Full text of Federal Reserve Bulletin : April 1988
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VOLUME 74 •
NUMBER 4 •
APRIL
1988
B O A R D OF GOVERNORS OF THE F E D E R A L RESERVE SYSTEM, W A S H I N G T O N ,
PUBLICATIONS
D.C.
COMMITTEE
Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost
• Griffith L. Garwood • Donald L. Kohn • Michael J. Prell • Edwin M. Truman
The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for
opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T.
Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
195 THE RECENT
OF DEMAND
ate Committee on Banking, Housing, and
Urban Affairs on February 24, 1988.)
BEHAVIOR
DEPOSITS
Demand deposits have become somewhat
more volatile month to month, and, more
important from a policy perspective, their
longer-run relationship to income and to
interest rates appears to be changing.
232
ANNOUNCEMENTS
Meeting of Consumer Advisory Council.
Amendment to Regulation K.
Admission of three state banks to member-
209 TREASURY AND FEDERAL
RESERVE
FOREIGN EXCHANGE
OPERATIONS
The dollar experienced recurrent periods of
downward pressure throughout November
and December and then firmed in early
January.
215 INDUSTRIAL
PRODUCTION
Industrial production increased an estimated 0.4 percent in January.
217 STATEMENTS
TO CONGRESS
Alan Greenspan, Chairman, Board of Governors, addresses questions about the Federal Reserve's response to the turbulence in
financial markets last October, the functioning of our financial markets during that
period, and proposals for structural and
regulatory reforms, before the Senate Committee on Banking, Housing, and Urban
Affairs, February 2, 1988.
225 Chairman Greenspan discusses the conduct
of monetary policy and the economic and
financial situation, as detailed in the
Board's semiannual Monetary Policy Report to the Congress, and says that the
setting for monetary policy for the year
1988 and beyond is more than normally
complex, before the House Committee on
Banking, Finance and Urban Affairs, February 23, 1988. (Chairman Greenspan presented identical testimony before the Sen
ship in the Federal Reserve System.
234 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET
COMMITTEE
At its meeting on December 15-16, 1987,
the Committee approved a directive that
called for maintaining the existing degree of
pressure on reserve positions and for phasing open market operations into a more
normal approach to policy implementation
keyed increasingly to a desired degree of
reserve pressure while giving less emphasis
than recently to money market conditions.
The members recognized that the conduct
of open market operations might continue
to require a special degree of flexibility,
given still quite sensitive conditions in financial markets and the uncertainties in the
business outlook. Taking account of conditions in financial markets, the members
indicated that somewhat less or somewhat
more reserve restraint would be acceptable,
depending on the strength of the business
expansion, indications of inflation, the performance of the dollar in foreign exchange
markets, with consideration also taken of
the behavior of the monetary aggregates. If
current reserve conditions were maintained, the members expected growth in M2
and M3 to pick up from the pace in recent
months to annual rates of about 5 percent
and 6 percent respectively over the fourmonth period from November to March.
Growth of Ml was expected to remain
relatively limited over the same period;
because of the substantial uncertainty that
continued to surround the outlook for M l ,
the Committee continued its practice of not
specifying a numerical expectation for its
growth. 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 a telephone meeting on January 5,
1988, the Committee agreed that with the
further passage of time since the October
disturbances in financial markets and with
year-end pressures in the money market in
the process of unwinding, further progress
could be made toward restoring a normal
approach to open market operations. Some
flexibility might continue to be needed in
the conduct of operations, given the still
somewhat unsettled conditions in financial
markets and the uncertainties in the economic outlook.
243 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
A76 BOARD OF GOVERNORS AND STAFF
A78 FEDERAL OPEN MARKET COMMITTEE
AND STAFF; ADVISORY COUNCILS
A80 FEDERAL RESERVE
PUBLICATIONS
BOARD
A83 INDEX TO STATISTICAL
TABLES
A85 FEDERAL RESERVE BANKS,
AND OFFICES
BRANCHES,
A86 MAP OF FEDERAL RESERVE
SYSTEM
The Recent Behavior of Demand Deposits
-
' -I ..••' ' - . . ' .•'•.
" '
Patrick I. Mahoney of the Board's Division of
Monetary Affairs prepared this article. Mary T.
Hoffman and Linda C. Rosenberg provided research assistance for the article, and Lyle S.
Kumasaka provided extensive research assistance on the survey.
The monetary aggregate M l , consisting of currency, demand deposits, and other checkable
deposits, has been less reliable as an economic
indicator during the 1980s than it was during
previous decades. In part, the deterioration in
the link between Ml and economic activity is
attributable to the inclusion in Ml of negotiable
order of withdrawal (NOW) accounts. These
deposits, which were authorized nationwide
effective at the end of 1980, serve as a hybrid
savings and transaction instrument and therefore
blur the definition of Ml as a transaction aggregate and increase its interest sensitivity. In addition, the behavior of the demand-deposit component of Ml has changed in the 1980s. The shift of
household transaction deposits to NOW accounts, changes in the way businesses manage
cash and compensate banks for services, and
innovations in financial instruments are among
the factors responsible for that change. Demand
deposits have become somewhat more volatile
month to month and, more important from a
policy perspective, their longer-run relationship
to income and to interest rates appears to be
changing. In particular, growth in demand deposits was considerably stronger in 1986 and considerably weaker in 1987 than historical relationships suggested.
To obtain more information about the weakness of demand deposits in 1987 and in particular
to understand better the role of compensatingbalance arrangements in the behavior of these
deposits, the staff at the Board of Governors of
the Federal Reserve System and at the Federal
Reserve Banks conducted a survey of senior
financial officers of large banks in January of this
"
'
....
year. The results of the survey, reported in the
second part of this article, confirm the influence
of interest rate movements on the recent behavior of demand deposits and shed some light on
changing ways of using demand balances to
compensate banks for services.
DEMAND DEPOSIT BEHAVIOR
IN THE 1980S
The short-run behavior of demand deposits has
been more volatile in the 1980s than it was in the
previous decade. For example, the monthly
growth rates of demand deposits have varied
over a wider range in the 1980s (chart 1). In
statistical terms, the. standard deviation of annualized monthly growth rates of seasonally
adjusted demand deposits, which was slightly
less than 6 percent over the 1970s, jumped to
nearly 14 percent for the 1980-87 period. Because data on demand deposits for earlier years
have been subject to the smoothing effects of
more revisions in seasonal factors, the figures as
first published for both periods were examined to
provide the same review of seasonal factors. The
standard deviation of these monthly growth rates
was about 8 percent over the 1970s and has been
15 percent so far in the 1980s. And for not
1. Monthly growth rate
of demand deposits, 1970-87
Seasonally adjusted.
196
Federal Reserve Bulletin • April 1988
seasonally adjusted data, the comparable standard deviations also rose though by smaller
amounts, from 26 to 32 percent. Statistical tests
confirmed the significance of the increases in
variability. These wider monthly swings in
growth have made it more difficult to predict and
to interpret the behavior of demand deposits in
the short run.
More important, the relationship between
longer-run movements in demand deposits and
aggregate spending, which was relatively stable
in the 1960s and 1970s, has weakened in the
1980s. Movements in the velocity of demand
deposits, the ratio of gross national product to
demand deposits, were fairly steady and predictable through the end of the 1970s; over this
period, velocity rose at an average annual rate of
4.1 percent per year, in part reflecting rising
interest rates. Velocity jumped at the beginning
of 1981, however, as consumers shifted funds out
of demand deposits and into interest-bearing
NOW accounts (chart 2). Later, in 1985 and
particularly in 1986, the velpcity of demand deposits declined substantially, and then it rebounded in 1987.
The shifts in velocity in the past three years
appear to be related to the pattern of interest rate
movements and to an increasing responsiveness
to changes in rates. Rates declined in 1985 and
1986, reducing incentives for depositors to economize on cash balances and increasing the levels
of balances businesses needed to compensate
their banks for credit and operational services
(see the discussion below). Rates then rose
through most of 1987, reversing these effects.
2. Velocity of demand deposits, 1970-87
Ratio scale
But the responses of demand deposits to changes
in interest rates were greater than past norms
suggested. This change is illustrated by the results of a simulation of a typical money-demand
model for demand deposits (see the appendix for
its specification and discussion of other work).
The model explains the annual growth in demand
deposits fairly accurately through 1985, but then
underpredicts growth by 5.6 percentage points in
1986, when rates were falling, and overpredicts it
by 5.2 percentage points in 1987, when rates
were rising (table 1). The misses in the simulation
generally are related to movements in interest
rates; coupled with the results of estimations of
the model over more recent periods, they suggest
that the interest elasticity of demand deposits has
increased, though to an uncertain extent.
This development has caused the growth of
demand deposits to diverge increasingly from
predictions implied by its historical relationship
with spending and interest rates. To be sure, this
relationship had had episodes of unpredictability
before, such as the surprising weakness of these
deposits in the mid-1970s. But, the divergence of
demand deposits from their previously normal
relationship to spending and interest rates has
widened in the 1980s.
1. Results of a long-run simulation
of demand-deposit growth
Demand-deposit growth
(percent)
Year
1981
1982
1983
1984
1985
1986
1987
Actual
Predicted 1
-12.8
.8
2.4
1.5
8.9
11.8
-.9
-12.83
-1.0
4.9
2.1
8.7
6.3
4.2
Difference
(percentage
points)
Change in
3-month
Treasury bill
rate 2 (basis
points)
.0
1.8
-2.6
-.6
.1
5.6
-5.2
200
-480
40
60
-250
-170
60
1. Simulation beginning in 1981.
2. Change from fourth quarter to fourth quarter of a two-quarter
moving average.
3. The model includes a variable to capture the effects of the
availability of N O W accounts.
FACTORS IN THE BEHAVIOR
DEPOSITS IN THE 1980S
Quarterly data.
OF
DEMAND
The 1980s have been characterized by many
financial events that have directly or indirectly
affected the behavior of demand deposits, includ-
The Recent Behavior of Demand Deposits
ing the deregulation of interest rates on other
deposits, changes in the structure of federal
income taxes, numerous innovations in financial
instruments and in the technology for executing
transactions, and greater volatility in interest
rates and financial markets. In some cases single
events have had easily identifiable effects, while
in others the interactions of several developments appear to have contributed to the changes
in the behavior of demand deposits.
Special
Rates
Occurrences
and Monthly
Growth
Certain unique developments, such as credit
controls and the nationwide authorization of
NOW accounts, explain some of the unusually
wide short-run swings in the growth of demand
deposits since 1979. Some affected the level of
demand deposits permanently, as when households shifted transaction balances to NOW accounts. Others affected the monthly growth rates
of demand deposits briefly, but had no long-run
effect on their levels. Monthly growth in demand
deposits can swing widely when the volumes of
major types of transactions diverge markedly
from their trends. For example, demand deposits
jumped in late 1986 when investors scrambled to
complete transactions under the more favorable
capital gains and other tax provisions that the
Tax Reform Act of 1986 eliminated or reduced.
They then fell rapidly in January 1987 as the
bulge worked its way through, only to rise markedly in April with income tax payments that were
considerably higher than normal because they
reflected the increase in income tax liabilities
incurred by the transactions at the end of 1986.
Another temporary surge in October 1987 resulted from the huge increase in financial transactions associated with the plunge in share prices
in midmonth.
'
Financial Developments
Sensitivity of Demand
s. sv.-tV^MHRc.-a •
and the
Deposits
Interest
The relationship between movements in interest
rates and the deviations of the velocity of demand deposits from historical patterns suggests
that the interest sensitivity of demand deposits
has increased. As this sensitivity increases,
197
movements in demand deposits are more likely
to reflect unanticipated changes in interest rates
than variations in aggregate spending. Even a
one-time increase in this interest elasticity—that
is, the percent change in demand-deposit balances demanded given a 1 percent change in the
level of interest rates—loosens the observed linkage between demand deposits and underlying
economic developments and produces wider
swings in velocity. Because demand deposits are
a significant component of the very narrow monetary aggregates, such an increase in interest
elasticity lessens the usefulness of these aggregates as intermediate monetary targets. In addition, if the interest elasticity of demand deposits
continually changes, both predicting the behavior of demand deposits and relating it to economic activity become even more uncertain and
complicated.
The economic literature has identified two
channels through which movements in interest
rates affect the level of demand deposits: opportunity costs and, for business deposits, compensating-balance arrangements.
Opportunity Costs. The opportunity cost of
holding demand-deposit balances is the return
that could have been earned if those balances had
been placed in an interest-bearing instrument,
less any implicit return on the deposit itself.
Managing balances in a demand-deposit account
is not costless, however. Shifting funds to earning assets entails transaction costs and often
reduces the liquidity of these funds. When market interest rates decline, the opportunity cost of
holding demand-deposit balances also declines,
and balances tend to rise, ceteris paribus, as the
loss of liquidity and the transaction costs of
frequent shifts of funds out of these deposits
outweigh the explicit interest that might be
earned elsewhere. When rates increase, the opportunity cost of holding demand-deposit balances also increases, and depositors, both households and businesses, have more incentive to
economize on balances and invest funds in other
instruments. The elasticities that opportunity
costs impart to demand deposits probably are not
large. Theoretical models of the behavior of
demand deposits suggest that the interest elasticity from this channel is considerably less than
198 Federal Reserve Bulletin • April 1988
unity; that is, a 1 percent change in the level of
interest rates results in a change of less than 1
percent in the level of balances demanded by
depositors.
Compensating Balances. The other channel
through which changes in interest rates affect the
level of demand deposits is the use of compensating-balance arrangements by businesses. Under such arrangements, firms compensate their
banks for credit and operational services by
maintaining a specified level of demand-deposit
balances. The amount of balances required to
compensate the bank for a given level of services
is determined by the earnings credit rate (ECR).
The ECR usually is based on a short-term market
interest rate, reduced by 12 percent to reflect the
reserve requirements on demand deposits. Specifically, required compensating balances are calculated by the following formula:
MR( 1 - RR)
where
RCB = required compensating balances
S = the dollar value of services used
MR = the market rate, expressed as a decimal
RR = the percentage reserve requirement,
expressed as a decimal; MR(\ - RR)
= the earnings credit rate.
When market interest rates rise and thus the
ECR rises, the balance that a firm must hold to
compensate its bank for a given amount of services declines. As market interest rates fall, firms
must hold higher compensating balances.
The ultimate effect of compensating-balance
arrangements on the interest elasticity of business demand deposits is considerably more complex than this formula suggests, and it may vary
with interest rates. If, for a given amount of
services, the level of a firm's demand deposits on
the margin is determined solely by compensating-balance requirements and thus changes in the
ECR, its deposits will have a relatively large
interest elasticity; specifically, it will be unity;
that is, if interest rates and thus the ECR fall by
half, the firm's required compensating balances
and thus its demand deposits will double.
But, while demand deposits held to compensate banks for services earn an implicit return,
they still entail opportunity costs because of the
existence of reserve requirements on demand
deposits. As shown by the formula above, the
implicit return on balances held for compensation purposes is lower than the market rate by the
amount of reserves banks are required to hold
against demand deposits. This reserve requirement, currently 12 percent, represents an opportunity cost. Firms thus have an incentive to
reimburse their banks at least partially for services by paying explicit fees rather than holding
compensating balances. This practice, in turn,
can cause the interest elasticity of their demand
deposits to be less than unity. When a firm—
given the level of interest rates, its own funding
needs, and its demand for services—can choose
a combination of balances and fees to remunerate
its bank, it may keep its balances at the level
desired for transaction purposes and simply
make up the difference in required compensation
by paying higher explicit fees. Because the interest elasticity associated with the opportunity cost
of holding balances for transactional purposes is
less than unity, using such a combination reduces
the interest elasticity of the firm's demand deposits below that implied by the strict application of
the formula for computing required compensating balances.
When interest rates are low, however, the
absolute value of the opportunity cost arising
from reserve requirements is small relative to the
transaction and liquidity costs of shifting balances out of demand deposits. Firms then have
little incentive to reduce their balances below
those required for compensation purposes and to
make up the difference with fees. In this situation
firms may stop paying fees and alter the level of
their demand deposits in line with changes in
their required compensating balances. When interest rates rise, firms may shift back to compensating banks by a combination of fees and balances. The importance of such shifts on
movements of demand deposits as interest rates
change is unknown, but to the extent that they
are present, they may compound the difficulty of
measuring interest elasticity empirically.
The Recent Behavior of Demand Deposits
At a given level of interest rates, levels of
demand deposits of some firms probably are
determined on the margin primarily by transaction needs, while those of other firms are determined by required compensating balances, and
this mix may vary with the level of interest rates.
In addition, this mix and the importance of these
types of demand-deposit arrangements to the
behavior of aggregate demand deposits likely
vary over time in response to technological
change, deregulation, and changes in cash-management practices. Thus the rapid pace of change
in financial markets in the 1980s probably has
significantly altered the traditional channels
through which interest elasticity is imparted to
demand balances. New instruments have appeared, new cash-management techniques have
developed that facilitate shifts of funds from
non-interest-bearing demand deposits to interestearning financial assets, and the ways businesses
compensate banks for credit and operational
services have been evolving. In addition, complex transactions involving the relatively new
mortgage-backed securities market appear to
have contributed to variations in demand-deposit
holdings, and the ownership of demand deposits
has shifted away somewhat from households
following the introduction of NOW accounts.
Changes in the Ownership of Demand Deposits. Changes over the 1980s in the shares of
demand deposits that various sectors of the economy hold partly explain an increase in the interest elasticity of these deposits. According to the
Federal Reserve's Demand Deposit Ownership
199
Survey (DDOS), consumers held one-third of
demand deposits at all insured commercial banks
in 1980 (table 2). This share had declined to about
one-quarter by 1987, largely because of the nationwide authorization of NOW accounts. Holdings of demand deposits by financial and nonfinancial businesses, which may not own NOW
accounts, rose from three-fifths to about twothirds of total demand deposits. The rise in
businesses' share of demand deposits likely has
increased the interest elasticity of demand deposits as a whole. Earlier empirical work at the
Federal Reserve Board has shown that demand
deposits of businesses are more interest elastic
than are those of households, possibly because
firms use compensating-balance arrangements
and because they manage cash more carefully.
But changes in ownership shares probably explain the apparent increase in the interest elasticity only partially; the increase in the business
share of total demand deposits, while significant,
was limited, and the shares have remained relatively stable over the past few years.
Effects of Innovations in Mortgage Markets.
The tremendous growth in the market for mortgage-backed securities in the 1980s appears to
have opened a new channel through which interest rates affect demand deposits. When a mortgage underlying two types of mortgage-backed
securities is prepaid, the proceeds must be
placed in custodial accounts until they are disbursed to the security holders on a specific date
the following month. For one of these types of
mortgage-backed securities, mortgage servicers
2. Ownership of demand deposits, by type of holder, all insured commercial banks
Percent
1. Details may not add to totals because of rounding.
2. Data through 1987:3.
SOURCE. Board of Governors of the Federal Reserve System,
Demand Deposit Ownership Survey.
200
Federal Reserve Bulletin • April 1988
are required to use non-interest-bearing accounts, and they typically use demand deposits
for custodial purposes. As a result, some prepayments may be held in demand deposits for as long
as 49 days. Thus major changes in the pace of
mortgage prepayments can affect both the level
of demand deposits and their growth rates.
The wide variation in mortgage interest rates in
the 1980s may have resulted in unexpected
movements in demand deposits through this new
channel. A substantial amount of mortgages was
made at the very high interest rates prevailing
earlier in the decade and, with the significant
drop in mortgage interest rates over the last few
years, mortgage refinancings—and thus prepayments—rose sharply. Commitments for refinancings as a share of all mortgage commitments at
thrift institutions jumped from less than 20 percent in the early 1980s to more than 35 percent in
1986 and early 1987 (chart 3). Mortgage refinancing at thrift institutions is estimated to have
risen from a monthly rate of $1 billion or $2
billion to more than $15 billion over the same
period; it fell off sharply in the late spring of 1987,
both in dollar terms and as a share of total
mortgage activity. As a result of the institutional
practices discussed above, these movements
may have been a factor in the strong growth in
demand deposits in 1986 and in their subsequent
weakness in the second half of last year. They
also may have increased the volatility in the
monthly growth rate of demand deposits, although in either case the effect is difficult to
quantify.
It is too soon to determine the longer-run
effects of this development on the behavior of
demand deposits. The surge in refinancings resulted from the existence of a large stock of
mortgages issued during the earlier period of
very high interest rates, and that stock has been
reduced. Another surge in refinancings likely
would require another substantial, sustained
drop in interest rates. Nevertheless, the size of
the mortgage-backed securities market and its
institutional practices have opened a new channel through which changes in interest rates apparently can affect the levels of demand deposits.
Evolving Cash-Management Practices. While
empirical evidence points to an increase in the
3. Mortgage interest rates and refinancings as
a percent of mortgage activity, 1980-87
Percent
20
(Vrcci i
Interest rate on
fixed-rate mortgages 1
1981.
1983
Refinancin g
1985
»
40
—
30
—
10
1987
1. Commitment rate on 30-year fixed-rate mortgages at thrift institutions.
2. Commitments to refinance as a percent of total mortgage commitments at thrift institutions.
Monthly data.
interest elasticity of demand deposits over the
past few years, it is difficult to sort through the
interactions of the many financial innovations
that facilitated the management of demand balances by businesses and to identify all of the
changes in the ways businesses and banks interact. Rising interest rates spurred innovations in
cash-management techniques and encouraged
their implementation. In the mid-1970s, banks
began aggressively to market instruments of very
short maturity such as repurchase agreements
and overnight dollar-denominated deposits at
their offshore branches. The introduction of
money market deposit accounts in December
1982 gave businesses, especially smaller firms for
which the more sophisticated forms of cash management were not feasible, a new vehicle for
obtaining returns on liquid balances. Together
with more recent advances in telecommunications and the rise of electronic funds transfers,
these innovations have allowed businesses to
manage their demand deposits more effectively.
Theoretical models of money demand suggest
that marginal changes in the transaction costs
associated with managing demand balances will
not affect the interest elasticity of demand deposits. At the same time, they imply that the quantum jumps in the availability of alternative investments and the spread of cash-management
services can increase the interest elasticity of
demand deposits of some firms, especially
smaller ones. Smaller businesses may, for example, have been constrained in managing cash
The Recent Behavior of Demand Deposits
balances by transaction costs that were high
compared with their relatively small balances.
By dramatically lowering these costs and by
offering investments that theretofore were not
available, the new instruments may have allowed
these firms to adjust their balances more closely
than before to changes in opportunity costs.
Furthermore, small and medium-sized firms
likely are making more use of cash-management
services than they did in the past, as banks
increasingly compete for business customers and
market these services more aggressively. Finally, one legacy of the rise in interest rates in the
late 1970s and early 1980s probably was an
increase in businesses' sensitivity to the opportunity costs of holding demand deposits, with
consequent investment in the technology and the
professional staff needed to manage balances
more closely. Indeed, the cash-management literature and corporate cash managers see a
spread in this expertise, especially to mediumsized and small firms, which likely increases the
interest sensitivity of demand deposits.
Other innovations are affecting the behavior of
business demand deposits, but with uncertain
implications for their interest elasticity. Banks
have marketed sweep accounts, in which all
balances remaining at the end of the day are
placed in overnight investments, so that these
balances are eliminated from the demand deposits reported in M l . Controlled disbursement accounts have the same effect: all debits are effectively cleared early in the day, allowing funds to
be swept sooner. By removing demand-deposit
balances of firms with extensive cash-management expertise from aggregate demand deposits,
these innovations may be increasing the importance in aggregate demand deposits of accounts
that exhibit more traditional responses to
changes in opportunity costs; no available data
measure this phenomenon, however. Perhaps
more important, these innovations weaken the
link between aggregate spending and demand
deposits because changes in transaction activity
in such accounts are not reflected in the levels of
demand deposits.
Compensating-balance
arrangements
also
have been changing, in reflection both of the
spread of cash-management expertise and of the
increase in competition among banks, which has
201
fostered the unbundling of fees for services. The
trend in cash management has been to substitute
explicit fees entirely for compensating-balance
arrangements as the means for reimbursing
banks for services. This transition has been slow
for a variety of reasons; one reason often noted
in the cash-management literature is that such
changes require the education of senior management because explicit fees must be budgeted for
and approved while the costs of compensating
balances are indirect. Using a combination of
fees and compensating balances narrows the
opportunity cost associated with reserve requirements, but when interest rates are low, the
absolute cost of this wedge, as discussed above,
also is low. When interest rates rise, the cost of
this wedge also rises, increasing the incentive for
firms to shift entirely out of compensating-balance arrangements.
Changes in the use of compensating-balance
arrangements and other innovations obviously
have implications for the interest elasticity of
demand deposits. To the extent that firms hold
balances only to meet transaction needs and use
fees for the rest of their reimbursement to banks,
the interest sensitivity of their deposits could be
lower. As firms shift out of compensating-balance arrangements completely to zero-balance
accounts so that a larger proportion of the remaining demand deposits are held under compensating-balance arrangements, the interest
elasticity of these deposits could increase. No
data exist to determine whether such an increase
has occurred over the 1980s.
SURVEY DATA ON
COMPENSATING
BALANCES AND THE BEHAVIOR
OF DEMAND DEPOSITS IN LATE 1987
To obtain additional information about the behavior of demand deposits in late 1987 and compensating balances, the Federal Reserve surveyed senior financial officers at 60 large
commercial banks in mid-January 1988. The demand deposits at these banks account for approximately 37 percent of total demand deposits
at all federally insured commercial banks.
The results of the survey indicate that compensating balances are an important component of
202
Federal Reserve Bulletin • April 1988
business demand deposits and that movements in
market interest rates continue to affect the levels
of demand deposits both through compensatingbalance arrangements and through changing opportunity costs, sometimes with a considerable
lag. The survey also revealed an acceleration of
shifts out of compensating balances in 1987. The
interaction of these factors, coupled with volatile
interest rates and shifts away from compensating-balance arrangements, underscores the difficulty in assessing seasonal patterns and interest
elasticities for demand deposits. Because most
compensating-balance arrangements effectively
require year-end settlement of accounts, yearend flows of demand deposits may be affected in
complex ways by rate movements and by other
developments over the year.
Besides questions about compensating-balance arrangements, respondents were asked
about the sharp declines in demand deposits in
November and December 1987. These declines,
at annual rates of nearly 19 and 14 percent
respectively for the two months, were larger than
could be accounted for by the runoff of the surge
in demand deposits associated with the October
plunge in the stock market. The results of this
portion of the survey verify that movements
in interest rates significantly affected the levels of
demand deposits, if with considerable lags, and
confirm that other factors, such as shifts by
firms away from compensating-balance arrangements, also affected the growth of demand deposits.
The Current
Balances
Structure
of
Compensating
According to the survey, compensating-balance
arrangements vary widely across banks and
across customers within individual banks.
Twelve percent of the responding banks report
that 20 percent or less of their business demand
deposits are held under formal compensatingbalance arrangements, while a quarter of the
respondents cited proportions of over 80 percent.
(See table A.l. for detailed responses to this
portion of the survey.) On average, about 62
percent of balances in business demand deposits
at the respondent banks are made up of funds
held under formal compensating-balance ar
rangements. This proportion should be seen only
as a confirmation that compensating balances are
an important component of demand deposits;
some may have been held in any event to meet
current transaction needs, and the survey results
do not indicate what proportion of business demand deposits are constrained at the margin by
compensating-balance requirements.
Five out of six respondents based their
ECR on the three-month Treasury bill rate,
using either secondary market or auction rates.
Other rates used included the federal funds rate
and rates on wholesale certificates of deposit; all
banks adjusted for reserve requirements. Onethird of all respondents indicated that they lag
their ECR a month or more in calculating required balances.
Compensating-balance requirements also are
measured over a variety of periods. Although 83
percent of the respondents indicated that they
measured balances primarily on a monthly basis
and another 15 percent reported quarterly computation periods, many commented that such
arrangements were open to negotiation with individual customers or were left to the discretion
of the account manager. As a result, some banks
use various periods for various customers. The
lags in applying ECRs, coupled with varying
computation periods, result in lags in the changes
in the levels of demand deposits in response to
changes in interest rates and, if these arrangements shift over time, contribute to the uncertainty and unpredictability of this response.
Variation in compensating-balance arrangements also is evident in the willingness of banks
to allow carryovers of surpluses or deficits.
About two-thirds of the respondents allow carryovers from one computation period to the next.
Some allow it only for certain customers, and a
few institutions allow carryovers only of overages, not deficits. About three-fourths of the
respondents that allow carryovers do not
allow them beyond the end of the calendar year,
effectively requiring account settlement at yearend.
The survey results confirm the view expressed
in the cash-management literature and by corporate cash managers that businesses have been
moving away from compensating-balance arrangements in favor of reimbursing their banks
The Recent Behavior of Demand Deposits
for services by explicit fees. Nearly three-fourths
of the bank respondents reported such a shift,
and 38 percent of these indicated that it had
accelerated in 1987. Thus the combination of
spreading cash-management expertise and the
reserve-requirement wedge appears to have reduced the use of compensating-balance arrangements. Indeed, one bank commented that recent
articles in cash-management journals have
spurred shifts by some of their customers.
Evidence from
November-December
1987
The most striking result from this section of the
survey was the importance of lagged effects of
changes in market interest rates on demanddeposit levels. Apart from any unusual movements related to the drop in the stock market, the
weakness in demand deposits in November and
December reflected most importantly the lagged
adjustment of account levels to earlier increases
in interest rates, which peaked in mid-October.
This development was attributed both to closer
management of balances and to reductions in
required compensating balances as rates rose in
1987.
Half of the respondents reported that growth in
demand deposits at their institutions was below
normal or very weak in November and December (see table A.2.). Only a few reported abovenormal growth in demand deposits, and none
experienced very strong growth. Of those with
growth that was lower than normal, 83 percent
experienced weakness in business deposits,
while slightly less than half cited weakness in
household accounts. Data from the DDOS of
weekly reporting banks for the fourth quarter of
1987 also point to weakness in business accounts. Demand deposits held by financial and
nonfinancial business at these banks declined at
seasonally adjusted annual rates of 12 percent
and 9 percent respectively over the fourth quarter of last year. Consumer demand deposits grew
at a 7 percent rate, noticeably below their pace of
the fourth quarter of 1986.
Higher interest rates were the most important
single factor in the weakness in demand deposits:
54 percent of the respondents to the senior
financial officer survey who reported weakness in
203
business demand deposits attributed it to more
careful cash management by firms in response to
higher interest rates, and 29 percent indicated
that higher rates (and thus higher ECRs) had
permitted reductions in required compensating
balances.
Other factors, including changes in cash-management practices, also affected growth in demand deposits in November and December.
One-third of the respondents stated that customers switching from compensating-balance arrangements to explicit fees as payment for services had depressed demand-deposit levels at
their banks. A few senior financial officers noted
that some customers had reduced their balances
below the minimums required late last year,
making up the difference with fees; in the past
corporate cash managers have stated that firms
may be looking to reductions in compensating
balances as a source of funds.
Twenty-nine percent of the survey respondents saw a slowing in business activity at
some firms as a factor in the weakness in business demand deposits, while about 13 percent
cited a reduction in financial activity associated
with leveraged buyouts and merger financing. A
reduction in demands by corporate customers for
credit and operational services combined, which
perhaps mirrored these developments, were reported as a factor by about 30 percent of the
banks with lower than normal growth in business
deposits. Slow loan growth and the financial
troubles of one bank also were cited.
The contraction in business demand deposits
was not concentrated in any one sector: over
three-fourths of the respondents reported weakness across all of their business accounts. The
fourth-quarter DDOS data for financial and nonfinancial businesses confirm this result. The respondents who cited specific sectors named real
estate and mortgage banking most often. In terms
of account structure, most of the institutions
reported that the falloflf in business demand
deposits resulted from lower average balances;
about 14 percent reported a decline in the
number of accounts as some customers continued to consolidate demand accounts to reduce
expenses and to facilitate cash management, a
trend also noted in the cash-management literature.
204
Federal Reserve Bulletin • April 1988
SUMMARY
The behavior of demand deposits in the 1980s has
diverged from previous patterns, and movements
of these deposits have become more unpredictable, in both the short and the longer run, than
they were in the 1970s. In the short run, the
variability in monthly growth rates of demand
deposits is greater than it was in the previous
decade. Special factors, such as the nationwide
introduction of NOW accounts, the Tax Reform
Act of 1986, and the stock market plunge, have
accounted for specific episodes of wide swings in
the month-to-month growth of demand deposits.
Practices in some relatively new markets, coupled with volatile interest rates, also appear to
have had noticeable, if not readily quantifiable,
effects on short- and longer-run movements in
demand deposits.
The longer-run behavior of demand deposits
also appears to have changed from what their
historical relationships with income and interest
rates suggest. Available evidence indicates that
part of this change in the behavior of demand
deposits reflects an increase in their interest
elasticity. Financial innovations, improvements
in cash-management techniques, and retail deposit deregulation, all prompted to some extent
by the high and rising market interest rates of the
1970s and early 1980s, may have contributed to a
heightened interest elasticity of demand deposits
by providing new techniques and vehicles for
managing cash balances and by increasing the
proportion of aggregate demand deposits that are
held by businesses.
In addition, survey data tend to confirm previous indications that compensating-balance arrangements figure large in the interest sensitivity
of demand deposits and also involve practices
that add to the unpredictability of deposit movements resulting from changes in interest rates. A
shift by firms from compensating-balance arrangements to explicit fees as a way of paying
banks for services also affects movements in
demand deposits and possibly their interest elasticity. Overall, there seem to have been significant shifts in the behavior and predictability of
demand deposits in the 1980s. These shifts appear to have stemmed from a variety of causes,
some of which probably will continue to operate
in the future.
The Recent Behavior of Demand Deposits
APPENDIX
This technical appendix presents the specification of the model of the demand for demand
deposits, and detailed responses to the Senior
Financial Officer Opinion Survey conducted by
the staff at the Federal Reserve Board and at the
Reserve Banks in January 1988.
Specification of the demand-deposit
model
Alog (£>£>) = - . 1 1 9 2 - .0180 log(RTBE)_ i
[-2.5]
[-3.2]
- . 1 6 8 6 [log(DD) [-2.5]
\og(EPCEN)]_}
- .0009 TYME_, - .0030 SHIFT
[-2.2]
[-2.7]
205
RTBE = rate on three-month Treasury bills
(effective yield)
SHIFT = 0 through 1974:2, 1 in 1974:3; increases
in increments of 1 until reaching 10 in
1976:4 and remains at 10 thereafter (a
dummy variable for the "missing
money")
TYME = time variable: 1947:1 = 1; increases in
increments of 1 each quarter.
All variables are quarterly averages.
Sample period: 1961:1-1986:2; R2 = .763; Durbin H statistic
= -.7908; standard error of regression = .0069. The numbers
in brackets are t statistics.
One convergence restriction is imposed on the
estimates:
2
X dyi + coefficient on Alog (DD)_,
= 1.
i=0
+ .1605 log(l [2.2]
JNOWT)
+ Z dr, Alog (RTBE)_I
i= 0
+ X dy, Alog ( E P C E N ) _ ,
1=0
- .0089 A SHIFT
[-3.3]
+ .8926 Alog (1 [11.3]
JNOWT)
+ .1481 Alog CDD)_X
[2.5]
X dr{ = - .0295
[-3.3]
£ dy, = .8519
[13.5]
dr0 = - . 0 0 7 2
dy0 = .4889
dr, = - . 0 2 2 2
dyx = .1984
dy2 = .1645
where
DD = demand deposits (business and consumer)
EPCEN = personal consumption expenditures in
current dollars
JNOWT = index of the availability of NOW accounts (held constant from 1985 onward)
This restriction imposes on the short-run dynamic
terms the same unitary elasticity with respect to consumption that is imposed in the long run by the second
line of the model.
This model and the results of the simulation
are presented as an illustration of the extent to
which the behavior of demand deposits in the
1980s has departed from that suggested by past
relationships with interest rates and aggregate
spending. The results presented in text table 1
are from a quarterly dynamic simulation of the
model beginning in 1981:1. The parameter estimates of the model are based on quarterly data
from 1961:1-1986:2 and thus incorporate data
from the 1960s, including a part of 1986-87, the
period when the most serious simulation errors
emerge. By including information on demanddeposit behavior in the 1980s, rather than a pure
out-of-sample simulation, this approach illustrates the extent to which the longer-run predictability of demand deposits has deteriorated. In
addition, economists at the Board have run simulations of demand-deposit models with different
specifications, estimated over 1961-86 and over
1983-87, and found similar patterns of errors in
1986 and 1987. As noted in the text, the apparent
relation of the errors to movements in interest
rates implies that the interest elasticity of demand deposits has increased.
206
Federal Reserve Bulletin • April 1988
Because of the wide swings in demand deposits in late 1986 and in various periods in 1987
induced by the special factors discussed in the
text, it is difficult to sort out elasticity effects by
estimating models over periods that include
1986:3-1987:4. The model specified here also
was estimated from the early 1970s through mid1986,and the results, when compared to those
from estimating the model over the entire
1961:1-1986:2 period, indicate an increase in the
long-run interest elasticity of demand deposits.
This result supports the conclusion of a higher
interest elasticity of demand deposits implied by
the pattern of errors in the various simulations.
A detailed technical discussion of such empirical work at the Board is contained in a draft
paper, "Modeling the Disaggregated Demands
for M2 and Ml in the 1980s: the U.S. Experience," by George Moore, Richard Porter, and
David Small, presented at a workshop at the
Board in mid-January 1988.
RESPONSES
FINANCIAL
TO THE SENIOR
OFFICER OPINION
SURVEY
Tables A. 1. and A.2. contain detailed data on the
responses to the January 1988 Senior Financial
Officer Opinion Survey. Of the survey panel of 60
banks, 59 responded. Not all of the 59 banks,
however, responded to all questions on the survey. Nonresponses were not included in tabulating the survey results and computing the percent
of institutions answering in a particular category
of a question. For example, 51 banks responded
to the question, reported in table A.I., about the
proportion of business demand balances held
under formal compensating-balance arrangements, and the percentage of responses in each
category is based on 51 respondents. On questions to which 59 banks responded, the percentages are based on 59 respondents. Of course,
some questions applied to only a subset of the
panel, depending on their answers to a previous
question. For example, only the 37 banks that
reported a shift from compensating balances to
explicit fees answered the question about
whether such shifts had accelerated in 1987. In
all cases, if a bank responded that it was uncertain as to the answer to a question, its response
was included in the totals and reported in the
"uncertain" category.
The Recent Behavior of Demand Deposits
207
A . l . Importance and structure of compensating balances at selected large U.S. banks, 1987
Survey item
Number
of banks
Percent
of
banks'
Proportion of business demand
balances held under formal
compensating-balance
arrangements
(percent)
0-20
21-40
41-60
61-80
Over 80
All banks 2
Change in proportion
Increase
Decrease
None
Uncertain
All banks
6
2
16
14
13
51
12
4
31
27
25
100
2
6
41
2
51
4
12
80
4
100
in 1987
Shift from
compensating
balances to explicit fees in
recent years
Yes
Acceleration in 1987
Yes
No
Uncertain
All banks
No
All banks
37
73
14
22
1
37
14
51
38
59
3
100
27
100
Most common ECR formula for
compensating
balance
Adjusted for required reserves ..
All banks
48
48
100
100
Interest rate used as basis for
ECR
Three-month Treasury bills
Ninety-day CDs
Other
Average of several rates
All banks
49
3
3
4
59
83
5
5
7
100
1. Details may not add to totals because of rounding.
2. Mean for all banks, 61.6 percent.
3. A bank may have responded in more than one category.
SOURCE. Board of Governors of the Federal Reserve System,
Number
of banks
Survey item
Period for measuring interest
used for ECR3
Week
Month
Quarter
Longer
All banks
Percent
of banks'
rate
1
47
9
1
58
2
81
16
2
100
19
10
33
17
49
9
1
59
83
15
2
100
Carryover of surpluses or deficiencies
permitted period to period
Yes
No
For some customers
All banks
40
16
3
59
68
27
5
100
Limits on carryovers
Yes
No
For some customers
All banks
4
38
1
43
9
88
2
100
Carryovers permitted beyond end of
calendar year
Yes
No
For some customers
All banks
10
32
1
43
23
74
2
100
Change in ECR formula or other
compensating-balance
feature
1987
N o change
Change by customer
Change by bank
Adjustment for FDIC insurance
All banks
51
2
4
2
59
86
3
7
3
100
MEMO
Lagged ECR
Moving average
Period for measuring
balances
Month
Quarter
Year
All banks
compensating
in
January 1988 Senior Financial Officer Opinion Survey. The survey
panel consists of 60 large commercial banks with total combined
domestic assets of $810 billion as of June 30, 1987; all federally insured
commercial banks have $2.5 trillion in commercial assets.
208
Federal Reserve Bulletin • April 1988
A.2. Behavior of demand deposits at selected large U.S. banks, November and December 1987
Survey item
Strength of demand-deposit
Very strong
Above normal
About normal
Below normal
Very weak
All banks
Accounts with below-normal
Business
Household
Other
All banks
Number of banks
growth
0
58
100
24
14
5
29
83
48
17
7
3
13
29
13
54
7
3
4
2
8
29
13
17
8
33
25
1
growth
Reason for below-normal or very weak growth in business
Slowing business activity
Less leveraged-buyout and merger activity
Stricter cash management
Reduction in compensating balances, by cause
Higher interest rate
Less use of credit services
Less use of operational services
Overages earlier in the year
Shift from compensating balances to fees
Other
All banks
accounts1
6
24
Concentration of below-normal or very weak growth in business accounts,
business1
Financial institutions
Securities firms
Real estate firms
Firms involved in merger and acquisition activity
Energy-related firms
N o apparent concentration
All banks
Manifestation of below-normal or very weak growth in business
Reduction in number of accounts
Reduction in average account balance
Both
Uncertain
All banks
1. A bank may have responded in more than one category.
6
0
7
43
40
10
4
25
23
or very weak
Percent of banks
by type of
accounts1
SOURCE. See table A . l .
2
1
3
1
1
18
23
9
4
13
4
4
78
2
20
2
5
29
7
69
7
17
209
Treasury and Federal Reserve
Foreign Exchange Operations
This quarterly report, covering the period November 1987 through January 1988, provides
information on Treasury and System foreign
exchange operations. It was prepared by Sam Y.
Cross, Manager of Foreign Operations of the
System Open Market Account and Executive
Vice President in charge of the Foreign Group of
the Federal Reserve Bank of New York J
The dollar experienced recurrent periods of
downward pressure throughout November and
December, then firmed in early January. On
balance, the dollar ended the three-month period
IVi percent lower against the Japanese yen and 3
to 4 percent lower against most European currencies and the Canadian dollar. The U.S. authorities intervened to support the dollar at various times during the period, most heavily in
early November and around the turn of the year.
EARLY NOVEMBER
ON THE DOLLAR
PRESSURE
In November, as the period under review
opened, the dollar was already under selling
pressure stemming from several sources.
Given the sharp decline in stock prices in
October and the relatively greater importance of
equity holdings in the United States than in other
countries, the U.S. economy was seen to be in
danger of weakening considerably, and more so
than the economies of other countries. Under
these circumstances and with the Federal Reserve acting to provide liquidity to the market,
U.S. interest rates had declined significantly.
Meanwhile interest rates in other countries had
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.
declined less sharply. As a result, interest rate
differentials favoring the dollar had narrowed.
Following the stock market developments in
October, market participants looked to the administration and the Congress for decisive action
to reduce the U.S. fiscal deficit. Progress was not
yet visible, even though the administration and
the Congress had begun discussions on a twoyear deficit reduction program.
In light of these factors and the continuing
large trade imbalances, many doubts were expressed in the press and in the market that the
Group of Seven (G-7) countries would place a
high priority on maintaining exchange rate stability and international policy coordination. As a
result, market participants were looking for evidence that the economic policy coordinating
mechanisms established at the February 1987
Louvre accord were still intact.
During the first week of November, the dollar's decline began to accelerate. Some press
reports asserted that the U.S. authorities' primary concern, at least for the moment, was to
prevent a recession, even at the risk of a further
decline in the dollar. Other reports tended to
reinforce doubts about the strength of the commitment of the G-7 countries to foster stability in
exchange rates. The dollar's decline continued
despite explicit reaffirmation of the U.S. adherence to the Louvre accord.
In fact, the Trading Desk at the Federal Reserve Bank of New York had already begun to
intervene in the market on behalf of the U.S.
monetary authorities. In concert with other central banks, the Desk purchased $1,095 million
from November 2 through November 10, of
which $717 million was against marks and $378
million against yen. The dollar traded as low as
DM1.6485 against the mark and Y133.20 against
the yen on November 10.
Following these intervention operations and a
210
Federal Reserve Bulletin • April 1988
statement by President Reagan on November 10
that he did not want to see a further decline of the
dollar, the selling pressures subsided. The report
a few days later that the U.S. trade deficit had
declined in September, and President Reagan's
subsequent statement that the budget negotiations could result in $80 billion in deficit reductions over two years, seemed to suggest progress
toward reducing the U.S. external and internal
imbalances. At the same time, the Bundesbank
took action to lower German short-term interest
rates, which reduced the tendency for the German mark to appreciate against its partner currencies within the European Monetary System
(EMS) as well as against the dollar. In that
environment, market participants questioned
whether the stage was being set for a G-7 meeting
that would reaffirm the commitment to exchange
rate stability. The dollar firmed to DM1.7170
against the mark and Y137.30 against the yen on
November 16.
REEMERGENCE OF PRESSURE
NOVEMBER AND DECEMBER
IN LATE
The dollar came under pressure again as hopes
faded for rapid progress in the budget reduction
negotiations. Expectations of an early G-7 meeting receded after statements by several foreign
officials seemed to indicate that a meeting would
not occur until a U.S. budget accord had been
negotiated and approved by the Congress. By
November 20, when the administration and congressional negotiators agreed upon a plan to
reduce the budget deficit about $75 billion over
two years, the dollar was already moving lower
as market participants wondered whether the
program would be adequate and how long it
would take for the Congress to enact the measures. With market attention focused almost exclusively on the progress of the budget reduction
plan through the Congress, news of coordinated
interest rate adjustments in Germany and several
other European countries on November 24 again
helped to ease tensions within the European
Monetary System but provided only limited support for the dollar. In the presence of continued
doubts about the strength of the G-7 commitment
to foster stability in exchange rates, the dollar
continued to move lower.
During late November and early December,
the U.S. authorities again entered the market to
contain the dollar's decline on various occasions
when it came under pressure. Between November 27 and December 4, the U.S. authorities
purchased $272 million against marks and yen,
again in cooperation with other central banks.
The dollar steadied during the first week of
December. The Bundesbank cut its discount rate
on December 3 to 2XH percent in a move accompanied by official rate cuts in France, the United
Kingdom, Switzerland, Belgium, the Netherlands, and Austria. Market participants were
encouraged by these signs of renewed international cooperation.
The announcement on December 10 that the
U.S. trade deficit had jumped to a record $17.6
billion (not seasonally adjusted) in October underlined the difficulties in reducing the U.S.
external imbalance and had a strong market
impact. As traders rushed to liquidate their dollar
positions, the dollar gapped downward IV2 to 2
percent within a few minutes of the announcement. The U.S. authorities entered the market,
in concert with several European central banks,
to restrain the dollar's decline. The next day,
when market conditions again deteriorated, the
Desk reentered the market. Over the two-day
period, the U.S. authorities purchased $351 million against marks and yen.
For the rest of the month, market sentiment
remained bearish as the dollar came under recurrent strong selling pressure in an atmosphere of
pessimism and uncertainty. Market participants
remained skeptical that the budget reductions
being considered by the Congress would be sufficient to deal effectively with the U.S. fiscal
deficit problem. Erroneous press reports, though
quickly denied, raised doubts about the commitment of the administration to exchange rate
stability and added to the uncertainty.
Meanwhile, market participants were reassessing the economic outlook generally and found the
performance abroad to be mixed. The Japanese
economy remained buoyant, driven by accelerating domestic demand, while in Germany the
mark's continuing rise was seen as possibly
leading to a decline in both German net exports
Treasury and Federal Reserve Foreign Exchange Operations
1. Federal Reserve reciprocal currency arrangements
Millions of dollars
Amount of
facility, January
31, 1988
Institution
Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
German Federal Bank
Bank of Italy
Bank of Japan
250
1,000
2,000
250
3,000
2,000
6,000
3,000
5,000
Bank of Mexico
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
700
500
250
300
4,000
Bank for International
Settlements
Dollars against Swiss francs
Dollars against other authorized European
currencies
600
1,250
30,100
Total
and investment spending. The view that the
Japanese economy was fairly strong, and that the
Japanese authorities had less scope than others
to lower interest rates, added to the selling
pressure on the dollar against the yen. In these
circumstances, the dollar fell more rapidly
against the yen than other major foreign currencies during the second half of December. The
strength of the yen relative to European currencies also was consistent with a view that, since
Japan's trade surplus with Europe had widened
in previous months, the yen had considerable
scope to appreciate vis-a-vis the European currencies.
At the same time, market participants were no
longer quite so pessimistic about the effect of the
Net profits or losses ( - ) on U.S. Treasury and
Federal Reserve current foreign exchange
operations1
211
October stock market decline on the U.S. economy. Evidence that consumer confidence may
have fallen sharply in October and remained
weak in November kept alive concerns about the
possible effect of the stock market decline on
U.S. economic growth. But the release of other
statistics, including employment and industrial
production figures for November that were better
than expected, suggested that the market's initial
worries that the decline might seriously weaken
U.S. economic activity were exaggerated.
On December 22, officials of the G-7 nations
issued a statement reaffirming the basic objectives and policy directions set forth in the Louvre
accord agreeing that a further decline of the
dollar could be counterproductive. However,
traders were disappointed that the statement
offered no explicit new economic policy moves
aimed at stabilizing exchange rates and redressing trade imbalances.
Against this background, the dollar again came
under strong downward pressure as the year
drew to a close. U.S. corporations and Japanese
banks sold dollars in thin holiday markets, at a
time when most banks in Europe and the United
States were unwilling to adjust their positions
ahead of the year-end, and the market became
one-sided. The U.S. monetary authorities intervened heavily in concerted intervention operations. During the period December 16 through
December 31, the Desk purchased a total of
$1,707 million, approximately half of which was
against marks and half against yen. By early
morning January 4, the dollar had declined to
record lows of DM1.5615 against the mark and
Y 120.20 against the yen in the Asian-Pacific
markets. At that point, the dollar was almost 10
percent lower against the mark and more than 13
percent lower against the yen from the start of
the period.
Millions of dollars
Period
November 1, 1987January 31, 1988
Valuation profits and
losses on outstanding
assets and liabilities
as of January 31, 1988
1. Data are on a value-date basis.
Federal
Reserve
U.S. Treasury
Exchange
Stabilization
Fund
612.4
749.7
1,846.8
1,350.5
RECOVERY
OF THE DOLLAR IN
JANUARY
Market sentiment changed dramatically beginning later that day, when active trading resumed
in New York after New Year's Day, in response
to unmistakable evidence of concerted, visible,
and aggressive intervention operations. These
operations provided a clear signal that U.S. and
212
Federal Reserve Bulletin • April 1988
foreign officials were seriously committed to fostering exchange rate stability and gave new
weight to the December G-7 statement. Reported
comments by foreign officials also reinforced the
view that the new initiatives to halt the dollar's
decline might be under way. The dollar advanced
PA percent against the mark and 2LA percent
against the yen by the close of New York trading,
from its lows earlier that day, and continued to
strengthen during the remainder of the first week
of January.
In this context, the announcement of reductions in official interest rates in three European
countries on January 5 was interpreted as a
further sign that officials were willing to take
steps to adjust their monetary stance and coordinate policy to support the dollar. The release
on January 8 of U.S. employment statistics for
December that were better than expected helped
to strengthen the view that a sharp slowdown in
domestic economic activity was not imminent,
and accordingly, that there might be less downward pressure on U.S. interest rates. On January
13, Japanese Prime Minister Takeshita and President Reagan met in Washington and reaffirmed
the December G-7 statement. They indicated that
arrangements had been made to assure the adequacy of resources needed for their cooperative
efforts.
On January 15, the report that the U.S. trade
deficit for November had narrowed to $13.2
billion (not seasonally adjusted) pushed the dollar sharply higher. Market participants were encouraged that the deficit, which had declined
with virtually all geographic regions and across
all commodity groups, was finally narrowing,
albeit slowly and erratically. U.S. retail sales
figures for December that were stronger than
expected, released at about the same time, reinforced earlier evidence that a recession was not
STATEMENT OF THE GROUP OF SEVEN
ON DECEMBER
22,1987
Paragraph 8
The Ministers and Governors agreed that either
excessive fluctuation of exchange rates, a further
decline of the dollar, or a rise in the dollar to an
extent that becomes destabilizing to the adjustment process could be counterproductive by damaging growth prospects in the world economy.
They re-emphasized their common interest in
more stable exchange rates among their currencies and agreed to continue to cooperate closely in
monitoring
and
implementing
policies
to
strengthen underlying economic fundamentals to
foster stability of exchange rates. In addition,
they agreed to cooperate closely on exchange
markets. The Ministers and Governors stressed
the need for consistent and mutually supportive
policies and believe that the measures being taken
will accelerate progress toward the increased,
more balanced economic growth and sustainable
external positions necessary for greater exchange
rate stability.
likely in the immediate future. The dollar closed
on January 15 at Y130.85 against the yen and at
DM1.6865 against the mark, 9 percent and 8
percent higher respectively, from its period lows
on the morning of January 4. Although profittaking brought the dollar back from its highs,
market participants had gained confidence in the
view that the dollar had stabilized, at least for the
time being.
Between January 4 and January 15, intervention dollar purchases by the U.S. monetary authorities totaled $685 million against marks and
yen. The bulk was purchased during the first two
business days of the new year.
3. Drawings and repayments by foreign central banks under special swap arrangement with the U.S. Treasury 1
Millions of dollars; drawings or repayments ( - )
Central bank drawing
on the U.S. Treasury
Central Bank of Argentina
Central Bank of Ecuador
1. Data are on a value-date basis.
2. N o facility.
Amount of
facility
Outstanding,
November 1,
1987
200
31
0
0
November
December
January
Outstanding,
January 31,
1988
190
-190
31
0
-31
(2)
(2)
(2)
Treasury and Federal Reserve Foreign Exchange Operations
The dollar traded within a narrow range from
the release of the U.S. trade figures through the
remainder of the month. Market participants
were impressed by the early January intervention
operations and expected the U.S. authorities to
act forcefully to counter any renewed sharp
decline of the dollar. As it happened, the U.S.
authorities intervened on only one other occasion, purchasing $30 million against yen on January 21 when the dollar came under some downward pressure. At the same time, events abroad
reinforced the sense that policies were being
directed toward lessening exchange market pressures. In Germany, the Bundesbank changed its
monetary target to a broader aggregate (M3) from
the narrower aggregate for central bank money.
The Bundesbank issued a statement that the new
target would allow the German authorities to
pursue the twin goals of providing monetary
stability and stimulating domestic demand. Although the change was technical, observers felt
that it might imply a reduced likelihood of a
tightening of monetary policy.
As the period came to a close, the exchange
market was quiet and the dollar was trading in a
narrow range. However, the dollar was perceived as still vulnerable to disappointing trade
figures. Market participants, therefore, awaited
further evidence that a bottom for the dollar had
been reached and that the underlying economic
conditions were in place for a more sustained
period of exchange rate stability. The dollar
closed the three-month period at DM1.68 against
the mark and at Y128 against the yen, down
on balance almost 3 percent and IV2 percent respectively, from levels at the end of
October.
During the three-month period, the U.S. monetary authorities purchased a total of $4,140
million dollars, of which $2,388.5 million was
against German marks and $1,751.5 million
against Japanese yen. The U.S. Treasury and
the Federal Reserve intervened in nearly equal
dollar amounts, though the currency composition differed. The Federal Reserve sold $2,030
million equivalent of German marks and no
yen; the Treasury's Exchange Stabilization Fund
(ESF) sold $358.5 million equivalent of marks
and the entire $1,751.5 million equivalent
of yen.
213
Over the same period, the U.S. authorities
acquired yen in a variety of ways. In particular,
$30.9 million equivalent was received representing interest payments under the Supplemental
Financing Facility of the International Monetary
Fund (IMF), $184.5 million equivalent resulted
from the exchange of SDRs with other monetary
authorities, and $1.4 million equivalent was purchased from customers.
In the November-January period, the Federal
Reserve and the E S F realized profits of $612.4
million and $749.7 million respectively, from
foreign currency operations. As of the end of
January, cumulative bookkeeping or valuation
gains on outstanding foreign currency balances
were $1,846.8 million for the Federal Reserve
and $1,350.5 million for the ESF. These valuation gains represent the increase in the dollar
value of outstanding currency assets valued at
end-of-period exchange rates, compared with the
rates prevailing at the time the foreign currencies
were acquired.
The Federal Reserve and the E S F regularly
invest their foreign currency balances in a variety
of instruments that yield market-related rates of
return and that have a high degree of quality and
liquidity. A portion of the balances is invested in
securities issued by foreign governments. As of
the end of January, holdings of such securities
by the Federal Reserve amounted to $1,051.7
million equivalent, and holdings by the Treasury amounted to the equivalent of $996.1
million.
TREASURY SWAP ARRANGEMENTS
FOREIGN CENTRAL
BANKS
WITH
During the period under review, the U.S. Treasury through the E S F provided short-term
financing facilities to Argentina and Ecuador.
Argentina. As noted in the previous report
(pages 14-17 of the January 1988 BULLETIN), on
October 30, 1987, a near-term credit facility of
$500 million was made available jointly by the
ESF, the Bank for International Settlements
(acting for certain central banks), and the central
banks of Mexico, Uruguay, and Colombia to the
Central Bank of the Argentine Republic. On
214
Federal Reserve Bulletin • April 1988
November 12, the Argentine central bank drew
$190 million from the ESF's portion of $200
million. The central bank of Argentina repaid
$90.1 million on December 7, $84.3 million on
December 21, $10.3 million on December 23, and
the remaining $5.3 million on December 30.
Ecuador. On December 3, 1987, the ESF
agreed to provide a $31 million short-term credit
facility for the Central Bank of Ecuador. On the
next day, the Central Bank of Ecuador drew the
full amount, which was subsequently repaid on
January 26, 1988.
215
Industrial Production
Released for publication February 17
of materials, which rose sharply throughout the
second half of last year, was little changed in
January. At 133.8 percent of the 1977 average,
the total index in January was 6 percent higher
than it was a year earlier.
In market groups, production of consumer
goods rose 0.4 percent in January as large increases in lightweight truck assemblies and in
nondurable consumer goods—particularly food
Industrial production increased 0.2 percent further in January after a revised rise of 0.4 percent
in December. Gains were concentrated in the
production of trucks for consumer use, nondurable consumer goods, business supplies, and manufacturing equipment; automobile production declined about 7.5 percent over the month. Output
Ratio scale, 1977 = 100
Products
Materials
J
_ MANUFACTURING
140
I
L
_ MATERIALS
Nondurable
Durable
120
100
80
INTERMEDIATE PRODUCTS
Business supplies
y
Construction supplies
240
240
200
OIL A N D GAS DRILLING
FINAL PRODUCTS
200
Defense and space
160
160
120
140
100
120
Consumer goods
80
100
60
80
1982
1984
1986
All series are seasonally adjusted. Latest figures: January.
1988
1982
1984
1986
1988
216
Federal Reserve Bulletin • April 1988
1977 = 100
Group
Percentage change from preceding month
1987
1988
Dec.
Jan.
1987
Sept.
Oct.
1988
Nov.
Dec.
Jan.
Percentage
change,
Jan. 1987
to Jan.
1988
Major market groups
Total industrial production
133.6
133.8
-.2
1.1
.4
.4
.2
6.0
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment...
Defense and space
Intermediate products...
Construction supplies.
Materials
141.1
139.2
129.3
120.3
132.6
148.7
189.7
147.7
134.6
123.3
141.5
139.5
129.8
120.8
133.1
148.6
190.2
148.2
134.6
123.4
-.4
-.4
-1.3
-2.2
-1.1
.4
.4
-.3
-.2
.2
1.1
1.1
1.1
4.8
-.2
1.6
.3
.9
.8
1.3
.0
-.2
.1
-.5
.3
-.3
-.3
.7
.5
.9
.1
.1
.1
-2.7
1.1
.3
-.1
.3
.4
.9
.2
.2
.4
.4
.4
-.1
.3
.4
.0
.1
5.2
4.7
3.4
1.6
4.0
7.2
1.5
6.8
3.3
7.4
.5
.2
.8
-.9
-.3
.2
.1
.4
-.6
1.3
6.2
6.1
6.4
3.2
5.6
Major industry groups
138.5
137.1
140.6
103.2
112.6
Manufacturing
Durable
Nondurable
Mining
Utilities
-.1
-.1
-.1
1.0
-1.4
138.9
137.2
141.2
102.6
114.0
1.2
2.3
-.3
1.7
.8
.4
.0
1.0
.5
.8
NOTE. Indexes are seasonally adjusted.
and energy—were only partially offset by continued weakness in auto output. Auto assemblies
were reduced in January to an annual rate of 6.0
million units from a rate of 6.5 million units in
December. Output of business equipment was
little changed, on balance. Production of manufacturing and power equipment advanced
strongly, and output of commercial equipment,
which includes computers, edged up. However,
output of transit equipment fell more than 3.5
Total industrial production—Revisions
Estimates as shown last month and current estimates
Index (1977=100)
Month
October
November
December
January
Percentage change
from previous
months
Previous
Current
Previous
Current
132.5
133.1
133.3
132.5
133.0
133.6
133.8
1.1
.4
.2
...
1.1
.4
.4
.2
percent last month, largely reflecting a decline in
assemblies of motor vehicles other than light
trucks.
The indexes for both durable and nondurable
materials were unchanged in January, but were
appreciably stronger in December than originally
published. In January, output of chemical materials and parts for equipment continued to post
strong gains, but production of paper and basic
metals registered declines. Production of energy
materials was up in January, with generation of
electricity providing the major impetus.
In industry groups, manufacturing output increased 0.2 percent in January. Although many
machinery industries continued to show gains,
production of iron and steel fell back in January
following a sharp rise in December. As a result,
durable manufacturing was about unchanged in
January. Output of nondurable goods increased
0.4 percent in January, and production at utilities
was up an estimated 1.3 percent. However, mining production declined 0.6 percent.
217
Statements to Congress
Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve
System,
before the Committee on Banking, Housing, and
Urban Affairs, U.S. Senate, February 2, 1988.
I appreciate this opportunity to appear before the
Banking Committee to address questions about
the Federal Reserve's response to the turbulence
in financial markets last October, the functioning
of our financial markets during that period, and
proposals for structural and regulatory reforms.
FEDERAL RESERVE
RESPONSE
TO THE OCTOBER CRISIS
During the stock market crash, and in the days
following, the Federal Reserve undertook a number of actions to deal with emerging problems
and restore confidence. Our purpose was to limit
any damage to the economy from the collapse in
financial markets.
History teaches us that central banks have a
crucial role to play in responding to episodes of
acute financial distress. Before the founding of
the Federal Reserve, the early stages of stock
market crashes or their equivalent were compounded by a sharp escalation of short-term
interest rates and a reduction in credit availability. For example, during the Panic of 1893, rates
on call loans to brokers in New York City were
quoted at the extraordinary level of as much as
74 percent per annum; the rates on prime commercial paper reached 18 percent. Interest rate
quotes during the Panic of 1907 were similar.
Moreover, these rates were for the most part
purely formal quotes; even at such high interest
rates, very little money was actually forthcoming
from nervous lenders.
These rates are a product of natural market
reactions to the dramatic increases in uncertainty
that accompany such episodes. Fearful people
tend to withdraw; they pull back; they endeavor
to become safer and more liquid. Savers and
lenders attempt to disengage from markets, especially those involving risk-bearing instruments, and look for preservation of principal
rather than capital gains and earnings potential.
This increased demand for liquidity and safety is
a phenomenon that in recent years has often been
described as a flight to quality. At the same time,
some private borrowers might find that their
credit needs have been enlarged by a stock
market crisis, especially the securities dealers
who need to finance a larger inventory of equity
shares acquired from a panicky public. Others
may increase their borrowing just to have a larger
cushion of cash on hand, given the financial
uncertainties.
This combination of supply and demand factors can add up to a situation in which private
borrowers could have difficulty obtaining credit,
or at least find it very much more expensive.
Short-term interest rates on private instruments
and the cost of borrowing from intermediaries
could rise sharply, compounding the crisis and
increasing the potential for major damage to the
economy and the financial markets.
There certainly can be a rational component
underlying the heightened demand for liquidity
and increased reluctance to lend to private borrowers. A stock market crash can patently increase the credit risk involved in lending to
certain borrowers, such as those dealers holding
large inventories of equity relative to their capital, or firms planning to retire debt by selling
shares of stock, or companies that may experience reduced demand for their products as a
result of the decline in equity prices. But there
can be, and almost always is, an exaggerated
market reaction as well, based on little hard
evidence, that builds on itself and ultimately
affects borrowers whose creditworthiness has
not been materially impaired by the drop in
equity values. This irrational component of the
demand for liquidity may reflect concerns that
218
Federal Reserve Bulletin • April 1988
the crisis could affect the financial system or the
economy more generally, spreading beyond the
individual participants directly involved. It also
can be a strong reaction to heightened uncertainties before firm information becomes available on
which potential borrowers have been weakened
and which are still sound.
The irrational aspect of the flight to liquidity
and quality is similar in some respects to a run on
a bank that is fundamentally sound. In the days
before deposit insurance, banks attempted to
fend off such runs by putting cash in the front
window. By reassuring depositors that ample
supplies were on hand, the run might be discouraged from even beginning.
In a sense, the Federal Reserve adopted a
similar strategy after October 19, one aimed at
shrinking irrational reactions in the financial system to an irreducible minimum. Early on Tuesday morning, October 20th, we issued a statement indicating that the Federal Reserve stood
ready to provide liquidity to the economy and
financial markets. In support of that policy, we
maintained a highly visible presence through
open market operations, arranging System repurchase agreements each day from October 19th to
the 30th. These repurchase agreements were
substantial in amount and were frequently arranged at an earlier time than usual, underscoring
our intent to keep markets liquid.
By demonstrating openly our determination to
meet liquidity demands, we could, in practice,
reduce those demands to the extent that they
arose from exaggerated fears. Through its actions, the central bank can help to assure market
participants that systemic concerns are being
addressed and the risk is being contained—that
isolated problems will not be allowed to infect
the entire financial system.
The Federal Reserve's activities seem to have
contributed to a calming of the extreme concerns
generated by the stock market collapse. Gradually, risk premiums for private borrowers subsided, suggesting that the flight to quality had
abated. However, fear-based demands for liquidity remained, generated temporarily in the course
of the financial turmoil, and there were also
understandable and reasonable demands for excess reserves at depository institutions, whose
reserve management appropriately turned more
cautious. In addition, demand deposits bulged
after the stock market fall, probably in conjunction with the surge in financial transactions. The
Federal Reserve supplied extra reserves to accommodate these needs.
By helping to reduce irrational liquidity demands and by accommodating the remainder, the
Federal Reserve avoided a tightening in overall
pressures on reserve positions and an increase in
short-term interest rates. In fact, we went even
further and eased policy moderately after the
stock market collapse in light of the greater risk
to continued economic expansion. The federal
funds rate dropped from more than IVi percent
just before October 19th to about 63/4 percent in
the first half of November, and regular adjustment and seasonal borrowing at the discount
window fell from about $500 million to less than
$300 million in November. Rather than the spikes
in rates observed in panics earlier in our history,
short-term rates actually declined after October
19, even on private instruments.
At the same time, I should add that it was very
important that our actions not be perceived as
merely flooding the markets with reserves. That
would not have addressed the problem. We undertook open market operations in a measured
and calibrated way. Haphazard or excessive reserve creation would have fostered a notion that
the Federal Reserve was willing to tolerate a rise
in inflation, which could itself have impaired
market confidence. We were cautious to attack
the problem that existed and not cause one that
did not.
In addition, the Federal Reserve took a number of other steps after the stock market crash
that were focused on the functioning of the
markets and the financial strength of important
participants. These steps were designed to enable us to be in a position to address the consequences of the crash on markets, especially if
they threatened further disruption to the financial
system, and to assure the markets of our efforts
to contain the damage. Our actions dealt with a
number of actual and potential specific problems,
but more generally were also a key aspect of our
strategy to contain the effects of the market
disruption by maintaining a high visibility that
would calm markets and reduce irrational demands for liquidity.
Statements to Congress
We recognized that the safety and stability of
the banking system are essential to the success of
this strategy. History teaches us that stock market declines that do not adversely affect the
banking system have a much less serious effect
on the overall economy than ones that do.
For example, the stock market crashed in
March 1907, but the Panic of 1907 was not
initiated until the failure of the Knickerbocker
Trust Company in October. The damage to the
economy after the stock market crash in October
1929 was much magnified by the series of bank
failures that occurred in 1930-33. Conversely,
the stock market fell sharply in May and June
1962; however, the banking system was not
seriously affected, and the effect on the overall
economy was limited.
Accordingly, during the recent events, the
System placed examiners in major banking institutions and monitored bank developments carefully in several ways.
For example, the Federal Reserve Banks kept
close track of currency shipments to banking
institutions to identify potential emerging bank
runs. These shipments did increase after October
19 but seemed to involve banks that were taking
precaution against runs that never occurred. In
addition, there was a generalized increase in the
demand for precautionary balances in currency
by the public, not associated with runs on banks,
that was also satisfied.
We reviewed the potential impact of stock
market activity on pending bank holding company mergers and acquisitions. We monitored
the announced or unannounced intention of bank
holding companies to buy back their stock. When
discussing these possible actions with holding
companies, we took the position that such purchases would be inappropriate other than on a
limited basis to restore order in the market for
their stock.
We paid particular attention to the credit relationships between banks and securities dealers.
We assessed the banking industry's credit exposure to securities firms through loans, loan commitments, and letters of credit. We were in
contact with both banks and securities firms
regarding the liquidity and funding of brokers and
dealers. We recognized that banks needed to
exercise caution in their credit judgments to
219
protect their financial stability. At the same time,
banks have always been relied upon as important
sources of credit in financial markets, especially
when those markets are troubled and normal
access may have been impaired. In our conversations with banks, we stressed the importance
of ensuring adequate liquidity to meet legitimate
customer funding needs, even if they were unusually large, while recognizing explicitly the
responsibility of market participants to make
their own independent credit judgments.
In the event, banks did make a large volume of
securities loans after the stock price decline.
They apparently reviewed their credit exposure
carefully, in some cases asking for additional
collateral. However, our information suggests
that there were only a few instances in which
credit was withdrawn or requests for new credit
were refused, and these instances involved relatively minor amounts. The generally good performance of this key lending function may be
attributable, at least in part, to the knowledge
that the Federal Reserve was making reserves
freely available so that banks would not be facing
escalating funding costs.
The Federal Reserve also took particular interest in the government securities market. We have
long had a special involvement in this market
through our open market operations and as fiscal
agent for the Treasury.
In the wake of the stock market decline, we
stepped up our daily monitoring of primary government securities dealers and interdealer government securities brokers. We held discussions
with regulators and other market practitioners
regarding particular situations in which firms
were having difficulty meeting capital requirements. Officials of the Federal Reserve Bank of
New York met with representatives of government securities dealers and with interdealer government securities brokers with regard to concerns about counterparty risk, especially in
when-issued trading associated with the Treasury's November refunding.
One problem that arose resulted from a reluctance of some holders of government securities
to lend them as freely as they typically do. As a
consequence, the incidence of failures to deliver
particular government securities rose, potentially
disrupting trading and liquidity in this key mar-
220
Federal Reserve Bulletin • April 1988
ket. In response, the Federal Reserve temporarily liberalized the rules governing lending of
securities from its portfolio. For a time, we lifted
per-dealer and per-issue limits on such lending
and set aside the rule against lending to facilitate
short sales.
Beyond these eflforts in the banking and government securities areas, the Federal Reserve
was in frequent contact with market participants
and officials at the Treasury and at other regulatory agencies regarding the functioning of other
markets as well. The efforts proved essential to
gather information, identifying developing problems, and coordinate responses with other authorities.
Many of the contacts occurred through the
Federal Reserve Banks of New York and Chicago, which have special knowledge and understanding of nearby markets and contacts with
key officials. Through them and at the Board of
Governors, we were in touch with officials at the
stock, options, and futures exchanges, as well as
with the Securities and Exchange Commission
(SEC) and the Commodity Futures Trading Commission (CFTC), regarding the liquidity of the
markets, the functioning of market makers, operational problems, and settlement issues. In
addition, we discussed the possible effect of
sharp swings in markets on participants' financial
conditions to obtain advance warning of any
problems that might be developing. To facilitate
timely margin collections in futures markets, the
Federal Reserve extended the hours of operation
of its funds transfer system on October 19 and 20.
Furthermore, we closely monitored the international ramifications of the stock market crash,
and the effect of developments in foreign markets
on U.S. market participants. We communicated
with officials of foreign central banks with regard
to general market conditions and with various
market participants abroad regarding the effects
of the stock market developments in specific
markets.
In summary, the Federal Reserve acted in
response to the stock market crash to reduce
irrational fear-based demands for liquidity, to
meet remaining unusual liquidity demands, and
to monitor developments in the government securities and equities markets and in the banking
system. Our reactions to provide liquidity appar-
ently prevented the sharp interest rate spikes
observed in earlier crisis periods. Interest rate
spreads have come back more into line, and
market functioning appears to have returned
toward more normal conditions. Although it appears that the acute crisis period has passed,
markets remain quite sensitive, and could react
strongly to developments that seemed to portend
more market instability.
STOCK MARKET
AT THE BREAK
FUNCTIONING
Regarding the matter of the overall functioning of
our markets for equities and derivative instruments during the October turbulence, we now
have the benefit of several major studies. More
studies will be forthcoming. Clearly, the findings
and the recommendations of these studies deserve careful consideration. Senator Brady and
the other members of the Presidential task force,
along with their staff, have done a remarkable job
of assembling information and preparing their
report on the October plunge in so short a span of
time. The nation owes them a debt of gratitude
for their eflforts. We find their analysis of the
causes of the stock break particularly instructive
and subscribe to its general lines. We differ, in
part, on some of their recommendations for
reform. The Brady report, along with those of the
CFTC, the General Accounting Office (GAO),
and various private organizations, are adding
much to our understanding of these events and
the vulnerabilities of our securities markets to
rapidly changing developments.
It hardly needs to be said that we are dealing
with an extremely complex set of issues involving the factors that influence price movements in
securities markets and the capability of our financial institutions to withstand extreme shocks.
Not only do the studies emerging on this matter
reinforce the point that there are close relationships among the various domestic securities markets and between these markets and their derivative counterparts but also the extent to which
our financial marketplace has become intertwined with those abroad.
In addressing the issues before us, we must
keep these dependencies in mind. We must also
Statements to Congress
recognize that the financial system is in the
process of evolution and that much of the change
since mid-October has been in reaction to weaknesses displayed at that time. Some of these
adaptations—such as a reduction in the use of
portfolio insurance strategies—are taking forms
that limit pressures that would be placed on the
system if circumstances similar to those of midOctober were to recur. Others are adding to the
system's capacity to bear large shocks.
A central question is the cause of the market
collapse and its suddenness. Only if we understand why it happened can we gain insights into
how the structure of markets for equities and
their derivatives can be improved. Not only was
the stock price break very large, but it was
compressed into a very short span of time. We
can point to a number of price declines in our
history of a magnitude similar to last October,
but none have been as rapid. Also, the plunge
was an international phenomenon. The drop was
of fairly uniform severity across the major equity
markets, affecting those with well-developed and
less-developed derivative markets similarly.
Before the drop, the market had run up to very
high levels. The bull market from 1982 onward
was nurtured by a favorable economic setting for
businesses, which investors came increasingly to
view as likely to be sustained. In particular,
inflation expectations were greatly reduced over
this period, even as the economic expansion
continued. However, stock prices finally reached
levels that stretched to incredulity expectations
of rising real earnings and falling discount factors. Something had to snap. If it had not happened in October, it would have happened soon
thereafter. The immediate cause of the break was
incidental. The market plunge was an accident
waiting to happen. Measures of real rates of
return on equity investments indicated that such
returns were at historically low levels last summer—a situation that in the past has been restored to more normal levels either by a subsequent sharp increase in earnings or a pronounced
drop in share prices. In the event, we got the
latter.
