to new highs. For a sizable
number of families, especially in parts of the
country hard hit by economic adversities, servicing these debts became more difficult, as evidenced by higher consumer loan delinquencies
and charge-offs and high mortgage delinquencies.
The growth in consumption last year was
paced by strong gains in purchases of durable
goods, while spending on nondurables and services was up at about the same rate as in the
preceding few years. Within the durables category, sales of new cars rose to about WVT. million
units. Effective prices of new cars were held
down by a series of below-market finance incentive programs for domestic makes and by the
introduction of low-priced imports from Korea
and Yugoslavia. At the same time, sales of
Japanese and European models remained brisk,
despite appreciable increases in their sticker
prices. Outlays for other durables also rose substantially last year, as purchases of home electronics products advanced sharply and sales of
furniture and appliances were supported in part
by the robust pace of home sales in recent years.
Housing activity continued to expand in 1986.
Total housing starts edged up to 1.8 million units
for the year as a whole, their highest level since
the late 1970s. Single-family homebuilding increased about 10 percent, bolstered not only by a
sizable decline in mortgage rates—which brought
Monetary Policy Report to the Congress
fixed-rate loan rates back to single-digits for the
first time since 1978—but also by continuing
favorable demographic trends. In contrast, multifamily activity dropped off considerably over
the course of the year. In part, the slowdown
reflected the restraining influence of record-high
vacancy rates on rental units, especially in key
markets in the South. Also, several provisions of
the recent tax legislation have reduced the profitability of building rental housing.
The Business
Sector
Business spending on plant and equipment declined 5VI percent in real terms in 1986. Much of
the drop in investment was attributable to the
sharp cutback in oil and gas well drilling, which
fell almost 50 percent over the year. But investment outside the energy sector also was generally lackluster, as many firms—especially in the
tradable goods sector—trimmed expansion plans
in light of relatively low rates of utilization of
existing capacity and continuing uncertainties
about future sales trends. Investment in computers and other office machines remained on the
reduced growth path that has been evident since
the fading of the high-tech spending boom in
1985, reflecting in part concerns about the productivity-enhancing potential of some of these
products. More broadly, transitory tax considerations also helped to depress equipment spending in 1986. In late 1985, the widely anticipated
elimination of the investment tax credit prompted many firms to accelerate spending from early
1986; although there also was some tax-related
speedup of spending in late 1986, it appears to
have been comparatively small. Outlays for nonresidential structures outside the energy area,
which rose extraordinarily rapidly over the first
few years of the expansion, fell in 1986. The
decline in office construction, for which vacancy
rates have reached extraordinarily high levels,
was especially sharp.
Inventory investment generally remained subdued in 1986. In an environment of sluggish
orders and stable or falling prices, manufacturers
continued to trim their stocks. In the retail and
wholesale trade sector, inventories of goods other than automobiles increased moderately for the
245
second year in a row; however, at year-end such
stocks appeared to be roughly in line with nearterm sales prospects. At auto dealers, there were
sharp fluctuations in stocks, but little net change
over the course of the year; drops in inventories
coincided mainly with the timing of special incentive programs that pushed sales to record
levels as well as with a burst in sales in December in anticipation of tax changes in 1987.
Aftertax economic profits in the nonfinancial
corporate sector, although at fairly high levels
relative to GNP, were essentially unchanged
overall from 1985 levels. There was considerable
diversity in the performance of individual industries. The petroleum industry experienced a
sharp drop in profits associated with the fall in oil
prices. On the other hand, petroleum-using industries such as chemicals and plastics fared
relatively well.
Given these movements in business investment and corporate earnings, internal funds in
the aggregate were nearly sufficient to meet the
basic financing needs of nonfinancial corporations. However, some firms continued to borrow
heavily to fund massive retirements of equity in
association with mergers, buyouts, and share
repurchases. At the same time, the drop in longterm interest rates to the lowest levels in a
decade afforded businesses the opportunity to
improve their financial positions by selling bonds
and retiring older, high-coupon securities or
short-term debt.
The External
Sector
Widening U.S. trade and current account deficits
have aroused deep concern because of their
implications both for the orderly expansion of
the domestic economy and for international financial stability. The foreign exchange value of
the dollar, which had declined about 20 percent
against a weighted average of the currencies of
other Group of Ten (G-10) countries from February 1985 to December 1985, has fallen an additional 20 percent since that time. Because the
U.S. inflation rate over the past two years was
approximately the same as the average inflation
rate in other G-10 countries, the decline in the
real value of the dollar (that is, adjusted for
246
Federal Reserve Bulletin • April 1987
relative inflation rates) was similar to the nominal decline. As measured by broader exchangerate indexes, which include the currencies of
major developing countries as well, the real
decline in the value of the dollar was somewhat
smaller, in part because some of those countries
allowed their currencies to depreciate as part of
an effort to improve their external positions. On
such broader measures, the appreciation of the
dollar in real terms through early 1985 also was
smaller.
The decline in the dollar over the past year was
associated with a fall in interest rates on dollardenominated assets relative to rates on assets
denominated in other currencies. Moreover,
some correction of the dollar's external value
was seen to be an essential element in the
process of reducing over time the huge U.S.
current account deficit—which widened to the
$150 billion range in 1986—and restoring better
balance in the United States and world economies. The apparently muted response of the
current account to the dollar's depreciation
through most of 1986 contributed to sharp downward pressure on the dollar in early 1987.
The volume of merchandise imports rose
sharply in 1986, with increases widespread
across products and countries of origin. Petroleum imports surged as prices plunged and domestic production contracted, and nonpetroleum
imports continued to grow at about the rapid
1985 pace. In part, the sustained strength of
nonpetroleum imports reflected the relatively
moderate increase to date in prices of these
goods. As measured by the index compiled by
the Bureau of Labor Statistics, prices of nonpetroleum imports were up 8V2 percent over the
year, with sizable increases for products such as
automobiles, other consumer goods, and some
types of capital equipment. Nonetheless, the rise
in the overall index was somewhat smaller than
historical patterns would suggest, given the typical lags between movements in exchange rates
and import prices. The weak response of import
prices was attributable in part to the ability of
exporters to the United States, whose profit
margins had widened substantially during the
period of dollar appreciation in the early 1980s,
to absorb initially a large proportion of the dollar's depreciation. In some cases when prices of
imported goods have risen, U.S. distributors
have absorbed some of that increase. Also, since
early 1985, the dollar has appreciated in real
terms relative to the currencies of Canada and
some developing countries, which account for
almost half of U.S. nonpetroleum imports.
Meanwhile, the volume of merchandise exports picked up last year. This improvement
mainly reflected the enhanced international competitiveness of U.S. goods in foreign markets
that stemmed from the decline in the dollar, as
the pace of foreign economic activity generally
remained sluggish. Growth last year for the major industrialized countries as a group was slower
than in 1985, in part because of a pronounced
deceleration in Japan, while activity in many
developing countries was damped by subdued
growth in the industrialized world and the continuing pressures associated with the need to
meet external debt-servicing obligations. Weakness in world commodity prices also has aggravated the financial difficulties of many developing nations, including oil-exporting countries.
The Government
Sector
Even though the administration and the Congress have taken significant actions in the past
few years to reduce the federal budget deficit, it
has remained huge. In fiscal year 1986, the fiscal
imbalance hit a record $221 billion, exceeding the
previous year's figure by more than $8 billion.
Revenue growth last year was restrained by the
relatively moderate rise in nominal income,
while demands on a number of programs, especially in the agriculture and health areas, were
strong. Although the budgetary program put in
place for fiscal year 1987 was nominally consistent with the Gramm-Rudman-Hollings deficit
target of $144 billion, the administration and the
Congressional Budget Office recently have published estimates in the range of $175 billion,
equal to about 4 percent of GNP—still a high
ratio historically.
Excluding changes in farm inventories held by
the Commodity Credit Corporation (CCC), federal purchases of goods and services rose appreciably last year. Over the course of 1986, defense
purchases in real terms grew about 7 percent,
Monetary Policy Report to the Congress
similar to the increases that have been recorded
since the early 1980s. Excluding CCC purchases,
real nondefense outlays, which have shown little
net change in recent years, were essentially flat.
Purchases of goods and services by state and
local governments rose briskly last year, mainly
reflecting a surge in construction activity. An
upswing in the school-age population in recent
years has led to a step-up in school building, and
numerous programs are under way to expand
and improve basic infrastructure. The growth in
overall outlays has been sustained despite concerns about the financial condition of the sector.
Excluding some special one-time inflows—such
as previously escrowed oil lease payments—the
combined surplus of operating and capital accounts for the sector as a whole fell to near zero
in 1986. Many states, including most of those in
the energy and agricultural regions, have responded to budgetary pressures by raising taxes
and cutting spending.
Labor
Markets
Nonfarm payroll employment increased 2Vi million in 1986, about the same as the robust 1985
pace, and continued strong in January of this
year. Hiring in trade and services again was quite
vigorous, with especially large increases for business and health services. In contrast, manufacturing employment contracted over the first
three quarters of 1986. However, factory hiring
picked up in the autumn in response to an
apparent firming in industrial activity. Employment gains in nondurable industries, in which
output has risen steadily, have been widespread
in recent months; meanwhile, hiring at firms
producing durable goods has remained spotty.
The growth in jobs last year slightly exceeded
the rise in the labor force. As a result, the civilian
unemployment rate edged down, to 63A percent
at year-end. Labor force participation maintained its upward trend; women continued to
enter the work force in large numbers, in part
responding to expanding job opportunities, and
participation rates for adult men held steady.
Overall, the number of persons employed relative to the working-age civilian population
reached 61 percent—a new high.
247
Wages continued on a path of moderation in
1986. Hourly compensation in the nonfarm private sector, as measured by the employment cost
index, rose about 31/4 percent, 3A percentage
point less than in 1985. The deceleration in wages
reflected the continued slack in labor markets as
well as the reduction in price inflation, and was
widespread across industries and occupations. In
the unionized sector, wage increases have been
especially small, and a number of alternative,
more flexible compensation arrangements—including the substitution of lump-sum payments
for general wage increases—have been adopted.
Compensation for white-collar workers, although continuing to rise more rapidly than for
other groups, also moderated in 1986.
Unit labor costs in the nonfarm business sector
were well contained last year, given the relatively moderate increase in wages and a small advance in labor productivity. Gains in output per
hour, however, have averaged less than 1 percent per year since 1984, suggesting that the
underlying trend in productivity for the business
sector as a whole has improved only slightly
from the very low pace of the 1970s and remains
well below the pace of earlier in the postwar
period. In contrast, productivity in manufacturing over the past three years has increased
about 3V2 percent per year, in part because
intense foreign competition has induced many
producers to modernize their factories and
streamline their operations.
Price
Developments
The fixed-weighted price index for GNP rose
about 2V2 percent in 1986, down from an increase
of 3!/2 percent in 1985. The increase was the
smallest in more than two decades. Some other
popular measures of prices decelerated even
more markedly. The consumer price index for
goods and services rose only about 1 percent,
and the producer price index for finished goods
actually fell 2Vi percent.
The greater deceleration in the CPI and PPI
than in the GNP price measure is a reflection of
the greater importance of energy prices in those
indexes. The movements in energy prices over
the past year or so have been striking. World
crude oil prices dropped from $26 per barrel in
248
Federal Reserve Bulletin • April 1987
late 1985 to the $11 per barrel range around
midyear; these prices trended up over the second
half and recently have risen to around $18 per
barrel in the wake of the agreement on production limits reached at the meeting of the Organization of Petroleum Exporting Countries in late
December. The drop in crude oil prices in the
first half was reflected fairly rapidly in prices of
gasoline and home heating oil, which fell about
30 percent over the course of the year. There
also were declines in charges for electricity and
natural gas, but they were much smaller than
those on refined petroleum products. On balance, retail energy prices declined 20 percent last
year. The effects of the recent firming in oil
prices are already evident in general indexes: the
PPI jumped 0.6 percent in January, owing largely
to the rebound in gasoline and heating oil prices.
Price increases outside the energy area generally remained moderate in the past year. Retail
food prices rose 4 percent, a bit more than in
1985, reflecting the effects of last summer's heat
wave in the Southeast. However, prices of retail
goods excluding food and energy continued to
slow and, on balance, were up only V/2 percent.
The influence of the depreciating dollar on consumer goods prices was highly variable across
sectors and relatively small overall. There were
sizable increases in dockside prices for foreign
cars and for some types of home electronic and
photographic equipment, and retail prices of
such goods have accelerated. But there was little
evidence of any significant aggregate impact on
other consumer goods. Prices for nonenergy
services also slowed somewhat last year but still
rose about 5 percent, boosted by continued large
increases for medical services and higher premiums for various types of insurance.
Prices for many basic industrial commodities
continued to decline over the first three quarters
of 1986. Excess capacity in some basic industries
and the generally abundant world supplies of
many primary commodities contributed importantly to the weakness in these prices. Sluggish
industrial activity in the United States and other
large economies also was a factor. Prices in a
number of these markets have turned up in
recent months, possibly in response to the firming in U.S. industrial activity. Nonetheless, industrial commodity prices still are well below the
most recent peaks reached in mid-1984.
MONETAR Y POLICY AND
FINANCIAL MARKETS IN 1986
The Federal Reserve faced continuing challenges
in 1986, not only in discerning the underlying
trends in a complex domestic and international
economic setting, but also in specifying appropriate policy actions in a financial environment
marked by a rapid pace of structural change. As
in previous years, and in keeping with the Full
Employment and Balanced Growth Act, money
and credit aggregates were used as a means of
assessing and characterizing policy. At the same
time, however, in targeting and interpreting
these aggregates, and in reaching operational
decisions with respect to the degree of reserve
pressures and the discount rate, the evaluation of
signals provided by a broad range of economic
and financial indicators played a large role.
At its meeting in February 1986, the Federal
Open Market Committee established target
growth ranges, measured from the fourth quarter
of 1985 to the fourth quarter of 1986, of 3 to 8
percent for Ml and 6 to 9 percent for both M2
and M3. The associated monitoring range for
growth of domestic nonfinancial debt was set at 8
to 11 percent. Based on the experience of recent
years, the Committee recognized that the relationship between Ml and economic activity was
subject to particularly great uncertainty. Accordingly, the FOMC agreed to evaluate movements
in Ml in light of their consistency with the
patterns in other monetary aggregates, developments in the economy and financial markets, and
potential inflationary pressures.
Ml was well above its annual target range at
the time of the July FOMC meeting. The available evidence suggested that the rapid growth of
Ml reflected shifts in portfolios toward liquid
assets in the context of declining market interest
rates rather than excessive money growth with
potential inflationary consequences. Against this
background, the Committee concluded that Ml
growth above the existing range would be acceptable, provided the broader aggregates expanded within their target ranges, price pressures remained subdued, and the economy
continued to expand at a moderate pace. The
Committee reaffirmed the target ranges for M2
and M3 at its July meeting. Data at that time
showed that both of these aggregates had ex-
Monetary Policy Report to the Congress
panded near the midpoints of their ranges, and
Committee members felt that growth within
those ranges for the year was still consistent with
the overall policy objectives of reducing inflation
further, promoting sustainable growth in output,
and contributing to an improved pattern of international transactions. In the first half of the year,
the growth of domestic nonfinancial debt exceeded both its monitoring range and the growth of
nominal GNP, as it had in previous years. The
Committee was concerned about the burdens
and potential instabilities associated with the
persistence of rapid debt growth and felt that
raising the monitoring range for debt would create an inappropriate benchmark for evaluating
long-term trends. As such, the existing range was
maintained, but the FOMC thought that debt
growth could well exceed its upper bound.
The growth of M2 quickened in the second half
of the year, and M3 expanded at a somewhat
faster pace as well. However, both of the broader aggregates ended the year within—although
near the upper bounds of—their target ranges.
The growth of Ml accelerated further in the
second half of the year, resulting in a record
postwar decline in velocity for 1986. The growth
of nonfinancial debt slowed slightly in the second
half of the year, but still exceeded its monitoring
range by nearly 2 percentage points.
Pressure on reserve positions of depository
institutions, as reflected in a relatively low volume of borrowing at Federal Reserve Banks,
changed little over the course of 1986. The
broadly accommodative thrust of policy also was
manifest in the four reductions in the discount
rate between March and August. In part, the
discount rate cuts were intended to keep this rate
in line with the yields on short-term market
instruments, but they also were taken in the
context of hesitant worldwide economic growth,
an improved inflation outlook, and growth of the
broader monetary aggregates within their annual
target ranges.
In setting monetary policy the FOMC focused
considerable attention on the nation's trade deficit and on the foreign exchange value of the
dollar. The Committee members generally
viewed the narrowing in the trade deficit as a key
to achieving a sustainable and more even expansion of activity across the economy. At the same
time, however, the Committee was concerned
249
that an unduly precipitous decline of the dollar
against the currencies of our major trading partners could contribute to inflationary pressures in
the United States. To help limit the effect on the
value of the dollar, the first reduction in the
discount rate was a coordinated action with other
major central banks; similarly, the reduction in
April was accompanied by a cut in the Bank of
Japan's discount rate.
Money,
Credit, and Monetary
Policy
M2 expanded almost 9 percent in 1986, placing
this aggregate near the upper bound of its annual
growth target. Although in recent years this
aggregate has exhibited a tighter relationship
with nominal GNP than Ml, M2 velocity still
registered a decline of 4 percent last year and
reached its lowest level in decades. The buildup
of M2 balances relative to income probably reflected incentives to place savings in various
components of the aggregate whose offering
rates were falling more slowly than market interest rates.
The slowest adjustments in rates on retail
deposits last year were made in short-term accounts. Depository institutions have been reluctant to adjust savings deposit rates downward
because many of these accounts have represented a stable, profitable source of funds for many
years. Rates on NOW accounts also have fallen
only slightly. Much larger declines were registered on time deposits, reflecting not only
quicker adjustment to market rates but also the
pattern of rate movements in the credit markets,
in which long-term rates fell much more than
short-term rates in late 1985 and early 1986. The
changing structure of deposit rates at banks and
thrift institutions has led to a pronounced shift in
the composition of M2: inflows to transaction
deposits, savings deposits, money market deposit accounts, and money market mutual fund
shares were very strong last year, while small
time deposits ran off, marking the second consecutive year of zero or negative growth.
The weakness in small time deposits in 1985
and 1986 also could reflect "rate shock." As
existing time deposits matured, savers with highyielding deposits acquired several years ago
were unable to reinvest the funds at comparable
250
Federal Reserve Bulletin • April 1987
returns. A sizable portion of maturing deposits
evidently was placed in liquid instruments in M2
while savers searched for other investment opportunities. Yield-conscious investors also may
have been lured from time deposits by attractive
returns on some nondeposit instruments. For
example, stock and bond mutual funds grew
rapidly in 1985 and 1986 after stagnating during
most of the 1970s and early 1980s, and the
issuance of savings bonds was strong in the
summer and fall before their minimum yield was
lowered from IV2 to 6 percent.
M3 also ended 1986 near the upper bound of its
annual range, increasing 83/4 percent over the
year. Growth of M3 close to that of M2 is not
surprising, given that M2 constitutes four-fifths
of the larger aggregate. The remaining share is
dominated by large time deposits and certain
other managed liabilities of depository institutions. Credit growth at banks and thrift institutions remained quite strong last year, but with
the exception of the first quarter, the use of
managed liabilities in M3 was light as growth of
core deposits largely was sufficient to fund asset
expansion. Large CDs expanded only 3 percent
on balance in 1986, with commercial banks paying down their outstanding CDs during much of
the year and thrift institutions also doing so in the
fourth quarter. The weakness in CDs was widespread as institutions relied more on other managed liabilities, such as term repurchase agreements (RPs), included in M3, and advances from
Federal Home Loan Banks, not included in M3.
The broad shift to liquid assets greatly affected
the behavior of Ml. The narrow monetary aggregate expanded more than 15 percent in 1986,
marking the second consecutive year of doubledigit growth. The velocity of Ml fell 9Vi percent
last year, compared with a decline of 5XA percent
in 1985. Since 1981 the velocity of Ml has
declined 16 percent—a remarkable development
in view of its tendency to climb about 3 percent
per year in the previous two decades.
Much of the rapid growth in narrow money
over the past two years appeared to be related to
the effects of the sharp decline in market interest
rates on incentives to hold both NOW accounts
and demand deposits. Since their peak in the
latter part of 1984, short-term market interest
rates have fallen about 5 percentage points, to
their lowest levels in nine years, while NOW
account rates have changed considerably less.
Although more rapid money growth generally
would be expected in an environment of declining rates, the expansion of Ml last year and in
1985 was in excess of what would be indicated by
the historical relationships among money, interest rates, and income.
About half of the growth of Ml in both 1985
and 1986 occurred in interest-bearing checkable
deposits. Because depository institutions have
adjusted the rates paid on NOW accounts only
sluggishly, the spreads between the rates on
these deposits and those on substitutes have
narrowed substantially. For example, between
the first quarter of 1986, when interest rates on
Growth of money and debt 1
Percentage changes at annual rates
Ml
M2
M3
Domestic
nonfinancial
sector debt
7.9
7.3
5.1 (2.4) 2
8.6
10.2
5.4
12.1 ( 1 2 . 7 P
15.2
8.2
8.9
9.2
9.1
12.1
7.9
8.8
8.9
10.4
9.6
12.3
9.9
9.8
10.7
7.7
8.8
12.2
9.6
9.9
8.9
11.5
13.9
13.5
12.9
8.8
15.5
16.5
17.0
5.3
9.4
10.6
9.0
7.7
8.7
9.7
7.8
15.4
10.3
12.0
11.5
Period
Fourth quarter to fourth
1979
1980
1981
1982
1983
1984
1985
1986
Quarterly
1986: 1
2
3
4
quarter
growth
1. M l , M2, and M3 incorporate effects of benchmark and seasonal
adjustment revisions made in February 1987.
2. M l figure in parentheses is adjusted for shifts to N O W accounts
in 1981.
3. M l figure in parentheses is the annualized growth rate from the
s e c o n d to the fourth quarter of 1985.
Monetary Policy Report to the Congress
NOW accounts were fully deregulated, and the
fourth quarter of last year, the spread between
the three-month Treasury bill rate and the average rate on NOW accounts at commercial banks
shrank from 135 basis points to 53 basis points.
Similarly, the average rate on NOW accounts
late last year was not far below that on six-month
small time deposits.
The growth of demand deposits also accelerated last year, amounting to nearly 12 percent
from the fourth quarter of 1985 to the fourth
quarter of 1986. As with other checkable deposits, lower short-term interest rates are an important influence on the growth of demand deposits
because they reduce incentives to economize on
transaction balances. Also, some demand deposits are held by business firms in exchange for
services provided by banks, and these compensating balance requirements typically are enlarged as market rates decline. While these effects were important elements behind the
expansion of demand deposits throughout 1986,
the apparent response to declining interest rates
was much larger than would be expected from
historical experience.
Another element in the growth of demand
deposits apparently was the large volume of
financial transactions that occurred in 1986. For
example, because of certain payment procedures—such as funds held in escrow accounts
and transferred by officer's check rather than by
wire—the massive volume of mortgage originations and prepayments last year could have influenced the movement of demand deposits. In
addition, a flurry of financial transactions around
year-end, induced in part by impending tax law
changes, temporarily boosted demand deposits
sharply.
Domestic nonfinancial debt expanded almost
13 percent last year, a slightly slower pace than
in the two previous years but still above both the
Committee's monitoring range and the growth of
nominal GNP. 2 Debt issuance by the state and
local sector dropped off substantially from the
pace set in 1985, when it was boosted by borrow2. When measured from the end of December to the end of
December, domestic nonfinancial debt expanded 11 Vi percent last year. The fourth-quarter-to-fourth-quarter growth
cited in the text is higher because of the surge in debt at the
end of 1985 and the arithmetical effects of quarterly averaging.
251
ing in anticipation of tax reform restrictions. In
the household sector, mortgage borrowing
strengthened, but a marked decrease in the expansion of consumer installment credit from the
elevated rates in previous years contributed to a
moderation in overall growth of household indebtedness. A continuation of corporate financial restructurings buoyed expansion of business
debt, despite the maintenance of a moderate gap
between capital spending and internal funds.
Growth of federal sector debt remained strong.
In implementing policy in 1986, the FOMC
generally accommodated through open market
operations the strong demand for reserves associated with the rapid growth of transaction balances. In the context of prospects for slow
growth of real economic activity, disinflationary
trends in wages and prices, and growth of the
broader monetary aggregates within their target
ranges, four reductions in the discount rate were
implemented between March and August.
Early in the year, all the monetary aggregates
slowed sharply, with M2 dropping below its
annual target range. Also, evidence suggested
that the economy was growing sluggishly, and
the outlook for inflation improved as oil prices
fell. In this environment, market interest rates
began to decline in mid-February, and the Federal Reserve reduced the discount rate V2 percentage point to 7 percent in early March. At the
time, there was concern that unilateral action to
lower interest rates might cause an excessive
reaction in the foreign exchange market, in
which the dollar had been under downward pressure. Accordingly, the reduction was timed to
correspond with similar actions by the central
banks of West Germany, Japan, and several
other industrialized nations.
With the economy expanding slowly and underlying price pressures continuing to moderate,
interest rates fell further throughout March and
into April. By mid-April, most market interest
rates had reached their lowest levels since the
late 1970s. At that time, the Federal Reserve
instituted another reduction in the discount rate
to catch up with and to ratify the declines in
market rates.
After mid-April, interest rates rose for a short
time as market participants focused on an upturn
in oil prices, an acceleration in the growth of the
monetary aggregates, and a further decline in the
252
Federal Reserve Bulletin • April 1987
foreign exchange value of the dollar. By the end
of June, however, a steady flow of weak statistics began to reveal anemic growth in real economic activity in the second quarter. An improvement in activity had been expected by the
FOMC for the second half of the year, but the
rebound now appeared likely to be less vigorous
than previously anticipated and perhaps delayed
because of continued disappointing movements
in our trade position and the effects of pending
tax reform legislation on business investment.
Accordingly, shortly after the July FOMC meeting, the Board approved another cut of Vi point in
the discount rate to 6 percent.
The final reduction in the discount rate last
year took place after the August FOMC meeting.
The last two reductions in the discount rate in
1986 were adopted without similar action by
foreign central banks. Unilateral action to lower
interest rates carried the risk of adding to the
downward pressure on the dollar and possibly
feeding a source of inflationary pressure. However, the Federal Reserve thought that prevailing
economic and financial conditions warranted
such a risk, realizing that the provision of reserves could be tightened through open market
operations if adverse developments were to
arise.
While the value of the dollar fluctuated considerably after the reduction in the discount rate in
August, it showed no distinct downward movement until around year-end. Short-term interest
rates declined about 1 percentage point over the
summer months, moving either in anticipation
of, or in response to, the reductions in the
discount rate. Long-term rates were about unchanged on balance over the summer, but more
concern about interest rate prospects developed
in early fall. Economic indicators began signaling
a pickup in the pace of economic activity, and
rising prices of oil and precious metals, along
with the potential effects of the cumulative decline in the value of the dollar, seemed to raise
concerns about the outlook for inflation. Over
that period and through the remainder of the
year, the FOMC attempted to keep a steady
degree of reserve pressure, and market interest
rates fluctuated within a fairly narrow range.
Even so, short-term interest rates moved higher as the year-end approached, owing, in part, to
the exceptional volume of tax-related transactions. As firms rushed to complete mergers and
buyouts, and households stepped up their sales
of assets to realize capital gains, the demand for
transaction balances and business loans surged.
This heavy volume of financing also was reflected in unusually strong reserve demands by depository institutions. The System added reserves
freely to accommodate this demand, but the
pressure nevertheless showed through to shortterm rates. Shortly after the turn of the year,
short-term rates moved back toward their earlier
levels. The dollar, however, was under substantial downward pressure in early 1987; disappointing figures on the U.S. trade deficit prompted
selling of the dollar on exchange markets, and
this pressure intensified with reported suggestions by some U.S. policymakers that, particularly in the absence of more growth-oriented
policies abroad, further dollar depreciation might
be necessary to correct the nation's external
imbalance.
Other Developments
in Financial
Markets
As long-term interest rates declined last spring to
their lowest levels in eight years, the volume of
corporate bond issuance surged to record levels.
Indeed, the volume of domestic corporate bonds
sold last year was nearly twice the previous
record set in 1985. Much of the bond issuance
last year was used to refund higher-cost debt or
to pay down short-term credit. With the stock
market continuing to register impressive gains
last year, new equity issuance also reached record levels. Of the gross proceeds from new
equity issues sold last year, about 30 percent was
raised by firms issuing stock in the public market
for the first time.
The retirement of high-coupon bonds, the reduced dependence on short-term credit, and the
issuance of new equity shares tended to improve
conventional measures of corporate balance
sheet strength. However, massive volumes of
outstanding equity were retired through mergers,
acquisitions, buyouts, and other restructurings,
resulting in the third consecutive year of large
net equity retirements. Reflecting the financing
patterns in recent years, the aggregate debt-
Monetary Policy Report to the Congress
equity ratio of nonfinancial corporations, on a
" b o o k " basis, swelled to a record level. When
stated at market values, however, the robust
gains in share prices have kept debt-equity ratios
well below levels that generally prevailed during
the 1970s. With interest rates trending down in
recent years, interest-coverage ratios have crept
up, suggesting that the ability of firms in the
aggregate to service their debt has not deteriorated. These modest gains, however, have been
achieved in relatively benign market and economic circumstances.
Because of the large pay down of equity, the
ability of some corporations to weather economic shocks has waned. The weak financial structures of some firms, along with strains in certain
industries, led to more than $3 billion of corporate bond defaults in 1986, an amount that dwarfs
the experience in nearly every other year of the
postwar period. Concern that other firms also
may have problems in meeting their financial
obligations is reflected in the pace of bond downgradings, which last year totaled more than three
or four times that of the late 1970s.
Firms with downgraded debt typically find
their securities trading at higher interest rates in
the secondary market. In general, however,
quality spreads between private debt securities
of different grades have been relatively stable in
recent years, suggesting that investors have not
been alarmed at the credit quality of corporations
in the aggregate and have not attempted to limit
their portfolios to higher-rated issues. 3 During
the first half of 1986, spreads between the yields
on corporate bonds and Treasury securities widened considerably, but this appeared to be related to the heavy volume of corporate issues and a
revaluation of call and refunding provisions on
long-term obligations. A narrowing of these
spreads early in 1987 has reversed much of the
earlier increase.
The expansion of household debt slowed last
year as the growth of consumer installment cred3. The interest rate spreads between investment-grade and
speculative issues widened about 50 basis points for a short
time after the bankruptcy filing by LTV Corporation in July.
Low-rated or unrated bonds also experienced substantial
yield increases for a time later in the year, when concerns
about the liquidity of that market segment surfaced in connection with the insider trading scandal; that widening has
been reversed since the beginning of 1987.
253
it receded to about 12 percent from the 15 to 20
percent pace of recent years. Nevertheless, installment debt continued to grow faster than
income, and the ratio of such debt to income
established another record. With mortgage debt
expanding rapidly, the ratio of overall household
debt to income also reached a new high. While
assets of the household sector have increased
sharply in recent years, many individuals have
experienced difficulty in meeting their financial
commitments. The number of personal bankruptcies accelerated dramatically in 1985 and 1986,
with bankruptcies last year surging well beyond
the historical experience. Strains were particularly evident in the area of credit card debt, as
delinquency rates on revolving balances increased appreciably. Delinquency rates on other
categories of installment debt and mortgage
loans fell some last year, although they were at
much higher levels than in previous expansions.
For some households, debt-servicing burdens
were reduced last year by the refinancing of highrate mortgages or the decline in interest payments on their adjustable-rate mortgages.
While the economy has grown continuously
for more than four years, the expansion has been
uneven and has left certain sectors under severe
strains. The problems faced by firms in the
mining, energy, agricultural, and many manufacturing industries are well known, as are those of
a number of heavily indebted developing countries. The difficulties in these areas are feeding
through to the financial intermediaries supplying
them credit. Last year, for example, 136 commercial banks failed—compared with a total of
only seven in 1981. Many of these institutions
had heavy credit exposures to the oil industry,
while more than 40 percent of the failed banks
held large amounts of agricultural loans.
The impact of the distress in the farm sector
also has been severe for the Farm Credit System,
the government-sponsored agency that holds
about 25 percent of outstanding farm debt in the
United States. The losses of the banks in the
System probably exceeded $2 billion last year,
largely reflecting provisions for loan losses, and
the System's capital surplus soon will be exhausted if losses do not abate. The Congress last
fall approved regulatory accounting procedures
for the Farm Credit System that will allow the
254
Federal Reserve Bulletin • April 1987
banks to report higher net income figures than
generally accepted accounting principles would
permit. The higher reported income may ease
some of the problems within the System relating
to the preservation of capital and help to justify
charging borrowers more competitive rates. By
themselves, however, the accounting procedures
do not provide substantive relief.
The financial condition of the thrift industry as
a whole has improved markedly since the early
part of the decade, but the difficulties of many
institutions have intensified. As interest rates fell
from their elevated levels in 1981 and 1982, the
average cost of funds at thrift institutions declined much more rapidly than the average yield
on their assets. The industry as a whole returned
to profitability in 1983, and aggregate earnings
have jumped since then. Net income for the
industry in 1986 probably was strong again,
although it is likely to have been below that of
1985.
At the same time, asset quality problems have
become increasingly important for a sizable number of these institutions. While some of these
problems are associated with economically distressed regions of the country, overly aggressive
investment strategies of some institutions cer-
tainly have contributed heavily. For 1986, about
one-quarter of the thrift industry will report
negative net income, and the long-term prospects
for many of these institutions are unfavorable.
Moreover, the Federal Savings and Loan Insurance Corporation has inadequate resources to
manage these problems effectively.
While the many stresses and financial vulnerabilities are not amenable to correction through
general monetary policy, they do influence the
economic environment and represent a potentially disruptive and destabilizing element in financial markets. The Federal Reserve has been
called upon to play a positive role through its
regulatory and supervisory functions. For example, steps have been taken to reduce the risks
associated with large payments made by wire
transfer, and several proposals have been made
to ensure the capital adequacy of commercial
banks. Many of the financial and sectoral stresses will take considerable time to alleviate, and
will require a stable monetary environment, redress of the imbalances in the nation's federal
budget and international trade positions, and—
importantly—prudent private behavior, encouraged as necessary by sound regulation.
•
255
Basic Banking
This article was prepared by Glenn B. Canner of
the Board's Division of Research and Statistics
and Ellen Maland of the Board's Division of
Consumer and Community Affairs. Julia A.
Springer provided research
assistance.
On October 2, 1986, the Federal Financial Institutions Examination Council approved a policy
statement that endorses and encourages private
sector efforts to offer basic banking services. The
council's action, prompted by a recommendation
made by the Federal Reserve Board, occurred at
a time of heightened interest in the subject by
consumer groups, legislators, industry trade associations, and individual financial institutions.
This article discusses the definition and origins of
the basic banking issue, explores the positions
taken by various proponents of basic banking,
and reports highlights of research on the subject.
It also examines responses to the issue by the
banking industry and its regulators. The article
concludes by raising several questions about the
potential effectiveness and consequences of providing basic banking services.
BACKGROUND
In recent years, significant changes have occurred in the structure, the marketing practices,
and the regulation of the financial services industry. 1 These changes are the consequence of rapid
technological developments, declining inflation,
1. For example, the Depository Institutions Deregulation
and Monetary Control Act of 1980, in particular, has accelerated the evolution of the banking industry. Among other
changes, that act (1) authorized financial institutions nationwide to offer NOW accounts (interest-bearing checking accounts); (2) created the Depository Institutions Deregulation
Committee to phase out over six years interest rate ceilings
on deposits; and (3) required the Federal Reserve System to
establish fees for many services it had previously provided
without charge.
swings in the general level of economic activity,
and new competition from largely unregulated
providers of financial services. The changes have
afforded consumers new opportunities to invest
and save in various financial instruments that
yield rates of return determined by market
forces. They have also led financial institutions
to change the way services are offered and priced
to generate income, manage risk, and reduce
costs.
Financial institutions have adopted strategies
to respond to changing market pressures: explicitly pricing services previously offered without
charge, consolidating or eliminating unprofitable
services, and closing branch offices to reduce
overhead expenses. Implementing these strategies affects consumers in different ways. Explicit
pricing of services, for example, makes consumers consider the true cost of the services they
receive. Before the deregulation of interest rates,
financial institutions had to compete for consumers' deposits using various nonprice means, such
as longer banking hours, extensive branch networks, premiums, free or low-fee checking, and
nonexistent or low minimum-balance requirements on checking and savings accounts. Such
nonprice competition, of course, suggests an
inefficient allocation of society's scarce resources. For example, because inexpensive
checking was widely available, many consumers
established multiple checking accounts with
small balances, when fewer accounts—or even
one—might have sufficed.
While many changes in the financial marketplace have favorably affected consumers, concern has been raised that some of the changes
may have adversely affected certain segments of
the population. A particular concern is that pricing services explicitly and reducing the number
of branches in some areas may either price some
consumers out of the market for deposit services
or deny them convenient access to services.
Another concern is that some of the changes may
256
Federal Reserve Bulletin • April 1987
curtail access to credit because credit may be
more difficult to obtain if a person does not have
an account with a financial institution. Out of
these concerns has developed a movement advocating that depository institutions provide basic
banking services.
What Is Basic
Banking?
A uniformly accepted definition of basic banking
has not evolved from the public debate. Consequently, an element of uncertainty exists about
what kinds of services and associated prices
constitute a basic banking program. Nevertheless, several working definitions, which vary in
specificity, have been offered. Most generally,
basic banking has been defined as the minimum
level of financial services that should be available
to all citizens, regardless of income (see inset). A
more specific approach defines basic banking in
terms of the financial needs that should be met.
An example of this approach is the policy statement by the Federal Financial Institutions Examination Council (FFIEC), which identifies
three fundamental needs: a safe and accessible
place to keep money, a way to obtain cash, and a
way to make payments to third parties. (See the
appendix for the text of the statement.) Although
the statement does not address the issue of the
price that should be assessed for basic financial
services, it does explicitly state that such services should be offered in a manner consistent
with safe and sound business practices.
Various approaches to the provision of basic
banking services have evolved. Most include an
account that can be used for transactions, with
reduced fees and low minimum-balance requirements. Many also include the cashing of checks
(particularly government checks) for both those
who hold accounts and those who do not. For
example, one bank offers a checking account
with no required minimum balance and unlimited
check-writing privileges provided deposits and
withdrawals are made through automated teller
machines. A fairly high fee is assessed for conducting a transaction with bank personnel if the
transaction could have been done by machine. In
another instance, a thrift institution offers an
account with a $10 opening balance but no required minimum balance on which eight free
checks may be written each month; additional
Lifeline banking was the term originally used by
those advocating the provision of financial services at reduced prices. The term was drawn from
the public utilities where it referred to providing at
least the minimum level of energy or telephone
services necessary for health and comfort for
those too poor to afford the usual charges. Use of
the term for financial services drew criticism from
those who felt that banking services do not cany
the same life-or-death connotations that some
utility services do. The critics suggested that use
of what they considered an emotion-laden phrase
obscures the practical elements of the issue. Over
time, then, lifeline has largely given way to basic.
Although the phrase basic financial services is
sometimes used to indicate that financial institutions other than banks are involved, basic banking has come to be the popular designation.
checks cost 50 cents each. In still another approach, an advisory group formed by the New
York State Banking Department called for a
passbook savings account with low or no minimum-balance requirements on which interest
would be earned on virtually all balances. 2 A
limited number of deposits and withdrawals (perhaps eight per month) would be permitted without charge, and three free money orders would
be provided.
One aspect of the basic banking issue on which
no consensus exists is to whom the services
should be offered. Some feel that access to basic
services should be based on an inability to pay
(determined perhaps by an income test or evidence of receipt of public benefits). Others believe that such services should be universally
available. Many of those who shun eligibility
tests believe that basic banking services, properly designed, are likely to satisfy the modest
needs of those intended to benefit while being
too limited to appeal to the general public.
PROPONENTS
OF BASIC
BANKING
Advocates of basic banking contend that recent
changes in banking practices have adversely
affected less affluent individuals and communi2. Speech by Vincent Tese, New York State Superintendent of Banks, before the 90th Annual Convention of the
New York State Bankers Association, June 11, 1984.
Basic Banking
ties. They see rising service charges and minimum-balance requirements taking an increasing
proportion of the resources of lower-income people, and they allege that branch closings have
effectively eliminated banking services in some
communities. They believe that these developments have harmed low-income people by forcing some out of the banking system, by preventing others from entering the system, and by
imposing financial hardship on those who remain
in the system. Proponents of basic banking worry that saving is being discouraged and that some
people have to rely more on the use of cash for
transactions, with its attendant inconveniences
and dangers. Moreover, they contend that access
to credit may be reduced because in their view
credit may be more difficult to obtain without a
deposit account.
Supporters of basic banking consider banking
services to be almost a necessity in today's
economy. They believe that banks and other
regulated financial institutions have a special
obligation to address these needs because of the
nature of their charters and the publicly backed
benefits they receive—deposit insurance and
regulatory oversight, for example.
Consumer
Activity
and Community
Organization
Over the past several years, consumer and community organizations have become increasingly
vocal in their demands that financial institutions
do more to make their services both affordable
and accessible to all segments of the public. The
techniques they employ cover a wide range:
filing petitions and suits, working on joint industry-consumer task forces, publicizing surveys of
fees, supporting legislation, protesting bank applications, organizing sit-ins, and picketing.
One of the earliest formal demands for basic
banking was an administrative petition filed in
August 1984 with California's attorney general
and state banking superintendent. 3 Filed on be3. "Petty Larceny: Excessive Bank Charges Produce
Banking Crisis for the Poor; An Administrative Petition to
Ensure Essential Banking Services for All California Consumers," filed by Public Advocates, Inc., of San Francisco
on August 7, 1984, on behalf of Consumer Action, Self-Help
for the Elderly, Black Women Organized for Political Action,
257
half of a coalition of nine California consumer
groups, the petition asserted that recent banking
practices—including special efforts to attract
wealthy customers and requiring credit cards to
open accounts—effectively shut low-income
consumers out of the banking system creating, as
the title states, a "crisis for the poor." Although
the petition was rejected by the banking superintendent, its contents provide an example of the
services and associated prices proponents of
basic banking support. Specifically, the petition
called for requiring banks (1) to offer those with
annual incomes of $11,000 or less savings accounts without fees and inexpensive checking
accounts with 10 free checks per month, (2) to
eliminate the requirement of a credit card to open
an account, (3) to cash government checks for
free, and (4) to charge no more than $1.00 for a
money order. The petition also proposed that a
finding be required t h a t ' 'public convenience and
advantage are preserved" before bank offices are
closed or replaced by automated teller machines.
Although denying the petitioners' request for
adoption of new regulations, the banking superintendent did encourage the petitioners to work
directly with the financial services industry to
resolve informally the problems cited in the
petition. 4
The concerns reflected in the California petition have been echoed by other groups. Several
national consumer organizations, including the
Consumer Federation of America, the Consumers Union, the American Association of Retired
Persons, and the Association of Community Organizations for Reform Now (ACORN), as well
as state and local organizations, have devoted
considerable attention in recent years to the
issue of availability and aflfordability of financial
services. These groups argue that a need for
basic banking services exists, particularly among
lower-income consumers. The organizations cite
as the basis for their concern the growing number
of complaints they receive and the evidence from
surveys they conduct about increasing service
Gray Panthers, the Oakland Citizens Committee for Urban
Renewal, the League of United Latin American Citizens, the
Sacramento Urban League, Progressive Senior Citizens, and
the San Francisco Chapter of the National Organization for
Women (NOW).
4. Letter, Louis Carter, California Superintendent of
Banks, to Law Offices of Public Advocates, Inc., September 6, 1984.
258
Federal Reserve Bulletin • April 1987
charges. 5 In some cases, organizations have taken more direct action, such as demonstrations at
banks and at the offices of a banking trade
association to demand wider availability of basic
banking services.
There has been a noticeable increase in the
frequency with which local groups have pressed
for commitments to provide basic banking services from banks and bank holding companies
applying to the Federal Reserve and other regulatory agencies for approval to merge with or
acquire another bank. Under the Community
Reinvestment Act (CRA), the agencies are required to take into account an applicant's record
of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. Community organizations sometimes
challenge such applications, contending that the
banks have not met these needs. 6 (The number of
protests lodged with the Federal Reserve System
that were based on alleged violations of the CRA
has increased from 7 in 1983-84 to 39 in 1985-86.
However, although the number of applications
protested on CRA grounds has grown in recent
years, in relation to the total number of applications processed by the Federal Reserve, the
number of CRA-based protests is small.) Most of
these protests focus on credit needs, but about
half of the recent protests have included complaints about the lack of other banking services.
One such protest in 1984 alleged that a bank's
pattern of branch closings discriminated against
minority and low- and moderate-income residents, thus depriving them of essential services. 7
Many of the most recent protests allege that
5. San Francisco Consumer Action and Consumer Federation of America, "Bank Fees on Consumer Accounts: A 10State Survey," May 17, 1984; "Bank Fees on Consumer
Accounts: The Second Annual National Survey," May 28,
1985; and "Bank Fees on Consumer Accounts: The Third
Annual National Survey," June 2, 1986. Press release highlighting results of survey on availability of banking services,
ACORN, New Orleans, Louisiana, April 17, 1986. See "It
Pays to Comparison Shop "American Banker, December 19,
1984, and "Consumer Group's Study Says Rhode Island
Banks Overcharge for Checking," American Banker,
March 17, 1986.
6. See, for example, "Hibernia Refuses Compromise with
Community Group," American Banker, May 30, 1986, and
"Acorn Fails in Bid to Block Phoenix Bank Acquisition,"
American Banker, August 27, 1986.
7. See "Order Approving Acquisition of a Bank, Citicorp,
New York, New Y o r k , " F E D E R A L RESERVE BULLETIN, vol.
70 (May 1984), pp. 431-33.
banks fail to offer or to publicize the availability
of low-cost deposit accounts and have restrictive
policies for cashing government checks. Some
agreements between banks and protesting groups
have required banks to look at the feasibility of
opening branches in "unbanked" or "underbanked" neighborhoods.
Besides filing formal protests, an increasing
number of community groups have been informally pressing their demands for basic services
with banks that are considering applications. The
result has been several agreements in which
banks have committed to offer transaction accounts at reduced prices, to cash government
checks for noncustomers, and to lower fees for
cashing government checks. 8
Legislative
Activity
Local, state, and federal legislators have expressed concern about the availability and affordability of banking services. For example, in
late 1982, the Philadelphia City Council considered, although it did not approve, a proposed
ordinance that would require banks to notify the
city in advance of a branch closing. 9 The city
treasurer would then hold a public hearing to
decide whether the closing was justified; if not,
city deposits would be withdrawn from the institution.
At least 15 states have considered basic banking legislation. New York was one of the first
states to consider such legislation, although it
has not adopted any to date. In April 1984, the
governor submitted a bill to the state legislature
that would require state-chartered banks and
thrift institutions to offer "lifeline" accounts in
return for allowing the institutions to exercise
expanded insurance powers. 10 The legislation
8. In 16 out of 22 agreements recently reviewed by Federal
Reserve staff, basic banking was a negotiated issue. See also
"Group Pushes for 'Lifeline' Bank Services," St. Louis
Post-Dispatch, December 5, 1985; "Demands for Local
Credit Shape More Bank Mergers," American Banker, June
2, 1986; and "Chase Promises Low-Cost Basic Banking
Services When It Opens in Arizona," American Banker,
August 12, 1986.
9. "Bill Aimed at Branch-Closers,"American Banker, December 27, 1982.
10. "Cuomo Offers Bills with New Banking Powers,"
American Banker, April 19, 1984. No action was taken on the
bill at that time, and the bill was reintroduced as the Governor's Program Bill, Senate 7648/Assembly 9670 (1986).
Basic Banking
was based on recommendations made by the
DeWind Commission, a group representing both
industry and consumer interests formed to conduct a broadly based study of the effects of
financial deregulation. 11 Part of the final report
expressed concern that increases in fees and
closings of branches might leave some consumers and some communities without access to
even minimal banking services. Another recommendation of the DeWind Commission called for
advance notice of branch closings. Under rules
adopted by the state banking board in July 1984,
the superintendent of banks, whenever determining that a closing would significantly reduce the
availability of services, is authorized to call
meetings with the institution and community
leaders to seek a way to replace the branch with
other banking facilities.
The first state to adopt a law dealing directly
with fees on deposit accounts was Massachusetts. In October 1984, that state prohibited
state-chartered banks from assessing service
charges on savings or checking accounts held by
anyone 65 years and older or 18 years and
younger. 12 In 1985, Rhode Island adopted a similar law, prohibiting the assessment of charges on
savings accounts for those 17 years of age or
younger, as long as the balance is under $500.13
In 1986, three states adopted laws to require
financial institutions to offer basic banking services. Illinois requires institutions to offer "basic
checking accounts" to those 65 years and older;
the accounts must allow 10 free checks a month
and cannot require initial deposits of more than
$100.14 Minnesota and Pennsylvania have made
basic banking part of their interstate banking
laws: institutions involved in interstate banking
are obligated to offer basic banking services. The
Minnesota law defines with some specificity the
"basic services transaction account" that must
be offered (six free checks and six free transactions at an automated teller machine allowed per
month and no periodic service charges) with
eligibility restricted to those who meet an income
11. Report of the Temporary State Commission on Banking, Insurance and Financial Services, February 15, 1984.
12. Mass. Gen. Laws Ann. ch. 167D, § 2 (West supp.
1986).
13. R.I. Gen. Laws § 19-11-11 (Supp. 1986).
14. 111. Ann. Stat. ch. 17, § 504 (Smith-Hurd supp. 1986).
259
test or receive public benefits. 15 The law also
requires banks to cash federal and state government checks. The Pennsylvania law authorizes
the state banking department to ensure that
"basic transaction account services" are available from institutions applying for interstate
banking privileges. 16 The law leaves the definition of such services to the banking department.
The issue of basic banking has also attracted
the attention of federal legislators. Although no
federal legislation pertaining to basic banking has
been enacted, several bills have been introduced
in recent years. In the fall of 1984, a bill was
introduced in the House of Representatives that
would require the regulators of financial institutions to study the issue of basic banking services
and offer recommendations to the Congress
about what should be done "to encourage savings by individuals and to assist individuals in
cashing checks." 17 The following year, three
more bills were introduced in the House. Two of
these defined in some detail the kinds of deposit
accounts depository institutions would be required to offer. 18 The third bill would have
amended the CRA to require financial regulators
to consider in applications an institution's record
of providing basic financial services to all members of its community, including low- and moderate-income members. 19
Consumer
Advisory
Council
Activity
Established by the Congress in 1976, the Consumer Advisory Council provides advice to the
Federal Reserve Board on consumer protection
matters. The council consists of 30 individuals,
including representatives of consumers and the
financial services industry, academics, and representatives from state government agencies. In
July 1984, the council formed a committee to
review in greater depth the basic banking issue
15. Reciprocal Interstate Banking Act, ch. 339, 2 Minn.
Legis. Serv. 66 (West 1986) (to be codified at Minn. Stat.
§§ 46.044, 48.512).
16. Act of June 25, 1986, Act. No. 1986-69, 4 Penn. Legis.
Serv. 109 (Purdon 1986) (to be codified at 7 Pa. Cons. Stat.
§ 116(i)-(k)).
17. H.R. 6435, 98 Cong. 2 Sess. (1984).
18. H.R. 2011, 99 Cong. 1 Sess. (1985); H.R. 2661, 99
Cong. 1 Sess. (1985).
19. H.R. 15, 99 Cong. 1 Sess. (1985).
260
Federal Reserve Bulletin • April 1987
and asked the Federal Reserve staff to prepare a
study of changes in bank service charges and
their effect on consumers. The committee concluded that basic banking services were needed
for low- and moderate-income consumers, that a
voluntary approach was preferable to a legislative mandate, and that the Federal Reserve and
other agencies should actively encourage the
institutions they supervise to offer such services.
The council endorsed the committee's conclusions and, in October 1985, recommended that
the Board of Governors issue a policy statement
on basic banking.
AVAILABLE EVIDENCE
BASIC
BANKING
CONCERNING
The Federal Reserve Board and others have
undertaken extensive research to assess recent
changes in the way financial institutions price
their deposit services. In general, this research
indicates that, in the past few years, fees charged
on transaction accounts have increased more
quickly than the general level of prices in the
economy and that minimum-balance requirements on deposit accounts have risen at about
the same rate as prices overall. 20 The financial
behavior of American families has also been
investigated, and some of this research is directly
relevant to the basic banking issue.
As noted earlier, proponents of basic banking
have expressed concern that many Americans
have no deposit account in a financial institution
and that the proportion of certain groups of
families in this category appears to have increased in recent years. Evidence on these
points comes from two consumer surveys, the
1977 Consumer Credit Survey and the 1983 Survey of Consumer Finances, jointly sponsored by
the Federal Reserve and other government agencies. 21 These surveys, which were conducted by
20. See Glenn B. Canner and Robert D. Kurtz, Service
Charges as a Source of Bank Income and Their Impact on
Consumers, Staff Studies 145 (Board of Governors of the
Federal Reserve System, 1985), tables B.1-B.7, pp. 21-25.
21. For a summary of basic results of these surveys, see
Thomas A. Durkin and Gregory E. Elliehausen, 1977 Consumer Credit Survey (Board of Governors of the Federal
Reserve System, 1977), and Robert B. Avery and others,
"Survey of Consumer Finances, 1983,"FEDERAL RESERVE
BULLETIN, vol. 70 (September 1984), pp. 679-92.
the Survey Research Center of the University of
Michigan, collected detailed information on deposit accounts held by nationally representative
samples of U.S. families.
Characteristics
Holders
of Deposit
Account
In 1983, roughly 79 percent of all families held a
checking account (see table l). 22 In addition, 9
percent of all families held a savings account but
no checking account. Taken together, these statistics imply that approximately 12 percent, or
roughly 9.5 million families, in 1983 held neither
a checking nor a savings account (table 2). The
vast majority of these families had no other
deposit accounts in a financial institution in 1983.
The 1983 survey affords an opportunity to
examine the characteristics of families that do
not maintain a deposit account in a financial
institution. Although families without deposit
accounts are in all income, age, and education
groups, most of these families are concentrated
in relatively few categories (see table 2). Overwhelmingly, the most common attribute of families without a deposit account is low income.
Thirty-six percent of families in the lowest quintile for family income (family income less than
$8,400) did not have a deposit account in 1983. In
contrast, almost all families in the highest quintile for family income (income more than
$37,000) had a checking account, a savings account, or both. Overall, 57 percent of all families
without an account in 1983 fell into the lowest
quintile for family income (table 2, column 3).
Families without a high-school diploma also
make up a substantial fraction of all the families
without a deposit account. While these lesseducated families are 28 percent of all families
(data not shown in tables), they account for 59
percent of all families without a deposit account.
Since families without a deposit account tend
to be poor, examining the demographic characteristics of these lower-income families in some
detail is informative (see table 3). The data reveal
22. Checking accounts include non-interest-bearing demand deposit and NOW accounts but exclude money market
deposit accounts.
Basic Banking
1. Checking and savings account holdings of families
with selected characteristics, 1977 and 1983
P e r c e n t of g r o u p
Family group
Hold checking
account
Hold savings
account only1
1977
1983
1977
1983
56
58
75
79
86
89
89
96
96
96
44
58
65
77
80
87
90
93
95
97
14
15
15
12
10
7
8
3
3
1
13
13
11
11
11
7
8
5
4
3
73
83
88
86
83
79
71
63
75
83
81
83
82
76
16
8
5
9
7
9
16
16
10
7
7
7
6
9
Education offamily
head
0 - 8 grades
9 - 1 1 grades
High-school diploma
S o m e college
College degree
63
69
87
90
97
59
66
80
84
95
14
13
7
8
3
12
10
10
8
3
Ail families
81
79
9
9
Family income
Lowest
Second
Third
Fourth
Fifth
Sixth
Seventh
Eighth
Ninth
Highest
Age offamily
(years)
L e s s than 25
25-34
35-44
45-54
55-64
65-74
75 o r m o r e
(decile)2
head
1. T h e s e f a m i l i e s h o l d a s a v i n g s a c c o u n t but not a c h e c k i n g
account.
2. A d i f f e r e n c e of l e s s t h a n a b o u t 11 p e r c e n t a g e p o i n t s b e t w e e n
1977 and 1983 is not statistically significant.
SOURCES: T h o m a s A . D u r k i n a n d G r e g o r y E. E l l i e h a u s e n , 1977
Consumer Credit Survey ( B o a r d o f G o v e r n o r s o f the F e d e r a l R e s e r v e
S y s t e m , 1977); R o b e r t B . A v e r y a n d o t h e r s , " S u r v e y o f C o n s u m e r
F i n a n c e s , 1 9 8 3 , " FEDERAL RESERVE BULLETIN, v o l . 7 0 ( S e p t e m b e r
1984), pp. 6 7 9 - 9 2 .
that low-income families headed by unmarried
nonwhites, regardless of age, are disproportionately represented among families without accounts. Particularly noteworthy is the disproportionate number of families headed by unmarried
nonwhite women that had no checking or savings
account. Families headed by such nonwhite
women (regardless of age) are 17 percent of total
low-income families but 34 percent of all lowincome families without a deposit account. Overall, regardless of age or income, families headed
by nonwhite women are 7 percent of all families
but make up 27 percent of all families without
accounts. Married families with a nonwhite head
also are disproportionately represented among
families without accounts: they are 9 percent of
all families but 17 percent of all families without a
checking or savings account.
Changes
in Deposit
Account
261
Holdings
Evidence from consumer surveys indicates that
roughly 10 percent of families did not maintain
deposit accounts in either 1977 or 1983. Close
inspection of the survey data shows that between
those two years certain groups of families experienced a decline in account ownership. For example, the proportion of families headed by a
younger person having a checking account decreased, as did the proportion of families in the
lowest income group (table 1). Moreover, the
proportion of lower-income and younger families
without any deposit account increased over this
period (table 2).
Some proponents of basic banking contend
that the decline in account ownership (particularly among the poor) is a consequence of financial
deregulation. However, underlying changes in
the demographic composition of the population
2. Proportion of families not holding a depository
account, by family groups with selected
characteristics, 1977 and 1983
P e r c e n t o f g r o u p e x c e p t as n o t e d
Family group
Family
income
1983
28
10
4
2
*
36
17
2
2
1
57
84
95
99
100
11
9
7
6
10
12
14
22
14
10
11
10
13
15
13
39
54
68
80
92
100
23
18
5
2
1
29
25
10
8
3
33
59
84
95
100
9
12
100
(quintile)1
Third
Fourth
Highest
Age of family head
L e s s than 25
25-34
35-44
45-54
55-64
65-74
75 or m o r e
(years)
Education of family
head
0 - 8 grades
9-11 grades
High-school diploma
S o m e college
College degree
All families 2
1977
Cumulative
percentage
o f all f a m i l i e s
without a dep o s i t acc o u n t , 1983
1. A d i f f e r e n c e of l e s s t h a n a b o u t 6 p e r c e n t a g e p o i n t s b e t w e e n 1977
and 1983 is not statistically significant.
2. A d i f f e r e n c e o f l e s s t h a n a b o u t 2 p e r c e n t a g e p o i n t s b e t w e e n 1977
and 1983 is not statistically significant.
* L e s s than 0 . 5 p e r c e n t .
SOURCES: D u r k i n a n d E l l i e h a u s e n , 1977 Consumer
Credit
Survey,
A v e r y and others, " S u r v e y of C o n s u m e r Finances, 1983."
262
Federal Reserve Bulletin • April 1987
3. Distribution of account holdings by families with incomes of less than $10,000 and by all families, by
selected characteristics of head, 1983
Percent 1
Families with incomes of less than $10,000
Head of family
Neither
savings nor
checking
account
Savings
account
only
Checking
account
All families
Total
Neither
savings nor
checking
account
Less than 50 years
of age
Unmarried
White male
Nonwhite male .
White female . . .
Nonwhite female
Married
White
Nonwhite
More than 50
years of age
Unmarried
White male
Nonwhite male .
White female . . .
Nonwhite female
Married
White
Nonwhite
Total
Savings
account
only
Checking
account
6
1
9
2
16
Total
7
2
9
4
22
10
34
5
31
3
6
5
4
10
15
8
5
14
10
6
1
32
4
6
2
22
8
4
3
8
11
5
2
7
5
11
1
3
1
10
3
6
8
6
4
17
3
12
5
8
7
12
4
25
2
22
3
100
100
100
100
100
100
100
100
*
1. Details may not add to totals because of rounding.
SOURCES: Robert B. Avery and Gregory E. Elliehausen, "Additional Evidence on Deposit Account Ownership Changes and Usage
Factors," memorandum to the Board of Governors of the Federal
Reserve System (June 6, 1986), table 2.
and differences in prevailing economic conditions at the times of the 1977 and 1983 surveys
provide a competing explanation. Survey findings indicate, for example, that a substantially
higher proportion of families in the lowest income decile were unemployed in 1983 than in
1977. Since only about one-fifth of unemployed
families in this income group held either a checking or a savings account in 1983, growth in the
proportion of lower-income families that were
unemployed between 1977 and 1983 may account
for part of the decline in measured ownership of
deposit accounts among all families in this income category.
Changes in the demographic composition of
the population between 1977 and 1983 may also
account for the differences in checking account
holdings among the poor. In particular, there
were significantly more low-income families
headed by a female in 1983 than in 1977 (data not
shown in tables). Because this group is less likely
than other families to hold accounts, the decline
in account ownership among the poor may reflect in substantial part changes in the composi-
tion of the population rather than changes in
regulation or underlying consumer behavior. 23
Reasons
for Lack of Account
Ownership
Whereas the socioeconomic attributes of families
without accounts are relatively well known,
much less information is available on the reasons
that these families do not have accounts. Such
information is important because it improves our
understanding of the financial behavior of such
families and helps indicate the potential demand
for basic banking services.
As noted earlier, before 1980, service fees and
minimum-balance requirements on checking or
savings accounts either did not exist or had
levels much lower than they are today. Nevertheless, in 1977, 9 percent of all families did not
hold a deposit account. Factors other than the
23. Robert B. Avery and Gregory E. Elliehausen, "Additional Evidence on Deposit Account Ownership Changes and
Usage Factors," memorandum to the Board of Governors of
the Federal Reserve System, June 6, 1986.
Basic Banking
pricing of deposit services seem to explain the
behavior of these families. Although no available
information specifically explains consumers'
decisions to hold deposit accounts in 1977, recent surveys that focus directly on the current
financial behavior of consumers may help the
understanding of the reasons that certain families
do not hold deposit accounts. 24
In 1985, the Unidex Corporation conducted
one such survey. 25 Families that had closed their
only checking account as well as families that
had never held such an account were asked
about their motivation for these decisions (table
4). In all cases a respondent's answer was followed by questions soliciting a more specific
response. Nearly half of the consumers reported
that they either did not want a checking account
or did not need such an account. Among those
who indicated they did not want an account,
most stated that they preferred to use cash or
money orders or had difficulty keeping an account balance. Some indicated they did not trust
financial institutions.
A substantial number of respondents (43 percent of those who had closed an account and 44
percent of those who had never had a checking
account) also stated that they could not afford
such an account. When questioned further, most
of these families indicated they did not have
enough money to make having an account worthwhile. Some respondents also mentioned high
service fees as the reason they could not afford
an account. Specifically, 11 percent of those who
closed an account because they could not afford
it cited high service fees as the reason for their
decision, and 2 percent of those who had never
had an account because they could not afford it
cited high service fees as the reason. 26 A relative-
24. One limitation of these surveys is that they were
conducted by telephone. As a result, families without phones
could not be contacted. Whether the behavior of such families (most of whom have low incomes) is similar to that of
other families, particularly other low-income families, is
unknown.
25. The survey included 527 low- and moderate-income
families without a checking account. See "Low-Income
Checking Study," survey by Unidex Corporation on behalf
of the American Bankers Association, February 1985.
26. A recent survey sponsored by the Travelers Express
Company found that among regular users of money orders 14
263
4. Reasons given by consumers for closing or never
opening a checking account, 19851
Percent
Closed a
checking
account
Never
opened a
checking
account
Major reasons
All reasons, total
D o not need account
Cannot afford account
D o not want account
Not convenient
100
21
43
26
10
100
22
44
29
6
Subcategories of reasons
D o not need account, total
D o not need account
U s e savings account instead
D o not make enough transactions
100
10
19
71
100
11
33
56
Cannot afford account, total
Cannot afford account
D o not have enough money to make
account worthwhile
Cannot afford service charges
100
6
100
11
83
11
87
2
D o not want account
D o not want account
Prefer to use cash or money order
Have trouble keeping account
balance
D o not trust institution
100
6
35
29
13
62
45
14
13
13
100
58
12
30
100
55
36
9
Reason 2
N o t convenient
N o t convenient
Banking hours not convenient
N o bank nearby
...
1. Respondents are low-income families without a checking account. The number of respondents w h o closed a checking account was
206, and the number w h o never opened a checking account was 312.
Details may not add to totals because of rounding.
2. Subcategories represent probing for specific reason.
SOURCE: Unidex Corporation, " L o w - I n c o m e Checking Study,"
sponsored by the American Bankers Association, February 1985.
ly small group of consumers also reported they
either had closed their only checking account or
had never had such an account because it was
inconvenient. When questioned further, some of
these consumers specifically noted that no financial institution was located conveniently for
them.
In June 1986, the Federal Reserve Board sponsored a survey that collected information about
deposit account ownership from a nationally
representative sample of families. 27 Those fampercent had recently given up their checking accounts; 23
percent of these families cited high service fees or minimumbalance requirements as the reason they dropped their checking account. "The Money Order User Profile," survey by J.
Maclachlan and Associates on behalf of Travelers Express
Company, Inc., April 1985.
27. Survey of Consumer Attitudes, conducted by the University of Michigan, Survey Research Center, June 1986.
264
Federal Reserve Bulletin • April 1987
ilies without a checking or savings account were
asked why they did not hold a deposit account.
Although the number of respondents without
accounts in the sample was relatively small, the
responses were consistent with those found in
the Unidex survey. No consumers in the June
survey mentioned high service fees or minimum
balance requirements as the main reason for not
having an account. The majority of respondents
without an account indicated they would not
write enough checks or did not have enough
money to make having an account worthwhile
(table 5). Thirteen percent of respondents indicated they preferred to use currency or money
orders, rather than checks, to conduct their
financial affairs. In addition, a small group (3
percent) of respondents stated that they did not
have a deposit account because financial institutions were either inconveniently located or not
open at convenient hours.
Although direct evidence on the financial habits of families without accounts is limited, some
data are available for analysis. Like other families, those without deposit accounts incur bills
associated with shelter, utilities, and the like.
Unlike families with checking accounts, however, these families rely primarily on cash and
money orders to pay bills.28 Results of the June
1986 Survey of Consumer Attitudes indicate that
47 percent of families without accounts reported
using money orders in the previous month compared with only 6 percent of families with checking accounts (data not shown in tables). Sixty-six
percent of families with savings accounts but no
checking accounts reported using money orders
in the previous month. On average, families
without accounts used only three money orders
per month. These findings are consistent with
those reported in the 1985 Unidex survey. That
survey found that roughly half (48 percent) of the
families without a checking account regularly use
money orders to pay bills and that 70 percent of
these families typically pay no more than five
28. Families without checking accounts most frequently
use money orders to pay utility, rent, mortgage, insurance,
medical, and charge account bills. See J.L. Pierce, "The
Users of Money Orders," paper prepared for the Symposium
on Money Orders and Travelers Checks, California State
Banking Department, San Francisco, December 8-9, 1977.
Further evidence on the use of money orders is found in
"Money Order User Profile."
5. Reasons given by consumers for having neither a
checking nor a savings account, 19861
Respondents
Reason
Prefer currency or money orders
Would not write enough checks or have
enough money to make account
worthwhile
High service charges or minimum-balance
requirements
Inconvenient hours or location
Other
Don't know
Total
Number
Percent 2
9
13
42
63
0
2
5
9
0
3
7
13
67
100
1. The survey asked each respondent: What is the most important
reason that you do not now have a checking or savings account—is it
because you prefer to use currency or money orders, because you do
not write enough checks or have enough money to make an account
worthwhile, because the service charges or minimum balance requirements are too high, because the bank does not have convenient hours
or locations, or what?
2. Details do not add to totals because of rounding.
SOURCE: Survey of Consumer Attitudes, conducted by the University of Michigan, Survey Research Center, June 1986.
bills a month. This latter figure is consistent with
the finding that most families without accounts
have particularly low expenditures.
Analysis of data from the 1984 Currency and
Transaction Account Usage Survey sponsored
by the Federal Reserve Board provides further
evidence that most families without deposit accounts have minimal demand for financial services. 29 Using survey data obtained from families
with deposit accounts, a statistical model was
developed to predict account usage on the basis
of income and other demographic characteristics. 30 This model was used to forecast the manner in which low-income families without accounts would use such accounts if they had
them. The model predicts that low-income families currently without checking accounts would
hold account balances averaging about one-half
that of other low-income families and would
write only one-half as many checks. This result
occurs primarily because families currently without accounts have, on average, lower incomes
29. The 1984 Currency and Transaction Account Usage
Survey collected detailed information from consumers about
their payment practices, including their sources and uses of
cash. See Robert B. Avery and others, "The Use of Cash and
Transaction Accounts by American Families," FEDERAL
RESERVE BULLETIN, vol. 72 (February 1986), pp. 87-108.
30. Avery and Elliehausen, "Additional Evidence," table 4.
Basic Banking
and expenditures than low-income families that
have checking accounts.
RESPONSES
TO CALLS FOR BASIC
BANKING
The banking industry and several state and federal regulatory agencies have responded to the
calls for basic banking. The responses have been
diverse, ranging over a wide spectrum.
Industry
Response
Whereas some financial institutions have chosen
to offer basic banking services, others have opposed the idea that they should have to develop
such special programs. Some of these institutions believe that they already offer regular banking products that meet basic banking needs. For
example, many institutions have traditionally
offered savings accounts with low or no fees and
sold money orders. Such an arrangement gives
consumers an opportunity to pay bills without
using cash and provides a safe place to hold
funds.
Regardless of whether they have decided to
offer basic banking services, some institutions
question whether such services really constitute
a "right" or "necessity," and some question
whether the evidence supports the contention
that people have in fact been forced out of the
banking system. They ask why banks and other
regulated financial institutions should be required to provide services at reduced prices
when similar demands are not made of sellers of
other goods and services. They contend that
banks should not be treated like public utilities
and suggest that, if the government believes all
people should have specific banking services, the
government should provide subsidies.
A number of financial institutions have chosen
to make basic banking services available. Such
services have long been offered to certain groups
(particularly to the elderly in the form of senior
citizens accounts), and an increasing number of
institutions are developing programs available to
the general public. 31 A 1985 survey by the Ameri-
31. Surveys of commercial banks indicate that 74 percent
of banks olfer "free" checking account services to senior
citizens. Pricing of Bank Services and Loans (Austin, Texas:
Sheshunoff and Company, 1983).
265
6. Proportion of commercial banks offering basic
banking services, by size of assets,
selected years
Percent
Bank assets
(millions of dollars)
L e s s than 5 0
50-99
100-499
500-999
1,000 or m o r e
1984
1985
Plan t o
offer 1
9.9
9.8
10.7
17.4
19.8
10.7
15.9
21.0
32.3
24.6
4.3
25.6
42.0
35.5
45.6
13.4
21.1
38.0
1. In 1985, t h e s e b a n k s s t a t e d t h e y p l a n n e d t o o f f e r b a s i c b a n k i n g
services.
2. T h i s is a n a v e r a g e w e i g h t e d b y the total n u m b e r o f b a n k s in e a c h
asset class.
SOURCE: Retail
Deposit
Services
Reports
(Washington, DC:
A m e r i c a n B a n k e r s A s s o c i a t i o n , 1984 a n d 1985).
can Bankers Association (ABA) revealed that 21
percent of all commercial banks offered a basic
banking account, up from 13 percent in 1984
(table 6). The survey also found that 38 percent
of the banks without a basic banking program
had plans to initiate such services. According to
the ABA survey, larger banks, most of which are
located in urban areas, are more likely than
smaller banks to offer basic banking services. A
survey of large financial institutions conducted in
1985 by Trans Data Corporation found that 24
percent of the largest banks and thrift institutions
offered basic banking accounts and a similar
percentage planned to begin offering such accounts during 1986.32 A Credit Union National
Association survey of its members in the spring
of 1985 found that 75 percent of credit unions
that offer share draft accounts imposed no maintenance or per draft fees. 33
Besides conducting surveys to gather information about available basic banking services, national and state trade associations have sponsored research on consumer attitudes about
changes in service charges, the effect of branch
closings, reasons for not holding an account, and
the need for and desirability of basic banking
accounts. Several trade associations have made
special efforts to encourage their members to
32. Retail Packaging, Lifelines and Deregulation 1986
(Salisbury, Maryland: Trans Data Corporation, Deposits and
Credit Products Program, 1985).
