Full text of Federal Reserve Bulletin : April 1990
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VOLUME 7 6 • NUMBER 4 • V APRIL 1 9 9 0 FEDERAL RESERVE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C . PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • 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 187 INDUSTRIAL PRODUCTION: 1989 DEVELOPMENTS AND HISTORICAL REVISION The Federal Reserve Board has completed the first comprehensive revision since 1985 of its index of industrial production, which now uses 1987 instead of 1977 as its reference period. This article reviews the recent performance of the industrial sector in light of the new data; presents highlights of the revision; and discusses areas in which the new estimates have shown changes in industrial production trends over the past thirteen years. 205 TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS In the period from November 1989 through January 1990, the dollar declined on balance against the mark and other European currencies, moving down 8V2 percent, 7lA percent, and 6 percent respectively against the German mark, Swiss franc, and British pound. It rose about 1 percent against both the yen and the Canadian dollar. On a trade-weighted basis, as measured by the staff of the Board of Governors, the dollar declined 53A percent. 209 INDUSTRIAL PRODUCTION Industrial production fell 1.2 percent in January after an increase of 0.2 percent (revised) in December. 211 STATEMENTS TO THE CONGRESS Wayne D. Angell, Member, Board of Governors, discusses issues related to the security of electronic funds transfer systems for large-dollar value transactions, before the Subcommittee on Telecommunications and Finance of the House Committee on Energy and Commerce, February 21, 1990. 215 Alan Greenspan, Chairman, Board of Governors, in conjunction with the Monetary Policy Report to the Congress, discusses monetary policy actions and plans in the context of both the current and projected state of the economy and longer-term objectives and the strategy for achieving them; he also addresses some issues raised by the increasingly international character of financial markets, before the Senate Committee on Banking, Housing, and Urban Affairs, February 22, 1990. (Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 20, 1990.) 222 Chairman Greenspan discusses recent proposals to return social security to a payas-you-go basis and to move its finances off budget and says that he is concerned that these proposals, if enacted, would hamper the efforts needed to meet our longer-term fiscal responsibilities and to provide for the needs of an aging population in a way that is equitable across generations, before the Senate Committee on Finance, February 27, 1990. 226 Chairman Greenspan reviews some of the main themes of the Monetary Policy Report to the Congress and some specific budgetary issues, including the proposal to return the social security system to a pay-as-yougo basis or to move social security off budget, and says that he hopes that the Congress will give special attention to the long-run needs of the economy in its deliberations on the budget, before the House Committee on the Budget, February 28, 1990. annual rates of about 8V2 and 51/2 percent respectively over the four-month period from November 1989 through March 1990. In light of the easing of reserve conditions over the course of recent months and the further slight easing at this meeting, the Committee decided to lower the intermeeting range for the federal funds rate by 1 percentage point to 6 to 10 percent. 231 ANNOUNCEMENTS Proposed regulation to set standards for appraisals conducted for state member banks and bank holding companies in federally related transactions; proposed regulation providing interim procedures for notifying the Board of changes in senior executive officers and directors at bank holding companies and state member banks that are newly chartered, undercapitalized, or in troubled condition. 241 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Hotline telephone number available for the Office of the Inspector General at the Board of Governors. Changes in Board staff. Ai FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of February 26, 1990. Admission of one state bank to membership in the Federal Reserve System. 233 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE At its meeting on December 18-19, 1989, the Committee adopted a directive that called for a slight easing of reserve conditions. In keeping with the Committee's usual approach to policy, the conduct of open market operations would be subject to further adjustment during the intermeeting period depending on progress toward price stability, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets. On the basis of such developments, slightly greater or slightly lesser reserve restraint would be acceptable during the period ahead. The reserve conditions contemplated at this meeting were expected to be consistent with growth of M2 and M3 at A3 Domestic Financial Statistics A46 Domestic Nonfinancial Statistics A55 International Statistics All GUIDE TO TABULAR PRESENTATION, STATISTICAL RELEASES, AND SPECIAL TABLES AH BOARD OF GOVERNORS AND STAFF A74 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS A76 FEDERAL RESERVE BOARD PUBLICATIONS A78 INDEX TO STATISTICAL TABLES A80 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A8i MAP OF FEDERAL RESERVE SYSTEM Industrial Production: 1989 Developments and Historical Revision Kenneth Armitage and Dixon A. Tranum, of the Board's Industrial Output Section in the Division of Research and Statistics, prepared this article. Rona J. McNeil provided research assistance. The Board of Governors of the Federal Reserve System has completed a revision of its index of industrial production. The index has been revised back to 1977, and it now uses 1987 instead of 1977 as its reference period. This discussion of the revision falls into two main parts. The first part reviews the recent performance of the industrial sector in light of the new data. The second part presents highlights of the revision and discusses areas in which the new estimates have shown changes in industrial production trends over the past thirteen years. Technical aspects of the revision appear in an appendix. 1. MAJOR INDUSTRIAL IN 1989 DEVELOPMENTS The revision to the industrial production index has altered only slightly the picture of major developments in the industrial sector during 1989. The revised index still shows that output decelerated markedly throughout 1989, after sizable advances in the preceding two years (table 1). Much of the slowdown in 1989 stemmed from a decrease in domestic purchases of goods made in the United States, particularly those relating to the motor vehicle industry. Some of this decline in demand for domestic goods was offset by further healthy gains in exports. In response to the slowing in overall demand, manufacturers quickly adjusted output to prevent a large buildup of inventories. This timely reaction helped prevent a significant contraction in overall industrial activity. Annual rates of change in industrial production, by major group, 1987-89' Percent 1987 1988 6.5 (5.8) 4.5 (5.0) Major market groups Products Materials 6.1 7.1 Major industry groups Mining Manufacturing Utilities Item Total industrial production1 1989 1989:H1 1989:H2 1.1 (1.6) 2.7 (2.7) -.4 (.5) 4.7 4.1 1.8 0 3.8 1.0 -.1 - 1.0 4.9 7.1 2.6 -.9 5.0 3.3 -.6 .9 5.5 -.7 2.9 4.3 -.6 -1.0 6.8 5.3 4.7 7.4 23.2 2.3 1.6 5.0 17.1 .3 -1.0 4.9 11.5 .2 -.2 1.7 15.3 .3 -1.7 8.3 7.8 MEMO Domestic purchases of goods and structures' U.S.-produced Foreign-produced Nonagricultural merchandise exports 1. Percent change from the final quarter of previous period to the final quarter of the period indicated. 2. Numbers in parentheses are from the previous, unrevised index. 3. Purchases in the United States of goods and structures wherever produced (defined as GNP for goods and structures plus merchandise imports less mer- chandise exports, farm inventories, and Commodity Credit Corporation inventory change). SOURCE. "National Income and Product Accounts," Survey of Current Business, vol. 70 (February 1990), various tables. 188 Federal Reserve Bulletin • April 1990 Nonetheless, the production adjustment resulted in a loss of manufacturing jobs. Factory employment, which had risen 90,000 in the first quarter of 1989, fell nearly 200,000 during the remainder of the year. About one-fourth of the decline occurred in the motor vehicle industry, and significant reductions were made in related industries, such as steel and metal stampings. Cutbacks in employment also occurred in electrical machinery, particularly in appliances and communication equipment. Although the adjustment of labor input to output changes was relatively prompt, the implied growth in productivity for production workers in manufacturing slowed in 1989 to about 2Vi percent, compared with the trend of about 4 percent per year that had prevailed since 1981. Motor Vehicles The most significant declines in industrial production last year occurred in motor vehicles and related industries (table 2). During much of 1989, dealers faced a persistent excess of stocks. In response, manufacturers of autos and light trucks adjusted production and offered more sales incentives during the year. Even so, by late autumn, inventories were still uncomfortably high in relation to the lackluster pace of sales. As a result, dealers became reluctant to place orders, and in late December the major producers of motor vehicles announced drastic cuts in output and increased their sales incen2. tives even further in an attempt to reduce inventories. The decline in the manufacture of cars by the domestic companies more than accounted for the overall drop in industrial output of autos in 1989. At the same time, foreign car companies increased their output of autos produced in the United States about 300,000 units. As a result, the share of these so-called transplants in total auto production rose to 15 percent from about 11 percent in 1988. Over the first half of 1989, the output of light trucks, most of which consumers purchase, although down somewhat from late 1988, remained relatively high. During the second half, however, it was slashed sharply. The output of medium and heavy trucks, all of which are included in business equipment, was weak throughout much of the year. The proportion of motor vehicles and parts in total industrial production in 1987 was about 43/4 percent. However, this proportion does not include the value added in production of various materials and equipment—including steel, rubber and plastics, machinery, chemicals, and textiles—that are used in assembling motor vehicles. Data from various sources suggest that the effect on total industrial output of these upstream industries is nearly equal to the direct effect of the change in motor vehicles and parts. Because of the lack of detailed statistics, monthly industrial production estimates are available for only some of the parts and materials Annual rates of change in the industrial production of motor vehicles, parts, and related materials, 1987-89' Percent Series 1987 proportion2 1987 1988 1989 1989: HI 1989:H2 Total 6.0 5.2 9.7 -10.1 -6.7 -13.5 Motor vehicles and parts Autos Trucks 4.7 1.6 1.1 3.9 -6.3 19.1 9.3 12.6 9.9 -11.1 -14.5 -11.4 -7.6 -12.9 -9.0 -14.4 -16.1 -13.7 Related materials Tires, original equipment Steel' Metal stampings4 .1 .3 1.0 6.3 6.7 9.8 13.7 14.6 9.7 -17.6 -21.5 -1.3 7.3 -14.0 -.8 -36.8 -28.3 -1.8 1. Percent change from the final quarter of the previous period to the final quarter of the period indicated. 2. Proportion of the total industrial production index derived from valueadded data from the 1987 Census of Manufactures. Details may not sum to totals because of rounding. 3. Steel mill products for consumer durables. In the 1989 shipments data published by the American Iron and Steel Institute, about 80 percent of steel shipments for use in the manufacture of durable consumer goods go to the motor vehicle industry. 4. According to the value-added data from the 1987 Census of Manufactures, about 50 percent of the output of this industry represents automotive stampings. Developments in Industrial Production used primarily in the manufacture of motor vehicles (table 2). The recent pattern of output in these industries parallels that for motor vehicles: After increasing rapidly in 1987 and over much of 1988, output of these parts and materials dropped sharply in 1989. In most cases, particularly in steel and tires, the largest reductions occurred late in the year. Industrial Production Vehicle Sector outside the Motor Industrial production excluding motor vehicles and related parts and materials rose at a relatively robust 3.4 percent annual rate during the first half of 1989 but leveled off in the second half (table 3). Some of the stagnation in the nonmotor-vehicle portion of industrial production reflected the influence of the motor vehicle sector on upstream industries that cannot be separated out. For example, the textiles used in making seats are included in total fabrics. Among final products, the slowdown over the year was widespread. During the first half of the year, particularly strong increases in the production of linens and curtains, cutlery, and toys and sporting goods boosted the growth in the output of consumer durables. Output of these goods grew further in the second half, but production of 3. 189 Other goods for the home, such as appliances, carpeting, and furniture, which had advanced during the first half of the year, sagged during the third quarter. In the fourth quarter, appliance production fell sharply, and furniture output remained weak. Growth in the output of nondurable consumer goods continued throughout 1989. The production of consumer paper products, particularly periodicals, books, and sanitary paper products, advanced noticeably over the year. The output of food continued to rise throughout the year, but clothing production, which had increased early in the year, weakened in the second half as imports picked up. The production of consumer chemical products—for example, drugs and medicines and soaps and toiletries—also increased late in the year after changing little, on balance, since the fourth quarter of 1988. The production of consumer fuel, mainly automotive gasoline, remained steady until late in the year when extremely cold weather caused temporary disruptions in production. The cold weather led to extraordinary demands for heating; and, as a result, the output of gas and electricity for residential use jumped sharply in December. During the first half of 1989, the output of business equipment, led by continued rapid growth in information-processing and related Annual rates of change of industrial production, by market group, excluding motor vehicles, parts, and related materials, 1987-89' Percent Series Total Products Final products Consumer goods Durable Nondurable Business equipment Information processing and related equipment Industrial equipment Transit equipment Other equipment Defense and space equipment Intermediate products Construction supplies Materials Durable Nondurable Energy 1987 proportion2 1987 1988 1989 94.0 57.6 42.9 24.5 4.1 20.4 6.6 6.3 5.6 3.1 6.4 2.3 4.1 4.4 4.8 3.9 4.4 3.9 1.9 2.7 2.9 2.7 2.1 2.8 3.4 4.7 5.4 2.9 5.1 2.4 .5 .7 .4 2.5 -.8 3.2 12.6 5.6 4.0 1.1 1.9 5.4 11.0 14.0 5.6 6.7 11.4 1.8 11.0 10.2 8.2 33.7 6.3 -3.1 4.1 6.3 1.8 1.9 4.1 -.2 11.0 13.5 6.0 19.6 6.7 1.8 -2.3 -.5 -2.3 -13.2 1.6 -2.2 14.7 6.0 8.4 6.7 2.9 2.6 2.0 1.2 2.6 1.9 1.5 .5 36.4 16.6 9.0 10.9 7.0 10.9 6.2 2.5 3.8 6.7 2.0 .3 .6 .3 1.1 .8 1.2 1.1 2.9 .2 0 -.5 -.7 1.5 1. Percent change from the final quarter of the previous period to the final quarter of the period indicated. 2. Proportion of the total industrial production index derived from value- 1989: HI 1989:H2 added data from the 1987 Census of Manufactures. Details may not sum to totals because of rounding. 190 Federal Reserve Bulletin • April 1990 equipment, particularly computers, was a significant source of strength to industrial production. 1 In the second half, the output of computers leveled out, and near the end of the year, new bookings for computers weakened. The output of the other types of information-processing and related equipment, including communications equipment and instruments, declined over the summer and then remained sluggish through the end of 1989. The output of the other major sectors within business equipment also rose sharply during the first half of 1989, but then declined, in most cases, during the second half. For example, production of industrial equipment, which includes machinery used in manufacturing, in mining, and in the generation and distribution of electricity, grew rapidly earlier in the year; but by summer, new orders for most of these goods had weakened. Producers reacted quickly and curtailed output over the remainder of the year. The rapid increase in the output of transit equipment other than motor vehicles during the first half of last year reflected mainly another surge in the production of commercial aircraft as order books remained full. However, a strike at the Boeing Company during October and November depressed commercial aircraft output in the fourth quarter; but production was back to normal in December, and capacity utilization returned to a very high level. The output of farm equipment, which is included in the category "other equipment," weakened during most of 1989 partially because of a curtailment in exports coupled with a large rise in imports. Toward the end of the year, exports rebounded somewhat, and production increased. Output of the remaining components of the "other equipment" category—office furniture and service equipment—increased early in the year and then weakened. After increasing during most of the 1980s, output of defense and space equipment declined in 1988 and then remained essentially unchanged in 1989. The weakness in the past two years has 1. Within the category of business equipment, new aggregates have been created (see table A.2 for their definition). Of the old groups, only transit equipment has been retained. resulted from the reduction in defense appropriations for hardware that began in 1986. The revised data for construction supplies indicate that a deceleration in output growth began in mid-1988, somewhat earlier than previously estimated. During 1989, the growth of production slowed to a 1 VA percent rate. This anemic pace is generally consistent with the softness observed throughout the year in outlays for both nonresidential and residential structures. The growth in the production of materials was similar to that of total products during 1987 and 1988. During 1989, while the output of total products slowed, the rate of growth in the production of materials decreased more sharply, the deceleration occurring mainly in durables production. For example, the production of parts used in the manufacture of equipment and the output of basic metals slowed during the first six months of 1989 and then flattened in the latter half of the year. Among nondurable materials industries, the output of textiles, mainly those used in making clothing, surged during the first half of 1989, after a sharp drop in 1988. Much of the rebound stemmed from increased orders from domestic apparel producers. However, the production of textiles declined in the second half of 1989, when most major users curtailed output. The production of chemical materials remained at a high level during 1989 after several years of rapid growth. Unlike the output of most products and materials, which in 1989 generally followed the path of demand, the output of chemical materials was limited to some extent by the high level of capacity utilization in this industry. Some expansion in capacity over 1989 lessened production constraints a bit; as a result, price pressures eased during the year. The situation was similar for paper materials: Output was well maintained, on balance, over 1989; and utilization rates, although a little lower than those in late 1988, remained quite high. Despite a weather-related surge in electricity generation and gas transmission late in the year, the output of energy materials remained sluggish over 1989 as crude oil production continued to decline. The oil spill in Alaska, which led to a temporary curtailment of oil flow through the Alaskan pipeline, aggravated the downward Developments in Industrial Production 1. Change in output of industries with above-average trade shares and of other manufacturing industries1 Percent Index, March 1973^100 Exchange value of the dollar against »G-10 currencies Industries with above-average trade shares •Other manufacturing industries 1983 1984 1987 1986 1985 1988 1989 1. Percent changes are from the fourth quarter of the previous year to the fourth quarter of the year indicated. Data are seasonally adjusted. The bar scale is on the left; the curve scale is on the right. trend in oil extraction. Despite a strike in the spring, the output at coal mines was little changed, on balance, over 1989. Foreign Trade and U.S. Performance Industrial Changes in foreign trade have heavily influenced recent developments in industrial production. Although in 1989 real net exports of the United States rose, they did so less rapidly than during the previous two years; the deceleration occurred during the second half of the year, when the growth of merchandise imports picked up while the growth in merchandise exports slowed. 2. Revised and earlier industrial production indexes1 Ratio scale, 1987 = 100 .^110 f f 100 Revised Earlier 1 1 1977 1 I 1 1 1 i 1981 1. Monthly data, seasonally adjusted. 1 1985 These developments related partly to an increase in the foreign exchange value of the dollar during much of 1988 and 1989: The change in the foreign exchange value of the dollar adversely influenced the competitiveness of U.S. goods in markets abroad as well as their ability to compete with imports in the domestic market. As a result of these developments, growth in those domestic industries with above-average volumes of trade relative to factory shipments slowed more sharply in 1989 than did that in other industries (chart l). 2 Important among the group of industries with above-average trade shares are producers of capital goods—such as computers and most other nonelectrical machinery, electronic components, and aircraft. Exports of these goods, in real terms, continued to expand rapidly in 1989, but imports accelerated. Other industries that typically are heavily influenced by changes in the overall terms of trade include materials, particularly chemicals, paper, textiles, and metals. Real net exports of nonagricultural industrial supplies rose about $12 billion in 1988 and 1989. However, all of the 1989 gain occurred during the first half of the year; real net exports of industrial materials, reflecting the weakness in demand for materials, actually fell nearly $4 billion in the second half. HIGHLIGHTS OF THE 1990 REVISION The revised index of industrial production shows slower growth from 1977 to 1989, on average, than previously reported (chart 2). The revision also 'Indicates that the recession in 1982 was somewhat less severe than originally estimated. These results stem from the incorporation into the index of available benchmark, annual, and monthly source data from 1977 to the present, including a revision of the Federal Reserve's index of industrial electricity use. The revision 90 80 1 191 I 1 1 1 1989 2. Trade shares were calculated (using data from 1985 on) by summing exports and imports and dividing by shipments. In general, data were gathered at the three-digit Standard Industrial Classification (SIC) level. Manufacturing industries were then divided into two groups—those with trade shares greater than the total manufacturing average and those with less. In terms of 1987 value added, the former group accounted for a little more than half of manufacturing. 192 Federal Reserve Bulletin • April 1990 also introduces new weights to aggregate the individual series into industry and market groups and has set 1987 as the comparison-base year, when all index numbers are equal to 100. These changes are outlined in the box "Summary of statistical revisions" and documented in greater detail in the appendix. The primary purpose of the 1990 revision was to include the latest available benchmark and annual information on the levels of the 250 basic series that now make up the index. When appropriate and where possible, the levels of the basic series in the industrial production index are determined by direct physical measures of output— for example, tons of primary aluminum ingot or barrels of motor gasoline. In many cases, however, comprehensive physical-product data are not available. In these cases, changes in output from one census year to the next for the basic series are derived from the indexes of production developed by the Census Bureau from the cen- suses of manufactures and minerals industries, which have been published every five years since 1939. The Census Bureau indexes—called benchmarks—capture the change in physical output of each represented industry by an indirect method—converting information on the value of shipments and inventory change into constant dollars. This revision to the Federal Reserve's industrial production indexes incorporates the Census Bureau's 1982 indexes of production. For its 1982 benchmark indexes of office and computing machines, the Census Bureau adopted the price deflator that the Commerce Department's Bureau of Economic Analysis (BEA) and the IBM Corporation developed jointly. This deflator, in turn, has been incorporated into the index of industrial production, and the result has been a significant upward revision of the growth rate in the nonelectrical machinery industry (chart 3). With the introduction of this deflator in the industrial production index, most major statistical Summary of statistical revisions, 1977-89 1990 revision Item Benchmark information Mining Latest monthly physical data from Department of Energy Annual physical data from Bureau of Mines through 1986 Previous index Same Annual physical data from Bureau of Mines through 1982 Manufacturing 1982 Census indexes of production Annual Survey of Manufactures for 1978-81 and 1983-86 Information from 1987 Census of Manufactures 1977 Census indexes of production Annual Survey of Manufactures for 1978-81 Utilities Latest monthly physical data from Department of Energy Latest monthly physical data from Department of Energy and American Gas Association Weighting 1977-81: 1977 weights 1982-86: 1982 weights 1987- : 1987 weights 1977- Base year 1987 1977 Series and structure modifications Textiles New series for cotton and synthetic fabrics, yarns, and fabric finishing Gas utilities All series based on data from Department of Energy Changes in market groups New aggregates compiled for business equipment : 1977 weights Some series based on data from American Gas Association and rest from Department of Energy Developments in Industrial Production 3. Revised and earlier industrial production indexes of nonelectrical machinery1 Ratio scale, 1987 = 100 100 jf Earlier . 80 60 ^Revised r i 1977 i1 1 1 1 t i l 1981 l 1985 1 1 1 I 1989 1. Monthly data, seasonally adjusted. series produced by U.S. government agencies measuring output now treat computers consistently. BE A initially introduced the deflator for computers, which incorporates both matchedmodel and hedonic components, in the National Income and Product Accounts in 1985.3 It accepted this new price measure on the basis of research conducted by several economists that indicated that conventional methods of calculating price indexes may not completely capture changes in quality in a rapidly evolving industry like computers. 4 An important feature of the 1990 revision of the industrial production index is the introduction of two new weight periods. Updated Census value-added weights have been used for 1982-86 and for 1987-90. Previously, the index used 1977 Census value-added weights for the entire period. In the index, series that measure the output of an individual industry are weighted according to their proportion in the total value-added output of all industries. If prices and costs changed uniformly across industries, different weight years in different periods would not be needed; but such factors do change. To represent as accurately as possible the relative price and cost structure of industries, the industrial production index, which extends back to 1919, is built for the most part in five-year chronological segments that are chainlinked to form a continuous index expressed as a percentage of output in a comparison-base year. Thus, the introduction of two new weight periods in the 1990 revision reflects more accurately the evolution of relative prices from 1977 to the present. Table 4 shows the value-added proportions used in the index for the period since 1963. The ten-point dip in 1982 in the proportion of manufacturing, accompanied by a similar rise in mining and utilities, partly reflects the elevated crude oil prices of the late 1970s and early 1980s. The relative proportions of mining and manufacturing shown for 1987 are closer to those of 1977, the previous reference year, and reflect in part a decline in the output of oil and gas extraction in 1982-87 and a softening of crude oil prices. Few modifications were made to the structure of the index and its monthly compilation as reported in Industrial Production—1986 Edition. Modifications that have been made to series in the index include a newly developed structure for the monthly measurement of textile mill products and the use of new annual and monthly data to measure output at gas utilities. Also, as mentioned previously, new aggregates within the category of business equipment have been created. Results 3. See, for example, Allan H. Young, "BEA's Measurement of Computer Output," Survey of Current Business, vol. 69 (July 1989), pp. 108-15; and David W. Cartwright, "Improved Deflation of Purchases of Computers," Survey of Current Business, vol. 66 (March 1986), pp. 7-10. 4. Rosanne Cole and others, "Quality-Adjusted Price Indexes for Computer Processors and Selected Peripheral Equipment," Survey of Current Business, vol. 66 (January 1986), pp. 41-50; and Ellen R. Dulberger, "The Application of a Hedonic Model to a Quality-Adjusted Price Index for Computer Processors," in Dale W. Jorgenson and Ralph Landau, Technology and Capital Formation (MIT Press, 1989). 193 of the Revision The average annual rate of growth for the total index is now 2.7 percent over 1977-89, or about 0.2 percentage point less than previously reported (table 5). Excluding office and computing machinery, the downward revision in the average annual growth rate of the index is 0.7 percentage point. Market Groups. The revision led to little change in the estimate of the overall growth of total 194 Federal Reserve Bulletin • April 1990 4. Proportions of value added in industrial production, by major market group and major industry group, selected years, 1963-87' Percent 1963 1967 1972 1977 1982 1987 100.00 100.00 100.00 100.00 100.00 100.00 Major market group Products, total Final products Consumer goods Durable Nondurable Total equipment2 Business Defense and space Intermediate products Construction supplies Business supplies Materials Durable Nondurable Energy 61.48 47.88 29.88 8.05 21.83 18.00 10.61 7.39 13.60 6.35 7.25 38.52 20.68 14.51 3.33 61.30 47.82 27.65 7.89 19.79 20.23 13.27 6.96 13.42 6.51 6.91 38.70 20.29 10.10 8.31 61.91 47.67 27.90 7.97 19.94 19.77 14.08 4.80 14.24 6.80 7.44 38.09 19.81 9.80 8.48 57.72 44.77 25.52 6.89 18.63 19.25 14.34 3.67 12.94 5.96 6.99 42.28 20.50 10.10 11.69 56.05 44.10 23.71 4.80 18.91 20.39 13.75 4.21 11.95 4.51 7.43 43.95 16.99 7.76 19.20 60.79 46.05 26.02 5.58 20.44 20.02 13.93 5.35 14.74 6.05 8.69 39.21 19.35 9.01 10.85 Major industry group Mining Metals Coal Oil and gas extraction Stone and earth minerals Manufacturing Durables Lumber and products Furniture and fixtures Clay, glass, and stone products Primary metals Fabricated metal products Nonelectrical machinery Office and computing machines Electrical machinery Transportation equipment Instruments Miscellaneous manufactures Nondurables Foods Tobacco products Textile mill products Apparel products Paper and products Printing and publishing Chemicals and products Petroleum products Rubber and plastics products Leather and products Utilities Electric Gas 7.09 .63 .77 4.91 .78 87.27 50.09 1.79 1.37 3.14 6.80 5.66 7.72 .73 7.58 9.74 1.78 1.59 37.18 9.73 .75 2.73 3.50 3.30 4.67 7.84 1.66 2.07 .93 5.64 4.32 1.31 6.36 .51 .69 4.40 .75 87.95 51.98 1.64 1.37 2.74 6.57 5.93 9.15 1.10 8.05 9.27 2.11 1.51 35.97 8.75 .67 2.68 3.31 3.21 4.72 7.74 1.79 2.24 .86 5.69 3.88 1.81 6.59 .58 ;91 4.44 .66 87.33 51.08 2.50 1.48 3.05 5.63 6.51 9.09 1.19 7.40 9.63 2.56 1.64 36.26 8.62 .64 2.84 3.27 3.16 4.89 7.85 1.47 2.82 .71 6.08 4.13 1.96 9.83 .50 1.60 7.07 .66 84.22 49.10 2.30 1.27 2.72 5.33 6.46 9.54 1.41 7.15 9.13 2.66 1.46 35.11 7.96 .62 2.29 2.79 3.15 4.54 8.05 2.40 2.80 .53 5.96 4.18 1.78 16.92 .29 1.68 14.39 .57 74.71 42.36 1.41 1.16 2.12 2.73 5.30 9.20 2.10 7.61 7.57 3.03 1.27 32.36 7.96 .81 1.67 2.35 3.00 4.90 6.81 1.99 2.45 .43 8.36 6.26 2.10 7.93 .32 1.22 5.73 .67 84.44 47.27 2.00 1.45 2.47 3.32 5.38 8.55 2.46 8.62 9.80 3.26 1.24 37.17 8.76 1.02 1.84 2.36 3.58 6.37 8.60 1.32 3.02 .30 7.63 6.01 1.62 Series Total 1. Details may not sum to totals because of rounding and the omission of some series. 2. Beginning in 1972, oil and gas well drilling is included in total equipment, but not in business equipment. Also, in 1972, prefabricated buildings were moved from intermediate products to total equipment. products: A slight upward revision in final products was about offset by a downward revision of about 0.8 percentage point per year in the less heavily weighted intermediate products group. The annual growth rate of materials production, which accounts for about 40 percent of the index, was revised down about 0.3 percentage point per year over the entire period of the revision. As a result, the disparity in rates of growth between total products and materials that began in the early 1980s is more pronounced than before the revision. Although the production of materials is more cyclical than that of products, from 1954 to 1980 their overall growth rates were similar. During the 1980s, however, domestic producers of raw materials faced stiffer competition from foreign producers. Moreover, the use of imported parts that are classified as materials—such as semiconductors, auto engines, and specialty steel—increased in the domestic assembly of final products, leading to a slower growth rate of domestically produced materials relative to products throughout the decade. Within the category of final products, the average Developments in Industrial Production 5. 195 Rates of growth in industrial production, by major market group, 1977-89 Average annual rate of growth, revised index (percent) Series Growth rate calculated with revised index minus growth rate calculated with earlier index 1977-82 1982-87 1987-89 1977-89 1977-82 1982-87 1987-89 1977-89 Total index Products, total Final products Consumer goods Durable Nondurable Total equipment Business Defense and space Intermediate products Construction supplies Business supplies Materials Durable Nondurable Energy .9 1.9 2.4 -.1 -4.3 1.2 5.5 5.2 6.0 .1 -2.7 2.2 -.5 -.5 - 1.1 -.1 4.1 4.7 4.4 3.4 7.8 2.2 5.4 6.5 8.8 5.9 6.7 5.4 3.3 6.4 4.0 -.1 4.0 4.2 4.5 3.3 3.9 3.1 6.0 9.1 -1.3 3.4 2.9 3.7 3.6 5.7 2.6 .7 2.7 3.4 3.6 1.9 2.0 1.9 5.5 6.4 5.9 3.0 2.1 3.7 1.7 3.3 1.6 0 .3 .4 .6 -.4 -.6 -.4 1.8 2.6 .1 -.3 -.2 -.3 .2 .7 -.4 -.3 -.6 -.4 -.2 -1.3 .1 -1.6 1.0 1.6 1.5 -1.2 -1.6 -.9 -.8 .6 - 1.4 .1 -.5 -.6 -.3 -1.2 .1 -1.6 .9 1.4 1.2 -1.4 -.8 -1.9 -.5 .1 -1.8 .3 -.2 -.1 .1 -.9 -.2 -1.1 1.3 2.0 .8 -.8 -.8 -.8 -.3 .5 -1.0 0 Excluding computers Total index Products, total Final products Business equipment Materials 0 .6 .8 0 -1.0 3.2 3.5 2.8 1.7 2.8 3.6 3.7 3.9 7.8 3.4 1.9 2.3 2.1 2.0 1.3 -.2 -.2 -.2 .3 -.1 -1.3 -1.3 -1.3 -2.0 -1.2 -.6 -.6 -.3 1.2 -.5 -.7 -.7 -.7 -.5 -.6 annual growth rate of consumer goods was revised down about 0.9 percentage point for the 1977-89 period, whereas that of equipment was revised up about 1.3 percentage points. The output of both durable and nondurable consumer goods is estimated to be lower, but the downward revision to nondurable goods is particularly significant. The estimates of the production of consumer foods, chemical products, and paper products were all revised downward substantially because of the incorporation of annual data. The revised annual growth rate of business equipment is quite a bit stronger than shown previously because of the sharply faster growth of office and computing machines. Excluding this series, business equipment was revised down and shows much slower growth for 1982-87. Output of defense and space equipment was revised up, on average. Even so, estimated production for 198789 declined. The downward revision to the intermediate products category was widespread among component series for construction and business supplies. The bulk of the revision occurred in the 1982-84 recovery period; for that period, the annual rate of growth of the new index is estimated at about 8 percent, about 4 percentage points less per year than that of the old index. In the materials sector, the growth of output of durable goods materials revised up about 0.5 percentage point, on net, with a substantial upward revision of 2 percentage points in equipment parts largely offset by a downward adjustment of nearly 1 percentage point in the growth rate of consumer durable parts. The market group of equipment parts includes several hightechnology components, such as computer and aircraft parts; the consumer durable parts aggregate includes several series related to motor vehicles, such as metal stampings and original equipment motor vehicle parts. Among nondurables, output in three series— textiles, paper, and chemicals—is now estimated to have risen much more slowly than estimated previously. In particular, the heavily weighted series for industrial organic chemicals revised down significantly. Comprehensive constantdollar data for many other chemical materials series also showed lower levels of output than previously reported. The revision made little change to the production of energy materials. Industry Groups. As table 6 shows, the revision for 1977-89 did not change the estimate for the average annual growth of manufacturing. Growth in the manufacturing of durable goods was up 196 Federal Reserve Bulletin • April 1990 6. Rates of growth in industrial production, by major industry group, 1977-89 Series Average annual rate of growth, revised index (percent) 1977-82 1982-87 1987-89 Mining Metals Coal Oil and gas extraction Stone and earth minerals 1.5 -3.1 3.7 1.8 -4.6 -1.8 2.8 1.8 -2.6 4.8 .3 18.5 2.8 -2.2 6.7 Manufacturing Durables Lumber and products Furniture and fixtures Clay, glass, and stone products Primary metals Fabricated metal products .9 1.1 -3.9 -.1 -2.9 -7.3 -2.1 5.5 6.6 8.2 6.2 4.4 3.7 3.7 Nonelectrical machinery Excluding computing and office machinery... Office and computing machines 7.2 -2.6 35.0 Electrical machinery Transportation equipment Instruments Miscellaneous manufactures Nondurables Foods Tobacco products Textile mill products Apparel products Paper and products Printing and publishing Chemicals and products Petroleum products Rubber and plastics products Leather and products Utilities 1977-82 1982-87 1987-89 1977-89 -.1 2.7 2.8 -.7 1.1 -.3 3.4 0 -.3 -3.6 -.1 1.1 -.1 .9 -1.4 -.7 4.2 .2 -.8 -1.2 -.3 2.6 0 .1 -2.3 4.4 5.3 1.4 2.6 3.9 4.5 3.6 3.4 4.1 1.9 3.0 1.2 -.9 1.2 .5 1.1 -.2 -1.0 -.7 .7 .7 -.2 .7 -1.3 -1.7 -1.5 -.6 -1.3 -.5 .4 -1.0 -2.2 1.7 .1 -2.4 0 .8 -.8 -1.5 -.6 .1 -.6 9.4 -.1 28.4 10.3 7.5 17.0 8.6 .1 29.1 4.3 .3 11.8 3.7 -3.4 18.9 .1 -2.2 6.3 3.4 -1.6 13.9 5.4 -2.6 4.9 -1.6 5.7 9.1 4.1 1.8 4.6 3.5 7.9 7.3 5.4 3.2 5.1 1.3 .2 .1 .3 .5 -.4 1.0 1.3 -.9 1.9 2.3 1.5 .3 .3 .8 .9 -.1 .6 2.1 .7 -1.9 -.3 3.9 2.7 -.3 3.8 2.1 3.1 2.6 -.5 1.0 2.1 2.4 2.4 .1 .9 1.1 -.5 -.7 -.3 .3 2.3 -1.4 - 1.0 0 -1.6 -2.1 -1.8 -1.1 .4 -1.7 .6 -1.1 -.9 -.1 -.8 .2 1.0 3.2 -.4 -3.1 .4 -4.0 4.1 5.9 4.1 2.3 8.7 -7.2 1.6 4.3 4.2 3.0 4.3 1.6 2.4 4.5 2.2 .1 4.4 -4.4 -.8 -.6 -1.1 .2 -1.6 0 -1.6 -1.6 -2.1 .2 .5 -1.2 -1.1 -3.8 -2.7 1.0 -1.0 1.4 -1.2 -1.5 -1.8 .3 -.7 -.3 .4 1.7 3.4 1.4 -.5 .7 .9 .2 somewhat less than 1 percentage point, and that of nondurable goods was down about 1 percentage point. Output in mining and utilities changed little. Much of the downward revision within manufacturing occurred in foods, textiles, lumber, furniture and fixtures, paper, printing and publishing, chemicals, and nonelectrical machinery other than office and computing machinery. For these industries, annual rates of growth between 1977 and 1989 were revised down from 3A of a percentage point to l3/4 percentage points. The growth rates of three individual series within the machinery group—construction and mining machinery, metalworking machinery, and general industrial machinery—revised down between 2Vi and 3!/2 percentage points by 1989. Offsetting these downward revisions were a striking upward revision in office and computing machinery and noticeable upward adjustments to output growth in transportation equipment and instruments. Growth rate calculated with revised index minus growth rate calculated with earlier index 1977-89 Implied Production-Worker and Kilowatt-Hour Productivity The revision caused little change in overall measures of production-worker productivity (that is, output per hour worked) in the industrial sector and in manufacturing for 1977-89 (table 7). Over the period, the annual rate of productivity growth for total industrial production remained about 3 percent, and that for manufacturing remained about 3Vz percent. This apparent stability in the aggregate masks two offsetting underlying developments—a large upward revision to the measure of output per hour in the computer industry and smaller downward revisions in a variety of other industries. Consequently, output per hour for the total industrial sector excluding office and computing machinery was revised down nearly half a percentage point. Output per kilowatt hour trended downward Developments in Industrial Production 7. 197 Average annual rate of growth in output per production-worker hour and in output per kilowatt hour, 1977-89 Percent Item Output per production-worker hour Output per kilowatt hour Unrevised Revised Unrevised Revised Total index Manufacturing Foods Tobacco products Textile mill products Apparel products Lumber and products Furniture and fixtures Paper and products Printing and publishing Chemicals and products Petroleum products Rubber and plastics products Leather and products Clay, glass, and stone products Primary metals Fabricated metal products Nonelectrical machinery Electrical machinery Transportation equipment Instruments Miscellaneous manufactures 3.0 3.4 3.1 2.1 3.7 2.0 2.5 3.8 3.4 3.0 3.0 1.3 2.5 1.1 2.1 3.9 2.9 5.9 4.4 2.9 3.1 2.7 2.9 3.5 2.2 2.1 3.4 2.1 1.5 2.3 2.3 1.5 1.2 1.6 1.8 .7 1.5 3.8 2.3 9.6 4.6 4.0 3.7 2.6 2.1 2.5 .9 0 .9 - 1.5 -.5 1.1 1.3 1.0 4.5 - 1.5 1.4 -4.1 1.1 -.2 -.6 3.0 2.2 .8 -.6 .7 1.8 2.5 0 -.1 .1 -1.3 -1.2 -.3 .2 -.5 2.7 -1.2 .8 -4.4 .5 -.1 -1.2 6.2 2.4 1.5 .3 .6 Excluding computers Total index Manufacturing Nonelectrical machinery 2.6 3.0 2.7 2.1 2.5 1.1 iBftpBiS? 1.7 2.1 .5 1.1 1.6 - 1.0 during the 1960s; but, spurred by higher oil prices, it began an upward trend in the 1970s.5 As table 7 shows, the upward trend has continued through the 1980s, as kilowatt-hour productivity in the total industrial sector increased at an average annual rate of nearly 2 percent from 1977 to 1989. Gains in four large industries—chemicals, nonelectrical machinery, electrical machinery, and transportation equipment—accounted for much of the advance in the total. Elsewhere, kilowatt-hour productivity grew little or declined. vented an excessive buildup of factory inventories. The revision indicates that the rate of growth of total industrial production over 1977-89 was slower than it appeared in the previous index. However, the revised index shows the growth rate for 1977-82 to be stronger and the 1982 recession to be milder than previously estimated. For 1982 to date, the annual average growth rate has been revised down more than 0.5 percentage point, and the index now shows growth of output in the industrial sector at a rate of about 4 percent per year. SUMMARY Industrial output weakened over the course of 1989, particularly during the second half. While the most pronounced declines occurred in motor vehicles and related industries, the output of other industries slowed significantly as both domestic and foreign demand softened. The response by producers to the overall slowing in demand in 1989 was relatively rapid and, on balance, pre5. Board of Governors of the Federal Reserve System, Industrial Production—1986 Edition (Board of Governors, 1986), p.39. APPENDIX As the text indicates, the most important aspect of the 1990 revision is the benchmarking of many of the indexes of industrial production to the valueadded-weighted production indexes from the 1982 Indexes of Production developed by the Census Bureau. "Benchmarking" is the process of adjusting the 250 components of the monthly industrial production index to annual levels derived A.l. Industry structure and composition of industrial production: classification, value-added weights, and description of selected series Value added3 Classification2 1977 Group and series' SIC code Textile mill products Fabrics Cotton and synthetic fabrics Wool fabrics* Narrow fabrics* Knit goods Hosiery Knit garments Market 1987 1982 Millions of dollars Proportion of total industrial production Millions of dollars Proportion of total industrial production Millions of dollars Proportion of total industrial production Type of series* 22 221-4 221,2 Mnt 16,105 5,399 4,735 2.29 .77 .68 18,549 5,940 5,126 1.67 .53 .46 25,705 7,371 6,254 1.84 .53 .45 Prod. 223 Mnt 313 .04 349 .03 507 .03 Kwh Pwh 224 225 2251,2 2253,4, 1Q 351 .05 465 .04 610 .04 Cc 3,863 859 .55 .12 4,985 1,395 .45 .13 6,103 1,729 .44 .12 Prod. Cc 3,004 .43 3,590 .32 4,374 .31 Kwh 1,590 .14 2,308 .16 Prod. Mnt Fabric finishing 226 Mnt 1,417 .20 Carpeting Woven carpets* Tufted carpeting* 227 2271,9 2272 Ch Ch 1,530 92 1,438 .22 .01 .20 1,712 127 1,585 .15 .01 .14 3,181 248 2,933 .23 .02 .21 Prod. Prod. Yarns and miscellaneous textiles . . . . Yarns and thread* 228,9 228 3,896 2,255 .55 .32 4,322 2,318 .39 .21 6,742 3,822 .48 .27 Prod. Kwh Miscellaneous textiles* Gas utilities* Gas transmission* Sales, gas* Residential gas* Nonresidential gas* Industrial gas* Commercial and other gas* 229 Mnt 492,493pt Me Cs Me lb 1,641 .23 2,004 .18 2,920 .21 12,548 1.78 17,839 2.10 15,820 1.62 4,465 .63 9,756 .88 7,737 .55 8,083 3,296 4,787 3,251 1,536 1.15 .47 .68 .46 .22 13,600 5,100 8,500 5,848 2,652 1.22 .46 .77 .53 .24 14,898 7,732 7,166 3,635 3,531 1.07 .55 .51 .26 .25 1. Series with asterisks are included in published totals but are not shown separately in the monthly report. 2. SIC numbers are from the Standard Industrial Classification Manual, 1977 edition, published by the U.S. Office of Management and Budget. The abbreviation "pt" means part. Market classifica- Units, composition, source for series, and beginning date 1947 1954 Index, production of broadwoven goods, American Textile Manufactures Institute (ATMI); shipments, pounds, filament fibers from Fiber Economics Bureau. 1954; two series before 1982 Linear yards, wool apparel fabrics (gray), Census Bureau, 1954-76. 1954 1972 1954 Pairs, weighted combination of total hosiery and pantyhose, National Association of Hosiery Manufactures. 1954 Production-worker hours for 1954-62. 1954 Index, production of broadwoven goods by weaving mills, ATMI; linear yards, finished cotton, finished synthetic, and silk fabrics, Census Bureau for 1954-81. 1954 1954 Square yards, Carpet and Rug Institute, 1954 Square yards, Carpet and Rug Institute; Productionworker hours for 1954-62; kilowatt hours for 1963-66. 1954; two series before 1977 1954 Tons, consumption of cotton and synthetic fibers, Census Bureau, 1954 Production-worker hours for 1954-62. 1954 Department of Energy (DOE). 1947 Prod. Cubic feet, sales by major pipeline companies of gas for transmission adjusted to annual data for marketed gas production. 1967 Prod. Cubic feet, sales, DOE. 1954 Prod. Prod. Cubic feet, sales, DOE. 1954 Cubic feet, sales, DOE. 1954 tion codes are as follows: Mnt—textile, paper, and chemical materials; Cc—clothing; Ch—home goods; Me—energy materials; Cs-consumer staples; and lb—business supplies. 3. Details may not sum to totals because of rounding. 4. Prod.-physical product data; Kwh-kilowatt-hour data; Pwh-production-worker-hour data. Developments in Industrial Production A.2. 199 Market structure of business equipment: classification and weights Value added3 Classification2 1977 Group and series' SIC code Business equipment 1982 1987 Market Millions of dollars Proportion of total industrial production Millions of dollars Proportion of total industrial production Millions of dollars Proportion of total industrial production Eb 101,027 14.34 152,856 13.75 194,563 13.93 Ebi Information processing and related equipment Office and computing machines* Telephone apparatus* Nondefense electronic communication equipment* Scientific and optical goods* Medical instruments* Copiers and related equipment* 357pt 3661 27,897 8,213 4,192 3.96 1.17 .60 54,635 18,148 7,121 4.92 1.63 .64 77,762 27,074 6,809 5.57 1.94 .49 3662pt 381,3 384 386 3,313 2,185 3,262 6,732 .47 .31 .46 .96 7,059 4,469 6,978 10,860 .63 .40 .63 .98 11,768 7,540 11,496 13,075 .84 .54 .82 .94 Industrial equipment Boiler shop products* Turbines Construction and mining equipment Materials handling machinery* Metal working machinery* Special industry machinery* General industrial equipment* 3443 3511 3531-3 3534-7 354 355 3561, 3-5, 41,205 4,075 1,553 9,200 2,635 8,747 5,271 6,388 5.85 .58 .22 1.31 .37 1.24 .75 .91 55,636 4,136 2,153 13,173 3,317 11,284 7,416 9,573 5.00 .37 .19 1.18 .30 1.01 .67 .86 56,389 3,395 1,967 11,675 3,837 13,006 9,590 7,225 4.04 .24 .14 .84 .27 .93 .69 .52 3,336 .47 4,584 .41 5,694 .41 Ebt 17,559 4,630 2,870 646 3,539 1,952 2,039 1,883 2.49 .66 .41 .09 .50 .28 .29 .27 22,946 4,976 2,555 592 6,591 3,853 3,961 418 2.06 .45 .23 .05 .59 .35 .36 .04 34,428 9,390 7,950 1,117 6,330 7,505 852 1,284 2.46 .67 .57 .08 .45 .54 .06 .09 Ebo 14,366 3,294 5,490 5,582 2.04 .47 .78 .79 19,639 5,795 6,146 7,698 1.77 .52 .55 .69 25,984 9,888 5,624 10,472 1.86 .71 .40 .75 Electrical distribution equipment* Ebn 361 Transit equipment Autos, business Trucks, business Truck trailers Commercial aircraft* Commercial aircraft equipment n.e.c.* Commercial ships* Railroad equipment 371pt 371pt 3715 372 lpt 3724, 8pt 373 lpt 374 Other equipment Fixtures and office furniture Farm and garden equipment Service industry equipment* 252, 4, 9 352 358pt «|. See table A.l, note 1. N.e.c. means not elsewhere classified. 2. See table A.l, note 2. Market classification codes are as follows: Eb— business equipment; Ebi-information processing and related equipment; Ebn—industrial equipment; Ebt—transit equipment: and Ebo—other equipment. 3. Details may not sum to totals because of rounding. from data sources more comprehensive than those available for the monthly compilation. "Value-added-weighted production index" refers to the concept of production to which the index of industrial production, as a measure, most closely adheres. This concept is known as "Census value added;" from the sum of the gross outputs of each industrial establishment it excludes the flows among establishments within the industrial sector and the inputs from other sectors. 6 The 1990 revision also incorporates a considerable amount of other new benchmark information. The general sources of this information are presented in the summary of statistical changes (see box). This appendix documents more fully the way in which the revision uses this information; it also evaluates the effect of the new weights. The structure of the basic series and the monthly source data used in the compilation of the monthly index are fundamentally unchanged, so the appendix does not present the complete series structure. Descriptions of several additions—the new textile industry series, the new source in gas utilities, and the new business equipment aggregates—appear in tables A. 1 and A.2. A copy of the complete 1990 index of industrial production structure and series composition is available upon written request to Industrial Output Section, Mail Stop 82, Division of Research 6. Census value-added data do not exclude outlays for business services purchased outside the industrial sector, such as advertising, insurance, and the like. For a discussion of concepts of industrial production, see Clayton Gehman and Cornelia Motheral, "Industrial Production Measurement in the United States: Concepts, Uses, and Compilation Practices" (reply to an inquiry from the Economic Commission of Europe, Board of Governors of the Federal Reserve System, Division of Research and Statistics, February 1964). 200 Federal Reserve Bulletin • April 1990 and Statistics, Federal Reserve Board, Washington, D.C. 20551. Benchmark and Annual Data The Census value-added-weighted production indexes are used at the four-digit Standard Industrial Classification (SIC) level, yielding measures of change in industry output from 1977 to 1982. For years in which Census indexes are unavailable, 1978-81 and 1983-86, staff members of the Federal Reserve Board developed annual indexes of production that are similar in concept to the Census indexes to form a consistent time series for the benchmarking of the industrial production index. The annual indexes are based on industry output in terms of current dollars, defined as value added plus the cost of materials, reported in the Annual Survey of Manufactures; the current dollars are converted to constant A.3. dollars with deflators from the Bureau of Economic Analysis, which are based mostly on producer price indexes published by the Bureau of Labor Statistics. In the 1990 revision, the annual indexes have also incorporated preliminary reports from the 1987 Censuses of Manufactures and Mineral Industries. The 1987 Census data are organized according to a new basis for industry classification, the 1987 SIC. However, the 1977 SIC remains the basis of classification for the industrial production index because most monthly source data are still reported according to it. For many industries, the changes have had little or no effect on the representation of industrial production series; for other industries, such as electrical and nonelectrical machinery, extensive changes have affected series in the index. Thus, the annual indexes and the weights constructed from the 1987 Census data adjusted to approximate the Sources of annual levels for basic series in the 1990 revision of the index of industrial production, by two-digit Standard Industrial Classification code1 Series and SIC code Annual physical product data Number of series Mining 10 11-12 13 14 Manufacturing 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 91 Utilities (49) Total index 1987 proportion 7 3 1.38 .14 1 3 .58 .67 11 2.80 . .. 1 3 .36 .99 1 .25 5 1.14 1 .06 18 1. This table refers to the source of annual levels to which the three types of monthly indicator (physical-product, kilowatt-hour, or production-worker Annual average of monthly physical product data 4.18 Number of series 1987 proportion Annual index constructed from constant-dollar data Number of series 1987 proportion 10 2 2 6 6.52 .15 1.22 5.15 1 1 .03 .03 56 14 2 11.66 2.61 .94 1 .48 156 15 1 10 6 7 69.98 6.15 .08 1.84 2.35 1.51 4 1 5 7 2.34 1.37 .78 1.11 3 4 2 10 1 1.45 1.24 4.63 6.83 .20 4 1 2 8 .40 .10 .06 1.09 4 2 10 7 13 2.37 .20 2.40 1.10 5.38 1 5 1 .04 .29 .05 13 19 19 5 2 3 8.52 8.26 9.75 3.26 1.24 1.18 9 7.63 75 25.81 157 70.01 data) are benchmarked. The table does not show the proportion of the three types of monthly indicator used in the index of industrial production. Developments in Industrial Production 1977 SIC are subject to further revision when the industrial production index switches to the 1987 SIC. Approximately 70 percent of the index is benchmarked to the annual indexes derived from comprehensive constant-dollar measures of industry output (table A.3). Benchmarking to constantdollar measures occurs almost exclusively in the manufacturing portion of the index. A smaller portion of the manufacturing series is benchmarked to a second type of basic source data— comprehensive physical-product data that are available on a monthly basis. An example is the index of primary aluminum ingot, which is shown in chart A.l with an annual index derived from constant-dollar data. As is typical, the movements and levels of the two types of indexes, though similar, are not identical. The third type of basic source data—annual physical-product data—is used for benchmarking only 11 of the 223 individual manufacturing series. For example, the predominant source of data for the annual levels for the mining and utilities industries in the industrial production index are physical measures of annual output available from the Bureau of Mines and the Department of Energy. The Bureau of Mines' Minerals Yearbooks through 1986 provided the basic data for most of the revised annual levels for the metal mining and stone and earth minerals series. Coal and oil and gas extraction series, as well as all utilities series, reflect the latest data available from the Department of Energy. The use of physical-product data for benchmarking should not be confused with their use in determining month-to-month movements in the index. In the revised index, as in the old, series that use physical-product data as a monthly A . l Annual indexes based on constant-dollar and physical-product data 201 indicator account for about 40 percent of the index in terms of its value-added proportions. No monthly indicators in the index require deflation. In all cases, the adjustment of monthly indicators to annual benchmark levels is performed as described in Industrial Production—1986 Edition. Weighting of the Index As the text indicates, this revision incorporates new weight periods. The index now uses 1977 value-added weights for 1977-81; 1982 weights for 1982-86; and 1987 weights for 1987-90. The chainlinking of intercensus segments of the index follows procedures established in the 1959 version of the index, as modified and reported in Industrial Production—1986 Edition. Because weighting is often difficult to understand, it should be recognized that the word weight commonly is used in two ways. One is in reference to proportions in the index showing the relative importance of each series in a weightbase year. Such figures have been published as "1977 proportion" in the Federal Reserve statistical release Industrial Production, and comparable figures will be shown as "1987 proportion" for the revised index in the new release Industrial Production and Capacity Utilization. (A summary of these figures and those for earlier years was presented in table 4.) A second usage of weight refers to the price element of the valueadded data used to calculate the proportions. Only the price element changes when one weight base replaces another. 7 7. Consider a weighted relative quantity index, j _ SCgn/go) W where qn and q0 are the quantity relatives and the w's are value weights (with both price and quantity elements) to indicate the relative importance of the quantities. Then with Ratio scale, 1987 = 100 Aluminum ingot QoPo 150 ^sr-125 Physical products > \ \ 1 1 1977 1 1 1 1 1981 1 1 1 1 198<i 100 \ 1 1 1 1 1989 the expression for /„ given above is algebraically equivalent to the equation j _ Zqnp0 ZqoPo This is a Laspeyres quantity index, which shows changes in quantities with prices held fixed at base-year values. Therefore, introducing new weights in an index—shifting the base year—updates the price element. 