Probably contributing to high share prices
were efforts by investors previous to October to
extend their cash equity positions on the thought
that the availability of liquid markets for deriva
221
tive instruments would enable them to promptly
trim their exposure and limit losses should they
fear a turndown in prices. Many users of portfolio insurance strategies, especially those aggressive formal programs that were model driven and
executed by computers, believed that they could
limit their losses in a declining market, and hence
were willing to be more than usually exposed in
cash equity markets. However, the experience of
last October vividly illustrates that timely execution cannot be assured, especially under those
conditions when it matters the most—when the
markets are under heavy selling pressure. In
essence, there was an illusion of liquidity that
likely encouraged larger equity positions on the
part of many investors. Of course, while an
individual investor can in principle reduce exposure to price declines, the system as a whole with
rare exceptions cannot. 1 Thus strategies by so
many investors to shed risk associated with a
large decline in price were vulnerable in ways
that had not been fully contemplated. The nearly
simultaneous efforts of so many investors to
contain losses pushed the system beyond its
limits, exacerbating problems of execution and
leading to portfolio losses that had not been
envisioned when these strategies were adopted.
The dramatic experience of October has, however, introduced more realism into such riskshedding investment strategies, and in the process has defused some of the potential pressures
on the system in the future. The mere fact of
sharply lower prices has significantly reduced the
risk of a replication of October 19.
Modern technology coupled with the greater
presence of sophisticated institutional investors
undoubtedly contributed to the suddenness of
the October drop. Through modern telecommunications and information processing, investors
can follow events as they unfold and react very
promptly. What formerly took hours or days now
can be done in seconds or minutes. Moreover,
institutional investors have taken on a major role
in the market for equities and derivative prod-
1. To the degree that derivative instruments facilitate a
better redistribution of price risk to those most willing and
able to bear it, they can add to the appeal of cash equity
investments to investors, encouraging them to hold larger
permanent equity positions.
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Federal Reserve Bulletin • April 1988
ucts—accounting for about two-thirds of trading
volume—and these sophisticated investors are
capable of reacting almost instantaneously to
information as it becomes available; these investors also were heavy users of portfolio insurance
programs that key oflf movements in market
prices and reinforce buying or selling pressures.
Modern technology, along with major institutional presence in the market, implies that an
enormous volume of buy and sell orders can be
sent to the markets at any moment, leading to
very sudden pressures on prices. Furthermore,
sharp downward price moves by themselves,
such as those occurring last October, can act to
heighten uncertainty in the markets and eflforts to
disengage, thereby compounding selling pressures. Under these circumstances, many potential buyers become reluctant to enter the market
as the sharp price move, outside the range of
normal experience, leads to doubts about underlying values. In other words, a rapid decline in
prices can act to raise the uncertainty premium in
share returns, adding, at least for a while, to
downward price momentum and pressures on
execution capacity. In earlier periods of large
market declines, such as the Panic of 1907, news
of the initial drop reached investors more slowly,
for many, the next day. As a consequence, price
declines were spread over a longer period of time
and some of the trauma caused by a sudden price
break and the corresponding pressures on system
capacity was thus avoided.
On top of these factors, system capacity became an influence on investor behavior. As investors came to recognize that the capacity of the
system to execute trades was faltering, they
sought to get out while they could. In other
words, the realization by investors that the system cannot simultaneously accommodate all the
eflforts under way to reduce long positions in
stocks or their derivative instruments prompts
still others to attempt to get out, too. This
situation is not at all unlike the conditions associated with a classic bank run once it becomes
apparent to depositors that the bank's liquidity
will be exhausted. The problem is compounded.
The confusion and uncertainty about execution
last October likely contributed to uncertainty
premiums in share returns and thus to additional
downward pressures on prices.
The emerging incoherence between the prices
of stocks, stock index futures, and options last
October also contributed to uncertainty premiums and the downward pressure on prices. There
is, of course, only one valuation process in these
markets, that being the underlying value of the
primary claims to corporate ownership. Index
futures and options are claims on the primary
claims and can have value only to the extent the
underlying stocks have value. In fact, index
futures and options merely gross up the demand
and supply for equity-related products. Every
such contract has equal outstanding long and
short positions, the net of which is, of necessity,
a wash. Stocks, in contrast, reflect a net long
position representing the total value of the combined equity and derivative products. In normal
circumstances, when markets are functioning
efficiently, arbitrage keeps the prices of these
so-called derivative instruments in line with equities. But under the strains of last October, the
individual markets for these instruments were
fragmented, generating considerable price disparities. These disparities were able to persist for
extended periods of time—adding to confusion
and doubt—owing to a breakdown of the arbitrage process associated with the withdrawal
process and execution problems.
Other factors added to strains on the markets
last October. The lack of coordination of margin
collection and payment crimped the liquidity of
some market makers and their ability to maintain
positions. Also, rumors and discussion of exchange closings and possibly insolvent clearinghouses added to confusion in the markets and
evidently encouraged some investors to liquidate
portfolios before the markets shut down, further
adding to strains on the system. In short, the
initial rapidity of the price correction to an overvalued market, and a faltering execution capacity, sharply raised risk or uncertainty premiums,
which contributed to historic declines in prices.
While much of the attention given to the performance of the equity and derivative markets
last October has been on the strains and weaknesses displayed, we must nonetheless not lose
sight of the fact that we came through the crisis
remarkably well given what happened. No major
brokerage firms failed, unprecedented margin
calls by the futures clearinghouses were met by
Statements
their members, and stock prices reached a new
trading range shortly after the plunge.
STRUCTURAL
AND REGULATORY
REFORMS
Turning to recommendations for structural reform, I particularly appreciate the opportunity to
appear after Senator Brady. The Brady task
force observes, as do others, that the weight of
the evidence clearly indicates that the markets
for securities and their derivative products are
very closely interrelated and can and should be
viewed as one market. They conclude that these
circumstances require a common regulatory approach.
Recognizing that we are dealing fundamentally
with a single market system is basic to addressing
the structural and regulatory issues before us.
We must appreciate that there is a single valuation process affecting stocks, index futures, and
options, and that arbitrage across these markets
in the normal course of events acts to keep the
prices of these various instruments in alignment.
Thus, we must not jump to the conclusion that
movements in futures prices by themselves cause
movements in the cash market just because they
frequently precede them. We must be careful to
avoid confusing symptoms with causes. When
information affecting the value of equities becomes available, portfolio adjustments naturally
occur first in those markets in which the costs of
making adjustments are lowest, which commonly
has been in the futures markets. Arbitrage, including index arbitrage, acts to ensure that values in the cash market and elsewhere reflect the
new information.
We must also recognize that some of the
factors contributing to the October break cannot
realistically be corrected by public policy. In
part, the sharpness of the October decline reflected modern telecommunications and information processing systems. But this technology also
tends to enhance the efficiency of our markets
and is beneficial to many other aspects of our
welfare and, nevertheless, is here to stay. We
must learn to adapt to this development, as we
have to so many others that have advanced our
society. Similarly, we do not want to lose sight of
the important role that professional institutional
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223
investors play in managing our retirement programs and the assets of nonprofit institutions,
though their very sophistication and rapid response accelerated price moves in October. It
also is important to realize that the so-called
portfolio insurance programs that institutions
have used are strategies and not products. These
strategies frequently involve active use of derivative instruments, but they would exist, though
probably on a smaller scale, even without the
availability of such products. Moreover, the
experience of last October demonstrated to these
investors that aggressive strategies aimed at eking out a little more yield are inherently much
more risky than had been thought, especially in
those circumstances for which protection is most
sought. Thus, the pressures that they would
place on the system in the event of a future
market contraction would be much diminished.
It is clear from the Brady report and from other
studies that the capacity of the infrastructure of
our financial system to absorb the extraordinary
demands placed on it last October was insufficient. We must be aware that demands on the
system could again exceed execution capability
and that remedies may well be needed that
expand capacity or that establish an orderly
adjustment process once capacity limits have
been reached.
Expansion of execution capacity, which rarely
comes into play, may imply a misuse of resources. As a consequence, the Brady task force
recommendation for circuit breakers has some
appeal. We now have a better idea of the consequences of relying on a disorderly process for
dealing with massive volume and demands on
market-maker capital in the context of volatile
price behavior. Relying on the disorderly process
of last October discourages buyers from entering
as well as compounds investor uncertainty. The
Brady report suggests circuit breakers in the
form of price limits and coordinated trading halts
as worthy of consideration. In a sense, this could
be viewed as a way of slowing things down when
market conditions become hectic and threaten to
get out of control, thereby replicating conditions
of the past. The use of price limits, provided that
they are known in advance and sufficiently wide
to permit trading in all but the most extreme
circumstances, could prove to be a constructive
224
Federal Reserve Bulletin • April 1988
measure for prompting a pause in trading, especially if there is unusual uncertainty on the part
of lenders about the financial position of various
market makers and brokers and uncertainties on
the part of such borrowers about access to credit.
They could also provide more time for policymakers to respond if the conditions giving rise to the
trading halt were deemed to be an emergency.
On the other hand, large price moves may lead
to fears that the limits will be reached and that
portfolio adjustments will not then be possible,
putting more pressure on the system and assuring
that the limits are hit. The recent proposal of the
New York Stock Exchange to place temporary
price limits on individual stocks could prove
helpful in assessing the viability of price limits.
Ad hoc methods for closing markets should best
be avoided, as reliance on such methods is likely
to encourage rumors of closings and add to
market confusion. Also, a system that leads to
market closings should be one that is coordinated
among the markets, perhaps internationally; if
not, trading likely would shift to those markets
remaining open, potentially pushing them beyond their capacity constraints. Price limits and
other circuit breakers must be viewed as being
inherently destabilizing, but they may be the
least bad of all the solutions. When orders exceed execution capacity, the system will break
down. The only question is whether it is better
for it to take the form of a controlled disruption
or leave the solution to a haphazard set of forces.
On the matter of regulatory structure, the
Board in 1985 reviewed the appropriate form of
margin regulation and suggested that margins on
stocks and derivative instruments be set by selfregulatory organizations (SROs) subject to federal oversight. It was thought that SROs were in
the best position to determine the appropriate
level of margin and had the incentive to do so to
protect the integrity of their markets. It also was
thought that federal oversight would be appropriate to assure coordination of margin setting
across cash, futures, and options markets, and a
direct federal role might be needed in emergency
situations. The CFTC and SEC were viewed as
playing an important role in federal oversight,
given their knowledge and expertise in the markets that they regulate. The Board expressed its
willingness to be a part of such a system.
We have reviewed the matter of federal oversight again and believe that such a concept
continues to be appropriate. We appreciate the
confidence that the Brady task force has implicitly placed in the Federal Reserve and also its
reasons for recommending that a single agency
have full intermarket oversight authority. However, we seriously question this recommendation. To be effective, an oversight authority must
have considerable expertise in the markets subject to regulation, something that the CFTC and
SEC have developed over some time. Moreover,
were the Federal Reserve to be given a dominant
role in securities market regulation, there could
be a presumption by many that the federal safety
net applicable to depository institutions was being extended to these markets and that the Federal Reserve stood ready to jump in whenever a
securities firm or clearing corporation was in
difficulty. Coherence of federal oversight over
the market for equity instruments could be
achieved through merging the relevant portions
of the CFTC with the SEC or by a joint oversight
authority including the SEC, CFTC, and perhaps
the Federal Reserve or the Treasury.
We continue to view the achievement of consistent margins across the various instruments as
being appropriate and believe that a federal oversight authority would be well positioned to accomplish this. The proper level of margin,
though, is a very complicated issue and must be
addressed carefully. There are fundamental differences in the price behavior of individual
stocks, stock indexes, options, and futures that
are likely to call for different levels of margin if
our primary objective is to preserve the integrity
of these markets while promoting liquidity. We
must recognize that setting margin too high on an
equity instrument would discourage the use of
such an instrument and reduce its liquidity, indirectly affecting the markets for the other instruments as well.
On the related matter of clearing mechanisms,
we concur with the spirit of the Brady task force
that improvements in the clearing system are
needed, based on a more unified approach. The
evidence for mid-October shows that lack of
synchronization of margin collection and payment across the markets led to cases in which
brokers or market makers were in a position of
Statements to Congress
225
having to pay out margin in one market before
being able to collect from another; this situation
tended to squeeze liquidity and contributed to
the overall problem. The need for better coordination of margin calls and collection and payment seems clear if the system is to be better able
to withstand the kinds of strains that were placed
on it last October. Whether a single clearing
organization servicing all of the exchanges or
tighter coordination of the clearing process
among the existing exchanges is required remains an open question at this point. Another
approach would be for a new intermarket clearing corporation to be established to handle the
accounts of brokers, market makers, and investors with intermarket positions. In any event, the
relation between margin and clearing suggests a
role for federal oversight in the intermarket clearing process.
Finally, the Brady task force proposes that
detailed trading information be collected on a
regular basis for purposes of monitoring market
developments and identifying market abuses.
The information to be collected would include,
besides the trade, the time of the trade and the
ultimate customer. While recognizing the potential value of such information, my colleagues on
the Board and I oppose such data collection,
except on a voluntary basis. The right to privacy
is important for a free society, and we believe
that the case for collecting such information must
be a compelling one, which this one does not
seem to be. Also, such an action by the United
States alone could well reduce the attractiveness
of our securities markets to foreign investors at a
time when we are heavily dependent on foreign
capital for financing our external deficit.
In sum, the Brady proposals and those formulated by others represent an important basis
for public discussion. Reactions to these and
other proposals by a wide cross section
of the public will prove helpful in clarifying
methods for strengthening our securities
markets.
•
Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve System,
before the Committee on Banking, Finance and
Urban Affairs, U.S. House of Representatives,
February 23, 1988.
those of earlier in the decade, are still high in a
long-term perspective. Moreover, uncertainties
persist about key indicators of policy—the monetary aggregates—and their relation to the performance of the economy. Our approach to monetary policy in 1988 will require a delicate
balancing of considerations that must take account of the difficult multiyear challenge that we
face in seeking to wind down our external deficits
in a manner that is consistent with the maintenance of sustainable growth in the United States
and the world economy in 1988 and beyond.
Toward this end, the Federal Open Market
Committee (FOMC) two weeks ago set somewhat lower target ranges for 1988, consistent
with a moderate pace of monetary expansion this
year. The ranges for M2 and M3 are 4 to 8
percent; for debt, we have set a monitoring range
of 7 to 11 percent. The annual ranges are wider
than in the past, recognizing that the linkage
between money and credit growth and economic
performance has become noticeably looser in
recent years.
Before discussing our monetary policy plans
I appreciate this opportunity to appear before
you to discuss the conduct of monetary policy
and the economic and financial situation. You
have received the more formal Monetary Policy
Report to the Congress of the Board of Governors detailing the economic and financial situation and reviewing our policy actions in 1987, and
presenting our approach to monetary policy this
year. (See pages 151-64 of the March 1988 BULLETIN.)
The setting for monetary policy for the year
1988 and beyond is more than normally complex.
While the economy itself is well into the sixth
year of expansion, the forward momentum of
that expansion has been brought into question,
and we continue to run sizable external deficits
with associated dependencies on foreign savings;
at the same time, inflation rates, while below
226
Federal Reserve Bulletin • April 1988
for 1988 in detail, I would like to review with you
the developments of the past year.
1987 IN
PERSPECTIVE
The year 1987 was a time of economic transition,
and, like many periods of change, it had its
difficult moments. Nevertheless, clear progress
was made in achieving a healthier, more balanced economy. For the year as a whole, output
and employment expanded strongly. As measured by the gross national product, production
increased nearly 4 percent from fourth quarter
1986 to fourth quarter 1987, according to the
Commerce Department's preliminary estimates.
Almost 3 million persons were added to payrolls
over this period. And the civilian unemployment
rate dropped to about 53/4 percent—the lowest
level in this decade.
We achieved this growth with a better relationship between domestic spending and domestic
production. Growth of private domestic final
purchases has slowed progressively from 73/4
percent in 1983 as the economy emerged from
recession to about 1 percent last year. Meanwhile, real exports of goods and services rose
more than 15 percent over the four quarters of
1987, as our international competitiveness was
enhanced by the success of business and labor in
increasing productivity and restraining cost pressures. In addition, the lower level of the dollar on
foreign exchange markets, because much of it
was not passed through into wage and other costs
domestically, also helped our firms to price more
competitively in foreign markets and to compete
with imports in the United States. The improvement in the trade sector accounted for more than
a quarter of the overall gain in gross national
product.
One aspect of the improved trade situation was
better balance of our economy internally, with
previously lagging sectors showing particular
strength. The manufacturing sector revived in
1987: industrial production in manufacturing
surged 5VI percent between December 1986 and
December 1987, and capacity utilization rose to
its highest level in seven years. For example,
output of steel rose especially strongly, which
was the main factor in bringing capacity utiliza-
tion in this industry from about 65 percent at the
end of 1986 to more than 90 percent at the end of
1987. And other areas of our economy, such as
farming, mining, and oil extraction, that had been
notably depressed earlier in the 1980s, showed
some signs of improvement.
The robust growth of the economy—in combination with the budgetary actions of the Congress and the President, and a one-time boost
from tax reform—brought about a major reduction in the federal budget deficit last year. To be
sure, the flow of federal red ink was still heavy,
but last December's agreement was at least a first
step in needed actions for the future.
On the negative side, inflation increased in
1987. This development was not altogether surprising, given the bounceback in energy prices
early in the year and the effects on import prices
of the decline in the dollar. Although wage gains
have remained subdued, we clearly need sustained effort to bring about a more stable price
level.
As you may recall, the Federal Reserve set
ranges for monetary growth in 1987 that were Vz
percentage point lower than in 1986. We also
noted that we would be conducting monetary
policy with an eye toward a variety of economic
indicators, including the strength of the economy, pressures on prices, and developments in
international markets, as well as money growth
relative to the ranges.
Although the aggregates from very early in the
year tended to run low relative to the ranges, the
challenge as we perceived it through much of
1987 was less to buoy money growth than to
prevent one-time price rises related to developments in energy and foreign exchange markets
from becoming rooted in a renewed inflation
process. Concerns about potential inflationary
pressures were clearly manifested in financial
markets as well. During the spring and again in
late summer, inflation worries pushed up commodities prices and long-term interest rates, and
heavy downward pressures on the dollar developed in light of growing pessimism about the
prospects for significant improvement in U.S.
external balances; concerns about the financing
of our external deficit in turn apparently added to
pressures on interest rates during these episodes.
In view of the inflationary potential, the Federal
Statements
Reserve increased somewhat restraint on reserves in both episodes, and in September raised
the discount rate from 5V2 to 6 percent.
The balance of risks shifted after the stock
market collapse of October 19. The Federal
Reserve immediately modified its approach to
monetary policy in light of the turbulent financial
market conditions. During the crisis, the System
temporarily altered its focus somewhat from reserve positions to more direct measures of
money market pressures, and took several steps
to ensure adequate liquidity in the financial system. Moreover, we encouraged some decline in
short-term interest rates, as a precautionary step
in light of the possibility that the contraction in
financial wealth and the deterioration in consumer and business confidence might lead to a
significant drop-off in spending.
These actions helped to restore a degree of
confidence in financial markets. As this occurred, the Federal Reserve returned some way
toward our earlier focus on reserve positions in
the day-to-day implementation of policy. But I
think it is fair to say that markets still are
exhibiting a certain edginess, and we cannot be
sure yet that normal market functioning has been
fully restored after the events of October. In
addition, the effects of the stock market events
on the economy may not be fully evident. Indeed, indications of some softening in the economy as the year began, against the background of
a more stable dollar in foreign exchange markets,
led us to take a further small easing step a few
weeks earlier.
In the context of a monetary policy that, for
much of the year, needed to counter inflationary
pressures, and in light of the very rapid money
growth in 1986 and marked variations in velocity
in recent years, modest expansion of the monetary aggregates in 1987 was viewed as acceptable
and appropriate. As market interest rates rose,
interest rates on deposits became less competitive. This development encouraged a shifting
away from monetary assets, and growth of all of
the monetary aggregates slowed sharply. In addition, some special factors, such as the effects of
the new tax law, changes in bank funding
sources, and evolving business practices with
respect to cash management and compensating
balances, may also have damped money growth
to Congress
227
last year. M2 and M3 grew 4 percent and 5l/2
percent respectively over the four quarters of last
year, leaving them below and just at the lower
ends of their annual ranges. Ml increased 6
percent.
Debt growth slowed to the midpoint of its
monitoring range. The progress in reducing the
federal budget deficit helped reduce borrowing,
and debt issuance by the private sector dropped
off as well. Debt growth could scarcely be characterized as slow; at 91/2 percent, it continued the
pattern of increases relative to GNP.
ECONOMIC OUTLOOK AND
POLICY FOR 1988
MONETARY
In formulating its monetary policy plans for 1988,
the FOMC sought to further a number of complementary objectives. The Committee continued to focus on maintaining the economic expansion and on progress toward price stability,
which was seen as a necessary condition for
long-term sustained economic growth. It also
recognized that satisfactory performance of the
economy depended on moving over time toward
better balance in our external accounts.
For 1988, the Committee members generally
were optimistic that policy could be geared to
meeting these goals. Most members foresee continued economic growth next year with no significant pickup in inflation, although at current
levels of resource utilization and with rising
prices of imports likely from recent dollar declines, vigilance against signs of a reemergence
of greater inflationary pressures will continue to
be needed. The central tendency of the forecasts
of FOMC members and other Reserve Bank
presidents is for growth in real GNP of about 2 to
2Vz percent from the fourth quarter of 1987 to the
fourth quarter of 1988—slower than in 1987, but
likely close to what is a sustainable pace over the
longer haul. The unemployment rate may not
drop further, but employment gains could again
be substantial and better distributed across industries and geographical regions. Much of the
impetus to growth is expected to come from a
rapid pace of expansion of net exports of goods
and services, which would promote the process
of adjustment to better balance internally and
228
Federal Reserve Bulletin • April 1988
externally. This should involve slow growth in
domestic demand, probably encompassing
damped gains in consumption and a muchreduced pace of inventory building from the pace
near year-end.
Recent patterns of wage negotiations and settlements do not seem to indicate any imminent
break from the restrained behavior of the mid1980s. Although capacity utilization has risen in
our manufacturing sector, bottlenecks are not as
yet a problem and are not expected to become
one if growth follows the subdued path of the
Committee's outlook for real GNP. Even so, we
cannot be complacent about the potential for
higher inflation; by the time an acceleration of
costs and price pressure were to become evident,
the inflation process would already be well entrenched.
With its objectives in mind, as I noted earlier,
the FOMC established ranges for M2 and M3 of
4 percent to 8 percent over the four quarters of
1988, with the debt of domestic nonfinancial
sectors expected to increase between 7 and 11
percent. The growth ranges for money represent
a decrease from those for 1987—1 percentage
point in terms of the midpoints. This reduction is
viewed as another step in the longer-term process of reducing targeted money growth to rates
more in line with reasonable price stability.
Moreover, the lower end of the ranges allows for
the possibility of little pickup in money growth,
especially M2, from 1987 under certain circumstances. If, for example, inflation expectations
were to strengthen, market interest rates would
tend to rise, and relatively slow money growth
could again be an appropriate policy stance.
The FOMC does not anticipate that circumstances will call for such slow money growth. In
fact, it expects some acceleration of monetary
expansion in 1988, perhaps to around the middle
of the ranges. But changing circumstances could
easily require a considerably different outcome.
In recognition of the unusual degree of uncertainty in the economic outlook and the large
movements of money relative to income in recent
years, we have widened the specified ranges for
monetary growth from the more traditional 3
percentage points to 4 points.
This change was advisable partly because the
linkage of money to spending and income ap-
pears to have become looser in the 1980s. As you
know, most historical experience has suggested a
fairly close relationship between spending and
the quantity of money and, over a longer run,
between money and prices. These relationships
established the basis for adopting specific targets
for growth of money to attain the ultimate goals
of macroeconomic policy.
But these relationships appear to have changed
considerably in the 1980s, partly reflecting the
effects of deregulation, innovation, and changing
technology. The spectrum of stores of value is
extremely broad, extending from real capital,
like plant and equipment and houses, on the one
hand, through stocks, bonds, and time deposits,
to perfectly liquid currency and checking accounts, on the other hand. Both households and
businesses are continually adjusting their balance
sheets and the allocation of their income flows
between accumulation of financial assets of
different sorts and acquisition of goods and services.
Transactions balances are on the edge of the
exchange of financial claims for goods and services. Regulation and established practices previously acted to enforce a marked separation
between transactions money balances and all
other balances and supported a fairly close relationship between spending and the quantity of
transactions money—as measured by Ml—which
allowed it to serve as a monetary policy guide.
Businesses and households maintained transactions balances in demand deposits in fairly close
relation to their spending requirements and relied
on other forms of deposits to serve as longer-run
stores of value.
But now, deregulation and improved information and communications technologies have
blurred distinctions between transactions balances and other assets. Businesses can move
unneeded transactions balances at each day's
close into Eurodollars, repurchase agreements,
commercial paper, or certificates of deposit
(CDs), at little cost, with the choice among these
instruments often depending on yield differentials of only a few basis points. In addition, firms
now can maintain balances in hybrid instruments
like money market deposit accounts (MMDAs)
and money funds and retrieve them nearly as
easily as they can from a regular checking ac-
Statements to Congress
count. Remaining business demand deposits
serve importantly as balances that compensate
banks for services, and these arrangements, too,
are evolving over time. For households, negotiable order of withdrawal (NOW) accounts—
interest-earning, fully checkable deposits—are
important savings as well as transactions vehicles, and have contributed greatly to the decreasing usefulness of Ml as a monetary target.
This process of innovation and deregulation
has affected the behavior of the monetary aggregates in several ways, only some of which we
fully understand. To some extent, it seems simply to have introduced more "noise" in the
money-spending relationship. In addition,
though, it appears that one important consequence has been to increase the sensitivity of the
demand for monetary assets to changes in market
interest rates—at least over the short run. While
deregulation has allowed institutions to vary the
rates on deposits, in practice returns on many
categories of deposits are adjusted sluggishly in
response to changes in market rates, giving rise
to relatively large swings in incentives to hold
these instruments.
NOW accounts may be the most prominent
example of this. Because these accounts are
close substitutes for other liquid instruments as a
store for savings, holders of NOW accounts are
highly sensitive to changes in interest rates on
these alternative investments. They place a
larger volume of funds into NOW accounts when
rates on other deposits at banks and thrift institutions are relatively low and deposit smaller
amounts or actually draw down checking account balances when investment opportunities
are more attractive elsewhere.
Widespread compensating-balance arrangements for businesses imply a strong interest
responsiveness of demand deposits, as well.
Changes in market interest rates alter the earnings value of these deposits to banks, with resulting adjustments to the balances required to compensate the bank for a given package of services.
M2 is a broader collection of the public's liquid
assets, and as a consequence internalizes some
of the shifts that have plagued Ml. But M2 is still
somewhat limited in its coverage of financial
wealth held in liquid forms, and shifts between
M2 and other financial assets may not by them
229
selves imply changes in spending tendencies.
Such shifts have been responsive to movements
in the rates on alternative investments relative to
returns on M2 balances. This sensitivity, though
considerably less than for M l , also seems to have
increased since the late 1970s, perhaps as improved information and communications technologies have facilitated transfers of funds between M2 assets and those outside this
aggregate. Over the longer run, once rates on
instruments in M2 adjust to changes in market
rates, this aggregate tends to grow in line with
income, as it has on average over the postwar
period.
M3 adds to M2 a number of the managed
liabilities that banks and thrift institutions use to
supplement their retail deposits to fund credit
expansion. Unlike Ml and M2, it is highly responsive to the decisions of institutions as to how
fast to expand their balance sheets and what
particular sources of funds to rely on. Small
changes in interest rate relationships can have
very substantial impacts on the funding decisions
of these institutions and consequently on M3,
without major implications for income and
prices.
M3, then, is determined largely by the decisions of depository institutions on how many
liabilities and of what type they wish to supply to
the markets. The managed liabilities in M3 are
very close substitutes for other money market
instruments in the public's portfolio. Ml and M2,
by contrast, can be thought of as depending more
directly on the public's desire to hold the assets
included in these aggregates, given the returns on
various alternative investments as well as levels
of wealth and income. Banks and thrift institutions, of course, do vary the offering rates on
their M2-type deposits to affect the quantity of
these deposits that they receive. But these adjustments tend to lag market rates, and while the
M2-holding public is sensitive to alternative
yields, it is not nearly so sensitive as the money
market investors holding managed liabilities. In
these circumstances, the connection between Ml
and M2 and the economy rests importantly on
the effect of interest rates on the demand for
these aggregates. For example, a more expansive
monetary policy, increasing reserve availability
or lowering the discount rate, boosts demand for
230
Federal Reserve Bulletin • April 1988
these aggregates as interest rates decline, and
with a lag stimulates economic activity.
Given uncertainties about how financial market pressures in fact may need to vary in response to changing conditions in the economy, it
is difficult to decide in advance on the appropriate growth of an aggregate that is sensitive to
movements in interest rates. Such growth could
range over a fairly wide spectrum and still be
consistent with satisfactory performance of the
economy. In these circumstances, the Committee decided that a modest widening of the ranges
for M2 and M3 would better encompass appropriate monetary growth, while still providing a
guide to policy.
This analysis also underlies our decision again
not to establish a target range for M l . We have
monitored the behavior of Ml and have conducted careful analyses of its properties. While
some of the erratic behavior of Ml remains
unexplained, we now believe that most of its
unusual movements relative to income in recent
years are attributable to a heightened and now
quite large interest elasticity.
In view of this behavior, our calculations suggest that something like a 7-percentage-point
range would be needed for Ml to encompass the
same range of uncertainties as is captured by our
4-percentage-point range for M2. Such a wide
range would be of little use in the conduct of
monetary policy or in communicating the stance
of monetary policy to the public.
One should not conclude from this that the
Federal Reserve is giving up on monetary targeting. We are not. The linkages between money on
the one hand and prices and spending on the
other may have loosened, but that is mainly a
problem over the short run. The chain still exists.
We are continuing to study these relationships
carefully; at some point, the shorter-run link
could well become tighter again. In any event,
economic theory as well as historical evidence
are quite persuasive that, over the long run,
money, income, and prices tend to move together.
The FOMC expects to achieve its aggregate
ranges for 1988. We will, however, need to
continue to interpret the incoming information on
these measures in light of other data on the
performance of the economy and prices, and
other indicators of the impact of monetary policy.
THE CHALLENGES
AHEAD
We face formidable challenges over 1988 and
beyond in meeting national economic goals of
sustaining growth and progress toward price stability. Some of these challenges relate to the
short-run outlook for the economy, as the possible effects of the stock market decline and the
buildup of inventories late last year work through
in 1988.
But our more fundamental task remains managing the process of restoring internal and external balance that is now under way. This is a
challenge that cannot be negotiated by the Federal Reserve alone. It will require complementary and consistent actions by our colleagues in
the Congress and the administration, as well as
by our major trading partners.
For the United States, the most direct and
beneficial approach would be to address the
problem at its major source—the federal budget
deficit. Reducing the deficit further would give us
the opportunity to add to domestic saving and
reduce dependence on foreign capital, while still
encouraging much-needed investment spending.
Because the United States is now operating at
relatively high rates of resource utilization, domestic demand must be restrained if our international sector is to expand without more inflation.
In the absence of fiscal restraint, greater pressure
would be felt in financial markets, with negative
consequences for investment and other private
spending.
While recognizing the need to supply the liquidity required to keep our economy expanding,
monetary policy cannot lose sight of the need to
keep inflation pressures under control. We cannot permit the price level adjustments associated
with restoring external balance to feed through
into a renewed inflation process. Escalating
prices and costs would reverse the hard-won
gains in our international competitive position,
leading inevitably to more difficult and wrenching
adjustments down the road. Progress toward
price stability is the foundation on which the
longest peacetime expansion in our nation's his-
Statements to Congress
tory has been built, and continued efforts along
this line will be the framework for future economic advances.
Our gains in international competitiveness
have reflected a number of factors. But we
should not underestimate the effects of the efforts
of business and labor over recent years to enhance productivity and restrain costs. And government has made a contribution through deregulation and through the absence of major
initiatives that would involve higher business
costs.
Our adjustment process by definition has a
counterpart for our trading partners. They must
promote expansion in their demands and reduce
trade barriers to assure active and receptive
markets for exports from the United States and
elsewhere.
The buildup of imbalances occurred over a
period of years, and has involved major adjustments to the structure of economies here and
abroad. These imbalances will not be reversed
easily—but they must be addressed. We must
resist the lure of "short-cuts," such as protectionist measures that would only entrench inefficiencies and reduce living standards at home as
well as around the world. We can make this
difficult transition, and monetary policy has a key
role to play. But if we are to have a chance of
doing so without dislocations and detours in our
national economic advance, we will have to work
together to utilize all the tools at our command.
Chairman Greenspan presented identical testimony before the Senate Committee
Housing, and Urban Affairs, February 24, 1988.
231
on
Banking,
232
Announcements
MEETING OF
CONSUMER ADVISORY
COUNCIL
The Federal Reserve Board announced that its
Consumer Advisory Council met on March 17
and 18.
The Consumer Advisory Council was established by the Board in 1976, at the direction of
the Congress, to represent the interests of the
financial industry and consumers. The Council
advises and consults with the Board on the
exercise of the Board's functions under the Consumer Credit Protection Act and on other consumer-related matters of interest to the Board.
AMENDMENT
TO REGULATION
K
The Federal Reserve Board announced on February 18, 1988, that it had further liberalized the
provisions of Regulation K to permit investments
abroad by U.S. banking organizations through
debt-for-equity swaps in private sector nonfinancial companies in heavily indebted developing
countries. The amendment was effective February 24, 1988.
This action is a follow-up step to the Board's
revision of Regulation K in August 1987 to permit
banking organizations, through debt-for-equity
swaps, to own up to 100 percent of nonfinancial
companies that are acquired from the government of a heavily indebted developing country.
The Board's regulation had already provided
banking organizations with considerable flexibility to do the following: (1) reduce exposure by
selling debt to other investors or (2) take advantage of debt-for-equity swap programs by exchanging debt obligations for controlling equity
interests in companies engaged in financial activities or for portfolio investments in up to 20
percent of the shares of nonfinancial companies.
The Board's new amendment provides bank
holding companies with broad flexibility to make
investments in up to 40 percent of the shares of
any private sector company in a heavily indebted
developing country. The amendment also substantially lengthens the permissible holding period for investments made through debt-forequity swaps.
The key elements of the amendment are the
following:
• A U.S. banking organization may invest in
up to 40 percent of the shares of a private sector
company through a debt-for-equity swap in a
heavily indebted country.
• The U.S. banking organization that makes
an investment in a private sector company under
the revised regulation will also be permitted to
provide loans or other financing in amounts up to
50 percent of the total loans and extensions of
credit to the affiliated company.
• The U.S. banking organization may hold the
investments made through debt-for-equity swaps
for two years beyond the end of the period during
which full repatriation of the investment is restricted by the debtor country, up to a maximum
of 15 years.
• Investments may be made under revised
general consent procedures, which require no
prior notice to the Board unless the size of the
investment exceeds the greater of $15 million or
1 percent of the bank holding company's equity
capital.
As a prudential measure, the amendment provides that if a bank holding company holds more
than 25 percent of the voting shares of a private
sector nonfinancial company, there must be another larger shareholder of the company unaffiliated with the bank holding company. In addition, the investment must be held through the
bank holding company unless the Board specifically permits the investment to be held through a
bank or bank subsidiary.
These measures will add to the menu of options available to banking organizations for man-
233
aging exposure to heavily indebted developing
countries.
SYSTEM MEMBERSHIP:
ADMISSION OF STATE BANKS
The following banks were admitted to membership in the Federal Reserve System during the
period February 1 through February 29, 1988:
Kansas
Overland Park
Michigan
Manistee
Pennsylvania
Wayne
Galleria Bank
First of America
Bank-Manistee
United Valley Bank
234
Record of Policy Actions
of the Federal Open Market Committee
MEETING HELD ON DECEMBER
1. Domestic
Policy
15-16,1987
Directive
The data on the economy reviewed at this meeting largely reflected the impact of developments
that were under way before the stock market
collapse in mid-October. The ultimate effects of
the decline in stock prices and associated developments in financial markets remained uncertain.
Available data suggested that growth in output
was moderating from a brisk pace in the third
quarter. Spending indicators pointed to a considerable slowing in the expansion of domestic
private final demands in the current quarter.
Prices and wages continued to increase at about
the same pace as in earlier months of the year.
Industrial production rose 0.4 percent in November, following a strong rise in the previous
month. In November, gains were widespread
with the exception of the motor vehicles industry. Capacity utilization in mining, manufacturing, and utilities rose slightly further in November, and the overall rate in manufacturing was at
its highest level since August 1984.
Total nonfarm payroll employment continued
to rise strongly over October and November.
The manufacturing sector again recorded relatively large gains, with hiring increases widespread across durable and nondurable goods
industries. At the same time, job growth in
service industries continued at a brisk pace.
Aggregate hours worked by production and nonsupervisory workers remained on a strong uptrend. The civilian unemployment rate fell back
to 5.9 percent in November.
Growth in consumer spending appeared to
have weakened thus far in the fourth quarter,
mainly because of a drop in purchases of new
cars after incentive programs ended in September, although sales of other items also were
weak. Retail sales edged up in November after
two months of substantial declines. Spending on
furniture and appliances fell sharply in September and October and moved lower again in November. Outlays for apparel recovered a bit in
November, but spending on general merchandise
registered another decline.
Housing starts rebounded in November, but
their average level in October and November
remained somewhat below the averages in the
second and third quarters. The improvement in
November reflected a sharp rise in the multifamily category, which had dropped noticeably
in October. Single-family starts edged up, supported by lower interest rates, but remained
below their third-quarter average. The number of
permits issued was about unchanged in November.
The expansion in business fixed investment
appeared to have decelerated markedly from the
exceptional pace of the third quarter. Outlays for
capital equipment were damped by the drop in
auto sales and a sharp decline in purchases of
heavy trucks. Outside of motor vehicles, equipment demand remained strong early in the current quarter. Nominal shipments of nondefense
capital goods, although down somewhat in October, remained above the third-quarter average.
In addition, new orders moved up further, suggesting that shipments were likely to retain some
momentum in the near term. Spending for nonresidential structures softened in recent months;
petroleum drilling appeared to have leveled off,
and nonresidential construction put-in-place declined somewhat in September and October.
Inventory investment was strong in October.
Nonetheless, factory stocks remained low relative to sales by historical standards. In the auto
sector, production exceeded sales in both October and November, and dealer stocks again rose
to relatively high levels. At other retail trade
235
establishments, inventory accumulation slowed
in October.
The nominal U.S. merchandise trade deficit
appeared to have deteriorated substantially in
October from the average rate in the third quarter, reflecting in part large seasonal swings in
both exports and imports. Exports were up
slightly in October; about half of the increase was
accounted for by a strong seasonal rise in agricultural products. The rise in nonagricultural
exports was concentrated in shipments of a variety of products to Canada while exports of
commercial aircraft dropped. Imports rose considerably in October. Most of the increase was in
non-oil products, particularly machinery imports
and imports of passenger cars from Japan, Canada, and Korea.
Economic growth in the major foreign industrial countries increased markedly in the third
quarter. Real GNP rose substantially in Japan
mainly because of a large increase in domestic
demand, although net exports made a small positive contribution to growth; expansion in residential investment was particularly strong. German GNP, which had declined over the first half
of the year, also increased sharply largely in
response to domestic demand. Industrial production data for October showed some further expansion of activity in Japan and Germany. Available data suggested that GDP growth in the third
quarter was strong in France, the United Kingdom, and Canada, as well.
The rise in most broad measures of prices and
wages in recent months generally was close to
that experienced earlier in the year. Retail energy
prices dropped in October, and crude oil prices
edged down in recent weeks. However, apart
from energy, increases in consumer prices
picked up recently, including higher prices for
food, new cars, apparel, and rents. At the producer level, prices of finished goods turned down
in October, but prices for intermediate and crude
materials remained on a strong uptrend.
At its meeting on November 3, the Committee
adopted a directive that called for maintaining
the degree of pressure on reserve positions that
had been sought around the time of that meeting.
The Committee recognized that the volatile conditions in financial markets, including potential
shifts in demands for liquidity, and uncertainties
in the economic outlook might continue to call
for a special degree of flexibility in open market
operations. Taking account of conditions in financial markets, the members decided that
somewhat lesser reserve restraint would, or
slightly greater reserve restraint might, be acceptable depending on the strength of the business expansion, indications of inflationary pressures, developments in foreign exchange
markets, as well as the behavior of the monetary
aggregates. The intermeeting range for the federal funds rate was reduced by 1 percentage point
to 4 to 8 percent.
During the interval since the November meeting, reserves continued to be supplied on a more
flexible basis than usual to help maintain relatively steady conditions in the money market at a
time of unusual sensitivity and uncertainty in
financial markets generally. Adjustment plus seasonal borrowing tended to be relatively low and
averaged about $225 million during the two maintenance periods ending December 2. As evidence
of a reduced willingness to borrow accumulated,
such borrowing behavior was accommodated
through provision of nonborrowed reserves in
order to keep money market conditions from
firming. Borrowing declined somewhat further so
far in the latest maintenance period. After expanding at a double-digit pace in October, total
and nonborrowed reserves contracted in November, reflecting a drop in required reserves associated in large measure with the reversal of the
postcrash bulge in transactions accounts and a
lower average level of demands for excess reserves.
Federal funds traded mainly in the 63A to 6%
percent range over the intermeeting period, close
to the average level around the time of the
November meeting. Most other short-term rates
rose somewhat on balance. The increases apparently reflected some ebbing of preferences for
liquidity as financial markets calmed further. In
addition, expectations of further ease in monetary policy tended to diminish as incoming data
suggested continued, albeit moderate, expansion
in the economy and as the dollar fell in foreign
exchange markets. To some extent rates on very
short-term instruments increased because of positioning in advance of anticipated pressures in
money markets around the year-end. Yields on
236
Federal Reserve Bulletin • April 1988
long-term Treasury securities were up about 20
basis points after early November, while corporate bond yields rose half that much. In contrast,
municipal bond yields and mortgage rates fell
over the intermeeting period. Stock prices declined slightly further on balance. In general,
while financial markets appeared to be functioning more normally, they remained unsettled with
occasional episodes of unusually wide price
swings and of flights to liquidity and quality
echoing the experience after mid-October.
Since the November meeting, the foreign exchange value of the dollar declined about 5
percent on a weighted-average basis in terms of
the other G-10 currencies. The dollar came under
pressure early in the period, partly because of
market disappointment over U.S. eflforts to reduce the budget deficit. In early December concerted reductions in official interest rates by
Germany and several other European countries
temporarily boosted the dollar; over the entire
intermeeting period short-term interest rates declined about ¥z percentage point, on average, in
major foreign industrial countries, while longterm rates were down slightly on balance. However, the dollar's decline resumed, especially
after the very disappointing U.S. trade figures for
October were released on December 10.
The monetary aggregates weakened substantially in November. While some of the weakness
reflected a runoff of the bulge in demand deposits
that followed the stock market plunge in October, demand deposits dropped below early October levels. Other checkable deposits also decreased. With the nontransactions portion of M2
expanding only sluggishly, the level of M2 was
about unchanged in November. Only small time
deposits and money fund shares showed any
strength, as their yields remained attractive relative to rates on market instruments and liquid
deposits. To supplement weak growth in core
deposits, banks and thrift institutions issued
managed liabilities at a robust pace in November,
and flows into institution-only money funds
moved up sharply, as returns on these funds
lagged the downward movement of market rates
in late October. Even so, M3 expanded at an
annual rate of only 43A percent. For the year
through November, M2 and M3 grew respectively at rates well below and at the lower ends of
the 5 l /i to 8V2 percent annual ranges established
by the Committee. Ml growth also slowed
sharply this year. The reduced growth of these
aggregates and a turnaround of their velocities
appeared to be attributable primarily to the rebound in interest rates and opportunity costs in
1987 after steep declines in 1985 and 1986.
The staff projection continued to point to relatively sluggish growth in economic activity during the first part of 1988 and to some pickup later
in the year. The contour of the projection was
dominated by the anticipated effects of the decline in stock prices and the accompanying developments in financial markets, although these
effects now were projected to be more muted
than was expected in early November. In the
context of recent decisions to reduce the federal
budget deficit, fiscal policy would exert a moderately restraining impact on aggregate demand.
As in the previous projection, consumer spending was projected to slow in coming quarters, but
to strengthen later in 1988 as most of the adjustment to the lower level of stock market wealth
was completed. Growth in spending for plant and
equipment was likely to slow in response to the
sluggish pace of domestic sales—offset only in
part by further growth in export sales—and the
resulting diminished requirements for additional
capacity. The decline in mortgage interest rates
was expected to stimulate a modest improvement
in residential construction. The external sector
would provide a substantial positive contribution
to activity over the entire projection horizon.
Prices were likely to rise at a moderate rate in
1988. Energy prices were expected to be flat, but
nonpetroleum import prices were projected to
continue to place upward pressure on inflation
and nominal gains in compensation were anticipated to increase. However, continuing eflforts to
improve competitiveness were expected to damp
real wages and labor costs over the projection
horizon.
In the Committee's discussion of the economic
situation and outlook, members referred to conflicting signs with regard to the prospective
strength of the business expansion. On the one
hand, employment and production had been well
maintained in recent months and financial markets had calmed since late October. To date, the
sharp decline in stock prices appeared to have
Record of Policy Actions of the FOMC
had little impact on domestic business activity,
perhaps because it had merely reversed a runup
in earlier months of the year and because it was
associated with a reduction in market interest
rates. Moreover, recent declines in the foreign
exchange value of the dollar would help to sustain the improvement in net exports. In these
circumstances, business investment also might
remain fairly strong. Members cited favorable
reports from businesses in many parts of the
country that tended to support an optimistic
outlook for overall business activity, although
some areas or industries had recovered only
slightly thus far from relatively depressed conditions. On the negative side, a number of members observed that the risks to the economy were
in the direction of slower growth than foreseen in
the staff forecast. Consumer spending in particular had been relatively weak, as evidenced by
recent trends and the apparent need for widespread discounting to buttress sales. Moreover,
growth in disposable incomes was believed likely
to remain relatively sluggish, and together with
an already low saving rate and rising consumer
debt burdens would tend to retard expansion in
retail sales. It also was noted that the full effects
of the decline in stock prices might not yet have
been felt. In addition, money growth had been
quite weak, and at some point the slow growth
might be reflected in incomes and spending.
Several members commented that current projections were subject to a great deal of uncertainty, especially in light of still unusually sensitive conditions in domestic financial markets and
the uncertain prospects for the dollar and the
nation's foreign trade balance.
The members gave considerable attention during the discussion to the outlook for foreign trade
and its implications for domestic economic activity. Recent data on nominal net exports were
disappointing, but real net exports had shown
considerable improvement so far this year. Gains
in exports were especially encouraging. The data
indicating an improved real trade balance were
supported by members' observations from
around the country. Many business contacts
were reporting greatly enhanced export opportunities as a result of the dollar's depreciation,
although there were exceptions, and they also
indicated that their ability to compete in domes-
237
tic markets against imported goods had improved. The members generally agreed that the
foreign trade sector was positioned to make an
appreciable contribution to sustained expansion
in domestic economic activity at a time when
growth in overall domestic demands might be
weakening. However, the likely extent of actual
gains from trade would depend to some degree
on the strength of the economies of foreign
industrial nations.
In further discussion members observed that,
given the higher rate of utilization of domestic
capital and labor resources, substantial improvement in the nation's trade balance implied the
need for relatively restrained growth in domestic
demands over time as more production was
diverted to export markets. The adjustment in
trade, which appeared inevitable in light of the
unsustainable size of the current trade deficit and
the rapid growth in the nation's external indebtedness, appeared feasible over time without
causing major disruptions in domestic business
activity. However, such an adjustment would
require the implementation of appropriate fiscal,
monetary, and trade policies by the United
States and its major trading partners.
Turning to the outlook for inflation, some
members commented that inflationary expectations seemed to have abated to some extent since
the collapse in stock prices during October. The
depreciation of the dollar would continue to exert
upward pressures on domestic prices, but increases in wages and other costs did not appear
to be worsening, and in the view of some members inflation might be in the process of easing.
Concern was expressed by a number of members, however, that wage and price pressures
might well intensify if the economy were to
expand at an appreciably faster pace than many
members currently expected or if the dollar were
to decline substantially in the foreign exchange
markets.
At its meeting in July the Committee reviewed
the basic policy objectives that it had set in
February for growth of the monetary and debt
aggregates in 1987 and established tentative objectives for expansion of those aggregates in
1988. For the period from the fourth quarter of
1986 to the fourth quarter of 1987, the Committee
reaffirmed the ranges established in February
238
Federal Reserve Bulletin • April 1988
involving growth of 51/2 to 8V2 percent for both
M2 and M3. Given developments through midyear, the Committee agreed in July that growth in
these aggregates around the lower ends of their
ranges might be appropriate, depending on the
circumstances. The monitoring range for expansion in total domestic nonfinancial debt also was
left unchanged at 8 to 11 percent for 1987. For
1988 the Committee agreed on tentative reductions of V2 percentage point to growth ranges of
5 to 8 percent for both M2 and M3. The Committee also reduced the associated range for growth
in total domestic nonfinancial debt by V2 percentage point to IV2 to IOI/2 percent for 1988. With
respect to M l , the Committee decided at the July
meeting not to set a specific target for the remainder of 1987 or to establish a tentative range for
1988. It was understood that all the ranges for
1988 were provisional and that they would be
reviewed in early 1988 in the light of intervening
developments. The issues involved with establishing a target for Ml would be carefully reappraised at the same time.
At this meeting the Committee held a preliminary discussion of issues relating to its target
ranges for monetary growth in 1988. The behavioral characteristics of the aggregates in recent
years were reviewed. Considerable attention was
devoted to the question of whether or not to
establish a target for Ml or some possible alternative such as MIA or the monetary base. While
no decisions were made at this meeting, the
members were not currently inclined to reestablish a range for M l , given the continued large
interest rate sensitivity of the demand for this
aggregate and the associated wide swings in its
velocity. The Committee will complete its review
of these issues and decide on its target ranges for
1988 at the February meeting.
In the Committee's discussion of policy for the
next intermeeting period, most of the members
agreed that on balance economic and financial
developments called for unchanged conditions of
reserve availability. Such a policy was viewed as
consistent with continuing growth in the economy at a moderate pace. The members recognized that financial markets remained unsettled
despite the emergence of a much calmer atmosphere since the latter part of October, and they
believed that money market conditions might be
subject to considerable volatility around the
year-end. In this situation most of the members
felt that open market operations should continue
to be conducted with a special degree of flexibility and should give considerable weight to
conditions in the money market, at least over the
nearer term, to accommodate shifting demands
for liquidity and reserves and to temper potentially excessive fluctuations in short-term markets. However, most of the members also favored looking for opportunities to move toward
more normal procedures for implementing policy
if financial markets continued to stabilize.
In the majority view the risks associated with
either firming or easing under current circumstances outweighed the potential benefits. It was
noted, for example, that any significant firming
would have unsettling effects on domestic financial markets and the associated rise in interest
rates would pose considerable risks to the economic expansion. At the same time, many members felt that any appreciable easing would not be
desirable currently, especially in light of the
dollar's weakness and the risks to domestic financial markets and the economy that a sharp
further decline in the dollar would incur. Other
members weighed such risks differently, including one member who concluded that monetary
policy should move toward somewhat easier
reserve conditions in light of the potential for
appreciably slower growth in the economy, given
in this view the prospects for substantially reduced growth in domestic demands and the possibility that improvement in the nation's foreign
trade balance would not provide a sufficient
offset. In light of the differences among the
members with regard to policy for the short run,
including the Committee's operating procedures
in the near term, and the uncertainties surrounding financial markets and the economy, it was
understood that the members might need to
consult on policy implementation before the next
scheduled meeting on February 9-10, 1988.
Several members expressed some concern
about the generally sluggish growth in the monetary aggregates since the early months of the
year, including indications of little or no growth
in M2 in recent weeks and much slower expansion in M3 than had been expected earlier. The
members recognized that the relationship be-
Record of Policy Actions of the FOMC
tween monetary growth and economic performance had been very imprecise in recent years.
Nonetheless, money growth and the economy
were not unrelated and the reemergence of a stronger linkage could not be ruled out. In these circumstances, a continuation of sluggish growth of the
monetary aggregates needed to be monitored
closely as a potential danger signal with regard to
the sustainability of the economic expansion.
The members also focused on the question of
possible adjustments in policy implementation
during the intermeeting period. A majority felt
that there should be no presumptions about the
likely direction of such adjustments, if any. In
their view the risks that economic and financial
developments might differ significantly from current expectations were fairly evenly balanced in
both directions. A number of other members
believed that the Committee should remain especially alert to developments that might call for
somewhat easier reserve conditions. In particular, these members felt that incoming information
regarding the performance of the economy
should be evaluated with particular care for
evidence of a possible slowing in the expansion.
The members recognized that the performance of
the dollar in foreign exchange markets might
have a key bearing on policy implementation in
this period. No member wanted to tie monetary
policy exclusively to the dollar, but some
strongly emphasized that further substantial depreciation in the dollar could have highly adverse
repercussions on domestic financial markets and
the economy.
During this meeting the members reviewed the
Committee's operating procedures. These had
been directed toward greater emphasis on stabilizing money market conditions since the stock
market collapse in October and had given relatively less attention to the implementation of a
specified degree of pressure on reserve positions.
The members generally agreed that the Committee should return to its earlier operating procedures. The latter were seen to possess a number
of advantages, including greater scope for market
forces to be reflected in money market conditions. Given the still sensitive conditions in financial markets, however, the members expressed a
range of views with regard to the appropriate
timing of a return to the Committee's former
239
operating procedures. Some endorsed the
prompt implementation of those procedures.
However, a majority felt that a gradual shift
toward greater emphasis on reserve objectives
should be implemented during the intermeeting
period. Such an approach would continue to give
some attention to moderating fluctuations in
money market conditions but would tolerate
somewhat greater fluctuations than had occurred
in recent weeks. A few members disagreed and
indicated a preference for retaining the recent
operating procedures at least for now. These
members emphasized that a normal or predictable relationship between the provision of reserves and money market conditions had not
been reestablished and was not likely to reemerge in the near term, at least in the period
through the year-end when interest rates and
reserves were expected to be subject to considerable variations associated with the bank statement date. The procedures could be reviewed in
early January and a decision delayed until then.
At the conclusion of the Committee's discussion, all but two of the members indicated their
support of a directive that called for maintaining
the existing degree of pressure on reserve positions and that would phase open market operations into a more normal approach to policy
implementation keyed increasingly to a desired
degree of reserve pressure while giving less emphasis than recently to money market conditions.
The members recognized that the conduct of
open market operations might continue to require a special degree of flexibility, given still
quite sensitive conditions in financial markets
and the uncertainties in the business outlook.
Taking account of conditions in financial markets, the members indicated that somewhat less
or somewhat more reserve restraint would be
acceptable, depending on the strength of the
business expansion, indications of inflation, the
performance of the dollar in foreign exchange
markets, with consideration also taken of the
behavior of the monetary aggregates. If current
reserve conditions were maintained, the members expected growth in M2 and M3 to pick up
from the pace in recent months to annual rates of
about 5 percent and 6 percent respectively over
the four-month period from November to March.
Growth of Ml was expected to remain relatively
240
Federal Reserve Bulletin • April 1988
limited over the same period; because of the
substantial uncertainty that continued to surround the outlook for Ml, the Committee continued its practice of not specifying a numerical
expectation for its growth. 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 economic information reviewed at this meeting
largely reflected the influence of developments that
were under way before the financial disturbances of
mid-October. The extent to which those disturbances
would affect the economy remained uncertain. Information available for the current quarter suggested that
the expansion in economic activity was moderating
from a brisk pace in the third quarter. Total nonfarm
payroll employment rose strongly further over October and November, with the manufacturing sector
recording relatively large gains. The civilian unemployment rate, at 5.9 percent in November, remained
close to its level since mid-year. Industrial production
also increased considerably further over October and
November, following sizable advances since late
spring. Retail sales edged up in November after two
months of substantial declines. Recent indicators of
business capital spending suggested modest further
growth after a surge in the third quarter. Housing
starts rose somewhat in November, after slowing in
October, but were little changed from the average pace
in the second and third quarters. The nominal U.S.
merchandise trade deficit in October appeared to have
deteriorated substantially from the average rate in the
third quarter. The rise in broad measures of prices and
wages in recent months generally has been close to
that experienced earlier in the year.
Financial markets remained somewhat unsettled.
Stock and bond prices continued to fluctuate over a
relatively wide range during the period since the
previous Committee meeting on November 3. On
balance, share prices fell somewhat further in this
period. Changes in long-term yields were mixed while
short-term interest rates rose, especially on shortmaturity private market instruments. The tradeweighted foreign exchange value of the dollar in terms
of the other G-10 currencies declined considerably
further.
The monetary aggregates weakened in November
after strengthening in October in conjunction with a
temporary surge in demands for transaction balances
and other liquid assets in the latter part of that month.
For 1987 through November, expansion of M2 fell
somewhat further below the lower end of the range
established by the Committee for the year, while
growth of M3 remained around the lower end of its
range. Growth of Ml was close to that of nominal G N P
for the year to date and expansion in total domestic
nonfinancial debt remained well within the Committee's monitoring range for the year.
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 its meeting
in July to reaffirm the ranges established in February
for growth of 5l/i to 8V2 percent for both M2 and M3
measured from the fourth quarter of 1986 to the fourth
quarter of 1987. The Committee agreed that growth in
these aggregates around the lower ends of their ranges
might be appropriate in light of developments with
respect to velocity and signs of the potential for some
strengthening in underlying inflationary pressures,
provided that economic activity was expanding at an
acceptable pace. The monitoring range for growth in
total domestic nonfinancial debt set in February for the
year was left unchanged at 8 to 11 percent.
For 1988, the Committee agreed in July on tentative
ranges of monetary growth, measured from the fourth
quarter of 1987 to the fourth quarter of 1988, of 5 to 8
percent for both M2 and M3. The Committee provisionally set the associated range for growth in total
domestic nonfinancial debt at IV2 to IOV2 percent.
With respect to M l , the Committee recognized that,
based on experience, the behavior of that aggregate
must be judged in the light of other evidence relating to
economic activity and prices; fluctuations in Ml have
become much more sensitive in recent years to
changes in interest rates, among other factors. Because of this sensitivity, which had been reflected in a
sharp slowing of the decline in Ml velocity over the
first half of the year, the Committee again decided at
the July meeting not to establish a specific target for
growth in Ml over the remainder of 1987 and no
tentative range was set for 1988. The appropriateness
of changes in Ml this year would continue to be
evaluated in the light of the behavior of its velocity,
developments in the economy and financial markets,
and the nature of emerging price pressures. The Committee welcomed substantially slower growth of M l in
1987 than in 1986 in the context of continuing economic expansion and some evidence of greater inflationary pressures. The Committee indicated in July
that in reaching operational decisions over the balance
of the year it would take account of growth in Ml in
the light of circumstances then prevailing. The issues
involved with establishing a target for Ml will be
carefully reappraised at the beginning of 1988.
In the implementation of policy for the immediate
future, the Committee seeks to maintain the existing
Record of Policy Actions of the FOMC
degree of pressure on reserve positions. The Committee recognizes that still sensitive conditions in financial
markets and uncertainties in the economic outlook
may continue to call for a special degree of flexibility
in open market operations. Taking account of conditions in financial markets, somewhat lesser reserve
restraint or somewhat greater reserve restraint would
be acceptable depending on the strength of the business expansion, indications of inflationary pressures,
developments in foreign exchange markets, as well as
the behavior of the monetary aggregates. The contemplated reserve conditions are expected to be consistent
with growth in M2 and M3 over the period from
November through March at annual rates of about 5
percent and 6 percent, respectively. Over the same
period, growth in Ml is expected to remain relatively
limited. 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. Greenspan, Corrigan, Angell, Boehne, Boykin, Heller, Keehn, Kelley, and Stern. Votes against this action: Mr. Johnson and Ms. Seger.
Mr. Johnson dissented because he believed
that policy implementation should continue to
focus on maintaining generally stable conditions
in the money market, at least through the yearend, pending the emergence of more settled
conditions in financial markets and a more predictable relationship between reserve objectives
and money market conditions. He also preferred
a directive that gave greater weight to the possibility for some easing, given potential developments during the intermeeting period.
Ms. Seger dissented because she favored some
slight easing of reserve conditions in light of her
concern about the downside risks in the economy, especially in the context of sluggish growth
in reserves and the monetary aggregates over an
extended period. She also wanted to continue to
focus on money market conditions in System
open market operations and in particular to counter upward pressures on short-term interest
rates.
2. Authorization
for
Domestic Open Market
Operations
Effective December 17, 1987, the Committee
241
approved a temporary increase of $3 billion, to $9
billion, in the limit between Committee meetings
on changes in System Account holdings of
U.S. government and federal agency securities
specified in paragraph 1(a) of the Authorization
for Domestic Open Market Operations. The increase was effective for the intermeeting period
ending with the close of business on February 10,
1988.
Votes for this action: Messrs. Greenspan, Corrigan, Angell, Boehne, Boykin, Heller, Johnson,
Keehn, Kelley, Ms. Seger, and Mr. Stern. Votes
against this action: None.
This action was taken on the recommendation
of the Manager for Domestic Operations. The
Manager advised that the normal leeway of $6
billion for changes in System Account holdings
of securities probably would not be sufficient
to accommodate desirable reductions in the intermeeting period because of seasonal declines in
currency in circulation and required reserves.
On January 5, 1988, the Committee held a
meeting by telephone conference to review monetary and financial developments since mid-December and to assess the Committee's decisions
at the December meeting to begin to redirect its
operating procedures toward more emphasis on
achieving a desirable degree of pressure on reserve positions. In the period after the stock
market collapse in October, open market operations had been guided to an important extent by
the objective of restoring and sustaining stability
in the money market, and less attention was
given than previously to the implementation of
objectives relating to reserve conditions.
In the Committee's discussion most of the
members agreed that with the further passage of
time since the October disturbances in financial
markets and with year-end pressures in the
money market now unwinding, further progress
could be made toward restoring the Committee's
earlier approach to open market operations. The
members recognized that conditions in financial
markets were still somewhat unsettled and that
the relationship between reserves and money
market conditions had not been reestablished on
a fully normal or predictable basis. In the circumstances and in light of the uncertainties in the
242
Federal Reserve Bulletin • April 1988
economic outlook, it was agreed that some
amount of flexibility might continue to be needed
in the conduct of open market operations.
To reflect and endorse the further progress
toward the operating procedures in use before
mid-October, the Committee decided to amend
the relevant reference in the operational paragraph of its directive issued at its December
meeting. The amendment encompassed solely a
change in emphasis relating to operating procedures and did not include any change in the
Committee's short-run policy objectives.
At the conclusion of this telephone meeting,
the Committee voted to change the operational
paragraph of its directive to read as follows:
In the implementation of policy for the immediate
future, the Committee seeks to maintain the existing
degree of pressure on reserve positions. The Committee agrees that the passing of time and the year-end
should permit further progress toward restoring a
normal approach to open market operations, although
still sensitive conditions in financial markets and uncertainties in the economic outlook may continue to
call for some flexibility in operations. Taking account
of conditions in financial markets, somewhat lesser
reserve restraint or somewhat greater reserve restraint
would be acceptable depending on the strength of the
business expansion, indications of inflationary pressures, developments in foreign exchange markets, as
well as the behavior of the monetary aggregates. The
contemplated reserve conditions are expected to be
consistent with growth in M2 and M3 over the period
from November through March at annual rates of
about 5 percent and 6 percent, respectively. Over the
same period, growth in Ml is expected to remain
relatively limited. 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.
Vote for this action: Messrs. Greenspan, Corrigan,
Angell, Boehne, Boykin, Heller, Johnson, Keehn,
Kelley, and Stern. Vote against this action: Ms.
Seger.
Ms. Seger dissented because she continued to
believe that open market operations should be
directed toward some slight easing. She also felt
that financial markets remained too unsettled to
warrant any shift at this time in operational
procedures toward more emphasis on reserve
objectives.
243
Legal Developments
AMENDMENT
TO REGULATION
K
The Board of Governors is amending 12 C.F.R. Part
211, its Regulation K. The regulation is revised to
permit investors to acquire up to 40 percent of the
shares of foreign nonfinancial companies where sovereign debt obligations are being exchanged for ownership interests in the companies. The regulation also is
revised to permit companies acquired through debtfor-equity conversions in heavily indebted developing
countries to be held for up to 15 years and to liberalize
the investment procedures for such investments.
Effective Feburary 24, 1988, the Board amends 12
C.F.R. Part 211 as follows:
Part 211—International Banking
Operations
1. The authority citation for 12 C.F.R. Part 211 continues to read as follows:
Authority: 12 U.S.C. 221 et seq.; 12 U.S.C.
et seq.; Pub. L. 95-369; 92 Stat. 607; 12 U.S.C.
et seq.; Title II, Pub. L. 97-290, 96 Stat. 1235;
IX, Pub. L. 98-181, 97 Stat. 1153, 12 U.S.C.
et seq., unless otherwise noted.
1841
3101
Title
3901
2. Section 211.5 is amended by revising paragraph
211.5(f) to read as follows:
Section 211.5—Investments and Activities
Abroad
(f) Investments made through debt-for-equity
conversions.
(1) Definitions. For purposes of this paragraph:
(i) "eligible country" means a country that, since
1980, has restructured its sovereign debt held by
foreign creditors, and any other country the
Board deems to be eligible;
(ii) "equity" includes common stockholder's equity and minority interests in consolidated subsidiaries, less goodwill;
(iii) "investment" has the meaning set forth in
section 211.2(i) of this regulation and, for purposes of the investment procedures of this paragraph only, shall include loans or other extensions
of credit by the bank holding company or its
affiliates to a company acquired pursuant to this
paragraph;
(iv) "loans and extensions of credit" means all
direct and indirect advances of funds to a person
made on the basis of any obligation of that person
to repay the funds.
(2) Permissible investments.
In addition to investments that may be made under other provisions of
this section, a bank holding company may make the
following investments through the conversion of
sovereign debt obligations of an eligible country,
either through direct exchange of the debt obligations for the investment or by a payment for the debt
in local currency, the proceeds of which are used to
purchase the investment:
(i) Public sector companies. A bank holding company may acquire up to and including 100 percent
of the shares of (or other ownership interests in)
any foreign company located in an eligible country if the shares are acquired from the government
of the eligible country or from its agencies or
instrumentalities.
(ii) Private sector companies.
A bank holding
company may acquire up to and including 40
percent of the shares, including voting shares, of
(or other ownership interests in) any other foreign
company located in an eligible country subject to
the following conditions:
(A) a bank holding company may acquire more
than 25 percent of the voting shares of the
foreign company only if another shareholder or
control group of shareholders unaffiliated with
the bank holding company holds a larger block
of voting shares of the company;
(B) the bank holding company and its affiliates
may not lend or otherwise extend credit to the
foreign company in amounts greater than 50
percent of the total loans and extension of
credit to the foreign company; and
(C) the bank holding company's representation
on the board of directors or on management
committees of the foreign company may be no
more than proportional to its shareholding in
the foreign company.
(3) Investments by bank subsidiary of bank holding
company. Upon application, the Board may permit
244
Federal Reserve Bulletin • April 1988
an investment to be made pursuant to this paragraph
through an insured bank subsidiary of the bank
holding company where the bank holding company
demonstrates that such ownership is necessary due
to special circumstances such as the requirements of
local law. In granting its consent, the Board may
impose such conditions as it deems necessary or
appropriate to prevent adverse effects, including
prohibiting loans from the bank to the company in
which the investment is made.
(4) Divestiture.
(i) Time limits for divestiture. The bank holding
company shall divest the shares of or other ownership interests in any company acquired pursuant to this paragraph (unless the retention of the
shares or other ownership interest is otherwise
permissible at the time required for divestiture)
within two years of the date on which the bank
holding company is permitted to repatriate in full
the investment in the foreign company, but in any
event within 15 years of the date of acquisition.
(ii) Report to Board. The bank holding company
shall report to the Board on its plans for divesting
an investment made under this paragraph no later
than 10 years after the date the investment is
made if the investment may be held for longer
than 10 years and shall report to the Board again
two years prior to the final date for divestiture, in
a manner to be prescribed by the Board.
(iii) Other conditions requiring divestiture.
All
investments made pursuant to this paragraph shall
be subject to paragraphs (b)(3)(i)(A) and (B) of
this section requiring prompt divestiture (unless
the Board upon application authorizes retention)
if the company invested in engages in impermissible business in the United States.
(5) Investment
procedures.
(i) General consent. Subject to the other limitations of this paragraph, the Board grants its general consent for investments made under this
paragraph if the total amount invested does not
exceed the greater of $15 million or one percent of
the equity of the investor.
(ii) All other investments shall be made in accordance with the procedures of paragraph (c) of this
section requiring prior notice or specific consent.
(6) Conditions.
(i) Name. Any company acquired pursuant to this
paragraph shall not bear a name similar to the
name of the acquiring bank holding company or
any of its affiliates.
(ii) Confidentiality. Neither the bank holding company nor its affiliates shall provide to any company acquired pursuant to this paragraph any
confidential business information or other infor-
mation concerning customers that are engaged in
the same or related lines of business as the company.
PREEMPTION DETERMINATION
REGULATION Z
UNDER
The Board of Governors has determined that a provision in the law of Indiana is inconsistent with the Truth
in Lending Act and Regulation Z and therefore preempted.
Effective October 1, 1988, with compliance optional
before that date, the Board has determined that the
provision in the state law of Indiana specified below is
preempted by 12 C.F.R. Part 226.
Part 226—Truth in Lending
1. The authority citation for 12 C.F.R. Part 226 continues to read as follows:
Authority: Sec. 105 as amended by sec. 605, Pub. L.
96-221, 94 Stat. 170 (15 U.S.C. 1604 et seq.).
2. In section 2 3 - 2 - 5 - 8 of Indiana's "Loan Broker"
statute, the inclusion of the loan broker's fees and
charges in the calculation of, among other items, the
finance charge and annual percentage rate disclosed to
potential borrowers is inconsistent with sections
106(a) and 226.4(a) of the Truth in Lending Act and
Regulation Z, respectively, and is preempted in those
instances where the use of the same term would
disclose a different amount than that required to be
disclosed under federal law.
ORDERS ISSUED UNDER BANK
COMPANY ACT
HOLDING
Orders Issued Under Section 3 of the Bank
Holding Company Act
First Bancshares, Inc.
Grove Hill, Alabama
Order Approving
Acquisition
of a Bank
First Bancshares, Inc., Grove Hill, Alabama, a bank
holding company within the meaning of the Bank
Holding Company Act, as amended (the "Act")
(12 U.S.C. § 1841 et seq.), has applied under section
3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire
Legal Developments
all of the voting shares of Jackson Bank & Trust
Company, Jackson, Alabama ("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, 52
Federal Register 42,340 (1987). 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, with one subsidiary bank, is the 106th
largest commercial banking organization in Alabama,
controlling total deposits of $34.6 million, representing
approximately 0.1 percent of total deposits in commercial banks in the state. 1 Bank is the 99th largest
commercial banking organization in Alabama, controlling total deposits of $36.3 million, representing approximately 0.2 percent of total deposits in commercial banks in the state. Upon consummation of this
proposal, Applicant would become the 42nd largest
commercial banking organization in Alabama, with
total domestic deposits of $70.9 million, representing
approximately 0.3 percent of total deposits in commercial banks in the state. Consummation of this proposal
would not have any significant adverse effects on the
concentration of banking resources in Alabama.
Applicant operates in the Jackson banking market, 2
where it is the fourth largest of seven commercial
banking organizations, controlling 16.1 percent of total
deposits in commercial banks in the market. 3 Bank
also operates in the Jackson banking market where it is
the third largest commercial banking organization,
controlling 16.9 percent of the total deposits in commercial banks in the market. Upon consummation of
this proposal, Applicant would become the largest
commercial banking organization in the market, controlling 33 percent of the total deposits in commercial
banks in the market.
The Jackson banking market is considered highly
concentrated, with a four-firm concentration ratio of
81.8 percent and a Herfindahl-Hirschman Index
("HHI") of 1950. Upon consummation of this proposal the four-firm concentration ratio would increase
by 9.3 percentage points to 91.1 percent and the HHI
would increase by 541 points to 2491. 4
1. State deposit data are as of December 31, 1986.
2. The Jackson banking market is defined as Clarke County plus the
towns of Sweet Water in Marengo County, Leroy in Washington
County, and Pine Hill in Wilcox County, all in Alabama.
3. Market deposit data are as of June 30, 1986.
4. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)) any market in which the
post-merger HHI is over 1800 is considered highly concentrated, and
the Department is likely to challenge a merger that increases the HHI
by more than 50 points unless other factors indicate that the merger
will not substantially lessen competition. In 1985, the Department of
245
Although consummation of this proposal would
eliminate existing competition between Applicant and
Bank, the Board believes that the anticompetitive
effects of this proposal are mitigated by several significant factors. First, the number of competitors remaining in the market upon consummation of the proposal
is significant given the characteristics of the Jackson
banking market. The Jackson banking market has a
population of approximately 30,000 residents and is
currently served by seven commercial banks with a
total of 13 offices. The ratio of bank offices to the
population in the market is more than double the
comparable ratio statewide. Upon consummation of
the proposal, the Jackson market will continue to be
served by six unaffiliated commercial banks and two
thrift institutions and will continue to have nearly
twice as many bank offices per capita as the statewide
average. In this connection, Applicant contends that
the market's size and number of offices are largely
responsible for the fact that the owners of Bank have
been unable to obtain an acceptable bid from any
out-of-market banking organization.
In addition, Bank has not been an aggressive competitor in the market. In this regard, Bank has lost
approximately 33 percent of its market share in the last
ten years, falling in rank from the largest bank to the
third largest bank in the market. Moreover, Bank has
not been an active lender in the market, with a
loan-to-asset ratio below 30 percent. Applicant has
proposed to increase the lending activities of Bank in
the Jackson banking market.
The Board has also considered the presence of thrift
institutions in the banking market in its analysis of this
proposal. The Board has previously indicated that
thrift institutions have become, or have the potential
to become, major competitors of commercial banks. 5
The largest and third largest savings and loan associations in Alabama operate branch offices in the Jackson banking market. These savings and loan associations offer a variety of transaction accounts, credit
cards, consumer loans, and commercial loans. Based
on the size, market share, and commercial lending
activities of thrift institutions in the market, the Board
has concluded that thrift institutions exert a competitive influence that also mitigates in part the anticom-
Justice informed the Board that a bank merger or acquisition is not
likely to be challenged (in the absence of other factors indicating an
anticompetitive effect) unless the post-merger HHI is at least 1800 and
the merger increases the HHI by at least 200 points. The Department
of Justice has stated that the higher than normal HHI thresholds for
screening bank acquisitions recognizes the competitive effects of
limited purpose lenders and other non-depository financial entities.
5. See Eastern Michigan Financial Corporation, 74 FEDERAL RESERVE BULLETIN 4 9 ( 1 9 8 8 ) ; National
RESERVE
BULLETIN
743
RESERVE BULLETIN 2 2 5
(1984);
(1984).
City
NCNB
Corporation,
Corporation,
7 0 FEDERAL
70
FEDERAL
246
Federal Reserve Bulletin • April 1988
petitive effects of this proposal. 6 Accordingly, in view
of all the facts of record, the Board has concluded that
consummation of this proposal would not have a
significantly adverse effect on existing competition in
the Jackson banking market.
The financial and managerial resources of Applicant, its subsidiary bank, and Bank, and their future
prospects are consistent with approval. Applicant proposes upon consummation of this proposal to increase
the number and size of the loans made by Bank, to
extend Bank's business hours, and to build a new
facility for Bank to accommodate customer needs.
Accordingly, factors relating to the convenience and
needs of the community to be served lend weight
toward approval that outweighs any adverse competitive effects of this proposal.
Based on the foregoing and other facts of record, the
Board has determined that the proposal 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
the Federal Reserve Bank of Atlanta, acting pursuant
to delegated authority.
By order of the Board of Governors, effective February 8, 1988.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, Heller, and Kelley.
JAMES M C A F E E
Associate
Secretary of the Board
First Bank System, Inc.
Minneapolis, Minnesota
Order Approving Acquisition
Company
of a Bank Holding
First Bank System, Inc., Minneapolis, Minnesota
("First Bank"), a bank holding company within the
meaning of the Bank Holding Company Act (12
U.S.C. § 1841 et seq.) (the "Act"), has applied for the
Board's approval under section 3(a)(3) of the Act (12
U.S.C. § 1842(a)(3)) to acquire Firstar Corporation,
Bloomington, Minnesota ("Firstar") and thereby indirectly to acquire Firstar's subsidiary bank, Marine
Bank, Bloomington, Minnesota.