33. Credit Union National Association, "Credit Union
Service Charges and Check Hold Policies" (Madison, Wisconsin: July 1985).
266
Federal Reserve Bulletin • April 1987
develop and market voluntarily products that
will provide banking services at affordable
prices. The ABA and the Consumer Bankers
Association, for example, have called on their
member institutions to respond to the demands
for basic banking services and have provided
models to guide the development and marketing
of such programs. Both organizations have also
alerted their members to related matters—such
as the importance of careful evaluation of proposed branch closings and the problems caused
by requiring credit cards for opening accounts—
and have encouraged the development of alternative policies.
Regulatory
Agency
Response
Concerns about the accessibility and affordability of services have been voiced by various state
and federal regulatory agencies. The New York
State Banking Department, for instance, convened a joint industry-consumer task force to
turn the DeWind Commission's recommendations into concrete legislative proposals for basic
banking accounts. Both the Office of the Comptroller of the Currency (OCC) and the Federal
Reserve System have arranged several meetings,
conferences, and seminars with bankers and
consumer representatives to discuss basic banking services and related issues.
The OCC sent two letters to national banks in
1985 alerting them to the possible problems associated with changes in banking practices. The
first letter urged banks to take steps to minimize
the adverse effect branch closings and reduction
of services can have on communities, particularly low- and moderate-income communities. The
letter suggested using objective criteria for decisions about cutbacks, considering whether other
institutions exist in the neighborhood, and giving
advance notice of closings to residents. Later in
1985, the OCC issued a banking circular encouraging banks to develop and promote basic banking services to customers. 34
The Federal Reserve Board first discussed the
34. Banking Circular on Basic Banking Services, Office of
the Comptroller of the Currency, August 23, 1985.
basic banking issue in June 1986. The discussion
was initiated in response to the Consumer Advisory Council's recommendation described earlier.
The Board deferred action on a proposed policy
statement to review the results of research then
under way concerning changes in account ownership and reasons for not holding accounts.
Board members were also interested in learning
more about how successful the banking trade
associations had been in encouraging voluntary
action by their member institutions. Finally,
some Board members expressed concern about
whether the policy statement would be perceived
incorrectly as mandating the provision of basic
banking services.
The Board again considered the question in
September 1986 and at this meeting approved a
policy statement. The Board was influenced by
the Consumer Advisory Council's request that
the Board not delay approval of the policy statement. Council members felt that Board action
would strengthen the industry's voluntary efforts
and might reduce the likelihood of burdensome
legislation. The policy statement ultimately approved by the Board differs from the draft originally considered in that the statement emphasizes
supporting
and
encouraging
trade
associations to address actively the interest in
basic banking services.
ISSUES TO WATCH
As noted, a growing number of financial institutions are implementing basic banking programs.
Efforts by trade associations to encourage the
development of such programs, along with recent endorsement by regulatory agencies of such
actions, will likely accelerate this trend. Despite
the relatively rapid development of basic banking
plans, the effectiveness and the profitability of
these programs still need to be assessed.
Effectiveness
Whether reduced fees for deposit account services will prove attractive to families without
such accounts is unclear. When asked why they
Basic Banking
do not hold a deposit account, many families cite
affordability of banking services in general or say
they do not have enough money or transactions
to make an account worthwhile. Yet few families
specifically cite high service charges and high
minimum-balance requirements as the reasons
they have no deposit account. Furthermore, the
cost of using nondepository providers of financial services (such as check-cashing facilities and
sellers of money orders) raises a question about
the importance of price compared with other
factors in the decision about whether or not to
hold an account. Finally, lowering the price for
services does not address the concern expressed
by the small proportion of families without accounts who cite inconvenient hours of operation
or location of banking facilities as the main
reason they do not hold an account. Thus, although reduced charges for deposit account services ifiay be attractive to the most price-sensitive families without accounts, whether the majority of families without accounts will be drawn
to basic banking services is an open question.
Evaluation of the effectiveness of basic banking programs must include how well such programs are reaching targeted groups. The marketing practices of institutions offering basic
banking will have a bearing on the number of
families that seek such services. Financial institutions may find effective marketing difficult
because they may be unaccustomed to selling
products to such families. Moreover, these families undoubtedly have developed relationships
with nondepository providers of financial services and may be reluctant to change established
financial habits. Without special outreach efforts
in both marketing and education, institutions
may find basic banking programs largely unused
or used by groups for whom the plans are really
not intended—college students, for example.
267
banking, they have stated that such programs
should be implemented in a manner consistent
with the safety and soundness of the institution.
The clear implication is that institutions should
attempt to develop products that meet the needs
of their potential basic banking customers without losing money. The ability of depository institutions to implement programs in this manner is
unclear. For instance, a 1986 survey by the
Consumer Bankers Association found that 61
percent of the banks offering basic banking plans
operated them on a break-even or profitable
basis. 35 A similar survey, conducted by the ABA
in 1986, found that 53 percent of banks offering
basic banking plans operated them on a breakeven or profitable basis. 36
Competitive
Equity
Competitive equity is a third area meriting attention. The market for most types of transaction
account services is local in nature. Thus the type
of community in which a financial institution
operates will have a direct bearing on potential
demand for its basic banking services. Institutions in predominately lower-income neighborhoods may find the demand for their basic banking accounts far different from that found by
institutions in higher-income locations. If basic
banking programs cannot be operated profitably,
or at least on a break-even basis, institutions
located in lower-income areas that offer such
accounts will operate at a competitive disadvantage. Ironically, this situation could create an
incentive for office relocations, potentially hurting all bank customers in the area.
These and other issues will need to be more
fully explored as basic banking services become
more common and assessments are made of how
well such services meet the purposes for which
they were intended.
Profitability
Besides the effectiveness of basic banking programs, issues related to the profitability of such
services warrant attention. Although the regulatory agencies have endorsed the concept of basic
35. Consumer Bankers Association, "Basic Banking Services Survey" (Arlington, Virginia: November 1986).
36. American Bankers Association, "Survey of Basic/NoFrills Banking Services: Management Summary of Results"
(Washington, DC: January 26, 1987).
268
Federal Reserve Bulletin • April 1987
APPENDIX
The following is the text of the policy statement
approved by the Federal Financial Institutions
Examination Council on October 2, 1986. The
FFIEC consists of representatives from the five
federal agencies that regulate financial institutions: the Federal Deposit Insurance Corporation, the Federal Home Loan Bank Board, the
Federal Reserve Board, the National Credit
Union Administration, and the Office of the
Comptroller of the Currency. The policy statement was also approved by three associations of
state supervisors: the Conference of State Bank
Supervisors, the National Association of State
Credit Union Supervisors, and the National Association of State Savings and Loan Supervisors.
Joint Policy Statement
Financial
Services
on
Basic
The Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation,
Federal Home Loan Bank Board, National Credit Union Administration, Office of the Comptroller of the Currency, Conference of State Bank
Supervisors, National Association of State Credit Union Supervisors, and National Association
of State Savings and Loan Supervisors are issuing this joint policy statement to encourage the
efforts of trade associations and individual depository institutions regarding the offering of
"basic financial services." 1
The economic environment in which financial
institutions operate has changed over the past
few years, due in part to increased competition
from outside the traditional depository institution structure, increased cost of funds following
deregulation of interest rates, and interest rate
volatility. As a consequence, many institutions
have had to adopt new strategies to market their
services, generate income, manage risk, and
reduce costs. Some institutions have begun to
1. The Comptroller of the Currency previously issued a
banking circular on this subject to all national banks in
August 1985.
explicitly price their products, consolidate or
eliminate services they believe to be unprofitable, and close branch offices. In many instances, institutions have increased service
charges, imposed new fees, and raised minimum
balance requirements.
While such adaptation may be a necessary
response to competitive markets, considerable
concern has developed about the potential impact of these changes in effectively denying or
reducing convenient access of many individuals
to the payments system and to safe depositories
for small savings. Because credit availability is
often dependent on an account relationship with
a financial institution, access to credit for lowincome or young consumers may also be adversely affected.
While a significant number of consumers have
never had a deposit account, some research
studies reflect declines in account ownership that
may be cause for concern. For example, between
1977 and 1983 the proportion of families headed
by a younger person having checking accounts
decreased, as did the number of families from the
lowest income group, regardless of age. The
proportion of young families having either a
savings or a checking account also declined.
While the cause of these declines is not always
clear, the surveys do suggest that a significant
number of individuals or families do not have a
deposit relationship of any kind.
Legislation dealing with basic financial services has been introduced at both the federal and
state level[s] as a result of these concerns. The
industry has also responded. Many financial institutions have independently undertaken to develop and implement new measures to meet
minimum consumer needs. They are offering
basic services, such as low-cost transaction and
savings accounts with low or no minimum balances, accounts for consumers who use a limited
number of checks or drafts, and other accounts
on which minimal charges are made for account
maintenance. Institutions that have for years
offered such services to particular groups of
customers are now advertising their availability
more widely. Other institutions are exploring and
finding ways to maintain a physical presence in
low- and moderate-income neighborhoods even
while reducing the expense normally associated
Basic Banking
with full branch facilities. Trade groups too have
joined in these efforts to encourage the offering
of such services at affordable prices. The American Bankers Association and Consumer Bankers
Association, for example, have called upon their
members to address the continuing interest in
basic banking services.
The member agencies of the Federal Financial
Institutions Examination Council and the associations of state supervisors wish to encourage
such efforts by trade associations and individual
depository institutions that promote the offering
of basic financial services, consistent with safe
and sound business practices. While the specific
type of services will, of course, vary because of
differences in local needs and in the characteristics of individual institutions, we encourage efforts to meet certain minimum needs of all consumers, in particular:
• the need for a safe and accessible place to
keep money;
269
• the need for a way to obtain cash (including,
for example, the cashing of government checks);
• the need for a way to make third party
payments.
We believe that industry trade associations
have a key role to play in this effort, and are in a
position to encourage a constructive response
without the rigidities of legislation or regulation.
We realize that some associations have such
programs already under way.
These programs could usefully:
1. Encourage members to offer and appropriately publicize low-cost basic financial services such as those listed above.
2. Survey the current availability of such
services among member institutions.
3. Make available to members not providing
such services material reflecting the successful
experiences of other organizations.
270
Staff Studies
The staffs of the Board of Governors of the
Federal Reserve System and of the Federal
Reserve Banks undertake studies that cover a
wide range of economic and financial subjects.
From time to time the results of studies that are
of general interest to the professions and to
others are summarized in the F E D E R A L R E S E R V E
BULLETIN.
The analyses and conclusions set forth are
those of the authors and do not necessarily
STUDY
indicate concurrence by the Board of Governors,
by the Federal Reserve Banks, or by the members of their staffs.
Single copies of the full text of each of the
studies or papers summarized in the B U L L E T I N
are available without charge. The list of Federal
Reserve Board publications at the back of each
B U L L E T I N includes a separate section
entitled
"Staff Studies" that lists the studies that are
currently available.
SUMMARY
DETERMINANTS
OF CORPORATE
Mark Warshawsky—Staff,
Board
MERGER
of
ACTIVITY: A REVIEW
OF THE
LITERATURE
Governors
Prepared as a staff study in the fall of 1986
Merger and restructuring activity among corporations has increased dramatically in recent
years. The high level of activity has attracted
considerable attention owing to the size and
prominence of the corporations involved, the
predominant use of debt (in particular, low-grade
" j u n k " bonds) to finance the activity, and the
success of hostile raiders in forcing changes in
management and in corporate policies. Particular
concern has been expressed about the significant
cutbacks in corporate expenditures and staff that
often result after completion of a takeover or
restructuring. More recently, several cases of
"insider" trading in stocks of target firms have
led to enforcement actions. These concerns have
prompted several proposals to curb takeovers.
This paper reviews the relevant theoretical
literature, much of it recent, regarding the major
determinants of corporate merger activity and
examines the empirical evidence bearing on the
aptness of the suggested explanations. It also
addresses the issue of increased leverage.
The literature suggests four major hypotheses
to explain merger activity. These are not by any
means mutually exclusive and might all be relevant in varying degree in different periods and
circumstances. The dominant view, for which
empirical studies have provided support, is that
mergers and takeovers primarily reflect efforts to
wrest corporate control from inefficient, entrenched management in order to realize the full
potential of a firm's assets. In the recent period,
the targets of many threatened or actual takeovers have been firms that seemed to have larger
cash flows than they could profitably plow back
into their basic businesses given the long-range
growth prospects of their industries. These firms
in effect were forced to distribute that excess
cash flow by exchanging debt for equity. In other
instances, firms were forced to sell productive
assets that they were unable to manage effectively. Any rise in share prices after restructuring or
takeover reflects the market's expectation that
the actions taken will improve a firm's profitability.
The second hypothesis focuses on tax consid-
271
erations. A merger may afford important tax
advantages through a rise in the asset "basis" for
depreciation allowances and other purposes, the
capture of tax-loss carryovers, or enhanced leverage. As an explanation of the choice of a
merger to realize tax savings, this hypothesis
suffers from the fact that many of these tax
advantages can be achieved by alternative transactions—for example, through partial asset sales
or debt-for-equity swaps. Tax factors, however,
may contribute to the profitability of mergers,
even if the choice of this transaction is primarily
motivated by other considerations. Consequently, tax factors may play a significant, although
largely secondary, role in the prices paid for
target companies and in the number of mergers
undertaken.
The third hypothesis maintains that mergers
are motivated by the desire to limit competition
and gain market power. Logic suggests that
merger activity might increase when some development (such as major deregulatory actions of
the sort seen in recent years or a slowing of
growth in demand for an industry's product)
intensifies competition among firms and thereby
enhances the desire to find relief from market
pressures through combination. Alternatively,
mergers will increase when antitrust restraints
are eased (again, something that has occurred in
recent years).
The fourth hypothesis states that mergers and
acquisitions are stimulated by financial market
inefficiencies that leave corporate equities undervalued relative to their intrinsic worth. In this
view, which is a commonplace in popular accounts of market activity, acquirers are shopping
for "bargains," that is, buying existing physical
assets more cheaply than they can be manufactured or built. Many corporate managers believe
that raiders essentially "steal" corporate assets
by purchasing shares at prices below their true
value. Such undervaluations, which are independent of managerial inefficiency, tax considerations, or the extent of market power, result
from the inability of the market to correctly value
corporate assets. Market undervaluation is more
likely during times of major economic disturbances and uncertainties when stock market
prices generally reach their trough. Distinguishing financial market inefficiencies empirically
from the corporate control case would be difficult; existing studies on market efficiency are not
conclusive, and not surprisingly, any evidence of
such inefficiencies is disputed by those who
believe the markets do a good job of valuing
corporate shares.
•
272
Industrial Production
manufacturing nearly 2 percent higher, but mining about 12 percent lower, than it was a year
earlier.
In market groups, output of consumer goods
rose 0.5 percent in January as production of
nondurable consumer goods continued to advance at its recent strong pace. However, output
of durable consumer goods was little changed, on
balance, following a sharp gain in December.
Released for publication February 16
Industrial production increased an estimated 0.4
percent in January following a rise of 0.3 percent
(downward revised) in December. Moderate
gains prevailed in most sectors, except home
goods and energy materials. At 126.9 percent of
the 1977 average, industrial output in January
was 0.6 percent above that of a year earlier, with
R a t i o scale, 1977 = 100
Products
140
TOTAL INDEX
120
100
80
MANUFACTURING
140
Durable
Nondurable
"
"N y
MATERIALS
Durable
Nondurable
120
• —
/
/
100
80
CONSUMER
160
GOODS
Nondurable
INTERMEDIATE
PRODUCTS
140
Business supplies
120
/
Durable
100
/
w
140
/
80 — C o n s t r u c t i o n supplies
J
I
I
FINAL PRODUCTS
MOTOR VECHICLES A N D PARTS
Defense and space
120
100
Business equipment
80
Consumer goods
60
1981
1983
1985
1987
All series are seasonally adjusted. Latest figures: January.
1981
1983
1985
1987
273
1977 = 100
Group
1986
1987
Dec.
Jan.
Percentage change from preceding month
1986
Sept.
Oct.
1987
Nov.
Dec.
Jan.
Percentage
change,
Jan. 1986
to Jan.
1987
Major market groups
Total industrial production
126.4
126.9
-.1
.3
.6
.3
.4
.6
Products, total
Final products
Consumer goods
Durable
Nondurable
Business e q u i p m e n t . .
Defense and s p a c e . . .
Intermediate p r o d u c t s . .
Construction supplies
Materials
135.2
133.9
127.1
121.1
129.3
138.3
185.3
139.6
126.9
114.4
135.9
134.6
127.8
121.3
130.1
138.9
186.7
140.3
127.9
114.6
-.4
-.3
-.7
1.4
-1.4
.0
.6
-.6
.4
.3
.6
.4
.4
-1.0
.8
-.2
1.4
1.3
.3
-.2
.4
.4
.6
1.3
.4
-.1
.2
.4
.7
.9
.5
.6
1.3
2.8
.8
-.4
.2
.2
-.2
.1
.5
.5
.5
.2
.7
.4
.8
.5
.8
.2
1.4
.5
3.2
4.6
2.8
-1.8
4.5
4.5
3.1
-.7
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
131.0
129.3
133.5
95.4
111.2
131.8
129.8
134.5
95.6
111.0
.3
.0
.7
-.6
.9
.4
.4
.3
1.2
1.7
.5
.5
.6
-1.3
.0
1.8
.2
4.0
-11.6
-1.3
NOTE. Indexes are seasonally adjusted.
Production of home appliances, which expanded
rapidly in late 1986, retreated in January, and
auto assemblies fell to an annual rate of 7.5
million units from a rate of 7.9 million in December; these declines were offset by increases in
output of trucks and home goods other than
appliances.
Production of business equipment rose 0.4
percent in January, with all major categories
posting gains, but the overall January level remains almost 2 percent lower than it was a year
earlier. Output of defense and space equipment
increased further. Following a small decline in
December, the output of construction supplies
rose 0.8 percent in January and production of
business supplies rose 0.3 percent further to a
level more than 5 percent higher than it was a
year earlier. Among materials, both durables and
nondurables posted gains in January, but energy
materials declined about 1 percent following a
similar drop in December. Within nondurables,
recent strength has been concentrated in chemicals and paper, which may have benefited, in
part, from increased exports of these products.
In industry groups, output in the manufacturing sector rose 0.6 percent in January, while
output of mining and utilities was about unchanged. Within manufacturing, gains were largest in nondurables, which rose 0.7 percent. Production of durables increased 0.4 percent; the
gain was damped by further declines in the
production of metals.
275
Statements to Congress
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Joint Economic Committee of the
U.S. Congress, February 2, 1987.
I am pleased to appear once again before this
committee to discuss the economic situation. As
you know, the Federal Reserve will be submitting its semiannual report on monetary policy to
the Congress later this month. My testimony at
that time will provide a full account of recent
monetary developments and will report on the
decisions to be made by the Federal Open Market Committee regarding money and credit targets for 1987. Therefore, in my statement today I
will be emphasizing more general considerations
of domestic and international economic policies.
The economy is now in the fifth year of
expansion, making it among the longest. During
this time about IIV2 million jobs have been
created, and the unemployment rate has fallen
more than 4 percentage points from its peak in
1982, reaching 63A percent in December. In contrast to the experience of the 1970s, real incomes
of households have risen steadily in recent years.
In the business sector, aftertax profits have
recovered both absolutely and relative to overall
gross national product. Interest rates, in contrast
to the usual cyclical pattern, are lower today
than when the expansion started.
These substantial economic gains were accompanied by—and I believe fundamentally dependent upon—consistent progress toward the objective of overall price stability. Consumer prices
rose a scant 1.1 percent last year, and producer
prices actually declined—a performance unrivaled since the early 1960s.
We know, of course, that such extraordinary
progress reflected, in large measure, the transitory influence of the sharp drop in oil prices that
occurred early last year; that movement has been
partially reversed recently. Moreover, given the
size of the fall in dollar exchange rates against
other leading industrialized countries, increases
in some important import prices are occurring.
Because of those factors, we cannot reasonably
expect so satisfactory a statistical result in 1987.
There is, however, encouraging evidence of continuing restraint on costs and in pricing behavior.
Most significantly, the trend toward moderation
in nominal wage and salary increases has continued in almost all sectors of the economy, and
productivity gains in manufacturing, if not in
other sectors, have been sizable during the expansion.
My purpose, however, is not to express satisfaction or complacency over past performance.
What will count is whether we can build upon
and sustain that progress. And the obstacles and
roadblocks are evident.
You are all too familiar with regional and
sectoral disparities in performance. Manufacturing has been relatively sluggish for two years
or more. Much of agriculture is depressed despite massive federal assistance. The energy
industry has been hard hit. Conversely, employment in services and finance has been expanding
rapidly.
Overall, higher levels of consumption have
been driving the economy over the past two
years, while investment and domestic savings
have lagged, hardly a sustainable combination.
The exuberance of financial markets and the
rapid pace of debt creation have been accompanied by evident pressures on some sectors of the
financial system, rising loan losses, and the risks
implied by greater leveraging of many businesses.
Plainly, in their particulars, many of the strains
and imbalances in our economy can be traced to
specific circumstances beyond the reach of
broad fiscal or monetary policies. For instance,
there is a worldwide tendency toward growing
surpluses of basic agricultural commodities. The
sharp break in oil prices has also been an international market event. Both of those circumstances
have contributed to the strains on some lending
institutions. But, through it all, two disturbing,
276 Federal Reserve Bulletin • April 1987
and partly related, currents run strongly—our
trade and budget deficits. Those are matters that
must be addressed—indeed can only be constructively addressed—by appropriate national
policies. And if we delay, the adjustments will
become even more difficult, compounding the
risks for the future.
The direct effects of the trade deficit are clear
enough. Burgeoning imports over several years,
while exports in real terms have risen much more
slowly, largely account for the overall sluggishness of manufacturing. With capacity ample, that
sluggishness feeds back on spending for plant
and equipment.
The effects of the budget deficit, in current
circumstances, may be less obvious—after all, as
many have noted, interest rates have fallen while
the deficits have been so large, the huge new
issues of Treasury securities have found a market, and private debt creation has been high as
well. How is that possible when, to take one
simple benchmark, our federal deficit has averaged about two-thirds of the net savings generated by our economy over the past four years?
In effect, the answer is that we are drawing on
the savings of others: in 1986, the net influx of
foreign capital appears to have exceeded all the
savings generated by individuals in the United
States. That capital influx is the mirror image of
the deficit in our current account—we cannot, at
one and the same time, borrow abroad (net) to
cover a domestic investment-savings imbalance
and run a balanced current account.
In a sense we have been fortunate. We have
been able to increase consumption rather rapidly, sustain overall growth, and reduce inflation
and interest rates even in the face of a large
federal budget deficit by calling upon other nations' savings, which they have readily provided.
But the cost has been a rising trade deficit and
increasing international indebtedness, strong
pressures on manufacturing in the here and now,
and an unsustainable pattern of economic activity for the future fraught with political as well as
economic risks.
Stated simply, we are living beyond our
means—individuals, businesses, and government have collectively been spending more than
we produce. That might be acceptable if we were
matching the foreign borrowing with a surge in
productive investment in the United States. That
has been the case at times in the distant past in
the United States and in other countries more
recently. But we are not making that match
now—it's consumption that has been leading the
economic parade.
In that context, the challenge for economic
policy over the next few years is clear enough.
We have to work toward better external and
internal balance at the same time. The adjustments required are large. Given our extended
position, the difficulties and risks are substantial.
We do not want to achieve the needed external
adjustments by recession, nor can we reasonably
float off our debts by rekindling inflation—and I
do not think it is realistic to think we have the
option of trading one of those possibilities for the
other.
That may sound like abstraction. I will be
more specific.
One requirement is progress in reducing our
trade deficit. That, on the face of it, will bring
benefits to manufacturing in the United States.
The potential is huge—to close our $150 billion
trade deficit by increased manufacturing (and I
do not see any other practical avenue) implies a
15 to 20 percent increase in industrial output over
the coming years above and beyond that required
to support domestic growth. While a surge of
that kind would be welcome in many respects,
the challenge is to achieve it without renewed
inflationary pressure in that sector. That will
require continuing restraint on costs, more modernization, and in time more capacity, which in
turn will require both money and real resources.
By definition, as we close the current account
deficit, those funds and real resources will no
longer be available from abroad. So we will have
to increase our own savings or reduce other
demands on savings at home. The obvious candidate—again, as a practical matter, it must be the
largest "contributor"—is a reduction in our federal budget deficit. And, unless productivity in
the economy as a whole is to dramatically increase above the recent trend of 1 percent or
so—and unhappily there is no solid evidence for
that—we will not be able to close the gap in trade
and meet our domestic investment needs without
slowing the growth in domestic consumption
well below the 4 percent pace it has averaged
during the current expansion.
In concept, all those things are "doable."
Statements to Congress
They provide the outline of an appropriate economic strategy. The result would be a more
balanced economy, greatly enhancing the prospects for sustained growth and greater exchange
rate and financial stability.
In fact, I believe we are beginning to make
progress in the required directions. But, in a
sense, we have so far only set the stage. Many
difficult decisions lie ahead.
• In the current fiscal year, some significant
progress toward reducing the extraordinary budget deficit appears to be under way. But, as you
well know, sustaining that progress will require
still more difficult decisions this year, and for the
years beyond. The Gramm-Rudman-Hollings
targets have signaled your intentions, but more
important than those numerical targets is specific
action by the Congress to ensure that the deficit
will, in fact, continue to decline year by year.
Without that progress, it is difficult to see how
we could manage to reduce the trade deficit—
and with it the net capital flow from abroad—
without jeopardizing growth, progress toward
lower interest rates, and financial and price stability at home.
• The large realignment of exchange rates over
the past two years should enable our industry to
compete much more aggressively with other major industrialized countries. But that constructive development should not obscure the fact
that a declining dollar at some point has high
costs and risks as well. It generates inflationary
pressures. Uncertainties about the future direction of currency values could dampen the willingness of others to place or maintain funds in the
United States—funds upon which, for the time
being, we are utterly dependent to finance internal needs.
A self-generating cumulative process of currency depreciation and inflation serves no one's
interest. Economic history is littered with examples of countries that acted as if currency depreciation alone could substitute for other action to
restore balance and competitiveness to their
economies.
• That history emphasizes the need for national
policy to remain strongly oriented toward maintaining greater price stability. As I indicated
earlier, the good performance of the key price
indexes in 1986 probably cannot be matched this
year as we absorb higher import prices and oil
277
prices no longer fall. But monetary policy, in
particular, must remain alert to the need to avoid
any sense of cumulating inflationary pressures.
Over the past year or more, as inflation has
subsided and with limited economic growth, the
Federal Reserve has been able to accommodate a
rapid growth in money and the discount rate has
been reduced on several occasions. Clearly, renewed inflationary pressures and weakness in
the dollar externally would be factors limiting
our flexibility. In that context, your efforts to
deal with the budget deficit are even more central
to the financial and economic outlook.
• In the end, the efficiency, competitiveness,
and salesmanship of U.S. industry, and its ability
to resist cost increases, will be critical. As I
indicated earlier, there are encouraging signs of
improved productivity in manufacturing. As a
result, profits and cash flow have been reasonably well maintained even as prices of goods
have remained virtually stable.
All that has been achieved during a period of
intense competitive pressure from abroad and at
a time of little growth. The challenge will be to
maintain that performance as prices of competitive imports increase, as export markets improve, and as new needs for capacity arise. If
not, the gains from the realignment of currencies
will be frittered away.
The point has often been made that despite the
longer-run benefits for the economy as a whole,
recent tax changes may tend to inhibit plant and
equipment spending in some industries. On the
other hand, the buoyancy of the financial markets should reduce the cost of capital and provide fresh opportunities for consolidating financial resources and balance sheet strength. Those
opportunities should be used constructively and
not be dissipated in excessive leveraging and
financial risk-taking that could in the end jeopardize our stability.
The burden of my comments is that there are
gross distortions and imbalances in the economy
that we must deal with forcibly and effectively.
But we also have a lot upon which to build. The
outlines of an effective approach are clear
enough. Major elements of that approach are in
place. But we will also need time and patience—
and they are in short supply.
For instance, the deterioration in our trade
balance appears to have ended, but signs that the
278
Federal Reserve Bulletin • April 1987
corner has been turned are not yet decisive.
Meanwhile, the inevitable adjustments in the
energy industry, in agriculture, and in commercial building are continuing to work against economic growth in many areas. In these circumstances, stronger growth in 1987, as well as more
sustainable growth over time, is heavily dependent on the realization of significant gains in
trade.
One temptation is to try to speed that process—and to vent our understandable frustration
about restrictive trade policies of others—by
resorting to broad-brush protectionism. But such
a course, it seems to me, would invite almost
certain failure. The lesson of experience is that
world trade and economic activity would be
depressed together. Indeed, given the greater
degree of economic and financial interdependence of nations today, the risks and potential
losses are all the greater.
At the same time, that very interdependence
means that we cannot be successful unless other
countries are taking constructive complementary
actions to maintain their own growth, to keep
their markets open, and to deal with legitimate
complaints of unfair trading practices.
The United States and its currency are a major
force in the world economy and financial system.
In that context, I can readily understand the
concern expressed abroad about instability in the
dollar exchange markets and about the potential
impact on their own economies. At a time of
rather sluggish growth among the main industrialized countries, abrupt further changes in the
dollar could undercut business planning and investment. We in the United States obviously
have nothing to gain—and a great deal to lose—
from any interruption in growth abroad.
But it is equally obvious that the needed
improvement in our trade position must be
matched by others absorbing increased imports
and facing stronger export competition; logically
and constructively, those changes should be
borne primarily by countries with huge external
surpluses. For countries that have been dependent on large export surpluses to support growth,
that poses difficult adjustment problems, the
mirror image of ours. In those cases, the plain
need is to encourage domestic growth, while also
maintaining the kind of open markets and receptivity to imports that are a necessary part of
achieving better international balance in a framework of world growth. Naturally these countries,
too, want to maintain and consolidate greater
price stability. But with their currencies appreciated, the opportunity to do so consistent with
more rapid growth will be enhanced by cheaper
and more available imports.
Sometimes, and I think unfortunately, that
need for complementary adjustment abroad is
framed in political terms as a request for "help"
by the United States to resolve our own problems. But what is at issue is not a narrow concept
of help for us or any single country; rather it is
what is required to achieve, in an interdependent
world, the sustainable world growth and stability
we all want. In that respect, no country heavily
dependent on trade is an island. Sooner or later,
the necessary adjustments in trade will be made.
The issue is whether they will be made in an
orderly way, in a framework of open markets and
growth, or with excessive currency instability, or
protectionism, or both.
Our own responsibilities in that connection, as
I have outlined, are unmistakable. But those
measures inevitably impact others, and a better
international balance cannot be achieved, in the
interests of the United States and its trading
partners, without constructive complementary
policies abroad.
Moreover, such responsibilities extend beyond the main industrialized countries to others,
particularly in the Far East, that have achieved
rapid growth largely by penetrating foreign markets open to them, most of all in the United
States. To the extent that some of those countries have large and growing external surpluses,
the time has come clearly for them to open their
markets more broadly. In doing so, the benefits
of their growth to their own consumers will be
enhanced, even as they contribute to easing the
problems of worldwide adjustments.
I want to emphasize, too, that all these actions—by the United States, by other industrialized countries, and by certain newly industrialized countries—are a necessary part of achieving
the healthy economic environment essential for
other developing countries to constructively deal
with their problems. The heavily indebted countries, in particular, must be able to penetrate
export markets outside the United States.
What I have tried to outline this morning is the
Statements to Congress
279
broad directions that I believe U.S. policy must
take—is in fact taking—during 1987 and the
years ahead. And I think there are signs as well
that the need for complementary policies abroad
is increasingly well understood.
Plainly, much more remains to be done. I do
not underestimate the difficulties. Right now, our
own growth is hesitant, and the indicators of
economic activity abroad have not been entirely
reassuring. The general ebullience of financial
markets masks some strains and weaknesses that
will need continuing attention. Despite the progress of the past, the cooperative effort to deal
with the acute debt problems in Latin America
by the countries themselves, by the international
financial institutions, and by leading banks needs
fresh impetus. With oil and commodity prices
now stable or even rising, maintaining the sense
of progress toward general price stability will be
more difficult, particularly in the United States.
Needed policy changes, here and abroad, even
when accepted conceptually, are hard to implement with the needed vigor.
At the same time, I think we should be encour-
aged by the degree to which some of the needed
policies are in place. There is some evidence that
the needed economic adjustments are beginning.
What seems to me important, as we assess
progress in 1987, is not so much whether we in
the United States—at least within some reasonable range—reach some specific rate of overall
economic growth. Rather, our emphasis in policymaking should be on whether the necessary
adjustments are clearly under way and will in
fact be sustained.
We will not eliminate the budget deficit or the
trade deficit easily or quickly and certainly not in
1987. By the same token, we cannot expect to
achieve an appropriate balance in our internal
savings and investment in so short a period of
time nor sharply improve productivity. As a
practical matter, a sudden spurt in growth abroad
will not be a solvent for our problems.
What we collectively can do—and what we
must do—is act with force and conviction in the
necessary directions. In doing so we will lay the
base for sustained noninflationary growth not
just in 1987 but for years beyond.
•
Statement by Wayne D. Angell, Member, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Consumer Affairs of
the Committee on Banking, Housing, and Urban
Affairs, U.S. Senate, February 5, 1987.
First, additional regulatory authority is needed to
make improvements to the check collection and
return process, thus reducing or eliminating the
risk to depository institutions of making funds
available more promptly. Second, there is a
strong and straightforward case that if they delay
availability of deposited funds, depository institutions should clearly disclose their policies to
consumers.
S. 344 also contains a third element—schedules that dictate the maximum holds that a depository institution may place on the proceeds of
deposits. The Federal Reserve Board believes
that mandatory schedules raise difficult problems
in minimizing risks to depository institutions and
maximizing consumer benefits. We have felt that
primary emphasis should be placed on improvements in the disclosure and payment system.
However, the Board does believe that availability schedules could be a workable component of
the delayed availability legislation. S. 344 contains the basic elements to achieve an effective
availability schedule.
I welcome this opportunity to provide the views
of the Federal Reserve Board on the issue of
delayed availability and specifically on S. 344,
the Fair Deposit Availability Act of 1987. We
share your frustration with the check hold practices of some depository institutions and with the
inefficiencies of the return-item process. Therefore, we are eager to work with you and the
committee to devise a legislative remedy to the
delayed availability problem. I am personally
sympathetic with the goals of S. 344; my family
experienced some of the problems faced by
many consumers when we moved from Kansas
to Washington, D.C., last year.
Legislation addressing the delayed availability
issue should contain two essential elements.
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Federal Reserve Bulletin • April 1987
EXPEDITED FUNDS
AVAILABILITY
Availability schedules should be designed so as
not to encourage check fraud by basing the
schedules on the time normally needed to clear
and return checks. Although this time period is
currently lengthy, it can be shortened to provide
for relatively prompt availability schedules if the
Board is given additional authority to implement
initiatives to expedite the check collection process.
The Board is concerned that requiring availability before the receiving institution can reasonably be expected to learn of the return of an
unpaid check will encourage check fraud, including kiting. It would be relatively easy to perpetrate a check fraud under a system in which
institutions are required to make funds available
to customers before there is any opportunity to
learn of nonpayment.
If an individual knows that funds must be
made available before a check can be returned,
all he would have to do is to open accounts at
two local institutions. Both accounts would be
maintained in a proper manner for sufficient time
to satisfy any new account exception. After that
time, suppose the individual writes a check subject to the availability schedule against nonsufficient funds on his account in one institution and
deposits it in his account at the other institution.
If the schedules are too stringent, the institution in which the check was deposited would be
required to make the funds available to the
individual depositing the check before learning
that the item would be returned unpaid. If the
individual withdraws the funds and leaves before
the check is returned, that institution would be
unable to charge the check back when it ultimately receives the return item, and it would
suffer a loss for the amount of the deposit.
Similar schemes involving dozens of institutions
could be easily accomplished. 1
While we recognize that this type of check
fraud can occur today, requiring funds availability before the completion of the normal collection and return cycle will tend to encourage this
type of check fraud. This is not to say that
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.
mandatory schedules must accommodate the return of all checks, but rather that the schedules
should not be designed so that individuals can
rely on obtaining availability before the check is
returned.
If mandatory availability schedules are adopted, the current check collection and return cycle
must be shortened to provide the most expeditious availability to consumers while limiting the
risk of increased check kiting. Federal Reserve
authority to make needed improvements in the
check system is crucial to accomplish this
objective as well as to improve the check collection system generally and thereby reduce the risk
to institutions from returned checks, even if
those checks are not covered by mandatory
availability schedules. Today, the Federal Reserve's regulatory authority generally applies
only to those checks that it clears. While the
Federal Reserve has devoted significant attention to improvements in the return-item process,
our lack of regulatory authority has lessened our
effectiveness in making significant progress in
this arena.
If legislation is passed under section 5(b) of
S. 344, the Board would propose several initiatives to improve the return process. One such
initiative that the Board might propose would be
to require the payer institution to return checks
to the institution of first deposit within a specified time frame. This requirement would effectively prohibit the use of the mail for most return
items. The mail is used now for more than 11
percent of returns, slowing the trip back to the
depositing institution as much as several days.
This requirement would expedite returns at relatively little cost to the industry, but would be
effective only if it were applicable to all checks
regardless of how they are cleared.
This initiative could also entail permitting institutions to return checks directly to the institution of first deposit, bypassing intermediate endorsers. This practice is not authorized by three
jurisdictions, but section 5(b) would provide the
Board with the authority to preempt the laws of
these jurisdictions, thus making the use of direct
returns feasible on a widespread scale.
A further initiative involves the automation of
return items through the use of the same efficient
mechanism used to collect checks. A recent test
of this concept by the Federal Reserve, the
Statements
American Bankers Association, and 75 depository institutions proved quite promising, reducing the time to return checks an average of more
than one-third. However, the cost of this program falls on the institution that is returning the
check, while the benefits of the expedited return
accrue to the institution of first deposit. Therefore, its use is not likely to be widespread
without the Federal Reserve having the authority
to create incentives for payer institutions to
participate in the program.
These examples illustrate the steps that could
be taken to accelerate the return of checks if
additional regulatory authority were granted to
the Board. This authority should be sufficiently
broad to enable the Board to consider not only
the specific initiatives contained in the legislation
but also additional proposals, perhaps not envisioned today.
With these improvements to the check collection system, a relatively prompt availability
schedule would be possible. A schedule of no
longer than four intervening business days, with
an additional business day added when determined necessary by the Board, would be workable. Therefore, to the extent that the schedule in
section 5(b) of S. 344 is based on business days,
it sets a realistic goal for availability of all
checks. Because many local and regional checks
are collected more promptly, the Board would
adopt more expeditious schedules for the large
majority of checks. Under this schedule, depositors seeking to perpetrate a fraud would not be
able to rely on obtaining availability before the
check is returned.
If the Board implemented the expedited availability system under section 5(b), it would have
the authority to establish only very limited exceptions to the schedules. However, even under
an expedited system, not all checks will be
returned within the time frames established for
availability. Therefore, it is important that any
mandatory availability schedules adopted contain adequate authority for the Board to establish
exceptions, not only for instances in which the
institution has specific reason to doubt the collectibility of an individual check, but also for
those classes of checks that may impose increased risk even though the individual check
raises no particular suspicion that it is uncollectible. For example, it may be necessary to pro
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281
vide an exception for foreign checks, since the
receiving institution will not learn of the nonpayment of these checks within the time frame
established in the bill. Similarly, general exceptions for new accounts, large dollar deposits, and
other types of checks recognized in section 5(c)
of S. 344 may also be warranted.
In summary, the expedited availability approach taken in section 5(b) of S. 344 provides
the needed authority for the Federal Reserve to
improve the check system and provides the
Board with sufficient flexibility in setting the
availability schedules so as to not encourage
check kiting schemes. However, it is essential
that these schedules allow for exceptions for
limited classes of checks, as provided in section
5(c)(2) of S. 344. With the addition of these
exceptions, and certain other technical changes,
we believe that the approach taken in section
5(b) would ensure that customers obtain prompt
availability on the funds they deposit, without
exposing depository institutions to significant
risks.
In contrast, the approach taken in section 5(c)
of the bill, which calls for availability at the time
of provisional credit, subject to broad exceptions, would likely result in increased check
fraud since institutions would be required to
provide availability before any opportunity to
learn of the return of the unpaid item. In addition, this alternative does not give the Board the
authority to expedite the check system, and thus
does not address one of the underlying causes of
the delayed availability problem.
DISCLOSURES
As I stated earlier, disclosures are an essential
element in any delayed availability legislation.
However, we believe that the disclosure provisions in S. 344 can be made more flexible,
particularly for those institutions that do not
routinely place holds on deposits. For example,
an alternative could be provided for these institutions, in which notice would be required when a
hold is placed on a given deposit that falls within
one of the exceptions of the bill. This notice
requirement would be in lieu of the disclosure
requirements. This approach would significantly
lessen the compliance burden on institutions
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Federal Reserve Bulletin • April 1987
that, except in rare situations, do not delay
availability. For institutions that do regularly
place holds on their customers' deposits, the
disclosure requirements set forth in S. 344 would
apply.
Further, the subcommittee may also wish to
consider limiting the disclosure requirements to
consumer accounts. Providing the required disclosures for all corporate accounts would be a
very complex undertaking since the availability
of deposits is often tied to the level of required
clearing balances and other account terms. Corporate accountholders are typically far more
familiar with their institution's availability schedules than are consumer accountholders. Even
with this limitation, a number of small businesses
may, as a practical matter, still be given the
disclosures required by the bill. Given the potential civil liability for failing to follow the requirements for consumer accounts, many institutions
would likely simply treat small business accounts
as consumer accounts to avoid a time-consuming
process of distinguishing between the two.
Finally, a number of other provisions of S. 344
bear further consideration. Under the bill, the
Board's authority to make payment system improvements could be construed to expire after 48
months. The Board should be given continuing
authority to make further improvements to the
check system and to modify the availability
schedule if warranted by these improvements.
The Board is also concerned that the requirement for establishing an Expedited Funds Availability Council may slow rather than facilitate
payment systems improvements. The council
would duplicate the responsibilities of several
other groups, such as the Consumer Advisory
Council, which are already in existence. In addition, there are other technical amendments that
we would like to propose. The Board staff will be
pleased to work with your staff to develop the
most effective legislative remedy to the delayed
availability problem.
In summary, we believe that legislation that
requires disclosure and provides authority to the
Federal Reserve to improve the return-item
process and establish availability schedules will
be beneficial to consumers and ensure that the
costs to the banking industry are reasonable.
Again, I am pleased to be here today and would
be glad to discuss the delayed availability issue in
more detail as the members of the subcommittee
desire.
•
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, February 19, 1987.
pattern of complementary action both in the
United States and in other countries if the common objective of sustained economic expansion
and price stability is to be reached.
I appreciate this opportunity to review once
again with this committee the conduct of monetary policy against the background of economic
and financial developments here and abroad. As
usual, a more detailed review of last year, of the
prospective ranges for monetary and credit
growth established by the Federal Open Market
Committee (FOMC), and of the Committee's
projections for economic activity and inflation
are set out in the Board's formal HumphreyHawkins Report delivered to you earlier. (See
pages 239-54 of this BULLETIN.) This morning, I
want to concentrate on more general considerations underlying the policy approaches of the
Federal Reserve. I will emphasize particularly
how those approaches must fit into a broader
THE ECONOMIC
SETTING
The current economic expansion—now extending into its fifth year—is already among the
longest in peacetime history. It is unusual in
other respects as well, including the absence of
certain signs of cyclical excesses that often develop after years of expansion. For instance,
inventories have been held well within past relationships to sales, and spending by manufacturers for plant and equipment has, if anything,
been restrained relative to prospective needs.
While the overall rate of economic growth has
been rather moderate since mid-1984, averaging
about 2Vi percent per year, that growth has been
Statements
maintained despite strong pressures on sizable
sectors of the economy. Oil exploration and
development activity and agricultural prices
have both been heavily affected by worldwide
surpluses. Commercial construction in many areas is suffering from earlier overbuilding. Regions of the country in which those impacts have
been particularly large have thus remained relatively depressed. Difficult as those regional conditions have been, however, many of the necessary adjustments are well advanced and other
areas of the economy have been moving strongly
ahead.
More importantly, both the inflation rate and
interest rates, after four years of expansion, are
substantially lower than when the recovery started. Homebuilding is being well maintained, and
both capital and labor appear available to support further growth for some time without undue
strain on resources. Certainly, conditions in financial markets, with stock prices exuberant and
interest rates generally as low as at any time
since the mid-1970s, appear supportive of new
investment.
But if the traditional indicators of cyclical
problems are largely absent, it is also evident
that the economy is struggling with structural
distortions and imbalances that, for us, have
little precedent. Economic activity over the past
two years has been supported largely by consumption. That has been at the expense of reduced personal saving rates that, by world standards, were already chronically low. At the same
time, the huge federal deficit is absorbing a
disproportionate amount of our limited savings.
For a time, we have largely escaped the adverse consequences for financial markets of that
insidious combination of low saving rates and
high federal deficits by drawing on capital from
abroad—the flow of which in 1986 actually exceeded all the savings by U.S. households. The
other side of that coin, however, is a massive
trade and current account deficit, restraining
growth in manufacturing generally and incentives for the industrial investment that we will
need in the years ahead.
The simple facts are that we are spending more
than we produce and that we are unable to
finance at home both our investment needs and
the federal deficit. Those conditions are not
sustainable for long—not when, as at present,
to Congress
283
the influx of capital from abroad cannot be traced
to a surge in productive investment.
It is not sustainable from an economic perspective to pile up foreign debts while failing to
make the investment that we need both to generate growth and to earn the money to service the
debts.
It is not supportable politically, as the pressures on our industrial base are transmuted into
demands for protection.
Ultimately it will not be supportable from an
international perspective either, as the confidence that underlies the flow of foreign savings
will be eroded.
Sooner or later, the process will stop. The only
question is how.
THE BROAD POLICY
APPROACH
In concept, we could shut off the flow of imports
by aggressive, broad-brush protectionist measures. But the result would be to drive up the rate
of inflation and interest rates here, to damage
growth abroad, and to invite retaliation. Instead
of sustained and orderly growth, we would invite
worldwide recession.
We could try to drive the dollar much lower—
or complacently sit back while the market forces
produce that result. But that too would undermine the hard-won gains against inflation and
would risk dissipating the flow of foreign capital
that we, for the time being, need. The stability of
financial markets would be jeopardized, and export prospects could be undercut by adverse
effects on growth abroad.
Faced with similar circumstances, many smaller countries might reasonably embark upon
strong austerity programs—indeed sooner or later they would be forced to undertake such programs. Large doses of fiscal and monetary restraint would be taken, risking recession in the
short run, but also anticipating that exports
would respond vigorously, imports would decline, and their economies would soon resume
growth on a much sounder footing. But, in the
context of a sluggish growth of the world economy, for the United States to take that course
would entail particularly high risks and the results would be problematical at best.
There is a reasonable alternative. It is more
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Federal Reserve Bulletin • April 1987
complicated, but at the same time much more
promising.
We can draw upon a combination of policy
instruments to encourage the needed adjustments. Results may take time. But those results
will come with greater certainty—and they
should be consistent with maintaining growth
here and abroad, with progress toward underlying price stability, and with open markets.
That is, in fact, the course on which we are
embarked. To be sure, its success will require an
unusual combination of discipline, patience, and
international cooperation. However, given the
stakes not just for the United States but for
others, I do not think there is any real choice.
Important steps have already been taken in the
needed directions. Most obviously, the value of
the dollar vis-a-vis the currencies of other industrialized countries has declined substantially,
placing our industry in a much stronger competitive position. The volume of exports is rising,
despite relatively slow growth abroad. The deterioration in the trade deficit overall appears to
have been stemmed, even if clear evidence of a
reversal is still lacking. Moreover, while the
depreciation of the dollar inevitably carries in its
train rising import prices, we have been fortunate
that the initial impact on the overall price level
was more than offset by falling oil and other
commodity prices. The underlying inflation rate,
measured by trends in wages relative to productivity, has continued to fall.
We have also been fortunate that the flow of
capital from abroad, buoyed by the rising stock
and bond markets here and by some declines in
interest rates abroad, has been well maintained
as the dollar depreciated. Nevertheless, as we
succeed in reducing our current account deficit,
the net capital inflow will decline as well. That
emphasizes the critical importance of moving
ahead with further reductions in the federal budget deficit, which absorbs so much of our own
savings.
The progress being made in that direction this
year is heartening. But that can only be a start.
The projected reduction of $40 billion to $50
billion this year is from a record high deficit of
more than $220 billion in fiscal 1986—more than
5 percent of the gross national product—and it is
being assisted by some temporary factors. Progress next year will be harder.
Success, in my mind, will not be measured so
much by whether we meet some preordained
arbitrary target but by whether in fact a reasonably steady downward pace in the deficit is
maintained as the economy grows—and maintained by measures that can be sustained, year
after year. Failing that, it is hard to see how a
sustained decline in the trade deficit, if possible
at all in the face of huge budget deficits, will
bring net benefit to the economy. The clear
implication would be congested capital markets,
higher interest rates, strong inflationary dangers,
and threats to growth.
INTERNATIONAL
CONSISTENCY
Inevitably, because we loom so large in the
world economy, marked improvement in our
trade balance will be matched by noticeable
deterioration elsewhere. Appropriately, that
should take place largely in the major countries
with exceptionally large surpluses—notably Japan and Germany, both of which are now experiencing some decline in real net exports. That
process cannot take place smoothly and effectively unless those countries and others are able
to maintain a strong momentum of internal demand.
For years, those countries have been dependent for growth mainly on high and rising export
surpluses. In both instances, some shift toward
domestic demand was apparent in 1986, encouraged partly by some relaxation of monetary
policies. That points in the needed direction. But
there are also signs that their growth, overall,
may be faltering, as exports have declined. At
the same time, relatively high levels of unemployment and unused capacity, together with
sharp appreciation of their currencies, offer substantial protection against a resurgence of inflationary pressures that they, understandably,
want to avoid.
Quite obviously, the needed reorientation of
economic policies—essentially the complement
of our own—is no easier to achieve in those
countries than here. Certainly, the nature and
design of the needed measures will be—indeed is
being—strongly debated within those countries.
What is critical from a world perspective is not
the precise nature of the measures or their exact
Statements to Congress
timing, but that, at the end of the day, they are
successful in maintaining a strong momentum of
growth even as they absorb more imports from
the rest of the world.
One danger is that, in the absence of stronger
domestic growth, pressures will intensify for
more appreciation of their currencies, undercutting further their own economic prospects. Given
the size of the exchange rate adjustments already
made, greater instability in that area seems neither in their interest nor ours.
Some newly industrialized countries also have
clear responsibilities for contributing to a better
world balance. Taiwan and Korea, in particular,
have, or are building, external surpluses that are
large even by the standards of the traditional
industrial powers. Part of that reflects a strong
competitive position, but both also maintain a
strong wall of protectionist barriers. The very
strength of their external positions points—in the
interests of their own citizens as consumers, as
well as of world equilibrium—to the need for
more forceful action to increase imports, whether by reducing tariffs, by lifting other trade
restrictions or by exchange rate changes.
Success in these efforts, I must emphasize,
will not necessarily or primarily be measured by
changes in our own bilateral trade vis-a-vis particular countries. An open competitive trading
order is by its nature multilateral, and we and
others should judge equilibrium in a worldwide
context.
In that connection, most of the developing
world, already carrying heavy debt burdens, is in
no position to revalue currencies or to absorb
much higher imports (from the United States or
from others) without more or less parallel increases in their exports. In recent years, however, the United States has, in fact, absorbed the
great bulk of what increase in exports Latin
America has had—their exports to Europe and
Japan have apparently increased little if at all.
For us to close our markets to them now would
assuredly thwart prospects for expansion, and
with it the encouraging progress that has been
made toward both more open, competitive economies and political democracy. What is needed
instead is greater access by those countries to
growing markets in Europe and Japan as well as
here. The recent changes in exchange rates in the
industrial world certainly provide greater incen
285
tives for exports of the developing countries to
shift to Europe and Japan. At the same time,
imports by the developing world from the United
States have become much more price competitive than a year or two earlier.
THE DEBT
SITUATION
I cannot neglect emphasizing one further continuing threat to growth and financial stability
involving the developing countries. Management
of the debt problems of Latin America and some
other developing countries is again at a critical
stage. The reason is not that progress is absent.
To the contrary, most of the heavily indebted
countries have been growing—if for the most
part far below their potential—debt burdens are
tending to move lower relative to exports or
other measures of capacity to pay, and new
financing needs have been reduced. Perhaps
most encouraging, there has been definite, if
sometimes hesitant, progress toward liberalizing
trade, opening markets, and reducing internal
economic distortions, with the World Bank playing a particularly helpful role.
At the same time, any failure of the industrialized countries collectively to achieve a satisfactory rate of growth would clearly impair prospects for the developing countries to find the
markets they need. More immediately, in recent
months, the process of reaching agreement on
adequately supportive and timely financing programs, whether by restructuring existing debts or
by arranging what new loans are necessary, has
conspicuously slowed.
In their particulars, the reasons are as varied
as the complexity of the individual financing
programs themselves, most of which require the
agreement of hundreds of banks around the
world. In some instances, policy setbacks in the
borrowing countries have complicated the task.
But I also suspect the very fact that progress has
been made over the past five years—most evidently in reducing the exposure of banks relative
to capital to something like half of what it was in
1982—has had the unfortunate effect of dulling a
sense of urgency and cooperation by some. I do
not want to deny the progress. But to fail to carry
through on past efforts now would plainly jeopardize much of that success and threaten new
strains on the financial system.
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Federal Reserve Bulletin • April 1987
IMPLICATIONS
FOR U.S.
POLICY
Several key implications of all this for the United
States should be clear.
First, the process of restoring external balance
requires first of all that we tend to our inescapable responsibilities to deal with our budget
deficit. That is not just because we are dangerously dependent on foreign savings but because
progress abroad is, as a practical matter, likely to
be stymied without constructive leadership from
the largest and the strongest nation. Should
we instead resort to closing our markets, be
indifferent to the depreciation of our own currency, and permit inflationary forces to regain the
upper hand, then there would be no basis for
confidence in the United States. Prospects for
effective complementary action abroad, or for
growth for the world economy, would be dim
indeed.
Second, we have to recognize that the needed
adjustments will require a relative shift of financial and real resources into internationally competitive industry and away from consumption
and federal deficits. Without a sharp rise in
overall productivity from the rate of 1 percent or
so characteristic of most of the 1970s and
1980s—and I see no reason to suggest that trend
will change abruptly—the recent rate of increase
in consumption is simply unsustainable for long.
Instead, more of our growth will need to be
reflected in net exports and business investment,
and less savings will be available to finance
government.
Fortunately, performance with respect to productivity growth and restraint on costs in the key
manufacturing sectors has been relatively strong
during the period of economic expansion. That
reinforces prospects for a stronger competitive
position internationally. The challenge will be to
maintain that performance in the face of a depreciated currency, higher import prices, and more
sizable needs for new investment to meet domestic and export opportunities.
Finally, achieving these goals in the context of
sustained growth and reasonable price stability is
beyond the capacity of any single policy instrument. Quite obviously, monetary policy will
have a critical role to play. In doing so, it has the
potential advantage of more flexibility than other
policy instruments. But there will also be a heavy
premium on maintaining discipline and sound
judgment amid potentially conflicting criteria.
RAPID GROWTH OF MONEY AND
LIQUIDITY
Throughout 1986, monetary policy accommodated a relatively rapid growth in the various monetary aggregates; the narrowly measured money
supply—Ml—grew at a particularly rapid pace.
The discount rate was reduced four times by a
total of 2 percentage points, more or less in line
with reductions in market interest rates. The
degree of reserve pressures, measured by average adjustment borrowings of depository institutions from the Federal Reserve, was relatively
low throughout 1986, and has remained so since.
This generous provision of reserves and expansion in money took place in, and appeared
justified by, an environment of restrained economic growth and declining inflationary pressures. The latter, to be sure, was dramatically
and importantly reinforced by a temporary factor—the sudden collapse in the price of the
world's most important commodity, oil. But,
potentially more lasting indicators of inflationary
pressure—the rate of increase in workers' compensation and in prices of some services that
respond slowly to changes in the economic environment—were also trending downward. For
much of the year, most commodity prices other
than oil, measured in dollars, were falling despite
the depreciation of the dollar in the exchange
markets. Moreover, the sizable declines in longterm interest rates seemed to reflect some easing
of fears of a resurgence of inflationary pressures
in the future.
Nonetheless, the possibility of renewed inflation remains of concern both in the markets and
within the Federal Reserve. One potential channel for renewed inflationary pressures would be
an excessive fall of the dollar in the exchange
markets. At times during the past year, such
exchange rate considerations prompted particular caution in the conduct of policy. The timing of
operational decisions with respect to the discount rate or the provision of reserves was
affected; on occasion close coordination with the
actions of other central banks was particularly
important.
More generally, intensive analytic work during
the year suggested that much of the relatively
Statements to Congress
rapid growth in the various monetary aggregates
was closely related (with lags) to the rather sharp
declines in market interest rates late in 1985 and
the early months of 1986. The responsiveness of
money demand to changes in interest rates is a
well-established phenomenon. What is new in
the present institutional setting is the increased
sensitivity of that relationship, most particularly
for Ml. Today, interest rates paid on transaction
accounts widely used by individuals are close to
rates paid on competing financial instruments.
That is because interest rates on those accounts
have not declined nearly as much as market rates
or those on longer-term deposit accounts. Consequently, there has been a strong incentive to
transfer funds to negotiable order of withdrawal
(NOW), and to some extent savings, accounts
and away from other, less liquid instruments.
Demand deposits, which are largely held by
businesses and pay no interest, also grew substantially more rapidly than in earlier years. In
part, that was also a reflection of declining
market rates; banks demanded larger balances in
compensation for services provided businesses,
and depositors found alternative uses of liquid
balances relatively less attractive.
Because of its composition, Ml was particularly influenced by these shifts and grew 15 percent.
That was far in excess of the target set at the start
of the year, when the Federal Open Market
Committee drew attention to the uncertainties
surrounding that aggregate, and above any postwar historical experience as well.
Both M2 and M3 ended the year within—but
just within—their target ranges. Even so, the
increases of almost 9 percent were about as large
as most earlier years, when inflation and the rate
of economic growth were higher.
With inflation down and real growth moderate,
these rapid increases in monetary growth meant
that all measures of velocity (that is, the ratio of
nominal GNP to money) declined. That was
particularly evident in the case of M l ; the decline
in velocity of 9 percent was greater than in any
year since World War II.
While velocity often moves erratically in the
short run and a decline is typical of periods of
falling interest rates, last year extended and
amplified a pattern that has persisted since interest rates peaked in 1981 and 1982. The earlier
postwar upward trend in Ml velocity of about 3
287
percent per year—a trend established during a
period of generally rising inflation and interest
rates—clearly does not provide a reasonable
base forjudging appropriate Ml growth today.
Historically, there has been little or no trend in
M2 velocity. Even so the current level is historically a bit low relative to other periods of low or
declining interest rates.
All of this poses new questions in setting
monetary targets to help guide the conduct of
monetary policy. In the broadest terms, a leveling, and even some decline, in velocity could be
welcomed as an appropriate sign of growing
confidence in the value of holding money during
a period of disinflation. But explanations revolving around declining interest rates and greater
confidence in price stability beg the larger issue.
Not all the increases in money can be adequately explained by interest rate relationships,
nor can we be certain about what interest rate is
appropriate. Confidence is hard to win and easy
to lose. We need to be conscious of the fact that
the effects of excessive money creation on inflation may only be evident with lags—possibly
quite long.
As a consequence, we cannot avoid relying
upon a large element of judgment in deciding
what, considering all the prevailing circumstances, money growth is appropriate.
Obviously, so far as 1986 is concerned, the
FOMC made the judgment that relatively strong
growth in the aggregates, and particularly M l ,
could be accommodated consistent with the
more basic objectives of orderly growth and
price stability. Neither the rate of economic
growth, nor the margins of available resources,
nor underlying cost trends, nor the movement of
sensitive commodity prices suggested money
growth was setting in train renewed inflationary
forces.
The continuing rapid rate of debt throughout
the economy—running far above the rate of
economic growth since 1982—has raised one
warning flag. In one sense, the enormous volume
of purely financial activity, especially at yearend but also at times earlier, reinforced other
factors increasing the demand for money. But
from another point of view, the ready availability
of reserves and money was also a factor facilitating that same increase in financial activity.
The implicit dangers should be clear. More
288
Federal Reserve Bulletin • April 1987
leveraging of corporations, aggressive lending to
consumers already laboring under heavy debt
burdens, and less equity in homes all increase the
vulnerability of the economy to economic risk—
to higher interest rates, to recession, or to both.
The fact that after four years of expansion, many
measures of credit quality are tending to deteriorate rather than to improve, and that too many
depository institutions are strained, should be
warning enough.
Restraining more speculative uses of credit by
more restrictive monetary policy is, of course,
possible. But that blunt approach inevitably has
implications for all credit and for the real economy as well as for financial activity. It cannot
substitute for prudent appreciation of the risks in
highly aggressive lending by those engaged in
financial markets, reinforced and encouraged by
regulatory and supervisory approaches sensitive
to the potential problems.
THE APPROACH
TO 1987
In evaluating this experience, the Committee
remains highly conscious of the long historical
patterns that relate high rates of monetary
growth over time to inflation. Consequently, in
approaching 1987, it starts with the strong presumption that such growth should be moderated.
Reflecting that intent, the tentative target ranges
for M2 and M3 set out last July of 5Vi to SVi
percent were reaffirmed. While those ranges are
only slightly below those set a year earlier, the
Committee expects that the actual outcome
should be much closer to the middle of the range
(and near the anticipated growth in nominal
GNP), assuming interest rates prove to be more
stable than in recent years.
While anticipating much slower growth than in
1986, the Committee did not set out a specific
target range for M l . Given the developments of
recent years, uncertainty obviously remains
about the long-term relationship between Ml and
nominal GNP. That uncertainty about the trend
might be encompassed by a relatively wide target
range. However, the shorter-term sensitivity of
M l currently to interest rates and other economic and financial variables realistically would require so wide a range (or tolerance for movements outside its bounds) as to provide little
guidance for the FOMC's operational decisions
or reliable information for the Congress or for
market participants.
Instead, the Committee will monitor Ml closely in the light of other information, including
whether or not changes in that aggregate tend to
reinforce or negate concerns arising from movements in M2 and M3. More broadly, the appropriateness of changes in M l will depend upon
evaluation of the growth of the economy and its
sustainability and the nature of any emerging
price pressures. Among the important factors
influencing such judgments may be the performance of the dollar in the exchange markets.
I recognize that the success of that approach
rests on good judgment and a degree of prescience. It is justified only by the fact that setting
out a precise M l target—and weighing it heavily
in policy implementation, whatever the circumstances—would run greater risks for the economy.
I would point out that the sensitivity of Ml to
interest rates and other developments will not
always work in the direction of relatively high
growth. To the contrary, action to reduce the
rate of M l growth, promptly and substantially,
would be called for in a context of strongly rising
economic activity and signs of emerging and
potential price pressures, perhaps related to significant weakness of the dollar externally. In that
connection, the Committee explicitly reserves
the possibility, in making shorter-run operational
decisions from meeting to meeting, to use M l
along with M2 and M3 as a benchmark. Conversely, lower interest rates in a context of weak
growth and further progress toward reducing
inflation pressures would suggest an accommodative approach toward M l growth.
In fact, the statistical and other signals provided about economic activity and prices seldom are
unambiguous or have the same directional implications for policy. In evaluating the evidence as
it does appear, the Committee will naturally be
sensitive to the desirability of maintaining the
forward momentum of the economy, as well as
encouraging greater price stability. Quite obviously, our task in that respect will be eased to the
extent fiscal policy is consistent with the needed
internal and external adjustments.
Most members believe that GNP growth of 2VI
to 3 percent is now likely, although a few individual members have higher or lower projections.
Statements
Such growth should be consistent with continuing sizable gains in employment and a slight
downward tilt in the unemployment rate. Members also agree that the rate of price increase is
very likely to be greater than last year, essentially because oil prices are expected to average
higher and because of the virtual inevitability of
higher import prices. The forecasts bunch in the
3 to 3Vi percent area for the GNP deflator. That
would be about as low as in 1985 despite the
special factors working toward higher prices this
year.
So far as inflation is concerned, what is critical
is that such a bulge in prices related to identifiable temporary external developments not be
translated into a broad-based cumulative upward
movement. As you well know, just such a cumulative inflationary process started in the 1960s
and then extended well over a decade into the
1980s. It was eventually brought to an end, but
only with great effort and at considerable cost.
The scars of that experience remain.
Against that background, participants both in
financial markets and in business have persistently been skeptical of prospects for lasting
price stability in making investment and pricing
decisions. They are bound to be alert and responsive to any sense of adverse change in the
underlying inflation trend, with implications for
interest rates, exchange rates, and pricing policies. The consequences for the economy would
clearly be undesirable.
In effect, neither the internal nor the external
setting permits thinking of trading off more inflation for more growth. Nor would inflation ease
the problem of international adjustment; quite to
the contrary, it would both undercut some of our
competitive gains and threaten the orderly inflow
of funds from abroad. The implications for caution in the conduct of monetary policy are evident.
CONCLUDING
COMMENTS
In sum, we face, at one and the same time, most
difficult and most promising economic circumstances.
They are difficult because there are obvious
289
distortions and imbalances within our economy
and internationally. Unless dealt with forcibly
and effectively, those imbalances will impair
both growth and price stability—and the adverse
implications will be amplified by the effects on
other countries. Moreover, those imbalances will
not yield to any single instrument of policy,
however wisely conducted. Instead, what are
required are complementary actions here and
abroad—on budgets, on monetary policies, and
on maintaining appropriate exchange rates and
an open trading order.
I know none of that is easy. Many countries
are involved, and all of them have tough political
decisions to make. Nor are the key decisions
entirely in the hands of governmental authorities.
American industry, in particular, has the challenge to build upon the efforts of recent years
toward effective control of costs and greater
efficiency, and to seek out and exploit the greater
market opportunities that exist today. Banks
around the world, despite the frustrations building over time, will need to maintain and reinforce
their efforts to deal cooperatively and constructively with the pressing debt problems of their
borrowers at home and abroad.
From one point of view, it may seem like a lot
to ask. But equally, there is a lot to be gained.
We already have achieved a long economic
expansion. We have managed to combine that
expansion with progress toward price stability—
and that progress has made possible lower interest rates. Financial markets more generally reflect renewed confidence. And the broad outline
of policies that can preserve and extend those
gains are by now well known.
To fail to act upon those policies—to instead
retreat into protectionism, to relax on inflation,
to fail to deal with the deficit—may in some ways
appear to be the course of least resistance. But
those are also precisely the ways by which we
would turn our back to the bright promise before
us.
It is only a concerted effort here and abroad
that will extend and reinforce the economic
expansion, consolidate the progress toward price
stability, and provide the international environment in which all countries can prosper.
•
Chairman Volcker presented identical testimony before the House Committee
and Urban Affairs, February 26, 1987.
to Congress
on Banking,
Finance
290
Federal Reserve Bulletin • April 1987
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve
System,
before the Committee on the Budget, U.S. Senate, February 24, 1987.
I appreciate the opportunity to appear before this
committee today. As you know, the Federal
Reserve submitted its semiannual monetary policy report to the Congress last week. That report,
which we have distributed to you, describes in
detail our plans for monetary policy, including
the Federal Open Market Committee's ranges for
growth of money and credit. My prepared remarks this morning will be confined to more
general considerations of domestic and international economic policies within the context of
recent and prospective developments.
THE ECONOMIC
SETTING
The current economic expansion—now extending into its fifth year—is already among the
longest in peacetime history. It is unusual in
other respects as well, including the absence of
certain signs of cyclical excesses that often develop after years of expansion. For instance,
inventories have been held well within past relationships to sales, and spending by manufacturers for plant and equipment has, if anything,
been restrained relative to prospective needs.
While the overall rate of economic growth has
been rather moderate since mid-1984, averaging
about 2Vi percent per year, that growth has been
maintained despite strong pressures on sizable
sectors of the economy. Oil exploration and
development activity and agricultural prices
have both been heavily affected by worldwide
surpluses. Commercial construction in many areas is suffering from earlier overbuilding. Regions of the country in which those impacts have
been particularly large have thus remained relatively depressed. Difficult as those regional conditions have been, however, many of the necessary adjustments are well advanced, and other
areas of the economy have been moving strongly
ahead.
More importantly, both the inflation rate and
interest rates, after four years of expansion, are
substantially lower than when the recovery start
ed. Homebuilding is being well maintained, and
both capital and labor appear available to support further growth for some time without undue
strain on resources. Certainly, conditions in financial markets, with stock prices exuberant and
interest rates generally as low as at any time
since the mid-1970s, appear supportive of new
investment.
But if the traditional indicators of cyclical
problems are largely absent, it is also evident
that the economy is struggling with structural
distortions and imbalances that, for us, have
little precedent. Economic activity over the past
two years has been supported largely by consumption. That has been at the expense of reduced personal saving rates that, by world standards, were already chronically low. At the same
time, the huge federal deficit is absorbing a
disproportionate amount of our limited savings.
For a time, we have largely escaped the adverse consequences for financial markets of that
insidious combination of low saving rates and
high federal deficits by drawing on capital from
abroad—the flow of which in 1986 actually exceeded all the savings by U.S. households. The
other side of that coin, however, is a massive
trade and current account deficit, restraining
growth in manufacturing generally and incentives for the industrial investment that we will
need in the years ahead.
The simple facts are that we are spending more
than we produce and that we are unable to
finance at home both our investment needs and
the federal deficit. Those conditions are not
sustainable for long—not when, as at present,
the influx of capital from abroad cannot be traced
to a surge in productive investment.
It is not sustainable from an economic perspective to pile up foreign debts while failing to
make the investment that we need both to generate growth and to earn the money to service the
debts.
It is not supportable politically, as the pressures on our industrial base are transmuted into
demands for protection.
Ultimately it will not be supportable from an
international perspective either, as the confidence that underlies the flow of foreign savings
will be eroded.
Sooner or later, the process will stop. The only
question is how.
Statements
THE BROAD POLICY
APPROACH
In concept, we could shut off the flow of imports
by aggressive, broad-brush protectionist measures. But the result would be to drive up the rate
of inflation and interest rates here, to damage
growth abroad, and to invite retaliation. Instead
of sustained and orderly growth, we would invite
worldwide recession.
We could try to drive the dollar much lower—
or complacently sit back while the market forces
produce that result. But that too would undermine the hard-won gains against inflation, and
would risk dissipating the flow of foreign capital
that we, for the time being, need. The stability of
financial markets would be jeopardized, and export prospects could be undercut by adverse
effects on growth abroad.
Both of those courses were specifically rejected by the finance ministers and Central Bank
governors at their meeting in Paris last weekend.
Faced with similar circumstances, many smaller countries might reasonably embark upon
strong austerity programs—indeed sooner or later they would be forced to undertake such programs. Large doses of fiscal and monetary restraint would be taken, risking recession in the
short run, but also anticipating that exports
would respond vigorously, imports would decline, and their economies would soon resume
growth on a much sounder footing. But, in the
context of sluggish growth of the world economy, for the United States to take that course
would entail particularly high risks and the results would be problematical at best.
There is a reasonable alternative. It is more
complicated, but at the same time much more
promising.
We can draw upon a combination of policy
instruments to encourage the needed adjustments. Results may take time. But those results
will come with greater certainty—and they
should be consistent with maintaining growth
here and abroad, with progress toward underlying price stability, and with open markets.
That is, in fact, the course on which we
collectively are embarked, and the course that
was endorsed at the meetings in Paris.
To be sure, its success will require an unusual
combination of discipline, patience, and international cooperation. However, given the stakes
to Congress
291
not just for the United States but for others, I do
not think there is any real choice.
Important steps have already been taken in the
needed directions. Most obviously, the value of
the dollar vis-a-vis the currencies of other industrialized countries has declined substantially,
placing our industry in a much stronger competitive position. The volume of exports is rising,
despite relatively slow growth abroad. The deterioration in the trade deficit overall appears to
have been stemmed, even if clear evidence of a
reversal is still lacking. Moreover, while the
depreciation of the dollar inevitably carries in its
train rising import prices, we have been fortunate
that the initial impact on the overall price level
was more than offset by falling oil and other
commodity prices. The underlying inflation rate,
measured by trends in wages relative to productivity, has continued to fall.