202 Federal Reserve Bulletin • April 1990 A.4. Effects of alternative weight years on the industrial production index, 1977-891 1977--82 Weight year 1982-87 1987-89 1977-89 Percentage increases 1977 1982 1987 Linked 4.7 1.1 -.5 4.7 (-.2) (-.6) (-1.1) (-.2) 34.2 22.1 20.4 22.1 (20.3) (17.2) (18.4) (17.2) 12.2 8.4 8.1 8.1 (7.6) (6.5) (7.4) (7.4) 57.6 33.7 29.5 38.2 (29.1) (24.1) (25.7) (25.6) (3.7) (3.2) (3.6) (3.6) 3.9 2.5 2.2 2.7 (2.2) (1.8) (1.9) (1.9) Average annual rate of growth 1977 1982 1987 Linked .9 .2 -.1 .9 (0) (-.1) (-.2) (0) 6.1 4.1 3.8 4.1 (3.8) (3.2) (3.4) (3.2) 5.9 4.1 4.0 4.0 1. Numbers in parentheses show the effect of excluding office and computing machines from the aggregates. As explained and illustrated in Industrial Production—1971 Edition, in a segment of the industrial production index for which the weights are held fixed, the proportion of fastgrowing industries in the index rises with time, whereas that of industries with relatively slow or declining growth falls. Because fast-growing industries generally show less-than-average increases in prices, the composition of the index—the proportions in the total—may be substantially altered with the introduction of new weights. For the most part such changes, reflecting changes in price relationships since the previous weight year, tend to reverse the changes in proportions that have already occurred as a result of quantity changes. Thus, one can analyze the revisions in the new index over 1977-89, and compare them with the old index, according to the increases or decreases owing to the introduction of two new weight periods. With this analysis, upward influences that arise from reweighting slow-growing industries such as textiles, primary metals, fabricated metals, and nonelectrical machinery excluding office and computing machines, almost offset in the aggregate downward influences owing to the reweighting of fast-growing industries, such as printing and publishing, electrical machinery, and instruments. Consequently, as in the past, the new weight periods cause a slight downward revision to the index, as the relative importance of industries that have been growing rapidly is reduced. The use of alternative weight years for the separate periods beginning in 1977 affects the index's representation of total industrial output. As table A.4 shows, the use of various single weight years, rather than linked segments, to aggregate component series of the index distorts the representation of total industrial output in periods distant from the base year. As the lower portion of the right column shows, total industrial output is calculated, with 1977 as a single weight year, to grow at an almost 4 percent rate on average for 1977-89, whereas the linked index grows at a more representative 2.7 percent rate. As shown by the figures in parentheses, these effects are exaggerated by the rapid growth of the office and computing machinery industry, which since 1977 has been estimated to have expanded at an average rate of almost 30 percent per year. A factor thought to complicate the use of 1982 weights is that year's recession, which might have distorted relationships in the value-added proportions between cyclical and noncyclical series. However, in view of the calculations in table A.4, where the growth rates shown are similar for 1982-87 with alternative 1982 and 1987 weight bases, the use of 1982 as a weight year has made little difference. Moreover, one can eliminate most of the effect of the oil crisis evident in the value-added proportions shown in table 4 by excluding mining and utilities from total industrial production. When those groups are excluded, the proportions of the relatively more cyclical durable goods industries and the A.5. Proportions of value added in manufacturing, 1977-871 Percent Series Total manufacturing 1977 1982 1987 100.00 58.31 41.69 100.00 56.69 43.31 100.00 55.98 44.02 Developments in Industrial Production A.6. 203 gomgarison of rates of growth in industrial production, by type of monthly indicator, 1977-89 Indicator Physical product Kilowatt hours Kilowatt hours, excluding computers Production-worker hours 1977-82 1982-87 1987-89 1977-89 1977-82 1982-87 1987-89 1977-89 -1.2 2.9 -.2 1.9 1.7 6.7 4.0 4.7 2.1 5.9 4.9 4.2 .5 5.0 2.4 3.5 -.4 .9 -.6 .7 -1.6 .2 -2.0 -.1 -.2 -1.8 -2.3 .9 -.8 .2 -1.4 less cyclically sensitive nondurable goods industries within manufacturing alone appear undistorted by the recession (table A.5). Revisions Monthly Growth" rale eSKtfrafgtT WmTT5vi§5jnird55J— minus growth rate calculated with earlier index Average annual rate of growth, revised index of Basic Series by Type of Indicator The industrial production index relies on three major types of indicators of monthly production: (1) physical-product series, (2) kilowatt hours of electricity used by industry, and (3) aggregate hours for which production workers are paid. The reliability of each series as a measure of output depends on two factors: (1) the accuracy of the indicator in reflecting changes in industry activity on a monthly basis and p ) the accuracy with which the basic indicators are transformed into measures of production. With physical-product data, the adjustments allow for incomplete coverage and for a change in the quality of the products produced in the industry. Production-workerhour or kilowatt-hour series reflect an extrapolation of the historical relationship of output to inputs, that is, changes in labor or energy productivity. Estimates of these relationships are recalculated when more comprehensive data are available; the extent of the 1990 revisions to industrial production series aggregated by type of indicator is shown in chart A.2. In the overall 1977-89 period, the annual growth rates of the series whose initial estimates were derived from the kilowatt-hour and production-worker-hour series revised upward 0.4 and 0.2 percentage point respectively. Excluding the office and computing machinery industry from the estimates, the growth rate of the kilowatthour series revised down about IV2 percentage A.2 Revised and earlier industrial production indexes of output, by type of monthly indicator 4 204 Federal Reserve Bulletin • April 1990 A.3 Indexes of electric power use by U.S. industries Ratio scale, 19HV-1UU Total kilowatt hours used 80 Kilowatt hours used for industrial production series 1977 1981 1985 1989 point, the largest revision shown in table A.6. The aggregate of series based on physicalproduct information revised downward 0.9 percentage point. On balance, these series had been thought to require more adjustment than the revision now indicates. This development suggests that the physical product indicators, which are more prevalent in relatively mature industries, were more representative of changes in quantity and quality of output during 1977-87 than in earlier periods. Revision of Electric Power Data The series on electric power use by industry has been revised back to January 1972. The revised series include the incorporation of new voluntary reporters of data as well as adjustment for the loss of reporters. The results of the review and the correction of the SIC codes assigned to the reporters are also included. The results of the revision of basic kilowatt-hour data used at the total industrial level appears in the top panel of chart A.3. Overall, the difference between the old series and the revised ones is small; however, the revised data for 1977-82 show a somewhat stronger cyclical pattern than do the earlier data, especially in the steeper decline in kilowatt hours now shown during the 1982 recession. Although the growth rate of total industrial use was little changed, changes at lower levels of aggregation were significant. The bottom panel of chart A.3 shows an aggregate of kilowatt-hour use for those industries for which the electric power series are used as monthly indicators in industrial production indexes. The panel, which shows the basic kilowatt-hour data before they were converted to a measure of output, indicates a more rapid growth rate for the revised aggregate than before, especially in 1977-82. On April 17,1990, revised Federal Reserve statistics of industrial production, capacity utilization, and electric power use by industries will be released. Historical data from all of these time series will be available on a single magnetic tape from the National Technical Information Service (703-487-4650). The G.12.3 statistical release, Industrial Production, and the G.3(402) release, Capacity Utilization, will be combined into the single publication: G. 17(419) Industrial Production and Capacity Utilization All data shown in the combined release will be available on the day of issue through the Department of Commerce's online Economic Bulletin Board (202-377-3870). The separate system of capacity utilization for materials will be discontinued. Many of the components of the materials group will be included in mining and in an improved primary processing aggregate for manufacturing. The revisions and structure modifications to the capacity and capacity utilization indexes will be presented in an article in the June Bulletin. 205 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period November 1989 through January 1990, provides information on Treasury and System foreign exchange operations. It was presented 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. George G. Bentley was primarily responsible for preparation of the report.1 Movements of the dollar against individual currencies diverged widely between November 1989 and January 1990—a period when the rapid opening up of Eastern Europe benefited the German mark and a number of factors continued to weigh against the Japanese yen. The dollar experienced occasional bouts of upward pressure against the yen, and on several of these occasions the U.S. monetary authorities intervened to resist the dollar's rise against that currency, selling a total of $750 million for yen. On balance, the dollar declined against the mark and other European currencies, moving down 8V2 percent, IVA percent, and 6 percent respectively against the mark, Swiss franc, and British pound. The dollar rose, however, about 1 percent against both the yen and the Canadian dollar. On a trade-weighted basis, as measured by the staff of the Board of Governors of the Federal Reserve System, the dollar declined 53/4 percent. NOVEMBER THROUGH MID-DECEMBER The movement in dollar exchange rates against the European currencies was most marked dur1. The charts for the report are available on request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. 1. Federal Reserve reciprocal currency arrangements Millions of dollars Institution Amount of facility, January 31, 1990 Austrian National Bank National Bank of Belgium Bank of Canada National Bank of Denmark Bank of England Bank of France Deutsche Bundesbank 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 Total 600 1,250 30,100 ing the first half of the reporting period. Positive sentiment toward the mark built rapidly after the opening on November 9 of the borders between East and West Germany. Market participants anticipated that an influx of East German immigrants would benefit the German economy by providing a new supply of skilled labor. At the same time, the new immigrants were expected to stimulate domestic demand and thereby spur higher mark interest rates as the Bundesbank sought to contain any potential inflationary pressures. More broadly, international investors focused on the prospects for greatly expanded market opportunities for German enterprises, and the German equity market surged in response to actual and anticipated capital inflows. Against this background, the mark strengthened against all major currencies, and talk began to circulate, especially around the December 8-9 European Community summit, that exchange market pressures would lead to a revaluation of the mark within the European Monetary System 206 Federal Reserve Bulletin • April 1990 (EMS). Germany has had large sustained trade surpluses against most of its European trading partners. Moreover, the German authorities were presumed to welcome any developments that would foster adjustment of the trade surplus or help dampen inflationary impulses to the economy. Market participants believed that a realignment within the EMS would be viewed by Bundesbank officials as consistent with both of these objectives. Accordingly, speculative flows into marks increased, and reports circulated in the market that the Bundesbank's partner central banks were intervening to sell both dollars and marks to support their own currencies. In the process, the dollar declined steadily against the mark. From DM1.8415 at the beginning of November, the dollar declined by midDecember to around DM1.7300, a drop of 6 percent. Against the yen, the dollar showed less of a trend, although it experienced upward pressure from time to time when there were reports of strong Japanese investor demand for portfolio and direct investments in the United States. Market participants were particularly impressed that Japanese interest in investing in dollar-denominated assets appeared to remain strong, even though market commentary about the outlook for U.S. and Japanese monetary policy implied that the interest rate differentials favoring the dollar would continue to narrow. Once in November and again in early December, the U.S. monetary authorities, in keeping with understandings in the Group of Seven on exchange rate cooperation, intervened to sell a total of $150 million against yen. These operations were coordinated with the Bank of Japan. By mid-December, the dollar was trading around ¥144.00, a level 3/4 percent higher than at the start of the reporting period. MID-DECEMBER THROUGH JANUARY In mid-December, one focus of market attention was the extent to which monetary policies in the United States and Japan might move in opposite directions. Economic statistics released through mid-December suggested that the U.S. economy was still sluggish and price pressures subdued, keeping alive expectations that U.S. interest rates would continue to move lower. The market's hope that the Federal Reserve had intended to signal a new easing of monetary policy in November had proved unfounded. But market participants were still confident that the Federal Reserve would continue to respond, as it had in preceding months, to evidence of a decelerating economy by allowing short-term interest rates to ease a bit further. Indeed, the Federal Reserve moved on December 20 to supply liquidity under circumstances that led market participants to believe that another such move had occurred, and they anticipated that further moves would be forthcoming early in the new year. In Japan, market participants had noted that short-term market interest rates had drifted progressively higher for several months, and that this trend had continued even after the Bank of Japan raised its discount rate in a surprise move in October. Trying to anticipate the authorities' next action, dealers were sensitive to the possibility that the Bank of Japan might again raise its discount rate to follow up on the move in market rates. When such an action did not occur by mid-December, market participants began to suspect that these expectations might not be fulfilled. They began to doubt that the authorities would move on interest rates at a time of impending changes in Bank of Japan leadership and so soon before parliamentary elections in early 1990. Market participants were surprised, therefore, when Japanese newspapers reported on December 18 that the Bank of Japan would soon raise its discount rate, a move that indeed took place on December 25. When worldwide trading resumed after the Christmas holidays, the dollar declined to its period low against the yen of ¥141.70 on December 27 and a twentymonth low against the mark of DM1.6752 on December 28—1 percent and 9 percent lower respectively than at the start of November. In early January, the market's assessment of the outlook for dollar interest rates began to change. Accumulating signs that the U.S. economy had stopped decelerating began to raise doubts about both the timing and the extent of any further easing of U.S. monetary policy. Data released around the turn of the year suggested that growth might not be as fragile as had previ- Treasury and Federal Reserve Foreign Exchange Operations ously been thought and that the slowdown in some manufacturing sectors in late 1989 had not spilled over into other sectors of the economy. Unseasonably cold weather led to a sharp runup in oil prices and heightened concerns about renewed price pressures in the food and energy sectors. The January 12 report of an unexpectedly large jump in U.S. producer prices was then interpreted as justifying concerns that little scope remained for further immediate declines in dollar interest rates. Later in January, the dollar received additional support as market participants focused on interpretive press reports indicating the Federal Reserve's concerns with inflation and its more optimistic assessment of economic growth prospects in 1990. When trading resumed after the new year, this reassessment helped to move the dollar up from its lows of late December and provided continuing support to the dollar throughout the rest of January. Against the yen, the dollar also benefited early in January from the potential uncertainties surrounding the upcoming parliamentary elections in Japan. Around the start of the new year, rumors of scandals involving members of the ruling Liberal Democratic Party once again unsettled the exchange markets, and the dollar reached its three-month high against the yen at ¥146.80 on January 3. With upward pressure on the dollar-yen exchange rate persisting throughout the first half of the month, the U.S. monetary authorities again intervened, on three days, to sell $600 million against yen. These operations, which were coordinated with the Bank of Japan, brought the total of U.S. intervention for the November-January period to $750 million, shared equally by the Federal Reserve and the U.S. Treasury. The dollar closed the period at ¥144.45, roughly 1 percent higher than at the start of November. The dollar recovered little against the mark in early January. At this time, talk revived of a revaluation of the German mark within the EMS. In fact, an adjustment of the EMS was announced on January 5 to accommodate a request from the Italian government to bring the Italian lira within the narrow band of the exchange rate mechanism of the EMS. When this relatively modest adjustment occurred smoothly and without a generalized realignment, expectations of 207 further near-term adjustments of exchange rates diminished. The dollar's low for the period was DM1.6630 on January 8. For the remainder of January, movements in the dollar-mark exchange rate were dominated by events in Eastern Europe. Although indications of heavy investor demand for the mark continued to support that currency, reports in mid-January began to reveal the fragility of the government structure in East Germany and elsewhere in Eastern Europe. Doubts also were voiced about political stability in the Soviet Union, especially in light of mounting separatist movements in several Soviet republics. These fears somewhat dampened the near-term enthusiasm for the mark, which traded with little clear direction for the rest of the month. The dollar closed the period against the mark at DM1.6850. Uncertainty about the implications of the widespread political and economic changes taking place was reflected in increased volatility in the world equity and bond markets during January. This volatility, together with convergence of long-term interest rates in the United States, Germany, and Japan, and the attraction of new investment opportunities in Europe, revived concerns about the continued smooth financing of the U.S. current account deficit. In this context, dollar rates from day to day were sometimes influenced by sharp movements in other financial markets. But for the month as a whole, these developments appeared to have little lasting effect on dollar exchange rates. Against the Canadian dollar, the dollar trended lower throughout the three-month period until mid-January. The dollar reversed its course at that time, when a move by the Bank of Canada to ease interest rates precipitated a sell-off of the Canadian currency. In other operations, the U.S. Treasury through the Exchange Stabilization Fund (ESF), together with the Bank for International Settlements (BIS), acting for certain participating central banks, agreed to provide short-term support of $500 million to the National Bank of Poland for its economic stabilization and reform efforts, effective December 27. The ESF's share in the facility was $200 million. On December 28, Poland drew $86 million of the ESF's portion. Also during the period, Bolivia on December 208 Federal Reserve Bulletin • April 1990 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments ( - ) Central bank drawing on the U.S. Treasury Bank of Mexico2 Central Bank of Bolivia National Bank of Poland5 Amount of facility Outstanding as of October 31, 1989 November December January Outstanding as of January 31, 1990 425.0 flOO.O3 I 75.0 4 200.0 384.1 75.0 3 ... ... -6.5 . . . ... ... -35.8 —75.03 75.0 4 86.0 -7.7 ... -75.04 . . . 334.1 0 1 0 j 86.0 4. The latest facility was established on December 29, 1989, and expired upon repayment on January 12, 1990. 5. Represents the ESF portion of a $500 million short-term credit facility established on December 27, 1989. 1. Data are on a value-date basis. 2. Represents the ESF portion of $2,000 million near-term credit facility. 3. The facility, which was established for $100 million on July 11, 1989, was renewed on September 15, 1989. 3. iff Drawings and repayments by foreign central banks1 Millions of dollars; drawings or repayments ( - ) Central bank Amount of facility Outstanding as of October 31, 1989 November December January Outstanding as of January 31, 1990 Under reciprocal currency arrangements with the Federal Reserve System Bank of Mexico 2 . 700.0 700.0 700.0 Under special swap arrangements with the Federal Reserve System Bank of Mexico2 125.0 84.1 1. Data are on a value-date basis. 29 repaid in full its $75 million outstanding drawing of a $100 million facility established with the ESF. On the same day, Bolivia drew the full amount of a newly established facility of $75 million. The drawing was fully repaid upon maturity on January 12 (table 2). On four separate occasions, Mexico repaid portions of its outstanding swap commitments under the $2,000 million facility established with the U.S. monetary authorities, the BIS (acting for certain participating central banks), and the Bank of Spain. The Federal Reserve and the ESF each received a total of $50 million (table 3). As of the end of January, cumulative bookkeeping or valuation gains on outstanding foreign currency balances were $2,709.6 million for the Federal Reserve and $2,011.0 million for the ESF (table 4). (Valuation gains on holdings warehoused by the ESF with the Federal Reserve are excluded in the first figure and, correspondingly, included in the second figure.) These valuation gains represent the increase in dollar value of outstanding currency assets valued at endof-period exchange rates, compared with the rates -6.5 -35.8 34.1 -7.7 2. Drawn as part of the $2,000 million near-term credit facility established on September 21, 1989. prevailing at the time the foreign currencies were acquired. The Federal Reserve and the ESF regularly invest their foreign currency balances in a variety of instruments that yield market-related rates of return and 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 $7,180.4 million equivalent, and holdings by the ESF amounted to the equivalent of $7,477.6 million. 4. Net profits or losses ( - ) on U. S. Treasury and Federal Reserve current foreign exchange operations1 Millions of dollars Period and item Federal Reserve U.S. Treasury Exchange Stabilization Fund October 1, 1989-January 31,1990 Valuation profits and losses on outstanding assets and liabilities as of January 31, 1990 1. Data are on a value-date basis. .0 .0 2,709.6 2,011.0 209 Industrial Production Released for publication February 16 Industrial production fell 1.2 percent in January following a revised increase of 0.2 percent in December. In January, the output of motor vehicles was curtailed drastically, and the extremely warm weather caused a sharp drop in utilities output. Elsewhere, industrial production, on bal- 1984 1986 1988 All series are seasonally adjusted. Latest series: January. 1990 ance, rose slightly. At 140.9 percent of the 1977 annual average, the total index was little changed from a year earlier. Manufacturing output declined 0.9 percent in January, and factory utilization dropped to 81.9 percent from 82.9 percent in December. Detailed data for capacity utilization are shown separately in "Capacity Utilization," Federal Reserve monthly statistical release G.3. 1984 1986 1988 1990 210 Federal Reserve Bulletin • April 1990 1977 = 100 Group Percentage change from preceding month 1989 1990 Dec. Jan. 1989 Sept. Oct. 1990 Nov. Dec. Jan. Percentage change, Jan. 1989 1990 Major market groups Total industrial production 142.5 140.9 -.1 -.3 .3 .2 -1.2 .1 Products, total Final products Consumer goods Durable Nondurable Business equipment Defense and space Intermediate products Construction supplies Materials 153.5 151.5 141.4 128.5 146.1 168.8 177.7 160.3 143.7 127.6 151.3 148.8 138.2 119.7 145.1 165.9 177.7 159.9 144.0 126.6 -.1 -.2 -.2 -.6 -.1 -.2 -.3 .2 -.4 -.2 -.6 -.9 .9 .0 1.2 -2.8 -3.4 .5 1.2 .0 .5 .5 .2 -.4 .4 1.1 .3 .6 .9 -.2 .7 .8 .6 .8 .6 1.3 .6 .5 -.1 -.7 -1.4 -1.8 -2.2 -6.8 -.7 -1.7 .0 -.3 .2 -.7 .8 .4 -.2 -9.0 2.8 1.2 -1.3 2.1 1.2 -1.1 .1 .3 -.2 -2.0 6.3 -.9 -1.7 .2 2.1 -10.7 .1 -2.0 2.8 1.5 -3.8 Major industry groups Manufacturing Durable Nondurable Mining Utilities 148.6 145.9 152.4 102.4 122.8 147.2 143.3 152.7 104.6 109.6 -.2 -.4 .0 1.1 1.0 -.6 -1.6 .8 .8 .9 .3 .4 .2 .2 -.1 NOTE. Indexes are seasonally adjusted. In market groups, the production of consumer goods fell 2.2 percent in January as automobile assemblies plunged to an annual rate of 4.1 million units from a rate of 6.2 million units in December, and light truck production for consumer use fell more than 30 percent. In addition, the sale of electricity and gas for residential use was down sharply because of warmer than usual weather over most of the nation. Output of home goods, however, picked up as appliances rebounded after significant cutbacks in each of the two preceding months. Business equipment also was down sharply because of the decline in production of motor vehicles. Excluding motor vehicles, business Total industrial production—Revisions Estimates as shown last month and current estimates Index (1977=100) Month Oct Nov Dec Jan Percentage change from previous months Previous Current Previous Current 141.8 142.3 142.8 141.8 142.2 142.5 140.9 -.4 .3 .4 -.3 .3 .2 -1.2 equipment was about unchanged, output of construction, mining, and farm equipment advanced further, but commercial equipment, particularly computers, weakened. Construction supplies were essentially unchanged again last month, but business supplies, which include the sale of electricity and gas to commercial users, declined. Materials output was down 0.7 percent in January as output of consumer durable parts, mainly for motor vehicles, and energy materials, primarily electricity generation, fell sharply. However, these declines were moderated somewhat by increases in steel and coal output. In industry groups, output in manufacturing declined 0.9 percent in January, with motor vehicles and parts more than accounting for the drop. Fabricated metals and rubber and plastics products, which are partially related to motor vehicles, also declined. In addition, declines occurred in lumber, nonelectrical machinery, and textiles. However, there were sharp increases in petroleum refining and iron and steel output. Outside manufacturing, mining rose because of increased coal production, and utilities fell because the warm weather lowered the demand for heating. 211 Statements to the Congress Statement by Wayne D. Angell, Member, Board of Governors of the Federal Reserve System, before the Subcommittee on Telecommunications and Finance of the Committee on Energy and Commerce, U.S. House of Representatives, February 21, 1990. I am pleased to appear today to discuss with you issues related to the security of large-dollar value electronic funds transfer systems and the influence of technology on the future development of these systems. The security of funds transfer and financial message processing systems is the subject of a report by the General Accounting Office (GAO).i My testimony is divided into three parts and addresses topics identified by the subcommittee as being of particular interest. First, I will provide an update on progress with respect to implementation of the GAO's recommendations addressing security on Fedwire, the large-dollar funds transfer system operated by the Federal Reserve Banks. Second, I will provide the Board's views on the need for clarification of its authority to oversee other funds transfer and financial message systems, such as the Clearing House Interbank Payments System (CHIPS) and the Society for Worldwide Interbank Financial Telecommunication (S.W.I.F.T.). Finally, I will provide a broader perspective on future technology trends as they will influence the international financial marketplace, with particular reference to payments networks. As background to the update on the Federal Reserve's response to the GAO recommendations regarding Fedwire, it may be useful to highlight three distinguishing features of this system. First, the modern technology base that 1. See U.S. General Accounting Office, Electronic Funds Transfer: Oversight of Critical Banking Systems Should Be Strengthened, report number IMTEC-90-14 (GAO, January 1990). serves as the automation "platform" for Fedwire has evolved from decades of experience in applying new technology to meet business requirements. The electronic transfer of reserve balances on the books of the Federal Reserve Banks began in 1918, using the telegraph. Today, the Federal Reserve uses state-of-the-art computers and data communications to operate Fedwire and is investing in research and development to ensure that the most current technology is used effectively, with a strong focus on security. Second, Fedwire is truly the nation's funds transfer system. All depository institutions have access to Fedwire, and the Reserve Banks currently connect more than 11,000 end points in all parts of the nation. These end points include the smallest to the largest depository institutions. As a truly national payment system, Fedwire must be responsive to a variety of needs presented by depository institutions having diverse characteristics. Third, Fedwire is the chief vehicle for effecting immediate final settlement for U.S. dollar payments, that is, the irrevocable transfer of value on the books of the Federal Reserve Banks, regardless of whether the payment originated domestically, or in London or Tokyo and was sent through a U.S. banking office. In short, when describing the role of Fedwire for settling interbank dollar transactions, it is no exaggeration to say that "the buck stops here." As noted in the Board's November 9, 1989, response to GAO's draft report on oversight of electronic funds transfer systems, the Federal Reserve is strongly committed to providing the most secure electronic payment services possible. Such a commitment is essential in the case of a funds transfer system like Fedwire that handles about 240,000 transfers each day with an average value per transfer of $3.1 million. We believe that it is important to begin any discussion of Fedwire security, as did the GAO, with the statement that there have not been any reported incidents (I can say with assurance no incidents) of fraudulent 212 Federal Reserve Bulletin • April 1990 transfers by the employees who operate the system. Moreover, in the case of Fedwire, the same holds true for so-called interloper fraud. The Federal Reserve's commitment to security begins with a sound Fedwire security "architecture," or unified structure of security safeguards and features, which, in combination, define an organization's approach to security. The Federal Reserve security architecture incorporates a wide range of safeguards, which total more than 100. These safeguards are, by the way, the result of our work with an outside consultant. To put the GAO recommendations in the proper perspective, it is important to understand the Federal Reserve's overall security architecture. I would now like to take a few moments to describe the safeguards and mechanisms that protect the Fedwire system within the overall security architecture. The Fedwire safeguards are grouped into the following categories: Physical security—to limit access to terminals and computer operations areas to those individuals who require access to perform their duties. Guards, surveillance equipment, and card key access devices are relied upon to prevent and detect unauthorized physical access to restricted computer spaces. Access controls—both software and code words, to prevent unauthorized access to sensitive data and programs. Encryption—to protect the confidentiality and integrity of Fedwire transactions, especially from interlopers. Nearly 100 percent of transmissions between depository institutions and Reserve Banks are encrypted and, as I will discuss later, the "backbone" communications network that links the twelve Federal Reserve Banks will be encrypted by July 1990. Administrative controls—to govern employment practices, separation of duties, and software development standards. Capacity planning and disaster recovery programs are also key components of the architecture to ensure that Fedwire provides secure and reliable services. In recent years, Fedwire computer uptime has improved steadily as a result of added attention to the need for a secure, resilient, and reliable automation environment. For example, in 1987 and 1988, Fedwire computer uptime averaged 99.14 and 99.21 percent respectively. In 1989, Fedwire computer uptime averaged more than 99.71 percent. I might note that last year's uptime statistic covers the period of the San Francisco earthquake on October 17, 1989. As a result of careful preparation and skillful action on the scene, the Federal Reserve Bank of San Francisco was able to recover operations quickly after the earthquake, with no disruption to electronic payments processing. We welcome the opportunity to refine the implementation of the security safeguards that make up the Fedwire security architecture by responding to the recommendations recently made by the GAO. The GAO's recommendations represent opportunities to tighten further the implementation of a very solid security architecture. We agree fully with fifteen of the seventeen GAO findings. In twelve of the fifteen cases, full corrective action has already been taken. Corrective action for the other three findings will be fully completed by the end of June. Moreover, steps are being taken to ensure that the conditions leading to the GAO's findings do not exist at the eight Reserve Banks that were not reviewed by the GAO. The Federal Reserve's internal oversight of security is being focused to ensure that appropriate attention is given to the issues raised by the GAO. As we noted to the GAO, the Federal Reserve has for many years had a program of internal oversight based on independent operations review, financial examination, and audit staffs at both the Board and the Reserve Banks. The Board's operations review and financial examination programs will scrutinize Fedwire security in these areas during 1990. Additionally, every Reserve Bank's internal audit function will perform a review of the Fedwire system, including security, to be completed by midyear. Two specific GAO findings relating to (1) the separation of duties between computer and network operators, and (2) hardware redundancy on the "backbone" network linking the twelve Reserve Banks may be due to some confusion regarding how Fedwire security is implemented in these areas. The GAO report indicates that there should be a complete separation of duties between computer and network operators. Our Statements to the Congress view is that combining these functions has no detrimental effect on security and is industry practice. Adequate hardware redundancy already exists on the backbone communications network as part of a comprehensive and sound backup plan to provide quick recovery for the failure of any network component. This backup plan, which is tested quarterly and has been used successfully in production, has contributed to our network availability record of more than 99.99 percent since the network was implemented in 1982. A detailed discussion of our response regarding network backup is appended to the GAO report. The GAO also makes two systemwide recommendations. First, the GAO recommends that the Board require annual external reviews of Fedwire security. We agree that it is useful to engage the services of outside consultants to assess security. We believe, however, that such outside consultation can best be used when conditions support such a need, as opposed to regular annual consultations. The System has a history of employing outside technical consultants to assess security, as I already noted in the case of the development of the Federal Reserve's security safeguards. More recently, an outside assessment of Fedwire security has just been completed at the Federal Reserve Bank of New York. An outside consultant specializing in security performed a risk assessment of the Bank's Fedwire operations, including both automation and business areas. Use of a firm with specialized security expertise is intended, in part, to introduce a view that is unconstrained by acceptance of traditional safeguards. It is a way to take a "fresh look" at what we do. The results of this security review will be shared among all the Federal Reserve Banks. In addition, the Board retains a public accounting firm each year to review a range of operations review and financial examination procedures. This year, the firm will review electronic data processing, including a review of security. We will continue to employ consultative services such as these when, based on management judgement, the circumstances warrant such input. The GAO's second systemwide recommendation is that the Federal Reserve use both encryption and message authentication (known as MAC 213 or message authentication codes) to enhance security. As noted earlier, nearly 100 percent of Fedwire links between Reserve Banks and depository institutions are already encrypted. Further, encryption of the backbone network will be completed by July 1990. The Federal Reserve has made significant resource investments in studying the use of message authentication codes for Fedwire. These investments include active participation in study groups of the American National Standards Institute to develop bona fide national standards for message authentication and the complex process of key management that is a necessary part of a message authentication system. On a large network with a variety of end points, such as Fedwire, use of message authentication codes must take place in a manner consistent with approved technical standards for both authentication and management of authentication keys. Reliance on national standards is important to avoid unique technical solutions that ultimately raise the costs of the depository institutions connected to Fedwire. Further, commercially available solutions that are cost effective for the range of depository institutions that use Fedwire must be available. The first phase of a Federal Reserve effort to test emerging commercial message authentication code products that meet national standards has just been completed. These tests have not uncovered any technical impediments to the use of message authentication codes on Fedwire. With the results of this phase of our program to investigate message authentication codes complete, plans to adopt message authentication as an additional security enhancement for Fedwire are currently under review. Adoption of message authentication on Fedwire has my strong personal support. I will now turn to the GAO recommendation that the Federal Reserve Board work with other central banks and bank supervisory authorities to ensure effective oversight and regulation of the S.W.I.F.T. system and similar systems that serve the international banking community. S.W.I.F.T. processes a large volume of payment orders that result in the transfer of very large sums between depository institutions, both domestically and abroad. S.W.I.F.T. differs from 214 Federal Reserve Bulletin • April 1990 Fedwire and CHIPS, however, in the manner of settlement for these payment orders. In Fedwire, payment orders result in virtually instantaneous debits and credits on the books of the Reserve Banks without any independent action on the part of the sending or receiving bank. Similarly, CHIPS messages are settled virtually automatically at the end of the day. Payment orders sent over S.W.I.F.T., on the other hand, must be settled independently of the S.W.I.F.T. system through correspondent accounts or through Fedwire or CHIPS transfers. In this regard, S.W.I.F.T. is only one of several means that banks use to communicate payment orders. Payment orders may be transmitted telephonically or by data transmission, using a variety of providers of telecommunications services. For any system used to transmit payment orders that may result in the transfer of large sums, however, a depository institution receiving the payment order should be responsible for verifying the authenticity and the content of the payment order before acting on it. A proposed new Article 4A to the Uniform Commercial Code makes it clear that depository institutions are liable if they act on unauthorized payment orders unless they use commercially reasonable security procedures. In some cases, a receiving bank may have sufficient confidence in the controls and the integrity of the system through which it receives payment orders to rely on this system's authentication and verification procedures. In other cases, a depository institution may wish to verify and authenticate payment orders by means of its own procedures. We believe that the appropriate role of bank supervisors is to ensure that depository institutions maintain adequate authentication and verification procedures and that they do not rely on others to perform these critical functions without assuring themselves that these functions are performed adequately. Ordinarily, the supervisory focus should be on the institution receiving a payment order rather than on a telecommunications system transmitting the order. When a receiving depository institution relies on an authentication procedure provided by a telecommunications service provider, such as CHIPS, we may need to be able to examine the communications systems on which they rely to assure ourselves that depository institutions are not delegating these functions inappropriately. At the same time, however, we do not want to encourage depository institutions to delegate these functions to service providers merely because the service providers enjoy some degree of federal oversight. We will continue to monitor and evaluate bank reliance on telecommunications systems, including the S.W.I.F.T. system. When we discover problems stemming from banks' reliance on telecommunications systems we will take steps to strengthen our supervisory oversight and, when appropriate, coordinate any regulatory activities with supervisory authorities or central banks in other countries. We believe, however, that the principal responsibility to authenticate payment orders lies with the banks receiving these orders. The subcommittee has also asked for the Federal Reserve's broader perspective on the importance of technology in the future of the international financial marketplace. We expect a continuing and increasing reliance on automation and communications to provide secure, reliable, and efficient payment services. In our discussions with central bankers from other developed nations, it is evident that their approach to using advanced technologies for payment system applications is quite similar to that in the United States. Most of the G-10 countries and Switzerland have state-of-the-art computer systems with many of the features found in comparable U.S. banking systems. These systems rely on sophisticated computer systems, sound test procedures, and advanced recovery features designed to provide high availability. Generally, the same technology used in the United States for encryption, physical security, and access control is available in many other nations. As the cost effectiveness of automation improves, the use of advanced automation and communications technologies will continue to grow. Even today, the technology is available to link international financial markets around the clock. The benefits and promise of this advanced technology, however, can only be achieved through its careful management. As payment systems become more reliant on sophisticated technology to deliver basic functions, the consequences of a systems failure or security breach is Statements to the Congress 215 expanded significantly. We believe that close attention by senior management to automation planning, disaster recovery, and security is essential. In conclusion, we are confident in the security architecture surrounding Fedwire and in this system's ability to provide high reliability in a secure environment. We appreciate the analysis conducted by the GAO and, in most cases, we agree with the findings and have moved quickly to correct the problems that have been identified. As I stated at the outset, the GAO's findings represent an opportunity to tighten the implementation of a security program that we believe is exceptionally sound. • 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 22, 1990. the winter, but started down when signs of more restrained aggregate demand and of reduced potential for higher inflation began to appear. As midyear approached, a marked strengthening of the dollar on foreign exchange markets further diminished the threat of accelerating inflation. New economic data suggested that the balance of risks had shifted toward the possibility of an undue weakening in economic activity. With M2 and M3 below the lower bounds of their annual ranges in the spring, the Federal Reserve in June embarked on a series of measured easing steps that continued through late last year. Across the maturity spectrum, interest rates declined further, to levels about 1 Vi percentage points below March peaks. Reductions in inflation expectations and reports of a softer economy evidently contributed to the drop in rates in longer-term markets. The decrease in short-term rates lifted M2 to around the middle of its annual range in the latter part of the year. Efforts under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 to close insolvent thrift institutions and strengthen undercapitalized thrift institutions led to a cutback of the industry's assets and funding needs. This behavior held down M3 growth in the second half of the year, and that aggregate ended the year around the lower end of its annual range. The restructuring of the thrift industry did not, however, seem to appreciably affect the overall cost and availability of residential mortgage credit, as other suppliers of this credit stepped into the breach. In the aggregate, the debt of nonfinancial sectors slowed somewhat, along with spending, to a rate just below the midpoint of its annual range. So far this year, the federal funds rate has remained around 8V4 percent, but rates on Trea- I appreciate the opportunity to testify today on the Federal Reserve's semiannual Monetary Policy Report to the Congress. 1 My prepared remarks discuss our monetary policy actions and plans in the context not only of the current and projected state of the economy, but also against the background of our longer-term objectives and strategy for achieving them. The testimony also addresses some issues for monetary policy raised by the increasingly international character of financial markets. ECONOMIC AND MONETARY DEVELOPMENTS IN 1989 POLICY Last year marked the seventh year of the longest peacetime expansion of the U.S. economy on record. Some 2Vz million jobs were created, and the civilian unemployment rate held steady at 5V4 percent. Inflation was held to a rate no faster than that in recent years, but unfortunately no progress was made in 1989 toward price stability. Thus, while we can look back with satisfaction at the economic progress made last year, there is still important work to be done. About a year ago, Federal Reserve policy was in the final phase of a period of gradual tightening, designed to inhibit a buildup of inflation pressures. Interest rates moved higher through 1. See "Monetary Policy Report to the Congress," Federal Reserve Bulletin, vol. 76 (March 1990), pp. 107-19. 216 Federal Reserve Bulletin • April 1990 sury securities and longer-term private instruments have reversed some of their earlier declines. Investors have reacted to economic data that were stronger than expected, a runup in energy prices, and increasingly attractive investment opportunities abroad, especially in Europe. THE ULTIMATE OBJECTIVES MEDIUM-TERM STRATEGY OF MONETARY POLICY AND Monetary policy was conducted again last year with an eye on long-run policy goals, and economic developments in 1989 were consistent with the Federal Reserve's medium-term strategy for reaching them. The ultimate objective of economic policy is to foster the maximum sustainable rate of economic growth. This outcome depends on market mechanisms that provide incentives for economic progress by encouraging creativity, innovation, saving, and investment. Markets perform these tasks most effectively when individuals can reasonably believe that by forgoing consumption or leisure in the present they can reap adequate rewards in the future. Inflation insidiously undermines such confidence. It raises doubts in people's minds about the future real value of their nominal savings and earnings, and it distorts decisionmaking. Faced with inflation, investors are more likely to divert their attention to protecting the near-term purchasing power of their wealth. Modern day examples of economies stunted by rapid inflation are instructive. In countries with high rates of inflation, people tend to put their savings in foreign currencies and commodities rather than in the financial investments and claims on productive assets that can best foster domestic growth. By ensuring stable prices, monetary policy can play its most important role in promoting economic progress. The strategy of the Federal Open Market Committee (FOMC) for moving toward this goal remains the same—to restrain growth in money and aggregate demand in coming years enough to establish a clear downward tilt to the trend of inflation and inflation expectations, while avoiding a recession. Approaching price stability may involve a period of expansion in activity at a rate below the growth in the economy's potential, thereby relieving pressures on resources. Once some slack develops, real output growth can pick up to around its potential growth rate, even as inflation continues to trend down. Later, as price stability is approached, real output growth can move still higher, until full resource utilization is restored. While these are the general principles, no one can be certain what path for the economy would, in practice, accompany the gradual approach to price stability. One key element that would minimize the costs associated with the transition would be a conviction of participants in the economy that the anti-inflation policy is credible, that is, likely to be effective and unlikely to be reversed. Stability of the general price level will yield important long-run benefits. Nominal interest rates will be reduced with the disappearance of expectations of inflation, and real interest rates likely will be lower as well, as less uncertainty about the future behavior of overall prices induces a greater willingness to save. Higher saving and capital accumulation will enhance productivity, and the trend growth in real GNP will be greater than would be possible if the recent inflation rate continued. If past patterns of monetary behavior persist, maintaining price stability will require an average rate of M2 growth over time approximately equal to the trend growth in output. During the transition, the decline of market interest rates in response to the moderation in inflation would boost the public's demand for M2 relative to nominal spending, lowering M2 velocity. M2 growth over several years accordingly may show little deceleration, and it could actually speed up from time to time, as interest rates decline in fits and starts. Hence, the FOMC would not expect to lower its M2 range mechanically each and every year in the transition to price stability. This qualitative description of our mediumterm strategy is easy to state, but actually implementing it will be difficult. Unexpected developments no doubt will require flexible policy responses. Any such adjustments will not imply a retreat from the medium-term strategy or from ultimate policy goals. Rather, they will be midcourse corrections that attempt to keep the econ- Statements to the Congress omy and prices on track. The easing of reserve pressures starting last June is a case in point. Successive FOMC decisions to ease operating policy were intended to forestall an economic downturn, the chances of which seemed to be increasing as the balance of risks shifted away from greater inflation. The FOMC was in no way abandoning its long-run goal of price stability. Instead, it sought financial conditions that would support the moderate economic expansion judged to be consistent with progress toward stable prices. In the event, output growth was sustained last year, although in the fourth quarter a major strike at Boeing, combined with the first round of production cuts in the auto industry, accentuated the underlying slowdown. On the inflation side, price increases in the second half were appreciably lower than those in the first. Although the CPI for January, as expected, showed a sizable jump in energy and food prices in the wake of December's cold snap, a reversal is apparently under way. MONETARY POLICY AND THE ECONOMIC OUTLOOK FOR 1990 Against this background, the Federal Reserve Governors and the Presidents of the Reserve Banks foresee continued moderate economic expansion over 1990, consistent with conditions that will foster progress toward price stability over time. At its meeting earlier this month, the FOMC selected ranges for growth in money and debt that it believes will promote this outcome. My testimony last July indicated the very preliminary nature of the tentative ranges chosen for 1990, given the uncertain outlook for the economy, financial conditions, and appropriate growth of money and debt. With the economic situation not materially different from what was anticipated at that time, the FOMC reaffirmed the tentative growth range of 3 percent to 7 percent for M2 in 1990 that it set last July. This range, which is the same as that used in 1989, is expected by most FOMC members to produce somewhat slower growth in nominal GNP this year. The declines in short-term interest rates through late last year can be expected to continue to boost the public's demands for liquid balances in M2, at least for a 217 while longer. M2 growth over 1990 thus may be faster than in recent years, and M2 velocity could well decline over the four quarters of the year, absent a pronounced firming in short-term market interest rates. In contrast to M2, the range for M3 has been reduced from its tentative range set last July. The new M3 range of 2Vi percent to 6V2 percent is intended to embody the same degree of restraint as the M2 range, but it was lowered to reflect the continued decline in thrift assets and funding needs now anticipated to accompany the ongoing restructuring of the thrift industry. This asset runoff began in earnest in the second half of last year, so its magnitude was not incorporated into the tentative M3 range for 1990 set last July. The bulk of the mortgage and real estate assets that thrift institutions will shed are expected to be acquired by the Resolution Trust Corporation and diversified investors other than depository institutions. Such assets thus will no longer be financed by monetary instruments included in M3. In addition, commercial banks are likely to be more cautious in their lending activities, reducing their need to issue wholesale managed liabilities included in M3. These influences should retard the growth of M3 relative to M2 again this year. The debt of domestic nonfinancial sectors is expected to decelerate along with nominal GNP for a fourth straight year, and the Committee chose to lower the monitoring range for this aggregate to 5 percent to 9 percent for 1990. Merger and acquisition activity has retreated from the feverish pace of recent years, reflecting some well-publicized difficulties of restructured firms and more caution on the part of creditors. All other things equal, less restructuring activity and greater use of equity finance imply reduced corporate borrowing. An ebbing of growth in household debt also seems probable. Over the last decade, money and debt aggregates have become less reliable guides for the Federal Reserve in conducting policy. The velocities of the aggregates have ranged widely from one quarter or one year to the next, in response to interest rate movements and special factors. In the coming year, the effects of the contraction of the thrift industry on the velocity of M3, and to a lesser extent on that of M2, are especially dif- 218 Federal Reserve Bulletin • April 1990 ficult to predict. While recognizing that the growth rates of the broader monetary aggregates over long periods are still good indicators of trends in inflation, the FOMC will continue to take an array of factors into account in guiding operating policy. Information about emerging patterns of inflationary pressure, business activity, and conditions in domestic and international financial markets again will need to supplement monetary data in providing the background for decisions about the appropriate operating stance. The Committee's best judgment is that money and debt growth within these annual ranges will be compatible with a moderation in the expansion of nominal GNP. Most FOMC members and other Reserve Bank presidents foresee real GNP growing V>h percent to 2 percent over the year as a whole. Such a rate would be around last year's moderate pace, excluding the rebound in agricultural output from the 1988 drought. A slight easing of pressures on resources probably is in store. Inflation pressures should remain contained, even though the decline in the dollar's value over the past half year likely will reverse some of the beneficial effects on domestic inflation stemming from the dollar's earlier appreciation. The CPI this year is projected to increase 4 percent to Wi percent, as compared with last year's AVI percent. RISKS TO THE ECONOMIC OUTLOOK Experience has shown such macroeconomic forecasts to be subject to a variety of risks. Assessing the balance of risks between production shortfalls and inflation pressures in the current outlook is complicated by several crosscurrents in the domestic and international economic and financial situation. One risk is that the weakness in economic activity evident around year-end may tend to cumulate, causing members' forecasts about production and employment this year to be overly optimistic. However, available indicators of near-term economic performance suggest that the weakest point may have passed. The inventory correction in the auto industry—a rapid one involving a sharp reduction in motor vehicle assemblies in January coupled with better motor vehicle sales—seems to be largely behind us. Industrial activity outside of motor vehicles appears to be holding up. Production of business equipment, when evidence has accumulated of some stability—if not an increase—in orders for capital goods, is likely to support manufacturing output in coming months. Housing starts were depressed in December by severely cold weather in much of the country. But starts bounced back strongly in January, in line with the large gain in construction employment last month. From these and similar data, one can infer the beginnings of a modest firming in economic activity. While we cannot be certain that we are as yet out of the recessionary woods, such evidence warrants at least guarded optimism. There are, however, other undercurrents that continue to signal caution. One that could disturb the sustainability of the current economic expansion has been the recent substantial deterioration in profit margins. A continuation of this trend could seriously undercut the still expanding capital goods market. However, if current signs of an upturn in economic activity broaden, profit margins can be expected to stabilize. A more deep-seated concern with respect to the longer-run viability of the expansion is the increase in debt leverage. Although the trends of income and cash flow may have turned the corner, the structure of the economy's financial balance sheet weighs increasingly heavily on the dynamics of economic expansion. In recent years, business debt burdens have been enlarged through corporate restructurings, and as a consequence interest