6. If 50 percent of the deposits controlled by thrift institutions were
included in the calculation of market concentration. Applicant and
Bank would control 15.1 percent and 15.8 percent of total market
deposits, respectively. The pre-merger HHI would be 1724, and upon
consummation of this proposal, would increase by 477 points to 2201.
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (53 Federal Register 3,078 (1988)). 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.
First Bank is the largest commercial banking organization in Minnesota, controlling deposits of $11.1
billion, representing 28.5 percent of the total deposits
in commercial banking organizations in the state. 1
Firstar is the 10th largest commercial banking organization in Minnesota, controlling deposits of $196.0
million, representing 0.5 percent of total deposits in
commercial banking organizations in the state. Upon
consummation of this proposal, First Bank would
control $11.3 billion in deposits, representing 29.0
percent of total deposits in commercial banking organizations in the state. Consummation of the proposal
would not increase significantly the concentration of
banking resources in Minnesota.
First Bank competes directly with Firstar in the
Minneapolis - St. Paul banking market. 2 First Bank is
the largest commercial banking organization in the
market, with deposits of $9.1 billion, representing 39.2
percent of the total deposits in commercial banks in
the market. Firstar is the 8th largest commercial
banking organization in the market, with $196.0 million in deposits, representing 0.8 percent of the total
deposits in commercial banks in the market. Upon
consummation of this proposal, First Bank would
control $9.3 billion in deposits, representing 40.0 percent of the total commercial banking deposits in the
market. The Minneapolis - St. Paul banking market is
considered concentrated, with a four-firm concentration ratio of 73.3 percent. The Herfindahl-Hirschman
Index ("HHI") of the market is 2210 and would
increase by 65 points to 2275 upon consummation of
this proposal. 3
1. Banking data are as of December 31, 1986. Thrift market data
are as of June 30, 1986.
2. The Minneapolis - St. Paul banking market is defined as the
Minneapolis - St. Paul Ranally Metropolitan Area adjusted to include
all of Scott and Carver Counties and Lanesburgh Township in Le
Sueur County.
3. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), any market in which the
post-merger HHI is over 1800 is considered highly concentrated, and
the Department is likely to challenge a merger that increases the HHI
by more than 50 points unless other factors indicate that the merger
will not substantially lessen competition. The Department of Justice
has informed the Board that a bank merger or acquisition is not likely
to be challenged (in the absence of other factors indicating an
anticompetitive effect) unless the post-merger HHI is at least 1800 and
the merger increases the HHI by at least 200 points. The Justice
Department has stated that the higher than normal HHI thresholds for
screening bank acquisitions for anti-competitive effects implicitly
Legal Developments
Although consummation of this proposal would
eliminate existing competition between First Bank and
Firstar in the Minneapolis - St. Paul banking market,
over 115 other commercial banks would continue to
operate in the market after consummation of this
proposal. 4 In addition, the Board has considered the
presence of thrift institutions in the banking market in
its analysis of this proposal. The Board previously has
indicated that thrift institutions have become, or have
the potential to become, major competitors of commercial banks. 5 Thrift institutions already exert a
considerable competitive influence in the market as
providers of NOW accounts and consumer loans, and
many are engaged in the business of making commercial loans. Based upon the size, market share and
commercial lending activities of thrift institutions in
the market, the Board has concluded that thrift institutions exert a significant influence that mitigates the
anticompetitive effects of this proposal in the Minneapolis - St. Paul banking market. 6 Accordingly, in view
of all of the facts of record, including the small
increase in concentration in the market, the Board has
determined that consummation of this proposal would
not have a significant adverse effect on existing competition in the Minneapolis - St. Paul banking market.
The financial and managerial resources of First
Bank and its subsidiary banks as well as Firstar and its
subsidiary bank are consistent with approval. Considerations relating to the convenience and needs of the
community to be served are also consistent with
approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
recognizes the competitive effects of limited purpose lenders and
other non-depository financial entities.
4. The Board received comments from the Minnesota Commissioner of Commerce expressing his concern about the competitive
effects of this acquisition. Although the Commissioner did not disapprove First Bank's application, he requested that the Board hold a
public hearing to consider the application. Because the Commissioner
did not recommend denial of the application, the Board is not required
to hold a hearing. 12 U.S.C. § 1842(b). The Board, however, has
carefully reviewed the facts of record, and does not believe that a
hearing wouid provide it with any additional facts that are not already
in the record. The Board has also carefully considered the Commissioner's views regarding the competitive effects of this acquisition.
Accordingly, the Commissioner's request for a hearing is denied, and,
for the reasons set out below, the Board does not believe that the
competitive effects of this acquisition are so adverse as to warrant
denial of this application.
5. National
(1984); NCNB
City Corporation,
Bancorporation,
7 0 FEDERAL RESERVE BULLETIN 743
7 0 FEDERAL RESERVE BULLETIN 225
(1984); General Bancshares Corporation, 69 FEDERAL RESERVE BULLETIN 802 (1983); and First Tennessee National Corporation, 69
and hereby is, approved. The acquisition 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 Minneapolis, acting
pursuant to delegated authority.
By order of the Board of Governors, effective
February 29, 1988.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governor Kelley.
JAMES M C A F E E
Associate
Secretary
of the Board
Tri-State Financial Bancorp, Inc.
Bryan, Ohio
Order Approving Acquisition
of a Bank
Tri-State Financial Bancorp, Inc., Bryan, Ohio ("TriState"), a bank holding company within the meaning
of the Bank Holding Company Act ("Act"),
12 U.S.C. § 1842 et seq., has applied pursuant to
section 3(a)(3) of the Act, 12 U.S.C. § 1842(a)(3), to
acquire all of the voting shares of Mid American
National Bank and Trust Company, Northwood, Ohio
("Mid American").
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published (52 Federal Register 43,673 (1987)).
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.
Tri-State is the 53rd largest commercial banking
organization in Ohio, with deposits of $116.8 million,
representing less than 1 percent of total deposits in
commercial banking organizations in the state. 1 Mid
American is the 18th largest commercial banking organization in Ohio, controlling deposits of $365.1
million, representing less than 1 percent of total deposits in commercial banking organizations in the
state. Upon consummation of this proposal, Tri-State
would become the 15th largest commercial banking
organization in the state, controlling $481.9 million in
deposits, representing less than 1 percent of total
deposits in commercial banking organizations in the
state. Consummation of the proposal would not in-
FEDERAL RESERVE BULLETIN 2 9 8 (1983).
6. If 50 percent of the deposits controlled by thrift institutions were
included in the calculation of market concentration, First Bank and
Firstar would control 35.4 percent and 0.8 percent of total market
deposits, respectively. The HHI would increase by 55 points to 1890
upon consummation of this proposal.
247
1. All banking data are as of June 30, 1987.
248
Federal Reserve Bulletin • April 1988
crease significantly the concentration of banking resources in Ohio.
Tri-State competes directly with Mid American in
the Williams County banking market. 2 Tri-State is the
second largest commercial banking organization in the
market, with deposits of $67.2 million, representing
20.3 percent of the total deposits in commercial banks
in the market. Mid American is the fourth largest
commercial banking organization in the market, with
$35.6 million in deposits, representing 10.7 percent of
total deposits in commercial banks in the market.
Upon consummation of this proposal, Tri-State would
remain the second largest commercial banking organization in the market, with $102.8 million in deposits,
representing 31.0 percent of the total commercial
banking deposits in the market. The market is considered highly concentrated, with a four-firm concentration ratio of 76.4 percent. The Herfindahl-Hirschman
Index ("HHI") of the market is 1906 and would
increase by 435 points to 2341 upon consummation of
this proposal. 3
Although consummation of this proposal would
eliminate existing competition between Tri-State and
Mid American in the Williams County banking market,
numerous other commercial banks would continue to
operate in the market after consummation of this
proposal. Moreover, the Board notes that the market
is attractive for entry, as evidenced by the fact that
two commercial banking organizations have entered
the market in recent years, including one de novo
entry. Furthermore, the record indicates that other
commercial banking organizations have expressed interest in entering the market.
In addition, the Board has considered the presence
of thrift institutions in the banking market in its
analysis of this proposal. The Board previously has
indicated that thrift institutions have become, or have
the potential to become, major competitors of commercial banks. 4 The two thrift institutions in the mar-
2. The Williams County banking market is approximated by Williams County, Ohio.
3. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), any market in which the
post-merger HHI is over 1800 is considered highly concentrated, and
the Department is likely to challenge a merger that increases the HHI
by more than 50 points unless other factors indicate that the merger
will not substantially lessen competition. The Department of Justice
has informed the Board that a bank merger or acquisition is not likely
to be challenged (in the absence of other factors indicating an
anti-competitive effect) unless the post-merger HHI is at least 1800
and the merger increases the HHI by at least 200 points. The Justice
Department has stated that the higher than normal HHI thresholds for
screening bank acquisitions for anti-competitive effects implicitly
recognizes the competitive effects of limited purpose lenders and
other non-depository financial entities.
4. See, e.g.,
National
City Corporation,
B U L L E T I N 7 4 3 ( 1 9 8 4 ) ; NCNB
BULLETIN 225 (1984); General
Bancorporation,
Bancshares
70 FEDERAL RESERVE
7 0 FEDERAL RESERVE
Corporation,
6 9 FEDERAL
ket already exert a considerable competitive influence
as providers of NOW accounts and consumer loans,
and are engaged in the business of making commercial
loans. Based upon the relative size, market share and
commercial lending activities of thrift institutions in
the market, the Board has concluded that thrift institutions exert a significant competitive influence that
mitigates the anti-competitive effects of this proposal
in the Williams County banking market. 5
The financial and managerial resources of Tri-State
and Mid American are consistent with approval.
In considering the convenience and needs of the
communities to be served, the Board has taken into
account a comment received from the Superintendent
of Edgerton Local Schools located in Edgerton, Ohio.
The Superintendent argues that Mid American and
Tri-State are the only two commercial banking organizations in Edgerton, Ohio, one of the towns in the
Williams County banking market. Upon consummation of the proposed transaction, Tri-State would be
the only commercial banking organization in Edgerton, Ohio. The Superintendent states that consummation of the proposed transaction would eliminate some
of the banking options available to the school district
and requests that the Board not approve the application unless the vacated bank is purchased by another
bank.
In analyzing the competitive effects of a proposal,
the Board is required to examine an acquisition in light
of the geographic area in which customers may practicably turn to for alternatives. The geographic market
for banking services is generally an area larger than an
individual town, and in this case, the Board believes
that the area where customers can practicably turn to
for banking services is approximated by Williams
County. Because of the number of alternatives in the
Williams County banking market and other facts of
record, the Board concludes that the elimination of a
competitor in the town of Edgerton does not warrant
denial of the application.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The acquisition 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
RESERVE BULLETIN 802 (1983); and First Tennessee National
ration,
Corpo-
6 9 FEDERAL RESERVE BULLETIN 2 9 8 ( 1 9 8 3 ) .
5. If 50 percent of the deposits controlled by thrift institutions were
included in the calculation of market concentration, Tri-State and Mid
American would control 17.6 percent and 9.3 percent of total market
deposits, respectively. The HHI would increase by 329 points to 1912
upon consummation of the proposal.
Legal Developments
by the Federal Reserve Bank of Cleveland, acting
pursuant to delegated authority.
By order of the Board of Governors, effective February 2, 1988.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, and Kelley. Voting against this action:
Governor Angell. Absent and not voting: Governor Heller.
JAMES M C A F E E
Associate
Dissenting
Statement
Secretary of the Board
of Governor
Angell
I believe this application raises serious questions concerning the anticompetitive effects of mergers and
acquisitions in those markets with a small number of
banking competitors. Tri-State's subsidiary bank and
Mid American are the only two banks competing in the
town of Edgerton. Although there are banking alternatives in towns close to Edgerton, I am concerned
that these distances might be sufficiently great to allow
anticompetitive behavior with respect to the pricing
and conditions of agricultural, small business and
consumer loans in Edgerton.
February 2, 1988
Orders Issued Under Section 4 of the Bank
Holding Company Act
The Bank of Nova Scotia
Toronto, Canada
Order Approving Application to Engage in Securities
and Financial Advisory
Activities
The Bank of Nova Scotia, Toronto, Canada ("Applicant"), a foreign bank subject to the Bank Holding
Company Act, 12 U.S.C. § 1841 etseq. ("BHC Act"),
has applied for the Board's approval under section
4(c)(8) of the BHC Act, 12 U.S.C. § 1843(c)(8), and
section 225.21(a) of the Board's Regulation Y,
12 C.F.R. § 225.21(a), to acquire McLeod Young Weir
Incorporated, New York, New York ("Company"),
and thereby engage in:
(1) providing advice in connection with mergers and
acquisitions, divestitures, loan syndications, interest rate swaps, interest rate caps and similar transactions to unaffiliated financial and nonfinancial institutions;
(2) providing securities brokerage and investment
advisory services to institutional customers on a
combined basis; and
249
(3) providing financial advice to the Canadian federal and provincial governments, such as with respect to the issuance of their securities in the U.S. 1
Company currently engages in a wide range of
securities underwriting, dealing, brokerage and advisory activities. 2 Applicant has committed to limit Company to those activities for which it seeks approval
here.
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published (52 Federal Register 49,089 (1987)).
The time for filing comments has expired, and the
Board has considered the application and all comments received in light of the public interest factors set
forth in section 4(c)(8) of the BHC Act.
Applicant, with total consolidated assets equivalent
to approximately $54 billion, is the 78th largest banking organization in the world. 3 Applicant owns a bank
subsidiary in San Juan, Puerto Rico and maintains
branches in New York City, Portland and Boston and
agencies in Atlanta, Miami and San Francisco. Applicant also owns The Bank of Nova Scotia Trust Company, New York, New York, an uninsured limitedpurpose trust company that neither accepts deposits
nor makes commercial loans, and engages in various
activities in the United States under sections 4(c)(8)
and 4(c)(9) of the BHC Act and the Board's Regulations Y and K (12 C.F.R. Parts 225 and 211, respectively).
1. Applicant has also applied to engage in providing discount
brokerage services to non-institutional customers; furnishing general
economic information and advice, general economic statistical forecasting services and industry studies to institutional customers; providing portfolio investment advice and research to institutional customers; and underwriting and dealing in obligations of the United
States, general obligations of states and their political subdivisions,
and other obligations that state member banks are authorized to
underwrite and deal in under 12 U.S.C. §§ 24 and 335. The Board has
previously found these activities, as proposed here, to be closely
related to banking and a proper incident thereto. 12 C.F.R. §§
225.25(b)(15), (4)(iv), (4)(iii) and (16) respectively.
2. Company's current activities consist of providing brokerage and
execution services to institutional customers; acting as agent in the
private placement of corporate securities; providing investment advice and research to institutional customers; trading for its own
account in Canadian federal and provincial government securities,
U.S. government and agency securities and corporate debt and equity
securities; underwriting and distributing Canadian federal and provincial government securities and corporate debt and equity securities;
and other incidental securities activities such as borrowing and
lending securities and entering into repurchase and reverse repurchase
arrangements involving U.S. government and agency securities. Company also provides financial advice to institutional customers relating
to acquisitions, mergers, divestitures, restructurings and public and
private financing transactions, and to the Canadian federal and provincial governments and agencies thereof relating to financing transactions in the U.S.
3. Asset data are as of June 30, 1987. Banking data are as of
December 31, 1986.
250
Federal Reserve Bulletin • April 1988
I. Merger and Acquisition Advice to
Unaffiliated Financial and Nonfinancial
Institutions
Applicant has proposed that Company engage in certain financial advisory activities for unaffiliated financial and nonfinancial institutions. The Board previously has determined that, subject to certain
limitations, these financial advisory activities are permissible nonbanking activities for bank holding companies. Signet Banking Corporation, 73 FEDERAL RESERVE BULLETIN 59 (1987). Applicant has c o m m i t t e d
to limit Company's financial advisory activities as set
forth in that Order.
II. Providing Investment Advice and Securities
Brokerage on a Combined Basis
The Board previously has determined that the combined offering of investment advice with securities
brokerage services to institutional customers is a permissible nonbanking activity and does not violate the
Glass-Steagall Act. See, e.g., National
Westminster
Bank
PLC,
72
FEDERAL RESERVE BULLETIN
(1986) ( " N a t W e s t " ) ; and Manufacturers
Corporation,
584
Hanover
73 FEDERAL RESERVE BULLETIN
III. Financial Advisory Services to Canadian
Governmental Entities
The Board has not previously approved Applicant's
third proposed activity, providing financial advice to
the Canadian federal and provincial governments,
such as with respect to the issuance of their securities
in the U.S.
In order to approve this aspect of the proposal, the
Board must determine:
(1) that the proposed activity is closely related to
banking; and
(2) that the public benefits associated with the proposed activity outweigh any possible adverse
effects. 6
930
(1987) ("Manufacturers Hanover"). That position has
been upheld by the U.S. Court of Appeals for the
District of Columbia Circuit in its affirmance of the
Board's NatWest Order. 4
Applicant has proposed to conduct its brokerage
activity in accordance with the limitations approved
by the Board in NatWest and Manufacturers
Hanover
with one exception. 5 In NatWest, the Board permitted
officer, director and employee interlocks between the
brokerage subsidiary and its holding company but did
not permit officer and director interlocks with its bank
affiliates. Here, Applicant proposes that officers of
Applicant, a foreign bank, be permitted to serve as
4. Securities Industry Ass'n v. Board of Governors, 821 F.2d 810
(D.C. Cir. 1987). The U.S. Supreme Court recently has declined to
review that decision, cert, denied, 56 U.S.L.W. 3451 (U.S. Jan. 11,
1988) (No. 87-562).
5. As in Manufacturers Hanover, under this proposal, Company
will not act as principal or take a position (i.e., bear the financial risk)
in any securities it brokers or recommends. Company will execute a
transaction only at the direction of a customer and will not exercise
discretion with respect to any customer account. Company will not
execute any transaction where an affiliate exercises investment discretion without customer authorization. Company will offer investment advice, as well as provide securities execution services, to
institutional customers on an integrated basis, i.e.. Company will not
charge an explicit fee for the investment advice and will receive fees
only for transactions executed for customers. In addition, as in
Manufacturers Hanover, Company will employ a $1 million threshold
in determining institutional customers and will share customer lists
with its affiliates, but not confidential information obtained from its
customers.
directors of Company. N o officers of Applicant will
serve as officers of Company.
The Board has determined that the proposed interlocks are consistent with NatWest because Applicant
does not accept insured deposits in the U.S. and hence
does not function as a domestic banking organization.
Moreover, Applicant has committed that Company
will not have officer or director interlocks with its U.S.
bank subsidiaries, branches or agencies.
In determining if an activity is closely related to
banking under section 4(c)(8) of the BHC Act, the
Board has relied on guidelines established by the
federal courts. Under these guidelines, an activity may
be found to be closely related to banking if it is
demonstrated:
(1) that banks generally have, in fact, provided the
proposed services;
(2) that banks generally provide services that are
operationally or functionally so similar to the proposed services as to equip them particularly well to
provide the proposed services; or
(3) that banks generally provide services that are so
integrally related to the proposed activity as to
require their provision in a specialized form. 7
In this case, the record reflects that banks in general, as well as Company, which currently engages in
this activity, do provide services similar to those
proposed here and have developed expertise in pro-
6. 12 U.S.C. § 1843(c)(8).
7. National Courier Association v. Board of Governors, 516 F.2d
1229 (D.C. Cir. 1975). However, the National Courier guidelines are
not the exclusive basis for finding a close relationship between a
proposed activity and banking. The Board has stated that in acting on
a request to engage in a new nonbanking activity, it will consider any
other factor that an applicant may advance to demonstrate a reasonable or close connection or relationship of the activity to banking. 49
Federal Register 794, 806 (1984); Securities Industry Association v.
Board of Governors, 468 U.S. 207, 210-11 n.5 (1984).
Legal Developments
viding financial advice to foreign governments and
their subdivisions.
The Board notes that the proposed activity is functionally and operationally similar to the activity of
providing financial advice to state and local governments, such as with respect to the issuance of their
securities, which the Board has found to be generally
permissible for bank holding companies and incorporated into Regulation Y. 12 C.F.R. § 225.25(b)(4)(v).
In addition, the Board's Regulation K authorizes the
provision of such financial advisory services to foreign
governmental entities. 12 C.F.R. § 211.5(d)(8). Accordingly, the Board concludes that the proposed
activity is closely related to banking.
With respect to the "proper incident" requirement,
section 4(c)(8) of the BHC Act requires the Board to
consider whether the performance of the activity by an
affiliate of a holding company "can reasonably be
expected to produce benefits to the public, such as
greater convenience, increased competition, or gains
in efficiency that outweigh possible adverse effects,
such as undue concentration of resources, decreased
or unfair competition, conflicts of interests, or unsound banking practices."
The record indicates that no adverse effects are
likely to occur from the provision of such advice to
Canadian federal and provincial governments. Moreover, Company, through its association with a large
financial institution, will have access to increased
resources and will become a more effective competitor
in this area. Hence, this aspect of the proposal will
result in net public benefits.
Consummation of the proposal is not likely to result
in decreased or unfair competition, conflicts of interest, unsound banking practices, concentration of resources, or other adverse effects. Based on the foregoing and other facts of record, the Board has
determined that the balance of public interest factors it
must consider under section 4(c)(8) of the BHC Act is
favorable. Accordingly, the Board has determined that
the application should be, and hereby is, approved.
This determination is further subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of the holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the BHC Act and the Board's regulations and orders
issued thereunder, or to prevent evasion thereof.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
251
By order of the Board of Governors, effective
February 12, 1988.
V o t i n g for this action: Chairman G r e e n s p a n and G o v e r n o r s
J o h n s o n , S e g e r , A n g e l l , H e l l e r , and K e l l e y .
JAMES M C A F E E
Associate
Secretary
of the Board
FFB, Inc.
Newark, New Jersey
Philadelphia, Pennsylvania
Order Approving Acquisition
of Nonbank
Subsidiary
FFB, Inc., Newark, New Jersey, and Philadelphia,
Pennsylvania ("FFB"), a bank holding company
within the meaning of the Bank Holding Company Act
("Act") (12 U.S.C. § 1841 et seq.) has applied under
section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and
section 225.25(b)(8) of the Board's Regulation Y (12
C.F.R. § 225.25(b)(8)) to acquire Broad & Lombardy
Associates, Inc., Newark, New Jersey ("B & L"), a
company which acts as an agent or broker for the sale
of credit-related life, accident and health, property and
casualty insurance.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been duly published (52 Federal
Register
43,672 (1987)). The time for filing comments has expired, and the Board has considered the application
and all comments received 1 in light of the public
interest factors set forth in section 4(c)(8) of the Act.
FFB was formed to acquire First Fidelity Bancorporation, Newark, New Jersey, and Fidelcor, Inc.,
Philadelphia, Pennsylvania, and their respective banking and nonbanking subsidiaries. 2 B & L, a subsidiary
of First Fidelity Bancorporation, conducts its insurance activities from one office in Newark, N e w Jersey,
primarily serving the northern New Jersey and N e w
York metropolitan areas.
On February 14, 1979, the Federal Reserve Bank of
New York, acting pursuant to delegated authority,
approved the application of First Fidelity Bancorporation to engage through a de novo subsidiary, B & L, in
the activity of acting as agent or broker for the sale of
1. The Board has received comments in opposition to this proposal
from the Independent Insurance Agents of America, Inc.; the National Association of Casualty and Surety Agents; the National
Association of Surety Bond Producers; the National Association of
Life Underwriters; and the National Association of Professional
Insurance Agents (collectively, "Protestants").
2. The Board previously approved the application of FFB to
acquire First Fidelity Bancorporation, Fidelcor, and their respective
subsidiaries other than B & L, by Order dated January 11, 1988.
252
Federal Reserve Bulletin • April 1988
life, accident and health insurance and property and
casualty insurance related to extensions of credit by its
First Fidelity affiliates. Thus on May 1, 1982, B & L
was engaged lawfully in acting as an insurance agent or
broker for credit-related life, accident and health,
property and casualty insurance and therefore meets
the qualifications for grandfather rights under exemption D.
Protestants argue that even if B & L was authorized
under section 4(c)(8)(D) of the Act to engage in insurance agency activities, these rights are not transferable
and expire upon the acquisition of a grandfathered
company by another bank holding company. As the
Board previously has determined, however, a company that is entitled to engage in insurance activities
under exemption D does not lose those rights upon its
acquisition by another bank holding company, provided that the grandfathered entity retains its separate
corporate structure and its insurance activities are not
conducted by other companies within the acquiring
banking organization. 3 In the instant case, following
its acquisition by FFB, First Fidelity Bancorporation
would remain a separate bank holding company and
B & L would remain a separate nonbank subsidiary
thereof, and their grandfathered insurance activities
would not be conducted by FFB or other entities
within FFB's organization. First Fidelity Bancorporation and B & L therefore may retain their exemption D
grandfather privileges after acquisition by FFB. 4
The Protestants also request that the Board delay
consideration of this proposal until the expiration of
the insurance activities moratorium contained in the
Competitive Equality Banking Act of 1987 ("CEBA"),
Pub. L. No. 100-86, § 201, 101 Stat. 581 (1987). The
Board notes that, by its terms, the moratorium on
insurance activities in CEBA does not apply to insurance activities expressly authorized for bank holding
companies under subparagraphs (A) through (G) of
section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)
(A-G)). Inasmuch as the insurance agency activities of
B & L are authorized pursuant to section 4(c)(8)(D),
the continued conduct of those activities is explicitly
preserved under CEBA.
The record reflects that FFB's acquisition of B & L
would not significantly affect competition in any relevant market. Moreover, there is no evidence to indicate that approval of this proposal would result in
3.
See
e.g.,
U.
S.
Bancorp,
7 3 FEDERAL RESERVE B U L L E T I N
941
(1987); Trustcorp,
Inc., 73 FEDERAL RESERVE BULLETIN 934 (1987);
MNC Financial,
Inc., 7 3 FEDERAL RESERVE BULLETIN 7 4 0 ( 1 9 8 7 ) ;
and Sovran Financial
Corporation,
73 FEDERAL RESERVE BULLETIN
672 (1987).
4. Applicant also has committed that B & L will continue to abide
by the geographic and functional limitations of exemption D with
respect to its insurance activities.
undue concentration of resources, unfair competition,
conflicts of interest, unsound banking practices, or
other adverse effects.
Based on the foregoing and other facts of record, the
Board has determined that the balance of the public
interest factors it must consider under section 4(c)(8)
of the Act is favorable. Accordingly, the application
should be, and hereby is, approved. This determination is subject to all of the conditions set forth in
Regulation Y, including 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 holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
The transaction shall not be consummated later than
three months after the effective date of this Order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Philadelphia,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
February 19, 1988.
Voting for this action: Chairman Greenspan and Governors
Angell, Heller, and Kelley. Absent and not voting: Governors Johnson and Seger.
JAMES M C A F E E
Associate
Secretary
of the Board
Midland Bank, PLC
London, England
Order Approving Application to Issue Variably
Denominated Payment Instruments Payable in
Foreign Currencies With Unlimited Face Values
Midland Bank, PLC, London, England ("Midland"),
a foreign bank subject to the Bank Holding Company
Act, 12 U.S.C. § 1841 et seq. ("BHC Act"), has
applied for the Board's approval under section 4(c)(8)
of the BHC Act (12 U.S.C. § 1843(c)(8)) and section
225.23(a)(3) of the Board's Regulation Y (12 C.F.R. §
225.23(a)(3)), to engage de novo through its wholly
owned subsidiary, Thomas Cook, Inc., Princeton,
New Jersey ("TCI"), in the issuance and sale of
foreign drafts and wire transfers (collectively,
"payment instruments") that are payable in foreign
currencies and are without limitation as to their face
amount. Midland proposes to conduct these activities
through TCI, as well as to market such instruments
through a nationwide network of unaffiliated selling
Legal Developments
agents, including commercial banks, thrift institutions
and others. 1
Notice of the application, affording interested persons an opportunity to comment, has been published
(52 Federal Register 46,003 (1987)). 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.
Midland, with total consolidated assets equivalent
to approximately $51.1 billion, is the 34th largest
banking organization in the world. 2 Midland operates a
U.S. branch and an Edge corporation both located in
New York, New York, and engages in various activities in the United States under sections 4(c)(8) and
4(c)(9) of the BHC Act and the Board's Regulations Y
and K (12 C.F.R. Parts 225 and 211 respectively).
The Board previously has determined that the issuance and sale of money orders and similar payment
instruments with a maximum face value of $1,000 are
closely related to banking. 12 C.F.R. § 225.25(b)(12).3
The Board also has approved by order a limited
number of applications to engage in the issuance and
sale of payment instruments with a $10,000 maximum
face value. 4 In addition, the Board has approved the
issuance and sale of certain payment instruments with
no maximum limitation on their face amount, subject
to a number of operational restrictions and reporting
requirements similar to those proposed in the instant
application. Wells Fargo & Company, 72 FEDERAL
RESERVE BULLETIN 148 (1986) ("Wells Fargo"). In
the Wells Fargo Order, the Board determined that an
increase in the denomination of such instruments
would not affect the fundamental nature of the payment instruments, and the Board concluded that the
issuance and sale of the proposed instruments in
increased denominations, such as proposed here, are
closely related to banking.
In order to approve this application under section
4(c)(8), the Board must also find that the performance
of the proposed activity by Midland "can reasonably
be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains
1. Midland also proposes to engage in data processing activities
related to the issuance and sale of such payment instruments. The
Board previously has determined that data processing activities for
the processing and transmission of financial, banking, or economic
data, such as proposed here, are closely related to banking. 12 C.F.R.
§ 225.25(b)(7)(ii).
2. Asset data are as of June 30, 1987. Banking data are as of
December 31, 1986.
3. TCI currently issues and sells travelers checks in various foreign
currencies with a maximum denomination of $1,000 pursuant to that
section.
4. See
e.g.,
BankAmerica
BULLETIN 7 2 7 (1987).
Corporation,
73 FEDERAL RESERVE
253
in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased
or unfair competition, conflicts of interest, or unsound
banking practices."
In considering previous applications regarding variably denominated payment instruments, the Board has
expressed concern that the issuance of instruments in
denominations larger than $1,000 would result in an
adverse effect on the reserve base because such instruments are not subject to transaction account reserve
requirements. The Board has noted that because reserve requirements serve as an essential tool of monetary policy, the conduct of that policy could be
adversely affected by the erosion of reservable deposits in the banking system. Accordingly, in order to
guard against such potential adverse effects, the Board
conditioned its approval of the Wells Fargo proposal
on a commitment that Wells Fargo cause to be deposited into a demand deposit account at its bank subsidiary all of the proceeds of any official check having a
face value in excess of $10,000, thereby rendering the
proceeds subject to reserve requirements. The Board
also made its approval subject to certain reporting
requirements, as well as its own continued evaluation
of the activity's effects on monetary policy.
To address the monetary policy concerns expressed
in the Board's Wells Fargo Order, Midland has committed that the proceeds of all sales of foreign-currency denominated instruments will be held in demand
deposit accounts at U.S. commercial banks. Deposits
stemming from the sale of instruments with denominations of $10,000 or less will be swept daily into
nonreservable instruments. The entire proceeds of the
sale of any payment instrument with a face value
greater than $10,000 will be deposited in a demand
deposit account at a U.S. depository institution. Such
proceeds will then be used to purchase foreign currency for each particular payment instrument at the
time of the transaction. Midland states that its purchases of foreign currency are typically value-dated
two days hence, at which time the demand deposit
account will be debited and the U.S. dollar funds will
leave the U.S. monetary system. Midland has committed that the U.S. dollar fund proceeds of all instruments with a face value greater than $10,000 will not
be swept out overnight while in demand deposit accounts, and thus will be reservable. Midland has
committed to submit to the Board weekly reports of
balances held in demand deposit accounts.
Midland contends that implementation of the foregoing commitments and procedures will adequately
address the Board's monetary policy concerns. After
reviewing the proposal, the Board has determined that
the commitments and procedures outlined therein adequately address the Board's concerns regarding po-
254
Federal Reserve Bulletin • April 1988
tential adverse effects on the reserve base. The
Board's approval for Midland to engage in this activity
is subject to the continued evaluation of its potential
for adverse effects on the conduct of monetary policy.
If the Board discerns such effects in the future, the
Board would require appropriate modification of the
activity and/or imposition of additional reserve requirements.
The record reflects that the sale of these payment
instruments by Midland would increase competition in
an industry that currently is highly concentrated and
enhance the convenience of purchasers. The Board
finds that these instruments, which will be issued by a
large financial organization, will enjoy ready acceptability and provide benefits to the public. Moreover,
there is no evidence in the record that consummation
of this proposal would result in adverse effects, such
as unsound banking practices, unfair competition,
conflicts of interest, or undue concentration of resources.
Based upon the foregoing and other considerations
reflected in the record, the Board has determined that
the balance of the public interest factors it is required
to consider under section 4(c)(8) is favorable. This
determination is subject to all of the conditions set
forth in Regulation Y, including sections 225.4(d) and
225.23(b), and to the Board's authority to require such
modification or termination of the activities of a holding company or any of its subsidiaries as the Board
finds necessary to assure compliance with the provisions and purposes of the BHC Act and the Board's
regulations and orders issued thereunder, or to prevent evasion thereof.
The activity shall be commenced no later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of New York, acting
pursuant to delegated authority.
By order of the Board of Governors, effective February 3, 1988.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, Heller, and Kelley.
JAMES M C A F E E
Associate
Secretary of the Board
National Westminster Bank PLC
London, England
NatWest Holdings, Inc.
New York, New York
Order Approving Application to Acquire Washington
Analysis Corporation, Washington, D.C.
National Westminster Bank PLC, London, England
and NatWest Holdings, Inc., New York, New York
(collectively "NatWest"), both bank holding companies within the meaning of the Bank Holding Company
Act (12 U.S.C. § 1841 et seq.) ("Act"), have applied
for the Board's approval under section 4(c)(8) of the
Act
(12
U.S.C.
§ 1843(c)(8))
and
section
225.25(b)(4)(iv) of the Board's Regulation Y (12
C.F.R. § 225.25(b)(4)(iv)) to acquire, through a wholly
owned subsidiary, County NatWest Inc., New York,
New York ("CNI"), 100 percent of the voting shares
of Washington Analysis Corporation, Washington,
D.C. ("WAC"), which engages in furnishing general
economic information and advice, general economic
statistical forecasting services and industry studies to
"Institutional Customers." 1
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published (52 Federal Register 49,508 (1987)).
The time for filing comments has expired, and the
Board has considered the application and all comments received in light of the public interest factors set
forth in section 4(c)(8) of the Act.
National Westminster Bank PLC ("NatWest Bank
PLC"), with approximately $140.3 billion in total
consolidated assets as of June 30, 1987, is the seventeenth largest banking organization in the world and
provides a full range of retail and wholesale banking
services worldwide. In the United States, NatWest
Bank PLC operates four representative offices,
branches in New York and Chicago, agencies in San
Francisco and Dallas, and six nonbanking subsidiaries
(engaged in data processing, factoring, and securities
brokerage and dealing). NatWest Bank PLC also controls applicant NatWest Holdings, Inc., and its subsidiary National Westminster Bank USA, N.A., New
1. An Institutional Customer is defined by NatWest to be a person
that is:
(1) a bank (acting in an individual or fiduciary capacity); an
insurance company; a registered investment company under the
Investment Company Act of 1940; or a corporation, partnership,
proprietorship, organization or institutional entity that regularly
invests in types of securities as to which investment advice is given,
or that regularly engages in transactions in securities;
(2) an employee benefit plan with assets exceeding $5,000,000, or
whose investment decisions are made by a bank, insurance company or investment advisor registered under the Investment Advisors Act of 1940;
(3) a natural person whose individual net worth (or joint net worth
with his or her spouse) at a time of receipt of the investment advice
or brokerage services exceeds $5,000,000;
(4) a broker-dealer or option trader registered under the Securities
Exchange Act of 1934, or other securities professional; or
(5) an entity all of the equity owners of which are institutional
customers.
Legal Developments
York, N e w York, which holds total deposits
of approximately $11.3 billion as of September 30,
1987. 2
WAC engages in monitoring and analyzing U.S.
legislative and regulatory developments exclusively
within the context of probable effects on the general
economy and individual markets, industries, companies and products. Upon consummation of this proposal, NatWest will transfer the activities of WAC to
County Securities Corporation USA, N e w York, New
York ("CSC"), an indirect subsidiary of NatWest
wholly owned by CNI. 3 CSC currently engages in the
combined offering of investment advice and securities
execution services to institutional customers, pursuant
to prior Board approval. National Westminster Bank
PLC,
et
al.,
7 2 F E D E R A L RESERVE B U L L E T I N
584
(1986). 4 CSC will offer WAC's services to its institutional customers either as a stand-alone service or in
connection with brokerage services. 5
Section 4(c)(8) imposes a two-step test for determining the permissibility of nonbanking activities for bank
holding companies:
(1) whether the activity is closely related to banking;
and
(2) whether the activity is a "proper incident" to
banking—that is, whether the proposed activity can
reasonably be expected to produce benefits to the
public that outweigh possible adverse effects.
12 U.S.C. § 1843(c)(8).
The Board has previously determined that analysis
of regulatory developments, in the context of providing investment research advice, is closely related to
banking and permissible for bank holding companies
under section 225.25(b)(4). Security Pacific Corporation,
7 1 F E D E R A L RESERVE B U L L E T I N 1 1 8 ( 1 9 8 4 ) ( " S e -
curity Pacific Order"). WAC's activities are very
similar to the activities approved in the Security Pacific Order. Moreover, the underlying rational of the
Board's decision in the Security Pacific Order, that
analysis of the effects of regulatory developments on
2. Total deposit data reflects NatWest's acquisition of First Jersey
National Corporation, Jersey City, New Jersey, approved by the
Board on December 21, 1987.
3. WAC's former employees will operate as part of CSC's research
staff. WAC's services will be offered as CSC's services to CSC's
institutional customers.
4. The Board determined that the combined offering of investment
advice with securities execution services to institutional customers
from the same bank holding company subsidiary is closely related
and a proper incident to banking under section 4(c)(8) of the Act
and does not violate the Glass-Steagall Act. National Westminister
Bank PLC,
J.P. Morgan
et al., 7 2 FEDERAL RESERVE BULLETIN 5 8 4 ( 1 9 8 6 ) :
and Company,
Inc., 7 3 FEDERAL RESERVE BULLETIN
810 (1987).
5. NatWest has reaffirmed its adherence to the commitments and
conditions set forth in National Westminister Bank PLC, et al., 72
FEDERAL RESERVE BULLETIN 5 8 4 (1986).
255
individual industries within the context of providing
investment advice to institutional customers is permissible, supports the permissibility of WAC's activities.
On this basis, the Board finds the activities of WAC to
be closely related to banking.
With regard to the "proper incident" requirement,
section 4(c)(8) of the Act requires the Board to determine that NatWest's performance of WAC's activities
could "reasonably be expected to produce benefits to
the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts
of interest, or unsound banking practices." 12 U.S.C.
§ 1843(c)(8).
Although NatWest and WAC both engage in providing investment advice, the market for their activities is
relatively unconcentrated with no significant barriers
to entry. In addition, NatWest, through CSC, currently engages in investment advice activities that
emphasize security-specific analysis, unlike WAC's
investment advice activities which emphasize the effects of legislative and regulatory developments on
general industry and economic trends. Accordingly,
the Board concludes that consummation of this proposal would not have a significant adverse effect on
existing or potential competition. There is no evidence
in the record that consummation of this proposal
would result in unsound banking practices, unfair
competition, conflicts of interest, or undue concentration of resources. NatWest's investment advice capabilities would be enhanced by offering WAC's services, allowing it to provide more comprehensive
investment advice to its customers. Accordingly, the
Board believes that the public benefits of the proposal
outweigh any potential adverse effects.
Based upon the foregoing and other considerations
reflected in the record, and NatWest's adherence to
the commitments and conditions contained in National Westminster Bank PLC, et al., the Board has
determined that the balance of public interest factors
that the Board is required to consider under section
4(c)(8) is favorable. Accordingly, the application is
hereby approved. This determination is subject to all
of the conditions set forth in Regulation Y, including
sections 225.4(d) and 225.23(b), and to the Board's
authority to require such modification or termination
of the activities of a holding company or any of its
subsidiaries as the Board finds necessary to assure
compliance with the provisions and purposes of the
Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
This transaction shall be consummated not later
than three months after the effective date of this
Order, unless such period is extended for good cause
256
Federal Reserve Bulletin • April 1988
by the Board or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
February 8, 1988.
Voting for this action: Chairman Greenspan and Governors
Seger, Angell, Heller, and Kelley. Absent and not voting:
Governor Johnson.
By order of the Board of Governors, effective February 4, 1988.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, and Angell. Absent and not voting: Governors Heller and Kelley.
JAMES MCAFEE
Associate
Secretary
of the Board
JAMES MCAFEE
Associate
Secretary of the Board
Security Pacific Corporation
Los Angeles, California
Order Vacating Prior Order Approving
Application
To Establish an Automated Trading System for
Options on United States Government
Securities
By Order dated August 5, 1987, the Board of Governors of the Federal Reserve System ("Board") approved an application submitted by Security Pacific
Corporation, Los Angeles, California ("Security Pacific") under section 4(c)(8) of the Bank Holding
Company Act by issuing an Order Approving Application to Establish an Automated Trading System for
Options on United States Government Securities
("August 5, 1987 Order"). 1
On September 1, 1987, the Board of Trade of the
City of Chicago, the Chicago Board Options Exchange, Inc., and the Chicago Mercantile Exchange
("Petitioners"), each of which had protested Security
Pacific's application before the Board, filed a timely
petition for review in the United States Court of
Appeals for the Seventh Circuit ("Court of Appeals").
On December 9, 1987, Security Pacific advised the
Board that its subsidiaries had sold all of their rights,
title, and interest in and to the automated trading
system that was the subject of the August 5, 1987
Order.
On December 11, 1987, Petitioners filed their brief in
support of their petition for review with the Court of
Appeals. On January 26, 1988, the Court of Appeals
granted a motion by Petitioners and the Board to
dismiss the pending petition for review and remand the
August 5, 1987 Order to the Board so that the Board
may vacate that Order. Because of the dismissal of the
petition for review, the Order approving this application is hereby vacated and is no longer effective.
1.
73 FEDERAL RESERVE BULLETIN
815.
SunTrust Banks, Inc.
Atlanta, Georgia
Order Approving an Application to Engage in
Certain Financial Advisory
Activities
SunTrust Banks, Inc., Atlanta, Georgia ("SunTrust"),
a bank holding company within the meaning of the
Bank Holding Company Act (12 U.S.C. § 1841
et seq.) (the "Act"), has applied for the Board's
approval under section 4(c)(8) of the Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. § 225.23), to engage directly in
certain financial advisory activities.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been duly published (52 Federal
Register
46,002 (1987)). The time for filing comments has expired, and the Board has considered the application
and all comments received in light of the public
interest factors set forth in section 4(c)(8) of the Act.
SunTrust, with total consolidated assets of approximately $25.9 billion,1 controls banking subsidiaries in
Florida, Georgia and Tennessee, and engages through
other subsidiaries in various permissible nonbanking
activities. SunTrust now proposes to engage directly
in certain activities currently conducted by its lead
bank and other banking affiliates. These activities are:
(1) furnishing general economic information and
advice, general economic statistical forecasting
services and industry studies;
(2) providing financial advice to state and local
governments, such as with respect to the issuance of
their securities;
(3) providing advice regarding the structuring of and
arranging for loan syndications, interest rate
"swaps," interest rate "caps," and similar transactions;
(4) providing advice in connection with financing
transactions for nonaffiliated financial and nonfinancial institutions;
(5) providing valuation services for nonaffiliated
financial and nonfinancial institutions;
1. Banking data are as of September 30, 1987.
Legal Developments
(6) advising nonaffiliated financial and nonfinancial
institutions in connection with merger, acquisition
and divestiture considerations;
(7) rendering fairness opinions in connection with
merger, acquisition and similar transactions for nonaffiliated financial and nonfinancial institutions; and
(8) conducting feasibility studies for corporations.
The activities described in paragraphs (1) and (2)
are included on the list of permissible nonbanking
activities in the Board's Regulation Y (12 C.F.R.
§ 225.25(b)(4)(iv) and (v)). The Board has previously
determined by Order that the remaining proposed
activities are closely related to banking and permissible for bank holding companies. 2
The Board previously has expressed its concerns
regarding conflicts of interest and related adverse
effects that, absent certain limitations, may be associated with financial feasibility studies that may be
conducted as part of these activities. SunTrust has
committed to abide by the conditions established in
these cases in order to avoid such adverse effects.
Specifically, SunTrust has agreed that:
(1) SunTrust's financial advisory activities shall not
encompass the performance of routine tasks or
operations for a customer on a daily or continuous
basis;
(2) advice rendered by SunTrust on an explicit fee
basis will be without regard to correspondent balances maintained by a customer of SunTrust at any
depository subsidiary of SunTrust; and
(3) SunTrust will not make available to any of its
subsidiaries confidential information received from
SunTrust's clients, except as authorized by the
respective client.
Under these conditions, SunTrust's performance of
this activity is unlikely to result in conflicts of interest
or other potential adverse effects.
In order to approve this application, the Board must
also find that performance of the proposed activities
"can reasonably be expected to produce benefits to
the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts
of interest, or unsound banking practices." SunTrust's
proposal represents a corporate reorganization
wherein activities currently performed by its subsid-
2. Signet
Banking
Corporation,
73 FEDERAL RESERVE BULLETIN
59 (1987) (paragraphs (3), (5). (6) and (7)); Sovran Financial
tion,
Corpora-
73 FEDERAL RESERVE BULLETIN 744 (1987) (paragraph (4)); a n d
Security Pacific Corporation
Duff & Phelps, Inc., 71 FEDERAL RE-
SERVE BULLETIN 118 (1985) (paragraph (8)).
257
iaries will be conducted directly by SunTrust. Because
the proposal essentially would result in a transfer of
the activities within the same corporate structure,
approval of the application would have no adverse
competitive effects. Moreover, there is no evidence in
the record that SunTrust's performance of these activities is likely to result in any undue concentration of
resources, decreased or unfair competition, unsound
banking practices, or other adverse effects.
Based upon a consideration of all the relevant facts,
the Board concludes that the balance of the public
interest factors that the Board is required to consider
under section 4(c)(8) is favorable. Financial and managerial resources also are consistent with approval of
the proposal. Accordingly, the application is hereby
approved. This determination is subject to the conditions set forth in this Order and in sections 225.4(d)
and 225.23(b)(3) of Regulation Y. This approval is also
subject to the Board's authority to require such modification or termination of the activities of a bank
holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with the
provisions and purposes of the Act and the Board's
regulations and orders issued thereunder, or to prevent evasion thereof.
The transaction shall not be consummated later than
three months after the effective date of this Order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Atlanta,
pursuant to delegated authority.
By order of the Board of Governors, effective February 8, 1988.
Voting for this action: Chairman Greenspan and Governors
Seger, Angel), Heller, and Kelley. Absent and not voting:
Governor Johnson.
JAMES M C A F E E
Associate
Secretary
of the Board
Orders Issued Under Sections 3 and 4 of the
Bank Holding Company Act
The Bank of New York Company, Inc.
New York, New York
Order Conditionally Approving
Bank Holding Company
the Acquisition
of a
The Bank of New York Company, Inc., New York,
New York ("BNY"), a bank holding company within
the meaning of the Bank Holding Company Act of
1956, as amended (the "Act" or the "BHC Act")
(12 U.S.C. § 1841 et seq.), has applied for the Board's
approval under section 3 of the Act (12 U.S.C.
258
Federal Reserve Bulletin • April 1988
§ 1842) to acquire 100 percent of the voting shares of,
and/or to effect a merger with, Irving Bank Corporation, New York, New York ("IBC"), and thereby to
acquire IBC's subsidiary banks. 1
BNY also has applied under section 4(c)(8) of the
Act (12 U.S.C. § 1843(c)(8)) to acquire the nonbanking subsidiaries of IBC listed in the Appendix to this
Order. In addition, BNY has applied to acquire indirectly the shares of Irving Trust International Bank
and Irving International Financing Corporation, corporations chartered pursuant to section 25(a) of the
Federal Reserve Act (the "Edge Act") (12 U.S.C.
§§ 611-631).
BNY also has provided notice of its intention to
acquire indirectly Banca Delia Svizzera Italiana, Lugano, Switzerland; Banco Irving Austral, Buenos
Aires, Argentina; International Commercial Bank
PLC, London, United Kingdom; Irving Bank Canada,
Toronto, Ontario, Canada; Sociedad Financiera Consolidada, Caracas, Venezuela; Turkiye Tutunculer
Bankasi A.S., Izmir, Turkey; Wing Hang Bank Limited, Hong Kong; and Banco Weng Hang, Hong Kong,
under section 4(c)(13) of the Act (12 U.S.C.
§ 1843(c)(13)) and Irving International Trade, Inc.,
under section 4(c)(14) of the Act (12 U.S.C.
§ 1843(c)(14».
Because of certain provisions of state law discussed
below and IBC's Shareholders' Purchase Rights Plan,
BNY may decide to acquire initially no more than 19.9
percent of IBC's voting stock and through a proxy
solicitation to seek to elect at least a majority of IBC's
board of directors. If BNY is successful, it would then
proceed to acquire the remainder of IBC's shares.
Accordingly, BNY has also requested approval under
the BHC Act to acquire 19.9 percent of IBC's shares
and to acquire voting control of such number of IBC's
voting shares as will enable BNY to elect at least a
majority of IBC's directors.
Notice of these applications, affording interested
persons an opportunity to submit comments, has been
published (52 Federal Register 38,273 and 45,689
(1987)). 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
1. These are Irving Trust Company, New York, New York; The
Bank of Lake Placid, Lake Placid, N e w York; Bank of Long Island,
Babylon, N e w York; Central Trust Company, Rochester, New York;
Dutchess Bank & Trust Company, Poughkeepsie, N e w York; Endicott Trust Company, Endicott, New York; The First National Bank of
Hancock, Hancock, N e w York; The First National Bank of Moravia,
Moravia, N e w York; The Fulton County National Bank and Trust
Company, Gloversville, N e w York; Hayes National Bank, Clinton,
New York; The Merchants National Bank & Trust Company of
Syracuse, Syracuse, New York; Nanuet National Bank, Nanuet, New
York; Scarsdale National Bank and Trust Company, Scarsdale, New
York; and Union National Bank, Albany, New York.
sections 3(c) and 4 of the Act and the purposes of the
Edge Act. The Board notes that on February 25, 1988,
the New York State Banking Board unanimously
approved BNY's proposal to acquire IBC, after examining the proposal from the standpoint of safety and
soundness, banking competition, maintenance of financial services and the public convenience and needs
and considering IBC's comments in opposition to the
proposal.
The Board has received comments from IBC objecting to Board approval of the proposed acquisition. IBC
also has requested that the Board hold a hearing
regarding the applications. 2 IBC raises questions concerning, among other things, the ability of BNY to
consummate this transaction under N e w York law and
IBC's Shareholders' Purchase Rights Plan, the definitiveness of the proposal, the adequacy of the specifications in BNY's application regarding the proposal,
the adequacy of the capital position of the resulting
organization, its managerial resources and future prospects, BNY's plans regarding the retention and operation of certain IBC subsidiaries, the effect of the
presence of a minority shareholder on the operations
and future prospects of IBC, and the effect of the
proposed acquisition on the convenience and needs of
the communities served by IBC's subsidiaries.
The Board has considered these comments carefully, as well as the responses to these comments
submitted by BNY, and has reviewed the application
in light of all of the information presented and otherwise available to the Board. Based upon this consideration and subject to BNY's commitments and the
conditions established by the Board as described below, the Board has concluded that BNY's proposal
satisfies the criteria set out in the Act. Accordingly,
the Board has determined to approve the applications
subject to the fulfillment of BNY's commitments and
the conditions established herein by the Board.
Board Policy in Evaluating
Proposals
Contested
BNY's proposal raises issues concerning the Board's
general policy toward bank holding company acquisitions that are opposed by the management of the
institution to be acquired and the adequacy of the
Board's procedures in considering these applications.
Section 3(c) of the BHC Act requires the Board to
review each application on its merits in light of the
2. In addition to the IBC comments, the application was protested
under the Community Reinvestment Act, 12 U.S.C. § 2901 et seq.
The Board also received comments from members of the public,
members of Congress, and various organizations. As discussed more
fully in this Order, the Board has carefully considered all these
comments in reaching its decision.
Legal Developments
Act's competitive standards, the financial and managerial resources and future prospects of the companies
and banks concerned, and the convenience and needs
of the community to be served. The Act does not draw
any distinction between acquisitions that are agreed to
between the parties and those where, as here, there is
no agreement. The Board's experience over the years
indicates that the criteria established by Congress in
the BHC Act are adequate for the Board to carry out
the Congressional mandate of maintaining competition, assuring safety and soundness, and meeting
community convenience and needs. The Board believes this is true regardless of whether the proposed
acquisition is friendly or hostile.
In accordance with the requirements of the Act, the
Board evaluates each bank holding company acquisition proposal to ensure that these criteria are satisfied.
Where the statutory criteria are met, the Board would
be acting outside its delegated discretion to withhold
approval based upon other factors such as whether the
proposal is acceptable to the management of the
banking organization to be acquired. 3 The Board thus
applies the statutory criteria equally in the case of
applications supported by the management of the
acquired company as well as in those that are opposed
by management. 4
In some cases, however, the lack of agreement
between the applicant and the organization to be
acquired may introduce an element of uncertainty in
the analysis of certain of the effects of the proposed
acquisition on the statutory factors. The Board is
mindful of the potential contested situations may pose
for adverse effects on the financial and managerial
resources of the company to be acquired as well as
with respect to the acquiring organization. Thus, in the
case of applications involving contested acquisitions,
as in the case of the present application, the Board
pays special attention to assuring that the statutory
criteria are met.
The Board will also take into account the potential
for adverse effects on bank safety and soundness in the
event that a contested situation is prolonged. Thus, as
discussed below, the Board intends to review carefully
any request by BNY to extend the normal 90-day
period provided for an applicant to consummate an
3. For example, where the Board rejected an application because
the applicant's offer did not treat all shareholders equally, a reviewing
court found that the Board's decision was unauthorized under the Act.
Western Bartcshares, Inc. v. Board of Governors of the Federal
Reserve System, 480 F.2d 749 (10th Cir. 1973).
4 . See
McLeodBancshares,
Inc.,
Bank
PLC,
73 FEDERAL RESERVE BUL-
7 2 FEDERAL RESERVE BULLETIN
841 (1986); Simmer Development
Company, 72 FEDERAL RESERVE
BULLETIN 494 (1986); Hudson Financial Associates,
72 FEDERAL
RESERVE BULLETIN 150 ( 1 9 8 6 ) .
approved proposal. The Board would not expect to
grant more than one extension of this period and then
only if the Board is satisfied regarding bank safety and
soundness considerations and the likelihood of consummation of the proposal within the extended period.
Adequacy of Board
Procedures
The Board has also considered whether the Board's
current procedures for processing bank holding company applications are sufficient in a contested situation
such as presented here. The Board believes that these
procedures are fully adequate to provide all interested
parties the opportunity to review the proposal, to bring
to the Board's attention any issue bearing on the
statutory criteria, and to present evidence and comment on the issue. The Board's rules establish detailed
procedures that govern the submission and content of
applications, require notice of the application to the
public in newspapers and in the Federal Register, and
provide interested persons with an opportunity to
comment on the proposal for at least 30 days. 5 In
addition, in 1984, the Board issued a policy statement
setting out in detail the procedures that should be used
in protested applications. 12 C.F.R. § 262.25. There
are also detailed staff guidelines that govern every
aspect of the application process, including procedures for the exchange of communications between
applicant and protestants and relevant time periods for
rebuttal.6 Under these procedures, the applicant and
protesting party are provided an opportunity to comment on each other's submissions and to provide data
and information to support their positions. In this
case, for example, there have been numerous and
lengthy submissions by both BNY and IBC throughout
the application process regarding the issues raised by
the application as well as each other's comments.
Moreover, in this case IBC has been provided, by
stipulation between IBC, BNY, and the Board, access
to major portions of the application normally not made
available to the public, which contain Applicant's
financial projections, underlying assumptions and
other confidential business information. As a result,
IBC was able to comment meaningfully on key financial considerations in the application that in a number
of instances resulted in modifications of BNY's previous submissions. This procedure available under the
Board's current rules has provided the Board with the
benefit of extensive submissions by IBC regarding the
7 3 FEDERAL RESERVE BULLETIN
724 (1987); Crescent Holding Company,
LETIN 4 5 7 ( 1 9 8 7 ) ; Lloyds
259
5. 12 C.F.R. § 262.3. This comment period may be extended by the
Secretary of the Board, as it was in this application, for good cause.
12 C.F.R. § 265.2(a)(10).
6. Manual on Procedures for Processing Applications,
A D 87-20
(FIS) (May, 1987).
260
Federal Reserve Bulletin • April 1988
issues and BNY's submissions and has produced, in
the Board's view, a sufficient record for considering
this application under the criteria in the Act. The
Board believes these procedures have provided IBC
with a fully adequate opportunity to comment on this
proposal.
Competitive
Considerations
BNY is the seventh largest commercial banking organization in New York, with one subsidiary bank that
controls domestic deposits of $11.9 billion, representing 5.0 percent of total domestic deposits in commercial banks (hereinafter "deposits") in New York. 7 IBC
operates fourteen banking subsidiaries in New York
and is the ninth largest commercial banking organization in the state, controlling domestic deposits of $9.9
billion, representing 4.1 percent of deposits in New
York. Upon consummation of the proposed acquisition, BNY would become the fifth largest commercial
banking organization in New York, controlling $21.8
billion in domestic deposits, representing approximately 9.1 percent of deposits in that state. Consummation of this proposal would have no significant
adverse effect upon the concentration of commercial
banking resources in New York.
Insofar as the commercial banking product market is
concerned, BNY and IBC compete directly in two
relevant geographic banking markets: the Metropolitan New York-New Jersey and Mid-Hudson banking
markets. 8 In the Metropolitan New York-New Jersey
banking market, BNY is the seventh largest of 159
commercial banking organizations, controlling $10.5
billion in deposits, which represents 4.4 percent of the
deposits in that market. IBC is the eleventh largest
commercial banking organization in this market, controlling $6.1 billion in deposits, which represents 2.5
percent of deposits in the market. Upon consummation of this proposal, BNY would become the fifth
largest commercial banking organization, controlling
$16.6 billion in deposits, or 6.9 percent of the market's
deposits. The Metropolitan New York-New Jersey
banking market is considered to be unconcentrated
and would remain so upon consummation of the
proposal. The Herfindahl-Hirschman Index ("HHI")
7. State deposit data are as of September 30, 1987, and market
deposit data are as of June 30, 1986. BNY also operates a credit card
bank in Delaware.
8. The Metropolitan New York-New Jersey market is defined to
include N e w York City and Long Island, New York; Putnam,
Sullivan, Westchester, Rockland, and Orange Counties in N e w York;
Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris,
Ocean, Passaic, Somerset, Sussex, Union, and Warren Counties in
N e w Jersey; and portions of Fairfield County in Connecticut.
The Mid-Hudson banking market consists of Dutchess and Ulster
Counties in N e w York.
for the market would increase by only 23 points to 710
upon consummation of the proposal. The four-firm
concentration ratio (of 46.3 percent) for the market
would remain unchanged.
In the Mid-Hudson banking market, B N Y is the
tenth largest of fifteen commercial banking organizations, with $82 million in deposits, representing 5.0
percent of deposits in the market. IBC is the fourth
largest commercial banking organization in the market, with $188 million in deposits, representing 11.5
percent of deposits in the market. Upon consummation of the proposal, BNY would become the largest
commercial bank organization in the market with a
16.5 percent market share. The Mid-Hudson banking
market will become moderately concentrated, with the
four largest commercial banking organizations controlling 51.8 percent of total deposits. Upon consummation of this proposal, the HHI would increase by 115
points to 1105 and the four-firm concentration ratio
would increase to 56.5 percent. 9
On the basis of the above facts, including the
presence of numerous thrift institutions in each market, the Board concludes that consummation of the
proposal is not likely to lessen substantially existing
competition for banking services in any relevant geographic market or otherwise result in anticompetive
effects of the type described in sections 3(c)(1) or (2) of
the BHC Act.
IBC operates in ten banking markets in which B N Y
does not operate. 10 Nine of these markets are not
concentrated and all of the markets have numerous
probable future entrants. Based upon these and other
facts of record, the Board concludes that consummation of the proposal would not substantially lessen
probable future competition in any relevant banking
market.
Government Securities Clearance and
American Depository Receipts (ADR) Services
IBC and BNY each provide government securities
clearance and settlement and ADR services to third
9. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), a market in which the
post-merger HHI is between 1000 and 1800 is considered moderately
concentrated. In such markets, the Department is likely to challenge
a merger that increases the HHI by more than 50 points. The
Department has informed the Board that a bank merger or acquisition
generally will not be challenged (in the absence of other factors
indicating anticompetitive effects) unless the post-merger HHI is at
least 1800 and the merger increases the HHI by at least 200 points. The
Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognizes the competitive effect of limited purpose lenders
and other non-depository financial entities.
10. These markets are the Albany, Binghamton, Buffalo, ElmiraCorning, Ithaca, Oneonta, Plattsburgh, Rochester, Syracuse and
Utica-Rome banking markets.
Legal Developments
parties. 11 As part of its protest, IBC contends that the
Board must consider the competitive effects of the
proposal viewing government securities clearance and
ADR services each as separate product markets. IBC
asserts that these products constitute highly concentrated markets separately defined from the commercial
banking product market and that competition in each
market will be adversely affected by the merger of IBC
and BNY. BNY asserts that commercial banking is the
appropriate line of commerce; or, in the alternative, if
the activities are separate lines of commerce, that
consummation will not result in any substantial competitive harm.
In delineating the relevant product market in which
to assess the probable competitive effects of a bank
acquisition or merger, the Supreme Court has determined that "commercial banking" is the appropriate
line of commerce on the basis that the "cluster of
products . . . and services" provided by commercial
banks is unique relative to other institutions. 12 Underlying this analysis is the recognition that the relationship among the products and services that constitute
commercial banking creates an "economic significance well beyond the various products and services
involved." 1 3 To measure the "cluster of products,"
the Court has used bank deposits as a proxy for the
market share of the bank. This approach has reasonably approximated economic reality in commercial
banking and has provided a practical and workable
basis for competitive assessments.
Government securities clearing and settlement services are generally provided by depository institutions
and involve a combination of services that banks have
11. ADRs are receipts, similar to domestic stock certificates, issued
by a U.S. bank that represent a stated number of shares of a foreign
security. The foreign securities represented by the ADRs are held by
a foreign depository trust company, which serves as agent for the
issuing domestic bank. ADRs are dollar denominated and permit a
United States investor to own and trade foreign stocks without
directly trading on the foreign stock exchange. The bank issuing
ADRs effectively commits to the valid ownership rights in the shares,
monitors all foreign corporate activities and subscription rights associated with the shares, and distributes dividends (less applicable taxes
and fees) to the ADR holders in dollars. ADRs do not, of course,
provide the only available means of foreign stock ownership. For
example, United States investors may purchase foreign shares directly and, in instances where a foreign issuer has appointed its own
United States transfer agent, purchase United States equity equivalents known as " N e w York shares." Additionally, for some investors
a mutual fund specializing in international markets could provide a
substitute for direct stock ownership.
12. United States v. Philadelphia National Bank, 374 U.S. 321, 356
(1963)0'Philadelphia"). In United States v. Phillipsburg
National
Bank, 399 U.S. 350 (1970), the Court stressed that banks were the only
financial institution in which a wide variety of financial products and
services were gathered in one place and that this "clustering" of
financial products and services facilitated convenient access to them
for all banking customers. 399 U.S. at 359.
13. United States v. Phillipsburg Nat'I Bank, 399 U.S. at 361.
261
traditionally provided, such as funds transmissions,
settlement services and custodial services. Clearing
services are also closely tied to lending activities
because clearing may involve credit extension by the
bank to the dealer. Similarly, ADR services have been
provided only by banks and are composed of traditional banking activities such as custodial and trust
services, depositary services, transfer agency services
and lending services. On the basis of these factors, the
Board believes that government securities clearing and
ADR services should be viewed as elements of the
cluster of services that traditionally has constituted the
commercial banking line of commerce, as articulated
by the Supreme Court in Philadelphia. As discussed
above, in this product market, consummation of the
proposal would have no substantial adverse effect on
competition in any relevant geographic area or otherwise violate the competitive standards in section 3(c)
of the Act.
Even if government securities clearance and ADR
services were each viewed as constituting separate
lines of commerce that are distinct from the commercial banking product market delineated in Philadelphia, the Board does not believe that consummation of
this proposal would substantially lessen competition in
either market.
In defining the government securities clearing market, IBC includes only those depository institutions
that provide clearing and settlement services for the
more active government securities dealers and brokers
unaffiliated with a depository institution. 14 Under this
approach, BNY has the second largest market share of
the five clearing banks in the business with a 28.3
percent market share. IBC is the fourth largest participant with a 18.7 percent market share. Upon consummation of the proposal, IBC projects that BNY would
be the largest participant in the market, with almost a
47.0 percent market share and that the four-firm concentration ratio would increase to 100 percent, with an
increase in the HHI of over 1000 points to over 3400. 15
If transactions cleared for affiliates are not excluded,
BNY's market share would upon consummation be
about 43 percent and the HHI would increase by 900
points to just over 3100.
BNY disputes IBC's market definition as being too
narrow. BNY would include all depository institutions
14. Market shares are estimated by analyzing the number of transactions performed by these clearing banks, excluding transactions
originated by their own affiliates.
15. Under the revised Department of Justice Merger Guidelines, a
market in which the post-merger HHI is above 1800 is considered
highly concentrated. In such markets, the Department is likely to
challenge a merger that increases the HHI by more than 50 points, in
the absence of other factors indicating that the merger would not
substantially lessen competition.
262
Federal Reserve Bulletin • April 1988
that clear government securities transfers, including
those that are technically unable to meet the clearing
requirements of dealers and brokers or that do not
choose to provide clearing services to third parties.
Under this market definition, IBC and BNY would
control 11.7 percent and 15.7 percent of the market,
respectively. Upon consummation, BNY would control 27 percent of the market; the four-firm concentration ratio would increase from 57.7 to 63.7 percent;
and the HHI would increase from 368 points to 1397.
The Board is inclined to the view that the product
market for clearing government securities should include only those depository institutions that clear for
third parties, although the Board notes that under the
Department of Justice Merger Guidelines, banks that
clear only for themselves or affiliates would be included, since these organizations could offer such
services to third parties within one year. 16 While this
view excludes from the market institutions clearing
only for themselves or their affiliates, the Board believes that the presence of these institutions, which
include at least five large money-center banks on the
fringe of the market, exerts a strong mitigating effect
on the potential for a significant reduction in competition in the market. 17 This influence, along with the
other mitigating factors described below, would, in the
Board's view, be likely to prevent substantial anticompetitive effects from arising as a result of consummation of the proposal.
Although the market for clearing government securities (as defined by IBC) is concentrated, there is
substantial competition in the market for customers on
the basis of price and quality of service, 18 and the
16. If the five large New York City banks that clear for themselves
(Citibank, Morgan Guaranty, Bankers Trust, Chase Manhattan and
Chemical Bank) were included in the product market, BNY would
control, upon consummation, 27.3 percent of the market and the HHI
would increase by 598 points to 2118. The Board notes that these five
clearing banks are among the nation's largest financial institutions and
have in place, or readily available, the personnel and technology to be
able to provide within a short period of time clearing services for third
parties.
17. While three of these institutions have terminated clearing
services for third parties within the last few years, there have been
significant improvements in clearing technology since and technology
is available through purchase of software packages.
18. The Board notes that significant concentration ratios can be
unreliable indicators of actual market behavior, and the prima facie
case that is established by such ratios under relevant judicial precedent may be rebutted by a showing that these ratios do not accurately
reflect the true economic characteristics of the relevant market.
United States v. Marine Bancorporation, 418 U.S. 602, 631 (1973).
Accord: Brown Shoe v. United States, 370 U.S. 294, 322 n.38 (1961)
(statistics concerning market share are not conclusive, as "only a
further examination of the particular market—its structure, history,
and probable future—can provide the appropriate setting forjudging
the probable anticompetitive eflfect of the merger"); United States v.
General Dynamics Corp., 415 U.S. 486, 497-98 (1973); United States
v. First National State Bancorporation,
499 F. Supp. 793, 804-805
(D.N.J. 1980) (concentration ratios are useful only as a starting point
market is likely to remain competitive after the proposed acquisition. In this market, a relatively small
number of large, sophisticated customers account for a
significant portion of the clearing transactions. 19 These
large customers promote competition among clearing
banks through their ability to move, or threaten to
move, their large volume of business to another
clearer. In addition, dealers often divide business
among clearing banks based on the type of security.
Because of these established business relationships
and technological interface, changing from one clearing bank to another can be relatively easy. Customers
have been successful in promoting competition in this
manner because of sensitivity of clearing bank profits
to the volume of transactions. Indeed, the significant
economies of scale in the government securities clearing business serve to explain the high concentration
ratios.
The Board also has considered two other factors
that should provide added pressure to ensure that the
market remains competitive after consummation of the
proposal. Government securities industry participants
have recently explored using industry associations to
develop a more efficient and cost-effective clearing
system, which should result in the reduction of transaction volume handled by the clearing banks. For
example, the Government Securities Clearing Corporation ("GSCC"), which is organized by primary
dealers and major banks, is developing a computer
system to reduce the volume of transactions currently
processed by clearing banks through netting the trades
among participating brokers and dealers before the
trades are cleared by a clearing bank. The resulting
decline in demand for clearing bank services should
create excess capacity, which should in turn promote
competition among clearing banks.
Second, as noted, the potential for de novo entry
provides a strong force preventing anticompetitive
behavior in the market. There are numerous banking
organizations large enough to enter the clearing market. For these organizations, entry cost and start-up
time do not present insurmountable barriers. The
highest estimate in the record, $25 million, is still
relatively small in relation to the resources of most
potential entrants. Furthermore, currently available
software packages permit de novo entrants to begin
operations more quickly than if they were required to
develop this software in-house. As noted above, there
are at least five large money-center banks that clear for
of analysis; one must thereafter study actual performance of market
participants to determine the competitiveness of the market).
19. Large customers include primary dealers, aspiring primary
dealers and the seven interdealer brokers, who are among the major
participants in the government securities market.
Legal Developments
themselves that could readily provide the same services to third parties should competition in the market
falter significantly. 20 If the degree of customer dissatisfaction over price or quality of service is sufficient,
potential entrants could be encouraged by commitments by the customer to provide business to the
entrant. Finally, past history in this area demonstrates
that market participants are able and will take action to
reduce costs and improve services.
ADR
Services
As with government securities clearing services, IBC
and BNY present significantly different market structures for ADRs. IBC defines the market as the number
of shares against which each bank has issued ADRs.
IBC estimates that the post-merger share would make
BNY the second largest participant with a market
share of 28 percent. 21 The four-firm concentration
ratio would be 100 percent and the HHI would increase 384 points to 4823.
BNY disputes IBC's definition of the market as
being too narrowly limited to the number of foreign
shares against which banks issue ADRs. According to
BNY, other methods of foreign share ownership, such
as direct investments and mutual funds comprised of
foreign shares, should be included when defining the
applicable market. Under this approach, and assuming
that ADRs represented one-third of all foreign shares
owned by U.S. investors (an over-estimation according to BNY), the relevant market would be 200 percent
larger than IBC projects with an HHI below 1000 and
a post-merger change of less than 40 points.
Even if IBC's market definition is accepted, the
Board concludes that the number of potential entrants,
the ease of entry into the ADR market, the rapid
growth in the use of ADRs, as well as the availability
of close substitutes for ADRs would preclude consummation of the proposal from substantially lessening
competition in the market.
The number of potential entrants into the ADR
market is large; major New York banks, other large
United States banks with experience in clearing and
transfer operations, large foreign banks with a pres-
20. Moreover, the Board notes that the true dimension of the
government securities clearing market, as proposed by IBC, ignores
the fact that a number of nonbanking companies engage in the clearing
business even though they ultimately must clear their net positions
through a depository institution. The figures supplied by IBC do not
include the full volume of clearing business effected by these firms.
This volume of business would tend to reduce the concentration
figures noted above.
21. On this basis, this market would be dominated by Morgan
Guaranty Trust Company of N e w York with a market share of
approximately 63 percent. IBC traditionally has been the second
largest firm in the market with a 17 percent market share.
263
ence in the United States and large brokerage houses
are potential entrants into this market. The activities
required to offer ADR services are relatively common
for the potential entrants. 22 ADR marketing requires
custodial, depositary transfer agent and lending activities. Custodians to hold the foreign securities underlying the ADRs can be provided without large capital
costs through foreign offices or agency agreements
with foreign institutions.
To provide ADR services, an entrant must have
personnel and a computer system capable of tracking
ADR ownership, collecting and converting dividends,
exercising rights offerings, controlling pre-release
lending 23 and monitoring the lending limits of brokers. These services do not differ materially from the
requirements for establishing other securities trading
operations and therefore would not constitute a
significant barrier to entry into the ADR service
market.
A de novo entrant may experience a cost disadvantage in securing sponsored ADRs 2 4 because a foreign
company that wishes to convert to sponsored ADRs
must pay a cancellation fee to the holders of all
previously issued unsponsored ADRs. Banks with
large holdings of shares against which unsponsored
ADRs have been issued could have a cost advantage
over a new entrant because they do not have to pay
cancellation fees for the shares they are holding, thus
reducing the cost of switching to a sponsored ADR. A
new entrant without the benefit of such holdings would
be forced to absorb the cancellation fees on an outstanding unsponsored ADR which the issuer of the
underlying security has determined to convert to a
sponsored ADR. This cost disadvantage is not present
when introducing sponsored ADRs that have not previously been traded on an unsponsored basis, however. By aggressively competing for this type of ADR,
a de novo entrant can overcome this cost disadvan-
22. For example, a number of banks and other firms issue custody
receipts for securities other than foreign securities, including instruments representing interests in the "stripped" U.S. government
securities known by acronyms: LIONS, TIGRS, and CATS. The
services provided to holders of these receipts are very similar to those
provided to holders of ADRs.
23. Pre-release lending occurs when depositaries provide shortterm loans that cover the ADR until the actual underlying foreign
security is delivered. This process is necessary because foreign
countries often do not require the delivery of purchased securities
within the same time frame required under United States law.
24. Unsponsored ADRs are issued by a bank without the participation of the company whose securities underlie the receipt. They
may be issued by a number of different banks for the same underlying
security issue. Sponsored ADRs are issued by only one bank under an
agreement with the foreign issuer. Although unsponsored ADRs
constitute approximately 75 percent of the market, sponsored ADRs
account for an increasing share of all ADRs traded in this country.
264
Federal Reserve Bulletin • April 1988
tage. The rapid growth of the ADR market 25 makes
it attractive for entry and entry is presently
occurring. 26
Finally, the Board notes the availability of a number
of substitutes for ADR services for certain types of
customers, principally direct investment in foreign
shares, particularly by larger financially sophisticated
customers and mutual funds with portfolios of foreign
securities. As in the case of government clearing
services, the immediate customers of ADRs are brokers and similar financially sophisticated customers,
who are able to demand competitive prices and services by moving or threatening to move their business
to another competitor or potential competitor or utilizing competitive alternatives, such as direct investment for certain types of investors.
For the above reasons, the Board concludes that the
proposed transaction would not have a significant
adverse effect on competition in government securities
clearing and ADR services even assuming these services were considered to constitute distinct product
markets. In this regard, the Board has been advised by
the Antitrust Division of the U.S. Department of
Justice, which has investigated the competitive effect
of the proposal, that it has concluded that the proposal
would not have a significantly adverse effect on competition.
Financial
Factors
In evaluating these applications, the Board has carefully considered the financial resources of the companies and banks involved and the elfect on those
resources of the proposed acquisition. The Board has
stated and continues to believe that capital adequacy is
an especially important factor in the analysis of bank
holding company expansion proposals, particularly in
transactions, such as this, where a major acquisition is
proposed. 27
In this regard, the Board has stated that it expects
banking organizations contemplating expansion proposals to maintain strong capital levels substantially
above the minimum levels specified in the Board's
Capital Adequacy Guidelines 28 without significant reliance on intangibles, particularly goodwill. The Board
carefully analyzes the elfect of expansion proposals on
the preservation or achievement of strong capital
levels and has adopted a policy that there should be no
significant diminution of financial strength below these
levels for the purpose of effecting major expansion
proposals. 29
The proposed transaction represents a substantial
acquisition for BNY that would double its size in terms
of total assets and make it one of the nation's largest
banking organizations. BNY proposes to acquire all of
the outstanding common shares of IBC stock through
a stock and cash offer based on a $60.00 per share
value of IBC stock. 30 The cash portion of the purchase
amounts to $264 million and will be funded through the
liquidation of $220 million of investments and the
issuance of $44 million of short-term debt.