Given the size of the adjustments in the exchange rate already made among the major countries, there is a point beyond which further
instability would damage both our objectives and
those of our trading partners. Against that background, the ministers and governors of the leading industrialized countries collectively agreed
last weekend that "their currencies are within
ranges broadly consistent with underlying economic fundamentals" on the assumption certain
broad economic policies are carried out.
We have been fortunate that the flow of capital
from abroad, buoyed by the rising stock and
bond markets here and by some declines in
interest rates abroad, was well maintained as the
dollar depreciated. Nevertheless, as we succeed
in reducing our current account deficit, the net
capital inflow will decline as well. That emphasizes the critical importance of one of the policy
assumptions referred to in the weekend statement—that the United States move ahead with
further reductions in the federal budget deficit,
which absorbs so much of our own savings.
The progress being made in that direction this
year is heartening. But that can only be a start.
The projected reduction of $40 billion to $50
billion this year is from a record high deficit of
more than $220 billion in fiscal 1986—more than
5 percent of the gross national product—and it is
being assisted by some temporary factors. Progress next year will be harder.
Success, in my mind, will require a reasonably
292
Federal Reserve Bulletin • April 1987
steady downward pace in the deficit as the
economy grows—and that progress will need to
be maintained by measures that can be sustained, year after year. Failing that, it is hard to
see how a sustained decline in the trade deficit, if
possible at all in the face of huge budget deficits,
will bring net benefit to the economy. The clear
implication would be congested capital markets,
higher interest rates, strong inflationary dangers,
and threats to growth.
INTERNATIONAL
CONSISTENCY
Inevitably, because we loom so large in the
world economy, marked improvement in our
trade balance will be matched by noticeable
deterioration elsewhere. Appropriately, that
should take place largely in the major countries
with exceptionally large surpluses—notably Japan and Germany, both of which are now experiencing some decline in real net exports. That
process cannot take place smoothly and effectively unless those countries and others are able
to maintain a strong momentum of internal demand.
For years, those countries have been dependent for growth mainly on high and rising export
surpluses. In both instances, some shift toward
domestic demand was apparent in 1986, encouraged partly by some relaxation of monetary
policies. That points in the needed direction.
Again, the Paris statement provided an indication of the intent of Japan and Germany, along
with others, to sustain growth by stimulating
domestic demand if necessary.
What is critical from a world perspective is not
the precise nature of these measures or their
exact timing, but that, at the end of the day,
those countries are successful in maintaining a
strong momentum of growth even as they absorb
more imports from the rest of the world.
Some newly industrialized countries also have
clear responsibilities for contributing to a better
world balance. Taiwan and Korea, in particular,
have, or are building, external surpluses that are
large even by the standards of the traditional
industrial powers. Part of that reflects a strong
competitive position, but both also maintain a
strong wall of protectionist barriers. The very
strength of their external positions points—in the
interests of their own citizens as consumers, as
well as of world equilibrium—to the need for
more forceful action to increase imports, whether by reducing tariffs, by lifting other trade
restrictions, or by exchange rate changes.
Success in these efforts, I must emphasize,
will not necessarily or primarily be measured by
changes in our own bilateral trade vis-a-vis particular countries. An open competitive trading
order is by its nature multilateral, and we and
others should judge equilibrium in a worldwide
context.
In that connection, most of the developing
world, already carrying heavy debt burdens, is in
no position to revalue currencies or to absorb
much higher imports (from the United States or
from others) without more or less parallel increases in their exports. In recent years, however, the United States has, in fact, absorbed the
great bulk of what increase in exports Latin
America has had—their exports to Europe and
Japan have apparently increased little if at all.
For us to close our markets to them now would
assuredly thwart prospects for expansion, and
with it the encouraging progress that has been
made toward both more open, competitive economies and political democracy. What is needed
instead is greater access by those countries to
growing markets in Europe and Japan as well as
here. The recent changes in exchange rates in the
industrial world certainly provide greater incentives for exports of the developing countries to
shift to Europe and Japan. At the same time,
imports by the developing world from the United
States have become much more price competitive than a year or two earlier.
THE DEBT
SITUATION
I cannot neglect emphasizing one further continuing threat to growth and financial stability
involving the developing countries. Management
of the debt problems of Latin America and some
other developing countries is again at a critical
stage. The reason is not that progress is absent.
To the contrary, most of the heavily indebted
countries have been growing—if for the most
part far below their potential—debt burdens are
tending to move lower relative to exports or
other measures of capacity to pay, and new
Statements
financing needs have been reduced. Perhaps
most encouraging, there has been definite, if
sometimes hesitant, progress toward liberalizing
trade, opening markets, and reducing internal
economic distortions, with the World Bank playing a particularly helpful role.
At the same time, any failure of the industrialized countries collectively to achieve a satisfactory rate of growth would clearly impair prospects for the developing countries to find the
markets they need. More immediately, in recent
months, the process of reaching agreement on
adequately supportive and timely financing programs, whether by restructuring existing debts or
by arranging what new loans are necessary, has
conspicuously slowed.
Now, the largest of the debtor countries, Brazil, after a period of strong expansion, large trade
surpluses, and greater price stability, is again
experiencing pronounced inflationary pressures
and economic difficulties. Its suspension of most
external interest payments to private creditors
underscores the urgency of coming to grips with
its internal economic difficulties as well as developing an appropriate financing program. I suspect that the very fact that progress has been
made over the past five years—until recently in
Brazil as in a number of other countries and most
evidently in reducing the exposure of banks
relative to capital to something like half of what it
was in 1982—has had the unfortunate effect of
dulling a sense of urgency and cooperation in
dealing with the remaining problems. I do not
want to deny the progress. But to fail in carrying
through on past efforts or in dealing with the new
points of strain would plainly jeopardize past
successes and threaten new strains on the financial system.
IMPLICATIONS
FOR U.S.
POLICY
Several key implications of all this for the United
States should be clear.
First, the process of restoring external balance
requires first of all that we tend to our inescapable responsibilities to deal with our budget
deficit. That is not just because we are dangerously dependent on foreign savings but because
progress abroad is, as a practical matter, likely to
be stymied without constructive leadership from
to Congress
293
the largest and strongest nation. Should we instead resort to closing our markets, be indifferent
to depreciation of our own currency, and permit
inflationary forces to regain the upper hand, then
there would be no basis for confidence in the
United States. Prospects for effective complementary action abroad, or for growth for the
world economy, would be dim indeed.
Second, we have to recognize that the needed
adjustments will require a relative shift of financial and real resources into internationally competitive industry and away from consumption
and federal deficits. Without a sharp rise in
overall productivity from the rate of 1 percent or
so characteristic of most of the 1970s and
1980s—and I see no reason to suggest that trend
will change abruptly—the recent rate of increase
in consumption is simply unsustainable for long.
Instead, more of our growth will need to be
reflected in net exports and business investment,
and less savings will be available to finance
government.
Fortunately, performance with respect to productivity growth and restraint on costs in the key
manufacturing sectors has been relatively strong
during the period of economic expansion. That
reinforces prospects for a stronger competitive
position internationally. The challenge will be to
maintain that performance in the face of a depreciated currency, higher import prices, and more
sizable needs for new investment to meet domestic and export opportunities.
Finally, achieving these goals in the context of
sustained growth and reasonable price stability is
beyond the capacity of any single policy instrument. Quite obviously, monetary policy will
have a critical role to play. In doing so, it has the
potential advantage of more flexibility than other
policy instruments. But there will also be a heavy
premium on maintaining discipline and sound
judgment amid potentially conflicting criteria.
MONETARY
POLICY
Looking back, monetary policy has accommodated a relatively rapid growth in the various
monetary aggregates for some time; in 1986, the
discount rate was reduced four times by a total of
2 percentage points, more or less in line with
reductions in market interest rates.
294
Federal Reserve Bulletin • April 1987
This generous provision of reserves and expansion in money took place in, and appeared
justified by, an environment of restrained economic growth and declining inflationary pressures. The latter, to be sure, was dramatically
and importantly reinforced by a temporary factor—the sudden collapse in the price of the
world's most important commodity, oil. But,
potentially more lasting indicators of inflationary
pressure—the rate of increase in workers' compensation and in prices of some services that
respond slowly to changes in the economic environment—were also trending downward. For
much of the year, most commodity prices other
than oil, measured in dollars, were falling despite
the depreciation of the dollar in the exchange
markets. Moreover, the sizable declines in longterm interest rates seemed to reflect some easing
of fears of a resurgence of inflationary pressures
in the future.
Nonetheless, the possibility of renewed inflation remains of concern both in the markets and
within the Federal Reserve. One potential channel for renewed inflationary pressures would be
an excessive fall of the dollar in the exchange
markets.
Moreover, the continuing rapid expansion of
debt throughout the economy—running far
above the rate of economic growth since 1982—
has raised one warning flag. The implicit dangers
should be clear. More leveraging of corporations, aggressive lending to consumers already
laboring under heavy debt burdens, and less
equity in homes all increase the vulnerability of
the economy to economic risk—to higher interest rates, to recession, or to both. The fact that,
after four years of expansion, many measures of
credit quality are tending to deteriorate rather
than improve, and that too many depository
institutions are strained, should be warning
enough.
As we look ahead, the Federal Reserve remains highly conscious of the long historical
patterns that relate high rates of monetary
growth over time to inflation.
In 1987, the effects of the depreciation of the
dollar and the rebound in oil prices are very
likely to be reflected in somewhat larger increases in consumer prices than occurred last
year. What is critical is that such a bulge in prices
related to identifiable temporary external devel
opments not be translated into a broad-based
cumulative upward movement. As you well
know, just such a cumulative inflationary process started in the 1960s and then extended well
over a decade into the 1980s. It was eventually
brought to an end, but only with great effort and
at considerable cost. The scars of that experience remain.
Against that background, participants both in
financial markets and in business have persistently been skeptical of prospects for lasting
price stability in making investment and pricing
decisions. They are bound to be alert and responsive to any sense of adverse change in the
underlying inflation trend, with implications for
interest rates, exchange rates, and pricing policies. The consequences for the economy would
clearly be undesirable.
In effect, neither the internal nor external
setting permits thinking of trading off more inflation for more growth. Nor would inflation ease
the problem of international adjustment; quite to
the contrary, it would both undercut some of our
competitive gains and threaten the orderly inflow
of funds from abroad. Naturally, in the conduct
of monetary policy, we will want to encourage
continuing economic expansion. But we also
want to see as long an expansion as possible. To
that end, the threat of renewed inflation will
require continuing caution to avoid excessive
increases in money and credit. Clearly, further
sizable declines in the federal budget deficit will
make our job in the Federal Reserve easier.
CONCLUDING
COMMENTS
In sum, we face, at one and the same time, most
difficult and most promising economic circumstances.
They are difficult because there are obvious
distortions and imbalances within our economy
and internationally. Unless dealt with forcibly
and effectively, those imbalances will impair
both growth and price stability—and the adverse
implications will be amplified by the effects on
other countries. Moreover, those imbalances will
not yield to any single instrument of policy,
however wisely conducted. Instead, what are
required are complementary actions here and
abroad—on budgets, on monetary policies, and
Statements to Congress
on maintaining appropriate exchange rates and
an open trading order.
I know none of that is easy. Many countries
are involved, and all of them have tough political
decisions to make. Nor are the key decisions
entirely in the hands of governmental authorities.
American industry, in particular, has the challenge to build upon the efforts of recent years
toward effective control of costs and greater
efficiency, and to seek out and exploit the greater
market opportunities that exist today.
From one point of view, it may seem like a lot
to ask. But equally, there is a lot to be gained.
We already have achieved a long economic
expansion. We have managed to combine that
expansion with progress toward price stability—
and that progress has made possible lower inter-
295
est rates. Financial markets more generally reflect renewed confidence. And the broad outline
of policies that can preserve and extend those
gains are by now well known.
To fail to act upon those policies—to instead
retreat into protectionism, to relax on inflation,
to fail to deal with the deficit—may in some ways
appear to be the course of least resistance. But
those are also precisely the ways by which we
would turn our back to the bright promise before
us.
It is only a concerted effort here and abroad
that will extend and reinforce the economic
expansion, consolidate the progress toward price
stability, and provide the international environment in which all countries can prosper.
•
296
Announcements
MEETING OF
CONSUMER ADVISORY
COUNCIL
The Federal Reserve Board announced that its
Consumer Advisory Council met on March 19
and 20, in sessions open to the public. The
Council's function is to advise the Board on the
exercise of the Board's responsibilities under the
Consumer Credit Protection Act and on other
matters on which the Board seeks its advice.
BANK HOLDING COMPANY SUPERVISION
MANUAL: NEW EDITION NOW
AVAILABLE
The Division of Banking Supervision and Regulation has completely updated, revised, and reformatted the Bank Holding Company Supervision Manual. The new inspection Manual
includes supervisory developments, policies,
and procedures through June 1986. The December 1986 publication is available for purchase at
$40.00 per copy by writing to Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551.
The new Manual implements the System's
intensified on-site inspection program that calls
for more frequent and in-depth inspections targeted to review certain larger and weaker organizations. The intensified inspection program was the
result of a Board policy statement issued in
October 1985 designed to strengthen, Systemwide, the supervision of banks and bank holding
companies. Besides strengthening on-site inspection activity, the policies also call for greater offsite surveillance, increased efforts to better communicate the results of inspections to the senior
management of bank holding companies, and the
use of limited and targeted inspections.
Other prominent new topics are the following:
the April 1985 Capital Adequacy Guidelines, the
November 1985 Board policy statement on cash
dividend payments, the revised inspection approaches to parent company cash flow and liquidity, the inspection review of funding policies, parent company supervision and control of
subsidiary lending and investment activities, use
and development of a consolidated plan, budgeting, risk management, securities lending, and
repurchase agreements. The nonbank activities
section of the Manual has also been expanded to
include the nonbank activities authorized by
Regulation Y through June 30, 1986. Those activities approved or denied by Board order and not
specifically authorized by Regulation Y are also
included.
The Manual includes an expanded table of
contents and an alphabetical index keyed to all of
the section and subsection titles and numbers,
allowing for easier identification and location of
selected topics. The numbering system has been
revised and expanded to allow for insertion of
new topics as the manual is periodically updated.
Comments and suggestions on the Manual content should be directed to the Director of
Banking Supervision and Regulation, Board of
Governors of the Federal Reserve System,
Washington, D.C. 20551.
PROPOSED
ACTIONS
The Federal Reserve Board requested comment
on a proposed risk-based capital framework for
banks and bank holding companies. Comment
should be received by the Board on this matter
by May 13, 1987.
The Federal Reserve Board also requested
comment on two notices that would be used by
financial institutions to notify their federal regulators of their status under the Government Securities Act of 1986. Comment must be received
by the Board by March 27.
The Federal Reserve Board has extended the
comment period on most of its proposals issued
297
on December 10, 1986, to reduce the risks on
large-dollar payment systems. The comment period has been extended from February 27 to
April 3 for the proposals concerning the risks
associated with book-entry securities transfers,
the reduction of existing levels for net debit caps,
the establishment of a "de minimis" cap category, and the adoption of limits on interaffiliate
Fedwire transfers. The comment period for the
proposed changes to the automated clearinghouse (ACH) procedures has been extended
from March 16 to April 3.
The Board also sought comment on the concept of charging a fee for all daylight overdrafts
in accounts maintained with the Federal Reserve
that are subject to the net debit cap. Comment is
requested by April 13.
The Federal Reserve Board also extended the
comment period to March 25 on its proposed
rulemaking to permit bank holding companies to
engage in limited real estate investment activities.
299
Record of Policy Actions of the
Federal Open Market Committee
MEETING HELD ON DECEMBER
Domestic
Policy
15-16,
1986
Directive
The information reviewed at this meeting suggested that economic activity was continuing to
expand at a moderate pace in the current quarter.
Payroll employment increased considerably in
October and November; hiring in manufacturing
rose somewhat in both months after declining on
balance since the beginning of the year. Apart
from sales of motor vehicles, which dropped off
with the end of financing incentive programs,
consumer spending has posted sizable gains in
recent months. Business investment spending,
however, has remained sluggish, while housing
starts have weakened. At the same time, the
trade balance has shown only limited indications
of improvement. Increases in labor costs still
were moderate, but price increases have been
somewhat higher than earlier in the year because
of developments in food and energy markets.
Total nonfarm payroll employment rose about
V4 million in both October and November. Much
of the gain was in the private service-producing
sector, but factory employment also rose moderately, and the workweek lengthened. Aggregate
hours for production and nonsupervisory workers in November were a full percentage point
above the third-quarter average. The civilian
unemployment rate stayed at 7 percent in November for the third consecutive month.
Gains in employment and hours worked were
associated with a sizable pickup in industrial
production in November. The industrial production index rose 0.6 percent last month, after
essentially no change over the previous three
months. Increases in output were evident in most
major marketing groups, with only energy materials showing a marked decline, although auto
assemblies were about unchanged from October.
Capacity utilization in manufacturing, mining,
and utilities rose 0.3 percentage point in November to 79.3 percent. Nonetheless, utilization has
changed little on balance since March and is 2XH
points below its most recent peak in the summer
of 1984.
Sales of domestic cars fell sharply after the
expiration of cut-rate financing incentive programs in early October. These sales averaged
less than 7 million units at an annual rate over the
October-November period, compared with the
strong 91/2 million unit pace for the third quarter
as a whole. Excluding autos, gasoline, and nonconsumer items, retail sales in November rose
0.9 percent paced by continued strength in purchases of furniture and appliances and in other
nonauto durables. In addition, data for earlier
months were revised upward slightly.
Business investment appears to have remained
sluggish. Shipments of nondefense capital goods
increased in October, and construction spending
has firmed in recent months, but prospects for
such spending have continued to be affected
adversely by high vacancy rates and reactions to
tax reform. In contrast, sales of heavy-weight
trucks fell markedly in October, and business
purchases of cars and light trucks also probably
declined sharply after the sales incentive programs ended. At the same time, new orders for
nondefense capital goods fell 5 percent. Initial
surveys of capital spending plans for 1987 suggested that overall nominal spending on plant
and equipment is likely to change little from the
1986 level.
Housing starts continued to decline in November. During the month total private housing
starts, at 1.6 million units, were a bit below the
reduced pace of September and October. Singlefamily starts were virtually unchanged from their
rate during the preceding two months, but were
below their level earlier in the year; new home
300
Federal Reserve Bulletin • April 1987
sales also have remained below their previous
pace in recent months. Multifamily starts declined further in November in response to high
vacancy rates and adverse changes in tax laws.
Price increases, although still moderate, have
been somewhat higher than earlier in the year
partly because of developments in food and
energy markets. The consumer price index rose
0.2 percent in October and the producer price
index was up 0.2 percent in November. In the
food sector, some upward price pressure continued to be evident, although increases in food
prices slowed from the rapid pace during the
summer. In addition, energy prices turned down
a bit at both the retail and refinery levels, despite
the firming of crude oil prices in spot markets
since midsummer. Excluding food and energy,
the CPI rose 0.4 percent in October, somewhat
faster than earlier in the year as new car prices
increased sharply. Wage inflation has picked up
a bit recently, but has continued at a moderate
pace.
The trade-weighted value of the dollar against
other G-10 currencies has declined somewhat on
balance since the November 5 meeting of the
Committee. Exchange rates have been affected
by news about the pace of economic activity,
developments in the U.S. trade balance, and
prospects for monetary actions in the United
States and in key industrial nations abroad.
Short-term interest rates rose moderately
abroad, about in line with movements in U.S.
rates, while differentials in long-term interest
rates moved slightly against dollar assets. Over
the period, the dollar declined about 2 percent
against the mark and was essentially unchanged
against the yen, but the dollar's depreciation had
been somewhat larger in early December. As of
mid-December, the value of the dollar in relation
to other major currencies was little changed on
balance from the level prevailing in August.
Economic activity in major foreign industrial
countries was mixed in the third quarter. The
U.S. merchandise trade deficit was estimated to
be about the same in the third quarter as in the
previous three quarters. Exports were flat in the
quarter, while the value of oil imports was close
to that in the second quarter as price declines
about offset volume increases. Very preliminary
data indicated that the deficit in October was the
smallest in recent months as exports of agricultural products rose somewhat and imports declined moderately.
At its meeting on November 5, the Committee
adopted a directive that called for maintaining
the existing degree of pressure on reserve positions. This action was expected to be consistent
with growth in both M2 and M3 at annual rates of
7 to 9 percent from September to December.
Growth in Ml over the same period was expected to moderate from its exceptional pace during
the previous several months. The Committee
agreed that the growth in Ml would continue to
be evaluated in light of the behavior of the
broader monetary aggregates and other factors.
The members also decided that slightly greater or
slightly lesser reserve restraint might be acceptable depending on the behavior of the monetary
aggregates, taking into account the strength of
the business expansion, developments in foreign
exchange markets, progress against inflation,
and conditions in domestic and international
credit markets. The intermeeting range for federal funds was maintained at 4 to 8 percent.
M2 growth slowed substantially in November
to a 6V2 percent annual rate, and M3 growth
moderated further to a 5V2 percent annual rate;
through November both M2 and M3 were just
inside the upper bounds of their 6 to 9 percent
growth ranges established by the Committee for
1986. Ml accelerated again in November, reaching a rate of 21 percent, as growth in demand
deposits surged. Ml growth has remained far in
excess of GNP growth so far this year and its
velocity is expected to fall at a historically high
rate.
Growth of total reserves picked up sharply
over the intermeeting period largely because of a
surge in required reserves against transaction
deposits. In addition, excess reserves increased
from almost $750 million in the previous three
months to around $1 billion on average in November, reflecting mainly the usual patterns
around holidays and social security payment
dates. Adjustment plus seasonal borrowing in the
two complete maintenance periods since the
November FOMC meeting averaged about $300
million, down somewhat from the average over
the previous intermeeting period. Even so, the
funds rate firmed from around 5Vs percent at the
Record of Policy Actions of the FOMC
time of the last meeting to well above 6 percent in
early December. More recently, the federal
funds rate has averaged close to 6 percent.
With the federal funds rate firmer through
much of the intermeeting period, other shortterm market rates rose 15 to 50 basis points.
However, bond yields generally were about unchanged to down 25 basis points. Rates on commitments for fixed-rate home mortgages dropped
about Vi percentage point, moving toward a more
normal alignment with Treasury bond yields.
Although stock prices fell initially on the announcement of insider trading violations related
to takeover activity, on balance they showed
little change over the period.
The staff projections presented at this meeting
suggested that real GNP would continue to grow
at a moderate rate through the end of 1987.
Prospects for an improvement in real net exports
of goods and services continued to be a key
element shaping the 1987 forecast; export growth
was expected to accelerate next year and import
growth to moderate as world trade flows adjusted to increased U.S. competitiveness. Gross
domestic purchases were projected to be relatively sluggish through the end of 1987, reflecting
mainly a shift toward fiscal restraint, the likely
weakness in multifamily housing and nonresidential construction, and the damping influence of
higher import prices on the growth of real income
and consumption. Inflation was expected to pick
up a bit in early 1987 as a consequence of the
dollar's depreciation and higher energy prices.
In the Committee's discussion of current and
prospective economic developments, members
generally agreed that continuing expansion at a
moderate pace remained a reasonable expectation for the year ahead, but a number of members
emphasized the risks of a shortfall from current
projections, especially in the early part of 1987.
In particular, members mentioned the risks that
the expected improvement in the nation's foreign
trade might be relatively disappointing next year
and that overall business spending might remain
sluggish. A few members also referred to the
possibility of slower growth in consumer spending. On balance, however, while no important
sector of the domestic economy seemed likely to
be a source of substantial strength in 1987, the
members read current economic indicators and
301
other business information as pointing to a fifth
year of moderate expansion. Such expansion
might be accompanied by some rise in the rate of
inflation, primarily reflecting the effects of the
dollar's depreciation and energy-sector developments.
The members again gave considerable attention to the outlook for foreign trade. An improvement in trade generally was viewed as an essential factor in sustaining a moderate rate of
business expansion in the context of perhaps
diminishing growth in overall domestic demands.
Unfortunately, there was no convincing evidence thus far of a turnaround in the trade
balance, and a number of members commented
that the expected improvement could be relatively limited next year. On the favorable side, the
depreciation of the dollar evidently had enhanced the competitive position of U.S. firms,
and individual reports of expanding export opportunities appeared to be multiplying as well as
indications of an improved ability of many U.S.
firms to compete domestically with imports. As
they had at earlier meetings, the members referred to a number of factors that were inhibiting
an overall improvement in net exports, including
limited expansion in many industrial nations
abroad and strong competition from a number of
countries whose currencies had not appreciated
against the dollar. One member also stressed that
persisting debt problems in several developing
countries constituted an element of vulnerability
for international financial markets and international trade and also for the U.S. economy.
With regard to the domestic economy, a number of members commented that consumer expenditures on durables, especially automobiles,
and some business spending appeared to have
been accelerated into 1986 in reaction to provisions of the tax reform legislation. Compensating
adjustments in such spending later could have a
restraining effect on economic growth, notably
during the first part of 1987. Nonetheless, a few
members referred to the possibility that consumer spending might be well maintained during 1987
as a whole. The latter acknowledged the inhibiting effects of the growth in consumer debt, but
they stressed the favorable implications of cumulative increases in the total assets and net worth
of consumers and the positive impact of reduc-
302
Federal Reserve Bulletin • April 1987
tions in personal income tax rates. The outlook
for business spending continued to be uncertain
and in some respects unpromising, especially
with regard to multifamily housing and nonresidential construction; both areas would be adversely affected by high vacancy rates and negative reactions to the tax reform legislation. There
were further reports of plant closings, notably in
the Midwest. However, one member observed
that business spending for plant and equipment
might well hold up in response to continuing
growth in overall economic activity. As usual,
the prospects for inventory accumulation were
uncertain and would be affected by the outlook
for prices.
With regard to the outlook for prices and
wages, members generally agreed that increases
might be somewhat larger in 1987, reflecting the
impact of rising import prices and indications of a
turnaround in oil prices. However, the prospect
of only moderate economic growth and continued margins of slack in labor and product markets suggested that strong wage pressures were
not likely over the year ahead. One member
observed that agricultural conditions worldwide
suggested an absence of pressure on food prices.
Moreover, generally limited growth in key industrial nations together with an ample availability
of productive resources abroad implied continuing strong competitive pressures and restrained
advances in prices of U.S. imports. Even so, a
somewhat higher rate of inflation appeared to be
in prospect for next year.
At its meeting in July, the Committee had
agreed on tentative ranges of 5V2 to 8V2 percent
for growth in both M2 and M3 during the period
from the fourth quarter of 1986 to the fourth
quarter of 1987. The associated range for growth
in total domestic nonfinancial debt was set at 8 to
11 percent for 1987. In the case of Ml the
Committee had indicated on a more tentative
basis than usual that it might retain the 1986
range of 3 to 8 percent for 1987. Such a range
implied a marked reduction from the Ml growth
experienced in 1986 and provisionally assumed
that the relationship of Ml to income, interest
rates, and other economic variables next year
would be broadly consistent with earlier historical experience.
At this meeting the Committee held a prelimi-
nary discussion of the factors bearing on appropriate ranges for the various monetary aggregates in 1987. Most of the attention was devoted
to the issue of whether a range should be established for M l , given the uncertainty surrounding
behavior of that aggregate and its velocity in
recent years. While most members currently did
not favor establishing a formal target range for
Ml growth in 1987, many of them believed that
this aggregate should continue to be monitored
or evaluated in light of information about the
economy, prices, and the broad monetary aggregates and other financial variables. The Committee will complete its review of the role of Ml and
the ranges for the broad aggregates for 1987 at its
February meeting.
In the Committee's discussion of policy implementation for the period immediately ahead, all
of the members indicated that they were in favor
of directing open market operations, at least
initially, toward maintaining unchanged conditions of reserve availability. For now, monetary
policy was deemed to be exerting an appropriate
degree of pressure on reserve positions in light of
the growth of the broader monetary aggregates
within—though at the upper ends of—their longer-run ranges, and the generally favorable prospects for sustained, albeit moderate, economic
growth.
The members recognized that the outlook for
the monetary aggregates remained uncertain, notably in the case of M l . According to an analysis
presented at this meeting, a moderate trend in
the growth of M2 and M3 might be anticipated,
given the outlook for fairly limited growth in
economic activity and an abatement of the effects of earlier interest rate declines. For the
months ahead, growth in the broader aggregates
might be well within the Committee's tentative
ranges for 1987 on the assumption that there
would be no significant changes in market interest rates. The outlook for Ml growth remained
highly uncertain, although underlying forces
seemed consistent with a considerable slowing
over time from the extraordinary expansion experienced during 1986. Some concern was expressed that the failure of such a slowing to occur
and the associated large provision of reserves
could eventually have inflationary consequences. Even with some moderation over com-
Record of Policy Actions of the FOMC
ing months, Ml might continue to expand at
rates markedly in excess of the growth in nominal GNP. In view of the uncertainties that were
involved and in keeping with the Committee's
practice since mid-1986, the members did not
want to indicate specific expectations with regard to Ml growth in the operational paragraph
of the Committee's directive. Nonetheless, it
was understood that growth of this aggregate
would continue to be evaluated in light of the
behavior of the broader monetary aggregates and
other economic and financial developments.
In their discussion of possible intermeeting
adjustments in the degree of reserve pressure,
the members thought it unlikely that developments would warrant more than a minor, if any,
change in reserve conditions during the weeks
ahead. All of the members understood that some
small adjustment in either direction might be
appropriate under certain circumstances. However, in the context of what they perceived as
greater downside risks in the outlook for economic activity, several believed that policy implementation should remain especially alert to
developments that might call for somewhat easier reserve conditions. It was noted in this connection that the relative stability of the dollar in
foreign exchange markets over the past few
months provided greater flexibility for potential
easing actions.
At the conclusion of the Committee's discussion, all of the members indicated that they
favored a directive that called for no change in
the degree of pressure on reserve positions. The
members expected this approach to policy implementation to be consistent with growth of both
M2 and M3 at an annual rate of about 7 percent
over the four-month period from November to
March. Because the behavior of Ml remained
subject to unusual uncertainty, the members
decided they would continue to evaluate this
aggregate in the light of the performance of the
broader monetary aggregates and other factors.
The members indicated that slightly greater reserve restraint or somewhat lesser reserve restraint would be acceptable over the intermeeting period depending on the behavior of the
monetary aggregates, taking into account the
strength of the business expansion, the performance of the dollar in foreign exchange markets,
303
progress against inflation, and conditions in domestic and international credit markets. The
members agreed that the intermeeting range for
the federal funds rate, which provides a mechanism for initiating consultation of the Committee
when its boundaries are persistently exceeded,
should be left unchanged at 4 to 8 percent.
At the conclusion of the meeting, the following
domestic policy directive was issued to the Federal Reserve Bank of New York:
The information reviewed at this meeting suggests
that economic activity continues to grow at a moderate
pace in the current quarter. Total nonfarm payroll
employment grew appreciably further in October and
November, and employment in manufacturing also
rose after declining on balance in previous months.
The civilian unemployment rate remained at 7.0 percent in November for the third consecutive month.
Industrial production picked up considerably in November. Total retail sales rose moderately last month
after changing little on balance over September and
October. Housing starts have weakened and business
capital spending generally appears to have remained
sluggish. Preliminary data for the U.S. merchandise
trade deficit in October suggest a moderate narrowing.
Broad measures of prices have firmed somewhat in
recent months due to developments in food and energy
markets. Labor cost increases this year have remained
moderate compared with other recent years.
Growth of M2 slowed substantially in November,
while growth of M3 remained moderate. Expansion of
these two aggregates for the year through November
has been just below the upper end of their respective
ranges established by the Committee for 1986. In
November growth of Ml accelerated to a very rapid
rate. Expansion in total domestic nonfinancial debt
remains appreciably above the Committee's monitoring range for 1986. Short-term interest rates have risen
somewhat since the November 5 meeting of the Committee, while long-term rates have declined on balance. In foreign exchange markets the trade-weighted
value of the dollar against other G-10 currencies has
declined moderately on balance since the November
meeting.
The Federal Open Market Committee seeks monetary and financial conditions that will foster reasonable
price stability over time, promote growth in output on
a sustainable basis, and contribute to an improved
pattern of international transactions. In furtherance of
these objectives the Committee agreed at the July
meeting to reaffirm the ranges established in February
for growth of 6 to 9 percent for both M2 and M3,
measured from the fourth quarter of 1985 to the fourth
quarter of 1986. With respect to Ml, the Committee
recognized that, based on the experience of recent
years, the behavior of that aggregate is subject to
substantial uncertainties in relation to economic activi-
304
Federal Reserve Bulletin • April 1987
ty and prices, depending among other things on the
responsiveness of Ml growth to changes in interest
rates. In light of these uncertainties and of the substantial decline in velocity in the first half o f the year, the
Committee decided that growth of Ml in excess of the
previously established 3 to 8 percent range for 1986
would be acceptable. Acceptable growth of Ml over
the remainder of the year would depend on the behavior of velocity, growth in the other monetary aggregates, developments in the economy and financial
markets, and price pressures. Given its rapid growth in
the early part of the year, the Committee recognized
that the increase in total domestic nonfinancial debt in
1986 may exceed its monitoring range of 8 to 11
percent, but felt an increase in that range would
provide an inappropriate benchmark for evaluating
longer-term trends in that aggregate.
For 1987 the Committee agreed on tentative ranges
of monetary growth, measured from the fourth quartfer
of 1986 to the fourth quarter of 1987, of 5Vi to 8V2
percent for M2 and M3. While a range of 3 to 8 percent
for Ml in 1987 would appear appropriate in the light of
most historical experience, the Committee recognized
that the exceptional uncertainties surrounding the behavior of Ml velocity over the more recent period
would require careful appraisal of the target range at
the beginning of 1987. The associated range for growth
in total domestic nonfinancial debt was provisionally
set at 8 to 11 percent for 1987.
In the implementation of policy for the immediate
future, the Committee seeks to maintain the existing
degree of pressure on reserve positions. This action is
expected to be consistent with growth in M2 and M3
over the period from November to March at an annual
rate of about 7 percent. Growth in Ml will continue to
be appraised in the light of the behavior of M2 and M3
and the other factors cited below. Slightly greater
reserve restraint or somewhat lesser reserve restraint
would be acceptable depending on the behavior of the
aggregates, taking into account the strength of the
business expansion, developments in foreign exchange
markets, progress against inflation, and conditions in
domestic and international credit markets. The Chairman may call for Committee consultation if it appears
to the Manager for Domestic Operations that reserve
conditions during the period before the next meeting
are likely to be associated with a federal funds rate
persistently outside a range of 4 to 8 percent.
Votes for this action: Messrs. Volcker, Corrigan,
Angell, Guffey, Heller, Mrs. Horn, Messrs. Johnson, Melzer, Morris, and Ms. Seger. Votes against
this action: None. Absent and not voting: Mr. Rice.
305
Legal Developments
ORDERS ISSUED UNDER BANK HOLDING
COMPANY ACT, BANK MERGER ACT, BANK
SERVICE CORPORATION ACT, AND FEDERAL
RESERVE ACT
Orders Issued Under Section 3 of the Bank
Holding Company Act
Bellevue Capital Company
Bellevue, Nebraska
Order Approving Acquisition of a Bank
Bellevue Capital Company, Bellevue, Nebraska, a
bank holding company within the meaning of the Bank
Holding Company Act ("Act"), 12 U.S.C. § 1841
et seq., has applied for the Board's approval pursuant
to section 3(a)(3) of the Act, to acquire 99 percent of
the voting shares of Otoe County National Bank and
Trust Company, Nebraska City, Nebraska ("Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act (51
Federal Register 43,974 (1986)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act.
Applicant is a one-bank holding company by virtue
of its control of Bank of Bellevue, Bellevue, Nebraska
("Bellevue"). Applicant, with deposits of $43.8 million,1 is the 64th largest banking organization in Nebraska, controlling 0.3 percent of the total deposits in
commercial banking organizations in the state. Upon
consummation of this proposal, Applicant will become
the 27th largest commercial banking organization in
Nebraska and control deposits of $78.2 million, representing 0.6 percent of the total deposits in commercial
banking organizations in the state. Applicant's principal controls Bank and thus, this proposal represents a
reorganization of Bank's ownership from individuals
to a corporation controlled by the same individuals.
Accordingly, consummation of this proposal would
1. All banking data are as of D e c e m b e r 31, 1985.
not have any significant adverse effect upon the concentration of banking resources in the state.
Bank operates in the Otoe County banking market,2
where it is the largest of eight commercial banking
organizations, controlling 27.5 percent of the total
deposits in commercial banks in the market. Neither
Applicant nor any of its principals is associated with
any other commercial banking organization in the
relevant market. Consummation of this proposal
would not have any adverse effect on existing competition in any relevant market. Accordingly, considerations relating to competitive considerations under the
Act are consistent with approval.
The financial and managerial resources of Applicant, Bellevue, and Bank are consistent with approval.
This proposal is essentially a reorganization of existing
ownership interests, and no additional debt will be
incurred as a result of this transaction. The purpose of
the proposal is to permit Applicant to use certain tax
benefits that have accrued to Bank, which will enhance the debt-servicing capabilities of Applicant.
Considerations relating to the convenience and needs
of the communities to be served also are consistent
with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application 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 Kansas City pursuant
to delegated authority.
By order of the Board of Governors, effective
February 2, 1987.
Voting for this action: Vice Chairman Johnson and Governors Seger, Angell, and Heller. Absent and not voting:
Chairman Volcker.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
2. T h e O t o e County banking market is approximated b y O t o e
County, Nebraska.
306
Federal Reserve Bulletin • April 1987
Northfield Bancshares, Inc.
Northfield, Minnesota
Order Approving Formation of a Bank Holding
Company
Northfield Bancshares, Inc., Northfield, Minnesota,
has applied for the prior approval of the Board under
section 3 of the Bank Holding Company Act of 1956,
as amended (12 U.S.C. § 1841 et seq.) (the "Act"), to
acquire 100 percent of the voting shares of First Bank
(N.A.) — Northfield, Northfield,
Minnesota
("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments and views, has
been duly published (51 Federal Register 43,974
(1986)). The time for filing comments has expired, and
the Board has considered the application and all
comments received in light of the factors set forth in
section 3(c) of the Act (12 U.S.C. § 1842(c)).
Applicant is a nonoperating corporation formed for
the purpose of acquiring Bank. Bank is the 153rd
largest commercial banking organization in Minnesota
with $29.7 million in total deposits, representing .09
percent of total deposits in Minnesota.1 Consummation of the proposal would not have a significant effect
on the concentration of banking resources in Minnesota.
Bank operates in the Northfield banking market,2
where it is the fourth largest commercial bank in the
market, controlling 9.04 percent of the deposits in
commercial banks in the market. Principals of Applicant are not affiliated with any other depository institution in the market. Based on all the facts of record,
consummation of this proposal would not result in any
significant adverse effects on existing or potential
competition or increase the concentration of banking
resources in any relevant area. Accordingly, the Board
concludes that competitive considerations are consistent with approval.
The Board has indicated on previous occasions that
a bank holding company should serve as a source of
financial and managerial strength to its subsidiary
banks, and that the Board would closely examine the
condition of an applicant in each case with this consideration in mind.3 This application represents the dives-
titure by First Bank System, Minneapolis, Minnesota
("First Bank System"), a large regional bank holding
company, of Bank to a small bank holding company.
Under these circumstances, the Board is particularly
concerned with the financial strength and future prospects of the bank to be divested, in part because of the
uncertainty associated with a change in ownership
from a large regional banking organization to a bank
holding company with substantially fewer resources to
support the bank.
These concerns are mitigated in this case by several
factors. First, First Bank System has agreed to retain
an investment in Applicant until Applicant's initial
leverage is reduced. Second, although Applicant will
incur a certain amount of debt in connection with the
proposed transaction, it appears that Applicant will
have sufficient flexibility to retire the debt without
adversely affecting the capital position of Bank. In
addition, in contemplation of this transaction, First
Bank System has taken steps to strengthen Bank's
loan portfolio. All of these factors are designed to
strengthen the acquiring organization and to facilitate
the transfer of Bank to new ownership, thus ensuring
that Bank will be financially protected following the
divestiture.
In light of these and other facts of record, the
financial and managerial resources and future prospects of Applicant and Bank are consistent with approval of the proposal. Considerations relating to the
convenience and needs of the communities to be
served are also consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The acquisition of Bank shall
not be consummated before the thirtieth calendar day
following the effective date of this Order, unless such
period is extended for good cause by the Board or by
the Federal Reserve Bank of Minneapolis, acting
pursuant to delegated authority.
By order of the Board of Governors, effective
February 13, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Angell. Absent and not voting: Governor Heller.
WILLIAM W . WILES
[SEAL]
1. D a t a are as o f June 30, 1985.
2. The Northfield banking market is approximated by Rice County
and the t o w n s h i p s of W a r s a w , H o l d e n , and K e n y o n in G o o d h u e
County.
3. The Bank Holding C o m p a n y A c t requires that before an organization is permitted to b e c o m e a bank holding c o m p a n y and thus obtain
the benefits associated with the holding c o m p a n y structure, it must
Secretary of the Board
secure the Board's approval. S e c t i o n 3(c) o f the A c t provides that the
Board must, in every c a s e , consider, a m o n g other things, the financial
and managerial resources of both the applicant c o m p a n y and the bank
to be acquired. The Board's action in this c a s e is based on a
consideration of such factors.
Legal Developments
State First Financial Corporation
Texarkana, Arkansas
Order Approving Acquisition of a Bank
State First Financial Corporation, Texarkana, Arkansas, has applied for the Board's approval under section
3(a)(3) of the Bank Holding Company Act ("Act")
(12 U.S.C. § 1842(a)(3)) to acquire American National
Bank, Texarkana, Texas ("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 (51
Federal Register 41,837 (1986)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)).
Section 3(d) of the Act, 12 U.S.C. § 1842(d), the
Douglas Amendment, prohibits the Board from approving an application by a bank holding company to
acquire a bank located outside the bank holding company's home state, 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."1
Effective January 1, 1987, Texas enacted an interstate banking statute that permits out-of-state bank
holding companies to acquire established Texas banks
and bank holding companies.2 The Texas Banking
Department has informed the Board that it has no
objection to this proposal. Based on the foregoing, the
Board has determined that the proposed acquisition is
specifically authorized by the statute laws of Texas
and thus Board approval is not prohibited by the
Douglas Amendment.
Applicant is the tenth largest banking organization
in Arkansas, operating two subsidiary banks with total
deposits of $295.7 million, representing 2.0 percent of
the total deposits in commercial banks in Arkansas.3
Bank is the 586th largest bank in Texas, with $56.0
million in deposits, representing less than one percent
of the total deposits in commercial banks in Texas.
Consummation of this proposal would not have a
significant adverse effect on the concentration of banking resources in Arkansas or Texas.
1. A b a n k h o l d i n g c o m p a n y ' s h o m e state f o r p u r p o s e s o f the
D o u g l a s A m e n d m e n t is that s t a t e in w h i c h the total d e p o s i t s o f its
b a n k i n g s u b s i d i a r i e s w e r e largest o n July 1, 1966, o r o n t h e date it
b e c a m e a b a n k h o l d i n g c o m p a n y , w h i c h e v e r d a t e is later. 12 U . S . C .
§ 1842. A p p l i c a n t ' s h o m e s t a t e is A r k a n s a s .
2. T e x . R e v . C i v . Stat. A n n . art. 3 4 2 - 9 1 6 ( V e r n o n 1986). T h e T e x a s
statute requires that t h e m a j o r i t y o f the d i r e c t o r s o f a n y b a n k b e T e x a s
residents.
3. B a n k i n g d a t a are a s o f D e c e m b e r 31, 1985, a n d reflect h o l d i n g
c o m p a n y acquisitions approved and mergers c o n s u m m a t e d through
O c t o b e r 31, 1986.
307
Applicant and Bank compete in the Texarkana market.4 Applicant is the largest of eight commercial
banking organizations in the market, controlling 32.7
percent of total deposits in commercial banking organizations in the market.5 Bank is the sixth largest
commercial banking organization in the market, controlling 6.4 percent of the total deposits in commercial
banks in the market. Upon consummation of the
proposal, Applicant's share of the deposits would
increase to 39.1 percent. The Texarkana market is
considered to be highly concentrated, with the four
largest commercial banks controlling 80.0 percent of
the deposits in commercial banks in the market. The
Herfindahl-Hirschman Index ("HHI") for the market
is 2035 and would increase by 418 points to 2453 upon
consummation of the proposal.6
Although consummation of the proposal would eliminate some existing competition between Applicant
and Bank in the Texarkana banking market, numerous
other commercial banking organizations would remain
as competitors in the market. In addition, the presence
of six thrift institutions, controlling approximately 33.4
percent of the market's total deposits,7 mitigates the
anticompetitive effects of the transaction.8 Thrift institutions already exert a considerable competitive influence in the market as providers of consumer, real
estate, and commercial loans in addition to traditional
thrift services. Based upon the above considerations,
the Board concludes that consummation of the proposal is not likely to substantially lessen competition in
the Texarkana banking market.9
The financial and managerial resources of Applicant, its subsidiary banks, and Bank are consistent
4. T h e T e x a r k a n a m a r k e t is a p p r o x i m a t e d b y t h e c o u n t i e s o f Miller
a n d Little R i v e r , A r k a n s a s , a n d B o w i e C o u n t y , T e x a s .
5. M a r k e t data are a s o f J u n e 30, 1986, a n d reflect k n o w n h o l d i n g
c o m p a n y acquisitions approved and mergers c o n s u m m a t e d through
D e c e m b e r 31, 1986.
6. U n d e r t h e r e v i s e d D e p a r t m e n t o f J u s t i c e M e r g e r G u i d e l i n e s (49
Federal Register 2 6 , 8 2 3 (June 29, 1984)), a n y m a r k e t in w h i c h t h e
p o s t - m e r g e r H H I is a b o v e 1800 is c o n s i d e r e d h i g h l y c o n c e n t r a t e d , a n d
the D e p a r t m e n t is l i k e l y t o c h a l l e n g e a m e r g e r that i n c r e a s e s t h e H H I
b y m o r e than 5 0 p o i n t s . T h e D e p a r t m e n t h a s i n f o r m e d t h e B o a r d that
a b a n k m e r g e r o r a c q u i s i t i o n g e n e r a l l y will n o t b e c h a l l e n g e d (in the
a b s e n c e o f o t h e r f a c t o r s i n d i c a t i n g a n t i c o m p e t i t i v e e f f e c t s ) u n l e s s the
p o s t - m e r g e r H H I is at l e a s t 1800 a n d the m e r g e r i n c r e a s e s the H H I b y
at l e a s t 2 0 0 p o i n t s .
7. Thrift institution d e p o s i t d a t a are a s o f J u n e 30, 1985.
8. T h e B o a r d h a s p r e v i o u s l y i n d i c a t e d that thrift institutions h a v e
b e c o m e , or h a v e t h e p o t e n t i a l t o b e c o m e , m a j o r c o m p e t i t o r s o f
c o m m e r c i a l b a n k s . National City Corporation,
7 0 FEDERAL RESERVE
BULLETIN 7 4 3 (1984); NCNB Bancorporation,
7 0 FEDERAL RESERVE
BULLETIN 225 (1984); General Bancshares
Corporation,
6 9 FEDERAL
RESERVE BULLETIN 8 0 2 (1983); First Tennessee
National
Corporation, 6 9 FEDERAL RESERVE BULLETIN 2 9 8 (1983).
9. If 5 0 p e r c e n t o f d e p o s i t s h e l d b y thrift institutions in the
T e x a r k a n a b a n k i n g m a r k e t w e r e i n c l u d e d in t h e c a l c u l a t i o n o f market
c o n c e n t r a t i o n , the share o f total d e p o s i t s h e l d b y t h e f o u r largest
o r g a n i z a t i o n s in t h e m a r k e t w o u l d b e 6 8 . 4 p e r c e n t . A p p l i c a n t w o u l d
c o n t r o l 2 6 . 2 p e r c e n t o f the m a r k e t ' s d e p o s i t s a n d B a n k w o u l d c o n t r o l
5.1 p e r c e n t o f the m a r k e t ' s d e p o s i t s . T h e H H I w o u l d i n c r e a s e b y 2 6 8
p o i n t s t o 1714.
308
Federal Reserve Bulletin • April 1987
with approval. Considerations relating to the convenience and needs of the communities 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 approved.
On the basis of the record, the application is approved for the reasons summarized above. The 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 extended for good
cause by the Board or by the Federal Reserve Bank of
St. Louis pursuant to delegated authority.
By order of the Board of Governors, effective
February 9, 1987.
Voting for this action: Chairman Volcker and Governors
Seger, Angell, and Heller. Absent and not voting: Governor
Johnson.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
SunTrust Banks, Inc.
Atlanta, Georgia
Order Approving Acquisition of a Bank Holding
Company
SunTrust Banks, Inc., Atlanta, Georgia, and its wholly
owned subsidiary, Third National Corporation, Nashville, Tennessee (together, "Applicant"), bank holding companies within the meaning of the Bank Holding
Company Act of 1956, as amended (12 U.S.C. § 1841
et seq.) ("Act"), have applied for the Board's approval under section 3(a)(5) of the Act to merge with
Peoples Bancshares, Inc., Lebanon, Tennessee
("Company"), and thereby to acquire indirectly The
Peoples Bank, Lebanon, Tennessee ("Bank").
Notice of the applications, affording interested
persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act
(51 Federal Register 44,524 (1986)). 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) of the Act.
Applicant is the second largest banking organization
in Georgia, with total Georgia deposits of $5.2 billion,1
representing 15.3 percent of the total deposits in
commercial banks in the state. Applicant is also the
1. All b a n k i n g data are as o f J u n e 30, 1986.
second largest banking organization in Florida, controlling deposits in that state of $9.7 billion, representing 13.2 percent of the total deposits in commercial
banks in Florida. In addition, Applicant is the largest
banking organization in Tennessee with total deposits
of $4.2 billion, representing 14.4 percent of state
deposits. Bank is the 94th largest commercial banking
organization in Tennessee and controls deposits of
$53.0 million, representing 0.2 percent of the deposits
in commercial banks in Tennessee. Consummation of
this proposal would have no significant effect on the
concentration of banking resources in Tennessee,
Florida, or Georgia.
Section 3(d) of the Act (12 U.S.C. § 1842(d)), the
Douglas Amendment, prohibits the Board from approving an application by a bank holding company to
acquire a bank located outside the bank holding company's home state,2 unless the state where the bank to
be acquired is located has specifically authorized the
acquisition by language to that effect and not merely
by implication. Applicant's home state is Florida. The
Board has previously determined that Tennessee's
interstate banking statute expressly authorizes a Florida bank holding company, such as Applicant, to
acquire a Tennessee bank holding company, such as
Company.3 Accordingly, approval of Applicant's proposal to acquire a bank holding company in Tennessee
is not barred by the Douglas Amendment.
Applicant and Bank compete directly in the Nashville banking market.4 Applicant is the largest of 17
commercial banking organizations operating in the
market, with total deposits of $2.1 billion, representing
32.6 percent of the total deposits in commercial banks
in the market. Bank is the ninth largest commercial
banking organization in the market, with total deposits
of $53.0 million, representing 0.8 percent of the total
deposits in commercial banks in the market. Upon
consummation of the proposal, Applicant's share of
the deposits in commercial banks in the market would
increase to 33.4 percent. The Nashville banking market is considered to be highly concentrated, with the
four largest commercial banks controlling 84.4 percent
of the deposits in commercial banks in the market. The
Herfindahl-Hirschman Index ("HHI") for the market
2. A bank h o l d i n g c o m p a n y ' s h o m e s t a t e is that state in w h i c h the
o p e r a t i o n s o f the b a n k h o l d i n g c o m p a n y ' s b a n k i n g subsidiaries w e r e
principally c o n d u c t e d o n July 1, 1966, o r the d a t e o n w h i c h the
c o m p a n y b e c a m e a b a n k h o l d i n g c o m p a n y , w h i c h e v e r is later.
3. SunTrust Banks Inc., 73 FEDERAL RESERVE BULLETIN 67 (1986).
4. T h e N a s h v i l l e b a n k i n g m a r k e t is a p p r o x i m a t e d b y D a v i d s o n ,
Rutherford, Williamson, Wilson, R o b i n s o n and S u m n e r Counties.
Legal Developments
is 2135 and would increase by 55 points to 2190 upon
consummation of the proposal.5
Although consummation of the proposal would eliminate some existing competition between Applicant
and Bank in the Nashville market, numerous other
commercial banking organizations would remain as
competitors in the market upon consummation. In
addition, the presence of ten thrift institutions that
control approximately 20.1 percent of the market's
total deposits mitigates the anticompetitive effects of
the transaction.6 Thrift institutions already exert a
considerable competitive influence in the market as
providers of commercial and industrial loans in addition to traditional thrift services. Based upon the
above considerations, the Board concludes that consummation of the proposal is not likely to substantially
lessen competition in the Nashville banking market.7
The financial and managerial resources of Applicant, its subsidiary banks, and Bank are consistent
with approval. Considerations relating to the convenience and needs of the communities to be served are
also consistent with approval. Based upon 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 applications should be approved.
On the basis of the record, the applications are
approved for the reasons summarized above. The
transaction shall not be consummated before the thirtieth calendar day following the effective date of this
Order, or later than three months after the effective
date of this Order, unless such period is extended for
good cause by the Board or by the Federal Reserve
Bank of Atlanta pursuant to delegated authority.
5. U n d e r the r e v i s e d D e p a r t m e n t o f J u s t i c e M e r g e r G u i d e l i n e s ,
4 9 Federal Register 2 6 , 8 2 3 ( J u n e 29, 1984), a n y m a r k e t in w h i c h the
p o s t - m e r g e r H H I is a b o v e 1800 is c o n s i d e r e d highly c o n c e n t r a t e d .
T h e D e p a r t m e n t h a s i n f o r m e d t h e B o a r d that a b a n k m e r g e r o r
a c q u i s i t i o n g e n e r a l l y will n o t b e c h a l l e n g e d (in the a b s e n c e o f o t h e r
f a c t o r s indicating a n t i c o m p e t i t i v e e f f e c t s ) u n l e s s the p o s t - m e r g e r H H I
is at least 1800 a n d t h e m e r g e r i n c r e a s e s the H H I b y at least 2 0 0
points.
6. T h e B o a r d h a s p r e v i o u s l y i n d i c a t e d that thrift institutions h a v e
b e c o m e , or h a v e t h e p o t e n t i a l t o b e c o m e , m a j o r c o m p e t i t o r s o f
c o m m e r c i a l b a n k s . National City Corporation,
7 0 FEDERAL RESERVE
BULLETIN 7 4 3 (1984); NCNB Bancorporation,
7 0 FEDERAL RESERVE
BULLETIN 225 (1984); General Bancshares
Corporation,
69 Federal
R e s e r v e B u l l e t i n 8 0 2 (1983); First Tennessee National Corporation,
69
FEDERAL RESERVE BULLETIN 2 9 8 (1983).
7. If 5 0 p e r c e n t o f d e p o s i t s h e l d b y thrift institutions in the
N a s h v i l l e b a n k i n g m a r k e t w e r e i n c l u d e d in t h e c a l c u l a t i o n of market
c o n c e n t r a t i o n , t h e share o f total d e p o s i t s h e l d b y the f o u r largest
o r g a n i z a t i o n s in the m a r k e t w o u l d b e 7 4 . 8 p e r c e n t . A p p l i c a n t w o u l d
c o n t r o l 2 8 . 9 p e r c e n t o f the m a r k e t ' s d e p o s i t s a n d B a n k w o u l d c o n t r o l
0.8 percent of the market's deposits. The H H I would increase by 40
p o i n t s t o 1750.
309
By order of the Board of Governors, effective
February 10, 1987.
Voting for this action: Chairman Volcker and Governors
Seger, Angell, and Heller. Absent and not voting: Governor
Johnson.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Orders Issued Under Section 4 of the Bank
Holding Company Act
United Virginia Bankshares, Inc.
Richmond, Virginia
Order Approving an Application to Purchase and
Sell Precious Metals and Coins for the Account of
Customers
United Virginia Bankshares, Inc., Richmond, Virginia, 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 225.23(a) of the
Board's Regulation Y, 12 C.F.R. § 225.23(a), to
engage de novo through its subsidiary, United Virginia
Brokerage, Inc., Richmond, Virginia ("Company"),
in the purchase and sale of gold and silver bullion and
coins for the account of its customers.
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published (51 Federal Register 44,124 (1986)).
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.
Company proposes to engage in the purchase and
sale of silver and gold bullion and coins for the account
of customers. Company will not engage in the purchase and sale of platinum and palladium,1 nor will it
deal in gold or silver for its own account. In addition,
Company does not propose to extend credit, and does
not propose to offer investment advice to customers in
connection with the proposed services.
Applicant is a multibank holding company with
three subsidiary banks in Virginia, Maryland, and the
District of Columbia, controlling total deposits of
approximately $6.3 billion.2 Company has obtained
1. In Standard and Chartered
Banking Group Ltd., 3 8
Federal
Register 2 7 , 5 5 2 (1973), t h e B o a r d f o u n d that t h e a c t i v i t i e s o f dealing in
platinum a n d p a l l a d i u m w e r e n o t a u t h o r i z e d f o r national b a n k s a n d
were not closely related to banking.
2. D a t a are a s o f S e p t e m b e r 30, 1986.
310 Federal Reserve Bulletin • April 1987
approval to engage in discount securities brokerage
activities permissible for bank holding companies under section 225.25(b)(15) of the Board's Regulation Y,
12 C.F.R. § 225.25(b)(15).
The proposed activities of Company are essentially
identical to activities previously approved by the
Board.3 In addition, banks have traditionally engaged
in the purchase and sale of gold and silver bullion.4
Thus, the Board concludes that Applicant's proposal
to engage in the purchase and sale of bullion and coins
for the account of customers 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 . . . that
outweigh possible adverse effects . . . . " ( 1 2 U.S.C.
§ 1843(c)(8)). Consummation of Applicant's proposal
will result in increased convenience to customers. In
addition, the Board expects that the entry of Applicant
into the market for these services will increase the
level of competition among providers of these services. Accordingly, the Board concludes that the
performance of the proposed activities by Applicant
can reasonably be expected to produce benefits to the
public.
The Board has also considered the potential for
adverse effects that may be associated with this proposal. There is no evidence in the record that consummation of the proposed transactions would result in
any adverse effects such as decreased competition,
undue concentration of resources, unfair competition,
conflicts of interest, or unsound banking practices.
Applicant's proposal to buy and sell gold and silver
bullion and coins is a fee-generating, nonleveraged
activity that the Board believes would not have an
adverse effect on Applicant's financial resources. Accordingly, the financial and managerial resources of
Applicant and its subsidiaries overall are consistent
with approval of the application.
Based upon a consideration of ail the facts of record,
the Board concludes that the balance of the public
interest factors that 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 the Board's Regulation Y, including those
3. Texas American Bancshares,
Inc., 7 2 FEDERAL RESERVE BULLETIN 501 (1986); First Interstate
Bancorp,
71 FEDERAL RESERVE
BULLETIN 4 6 7 (1985). See also, The Hongkong
and Shanghai
Banking Corp., 7 2 FEDERAL RESERVE BULLETIN 345 (1986); Standard and
Chartered Banking Group Ltd., 38 Federal Register 2 7 , 5 5 2 (1973).
4 . See, e.g., 12 U . S . C . § 24(7) (national b a n k s are e x p l i c i t l y permitt e d t o b u y a n d sell c o i n s a n d b u l l i o n ) .
in sections 225.4(d) and 225.23(b) (12 C.F.R.
§§ 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
BHC Act and the Board's regulations and order issued
thereunder, or to prevent evasion thereof.
The activity 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 Richmond, pursuant
to delegated authority.
By order of the Board of Governors, effective
February 9, 1987.
Voting for this action: Chairman Volcker and Governors
Seger, Angell, and Heller. Absent and not voting: Governor
Johnson.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
ORDERS ISSUED UNDER SECTIONS 3 AND 4 OF
THE BANK HOLDING COMPANY ACT
Maryland National Corporation
Baltimore, Maryland
Order Conditionally Approving the Acquisition of a
Bank, a Bank Holding Company and its Nonbank
Subsidiaries
Maryland National Corporation, Baltimore, Maryland, a bank holding company within the meaning of
the Bank Holding Company Act of 1956, as amended
("BHC Act" or "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
American Security Corporation, Washington, D.C.
("ASC"), and thereby indirectly to acquire ASC's
subsidiary bank, American Security Bank, Washington, D.C. ("Bank"). In order to effect the transaction,
Applicant proposes to form an interim bank holding
company subsidiary to be merged with ASC.
ASC engages through two nonbanking subsidiaries
in the provision of financial advice and discount brokerage services. ASC also engages directly and
through one subsidiary in certain otherwise impermissible travel agency, general insurance, and real estate
brokerage, leasing and property management activities
on the basis of grandfather privileges provided in
section 4(a)(2) of the Act, 12 U.S.C. § 1843(a)(2).
Applicant has applied under section 4(c)(8) of the Act
Legal Developments
(12 U.S.C. § 1843(c)(8)) and sections 225.25(b)(4) and
(b)(15) of Regulation Y (12 C.F.R. §§ 225.25(b)(4) and
(b)(15)) to acquire the financial advisory and discount
brokerage activities of ASC's nonbank subsidiaries.
Applicant further has requested approval to retain
ASC's grandfathered travel agency, general insurance,
and real estate brokerage, leasing and property management activities following consummation of its proposal.
Notice of the applications, affording an opportunity
for interested persons to submit comments, has been
given in accordance with sections 3 and 4 of the Act
(51 Federal Register 37,493 (October 22, 1986)). 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)
of the Act (12 U.S.C. § 1842(c)) and the considerations specified in section 4(c)(8) of the Act.
Applicant is the largest commercial banking organization in Maryland with 19.4 percent of the total
deposits in commercial banks in that state. Applicant's
lead bank subsidiary operates 203 branch offices and
controls total domestic deposits of $5.2 billion. ASC is
the second largest commercial banking organization in
the District of Columbia, with 24.7 percent of the total
deposits in commercial banks in the District. ASC's
sole bank subsidiary operates 31 branches and controls total domestic deposits of $2.5 billion.1
Section 3(d) of the Act (12 U.S.C. § 1842(d)), the
Douglas Amendment, prohibits the Board from approving an application by a bank holding company to
acquire control of any bank located outside of the
holding company's home state,2 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." Applicant's
home state is Maryland.
The statute laws of the District of Columbia permit a
bank holding company located within a defined region
that includes Maryland to acquire an established District of Columbia bank or bank holding company,
provided the acquiror's home state permits reciprocal
acquisitions of banks in that state by bank holding
companies located in the District.3 The Board has
previously determined that the Maryland banking
1. S t a t e d e p o s i t d a t a are a s o f June 30, 1986. A p p l i c a n t a l s o
o p e r a t e s a c r e d i t c a r d b a n k in D e l a w a r e .
2. A bank h o l d i n g c o m p a n y ' s h o m e state is that state in w h i c h t h e
o p e r a t i o n s o f t h e b a n k h o l d i n g c o m p a n y ' s b a n k i n g subsidiaries w e r e
principally c o n d u c t e d o n July 1, 1966, o r t h e date o n w h i c h t h e
c o m p a n y b e c a m e a b a n k h o l d i n g c o m p a n y , w h i c h e v e r is later.
3. D . C . C o d e A n n . § 2 6 - 8 0 1 et seq. ( S u p p . 1986), a s a m e n d e d b y
t h e D i s t r i c t o f C o l u m b i a R e g i o n a l Interstate B a n k i n g A c t o f 1985,
D.C. Law 6-276.
311
code4 permits a District bank holding company to
acquire a banking organization in that state,5 and by
resolution dated October 7, 1986, the District of Columbia City Council has indicated that the statute laws
of Maryland and the District are reciprocal and provide a basis for authorizing the proposed acquisition.
The Board therefore concludes that approval of the
proposed acquisition is not prohibited by the Douglas
Amendment.
Applicant's lead subsidiary bank competes with
Bank in the District of Columbia banking market.6
Applicant is the seventh largest of 65 commercial
banking organizations in the District of Columbia
market. Applicant controls deposits of $1 billion,
representing 4.5 percent of the total deposits in commercial banks in that area. Bank is the fourth largest
commercial banking organization in the market, controlling domestic deposits of $2.2 billion, representing
9.7 percent of the total deposits in commercial banks
in the market. Upon acquisition of Bank, Applicant
would become the second largest commercial banking
organization in the Washington, D.C. market and
would control 14.2 percent of the $22.2 billion total
deposits in commercial banks in that area.7
The Washington, D.C., banking market is unconcentrated, and would remain so after consummation of
the proposed acquisition. The share of deposits held
by the four largest commercial banking organizations
in the market is 50.4 percent and the HerfindahlHirschman Index ("HHI") for the market is 816
points.8 An alternative definition of the District of
Columbia product market to include 50 percent of the
deposits held by thrift institutions would further mitigate any adverse competitive effects arising from
Applicant's proposal.9 Shares of the expanded market
held by Applicant and ASC would decline to 3.2 and
4. M d . Fin. Inst. C o d e A n n . § 5 - 1 0 0 1 et seq. ( S u p p . 1985).
5. James Madison,
Ltd., 7 2 FEDERAL RESERVE BULLETIN
50
(1987).
6. T h e D i s t r i c t o f C o l u m b i a b a n k i n g m a r k e t is d e f i n e d as the
W a s h i n g t o n , D . C . , R a n a l l y M e t r o p o l i t a n A r e a , w h i c h c o m p r i s e s the
District o f C o l u m b i a ; all o f A r l i n g t o n , F a i r f a x a n d P r i n c e William
Counties; and portions of Fauquier, L o u d o n and Stafford Counties;
the cities of Alexandria, Fairfax, Falls Church, M a n a s s a s , and Manass a s Park in Virginia; a n d s u b s t a n t i a l l y all o f M o n t g o m e r y , Prince
G e o r g e s , a n d C h a r l e s C o u n t i e s , p l u s small p o r t i o n s o f A n n e A r u n d e l ,
Calvert, Carroll, F r e d e r i c k , a n d H o w a r d C o u n t i e s in M a r y l a n d .
7. M a r k e t d e p o s i t d a t a are a s o f J u n e 30, 1985.
8. C o n s u m m a t i o n o f the p r o p o s e d t r a n s a c t i o n w o u l d i n c r e a s e t h e
m a r k e t ' s H H I b y 87 t o 903 p o i n t s a n d i n c r e a s e the four-firm c o n c e n tration ratio b y 4 . 5 t o 5 4 . 9 p e r c e n t . T h e t r a n s a c t i o n , t h e r e f o r e , is
unlikely to b e c h a l l e n g e d b y the D e p a r t m e n t o f J u s t i c e u n d e r its
merger g u i d e l i n e s , 4 9 Federal Register 2 6 , 8 2 3 (1984).
9. T h e B o a r d h a s p r e v i o u s l y i n d i c a t e d that thrift institutions h a v e
b e c o m e , or h a v e t h e potential t o b e c o m e , m a j o r c o m p e t i t o r s o f
c o m m e r c i a l b a n k s . National City Corporation,
7 0 FEDERAL RESERVE
BULLETIN 743 (1984); NCNB
Corporation,
7 0 FEDERAL RESERVE
BULLETIN 225 (1984); General Bancshares
Corporation,
6 9 FEDERAL
RESERVE BULLETIN 8 0 2 (1983); First Tennessee
National
Corporation, 6 9 FEDERAL RESERVE BULLETIN 298 (1983).
312
Federal Reserve Bulletin • April 1987
6.9 percent respectively, and the HHI would increase
44 points to 466. The Board notes that numerous large
commercial banking organizations currently operate in
the District of Columbia market and several others
have undertaken plans to establish a presence there.
On the basis of these and all other facts of record, the
Board concludes that consummation of the proposed
transaction would not have a significant adverse effect
on existing or probable future competition in the
District of Columbia market.
The financial and managerial resources and future
prospects of Applicant, ASC and their respective bank
subsidiaries are consistent with approval of the application. Considerations relating to the convenience and
needs of the communities to be served are also consistent with approval.
The Board has also considered Applicant's proposed acquisition of ASC's subsidiaries engaged in
financial advisory and discount brokerage activities
under the proper incident to banking criteria of section
4(c)(8) of the Act. The market for these activities is
nationwide and unconcentrated. Because Applicant
does not currently provide financial advisory services
and because Applicant's share of the discount brokerage market is de minimis, the proposed acquisition of
ASC's two nonbanking subsidiaries would not eliminate any significant existing competition. In view of
the great number of prospective providers of financial
advisory and discount brokerage services, the proposed acquisition is unlikely to have a significant
adverse effect on probable future competition. Furthermore, there is no evidence in the record to indicate
that approval of this aspect of Applicant's proposal
would result in undue concentration of resources,
unfair competition, conflicts of interest, unsound
banking practices or other adverse effects. The Board
therefore concludes 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 Applicant's request to engage in permissible financial advisory and discount brokerage activities.
In addition to its applications under section 4(c)(8),
Applicant seeks further approval from the Board to
retain certain otherwise impermissible travel agency,
general insurance, and real estate brokerage, leasing
and property management activities conducted directly by ASC and one insurance subsidiary. ASC has
conducted these activities on the basis of a grandfather
provision in the Act for certain bank holding companies that, like ASC, were brought within the coverage
of the Act as a result of enactment of the 1970
Amendments.10
10. See, B o a r d Order, d a t e d July 21, 1976, c o n c l u d i n g that A S C
c o u l d retain t h e s e o t h e r w i s e i m p e r m i s s i b l e n o n b a n k i n g a c t i v i t i e s
u n d e r t h e g r a n d f a t h e r p r o v i s i o n in s e c t i o n 4(a)(2) o f t h e A c t .
Based on a careful analysis of section 4 of the BHC
Act, its legislative history, and prior Board decisions,
the Board concludes that grandfather privileges provided by section 4(a)(2) of the Act are proprietary to
those companies which qualified for the grandfather
privilege as of December 31, 1970, and that a company
may not acquire such grandfather privileges by acquiring a company that previously qualified for such
privileges.
Section 4 of the BHC Act prohibits a bank holding
company from acquiring direct or indirect ownership
or control of any company (other than a bank) or
engaging in activities other than banking or managing
or controlling banks unless the acquisition or activity
falls within one of the specifically enumerated exceptions in the Act to this general prohibition. 12 U.S.C.
§ 1841(a). While there is an exception to this prohibition for one-bank holding companies that were first
brought under the Act by the 1970 Amendments,11 the
exception does not by its terms apply to Applicant.
The section of the Act upon which ASC relies for its
grandfather privileges (section 4(a)(2)) pertains only to
a "company covered in 1970." Under section 4(a)(2)
of the Act, a "company covered in 1970" may engage
in any nonbanking activity in which it was lawfully
engaged on June 30, 1968, and continuously since that
date. A "company covered in 1970" is defined to
mean a company that became a bank holding company
as a result of the 1970 Amendments and that would
have been a bank holding company on June 30,1968, if
those amendments had been in effect on that date.
12 U.S.C. § 1841(b). This grandfather right applies
only to a company that: (1) involuntarily became a
bank holding company by operation of law when the
1970 Amendments were passed, 12 and (2) would have
been a bank holding company on June 30, 1968, had
the Act applied to one-bank holding companies on that
date.13
Applicant does not qualify as a "company covered
in 1970" because it did not control a bank on the
June 30, 1968, grandfather date.14 Further, there is no
provision in the BHC Act for the transfer of grandfa11. Prior t o the 1970 A m e n d m e n t s ( e n a c t e d o n D e c e m b e r 31, 1970),
the B H C A c t a p p l i e d o n l y t o c o m p a n i e s that c o n t r o l l e d t w o o r m o r e
b a n k s . T h e 1970 A m e n d m e n t s e x t e n d e d the c o v e r a g e o f t h e A c t t o
o n e - b a n k h o l d i n g c o m p a n i e s f o r t h e first t i m e .
12. See, Orwig and Company, Inc., 6 2 FEDERAL RESERVE BULLETIN 1 6 0 ( 1 9 7 5 ) .
13. A g r a n d f a t h e r e d c o m p a n y is n o t f r e e t o c o n d u c t a n y n o n b a n k ing a c t i v i t y it d e s i r e s . It m a y c o n t i n u e t o e n g a g e o n l y in t h o s e
a c t i v i t i e s in w h i c h it h a d b e e n e n g a g e d c o n t i n u o u s l y s i n c e June 30,
1968 (as w e l l a s a n y a d d i t i o n a l a c t i v i t i e s that are g e n e r a l l y p e r m i s s i b l e
f o r b a n k h o l d i n g c o m p a n i e s ) . A g r a n d f a t h e r e d c o m p a n y m a y not
e x p a n d its g r a n d f a t h e r e d a c t i v i t i e s t h r o u g h t h e a c q u i s i t i o n o f a g o i n g
c o n c e r n , b u t i n s t e a d is l i m i t e d t o t h e a c q u i s i t i o n of de novo c o m p a n i e s . 12 U . S . C . §§ 1843(a)(2) a n d ( c ) ( l l ) .