costs as a percent of cash flow have risen markedly. Responding to certain wellpublicized, debt-servicing problems, creditors have become more selective in committing funds for these purposes. Within the banking industry, credit standards have been tightened for merger and leveraged buyout (LBO) loans, as well as for some other business customers. Credit for construction projects reportedly has become less available because of limits imposed by the FIRREA and heightened concerns about overbuilding in a number of real estate markets. Among households, too, debt-servicing burdens have risen to historic highs relative to income, and delinquency rates have moved up of late. Suppliers of consumer and mortgage credit Statements to the Congress appear to have tightened lending terms a little. Real estate values have softened in some locales, although prices have maintained an uptrend in terms of the national averages, especially for single-family residences. These and other financial forces merit careful monitoring. While welcome from a supervisory perspective, more cautious lending does have the potential for damping aggregate demand. It is difficult to assess how serious a threat increased leverage is to the current levels of economic activity. Clearly, should the economy fall into a recession, excess debt service costs would intensify the problems of adjustment. But it is unlikely that in current circumstances strains coming from the economy's financial balance sheet can themselves precipitate a downturn. As I indicated earlier, we expect nonfinancial debt growth to continue to slow from its frenetic pace of the mid-1980s. This should lessen the strain and hopefully the threat to the economy. INTERNATIONAL AND MONETARY FINANCIAL POLICY MARKETS Among other concerns, recent events have highlighted the complex interactions between developments in the U.S. economy and financial markets and those in the other major industrial countries. Specifically, the parallel movements in long-term interest rates here and abroad over the early weeks of 1990 have raised questions: To what extent is the U.S. economy subject to influences from abroad? To what extent, as a consequence, have we lost control over our economic destiny? The simple answer to these questions is that the U.S. economy is influenced from abroad to a substantially greater degree than, say, two or three decades ago, but U.S. monetary policy is, nonetheless, able to carry out its responsibilities effectively. The postwar period has seen markedly closer ties among the world's economies. Markets for goods have become increasingly, and irreversibly, integrated as a result of the downsizing of economic output and the consequent expansion of international trade. The past decade, in particular, also has witnessed the growing integration of financial markets around the world. Advancing 219 technology has fostered the unbundling and transfer of risk and engendered a proliferation of new financial products. Cross border financial flows have accordingly accelerated at a pace in excess of global trade gains. This globalization of financial markets has meant that events in one market or in one country can affect within minutes developments in markets throughout the world. More integrated and open financial markets have enabled all countries to reap the benefits of enhanced competition and improved allocation of capital. Our businesses can raise funds almost anywhere in the world. Our savers can choose from a lengthening menu of investments as they seek the highest possible return on their funds. Our financial institutions enjoy wider opportunities to compete. In such an environment, a change in the expected rate of return on financial assets abroad naturally can affect the actions of borrowers or lenders in the United States. In response, exchange rates, asset prices, and rates of return all may adjust to new values. Strengthened linkages among world financial markets affect all markets and all investors. Just as U.S. markets are influenced by developments in markets abroad, foreign markets are influenced by events here. These channels of influence do not depend on whether a country is experiencing a deficit or a surplus in its current account. In today's financial markets, the net flows associated with current account surpluses and deficits are only the tip of the iceberg. What are more important are the huge stocks of financial claims—more than $1.5 trillion held in the United States by foreigners and more than $26 trillion of dollar-denominated claims on U.S. borrowers held by U.S. residents. This is in addition to the vast quantities of assets held in foreign currencies abroad. It is these holdings that can respond to changes in actual and expected rates of return. In recent years we have seen several instances in which rates of return have changed essentially simultaneously around the world. For example, stock prices moved together in October 1987 and 1989, and in 1990 bond yields have risen markedly in many industrial countries. However, we must be cautious in interpreting such events, and in drawing implications for the 220 Federal Reserve Bulletin • April 1990 United States. Frequently, such movements occur in response to a common worldwide influence. Currently, the world economy is adjusting to the implications of changes in Eastern Europe, where there are tremendous new opportunities to invest and to promote reconstruction and growth. Those opportunities, while contributing to the increase in interest rates in the United States, also open up new markets for our exports. Moreover, despite globalization, financial markets do not necessarily move together—they also respond to more localized influences. Over 1989, for example, bond yields in West Germany and Japan rose about a percentage point, while those in the United States fell by a similar amount. The contrast between 1989 and 1990 illustrates the complexity of relationships among financial markets. Interactions can show through in movements in exchange rates as well as interest rates, and changes in the relative prices of assets depend on a variety of factors, including economic developments and inflation expectations in various countries as well as monetary and fiscal policies here and abroad. The importance of foreign economic policies for domestic economic conditions has given rise in recent years to a formalized process of policy coordination among the major industrial countries. The purpose of such coordination is to help policymakers achieve better performance in their national economies. It begins with improved communication among authorities about economic developments within each country. It includes systematic analysis of the likely impact of these developments on the economies of the partner countries and on variables such as exchange rates that are inherently jointly determined in international markets. Within such a framework, it is possible to consider alternative choices for economic policies and to account explicitly for the impacts of likely policy measures in one country on the other economies. The influence of economic policies abroad and other foreign developments on the U.S. economy is profound, and the Federal Reserve must carefully take them into account when considering its monetary policy. But these influences do not fundamentally constrain our ability to meet our most important monetary policy objectives. Developments within U.S. financial markets remain the strongest influence on the asset prices and interest rates determined by those markets and, through them, on the U.S. economy. Exchange rates absorb much of the impact of developments in foreign asset markets, permitting U.S. interest rates to reflect primarily domestic economic conditions. Exchange rates influence the prices of products that do, or can, enter into international trade. Such factors can bring about changes in the composition of production between purely domestic goods and services and those entering international trade, and they can affect aggregate price movements for a time. However, the overall pace of spending and output in the United States depends on the demands upon all sectors of the U.S. economy taken together. And our inflation rate, over time, depends on the strength of those demands relative to our ability to supply them out of domestic production. Because the Federal Reserve is able to affect short-term interest rates in U.S. financial markets, it is able to influence the pace of economic activity in the short run and inflationary pressures longer term. To be sure, monetary policy must currently balance more factors than in previous decades. But our goals are still achievable. Monetary policy is only one tool, however, and it cannot be used successfully to meet multiple objectives. The Federal Reserve, for example, can address itself to either domestic prices or exchange rates but cannot be expected to achieve objectives for both simultaneously. Monetary policy alone is not readily capable of addressing today's large current account deficit, which is symptomatic of underlying imbalances among saving, spending, and production within the U.S. economy. Continued progress in reducing the federal deficit is a more appropriate instrument to raise domestic saving and free additional resources for productive investment. The long-term health of our economy requires the balanced use of monetary and fiscal policy to reach all of the nation's policy objectives. CONSIDERATIONS REGARDING IMMEDIATE RELEASE OF FOMC OPERATING DECISIONS Finally, you requested that I address an issue that has been prominent in recent discussions of Statements to the Congress the procedures used to implement policy on a day-to-day basis. I refer to the way the Federal Reserve communicates its policy decisions to the public. The selection of money and debt ranges is aired promptly and thoroughly in the semiannual reports and testimonies. Changes in the discount rate are immediately announced in a press release. Decisions made about open market operations at and between FOMC meetings are conveyed to the markets and to the public at large through those operations. In practice, there is little lag between a discrete change in operating policy and the wide recognition of that change, despite the absence of an immediate public announcement. Guidance for those operations is given to the Account Manager at the Federal Reserve Bank of New York as a Directive, which is made public shortly after the next FOMC meeting, six to seven weeks later. Suggestions have been made that we release the Directive immediately after an FOMC meeting, or announce publicly any change in our operating objectives as it occurs. These suggestions have appeal: Surely more information is better than less in promoting efficient financial markets; and the need to infer the Federal Reserve's policy stance from its actions can give rise to mistakes and unnecessary market volatility. Yet the amount of genuine new information that would be released is small; it is subject to misinterpretations; and its premature announcement could adversely affect the policy process. For example, the Directive itself cannot capture all the considerations that guide Committee policy for the intermeeting period. It needs to be accompanied by the record of the Committee's deliberations, which takes several weeks to prepare properly. Moreover, early release could provoke overreactions in financial markets to contingencies or reserve pressure alternatives mentioned in a Directive that may not occur, or that may be superseded by intermeeting developments and adjustments. To the extent that market participants anticipate contingencies in the Directive that never materialize, the markets would be subjected to unnecessary volatility. 221 Earlier release of the Directive would, in addition, force the Committee itself to focus on the market impact of the announcement as well as on the ultimate economic impact of its actions. To avoid premature market reaction to mere contingencies, FOMC decisions could well lose their conditional character. Given the uncertainties in economic forecasts and in the links between monetary policy actions and economic outcomes, such an impairment of flexibility in the evolution of policy would be undesirable. Wide movements in bond and stock prices occur when investors receive new information that significantly alters their expectations over a relatively long-term horizon. Normally, changing perceptions about the current operating stance of monetary policy play only a minor role in episodes of financial variability. For example, over the last two months, U.S. bond and stock prices fell appreciably on balance, with fairly wide day-to-day and even intraday swings, but there was no uncertainty or change of view about the current stance of operating policy. To the extent that any of these market movements reflected policy, they must have been reactions to prospective changes in policy. But announcements of future changes in operating policy are not possible, since they are contingent upon future economic developments. Changes in our current operating stance, of course, have the potential to alter anticipations of future conditions, including future policy. At times, monetary policymakers wish to strengthen the market's sense of a more basic change in the thrust of policy through an announcement effect, as well as through a change in the instrument itself. Changes in the discount rate provide good examples. More often, however, the Federal Reserve judges that policy implementation is better served through small, incremental operating moves that do not connote a significant alteration in policy intent and do not have major implications for financial conditions in the more distant future. Signaling such policy moves through open market operations usually avoids major and potentially destabilizing movements in bond and stock prices. 222 Federal Reserve Bulletin • April 1990 This way of distinguishing the nature of policy intent may well convey information to the financial markets about the future direction of policy immediate change. better than would a formal, announcement of every policy • Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 20, 1990. Statement by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, before the Committee on Finance, U.S. Senate, February 27, 1990. I am pleased to be here today to discuss the government's role in providing retirement security to present and future generations—an issue that has moved to the forefront of the policy debate. Senator Moynihan has introduced legislation to cut payroll taxes and return social security to a pay-as-you-go basis, and others would like to move its finances fully off budget. In large part, such proposals arise out of frustration with the slow pace of deficit reduction, and they have helped to dramatize the seriousness of the current budget situation. But I am concerned that they will ultimately be counterproductive and hamper the efforts needed to meet our longer-term fiscal responsibilities. And, as I hope to make clear, they will increase the difficulty of providing for the needs of an aging population in a way that is equitable across generations. I shall address, in particular, how the social security system can contribute to those objectives; this issue was a main focus of the National Commission on Social Security Reform in the early 1980s. I shall also touch on the relationship of social security to the rest of the budget and its role in the setting of overall budget goals. I have testified often before committees of the Congress about the corrosive effects that sustained large budget deficits have on the economy and about the way our economic prospects in coming years will hinge on our ability to increase national saving and investment. One factor that argues for running sizable budget surpluses by later this decade is the need to set aside re- sources to meet the retirement needs of today's working population. Although the share of the total population that is in the labor force has risen steadily over the past few decades, that percentage will shrink considerably after the turn of the century as members of the so-called baby boom generation begin to retire. Barring a sharp upturn in the birth rate, a large influx of immigrants, or a significant increase in the age of retirement, growth of the labor force will slow appreciably. The demographics are compelling. In 1960, there were twenty beneficiaries for every one hundred workers contributing to social security; currently there are thirty. The Social Security Administration—under intermediate economic and demographic assumptions—expects that number to approach fifty by about the year 2025 and to remain at that level at least through the middle of the twenty-first century. Assuming their living standards keep pace with those of the working population, the elderly will of necessity consume a growing proportion of total output in the future. They will finance their consumption out of private and public pensions and by drawing down their own assets. Nonetheless, the goods and services they buy can only come from the output of then-active workers. The allocation of production to meet the needs of retirees necessarily will cut into what is available for consumption by the rest of the population and for investment in new equipment and structures. We can do little to change the demographic forces. We can, however, take actions now that will help to lift the size of future output above that implied by the current pace of capital formation and the trend in productivity. Such actions will improve the likelihood that future workers can maintain their living standards while satisfying the retirement expectations of current work- Statements to the Congress ers. Your decisions will also influence how much of the burden of its retirement the baby boom cohort will shoulder for itself and how much will fall on its children. Indeed, this is one of the few instances in which policymakers have had the luxury of being able to foresee a problem that a thoughtful policy response might ameliorate. Thus far, I believe, the plan for social security, given the conflicting political pressures, has been reasonable. One element in the strategy is the accumulation of sizable balances in the social security trust funds over the next few decades. As you know, before the Social Security Amendments of 1977, the system operated, in effect, on a payas-you-go basis. The 1977 amendments set in motion an accumulation of trust fund assets that can be drawn down as required to meet the retirement needs of today's workers. This shift toward a funded system was given careful further consideration by the National Commission on Social Security Reform in the early 1980s. The deliberations of the commission identified several complex issues. They included difficult questions of equity within and across generations and assessments of the effects social security has on incentives to work and save. We recognized, too, the political riskiness of accumulating large surpluses. On the whole, however, we concluded that each cohort of workers and their employers should make contributions into a fund that, with interest, at least approached the actuarial value of the benefits the workers will eventually receive. Notably, this requirement forces today's workers—including the baby boomers—to pay more in payroll taxes than is needed to cover the benefits of the relatively small group of current beneficiaries, so that sizable surpluses build up in the trust funds. In essence, the commission reaffirmed the intent of the 1977 amendments; our recommendations were largely accepted by the Congress and hence shaped the legislation of 1983. The current structure of social security may not be appropriate in all circumstances. But, at present, it is still the best option. One reason to build surpluses in the trust funds is to set aside saving, and thus to divert part of the nation's current production away from consumption—both private and public. Assuming, of course, that the surpluses are not offset by re 223 ductions in the saving of households and businesses or by larger dissaving, that is, deficits, elsewhere in the federal budget, they should boost investment and thus foster the growth of the nation's capital stock. And with more capital per worker than would otherwise be in place, productive capacity will be greater, and we will be better able to fulfill our promises to the retirees, while maintaining the standard of living of future workers. The relationships among saving, the aggregate capital stock, and labor productivity are complex and difficult to pin down quantitatively, in part, because productivity depends not only on the amount of physical capital but on factors such as the education and skill level of the work force and the rate of technological progress. Nonetheless, I have little doubt that a larger, more modern capital stock will improve labor productivity and hence overall real income levels in coming years. Building surpluses in the trust funds also contributes to fairness across generations. Given the demographics, the generation after the baby boomers will have to shoulder a fairly heavy burden to meet the retirement claims of their parents. This burden can be ameliorated only if current workers save enough during their working years to fund, in effect, their own retirement. Saving today will not reduce the share of GNP that will be transferred to retirees tomorrow; however, current saving directed toward capital formation will help to ensure that overall incomes in the future will be large enough to provide benefits to retirees without denting the standards of living of their children too deeply, if at all. The current social security system, when used properly, has such a focus and affords an opportunity for today's workers to lighten the burden on the workers of the next generation. Pay-as-you-go financing does not have that focus. Rather, each year, workers and employers contribute only enough to cover the cost of providing benefits to current recipients and to maintain a contingency reserve sufficient to carry the system through periods of poor economic performance. Thus, returning to pay as you go now would confer a significant windfall on the baby boomers who, in effect, would benefit doubly from the size of their age cohort. Given their 224 Federal Reserve Bulletin • April 1990 numbers, each would make a disproportionately small contribution during his or her working years to the retirement of their elders. Yet in retirement, each would expect to receive full benefits, which could come only at a disproportionately high cost to their children. At that time, pressures may well emerge to stretch out benefits by, for example, increasing the retirement age to reflect rising life expectancies. Linking an individual's benefits to his or her contributions has generally been considered equitable and desirable. Under the present system, the current generation of workers and the next will face the same Old Age, Survivors, and Disability Insurance (OASDI) tax rate of 12.4 percent, summing the employee and the employer shares. Assuming that benefits evolve according to existing laws—and that social security revenues are set aside, rather than used to lower other taxes or raise other outlays—the system moves in the direction of actuarial soundness; it confers no windfall gains or unforeseen losses on any particular generation. Accordingly, it offers some assurance to current and future workers that the government will keep its promises. Senator Moynihan's proposal cuts the OASDI tax rate to 10.2 percent of covered wages in the 1990s. However, as his bill makes clear, with pay as you go, rates will have to rise sharply once the baby boomers begin to retire; the proposed rate for the years 2025 through 2044, for example, is 15.4 percent. Support for the system may well erode when the next generation is asked to take on a tax bill that their parents were unwilling—or too shortsighted—to assume during their own working years. The choice of financing mechanism can also influence the mix of federal taxes. Indeed, the increase in the share of payroll taxes in total revenues—and the regressiveness of these taxes—is frequently cited as a reason to return to pay-as-you-go financing. However, looking at just the tax side presents an overly narrow view of the relationship between social security and the distribution of income in the United States. When considered from the perspective of an individual's lifetime—and when the formula for benefits as well as contributions is taken into account—social security clearly appears progressive. The numbers are striking. Consider individuals who retire this year at age sixty-five after working forty years. All anticipate receiving a benefits annuity that equals or exceeds in pre sent-value terms the sum of lifetime social security contributions plus accumulated interest. The return for low-income workers, however, is especially great. In fact, the average minimum-wage worker can expect benefits that—relative to contributions—are roughly one and one-half to two times as large as those received by persons with aboveaverage earnings. In any event, although the current system assigns them a leading role in providing retirement incomes in coming decades, the trust funds are only part of the story. In reality, the social security reserves are merely a bookkeeping entry within the federal sector. Ultimately, their size matters only to the extent that they lead to smaller overall federal budget deficits—or larger total surpluses—and thus to higher national saving than would otherwise be the case. At present, the contribution of the trust funds to national saving is greatly diluted by the large deficits in the rest of the budget. As long as the non-social-security deficits remain sizable, Senator Moynihan and others are correct in pointing out that we are doing little to solve the future retirement problem. If, however, actions are taken to bring the rest of the budget into balance, the trust funds will no longer be financing current government consumption, but will translate dollar for dollar into national saving. Where in the total unified budget the saving takes place—in social security or elsewhere—is of secondary importance. What matters in terms of reaching our longer-term growth objective is the government's net contribution to national saving. The important policy issue in the current context, therefore, is whether any of the major proposals regarding social security will help to achieve that goal. For example, is the federal government more likely to shift toward a position of positive net saving if social security is returned to pay-as-you-go financing? Given the large revenue loss implied by the plan, I think not. Another proposal is to move the social security system fully "off-budget," so that the trust funds would be excluded from the official summary budget figures and from the setting of deficit Statements to the Congress targets. Unlike Senator Moynihan's plan, a switch in budget accounting systems in isolation would not change the government's contribution to national saving and thus would have no direct effect on the economy. But the proposal raises other concerns. First, splitting off social security—or any other program—would highlight a distinction that has little macroeconomic or analytical significance. Regardless of which numbers are reported, government saving or dissaving would continue to be well approximated by the surplus or deficit in the total federal budget as currently defined in the National Income and Product Accounts, a close variant of the total unified budget. Moreover, the way budget numbers are presented can influence public perceptions of important fiscal issues and thus—for good or ill—shape the debate among policymakers. As a consequence, methods of accounting and presentation can play a role in determining the size of the overall deficit or surplus. In particular, I fear that adopting a system that draws attention to the surpluses in the trust funds might foster the illusion that we already are putting enough money aside to meet future obligations. Furthermore, it would tend to remove social security from the broader fiscal policy debate. In large part, my concerns are grounded in the analytical issues I discussed earlier. But they are compounded by a technical factor that affects the interpretation of the commonly cited statistics on the social security trust funds. For example, the Congressional Budget Office (CBO) projects that the annual surplus in the OASDI trust funds will increase from $66 billion in fiscal 1990 to $128 billion in fiscal 1995. But, as the CBO points out, fully half of the difference between those two figures is accounted for by the interest received on the trust funds' holdings of government debt, which is forecast to grow from $16 billion to $50 billion over that period. The latter figure represents nearly 0.7 percent of the GNP projected by the CBO for that year. Moreover, in their report for 1989, the Social Security Board of Trustees projects that ratio to rise to 1.3 percent of GNP by the year 2030. Such intragovernmental interest payments are both an inflow to the trust funds and an outlay from the general funds and 225 wash out when the accounts are consolidated. But, because they result in an overstatement of both the saving taking place in the trust funds and the dissaving elsewhere, they can contribute to a significant misreading of saving trends when either part of the budget is considered in isolation. The figures over longer time horizons are even more dramatic, magnified by the wonders of compound interest; but the story is much the same. For example, the Social Security Trustees project that net inflows to the trust funds— apart from interest—will remain at their current level of about 1 percent of GNP over the next twenty years, then turn sharply negative once the baby boomers retire in force. However, because of the surging interest payments, trust fund assets will continue to grow for a time, reaching a peak of about $12 trillion around the year 2030. Excluding interest payments, those assets will rise to only about $3 trillion around the year 2020 before turning down. Thus, the peak trust balance in 2030 will essentially represent interest receipts that are offset elsewhere in the federal accounts. While the contribution of social security to national saving is sizable— over both the medium and the long term—it is clearly much smaller than the conventional calculations suggest. More generally, I fear that moving away from the unified budget concept will impede the achievement of the sizable deficit reductions that the nation so sorely needs. The arguments are well known. Many of them center on social security itself and on the inevitable pressures that would develop to expand benefits or to cut payroll taxes if the system were not subject to the discipline of an overall deficit constraint. In the absence of offsetting changes elsewhere in the budget, such actions would reduce national saving and over time worsen the burden on the generation after the baby boom. Moreover, responsible budgeting requires a comprehensive framework for setting priorities and assessing competing claims on national resources. That function currently is filled by the unified budget process. If deficit targets were to be set exclusive of social security, they could be met—at least in part—by moving related programs into the social security account or by 226 Federal Reserve Bulletin • April 1990 shifting other trust funds off the books. Such actions would shrink the on-budget deficit but would not reduce federal demands on private saving or on credit markets. Most important, we must not allow the choice of a budget accounting system to divert attention from the pressing need for meaningful deficit reduction. In other words, the Congress must take actions to set the federal government's claim on saving—however the budget deficit is measured—firmly on a downward track. Making a serious commitment to eliminating the unified deficit within the foreseeable future is an essential first step and meeting that commitment will be a formidable challenge. But it is just a first step. If households and businesses continue to save relatively little, then the federal government should compensate by moving its budget in the direction of greater surplus. Let me reiterate that the source of our fundamental budget problem is the persistence of enormous deficits at a time when demoraphic trends call for increases in private and government saving. Undoing a social security system that is the result of many years of careful consideration and compromise, in my judgment, will not address our fundamental policy needs. Indeed, it could be counterproductive. • Statement by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, before the Committee on the Budget, U.S. House of Representatives, February 28, 1990. emerged an increasing risk of an undue weakening in economic activity. Consequently, the Federal Reserve in June embarked on a series of measured steps to ease reserve positions, and those steps continued through late last year. Interest rates, which had turned downward in the spring, declined further in the second half of the year, to levels about 1 Vi percentage points below March peaks. In the event, output growth slowed from the unsustainable pace of the two previous years, but still was sufficient to support the creation of 2Vi million jobs and keep the civilian unemployment rate steady at 5lA percent. Inflation was held to a rate no faster than that of recent years, but unfortunately no progress was made in 1989 toward price stability. The policy adjustments that we undertook over the course of 1989 were more in the nature of a midcourse correction, rather than a reflection of a fundamental shift in policy. Our more basic goals and strategies remained unchanged from what they had been in previous years. The ultimate goal of monetary policy still is that of ensuring price stability so as to promote the maximum sustainable rate of economic growth. Similarly, the strategy for moving toward this goal still is that of restraining growth in money and aggregate demand in coming years enough to establish a clear downward tilt to the trend of inflation and inflation expectations, while avoiding a recession. I am pleased to have the opportunity to appear before you once again. As you know, the Federal Reserve's semiannual Monetary Policy Report to the Congress, which was submitted to the Congress last week, provided an extensive picture both of recent economic developments and of the Federal Reserve's policy actions and intentions. 1 Rather than take you through the details of that report this morning, I would like briefly to review some of its main themes and then turn to some of the specific budgetary issues that the committee has asked me to address. ECONOMIC AND MONETARY DEVELOPMENTS IN 1989 POLICY About a year ago, in early 1989, Federal Reserve policy was in the final phase of a period of gradual tightening, designed to inhibit a buildup of inflation pressures. However, as the year progressed, the threat of accelerating inflation seemed to diminish, and at the same time, there 1. See "Monetary Policy Report to the Congress," Federal Reserve Bulletin, vol. 76 (March 1990), pp. 107-19. Statements to the Congress MONETARY POLICY AND THE ECONOMIC OUTLOOK FOR 1990 Thus far in 1990, monetary policy basically has stayed on an even keel, and the federal funds rate has remained around 8V4 percent. Nonetheless, the interest rates on Treasury securities and longer-term private instruments have reversed, on net, some of their earlier declines, reflecting the reaction of investors to stronger-than-expected economic data, a firming of oil prices, and the prospect of greater demands on world saving to support development of the economies of Eastern Europe. In assessing the economic prospects for 1990 as a whole, the Federal Reserve Governors and the Reserve Bank Presidents foresee continued moderate economic expansion, consistent with conditions that will foster progress toward price stability over time. At its meeting earlier this month, the Federal Open Market Committee (FOMC) selected ranges for growth in money and debt that it believes will promote this outcome. In brief, the FOMC reaffirmed the tentative growth range for M2 of 3 percent to 7 percent in 1990 that it set last July, and it reduced the M3 targets from their tentative range. The M2 range for 1990, which is the same as that used in 1989, is expected by most FOMC members to produce somewhat slower growth in nominal GNP this year. The new M3 range of 2Vi percent to 6V2 percent is intended to embody the same degree of restraint as the M2 range, but it was lowered to reflect the continued decline in thrift assets and funding needs anticipated to accompany the ongoing restructuring of the thrift industry. The monitoring range for debt was lowered from a range of 6V2 percent to 10V2 percent in 1989 to a range of 5 percent to 9 percent in 1990. The overwhelming majority of the Committee believes that money growth within these annual ranges will be compatible with expansion of nominal GNP in a range of 5V2 percent to 6V2 percent. Expectations of real GNP growth center on a range of PA percent to 2 percent over the four quarters of the year. A slight easing of pressures on resources probably is in store, and inflation pressures should remain contained, even though the decline in the dollar's value 227 since last summer likely will reverse some of the beneficial effects on domestic inflation stemming from the dollar's earlier consumer appreciation. The consumer price index (CPI) this year is projected to increase 4 percent to 4V2 percent, as compared with last year's rise of 4V2 percent. RISKS TO THE ECONOMIC OUTLOOK Economic forecasting, of course, is not an exact science, and at present, there are obvious risks in the outlook. For example, it is possible that the weakness in economic activity evident around the turn of the year may tend to cumulate, causing members' forecasts about production and employment this year to be overly optimistic. However, two major depressants of growth now seem behind us: Boeing has returned to full-scale production after last fall's long strike, and in January the auto industry greatly reduced its inventory problems by slashing production and boosting incentives to customers. Still, we shall need to remain attentive to the risks posed in several areas in which the undercurrents have been troubling of late. Profit margins, for example, have deteriorated substantially in recent quarters, and a continuation of this trend could seriously undercut the expansion in capital investment. Another concern is the increase in financial leverage in the economy. In recent years, business debt burdens have been enlarged through corporate restructurings, and as a consequence interest costs as a percent of cash flow have risen markedly. Among households, too, debtservicing burdens have risen to historic highs relative to income, and delinquency rates have moved up a bit. Clearly, should the economy fall into a recession, excess debt-service costs would intensify the problems of adjustment. While these strains seem unlikely in themselves to precipitate a downturn, they are nonetheless worrisome. Fortunately, the growth of nonfinancial debt has slowed from its frenetic pace of the mid-1980s, and a continuation of this recent trend, along the lines that the FOMC is anticipating, should lessen the financial strains and, hopefully, the threat to the economy. 228 Federal Reserve Bulletin • April 1990 THE FEDERAL BUDGET DEFICIT AND SOCIAL SECURITY A risk in the longer-run outlook for the economy—and one that is closer to the day-to-day work of this committee—is the possibility that the federal government might fail to build upon the progress that has been made to date in moving toward reduced federal budget deficits and eventually, I would hope, toward a position of surplus. I have testified often before committees of the Congress about the adverse effects on our economy of sustained large budget deficits. Put simply, my central concern on this score is that deficits cut into national saving and investment and thereby limit our ability to expand and upgrade the nation's stock of productive capital. It is the size of that stock, together with the quality of the labor force, that ultimately determines overall productive capacity and the future standard of living of our population. Unfortunately, much of the recent policy debate has shifted away from the budget deficit per se, and toward the financing over time of the nation's social security program. Senator Moynihan has introduced legislation to cut payroll taxes and return the system to a pay-as-you-go basis, and others would like to move its finances fully off-budget. As I stated yesterday in my testimony before the Senate Finance Committee, I am concerned that these changes, if enacted, will ultimately prove counterproductive and will hamper the efforts needed to meet our longerterm fiscal responsibilities. They also would likely increase the difficulty of providing for the needs of an aging population in a way that is equitable across generations. If I may frame the issue in the most basic way: We need to save and invest now to have the productive economy that can support a rapidly growing population of retirees two or three decades in the future; pay as you go would not be supportive of that savinginvestment relationship, besides undermining the notion of equity across generations. The need to take a long view of the issue arises from the compelling demographic trends that are now in progress. In 1960, there were twenty beneficiaries for every one hundred workers contributing to social security; currently there are thirty. The Social Security Administration—under intermediate economic and demographic assumptions—expects that number to approach fifty by about the year 2025 and to remain at that level at least through the middle of the twentyfirst century. Assuming that their living standards keep pace with those of the working population, the elderly will of necessity consume a growing proportion of total output in the future. They will finance their consumption out of private and public pensions and by drawing down their own assets. Nonetheless, the goods and services they buy can only come from the output of then-active workers, whose productivity will depend on the investments that we make in capital and new technologies in the interim. Investment is possible, of course, only if there is saving—the diversion of part of the nation's current production away from consumption, both private and public. The present buildup in the social security trust funds is one source of the needed saving. While, in a sense, these funds exist on paper only, they also are very real claims on future taxpayers and hence on future real output. All else constant, the accumulation of saving in the trust funds increases the likelihood that the real output will be available to meet the needs of retirees without denting the living standards of their children too deeply, if at all. In particular, to the extent that the surpluses are not offset by reductions in the saving of households and businesses or by larger dissaving, that is, deficits, elsewhere in the federal budget, they should boost investment and thus foster growth of the nation's capital stock. And with more capital per worker than would otherwise be in place, productive capacity and output also will be higher. At present, the contribution of the trust funds to national saving is being swamped by the large deficits in the rest of the budget. As long as the non-social-security deficits remain sizable, Senator Moynihan and others are correct in pointing out that we are doing little to solve the future retirement problem. If, however, actions are taken to bring the non-social-security part of the budget into balance, the trust funds no longer will be financing current government spending, but will translate dollar for dollar into national saving. Statements to the Congress Ultimately, when saving takes place in the total unified budget—social security or elsewhere—is of secondary importance. What matters in terms of reaching our longer-term growth objective is the government's overall net contribution to national saving. Thus, a chief criterion for evaluating the major proposals regarding social security should perhaps be whether they would, in fact, help us to achieve the needed saving and investment. For example, is the federal government more likely to shift toward a position of positive net saving if social security is returned to pay-as-you-go financing? Given the large revenue loss implied by the plan, I think not. A second key criterion for evaluating the proposals is whether they meet the test of equity across generations. Without going into great detail on this point, it would seem to me that the pay-as-you-go proposal again falls short. Indeed, returning now to pay-as-you-go financing would confer a significant windfall on the baby boomers who, in effect, would benefit doubly from the size of their age cohort. Given their numbers, each would make a disproportionately small contribution during his or her working years to the retirement of their elders. Yet, in retirement, each would expect to receive full benefits, which could come only at a disproportionately high cost to their children. The present structure, in my view, is more likely to ensure that an individual's contributions are linked equitably to his or her benefits. MOVING SOCIAL "OFF-BUDGET" SECURITY I also have deep reservations about proposals that would move the social security system fully "off-budget," so that the trust funds would be excluded from the official summary budget figures and from the setting of deficit targets. First, splitting off social security—or any other program—would highlight a distinction that has little macroeconomic or analytical significance. Regardless of which numbers are reported, government saving or dissaving would continue to be well approximated by the surplus or deficit in the total federal budget as currently defined in the 229 National Income and Product Accounts, a close variant of the total unified budget. Second, the way budget numbers are presented can influence public perceptions of important fiscal issues and thereby—for good or ill— play a role in decisions that affect the size of the overall deficit or surplus. In particular, I fear that adopting a system that draws attention to the surpluses in the trust funds might foster the illusion that saving already is great enough to meet future obligations. In large part, my concerns are grounded in the analytical issues I discussed earlier. But they are compounded by a technical factor, namely that much of the growth in the trust funds is reflecting interest received from the holdings of government debt. Such intragovernmental interest payments, which will approach 1 percent of GNP in a few years, are both an inflow to the trust funds and an outlay from the general funds, and they wash out when the accounts are consolidated. But, because they result in an overstatement of both the saving taking place in the trust funds and the dissaving elsewhere, they can contribute to a significant misreading of saving trends when either part of the budget is considered in isolation. Moreover, the very growth in anticipated social security surpluses, in large part the result of interest received, is mirrored in the increasing interest costs and widening deficits projected in the non-social-security part of the budget. The implied deficit-reduction targets might then be well out of political reach. Accordingly, I fear that moving away from the unified budget concept will impede the achievement of the sizable deficit reductions that the country so sorely needs. In addition, the inevitable pressures to expand social security benefits or cut payroll taxes if the system were not subject to the discipline of an overall deficit constraint would mount. In the absence of offsetting changes elsewhere in the budget, such actions would reduce national saving and over time worsen the burden on the generation after the baby boom. Responsible budgeting requires a comprehensive framework for setting priorities and assessing competing claims on national resources. That function currently is filled by the unified budget process. If deficit targets were to be set exclusive 230 Federal Reserve Bulletin • April 1990 of social security, for example, they could be met—at least in part—by moving related programs into the social security account or by shifting other trust funds off the books. Such actions would shrink the on-budget deficit but would not reduce federal demands on private saving or on credit markets. THE NEED FOR FURTHER REDUCTION DEFICIT Most important, we must not allow the choice of a budget accounting system to divert attention from the pressing need for meaningful deficit reduction, but rather must take actions to set the federal government's claim on saving—however the budget deficit is measured—on a firm downward track. Making a serious commitment to eliminating the unified deficit within the foreseeable future is an essential first step, and meeting that commitment will be a formidable challenge. But it is just a first step. If households and businesses continue to save relatively little, then the federal government should compensate by moving its budget in the direction of greater surplus. I would remind you, in closing, that budget decisions often have been shaped by short-run concerns and pressures. Those same decisions, though, many times have had longer-run repercussions that were unintended or perhaps even contrary to original intentions. I hope that in your deliberations on the budget—and particularly in your actions on the social security issue—you will give special attention to the long-run needs of the economy. It is the process of saving, investment, capital accumulation, and rising productivity that largely will determine the economic prospects of the next generation. These goals will be fostered to the extent that you keep us on the path toward reduced government deficits and increased national saving. • 231 Announcements PROPOSED ACTIONS The Federal Reserve Board issued for public comment on February 6, 1990, a proposed regulation that would set standards for appraisals conducted for state member banks and bank holding companies in federally related transactions. Comments should be received by the Board by April 10. The Board also issued for public comment on February 14, 1990, a proposed regulation providing interim procedures for notifying the Board of changes in senior executive officers and directors at bank holding companies and state member banks that are newly chartered, undercapitalized, or in troubled condition. Comments are requested by April 23, 1990. HOTLINE TELEPHONE NUMBER AVAILABLE FOR OFFICE OF THE INSPECTOR GENERAL AT THE BOARD The Office of Inspector General at the Board has established a nationwide, toll-free hotline telephone number that can be used to report suspected cases of impropriety, wrongdoing, fraud, or waste and abuse in programs and operations administered or financed by the Board. The hotline number is (800) 827-3340. The Office may also be reached at the local Washington number (202) 452-6400, or by writing to the following address: Office of Inspector General Federal Reserve Board Washington, D.C. 20551. CHANGES IN BOARD STAFF The Board of Governors announced the following official staff actions, effective February 14, 1990: Robert J. Zemel has been promoted from Assistant Director to Associate Director in the Division of Applications Development and Statistical Services. Marianne M: Emerson has been appointed Assistant Director in the Office of Executive Director for Information Resources Management. Raymond H. Massey has been appointed Assistant Director in the Division of Applications Development and Statistical Services. Po Kyung Kim has been appointed Assistant Director in the Division of Applications Development and Statistical Services. Ms. Emerson joined the Board's staff in August 1982 and has rotated through several positions in Information Resources Management as a manager. She holds a B.A. from Bryn Mawr College and an M.S. in Computer Science from the University of Maryland. Mr. Massey joined the Board's staff in February 1971 and has held several positions in the Division of Applications Development and Statistical Services and in the Division of Hardware and Software Systems. Mr. Kim joined the Board's staff in April 1977 and has held several managerial positions in the Division of Applications Development and Statistical Services. He holds a B.A. in Economics from the University of North Carolina. SYSTEM MEMBERSHIP: STATE BANKS ADMISSION OF The following state bank was admitted to membership during the period from November 1, 1989, to January 31, 1990: Pennsylvania Troy First Bank of Troy 233 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 18-19, 1. Domestic Policy 1989 Directive The information reviewed at this meeting suggested that economic activity was expanding slowly in the fourth quarter, with the moderation from earlier in the year only partly attributable to strikes and other special factors. Abstracting from these factors, the growth of final demands had slowed, and the effects were especially evident in the manufacturing sector. By contrast, growth of the service sector appeared to be well sustained, and overall construction activity seemed relatively firm. Broad measures of inflation indicated that prices had risen more slowly on balance since midyear, partly reflecting sharp reductions in energy prices; recent wage data suggested no significant change in prevailing trends. Total nonfarm payroll employment rose appreciably in November after a small gain in October. All of the November increase occurred at service, trade, and financial establishments. Job losses continued in manufacturing, especially in motor vehicle and related industries, but cutbacks were evident elsewhere, notably in electrical machinery. The civilian unemployment rate edged up to 5.4 percent in November, its highest level since January. Industrial production rose slightly in November after a sizable decline in October that resulted from strike activity and other disruptions; adjusting for these temporary influences, production was down slightly, on balance, in recent months. Output of consumer goods declined in November as production of durables other than motor vehicles dropped sharply further. Output of business equipment increased appreciably, owing in part to a recovery in the production of computers in the aftermath of the earthquake in the San Francisco area. Total industrial capacity utilization slipped a bit in November and was nearly 1 Vi percent below its level a year earlier. Nominal retail sales in November partially retraced the sharp October decline; sales for the month were little changed from the third-quarter average, reflecting continued weakness in motor vehicles. Outside of vehicles, sales rebounded for a wide range of goods, especially for apparel items. Housing starts declined in November as construction of multifamily units fell back to about the average pace that had prevailed since April. However, for the October-November period, starts were up somewhat on average from their third-quarter level because of a pickup in single-family units. Recent indicators of business capital spending suggested a weakening in expenditures after a substantial increase earlier in the year. Shipments of nondefense capital goods fell in October for a second straight month. Part of the October decline stemmed from the effects of the strike at Boeing on shipments of aircraft; small declines were widespread elsewhere, and a considerable drop occurred in computing equipment. The orders data for October suggested continued weakness in equipment outlays in the near term. Nonresidential construction activity posted another gain, led by a sizable increase in non-office commercial construction; however, office vacancy rates, construction permits, and other indicators pointed to renewed weakness. Total manufacturing and trade inventories rose in October at about the third-quarter pace. Accumulation of manufacturing inventories was moderate, and stocks remained at relatively low levels compared to shipments. Stocks at wholesalers jumped but, in relation to sales, remained in the middle of the range that has prevailed over the past two years. Retail inventories fell appreciably in October, reflecting a large decline in auto 234 Federal Reserve Bulletin • April 1990 dealers' stocks. Excluding auto dealers, the retail inventory-sales ratio increased in October to a level well above its range over the past year. The nominal U.S. merchandise trade deficit widened appreciably in October from an upward revised September rate. Much of the widening reflected a sharp increase in imports of industrial supplies, notably paper, steel, and textiles. The value of exports showed a small increase for the third straight month as larger shipments of automotive products and other industrial goods outweighed a substantial decline in exports of aircraft. Indicators of economic activity in the major foreign industrial countries suggested a mixed performance in the third quarter, although growth remained fairly strong on balance. Economic growth appeared to have rebounded strongly in Japan and, adjusted for special factors, to have remained firm in Germany. Producer prices for finished goods edged down in November after sizable increases in the previous two months and, on balance, had risen at lower rates since midyear. Prices of finished energy products, especially gasoline, fell sharply; the drop more than offset a second month of increases in finished food prices. Consumer prices excluding food and energy items rose a little faster in October and November than in other recent months. Over the OctoberNovember period, food prices were boosted by sharp increases in dairy products, meats, and fresh produce while the rise in energy prices was held down by a net decline in the price of gasoline. Average hourly earnings slipped in November, and the large increase initially reported for October was revised downward. However, the results of recent collective bargaining activity suggested a continuation of the larger wage settlements evident earlier in the year. At its meeting on November 14, the Committee had adopted a directive that called for maintaining the existing degree of pressure on reserve positions and that provided for giving special weight to potential developments that might require some easing during the intermeeting period. The availability of reserves had been eased slightly earlier in November. With regard to the intermeeting period ahead, the Committee had agreed that slightly lesser reserve restraint would be acceptable, or slightly greater reserve re- straint might be acceptable, depending on progress toward price stability, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets. The contemplated reserve conditions were expected to be consistent with growth of M2 and M3 over the period from September through December at annual rates of about IVi percent and AVi percent respectively. In the period since the November meeting, the Manager for Domestic Operations had directed open market transactions toward maintaining an unchanged degree of reserve availability. Conditions in reserve markets softened temporarily around Thanksgiving when operations to meet seasonal reserve needs were misread as signaling a further easing of monetary policy. Over most of the intermeeting period, however, federal funds traded around 8V2 percent, the level prevailing at the time of the mid-November meeting. Adjustment plus seasonal borrowing fell to an average of around $150 million in the first half of December. To reflect a continuing decline in seasonal borrowing, technical reductions were made at the start of the intermeeting period and in the second week of December in the assumed level of adjustment plus seasonal borrowing used in constructing the target paths for the provision of reserves. Against the background of an unchanged monetary policy and incoming information that generally was viewed as consistent with expectations of continuing but slow growth in economic activity, most market interest rates changed little on balance over the intermeeting period. Major indexes of stock prices generally rose over the period. In foreign exchange markets, the tradeweighted value of the dollar in terms of the other G-10 currencies fell substantially despite some easing of short-term interest rates in Germany and Japan. The decline of the dollar primarily reflected the buoyancy of the German mark as exchange market participants interpreted political developments in Eastern Europe as having favorable implications