While financial projections submitted by the Applicant indicate that the capital ratios of the resulting
organization would remain above the minimum levels
specified in the
Board's
Capital
Adequacy
Guidelines, 31 the proposal will result in a lessening of
the capital strength of the two organizations on a
combined basis as a result of the proposed $264 million
payment of a portion of the purchase price in cash. To
address these effects, BNY has committed that, at
consummation of the acquisition of IBC, its consolidated tangible common equity to assets ratio will equal
at least 3.5 percent and that it will achieve a 4.1
percent tangible common equity to assets ratio within
one year of consummation. 32
These commitments, however, are not fully sufficient to satisfy the Board's policy regarding the avoidance of declines in existing capital levels and the
maintenance of strong capital levels in significant bank
28. Capital Adequacy Guidelines, 50 Federal Register
16,057
(April 24, 1985).
29. Thus, for example, the Board has generally approved proposals
involving a decline in capital only where the applicants have promptly
restored their capital to pre-acquisition levels following consummation of the proposals and have implemented programs of capital
improvement to raise capital significantly above minimum levels. See,
e.g., Citicorp,
72 FEDERAL RESERVE BULLETIN 7 2 6 ( 1 9 8 6 ) ;
Security
Pacific Corporation,
7 2 FEDERAL RESERVE BULLETIN 8 0 0 (1986). See
25. For example, based on trading volume, as measured by the
volume of ADRs traded on NASDAQ, the market increased by 38
percent from 1985 through 1986.
26. For example, the Bankers Trust Company appears to be
expanding its involvement in the market. The Board also notes that
B N Y itself entered the market only four years ago and has accumulated an 11 percent market share.
27. Chemical New York Corporation, 73 FEDERAL RESERVE BULLETIN
378
(1987);
Citicorp,
72
FEDERAL
RESERVE
BULLETIN
497
(1986); National City Corporation, 70 FEDERAL RESERVE BULLETIN
743 (1984); Banks of Mid-America,
Inc., 70 FEDERAL RESERVE
BULLETIN 460 (1984); Manufacturers Hanover Corporation (CIT), 70
FEDERAL RESERVE BULLETIN 4 5 2 (1984).
also Security Banks of Montana, 71 FEDERAL RESERVE BULLETIN 246
(1985).
30. Each share of IBC common stock will be exchanged for 1.575
shares of BNY's common stock and $15.00 net to the seller in cash.
The total consideration for the acquisition is $1.1 billion.
31. In analyzing the financial aspects of the proposal, the Board has
used financial statements as of December 31, 1987, for both parties,
adjusted for projected operations of the organizations through April
30, 1988, BNY's anticipated consummation date, as well as IBC's
issuance on February 23, 1988, of approximately $100 million of
cumulative convertible preferred stock.
32. BNY's commitments are based on the deduction of all intangibles from the calculation of this ratio, not only goodwill.
Legal Developments
265
IBC has challenged BNY's pro forma capital ratio
commitments on the basis of the purchase accounting
adjustments projected by BNY for certain IBC
assets. 34 The primary dispute concerns the accounting
treatment of IBC's loans to heavily indebted developing countries and IBC's nonperforming loans. 35
BNY proposes to write down the value of $250
million of IBC's debt to heavily indebted developing
countries to be sold within one year following consummation to reflect the estimated secondary market value
of this debt but proposes to make no further accounting adjustments for the remaining portion of this
portfolio or IBC's nonperforming loans. BNY relies on
its interpretation of generally accepted accounting
principles governing purchase transactions to support
its accounting treatment of IBC's loans.
IBC counters with its interpretation of prevailing
accounting principles that would require all of its debt
to heavily indebted developing countries and nonperforming loans to be written down to current market
values. Under these accounting adjustments, additional goodwill would be created thus requiring BNY
to raise more capital in absolute terms to achieve its
capital ratio commitments.
The Board's requirement for additional capital at
and shortly after consummation of the proposal assumes the purchase accounting adjustments submitted
by BNY and in the amounts stated in its proposal. As
noted, this capital level, higher than that proposed by
BNY, was established in part on the basis of the
Board's consideration of asset quality and the uncertainties that are naturally raised in an acquisition of
this size. Thus, the Board's requirement for a strong
tangible equity position takes into account the concerns raised by IBC.
Based on the above considerations, including the
capital requirements established by the Board in this
Order and the commitments by BNY regarding its
tangible common equity to assets ratio at consummation and within 12 months of consummation, and
the facts of record, the Board concludes that the
financial resources of BNY and the banks and companies involved are consistent with approval of the
proposal.
In its application, BNY requested approval for the
acquisition of IBC's shares under three different purchase prices, which included variations on the cash
and stock portions of the purchase price. BNY also
has reserved the right to modify its offer and, as noted,
has done so during the pendency of this application.
33. For example, this would allow for any additional costs that
B N Y might incur in rationalizing the computer systems of the two
organizations or offset any reduction in BNY's projected cost savings
arising from the acquisition.
34. Accounting adjustments directly impact on these commitments
by potentially increasing the amount of goodwill generated by the
acquisition and producing a complementary diminution in the capital
ratios if all other circumstances remained unchanged.
35. Recent loan loss reserve provisions for the debt to heavily
indebted developing countries taken by IBC in the fourth quarter have
significantly reduced the quantitative impact of this dispute.
expansion proposals. To achieve full compliance with
this policy, particularly given the size of the proposed
combination, the Board believes that, in order for
BNY to proceed with consummation of its proposal,
BNY should support at least 60 percent of the cash
outlay required by its proposed purchase through the
issuance of an equal amount of new equity capital in
the form of common stock or noncumulative, perpetual preferred stock. Moreover, the Board believes
that, within six months of consummation of the proposal, the remaining 40 percent of the cash outlay for
the purchase should be supported by common stock or
perpetual preferred stock. The Board conditions its
order on compliance with these capital requirements.
The new equity capital BNY must raise to comply with
these capital requirements will not be considered in
determining whether BNY has complied with its commitment to the Board that at consummation BNY
would have a tangible common equity to assets ratio of
at least 3.5 percent.
On the basis of these requirements, the capital of the
combined organization would be restored to pre-acquisition levels within a short period of time after consummation. The proposal, thus, would be consistent
with the Board's capital policy that an expansionary
acquisition not interfere with an applicant's ability to
maintain a strong capital position above the minimum
levels required under the Board's guidelines, without
significant reliance on intangibles.
Further, on the basis of these capital requirements,
BNY's capital position at consummation would not
only be in full compliance with the Board's Capital
Adequacy Guidelines but would also be at or above
the current average levels of its peer group of the
nation's largest banking organizations. The increased
capital will serve to offset the goodwill BNY would
incur to effect the acquisition and will provide additional capital to cushion the impact of any potentially
adverse financial effects raised in an acquisition of this
magnitude. 33 These capital requirements fully address
IBC's contention that BNY's cash payment to IBC
shareholders and the costs of effecting the acquisition
will weaken the capital position of the combined
organization.
266
Federal Reserve Bulletin • April 1988
The Board's approval in this Order, however, is
limited to the current offer made by BNY for IBC's
shares as described in this Order. Accordingly, if BNY
further amends or alters the offer, it must consult with
the Board to determine whether the amendment is so
material, as it relates to the Board's analysis and
conclusions under the statutory factors, that it would
require a new application or further proceedings before the Board.
Managerial Resources and Future Prospects
The Board has also considered the managerial resources of the companies and banks involved, including those of the combined organization upon consummation, as well as their future prospects, as required
under section 3(c) of the Act. At the outset, the Board
notes that both organizations have management resources which have established records of positive
earnings and operations.
IBC comments that several considerations in the
proposal will result in inadequate managerial resources for the combined organization. In its view,
disparate technological systems and management philosophies will make it extremely difficult to combine
successfully the two organizations. IBC predicts significant employee defection, with an irreplaceable loss
of expertise in such key areas as its international
operations. Additionally, IBC criticizes BNY's past
management record and questions the propriety of the
BNY employee pension plan's purchase of BNY
stock.
BNY disputes any negative managerial considerations by focusing on its commitment to retain IBC's
management personnel after consummation of the
transaction. BNY has offered contracts to senior management and has committed to establish a committee
comprised of officers from each institution for the
purpose of determining staffing decisions for the combined institutions solely on the basis of merit. According to BNY, its decision to foster the goodwill of IBC
management and personnel through these commitments significantly reduces potential difficulties involved in merging the two organizations. BNY also
defends its past management record and maintains that
the pension benefits of its employees were increased
by the purchase of BNY stock.
The Board believes that BNY's personnel commitments and the involvement of IBC management in
future staffing decisions mitigate potential concerns
raised by a consolidation of this magnitude and complexity. Through these commitments, BNY enhances
the availability of experienced employees to assist in
both the technological and organizational integrations.
To the extent that IBC employees voluntarily depart,
BNY would have the resources to be able to attract
adequate replacement personnel. Further, B N Y has
demonstrated its ability to manage a large banking
organization. The Board finds no evidence to support
a finding that BNY's managerial resources are inadequate to undertake the proposal. The Board also finds
no evidence that pension fund purchases of BNY
stock reflect adversely on the integrity or the managerial ability of BNY.
IBC also questions the future prospects of the
combined institutions on the following bases:
(1) BNY's proposed asset divestitures are necessitated by its commitment to meet capital ratios and
will adversely affect IBC's core business operations
by significantly weakening its future financial resources;
(2) disparate IBC technology will make BNY's
systems integration difficult, costly and extremely
risky; and
(3) BNY's cost savings projections are unrealistic
and ill-conceived.
BNY responds that:
(1) proposed asset divestitures are based on strategic planning incorporating BNY's greater emphasis
on profit;
(2) IBC's and BNY's technological systems are not
so dissimilar as to prevent an efficient integration;
and
(3) cost savings are based on reasonable projections
of employee attrition and more efficient use of
present resources.
IBC attributes a loss of core business primarily to
BNY's proposed $1 billion reductions in its interestbearing foreign deposits and foreign short-term loans.
Additionally, BNY's proposed reduction in trading
assets and federal funds transactions will, according to
IBC, impair its current status as a primary dealer
thereby making it more difficult to attract foreign
institutional customers. The Board finds, however,
that BNY's strategic planning differs from IBC's approach in allocating financial resources. In short, BNY
does not propose to run IBC's international operations
under IBC's business assumptions. Moreover, when
these reductions are considered in the context of the
combined organization's resources for international
operations, there appears to be sufficient flexibility for
BNY to make adjustments that may be required if
IBC's projections are accurate. BNY also has adequate alternatives for achieving its capital commitments without total reliance on these proposed divestitures.
IBC has alleged in detail the incompatibility of the
IBC and BNY technological systems, and although the
Legal Developments
extent of the difficulty and costs involved in integrating
these systems is in dispute, the Board recognizes that
this process is a significant undertaking that requires
careful consideration. BNY has committed to devote
its internal resources as well as those of outside
experts toward extensive analysis and planning before
the integration is initiated, and the record in this
application does not demonstrate that BNY is unable
to undertake this process. The Board recognizes that
there may be significant costs in integrating the two
systems. However, even if BNY's projected cost
savings from the acquisition are totally eliminated, the
Board believes that BNY will have sufficient financial
resources to meet the challenge of integrating the
technological systems, particularly given the level of
capital required of BNY in order for it to consummate
the acquisition.
IBC states that other BNY costs savings resulting
from staff reductions through attrition and reduced
office space needs for the combined organizations are
unrealistic. The record in this application does not,
however, support a finding that BNY's projections
on employee attrition are unrealistic. 36 Additionally,
BNY's decision not to sell immediately IBC's building
at 1 Wall Street increases BNY's flexibility to provide sufficient office space for the combined
workforce.
Regarding its future prospects, BNY submitted financial projections showing certain cost savings from
reduction in salaries, benefits, advertising and marketing, and occupancy. In evaluating the future prospects
of the organization, the Board has excluded BNY's
projected cost savings (due to their inherently subjective nature and the fact they could be offset by
additional expenses in integrating the two organizations, particularly with respect to their data processing
systems) and has projected earnings on a more conservative basis than advocated by BNY based upon
the historical performance of the two organizations.
Even at this level, however, BNY would be able to
meet its 4.1 percent tangible common equity commitment, particularly given the Board's requirement for
new equity capital to offset the cash portion of the
purchase price. 37
On the basis of its review of the record, including
the organizations' records of earnings and capital
improvement, the Board concludes that the managerial resources and future prospects of the companies
36. In light of B N Y ' s personnel commitments, IBC's suggested
cost to account for involuntary termination benefits has diminished
relevance.
37. The Board has considered growth in assets above that projected by BNY. The Board notes, however, that BNY would be
required to limit asset growth to deal with any capital demand that is
not met by earnings retention or issuance of additional capital.
267
and banks involved are consistent with approval of the
application. 38
Convenience and Needs
Considerations
IBC contends that the public convenience and needs
would not be served by BNY's proposal for the
following reasons:
(1) an increase in concentration in the government
securities clearing market would increase operational risks to federal debt financing;
(2) problems associated with the integration of IBC
and BNY would decrease IBC's present quality of
service to local communities;
(3) services to certain local counties would be lost
because branches would replace local subsidiary
banks; and
(4) non-negotiated takeovers threaten the public
interest.
The Board has carefully considered the potential in
this proposal for aggravating the risks posed by the
possible operational failure of a major participant in
the government securities clearing market. In this
regard, BNY has committed to run both BNY's and
IBC's clearing systems separately for a considerable
period of time while BNY conducts an extensive
review and analysis to determine how the systerhs may
be properly integrated. During this period the two
systems will be operated as they are now by generally
the same personnel. BNY further commits to fully
inform the Federal Reserve Bank of New York of
its plans and progress and not to effect any consolidation without Federal Reserve Bank approval. Under
these circumstances, the Board concludes that the
acquisition of IBC's government securities clearing
operation is not a negative consideration in this proposal.
The record of this application does not support
IBC's second and third concerns. As previously discussed, BNY's personnel plans will minimize any
disruption caused by combining the two companies.
Similarly, BNY appears to have sufficient financial
flexibility to minimize the possibility of any abnormal
disruption in customer service when integrating the
technological systems. The record is equally unsupportive of IBC's assertion that conversion of current
IBC subsidiary banks into branches of B N Y would be
injurious to the public convenience and needs of
certain local New York counties. The Board has never
determined that, as a general matter, one form of
38. The Board requires as a condition of approval that B N Y submit
to the Federal Reserve Bank of N e w York the names and qualifications of the persons it intends to nominate to the IBC board.
268
Federal Reserve Bulletin • April 1988
corporate organization provides superior services to
the public over the other. In the context of this specific
application, the record fails to demonstrate that BNY
will be any less able than IBC to serve the public
convenience and needs through its branches instead of
through individually chartered banks. 39 The Board
notes that there are in New York and in many areas of
United States, large numbers of banking organizations
that effectively serve different communities through
branch systems rather than through individual
banks.
As noted, the Board does not believe the nonnegotiated nature of the proposal in and of itself should
be given negative weight in the Board's evaluation
under the financial and public convenience and needs
criteria Congress has set out in the Act. Moreover, the
Board does not believe that the non-negotiated nature
of the proposal would, under the facts and circumstances and given the conditions established in this
Order, result in adverse effects on the public convenience and needs, or the financial or managerial resources and future prospects of the organizations
involved, that would warrant denial under the Act's
statutory criteria.
Community Reinvestment
Act
In considering the convenience and needs of the
community to be served, the Board has taken into
account the record of BNY under the Community
Reinvestment Act ("CRA") (12 U.S.C. § 2901
et seq.). The CRA requires the federal bank supervisory agencies to encourage financial institutions to
help meet the credit needs of the local communities in
which they operate, including low- and moderateincome neighborhoods, consistent with the safe and
sound operation of the institutions. To accomplish this
end, the CRA requires the appropriate supervisory
authority to "assess the institution's record of meeting
the credit needs of its entire community, including
low- and moderate-income neighborhoods, consistent
with the safe and sound operation of the institution."
The Board is required to "take such record into
account in its evaluation" of applications under section 3 of the Act.
With regard to BNY's CRA record, the Board
received comments from the New York chapter of the
Association of Community Organizations for Reform
Now ("ACORN") and the United Tenants of Albany
("UTA") (collectively "Protestants") opposing ap-
39. BNY has committed that it will not close any branch acquired
from IBC if, as a consequence, any neighborhood previously served
by a particular IBC branch is left without a branch of either BNY or
IBC.
proval of the application. On February 19, 1988,
ACORN advised the Board that it had reached a
community reinvestment agreement with BNY to
strengthen substantially BNY's commitment to help
meet the housing credit needs of low- and moderateincome neighborhoods in the City of New York.
ACORN further stated that it therefore recommends
approval of the proposal.
In accordance with the Board's practice and procedure the Board has reviewed the CRA record of
BNY's subsidiary bank, the allegations made by protestants, and BNY's response. 40 The Board notes that
while the CRA record of BNY's subsidiary bank
("Bank") has been generally satisfactory, there are
certain areas where the Board believes Bank needs to
take steps to strengthen its CRA performance. In
particular, the Board believes Bank must reassess its
local community delineations in the New York City
area to ensure that they reflect Bank's lending territory
and do not arbitrarily exclude major portions of New
York City, including low- and moderate-income
neighborhoods. 41 In addition, upon consummation,
BNY should also take steps to reassess the community
delineations for Irving Trust Company to ensure that
they reflect that institution's lending territory and do
not arbitrarily exclude low- and moderate-income
neighborhoods.
Regarding Bank's efforts to ascertain and help meet
community credit needs, to participate in community
development and to institute appropriate procedures
40. Although UTA joined with ACORN's protest of this application, its primary concern was the potential negative impact on banking
services in low- and moderate-income neighborhoods in the AlbanyTroy SMSA that may be caused by BNY's proposed sale of IBC's
bank subsidiary located in this area. To the extent that these concerns
are based on a potential lack of effective competition, BNY has
committed to sell IBC's subsidiary banks only to purchasers satisfying
current Department of Justice competitive guidelines. Other concerns
may best be addressed in the context of a specific proposal before the
appropriate federal or state regulatory authority required to approve
the purchase. Under the relevant statutory criteria that would be
applied, the reviewing authority would have to determine that the
acquisition would not be competitively harmful, that the acquiror has
the financial and managerial resources to manage the institution
effectively, and that the convenience and needs of the community
would continue to be served by the institution.
Other commentators have viewed BNY's proposed sale of IBC's
upstate bank subsidiaries as potentially causing widespread unemployment. There is, however, no evidence that the proposed sales will
cause significant unemployment because the purchasers will need
personnel to staff offices. Moreover, immediate, significant changes in
personnel at these banks would be inconsistent with BNY's announced intent to sell the upstate subsidiaries. Accordingly, BNY's
response to these concerns reflects an intent to continue current
personnel levels at the bank subsidiaries proposed for divestiture. As
noted by the New York State Banking Board, B N Y has pledged to
attempt to achieve any necessary personnel reductions in the resulting
organization through attrition.
41. The Board notes that while Bank's CRA delineations appear
too narrow under the standards in the Board's regulations (12 C.F.R.
§ 228.3), the Board finds no evidence that Bank has discriminated in
its lending geographically.
Legal Developments
to monitor CRA performance, the Board has considered the action taken by the board of directors of Bank
on February 16, 1988, to adopt a formal CRA statement for Bank. The statement pledges Bank's commitment to the goals of CRA and institutes a four-point
plan to strengthen Bank's service to its local communities, including low- and moderate-income neighborhoods. In particular, the statement requires Bank to:
• adopt an education and information program for
bank officers and employees regarding their responsibilities under CRA and fair lending practices laws,
including information regarding Bank's policies regarding loans to small and minority-owned businesses
and low- and moderate-income housing;
• designate a lending officer for each of its principal
geographical areas who will be responsible for monitoring the availability of Bank's lending programs for
small and minority-owned business and low- and moderate-income housing in that area;
• provide specialized training to designated CRA officers to assist Bank's lending employees and officers
in connection with specialized government and community development programs directed to low- and
moderate-income communities;
• continue Bank's broad-based advertising and marketing programs to inform low- and moderate-income
groups and minority communities of Bank's lending
programs and services, including making available in
branches in New York City and other appropriate
areas, marketing and informational materials printed
in Spanish as well as English;
• inform itself of community credit needs through a
program of periodic meetings with public and private
community groups to discuss the credit needs of lowand moderate-income groups and minorities and provide a mechanism by which these communications
regarding the community needs are made available to
Bank's officers with responsibility in the CRA area;
• develop loan programs responsive to the credit
needs of low- and moderate-income neighborhoods,
by providing financing for low- and moderate-income
housing, small business and commercial real estate
projects in its communities consistent with safe and
sound banking practices;
• attempt to be flexible in the application of its general
underwriting credit criteria within the bounds of prudent lending practices and safe and sound banking
operations;
269
• emphasize home mortgage and home improvement
loans for development and rehabilitation of one-to
four-family structures, as well as housing development
loans for multi-family structures; and
• implement a CRA compliance reporting and monitoring system, with at least quarterly reports by local
CRA officers to Bank's CRA compliance officer as
well as review of the reports by a CRA committee of
Bank's board of directors and the entire board of
directors.
The Board believes that Bank's effective implementation of the measures spelled out in this statement will
strengthen Bank's CRA performance in the areas
noted. In light of this statement, and the other facts of
record, including Bank's overall satisfactory CRA
record, and subject to Bank's reassessment of its local
communities as discussed above, the Board concludes
that convenience and needs considerations are consistent with approval.
In order to monitor implementation of Bank's statement, particularly Bank's emphasis on housing-related
lending, as well as Bank's reassessment of its local
communities in New York City, the Board requires
that BNY submit periodically reports to the Federal
Reserve Bank of New York describing Bank's progress in these areas beginning six months after consummation of its acquisition and continuing thereafter until
the Federal Reserve Bank is satisfied that the statement has been implemented and the reassessment of
its communities has been accomplished.
Provisions of New York Law and IBC's
Shareholders' Purchase Rights Plan
IBC argues that New York corporate takeover law and
IBC's shareholders' rights plan present potential barriers to BNY's contested acquisition of IBC. 4 2 Under
New York law ("Section 912"), 43 a shareholder acquiring more than 20 percent of the stock in a target
corporation without the approval of its board of directors may not subsequently merge the two organizations for a minimum period of five years. Similarly,
IBC's Shareholders' Purchase Rights Plan permits
IBC stockholders to acquire $400 of BNY's stock after
the acquisition for $200, the current exercise price for
the rights, unless these rights are redeemed by IBC's
42. In recognition of these issues, B N Y has conditioned its tender
offer upon their satisfactory resolution. Other conditions to the tender
offer include a valid tendering of at least two-thirds of the total number
of outstanding IBC shares on a fully diluted basis, approval by BNY's
shareholders, and other appropriate regulatory approvals without
material conditions unacceptable to BNY.
43. N.Y. Bus. Corp. Law § 912 (McKinney 1986).
270
Federal Reserve Bulletin • April 1988
board of directors before a third party acquires 20
percent of IBC's voting shares. 44
At the outset, the Board notes that BNY proposes to
initiate a tender offer for all of IBC's shares, and has
applied to the Board for approval under the Act to
acquire the shares tendered. If the tender is successful, IBC's board of directors could reconsider and
approve the acquisition of 20 percent or more of IBC's
shares or its merger with BNY, thus satisfying Section
912. Similarly, in such a situation, the board of directors may decide to redeem the Shareholders' Purchase
Rights Plan.
BNY has presented an alternative proposal to overcome these obstacles, however, in the event IBC's
board does not consent to the acquisition. With Board
approval under the BHC Act, BNY proposes to initiate a proxy contest at its next annual meeting for
control of IBC's board of directors at IBC's next
annual shareholders meeting (scheduled for April 21,
1988) and to acquire up to 19.9 percent of IBC's voting
shares prior to that time to increase the likelihood of a
successful proxy solicitation. If this approach is successful, the newly constituted board could, according
to BNY, approve BNY's offer and redeem the shareholders rights before the 20 percent thresholds in
Section 912 or the rights plan are triggered. BNY has
committed not to elect its nominees to IBC's board,
however, unless the nominees constitute at least a
majority of the IBC directors. 45
44. Under this plan, holders of the rights are entitled to purchase
one share of new IBC common stock for $200. If IBC is subsequently
acquired in a merger or other business combination transaction, or 50
percent or more of its consolidated assets are sold, each holder of an
unexercised right is entitled to purchase that number of the acquiror's
common shares that have a market value of two times the then-current
exercise price.
45. BNY also proposes alternative resolutions to these state law
questions, such as litigation to challenge the legality of these provisions or a continuing refusal of IBC's directors to accept the offer. IBC
challenges these alternatives by asserting the constitutionality of New
York law and the legality of all actions by the IBC board of directors
under BNY's view of applicable corporate case law precedent.
Regarding constitutional challenges to state laws, the Board has
previously stated that it will not hold a state statute unconstitutional
without "clear and unequivocal evidence of the inconsistency of the
state law with the federal Constitution." Chemical New York Corporation, 7 3 FEDERAL RESERVE BULLETIN 609, 6 1 0 (1987); Bank of New
England
Corporation,
7 0 FEDERAL RESERVE BULLETIN 3 7 4 , 3 7 6
(1984); NCNB Corp., 68 FEDERAL RESERVE BULLETIN 54, 56 (1982);
Whitney National Bank in Jefferson Parish v. Bank of New Orleans &
Trust Company, 379 U.S. 411, 419 (1965). The Board concludes that
Section 912 has not been demonstrated to be unconstitutional under
this standard. In any event, the Board finds it unnecessary to resolve
the remaining legal issues presented by BNY's alternative proposals.
BNY's proposed proxy contest to elect a majority of the IBC board
provides a reasonably certain resolution of the issues presented by
both of these potential barriers. If BNY is unable to effect its proposal
within three months, under the terms of this Order the Board will have
the opportunity at that time to reassess BNY's ability to consummate
the transaction.
IBC challenges BNY's approach under the Depository Institution Management Interlocks Act ("Interlocks Act") (12 U.S.C. § 3201 et seq.) and the
Board's decision in NBC Co. 4 6 The Interlocks Act
prohibits director interlocks between two nonaffiliated
institutions in the same metropolitan statistical area
and between large bank holding companies unless an
institution is a "subsidiary" for purposes of section
2(d) of the Bank Holding Company Act. 4 7 In light of
BNY's proposal to acquire at least 19.9 percent of
IBC's shares and its commitment to elect at least a
majority of the IBC board of directors, the Board
concludes that the two organizations would become
"affiliates" for purposes of the Interlocks Act, and
thus the interlocking directors between IBC and BNY
would not be prohibited.
IBC also challenges BNY's proposed acquisition
under the Board's decision in NBC Co. In that case,
the Board denied a bank holding company's application to acquire between 20 to 25 percent of the voting
shares of a bank. In NBC Co., the Board stated that,
because a single shareholder held over 50 percent of
the voting shares of the bank and vigorously opposed
the acquisition, the proposal "would only perpetuate
or aggravate dissension in Bank's management" without the applicant having any opportunity to obtain
control of the bank. 48 The Board also noted that the
proposed acquisition in NBC Co. could detract from
the overall financial condition of the applicant, which
planned to rely on the bank's dividends to service the
applicant's acquisition debt.
The Board has considered the effects of BNY's
proposed minority ownership position on the management of IBC. In this case, unlike in NBC Co., BNY
will become the largest single shareholder of IBC, and
its acquisition of a minority interest is a first step in
seeking control of IBC. The Board has recently approved the acquisition of a minority interest in a bank
holding company "where there is a possibility or
likelihood that the applicant will eventually gain control, despite claims by management of possible
dissension." 49 Moreover, the proposed 19.9 percent
46.
6 0 FEDERAL RESERVE BULLETIN 7 8 2
(1974).
47. Under the relevant alternative tests in the Act, a "subsidiary"
is: (i) "any company the election of a majority of whose directors is
controlled in any manner by such bank holding company"; or (ii) "any
company with respect to the management or policies of which such
bank holding company has the power, directly or indirectly, to
exercise a controlling influence . . ." 12 U.S.C. § 1841(d).
48. Id. at 784.
49.
Crescent
Holding
Company,
7 3 FEDERAL RESERVE BULLETIN
457 (1987). See also Lloyds Bank PLC, 72 FEDERAL RESERVE BULLETIN 841, 844 (1986). The position taken by IBC could preclude the
Board from approving any proposal to acquire less than an absolute
majority of the shares of a bank holding company if the management
of the bank holding company disapproves the acquisition. Crescent
Holding Company at 458; Lloyds Bank PLC at 844.
Legal Developments
investment will not impair the financial resources or
capital position of BNY, and BNY would not be
dependent upon dividends from IBC to meet any debt
servicing requirement. Consequently, even if BNY is
unsuccessful in its proxy solicitation, this case more
closely resembles the facts of several cases approved
by the Board, which involved acquisitions by bank
holding companies of minority positions in other institutions without the consent of the institutions'
management. 50 The Board finds no evidence in the
record that BNY's retention of a 19.9 percent interest
in IBC, if BNY's efforts to acquire all of the shares of
IBC are unsuccessful, would adversely affect in a
significant manner IBC's operations. In this regard,
the Board notes that BNY has committed that if it is
unsuccessful in electing at least a majority of IBC's
board through the proposed proxy solicitation, BNY
would not elect any representative to the IBC board.
BNY has stated that if it decides to acquire this 19.9
percent interest, it will fund the acquisition with the
issuance of new primary capital, thus avoiding any
diminution of BNY's capital position. The Board's
approval for BNY to acquire these shares, as proposed, is, however, conditioned upon BNY raising
common equity in an amount that is at least equal to
the cost of these shares. This common equity must be
raised within six months following the expiration of
the period provided in this Order for BNY to consummate its proposal to acquire 100 percent of IBC, or
within six months of any extension of such period by
the Board.
Hearing
Request
IBC has requested a formal hearing on the application.
Section 3(b) of the BHC Act does not require the
Board to hold a hearing concerning an application
unless the appropriate banking authority for the banks
to be acquired makes a timely written recommendation of denial of the application. In this case, no such
recommendation of denial has been received from the
Comptroller of the Currency or the New York Superintendent of Banks, and thus no hearing is required
under the terms of the BHC Act. 51
Further, IBC has been given the opportunity, and
has submitted, extensive written facts and arguments
to the Board regarding this application. These materi-
50.
Hudson
Financial
TIN 151 (1986); See,
Associates,
e.g.,
RESERVE BULLETIN 5 7 5
72 FEDERAL RESERVE BULLE-
City Holding
Company,
271
als, as well as responses from BNY have not provided
any basis to support the belief that the facts already
before the Board are incomplete or insufficient to
permit the Board to carry out its responsibility under
the BHC Act to evaluate the applications under the
statutory criteria or that further investigation would
produce additional relevant information. The Board is
not required to hold a formal hearing where a party
disputes the conclusions to be drawn from established
facts or where such proceedings would not serve to
develop new or useful facts.
IBC asserts several factual disputes, including
whether BNY has satisfied the Board's capital adequacy requirements with accurate pro forma financial
projections; whether proposed assets sales would adversely affect IBC's business; whether BNY's cost
savings estimates are justified; whether the technological systems can be integrated; whether the managerial
resources will be sufficient; whether government securities clearance and ADR operations are distinct product markets; and whether the combined institution will
serve the needs of the community. These assertions
are not designed to dispute facts in the record or even
to elicit new facts. Rather than challenging existing
facts, these assertions draw into question inferences
and conclusions drawn from the factual presentations
in the application. 52 The Board finds that IBC and
BNY have had ample opportunity to present evidence
and arguments in writing and to respond to one another's submissions and concludes that the parties'
extensive written submissions have been an adequate
means of clarifying the issues in this case, including
the factual questions raised by IBC. A formal hearing
is unnecessary to develop new or useful facts and,
accordingly, IBC's request for a hearing is denied.
Other Matters
IBC has raised the question regarding the propriety of
certain communications between the New York Reserve Bank staff and BNY concerning BNY's pro
forma tangible common equity. The record in this
case, however, demonstrates that these communications occurred early in the application process, well
before the time IBC protested the application. Accordingly, the Board does not regard the communications
as ex parte or improper. The Board notes that the
existence and substance of these communications
were made known to IBC and IBC has commented
thereon.
71 FEDERAL
(1985).
51. 12 U.S.C. § 1842(b); Farmers & Merchants Bank of Las Cruces
v. Board of Governors, 567 F.2d 1082, 1085 (D.C. Cir. 1977); Grandview Bank & Trust Co. v. Board of Governors, 550 F. 2d 415, 421 (8th
Cir. 1977), cert, denied, 434 U.S. 821 (1977); and Northwest Bancorporation v. Board of Governors, 303 F.2d 832, 842-44 (8th Cir. 1962).
52. For example, IBC's contentions regarding financial projections
and cost savings have been addressed by the Board through the
requirement for stronger capital initially.
272
Federal Reserve Bulletin • April 1988
IBC has questioned the propriety of BNY's supplementation of its application to the Board with copies of
Securities and Exchange Commission filings and other
materials, instead of restating and refiling the application with the Board. The Board's procedures and
practice do not require an applicant to file a new
restated application to reflect changes occurring during the application process, but permit the applicant to
amend the initial application by letter or other written
submissions to reflect the changes. In this case, that
practice was followed. BNY's proposal is fully detailed in the initial application (FR Form Y-2) and
subsequent amendments filed to reflect changes occurring during the pendency of the application, and BNY
has responded fully to all requests by the Board for
information regarding the proposal. The Board finds
no inadequacies in BNY's amendatory submissions
that would impair the Board's ability to evaluate the
financial or other relevant aspects of the proposal
under the criteria specified in the Act. Accordingly,
the Board does not believe that it is necessary or
appropriate to require BNY to restate or refile its
original application.
Extension of the 90-day Period for
Consummation
As discussed at the outset, the Board is concerned that
the extension of the post-approval consummation period over a prolonged period in a contested situation
could result in adverse effects on the financial and
managerial resources of the organizations in a variety
of different areas. For example, when ownership of an
institution is in doubt over a prolonged period of time,
the personnel and financial resources of both the
offeror and the target are subject to strain.
Accordingly, the Board has determined not to follow its normal procedure of permitting the appropriate
Reserve Bank to extend the 90-day consummation
period upon a showing by the applicant of no material
change in the facts and circumstances underlying the
Board's approval decision. The Board will carefully
evaluate any request by BNY to extend the period for
consummation of the application in light of bank safety
and soundness concerns. The Board would not expect
to extend the 90-day period more than once and then
only if the Board is satisfied regarding bank safety and
soundness considerations and that consummation of
the proposal is likely within the extended period.
Nonbanking
Acquisitions
BNY also has applied, pursuant to section 4(c)(8), to
acquire certain nonbanking subsidiaries of IBC. BNY
operates loan production and loan servicing, mortgage
banking, equipment lease financing, credit life, accident and health insurance, corporate trust and custody, personal trust and retail discount brokerage
subsidiaries that directly compete with IBC and its
subsidiaries in these activities. Consummation of the
proposal, however, would have a de minimis effect on
existing competition in each of these markets and
there are numerous competitors for these services.
Accordingly, the Board concludes that the proposal
would not have any significant adverse effect on
existing or probable future competition in any relevant
market. Furthermore, there is no evidence in the
record to indicate that approval of this proposal would
result in undue concentration of resources, decreased
or unfair competition, conflicts of interests, unsound
banking practices, or other adverse effects on the
public interest. Accordingly, the Board has determined that the balance of public interest factors it must
consider under section 4(c)(8) of the Act is favorable
and consistent with approval of the applications to
acquire the nonbanking subsidiaries of IBC.
The Board has also considered the notice of BNY's
proposed investment in Irving International Trade
Inc., under section 4(c)(14) of the BHC Act and the
acquisition of Irving International Financing Corporation under the Edge Act. Based on all the facts of
record, the Board has determined that disapproval of
the proposed investment is not warranted.
Conclusion
Based on the foregoing and other facts of record, the
Board has determined that the applications under
sections 3 and 4 of the BHC Act and under the Edge
Act should be and hereby are approved. This approval
is also subject to the condition that BNY obtain all
required state approvals and comply with all conditions and commitments stated in this Order. The
acquisition of IBC 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 by the Board.
The determinations as to BNY's nonbanking activities are subject to all of the conditions contained in
Regulation Y, including those in section 225.4(d) and
225.23(b)(3) (12 C.F.R. §§ 225.4(d) & 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 evasion
thereof.
Legal Developments
By order of the Board of Governors, effective
February 25, 1988.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governor Kelley.
WILLIAM W . WILES
Secretary of the Board
APPENDIX
Nonbanking Subsidiaries To Be Acquired
Irving Business Center, Inc., and thereby engage in
the business of marketing the lending and leasing
products and services of Irving Trust Company; Irving
Financial Centers, Inc., and thereby engage in consumer lending and commercial lending to local business; Irving Life Insurance Company, and thereby
engage in providing credit-related life, mortgage and
health insurance sold in connection with extensions of
credit to customers of IBC's bank and nonbank subsidiaries; Irving Securities, Inc., and thereby engage in
securities trading activities, including acting as a primary dealer in United States government securities;
273
Irving Services Corporation, and thereby engage in
servicing loans primarily related to credit card purchases and providing data processing services to others; Irving Trust Company California, and thereby
engage in providing fiduciary, custody and investment
management services; Irving Trust Company Florida,
and thereby engage in providing fiduciary, custody and
investment management services; One Wall Street
Brokerage, Inc., and thereby engage in securities
brokerage activities; Briggs, Schaedle Futures Inc.,
and thereby engage in futures commission merchant
for nonaffiliated persons in the execution and clearance of futures contracts and options on futures contracts; Liberty Brokerage, Inc., and thereby engage as
interdealer broker of United States government securities; and Irving Leasing Corporation and its twelve
subsidiaries (Airlease Incorporated, Airlease Foreign
Sales Corporation, IRE-AC Inc., IRE-AC, Parent,
Inc., IRE-AC, Subsidiary, Inc., IRE-BC, Inc., IRE-1,
Inc., IRE-3, Inc., IRE-4, Inc., Irving Leasing Foreign
Sales Corporation, ITC Leasing Corporation and SDM
Development Enterprises, Inc.), and thereby engage
in leasing personal or real property or acting as agent,
broker or advisor in leasing such property. The Board
has determined that these activities are closely related
to banking and permissible for bank holding companies. 12 C.F.R. §§ 225.25 (b)(1), (3), (5), (7), (8), (15),
(16), and (18).
ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT
By Federal Reserve
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
,.
A
Applicant
Anmer Corporation,
Neligh, Nebraska
Banc One Corporation,
Columbus, Ohio
Capital Directions, Inc.,
Mason, Michigan
CB&T Bancshares, Inc.,
Columbus, Georgia
Central of Kansas, Inc.,
Junction City, Kansas
t-j i / \
Bank(s)
First United Bank,
Neligh, Nebraska
Universal Corporation,
Ypsilanti, Michigan
Mason State Bank,
Mason, Michigan
Northwest Florida Banking
Corporation,
Quincy, Florida
The Peoples National Bank of
Clay Center,
Clay Center, Kansas
Reserve
^
Effective
^
Kansas City
February 12, 1988
Cleveland
February 16, 1988
Chicago
February 22, 1988
Atlanta
January 11, 1988
Kansas City
February 4, 1988
274
Federal Reserve Bulletin • April 1988
Section 3—Continued
.
Applicant
Century Financial Corporation,
Rochester, Pennsylvania
w \
Bank(s)
Century National Bank and Trust
Company,
Rochester, Pennsylvania
Citizens Holdings,
El Camino Bancorp,
Anaheim, California
Newport Beach, California
First National Bank of Overland
CNB Financial Corporation,
Park,
Kansas City, Kansas
Overland Park, Kansas
Community Bancorp, Inc.,
Three Cities Bancorp, Inc.,
Manchester, Missouri
Manchester, Missouri
Second Illinois Bancorp, Inc.,
Manchester, Missouri
Third Illinois Bancorp, Inc.,
Manchester, Missouri
First Bank of Red Bud, N.A.,
Red Bud, Illinois
Citizens State Bank of Pleasant Hill,
Pleasant Hill, Illinois
Roodhouse National Bank,
Roodhouse, Illinois
The Winchester National Bank,
Winchester, Illinois
C.P. Burnett & Sons, Bankers,
C.P. Burnett & Sons, Inc.,
Eldorado, Illinois
Eldorado, Illinois
Dominion Bankshares Corporation, Citizens Union Corporation,
Rogersville, Tennessee
Roanoke, Virginia
Dominion Bankshares Corporation, Merchants & Planters Corporation,
Newport, Tennessee
Roanoke, Virginia
Farmers State Holding Company, Farmers State Bank,
Marion, South Dakota
Marion, South Dakota
Fidelity BancShares (N.C.), Inc., The Fidelity Bank,
Fuquay-Varina, North Carolina
Fuquay-Varina, North Carolina
First Bancorp of Louisiana, Inc., First Bancorp of Louisiana, Inc.,
West Monroe, Louisiana
Employee Stock Ownership Plan,
West Monroe, Louisiana
First Commercial Bancshares, Inc.,
First Commerce Corporation,
Chalmette, Louisiana
New Orleans, Louisiana
First Farmers National Bank,
First Farmers Financial
Converse, Indiana
Corporation,
Converse, Indiana
Blackduck State Bank,
First National Agency of
Baudette, Inc.,
Blackduck, Minnesota
Baudette, Minnesota
First National Financial
The First National Bank of
Corporation,
Mt. Pulaski,
Mt. Pulaski, Illinois
Mt. Pulaski, Illinois
Reserve
^
Cleveland
Effective
^
February 23, 1988
San Francisco February 11, 1988
Kansas City
February 16, 1988
St. Louis
January 28, 1988
St. Louis
January 29, 1988
Richmond
February 22, 1988
Richmond
February 18, 1988
Minneapolis
February 9, 1988
Richmond
February 11, 1988
Dallas
February 2, 1988
Atlanta
February 9, 1988
Chicago
February 19, 1988
Minneapolis
February 2, 1988
Chicago
January 29, 1988
Legal Developments
275
Section 3—Continued
. ..
.
Applicant
First National Massillon
Corporation,
Massillon, Ohio
First United Corporation,
Oakland, Maryland
-pv i / \
Bank(s)
The First National Bank in
Massillon,
Massillon, Ohio
The First National Bank of
Piedmont,
Piedmont, West Virginia
First West Virginia Bancorp, Inc., Farmers and Merchants National
Wheeling, West Virginia
Bank in Bellaire,
Bellaire, Ohio
Woburn Five Cents Savings Bank,
First Woburn Bancorp, Inc.,
Woburn, Massachusetts
Woburn, Massachusetts
FSB Bancorp,
Frontier State Bank,
Show Low, Arizona
Show Low, Arizona
Harrison Bankshares, Inc.,
The Harrison County Bank,
Lost Creek, West Virginia
Lost Creek, West Virginia
Independent Community Bancorp, Kentucky Independent Bank, Inc.,
Frankfort, Kentucky
Inc.,
Frankfort, Kentucky
Jasand, Inc.,
City National Bank of Cedar Rapids,
Cedar Rapids, Iowa
Cedar Rapids, Iowa
Lake City State Bank,
Lake City Bancorporation,
Lake City, Iowa
Lake City, Iowa
The Bank of Elizabethtown, Inc.,
Liberty National Bancorp, Inc.,
Elizabethtown, Kentucky
Louisville, Kentucky
WABANC, Inc.,
Lincoln Financial Corporation,
Fort Wayne, Indiana
Wabash, Indiana
The First National Bank of Logan,
Logan Bancshares, Inc.,
Logan, Kansas
Logan, Kansas
Market Place National Bank,
Market Place Bancshares, Inc.,
Champaign, Illinois
Champaign, Illinois
NorCen Bank,
NCB Corp.,
Culver, Indiana
Culver, Indiana
El Camino Bank,
Ormside Proprietary Limited,
Anaheim, California
Melbourne, Australia
Overseas Finance Holdings
Proprietary Limited,
Melbourne, Australia
Aylworth Proprietary Limited,
Melbourne, Australia
Costa Mesa Limited,
London, England
Costa Mesa Holding N.V.,
Curacao, Netherlands Antilles
Citizens Financial Holdings, B.V.,
Amsterdam, Netherlands
Orrstown Financial Services, Inc., Orrstown Bank,
Orrstown, Pennsylvania
Orrstown, Pennsylvania
Reserve
^
Effective
^
Cleveland
February 8, 1988
Richmond
February 11, 1988
Cleveland
January 29, 1988
Boston
February 1, 1988
San Francisco February 5, 1988
Richmond
February 17, 1988
St. Louis
February 17, 1988
Chicago
February 4, 1988
Chicago
February 5, 1988
St. Louis
February 23, 1988
Chicago
February 25, 1988
Kansas City
February 19, 1988
Chicago
February 19, 1988
Chicago
February 22, 1988
San Francisco February 11, 1988
Philadelphia
February 5, 1988
276
Federal Reserve Bulletin • April 1988
Section 3—Continued
.
Applicant
PBT Bancshares, Inc.,
McPherson, Kansas
Premier Bancorporation, Inc.
Jackson, Michigan
Sea Island Bankshares, Inc.,
Statesboro, Georgia
Southold Bancorp, Inc.,
Southold, New York
T & C Bancorp, Inc.,
Lewistown, Missouri
Unibancorp, Inc.,
Chicago, Illinois
~ , , .
Bank(s)
Peoples Bank and Trust Company,
McPherson, Kansas
Michigan Bank-Midwest,
Jackson, Michigan
Michigan Bank - Mid South,
Litchfield, Michigan
Sea Island Bank,
Statesboro, Georgia
Southold Savings Bank,
Southold, New York
LaBelle Bancshares, Inc.,
LaBelle, Missouri
Great River Bancshares, Inc.,
La Grange, Missouri
The Farmers State Bank of Lostant,
Lostant, Illinois
Reserve
^
Effective
date
Kansas City
January 29, 1988
Chicago
February 3, 1988
Atlanta
February 17, 1988
New York
February 22, 1988
St. Louis
February 19, 1988
Chicago
February 10, 1988
Section 4
Applicant
Bank of Boston Corporation,
Boston, Massachusetts
Business Bancorp,
San Jose, California
CoreStates Financial Corp.,
Philadelphia, Pennsylvania
Lane Financial, Inc.,
Northbrook, Illinois
MCorp,
Dallas, Texas
MCorp Financial, Inc.,
Wilmington, Delaware
Paducah Bank Shares, Inc.,
Paducah, Kentucky
Nonbanking
Company/Activity
First Trust Company of Florida,
National Association,
Sarasota, Florida
provide data processing services
throughout the state of California
First Interstate Commercial
Corporation,
Pasadena, California
Lane Data Services, Inc.,
Northbrook, Illinois
Security Courier Corporation,
Carrollton, Texas
acquire certain additional assets
and certain liabilities of related
companies
assets of Commonwealth Financial
Services Corporation,
Bowling Green, Kentucky
Reserve
Bank
Boston
Effective
date
January 29, 1988
San Francisco February 19, 1988
Philadelphia
February 8, 1988
Chicago
February 5, 1988
Dallas
February 9, 1988
St. Louis
January 29, 1988
Legal Developments
277
Sections 3 and 4
Bank(s)/Nonbanking
Company
Applicant
AmSouth Bancorporation,
Birmingham, Alabama
Carlson Bankshares, Inc.,
Comfrey, Minnesota
Sioux National Company,
Lincoln, Nebraska
ORDERS APPROVED
Gulf First Holding Corporation,
Panama City, Florida
ATM Network, Inc.,
Panama City, Florida
First State Bank of N e w London,
N e w London, Minnesota
N e w London Agency, Inc.,
N e w London, Minnesota
Security State Bank,
Holbrook, Nebraska
engage in the sale of general
insurance in a town with a
population of less than 5,000
UNDER BANK MERGER
Reserve
Bank
Effective
date
Atlanta
February 18, 1988
Minneapolis
February 25, 1988
Kansas City
February 19, 1988
ACT
By Federal Reserve Banks
Applicant
Farmer & Merchants Bank and
Trust Company,
Aberdeen, South Dakota
Farmers State Bank of Alpha,
Alpha, Illinois
PENDING
CASES INVOLVING
Effective
date
Bank of Cresbard,
Cresbard, South Dakota
Minneapolis
February 3, 1988
Bank of Viola,
Viola, Illinois
Chicago
February 18, 1988
THE BOARD OF
GOVERNORS
This list of pending cases does not include suits against
Governors is not named a party.
National Association of Casualty and Surety Agents,
et al., v. Board of Governors,
Nos. 87-1644,
87-1801, 88-1001 (D.C. Cir., filed Nov. 4, Dec. 21,
1987, Jan. 4, 1988).
Securities Industry Association
v. Board of Governors, N o . 87-4161 (2d Cir., filed Dec. 15, 1987).
Independent
Insurance Agents of America, Inc. v.
Board of Governors, N o . 87-1686 (D.C. Cir., filed
N o v . 19, 1987).
Teichgraeber v. Board of Governors, No. 87-2505-0
(D. Kan., filed Oct. 16, 1987).
Securities Industry Association
v. Board of Governors, N o . 87-4135 (2d Cir., filed Oct. 8, 1987).
Reserve
Bank
Bank(s)
the Federal
Reserve
Banks in which the Board
of
Independent Insurance Agents of America, Inc. v.
Board of Governors, N o . 87-4118 (2d Cir., filed
Sept. 17, 1987).
Citicorp v. Board of Governors, N o . 87-1475 (D.C.
Cir., filed Sept. 9, 1987).
Securities Industry Association
v. Board of Governors, No. 87-4115 (2d Cir., filed Sept. 9,
1987).
Barrett v. Volcker, N o . 87-2280 (D.D.C., filed Aug.
17, 1987).
Northeast
Bancorp v. Board of Governors,
No.
87-1365 (D.C. Cir., filed July 31, 1987).
278
Federal Reserve Bulletin • April 1988
National Association of Casualty & Insurance Agents
v. Board of Governors, Nos. 87-1354, 87-1355 (D.C.
Cir., filed July 29, 1987).
The Chase Manhattan Corporation v. Board of Governors, No. 87-1333 (D.C. Cir., filed July 20, 1987).
Securities Industry Association v. Board of Governors, Nos. 87-4091, 87-4093, 87-4095 (2d Cir., filed
July 1 and July 15, 1987).
Lewis v. Board of Governors, Nos. 87-3455, 87-3545
(11th Cir., filed June 25, Aug. 3, 1987).
Securities Industry Association v. Board of Governors, et al. No. 87-4041 and consolidated cases (2d
Cir., filed May 1, 1987).
Securities Industry Association v. Board of Governors, et al., No. 87-1169 (D.C. Cir., filed April 17,
1987).
Independent Insurance Agents of America, et al. v.
Board of Governors, Nos. 86-1572, 1573, 1576
(D.C. Cir., filed Oct. 24, 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).
CBC, Inc. v. Board of Governors, No. 86-1001 (10th
Cir., filed Jan. 2, 1986).
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).
Brown v. United States Congress, et al., No. 8 4 2887-6(IG) (S.D. Cal., filed Dec. 7, 1984).
Melcher
v. Federal
Open Market
Committee,
No. 86-5692 (D.C. Cir., filed April 30, 1984).
A1
Financial and Business Statistics
CONTENTS
Domestic
WEEKLY REPORTING
Financial
Statistics
MONEY STOCK AND BANK
A3
A4
A5
A6
Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve
Bank credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks
POLICY
A7
A8
A9
CREDIT
INSTRUMENTS
Federal Reserve Bank interest rates
Reserve requirements of depository 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
MONETAR Y AND CREDIT AGGREGA TES
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
A19
A20
A21
ALL
COMMERCIAL
BANKS
Assets and liabilities
All reporting banks
Banks in N e w York City
Branches and agencies of foreign banks
Gross demand deposits—individuals,
partnerships, and corporations
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 N e w security issues—State and local
governments and corporations
A35 Open-end investment companies—Net sales and
asset position
A35 Corporate profits and their distribution
A36 Nonfinancial corporations—Assets and
liabilities
2
Federal Reserve Bulletin • April 1988
A36 Total nonfarm business expenditures on new
plant and equipment
A37 Domestic finance companies—Assets and
liabilities and business credit
A55 Foreign branches of U . S . banks—Balance sheet
data
A57 Selected U . S . liabilities to foreign official
institutions
REAL
REPORTED BY BANKS
ESTATE
A38 Mortgage markets
A39 Mortgage debt outstanding
CONSUMER
INSTALLMENT
CREDIT
A40 Total outstanding and net change
A41 Terms
FLOW OF FUNDS
IN THE UNITED
A57
A58
A60
A61
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
ENTERPRISES IN THE UNITED
BUSINESS
STATES
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 Nonfinancial
SECURITIES
SELECTED
Statistics
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
SUMMARY
A53
A54
A54
A54
Statistics
STATISTICS
U . S . international transactions—Summary
U . S . foreign trade
U . S . reserve assets
Foreign official assets held at Federal Reserve
Banks
STATES
HOLDINGS
AND
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 Presentation,
Statistical Releases, and Special
Tables
SPECIAL
TABLES
A70 Assets and liabilities of commercial banks,
September 30, 1987
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)
Item
Ql
Q2
Q3
Q4
1988
Sept.
Oct.
Nov.
Dec.
Jan.
institutions2
1
7
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base
S
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
Nontrgnsaction
10 In M2y
11 In M3 only 6
1987r
1987'"
16.4
16.5
18.5
11.1
8.0
8.4
5.4
6.9
-1.6
-.5
-.4
5.1
1.4
.3
1.2
7.7
-1.0
4.0
-7.2
6.0
13.9
7.1
14.1
11.0
-10.4
-6.4
-4.0
6.9
-11.4
-13.8
-14.7
3.1
18.4
13.0
12.2
16.7
13.2
6.5
6.5
6.1
10.5
6.6
2.6
4.7
4.1
8.7
.8
2.8
4.5
4.2
8.1
3.9
4.0
5.5
6.1
9.7
1.6
4.7
5.0
7.0
9.0
14.0
6.0
7.5
8.4
10.1
-5.6
1.0
4.9
3.9
11.3
-3.0
1.8
1.5
1.9
8.1
12.9
9.8
8.5
n.a.
n.a.
4.2
6.7
1.2
13.2
3.5
11.1
4.0
11.5
5.8
6.0
3.2
13.4
3.3
20.0
3.5
.3
8.7
3.9
35.2
-5.6
8.7
22.4
-2.7
17.1
10.1
7.4
6.8
.7
14.8
10.5
2.7
5.2
3.8
-2.0
19.2
14.1
-1.3
23.7
18.1
.0
9.4
4.5
5.4
10.6
-12.6
25.4
-4.2
-12.6
19.2
1.2
-5.1
7.0
9.3
9.9
-3.8
16.0
22.2
2.5
11.3
15.2
-7.0
12.6
26.1
-9.1
25.9
25.6
-4.1
19.4
23.5
-3.1
19.1
11.2
12.2
10.0
10.4
8.8
8.7
8.2
5.9
8.8
6.2
7.5
10.4
5.8
6.5
9.8
8.6
3.9
12.0
7.0
12.6
10.9
2.6
8.0
8.1
-1.0
n.a.
n.a.
5.9
components
Time and savings deposits
Commercial banks
Savings 7
Small-denomination time
Large-denomination time
Thrift institutions
IS
Savings
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: (I) currency outside the Treasury, Federal Reserve Banks, and the vaults
of depository institutions: (2) travelers checks of nonbank issuers; (3) demand
deposits at all commercial banks other than those due to depository institutions,
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.
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.
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 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
DomesticNonfinancialStatistics • April 1988
1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT
Millions of dollars
Monthly averages of
daily figures
1987
Weekly averages of daily figures for week ending
1988
1987
1988
Nov.
Dec.
Jan.
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
240,088
245,975
246,090
245,050
244,657
247,325
251,166
247,132
244,506
244,769
214,695
213,706
989
7,956
7,567
389
0
610
866
15,961
11,084
5,018
18,102
219,761
218,734
1,027
8,062
7,559
503
0
836
1,545
15,771
11,080
5,018
18,153
219,855
219,069
786
7,806
7,503
303
0
1,028
1,784
15,617
11,074
5,018
18,205
219,006
219,006
0
7,558
7,558
0
0
875
1,942
15,668
11,081
5,018
18,148
219,179
219,179
0
7,556
7,556
0
0
586
1,123
16,212
11,080
5,018
18,158
220,447
218,704
1,743
8,529
7,555
974
0
755
1,580
16,013
11,079
5,018
18,168
222,278
219,272
3,006
8,616
7,553
1,063
0
2,908
1,224
16,141
11,078
5,018
18,179
220,074
219,578
496
7,815
7,553
262
0
981
2,737
15,524
11,076
5,018
18,193
218,734
218,734
0
7,534
7,534
0
0
593
1,855
15,790
11,074
5,018
18,207
219,489
218,988
501
7,627
7,423
204
0
422
1,464
15,767
11,071
5,018
18,221
223,078
471
227,366
454
226,414
441
226,447
454
227,673''
453r
229,747'
452r
229,919
446
227,843
438
225,981
446
224,244
436
3,755
299
4,209
233
5,774
274
4,817
233
4,219
240
3,719
192
5,031
263
3,871
235
2,521
347
8,941
226
2,063
374
2,168
366
2,233
432
2,128
321
1,960
326
2,269
377
2,286
909
2,278
254
2,101
329
2,697
383
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit
2
U.S. government securities'
3
Bought outright
4
Held under repurchase agreements....
Federal agency obligations
5
Bought outright
6
7
Held under repurchase agreements....
Acceptances
8
9
Loans
10 Float
11 Other Federal Reserve assets
12 Gold stock2
13 Special drawing rights certificate account..
14 Treasury currency outstanding
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings"
Deposits, other than reserve balances, with
Federal Reserve Banks
17 Treasury
18 Foreign
19 Service-related balances and
adjustments
20 Other
21 Other Federal Reserve liabilities and
capital
22 Reserve balances with Federal
Reserve Banks3
7,418
7,443
7,432
7,306
7,270
7,468
7,201
7,522
7,548
7,618
36,834
37,986
37,389
37,591
36,772
37,366
39,386
38,981
39,533
34,534
Jan. 20
Jan. 27
End-of-month figures
1987
Wednesday figures
1988
1987
1988
Nov.
Dec.
Jan.
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
23 Reserve Bank credit
245,472
251,883
242,517
245,729
244,963
250,948
248,914
246,529
249,362
245,867
24
U.S. government securities'
25
Bought outright
26
Held under repurchase agreements....
27 Federal agency obligations
28
Bought outright
29
Held under repurchase agreements....
30 Acceptances
31
Loans
32
Float
33 Other Federal Reserve assets
34 Gold stock2
35 Special drawing rights certificate account..
218,960
213,563
5,397
9,844
7,567
2,277
0
790
428
15,450
11,082
5,018
222,551
218,906
3,645
8,869
7,553
1,316
0
3,815
811
15,837
11,078
5,018
218,411
218,411
0
7,423
7,423
0
0
333
396
15,954
11,068
5,018
216,715
216,715
0
7,556
7,556
0
0
836
4,560
16,062
11,081
5,018
219,049
219,049
0
7,556
7,556
0
0
492
1,951
15,915
11,079
5,018
222,383
218,549
3,834
9,349
7,553
1,796
0
951
2,011
16,254
11,078
5.018
220,983
218,863
2,120
8,429
7,553
876
0
749
2,830
15,923
11,077
5,018
219,332
219,332
0
7,553
7,553
0
0
2,717
1,204
15,723
11,075
5,018
218,442
218,442
0
7,423
7,423
0
0
450
7,381
15,666
11,072
5,018
220,282
218,892
1,390
8,034
7,423
611
0
363
943
16,245
11,071
5,018
18,127
18,177
18,233
18,157
18,167
18,177
18,191
18,205
18,219
18,233
229,065
446
227,031
448
225,640
436
223,650
437
SUPPLYING RESERVE FUNDS
36 Treasury currency outstanding
ABSORBING RESERVE FUNDS
37 Currency in circulation
38 Treasury cash holdings"
Deposits, other than reserve balances, with
Federal Reserve Banks
39 Treasury
40
Foreign
41
Service-related balances and
adjustments
42 Other
43 Other Federal Reserve liabilities and
capital
44 Reserve balances with Federal
Reserve Banks3
r
225,090
465
230,213'
446r
223,188
438
226,88l
453r
229,226''
452'
3,594
352
5,313
244
10,276
355
9,036
270
2,992
215
4,773
207
4,098
237
3,421
212
3,859
231
9,481
220
1,717
450
1,687
1,027
1,674
315
1,699
359
1,697
293
1,699
364
1,687
284
1,687
289
1,681
358
1,677
383
230,403
45 V
7,968
7,129
6,926
7,095
7,096
7,453
7,376
7,438
7,300
7,459
40,064
40,097
33,664
34,192
37,256
39,871
40,007
40,302
44,167
36,882
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 April 1987. At times during
this interval, outstanding gold certificates were inadvertently in excess of the gold
r
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 A N D BORROWINGS
A5
Depository Institutions
Millions of dollars
Monthly averages 8
Reserve classification
1 Reserve balances with Reserve Banks1
cash
7 Total vault
3
3
4
6
7
8
9
10
Vault
Surplus
Total reserves
Required reserves
Excess reserve balances at Reserve Banks
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks
1985
1986
1987
Dec.
Dec.
Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
27,620
22,953
20,522
2,431
48,142
47,085
1,058
1,318
56
499
37,360
24,079
22,199
1,879
59,560
58,191
1,369
827
38
303
37,673
26,155
24,449
1,706
62,123
61,094
1,029
777
93
483
36,309
24,369
22,475
1,893
58,784
57,594
1,190
776
259
273
36,110
24,613
22,728
1,885
58,838
58,078
761
672
283
194
35,616
24,644
22,745
1,899
58,361
57,329
1,032
647
279
132
36,685
24,854r
23,128
1,726'
59,813
59,020
793
940
231
409
37,249
25,587'
23,857
1,730'
61,106
59,977
1,129'
943'
189
449
37,453
25,431
23,752
1,679
61,205
60,282
923
625
126
394
37,673
26,155
24,449
1,706
62,123
61,094
1,029
777
93
483
1987
Biweekly averages of daily figures for weeks ending
1987
11
1?
13
14
15
16
17
18
19
20
Reserve balances with Reserve Banks 1
Total vault cash
Vault3
Surplus 4 .
Total reserves
Required reserves
Excess reserve balances at Reserve Banks
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks
Oct. 21
Nov. 4
Nov. 18
Dec. 2
Dec. 16
Dec. 30
Jan. 13
Jan. 27
Feb. 10
Feb. 24
36,672
26,183
24,410
1,773
61,082
60,115
967
1,007
183
482
38,353
25,174
23,464
1,710
61,817
60,256
1,561
677
169
390
37,525
25,188
23,622
1,566
61,147
60,665
492
561
125
334
37,069
25,802
23,999
1,803
61,068
59,855
1,213
683
114
465
38,272
25,372
23,824
1,549
62,095
60,890
1,206
815
83
653
37,055
26,960
25,105
1,855
62,160
61,354
806
671
102
316
39,175
26,566
24,937
1,629
64,112
62,805
1,307
1,945
66
485
37,002
26,533
24,840
1,694
61,842
60,554
1,288
508
54
332
33,691
29,417
26,965
2,452
60,656
59,368
1,288
287
55
144
34,087
27,954
25,673
2,282
59,759
58,688
1,071
425
77
232
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
1988
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 balance's.
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.
A6
DomesticNonfinancialStatistics • April 1988
1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1
Averages of daily figures, in millions of dollars
1987 week ending Monday
Maturity and source
1
2
3
4
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
Aug. 10
Aug. 17
Aug. 24
Aug. 31
Sept. 7
Sept. 14
Sept. 21
Sept. 28
Oct. 5
72,747
9,252
71,952
8,970
69,808
9,098
70,480
9,442
75,786
9,171
75,048
8,848
70,262
8,888
66,374
9,170
74,386
8,209
32,923
6,753
32,524
6,517
30,368
6,387
30,994
6,622
29,160
6,160
30,085
6,560
27,159
6,895
25,696
6,773
25,513
5,978
Repurchase agreements on U.S. 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
13,744
12,363
12,715
12,546
12,756
13,455
13,002
13,619
13,332
13,880
13,966
13,827
13,289
15,032
13,685
15,720
15,505
12,059
27,417
8,165
27,613
8,550
27,496
9,188
27,128
9,657
26,288
9,120
26,501
9,036
26,808
8,943
26,957
8,891
27,240
8,054
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
30,410
12,886
29,547
11,853
28,622
13,676
29,053
14,024
30,568
14,062
28,193
14,067
30,303
14,172
29,348
14,600
33,209
14,751
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.
Policy Instruments
1.14
FEDERAL RESERVE BANK INTEREST
A7
RATES
Percent per year
Current and previous levels
Extended credit 2
Adjustment credit
and
Seasonal credit 1
Federal Reserve
Bank
First 30 days of borrowing
Effective
date
Previous
rate
Boston
New York . . .
Philadelphia..
Cleveland....
Richmond....
Atlanta
9/9/87
9/4/87
9/4/87
9/4/87
9/5/87
9/4/87
5W
Chicago
St. Louis
Minneapolis . .
Kansas C i t y . .
Dallas
San Francisco
9/4/87
9/9/87
9/8/87
9/4/87
9/11/87
9/9/87
On
2/24/88
On
2/24/88
Effective
date
Previous
rate
919181
9/4/87
9/4/87
9/4/87
9/5/87
9/4/87
5W
9/4/87
9/9/87
9/8/87
9/4/87
9/11/87
9/9/87
5W
After 30 days of borrowing
On
2/24/88
Effective
date
Previous
rate
Efifective date
2/11/88
1/28/88
1/28/88
1/28/88
1/28/88
1/28/88
1/28/88
2/11/88
2/11/88
2/11/88
2/11/88
2/11/88
2/11/88
1/28/88
1/28/88
1/28/88
1/28/88
1/28/88
1/28/88
2/11/88
2/11/88
2/11/88
2/11/88
2/11/88
5!A
7.30
Range of rates for adjustment credit in recent years 4
Effective date
In effect Dec. 31, 1977.
1978—Jan.
9
20
May 11
12
July
3
10
Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
3
1979—July 20
Aug. 17
20
Sept. 19
21
Oct.
8
10
1980—Feb. 15
19
May 29
30
June 13
16
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
6
6-6W
6W
6W-7
1
7-7V4
6
6W
6W
IV*
m
8
8-8W
sw
8 W-9 W
9W
10
i
i
m
IVA
73/4
8
8W
8 Vi
9Vi
9W
Effective
1980-—July 78
79
Sept. 76
Nov. 17
Dec. 5
1981-—May 5
8
Nov. 7
6
Dec.
1982--- J u l y
4
70
73
7
3
16
Aug.
10-10W
10W
10W-11
11
11-12
12
10
10W
low
11
11
12
12
12-13
13
12-13
12
11-12
11
13
13
13
12
11
11
77
30
Oct. 17
n
Nov. 77
76 .
Dec. 14
15
17
1. Adjustment credit is available on a short-term basis to help depository
institutions meet temporary needs for funds that cannot be met through reasonable alternative sources. After May 19, 1986, the highest rate established for loans
to depository institutions may be charged on adjustment credit loans of unusual
size that result from a major operating problem at the borrower's facility.
Seasonal credit is available to help smaller depository institutions meet regular,
seasonal needs for funds that cannot be met through special industry lenders and
that arise from a combination of expected patterns of movement in their deposits
and loans. A temporary simplified seasonal program was established on Mar. 8,
1985, and the interest rate was a fixed rate W percent above the rate on adjustment
credit. The program was reestablished 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
Vi percent higher.
2. Extended credit is available to depository institutions, where similar assistance is not reasonably available from other sources, when exceptional circumstances or practices involve only a particular institution or when an institution is
experiencing difficulties adjusting to changing market conditions over a longer
period of time.
3. For extended-credit loans outstanding more than 30 days, a flexible rate
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
Efifective date
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
10-11
10
11
12
12-13
10
10
11
12
13
1984—Apr.
9
13
Nov. 21
26
Dec. 24
8 W-9
9
8 W-9
8W
8
9
9
8W
8W
8
13-14
14
13-14
13
12
14
14
13
13
12
1985—May 20
24
7W-8
7W
7W
7W
1986—Mar.
7-7 W
7
6W-7
6
5W-6
5W
7
7
6W
6
5W
5W
5W-6
6
6
6
6
6
11W-12
UW
11-11W
11
10W
10-10W
10
9W-10
9W
9 - 9 Vi
9
8W-9
8 W-9
8W
11W
11W
11
11
10W
10
10
9W
9W
9
9
9
8W
8W
7
10
Apr. 21
July 11
Aug. 12
22
1987—Sept.
4
11
In effect February 24, 1 9 8 8 . . . .
somewhat above rates on market sources of funds ordinarily will be charged, but
in no case will the rate charged be less than the basic discount rate plus 50 basis
points. The flexible rate is reestablished on the first business day of each
two-week reserve maintenance period. At the discretion of the Federal Reserve
Bank, the time period for which the basic discount rate is applied may be
shortened.
4. For 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.
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, 1981. As of Oct. 1, 1981 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.
A8
1.15
DomesticNonfinancialStatistics • April 1988
RESERVE REQUIREMENTS OF DEPOSITORY
INSTITUTIONS1
Percent of deposits
Type of deposit, and
deposit interval
Depository institution requirements
after implementation of the
Monetary Control Act
Effective date
Net transaction accounts
$0 million-$40.5 million...
More than $40.5 million ..
12/15/87
12/15/87
Nonpersonal time deposits'By original maturity
Less than 1 Vi years
1 Vi years or more
10/6/86
10/6/83
Eurocurrency liabilities
All types
1. Reserve requirements in effect on Dec. 31, 1987. 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. For previous reserve
requirements, see earlier editions of the Annual Report and of the FEDERAL
RESERVE BULLETIN. 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
corporations.
2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law
97-320) requires 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 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. On Dec. 15, 1987, the exemption was raised from $2.9
million to $3.2 million. In determining the reserve requirements of depository
institutions, the exemption shall apply in the following order: (1) net NOW
accounts (NOW accounts less allowable deductions); (2) net other transaction
accounts; and (3) nonpersonal time deposits or Eurocurrency liabilities starting
with those with the highest reserve ratio. With respect to NOW accounts and
11/13/80
other transaction accounts, the exemption applies only to such accounts that
would be subject to a 3 percent reserve requirement.
3. 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 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).
4. 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. 15,
1987 for institutions reporting quarterly and Dec. 29, 1987 for institutions
reporting weekly, the amount was increased from $36.7 million to $40.5 million.
5. 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.
Policy Instruments
A9
1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1
Millions of dollars
1987
Type of transaction
1985
1987
1986
Aug.
July
June
Sept.
Oct.
Nov.
Dec.
U . S . TREASURY SECURITIES
Outright transactions (excluding matched
transactions)
1
2
3
4
Treasury bills
Gross purchases
Gross sales
Exchange
Redemptions
5
6
7
8
9
22,214
4,118
0
3,500
22,602
2,502
0
1,000
18,983
6,050
0
9,029
575
22
0
0
575
912
0
4,572
499
0
0
0
4,528
0
0
3,657
1,095
300
0
0
3,388
0
0
0
150
0
0
0
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
1,349
0
19,763
-17,717
0
190
0
18,673
-20,179
0
3,658
300
21,502
-20,388
70
535
0
1,715
-1,812
0
0
0
1,437
-613
0
0
0
2,723
-1,787
0
443
300
1,500
-917
0
300
0
816
-1,178
0
670
0
2.247
-3,728
70
479
0
1,400
-1,742
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
2,185
0
-17,459
13,853
893
0
-17,058
16,984
10,231
452
-17,974
18,938
1,394
0
-1,715
1,812
0
200
-1,397
613
5
0
-2,122
1,612
2,551
0
-1,500
917
0
0
-761
1,178
50
0
-1,900
3,278
2,589
0
-1,400
1,742
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
458
100
-1,857
2,184
236
0
-1,620
2,050
2,441
0
-3,529
950
312
0
0
0
0
0
-40
0
0
0
-601
100
619
0
0
0
0
0
-55
0
0
0
-347
300
596
0
0
0
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
293
0
-447
1,679
158
0
0
1,150
1,858
0
0
500
251
0
0
0
0
0
0
0
0
0
0
75
493
0
0
0
0
0
0
0
0
0
0
150
445
0
0
0
26,499
4,218
3,500
24,078
2,502
1,000
37,171
6,802
9,099
3,066
22
0
575
1,112
4,572
504
0
0
8,633
300
3,657
1,395
300
0
4,108
0
70
4,259
0
0
866,175
865,968
927,997
927,247
950,923
950,935
87,228
87,128
80,304
80,037
60,731
62,594
61,321
61,347
77,497
73,779
85,288
85,494
104,833
105,917
134,253
132,351
170,431
160,268
314,620
324,666
24,167
22,108
3,298
2,058
9,013
12,311
34,080
34,080
65,675
57,380
15,853
18,751
23,512
25,264
20,477
29,989
11,235
5,002
-4,136
-931
4,702
5,673
1,346
3,591
0
0
162
0
0
398
0
0
276
0
0
0
0
0
59
0
0
0
0
0
0
0
0
56
0
0
1
0
0
13
22,183
20,877
31,142
30,522
80,353
81,351
3,907
2,910
929
996
2,369
3,298
7,174
7,174
18,523
15,607
6,786
7,425
9,718
10,679
All maturities
22 Gross purchases
23 Gross sales
24 Redemptions
Matched transactions
25 Gross sales
26 Gross purchases
2
Repurchase agreements
27 Gross purchases
28 Gross sales
29 Net change in U.S. government securities
FEDERAL AGENCY OBLIGATIONS
Outright transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase agreements2
33 Gross purchases
34 Gross sales
35 Net change in federal agency obligations
1,144
222
-1,274
997
-126
-929
0
2,860
-640
-975
36 Total net change in System Open Market
21,621
30,211
9,961
5,999
-4,262
-1,861
4,702
8,533
706
2,617
1. 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.
2. In July 1984 the Open Market Trading Desk discontinued accepting bankers
acceptances in repurchase agreements,
A10
DomesticNonfinancialStatistics • April 1988
1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements'
Millions of dollars
Wednesday
Account
1988
1987
Dec. 30
End of month
Jan. 6
Jan. 13
1988
1987
Jan. 20
Jan. 27
Nov.
Dec.
Jan.
Consolidated condition statement
ASSETS
11,078
5,018
413
11,077
5,018
401
11,075
5,018
409
11,072
5,018
442
11,071
5,018
465
11,082
5,018
446
11,078
5,018
408
11,068
5,018
478
951
0
0
749
0
0
2,717
0
0
450
0
0
363
0
0
790
0
0
3,815
0
0
333
0
0
7,553
1,796
7,553
876
7,553
0
7,423
0
7,423
611
7,567
2,277
7,553
1,316
7,423
0
107,334
82,973
28,242
218,549
3,834
222,383
107,648
82,973
28,242
218,863
2,120
220,983
108,117
82,973
28,242
219,332
0
219,332
107,227
82,973
28,242
218,442
0
218,442
107,677
82,973
28,242
218,892
1,390
220,282
106,457
79,345
27,761
213,563
5,397
218,960
107,691
82,973
28,242
218,906
3,645
222,551
107,1%
82,973
28,242
218,411
0
218,411
232,683
230,161
229,602
226,315
228,679
229,594
235,235
226,167
7,973
704
10,643
705
7,692
705
18,168
707
7,086
704
4,901
698
7,990
705
6,489
705
7,757
7,793
7,451
7,767
7,420
7,598
7,364
7,595
7,371
8,170
8,064
6,688
7,773
7,359
6,714
8,535
273,419
273,223
269,519
276,681
268,564
266,491
275,566
265,174
213,090
211,721
209,682
208,298
206,319
207,873
212,890
205,871
41,570
4,773
207
364
41,694
4,098
237
284
41,989
3,421
212
289
45,848
3,859
231
358
38,559
9,481
220
383
41,781
3,594
352
450
41,784
5,313
244
1,027
35,338
10,276
355
315
46,914
46,313
45,911
50,296
48,643
46,177
48,368
46,284
5,962
3,053
7,813
3,015
6,488
2,985
10,787
2,857
6,143
3,020
4,473
2,985
7,179
3,035
6,093
2,654
269,019
268,862
265,066
272,238
264,125
261,508
271,472
260,902
2,045
1,873
482
2,044
2,047
270
2,049
2,047
357
2,058
2,047
338
2,060
2,047
332
2,032
1,873
1,078
2,047
2,047
0
2,062
2,042
168
33 Total liabilities and capital accounts
273,419
273,223
269,519
276,681
268,564
266,491
275,566
265,174
34 MEMO: Marketable U.S. Treasury securities held in
custody for foreign and international account
198,823
201,499
204,386
205,233
210,231
193,044
198,288
210,410
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4 To depository institutions
5
Other
6 Acceptances held under repurchase agreements
Federal agency obligations
Bought outright
7
8
Held under repurchase agreements
U.S. Treasury securities
Bought outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright2
13 Held under repurchase agreements
14 Total U.S. Treasury securities
15 Total loans and securities
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies
19 All other 4
20 Total assets
LIABILITIES
21 Federal Reserve notes
Deposits
22 To depository institutions
23 U.S. Treasury—General account
24 Foreign—Official accounts
25 Other
26 Total deposits
27 Deferred credit items
28 Other liabilities and accrued dividends5
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding issued to bank
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. Treasury and agency securities
253,508
40,418
213,090
252,950
41,229
211,721
252,838
43,156
209,682
252,883
44,585
208,298
253,163
46,844
206,319
254,499
46,626
207,873
253,313
40,423
212,890
253,303
47,432
205,871
11,078
5,018
0
196,994
11,077
5,018
0
195,626
11,075
5,018
0
193,589
11,072
5,018
0
192,208
11,071
5,018
0
190,230
11,082
5,018
0
191,773
11,078
5,018
0
196,794
11,068
5,018
0
189,785
42 Total collateral
213,090
211,721
209,682
208,298
206,319
207,873
212,890
205,871
1. Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities
pledged with Federal Reserve Banks—and excludes securities sold and scheduled
to be bought back under matched sale-purchase transactions.