14. A p p l i c a n t w a s o r g a n i z e d o n D e c e m b e r 9, 1968, a n d o b t a i n e d
c o n t r o l o f a b a n k o n April 30, 1969.
Legal Developments
ther rights from one bank holding company to another,
unless, under a Board interpretation, the second company qualifies as the "successor" to the first company.15 A "successor" is defined in the Act as a company that acquires a bank from a bank holding company
in such a manner that there is no substantial change in
the control of the bank or the beneficial ownership of
that bank.16 Here, because there is a complete change
in the ownership of ASC's shares, Applicant is not a
"successor" as that term is used in the BHC Act.
Thus, under the terms of section 4 of the BHC Act,
Applicant may not acquire control of a company
engaged in the nonbanking activities in question. The
fact that the proposed acquisition is to be made
through the intermediary of a grandfathered bank
holding company does not change this result, because
Applicant must also independently qualify under the
Act to acquire the company.
Applicant contends that because ASC will continue
to exist as a separate holding company after the
acquisition, ASC should be entitled to retain its grandfather status and continue to engage in otherwise
impermissible nonbanking activities. In other words,
Applicant argues that ASC does not forego its status as
a "grandfathered" bank holding company even though
it becomes a subsidiary of Applicant, a non-grandfathered bank holding company.
This argument incorrectly focuses on whether ASC
may continue to engage in grandfathered activities,
and ignores the more fundamental question whether
Applicant may acquire a company engaged in such
activities. While it is true that the BHC Act permits
ASC to continue to engage in grandfathered activities,
Applicant as an acquiring bank holding company must
also comply with the nonbanking restrictions of the
Act. As noted, there is a strict prohibition against a
bank holding company acquiring directly or indirectly
any company engaged in nonbanking activities unless
they are closely related to banking (or qualify under
one of the other limited exceptions in the Act). There
is no provision in the Act excusing compliance by a
bank holding company with this prohibition in the case
of the acquisition of a company exercising grandfather
15. Hathdel,
Inc., 38 Federal Register
2 1 , 2 2 0 (1973) See
also,
American Security Corp.,
supra.
16. 12 U . S . C . § 1841(e).
17. A p p l i c a n t c o n t e n d s that its c l a i m t o A S C ' s grandfather privil e g e s is s u p p o r t e d b y t h e B o a r d ' s BankAmerica/Seafirst
decision, 69
FEDERAL RESERVE BULLETIN 5 6 8 (1983), in w h i c h t h e B o a r d permitted Seafirst t o c o n t i n u e t o sell credit-related p r o p e r t y a n d c a s u a l t y
i n s u r a n c e (an a c t i v i t y w h i c h h a d b e e n a p p r o v e d b y the B o a r d )
f o l l o w i n g its a c q u i s i t i o n b y B a n k A m e r i c a , w h i c h h a d n e v e r s e c u r e d
B o a r d a p p r o v a l t o sell s u c h i n s u r a n c e . R e l i a n c e o n this d e c i s i o n b y
A p p l i c a n t is m i s p l a c e d . Seafirst c l a i m e d grandfather rights t o c o n t i n u e
t o sell c r e d i t - r e l a t e d i n s u r a n c e u n d e r the G a r n - S t G e r m a i n D e p o s i t o r y
I n s t i t u t i o n s A c t o f 1982, P u b l i c L a w 9 7 - 3 2 0 , rather than u n d e r t h e
indefinite g r a n d f a t h e r p r o v i s i o n s o f s e c t i o n 4(a)(2) o f the A c t .
313
privileges under section 4(a)(2) of the Act.17 Further,
the Board notes that interpreting the Act to permit the
acquisition of a grandfathered company would open a
substantial loophole in the Act by allowing a nongrandfathered holding company to engage in a wide
variety of nonbanking activities by acquiring one or
more of the numerous bank holding companies with
existing grandfather rights.
The legislative history of the 1970 Amendments also
demonstrates that the grandfather provision in question was intended only for the select companies that
qualified for the privilege in 1970, and that it was not a
transferable right that could be passed from one bank
holding company to another.18
Prior Board determinations have uniformly construed the grandfather provision in a narrow manner
and have restricted the ability to transfer such rights.
In Wyoming Bancorporation,19 the Board conditioned
the acquisition of a bank holding company with grandfathered insurance agency activities on the cessation
of those activities by the acquiring bank holding company, since "grandfather rights may not be transferred." Likewise, in Hathdel, Inc., supra., the Board
permitted a company to acquire and retain the grandfathered rights of an existing one-bank holding company, but only because the succeeding company qualified as a "successor" to the existing holding
company.20
The narrow interpretation given the grandfather
provisions may also be illustrated by the decision of
the Board in Orwig and Company, Inc.21 The Board
determined that in order to be a "company covered in
1970" the company must have controlled the same
bank on June 30, 1968, and December 31, 1970, and
18. See e.g., 115 C o n g . R e c . S 15,700 (daily e d . S e p t e m b e r 16,
1970) ( R e m a r k s o f S e n a t o r Hart):
When any legislative body is asked to pass a grandfather clause, it is either
engaged in the process of balancing equities or of conferring a benefit on a
select group and denying the same to all others. The only group with any
equities in this case are those one-bank holding companies formed in line with
the historical purposes of the exemption.
A c c o r d : 115 C o n g . R e c . S 1 5 , 7 0 1 - 2 (daily e d . S e p t e m b e r 16, 1970)
( R e m a r k s o f S e n a t o r P r o x m i r e ) ; 116 C o n g . R e c . S 15,691 (daily e d .
S e p t e m b e r 16, 1970) ( R e m a r k s o f S e n a t o r W i l l i a m s ) relating t o a n
a n a l o g o u s p r o p o s e d g r a n d f a t h e r p r o v i s i o n ; 116 C o n g . R e c . S 15,695
(daily e d . S e p t e m b e r 16, 1970) ( R e m a r k s o f S e n a t o r M o n d a l e ) ; 116
C o n g . R e c . H 11,792 (daily e d . D e c e m b e r 16, 1970), reprinting letter,
d a t e d N o v e m b e r 17, 1970, f r o m D e p u t y A t t o r n e y G e n e r a l R i c h a r d G .
Kleindeinst.
19. 5 9 FEDERAL RESERVE BULLETIN 180 (1973).
20. See, MorAmerica
Financial Corp., 39 Federal Register 3 6 , 3 9 1
(1974), w h e r e t h e B o a r d d e n i e d " s u c c e s s o r " status t o a c o m p a n y
seeking to merge with another bank holding c o m p a n y which had
grandfather rights. In this d e c i s i o n , t h e B o a r d n o t e d that the legislative h i s t o r y o f the s t a t u t e i n d i c a t e s that t h e p u r p o s e o f the " s u c c e s s o r " p r o v i s i o n w a s t o c l o s e a l o o p h o l e in t h e A c t , a n d n o t t o e x p a n d
the grandfather e x e m p t i o n s t o s e c t i o n 4.
21. 6 2 FEDERAL RESERVE BULLETIN 160 (1975).
314
Federal Reserve Bulletin • April 1987
continuously between those dates. The Board based
this conclusion on the rationale that grandfather provisions were enacted because of a legislative concern
about the disruption of holding company relationships
that existed from at least June 30, 1968. The Board
concluded that if a company controlled one bank on
June 30, 1968, and voluntarily relinquished that control position prior to the enactment of the 1970 Amendments, it was not within the scope of the Congress'
concern, even though it may have acquired control of
a different bank prior to December 31, 1970.
The Board also notes that its interpretation of the
grandfather provisions of the Act is in accord with
general principles of statutory construction. The
grandfather provision in section 4(a)(2) is an exception
to the general requirement of the Act requiring the
divestiture of non-conforming nonbanking activities or
divestiture of all subsidiary banks. Under the rules of
statutory interpretation, an exception to a general rule
is to be narrowly construed.22 The Board also notes
that the statement by the House managers for the 1970
Amendments states that the Board should interpret
exemptions in those amendments "as narrowly as
possible in order that all bank holding companies
which should be covered under the Act in order to
protect the public interest will, in fact, be covered." 23
For the foregoing reasons, the Board has concluded
that Applicant may not acquire ASC except on condition that ASC terminate or divest its impermissible
nonbanking activities. In accordance with its policy,24
the Board believes it appropriate to provide Applicant
with a period of time to divest or terminate ASC's
impermissible nonbanking activities or to conform
them to the Act. Accordingly, approval of this application is conditioned upon Applicant's divestiture or
termination, within two years of consummation of the
proposal, of ASC's impermissible nonbanking activities, unless within that time Applicant secures Board
approval to retain any of the activities under section
4(c)(8) of the Act.
Based on the foregoing and other facts of record and
conditioned upon Applicant's divestiture of ASC's
previously grandfathered travel agency, general insurance, and real estate brokerage, leasing and property
management activities within two years from the date
of consummation of the proposal, the Board has
determined that the applications under sections 3(a)(3)
and 4(c)(8) should be, and hereby are approved. The
acquisition of ASC and Bank shall not be consummated before the thirtieth calendar day following the
effective date of this Order, or later than three months
after the effective of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Richmond, acting pursuant
to delegated authority. The determinations as to Applicant's nonbanking activities are subject to all of the
conditions contained in Regulation Y, including those
in sections 225.4(d) and 225.23(b)(3) (12 C.F.R.
§§ 225.4(d) and 225.23(b)(3)), 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 evasions thereof.
By order of the Board of Governors, effective
February 13, 1987.
22. See e.g., Honeywell Inc. v. United States, 551 F . 2 d 182, 186
(Ct. CI. 1981) (grandfather c l a u s e s are t o b e n a r r o w l y c o n s t r u e d ) ;
United States v. Allan Drug Corp., 357 F . 2 d 7134, 7 1 8 (10th Cir. 1966)
(same).
23. H . R . R e p . N o . 1747, 9 1 s t C o n g . 2d S e s s . 23 (1970).
24. See, Security Pacific Corporation,
7 2 FEDERAL RESERVE BULLETIN 800, 802, n . 1 2 (1986).
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Angell. Absent and not voting: Governor Heller.
WILLIAM W . WILES
[SEAL]
Secretary of the Board
Legal Developments
315
ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT
By the Board of Governors
Recent applications have been approved by the Board of Governors as 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
Applicant
Oregon Pacific Financial, Inc.,
Portland, Oregon
By Federal Reserve
Effective
^^
Bank(s)
Santiam Valley Bank,
Aumsville, Oregon
February 25, 1987
Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon
request to the Reserve Banks.
Section 3
Applicant
Cattlemen's Financial Services,
Inc.,
Austin, Texas
CCSB Corporation,
Charlevoix, Michigan
Central Wisconsin Bankshares,
Inc.,
Wausau, Wisconsin
Commerce Bancshares, Inc.,
Greenwood, Mississippi
Commerce Union Corporation,
Nashville, Tennessee
Conover Bancorporation,
Creston, Iowa
CB&T Bancshares, Inc.,
Columbus, Georgia
F & M National Corporation,
Winchester, Virginia
First of America Bank
Corporation,
Kalamazoo, Michigan
Bank(s)
Reserve
Bank
Effective
date
Cattlemen's State Bank,
Austin, Texas
Dallas
February 5, 1987
Charlevoix County State Bank,
Charlevoix, Michigan
Bank of Plover,
Plover, Wisconsin
Chicago
February 6, 1987
Chicago
February 12, 1987
Bank of Commerce,
Greenwood, Mississippi
First National Bancorp of
Lewisburg, Inc.,
Lewisburg, Tennessee
The First National Bank in
Creston,
Creston, Iowa
First Community Bancshares of
Tifton, Inc.,
Tifton, Georgia
The Middleburg National Bank,
Middleburg, Virginia
Lewiston State Bank,
Lewiston, Michigan
St. Louis
February 9, 1987
Atlanta
February 3, 1987
Chicago
February 6, 1987
Atlanta
February 11, 1987
Richmond
February 17, 1987
Chicago
February 20, 1987
316
Federal Reserve Bulletin • April 1987
Section 3—Continued
. i•
.
Applicant
First State Bancshares, Inc.,
Farmington, Missouri
Founders Bancorp, Inc.,
Scottsdale, Arizona
Hartland Bancshares, Inc.,
Hartland, Minnesota
Hawaii National Bancshares,
Inc.,
Honolulu, Hawaii
Key Centurion Bancshares,
Inc.,
Charleston, West Virginia
Key Centurion Bancshares,
Inc.,
Charleston, West Virginia
NBD Bancorp, Inc.,
Detroit, Michigan
NBD Valley Corporation,
Detroit, Michigan
Norwest Corporation,
Minneapolis, Minnesota
Pacific National Bancshares,
Inc.,
Chesterfield, Missouri
Ranco Bancshares, Inc.,
Spur, Texas
Southwest Bancshares, Inc.,
Hermitage, Missouri
Turner Bancshares, Inc.,
Kansas City, Kansas
r, , , .
Bank(s)
Reserve
,
Bank
Effective
,
date
Iron County Security Bank,
Ironton, Missouri
Founders Bank of Arizona,
Scottsdale, Arizona
Farmers State Bank of Hartland,
Hartland, Minnesota
Hawaii National Bank,
Hololulu, Hawaii
St. Louis
February 11, 1987
San Francisco
February 13, 1987
Minneapolis
February 5, 1987
San Francisco
January 14, 1987
Union Bancorp of West Virginia,
Inc.,
Clarksburg, West Virginia
Wayne Bancorp, Inc.,
Wayne, West Virginia
Richmond
February 11, 1987
Richmond
February 11, 1987
USAmeribancs, Inc.,
Highland Park, Illinois
Chicago
January 27, 1987
Dial Bank,
Sioux Falls, South Dakota
Commerce Bank of Pacific, N.A.,
Pacific, Missouri
Minneapolis
February 23, 1987
St. Louis
February 5, 1987
Sudan Bancshares, Inc.,
Sudan, Texas
Buffalo Bank,
Buffalo, Missouri
First National Bank,
Republic, Missouri
Citizens State Bank of Polk
County,
Bolivar, Missouri
Humansville Bank,
Humansville, Missouri
Kaw Valley Bancshares, Inc.,
Kansas City, Kansas
Dallas
February 4, 1987
Kansas City
November 28, 1986
Kansas City
January 22, 1987
Legal Developments
317
Section 4
Applicant
Banc One Corporation,
Columbus, Ohio
Deposit Guaranty Corporation,
Jackson, Mississippi
First Commerce Corporation,
New Orleans, Louisiana
First Capital Corporation,
Jackson, Mississippi
Hibernia Corporation,
New Orleans, Louisiana
First National Financial
Corporation,
Vicksburg, Mississippi
Eastman National Bankshares,
Inc.,
Newkirk, Oklahoma
Norwest Corporation,
Minneapolis, Minnesota
Norwest Corporation,
Minneapolis, Minnesota
San Diego Financial
Corporation,
San Diego, California
Nonbanking
Compan y/Acti vity
Reserve
Bank
Effective
date
Cleveland
January 22, 1987
Atlanta
February 24, 1987
Eastman Company,
Newkirk, Oklahoma
Kansas City
December 24, 1986
financing, credit-related
insurance, and data processing
home mortgage redemption
insurance
joint venture reinsurance of group
credit insurance risk
Minneapolis
February 23, 1987
Minneapolis
February 23, 1987
San Francisco
February 5, 1987
American Fletcher Mortgage
Company, Inc.,
Indianapolis, Indiana
American Fletcher Financial
Services, Inc.,
Marion, Indiana
GulfNet, Inc.,
New Orleans, Louisiana
Sections 3 and 4
.
..
FNB Corp,
Mount Clemens, Michigan
Bank(s)/Nonbanking
Company
First National Bank in Mount
Clemens,
Mount Clemens, Michigan
credit life and disability
reinsurance directly related to
extensions of credit
Reserve
Bank
Chicago
Effective
date
December 30, 1986
318
Federal Reserve Bulletin • April 1987
ORDERS APPROVED UNDER BANK MERGER ACT
By Federal Reserve
Banks
Applicant
M&I Marshall & Ilsley Bank,
Milwaukee, Wisconsin
Orrville Savings Bank,
Orrville, Ohio
Effective
date
Bank(s)
M&I Bay View State Bank,
Milwaukee, Wisconsin
M&I Silver Spring Bank,
Milwaukee, Wisconsin
M&I Bank of Greenfield,
Greenfield, Wisconsin
Orrville Interim Bank,
Orrville, Ohio
Chicago
January 30, 1987
Cleveland
February 10, 1987
PENDING CASES INVOLVING THE BOARD OF 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.
Jones v. Volcker, No. 87-0427 (D.D.C., filed Feb. 19,
1987).
Bankers Trust New York Corp. v. Board of Governors,
No. 87-1035 (D.C. Cir., filed Jan. 23, 1987).
Securities Industry Association v. Board of Governors, et al, No. 87-1030 (D.C.Cir., filed Jan. 20,
1987).
Grimm v. Board of Governors, No. 87-4006 (2nd Cir.,
filed Jan. 16, 1987).
Independent Insurance Agents of America, et al. v.
Board of Governors, Nos. 86-1572, 1573, 1576
(D.C. Cir., filed Oct. 24, 1986).
Securities Industry Association v. Board of Governors, No. 86-2768 (D.D.C., filed Oct. 7, 1986).
Independent
Community Bankers Association
of
South Dakota v. Board of Governors, No. 86-5373
(8th Cir., filed Oct. 3, 1986).
Jenkins v. Board of Governors, No. 86-1419 (D.C.
Cir., filed July 18, 1986).
Securities Industry Association v. Board of Governors, No. 86-1412 (D.C. Cir., filed July 14, 1986).
Adkins v. Board of Governors, No. 86-3853 (4th Cir.,
filed May 14, 1986).
Optical Coating Laboratory, Inc. v. United States,
No. 288-86C (U.S. Claims Ct., filed May 6, 1986).
CBC, Inc. v. Board of Governors, No. 86-1001 (10th
Cir., filed Jan. 2, 1986).
Howe v. United States, et al., No. 86-889 (U.S. S.Ct.
filed Dec. 6, 1985).
Myers, et al. v. Federal Reserve Board, No. 85-1427
(D. Idaho, filed Nov. 18, 1985).
Souser, et al. v. Volcker, et al., No. 85-C-2370, et al.
(D. Colo., filed Nov. 1, 1985).
Podolak v. Volcker, No. C85-0456, et al. (D. Wyo.,
filed Oct. 28, 1985).
Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa,
filed Oct. 22, 1985).
Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D.
Minn., filed Oct. 21, 1985).
Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D.
Neb., filed Oct. 16, 1985).
Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D.,
filed Oct. 8, 1985).
Independent Community Bankers Associaton of South
Dakota v. Board of Governors, No. 84-1496 (D.C.
Cir., filed Aug. 7, 1985).
Legal Developments
Urwyler, et al. v. Internal Revenue Service, et al., No.
85-2877 (9th Cir., filed July 18, 1985).
Wight, et al. v. Internal Revenue Service, et al., No.
85-2826 (9th Cir., filed July 12, 1985).
Florida Bankers Association v. Board of Governors,
No. 84-3883 and No. 84-3884 (11th Cir., filed Feb.
15, 1985).
Florida Department of Banking v. Board of Governors, No. 84-3831 (11th Cir., filed Feb. 15, 1985),
and No. 84-3832 (11th Cir., filed Feb. 15, 1985).
Lewis v. Volcker, et al, No. 86-3210 (6th Cir., filed
Jan. 14, 1985).
319
Brown v. United States Congress, et al., No. 84-28876(IG) (S.D. Cal., filed Dec. 7, 1984).
Melcher v. Federal Open Market Committee, No. 841335 (D.D.C., filed Apr. 30, 1984).
Florida Bankers Association, et al. v. Board of Governors, Nos. 84-3269, 84-3270 (11th Cir., filed April
20, 1984).
Securities Industry Association v. Board of Governors, No. 86-5089, et al. (D.C. Cir., filed Oct. 24.,
1980).
1
Financial and Business Statistics
CONTENTS
Domestic
WEEKLY REPORTING COMMERCIAL BANKS
Financial
Statistics
MONEY STOCK AND BANK CREDIT
Reserves, money stock, liquid assets, and debt
measures
A4 Reserves of depository institutions, Reserve
Bank credit
A5 Reserves and borrowings—Depository
institutions
A5 Selected borrowings in immediately available
funds—Large member banks
A19
A20
A21
A22
Assets and liabilities
All reporting banks
Banks in New York City
Branches and agencies of foreign banks
Gross demand deposits—individuals,
partnerships, and corporations
A3
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
FEDERAL RESERVE BANKS
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, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks
COMMERCIAL BANKING
INSTITUTIONS
A17 Major nondeposit funds
A18 Assets and liabilities, last-Wednesday-of-month
series
FINANCIAL
MARKETS
A23 Commercial paper and bankers dollar
acceptances outstanding
A23 Prime rate charged by banks on short-term
business loans
A24 Interest rates—money and capital markets
A25 Stock market—Selected statistics
A26 Selected financial institutions—Selected assets
and liabilities
FEDERAL FINANCE
A28
A29
A30
A30
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types and
ownership
A31 U.S. government securities dealers—
Transactions
A32 U.S. government securities dealers—Positions
and financing
A33 Federal and federally sponsored credit
agencies—Debt outstanding
SECURITIES MARKETS AND
CORPORATE FINANCE
A34 New security issues—State and local
governments and corporations
A35 Open-end investment companies—Net sales and
asset position
A35 Corporate profits and their distribution
2
Federal Reserve Bulletin • April 1987
A36 Nonfinancial corporations—Assets and
liabilities
A36 Total nonfarm business expenditures on new
plant and equipment
A37 Domestic finance companies—Assets and
liabilities and business credit
A54 Foreign official assets held at Federal Reserve
Banks
A55 Foreign branches of U.S. banks—Balance sheet
data
A57 Selected U.S. liabilities to foreign official
institutions
REAL ESTATE
REPORTED BY BANKS IN THE UNITED STATES
A38 Mortgage markets
A39 Mortgage debt outstanding
A57
A58
A60
A61
CONSUMER INSTALLMENT
CREDIT
A40 Total outstanding and net change
A41 Terms
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A61 Banks' own claims on unaffiliated foreigners
A62 Claims on foreign countries—Combined
domestic offices and foreign branches
REPORTED BY NONBANKING BUSINESS
ENTERPRISES IN THE UNITED STATES
FLOW OF FUNDS
A42 Funds raised in U.S. credit markets
A43 Direct and indirect sources of funds to credit
markets
A63 Liabilities to unaffiliated foreigners
A64 Claims on unaffiliated foreigners
Domestic
SECURITIES HOLDINGS AND
Nonfinancial
Statistics
SELECTED MEASURES
A44 Nonfinancial business activity—Selected
measures
A45 Labor force, employment, and unemployment
A46 Output, capacity, and capacity utilization
A47 Industrial production—Indexes and gross value
A49 Housing and construction
A50 Consumer and producer prices
A51 Gross national product and income
A52 Personal income and saving
International
Statistics
SUMMARY STATISTICS
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
A54 U.S. reserve assets
TRANSACTIONS
A65 Foreign transactions in securities
A66 Marketable U.S. Treasury bonds and notes—
Foreign transactions
INTEREST AND EXCHANGE
RATES
A67 Discount rates of foreign central banks
A67 Foreign short-term interest rates
A68 Foreign exchange rates
A69 Guide to Tabular
Statistical Releases,
Tables
Presentation,
and Special
Money Stock and Bank Credit
1.10
A3
RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Monetary and credit aggregates
(annual rates of change, seasonally adjusted in percent) 1
Item
1986'
Q1
Q3
Q4
Sept.
Oct.
Nov.
Dec.
Jan.
institutions2
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
5
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
Nontransaction
10 In M25
11 In M3 only 6
Q2
1987
1986'
13.1
12.3
19.1
8.3
18.0
19.8
17.9
9.0
23.5
23.9
23.8
10.1
21.5
19.9
22.4
10.3
11.5
12.0
8.4
5.7
13.7
13.4
17.9
9.2
32.6
27.7
35.2
13.4
40.5
32.3
39.3
14.1
21.7
28.8
27.4
16.0
8.8
5.3
7.7
8.1
15.5
15.5
9.4
8.7
7.1
10.3
16.5
10.6
9.7
8.2
12.0
17.0
9.1
7.9
8.2
11.5
10.7
7.9
8.8
8.9
11.9
14.4
10.6
7.2
7.8
9.3
18.8
6.2
6.0
7.4
12.1
30.5
10.3
9.7
9.0
13.5
11.7
9.3
8.8
n.a.
n.a.
4.2
17.3
7.4
6.1
8.6
6.4
6.4
3.4
6.9
12.7
9.3
-6.3
1.8
5.4
3.4
7.0
8.4
6.8
1.9
3.9
16.0
13.4
-2.5
-3.5
25.0
-7.5
-1.5
36.9
-10.7
.4
31.4
-9.2
-1.2
40.0
-13.2
-6.2
36.2
-13.3
7.1
34.4
-3.9
8.3
41.2
.0
15.2
5.9
4.8
6.6
16.0
.3
11.2
21.0
-3.4
2.8
23.0
-6.4
-7.3
18.9
-3.6
-4.5
25.8
-8.2
-9.8
21.7
-8.2
-12.2
19.6
-6.8
-5.4
29.5
-5.9
-10.1
17.0
15.0
12.7
11.6
9.8
4.1
14.5
11.2
10.6
12.6
11.1
9.1
11.4
12.0
13.0
9.8
9.2
2.2
16.0
10.9
8.8
18.6
11.9
17.4
n.a.
n.a.
18.4
components
Time and savings deposits
Commercial banks
Savings 7
Small-denomination time 8
Large-denomination time 9,10
Thrift institutions
15 Savings 7
16 Small-denomination time
17 Large-denomination time 9
12
13
14
Debt components4
18 Federal
19 Nonfederal
20 Total loans and securities at commercial banks"
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. The monetary base not adjusted for discontinuities consists of total
reserves plus required clearing balances and adjustments to compensate for float
at Federal Reserve Banks plus the currency component of the money stock less
the amount of vault cash holdings of thrift institutions that is included in the
currency component of the money stock plus, for institutions not having required
reserve balances, the excess of current vault cash over the amount applied to
satisfy current reserve requirements. After the introduction of contemporaneous
reserve requirements (CRR), currency and vault cash figures are measured over
the weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock plus the remaining items seasonally
adjusted as a whole.
4. Composition of the money stock measures and debt is as follows:
Ml: (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 OCD liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts
(MMDAs), savings and small-denomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and
tax-exempt general purpose and broker/dealer money market mutual funds.
Excludes individual retirement accounts (IRA) and Keogh balances at depository
institutions and money market 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 are based on monthly averages. Growth rates for debt reflect adjustments for
discontinuities over time in the levels of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker/dealer), MMDAs, 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.
11. Changes calculated from figures shown in table 1.23.
A4
1.11
DomesticNonfinancialStatistics • April 1987
RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK
CREDIT
Millions of dollars
Monthly averages of
daily figures
Factors
Weekly averages of daily figures for week ending
1987
1986
1986
1987
Nov.
Dec.
219,190
226,527
230,490
224,476
227,065
232,826
231,444
229,012
227,489
234,201
193,043
192,284
759
7,968
7,867
101
0
802
974
16,403
11,065
5,018
17,516
199,939
197,057
2,882
8,129
7,829
300
829
1,302
16,328
11,065
5,018
17,541
202,966
199,842
3,124
8,268
7,786
482
0
586
1,712
16,958
11,060
5,018
17,593
198,668
197,512
1,156
7,956
7,829
127
0
644
1,094
16,113
11,067
5,018
17,538
200,640
197,069
3,571
8,064
7,829
235
0
554
1,413
16,395
11,065
5,018
17,548
203,718
197,175
6,543
8,604
7,829
775
0
1,818
1,764
16,922
11,064
5,018
17,558
204,343
198,500
5,843
8,605
7,829
776
0
698
951
16,847
11,062
5,018
17,569
203,060
200,393
2,667
8,036
7,829
207
0
311
751
16,854
11,058
5,018
17,583
201,377
200,589
788
7,862
7,798
64
0
398
1,051
16,801
11,059
5,018
17,597
203,376
200,250
3,126
8,398
7,719
679
0
979
4,324
17,123
11,059
5,018
17,611
205,069
456
209,228
435
207,962
437
208,350
436
209,759
433
211,636
430
211,199
434
208,782
433
206,978
434
205,945
443
3,117
233
3,658
232
9,824
226
3,524
266
3,391
211
5,340
237
5,959
241
4,306
221
9,302
217
16,853
230
2,064
522
2,230
477
2,353
506
2,421
539
2,273
390
2,219
458
2,281
850
2,619
351
2,268
394
2,183
460
Jan.
Dec. 17
Dec. 24
Dec. 31
Jan. 7
Jan. 14
Jan. 21
Jan. 28
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit
U.S. government securities 1
2
3
Bought outright
4
Held under repurchase agreements....
Federal agency obligations
5
6
Bought outright
Held under repurchase agreements
7
8
Acceptances
Loans
9
10 Float
11 Other Federal Reserve assets
12 Gold stock 2
13 Special drawing rights certificate a c c o u n t . . . .
14 Treasury currency outstanding
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings 2
Deposits, other than reserve balances, with
Federal Reserve Banks
17 Treasury
18 Foreign
19 Service-related balances and
adjustments
20
Other
21 Other Federal Reserve liabilities and
capital
22 Reserve balances with Federal
Reserve Banks 3
6,345
6,404
6,412
6,406
6,411
6,425
6,163
6,452
6,360
6,451
34,984
37,488
36,441
36,158
37,828
39,723
37,967
39,507
35,210
35,323
End-of-month figures
1986
Wednesday figures
1987
1986
1987
Nov.
Dec.
221,673
241,760
230,331
230,336
228,775
241,760
229,514
230,747
231,483
234,730
196,293
194,876
1,417
8,177
7,829
348
0
557
748
15,898
211,316
197,625
13,691
10,143
7,829
2,314
0
1,565
1,261
17,475
202,486
199,318
3,168
8,576
7,719
857
0
513
716
18,040
200,631
197,418
3,213
8,234
7,829
405
0
1,965
2,974
16,532
200,491
196,742
3,749
8,127
7,829
298
0
468
2,619
17,070
211,316
197,625
13,691
10,143
7,829
2,314
0
1,565
1,261
17,475
202,484
198,625
3,859
8,404
7,829
575
0
334
1,510
16,782
204,608
198,183
6,425
8,206
7,829
377
0
325
333
17,275
204,438
202,032
2,406
7,922
7,719
203
0
382
1,823
16,918
204,412
201,565
2,847
8,442
7,719
723
0
3,923
756
17,197
11,070
5,018
17,517
11,064
5,018
17,567
11,062
5,018
17,623
11,068
5,018
17,547
11,064
5,018
17,557
11,064
5,018
17,567
11,058
5,018
17,581
11,056
5,018
17,595
11,059
5,018
17,609
11,059
5,018
17,623
206,878
445
211,995
427
205,374
446
208,754
437
211,051
430
211,995
427
210,248
433
207,867
431
206,646
434
205,643
443
2,529
225
7,588
287
15,746
226
4,536
345
3,681
177
7,588
287
4,070
184
5,549
226
15,742
240
17,744
236
1,802
425
1,812
917
1,786
453
1,805
471
1,812
375
1,812
917
1,813
300
1,814
359
1,804
330
1,804
517
Jan.
Dec. 17
Dec. 24
Dec. 31
Jan. 7
Jan. 14
Jan. 21
Jan. 28
SUPPLYING RESERVE FUNDS
23 Reserve Bank credit
24
25
26
27
28
29
30
31
32
33
U.S. government securities 1
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Federal agency obligations
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Acceptances
Loans
Float
Other Federal Reserve assets
34 Gold stock 2
35 Special drawing rights certificate account
36 Treasury currency outstanding
...
ABSORBING RESERVE F U N D S
37 Currency in circulation
38 Treasury cash holdings 2
Deposits, other than reserve balances with
Federal Reserve Banks
39 Treasury
40
Foreign
41
Service-related balances and
adjustments
42
Other
43 Other Federal Reserve liabilities and
capital
44 Reserve balances with Federal
Reserve Banks 3
6,480
6,088
7,201
6,257
6,415
6,088
6,275
6,298
6,157
6,303
36,494
46,295
32,802
41,364
38,473
46,295
39,848
41,872
33,816
35,740
1. Includes securities loaned—fully guaranteed by U.S government securities
pledged with Federal Reserve Banks—and excludes any securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Revised for periods between October 1986 and February 1987. During this
interval, outstanding gold certificates were inadvertently in excess of the gold
stock. Revised data not included in this table are available from the Division of
Research and Statistics, Banking Section.
3. Excludes required clearing balances and adjustments to compensate for
float.
NOTE. For amounts of currency and coin held as reserves, see table 1.12.
Money Stock and Bank Credit
1.12
RESERVES AND BORROWINGS
A5
Depository Institutions
Millions of dollars
Monthly averages 8
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
1983
1984
1985
Dec.
Dec.
Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
21,138
20,755
17,908
2,847
38,894
38,333
561
774
96
2
21,738
22,316
18,958
3,358
40,696
39,843
853
3,186
113
2,604
27,620
22,956
20,522
2,434
48,142
47,085
1,058
1,318
56
499
29,499
22,805
20,439
2,366
49,938
49,007
931
803
108
531
30,313
23,098
20,716
2,381
51,029
50,118
910
741
116
378
30,165
23,451
21,112
2,339
51,277
50,538
740
872
144
465
31,922
23,384
21,267
2,117
53,189
52,463
726
1,008
137
570
32,947
23,753
21,676
2,078
54,623
53,877
746
841
99
497
34,803
23,543
21,595
1,947
56,399
55,421
978
752
70
418
37,360
24,071
22,199
1,872
59,560
58,191
1,369
827
38
303
1986
Biweekly averages of daily figures for weeks ending
1986
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
Oct. 22
Nov. 5
Nov. 19
Dec. 3
Dec. 17
Dec. 31
Jan. 14
Jan. 28
Feb. IIP
Feb. 25p
33,007
23,955
21,914
2,041
54,921
54,170
751
771
88
488
33,557
23,208
21,204
2,004
54,921
53,947
814
899
93
476
34,945
23,405
21,570
1,835
56,515
55,599
916
811
68
437
35,189
23,871
21,806
2,065
56,995
55,865
1,130
610
63
368
36,527
23,485
21,725
1,733
58,251
57,511
740
514
34
310
38,659
24,729
22,758
1,971
61,417
59,369
2,048
1,186
37
282
38,710
24,583
22,815
1,768
61,525
60,680
845
505
28
215
35,228
25,028
23,012
2,017
58,239
57,033
1,206
689
36
227
33,026
27,327
24,680
2,647
57,705
56,208
1,497
425
56
265
33,704
25,237
22,834
2,403
56,538
55,513
1,025
680
81
299
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
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
1.13
1987
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy
reserve requirements less required reserves.
7. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
8. Before February 1984, data are prorated monthly averages of weekly
averages; beginning February 1984, data are prorated monthly averages of
biweekly averages.
NOTE. These data also appear in the Board's H.3 (502) release. For address, see
inside front cover.
SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE F U N D S
Large Member Banks'
Averages of daily figures, in millions o f dollars
1986 and 1987 week ending Monday
By maturity and source
1
2
3
4
Jan. 5 '
Jan. 12'
Jan. 19'
Jan. 2 6
Dec. 22
Dec. 29
80,932
7,790
78,638
9,148
91,167
8,287
84,218
7,915
81,469
8,788
78,809
8,331
78,255
8,052
80,428
8,229
76,752
8,773
34,382
6,126
31,199
7,026
33,292
5,951
37,498
6,646
35,447
7,236
32,459
7,220
38,995
6,175
39,005
5,920
38,912
6,599
Federal funds purchased, repurchase agreements, and other
selected borrowing in immediately available funds
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and
foreign official institutions, and United States
government agencies
For one day or under continuing contract
For all other maturities
Feb. 2
Feb. 9
Feb. 16
Repurchase agreements on United States government
and federal agency securities in immediately
available funds
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities
9,798
9,099
9,972 R
7,613'
12,479
5,942
12,948
7,731
11,670
9,759
13,593
9,611
13,194
9,043
12,909
9,734
13,932
10,371
29,384
11,233
26,786
14,973'
29,064
11,565
30,806
10,247
29,307
10,097
28,291
10,719
28,016
10,690
27,793
10,431
26,707
10,630
MEMO: Federal funds loans and resale agreements in
immediately available funds in maturities of one day
or under continuing contract
9 To commercial banks in the United States
10 To all other specified customers 2
28,024
9,076
30,563
10,205
33,044
10,480
33,777
10,424
30,719
10,219
29,211
11,606
34,026
12,671
31,178
10,978
28,125
12,254
5
6
7
8
1. Banks with assets of $1 billion or more as of Dec. 31, 1977.
2. Brokers and nonbank dealers in securities; other depository institutions;
foreign banks and official institutions; and United States government agencies.
A6
1.14
DomesticNonfinancialStatistics • April 1987
FEDERAL RESERVE BANK INTEREST
RATES
Percent per annum
Current and previous levels
Extended credit 2
Short-term adjustment credit
and seasonal credit 1
Federal Reserve
Bank
First 60 days
of borrowing
Next 90 days
of borrowing
Rate on
2/25/87
Effective
date
Previous
rate
Rate on
2/25/87
Previous
rate
Rate on
2/25/87
Previous
rate
Rate on
2/25/87
SVi
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
6
5Vi
6
6 '/>
7
71h
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o . . .
5^/2
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
6
6V2
6
5'/2
Range of rates in recent years
Effective date
In effect Dec. 31, 1973
1974— Apr. 25
30
Dec. 9
16
1975— Jan.
6
10
24
Feb. 5
7
Mar. 10
14
May 16
23
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
lxh
7>/i-8
7'/>
8
3
7 /4-8
73/4
71/4-73/4
7'/4-73/4
IVA
6 3 /4-7'/4
6 3 /4
61/4—63/4
6V4
6-61/4
6
73/4
73/4
73/4
71/4
71/4
63/4
63/4
6'/4
61/4
6
6
19
23
Nov. 22
26
51/2-6
SV2
51/4-51/!
51/4
51/?
5'/.
51/4
51/4
1977— Aug. 30
31
Sept. 2
Oct. 26
51/4-53/4
51/4
1976— Jan.
1978— Jan.
9
20
May 11
12
July
July
After 150 days
3
10
5'/4-5 3 /4
53/4
53/4
6
53/4
6-61/>
6 '/>
6W-7
7
7-7'/t
61/!
6'/2
7
7
IVA
71/4
6
IVA
Effective date
Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
3
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
IVi
F.R.
Bank
of
N.Y.
7 3 /4
8
m
sl/2-m
8'/2
91/2
m
9>/i
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
1982— July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
im-12
11 Vi
ll-ll'/i
11
10 '/>
10-10'/2
10
9Vi-10
91/2
9-9 '/2
9
11 Vi
11 Vi
11
11
10'/!
10
10
9'/!
91/2
Effective date
July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10
10-10'/!
10'/>
lO'/j-ll
11
11-12
12
Feb. 15
19
May 29
30
June 13
16
July 28
29
Sept. 26
Nov. 17
Dec. 5
8
12-13
13
12-13
12
11-12
13
13
13
12
11
1984— Apr.
9
13
Nov. 21
26
Dec. 24
8'/2-9
9
8'/>-9
8>/i
8
8>/2
m
8
10-11
10
11
12
12-13
13
10
10
11
12
13
13
1985— May 20
24
7Vi-8
7'/2
71/2
1986— Mar.
i-m
1
6V1-I
13-14
14
13-14
13
12
14
14
13
13
12
May
5
Nov.
2
6
4
Dec.
1. After May 19, 1986, the highest rate within the structure of discount rates
may be charged on adjustment credit loans of unusual size that result from a major
operating problem at the borrower's facility.
A temporary simplified seasonal program was established on Mar. 8, 1985, and
the interest rate was a fixed rate xh percent above the rate on adjustment credit.
The program was re-established on Feb. 18, 1986 and again on Jan. 28, 1987; the
rate may be either the same as that for adjustment credit or a fixed rate xh percent
higher.
2. Applicable to advances when exceptional circumstances or practices involve
only a particular depository institution and to advances when an institution is
under sustained liquidity pressures. As an alternative, for loans outstanding for
more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes
into account rates on market sources of funds, but in no case will the rate charged
be less than the basic rate plus one percentage point. Where credit provided to a
particular depository institution is anticipated to be outstanding for an unusually
prolonged period and in relatively large amounts, the time period in which each
Previous
rate
3
Range (or
level)—
All F.R.
Banks
73/4
8
8 - 8 Vi
7
Effective date
for current rates
10
W>/2
10'/!
11
11
12
12
7
10
Apr. 21
23
July 11
Aug. 21
22
In effect Feb. 25, 1987
8Vi-9
8'/2-9
8'/!
61/2
6
5'/2-6
9
9
9
8'/>
8>/2
9
9
lX/l
7
7
6V2
6'/2
6
5Vi
5'A
5>/2
5'Vi
5'/!
rate under this structure is applied may be shortened. See section 201.3(b)(2) of
Regulation A.
3. Rates for short-term adjustment credit. For description and earlier data see
the following publications of the Board of Governors: Banking and Monetary
Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980,
1981, and 1982.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than 4 weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar, 17, 1980, through May 7,
1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was
adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and
to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective
Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for
applying the surcharge was changed from a calendar quarter to a moving 13-week
period. The surcharge was eliminated on Nov. 17, 1981.
Policy Instruments
Al
1.15 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
Time and savings2>3
Savings
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
11 3 /4
123/4
16'/4
3
12/30/76
12/30/76
12/30/76
12/30/76
12/30/76
3
12
12/30/86
12/30/86
Nonpersonal time deposits9
By original maturity
Less than l'/i years
1 Vi years or more
3
0
10/6/83
10/6/83
Eurocurrency
All types
1
3/16/67
1/8/76
10/30/75
6
IVi
1
12/12/74
1/8/76
10/30/75
3
2'/2
3
11/13/80
accounts1
3/16/67
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 from 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. For 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 iVi
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.
Effective date
Net transaction
7
9>/z
Depository institution requirements
after implementation of the
Monetary Control Act 6
Percent
Effective date
demand2
$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 97320) 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. 1,1985, the amount of the exemption was established at $2.4
million. Effective with the reserve computation period beginning Dec. 31, 1985,
the amount of the exemption was established at $2.6 million. Effective Dec. 30,
1986, the amount of the exemption is $2.9 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)
described in 12 CFR section 204.2 (d)(2); (2) net NOW 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 NOW 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, MMDAs and similar accounts offered by institutions not subject to the
rules that permit no more than six preauthorized, automatic, or other transfers per
month of which no more than three can be checks—are not transaction accounts
(such accounts are savings deposits subject to time deposit reserve requirements.)
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;
effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million;
effective Jan. 1, 1985, to $29.8 million; and effective Dec. 31, 1985, to $31.7
million. Effective Dec. 30, 1986, the amount was increased to $36.7 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. For 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. Nonmembers may maintain reserve balances with a
Federal Reserve Bank indirectly on a pass-through basis with certain approved
institutions.
A8
DomesticNonfinancialStatistics • April 1987
1.16
MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions1
Percent per annum
Type of deposit
Commercial banks
Savings and loan associations and
mutual savings banks (thrift institutions) 1
In effect Feb. 28, 1987
In effect Feb. 28, 1987
Percent
1 Savings
2 Negotiable order of withdrawal accounts
3 Money market deposit account
(23)
(4)
()
Time accounts
4 7-31 days
(5)
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.
2. Effective Apr. 1, 1986, the interest rate ceiling on savings deposits was
removed. Before Apr. 1, 1986, savings deposits were subject to an interest rate
ceiling of 5l/i percent.
3. Before ]an. 1, 1986, NOW accounts with minimum denomination requirements of less than $1,000 were subject to an interest rate ceiling of 5'/t percent.
NOW accounts with minimum required denominations of $1,000 or more and
IRA/Keough (HR10) Plan accounts were not subject to interest rate ceilings.
Effective Jan. 1, 1986, the minimum denomination requirement was removed.
Effective date
4/1/86
1/1/86
12/14/82
1/1/86
10/1/83
Percent
(2)
(34)
()
(5)
Effective date
4/1/86
1/1/86
12/14/82
1/1/86
10/1/83
4. 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. Effective Jan. 1, 1985,
the minimum denomination and average balance maintenance requirements was
lowered to $1,000. Effective Jan. 1, 1986, the minimum denomination and average
balance maintenance requirements were removed. No minimum maturity period
is required for this account, but depository institutions must reserve the right to
require seven days, notice before withdrawals.
5. Before Jan. 1, 1986, deposits of less than $1,000 were subject to an interest
rate ceiling of 5Vi percent. Deposits of less than $1,000 issued to governmental
units were subject to an interest rate ceiling of 8 percent. Effective Jan. 1, 1986,
the minimum denomination requirement was removed.
Policy Instruments
1.17
A9
FEDERAL RESERVE OPEN MARKET TRANSACTIONS
Millions of dollars
1986
Type of transaction
1983
1985
1984
Aug.
July
June
Oct.
Sept.
Nov.
Dec.
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
18,888
3,420
0
2,400
20,036
8,557
0
7,700
22,214
4,118
0
3,500
1,402
0
0
0
867
0
0
0
2,940
0
0
0
861
0
0
0
928
0
0
0
3,318
0
0
0
5,422
0
0
0
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
484
0
18,887
-16,553
87
1,126
0
16,354
-20,840
0
1,349
0
19,763
-17,717
0
0
0
1,152
-1,957
0
0
0
579
-1,253
0
0
0
1,715
-4,087
0
0
0
1,053
-1,892
0
0
0
974
-529
0
190
0
2,974
-1,810
0
0
0
1,280
-1,502
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
1,896
0
-15,533
11,641
1,638
0
-13,709
16,039
2,185
0
-17,459
13,853
0
0
-1,152
1,957
0
0
-386
1,253
0
0
-1,194
2,587
0
0
-1,053
1,892
0
0
-969
529
893
0
-2,414
1,510
0
0
-1,280
1,502
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
890
0
-2,450
2,950
536
300
-2,371
2,750
458
100
-1,857
2,184
0
0
0
0
0
0
-193
0
0
0
-520
1,000
0
0
0
0
0
0
-5
0
236
0
-560
200
0
0
0
0
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
383
0
-904
1,962
441
0
-275
2,052
293
0
-447
1,679
0
0
0
0
0
0
0
0
0
0
0
500
0
0
0
0
0
0
0
0
158
0
0
100
0
0
0
0
22
23
24
All maturities
Gross purchases
Gross sales
Redemptions
22,540
3,420
2,487
23,776
8,857
7,700
26,499
4,218
3,500
1,402
0
0
867
0
0
2,940
0
0
861
0
0
928
0
0
4,795
0
0
5,422
0
0
578,591
576,908
808,986
810,432
866,175
865,968
80,219
80,674
70,928
69,659
60,460
60,011
73,179
70,817
77,262
81,892
60,146
60,232
91,404
88,730
105,971
108,291
127,933
127,690
134,253
132,351
5,640
5,640
18,657
18,657
0
0
14,717
8,403
5,670
11,984
16,888
15,471
44,303
32,028
12,631
8,908
20,477
1,857
-403
2,491
4,814
-756
6,298
15,023
0
0
292
0
0
256
0
0
162
0
0
0
0
0
0
0
90
0
0
*
0
0
93
0
0
125
0
0
0
8,833
9,213
11,509
11,328
22,183
20,877
1,691
1,691
4,984
4,984
0
0
2,678
869
952
2,761
1,622
1,274
5,488
3,522
-672
-76
1,144
0
*
-90
1,809
-1,902
223
1,965
-1,062
-418
0
0
0
0
0
0
0
0
10,897
8,414
21,621
1,857
-403
2,401
6,623
-2,658
6,522
16,988
Matched transactions
26
27
28
Gross purchases
Repurchase agreements
Gross purchases
Gross sales
29 Net change in U.S. government securities
FEDERAL AGENCY OBLIGATIONS
30
31
32
Outright transactions
Gross purchases
Gross sales
Redemptions
33
34
Repurchase agreements
Gross purchases
Gross sales
35 Net change in federal agency obligations
BANKERS ACCEPTANCES
36 Repurchase agreements, net
37 Total net change in System Open Market
Account
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 1987
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements
Millions of dollars
End of month
Wednesday
Account
1986
1987
1986
Jan. 7
Dec. 31
Jan. 14
Jan. 28
Jan. 21
Nov.
1987
Jan.
Dec.
Consolidated condition statement
ASSETS
11,084
5,018
485
11,084
5,018
490
11,084
5,018
508
11,084
5,018
530
11,075
5,018
545
11,084
5,018
507
11,084
5,018
485
11,075
5,018
553
1,565
0
334
0
325
0
382
0
3,923
0
557
0
1,565
0
513
0
1 Gold certificate account
2 Special drawing rights certificate account
3
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
0
0
0
0
0
0
0
0
7,829
2,314
7,829
575
7,829
377
7,719
203
7,719
723
7,829
348
7,829
2,314
7,719
857
103,775
68,126
25,724
197,625
13,691
211,316
104,775
68,126
25,724
198,625
3,859
202,484
104,333
68,126
25,724
198,183
6,425
204,608
108,182
68,126
25,724
202,032
2,406
204,438
107,715
68,126
25,724
201,565
2,847
204,412
101,026
68,126
25,724
194,876
1,417
196,293
103,775
68,126
25,724
197,625
13,691
211,316
105,468
68,126
25,724
199,318
3,168
202,486
15 Total loans and securities
223,024
211,222
213,139
212,742
216,777
205,027
223,024
211,575
8,938
661
8,724
662
6,562
661
11,976
663
6,674
660
4,721
654
8,938
661
5,947
665
9,475
7,339
9,439
6,681
9,446
7,168
9,460
6,795
9,465
7,072
9,179
6,065
9,475
7,339
10,276
7,099
266,024
253,320
253,586
258,268
257,286
242,255
266,024
252,208
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies 2
19 All other 3
20 Total assets
LIABILITIES
195,360
193,616
191,239
190,026
189,024
190,327
195,360
188,763
22
23
24
25
48,107
7,588
287
917
41,661
4,070
184
300
43,686
5,549
226
359
35,620
15,742
240
330
37,544
17,744
236
517
38,296
2,529
225
425
48,107
7,588
287
917
34,588
15,746
226
453
26 Total deposits
56,899
46,215
49,820
51,932
56,041
41,475
56,899
51,013
7,677
2,340
7,214
2,203
6,229
2,249
10,153
2,105
5,918
2,252
3,973
2,242
7,677
2,340
5,231
2,268
262,276
249,248
249,537
254,216
253,235
238,017
262,276
247,275
1,874
1,874
0
1,875
1,873
324
1,874
1,873
302
1,876
1,873
303
1,877
1,874
300
1,860
1,781
597
1,874
1,874
0
1,877
1,873
1,183
33 Total liabilities and capital accounts
266,024
253,320
253,586
258,268
257,286
242,255
266,024
252,208
34 MEMO: Marketable U.S. government securities held in
custody for foreign and international account
162,381
165,515
163,606
165,049
163,606
164,411
162,381
163,927
21 Federal Reserve notes
Deposits
To depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
77 Deferred credit items
28 Other liabilities and accrued dividends 4
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31
32 Other capital accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding
36
LESS: Held by bank
Federal Reserve notes, net
37
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
231,603
36,243
195,360
230,980
37,364
193,616
230,797
39,558
191,239
231,322
41,296
190,026
231,326
42,302
189,024
231,281
40,954
190,327
231,603
36,243
195,360
231,694
42,931
188,763
11,084
5,018
0
179,258
11,084
5,018
0
177,514
11,084
5,018
0
175,137
11,084
5,018
0
173,924
11,075
5,018
0
172,931
11,084
5,018
0
174,225
11,084
5,018
0
179,258
11,075
5,018
0
172,670
42 Total collateral
195,360
193,616
191,239
190,026
189,024
190,327
195,360
188,763
1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Assets shown in this line are revalued monthly at market exchange rates.
3. Includes special investment account at Chicago of Treasury bills maturing
within 90 days.
4. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
All
Maturity Distribution of Loan and Security Holdings
Millions of dollars
End of month
Wednesday
Type and maturity groupings
1987
1986
Jan. 30
557
545
12
0
1,565
1,553
12
0
513
508
5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
204,438
16,494
53,048
59,915
36,484
15,431
23,066
204,412
13,726
53,124
62,581
36,484
15,431
23,066
196,293
7,625
54,077
59,068
37,006
15,451
23,066
211,316
20,480
53,611
62,239
36,469
15,451
23,066
202,486
8,522
57,100
61,883
36,484
15,431
23,066
7,922
366
862
1,318
3,718
1,300
358
8,442
907
801
1,338
3,733
1,305
358
8,177
653
851
1,376
3,730
1,193
374
10,143
2,704
809
1,224
3,854
1,178
374
8,576
1,041
801
1,338
3,733
1,305
358
Jan. 7
Jan. 14
Jan. 21
Jan. 28
1,565
1,553
12
0
334
333
0
325
322
3
0
382
374
8
0
3,923
3,920
3
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 1
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
211,316
20,480
53,611
62,239
36,469
15,451
23,066
202,484
14,191
50,768
62,539
36,469
15,451
23,066
204,608
16,096
51,124
62,402
36,469
15,451
23,066
16 Federal agency obligations—Total
17 Within 15 days 1
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
10,143
2,704
809
1,224
3,854
1,178
374
8,404
825
958
1,215
3,854
1,178
374
8,206
526
954
1,220
3,814
1,318
374
;
5 Acceptances—Total
6
Within 15 days
7
16 days to 90 days
8 91 days to 1 year
1
Nov. 28
Dec. 31
Dec. 31
1 Loans—Total
2 Within 15 days
3
16 days to 90 days
4 91 days to 1 year
1987
1986
1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements.
A12
1.20
DomesticNonfinancialStatistics • April 1987
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE
Billions o f dollars, averages of daily
Item
figures
1983
Dec.'
1984
Dec/
1985
Dec/
July'
June'
2
3
4
5
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
51.81
52.40
53.82
55.64
56.64
50.80
51.56
53.07
54.81
51.37
52.06
53.49
55.11
51.08
51.66' 52.85
54.27
231.69' 233.46' 236.07' 238.84'
56.06
56.29
55.58
242.04
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS'
1 Total reserves 2
1987
1986
1986
Dec.
36.16
39.48
45.52
55.64
49.35
50.48
51.32
35.38
35.38
35.59
185.38
36.29
38.90
38.66
199.15
44.20
44.70
44.55
216.70
54.81
55.11
54.27
238.84'
48.55
49.08
48.51
226.51
49.74
50.12
49.58
228.35
50.45
50.91
50.58
230.60'
Not seasonally adjusted
6 Total reserves2
7
8
9
10
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
49.11
50.31
50.62
51.55
52.34
54.11
57.17
58.25
45.43
45.93
45.78
220.26
56.34
56.64
55.80
243.04
48.30
48.83
48.27
226.91
49.57
49.95
49.41
230.01
49.75
50.22'
49.88
230.76
50.54
51.11
50.82
231.51
51.50
52.00
51.60
233.04
53.36
53.77
53.13
236.91
56.34
56.64
55.80
243.04
57.67
57.90
57.19
242.82
40.67
48.05
59.56
49.85
51.02
51.28
53.19
54.62
56.40
59.56
59.67
37.48
40.06
39.84
204.13
46.73
47.32
47.08
223.45
58.73
59.04
58.19
247.71
49.04
49.72
49.01
229.56
50.28
50.68
50.12
232.54
50.41
50.90
50.54
233.32
52.18
52.76
52.46
235.07
53.78
54.15
53.88
237.26
55.65
56.15
55.42
241.27
58.73
59.04
58.19
247.71
59.09
59.32
58.60
246.77
36.87
40.53
36.09
36.10
36.31
188.65
37.35
39.95
39.71
202.29
38.89
38.12
38.12
38.33
192.26
46.75
57.17'
N O T ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 5
11 Total reserves2
12
13
14
15
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
1. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
2. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
3. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
4. The monetary base not adjusted for discontinuities consists of total reserves
plus required clearing balances and adjustments to compensate for float at Federal
Reserve Banks and the currency component of the money stock less the amount
of vault cash holdings of thrift institutions that is included in the currency
component of the money stock plus, for institutions not having required reserve
balances, the excess of current vault cash over the amount applied to satisfy
current reserve requirements. After the introduction of contemporaneous reserve
requirements (CRR), currency and vault cash figures are measured over the
weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After 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 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 from the Board's
H.3(502) statistical release. Historical data and estimates of the impact on
required reserves of changes in reserve requirements are available from the
Banking Section, Division of Research and Statistics, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Billions of dollars, averages o f daily figures
1987
1986
1983
Dec/
1984
Dec/
1985
Dec/
1986
Dec/
Oct/
Nov/
Dec/
Jan.
Seasonally adjusted
1 Ml
7 M2
M3
4 L
5 Debt
526.9
2,184.6
2,692.8
3,154.6
5,210.1
557.5
2,369.1
2,985.7
3,528.1
5,949.8
627.0
2,569.6
3,205.6
3,838.3
6,778.6
730.5
2,798.2
3,487.7
4,140.2
7,604.4
701.4
2,760.4
3,442.9
4,085.4
7,444.7
712.4
2,774.6
3,460.2
4,110.4
7,519.8
730.5
2,798.2
3,487.7
4,140.2
7,604.4
737.7
2,819.4
3,512.7
n.a.
n.a.
148.3
4.9
242.3
131.4
158.5
5.2
248.3
145.5
170.6
5.9
272.2
178.3
183.5
6.4
308.3
232.3
181.2
6.4
293.4
220.4
182.4
6.4
297.8
225.9
183.5
6.4
308.3
232.3
186.0
6.5
305.1
240.1
1,657.7
508.2
1,811.6
616.6
1,942.6
636.1
2,067.7
689.5
2,059.0
682.5
2,062.1
685.6
2,067.7
689.5
2,081.8
693.2
7
8
9
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
10
11
Nontransactions components
In M26
In M3 only 7
1?
13
Savings deposits 9
Commercial Banks
Thrift institutions
133.2
173.0
122.2
166.6
124.6
179.0
154.5
211.7
145.8
204.6
150.2
208.3
154.5
211.7
159.7
216.9
14
15
Small denomination time deposits 9
Commercial Banks
Thrift institutions
350.9
432.9
386.6
498.6
383.9
500.3
364.7
488.5
370.0
494.7
365.9
491.3
364.7
488.5
364.7
486.1
16
17
Money market mutual funds
General purpose and broker/dealer
Institution-only
138.2
43.2
167.5
62.7
176.5
65.1
207.5
84.1
206.9
84.5
207.1
84.4
207.5
84.1
208.9
84.0
18
19
Large denomination time deposits 10
Commercial Banks 11
Thrift institutions
230.0
96.2
269.6
147.3
284.1
152.1
291.9
155.1
288.3
157.4
290.0
155.8
291.9
155.1
295.6
153.7
7.0
21
Debt components
Federal debt
Non-federal debt
1,172.8
4,037.3
1,367.6
4,582.2
1,587.0
5,191.6
1,806.9
5,797.6
1,755.9
5,688.8
1,779.3
5,740.5
1,806.9
5,797.6
n.a.
n.a.
Not seasonally adjusted
538.3
2,191.6
2,702.4
3,163.1
5,204.5
570.3
2,378.3
2,997.6
3,538.8
5,944.0
641.0
2,580.6
3,218.9
3,850.2
6,772.0
746.6
2,811.7
3,502.9
4,153.7
7,597.2
698.9
2,756.8
3,439.4
4,079.7
7,427.2
715.5
2,776.8
3,464.5
4,113.3
7,504.0
746.6
2,811.7
3,502.9
4,153.7
7,597.2
744.4
2,829.7
3,523.5
n.a.
n.a.
150.6
4.6
251.0
132.2
160.8
4.9
257.2
147.4
173.1
5.5
282.0
180.4
186.2
6.0
319.5
235.0
180.9
6.5
293.0
218.5
183.2
6.1
300.1
226.0
186.2
6.0
319.5
235.0
184.6
6.0
311.0
242.8
1,653.3
510.8
1,808.1
619.2
1,939.6
638.3
2,065.1
691.2
2,057.9
682.6
2,061.3
687.7
2,065.1
691.2
2,085.3
693.8
Money market deposit accounts
Commercial banks
Thrift institutions
230.4
148.5
267.4
150.0
332.5
180.7
379.0
192.3
372.6
191.9
375.9
192.7
379.0
192.3
381.6
192.4
35
36
Savings deposits 8
Commercial Banks
Thrift institutions
132.2
172.4
121.4
166.2
123.9
178.8
153.8
211.7
146.4
204.8
150.3
209.0
153.8
211.7
159.1
217.2
37
38
Small denomination time deposits 9
Commercial Banks
Thrift institutions
351.1
433.5
386.7
499.6
383.8
501.5
364.4
489.6
371.3
496.1
366.7
492.9
364.4
489.6
364.4
489.1
39
40
Money market mutual funds
General purpose and broker/dealer
Institution-only
138.2
43.2
167.5
62.7
176.5
65.1
207.5
84.1
206.9
84.5
207.1
84.4
207.5
84.1
208.9
84.0
41
42
Large denomination time deposits 10
Commercial Banks 11
Thrift institutions
231.6
96.3
271.2
147.3
285.6
151.9
293.3
154.7
289.5
157.8
290.8
156.0
293.3
154.7
296.8
154.1
43
44
Debt components
Federal debt
Non-federal debt
1,170.2
4,034.3
1,364.7
4,579.2
1,583.7
5,188.3
1,803.3
5,793.9
1,748.6
5,678.6
1,771.7
5,732.3
1,803.3
5,793.9
n.a.
n.a.
22
23
24
25
26
Ml
M2
M3
L
Debt
27
78
79
30
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
31
32
Nontransactions components
M26
M3 only 7
33
34
For notes see following page.
A14
DomesticNonfinancialStatistics • April 1987
NOTES TO TABLE 1.21
1. Composition of the money stock measures and debt is as follows:
Ml: (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 OCD 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 Board's flow of funds accounts. Debt
data are based on monthly averages.
2. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of
commercial banks. Excludes the estimated amount of vault cash held by thrift
institutions to service their OCD 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 OCD liabilities.
5. Consists of NOW 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 OCD and seasonally adjusted demand
deposits. Included are all ceiling free "Super NOWs," 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 MMDAs.
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 from 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 b>
money market mutual funds, depository institutions, and foreign banks anc
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.
Monetary and Credit Aggregates
1.22
A15
BANK DEBITS AND DEPOSIT TURNOVER
Debits are s h o w n in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
Bank group, or type of customer
1983'
19841
19851
July
Aug.
Sept.
Seasonally adjusted
2
Demand deposits
1
All insured banks
Major New York City banks
2
3 Other banks
4 ATS-NOW accounts 3
5 Savings deposits 4
128,440.8
57,392.7
71,048.1
1,588.7
633.1
154,556.0
70,445.1
84,110.9
1,920.8
539.0
189,534.1
91,212.9
98,321.4
2,351.1
410.3
188,874.2
91,040.8
97,833.4
2,320.1
417.4
194,457.3
92,961.7
101,495.6
2,414.8
421.0
197,997.9
95,252.0
102,745.9
2,704.8
428.4
197,222.5
95,919.7
101,302.9
2,292.5
456.5
187,594.4
96,829.5
90,764.9
2,501.0
424.9
206,689.6
95,831.3
110,858.4
2,960.8
533.7
434.4
1,843.0
268.6
15.8
5.0
496.5
2,168.9
301.8
16.7
4.5
561.8
2,460.6
327.4
16.8
3.1
556.4
2,417.2
324.2
16.8
3.2
567.6
2,437.0
333.4
16.9
3.2
573.9
2,519.8
334.5
18.4
3.1
569.6
2,493.4
329.2
15.2
3.2
538.2
2,513.2
292.8
16.1
2.9
560.7
2,251.6
340.0
18.3
3.5
DEPOSIT TURNOVER
Demand deposits 2
6
All insured banks
Major New York City banks
7
8
Other banks
9 ATS-NOW accounts 3
10 Savings deposits 4
Not seasonally adjusted
DEBITS TO
2
Demand deposits
11 All insured banks
12 Major New York City banks
13 Other banks
14 ATS-NOW accounts 3
15 MMDA 5
16 Savings deposits 4
128,059.1
57,282.4
70,776.9
1,579.5
848.8
632.9
154,108.4
70,400.9
83,707.8
1,903.4
1,179.0
538.7
189,443.3
91,294.4
98,149.0
2,338.4
1,599.3
404.3
198,657.9
96,686.1
101,971.8
2,240.4
1,575.9
419.9
186,892.9
88,807.6
98,085.3
2,140.8
1,530.6
413.7
198,433.5
96,489.1
101,944.4
2,524.1
1,612.9
414.2
204,618.4
98,837.9
105,780.4
2,231.9
1,607.4
449.2
167,465.5
85,849.7
81,615.8
2,255.1
1,434.0
382.7
226,263.1
106,935.2
119,327.9
2,841.5
2,058.2
503.6
433.5
1,838.6
267.9
15.7
3.5
5.0
497.4
2,191.1
301.6
16.6
3.8
4.5
564.0
2,494.3
327.9
16.8
4.5
3.1
587.8
2,620.6
338.7
16.3
4.4
3.2
554.7
2,421.9
326.6
15.1
4.2
3.1
577.6
2,603.6
332.6
17.3
4.4
3.0
593.5
2,656.9
343.9
14.9
4.4
3.2
476.4
2,225.4
260.8
14.6
3.8
2.6
600.3
2,483.2
357.4
17.4
5.5
3.3
DEPOSIT TURNOVER
17
18
19
20
21
22
Demand deposits 2
All insured banks
Major New York City banks
Other banks
ATS-NOW 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 NOW accounts, MMDA 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 ATS-NOW and savings deposits are available back to
July 1977. Back data are available on request from the Banking Section, Division
of Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
These data also appear on the Board's G.6 (406) release. For address, see inside
front cover.
A16
1.23
DomesticNonfinancialStatistics • April 1987
LOANS AND SECURITIES
All Commercial Banks'
Billions of dollars; averages of W e d n e s d a y
figures
1986
1987
Category
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
Seasonally adjusted
1 Total loans and securities2
2 U.S. government securities
3 Other securities
4 Total loans and leases 2
Commercial and industrial
5
6
Bankers acceptances held 3 ..
7
Other commercial and
industrial
8
U.S. addressees 4
9
Non-U.S. addressees 4
10 Real estate
11 Individual
12 Security
13 Nonbank financial
institutions
14 Agricultural
15 State and political
subdivisions
16 Foreign banks
17 Foreign official institutions . . .
18 Lease financing receivables...
19 All other loans
1,935.5
1,944.6
1,947.9
1,957.5
1,963.7
1,985.0
2,007.7
2,029.6
2,034.0
2,049.0
2,078.7
2,110.6
273.6
188.1
1,473.7
502.4
4.8
269.5
183.3
1,491.8
506.1
4.9
270.0
182.1
1,495.8
507.8
5.2
274.1
181.9
1,501.5
506.7
5.6
274.8
183.6
1,505.3
508.7
6.1
285.4
186.1
1,513.4
508.7
5.8
290.9
192.3
1,524.5
510.4
5.9
294.3
200.7
1,534.7
512.1
6.3
299.6
196.7
1,537.7
514.1
6.4
304.8
194.8
1,549.5
520.3
6.1
309.1
193.4
1,576.2
536.9
5.9
313.9
188.7
1,608.0
551.2
6.3
497.6
488.4
9.2
431.4
297.4
43.4
501.2
491.3
9.9
436.1
299.5
50.4
502.6
492.7
9.8
440.7
301.1
48.0
501.0
490.6
10.5
446.4
303.0
46.4
502.6
493.1
9.5
450.7
304.5
42.5
502.8
493.8
9.0
455.9
305.6
44.8
504.4
495.4
9.1
461.4
306.9
44.2
505.8
496.9
8.9
465.9
308.8
44.4
507.8
499.0
8.8
470.8
309.8
39.5
514.1
505.4
8.7
476.6
311.1
40.1
531.0
522.5
8.5
486.4
313.0
37.3
544.9
535.9
9.0
494.5
314.2
38.6
31.8
35.4
32.2
34.9
32.3
34.6
33.3
34.1
34.7
33.7
34.2
33.3
34.4
33.3
35.1
33.2
35.7
33.1
35.3
33.2
35.6
33.2
35.8
33.2
60.3
9.2
7.0
19.6
35.8
60.2
9.2
6.8
19.8
36.6
59.8
9.2
5.3
19.9
37.3
59.5
9.3
5.1
19.8
37.9
59.4
9.5
6.4
20.0
35.4
59.0
9.5
6.5
20.0
35.8r
59.4
9.3
6.5
20.2
38.5
59.4
9.4
6.4
20.4
39.7
58.5
9.1
6.4
20.4
40.3
57.8
9.0
6.2
21.0
38.9
57.0
9.6
6.2
21.7
39.3
57.1
9.8
6.3
21.7
45.6
Not seasonally adjusted
20 Total loans and securities2
1,932.4
1,944.1
1,950.5
1,956.7
1,965.4
1,981.4
1,999.8
2,027.3
2,029.2
2,048.6
2,092.6
2,116.2
21 U.S. government securities
22 Other securities
23 Total loans and leases 2
24
Commercial and industrial...
25
Bankers acceptances held 3 .
26
Other commercial and
industrial
27
U.S. addressees 4
28
Non-U.S. addressees 4 ...
29 Real estate
30
Individual
31
Security
32
Nonbank financial
institutions
33
Agricultural
34
State and political
subdivisions
35
Foreign banks
36
Foreign official institutions . .
37
Lease financing receivables..
38 All other loans
275.0
188.9
1,468.5
500.1
4.7
273.2
183.9
1,487.1
506.9
5.0
274.0
181.8
1,494.7
510.0
5.2
275.4
182.2
1,499.0
508.5
5.5
276.2
182.5
1,506.7
509.4
6.0
285.3
183.9
1,512.1
508.6
6.0
289.1
192.1
1,518.7
508.3
5.9
292.6
200.7
1,534.0
511.2
6.1
295.2
196.3
1,537.7
513.1
6.2
302.5
194.8
1,551.3
519.3
6.2
306.8
194.6
1,591.2
539.4
6.3
313.4
189.9
1,612.9
550.8
6.2
495.4
486.3
9.1
430.6
296.3
42.6
501.9
492.7
9.2
434.9
296.8
49.5
504.9
495.4
9.5
439.5
298.6
48.5
503.0
493.3
9.7
445.2
301.1
45.6
503.4
494.0
9.4
450.2
303.1
42.5
502.6
493.3
9.3
455.8
304.9
43.0
502.4
493.1
9.4
461.7
307.2
41.3
505.2
495.9
9.3
466.9
310.2
41.8
506.9
497.8r
9.2
472.2
311.4
38.7
513.0
503.8
9.2
478.1
312.4
41.3
533.2
524.4
8.8
487.4
316.5
42.2
544.5
535.6
8.9
494.7
316.7
41.0
31.2
34.5
31.6
34.0
32.2
33.9
33.1
34.1
34.6
34.2
34.3
34.1
34.6
34.1
35.3
33.9
35.5
33.6
35.4
33.2
36.6
32.9
36.1
32.6
60.3
9.3
7.0
19.8
36.6
60.2
9.1
6.8
19.8
37.5
59.8
9.0
5.3
19.9
38.1
59.5
9.1
5.1
19.9
37.9
59.4
9.2
6.4
20.0
37.7
59.0
9.4
6.5
20.0
36.5
59.4
9.1
6.5
20.1
36.3
59.4
9.4
6.4
20.3
39.1
58.5
9.3
6.4
20.3
38.9
57.8
9.3
6.2
20.9
37.4
57.0
10.1
6.2
21.7
41.3
57.1
10.0
6.3
21.9
45.8
1. Data are prorated averages of Wednesday estimates for domestically chartered insured banks, based on weekly sample reports and quarterly universe
reports. For foreign-related institutions, data are averages of month-end estimates
based on weekly reports from large U.S. agencies and branches and quarterly
reports from all U.S. agencies and branches, New York investment companies
majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks.
2. Excludes loans to commercial banks in the United States.
3. Includes nonfinancial commercial paper held.
4. United States includes the 50 states and the District of Columbia.
NOTE. These data also appear in the Board's G.7 (407) release. For address, see
inside front cover.