for the German economy. The dollar declined somewhat less against other European currencies linked to the mark in the European Monetary System and was little changed against the yen. Record of Policy Actions of the Federal Open Market Committee Growth of the broader monetary aggregates accelerated somewhat further in November and remained robust in early December, despite a contraction in demand deposits that resulted in considerably slower expansion of Ml. The expansion of M2 continued to reflect the effects of earlier reductions in market interest rates and related opportunity costs, and it seemed likely that the velocity of M2 would decline substantially further in the fourth quarter. Assets of thrift institutions and their associated funding needs apparently continued to contract, keeping growth of M3 below that of M2, but the decline seemed to be at a reduced pace and in November M3 grew at its fastest rate since the summer. Through November, M2 had expanded at a pace near the midpoint of the Committee's annual range while M3 had grown at a rate a little above the lower bound of its annual range. The staff projection prepared for this meeting continued to suggest that the economy would expand at a reduced pace over the next several quarters. Growth in the first quarter was expected to rebound from temporary disturbances to production stemming from strike activity and natural disasters in the fourth quarter, although the extent of the rebound would be limited by further reductions in the production of motor vehicles in the early months of the year. Over the remainder of 1990, a relatively moderate expansion in consumer spending was projected to be a key factor in sustaining overall demand and production. Business outlays for fixed investment also were expected to increase, but at a much reduced pace in an environment of slow revenue growth and deteriorating cash flows. Housing construction was forecast to expand at a relatively sluggish pace over the course of the year. The projection continued to assume that the federal budget deficit would decline moderately and that net exports would make little contribution to domestic economic growth in 1990. Pressures on labor and other production resources were expected to ease only marginally, and the underlying trend of inflation was not projected to change significantly. In the Committee's discussion of the economic situation and outlook, members emphasized that signs of a weaker expansion had accumulated and that the economy was likely to remain slug 235 gish at least over the near term. While most members agreed that further economic growth was a reasonable expectation for the year ahead, several observed that recent developments suggested greater risks in the direction of a weaker economic performance. These members expressed concern that problems in some sectors of the economy such as motor vehicles and commercial and residential real estate might lead to greater caution in credit extensions and overall spending, especially given indications of some deterioration in business confidence, and to more widespread softening in the economy. Other members saw more favorable prospects for some strengthening of the expansion next year, though they did not anticipate a strong rebound in economic activity. These members recognized that there were imbalances in the economy, but they felt that, among other developments, prevailing patterns in orders and production, though softening, were not inconsistent with somewhat faster economic growth once current difficulties such as those in the automobile industry were worked through and the effects of the monetary policy easing over the past half year were felt more fully. It also was noted that certain forward-looking indicators, including commodity prices, monetary growth, foreign exchange rates, and the Treasury yield curve, were consistent with some pickup in economic expansion next spring. With regard to the outlook for inflation, those who believed the risks were on the side of a weaker economy and less pressure on production resources generally saw favorable prospects for further progress toward price stability next year. Some of the members who expected a somewhat stronger economy were less optimistic about the extent of such progress, if any, but they also believed that there was little risk of a pickup in the underlying rate of inflation. In the course of the Committee's discussion, members reported more sluggish business conditions in a number of areas and some loss of business confidence, but overall economic activity appeared to be continuing to grow in most, if not all, parts of the country. With some notable exceptions, manufacturing activity had moderated across the country, with particular weakness in the production of motor vehicles, other durable consumer goods, and some types of 236 Federal Reserve Bulletin • April 1990 capital equipment. Members observed that conditions in the automobile industry probably would continue to have a negative effect on overall economic activity in the months ahead, and some noted that the longer-term outlook was difficult to predict because structural problems related to changing demand patterns appeared to be involved. Construction activity also was cited as a source of weakness in many areas, though it remained relatively robust in others. In general, nonresidential construction seemed likely to be damped by overcapacity in office and other commercial structures. Overall demand for new housing appeared to be essentially flat, though with considerable local variations, despite earlier declines in mortgage interest rates. It was noted that the availability of financing for the construction of housing appeared to have been reduced by tighter supervisory regulations and some decrease in the number of traditional institutional lenders to this industry. In addition, the availability of such financing appeared to have been adversely affected by the weakness of real estate markets in a number of areas and the large resulting losses on loans. On a more positive note, a number of members commented that consumer spending was likely to be sustained by continuing gains in incomes and the ample liquid assets of households that were available to support greater spending. Consumer spending on services was likely to continue to grow. The outlook for retail sales was somewhat uncertain, including at this point the still very limited information on holiday sales, but outside the most depressed areas retailers appeared to be relatively optimistic. The recent depreciation of the dollar would tend over time to boost overall demand and economic growth. More generally, the recent slowing in the expansion could be attributed in part to special or temporary factors and to the lagged effects of the tightening of monetary policy through early 1989. On the whole, current demand conditions were not seen by most members as suggesting a cumulative weakening in the economy. With regard to the outlook for inflation, the views of the members continued to differ to some extent. Several anticipated that little or no progress was likely to be made in reducing inflation over the year ahead, in part because the effects of the recent decline of the dollar would tend to offset expected gains from diminished pressures on labor and other production resources. Some of these members also expressed concern that a possible resumption of economic growth at a pace closer to the economy's potential, perhaps later next year, would reverse any tendency for inflation to decline. Other members were somewhat more optimistic about the outlook for prices and wages. Some commented that they were encouraged by the performance of prices in the second half of 1989, and a number cited the strong competition for many products from both domestic and foreign producers, the behavior of industrial materials and commodity prices, and the growth of capacity in some key industries. In the Committee's discussion of monetary policy for the intermeeting period ahead, the members focused on the possible need to ease reserve conditions slightly further to provide greater assurance that weaknesses in demand did not persist or deepen. The current slowdown in economic growth was to a considerable extent the result of the policy implemented much earlier to restrain emerging inflation pressures, and this policy seemed at least to have avoided an upsurge in inflation. Over time, a further damping of price pressures was needed if the economy was to realize the benefits of price stability, but that need not involve a downturn in the economy. Several members observed that the choice between some slight easing at this time or waiting for additional evidence that the economy might be weakening further was a close one. A majority indicated that on balance they viewed the risks of a shortfall in economic activity as sufficiently high to justify an immediate move to slightly easier reserve conditions, and one member expressed a preference for somewhat greater easing. In this regard, some noted that the next several months might be a critical period in terms of avoiding a recession and that some modest easing at this point might have a calming effect on financial markets and help to boost business confidence. Given downward pressures on many prices and softness in business conditions, some slight easing was not likely in this view to be inconsistent with the long-run objective of price stability or the public's perception of the importance that the System placed on that objective. Record of Policy Actions of the Federal Open Market Committee These members recognized that an easing of reserve pressures immediately after the meeting would make the need for further easing less likely over the coming intermeeting period. As a consequence, they favored a directive that did not contain a tilt toward less restraint but one that gave equal weight to potential intermeeting adjustments in either direction. Members who supported an unchanged policy commented that current reserve conditions appeared to be consistent with ongoing expansion in business activity at a pace that over time would serve to moderate pressures on labor and other production resources, and they were concerned that further easing might overcompensate for current weaknesses in the economy at the cost of delaying progress toward price stability. In current circumstances, an easing also might foster some concern about the System's commitment to achieving price stability and put undesirable downward pressure on the dollar in the foreign exchange markets. At the same time, these members recognized the risk of some further weakening in the economy, and several favored a directive that incorporated a strong presumption that indications of such a development would trigger a prompt adjustment of reserve conditions. Most of these members were willing to accept a slight immediate move toward easier reserve conditions but, in that case, they doubted that any further easing would be appropriate over the intermeeting period unless the economy, prices, or financial developments deviated very substantially from current expectations. Two members indicated that they could not accept any further easing at this time, in part because of their concerns about the consequences for growth of the monetary aggregates and, more generally, for inflation expectations and inflation over time. Members referred to the strong growth of M2 over the past several months and took note of a staff analysis that concluded that such growth would remain fairly strong over months ahead if reserve conditions stayed unchanged or were eased slightly. Earlier declines in short-term interest rates and typically slow adjustments of offering rates on M2-type deposits had tended to make such deposits relatively more attractive by reducing the opportunity costs of holding them. 237 The outlook for M3 was subject to considerable uncertainty, but growth of that aggregate was expected to remain below that of M2. The extent of the shortfall would depend in important measure on the degree to which solvent but capitaldeficient thrift institutions continued to reduce assets to meet new capital requirements and on the extent of RTC activity in resolving insolvent thrift institutions. At the conclusion of the Committee's discussion, all but two of the members indicated that they favored or could accept a directive that called for a slight easing of reserve conditions. In keeping with the Committee's usual approach to policy, the conduct of open market operations would be subject to further adjustment during the intermeeting period depending on progress toward price stability, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets. On the basis of such developments, slightly greater or slightly lesser reserve restraint would be acceptable during the period ahead. The reserve conditions contemplated at this meeting were expected to be consistent with growth of M2 and M3 at annual rates of about 8V2 and 5Vi percent respectively over the four-month period from November 1989 through March 1990. In light of the easing of reserve conditions over the course of recent months and the further slight easing favored by a majority of the members at this meeting, the Committee decided to lower the intermeeting range for the federal funds rate by 1 percentage point to 6 to 10 percent. Such a reduction would center the range more closely around the average federal funds rate that was expected to prevail after this meeting. At the conclusion of the Committee's meeting, the following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting suggests that economic activity is expanding slowly in the current quarter. Total nonfarm payroll employment has increased at a reduced pace on average over the past several months, with declines continuing in the manufacturing sector. The civilian unemployment rate edged up to 5.4 percent in November. Industrial production rose slightly in November after a decline in October resulting from strike activity and other dis- 238 Federal Reserve Bulletin • April 1990 ruptions. Nominal retail sales excluding motor vehicles strengthened in November, but continued weak sales of vehicles held total retail sales for the month to a level that was little changed from the third-quarter average. Housing starts fell in November but for the October-November period were up somewhat on average from their third-quarter level. Indicators of business capital spending suggest a weakening in expenditures after a substantial increase earlier in the year. The preliminary data indicate that the nominal U.S. merchandise trade deficit widened appreciably in October from an upward revised September rate. Broad measures of inflation suggest that prices have risen more slowly on balance since midyear, partly reflecting sharp reductions in energy prices, but the latest data on labor compensation suggest no significant change in prevailing trends. Interest rates have changed little on balance since the Committee meeting on November 14. In foreign exchange markets, the trade-weighted value of the dollar in terms of the other G-10 currencies declined substantially over the intermeeting period, with a particularly pronounced depreciation against the German mark and related European currencies in the last week of the period. M2 continued to grow fairly briskly in November, largely reflecting strength in its retail deposit components; M2 has expanded this year at a pace near the midpoint of the Committee's annual range. Growth of M3 picked up in November but has remained more restrained than that of M2, as assets of thrift institutions and their associated funding needs apparently continued to contract; for the year to date, M3 has grown at a rate a little above the lower bound of the Committee's annual range. The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability, promote growth in output on a sustainable basis, and contribute to an improved pattern of international transactions. In furtherance of these objectives, the Committee at its meeting in July reaffirmed the ranges it had established in February for growth of M2 and M3 of 3 to 7 percent and 31/2 to IVi percent, respectively, measured from the fourth quarter of 1988 to the fourth quarter of 1989. The monitoring range for growth of total domestic nonfinancial debt also was maintained at 6!/2 to IOV2 percent for the year. For 1990, on a tentative basis, the Committee agreed in July to use the same ranges as in 1989 for growth in each of the monetary aggregates and debt, measured from the fourth quarter of 1989 to the fourth quarter of 1990. The behavior of the monetary aggregates will continue to be evaluated in the light of movements in their velocities, developments in the economy and financial markets, and progress toward price level stability. In the implementation of policy for the immediate future, the Committee seeks to decrease slightly the existing degree of pressure on reserve positions. Tak- ing account of progress toward price stability, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets, slightly greater reserve restraint or slightly lesser reserve restraint would be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be consistent with growth of M2 and M3 over the period from November through March at annual rates of about 8V2 and 5'/2 percent respectively. 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 6 to 10 percent. Votes for this action: Messrs. Greenspan, Corrigan, Guffey, Johnson, Keehn, Kelley, La Ware, Ms. Seger, and Mr. Syron. Votes against this action: Messrs. Angell and Melzer. Messrs. Angell and Melzer dissented because they did not believe that policy should be eased. Mr. Angell was concerned that the Committee was responding to indicators of recent weakness in economic activity, a weakness that was a consequence of somewhat cautious policy responses earlier. Policy decisions should rely mainly on leading indicators, including commodity prices, the exchange rate, the yield curve, and money supply growth. Attention to such indicators had served policy well in the past. During the spring and summer while the dollar was appreciating and commodity prices, including gold, were generally falling, easing of reserve conditions was accompanied by the lower long-term interest rates necessary to undergird housing and other longterm investments. At this meeting, price-level indicators were not signaling a need for further ease. In these circumstances, an additional drop in the federal funds rate, coming after two previous easing moves in the fourth quarter, could raise doubts about the System's commitment to its objective of price stability, especially given that the easing would further stimulate M2 growth. Under such conditions, further easing of reserve pressures would tend to accommodate rising prices, foster uncertainty in financial markets, and drive up long-term interest rates, thereby increasing the likelihood of economic instability. Steady policy in pursuit of price stability, using forwardlooking indicators, would reduce uncertainty Record of Policy Actions of the Federal Open Market Committee about price trends, bolster confidence in the dollar domestically and internationally, and bring about lower interest rates and higher economic growth. Mr. Melzer dissented because he favored an unchanged degree of reserve restraint. He noted that policy had been eased considerably over the last six months in anticipation of prospective sluggishness in the economy and that ample liquidity was now being provided by the central bank. In addition, based on recent and projected growth in the monetary aggregates, he was concerned that long-term progress toward price stability would be jeopardized by a more accommodative short-run policy stance. 2. Foreign Currency Paragraph ID of the Committee's Authorization for Foreign Currency Operations permitted the Federal Reserve Bank of New York, for the System Open Market Account, to maintain an overall open position in all foreign currencies not exceeding $20 billion, based on historical costs. System purchases of foreign currencies, which were coordinated with similar transactions by the U.S. Treasury, had been relatively limited recently, but, with the accumulation of interest, total holdings were approaching the $20 billion limit. The Manager for Foreign Operations advised that even in the absence of new market purchases, continuing accruals of interest would raise total holdings to the current limit by February. The Committee agreed to raise the limit to $21 billion, effective immediately. Authorization At this meeting, the Committee approved an increase in the limit on holdings of foreign currencies in the System Open Market Account. 239 Votes for this action: Messrs. Greenspan, Corrigan, Angell, Gufifey, Johnson, Keehn, Kelley, LaWare, Melzer, Ms. Seger, and Mr. Syron. Votes against this action: None. 241 Legal Developments ORDER TERMINATING STATE EXEMPTIONS The Board of Governors determined that certain financial institutions in Connecticut, Massachusetts, and N e w Jersey have previously been exempted from the Home Mortgage Disclosure Act because they were subject to substantially similar mortgage disclosure requirements under state law. Recent amendments to the act and to the Board's implementing rule, Regulation C, have produced discrepancies between the federal provisions and current state laws such that the state laws are no longer substantially similar to the federal statute and regulation, as amended. The Board is formally terminating the exemptions as of January 1, 1990, the date the amended federal act and regulation took effect. Effective January 1, 1990, applications that are received prior to March 1, 1990, by a previously exempt institution, data on race or national origin and sex are to be reported if the institution has this information; institutions need not contact applicants again in order to obtain the data. Introduction The Board's Regulation C (12 C.F.R. Part 203) implements the Home Mortgage Disclosure Act of 1975 ("HMDA") (12 U.S.C. § 2801 etseq.). Prior to amendments that took effect January 1, 1990, the regulation required depository institutions, mortgage banking subsidiaries of holding companies, and savings and loan service corporations with more than $10 million in assets and with offices in metropolitan statistical areas to disclose annually their originations and purchases of home mortgage and home improvement loans. Institutions compiled data about loans, itemizing this information by census tract (or by country, in some instances) and also by type of loan. The institutions disclosed this information to the public by March 31 following the calendar year for which the data were compiled. Copies were sent to the institutions' federal supervisory agencies for aggregation on an MSA-wide basis by the Federal Financial Institutions Examination Council. The Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"), which was signed into law on August 9, 1989, made major revisions to H M D A . (FIRREA, Pub. L. N o . 101-73, 103 Stat. 183 (1989)). The Board amended Regulation C to implement the provisions of section 1211 of FIRREA, publishing the revised regulation in final form in the Federal Register on December 15, 1989 (54 Federal Register 51,356). First, the coverage of H M D A and of Regulation C was expanded to include mortgage lenders that are not affiliated with depository institutions or holding companies. Second, the FIRREA amendments require reporting of data regarding loan applications; previously, institutions reported only data regarding loans originated or purchased. Third, the amendments require most covered lenders to report the race or national origin, sex, and income of mortgage applicants and borrowers (depository institutions with assets of $30 million or less are exempt from this particular requirement). Fourth, the FIRREA amendments require that lenders identify the class of purchaser for mortgage loans that they sell. Fifth, the amendments to permit lenders to explain the basis for lending decisions to their supervisory agency. Finally, the revised Regulation C provides for a "register" form of reporting. Lenders will record certain data for each application that they receive (whether granted, denied, or withdrawn) and for each home purchase or home improvement loan that they originate or purchase, and will submit the registers to their supervisory agency at the close of the calendar year. Thus, covered institutions will no longer be required to cross-tabulate loan data, as was the case under federal law previously. Under HMDA and Regulation C, the Board may grant exemptions to state-chartered or state-licensed financial institutions subject to state mortgage disclosure laws that are substantially similar to the Federal law and that contain adequate provision for enforcement. Exemptions are subject to termination if the Board determines that the state laws no longer meet these two conditions. Based on the act and regulation in effect prior to the 1989 amendments, exemptions were previously granted for state-chartered financial institutions subject to the state mortgage disclosure laws of Connecticut, Massachusetts, and N e w Jersey. Following the adoption of the revised Regulation C, the Board published a notice of intent to terminate these state exemptions on December 15, 1989 (54 Federal Register 51,404), for a 30-day comment period. 242 Federal Reserve Bulletin • April 1990 T w o comments were received. A state banking official from Connecticut noted that the state intends to amend its version of the Home Mortgage Disclosure Act and implementing regulation to make them substantially similar to federal law, and required either a continuance of the Connecticut exemption or its reinstatement upon the adoption of the requisite changes. The other comment, submitted by an industry group, did not take issue with the Board's position that substantial similarity no longer exists between the federal and state laws, but suggested that the revocation should not take effect on January 1, 1990, as proposed, but at a later date. In addition, officials from Massachusetts and N e w Jersey informally advised the Board of plans to change their laws to parallel the federal requirements. The Board has determined that substantial similarity between the federal and state laws no longer exists. Thus, it is terminating the exemptions as of January 1, 1990, the effective date of the changes to HMDA and Regulation C. State-chartered institutions previously exempted from H M D A and Regulation C by virtue of the disclosure laws of Connecticut, Massachusetts, and N e w Jersey must comply with the data collection requirements of the federal law as of that date. Accordingly, these institutions must maintain loan/application registers showing the required information on the loans they originate or purchase, and for applications they receive, beginning January 1, 1990, except that for applications received by these institutions prior to March 1, 1990, data on race or national origin and sex are to be reported if the institution has this information; institutions are not required to contact applicants again in order to obtain the data. The loan/application registers are to be submitted to institutions' federal supervisory agencies by March 1, 1991. If a state subsequently adopts new requirements that are substantially similar to the federal law, and those requirements are made effective as of January 1, 1990, the Board may grant a reinstatement of the exemption. If an exemption is reinstated, covered institutions would submit data about their mortgage lending only to the state supervisory agency, instead of having to send separate reports to federal and state regulators. To meet the "substantially similar" test, it will be necessary for the state law to cover applications as well as loans granted and purchased; to require reporting of information on the location of the properties to which the covered loans or applications relate, and on the race or national origin, sex, and income of applicants and borrowers; to provide disclosure of the type of purchaser for loans sold by an institution; and to call for a register form of reporting. The termination of these state exemptions in no way affects the mortgage disclosures required for loans made or purchased in calendar year 1989. Institutions previously exempt must submit reports on these loans to their state supervisory agency in keeping with state law requirements. Order of Termination The Board granted exemptions from the federal Home Mortgage Disclosure Act to state-chartered financial institutions in Connecticut, Massachusetts, and N e w Jersey in 1978, 1976, and 1978, respectively, based on the existence of substantially similar requirements imposed by state law and on the states' provisions for their enforcement. These exemptions were renewed in 1982 following changes in the federal act and regulation and corresponding changes in the state law. Because the federal law was amended in 1989, and no comparable changes in the state laws have followed to date, the substantial similarity required for an exemption no longer exists between the federal and state laws. The Board is therefore terminating the exemptions for Connecticut, Massachusetts, and N e w Jersey. State-chartered financial institutions in these states that were previously exempted from the federal law shall comply with the federal H o m e Mortgage Disclosure Act and Regulation C beginning January 1, 1990, the date the amendments to H M D A and Regulation C became effective. In the case of applications received by these institutions prior to March 1, 1990, data on race or national origin and sex are to be reported if the institution has this information; institutions are not required to contact applicants again in order to obtain that data. AMENDMENT TO REGULATION Y The Board of Governors is amending its Regulation Y, section 225 of Title 12, Code of Federal Regulations, to implement the provisions of section 914 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), Pub. L. 101-73, 103 Stat. 183. Section 914 of FIRREA requires bank holding companies and state member banks that have recently undergone a change in control, have less than minimum required capital, or are otherwise in troubled condition to file a notice with the Board of Governors of the Federal Reserve System ("Board") prior to adding a member of the board of directors, or employing an individual as a senior executive officer. This prior notice requirement also applies to state member banks that have been chartered within two years before the proposed management change. The Board may disapprove any proposed board member or senior Legal Developments executive officer whose service is not considered to be in the best interests of the depositors of the bank or the public. The regulation defines the terms "troubled condition" and "senior executive officer." The regulation also clarifies the types of changes in control of a state member bank or bank holding company that require a notice under section 914, and establishes the procedures for filing the required notice. Because the provisions of section 914 became effective on the date of enactment of FIRREA, this regulation is immediately effective. The Board requests comment on any issue raised by this regulation; interested persons have 60 days in which to respond. After the close of the comment period, the Board may amend the regulation in response to the comments received. Effective February 13, 1990, the Board amends 12 C.F.R.Part 225 as follows: 1. The authority citation for Part 225 is revised to read as follows: Authority: 12 U.S.C. 18170X13), 1818, 1831i, 1843(c)(8), 1844(b), 3106, 3108, 3907 and 3909. 2. Subpart H, consisting of sections 225.71 through 225.73, is added to read as follows: Subpart H—Notice of Addition or Change of Directors and Senior Executive Officers Section 225.71—Definitions Section 225.72—Director and officer appointments; prior notice requirement Section 225.73—Procedures for filing, processing, and acting on notices; standards for disapproval; waiver of notice Subpart H—Notice of Addition or Change of Directors and Senior Executive Officers Section 225.71—Definitions (a) "Senior executive officer" means a person who, without regard to title, exercises the authority of one or more of the following positions: chief executive officer, chief operating officer, chief financial officer, chief lending officer, or chief investment officer. "Senior executive officer" also includes any other person with significant influence over major policymaking decisions of a state member bank or bank holding company. (b) "Bank or bank holding company in troubled condition" means any state member bank or bank holding company that: 243 (1) Has a composite rating, as determined in the most recent report of examination or inspection, of 4 or 5 under the commercial bank Uniform Interagency Bank Rating System or under the Federal Reserve bank holding company rating system; (2) Is subject to a cease and desist order or formal written agreement that requires action to improve the financial condition of the institution, unless otherwise informed in writing by the Board or the appropriate Reserve Bank; or, (3) Is expressly informed by the Board or Reserve Bank that it is in troubled condition for purposes of the requirements of this subpart on the basis of the institution's most recent examination, report of condition, or inspection, or other information available to the Board. Section 225.72—Director and officer appointments; prior notice requirement (a) Prior notice. A state member bank or bank holding company shall give the Board 30 days written notice, as specified in section 225.73, before adding or replacing any member of the board of directors of employing or changing the responsibilities of any individual to a position as a senior executive officer of the bank or bank holding company, if: (1) The bank has been chartered less than two years; (2) Within the preceding two years, the bank or bank holding company has undergone a change in control that required a notice to be filed pursuant to the Change in Bank Control Act or Subpart E of this part; (3) Within the preceding two years, the bank holding company became a registered bank holding company, unless the bank holding company is owned or controlled by a registered bank holding company, or the bank holding company was established in a reorganization in which substantially all of the shareholders of the bank holding company were shareholders of the bank prior to the bank holding company's formation; or (4) The bank or bank holding company is not in compliance with all minimum capital requirements applicable to the institution as determined on the basis of the institution's most recent report of condition, examination or inspection, or is otherwise in troubled condition. (b) Advisory directors. (1) For purposes of this subpart, except as provided in paragraph (b)(2) of this section, the term "member of the board of directors" does not include an advisory director who: (i) Is not elected by the shareholders of the bank or bank holding company; 244 Federal Reserve Bulletin • April 1990 (ii) Is not authorized to vote on any matters before the board of directors; and (iii) Provides solely general policy advice to the board of directors. (2) The Board or Reserve Bank may otherwise determine that an advisory director is in fact functioning as a director or senior executive officer for purposes of this subpart. Section 225.73—Procedures for filing, processing, and acting on notices; standards for disapproval; waiver of notice (a)(1) Filing notice. The notice required in section 225.72 shall be filed with the appropriate Reserve Bank and shall contain the information required by paragraph 6(A) of the Change in Bank Control Act (12 U . S . C . 1817(j)(6)(A)) or prescribed in the designated Board form, subject, in either case, to the authority of the Reserve Bank or the Board to modify these requirements or require additional information. (2) Acceptance of notice. The 30-day notice period specified in section 225.12 shall begin on the date all required information is received by the appropriate Reserve Bank or the Board. The Reserve Bank shall notify the bank or bank holding company submitting the notice of the date all such required information is received and the notice is accepted for processing, and of the date on which the 30-day notice period will expire. (b) Commencement of service. (1) At expiration of period. A proposed director or senior executive officer may begin service 30 days after a complete notice under paragraph (a) of this section has been accepted by the Reserve Bank unless the Board or Reserve Bank issues a notice of disapproval of the proposed addition or employment before the end of the 30-day period. (2) Prior to expiration of period. A proposed director or senior executive officer may begin service before the expiration of the 30-day period if the Board or the Reserve Bank notifies the bank or bank holding company in writing of the Board's intention not to disapprove the addition or employment. (c) Notice of disapproval. The Board or Reserve Bank must disapprove a notice under section 225.72 if the Board or Reserve Bank finds that the competence, experience, character, or integrity of the individual with respect to whom the notice is submitted indicates that it would not be in the best interests of the depositors of the bank or in the best interests of the public to permit the individual to be employed by, or associated with, the bank or bank holding company. The notice of disapproval shall contain a statement of the basis for disapproval. (d) Appeal. (1) The disapproved individual or the state member bank or bank holding company may appeal to the Board the disapproval of a notice under this subpart within 15 calendar days of the effective date of the notice of disapproval. An appeal shall be in writing and explain the reasons for the appeal and include all facts, documents, and arguments that the appealing party wishes to be considered in the appeal. (2) The Board may, in its sole discretion, order an informal hearing if the hearing is requested in writing by the disapproved individual or the notificant at the time of an appeal, and the Board finds that oral argument is appropriate or that a hearing is necessary to resolve disputes regarding material issues of fact. (3) The disapproved individual may not serve as a director or senior executive officer while the appeal is pending. Written notice of the final decision of the Board shall be sent to the appealing party. (e)(1) Waiver of notice. The Board or the Reserve Bank may waive the prior notice required under this subpart if it finds that: (i) Delay would threaten the safety or soundness of the state member bank or the bank holding company or any of its bank subsidiaries; (ii) Delay would not be in the public interest; or (iii) Other extraordinary circumstances exist that justify waiver of prior notice. (2) Effect on disapproval authority. Any waiver issued by the Board or Reserve Bank shall not affect the authority of the Board or Reserve Bank to issue a notice of disapproval within 30 days after such waiver. ORDERS ISSUED UNDER BANK COMPANY ACT HOLDING Orders Issued Under Section 3 of the Bank Holding Company Act BankAmerica Corporation San Francisco, California Order Approving Acquisition of a Bank BankAmerica Corporation, San Francisco, California ("BankAmerica"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 3(a)(3) of the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire all the voting shares of Bank of Legal Developments America State Bank, Concord, California ("State Bank"), a de novo state bank. Notice of the application, affording an opportunity for interested persons to submit comments, has been duly published (54 Federal Register 29,620 (1989)). The time for filing comments has expired, and the Board has considered the application and all comments received, including those of various insurance industry trade associations ("protestants"), in light of the factors set forth in section 3(c) of the BHC Act. 1 BankAmerica operates two banking subsidiaries in California and Washington. 2 BankAmerica is the third largest commercial banking organization in the United States and is the largest commercial banking organization in California, controlling deposits of $51.3 billion, representing approximately 23.4 percent of the total deposits in commercial banks in California.3 State Bank, a de novo institution, is organized as a state-chartered nonmember bank. In light of State Bank's de novo status and based upon the facts of record, the Board concludes that consummation of the proposed acquisition would not result in an adverse effect on the concentration of banking resources in California. In evaluating this application, the Board has carefully considered the financial resources of BankAmerica and the effect on those resources of the proposed acquisition. The Board has previously 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, without significant reliance on intangibles, particularly goodwill. 4 The Board carefully analyzes the effect 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 finan- 1. The Board has received comments protesting the application from the Independent Insurance Agents of America, Inc., National Association of Casualty & Surety Agents, National Association of Life Underwriters, National Association of Professional Insurance Agents, National Association of Surety Bond Producers, New York Association of Life Underwriters, Professional Insurance Agents of New York, Inc., Independent Insurance Agents of New York, Inc., California Association of Life Underwriters, Professional Insurance Agents of California and Nevada, Inc., and Independent Insurance Agents & Brokers of California. 2. The Board has also recently approved BankAmerica's acquisition of a savings bank in Washington (BankAmerica Corporation (American Savings Financial Corporation), 75 Federal Reserve Bulletin 827 (1989)) and a thrift in Nevada (BankAmerica Corporation (Nevada First Development Corporation), 75 Federal Reserve Bulletin 825 (1989)). 3. All data are as of September 30, 1989 4. The Bank of New York Company, Inc., 74 Federal Reserve Bulletin 257 (1988); Capital Adequacy Guidelines, 50 Federal Register 16,057 (April 24, 1985). 245 cial strength below those levels for the purpose of effecting major expansion. 5 The Board has previously noted that BankAmerica has taken the appropriate steps over the last few years to strengthen its capital position, both through the issuance of new equity and through the retention of earnings. 6 BankAmerica's capital ratios are above the minimum requirements under the Board's Capital Adequacy Guidelines and the proposal would have no effect on BankAmerica's capital position. In light of these considerations, the Board concludes that the financial resources of BankAmerica are consistent with approval of the proposal. State Bank is chartered under California law to engage in commercial banking business. State Bank intends to focus its banking activities primarily on providing the following services: (1) specialized community development lending activities to further economic and neighborhood revitalization and production of housing for low- and moderate-income households; 7 and (2) cash management services for California corporate customers and public agencies. 8 Based on the facts of record, the Board concludes that the managerial resources, future prospects, and convenience and needs considerations are also consistent with approval. 5. 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 726 (1986); Security Pacific Corporation, 72 Federal Reserve Bulletin 800 (1986). 6. BankAmerica Corporation (American Savings Corporation), 75 Federal Reserve Bulletin 827 (1989). 7. Except for investments in projects designed primarily to promote community welfare, such as the economic rehabilitation and development of low-income areas, State Bank will not make real estate or equity investments and will not make any investment not otherwise permissible for any national bank, a state member bank, or a nonbank subsidiary of a bank holding company, without the prior approval of the Federal Reserve System. 8. The cash management services involve collection services (lockbox, cash concentration, and cash vault services); information services (transmission of or direct access via terminal to checking account and investment information between State Bank and the customer); and disbursement services (controlled disbursement and electronic funds transfers). A controlled disbursement account allows customers to fund their account on the same day that checks are presented. Each morning the customer is advised of the total dollar amount of checks that have been presented for payment and the customer has until close of business that day to wire or otherwise transfer good funds to cover those checks. The ability to segregate controlled disbursement checks and report clearings early in the day is substantially facilitated by a distinct American Bankers Association transit routing number, which BankAmerica will obtain through State Bank. California law encourages the use of California disbursement banks by providing that, generally, wages paid by check must use checks payable at an established place of business in the state that is identified on the check. Cal. Labor Code § 212 (1989). In addition, competitors of BankAmerica currently offer controlled disbursement services through California banking subsidiaries. 246 Federal Reserve Bulletin • April 1990 State Bank also proposes to engage in insurance agency/brokerage activities permissible for state-chartered banks under California law. 9 The Board has previously determined that insurance activities conducted by holding company banks directly under state law are not limited by the nonbanking provisions of section 4 of the BHC Act, except where the record demonstrates the type of evasion described in the Citicorp (South Dakota) case. 10 In the Citicorp (South Dakota) case, the Board concluded that the proposal, taken as a whole, amounted to an evasion of the BHC Act and on that basis denied the application. 11 Protestants have urged the Board to deny BankAmerica's application under this precedent. However, State Bank is a bank within the BHC Act's definition (12 U.S.C. § 1841(c)) and, in the Board's view, BankAmerica's application presents material considerations that distinguish this record from the circumstances in the Citicorp proposal. In Citicorp (South Dakota), after reviewing the applicable legal framework governing competition for banking and insurance services within the state, the Board concluded that the South Dakota statute itself had the effect of enabling out-of-state bank holding companies to evade the nonbanking insurance prohibitions of the Garn-St Germain Act by authorizing, through an institution that was a bank in name only, a nationwide insurance franchise. 12 Accordingly, it was 9. Proposition 103, which repealed prohibitions against all insurance activities by California banks and bank holding companies, was approved by the voters in the November 8, 1988, general election and its constitutionality has been upheld by the California Supreme Court. CalFarm Insurance Company v. Deukmejian, 48 Cal. 3d. 805, 771 P. 2d 1247 (1989). The California Superintendent of Banks has indicated that California state-chartered banks may engage in insurance agency/brokerage activities and protestants concede that California law would permit State Bank to conduct a general insurance agency business. State Bank would not engage in insurance underwriting or the reinsurance of any insurance policies. Additionally, State Bank will not enter into contingent commission or other arrangements with insurers that would expose State Bank to an underwriting loss. All insurance activities will be conducted directly in the bank and State Bank will only enter into agency agreements with insurers who are rated " A " or higher by A.M. Best and who exceed minimum capital and surplus requirements for the types of business they are underwriting. 10. Merchants National Corporation, 75 Federal Reserve Bulletin 388 (1989); affirmed by the United States Court of Appeals for the Second Circuit in Independent Insurance Agents of America, Inc., et al. v. Board of Governors, 890 F.2d 1275 (2d Cir. 1989) VMerchants"). Protestants continue to maintain, however, that State Bank's proposed insurance activities are prohibited under section 4(c)(8) of the BHC Act, as amended by Title VI of the Garn-St Germain Depository Institutions Act of 1982 ("Garn-St Germain Act"). The Garn-St Germain Act provides that, with seven exceptions (not at issue in this application), insurance activities are not closely related to banking and thus are not generally permissible for bank holding companies. 11. Citicorp (American State Bank), 71 Federal Reserve Bulletin 789 (1985) ("Citicorp (South Dakota)"). 12. Under the applicable South Dakota statute, while an out-of-state bank holding company was significantly limited in its ability to the grant of broad insurance powers, which were otherwise prohibited to bank holding companies, that replaced the opportunity to conduct a banking business in South Dakota as the incentive to attract out-of-state bank holding companies to acquire South Dakota banks. This incentive—crucial to the success of the South Dakota statute's articulated legislative purpose of attracting out-of-state bank holding companies as a means of increasing tax revenues and jobs in South Dakota—existed only because insurance activities were expressly prohibited for bank holding companies under the BHC Act. The insurance authorization provided under California law, however, contains no similar restrictive structure that effectively limits the incentive for acquiring a state-chartered bank to its potential as a vehicle for selling insurance and State Bank will, in fact, conduct banking activities in California. The Board also concluded that the Citicorp operating plan required a dedication of significant resources for its insurance activities. Although BankAmerica has not developed financial projections or a definite operational plan for State Bank's insurance activities, the business operations differ significantly from Citicorp's plans to engage primarily, if not solely, in insurance activities through its South Dakota bank. Unlike the Citicorp proposal, State Bank intends to engage in traditional, although more focused, banking activities and will compete in the California market for community development and cash management banking services. BankAmerica has also indicated that, based on certain assumptions, the insurance agency business may comprise approximately one-third of the total revenues of State Bank. 13 This plan of operation significantly contrasts with Citicorp's plan to conduct insurance activities in its state bank to the fullest extent possible by investing approximately $2.5 million in a facility and employing a minimum of 100-125 additional nonbanking personnel for a bank with $17.5 million in assets and 28 employees. conduct a banking business in South Dakota once it acquired a South Dakota bank, the out-of-state bank holding company was permitted to use the South Dakota bank franchise to conduct insurance activities nationwide without any limitation (other than that it restrict its insurance activities within South Dakota itself to avoid competing with South Dakota firms). 13. Using its current experience with the sale of insurance and securities products by a third-party vendor from leased branch office space, BankAmerica estimates, by comparing the revenues expected to be generated in 1989 from the sale of fixed-rate annuities (the only insurance product in the program) with the revenues expected to be generated from the sale of securities (including variable-rate annuities) and the banking services offered by State Bank, that in State Bank's third year of operation, insurance revenue would amount to approximately one-third of State Bank's total revenues. BankAmerica regards years 1 and 2 as a start-up period for establishing its market share of community development and cash management banking services. Legal Developments On the basis of this record, the Board does not believe that BankAmerica's acquisition of State Bank will constitute an evasion of the insurance prohibitions of section 4 of the BHC Act. However, the Board, as a condition of this Order, retains supervisory authority to review State Bank's activities in order to ensure that no such evasion of the requirements of the BHC Act occurs. 14 Protestants have requested a hearing on the application. Section 3(b) of the BHC Act does not require the Board to hold a hearing concerning an application to acquire a bank under section 3 of the BHC Act unless the appropriate banking authority for the bank 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 California Superintendent of Banks. 15 Furthermore, protestants have been given the opportunity to submit, and have submitted, written facts and arguments to the Board regarding this application. These materials, as well as responses by BankAmerica, have not provided any basis to believe that the material facts already before the Board are incomplete or insufficient to permit the Board to evaluate the application under the BHC Act 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 material facts. 16 Protestants have alleged several factual disputes supporting their request for a hearing to determine whether BankAmerica's application is proposed primarily to provide BankAmerica with an insurance agency subsidiary thereby evading the BHC Act as 14. The insurance activities of State Bank will also be subject to the anti-tying restrictions of the 1970 Amendments to the BHC Act, which unlike section 4(a), explicitly apply to "banks." 12 U.S.C. § 1972(1). 15. 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). Nothing in section 5 of the BHC Act, relating to the Board's authority to prevent evasions, requires a hearing. 16. Section 4(c)(8) of the BHC Act provides that, in approving activities under that provision, the Board must provide notice and opportunity for hearing. However, this case does not involve an application under section 4 of the BHC Act. In light of the Board's determination in Merchants, section 4 does not apply to limit the direct activities of subsidiary state banks or require that an application under section 4(c)(8) be filed for approval for such bank. In addition, even where the applicable provision requires an opportunity for a hearing, such as under section 4(c)(8), a protestant is not entitled to discovery and a hearing on every application, but only when there are material issues of fact in dispute. Connecticut Bankers Assn. v. Board of Governors, 627 F.2d 245 (D.C. Cir. 1980). As discussed in this Order, there are no material issues of fact in dispute. 247 prohibited by the Citicorp (South Dakota) precedent. These factual disputes include the operational considerations in support of cash management services through State Bank, the accuracy of BankAmerica's estimate regarding income from State Bank's insurance activities or, alternatively, the substantiality of insurance activity demonstrated by the estimate, and BankAmerica's motivation for chartering a state bank in a state that permits banks to engage in insurance agency activities. In a more general sense, protestants allege that BankAmerica's credibility and real intent are at issue and that additional information in the form of documents and testimony from BankAmerica's officials and other witnesses is required to demonstrate the evasion that protestants have alleged. These assertions, however, are not designed to dispute material facts in the record or even to provide a basis for eliciting new material facts relevant under the Citicorp (South Dakota) precedent. Rather than challenging existing facts, these assertions question inferences and conclusions drawn from the factual presentation in the application. State Bank intends to engage in banking activities and to compete for banking services in California. As previously discussed, the statutory framework and the extent of the operational plans for insurance activities presented by this application differ significantly from the Citicorp proposal. Furthermore, protestants have failed to allege sufficient facts to demonstrate that BankAmerica's representations, including its representations regarding its insurance operations, are not credible or to justify convening a formal hearing for the purpose of providing protestants with the opportunity to enhance their protest. 17 Under these circumstances, and with the recognition that the Board has retained authority to prevent any evasion of the BHC Act or this Order, the Board concludes that a formal hearing is unnecessary and, accordingly, protestants' request for a hearing is denied. Based on the foregoing and all of the facts of record, including representations made by BankAmerica, the Board has determined that the application should be, and hereby is, approved. This 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. State Bank shall be opened for business not later than six months after the effective date of this Order. The latter two periods may be extended for good cause by the Board or the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority. 17. The Board notes that intentional violations of the BHC Act or regulations of the Board, including false statements of a bank holding company, carry both civil and criminal penalties. 12 U.S.C. § 1847. 248 Federal Reserve Bulletin • April 1990 By order of the Board of Governors, effective February 16, 1990. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, Kelley, and LaWare. JENNIFER J. JOHNSON Associate Secretary of the Board BankAmerica Corporation S a n F r a n c i s c o , California Seafirst C o r p o r a t i o n Seattle, Washington Order Approving Acquisition Company and Bank of a Bank Holding BankAmerica Corporation, San Francisco, California ("BankAmerica"), and its wholly-owned subsidiary, Seafirst Corporation, Seattle, Washington ("Seafirst"), both bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have applied for the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire by merger Woodburn Bancorp, Woodburn, Oregon ("Woodburn"), and thereby acquire Woodburn State Bank, Woodburn, Oregon ("Bank"). 1 Notice of the application, affording an opportunity for interested persons to submit comments, has been duly published (54 Federal Register 48,940 (1989)). The time for filing comments has expired, and the Board has considered the application and all comments received, including those of various insurance trade associations ("Protestants"), in light of the factors set forth in section 3(c) of the BHC Act. 2 Section 3(d) of the BHC Act, the Douglas Amendment, prohibits the Board from approving an application by a bank holding company to acquire control of any bank located outside of the bank holding company's home state, unless such acquisition is "specifically authorized by the statute laws of the State in which [the] bank is located, by language to that effect 1. The proposed transaction would be effected through the exchange of newly issued BankAmerica shares for all the shares of Woodburn Bancorp, less dissenting shares. Immediately following the exchange, Woodburn Bancorp would merge with and into Seafirst. 2. The Board has received comments protesting the application from the Independent Insurance Agents of America, Inc., National Association of Casualty & Surety Agents, National Association of Life Underwriters, National Association of Professional Insurance Agents, National Association of Surety Bond Producers, New York Association of Life Underwriters, Professional Insurance Agents of New York, Inc., Independent Insurance Agents of New York, Inc., California Association of Life Underwriters, Professional Insurance Agents of California and Nevada, Inc., and Independent Insurance Agents & Brokers of California. and not merely by implication." 3 Oregon's banking laws permit out-of-state bank holding companies, with the approval of the Oregon Department of Insurance and Finance, to acquire established Oregon banks and bank holding companies. 4 The Board has determined previously that a California bank holding company may acquire a bank holding company and bank in Oregon. 5 Accordingly, Board approval of this proposal is not barred by the Douglas Amendment. BankAmerica operates two banking subsidiaries in California and Washington. 6 BankAmerica is the third largest commercial banking organization in the United States and is the largest commercial banking organization in California, where it controls deposits of approximately $51.2 billion, representing approximately 23.4 percent of the total deposits in commercial banks in California. 