3. Valued monthly at market exchange rates.
4. Includes special investment account at the Federal Reserve Bank of Chicago
in Treasury bills maturing within 90 days.
5. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
Federal Reserve
Banks
A11
1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings
Millions of dollars
End of month
Wednesday
Type and maturity groupings
Dec. 30
Jan. 6
1988
1987
1988
1987
Jan. 13
Jan. 20
Jan. 27
Nov. 30
Dec. 31
Jan. 29
Within 15 days
16 days to 90 days
91 days to 1 year
951
943
8
0
749
738
11
0
2,717
2,639
78
0
450
445
5
0
363
362
1
0
790
765
25
0
3,815
3,806
9
0
333
326
7
0
5 Acceptances—Total
6
Within 15 days
16 days to 90 days
7
8 91 days to 1 year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
222,383
11,583
50,901
71,993
47,169
15,313
25,424
220,983
10,503
50,752
71,479
47,512
15,313
25,424
219,332
7,667
52,124
71,292
47,512
15,313
25,424
218,442
8,554
53,598
68,248
47,410
15,208
25,424
220,282
9,123
52,598
70.519
47,410
15,208
25,424
218,960
9,805
52,165
72.716
44,580
14.717
24,977
222,551
11,363
46,112
76,827
47,512
15,313
25,424
218,411
4,402
55,664
70,303
47,410
15,208
25,424
9,349
2,041
691
1,653
3,416
1,358
190
8,429
1,046
836
1,583
3,416
1,358
190
7,553
151
926
1,473
3,441
1,373
189
7,423
165
781
1,473
3,481
1,333
190
8,034
781
886
1,538
3,323
1,317
189
9,843
2,527
568
1,621
3,524
1,387
216
8,868
1,560
691
1,653
3,416
1,358
190
7,423
170
886
1,538
3,323
1,317
189
2
3
4
9 U.S. Treasury securities—Total
10 Within 15 days'
11
16 days to 90 days
12 91 days to 1 year
13 Over 1 year to 5 years
14 Over 5 years to 10 years
16 Federal agency obligations—Total
17 Within 15 days'
18
16 days to 90 days
19 91 days to 1 year
20 Over 1 year to 5 years
21 Over 5 years to 10 years
22 Over 10 years
1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements.
A12
DomesticNonfinancialStatistics • April 1988
1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE
Billions of dollars, averages of daily figures
1987
Item
1984
Dec.
1985
Dec.
1986
Dec.
1988
1987
Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
57.83
58.50
57.99
57.44
58.32
Seasonally adjusted
CHANGES IN RESERVE REQUIREMENTS'
1 Total reserves2
7
3
4
5
Nonborrowed reserves
Nonborrowed reserves plus extended credit
Required reserves
Monetary base4
39.91
36.72
39.33
39.06
199.60
56.17
46.06
57.44
57.71
55.34
56.66
44.74
56.93
55.64
57.14
45.24
57.20
54.80
56.41
56.52
45.00
217.34R 239.52' 256.68R 248.48
57.60
57.88
56.93
57.23
56.89
57.55
57.36
56.66
57.24
57.12
57.29
57.61
57.36
58.00
57.76
57.14
57.37
56.84
56.84
57.03
57.06
56.41
57.02
R
R
249.5 V 251.00' 252.25 254.56' 256.02' 256.68 260.25
Not seasonally adjusted
6 Total reserves2
7
8
9
10
Nonborrowed reserves
Nonborrowed reserves plus extended credit"
Required reserves
Monetary base 4
40.94
47.24
57.64
58.96
57.63
57.74
57.39
57.50
58.04
58.09
58.96r
60.17
37.75
40.35
40.08
202.70
45.92
46.42
46.18
220.82
56.81
57.11
56.27
243.63
58.19
58.67
57.94
261.21
56.85
57.12
56.43
249.29
57.07
57.27
56.98
251.42
56.74
56.88
56.36
251.42
56.56
56.96
56.70
251.60
57.09
57.54
56.91
253.29
57.47
57.86
57.17
256.82
58.19
58.67
57.94
261.21
59.09
59.46
58.88
261.21
40.70
48.14
59.56
62.12
58.78
58.84
58.36
59.81
61.11
61.20
62.12
62.64
37.51
40.09
39.84
204.18
46.82
47.41
47.08
223.53
58.73
59.04
58.19
247.71
61.35
61.86
61.09
266.16
58.01
58.34
57.59
252.54
58.17
58.37
58.08
254.67
57.71
57.76
57.33
254.36
58.87
58.85
59.02
255.69
60.16
61.22
59.98
258.08
60.58
60.79
60.28
261.67
61.35
61.86
61.09
266.16
61.56
62.13
61.34
265.79
N O T ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 5
11 Total reserves2
12
13
14
15
Nonborrowed reserves
Nonborrowed reserves plus extended credit
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 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
A13
1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Billions of dollars, averages of daily figures
1987r
Item'
1984
Dec/
1985
Dec/
1986
Dec/
1988
1987
Dec/
Oct.
Nov.
Dec.
Jan.
Seasonally adjusted
1 Ml
2 M2
M3
4 L
5 Debt
551.9
2,363.6
2,978.3
3,519.4
5,932.9
620.1
2,562.6
3,196.0
3,825.4
6,746.9
725.4
2,807.8
3,490.4
4,134.1
7,598.5
750.8
2,901.3
3,663.0
4,332.8
8,284.9
756.2
2,894.6
3,643.5
4,312.0
8,161.5
752.7
2,897.0
3,658.5
4,325.9
8,231.7
750.8
2,901.3
3.663.0
4,332.8
8,284.9
758.9
2,925.0
3,689.1
n.a.
n.a.
156.1
5.2
244.1
146.4
167.7
5.9
267.2
179.2
180.4
6.5
303.3
235.2
196.5
7.1
288.0
259.3
193.1
7.0
295.9
260.3
195.0
7.0
291.3
259.4
196.5
7.1
288.0
259.3
198.4
7.2
289.9
263.3
1,811.7
614.7
1,942.5
633.3
2,082.4
682.6
2,150.5
761.6
2,138.4
748.9
2,144.3
761.4
2,150.5
761.6
2,166.1
764.1
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 only7
12
13
Savings deposits 8
Commercial Banks
Thrift institutions
122.6
162.9
124.8
176.6
155.5
215.2
178.2
236.0
178.4
238.6
178.2
236.8
178.2
236.0
179.0
235.4
14
15
Small denomination time deposits 9
Commercial Banks
Thrift institutions
386.3
497.0
383.3
496.2
364.6
488.6
384.6
528.5
374.2
509.1
381.6
520.1
384.6
528.5
388.0
536.9
16
17
Money market mutual funds
General purpose and broker-dealer
Institution-only
167.5
62.7
176.5
64.5
208.0
84.4
222.2
89.6
218.8
82.5
220.9
89.5
222.2
89.6
226.2
94.4
18
19
Large denomination time deposits 10
Commercial Banks"
Thrift institutions
270.2
146.8
284.9
151.6
288.9
150.3
323.5
161.2
317.5
154.8
322.3
158.1
323.5
161.2
320.1
162.7
20
21
Debt components
Federal debt
Nonfederal debt
1,365.3
4,567.6
1,584.3
5,162.6
1,804.5
5,794.0
1,953.3
6,331.7
1,919.3
6,242.1
1,939.6
6,292.0
1,953.3
6,331.7
n.a.
n.a.
ft
Not seasonally adjusted
564.5
2,373.2
2,991.4
3,532.7
5,927.1
633.5
2,573.9
3,210.5
3,840.9
6,740.6
740.6
2,821.5
3,507.2
4,152.1
7,591.7
765.9
2,915.0
3,679.5
4,350.9
8,277.6
753.7
2,895.2
3,643.5
4,312.3
8,147.3
756.0
2,900.5
3,665.8
4,335.8
8,216.5
765.9
2,915.0
3,679.5
4,350.9
8,277.6
764.8
2,937.3
3,701.6
n.a.
n.a.
158.5
4.9
253.0
148.2
170.2
5.5
276.9
180.9
183.0
6.0
314.4
237.3
199.4
6.5
298.5
261.5
192.6
7.0
295.7
258.4
195.9
6.6
294.1
259.3
199.4
6.5
298.5
261.5
197.1
6.6
295.8
265.3
1,808.7
618.2
1,940.3
636.7
2,080.8
685.7
2,149.1
764.5
2,141.5
748.3
2,144.5
765.2
2,149.1
764.5
2,172.5
764.3
Money market deposit accounts
Commercial Banks
Thrift institutions
267.4
149.4
332.8
180.8
379.6
192.9
358.2
167.0
360.0
173.9
358.1
169.6
358.2
167.0
358.9
165.2
3S
36
Savings deposits 8
Commercial Banks
Thrift institutions
121.5
161.5
123.7
174.8
154.2
212.9
176.7
233.3
178.6
239.3
177.5
235.7
176.7
233.3
178.2
233.0
37
38
Small denomination time deposits 9
Commercial Banks
Thrift institutions
386.9
498.2
384.0
497.5
365.3
489.7
385.2
529.3
375.0
510.5
382.6
521.1
385.2
529.3
389.3
540.5
39
40
Money market mutual funds
General purpose and broker-dealer
Institution-only
167.5
62.7
176.5
64.5
208.0
84.4
222.2
89.6
218.8
82.5
220.9
89.5
222.2
89.6
226.2
94.4
41
42
Large denomination time deposits 10
Commercial Banks"
Thrift institutions
270.9
146.8
285.4
151.9
289.1
150.7
323.6
161.7
317.3
155.7
322.4
159.0
323.6
161.7
321.1
163.8
43
44
Debt components
Federal debt
Nonfederal debt
1,364.7
4,562.4
1,583.7
5,156.9
1,804.0
5,787.8
1,952.7
6,324.9
1,909.8
6,237.5
1,935.3
6,281.2
1,952.7
6,324.9
77
73
24
7.5
26
Ml
M2
M3
L
Debt
27
28
29
30
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
31
32
Nontransactions
components
M26....
M3 only7
33
34
For notes see following page.
n.a.
n.a.
A14
DomesticNonfinancialStatistics • April 1988
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 depository institutions; (2) travelers checks of nonbank issuers; (3) demand
deposits at all commercial banks other than those due to depository institutions,
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.
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.
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 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
depository institutions.
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 depository institutions, the U.S. government, and foreign banks
and official institutions less cash items in the process of collection and Federal
Reserve float.
5. Consists of NOW and ATS balances at all depository institutions, credit
union share draft balances, and demand deposits at thrift institutions.
6. Sum of overnight RPs and overnight Eurodollars, money market fund
balances (general purpose and broker-dealer), MMDAs, and savings and small
time deposits.
7. Sum of large time deposits, term RPs, and term Eurodollars of U.S.
residents, money market fund balances (institution-only), less 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 by
money market mutual funds, depository institutions, and foreign banks and
official institutions.
NOTE. Latest monthly and weekly figures are available from the Board's H.6
(508) release. Historical data are available from the Banking Section, Division of
Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Monetary and Credit Aggregates
A15
1.22 BANK DEBITS AND DEPOSIT TURNOVER1
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
Bank group, or type of customer
June
July
Aug.
Sept.
Oct.
Seasonally adjusted
Demand deposits3
1 All insured banks
2
Major New York City banks
3 Other banks
4 ATS-NOW accounts 4
5 Savings deposits
156,091.6
70,585.8
85,505.9
1,823.5
384.9
188,345.8
91,397.3
96,948.8
2,182.5
403.5
217,115.9
104,496.3
112,619.8
2,402.7
526.5
212,414.4
103,027.6
109,386.8
2,417.6
565.8
219,501.3
106,428.9
113,072.3
2,498.7
548.2
221,729.0
109,062.5
112,666.5
2,333.1
518.8
219,182.9
105,149.4
114,033.4
2,349.0
524.0
234,398.3
110,833.6
123,564.6
2,591.3
582.4
219,386.1
103,693.6
115,692.5
2,536.1
570.8
500.3
2,196.9
305.7
15.8
3.2
556.5
2,498.2
321.2
15.6
3.0
612.1
2,670.6
357.0
13.8
3.1
601.6
2,671.6
347.8
13.9
3.3
628.6
2,837.4
362.8
14.3
3.1
623.3
2,718.2
357.0
13.2
3.0
625.3
2,715.1
365.7
13.2
3.0
654.9
2,744.7
389.1
14.4
3.3
619.0
2,620.2
367.4
14.2
3.3
DEPOSIT TURNOVER
6
7
8
9
10
Demand deposits 3
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts 4
Savings deposits
Not seasonally adjusted
DEBITS TO
3
Demand deposits
11 All insured banks
12 Major New York City banks
13 Other banks
14 ATS-NOW accounts 4
15 MMDA
16 Savings deposits
156,052.3
70,559.2
85,493.1
1,826.4
1,223.9
385.3
188,506.4
91,500.0
97,006.6
2,184.6
1,609.4
404.1
217,124.8
104,518.6
112,606.1
2,404.8
1,954.2
526.8
221,038.4
106,171.3
114,867.0
2,466.9
1,987.9
565.2
228,764.2
111,157.7
117,606.5
2,466.0
2,002.7
576.5
214,145.9
103,822.8
110,323.1
2,226.4
1,752.7
524.2
216,728.0
104,234.0
112,494.0
2,414.9
1,846.6
519.0
233,999.8
111,398.9
122,600.8
2,577.7
2,247.8
604.3
202,230.1
96,035.9
106,194.2
2,375.8
1,959.8
519.9
499.9
2,196.3
305.6
15.8
4.0
3.2
556.7
2,499.1
321.2
15.6
4.5
3.0
612.3
2,674.9
356.9
13.8
5.3
3.1
625.0
2,801.5
363.8
14.3
5.4
3.3
651.7
2,928.4
375.7
14.3
5.5
3.3
612.5
2,721.9
354.2
12.8
4.8
3.0
620.2
2,751.0
361.1
13.7
5.1
3.0
657.8
2,824.8
387.6
14.6
6.3
3.5
565.6
2,467.8
333.3
13.3
5.5
3.0
DEPOSIT TURNOVER
17
18
19
20
21
22
Demand deposits 3
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts 4
MMDA
Savings deposits 5
1. These series have been revised to reflect new benchmark adjustments and
revised seasonal factors as well as some revisions of reported data. Historical
tables containing revised data for earlier periods may be obtained from the
Banking Section, Division of Monetary Affairs, 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.
2. Annual averages of monthly figures.
3. Represents accounts of individuals, partnerships, and corporations and of
states and political subdivisions.
4. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data are
available beginning December 1978.
5. Excludes ATS and NOW accounts, MMDA and special club accounts, such
as Christmas and vacation clubs.
6. Money market deposit accounts.
A16
Domestic Financial Statistics • April 1988
1.23 LOANS AND SECURITIES All Commercial Banks1
Billions of dollars; averages of Wednesday figures
1987r
1988
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 leases2
5 Commercial and industrial . . . . .
6
Bankers acceptances held . . .
7
Other commercial and
industrial
8
U.S. addressees 4 .
9
Non-U.S. addressees
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
2,120.1
2,130.7
2,152.0
2,166.0
2,176.7
2,181.3
2,199.0
2,214.7
2,227.6
2,232.1
2,230.6
2,242.0
314.7
192.0
1,613.5
548.0
5.0
315.4
193.1
1,622.3
546.2
4.7
318.1
194.4
1,639.6
549.1
4.8
321.3
195.5
1,649.3
551.9
4.8
321.3
195.9
1,659.6
554.4
4.6
322.9
194.3
1,664.1
553.6
4.5
328.5
193.7
1,676.8
554.0
5.3
331.3
193.7
1,689.8
559.0
5.4
331.7
194.2
1,701.7
562.8
5.6
331.1
196.2
1,704.8
563.1
4.6
333.2
196.0
1,701.4
565.5
4.3
334.1
194.0
1,713.9
568.5
4.5
543.0
534.3
8.8
509.7
316.0
39.8
541.5
533.2
8.3
517.1
316.8
40.1
544.3
536.0
8.3
524.8
317.8
44.6
547.1
539.0
8.1
532.6
319.1
43.6
549.8
541.3
8.4
542.6
318.9
44.0
549.1
540.8
8.4
549.6
319.7
43.9
548.7
540.5
8.2
556.8
321.5
45.4
553.6
545.6
8.0
561.7
322.8
46.1
557.3
549.3
8.0
569.4
324.1
47.1
558.5
550.9
7.6
576.2
325.0
39.3
561.2
553.0
8.2
582.3
325.9
33.6
564.0
555.0
8.9
586.9
327.8
36.6
35.1
30.7
35.4
30.2
35.6
29.9
35.8
30.0
34.6
30.0
32.9
29.8
32.0
29.7
31.8
29.6
32.1
29.6
32.3
29.4
32.3
29.3
32.0
29.4
56.4
9.5
6.2
22.5
39.3
56.6
9.1
6.8
22.7
41.2
56.4
9.3
6.8
23.3
42.0
56.2
9.3
6.1
23.7
41.1
55.9
9.6
5.8
23.9
39.9
55.3
9.0
5.7
23.9
40.5
54.5
9.1
5.7
24.0
44.0
54.5
9.2
5.7
24.1
45.2
54.1
9.6
5.8
24.3
42.7
53.4
8.8
5.7
24.5
47.1
51.2
8.2
5.6
24.8
42.7
53.9
8.3
5.7
25.0
41.6
Not seasonally adjusted
20 Total loans and securities2
2,124.0
2,130.7
2,153.1
2,163.4
2,173.7
2,172.8
2,188.8
2,211.6
2,222.4
2,231.3
2,247.0
2,254.7
21 U.S. government securities
22 Other securities
23 Total loans and leases2
24 Commercial and industrial
25
Bankers acceptances h e l d 3 . . .
Other commercial and
26
industrial
27
U.S. addressees 4
28
Non-U.S. addressees
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
319.3
192.7
1,612.0
547.3
5.0
317.4
192.7
1,620.6
550.7
4.6
318.0
194.0
1,641.1
552.8
4.8
320.0
195.5
1,647.9
554.4
4.8
318.4
195.3
1,660.0
555.9
4.7
322.1
193.0
1,657.7
551.3
4.6
328.3
193.6
1,666.9
549.5
5.3
331.3
193.8
1,686.6
555.7
5.5
329.3
193.3
1,699.8
558.7
5.4
331.0
195.6
1,704.7
562.0
4.6
333.1
196.6
1,717.3
569.6
4.4
335.6
196.7
1,722.4
568.1
4.3
542.3
533.8
8.5
509.1
315.4
38.4
546.1
537.9
8.1
516.4
313.8
39.6
548.0
539.9
8.2
523.9
315.0
46.4
549.6
541.4
8.2
532.0
316.5
43.9
551.2
542.7
8.5
542.4
316.9
45.4
546.7
538.1
8.6
549.7
318.4
43.3
544.2
535.9
8.3
556.8
321.5
43.3
550.2
542.1
8.2
562.4
324.3
44.8
553.3
545.2
8.1
570.0
325.7
45.6
557.4
549.2
8.2
576.8
326.7
39.4
565.2
557.0
8.2
583.2
330.2
35.3
563.8
555.7
8.1
587.3
331.2
37.5
34.1
29.7
34.3
29.2
35.5
29.1
35.6
29.7
34.7
30.3
32.7
30.5
31.9
30.6
32.3
30.7
32.2
30.4
32.7
29.6
33.6
29.1
32.3
28.7
57.8
9.8
6.2
22.7
41.5
57.6
9.0
6.8
22.9
40.3
56.9
8.9
6.8
23.5
42.4
56.2
9.0
6.1
23.8
40.7
55.5
9.5
5.8
24.0
39.6
54.5
9.0
5.7
23.9
38.7
53.9
8.9
5.7
23.9
40.8
53.7
9.5
5.7
24.0
43.6
53.2
9.8
5.8
23.9
44.4
52.3
8.8
5.7
24.2
46.4
51.2
8.6
5.6
24.8
46.2
53.9
8.5
5.7
25.2
44.1
1. Data have been revised because of benchmarking and new seasonal factors.
Back data are available from the Banking and Monetary Statistics section, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551. These
data also appear in the Board's G.7 (407) release.
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,
Commercial Banking Institutions
A17
1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1
Monthly averages, billions of dollars
1987'
1988
Source
Total nondeposit funds
Seasonally adjusted
Not seasonally adjusted
Federal funds, RPs, and other
borrowings from nonbanks
3 Seasonally adjusted
4 Not seasonally adjusted
5 Net balances due to foreign-related
institutions, not seasonally adjusted
1
2
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
159.7
162.3
165.4
166.5
161.6
161.1
170.8
170.9
167.1
164.0
160.3
156.6
166.6
166.7
177.2
177.6
176.2
176.2
173.6
175.9
176.9
177.8
177.3
177.7
172.0
174.5
171.9
173.0
172.1
171.6
170.5
170.6
168.3
165.2
167.2
163.6
167.1
167.2
165.0
165.4
164.6
164.7
165.7
168.1
161.8
162.7
169.0
169.4
-12.3
-6.5
-10.5
.2
-1.2
-6.9
-.4
12.2
11.5
7.8
15.1
8.3
-23.8
68.3
44.5
-21.1
66.0
44.9
-23.0
70.5
47.5
-15.5
68.5
53.0
-15.5
67.1
51.5
-22.2
66.4
44.2
-17.7
64.5
46.8
-11.8
63.8
52.0
-14.7
67.7
53.0
-17.1
70.4
53.3
-14.1
69.6
55.5
-17.4
72.1
54.7
11.5
73.9
85.4
14.6
71.7
86.3
12.5
73.1
85.6
15.7
75.8
91.5
14.3
77.4
91.7
15.3
77.4
92.7
17.3
77.6
94.9
24.0
77.2
101.3
26.2
79.7
105.9
24.9
83.2
108.0
29.2
79.8
109.0
25.6
85.2
110.8
97.9
100.4
96.4
97.4
99.2
98.7
99.9
100.0
101.8
98.7
103.0
99.4
105.2
105.3
107.5
107.9
107.6
107.7
106.9
109.2
106.2
107.1
108.5
108.9
22.7
28.6
18.9
17.1
21.4
21.6
25.3
30.8
26.9
25.5
24.4
26.6
28.5
21.6
24.9
25.5
34.2
30.7
35.7
25.8
26.1
22.4
18.6
24.9
354.2
354.1
355.9
357.7
358.9
358.5
365.7
366.3
372.1
371.4
372.5
370.0
372.3
371.8
373.0
373.2
380.5
380.4
387.0
387.0
389.2
389.3
389.1
390.2
MEMO
6 Domestically chartered banks' net positions
with own foreign branches,
not seasonally adjusted
7 Gross due from balances
8 Gross due to balances
9 Foreign-related institutions' net positions
with directly related institutions,
not seasonally adjusted 5
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
14 Seasonally adjusted
15 Not seasonally adjusted
Time deposits, $100,000 or more 8
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.
Data have been revised because of benchmarking to new Call Reports and to
new seasonal factors. Back data are available from the Banking and Monetary
Statistics section, Board of Governors of the Federal Reserve System, Washington, D.C. 20551.
These data also appear in the Board's G. 10(411) release.
2. Includes seasonally adjusted federal funds, RPs, and other borrowings from
nonbanks and not seasonally adjusted net Eurodollars.
3. Other borrowings are borrowings on any instrument, such as a promissory
note or due bill, given for the purpose of borrowing money for the banking
business. This includes borrowings from Federal Reserve Banks and from
foreignbanks, term federal funds, overdrawn due from bank balances, loan RPs,
and participations in pooled loans.
4. Averages of daily figures for member and nonmember banks.
5. Averages of daily data.
6. Based on daily average data reported by 122 large banks.
7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at
commercial banks. Averages of daily data.
8. Averages of Wednesday figures.
A18
DomesticNonfinancialStatistics • April 1988
1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1
Billions of dollars
1987R
1988
Account
ALL
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
2,286.1
484.6
299.6
185.0
25.3
1,776.3
158.6
1,617.7
551.4
517.2
313.8
235.4
2,314.2
491.7
305.6
186.1
23.4
1,799.2
154.0
1,645.2
551.9
526.4
316.3
250.6
2,325.8
494.5
307.4
187.0
21.4
1,810.0
161.8
1,648.1
555.1
533.8
316.9
242.3
2,321.0
492.7
304.6
188.0
20.2
1,808.2
150.7
1,657.5
554.6
544.4
317.3
241.1
2,331.6
497.1
309.4
187.7
20.4
1,814.1
156.5
1,657.6
548.1
552.9
319.4
237.2
2,348.8
501.1
313.7
187.4
19.5
1,828.2
160.8
1,667.5
548.2
558.2
322.1
239.0
2,374.8
501.7
313.8
187.9
19.5
1,853.6
157.4
1,696.2
560.7
564.1
325.3
246.0
2,402.4
503.8
316.0
187.9
19.6
1,878.9
172.9
1,706.1
559.7
571.7
326.7
248.0
2,389.9
508.0
317.3
190.7
20.3
1,861.6
162.0
1,699.7
561.1
577.4
326.9
234.3
2,430.5
514.4
321.4
193.1
16.9
1,899.2
172.1
1,727.2
576.4
586.3
332.4
232.1
2,415.2
515.2
322.9
192.4
18.3
1,881.6
160.5
1,721.1
565.3
588.5
330.8
236.5
205.8
30.7
22.8
68.3
211.6
29.4
24.0
74.8
231.9
37.5
25.1
81.6
214.2
33.5
24.2
74.7
208.4
32.5
24.5
69.0
210.7
37.3
24.7
65.9
223.8
32.9
24.5
81.6
223.5
38.3
25.0
79.0
215.2
33.8
24.0
76.1
232.5
36.2
28.5
79.9
209.6
33.3
25.8
70.7
32.0
51.9
33.1
50.3
36.5
51.2
30.4
51.4
31.0
51.5
30.8
52.1
32.7
52.1
32.3
48.9
32.9
48.4
36.6
51.4
31.4
48.5
COMMERCIAL BANKING
INSTITUTIONS 2
1 Loans and securities
2 Investment securities
U.S. government securities
3
Other
4
5 Trading account assets
6 Total loans
Interbank loans
7
Loans excluding interbank
8
Commercial and industrial
9
Real estate
10
Individual
11
All other
12
13 Total cash assets
14 Reserves with Federal Reserve Banks.
15 Cash in vault
16 Cash items in process of collection . . .
17 Demand balances at U.S. depository
institutions
18 Other cash assets
198.9
199.2
203.7
197.4
182.5
184.5
193.6
186.3
187.5
184.0
176.0
2,690.8
2,724.9
2,761.4
2,732.6
2,722.6
2,744.0
2,792.2
2,812.2
2,792.6
2,847.1
2,800.7
1,903.0
569.7
542.0
791.2
415.4
186.2
186.2
1,922.8
591.6
537.6
793.6
420.2
194.1
187.8
1,942.5
598.1
541.0
803.4
429.9
200.0
189.0
1,927.4
579.6
537.6
§10.1
419.5
202.0
183.7
1,928.8
575.3
538.7
814.8
414.6
202.5
176.7
1,930.4
574.1
537.9
818.4
426.4
209.6
177.6
1,972.4
612.4
535.3
824.7
416.3
224.7
178.8
1,971.2
598.1
531.7
841.4
435.7
225.5
179.8
1,974.1
592.0
531.1
851.0
420.1
218.9
179.5
2,009.1
623.3
528.0
857.9
426.2
231.5
180.4
1,968.1
576.0
531.4
860.6
443.2
208.7
180.7
316.8
319.4
321.0
317.0
323.8
326.8
327.7
329.9
331.7
332.4
336.9
193.0
195.6
194.8
195.8
193.8
193.8
193.5
193.5
196.6
198.9
196.7
2,125.3
461.0
289.2
171.7
25.3
1,639.1
124.9
2,152.0
468.1
295.5
172.6
23.4
1,660.5
124.3
2,160.3
469.5
296.9
172.5
21.4
1,669.5
128.7
2,157.0
468.1
295.1
173.0
20.2
1,668.7
120.9
2,162.8
472.1
299.4
172.7
20.4
1,670.3
122.0
2,179.6
476.2
303.5
172.6
19.5
1,684.0
128.6
2,195.4
475.9
302.9
173.0
19.5
1,700.0
125.0
2,218.6
478.7
305.7
173.0
2,213.8
482.6
176.2
20.3
1,711.0
130.5
2,231.2
487.0
311.3
175.8
1,720.3
133.3
2,238.5
488.3
311.0
177.3
16.9
1,733.3
135.3
1,514.2
474.5
509.2
313.5
217.1
1,536.3
473.4
517.8
316.0
229.1
1,540.8
475.1
525.0
316.5
224.2
1,547.8
471.3
535.5
317.0
224.0
1,548.3
465.2
543.5
319.1
220.4
1,555.4
464.4
548.4
321.8
220.8
1,575.0
470.2
554.0
325.0
225.8
1,587.0
470.6
561.9
326.4
228.1
1,580.4
472.0
567.3
326.6
214.6
1,598.0
479.4
575.0
332.1
211.6
1,594.9
472.6
577.1
330.5
214.7
189.3
29.7
22.8
68.0
195.2
27.2
24.0
74.3
215.4
35.9
25.0
81.2
197.7
32.1
24.1
74.2
191.6
31.3
24.4
68.5
192.7
36.2
24.6
65.4
204.8
30.9
24.4
81.0
207.8
36.5
24.9
78.4
199.3
31.5
24.0
75.7
214.9
35.1
28.4
79.5
191.9
31.7
25.7
70.2
47
Total cash assets
Reserves with Federal Reserve Banks.
Cash in vault
Cash items in process of collection . . .
Demand balances at U.S. depository
institutions
Other cash assets
30.4
38.4
31.3
38.5
34.5
38.8
28.7
38.6
29.3
38.0
29.2
37.2
30.8
37.7
30.6
37.3
31.4
36.7
34.7
37.3
29.7
34.6
48
Other assets
142.1
142.6
142.3
132.8
120.5
119.9
134.2
130.0
123.7
127.2
118.8
2,474.9
2,492.2
2,534.5
2,556.4
2,536.8
2,580.7
2,542.0
1,868.3
567.4
536.6
764.3
318.9
114.2
173.5
1,868.8
566.0
535.7
767.1
333.0
116.0
174.4
1,910.3
603.9
533.2
773.3
324.7
123.8
175.6
1,909.1
589.5
529.5
790.1
345.7
125.0
176.6
1,912.4
583.7
528.8
799.9
323.2
124.8
176.3
1,944.6
614.9
525.7
804.1
331.9
127.0
177.2
1,905.9
567.7
529.1
809.1
344.7
113.9
177.5
19 Other assets
20 Total assets/total liabilities and capital....
21
22
23
24
25
26
27
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
MEMO
28 U.S. government securities (including
trading account)
29 Other securities (including trading account)
DOMESTICALLY CHARTERED
COMMERCIAL BANKS 3
30 Loans and securities
31 Investment securities
U.S. Treasury securities
32
Other
33
34
Trading account assets
35 Total loans
Interbank loans
36
37
Loans excluding interbank
Commercial and industrial
38
Real estate
39
Individual
40
All other
41
42
43
44
45
46
49
Total assets/liabilities and capital
2,456.8
2,489.7
2,517.9
2,487.5
50
51
52
53
54
55
56
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
1,844.4
562.3
540.0
742.1
320.3
109.2
182.9
1,860.7
583.7
535.6
741.5
328.2
116.2
184.6
1,880.1
590.0
539.0
751.1
1,865.7
571.4
535.6
758.7
327.0
114.4
180.5
336.3
115.8
185.7
1. Data have been revised because of benchmarking to new Call Reports
beginning July 1986. Back data are available from the Banking and Monetary
Statistics section, Board of Governors of the Federal Reserve System, Washington, D.C., 20551.
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
19.6
306.4
18.3
1,725.9
131.0
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.
2. 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.
3. Insured domestically chartered commercial banks include all member banks
and insured nonmember banks.
Weekly Reporting
Commercial
Banks
A19
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, Wednesday figures
1987
Account
Nov. 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
Cash and balances due from depository institutions
Total loans, leases, and securities, net
U.S. Treasury and government agency
Trading acount
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
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
Revolving, home equity
All other
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans and leases, net
All other assets
Total assets
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
Nontransaction balances
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions, and banks . . .
Liabilities for borrowed money
Borrowings from Federal Reserve Banks
Treasury tax-and-loan notes
All other liabilities for borrowed money
Other liabilities and subordinated note and debentures .
Total liabilities
Residual (total assets minus total liabilities)3
69
70
71
72
73
74
75
Total loans and leases (gross) and investments adjusted
Total loans and leases (gross) adjusted 4
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates—total5
Commercial and industrial
Other
Nontransaction savings deposits (including MMDAs)
MEMO
.
Nov. 11
Nov. 25
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30'
113,394
106,811'
105,037'
99,175
108,378'
97,636'
106,338
100,794
104,047
l,029,460r 1,020,093' 1,020,636' 1,014,084' 1,023,781' 1,012,808' 1,024,791' 1,016,071' 1,024,441
116,679
119,364'
118,436'
118,239'
119,092'
115,659
118,856
117,548
116,718
11,022
12,242
15,383
14,787
13,483
13,988
15,399
14,452
14,666
105,658
105,9%'
103,981'
104,953'
103,0%
104,305'
103,457
102,052
101,671
16,034
15,891
16,075
16,193
16,075
15,953
15,934
15,798
15,884
46,705
46,730
45,854
46,142
46,773
44,332
44,997
44,952
44,412
43,060
43,230
41,933
42,102
41,385
42,525
42,346
42,086
41,757
69,370
68,442'
68,295'
68,499
69,038
68.36C
68,156'
68,772
68,571
2,953
2,377
2,187
2,230
2,467
2,551
1,981
2,415
2,5%
66,417
66,064'
66,173'
66,175'
66,066'
66,357
66,486
65,975
66,031
47,012
46,982
47,083
47,797
47,541
47,256
47,201
47,598
47,846
5,201
5,187
5,186
5,144
5,192
5,216
5,227
5,219
5,212
41,811
41,7%
42,112
41,896
42,322
42,008
42,580
42,370
42,633
19,404
18,982'
19,083'
18,917'
18,974'
18,234
18,945
18,759
18,129
2,880
2,675
3,161
2,629
3,027
3,114
3,293
2,869
2,960
63,563
56,107
67,365
66,172
61,422
59,129
66,010
74,436
69,181
44,223
44,741
35,884
43,149
40,005
37,024
36,279
40,003
46,827
13,109
13,776
14,506
16,687
17,442
15,957
20,972
18,031
19,153
6,231
6,447
6,774
6,925
8,204
7,712
6,893
7,976
8,455
810,060
809,02C
807,894'
804,288'
802,283'
801,693'
805,708' 802,686' 802,814'
r
789,740
788,820'
782,504'
784,353'
782,273'
787,816'
782,636'
781,488'
785,712
279,499
278,380'
276,665'
275,938'
277,657'
276,918'
276,351' 276,558' 275,645'
2,010
1,9%
2,180
2,063
2,275
2,224
2,200
2,353
2,289
277,489
276,384'
274,485'
275,594'
273,738'
274,628' 274,075' 274,204' 273,421'
r
274,507
273,295'
272,549'
271,495'
270,676'
271,254'
270,462'
271,598
271,001'
2,982
3,089
3,045
2,990
3,061
3,075
2,959
2,950
3,030
245,894
245,420'
243,577'
243,778'
244,746'
242,024' 242,755' 243,111'
241,261'
15,026
14,784
14,436
14,676
14,428
14,532
14,240
14,318
14,174
230,868
230,636'
230,07C
229,140'
229,246'
228,436'
228,683'
227,087' 227,784'
144,541
143,944'
144,953'
142,448'
142,8%'
142,567'
142,321'
142,333'
142,520'
50,062
50,295'
50,652'
50,494'
50,516'
49,766'
50,739'
51,347'
51,020'
21,723
21,694'
22,006'
22,112'
22,422'
21,993'
22,058'
22,735'
22,429'
4,210
4,506
4,225
4,400
4,516
4,770
4,314
4,970
5,289
24,128
23,912'
23,647'
24,102'
23,514
23,341
23,803'
23,628
23,711
12,861
12,792'
13,064'
12,898
12,507
12,650
12,407
12,488
14,679
5,713
5,560
5,531
5,557
5,504
5,508
5,522
5,573
5,601
30,413
30,609
30,807
31,124
30,894
31,366
31,443
31,301
31,474
2,660
2,734
2,799
2,752
2,810
2,840
2,844
2,813
2,888
18,099
18,075'
18,714'
18,534'
18,656'
17,488'
17,985'
19,024'
18,184'
20,320
20,077'
20.20C
19,935'
20,011'
20,204'
19,9%'
20,178'
20,181'
4,428
4,545'
4,499'
4,524'
4,548'
4,523'
4,601'
4,586'
4,592'
33,925
34,108
34,351
34,498
34,439
34,356
34,318
34,352
34,336
771,948
770,607'
765,531'
763,561'
769,259'
762,782'
766,775' 763,727' 763,884'
122,137
121,937'
121,954'
120,564'
124,501'
119,758'
124,154'
127,818'
125,462'
1,261,325' 1,251,892' 1,245,584' 1,233,016' 1,254,113' 1,231,008' 1,254,33C 1,244,819' 1,259,988
239,164
230,206'
237,814'
225,666'
213,082'
224,%5
217,809
234,023
223,223
184,002
180,792
183,331
177,824
168,885
171,882
173,804
180,167
175,482
5,887
6,0%
6,192
5,658
5,601
5,193
5,344
5,140
5,493
3,139
3,427
1,474
3,716
1,364
3,852
2,190
1,460
4,581
26,991
23,98C
27,731'
23,154
23,529'
21,663'
24,805
24,947
25,261
6,883
6,652
7,090
7,017
6,499
6,467
6,604
6,928
6,445
689
1,199
1,035
809
755
763
848
651
810
11,063
9,309
8,570
9,282
8,195
9,906
7,761
8,587
11,098
62,235
62,574
62,753
62,399
60,792
62,306
61,824
61,228
62,477
534,985
536,529
536,090
536,826
536,098
536,595
535,801
535,904
535,335
497,334
498,785
498,816
499,014
499,662
499,467
498,327
499,007
498,289
25,370
25,425
25,022
25,292
25,381
25,088
25,357
25,345
25,159
892
898
832
779
763
910
764
748
773
10,602
10,208
10,580
10,451
10,429
10,278
10,452
10,095
10,165
788
815
810
834
846
831
824
833
825
250,072
242,417'
257,183'
242,752'
246,563'
250,946' 245,5%'
258,040' 259,414'
430
565
185
415
630
369
330
345
260
23,170
22,168
16,895
16,117
5,382
12,394
20,490
16,626
14,033
226,321
220,064'
240,651'
233,604'
233,952' 228,370'
236,740'
243,662' 238,663'
94,630
93,468'
92.82C
95,612'
91,834'
92,244'
94,202'
91,586'
92.02C
1,181,895' 1,171,951' 1,165,978' 1,154,20c 1,174,513' 1,150,579' 1,174,709' 1,165,195' 1,181,087
78,901
79,624
78,816
79,600
79,621
79,606
80,429
79,430
79,942
999,137'
810,888'
172,558
1,708
1,248
459
224,976
9%,311'
809,126'
172,597
1,718
1,263
455
224,971
1. Includes securities purchased under agreements to resell.
2. 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.
3. This is not a measure of equity capita) for use in capital-adequacy analysis or
for other analytic uses.
Nov. 18
997,505'
806,763'
172,906
1,778
1,321
456
225,070
993,858'
803,980'
172,866
1,812
1,352
460
224,050
997,219'
806,082'
171,172
1,731
1,270
461
225,674
993,510'
803,141'
172,264
1,699
1,245
454
225,236
996,931'
807,319'
172,002
1,557
1,126
431
224,754
997,157'
807,549'
173,729
1,500
1,080
420
223,278
996,859
807,677
173,501
1,366
1,057
309
222,410
4. Exclusive of loans and federal funds transactions with domestic commercial
banks.
5. 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
DomesticNonfinancialStatistics • April 1988
1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities
Millions of dollars, Wednesday figures except as noted
1987
Account
Nov. 4
1 Cash balances due from depository institutions
2 Total loans, leases and securities, net1
Securities
3 U.S. Treasury and government agency
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 securities2
10 Trading account 2
11 Investment account
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
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
Loans and leases
Federal funds sold3
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
Revolving, home equity
All other
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans and leases, net
All other assets
46 Total assets
41
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
(ATS, NOW, Super NOW, telephone transfers)
Nontransaction balances
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions, and banks ..
Liabilities for borrowed money
Borrowings from Federal Reserve Banks
Treasury tax-and-Ioan notes
All other liabilities for borrowed money5
Other liabilities and subordinated note and debentures ..
67 Total liabilities
68 Residual (total assets minus total liabilities)6
Nov. 11
Nov. 18
Nov. 25
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
25,488
26,426
23,107
22,068
25,598
25,475
24,132
25,476
29,583
219,192r
214,775'
215,004'
210,788'
216,198r
210,923'
216,740r
211,881''
215,505'
0
0
14,141
1,441
4,216
8,483
0
0
16,572
13,482
788
12,694
3,090
0
0
0
13,821
1,469
4,122
8,230
0
0
16,657
13,453
795
12,659
3,203
0
0
0
14,368
1,517
4,640
8,212
0
0
16,736
13,355
786
12,568
3,381
0
0
0
13,718
1,498
4,663
7,557
0
0
16,753
13,291
775
12,515
3,462
0
0
0
14,311
1,452
4,681
8,178
0
0
16,926
13,262
874
12,387
3,664
0
0
0
14,224
1,417
4,608
8,199
0
0
16,953
13,258
880
12,379
3,694
0
0
0
14,451
1,523
4,609
8,319
0
0
17,029
13,262
865
12,397
3,766
0
0
0
14,333
1,245
4,643
8,445
0
0
16,927
13,274
879
12,395
3,653
0
0
0
14,553
1,381
4,707
8,465
0
0
17,144
13,302
868
12,434
3,842
0
31,439
14,259
11,826
5,354
172,576'
168,068'
59,181
438
2,313
42,374'
58,742
58,214
529
44,687'
21,331'
21,918'
11,836'
3,287
6,795
5,882
331
7,721
742
6,274'
4,509
1,346'
14,190
157,040'
61,178'
29,539
11,479
12,850
5,209
170,326'
165,813'
58,562
380
2,329
42,506'
58,182
57,635
547
44,836'
21,405'
21,804'
12,222'
2,784
6,798
4,394
324
7,697
638
6,152'
4,512
1,352'
14,216
154,758'
58,434'
30,165
14,241
10,959
4,965
169,285'
164,796'
57,841
411
2,353
42,653'
57,430
56,957
473
45,006'
21,037'
21,541'
11,799'
2,968
6,774
4,794
342
7,770
664
5,801'
4,489
1,365'
14,186
153,734'
60,186'
26,826
11,953
9,992
4,881
169,035'
164,515'
56,954
358
2,373
42,708'
56,596
56,142
455
45,080'
21,163'
21,380'
11,997'
2,460
6,923
5,037
300
7,745
625
6,230'
4,520
1,348'
14,196
153,491'
55,869'
30,182
15,313
10,779
4,090
170,345'
165,860'
57,463
357
2,389
42,972'
57,105
56,655
450
45,361'
21,180'
21,649'
12,185'
2,487
6,978
5,560
297
7,665
663
6,022'
4,485
1,329'
14,237
154,779'
57,380'
26,163
11,985
9,544
4,635
169,153'
164,614'
57,105
336
2,407
43,209'
56,769
56,277
491
45,616'
21,255'
21,727'
12,088'
2,682
6,957
4,824
307
7,502
610
5,667'
4,539
1,338'
14,233
153,583'
53,896'
28,858
16,333
8,947
3,578
171,924'
167,378'
58,195
318
2,424
43,668'
57,878
57,406
472
46,092'
21,451'
21,999'
12,208'
2,342
7,449
5,291
323
7,423
712
5,891'
4,546
1,346'
14,176
156,402'
55,736'
24,645
12,412
8,312
3,921
171,384'
166,830'
58,010
306
2,441
44,201'
57,704
57,244
460
46,642'
21,581'
21,897'
12,253'
2,625
7,020
4,944
284
7,347
657
5,468'
4,554
1,360'
14,048
155,975'
51,836'
26,753
15,081
8,320
3,352
172,395'
167,830'
58,447
304
2,463
44,699'
58,142
57,743
400
47,162'
21,747'
21,704'
12,196'
2,316
7,193
4,724
282
7,386
597
5,780'
4,565
1,365'
13,975
157,055'
53,385'
305,858
299,635
298,296
288,726
299,176
290,294
296,608
289,192
298,474
63,618
44,225
879
870
6,118
5,623
671
5,232
56,801
39,952
1,066
261
5,871
5,226
703
3,722
60,251
40,612
889
717
7,116
5,303
517
5,098
54,185
38,671
791
367
5,715
5,223
587
2,831
56,287
39,683
912
192
5,292
5,846
678
3,684
53,403
37,296
846
187
5,434
5,759
626
3,255
62,863
43,119
968
595
7,680
5,337
889
4,274
58,495
41,654
810
566
5,999
5,277
553
3,636
63,743
42,692
758
593
7,573
5,640
1,061
5,424
8,073
101,446
92,300
6,794
67
1,870
415
70,652
0
3,283
67,369
38,767
8,094
101,376
92,527
6,530
55
1,876
388
73,380
0
5,007
68,372
36,398
8,002
101,404
92,574
6,542
57
1,844
388
69,556
0
4,222
65,334
35,763
7,932
101,097
92,342
6,481
56
1,833
385
64,759
0
4,327
60,432
37,632
8,171
101,566
93,046
6,238
57
1,829
395
73,560
0
4,173
69,387
36,196
8,062
101,144
92,551
6,326
60
1,833
373
65,077
0
1,269
63,808
39,044
8,163
101,300
92,737
6,248
59
1,886
370
63,327
0
3,602
59,726
37,553
8,249
101,225
92,647
6,127
50
2,015
386
58,880
0
5,570
53,310
38,953
8,337
101,540
92,979
6,122
50
2,015
373
61,299
0
5,642
55,656
40,347
282,557
276,049
274,976
265,606
275,780
266,731
273,208
265,802
275,266
23,301
23,586
23,321
23,120
23,396
23,562
23,401
23,390
23,208
208,633'
177,920'
38,448
206,641'
176,163'
38,397
204,515'
173,410'
38,361
202,383'
171,912'
38,016
204,266'
173,029'
37,776
202,42c
171,243'
37,761
203,721'
172,241'
37,476
202,624'
171,363'
37,881
203,569'
171,871'
37,437
MEMO
69 Total loans and leases (gross) and investments adjusted •
70 Total loans and leases (gross) adjusted
71 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
A21
1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS1 Assets and
Liabilities
Millions of dollars, Wednesday figures
1987
Account
1 Cash and due from depository institutions . . .
2 Total loans and securities
3 U.S. Treasury and government agency
securities
4 Other securities
5 Federal funds sold
6 To commercial banks in the United States .
7 To others
8 Other loans, gross
9 Commercial and industrial
Bankers acceptances and commercial
10
paper
11
All other
12
U.S. addressees
Non-U.S. addressees
13
14 To financial institutions
15
Commercial banks in the United States..
16
Banks in foreign countries
Nonbank financial institutions
17
18 To foreign governments and official
institutions
19 For purchasing and carrying securities
20 All other
21 Other assets (claims on nonrelated parties) ..
22 Net due from related institutions
23 Total assets
24 Deposits or credit balances due to other
than directly related institutions
25 Transaction accounts and credit balances .
Individuals, partnerships, and
26
corporations
27
Other
28 Nontransaction accounts
Individuals, partnerships, and
29
corporations
30
Other
Borrowings from other than directly
31
related institutions
32 Federal funds purchased 5
From commercial banks in the
33
United States
From others
34
35 Other liabilities for borrowed money
36
To commercial banks in the
United States
To others
37
38 Other liabilities to nonrelated parties
39 Net due to related institutions
40 Total liabilities
Nov. 4
Nov. 11
Nov. 18
Nov. 25
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
10,434
97,204
10,013
96,081
10,922
98,486
9,970
96,156
11,801
96,785
9,920
99,280
10,326
100,996
10,150
102,108
10,878
106,201
7,466
7,402
8,474
6,730
1,744
73,860
49,111
7,290
7,516
8,073
6,081
1,992
73,202
47,548
7,558
7,456
10,615
8,191
2,423
72,857
48,072
7,328
7,450
7,679
5,663
2,016
73,698
47,700
7,681
7,394
6,947
4,174
2,772
74,763
48,231
7,626
7,299
8,988
6,354
2,634
75,367
49,280
7,511
7,341
10,272
8,152
2,120
75,872
49,217
7,370
7,474
9,364
7,490
1,874
77,899
50,530
7,056
7,811
11,688
10,136
1,552
79,645
52,252r
3,361
45,751
43,421
2,330
15,597
11,644
1,012
2,940
1,553
45,995
43,597
2,398
15,815
11,872
913
3,029
1,448
46,624
44,234
2,391
15,605
11,437
1,133
3,035
1,501
46,199
43,743
2,456
16,805
12,688
1,093
3,024
1,488
46,744
44,400
2,344
16,618
12,218
1,288
3,112
1,524
47,756
45,281
2,475
16,237
11,806
1,272
3,159
1,457
47,760
45,192
2,568
16,279
11,924
1,223
3,132
1,528
49,002
46,751
2,251
16,901
12,429
1,208
3,264
1,668
50,584r
48,526
2,183
16,766
12,153
1,245
3,368
388
2,062
6,701
28,927
15,953
152,517
400
2,339
7,100
31,776
14,071
151,942
407
1,655
7,118
31,619
13,816
154,844
403
1,738
7,052
31,805
16,081
154,012
401
1,991
7,522
31,787
14,182
154,555
411
1,971
7,468
31,798
13,879
154,877
398
2,200
7,777
31,264
12,498
155,084
400
2,201
7,866
31,427
13,256
156,942
418
2,121
7,962
31,500
12,676
161,255
42,747
3,527
42,397
3,341
41,917
3,221
41,849
2,918
41,773
2,841
42,366
3,092
43,088
3,206
43,349
3,033
44,244
3,461
1,865
1,662
39,219
1,908
1,432
39,056
1,932
1,289
38,696
1,714
1,204
38,931
1,709
1,132
38,932
1,969
1,123
39,274
1,876
1,330
39,882
1,909
1,124
40,315
1,895
1,566
40,783
31,889
7,330
31,954
7,102
31,655
7,042
31,912
7,018
31,234
7,699
31,430
7,844
32,290
7,592
32,718
7,597
33,190
7,593
56,494
27,448
54,297
25,598
57,873
28,195
58,464
27,249
58,777
28,495
56,187
25,886
56,865
25,380
54,285
22,167
56,753
24,201
17,568
9,880
29,046
15,592
10,007
28,699
17,030
11,166
29,678
16,924
10,326
31,215
16,373
12,122
30,282
13,943
11,943
30,302
15,256
10,124
31,486
12,413
9,754
32,118
15,115
9,086
32,552
22,743
6,303
33,004
20,272
152,517
22,672
6,027
32,830
22,417
151,942
23,826
5,851
32,928
22,124
154,844
24,299
6,916
33,016
20,683
154,012
23,841
6,441
33,304
20,701
154,555
23,081
7,221
33,338
22,986
154,877
24,295
7,190
32,544
22,587
155,084
24,359
7,759
32,639
26,668
156,942
25,128
7,424
32,557
27,701
161,255
78,829
63,960
78,128
63,322
78,857
63,843
77,804
63,026
80,393
65,317
81,121
66,195
80,920
66,068
82,189
67,344
83,912
69,044
MEMO
41 Total loans (gross) and securities adjusted ..
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
D o m e s t i cNonfinancialStatistics • April 1988
1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1
Billions of dollars, estimated daily-average balances, not seasonally adjusted
Commercial banks
Type of holder
1986
1982
Dec.
1983
Dec.
1984
Dec.
1987
Dec.^
Sept.
Dec.
Mar.
June
Sept.
1 All holders—Individuals, partnerships, and
corporations
291.8
293.5
302.7
321.0
333.6
363.6
335.9
340.2
339.0
2
3
4
5
6
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
32.3
178.5
85.5
3.5
21.2
35.9
185.9
86.3
3.3
22.2
41.4
202.0
91.1
3.3
25.8
35.9
183.0
88.9
2.9
25.2
36.6
187.2
90.1
3.2
23.1
36.5
188.2
88.7
3.2
22.4
Financial business
Nonfinancial business
Consumer
Foreign
Other
Dec.
t
I
n.a.
Weekly reporting banks
1986
1982
Dec.
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial business
Nonfinancial business
Consumer
Foreign
Other
1983
Dec.
1987
Decj'4
Sept.
Dec.
Mar.
June
Sept.
Dec.
144.2
146.2
157.1
168.6
174.7
195.1
178.1
179.3
179.1
187.0
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
25.9
94.5
33.2
3.1
12.0
28.9
94.8
35.0
3.2
12.8
32.5
106.4
37.5
3.3
15.4
28.7
94.4
36.8
2.8
15.5
29.3
94.8
37.5
3.1
14.6
29.3
96.0
37.2
3.1
13.5
29.5
100.8
39.4
3.3
14.0
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
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
A23
1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1987
1983
Dec.
Instrument
1984
Dec.
1985
Dec.
1986
Dec.
1987
Dec.
July
Aug.
Oct.
Sept.
Nov. 1
Dec.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
2
3
4
5
6
Financial companies 2
Dealer-placed paper
Total
Bank-related (not seasonally
adjusted)
Directly placed paper4
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies 5
187,658
237,586
300,899
331,016
357,130
349,976
350,780
357,019
356,578
351,846
357,130
44,455
56,485
78,443
100,207
101,958
108,470
109,941
114,435
109,020
105,197
101,958
2,441
2,035
1,602
2,265
1,428
2,311
2,404
2,590
2,689
1,893
1,428
97,042
110,543
135,504
152,385
173,940
162,764
162,674
165,344
170,403
169,779
173,940
35,566
46,161
42,105
70,558
44,778
86,952
40,860
78,424
43,173
81,232
46,354
78,742
45,487
78,165
46,815
77,240
46,249
77,155
45,353
76,870
43,173
81,232
Bankers dollar acceptances (not seasonally adjusted) 6
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
78,309
78,364
68,413
64,974
70,565
68,495
68,645
68,771
71,891
71,068
70,565
9,355
8,125
1,230
9,811
8,621
1,191
11,197
9,471
1,726
13,423
11,707
1,716
10,942
9,464
1,479
10,664
9,630
1,035
10,870
9,905
965
10,521
9,400
1,121
10,856
9,742
1,114
10,701
9,714
987
10,942
9,464
1,479
418
729
67,807
0
671
67,881
0
937
56,279
0
1,317
50,234
0
965
58,658
0
1,463
56,367
0
1,397
56,378
0
1,467
56,784
0
1,400
59,635
0
1,134
59,234
0
965
58,658
15,649
16,880
45,781
17,845
16,305
44,214
15,147
13,204
40,062
14,670
12,960
37,344
16,483
15,227
38,847
17,431
14,659
36,405
17,087
14,967
36,590
17,198
15,046
36,526
17,814
15,949
38,122
16,942
15,435
38,691
16,483
15,227
38,847
1. A change in the reporting panel in November resulted in a slight understatement of outstanding volume.
2. 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.
3. Includes all financial company paper sold by dealers in the open market.
4. As reported by financial companies that place their paper directly with
investors.
5. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
6. 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.
1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per year
Effective Date
10.50
10.00
9.50
9.00
8.50
8.00
7.50
1
1
IS
Sept. 4
Oct. 7
??
Nov. 5
1987—Apr.
May
Month
7.75
8.00
8.25
8.75
9.25
9.00
8.75
NOTE. These data also appear in the Board's H.15 (519) release. For address,
see inside front cover.
Average
rate
1985—Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
10.61
1986—Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
9.50
9.50
9.10
8.83
8.50
8.50
10.50
10.50
10.50
10.31
9.78
9.50
9.50
9.50
9.50
9.50
9.50
8.16
7.90
1986—Sept.
Oct.
Nov.
Dec.
1987—Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1988—Jan.
A24
DomesticNonfinancialStatistics • April 1988
1.35 INTEREST RATES Money and Capital Markets
Averages, percent per year; weekly and monthly figures are averages of business day data unless otherwise noted.
1987
Instrument
1985
1986
1988
1988, week ending
1987r
Oct.
Nov.
Dec.
Jan.
Jan. 1
Jan. 8
Jan. 15
Jan. 22
Jan. 29
MONEY MARKET RATES
1
?
Commercial paper '
3
4
S
6
7
8
9
in
Finance paper, directly placed 4.
Bankers acceptances
6.80
6.33
6.66
5.66
7.29
6.00
6.69
6.00
6.77
6.00
6.83
6.00
6.81
6.00
7.02
6.00
6.81
6.00
6.89
6.00
6.66
6.00
7.94
7.95
8.01
6.62
6.49
6.39
6.73
6.81
6.84
7.38
7.89
7.96
6.77
7.17
7.17
7.76
7.61
7.49
6.76
6.87
6.92
7.45
7.30
7.22
6.85
6.95
7.00
6.80
6.92
7.00
6.75
6.85
6.91
6.66
6.75
6.78
7.91
7.77
7.75
6.58
6.38
6.31
6.61
6.54
6.37
7.28
7.40
7.17
6.63
6.91
6.69
7.23
6.97
6.64
6.65
6.62
6.53
6.97
6.78
6.63
6.74
6.67
6.59
6.69
6.68
6.60
6.61
6.61
6.53
6.54
6.51
6.41
7.92
7.96
6.39
6.29
6.74
6.77
7.85
7.92
7.07
7.07
7.48
7.41
6.77
6.83
7.17
7.14
6.89
6.97
6.83
6.93
6.73
6.76
6.61
6.63
7.97
8.05
8.25
8.28
6.61
6.52
6.51
6.71
6.74
6.86
7.00
7.06
7.39
8.02
8.19
8.29
6.80
7.24
7.31
7.41
7.86
7.66
7.67
7.86
6.78
6.92
7.10
7.11
7.57
7.38
7.40
7.69
6.87
7.03
7.21
7.23
6.81
6.99
7.21
7.23
6.76
6.87
7.07
7.11
6.66
6.77
6.09
7.03
7.48
7.65
7.81
5.98
6.03
6.08
5.78
6.03
6.32
6.13
6.69
7.05
5.69
6.19
6.50
5.77
6.36
6.69
5.81
6.25
6.52
5.73
6.26
6.66
5.86
6.36
6.66
5.81
6.29
6.63
5.85
6.25
6.45
5.74
6.11
6.33
7.49
7.66
7.81
5.97
6.02
6.07
5.82
6.05
6.33
6.40
6.86
6.89
5.81
6.23
6.48
5.80
6.36
6.74
5.90
6.31
6.67
5.73
6.32
n.a.
5.90
6.35
n.a.
5.85
6.33
n.a.
5.98
6.37
6.67
5.85
6.19
n.a.
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
6.77
7.41
7.67
7.94
8.22
8.39
n.a.
8.58
7.59
8.40
8.75
9.08
9.37
9.52
n.a.
9.61
6.96
7.69
7.99
8.35
8.69
8.86
n.a.
8.95
7.17
7.86
8.13
8.45
8.82
8.99
n.a.
9.12
6.99
7.63
7.87
8.18
8.48
8.67
n.a.
8.83
7.15
7.82
8.08
8.38
8.69
8.85
n.a.
8.95
7.15
7.81
8.05
8.37
8.69
8.84
n.a.
8.98
7.12
7.75
7.99
8.33
8.65
8.84
n.a.
9.01
6.90
7.57
7.80
8.08
8.37
8.57
n.a.
8.74
6.77
7.39
7.63
7.91
8.19
8.39
8.56
10.75
8.14
8,63
9.61
8.99
9.12
8.82
8.96
9.00
9.01
8.72
8.55
8.60
9.58
9.11
6.95
7.76
7.32
7.14
8.17
7.64
7.90
8.85
8.70
7.50
8.47
7.95
7.45
8.42
7.96
7.29
8.12
7.70
n.a.
n.a.
n.a.
7.40
8.40
7.86
7.35
8.30
7.83
7.25
8.00
7.61
7.15
7.80
7.51
12.05
11.37
11.82
12.28
12.72
9.71
9.02
9.47
9.95
10.39
9.91
9.38
9.68
9.99
10.58
10.97
10.52
10.74
10.98
11.62
10.54
10.01
10.27
10.63
11.23
10.59
10.11
10.33
10.62
11.29
10.37
9.88
10.09
10.43
11.07
10.53
10.06
10.25
10.58
11.24
10.49
10.00
10.19
10.54
11.22
10.48
10.00
10.19
10.52
11.19
10.34
9.88
10.06
10.41
11.02
10.16
9.64
9.90
10.58
10.85
12.06
9.61
9.95
11.07
10.39
10.42
10.05
10.25
10.30
9.99
9.92
9.76
10.49
4.25
8.76
3.48
8.37
3.08
8.99
3.25
9.11
3.66
9.08
3.71
9.04
3.66
9.12
3.66
9.14
3.51
9.11
3.70
8.99
3.75
8.93
3.66
,6
Certificates of deposit, secondary market 7
N
I?
N
14
U.S. Treasury bills'
Secondary market
15
16
17
8.10
7.69
Auction average10
18
19
20
CAPITAL MARKET RATES
U.S. Treasury notes aqd bonds"
Constant maturities171
11
73
74
?5
?6
77
?8
20-year
Composite
?9
State and local notes and bonds
Moody's series' 4
30
31
V>
Baa
Corporate bonds
Seasoned issues16
33
34
35
36
37
38
39
40
Aa
A
Baa
A-rated, recently-offered utility
bonds 17
MEMO: Dividend/price ratio18
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 in 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 often 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
A23
1.36 STOCK MARKET Selected Statistics
1987
1985
Indicator
1986
1988
1987
May
June
July
Sept.
Aug.
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
Finance
5
6 Standard & Poor's Corporation
(1941-43 = 10)1
7 American Stock Exchange
(Aug. 31, 1973 = 50)
108.09
123.79
104.11
56.75
114.21
136.00
155.85
119.87
71.36
147.19
161.70
195.31
140.39
74.29
146.48
163.00
198.78
141.30
71.64
145.97
169.58
206.61
150.39
74.25
152.73
174.28
214.12
157.49
74.18
152.27
184.18
226.49
164.02
78.20
160.94
178.39
219.52
158.58
76.13
154.08
157.13
189.86
140.95
73.27
137.35
137.21
163.42
117.57
69.86
118.30
134.88
162.19
115.85
67.39
111.47
140.55
168.47
121.20
70.01
119.40
186.84
236.34
286.83
289.12
301.36
310.09
329.36
318.66
280.16
245.01
240.96
250.48
229.10
264.38
316.61
328.77
334.49
348.68
361.52
353.72
306.34
249.42
248.52
267.29
109,191
8,355
141,385
11,846
188,642
13,832
170,898
11,655
163,380
12,813
180,356
12,857
193,477
13,604
177,319
12,381
277,026
18,173
179,481
11,268
178,517
13,422
174,754
9,853
2
Volume of trading (thousands of shares)
8 New York Stock Exchange
9 American Stock Exchange
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers 3
28,390
36,840
31,990
38,890
38,420
40,250
41,640
44,170
38,250
34,180
31,990
31,320
Free credit balances at brokers4
11 Margin-account
12 Cash-account
2,715
12,840
4,880
19,000
4,750
15,640
4,355
16,985
3,680
15,405
4,095
15,930
4,240
16,195
4,270
15,895
8,415
18,455
6,700
15,360
4,750
15,640
4,675
15,270
Margin requirements (percent of market value and effective date) 6
13 Margin stocks
14 Convertible bonds
15 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 Juiy 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.
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. These regulations, adopted by the Board of Governors pursuant to the
Securities Exchange Act of 1934, limit the amount of credit to purchase and carry
"margin securities" (as defined in the regulations) when such credit is collateralized by securities. Margin requirements on securities other than options are the
difference between the market value (100 percent) and the maximum loan value of
collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15,
1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968;
and Regulation X, effective Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in
Regulation T the initial margin required for writing options on securities, setting
it at 30 percent of the current market-value of the stock underlying the option. On
Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the
same as the option maintenance margin required by the appropriate exchange or
self-regulatory organization; such maintenance margin rules must be approved by
the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC
approved new maintenance margin rules, permitting margins to be the price of the
option plus 15 percent of the market value of the stock underlying the option.
A26
DomesticNonfinancialStatistics • April 1988
1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities
Millions of dollars, end of period
1987
Account
1985
1986
Sept.
Oct.
Nov.
935,438' 936,858' 939,721' 944,229' 952,671' 949,069' 949,238' 955,253
956,744
973,992
975,809
150,230
139,675
301,229
151,986
135,297
304,686
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Savings and loan associations
1 Assets
948,781
963,316
2 Mortgage-backed securities
Cash and investment securities
4 Other
97,303
126,712
238,833
123,257
142,700
251,769
129,338' 128,856 129,274' 134,746' 141,023' 142,241' 140,897' 144,058
133,028' 135,885' 138,746' 136,370 138,303' 138,125' 138,520' 137,323
261,858' 263,829' 266,393' 274,812' 283,644' 285,473' 287,55C 292,737
146,247
131,729
295,225
5 Liabilities and net worth
948,781
963,316
935,438' 936,858' 939,721' 944,229' 952,671' 949,069' 949,238' 955,253
956,744
973,992
975,809
721,714' 722,226' 722,548 716,798 718,633 715,662 716,389
153,381' 152,176' 158,192' 165,883' 171,279' 175,394' 174,357
76,469
77,857
78,583
79,188
78,888
75,552
75,671
77,829' 76,505' 81,723' 88,026' 92,696' 96,206' 95,469
20,869' 22,628' 19,584' 20,682'
19,829' 21,878' 18,958
717,259
178,642
79,546
99,0%
21,941
721,409
180,360
80,848
99,512
19,158
727,274
190,706
83,303
107,403
20,9%
730,324
188,778
84,421
104,357
21,587
37,406
35,814
35,003
35,106
6 Savings capital
7 Borrowed money
K FHLBB
9
Other
10 Other
11 Net worth 2
750,071
138,798
73,888
64,910
19,045
741,081
159,742
80,194
79,548
20,071
41,064
42,423
40,514'
40,579'
40,023'
40,678'
40,127'
38,428'
37,809'
FSLIC-insured federal savings banks
131,868
210,562
235,428
241,418
246,277
253,006
264,106
268,813
272,088
272,789
276,490
279,153
72,355
15,676
11,723
113,638
29,766
19,034
136,782' 136,505' 138,882
36,088
34,634
33,570
16,605
15,769
16,060
140,854
37,500
17,034
144,581
39,371
17,200
150,421
40,969
17,924
152,881'
42,713'
17,546
154,058
43,531
17,779
154,658
44,422
17,559
156,460
45,132
17,383
158,874
45,255
17,325
16 Liabilities and net worth
131,868
210,562
235,428
235,763
241,418
246,277
253,006
264,106
268,813
272,088
272,789
276,490
279,153
17
18
19
70
71
22
103,462
19,323
10,510
8,813
2,732
6,351
157,872
37,329
19,897
17,432
4,263
11,098
176,938'
40,614
20,730
19,884
5,308'
12,774
177,355' 178,672
43,919
39,777
21,104
20,226
22,815
19,551
5,264'
5,484'
13,564
13,151
180,637
46,125
21,718
24,407
5,547
13,978
182,802
49,896
22,788
27,108
6,044
14,272
189,998
53,255
24,486
28,769
5,987'
14,871
193,890
53,652
24,981
28,671
6,142'
15,134
194,853
55,660
25,546
30,114
6,454
15,123
195,213
56,540
26,287
30,253
5,630
15,408
197,2%
57,551
27,350
30,201
6,308
15,348
199,114
58,276
27,947
30,329
6,361
15,415
12 Assets
13 Mortgages
14 Mortgage-backed securities
15 Other
Savings capital
Borrowed money
FHLBB
Other
Other
Net worth
235,763
Savings banks
23 Assets
216,776
236,866
235,603
238,074
240,739
243,454
245,906
244,760
246,833
249,888
251,472
255,989
260,600
110,448
30,876
118,323
35,167
119,199
36,122
119,737
37,207
121,178
38,012
122,769
37,136
124,936
37,313
128,217
35,200
129,624
35,591
130,721
36,793
133,298
36,134
135,317
36,471
137,044
37,189
13,111
19,481
2,323
21,199
6,225
13,113
14,209
25,836
2,185
20,459
6,894
13,793
13,332
26,220
2,180
19,795
5,239
13,516
13,525
26,893
2,168
19,770
5,143
13,631
13,631
27,463
2,041
19,598
5,703
13,713
13,743
28,700
2,063
19,768
5,308
13,967
13,650
28,739
2,053
19,956
5,176
14,083
13,549
27,785
2,059
18,803
4,939
14,208
13,498
28,252
2,050
18,821
4,806
14,191
13,720
28,913
2,038
18,573
4,823
14,307
13,122
29,655
2,023
18,431
4,484
14,325
13,817
30,202
2,034
18,062
5,529
14,557
15,694
31,144
2,046
17,583
5,063
14,837
32 Liabilities
216,776
236,866
235,603
238,074
240,739
243,454
245,906
244,760
246,833
249,888
251,472
255,989
260,600
33 Deposits
34
Regular 3
35
Ordinary savings
Time
36
37
Other
38 Other liabilities
39 General reserve accounts
185,972
181,921
33,018
103,311
4,051
17,414
12,823
192,194
186,345
37,717
100,809
5,849
25,274
18,105
191,441
186,385
38,467
100,604
5,056
24,710
18,236
192,559
187,597
39,370
100,922
4,962
25,663
18,486
193,693
188,432
40,558
100,896
5,261
27,003
18,830
193,347
187,791
41,326
100,308
5,556
29,105
19,423
194,742
189,048
41,967
100,607
5,694
30,436
19,603
193,274
187,669
42,178
100,604
5,605
30,515
19,549
194,549
188,783
41,928
102,603
5,766
31,655
19,718
195,895
190,335
41,767
105,133
5,560
32,467
20,471
196,824
191,376
41,773
107,063
5,448
32,827
20,407
199,336
193,777
42,045
109,486
5,559
34,226
20,365
202,030
1%,724
42,493
112,231
5,306
36,167
21,133
24
25
26
27
28
29
30
31
Loans
Mortgage
Other
Securities
U.S. government
Mortgage-backed securities . .
State and local government . .
Corporate and other
Cash
Other assets
Financial Markets A23
1.37—Continued
1987
Account
1985
1986
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
n. a.
n a.
n. a.
n a.
n a.
1,026,919
1,021,148
89,408
63,352
11,087
14,969
558,787
451,453
107,334
204,264
33,048
53,422
87,991
90,782
64,880
11,363
14,539
549,426
455,678
93,748
206,507
33,235
53,413
87,785
Credit unions 4
40 Total assets/liabilities
and capital
41
42
Federal
State
43 Loans outstanding ..
44
Federal
45
State
46 Savings
47
Federal
48
State
118,010
147,726
149,383
149,751
153,253
154,549
156,086
160,644
77,861
40,149
95,483
52,243
96,801
52,586
96,753
52,998
98,799
54,454
99,751
54,798
100,153
55,933
104,150
56,494
73,513
47,933
25,580
105,963
70,926
35,037
86,137
55,304
30,833
134,327
87,954
46,373
85,984
55,313
30,671
135,907
89,717
46,130
85,651
54,912
30,739
136,441
89,485
46,956
86,101
55,118
30,983
138,810
91,042
47,768
87,089
55,740
31,349
140,014
92,012
48,002
87,765
55,952
31,813
141,635
97,189
49,248
90,912
58,432
32,480
148,283
96,137
52,146
Life insurance companies
49 Assets
50
51
52
53
54
55
56
57
58
59
60
Securities
Government
United States 5 ..
State and local .
Foreign 6
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
825,901
937,551
948,665
961,937
978,455
978,455
985,942
995,576
75,230
51,700
9,708
13,822
423,712
346,216
77,496
171,797
28,822
54,369
71,971
84,640
59,033
11,659
13,948
492,807
401,943
90,864
193,842
31,615
54,055
80,592
84,923
59,596
11,245
14,082
504,582
408,788
95,794
194,213
31,718
53,832
79,397
88,003
62,724
11,315
13,964
514,328
415,004
99,324
194,935
32,003
53,806
78,842
90,337
65,661
10,860
13,816
519,766
417,933
101,833
195,743
31,834
53,652
82,105
89,711
64,621
11,068
14,022
522,097
420,474
101,623
197,315
32,011
53,572
83,749
89,554
64,201
11,208
14,145
528,789
425,788
103,001
198,760
32,149
53,468
83,222
87,279
61,405
11,485
14,389
537,507
432,095
105,412
200,382
32,357
53,378
84,390
1. Holdings of stock of the Federal Home Loan Banks are in "other assets."
2. Includes net undistributed income accrued by most associations.
3. Excludes checking, club, and school accounts.
4. Data include all federally insured credit unions, both federal and state
chartered, serving natural persons.
5. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under "Business" securities.
6. 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.
1,005,592 1,017,018
88,199
62,461
11,277
14,461
555,423
448,146
107,277
201,297
32,699
53,338
85,420
89,924
64,150
11,190
14,584
551,701
442,604
109,097
202,241
32,992
53,330
86,830
n.a.
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 total, in "other assets."
A28
Domestic Financial Statistics • April 1988
1.38 FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Calendar year
Type of account or operation
Fiscal
year
1986
Fiscal
year
1987
1987
Aug.
U.S. budget2
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
9 Off-budget
Source of financing (total)
Borrowing from the public
Operating cash (decrease, or increase
(~k
12 Other3
10
11
769,091
568,862
200,228
990,258
806,760
183,498
-221,167
-237,898
16,731
854,143
640,741
213,402
1,004,586
810,754
193,832
-150,444
-170,014
19,570
60,213
43,511
16,703
81,890
65,021
16,869
-21,677
-21,511
-166
Sept.
92,410
73,755
18,656
76,980
60,337
16,643
15,430
13,417
2,013
1988
Oct.
Nov.
Dec.
62,354
45,992
16,362
93,095
76,910
16,185
-30,741
-30,918
176
56,987
40,630
13,357
83,920
67,150
16,770
-26,934
-26,520
-414
85,525
67,645
17,880
109,741
77,845
31,896
-24,216
-10,200
-14,016
Jan.
81,791
60,645
21,146
65,706
66,493
-787
16,085
-5,848
21,933
236,187
150,070
33,060
-8,060
27,282
23,603
9,766
5,281
-14,324
-696
-5,052
5,426
-3,219
-8,165
-13,800
6,430
-1,879
5,338
17,164
-13,833
-1,218
15,668
-17,555
-3,810
31,384
7,514
23,870
36,436
9,120
27,316
22,635
3,764
18,872
36,436
9,120
27,316
38,315
8,898
29,416
21,151
3,595
17,556
22,369
5,313
17,056
39,924
10,276
29,648
MEMO
13 Treasury operating balance (level, end of
period)
14 Federal Reserve Banks
15 Tax and loan accounts
1. FY 1987 total outlays and deficit do not correspond to the monthly data
because the Monthly Treasury Statement has not completed the monthly distribution of revisions reflected in the fiscal year total in The Budget of the U.S.