Commercial Banking Institutions
A17
19862'
1987
1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS'
Monthly averages, billions of dollars
Source
Feb.
Total nondeposit funds
Seasonally adjusted 3
Not seasonally adjusted
Federal funds, RPs, and other
borrowings from nonbanks 4
3 Seasonally adjusted
4
Not seasonally adjusted
5 Net balances due to foreign-related
institutions, not seasonally
adjusted
1
2
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
132.3
134.8
142.1
144.3
135.3
135.6
137.4
138.5
134.3
132.1
136.0
132.9
137.8
137.7
142.4
141.7
140.0
139.1
143.2
144.7
143.4
143.5
152.2
151.7
152.9
155.3
160.8
163.0
160.8
161.0
158.8
159.9
158.0
155.7
165.5
162.3
167.3
167.2
166.7
166.0
167.3
166.4
165.0
166.5
162.4
162.5
167.3
166.8
-20.5
-18.7
-25.5
-21.3
-23.7
-29.5
-29.5
-24.3
-27.3
-21.8
-19.0
-15.1
-25.8
69.4
43.6
-26.5
71.7
45.2
-30.2
75.2
45.1
-29.3
72.9
43.6
-30.5
72.2
41.7
-33.8
73.9
40.1
-31.2
75.2
44.0
-29.2
74.0
44.8
-31.9
73.5
41.6
-28.7
70.8
42.1
-30.7
73.4
42.7
-25.6
70.8
45.2
5.2
60.0
65.2
7.8
60.6
68.4
4.7
62.5
67.2
8.0
60.0
67.9
6.8
62.8
69.6
4.3
64.2
68.6
1.7
66.3
67.9
4.9
67.9
72.7
4.7
68.3
72.9
6.9
68.7
75.7
11.7
70.8
82.5
10.5
74.6
85.1
89.7
92.2
90.0
92.1
90.1
90.4
89.9
91.0
90.2
87.9
95.1
92.0
95.8
95.7
95.7
95.0
96.5
95.6
95.9
97.4
95.4
95.5
97.5
97.0
20.1
24.2
16.2
15.7
17.0
17.8
19.1
21.8
17.7
16.1
15.4
16.8
14.5
11.1
16.5
18.2
17.1
15.3
23.2
15.3
21.2
19.2
21.3
27.5
349.5
350.9
346.5
348.5
346.3
343.6
341.9
340.5
341.8
339.2
341.1
338.3
344.3
344.0
344.2
345.5
342.7
343.8
343.3
344.1
345.7
347.1
350.2
351.4
MEMO
6 Domestically chartered banks' net
positions with own foreign
branches, not seasonally
adjusted 5
7 Gross due from balances
8
Gross due to balances
9 Foreign-related institutions' net
positions with directly related
institutions, not seasonally
adjusted 6
10 Gross due from balances
11 Gross due to balances
Security RP borrowings
12 Seasonally adjusted'
13 Not seasonally adjusted
U.S. Treasury demand balances 8
14 Seasonally adjusted
15 Not seasonally adjusted
Time deposits, $100,000 or more 9
16 Seasonally adjusted
17 Not seasonally adjusted
1. Commercial banks are those in the 50 states and the District of Columbia
with national or state charters plus agencies and branches of foreign banks, New
York investment companies majority owned by foreign banks, and Edge Act
corporations owned by domestically chartered and foreign banks.
2. Data for lines 1-4 and 12-17 have been revised in light of benchmarking and
revised seasonal adjustment.
3. Includes seasonally adjusted federal funds, RPs, and other borrowings from
nonbanks and not seasonally adjusted net Eurodollars. Includes averages of
Wednesday data for domestically chartered banks and averages of current and
previous month-end data for foreign-related institutions.
4. 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 from Federal Reserve Banks and from foreign
banks, term federal funds, overdrawn due from bank balances, loan RPs, and
participations in pooled loans.
5. Averages of daily figures for member and nonmember 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.
A18
1.25
DomesticNonfinancialStatistics • April 1987
ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS
Last-Wednesday-of-Month Series
Billions of dollars
1986
1987
Account
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
2,091.4
427.2
253.7
173.5
30.1
1,634.2
146.0
1,488.1
508.5
435.9
296.9
246.9
2,113.4
429.5
255.8
173.6
27.8
1,656.1
155.7
1,500.4
510.5
441.7
300.4
247.8
2,101.3
430.9
257.7
173.2
27.0
1,643.5
146.2
1,497.2
506.2
446.4
301.1
243.6
2,105.5
432.6
259.6
173.0
27.4
1,645.5
139.2
1,506.3
512.3
451.4
304.0
238.7
2,134.0
445.7
269.6
176.1
28.7
1,659.6
148.6
1,511.0
507.3
457.6
305.6
240.5
2,154.4
455.1
272.2
183.0
29.3
1,670.0
149.4
1,520.6
510.1
463.2
308.4
238.8
2,171.1
464.6
275.9
188.7
27.9
1,678.5
145.3
1,533.2
512.1
467.7
310.5
242.9
2,173.2
467.4
281.8
185.6
26.0
1,679.9
146.8
1,533.1
512.6
473.5
311.8
235.2
2,218.1
470.4
286.2
184.3
28.1
1,719.5
161.0
1,558.6
520.2
479.3
312.8
246.3
2,303.7
474.8
291.7
183.1
27.8
1,801.1
173.4
1,627.7
563.5
494.8
319.6
249.9
2,276.4
477.3
295.3
182.0
26.4
1,772.7
166.0
1,606.7
546.9
496.9
316.0
246.9
198.1
29.1
21.8
68.8
209.9
25.5
22.3
80.7
221.0
30.2
23.9
84.6
196.0
27.9
23.0
67.3
206.2
28.2
23.3
72.1
205.8
27.9
23.7
73.5
196.6
27.8
22.9
66.3
200.4
31.2
23.5
66.2
223.9
31.7
22.2
86.5
270.7
40.8
25.7
111.2
211.2
32.9
23.6
74.4
31.1
47.4
34.7
46.7
36.8
45.5
32.0
45.8
33.8
48.7
33.6
47.1
32.3
47.4
32.6
46.9
37.7
45.8
42.7
50.4
33.4
46.7
Jan.
ALL COMMERCIAL BANKING
INSTITUTIONS 1
1
2
3
4
5
6
7
8
9
10
11
12
Loans and securities
Investment securities
U.S. government securities
Other
Trading account assets
Total loans
Interbank loans
Loans excluding interbank
Commercial and industrial
Real estate
Individual
All other
Total cash assets
Reserves with Federal Reserve Banks
Cash in vault
Cash items in process of collection . . .
Demand balances at U.S. depository
institutions
18
Other cash assets
13
14
IS
16
17
19
Other assets
195.3
207.0
195.9
196.6
196.6
196.2
200.8
198.2
201.9
225.3
199.9
20
Total assets/total liabilities and capital . . .
2,484.8
2,530.3
2,518.3
2,498.1
2,536.7
2,556.4
2,568.4
2,571.8
2,643.9
2,799.7
2,687.5
21
22
23
24
23
26
27
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
1,762.8
502.5
462.0
798.3
373.1
179.3
169.7
1,798.4
540.7
467.8
789.9
390.7
170.4
170.8
1,807.4
542.7
477.3
787.5
367.4
173.1
170.3
1,791.9
523.3
482.4
786.3
366.8
168.5
170.9
1,819.5
540.0
490.8
788.7
379.2
168.6
169.4
1,833.6
544.2
497.7
791.7
377.3
174.7
170.8
1,830.8
537.4
504.4
789.0
388.1
177.5
172.1
1,843.7
547.5
514.8
781.4
380.0
175.1
173.1
1,896.8
594.8
521.7
780.3
394.1
180.2
172.8
2,014.6
689.6
533.9
791.1
410.6
199.8
174.8
1,894.5
576.2
531.1
787.3
429.3
188.2
175.4
273.7
274.0
275.1
276.5
288.8
289.8
292.5
298.5
303.6
307.5
313.7
183.6
183.3
182.8
183.5
185.6
194.6
200.0
194.8
195.0
195.0
190.0
1,972.4
416.0
248.5
167.5
30.1
1,526.3
120.2
1,406.1
448.2
430.7
296.6
230.7
1,993.3
416.1
248.8
167.2
27.8
1,549.4
129.3
1,420.1
452.3
436.3
300.1
231.4
1,985.3
417.1
250.2
166.9
27.0
1,541.3
123.3
1,418.0
449.8
440.7
300.8
226.7
1,990.0
419.6
253.1
166.5
27.4
1,543.0
117.3
1,425.8
452.5
445.8
303.6
223.9
2,014.0
432.5
263.2
169.4
28.7
1,552.8
122.7
1,430.1
448.4
451.9
305.3
224.6
2,029.4
440.2
264.5
175.7
29.3
1,559.8
123.1
1,436.7
448.4
457.3
308.1
222.9
2,039.8
448.0
267.5
180.5
27.9
1,564.0
118.9
1,445.1
447.2
461.7
310.1
226.1
2,046.2
450.6
272.9
177.8
26.0
1,569.6
122.5
1,447.1
447.2
467.6
311.5
220.8
2,090.2
454.4
278.1
176.4
28.1
1,607.6
137.8
1,469.9
453.9
472.7
312.4
230.8
2,150.5
456.8
282.4
174.4
27.8
1,665.9
142.5
1,523.4
486.7
487.8
319.1
229.8
2,132.1
459.0
286.2
172.8
26.4
1,646.7
138.3
1,508.4
474.3
490.4
315.7
228.1
182.7
28.4
21.7
68.4
194.3
24.4
22.2
80.3
205.8
28.7
23.8
84.2
180.1
26.3
22.9
66.7
187.8
27.2
23.2
71.7
189.3
26.6
23.7
73.1
180.4
26.9
22.8
65.9
183.1
29.7
23.4
65.5
207.6
29.8
22.2
86.1
251.3
39.6
25.6
110.9
194.1
31.2
23.6
74.0
29.4
34.7
33.0
34.3
35.1
34.0
30.2
34.0
32.0
33.6
31.9
34.1
30.5
34.4
30.9
33.6
35.8
33.7
40.3
34.8
31.7
33.7
MEMO
28
29
U.S. government securities (including
trading account)
Other securities (including trading
account)
DOMESTICALLY CHARTERED
COMMERCIAL BANKS 2
30
31
32
33
34
35
36
37
38
39
40
41
Loans and securities
Investment securities
U.S. government securities
Other
Trading account assets
Total loans
Interbank loans
Loans excluding interbank
Commercial and industrial
Real estate
Individual
All other
Total cash assets
Reserves with Federal Reserve Banks
Cash in vault
Cash items in process of collection . . .
Demand balances at U.S. depository
institutions
47
Other cash assets
42
43
44
45
46
48
Other assets
144.0
150.3
142.8
144.1
143.2
141.7
145.5
142.7
143.0
166.0
142.9
49
Total assets/total liabilities and capital . . .
2,299.1
2,337.9
2,334.0
2,314.1
2,345.0
2,360.3
2,365.7
2,372.1
2,440.8
2,567.7
2,469.1
50
51
52
53
54
55
56
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
1,713.1
495.0
460.1
758.1
304.8
114.6
166.5
1,749.1
533.1
465.8
750.1
309.1
112.0
167.7
1,758.7
535.3
475.2
748.1
294.2
113.9
167.2
1,741.4
515.5
480.3
745.6
293.5
111.5
167.8
1,768.0
532.1
488.7
747.2
300.5
110.3
166.2
1,779.9
536.1
495.5
748.2
295.5
117.3
167.7
1,775.2
529.3
502.1
743.8
305.2
116.4
168.9
1,788.6
539.7
512.5
736.5
299.3
114.2
169.9
1,840.5
586.8
519.2
734.5
312.6
118.0
169.6
1,952.8
680.8
531.4
740.6
321.6
121.7
171.6
1,836.3
567.9
528.6
739.7
340.3
120.2
172.3
1. Commercial banking institutions include insured domestically chartered
commercial banks, branches and agencies of foreign banks, Edge Act and
Agreement corporations, and New York State foreign investment corporations.
2. Insured domestically chartered commercial banks include all member banks
and insured nonmember banks.
NOTE. Figures are partly estimated. They include all bank-premises subsidiaries and other significant majority-owned domestic subsidiaries. Loan and securities data for domestically chartered commercial banks are estimates for the last
Wednesday of the month based on a sample of weekly reporting banks and
quarter-end condition report data. Data for other banking institutions are estimates made for the last Wednesday of the month based on a weekly reporting
sample of foreign-related institutions and quarter-end condition reports.
Weekly Reporting Commercial Banks
1.26
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, W e d n e s d a y
figures
1987
1986
Dec. 3
1 Cash and balances due from depository institutions
Total loans, leases and securities, net
U.S. Treasury and government agency
Trading account
Investment account, by maturity
One year or less
Over one through five years
Over five years
Other securities
Trading account
Investment account
States and political subdivisions, by maturity..
One year or less
Over one year
Other bonds, corporate stocks, and securities .
Other trading account assets
Federal funds sold1
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross 2
Other loans, gross 2
Commercial and industrial 2
Bankers acceptances and commercial paper .
All other
U.S. addressees
Non-U.S. addressees
Real estate loans 2
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions . . . .
AH other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve 2
Other loans and leases, net 2
All other assets
Total assets
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
53 Transaction balances other than demand deposits
54 Nontransaction balances
55 Individuals, partnerships and corporations
56 States and political subdivisions
57
U.S. government
58 Depository institutions in the United States
59 Foreign governments, official institutions and banks . . .
60 Liabilities for borrowed money
61
Borrowings from Federal Reserve Banks
62 Treasury tax-and-loan notes
63 All other liabilities for borrowed money 3
64 Other liabilities and subordinated note and debentures.
65 Total liabilities
66 Residual (total assets minus total liabilities)4
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
42
43
44
45
46
MEMO
67
68
69
70
71
72
73
A19
5
Total loans and leases (gross) and investments adjusted .
Total loans and leases (gross) adjusted 2 - 5
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates—total 6
Commercial and industrial
Other
Nontransaction savings deposits (including MMDAs)
Dec. 17
Dec. 24
Dec. 31
Jan. 7
Jan. 14
Jan. 21
107,197'
105,565'
112,948'
134,935
107,814
108,955
112,965
996,381'
984,060'
995,980' 1,009,141' 1,019,096
1,020,976
1,015,867
1,013,577
118,357
25,356
93,001
115,870
23,497
92,373
17,626'
41,614
33,133'
71,037'
5,106
65,931'
56,128
8,960
47,167
9,803'
6,059
57,038
33,204
15,869
7,966
756,064
738,404
265,738'
2,452
263,286'
259,424'
3,861
204,797'
142,970
48,999'
16,975
5,447
26,576'
15,131
5,598
34,819
3,128
17,223'
17,661
5,007
17,001
734,055
127,172'
114,182
21,815
92,367
17,629'
41,690
33,048'
70,685r
5,395
65,29C
55,792
8,898'
46,894
9,497r
5,371
61,900
39,911
14,806
7,182
765,830
748,196
268,849'
2,582
266,267'
262,438'
3,830
206,324'
143,777
49,876
18,118
5,098
26,659
17,257
5,592
34,684
3,042
18,793
17,634
5,009
16,978
743,842
130,888'
113,806
19,896
93,909
17,816
42,293
33,800
72,190
7,227
64,963
54,659
8,140
46,519
10,304
5,179
51,363
31,372
13,858
6,133
798,314
780,374
289,127
2,426
286,701
282,922
3,779
209,814
145,397
56,176
20,502
6,696
28,978
14,368
5,784
34,525
3,347
21,836
17,939
5,031
16,725
776,558
141,936
114,702
18,975
95,727
18,939
42,501
34,287
69,464
4,496
64,968
54,159
7,572
46,587
10,810
4,337
61,039
40,056
13,435
7,548
793,731
775,738
286,811
2,357
284,454
280,724
3,730
213,475
145,013
53,627
20,503
5,744
27,380
14,163
5,616
34,717
3,130
19,185
17,993
5,056
17,242
771,432
130,977
114,806
19,447
95,359
18,693
41,957
34,709
68,454
3,716
64,738
53,967
7,470
46,497
10,771
3,766
63,779
41,060
14,781
7,938
787,424
769,455
283,242
2,381
280,861
277,165
3,696
214,203
144,401
52,733
20,572
5,470
26,692
14,093
5,503
34,920
3,210
17,149
17,970
5,069
17,293
765,062
126,522
115,483
20,966
94,518
18,422
41,511
34,585
68,150
3,539
64,611
53,798
7,515
46,283
10,812
4,751
58,961
36,185
15,364
7,412
788,569
770,514
281,315
2,539
278,776
274,921
3,855
214,584
143,885
54,594
20,979
6,952
26,663
14,158
5,375
34,845
3,368
18,388
18,056
5,063
17,275
766,232
124,014
1,295,966
1,259,766
1,251,343
1,250,555
289,619
222,598
6,975
1,815
33,985
7,767
887
15,592
60,137
509,133
470,730
25,813
762
10,792
1,035
261,730
233,105
182,577
5,557
3,158
25,290
5,860
743
9,920
60,227
516,675
478,055
26,250
783
10,520
1,067
270,484
0
18,993
251,491
83,974
241,012
183,217
6,071
4,218
28,468
8,331
891
9,816
58,796
516,674
478,443
26,152
671
10,349
1,058
262,372
5
19,629
242,738
84,432
1,163,287
17,70C
42,314
32,987'
71,458'
5,373
66,085r
56,301
8,920
47,381
9,784'
6,256
61,764
39,434
15,136
7,194
760,551
743,020
266,275'
2,725
263,550'
259,702'
3,847
203,786'
142,557
50,010
17,683
5,644
26,683
16,991
5,669
35,104
3,305
19,323
17,531
4,988
17,016
738,546
129,207'
1,232,785
242,311
183,584
5,425
3,919
27,979
6,825
914
13,664
55,286
500,998
463,08C
26,300'
794
9,683
1,140
263,922
373
7,355
256,194
85,435
1,147,951
84,834
961,268'
765,198
151,357
1,631
950
680
222,687
1. Includes securities purchased under agreements to resell.
2. Levels of major loan items were affected by the Sept. 26, 1984, transaction
between Continental Illinois National Bank and the Federal Deposit Insurance
Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984.
3. Includes federal funds purchased and securities sold under agreements to
repurchase; for information on these liabilities at banks with assets of $1 billion or
more on Dec. 31, 1977, see table 1.13.
Dec. 10
1 , 2 1 6 , 7 9 8 ' 1,239,816
235,205'
181,457
5,702
2,425
27,049'
6,988
707
10,877
54,910
502,109
464,128'
26,261'
784
9,855
1,081
253,061
0
2,102
250,959
86,191
955,890'
762,924
151,902'
1,713
1,003
710
223,531
115,153
21,424
93,730
17,587'
42,116'
34,027'
71,774'
5,967
65,808'
55,922
8,707
47,216
9,885'
4,984
57,710
36,223
14,697
6,791
781,336
763,536
275,999'
2,464
273,535'
269,640'
3,895
207,306'
145,014
53,511
20,266
6,681
26,564
17,962
5,611
34,724
2,982
20,426
17,800
5,041
16,777
759,518
132,081'
1,249,191
244,491
187,437
6,138
1,491
28,735
5,714
758
14,218
55,829
501,358
463,460'
25,966'
752
10,090
1,090
265,774
1,439
15,253
249,082
251,829
191,677'
5,956
3,022
30,080'
7,298
948
12,848
56,954
504,161
466,169'
25,73C
754
10,45c
1,058
259,041
0
17,578
241,462
443
18,550
242,736
87,412
92,428
89,674
245,676
191,032
5,905
2,650
27,152
7,355
803
10,780
61,718
517,245
479,157
25,756
780
10,554
998
267,566
0
17,958
249,608
81,360
1,164,413 1,210,292
1,173,565
1,164,465
84,778
85,674
86,201
86,878
87,268
974,47C
988,977
797,803
154,365
1,598
1,013
585
227,984
982,714
794,211
154,891
1,623
1,053
570
232,253
976,598
789,572
155,666
1,748
1,182
566
231,245
978,751
790,366
156,149
1,764
1,190
574
231,024
1 , 1 3 1 , 4 7 6 ' 1,154,864
85,322
107,969'
84,952
959,939'
769,701
151,273'
1,756
1,004
752
223,718
782,557
153,832'
1,654'
1,088
566'
223,850
4. This is not a measure of equity capital for use in capital adequacy analysis or
for other analytic uses.
5. Exclusive of loans and federal funds transactions with domestic commercial
banks.
6. Loans sold are those sold outright to a bank's own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank's holding company (if
not a bank), and nonconsolidated nonbank subsidiaries of the holding company.
A20
1.28
DomesticNonfinancialStatistics • April 1987
LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities
M i l l i o n s o f d o l l a r s , W e d n e s d a y figures e x c e p t as n o t e d
1986
1987
Account
Dec. 3
1 Cash and balances due from depository institutions
2 Total loans, leases and securities, net 1
Securities
3 U.S. Treasury and government agency 2
4
Trading account 2
5
Investment account, by maturity
6
One year or less
7
Over one through five years
8
Over five years
9 Other securities 2
10
Trading account 2
Investment account
11
12
States and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks and securities
16 Other trading account assets 2
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Loans and leases
Federal funds sold 3
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-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
T o finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans and leases, net
All other assets 4
44 Total assets
Deposits
45 Demand deposits
46
Individuals, partnerships, and corporations
47
States and political subdivisions
48
U.S. government
49
Depository institutions in the United States
50
Banks in foreign countries
Foreign governments and official institutions
51
Certified and officers' checks
52
53 Transaction balances other than demand deposits
ATS, NOW, Super N O W , telephone transfers)
54 Nontransaction balances
55
Individuals, partnerships and corporations
56
States and political subdivisions
57
U.S. government
58
Depository institutions in the United States
59
Foreign governments, official institutions and banks
60 Liabilities for borrowed money
Borrowings from Federal Reserve Banks
61
62
Treasury tax-and-loan notes
63
All other liabilities for borrowed money 5
64 Other liabilities and subordinated note and debentures
65 Total liabilities
66 Residual (total assets minus total liabilities) 6
Dec. 10
Dec. 17
Dec. 24
Dec. 31
Jan. 7
Jan. 14
Jan. 21
Jan. 28
26,092
28,839
30,069
25,957
32,884
23,241
29,606
26,664
32,952
216,340
212,332
216,971
219,590
219,526
220,193
220,232
220,952
224,049
0
0
14,172
1,503
5,689
6,980
0
0
16,213
14,174
1,793
12,381
2,039
0
0
0
13,809
1,437
5,355
7,016
0
0
16,167
14,162
1,781
12,380
2,006
0
0
0
13,580
1,415
5,404
6,761
0
0
15,879
14,176
1,809
12,368
1,703
0
0
0
13,500
1,419
5,395
6,686
0
0
16,447
14,648
1,787
12,862
1,799
0
0
0
13,529
1,423
5,330
6,775
0
0
16,484
14,616
1,696
12,920
1,868
0
0
0
13,748
1,850
4,916
6,982
0
0
16,230
14,050
1,448
12,602
2,180
0
0
0
13,182
1,569
4,637
6,976
0
0
16,097
13,981
1,425
12,556
2,116
0
0
0
13,179
1,583
4,631
6,965
0
0
16,093
13,960
1,597
12,363
2,133
0
0
0
13,335
1,357
4,440
7,538
0
0
16,154
13,940
1,587
12,353
2,214
0
25,740
12,308
7,549
5,883
166,675
162,378
62,287
956
61,331
60,978
352
35,406
19,996
18,787
9,225
2,724
6,839
9,203
310
8,664
990
6,734
4,297
1,551
4,909
160,215
71,372
25,711
11,183
8,034
6,494
163,109
158,833
61,764
680
61,084
60,708
375
35,727
20,116
18,033
8,848
2,679
6,505
8,177
297
8,410
839
5,469
4,276
1,553
4,912
156,644
69,144
27,740
14,556
7,459
5,725
166,228
161,936
62,323
742
61,582
61,214
368
35,994
20,208
18,891
9,778
2,462
6,650
9,221
325
8,381
771
5,822
4,292
1,565
4,892
159,771
71,900
24,440
11,797
7,267
5,376
171,608
167,307
63,980
548
63,432
63,044
388
36,557
20,483
20,479
10,716
3,076
6,686
9,501
334
8,429
722
6,822
4,302
1,569
4,837
165,203
71,241
20,477
10,054
5,858
4,565
175,324
171,026
67,561
544
67,016
66,585
432
37,504
20,750
21,610
11,321
3,061
7,229
6,091
346
8,413
1,072
7,679
4,298
1,562
4,728
169,035
79,865
21,706
9,450
6,184
6,072
175,035
170,734
67,488
615
66,873
66,438
436
38,244
20,989
22,025
12,451
2,982
6,591
6,430
260
8,535
908
5,856
4,300
1,578
4,948
168,509
66,894
25,000
12,162
6,759
6,079
172,491
168,205
65,647
590
65,056
64,598
459
38,454
20,829
21,368
12,076
2,823
6,468
6,750
236
8,769
989
5,162
4,286
1,582
4,957
165,952
63,178
24,095
10,773
7,640
5,682
174,112
169,805
64,796
779
64,017
63,490
527
38,540
20,803
23,200
12,395
4,202
6,603
6,540
231
8,760
1,136
5,799
4,307
1,582
4,943
167,586
62,208
26,680
10,076
8,583
8,022
174,402
170,081
65,909
768
65,141
64,686
455
38,541
20,695
21,460
12,204
2,979
6,277
6,980
240
8,749
1,062
6,446
4,321
1,583
4,940
167,879
61,762
313,805
310,314
318,940
316,789
332,275
310,328
313,016
309,825
318,762
63,939
42,231
713
850
7,101
5,560
764
6,720
63,874
44,555
704
466
6,951
5,663
568
4,967
66,194
45,484
614
215
7,370
4,500
608
7,404
66,372
45,521
728
587
7,900
5,814
795
5,028
78,411
55,129
1,106
245
9,213
6,453
681
5,583
61,673
44,102
705
380
5,747
6,023
641
4,074
59,464
43,072
719
561
5,918
4,560
610
4,025
64,512
44,768
821
627
6,313
7,011
734
4,239
65,564
43,905
686
439
7,285
5,848
617
6,783
6,800
95,480
86,122
6,442
64
2,240
611
83,625
0
1,532
82,094
36,388
6,808
95,238
86,027
6,392
62
2,167
589
80,213
0
440
79,772
36,270
7,097
95,920
87,009
6,118
59
2,145
588
83,973
800
3,652
79,521
37,919
7,434
96,345
87,482
6,008
56
2,221
579
80,317
0
4,392
75,925
39,087
7,742
97,844
88,643
6,064
50
2,524
563
80,216
0
4,609
75,608
39,978
7,907
98,981
89,943
5,940
50
2,540
508
80,801
0
4,506
76,295
33,037
7,753
98,629
89,513
6,093
50
2,441
531
82,980
0
4,610
78,370
36,140
7,584
99,180
90,124
6,177
37
2,322
520
74,184
0
4,825
69,359
36,341
7,449
98,517
89,336
6,165
38
2,448
530
81,178
2,990
4,824
73,364
38,053
286,232
282,402
291,104
289,555
304,191
282,398
284,965
281,802
290,760
27,573
27,912
27,836
27,234
28,084
27,930
28,050
28,024
28,002
201,268
170,882
34,390
198,766
168,789
34,229
199,094
169,634
34,093
203,482
173,535
34,743
204,440
174,427
35,176
204,818
174,840
35,727
202,532
173,252
35,491
204,311
175,039
36,057
208,292
178,802
35,885
MEMO
67 Total loans and leases (gross) and investments adjusted 1 ' 7
68 Total loans and leases (gross) adjusted 7
69 Time deposits in amounts of $100,000 or more
1. Excludes trading account securities.
2. Not available due to confidentiality.
3. Includes securities purchased under agreements to resell.
4. Includes trading account securities.
5. Includes federal 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.
7. Exclusive of loans and federal funds transactions with domestic commercial
banks.
NOTE. These data also appear in the Board's H.4.2 (504) release. For address,
see inside front cover.
Weekly Reporting Commercial Banks
1.30
LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS 1
Liabilities
A21
Assets and
Millions of dollars, W e d n e s d a y figures
1987
1986
Account
Dec. 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Cash and due from 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
To financial institutions
Commercial banks in the United States.
Banks in foreign countries
Nonbank financial institutions
To foreign govts, and official institutions ..
For purchasing and carrying securities . .
All other
Other assets (claims on nonrelated parties)..
Net due from related institutions
Total assets
Deposits or credit balances due to other
than directly related institutions
Transaction accounts and credit balances3
Individuals, partnerships, and
corporations
Other
Nontransaction accounts 4
Individuals, partnerships, and
corporations
Other
Borrowings from other than directly
related institutions
Federal funds purchased 5
From commercial banks in the
United States
From others
Other liabilities for borrowed money
To commercial banks in the
United States
To others
Other liabilities to nonrelated parties
Net due to related institutions
Total liabilities
Dec. 1C
Dec. 17
Dec. 24
Dec. 31'
Jan. 7
Jan. 14
Jan. 21
Jan. 28
10,195
77,993
5,985
5,463
5,502
4,589
913
61,042
37,74C
9,625
77,381
6,231
5,626
5,002
4,028
973
60,523
37,246
9,616
81,849
6,100
5,678
5,664
4,717
947
64,407
38,570
9,651
87,080
6,066
5,846
5,137
4,218
918
70,032
41,090
11,946
91,699
6,508
6,102
6,671
5,675
9%
72,418
43,214
9,997
85,084
6,715
6,118
4,612
3,308
1,303
67,639
40,951
9,790
84,204
6,460
6,158
5,513
3,864
1,648
66,073
40,183
9,990
86,466
6,630
6,256
7,463
5,856
1,606
66,116
40,530
10,191
86,081
6,430
6,453
6,645
4,880
1,765
66,553
40,767
3,033
34,707'
32,459'
2,248
15,056
11,749
1,031
2,276
510
2,363
5,373'
22,878
12,410
123,476
3,111
34,135
31,987
2,147
15,021
11,573
1,048
2,401
512
2,655
5,089
22,608
13,419
123,034
2,999
35,571
33,354
2,217
16,034
12,360
1,099
2,575
518
3,635
5,649
23,286
14,281
129,032
3,031
38,058
35,620
2,438
17,378
13,388
1,038
2,952
505
4,852
6,207
22,894
16,498
136,122
3,170
40,044
37,989
2,054
17,310
12,770
1,249
3,290
548
5,105
6,242
23,673
14,427
141,745
3,039
37,912
35,764
2,149
16,059
11,916
1,092
3,051
525
3,900
6,204
22,378
15,988
133,448
2,893
37,290
35,085
2,205
15,974
11,981
1,092
2,900
527
3,496
5,892
22,723
16,615
133,332
2,988
37,542
35,324
2,218
15,546
11,785
990
2,772
556
3,602
5,883
22,756
14,980
134,191
2,987
37,781
35,364
2,416
15,798
12,044
1,048
2,706
576
3,610
5,802
22,913
13,701
132,886
37,383
3,600
37,425
3,502
38,849
3,960
40,348
3,578
42,414
3,975
38,694
3,191
39,572
3,576
39,745
3,809
39,225
3,488
2,006
1,593
33,784
1,987
1,515
33,923
2,082
1,878
34,889
2,180
1,398
36,770
1,888
2,086
38,440
1,884
1,308
35,502
1,843
1,733
35,9%
1,969
1,840
35,936
1,859
1,629
35,737
27,270
6,514
27,418
6,505
28,367
6,522
30,112
6,658
31,525
6,915
28,774
6,728
29,114
6,882
29,275
6,661
28,868
6,869
47,890
24,298
45,776
23,176
48,447
24,656
53,087
23,552
50,791
21,822
55,698
31,088
53,770
28,147
54,113
28,405
51,234
26,191
16,445
7,853
23,591
15,112
8,064
22,600
15,092
9,564
23,790
14,516
9,036
29,535
12,046
9,776
28,968
20,112
10,976
24,610
18,361
9,786
25,623
17,123
11,282
25,707
16,001
10,190
25,042
20,606
2,985
24,735
13,468
123,476
19,506
3,094
24,746
15,086
123,034
20,556
3,234
25,433
16,303
129,032
25,540
3,996
25,296
17,391
136,122
24,628
4,341
25,119
23,421
141,745
21,691
2,919
24,077
14,979
133,448
22,580
3,042
24,519
15,472
133,332
22,133
3,574
24,517
15,817
134,191
21,864
3,178
24,967
17,460
132,886
61,655
50,206
61,780
49,923
64,772
52,993
69,473
57,562
73,254
60,644
69,859
57,026
68,359
55,741
68,824
55,938
69,157
56,275
MEMO
41 Total loans (gross) and securities adjusted 6
42 Total loans (gross) adjusted 6
1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and
agencies of foreign banks that include those branches and agencies with assets of
$750 million or more on June 30, 1980, plus those branches and agencies that had
reached the $750 million asset level on Dec. 31, 1984.
2. Includes securities purchased under agreements to resell.
3. Includes credit balances, demand deposits, and other checkable deposits.
4. Includes savings deposits, money market deposit accounts, and time
deposits.
5. Includes securities sold under agreements to repurchase.
6. Exclusive of loans to and federal funds sold to commercial banks in the
United States.
A22
1.31
DomesticNonfinancialStatistics • April 1987
GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations'
Billions of dollars, estimated daily-average balances, not seasonally adjusted
Commercial banks
Type of holder
1981
Dec.
1982
Dec.
1983
Dec.
1985
1984
Dec.
June
34
Sept.
1986
Dec.
Mar.
June'
Sept.
1 All holders—Individuals, partnerships, and
corporations
288.9
291.8
293.5
302.7
298.4
299.3
321.0
307.4
322.4
333.6
2
3
4
5
6
28.0
154.8
86.6
2.9
16.7
35.4
150.5
85.9
3.0
17.0
32.8
161.1
78.5
3.3
17.8
31.7
166.3
81.5
3.6
19.7
27.9
164.5
82.8
3.7
19.5
28.1
167.2
82.0
3.5
18.5
32.3
178.5
85.5
3.5
21.2
31.8
166.6
84.0
3.4
21.6
32.3
180.0
86.4
3.0
20.7
35.9
185.9
86.3
3.3
22.2
Financial business
Nonfinancial business
Consumer
Foreign
Other
Weekly reporting banks
1981
Dec.
1982
Dec.
1983
Dec.
June3-4
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial business
Nonfinancial business
Consumer
Foreign
Other
Sept.
Dec.
Mar.
June1,
Sept.P
137.5
144.2
146.2
157.1
151.2
153.6
168.6
159.7
168.5
174.7
21.0
75.2
30.4
2.8
8.0
26.7
74.3
31.9
2.9
8.4
24.2
79.8
29.7
3.1
9.3
25.3
87.1
30.5
3.4
10.9
22.1
83.7
31.0
3.5
10.9
22.7
85.5
31.6
3.3
10.5
25.9
94.5
33.2
3.1
12.0
25.5
86.8
32.6
3.3
11.5
25.7
93.1
34.9
2.9
11.9
28.9
94.8
35.0
3.2
12.8
1. Figures include cash items in process of collection. Estimates of gross
deposits are based on reports supplied by a sample of commercial banks. Types of
depositors in each category are described in the June 1971 BULLETIN, p. 466.
Figures may not add to totals because of rounding.
2. Beginning in March 1984, these data reflect a change in the panel of weekly
reporting banks, and are not comparable to earlier data. Estimates in billions of
dollars for December 1983 based on the new weekly reporting panel are: financial
business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other,
9.5.
3. Beginning March 1985, financial business deposits and, by implication, total
gross demand deposits have been redefined to exclude demand deposits due to
1986
1985
1984
Dec. 2
thrift institutions. Historical data have not been revised. The estimated volume of
such deposits for December 1984 is $5.0 billion at all insured commercial banks
and $3.0 billion at weekly reporting banks.
4. Historical data back to March 1985 have been revised to account for
corrections of bank reporting errors. Historical data before March 1985 have not
been revised, and may contain reporting errors. Data for all commercial banks for
March 1985 were revised as follows (in billions of dollars): all holders, - . 3 ;
financial business, - . 8 ; nonfinancial business, - . 4 ; consumer, .9; foreign, .1;
other, - . 1 . Data for weekly reporting banks for March 1985 were revised as
follows (in billions of dollars): all holders, - .1; financial business, - . 7 ; nonfinancial business, - . 5 ; consumer, 1.1; foreign, .1; other, - . 2 .
Financial Markets
1.32
A23
COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1986
Instrument
Dec.
Dec.
Dec.
Dec.
Dec.
July
Aug.
Sept.
Oct.
Nov.
Dec.
Commercial paper (seasonally adjusted unless noted otherwise)
1 A11 issuers
2
3
4
5
6
Financial companies 3
Dealer-placed paper4
Total
Bank-related (not seasonally
adjusted)
Directly placed paper5
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies 6
166,436
187,658
237,586
300,899
332,330
311,435
326,601
326,567
329,516
321,907
332,330
34,605
44,455
56,485
78,443
100,942
90,038
94,084
97,994
99,688
93,548
100,942
2,516
2,441
2,035
1,602
2,265
1,772
1,799
1,980
2,172
2,031
2,265
84,393
97,042
110,543
135,504
152,159
142,121
149,200
147,497
147,163
146,434
152,159
32,034
47,437
35,566
46,161
42,105
70,558
44,778
86,952
40,860
79,229
39,067
79,276
40,415
83,317
37,455
81,076
38,957
82,665
39,205
81,925
40,860
79,229
Bankers dollar acceptances (not seasonally adjusted) 7
7 Total
Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others
Basis
14 Imports into United States
15 Exports from United States
16 All other
8
9
10
11
12
13
79,543
78,309
78,364'
68,4iy
64,974'
66,437
64,480
67,009
65,920
64,952
64,974
10,910
9,471
1,439
9,355
8,125
1,230
9,811
8,621
1,191
11,197'
9,471'
1,726
13,423'
11,707'
1,716
11,577
9,257
2,320
12,127
9,794
2,333
13,101
11,001
2,101
12,569
10,178
2,391
12,787
10,951
1,835
13,423
11,707
1,716
1,480
949
66,204
418
729
67,807
0
671
67,881'
0
937
56,279'
0
1,317
50,234'
0
931
53,929
0
897
51,456
0
924
52,984
0
1,131
52,220
0
1,052
51,113
0
1,317
50,234
17,683
16,328
45,531
15,649
16,880
45,781
17,845'
16,305'
44,214'
15,147
13,204
40,062'
14,67c
12,94c
37,364'
15,601
13,781
37,056
15,796
12,948
35,736
16,612
12,693
37,704
15,980
12,612
37,327'
15,354'
12,699'
36,899
14,670
12,940
37,364
1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The
key changes in the content of the data involved additions to the reporting panel,
the exclusion of broker or dealer placed borrowings under any master note
agreements from the reported data, and the reclassification of a large portion of
bank-related paper from dealer-placed to directly placed.
2. Correction of a previous misclassification of paper by a reporter has created
a break in the series beginning December 1983. The correction adds some paper to
nonfinancial and to dealer-placed financial paper.
3. Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
1.33
4. Includes all financial company paper sold by dealers in the open market.
5. As reported by financial companies that place their paper directly with
investors.
6. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
7. Beginning October 1984, the number of respondents in the bankers acceptance survey were reduced from 340 to 160 institutions—those with $50 million or
more in total acceptances. The new reporting group accounts for over 95 percent
of total acceptances activity.
PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per annum
Average
rate
Effective Date
11.50
12.00
12.50
13.00
12.75
12.50
12.00
11.75
11.25
10.75
1985—Jan. 15
May 20
June 18
10.50
10.00
9.50
1986—Mar. 7
Apr. 21
July 11
Aug. 26
9.00
8.50
8.00
7.50
NOTE. These data also appear in the Board's H.15 (519) release. For address,
see inside front cover.
1984—Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept
Oct.
Nov.
Dec.
1985—Jan..
Feb.
Mar.
Apr.
May.
June
July.
11.00
11.00
11.21
11.93
12.39
12.60
13.00
13.00
12.97
12.58
11.77
11.06
10.61
10.50
10.50
10.50
10.31
9.78
9.50
1985—Aug.
Sept.
Oct.
Nov.
Dec.
1986—Jan..
Feb.,
Mar.
Apr.,
May,
June,
July.
Aug.
Sept.
Oct.,
Nov.
Dec.
1987—Jan. .
A24
1.35
DomesticNonfinancialStatistics • April 1987
INTEREST RATES Money and Capital Markets
A v e r a g e s , percent per annum; w e e k l y and monthly figures are averages of business day data unless otherwise noted.
1987
1986
Instrument
1984
1985
1987, week ending
1986
Oct.
Nov.
Dec.
Jan.
Jan. 2
Jan. 9
Jan. 16
Jan. 23
Jan. 30
MONEY MARKET RATES
1 Federal funds 1 - 2
2 Discount window borrowing 1 ' 2,3
Commercial paper 4 ' 5
3
1-month
4
3-month
i
6-month
Finance paper, directly placed 4 ' 5
6
1-month
7 3-month
8 6-month
Bankers acceptances 5 - 6
9
3-month
10 6-month
Certificates of deposit, secondary market 7
11
1-month
12 3-month
13 6-month
14 Eurodollar deposits, 3-month 8
U.S. Treasury bills5
Secondary market 9
15
3-month
16
6-month
17
1-year
Auction average 10
18
3-month
19
6-month
20
1-year
10.22
8.80
8.10
7.69
6.80
6.33
5.85
5.50
6.04
5.50
6.91
5.50
6.43
5.50
9.20
5.50
7.62
5.50
6.01
5.50
6.01
5.50
6.13
5.50
10.05
10.10
10.16
7.94
7.95
8.01
6.62
6.49
6.39
5.74
5.68
5.61
5.84
5.76
5.69
6.63
6.10
5.88
5.95
5.84
5.76
7.31
6.32
6.00
6.01
5.87
5.77
5.90
5.80
5.73
5.87
5.79
5.71
5.94
5.87
5.78
9.97
9.73
9.65
7.91
7.77
7.75
6.58
6.38
6.31
5.74
5.56
5.50
5.79
5.67
5.58
6.32
5.81
5.74
5.86
5.59
5.60
6.89
6.05
6.03
5.83
5.57
5.76
5.79
5.57
5.54
5.75
5.44
5.41
5.86
5.61
5.55
10.14
10.19
7.92
7.96
6.39
6.29
5.58
5.52
5.67
5.59
5.96
5.78
5.74
5.65
6.08
5.86
5.72
5.64
5.71
5.63
5.69
5.60
5.81
5.71
10.17
10.37
10.68
10.73
7.97
8.05
8.25
8.28
6.61
6.52
6.51
6.71
5.71
5.69
5.70
5.88
5.80
5.76
5.76
5.96
6.66
6.04
5.95
6.23
5.94
5.87
5.85
6.10
7.32
6.22
6.06
6.16
6.00
5.90
5.86
6.06
5.91
5.85
5.84
6.08
5.85
5.82
5.80
6.10
5.92
5.88
5.87
6.14
9.52
9.76
9.92
7.48
7.65
7.81
5.98
6.03
6.08
5.18
5.26
5.41
5.35
5.41
5.48
5.53
5.55
5.55
5.43
5.44
5.46
5.65
5.64
5.64
5.46
5.49
5.49
5.35
5.41
5.45
5.35
5.33
5.38
5.51
5.47
5.50
9.57
9.80
9.91
7.47
7.64
7.76
5.96
6.03
6.07
5.18
5.26
5.44
5.35
5.42
5.45
5.49
5.53
5.60
5.45
5.47
5.44
5.53
5.55
n.a.
5.38
5.43
n.a.
5.23
5.27
n.a.
5.44
5.43
5.44
5.58
5.59
n.a.
10.89
11.65
11.89
12.24
12.40
12.44
12.48
12.39
8.43
9.27
9.64
10.13
10.51
10.62
10.97
10.79
6.46
6.87
7.06
7.31
7.55
7.68
7.85
7.80
5.72
6.28
6.56
6.83
7.24
7.43
7.61
7.70
5.80
6.28
6.46
6.76
7.08
7.25
7.42
7.52
5.87
6.27
6.43
6.67
6.97
7.11
7.28
7.37
5.78
6.23
6.41
6.64
6.92
7.08
n.a.
7.39
5.97
6.36
6.54
6.79
7.07
7.20
7.36
7.45
5.80
6.22
6.38
6.63
6.91
7.05
n.a.
7.33
5.76
6.22
6.39
6.63
6.92
7.07
n.a.
7.37
5.69
6.18
6.37
6.58
6.86
7.03
n.a.
7.33
5.82
6.26
6.46
6.66
6.96
7.15
n.a.
7.47
11.99
10.75
8.14
8.04
7.81
7.67
7.60
7.74
7.57
7.58
7.54
7.67
9.61
10.38
10.10
8.60
9.58
9.11
6.95
7.76r
7.32
6.44
7.23
7.08
6.19
7.13
6.85
6.29
7.25
6.86
6.12
6.93
6.61
6.25
7.20
6.85
6.15
6.35
6.70
6.10
7.05
6.65
6.05
7.00
6.54
6.05
7.05
6.56
13.49
12.71
13.31
13.74
14.19
12.05
11.37
11.82
12.28
12.72
9.71
9.02
9.47
9.95
10.39
9.54
8.86
9.33
9.72
10.24
9.37
8.68
9.20
9.51
10.07
9.23
8.49
9.02
9.41
9.97
9.04
8.36
8.86
9.23
9.72
9.22
8.49
9.01
9.41
9.97
9.12
8.40
8.93
9.32
9.82
9.03
8.33
8.83
9.26
9.70
8.98
8.31
8.81
9.15
9.65
9.01
8.37
8.83
9.16
9.68
13.81
12.06
9.61
9.48
9.31
9.08
8.92
9.14
8.92
8.88
8.84
8.81
11.59
4.64
10.49
4.25
8.76
3.48
8.17
3.49
8.07
3.40
8.18
3.38
7.91
3.17
8.21
3.47
7.99
3.28
7.91
3.20
7.86
3.14
7.89
3.07
CAPITAL MARKET RATES
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
U.S. Treasury notes and bonds 11
Constant maturities 12
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
Composite 13
Over 10 years (long-term)
State and local notes and bonds
Moody's series 14
Aaa
Baa
Bond Buyer series 15
Corporate bonds
Seasoned issues 16
All industries
Aaa
Aa
A
Baa
A-rated, recently-offered utility
bonds 17
MEMO: Dividend/price ratio 18
39 Preferred stocks
40
Common stocks
1. Weekly and monthly figures are averages of all calendar days, where the
rate for a weekend or holiday is taken to be the rate prevailing on the preceding
business day. The daily rate is the average of the rates on a given day weighted by
the volume of transactions at these rates.
2. Weekly figures are averages for statement week ending Wednesday.
3. Rate for the Federal Reserve Bank of New York.
4. Unweighted average of offering rates quoted by at least five dealers (in the
case of commercial paper), or finance companies (in the case of finance paper).
Before November 1979, maturities for data shown are 30-59 days, 90—119 days,
and 120-179 days for commercial paper; and 30-59 days, 90—119 days, and 150—
179 days for finance paper.
5. Yields are quoted on a bank-discount basis, rather than an investment yield
basis (which would give a higher figure).
6. Dealer closing offered rates for top-rated banks. Most representative rate
(which may be, but need not be, the average of the rates quoted by the dealers).
7. Unweighted average of offered rates quoted by at least five dealers early in
the day.
8. Calendar week average. For indication purposes only.
9. Unweighted average of closing bid rates quoted by at least five dealers.
10. Rates are recorded in the week in which bills are issued. Beginning with the
Treasury bill auction held on Apr. 18, 1983, bidders were required to state the
percentage yield (on a bank discount basis) that they would accept to two decimal
places. Thus, average issuing rates in bill auctions will be reported using two
rather than three decimal places.
11. Yields are based on closing bid prices quoted by at least five dealers.
12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields
are read from a yield curve at fixed maturities. Based on only recently issued,
actively traded securities.
13. Averages (to maturity or call) for all outstanding bonds neither due nor
callable in less than 10 years, including one very low yielding "flower" bond.
14. General obligations based on Thursday figures; Moody's Investors Service.
15. General obligations only, with 20 years to maturity, issued by 20 state and
local governmental units of mixed quality. Based on figures for Thursday.
16. Daily figures from Moody's Investors Service. Based on yields to maturity
on selected long-term bonds.
17. Compilation of the Federal Reserve. This series is an estimate of the yield
on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of
call protection. Weekly data are based on Friday quotations.
18. Standard and Poor's corporate series. Preferred stock ratio based on a
sample of ten issues: four public utilities, four industrials, one financial, and one
transportation. Common stock ratios on the 500 stocks in the price index.
NOTE. These data also appear in the Board's H.15 (519) and G. 13 (415) releases.
For address, see inside front cover.
Financial Markets
1.36
STOCK MARKET
A25
Selected Statistics
1986
Indicator
1984
1985
1987
1986
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
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 & Poor's Corporation (1941-43 = 10)1 . . .
7 American Stock Exchange 2
(Aug. 31, 1973 = 50)
92.46
108.01
85.63
46.44
89.28
160.50
108.09
123.79
104.11
56.75
114.21
186.84
136.00
155.85
119.85
71.35
147.18
236.34
137.37
158.59
122.21
68.65
151.28
238.46
140.82
163.15
120.65
70.69
151.73
245.30
138.32
158.06
112.03
74.20
150.23
240.18
140.91
160.10
111.24
77.84
152.90
245.00
137.06
156.52
114.06
74.56
145.56
238.27
136.74
156.56
120.04
73.38
143.89
237.36
140.84
162.10
122.27
75.77
142.97
245.09
142.12
163.85
121.26
76.07
144.29
248.61
151.17
175.60
126.61
78.54
153.32
264.51
207.96
229.10
264.38
274.22
281.18
269.93
268.55
264.30
257.82
265.14
264.65
289.02
Volume of trading (thousands of shares)
8 New York Stock Exchange
9 American Stock Exchange
91,084 109,191 141,306 127,624 126,151 137,709 128,661 150,831
9,885 10,853
6,107
8,355 11,846 11,870 12,795 10,320
131,155
8,930
154,770
10,513
148,228
12,272
192,419
14,755
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers
3
Free credit balances at brokers4
11 Margin-account 5
12 Cash-account
22,470
28,390
36,840
32,370
32,480
33,170
34,550
34,580
36,310
37,090
36,840
34,960
1,755
10,215
2,715
12,840
4,880
19,000
2,405
12,970
2,585
13,570
2,570
14,600
3,035
14,210
3,395
14,060
3,805
14,445
3,765
15,045
4,880
19,000
5,060
17,395
Margin-account debt at brokers (percentage distribution, end of period) 6
13 Total
14
15
16
17
18
19
By equity class (in percentf
Under 40
40-49
50-59
60-69
70-79
80 or more
100.0
100.0
100.0
100.0
18.0
18.0
16.0
9.0
5.0
6.0
34.0
20.0
19.0
30.0
19.0
22.0
12.0
8.0
9.0
31.0
20.0
20.0
13.0
8.0
8.0
11.0
8.0
8.0
Special miscellaneous-account balances at brokers (end of period) 6
20 Total balances (millions of dollars)
Distribution by equity status
21 Net credit status
Debt status, equity of
22 60 percent or more
23
Less than 60 percent
8
109,620
75,840
99,310
112,401
59.0
58.0
58.0
59.0
29.0
31.0
33.0
9.0
32.0
9.0
(percent)
11.0
11.0
Margin requirements (percent of market value and effective date) 9
24 Margin stocks
25 Convertible bonds
26 Short sales
Mar. 11, 1968
June 8, 1968
May 6, 1970
Dec. 6, 1971
Nov. 24, 1972
Jan. 3, 1974
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
50
50
50
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Beginning July 1983, under the revised Regulation T, margin credit at
broker-dealers includes credit extended against stocks, convertible bonds, stocks
acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues was discontinued in April 1984, and margin credit at
broker-dealers became the total that is distributed by equity class and shown on
lines 17-22.
4. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
5. New series beginning June 1984.
6. In July 1986, the New York Stock Exchange stopped reporting certain data
items that were previously obtained in a monthly survey of a sample of brokers
and dealers. Data items that are no longer reported include distributions of margin
debt by equity status of the account and special miscellaneous-account
balances.
7. Each customer's equity in his collateral (market value of collateral less net
debit balance) is expressed as a percentage of current collateral values.
8. 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.
9. Regulations G, T, and U of the Federal Reserve Board of Governors,
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 stocks" is defined in the
corresponding regulation.
A26
1.37
DomesticNonfinancialStatistics • April 1987
SELECTED FINANCIAL INSTITUTIONS
Selected Assets and Liabilities
Millions of dollars, end o f period
1986
Account
1983
1984
Feb.
Mar.
May
Apr.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Savings and loan associations
1 Assets
773,417
903,488
943,029
947,302
954,869
963,274
954,226'
7 Mortgages
494,789
555,277
4 Cash and investment securities1 .
5 Other
104,274
174,354
124,801
223,396
576,608
98,482
127,028
239,394
574,732
99,332
131,464
241,104
575,177
103,415
132,351'
247,339
574,992
108,324
134,881
253,400'
565,037' 565,353'
113,158' 113,099'
130,877 132,791'
258,31C 259,806'
6 Liabilities and net worth
7 Savings capital
8 Borrowed money
9 FHLBB
10 Other
11 Other
12 Net worth 2
957,952'
965,035' 957,303' 961,939' 964,198'
566,438'
113,619
138,864'
259,731'
557,137'
117,675'
138,552'
261,613'
557,303'
121,238'
138,532'
266,101'
963,163
556,780'
122,420'
141,504'
265,914'
553,552
122,847
142,841
266,769
773,417
903,488
943,029
947,302
954,869
963,274
954,226'
957,952'
965,035' 957,303' 961,939' 964,198'
963,163
634,455
92,127
52,626
39,501
15,968
725,045
125,666
64,207
61,459
17,944
747,016
131,671
71,214
60,457
23,125
752,056
133,407
70,464
62,943
20,078
750,299
140,427
73,815
66,612
21,978
751,138
145,032
73,520
71,512
24,722
744,026
148,054'
73,553
74,501'
20,792
747,020 749,020 743,517' 742,682' 740,095'
146,578' 148,535 155,735' 152,626' 156,896'
80,364
75,594
75,295
75,626'
75,058
71,520'
72,941
75,371' 77,331' 81,270'
22,782'
24,703' 15,463' 23,264' 24,097'
740,920
156,814
80,129
76,685
20,557
30,867
34,833
41,217
41,760
42,163
42,382
41,353'
41,571'
42,776'
42,588'
43,365'
43,110'
42,871
54,113
61,305
52,542
54,366
55,818
57,997
57,200
55,687
53,180
51,163'
49,887'
48,222'
41,650
MEMO
N
Mortgage loan commitments
outstanding 3
FSLlC-insured federal savings banks
14 Assets
64,969
98,559
146,508
152,823
155,686
164,129
180,124
183,317'
186,810' 196,228' 202,106' 204,927'
211,368
15 Mortgages
16 Mortgage-backed securities....
17 Other
38,698
7,172
6,595
57,429
9,949
10,971
81,641
16,367
13,759
85,028
17,851
13,923
86,598
18,661
14,590
89,108
19,829
15,083
99,758
21,598
16,774
101,759
23,247
17,025
103,020
24,097
17,056
108,217' 110,830' 112,138'
26,440' 27,516' 28,326'
18,492
18,693' 19,265'
113,403
29,825
19,784
18 Liabilities and net worth
64,969
98,559
146,508
152,823
155,686
164,129
180,124
183,317'
186,810' 196,228' 202,106' 204,927'
211,368
19
20
71
??
73
24
53,227
7,477
4,640
2,837
1,157
3,108
79,572
12,798
7,515
5,283
1,903
4,286
114,743
21,254
11,283
9,971
3,397
7,114
119,434
22,747
12,064
10,683
3,291
7,349
121,133
23,1%
12,476
10,720
3,758
7,599
126,123
25,686
12,830
12,856
4,338
7,982
138,168
28,502
15,301
13,201
4,279
9,175
140,610
28,722
15,866
12,856
4,564'
9,422'
142,858
29,390
16,123
13,267
4,914'
9,647
154,447'
33,937'
17,863'
16,074'
5,652'
10,891'
157,600
37,079
19,897
17,182
5,749
10,939
2,151
3,234
7,718
8,330
8,287
8,762
9,410
10,134
9,770
9,957'
8,687
Savings capital
Borrowed money
FHLBB
Other
Other
Net worth
149,074' 152,834
32,319
33,430
16,853
17,382
15,466
16,048
4,671'
5,324'
10,163' 10,522
MEMO
25 Mortgage loan commitments
outstanding 3
10,221'
9,356'
Savings banks
26 Assets
27
28
29
30
31
32
33
34
Loans
Mortgage
Other
Securities
U.S. government
Mortgage-backed securities...
State and local government...
Corporate and other
Cash
Other assets
35 Liabilities
36 Deposits
37
Regular 4
38
Ordinary savings
39
Time
40
Other
41 Other liabilities
42 General reserve accounts
193,535
203,898
218,119
221,256
222,542
226,495
223,367
224,569
227,011
228,854
230,919
232,577
97,356
19,129
102,895
24,954
109,702
32,501
110,271
34,873
111,813
34,591
112,417
35,500
110,958
36,692
111,971
36,421
113,265
37,350
114,188
37,298
116,648
36,130
117,612
36,149
15,360
18,205
2,177
25,375
6,263
9,670
14,643
19,215
2,077
23,747
4,954
11,413
12,474
21,525
2,297
20,707
5,646
13,267
12,313
21,593
2,306
20,403
5,845
13,652
12,013
21,885
2,372
20,439
5,570
13,859
13,210
22,546
2,343
20,260
6,225
13,994
12,115
22,413
2,281
2,036
5,301
13,244
12,297
22,954
2,309
20,862
4,651
13,104
12,043
21,161
2,400
20,602
5,018
13,172
12,357
23,216
2,407
20,902
4,811
13,675
12,585
23,437
2,347
21,156
5,195
13,421
13,037
24,051
2,290
20,749
5,052
13,637
193,535
203,898
218,119
221,256
222,542
226,495
223,367
224,569
227,011
228,854
230,919
232,577
188,960
184,704
33,021
105,562
4,256
18,412
13,548
189,025
184,580
33,057
105,550
4,445
19,074
14,114
190,310
185,716
33,577
105,146
4,594
21,384
14,519
189,109
183,970
34,008
103,083
5,139
19,226
14,731
188,615
183,433
34,166
102,374
5,182
20,641
15,084
189,937
184,764
34,530
102,668
5,173
21,360
15,427
190,210
185,002
35,227
102,191
5,208
21,947
16,319
190,334
185,254
36,165
101,125
5,080
23,319
16,8%
190,858
185,958
36,739
102,240
4,900
24,254
17,146
172,665
170,135
38,554
95,129
2,530
10,154
10,368
180,616
177,418
33,739
104,732
3,198
12,504
10,510
186,777
182,890
32,693
104,588
3,887
17,793
13,211
n.a.
Financial Markets
All
1.37—Continued
1986
Account
1983
1984
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Credit unions 5
43 Total assets/liabilities and capital .
81,961
93,036
122,623
126,653
128,229
132,415
134,703
137,901
139,233
140,496
143,662
145,653
44
45
54,482
27,479
63,205
29,831
80,024
42,599
82,275
44,378
83,543
44,686
86,289
46,126
87,579
47,124
89,539
48,362
90,367
48,866
91,981
48,515
93,257
50,405
94,638
51,015
50,083
32,930
17,153
74,739
49,889
24,850
62,561
42,337
20,224
84,348
57,539
26,809
74,207
48,059
26,148
110,541
73,227
37,314
75,300
48,633
26,667
114,579
75,698
38,881
76,385
49,756
26,629
116,703
77,112
39,591
76,774
49,950
26,824
120,331
79,479
40,852
77,847
50,613
27,234
122,952
80,975
41,977
79,647
51,331
28,316
125,331
82,596
42,735
80,656
52,007
28,649
126,268
83,132
43,136
81,820
53,042
28,778
128,125
84,607
43,518
83,388
53,434
29,954
130,483
86,158
44,325
84,635
53,877
30,758
131,778
87,009
44,769
n.a.
n.a.
n.a.
Federal
State
46 Loans outstanding
47
Federal
48
State
49 Savings
50
Federal
51
State
Life insurance companies
52 Assets
53
54
55
56
57
58
59
60
61
62
63
Securities
Government
United States 6
State and local
Foreign 7
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
654,948 722,979
839,856
848,535
855,605
863,610
872,359
877,919
887,255
892,304
910,691
50,752 63,899
28,636 42,204
9,986
8,713
12,130 12,982
322,854 359,333
257,986 295,998
64,868 63,335
150,999 156,699
22,234 25,767
54,063 54,505
54,046 63,776
76,761
53,264
9,588
13,909
435,758
354,911
80,847
172,997
29,356
54,267
57,351
77,965
54,289
9,674
14,002
440,963
357,196
83,767
174,823
29,804
54,273
57,753
78,494
54,705
9,869
13,920
445,573
361,306
84,267
175,951
30,059
54,272
57,492
79,051
55,120
9,930
14,001
450,279
364,122
86,157
177,554
30,025
54,351
57,802
78,284
54,197
10,114
13,973
455,119
367,966
87,153
180,041
30,350
57,342
58,290
78,722
54,321
10,350
14,051
455,013
369,704
85,309
182,542
31,151
54,249
58,792
79,188
54,487
10,472
14,229
463,135
374,670
88,465
183,943
31,844
54,247
57,905
81,636
56,698
10,606
14,332
462,540
378,267
84,273
185,268
31,725
54,273
58,086
84,858
59,802
10,712
14,344
473,860
386,293
87,567
189,460
32,184
54,152
58,006
1. Holdings of stock of the Federal Home Loan Banks are in "other assets."
2. Includes net undistributed income accrued by most associations.
3. As of July 1985, data include loans in process.
4. Excludes checking, club, and school accounts.
5. Data include all federally insured credit unions, both federal and state
chartered, serving natural persons.
6. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under "Business" securities.
7. Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
NOTE. Savings and loan associations: Estimates by the FHLBB for all
associations in the United States based on annual benchmarks for non-FSLICinsured associations and the experience of FSLIC-insured associations.
FSLIC-insured federal savings banks: Estimates by the FHLBB for federal
savings banks insured by the FSLIC and based on monthly reports of federally
insured institutions.
Savings banks: Estimates by the National Council of Savings Institutions for all
savings banks in the United States and for FDIC-insured savings banks that have
converted to federal savings banks.
Credit unions: Estimates by the National Credit Union Administration for
federally chartered and federally insured state-chartered credit unions serving
natural persons.
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 toted, in "other assets."
A28
1.38
DomesticNonfinancialStatistics • April 1987
FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Calendar year
Type of account or operation
Fiscal
year
1984
Fiscal
year
1985
Fiscal
year
1986
1986
Aug.
U.S. budget1
1 Receipts, total
2 On-budget
3 Off-budget
4 Outlays, total
5 On-budget
6 Off-budget
7 Surplus, or deficit ( - ) , total
8 On-budget
Off-budget
9
Source of financing (total)
Borrowing from the public
Cash and monetary assets (decrease, or
increase ( - ) ) 2
12 Other 3
10
11
666,457
n.a.
n.a.
851,796
n.a.
n.a.
-185,339
n.a.
n.a.
734,057
547,886
186,170
945,987
769,180
176,807
-211,931
-221,294
9,363
170,817
5,636
8,885
22,345
3,791
18,553
Sept.
1987
Oct.
Nov.
Dec.
59,012
43,865
15,147
84,267
68,780
15,486
-25,255
-24,915
-340
52,967
38,158
14,809
79,973
63,639
16,334
-27,006
-25,481
-1,524
78,035
60,694
17,341
90,112
75,623
14,489
-12,077
-14,930
2,853
Jan.
769,091
568,862
200,228
989,789
806,291
183,498
-220,698
-237,428
16,371
56,523
41,404
15,119
84,434
68,112
16,322
-27,911
-26,708
-1,203
197,269
235,745
20,278
22,188
5,936
40,352
22,824
4,353
10,673
3,989
-18,044
2,997
10,298
-2,665
-21,313
2,862
18,131
1,188
-2,721
-10,625
-14,751
4,004
-9,564
7,381
17,060
4,174
12,886
31,384
7,514
23,870
10,428
1,106
9,322
31,384
7,514
23,870
13,616
2,491
11,126
17,007
2,529
14,478
30,945
7,588
23,357
41,307
15,746
25,561
78,013
59,978
18,035
81,750
65,614
16,136
-3,737
-5,636
1,898
81,771
62,981
18,790
83,942
68,176
15,766
-2,170
-5,195
3,024
MEMO
13 Treasury operating balance (level, end of
period)
14 Federal Reserve Banks
15 Tax and loan accounts
1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. The Federal
Financing Bank (FFB) activities are now shown as separate accounts under the
agencies that use the FFB to finance their programs. The act has also moved two
social security trust funds (Federal old-age survivors insurance and Federal
disability insurance trust funds) off-budget.
2. Includes U.S. Treasury operating cash accounts; SDRs; reserve position on
the U.S. quota in the IMF; loans to International Monetary Fund; and other cash
and monetary assets.
3. Includes accrued interest payable to the public; allocations of special
drawing rights; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S.
currency valuation adjustment; net gain/loss for IMF valuation adjustment; and
profit on the sale of gold.
SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S.
Government," and the "Daily Treasury Statement."
Federal Finance
1.39
A29
U.S. BUDGET RECEIPTS AND OUTLAYS
Millions of dollars
Calendar year
Source or type
Fiscal
year
1985
Fiscal
year
1986
1985
HI
1986
H2
1986
HI
H2
Nov.
1987
Dec.
Jan.
RECEIPTS
1 All sources
2 Individual income taxes, net
3 Withheld
Presidential Election Campaign Fund . . .
4
5 Nonwithheld
6 Refunds
Corporation income taxes
7 Gross receipts
8 Refunds
9 Social insurance taxes and contributions,
net
10 Employment taxes and
contributions 1
Self-employment taxes and
11
contributions 2
12 Unemployment insurance
13 Other net receipts 3
734,057
769,091
380,618
364,790
394,345
387,524
52,967
78,035
81,771
334,531r
298,941
35
101,328
65,743
348,959
314,838'
36
105,994
71,873
166,783
149,288
29
76,155
58,684
169,987
155,725
6
22,295
8,038
169,444
153,919
31
78,981
63,488
183,156
164,071
4
27,733
8,652
24,122
24,242
0
1,143
1,263
33,584
30,733
0
3,585
734
46,466
26,375
0
20,254
163
77,413
16,082
80,442
17,298
42,193
8,370
36,528
7,751
41,946
9,557
42,108
8,230
2,716
968
16,531
839
4,332
872
265,163
283,901
144,598
128,017
156,714
134,006
21,751
22,267
25,664
234,646
255,062
126,038
116,276
139,706
122,246
19,015
21,625
24,266
10,468
25,758
4,759
11,840
24,098
4,742'
9,482
16,213
2,350
985
9,281
2,458
10,581
14,674
2,333
1,338
9,328
2,429
223
2,377
360
0
196
446
795
1,024
375
35,992
12,079
6,422
18,539'
32,919
13,323
6,958
19,887
17,259
5,807
3,204
9,144
18,470
6,354
3,323
9,861
15,944
6,369
3,487
10,002
15,947
7,282
3,649
9,605
2,488
1,090
488
1,279
3,003
1,098
695
1,696
2,840
1,135
652
1,554
18 All types
946,223
989,789
463,842
487,188
486,037
505,739
79,973
90,112
83,942
19
20
21
22
23
24
National defense
International affairs
General science, space, and technology...
Energy
Natural resources and environment
Agriculture
252,748
16,176
8,627
5,685
13,357
25,565
273,369
14,471
9,017
4,792
13,508
31,169
124,186
6,675
4,230
680
5,892
11,705
134,675
8,367
4,727
3,305
7,553
15,412
135,367
5,384
12,519
2,484
6,245
14,482
138,544
8,876'
4,594
2,735
7,141
16,160
20,907
1,986
708
553
973
3,162
24,401
1.14C
843
485
1,253
3,751
22,057
358
562
390
1,003
4,063
25
26
27
28
Commerce and housing credit
Transportation
Community and regional development . . . .
Education, training, employment, social
services
4,229
25,838
7,680
4,258
28,058
7,510
-260
11,440
3,408
644
15,360
3,901
860
12,658
3,169
3,647
14,745
3,494
182
2,399
478
-314
2,409
548
717
1,870
477
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts 4
OUTLAYS
29,342
29,662
14,149
14,481
14,712
15,268
2,504
2,8%
2,358
7.9 Health
30 Social security and medicare
31 Income security
33,542
254,446
128,200
35,936
190,850
120,686
16,945
128,351
65,246
17,237
129,037
59,457
17,872
135,214
60,786
19,814
138,2%
59,628
3,153
22,182
9,130
3,032
23,378
11,625
3,148
22,640
11,301
32
33
34
35
36
37
26,352
6,277
5,228
6,353
129,436
-32,759
26,614
6,555
6,796
6,430
135,284
-33,244
11,956
3,016
2,857
2,659
65,143
-14,436
14,527
3,212
3,634
3,391
67,448
-17,953
12,193
3,352
3,566
2,179
68,054
-17,193
14,497
3,360
2,786
2,767
65,816'
-17,426
797
505
371
-2
12,441
-2,455
3,641
684
895
226
10,958'
-2,694
2,227
482
166
-21
12,583
-2,440
Veterans benefits and services
Administration of justice
General government
General-purpose fiscal assistance
Net interest 5
Undistributed offsetting receipts 6
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. Net interest function includes interest received by trust funds.
6. 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.
Government," and the Budget of the U.S. Government, Fiscal Year 1988.
A30
1.40
DomesticNonfinancialStatistics • April 1987
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1985
1984
1986
Item
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
1 Federal debt outstanding
1,576.7
1,667.4
1,715.1
1,779.0
1,827.5
1,950.3
1,991.1
2,063.6
2,129.5
2 Public debt securities
Held by public
3
4
Held by agencies
1,572.3
1,309.2
263.1
1,663.0
1,373.4
289.6
1,710.7
1,415.2
295.5
1,774.6
1,460.5
314.2
1,823.1
1,506.6
316.5
1,945.9
1,597.1
348.9
1,986.8
1,634.3
352.6
2,059.3
1,684.9
374.4
2,125.3
1,742.4
382.9
4.5
3.4
1.1
4.5
3.4
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.3
3.2
1.1
4.3
3.2
1.1
4.2
3.2
1.1
1,573.0
1,663.7
1,711.4
1,775.3
1,823.8
1,932.4
1,973.3
2,060.0
2,111.0
1,931.1
1.3
1,972.0
1.3
2,058.7
1.3
2,109.7
1.3
2,078.7
2,078.7
2,078.7
2,111.0
5 Agency securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
9 Public debt securities
10 Other debt 1
1,571.7
1.3
1,662.4
1.3
1,710.1
1.3
1,774.0
1.3
1,822.5
1.3
11 MEMO: Statutory debt limit
1,573.0
1,823.8
1,823.8
1,823.8
1,823.8
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
Sept. 30
NOTE. Data from Treasury Bulletin and Daily Treasury Statement
Treasury Department),
(U.S.
Types and Ownership
Billions of dollars, end o f period
1985
Type and holder
1982
1983
1984
Q4
1 Total gross public debt
2
3
4
5
6
7
8
9
in
u
12
13
By type
Interest-bearing debt
Marketable
Bills
Notes
Bonds
Nonmarketable 1
State and local2 government series
Foreign issues
Government
Public
Savings bonds and notes
Government account series 3
14 Non-interest-bearing debt
15
16
17
18
19
70
21
22
23
74
75
26
By holder4
U.S. government agencies and trust funds
Federal Reserve Banks
Private investors
Commercial banks
Money market funds
Insurance companies
Other companies
State and local governments
Individuals
Savings bonds
Other securities
Foreign and international 5
Other miscellaneous investors 6
Q2
Ql
Q3
1,197.1
1,410.7
1,663.0
1,945.9
1,945.9
1,986.8
2,059.3
2,125.3
1,195.5
881.5
311.8
465.0
104.6
314.0
25.7
14.7
13.0
1.7
68.0
205.4
1,400.9
1,050.9
343.8
573.4
133.7
350.0
36.7
10.4
10.4
.0
70.7
231.9
1,660.6
1,247.4
374.4
705.1
167.9
413.2
44.4
9.1
9.1
.0
73.1
286.2
1,943.4
1,437.7
399.9
812.5
211.1
505.7
87.5
7.5
7.5
.0
78.1
332.2
1,943.4
1,437.7
399.9
812.5
211.1
505.7
87.5
7.5
7.5
.0
78.1
332.2
1,984.2
1,472.8
393.2
842.5
223.0
511.4
88.5
6.7
6.7
.0
79.8
336.0
2,056.7
1,498.2
396.9
869.3
232.3
558.5
98.2
5.3
5.3
.0
82.3
372.3
2,122.7
1,564.3
410.7
896.9
241.7
558.4
102.4
4.1
4.1
.0
85.6
365.9
1.6
9.8
2.3
2.5
2.5
2.6
2.6
.4
209.4
139.3
848.4
131.4
42.6
39.1
24.5
127.8
236.3
151.9
1,022.6
188.8
22.8
56.7
39.7
155.1
289.6
160.9
1,212.5
183.4
25.9
76.4
50.1
179.4
348.9
181.3
1,417.2
192.2
25.1
93.2
59.0
n.a.