7 Seafirst is the largest commercial banking organization in Washington, where it controls deposits of approximately $8.5 billion, representing approximately 29.3 percent of the total deposits in commercial banks in Washington. Woodburn Bancorp is the 38th largest commercial banking organization in Oregon, where it controls deposits of approximately $15.6 million, representing less than one percent of the total deposits in commercial banking organizations in Oregon. Based upon the facts of record, the Board concludes that consummation of the proposed acquisition would not result in any significantly adverse effect on the concentration of banking resources in Oregon. BankAmerica, through Seafirst, competes directly with Woodburn in the Portland, Oregon, banking market. 8 BankAmerica is the ninth largest commercial banking organization in the market, controlling depos- 3. 12 U.S.C. § 1842(d). A bank holding company's home state for purposes of the Douglas Amendment is that state in which the total deposits of its banking subsidiaries were largest on July 1, 1966, or on the date it became a bank holding company, whichever date is later. Id. BankAmerica's home state is California. 4. Or. Rev. Stat. § 715.065(1) (1989); see also Or. Rev. Stat. § 706.005(29) (1989). In addition, the Oregon Department of Insurance and Finance has determined that this proposal meets all the statutory considerations. 5. Security Pacific Corporation, 73 Federal Reserve Bulletin 381 (1987). 6. The Board also has recently approved BankAmerica's acquisition of a savings bank in Washington (BankAmerica Corporation (American Savings Financial Corporation), 75 Federal Reserve Bulletin 827 (1989)); a thrift in Nevada (BankAmerica Corporation (Nevada First Development Corporation), 75 Federal Reserve Bulletin 825 (1989)); and a de novo state-chartered bank in California (BankAmerica Corporation (Bank of America State Bank), 76 Federal Reserve Bulletin 244 (Order dated February 16, 1990)). 7. State banking data are as of September 30, 1989. Market banking data are as of June 30, 1987. 8. The Portland, Oregon, banking market is approximated by the Portland Ranally Metropolitan Area, which includes several communities in Washington State. Seafirst's principal bank subsidiary operates branches in that portion of the Portland banking market which is within the State of Washington. Legal Developments its of approximately $119.8 million, representing approximately 1.5 percent of the total deposits in commercial banking organizations in the market. Woodburn is the 14th largest commercial banking organization in the market, controlling deposits of approximately $13.4 million, representing less than one percent of the total deposits in commercial banking organizations in the market. Upon consummation of the proposed acquisition, BankAmerica would remain the ninth largest commercial banking organization in the market, controlling deposits of $133.2 million, representing approximately 1.7 percent of the total deposits in commercial banking organizations in the market. The Herfindahl-Hirschman Index ("HHI") would increase by less than one percentage point to 2572 after consummation. 9 Based upon the facts of record, the Board concludes that consummation of the proposed acquisition would not result in any significantly adverse effect on competition in any relevant market. In evaluating this application, the Board has considered the financial resources of BankAmerica and Seafirst and the effect on those resources of the proposed acquisition. The Board has stated previously 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, without significant reliance on intangibles, particularly goodwill. 10 The Board carefully analyzes the effect 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 those levels for the purpose of effecting major expansion. 11 9. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (1984)), a market in which the post-merger HHI is above 1800 is considered highly concentrated. In such markets, the Department of Justice is likely to challenge a merger that increases the HHI by more than 50 points. The Department of Justice 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 raises the HHI by at least 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 10. BankAmerica Corporation (American Savings Financial Corporation), 75 Federal Reserve Bulletin 827 (1989); The Bank of New York Company, Inc., 74 Federal Reserve Bulletin 257 (1988); Capital Adequacy Guidelines, 12 C.F.R. Part 225, Appendix B. 11. Thus, for example, the Board generally has approved proposals involving a decline in capital only where the applicants have promptly restored their capital to preacquisition 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 726 (1986); Security Pacific Corporation, 72 Federal Reserve Bulletin 800 (1986). 249 The Board has noted previously that BankAmerica has taken appropriate steps over the last few years to strengthen its capital position, both through the issuance of new equity and through the retention of earnings. 12 BankAmerica's capital ratios are above the minimum requirements under the Board's Capital Adequacy Guidelines. In addition, BankAmerica would effect this transaction through an exchange of shares, and the proposal would have a de minimis effect on BankAmerica's capital position. Moreover, this proposal would result in a small increase in BankAmerica's asset size in relative terms. In light of these considerations, the Board concludes that the financial resources of BankAmerica are consistent with approval of the proposal. Based on the facts of record, the Board also concludes that the managerial resources, future prospects, and convenience and needs considerations are also consistent with approval. Oregon law authorizes state-chartered banks, such as Bank, to conduct general insurance agency activities, subject to the State's insurance licensing provisions. 13 Protestants allege that BankAmerica may conduct general insurance agency activities through Bank in the future and that such conduct would be prohibited by section 4 of the BHC Act. 1 4 The Board previously determined in its Merchants National decision that the nonbanking restrictions of section 4 of the BHC Act do not apply to the direct activities of holding company banks, except where the record demonstrates the type of evasion described in Citicorp (American State Bank) (71 Federal Reserve Bulletin 789 (1985) "Citicorp (South Dakota)").15 Thus, subject to the type of situation presented in Citicorp (South Dakota), a holding company's state bank may engage directly in insurance agency activities authorized under state law even though such activities are not permitted for bank holding companies. The Board concludes that the record in this application does not support a finding of evasion of the 12. BankAmerica Corporation (American Savings Financial Corporation), 75 Federal Reserve Bulletin 827 (1989). 13. Or. Rev. Stat. § 707.310(d) (1989). See also Or. Rev. Stat. §§ 744.002, 744.115 (1989). 14. Section 4(c)(8) of the BHC Act, as amended by Title VI of the Garn-St Germain Depository Institutions Act of 1982, provides that, with seven exceptions (not at issue in this application), insurance activities are not closely related to banking and thus are not generally permissible for bank holding companies. 15. Merchants National Corporation, 75 Federal Reserve Bulletin 388; affirmed by the United States Court of Appeals for the Second Circuit in Independent Insurance Agents of America, Inc., et al. v. Board of Governors, 890 F. 2d 1275 (1989). The Court of Appeals for the Second Circuit lifted its stay order in Merchants National on February 1, 1990, and the United States Supreme Court has denied a request to issue a stay. 250 Federal Reserve Bulletin • April 1990 B H C Act. Bank conducts a full-service banking business in Oregon, accepting demand deposits and engaging in the business of making commercial loans, and is a bank within the BHC Act's definition (12 U.S.C. § 1841(c)). Bank does not currently conduct general insurance agency activities or possess an Oregon insurance license, nor has Bank itself previously acted as a general insurance agent. Furthermore, BankAmerica has stated that, at present, it does not intend to engage in general insurance agency activities through Bank. Accordingly, the Board concludes that the record in this application, unlike the record of the Citicorp (South Dakota) order, does not indicate that the acquisition of Bank is primarily a device to permit the acquiring bank holding company to engage in prohibited insurance activities. Based on the foregoing and all of the facts of record, including representations made by BankAmerica, the Board has determined that the application should be, and hereby is, approved. The transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three months after the effective date of the Order. The latter two periods may be extended for good cause by the Board or the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority. By order of the Board of Governors, effective February 26, 1990. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Kelley. Absent and not voting: Governor LaWare. JENNIFER J. JOHNSON Associate Secretary of the Board Wells Fargo & Company S a n F r a n c i s c o , California Order Approving Companies the Acquisition of Bank Holding Wells Fargo & Company, San Francisco, California ("Wells Fargo"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 3(a)(5) of the BHC Act (12 U . S . C . § 1842(a)(5)) to merge with: (1) Central Pacific Corporation, Bakersfield, California ("Central Pacific"), thereby acquiring its subsidiary bank, American National Bank, Bakersfield, California; and (2) Torrey Pines Group, Solana Beach, California ("TPG"), thereby acquiring its subsidiary bank, Torrey Pines Bank, Solana Beach, California. 1 Notice of the applications, affording an opportunity for interested persons to submit comments, has been duly published (54 Federal Register 48,025 and 48,320 (1989)). The time for filing comments has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3(c) of the BHC Act.* Wells Fargo operates one banking subsidiary with numerous branches in California. Wells Fargo is the second largest commercial banking organization in California, controlling deposits of $34 billion, representing approximately 15.5 percent of the total deposits in commercial banks in the state. 3 Central Pacific is the 20th largest commercial banking organization in California, controlling deposits of $817.8 million, representing less than 1 percent of the total deposits in commercial banks in the state. TPG is the 39th largest commercial banking organization in California, controlling deposits of $424 million, representing less than 1 percent of the total deposits in commercial banks in the state. Upon consummation of the proposal, Wells Fargo would remain the second largest commercial banking organization in California, controlling deposits of $35.3 billion, representing approximately 16.1 percent of the total deposits in commercial banks in California. Consummation of this proposal would not have a significantly adverse effect upon the concentration of commercial banking resources in California. Wells Fargo and TPG compete directly in the San Diego RMA and Oceanside RMA banking markets. Upon consummation of this proposal, neither of the banking markets would be highly concentrated and the Herfindahl-Hirschman Index ( " H H I " ) would increase by fewer than 100 points in each of these markets. 4 1. The Office of the Comptroller of the Currency ("OCC") has approved Wells Fargo's applications to merge American National Bank and Torrey Pines Bank with Wells Fargo Bank, N.A. 2. The Board has received comments filed by several groups protesting Wells Fargo's applications ("Protestants"). These groups are the Certified Development Corporation of San Diego County, the Black Chamber of Commerce, the Sacramento Urban League, Inc., The Greenlining Coalition ("TGC" representing twenty-six community organizations), The Latino Issues Forum (a member of TGC), the Consumers Union, the League of United Latin American Citizens, and Public Advocates Inc. 3. State deposit data are as of September 30, 1989. Market deposit data are as of June 30, 1987. 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 greater than 1800 is considered highly concentrated, and the Justice 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 Justice Department has informed the Board that a bank merger or acquisition is not likely to be challenged (in the absence of other factors indicating Legal Developments Wells Fargo also competes directly with Central Pacific in 13 banking markets in California.5 In ten of these banking markets, the increase in the HHI upon consummation of the proposal would not exceed the limits in the revised Department of Justice Merger Guidelines. 6 In the Bakersfield, San Bernardino and Madera County banking markets, consummation of the proposal would increase the HHI more than 200 points in a post-merger market exceeding 1800.7 However, if 50 percent of the deposits held by thrift institutions were included in the calculation of market concentration, upon consummation of the proposal these three banking markets would become moderately concentrated, and the HHI in all markets would increase by fewer than 200 points. 8 On the basis of the above facts and other facts of record, including the numerous competitors that would remain in all the markets discussed, the Board finds that consummation of the proposal would not have a significantly adverse effect on existing competition in any relevant market. The Board also has considered the effects of the proposal on probable future competition in the relevant markets in which Wells Fargo, TPG and Central Pacific do not compete. an anticompetitive effect) unless the post-merger HHI is at least 1800 and the merger increases the HHI by 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank acquisitions for anticompetitive effects implicitly recognizes the competitive effects of limited-purpose lenders and other non-depository financial entities. 5. These markets are Bakersfield RMA, Fresno RMA, Merced RMA, Modesto RMA, Porterville RMA, Visalia RMA, Riverside RMA, San Bernardino RMA, Madera County, Fresno County (the portion not in an RMA), western Kern County, southern Stanislaus County, and southwestern Tulare County. 6. In the Fresno RMA, Merced RMA, Porterville RMA, Visalia RMA, Riverside RMA, Fresno County (the portion not in an RMA), western Kern County, and southwestern Tulare County the HHI would increase by less than 200 points after consummation. In the Modesto RMA and the southern Stanislaus County banking markets, the HHI would increase by over 200 points but the market would remain moderately concentrated after consummation. 7. Wells Fargo's pro forma market share is 23.7 percent in the Bakersfield banking market, 29.2 percent in the San Bernardino banking market, and 28.0 percent in the Madera County banking market. The HHI will increase by 276 points to 1966 for the Bakersfield banking market, 415 points to 2224 for the San Bernardino banking market, and 233 points to 2621 for the Madera County banking market. 8. The Board previously has indicated that thrift institutions have become, or have the potential to become, important competitors of commercial banks. See National City Corporation, 70 Federal Reserve Bulletin 743 (1984); The Chase Manhattan Corporation, 70 Federal Reserve Bulletin 529 (1984); NCNB Bancorporation, 70 Federal Reserve Bulletin 225 (1984); General Bancshares Corporation, 69 Federal Reserve Bulletin 802 (1983); First Tennessee Corporation, 69 Federal Reserve Bulletin 298 (1983). By including 50 percent of the deposits held by thrift institutions, Wells Fargo's pro forma market share would be 16.8 percent in the Bakersfield banking market, 15.2 percent in the San Bernardino banking market, and 21.3 percent in the Madera County banking market. The HHI would increase by 139 points to 1111 for the Bakersfield banking market, 112 points to 1356 for the San Bernardino banking market, and 135 points to 1669 for the Madera County banking market. 251 In light of the market concentration and the number of probable future entrants into those markets, the Board concludes that consummation of this proposal would not have a significantly adverse effect on probable future competition in any relevant market. The financial and managerial resources of Wells Fargo, TPG and Central Pacific are consistent with approval. N o additional debt will be incurred in connection with the proposals. In considering the convenience and needs of the communities to be served, the Board has taken into account the record of Wells Fargo's subsidiary bank, Wells Fargo Bank, N.A., San Francisco, California ("Bank"), under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the local communities in which they operate consistent with the safe and sound operation of such institutions. To accomplish this end, the CRA requires the appropriate federal supervisory authority to "assess an institution's record of meeting the credit needs of its entire community, including low- and moderateincome neighborhoods, consistent with the safe and sound operation of the institution," and to "take this record into account in its evaluation of bank holding company applications." 9 Protestants allege that Bank has failed to meet the credit needs of its entire community, including lowincome and minority neighborhoods. 10 The Board has carefully reviewed the CRA performance record of Wells Fargo, including Protestants' comments regarding Bank's provision of loans and other services to minority communities, and Wells Fargo's response to those comments, in light of the CRA, the Board's regulations, and the jointly issued Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("CRA Policy Statement"). 11 The CRA Policy Statement provides guidance regarding the types of policies and procedures that the supervisory agencies believe financial 9. 12 U.S.C. § 2903. 10. Protestants' allegations regarding Bank include the following: (1) discriminatory lending practices for consumer and commercial loans in minority neighborhoods; (2) inadequate marketing programs to meet the credit needs of minority communities; (3) branch closings detrimental to minority neighborhoods; (4) inadequate investment in low-income consumer loan portfolios and inadequate participation in Small Business Administration ("SBA") programs; (5) inadequate philanthropic contributions to minorities and insensitivity to the needs of minorities as reflected by inadequate participation of minorities in Bank's top management; and (6) the failure of Bank to award contracts to minority-owned businesses. 11. 54 Federal Register 13,742 (March 21, 1989). 252 Federal Reserve Bulletin • April 1990 institutions should have in place in order to fulfill their responsibilities under the CRA on an ongoing basis, and the procedures that the supervisory agencies will use during the application process to review an institution's CRA compliance and performance. Initially, the Board notes that Bank has received a satisfactory rating from the OCC in an April 1989 examination of its CRA performance. In addition, Bank has in place the types of programs outlined in the CRA Policy Statement as essential to any effective CRA program. Bank has a Community Affairs Department staffed by four full-time employees. The Community Affairs Department monitors community and economic development loan activities and promotes outreach efforts to neighborhood and consumer groups, public officials, minority associations, and business organizations. It performs such roles as overseeing the development and implementation of various housing development programs and training branch managers in CRA-related concerns. 12 Bank's board of directors is also involved with Bank's CRA program. A CRA Committee, consisting of three directors, meets three times a year with senior executive management responsible for overseeing the Community Affairs Department. The CRA Committee reports to the Board at least annually and this committee is active in the affairs of Bank and the monitoring of CRA activity. In addition, Bank has adopted a branch closure analysis procedure, designed to ensure that CRA-related concerns will be taken into account in any decision to close a particular branch. 13 A major aspect of Bank's CRA activities is a program entitled the Wells Fargo Community and Economic Development Loan Program ("Program"). The Program finances various CRA-related projects, such as low-income housing projects, projects that provide jobs in lower-income communities, and programs designed to help small businesses. In 1986, Wells Fargo set an annual goal of $41 million for the Program, which Bank has exceeded every year. Bank invested approximately $118 million in the Program in 1989, of which approximately half is attributable to low-income housing developments. In addition, Bank has joined 12. Bank will require completion of community contact forms by branch and Community Affairs Department staff and make outreachrelated training part of the ongoing CRA training provided to branch managers. 13. The Community Affairs Department evaluates the CRA impact of branch closings and makes recommendations to appropriate Retail and Commercial Banking Divisions to ensure that a branch closing is consistent with Bank's continued effort to meet the credit needs of the community. A CRA Compliance Checklist must be completed for any branch proposed to be closed, relocated, consolidated, or downsized. The CRA Committee reviews the Community Affairs Department's evaluations on branch closings. the California Community Reinvestment Corporation, making a $13 million commitment over two years. Bank is also engaged in a variety of other CRArelated activities. For example, Bank has one program that provides liberalized credit qualifications and repayment terms to qualified low-income borrowers. Bank also makes direct contributions to community organizations, including minority organizations. In the small business area, while Bank makes few SBA loans, it has a variety of conventional products providing non-guaranteed financing to non-profit and forprofit small businesses. In its April 1989 CRA examination of Bank, the OCC found that Bank's geographic distribution of credit appeared reasonable and that Bank's lending practices did not discourage applications for types of credit listed in Bank's CRA Statement. The examination found no evidence of discriminatory lending or other illegal credit practices. 14 Bank's assessment of community credit needs and its loan marketing were considered satisfactory. The types of credit offered and extended were also considered satisfactory. As noted above, Bank has developed and extended loans which meet the credit needs of low- and moderateincome borrowers, including loans originated for residential mortgages, housing rehabilitation, home improvement, small businesses, and small farms within the community. Bank also participates in governmental^ insured, guaranteed and subsidized loans. Bank's participation in local community development and redevelopment programs was determined to be satisfactory. The Board notes that Bank is also taking appropriate measures to strengthen its performance in response to suggestions from its primary regulator. For example, Bank has agreed to explore advertising and direct marketing strategies for special credit products, based on the study of local credit needs in progress at the time of its most recent examination. 15 The Board will review Bank's progress under the CRA in future applications. 14. Analyses of the Home Mortgage Disclosure Act data for Bank in 22 California MSAs where Bank reported loans for 1987 and 1988 were consistent with lending patterns of aggregate lenders in those areas. In 1987, Bank made 11 percent of its mortgage loans in low- and moderate-income neighborhoods as compared to 13 percent for aggregate lenders. Fourteen percent of Bank's mortgage portfolio was originated in areas with a minority population higher than 40 percent, compared with 15 percent for lenders as a whole. Similarly, in 1988 mortgage lending by Bank in low- and moderate-income areas accounted for 10 percent of its mortgage portfolio, while mortgage lending in substantially minority areas accounted for 14 percent. For aggregate lenders in 1988, these figures were 13.5 percent and 16.5 percent, respectively. 15. Bank will initiate a promotion of its Low Income Finance Terms program, which features reduced monthly payments over longer terms, and modified employment qualifications, to include advertisements in community-based publications. Legal Developments For the foregoing reasons, and based upon the overall CRA record of Bank, and other facts of record, the Board concludes that convenience and needs considerations, including the record of performance under the CRA of Bank, are consistent with approval of these applications. 16 Based on the foregoing and other facts of record, the Board has determined that the applications under section 3 of the BHC Act should be, and hereby are, approved. The proposals 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 San Francisco, acting pursuant to delegated authority. By order of the Board of Governors, effective February 26, 1990. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Kelley. Absent and not voting: Governor LaWare. JENNIFER J. JOHNSON Associate Secretary of the Board Orders Issued Under Section 4 of the Bank Holding Company Act Ameritrust Corporation Cleveland, Ohio Order Approving Acquisition of a Company Engaged in Trust, Investment Advisory and Real Estate Equity Financing and Appraisal Activities Ameritrust Corporation, Cleveland, Ohio ("Ameritrust"), a bank holding company within the meaning of the Bank Holding Company Act (the " B H C Act"), has applied pursuant to section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the Board's Regulation Y (12 C.F.R. 225.23(a)), to acquire 16. Protestants also have requested that the Board hold a public hearing or meeting to further assess the facts surrounding Bank's CRA performance, as well as conduct an audit of Bank's commercial and residential loan portfolio. Generally under the Board's rules, the Board may hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 U.S.C. §§ 262.3(e) and 262.25(d). In light of the fact that the parties in this case have had ample opportunity to present their arguments in writing and to respond to one another's submissions, the Board has determined that a public hearing or meeting would serve no useful purpose. Accordingly, these requests are denied. Furthermore, since the OCC completed a CRA examination of Bank in April 1989, the Board has also determined that an audit of Bank's loan portfolio would serve no useful purpose. Accordingly, the request for an audit of Bank's loan portfolio is denied. 253 MVestment Corporation, Dallas, Texas ("MVestment"), and thereby engage in the exercise of trust powers, investment advisory activities, real estate equity financing activities and real estate appraisals. 1 Notice of the application, affording interested persons an opportunity to submit comments, has been duly published (54 Federal Register 47,270 (1989)). 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 B H C Act. Ameritrust, with total consolidated assets of $10.9 billion, is the third largest commercial banking organization in Ohio and the 53rd largest bank holding company in the United States. 2 Ameritrust operates six subsidiary banks in Ohio and Indiana and engages through subsidiaries in a variety of nonbanking activities. The Board has previously determined that the activities Ameritrust proposes to conduct through MVestment are closely related to banking and permissible for bank holding companies to conduct under section 4(c)(8) of the B H C Act. 3 Ameritrust has proposed to conduct these activities within the limitations established in the Board's regulations. In order to approve this application, the Board also must find that the 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. In evaluating the balance of public benefits associated with this proposal, the Board has considered the financial and managerial resources of Ameritrust and its bank subsidiaries, and the effect on those resources of the proposed acquisition. The Board has stated and continues to believe that capital adequacy is an important factor in the analysis of bank holding company expansion proposals. 4 In this regard, the Board has 1. MVestment owns four non-bank subsidiaries: MTrust Corporation, Dallas, Texas (provider of trust services); MSecurities Corporation, Dallas, Texas (provider of investment advisory services pertaining to common stock portfolios); MRealty Corporation, Dallas, Texas (investment advisory services pertaining to real estate investments, equity financing activities and real estate appraisal); and MPetroleum Corporation, Dallas, Texas (investment advisory services pertaining to investments in petroleum producing facilities). 2. All banking data are as of September 30, 1989. 3. The Board's Regulation Y (12 C.F.R. Part 225) includes the four activities in which Ameritrust proposes to engage: exercising trust powers; providing portfolio advice; performing appraisals of real estate; and arranging commercial real estate equity financing. (12 C.F.R. 225.25(b)(3), (4), (13) and (14)). 4. First Union Corporation, 76 Federal Reserve Bulletin 83 (1990), The Bank of New York Company, Inc., 74 Federal Reserve Bulletin 257 (1988); Chemical New York Corporation, 73 Federal Reserve 254 Federal Reserve Bulletin • April 1990 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 ("Guidelines") 5 without significant reliance on intangibles, in particular goodwill. The Board carefully analyzes the effect 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. 6 Upon consummation of the proposed transaction, Ameritrust's capital ratios would remain above the minimum levels specified in the Guidelines, without significant reliance on intangible assets. In this regard, the Board notes that Ameritrust proposes to fund a significant portion of the purchase price with the issuance of new equity capital and that Ameritrust projects a further strengthening of its capital after consummation of this proposal. In light of the foregoing and, in particular, Ameritrust's proposed issuance of equity capital, the Board concludes that the financial resources of Ameritrust are consistent with approval of this proposal. There is no evidence in the record to indicate that approval of this proposal would result in undue concentration of resources, unfair competition, conflicts of interests or other adverse effects on the public interest. Ameritrust does not currently engage in equity financing, or real estate appraisal activities, and does not provide personal trust services in Texas where MVestment operates. The corporate trust and investment advisory services provided by Ameritrust and MVestment represent a de minimis share of the total market for these services. Moreover, the market for these services is highly competitive, with numerous bank and nonbank competitors. Consummation of the proposed transaction, therefore, would not have a significant adverse effect on competition in any relevant market. Based upon the foregoing and all the facts of record, the Board has determined that the balance of the public interest factors that it is required to consider under section 4(c)(8) is favorable and consistent with approval of this application. Bulletin 378 (1987); Citicorp, 72 Federal Reserve Bulletin 497 (1986); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). 5. Capital Adequacy Guidelines, 50 Federal Register 16,057 (April 24, 1985). 6. 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 726 (1986); Security Pacific Corporation, 72 Federal Reserve Bulletin 800 (1986). Accordingly, the Board has determined that the application should be, and hereby is, approved. This determination is subject to all of the conditions contained in Regulation Y , including those in sections 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), and to the Board's authority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and orders issued thereunder. 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 Cleveland, pursuant to delegated authority. By order of the Board of Governors, effective February 26, 1990. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Kelley. Absent,and not voting: Governor LaWare. JENNIFER J. JOHNSON Associate Secretary of the Board Peoples Bancorporation R o c k y Mount, North Carolina Order Approving Association Acquisition of a Savings Peoples Bancorporation, Rocky Mount, North Carolina ("Peoples"), has applied for the Board's approval under section 4(c)(8) of the Bank Holding Company Act ("BHC Act") (12 U . S . C . § 1843 et seq.), and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to acquire Watauga Savings & Loan Association, Inc., Boone, North Carolina ("Watauga"), a savings association, pursuant to section 225.25(b)(9) of the Board's Regulation Y (12 C.F.R. 225.25(b)(9)). Notice of the application, affording interested persons an opportunity to submit comments, has been published (54 Federal Register 41,680 (1989)). 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. Peoples, which operates three banking subsidiaries, is the ninth largest commercial banking organization in North Carolina, with deposits of approximately $1.1 billion. 1 Watauga is the 52nd largest savings associa- 1. All deposit and market data are as of June 30, 1989. Legal Developments tion in North Carolina, with total deposits of approximately $112.8 million. Watauga is currently operating as a mutual savings association. Prior to the acquisition, Watauga proposes to convert from mutual to stock form, with Peoples purchasing all of the outstanding stock of Watauga. Section 601 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L. 101-73, § 6 0 1 , 101 Stat. 183, 408 (as codified at 12 U . S . C . § 1843(i)) permits the Board to approve an application by a bank holding company to acquire a savings association under section 4(c)(8) of the BHC Act. Pursuant to this authority, the Board has determined that the operation of a savings association is closely related to banking and permissible for bank holding companies. 12 C.F.R. 225.23(b)(9). 2 In order to approve this application, the Board also is required to determine that the performance of the proposed activities by Peoples "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." 12 U . S . C . § 1843(c)(8). This consideration includes an evaluation of the financial and managerial resources of the applicant, including its subsidiaries, and any company to be acquired, and the effect of the proposed transaction on these resources. 12 C.F.R. 225.24. The financial and managerial resources and future prospects of Peoples and its bank subsidiaries, and Watauga are consistent with approval. Upon consummation of the proposed transaction, Peoples' capitalization will remain above the minimum levels specified in the Board's Capital Guidelines, without significant reliance upon intangible assets. In assessing the financial factors, the Board has also considered the proposed recapitalization of Watauga. In this regard, the Board believes that bank holding companies must maintain adequate capital at savings associations that they propose to acquire. Peoples' acquisition of Watauga will result in a capital infusion of approximately $6 million into Watauga. Upon consummation, Watauga's Tier 1 capital, exclusive of all intangible assets, will be more than three percent of the savings association's total assets. Further, Peoples has committed that Watauga will meet all present and future minimum 2. In making this determination, the Board required that savings associations acquired by bank holding companies conform their direct and indirect activities to those activities permissible for bank holding companies under section 4 of the BHC Act. See National City Corporation, 76 Federal Reserve Bulletin 11 (1990). Peoples has committed in its application to conform all of the direct and indirect activities of Watauga to the requirements of section 4(c)(8) of the BHC Act upon consummation. 255 capital ratios adopted for savings associations by the Office of Thrift Supervision or the Federal Deposit Insurance Corporation. Upon consummation of the proposed acquisition, Peoples would remain the ninth largest commercial banking organization in North Carolina, controlling approximately $1.2 billion in deposits in the state, representing an approximate 1.85 percent share of deposits in depository institutions in North Carolina. Peoples and Watauga do not operate in the same banking markets. Accordingly, the Board concludes that the acquisition would not have a significantly adverse effect upon the concentration of banking organizations in North Carolina, or on existing competition in any relevant market. There is no evidence in the record to indicate that approval of this proposal would result in conflicts of interest, unsound banking practices, or other adverse effects on the public interest. Moreover, the Board feels that any adverse effects that may result from this acquisition are outweighed by the financial and managerial strength that Peoples will provide to Watauga as a result of the acquisition. Accordingly, based upon consideration of all the relevant facts, 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 and consistent with approval of Peoples' application to acquire Watauga. For these reasons and based on all the facts of record, and subject to the commitments made by Peoples as set forth in its application and in this Order, the Board has determined that the proposed application should be, and hereby is, approved. This determination is also subject to all of the conditions set forth in the Board's Regulation Y, including sections 225.4(d) and 225.23, and to the Board's authority to require such modifications or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and orders issued thereunder. This transaction shall be made no later than three months after the effective date of this Order, unless such Order is extended for good cause by the Board or by the Federal Reserve Bank of Richmond, pursuant to delegated authority. By order of the Board of Governors, effective February 16, 1990. Voting for this action: Chairman Greenspan and Governors Johnson, Angell, and Kelley. Absent and not voting: Governors Seger and La Ware. JENNIFER J. JOHNSON Associate Secretary of the Board 256 Federal Reserve Bulletin • April 1990 S o v r a n Financial Corporation N o r f o l k , Virginia Order Approving Application to Underwrite and Deal in Certain Securities to a Limited Extent Sovran Financial Corporation, Norfolk, Virginia ("Sovran"), a bank holding company within the meaning of the Bank Holding Company Act ("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 of the Board's Regulation Y (12 C.F.R. 225.23), to engage through its subsidiary, Sovran Investment Corporation, Richmond, Virginia ("Company"), 1 on a limited basis in underwriting and dealing in: (1) municipal revenue bonds, including certain industrial development bonds; (2) 1-4 family mortgage-related securities; (3) commercial paper, and (4) consumer-receivable-related securities (collectively "bank-ineligible securities"). Sovran, with total consolidated assets of $23.4 billion, is the 27th largest banking organization in the nation. 2 Sovran operates 13 subsidiary banks and engages directly and through subsidiaries in a variety of permissible nonbanking activities. Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (55 Federal Register 1097 (1990)). 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. The Board has previously determined that the conduct of the proposed bank-ineligible securities underwriting and dealing activity is consistent with section 20 of the Glass-Steagall Act provided the underwriting subsidiary derives no more than 10 percent of its total gross revenue from underwriting and dealing in the approved securities over any two-year period. 3 Sovran has committed that Company will conduct its underwriting and dealing activities with respect to bankineligible securities subject to the 10 percent revenue test and the prudential limitations established by the Board in its Citicorp/Morgan/Bankers Trust, Chemical, and Modification Orders. The Board has also found by order that, subject to the prudential framework of limitations established to address the potential for conflicts of interest, unsound banking practices or other adverse effects, the proposed underwriting and dealing activities are so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act. 4 Consummation of the proposal would provide added convenience to Sovran's customers. In addition, the Board expects that the de novo entry of Sovran into the market for some of these services would increase the level of competition among providers of these services. Under the framework established in this and prior decisions, consummation of this proposal is not likely to result in any significant undue concentration of resources, decreased or unfair competition, conflicts of interest, unsound banking practices, or other adverse effects. Accordingly, the Board has determined that the performance of the proposed activities by Sovran can reasonably be expected to produce public benefits which would outweigh adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. 5 Based on the above, the Board has determined to approve Sovran's application subject to all of the 1. Company previously has received authorization from the Board to: (1) provide discount securities brokerage services; (2) buy and sell, as agent on behalf of unaffiliated persons, options on securities issued or guaranteed by the U.S. Government and its agencies, and options on U.S. and foreign money market instruments; (3) purchase and sell gold and silver bullion and gold coins solely for the account of customers; (4) underwrite and deal in government obligations and money market instruments; (5) provide investment advice relating solely to government obligations and money market instruments; (6) provide certain fiduciary services; (7) provide cash management services; (8) provide certain investment advisory services, and (9) combine brokerage services with non-fee ancillary investment advice to corporate and other institutional customers in a limited range of non-bank eligible securities. See Sovran Financial Corporation, 74 Federal Reserve Bulletin 504 (1988). 2. Data are as of September 30, 1989. 3. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust New York Corporation, 73 Federal Reserve Bulletin 473 (1987) CCiticorp!Morgan! Bankers Trust"), aff d sub nom., Securities Industry Association v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 S.Ct 2830 (1988) C'SIA v. Board"); and Chemical New York Corporation, The Chase Manhattan Corporation, Bankers Trust New York Corporation, Citicorp, Manufacturers Hanover Corporation and Security Pacific Corporation, 73 Federal Reserve Bulletin 731 (1987) ("Chemical"); as modified by Order Approving Modifications to Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989) ("Modification Order"). 4. Id. 5. Company may also provide services that are necessary incidents to these approved activities. Any activity conducted as a necessary incident to the ineligible securities underwriting and dealing activity must be treated as part of the ineligible securities activity unless Company has received specific approval under section 4(c)(8) of the BHC Act to conduct the activity independently. Until such approval is obtained, any revenues from the incidental activity must be counted as ineligible revenue subject to the 10 percent gross revenue limit set forth in the Modification Order. Legal Developments terms and conditions set forth in this Order and in the above-noted Board Orders that relate to this activity. 6 The Board's determination is 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 a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. 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 Richmond, pursuant to delegated authority. By order of the Board of Governors, effective February 12, 1990. Voting for this action: Chairman Greenspan and Governors Seger, Angell, Kelley, and LaWare. Absent and not voting: Governor Johnson. JENNIFER J. JOHNSON Associate Secretary of the Board The Cedar Vale Bank Holding Company Wellington, Kansas Order Denying Applications to Become a Bank Holding Company and to Engage in Insurance Agency Activities The Cedar Vale Bank Holding Company, Wellington, Kansas ("Cedar Vale"), has applied for the Board's approval under section 3 of the Bank Holding Company Act (the " B H C Act") (12 U.S.C. § 1842) to become a bank holding company through the acquisition of 90.5 percent of the voting shares of Bank of Commerce & Trust Company, Wellington, Kansas ("Bank"). Cedar Vale also has applied under section 4(c)(8) of the BHC Act to acquire all of the voting shares of Tri-County Financial Corporation, Wellington, Kansas, and thereby to engage in the sale of credit-related life, accident, and health insurance, and crop insurance pursuant to section 225.25(b)(8)(vi) of the Board's Regulation Y (12 C.F.R. 225.25(b)(8)(vi)). Notice of the applications, affording interested persons an opportunity to comment, has been published (54 Federal Register 38,738 (1989)). The time for filing comments has expired, and the Board has considered 6. In light of the decision in SIA v. Board, Sovran will not be subject to the market share limitation with respect to its ineligible activities that was originally imposed in the CiticorplMorganlBankers Trust and Chemical Orders. 257 the applications and all comments received in light of the factors set forth in sections 3 and 4 of the BHC Act. Cedar Vale is a non-operating company that formerly operated a bank. 1 Bank is the 245th largest commercial banking organization in Kansas, controlling deposits of $25.4 million, representing less than one percent of the total deposits in commercial banking organizations in the state. 2 Bank is the fifth largest of 11 commercial banking organizations in the Sumner County, Kansas, banking market, controlling 10.3 percent of the total deposits in commercial banking organizations in the market. 3 This proposal represents a restructuring of existing ownership interests. 4 Consummation of this proposal would not result in any significantly adverse effect on the concentration of banking resources or competition in any relevant market. In evaluating this application, the Board is required under section 3 of the BHC Act to consider the financial and managerial resources of Cedar Vale and Bank and the effect of the proposed acquisition on those resources and on the future prospects of both Bank and Cedar Vale. The Board previously has stated that a bank holding company should serve as a source of financial strength to its subsidiary banks and that the Board would examine closely the condition of an applicant and its subsidiaries in each case with this consideration in mind. The Board also has cautioned against the assumption of substantial debt by a bank holding company because of concern that a holding company with substantial debt would not have the financial flexibility necessary to meet unexpected problems in its subsidiary banks and could be forced to place substantial demands on the subsidiary banks to meet debt-servicing requirements. 5 Cedar Vale proposes to finance the transaction with substantial debt. Bank's current parent is debt free, and thus the effect of the transaction would be to transfer Bank from a holding company without debt to a holding company with substantial debt obligations. Cedar Vale's controlling shareholder, who currently 1. Cedar Vale received approval in 1975 to become a bank holding company through the acquisition of Cedar Vale State Bank, Cedar Vale, Kansas. Cedar Vale was acquired by its current owner in 1984. Cedar Vale State Bank failed and was closed by the State of Kansas on January 21, 1988. 2. Banking data are as of December 31, 1987. 3. The Sumner County, Kansas banking market is approximated by Sumner County, Kansas. 4. Cedar Vale proposes to acquire Bank from Sumner County Bancshares, Wellington, Kansas. Cedar Vale and Sumner County Bancshares are controlled by a common shareholder, who serves as president and chief executive officer of each company. 5. See St. Croix Valley Bancshares, Inc., 75 Federal Reserve Bulletin 575 (1989); F.N.B.A. Holding Company, Inc., 75 Federal Reserve Bulletin 711 (1989). 258 Federal Reserve Bulletin • April 1990 services Cedar Vale's debt, states that the proposed acquisition of Bank would provide Cedar Vale a source of income and enable Cedar Vale to avail itself of certain tax benefits. Cedar Vale projects that it will be able to reduce the acquisition debt in a manner consistent with Board policy. In light of the historical performance and overall financial condition of Bank and Cedar Vale, however, Cedar Vale's earnings projections appear to be overly optimistic, even after consideration of potential tax benefits that Cedar Vale may gain as a result of the proposed acquisition of Bank. In particular, the Board's analysis of Bank's earnings performance during the past five years and Bank's overall financial condition, including Bank's current asset quality, indicates that Bank may be unable to provide income sufficient to support Cedar Vale's debt-servicing requirements. In addition, although Bank's capital is above the minimum levels set forth in the Board's Capital Adequacy Guidelines, Bank's capital ratio has declined during the past year. 6 Finally, the continuing weak condition of Bank's loan portfolio may indicate the need to make additional provisions for loan losses. Upon careful evaluation of more conservative projections based on the historical performance and overall financial condition of Bank and Cedar Vale, it is the Board's judgment that Cedar Vale would not have sufficient financial flexibility to service its debt without unduly straining the resources of the proposed combined organization and Bank. The Board has approved proposals involving relatively high levels of debt that otherwise met the terms of the Board's Policy Statement for Formation of Small One-Bank Holding Companies (the "Policy Statement") in order to facilitate the transfer of ownership of small banks to local owners. 7 In this case, a common shareholder controls both the selling and acquiring companies and would remain in control of the acquiring company following consummation of the transaction. Based on these facts, the Board concludes that consummation of this proposal would not result in an actual change in ownership and control of Bank. 8 Based on the facts of record and for the reasons stated above, the Board believes that even if the proposed transaction did qualify for treatment under the Policy Statement guidelines, Cedar Vale would not have sufficient financial resources or flexibility to service its 6. Capital Adequacy Guidelines for Bank Holding Companies and State Member Banks: Leverage Measure, 12 C.F.R. Part 225, Appendix B. 7. Oxford Agency, Inc., 71 Federal Reserve Bulletin 348 (1985); Policy Statement for Formation of Small One-Bank Holding Companies, 12 C.F.R. Part 225, Appendix C. 8. See Spur Bancshares, Inc., 69 Federal Reserve Bulletin 806 (1983). proposed debt. Accordingly, based upon all the facts of record in this case, the Board finds that financial considerations are not consistent with approval of this application. 9 Managerial factors and convenience and needs considerations in this case do not lend sufficient weight to warrant approval of this application. On the basis of all the facts of record, the Board concludes that the banking considerations involved in this proposal present adverse factors bearing upon the financial resources and future prospects of Cedar Vale and Bank. Such adverse factors are not outweighed by any pro-competitive effects, by significant benefits that would better serve the convenience and needs of the community to be served, or by other factors. Accordingly, it is the Board's judgment that approval of these applications would not be in the public interest and that the applications should be, and hereby are, denied. By order of the Board of Governors, effective February 9, 1990. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, Kelley, and La Ware. JENNIFER J. JOHNSON Associate Secretary of the Board 9. Applicant contends that these applications were approved by operation of law as of January 22, 1990, and that Applicant, therefore, may consummate the proposed transactions without Board action. Applicant bases this argument on its opinion that the ninety-one day period stipulated in the BHC Act and the Board's regulations for Board action on an application began upon the acceptance of these applications for processing and thus has expired. The terms of the BHC Act, the Board's regulations, and relevant court cases do not support Applicant's contention. The BHC Act provides that the ninety-one day period does not begin until the submission to the Board of the completed record on the application. 12 U.S.C. §§ 1842(b)(1), 1843(c). The Board's regulations provide that the record on an application is not complete until the "date of receipt by the Board of the last relevant material regarding the application that is needed for the Board's decision, if the material is received from a source outside the Federal Reserve System." 