Government, Fiscal Year 1989.
2. 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.
3. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to
international monetary fund; other cash and monetary assets; 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 Budget of the U.S. Government.
Federal
Finance
A29
1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1
Millions of dollars
Calendar year
Source or type
Fiscal
year
1986
Fiscal
year
1987r
1987
1986
1987
1988
HI
H2
HI
H2
Nov.
Dec.
Jan.
RECEIPTS
1 All sources
769,091
854,143
394,345
387,524
447,282
421,712
56,987
85,525
81,791
348,959
314,803
36
105,994
71,873
392,557
322,463
33
142,957
72,896
169,444
153,919
31
78,981
63,488
183,156
164,071
4
27,733
8,652
205,157
156,760
30
112,421
64,052
192,575
170,203
4
31,223
8,853
25,039
24,888
0
1,664
1,512
36,537
34,020
0
3,309
793
43,987
24,979
0
19,262
255
80,442
17,298
102,859
18,933
41,946
9,557
42,108
8,230
52,396
10,881
52,821
7,119
2,558
891
18,633
884
4,450
820
283,901
303,318
156,714
134,006
163,519
143,755
23,756
23,361
28,162
255,062
273,185
139,706
122,246
146,696
130,388
20,731
22,735
26,920
11,840
24,098
4,742
13,987
25,418
4,715
10,581
14,674
2,333
1,338
9,328
2,429
12,020
14,514
2,310
1,889
10,977
2,390
144
2,661
364
0
170
457
819
883
360
32,919
13,327
6,958
19,884
32,510
15,032
7,493
19,307
15,944
6,369
3,487
10,002
15,947
7,282
3,649
9,605
15,845
7,129
3,818
10,299
17,680
7,993
3,610
10,399
2,854
1,247
617
1,807
3,838
1,361
540
2,141
2,393
1,195
531
1,893
18 All types
990,231
1,004,586
486,OSS'
505,980'
502,206r
532,045'
83,920r
109,741'
65,706
19
20
21
22
23
24
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
273,375
14,152
8,976
4,735
13,639
31,449
281,999
11,649
9,216
4,115
13,363
27,356
135,367
5,384
12,519
2,484
6,245
14,482
138,544
8,876
4,594
2,735
7,141
16,160
142,886
4,374
4,324
2,335
6,175
11,824
147,009
4,589
5,441
1,531
7,452
13,775
21,366
65
867
316
1,121
3,139
29,070
517
937
316
1,371
1,278
19,895
1,074
773
247
1,097
2,275
25
26
27
28
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
4,823
28,117
7,233
6,182
26,228
5,051
860
12,658
3,169
3,647
14,745
3,494
4,893
12,113
3,108
1,402
14,096
2,358
585
2,304
450
-688
2,287
701
1,216
1,990
452
2 Individual income taxes, net
3 Withheld
4 Presidential Election Campaign Fund . . . .
5 Nonwithheld
6 Refunds
Corporation income taxes
7 Gross receipts
8 Refunds
9 Social insurance taxes and contributions,
net
10 Employment taxes and
contributions
11 Self-employment taxes and
contributions
12 Unemployment insurance
13 Other net receipts
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts
OUTLAYS
30,585
29,724
14,712
15,287
14,182
14,590
3,045
2,301
2,771
29 Health
30 Social security and medicare
31 Income security
35,935
268,921
119,796
39,968
282,473
123,250
17,872
135,214
60,786
18,795
138,299
60,628
20,318
142,864
62,248
20,750
158,469
61,449
3,744
23,153
9,595
3,176
40,992
11,485
3,577
6,951
10,220
32
33
34
35
36
37
26,356
6,603
6,104
6,431
136,008
-33,007
26,782
7,548
5,948
1,621
138,570
-36,455
12,193
3,352
3,566
2,179
68,054
-17,193
14,447
3,360
2,786
2,886
65,816
-17,376
12,264
3,626
3,344
337
70,110
-18,104
14,974
4,251
3,617
1,175
71,882
-18,149
899
649
1,085
148
13,215
-2,990
3,773
774
1,577
129
12,177
-2,770
1,207
706
-52
403
13,551
-2,647
Veterans benefits and services
Administration of justice
General government
General-purpose fiscal assistance
Net interest 6
Undistributed offsetting receipts
1. Functional details do not add to total outlays for calendar year data because
revisions to monthly totals have not been distributed among functions. Fiscal year
total for outlays does not correspond to calendar year data because revisions from
the Budget have not been fully distributed across months.
2. Old-age, disability, and hospital insurance, and railroad retirement accounts.
3. Old-age, disability, and hospital insurance.
4. Federal employee retirement contributions and civil service retirement and
disability fund.
5. Deposits of earnings by Federal Reserve Banks and other miscellaneous
receipts.
6. Net interest function includes interest received by trust funds.
7. Consists of rents and royalties on the outer continental shelf and U.S.
government contributions for employee retirement.
SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government, and the U.S. Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 1988.
A30
D o m e s t i cNonfinancialStatistics • April 1988
1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1985
1986
1987
Item
Dec. 31
Mar. 31
June 30
Sept. 30
2,129.5
2,218.9
2,250.7
2,313.1
2,354.3
2,125.3
1,742.4
382.9
2,214.8
1,811.7
403.1
2,246.7
1,839.3
407.5
2,309.3
1,871.1
438.1
2,350.3
1,893.1
457.2
4.3
3.2
1.1
4.2
3.2
1.1
4.0
3.0
1.1
4.0
2.9
1.1
3.8
2.8.
1.0
4.0
3.0
1.0
1,973.3
2,060.0
2,111.0
2,200.5
2,232.4
2,295.0
2,336.0
1,972.0
1.3
2,058.7
1.3
2,109.7
1.3
2,199.3
1.3
2,231.1
1.3
2,293.7
1.3
2,334.7
1.3
2,078.7
2,078.7
2,111.0
2,300.0
2,300.0
2,320.0
2,800.0
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
1 Federal debt outstanding
1,827.5
1,950.3
1,991.1
2,063.6
2 Public debt securities
Held by public
3
4 Held by agencies
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
4.4
3.3
1.1
4.4
3.3
1.1
4.3
3.2
1.1
1,823.8
1,932.4
9 Public debt securities
10 Other debt 1
1,822.5
1.3
1,931.1
1.3
11 MEMO: Statutory debt limit
1,823.8
2,078.7
5 Agency securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
1. Includes guaranteed debt of Treasui^ and other federal agencies, specified
participation certificates, notes to international lending organizations, and District
of Columbia stadium bonds.
SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the
United States,
1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership
Billions of dollars, end of period
1986
Type and holder
1 Total gross public debt
By type
7 Interest-bearing debt
3 Marketable
4 Bills
5
6 Bonds
7 Nonmarketable 1
8 State and local2 government series
9 Foreign issues
Government
10
Public
11
Savings bonds and notes.
1?
13 Government account series
14 Non-interest-bearing debt
15
16
17
18
19
20
21
22
73
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 Treasurys
Individuals
Savings bonds
Other securities
Foreign and international
Other miscellaneous investors 6
1983
1985
1987
1986
Q4
Q1
Q2
Q3
1,410.7
1,663.0
1,945.9
2,214.8
2,214.8
2,246.7
2,309.3
2,350.3
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
2,212.0
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
2,212.0
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
2,244.0
1,635.7
406.2
955.3
259.3
608.3
118.5
4.9
4.9
.0
93.0
391.4
2,306.7
1,659.0
391.0
984.4
268.6
647.7
125.4
5.1
5.1
.0
95.2
421.6
2,347.8
1,676.0
378.3
1,005.1
277.6
671.8
129.0
4.4
4.4
.0
97.0
440.7
9.8
2.3
2.5
2.8
2.8
2.7
2.6
2.5
236.3
151.9
1,022.6
188.8
22.8
56.7
39.7
150.5'
289.6
160.9
1,212.5
183.4
25.9
76.4
50.1
173.4'
348.9
181.3
1,417.2
192.2
25.1
95.8
59.0
235.8'
403.1
211.3
1,602.0
230.1'
28.6
106.9
68.8
273.1'
403.1
211.3
1,602.0
230.1'
28.6
106.9
68.8
273.1'
407.5
196.4
1,641.4
232.0
18.8
n.a.
73.4
n.a.
438.1
212.3
1,657.7
237.1
20.6
n.a.
78.7
n.a.
457.2
211.9
1,682.6
250.5
n.a.
n.a.
80.2
n.a.
71.5
61.9
166.3
264.4'
74.5
69.3
192.9
366.6'
79.8
75.0
212.5
442.0"
92.3
70.5
251.5
486.(y
92.3
70.5
251.5
486.0'
94.7
68.3
250.7
n.a.
96.8
68.6
270.1
n.a.
98.5
70.4
268.4
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. Treasury agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. Treasury agencies and trust funds
are actual holdings; data for other groups are Treasury estimates.
1984
5. Consists of investments of foreign and international accounts. Excludes
non-interest-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. Treasury deposit accounts, and federally-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
A31
1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions'
Par value; averages of daily figures, in millions of dollars
1987
Item
1
?
3
4
S
6
7
8
9
10
II
12
13
14
15
16
17
18
Immediate delivery2
U.S. Treasury securities
By maturity
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
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 contracts
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions
U.S. Treasury securities
Federal agency securities
1985
1986
1987 and 1988
Nov.
Dec.'
Jan.
Dec. 23r
Dec. 30r
Jan. 6
Jan. 13
Jan. 20
Jan. 27
75,331
95,445
109,866
95,689
75,157
108,588
81,517
54,635
82,922
99,913
111,025
111,057
32,900
1,811
18,361
12,703
9,556
34,247
2,115
24,667
20,456
13,961
37,853
3,266
27,857
23,949
16,922
30,259
4,070
28,364
19,153
13,844
25,227
2,965
20,802
15,796
10,367
31,965
3,788
28,717
27,346
16,773
25,862
2,488
24,191
17,507
11,469
19,753
3,027
17,076
9,365
5,415
25,198
4,389
20,836
19,905
12,594
30,252
3,287
26,382
25,196
14,797
38,800
3,665
26,401
26,979
15,180
30,052
3,564
29,863
28,853
17,726
3,336
3,670
2,923
1,894
2,089
2,757
2,866
1,775
2,023
2,492
2,975
2,726
36,222
35,773
11,640
4,016
3,242
12,717
49,558
42,218
16,748
4,355
3,272
16,660
61,493
45,449
18,882
4,106
2,966
17,104
55,448
38,346
17,919
3,392
2,727
16,007
43,458
29,609
14,394
3,019
2,259
15,163
63,586
42,244
18,103
4,723
3,201
19,442
46,317
32,334
12,262
2,870
1,938
14,625
28,602
24,257
11,763
2,819
1,804
11,229
48,800
32,098
15,867
6,057
3,841
19,199
61,263
36,157
16,761
4,172
2,950
18,562
63,180
44,869
19,410
4,471
3,059
20,279
63,046
44,285
16,341
3,9%
3,069
17,654
5,561
6,085
252
3,311
7,175
16
3,224
8,956
5
2,774
8,489
2
2,342
7,364
5
2,783
9,410
1
1,451
7,511
0
1,708
3,993
25
1,438
7,704
0
2,517
9,512
0
3,383
8,321
0
3,105
9,792
0
1,283
3,857
1,876
7,831
2,061
9,824
2,167
7,191
1,097
5,704
1,698
6,545
1,632
6,268
360
3,364
1,567
3,978
1,343
7,464
1,016
8,615
1,690
4,972
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. Treasury
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
1988
1987'
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 Treasury securities (Treasury bills, notes, and
bonds) or after 30 days for mortgage-backed agency issues.
A32
DomesticNonfinancialStatistics • April 1988
1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1
Averages of daily figures, in millions of dollars
1987
Item
1985
1986
1988
1987 and 1988
1987
Nov.
Dec/
Jan.
Dec. 30r
Jan. 6
Jan. 13
Jan. 20
Jan. 27
Positions
Net immediate2
U.S. Treasury securities
7,391
12,912
-6,258
-6,865
-8,657
-13,257
-7,310
11,424
-15,083
-12,145
-13,476
2
3
4
5
6
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
10,075
1,050
5,154
-6,202
-2,686
12,761
3,706
9,146
-9,505
-3,197
4,325
1,556
592
-6,560
-6,172
5,702
-565
1,750
-6,214
-7,538
2,506
-564
785
-3,565
-7,819
2,269
-712
-61
-5,615
-9,138
1,529
-1,238
5,486
-4,695
-8,392
179
-1,639
4,351
-5,321
-8,994
-340
-961
634
-4,869
-9,547
4,641
-629
-1,391
-5,354
-9,413
3,700
-79
-1,994
-617
-8,933
7
8
9
10
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
Treasury bills
Treasury coupons
Federal agency securities
Forward positions
U.S. Treasury securities
Federal agency securities
22,860
9,192
4,586
5,570
32,984
10,485
5,526
8,089
31,900
8,187
3,661
7,492
29,108
6,821
3,151
7,729
25,314
6,815
2,409
7,953
23,944
5,863
2,246
5,533
22,226
7,844
2,838
9,095
23,375
7,654
2,573
6,873
24,374
6,040
2,056
5,054
24,630
5,451
2,191
5,528
23,164
5,289
2,321
5,213
-7,322
4,465
-722
-18,059
3,473
-153
-3,372
5,989
-95
1,158
9,170
-90
450
8,179
-84
-2,162
7,829
0
-1,354
7,709
-72
-2,159
8,189
0
-1,411
8,833
0
-2,125
8,342
0
-2,727
7,223
0
-911
-9,420
-2,144
-11,840
-1,190
-18,817
145
-18,489
-1,641
-15,024
-1,174
-14,389
-315
-12,499
-1,364
-13,870
-1,302
-15,875
-2,287
-14,933
-609
-13,015
1
11
12
13
14
15
Financing3
Reverse repurchase agreements 4
Overnight and continuing
Term
Repurchase agreements
18 Overnight and continuing
19 Term
16
17
68,035
80,509
98,954
108,693
n.a.
n.a.
117,6%
164,332
n.a.
n.a.
126,667
155,658
121,267
130,567
128,224
145,945
122,371
150,236
125,177
153,567
131,187
n.a.
101,410
70,076
141,735
102,640
n.a.
n.a.
152,504
138,724
n.a.
n.a.
160,399
122,464
149,481
108,767
162,475
114,106
153,439
115,756
162,704
118,393
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. Treasury
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. Treasury 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
A33
1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding
Millions of dollars, end of period
1987
1984
Agency
1 Federal and federally sponsored agencies
2 Federal agencies
3 Defense Department
4
Export-Import Bank ' 3
Federal Housing Administration
5
6 Government National Mortgage Association participation
certificates
Postal Service 6
7
8 Tennessee Valley Authority
United States Railway Association 6
9
10 Federally sponsored agencies 7
Federal Home Loan Banks
11
12 Federal Home Loan Mortgage Corporation
13 Federal National Mortgage Association
14 Farm Credit Banks
Student Loan Marketing Association 8
15
16 Financing Corporation .
1985
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
271,220
293,905
307,361
313,859
316,940
320,789
328,990
334,678
35,145
142
15,882
133
36,390
71
15,678
115
36,958
33
14,211
138
36,%3
18
13,416
175
37,845
16
13,416
174
37,177
15
12,650
178
37,207
15
12,470
182
37,303
15
12,470
182
2,165
1,337
15,435
51
2,165
1,940
16,347
74
2,165
3,104
17,222
85
1,965
3,718
17,586
85
1,965
4,603
17,586
85
1,965
4,603
17,766
0
1,965
4,603
17,972
0
1,965
4,603
18,068
0
237,012
65,085
10,270
83,720
72,192
5,745
n.a.
257,515
74,447
11,926
93,8%
68,851
8,395
n.a.
270,553
88,752
13,589
93,563
62,478
12,171
n.a.
276,8%
100,976
12,309
91,637
55,715
16,259
n.a.
279,095
102,422
14,150
91,568
55,408
15,547
n.a.
283,612
104,380
14,949
92,618
55,276
16,389
n.a.
291,783
108,108
16,703
94,298
55,854
16,220
600
297,375
111,185
17,762
95,0%
55,629
16,362
1,200
115,725
n.a.
97,057
54,964
16,503
1,200
145,217
153,373
157,510
157,302
158,117
157,252
156,9ir
156,850
n.a.
15,852
1,087
5,000
13,710
51
15,670
1,690
5,000
14,622
74
14,205
2,854
4,970
15,797
85
13,410
3,468
4,970
16,206
85
13,410
4,353
4,970
16,206
85
12,644
4,353
4,970
16,386
0
12,464
4,353
4,97<T
16,592
0
12,464
4,353
4,970
16,688
0
58,971
20,693
29,853
64,234
20,654
31,429
65,374
21,680
32,545
65,049
21,529
32,585
65,069
21,503
32,521
65,009
21,197
32,693
64,934
21,226
32,380''
64,934
21,215
32,226
n.a.
MEMO
17 Federal Financing Bank debt 10
18
19
20
21
22
Lending to federal and federally sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
Other Lending11
73 Farmers Home Administration
74 Rural Electrification Administration
25
agencies
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.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Some data are estimated.
-i
n.a.
8. Before late 1981, the Association obtained financing through the Federal
Financing Bank (FFB).
9. The Financing Corporation, established in August 1987 to recapitalize the
Federal Savings and Loan Insurance Corporation, undertook its first borrowing in
October 1987.
10. 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.
11. 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
D o m e s t i cNonfinancialStatistics • April 1988
1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments
Millions of dollars
1987
Type of issue or issuer,
or use
1985
1986
1988
1987
June
July
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
1 All issues, new and refunding1
214,189
147,011
95,029
10,718
6,967
6,500
5,510
6,257
7,758
7,671
5,202
Type of issue
2 General obligation
3 Revenue
52,622
161,567
46,346
100,664
29,599
65,430
3,329
7,389
2,238
4,729
1,975
4,525
1,755
3,755
1,127
5,130
2,449
5,309
1,894
5,777
1,243
3,959
Type of issuer
4 State
5 Special district and statutory authority 2
6 Municipalities, counties, and townships
13,004
134,363
66,822
14,474
89,997
42,541
8,426
61,663
24,940
1,138
6,453
3,126'
834
3,951
2,182
398
4,508
1,594
535
3,712
1,263
385
4,668
1,204
431
4,612'
2,715'
550
4,972
2,149
423
3,055
1,724
7 Issues for new capital, total
156,050
83,490
53,677
7,552
4,478
5,084
4,340
4,095
6,628
5,351
2,886
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
16,658
12,070
26,852
63,181
12,892
24,398
16,948
11,666
35,383
17,332
5,594
47,433
9,217
3,589
7,299
9,627
6,083
17,862
1,554
705
1,313
1,082
498
2,399
773
647
823
465
469
1,301
869
226
424
903
1,630
1,033
653
311
491
647
412
1,826
480
168
590
8%
683
1,278
1,006
329
1,042
1,784
229
2,238
748
451
350
1,134
1,155
1,513
851
176
302
833
133
591
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning 1986.
SOURCES. Securities Data/Bond Buyer Municipal Data Base beginning 1986.
Public Securities Association for earlier data.
1.46 NEW SECURITY ISSUES U.S. Corporations
Millions of dollars
1987
Type of issue or issuer,
or use
1985
1986
1987
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1 All issues'
239,015
423,726
286,320
19,977'
28,450'
27,411
21,888
29,363
20,682'
14,230'
11,383
2 Bonds2
203,500
355,293
232,969
13,439r
22,098'
22,071
17,685
23,705
17,603'
13,532'
10,609
Type of offering
3 Public, domestic
4 Private placement, domestic 3
5. Sold abroad
119,559
46,195
37,781
231,936
80,761
42,5%
208,670
n.a.
24,299
11,402'
n.a.
2,037
20,568'
n.a.
1,530
19,045
n.a.
3,026
14,852
n.a.
2,833
22,045
n.a.
1,660
16,107'
n.a.
1,4%
12,799'
n.a.
733
10,274
n.a.
335
63,973
17,066
6,020
13,649
10,832
91,958
91,548
40,124
9,971
31,426
16,659
165,564
45,209
19,918
2,039
17,382
5,772
142,633
5,035
754
21
572
138
6,920'
4,104
2,061
0
2,091
205
13,636'
5,552
1,037
343
1,654
119
13,366
3,343
1,281
2%
1,533
856
10,377
3,506
1,479
25
1,702
930
16,063
2,724'
1,165
263
997
1,384
11,071
1,280'
483
0
893
270
10,586'
860
2,577
226
1,570
510
4,865
12 Stocks3
35,515
68,433
53,351
6,538
6,352
5,340
4,203
5,658
3,079
698'
774
Type
13 Preferred
14 Common
15 Private placement3
6,505
29,010
35,515
11,514
50,316
68,433
10,123
43,228
53,351
1,170
5,368
n.a.
1,202
5,150
n.a.
1,157
4,183
n.a.
906
3,297
n.a.
1.112
4,546
n.a.
236
2,843
n.a.
162
533
n.a.
61
713
n.a.
5,700
9,149
1,544
1,966
978
16,178
15,027
10,617
2,427
4,020
1,825
34,517
9,642
11,461
1,795
3,839
1.264
25,350
1,066
1,516
3
374
200
3,379
1,438
1,353
492
329
199
2,541
1,046
879
379
472
294
2,270
370
9%
0
85
277
2,475
858
807
11
529
75
3,378
703
656
40
75
107
1,498
237
86
149
25
1
200
76
14
1
0
11
672
6
7
8
9
10
11
16
17
18
19
20
21
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, are principal amount or number of units multiplied by offering price.
Excludes secondary offerings, employee stock plans, investment companies other
than closed-end, intracorporate transactions, equities sold abroad, and Yankee
bonds. Stock data include ownership securities issued by limited partnerships.
2. Monthly data include only public offerings.
3. Data are not available on a monthly basis.
SOURCES. IDD Information Services, Inc., U.S. Securities and Exchange
Commission and the Board of Governors of the Federal Reserve System.
Securities
Market
and Corporate
Finance
A35
1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position
Millions of dollars
1987
Item
1986
1987
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
INVESTMENT COMPANIES 1
1 Sales of own shares2
411,751
380,260
28,295
28,637
27,970
26,455
24,834
25,990
21,927
26,494
2 Redemptions of own shares 3
3 Net sales
239,394
172,357
314,253
66,007
23,453
4,842
23,693
4,944
22,807
5,763
22,561
3,894
28,323
-3,489
34,597
-8,607
20,400
1,507
28,100
-1,606
4 Assets4
424,156
453,793
500,634
516,866
531,022
539,171
521,007
456,422
446,479
453,793
5 Cash position5
6 Other
30,716
393,440
38,175
415,618
39,158
461,476
41,467
475,099
41,587
489,435
40,802
498,369
42,397
478,610
40,929
415,493
41,432
405,047
38,175
415,618
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.
5. Also includes all U.S. government securities and other short-term debt
securities.
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.
1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
Account
1984
1985
1986
1987
1986
Q4
QL
Q2
Q3
Q4
QL
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
266.9
239.9
93.9
146.1
79.0
67.0
277.6
224.8
96.7
128.1
81.3
46.8
284.4
231.9
105.0
126.8
86.8
40.0
277.8
233.5
99.1
134.4
81.7
52.7
288.0
218.9
98.1
120.9
84.3
36.6
282.3
224.4
102.1
122.3
86.6
35.7
286.4
236.3
106.1
130.2
87.7
42.5
281.1
247.9
113.9
134.0
88.6
45.4
294.0
257.0
128.0
129.0
90.3
38.7
296.8
268.7
134.2
134.5
92.4
42.1
314.9
284.9
143.0
141.9
95.2
46.7
7 Inventory valuation
8 Capital consumption adjustment
-5.8
32.8
-.8
53.5
6.5
46.0
-9.8
54.2
17.8
51.3
11.3
46.7
6.0
44.0
-8.9
42.1
-11.3
48.2
-20.0
48.0
-17.6
47.7
SOURCE. Survey of Current Business (Department of Commerce).
A36
D o m e s t i cNonfinancialStatistics • April 1988
1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities1
Billions of dollars, except for ratio
1985
Account
1 Current assets
1980
1981
1982
1983
1986
1984
Q1
Q2
Q3
Q4
Q1
1,328.3
1,419.6
1,437.1
1,565.9
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 ratio2
1.492
1.462
1.459
1.487
1.464
1.467
1.466
1.455
1.447
1.469
2
3
4
5
6
Cash
U.S. government securities
Notes and accounts receivable
Inventories
Other
1. For a description of this series, see "Working Capital of Nonfinancial
Corporations" in the July 1978 BULLETIN, pp. 533-37. Data are not currently
available after 1986:1.
2. Ratio of total current assets to total current liabilities.
SOURCE. Federal Trade Commission and Bureau of the Census,
1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment •
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1986
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
1985
1986
1988
Q2
Q3
Q4
Ql
Q2
Q3
Q41
Ql2
387.13
379.47
390.57
376.21
375.50
386.09
374.23
377.65
393.13
417.25
427.97
73.27
80.21
69.14
73.56
71.85
76.01
68.56
73.62
69.42
70.01
69.87
74.20
70.47
70.18
68.76
72.03
71.78
75.78
76.40
86.05
78.41
86.27
15.88
11.22
11.18
11.29
10.14
10.31
10.31
11.02
11.64
11.74
11.86
7.08
4.79
6.15
6.66
6.26
5.89
6.15
6.53
6.42
6.70
5.87
5.83
7.02
5.78
6.01
6.41
6.84
6.25
5.55
7.46
5.97
5.77
5.72
6.19
6.21
5.91
7.05
7.08
7.03
6.48
7.66
8.35
6.92
36.11
12.71
150.94
33.91
12.47
160.38
31.65
12.88
167.89
33.77
12.66
157.91
33.81
12.00
161.31
33.78
12.34
166.08
30.85
12.75
160.70
31.13
12.35
164.69
31.31
13.58
169.87
33.32
12.84
176.29
31.65
13.72
183.15
•Trade and services are no longer being reported separately. They are included
in Commercial and other, line 10.
1. Anticipated by business.
1987
19871
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
A37
1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities
Billions of dollars, end of period
1987
1986
Account
1983
1984
1985
Q2
Q3
Q4
Ql
Q2
Q3
Q4
ASSETS
Accounts receivable, gross
Consumer
Business
Real estate
Total
83.3
113.4
20.5
217.3
89.9
137.8
23.8
251.5
113.4
158.3
28.9
300.6
125.1
167.7
30.8
323.6
137.1
161.0
32.1
330.2
136.5
174.8
33.7
345.0
133.9
182.8
35.1
351.8
138.0
189.0
36.9
363.9
144.4
188.7
38.3
371.5
143.8
202.6
40.3
386.8
Less:
5 Reserves for unearned income
6 Reserves for losses
30.3
3.7
33.8
4.2
39.2
4.9
40.7
5.1
42.4
5.4
41.4
5.8
40.4
5.9
41.2
6.2
42.8
6.6
45.3
6.8
7 Accounts receivable, net
8 All other
183.2
34.4
213.5
35.7
256.5
45.3
277.8
48.8
282.4
59.9
297.8
57.9
305.5
59.0
316.5
57.7
322.1
65.0
334.7
58.2
9 Total assets
217.6
249.2
301.9
326.6
342.3
355.6
364.5
374.2
387.1
392.9
18.3
60.5
20.0
73.1
20.6
99.2
19.2
108.4
20.2
112.8
22.2
117.8
17.3
119.1
17.2
120.4
16.2
123.5
16.5
126.5
11.1
67.7
31.2
28.9
12.9
77.2
34.5
31.5
12.5
93.1
40.9
35.7
15.4
105.2
40.1
38.4
16.0
109.8
44.1
39.4
17.2
115.6
43.4
39.4
21.6
118.4
46.3
41.8
24.4
121.5
48.3
42.3
26.9
128.0
48.7
43.8
27.0
130.1
50.1
42.6
217.6
249.2
301.9
326.6
342.3
355.6
364.5
374.2
387.1
392.9
1
2
3
4
LIABILITIES
10 Bank loans
11 Commercial paper
Debt
12 Other short-term
13 Long-term
14 All other liabilities
15 Capital, surplus, and undivided profits
16 Total liabilities and capital
NOTE. Components may not add to totals because of rounding.
1.52 DOMESTIC FINANCE COMPANIES Business Credit
Millions of dollars, seasonally adjusted except as noted
Type
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
Accounts
receivable
outstanding
Dec. 31
19871
Extensions
Repayments
1987
1987
1987
Oct.
Nov.
Dec.
Oct.
Nov.
Dec.
Oct.
Nov.
Dec.
202,585
4,337
1,250
1,070
30,929
30,336
31,262
26,592
29,087
30,192
34,387
24,945
735
258
447
-25
991
376
1,159
1,526
1,283
1,395
1,676
1,564
424
1,268
836
1,420
684
1,188
30,760
5,512
7,948
3,485
249
-1,455
261
61
121
-167
-116
171
12,557
886
2,983
12,662
623
3,043
12,188
679
3,182
9,072
637
4,437
12,401
562
2,921
12,355
795
3,011
21,711
41,675
-197
188
211
-92
71
-494
1,117
1,245
1,117
881
1,086
608
1,314
1,057
906
973
1,015
1,102
18,358
17,289
704
369
331
-67
-337
573
8,241
1,215
8,005
1,326
8,564
1,714
7,537
846
7,674
1,393
8,901
1,141
These data also appear in the Board's G.20 (422) release. For address, see
inside front cover.
Changes in accounts
receivable
1. Not seasonally adjusted,
A38
DomesticNonfinancialStatistics • April 1988
1.53 MORTGAGE MARKETS
Millions of dollars; exceptions noted.
1987
1988
1986
Item
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)
Contract rate (percent per year)
Yield (percent per year)
7 FHLBB series3
8 HUD series4
104.1
77.4
77.1
26.9
2.53
11.12
118.1
86.2
75.2
26.6
2.48
9.82
137.0
100.5
75.2
27.8
2.26
8.94
134.6
99.4
75.4
27.9
2.42
9.01
141.2
102.6
75.0
27.8
2.19
9.01
140.2
100.8
74.6
27.3
2.08
9.03
145.3
106.1
75.0
28.3
2.34
8.86
135.9
100.2
75.4
28.3
2.33
8.92
147.3
107.7
74.9
28.2
2.22
8.78
150.8
109.4
74.5
28.3
2.22
8.77
11.58
12.28
10.25
10.07
9.31
10.13
9.41
10.22
9.38
10.37
9.37
10.86
9.25
10.87
9.30
10.59
9.15
10.52
9.13
n.a.
12.24
11.61
9.91
9.30
10.12
9.42
10.38
9.59
10.55
9.77
10.71
10.40
10.90
10.53
10.76
9.96
10.63
10.18
n.a.
9.83
SECONDARY MARKETS
Yield (percent per year)
9 FHA mortgages (HUD series)
10 GNMA securities6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
12 FHA/VA-insured
13 Conventional
94,574
34,244
60,331
98,048
29,683
68,365
95,030
21,660
73,370
94,154
21,730
72,424
94,600
21,555
73,045
94,884
21,620
73,264
95,097
21,481
73,617
95,411
21,510
73,902
96,649
20,288
76,361
4
I
Mortgage transactions (during period)
14 Purchases
21,510
30,826
20,531
1,569
1,613
1,743
1,278
1,297
3,747
n.a.
Mortgage commitments7
13 Contracted (during period)
16 Outstanding (end of period)
20,155
3,402
32,987
3,386
25,415
4, H86
2,373
5,071
2,276
5,690
1,842
5,627
1,566
5,046
2,899
5,845
3,115
4,886
1
1
t
Mortgage holdings (end of period f
17 Total
18 FHA/VA
19 Conventional
12,399
841
11,559
13,517
746
12,771
12,834
684
12,150
12,924
679
12,245
12,940
672
12,269
12,782
666
12,115
12,904
663
12,240
4
T
4
T
Mortgage transactions (during period)
20 Purchases
21
44,012
38,905
103,474
100,236
7,252
6,831
5,031
4,723
4,297
4,160
3,079
3,111
2,978
2,742
n.a.
1
1
Mortgage commitments9
22 Contracted (during period)
48,989
110,855
5,611
4,506
3,507
3,011
2,668
t
t
1
FEDERAL HOME L O A N MORTGAGE CORPORATION
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.
1
1
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
A39
1.54 MORTGAGE DEBT OUTSTANDING1
Millions of dollars, end of period
1986
Type of holder, and type of property
1985
1986
1987
1987
04
Ql
Q2
Q3'
04
1 All holders
2,269,173
2,568,562'
2,906,394
2,568,562'
2,665,20T
2,756,124'
2,831,431
2,906,394
2 1- to 4-family
3 Multifamily
4 Commercial
5
1,467,409
214,045
482,029
105,690
1,668,209'
247,024'
556,569
96,760
1,889,364
272,604
654,288
90,138
1,668,209'
247,024'
556,569
%,760
1,714,213'
257,615'
599,822'
93,557'
1,783,521'
263,513'
616,968'
92,122'
1,835,671
268,322
636,508
90,930
1,889,364
272,604
654,288
90,138
1,390,394
429,196
213,434
23,373
181,032
11,357
1,507,289
502,534
235,814
31,173
222,799
12,748
1,699,702
587,557
273,214
32,433
267,221
14,689
1,507,289
502,534
235,814
31,173
222,799
12,748
1,559,549'
519,474
243,518
29,515
233,234
13,207
1,606,622'
544,381
255,672
30,4%
244,385
13,828
1,650,462
566,213
262,869
31,311
257,882
14,151
1,699,702
587,557
273,214
32,433
267,221
14,689
760,499
554,301
89,739
115,771
688
171,797
12,381
19,894
127,670
11,852
28,902
777,312
558,412
97,059
121,236
605
193,842
12,827
20,952
149,111
10,952
33,601
861,233
602,740
107,054
150,680
n.a.
210,563
13,142
22,168
165,364
9,889
40,349
777,312
558,412
97,059
121,236
605
193,842
12,827
20,952
149,111
10,952
33,601
809,245'
555,693'
104,035'
148,712'
805'
195,743
12,903
20,934
151,420
10,486
35,087
824,%1'
572,075'
102,933'
149,183'
n.a.
200,382
12,745
21,663
155,611
10,363
36,898
841,658
586,221
104,764
149,904
n.a.
204,263
12,742
21,968
159,464
10,089
38,328
861,233
602,740
107,054
150,680
n.a.
210,563
13,142
22,168
165,364
9,889
40,349
166,928
1,473
539
934
733
183
113
159
278
203,800
889
47
842
48,421
21,625
7,608
8,446
10,742
192,401
455
24
431
42,978
18,111
7,903
6,592
10,372
203,800
889
47
842
48,421
21,625
7,608
8,446
10,742
199,509
687
46
641
48,203
21,390
7,710
8,463
10,640
196,514
667
45
622
48,085
21,157
7,808
8,553
10,567
191,520
458
25
433
42,978
18,111
7,903
6,592
10,372
192,401
455
24
431
42,978
18,111
7,903
6,592
10,372
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11,564
10,010
1,554
5,479
2,551
2,928
%,649
89,666
6,983
33,930
1,9%
31,934
12,910
11,580
1,330
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11,564
10,010
1,554
5,177
2,447
2,730
95,140
88,106
7,034
37,362
2,198
35,164
12,940
11,774
1,166
5,268
2,531
2,737
94,064
87,013
7,051
35,833
2,108
33,725
12,597
11,172
1,425
5,330
2,452
2,878
94,884
87,901
6,983
34,930
2,055
32,875
12,940
11,570
1,370
5,479
2,551
2,928
96,649
89,666
6,983
33,930
1,9%
31,934
12,910
11,580
1,330
44 Mortgage pools or trusts 6
45 Government National Mortgage Association
1- to 4-family
46
Multifamily
47
48 Federal Home Loan Mortgage Corporation
49
1- to 4-family
Multifamily
50
51 Federal National Mortgage Association
57
1- to 4-family
53
Multifamily
,
54 Farmers Home Administration5
1- to 4-family
55
Multifamily
56
Commercial
57
Farm
58
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
531,591'
262,697'
256,920'
5,777'
171,372
166,667
4,705
97,174
95,791
1,383
348
142
0
132
74
671,749
319,360
311,567
7,793
212,105
205,460
6,645
139,960
137,988
1,972
324
139
0
122
63
531,591'
262,697'
256,92C
5,777'
171,372
166,667
4,705
97,174
95,791
1,383
348
142
0
132
74
575,435'
281,116'
274,710'
6,406'
186,295
180,602
5,693
107,673
106,068
1,605
351
154
0
127
70
615,142'
293,246'
286,091'
7,155'
200,284
194,238
6,046
121,270
119,617
1,653
342
149
0
126
67
648,219
308,9%
301,456
7,540
208,350
201,786
6,564
130,540
128,770
1,770
333
144
0
124
65
671,749
319,360
311,567
7,793
212,105
205,460
6,645
139,960
137,988
1,972
324
139
0
122
63
59 Individuals and others 7
1- to 4-family
60
61 Multifamily
67 Commercial
63 Farm
2%,809
165,835
55,424
49,207
26,343
325,882
180,8%
66,133
54,845
24,008
342,542
180,837
74,964
64,309
22,432
325,882
180,8%
66,133
54,845
24,008
330,714
179,517
70,146
57,866
23,185
337,846
182,010
73,924
59,110
22,802
341,230
181,241
74,838
62,542
22,609
342,542
180,837
74,964
64,309
22,432
6 Selected financial institutions
7 Commercial banks 2
1- to 4-family
8
9
Multifamily
Commercial
10
Farm
11
12
13
14
15
16
17
18
19
70
71
22
Savings institutions3
1- to 4-family
Multifamily
Commercial
Farm
Life insurance companies
1- to 4-family
Multifamily
Commercial
Farm
Finance companies
23 Federal and related agencies
24 Government National Mortgage Association
1- to 4-family
25
Multifamily
26
77 Fanners Home Administration3
28
1- to 4-family
29
Multifamily
Commercial
30
Farm
31
37,
33
34
35
36
37
38
39
40
41
47.
43
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. 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.
2. Includes loans held by nondeposit trust companies but not bank trust
departments.
3. Includes savings banks and savings and loan associations. Beginning 1987:1,
data reported by FSLIC-insured institutions include loans in process and other
contra assets.
4. Assumed to be entirely 1- to 4-family loans.
5. FmHA-guaranteed securities sold to the Federal Financing Bank were
reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:4,
because of accounting changes by the Farmers Home Administration.
6. Outstanding principal balances of mortgage pools backing securities insured
or guaranteed by the agency indicated.
7. 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.
A40
D o m e s t i cNonfinancialStatistics • April 1988
1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change, seasonally adjusted
Millions of dollars
1987
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
Amounts outstanding (end of period)
1 Total
577,784
612,571
583,595
583,276
587,821
591,175
596,182
602,607
605,488
608,122
612,571
By major holder
Commercial banks
Finance companies
Credit unions
Retailers3
Savings institutions
Gasoline companies
261,604
136,494
77,857
40,586
58,037
3,205
274,984
143,788
84,839
40,647
64,788
3,525
263,433
137,091
79,255
40,467
59,826
3,522
263,463
136,398
79,476
40,318
60,045
3,576
264,3%
138,038
80,585
40,287
60,983
3,532
265,085
138,745
81,492
40,364
61,910
3,580
265,893
140,689
82,486
40,391
63,080
3,643
269,155
142,648
83,340
40,482
63,279
3,703
270,836
143,118
83,639
40,678
63,525
3,691
272,274
142,767
84,419
40,559
64,502
3,600
274,984
143,788
84,839
40,647
64,788
3,525
By major type of credit
8 Automobile
9 Commercial banks
10 Credit unions
11 Finance companies
12 Savings institutions
245,055
100,709
39,029
93,274
12,043
261,654
106,487
42,529
99,195
13,444
247,663
101,781
39,730
93,738
12,414
247,578
102,189
39,841
93,089
12,459
250,130
102,810
40,3%
94,270
12,654
250,980
102,829
40,851
94,455
12,846
254,013
103,382
41,349
96,193
13,089
257,470
104,662
41,777
97,900
13,130
258,710
105,382
41,927
98,219
13,182
259,134
106,036
42,318
97,395
13,384
261,654
106,487
42,529
99,195
13,444
13 Revolving
14 Commercial banks
15 Retailers
16 Gasoline companies
17 Savings institutions
18 Credit unions
134,938
85,652
36,240
3,205
7,713
2,128
145,940
95,273
36,213
3,525
8,610
2,319
136,706
86,929
36,139
3,522
7,951
2,166
136,869
87,133
36,009
3,576
7,980
2,172
137,401
87,590
35,971
3,532
8,105
2,202
138,741
88,685
36,021
3,580
8,228
2,227
139,837
89,535
36,022
3,643
8,383
2,254
141,704
91,226
36,087
3,703
8,410
2,278
143,142
92,459
36,264
3,691
8,443
2,286
143,620
92,992
36,148
3,600
8,572
2,307
145,940
95,273
36,213
3,525
8,610
2,319
19 Mobile home
20 Commercial banks
21 Finance companies
22
Savings institutions
25,710
8,812
9,028
7,870
25,612
8,357
8,470
8,785
25,626
8,698
8,816
8,112
25,542
8,615
8,785
8,142
25,685
8,609
8,807
8,269
25,860
8,626
8,839
8,395
25,695
8,518
8,623
8,554
25,699
8,538
8,580
8,581
25,677
8,453
8,610
8,614
25,731
8,407
8,578
8,746
25,612
8,357
8,470
8,785
23 Other
24 Commercial banks
25
Finance companies
26 Credit unions
27
Retailers
28 Savings institutions
172,081
66,431
34,192
36,700
4,346
30,412
179,365
64,867
36,123
39,992
4,433
33,949
173,600
66,026
34,537
37,359
4,328
31,349
173,287
65,527
34,524
37,463
4,310
31,463
174,605
65,387
34,%2
37,986
4,315
31,955
175,594
64,945
35,452
38,413
4,343
32,441
176,637
64,458
35,874
38,882
4,369
33,054
177,733
64,728
36,168
39,285
4,395
33,158
177,959
64,542
36,289
39,426
4,415
33,287
179,637
64,840
36,794
39,794
4,411
33,799
179,365
64,867
36,123
39,992
4,433
33,949
2
3
4
i
6
7
Net change (during period)
29 Total
54,979
34,787
3,682
-319
4,545
3,354
5,007
6,425
2,881
2,634
4,449
By major holder
Commercial banks
Finance companies
Credit unions
Retailers
Savings institutions
Gasoline companies
19,520
23,424
5,738
1,722
5,604
-1,030
13,380
7,294
6,982
61
6,751
320
1,500
1,041
686
-2
338
117
30
-693
221
-149
219
54
933
1,640
1,109
-31
938
-44
689
707
907
77
927
48
808
1,944
994
27
1,170
63
3,262
1,959
854
91
199
60
1,681
470
299
196
246
-12
1,438
-351
780
-119
977
-91
2,710
1,021
420
88
286
-75
By major type of credit
36 Automobile
37 Commercial banks
38 Credit unions
39 Finance companies
40
Savings institutions
36,998
7,706
3,394
23,183
2,715
16,599
5,778
3,500
5,921
1,401
1,373
253
344
706
70
-85
408
111
-649
45
2,552
621
555
1,181
195
850
19
455
185
192
3,033
553
498
1,738
243
3,457
1,280
428
1,707
41
1,240
720
150
319
52
424
654
391
-824
202
2,520
451
211
1,800
60
41 Revolving
42 Commercial banks
43 Retailers
44 Gasoline companies
45
Savings institutions
46 Credit unions
12,917
9,786
1,545
-1,030
2,008
608
11,002
9,621
-27
320
897
191
1,540
1,362
-2
117
45
19
163
204
-130
54
29
6
532
457
-38
-44
125
30
1,340
1,095
50
48
123
25
1,0%
850
1
63
155
27
1,867
1,691
65
60
27
24
1,438
1,233
177
-12
33
8
478
533
-116
-91
129
21
2,320
2,281
65
-75
38
12
47 Mobile home
48 Commercial banks
49 Finance companies
50 Savings institutions
222
-726
-363
1,311
-98
-455
-558
915
12
-27
-7
45
-84
-83
-31
30
143
-6
22
127
175
17
32
126
-165
-108
-216
159
4
20
-43
27
-22
-85
30
33
54
-46
-32
132
-119
-50
-108
39
51 Other
52 Commercial banks
53 Finance companies
54 Credit unions
55 Retailers
56 Savings institutions
4,842
2,754
604
1,736
177
-429
7,284
-1,564
1,931
3,292
87
3,537
756
-87
341
323
1
177
-313
-499
-13
104
-18
114
1,318
-140
438
523
5
492
989
-442
490
427
28
486
1,043
-487
422
469
26
613
1,0%
270
294
403
26
104
226
-186
121
141
20
129
1,678
298
505
368
-4
512
-272
27
-671
198
22
150
30
31
32
33
34
35
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,
Consumer Installment Credit
A41
1.56 TERMS OF CONSUMER INSTALLMENT CREDIT
Percent unless noted otherwise
1987
Item
1985
1986
1987
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
INTEREST RATES
1
2
3
4
5
6
Commercial banks'
48-month new c a r
24-month personal
120-month mobile home 2
Credit card
Auto finance companies
New car
Used car
12.91
15.94
14.96
18.69
11.33
14.82
13.99
18.26
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.37
14.22
13.24
17.85
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.86
14.58
13.62
17.82
n.a.
n.a.
n.a.
n.a.
11.98
17.59
9.44
15.95
10.73
14.60
10.64
14.47
10.52
14.53
9.63
14.53
8.71
14.58
10.31
14.76
12.24
14.90
12.23
14.97
51.5
41.4
50.0
42.6
53.5
45.2
53.6
45.4
53.4
45.5
52.1
45.4
50.7
45.2
52.8
45.2
55.4
45.3
55.5
45.3
91
94
91
97
93
98
93
98
93
98
93
98
93
98
93
99
94
99
93
99
9,915
6,089
10,665
6,555
11,203
7,420
11,214
7,479
11,267
7,527
11,374
7,763
11,455
7,476
11,585
7,537
11,630
7,646
11,645
7,718
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
DomesticNonfinancialStatistics • April 1988
1.57 FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1984
Transaction category, sector
1982
1983
1984
1985
1985
1986
1987
1986
HI
H2
HI
H2
HI
H2
HI
Nonfinancial sectors
388.9
550.2
753.9
854.8
833.4
717.3
790.4
722.7
986.8
676.9
989.9
568.3
Agency issues and mortgages
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
190.4
190.7
-.2
207.2
207.3
-.1
204.8
204.9
-.1
242.5
242.5
-.1
207.2
207.4
-.1
221.5
222.0
-.5
151.4
151.7
-.4
5 Private domestic nonfinancial sectors
6 Debt capital instruments
Tax-exempt obligations
7
8
9
Mortgages
10
Home mortgages
11
Multifamily residential
Commercial
17
13
227.6
148.3
44.2
18.7
85.4
50.5
5.4
25.2
4.2
363.6
253.4
53.7
16.0
183.6
117.5
14.2
49.3
2.6
555.1
313.6
50.4
46.1
217.1
129.7
25.1
63.2
-.9
631.1
447.8
136.4
73.8
237.7
151.9
29.2
62.5
-6.0
619.0
445.0
35.4
121.7
298.0
199.4
33.0
73.9
-8.3
526.9
284.7
33.8
22.5
228.5
139.5
27.8
62.6
-1.4
583.3
342.5
67.0
69.8
205.7
119.9
22.4
63.8
-.4
518.0
350.4
67.0
62.2
221.2
139.2
25.0
59.5
-2.5
744.3 469.6
545.2 363.4
205.8 -16.9
85.3 135.3
254.2 245.0
164.7 163.8
33.4
31.2
65.5
58.9
-9.5
-8.9
768.4
546.7
87.7
108.1
350.9
234.9
34.8
88.9
-7.7
417.0
407.1
20.0
89.0
298.1
217.5
27.7
62.5
-9.6
79.3
19.3
50.4
-6.1
15.8
110.2
56.6
23.2
-.8
31.3
241.5
90.4
67.1
21.7
62.2
183.3
94.6
38.6
14.6
35.5
164.0
65.8
66.5
-9.3
41.0
242.2
94.7
71.2
26.6
49.7
240.8
86.2
63.0
16.8
74.7
167.5
95.3
21.0
14.4
36.8
199.1 106.2
93.9
71.0
56.2
12.2
14.8 -13.1
34.2
36.2
221.8
60.6
120.8
-5.5
45.9
9.9
15.7
-40.2
4.5
29.9
227.6
21.5
90.0
6.8
40.2
69.0
363.6
34.0
188.2
4.1
77.0
60.3
555.1
27.4
234.6
-.1
97.0
196.0
631.1
91.8
293.4
-13.9
93.1
166.7
619.0
46.4
279.9
-15.1
115.9
192.0
526.9
16.2
235.0
-.5
101.8
174.3
583.3
38.6
234.2
.4
92.2
217.8
518.0
56.3
259.8
-7.0
85.7
123.2
744.3
127.2
327.1
-20.8
100.5
210.3
469.6
3.1
232.8
-16.8
96.2
154.3
768.4
89.7
326.9
-13.3
135.5
229.7
417.0
28.6
224.0
-19.5
92.8
91.2
25 Foreign net borrowing in United States
76 Bonds
77
Bank loans n.e.c
78 Open market paper
29 U.S. government loans
16.0
6.6
-5.5
1.9
13.0
17.3
3.1
3.6
6.5
4.1
8.3
3.8
-6.6
6.2
5.0
1.2
3.8
-2.8
6.2
-6.0
9.0
2.6
-1.0
11.5
-4.0
36.1
1.3
-1.3
16.6
19.5
-19.4
6.3
-11.9
-4.3
-9.6
-5.8
5.5
-5.8
2.8
-8.2
8.2
2.1
.1
9.6
-3.7
21.5
6.2
1.5
19.1
-5.3
- 3 . 5 -12.6
-1.1
-1.1
-3.5
-3.5
3.9
-5.3
-2.7
-2.8
30 Total domestic plus foreign
404.8
567.5
762.2
856.0
842.4
753.4
771.0
716.9
995.0
698.3
986.4
555.7
1 Total net borrowing by domestic nonfinancial sectors
By sector and instrument
3
4
14
15
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
19
70
71
7?
73
24
By borrowing sector
State and local governments
Households
Farm
Other
Corporate
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 Loans from U.S. government
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
50 CMO Issuers
90.3
99.3
151.9
199.0
291.1
153.0
150.7
175.1
222.8
238.8
343.4
317.5
64.9
14.9
49.5
.4
25.4
12.7
.1
1.9
9.9
.8
67.8
1.4
66.4
74.9
30.4
44.4
77.3
31.5
45.8
96.8
26.6
70.3
80.5
30.8
.4
.6
32.1
16.5
73.5
41.5
.4
.7
16.0
14.9
78.3
48.9
-.1
21.3
-7.0
77.0
36.2
.4
.7
24.1
15.7
174.3
13.2
161.4
-.4
116.8
68.7
.1
4.0
24.2
19.8
72.5
29.4
43.1
31.5
17.4
101.5
20.6
79.9
1.1
97.4
48.6
.1
2.6
32.0
14.2
2.3
14.6
12.5
106.3
14.6
89.5
2.2
116.5
48.3
.1
2.9
49.4
15.9
133.8
6.4
126.6
.8
105.0
70.9
.6
4.0
15.1
14.4
214.8
20.0
196.3
-1.5
128.6
66.5
-.5
4.0
33.4
25.2
180.2
7.8
171.8
.5
137.4
92.5
.2
-7.4
38.3
13.6
15.3
49.5
25.4
11.7
6.8
2.5
4.5
-.2
.2
1.4
66.4
31.5
5.0
12.1
-2.1
12.9
-.1
3.7
30.4
44.4
77.0
7.3
15.6
22.7
18.9
.1
12.4
21.7
79.9
97.4
-4.9
14.5
22.3
53.9
-.7
12.2
12.9
161.4
116.8
-3.6
4.6
29.3
50.2
-.3
36.7
29.4
43.1
80.5
19.8
20.4
22.0
8.2
.2
9.8
31.5
45.8
73.5
-5.3
10.8
23.3
29.6
.1
15.0
26.6
70.3
78.3
-4.7
10.2
14.2
49.7
-.6
9.5
16.8
89.5
116.5
-5.0
18.9
30.4
58.1
-.8
14.9
7.2
126.6
105.0
-2.7
-1.7
25.5
53.1
.6
30.2
18.5
196.3
128.6
-4.6
10.9
33.1
47.2
-1.3
43.3
8.3
171.8
137.4
4.4
21.6
30.7
27.2
-.2
53.7
1,217.8
937.1
1,329.8
873.2
346.6 340.2
205.8 -16.9
135.7 212.4
254.2 245.6
93.9
71.0
59.2
17.7
73.7
21.0
48.6
46.1
437.8
87.7
173.5
350.4
60.6
121.3
31.7
66.9
331.0
20.0
180.5
298.3
15.7
-51.0
37.5
41.1
*
*
All sectors
51 Total net borrowing
495.1
666.8
914.1
52
53
54
55
56
57
58
59
225.9
44.2
38.0
85.4
19.3
46.7
5.7
30.0
254.4
53.7
36.5
183.6
56.6
26.7
26.9
28.4
273.8
50.4
86.1
217.4
90.4
61.1
52.0
82.9
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
1,054.9 1,133.5
324.2
136.4
126.1
237.7
94.6
38.3
52.8
44.8
389.0
35.4
192.9
298.0
65.8
69.5
26.4
56.5
906.4
921.8
892.1
263.1
33.8
54.6
228.8
94.7
70.4
75.4
85.7
284.5
67.0
117.6
206.0
86.2
51.8
28.6
80.0
301.7
67.0
116.6
221.2
95.3
17.5
31.8
41.1
External corporate equity funds raised in United States
60 Total new share issues
25.8
61.8
-36.4
19.9
61
62
63
64
65
8.8
17.0
11.4
4.2
1.4
27.2
34.6
28.3
2.6
3.7
29.3
-65.7
-74.5
7.8
.9
85.7
-65.8
-81.5
12.0
3.7
Mutual funds
All other
Nonfinancial corporations
Financial corporations
Foreign shares purchased in United States
-47.9
-24.9
3.0
26.5
163.3
-71.7 -74.4
-80.8 -79.5
6.8
8.3
.7 - 1 . 6
32.2
-57.1
-69.4
8.8
3.5
64.2
-61.2
-75.5
11.2
3.1
91.6
36.7
100.8
82.3
61.8
107.1 155.5
-70.4 -54.7
-87.5 -68.7
12.8
7.5
4.3
6.6
171.1
-88.7
-92.7
9.1
-5.1
123.3
-61.5
-70.0
6.7
1.9
Flow of Funds
A43
1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates.
1984
Transaction category, or sector
1 Total funds advanced in credit markets to domestic
nonfinancial sectors
7
3
4
5
6
By public agencies and foreign
Total net advances
U.S. government securities
Residential mortgages
FHLB advances to savings and loans
Other loans and securities
1982
1983
1984
1985
1985
1986
1987
1986
HI
H2
HI
H2
HI
H2
HI
388.9
550.2
753.9
854.8
833.4
717.3
790.4
722.7
986.8
676.9
989.9
568.3
114.9
22.3
61.0
.8
30.8
114.0
26.3
76.1
-7.0
18.6
157.6
39.3
56.5
15.7
46.2
202.3
47.1
94.6
14.2
46.3
317.3
84.8
158.5
19.8
54.2
132.7
27.6
55.5
16.5
33.2
182.5
51.0
57.4
14.9
59.2
195.8
50.3
88.6
12.5
44.4
208.7
43.9
100.7
15.9
48.2
264.1
74.0
123.8
14.4
52.0
370.6
95.6
193.2
25.2
56.5
241.3
46.3
164.9
13.6
16.5
7
8
9
10
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
15.9
65.5
9.8
23.7
9.7
69.8
10.9
23.7
17.1
74.3
8.4
57.9
16.8
101.5
21.6
62.3
9.5
175.5
30.2
102.1
7.5
73.3
12.0
39.8
26.6
75.2
4.8
75.9
25.1
96.4
27.5
46.8
8.4
106.7
15.8
77.8
10.8
128.2
13.2
111.9
8.2
222.8
47.2
92.3
-4.1
167.7
10.8
66.9
11
12
Agency and foreign borrowing not in line 1
Sponsored credit agencies and mortgage pools
Foreign
64.9
16.0
67.8
17.3
74.9
8.3
101.5
1.2
174.3
9.0
72.5
36.1
77.3
-19.4
96.8
-5.8
106.3
8.2
133.8
21.5
214.8
-3.5
180.2
-12.6
Private domestic funds advanced
N Total net advances
14 U.S. government securities
15 State and local obligations
16 Corporate and foreign bonds
17 Residential mortgages
18 Other mortgages and loans
19 LESS: Federal Home Loan Bank advances
354.8
203.6
44.2
14.7
-5.3
98.3
.8
521.3
228.1
53.7
14.5
55.0
162.4
-7.0
679.5
234.5
50.4
35.1
98.2
276.9
15.7
755.2
277.0
136.4
40.8
86.4
228.8
14.2
699.3
304.2
35.4
84.3
73.8
221.4
19.8
693.2
235.5
33.8
17.3
111.7
311.5
16.5
665.7
233.5
67.0
53.0
84.8
242.3
14.9
618.0
251.3
67.0
39.7
75.5
197.0
12.5
892.5
302.7
205.8
42.0
97.4
260.6
15.9
568.0
266.3
-16.9
100.8
71.3
161.0
14.4
830.6
342.2
87.7
67.8
76.4
281.8
25.2
494.6
284.7
20.0
61.6
80.3
61.6
13.6
Private financial intermediation
70 Credit market funds advanced by private financial
institutions
Commercial banking
71
77 Savings institutions
73
Insurance and pension funds
24
Other finance
274.2
110.2
22.9
96.6
44.5
395.8
144.3
135.6
100.1
15.8
559.8
168.9
150.2
121.8
118.9
579.5
186.3
83.0
156.0
154.2
726.1
194.7
105.8
175.9
249.6
587.5
192.2
167.0
148.3
80.0
532.1
145.5
133.5
95.3
157.8
483.8
143.3
54.5
139.4
146.5
675.2
229.4
111.4
172.5
161.9
638.9
117.2
94.5
170.6
256.7
813.2
272.3
117.2
181.2
242.4
485.1
49.9
85.7
213.3
136.2
75 Sources of funds
26 Private domestic deposits and RPs
27 Credit market borrowing
274.2
196.2
25.4
395.8
215.4
31.5
559.8
316.9
77.0
579.5
213.2
97.4
726.1
272.8
116.8
587.5
280.2
80.5
532.1
353.5
73.5
483.8
191.4
78.3
675.2
235.0
116.5
638.9
252.2
105.0
813.2
293.4
128.6
485.1
15.1
137.4
78
79
30
31
32
52.6
-31.4
6.1
106.0
-28.1
148.9
16.3
-5.3
109.7
28.2
165.9
5.4
4.0
118.6
37.9
268.9
17.7
10.3
141.0
99.9
336.4
12.4
1.7
152.5
169.8
226.8
10.9
-2.8
162.5
56.1
105.1
-.1
10.8
74.6
19.7
214.1
21.3
13.9
118.6
60.3
323.6
14.2
6.6
163.4
139.4
281.7
12.3
-4.2
138.6
134.9
391.1
12.5
7.6
166.4
204.6
332.6
41.8
-4.4
234.4
60.8
106.0
68.5
25.0
-5.7
18.2
157.0
99.3
40.3
-11.6
12.0
17.0
196.7
123.6
30.4
5.2
9.3
28.1
273.2
145.3
47.6
11.8
43.9
24.6
90.1
43.4
-.8
34.4
-4.8
17.9
186.2
162.8
10.4
-26.4
15.6
23.8
207.1
84.3
50.4
36.9
3.0
32.5
212.5
156.2
14.8
15.4
3.5
22.6
333.9
134.5
80.4
8.2
84.2
26.6
34.1
37.4
-68.7
68.1
-16.3
13.6
146.1
49.4
67.2
.8
6.7
22.1
146.9
69.9
21.7
39.0
7.7
8.5
39 Deposits and currency
40 Currency
41 Checkable deposits
42
Small time and savings accounts
43 Money market fund shares
44 Large time deposits
45 Security RPs
46 Deposits in foreign countries
205.5
9.7
18.0
136.0
33.5
-2.4
11.1
-.4
232.8
14.3
28.6
215.7
-39.0
-8.4
18.5
3.1
320.4
8.6
27.9
150.1
49.0
84.9
5.0
-5.1
223.5
12.4
41.4
139.1
8.9
7.2
16.6
-2.1
293.2
14.4
97.7
122.5
43.8
-9.3
18.3
5.9
286.8
13.7
26.0
129.0
24.5
92.0
8.7
-7.1
354.0
3.6
29.8
171.2
73.4
77.9
1.2
-3.1
198.3
15.9
14.6
161.5
10.6
-7.6
12.2
-9.0
248.7
8.8
68.2
116.7
7.1
21.9
21.1
4.9
262.0
10.7
79.9
115.4
46.9
10.0
-.9
324.4
18.2
115.5
129.5
40.6
-18.7
26.5
12.8
10.2
10.0
-28.5
33.9
-4.6
1.5
12.7
-14.9
47 Total of credit market instruments, deposits, and
currency
311.5
389.9
517.1
496.7
383.3
473.0
561.1
410.7
582.6
296.0
470.5
157.1
48
49
50
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
28.4
77.3
-7.7
20.1
75.9
40.0
20.7
82.4
63.3
23.6
76.7
80.1
37.7
103.8
114.5
17.6
84.7
50.7
23.7
79.9
75.8
27.3
78.3
68.1
21.0
75.6
92.0
37.8
112.5
124.2
37.6
97.9
104.9
43.4
98.1
108.7
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
25.8
8.8
17.0
25.9
-.1
61.8
27.2
34.6
51.1
10.7
-36.4
29.3
-65.7
19.7
-56.1
19.9
85.7
-65.8
42.8
-22.9
91.6
163.5
-71.7
48.2
43.4
-47.9
26.5
-74.4
-.2
-47.7
-24.9
32.2
-57.1
39.7
-64.6
3.0
64.2
-61.2
58.8
-55.8
36.7
107.1
-70.4
26.8
10.0
100.8
155.5
-54.7
56.6
44.2
82.3
171.1
-88.7
39.7
42.6
61.8
123.3
-61.5
65.5
-3.6
Other sources
Foreign funds
Treasury balances
Insurance and pension reserves
Other, net
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
*
NOTES BY LINE NUMBER.
1. Line 1 of table 1.57.
2. Sum of lines 3-6 or 7-10.
6. Includes farm and commercial mortgages.
11. Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
13. 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.
18. Includes farm and commercial mortgages.
26. Line 39 less lines 40 and 46.
27. Excludes equity issues and investment company shares. Includes line 19.
29. 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.
30. Demand deposits and note balances at commercial banks.
*
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 20/line 13.
50. Sum of lines 10 and 29.
51. 53. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types in flows and in amounts
outstanding may be obtained from Flow of Funds Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.
A44
Domestic Nonfinancial Statistics • April 1988
2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1
1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1987
Measure
1985
1986
1988
1987
May
June
July
Aug.
Sept.
Oct.'
Nov.'
Dec.'
Jan.
1 Industrial production
123.8
125.1
129.8
128.2
129.1
130.6
131.2
131.0
132.5
133.0
133.6
133.8
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
130.8
131.1
120.2
145.4
130.0
114.2
133.2
132.3
124.5
142.7
136.4
113.9
138.3
136.8
127.7
148.8
143.5
118.2
136.9
135.5
127.3
146.3
141.8
116.3
137.8
136.2
127.2
148.1
143.3
117.2
139.5
137.9
128.9
149.7
145.0
118.5
139.9
138.4
129.4
150.2
145.3
119.4
139.4
137.8
127.7
151.2
144.9
119.7
140.9
139.3
129.0
153.0
146.1
121.2
140.9
139.1
129.1
152.4
147.2
122.2
141.1
139.2
129.3
152.4
147.7
123.3
141.5
139.5
129.8
152.4
148.2
123.4
126.4
129.1
134.6
133.2
134.0
135.6
135.9
135.7
137.3
137.9
138.5
138.9
80.1
80.2
79.8
78.5
80.4
79.3
80.8
79.8
81.5
80.6
81.5
81.1
81.3
81.2
82.0
82.1
82.2
82.7
82.4
83.3
82.4
83.3
2
3
4
5
6
7
Industry groupings
8 Manufacturing
Capacity utilization (percent) 2
9
Manufacturing
10 Industrial materials industries
3
136.0'
158.0'
162.0
157.0'
167.0'
165.0'
174.0'
160.0r
164.0
157.0
157.0
145.0
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
Retail sales
118.3
102.4
97.8
92.6
125.0
207.0
198.7
172.8
206.0
190.6
120.8
102.4
96.5
91.2
128.9
219.9
210.2
176.4
219.1
199.9
123.8
102.2
97.1
92.1
132.9
233.1
222.6
181.5
230.7
208.7
123.3
101.7
96.6
91.6
132.4
230.7
220.7
179.9
229.6
207.3
123.5
101.7
96.6
91.6
132.6
231.1
221.2
180.0
228.9
209.6
123.8
102.1
97.0
92.1
132.9
232.6
222.3
180.1
230.4
210.9
124.0
102.2
97.2
92.2
133.1
233.9
224.2
182.0
231.6
214.0
124.2
102.4
97.4
92.5
133.4
235.3
225.4
183.7
232.9
210.5
124.9
103.0
97.8
92.9
134.1
239.8
227.1
184.7
237.9
208.5
125.2
103.4
98.2
93.3
134.4
238.8
228.6
185.7
236.4
209.1
125.6
103.8
98.4
93.6
134.8
240.5
229.5
186.1
237.9
211.6
125.7
103.6
98.6
93.7
135.0
241.3
231.0
186.8
239.4
212.6
22
23
Prices?
Consumer (1967 = 100)
Producer finished goods (1967 = 100) . . .
107.6'
104.7'
109.6'
103.2'
113.6
105.4
113.1'
105.4'
113.5'
105.5'
113.8'
106.0'
114.4'
105.9'
115.0'
105.7'
115.3
106.3
115.4
106.2
115.4
105.7
115.7
106.2
11 Construction contracts (1982 = 100)
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 i n t h e FEDERAL RESERVE BULLETIN, v o l . 7 1
(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
A45
2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data are seasonally adjusted. Exceptions noted.
1987
Category
1985
1986
1988
1987
June
July
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
HOUSEHOLD SURVEY DATA
1 Noninstitutional population1
180,440
182,822
185,010
184,941
185,127
185,264
185,428
185,575
185,737
185,882
186,083
2 Labor force (including Armed Forces)1
3 Civilian labor force
Employment
4
Nonagricultural industries
5
Agriculture
Unemployment
6
Number
Rate (percent of civilian labor force)
7
8 Not in labor force
117,695
115,461
120,078
117,834
122,122
119,865
121,846
119,608
122,132
119,890
122,568
120,306
122,230
119,963
122,651
120,387
122,861
120,594
122,984
120,722
123,436
121,175
103,971
3,179
106,434
3,163
109,232
3,208
109,108
3,192
109,427
3,212
109,907
3,143
109,688
3,184
109,961
3,249
110,332
3,172
110,529
3,215
110,836
3,293
8,312
7.2
62,745
8,237
7.0
62,744
7,425
6.2
62,888
7,308
6.1
63,095
7,251
6.0
62,995
7,256
6.0
62,6%
7,091
5.9
63,198
7,177
6.0
62,924
7,090
5.9
62,876
6,978
5.8
62,898
7,046
5.8
62,647
9 Nonagricultural payroll employment3
97,519
99,610
102,105
101,818
102,126
102,275
102,434
102,983
103,285'
103,5%
103,703
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
19,260
927
4,673
5,238
23,073
5,955
22,000
16,394
18,994
783
4,904
5,244
23,580
6,297
23,099
16,710
19,112
742
5,032
5,377
24,056
6,588
24,136
17,063
19,015
738
5,008
5,350
24,007
6,586
24,083
17,031
19,104
744
5,002
5,363
24,071
6,608
24,214
17,020
19,129
751
5,006
5,377
24,063
6,624
24,279
17,046
19,169
759
4,989
5,416
24,129
6,629
24,295
17,048
19,247
764
5,053
5,436
24,239
6,650
24,406
17,188
19,336
759r
5,074r
5,459r
24,294r
6,657r
24,493r
17,213r
19,377
759
5,122
5,468
24,306
6,667
24,623
17,274
19,402
745
5,072
5,476
24,479
6,671
24,651
17,207
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
D o m e s t i c Nonfinancial Statistics • April 1988
2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION
Seasonally adjusted
1987
1987
1987
Series
Q2
Ql
Q3
Q4
Output (1977 = 100)
Ql
Q2
Q3
Q4
Ql
Capacity (percent of 1977 output)
Q2
Q3
Q4
Utilization rate (percent)
1 Total industry
126.9
128.2
130.9
133.0
159.5
160.4
161.3
162.2
79.5
79.9
81.2
82.0
2 Mining
3 Utilities
98.8
108.1
99.0
108.3
100.6
111.6
103.2
112.5
130.4
137.7
129.7
138.3
129.0
138.8
128.4
139.4
75.8
78.5
76.3
78.3
78.0
80.5
80.3
80.7
4 Manufacturing
131.6
133.2
135.7
137.9
164.5
165.6
166.7
167.7
80.0
80.5
81.4
82.2
5 Primary processing
6 Advanced processing, .
114.3
142.0
116.1
143.5
119.2
145.8
122.1
147.5
138.2
180.3
139.0
181.6
139.8
182.9
140.6
184.1
82.7
78.7
83.5
79.0
85.3
79.7
86.9
80.1
7 Materials
115.0
116.5
119.1
121.9
146.1
146.7
147.2
147.8
78.7
79.4
81.0
82.5
8 Durable goods
9 Metal materials
10 Nondurable goods
11
P
13
121.4
74.7
121.2
122.3
136.4
122.9
122.9
77.0
124.0
125.1
137.7
125.3
125.5
83.6
128.2
130.5
144.5
130.7
129.6
91.1
129.3
132.3
162.3
110.6
145.6
142.4
142.8
148.8
163.1
110.0
143.8
143.4
143.9
149.8
163.9
109.4
144.7
144.4
145.1
150.9
164.7
108.8
145.6
145.4
74.8
67.5
84.8
85.9
95.5
82.6
75.4
70.0
86.2
87.2
95.7
83.6
76.7
76.5
88.6
90.4
78.7
83.8
91.0
14 Energy materials
98.3
98.7
100.0
101.8
120.3
120.2
120.1
119.9
81.7
82.1
83.3
84.9
Previous cycle1
High
Low
Latest cycle2
1987
Low
Jan.
High
1987
May
June
July
Aug.
1988
Sept.
Oct/
Nov/
Dec/
Jan.
Capacity utilization rate (percent)
15 Total industry
88.6
72.1
86.9
69.5
79.2
79.9
80.3
81.1
81.4
81.1
81.9
82.0
82.2
82.2
16 Mining
17 Utilities
92.8
95.6
87.8
82.9
95.2
88.5
76.9
78.0
76.1
78.5
76.5
79.2
76.6
79.0
76.8
80.2
78.2
81.3
79.1
80.0
80.6
80.5
81.1
81.0
80.5
80.7
80.2
81.6
18 Manufacturing
87.7
69.9
86.5
68.0
79.6
80.4
80.8
81.5
81.5
81.3
82.0
82.2
82.4
82.4
19 Primary processing
20 Advanced processing..
91.9
86.0
68.3
71.1
89.1
85.1
65.1
69.5
82.7
78.2
83.2
79.2
84.0
79.2
85.4
79.8
85.3
79.9
85.1
79.5
86.2
80.1
87.0
80.0
88.1
79.8
88.1
79.9
21 Materials
92.0
70.5
89.1
68.5
78.7
79.3
79.8
80.6
81.1
81.2
82.1
82.7
83.3
83.3
22 Durable goods
23 Metal materials
91.8
99.2
64.4
67.1
89.8
93.6
60.9
45.7
74.4
66.2
75.1
69.7
75.9
71.5
76.5
73.9
76.6
77.5
77.0
78.3
78.3
82.4
78.9
83.1
79.9
87.3
79.8
85.9
24 Nondurable goods
91.1
66.7
88.1
70.7
85.1
86.2
86.1
88.4
88.6
88.7
88.2
88.9
90.0
89.8
~>f<
~>1
92.8
98.4
92.5
64.8
70.6
64.4
89.4
97.3
87.9
68.8
79.9
63.5
86.4
96.4
83.4
87.1
95.7
83.9
87.1
96.3
83.1
90.0
100.5
85.1
90.5
99.9
86.4
90.7
98.5
87.4
90.4
97.4
88.0
91.1
98.1
88.6
92.3
99.8
90.0
92.3
28 Energy materials
94.6
86.9
94.0
82.3
82.5
82.1
82.8
82.4
84.0
83.5
84.9
85.4
84.5
84.8
25
Textile, paper, and
chemical
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
A47
2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value A
Monthly data are seasonally adjusted
1977
Groups
portion
1988
1987
1986
1986
avg.
Dec.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct/
Nov.
Dec/
Jan/
Index (1977 = 100)
MAJOR MARKET
1
Total index
? Products
Final products
Consumer goods
4
S
Equipment
6 Intermediate products
7 Materials
Consumer goods
8 Durable consumer goods
9 Automotive products
Autos and trucks
10
Autos, consumer
II
Trucks, consumer
1?
Auto parts and allied goods
N
14 Home goods
Appliances, A/C and TV
15
Appliances and TV
Carpeting and furniture
17
Miscellaneous home goods
18
125.0
126.7
127.2
127.3
127.4
128.4
129.1
130.6
131.2
131.0
132.5
133.0
133.6
133.8
57.72 133.2
44.77 132.3
25.52 124.5
19.25 142.7
12.94 136.4
42.28 113.9
135.0
133.7
127.2
142.2
139.7
115.2
136.1
135.0
127.5
144.9
139.7
115.1
136.2
135.0
127.5
145.0
140.4
115.2
137.2
134.5
126.6
144.9
139.9
116.2
137.2
135.8
128.2
145.8
142.1
116.3
137.8
136.2
127.2
148.1
143.3
117.2
139.5
137.9
128.9
149.7
145.0
118.5
139.9
138.4
129.4
150.2
145.3
119.4
139.4
137.8
127.7
151.2
144.9
119.7
140.9
139.3
129.0
153.0
146.1
121.2
140.9
139.1
129.1
152.4
147.2
122.2
141.1
139.2
129.3
152.4
147.7
123.3
141.5
139.5
129.8
152.4
148.2
123.4
120.3
116.0
110.2
83.7
120.8
117.2
112.8
77.5
124.6
123.6
143.5
143.4
132.9
104.0
123.9
123.9
142.5
133.1
140.5
100.00
6.89
2.98
1.79
1.16
.63
1.19
3.91
1.24
1.19
.96
1.71
116.2
115.1
112.9
97.3
141.8
118.4
117.1
139.5
141.6
125.8
96.0
121.5
117.7
115.6
99.5
145.6
120.8
124.4
153.2
155.1
132.0
99.4
122.4
123.5
125.2
105.3
162.1
121.0
121.6
145.2
146.7
130.8
99.3
121.2
121.2
121.6
100.9
159.9
120.5
121.2
142.9
143.8
131.3
99.8
118.1
115.7
111.5
91.8
148.1
121.9
119.9
137.7
139.2
133.5
99.4
120.2
118.0
113.1
91.0
154.2
125.3
121.8
142.2
142.3
133.3
100.7
117.4
114.9
107.9
87.4
146.0
125.4
119.3
133.4
133.4
132.3
101.8
120.4
117.5
112.3
86.4
160.4
125.3
122.5
141.7
142.6
134.1
102.2
121.2
118.0
112.4
76.8
178.4
126.6
123.6
147.1
145.5
132.0
102.0
118.6
114.2
107.2
79.1
159.4
124.8
121.9
141.8
140.6
131.6
102.2
124.3
124.3
122.2
94.7
173.2
127.5
124.3
145.7
146.1
132.9
104.1
123.7
121.4
118.7
91.9
168.5
125.4
125.4
150.1
150.5
133.0
103.4
19 Nondurable consumer goods
70 Consumer staples
Consumer foods and tobacco
71
Nonfood staples
??