348.9
181.3
1,417.2
192.2
25.1
93.2
59.0
n.a.
352.6
184.8
1,473.1
195.1
29.9
95.8
59.6
n.a.
374.4
183.8
1,502.7
197.2
22.8
n.a.
59.8
n.a.
382.9
190.8
1,553.3
212.5
24.9
n.a.
67.0
n.a.
68.3
48.2
149.5
217.0
71.5
61.9
166.3
259.8
74.5
69.3
192.9
360.6
79.8
75.0
214.6
n.a.
79.8
75.0
214.6
n.a.
81.4
76.2
225.4
n.a.
83.8
73.9
239.8
n.a.
87.1
69.0
256.3
n.a.
1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual
retirement bonds.
2. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners.
3. Held almost entirely by U.S. government agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust
funds are actual holdings; data for other groups are Treasury estimates.
1986
1985
5. Consists of investments of foreign and international accounts. Excludes noninterest-bearing notes issued to the International Monetary Fund.
6. Includes savings and loan associations, nonprofit institutions, credit unions,
mutual savings banks, corporate pension trust funds, dealers and brokers, certain
U.S. government deposit accounts, and U.S. government-sponsored agencies.
SOURCES. Data by type of security, U.S. Treasury Department, Monthly
Statement of the Public Debt of the United States; data by holder. Treasury
Bulletin.
Federal Finance
1.42
U.S. GOVERNMENT SECURITIES DEALERS
A31
Transactions1
Par value; averages of daily figures, in millions o f dollars
1986
Item
1984
1985
1987
1986
1987
Jan.
Dec. 24' Dec. 31'
1986
Nov/
Dec/
Jan. 7
Jan. 14
Jan. 21
Jan. 28
1
Immediate delivery 2
U.S. government securities
52,778
75,331
95,422
96,369
88,650
112,337
76,468
64,589
101,187
120,451
117,570
107,280
7.
3
4
5
6
By maturity
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
26,035
1,305
11,733
7,606
6,099
32,900
1,811
18,361
12,703
9,556
34,249
2,116
24,664
20,435
13,959
32,166
2,119
25,811
20,756
15,517
33,166
2,353
22,022
19,383
11,726
45,148
3,013
24,697
23,967
15,512
30,688
2,734
21,559
12,095
9,393
31,053
2,125
13,916
11,959
5,536
44,163
3,695
20,922
20,239
12,168
49,549
3,141
25,062
25,887
16,812
49,542
2,588
27,596
22,851
14,992
38,226
2,484
24,063
25,443
17,065
2,919
3,336
3,646
3,801
3,269
3,452
2,480
2,1%
3,464
2,910
4,490
2,991
25,580
24,278
7,846
4,947
3,243
10,018
36,222
35,773
11,640
4,016
3,242
12,717
49,355
42,205
16,726
4,352
3,273
16,645
50,091
41,960
19,909
3,859
2,852
16,550
44,050
40,783
20,159
3,676
2,529
16,516
59,844
48,343
21,410
6,103
3,390
19,339
36,977
37,010
19,164
3,829
2,141
18,133
29,754
32,638
11,561
2,739
1,791
14,278
53,338
44,385
15,489
5,399
3,866
22,515
65,387
52,153
18,820
5,867
3,494
17,908
61,034
52,045
26,100
5,999
3,366
20,212
59,714
44,574
26,124
6,934
2,795
17,173
6,947
4,503
262
5,561
6,069
240
3,311
7,170
12
2,801
6,374
21
1,909
5,519
0
2,879
7,025
0
940
3,434
1,260
3,020
1
2,162
6,025
*
2,785
8,018
0
2,851
6,982
0
3,070
7,324
*
1,364
2,843
1,283
3,857
1,873
7,823
2,419
10,257
2,066
9,933
2,053
10,698
3,061
9,7%
1,313
4,299
1,103
7,331
2,087
11,837
2,857
15,903
1,927
9,8%
7
8
9
10
11
12
n
14
15
16
17
18
By type of customer
U.S. government securities
dealers
U.S. government securities
brokers
All others 3
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures transactions 4
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions 5
U.S. government securities
Federal agency securities
1. Transactions are market purchases and sales of securities as reported to the
Federal Reserve Bank of New York by the U.S. government securities dealers on
its published list of primary dealers.
Averages for transactions are based on the number of trading days in the period.
The figures exclude allotments of, and exchanges for, new U.S. government
securities, redemptions of called or matured securities, purchases or sales of
securities under repurchase agreement, reverse repurchase (resale), or similar
contracts.
2. Data for immediate transactions do not include forward transactions.
3. Includes, among others, all other dealers and brokers in commodities and
*
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal Reserve System.
4. Futures contracts are standardized agreements arranged on an organized
exchange in which parties commit to purchase or sell securities for delivery at a
future date.
5. Forward transactions are agreements arranged in the over-the-counter
market in which securities are purchased (sold) for delivery after 5 business days
from the date of the transaction for government securities (Treasury bills, notes,
and bonds) or after 30 days for mortgage-backed agency issues.
NOTE. Data for the period May 1 to Sept. 30, 1986, are partially estimated.
A32
1.43
DomesticNonfinancialStatistics • April 1987
U.S. GOVERNMENT SECURITIES DEALERS
Positions and Financing1
A v e r a g e s o f daily figures, in millions o f dollars
1986
Nov.
Dec.'
1987
1986
Jan.
Dec. 31'
1987
Jan. 7
Jan. 14
Jan. 21
Jan. 28
Positions
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Net immediate 2
U.S. government securities
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
Treasury bills
Treasury coupons
Federal agency securities
Forward positions
U.S. government securities
Federal agency securities
5,429
5,500
63
2,159
-1,119
-1,174
15,294
7,369
3,874
3,788
7,391
10,075
1,050
5,154
-6,202
-2,686
22,860
9,192
4,586
5,570
13,049
12,726
3,698
9,297
-9,504
-3,169
33,075
10,533
5,533
8,087
14,367'
14,967
2,030
8,419
-8,131
-2,916
30,258'
9,954'
5,244
9,630
10,219
10,979
2,969
6,815
-6,977
-3,567
34,694
10,049
5,072
9,789
13,172
13,396
3,463
9,185
-7,175
-5,696
31,258
9,439
4,756
9,973
8,919
9,760
3,034
8,291
-7,712
-4,453
34,543
9,442
4,703
10,065
10,384
10,895
3,346
7,819
-6,824
-4,852
29,543
9,187
4,508
8,716
12,240
13,205
3,062
7,857
-6,543
-5,341
30,909
8,610
3,930
8,726
17,083
17,702
3,424
8,388
-7,116
-5,315
33,432
9,814
4,928
10,769
15,400
13,895
3,803
11,940
-7,983
-6,255
31,730
9,795
5,370
10,906
-4,525
1,794
233
-7,322
4,465
-722
-18,063
3,493
-153
-15,972
4,022
-82
-16,170
3,359
-89
-15,293
5,230
-92
-14,305
4,247
-90
-15,233
4,144
-92
-15,641
4,801
-92
-16,578
4,330
-92
-14,340
6,393
-93
-1,643
-9,205
-911
-9,420
-2,303
-11,920
-781
-14,634'
-2,101
-17,058
183
-16,649
-2,775
-14,446
-1,315
-13,678
-1,539
-18,489
416
-19,093
2,434
-16,036
Financing 3
Reverse repurchase agreements 4
Overnight and continuing
Term agreements
Repurchase agreements 5
18 Overnight and continuing
19 Term agreements
16
17
44,078
68,357
68,035
80,509
98,954
108,693
108,790
117,299
109,241
123,297
n.a.
n.a.
101,861
130,498
129,183
115,555
130,627
128,658
128,525
125,274
n.a.
n.a.
75,717
57,047
101,410
70,076
141,735
102,640
146,960
115,968
149,315
120,500
n.a.
n.a.
138,766
133,497
163,641
111,563
175,674
115,342
177,665
114,066
n.a.
n.a.
1. Data for dealer positions and sources of financing are obtained from reports
submitted to the Federal Reserve Bank of New York by the U.S. government
securities dealers on its published list of primary dealers.
Data for positions are averages of daily figures, in terms of par value, based on
the number of trading days in the period. Positions are net amounts and are shown
on a commitment basis. Data for financing are in terms of actual amounts
borrowed or lent and are based on Wednesday figures.
2. Immediate positions are net amounts (in terms of par values) of securities
owned by nonbank dealer firms and dealer departments of commercial banks on a
commitment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase (RPs). The maturities of some
repurchase agreements are sufficiently long, however, to suggest that the securities involved are not available for trading purposes. Immediate positions include
reverses to maturity, which are securities that were sold after having been
obtained under reverse repurchase agreements that mature on the same day as the
securities. Data for immediate positions do not include forward positions.
3. Figures cover financing involving U.S. government and federal agency
securities, negotiable CDs, bankers acceptances, and commercial paper.
4. Includes all reverse repurchase agreements, including those that have been
arranged to make delivery on short sales and those for which the securities
obtained have been used as collateral on borrowings, that is, matched agreements.
5. Includes both repurchase agreements undertaken to finance positions and
"matched book" repurchase agreements.
NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially
estimated.
Federal Finance
1.44
FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES
A33
Debt Outstanding
Millions of dollars, end o f period
1986
1983
Agency
1 Federal and federally sponsored agencies
2 Federal agencies
3 Defense Department 1
Export-Import Bank 2 ' 3
4
5
Federal Housing Administration 4
6
Government National Mortgage Association
participation certificates'
7 Postal Service 6
8
Tennessee Valley Authority
United States Railway Association 6
9
10 Federally sponsored agencies 7
11 Federal Home Loan Banks
12 Federal Home Loan Mortgage Corporation
13 Federal National Mortgage Association
14 Farm Credit Banks
15 Student Loan Marketing Association 8
MEMO
16 Federal Financing Bank debt
Lending to federal and federally
17
18
19
20
21
1985
July
Aug.
Sept.
Oct.
Nov.
240,068
271,220
293,905
298,361
299,211
302,411
305,011
33,940
243
14,853
194
35,145
142
15,882
133
36,390
71
15,678
115
35,768
45
14,953
115
36,132
40
14,953
115
36,473
37
14,274
117
36,716
36
14,274
123
36,952
35
14,274
124
2,165
1,404
14,970
111
2,165
1,337
15,435
51
2,165
1,940
16,347
74
2,165
1,854
16,562
74
2,165
1,854
16,931
74
2,165
3,104
16,702
74
2,165
3,104
16,940
74
2,165
3,104
17,176
74
206,128
48,930
6,793
74,594
72,816
3,402
236,075
65,085
10,270
83,720
71,193
5,745
257,515
74,447
11,926
93,896
68,851
8,395
262,593
83,081
12,818
93,417
62,857
10,420
263,079
85,997
12,801
92,286
61,575
10,420
265,938
87,133
13,548
91,629
63,073
10,555
268,295
87,146
14,007
93,272
63,079
10,791
n.a.
86,891
n.a.
93,477
62,693
11,102
135,791
145,217
153,373
155,526
156,132
156,873
157,371
157,452
14,789
1,154
5,000
13,245
111
15,852
1,087
5,000
13,710
51
15,670
1,690
5,000
14,622
74
14,947
1,604
5,000
14,937
74
14,947
1,604
5,000
15,306
74
14,268
2,854
4,970
15,077
74
14,268
2,854
4,970
15,515
74
14,268
2,854
4,970
15,751
74
55,266
19,766
26,460
58,971
20,693
29,853
64,234
20,654
31,429
65,174
21,321
32,469
65,274
21,398
32,529
65,374
21,460
32,796
65,374
21,506
32,810
65,374
21,531
32,630
Dec.
n.a.
n.a.
n a.
88, /52
n.a.
93,563
62,328
11,795
sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
Other Lending10
22 Farmers Home 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 Home Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
1984
n a.
7. Includes outstanding noncontingent liabilities: Notes, bonds, and debentures. Some data are estimated.
8. Before late 1981, the Association obtained financing through the Federal
Financing Bank.
9. The FFB, which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since FFB
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 FFB 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.
A34
1.45
DomesticNonfinancialStatistics • April 1987
NEW SECURITY ISSUES Tax-Exempt State and Local Governments
Millions of dollars
1986
Type of issue or issuer,
or use
1984
1 A1I issues, new and refunding 1
1985
1986
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
106,641
214,189
134,606
13,215
12,611
19,833
25,965
4,532
8,825
10,085
14,082
Type of issue
2 General obligation
3 Revenue
26,485
80,156
52,622
161,567
44,801
89,806
7,115
6,100
6,326
6,285
6,531
13,302
5,931
20,034
1,267
3,265
2,104
6,721
1,427
8,658
4,254
9,828
Type of issuer
4 State
5 Special district and statutory authority 2
6 Municipalities, counties, townships
9,129
63,550
33,962
13,004
134,363
66,822
14,935
79,291
40,374
2,825
6,427
3,962
1,705
6,351
4,554
2,879
10,589
6,365
2,121
15,714
8,125
9
3,275
1,248
697
5,757
2,371
111
7,761
2,213
%1
9,414
3,707
7 Issues for new capital, total
94,050
156,050
79,195
7,155
8,178
13,165
17,810
2,558
3,789
4,085
8,831
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
7,553
7,552
17,844
29,928
15,415
15,758
16,658
12,070
26,852
63,181
12,892
24,398
16,948
11,666
35,383
17,332
5,594
47,433
1,827
273
3,450
1,424
264
5,978
1,694
947
1,583
1,518
255
6,614
2,800
3,164
4,425
1,186
975
7,281
2,926
1,460
6,292
2,554
489
12,245
558
827
1,365
812
138
832
928
1,195
2,3%
2,098
499
1,708
1,486
976
3,239
2,635
331
1,418
1,588
588
2,330
3,944
2,159
3,473
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning April 1986.
SOURCES. Securities Data Company beginning April 1986. Public Securities
Association for earlier data. This new data source began with the November
BULLETIN.
1.46
NEW SECURITY ISSUES Corporations
Millions of dollars
Type of issue or issuer,
or use
1 All issues1
1986
1984
1985
1986
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
132,531
201,269
294,218
19,564
25,776
21,093
24,245
16,093
28,582
28,867
25,041
109,903
165,754
232,395
13,050
20,756
16,766
18,481
12,830
23,476
22,268
18,800
73,579
36,324
119,559
46,195
232,395
n.a.
13,050
n.a.
20,756
n.a.
16,766
n.a.
18,481
n.a.
12,830
n.a.
23,476
n.a.
22,268
n.a.
18,800
n.a.
24,607
13,726
4,694
10,679
2,997
53,199
52,228
15,140
5,743
12,957
10,456
69,232
52,872
19,220
4,262
25,535
13,430
117,080
3,939
1,776
427
1,709
712
4,487
5,368
2,056
250
1,948
810
10,324
2,535
3,409
497
1,470
465
8,390
4,536
1,045
550
2,098
1,615
8,638
2,345
1,405
375
1,915
417
6,373
2,055
1,067
170
2,537
1,255
16,392
3,378
1,213
0
2,587
1,158
13,933
3,300
2,066
70
2,448
776
10,140
11 Stocks3
22,628
35,515
61,823
6,514
5,020
4,327
5,764
3,263
5,106
6,599
6,241
Type
12 Preferred
13 Common
4,118
18,510
6,505
29,010
11,514
50,309
856
5,658
1,284
3,736
726
3,601
1,290
4,474
402
2,861
817
4,289
1,390
5,209
1,293
4,948
4,054
6,277
589
1,624
419
9,665
5,700
9,149
1,544
1,966
978
16,178
14,206
9,234
2,395
3,788
1,509
30,691
1,827
953
372
346
74
2,942
1,132
421
154
406
140
2,767
746
917
179
305
107
2,073
982
803
57
208
379
3,335
250
1,009
28
174
0
1,802
570
1,271
511
410
59
2,285
2,565
535
15
218
104
3,162
1,753
691
186
870
106
2,635
2 Bonds
2
Type of offering
3 Public
4 Private placement
5
6
7
8
9
10
14
15
16
17
18
19
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1. Figures, which represent gross proceeds of issues maturing in more than one
year, sold for cash in the United States, are principal amount or number of units
multiplied by offering price. Excludes offerings of less than $100,000, secondary
offerings, undefined or exempted issues as defined in the Securities Act of 1933,
employee stock plans, investment companies other than closed-end, intracorporate transactions, and sales to foreigners.
2. Monthly data include only public offerings.
3. Beginning in August 1981, gross stock offerings include new equity volume
from swaps of debt for equity.
SOURCES. IDD Information Services, Inc., Securities and Exchange Commission and the Board of Governors of the Federal Reserve System.
Securities Market and Corporate Finance
1.47
O P E N - E N D INVESTMENT COMPANIES
A35
Net Sales and Asset Position
Millions of dollars
1986
Item
1985
1986
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
INVESTMENT COMPANIES 1
1 Sales of own shares 2
2 Redemptions of own shares 3
3 Net sales
222,670
132,440
90,230
411,747
239,340
172,407
31,251
16,706
14,545
30,619
18,921
11,698
35,684
21,508
14,176
32,636
20,102
12,534
34,690
21,338
13,352
37,150
20,782
16,368
33,672
20,724
12,948
44,670
34,779
9,891
4 Assets 4
5
Cash position5
6
Other
251,695
20,607
231,088
424,088
30,783
393,305
343,926
28,184
315,742
356,040
28,083
327,957
360,050
28,080
331,970
387,547
28,682
358,865
381,872
29,540
352,332
402,644
30,826
371,818
416,939
29,579
387,360
424,088
30,783
393,305
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 AND THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1984
Account
1983
1984
1985
1986
1985
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2
3
4
5
6
1 Corporate profits with inventory valuation and
capital consumption adjustment
Profits before tax
Profits tax liability
Profits after tax
Dividends
Undistributed profits
213.7
207.6
77.2
130.4
71.5
58.8
264.7
235.7
95.4
140.3
78.3
62.0
280.6
223.1
91.8
131.4
81.6
49.8
265.0
221.9
87.8
134.1
80.1
54.0
266.4
213.8
87.8
126.0
80.9
45.1
274.3
213.8
87.1
126.7
81.4
45.3
296.3
229.2
95.8
133.4
81.6
51.8
285.6
235.8
96.4
139.4
82.5
57.0
296.4
222.5
95.7
126.9
85.2
41.7
293.1
227.7
99.0
128.8
87.5
41.2
302.0
240.4
104.4
135.9
88.8
47.2
7 Inventory valuation
8 Capital consumption adjustment
-10.9
17.0
-5.5
34.5
-.6
58.1
-1.6
44.7
-.5
53.2
1.6
58.9
6.1
61.0
-9.4
59.2
16.5
57.3
10.6
54.8
6.1
55.5
SOURCE. Survey of Current Business (Department of Commerce).
A36
1.49
DomesticNonfinancialStatistics • April 1987
NONFINANCIAL CORPORATIONS
Assets and Liabilities
Billions of dollars, e x c e p t for ratio
1985
Account
1980
1 Current assets
2
3
4
5
6
Cash
U.S. government securities
Notes and accounts receivable
Inventories
Other
1981
1982
1983
1986
1984
Ql
Q2
Q3
Q4
Ql
1,328.3
1,419.6
1,437.1
1,575.9
1,703.0
1,722.7
1,734.6
1,763.0
1,784.6
1,795.7
127.0
18.7
507.5
543.0
132.1
135.6
17.7
532.5
584.0
149.7
147.8
23.0
517.4
579.0
169.8
171.8
31.0
583.0
603.4
186.7
173.6
36.2
633.1
656.9
203.2
167.5
35.7
650.3
665.7
203.5
167.1
35.4
654.1
666.7
211.2
176.3
32.6
661.0
675.0
218.0
189.2
33.0
671.5
666.0
224.9
195.3
31.0
663.4
679.6
226.3
7 Current liabilities
890.6
971.3
986.0
1,059.6
1,163.6
1,174.1
1,182.9
1,211.9
1,233.6
1,222.3
8 Notes and accounts payable
9 Other
514.4
376.2
547.1
424.1
550.7
435.3
595.7
463.9
647.8
515.8
636.9
537.1
651.7
531.2
670.4
541.5
682.7
550.9
668.4
553.9
10 Net working capital
437.8
448.3
451.1
516.3
539.5
548.6
551.7
551.1
551.0
573.4
11 MEMO: Current ratio 1
1.492
1.462
1.458
1.487
1.464
1.467
1.466
1.455
1.447
1.469
Statistics, Board of Governors of the Federal Reserve System, Washington, D.C.
20551.
SOURCE. Federal Trade Commission and Bureau of the Census.
1. Ratio of total current assets to total current liabilities.
NOTE. For a description of this series, see "Working Capital of Nonfinancial
C o r p o r a t i o n s " i n t h e J u l y 1978 BULLETIN, p p . 5 3 3 - 3 7 .
All data in this table reflect the most current benchmarks. Complete data are
available upon request from the Flow of Funds Section, Division of Research and
1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment •
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
Industry
1 Total nonfarm business
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
Nonmanufacturing
4 Mining
Transportation
5
Railroad
6
Air
7
Other
Public utilities
8
Electric
9
Gas and other
10 Commercial and other 2
1984
1985
1987
Q2
Q3
Q4
Ql
Q2
Q3
Q41
Ql>
354.44
387.13
380.69
387.86
389.23
397.88
377.94
375.92
374.55
394.34
386.82
66.24
72.58
73.27
80.21
69.96
74.81
74.34
79.91
72.99
81.48
75.47
82.79
68.01
76.02
68.33
73.35
69.31
69.89
74.17
80.00
67.86
73.36
16.86
15.88
11.24
16.56
15.89
15.25
12.99
11.22
10.15
10.62
10.36
6.79
3.56
6.17
7.08
4.79
6.15
6.72
6.04
5.87
7.38
3.71
6.35
7.79
5.17
5.85
6.74
6.07
6.34
6.22
6.58
5.42
6.77
5.77
5.74
7.31
5.69
6.03
6.60
6.12
6.30
6.37
7.22
6.26
37.03
10.44
134.75
36.11
12.71
150.93
33.96
12.57
159.50
36.00
12.61
150.99
35.58
12.86
151.62
36.38
13.41
155.42
34.21
12.82
155.67
33.81
12.74
158.18
33.91
11.99
160.25
33.91
12.72
163.91
33.34
12.97
169.08
• T r a d e and services are no longer being reported separately. They are included
in Commercial and other, line 10.
1. Anticipated by business.
1986
19861
2. "Other" consists of construction; wholesale and retail trade; finance and
insurance; personal and business services; and communication.
SOURCE. Survey of Current Business (Department of Commerce).
Securities Markets and Corporate Finance
1.51
DOMESTIC FINANCE COMPANIES
A37
Assets and Liabilities
Billions of dollars, end of period
1985
Account
1982
1983
1986
1984
Q2
Q3
Ql
Q4
Q2
Q3
Q4
ASSETS
1
2
3
4
Accounts receivable, gross
Consumer
Business
Real estate
Total
5
6
Less:
Reserves for unearned income
Reserves for losses
7
8
9
78.1
101.4
20.2
199.7
87.4
113.4
22.5
223.4
96.7
135.2
26.3
258.3
106.0
144.6
28.4
279.0
116.4
141.4
29.0
286.5
120.8
152.8
30.4
304.0
125.5
159.7
31.5
316.7
134.7
160.3
32.4
327.5
146.7
152.7
33.8
333.2
146.1
165.0
35.2
346.3
31.9
3.5
33.0
4.0
36.5
4.4
38.6
4.8
41.0
4.9
40.9
5.0
41.3
5.1
41.8
5.2
43.6
5.5
42.5
6.0
Accounts receivable, net
All other
164.3
30.7
186.4
34.0
217.3
35.4
235.6
39.5
240.6
46.3
258.1
46.8
270.3
50.6
280.4
52.1
284.1
63.1
297.8
61.7
Total assets
195.0
220.4
252.7
275.2
286.9
304.9
321.0
332.5
347.2
359.6
18.3
51.1
18.7
59.7
21.3
72.5
18.5
82.6
18.2
93.6
21.0
96.9
20.4
102.0
22.9
106.4
25.3
110.6
30.6
115.2
12.7
64.4
21.2
27.4
13.9
68.1
30.1
29.8
16.2
77.2
33.1
32.3
16.6
85.7
36.9
34.8
16.6
86.4
36.6
35.7
17.2
93.0
39.6
37.1
18.5
100.0
41.4
38.8
20.9
101.8
40.4
40.2
21.6
105.3
43.2
41.3
23.1
106.0
43.6
41.1
195.0
220.4
252.7
275.2
286.9
304.9
321.0
332.5
347.2
359.6
LIABILITIES
12
13
14
15
Bank loans
Commercial paper
Debt
Other short-term
Long-term
All other liabilities
Capital, surplus, and undivided profits
16
Total liabilities and capital
10
11
NOTE. Components may not add to totals due to rounding.
These data also appear in the Board's G.20 (422) release. For address, see
inside front cover.
1.52
DOMESTIC FINANCE COMPANIES
Business Credit
Millions of dollars, seasonally adjusted except as noted
Type
Changes in accounts
receivable
Extensions
Repayments
1986
1986
1986
Accounts
receivable
outstanding
Dec. 3 1 ,
1986'
Oct.
1 Total
2
3
4
5
6
7
8
9
10
Retail financing of installment sales
Automotive (commercial vehicles)
Business, industrial, and farm equipment
Wholesale financing
Automotive
Equipment
All other
Leasing
Automotive
Equipment
Loans on commercial accounts receivable and factored commercial accounts receivable
All other business credit
1. Not seasonally adjusted.
Nov.
Dec.
Oct.
Nov.
Dec.
Oct.
Nov.
Dec.
164,989
5,751
1,197
1,736
32,469
26,641
30,872
26,718
25,444
29,136
17,429
20,210
281
11
-422
168
-418
177
1,359
965
651
1,195
720
1,611
1,078
954
1,073
1,027
1,138
1,434
22,078
5,017
7,778
4,592
134
149
1,194
149
315
-1,021
93
58
13,818
715
2,043
9,895
883
1,857
9,973
945
2,141
9,226
581
1,893
8,701
734
1,542
10,994
852
2,083
18,610
43,151
248
-10
-90
-237
1,497
1,244
1,018
1,770
766
1,290
1,733
1,985
770
1,780
856
1,527
236
741
16,185
14,531
-267
613
-125
245
-681
786
9,201
1,580
8,806
1,298
9,170
2,593
9,468
966
8,931
1,053
9,851
1,808
NOTE. These data also appear in the Board's G.20 (422) release. For address,
see inside front cover.
A38
1.53
DomesticNonfinancialStatistics • April 1987
MORTGAGE MARKETS
Millions of dollars; exceptions noted.
1986
Item
1984
1985
1987
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
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 annum)
7 FHLBB series5
8 HUD series4
96.8
73.7
78.7
27.8
2.64
11.87
104.1
77.4
77.1
26.9
2.53
11.12
118. fr
86.2
75.2
26.6
2.48
9.82
115.7
83.4
73.9
26.2
2.35
9.89
117.9
84.8
74.5
26.5
2.40
9.84
124.0
90.4
75.2
27.1
2.49
9.74
127.5
93.9
75.6
27.9
2.66
9.57
124.2
92.5
76.2
27.3
2.64
9.45
124.8r
93.2'
76.4
27.4'
2.46'
9.28
133.4
98.1
75.6
27.8
2.28
9.17
12.37
13.80
11.58
12.28
10.25'
10.07
10.30
10.28
10.26
9.88
10.17
9.96
10.02
9.89
9.91
9.47
9.69'
9.33
9.55
9.09
13.81
13.13
12.24
11.61
9.91
9.30
10.01
9.31
9.80
9.11
9.90
9.17
9.80
9.06
9.26
8.83
9.21
8.62
8.79
8.46
SECONDARY MARKETS
Yield (percent per annum)
9 FHA mortgages (HUD series)5.
10 GNMA securities6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
12 FHA/VA-insured
13 Conventional
83,339
35,148
48,191
94,574
34,244
60,331
98,048
29,683
68,365
97,255
30,766
66,489
96,675
28,451
68,224
97,717
26,658
71,059
98,402
25,435
72,967
98,210
24,300
73,910
97,895
23,121
74,774
96,382
22,155
74,227
Mortgage transactions (during period)
14 Purchases
15 Sales
16,721
978
21,510
1,301
30,826
n.a.
3,343
n.a.
3,800
n.a.
4,649
n.a.
3,784
n.a.
2,549
n.a.
2,336
n.a.
1,364
n.a.
21,007
6,384
20,155
3,402
32,987
3,386
3,270
7,706
3,840
7,671
4,248
7,252
2,375
5,740
1,811
4,625
1,272
3,386
948
2,258
9,283
910
8,373
12,399
841
11,558
13,795
692
13,103
14,010
739
13,271
13,359
729
12,630
12,905
722
12,183
12,315
707
11,607
Mortgage transactions (during period)
21 Purchases
22 Sales
21,886
18,506
44,012
38,905
8,518
8,113
10,458
10,132
12,486
13,072
11,566
11,417
9,862
10,510
n.a.
n.a.
Mortgage commitments9
23 Contracted (during period)
24 Outstanding (end of period)
32,603
13,318
48,989
16,613
7,863
n.a.
13,707
n.a.
10,658
n.a.
9,356
n.a.
11,233
n.a.
1
Mortgage commitments
16 Contracted (during period)
17 Outstanding (end of period)
FEDERAL H O M E LOAN MORTGAGE CORPORATION
Mortgage holdings (end of period)8
18 Total
19 FHA/VA
20 Conventional
1. Weighted averages based on sample surveys of mortgages originated by
major institutional lender groups; compiled by the Federal Home Loan Bank
Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and "points" paid (by the
borrower or the seller) to obtain a loan.
3. Average effective interest rates on loans closed, assuming prepayment at the
end of 10 years.
4. Average contract rates on new commitments for conventional first mortgages; from Department of Housing and Urban Development.
5. Average gross yields on 30-year, minimum-downpayment, Federal Housing
Administration-insured first mortgages for immediate delivery in the private
secondary market. Based on transactions on first day of subsequent month. Large
monthly movements in average yields may reflect market adjustments to changes
in maximum permissable contract rates.
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 FHA/VA mortgages carrying the
prevailing ceiling rate. Monthly figures are averages of Friday figures from the
Wall Street Journal.
7. Includes some multifamily and nonprofit hospital loan commitments in
addition to 1- to 4-family loan commitments accepted in FNMA's free market
auction system, and through the FNMA-GNMA tandem plans.
8. Includes participation as well as whole loans.
9. Includes conventional and government-underwritten loans. FHLMC's mortgage commitments and mortgage transactions include activity under mortgage/
securities swap programs, while the corresponding data for FNMA exclude swap
activity.
Real Estate
1.54
A39
MORTGAGE DEBT OUTSTANDING
Millions of dollars, end of period
1986
1985
1984
Type of holder, and type of property
1985
1986
Q4
Ql
Q2
Q3
Q4
1 All holders
2,036,158
2,268,423'
2,556,620
2,268,423'
2,317,641'
2,385,417'
2,466,597'
2,556,620
7 1- to 4-family
3 Multifamily
4 Commercial
5
1,320,444
185,414
418,300
112,000
1,468,273'
213,816'
480,719'
105,615
1,668,285
244,122
545,185
99,028
1,468,273'
213,816'
480,719'
105,615
1,4%,282'
221,587'
495,879'
103,893
1,545,311'
229,186'
509,337'
101,583'
1,605,598'
236,595'
524,235'
100,169'
1,668,285
244,122
545,185
99,028
1,272,206
379,498
196,163
20,264
152,894
10,177
154,441
107,302
19,817
27,291
31
1,391,894'
429,196'
213,434'
23,373'
181,032'
11,357
177,263
121,879
23,329
31,973
82
1,504,721
500,163
240,378
30,010
216,771
13,004
224,901
155,229
30,291
39,277
104
1,391,894'
429,196'
213,434'
23,373'
181,032'
11,357
177,263
121,879
23,329
31,973
82
1,410,344'
441,0%'
216,290'
25,389'
187,620'
11,797
188,154
131,381
23,980
32,707
86
1,436,865'
455 ,%5'
221,644'
26,840'
195,247'
12,234'
203,398'
142,174'
26,543'
34,577'
104
1,465,757'
474,542'
229,340'
28,250'
204,480'
12,472
215,036'
149,786'
28,400'
36,762'
88'
1,504,721
500,163
240,378
30,010
216,771
13,004
224,901
155,229
30,291
39,277
104
555,277
421,489
55,750
77,605
433
156,699
14,120
18,938
111,175
12,466
26,291
583,236
432,422
66,410
83,798
606
171,797
12,381
19,894
127,670
11,852
30,402
553,552
404,034
67,282
81,734
502
190,869
13,027
20,709
145,863
11,270
35,236
583,236
432,422
66,410
83,798
606
171,797
12,381
19,894
127,670
11,852
30,402
574,732
420,073
67,140
86,860
659
174,823
12,605
20,009
130,569
11,640
31,539
565,037'
413,865'
66,020'
84,618'
534'
180,041
12,608
20,181
135,924
11,328
32,424
557,139'
408,152'
65,827'
82,644'
5W
185,269
12,927
20,709
140,213
11,420
33,771
553,552
404,034
67,282
81,734
502
190,869
13,027
20,709
145,863
11,270
35,236
158,993
2,301
585
1,716
1,276
213
119
497
447
166,928
1,473
539
934
733
183
113
159
278
157,049
897
47
850
480
140
50
120
170
166,928
1,473
539
934
733
183
113
159
278
165,041
1,533
527
1,006
704
217
33
217
237
161,398
876
49
827
570
146
66
111
247
159,505
887
48
839
457
132
57
115
153
157,049
897
47
850
480
140
50
120
170
4,816
2,048
2,768
87,940
82,175
5,765
52,261
3,074
49,187
10,399
9,654
745
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
4,899
2,303
2,5%
97,895
90,718
7,177
40,719
2,3%
38,323
12,159
10,927
1,232
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
4,964
2,309
2,655
98,795
92,315
6,480
45,422
2,673
42,749
13,623
12,231
1,392
5,094
2,449
2,645
97,295
90,460
6,835
43,369
2,552
40,817
14,194
11,890
2,304
4,966
2,331
2,635
97,717
90,508
7,209
42,119
2,478
39,641
13,359
11,127
2,232
4,899
2,303
2,5%
97,895
90,718
7,177
40,719
2,3%
38,323
12,159
10,927
1,232
49 Mortgage pools or trusts 3
50 Government National Mortgage Association
51
1- to 4-family
57
Multifamily
53 Federal Home Loan Mortgage Corporation
1- to 4-family
54
55
Multifamily
56 Federal National Mortgage Association
57
1- to 4-family
58
Multifamily
59 Farmers Home Administration
60
1- to 4-family
61
Multifamily
6?
Commercial
63
Farm
332,057
179,981
175,589
4,392
70,822
70,253
569
36,215
35,965
250
45,039
21,813
5,841
7,559
9,826
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
575,301
259,373
253,388
5,985
170,393
165,856
4,537
97,174
95,791
1,383
48,361
21,682
7,453
8,459
10,767
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
440,701
220,348
215,148
5,200
110,337
108,020
2,317
62,310
61,117
1,193
47,706
22,082
6,943
8,150
10,531
475,615
229,204
223,838
5,366
125,903
123,676
2,227
72,377
71,153
1,224
48,131
21,987
7,170
8,347
10,627
522,721
241,230
235,664
5,566
146,871
143,734
3,137
86,359
85,171
1,188
48,261
21,782
7,353
8,409
10,717
575,301
259,373
253,388
5,985
170,393
165,856
4,537
97,174
95,791
1,383
48,361
21,682
7,453
8,459
10,767
64 Individuals and others 4
65
1- to 4-family
66 Multifamily
67 Commercial
68 Farm
272,902
153,710
48,480
41,279
29,433
294,559
165,199
55,195
47,897
26,268
319,549
177,133
64,567
52,961
24,888
294,559
165,199
55,195
47,897
26,268
301,555
167,755
57,850
49,756
26,194
311,539
174,3%
60,938
50,513
25,692
318,614
178,647
63,193
51,612
25,162
319,549
177,133
64,567
52,961
24,888
6 Selected financial institutions
7 Commercial banks1
8
1- to 4-family
9
Multifamily
10
Commercial
11
Farm
1? Savings banks
13
1- to 4-family
14
Multifamily
15
Commercial
16
Farm
17
18
19
70
71
7.7
?3
74
75
76
27
Savings and loan associations
1- to 4-family
Multifamily
Commercial
Farm
Life insurance companies
1- to 4-family
Multifamily
Commercial
Farm
Finance companies 2
78 Federal and related agencies
29 Government National Mortgage Association
30
1- to 4-family
31
Multifamily
32 Fanners Home Administration
33
1- to 4-family
Multifamily
34
35
Commercial
36
Farm
37
38
39
40
41
4?
43
44
45
46
47
48
Federal Housing and Veterans
Administration
1- to 4-family
Multifamily
Federal National Mortgage Association
1- to 4-family
Multifamily
Federal Land Banks
1- to 4-family
Farm
Federal Home Loan Mortgage Corporation
1- to 4-family
Multifamily
:
1. Includes loans held by nondeposit trust companies but not bank trust
departments.
2. Assumed to be entirely 1- to 4-family loans.
3. Outstanding principal balances of mortgage pools backing securities insured
or guaranteed by the agency indicated.
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 other U.S. agencies.
NOTE. Based on data from various institutional and governmental sources, with
some quarters estimated in part by the Federal Reserve. Multifamily debt refers to
loans on structures of five or more units.
A40
1.55
DomesticNonfinancialStatistics • April 1987
CONSUMER INSTALLMENT CREDIT 14 Total Outstanding, and Net Change, seasonally adjusted
Millions of dollars
1986
nuiuer, ana type oi creuu
1985
1986
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
Amounts outstanding (end of period)
1 Total
535,098
594,929
555,810
562,267
567,653
573,216
576,609
584,334
591,542
594,824
594,929
By major holder
Commercial banks 2
Finance companies
Credit unions
Retailers 3
Savings institutions
Gasoline companies
240,7%
120,095
75,127
39,187
55,555
4,337
257,653
145,378
83,998
40,907
63,641
3,352
247,498
128,728
77,957
39,826
58,024
3,777
248,681
131,172
78,474
40,139
60,247
3,554
249,753
134,933
79,095
40,076
60,352
3,445
251,197
137,197
80,130
40,251
61,051
3,389
251,908
138,938
80,622
40,351
61,421
3,368
253,329
144,559
81,374
40,445
61,331
3,295
255,805
146,862
82,500
40,641
62,414
3,320
258,678
146,218
83,104
40,716
62,832
3,277
257,653
145,378
83,998
40,907
63,641
3,352
By major type of credit
8 Automobile
9 Commercial banks
10 Credit unions
11 Finance companies
12 Savings institutions
206,482
92,764
30,577
73,391
9,750
241,800
98,695
34,187
97,762
11,157
215,814
93,013
31,728
80,685
10,386
218,965
93,157
31,939
83,221
10,648
222,606
93,261
32,191
86,520
10,634
226,234
94,014
32,613
88,862
10,745
228,814
94,686
32,813
90,578
10,736
236,280
95,842
33,119
%,598
10,721
240,548
97,359
33,577
98,695
10,916
241,095
98,259
33,823
98,016
10,9%
241,800
98,695
34,187
97,762
11,157
13 Revolving
14 Commercial banks
15 Retailers
16 Gasoline companies
17 Savings institutions
118,2%
73,893
34,560
4,337
5,506
127,914
81,213
36,052
3,352
7,297
123,442
78,421
35,170
3,777
6,075
124,545
79,151
35,449
3,554
6,392
124,720
79,397
35,390
3,445
6,488
125,577
79,998
35,542
3,389
6,649
125,915
80,133
35,639
3,368
6,775
126,012
80,160
35,688
3,295
6,869
126,514
80,273
35,861
3,320
7,059
128,095
81,706
35,918
3,277
7,194
127,914
81,213
36,052
3,352
7,297
18 Mobile home
19 Commercial banks
20 Finance companies
21 Savings institutions
25,461
9,578
9,116
6,767
25,069
9,090
8,612
7,367
25,513
9,264
9,286
6,%3
25,560
9,215
9,115
7,230
25,479
9,1%
9,077
7,206
25,398
9,156
8,989
7,253
25,215
9,086
8,882
7,248
24,958
9,071
8,681
7,206
24,995
9,075
8,611
7,309
25,025
9,094
8,598
7,333
25,069
9,090
8,612
7,367
22 Other
23 Commercial banks
24 Finance companies
25 Credit unions
26 Retailers
27 Savings institutions
184,859
64,561
37,588
44,550
4,627
33,533
200,145
68,655
39,005
49,811
4,855
37,820
191,041
66,800
38,757
46,228
4,656
34,600
193,197
67,158
38,836
46,535
4,690
35,977
194,847
67,898
39,336
46,903
4,686
36,024
1%,007
68,030
39,345
47,517
4,710
36,405
1%,665
68,003
39,479
47,809
4,712
36,662
197,084
68,256
39,281
48,255
4,758
36,535
199,485
69,098
39,556
48,922
4,780
37,130
200,610
69,618
39,604
49,280
4,798
37,309
200,145
68,655
39,005
49,811
4,855
37,820
2
3
4
5
6
/
Net change (during period)
28 Total
81,518
59,831
4,871
6,457
5,386
5,563
3,393
7,725
7,208
3,282
105
By major holder
Commercial banks
Finance companies 2
Credit unions
Retailers3
Savings institutions
Gasoline companies
31,638
23,%9
8,583
2,126
15,225
-24
16,857
25,283
8,871
1,720
8,086
-985
2,326
1,306
1,004
-18
451
-198
1,183
2,444
517
313
2,223
-223
1,072
3,761
621
-63
105
-109
1,444
2,264
1,035
175
699
-56
711
1,741
492
100
370
-21
1,421
5,621
752
94
-90
-73
2,476
2,303
1,126
196
1,083
25
2,873
-644
604
75
418
-43
-1,025
-840
894
191
809
75
By major type of credit
35 Automobile
3b Commercial banks
37 Credit unions
38 Finance companies
39 Savings institutions
33,360
8,864
1,963
18,728
3,805
35,318
5,931
3,610
24,371
1,407
1,453
-364
408
1,269
138
3,151
144
211
2,536
262
3,641
104
252
3,299
-14
3,628
753
422
2,342
111
2,580
672
200
1,716
-9
7,466
1,156
306
6,020
-15
4,268
1,517
458
2,097
195
547
900
246
-679
80
705
436
364
-254
161
40 Revolving
41 Commercial banks
42 Retailers
43 Gasoline companies
44 Savings institutions
19,782
15,748
1,4%
-24
2,562
9,618
7,320
1,492
-985
1,791
1,311
1,400
-18
-198
128
1,103
730
279
-223
317
175
246
-59
-109
%
857
601
152
-56
161
338
135
97
-21
126
97
27
49
-73
94
502
113
173
25
190
1,581
1,433
57
-43
135
-181
-493
134
75
103
45 Mobile home
46 Commercial banks
47 Finance companies
48 Savings institutions
1,277
-45
-45
1,367
-392
-488
-504
600
-71
-84
-41
54
47
-49
-171
267
-81
-19
-38
-24
-81
-40
-88
47
-183
-70
-107
-5
-257
-15
-201
-42
37
4
-70
103
30
19
-13
24
44
-4
14
34
49 Other
50 Commercial banks
51 Finance companies
52 Credit unions
53 Retailers
54 Savings institutions
27,099
7,071
5,286
6,620
630
7,492
15,286
4,094
1,417
5,261
228
4,287
2,178
1,373
79
595
0
131
2,156
358
79
307
34
1,377
1,650
740
500
368
-4
47
1,160
132
9
614
24
381
658
-27
134
292
2
257
419
253
-198
446
46
-127
2,401
842
275
667
22
595
1,125
520
48
358
18
179
-465
-%3
-599
531
57
511
29
30
31
32
33
34
1. The Board's series cover most short- and intermediate-term credit extended
to individuals that is scheduled to be repaid (or has the option of repayment) in
two or more installments.
2. More detail for finance companies is available in the G.20 statistical release,
3. Excludes 30-day charge credit held by travel and entertainment companies,
4. All data have been revised.
Consumer Installment Credit
A41
1.56 TERMS OF CONSUMER INSTALLMENT CREDIT
Percent unless noted otherwise
1986
Item
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
INTEREST RATES
Commercial banks'
1 48-month new car 2
2 24-month personal
120-month mobile home 2
3
4 Credit card
Auto finance companies
New car
6 Used car
13.71
16.47
15.58
18.77
12.91
15.94
14.96
18.69
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
14.70
13.95
18.15
11.00
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.58
14.19
13.49
18.09
n.a.
n.a.
n.a.
n.a.
14.62
17.85
11.98
17.59
9.44
15.95
9.35
16.06
9.31
15.83
9.29
15.56
5.40
15.23
6.12
15.17
11.83
15.20
11.71
15.12
48.3
39.7
51.5
41.4
50.0
42.6
49.5
42.7
49.9
42.8
50.4
42.9
44.5
42.5
45.3
42.2
53.4
42.6
53.3
42.7
88
92
91
94
91
97
89
97
89
97
90
97
92
98
92
97
93
97
93
98
9,333
5,691
9,915
6,089
10,665
6,555
10,608
6,611
10,748
6,614
10,756
6,569
11,162
6,763
11,340
6,746
11,160
6,946
10,835
7,168
OTHER TERMS 3
7
8
9
10
11
12
Maturity (months)
New 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.
NOTE. These data also appear in the Board's G.19 (421) release. For address,
see inside front cover.
A42
1.57
DomesticNonfinancialStatistics • April 1987
FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1984
HI
1985
H2
HI
1986
H2
HI'
H2
Nonfinancial sectors
375.8
387.4
548.8
756.3
869.3
827.7
727.8
784.8
732.6 1,006.1
705.2
950.7
87.4
87.8
-.5
161.3
162.1
-.9
186.6
186.7
-.1
198.8
199.0
-.2
223.6
223.7
-.1
214.3
214.7
-.3
181.3
181.5
-.2
216.3
216.4
-.1
201.8
201.9
-.1
245.5
245.5
-.1
211.3
211.4
-.1
217.5
218.0
-.5
5 Private domestic nonfinancial sectors
6 Debt capital instruments
7
Tax-exempt obligations
8
Corporate bonds
9
Mortgages
10
Home mortgages
11
Multifamily residential
12
Commercial
13
Farm
288.5
155.5
23.4
22.8
109.3
72.2
4.8
22.2
10.0
226.2
148.3
44.2
18.7
85.4
50.5
5.4
25.2
4.2
362.2
252.8
53.7
16.0
183.0
117.1
14.1
49.0
2.8
557.5
314.0
50.4
46.1
217.5
129.9
25.1
63.3
-.8
645.7
461.7
152.4
73.9
235.4
150.3
29.2
62.4
-6.4
613.3
447.0
48.5
109.2
289.4
200.6
30.4
64.4
-6.0
546.5
298.4
42.8
31.2
224.5
135.2
27.5
62.9
-1.1
568.5
329.6
58.0
61.1
210.5
124.7
22.7
63.7
-.5
530.8
355.4
67.5
72.7
215.2
133.1
24.6
60.3
-2.8
760.6
568.0
237.3
75.1
255.7
167.5
33.7
64.4
-10.0
494.0
384.3
15.9
129.2
239.2
156.4
30.9
59.3
-7.4
733.2
509.7
81.1
89.1
339.5
244.7
29.9
69.5
-4.6
14
15
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
133.0
22.6
57.0
14.7
38.7
77.9
17.7
52.9
-6.1
13.4
109.5
56.8
25.8
-.8
27.7
243.5
95.0
80.1
21.7
46.6
184.0
96.6
41.3
14.6
31.4
166.3
67.9
80.2
-9.3
27.4
248.1
98.7
91.9
24.8
32.7
238.9
91.3
68.4
18.7
60.5
175.4
97.3
24.9
12.3
40.9
192.6
95.9
57.7
16.9
22.0
109.6
75.3
22.0
-15.7
28.1
223.5
61.2
138.4
-2.9
26.8
19
20
21
22
23
24
By borrowing sector
State and local governments
Households
Farm
Nonfarm noncorporate
Corporate
288.5
6.8
121.4
16.6
38.5
105.2
226.2
21.5
88.4
6.8
40.2
69.2
362.2
34.0
188.0
4.3
76.6
59.3
557.5
27.4
239.5
.1
97.1
193.4
645.7
107.8
295.0
-13.6
92.8
163.7
613.3
60.0
291.2
-11.7
100.7
173.2
546.5
25.2
232.8
-.4
101.4
187.4
568.5
29.6
246.2
.5
92.7
199.5
530.8
56.8
253.6
-5.9
85.6
140.7
760.6
158.7
336.4
-21.3
99.9
186.8
494.0
35.7
231.8
-15.2
95.7
145.9
733.2
84.2
351.1
-8.3
105.7
200.5
25 Foreign net borrowing in United States
26 Bonds
27 Bank loans n.e.c
28 Open market paper
29 U.S. government loans
23.5
5.4
3.0
3.9
11.1
16.0
6.7
-5.5
1.9
13.0
17.4
3.1
3.6
6.5
4.1
6.1
1.3
-6.6
6.2
5.3
1.7
4.0
-2.8
6.2
-5.7
14.4
5.2
-2.1
11.5
-.2
35.5
1.1
-2.2
18.0
18.7
-23.3
1.5
-11.1
-5.6
-8.1
-4.1
5.5
-6.1
4.2
-7.8
7.5
2.6
.4
8.2
-3.6
24.3
7.1
1.4
20.6
-4.8
4.4
3.3
-5.6
2.4
4.4
399.3
403.4
566.2
762.4
871.0
842.0
763.3
761.5
728.4 1,013.5
729.5
955.1
1 Total net borrowing by domestic nonfinancial sectors . . . .
By sector and instrument
2 U.S. government
3 Treasury securities
4 Agency issues and mortgages
30 Total domestic plus foreign
Financial sectors
31 Total net borrowing by financial sectors
By instrument
32 U.S. government related
33 Sponsored credit agency securities
34 Mortgage pool securities
35
36 Private financial sectors
37 Corporate bonds
38 Mortgages
39 Bank loans n.e.c
40 Open market paper
41 Loans from Federal Home Loan Banks
By sector
42 Sponsored credit agencies
43 Mortgage pools
44 Private financial sectors
45 Commercial banks
46 Bank affiliates
47 Savings and loan associations
48 Finance companies
49 REITs
101.9
90.1
94.0
139.0
186.9
242.0
134.2
143.8
154.8
218.9
189.0
295.0
47.4
30.5
15.0
1.9
54.5
4.4
64.9
14.9
49.5
.4
25.2
12.5
.1
1.9
9.9
.8
67.8
1.4
66.4
74.9
30.4
44.4
80.0
31.8
48.2
92.9
25.3
67.6
64.4
17.3
.4
-.1
31.1
15.7
63.8
29.3
.4
1.4
17.0
15.7
61.9
35.3
-.1
21.3
-7.0
64.1
23.3
.4
.7
24.1
15.7
171.1
12.4
159.0
-.4
71.0
22.3
.1
3.6
25.2
19.8
69.8
29.1
40.7
26.2
12.1
101.5
20.6
79.9
1.1
85.3
36.5
.1
2.6
32.0
14.2
.9
13.9
11.7
110.2
15.9
92.1
2.2
108.8
37.7
.1
4.2
50.1
16.7
129.5
4.4
124.3
.8
59.6
28.7
.6
2.4
14.4
13.5
212.7
20.5
193.7
-1 5
82.4
15.9
-.5
4.7
36.1
26.2
1.4
66.4
26.2
5.0
12.1
-2.1
11.4
-.2
30.4
44.4
64.1
7.3
15.6
22.7
17.8
.8
21.7
79.9
85.3
-4.9
14.5
22.3
52.8
.5
12.1
159.0
71.0
-2.2
4.5
31.3
36.9
.5
29.1
40.7
64.4
15.4
23.7
20.2
4.3
.8
31.8
48.2
63.8
-.9
7.5
25.1
31.3
.8
25.3
67.6
61.9
-9.2
13.7
12.1
44.8
.5
18.1
92.1
108.8
-.6
15.3
32.6
60.9
.5
5.2
124.3
59.6
-6.7
1.7
23.1
40.6
.9
18.9
193.7
82.4
2.3
7.2
39.5
33.2
.1
*
1.2
32.7
16.2
32.4
15.0
54.5
11.6
9.2
15.5
18.5
-.2
15.3
49.5
25.2
11.7
6.8
2.5
4.3
*
*
*
All sectors
50 Total net borrowing
501.3
493.5
660.2
901.4
51
52
53
54
55
56
57
58
133.0
23.4
32.6
109.2
22.6
61.2
51.3
68.0
225.9
44.2
37.8
85.4
17.7
49.3
5.7
27.6
254.4
53.7
31.2
183.0
56.8
29.3
26.9
24.8
273.8
50.4
70.7
217.8
95.0
74.2
52.0
67.6
U.S. government securities
State and local obligations
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans
1057.8 1084.1
324.2
152.4
114.4
235.4
96.6
41.0
52.8
41.0
385.8
48.5
136.6
289.4
67.9
81.7
27.4
46.7
897.5
905.3
833.3 1,232.4
918.6
1250.1
251.2
42.8
49.6
224.8
98.7
89.6
73.8
67.1
296.4
58.0
91.9
210.8
91.3
58.8
30.1
68.1
294.8
67.5
113.5
215.2
97.3
19.8
30.4
44.8
340.0
15.9
165.0
239.7
75.3
25.9
19.3
37.5
431.7
81.1
108.3
339.0
61.2
137.5
35.5
55.8
353.5
237.3
115.3
255.7
95.9
62.3
75.2
37.3
External corporate equity funds raised in United States
59 Total new share issues
60
61
62
63
64
Mutual funds
All other
Nonfinancial corporations
Financial corporations
Foreign shares purchased in United States
-3.3
33.6
67.0
-31.1
37.5
115.3
-40.1
-22.2
33.3
41.6
149.6
81.1
6.0
-9.3
-11.5
1.9
.3
16.8
16.8
11.4
4.0
1.5
32.1
34.9
28.3
2.7
3.9
38.0
-69.1
-77.0
6.7
1.2
103.4
-65.9
-81.6
11.7
4.0
187.6
-72.3
-80.8
6.7
1.8
39.3
-79.4
-84.5
5.9
-.7
36.6
-58.8
-69.4
7.6
3.0
93.6
-60.4
-75.7
113.1
-71.5
-87.5
12.4
3.6
201.5
-52.0
-68.7
8.3
8.5
173.6
-92.6
-92.7
5.1
-4.9
11.0
4.3
Flow of Funds
1.58
A43
DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates.
1985
1984
Transaction category, or sector
1981
1982
1983
1984
1985
1986
1986
HI
H2
HI
H2
HI'
H2
1 Total funds advanced in credit markets to domestic
nonfinancial sectors
375.8
387.4
548.8
756.3
869.3
827.7
727.8
784.8
732.6
1,006.1
705.2
950.7
By public agencies and foreign
? Total net advances
3 U.S. government securities
4 Residential mortgages
5 FHLB advances to savings and loans
6 Other loans and securities
104.4
17.1
23.5
16.2
47.7
115.4
22.7
61.0
.8
30.8
115.3
27.6
76.1
-7.0
18.6
154.6
36.0
56.5
15.7
46.5
203.3
47.2
94.6
14.2
47.3
313.0
85.5
156.5
19.8
51.2
132.5
26.8
52.7
15.7
37.5
176.6
45.2
60.2
15.7
55.5
201.8
53.1
85.6
11.7
51.4
204.9
41.3
103.7
16.7
43.2
261.3
77.4
121.0
13.5
49.4
364.6
93.5
191.9
26.2
53.0
7
8
9
10
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
24.0
48.2
9.2
23.0
15.9
65.5
9.8
24.1
9.7
69.8
10.9
24.9
17.4
73.3
8.4
55.5
17.8
101.5
21.6
62.4
14.2
170.6
30.2
98.0
9.0
74.0
8.8
40.7
25.7
72.5
8.0
70.4
28.8
98.2
23.7
51.0
6.7
104.9
19.5
73.8
14.6
127.3
9.8
109.7
13.8
214.0
50.6
86.2
11
12
Agency and foreign borrowing not in line 1
Sponsored credit agencies and mortgage pools
Foreign
47.4
23.5
64.9
16.0
67.8
17.4
74.9
6.1
101.5
1.7
171.1
14.4
69.8
35.5
80.0
-23.3
92.9
-4.1
110.2
7.5
129.5
24.3
212.7
4.4
342.3
115.9
23.4
19.8
53.5
145.9
16.2
352.9
203.1
44.2
14.8
-5.3
96.9
.8
518.7
226.9
53.7
14.6
55.0
161.5
-7.0
682.7
237.8
50.4
32.6
98.5
279.1
15.7
769.2
277.0
152.4
41.2
84.8
228.1
14.2
700.1
300.3
48.5
75.3
74.5
221.3
19.8
700.5
224.4
42.8
25.6
109.9
313.6
15.7
664.9
251.2
58.0
39.6
87.0
244.7
15.7
619.6
241.7
67.5
49.7
72.0
200.4
11.7
918.8
312.2
237.3
32.7
97.5
255.9
16.7
597.7
262.5
15.9
96.4
66.2
170.1
13.5
803.2
338.2
81.1
54.3
82.7
273.0
26.2
Private financial intermediation
70 Credit market funds advanced by private financial
institutions
71 Commercial banking
77 Savings institutions
73 Insurance and pension funds
24 Other finance
320.2
106.5
26.2
93.5
94.0
261.9
110.2
21.8
86.2
43.7
391.9
144.3
135.6
97.8
14.1
550.5
168.9
149.2
124.0
108.3
554.4
186.3
83.4
141.0
143.6
659.2
203.2
109.6
137.3
209.1
581.8
184.2
173.5
144.5
79.5
519.1
153.5
124.9
103.5
137.2
471.3
133.8
63.0
121.8
152.7
637.4
238.8
103.9
160.1
134.5
572.5
106.9
101.4
124.6
239.6
746.6
299.8
117.8
150.1
178.8
75 Sources of funds
76 Private domestic deposits and RPs
27 Credit market borrowing
320.2
214.5
54.5
261.9
195.2
25.2
391.9
212.2
26.2
550.5
317.6
64.1
554.4
204.8
85.3
659.2
253.3
71.0
581.8
300.2
64.4
519.1
334.9
63.8
471.3
203.0
61.9
637.4
206.6
108.8
572.5
224.5
59.6
746.6
282.3
82.4
78
79
30
31
32
51.2
-23.7
-1.1
89.6
-13.6
41.5
-31.4
6.1
92.5
-25.7
153.4
16.3
-5.3
110.6
31.8
168.8
5.4
4.0
112.5
46.8
264.2
17.7
10.3
107.0
129.2
334.9
14.7
1.9
120.2
198.1
217.2
3.0
-.1
146.5
67.8
120.4
7.8
8.2
78.5
25.9
206.5
11.2
14.4
97.4
83.5
322.0
24.3
116.6
175.0
288.4
.9
-5.5
104.5
188.5
381.9
28.6
9.4
135.9
208.1
Private domestic nonfinancial investors
33 Direct lending in credit markets
34 U.S. government securities
35 State and local obligations
36 Corporate and foreign bonds
37 Open market paper
38 Other
76.6
37.1
11.1
-4.0
1.4
31.0
116.3
69.9
25.0
2.0
-1.3
20.6
153.0
95.5
39.0
-12.7
15.1
16.2
196.4
132.9
29.6
-3.4
8.9
28.3
300.2
150.9
59.2
13.2
51.8
25.1
111.9
65.7
6.4
11.5
7.0
21.3
183.1
142.2
25.0
-26.8
15.7
26.9
209.6
123.6
34.3
19.9
2.2
29.7
210.2
130.8
20.5
25.4
7.3
26.3
390.2
171.0
98.0
1.0
96.3
24.0
84.8
53.4
-24.5
44.6
-13.0
24.3
139.0
78.2
37.3
-21.6
27.1
18.0
39 Deposits and currency
40 Currency
41 Checkable deposits
47 Small time and savings accounts
43 Money market fund shares
44 Large time deposits
45 Security RPs
46 Deposits in foreign countries
222.4
9.5
18.5
47.3
107.5
36.0
5.2
-1.7
204.5
9.7
18.6
135.7
24.7
5.2
11.1
-.4
229.7
14.3
28.8
215.3
-44.1
-6.3
18.5
3.1
321.1
8.6
27.8
150.7
47.2
84.9
7.0
-5.1
215.1
12.4
42.0
137.5
-2.2
14.0
13.4
-2.1
274.9
14.4
99.2
117.9
20.8
1.6
13.7
7.1
311.3
13.1
29.4
136.4
30.2
93.4
10.8
-2.0
330.9
4.1
26.3
164.9
64.2
76.5
3.1
-8.2
215.9
15.8
18.2
167.1
4.2
-.8
14.3
-2.9
214.3
9.0
65.8
108.0
-8.6
28.9
12.5
-1.3
241.6
10.9
83.9
117.5
29.0
2.0
-7.9
6.2
308.3
18.0
114.6
118.3
12.7
1.3
35.3
8.1
47 Total of credit market instruments, deposits and
currency
299.0
320.7
382.7
517.4
515.3
386.7
494.4
540.5
426.0
604.5
326.4
447.3
26.2
93.6
-.7
28.6
74.2
-7.3
20.4
75.5
41.3
20.3
80.6
60.9
23.3
72.1
80.1
37.2
94.2
112.7
17.4
83.1
43.7
23.2
78.1
78.2
27.7
76.1
62.2
20.2
69.4
98.1
35.8
95.8
110.5
38.2
93.0
114.8
-3.3
33.6
67.0
-31.1
37.5
115.3
-40.1
-22.2
33.3
41.6
149.6
81.1
6.0
-9.3
19.9
-23.2
16.8
16.8
27.6
6.0
32.1
34.9
46.8
20.2
38.0
-69.1
8.2
-39.4
103.4
-65.9
33.3
4.1
187.6
-72.3
27.8
87.5
39.3
-79.4
-4.1
-36.0
36.6
-58.8
20.6
-42.7
93.6
-60.4
54.0
-20.7
113.1
-71.5
12.6
29.0
201.5
-52.0
35.4
114.2
173.6
-92.6
20.3
60.7
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 Home Loan Bank advances
N
14
15
16
17
18
19
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
57 Mutual fund shares
53 Other equities
54 Acquisitions by financial institutions
55 Other net purchases
NOTES BY LINE NUMBER.
1.
2.
6.
11.
13.
18.
26.
27.
29.
30.
Line 1 of table 1.57.
Sum of lines 3-6 or 7-10.
Includes farm and commercial mortgages.
Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also
sum of lines 28 and 47 less lines 40 and 46.
Includes farm and commercial mortgages.
Line 39 less lines 40 and 46.
Excludes equity issues and investment company shares. Includes line 19.
Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates, less
claims on foreign affiliates and deposits by banking in foreign banks.
Demand deposits and note balances at commercial banks.
6.1
31. Excludes net investment of these reserves in corporate equities.
32. Mainly retained earnings and net miscellaneous liabilities.
33. Line 13 less line 20 plus line 27.
34-38. Lines 14-18 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 38 includes mortgages.
40. Mainly an offset to line 9.
47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46.
48. Line 2/line 1.
49. Line 20fline 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 Funds Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.
A44
2.10
Domestic Nonfinancial Statistics • April 1987
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures'
1977 = 100; monthly and quarterly data are seasonally adjusted. E x c e p t i o n s noted.
1986
Measure
1984
1985
1987
1986
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
1
Industrial production
121.8
124.5
126.2
124.2
124.2
124.9
125.1
124.9
125.3
126.0
126.4
126.9
2
3
4
5
6
7
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
127.1
127.8
118.2
140.5
124.9
114.6
131.7
132.0
120.7
147.1
130.6
114.7
134.0
133.9
123.8
147.5
134.2
115.5
132.4
131.6
124.3
141.2
135.1
113.0
132.4
131.1
124.4
140.0
137.0
113.1
133.2
132.0
125.2
141.0
137.3
113.6
133.8
132.6
125.1
142.5
137.8
113.2
133.3
132.2
124.2
142.8
137.0
113.5
134.0
132.7
124.7'
143.3'
138.7'
113.3
134.5
133.4
125.4'
143.4'
139.3'
114.4'
135.2
134.2
127.1
143.0
139.6
114.4
135.9
134.6
127.8
143.7
140.3
114.6
8
Industry groupings
Manufacturing
123.9
127.1
129.4
128.2
128.3
129.2
129.5
129.5
129.9
130.4'
131.0
131.8
80.5
82.0
80.1
80.2
79.8
79.4
78.1
79.3
78.0
79.7
78.3
79.7
77.9
79.6
78.1
79.(f
79.8'
78.4'
80.1
78.4
80.3
78.4
Capacity utilization (percent) 2
9
Manufacturing
Industrial materials industries
10
3
77.8'
11
Construction contracts (1982 = 100)
135.0'
148.0'
155.(K
153.CK
159.0'
157.0'
155^
155.0-
151.0'
156.0'
155.0
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 (1977 = 100)6
114.5
101.6
98.6
94.1
120.0
193.5
184.8
164.6
193.6
179.0
118.5
102.9
98.7
93.5
125.0
206.2
197.8
172.5
205.0
190.6
121.5
102.5
97.5
92.1
129.4
216.9
208.6
176.7
215.5
199.9
121.2
102.6
97.5
92.1
129.0
216.6
207.1
176.1
215.9
197.0
121.1
102.1
97.2
91.8
129.0
216.6
207.6
175.4
215.5
197.5
121.4
102.2
97.1
91.7
129.4
217.2
208.5
175.5
215.8
198.9
121.6
102.2
97.1
91.7
129.7
217.6
209.6
176.6
215.9
201.7
121.9
102.1
97.0
91.7
130.2
218.2
210.1
176.5
216.4
213.0
122.3
102.1
97.1
91.8
130.7
218.8'
211.5
179.0
216.7'
201.9
122.6
102.3
97.3
92.1
131.0
219.2'
212.5
177.8'
216.8'
200.9'
122.8
102.4
97.4
92.3
131.4
220.6
212.8
178.0
217.8
210.1
123.4
102.9
97.5
92.4
131.9
220.7
214.0
178.7
219.4
198.0
22
23
Prices 7
Consumer
Producer finished goods
311.1
291.1
322.2
293.7
328.4
289.6
326.3
288.9
327.9
289.3
328.0
287.6
328.6
288.1
330.2
287.3'
330.5
290.5
330.8
290.7
331.1
289.9
333.1
291.7
1. A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See "A Revision of the Index of
Industrial Production" and accompanying tables that contain revised indexes
( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE BULLETIN, v o l . 71
(July 1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September BULLETIN.
2. Ratios of indexes of production to indexes of capacity. Based on data from
Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential,
nonresidential and heavy engineering, from McGraw-Hill Information Systems
Company, F. W. Dodge Division.
4. Based on data in Employment and Earnings (U.S. Department of Labor).
Series covers employees only, excluding personnel in the Armed Forces.
5. Based on data in Survey of Current Business (U.S. Department of Commerce).
6. Based on Bureau of Census data published in Survey of Current Business.
1. 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.
Selected Measures
2.11
A45
LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
T h o u s a n d s o f persons; monthly data are seasonally adjusted. Exceptions noted.
1987
1986
Category
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
HOUSEHOLD SURVEY DATA
1 Noninstitutional population 1
178,602
180,440
182,822
182,732
182,906
183,074
183,261
183,450
183,628
183,815
184,092
2 Labor force (including Armed Forces) 1
3 Civilian labor force
Employment
4
Nonagricultural industries 2
5
Agriculture
Unemployment
6
Number
7
Rate (percent of civilian labor force) . . .
8 Not in labor force
115,763
113,544
117,695
115,461
120,078
117,834
120,234
118,005
120,341
118,117
120,370
118,124
120,536
118,272
120,678
118,414
120,940
118,675
120,854
118,586
121,299
119,034
101,685
3,321
103,971
3,179
106,434
3,163
106,449
3,164
106,763
3,124
107,010
3,057
106,845
3,142
107,030
3,162
107,217
3,215
107,476
3,161
107,866
3,145
8,539
7.5
62,839
8,312
7.2
62,745
8,237
7.0
62,744
8,392
7.1
62,498
8,230
7.0
62,565
8,057
6.8
62,704
8,285
7.0
62,725
8,222
6.9
62,772
8,243
6.9
62,688
7,949
6.7
62,961
8,023
6.7
62,793
9 Nonagricultural payroll employment 3
94,461
97,698
100,168
99,843
100,105
100,283
100,560
100,826
101,068'
101,293
101,741
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
19,412
974
4,345
5,171
22,134
5,682
20,761
15,984
19,426
969
4,661
5,300
23,195
5,924
21,929
16,295
19,187
792
4,961
5,285
23,829
6,304
23,073
16,738
19,135
772
4,947
5,167
23,773
6,295
23,072
16,682
19,121
768
4,980
5,288
23,841
6,334
23,176
16,597
19,123
753
5,012
5,255
23,893
6,364
23,255
16,628
19,105
743
5,010
5,316
23,924
6,388
23,300
16,774
19,118
746
5,001
5,316
24,007
6,409
23,359
16,870
19,156'
742'
4,993
5,351'
24,056'
6,429'
23,451'
16,890'
19,183
740
4,997
5,359
24,053
6,469
23,567
16,925
19,186
729
5,139
5,363
24,238
6,491
23,684
16,911
ESTABLISHMENT SURVEY DATA
10
11
12
13
14
15
16
17
1. Persons 16 years of age and over. Monthly figures, which are based on
sample data, relate to the calendar week that contains the 12th day; annual data
are averages of monthly figures. By definition, seasonality does not exist in
population figures. Based on data from Employment and Earnings (U.S. Department of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.
3. Data include all full- and part-time employees who worked during, or
received pay for, the pay period that includes the 12th day of the month, and
exclude proprietors, self-employed persons, domestic servants, unpaid family
workers, and members of the Armed Forces. Data are adjusted to the March 1984
benchmark and only seasonally adjusted data are available at this time. Based on
data from Employment and Earnings (U.S. Department of Labor).
A46
2.12
Domestic Nonfinancial Statistics • April 1987
OUTPUT, CAPACITY, AND CAPACITY UTILIZATION
Seasonally adjusted
1986
Q2
Ql
1986
1986
Q3
Q4'
Ql
Q2
Q3
Q4
Capacity (percent of 1977 output)
Output (1977 = 100)
Q2
Ql
Q3
Q4'
Utilization rate (percent)
1 Total industry
125.0
124.4
125.0
125.9
156.3
157.1
157.9
158.7
80.0
79.2
79.1
79.3
2 Mining
3 Utilities
105.4
110.5
99.9
108.9
96.6
108.8
95.9
110.6
132.4
136.3
132.1
136.9
131.9
137.5
131.7
138.1
79.6
81.1
75.6
79.5
73.2
79.1
72.8
80.1
4 Manufacturing
128.4
128.4
129.4
130.4
160.5
161.4
162.4
163.4
80.0
79.5
79.7
79.8
5 Primary processing . . .
6 Advanced processing .
111.5
138.5
111.1
138.9
112.1
139.7
113.9
140.4
133.6
176.7
134.0
177.9
134.6
179.1
135.1
180.4
83.5
78.4
82.9
78.0
83.3
78.0
84.3
77.8
7 Materials
114.5
113.3
113.4
114.0
144.2
144.7
145.3
145.8
79.4
78.3
78.1
78.2
8 Durable goods
9 Metal materials . . . .
10 Nondurable goods
11 Textile, paper, and chemical..
12
Paper
Chemical
13
120.9
79.0
115.7
116.2
128.8
115.3
118.8
75.1
116.9
117.0
130.1
115.4
118.8
73.1
119.7
120.4
135.1
117.7
120.0
75.9
120.7
121.6
135.0
119.5
159.9
115.0
139.0
138.4
137.3
144.0
160.7
114.5
139.5
138.8
138.1
144.3
161.5
114.0
139.9
139.2
138.9
144.7
162.2
113.4
140.4
139.6
139.7r
145.CK
75.6
68.7
83.2
83.9
93.8
80.1
73.9
65.6
83.8
84.3
94.2
80.0
73.6
64.2
85.6
86.5
97.3
81.4
74.0
66.9
86.0
87.1
96.7
82.4
14 Energy materials
102.2
100.6
98.6
97.8
121.1
121.3
121.4
121.6
84.4
82.9
81.2
80.4
Previous cycle1
High
Low
Latest cycle2
High
Low
1986
Jan.