12 C.F.R. 225.14(g); see also 12 C.F.R. 225.23(h); accord First Lincolnwood Corp. v. Board of Governors of the Federal Reserve System, 546 F.2d 718 (7th Cir. 1976), modified, 560 F.2d 258 (7th Cir. 1977), rev'd on other grounds, 439 U.S. 234 (1978). Applicant has submitted additional information regarding these applications on several occasions since acceptance of the application for processing, including letters dated November 10, 1989, and January 19, 1990. This additional information concerned Bank's asset quality, earnings, and capital. Additional material information was also received from the FDIC on November 15, 1989, regarding the financial condition of Bank. This information, all received from sources outside the System, was necessary to the Board's decision regarding the financial and managerial factors in this case. In light of the relevant, material nature of information received by the Board through January 19, 1990, the Board finds that the ninety-one day period in this case has not expired as of the date of this Order and Applicant is not entitled as a matter of law to consummate this proposal. Legal Developments Orders Issued Under Financial Institutions Reform, Recovery, and Enforcement Act February 2, 1990 Lee S. Adams Counsel Banc One Corporation 100 East Broad Street Columbus, Ohio 43271 259 Based on the foregoing and all of the other facts of record, the Staff Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board, acting pursuant to authority delegated by the Board of Governors, hereby approve your request to engage in the proposed transaction under section 5(d)(3) of the FDI Act. This approval is subject to Banc One obtaining the required approval of the appropriate Federal banking agency for the proposed merger under the Bank Merger Act. Dear Mr. Adams: Very truly yours, Banc One Corporation, Columbus, Ohio ("Banc One"), proposes that its bank subsidiary, Bank One, Texas, N.A., Dallas, Texas, purchase the assets and assume the liabilities of Banc One Federal Savings Bank, Dallas, Texas, its savings association subsidiary, ("Banc One Savings"). Banc One has requested Board approval of this transaction pursuant to section 5(d)(3) of the Federal Deposit Insurance Act ("FDI Act") as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199 (1989)). Banc One Savings has been established to acquire certain assets and assume deposit liabilities of Bright Banc Savings Association, Dallas, Texas ("Bright"). The record in this case shows that: (1) The aggregate amount of the total assets of all depository institution subsidiaries of Banc One is $26.7 billion, an amount which is not less than 200 percent of the total assets of Banc One Savings, which currently has $1.9 billion in total assets; (2) Banc One and all of its bank subsidiaries currently meet all applicable capital standards and, upon consummation of the proposed transactions, will continue to meet all applicable capital standards; (3) The transaction is not in substance the acquisition of a Bank Insurance Fund member bank by a Savings Association Insurance Fund member; (4) Community, the predecessor to Banc One Savings, had tangible capital of less than 4 percent during the quarter preceding its acquisition by Banc One; (5) The transaction, which involves the purchase of assets and assumption of liabilities of Banc One Savings, a savings association located in Wisconsin, by bank subsidiaries of Banc One, a bank holding company whose banking subsidiaries' operations are principally conducted in Ohio, would comply with the requirements of section 3(d) of the Bank Holding Company Act if Banc One Savings were a state bank which Banc One was applying to acquire. William W. Wiles Secretary of the Board cc: Federal Reserve Bank of Cleveland February 2, 1990 Lee S. Adams Counsel Banc One Corporation 100 East Broad Street Columbus, Ohio 43271 Dear Mr. Adams: Banc One Corporation, Columbus, Ohio ("Banc One"), proposes that its bank subsidiaries, Bank One, Appleton, N . A . , Appleton, Wisconsin; Bank One, Oshkosh, N . A . , Oshkosh, Wisconsin; Bank One Campbellsport, Campbellsport, Wisconsin; and Bank One, Green Bay, Green Bay, Wisconsin, purchase the assets and assume the liabilities of Banc One Savings, Fond du Lac, Wisconsin, its savings association subsidiary, ("Banc One Savings"). Banc One has requested Board approval of this transaction pursuant to section 5(d)(3) of the Federal Deposit Insurance Act ("FDI Act") as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199 (1989)). Banc One Savings has been established to acquire certain assets and assume deposit liabilities of Community Savings & Loan Association, Fond du Lac, Wisconsin ("Community"). The record in this case shows that: (1) The aggregate amount of the total assets of all depository institution subsidiaries of Banc One is $26.7 billion, an amount which is not less than 200 percent of the total assets of Banc One Savings, which currently has $144.2 million in total assets; (2) Banc One and all of its bank subsidiaries cur- 260 Federal Reserve Bulletin • April 1990 rently meet all applicable capital standards and, upon consummation of the proposed transactions, will continue to meet all applicable capital standards; (3) The transaction is not in substance the acquisition of a Bank Insurance Fund member bank by a Savings Association Insurance Fund member; (4) Community, the predecessor to Banc One Savings, had tangible capital of less than 4 percent during the quarter preceding its acquisition by Banc One; (5) The transaction, which involves the purchase of assets and assumption of liabilities of Banc One Savings, a savings association located in Wisconsin, by bank subsidiaries of Banc One, a bank holding company whose banking subsidiaries' operations are principally conducted in Ohio, would comply with the requirements of section 3(d) of the Bank Holding Company Act if Banc One Savings were a state bank which Banc One was applying to acquire. Based on the foregoing and all of the other facts of record, the Staff Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board, acting pursuant to authority delegated by the Board of Governors, hereby approve your request to engage in the proposed transaction under section 5(d)(3) of the FDI Act. This approval is subject to Banc One obtaining the required approval of the appropriate Federal banking agency for the proposed merger under the Bank Merger Act. Very truly yours, William W. Wiles Secretary of the Board cc: Federal Reserve Bank of Cleveland February 2, 1990 John A. Newcomer Planning and Development Officer Peoples State Bank 830 Pleasant Street St. Joseph, Michigan 49085 Dear Mr. Newcomer: Pinnacle Financial Services, Inc., St. Joseph, Michigan ("Pinnacle"), proposes that its bank subsidiary, Peoples State Bank, St. Joseph, Michigan, purchase the assets and assume the liabilities of PSB S&L, St. Joseph, Michigan, its savings association subsidiary. Pinnacle has requested Board approval of this transaction pursuant to section 5(d)(3) of the Federal Deposit Insurance Act ("FDI Act") as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199 (1989)). PSB S&L has been established to acquire certain assets and assume deposit liabilities of Peoples Savings Association, St. Joseph, Michigan ("Peoples"). The record in this case shows that: (1) The aggregate amount of the total assets of all depository institution subsidiaries of Pinnacle is $230 million, an amount which is not less than 200 percent of the total assets of PSB S&L, which currently has $75 million in total assets; (2) Pinnacle and all of its bank subsidiaries currently meet all applicable capital standards and, upon consummation of the proposed transactions, will continue to meet all applicable capital standards; (3) The transaction is not in substance the acquisition of a Bank Insurance Fund member bank by a Savings Association Insurance Fund member; (4) Peoples, the predecessor to PSB S&L, had tangible capital of less than 4 percent during the quarter preceding its acquisition by Pinnacle; (5) The transaction, which involves the purchase of assets and assumption of liabilities of PSB S&L, a savings association located in Michigan, by a bank subsidiary of Pinnacle, a bank holding company whose banking subsidiaries' operations are principally conducted in Michigan, would comply with the requirements of section 3(d) of the Bank Holding Company Act if PSB S&L were a state bank which Pinnacle was applying to acquire. Based on the foregoing and all of the other facts of record, the Staff Director of the Division of Banking Supervision and Regulation and the General Counsel of the Board, acting pursuant to authority delegated by the Board of Governors, hereby approve your request to engage in the proposed transaction under section 5(d)(3) of the FDI Act. This approval is subject to Pinnacle obtaining the required approval of the appropriate Federal banking agency for the proposed merger under the Bank Merger Act. Very truly yours, William W. Wiles Secretary of the Board cc: Federal Reserve Bank of Chicago Legal Developments APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY 261 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 Applicant(s) Alton Bancshares, Inc., Grandin, Missouri Border Bancshares, Inc., Greenbush, Minnesota Center Banks Incorporated, Skaneateles, N e w York Century South Banks, Inc., Dahlonega, Georgia Century South Banks, Inc., Dahlonega, Georgia Citizens National Corporation, Naples, Florida Claremont Financial Services, Inc., St. Paul, Minnesota Community National Bancorporation, Ashburn, Georgia Emclaire Financial Corp., Emlenton, Pennsylvania Farmers National Bancorp, Inc. Geneseo, Illinois Farmers State Bancorporation, Inc., Hoffman, Illinois The Farmers State Bank Corporation of Fort Morgan, Fort Morgan, Colorado FCFT, Inc., Princeton, West Virginia First Virginia Banks, Inc., Falls Church, Virginia F.N.B. Corporation, Hermitage, Pennsylvania Greeley Bancshares, Inc., Greeley, Kansas Bank(s) Alton Bank, Alton, Missouri Badger State Bank, Badger, Minnesota Skaneateles Savings Bank, Skaneateles, New York First Union Bancorp, Inc., Blairsville, Georgia Mountain Bank of Georgia, Hiawassee, Georgia Citizens National Bank of Naples, Naples, Florida Security State Bank of Claremont, Claremont, Minnesota Community National Bank, Ashburn, Georgia Farmers National Bank of Emlenton, Emlenton, Pennsylvania Woodhull State Bank, Woodhull, Illinois Farmers State Bank of Hoffman, Hoffman, Illinois The Farmers State Bank of Fort Morgan, Fort Morgan, Colorado First Community Bancshares, Inc., Princeton, West Virginia Flat Top Bankshares, Inc., Bluefield, West Virginia N e w Bank, Cockeysville, Maryland Emclaire Financial Corp., Emlenton, Pennsylvania Bank of Greeley, Greeley, Kansas Reserve Bank Effective date St. Louis February 13, 1990 Minneapolis February 2, 1990 N e w York February 16, 1990 Atlanta February 2, 1990 Atlanta February 2, 1990 Atlanta January 29, 1990 Minneapolis February 1, 1990 Atlanta February 16, 1990 Cleveland February 2, 1990 Chicago February 14, 1990 St. Louis February 1, 1990 Kansas City January 26, 1990 Richmond February 9, 1990 Richmond January 25, 1990 Cleveland February 2, 1990 Kansas City February 16, 1990 262 Federal Reserve Bulletin • April 1990 Section 3—Continued Applicant(s) High Point Bank Corporation, High Point, North Carolina Lonoke Bancshares, Inc., Lonoke, Arkansas Metro Financial Corporation, Atlanta, Georgia Mid-Michigan Bancorp, Inc., Portland, Michigan Montgomery Bancorp, Inc., Bethesda, Maryland New East Bancorp, Raleigh, North Carolina Omega Financial Corporation, State College, Pennsylvania Pennyrile Bancshares, Inc., Hopkinsville, Kentucky Planters & Merchants Bancshares, Inc., Gillett, Arkansas Sun State Capital Corporation, Las Vegas, Nevada Synovus Financial Corp., Columbus, Georgia TB&C Bancshares, Inc., Columbus, Georgia Synovus Financial Corp., Columbus, Georgia TB&C Bancshares, Inc., Columbus, Georgia Union Bancshares, Inc., Blairsville, Georgia Walden Holding Company, Jonesboro, Arkansas Bank(s) Reserve Bank Effective date High Point Bank and Trust Company, High Point, North Carolina First State Bank, Lonoke, Arkansas Metro Bank, Atlanta, Georgia Maynard-Allen State Bank, Portland, Michigan Prince George's National Bank, Landover, Maryland New East Bank of Elizabeth City, Elizabeth City, North Carolina Mifflinburg Bancorp, Inc., Mifflinburg, Pennsylvania Pennyrile Citizens Bank and Trust Company, Hopkins ville, Kentucky Planters & Merchants Bank, Gillett, Arkansas Richmond February 13, 1990 St. Louis February 7, 1990 Atlanta January 26, 1990 Chicago February 21, 1990 Richmond February 5, 1990 Richmond February 5, 1990 Philadelphia January 29, 1990 St. Louis January 25, 1990 St. Louis January 26, 1990 Sun State Bank, Las Vegas, Nevada NBWC Corporation, Monroe, Georgia San Francisco February 16, 1990 Atlanta February 5, 1990 State Bancshares, Inc., Enterprise, Alabama Atlanta February 9, 1990 Citizens Bank, Murphy, North Carolina Baker Financial Corporation, Pocahontas, Arkansas Atlanta January 31, 1990 St. Louis February 12, 1990 Legal Developments 263 Section 4 Nonbanking Activity/Company Applicant(s) A.B.N. - Stichting, Amsterdam, The Netherlands Alegemene Bank Nederland N.V., Amsterdam, The Netherlands ABN/LaSalle North America, Inc., Chicago, Illinois LaSalle National Corporation, Chicago, Illinois The Chase Manhattan Corporation, N e w York, N e w York Citicorp, N e w York, N e w York MNC Financial, Inc., Baltimore, Maryland MNC Financial, Inc., Baltimore, Maryland PSB Financial Corporation, Many, Louisiana Springfield Investment Company, Springfield, Minnesota APPLICATIONS APPROVED Reserve Bank Effective date LaSalle National Trust, N.A. Chicago, Illinois Chicago February 21, 1990 Chase Securities, Inc., N e w York, New York N e w York February 5, 1990 American Financial Systems, Inc., Haverford, Pennsylvania Mid-Atlantic Holdings, Inc., Fayetteville, North Carolina Newton Finance Company, Inc. Covington, Georgia H & R Block, Many, Louisiana Morgan Insurance Agency, Morgan, Minnesota Ziegenhagen Insurance Agency, Clements, Minnesota N e w York February 8, 1990 Richmond January 30, 1990 Richmond February 7, 1990 Dallas January 26, 1990 Minneapolis February 16, 1990 UNDER BANK MERGER 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. Applicant(s) Metro Bank, Atlanta, Georgia N e w Bank, Cockeysville, Maryland Bank(s) Metro Interim Bank, Atlanta, Georgia Clifton Trust Bank, Cockeysville, Maryland Reserve Bank Effective date Atlanta January 26, 1990 Richmond January 25, 1990 264 Federal Reserve Bulletin • April 1990 PENDING CASES INVOLVING GOVERNORS THE BOARD OF This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. BancTEXAS Group, Inc. v. Board of Governors, No. CA 3-90-0236-R (N.D. Texas, filed February 2, 1990). Plaintiff seeks temporary restraining order and preliminary injunction enjoining the Board from enforcing a temporary order to cease and desist requiring injection of capital into plaintiffs subsidiary banks under the Board's source of strength doctrine. The district court denied the TRO request on February 6, 1990. Woodward v. Board of Governors, No. 90-3031 (11th Cir., filed January 16, 1990); Kaimowitz v. Board of Governors, No. 90-3067 (11th Cir., filed January 23, 1990). Petitions for review of Board order dated December 22, 1989, approving application by First Union Corporation to acquire Florida National Banks. Petitioners object to approval on Community Reinvestment Act grounds. The court denied their motion for a stay of the Board's order, and is considering jurisdictional issues raised by the Board. Securities Industry Association v. Board of Governors, No. 89-1730 (D.C. Cir., filed November 29, 1989). Petition for review of Board order approving application under section 4(c)(8) to engage in private placement and riskless principal activities. The case has been held in abeyance pending the outcome of Securities Industry Association v. Board of Governors, No. 89-1127 (D.C. Circuit). Babcock and Brown Holdings, Inc., et al. v. Board of Governors, No. 89-70518 (9th Cir., filed November 22, 1989). Petition for review of Board determination that a company would control a proposed insured bank for purposes of the Bank Holding Company Act. Consumers Union of U.S., Inc. v. Board of Governors, No. 89-3008 (D.D.C., filed November 1, 1989). Challenge to various aspects of amendments to Regulation Z implementing the Home Equity Loan Consumer Protection Act. The Board and Consumers Union have filed cross-motions for summary judgment. Synovus Financial Corp. v. Board of Governors, No. 89-1394 (D.C. Cir., filed June 21, 1989). Petition for review of Board order permitting relocation of a bank holding company's national bank subsidiary from Alabama to Georgia. MCorp v. Board of Governors, N o . 89-2816 (5th Cir., filed May 2, 1989). Appeal of preliminary injunction against the Board enjoining pending and future enforcement actions against bank holding company now in bankruptcy. Awaiting decision. Independent Insurance Agents of America v. Board of Governors, No. 89-4030 (2d Cir., filed March 9, 1989). Petition for review of Board order ruling that the non-banking restrictions of section 4 of the Bank Holding Company Act apply only to non-bank subsidiaries of bank holding companies. The Board's order was upheld on November 29, 1989. Petitions in the Second Circuit and the Supreme Court for a stay pending review have been denied. Securities Industry Association v. Board of Governors, No. 89-1127 (D.C. Cir., filed February 16, 1989). Petition for review of Board order permitting five bank holding companies to engage to a limited extent in additional securities underwriting and dealing activities. Oral argument is scheduled for March 6, 1990. American Land Title Assoc. v. Board of Governors, No. 88-1872 (D.C. Cir., filed December 16, 1988). Petition for review of Board order ruling that exemption G from the section 4(c)(8) prohibition on insurance activities, which grandfathers insurance agency activities by bank holding companies that conducted insurance agency activities before January 1, 1971, does not limit those grandfathered activities to the specific ones undertaken at that time. Board's order upheld on December 29, 1989. MCorp v. Board of Governors, No. CA3-88-2693 (N.D. Tex., filed October 10, 1988). Application for injunction to set aside temporary cease and desist orders. Stayed pending outcome of MCorp v. Board of Governors in Fifth Circuit. White v. Board of Governors, No. CU-S-88-623-RDF (D. Nev., filed July 29, 1988). Age discrimination complaint. Cohen v. Board of Governors, No. 88-1061 (D.N.J., filed March 7, 1988). Action seeking disclosure of documents under the Freedom of Information Act. Lewis v. Board of Governors, Nos. 87-3455, 87-3545 (11th Cir., filed June 25, August 3, 1987). Petition for review of Board orders approving applications of non-Florida bank holding companies to expand activities of Florida trust company subsidiaries. Matter stayed pending Supreme Court review of Continental Illinois Corp. v. Lewis, 827 F.2d 1517 (11th Cir. 1987). Legal Developments FINAL ENFORCEMENT ORDERS ISSUED BY BOARD OF GOVERNORS Bank D a g a n g N e g a r a Jakarta, I n d o n e s i a The Federal Reserve Board announced on February 21, 1990, the issuance of a Cease and Desist Order against the Bank Dagang Negara, Jakarta, Indonesia, and its Los Angeles Agency. Ben D. Former Flower Flower Campbell Chairman o f the Board o f Directors Mound Bank Mound, Texas The Federal Reserve Board announced on February 6, 1990, the issuance of an Order of Prohibition against 265 Ben D. Campbell, the former Chairman of the board of directors of the Flower Mound Bank, Flower Mound, Texas. Mr. Campbell, who consented to the issuance of the Order of Prohibition, is henceforth prohibited from participating, including serving as an officer, director or employee, in any manner in the conduct of the affairs of any institution supervised by a financial institution supervisory agency without the approval of the appropriate federal banking agency. A1 Financial and Business Statistics N O T E . The following tables may have some discontinuities in historical data for some series beginning with the December 1989 issue: 1.12, 1.33, 1.44, 1.52, 1.57-1.60, 2.10, 2.12, 2.13, 3.10, 3.11, 3.15-3.20, 3.22-3.25, 3.27, 3.28, and 4.30. For a more detailed explanation of the changes, see the announcement on page 16 of the January CONTENTS COMMERCIAL Domestic MONEY Financial Statistics STOCK AND BANK 1990 BULLETIN. A17 Major nondeposit funds A18 Assets and liabilities, last-Wednesday-of-month series WEEKLY A19 A20 A21 A22 INSTRUMENTS A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions A9 Federal Reserve open market transactions RESERVE AND CREDIT AGGREGATES A12 Aggregate reserves of depository institutions and monetary base A13 Money stock, liquid assets, and debt measures A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks COMMERCIAL BANKS 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 BANKS A10 Condition and Federal Reserve note statements A l l Maturity distribution of loan and security holdings MONETARY REPORTING 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 FEDERAL INSTITUTIONS CREDIT A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve Bank credit A5 Reserves and borrowings—Depository institutions A6 Selected borrowings in immediately available funds—Large member banks POLICY BANKING FEDERAL A28 A29 A30 A30 FINANCE 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 2 Federal Reserve Bulletin • April 1990 SECURITIES MARKETS AND CORPORATE FINANCE International 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 A35 Total nonfarm business expenditures on new plant and equipment A36 Domestic finance companies—Assets and liabilities and business credit SUMMARY REAL Statistics STATISTICS A55 A56 A56 A56 U.S. international transactions—Summary U.S. foreign trade U.S. reserve assets Foreign official assets held at Federal Reserve Banks A57 Foreign branches of U.S. banks—Balance sheet data A59 Selected U.S. liabilities to foreign official institutions ESTATE REPORTED BY BANKS A37 Mortgage markets A38 Mortgage debt outstanding CONSUMER INSTALLMENT CREDIT A39 Total outstanding and net change A40 Terms FLOW OF FUNDS A41 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit markets A44 Summary of credit market debt outstanding A45 Summary of credit market claims, by holder Nonfinancial SELECTED MEASURES Statistics A46 Nonfinancial business activity—Selected measures A47 Labor force, employment, and unemployment A48 Output, capacity, and capacity utilization A49 Industrial production—Indexes and gross value A51 Housing and construction A52 Consumer and producer prices A53 Gross national product and income A54 Personal income and saving STATES A59 A60 A62 A63 Liabilities to and claims on foreigners Liabilities to foreigners Banks' own claims on foreigners Banks' own and domestic customers' claims on foreigners A63 Banks' own claims on unaffiliated foreigners A64 Claims on foreign countries—Combined domestic offices and foreign branches REPORTED BY NONBANKING ENTERPRISES IN THE UNITED BUSINESS STATES A65 Liabilities to unaffiliated foreigners A66 Claims on unaffiliated foreigners SECURITIES Domestic IN THE UNITED HOLDINGS AND TRANSACTIONS A67 Foreign transactions in securities A68 Marketable U.S. Treasury bonds and notes—Foreign transactions INTEREST AND EXCHANGE RATES A69 Discount rates of foreign central banks A69 Foreign short-term interest rates A70 Foreign exchange rates A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Annual rates of change, seasonally adjusted in percent1 1989 1990 1989 Monetary and credit aggregates Q4r Qlr Q2' -4.2 -4.4 .0 4.2 -8.7 -7.6 -10.2 1.6 .3 .1 8.3 3.2 5.7 5.5 7.8 4.1 9.6 8.6 9.3 4.9 -.1 2.3 3.9 5.2 8.4 -4.4 1.6 3.3 5.0 7.9 1.8 6.9 3.9 4.3 7.2 5.1 7.1 1.9 2.7 8.0 3.2 9.6 3.7 9.1 8.7 -6.8 -5.5 22.4 16.5 -11.5 25.9 16.3 -7.7 5.7 .7 7.7 8.6 Q3 Sept/ Oct/ Nov/ Dec/ Jan. 8.1 6.5 11.0 4.3 -1.1 .4 3.1 1.6 8.5 9.1 10.3 7.5 -4.4 -6.4 -8.0 10.7 4.0 6.3 .0 1.3 7.1 7.8 6.9 1.4 1.7 8.6 2.0 7.3 4.0 3.8 8.9 8.2 7.8 4.0 5.0 5.6 .2 4.0 2.6 n.a. n.a. 7.7 -16.7 7.1 -22.9 6.6 -19.2 9.0 -8.8 7.7 -10.7 5.3 -2.8 .4 11.9 3.0 7.1 11.2 2.6 6.3 6.9 -1.9 6.3 14.8 5.0 9.5 10.9 7.9 7.3 9.4 -.2 8.9 6.7 .5 -14.9 10.7 7.5 -5.2 8.8 -10.7 .3 -2.5 -28.7 2.9 -.7 -29.5 -1.7 -5.8 -32.8 1.7 -4.1 -32.0 -.1 -1.0 -20.5 .4 -5.3 -30.2 6.9 8.2 4.6 8.0 9.6 7.5 11.0 5.9 9.8 8.2 11.1 8.2 3.6 6.2 institutions2 1 2 3 4 Reserves of depository Total Required Nonborrowed Monetary base 5 6 7 8 9 Concepts of money, liquid assets, and debt4 Ml M2 M3 L Debt Nontrgnsaction 10 In M2 5 11 In M3 only 6 r components Time and savings deposits Commercial banks Savings' Small-denomination time Large-denomination time 9,10 Thrift institutions Savings' 15 16 Small-denomination time 17 Large-denomination time 9 12 13 14 Debt components4 18 Federal 19 Nonfederal 1. Unless otherwise noted, rates of change are calculated from average amounts outstanding in preceding month or quarter. 2. Figures incorporate adjustments for discontinuities associated with the implementation of the Monetary Control Act and other regulatory changes to reserve requirements. To adjust for discontinuities due to changes in reserve requirements on reservable nondeposit liabilities, the sum of such required reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to compensate for float also are subtracted from the actual series. 3. The monetary base not adjusted for discontinuities consists of total reserves plus required clearing balances and adjustments to compensate for float at Federal Reserve Banks plus the currency component of the money stock less the amount of vault cash holdings of thrift institutions that is included in the currency component of the money stock plus, for institutions not having required reserve balances, the excess of current vault cash over the amount applied to satisfy current reserve requirements. After the introduction of contemporaneous reserve requirements (CRR), currency and vault cash figures are measured over the weekly computation period ending Monday. Before CRR, all components of the monetary base other than excess reserves are seasonally adjusted as a whole, rather than by component, and excess reserves are added on a not seasonally adjusted basis. After CRR, the seasonally adjusted series consists of seasonally adjusted total reserves, which include excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted currency component of the money stock plus the remaining items seasonally adjusted as a whole. 4. Composition of the money stock measures and debt is as follows: Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults of 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 n.a. n.a. 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. A4 1.11 DomesticNonfinancialStatistics • April 1990 RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Factors 1989 Weekly averages of daily figures for week ending 1990 1989 1990 Nov. Dec. Jan. Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 265,521 269,244 269,857 267,551 270,879 276,395 274,209 269,192 267,901 265,235 217,455 216,475 980 6,602 6,525 77 0 346 1,024 37,093 11,062 8,518 19,529 224,142 223,031 1,111 6,683 6,525 158 0 289 1,128 37,003 11,059 8,518 19,585 222,417 221,432 985 6,644 6,525 119 0 412 978 39,406 11,059 8,518 19,650 222,841 222,609 232 6,544 6,525 19 0 189 1,314 36,665 11,059 8,518 19,592 224,613 221,943 2,670 6,786 6,525 261 0 513 1,692 37,275 11,059 8,518 19,606 228,646 225,276 3,370 7,164 6,525 639 0 523 1,095 38,966 11,059 8,518 19,620 226,700 224,145 2,555 6,810 6,525 285 0 155 1,405 39,139 11,059 8,518 19,630 222,410 222,410 0 6,525 6,525 0 0 219 814 39,224 11,059 8,518 19,640 220,558 220,558 0 6,525 6,525 0 0 379 960 39,480 11,059 8,518 19,645 217,228 217,228 0 6,525 6,525 0 0 851 652 39,981 11,059 8,518 19,655 251,807 448 256,870 448 256,669 468 256,683 447 259,112 447 260,573 450 259,135 463 257,350 468 255,231 472 253,232 . 476 5,008 234 4,787 286 6,302 255 4,402 252 4,571 215 6,283 454 5,416 246 4,108 248 5,930 217 9,550 255 1,944 333 1,817 397 2,075 364 1,881 337 1,822 337 1,998 1,004 2,210 164 2,094 227 2,125 209 1,882 625 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 2 U.S. government securities' 3 Bought outright Held under repurchase agreements 4 5 Federal agency obligations 6 Bought outright Held under repurchase agreements 7 8 Acceptances 9 Loans 10 Float 11 Other Federal Reserve assets 12 Gold stock 2 13 Special drawing rights certificate a c c o u n t . . . 14 Treasury currency outstanding ABSORBING RESERVE FUNDS 15 Currency in circulation 16 Treasury cash holdings 2 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments 20 Other 21 Other Federal Reserve liabilities and capital 22 Reserve balances with Federal Reserve Banks 3 7,862 8,242 8,928 7,839 8,140 8,488 8,872 8,949 9,021 9,011 33,993 35,559 34,023 34,878 35,417 36,342 36,910 34,965 33,918 29,436 Jan. 24 Jan. 31 End-of-month figures 1989 Nov. Wednesday figures 1990 Dec. Jan. 1989 Dec. 20 1990 Dec. 27 Jan. 3 Jan. 10 Jan. 17 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 267,060 276,622 265,926 270,208 283,575 277,334 274,917 271,289 269,550 265,926 24 U.S. government securities 1 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 stock 2 35 Special drawing rights certificate a c c o u n t . . . 36 Treasury currency outstanding 223,142 223,142 0 6,525 6,525 0 0 181 668 36,544 11,060 8,518 19,564 228,367 226,775 1,592 7,050 6,525 525 0 481 1,093 39,631 11,059 8,518 19,615 218,392 218,392 0 6,525 6,525 0 0 733 216 40,061 11,059 8,518 19,655 224,245 222,623 1,622 6,655 6,525 130 0 182 2,100 37,028 11,059 8,518 19,592 233,951 222,195 11,756 8,026 6,525 1,501 0 2,159 1,514 37,926 11,059 8,518 19,606 228,867 223,744 5,123 7,310 6,525 785 0 166 2,034 38,956 11,059 8,518 19,620 227,060 223,666 3,394 7,117 6,525 592 0 158 888 39,694 11,059 8,518 19,630 221,748 221.748 0 6,525 6,525 0 0 147 3,649 39,222 11,059 8,518 19,640 221,961 221,961 0 6,525 6,525 0 0 640 768 39,656 11,059 8,518 19,645 218,392 218,392 0 6,525 6,525 0 0 733 216 40,061 11,059 8,518 19,655 253,960 445 260,443 455 253,123 479 257,700 447 260,291 447 260,601 450 258,319 467 256.749 471 254,251 475 253,123 479 5,500 307 6,217 589 13,153 251 5,356 228 5,029 269 7,203 282 4,509 216 6,948 273 6,044 188 13,153 251 1,638 311 1,618 1,298 1,882 357 1,637 228 1,626 523 1,998 172 2,210 145 2,094 257 2,125 206 1,882 357 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 Banks 3 8,402 8,486 8,884 7,641 8,062 8,654 8,859 8,692 8,824 8,884 35,639 36,709 27,029 36,141 46,511 37,170 39,399 35,022 36,658 27,029 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 stock. Revised data not included in this table are available from the Division of Monetary Affairs, 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. Components may not add to totals because of rounding. Money Stock and Bank Credit 1.12 RESERVES AND BORROWINGS A5 Depository Institutions1 Millions of dollars Monthly averages 9 Reserve classification 1 2 3 4 5 6 7 8 9 10 Reserve balances with Reserve Banks 2 Total vault cash 3 Vault4 Surplus Total reserves 6 Required reserves Excess reserve balances at Reserve Banks Total borrowings at Reserve Banks Seasonal borrowings at Reserve Banks Extended credit at Reserve Banks 1987 1988 1989 Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 37,673 26,185 24,449 1,736 62,123 61,094 1,029 777 93 483 37,830 27,205' 25,909 1,2%' 63,739 62,699 1,040 1,716 130 1,244 35,436' 28,782 27,374 1,409 62,810 61,888' 922' 265 84 20 33,902 27,851 26,351 1,499' 60,254 59,288 966 694 497 106 32,823 28,362' 26,735 1,627' 59,559 58,674 885 675 490 41 33,556 28,089' 26,570 1,515^ 60,126 59,188 938 693 452 22 33,123 28,897' 27,275 1,622' 60,397 59,378 1,020 555 330 21 33,941 28,519 27,048 1,472' 60,989 60,044 945 349 134 21 35,436' 28,782 27,374 1,409 62,810 61,888' 922' 265 84 20 34,087 30,354 28,841 1,513 62,928 61,914 1,014 440 47 26 1989 1990 Biweekly averages of daily figures for weeks ending 1989 11 12 13 14 15 16 17 18 19 20 Reserve balances with Reserve Banks 2 Total vault cash 3 Vault 4 .. Surplus 5 .... 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 8 Oct. 4 Oct. 18 Nov. 1 Nov. 15 Nov. 29 Dec. 13 Dec. 27 Jan. 1C Jan. 24 Feb. 7 32,643 28,300' 26,695 1,605' 59,338 58,343 995 898 453 25 33,581 29,088' 27,531 1,557' 61,112 60,186 926 653 342 19 32,778 28,875 27,177 1,698 59,955 58,827 1,128 345 280 23 34,468 27,908' 26,552 1,357' 61,020 60,139 881 272 147 20 33,394 29,156 27,574 1,582 60,968 59,958 1,009 441 115 23 35,399 27,821 26,509 1,312 61,908 61,149 759 151 87 22 35,131 29,415 27,903 1,513 63,033 62,015 1,018 351 89 19 36,627 29,695 28,335 1,360 64,961 63,844 1,117 339 58 19 34,424 29,338 28,045 1,294 62,468 61,627 841 300 41 27 29,787 33,327 31,156 2,171 60,943 59,733 1,210 865 44 33 1. These data also appear in the Board's H.3 (502) release. For address, see inside front cover. 2. Excludes required clearing balances and adjustments to compensate for float. 3. 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. 4. 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. 5. 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. 6. Total reserves not adjusted for discontinuities consist of reserve balances 1990 with Federal Reserve Banks, which exclude required clearing balances and adjustments to compensate for float, plus vault cash used to satisfy reserve requirements. Such vault cash consists of all vault cash held during the lagged computation period by institutions having required reserve balances at Federal Reserve Banks plus the amount of vault cash equal to required reserves during the maintenance period at institutions having no required reserve balances. 7. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements less required reserves. 8. 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. 9. Data are prorated monthly averages of biweekly averages. A6 DomesticNonfinancialStatistics • April 1990 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1988 and 1989 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 U.S. government agencies For one day or under continuing contract For all other maturities Dec. 26 Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 Feb. 6 Feb. 13 Feb. 20 70,964 9,810 67,427 9,356 75,520 9,753 70,344 10,870 69,604 10,424 66,372 9,947 71,750 10,289 71,162 10,627 69,950 11,937 24,933 8,730 22,855 7,709 28,713 6,801 26,331 7,431 24,937 6,694 27,974 6,345 27,292 6,524 29,241 6,787 27,903 7,467 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 13,043 11,003 12,610 8,252 15,134 9,458 14,513 11,235 15,955 11,280 16,041 12,425 14,289 13,279 14,754 14,100 15,077 13,592 27,986 10,860 27,418 9,248 28,613 9,154 29,334 9,547 28,826 9,389 28,775 9.750 27,966 9,980 27,901 10,178 27,792 10,299 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 40,080 14,987 38,015 12,747 42,159 15,135 40,105 14,111 40,596 14,784 40,075 13,584 41,248 17,118 39,096 15,055 38,742 16,176 5 6 7 8 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. These data also appear in the Board's H.5 (507) release. For address, see inside front cover. 2. Brokers and nonbank dealers in securities; other depository institutions; foreign banks and official institutions; and United States government agencies, Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Extended credit 2 Adjustment credit and Seasonal credit 1 Federal Reserve Bank On 2/22/90 Effective date 7 2/24/89 2/24/89 2/24/89 2/24/89 2/24/89 2/24/89 Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco . . . 7 After 30 days of borrowing 3 First 30 days of borrowing Previous rate 6 2/24/89 2/24/89 2/24/89 2/24/89 2/27/89 2/24/89 On 2/22/90 Effective date 7 2/24/89 2/24/89 2/24/89 2/24/89 2/24/89 2/24/89 Vl 6V2 2/24/89 2/24/89 2/24/89 2/24/89 2/27/89 2/24/89 7 Previous rate 6 6 On 2/22/90 Effective date Previous rate Effective date 8.70 2/22/90 2/22/90 2/22/90 2/22/90 2/22/90 2/22/90 8.70 2/8/90 2/8/90 2/8/90 2/8/90 2/8/90 2/8/90 Vl Vl 8.70 2/22/90 2/22/90 2/22/90 2/22/90 2/22/90 2/22/90 2/8/90 2/8/90 2/8/90 2/8/90 2/8/90 2/8/90 8.70 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 Range (or level)— All F.R. Banks 6 F.R. Bank of N.Y. 6 6-6V1 6V1 6 Vl 6V2 ftVi-1 7 7 7-71/4 IV* 7V4 8 8-8W $V2 Vi 8V>-9'/> 9 10 lO-lOVi lOVi 10W-11 11 11-12 12 7 7V4 7V4 73/4 8 8W Vl 8 9 Vi 9 Vi 10 10 10 11 Vi Vi Effective date 10-11 10 11 12 12-13 10 10 1981—May 13-14 14 13-14 13 12 14 14 13 13 Nov. Dec. 1982—July Aug. Oct. Nov. 1980—Feb. 15 19 May 29 30 June 13 16 12-13 13 12-13 12 11-12 11 13 13 13 12 11 Dec. 5 8 2 6 4 20 23 2 3 16 27 30 12 13 22 26 14 15 17 12 13 Vl 11 lO-lOVi 10 9^-10 9 9-9Vz 9 SVl-9 SVi-9 10 10 9Vi 9Vl 9 9 9 8V1 SVl-9 9 9 9 SVi-9 m 8 Vi 8 Vi 1985—May 20 24 7W-8 1986—Mar. 12 im 11 7 10 Apr. 21 July 11 Aug. 21 22 11 10W m 8 Vi Range (or level)— All F.R. Banks 1984—Apr. 9 13 Nov. 21 26 Dec. 24 11 11 Vi—12 im 11-1 \Vi 11 low Vi Effective date 1987—Sept. 4 11 1988—Aug. 8 IVi 7-7 Vl 1 (,Vi-l 6 5W-6 5 Vl 5Vl-6 6 Vl Vl 6Vi-l 8 IVi 7 Vi 7 7 6 6 5W 5 Vl Vl 6 6 9 11 6-6 6 6 6 1989—Feb. 24 27 7 7 7 7 7 In effect Feb. 22, 1990. Vl Vl 11 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 Vl percent above the rate on adjustment credit. The program was reestablished for 1986 and 1987 but was not renewed for 1988. 2. Extended credit is available to depository institutions, when 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 somewhat above rates on market sources of funds ordinarily will be charged, but F.R. Bank of N.Y. 1980—July 28 29 Sept. 26 Nov. 17 Dec. 5 11 12 12 Range (or level)— All F.R. Banks 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 four 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 DomesticNonfinancialStatistics • April 1990 1.15 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 accounts3'4 $0 million-$40.4 million.... More than $40.4 million . . . 12/19/89 12/19/89 Nonpersonal time deposits5 By original maturity Less than \Yi years 1 Vi years or more 10/6/83 10/6/83 Eurocurrency All types liabilities 1. Reserve requirements in effect on Dec. 31, 1989. Required reserves must be held in the form of deposits with Federal Reserve Banks or vault cash. Nonmember institutions 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 or 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. 20, 1988, the exemption was raised from $3.2 million to $3.4 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 change in transaction accounts held by all depository institutions, determined as of June 30 each year. Effective Dec. 19, 1989 for institutions reporting quarterly and Dec. 26, 1989 for institutions reporting weekly, the amount was decreased from $41.5 million to $40.4 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 1989 Type of transaction 1987 1989 1988 Aug. July June Sept. Nov. Oct. 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 18,983 6,051 0 9,029 8,223 587 0 2,200 14,284 12,818 0 12,730 0 571 0 1,200 0 5,517 0 2,400 0 934 0 800 0 0 0 0 219 1,633 0 1,400 8,794 0 0 3,530 1,883 0 0 0 Others within 1 year Gross purchases Gross sales Maturity shift Exchange Redemptions 3,659 300 21,504 -20,388 70 2,176 0 23,854 -24,588 0 327 0 28,848 -25,783 500 0 0 1,828 -1,434 0 0 0 1,749 -1,073 0 0 0 4,200 -4,025 0 0 0 1,832 0 0 0 0 852 -2,678 500 155 0 3,915 -5,502 0 0 0 1,268 0 0 10 11 12 13 1 to 5 years Gross purchases Gross sales Maturity shift Exchange 10,231 452 -17,975 18,938 5,485 800 -17,720 22,515 1,436 490 -25,534 23,250 0 0 -1,828 1,434 0 13 -1,584 787 0 150 -3,321 3,425 0 0 -1,832 0 0 24 -758 2,552 0 0 -2,869 4,902 0 0 -1,268 0 14 15 16 17 5 to 10 years Gross purchases Gross sales Maturity shift Exchange 2,441 0 -3,529 950 1,579 175 -5,946 1,797 287 29 -2,231 1,934 0 0 0 0 0 9 -165 286 0 0 -879 400 0 0 0 0 0 0 -95 126 0 0 -1,046 400 0 0 0 0 18 19 20 21 Over 10 years Gross purchases Gross sales Maturity shift Exchange 1,858 0 0 500 1,398 0 -188 275 284 0 -1,086 600 0 0 0 0 0 0 0 0 0 0 0 200 0 0 0 0 0 0 0 0 0 0 0 200 0 0 0 0 37,170 6,803 9,099 18,863 1,562 2,200 16,617 13,337 13,230 0 571 1,200 0 5,539 2,400 0 1,084 800 0 0 0 219 1,657 1,900 8,949 0 3,530 1,883 0 0 Matched transactions 25 Gross sales 26 Gross purchases 950,923 950,935 1,168,484 1,168,142 1,323,480 1,326,542 128,139 138,141 123,373 118,221 146,611 147,228 116,502 120,144 111,430 111,893 105,696 105,243 103,077 104,827 Repurchase agreements2 27 Gross purchases 28 Gross sales 314,621 324,666 152,613 151,497 129,518 132,688 6,203 6,203 4,961 4,961 0 0 9,396 9,396 0 0 15,350 15,350 22,737 21,145 11,234 15,872 -10,055 8,232 -13,091 -1,267 3,642 -2,875 4,966 5,225 0 0 276 0 0 587 0 0 442 0 0 0 0 0 45 0 0 0 0 0 54 0 0 30 0 0 0 0 0 0 Repurchase agreements2 33 Gross purchases 34 Gross sales 80,353 81,350 57,259 56,471 39,972 41,548 1,666 1,666 1,137 1,137 0 0 4,011 4,011 0 0 1,247 1,247 2,992 2,467 35 Net change in federal agency obligations -1,274 198 -2,018 0 -45 0 -54 -30 0 525 36 Total net change in System Open Market Account 9,961 16,070 -12,073 8,232 -13,136 -1,267 3,588 -2,905 4,966 5,750 All maturities 22 Gross purchases 23 Gross sales 24 Redemptions 29 Net change in U.S. government securities FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 31 Gross sales 32 Redemptions 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 1990 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday Account End of month 1990 Jan. 3 Jan.10 1989 Jan. 17 Jan. 24 Jan. 31 1990 Nov. Dec. Jan. Consolidated condition statement ASSETS 1 Gold certificate account 2 Special drawing rights certificate account 3 Loans 4 To depository institutions 5 Other 6 Acceptances held under repurchase agreements Federal agency obligations 7 Bought outright 8 Held under repurchase agreements U.S. Treasury securities Bought outright 9 Bills 10 Notes 11 Bonds 12 Total bought outright 2 13 Held under repurchase agreements 14 Total U.S. Treasury securities 15 Total loans and securities 11,059 8,518 447 11,060 8,518 455 11,059 8,518 478 11,059 8,518 505 11,059 8,518 524 11,060 8,518 465 11,059 8,518 456 11,059 8,518 524 166 0 0 157 0 0 146 0 0 640 0 0 733 0 0 182 0 0 481 0 0 733 0 0 6,525 785 6,525 592 6,525 0 6,525 0 6,525 0 6,525 0 6,525 525 6,525 0 101,549 91,381 30,814 223,744 5,123 228,867 101,471 91,381 30,814 223,666 3,394 227,060 99,553 91,381 30,814 221,748 0 221,748 99,766 91,381 30,814 221,961 0 221,961 96,197 91,381 30,814 218,392 0 218,392 100,947 91,381 30,814 223,142 0 223,142 104,581 91,381 30,814 226,775 1,592 228,367 96,197 91,381 30,814 218,392 0 218,392 236,343 234,334 228,418 229,125 225,649 229,848 235,898 225,649 10,830 790 7,225 791 14,272 791 5,892 791 5,848 791 6,103 776 8,903 790 5,848 791 31,335 6,741 31,487 6,879 31,585 6,854 31,744 7,110 31,920 7,723 29,593 6,175 31,333 7,465 31,920 7,723 306,063 300,748 301,977 294,746 292,033 292,539 304,424 292,033 241,878 239,611 238,059 235,588 234,471 235,306 241,739 234,471 38,948 7,203 282 172 41,594 4,509 216 145 37,528 6,948 273 257 38,540 6,044 188 206 29,464 13,153 251 357 37,277 5,500 307 311 38,327 6,217 590 1,298 29,464 13,153 251 357 46,606 46,463 45,007 44,978 43,228 43,395 46,430 43,228 8,925 3,980 5,815 3,943 10,220 3,795 5,357 3,915 5,452 3,911 5,436 3,081 7,773 3,994 5,452 3,911 301,389 295,831 297,079 289,837 287,060 287,217 299,935 287,060 2,243 2,243 188 2,249 2,243 425 2,249 2,243 405 2,250 2,243 416 2,249 2,243 481 2,229 2,112 980 2,243 2,243 0 2,249 2,243 481 33 Total liabilities and capital accounts 306,063 300,748 301,977 294,746 292,033 292,539 304,423 292,033 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 228,101 228,427 228,568 228,643 228,073 235,096 233,048 228,073 16 Items in process of collection 17 Bank premises Other assets 18 Denominated in foreign currencies 3 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 dividends 5 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 37 Federal Reserve notes, net Collateral held against notes net: 38 Gold certificate account 39 Special drawing rights certificate account 40 Other eligible assets 41 U.S. Treasury and agency securities 42 Total collateral 279,177 37,298 241,878 278,757 39,146 239,611 279,256 41,197 238,059 279,680 44,092 235,588 279,920 45,449 234,471 279,629 44,321 235,306 279,665 37,926 241,739 279,920 45,449 234,471 11,059 8,518 0 222,301 11,060 8,518 0 220,033 11,059 8,518 0 218,481 11,059 8,518 0 216,010 11,059 8,518 0 214,894 11,060 8,518 0 215,728 11,059 8,518 0 222,162 11,059 8,518 234,471 235,306 241,739 241,878 239,611 238,059 235,588 0 214,894 234,471 1. Some of these data also appear in the Board's H.4.1 (503) release. For address, see inside front cover. Components way not add to totals because of rounding. 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 1.19 FEDERAL RESERVE BANKS All Maturity Distribution of Loan and Security Holding Millions of dollars End of month Wednesday Jan. 3 1990 1989 1990 Type and maturity groupings Jan. 10 Jan. 17 Jan. 24 Jan. 31 Nov. 30 Dec. 29 Jan. 31 1 Loans—Total 2 Within 15 days 3 16 days to 90 days 4 91 days to 1 year 166 158 8 0 157 145 12 0 146 146 0 0 640 640 0 0 850 848 2 0 182 134 48 0 481 469 11 0 850 848 2 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 0 228,867 18,867 47,380 69,308 54,076 12,529 26,706 227,060 10,617 53,508 69,624 54,076 12,529 26,706 221,748 7,490 53,750 67,477 53,717 12,607 26,706 221,961 5,076 54,451 69,402 53,717 12,607 26,706 218,392 10,372 47,233 68,022 53,452 12,607 26,706 223,142 4,468 51,283 74,646 53,509 12,529 26,706 228,367 9,413 55,523 70,687 53,509 12,529 26,706 218,392 10,372 47,233 68,022 53,452 12,607 26,706 7,310 798 718 1,336 3,198 1,071 188 6,525 84 659 1,311 3,231 1,051 188 6,525 203 540 1,311 3,231 1,051 188 6,525 156 570 1,281 3,277 1,051 188 6,525 119 668 1,253 3,238 1,057 188 6,525 316 418 1,395 3,159 1,048 189 7,050 678 568 1,346 3,198 1,071 188 6,525 119 668 1,253 3,238 1,057 188 9 U.S. Treasury securities—Total 10 Within 15 days 1 11 16 days to 90 days 12 91 days to 1 year 13 Over 1 year to 5 years 14 Over 5 years to 10 years 15 Over 10 years 16 Federal agency obligations—Total 17 Within 15 days 1 18 16 days to 90 days 19 91 days to 1 year 20 Over 1 year to 5 years 21 Over 5 years to 10 years 22 Over 10 years 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. NOTE: Components may not add to totals due to rounding, A12 DomesticNonfinancialStatistics • April 1990 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE 1 Billions of dollars, averages of daily figures 1990 1989 Item 1986 Dec. 1987 Dec. 1988 Dec. 1989 Dec. June 2 3 4 5 Nonborrowed reserves Nonborrowed reserves plus extended credit Required reserves Monetary base Aug. Sept. Oct. Nov. Dec. Jan. 59.22 59.62 59.57 59.99 59.77 Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 2 1 Total reserves3 July 58.14 58.69 60.71 59.99 58.35 58.70 58.75 57.31 57.92 58.99 59.73 58.08 59.22 56.86 58.00 58.53 59.07 59.73 57.62 60.23 59.74' 57.78 58.12 58.40 58.11 59.09 59.24 58.55 59.74' 56.77 59.67 59.07 57.87 57.44 57.73 58.60 57.66 58.62 58.29 59.07 241.63r 258.27'' 275.54'' 285.08' 278.94r 279.97' 280.76r 281.91' 282.92' 283.31' 285.08' 59.33 59.36 58.76 287.62 Not seasonally adjusted 6 Total reserves3 7 8 9 10 Nonborrowed reserves Nonborrowed reserves plus extended credit Required reserves Monetary base 59.46 60.06 58.64 58.94 58.09 245.25 59.28 59.76 59.03 262.08 62.21 61.50 58.41 58.95 58.30 58.91 59.14 59.72 61.50 61.43 56.92 57.84 57.51 280.19 58.26 58.37 57.99 282.10 57.62 57.66 57.41 281.09 58.21 58.24 57.97 280.70 58.58 58.61 58.12 281.37 59.37 59.39 58.77 284.13 61.24 61.26 60.58 289.45' 60.99 61.02 60.42 288.72 62.81 59.59 60.25 59.56 60.13 60.40 60.99 62.81 62.93 62.02 62.54 63.27 62.56 62.70 61.89 283.18 292.71 58.10 59.01 58.68 283.28 59.56 59.67 59.29 285.39 58.88 58.93 58.67 284.23 59.43 59.46 59.19 283.78 59.84 59.86 59.38 284.49 60.64 62.54 60.66 62.56 60.04 61.89 287.35 292.71 62.49 62.51 61.91 292.31 60.50 61.24 61.74 61.26 61.17 60.58 279.71 289.45' N O T ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 6 11 Total reserves 3 12 13 14 15 Nonborrowed reserves Nonborrowed reserves plus extended credit Required reserves Monetary base 5 59.56 62.12 58.73 59.04 58.19 247.71 61.35 61.83 61.09 266.16 1. 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 Monetary and Reserves Projections Section. Division of Monetary Affairs. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. 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. 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. 4. Extended credit consists of borrowing at the discount window under 63.74 the terms and conditions established for the extended credit program to helpdepository institutions deal with sustained liquidity pressures. Because there isnot 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. 5. 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 plus, for institutions not having required reserve balances, the excess of current vault cash over the amount applied to satisfy current reserve requirements. Currency and vault cash figures are measured over the weekly computation period ending Monday. The seasonally adjusted monetary base 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. 6. 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. Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES 1 Billions of dollars, averages of daily figures 1989 1986 Dec/ Item 1987 Dec/ 1988 Dec/ 1990 1989 Dec/ Oct/ Nov/ Dec/ Jan. Seasonally adjusted 724.7 2,814.2 3,494.5 4,135.5 7,597.0 750.4 2,913.2 3,678.7 4,338.7 8,316.1 787.5 3,072.4 3,918.4 4,676.1 9,082.2 794.8 3,221.7 4,043.3 4,866.0 9,801.3 788.1 3,181.5 4,016.6 4,830.4 9,684.3 789.4 3,200.8 4,029.8 4,845.8 9,756.0 794.8 3,221.7 4,043.3 4,866.0 9,801.3 794.9 3,232.5 4,052.2 n.a. n.a. 180.6 6.5 302.1 235.5 196.7 7.0 287.0 259.7 211.8 7.5 287.0 281.3 221.9 7.4 279.7 285.7 220.0 7.3 280.0 280.8 220.4 7.4 278.8 282.8 221.9 7.4 279.7 285.7 224.6 7.5 277.3 285.5 2,089.6 680.3 2,162.8 765.5 2,284.9 845.9 2,426.9 821.6 2,393.4 835.2 2,411.4 829.0 2,426.9 821.6 2,437.6 819.7 Savings deposits 9 Commercial Banks Thrift institutions 155.8 214.3 178.3 236.6 192.0 235.9 188.5 220.5 185.9 220.3 187.3 220.6 188.5 220.5 189.9 220.6 14 15 Small-denomination time deposits 10 Commercial Banks Thrift institutions 366.3 489.9 388.1 529.7 447.5 583.5 528.5 613.6 519.7 616.2 524.4 614.1 528.5 613.6 531.4 610.9 16 17 Money market mutual funds General purpose and broker-dealer Institution-only 208.7 83.8 222.0 89.0 240.9 87.1 313.1 102.3 302.7 101.1 309.1 101.1 313.1 102.3 320.8 103.3 289.8 150.0 326.9 161.9 368.2 172.9 401.4 156.8 398.8 163.8 401.4 159.5 401.4 156.8 401.5 152.8 1,805.8 5,791.2 1,957.4 6,358.6 2,113.5 6,968.7 2,265.8 7,535.5 2,238.3 7,445.9 2,259.0 7,497.1 2,265.8 7,535.5 n.a. n.a. 1 2 3 4 5 Ml M2 M3 L Debt 6 7 8 9 Ml components Currency Travelers checks Demand deposits Other checkable deposits 6 10 11 Nontransactions components In M2 . In M3 only 8 n 13 18 19 Large-denomination time deposits Commercial Banks Thrift institutions 70 21 Debt components Federal debt Nonfederal debt 11 Not seasonally adjusted ?? 73 ?A 25 26 Ml M2 M3 L Debt 27 28 29 30 Ml components Currency Travelers checks Demand deposits Other checkable deposits 31 32 Nontransactions components M2 M3 only® 33 34 740.5 2,826.5 3,508.8 4,151.5 7,580.7 766.4 2,925.6 3,692.7 4,355.0 8,297.6 804.5 3,085.2 3,932.5 4,692.9 9,067.5 812.1 3,234.6 4,057.4 4,883.4 9,787.1 785.0 3,178.9 4,016.7 4,830.3 9,650.1 791.7 3,204.4 4,039.6 4,854.6 9,723.0 812.1 3,234.6 4,057.4 4,883.4 9,787.1 802.4 3,244.2 4,061.2 n.a. n.a. 183.0 6.0 314.0 237.5 199.3 6.5 298.6 262.0 214.8 6.9 298.9 283.8 225.3 6.9 291.6 288.4 218.9 7.3 280.7 278.1 221.0 7.0 281.6 282.1 225.3 6.9 291.6 288.4 222.9 7.0 283.0 289.5 2,086.0 682.3 2,159.2 767.0 2,280.8 847.3 2,422.5 822.8 2,393.9 837.8 2,412.7 835.1 2,422.5 822.8 2,441.8 817.0 Money market deposit accounts Commercial Banks Thrift institutions 379.8 192.9 359.0 167.5 353.2 150.6 355.0 132.9 342.7 131.8 350.3 132.8 355.0 132.9 356.4 133.0 35 36 Savings deposits 9 Commercial Banks Thrift institutions 154.4 212.7 176.9 234.9 190.6 234.2 187.2 219.0 185.9 221.3 187.1 220.5 187.2 219.0 189.0 219.0 37 38 Small-denomination time deposits 10 Commercial Banks Thrift institutions 366.1 489.8 387.3 529.1 446.0 582.4 526.4 612.3 519.3 616.3 523.1 614.2 526.4 612.3 530.8 613.0 39 40 Money market mutual funds General purpose and broker-dealer Institution-only 208.0 84.4 221.5 89.6 240.5 87.6 312.8 102.9 301.3 98.7 309.8 102.1 312.8 102.9 319.6 106.1 41 42 Large-denomination time deposits 11 Commercial Banks Thrift institutions 289.2 150.7 325.8 162.9 366.9 174.2 399.7 158.2 399.9 165.5 401.9 161.7 399.7 158.2 399.2 154.0 43 44 Debt components Federal debt Nonfederal debt 1,803.9 5,776.8 1,955.6 6,342.0 2,111.8 6,955.7 2,264.1 7,523.0 2,222.6 7,427.5 2,250.8 7,472.2 2,264.1 7,523.0 For notes see following page. n.a. n.a. A14 DomesticNonfinancialStatistics • April 1990 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) release. Historical data are available from the Monetary and Reserves Projection section, Division of Monetary Affairs, Board of Governors of the Federal Reserve System, Washinjgton, D.C. 20551. 2. 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. 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository institutions. 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in demand deposits. 5. 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. 6. Consists of NOW and ATS balances at all depository institutions, credit union share draft balances, and demand deposits at thrift institutions. 7. Sum of overnight RPs and overnight Eurodollars, money market fund balances (general purpose and broker-dealer), MMDAs, and savings and small time deposits. 8. 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. 9. Savings deposits exclude MMDAs. 10. 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. 11. Large-denomination time deposits are those issued in amounts of $100,000 or more, excluding those booked at international banking facilities. 12. Large-denomination time deposits at commercial banks less those held by money market mutual funds, depository institutions, and foreign banks and official institutions. Monetary and Credit Aggregates 1.22 A15 B A N K DEBITS A N D DEPOSIT TURNOVER1 Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1989 Bank group, or type of customer July June Demand deposits 3 All insured banks Major New York City banks Other banks ATS-NOW accounts 4 Savings deposits 6 7 8 9 10 Demand deposits 3 All insured banks Major New York City banks Other banks ATS-NOW accounts 4 Savings deposits 5 Sept. Oct. Nov. Seasonally adjusted DEBITS TO 1 2 3 4 5 Aug. 188,346.0 91,397.3 96,948.8 2,182.5 403.5 217,116.2 104,496.3 112,619.8 2,402.7 526.5 226,888.4 107,547.3 119,341.2 2,757.7 583.0 284,129.2 129,166.6 154,962.7 3,696.5 640.0 276,453.7 114,991.8 161,461.9 3,596.3 580.4 292,446.5 121,378.1 171,068.3 3,943.1 650.0 281,432.2 125,206.9 156,225.3 3,601.9 672.3 293,424.9 136,039.0 155,385.9 3,911.9 665.4 296,768.7 130,440.2 166,328.5 3,855.2 610.3 556.5 2,498.2 321.2 15.6 3.0 612.1 2,670.6 357.0 13.8 3.1 641.2 2,903.5 376.8 14.7 3.1 824.0 3,588.5 501.8 19.8 3.6 788.4 3,222.3 512.6 19.1 3.2 841.8 3,402.4 548.8 20.6 3.6 802.2 3,482.2 496.2 18.8 3.7 826.4 3,486.5 492.5 20.1 3.6 855.7 3,499.8 537.3 19.7 3.3 DEPOSIT TURNOVER Not seasonally adjusted DEBITS TO U 12 13 14 15 16 Demand deposits 3 All insured banks Major New York City banks Other banks ATS-NOW accounts 4 MMDA Savings deposits 17 18 19 20 21 22 Demand deposits 3 All insured banks Major New York City banks Other banks ATS-NOW accounts 4 MMDA 6 Savings deposits 5 188,506.7 91,500.1 97,006.7 2,184.6 1,609.4 404.1 217,125.1 104,518.8 112,606.2 2,404.8 1,954.2 526.8 227,010.7 107,565.0 119,445.7 2,754.7 2,430.1 578.0 295,522.8 134,020.7 161,502.1 3,770.8 3,136.0 641.4 268,243.0 117,276.1 150,966.9 3,549.0 2,686.7 610.4 304,407.5 132,158.8 172,248.7 3,762.6 3,068.7 656.7 266,882.2 115,187.4 151,694.7 3,702.7 2,554.3 665.2 292,750.0 138,964.6 153,785.5 3,891.4 2,651.5 690.4 285,372.8 129,905.5 155,467.3 3,611.5 2,569.1 555.9 556.7 2,499.1 321.2 15.6 4.5 3.0 612.3 2,674.9 356.9 13.8 5.3 3.1 641.7 2,901.4 377.1 14.7 6.9 3.1 855.6 3,795.0 520.9 20.3 9.7 3.6 761.3 3,247.5 477.4 18.9 8.2 3.4 891.5 3,911.6 559.9 20.0 9.2 3.6 763.1 3,279.7 482.2 19.5 7.6 3.7 829.6 3,594.8 489.4 20.3 7.8 3.8 815.6 3,548.5 496.3 18.5 7.4 3.0 DEPOSIT TURNOVER 1. Historical tables containing revised data for earlier periods may be obtained from the Monetary and Reserves Projections 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 DomesticNonfinancialStatistics • April 1990 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1989 1990 Category Feb/ Mar/ Apr/ May r June r July r Aug/ Sept/ Oct/ Nov/ Dec/ Jan. Seasonally adjusted 1 Total loans and securities 2 2 U.S. government securities 3 Other securities 4 Total loans and leases 2 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 1/ Foreign official institutions 18 Lease financing receivables 19 All other loans 2,445.1 2,460.3 2,469.2 2,482.9 2,496.0 2,512.4 2,527.4 2,538.9 2,562.6 2,577.7 2,581.2 2,585.0 362.0 190.0 1,893.1 617.4 8.2 368.0 189.3 1,903.0 619.1 8.4 370.5 188.3 1,910.5 621.7 8.3 372.5 187.8 1,922.6 626.6 8.3 373.7 187.3 1,935.0 627.1 8.2 374.0 186.3 1,952.1 631.8 7.9 375.5 183.8 1,968.2 636.1 8.1 378.1 183.1 1,977.7 637.7 8.4 389.8 181.0 1,991.9 641.3 8.8 394.6 179.4 2,003.7 645.0 8.1 394.2 180.4 2,006.5 641.6 7.6 402.3 180.2 2,002.4 638.1 7.4 609.2 602.8 6.4 684.1 358.1 45.1 610.7 604.2 6.5 689.9 358.9 43.8 613.4 607.0 6.4 698.9 361.6 40.0 618.4 612.8 5.6 705.6 363.5 38.5 618.9 613.2 5.8 713.0 363.8 40.6 623.9 619.8 4.0 720.1 365.8 40.1 628.0 624.3 3.7 727.7 367.5 39.1 629.3 625.4 3.9 735.8 370.3 39.8 632.6 628.4 4.2 742.1 372.6 41.3 636.9 631.8 5.1 748.4 374.5 41.6 634.0 628.6 5.5 755.8 375.7 39.6 630.7 623.0 7.7 759.1 377.8 39.2 30.6 30.0 30.1 29.7 29.6 29.7 29.3 29.9 30.5 30.0 31.3 30.0 31.5 29.9 31.8 29.6 32.7 29.6 33.3 29.9 32.7 30.3 32.3 30.9 43.4 8.0 4.7 29.8 41.9 43.4 7.4 4.7 30.0 46.1 43.3 7.3 4.7 30.0 43.7 43.1 8.0 4.5 30.2 43.3 42.8 7.9 4.2 30.2 44.9 42.5 7.9 4.0 30.7 47.9 42.2 8.1 3.8 31.0 51.2 41.7 7.5 3.8 31.3 48.3 41.3 8.5 3.6 31.7 47.2 40.8 8.0 3.3 31.6 47.2 40.1 8.6 3.3 31.4 47.4 38.6 7.9 2.9 31.7 43.9 Not seasonally adjusted 20 Total loans and securities 2 21 U.S. government securities 22 Other securities 23 Total loans and leases 2 24 Commercial and industrial . . . . . 25 Bankers acceptances held . . . 26 Other commercial and 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 2,447.1 2,455.0 2,469.4 2,482.2 2,496.3 2,507.0 2,521.1 2,537.5 2,562.9 2,579.8 2,589.2 2,590.6 366.1 189.9 1,891.0 617.9 8.4 369.5 188.8 1,896.7 621.1 8.3 370.4 187.5 1,911.5 625.9 8.1 371.6 187.1 1,923.5 630.6 8.1 371.3 186.5 1,938.5 629.6 8.0 372.1 184.7 1,950.2 631.9 7.6 376.1 183.8 1,961.2 633.4 8.1 377.2 183.3 1,977.0 633.7 8.4 387.1 181.9 1,993.9 638.7 8.9 394.7 180.7 2,004.5 642.3 8.2 395.4 181.4 2,012.5 641.6 7.7 404.0 180.7 2,005.9 636.6 7.5 609.5 604.2 5.3 681.9 357.3 44.5 612.8 607.4 5.4 687.5 355.8 44.8 617.9 612.5 5.4 697.2 359.0 42.6 622.5 616.9 5.6 704.6 361.2 39.0 621.6 616.0 5.6 712.9 362.1 43.0 624.3 618.6 5.7 720.7 364.3 40.2 625.3 619.8 5.5 729.2 367.7 38.5 625.3 619.8 5.5 737.8 372.1 38.9 629.8 624.2 5.6 743.4 373.7 40.2 634.0 628.6 5.5 750.1 375.9 40.4 633.8 628.5 5.3 756.6 380.2 38.6 629.1 624.1 5.0 759.1 381.4 37.5 30.2 29.1 29.4 28.7 29.5 28.8 29.2 29.5 30.8 30.3 31.4 30.7 31.3 30.7 31.4 30.5 32.4 30.4 33.6 30.2 33.7 30.2 33.0 30.3 44.0 7.9 4.7 29.9 43.7 43.6 7.0 4.7 29.9 44.3 43.3 7.0 4.7 30.1 43.5 43.0 7.9 4.5 30.2 43.7 42.6 8.1 4.2 30.2 44.8 42.1 8.0 4.0 30.4 46.3 41.9 8.1 3.8 30.9 45.9 41.6 7.8 3.8 31.1 48.1 41.2 8.8 3.6 31.6 49.9 40.6 8.1 3.3 31.6 48.3 39.7 8.4 3.3 31.5 48.7 39.5 8.0 2.9 32.1 45.4 1. Data have been revised because of benchmarking and seasonal adjustment revisions beginning January 1973. These data also appear in the Board's G.7 (407) release. For address, see inside front cover. 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 BANKS 1 Monthly averages, billions of dollars 1990 1989 Source 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Seasonally adjusted Total nondeposit funds Net balances due to related foreign offices — Borrowings from other than commercial banks in United States Domestically chartered banks Foreign-related banks Not seasonally adjusted Total nondeposit funds Net balances due to related foreign offices Domestically chartered banks Foreign-related banks Borrowings from other than commercial banks in United States 4 Domestically chartered banks Federal funds and security RP borrowings Other® Foreign-related banks 6 Feb/ Mar/ Apr/ May' June' July' Aug.' Sept.' Oct.' Nov.' Dec.' Jan. 212.2 10.7 212.5 8.2 206.0 3.0 211.8 -.1 229.6 7.7 229.1 11.1 230.6 9.3 238.9 9.7 249.3 9.9 252.8 8.8 249.5 7.2 245.4 10.6 201.4 161.3 40.1 204.3 165.7 38.6 203.0 163.5 39.5 212.0 169.6 42.4 221.9 179.5 42.4 218.0 175.8 42.2 221.4 178.7 42.6 229.2 185.4 43.7 239.4 192.6 46.8 244.0 194.8 49.2 242.4 195.0 47.4 234.9 187.1 47.8 217.0 10.5 -17.6 28.1 218.2 7.1 -19.5 26.7 208.7 .9 -22.8 23.7 219.5 2.5 -21.9 24.4 232.8 7.8 -18.3 26.2 224.8 8.1 -16.4 24.5 229.4 8.9 -15.5 24.4 234.9 10.7 -14.2 24.9 242.4 9.6 -14.8 24.4 248.4 9.8 -15.2 25.0 242.5 9.7 -19.0 28.7 245.0 10.2 -14.7 24.9 206.5 165.1 211.0 170.9 207.8 167.4 217.0 174.1 224.9 180.8 216.7 174.0 220.5 178.2 224.2 181.2 232.8 187.8 238.6 193.2 232.8 187.9 234.8 185.4 161.9 3.2 41.4 167.4 3.5 40.1 162.9 4.5 40.4 170.1 4.0 42.9 177.0 3.8 44.1 170.9 3.1 42.8 175.2 3.0 42.3 178.3 3.0 42.9 184.8 2.9 45.1 190.8 2.4 45.4 185.4 2.5 44.9 182.8 2.6 49.4 441.9 441.7 447.1 449.9 452.3 452.3 457.0 457.4 460.0 459.4 463.4 461.1 462.0 462.6 460.0 461.5 461.4 462.6 463.9 464.4 464.3 462.7 462.7 460.4 20.8 25.9 20.9 18.1 21.3 20.2 25.5 34.3 25.7 26.2 22.4 23.0 22.3 15.8 22.8 24.9 21.5 20.6 20.4 14.7 21.1 19.6 20.2 23.2 MEMO 15 16 17 18 Gross large time deposits 7 Seasonally adjusted Not seasonally adjusted U.S. Treasury demand balances at commercial banks 8 Seasonally adjusted 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. These data also appear in the Board's G.10 (411) release. For address, see inside front cover. 2. Includes federal funds, RPs, and other borrowing from nonbanks and net balances due to related foreign offices. 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and U.S. branches and agencies of foreign banks with related foreign offices plus net positions with own IBFs. 4. Other borrowings are borrowings through any instrument, such as a promissory note or due bill, given for the purpose of borrowing money for the banking business. This includes borrowings from Federal Reserve Banks and from foreign banks, term federal funds, loan RPs, and sales of participations in pooled loans. 5. Based on daily average data reported weekly by approximately 120 large banks and quarterly or annual data reported by other banks. 6. Figures are partly daily averages and partly averages of Wednesday data. 7. Time deposits in denominations of $100,000 or more. Estimated averages of daily data. 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at commercial banks. Averages of daily data. A18 1.25 DomesticNonfinancialStatistics • April 1990 A S S E T S A N D L I A B I L I T I E S OF C O M M E R C I A L B A N K I N G I N S T I T U T I O N S Last-Wednesday-of-Month Series 1 Billions of dollars 1989 1990 Account Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. 2,627.1 539.1 355.5 183.6 21.8 2,066.2 154.9 1,911.3 622.9 692.6 358.1 237.7 2,623.0 538.3 356.6 181.7 17.8 2,066.8 150.7 1,916.2 627.3 699.4 361.8 227.7 2,659.8 541.1 359.1 182.0 19.2 2,099.5 160.5 1,939.0 631.1 706.7 363.8 237.4 2,660.7 541.6 362.2 179.4 18.2 2,100.9 155.0 1,945.9 628.3 715.1 366.0 236.6 2,677.1 538.3 360.3 178.1 19.8 2,119.0 162.4 1,956.6 635.3 722.8 366.2 232.3 2,692.5 542.8 365.3 177.5 18.7 2,131.0 162.9 1,968.1 631.9 733.9 371.4 231.0 2,695.7 542.4 366.4 176.1 18.3 2,135.0 158.0 1,977.1 630.3 737.5 375.5 233.7 2,728.1 545.4 370.8 174.6 26.6 2,156.1 164.2 1,992.0 634.9 743.2 376.1 237.8 2,764.7 549.5 375.8 173.7 27.6 2,187.6 179.9 2,007.8 638.7 752.0 378.8 238.2 2,770.9 550.4 375.7 174.7 23.4 2,197.1 181.9 2,015.2 639.4 757.6 384.5 233.8 2,781.3 562.9 389.8 173.0 32.0 2,186.5 180.2 2,006.3 631.9 760.4 383.6 230.5 211.5 30.9 26.8 75.9 215.8 33.4 26.9 78.8 248.3 27.8 27.9 107.6 214.2 27.9 27.6 78.7 211.7 30.6 27.4 75.2 212.0 28.7 28.5 77.4 219.6 31.7 28.0 82.6 213.0 28.0 27.9 77.5 234.8 38.7 30.7 84.1 259.4 42.8 31.6 98.8 223.2 24.5 28.1 89.8 28.8 49.0 28.5 48.3 34.9 50.2 29.6 50.5 28.8 49.7 29.7 47.7 29.0 48.3 28.8 50.7 28.9 52.3 32.5 53.7 30.6 50.3 A L L COMMERCIAL BANKING INSTITUTIONS 2 1 Loans and securities 2 Investment securities 3 U.S. government securities Other 4 5 Trading account assets 6 Total loans 7 Interbank loans 8 Loans excluding interbank 9 Commercial and industrial 10 Real estate 11 Individual 12 All other 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 19 Other assets 194.1 200.7 206.8 198.7 201.1 199.6 203.9 203.8 201.9 208.2 214.0 20 Total assets/total liabilities and capital.... 3,032.7 3,039.5 3,114.9 3,073.6 3,090.0 3,104.0 3,119.3 3,144.9 3,201.3 3,238.4 3,218.5 21 22 23 24 25 26 27 2,123.7 583.2 523.2 1,017.3 483.6 223.9 201.4 2,134.2 594.5 512 0 1,027.6 486.7 217.4 201.2 2,182.6 628.5 509.7 1,044.3 510.6 218.6 203.2 2,138.2 580.5 507.4 1,050.2 512.7 218.4 204.4 2,152.0 579.4 514.0 1,058.6 510.2 223.1 204.7 2,166.6 583.4 518.9 1,064.4 504.6 226.3 206.5 2,175.3 588.5 520.7 1,066.1 516.5 221.4 206.1 2,194.2 588.0 527.6 1,078.6 526.5 222.4 201.9 2,221.1 602.5 537.6 1,081.0 542.2 235.2 202.9 2,265.1 643.3 540.3 1,081.5 530.6 238.9 203.8 2,241.9 613.7 542.7 1,085.5 551.7 222.1 202.8 372.1 369.5 372.3 374.4 373.5 377.5 378.5 390.4 396.2 392.2 415.0 188.8 186.6 188.0 185.4 184.6 184.0 182.3 181.6 180.9 181.6 179.8 2.407.8 513.1 342.7 170.4 21.8 1,872.8 122.3 1,750.5 506.1 669.8 357.7 216.9 2,407.8 513.8 344.1 169.7 17.8 1,876.2 120.2 1,756.0 511.3 676.0 361.4 207.3 2,446.0 516.1 345.9 170.2 19.2 1,910.6 131.5 1,779.2 515.5 683.2 363.5 217.0 2,439.9 517.3 349.5 167.8 18.2 1,904.5 119.3 1,785.1 511.6 691.6 365.6 216.3 2,452.1 514.2 347.8 166.5 19.8 1,918.1 126.4 1,791.7 515.6 698.2 365.8 212.0 2,467.6 519.4 353.5 165.9 18.7 1,929.4 127.0 1,802.5 512.8 708.7 371.1 209.9 2,473.6 519.0 354.5 164.5 18.3 1,936.3 125.1 1,811.2 510.4 712.2 375.2 213.5 2,506.5 521.6 358.7 162.9 26.6 1,958.3 134.9 1,823.5 514.2 717.1 375.8 216.4 2,526.4 523.0 362.1 160.9 27.6 1,975.8 142.1 1,833.7 515.3 724.4 378.5 215.5 2,535.8 524.2 363.2 161.0 23.4 1,988.2 145.8 1,842.4 515.9 729.6 384.2 212.7 2,548.3 535.1 375.3 159.8 32.0 1,981.2 144.7 1,836.5 512.7 731.0 383.2 209.7 191.4 29.5 26.8 75.1 195.3 30.7 26.8 77.9 227.0 26.7 27.9 106.6 192.3 26.6 27.6 77.7 190.1 29.6 27.4 74.4 191.7 27.0 28.5 76.5 197.6 29.5 28.0 81.3 191.5 26.3 27.9 76.3 209.5 37.9 30.7 82.2 235.0 41.7 31.5 97.4 200.9 22.7 28.1 88.3 26.6 33.4 26.8 33.1 32.9 33.0 27.5 32.9 27.0 31.7 28.0 31.7 27.3 31.6 26.9 34.2 27.0 31.7 30.7 33.6 28.7 33.0 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. government securities 32 33 Other Trading account assets 34 35 Total loans 36 Interbank loans 37 Loans excluding interbank 38 Commercial and industrial 39 Real estate 40 Individual 41 All other 42 Total cash assets 43 Reserves with Federal Reserve Banks. 44 Cash in vault 45 Cash items in process of collection . . . 46 Demand balances at U.S. depository institutions 47 Other cash assets 48 Other assets 49 Total assets/liabilities and capital 50 51 52 53 54 55 56 Deposits Transaction deposits Savings deposits Time deposits Borrowings Other liabilities Residual (assets less liabilities) 130.6 134.6 133.6 131.6 128.4 127.5 131.5 126.3 132.2 136.0 138.7 2,729.9 2,737.7 2,806.6 2,763.9 2,770.6 2,786.7 2,802.8 2,824.3 2,868.2 2,906.7 2,887.9 2,047.4 574.1 520.7 952.6 362.8 121.7 197.9 2,056.2 584.8 509.4 961.9 368.2 115.6 197.7 2,103.0 618.7 507.1 977.2 383.0 120.9 199.7 2,058.8 571.2 504.8 982.9 387.3 116.9 200.8 2,071.3 570.2 511.3 989.9 380.2 117.8 201.2 2,086.9 574.7 516.2 995.9 375.5 121.3 203.0 2,094.5 578.8 517.9 997.7 390.8 114.9 202.6 2,112.4 578.4 525.0 1,009.0 393.2 120.4 198.4 2,139.2 592.7 534.8 1,011.6 404.4 125.2 199.4 2,182.4 633.2 537.5 1,011.7 398.3 125.8 200.3 2,159.9 603.4 539.9 1,016.6 404.5 124.2 199.2 42.5 627.3 43.4 632.6 44.3 638.9 45.3 646.2 45.7 652.5 46.4 662.3 47.1 665.0 47.9 669.2 48.5 676.0 49.1 680.5 50.3 680.6 MEMO 57 Real estate loans, revolving 58 Real estate loans, other 1. 