Consumer chemical products
73
Consumer paper products
74
75
Consumer energy
Consumer fuel
76
Residential utilities
27
18.63
15.29
7.80
7.49
2.75
1.88
2.86
1.44
1.42
127.5
97.0
134.1
131.9
136.5
161.2
147.4
105.7
92.8
129.4
136.0
133.9
138.2
163.1
150.1
106.4
92.2
120.8
129.4
135.9
134.0
137.9
164.7
147.8
105.7
92.5
119.2
129.8
136.5
134.8
138.2
165.7
147.5
105.8
94.1
117.7
129.8
136.4
134.4
138.5
164.7
148.9
106.5
94.5
118.7
131.1
137.7
135.6
139.9
165.9
152.9
106.4
92.1
121.0
130.9
137.6
136.0
139.2
164.4
153.1
105.9
91.9
120.2
132.1
138.9
137.2
140.6
165.7
153.8
108.0
92.7
123.6
132.5
139.2
137.4
141.2
167.4
153.9
107.7
91.4
124.3
131.0
137.8
137.0
138.6
163.6
153.2
105.0
91.6
118.7
130.8
137.4
137.5
137.2
160.0
151.8
105.8
92.4
119.4
131.1
137.9
137.1
138.6
162.1
153.0
106.7
93.2
120.5
132.6
139.9
139.0
140.8
166.6
154.6
107.0
94.7
141.2
Equipment
78 Business and defense equipment
79 Business equipment
Construction, mining, and farm
30
Manufacturing
31
3?
Power
33
Commercial
Transit
34
35 Defense and space equipment
18.01 147.1
14.34 138.6
2.08 59.8
3.27 112.0
1.27 81.6
5.22 214.6
2.49 109.2
3.67 180.3
147.0
137.1
58.2
108.8
80.2
213.7
108.9
185.8
150.1
140.8
56.8
111.5
81.2
218.4
117.4
186.5
150.1
140.8
58.1
110.9
81.7
219.7
114.0
186.6
150.0
140.8
58.6
82.4
220.9
110.4
186.1
150.8
141.7
61.2
111.5
84.0
222.0
110.1
186.5
153.2
144.2
63.0
117.2
84.0
226.7
105.4
188.6
154.4
145.6
65.0
120.4
81.8
227.9
106.1
188.7
154.5
145.6
66.4
120.9
82.8
227.7
104.7
189.1
155.2
146.3
66.1
122.0
81.1
229.1
105.1
189.8
157.2
148.7
66.5
120.5
83.0
232.4
112.5
190.3
156.7
148.3
67.1
120.0
83.8
231.9
111.2
189.8
157.0
148.7
67.0
121.3
84.7
232.8
109.5
189.7
157.1
148.6
67.1
122.5
85.5
233.3
105.6
190.2
5.95 124.7
6.99 146.4
5.67 150.6
1.31 128.3
127.9
149.8
154.3
130.3
128.4
149.4
154.1
128.8
128.5
150.5
155.2
130.3
127.3
150.5
155.5
129.0
128.3
153.8
158.2
135.0
131.5
153.4
158.5
131.1
133.1
155.2
160.5
132.3
132.5
156.3
161.0
135.8
132.3
155.6
160.9
132.7
133.3
157.1
162.3
134.6
134.0
158.5
164.3
133.2
134.6
158.8
164.5
134.2
134.6
20.50 119.7
4.92 98.5
5.94 153.9
9.64 109.4
4.64 80.0
120.7
98.8
154.2
111.2
80.3
121.5
100.0
155.6
111.5
80.3
121.8
98.9
155.8
112.6
80.8
122.2
96.2
157.1
114.1
81.8
121.6
95.2
156.0
113.9
81.9
124.0
99.2
158.3
115.5
83.6
125.2
98.5
159.3
117.7
86.6
125.5
99.6
159.5
117.9
90.4
126.4
99.0
161.1
118.9
91.3
128.7
102.3
162.2
121.6
95.3
130.0
103.0
163.2
123.2
96.3
131.8
103.7
164.8
125.9
100.7
131.9
103.0
166.0
125.7
99.5
Intermediate products
36 Construction supplies
37 Business supplies
38 General business supplies
39 Commercial energy products
Materials
40 Durable goods materials
41
Durable consumer parts
Equipment parts
4?
43 Durable materials n.e.c
Basic metal materials
44
45 Nondurable goods materials
46 Textile, paper, and chemical
47
48
49
50
Textile materials
Pulp and paper materials
Chemical materials
Miscellaneous nondurable materials . . .
51 Energy materials
5? Primary energy
53 Converted fuel materials
111.1
118.3
123.2
122.5
122.8
125.4
125.3
124.1
127.6
128.3
128.6
128.2
129.4
131.3
131.4
7.53 118.9
1.52 110.6
1.55 132.1
4.46 117.1
2.57 116.5
124.7
116.1
140.2
122.3
118.5
123.6
115.8
136.7
121.8
119.0
124.0
118.5
134.7
122.1
119.2
126.9
125.0
137.4
125.0
121.1
126.5
129.6
117.8
145.4
128.1
122.0
130.6
116.7
145.0
130.4
121.4
131.2
116.0
143.3
132.2
120.9
131.0
113.0
142.0
133.4
119.7
132.4
114.2
143.5
134.7
120.9
134.5
114.6
146.4
137.2
134.9
137.4
125.0
122.0
125.1
111.9
139.0
124.9
120.9
11.69 99.9
7.57 105.5
4.12 89.6
98.8
105.1
87.3
97.6
102.6
88.5
97.0
101.5
88.9
97.5
102.3
88.7
99.3
103.6
91.4
99.4
104.0
91.0
99.0
102.5
92.5
100.9
104.6
94.1
100.2
104.6
92.2
101.8
106.8
92.7
102.4
107.8
92.6
101.3
106.3
92.1
101.6
10.09
A48
Domestic Nonfinancial Statistics • April 1988
2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued
Groups
SIC
code
1977
propor-
1988
1987
1986
1986
avg.
Dec.
Mar.
Feb.
Apr.
May
June
July
Aug.
Sept.
Oct/
Nov.
Dec."
Jan/
Index (1977 = 100)
MAJOR INDUSTRY
15.79
9.83
5.%
84.21
35.11
49.10
103.4
99.6
109.6
129.1
130.9
127.9
101.6
97.1
109.0
131.3
133.4
129.7
102.4
98.8
108.5
131.6
132.9
130.8
101.9
98.3
107.9
132.4
133.7
131.5
101.4
98.6
106.0
132.4
134.6
130.9
103.1
99.2
109.6
133.2
135.7
131.4
103.0
99.2
109.4
134.0
136.9
132.0
103.7
99.2
111.2
135.6
138.5
133.5
105.4
100.9
112.9
135.9
138.8
133.8
105.4
101.9
III.2
135.7
138.6
133.7
106.8
103.6
112.1
137.3
138.1
136.8
107.5
104.2
112.9
137.9
139.4
136.7
106.8
103.2
112.6
138.5
140.6
137.1
106.9
102.6
114.0
138.9
141.2
137.2
10
11.12
13
14
.50
1.60
7.07
.66
124.2
94.7
113.9
76.2
125.4
89.8
122.5
73.6
131.7
90.9
122.1
71.2
122.3
92.4
123.8
65.7
121.9
93.1
125.4
71.7
127.2
92.1
127.6
70.7
128.8
91.8
128.5
71.4
127.9
91.8
130.7
79.3
130.5
93.0
130.3
86.5
133.3
93.3
130.0
85.6
140.3
94.1
131.0
90.0
142.9
93.6
134.1
140.6
92.7
135.7
139.0
92.3
1 Mining and utilities
2
Mining
3
Utilities
4 Manufacturing
5
Nondurable
6
Durable
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
133.6
96.6
113.2
103.6
136.4
136.7
93.4
113.4
104.9
141.1
136.4
99.9
110.8
106.5
139.9
137.3
101.1
112.6
105.4
139.9
136.0
99.6
116.6
105.3
140.5
137.4
106.6
115.7
106.4
141.3
137.7
107.0
117.2
107.7
142.6
138.5
138.8
110.4
119.8
108.4
148.9
139.5
101.7
118.2
107.6
147.4
138.0
103.7
116.8
108.0
146.0
138.4
103.4
118.3
109.3
148.3
139.4
118.3
109.7
148.8
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
163.4
133.0
92.1
153.3
61.3
166.4
135.7
93.5
157.1
60.2
164.4
135.7
91.6
156.2
59.8
167.6
135.3
92.1
158.6
59.4
169.2
137.3
94.0
160.5
60.2
171.4
138.1
92.6
162.2
61.4
174.1
139.3
92.3
165.4
60.8
174.0
140.8
94.1
167.2
59.2
174.7
142.3
92.9
164.8
61.3
174.9
142.4
93.5
165.2
60.7
175.2
141.5
94.6
166.7
59.6
175.6
144.2
93.3
169.4
60.7
175.9
146.8
96.0
169.9
58.3
24
25
32
2.30
1.27
2.72
123.4
146.7
120.2
133.5
148.8
119.4
129.6
145.0
118.8
128.9
149.9
119.8
127.8
148.2
120.6
130.3
150.5
117.2
131.1
153.9
117.9
132.8
156.2
118.8
131.1
155.2
116.5
126.9
155.9
118.6
129.8
156.0
118.9
134.0
158.1
120.5
135.8
159.2
122.1
33
331.2
34
35
36
5.33
3.49
6.46
9.54
7.15
75.8
63.4
107.4
141.9
166.5
73.4
61.3
109.6
144.8
170.4
75.1
62.3
108.3
145.5
171.0
77.0
65.4
110.5
148.5
168.5
76.1
65.0
109.9
150.4
168.4
77.0
65.7
108.5
149.7
171.1
78.8
68.3
111.1
151.8
170.5
81.4
70.9
111.1
155.3
172.5
85.1
76.0
110.1
154.3
174.3
84.5
74.6
111.1
156.6
173.4
90.6
82.0
113.5
158.0
175.5
90.0
79.7
113.8
157.3
175.7
92.6
85.0
115.5
158.6
175.3
116.0
159.2
176.3
37
371
9.13
5.25
125.8
110.9
126.8
109.7
132.7
117.7
132.2
116.5
127.8
109.8
129.4
112.0
126.5
107.4
127.6
109.4
128.1
109.1
125.5
105.6
132.0
116.0
130.4
114.0
128.4
110.5
128.0
109.0
372-6.9
38
39
3.87
2.66
1.46
146.1
141.3
99.3
150.1
140.2
103.8
153.0
142.0
101.6
153.4
140.3
103.9
152.3
142.8
101.4
153.1
142.1
101.9
152.4
144.5
101.2
152.3
143.8
100.5
153.9
146.3
102.2
152.5
145.6
102.1
153.7
146.7
104.6
152.8
147.3
104.5
152.6
144.8
103.6
153.8
145.8
4.17
122.2
122.6
122.3
123.6
122.3
128.8
128.8
131.0
132.0
127.5
126.8
127.5
126.9
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 manufactures
Utilities
34 Electric
119.2
149.8
178.0
97.4
91.0
Gross value (billions of 1982 dollars, annual rates)
MAJOR MARKET
35 Products, total.
517.5
1,702.2 1,700.7 1,718.7 1.725.2 1,710.0 1,723.0 1,720.4 1.732.5 1,741.7 1,735.9 1,774.1 1,771.1 1,771.0 1,780.2
36 Final
37
Consumer goods.
38
Equipment
39 Intermediate
405.7
272.7
133.0
111.9
1,314.5 1,307.3 1,329.2 1.330.3 1,316.5 1,324.7 1,320.1 1.326.6 1,334.9 1,330.3 1,360.9 1,358.5 1,355.3 1,363.1
853.8 857.1 865.3 868.1 857.1 862.8 855.1 863.2 866.4 856.9 876.6 877.9 878.2 885.5
458.2 450.2 463.9 462.2 459.4 461.9 465.0 463.5 468.5 473.4 484.4 480.6 477.1 477.6
387.6 393.4 389.5 394.9 393.6 398.4 400.3 405.9 406.8 405.6 413.2 412.6 415.7 417.1
• 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.
NOTE. These data also appear in the Board's G. 12.3 (414) release. For address,
see inside front cover.
Selected Measures
A49
2.14 HOUSING AND CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1987
Item
1985
1986
1987
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct/
Nov/
Dec
Private residential real estate activity (thousands of units)
N E W UNITS
1 Permits authorized
2
1-family
3 2-or-more-family
1,733
957
777
1,750
1,071
679
1,524
1,030
495
1,719
1,150
569
1,598
1,058
540
1,493
1,009
484
1,517
1,039
478
1,487
993
494
1,502
1,023
479
1,502
992
510
1,463
977
486
1,469
983
486
1,361
974
387
4 Started
1-family
5
6
2-or-more-family
1,742
1,072
669
1,805
1,179
626
1,621
1,147
474
1,723'
1,206'
517'
1,635'
1,201'
434'
l ^
1,125'
474'
1,583'
1,086'
497'
1,594'
1,142'
452'
1,583'
1,109'
474
1,679'
1,211
468'
1,538
1,105
433
1,661
1,129
532
1,404
1,041
363
7 Under construction, end of period 1
8
1-family
9
2-or-more-family
1,063
539
524
1,074
583
490
1,002
599
403
1,085
618
467
1,070
623
446
1,061
621
441
1,059
620
439
1,053
623
430
1,049
625
424
1,052
631
421
1,049
631
418
1,050
630
420
1,030
625
406
1,703
1,072
631
1,756
1,120
637
1,664
1,120
545
1,689
1,141
548
1,830
1,148
682
1,621
1,158
463
1,601
1,101
500
1,698
1,120
578
1,666
1,067
599
1,581
1,112
469
1,549
1,111
438
1,562
1,080
482
1,635
1,110
525
13 Mobile homes shipped
284
244
233
23C
229r
224'
234'
243'
234'
24C
234
222
227
Merchant builder activity in
1-family units
14 Number sold
15 Number for sale, end of period1 . . .
688
350
748
361
675
371
720
358
733
359
649
355
641
359
671
359
675
361
644'
361
659
360
643
363
603
366
10 Completed
11
1-family
12 2-or-more-family
Price (thousands of dollars)2
Median
Units sold
Average
17 Units sold
16
84.3
92.2
104.4
98.4
96.5
104.9
109.0
105.0
106.8
106.5'
106.0
117.0
108.9
101.0
112.2
127.8
119.5
118.1
126.6
135.8
128.6
128.5
133.5'
125.0
139.0
135.8
3,217
3,566
3,523
3,680
3,560
3,770
3,500
3,430
3,410
3,450
3,570
3,370
3,330
75.4
90.6
80.3
98.3
84.9
105.3
85.6
104.9
85.0
105.0
85.2
106.3
85.2
106.0
86.2
107.6
85.1
105.3
85.1
106.2
84.8
106.3
83.7
105.0
85.4
107.1
EXISTING U N I T S ( 1 - f a m i l y )
18 Number sold
Price of units sold
(thousands of dollars)1
19 Median
20 Average
Value of new construction 3 (millions of dollars)
CONSTRUCTION
21 Total put in place
355,995
388,815
399,468
388,303
396,222
396,680
397,191
398,465
402,872
402,782' 403,482
411,325
409,730
22 Private
23 Residential
24 Nonresidential, total
Buildings
25
Industrial
26
Commercial
27
Other
28
Public utilities and other —
291,665
158,475
133,190
316,589
187,147
129,442
324,065
198,103
125,962
312,203
190,812
121,391
320,483
199,523
120,960
321,414
195,871
125,543
324,256
200,864
123,392
323,847
198,005
125,842
329,831
200,241
129,590
324,857' 326,658
196,969' 198,803
127,888 127,855
333,581
199,823
133,758
330,090
200,762
129,328
15,769
51,315
12,619
53,487
13,747
48,592
13,216
53,887
13,072
43,892
15,199
53,799
11,354
52,285
15,143
42,609
11,492
50,924
14,950
43,594
13,376
53,224
14,926
44,017
13,023
51,831
14,769
43,769
13,005
52,537
15,317
44,983
13,659
54,055
14,888
46,988
14,387
52,800
15,079
45,622
13,561
53,788
15,567
44,939
14,363
57,602
16,158
45,635
13,412
53,935
16,515
45,466
29 Public
30 Military
31 Highway
32 - Conservation and development
33 Other
64,326
3,283
21,756
4,746
34,541
72,225
3,919
23,360
4,668
40,278
75,401
4,204
23,275
5,222
42,700
76,100
3,893
23,575
4,792
43,840
75,739
3,403
22,673
5,551
44,112
75,266
4,397
22,607
4,839
43,423
72,935
4,352
21,704
5,498
41,381
74,618
5,009
22,441
5,328
41,840
73,041
4,193
22,005
5,127
41,716
77,924
6,083
23,489
4,978
43,374
76,824
4,308
24,975
5,491
42,050
77,744
4,738
24,832
5,188
42,986
79,641
3,164
26,400
6,060
44,017
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.
NOTE. Census Bureau estimates for all series except (1) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices
of existing units, which are published by the National Association of Realtors. All
back and current figures are available from the originating agency. Permit
authorizations are those reported to the Census Bureau from 16,000 jurisdictions
beginning with 1978.
A50
Domestic Nonfinancial Statistics • April 1988
2.15 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)
item
Change from 1 month earlier
1987r
1987
Jan.
1987r
1988
1988
Jan.
Mar.
June
Sept.
Dec.
Sept.
Oct.
Nov.
Dec.
Jan.
Index
level
Jan.
1988
(1967
= 100)'
CONSUMER PRICES 2
1
All items
2
3 Energy items
4 All items less food and energy
5 Commodities
6 Services
1.5
4.0
6.3
4.3
3.9
3.2
.3
.3
.3
.2
.3
115.7
4.2
-17.1
3.8
1.4
5.0
3.2
4.2
4.3
3.4
4.8
3.6
25.5
4.9
4.8
4.8
5.8
6.6
3.8
3.7
4.4
2.1
6.0
3.8
2.9
4.3
2.8
-3.9
4.4
2.5
5.0
.5
-.4
.2
.4
.2
.2
-.6
.5
.4
.6
.1
.3
.3
.4
.2
.4
-.8
.2
-.2
.4
.3
-.7
.5
.4
.6
115.7
87.4
120.8
113.2
125.2
-1.4
1.8
-31.9
3.1
2.4
2.1
2.4
1.7
2.7
1.2
4.3
-2.5
40.6
2.9
1.1
3.5
9.6
2.0
1.8
1.1
3.8
-1.8
16.5
4.6
4.0
-2.6
-5.7
-12.5
1.4
-.7
.4
.6
-.5
.5
.5
-.2
-.4
-.8
.1
-.3
-.1
.3
-.9
-.1
-.4
-1.4
-1.6
.3
.2
.4
1.7
-4.5
.6
.2
106.2
110.6
59.0
116.3
112.7
-3.3
.7
5.1
5.8
6.7
4.2
5.3
4.2
5.6
5.3
4.8
7.6
.2
.6
.5
.7
.5
.5
.2
.5
.3
.9
104.2
111.7
-1.8
-21.1
1.8
5.6
-1.9
22.4
-2.5
50.0
8.7
25.2
11.3
27.2
-4.8
5.9
39.4
-5.2
-15.7
16.9
.0
-2.8
3.4
.5
-1.6
2.8
-2.7
-1.2
.7
.8
-1.5
.5
.9
-3.8
1.3
96.9
70.7
128.6
PRODUCER PRICES
7 Finished goods
8 Consumer foods
9 Consumer energy
10 Other consumer goods
11 Capital equipment
12 Intermediate materials
13 Excluding energy
14
15
16
Crude materials
Foods
Energy
Other
3
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.
-.1
3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds.
SOURCE. Bureau of Labor Statistics.
Selected
Measures
A51
2.16 GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.
1987
1986
Account
1985
1986
1987'
Q4
Ql
Q2
Q3
Q4'
GROSS NATIONAL PRODUCT
1
4,010.3
4,235.0
4,487.7
4,288.1
4,377.7
4,445.1
4,524.0
4,604.0
By source
2 Personal consumption expenditures
3 Durable goods
4 Nondurable goods
5 Services
2,629.4
368.7
913.1
1,347.5
2,799.8
402.4
939.4
1,458.0
2,967.0
413.8
981.6
1,571.6
2,858.6
419.8
946.3
1,492.4
2,893.8
396.1
969.9
1,527.7
2,943.7
409.0
982.1
1,552.6
3,011.3
436.8
986.4
1,588.1
3,019.2
413.1
988.1
1,617.9
641.6
631.6
442.6
152.5
290.1
189.0
671.0
655.2
436.9
137.4
299.5
218.3
716.7
671.3
442.9
133.9
309.0
228.4
660.2
666.6
439.7
132.9
306.7
226.9
699.9
648.2
422.8
128.7
294.1
225.4
702.6
662.3
434.6
129.7
304.9
227.7
707.4
684.5
456.6
137.1
319.5
227.9
756.8
690.1
457.8
140.1
317.6
232.3
10.0
13.6
15.7
16.8
45.4
36.6
-6.4
5.1
51.6
48.7
40.3
27.3
22.9
11.1
66.7
59.3
14 Net exports of goods and services
IS Exports
16 Imports
-79.2
369.9
449.2
-105.5
376.2
481.7
-120.3
427.4
547.7
-116.9
383.3
500.2
-112.2
397.3
509.5
-118.4
416.5
534.8
-123.7
439.2
562.9
-126.9
456.8
583.7
17 Government purchases of goods and services
18 Federal
19 State and local
818.6
353.9
464.7
869.7
366.2
503.5
924.3
380.9
543.4
886.3
368.6
517.7
896.2
366.9
529.3
917.1
379.6
537.6
929.0
382.1
546.9
954.8
395.1
559.7
4,000.3
1,637.9
704.3
933.6
1,969.2
403.1
4,219.3
1,693.8
726.8
967.0
2,116.2
425.0
4,442.3
1,782.5
772.9
1,009.6
2,270.1
435.1
4,294.6
1,698.9
737.3
961.6
2,160.0
429.3
4,326.0
1,738.7
747.0
991.7
2,212.0
426.9
4,404.8
1,763.5
756.7
1,006.8
2,252.2
429.4
4,501.1
1,798.3
785.7
1,012.6
2,289.3
436.4
4,537.3
1,829.4
802.2
1,027.2
2,327.0
447.6
10.0
7.3
2.7
15.7
4.8
10.9
45.4
24.8
20.6
-6.4
-4.5
-1.9
51.6
35.2
16.5
40.3
22.1
18.2
22.9
-1.9
24.8
66.7
43.7
23.0
3,607.5
3,713.3
3,820.3
3,731.5
3,772.2
3,795.3
3,835.9
3,877.9
30
3,229.9
3,422.0
3,637.7
3,471.0
3,548.3
3,593.3
3,659.0
n.a.
31 Compensation of employees
3? Wages and salaries
33
Government and government enterprises
Other
34
35 Supplement to wages and salaries
Employer contributions for social insurance
36
Other labor income
37
2,370.8
1,974.7
372.3
1,602.6
396.1
203.8
192.3
2,504.9
2,089.1
394.8
1,694.3
415.8
214.7
201.1
2,647.5
2,212.7
421.4
1,791.3
434.8
224.6
210.2
2,552.0
2,128.5
403.8
1,724.7
423.5
219.1
204.4
2,589.9
2,163.3
412.2
1,751.1
426.6
220.0
206.7
2,623.4
2,191.4
418.1
1,773.3
432.0
222.5
209.5
2,663.5
2,226.5
424.5
1,801.9
437.0
225.9
211.1
2,713.4
2,269.8
430.9
1,838.9
443.6
230.0
213.5
257.3
227.6
29.7
289.8
252.6
37.2
327.8
279.0
48.8
297.8
261.2
36.6
320.9
269.7
51.3
323.1
275.8
47.3
322.7
282.1
40.6
344.5
288.4
56.1
6 Gross private domestic investment
7 Fixed investment
8
Nonresidential
9
Structures
10
Producers' durable equipment
Residential structures
11
1?
13
Change in business inventories
Nonfarm
By major type of product
70 Final sales, total
71 Goods
Durable
77
?3
Nondurable
74 Services
25 Structures
76 Change in business inventories
2.7
28 Nondurable goods
29
MEMO
Total GNP in 1982 dollars
NATIONAL INCOME
38
39
40
Business
and professional
Farm 1
41 Rental income of persons 2
9.0
16.7
19.1
18.4
20.0
18.9
17.3
20.1
42 Corporate profits1 3
43 Profits before tax
44 Inventory valuation adjustment
45 Capital consumption adjustment
277.6
224.8
-.7
53.5
284.4
231.9
6.5
46.0
306.5
275.7
-17.3
48.2
281.1
247.9
-8.9
42.1
294.0
257.0
-11.3
48.2
296.8
268.7
-20.0
48.0
314.9
284.9
-17.6
47.7
n.a.
n.a.
-20.4
48.7
46 Net interest
315.3
326.1
336.7
321.7
323.6
331.1
340.6
351.6
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).
A52
Domestic Nonfinancial Statistics • April 1988
2.17 PERSONAL INCOME AND SAVING
Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1986
Account
1985
1986
1987
1987'
Q4
Ql
Q2
Q3
Q4'
PERSONAL INCOME AND SAVING
1 Total personal income
3,327.0
3,534.3
3,746.3
3,593.6
3,662.0
3,708.6
3,761.0
3,853.6
2 Wage and salary disbursements
3 Commodity-producing industries
Manufacturing
4
5 Distributive industries
Service industries
6
Government and government enterprises
7
1,974.9
609.2
460.9
473.0
520.4
372.3
2,089.1
623.3
470.5
497.1
573.9
394.8
2,212.7
641.1
484.0
522.9
627.3
421.4
2,128.5
628.4
474.5
504.7
591.6
403.8
2,163.3
632.9
477.2
511.5
606.7
412.2
2,191.4
635.0
479.0
518.9
619.3
418.1
2,226.1
641.8
485.1
526.3
633.9
424.2
2,270.2
654.8
494.7
534.8
649.3
431.2
192.3
257.3
227.6
29.7
9.0
76.3
476.5
489.7
253.4
201.1
289.8
252.6
37.2
16.7
81.2
497.6
518.3
269.2
210.2
327.8
279.0
48.8
19.1
87.5
515.8
543.0
282.8
204.4
297.8
261.2
36.6
18.4
82.9
496.8
526.6
273.5
206.7
320.9
269.7
51.3
20.0
84.5
499.8
533.7
278.0
209.5
323.1
275.8
47.3
18.9
86.3
506.3
541.5
282.3
211.1
322.7
282.1
40.6
17.3
88.7
520.0
545.8
284.4
213.5
344.5
288.4
56.1
20.1
90.5
537.2
551.2
286.5
8
9
10
11
12
13
14
15
16
17
Other labor income
Proprietors' income1
Business and professional
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
148.9
159.6
169.8
161.8
166.7
168.4
170.7
173.6
3,327.0
3,534.3
3,746.3
3,593.6
3,662.0
3,708.6
3,761.0
3,853.6
485.9
512.2
564.8
532.0
536.1
578.0
565.7
579.4
20 EQUALS: Disposable personal income
2,841.1
3,022.1
3,181.5
3,061.6
3,125.9
3,130.6
3,195.3
3,274.2
21
LESS: Personal outlays
2,714.1
2,891.5
3,061.9
2,952.6
2,987.5
3,037.4
3,106.5
3,116.4
22 EQUALS: Personal saving
127.1
130.6
119.6
109.0
138.4
93.2
88.8
157.9
15,073.7
9,830.2
10,622.0
4.5
15,369.6
10,142.8
10,947.0
4.3
15,669.8
10,239.1
10,979.0
3.8
15,387.6
10,228.8
10,956.0
3.6
15,523.4
10,188.9
11,008.0
4.4
15,586.4
10,215.6
10,865.0
3.0
15,714.4
10,326.5
10,958.0
2.8
15,847.5
10,220.2
11,083.0
4.8
27 Gross saving
531.3
532.0
566.2
515.3
554.3
551.3
559.3
n.a.
28
29
30
31
664.2
127.1
99.6
-.7
679.8
130.6
92.6
6.5
673.3
119.6
74.6
-17.3
653.4
109.0
78.5
-8.9
683.8
138.4
75.6
-11.3
639.9
93.2
70.1
-20.0
648.7
88.8
76.8
-17.6
n.a.
157.9
n.a.
-20.4
269.1
168.5
282.8
173.8
296.2
182.9
289.3
176.6
291.8
178.0
294.5
182.1
297.8
185.3
300.9
186.3
-132.9
-196.0
63.1
-147.8
-204.7
56.8
-107.1
-151.4
44.3
-138.1
-188.7
50.6
-129.5
-170.5
41.0
-88.6
-139.2
50.6
-89.3
-135.8
46.5
525.7
527.1
559.5
503.7
552.1
548.1
548.4
589.2
641.6
-115.9
671.0
-143.9
716.7
-157.2
660.2
-156.5
699.9
-147.7
702.6
-154.5
707.4
-159.0
756.8
-167.7
-5.6
-4.9
-6.8
-11.6
-3.1
-10.9
-10.9
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)
GROSS SAVING
Gross private saving
Personal saving
Undistributed corporate profits
Corporate inventory valuation adjustment
Capital consumption
32 Corporate
33 Noncorporate
34
35
36
allowances
Government surplus, or deficit ( - ) , national income and
product accounts
Federal
State and local
37 Gross investment
38 Gross private domestic
39 Net foreign
40 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
-2.2 |
SOURCE. Survey of Current Business (Department of Commerce).
n.a.
n.a.
n.a.
Summary
Statistics
A53
3.10 U.S. INTERNATIONAL TRANSACTIONS Summary
Millions of dollars; quarterly data are seasonally adjusted except as noted. 1
1987
1986
Item credits or debits
1 Balance on current account
2 Not seasonally adjusted
3 Merchandise trade balance
Merchandise exports
4
Merchandise imports
5
6 Military transactions, net
7 Investment income, net
Other service transactions, net
Remittances, pensions, and other transfers .
U.S. government grants (excluding military) .
11 Change in U.S. government assets, other than official
reserve assets, net (increase, - )
1984
1985
1986
Q3
Q4
Ql
Q2
Q3P
-37,977
-36,398
-38,595
57,021
-95,616
-495
4,492
759
-1,151
-2,987
-36,784
-33,435
-38,757
56,992
-95,749
-37
5,500
-387
-1,017
-2,086
-41,190
-42,006
-39,558
60,097
-99,655
29
1,577
-146
-865
-2,227
-43,378
-48,525
-39,832
65,263
-105,095
-443
-267
95
-872
-2,059
107,013
-116,394
-141,352
-112,522
219,900
332,422
-1,942
18,490
1,138
-3,637
-8,541
-122,148
215,935
-338,083
-3,338
25,398
-1,005
-4,079
-11,222
-144,339
224,361
-368,700
-3,662
20,844
1,463
-3,885
-11,772
-36,583
-40,230
-37,115
56,534
-93,649
-815
5,339
342
-875
-3,459
-5,476
-2,831
-1,920
-1,454
15
225
-177
232
1,956
0
76
606
1,274
3,419
0
-171
335
3,255
32
0
-210
407
-165
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
-3,130
0
-979
-995
-1,156
-3,858
0
-897
908
-3,869
312
0
-246
1,500
-942
280
0
163
508
-391
132
0
-31
283
-120
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
-13,685
-11,127
5,019
-4,756
-2,821
-24,711
-1,323
1,361
-7,481
-17,268
-94,374
-59,039
-3,986
-3,302
-28,047
-23,304
-18,878
685
620
-5,731
-32,351
-31,800
170
3,113
-3,834
13,352
25,686
-1,163
-1,345
-9,826
-18,137
-15,685
2,603
384
-5,439
-29,467
-21,249
22 Change in foreign official assets in the United States
(increase, +)
23 U.S. Treasury securities
24 Other U.S. government obligations
25 Other U.S. government liabilities
26 Other U.S. liabilities reported by U.S. banks
27 Other foreign official assets 5
2,987
4,690
13
586
555
-2,857
-1,140
-838
-301
823
645
-1,469
34,698
34,515
-1,214
1,723
554
-880
15,551
12,167
-276
999
2,963
-302
1,003
4,572
-117
-607
-2,435
-410
13,953
12,145
-62
-1,381
3,611
-360
10,070
11,084
256
-1,504
547
-313
359
1,200
714
-506
-425
-624
28 Change in foreign private assets in the United States
(increase, +) 3
29 U.S. bank-reported liabilities
30 U.S. nonbank-reported liabilities
31 Foreign private purchases of U.S. Treasury securities, net
32 Foreign purchases of other U.S. securities, net
33 Foreign direct investments in the United States, net
99,481
33,849
4,704
23,001
12,568
25,359
131,012
41,045
-450
20,433
50,962
19,022
178,689
77,350
-2,791
8,275
70,802
25,053
54,040
30,360
-80
609
17,074
6,077
57,428
34,604
1,035
-3,074
12,269
12,594
12,802
-13,614
1,761
-1,570
18,499
7,726
39,494
14,823
1,526
-2,211
15,870
9,486
67,650
48,872
-2,832
12,669
8,941
0
26,837
0
17,920
0
23,947
0
-8,530
-4,153
0
11,750
3,904
0
-5,504
2,652
0
6,521
-2,009
0
4,572
-5,177
26,837
17,920
23,947
-4,377
7,846
-8,156
8,530
9,749
-3,130
-3,858
34 Allocation of SDRs
35 Discrepancy
36 Owing to seasonal adjustments
37 Statistical discrepancy in recorded data before seasonal
adjustment
-930
-7,288
MEMO
Changes in official assets
U.S. official reserve assets (increase, - )
Foreign official assets in the United States (increase, +)
excluding line 25
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
312
280
132
1,956
3,419
32
— 1,963
32,975
14,552
1,610
15,334
11,574
865
-4,504
-6,709
-8,508
-3,023
-5,195
-2,901
-2,651
-1,681
153
46
101
19
53
8
26
10
2,401
1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and
38-41.
2. Data are on an international accounts (IA) basis. Differs from the Census
basis data, shown in table 3.11, for reasons of coverage and timing. Military
exports are excluded from merchandise data and are included in line 6.
3. Includes reinvested earnings.
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 1988
3.11 U.S. FOREIGN TRADE1
Millions of dollars; monthly data are not seasonally adjusted.
1987
Item
1
EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments, f.a.s. value
2 GENERAL IMPORTS including
merchandise for immediate
consumption plus entries into
bonded warehouses, c.i.f. value . . . .
3 Trade balance
1985
218,815
1986
226,808
1987
252,866
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
21,126
21,008
20,222
20,986
21,752
23,799
24,801
352,463
382,964
424,082
36,838
37,483
35,905
35,062
39,383
37,016
37,003
-133,648
-156,156
-171,217
-15,711
-16,475
-15,683
-14,076
-17,631
-13,218
-12,202
1. The Census basis data differ from merchandise trade data shown in table
3.10, U.S. International Transactions Summary, for reasons of coverage and
timing. On the export side, the largest adjustment is 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 transac-
tions; military payments are excluded and shown separately as indicated above.
As of Jan. 1, 1987 census data are released 45 days after the end of the month.
Total exports and the trade balance reflect adjustments for undocumented exports
to Canada.
SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade"
(Department of Commerce, Bureau of the Census).
3.12 U.S. RESERVE ASSETS
Millions of dollars, end of period
1987
Type
1984
1985
1988
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
1 Total
34,934
43,186
48,511
44,318
45,944
45,070
46,200
46,779
45,798
42,955
2 Gold stock, including Exchange Stabilization Fund 1
11,096
11,090
11,064
11,069
11,068
11,075
11,085
11,082
11,078
11,068
5,641
7,293
8,395
8,813
9,174
9,078
9,373
9,937
10,283
9,765
11,541
11,947
11,730
10,964
11,116
10,918
11,157
11,369
11,349
10,804
6,656
12,856
17,322
13,472
14,586
13,999
14,585
14,391
13,088
11,318
3 Special drawing rights2'3
4
Reserve position in International Monetary Fund
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. 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.
3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1
Millions of dollars, end of period
1987
Assets
1984
1985
July
1 Deposits
Assets held in custody
1 U.S. Treasury securities2
3 Earmarked gold
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
267
480
287
261
294
456
236
351
244
355
118,000
14,242
121,004
14,245
155,835
14,048
171,269
14,010
179,484
14,022
179,097
14,015
182,072
13,998
187,767
13,965
195,126
13,919
206,675
13,882
1. Excludes deposits and U.S. Treasury securities held for international and
regional organizations.
2. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S.
Treasury securities payable in dollars and in foreign currencies.
1988
1986
3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce,
Earmarked gold is gold held for foreign and international accounts and is not
included in the gold stock of the United States.
Summary
Statistics
A55
3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1
Millions of dollars, end of period
1987
Asset account
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec."
All foreign countries
1 Total, all currencies
2 Claims on United States
3 Parent bank
4 Other banks in United States
5 Nonbanks
6 Claims on foreigners
7 Other branches of parent bank
8 Banks
9 Public borrowers
10 Nonbank foreigners
453,656
458,012
456,628
475,188
470,391
473,540
489,692r
520,860r
524,980
518,149
113,393
78,109
13,664
21,620
320,162
95,184
100,397
23,343
101,238
119,706
87,201
13,057
19,448
315,676
91,399
102,960
23,478
97,839
114,563
83,492
13,685
17,386
312,955
96,281
105,237
23,706
87,731
123,400
89,376
15,981
18,043
319,546
101,326
107,747
22,590
87,883
123,687
89,793
14,303
19,591
314,078
%,582
110,124
21,412
85,960
124,737
89,958
14,739
20,040
314,727
97,988
108,068
21,537
87,134
137,218
101,635
15,949
19,634
319,365
103,277
108,230
21,463
86,395
138,016'"
99,245'
17,826
20,945
347,014'
116,547'
118,051
21,843
90,573
140,693
102,609
16,701
21,383
345,735
116,498
115,372
22,131
91,734
137,751
105,562
16,416
15,773
341,936
122,057
108,643
21,659
89,577
20,101
22,630
29,110
32,242
32,626
34,076
33,109r
35,830
38.552
38,462
12 Total payable in U.S. dollars
350,636
336,520
317,487
329,499
322,300
322,286
340,653'
354,122
352,584
350,166
n Claims on United States
14 Parent bank
15 Other banks in United States
16 Nonbanks
17 Claims on foreigners
18 Other branches of parent bank
19 Banks
20 Public borrowers
21 Nonbank foreigners
111,426
77,229
13,500
20,697
228,600
78,746
76,940
17,626
55,288
116,638
85,971
12,454
18,213
210,129
72,727
71,868
17,260
48,274
110,620
82,082
12,830
15,708
195,063
72,197
66,421
16,708
39,737
118,411
87,540
14,669
16,202
198,465
75,771
67,287
16,271
39,136
118,563
87,779
12,794
17,990
190,590
72,515
65,673
15,062
37,340
118,964
87,844
12,830
18,290
189,958
73,327
64,106
15,115
37,410
131,684
99,776
13,942
17,966
195,075
77,699
64,506
14,942
37,928
131,454'
97,052'
15,627
18,775
208,934'
86,687'
68,888
14,889
38,470
133,911
99,844
14,632
19,435
203,298
85,545
65,728
14,854
37,171
131,740
102,968
14,657
14,115
202,280
88,186
63,704
14,730
35,660
10,610
9,753
11,804
12,623
13,147
13,364
13,894r
13,734
15,375
16,146
11 Other assets
22 Other assets
United Kingdom
23 Total, all currencies
144,385
148,599
140,917
146,678
149,760
148,039
149,633'
163,472
167,726
159,186
74 Claims on United States
25 Parent bank
26 Other banks in United States
Nonbanks
27
28 Claims on foreigners
29 Other branches of parent bank
30 Banks
31
Public borrowers
Nonbank foreigners
32
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
24,599
19,085
1,612
3,902
109,508
33,422
39,468
4,990
31,628
30,859
25,944
1,194
3,721
107,407
32,641
37,745
4,684
32,337
32,694
27,288
1,537
3,869
108,732
31,241
41,219
4,617
31,655
31,377
25,627
1,585
4,165
108,293
30,794
40,082
4,761
32,656
32,581
27,128
1,349
4,104
108,562
33,334
38,390
4,725
32,113
33,904'
27,71C
1,870
4,324
120,079'
37,402'
42,929
4,881
34,867
35,406
29,553
1,694
4,159
121,473
39,138
41,649
5,272
35,414
32,518
27,350
1,259
3,909
115,700
39,903
36,735
4,752
34,310
33 Other assets
34 Total payable in U.S. dollars
35 Claims on United States
36 Parent bank
37 Other banks in United States
38 Nonbanks
39 Claims on foreigners
40 Other branches of parent bank
Banks
41
42 Public borrowers
43 Nonbank foreigners
44 Other assets
4,882
5,225
6,810
8,412
8,334
8,369
8,490'
9,489
10,847
10,%8
112,809
108,626
95,028
97,672
99,170
%,510
99,656r
105,515
107,215
101,065
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
23,193
18,526
1,475
3,192
68,138
26,361
23,251
3,677
14,849
29,252
25,286
950
3,016
64,676
25,409
21,355
3,470
14,442
31,076
26,661
1,294
3,121
64,024
23,827
22,975
3,400
13,822
29,519
24,853
1,309
3,357
63,265
23,155
22,646
3,473
13,991
30,791
26,423
1,105
3,263
64,561
25,600
21,522
3,377
14,062
31,82c
26,850'
1,504
3,466
69,276'
27,810'
22,941
3,426
15,099
33,335
28,611
1,408
3,316
68,864
29,166
21,833
3,472
14,393
30,439
26,304
1,044
3,091
64,560
28,635
19,188
3,313
13,424
2,9%
3,059
3,697
3,744
4,070
3,726
4,304'
4,419
5,016
6,066
Bahamas and Caymans
45 Total, all currencies
46 Claims on United States
47 Parent bank
48 Other banks in United States
49 Nonbanks
50 Claims on foreigners
51 Other branches of parent bank
52 Banks
53 Public borrowers
54 Nonbank foreigners
55 Other assets
56 Total payable in U.S. dollars
146,811
142,055
142,592
142,170
140,512
139,986
151,909
156,752
154,901
159,940
77,2%
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
78,048
54,575
11,156
12,317
60,005
17,2%
27,476
7,051
8,182
72,541
45,891
13,684
12,966
65,280
18,873
30,987
7,025
8,395
72,772
46,256
11,824
14,692
63,027
17,493
30,372
7,046
8,116
72,558
45,697
12,111
14,750
62,336
18,228
29,160
6,873
8,075
81,679
53,668
13,538
14,473
65,619
18,698
31,690
6,987
8,244
83,187
53,093
14.721
15,373
68,710
18,936
35,012
7,017
7,745
82,629
52,563
13,980
16,086
67,196
18,905
33,477
7,195
7,619
84,937
59,667
14,277
10,993
70,160
21,277
33,749
7,428
7,706
4,611
4,855
5,076
4,843
142,385
145,642
144,326
151,053
3,917
3,309
4,539
4,349
4,713
5,092
141,562
136,794
136,813
135,323
131,636
130,985
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.
A56
International Statistics • April 1988
3.14 Continued
1987
Liability account
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
All foreign countries
57 Total, all currencies
453,656
458,012
456,628
475,188
470,391
473,540
489,692'
520,86c
524,980
518,149
58 Negotiable CDs
59 To United States
60 Parent bank
61 Other banks in United States
62 Nonbanks
37,725
147,583
78,739
18,409
50,435
34,607
156,281'
84,657'
16,894
54,730
31,629
152,465'
83,394'
15,646
53,425
31,776
150,939'
78,976'
16,814
55,149
32,993
144,267'
72,376'
15,005
56,886
33,648
141,913'
74,361'
15,289
52,263
35,724
153,758'
80,559'
17,229
55,970
36,796
156,598'
79,592'
18,853'
58,153'
34,630
156,007
83,308
18,843
53,856
30,929
161,213
86,326
20,476
54,411
63 To foreigners
64 Other branches of parent bank
65 Banks
66 Official institutions
67 Nonbank foreigners
68 Other liabilities
247,907
93,909
78,203
20,281
55,514
20,441
245,939
89,529
76,814
19,520
60,076
21,185'
253,775
95,146
77,809
17,835
62,985
18,759'
274,061
100,826
81,229
22,264
69,742
18,412'
274,407
95,376
87,734
21,528
69,769
18,724'
278,883
97,908
87,449
21,016
72,510
19,096'
280,651
103,921
85,512
20,116
71,102
19,559'
306,472
114,559
98,025
20,235
73,653
20,994
311,997
116,809
97,342
21,777
76,069
22,346
304,080
123,527
87,969
19,464
73,120
21,927
69 Total payable in U.S. dollars
367,145
353,712
336,406
340,985
334,218
333,673
351,879'
365,244'
361,068
360,272
70 Negotiable CDs
71 To United States
72 Parent bank
73 Other banks in United States ,
74 Nonbanks
35,227
143,571
76,254
17,935
49,382
31,063
150,905'
81,631'
16,264
53,010
28,466
144,483'
79,305'
14,609
50,569
27,929
142,491'
74,833'
15,602
52,056
28,781
135,564'
67,707'
13,895
53,962
29,634
132,907'
69,581'
14,086
49,240
30,933
143,707'
75,282'
15,812
52,613
32,117
145,326'
74,111'
17,298'
53,917'
30,075
143,027
77,227
17,169
48,631
26,768
148,134
80,527
19,072
48,535
75 To foreigners
76 Other branches of parent bank
77 Banks
78 Official institutions
79 Nonbank foreigners
80 Other liabilities
178,260
77,770
45,123
15,773
39,594
10,087
163,583
71,078
37,365
14,359
40,781
8,161'
156,806
71,181
33,850
12,371
39,404
6,651'
163,505
74,202
31,812
15,985
41,506
7,06c
162,766
70,911
35,250
15,806
40,799
7,107'
163,723
72,620
35,104
15,527
40,472
7,409'
169,342
78,036
35,202
14,209
41,895
7,897'
179,011
84,208
40,078
13,323
41,402
8,790
179,063
84,409
38,772
14,119
41,763
8,903
176,860
89,395
35,384
12,351
39,730
8,510
163,472
United Kingdom
81 Total, all currencies
144,385
148,599
140,917
146,678
149,760
148,039
149,633'
167,726
159,186
82 Negotiable CDs
83 To United States
84 Parent bank
85 Other banks in United States
86 Nonbanks
34,413
25,250
14,651
3,125
7,474
31,260
29,422
19,330
2,974
7,118
27,781
24,657
14,469
2,649
7,539
27.511
24.512
14,745
2,109
7,658
28,590
24,347
14,010
2,021
8,316
29,363
22,202
13,234
1,875
7,093
31,451
22,462
13,357
2,073
7,032
32,523
22,868
12,251
2,382'
8,235'
30,475
24,961
14,018
2,103
8,840
26,988
23,625
13,223
1,740
8,662
87 To foreigners
88 Other branches of parent bank
89 Banks
90 Official institutions
91 Nonbank foreigners
92 Other liabilities
77,424
21,631
30,436
10,154
15,203
7,298
78,525
23,389
28,581
9,676
16,879
9,392
79,498
25,036
30,877
6,836
16,749
8,981
86,041
25,350
32,036
9,748
18,907
8,614
87,942
23,572
35,647
9,241
19,482
8,881
87,745
23,379
34,414
9,670
20,282
8,729
86,813
26,094
31,681
10,387
18,651
8,907'
98,215
29,718
38,502
10,248
19,747
9,866
101,686
30,727
37,690
12,000
21,269
10,604
98,534
32,600
34,768
11,015
20,151
10,039
93 Total payable in U.S. dollars
117,497
112,697
99,707
100,031
101,593
99,459
102,202'
108,440
108,481
102,072
94 Negotiable CDs
95 To United States
96 Parent bank
97 Other banks in United States
98 Nonbanks
33,070
24,105
14,339
2,980
6,786
29,337
27,756
18,956
2,826
5,974
26,169
22,075
14,021
2,325
5,729
25,695
21,850
14,252
1,899
5,699
26,397
21,689
13,399
1,776
6,514
27,264
19,578
12,608
1,694
5,276
28,776
19,528
12,609
1,883
5,036
29,991
18,819
11,283
2,08C
5,456'
27,999
19,800
12,792
1,789
5,219
24,926
17,752
12,026
1,512
4,214
99 To foreigners
100 Other branches of parent bank
101 Banks
102 Official institutions
103 Nonbank foreigners
104 Other liabilities
56,923
18,294
18,356
8,871
11,402
3,399
51,980
18,493
14,344
7,661
11,482
3,624
48,138
17,951
15,203
4,934
10,050
3,325
49,089
17,654
13,566
7,283
10,586
3,397
50,294
16,171
16,330
7,203
10,590
3,213
49,479
15,565
15,767
7,872
10,275
3,138
50,386
17,994
14,359
8,060
9,973
3,512'
55,209
20,018
17,786
7,115
10,290
4,421
56,443
20,826
17,024
7,970
10,623
4,239
55,441
21,856
15,580
7,530
10,475
3,953
Bahamas and Caymans
105 Total, all currencies
146,811
142,055
142,592
142,170
140,512
151,909
156,752
154,901
159,940
106 Negotiable CDs
107 To United States
108 Parent bank
109 Other banks in United States
110 Nonbanks
615
102,955
47,162
13,938
41,855
610
104,556'
45,554'
12,778
46,224
847
106,081'
49,481'
11,715
44,885
1,067
103,831'
44,112'
13,382
46,337
1,119
100,073'
40,675'
11,989
47,409
975
98,085'
41,730'
12,276
44,079
886
108,10C
46,745'
13,579
47,776
890
111,925
48,793
14,857
48,275
801
107,967
49,568
15,179
43,220
885
113,735
52,075
17,142
44,518
111 To foreigners
112 Other branches of parent bank
113 Banks
114 Official institutions
115 Nonbank foreigners
116 Other liabilities
40,320
16,782
12,405
2,054
9,079
2,921
35,053
14,075
10,669
1,776
8,533
1,836'
34,400
12,631
8,617
2,719
10,433
1,264'
36,004
14,023
7,943
3,185
10,853
1,268'
37,988
14,803
9,395
3,263
10,527
1,332'
39,437
16,465
9,514
2,935
10,523
l ^
41,277
16,925
10,395
1,786
12,171
1,646'
42,147
17,032
11,587
2,113
11,415
1,790
44,331
17,812
12,611
2,023
11,885
1,802
43,650
18,745
11,119
1,466
12,320
1,670
143,582
138,322
138,774
137,763
134,354
145,166
149,273
146,286
152,546
117 Total payable in U.S. dollars
135,376
139,986
Summary Statistics
A57
3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1987'
Item
1 Total1
By type
2 Liabilities reported by banks in the3 United States^
3 U.S. Treasury bills and certificates
U.S. Treasury bonds and notes
4 Marketable
5 Nonmarketable
6 U.S. securities other than U.S. Treasury securities
1
8
9
10
11
12
By area
Western Europe
Canada
Latin America and Caribbean
Africa
Other countries
1986
1985
June
July
Aug.
Sept.
Oct.
Nov.
Dec/
178,380
211,782
238,797
232,370
237,728
239,534
252,476
253,852
259,410
26,734
53,252
27,868
75,650
32,079
80,663
31,513
73,435
29,638
78,210
31,869
75,701
38,273
78,819
34,038
82,542
31,627
88,829
77,154
3,550
17,690
91,368
1,300
15,596
110,238
700
15,117
112,490
500
14,432
115,101
300
14,479
116,462
300
15,202
118,898
300
16,186
120,755
300
16,217
122,544
300
16,110
74,447
1,315
11,148
86,448
1,824
3,199
88,623
2,004
8,372
105,868
1,503
5,412
111,625
3,502
7,583
108,702
1,400
5,985
107,823
3,559
7,904
105,505
1,590
5,989
106,873
4,189
8,712
109,529
1,837
6,589
108,248
4,529
8,561
109,482
1,618
7,094
116,360
5,152
9,217
114,160
1,474
6,109
117,372
4,884
8,916
116,464
1,562
4,655
124,341
4,961
8,308
116,276
1,402
4,122
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.
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.
3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies1
Millions of dollars, end of period
1987
1986
Item
1 Banks' own liabilities
2 Banks' own claims
3 Deposits
4 Other claims
5 Claims of banks' domestic customers
1983
5,219
7,231
2,731
4,501
1,059
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.
2. Assets owned by customers of the reporting bank located in the United
1984
8,586
11,984
4,998
6,986
569
1985
15,368
16,294
8,437
7,857
580
Dec.
Mar.
June
Sept. r
29,702
26,180
14,129
12,052
2,507
37,873
34,153
16,102
18,050
2,012
38,470
34,006
12,735
21,271
889
45,515
41,159
15,404
25,755
1,067
States that represent claims on foreigners held by reporting banks for the accounts
of the domestic customers.
A58
International Statistics • April 1988
3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States
Payable in U.S. dollars
Millions of dollars, end of period
1987
Holder and type of liability
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec.''
1 All foreigners
407,306
435,726
540,996
551,362
545,630
555,185
584,448
605,009''
604,540
620,140
2 Banks' own liabilities
3 Demand deposits
4 Time deposits
5 Other 2
6 Own foreign offices
306,898
19,571
110,413
26,268
150,646
341,070
21,107
117,278
29,305
173,381
406,485
23,789
130,891
42,705
209,100
410,834
22,837
133,393
42,385
212,219
410,881
20,219
134,127
44,721
211,814
415,824
22,117
137,861
42,317
213,530
446,520
21,150
148,354
48,903
228,113
462,879'
23,201'
152,292
52,797'
234,589'
457,081
24,046
147,183
52,210
233,642
469,816
23,125
148,115
52,534
246,042
100,408
76,368
94,656
69,133
134,511
90,398
140,528
93,695
134,749
88,193
139,361
92,705
137,928
89,747
142,130'
91,374
147,460
95,869
150,325
101,794
18,747
5,293
17,964
7,558
15,417
28,696
16,371
30,462
15,632
30,924
15,259
31,397
16,042
32,139
15,933'
34,823
17,500
34,090
16,717
31,814
11 Nonmonetary international and regional
organizations
4,454
5,821
5,807
4,005
5,946
5,332
7,845
3,594'
5,703
5,065
12 Banks' own liabilities
13 Demand deposits
14 Time deposits'
15 Other 2
2,014
254
1,267
493
2,621
85
2,067
469
3,958
199
2,065
1,693
2,515
72
987
1,456
2,367
76
599
1,692
2,498
44
807
1,647
4,674
80
1,235
3,358
1,680'
107
986
586'
3,089
74
1,094
1,921
3,304
328
1,523
1,452
16 Banks' custody liabilities4
17 U.S. Treasury bills and certificates
18 Other negotiable and readily transferable
instruments 6
19 Other
2,440
916
3,200
1,736
1,849
259
1,490
266
3,579
2,339
2,834
1,635
3,171
1,793
1,914
285
2,614
747
1,761
265
1,524
0
1,464
0
1,590
0
1,224
0
1,240
0
1,193
6
1,378
0
1,624
6
1,811
55
1,497
0
7 Banks' custody liabilities4
U.S. Treasury bills and certificates
8
Other negotiable and readily transferable
9
instruments 6
10 Other
20 Official institutions8
86,065
79,985
103,569
112,742
104,948
107,848
107,570
117,092'
116,580
120,456
21 Banks' own liabilities
22 Demand deposits
23 Time deposits
24 Other 2
19,039
1,823
9,374
7,842
20,835
2,077
10,949
7,809
25,427
2,267
10,497
12,663
28,690
1,743
13,266
13,680
28,343
1,711
13,567
13,065
26,342
1,907
13,489
10,946
28,169
1,800
14,246
12,123
34,720'
1,905
16,574'
16,241'
30,873
1,810
13,505
15,557
28,510
1,948
12,480
14,082
25 Banks' custody liabilities4
26 U.S. Treasury bills and certificates
27 Other negotiable and readily transferable
instruments6
28 Other
67,026
59,976
59,150
53,252
78,142
75,650
84,052
80,663
76,605
73,435
81,505
78,210
79,401
75,701
82,372'
78,819
85,707
82,542
91,947
88,829
6,966
84
5,824
75
2,347
145
3,141
248
2,950
220
3,151
144
3,540
160
3,328'
225
2,965
200
2,972
146
29 Banks9
248,893
275,589
351,745
357,145
358,378
362,883
388,625
405,027'
400,043
414,885
30 Banks' own liabilities
31 Unaffiliated foreign banks
32
Demand deposits
33
Time 2deposits1
34
Other
35 Own foreign offices
225,368
74,722
10,556
47,095
17,071
150,646
252,723
79,341
10,271
49,510
19,561
173,381
310,166
101,066
10,303
64,232
26,531
209,100
314,621
102,402
10,293
67,045
25,063
212,219
315,096
103,283
8,741
66,865
27,677
211,814
319,883
106,353
9,901
69,588
26,864
213,530
344,886
116,772
9,801
77,743
29,228
228,113
358,706'
124,117'
11,364
79,995'
32,758'
234,589'
353,816
120,174
11,877
77,077
31,220
233,642
370,808
124,766
10,842
79,860
34,064
246,042
23,525
11,448
22,866
9,832
41,579
9,984
42,524
9,066
43,281
9,142
43,000
9,100
43,739
9,206
46,321
8,961
46,227
8,792
44,077
9,185
7,236
4,841
6,040
6,994
5,165
26,431
5,611
27,848
5,850
28,289
5,320
28,581
5,221
29,312
5,454
31,906
6,292
31,143
5,461
29,430
36 Banks' custody liabilities4
37 U.S. Treasury bills and certificates
38 Other negotiable6 and readily transferable
instruments
39 Other
40 Other foreigners
67,894
74,331
79,875
77,470
76,359
79,122
80,408
79,296'
82,215
79,734
41 Banks' own liabilities
42 Demand deposits
43 Time deposits
44 Other 2
60,477
6,938
52,678
861
64,892
8,673
54,752
1,467
66,934
11,019
54,097
1,818
65,009
10,729
52,095
2,185
65,075
9,691
53,096
2,287
67,101
10,264
53,977
2,860
68,791
9,468
55,130
4,193
67,773'
9,825'
54,736
3,211
69,303
10,285
55,507
3,511
67,194
10,006
54,251
2,936
7,417
4,029
9,439
4,314
12,941
4,506
12,462
3,701
11,284
3,276
12,022
3,761
11,617
3,046
11,523
3,309
12,912
3,787
12,540
3,515
3,021
367
4,636
489
6,315
2,120
6,395
2,366
5,592
2,415
5,594
2,667
5,904
2,668
5,527
2,686
6,432
2,693
6,787
2,238
10,476
9,845
7,496
7,356
6,313
6,458
6,501
6,676'
7,521
7,340
45 Banks' custody liabilities4
46
U.S. Treasury bills and certificates
47 Other negotiable and readily transferable
instruments 6
48 Other
49 MEMO: Negotiable time certificates of deposit in
custody for foreigners
1. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
2. Includes borrowing under repurchase agreements.
3. U.S. banks: includes amounts due to own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due to head office or parent foreign bank, and
foreign branches, agencies, or wholly owned subsidiaries of head office or parent
foreign bank.
4. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
5. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
6. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
7. Principally the International Bank for Reconstruction and Development, and
the Inter-American and Asian Development Banks. Data exclude "holdings of
dollars" of the International Monetary Fund.
8. Foreign central banks, foreign central governments, and the Bank for
International Settlements.
9. Excludes central banks, which are included in "Official institutions."
Nonbank-Reported
Data
3.17 Continued
1987
Area and country
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
1 Total
407,306
435,726
540,996
551,362
545,630
555,185
584,448
605,009'
604,540
620,140
2 Foreign countries
402,852
429,905
535,189
547,358
539,685
549,853
576,603
601,415'
598,838
615,075
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
180,556
1,181
6,729
482
580
22,862
5,762
700
10,875
5,600
735
699
2,407
884
30,534
454
85,334
630
3,326
80
702
210,606
974
9,577
425
616
27,951
8,218
690
11,990
5,367
502
704
2,340
1,296
27,796
454
105,2%
433
5,284
36
656
204,865
795
9,154
486
497
25,486
7,162
667
10,031
5,447
562
586
2,103
1,235
24,607
365
107,641
459
6,410
550
622
208,715
1,066
9,754
576
545
27,003
7,715
636
7,667
5,461
593
700
2,287
1,387
28,260
514
107,369
491
6,016
45
629
214,145
1,281
10,460
590
517
27,899
6,823
690
8,410
6,106
663
684
2,526
1,639
27,325
398
109,269
519
7,808
51
485
233,370r
1,166
10,743
704
581
28,255
8,557'
738
10,254
6,773r
1,179
724
2,683
1,567
29,153'
550'
119,478
508
9,060'
87
609'
228,976
1,262
10,909
628
471
27,519
8,527
699
9,936
6,490
1,074
858
2,614
2,862
30,178
433
115,308
485
8,085
36
601
235,098
920
9,263
811
372
29,980
7,206
688
12,050
5,016
1,374
799
2,618
1,363
34,634
703
116,994
711
8,950
31
612
3 Europe
Austria
4
5 Belgium-Luxembourg
6
Denmark
Finland
7
8
France
9
Germany
10 Greece
Italy
11
12 Netherlands
13 Norway
14 Portugal
15
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
16,059
17,427
26,345
21,942
21,232
22,556
26,066
25,733
28,557
30,080
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
210,318
4,757
73,619
2,922
4,325
72,263
2,054
4,285
7
1,236
1,123
136
13,745
4,970
6,886
1,163
1,537
10,171
5,119
198,010
4,794
66,313
2,050
3,672
68,830
1,971
4,304
8
1,118
1,121
158
13,855
5,192
7,157
1,139
1,504
9,739
5,085
200,119
5,122
62,518
2,317
3,783
73,678
2,035
4,424
8
1,088
1,109
146
14,159
5,291
6,994
1,147
1,536
9,679
5,085
201,441
5,074
62,470
2,267
3,955
73,722
2,119
4,426
7
1,101
1,087
171
14,549
5,338
7,130
1,203
1,485
10,146
5,189
214,364
4,674
71,502
2,234
4,377
78,116
2,248
4,195
7
1,097
1,072
156
14,290
5,218
7,188
1,206
1,492
9,824
5,469
217,763'
5,075
72,768'
2,437
3,943'
79,702'
2,191
4,190
12
1,115
1,053
140
14,338
5,305
7,467
1,205
1,493
9,882
5,447
214,132
5,277
70,886
2,246
4,090
78,162
2,218
4,299
9
1,087
1,032
150
14,508
5,234
7,513
1,205
1,526
9,032
5,657
220,911
5,000
73,673
2,749
4,028
81,481
3,041
4,205
12
1,081
1,078
159
14,534
4,972
7,403
1,268
1,579
9,000
5,648
71,187
72,280
108,831
108,162
104,394
106,999
111,401
115,626'
118,741
120,931
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
1,476
18,902
9,393
674
1,547
1,892
47,410
1,141
1,866
1,119
12,352
11,058
1,737
16,353
9,109
714
1,773
1,229
50,867
1,406
1,222
1,144
11,463
11,145
1,744
16,436
8,595
572
1,404
928
48,145
1,410
1,148
1,096
11,676
11,241
2,011
15,377
9,015
902
1,541
1,036
49,872
1,388
1,208
1,190
12,676
10,782
1,775
15,197
8,637
771
1,435
1,105
52,945
1,714
1,152
1,118
14,043
11,507
1,699
18,302
9,579'
606
1,336
2,170
53,212
1,577
1,331
1,275
13,660
10,878
1,435
21,564
10,531
701
1,677
1,271
52,634
1,591
1,259
1,483
13,373
11,222
1,157
21,488
10,116
586
1,399
2,676
52,878
1,573
1,082
1,344
13,954
12,677
57 Africa
58
Egypt
59
Morocco
60
South Africa
61
Zaire
62
Oil-exporting countries 4
63
Other
3,396
647
118
328
153
1,189
961
4,883
1,363
163
388
163
1,494
1,312
4,021
706
92
270
74
1,519
1,360
3,751
1,009
106
188
58
1,111
1,281
4,023
1,113
75
229
64
1,275
1,267
4,194
1,158
74
227
69
1,331
1,335
4,011
1,118
81
199
81
1,178
1,354
3,919
1,104
70
280
71
1,081
1,313
4,066
1,169
75
246
82
1,108
1,386
3,942
1,148
194
202
67
1,014
1,316
64 Other countries
Australia
65
66
All other
5,684
5,300
384
3,347
2,779
568
5,118
4,196
922
4,887
4,113
774
5,052
4,333
718
5,948
5,019
929
6,616
5,641
975
5,005
4,011
994
4,367
3,666
701
4,114
3,323
791
67 Nonmonetary international and regional organizations
International 5
Latin American regional
Other regional
4,454
3,747
587
120
5,821
4,806
894
121
5,807
4,620
1,033
154
4,005
2,597
1,047
362
5,946
4,486
1,075
384
5,332
3,819
1,070
443
7,845
6,197
1,126
522
3,594'
2,107'
1,155
331
5,703
3,617
1,478
608
5,065
3,432
1,272
362
24 Canada
25 Latin America and Caribbean
26
Argentina
27
Bahamas
78
Bermuda
29
Brazil
30
British West Indies
31
Chile
37
Colombia
33
Cuba
Ecuador
34
35
Guatemala
36 Jamaica
37
Mexico
38
Netherlands Antilles
39 Panama
40
Peru
41
Uruguay
Venezuela
47
43
Other
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
Other
68
69
70
1. Includes the Bank for International Settlements and Eastern European
countries that are not listed in line 23.
2. Comprises Bulgaria, Czechoslovakia, the German Democratic Republic,
Hungary, Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Excludes "holdings of dollars" of the International Monetary Fund.
6. Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in "Other
Western Europe."
A59
A60
International Statistics • April 1988
3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1987
Area and country
1984
1985
1986
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
1 Total
400,162
401,608
444,745
435,817
424,392
427,057
447,727
461,110''
458,854
457,223
2 Foreign countries
399,363
400,577
441,724
433,685
421,289
423,993
443,043
458,280'
451,684
452,769
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
107,823
728
7,498
688
987
11,356
1,816
648
9,043
3,296
672
739
1,492
1,964
3,352
1,543
58,335
1,835
539
345
948
114,469
758
9,828
706
1,045
12,036
1,612
457
8,409
5,744
774
659
1,872
2,330
2,618
1,785
59,937
1,757
567
582
993
108,062
698
10,239
604
1,037
11,673
2,009
433
6,784
4,429
830
645
1,830
2,287
2,464
1,753
56,544
1,764
647
420
974
104,180
785
9,550
868
1,031
12,530
1,333
375
6,407
3,078
803
667
1,945
2,473
2,664
1,757
54,144
1,742
548
521
958
105,930
684
9,591
747
1,266
12,781
1,485
406
6,541
3,247
722
638
2,233
2,752
2,612
1,689
54,710
1,741
619
549
915
110,999'
930
10,131
795
1,089
14,350
2,092'
430
7,418
3,976
812
570
1,859
2,533
2,825
1,564
55,860'
1,750
549
473
994'
107,223
1,038
9,441
886
1,030
13,513
1,546
452
7,2%
3,798
938
542
2,032
2,646
2,880
1,566
53,908
1,697
672
437
904
101,111
790
9,355
722
992
13,479
2,042
463
7,271
2,747
933
472
1,832
2,225
2,638
1,674
49,845
1,700
670
394
865
3 Europe
4 Austria
3 Belgium-Luxembourg
6 Denmark
7 Finland
8 France
9 Germany
10 Greece
U
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
24 Canada
16,109
16,482
21,006
20,731
18,676
18,494
21,578
21,402
25,313
25,347
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
208,825
12,091
59,342
418
25,716
46,284
6,558
2,821
0
2,439
140
198
30,698
1,041
5,436
1,661
940
11,108
1,936
202,378
12,212
56,670
297
25,522
43,939
6,339
2,649
0
2,354
109
182
30,353
1,346
4,986
1,568
950
10,982
1,920
200,728
12,151
53,842
387
25,999
44,626
6,500
2,743
0
2,396
107
268
30,271
1,084
4,633
1,567
949
11,306
1,902
202,384
12,221
55,935
359
26,594
43,290
6,510
2,784
0
2,384
105
202
30,638
994
4,616
1,549
966
11,366
1,872
214,716
11,857
65,309
328
26,056
47,512
6,469
2,729
0
2,367
124
198
30,542
1,041
4,579
1,479
946
11,308
1,872
216,783'
12,117'
63,699'
423
25,820'
51,473
6,388'
2,73C
0
2,449
131
191
30,259'
1,019
4,546'
1,457
961
11,200'
1,920
209,138
12,052
59,333
331
25,472
48,926
6,429
2,758
0
2,334
145
184
30,044
1,115
4,666
1,459
975
11,098
1,818
212,597
11,963
64,154
529
25,258
48,758
6,282
2,734
2
2,282
145
233
29,493
1,125
4,571
1,323
%3
10,981
1,799
66,316
66,212
96,126
88,401
86,516
91,429
93,322
100,440'
102,132
105,865
710
1,849
7,293
425
724
2,088
29,066
9,285
2,555
1,125
5,044
6,152
639
1,535
6,797
450
698
1,991
31,249
9,226
2,224
845
4,298
6,260
787
2,681
8,307
321
723
1,634
59,674
7,182
2,217
578
4,122
7,901
993
3,303
7,731
430
677
1,450
55,415
5,325
2,112
538
3,808
6,619
929
2,487
7,495
416
639
1,413
54,596
4,954
2,211
565
3,914
6,897
919
2,772
6,556
565
624
1,450
61,072
4,589
2,148
545
4,315
5,875
894
2,980
6,933
541
622
1,591
60,121
4,606
2,126
453
4,848
7,607
543'
4,224'
6,889
527
625
1,331
65,787
4,9%'
2,082
446'
5,063
7,926'
615
4,784
7,301
517
601
1,293
64,767
4,807
2,040
439
5,157
9,811
981
4,413
8,112
499
580
1,362
69,002
4,952
2,070
487
4,833
8,575
57 Africa
38 Egypt
39 Morocco
60 South Africa
61 Zaire
62 Oil-exporting countries
63 Other
6,615
728
583
2,795
18
842
1,649
5,407
721
575
1,942
20
630
1,520
4,650
567
598
1,550
28
694
1,213
4,704
600
563
1,501
39
818
1,184
4,705
572
568
1,479
38
866
1,182
4,739
586
603
1,497
35
862
1,156
4,704
541
582
1,504
40
888
1,149
5,376
538
605
1,546
38
1,531
1,118
4,669
526
527
1,494
36
%3
1,123
4,719
521
542
1,507
15
1,004
1,130
64 Other countries
65 Australia
66 All other
3,447
2,769
678
3,390
2,413
978
3,294
1,949
1,345
3,001
1,980
1,021
2,601
1,693
908
2,766
1,686
1,080
2,794
1,834
959
3,280
2,034
1,246
3,208
2,090
1,118
3,131
2,100
1,031
800
1,030
3,021
2,132
3,103
3,063
4,684
2,830
7,170
4,454
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 Guatemala 3
36 Jamaica
3/
Mexico
38 Netherlands Antilles
39 Panama
40 Peru
41 Uruguay
42 Venezuela
43 Other Latin America and Caribbean
44
45
46
4/
48
49
50
51
52
53
54
53
36
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle East oil-exporting countries
Other Asia
67 Nonmonetary international and regional
organizations 6
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
Data
3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States1
Payable in U.S. Dollars
Millions of dollars, end of period
1987
Type of claim
1984
1985
1986
June
July
Aug.
Sept.
Oct/
Nov.
Dec."
1 Total
433,078
430,489
478,650
468,876
424,392
427,057
481,652
461,110
458,854
457,223
2
3
4
5
6
7
8
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
444,745
64,095
211,533
122,946
57,484
65,462
46,171
435,817
63,516
201,501
126,462
61,004
65,458
44,337
424,392
65,857
189,142
124,364
59,612
64,753
45,029
427,057
65,808
196,182
121,939
56,788
65,151
43,128
447,727
67,077
210,503
127,285
59,696
67,589
42,863
461,110
65,147
218,391
134,106
62,872
71,234
43,466
458,854
69,329
219,952
126,397
57,683
68,714
43,176
457,223
65,157
222,478
126,790
59,996
66,794
42,798
32,916
3,380
28,881
3,335
33,905
4,413
33,059
3,474
33,925
3,218
23,805
19,332
24,044
21,384
22,071
5,732
6,214
5,448
8,202
8,636
37,103
28,487
25,706
23,691
21,782
40,714
38,102
42,079
38,061
42,951
38,819
n.a.
Banks' own claims on foreigners
Foreign public borrowers
Own foreign offices
Unaffiliated foreign banks
Deposits
Other
All other foreigners
9 Claims of banks' domestic customers 3 ...
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
40,302
41,412
39,768
3. 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.
4. Principally negotiable time certificates of deposit and bankers acceptances.
5. 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.
1. 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.
2. 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.
3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1986
Maturity; by borrower and area
1 Total
By borrower
Maturity of 1 year or less1
Foreign public borrowers
All other foreigners
Maturity over 1 year 1
Foreign public borrowers
All other foreigners
2
3
4
5
6
7
8
9
10
11
1?.
13
14
15
16
17
18
19
By area
Maturity of 1 year or less
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 2
Maturity of over 1 year 1
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 2
1. Remaining time to maturity.
1983
1984
1987
1985
Dec.
Mar.
June
Sept.
243,715
243,952
227,903
232,295
226,426
236,392
235,812
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
160,555
24,842
135,714
71,740
39,103
32,637
154,789
24,154
130,635
71,637
39,168
32,468
167,244
23,270
143,973
69,149
39,483
29,665
165,451
27,008
138,442
70,361
39,757
30,605
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
61,784
5,895
56,271
29,457
2,882
4,267
58,042
5,625
54,223
29,714
3,154
4,031
68,891
5,622
55,429
30,936
2,980
3,385
62,045
5,733
58,138
32,065
2,878
4,592
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
6,737
1,925
56,719
4,043
1,539
777
6,742
1,873
56,705
4,122
1,630
564
6,417
1,631
55,572
3,387
1,522
621
6,747
1,577
55,097
3,535
1,612
1,793
2. Includes nonmonetary international and regional organizations.
A61
A62
International Statistics • April 1988
3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2
Billions of dollars, end of period
1985
Area or country
1983
1986
1987
1984
Sept.