1986
May
June
July
Aug.
Sept.
Oct/
Nov/
Dec/
Jan.
Capacity utilization rate (percent)
15 Total industry
88.6
72.1
86.9
69.5
80.9
79.1
79.0
79.2
79.2
79.0
79.0
79.4
79.5
79.7
16 Mining
17 Utilities
92.8
95.6
87.8
82.9
95.2
88.5
76.9
78.0
81.6
82.7
75.5
79.3
74.9
79.2
73.5
79.9
73.1
78.8
72.9
78.7
72.5
79.3
73.4
80.5
72.5
80.4
72.7
80.2
80.3
18 Manufacturing
87.7
69.9
86.5
68.0
80.8
79.4
79.3
79.7
79.7
79.6
79.6
79.8
80.1
19 Primary processing . . .
20 Advanced processing .
91.9
86.0
68.3
71.1
89.1
85.1
65.1
69.5
84.4
79.2
82.9
78.0
82.7
77.7
82.9
78.4
83.2
78.0
83.7
77.6
83.8
77.8
84.4
77.7
84.7
77.9
21 Materials
92.0
70.5
89.1
68.4
80.1
78.1
78.0
78.3
77.9
78.1
77.8
78.4
78.4
78.4
22 Durable goods
23 Metal materials
91.8
99.2
64.4
67.1
89.8
93.6
60.9
45.7
76.5
71.0
73.7
65.2
73.2
63.2
73.7
63.8
73.5
63.8
73.5
64.8
73.6
65.2
74.2
65.4
74.1
67.1
74.3
67.0
24 Nondurable goods . . . .
25 Textile, paper, and
chemical
">6
77
91.1
66.7
88.1
70.6
83.7
83.5
84.3
85.0
85.5
86.1
85.8
85.6
86.5
87.1
92.8
98.4
92.5
64.8
70.6
64.4
89.4
97.3
87.9
68.6
79.9
63.3
84.3
94.6
80.8
84.2
93.1
80.2
85.1
95.9
80.4
85.6
97.8
80.2
86.5
97.9
81.2
87.4
96.1
82.6
87.0
95.7
82.5
86.7
96.0
81.7
87.7
98.2
82.9
88.4
28 Energy materials
94.6
86.9
94.0
82.2
85.1
82.9
83.1
82.3
80.6
80.7
79.7
81.2
80.4
79.4
1. Monthly high 1973; monthly low 1975.
2. Monthly highs 1978 through 1980; monthly lows 1982.
NOTE. These data also appear in the Board's G.3 (402) release. For address, see
inside front cover.
Selected Measures
2.13
INDUSTRIAL PRODUCTION
Indexes and Gross Value
A47
•
Monthly data are seasonally adjusted
Grouping
1977
proportion
1986
1985
avg.
Jan.
Feb.
Mar.
Apr.
May
June
1987
July
Aug.
Sept.
Oct/
Nov.
Dec."
Jan. e
Index (1977 = 100)
MAJOR MARKET
100.00
123.8
126.2
125.3
123.6
124.7
124.2
124.2
124.9
125.1
124.9
125.3
126.0
126.4
126.9
2 Products
3 Final products
Consumer goods
4
5
Equipment
57.72
44.77
25.52
19.25
130.8
131.1
120.2
145.4
134.0
133.9
123.8
147.5
132.9
132.8
123.3
145.4
131.2
130.6
121.8
142.3
132.7
132.1
124.5
142.3
132.4
131.6
124.3
141.2
132.4
131.1
124.4
140.0
133.2
132.0
125.2
141.0
133.8
132.6
125.1
142.5
133.3
132.2
124.2
142.8
134.0
132.7
124.7
143.3
134.5
133.1
125.4
143.4
135.2
133.9
127.1
143.0
135.9
134.6
127.8
143.7
6 Intermediate products
7 Materials
12.94
42.28
130.0
114.2
134.2
115.5
133.4
114.8
133.3
113.3
134.5
113.8
135.1
113.0
137.0
113.1
137.3
113.6
137.8
113.2
137.0
113.5
138.7
113.3
139.3
114.4
139.6
114.4
140.3
114.6
6.89
2.98
1.79
1.16
.63
1.19
3.91
1.24
1.19
.96
1.71
112.9
114.0
112.0
98.9
136.3
116.9
112.2
131.0
131.8
119.8
94.3
116.0
116.2
118.2
105.5
141.7
113.3
115.8
133.2
135.7
125.1
98.0
116.6
117.6
119.4
107.1
142.1
114.9
115.8
135.1
137.6
124.4
97.0
112.4
110.4
106.3
93.7
129.6
116.6
113.9
133.7
136.0
121.2
95.5
115.9
116.4
115.1
100.8
141.5
118.4
115.5
138.8
140.6
121.8
95.0
113.8
113.2
110.3
94.8
139.1
117.4
114.3
133.9
135.8
123.3
95.0
114.3
113.7
112.2
99.3
136.1
116.1
114.8
137.5
139.1
122.5
94.1
116.3
116.4
114.5
95.3
150.3
119.1
116.3
138.9
141.6
126.6
94.1
115.7
114.5
110.4
87.8
152.4
120.7
116.7
139.4
142.5
125.8
95.1
117.4
117.0
116.8
96.2
155.1
117.3
117.7
141.2
143.5
126.2
96.0
116.3
112.7
107.7
91.9
137.1
120.1
119.0
142.6
144.3
128.8
96.5
117.8
114.2
107.6
92.3
136.0
124.2
120.6
146.2
147.9
131.1
96.3
121.1
118.1
115.6
99.5
145.6
121.8
123.4
152.6
154.5
132.6
97.2
121.3
120.4
119.1
95.2
19 Nondurable consumer goods
20 Consumer staples
21
Consumer foods and tobacco
22
Nonfood staples
23
Consumer chemical products ..
24
Consumer paper products
25
Consumer energy
26
Consumer fuel
27
Residential utilities
18.63
15.29
7.80
7.49
2.75
1.88
2.86
1.44
1.42
122.9
129.0
128.8
129.2
149.1
141.9
101.8
88.6
115.3
126.6
132.8
130.1
135.6
156.3
148.9
107.0
94.1
120.1
125.8
132.3
131.1
133.5
158.3
143.4
103.2
92.0
114.5
125.3
131.6
130.3
133.0
156.4
143.1
104.0
92.2
116.1
127.7
134.3
131.9
136.7
163.1
145.1
106.0
93.7
118.4
128.1
135.0
132.4
137.7
162.4
148.6
106.8
96.4
117.5
128.1
135.1
133.3
137.0
163.6
147.1
104.8
91.8
118.1
128.4
135.3
132.2
138.5
166.4
146.4
106.6
91.2
122.3
128.6
135.5
133.2
137.9
163.4
147.7
107.1
94.9
119.6
126.7
133.6
131.0
136.3
161.1
145.7
106.3
92.0
120.9
127.8
134.4
131.6
137.2
161.7
150.3
105.2
90.8
119.8
128.2
134.9
132.6
137.4
161.0
151.6
105.5
91.7
119.6
129.3
136.0
134.1
137.9
161.3
151.8
106.3
93.5
130.1
136.8
Equipment
28 Business and defense equipment
29 Business equipment
30
Construction, mining, and farm ..
31
Manufacturing
32
Power
33
Commercial
34
Transit
35 Defense and space equipment
18.01 146.0
14.34 139.6
2.08 64.3
3.27 110.7
1.27 83.5
5.22 217.9
2.49 105.4
3.67 170.6
149.1
141.5
65.3
113.0
82.9
217.8
112.7
178.7
147.8
140.5
63.0
112.9
82.3
216.8
111.7
176.3
145.5
137.7
59.5
112.4
82.0
214.3
104.3
176.2
146.6
138.6
58.6
111.9
83.0
213.4
112.1
178.0
146.0
137.9
60.9
111.9
82.9
212.9
107.3
178.0
145.1
136.6
61.9
111.7
83.5
208.2
108.8
178.4
146.4
137.9
60.6
112.6
81.7
214.5
103.9
179.5
147.8
139.3
58.3
113.3
81.7
217.5
106.9
181.0
148.0
139.3
58.1
113.0
80.3
215.1
113.3
182.0
148.4
139.1
58.0
112.7
80.5
215.4
111.8
184.6
148.3
138.9
56.6
110.9
79.5
217.3
110.7
184.9
147.9
138.3
56.3
111.2
80.7
216.0
109.1
185.3
148.6
138.9
1 Total index
Consumer goods
8 Durable consumer goods
9 Automotive products
10
Autos and trucks
11
Autos, consumer
12
Trucks, consumer
13
Auto parts and allied goods
14 Home goods
15
Appliances, A/C and TV
16
Appliances and TV
17
Carpeting and furniture
18
Miscellaneous home goods
Intermediate products
36 Construction supplies
37 Business supplies
38 General business supplies
39 Commercial energy products
122.3
122.1
145.9
138.8
111.3
81.0
217.1
109.7
186.7
5.95
6.99
5.67
1.31
118.3
140.0
143.9
122.9
124.0
142.9
147.2
124.4
122.6
142.6
146.7
124.9
122.6
142.5
146.4
125.6
123.6
143.8
148.0
125.8
123.5
145.0
148.3
130.7
124.1
147.9
151.6
131.9
124.0
148.6
153.3
128.3
125.4
148.4
152.5
130.6
125.9
146.4
151.2
125.8
126.3
149.3
154.1
128.8
127.1
149.7
153.7
132.4
126.9
150.3
154.2
133.7
127.9
20.50
4.92
5.94
9.64
4.64
121.4
100.3
158.0
109.7
84.8
122.2
103.5
153.8
112.2
85.2
121.3
103.2
153.0
111.0
83.0
119.3
99.9
153.7
108.0
79.6
120.2
99.3
154.8
109.4
82.9
118.4
96.4
152.3
108.8
78.9
117.8
96.3
151.8
107.9
76.7
118.8
96.7
154.3
108.2
77.4
118.8
95.2
155.6
108.1
76.9
118.9
95.3
154.8
108.8
78.4
119.2
97.0
153.5
109.4
78.8
120.4
98.0
154.5
110.8
82.1
120.4
98.8
154.1
110.7
81.0
121.0
99.4
155.0
111.1
45 Nondurable goods materials
46 Textile, paper, and chemical
materials
47
Textile materials
48
Pulp and paper materials
49
Chemical materials
50 Miscellaneous nondurable materials
10.09
112.2
116.2
116.1
114.8
116.5
116.5
117.7
118.9
119.7
120.6
120.3
120.1
121.6
122.6
7.53
1.52
1.55
4.46
2.57
112.2
98.7
124.1
112.7
112.1
116.5
104.1
129.7
116.2
115.4
116.5
107.5
128.8
115.4
115.0
115.5
105.7
128.0
114.5
112.8
115.9
106.7
129.0
114.5
118.2
116.9
108.4
128.6
115.7
115.3
118.2
109.5
132.7
116.1
116.4
119.0
111.2
135.6
115.9
118.3
120.5
113.4
136.0
117.5
117.2
121.8
116.0
133.7
119.7
117.1
121.3
114.3
133.5
119.5
117.5
121.0
115.0
134.2
118.5
117.6
122.6
113.9
137.4
120.4
118.7
123.8
51 Energy materials
52 Primary energy
53 Converted fuel materials
11.69
7.57
4.12
103.4
107.2
96.4
103.0
106.9
95.8
102.1
106.7
93.6
101.4
107.4
90.5
100.4
106.2
89.7
100.5
106.7
89.2
100.8
106.5
90.4
99.9
104.8
90.9
97.9
103.7
87.3
98.0
103.8
87.4
96.9
102.7
86.2
98.7
104.8
87.5
97.7
102.9
88.2
96.6
Materials
40 Durable goods materials
41 Durable consumer parts
42 Equipment parts
43 Durable materials n.e.c
44
Basic metal materials
A48
2.13
Domestic Nonfinancial Statistics • April 1987
INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued
Grouping
SIC
code
1977
proportion
1986
1985
avg.
Jan.
Feb.
Mar.
Apr.
May
June
1987
July
Aug.
Sept.
Oct/
Nov.
Dec.P
Jan.
Index (1977 = 100)
MAJOR INDUSTRY
15.79
9.83
5.96
84.21
35.11
49.10
110.0
108.8
111.9
126.4
125.1
127.3
109.8
108.1
112.5
129.4
129.3
129.5
106.8
105.1
109.7
128.7
128.7
128.7
105.4
103.0
109.3
127.2
127.7
126.8
104.2
101.0
109.4
128.7
129.6
128.1
103.1
99.8
108.5
128.2
129.9
127.0
102.6
98.9
108.6
128.3
131.2
126.2
101.8
97.1
109.7
129.2
131.7
127.4
100.9
96.4
108.3
129.5
132.2
127.5
100.8
96.2
108.3
129.5
131.4
128.1
100.7
95.6
109.3
129.9
132.3
128.1
102.1
96.7
111.2
130.4
132.8
128.6
101.4
95.4
111.2
131.0
133.5
129.3
10
11.12
13
14
.50
1.60
7.07
.66
75.0
126.8
106.2
118.3
73.5
130.8
104.9
113.5
77.2
126.5
101.1
116.8
75.9
124.7
99.2
111.6
76.0
124.4
96.2
115.0
72.0
124.0
95.1
112.4
65.9
127.3
93.3
114.5
69.2
120.2
92.4
111.8
70.9
122.2
90.7
114.8
70.7
120.8
91.0
111.7
68.5
117.6
90.5
116.4
130.1
89.4
115.2
124.8
88.8
114.8
1 Mining and utilities
2
Mining
3
Utilities
4 Manufacturing
5
Nondurable
6
Durable
101.4
95.6
111.0
131.8
134.5
129.8
7
8
9
10
Mining
Metal
Coal
Oil and gas extraction
Stone and earth minerals
11
12
13
14
15
Nondurable
manufactures
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
20
21
22
23
26
7.96
.62
2.29
2.79
3.15
130.2
100.2
103.2
100.9
127.6
132.0
93.8
107.9
105.5
133.6
132.9
97.0
109.9
102.8
132.6
132.2
93.6
108.0
102.8
132.4
133.1
100.3
111.4
103.1
134.1
133.7
101.6
111.3
102.6
133.2
134.6
97.6
112.6
101.7
137.2
134.3
97.9
113.4
102.5
138.1
135.1
97.1
114.7
102.5
138.6
134.3
89.8
116.0
102.7
136.9
133.7
100.1
116.1
104.2
137.8
134.1
99.7
117.9
105.1
139.5
117.7
106.1
141.4
16
17
18
19
20
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastic products
Leather and products
27
28
29
30
31
4.54
8.05
2.40
2.80
.53
153.9
127.1
86.8
146.9
68.5
160.9
131.7
94.7
150.2
65.4
156.7
132.0
90.1
151.1
64.8
157.8
130.2
88.6
147.8
62.7
161.6
132.8
91.3
146.8
61.5
161.9
131.5
95.7
150.1
59.5
164.0
134.2
91.8
152.2
57.9
165.4
134.1
90.6
155.5
61.9
164.6
134.4
94.0
155.5
62.0
163.0
133.9
93.3
154.9
59.4
167.8
133.9
91.1
157.6
60.2
168.5
132.9
91.5
159.0
61.3
168.5
133.5
92.5
160.0
61.1
24
25
32
2.30
1.27
2.72
113.4
139.7
115.5
120.5
141.2
120.0
120.3
143.2
119.3
120.7
142.9
120.0
121.3
145.9
121.6
121.6
146.2
120.2
120.9
147.1
120.8
120.8
149.5
119.6
122.5
148.3
119.7
125.0
147.7
121.6
125.9
149.2
118.1
129.3
148.6
120.6
150.4
121.6
33
331.2
34
35
36
5.33
3.49
6.46
9.54
7.15
80.5
70.4
107.3
145.3
168.4
82.4
72.2
109.2
144.9
166.1
80.3
69.5
108.5
143.9
164.8
76.3
64.3
107.6
141.7
165.2
78.1
65.6
108.2
140.8
166.8
74.8
60.2
106.5
141.3
166.0
71.4
58.3
106.6
140.4
163.2
73.6
61.7
105.7
142.6
166.8
73.4
60.8
105.9
142.6
167.2
74.1
61.1
107.3
140.9
166.9
74.2
62.2
108.3
142.2
167.7
76.8
64.8
107.1
141.6
168.2
74.7
62.0
108.4
140.7
169.9
109.4
141.7
170.0
37
371
9.13
5.25
121.4
111.5
128.2
116.5
127.5
116.4
122.6
108.1
126.2
112.6
124.1
108.7
125.1
110.6
125.6
111.2
125.1
108.2
127.7
112.2
125.2
107.1
125.6
107.9
127.5
111.5
127.9
112.2
372-6.9
38
39
3.87
2.66
1.46
134.9
139.1
96.1
143.9
141.5
100.9
142.6
141.9
100.9
142.4
142.0
99.0
144.8
142.4
99.2
145.0
140.3
101.0
144.7
139.9
98.3
145.2
141.7
97.5
148.0
142.0
98.3
148.7
141.7
97.7
149.7
140.3
99.0
149.6
141.1
98.9
149.3
142.2
100.6
149.1
142.5
4.17
119.7
119.7
119.5
119.8
121.6
121.7
123.1
125.4
122.4
122.8
123.8
125.2
125.5
Durable
manufactures
21 Lumber and products
22 Furniture and fixtures
23 Clay, glass, stone products
24
25
26
27
28
Primary metals
Iron and steel
Fabricated metal products
Nonelectrical machinery
Electrical machinery
29 Transportation equipment
30
Motor vehicles and parts.
31
Aerospace and miscellaneous
transportation equipment
32 Instruments
33 Miscellaneous m a n u f a c t u r e s . . .
Utilities
34 Electric
88.7
134.9
170.0
93.5
74.2
Gross value (billions of 1978 dollars, annual rates)
MAJOR MARKET
35 Products, total
5 1 7 . 5 1 , 6 5 0 . 9 1.702.1 1 , 6 8 6 . 5 1,660.8 1 , 6 8 6 . 3 1 , 6 8 7 . 6 1 , 6 7 6 . 7 1 , 6 6 9 . 9 1 , 6 8 1 . 3 1 , 6 7 7 . 8 1 , 6 8 3 . 9 1 , 6 9 0 . 8 1 , 7 0 3 . 9 1 . 7 1 6 . 2
36 Final
37
Consumer goods
38
Equipment
39 Intermediate
405.7 1,282.3 1.321.2 1,310.3 1,282.5 1,307.0 1,301.1 1,289.5 1,282.7 1,292.6 1,292.3 1,292.5 1,297.3 1,309.3 1.323.3
272.7 820.7 850.7 845.3 832.0 852.3 852.4 843.8 842.3 846.9 839.8 839.3 846.2 861.4 869.1
133.0 461.7 470.5 465.1 450.4 454.7 448.7 445.7 440.4 445.7 452.5 453.2 451.1 447.9 454.1
111.9 368.6 380.8 376.2 378.3 379.3 386.4 387.2 387.1 388.7 385.5 391.4 393.4 394.6 393.0
• A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See " A Revision of the Index of
Industrial Production" and accompanying tables that contain revised indexes
( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE BULLETIN, v o l . 71
(July 1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September BULLETIN.
NOTE. These data also appear in the Board's G.12.3 (414) release. For address,
see inside front cover.
Selected Measures
2.14
A49
HOUSING AND CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1986
Item
1984
1985
1986
Apr.
Mar.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Private residential real estate activity (thousands of units)
N E W UNITS
1 Permits authorized
7
1-family
3 2-or-more-family
1,682
922
759
1,733
957
777
1,750
1,071
679
1,834
1,043
791
1,885
1,139
746
1,788
1,092
696
1,792
1,121
671
1,759
1,093
666
1,673
1,039
634
1,603
1,047
556
1,565
1,006
559
1,613
991
622
1,910
1,168
742
4 Started
5 1-family
6 2-or-more-family
1,749
1,084
665
1,742
1,072
669
1,806'
1,179
626
1,887'
1,195'
692'
1,945'
1,220'
725'
1,848'
1,219
629
1,842'
1,212'
630'
1,786'
1,147'
639'
1,800'
1,18c
62C
1,689'
1,123'
56V
1,657'
1,114'
543
1,637'
1,129'
508'
1,808
1,225
583
7 Under construction, end of period1
8
1-family
9 2-or-more-family
1,051
556
494
1,063
539
524
1,085
590
495
1,099
574
526
1,135
586
549
1,132
597
534
1,151
612
539
1,157
623
533
1,164
630
533
1,154
626
527
1,142'
625
517'
1,123'
507'
1,111
615
497
1,652
1,025
627
1,703
1,072
631
1,754
1,118
637
1,806
1,153
653
1,693
1,127
566
1,829
1,140
689
1,620
1,060
560
1,761
1,067
694
1,763
1,128
635
1,743
1,110
633
1,732'
1,168'
564'
1,771'
1,174'
597'
1,883
1,158
725
13 Mobile homes shipped
296
284
244
241'
251'
239
232'
238'
231'
243'
241'
237'
251
Merchant builder activity in 1-family units
14 Number sold
15 Number for sale, end of period1
639
358
688
350
748
366
924
338
880
336
787
336
722
340
698
349
618
352
745'
355'
678'
357'
685'
354'
772
362
10 Completed
11 1-family
12 2-or-more-family
Price (thousands of dollars)2
Median
Units sold
80.0
84.3
92.3
88.7
92.5
92.1
91.2
94.1
91.5
95.C
96.C
95.C
95.5
97.5
101.0
112.5
108.0
110.3
114.6
110.9
116.8
113.2
114.C
114.9'
114.6'
122.6
2,868
3,217
3,566
3,200
3,570
3,450
3,390
3,470
3,610
3,770
3,810
3,910
4,060
72.3
85.9
75.4
90.6
80.2
98.2
79.8
96.8
80.2
98.1
83.2
101.7
82.6
102.1
79.9
99.2
82.0
100.3
79.4
96.8
79.4
97.3
80.4
99.1
80.8
100.6
21 Total put in place
327,209 555,570 $76,856 368,027 373,904 374,483 375,397 380,722 382,603 382,581 384,317 378,444
374,903
V
73
74
271,973 292,792 305,700 298,868 303,320 302,573 304,567 309,003 310,155
155,148 158,818 174,551 165,645 170,520 172,491 174,478 178,821 178,761
116,825 133,974 131,149 133,223 132,800 130,082 130,089 130,182 131,394
303,751
178,623
125,128
16
17
Units sold
EXISTING UNITS ( 1 - f a m i l y )
18 Number sold
Price of units sold (thousands of dollars)2
19 Median
20 Average
Value of new construction3 (millions of dollars)
CONSTRUCTION
75
76
77
28
Residential
Nonresidential, total
Buildings
Industrial
Commercial
Other
Public utilities and other
79 Public
30 Military
31 Highway
37
Conservation and development
33 Other
13,746
48,100
12,547
42,432
15,769
59,626
12,619
45,960
13,611
51,901
13,436
52,201
13,354
60,716
13,131
46,022
14,557
59,763
13,006
45,474
13,658
57,368
13,131
45,925
13,027
57,443
13,263
46,356
12,866
58,132
13,277
45,907
12,543
60,054
13,315
45,482
13,180
58,001
14,001
44,955
12,948
56,273
14,341
45,284
13,428
54,834
13,956
44,237
12,739
54,253
13,833
44,303
55,232
2,839
16,343
4,654
31,396
62,777
3,283
19,998
4,952
34,544
71,154
3,847
21,383
4,919
41,005
69,159
3,673
22,673
4,598
38,215
70,583
3,725
23,155
4,947
38,756
71,910
3,637
23,240
4,729
40,304
70,830
3,761
22,001
4,657
40,411
71,719
3,553
21,603
4,415
42,148
72,448
4,132
21,607
4,294
42,415
73,964
5,050
20,552
4,841
43,521
73,613
3,695
20,465
6,425
43,028
69,836
3,722
18,371
4,635
43,108
71,152
3,847
18,932
5,159
43,214
1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in prior periods because of changes by the Bureau of the
Census in its estimating techniques. For a description of these changes see
Construction Reports (C-30-76-5), issued by the Bureau in July 1976.
308,617 310,704 308,609
178,480 181,858 182,154
130,137 128,846 126,455
NOTE. Census Bureau estimates for all series except (a) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of
existing units, which are published by the National Association of Realtors. All
back and current figures are available from originating agency. Permit authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning
with 1978.
A50
2.15
Domestic Nonfinancial Statistics • April 1987
CONSUMER AND PRODUCER PRICES
Percentage changes based on seasonally adjusted data, except as noted
Change from 12
months earlier
Change from 3 months earlier
(at annual rate)
Change from 1 month earlier
Index
level
Jan.
Item
1986'
1986
1987
Jan.
Jan.
Mar.
June
1986'
Sept.
Dec.
Sept.
Oct.
1987
(1967
= 100)'
1987
Nov.
Dec.
Jan.
CONSUMER PRICES 2
1
All items
Food
3 Energy items
4 All items less food and energy
5
Commodities
6 Services
2
3.9
1.4
-1.3
1.6
2.0
2.5
.3
.2
.2
.2
.7
333.1
2.7
2.5
4.4
2.1
5.9
4.2
-17.1
3.7
1.4
5.1
-.9
-32.3
4.4
1.2
6.5
3.9
-12.6
3.3
.3
4.9
8.4
-21.0
3.7
2.6
4.3
4.1
-9.9
3.7
1.4
5.1
.4
.4
.3
.1
.3
.4
-1.9
.4
.1
.6
.4
-.5
.3
.1
.4
.2
-.2
.2
.1
.3
.4
3.0
.5
.6
.5
328.9
352.2
333.6
265.5
407.5
1.3
.5
-1.5
2.4
2.2
-1.5
1.8
-31.7
3.0
2.4
-10.5
-7.6
-62.9
4.1
1.1
.7
8.2
-20.7
.9
2.4
-.4
11.2
-42.7
2.3
2.0
1.1
1.1
-18.4
4.1
3.3
.3
-.1
1.8
.2
.3
.3
.6
-3.1
.6
.4
.1
.0
-1.1
.3
.3
-.1
-.4
-.9
.1
.1
.6
-1.8
9.9
.5
.2
291.7
280.0
478.5
263.2
311.2
-.6
-.3
-3.3
.6
-9.8
-.7
-5.1
-1.2
-1.5
1.5
-1.2
1.1
.4
.2
-.3
.2
.0
.1
.0
.0
1.0
.4
312.9
306.2
-7.6
-3.3
-3.4
-2.0
-22.0
2.1
-22.6
-51.3
25.9
5.9
-29.1
6.6
18.1
-19.6
-24.1
-3.8
-10.4
8.0
-1.0
2.6
-.5
1.5
1.0
1.1
-1.3
-.7
.7
-1.2
-3.0
.1
-3.0
10.0
.5
227.1
571.6
251.0
PRODUCER PRICES
Finished goods
Consumer foods
9 Consumer energy
10
Other consumer goods
11
Capital equipment
7
8
12
13
Intermediate materials3
Excluding energy
14
15
16
Crude materials
Foods
Energy
Other
1. Not seasonally adjusted.
2. Figures for consumer prices are those for all urban consumers and reflect a
rental equivalence measure of homeownership after 1982.
3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds.
SOURCE. Bureau of Labor Statistics.
Selected Measures
2.16
A51
GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.
1986
1985
Account
1984
1985
1986 R
Q4
Q1
Q2
Q3
Q4'
GROSS NATIONAL PRODUCT
1
2
3
4
5
6
7
8
9
10
11
1?
13
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
Gross private domestic investment
Fixed investment
Nonresidential
Structures
Producers' durable equipment
Residential structures
Change in business inventories
Nonfarm
3,765.0
3,998.1
4,206.5
4,087.7
4,149.2
4,175.6
4,240.7
4,260.6
2,428.2
331.2
870.1
1,227.0
2,600.5
359.3
905.1
1,336.1
2,763.1
388.4
932.7
1,442.0
2,667.9
362.0
922.6
1,383.2
2,697.9
360.8
929.7
1,407.4
2,732.0
373.9
928.4
1,429.8
2,799.8
414.5
932.8
1,452.4
2,822.5
404.3
939.7
1,478.5
662.1
598.0
416.5
139.3
277.3
181.4
661.1
650.0
458.2
154.8
303.4
191.8
684.1
676.3
459.3
143.1
316.2
217.0
669.5
672.6
474.0
157.2
316.8
198.6
708.3
664.4
459.2
154.6
304.6
205.3
687.3
672.8
457.5
141.5
316.0
215.3
675.8
680.3
459.0
139.5
319.5
221.3
665.3
687.8
461.4
136.8
324.6
226.3
64.1
56.6
11.1
12.2
7.8
8.3
-3.1
16.7
43.8
41.2
14.5
10.5
-4.5
-10.3
-22.5
-8.3
14
15
16
Net exports of goods and services
Exports
Imports
-58.7
382.7
441.4
-78.9
369.8
448.6
-105.2
372.3
477.5
-105.3
368.2
473.6
-93.7
374.8
468.5
-104.5
363.0
467.5
-108.9
370.8
479.7
-113.6
380.7
494.3
17
18
19
Government purchases of goods and services
733.4
311.3
422.2
815.4
354.1
461.3
864.5
366.6
497.9
855.6
380.9
474.7
836.7
355.7
480.9
860.8
367.6
493.3
874.0
369.3
504.7
886.5
374.0
512.5
3,700.9
1,576.7
675.0
901.7
1,813.1
375.1
3,987.0
1,630.2
700.2
930.0
1,959.8
408.1
4,198.7
1,671.4
716.8
954.6
2,105.4
429.8
4,090.8
1,644.1
709.1
935.0
2,025.5
418.1
4,105.4
1,669.0
710.6
958.4
2,057.7
422.6
4,161.2
1,661.6
703.1
958.5
2,087.4
426.7
4,245.2
1,680.2
730.1
950.1
2,125.2
435.3
4,283.1
1,674.7
723.4
951.3
2,151.2
434.7
64.1
39.2
24.9
11.1
6.6
4.5
7.8
-.7
8.6
-3.1
9.5
-12.7
43.8
28.6
15.3
14.5
-.1
14.6
-4.5
-15.6
11.1
-22.5
-15.8
-6.7
3,489.9
3,585.2
3,675.5
3,622.3
3,655.9
3,661.4
3,686.4
3,698.3
State and local
By major type of product
70
?1
77
73
74
25
76
77
28
Durable
Nondurable
Structures
Change in business inventories
Durable goods
Nondurable goods
2 9 MEMO: T o t a l G N P i n 1 9 8 2 d o l l a r s
NATIONAL INCOME
30
3,032.0
3,222.3
3,385.1
3,287.3
3,340.7
3,376.4
3,396.1
n.a.
2,214.7
1,837.0
346.2
1,490.6
377.7
193.1
184.5
2,368.2
1,965.8
372.2
1,593.9
402.4
205.5
196.9
2,498.0
2,073.5
395.7
1,677.8
424.5
215.7
208.8
2,423.6
2,012.8
381.6
1,631.1
410.9
209.1
201.7
2,461.5
2,044.1
387.2
1,656.8
417.4
212.9
204.5
2,480.2
2,058.8
392.5
1,666.3
421.3
214.1
207.3
2,507.4
2,081.1
398.4
1,682.7
426.3
215.9
210.4
2,542.8
2,109.8
404.4
1,705.4
433.0
220.1
213.0
236.9
205.3
31.5
254.4
225.2
29.2
279.2
252.7
26.5
262.1
232.7
29.4
265.3
240.9
24.4
289.1
249.6
39.5
277.5
258.0
19.6
284.9
262.2
22.7
31
37
33
34
35
36
37
Compensation of employees
Wages and salaries
Government and government enterprises
Other
Supplement to wages and salaries
Employer contributions for social insurance
Other labor income
38
39
40
Proprietors' income1
Business and professional1
Farm 1
41
Rental income of persons 2
8.3
7.6
15.0
8.3
12.8
16.3
16.2
42
43
44
45
Corporate profits1
Profits before tax 3
Inventory valuation adjustment
Capital consumption adjustment
264.7
235.7
-5.5
34.5
280.7
223.2
-.6
58.1
299.7
235.4
6.5
56.8
285.6
235.8
-9.4
59.2
296.4
222.5
16.5
57.3
293.1
227.7
10.6
54.8
302.0
240.4
6.1
55.5
n.a.
n.a.
46
Net interest
307.4
311.4
294.2
307.6
304.9
297.7
292.9
281.5
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. Survey of Current Business (Department of Commerce).
14.8
-7.2
59.4
A52
2.17
Domestic Nonfinancial Statistics • April 1987
PERSONAL INCOME AND SAVING
Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1985
1984
1985
Q4
Q2
Q1
Q3
PERSONAL INCOME AND SAVING
1 Total personal income
3,110.2
3,314.5
3,486.1
3,382.9
3,432.6
3,483.3
3,498.8
2 Wage and salary disbursements
3 Commodity-producing industries
Manufacturing
4
5 Distributive industries
6 Service industries
7 Government and government enterprises
1.836.8
577.8
439.1
442.2
470.6
346.2
1,966.1
607.7
460.1
469.8
516.4
372.2
2,073.5
623.2
471.2
487.9
566.7
395.7
2,012.8
2,044.1
2,081.1
617.7
467.5
478.9
534.6
381.6
622.0
2,058.8
620.8
468.8
484.3
561.3
392.5
184.5
236.9
205.3
31.5
8.3
74.7
446.9
455.6
235.7
196.9
254.4
225.2
29.2
7.6
76.4
476.2
487.1
253.4
208.8
201.7
262.1
232.7
29.4
8.3
76.7
480.6
493.6
256.8
204.5
265.3
240.9
24.4
12.8
207.3
289.1
249.6
39.5
16.3
210.4
277.5
258.0
19.6
16.2
79.1
480.8
504.7
263.2
81.1
82.0
480.1
510.1
264.1
473.8
518.5
269.6
133.5
150.2
160.3
152.9
158.6
159.5
160.8
3,110.2
3,314.5
3,486.1
3,382.9
3,432.6
3,483.3
3.498.8
8
9
10
11
12
13
14
15
16
17
Other labor income
Proprietors' income1
Business and professional1
Farm 1
Rental income of persons 2
Dividends
Personal interest income
Transfer payments
Old-age survivors, disability, and health insurance benefits
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
279.2
252.7
26.5
15.0
81.2
475.0
513.7
266.8
470.5
485.2
549.6
387.2
621.8
470.0
488.3
572.6
398.4
439.6
486.5
514.1
500.7
497.5
504.8
519.0
20 EQUALS: Disposable personal income
2,670.6
2,828.0
2,972.0
2,882.2
2,935.1
2,978.5
2.979.9
21
LESS: Personal outlays
2.501.9
2,684.7
2,858.0
2,756.4
2,789.4
2,825.5
2,895.8
22 EQUALS: Personal saving
168.7
143.3
116.3
125.8
145.6
153.1
84.1
14,721.1
9,475.4
10,421.0
6.3
14,982.0
9,713.7
10,563.0
5.1
15,219.4
10,016.9
10,774.0
3.8
15,079.9
9,790.3
10,577.0
4.4
15,188.0
9,857.1
10,723.0
5.0
15,178.9
9,984.4
10,886.0
5.1
15,245.6
10,124.0
10,776.0
27 Gross saving
573.3
551.5
536.1
524.1
583.2
539.7
517.2
28
29
30
31
674.8
168.7
91.0
687.8
143.3
107.3
679.2
125.8
650.5
84.1
108.8
-.6
-9.4
708.3
145.6
115.5
16.5
713.0
153.1
106.6
-5.5
677.9
116.3
108.6
6.5
10.6
6.1
253.9
268.2
280.2
273.3
173.4
275.3
171.8
.0
278.9
174.4
.0
281.6
176.0
.0
-125.1
-195.0
69.9
-173.3
-232.2
58.9
-133.3
-197.4
64.0
19
LESS: Personal tax and nontax payments
MEMO
Per capita (1982 dollars)
23 Gross national product
24 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
2.8
GROSS SAVING
Gross private saving
Personal saving
Undistributed corporate profits1
Corporate inventory valuation adjustment
Capital consumption allowances
32 Corporate
33 Noncorporate
34 Wage accruals less disbursements
35 Government surplus, or deficit ( - ) , national income and
product accounts
36 Federal
37 State and local
280.2
175.0
.0
268.2
169.0
-101.5
-170.0
68.5
.0
.0
-198.0
61.7
-204.9
63.1
161.2
106.8
.0
-155.1
-217.6
62.5
.0
.0
.0
.0
.0
.0
.0
39 Gross investment
571.4
545.9
541.5
525.7
579.6
544.3
527.5
40 Gross private domestic
41 Net foreign
662.1
-90.7
661.1
-115.2
684.1
-142.7
669.5
-143.8
708.3
-128.6
687.3
-143.0
675.8
-148.3
4.6
10.3
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.
5.4
SOURCE. Survey of Current Business (Department of Commerce).
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A53
Summary
Millions of dollars; quarterly data are seasonally adjusted except as noted. 1
1986
1985
1984
1983
Item credits or debits
1985
Q3
1 Balance
Q2
Ql
Q4
Q3 P
on current account
-46,605
-106,466
-117,677
-28,455
-32,275
-33,695
-31,510
-34,038
-31,020
-34,413
-35,458
-36,280
-40,206
Merchandise trade balance 2
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net 3
Other service transactions, net
-67,080
201,820
-268,900
-370
24,841
5,484
-112,522
219,900
-332,422
-1,827
18,751
1,288
-124,439
214,424
-338,863
-2,917
25,188
-525
-31,675
52,498
-84,173
-619
8,262
-422
-37,352
52,727
-90,079
-1,322
9,255
-32
-36,459
53,661
-90,120
-1,066
6,517
-7
-35,669
55,149
-90,818
-695
5,325
705
-37,669
55,318
-92,987
-624
5,509
681
-3,194
-6,286
-3,621
-8,536
-3,787
-11,196
-914
-3,087
-937
-3,307
-954
-2,069
-834
-3,245
-789
-3,388
11 Change in U.S. government assets, other than official
reserve assets, net (increase, - )
-5,005
-5,523
-2,824
-422
-540
-250
-209
-1,346
12 Change in U.S. official reserve assets (increase, - )
13 Gold
14 Special drawing rights (SDRs)
15 Reserve position in International Monetary Fund
16 Foreign currencies
-1,196
0
-66
-4,434
3,304
-3,130
0
-979
-995
-1,156
-3,858
0
-897
908
-3,869
-121
0
-264
388
-245
-3,148
0
-189
168
-3,126
-115
0
-274
344
-185
16
0
-104
366
-246
280
0
163
508
-391
17 Change in U.S. private assets abroad (increase, - ) 3
18 Bank-reported claims
19 Nonbank-reported claims
20 U.S. purchase of foreign securities, net
21 U.S. direct investments abroad, net 3
-43,821
-29,928
-6,513
-7,007
-373
-14,987
-11,127
5,081
-5,082
-3,859
-25,754
-691
1,665
-7,977
-18,752
-5,324
4,009
-1,517
-1,664
-6,152
-19,579
-8,485
418
-1,411
-10,101
-12,533
6,333
-2,842
-6,133
-9,891
-25,357
-14,387
-1,220
-1,664
-8,806
-28,016
-20,507
n.a.
163
-7,672
7.3
24
25
26
27
22 Change in foreign official assets in the United States
(increase, +)
U.S. Treasury securities
Other U.S. government obligations
Other U.S. government liabilities4
Other U.S. liabilities reported by U.S. banks
Other foreign official assets 5
5,968
6,972
-476
725
545
-1,798
3,037
4,690
13
436
555
-2,657
-1,324
-546
-295
483
522
-1,488
2,577
-81
46
58
2,932
-378
-1,322
-1,976
-171
263
722
-160
2,469
3,256
-177
288
-1,261
363
14,704
14,538
-644
679
662
-531
15,839
12,262
-276
954
3,201
-302
28 Change in foreign private assets in the United States
(increase, +) 3
U.S. bank-reported liabilities
U.S. nonbank-reported liabilities
Foreign private purchases of U.S. Treasury securities, net
Foreign purchases of other U.S. securities, net
Foreign direct investments in the United States, net 3
79,528
50,342
-118
8,721
8,636
11,947
99,730
33,849
4,704
23,059
12,759
25,359
128,430
40,387
-1,172
20,500
50,859
17,856
33,088
7,276
589
7,484
11,628
6,111
53,158
20,427
2,232
5,676
22,441
2,382
34,151
8,434
-2,057
7,666
18,686
1,422
32,822
3,553
-1,644
3,807
23,018
4,088
53,294
32,187
n.a.
597
17,078
3,432
0
11,130
0
27,338
0
23,006
0
-1,343
-3,687
0
5,125
3,771
0
10,316
1,216
0
12,437
-1,505
0
-3,771
-3,993
11,130
27,338
23,006
2,344
1,354
9,100
13,942
222
-1,196
-3,130
-3,858
-121
-3,148
-115
16
280
5,243
2,601
-1,807
2,519
-1,585
2,181
14,025
14,885
-8,283
-4,304
-6,599
-1,831
-1,002
1,421
-1,938
-2,828
194
190
64
15
28
22
12
15
•>
3
4
5
6
7
8
9
10
Remittances, pensions, and other transfers
U.S. government grants (excluding military)
29
30
31
32
33
34 Allocation of SDRs
35 Discrepancy
36
37 Statistical discrepancy in recorded data before 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 from
lines 4, 6, and 10 above)
38
39
1. Seasonal factors are not calculated for lines
38-41.
2. Data are on an international accounts (IA)
basis data, shown in table 3.11, for reasons of
exports are excluded from merchandise data and
3. Includes reinvested earnings.
6, 10, 12-16, 18-20, 22-34, and
basis. Differs from the Census
coverage and timing; military
are included in line 6.
4. Primarily associated with military sales contracts and other transactions
arranged with or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of
private corporations and state and local governments.
NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business
(Department of Commerce).
A54
International Statistics • April 1987
3.11
U.S. FOREIGN TRADE
Millions of dollars; monthly data are not seasonally adjusted.
1986
Item
1984
1983
1985
June
1 EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments
213,146
Aug.
July
17,604
Nov.
Dec.
200,486
217,865
258,048
325,726
345,276
31,764
34,121
29,476
28,695
30,018
36,187
27,795
3 Trade balance
-57,562
107,861
-132,129
-12,694
-16,414
-11,871
-11,177
-10,688
-17,592
-9,364
3.12
17,707
Oct.
2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded
warehouses
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
19,070
Sept.
17,518
19,33(K
18,595
18,431
the export side, the largest adjustments are: (1) the addition of exports to Canada
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.
SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade"
(Department of Commerce, Bureau of the Census).
U.S. RESERVE ASSETS
Millions of dollars, end of period
1986
Type
1984
1983
1987
1985
July
Sept.
Aug.
Oct.
Nov.
Dec.
Jan.
1 Total
33,747
34,934
43,191
47,430
48,161
48,086
47,089
47,824
48,427
49,348
2 Gold stock, including Exchange Stabilization Fund 1
11,121
11,096
11,090
11,084
11,084
11,084
11,066
11,070
11,064
11,062
5,025
5,641
7,293
8,085
8,250
8,295
8,090
8,310
8,395
8,470
11,312
11,541
11,952
12,114
12,017
11,922
11,575
11,659
11,730
11,834
6,289
6,656
12,856
16,147
16,810
16,785
16,358
16,785
17,238
17,982
3 Special drawing rights 2,3
4 Reserve position in International Monetary Fund 2
5
Foreign currencies 4
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
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.
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS
Millions of dollars, end of period
1986
Assets
1984
1983
July
1 Deposits
Assets held in custody
2 U.S. Treasury securities1
3 Earmarked gold2
Sept.
Aug.
Nov.
Oct.
Jan .p
Dec.
190
267
480
233
227
342
303
224
287
226
117,670
14,414
118,000
14,242
121,004
14,245
144,527
14,131
148,263
14,120
152,275
14,115
156,076
14,110
156,919
14,057
155,835
14,048
159,597
14,041
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.
1987
1985
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.
Summary Statistics
3.14
FOREIGN BRANCHES OF U.S. BANKS
A55
Balance Sheet Data1
Millions of dollars, end of period
1986
Asset account
June
July
Aug.
Sept.
Oct.
Nov.
Dec.''
All foreign countries
1 Total, all currencies
7. Claims on United States
Parent bank
4 Other banks
in United States 2
5 Nonbanks 2
6 Claims on foreigners
7 Other branches of parent bank
8 Banks
9 Public borrowers
10 Nonbank foreigners
1
477,090
453,656
458,012
467,565
454,886
461,440
474,567
446,581
446,555
456,627
115,542
82,026
,
113,393
78,109
13,664
21,620
320,162
95,184
100,397
23,343
101,238
119,713
87,201
13,057
19,455
315,680
91,399
102,960
23,478
97,843
117,812
82,565
14,039
21,208
324,216
98,406
105,648
23,279
96,883
113,474
79,387
13,527
20,560
314,354
92,641
103,095
23,578
95,040
117,661
83,779
13,072
20,810
315,583
93,435
102,849
23,720
95,579
116,392'
82,302
13,624
20,466'
328,553'
103,278
107,503
23,505
94,267r
112,078'
79,999
11,659
20,420'
305,562'
90,412
100,707
24,215
90,228'
108,363
76,205
11,904
20,254
308,393
91,570
103,292
23,357
90,174
113,133
81,984
13,685
17,464
314,384
97,788
105,281
23,520
87,795
342,689
96,004
117,668
24,517
107,785
18,859
20,101
22,619
25,537
27,058
28,196
29,622
28,941
29,799
29,110
12 Total payable in U.S. dollars
371,508
350,636
336,288
327,639
313,703
318,375
330,597
309,087
306,633
317,485
H Claims on United States
14 Parent bank
15 Other banks in United States 2
16 Nonbanks 2
17 Claims on foreigners
18 Other branches of parent bank
19 Banks
70 Public borrowers
21 Nonbank foreigners
113,436
80,909
247,406
78,431
93,332
17,890
60,977
111,426
77,229
13,500
20,697
228,600
78,746
76,940
17,626
55,288
116,645
85,971
12,454
18,220
209,905
72,689
71,748
17,252
48,216
113,519
81,073
12,907
19,539
203,934
75,883
66,751
16,498
44,802
109,263
78,025
12,373
18,865
194,102
69,135
65,033
16,684
43,250
113,636
82,261
12,180
19,195
194,643
68,604
64,940
16,788
44,311
112,133
80,753
12,802
18,578
207,701
78,400
68,596
16,521
44,184
107,612
78,335
10,544
18,733
190,030
67,835
62,836
17,455
41,904
104,224
74,705
10,986
18,533
190,663
67,835
64,919
16,821
41,088
109,190
80,574
12,830
15,786
196,491
73,704
66,464
16,586
39,737
10,666
10,610
9,738
10,186
10,338
10,096
10,763
11,445
11,746
11,804
11 Other assets
22 Other assets
United Kingdom
23 Total, all currencies
74 Claims on United States
75 Parent bank
76 Other banks in United States 2
77 Nonbanks 2
78 Claims on foreigners
79 Other branches of parent bank
30 Banks
31 Public borrowers
32 Nonbank foreigners
144,385
148,599
151,593
145,448
145,619
151,596
142,398
143,800
140,917
34,433
29,111
27,675
21,862
1,429
4,384
111,828
37,953
37,443
5,334
31,098
33,157
26,970
1,106
5,081
110,217
31,576
39,250
5,644
33,747
31,364
25,106
1,365
4,893
113,739
34,670
39,430
5,236
34,403
30,223
24,252
1,369
4,602
108,156
31,613
38,393
5,229
32,921
29,839
23,466
1,448
4,925
109,024
31,828
38,048
5,336
33,812
30,879
24,291
2,092
4,4%
113,368
34,678
40,204
5,086
33,400
30,747
24,800
1,314
4,633
105,534
31,268
37,836
5,157
31,273
28,940
22,671
1,534
4,735
108,147
29,%0
41,145
5,038
32,004
24,599
19,085
1,612
3,902
109,508
33,422
39,468
4,990
31,628
->
119,280
36,565
43,352
5,898
33,465
33 Other assets
34 Total payable in U.S. dollars
35 Claims on United States
36 Parent bank
37 Other banks
in United States 2
38 Nonbanks 2
39 Claims on foreigners
40 Other branches of parent bank
41 Banks
47 Public borrowers
43 Nonbank foreigners
158,732
5,019
4,882
5,225
6,490
7,069
6,756
7,349
6,117
6,713
6,810
126,012
112,809
108,626
104,013
97,641
97,771
103,228
97,295
97,119
95,028
33,756
28,756
88,917
31,838
32,188
4,194
20,697
26,868
21,495
1,363
4,010
82,945
33,607
26,805
4,030
18,503
32,092
26,568
1,005
4,519
73,475
26,011
26,139
3,999
17,326
29,944
24,693
1,102
4,149
70,697
27,559
22,825
3,777
16,536
28,848
23,888
1,131
3,829
65,472
24,258
21,938
3,793
15,483
28,446
22,972
1,194
4,280
66,465
24,657
21,636
3,838
16,334
29,512
23,826
1,848
3,838
70,325
27,151
22,917
3,778
16,479
29,312
24,323
1,110
3,879
64,873
24,632
21,011
3,859
15,371
27,564
22,106
1,364
4,094
66,298
23,223
24,020
3,811
15,244
23,193
18,526
1,475
3,192
68,138
26,361
23,251
3,677
14,849
3,339
2,996
3,059
3,372
3,321
2,860
3,391
3,110
3,257
3,697
143,082
134,060
131,306
142,592
68,624'
44,476
9,557
14,591'
59,612'
16,985
26,205
7,263
9,159'
66,021
42,166
9,628
14,227
59,436
18,139
25,743
6,697
8,857
76,620
53,068
11,156
12,396
61,433
18,803
27,519
6,929
8,182
1
44 Other assets
Bahamas and Caymans
45 Total, all currencies
46 Claims on United States
47 Parent bank
48 Other banks in United States 2
49 Nonbanks 2
50 Claims on foreigners
51 Other branches of parent bank
57 Banks
53 Public borrowers
54 Nonbank foreigners
55 Other assets
56 Total payable in U.S. dollars
1
152,083
146,811
142,055
138,944
134,238
137,526
75,309
48,720
"li coo
77,296
49,449
11,544
16,303
65,598
17,661
30,246
6,089
11,602
74,864
50,553
11,204
13,107
63,882
19,042
28,192
6,458
10,190
70,883
44,183
11,730
14,970
64,043
20,585
27,078
6,405
9,975
69,812
43,867
11,201
14,744
60,363
16,682
27,160
6,551
9,970
73,047
47,694
10,813
14,540
60,167
16,539
27,065
6,675
9,888
72,868
20,626
36,842
6,093
12,592
3,906
3,917
3,309
4,018
4,063
4,312
4,544
5,824
5,849
4,539
145,641
141,562
136,794
132,353
127,910
130,723
136,615
127,361
t24,744
136,813
1. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
71,918
46,635
10,641
14,652'"
66,610'
22,763
27,779
6,434
9,634'
2. Data for assets vis-a-vis other banks in the United States and vis-a-vis
nonbanks are combined for dates before June 1984.
A56
3.14
International Statistics • April 1987
Continued
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec.?
All foreign countries
57 Total, all currencies
477,090
453,656
458,012
467,565
454,886
461,440
474,567
446,581
446,555
456,627
58 Negotiable CDs 3
59 To United States
60 Parent bank
Other banks in United States
61
62 Nonbanks
n.a.
188,070
81,261
29,453
77,356
37,725
147,583
78,739
18,409
50,435
34,607
155,538
83,914
16,894
54,730
34,683
149,848
85,126
16,118
48,604
32,656
141,599
81,299
14,191
46,109
31,475
145,488
79,564
15,151
50,773
33,642
151,281
87,927
14,153
49,201
32,444
141,126
75,777
14,791
50,558
32,926
137,101
75,087
14,661
47,353
31,642
151,639
82,510
15,599
53,530
63 To foreigners
64 Other branches of parent bank
Banks
65
Official institutions
66
67 Nonbank foreigners
68 Other liabilities
269,685
90,615
92,889
18,896
68,845
19,335
247,907
93,909
78,203
20,281
55,514
20,441
245,942
89,529
76,814
19,523
60,076
21,925
262,329
97,717
81,008
20,480
63,124
20,705
259,133
91,144
82,854
20,608
64,527
21,498
262,978
91,307
85,239
20,637
65,795
21,499'
269,322
102,245
81,953
20,109
65,015
20,322
253,202
87,883
80,709
19,436
65,174
19,809'
256,476
87,853
83,655
18,831
66,137
20,052
253,729
95,146
77,789
17,835
62,959
19,617
69 Total payable in U.S. dollars
388,291
367,145
353,470
346,428
330,183
333,581
349,259
323,699
319,885
336,406
70 Negotiable CDs 3
71 To United States
72 Parent bank
73 Other banks in United States
74
Nonbanks
n.a.
184,305
79,035
28,936
76,334
35,227
143,571
76,254
17,935
49,382
31,063
150,161
80,888
16,264
53,009
31,076
142,730
81,066
15,323
46,341
28,970
133,908
77,048
13,507
43,353
28,091
137,805
75,391
14,364
48,050
30,560
143,627
83,790
13,173
46,664
29,206
133,301
71,858
13,768
47,675
29,752
129,2%
71,042
13,808
44,446
28,467
143,654
78,435
14,545
50,674
75 To foreigners
Other branches of parent bank
76
Banks
77
78 Official institutions
79 Nonbank foreigners
80 Other liabilities
194,139
73,522
57,022
13,855
51,260
9,847
178,260
77,770
45,123
15,773
39,594
10,087
163,361
70,943
37,323
14,354
40,741
8,885
163,943
75,805
33,745
13,772
40,621
8,679
158,314
68,065
34,827
14,091
41,331
8,991
158,931
66,878
36,460
14,125
41,468
8,754
167,356
77,464
35,358
13,697
40,837
7,716
153,536
65,077
33,802
13,320
41,337
7,656
153,437
63,638
35,177
13,139
41,483
7,400
156,777
71,181
33,847
12,371
39,378
7,508
United Kingdom
158,732
144,385
148,599
151,593
145,448
145,619
151,596
142,398
143,800
140,917
82 Negotiable CDs 3
83 To United States
84 Parent bank
Other banks in United States
85
86
Nonbanks
n.a.
55,799
14,021
11,328
30,450
34,413
25,250
14,651
3,125
7,474
31,260
29,422
19,330
2,974
7,118
31,396
26,270
15,892
1,997
8,381
29,295
22,671
13,300
1,999
7,372
28,279
22,831
14,188
2,148
6,495
30,352
26,540
17,399
2,062
7,079
28,847
24,610
14,014
2,382
8,214
28,984
22,714
13,811
2,313
6,590
27,781
24,703
14,469
2,666
7,568
87 To foreigners
88 Other branches of parent bank
89 Banks
Official institutions
90
Nonbank foreigners
91
92 Other liabilities
95,847
19,038
41,624
10,151
25,034
7,086
77,424
21,631
30,436
10,154
15,203
7,298
78,525
23,389
28,581
9,676
16,879
9,392
84,362
27,029
30,505
9,543
17,285
9,565
83,707
25,106
31,678
9,074
17,849
9,775
84,880
24,962
32,250
9,330
18,338
9,629
85,554
28,272
31,190
8,652
17,440
9,150
80,252
24,194
31,001
8,068
16,989
8,689
83,320
23,733
34,192
7,875
17,520
8,782
79,452
25,036
30,860
6,836
16,720
8,981
81 Total, all currencies
131,167
117,497
112,697
108,375
101,095
101,397
108,249
99,820
99,321
99,707
94 Negotiable CDs 3
95 To United States
Parent bank
%
Other banks in United States
97
98
Nonbanks
n.a.
54,691
13,839
11,044
29,808
33,070
24,105
14,339
2,980
6,786
29,337
27,756
18,956
2,826
5,974
29,135
24,214
15,331
1,817
7,066
27,015
20,065
12,648
1,738
5,679
26,114
20,403
13,707
1,879
4,817
28,490
24,039
16,984
1,735
5,320
26,927
21,960
13,591
2,108
6,261
27,166
20,184
13,438
2,009
4,737
26,169
22,104
14,021
2,325
5,758
99 To foreigners
100 Other branches of parent bank
Banks
101
102 Official institutions
103 Nonbank foreigners
104 Other liabilities
73,279
15,403
29,320
8,279
20,277
3,197
56,923
18,294
18,356
8,871
11,402
3,399
51,980
18,493
14,344
7,661
11,482
3,624
51,056
20,455
13,073
6,914
10,614
3,970
49,932
17,868
14,251
6,658
11,155
4,083
50,855
17,790
15,056
6,724
11,285
4,025
52,645
21,305
14,491
6,015
10,834
3,075
47,491
17,289
14,123
5,685
10,394
3,442
48,921
16,689
15,855
5,655
10,722
3,050
48,109
17,951
15,203
4,934
10,021
3,325
93 Total payable in U.S. dollars
Bahamas and Caymans
105 Total, all currencies
152,083
146,811
142,055
138,944
134,238
137,526
143,082
134,060
131,306
142,592
106 Negotiable CDs 3
107 To United States
108 Parent bank
109 Other banks in United States
110 Nonbanks
n.a.
111,299
50,980
16,057
44,262
615
102,955
47,162
13,938
41,855
610
103,813
44,811
12,778
46,224
567
98,897
47,014
12,868
39,015
565
96,636
47,862
11,131
37,643
470
99,585
44,417
11,952
43,216
527
102,012
49,981
10,986
41,045
683
95,840'
43,470
11,144
41,226
784
94,436
43,597
11,131
39,708
847
105,229
48,622
11,646
44,961
111 To foreigners
112 Other branches of parent bank
113 Banks
114 Official institutions
115 Nonbank foreigners
116 Other liabilities
38,445
14,936
11,876
1,919
11,274
2,339
40,320
16,782
12,405
2,054
9,079
2,921
35,053
14,075
10,669
1,776
8,533
2,579
37,340
15,882
9,991
2,427
9,040
2,140
34,827
13,561
9,636
2,468
9,162
2,210
35,216
13,368
10,216
2,386
9,246
2,255
38,447
15,918
10,158
2,834
9,537
2,0%
35,427
13,574
8,964
2,665
10,224
2,110
33,841
12,527
8,545
2,577
10,192
2,245
34,400
12,631
8,614
2,719
10,436
2,116
148,278
143,582
138,322
134,606
130,075
133,256
138,733
130,084
127,252
138,774
117 Total payable in U.S. dollars
3. Before June J984, liabilities on negotiable CDs were included in liabilities to
the United States or liabilities to foreigners, according to the address of the initial
purchaser.
Summary Statistics
3.15
A57
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions o f dollars, end of period
1986
Item
1 Total
2
3
4
5
6
1
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
1984
1985
July
Aug.
Sept.
Oct.
Nov.
Dec.?
180,552
178,356
194,562
198,784
203,364
209,608
211,053
210,966
211,125
26,089
59,976
26,734
53,252
26,142
65,790
25,143
70,721
25,482
74,766
29,544
75,095
27,188
75,457
27,743
75,132
26,994
75,674
69,019
5,800
19,668
77,108
3,550
17,712
84,113
1,800
16,717
85,561
1,300
16,059
85,622
1,300
16,194
87,546
1,300
16,123
91,052
1,300
16,056
91,104
1,300
15,687
91,506
1,300
15,651
69,776
1,528
8,561
93,954
1,264
5,469
74,418
1,314
11,141
86,459
1,824
3,200
79,641
1,529
11,046
97,359
1,717
3,270
81,524
1,627
11,242
100,070
1,525
2,796
83,874
1,535
10,801
102,362
1,958
2,834
87,261
1,626
10,353
105,598
1,864
2,906
88,590
1,699
10,047
105,336
1,715
3,666
87,707
1,891
9,111
105,418
1,544
5,295
87,774
2,004
8,381
106,013
1,464
5,489
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
June
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.
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 AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, end o f period
1985
Item
1982
1983
Dec.
1 Banks' own liabilities
2 Banks' own claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers 1
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.
4,844
7,707
4,251
3,456
676
5,219
7,231
2,731
4,501
1,059
1986
1984
8,586
11,984
4,998
6,986
569
15,368
16,294'
8,437'
7,857
580
Mar.'
21,336
19,800
11,383
8,417
1,426
June'
24,088
21,138
11,465
9,673
1,385
Sept.
29,227
24,516
13,818
10,698
1,660
NOTE. Data on claims exclude foreign currencies held by U.S. monetary
authorities,
A58
3.17
International Statistics • April 1987
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States
Millions of dollars, end of period
1986
Holder and type of liability
1983
1984
1985
June
July'
Aug/
Sept.
Oct.
Nov.
Dec.f
1 All foreigners
369,607
407,306
435,726
457,879'
470,842
487,452
505,464
497,018'
511,947
537,456
2 Banks' own liabilities
3 Demand deposits
4 Time deposits1
5 Other 2
6 Own foreign offices3
279,087
17,470
90,632
25,874
145,111
306,898
19,571
110,413
26,268
150,646
341,070
21,107
117,278
29,305
173,381
346,192'
21,66c
115,163'
32,012'
177,357'
342,515
19,693
117,010
30,894
174,917
355,941
20,246
122,286
33,779
179,630
372,368
21,388
125,840
36,834
188,307
362,309'
21,730
123,503'
36,303'
180,773
377,707
24,772
125,651
35,567
191,718
404,073
23,530
131,191
40,325
209,027
90,520
68,669
100,408
76,368
94,656
69,133
111,687
82,701
128,327
86,789
131,511
89,586
133,095
90,467
134,710
91,305
134,240
90,351
133,383
90,271
17,467
4,385
18,747
5,293
17,964
7,558
14,729
14,257
14,702
26,836
14,507
27,417
14,430
28,198
15,085
28,319
14,360
29,529
15,451
27,661
11 Nonmonetary international and regional
organizations7
5,957
4,454
5,821
3,441
3,974
5,253
3,038
3,902
4,315
4,826
12 Banks' own liabilities
13 Demand deposits
14 Time deposits1
15 Other2
4,632
297
3,584
750
2,014
254
1,267
493
2,621
85
2,067
469
891
79
551
262
1,857
156
1,209
492
4,090
165
3,233
691
1,721
180
1,243
299
2,426
175
1,939
312
2,944
135
2,299
511
2,977
199
2,166
611
16 Banks' custody liabilities4
17 U.S. Treasury bills and certificates
18 Other negotiable and readily transferable
instruments6
19 Other
1,325
463
2,440
916
3,200
1,736
2,550
1,619
2,118
991
1,163
129
1,317
218
1,476
308
1,371
262
1,849
259
862
0
1,524
0
1,464
0
918
13
1,126
0
1,033
1
1,099
0
1,162
6
1,104
5
1,590
0
20 Official institutions8
79,876
86,065
79,985
92,402'
96,467
101,371
104,640
102,645
102,875
102,668
21 Banks' own liabilities
22 Demand deposits
23 Time deposits1
24 Other 2
19,427
1,837
7,318
10,272
19,039
1,823
9,374
7,842
20,835
2,077
10,949
7,809
23,399'
2,131
10,55c
10,718'
22,647
1,608
10,475
10,564
23,834
1,582
10,257
11,995
26,821
1,895
10,918
14,008
24,064
1,840
10,389
11,835
25,165
2,188
11,286
11,691
24,526
2,121
10,447
11,957
25 Banks' custody liabilities4
26
U.S. Treasury bills and certificates 3
27 Other negotiable and readily transferable
instruments 6
28 Other
60,448
54,341
67,026
59,976
59,150
53,252
69,004
65,790
73,820
70,721
77,538
74,766
77,819
75,095
78,581
75,457
77,710
75,132
78,142
75,674
6,082
25
6,966
84
5,824
75
2,996
218
2,892
207
2,624
148
2,524
199
2,920
204
2,446
132
2,323
145
29 Banks9
226,887
248,893
275,589
284,335'
292,554
301,879
318,552
310,650
324,734
349,533
30 Banks' own liabilities
31 Unaffiliated foreign banks
32
Demand deposits
33
Time deposits1
34
Other2
35 Own foreign offices3
205,347
60,236
8,759
37,439
14,038
145,111
225,368
74,722
10,556
47,095
17,071
150,646
252,723
79,341
10,271
49,510
19,561
173,381
255,37C
78,013'
10,273'
48,196'
19,544
177,357'
251,300
76,383
9,142
49,059
18,181
174,917
260,794
81,165
9,304
52,411
19,451
179,630
276,496
88,188
9,295
58,006
20,887
188,307
268,436
87,663
9,714
55,63C
22,319'
180,773
282,484
90,766
11,626
57,533
21,608
191,718
309,721
100,694
10,234
64,420
26,040
209,027
21,540
10,178
23,525
11,448
22,866
9,832
28,964
10,688
41,254
10,934
41,084
10,543
42,057
10,635
42,214
10,601
42,250
10,491
39,812
9,962
7,485
3,877
7,236
4,841
6,040
6,994
5,448
12,828
5,585
24,735
5,526
25,016
5,538
25,883
5,532
26,081
5,468
26,291
5,366
24,484
7 Banks' custody liabilities4
8 U.S. Treasury bills and certificates'
9 Other negotiable and readily transferable
instruments 6
10 Other
36 Banks' custody liabilities4
37 U.S. Treasury bills and certificates
38 Other negotiable and readily transferable
instruments6
39 Other
40 Other foreigners
56,887
67,894
74,331
77,701'
77,847
78,949
79,233
79,822'
80,022
80,430
41 Banks' own liabilities
42 Demand deposits
43
Time 2deposits
Other
44
49,680
6,577
42,290
813
60,477
6,938
52,678
861
64,892
8,673
54,752
66,711
8,786
56,267
1,657
67,223
9,196
56,386
1,642
67,331
10,018
55,673
1,640
67,383'
10,000
55,546'
1,838
67,114
10,824
54,533
1,757
66,850
10,975
54,158
1,467
66,531'
9,177'
55,866'
1,488'
7,207
3,686
7,417
4,029
9,439
4,314
11,169
4,604
11,136
4,143
11,726
4,149
11,903
4,519
12,439
4,939
12,908
4,465
13,580
4,377
3,038
483
3,021
367
4,636
489
5,367
1,198
5,099
1,894
5,325
2,253
5,268
2,115
5,472
2,028
5,342
3,100
6,172
3,032
10,346
10,476
9,845
6,419
6,492
6,569
6,554
6,759
6,609
7,343
Banks' custody liabilities4
46 U.S. Treasury bills and certificates
47 Other negotiable and readily transferable
instruments6
48 Other
45
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.
1,717
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."
Nonbank-Reported
3.17
Data
Continued
1986
Area and country
1983
1984
1985
June
July
Aug.
Sept.
Oct.
Nov.
Dec.P
1 Total
369,607
407,306
435,726
457,879''
470,842'
487,452'
505,464
497,018'
511,947
537,456
2 Foreign countries
363,649
402,852
429,905
454,438'
466,867'
482,199'
502,426
493,116'
507,632
532,631
138,072
585
2,709
466
531
9,441
3,599
520
8,462
4,290
1,673
373
1,603
1,799
32,246
467
60,683
562
7,403
65
596
153,145
615
4,114
438
418
12,701
3,358
699
10,762
4,731
1,548
597
2,082
1,676
31,740
584
68,671
602
7,192
79
537
164,114
693
5,243
513
496
15,541
4,835
666
9,667
4,212
948
652
2,114
1,422
29,020
429
76,728
673
9,635
105
523
166,918'
1,013
5,224
519
49C
19,862
5,14c
657
8,917'
4,224
710
795
2,069
1,118
27,843'
586
82,313'
661
3,997
89
690
163,337'
988
5,343
560
449
20,171'
6,001'
604
8,746'
4,682
497
711
1,894
1,267
28,455
310
78,20C
542
3,366
48
506
166,939'
1,035
5,114
643
365
21,469
6,062'
570
9,269
4,495
542
791
1,979
944
29,064
285
79,954'
482
3,292'
32
553
173,930
1,073
6,165
483
406
21,339
5,559
623
8,836
4,952
576
758
2,082
1,293
29,207
448
86,215
562
2,724
84
545
173,485'
1,018
6,024'
478
606
21,242'
6,624
646
8,807'
4,826'
654
738
2,297
1,016'
29,848'
401
84,297'
515
2,938
25
484'
175,791
1,197
6,836
604
448
21,641
5,856
755
9,304
4,410
512
685
2,197
1,301
30,406
1,263
84,058
544
3,308
16
452
180,343
1,180
6,890
480
557
22,846
5,386
706
10,865
5,558
719
700
2,348
920
31,235
454
85,431
630
2,706
23
710
3 Europe
4
Austria
5 Belgium-Luxembourg
6 Denmark
Finland
7
8 France
9 Germany
in
Greece
Italy
ii
17 Netherlands
13 Norway
14 Portugal
1*5 Spain
16 Sweden
17 Switzerland
18 Turkey
19 United Kingdom
70
Yugoslavia
Other Western Europe 1
71
77
U.S.S.R
Other Eastern Europe 2
23
16,026
16,059
17,427
22,926
22,359
23,933
24,150
24,340
25,753
26,256
140,088
4,038
55,818
2,266
3,168
34,545
1,842
1,689
8
1,047
788
109
10,392
3,879
5,924
1,166
1,244
8,632
3,535
153,381
4,394
56,897
2,370
5,275
36,773
2,001
2,514
10
1,092
896
183
12,303
4,220
6,951
1,266
1,394
10,545
4,297
167,856
6,032
57,657
2,765
5,373
42,674
2,049
3,104
11
1,239
1,071
122
14,060
4,875
7,514
1,167
1,552
11,922
4,668
169,644'
6,229
60,082'
2,513
5,185
43,271'
2,270
3,419
8
1,262
1,108
185
13,633
4,358
6,687'
1,254
1,664
11,733'
4,783
182,617'
6,336
60,764
2,201
5,134
56,432'
2,227
3,334
7
1,196
1,123
184
12,985
4,382
6,640'
1,158
1,687
12,058
4,770
187,924'
6,096
67,044'
2,248'
5,168'
55,928'
2,139
3,315
8
1,232
1,140
177
13,609
4,383
6,392'
1,149
1,636
196,704
6,069
69,123
2,199
5,359
61,635
2,426
3,373
7
1,260
1,129
187
13,137
4,775
6,415
1,256
1,589
11,709
5,056
187,968'
5,748
64,106
1,918
5,361
58,713'
2,398'
3,775
6
1,216
1,126
151
13,197'
4,645
6,522'
1,167
1,608
11,392
4,917
189,383
5,202
62,613
2,549
4,684
61,465
2,325
3,873
6
1,199
1,129
153
13,488
4,706
6,729
1,145
1,610
11,670
4,835
207,902
4,723
72,300
2,964
4,360
70,872
2,051
4,280
7
1,235
1,122
181
13,586
4,846
6,858
1,162
1,532
10,450
5,373
58,570
71,187
72,280
86,976'
91,669
96,021
100,058
99,325'
107,025
108,959
249
4,051
6,657
464
997
1,722
18,079
1,648
1,234
747
12,976
9,748
1,153
4,990
6,581
507
1,033
1,268
21,640
1,730
1,383
1,257
16,804
12,841
1,607
7,786
8,067
712
1,466
1,601
23,077
1,665
1,140
1,358
14,523
9,276
1,469
13,683
8,656
695
1,416
1,725
31,325
1,414
1,306
1,068
14,581
9,638
1,795
14,331
8,934
562
1,572
1,731
36,286
1,392
1,363
1,104
12,739
9,861
1,185
15,608
9,026
685
1,474
1,686
38,221
1,251
1,458
1,080
13,227
11,121
1,938
16,129
9,349
651
1,611
2,109
39,951
1,282
1,400
1,100
13,056
11,481
1,585
16,528'
8,662'
755
1,530
1,986
41,311
1,446
1,707
1,115
12,045
10,654
1,450
17,540
9,347
701
1,528
2,380
46,155
1,128
1,720
1,083
13,010
10,984
1,476
18,980
9,189
674
1,553
1,890
47,658
1,147
1,870
1,104
12,369
11,051
57 Africa
58 Egypt
59 Morocco
South Africa
60
61 Zaire
Oil-exporting countries 4
62
Other Africa
63
2,827
671
84
449
87
620
917
3,396
647
118
328
153
1,189
961
4,883
1,363
163
388
163
1,494
1,312
4,291
1,079
87
414
92
1,463
1,156
3,962'
820
93
530'
65
1,368
1,086
4,227
1,088
82
438
60
1,371
1,189
4,158
843
91
318
80
1,625
1,203
3,973
640
86
347
79
1,623
1,199
4,018
710
84
264
96
1,593
1,272
3,985
703
92
278
74
1,518
1,319
64 Other countries
65
Australia
All other
66
8,067
7,857
210
5,684
5,300
384
3,347
2,779
568
3,682
2,943
739
2,924
2,173
751
3,155
2,459
696
3,425
2,785
640
4,026
2,943
1,083
5,662
4,286
1,376
5,186
4,262
924
67 Nonmonetary international and regional
organizations
International
Latin American regional
Other regional 5
5,957
5,273
419
265
4,454
3,747
587
120
5,821
4,806
894
121
3,441
2,471
845
126
3,974
2,714
922
338
5,253
4,147
916
190
3,038
1,759
972
307
3,902
2,748
957
197
4,315
3,232
927
157
4,826
3,575
969
281
24 Canada
75 Latin America and Caribbean
76
Argentina
77
Bahamas
78
Bermuda
79
Brazil
30
British West Indies
31
Chile
Colombia
37
33
Cuba
34
Ecuador
35
Guatemala
36 Jamaica
Mexico
37
38
Netherlands Antilles
39 Panama
40
Peru
Uruguay
41
Venezuela
47
Other Latin America and Caribbean
43
44
45
46
47
48
49
50
51
57
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle-East oil-exporting countries 3
Other Asia
68
69
70
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).