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 weekly H.8 (510) release. Figures are partly estimated. They include all bank-premises subsidiaries and other significant majority-owned domestic subsidiaries. Loan and securities data for domestically chartered commercial banks are estimates for the last Wednesday of the month based on a sample of weekly reporting banks and quarter-end condition report data. Data for other banking institutions are estimates made for the last Wednesday of the month based on a weekly reporting sample of foreign-related institutions and quarter-end condition reports. 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 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS 1 Millions of dollars, Wednesday figures 1989 1990 Account Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 1 Cash and balances due from depository institutions . . . 112,989 114,977 123,403 138,913 141,952 119,669 2 Total loans, leases, and securities, net 1,257,325 1,258,300 1,258,888 1,251,465 1,275,712 1,268,788 3 U.S. Treasury and government agency 164,934 161,214 165,260 157,022 163,514 166,819 4 Trading account 22,782 19,700 16,554 22,685 20,%9 23,342 5 Investment account 142,152 141,514 142,545 142,576 140,469 143,477 6 Mortgage-backed securities3 71,681 72,119 71,306 71,601 71,196 71,800 All other maturing in 7 One year or less 19,930 19,949 20,406 19,846 20,370 20,957 8 Over one through five years 34,961 34,724 34,346 34,008 33,986 34,508 9 Over five years 15,955 15,537 15,845 15,419 16,070 16,212 10 Other securities 66,311 66,355 66,206 67,485 66,258 67,070 11 Trading account 1,087 1,253 1,244 1,078 1,276 1,056 12 Investment account 64,954 64,981 66,241 66,014 65,224 65,277 13 States and political subdivisions, by maturity 38,036 37,406 37,332 37,672 37,790 37,459 14 One year or less 5,017 4,919 4,778 4,963 4,876 4,644 15 Over one year 33,018 32,487 32,894 32,814 32,827 32,456 16 Other bonds, corporate stocks, and securities 27,188 27,548 27,649 28,568 28,555 27,486 17 Other trading account assets 6,265 5,866 6,001 5,570 5,576 6,000 18 Federal funds sold4 71,480 70,744 71,999 69,587 72,872 66,654 19 To commercial banks 48,399 51,964 50,681 55,314 49,069 48,007 20 To nonbank brokers and dealers in securities 13,459 13,484 15,248 14,638 12,650 12,595 21 To others 7,834 7,037 6,576 5,422 4,907 6,052 22 Other loans and leases, gross 991,529 993,2% 9%,866 995,794 1,009,602 1,005,167 23 Other loans, gross 965,642 970,873 983,139 %7,382 %9,626 978,476 24 Commercial and industrial 320,067 322,195 317,993 318,357 318,772 321,033 25 Bankers acceptances and commercial paper 1,495 1,404 1,425 1,410 1,404 1,387 26 All other 316,497 316,947 318,663 317,368 320,770 319,646 27 U.S. addressees 314,744 316,936 315,172 315,562 318,978 317,8% 28 Non-U.S. addressees 1,727 1,753 1,774 1,806 1,793 1,749 29 Real estate loans 352,158 353,161 353,408 352,577 357,615 357,986 30 Revolving, home equity 26,908 27,222 27,773 27,864 27,035 27,272 31 Mother 325,249 326,186 325,305 329,842 326,127 330,122 32 177,161 177,792 181,082 To individuals for personal expenditures 175,493 176,620 180,735 33 To depository and financial institutions 49,119 47,948 47,570 50,448 49,918 48,480 34 Commercial banks in the United States 21,490 20,633 20,812 21,140 22,611 23,233 35 Banks in foreign countries 4,615 4,876 4,368 4,430 5,201 4,136 36 Nonbank depository and other financial institutions 23,014 22,972 22,439 22,329 22,636 22,548 37 For purchasing and carrying securities 17,110 16,260 14,650 15,286 16,852 14,767 5,675 38 To finance agricultural production 5,355 5,379 5,450 5,617 5,398 39 To states and political subdivisions 25,210 24,919 24,856 25,040 24,9% 24,916 40 To foreign governments and official institutions . . . 1,340 1,364 1,452 1,415 1,319 1,201 41 All other 23,688 23,428 24,933 25,116 22,305 22,153 42 Lease financing receivables 25,887 25,993 25,913 26,168 26,463 26,691 43 LESS: Unearned income 4,784 4,813 4,817 4,762 4,938 4,928 44 38,381 38,480 Loan and lease reserve 38,539 38,004 37,994 38,400 45 Other loans and leases, net 948,336 953,602 953,027 966,264 949,940 %2,246 136,526 46 All other assets 135,658 136,780 135,727 139,695 135,674 47 Total assets 1,505,973 1,510,058 1,518,817 1,526,105 1,557,359 1,524,131 48 Demand deposits 227,177 247,136 247,985 228,102 271,702 235,259 182,551 49 Individuals, partnerships, and corporations 191,286 197,147 188,220 185,306 214,963 50 States and political subdivisions 5,998 5,944 7,450 7,245 6,170 8,112 51 U.S. government 2,675 5,104 1,853 2,730 3,554 1,446 22,542 52 Depository institutions in the United States 20,475 20,197 23,729 26,478 20,996 6,844 53 Banks in foreign countries 6,304 5,982 8,1% 8,088 6,119 54 Foreign governments and official institutions 606 628 681 746 878 606 55 Certified and officers' checks 8,567 11,929 10,485 9,595 8,349 10,585 56 Transaction balances other than demand deposits 79,918 79,232 79,264 86,524 83,724 78,322 57 Nontransaction balances 706,637 702,865 706,401 704,033 722,592 723,942 58 Individuals, partnerships, and corporations 668,841 665,733 666,395 668,522 684,705 684,646 59 States and political subdivisions 28,424 28,932 29,273 29,298 30,257 29,399 60 U.S. government 898 886 886 944 900 913 61 Depository institutions in the United States 7,289 7,061 7,241 7,128 7,002 7,523 62 Foreign governments, official institutions, and banks 533 563 554 579 572 573 63 Liabilities for borrowed money 299,242 306,167 306,043 302,906 290,147 291,188 64 Borrowings from Federal Reserve Banks 0 0 25 1,943 0 0 65 Treasury tax-and-loan notes 17,626 15,064 2,084 7,786 7,360 5,978 66 All other liabilities for borrowed money6 298,381 281,616 285,899 289,104 298,658 284,170 67 Other liabilities and subordinated notes and debentures 91,000 87,003 92,012 92,732 90,901 86,772 68 Total liabilities 1,406,901 1,410,880 1,419,475 1,426,920 1,458,778 1,423,975 99,342 99,185 69 Residual (total assets minus total liabilities)7 99,072 99,178 98,581 100,157 Jan. 17 Jan. 24 Jan. 31 Adjustment bank 19892 112,801 144,053 110,336 1,280,208 1,272,574 1,283,823 168,891 170,776 173,916 24,812 25,605 25,102 145,964 143,286 148,814 72,905 75,745 76,674 1,024 17,888 2,407 1 2,406 470 20,815 21,161 21,860 34,016 34,381 34,3% 15,551 14,675 15,884 67,226 67,140 67,006 887 960 802 66,180 66,338 66,205 37,2% 37,120 37,357 4,614 4,643 4,676 32,653 32,444 32,743 29,043 29,085 28,823 6,011 5,471 6,060 71,534 65,054 71,328 52,004 45,791 50,288 13,274 13,961 13,679 6,255 5,302 7,361 1,010,300 1,007,098 1,008,772 980,076 983,518 981,752 319,102 319,760 319,956 1,325 1,451 1,425 318,309 317,777 318,531 316,626 316,176 316,957 1,682 1,601 1,574 358,292 358,666 358,597 27,921 28,081 28,210 330,372 330,584 330,387 180,426 180,362 180,291 53,5% 52,485 52,183 25,787 26,782 26,353 4,136 5,193 4,093 591 1,014 331 1,234 2 1,232 797 124 673 434 0 766 745 21 0 13,916 13,864 3,580 17 3,563 3,562 0 6,248 301 5,947 3,219 43 12 0 21,566 21,737 16,251 16,041 5,548 5,515 24,816 24,756 1,143 1,181 21,638 23,231 27,022 27,020 4,924 4,848 38,668 38,412 %3,506 965,512 133,542 138,785 1,518,918 1,532,945 219,475 232,213 173,861 185,059 6,560 7,160 4,127 2,246 20,012 21,208 6,362 6,021 720 780 7,833 9,739 78,982 80,236 719,576 719,887 680,428 680,987 30,339 30,074 831 850 7,380 7,392 597 584 306,965 306,882 475 590 24,045 25,565 282,445 280,727 95,455 93,749 32 97 86 355 0 236 52 193 242 13,481 935 19,848 3,273 2,885 69 29 137 0 0 152 1,998 14,842 13,867 1,036 4 -65 0 -1,246 0 11 -1,257 409 1,459,7% 1,420,453 1,432,%8 98,464 98,830 99,977 19,276 572 1,231,448 1,229,554 1,222,738 1,241,125 1,240,470 1,245,545 1,243,592 1,250,442 9%,268 993,831 993,888 1,004,549 1,000,581 1,004,043 999,579 1,003,459 215,307 214,664 218,564 217,113 218,338 217,514 217,171 216,028 17,882 19,039 17.257 19,652 18,753 20,510 19,243 21,792 524 536 532 541 537 544 542 540 232 229 235 242 239 239 253 242 295 304 297 298 299 305 290 298 268,617 266,828 268,435 275,728 276,506 275,917 272,733 273,730 17,567 13,926 4,3% 462 22,616 16,453 5,575 24,834 1,207 23,438 26,783 4,924 38,205 %7,172 134,365 1,558,626 260,654 204,517 6,770 4,504 27,496 6,833 676 9,857 83,015 723,028 683,968 30,100 933 7,429 598 301,150 0 12,350 288,799 91,949 MEMO 70 Total loans and leases (gross) and investments adjusted8 1,230,630 71 Total loans and leases (gross) adjusted 8 993,121 72 Time deposits in amounts of $100,000 or more 217,753 73 U.S. Treasury securities maturing in one year or less . 18,4% 74 Loans sold outright to affiliates—total9 536 75 Commercial and industrial 233 304 76 Other 77 Nontransaction savings deposits (including MMDAs) .. 268,157 1. Beginning Jan. 6, 1988, the "Large bank" reporting group was revised somewhat, eliminating some former reporters with less than $2 billion of assets and adding some new reporters with assets greater than $3 billion. 2. These amounts represent accumulated adjustments originally made to offset the cumulative effects of bank mergers during the calendar year. The adjustment data for 1989 should be added to the reported data for 1989 to establish comparability with data reported for 1990. 3. Includes U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages. 4. Includes securities purchased under agreements to resell. http://fraser.stlouisfed.org/ 5. Includes allocated transfer risk reserve. Federal Reserve Bank of St. Louis 0 0 0 4,068 6. 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. 7. This is not a measure of equity capital for use in capital-adequacy analysis or for other analytic uses. 8. Exclusive of loans and federal funds transactions with domestic commercial banks. 9. 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 1990 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1989 1990 Account Dec. 6 1 Cash balances due from depository institutions 2 Total loans, leases, and securities, net 2 Securities 3 U.S. Treasury and government agency 4 Trading account 5 Investment account Mortgage-backed securities 6 All other maturing in 7 One year or less 8 Over one through five years 9 Over five years 10 Other securities 3 11 Trading account 12 Investment account 13 States and political subdivisions, by maturity 14 One year or less 15 Over one year Other bonds, corporate stocks, and securities 16 17 Other trading account assets 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 Loans and leases Federal funds sold 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 47 Total assets 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 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-loan notes All other liabilities for borrowed money Other liabilities and subordinated notes and debentures 68 Total liabilities 69 Residual (total assets minus total liabilities) 9 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 22,921 21,572 28,238 36,663 27,408 25,306 28,816 24,988 21,895 209,462 214,997 210,684 207,786 211,295 207,205 213,833 212,264 215,737 0 0 16,689' 8,588 0 0 16,591' 8,464 0 0 16,517' 8,402 0 0 16,396' 8,242 0 0 16,076 8,242 0 0 16,172 8,235 0 0 16,809 9,000 0 0 18,641 10,807 0 0 19,307 11,138 2,792 3,416' 1,893' 0 0 14,325' 7,893 1,052 6,841 6,432r 0 2,813 3,420' 1,894' 0 0 14,352r 7,867 1,055 6,812 6,485r 0 2,816 3,379' 1,92c 0 0 14,257' 7,837 1,053 6,783 6,421' 0 2,774 3,452' 1,926' 0 0 14,282' 7,833 1,047 6,786 6,449' 0 2,264 3,536 2,034 0 0 14,525 7,829 1,065 6,763 6,6% 0 2,367 3,536 2,034 0 0 14,576 7,816 1,057 6,759 6,760 0 2,241 3,524 2,044 0 0 14,625 7,789 1,044 6,745 6,835 0 2,168 3,620 2,046 0 0 14,849 7,807 1,072 6,734 7,042 0 2,256 3,658 2,254 0 0 14,847 7,749 1,076 6,673 7,098 0 17,344 8,310 4,922 4,113 181,205 175,510 59,781 122 59,659 59,056 603 61,332 3,840 57,492 19,975 18,596 7,166 3,200 8,230 5,425 103 5,515 316 4,465 5,695 1,801 18,301 161,103 61,547 20,548 12,041 5,098 3,409 183,655 177,917 60,455 116 60,339 59,724 616 61,563 3,852 57,711 19,969 18,479 7,259 3,006 8,214 6,841 111 5,350 346 4,803 5,739 1,807 18,343 163,506 61,204 17,304 10,169 4,154 2,981 182,749 177,023 60,379 134 60,245 59,635 609 61,303 3,864 57,439 19,967 18,066 6,797 3,536 7,733 6,298 113 5,340 405 5,154 5,726 1,808 18,336 162,606 59,750 16,289 10,381 3,339 2,569 180,812 175,068 58,571 125 58,445 57,838 607 60,850 3,841 57,009 20,046 18,098 7,446 3,026 7,625 6,150 113 5,349 384 5,509 5,744 1,801 18,192 160,819 61,849 17,988 11,957 3,332 2,699 182,400 176,691 57,966 166 57,800 57,233 566 61,398 3,941 57,458 20,096 20,511 9,055 3,987 7,469 5,208 107 5,387 296 5,723 5,709 1,820 17,873 162,707 65,902 15,702 8,731 3,425 3,546 179,833 174,135 58,008 101 57,907 57,339 567 61,661 3,949 57,712 20,096 19,024 8,597 2,888 7,539 5,260 117 5,326 228 4,414 5,698 1,818 17,261 160,754 62,252 17,%2 10,819 3,574 3,569 183,517 177,830 57,792 91 57,702 57,054 648 61,625 3,955 57,671 20,081 21,044 9,444 3,867 7,732 6,551 111 5,317 246 5,061 5,688 1,819 17,261 164,437 64,560 16,456 10,452 3,081 2,923 181,408 175,721 57,854 85 57,769 57,195 574 61,489 3,964 57,525 20,117 19,603 9,258 2,970 7,375 6,658 100 5,312 214 4,374 5,687 1,824 17,266 162,318 61,211 18,516 10,403 3,539 4,574 182,285 176,611 58,519 93 58,426 57,854 572 61,750 3,969 57,782 20,121 19,296 8,887 2,847 7,562 5,988 105 5,316 326 5,189 5,674 1,820 17,397 163,068 63,950 293,930 297,773 298,672 306,298 304,605 294,763 307,210 298,464 301,583 48,644 34,518 584 448 4,451 5,037 479 3,127 50,476 36,648 547 168 4,458 4,799 740 3,114 59,194 39,192 953 1,004 5,424 6,708 392 5,521 55,232 38,291 810 270 5,432 5,547 541 4,340 60,264 43,850 1,040 295 4,617 6,690 578 3,194 53,284 37,261 916 661 5,332 4,844 470 3,800 58,254 40,746 834 611 6,341 5,423 510 3,790 49,609 34,652 689 784 5,115 5,044 557 2,768 51,287 35,897 773 278 5,324 4,664 659 3,692 8,560 116,075 106,650 7,117 30 2,041 238 68,108 0 1,594 66,515 28,037 8,505 115,658 106,374 7,040 29 1,980 234 67,054 0 1,541 65,514 31,589 8,675 116,117 107,067 6,819 27 1,976 228 61,462 0 4,664 56,798 28,929 8,701 115,660 106,870 6,691 26 1,833 240 71,691 1,680 3,831 66,180 30,930 9,403 117,550 109,041 6,447 25 1,795 241 65,457 0 322 65,135 27,880 9,146 116,804 108,307 6,504 26 1,736 231 61,668 0 1,091 60,577 29,828 9,073 117,392 108,884 6,523 26 1,727 233 68,106 0 2,799 65,307 30,482 8,659 116,209 107,697 6,527 27 1,726 232 64,150 0 6,541 57,609 35,893 8,760 116,676 108,165 6,540 28 1,723 220 67,277 0 6,721 60,556 33,717 269,425 273,282 274,377 282,214 280,554 270,731 283,308 274,519 277,717 24,505 24,491 24,295 24,084 24,051 24,032 23,901 23,945 23,866 214,087 183,073 41,740 3,066 215,846 184,904 41,535 3,084 213,862 183,087 41,798 3,118 209,952 179,274 41,103 3,240 209,977 179,377 41,336 2,615 208,956 178,207 40,855 2,744 212,650 181,216 41,683 2,835 211,644 178,154 41,147 2,950 215,665 181,511 41,281 3,391 MEMO 70 71 72 73 Total loans and leases (gross) and investments adjusted • Total loans and leases (gross) adjusted 10 Time deposits in amounts of $100,000 or more U.S. Treasury securities maturing in one year or less 1. These data also appear in the Board's H.4.2 (504) release. For address, see inside front cover. 2. Excludes trading account securities. 3. Not available due to confidentiality. 4. Includes U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages. 5. Includes securities purchased under agreements to resell. http://fraser.stlouisfed.org/ 6. Includes allocated transfer risk reserve. Federal Reserve Bank of St. Louis 7. Includes trading account securities. 8. Includes federal funds purchased and securities sold under agreements to repurchase. 9. Not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. 10. Exclusive of loans and federal funds transactions with domestic commercial banks. Weekly Reporting Commercial Banks 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS 1 Liabilities A21 Assets and Millions of dollars, Wednesday figures 1989 1990 Account Dec. 38 39 40 41 Cash and due from depository institutions . . . Total loans and securities U.S. Treasury and government agency securities Other securities Federal funds sold To commercial banks in the United States . To others Other loans, gross Commercial and industrial Bankers acceptances and commercial paper All other U.S. addressees Non-U.S. addressees Loans secured by real estate 3 To financial institutions Commercial banks in the United States.. Banks in foreign countries Nonbank financial institutions To foreign governments and official institutions For purchasing and carrying securities . . . . All other 3 Other assets (claims on nonrelated parties) .. Net due from related institutions Total assets Deposits or credit balances due to other than directly related institutions Transaction accounts and credit balances . Individuals, partnerships, and corporations Other.. Nontransaction accounts Individuals, partnerships, and corporations Other Borrowings from other than directly related institutions Federal funds purchased From commercial banks in the United States From others Other liabilities for borrowed money To commercial banks in the United States To others Other liabilities to nonrelated parties Net due to related institutions Total liabilities 42 43 Total loans (gross) and securities adjusted 7 .. Total loans (gross) adjusted 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 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 12,161 142,824 12,958 143,457' 13,008 143,263 13,410 144,882' 12,719 143,274 13,077 142,536 12,920 140,223 13,708 141,533 12,637 143,025 8,922 6,637 4,984 3,233 1,751 122,281 74,495' 9,054 6,672 6,182 4,293 1,889 121,549' 73,960' 8,380 6,810 4,857 3,532 1,325 123,216 75,246' 8,266 6,925 6,956 5,745 1,211 122,735' 75,132' 8,429 7,038 6,153 4,626 1,527 121,654 74,243 9,013 6,893 6,403 4,942 1,461 120,227 72,964 9,280 6,741 4,678 3,165 1,513 119,524 73,060 9,538 6,770 7,639 5,989 1,650 117,586 72,006 9,828 6,747 6,993 5,643 1,350 119,457 72,210 2,050 72,445' 70,785' 1,660^ 18,254' 24,869 18,487 1,803 4,579 2,062 71,898' 70,268' 1,63C 18,234' 24,441 18,082 1,779 4,580 2,065 73,181' 71,515' 1,666' 18,272' 24,826 18,348 1,636 4,842 2,054 73,078' 71.39C 1,688' 18,581' 24,910' 18,388 1,415 5,107' 1,811 72,432 70,822 1,610 18,950 24,832 17,900 1,833 5,099 1,755 71,209 69,751 1,458 19,138 24,762 17,817 1,867 5,078 1,886 71,174 69,701 1,473 19,450 23,447 16,900 1,421 5,126 2,058 69,948 68,388 1,560 19,433 22,695 16,628 1,231 4,836 1,983 70,227 68,732 1,495 19,488 23,902 17,943 1,144 4,815 431 2,026 2,206' 37,903 13,961 206,852 434 2,206 2,274' 38,117 12,517 207,047 402 2,141 2,329' 38,122 13,350 207,742 388 1,956 1,768' 37,250 12,124 207,665 382 1,510 1,737 37,674 15,131 208,798 263 1,436 1,664 37,111 16,059 208,785 254 1,702 1,611 35,294 16,458 204,898 246 1,559 1,647 35,407 14,558 205,206 254 1,585 2,018 36,563 15,184 207,410 49,684 3,735 50,906 4,292 50,992 4,241 50,180 4,047 50,156 4,085 49,780 3,917 50,664 4,210 50,089 4,531 50,151 4,574 2,509 1,226 45,949 2,514 1,778 46,614 2,612 1,629 46,751 2,632 1,415 46,133 2,656 1,429 46,071 2,542 1,375 45,863 2,725 1,485 46,454 2,572 1,959 45,558 3,0% 1,478 45,577 38,311 7,638 38,334 8,280 38,961 7,790 38,816 7,317 38,881 7,190 38,392 7,471 38,272 8,182 38,352 7,206 38,761 6,816 92,244 39,896 88,366 35,839 92,845 41,464 86,771 34,624 92,991 42,000 94,130 41,983 93,780 41,876 95,181 42,456 96,982 44,025 21,010 18,886 52,348 18,551 17,288 52,527 23,606 17,858 51,381 16,521 18,103 52,147 19,993 22,007 50,991 20,900 21,083 52,147 19,264 22,612 51,904 18,687 23,769 52,725 20,677 23,348 52,957 33,718 18,630 37,386 27,537 206,852 33,508 19,019 38,052 29,722 207,047 32,250 19,131 37,582 26,323 207,742 33,674 18,473 37,169 33,545 207,665 32,549 18,442 37,341 28,310 208,798 32,566 19,581 36,900 27,975 208,785 33,265 18,639 34,957 25,496 204,898 33,537 19,188 35,253 24,684 205,206 33,864 19,093 36,724 23,552 207,410 121,104 105,545 121,082' 105,356' 121,383 106,193 120,749' 105,558' 120,748 105,281 119,777 103,871 120,158 104,137 118,916 102,608 119,439 102,864 MEMO 1. Effective Jan. 4, 1989, the reporting panel includes a new group of large U.S. branches and agencies of foreign banks. Earlier data included 65 U.S. branches and agencies of foreign banks that included 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. These data also appear in the Board's H.4.2 (504) release. For address, see inside front cover. 2. Includes securities purchased under agreements to resell. 3. Effective Jan. 4, 1989, loans secured by real estate are being reported as a separate component of Other loans, gross. Formerly, these loans were included in "All other", line 21. 4. Includes credit balances, demand deposits, and other checkable deposits. 5. Includes savings deposits, money market deposit accounts, and time deposits. 6. Includes securities sold under agreements to repurchase. 7. Exclusive of loans to and federal funds sold to commercial banks in the United States. A22 DomesticNonfinancialStatistics • April 1990 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1 Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks Type of holder 19852 Dec. 1988 1986 Dec. 1987 Dec. 1989 1988 Dec. Sept. Dec. Mar. June Sept. 1 All holders—Individuals, partnerships, and corporations 321.0 363.6 343.5 354.7 337.8 354.7 330.4 329.3 337.3 2 3 4 5 6 32.3 178.5 85.5 3.5 21.2 41.4 202.0 91.1 3.3 25.8 36.3 191.9 90.0 3.4 21.9 38.6 201.2 88.3 3.7 22.8 34.8 190.3 87.8 3.2 21.7 38.6 201.2 88.3 3.7 22.8 36.3 182.2 87.4 3.7 20.7 33.0 185.9 86.6 2.9 21.0 33.7 190.4 87.9 2.9 22.4 Financial business Nonfinancial business Consumer Foreign Other Dec. f 1 n.a. 1 I • Weekly reporting banks 19852 Dec. 7 All holders—Individuals, partnerships, and corporations 8 9 10 11 12 Financial business Nonfinancial business Consumer Foreign Other 1988 1986 Dec. 1989 1988 Dec. Sept. Dec. Mar. June Sept. Dec. 168.6 195.1 183.8 198.3 185.3 198.3 181.9 182.2 186.6 196.7 25.9 94.5 33.2 3.1 12.0 32.5 106.4 37.5 3.3 15.4 28.6 100.0 39.1 3.3 12.7 30.5 108.7 42.6 3.6 12.9 27.2 101.5 41.8 3.1 11.7 30.5 108.7 42.6 3.6 12.9 27.2 98.6 41.1 3.3 11.7 25.4 99.8 42.4 2.9 11.7 26.3 101.6 43.0 2.8 12.9 27.6 108.8 44.1 3.0 13.2 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. Beginning March 1985, financial business deposits and, by implication, total gross demand deposits have been redefined to exclude demand deposits due to 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. 1987 Dec. 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 . 3. Beginning March 1988, 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 1987 based on the new weekly reporting panel are: financial business, 29.4; nonfinancial business, 105.1; consumer, 41.1; foreign, 3.4; other, 13.1. Financial Markets A23 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1989 1985 Dec. Instrument 1986 Dec. 1987 Dec. 1988 Dec. 1989 Dec. July Aug. Sept. Oct. Nov/ Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 2 3 4 5 6 Financial companies' Dealer-placed paper Total Bank-related (not seasonally adjusted) Directly placed paper Total Bank-related (not seasonally adjusted) Nonfinancial companies 298,779 329,991 357,129 455,017 525,266 506,095 516,476 507,090 508,043r 517,574 525,266 78,443 101,072 101,958 159,947 186,362 179,354 182,083'' 177,080r 175,722r 182,459 186,362 1,602 2,265 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 135,320 151,820 173,939 192,442 209,551 205,847 208,915 206,521 210,855 210,560 209,551 44,778 85,016 40,860 77,099 43,173 81,232 43,155 102,628 n.a. 129,353 n.a. 121,217 n.a. 125,478 n.a. 123,489 n.a. 121,466 n.a. 124,555 n.a. 129,353 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 68,413 64,974 70,565 66,631 62,972 65,588 65,764 63,814 63,660 63,802 62,972 11,197 9,471 1,726 13,423 11,707 1,716 10,943 9,464 1,479 9,086 8,022 1,064 9,433 8,510 924 9,410 8,334 1,076 9,935 8,874 1,061 9,526 8,779 747 10,81r 9,108 1,703 9,923 8,548 1,375 9,433 8,510 924 0 937 56,279 0 1,317 50,234 0 965 58,658 0 1,493 56,052 0 1,066 52,473 0 1,026 55,152 0 1,014 54,815r 0 1,016 53,370 0 1,016 51,833 0 1,034 52,846 0 1,066 52,473 15,147 13,204 40,062 14,670 12,960 37,344 16,483 15,227 38,855 14,984 14,410 37,237 15,651 13,683 33,638 15,338 15,270 34,980 16,140 14,895 34,729 16,101 14,304 33,409 16,157 14,275 33,228 15,691 14,385 33,726 15,651 13,683 33,638 1. 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. 2. Includes all financial company paper sold by dealers in the open market. 3. Beginning January 1989, bank-related series have been discontinued. 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 January 1988, the number of respondents in the bankers acceptance survey were reduced from 155 to 111 institutions—those with $100 million or more in total acceptances. The new reporting group accounts for over 90 percent of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Average rate 7.75 8.00 8.25 8.75 9.25 9.00 8.75 8.50 9.00 9.50 10.00 10.50 11.00 11.00 11.50 1987 1988 1989 1987— Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 8.21 9.32 10.87 7.50 7.50 7.50 7.75 8.14 8.25 8.25 8.25 8.70 9.07 8.78 8.75 10.50 10.00 NOTE. These data also appear in the Board's H.15 (519) and G. 13 (415) releases. For address, see inside front cover. Average rate 1988—Jan. ... Feb. .. Mar. .. Apr. .. May ... June .. July ... Aug. .. Sept. .. Oct. ... Nov. .. Dec. .. 8.75 8.51 8.50 8.50 8.84 9.00 9.29 9.84 10.00 10.00 10.05 10.50 Period 1989— Jan. ... Feb. .. Apr. . May ... July ... Aug. .. Sept. .. Oct. ... Nov. .. Dec. .. 1990— Jan. ... Feb. A24 1.35 DomesticNonfinancialStatistics • April 1990 I N T E R E S T R A T E S M o n e y and Capital Markets Averages, percent per year; weekly, monthly and annual figures are averages of business day data unless otherwise noted. 1989 Instrument 1987 1988 1989, week ending 1989 Sept. Oct. Nov. Dec. Dec. 1 Dec. 8 Dec. 15 Dec. 22 Dec. 29 MONEY MARKET RATES 1 Federal funds 1,2 2 Discount window borrowing 1 ' 2 ' 3 Commercial paper • 3 1-month 4 3-month 5 6-month Finance paper, directly placed 4. 6 1-month / 3-month 8 6-month Bankers acceptances ' 6 9 3-month 10 6-month Certificates of deposit, secondary market 11 1-month 12 3-month 13 6-month 14 Eurodollar deposits,, 3-month 8 U.S. Treasury bills 5 Secondary market 9 15 3-month 16 6-month 17 1-year Auction average 10 18 3-month 19 6-month 20 1-year 6.66 5.66 7.57 6.20 9.21 6.93 9.02 7.00 8.84 7.00 8.55 7.00 8.45 7.00 8.51 7.00 8.52 7.00 8.47 7.00 8.52 7.00 8.38 7.00 6.74 6.82 6.85 7.58 7.66 7.68 9.11 8.99 8.80 8.87 8.70 8.50 8.66 8.53 8.24 8.47 8.35 8.00 8.61 8.29 7.93 8.42 8.25 7.90 8.53 8.24 7.86 8.61 8.31 7.94 8.67 8.33 7.94 8.66 8.31 7.99 6.61 6.54 6.37 7.44 7.38 7.14 8.99 8.72 8.16 8.76 8.35 7.56 8.54 8.29 7.50 8.33 8.07 7.45 8.40 8.01 7.33 8.21 7.97 7.34 8.40 8.00 7.33 8.45 8.01 7.31 8.43 8.01 7.34 8.28 8.00 7.36 6.75 6.78 7.56 7.60 8.87 8.67 8.59 8.37 8.42 8.08 8.21 7.86 8.15 7.78 8.12 7.77 8.10 7.73 8.19 7.81 8.15 7.77 8.16 7.84 6.75 6.87 7.01 7.07 7.59 7.73 7.91 7.85 9.11 9.09 9.08 9.16 8.83 8.78 8.75 8.85 8.62 8.60 8.45 8.67 8.44 8.39 8.21 8.42 8.65 8.32 8.12 8.39 8.43 8.27 8.09 8.25 8.55 8.26 8.04 8.34 8.67 8.35 8.16 8.40 8.72 8.37 8.15 8.48 8.72 8.33 8.16 8.39 5.78 6.03 6.33 6.67 6.91 7.13 8.11 8.03 7.92 7.75 7.74 7.65 7.64 7.62 7.45 7.69 7.49 7.25 7.63 7.42 7.21 7.63 7.43 7.21 7.61 7.35 7.22 7.65 7.40 7.22 7.60 7.42 7.15 7.68 7.56 7.27 5.82 6.05 6.33 6.68 6.92 7.17 8.12 8.04 7.91 7.72 7.74 7.61 7.63 7.61 7.35 7.65 7.46 7.17 7.64 7.45 7.14 7.63 7.45 n.a. 7.55 7.30 n.a. 7.60 7.41 n.a. 7.62 7.43 7.14 7.77 7.64 n.a. 6.77 7.42 7.68 7.94 8.23 8.39 n.a. 8.59 7.65 8.10 8.26 8.47 8.71 8.85 n.a. 8.96 8.53 8.57 8.55 8.50 8.52 8.49 n.a. 8.45 8.22 8.28 8.26 8.17 8.23 8.19 n.a. 8.15 7.99 7.98 8.02 7.97 8.03 8.01 n.a. 8.00 7.77 7.80 7.80 7.81 7.86 7.87 n.a. 7.90 7.72 7.78 7.77 7.75 7.85 7.84 n.a. 7.90 7.73 7.76 7.76 7.77 7.83 7.85 n.a. 7.91 7.73 7.77 7.77 7.74 7.83 7.84 n.a. 7.90 7.73 7.78 7.74 7.72 7.83 7.82 n.a. 7.88 7.66 7.71 7.72 7.69 7.81 7.78 n.a. 7.85 7.80 7.89 7.90 7.88 7.99 7.93 n.a. 7.98 8.64 8.98 8.58 8.31 8.15 8.03 8.02 8.03 8.02 8.00 7.97 8.12 7.14 8.17 7.63 7.36 7.83 7.68 7.00 7.40 7.23 6.97 7.26 7.26 6.93 7.33 7.22 6.77 7.16 7.14 6.72 7.03 6.98 6.67 7.00 7.04 6.61 6.83 7.00 6.73 7.10 6.99 6.76 7.10 6.96 6.76 7.10 6.97 9.91 9.38 9.68 9.99 10.58 10.18 9.71 9.94 10.24 10.83 9.66 9.26 9.46 9.74 10.18 9.41 9.01 9.23 9.51 9.91 9.34 8.92 9.19 9.44 9.81 9.32 8.89 9.14 9.42 9.81 9.30 8.86 9.11 9.39 9.82 9.31 8.88 9.14 9.40 9.83 9.30 8.86 9.11 9.40 9.81 9.29 8.85 9.12 9.38 9.81 9.28 8.85 9.08 9.36 9.82 9.32 8.88 9.14 9.41 9.85 9.96 10.20 9.79 9.55 9.39 9.28 9.36 9.26 9.29 9.33 9.40 9.54 8.37 3.08 9.23 3.64 9.05 3.45 8.82 3.29 8.85 3.29 8.73 3.39 8.75 3.33 8.67 3.37 8.69 3.33 8.68 3.29 8.75 3.39 8.75 3.31 CAPITAL MARKET RATES 21 22 23 24 25 26 11 28 29 30 31 32 33 34 35 36 3/ 38 U.S. Treasury notes and bonds" Constant maturities 12 1-year 2-year 3-year 5-year 7-year 10-year 20-year 30-year Composite 13 Over 10 years (long-term) State and local notes and bonds Moody's series 14 Aaa Baa Bond Buyer series 15 Corporate bonds Seasoned issues 16 All industries Aaa Aa A Baa A-rated, recently offered utility bonds MEMO: Dividend/price ratio 18 39 Preferred stocks Common stocks 40 1. Weekly, monthly and annual 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 of ten issues: four public utilities, four industrials, one financial, and one transportation. Common stock ratios on the 500 stocks in the price index. NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. For address, see inside front cover. Financial Markets 1.36 STOCK MARKET A25 Selected Statistics 1989 Indicator 1987 1988 1990 1989 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 2 Industrial 3 Transportation 4 Utility 5 Finance 6 Standard & Poor's Corporation (1941-43 = 10)1 161.78 195.31 140.52 74.29 146.48 149.97 180.83 134.09 72.22 127.41 180.13 228.04 174.90 94.33 162.01 175.30 211.81 169.05 84.21 146.82 180.76 216.75 173.47 87.95 154.08 185.15 221.74 179.32 90.40 157.78 192.93 231.32 197.53 92.90 164.86 193.02 230.86 202.02 93.44 165.51 192.49 229.40 190.36 94.67 166.55 188.50 224.38 174.26 94.95 160.89 192.67 230.12 177.25 99.73 155.63 187.96 225.79 173.67 95.69 150.11 287.00 265.88 323.05 313.93 323.73 331.92 346.61 347.33 347.40 340.22 348.57 339.97 7 American Stock Exchange (Aug. 31, 1973 = 50? 316.78 295.08 356.67 349.50 362.73 368.52 379.28 382.75 383.63 371.92 373.87 367.40 188,922 13,832 161,386 9,955 165,568 13,124 171,495 11,699 180,680 13,519 162,501 11,702 171,683 14,538 151,752 12,631 Volume of trading (thousands of shares) 8 New York Stock Exchange 9 American Stock Exchange 182,394 144,389 160,671 13,853'" 12,001' 13,298' 172,420 14,831 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers 3 31,990 32,740 34,320 33,140 34,730 34,360 33,940 35,020 35,110 34,630 34,320 32,640 Free credit balances at brokers4 11 Margin-account 12 Cash-account 4,750 15,640 5,660 16,595 7,040 18,505 5,250 15,965 6,900 19,080 5,420 16,345 5,580 16,015 5,680 15,310 6,000 16,340 5,815 16,345 7,040 18,505 6,755 17,370 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 July 1983, under the revised Regulation T, margin credit at broker-dealers includes credit extended against stocks, convertible bonds, stocks acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds, and subscription issues was discontinued in April 1984. 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 1990 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1989 Account 1987 1988 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. SAIF-insured institutions 1 Assets 2 Mortgages 3 Mortgage-backed securities 4 Contra-assets to mortgage assets 1 . 5 Commercial loans 6 Consumer loans 7 Contra-assets to nonmortgage loans . 8 Cash and investment securities 9 Other 3 1,340,502 1,345,347 1,346,564 721,593 764,513 767,603 769,398 773,386 774,358 772,720 771,716' 770,117' 764,699' 757,718' 753,993 201,828 214,587 213,090 215,203 216,129 216,256 211,325 204,364' 195,308' 188,436' 181,627' 176,541 42,344 23,163 57,902 37,950 33,889 61,922 37,013 32,955 61,981 37,842 32,866 61,402 37,791 32,812 61,710 37,504 33,009 61,869 37,540 33,073 60,769 37,172' 33,198' 61,098' 36,763' 33,026' 60,978' 36,292' 32,925' 60,423' 34,925' 32,562' 59,793' 33,990 32,334 59,4% 1,250,855 Savings capital Borrowed money FHLBB Other Other Net worth 1,338,576 1,331,940' 1 , 3 1 8 , l l ? 1,301,059' 1,288,722' 1,279,067 3,467 3,056 2,923 3,074 2,899 2,918 3,192 3,203' 3,167' 3,12C 3,106' 3,202 169,717 122,462 186,986 129,610 177,178 126,243 177,094 125,455 175,841 126,065 174,333 127,161 175,222 126,200 175,135' 126,803' 171,565' 127,055' 169,582' 124,415' 172,612' 122,440' 172,333 121,561 1,350,500 1,339,115 1,340,502 1,345,347 1,346,564 957,358 305,675 140,089 165,586 31,749 58,962 956,663 312,988 146,007 166,981 29,593 57,113 954,495 318,671 148,000 170,671 31,629 56,068 955,566 318,367 146,520 171,847 33,585 54,5% 10 Liabilities and net worth . 1,250,855 11 12 13 14 15 16 1,350,500 1,339,115 932,616 249,917 116,363 133,554 21,941 46,382 971,700 299,400 134,168 165,232 24,216 55,185 1,338,576 1,331,94c 1,318,118' 1,301,059' 1,288,722' 1,279,067 960,073 312,093 144,217 167,876 29,892 52,741 963,158 301,572' 141,875 159,697' 31,881' 50,907' 960,344 289,634' 138,331 151,303' 33,807 49,93C 958,911' 281,474 133,633 147,841 29,899' 46,685' 948,512' 275,977' 130,514 145,463' 30.96C 48,345' 946,668 268,462 127,671 140,791 31,991 47,177 SAIF-insured federal savings banks 17 Assets 284,270 425,983 432,675 443,167 455,143 469,939 495,739 507,020 504,187 501,128 502,589 18 Mortgages 19 Mortgage-backed securities 20 Contra-assets to mortgage assets 1 . 21 Commercial loans 22 Consumer loans 23 Contra-assets to nonmortgage loans 2 . 24 Finance leases plus interest 25 Cash and investment . . . 26 Other 161,926 227,869 238,415 241,076 249,940 257,187 276,613 285,072 285,503 283,188 283,674 45,826 64,957 65,896 68,086 69,964 73,%3 73,943 74,341 72,082 72,438 72,318 9,100 6,504 17,696 13,140 16,731 24,222 12,685 16,320 25,977 12,8% 16,313 26,0% 13,049 16,497 26,768 13,227 16,934 27,957 13,662 18,014 28,157 13,972 18,279 28,9% 13,859 18,169 28,985 13,821 18,195 28,766 13,492 18,301 28,326 678 889 857 977 863 888 976 980 987 1,029 1,051 591 35,347 24,069 880 61,029 35,428 946 57,986 34,664 1,011 60,272 34,964 1,047 61,278 37,333 1,072 62,002 38,021 1,083 65,778 39,644 1,088 66,068 40,340 1,075 65,109 40,534 1,092 64,232 40,680 1,087 65,277 40,756 27 Liabilities and net worth . 284,270 425,983 432,675 443,167 455,143 469,939 495,739 507,020 504,187 501,128 502,589 28 29 30 31 32 33 203,196 60,716 29,617 31,099 5,324 15,034 298,197 99,286 46,265 53,021 8,075 20,235 301,770 102,902 48,951 53,951 8,884 22,700 307,580 107,179 51,532 55,647 8,649 23,090 315,725 110,004 53,519 56,485 9,306 23,404 324,369 114,854 55,463 59,391 10,174 23,926 342,145 121,895 58,505 63,390 9,825 25,677 352,547 121,195 59,781 61,414 10,697 26,266 352,099 117,970 59,189 58,781 11,443 26,369 353,461 115,628 57,941 57,687 9,904 26,134 355,903 114,232 57,793 56,439 10,298 26,126 Savings capital Borrowed money FHLBB Other Other Net worth n.a. Financial Markets A27 1.37—Continued 1989 Account 1987 1988 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Credit unions 4 34 Total assets/liabilities and capital 174,593 176,270 178,175 177,417 178,812 180,664 179,029 180,035 181,812 181,527 182,856 35 36 114,566 60,027 115,543 60,727 117,555 60,620 115,416 62,001 116,705 62,107 117,632 63,032 117,475 61,554 117,463 62,572 118,746 63,066 118,887 62,640 119,682 63,174 113,191 73,766 39,425 159,010 104,431 54,579 113,880 73,917 39,963 161,073 105,262 55,811 114,572 74,395 40,177 164,322 107,368 56,954 115,249 75,003 40,246 161,388 105,208 56,180 116,947 76,052 40,895 162,134 105,787 56,347 119,101 77,729 41,372 164,415 106,984 57,431 119,720 78,472 41,248 162,405 106,266 56,139 120,577 78,946 41,631 162,754 106,038 56,716 122,522 80,548 41,874 164,050 106,633 57,417 122,997 80,570 42,427 164,695 107,588 57,107 122,899 80,601 42,298 165,533 108,319 57,214 Federal State 37 Loans outstanding Federal 38 39 State 40 Savings Federal 41 42 State n.a. 1 I t Life insurance companies 43 Assets 44 45 46 47 48 49 50 51 52 53 54 Securities Government.. United States 5 State and local Foreign 6 Business Bonds Stocks Mortgages Real estate Policy loans Other assets 1,044,459 1,157,140 1,186,208 1,199,125 1,209,242 1,221,332 1,232,195 1,247,341 1,257,045 1,266,773 1,276,181 84,426 57,078 10,681 16,667 n.a. 472,684 n.a. 203,545 34,172 53,626 89,586 84,051 58,564 9,136 16,351 n.a/ 556,043 n.a/ 232,863 37,371 54,236 93,358 84,190 58,509 8,817 16,864 678,541 571,365 107,176 233,556 37,603 54,738 97,580 84,485 58,417 8,860 17,208 687,777 579,232 108,545 234,632 37,842 54,921 99,468 82,873 57,127 8,911 16,835 697,703 587,889 109,814 235,312 37,976 55,201 100,173 83,847 57,790 8,953 17,104 706,960 595,500 111,460 236,651 38,598 55,525 99,751 84,564 57,817 9,036 17,711 714,398 601,786 112,612 237,444 38,190 55,746 101,853 84,438 57,698 9,061 17,679 726,599 606,686 119,913 237,865 38,622 55,812 104,005 83,225 56,978 9,002 17,245 735,441 614,585 120,856 238,944 38,822 56,077 104,536 82,867 56,684 9,037 17,146 742,537 621,856 120,681 240,189 38,942 56,403 105,835 83,727 57,726 9,019 16,982 748,075 628,695 119,380 242,391 39,343 56,727 105,918 1. Contra-assets are credit-balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels. Contra-assets to mortgage loans, contracts, and pass-through securities include loans in process, unearned discounts and deferred loan fees, valuation allowances for mortgages "held for sale," and specific reserves and other valuation allowances. 2. Contra-assets are credit-balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels. Contra-assets to nonmortgage loans include loans in process, unearned discounts and deferred loan fees, and specific reserves and valuation allowances. 3. Holding of stock in Federal Home Loan Bank and Finance leases plus interest are included in "Other" (line 9). 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. n.a. NOTE. FSLIC-insured institutions: Estimates by the FHLBB for all institutions insured by the FSLIC and based on the FHLBB thrift Financial Report. FSLIC-insured federal savings banks: Estimates by the FHLBB for federal savings banks insured by the FSLIC and based on the FHLBB thrift Financial Report. 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." As of June 1989 Savings bank data are no longer available. A28 D o m e s t i c F i n a n c i a l Statistics • April 1990 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Type of account or operation U.S. budget1 1 Receipts, total 2 On-budget 3 Off-budget 4 Outlays, total 5 On-budget 6 Off-budget 7 Surplus, or deficit ( - ) , total 8 On-budget 9 Off-budget 10 11 12 Source of financing (total) Borrowing from the public Operating cash (decrease, or increase (-)),2 Other Fiscal year 1987 Fiscal year 1988r Fiscal year 1989 1989 1990 Aug. Sept. Oct. Nov. Dec. 76,161 57,156 19,004 98,310 79,218 19,092 -22,150 -22,062 -88 99,233 75,711 23,522 105,299 86,548 18,750 -6,066 -10,837 4,771 68,426 50,122 18,304 94,515 75,096 19,419 -26,089 -24,974 -1,115 71,213 51,989 19,223 100,172 80,794 19,378 -28,959 -28,804 -155 89,130 69,052 20,077 103,770 91,249 12,522 -14,641 -22,196 7,556 Jan. 854,143 640,741 213,402 1,003,804 809,972 193,832 -149,661 -169,231 19,570 908,166 666,675 241,491 1,063,318 860,626 202,691 -155,151 -193,951 38,800 990,789 727,123 263,666 1,142,777 931,556 211,221 -151,988 -204,433 52,445 99,542 74,247 25,295 89,622 71,082 18,540 9,920 3,165 6,755 151,717 166,139 140,156 35,854 6,618 36,690 19,790 6,821 15,841 -5,052 2,996 -7,963 -3,025 3,425 8,407 -3,235 -10,469 -15,589 14,977 -2,513 -8,088 21,772 -12,603 -5,221 13,040 -18,116 -7,644 36,436 9,120 27,316 44,398 13,024 31,375 40,973 13,452 27,521 25,384 6,652 18,732 40,973 13,452 27,521 43,486 13,124 30,362 21,715 5,501 16,214 26,935 6,217 20,718 45,051 13,153 31,899 MEMO 13 Treasury operating balance (level, end of period) 14 Federal Reserve Banks 15 Tax and loan accounts 1. In accordance with the Balanced Budget and Emergency Deficit Control Act of 1985, all former off-budget entries are now presented on-budget. The Federal Financing Bank (FFB) activities are now shown as separate accounts under the agencies that use the FFB to finance their programs. The act has also moved two social security trust funds (Federal old-age survivors insurance and Federal disability insurance trust funds) off-budget. 2. Includes 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 OUTLAYS 1 Millions of dollars Calendar year Source or type Fiscal year 1988 Fiscal year 1989 1988 1990 1989 HI H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 All sources 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 2 Self-employment taxes and 11 contributions 12 Unemployment insurance 13 Other net receipts 14 15 16 17 Excise taxes Customs deposits Estate and gift taxes Miscellaneous receipts 908,166 990,789 475,724 449,394 527,574 470,354 71,213 89,130 99,542 401,181 341,435 33 132,199 72,487 445,690 361,386 32 154,839 70,567 207,659 169,300 28 101,614 63,283 200,300 179,600 4 29,880 9,186 233,572 174,230 28 121,563 62,251 218,661 193,2% 3 33,303 7,943 34,448 34,439 0 1,459 1,450 37,385 35,443 0 2,717 775 56,044 34,172 0 22,389 517 109,683 15,487 117,015 13,723 58,002 8,706 56,409 7,250 61,585 7,259 52,269 6,842 3,381 996 19,731 853 4,277 1,159 334,335 359,416 181,058 157,603 200,127 162,574 26,791 25,805 32,863 305,093 332,859 164,412 144,983 184,569 152,407 24,303 25,266 31,767 17,691 24,584 4,659 18,405 22,011 4,547 14,839 14,363 2,284 3,032 10,359 2,262 16,371 13,279 2,277 1,947 7,909 2,260 140 2,088 401 0 161 377 1,213 742 354 35,540 15,411 7,594 19,909 34,386 16,334 8,745 22,927 16,440 7,522 3,863 9,950 19,299 8,107 4,054 10,873 16,814 7,918 4,583 10,235 16,844 8,667 4,451 13,728 2,939 1,421 693 2,535 2,763 1,293 850 2,156 2,624 1,440 805 2,648 1,063,318 1,142,777 512,856 552,801 565,524 586,4% 100,172 103,770 89,622 290,361 10,471 10,841 2,297 14,625 17,210 303,551 9,596 12,891 3,745 16,084 16,948 143,080 7,150 5,361 555 6,776 7,872 150,496 2,636 5,852 1,966 9,144 6,911 148,098 6,605 6,238 2,221 7,022 9,619 149,613 5,981 7,091 564 9,209 4,132 25,234 495 1,155 -170 2,064 1,967 28,570 1,306 1,202 160 1,319 1,097 21,978 1,248 1,058 -460 1,133 1,113 5,951 12,700 2,765 19,836 14,922 2,690 4,129 13,035 1,833 22,200 14,982 4,879 2,030 2,584 1,100 1,107 2,515 841 -2,286 2,409 848 OUTLAYS 18 All types 19 20 21 22 23 24 National defense International affairs General science, space, and technology Energy Natural resources and environment Agriculture 25 26 27 28 Commerce and housing credit Transportation Community and regional development Education, training, employment, and social services 18,828 27,272 5,294 27,81<y 27,623 5,755 31,938 35,697 15,451 16,152 18,083 18,663 3,194 3,151 3,4% 29 Health 30 Social security and medicare 31 Income security 44,490 297,828 129,332 48,391 317,506 136,765 22,643 135,322 65,555 23,360 149,017 64,978 24,078 162,195 70,937 25,339 162,322 67,950 4,136 27,337 11,456 4,435 27,166 13,217 4,663 28,228 12,010 32 33 34 35 36 37 29,406 8,436 9,518 1,816 151,748 -36,967 30,066 9,396 8,940 n.a. 169,314 -37,212 13,241 4,379 4,337 448 76,098 -17,766 15,797 4,351 5,137 0 78,317 -18,771 14,891 4,801 3,858 0 86,009 -18,131 14,864 4,963 4,753 n.a. 87,927 -18,935 2,627 771 1,437 n.a. 15,526 -2,771 3,664 %8 745 n.a. 14,579 -2,271 1,086 811 972 n.a. 14,281 -2,967 Veterans benefits and services Administration of justice General government General-purpose fiscal assistance Net interest 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 1990. A30 DomesticNonfinancialStatistics • April 1990 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION B i l l i o n s o f dollars 1987 1989 1988 Item Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 2,435.2 2,493.2 2,555.1 2,614.6 2,707.3 2,763.6 2,824.0 2,881.1 2,975.5 2 Public debt securities 3 Held by public 4 Held by agencies 2,431.7 1,954.1 477.6 2,487.6 1,996.7 490.8 2,547.7 2,013.4 534.2 2,602.2 2,051.7 550.4 2,684.4 2,095.2 589.2 2,740.9 2,133.4 607.5 2,799.9 2,142.1 657.8 2,857.4 2,180.7 676.7 2,953.0 n.a. n.a. 3.5 2.7 .8 5.6 5.1 .6 7.4 7.0 .5 12.4 12.2 .2 22.9 22.6 .3 22.7 22.3 .4 24.0 23.6 .5 23.7 23.5 .1 2,417.4 2,472.6 2,532.2 2,586.9 2,669.1 2,725.6 2,784.6 2,829.8 2,921.7 2,725.5 .2 2,784.3 .2 2,829.5 .3 2,921.4 .3 2,800.0 2,800.0 2,870.0 3,122.7 5 Agency securities 6 Held by public 7 Held by agencies 8 Debt subject to statutory limit 9 Public debt securities 10 Other debt 1 2,416.3 1.1 2,472.1 .5 2,532.1 .1 2,586.7 .1 2,668.9 .2 11 MEMO: Statutory debt limit 2,800.0 2,800.0 2,800.0 2,800.0 2,800.0 1. Includes guaranteed debt of Treasury and other federal agencies, specified participation certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY SOURCES. Treasury Bulletin and Monthly United States. Statement n.a. n.a. n.a. of the Public Debt of the Types and Ownership Billions of dollars, end of period 1987 Type and holder 1 Total gross public debt 2 3 4 5 6 7 8 9 10 11 12 13 By type Interest-bearing debt Marketable Bills Notes Bonds Nonmarketable 1 State and local government series Foreign issues Government Public Savings bonds and n o t e s . . ^ Government account series 14 Non-interest-bearing debt 15 16 17 18 19 20 21 22 23 24 25 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 5 Other miscellaneous investors Qi Q2 Q3 Q4 2,214.8 2,431.7 2,684.4 2,953.0 2,740.9 2,799.9 2,857.4 2,953.0 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 2,428.9 1,724.7 389.5 1,037.9 282.5 704.2 139.3 4.0 4.0 .0 99.2 461.3 2,663.1 1,821.3 414.0 1,083.6 308.9 841.8 151.5 6.6 6.6 .0 107.6 575.6 2,931.8 1.945.4 430.6 1.151.5 348.2 986.4 163.3 6.8 6.8 115.7 695.6 2,738.3 1,871.7 417.0 1,121.4 318.4 866.6 154.4 6.7 6.7 .0 110.4 594.7 2,797.4 1,877.3 397.1 1,137.2 328.0 920.1 156.0 6.2 6.2 .0 112.3 645.2 2,836.3 1,892.8 406.6 1,133.2 338.0 943.5 158.6 6.8 6.8 .0 114.0 663.7 2,931.8 1,945.4 430.6 1,151.5 348.2 986.4 163.3 6.8 6.8 .0 115.7 695.6 2.8 2.8 21.3 21.2 2.6 2.5 21.1 21.2 403.1 211.3 1,602.0 203.5 28.0 105.6 68.8 262.8 477.6 222.6 1,745.2 201.5 14.6 104.9 84.6 284.6 589.2 238.4 1,852.8 193.8 111.2 86.5 313.6 607.5 228.6 1,900.2 200.9 13.0 112.5 89.2 320.4 657.8 231.8 1,905.4 206.7 11.6 n.a. 90.7 322.1 676.7 220.6 1,954.6 n.a. 12.4 n.a. n.a. n.a. 92.3 70.4 263.4 506.6 101.1 70.2 299.7 584.0 109.6 77.0 362.1 587.2 112.2 82.9 375.6 593.5 114.0 89.1 367.9 n.a. 115.7 n.a. 393.5 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. 1989 18.8 .0 n.a. 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 and the Treasury Bulletin. Federal Finance A31 Transactions1 1.42 U.S. GOVERNMENT SECURITIES DEALERS Par value; averages of daily figures, in millions of dollars 1989 Item 1 7 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 Immediate delivery 2 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 1987 1988 1989 1990 Nov/ Dec/ Jan. Dec. 27' Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 110,050 101,623 112,715 115,662 84,153 118,584 72,702 72,473 102,219 128,457 123,690 133,945 37,924 3,271 27,918 24,014 16,923 29,387 3,426 27,777 24,939 16,093 30,733 3,182 33,662 28,679 16,458 32,611 2,811 38,423 26,189 15,628 26,756 2,559 25,884 18,240 10,714 32,817 3,438 32,925 31,345 18,059 24,356 2,193 22,219 14,336 9,597 23,913 3,764 20,322 15,805 8,669 26,939 3,382 27,628 29,015 15,255 41,663 3,283 34,180 32,612 16,718 30,796 2,568 36,446 33,252 20,628 35,767 4,216 37,091 34,744 22,126 2,936 2,761 3,287 3,498 2,545 3,141 2,952 1,998 2,765 3,138 3,149 3,890 61,539 45,575 18,084 4,112 2,965 17,135 59,844 39,019 15,903 3,369 2,316 22,927 66,417 43,011 18,623 2,798 2,222 31,805 66,532 45,632 20,012 2,184 1,998 31,188 45,753 35,854 17,939 1,597 1,635 32,267 71,886 43,557 19,950 2,283 1,843 37,311 38,310 31,439 13,428 1,052 1,226 31,735 39,910 30,565 12,136 1,487 1,854 37,538 60,945 38,509 22,046 2,083 1,960 36,227 77,400 47,918 24,078 2,667 2,079 40,660 76,535 44,006 18,123 2,476 1,744 35,886 81,668 48,387 18,496 2,142 1,550 35,765 3,233 8,963 5 2,627 9,695 1 2,525 9,603 8 1,898 9,313 7 2,523 5,836 3 2,684 12,345 14 1,788 6,769 2 1,014 6,353 0 1,940 9,451 7 4,274 11,507 32 2,784 12,746 24 2,464 16,908 4 2,029 9,290 2,095 8,008 2,126 9,484 2,009 10,894 1,821 9,520 1,786 11,594 1,672 5,710 817 7,432 2,207 15,040 1,022 13,816 2,770 10,104 1,358 8,710 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 1990 1989' 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 1990 1.43 U.S. GOVERNMENT SECURITIES DEALERS Averages of dailyfigures,in millions of dollars Positions and Financing1 1989 Item 1987' 1988' 1990 1990 1989' Nov.' Dec.' Jan. Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Positions 1 Net immediate 2 U.S. Treasury securities -6,216 -22,765 -5,948 17,139 25,224 18,282 20,189 18,684 21,044 16,817 17,217 2 3 4 3 6 Bills Other within 1 year 1-5 years 5—10 years Over 10 years 4,317 1,557 649 -6,564 -6,174 2,238 -2,236 -3,020 -9,663 -10,084 7,831 -1,528 2,334 -8,133 -6,452 22,515 -1,276 10,532 -8,992 -5,640 26,823 -1,171 12,398 -7,230 -5,596 24,925 -836 13,976 -10,477 -9,305 22,282 -2,031 15,108 -8,682 -6,488 24,690 -877 14,012 -10,256 -8,884 25,198 -321 13,704 -8,744 -8,794 25,767 -476 12,142 -11,182 -9,435 25,234 -1,007 15,787 -11,953 -10,845 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 31,911 8,188 3,660 7,496 28,230 7,300 2,486 6,152 31,914 6,674 2,089 8,243 35,453 7,003 1,925 7,650 35,928 6,884 1,736 8,152 35,551 5,972 1,703 7,663 32,315 5,896 1,533 7,599 35,441 5,874 1,542 7,067 39,301 5,985 1,925 7,509 37,300 6,063 1,781 7,611 33,184 5,993 1,692 8,286 -3,373 5,988 -95 -2,210 6,224 0 -4,599 -2,919 14 -9,455 -11,364 25 -10,135 -11,022 30 -9,896 -6,388 27 -6,730 -7,693 47 -6,365 -7,244 46 -9,387 -7,631 -7 -12,771 -6,405 23 -12,323 -4,241 31 -1,211 -18,817 346 -16,348 -546 -16,878 -109 -17,372 -145 -16,522 -2,094 -13,814 -2,405 -10,672 -1,226 -14,569 -1,688 -18,644 -3,273 -15,322 -2,194 -10,056 11 12 13 14 15 Financing 3 Reverse repurchase agreements 4 Overnight and continuing Term Repurchase agreements 18 Overnight and continuing 19 Term 16 17 126,709 148,288 136,327 177,477 157,955 225,126 153,134 242,219 143,024 219,169 150,660 216,646 141,007 195,588 143,920 214,139 150,622 209,934 154,459 223,620 159,429 231,526 170,763 121,270 172,695 137,056 219,083 179,555 227,653 218,441 233,258 179,487 240,341 179,484 231,227 151,466 233,091 174,758 242,684 176,502 247,370 189,192 243,687 194,294 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 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES A33 Debt Outstanding Millions of dollars, end of period 1989 Agency 1 1986 Federal and federally sponsored agencies 2 Federal agencies 3 Defense Department 4 Export-Import Bank 2,3 5 Federal Housing Administration Government National Mortgage Association participation 6 certificates 5 Postal Service 7 8 Tennessee Valley Authority United States Railway Association 6 9 12 13 14 15 16 17 18 Federally sponsored agencies 7 Federal Home Loan Banks Federal Home Loan Mortgage Corporation Federal National Mortgage Association Farm Credit Banks Student Loan Marketing Association Financing Corporation Farm Credit Financial Assistance Corporation Resolution Funding Corporation 19 Federal Financing Bank debt 13 10 11 1988 1987 1989 Aug. Sept. Oct. Nov. Dec. 307,361 341,386 381,498 411,805 411,979 408,591 409,113 412,234 411,805 36,958 33 14,211 138 37,981 13 11,978 183 35,668 8 11,033 150 35,664 7 10,985 328 36,453 7 11,014 255 36,584 7 10,990 295 36,378 7 10,990 301 35,855 7 10,990 308 35,664 7 10,985 328 2,165 3,104 17,222 85 1,615 6,103 18,089 0 0 6,142 18,335 0 0 6,445 17,899 0 0 6,445 18,732 0 0 6,445 18,847 0 0 6,445 18,635 0 0 6,445 18,105 0 0 6,445 17,899 0 270,553 88,752 13,589 93,563 62,478 12,171 0 0 0 303,405 115,725 17,645 97,057 55,275 16,503 1,200 0 0 345,830 135,834 22,797 105,459 53,127 22,073 5,850 690 0 376,141 136,087 26,882 116,064 54,864 28,705 8,170 847 4,522 375,526 149,269 27,165 110,155 53,511 27,079 7,500 847 0 372,007 143,578 26,738 111,507 54,015 27,126 8,170 847 0 372,735 140,854 25,097 111,776 54,029 27,440 8,170 847 4,522 376,379 138,229 27,018 115,774 54,131 27,688 8,170 847 4,522 376.141 136,087 26,882 116,064 54,864 28,705 8,170 847 4,522 157,510 152,417 142,850 134,873 137,690 136,092 135,841 135,213 134,873 14,205 2,854 4,970 15,797 85 11,972 5,853 4,940 16,709 0 11,027 5,892 4,910 16,955 0 10,979 6,195 4,880 16,519 0 11,008 6,195 4,910 17,352 0 10,984 6,195 4,910 17,467 0 10,984 6,195 4,880 17,255 0 10,984 6,195 4,880 16,725 0 10,979 6,195 4,880 16,519 0 65,374 21,680 32,545 59,674 21,191 32,078 58,496 19,246 26,324 53,311 19,265 23,724 54,611 19,270 24,344 53,311 19,275 23,950 53,311 19,233 23,983 53,311 19,249 23,869 53,311 19,265 23,724 MEMO Lending to federal and federally sponsored 70 Export-Import Bank 21 Postal Service 7.2 Student Loan Marketing Association 2 3 Tennessee Valley Authority 24 United States Railway Association 76 27 Other Lending14 Farmers Home Administration Rural Electrification Administration Other 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 deben1 tures. Some data are estimated. 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, shown in line 17. 9. Before late 1981, the Association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 21. 10. The Financing Corporation, established in August 1987 to recapitalize the Federal Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 11. The Farm Credit Financial Assistance Corporation (established in January 1988 to provide assistance to the Farm Credit System) undertook its first borrowing in July 1988. 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 13. 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. 14. 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. A34 DomesticNonfinancialStatistics • April 1990 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1989 Type of issue or issuer, or use 1987 1 All issues, new and refunding 1 1990 1989 1988 June July Aug. Sept. Oct. Nov. Dec.' Jan. 102,407 114,522 113,646r 13,775 8,735 9,824 10,818 9,075 9,564 13,636 5,876 Type of issue 2 General obligation 3 Revenue 30,589 71,818 30,312 84,210 35,774' 77,873' 4,960 8,815 3,789 4,946 2,199 7,625 3,500 7,318 3,273 5,802 3,328 6,237 2,158 11,478 2,231 3,645 Type of issuer 4 State 5 Special district and statutory authority 6 Municipalities, counties, and townships 10,102 65,460 26,845 8,830 74,409 31,193 l l ^ 71,022' 30,805' 1,989 8,033 3,753 970 4,868 2,897 694 7,027 2,103 764 7,567 2,487 1,330 4,770 2,975 930 5,473 3,161 911 9,391 3,334 709 3,975 1,192 7 Issues for new capital, total 56,789 79,665 84,062' 10,078 6,816 6,612 7,470 7,266 7,777 10,195 5,578 Use of proceeds Education Transportation Utilities and conservation Social welfare Industrial aid Other purposes 9,524 3,677 7,912 11,106 7,474 18,020 15,021 6,825 8,4% 19,027 5,624 24,672 15,133' 6,870' 11,427' 16,703' 5,036' 28,894' 2,678 576 1,058 1,509 329 3,928 998 500 551 1,632 440 2,695 1,302 556 813 1,553 447 1,941 1,639 976 622 1,242 381 2,610 1,006 280 718 1,803 345 3,114 1,058 675 1,137 1,441 444 3,022 1,495 645 2,219 2,518 1,119 2,199 1,173 84 796 667 305 2,553 8 9 10 11 12 13 1. Par amounts of long-term issues based on date of sale. 2. Includes school districts beginning 1986. 1.46 NEW SECURITY ISSUES SOURCES. Securities Data/Bond Buyer Municipal Data Base beginning 1986. Public Securities Association for earlier data. U.S. Corporations Millions of dollars 1989 Type of issue or issuer, or use 1987 1988 1989 May June July Aug. Sept. Oct. Nov. Dec. 1 AU issues1 392,339' 409,925' 231,206 21,571' 24,750' 18,030' 14,930' 14,629' 24,644' 20,522' 20,945 2 Bonds2 325,838' 352,124' 199,930 19,762' 21,922' 12,976' 12,895' 12,356' 20,964' 16,282' 17,000 Type of offering 3 Public, domestic 4 Private placement, domestic 3 5. Sold abroad 209,455' 92,070 24,308 201,246' 127,700 23,178 177,438 n.a. 22,492 17,856' n.a. 1,906 19,014' n.a. 2,908 11,556' n.a. 1,420 12,079' n.a. 816 11,156' n.a. 1,200 19,856' n.a. 1,108 14,208' n.a. 2,074' 15,500 n.a. 1,500 61,266' 49,773' 11,974 23,004 7,340 172,474' 70,595' 62,070' 10,076' 19,318 5,951 184,114' 42,049 15,945 3,586 13,619 3,859 120,875 7,815' 2,162 150 385 122 9,128 3,502' 1,649 480 2,936 4 13,352' 2,850' 1,331 0 1,346' 300 7,149' 2,670' 1,090 423 705 358 7,649' 2,247' 1,393 30' 1,059' 308 7,320' 3,646' 1,830 906' 1,738 632 12,213' 3,435' 1,253' 312' 977' 812 9,493' 3,992 347 1,083 1,090 577 9,911 12 Stocks2 66,508 57,802 32,225 1,809 2,828 5,054 2,035 2,273 3,680 4,240 3,945 Type 13 Preferred 14 Common 15 Private placement 3 10,123 43,225 13,157 6,544 35,911 15,346 6,194 26,030 n.a. 306 1,503 n.a. 335 2,493 n.a. 920 4,134 n.a. 1,013 1,023 n.a. 519 1,754 n.a. 570 3,110 n.a. 160 4,080 n.a. 626 3,319 n.a. 13,880 12,888 2,439 4,322 1,458 31,521 7,608 8,449 1,535 1,898 515 37,798 5,081 4,428 532 2,297 471 19,250 299 115 39 192 280 884 630 512 0 125 25 1,536 593 438 0 25 29 3,%9 393 343 0 137 20 1,020 193 155 0 709 0 1,195 190 728 50 465 0 2,214 378 498 0 211 0 3,153 279 1,045 0 244 0 2,377 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. Before 1987, annual totals include underwritten issues only. SOURCES. IDD Information Services, Inc., the Board of Governors of the Federal Reserve System, and before 1989, the U.S. Securities and Exchange Commission. Securities 1.47 OPEN-END INVESTMENT COMPANIES Market and Corporate Finance A35 Net Sales and Asset Position Millions of dollars 1989 Item 1988 1989 May June July Aug. Sept. Oct. Nov/ Dec. INVESTMENT COMPANIES 1 1 Sales of own shares2 271,237 306,445 24,661 25,817 25,330 26,800 23,911 23,872 24,673 30,982 2 Redemptions of own shares 3 3 Net sales 267,451 3,786 272,165 34,280 22,483 2,178 22,562 3,255 20,053 5,277 22,262 4,538 21,499 2,412 21,702 2,170 19,573 5,100 24,967 6,015 4 Assets4 472,297 553,875 509,781 515,814 535,910 539,553 539,814 534,922 549,892 553,875 45,090 427,207 44,792 509,083 49,177 460,604 48,428 467,386 47,888 488,022 47,209 492,344 47,163 492,651 46,146 488,776 47,875 502,017 44,792 509,083 5 Cash position 6 Other 5 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. SOURCE. Survey of Current Business (Department of Commerce). 1. Data on sales and redemptions exclude money market mutual funds but include limited maturity municipal bond funds. Data on asset positions exclude both money market mutual funds and limited maturity municipal bond 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. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1988 Account 1987 1988 1989 1989 QL Q2 Q3 Q4 QL Q2 Q3 Q4 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 298.7 266.7 124.7 142.0 98.7 43.3 328.6 306.8 137.9 168.9 110.4 58.5 298.2 287.3 129.0 158.2 122.1 36.2 318.1 288.8 129.0 159.9 105.7 54.2 325.3 305.3 138.4 166.9 108.6 58.3 330.9 314.4 141.2 173.2 112.2 61.1 340.2 318.8 143.2 175.6 115.2 60.4 316.3 318.0 144.4 173.6 118.5 55.1 307.8 296.0 134.9 161.1 120.9 40.2 295.2 275.0 122.6 152.4 123.3 29.1 n.a. n.a. n.a. n.a. 125.6 n.a. 7 Inventory valuation 8 Capital consumption adjustment -18.9 50.9 -25.0 46.8 n.a. 29.4 -20.7 49.9 -28.8 48.9 -30.4 46.9 -20.1 41.5 -38.3 36.6 -21.0 32.3 n.a. 26.5 n.a. 22.4 Source. Survey of Current Business (Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1988 Industry 1989 1989 1990 19901 Q2 Q3 Q4 Ql Q2 Q3 Q41 Ql 1 430.17 475.18 505.49 427.54 435.61 442.11 459.47 470.86 484.93 485.45 503.46 Manufacturing 77.75 86.79 83.05 100.11 83.22 106.94 77.38 85.24 79.15 89.62 80.56 92.76 81.26 93.96 82.97 98.57 85.66 102.00 82.30 105.90 86.84 106.92 Nonmanufacturing 12.57 12.50 12.01 13.15 12.53 12.38 12.15 12.70 12.59 12.58 12.23 7.21 7.00 7.15 8.12 9.50 7.62 7.78 10.60 8.03 6.99 6.91 7.05 6.84 8.09 7.08 7.45 7.69 6.89 8.02 7.04 8.07 7.37 9.49 7.40 8.16 12.48 7.89 8.93 8.99 7.13 7.91 10.12 8.58 31.75 14.63 185.32 33.96 16.10 204.22 34.32 15.82 226.78 31.31 14.49 185.21 32.07 14.61 185.61 33.69 15.04 185.65 33.69 17.12 198.15 35.34 16.67 200.36 33.73 15.84 206.59 33.07 14.79 211.76 35.47 16.42 218.97 1 7 3 4 Transportation 5 6 7 1988 Air Other Public utilities 8 9 10 •Trade and services are no longer being reported separately. They are included in Commercial and other, line 10. 1. Anticipated by business. 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). A36 DomesticNonfinancialStatistics • April 1990 Assets and Liabilities1 1.51 DOMESTIC FINANCE COMPANIES Billions of dollars, end of period 1988 Account 1985 1986 1989 1987 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ASSETS Accounts receivable, gross 2 Consumer Business Real estate Total 111.9 157.5 28.0 297.4 134.7 173.4 32.6 340.6 141.1 207.4 39.5 388.1 141.5 219.7 41.4 402.6 144.4 224.0 42.5 410.9 146.3 223.3 43.1 412.7 146.2 236.5 43.5 426.2 140.2 243.1 45.4 428.7 144.9 250.5 47.4 442.8 147.2 248.8 48.9 444.9 Less: 5 Reserves for unearned income 6 Reserves for losses 39.2 4.9 41.5 5.8 45.3 6.8 46.8 6.8 46.3 6.8 48.4 7.1 50.0 7.3 50.9 7.4 52.1 7.5 53.7 7.8 7 Accounts receivable, net 8 All other 253.3 45.3 293.3 58.6 336.0 58.3 348.9 60.1 357.8 70.5 357.3 68.7 368.9 72.4 370.4 75.1 383.2 81.5 383.5 83.1 9 Total assets 298.6 351.9 394.2 409.1 428.3 426.0 441.3 445.5 464.6 466.6 10 Bank loans 11 Commercial paper 18.0 99.2 18.6 117.8 16.4 128.4 14.9 125.2 13.3 131.6 11.9 129.4 15.4 142.0 11.6 147.9 12.2 149.2 12.3 147.4 12 Other short-term 13 Long-term 14 Due to parent 15 Not elsewhere classified 16 All other liabilities 17 Capital, surplus, and undivided profits 12.7 94.4 n.a. n.a. 41.5 32.8 17.5 117.5 n.a. n.a. 44.1 36.4 28.0 137.1 n.a. n.a. 52.8 31.5 n.a. n.a. 49.0 132.4 56.1 31.5 n.a. n.a. 51.4 139.8 58.7 33.5 n.a. n.a. 51.5 139.3 58.9 34.9 n.a. n.a. 50.6 137.9 59.8 35.6 n.a. n.a. 56.8 134.5 58.1 36.6 n.a. 59.7 141.3 63.5 38.7 n.a. 60.4 146.1 60.4 40.0 298.6 351.9 394.2 409.1 428.3 426.0 441.3 445.5 464.6 466.6 1 2 3 4 LIABILITIES 18 Total liabilities and capital 1. Components may not add to totals because of rounding. 