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
434.0
405.7
394.9
391.2r
393.4r
389.7'
389.5r
389.6r
398.9'
391.1'
391.7'
167.8
12.4
16.2
11.3
11.4
3.5
5.1
4.3
65.3
8.3
29.9
148.1
8.7
14.1
9.0
10.1
3.9
3.2
3.9
60.3
7.9
27.1
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
157.0
8.4
13.8
11.3
8.5
3.5
2.9
5.4
68.8
6.4
28.1
160.3
9.0
15.1
11.5
9.3
3.4
2.9
5.6
69.2
7.0
27.2
159.0
8.5
14.7
12.5
8.1
3.9
2.7
4.8
70.3
6.2
27.4
158.0
8.4
13.8
11.7
9.0
4.6
2.4
5.8
71.9
5.4
25.0
164.5'
9.1
13.4
12.8
8.6
4.4
3.0
5.8
74.0'
5.3
28.1
161.8'
8.5
12.6
11.4
7.5
7.3
2.4
5.7
72.7'
6.9
26.7
156.8'
8.3'
13.8
10.6
6.7
4.8
2.7
5.4
72.1
4.7
27.8'
13 Other developed countries
14 Austria
15 Denmark
16 Finland
17 Greece
18 Norway
19 Portugal
20 Spain
21 Turkey
22 Other Western Europe
23 South Africa
24 Australia
36.0
1.9
3.4
2.4
2.8
3.3
1.5
7.1
1.7
1.8
4.7
5.4
33.6
1.6
2.2
1.9
2.9
3.0
1.4
6.5
1.9
1.7
4.5
6.0
32.0
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
6.5
2.3
2.4
3.2
4.9
30.7
1.7
2.4
1.6
2.6
3.0
1.1
6.4
2.5
2.1
3.1
4.2
29.5
1.7
2.3
1.7
2.3
2.7
1.0
6.7
2.1
1.6
3.1
4.1
26.2
1.7
1.7
1.4
2.3
2.4
.8
5.8
2.0
1.4
3.1
3.5
26.0
1.9
1.7
1.4
2.1
2.2
.9
6.3
1.9
1.4
3.1
3.2
25.7
1.8
1.5
1.5
2.0
2.2
.8
6.1
2.1
1.6
3.1
3.1
26.8'
1.9
1.6
1.4
1.9
2.4
.8
7.4
1.9
1.6'
3.0
2.9
25 OPEC countries 3
26 Ecuador
27 Venezuela
28 Indonesia
29 Middle East countries
30 African countries
28.4
2.2
9.9
3.4
9.8
3.0
24.9
2.2
9.3
3.3
7.9
2.3
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
4.7
1.8
20.6
2.1
8.8
3.0
5.0
1.7
20.0
2.2
8.7
2.8
4.6
1.7
19.6
2.2
8.6
2.5
4.5
1.7
20.5
2.1
8.8
2.4
5.5
1.7
19.2
2.1
8.7
2.2
4.5
1.7
19.4'
2.1
8.5
2.0
5.1
1.7
1 Total
2 G-10 countries and Switzerland
3 Belgium-Luxembourg
4 France
5 Germany
6
Italy
7 Netherlands
Sweden
8
9
Switzerland
10 United Kingdom
11 Canada
12 Japan
110.8
111.8
107.8
105.1
103.9
102.0
100.0
99.7
99.9
100.3'
97.4
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other Latin America
9.5
23.1
6.4
3.2
25.8
2.4
4.2
8.7
26.3
7.0
2.9
25.7
2.2
3.9
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
25.8
7.1
2.3
24.1
1.7
3.3
9.2
25.5
7.1
2.2
24.0
1.6
3.3
9.3
25.4
7.2
2.0
24.0
1.5
3.3
9.5
25.3
7.1
2.1
24.0
1.5
3.1
9.5
25.7
7.3
2.0
23.7
1.4
3.0
9.5
24.6
7.2
2.0
25.4
1.4
3.0
9.3
24.6
7.1
2.0
24.7
1.2
2.8
39
40
41
42
43
44
45
46
47
Asia
China
Mainland
Taiwan
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
.3
5.2
.9
1.9
11.2
2.8
6.1
2.2
1.0
.7
5.1
.9
1.8
10.6
2.7
6.0
1.8
1.1
1.1
5.1
1.1
1.5
10.4
2.7
6.0
1.7
.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
8.7
2.0
5.7
1.1
.8
.6
4.3
1.3
1.4
7.3
2.1
5.4
1.0
.7
.4
4.9
1.2
1.5
6.7
2.1
5.4
.9
.7
.9
5.5
1.6
1.4
6.2
1.9
5.4
.9
.6
.6
6.6
1.7
1.3
5.7'
1.7
5.4
.8
.8
.3
5.9
1.9
1.3
5.1
1.6
5.4
.7
.7
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 4
1.5
.8
.1
2.3
1.2
.8
.1
2.1
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
.7
.9
.1
1.6
.6
.9
.1
1.4
.6
.9
.1
1.3
.6
.8
.1
1.3
52 Eastern Europe
53
U.S.S.R
54 Yugoslavia
55 Other
5.3
.2
2.4
2.8
4.4
.1
2.3
2.0
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
3.4
.1
1.9
1.4
3.2
.1
1.7
1.4
3.1
.1
1.6
1.3
3.4
.3
1.7
1.4
3.4
.5
1.7
1.3
56 Offshore banking centers
57 Bahamas
58 Bermuda
59 Cayman Islands and other British West Indies
60 Netherlands Antilles
61 Panama
62 Lebanon
63 Hong Kong
Singapore
64
65 Others 6
68.9
21.7
.9
12.2
4.2
5.8
.1
13.8
10.3
.0
65.6
21.5
.9
11.8
3.4
6.7
.1
11.4
9.8
.0
58.8
16.6
.8
12.3
2.3
6.1
.0
11.4
9.4
.0
64.6r
21.4
.7
12.7'
2.3
6.0
.1
11.5
9.9
.0
59.4r
21.4
.7
10.6'
2.3
4.4
.1
11.5
8.5
.0
55.4'
17.1
.4
12.2r
2.4
4.2
.1
9.5
9.3
.0
60.5'
19.9
.4
12.8'
1.9
5.1
.1
10.5
9.7
.0
63.2'
22.3
.7
13.6'
1.8
4.1
.1
11.2
9.4
.0
65.1'
24.1
.8
12.7'
1.7
5.4
.1
11.4
8.8
.0
62.6'
20.0
.6
14.2'
1.3
5.3
.1
12.6
8.5
.0
66.6'
26.4
.6
12.4'
1.2
5.3
.1
12.3
8.3
.0
66 Miscellaneous and unallocated7
16.8
17.3
17.3
16.9
16.8
16.8
17.2
19.8
19.8
IS.C
21.4'
31 Non-OPEC developing countries
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. This group comprises the Organization of Petroleum Exporting Countries
shown individually, other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and 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
A63
3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States1
Millions of dollars, end of period
1987
1986
Type, and area or country
1984
1983
1985
Sept.
Dec.
Mar.
June
Sept.
1 Total
25,346
29,357
27,825
26,429
25,717
27,432
28,751
28,167
2 Payable in dollars
3 Payable in foreign currencies
22,233
3,113
26,389
2,968
24,296
3,529
22,432
3,997
21,885
3,833
23,264
4,169
24,286
4,466
23,846
4,321
By type
4 Financial liabilities
5 Payable in dollars
6 Payable in foreign currencies
10,572
8,700
1,872
14,509
12,553
1,955
13,600
11,257
2,343
13,501
11,071
2,430
12,239
9,774
2,464
13,114
10,398
2,716
13,946
11,068
2,878
12,667
9,955
2,712
7 Commercial liabilities
8 Trade payables
9 Advance receipts and other liabilities
14,774
7,765
7,009
14,849
7,005
7,843
14,225
6,685
7,540
12,929
5,728
7,201
13,479
6,447
7,032
14,318
6,985
7,333
14,805
7,139
7,666
15,500
7,389
8,111
13,533
1,241
13,836
1,013
13,039
1,186
11,361
1,567
12,110
1,368
12,865
1,453
13,218
1,587
13,891
1,609
5,742
302
843
502
621
486
2,839
6,728
471
995
489
590
569
3,297
7,700
349
857
376
861
610
4,305
8,907
448
501
319
741
567
5,880
8,023
270
644
270
704
646
5,199
8,383
232
742
368
693
711
5,378
9,645
257
807
305
669
703
6,642
9,081
230
574
291
677
684
6,349
10
11
12
13
14
15
16
17
18
Payable in dollars
Payable in foreign currencies
By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
19
Canada
764
863
839
362
399
431
441
407
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,596
751
13
32
1,041
213
124
5,086
1,926
13
35
2,103
367
137
3,184
1,123
4
29
1,843
15
3
2,283
842
4
28
1,291
18
5
1,964
614
4
32
1,163
22
3
2,369
669
0
26
1,545
30
3
1,747
398
0
22
1,223
29
5
961
280
0
22
581
17
3
27
28
29
Asia
Japan
Middle East oil-exporting countries
1,424
991
170
1,777
1,209
155
1,815
1,198
82
1,881
1,446
3
1,784
1,377
8
1,861
1,459
7
2,046
1,666
7
2,140
1,653
7
30
31
Africa
Oil-exporting countries3
19
0
14
0
12
0
4
2
1
1
3
1
1
0
2
0
32
Mother4
27
41
50
63
67
67
66
76
3,245
62
437
427
268
241
732
4,001
48
438
622
245
257
1,095
4,074
62
453
607
364
379
976
4,344
75
370
633
581
361
1,142
4,494
101
351
722
460
387
1,346
4,521
85
379
591
372
484
1,309
4,987
111
422
594
339
557
1,380
4,973
56
437
679
350
556
1,475
33
34
35
36
37
38
39
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
40
Canada
1,841
1,975
1,449
1,313
1,393
1,352
1,253
1,263
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,473
1
67
44
6
585
432
1,871
7
114
124
32
586
636
1,088
12
77
58
44
430
212
848
37
172
44
45
197
207
890
32
132
61
48
213
217
1,089
28
297
82
89
185
224
1,037
13
245
88
64
160
203
1,050
22
223
40
44
231
176
48
49
50
Asia
Japan
Middle East oil-exporting countries ' 5
6,741
1,247
4,178
5,285
1,256
2,372
6,046
1,799
2,829
4,856
2,137
1,507
5,098
2,051
1,686
5,818
2,468
1,948
5,921
2,480
1,870
6,516
2,422
2,109
51
52
Africa
Oil-exporting countries3
553
167
588
233
587
238
585
176
622
197
520
170
524
166
571
150
53
All other 4
921
1,128
982
982
981
1,019
1,083
1,128
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 1988
3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States1
Millions of dollars, end of period
1986
Type, and area or country
1983
1984
1987
1985
Sept.
Dec.
Mar.
June
Sept.
1 Total
34,911
29,901
28,876
34,157
33,451
34,034
31,515
31,211
2 Payable in dollars
3 Payable in foreign currencies
31,815
3,096
27,304
2,597
26,574
2,302
31,446
2,711
30,923
2,528
31,238
2,7%
28,405
3,110
28,546
2,666
By type
4 Financial claims
5 Deposits
6
Payable in dollars
7
Payable in foreign currencies
8 Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
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
18,891
15,526
14,911
615
3,364
2,330
1,035
24,833
18,953
18,389
565
5,880
4,506
1,374
23,357
17,899
17,343
555
5,458
4,110
1,349
24,080
17,994
17,168
826
6,086
4,740
1,345
21,580
15,437
14,253
1,183
6,143
4,868
1,275
20,906
15,920
15,086
834
4,985
3,860
1,125
11 Commercial claims
12 Trade receivables
13 Advance payments and other claims
11,131
9,721
1,410
10,646
9,177
1,470
9,986
8,6%
1,290
9,324
8,079
1,245
10,095
8,902
1,192
9,954
8,898
1,056
9,935
8,892
1,043
10,305
9,364
942
14
15
10,494
637
9,912
735
9,333
652
8,551
773
9,471
624
9,330
624
9,283
652
9,599
706
6,488
37
150
163
71
38
5,817
5,762
15
126
224
66
66
4,864
6,929
10
184
223
161
74
6,007
10,545
67
418
129
73
138
9,478
8,759
41
138
111
86
182
7,957
9,337
15
172
163
69
74
8,491
9,859
6
154
92
75
95
9,237
9,336
23
169
83
94
44
8,709
16
17
18
19
20
21
22
Payable in dollars
Payable in foreign currencies
By area or country
Financial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
31
32
33
34
35
36
37
38
39
40
41
42
43
5,989
3,988
3,260
3,970
3,964
3,779
3,329
2,883
10,234
4,771
102
53
4,206
293
134
8,216
3,306
6
100
4,043
215
125
7,846
2,698
6
78
4,571
180
48
9,438
2,806
19
105
6,060
173
40
9,207
2,624
6
73
6,078
174
24
9,547
3,945
3
71
5,128
164
23
7,539
2,572
6
103
4,349
167
22
7,491
2,507
2
102
3,687
173
18
Asia
Japan
Middle East oil-exporting countries 2
764
297
4
%1
353
13
731
475
4
715
365
2
1,320
999
11
1,193
931
11
779
439
10
1,105
721
10
Africa
Oil-exporting countries 3
147
55
210
85
103
29
84
18
85
28
84
19
58
9
71
14
All other 4
159
117
21
81
22
140
16
20
3,670
135
459
349
334
317
809
3,801
165
440
374
335
271
1,063
3,533
175
426
346
284
284
898
3,389
125
415
401
157
233
874
3,718
133
410
447
173
217
998
3,703
145
417
451
165
1%
1,070
3,850
137
435
531
182
187
1,071
4,114
168
411
550
199
208
1,224
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
829
1,021
1,023
960
928
927
927
903
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,695
8
190
493
7
884
272
2,052
8
115
214
7
583
206
1,753
13
93
206
6
510
157
1,686
29
132
202
23
317
192
1,981
28
170
235
51
411
234
1,944
11
157
217
25
445
171
1,878
14
153
202
17
346
201
1,844
12
125
226
20
365
188
52
53
54
Asia
Japan
Middle East oil-exporting countries
3,063
1,114
737
3,073
1,191
668
2,982
1,016
638
2,588
797
682
2,751
881
565
2,707
926
529
2,640
950
455
2,772
1,018
436
55
56
Africa
Oil-exporting countries3
588
139
470
134
437
130
470
168
495
135
432
141
379
123
407
123
57
All other 4
286
229
257
231
222
240
261
267
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.
Securities Holdings and Transactions
A65
3.24 FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1987
Transactions, and area or country
1985
1987
1986
Jan.Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
22,473
19,433
30,207
27,768
13,616
20,302
13,632
16,620
U.S. corporate securities
STOCKS
81,995
77,054
1 Foreign purchases
2 Foreign sales
148,114
129,395
248,887
232,613
18,687
17,054
23,645
21,883
24,774
24,554
3 Net purchases, or sales ( - )
4,941
18,719
16,273
1,634
1,763
220
3,040
2,438
-6,687
-2,988
4 Foreign countries
4,857
18,927
16,322
1,679
1,749
117
2,951
2,424
-6,639
-2,927
2,057
-438
730
-123
-75
1,665
356
1,718
238
296
24
168
9,559
459
341
936
1,560
4,826
816
3,031
976
3,876
297
373
1,864
903
-74
890
-1,162
517
1,116
1,318
-1,361
12,896
123
365
669
107
-155
232
-206
671
-238
2%
-26
1,009
-30
-1
717
66
-96
153
-80
635
255
387
-913
1,290
-14
27
81
-69
28
135
-325
125
-21
188
-255
171
16
-63
1,312
-15
-12
79
435
770
-46
157
135
1,242
20
132
138
58
380
-40
294
-624
238
-512
569
2,014
7
-30
-5,948
-541
-183
-169
-1,574
-3,407
181
-561
-83
-28
11
-211
-2,326
-395
-149
32
-741
-956
120
-46
-448
-160
-6
-61
84
-208
-48
-45
14
102
90
15
-48
-61
86,587
42,455
123,169
72,520
105,802
78,116
10,432
8,311
9,414
6,533
7,027
5,638
8,662
4,786
9,158'
7,275'
5,691
5,346
6,838
5,470
1,368
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
BONDS2
18 Foreign purchases
19 Foreign sales
20 Net purchases, or sales ( - )
44,132
50,648
27,686
2,121
2,881
1,389
3,876
1,883'
345
21 Foreign countries
44,227
49,801
26,945
2,030
2,872
1,548
3,836
1,874'
88
939
22
23
24
25
7,6
27
28
29
30
31
32
33
40,047
210
2,001
222
3,987
32,762
190
498
-2,648
6,091
11
38
39,313
389
-251
387
4,529
33,900
548
1,476
-2,961
11,270
16
139
22,143
195
-8
269
1,650
19,911
1,296
2,473
-551
1,630
16
-61
2,266
43
80
37
105
1,857
49
-4
-128
-169
8
8
2,328
64
116
-65
245
1,897
87
305
-166
301
1
15
1,616
26
-22
44
306
1,317
-8
44
-14
-93
-17
20
3,149
-37
-56
116
166
2,828
47
682
-87
52
-6
-1
922'
55
-98
36
136
1,012'
305
524
42
65
24
-9
417
-34
-26
-16
-39
379
68
-15
-92
-247
-10
-33
565
-12
17
1
-203
776
114
292
-20
-14
3
0
-95
847
740
91
9
-159
40
257
429
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
10
Foreign securities
35 Stocks, net purchases, or sales ( - )
36 Foreign purchases
37 Foreign sales
-3,941
20,861
24,803
-2,360
49,587
51,947
1,422
94,231
92,809
-257
8,781
9,038
-15
8,585
8,599
-373
8,674
9,047
448
8,657
8,208
2,053'
12,857'
10,804'
725
7,534
6,809
928
4,898
3,970
38 Bonds, net purchases, or sales ( - )
39 Foreign purchases
40 Foreign sales
-3,999
81,216
85,214
-3,555
166,992
170,548
-7,051
198,564
205,615
2,285
25,797
23,512
-588
16,303
16,891
-241
12,292
12,532
-674
12,923
13,597
-2,566'
18,118'
20,684'
-1,929
17,674
19,603
-1,153
12,399
13,552
41 Net purchases, or sales (—), of stocks and bonds
-7,940
-5,915
-5,629
2,028
-602
-614
-226
-513'
-1,204
-225
42 Foreign countries
-9,003
-7,000
-5,773
1,985
-329
-1,207
-546
253'
-1,104
90
43
44
45
46
47
48
-9,887
-1,686
1,797
659
75
38
-18,533
-876
3,476
10,858
52
-1,977
-11,800
-3,855
829
9,553
89
-590
-27
-489
106
2,513
6
-124
-572
-5%
-62
1,078
5
-182
-896
-484
83
224
5
-140
-510
-263
-20
82
14
150
-931'
-71
-152
1,333
16
59'
-1,591
-465
329
418
3
201
-354
133
4
193
10
105
1,063
1,084
144
44
-274
594
320
-767
-101
-314
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
International Statistics • April 1988
3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions
Millions of dollars
1987
Country or area
1985
1987
1986
Jan.Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
Transactions, net purchases or sales ( - ) during period'
1 Estimated total2
2 Foreign countries
2
3 Europe 2
4 Belgium-Luxembourg
5 Germany 2
6 Netherlands
7
Sweden .. s
8
Switzerland2
9
United Kingdom
10 Other Western Europe
11 Eastern Europe
12 Canada
13
14
15
16
17
18
19
20
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
All other
21 Nonmonetary international and regional organizations
22 International
23 Latin American regional
Memo
24 Foreign countries2
25 Official institutions
26 Other foreign2
27
28
Oil-exporting countries
Middle East 3
Africa 4
29,208
19,388
25,936
12,281
807
1,110
523
—l,262r
6,380
2,675
28,768
20,491
31,027
8,646
3,610
2,787
704
-5,527 r
7,676
4,290
4,303
476
1,917
269
976
773
-1,810
1,701
0
-188
16,326
-245
7,670
1,283
132
329
4,546
2,613
0
881
23,610
653
13,295
-911
233
1,925
3,955
4,479
-19
4,534
3,640
58
1,534
111
-183
585
617
913
5
413
4,453
-2
1,516
204
76
512
1,105
1,042
0
654
-1,007
366
780
-254
-153
-688
-431
-631
4
378
-1,167
-25
130
-296
-156
-99
-985
259
5
203
-954 r
165r
31
-707
4
-609
-642 r
804r
0
-389
6,340
-2
1,820
314
182
-297
3,163
1,158
3
679
1,282
-103
1,121
-76
51
-522
1,200
-391
1
720
4,315
248
2,336
1,731
19,919
17,909
112
308
926
-96
1,130
-108
1,345
-22
-54
1,067
-2,146
150
-1,096
-1,200
4,677
877
-56
407
780
-17
-514
1,311
3,531
4,199
-18
300
-673
-4
15
-684
-676
-597
20
-168
-675
30
-49
-656
4,318
1,839
-24
-204
-29
55
-155
72
1,762
799
3
-68
-117
-63
-227
173
-5,333
-5,272
2
1,263
472
35
367
69
1,476
1,757
-29
-1,260
-141
1
167
-309
2,429
2,020
49
-48
442
-436
18
-1,104
-1,430
157
-5,090
-4,177
3
3,635
3,517
3
-2,802
-2,875
0
-1,677
-1,722
0
-180
111
-10
4,265
4,326
0
-1,296
-1,492
0
-1,615
-1,620
0
28,768
8,135
20,631
20,491
14,214
6,283
31,027
31,176
-152
8,646
3,719
4,927
3,610
2,251
1,358
2,787
2,612
175
704
1,360
-657
-5,527'
2,437
-7,964'
7,676
1,857
5,819
4,290
1,789
2,502
-1,547
7
-1,529
5
-3,111
16
-857
1
107
0
329
0
-509
0
-695
-1
-891
-1
368
-1
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
A67
3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per year
Rate on Feb. 29, 1988
Rate on Feb. 29, 1988
Rate on Feb. 29, 1988
Country
Country
Month
effective
Month
effective
3.0
6.75
49.0
8.58
7.0
Dec. 1987
Jan. 1988
Mar. 1981
Feb. 1988
Oct. 1983
France
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
7.25
2.5
12.0
2.5
3.25
Jan. 1988
Dec. 1987
Aug. 1987
Feb. 1987
Jan. 1988
Norway
Switzerland
„
United Kingdom'
Venezuela
Percent
Month
effective
8.0
2.5
June 1983
Dec. 1987
8.0
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.
3.27 FOREIGN SHORT-TERM INTEREST RATES
Percent per year, averages of daily figures
1988
1987
Country, or type
1
? United Kingdom
3
4
5 Switzerland
6
7
8
9
10 Japan
1985
1986
1987
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
8.27
12.16
9.64
5.40
4.92
6.70
10.87
9.18
4.58
4.19
7.07
9.65
8.38
3.97
3.67
6.91
9.95
9.11
3.93
3.55
7.51
10.12
9.32
3.98
3.51
8.29
9.92
9.12
4.70
4.03
7.41
8.87
8.70
3.92
3.65
7.86
8.71
8.95
3.65
3.51
7.11
8.84
8.75
3.40
2.09
6.73
9.18
8.58
3.29
1.48
6.29
9.91
14.86
9.60
6.47
5.56
7.68
12.60
8.04
4.96
5.24
8.14
11.15
7.01
3.87
5.27
7.88
11.96
6.55
3.71
5.31
7.85
12.36
6.56
3.77
5.63
8.15
11.85
6.84
3.89
4.99
8.66
11.36
6.93
3.90
4.65
8.48
11.25
6.57
3.90
4.24
8.19
10.47
6.49
3.88
3.98
7.54
10.80
6.19
3.82
NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate.
A68
International Statistics • April 1988
3.28 FOREIGN EXCHANGE RATES
Currency units per dollar
1987
1985
Country/currency
1
2
3
4
5
6
Australia/dollar
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone
1986
1988
1987
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
70.026
20.676
59.336
1.3658
2.9434
10.598
67.093
15.260
44.662
1.3896
3.4615
8.0954
70.136
12.649
37.357
1.3259
3.7314
6.8477
72.68
12.765
37.657
1.3154
3.7314
6.9893
71.12
12.674
37.494
1.3097
3.7314
6.9262
68.60
11.843
35.190
1.3167
3.7314
6.4962
71.06
11.500
34.186
1.3075
3.7314
6.3043
71.11
11.635
34.576
1.2855
3.7314
6.3562
71.40
11.920
35.473
1.2682
3.7314
6.4918
7
8
9
10
11
12
13
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/punt1
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
4.4036
6.0121
1.7981
135.47
7.7985
12.943
148.79
4.3954
6.0555
1.8134
138.40
7.8035
12.993
147.54
4.3570
6.0160
1.8006
138.61
7.8077
12.995
148.72
4.1392
5.7099
1.6821
132.42
7.7968
12.972
158.08
4.0462
5.5375
1.6335
129.46
7.7726
12.934
162.63
4.0391
5.5808
1.6537
131.92
7.7872
13.040
160.64
4.1159
5.7323
1.6963
135.56
7.7978
13.065
156.87
14
15
16
17
18
19
20
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar1 . . .
Norway/krone
Portugal/escudo
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
1297.03
144.60
2.5185
2.0263
59.327
6.7408
141.20
1310.86
143.29
2.5189
2.0413
63.352
6.6505
142.94
1302.58
143.32
2.5308
2.0267
64.031
6.6311
142.82
1238.89
135.40
2.4989
1.8931
61.915
6.4233
136.84
1203.74
128.24
2.4944
1.8382
64.664
6.3820
133.77
1216.88
127.69
2.5400
1.8584
65.818
6.3538
135.87
1249.62
129.17
2.5812
1.9051
66.386
6.4167
138.84
21
22
23
24
25
26
27
28
29
30
Singapore/dollar
South Africa/rand 1
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound1
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
2.1059
49.081
825.93
123.54
29.471
6.3468
1.4918
31.756
25.774
163.98
2.0924
48.86
810.07
121.34
29.902
6.3844
1.5029
30.151
25.765
164.46
2.0891
48.79
808.47
118.60
30.347
6.3560
1.4940
30.036
25.783
166.20
2.0444
50.67
802.30
113.26
30.519
6.0744
1.3825
29.813
25.495
177.54
2.0127
51.22
798.34
110.80
30.644
5.9473
1.3304
29.004
25.249
182.88
2.0261
50.62
791.31
112.34
30.825
5.9749
1.3466
28.628
25.235
180.09
2.0185
48.73
776.85
114.36
30.859
6.0524
1.3916
28.665
25.324
175.82
143.01
112.22
96.94
97.23
96.65
91.49
88.70
89.29
91.08
MEMO
31 United States/dollar2 . . .
1. Value in U.S. cents.
2. Index of weighted-average exchange value of U.S. dollar against the
currencies of 10 industrial countries. The weight for each of the 10 countries is the
1972-76 average world trade of that country divided by the average world trade of
all 10 countries combined. Series revised as of August 1978 (see FEDERAL
RESERVE BULLETIN, v o l . 6 4 , A u g u s t 1978, p . 7 0 0 ) .
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.
A69
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
Issue
Anticipated schedule of release dates for periodic releases
SPECIAL
Page
December 1987
A77
July
October
February
April
May
August
November
February
February
May
September
January
November
February
A76
A70
A70
A70
A76
A70
A70
A76
A70
A70
A70
A70
A74
A80
TABLES
Published Irregularly, with Latest Bulletin
Reference
Assets and liabilities of commercial banks, December 31, 1986
Assets and liabilities of commercial banks, March 31, 1987
Assets and liabilities of commercial banks, June 30, 1987
Assets and liabilities of commercial banks, September 30, 1987
Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1986
Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1987
Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1987
Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1987
Terms of lending at commercial banks, November 1986
Terms of lending at commercial banks, February 1987
Terms of lending at commercial banks, May 1987
Terms of lending at commercial banks, August 1987
Pro forma balance sheet and income statements for priced service operations, June 30, 1987
Pro forma balance sheet and income statements for priced service operations, September 30, 1987 .
Special tables begin on next page.
1987
1987
1988
1988
1987
1987
1987
1988
1987
1987
1987
1988
1987
1988
A70
Special Tables • April 1988
4.20 DOMESTIC AND FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities'2
Consolidated Report of Condition, September 30, 1987
Millions of dollars
Banks with domestic
offices only8
Banks with foreign offices5-7
Item
Total
Total
6
1 Total assets
2 Cash and balances due from depository institutions
3 Cash items in process of collection, unposted debits, and currency
4 Cash items in process of collection and unposted debits and coin
5 Currency and coin
6 Balances due from depository institutions in the United States
7 Balances due from banks in foreign countries and foreign central banks
8 Balances due from Federal Reserve Banks
Foreign
Domestic
Over 100
2,894,489
1,684,802
441,058
1,296,832
803,068
406,619
328,029
233,616
73,102
n.a.
n.a.
37,255
103,562
19,697
125,439
1,858
n.a.
n.a.
22,757
100,565
258
108,178
71,244
59,488
11,756
14,498
2,997
19,439
61,028
24,871
16,407
8,464
21,284
4,673
10,200
33,384
i
T
1
n.a.
1
n.a.
n.a.
9,349
12,457
10,672
n.a.
1
MEMO
9
Under 100
T
Noninterest-bearing balances due from commercial banks in the United
States (included in balances due from depository institutions in the U.S.)
2,348,381
1,284,886
n.a.
n.a.
708,080
355,415
496, 588
202,781
27,242
175,539
173,136
120,672
302,730
n.a.
n.a.
107,629
64,907
42,722
786
581
205
106,843
64,326
42,517
108,696
64,732
43,965
86,405
n.a.
n.a.
64,103
n.a.
122,788
1,733
121,055
71,070
33,001
9,721
51,248
344
50,904
43,904
17,881
159
46
951
1
950
25,504
1,096
32,841
9,675
50,297
343
49,954
18,400
16,785
17,799
26,166
45,929
661
45,268
18,510
18,159
13,304
n.a.
25,611
727
24,884
8,656
7,240
37,456
3,759
14,122
26,023
8
1,089
24,408
3,751
13,034
1,615
2,619
15,541
351
863
7,793
130,388
1,782,977
14,814
1,768,163
46,580
179
1,721,404
65,748
1,058,176
6,553
1,051,624
35,088
178
1,016,357
257
224,842
1,972
222,870
n.a.
n.a.
n.a.
65,491
833,334
4,581
828,753
n.a.
n.a.
n.a.
41,408
507,238
5,637
501,600
8,063
1
493,537
23,233
217,563
2,624
214,939
3,429
0
211,511
570,590
i
270,494
18,433
1
n.a.
1
n.a.
1
65,049
n a.
n a.
n a.
58,880
22,600
4,730
31,550
28,204
1,063
212
26,930
t
252,061
77,476
1,561
96,511
8,828
67,685
30,676
21,537
4,518
4,621
202,322
31,460
3,884
95,133
5,942
65,904
5,293
4,345
786
162
97,774
7,895
8,673
53,561
2,013
25,631
877
n.a.
n.a.
n.a.
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
To U.S. addressees (domicile)
To non-U.S. addressees (domicile)
Acceptances of other banks
U.S. banks
31,001
577,911
n a.
n a.
3,332
n a.
n.a.
5,645
404,193
307,996
96,197
1,027
313
715
360
110,296
17,412
92,884
336
6
330
5,285
293,897
290,584
3,313
691
307
384
6,685
126,139
125,774
365
1,255
n.a.
n.a.
18,670
47,579
n.a.
n.a.
1,049
n.a.
n.a.
Loans to individuals for household, family, and other personal expenditures
(includes purchased paper)
Credit cards and related plans
Other (includes single payment and installment)
323,845
82,759
241,086
144,387
43,044
101,344
11,543
n.a.
n.a.
132,844
n.a.
n.a.
133,385
37,527
95,858
46,072
2,188
43,885
52 Obligations (other than securities) of states and political subdivisions in the U.S.
(includes nonrated industrial development obligations)
53
54
55
56 Loans to foreign governments and official institutions
57
Loans for purchasing and carrying securities
58
All other loans
59
54,679
1,615
53,064
127 838
n.a.
n a.
n.a.
n.a.
33,878
433
33,445
115,700
38,932
76,768
n.a.
n.a.
665
-183
848
50,781
35,907
14,874
n.a.
n.a.
33,213
615
32,597
64,919
3,025
61,894
19,373
42,521
18,285
1,038
17,247
9,700
228
9,472
1,977
7,494
2,516
144
2,372
2,439
n.a.
n.a.
n.a.
n.a.
28,733
36,864
43,761
10,729
2,498
35,512
n .a.
4,515
84,201
23,972
36,014
22,618
4,532
1,758
35,077
n.a.
2,893
63,409
4,224
17,085
1
19,748
18,929
n.a.
n.a.
n.a.
n.a.
35,070
n.a.
n.a.
4,174
660
13,840
3,441
677
409
n.a.
1,455
13,477
587
190
7,303
2,755
63
25
n.a.
168
7,316
10 Total securities, loans and lease financing receivables, net
11 Total securities, book value
12 U.S. Treasury securities and U.S. government agency and corporation
obligations
13
U.S. Treasury securities
14
U.S. government agency and corporation obligations
15
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
16
All other
17 Securities issued by states and political subdivisions in the United States
18
Taxable
19
Tax-exempt
20 Other securities
">1
22
All holdings of private certificates of participation in pools of
residential mortgages
23
All other
14
25
26
27
28
29
30
31
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
LESS: Allowance for loan and lease losses
LESS: Allocated transfer risk reserves
EQUALS: Total loans and leases, net
Total loans, gross, by category
32 Loans secured by real estate
33 Construction and land development
34 Farmland
35
1-4 family residential properties
36 Multifamily (5 or more) residential properties
37 Nonfarm nonresidential properties
38 Loans to depository institutions
39 To commercial banks in the United States
40 To other depository institutions in the United States
41 To banks in foreign countries
42
43
44
45
46
47
48
49
50
51
60
61
62
63
64
65
66
67
68
Lease financing receivables
Assets held in trading accounts
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs . . .
Intangible assets
n.a.
I1
1
t
A
T
t
1
n.a.
1
1
t
Commercial Banks
A71
4.20 Continued
Banks with domestic
offices only 5
Banks with foreign offices 3 ' 4
Total
Foreign
Total
Domestic
Over 100
Under 100
.,894,489
1,684,802
n.a.
803,067
406,619
70 Total liabilities
71
Limited-life preferred stock
.,717,730
84
1,601,815
67
441,846
n.a.
1,213,056
n.a.
744,938
16
370,977
1
72 Total deposits
73
Individuals, partnerships, and corporations
74
U.S. government
75
States and political subdivisions in the United States
76 Commercial banks in the United States
77 Other depository institutions in the United States
78
Banks in foreign countries
79
Foreign governments and official institutions
80
Certified and official checks
81
All other 8
.,229,527
1,206, 885
J
343,443
186,525
A
t
n.a.
1
T
31,002
779
125,138
863,442
763,834
4,000
36,607
33,060
5,141
7,967
1,761
11,075
661,372
601,890
2,037
38,986
10,449
2,598
154
236
5,021
361,271
329,997
833
24,974
1,821
1,153
n.a.
n.a.
2,464
28
308,721
250,889
3,161
7,921
23,383
3,927
7,344
1,021
11,075
194,067
171,036
1,566
8,821
6,100
1,447
66
8
5,021
97,208
86,719
634
6,451
547
384
n.a.
n.a.
2,464
10
246,031
189,766
3,148
6,371
23,383
3,926
7,337
1,020
11,075
125,468
106,566
1,548
4,720
6,098
1,443
66
8
5,021
554,721
512,946
839
28,686
9,677
884
8,794
1,214
623
4
620
740
467,305
430,854
471
30,165
4,349
806
3,542
1,150
88
4
84
228
53,390
46,983
618
2,394
546
376
n.a.
n.a.
2,464
10
264,062
243,277
200
18,524
1,274
n.a.
n.a.
770
n.a.
n.a.
n.a.
n.a.
18
69 Total liabilities, limited-life preferred stock, and equity capital
7
82 Total transaction accounts
83 Individuals, partnerships, and corporations
84
U.S. government
85
States and political subdivisions in the United States
86 Commercial banks in the United States
87 Other depository institutions in the United States
88
Banks in foreign countries
89
Foreign governments and official institutions
90
Certified and official checks
91
All other
92 Demand deposits (included in total transaction accounts)
93
Individuals, partnerships, and corporations
94
U.S. government
95
States and political subdivisions in the United States
96 Commercial banks in the United States
97 Other depository institutions in the United States
98
Banks in foreign countries
99 Foreign governments and official institutions
100 Certified and official checks
101 Allother
102 Total nontransaction accounts
103 Individuals, partnerships, and corporations
104
U.S. government
105 States and political subdivisions in the United States
106 Commercial banks in the United States
107
U.S. branches and agencies of foreign banks
108
Other commercial banks in the United States
109 Other depository institutions in the United States
110 Banks in foreign countries
111
Foreign branches of other U.S. banks
112
Other banks in foreign countries
113 Foreign governments and official institutions
114 Allother
115
116
117
118
119
120
121
122
Federal funds purchased and securities sold under agreements to repurchase..
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and agreement subsidiaries, and I B F s . . .
All other liabilities
Total equity capital 9
123
124
125
126
127
128
Holdings of commercial paper included in total loans, gross
Total individual retirement accounts (IRA) and Keogh plan accounts
Total brokered deposits
Total brokered retail deposits
Issued in denominations of $100,000 or less
Issued in denominations greater than $100,000 and participated out by the
broker in shares of $100,000 or less
Savings deposits
Money market deposit accounts (MMDAs)
Other savings deposits (excluding MMDAs)
Total time deposits of less than $100,000
Time certificates of deposit of $100,000 or more
Open-account time deposits of $100,000 or more
All NOW accounts (including Super NOW)
Total time and savings deposits
1
n a.
1
19,340
n a.
n a.
n.a.
n.a.
n.a.
234,089
n.a.
97,426
35,648
17,289
n.a.
76,405
176, 675
184,795
n.a.
77,682
35,213
14,899
n.a.
60,639
82,920
605
n a.
35,116
7,019
n.a.
n a.
n.a.
n.a.
184,190
21,701
42,566
28,194
n.a.
18,017
n.a.
n.a.
46,050
4,881
18,757
409
2,019
n.a.
11,450
58,114
3,244
764
987
25
370
n.a.
4,316
35,641
1,755
1,245
511
32,901
24,590
4,937
1,439
720
32,219
4,519
2,553
1,967
n.a.
15,948
627
459
391
n a.
n.a.
Quarterly averages
136 Total loans
137 Obligations (other than securities) of states and political subdivisions
in the United States
138 Transaction accounts in domestic offices (NOW accounts, ATS accounts, and
telephone and preauthorized transfer accounts)
Nontransaction accounts in domestic offices
139 Money market deposit accounts (MMDAs)
140 Other savings deposits
141 Time certificates of deposit of $100,000 or more
142 All other time deposits
143 Number of banks
Footnotes appear at the end of table 4.22
n. a.
n a.
MEMO
129
130
131
132
133
134
135
n.a.
J
1
32,763
11,854
n a.
n.a.
13,687
254
n.a.
3,497
586
68
166,942
71,546
137,990
151,138
27,106
58,475
617,410
129,345
68,833
177
88,272
3,987
65,713
535,903
55,939
34,895
129,451
42,163
1,614
41,893
307,880
796,738
491,920
211,743
33,971
18,065
n.a.
64,390
68,970
43,551
167,909
72,379
148,426
163,070
131,021
69,156
87,607
178,191
56,455
34,633
41,611
130,481
2,342
11,091
n.a.
A70
Special Tables • April 1988
4.21 DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices12-3
Consolidated Report of Condition, September 30, 1987
Millions of dollars
Members
Item
Total
1 Total assets6
2 Cash and balances due from depository institutions
3 Cash items in process of collection and unposted debits
4 Currency and coin
5 Balances due from depository institutions in the United States
6 Balances due from banks in foreign countries and foreign central banks
7 Balances due from Federal Reserve Banks
8 Total securities, loans and lease financing receivables, (net of unearned income)
9 Total securities, book value
10 U.S. Treasury securities
11 U.S. government agency and corporation obligations
12
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
13
All other
14 Securities issued by states and political subdivisions in the United States
1")
16 Tax-exempt
17 Other domestic securities
All holdings of private certificates of participation in pools of residential mortgages
18
19
All other
20 Foreign securities
Nonmembers
Total
National
State
2,099,900
1,705,750
1,334,944
370,807
394,149
169,206
75,896
20,220
35,782
7,669
29,638
141,480
69,692
16,718
24,862
5,797
24,411
108,781
52,099
13,787
20,046
4,491
18,358
32,698
17,592
2,931
4,816
1,306
6,054
27,727
6,204
3,502
10,920
1,873
5,227
1,785,926
1,437,867
1,138,567
299,300
348,060
348,674
129,058
86,481
267,957
99,874
64,707
209,949
79,852
52,755
58,007
20,022
11,952
80,718
29,184
21,774
50,640
35,841
96,226
1,004
95,222
34,944
6,369
28,575
1,966
41,940
22,767
76,391
703
75,688
25,272
5,125
20,147
1,713
33,493
19,262
56,185
588
55,597
20,636
3,171
17,466
521
8,447
3,505
20,206
115
20,091
4,636
1,955
2,681
1,192
8,701
13,073
19,835
301
19,534
9,672
1,244
8,428
252
106,899
90,524
65,607
24,917
16,374
1,340,572
10,218
1,330,353
1,087,160
7,773
1,079,386
868,932
5,922
863,010
218,228
1,851
216,375
253,412
2,444
250,968
454,383
108,935
5,445
191,644
14,770
133,589
25,883
5,304
4,782
11,971
347,823
88,933
3,669
144,031
11,507
99,683
22,351
5,060
4,699
9,542
295,467
72,878
3,226
123,305
10,010
86,048
16,881
3,769
2,698
8,444
52,356
16,055
444
20,726
1,497
13,635
5,469
1,292
2,001
1,098
106,559
20,002
1,776
47,613
3,263
33,905
3,532
244
83
2,429
420,036
416,358
3,678
347,701
344,332
3,369
269,420
266,696
2,723
78,281
77,636
645
72,335
72,026
309
1,946
758
452
1,366
553
355
1,218
482
334
147
71
22
581
205
97
41 Loans to individuals for household, family, and other personal expenditures
(includes purchased paper)
42 Loans to foreign governments and official institutions
43 Obligations (other than securities) of states and political subdivisions in the United States . . . .
44
45
Tax-exempt
46 Other loans
47
Loans for purchasing and carrying securities
48
266,229
3,252
51,498
1,653
49,844
71,366
21,350
50,015
215,473
3,102
43,113
1,150
41,963
65,473
19,483
45,990
175,345
2,111
32,333
1,003
31,330
44,116
11,613
32,503
40,128
991
10,780
147
10,633
21,357
7,870
13,487
50,756
151
8,385
503
7,881
5,893
1,868
4,025
49 Lease financing receivables
50 Customers' liability on acceptances outstanding
51 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs
52
23,922
27,752
35,070
117,015
21,457
26,844
31,570
99,560
17,130
19,286
23,482
68,310
4,328
7,558
8,087
31,250
2,465
908
3,501
17,455
21 Federal funds sold and securities purchased under agreements to resell
2,2 Total loans and lease financing receivables, gross
7,3 LESS: Unearned income on loans
24 Total loans and leases (net of unearned income)
75
26
77
28
29
30
31
32
33
34
Total loans, gross, by category
Loans secured by real estate
Construction and land development
1-4 family residential properties
Multifamily (5 or more) residential properties
Nonfarm nonresidential properties . .
Loans to commercial banks in the United States
Loans to other depository institutions in the United States
Loans to banks in foreign countries
Loans to finance agricultural production and other loans to farmers
35 Commercial and industrial loans
36 To U.S. addressees (domicile)
37 To non-U.S. addressees (domicile)
38 Acceptances of other banks 10
39
Of U.S. banks
Of foreign banks
40
Commercial Banks
A73
4.21 Continued
Members
Item
Nonmembers
Total
Total
National
State
53
Total liabilities and equity capital
2,099,900
1,705,750
1,334,944
370,807
394,149
54
Total liabilities7
1,957,994
1,592,985
1,247,168
345,817
365,009
55
56
57
58
59
60
61
62
63
Total deposits
Individuals, partnerships, and corporations
U.S. government
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and official checks
1,524,813
1,365,724
6,037
75,593
43,509
7,739
8,121
1,997
16,096
1,204,077
1,073,427
5,137
57,379
39,487
5,870
7,596
1,725
13,459
962,658
864,366
4,251
47,932
28,950
4,133
3,953
796
8,282
241,419
209,061
886
9,447
10,537
1,738
3,643
930
5,177
320,737
292,298
900
18,213
4,022
1,868
525
272
2,638
64
65
66
67
68
69
70
71
72
Total transaction accounts
Individuals, partnerships, and corporations
U.S. government
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and official checks
502,787
421,925
4,727
16,742
29,482
5,374
7,410
1,029
16,096
411,987
339,717
4,055
13,590
28,144
4,818
7,214
989
13,459
318,563
268,574
3,259
11,050
20,032
3,220
3,724
422
8,282
93,424
71,143
796
2,540
8,113
1,597
3,490
567
5,177
90,800
82,208
672
3,152
1,338
557
196
40
2,638
73
74
75
76
77
78
79
80
81
Demand deposits (included in total transaction accounts)
Individuals, partnerships, and corporations
U.S. government
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and official checks
371,500
296,332
4,696
11,091
29,480
5,369
7,404
1,028
16,096
311,449
243,475
4,028
9,329
28,143
4,816
7,207
988
13,459
234,303
187,805
3,236
7,584
20,031
3,219
3,720
421
8,282
77,146
55,670
792
1,745
8,113
1,597
3,488
567
5,177
60,051
52,857
668
1,762
1,337
553
196
40
2,638
87
83
84
85
86
87
88
89
90
91
9?
93
Total nontransaction accounts
Individuals, partnerships, and corporations
U.S. government
States and political subdivisions in the United States
Commercial banks in the United States
U.S. branches and agencies of foreign banks
Other commercial banks in the United States
Other depository institutions in the United States
Banks in foreign countries
Foreign branches of other U.S. banks
Other banks in foreign countries
Foreign governments and official institutions
1,022,026
943,800
1,310
58,851
14,026
1,690
12,336
2,364
711
8
703
968
792,090
733,710
1,081
43,789
11,342
1,049
10,294
1,053
382
6
376
737
644,095
595,792
992
36,882
8,918
998
7,920
912
229
4
224
374
147,995
137,918
90
6,907
2,424
50
2,374
140
153
1
152
363
229,936
210,090
228
15,061
2,684
642
2,042
1,311
329
2
327
232
94
95
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
230,241
26,583
61,322
28,603
2,019
18,017
84,413
206,736
24,457
52,548
27,696
1,230
16,630
76,242
158,744
19,542
38,142
20,100
1,102
9,840
46,880
47,993
4,915
14,405
7,5%
128
6,790
29,362
23,504
2,125
8,774
908
789
1,387
8,172
141,905
112,765
87,776
24,989
29,140
1,231
65,120
29,109
7,490
3,406
959
50,393
24,163
5,944
2,297
812
41,629
20,333
5,042
2,151
147
8,764
3,830
902
146
272
14,727
4,946
1,546
1,109
4,083
3,647
2,891
755
437
296,287
140,379
314,858
239,410
31,093
124,189
1,153,314
234,149
108,282
235,275
186,911
27,472
95,020
892,628
190,245
84,864
198,539
151,974
18,474
79,128
728,355
43,905
23,418
36,736
34,937
8,998
15,892
164,273
62,137
32,097
79,583
52,499
3,620
29,168
260,686
1,288,658
52,036
1,042,931
43,692
836,654
32,327
206,277
11,365
245,727
8,344
133,359
102,676
84,523
18,152
30,684
121
298,930
141,535
236,033
341,260
236,422
109,357
184,211
259,078
192,167
86,228
150,177
213,634
44,254
23,128
34,034
45,444
62,508
32,179
51,821
82,182
122
2,596
1,505
1,272
233
1,091
%
97
98
99
100
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs
101
MEMO
102
103
104
105
106
107
Holdings of commercial paper included in total loans, gross
Total individual retirement accounts (IRA) and Keogh plan accounts
Total brokered deposits
Total brokered retail deposits
Issued in denominations of $100,000 or less
Issued in denominations greater than $100,000 and participated out by the broker in shares
of $100,000 o r less
Savings deposits
108
Money market deposit accounts (MMDAs)
109
NO Total time deposits of less than $100,000
111 Time certificates of deposit of $100,000 or more
11? Open-account time deposits of $100,000 or more
113 All NOW accounts (including Super NOW accounts)
114 Total time and savings deposits
Quarterly averages
115
116
117
Obligations (other than securities) of states and political subdivisions in the United States
Transaction accounts (NOW accounts, ATS accounts, and telephone preauthorized
Nontransaction accounts
118
Money market deposit accounts (MMDAs)
119
170
Time certificates of deposit of $100,000 or more
Footnotes appear at the end of table 4.22
A70
Special Tables • April 1988
4.22 DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities'-2 3
Consolidated Report of Condition, September 30, 1987
Millions of dollars
Members
Nonmembers
Item
Total
National
State
2,506,519
1,876,616
1,474,812
401,805
629,903
202,590
24,402
32,478
145,710
156,250
18,498
19,112
118,640
121,201
15,250
15,483
90,467
35,050
3,248
3,629
28,173
46,340
5,904
13,366
27,070
6 Total securities, loans, and lease financing receivables (net of unearned income)
2,144,771
1,587,952
1,261,027
326,926
556,818
7 Total securities, book value
8
U.S. Treasury securities and U.S. government agency and corporation obligations
Securities issued by states and political subdivisions in the United States
9
469,347
301,945
121,837
1,731
120,106
45,566
7,232
38,333
130,131
1,558,135
12,842
1,545,293
316,383
198,812
86,671
965
85,706
30,900
5,521
25,379
101,338
1,179,140
8,909
1,170,231
249,575
160,436
64,642
804
63,838
24,497
3,441
21,056
74,615
943,674
6,837
936,837
66,808
38,376
22,029
162
21,868
6,403
2,080
4,323
26,723
235,466
2,072
233,394
152,963
103,132
35,166
766
34,400
14,665
1,711
12,954
28,793
378,995
3,933
375,062
552,156
116,830
14,118
245,205
16,783
159,220
388,962
92,421
6,647
166,958
12,342
110,593
328,925
75,731
5,620
141,802
10,696
95,076
60,037
16,689
1,028
25,157
1,646
15,517
163,194
24,409
7,471
78,247
4,441
48,627
36,846
30,641
467,615
2,996
32,641
16,253
368,706
1,869
23,835
13,744
286,476
1,646
8,806
2,509
82,230
223
4,205
14,388
98,909
1,127
312,302
54,014
1,798
52,216
77,057
24,509
27,777
35,070
131,381
235,319
44,112
1,210
42,901
69,604
21,675
26,854
31,570
105,559
191,522
33,170
1,050
32,120
47,052
17,304
19,294
23,482
73,291
43,797
10,942
160
10,782
22,553
4,371
7,561
8,087
32,269
76,983
9,902
587
9,315
7,453
2,834
923
3,501
25,822
38 Total liabilities and equity capital
2,506,519
1,876,616
1,474,812
401,805
629,903
39 Total liabilities7
2,328,971
1,749,086
1,375,118
373,968
579,885
40 Total deposits
41
Individuals, partnerships, and corporations
42
U.S. government
43
States and political subdivisions in the United States
44
Commercial banks in the United States
45
Other depository institutions in the United States
46
Certified and official checks
47
All other
1,886,084
1,695,721
6,870
100,567
45,330
8,892
18,561
10,147
1,355,751
1,212,351
5,482
66,925
40,628
6,440
14,587
9,339
1,087,193
978,489
4,546
55,772
29,818
4,608
9,199
4,765
268,558
233,862
937
11,153
10,810
1,832
5,388
4,574
530,333
483,369
1,388
33,642
4,702
2,451
3,973
808
48 Total transaction accounts
49
Individuals, partnerships, and corporations
50
U.S. government
51
States and political subdivisions in the United States
52 Commercial banks in the United States
53 Other depository institutions in the United States
54
Certified and official checks
55
All other
599,996
508,644
5,361
23,193
30,029
5,758
18,561
8,449
452,989
376,297
4,325
16,011
28,564
4,995
14,587
8,209
352,412
298,849
3,490
13,059
20,297
3,369
9,199
4,151
100,577
77,448
835
2,952
8,267
1,626
5,388
4,059
147,007
132,347
1,036
7,182
1,465
763
3,973
240
56 Demand deposits (included in total transaction accounts)
57
Individuals, partnerships, and corporations
58
U.S. government
59
States and political subdivisions in the United States
60
Commercial banks in the United States
61
Other depository institutions in the United States
62
Certified and official checks
63
All other
424,890
343,315
5,314
13,485
30,026
5,745
18,561
8,442
334,564
263,691
4,292
10,237
28,563
4,990
14,587
8,202
253,296
204,480
3,462
8,345
20,296
3,364
9,199
4,145
81,269
59,211
830
1,892
8,267
1,626
5,388
4,056
90,326
79,624
1,022
3,248
1,463
755
3,973
240
1,286,088
1,187,077
1,509
77,374
15,300
3,134
1,697
902,762
836,055
1,158
50,915
12,064
1,446
1,130
734,781
679,641
1,056
42,713
9,521
1,240
614
167,982
156,414
102
8,201
2,543
206
516
383,326
351,023
352
26,460
3,236
1,688
567
2 Cash and balances due from depository institutions
4
5
Noninterest-bearing balances due from commercial banks
Other
13
All holdings of private certificates of participation in pools of residential mortgages
14
All other
15 Federal funds sold and securities purchased under agreements to resell
16 Total loans and lease financing receivables, gross
17 LESS: Unearned income on loans
18 Total loans and leases (net of unearned income)
Total loans, gross, by category
19 Loans secured by real estate
20 Construction and land development
21
Farmland
22
1-4 family residential properties
23 Multifamily (5 or more) residential properties
24
Nonfarm nonresidential properties
25
26
27
28
29
30
31
32
33
34
35
36
Loans to depository institutions
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
Acceptances of other banks
Loans to individuals for household, family, and other personal expenditures
(includes purchased paper)
Obligations (other than securities) of states and political subdivisions in the United States
Nonrated industrial development obligations
Other obligations (excluding securities)
All other loans
Lease financing receivables
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs
64 Total nontransaction accounts
65
Individuals, partnerships, and corporations
66
U.S. government
67
States and political subdivisions in the United States
68
Commercial banks in the United States
69 Other depository institutions in the United States
70
All other
Commercial Banks
A75
4.22 Continued
Members
Nonmembers
Total
Item
Total
National
State
233,484
27,346
62,310
28,628
2,389
18,017
88,730
208,398
24,816
53,143
27,706
1,304
16,630
77,969
160,001
19,827
38,522
20,107
1,168
9,840
48,300
48,397
4,988
14,620
7,599
136
6,790
29,669
25,087
2,530
9,167
923
1,085
1,387
10,761
177,548
127,530
99,694
27,836
50,017
79 Assets held in trading accounts 10
80
U.S. Treasury securities
81
U.S. government agency corporation obligations
82
Securities issued by states and political subdivisions in the United States
83
Other bonds, notes and debentures
84
Certificates of deposit
85 Commercial paper
86
Bankers acceptances
87
Other
19,779
9,735
4,285
2,440
182
385
46
1,371
874
19,467
9,704
4,284
2,426
181
381
46
1,363
863
11,723
4,801
3,030
1,710
96
345
46
880
608
7,743
4,903
1,254
715
85
36
0
483
255
313
32
1
14
1
4
0
8
11
88 Total individual retirement accounts (IRA) and Keogh plan accounts
89 Total brokered deposits
90 Total brokered retail deposits
91
Issued in denominations of $100,000 or less
92
Issued in denominations greater than $100,000 and participated out by the broker in
shares of $100,000 or less
81,068
29,736
7,949
3,797
56,811
24,454
6,136
2,462
46,938
20,556
5,184
2,277
9,873
3,898
952
184
24,257
5,282
1,813
1,336
4,151
3,674
2,907
768
477
352,226
175,275
444,308
281,573
32,707
166,081
1,461,194
258,832
122,941
286,414
206,516
28,059
112,308
1,021,187
210,510
96,612
240,267
168,454
18,937
93,500
833,898
48,322
26,330
46,147
38,061
9,121
18,808
187,289
93,394
52,333
157,894
75,057
4,648
53,773
440,007
1,500,401
1,132,484
909,558
222,926
367,917
176,910
120,427
99,248
21,179
56,483
355,384
176,169
277,643
471,741
261,300
123,918
203,595
310,498
212,613
97,896
166,540
255,643
48,687
26,021
37,055
54,856
94,084
52,251
74,048
161,243
13,687
5,747
4,649
1,098
7,940
71
72
73
74
75
76
77
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs
Remaining liabilities
78 Total equity capital 9
MEMO
93
94
95
96
97
98
99
Savings deposits
Money market deposit accounts (MMDAs)
Other savings deposits
Total time deposits of less than $100,000
Time certificates of deposit of $100,000 or more
Open-account time deposits of $100,000 or more
All NOW accounts (including Super NOW)
Total time and savings deposits
Quarterly averages
100 Total loans
101 Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized
transfer accounts)
102
103
104
105
Nontransaction accounts
Money market deposit accounts (MMDAs)
Other savings deposits
Time certificates of deposit of $100,000 or more
All other time deposits
106 Number of banks
1. Effective Mar. 31, 1984, the report of condition was substantially revised
for commercial banks. Some of the changes are as follows: (1) Previously, banks
with international banking facilities (IBFs) that had no other foreign offices were
considered domestic reporters. Beginning with the Mar. 31, 1984 call report these
banks are considered foreign and domestic reporters and must file the foreign and
domestic report of condition; (2) banks with assets greater than $1 billion have
additional items reported; (3) the domestic office detail for banks with foreign
offices has been reduced considerably; and (4) banks with assets under $25 million
have been excused from reporting certain detail items.
2. The " n . a . " for some of the items is used to indicate the lesser detail
available from banks without foreign offices, the inapplicability of certain items to
banks that have only domestic offices and/or the absence of detail on a fully
consolidated basis for banks with foreign offices.
3. All transactions between domestic and foreign offices of a bank are
reported in "net due f r o m " and "net due to." All other lines represent
transactions with parties other than the domestic and foreign offices of each bank.
Since these intraoffice transactions are nullified by consolidation, total assets and
total liabilities for the entire bank may not equal the sum of assets and liabilities
respectively, of the domestic and foreign offices.
4. Foreign offices include branches in foreign countries, Puerto Rico, and in
U.S. territories and possessions; subsidiaries in foreign countries; all offices of
Edge act and agreement corporations wherever located and IBFs.
5. The 'over 100' column refers to those respondents whose assets, as of June
30 of the previous calendar year, were equal to or exceeded $100 million. (These
respondents file the FFIEC 032 or FFIEC 033 call report.) The 'under 100' column
refers to those respondents whose assets, as of June 30 of the previous calendar
year, were less than $100 million. (These respondents filed the FFIEC 034 call
report.)
6. Since the domestic portion of allowances for loan and lease losses and
allocated transfer risk reserve are not reported for banks with foreign offices, the
components of total assets (domestic) will not add to the actual total (domestic).
7. Since the foreign portion of demand notes issued to the U.S. Treasury is not
reported for banks with foreign offices, the components of total liabilities (foreign)
will not add to the actual total (foreign).
8. The definition of 'all other' varies by report form and therefore by column
in this table. See the instructions for more detail.
9. Equity capital is not allocated between the domestic and foreign offices of
banks with foreign offices.
10. Components of assets held in trading accounts are only reported for banks
with total assets of $1 billion or more; therefore the components will not add to the
totals for this item.
A76
Federal Reserve Board of Governors
Chairman
Vice Chairman
MARTHA R . SEGER
MANUEL H . JOHNSON,
WAYNE D . ANGELL
OFFICE OF BOARD
MEMBERS
DIVISION
ALAN GREENSPAN,
JOSEPH R. COYNE, Assistant
to the Board
DONALD J. WINN, Assistant
to the Board
LYNN SMITH F o x , Special Assistant to the Board
BOB STAHLY MOORE, Special Assistant to the Board
OF INTERNATIONAL
E D W I N M . T R U M A N , Staff Director
LARRY J. PROMISEL, Senior Associate
CHARLES J. SIEGMAN, Senior Associate
D A V I D H . H O W A R D , Deputy Associate
ROBERT F. GEMMILL, Staff
LEGAL
DIVISION
MICHAEL BRADFIELD, General
J. VIRGIL MATTINGLY, J R . ,
Counsel
SECRETARY
Adviser
D O N A L D B . A D A M S , Assistant
Director
PETER HOOPER I I I , Assistant
Director
K A R E N H . JOHNSON, Assistant
Director
RALPH W . S M I T H , J R . , Assistant
Director
DIVISION
OF RESEARCH
AND
Secretary
Secretary
DIVISION OF
CONSUMER
AND COMMUNITY
AFFAIRS
GRIFFITH L . GARWOOD,
Director
G L E N N E . L O N E Y , Assistant
Director
ELLEN M A L A N D , Assistant
Director
DOLORES S . S M I T H , Assistant
Director
Staff Director
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
A N T H O N Y C O R N Y N , Assistant
Director
JAMES I. GARNER, Assistant
Director
JAMES D . GOETZINGER, Assistant
Director
MICHAEL G . MARTINSON, Assistant
Director
ROBERT S . PLOTKIN, Assistant
Director
S I D N E Y M . SUSS A N , Assistant
Director
L A U R A M . HOMER, Securities Credit Officer
WILLIAM TAYLOR,
DON E . KLINE,
Director
ELEANOR J. STOCKWELL, Associate
Director
MARTHA B E T H E A , Deputy Associate
Director
PETER A . TINSLEY, Deputy Associate
Director
MARK N . GREENE, Assistant
Director
MYRON L . K W A S T , Assistant
Director
S U S A N J. LEPPER, Assistant
Director
MARTHA S . S C A N L O N , Assistant
Director
D A V I D J. STOCKTON, Assistant
Director
JOYCE K . ZICKLER, Assistant
Director
L E V O N H . G A R A B E D I A N , Assistant
Director
(Administration)
DIVISION
DIVISION OF
BANKING
SUPERVISION
AND
REGULATION
STATISTICS
MICHAEL J. PRELL, Director
E D W A R D C . E T T I N , Deputy
Director
JARED J. E N Z L E R , Associate
Director
THOMAS D . SIMPSON, Associate
Director
LAWRENCE SLIFMAN, Associate
WILLIAM W . WILES,
Secretary
BARBARA R. LOWREY, Associate
JAMES MCAFEE, Associate
Director
Director
Director
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
OFFICE OF THE
FINANCE
OF MONETARY
AFFAIRS
Director
Deputy Director
BRIAN F. M A D I G A N , Assistant
Director
RICHARD D . PORTER, Assistant
Director
DONALD L . KOHN,
DAVID E . LINDSEY,
NORMAND R.V. BERNARD, Special Assistant
OFFICE OF THE INSPECTOR
BRENT L. BOWEN, Inspector
GENERAL
General
to the
Board
All
and Official Staff
H . ROBERT HELLER
EDWARD W . KELLEY, JR.
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
PORTIA W . THOMPSON, Equal Employment
Opportunity
DIVISION OF FEDERAL
BANK
OPERATIONS
Programs Officer
DIVISION
THEODORE E. ALLISON, Staff
OF HUMAN
RESOURCES
MANAGEMENT
D A V I D L . S H A N N O N , Director
JOHN R . W E I S , Associate
Director
A N T H O N Y V . D I G I O I A , Assistant
Director
JOSEPH H . H A Y E S , J R . , Assistant
Director
F R E D HOROWITZ, Assistant
Director
Director
RESERVE
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
JACK D E N N I S , J R . , Assistant
Director
EARL G . H A M I L T O N , Assistant
Director
JOHN H. PARRISH, Assistant
OFFICE OF THE
CONTROLLER
LOUISE L . ROSEMAN,
FLORENCE M . YOUNG,
GEORGE E . LIVINGSTON, Controller
STEPHEN J. CLARK, Assistant Controller
(Programs
and Budgets)
DARRELL R . P A U L E Y ,
DIVISION
Assistant Controller
OF SUPPORT
(Finance)
SERVICES
ROBERT E . FRAZIER, Director
GEORGE M . L O P E Z , Assistant
D A V I D L . WILLIAMS, Assistant
Director
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
Director
Assistant Director
ELIZABETH B . RIGGS, Assistant
Director
ROBERT J. Z E M E L , Assistant
Director
BRUCE M . BEARDSLEY,
THOMAS C . J U D D ,
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 . STEVENS, Assistant
PATRICIA A . W E L C H , Assistant
DEVELOPMENT
Director
Director
Director
AND
Director
Assistant
Adviser
Director
78
Federal Reserve Bulletin • April 1988
Federal Open Market Committee
FEDERAL
OPEN MARKET
COMMITTEE
MEMBERS
A L A N GREENSPAN,
Chairman
E . GERALD CORRIGAN,
H . ROBERT HELLER
W . L E E HOSKINS
M A N U E L H . JOHNSON
W A Y N E D . ANGELL
ROBERT P . BLACK
ROBERT P . FORRESTAL
E D W A R D W . KELLEY, JR.
ROBERT T . PARRY
MARTHA R . SEGER
ALTERNATE
MEMBERS
THOMAS M . TIMLEN
THOMAS C . MELZER
FRANK E . MORRIS
ROGER GUFFEY
SILAS KEEHN
Vice Chairman
STAFF
DONALD L. KOHN, Secretary and Staff Adviser
NORMAND R . V . BERNARD, Assistant
Secretary
ROSEMARY R . LONEY,
Deputy Assistant
MICHAEL BRADFIELD, General
ERNEST T . PATRIKIS,
E D W I N M . TRUMAN,
Secretary
Counsel
Deputy General Counsel
Economist (International)
JOHN H. BEEBE, Associate
Economist
J. ALFRED BROADDUS, JR., Associate
Economist
PETER D . STERNLIGHT, Manager
SAM Y . CROSS, Manager for
FEDERAL
ADVISORY
JOHN M. DAVIS, Associate
Economist
RICHARD G. DAVIS, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
MICHAEL J. PRELL, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
THOMAS D . SIMPSON, Associate
Economist
Economist
SHEILA L. TSCHINKEL, Associate
for Domestic Operations, System Open Market Account
Foreign Operations, System Open Market Account
COUNCIL
CHARLES T. FISHER, III,
BENNETT A . BROWN,
J. TERRENCE MURRAY, First District
WILLARD C . BUTCHER, Second District
SAMUEL A . MCCULLOUGH, Third District
THOMAS H . O ' B R I E N , Fourth District
FREDERICK D E A N E , JR., Fifth District
BENNETT A . BROWN, Sixth District
President
Vice President
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
PAUL HAZEN, Twelfth District
HERBERT V . PROCHNOW,
Secretary
WILLIAM J. KORSVIK, Associate
Secretary
A79
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
STEVEN W . H A M M , Columbia, South Carolina,
E D W A R D J. WILLIAMS, Chicago, Illinois, Vice
NAOMI G. ALBANESE, Greensboro, North Carolina
STEPHEN BROBECK, Washington, D.C.
E D W I N B . BROOKS, JR., Richmond, Virginia
JUDITH N. B R O W N , Edina, Minnesota
MICHAEL S . CASSIDY, New York, New York
BETTY TOM C H U , Arcadia, California
JERRY D. CRAFT, Atlanta, Georgia
DONALD C. D A Y , Boston, Massachusetts
RICHARD B. DOBY, Denver, Colorado
RICHARD H . F I N K , Washington, D.C.
N E I L J. FOGARTY, Jersey City, New Jersey
STEPHEN GARDNER, Dallas, Texas
KENNETH A. H A L L , Picayune, Mississippi
ELENA G. HANGGI, Little Rock, Arkansas
THRIFT INSTITUTIONS
ADVISORY
ROBERT A . HESS, Washington, D.C.
ROBERT J. HOBBS, Boston, Massachusetts
RAMON E. JOHNSON, Salt Lake City, Utah
ROBERT W. JOHNSON, West Lafayette, Indiana
A . J. (JACK) K I N G , Kalispell, Montana
JOHN M. KOLESAR, Cleveland, Ohio
A L A N B. LERNER, Dallas, Texas
RICHARD L. D. MORSE, Manhattan, Kansas
WILLIAM E. ODOM, Dearborn, Michigan
SANDRA R. PARKER, Richmond, Virginia
SANDRA PHILLIPS, Pittsburgh, Pennsylvania
JANE SHULL, Philadelphia, Pennsylvania
RALPH E. SPURGIN, Columbus, Ohio
LAWRENCE WINTHROP, Portland, Oregon
COUNCIL
JAMIE J. JACKSON,
GERALD M. CZARNECKI,
ROBERT S. D U N C A N , Hattiesburg, Mississippi
BETTY GREGG, Phoenix, Arizona
THOMAS A. K I N S T , Hoffman Estates, Illinois
RAY MARTIN, Los Angeles, California
JOE C. MORRIS, Emporia, Kansas
Chairman
Chairman
Houston, Texas, President
Honolulu, Hawaii, Vice President
JOSEPH W. MOSMILLER, Baltimore, Maryland
JANET M. PAVLISKA, Arlington, Massachusetts
LOUIS H. PEPPER, Seattle, Washington
WILLIAM G. SCHUETT, Milwaukee, Wisconsin
D O N A L D B. SHACKELFORD, Columbus, Ohio
A80
Federal Reserve Board Publications
Copies are available from PUBLICATIONS SERVICES,
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THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. 1984. 1 2 0 p p .
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A N N U A L REPORT: B U D G E T REVIEW, 1 9 8 6 - 8 7 .
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BANKING AND MONETARY STATISTICS. 1 9 1 4 - 1 9 4 1 . (Reprint
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AND MONETARY
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1,168 pp. $15.00.
A N N U A L STATISTICAL DIGEST
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1981.
1982.
1983.
1984.
1985.
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THE FEDERAL RESERVE A C T , and other statutory provisions
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REGULATIONS OF THE BOARD OF GOVERNORS OF THE F E D ERAL RESERVE SYSTEM.
A N N U A L PERCENTAGE RATE TABLES (Truth in Lending—
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THE U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A
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WELCOME TO THE FEDERAL RESERVE.
PROCESSING A N APPLICATION THROUGH THE FEDERAL RESERVE SYSTEM. August 1985. 30 pp.
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440 pp. $9.00 each.
FINANCIAL FUTURES A N D OPTIONS IN THE U . S . ECONOMY.
December 1986. 264 pp. $10.00 each.
CONSUMER EDUCATION
PAMPHLETS
Short pamphlets suitable for classroom use. Multiple copies
are available without charge.
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection Laws
Fair Credit Billing
Federal Reserve Glossary
A Guide to Business Credit and the Equal Credit Opportunity
Act
Guide to Federal Reserve Regulations
How to File A Consumer Credit Complaint
If You Borrow To Buy Stock
If You Use A Credit Card
Series on the Structure of the Federal Reserve
System
The Board of Governors of the Federal Reserve System
The Federal Open Market Committee
Federal Reserve Bank Board of Directors
Federal Reserve Banks
Organization and Advisory Committees
FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY
UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one
address, $1.50 each.
THE BANK HOLDING COMPANY MOVEMENT TO 1978: A
COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to
one address, $2.25 each.
1980. 68 pp. $1.50 each;
10 or more to one address, $1.25 each.
PAMPHLETS FOR FINANCIAL
INSTITUTIONS
Short pamphlets on regulatory compliance, primarily suitable for banks, bank holding companies and creditors.
INTRODUCTION TO FLOW OF F U N D S .
Limit of 50 copies
A81
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
Closing the Loan: A Consumer's Guide to Mortgage Settlement Costs
Refinancing Your Mortgage
A Consumer's Guide to Lock-Ins
134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: A REVIEW OF THE LITERATURE, b y
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 , GERMANY, 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 BANK 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, AND 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 U N I T E D STATES, by Thomas D. Simpson and
Patrick M. Parkinson. August 1984. 20 pp.
140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF
THE LITERATURE, by John D . Wolken. November
STAFF STUDIES.-
Bulletin
Summaries Only Printed in the
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.
Staff Studies 115-125 are out of print.
1984. 38 pp. Out of print.
141. A COMPARISON OF DIRECT DEPOSIT AND 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
BY
COMMERCIAL
Rhoades. December
1984. 30 pp. Out of print.
143. COMPLIANCE COSTS AND 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.
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 MARKET 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 1975, 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 AND 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
REVIEW OF THE TECHNIQUES AND LITERATURE, b y
Kenneth Rogoff. October 1983. 15 pp.
133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVENTION, AND INTEREST RATES: A N EMPIRICAL INVESTIGATION, by Bonnie E . Loopesko. November
1983. Out of print.
144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CONSUMER CREDIT REGULATIONS: THE 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 AND SECTORAL EFFECTS OF
THE ECONOMIC RECOVERY TAX ACT: SOME SIMULATION 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.
151. RESPONSES TO DEREGULATION: RETAIL
PRICING FROM 1 9 8 3 THROUGH 1 9 8 5 , by
DEPOSIT
Patrick I.
Mahoney, Alice P. White, Paul F. O'Brien, and Mary
M. McLaughlin. January 1987. 30 pp.
152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A
REVIEW OF THE LITERATURE, by Mark J. War-
shawsky. April 1987. 18 pp.
A82
by Carolyn D. Davis
and Alice P. White. September 1987. 14 pp.
153. STOCK MARKET VOLATILITY,
1 5 4 . THE EFFECTS ON CONSUMERS A N D CREDITORS OF
PROPOSED CEILINGS ON CREDIT CARD INTEREST
RATES, by Glenn B . Canner and James T . Fergus.
October 1987. 783 pp.
155. THE F U N D I N G OF PRIVATE PENSION PLANS,
by Mark
J. Warshawsky. November 1987. 25 pp.
Bank Lending to Developing Countries. 10/84.
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.
REPRINTS OF BULLETIN
ARTICLES
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.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
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.
U.S. International Transactions in 1986. 5/87.
Measuring the Foreign-Exchange Value of the Dollar. 6/87.
Changes in Consumer Installment Debt: Evidence from the
1983 and 1986 Surveys of Consumer Finances. 10/87.
A83
Index to Statistical Tables
References are to pages A3-A75 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, 70-75
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, 70, 72, 74. (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, 71, 73, 75
Federal Reserve Banks, 10
Central banks, discount rates, 67
Certificates of deposit, 24
Commercial and industrial loans
Commercial banks, 16, 19, 70, 72, 74
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20, 70, 75
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
Number, by classes, 71, 73, 75
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, 70, 72, 74
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, 71, 73, 75
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 22
Turnover, 15
Depository institutions
Reserve requirements, 8
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 18-20, 21, 71, 73, 75
Federal Reserve Banks, 4, 10
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, 6, 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
A84
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, 7
Foreign central banks and foreign countries, 67
Money and capital markets, 24
Mortgages, 38
Prime rate, 23
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, 70
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, 70, 72, 74
Federal Reserve Banks, 4, 5, 7, 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, 6
Reserve requirements, 8
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 (See 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, 72
Real estate loans—Continued
Financial institutions, 26
Terms, yields, and activity, 38
Type of holder and property mortgaged, 39
Repurchase agreements, 6, 17, 19, 20, 21
Reserve requirements, 8
Reserves
Commercial banks, 18, 71
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, 26, 39, 40, 42. (See also
Thrift institutions)
Savings banks, 26, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See also 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 and Savings
and loan associations)
Time and savings deposits, 3, 13, 17, 18, 19, 20, 21, 71, 73,
75
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, 70, 72, 74
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)
A85
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK, Chairman
branch, or facility
Zip
Deputy Chairman
BOSTON*
02106 George N. Hatsopoulos
Richard N. Cooper
President
First Vice President
Frank E. Morris
Robert W. Eisenmenger
NEW YORK*
John R. Opel
To be announced
Mary Ann Lambertsen
E. Gerald Corrigan
Thomas M. Timlen
Buffalo
10045
14240
John T. Keane
PHILADELPHIA
19105
Nevius M. Curtis
Peter A. Benoliel
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Charles W. Parry
John R. Miller
Owen B. Butler
James E. Haas
W. Lee Hoskins
William H. Hendricks
Robert A. Georgine
Hanne Merriman
Thomas R. Shelton
G. Alex Bernhardt
Robert P. Black
Jimmie R. Monhollon
Bradley Currey, Jr.
Larry L. Prince
Roy D. Terry
E. William Nash, Jr.
Sue McCourt Cobb
Condon S. Bush
Sharon A. Perlis
Robert P. Forrestal
Jack Guynn
Robert J. Day
Marcus Alexis
Richard T. Lindgren
Silas Keehn
Daniel M. Doyle
Robert L. Virgil, Jr.
H. Edwin Trusheim
James R. Rodgers
Lois H. Gray
Sandra B. Sanderson
Thomas C. Melzer
James R. Bowen
Michael W. Wright
John A. Rollwagen
Marcia S. Anderson
Gary H. Stern
Thomas E. Gainor
Irvine O. Hockaday, Jr.
Fred W. Lyons, Jr.
James C. Wilson
Patience S. Latting
Kenneth L. Morrison
Roger Guffey
Henry R. Czerwinski
Bobby R. Inman
Hugh G. Robinson
Peyton Yates
Walter M. Mischer, Jr.
Robert F. McDermott
Robert H. Boykin
William H.Wallace
Robert F. Erburu
Carolyn S. Chambers
Richard C. Seaver
Paul E. Bragdon
Don M. Wheeler
Carol A. Nygren
Robert T. Parry
Carl E. Powell
Cincinnati
Pittsburgh
45201
15230
RICHMOND*
23219
Baltimore
Charlotte
21203
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
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
59601
64198
80217
73125
68102
75222
79999
77252
78295
SAN FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
1
Charles A. Cerino
Harold J. Swart1
Robert D. McTeer, Jr.11
Albert D. Tinkelenberg
John G. Stoides1
1
Delmar Harrison
Fred R. Herr1
James D. Hawkins11
Patrick K. Barron
Donald E. Nelson
Henry H. Bourgaux
Roby L. Sloan1
John F. Breen
James E. Conrad
Paul I. Black, Jr.
Robert F. McNellis
Enis Alldredge, Jr.
William G. Evans
Robert D. Hamilton
Tony J. Salvaggio1
Sammie C. Clay
Robert Smith, III1
Thomas H. Robertson
John F. Hoover1 2
Thomas C. Warren
Angelo S. Carella11
E. Ronald Liggett
Gerald R. Kelly1
*Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, N e w Jersey 07016;
Jericho, N e w York 11753; Utica at Oriskany, N e w York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West
Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202.
1. Senior Vice President.
http://fraser.stlouisfed.org/
2. Executive Vice President.
Federal Reserve Bank of St. Louis
A86
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
®
w
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
PUBLICATIONS
CONSUMER
CREDIT
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 resolve a billing error.
The Board also publishes the Consumer
Handbook
to Credit Protection Laws, a complete guide to consumer credit protections. This 44-page booklet ex-
Fair
Credit
Billing
hrrrr^
i
i
plains 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.
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 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.
The Securities Credit Transactions Handbook con-
tains 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.
@FedFRASER