11,56c
4,701'
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in "Other
Western Europe."
A59
A60
3.18
International Statistics • April 1987
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1986
Area and country
1983
1984
1985
June
1 Total
391,312
400,162
401,608
2 Foreign countries
391,148
399,363
400,577
91,927
401
5,639
1,275
1,044
8,766
1,284
476
9,018
1,267
690
1,114
3,573
3,358
1,863
812
47,364
1,718
477
192
1,598
99,014
433
4,794
648
898
9,157
1,306
817
9,119
1,356
675
1,243
2,884
2,230
2,123
1,130
56,185
1,886
596
142
1,389
106,413
598
5,772
706
823
9,124
1,267
991
8,848
1,258
706
1,058
1,908
2,219
3,171
1,200
62,566
1,964
998
130
1,107
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
13 Spain
16 Sweden
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
July
Aug.
Sept.
Oct.
Nov.
Dec."
403,952'
403,491'
403,760'
416,577
406,286'
417,502
444,382
403,496'
402,999'
403,340'
416,376
405,9IY
417,331
441,399
104,505'
609
7,243
750
983
9,455
1,095
629
7,474
1,407
905
776
2,001
2,478
3,553
1,856
58,283'
2,005
1,258'
568
1,176
100,319'
619
6,113
856
1,041
9,583
1,426
622
7,266
1,427
614
789
1,863
2,906
2,617
1,709
56,247'
1,902
1,102
504
1,112
100,323
694
6,990
783
964'
9,483
1,181
660
5,981
1,254
698
757
1,757'
2,396'
3,306
1,649
57,856'
1,852
508'
528
1,026
106,735
654
6,574
807
1,085
10,209
1,599
706
6,797
2,039
732
734
1,995
2,487
2,665
1,586
61,997
1,871
791
405
1,002
103,622'
619
7,689
796
1,111
9,514'
1,320
626
7,681'
2,114
711
699
1,922
2,375
2,661
1,612
58,094'
1,886
799
296
1,097
106,348
748
8,149
764
1,176
9,499
1,654
792
8,323
2,424
712
682
1,722
2,343
3,574
3,527
56,610
1,897
600
225
927
106,401
739
7,491
688
1,128
11,156
1,317
628
8,942
2,363
633
706
1,459
1,943
3,047
1,534
58,206
1,833
556
634
1,3%
16,341
16,109
16,482
18,270
18,303
19,401
18,112
19,532
20,338
20,892
205,491
11,749
59,633
566
24,667
35,527
6,072
3,745
0
2,307
129
215
34,802
1,154
7,848
2,536
977
11,287
2,277
207,862
11,050
58,009
592
26,315
38,205
6,839
3,499
0
2,420
158
252
34,885
1,350
7,707
2,384
1,088
11,017
2,091
202,674
11,462
58,258
499
25,283
38,881
6,603
3,249
0
2,390
194
224
31,799
1,340
6,645
1,947
960
10,871
2,067
200,739'
12,077'
57,076'
274
24,855
40,050'
6,507
2,789
0
2,397
136
244
31,399
1,086
5,860
1,738
931
11,304
2,015
202,203'
12,282
56,250
432
24,915
41,923
6,513'
2,776
0
2,366
113
209
31,168
996
6,280
1,703
927
11,363'
1,985
197,879'
12,009
55,465'
373
24,762
39,836
6,449
2,642
0
2,375
127
209
30,839
1,060
5,862
1,677
936
11,289
1,969
205,579
12,119
61,705
320
24,856
40,360
6,489
2,633
0
2,387
135
224
31,037
1,133
6,377
1,600
1,051
11,177
1,977
196,413
12,243
53,557
452
24,738
39,535
6,514
2,674
0'
2,42(K
122
209'
31,061'
972
6,094
1,625
930
11,180
2,086
196,512
12,017
53,%7
447
25,880
39,248
6,526
2,665
1
2,395
138
216
30,659
911
5,354
1,618
943
11,014
2,513
210,344
12,075
58,694
1,379
25,435
45,789
6,540
2,818
0
2,431
140
198
30,477
1,038
5,423
1,637
1,045
12,802
2,423
67,837
66,316
66,212
72,072'
74,253
77,811'
78,073
78,558
86,209
95,838
292
1,908
8,489
330
805
1,832
30,354
9,943
2,107
1,219
4,954
5,603
710
1,849
7,293
425
724
2,088
29,066
9,285
2,555
1,125
5,044
6,152
639
1,535
6,796
450
698
1,991
31,249
9,226
2,224
845
4,298
6,260
567
1,238
7,526
440
675
1,772
38,524
9,016'
2,393
706
3,680
5,535
779
1,089
8,445
372
720
1,567
40,902
8,900
2,168
711
2,919
5,680
526
1,637
8,632
375
729
1,541
43,327
8,495'
2,128
736
2,764
6,921
758
1,903
8,883
355
689
1,622
42,751
7,846
2,148
636
3,724
6,758
758
1,528
8,337
316
694
1,630
45,167
7,023
2,071
611
3,3%
7,027
793
1,812
7,598
327
722
1,615
53,265
6,569
1,972
595
3,778
7,162
787
2,675
8,300
321
718
1,648
59,482
7,162
2,202
576
4,115
7,854
57 Africa
58 Egypt
59 Morocco
60 South Africa
61 Zaire
62 Oil-exporting countries 5
63 Other
6,654
747
440
2,634
33
1,073
1,727
6,615
728
583
2,795
18
842
1,649
5,407
721
575
1,942
20
630
1,520
4,971
740
642
1,705
17
415
1,452
4,817
701
615
1,661
17
413
1,410
4,693
633
617
1,683
21
445
1,294
4,651
593
636
1,607
33
511
1,271
4,531
577
621
1,549
35
545
1,203
4,737
560
621
1,586
27
690
1,253
4,621
567
598
1,531
27
688
1,209
64 Other countries
65 Australia
66 All other
2,898
2,256
642
3,447
2,769
678
3,390
2,413
978
2,939
2,023
916
3,103
2,159
945
3,232
2,293
940
3,225
2,221
1,004
3,259
2,143
1,115
3,187
1,985
1,202
3,303
1,952
1,350
164
800
1,030
456
493
420
200
372
171
2,983
25 Latin America and Caribbean
26 Argentina
27 Bahamas
28 Bermuda
29 Brazil
30 British West Indies
31 Chile
32 Colombia
33 Cuba
34 Ecuador
35 Guatemala3
36 Jamaica 3
37 Mexico
38 Netherlands Antilles
39 Panama
40 Peru
41 Uruguay
42 Venezuela
43 Other Latin America and Caribbean
44
45
46
47
48
49
50
51
52
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle East oil-exporting countries 4
Other Asia
67 Nonmonetary international and regional
organizations6
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in "Other Latin America and Caribbean" through March 1978.
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in
"Other Western Europe."
Nonbank-Reported
3.19
Data
BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
Millions of dollars, end of period
1986
Type of claim
1983
1984
1985
June'
July
Aug/
403,491
60,667
181,590
114,099
49,324
64,775
47,136
403,760
60,046
182,170
115,922
52,410
63,512
45,621
Sept.
1 Total
426,215
433,078
430,489
432,762
2
3
4
5
6
7
8
391,312
57,569
146,393
123,837
47,126
76,711
63,514
400,162
62,237
156,216
124,932
49,226
75,706
56,777
401,608
60,507
174,261
116,654
48,372
68,282
50,185
403,952
60,639
181,906
113,045
47,093
65,951
48,363
34,903
2,969
32,916
3,380
28,881
3,335
28,810
3,475
31,849
3,743
26,064
23,805
19,332
20,620
22,337
5,870
5,732
6,214
4,715
5,769
37,715
37,103
28,487
28,328
27,172
46,337
40,714
37,78C
46,200
Banks' own claims on foreigners
Foreign public borrowers
Own foreign offices'
Unaffiliated foreign banks
Deposits
Other
All other foreigners
9 Claims of banks' domestic customers2 ..
11 Negotiable and readily transferable
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 . . . .
1. U.S. banks: includes amounts due from own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due from head office or parent foreign bank,
and foreign branches, agencies, or wholly owned subsidiaries of head office or
parent foreign bank.
2. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the account
of their domestic customers.
3.20
Oct/
Nov.
Dec.''
406,286
60,745
182,548
117,392
53,074
64,319
45,601
417,502
60,668
189,093
120,266
52,834
67,431
47,475
444,382
64,877
210,326
122,936
56,381
66,555
46,243
43,690
44,903
n.a.
444,382
448,426
47,464
416,577
60,603
193,355
116,808
52,178
64,630
45,811
44,515
48,575
3. Principally negotiable time certificates of deposit and bankers acceptances.
4. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad. For
description of changes in data reported by nonbanks, see July 1979 BULLETIN,
p. 550.
NOTE. Beginning April 1978, data for banks' own claims are given on a monthly
basis, but the data for claims of banks' own domestic customers are available on a
quarterly basis only.
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1985
Maturity; by borrower and area
1
7
3
4
5
6
7
8
9
10
By borrower
Maturity of 1 year or less'
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'
Europe
Canada
Latin America and Caribbean
11
Africa
All other 2
Maturity of over 1 year 1
14 Europe
15 Canada
16 Latin America and Caribbean
17
18 Africa
19 All other 2
12
13
1. Remaining time to maturity.
1982
1983
1986
1984
Dec.
Mar.
June
Sept.
228,150
243,715
243,952
227,903
221,172'
222,559'
224,317
173,917
21,256
152,661
54,233
23,137
31,095
176,158
24,039
152,120
67,557
32,521
35,036
167,858
23,912
143,947
76,094
38,695
37,399
160,824
26,302
134,522
67,078
34,512
32,567
152,666'
23,845
128,821'
68,50&
36,681
31,825'
152,551'
23,164'
129,388'
70,008
37,177
32,830
154,731
22,392
132,339
69,586
38,115
31,471
50,500
7,642
73,291
37,578
3,680
1,226
56,117
6,211
73,660
34,403
4,199
1,569
58,498
6,028
62,791
33,504
4,442
2,593
56,585
6,401
63,328
27,966
3,753
2,791
53,435'
5,899
59,537'
28,032'
3,331
2,433
57,927'
6,078'
57,399'
25,777'
3,297
2,072'
59,331
5,968
57,814
26,713
3,038
1,866
11,636
1,931
35,247
3,185
1,494
740
13,576
1,857
43,888
4,850
2,286
1,101
9,605
1,882
56,144
5,323
2,033
1,107
7,634
1,805
50,674
4,502
1,538
926
7,809'
1,925
52,165
4,251
1,634
722
7,934
2,256
53,572
4,034
1,497
714
7,285
1,861
54,147
3,990
1,479
824
2. Includes nonmonetary international and regional organizations.
A61
A62
International Statistics • April 1987
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2
3.21
Billions of dollars, end of period
1984
Area or country
1 Total
1982
1985
1986
1983
Sept.
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.P
436.1
433.9
406.4
405.7
405.5
396.8
394.9
391.9
394.3
390.9
391.4
179.6
13.1
17.1
12.7
10.3
3.6
5.0
5.0
72.1
10.4
30.2
167.8
12.4
16.2
11.3
11.4
3.5
5.1
4.3
65.3
8.3
29.9
147.5
9.8
14.3
10.0
9.7
3.4
3.5
3.9
57.1
8.1
27.7
148.1
8.7
14.1
9.0
10.1
3.9
3.2
3.9
60.3
7.9
27.1
153.0
9.3
14.5
8.9
10.0
3.8
3.1
4.2
65.4
9.1
24.7
146.7
8.9
13.5
9.6
8.6
3.7
2.9
4.0
65.7
8.1
21.7
152.0
9.5
14.8
9.8
8.4
3.4
3.1
4.1
67.1
7.6
24.3
148.5
9.3
12.3
10.5
9.8
3.7
2.8
4.4
64.6
7.0
24.2
156.4
8.3
13.8
11.2
8.5
3.5
2.9
5.4
68.5
6.2
28.1
159.8
9.0
15.1
11.5
9.3
3.4
2.9
5.6
68.9
6.8
27.4
158.6
8.5
14.6
12.5
8.1
3.9
2.7
4.8
70.1
6.1
27.4
13 Other developed countries
14 Austria
15 Denmark
16 Finland
17 Greece
18 Norway
19 Portugal
20
21 Turkey
22 Other Western Europe
23 South Africa
24 Australia
33.5
1.9
2.4
2.2
3.0
3.3
1.5
7.5
1.4
2.3
3.7
4.3
36.0
1.9
3.4
2.4
2.8
3.3
1.5
7.1
1.7
1.8
4.7
5.4
36.2
1.8
2.9
1.9
3.2
3.2
1.6
6.9
2.0
1.7
5.0
6.1
33.6
1.6
2.2
1.9
2.9
3.0
1.4
6.5
1.9
1.7
4.5
6.0
32.8
1.6
2.1
1.8
2.9
2.9
1.4
6.4
1.9
1.7
4.2
6.1
32.3
1.6
1.9
1.8
2.9
2.9
1.3
5.9
2.0
1.8
3.9
6.2
32.0
1.7
2.1
1.8
2.8
3.4
1.4
6.1
2.1
1.7
3.3
5.6
30.4
1.6
2.4
1.6
2.6
2.9
1.3
5.8
1.9
2.0
3.2
5.0
31.6
1.6
2.5
1.9
2.5
2.7
1.1
6.4
2.3
2.4
3.2
4.9
30.6
1.7
2.4
1.6
2.6
3.0
1.0
6.4
2.5
2.1
3.1
4.2
29.4
1.7
2.3
1.7
2.3
2.7
1.0
6.7
2.1
1.6
3.1
4.2
25 OPEC countries3
26 Ecuador
27 Venezuela
28 Indonesia
29 Middle East countries
30 African countries
26.9
2.2
10.5
2.9
8.5
2.8
28.4
2.2
9.9
3.4
9.8
3.0
24.4
2.1
9.2
3.2
7.3
2.5
24.9
2.2
9.3
3.3
7.9
2.3
24.5
2.2
9.3
3.3
7.4
2.3
22.8
2.2
9.3
3.1
6.1
2.2
22.7
2.2
9.0
3.1
6.2
2.3
21.6
2.1
8.9
3.0
5.5
2.0
20.7
2.2
8.7
3.3
4.8
1.8
20.6
2.1
8.8
3.0
5.0
1.7
20.0
2.1
8.7
2.8
4.7
1.7
106.5
110.8
111.6
111.8
110.8
110.0
107.8
105.1
103.5
101.4
99.6
8.9
22.9
6.3
3.1
24.2
2.6
4.0
9.5
23.1
6.4
3.2
25.8
2.4
4.2
9.1
26.3
7.1
2.9
26.0
2.2
3.9
8.7
26.3
7.0
2.9
25.7
2.2
3.9
8.6
26.4
7.0
2.8
25.5
2.2
3.8
8.6
26.6
6.9
2.7
25.3
2.1
3.7
8.9
25.5
6.6
2.6
24.4
1.9
3.5
8.9
25.6
7.0
2.7
24.2
1.8
3.4
8.9
25.7
7.0
2.3
24.0
1.7
3.3
9.2
25.3
7.1
2.2
23.8
1.6
3.3
9.3
25.2
7.1
2.0
23.8
1.5
3.4
.3
5.2
.9
1.9
11.2
2.8
6.1
2.2
1.0
.5
5.1
1.0
1.7
10.3
2.9
5.9
1.8
.9
.7
5.1
.9
1.8
10.6
2.7
6.0
1.8
1.1
.7
5.3
.9
1.7
10.4
2.7
6.1
1.7
1.1
.3
5.5
.9
2.3
10.0
2.8
6.0
1.6
.9
1.1
5.1
1.1
1.5
10.4
2.7
6.0
1.6
.9
.5
4.5
1.2
1.6
9.4
2.4
5.7
1.4
1.0
.6
4.3
1.2
1.3
9.5
2.2
5.6
1.3
.9
.6
3.7
1.3
1.6
8.6
2.0
5.7
1.1
.8
.6
4.3
1.3
1.4
7.3
2.1
5.4
1.0
.7
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
31 Non-OPEC developing countries
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Other Latin America
Asia
China
Mainland
Taiwan
India
39
40
41
42
43
44
45
46
47
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
.2
5.3
.5
2.3
10.7
2.1
6.3
1.6
1.1
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 4
1.2
.7
.1
2.4
1.5
.8
.1
2.3
1.2
.8
.1
1.9
1.2
.8
.1
2.1
1.1
.8
.1
2.2
1.0
.8
.1
2.0
1.0
.9
.1
2.0
1.0
.9
.1
1.9
.9
.9
.1
1.9
.9
.9
.1
1.7
.7
.9
.1
1.6
52 Eastern Europe
53 U.S.S.R
54 Yugoslavia
55 Other
6.2
.3
2.2
3.7
5.3
.2
2.4
2.8
4.5
.2
2.3
2.1
4.4
.1
2.3
2.0
4.3
.2
2.2
1.9
4.3
.3
2.2
1.8
4.6
.2
2.4
1.9
4.2
.1
2.2
1.8
4.0
.3
2.0
1.7
4.0
.3
2.0
1.7
3.3
.1
1.9
1.4
56 Offshore banking centers
57 Bahamas
58 Bermuda
59 Cayman Islands and other British West Indies
60 Netherlands Antilles
61 Panama5
62 Lebanon
63 Hong Kong
64 Singapore
65 Others 6
66.0
19.0
.9
12.8
3.3
7.5
.1
13.3
9.1
.0
68.9
21.7
.9
12.2
4.2
5.8
.1
13.8
10.3
.0
65.1
23.3
1.0
11.1
3.1
5.6
.1
11.6
9.4
.0
65.6
21.5
.9
11.8
3.4
6.7
.1
11.4
9.8
.0
63.2
20.1
.7
12.3
3.3
5.5
.1
11.4
9.9
.0
63.9
21.1
.9
12.1
3.2
5.4
.1
11.4
9.7
.0
58.8
16.6
.8
12.3
2.3
6.1
.0
11.4
9.4
.0
65.4
21.4
.7
13.4
2.3
6.0
.1
11.5
9.9
.0
61.5
21.5
.7
11.3
2.3
5.9
.1
11.4
8.4
.0
57.2
17.3
.4
12.8
2.3
5.5
.1
9.4
9.3
.0
62.6
20.0
.5
13.2
1.9
6.8
.1
10.4
9.7
.0
66 Miscellaneous and unallocated7
17.5
16.8
17.1
17.3
16.9
16.9
17.3
16.9
16.7
17.2
17.8
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
3. Besides the Organization of Petroleum Exporting Countries shown individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well
as Bahrain and Oman (not formally members of OPEC).
4. Excludes Liberia.
5. Includes Canal Zone beginning December 1979.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.
Nonbank-Reported Data
3.22
A63
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States1
Millions of dollars, end of period
1985
Type, and area or country
1982
1986
1984
1983
Dec.
Sept.
Mar.
June
Sept.?
1 Total
27,512
25,346
29,357
25,533'
27,662'
25,635
24,222
24,380
2 Payable in dollars
3 Payable in foreign currencies
24,280
3,232
22,233
3,113
26,389
2,968
22,634'
2,899'
24,352'
3,310'
22,022
3,613
20,692
3,530
20,633
3,747
By type
4 Financial liabilities
5 Payable in dollars
6 Payable in foreign currencies
11,066
8,858
2,208
10,572
8,700
1,872
14,509
12,553
1,955
12,092'
10,05c
2,041'
13,437'
11,313'
2,123'
12,328
10,205
2,123
11,117
9,177
1,940
11,620
9,418
2,201
7 Commercial liabilities
8 Trade payables
9 Advance receipts and other liabilities
16,446
9,438
7,008
14,774
7,765
7,009
14,849
7,005
7,843
13,441
5,694
7,747
14,225
6,685
7,540
13,307
5,598
7,710
13,105
5,503
7,602
12,760
5,592
7,168
15,423
1,023
13,533
1,241
13,836
1,013
12,584
857
13,039
1,186
11,817
1,490
11,516
1,590
11,214
1,546
6,501
505
783
467
711
792
3,102
5,742
302
843
502
621
486
2,839
6,728
471
995
489
590
569
3,297
6,971
338
851
371
630
702
3,736
6,705
288
701
262
651
561
3,960
7,254
322
501
289
708
692
4,272
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
6,816'
367
849
509'
624
593
3,584'
7,616'
329
857
434'
745
676
4,254'
19
Canada
746
764
863
826
760
753
287
282
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,751
904
14
28
1,027
121
114
2,596
751
13
32
1,041
213
124
5,086
1,926
13
35
2,103
367
137
2,619
1,145
4
23
1,234
28
3
3,184'
1,123'
4
29
1,843'
15
3
2,788
954
13
26
1,610
20
4
2,404
859
14
27
1,362
30
3
2,269
863
4
28
1,256
18
5
27
28
29
Asia
Japan
Middle East oil-exporting countries 2
1,039
715
169
1,424
991
170
1,777
1,209
155
1,767
1,136
82
1,815'
1,198'
82
1,799
1,192
78
1,660
1,189
43
1,790
1,354
3
30
31
Africa
Oil-exporting countries 3
17
0
19
0
14
0
14
0
12
0
12
0
12
0
4
2
32
All other 4
12
27
41
50'
5C
4
49
21
3,831
52
598
468
346
367
1.027
3,245
62
437
427
268
241
732
4,001
48
438
622
245
257
1,095
3,897
56
431
601
386
289
858
4,074
62
453
607
364
379
976
3,915
66
382
546
545
251
957
3,761
58
357
512
587
283
861
4,337
75
369
628
613
360
1,086
33
34
35
36
37
38
39
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
40
Canada
1,495
1,841
1,975
1,383
1,449
1,442
1,351
1,240
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,570
16
117
60
32
436
642
1,473
1
67
44
6
585
432
1,871
7
114
124
32
586
636
1,262
2
105
120
15
415
311
1,088
12
77
58
44
430
212
1,097
26
210
64
7
256
364
1,304
10
294
107
35
235
488
843
37
172
43
38
196
207
48
49
50
Asia
Japan
Middle East oil-exporting countries2-5
8,144
1,226
5,503
6,741
1,247
4,178
5,285
1,256
2,372
5,353
1,567
2,109
6,046
1,799
2,829
5,384
2,039
2,171
5,068
2,095
1,731
4,781
2,114
1,528
51
52
Africa
Oil-exporting countries 3
753
277
553
167
588
233
572
235
587
238
486
148
569
215
578
176
53
All other 4
651
921
1,128
975
982
983
1,053
980
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
A64
International Statistics • April 1987
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
United States'
Reported by Nonbanking Business Enterprises in the
Millions of dollars, end of period
1985
Type, and area or country
1982
1986
1984
1983
Sept.
Dec.
Mar.
June
Sept.P
1
Total
28,725
34,911
29,901
28,626'
28,437'
30,927
32,519
32,262
2
3
Payable in dollars
Payable in foreign currencies
26,085
2,640
31,815
3,0%
27,304
2,597
25.76C
2,866
26,135'
2,302
28,740
2,187
30,337
2,182
29,787
2,475
4
5
6
7
8
9
10
By type
Financial claims
Deposits
Payable in dollars
Payable in foreign currencies
Other financial claims
Payable in dollars
Payable in foreign currencies
17,684
13,058
12,628
430
4,626
2,979
1,647
23,780
18,4%
17,993
503
5,284
3,328
1,956
19,254
14,621
14,202
420
4,633
3,190
1,442
19,22C
15,331'
14,627'
704
3,889
2,351
1,538
18,451'
15,204'
14,589'
615
3,248
2,213
1,035
21,540
18,146
17,689
457
3,394
2,301
1,093
23,324
20,034
19,479
555
3,290
2,269
1,021
23,165
18,554
18,066
488
4,611
3,392
1,220
11
12
13
Commercial claims
Trade receivables
Advance payments and other claims
11,041
9,994
1,047
11,131
9,721
1,410
10,646
9,177
1,470
9,406
7,932
1,475
9,986
8,6%
1,290
9,387
8,086
1,301
9,195
7,858
1,337
9,097
7,925
1,172
10,478
563
10,494
637
9,912
735
8,782
624
9,333
652
8,750
637
8,589
606
8,329
767
4,873
15
134
178
97
107
4,064
6,488
37
150
163
71
38
5,817
5,762
15
126
224
66
66
4,864
6,463
12
132
158
127
53
5,736
6,53c
10
184
223
61
74
5,725'
6,859
10
217
172
61
166
5,986
8,877
11
257
148
9,338
67
418
129
44
138
8,315
14
15
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
hi
177
8,051
23
Canada
4,377
5,989
3,988
4,038'
3.26C
4,024
4,464
3,690
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
7,546
3,279
32
62
3,255
274
139
10,234
4,771
102
53
4,206
293
134
8,216
3,306
6
100
4,043
215
125
7,619'
2,321'
5
92
4,642'
201
73
7,841'
2,698'
6
78
4,571'
180
48
9,934
3,500
2
77
5,904
178
43
9,151
3,251
17
75
5,359
176
42
9,300
2,912
19
101
5,871
173
40
698
153
15
764
297
4
%1
353
13
%9
725
6
696
475
4
621
350
2
111
499
2
673
387
2
158
48
147
55
210
85
104
31
103
29
87
27
89
25
84
18
31
159
117
26
21
14
20
81
3,826
151
474
357
350
360
811
3,670
135
459
349
334
317
809
3,801
165
440
374
335
271
1,063
3,235
158
360
336
286
208
779
3,533
175
426
346
284
284
898
3,387
148
384
3,304
131
390
414
237
221
668
3,345
123
412
397
183
232
830
31
32
33
34
35
36
37
38
39
40
41
42
43
Japan
Middle East oil-exporting countries 2
Africa
Oil-exporting countries 3
All other 4
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
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
633
829
1,021
1,100
1,023
1,060
970
929
2,526
21
261
258
12
775
351
2,695
8
190
493
7
884
272
2,052
8
115
214
7
583
206
1,660
18
62
211
7
416
149
1,753
13
93
206
6
510
157
1,599
27
82
231
7
388
172
1,590
24
148
194
24
320
180
1,665
29
132
206
23
299
190
3,050
1,047
751
3,063
1,114
737
3,073
1,191
668
2,712
884
541
2,982
1,016
638
2,606
801
630
2,649
846
691
2,471
788
597
470
134
434
131
437
130
491
167
447
171
456
168
229
264
257
244
235
231
55
56
Africa
Oil-exporting countries3
588
140
588
139
57
All other 4
417
286
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%
221
248
793
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
Securities Holdings and Transactions
3.24
A65
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1986
Transactions, and area or country
1984
1986
1985
Jan.Dec.
June
Aug.
July
Sept.
Oct.
Nov.
Dec."
U.S. corporate securities
STOCKS
1 Foreign purchases
2 Foreign sales
59,834
62,814
81,995
77,054
147,919
129,855
11,176
10,832
13,275'
11,261'
12,045
10,615
12,206
10,948
10,979'
12,300'
12,034
12,085
13,923
12,784
3 Net purchases, or sales (—)
-2,980
4,941
18,064
344
2,014'
1,430
1,258
-1,322'
-52
1,139
4 Foreign countries
-3,109
4,857
18,272
464
2,079'
1,470
1,303
-1,179'
-18
1,059
-3,077
-405
-50
-357
-1,542
-677
1,691
495
-1,992
-378
-22
175
2,057
-438
730
-123
-75
1,665
356
1,718
238
296
24
168
9,436
462
339
936
1,559
4,702
795
2,535
977
3,859
298
373
192
219
-174
97
-134
38
131
60
-236
288
-3
32
577'
182
-130
52
-198
482'
214
271'
181
830
30
-23
824
105
-42
50
44
521
97
108
78
376
-1
-13
587
30
9
36
70
462
93
145
58
346
-13
86
-1,124'
-92
-104
-19
-405
-481
-115'
154
-51
16
39
-97
-485
-69
-3
-50
-236
-114
42
367
-92
80
23
48
416
113
22
14
47
225
101
-272
268
445
17
84
129
84
-208
-121
-65
-40
-45
-143
-34
80
39,296
26,399
86,587
42,455'
122,659
71,840
8,964
5,686
8,937
5,679
9,420
5,348
10,160
5,585
9,712
5,527
9,232
6,032
11,977
7,863
4,114
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 1
Other Asia
Africa
Other countries
17 Nonmonetary international and
regional organizations
BONDS 2
18 Foreign purchases
19 Foreign sales
20 Net purchases, or sales ( - )
12,897
44,132'
50,819
3,278
3,259
4,072
4,575
4,185
3,200
21 Foreign countries
12,600
44,227'
50,161
2,798
3,197
4,077
4,871
4,457
2,881
4,377
11,697
207
1,724
100
643
8,429
-62
376
-1,230
1,817
1
0
40,047
210
2,001
222
3,987
32,762
190
498
-2,648'
6,091
11
38
39,266
388
-251
387
4,530
33,855
548
1,483
-2,951
11,684
17
114
2,763
-6
-3
-37
490
2,214
55
63
-632
480
3
66
2,395
6
-91
-39
180
2,213
85
250
-718
1,177
-3
11
2,484
20
-81
98
564
1,917
110
160
-40
1,329
5
29
3,386
-29
26
51
30
3,414
2
64
-169
1,586
6
-4
3,475
0
82
-55
265
3,177
88
101
-33
819
-3
11
2,102
328
-108
113
204
1,416
154
67
-355
926
3
-15
3,064
32
-19
52
-117
2,760
153
116
-258
1,297
4
3
657
480
61
-4
-296
-273
319
-263
22
73
24
75
76
77
78
79
30
31
32
33
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Africa
Other countries
34 Nonmonetary international and
regional organizations
297
-95
Foreign securities
35 Stocks, net purchases, or sales ( - )
36 Foreign purchases
37 Foreign sales
-1,101
14,816
15,917
-3,892'
20,861'
24,754'
-1,492
49,880
51,372
-238
3,775
4,013
404
4,310
3,907
-83
4,610
4,694
676
5,091
4,415
1,256'
6,324'
5,068'
390
4,149
3,758
27
4,597
4,570
38 Bonds, net purchases, or sales ( - )
39 Foreign purchases
40 Foreign sales
-3,930
56,017
59,948
-3,999'
81,21Gr
85,214'
-3,162
165,591
168,753
1,540
15,632
14,091
359
13,559
13,200
1,232
14,086
12,854
-2,231
15,182
17,412
2,151
16,249'
14,098'
-680
12,599
13,278
-455
16,128
16,583
-428
41 Net purchases, or sales (—), of stocks and bonds . . . .
-5,031
-7,891
-4,653
1,302
762
1,149
-1,555
3,407'
-289
42 Foreign countries
-4,642
-8,954
-5,781
1,122
438
1,090
-1,492
3,078'
-292
-876
43
44
45
46
47
48
-8,655
542
2,460
1,356
-108
-238
-9,887
-1,686'
1,846'
659'
75'
38
-17,650
-884
3,420
11,180
55
-1,903
-1,332
16
742
1,639
3
55
-683
245
278
659
9
-70
-714
263
127
1,337
1
75
-3,379
111
351
1,852
3
-430
-647'
88
502'
3,194'
-1
-58
-984
-109
16
802
4
-21
-1,372
-263
158
1,482
6
-886
-389
1,063
1,128
180
324
59
-63
330
3
448
Europe
Canada
Latin America and Caribbean
Africa
Other countries
49 Nonmonetary international and
regional organizations
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
2. Includes state and local government securities, and securities of U.S.
government agencies and corporations. Also includes issues of new debt securi-
ties sold abroad by U.S. corporations organized to finance direct investments
abroad.
A66
3.25
International Statistics • April 1987
MARKETABLE U.S. TREASURY BONDS AND NOTES
Foreign Transactions
Millions of dollars
1986
Country or area
1984
1986
1985'
Jan.Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.?
-1,254
Transactions, net purchases or sales ( - ) during period1
1
Estimated total2
21,501
29,208
24,307
3,112
-279'
754'
4,993
3,093
-2,298
2
Foreign countries 2
16,496
28,768
25,455
2,230
2,705
2,217'
3,997
2,778
-340
-227
3
4
5
6
7
8
9
10
11
12
Europe 2
Belgium-Luxembourg
Germany 2
Netherlands
Sweden
Switzerland2
United Kingdom
Other Western Europe
Eastern Europe
Canada
11,014
287
2,929
449
40
656
5,188
1,466
0
1,586
4,303
476
1,917
269
976
773
-1,810
1,701
0
-188
17,327
343
7,805
1,312
132
415
4,725
2,5%
0
874
2,562
82
357
-64
16
349
698
1,125
0
-302
2,544
-46
818
1,756
42
-278
610
-358
0
67
2,442
180
1,050
-64
-25
52
1,207
43
0
105
-685
239
1,133
-313
85
-53
-1,970
195
0
-198
3,135
4
2,560
112
-6
449
153
-136
0
-230
-668
-53
716
38
-70
-499
-285
-515
0
19
1,301
75
-347
-29
-236
-322
1,072
1,089
0
297
13
14
15
16
17
18
19
20
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
4,315
248
2,336
1,731
19,919
17,909
112
308
901
-69
1,131
-161
5,178
3,800
-54
1,229
-460
-170
-290
0
515
223
-5
-80
28
-72
96
5
-137
273
6
198
-37
-294
255
2
-132'
683
All other
1,418
14
536
869
2,431
6,289
-67
114
-160
220
266
32
-78
4,848
4,395
11
-200
-219
69
-314
26
-58
-453
-13
163
74
-139
5
208
-250
88
2
482
97
29
97
-30
-2,079
-2,104
-14
171
21
22
23
Nonmonetary international and regional organizations
International
Latin American regional
5,009
4,612
0
442
-436
18
-1,148
-1,474
157
882
899
5
-2,984'
-2,829'
0
-1,462
-1,511
0
996
890
39
314
365
-5
-1,958
-2,010
0
-1,481
-1,414
0
24
25
26
Foreign countries 2
Official institutions
Other foreign2
16,496
505
15,992
28,768
8,135
20,631
25,455
14,351
11,106
2,230
1,612
619
2,705
1,448
1,257
2,217'
61
2,156'
3,997
1,877
2,119
2,778
3,506
-727
-340
52
-393
-227
401
-628
27
28
Oil-exporting countries
Middle East 3
Africa 4
-6,270
-101
-1,547
7
-1494
5
-290
0
14
2
-239
-1
-205
2
-377
-1
-1,016
1
-14
0
-1
MEMO
1. Estimated official and private transactions in marketable U.S. Treasury
securities with an original maturity of more than 1 year. Data are based on
monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and
notes held by official institutions of foreign countries.
2. Includes U.S. Treasury notes publicly issued to private foreign residents
denominated in foreign currencies.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
Interest and Exchange Rates
3.26
A67
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Rate on Jan. 31, 1987
Austria..
Belgium .
Brazil...
Canada..
Denmark
Percent
Month
effective
3.5
8.5
49.0
7.74
7.0
Jan. 1987
Jan. 1987
Mar. 1981
Jan. 1987
Oct. 1983
Country
France 1
Germany, Fed. Rep. of
Italy
Japan
Netherlands
1. As of the end of February 1981, the rate is that at which the Bank of France
discounts Treasury bills for 7 to 10 days.
2. Minimum lending rate suspended as of Aug. 20, 1981.
NOTE. Rates shown are mainly those at which the central bank either discounts
3.27
Rate on Jan. 31, 1987
Rate on Jan. 31, 1987
Country
Country
Percent
Month
effective
7.25
3.5
12.0
3.0
4.5
Dec. 1986
Mar. 1986
May 1986
Oct. 1986
Mar. 1986
Percent
Norway
Switzerland
United Kingdom2.
Venezuela
Month
effective
June 1983
Jan. 1987
8.0
3.5
Oct. 1985
or makes advances against eligible commercial paper and/or government commercial banks or brokers. For countries with more than one rate applicable to such
discounts or advances, the rate shown is the one at which it is understood the
central bank transacts the largest proportion of its credit operations.
FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1987
1986
Country, or type
1
?
3
4
5
7
8
9
10
1984
1985
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Eurodollars
United Kingdom
Canada
Germany
Switzerland
10.75
9.91
11.29
5.96
4.35
8.27
12.16
9.64
5.40
4.92
6.70
10.87
9.18
4.58
4.19
6.54
9.91
8.45
4.61
4.80
6.06
9.79
8.50
4.56
4.30
5.88
10.05
8.38
4.48
4.13
5.88
11.08
8.45
4.56
3.96
5.96
11.12
8.39
4.67
3.88
6.23
11.30
8.34
4.80
4.08
6.10
10.98
7.95
4.45
3.63
Netherlands
France
Italy
Belgium
Japan
6.08
11.66
17.08
11.41
6.32
6.29
9.91
14.86
9.60
6.47
5.56
7.68
12.60
8.04
4.96
5.69
7.13
11.70
7.25
4.62
5.28
7.09
11.18
7.25
4.68
5.17
7.07
10.84
7.25
4.71
5.32
7.38
10.85
7.29
4.75
5.48
7.51
11.05
7.38
4.39
6.03
7.92
11.40
7.39
4.40
5.58
8.49
11.39
7.88
4.23
NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate.
A68
3.28
International Statistics • April 1987
FOREIGN EXCHANGE RATES
Currency units per dollar
1987
1986
Country/currency
1984
1985
1986
Aug.
1
2
3
4
5
6
7
Australia/dollar1
Austria/schilling
Belgium/franc
Brazil/cruzeiro
Canada/dollar
China, P.R./yuan
Denmark/krone
8
9
10
11
12
13
14
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/pound1
15
16
17
18
19
20
21
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar1
Norway/krone
Portugal/escudo
22
23
24
25
26
27
28
29
30
31
Singapore/dollar
South Africa/rand1
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound1
Sept.
Oct.
Nov.
Dec.
Jan.
87.937
20.005
57.749
1841.50
1.2953
2.3308
10.354
70.026
20.676
59.336
6205.10
1.3658
2.9434
10.598
67.093
15.260
44.662
13.051
1.3896
3.4615
8.0954
61.23
14.502
42.701
13.84
1.3885
3.7129
7.7657
62.21
14.349
42.315
13.84
1.3872
3.7150
7.7278
63.83
14.111
41.635
13.98
1.3885
3.7257
7.5607
64.45
14.251
42.069
14.10
1.3863
3.7314
7.6444
65.95
13.996
41.381
14.54
1.3801
3.7314
7.5235
66.09
13.087
38.616
15.58
1.3605
3.7314
7.0591
6.0007
8.7355
2.8454
112.73
7.8188
11.348
108.64
6.1971
8.9799
2.9419
138.40
7.7911
12.332
106.62
5.0721
6.9256
2.1704
139.93
7.8037
12.597
134.14
4.9377
6.7215
2.0621
134.68
7.8003
12.567
134.67
4.9190
6.6835
2.0415
135.07
7.8026
12.676
134.53
4.8684
6.5628
2.0054
135.44
7.7999
12.848
135.89
4.9576
6.6206
2.0243
139.12
7.7974
13.076
134.64
4.8980
6.5296
1.9880
140.13
7.7931
13.149
136.78
4.6419
6.2007
1.8596
134.80
7.7698
13.029
143.90
1756.10
237.45
2.3448
3.2083
57.837
8.1596
147.70
1908.90
238.47
2.4806
3.3184
49.752
8.5933
172.07
1491.16
168.35
2.5830
2.4484
52.456
7.3984
149.80
1420.33
154.18
2.6121
2.3242
50.068
7.3534
146.17
1410.23
154.73
2.6174
2.3050
47.950
7.3429
146.83
1387.67
156.47
2.6245
2.2663
50.392
7.3611
147.24
1401.08
162.85
2.6131
2.2870
51.382
7.5401
149.54
1379.44
162.05
2.5966
2.2470
51.339
7.5294
148.61
1317.17
154.83
2.5701
2.0978
53.605
7.1731
142.90
2.1325
69.534
807.91
160.78
25.428
8.2706
2.3500
39.633
23.582
133.66
2.2008
45.57
861.89
169.98
27.187
8.6031
2.4551
39.889
27.193
129.74
2.1782
43.952
884.61
140.04
27.933
7.1272
1.7979
37.837
26.314
146.77
2.1601
38.39
886.45
134.11
28.187
6.9365
1.6616
37.422
26.093
148.61
2.1680
43.36
883.06
134.10
28.297
6.9191
1.6537
36.885
26.120
146.98
2.1777
44.42
879.22
133.43
28.407
6.8901
1.6433
36.647
26.129
142.64
2.1922
44.37
873.54
136.10
28.471
6.9683
1.6858
36.438
26.278
142.38
2.1900
44.94
868.43
134.49
28.532
6.9081
1.6647
36.001
26.239
143.93
2.1510
47.70
862.86
129.54
28.578
6.6188
1.5616
35.304
26.037
150.54
138.19
143.01
112.22
107.50
107.15
106.58
107.90
106.54
101.13
MEMO
32 United States/dollar2
1. Value in U.S. cents.
2. Index of weighted-average exchange value of U.S. dollar against currencies
of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76
global trade of each of the 10 countries. Series revised as of August 1978. For
description and back data, see "Index of the Weighted-Average Exchange Value
of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN.
3. Currency reform.
NOTE. Averages of certified noon buying rates in New York for cable transfers.
Data in this table also appear in the Board's G.5 (405) release. For address, see
inside front cover.
69
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
Issue
December 1986
Page
A87
August
December
March
January
September
November
December
March
May
July
December
February
A70
A68
A68
A70
A70
A70
A76
A70
A70
A70
A70
A70
SPECIAL TABLES
Published Irregularly, with Latest Bulletin Reference
Assets and liabilities of commercial banks, March 31, 1983
Assets and liabilities of commercial banks, June 30, 1983
Assets and liabilities of commercial banks, September 30, 1983
Assets and liabilities of commercial banks, December 31, 1985
Assets and liabilities of U.S. branches and agencies of foreign banks,
Assets and liabilities of U.S. branches and agencies of foreign banks,
Assets and liabilities of U.S. branches and agencies of foreign banks,
Assets and liabilities of U.S. branches and agencies of foreign banks,
Terms of lending at commercial banks, February 1986
Terms of lending at commercial banks, May 1986
Terms of lending at commercial banks, August 1986
Terms of lending at commercial banks, November 1986
December 31, 1985
March 31, 1986
June 30, 1986
September 30, 1986
1983
1983
1984
1987
1986
1986
1986
1987
1986
1986
1986
1987
70
Federal Reserve Board of Governors
PAUL A . VOLCKER, Chairman
MANUEL H . JOHNSON, Vice Chairman
MARTHA R . SEGER
WAYNE D . ANGELL
OFFICE OF BOARD
OFFICE OF STAFF DIRECTOR
MONETARY AND FINANCIAL
MEMBERS
JOSEPH R. COYNE, Assistant
DONALD J. WINN, Assistant
to the
to the
Board
Board
DONALD L . K O H N ,
Assistant to the Chairman
BOB S. MOORE, Special Assistant to the Board
STEVEN M . ROBERTS,
Deputy Staff Director
NORMAND R.V. BERNARD, Special Assistant
DIVISION
LEGAL
FOR
POLICY
OF RESEARCH
AND
to the
STATISTICS
DIVISION
MICHAEL BRADFIELD, General
J. VIRGIL MATTINGLY, JR.,
Counsel
Deputy General Counsel
RICHARD M. ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General
Counsel
RICKI R. TIGERT, Assistant General
Counsel
MARYELLEN A. BROWN, Assistant to the General
Counsel
JAMES L . KICHLINE, Director
EDWARD C . ETTIN, Deputy Director
MICHAEL J. PRELL, Deputy Director
JARED J. ENZLER, Associate Director
D A V I D E . LINDSEY, Associate Director
ELEANOR J. STOCKWELL, Associate Director
MARTHA BETHEA, Deputy Associate Director
THOMAS D . SIMPSON, Deputy Associate Director
LAWRENCE SLIFMAN, Deputy
OFFICE OF THE
SECRETARY
WILLIAM W. WILES,
Secretary
BARBARA R. LOWREY, Associate
JAMES MCAFEE, Associate
Secretary
Secretary
Associate
Director
PETER A . TINSLEY, Deputy Associate Director
SUSAN J. LEPPER, Assistant Director
RICHARD D . PORTER, Assistant Director
MARTHA S . SCANLON, Assistant Director
JOYCE K . ZICKLER, Assistant Director
LEVON H . GARABEDIAN, Assistant Director
(Administration)
DIVISION OF CONSUMER
AND COMMUNITY
AFFAIRS
DIVISION
GRIFFITH L . GARWOOD,
OF INTERNATIONAL
GLENN E . LONEY, Assistant Director
ELLEN M A L A N D , Assistant Director
DOLORES S . SMITH, Assistant Director
E D W I N M . TRUMAN, Director
LARRY J. PROMISEL, Senior Associate
CHARLES J. SIEGMAN, Senior Associate
D A V I D H . HOWARD, Deputy Associate
ROBERT F. GEMMILL, Staff
DIVISION OF BANKING
SUPERVISION AND
REGULATION
WILLIAM TAYLOR, Director
FRANKLIN D . DREYER, Deputy Director'
D O N E . KLINE, Associate Director
FREDERICK M . STRUBLE, Associate Director
WILLIAM A . RYBACK, Deputy Associate Director
STEPHEN C . SCHEMERING, Deputy Associate Director
RICHARD SPILLENKOTHEN, Deputy Associate Director
HERBERT A . BIERN, Assistant Director
JOE M. CLEAVER, Assistant Director
ANTHONY CORNYN, Assistant Director
JAMES I. GARNER, Assistant Director
JAMES D . GOETZINGER, Assistant Director
MICHAEL G . MARTINSON, Assistant Director
ROBERT S . PLOTKIN, Assistant Director
SIDNEY M . SUSSAN, Assistant Director
LAURA M . HOMER, Securities Credit Officer
1. On loan from the Federal Reserve Bank of Chicago.
FINANCE
Director
Director
Director
Director
Adviser
DONALD B . A D A M S , Assistant Director
PETER HOOPER I I I , Assistant Director
KAREN H . JOHNSON, Assistant Director
RALPH W . SMITH, JR., Assistant Director
Board
71
and Official Staff
H . ROBERT HELLER
OFFICE OF
STAFF DIRECTOR
FOR
OFFICE OF STAFF DIRECTOR FOR
FEDERAL RESERVE BANK
ACTIVITIES
MANAGEMENT
S . D A V I D FROST, Staff Director
E D W A R D T . M U L R E N I N , Assistant Staff Director
CHARLES L . H A M P T O N , Senior Technical Adviser
PORTIA W . THOMPSON, Equal Employment Opportunity
Programs Officer
DIVISION
OF
CONTROLLER
OF SUPPORT
SERVICES
ROBERT E . FRAZIER, Director
GEORGE M . LOPEZ, Assistant
Director
OFFICE OF THE EXECUTIVE
INFORMATION RESOURCES
DIRECTOR FOR
MANAGEMENT
A L L E N E . B E U T E L , Executive Director
STEPHEN R . M A L P H R U S , Associate Director
DIVISION
SYSTEMS
OF HARDWARE
AND
SOFTWARE
BRUCE M . BEARDSLEY, Director
THOMAS C . J U D D , Assistant Director
ELIZABETH B . RIGGS, Assistant Director
ROBERT J. Z E M E L , Assistant Director
DIVISION OF APPLICATIONS
STATISTICAL
SERVICES
WILLIAM R . JONES, Director
D A Y W . R A D E B A U G H , Assistant
RICHARD C . S T E V E N S , Assistant
PATRICIA A . W E L C H , Assistant
RESERVE
JOHN H. PARRISH, Assistant
Director
FLORENCE M. YOUNG,
Adviser
GEORGE E . LIVINGSTON, Controller
B R E N T L . B O W E N , Assistant Controller
DIVISION
DIVISION OF FEDERAL
BANK
OPERATIONS
Director
C L Y D E H . FARNSWORTH, J R . , Director
ELLIOTT C . M C E N T E E , Associate Director
D A V I D L . ROBINSON, Associate Director
C . WILLIAM SCHLEICHER, J R . , Associate Director
CHARLES W . B E N N E T T , Assistant Director
A N N E M . D E B E E R , Assistant Director
JACK D E N N I S , J R . , Assistant Director
EARL G . H A M I L T O N , Assistant Director
PERSONNEL
D A V I D L . S H A N N O N , Director
JOHN R . W E I S , Assistant Director
CHARLES W . W O O D , Assistant Director
OFFICE OF THE
THEODORE E. ALLISON, Staff
DEVELOPMENT
Director
Director
Director
AND
72
Federal Reserve Bulletin • April 1987
Federal Open Market Committee
FEDERAL
OPEN MARKET
PAUL A . VOLCKER,
COMMITTEE
Chairman
E . GERALD CORRIGAN,
NORMAND R . V . BERNARD, Assistant
Secretary
MICHAEL BRADFIELD, General
Counsel
JAMES H . O L T M A N ,
Deputy General Counsel
JAMES L . KICHLINE,
EDWIN M . TRUMAN,
MARTHA R . SEGER
H . ROBERT HELLER
M A N U E L H . JOHNSON
SILAS K E E H N
W A Y N E D . ANGELL
E D W A R D G . BOEHNE
ROBERT H . BOYKIN
Economist
Economist (International)
PETER FOUSEK, Associate
Economist
DONALD L. KOHN, Associate
Economist
PETER D . STERNLIGHT, Manager
S A M Y . CROSS, Manager for
FEDERAL ADVISORY
GARY H . STERN
RICHARD W. LANG, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
MICHAEL J. PRELL, Associate
Economist
ARTHUR J. ROLNICK, Associate
Economist
HARVEY ROSENBLUM, Associate
Economist
KARL A . SCHELD, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
for Domestic Operations, System Open Market Account
Foreign Operations, System Open Market Account
COUNCIL
JOHN G . MEDLIN JR.,
President
JULIEN L . M C C A L L , Vice President
JOHN F . M C G I L L I C U D D Y , D E W A L T H . A N K E N Y , JR., A N D F . PHILLIPS GILTNER,
JOHN P . L A W A R E , First District
JOHN F. M C G I L L I C U D D Y , Second District
SAMUEL A . M C C U L L O U G H , Third District
JULIEN L . M C C A L L , Fourth District
JOHN G . M E D L I N , JR., Fifth District
B E N N E T T A . B R O W N , Sixth District
Vice Chairman
Directors
CHARLES T. FISHER III, Seventh District
D O N A L D N. B R A N D I N , Eighth District
D E W A L T H . A N K E N Y , JR., Ninth District
F . PHILLIPS GILTNER, Tenth District
GERALD W . FRONTERHOUSE, Eleventh District
JOHN D. MANGELS, Twelfth District
HERBERT V . PROCHNOW, SECRETARY
WILLIAM J. KORSVIK, ASSOCIATE SECRETARY
73
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
E D W A R D N . LANGE, Seattle, Washington,
STEVEN W . H A M M , Columbia, South Carolina,
E D W I N B . BROOKS, JR., Richmond, Virginia
JONATHAN A . B R O W N , W a s h i n g t o n , D . C .
JUDITH N. B R O W N , Edina, Minnesota
MICHAEL S. CASSIDY, New York, New York
THERESA FAITH CUMMINGS, Springfield, Illinois
RICHARD B. DOBY, Denver, Colorado
RICHARD H . F I N K , Washington, D.C.
NEIL J. FOGARTY, Jersey City, N e w Jersey
STEPHEN GARDNER, Dallas, Texas
KENNETH A. H A L L , Jackson, Mississippi
ELENA G . HANGGI, Little Rock, Arkansas
ROBERT J. HOBBS, Boston, Massachusetts
RAMON E. JOHNSON, Salt Lake City, Utah
ROBERT W. JOHNSON, West Lafayette, Indiana
THRIFT INSTITUTIONS
ADVISORY
JOHN
M.
Chairman
Vice Chairman
KOLESAR,
Cleveland, Ohio
ALAN B. LERNER, Dallas, Texas
FRED S. MCCHESNEY, Chicago, Illinois
RICHARD L. D. MORSE, Manhattan, Kansas
HELEN E . NELSON, Mill Valley,California
SANDRA R. PARKER, Richmond, Virginia
JOSEPH L. PERKOWSKI, Centerville, Minnesota
BRENDA L. SCHNEIDER, Detroit, Michigan
JANE SHULL, Philadelphia, Pennsylvania
TED L. SPURLOCK, Dallas, Texas
MEL R. STILLER, Boston, Massachusetts
CHRISTOPHER J. SUMNER, Salt Lake City, Utah
E D W A R D J. WILLIAMS, Chicago, Illinois
MICHAEL ZOROYA, St. Louis, Missouri
COUNCIL
MICHAEL R. WISE, Denver, Colorado, President
JAMIE J. JACKSON, Houston, Texas, Vice President
GERALD M. CZARNECKI, Mobile, Alabama
JOHN C. DICUS, Topeka, Kansas
BETTY GREGG, Phoenix, Arizona
THOMAS A. KINST, Hoffman Estates,
Illinois
RAY MARTIN, Los Angeles, California
DONALD F. MCCORMICK, Livingston, N e w Jersey
JANET
M.
PAVLISKA,
Arlington, Massachusetts
HERSCHEL ROSENTHAL, Miami, Florida
WILLIAM G . SCHUETT, Milwaukee, Wisconsin
GARY L. SIRMON, Walla Walla, Washington
74
Federal Reserve Board Publications
Copies are available from PUBLICATIONS SERVICES,
Mail Stop 138, Board of Governors of the Federal Reserve
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THE FEDERAL RESERVE SYSTEM—PURPOSES AND F U N C TIONS. 1984. 120 p p .
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A N N U A L REPORT: BUDGET REVIEW, 1 9 8 5 - 8 6 .
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BANKING AND MONETARY STATISTICS. 1 9 1 4 - 1 9 4 1 . (Reprint
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are available without charge.
Alice in Debitland
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75
PAMPHLETS FOR FINANCIAL
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Short pamphlets on regulatory compliance, primarily suitablefor banks, bank holding companies and creditors.
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REVIEW OF THE TECHNIQUES A N D 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. Out of print.
134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: A REVIEW OF THE LITERATURE, b y
The Board of Directors' Opportunities in Community Reinvestment
The Board of Directors' Role in Consumer Law Compliance
Combined Construction/Permanent Loan Disclosure and
Regulation Z
Community Development Corporations and the Federal Reserve
Construction Loan Disclosures and Regulation Z
Finance Charges Under Regulation Z
How to Determine the Credit Needs of Your Community
Regulation Z: The Right of Rescission
The Right to Financial Privacy Act
Signature Rules in Community Property States: Regulation B
Signature Rules: Regulation B
Timing Requirements for Adverse Action Notices: Regulation B
What An Adverse Action Notice Must Contain: Regulation B
Understanding Prepaid Finance Charges: Regulation Z
Ralph W. Tryon. October 1983. 14 pp. Out of print.
135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: APPLICATIONS TO C A N A D A , GERMA-
NY, AND JAPAN, by Deborah J. Danker, Richard A.
Haas, Dale W. Henderson, Steven A. Symansky, and
Ralph W. Tryon. April 1985. 27 pp. Out of print.
136. THE EFFECTS OF FISCAL POLICY ON THE U . S . ECONO-
MY, by Darrell Cohen and Peter B. Clark. January
1984. 16 pp. Out of print.
137. THE IMPLICATIONS FOR B A N K MERGER POLICY OF
FINANCIAL DEREGULATION, INTERSTATE BANKING,
AND
FINANCIAL
SUPERMARKETS,
by
Stephen
A.
Rhoades. February 1984. Out of print.
138. ANTITRUST L A W S , JUSTICE DEPARTMENT GUIDELINES, A N D THE LIMITS OF CONCENTRATION IN LOCAL BANKING MARKETS, by James Burke. June 1984.
14 pp. Out of print.
139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN
THE UNITED STATES, by Thomas D. Simpson and
Patrick M. Parkinson. August 1984. 20 pp.
140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF
STAFF STUDIES: Summaries Only Printed in the
Bulletin
THE LITERATURE, by John D. Wolken. November
1984. 38 pp. Out of print.
Studies and papers on economic and financial subjects that
are of general interest. Requests to obtain single copies of
the full text or to be added to the mailing list for the series
may be sent to Publications Services.
141. A COMPARISON OF DIRECT DEPOSIT A N D CHECK PAYMENT COSTS, by William Dudley. November 1984.
15 pp. Out of print.
142. MERGERS
AND
BANKS, 1 9 6 0 - 8 3 ,
ACQUISITIONS
A.
by Stephen
1984. 30 pp. Out of print.
Staff Studies 115-125 are out of print.
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.
126. DEFINITION A N D MEASUREMENT OF EXCHANGE MAR-
KET INTERVENTION, by Donald B. Adams and Dale
W. Henderson. August 1983. 5 pp. Out of print.
127. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: JANUARY-MARCH 1 9 7 5 , by Margaret L .
Greene. August 1984. 16 pp. Out of print.
128. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: SEPTEMBER 1977-DECEMBER 1 9 7 9 , b y M a r -
garet L. Greene. October 1984. 40 pp. Out of print.
129. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1 9 8 1 , by Margaret
L. Greene. August 1984. 36 pp.
130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTERNATIONAL TRADE A N D OTHER ECONOMIC VARIABLES: A REVIEW OF THE LITERATURE, by Victoria S .
Farrell with Dean A. DeRosa and T. Ashby McCown.
January 1984. Out of print.
131. CALCULATIONS OF PROFITABILITY FOR U . S . DOLLARDEUTSCHE MARK INTERVENTION, by Laurence R .
Jacobson. October 1983. 8 pp.
132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES AND INTERVENTION: A
BY
COMMERCIAL
Rhoades. December
143. COMPLIANCE COSTS A N D CONSUMER BENEFITS OF
THE ELECTRONIC F U N D TRANSFER ACT: RECENT
SURVEY EVIDENCE, by Frederick J. Schroeder. April
1985. 23 pp. Out of print.
144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CONSUMER CREDIT REGULATIONS: T H E TRUTH IN L E N D ING AND EQUAL CREDIT OPPORTUNITY L A W S , b y
Gregory E. Elliehausen and Robert D. Kurtz. May
1985. 10 pp.
145. SERVICE CHARGES AS A SOURCE OF BANK INCOME
AND THEIR IMPACT ON CONSUMERS, by Glenn B .
Canner and Robert D. Kurtz. August 1985. 31 pp. Out
of print.
146. THE ROLE OF THE PRIME RATE IN THE PRICING OF
BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84,
by Thomas F. Brady. November 1985. 25 pp.
147. REVISIONS IN THE MONETARY SERVICES (DIVISIA)
INDEXES OF THE MONETARY AGGREGATES, by Helen
T. Farr and Deborah Johnson. December 1985. 42 pp.
148. THE MACROECONOMIC A N D SECTORAL EFFECTS OF
THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA-
TION RESULTS, by Flint Brayton and Peter B. Clark.
December 1985. 17 pp.
149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS
IN BANKING BEFORE A N D AFTER ACQUISITION, b y
Stephen A. Rhoades. April 1986. 32 pp.
150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: A REEXAMINATION A N D AN APPLICATION, b y
John T. Rose and John D. Wolken. May 1986. 13 pp.
76
1 5 1 . RESPONSES TO DEREGULATION: RETAIL DEPOSIT
PRICING FROM 1 9 8 3 THROUGH 1 9 8 5 , b y P a t r i c k I.
Mahoney, Alice P. White, Paul F. O'Brien, and Mary
M. McLaughlin. January 1987. 30 pp.
REPRINTS
OF BULLETIN
ARTICLES
Survey of Consumer Finances, 1983: A Second Report.
12/84.
Union Settlements and Aggregate Wage Behavior in the
1980s. 12/84.
The Thrift Industry in Transition. 3/85.
A Revision of the Index of Industrial Production. 7/85.
Financial Innovation and Deregulation in Foreign Industrial
Countries. 10/85.
Recent Developments in the Bankers Acceptance Market.
1/86.
Most of the articles reprinted do not exceed 12 pages.
Limit of 10 copies
Foreign Experience with Targets for Money Growth. 10/83.
Intervention in Foreign Exchange Markets: A Summary of
Ten Staff Studies. 11/83.
A Financial Perspective on Agriculture. 1/84.
Survey of Consumer Finances, 1983. 9/84.
Bank Lending to Developing Countries. 10/84.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
U. S. International Transactions in 1985. 5/86.
Prices, Profit Margins, and Exchange Rates. 6/86.
Agricultural Banks under Stress. 7/86.
Foreign Lending by Banks: A Guide to International and
U.S. Statistics. 10/86.
Recent Developments in Corporate Finance. 11/86.
77
Index to Statistical Tables
References are to pages A3-A68 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20
Assets and liabilities {See also Foreigners)
Banks, by classes, 18-20
Domestic finance companies, 37
Federal Reserve Banks, 10
Financial institutions, 26
Foreign banks, U.S. branches and agencies, 21
Nonfinancial corporations, 36
Automobiles
Consumer installment credit, 40, 41
Production, 47, 48
BANKERS acceptances, 9, 23, 24
Bankers balances, 18-20 (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 24
Branch banks, 21, 55
Business activity, nonfinancial, 44
Business expenditures on new plant and equipment, 36
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 46
Capital accounts
Banks, by classes, 18
Federal Reserve Banks, 10
Central banks, discount rates, 67
Certificates of deposit, 24
Commercial and industrial loans
Commercial banks, 16, 19
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20
Commercial and industrial loans, 16, 18, 19, 20, 21
Consumer loans held, by type, and terms, 40, 41
Loans sold outright, 19
Nondeposit funds, 17
Real estate mortgages held, by holder and property, 39
Time and savings deposits, 3
Commercial paper, 23, 24, 37
Condition statements (See Assets and liabilities)
Construction, 44, 49
Consumer installment credit, 40, 41
Consumer prices, 44, 50
Consumption expenditures, 51, 52
Corporations
Nonfinancial, assets and liabilities, 36
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 26, 40 (See also Thrift institutions)
Currency and coin, 18
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 15
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 18-21
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 22
Turnover, 15
Depository institutions
Reserve requirements, 7
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 18-20, 21
Federal Reserve Banks, 4, io
Turnover, 15
Discount rates at Reserve Banks and at foreign central
banks and foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 35
EMPLOYMENT, 45
Eurodollars, 24
FARM mortgage loans, 39
Federal agency obligations, 4, 9, 10, 11, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and
ownership of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 28, 33
Federal funds, 5, 17, 19, 20, 21, 24, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 38, 39
Federal Housing Administration, 33, 38, 39
Federal Land Banks, 39
Federal National Mortgage Association, 33, 38, 39
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 4, 10, 11, 30
Federal Reserve credit, 4, 5, 10, 11
Federal Reserve notes, 10
Federal Savings and Loan Insurance Corporation insured
institutions, 26
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 37
Business credit, 37
Loans, 40, 41
Paper, 23, 24
Financial institutions
Loans to, 19, 20, 21
Selected assets and liabilities, 26
Float, 4
Flow of funds, 42, 43
Foreign banks, assets and liabilities of U.S. branches and
agencies, 21
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4, 10, 19, 20
Foreign exchange rates, 68
Foreign trade, 54
Foreigners
Claims on, 55, 57, 60, 61, 62, 64
Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66
78
GOLD
Certificate account, 10
Stock, 4, 54
Government National Mortgage Association, 33, 38, 39
Gross national product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 44, 51, 52
Industrial production, 44, 47
Installment loans, 40, 41
Insurance companies, 26, 30, 39
Interest rates
Bonds, 24
Consumer installment credit, 41
Federal Reserve Banks, 6
Foreign central banks and foreign countries, 67
Money and capital markets, 24
Mortgages, 38
Prime rate, 23
Time and savings deposits, 8
International capital transactions of United States, 53-67
International organizations, 57, 58, 60, 63, 64
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18, 19, 20, 21, 26
Commercial banks, 3, 16, 18-20, 39
Federal Reserve Banks, 10, 11
Financial institutions, 26, 39
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18-20
Commercial banks, 3, 16, 18-20
Federal Reserve Banks, 4, 5, 6, 10, 11
Financial institutions, 26, 39
Insured or guaranteed by United States, 38, 39
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 25
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 5
Reserve requirements, 7
Mining production, 48
Mobile homes shipped, 49
Monetary and credit aggregates, 3, 12
Money and capital market rates, 24
Money stock measures and components, 3, 13
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks, 8 (See also Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 9
PERSONAL income, 52
Prices
Consumer and producer, 44, 50
Stock market, 25
Prime rate, 23
Producer prices, 44, 50
Production, 44, 47
Profits, corporate, 35
REAL estate loans
Banks, by classes, 16, 19, 20, 39
Financial institutions, 26
Terms, yields, and activity, 38
Type of holder and property mortgaged, 39
Repurchase agreements, 5, 17, 19, 20, 21
Reserve requirements, 7
Reserves
Commercial banks, 18
Depository institutions, 3, 4, 5, 12
Federal Reserve Banks, 10
U.S. reserve assets, 54
Residential mortgage loans, 38
Retail credit and retail sales, 40, 41, 44
SAVING
Flow of funds, 42, 43
National income accounts, 51
Savings and loan associations, 8, 26, 39, 40, 42 (See also
Thrift institutions)
Savings banks, 26, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 65
New issues, 34
Prices, 25
Special drawing rights, 4, 10, 53, 54
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 19, 20, 26
Rates on securities, 24
Stock market, selected statistics, 25
Stocks (See also Securities)
New issues, 34
Prices, 25
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 3 (See also Credit unions, Mutual
savings banks, and Savings and loan associations)
Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21
Trade,foreign, 54
Treasury cash, Treasury currency, 4
Treasury deposits, 4, 10, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 18, 19, 20
Treasury deposits at Reserve Banks, 4, 10, 28
U.S. government securities
Bank holdings, 18-20, 21, 30
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 4, 10, 11, 30
Foreign and international holdings and transactions, 10,
30, 66
Open market transactions, 9
Outstanding, by type and holder, 26, 30
Rates, 24
U.S. international transactions, 53-67
Utilities, production, 48
VETERANS Administration, 38, 39
WEEKLY reporting banks, 19-21
Wholesale (producer) prices, 44, 50
YIELDS (See Interest rates)
79
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK, Chairman
Deputy Chairman
branch, or facility
Zip
President
First Vice President
BOSTON*
02106
Joseph A. Baute
George N. Hatsopoulos
Frank E. Morris
Robert W. Eisenmenger
NEW YORK*
10045
John R. Opel
Virginia A. Dwyer
Mary Ann Lambertsen
E. Gerald Corrigan
Thomas M. Timlen
19105
Nevius M. Curtis
George E. Bartol III
Edward G. Boehne
44101
Charles W. Parry
E. Mandell de Windt
Owen B. Butler
James E. Haas
Karen N. Horn
William H. Hendricks
Leroy T. Canoles, Jr.
Robert A. Georgine
Gloria L. Johnson
Wallace J. Jorgenson
Robert P. Black
Jimmie R. Monhollon
Bradley Currey, Jr.
Larry L. Prince
Margaret E. M. Tolbert
Andrew A. Robinson
Robert D. Apelgren
C. Warren Neel
Caroline K. Theus
Robert P. Forrestal
Jack Guynn
Robert J. Day
Marcus Alexis
Robert E. Brewer
Silas Keehn
Daniel M. Doyle
W.L. Hadley Griffin
Robert L. Virgil, Jr.
James R. Rodgers
Raymond M. Burse
Katherine H. Smythe
Thomas C. Melzer
Joseph P. Garbarini
John B. Davis, Jr.
Michael W. Wright
Warren H. Ross
Gary H. Stern
Thomas E. Gainor
Irvine O. Hockaday, Jr.
Robert G. Lueder
James E. Nielson
Patience S. Latting
Kenneth L. Morrison
Roger Guffey
Henry R. Czerwinski
Bobby R. Inman
Hugh G. Robinson
Mary Carmen Saucedo
Walter M. Mischer, Jr.
Robert F. McDermott
Robert H. Boykin
William H. Wallace
Fred W. Andrew
Robert F. Erburu
Richard C. Seaver
Paul E. Bragdon
Don M. Wheeler
John W. Ellis
Robert T. Parry
Carl E. Powell
Buffalo
PHILADELPHIA
CLEVELAND*
14240
Cincinnati
Pittsburgh
45201
15230
RICHMOND*
23219
Baltimore
21203
Charlotte
28230
Culpeper Communications
and Records Center 22701
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
72203
40232
Memphis
38101
MINNEAPOLIS
Helena
KANSAS CITY
55480
59601
64198
Denver
Oklahoma City
80217
73125
Omaha
68102
DALLAS
75222
El Paso
Houston
79999
77252
San Antonio
78295
SAN FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
John T. Keane
Charles A. Cerino
Harold J. Swart
Robert D. McTeer, Jr.
Albert D. Tinkelenberg
John G. Stoides
Delmar Harrison
Fred R. HenJames D. Hawkins
Patrick K. Barron
Jeffrey J. Wells
Henry H. Bourgaux
Roby L. Sloan
John F. Breen
James E. Conrad
Paul I. Black, Jr.
Robert F. McNellis
Wayne W. Martin
William G. Evans
Robert D. Hamilton
James L. Stull
Sammie C. Clay
J. Z. Rowe
Thomas H. Robertson
Thomas C. Warren
Angelo S. Carella
E. Ronald Liggett
Gerald R. Kelly
*Additional offices of these Banks are located at L e w i s t o n , Maine 04240; Windsor L o c k s , Connecticut 06096; Cranford, N e w Jersey 07016;
Jericho, N e w York 11753; U t i c a at Oriskany, N e w York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, W e s t
Virginia 25311; D e s M o i n e s , I o w a 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202.
80
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
April 1984
LEGEND
Boundaries of Federal Reserve Districts
®
Federal Reserve Bank Cities
Boundaries of Federal Reserve Branch
Territories
•
Federal Reserve Branch Cities
Federal Reserve Bank Facility
Q
Board of Governors of the Federal Reserve
System
Publications of Interest
FEDERAL RESERVE REGULATORY
SERVICE
To promote public understanding of its regulatory
functions, the Board publishes the Federal Reserve
Regulatory Service, a three-volume looseleaf service
containing all Board regulations and related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are
published separately as handbooks pertaining to monetary policy, securities credit, and consumer affairs.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each
contains conversion tables, citation indexes, and a
subject index.
The Monetary Policy and Reserve
Requirements
Handbook contains Regulations A, D, and Q plus
related materials. For convenient reference, it also
contains the rules of the Depository Institutions
Deregulation Committee.
The Securities Credit Transactions Handbook 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 $200 for
the Federal Reserve Regulatory Service and $75 for
each handbook. For subscribers outside the United
States, the price including additional air mail costs is
$250 for the Service and $90 for each Handbook. All
subscription requests must be accompanied by a check
or money order payable to Board of Governors of the
Federal Reserve System. Orders should be addressed
to Publications Services, Mail Stop 138, Federal Reserve Board, 20th Street and Constitution Avenue,
N.W., Washington, D.C. 20551.
Publications of Interest
FEDERAL RESERVE 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 complete guide to con-
sumer credit protections. This 44-page booklet explains how to use the credit laws to shop for credit,
apply for it, keep up credit ratings, and complain about
an unfair deal.
Protections offered by the Electronic Fund Transfer
Act are explained in Alice in Debitland. This booklet
offers tips for those using the new "paperless" systems for transferring money.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 138,
Board of Governors of the Federal Reserve System,
Washington, D.C. 20551. Multiple copies for classroom use are also available free of charge.
Pair
Credit
Billing
What
Thithln
Lending
Means
To You
@FedFRASER