1.52 DOMESTIC FINANCE COMPANIES 2. Excludes pools of securitized assets. Business Credit Outstanding and Net Change1 Millions of dollars, seasonally adjusted Type 1 Total 2 3 4 5 6 7 8 9 10 11 12 13 Retail financing of installment sales Automotive Equipment Pools of securitized assets 2 Wholesale Automotive Equipment All other Pools of securitized assets 2 Leasing Automotive Equipment Pools of securitized assets 2 Loans on commercial accounts receivable and factored commercial accounts receivable All other business credit 1987 1989 July Aug. Sept. Oct. 205,810 234,529 257,762 251,126 253,822 258,851 259,083 257,930 257,762 35,782 25,170 n.a. 36,548 28,298 n.a. 38,534 29,781 698 39,183 28,128 769 39,355 29,039 793 39,258 29,639 755 38,952 29,594 715 38,187 29,568 739 38,534 29,781 698 30,507 5,600 8,342 n.a. 33,300 5,983 9,341 n.a. 34,357 6,945 9,949 33,233 6,244 10,001 33,566 6,497 9,990 37,243 6,602 9,957 35,210 6,843 9,927 33,537 6,933 9,895 34,357 6,945 9,949 21,952 43,335 n.a. 24,673 57,455 n.a. 26,856 67,506 1,247 26,701 64,086 887 26,739 64,186 990 26,865 65,170 948 27,442 66,787 1,199 27,547 67,677 1,093 26,856 67,506 1,247 18,078 17,043 17,796 21,134 18,442 23,447 19,989 21,904 20,098 22,571 19,611 22,804 19,487 22,926 18,892 23,861 18,442 23,447 0 0 0 0 0 0 0 Net change (during period) 14 Total 15 16 17 18 19 20 21 22 23 24 25 26 Retail financing of installment sales Automotive Equipment Pools of securitized assets 2 Wholesale Automotive Equipment All other Pools of securitized assets 2 Leasing Automotive Equipment Pools of securitized assets 2 Loans on commercial accounts receivable and factored commercial accounts receivable All other business credit 33,750 22,662 21,789 1,803 2,697 5,029 232 -1,153 -168 9,767 2,058 n.a. 766 1,384 n.a. 1,988 1,483 -26 141 354 -38 172 911 24 -97 600 -38 -305 -45 -40 -765 -25 24 347 213 -41 7,497 252 1,309 n.a. 2,793 226 999 n.a. 1,057 962 609 0 -788 79 139 0 332 253 -11 0 3,677 104 -32 0 -2,033 242 -30 0 -1,673 90 -32 0 820 11 54 0 2,125 5,156 n.a. 2,721 9,962 n.a. 2,184 8,646 526 187 716 91 38 99 103 126 984 -42 577 1,618 251 105 890 -106 -691 -171 154 2,100 3,486 -282 4,091 646 3,719 687 235 109 667 -487 234 -124 122 -595 934 -450 -414 1. These data also appear in the Board's G.20 (422) release. For address, see inside front cover. 2. Data on pools of securitized assets are not seasonally adjusted. Real Estate 1.53 A37 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1989 Item 1987 1988 1990 1989 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 OTS series 3 8 HUD series 4 137.0 100.5 75.2 27.8 2.26 8.94 150.0 110.5 75.5 9.31 10.17 10.16 9.43 160.8 119.4 75.6 28.3 2.31 9.83 160.6 10.48 9.70 10.22 10.05 9.61 9.55 9.95 9.48 159.6 117.0 74.5 28.1 2.06 9.76 174.5 125.3 73.8 9.18 10.30 10.11 10.22 10.49 9.83 n.a. n.a. 28.0 2.19 8.81 28.6 2.42 10.06 153.1 111.3 73.2 27.3 1.95 9.77 152.8 110.4 73.0 27.1 1.81 9.78 162.7 119.9 74.4 27.9 10.24 10.04 10.11 9.79 10.09 9.72 10.07 9.75 9.94 9.47 9.73 9.21 9.69 9.07 9.72' n.a. 118.6 75.3 28.4 2.14 9.87 2.18 9.70 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 5 10 GNMA securities 6 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 12 FHA/VA-insured 13 Conventional 95,030 21,660 73,370 101,329 19,762 81,567 104,974 19,640 85,335 104,421 19,630 84,791 105,896 19,589 86,307 107,052 19,608 87,444 108,180 19,843 88,337 109,076 19,953 89,123 110,721 20,283 90,438 111,329 20,471 90,858 Mortgage transactions (during period) 14 Purchases 20,531 23,110 22,518 2,091 2,724 2,223 2,267 2,376 2,982 2,214 Mortgage commitments7 15 Contracted (during period) 16 Outstanding (end of period) 25,415 4,886 23,435 2,148 27,409 6,037 2,513 5,648 2,842 5,755 2,328 5,865 2,963 6,548 2,536 6,645 2,495 6,037 1,787 5,619 Mortgage holdings (end of periodf 17 Total 18 FHA/VA 19 Conventional 12,802 686 12,116 15,105 620 14,485 n.a. n.a. n.a. 20,533 585 19,948 21,024 589 20,435 20,650 540 20,110 21,342 588 20,755 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Mortgage transactions (during period) 20 Purchases 21 Sales 76,845 75,082 44,077 39,780 n.a. 73,446 5,720 5,180 7,283 6,650 7,889 8,050 7,884 7,058 n.a. 7,058 n.a. 8,526 n.a. 6,845 Mortgage commitments9 22 Contracted (during period) 71,467 66,026 n.a. 6,608 5,705 7,708 7,555 n.a. n.a. n.a. FEDERAL H O M E LOAN 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. 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. A38 1.54 DomesticNonfinancialStatistics • April 1990 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1988 Type of holder, and type of property 1987 1988 1989 1989 Q4 QL Q2 Q3 Q4" 1 All holders 2,977,293 3,268,285 3,521,337 3,268,285 3,328,824 3,391,259 3,454,053'' 3,521,337 2 1- to 4-family 3 Multifamily 4 Commercial 5 1,959,607 273,954 654,863 88,869 2,189,475 290,355 701,652 86,803 2,383,983 305,746 745,102 86,506 2,189,475 290,355 701,652 86,803 2,230,006 296,139 716,695 85,984 2,281,317 297,860 725,341 86,741 2,331,366r 302,121 733,988 86,578 2,383,983 305,746 745,102 86,506 1,704,560 591,369 276,270 33,330 267,340 14,429 1,874,967 669,160 314,283 34,131 305,242 15,504 1,968,786 757,904 359,182 37,049 344,349 17,324 1,874,967 669,160 314,283 34,131 305,242 15,504 1,905,052 688,662 324,681 34,172 313,941 15,868 1,932,154 715,049 338,872 34,954 324,878 16,345 1,950,634 737,979'' 349,739 36,075 335,296 16,869 1,968,786 757,904 359,182 37,049 344,349 17,324 860,467 602,408 106,359 150,943 757 212,375 13,226 22,524 166,722 9,903 40,349 929,647 678,263 111,302 139,416 666 232,639 15.284 23,562 184,124 9,669 43,521 920,974 675,842 108,421 136,070 641 239,202 13,525 26,506 189,642 9,529 50,707 929,647 678,263 111,302 139,416 666 232,639 15,284 23,562 184,124 9,669 43,521 936,091 682,658 112,507 140,255 671 234,910 12,690 24,636 188,073 9,511 45,389 933,694 684,828 110,009 138,201 656 236,160 12,745 25,103 188,756 9,556 47,251 927,982' 680,572 109,353 137,406 651 235,767r 13,045 25,913 187,208 9,601 48,906r 920,974 675,842 108,421 136,070 641 239,202 13,525 26,506 189,642 9,529 50,707 192,721 444 25 419 43,051 18,169 8,044 6,603 10,235 200,570 26 26 0 42,018 18,347 8,513 5,343 9,815 212,150 24 24 0 41,985 19,083 9,120 4,423 9,359 200,570 26 26 0 42,018 18,347 8,513 5,343 9,815 199,847 26 26 0 41,780 18,347 8,615 5,101 9,717 201,909 24 24 0 40,711 18,391 8,778 3,885 9,657 206,673' 23r 23 0 41,117' 18,405 8,916 4,366 9,430 212,150 24 24 0 41,985 19,083 9,120 4,423 9,359 5,574 2,557 3,017 96,649 89,666 6,983 34,131 2,008 32,123 12,872 11,430 1,442 5,973 2,672 3,301 103,013 95,833 7,180 32,115 1,890 30,225 17,425 15,077 2,348 6,202 3,007 3,194 110,884 102,819 8,064 30,792 1,888 28,904 22,265 19,174 3,091 5,973 2,672 3,301 103,013 95,833 7,180 32,115 1,890 30,225 17,425 15,077 2,348 6,075 2,550 3,525 101,991 94,727 7,264 31,261 1,839 29,422 18,714 16,192 2,522 6,424 2,827 3,597 103,309 95,714 7,595 31,467 1,851 29,616 19,974 17,305 2,669 6,023r 2,900' 3,123r 107,052r 99,168 7,884 30,943r 1,821 29,122 21,515r 18,493 3,022 6,202 3,007 3,194 110,884 102,819 8,064 30,792 1,888 28,904 22,265 19,174 3,091 44 Mortgage pools or trusts 6 45 Government National Mortgage Association 46 1- to 4-family 47 Multifamily 48 Federal Home Loan Mortgage Corporation 49 1- to 4-family 50 Multifamily 51 Federal National Mortgage Association 52 1- to 4-family 53 Multifamily 54 Farmers Home Administration 5 55 1- to 4-family 56 Multifamily 57 Commercial 58 Farm 718,297 317,555 309,806 7,749 212,634 205,977 6,657 139,960 137,988 1,972 245 121 0 63 61 810,887 340,527 331,257 9,270 226,406 219,988 6,418 178,250 172,331 5,919 104 26 0 38 40 931,090 374,434 362,711 11,723 266,260 259,332 6,928 216,466 207,677 8,789 79 23 0 22 34 810,887 340,527 331,257 9,270 226,406 219,988 6,418 178,250 172,331 5,919 104 26 0 38 40 839,684 348,622 337,563 11,059 234,695 228,389 6,306 188,071 181,352 6,719 96 24 0 34 38 861,827 353,154 341,951 11,203 242,789 236,404 6,385 196,501 188,774 7,727 85 23 0 26 36 898,388r 361,291' 349,830 11,461 256,896' 250,123 6,773 208,894'' 200,302 8,592 78r 22 0 22 34 931,090 374,434 362,711 11,723 266,260 259,332 6,928 216,466 207,677 8,789 79 23 0 22 34 59 Individuals and others 7 60 1- to 4-family 61 Multifamily 62 Commercial 63 Farm 361,715 201,704 75,458 63,192 21,361 381,861 215,077 78,411 67,489 20,884 409,310 235,138 82,862 70,596 20,714 381,861 215,077 78,411 67,489 20,884 384,241 215,379 78,814 69,291 20,757 395,369 225,059 79,840 69,595 20,875 398,358r 226,788r 81,009 69,690 20,871 409,310 235,138 82,862 70,596 20,714 6 Selected financial institutions 7 Commercial banks 8 1- to 4-family 9 Multifamily 10 Commercial 11 Farm 12 13 14 15 16 17 18 19 20 21 22 Savings institutions 3 1- to 4-family Multifamily Commercial Farm Life insurance companies 1- to 4-family Multifamily Commercial Farm Finance companies 4 23 Federal and related agencies 24 Government National Mortgage Association 25 1- to 4-family 26 Multifamily 27 Farmers Home Administration 28 1- to 4-family 29 Multifamily 30 Commercial 31 Farm 32 33 34 35 36 37 38 39 40 41 42 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 (credit balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels). 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. Includes private pools which are not shown as a separate line item. 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. Consumer Installment Credit A39 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1989 Holder, and type of credit 1988 1989 Apr. June May July Aug. Sept. Oct. Nov/ Dec. Amounts outstanding (end of period) 659,507 717,074 693,911 698,132 700,849 700,344 703,001 704,371 707,562 712,160 717,074 By major holder Commercial banks Finance companies Credit unions Retailers Savings institutions Gasoline companies Pools of securitized assets 318,925 145,180 86,118 43,498 62,099 3,687 n.a. 334,936 140,484 89,886 42,744 57,693 3,835 47,495 320,458 144,378 89,330 41,301 61,919 3,787 32,737 323,363 145,523 89,890 41,323 61,311 3,897 32,826 324,438 146,055 90,073 41,649 59,920 4,017 34,696 323,621 145,488 89,852 41,798 60,092 3,936 35,557 326,135 144,386 90,016 41,989 59,229 3,976 37,270 327,327 144,188 89,892 42,221 59,883 3,886 36,974 330,746 141,273 89,856 42,319 58,890 3,804 40,675 332,675 141,396 89,677 42,554 58,264 3,828 43,766 334,936 140,484 89,886 42,744 57,693 3,835 47,495 By major type of credit 9 Automobile 10 Commercial banks Credit unions 11 Finance companies 1? 13 Savings institutions 14 Pools of securitized assets 281,174 123,259 41,326 97,204 19,385 n.a. 289,459 127,285 42,865 83,572 17,332 18,404 289,654 123,878 42,510 90,268 18,866 14,132 290,741 125,118 42,687 90,976 18,566 13,395 290,192 125,592 42,684 91,184 18,032 12,700 288,526 124,881 42,624 90,213 17,972 12,835 288,533 126,597 42,747 89,439 17,603 12,147 287,754 126,759 42,733 88,317 17,990 11,955 288,747 128,238 42,761 84,814 17,692 15,243 289,200 128,654 42,720 84,707 17,504 15,615 289,459 127,285 42,865 83,572 17,332 18,404 11 Revolving 16 Commercial banks 17 Retailers 18 Gasoline companies 19 Savings institutions Credit unions 70 Pools of securitized assets 21 174,792 117,572 38,692 3,687 10,151 4,691 n.a. 203,301 122,404 37,804 3,835 10,775 5,406 23,077 184,500 114,130 36,497 3,787 10,918 5,035 14,134 186,502 115,407 36,504 3,897 11,008 5,109 14,578 189,622 115,561 36,814 4,017 10,951 5,162 17,117 191,028 115,967 36,963 3,936 11,176 5,192 17,795 194,398 117,012 37,134 3,976 11,206 5,244 19,827 195,302 117,868 37,355 3,886 11,183 5,279 19,731 196,379 118,801 37,435 3,804 10,998 5,319 20,021 199,240 119,254 37,639 3,828 10,881 5,351 22,286 203,301 122,404 37,804 3,835 10,775 5,406 23,077 25,744 8,974 7,186 9,583 22,602 9,001 4,846 8,756 23,993 8,836 5,659 9,498 23,952 8,878 5,684 9,390 23,685 8,847 5,674 9,163 23,630 8,830 5,624 9,176 22,938 8,808 5,100 9,030 22,991 8,788 5,087 9,116 22,947 8,724 5,272 8,951 22,567 8,941 4,783 8,843 22,602 9,001 4,846 8,756 177,798 69,120 40,790 40,102 4,807 22,981 n.a. 201,711 76,246 52,066 41,615 4,940 20,830 6,014 195,763 73,614 48,451 41,785 4,804 22,638 4,471 196,936 73,960 48,863 42,094 4,819 22,347 4,853 197,349 74,438 49,197 42,228 4,834 21,773 4,879 197,161 73,944 49,650 42,036 4,835 21,769 4,927 197,132 73,718 49,847 42,025 4,855 21,390 5,296 198,324 73,912 50,784 41,880 4,866 21,593 5,288 199,490 74,983 51,187 41,776 4,884 21,249 5,411 201,154 75,826 51,906 41,606 4,914 21,036 5,865 201,711 76,246 52,066 41,615 4,940 20,830 6,014 1 Total ? 3 4 5 6 7 8 ?? Mobile home 73 Commercial banks Finance companies 74 Savings institutions 25 76 Other Commercial banks 77 Finance companies 78 79 Credit unions Retailers 30 31 Savings institutions Pools of securitized assets 32 Net change (during period) 51,786 57,567 2,749 4,221 2,717 -505 2,657 1,371 3,191 4,598 4,913 36,015 4,899 6,031 2,523 2,248 69 n.a. 16,011 -4,696 3,768 -754 -4,406 148 18,668 2,216 1,309 815 2 -815 104 -882 2,904 1,145 560 21 -609 110 89 1,076 532 184 326 -1,390 120 1,870 -817 -567 -222 149 172 -81 861 2,514 -1,102 164 192 -863 39 1,713 1,192 -198 -124 231 654 -89 -2% 3,418 -2,915 -36 98 -993 -82 3,701 1,930 124 -179 235 -626 23 3,091 2,261 -913 209 190 -571 7 3,729 By major type of credit 41 Automobile Commercial banks 42 43 Credit unions Finance companies 44 Savings institutions 45 Pools of securitized assets 46 15,198 14,058 975 -991 1,157 n.a. 8,285 4,026 1,539 -13,632 -2,053 3,362 804 816 300 701 -366 -647 1,087 1,239 177 708 -300 -737 -549 474 -3 208 -533 -695 -1,667 -711 -60 -970 -61 135 7 1,716 123 -775 -369 -688 -779 162 -14 -1,122 387 -192 993 1,479 28 -3,503 -298 3,288 453 416 -40 -107 -188 372 259 -1,369 145 -1,135 -172 2,789 47 Revolving Commercial banks 48 49 Retailers Gasoline companies 50 51 Savings institutions 52 Credit unions 4 53 Pools of securitized assets 20,908 18,453 2,303 69 -216 300 n.a. 28,509 4,832 -888 148 624 715 12,588 1,670 1,576 8 104 58 88 -165 2,002 1,277 7 110 90 74 444 3,120 154 310 120 -57 53 2,539 1,406 405 149 -81 225 30 678 3,370 1,045 171 39 30 52 2,032 904 856 221 -89 -22 35 -96 1,076 933 80 -82 -185 40 290 2,861 453 205 23 -117 32 2,265 4,062 3,150 165 7 -107 55 791 -643 -246 -576 177 -3,142 27 -2,340 -827 -174 -7 -28 -140 -41 42 25 -108 -267 -31 -10 -227 -56 -18 -50 12 -692 -22 -524 -146 53 -20 -13 86 -44 -64 185 -165 -380 218 -489 -109 35 59 63 -87 16,323 3,750 6,466 4,758 221 1,131 n.a. 23,913 7,126 11,276 1,513 133 -2,151 2,718 449 -169 635 428 -7 -368 -70 1,173 346 412 309 15 -291 382 413 478 334 133 16 -574 26 -189 -494 453 -191 0 -5 48 -29 -226 197 -11 21 -379 369 1,192 194 937 -145 11 203 -8 1,166 1,071 403 -104 18 -344 123 1,664 843 719 -170 30 -212 454 557 420 159 10 25 -206 149 33 Total 34 35 36 37 38 39 40 By major holder Commercial banks Finance companies 2 Credit unions Retailers 3 Savings institutions Gasoline companies Pools of securitized assets 4 54 Mobile home 55 Commercial banks Finance companies 56 Savings institutions 57 58 Other 59 Commercial banks Finance companies 60 Credit unions 61 Retailers 62 Savings institutions 63 Pools of securitized assets 64 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. These data also appear in the Board's G.19 (421) release. For address, see inside front cover. 2. More detail for finance companies is available in the G. 20 statistical release. 3. Excludes 30-day charge credit held by travel and entertainment companies. 4. Outstanding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of the loan originator. A40 DomesticNonfinancialStatistics • April 1990 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1989 Item 1987 1988 1989 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES 1 2 3 4 6 Commercial banks 2 48-month new c a r 24-month personal 120-month mobile home 3 Credit card Auto finance companies New car Used car 10.45 14.22 13.38 17.92 10.85 14.68 13.54 17.78 12.07 15.44 14.11 18.02 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12.13 15.45 14.13 18.07 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11.94 15.42 13.97 18.07 n.a. n.a. n.a. n.a. 10.73 14.60 12.60 15.11 12.62 16.18 11.96 16.45 11.94 16.37 12.22 16.31 12.42 16.22 13.04 16.17 13.27 16.09 13.27 16.10 53.5 45.2 56.2 46.7 54.2 46.6 53.0 46.5 52.9 46.4 52.9 46.2 53.1 46.2 54.4 45.8 55.1 45.6 55.1 45.5 93 98 94 98 91 97 91 97 91 97 90 96 88 96 88 % 89 96 89 96 11,203 7,420 11,663 7,824 12,001 7,954 12,065 7,921 12,108 7,988 11,949 7,874 11,841 7,856 11,965 7,904 12,279 8,063 12,301 8,0% O T H E R TERMS 4 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. These data also appear in the Board's G.19 (421) release. For address, see inside front cover. 2. Data for midmonth of quarter only. 3. Before 1983 the maturity for new car loans was 36 months, and for mobile home loans was 84 months. 4. At auto finance companies. Flow of Funds 1.57 A41 F U N D S R A I S E D I N U . S . CREDIT M A R K E T S Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1988 Transaction category, sector 1984 1985 1986 1987 1989 1988 Q1 Q2 Q3 Q4 Qi Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 750.7 846.3 831.1 693.2 767.0 728.2 827.2 754.4 758.3 792.2 658.9 688.1 By sector and instrument 2 U.S. government 3 Treasury securities 4 Agency issues and mortgages 198.8 199.0 -.2 223.6 223.7 -.1 215.0 214.7 .4 144.9 143.4 1.5 157.5 140.0 17.4 211.6 212.0 -.5 113.7 106.0 7.7 162.5 141.6 20.9 142.1 100.5 41.6 199.9 201.1 -1.2 70.9 65.8 5.1 149.0 149.1 -.2 5 Private domestic nonfinancial sectors 6 Debt capital instruments 7 Tax-exempt obligations 8 Corporate bonds 9 Mortgages Home mortgages 10 Multifamily residential 11 Commercial 12 Farm 13 551.9 320.0 51.0 46.1 222.8 136.7 25.2 62.2 -1.2 622.7 451.4 135.4 73.8 242.2 156.8 29.8 62.2 -6.6 616.1 460.3 22.7 121.3 316.3 218.7 33.5 73.6 -9.5 548.3 458.5 34.1 99.9 324.5 234.9 24.4 71.6 -6.4 609.6 462.6 34.0 120.9 307.7 229.1 18.9 61.7 -2.1 516.6 386.5 29.1 118.8 238.7 170.7 24.2 48.5 -4.7 713.4 561.0 37.9 143.9 379.2 300.7 14.7 65.4 -1.6 592.0 463.9 34.8 115.9 313.2 231.0 19.5 65.4 -2.6 616.3 438.9 34.3 104.9 299.7 214.0 17.3 67.7 .7 592.3 427.8 29.3 111.6 286.9 205.2 27.2 58.8 -4.4 588.0 394.1 20.6 138.5 234.9 186.1 8.1 38.7 2.1 539.1 412.6 32.6 113.6 266.4 191.9 21.3 53.2 .0 14 15 16 17 18 Other debt instruments Consumer credit Bank loans n.e.c Open market paper Other 231.9 81.6 66.3 21.7 62.2 171.3 82.5 38.6 14.6 35.6 155.8 58.0 66.7 -9.3 40.5 89.7 32.9 10.8 2.3 43.8 147.0 51.1 38.4 11.6 45.9 130.1 43.7 20.8 2.4 63.2 152.4 51.9 58.8 6.8 34.8 128.1 35.5 7.3 17.1 68.1 177.3 73.1 66.6 20.0 17.6 164.5 34.8 23.1 44.1 62.5 193.9 46.0 29.9 44.9 73.1 126.5 30.9 21.6 20.4 53.6 19 20 21 22 23 24 25 By borrowing sector State and local governments Households Nonfinancial business Farm Nonfarm noncorporate Corporate 551.9 28.1 231.5 292.3 -.4 123.2 169.6 622.7 90.9 284.6 247.2 -14.5 129.3 132.4 616.1 36.2 289.2 290.7 -16.3 103.2 203.7 548.3 33.6 271.9 242.8 -10.6 107.9 145.5 609.6 29.8 287.9 291.8 -7.5 91.9 207.5 516.6 23.4 230.2 263.0 -12.7 85.2 190.5 713.4 37.0 346.7 329.7 -3.3 83.6 249.4 592.0 28.1 291.6 272.3 -2.2 100.5 174.0 616.3 30.6 283.3 302.4 -11.8 98.2 216.0 592.3 29.7 263.1 299.4 -2.2 91.1 210.6 588.0 27.7 227.1 333.3 .3 70.0 263.0 539.1 29.5 254.8 254.9 2.8 81.7 170.4 26 Foreign net borrowing in United States 27 Bonds Bank loans n.e.c 28 29 Open market paper 30 U.S. government loans 8.4 3.8 -6.6 6.2 5.0 1.2 3.8 -2.8 6.2 -6.0 9.7 3.1 -1.0 11.5 -3.9 4.9 7.4 -3.6 2.1 -1.0 6.9 6.9 -1.8 9.6 -7.8 4.8 14.2 1.7 .7 -11.8 5.4 2.6 -3.3 6.5 -.4 4.1 5.9 .0 10.3 -12.1 13.3 5.1 -5.7 21.0 -7.1 -1.1 3.2 4.9 12.1 -21.4 -3.9 11.1 1.7 -8.1 -8.6 28.7 9.1 .0 20.4 -.9 31 Total domestic plus foreign 759.1 847.5 840.9 698.1 773.9 733.0 832.6 758.5 771.7 791.1 655.0 716.8 Financial sectors 32 Total net borrowing by financial sectors 33 34 35 36 By instrument U.S. government related Sponsored credit agency securities Mortgage pool securities Loans from U.S. government 37 Private financial sectors Corporate bonds 38 39 Mortgages 40 Bank loans n.e.c 41 Open market paper 42 Loans from Federal Home Loan Banks 150.7 201.3 318.9 315.0 264.2 242.5 263.9 232.1 318.3 394.4 123.4 152.5 74.9 30.4 44.4 .0 101.5 20.6 79.9 1.1 187.9 15.2 173.1 -.4 185.8 30.2 156.4 -.8 137.5 44.9 92.6 .0 128.8 59.5 69.3 .0 104.3 11.1 93.1 .0 144.4 46.5 97.8 .0 172.5 62.3 110.1 .0 216.1 84.9 131.2 .0 105.8 12.5 93.3 .0 137.4 10.0 127.4 .0 75.9 34.3 .4 1.4 24.0 15.7 99.7 50.9 .1 2.6 32.0 14.2 131.0 82.9 .1 4.0 24.2 19.8 129.2 78.9 .4 -3.3 28.8 24.4 126.7 51.7 .3 1.4 53.6 19.7 113.7 60.0 -.1 5.9 38.5 9.4 159.6 71.1 .1 5.7 70.5 12.3 87.7 32.5 -.1 -5.6 35.1 25.8 145.8 43.0 1.2 -.3 70.4 31.4 178.3 52.7 .3 3.0 53.2 69.1 17.6 31.4 .0 .3 2.8 -16.9 15.1 26.4 .0 4.1 28.2 -43.7 150.7 201.3 318.9 315.0 264.2 242.5 263.9 232.1 318.3 394.4 123.4 152.5 30.4 44.4 75.9 7.3 16.1 17.2 1.2 24.0 .8 9.3 21.7 79.9 99.7 -4.9 16.6 17.3 1.5 57.2 .5 11.5 14.9 173.1 131.0 -3.6 15.2 20.9 4.2 54.5 1.0 39.0 29.5 156.4 129.2 7.1 14.3 19.6 8.1 40.3 .8 39.1 44.9 92.6 126.7 -3.9 5.2 19.9 1.9 67.0 4.1 32.5 59.5 69.3 113.7 -16.7 -8.8 10.0 2.3 78.4 5.4 43.0 11.1 93.1 159.6 -1.6 22.4 19.1 1.1 85.4 1.7 31.5 46.5 97.8 87.7 -.9 6.1 24.1 .5 40.7 -5.9 23.1 62.3 110.1 145.8 3.7 .8 26.3 3.8 63.6 15.0 32.5 84.9 131.2 178.3 -13.4 6.4 71.3 -2.8 78.4 -.9 39.3 12.5 93.3 17.6 -.9 6.5 -16.2 -1.1 32.8 -2.2 -1.4 10.0 127.4 15.1 7.5 6.7 -43.9 -2.9 43.2 -1.4 5.9 By sector 43 44 45 46 47 48 49 50 51 52 53 Sponsored credit agencies Mortgage pools Private financial sectors Commercial banks Bank affiliates Savings and loan associations Mutual savings banks Finance companies REITs SCO Issuers A42 DomesticNonfinancialStatistics • April 1990 1.57—Continued 1989 1988 Transaction category, sector 1984 1985 1986 1987 1988 Ql Q2 Q3 Q4 Q2 Q3 1,089.9 1,185.4 Ql All sectors 54 Total net borrowing 909.8 975.5 1,096.5 990.6 778.4 869.3 55 56 57 58 59 60 61 62 273.8 51.0 84.3 223.1 81.6 61.1 51.9 82.9 324.2 135.4 128.4 242.2 82.5 38.3 52.8 45.0 403.4 22.7 207.3 316.4 58.0 69.7 26.4 56.1 331.5 34.1 186.3 324.9 32.9 3.8 33.2 66.5 294.9 34.0 179.5 308.0 51.1 38.0 74.9 57.8 340.4 29.1 193.0 238.6 43.7 28.3 41.6 60.8 218.0 37.9 217.6 379.3 51.9 61.2 83.9 46.8 306.8 34.8 154.3 313.1 35.5 1.7 62.5 81.8 314.6 34.3 153.0 300.8 73.1 60.7 111.5 42.0 416.0 29.3 167.5 287.2 34.8 31.1 109.4 110.2 176.7 20.6 181.1 234.9 46.0 31.9 39.6 47.5 286.4 32.6 149.2 266.4 30.9 25.8 69.0 9.1 6.3 14.4 .0 -7.9 10.4 47.6 1.2 10.6 -17.9 -22.5 43.7 -7.5 744.4 192.5 831.9 209.3 831.2 215.0 701.1 152.8 756.6 147.1 680.6 164.0 825.9 112.5 743.8 151.8 776.3 160.0 814.7 222.4 615.2 27.2 695.6 156.4 -48.7 -64.7 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 63 MEMO: U.S. government, cash balance Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial Net borrowing by U.S. government 65 1,048.8 1,159.8 1,013.2 1,038.1 External corporate equity funds raised in United States 66 Total net share issues -36.0 20.1 90.5 14.3 67 68 69 70 71 29.3 -65.3 -74.5 8.2 .9 84.4 -64.3 -81.5 13.5 3.7 159.0 -68.5 -80.8 11.1 1.2 71.6 -57.3 -76.5 21.4 -2.1 Mutual funds All other Nonfinancial corporations Financial corporations Foreign shares purchased in United States -117.9 -101.0 -133.7 -73.5 -163.5 -163.5 -.7 -117.2 -130.5 12.4 .9 1.5 -75.0 -92.0 14.6 2.4 50.0 3.6 24.0 11.9 -175.4 -167.1 -72.7 -114.6 -195.0 -180.0 -105.0 -145.0 9.4 17.1 13.5 17.1 13.3 6.1 3.6 15.2 -9.5 -6.6 - 9 1 . 5 -127.0 - 9 5 . 0 -140.0 2.4 19.0 -6.0 1.1 Flow of Funds 1.58 A43 D I R E C T A N D I N D I R E C T S O U R C E S O F F U N D S TO C R E D I T M A R K E T S Billions of dollars, except as noted; quarterly data are at seasonally adjusted annual rates. 1989 1988 Transaction category, or sector 1 Total funds advanced in credit markets to domestic nonfinancial sectors 1984 1985 1986 1987 1988 Q1 Q2 Q3 Q4 Q1 Q2 Q3 750.7 846.3 831.1 693.2 767.0 728.2 827.2 754.4 758.3 792.2 658.9 688.1 157.6 38.9 56.5 15.7 46.6 202.0 45.9 94.6 14.2 47.3 314.0 69.4 170.1 19.8 54.7 262.8 70.1 153.2 24.4 15.1 237.6 85.0 104.0 19.7 28.8 278.6 153.2 88.9 9.4 27.1 185.5 43.3 107.9 12.3 22.1 196.9 24.1 98.1 25.8 49.0 289.3 119.6 121.2 31.4 17.1 348.7 26.7 97.6 -102.4 133.3 106.6 69.1 - 1 6 . 9 48.7 39.4 267.4 117.1 149.0 -43.7 45.0 17.1 74.3 8.4 57.9 17.8 103.5 18.4 62.3 9.7 187.2 19.4 97.8 -7.9 183.4 24.7 62.7 -4.9 129.6 10.5 102.3 -7.0 114.3 2.7 168.6 -7.6 105.7 5.0 82.5 4.3 130.1 15.5 47.0 -9.3 168.5 18.9 111.2 2.8 221.4 5.2 119.3 3.1 15.6 -3.9 11.9 5.2 165.6 -30.7 127.2 74.9 8.4 101.5 1.2 187.9 9.7 185.8 4.9 137.5 6.9 128.8 4.8 104.3 5.4 144.4 4.1 172.5 13.3 216.1 -1.1 105.8 -3.9 137.4 28.7 Private domestic funds advanced 13 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 676.3 234.9 51.0 35.1 105.3 265.6 15.7 747.0 278.2 135.4 40.8 91.8 214.8 14.2 714.8 333.9 22.7 84.2 82.0 211.8 19.8 621.1 261.4 34.1 87.5 106.1 156.5 24.4 673.8 209.9 34.0 104.4 144.0 201.2 19.7 583.2 187.2 29.1 126.5 106.0 143.8 9.4 751.3 174.7 37.9 126.2 207.5 217.2 12.3 705.9 282.8 34.8 91.7 152.3 170.1 25.8 654.8 195.0 34.3 73.0 110.1 273.7 31.4 658.4 318.4 29.3 89.4 99.2 191.3 69.1 734.1 279.1 20.6 132.3 87.5 197.7 -16.9 586.8 169.3 32.6 103.4 64.2 173.6 -43.7 Private financial intermediation 70 Credit market funds advanced by private financial institutions Commercial banking 71 Savings institutions 77 73 Insurance and pension funds 24 Other finance 585.8 169.2 154.7 121.8 140.1 579.9 186.0 87.9 154.4 151.6 744.0 197.5 107.6 174.6 264.2 560.8 136.8 136.8 210.9 76.3 558.2 155.3 120.5 194.9 87.4 617.4 87.9 96.0 257.4 176.1 553.7 194.5 134.9 182.7 41.6 427.5 118.4 157.0 150.5 1.7 634.1 220.5 94.2 189.1 130.3 568.6 120.6 62.2 228.3 157.6 342.2 544.3 132.9 158.6 - 7 3 . 1 -154.2 156.0 182.5 207.4 276.2 75 Sources of funds 26 Private domestic deposits and RPs Credit market borrowing 77 78 Other sources 79 Foreign funds Treasury balances 30 31 Insurance and pension reserves Other, net 32 585.8 322.6 75.9 187.3 8.8 4.0 124.0 50.5 579.9 214.3 99.7 265.9 19.7 10.3 131.9 104.1 744.0 262.6 131.0 350.4 12.9 1.7 149.3 186.5 560.8 144.1 129.2 287.5 43.7 -5.8 176.1 73.6 558.2 219.2 126.7 212.3 9.3 7.3 186.8 8.8 617.4 305.5 113.7 198.2 -60.6 44.2 190.1 24.4 553.7 102.0 159.6 292.1 94.5 -16.3 184.0 29.9 427.5 191.9 87.7 147.9 -42.1 5.6 109.8 74.5 634.1 277.4 145.8 210.9 45.5 -4.1 263.3 -93.8 568.6 166.5 178.3 223.8 -28.4 -21.6 133.0 140.8 544.3 213.4 17.6 313.3 -16.0 26.6 151.5 151.2 342.2 282.7 15.1 44.3 10.6 -6.4 88.7 -48.6 Private domestic nonfinancial investors 33 Direct lending in credit markets 34 U.S. government securities 35 State and local obligations Corporate and foreign bonds 36 37 Open market paper Other 38 166.4 111.4 27.1 -4.1 7.8 24.2 266.8 157.8 37.7 4.2 47.5 19.6 101.8 60.9 -21.7 39.3 5.4 17.9 189.6 100.0 45.6 24.1 6.6 13.3 242.3 149.3 33.9 2.6 37.2 19.3 79.5 119.6 19.7 -39.6 -14.5 -5.8 357.2 103.2 37.2 61.4 98.6 56.8 366.2 225.7 56.4 -5.8 77.4 12.5 166.5 148.7 22.3 -5.7 -12.6 13.9 268.1 211.1 35.7 -15.4 67.1 -30.3 207.5 123.2 -11.4 32.8 19.5 43.4 259.7 137.4 22.6 21.2 43.4 35.1 39 Deposits and currency 40 Currency Checkable deposits 41 Small time and savings accounts 47 43 Money market fund shares 44 Large time deposits 45 Security RPs 46 Deposits in foreign countries 326.1 8.6 30.2 150.7 49.0 82.9 9.8 -5.1 224.6 12.4 41.9 138.5 8.9 7.4 17.7 -2.1 283.0 14.4 95.0 120.6 38.3 -11.4 20.2 5.9 160.2 19.0 -3.0 76.0 27.2 26.7 17.2 -2.8 221.8 14.7 12.3 122.2 22.8 40.8 21.2 -12.1 313.5 10.7 3.6 199.5 57.6 16.9 27.9 -2.7 110.0 13.8 -30.5 130.5 -21.0 -3.5 26.5 -5.9 215.7 29.3 -21.4 72.7 -3.5 137.0 7.0 -5.5 248.2 5.1 97.3 86.0 58.1 12.7 23.3 -34.4 211.2 19.3 -54.5 26.4 51.1 111.9 31.6 25.5 231.1 12.6 -83.0 117.4 111.8 39.8 27.5 5.1 273.2 11.4 35.4 119.1 124.3 -15.4 19.4 -20.9 47 Total of credit market instruments, deposits, and currency 492.5 491.4 384.8 349.8 464.2 393.0 467.2 581.9 414.7 479.4 438.6 532.9 20.8 86.6 66.7 23.8 77.6 82.0 37.3 104.1 110.7 37.6 90.3 106.4 30.7 82.8 111.7 38.0 105.9 108.1 22.3 73.7 177.0 26.0 60.6 4.9 37.5 96.8 156.7 44.1 86.4 90.9 4.1 74.1 -4.1 37.3 58.3 137.8 -117.9 -101.0 -133.7 -73.5 -163.5 - 1 6 3 . 5 -48.7 -64.7 -.7 -117.2 5.4 -123.3 1.5 -75.0 25.5 -99.1 3.6 11.9 -175.4 -167.1 -6.5 30.1 -193.6 -157.0 24.0 50.0 - 7 2 . 7 -114.6 -6.5 3.8 -42.2 -68.4 By public agencies and foreign Total net advances U.S. government securities Residential mortgages FHLB advances to thrifts Other loans and securities 7 3 4 5 6 Total advanced, by sector U.S. government Sponsored credit agencies Monetary authorities Foreign Agency and foreign borrowing not in line 1 Sponsored credit agencies and mortgage pools 11 12 Foreign 7 8 9 10 48 49 50 Public holdings as percent of total Private financial intermediation (in percent) Total foreign funds MEMO: Corporate equities not included above 51 Total net issues -36.0 20.1 90.5 14.3 57 Mutual fund shares 53 Other equities 54 Acquisitions by financial institutions 55 Other net purchases 29.3 -65.3 15.8 -51.8 84.4 -64.3 45.6 -25.5 159.0 -68.5 53.7 36.8 71.6 -57.3 21.4 -7.1 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. -9.5 -6.6 - 9 1 . 5 -127.0 -34.4 .2 - 6 6 . 5 -133.9 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 DomesticNonfinancialStatistics • April 1990 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1988 Transaction category, sector 1984 1985 1986 1989 1987 Q2 Ql Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 5,951.8 6,795.1 7,631.2 8,335.0 8,477.0 8,686.9 8,875.4 9,105.6 9,258.7 9,428.4 9,604.5 By sector and instrument 2 U.S. government 3 Treasury securities Agency issues and mortgages 4 1,376.8 1,373.4 3.4 1,600.4 1,597.1 3.3 1,815.4 1,811.7 3.6 1,960.3 1,955.2 5.2 2,003.2 1,998.1 5.0 2,022.3 2,015.3 7.0 2,063.9 2,051.7 12.2 2,117.8 2,095.2 22.6 2,155.7 2,133.4 22.3 2,165.7 2,142.1 23.6 2,204.3 2,180.7 23.5 5 Private domestic nonfinancial sectors Debt capital instruments 6 7 Tax-exempt obligations 8 Corporate bonds 9 Mortgages 10 Home mortgages 11 Multifamily residential 12 Commercial 13 Farm 4.575.1 3,038.0 520.0 469.2 2,048.8 1.336.2 183.6 416.5 112.4 5,194.7 3,485.5 655.5 542.9 2.287.1 1.490.2 213.0 478.1 105.9 5.815.8 3,957.5 679.1 664.2 2,614.2 1,720.8 246.2 551.4 95.8 6,374.7 4.428.0 713.2 764.1 2,950.7 1.943.1 270.0 648.7 88.9 6,473.8 4.511.0 718.1 793.8 2.999.1 1,978.0 273.0 660.2 88.0 6,664.7 4.652.6 727.2 829.8 3.095.7 2,055.3 276.6 676.0 87.8 6,811.5 4,782.0 746.1 858.8 3,177.2 2,118.0 281.0 691.1 87.0 6,987.8 4.902.1 759.8 885.0 3,257.3 2.174.2 286.8 709.6 86.8 7,103.0 4,979.2 764.7 912.9 3,301.6 2,214.8 292.6 708.2 86.0 7,262.7 5.078.3 769.3 947.5 3,361.6 2.263.4 294.4 717.0 86.7 7,400.2 5,187.8 780.3 975.9 3.431.6 2.316.7 299.3 728.9 86.6 14 15 16 17 18 Other debt instruments Consumer credit Bank loans n.e.c Open market paper Other 1,537.1 519.3 553.1 58.5 406.2 1,709.3 601.8 592.7 72.2 442.6 1,858.4 659.8 656.1 62.9 479.6 1,946.7 692.7 664.3 73.8 516.0 1,962.8 688.9 668.3 73.5 532.1 2,012.0 705.8 687.2 77.8 541.2 2,029.4 721.2 687.7 80.3 540.2 2,085.7 743.7 702.6 85.4 554.0 2,123.8 745.0 717.6 96.1 565.1 2,184.3 761.0 729.8 110.1 583.5 2,212.4 775.3 734.5 113.1 589.5 19 20 21 22 23 24 25 By borrowing sector State and local governments Households Nonfinancial business Farm Nonfarm noncorporate Corporate 4.575.1 383.0 2.018.2 2,173.9 187.9 769.0 1,216.9 5,194.7 473.9 2.295.5 2,425.4 173.4 898.3 1.353.6 5,815.8 510.1 2,591.8 2,714.0 156.6 1,001.6 1,555.8 6,374.7 543.7 2,864.5 2.966.5 145.5 1,109.4 1.711.6 6,473.8 547.1 2,900.7 3,026.0 141.3 1,131.7 1,753.0 6,664.7 556.0 2,990.2 3,118.5 143.9 1,151.9 1,822.7 6,811.5 565.7 3,068.3 3.177.5 143.6 1.172.6 1,861.3 6,987.8 573.5 3,152.0 3.262.4 137.6 1,205.3 1.919.5 7,103.0 578.5 3,205.6 3.319.0 135.9 1.229.1 1,954.0 7,262.7 584.8 3,265.5 3,412.3 139.5 1,245.9 2,027.0 7,400.2 595.1 3,336.1 3,469.0 140.7 1,261.6 2,066.6 233.6 68.0 30.8 27.7 107.1 234.7 71.8 27.9 33.9 101.1 236.4 74.9 26.9 37.4 97.1 242.9 82.3 23.3 41.2 96.1 244.6 86.1 22.8 42.5 93.1 245.9 86.0 22.4 44.0 93.5 246.1 87.4 22.7 46.3 89.8 249.6 89.2 21.5 50.9 88.1 249.9 90.5 21.6 54.9 83.0 249.0 92.2 22.7 52.7 81.4 255.3 94.5 22.9 57.5 80.4 6,185.4 7,029.9 7,867.6 8,578.0 8,721.6 8,932.8 9,121.5 9,355.3 9,508.7 9,677.4 9,859.7 26 Foreign credit market debt held in United States 27 Bonds 28 Bank loans n.e.c 29 Open market paper 30 U.S. government loans 31 Total domestic plus foreign Financial sectors 32 Total credit market debt owed by financial sectors 33 34 35 36 37 38 39 40 41 42 By instrument U.S. government related Sponsored credit agency securities . . . . Mortgage pool securities Loans from U.S. government Private financial sectors Corporate bonds Mortgages Bank loans n.e.c Open market paper Loans from Federal Home Loan Banks 43 Total, by sector 44 45 46 47 48 49 50 51 52 53 Sponsored credit agencies Mortgage pools Private financial sectors Commercial banks Bank affiliates Savings and loan associations Mutual savings banks Finance companies REITs SCO issuers 1,010.2 1,213.2 1,563.6 1,885.5 1,926.0 2,000.5 2,058.2 2,149.7 2,258.7 2,298.9 2,336.7 531.2 237.2 289.0 5.0 479.0 153.0 2.5 29.5 219.5 74.6 632.7 257.8 368.9 6.1 580.5 204.5 2.7 32.1 252.4 88.8 844.2 273.0 565.4 5.7 719.5 287.4 2.7 36.1 284.6 108.6 1,026.5 303.2 718.3 5.0 859.0 366.3 3.1 32.8 323.8 133.1 1,050.6 313.5 732.1 5.0 875.4 380.5 3.1 31.7 330.6 129.5 1,076.9 317.9 754.0 5.0 923.6 397.9 3.1 34.3 353.4 134.8 1,116.3 328.5 782.8 5.0 941.9 406.4 3.1 32.9 358.0 141.6 1,164.0 348.1 810.9 5.0 985.7 418.0 3.4 34.2 377.4 152.8 1,209.0 364.3 839.7 5.0 1,049.7 458.2 3.5 32.2 392.0 163.8 1,235.8 369.0 861:8 5.0 1,063.1 465.8 3.5 33.8 398.3 161.9 1,273.8 370.4 898.4 5.0 1,062.9 472.8 3.5 34.7 400.9 151.1 1,010.2 1,213.2 1,563.6 1,885.5 1,926.0 2,000.5 2,058.2 2,149.7 2,258.7 2,298.9 2,336.7 242.2 289.0 479.0 84.1 89.5 81.6 2.9 203.0 4.3 13.5 263.9 368.9 580.5 79.2 106.2 98.9 4.4 261.2 5.6 25.0 278.7 565.4 719.5 75.6 116.8 119.8 8.6 328.1 6.5 64.0 308.2 718.3 859.0 82.7 131.1 139.4 16.7 378.8 7.3 103.1 318.5 732.1 875.4 76.4 131.0 135.3 17.1 393.0 8.7 113.9 322.9 754.0 923.6 77.2 136.3 141.9 17.6 419.8 9.1 121.8 333.5 782.8 941.9 76.6 136.3 148.1 18.1 427.7 7.6 127.5 353.1 810.9 985.7 78.8 136.2 159.3 18.6 445.8 11.4 135.7 369.3 839.7 1,049.7 73.3 140.0 170.1 17.8 463.8 11.1 173.5 374.0 861.8 1,063.1 74.5 141.2 167.9 17.7 478.0 10.6 173.1 375.4 898.4 1,062.9 75.8 141.5 156.8 17.6 486.3 10.3 174.6 All sectors 54 Total credit market debt 7,195.7 8,243.1 9,431.2 10,463.4 10,647.5 10,933.4 11,179.7 11,504.9 11,767.4 11,976.3 12,196.4 55 56 57 58 59 60 61 62 1,902.8 520.0 690.1 2,051.4 519.3 613.4 305.7 592.9 2,227.0 655.5 819.2 2,289.8 601.8 652.7 358.5 638.6 2,653.8 679.1 1,026.4 2,617.0 659.8 719.1 384.9 691.1 2,981.8 713.2 1,212.7 2,953.8 692.7 720.3 438.8 750.2 3,048.8 718.1 1,260.4 3,002.2 688.9 722.7 446.7 759.7 3,094.2 727.2 1,313.7 3,098.8 705.8 744.0 475.3 774.5 3,175.2 746.1 1,352.5 3,180.3 721.2 743.3 484.6 776.6 3,276.7 759.8 1,392.2 3,260.7 743.7 758.3 513.6 799.8 3,359.7 764.7 1,461.6 3,305.1 745.0 771.4 543.1 816.8 3,396.5 769.3 1,505.5 3,365.0 761.0 786.2 561.1 831.7 3,473.1 780.3 1,543.2 3,435.1 775.3 792.0 571.4 826.0 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 Flow of Funds 1.60 A45 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER Billions of dollars, except as noted; period-end levels. 1988 Transaction category, or sector 1 Total funds advanced in credit markets to domestic nonfinancial sectors 1984 1985 1986 1989 1987 Ql Q2 Q3 Q4 Ql Q2 Q3 5,951.8 6,795.1 7,631.2 8,335.0 8,477.0 8,686.9 8,875.4 9,105.6 9,258.7 9,428.4 9,604.5 1,257.7 377.9 423.5 74.6 381.6 1,460.5 423.8 518.2 88.8 429.7 1,794.7 493.2 712.3 108.6 480.5 2,044.9 563.3 862.0 133.1 486.6 2,099.4 595.7 880.6 129.5 493.6 2,151.3 610.1 906.1 134.8 500.3 2,191.8 613.3 934.9 141.6 502.1 2,266.4 648.3 966.0 152.8 499.3 2,332.1 666.2 995.3 163.8 506.9 2,345.1 644.6 1,020.5 161.9 518.1 2,414.3 670.7 1,062.6 151.1 529.8 7 Total held, by type of lender 8 U.S. government Sponsored credit agencies and mortgage pools . . . 9 10 Monetary authority 11 Foreign 1,257.7 228.2 556.3 167.6 305.6 1,460.5 246.7 659.8 186.0 367.9 1,794.7 253.3 869.8 205.5 466.1 2,044.9 238.0 1,048.9 230.1 527.9 2,099.4 237.1 1,068.0 224.9 569.5 2,151.3 235.8 1,095.6 229.7 590.2 2,191.8 226.3 1,132.9 230.8 601.9 2,266.4 216.9 1,178.6 240.6 630.3 2,332.1 213.9 1,223.5 235.4 659.3 2,345.1 215.2 1,228.9 238.4 662.6 2,414.3 216.9 1,275.3 227.6 694.5 Agency and foreign debt not in line 1 Sponsored credit agencies and mortgage pools . . . Foreign 531.2 233.6 632.7 234.7 844.2 236.4 1,026.5 242.9 1,050.6 244.6 1,076.9 245.9 1,116.3 246.1 1,164.0 249.6 1,209.0 249.9 1,235.8 249.0 1,273.8 255.3 Private domestic holdings 14 Total private holdings 15 U.S. government securities 16 State and local obligations 17 Corporate and foreign bonds 18 Residential mortgages 19 Other mortgages and loans LESS: Federal Home Loan Bank advances 20 5,458.9 1,524.9 520.0 476.8 1,096.5 1,915.3 74.6 6,202.1 1,803.2 655.5 517.6 1,185.1 2,129.7 88.8 6,917.1 2,160.6 679.1 601.3 1,254.7 2,330.0 108.6 7,559.5 2,418.5 713.2 689.6 1,351.1 2,520.1 133.1 7,672.7 2,453.1 718.1 722.2 1,370.4 2,538.5 129.5 7,858.4 2,484.1 727.2 752.9 1,425.9 2,603.3 134.8 8,045.9 2,561.9 746.1 775.7 1,464.1 2,639.6 141.6 8,252.8 2,628.4 759.8 794.0 1,494.9 2,728.4 152.8 8,385.5 2,693.5 764.7 817.6 1,512.2 2,761.3 163.8 8,568.1 2,751.9 769.3 849.3 1,537.3 2,822.2 161.9 8,719.2 2,802.3 780.3 875.1 1,553.5 2,859.1 151.1 Private financial intermediation 21 Credit market claims held by private financial institutions 7,7 Commercial banking 73 Savings institutions 24 Insurance and pension funds Other finance 25 4,699.6 1,791.9 1,100.7 1,215.3 591.7 5,283.1 1,978.9 1,191.2 1,369.7 743.4 6,025.7 2,176.3 1,297.9 1,544.3 1,007.1 6,604.6 2,313.1 1,445.5 1,755.2 1,090.7 6,732.0 2,327.1 1,453.6 1,810.6 1,140.7 6,891.0 2,382.6 1,495.9 1,859.0 1,153.5 7,003.5 2,421.6 1,538.8 1,899.1 1,144.0 7,168.1 2,468.4 1,571.3 1,950.2 1,178.1 7,298.7 2,490.9 1,566.7 1,996.7 1,244.4 7,458.7 2,538.2 1,557.3 2,046.5 1,316.7 7,543.1 2,580.2 1,522.8 2,083.7 1,356.5 76 Sources of funds 27 Private domestic deposits and RPs Credit market debt 28 4,699.6 2,715.6 479.0 5,283.1 2,930.0 580.5 6,025.7 3,188.4 719.5 6,604.6 3,324.8 859.0 6,732.0 3,404.2 875.4 6,891.0 3,432.6 923.6 7,003.5 3,474.2 941.9 7,168.1 3,554.2 985.7 7,298.7 3,587.8 1,049.7 7,458.7 3,644.5 1,063.1 7,543.1 3,710.6 1,062.9 79 1,504.9 -14.1 15.5 1,160.8 342.6 1,772.7 5.6 25.8 1,289.4 451.8 2,117.9 18.6 27.5 1,427.9 643.9 2,420.8 62.2 21.6 1,597.2 739.6 2,452.4 45.9 23.5 1,647.9 735.2 2,534.8 62.3 32.6 1,693.8 746.1 2,587.4 51.9 34.2 1,729.2 772.1 2,628.1 71.6 29.0 1,771.2 756.4 2,661.1 61.9 13.5 1,802.6 783.0 2,751.0 51.0 34.4 1,833.7 831.9 2,769.6 53.7 32.4 1,853.9 829.6 Private domestic nonfinancial investors 34 Credit market claims 35 U.S. government securities 36 Tax-exempt obligations 37 Corporate and foreign bonds Open market paper 38 Other 39 1,238.4 659.5 194.2 33.1 83.5 268.0 1,499.5 814.7 231.9 38.0 131.0 283.8 1,610.8 899.1 211.2 77.8 136.4 286.2 1,813.9 992.0 256.8 102.2 160.7 302.3 1,816.1 1,005.2 257.6 97.7 151.9 303.7 1,891.0 1,022.1 270.1 105.7 179.9 313.3 1,984.4 1,086.1 289.0 107.1 188.7 313.6 2,070.5 1,143.5 303.7 100.8 201.0 321.5 2,136.6 1,175.0 307.2 137.0 213.0 304.3 2,172.6 1,196.3 308.2 136.4 221.7 309.9 2,239.0 1,239.6 312.4 150.0 221.4 315.5 40 Deposits and currency 41 Currency Checkable deposits 47 43 Small time and savings accounts Money market fund shares 44 45 Large time deposits Security RPs I 46 47 Deposits in foreign countries 2,895.8 159.6 380.6 1,693.4 218.5 332.5 90.6 20.6 3,120.4 171.9 422.5 1,831.9 227.3 339.9 108.3 18.5 3,399.2 186.3 517.4 1,948.3 265.6 328.5 128.5 24.5 3,553.9 205.4 514.0 2,017.1 292.8 355.2 145.7 23.7 3,628.0 204.0 495.4 2,084.9 318.4 353.7 151.9 19.9 3,662.4 209.9 510.3 2,110.9 306.1 349.1 156.2 19.9 3,704.4 213.4 496.1 2,131.1 303.6 384.7 158.6 16.8 3,785.9 220.1 525.4 2,150.4 315.6 396.0 166.9 11.6 3,822.8 220.7 492.8 2,164.7 340.3 415.9 174.1 14.3 3,887.9 226.4 496.4 2,186.7 359.9 423.1 178.4 17.0 3,945.9 225.0 497.3 2,219.0 389.2 421.2 183.9 10.3 48 Total of credit market instruments, deposits, and currency 4,134.2 4,619.9 5,010.0 5,367.8 5,444.2 5,553.5 5,688.8 5,856.4 5,959.4 6,060.4 6,184.9 24.1 87.7 615.3 24.1 87.7 652.5 24.0 87.0 653.8 24.2 86.9 701.9 24.5 87.0 721.2 24.2 87.1 713.6 24.5 86.5 748.1 ? 3 4 5 6 12 13 30 31 32 33 By public agencies and foreign Total held U.S. government securities Residential mortgages FHLB advances to thrifts Other loans and securities Other sources Foreign funds Treasury balances Insurance and pension reserves Other, net Public holdings as percent of total Private financial intermediation (in percent) Total foreign funds 20.3 86.1 291.5 20.8 85.2 373.5 22.8 87.1 484.7 23.8 87.4 590.2 MEMO: Corporate equities not included above 52 Total market value 2,157.9 2,823.9 3,360.6 3,325.0 3,504.0 3,622.7 3,577.6 3,620.3 3,731.6 4,072.3 4,296.0 53 54 Mutual fund shares Other equities 136.7 2,021.2 240.2 2,583.7 413.5 2,947.1 460.1 2,864.9 479.2 3,024.8 486.8 3,136.0 478.1 3,099.5 478.3 3,142.0 486.3 3,245.3 514.8 3,557.5 538.5 3,757.5 55 Holdings by financial institutions Other holdings 615.6 1,542.3 800.0 2,023.9 972.1 2,388.4 1,013.8 2,311.2 1,112.6 2,391.3 1,170.0 2,452.8 1,167.1 2,410.5 1,200.4 2,419.9 1,277.7 2,453.9 1,395.7 2,676.6 1,523.6 2,772.4 49 50 51 56 NOTES BY LINE NUMBER. 1. Line 1 of table 1.59. 2. Sum of lines 3 - 6 or 7-10. 6. Includes farm and commercial mortgages. 12. Credit market debt of federally sponsored agencies, and net issues of federally related mortgage pool securities. 14. Line 1 less line 2 plus line 12 and 13. Also line 21 less line 28 plus line 34. Also sum of lines 29 and 48 less lines 41 and 47. 19. Includes farm and commercial mortgages. 27. Line 40 less lines 41 and 47. 28. Excludes equity issues and investment company shares. Includes line 20. 30. Foreign deposits at commercial banks plus bank borrowings from foreign affiliates, less claims on foreign affiliates and deposits by banking in foreign banks. 31. Demand deposits and note balances at commercial banks. 32. Excludes net investment of these reserves in corporate equities. 33. Mainly retained earnings and net miscellaneous liabilities. 34. Line 14 less line 21 plus line 28. 35-39. Lines 15-19 less amounts acquired by private finance plus amounts borrowed by private finance. Line 39 includes mortgages. 41. Mainly an offset to line 10. 48. Lines 34 plus 40, or line 14 less line 29 plus 41 and 47. 49. Line 2/line 1 and 13. 50. Line 2 Mine 14. 51. Sum of lines 11 and 30. 52-54. 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, Stop 95, Division of Research-and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. A46 D o m e s t i c N o n f i n a n c i a l Statistics 2.10 NONFINANCIAL BUSINESS ACTIVITY • April 1990 Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1989 Measure 1987 1988 1990 1989 May June July Aug. Sept. Oct. Nov.' Dec.' Jan. 1 Industrial production 129.8 137.2 n.a. 141.6 142.0 141.9 142.5 142.3 141.8 142.2 142.5 140.9 Market groupings Products, total Final, total Consumer goods Equipment Intermediate Materials 138.3 136.8 127.7 148.8 143.3 118.3 145.9 144.3 133.9 158.2 151.5 125.3 n.a. n.a. n.a. n.a. n.a. n.a. 151.7 150.4 139.2 165.4 156.3 127.9 152.5 151.2 139.9 166.1 157.0 127.7 151.8 150.2 138.7 165.5 157.5 128.3 152.5 151.1 139.3 166.8 157.5 128.8 152.4 150.8 139.0 166.5 157.8 128.6 151.5 149.4 140.2' 161.7' 158.6' 128.7' 152.3 150.2 140.5 163.2 159.5 128.4 153.5 151.5 141.4 164.9 160.3 127.6 151.3 148.8 138.2 162.9 159.9 126.6 134.6 142.8 n.a. 148.1 148.7 148.5 149.2 148.8 148.0 148.5 148.6 147.2 81.1 80.5 83.5 83.7 83.9' 83.7 84.3 83.8 84.4 83.6 84.0 83.7 84.2 83.9 83.7 83.6 83.1 83.5 83.1 83.2 82.9 82.5 81.9 81.7 2 3 4 5 6 7 Industry groupings 8 Manufacturing Capacity utilization (percent) 2 9 Manufacturing Industrial materials industries 10 11 Construction contracts (1982 = 100)3 163.8 160.8 160.8' 159.0 157.0 163.0 160.0 175.0 165.0 158.0 160.0 154.0 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® 123.9 101.5 96.7 91.9 133.3 235.0 226.3 183.8 232.4 210.8 128.0 103.7 98.6 93.9 138.2 252.8 244.4 196.5 252.1 225.2' 131.6 105.3 99.6 94.8 142.7 275.5 264.8 207.3 274.0 237.5 131.3 105.5 99.9 95.0 142.2 273.5 262.0 205.8 271.7 237.4 131.7 105.4 99.8 94.8 142.7 274.8 263.8 207.0 273.8 237.3 131.9 105.4 99.8 94.8 143.0 276.4 266.1 207.5 275.4 239.1 132.0 105.5 99.8 94.8 143.1 277.3 266.7 208.8 276.1 241.3 132.3 105.2 99.4 94.2 143.6 277.9 268.5 208.8 276.5 242.0 132.4 105.2 99.2 94.1 143.8 280.3 271.4 211.1 278.7 238.9 132.7 105.2 99.1 93.9 144.2 282.9 271.6 208.9 281.6 240.5 132.8 104.9 99.0 93.8 144.5 284.2 273.3 209.8 282.7 239.9 133.2 104.9 98.4 93.0 145.0 n.a. n.a. n.a. n.a. 243.8 22 23 Prices 7 Consumer (1982-84 = 100) Producer finished goods (1982 = 100) . . . 113.6 105.4 118.3 108.0 124.0 113.5 123.8 114.2 124.1 114.3 124.4 114.1 124.6 113.4 125.0 113.6' 125.6 114.8 125.9 114.8 126.1 115.3 127.4 117.5 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 (1977 = 100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July 1985), pp. 487-501. The revised indexes for January through June 1985 were shown in the September Bulletin. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources. 3. Index of dollar value of total construction contracts, including residential, nonresidential and heavy engineering, from McGraw-Hill Information Systems Company, F. W. Dodge Division. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). 6. Based on Bureau of Census data published in Survey of Current Business. 7. Data without seasonal adjustment, as published in Monthly Labor Review. Seasonally adjusted data for changes in the price indexes may be obtained from the Bureau of Labor Statistics, U.S. Department of Labor. NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, and indexes for series mentioned in notes 3 and 7 may also be found in the Survey of Current Business. Figures for industrial production for the last two months are preliminary and estimated, respectively. Selected Measures 2.11 hAl LABOR FORCE, EMPLOYMENT, A N D U N E M P L O Y M E N T Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1989 Category 1987 1988 1990 1989 June July Aug. Sept. Oct. Nov. Dec.' Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population 1 185,010 186,837 188,601 188,518 188,672 188,808 188,948 189,096 189,238 189,381 189,506 2 Labor force (including Armed Forces) 1 3 Civilian labor force Employment 4 Nonagricultural industries 5 Agriculture Unemployment Number 6 7 Rate (percent of civilian labor force) . . . . 8 Not in labor force 122,122 119,865 123,893 121,669 126,077 123,869 126,300 124,111 126,202 124,013 126,280 124,070 126,245 124,023 126,373 124,148 126,709 124,488 126,762 124,546 126,610 124,397 109,232 3,208 111,800 3,169 114,142 3,199 114,404 3,138 114,219 3,217 114,275 3,275 114,200 3,219 114,388 3,197 114,676 3,160 114,691 3,197 114,728 3,134 7,425 6.2 62,888 6,701 5.5 62,944 6,528 5.3 62,524 6,569 5.3 62,218 6,577 5.3 62,470 6,520 5.3 62,528 6,604 5.3 62,703 6,563 5.3 62,723 6,652 5.3 62,529 6,658 5.3 62,619 6,535 5.3 62,896 102,200 105,584 108,573 108,607 108,767 108,887 109,096 109,171 109,452' 109,548 109,823 19,024 717 4,967 5,372 24,327 6,547 24,236 17,010 19,403 721 5,125 5,548 25,139 6,676 25,600 17,372 19,611 722 5,302 5,703 25,807 6,814 26,889 17,726 19,650 715 5,283 5,716 25,781 6,808 26,931 17,723 19,649 706 5,314 5,736 25,823 6,815 26,973 17,751 19,644 729 5,321 5,618 25,877 6,836 27,058 17,804 19,559 730 5,325 5,709 25,896 6,852 27,159 17,866 19,537 731 5,335 5,729 25,957 6,851 27,188 17,843 19,517' 737 5,355' 5,753' 26,044' 6,871' 27,345' 17,830' 19,489 739 5,305 5,832 26,022 6,882 27,416 17,863 19,377 740 5,409 5,859 26,163 6,892 27,522 17,861 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment 3 10 11 12 13 14 15 16 17 Manufacturing Mining Contract construction Transportation and public utilities Trade Finance Service Government 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). A48 Domestic Nonfinancial Statistics • April 1990 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1989 1989 1989 Series Q1 Q2 Q3 Q4' Output (1977 = 100) Q1 Q2 Q4 Q3 Q1 Capacity (percent of 1977 output) Q2 Q3 Q4' Utilization rate (percent) 1 Total industry 140.7 141.8 142.2 142.2 167.5 168.7 169.9 171.1 84.0 84.1 83.7 83.1 2 Mining 101.8 116.0 102.0 102.7 113.9 103.8 125.1 141.0 124.7 141.4 124.3 123.8 142.0 81.3 81.8 81.8 82.6 80.4 83.8 83.0 174.3 175.7 84.4 84.0 83.0 147.8 192.6 86.4 82.9 85.6 81.9 3 Utilities 147.0 4 Manufacturing 5 Primary processing 127.8 158.6 6 Advanced processing 7 Materials 8 Durable goods 9 Metal materials 10 Nondurable goods 11 Textile, paper, and chemical 12 Paper 13 Energy Chemical 14 materials Previous cycle High Low 115.7 148.3 148.8 117.9 148.4 127.6 160.8 128.8 160.9 128.7 160.3 146.5 191.0 127.6 127.9 128.6 128.2 151.7 138.6 98.4 136.3 139.2 148.4 145.4 139.0 96.0 137.1 139.8 146.1 145.7 140.4 97.8 137.9 141.1 149.8 146.5 138.5 93.1 138.0 140.6 151.6 145.9 170.1 110.2 152.7 153.5 154.0 161.4 100.7 100.7 99.8 101.7 118.4 Latest cycle High Low 141.7 84.4 149.1 194.2 150.4 195.8 87.3 83.0 86.4 83.5 152.6 153.5 154.4 84.1 83.9 83.8 83.0 171.3 110.6 154.2 155.3 155.8 163.7 172.5 111.0 155.8 157.0 157.6 165.9 173.7 111.4 157.4 158.8 159.4 168.2 81.5 83.8 89.3 90.7 96.4 90.1 81.1 81.4 88.9 90.0 93.8 89.0 81.4 82.3 88.5 89.8 95.1 88.3 79.7 78.1 87.7 88.5 95.1 86.7 118.3 118.1 118.0 85.0 85.1 84.5 86.2 1989 Jan. 178.7 177.2 82.3 1989 May June July Aug. 1990 Sept. Oct/ Nov/ Dec/ Jan. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 84.3 84.0 84.0 83.7 83.9 83.6 83.1 83.1 83.1 81.9 16 Mining 17 Utilities 92.8 95.6 87.8 82.9 95.2 88.5 76.9 78.0 82.2 80.9 81.8 81.8 81.5 80.8 82.1 80.5 82.4 80.0 83.4 80.8 84.2 81.4 84.4 81.3 82.8 86.4 84.7 77.1 18 Manufacturing 87.7 69.9 86.5 68.0 84.7 84.3 84.4 84.0 84.2 83.7 83.1 83.1 82.9 81.9 19 Primary processing 91.9 86.0 68.3 71.1 89.1 85.1 65.0 69.5 88.4 83.1 86.2 83.4 86.2 83.5 86.7 82.9 86.6 85.8 82.6 86.2 81.6 85.6 81.9 84.9 82.1 84.9 80.7 92.0 70.5 89.1 68.5 84.6 83.8 83.6 83.7 83.6 83.5 83.2 82.5 81.7 91.8 99.2 91.1 64.4 67.1 66.7 89.8 93.6 88.1 60.9 45.7 70.7 82.1 86.1 90.1 81.0 79.8 88.7 81.1 80.6 88.7 81.3 82.3 89.2 81.7 82.7 88.8 81.2 81.9 87.5 80.3 81.5 88.3 79.9 77.7 87.7 78.9 74.9 87.1 78.2 77.3 86.7 92.8 98.4 92.5 64.8 70.6 64.4 89.4 97.3 87.9 68.8 79.9 63.5 91.5 98.1 90.7 89.6 93.2 88.4 89.8 93.7 88.5 90.6 95.0 89.5 90.1 95.1 88.6 88.8 95.1 86.7 89.4 96.4 87.4 88.5 94.7 86.9 87.8 94.2 85.9 87.1 94.6 86.9 94.0 82.3 84.9 85.5 83.8 83.9 84.3 85.4 86.1 86.3 86.2 84.8 20 Advanced processing.. 21 Materials 22 Durable goods 23 Metal materials , 24 Nondurable goods 25 Textile, paper, and chemical 26 Paper 28 Energy materials.. 1. These data also appear in the Board's G.3 (402) release. For address, see inside front cover. 83.2 83.9 2. Monthly high 1973; monthly low 1975. 3. Monthly highs 1978 through 1980; monthly lows 1982. Selected Measures hAl 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted Groups 1977 proportion 1989 1990 1989 avg. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov. Dec. p Jan/ Index (1977 = 100) MAJOR MARKET 100.00 140.8 140.5 140.7 141.7 141.6 142.0 141.9 142.5 142.3 141.8 142.2 142.5 140.9 57.72 44.77 25.52 19.25 12.94 42.28 150.1 148.2 138.5 161.1 156.6 128.1 150.0 148.6 138.7 161.6 155.1 127.4 150.5 148.9 138.4 162.8 156.1 127.3 151.6 150.2 139.5 164.3 156.5 128.2 151.7 150.4 139.2 165.4 156.3 127.9 152.5 151.2 139.9 166.1 157.0 127.7 151.8 150.2 138.7 165.5 157.5 128.3 152.5 151.1 139.3 166.8 157.5 128.8 152.4 150.8 139.0 166.5 157.8 128.6 151.5 149.4 140.2 161.7 158.6 128.7 152.3 150.2 140.5 163.2 159.5 128.4 153.5 151.5 141.4 164.9 160.3 127.6 151.3 148.8 138.2 162.9 159.9 126.6 6.89 2.98 1.79 1.16 .63 1.19 3.91 1.24 1.19 .96 1.71 131.5 132.5 135.6 99.6 202.3 127.9 130.7 151.0 149.5 141.1 110.1 131.6 131.6 133.1 96.0 201.9 129.4 131.6 153.9 153.0 141.3 110.1 130.1 128.9 128.3 95.0 190.0 129.8 131.1 151.6 152.3 140.7 110.9 132.2 131.7 131.7 98.8 192.8 131.7 132.6 151.7 152.5 142.8 113.0 131.2 128.6 127.4 96.0 185.5 130.4 133.3 151.3 151.4 144.3 114.1 130.8 125.6 123.3 91.4 182.5 129.1 134.8 155.6 155.0 143.1 115.0 127.3 120.2 114.6 81.2 176.7 128.7 132.7 148.1 147.0 141.3 116.8 128.7 122.3 119.3 86.4 180.5 126.7 133.5 152.1 149.4 139.8 116.6 127.9 120.6 117.1 92.7 162.4 125.9 133.4 151.9 148.3 139.9 116.5 127.9 119.2 113.1 91.5 153.3 128.3 134.4 151.7 147.3 141.9 117.8 127.4 120.3 114.7 84.3 171.2 128.8 132.8 145.0 142.3 142.9 118.2 128.5 123.6 118.3 84.2 181.7 131.4 132.2 142.0 137.9 144.2 118.4 119.7 99.5 78.5 56.1 120.2 131.1 135.0 149.8 19 Nondurable consumer goods Consumer staples 20 21 Consumer foods and tobacco 22 Nonfood staples Consumer chemical products 23 24 Consumer paper products 25 Consumer energy 26 Consumer fuel 27 Residential utilities 18.63 15.29 7.80 7.49 2.75 1.88 2.86 1.44 1.42 141.1 149.4 144.8 154.2 187.6 174.2 109.1 96.7 121.7 141.4 149.7 144.3 155.4 187.8 177.0 110.1 95.0 125.4 141.4 149.9 143.3 156.9 188.9 180.4 110.7 95.6 126.1 142.2 150.7 144.7 156.9 187.3 180.9 112.0 97.3 127.0 142.1 150.7 144.7 156.9 189.1 180.9 110.1 93.6 127.0 143.3 151.9 145.7 158.4 191.0 183.6 110.7 95.6 126.1 142.8 151.4 144.2 158.9 193.1 183.0 110.4 97.0 124.0 143.2 152.0 145.6 158.7 192.5 184.7 109.2 96.0 122.7 143.1 151.8 145.9 157.9 187.9 186.6 110.3 95.7 125.1 144.7 153.8 147.9 160.0 192.0 188.3 110.8 96.1 125.8 145.3 154.8 149.1 160.7 190.7 192.3 111.1 95.7 126.8 146.1 156.0 149.3 162.9 191.5 193.1 115.7 94.8 145.1 154.7 Equipment 28 Business and defense equipment 29 Business equipment 30 Construction, mining, and farm 31 Manufacturing 32 Power Commercial 33 34 Transit 35 Defense and space equipment 18.01 14.34 2.08 3.27 1.27 5.22 2.49 3.67 167.1 163.8 74.3 136.3 92.8 252.4 125.7 180.0 167.9 165.0 75.6 137.8 92.7 254.3 125.2 179.3 168.9 166.3 76.9 138.6 93.0 257.6 123.9 178.7 170.3 167.8 77.6 139.7 93.6 260.1 124.8 179.9 171.5 169.1 76.3 140.9 93.3 263.2 125.3 180.7 172.0 169.6 74.8 142.8 92.5 264.5 124.8 181.1 171.3 168.5 73.0 143.8 92.8 263.8 120.1 182.0 172.5 169.9 72.1 143.5 94.2 265.6 124.4 182.7 172.1 169.6 74.7 143.1 93.8 265.1 122.2 182.1 167.1 164.8 75.2 142.0 94.8 259.3 107.7 176.0 168.6 166.6 75.4 141.8 95.1 262.4 111.2 176.6 170.6 168.8 76.4 141.6 94.7 263.4 121.5 177.7 168.3 165.9 77.5 142.1 95.0 261.3 107.4 177.7 5.95 6.99 5.67 1.31 142.3 168.8 175.9 138.2 139.5 168.4 175.4 138.3 139.3 170.4 177.4 140.3 140.2 170.4 177.9 138.0 140.2 170.0 177.3 138.2 141.2 170.4 177.9 138.4 142.2 170.6 177.8 139.6 141.5 171.2 178.8 138.1 140.9 172.3 180.1 138.5 142.6 172.3 179.9 139.5 143.9 172.8 181.0 137.5 143.7 174.4 181.6 143.2 144.0 20.50 4.92 5.94 9.64 4.64 139.4 111.7 175.2 131.5 100.8 138.6 112.1 175.2 129.7 98.4 137.9 110.7 175.3 128.8 95.9 139.0 110.8 176.9 130.0 98.0 138.7 111.8 177.1 128.9 94.4 139.4 111.6 177.5 130.0 95.5 139.9 109.9 179.1 131.0 97.7 140.9 111.9 180.0 131.6 98.4 140.4 110.7 179.6 131.4 97.4 139.2 108.9 177.6 131.1 96.4 138.9 108.4 179.1 129.6 92.7 137.5 105.7 179.0 128.1 90.2 136.6 100.4 179.0 128.9 93.1 1 Total index 2 Products Final products 3 4 Consumer goods Equipment 5 Intermediate products 6 7 Materials Consumer goods 8 Durable consumer goods Automotive products 9 10 Autos and trucks 11 Autos, consumer 12 Trucks, consumer Auto parts and allied goods 13 14 Home goods 15 Appliances, A/C and TV 16 Appliances and TV 17 Carpeting and furniture 18 Miscellaneous home goods Intermediate products 36 Construction supplies 37 Business supplies 38 General business supplies Commercial energy products 39 Materials 40 Durable goods materials 41 Durable consumer parts 42 Equipment parts Durable materials n.e.c 43 44 Basic metal materials 160.2 107.5 45 Nondurable goods materials 46 Textile, paper, and chemical materials 47 Textile materials Pulp and paper materials 48 Chemical materials 49 50 Miscellaneous nondurable materials . . . 10.09 137.1 135.9 136.0 137.1 136.8 137.3 138.5 138.3 136.7 138.4 138.0 137.5 137.4 7.53 1.52 1.55 4.46 2.57 139.9 112.1 150.4 145.7 129.1 138.6 110.7 147.5 145.0 128.0 139.0 111.8 147.3 145.4 127.2 140.3 114.6 146.7 146.8 127.8 139.1 116.4 145.2 144.7 129.9 140.0 117.2 146.5 145.5 129.4 141.8 116.4 149.1 147.9 129.0 141.5 117.0 149.9 147.0 128.9 140.0 115.6 150.5 144.6 127.3 141.4 115.1 153.1 146.3 129.8 140.5 113.3 151.0 146.2 130.6 139.9 113.6 150.7 145.2 139.5 51 Energy materials 52 Primary energy Converted fuel materials 53 11.69 7.57 4.12 100.5 105.2 92.0 100.5 104.4 93.3 101.0 103.7 96.1 101.7 104.1 97.4 101.1 104.6 94.7 99.1 103.0 92.0 99.1 103.2 91.6 99.5 104.2 91.0 100.9 105.6 92.2 101.7 107.0 91.9 101.9 107.0 92.5 101.7 104.9 95.7 100.0 A50 Domestic Nonfinancial Statistics • April 1990 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued Groups SIC code 1977 proportion 1990 1989 avg. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. r Nov. Dec. p Index (1977 = 100) MAJOR INDUSTRY 15.79 9.83 5.96 84.21 35.11 49.10 107.2 103.0 114.0 147.2 148.5 146.2 106.8 100.9 116.5 146.8 148.1 145.9 107.5 101.5 117.5 147.0 148.6 145.8 107.9 102.4 117.1 148.0 149.6 146.9 107.2 102.0 115.6 148.1 149.5 147.1 106.3 101.5 114.3 148.7 150.5 147.4 106.6 114.0 148.5 150.8 146.8 106.5 102.4 113.3 149.2 151.1 147.8 107.7 103.5 114.5 148.8 151.1 147.2 108.6 104.4 115.6 148.0 152.4 144.9 108.7 104.5 115.5 148.5 152.7 145.5 .50 1.60 7.07 .66 106.9 144.7 88.9 150.8 98.6 134.7 89.5 142.5 98.1 137.7 89.6 143.5 96.8 145.5 89.1 144.5 94.0 137.1 90.5 146.6 101.2 129.2 90.6 150.2 106.2 130.2 90.8 152.1 103.7 135.4 90.3 151.5 104.3 144.2 90.0 148.8 104.0 144.4 90.9 151.8 104.4 144.4 91.2 151.1 138.3 89.7 153.6 7.96 .62 2.29 2.79 3.15 146.6 105.0 120.2 110.2 153.8 146.3 104.7 119.4 146.6 109.2 122.5 111.3 150.7 147.2 105.9 123.6 111.5 150.1 147.9 104.2 123.8 111.9 150.2 147.3 97.1 123.5 111.4 152.4 148.3 99.9 123.2 148.8 97.3 123.2 151.7 152.8 153.4 150.3 99.2 123.5 110.0 155.5 151.6 151.7 145.4 101.5 119.7 109.9 151.7 121.5 109.3 153.5 122.3 108.2 154.1 4.54 8.05 2.40 194.6 158.5 96.3 175.0 62.9 198.5 159.2 97.0 176.4 61.2 200.1 159.3 97.3 178.0 61.4 199.0 158.2 96.9 180.5 60.3 200.5 159.9 97.9 182.3 60.5 199.9 200.6 161.5 97.7 183.6 .53 193.0 159.0 98.0 175.9 62.9 60.2 203.1 159.3 98.4 184.2 60.4 204.8 161.3 98.1 186.0 60.0 206.8 162.1 98.2 185.2 57.5 207.7 161.6 95.5 184.1 55.6 24 25 32 2.30 1.27 2.72 139.9 166.3 126.6 132.8 164.8 125.4 133.4 165.8 125.5 135.1 168.0 124.7 135.5 170.2 123.9 137.2 170.8 123.9 136.9 169.0 122.9 136.5 168.0 123.9 135.7 167.6 123.4 137.4 167.5 123.6 138.9 167.9 124.3 139.0 168.5 123.6 33 331.2 34 35 36 5.33 3.49 6.46 9.54 7.15 93.2 82.2 124.5 178.7 180.9 91.1 79.1 124.5 90.1 77.0 123.1 184.7 182.2 87.2 73.2 124.8 186.5 181.6 87.3 72.9 125.2 187.5 181.9 89.2 75.4 125.4 186.7 181.4 90.3 75.9 125.5 187.8 183.7 89.2 75.4 124.4 182.7 89.0 76.4 124.1 184.1 182.2 85.1 72.0 125.4 187.5 181.3 83.0 70.2 124.7 181.7 88.4 75.9 123.8 183.0 181.6 180.9 123^4 186.6 181.9 29 Transportation equipment 37 30 Motor vehicles and parts 371 31 Aerospace and miscellaneous transportation equipment.. 372-6.9 32 Instruments 38 33 Miscellaneous manufactures 39 9.13 5.25 136.7 124.9 136.4 123.4 134.8 120.4 136.4 122.0 135.5 119.7 134.2 116.4 131.3 110.4 133.2 114.2 131.9 112.7 123.9 110.1 125.1 110.4 128.6 110.7 115.1 87.0 3.87 2.66 1.46 152.7 161.0 111.8 154.0 161.3 107.6 154.4 161.8 110.0 155.9 163.0 114.5 157.1 164.3 114.7 158.4 165.7 117.1 159.6 166.0 119.6 159.0 164.1 118.5 157.9 163.1 119.2 142.7 162.5 122.9 145.2 161.9 125.5 152.9 160.8 127.3 153.3 161.6 131.0 135.3 137.0 137.1 135.8 135.5 136.8 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 16 17 18 19 20 Printing and publishing Chemicals and products Petroleum products Rubber and plastic products . Leather and products Durable manufactures 21 Lumber and products 22 Furniture and fixtures 23 Clay, glass, and stone products 24 25 26 27 28 Primary metals Iron and steel Fabricated metal products. Nonelectrical machinery . . Electrical machinery 10 11.12 13 14 2.80 Utilities 34 Electric . 110.2 180.8 102.1 162.2 98.3 182.3 60.8 111.1 111.2 188.2 110.1 102.4 122.8 148.6 152.4 145.9 188.2 106.5 104.6 109.6 147.2 152.7 143.3 153.3 209.0 99^0 84.8 129.6 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,885.1 1,879.2 1,878.0 1,893.9 1.885.5 1,886.2 1,868.0 1,875.4 1,874.8 1,875.0 1,883.8 1,895.8 1.849.8 36 Final 37 Consumer goods 38 Equipment 39 Intermediate 405.7 272.7 133.0 1,447.5 1,449.6 1,442.8 1,460.4 1.449.6 1,450.2 1,430.0 1,438.1 1,436.5 1,432.7 1,439.4 1,451.2 1.406.9 935.6 934.3 928.0 939.4 928.5 929.3 915.5 919.9 917.7 926.2 930.6 939.4 908.5 511.9 515.2 514.8 521.1 521.1 520.9 514.5 518.2 518.8 506.5 508.8 511.8 498.4 437.7 429.6 435.3 433.5 435.9 436.0 438.0 437.3 438.3 442.3 444.4 444.6 443.0 111.9 1. These data also appear in the Board's G. 12.3 (414) release. For address, see inside front cover. 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 (1977=100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July 1985), pp. 487-501. The revised indexes for January through June 1985 were shown in the September Bulletin. Selected Measures hAl 2.14 HOUSING A N D CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1989 Item 1987 1988 1989 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 1,535 1,024 511 1,456 994 462 1,332 934 398 1,230 870 360 1,334 954 380 1,347 905 442 1,308 874 434 1,281 906 375 1,328 927 401 1,319 946 373 1,356 961 395 1,342 979 363 1,376 970 406 4 Started 1-family 2-or-more-family 1,621 1,146 474 1,488 1,081 407 1,374 1,002 373 1,405' 979' 426' 1,341' 1,028' 313' 1,308 977 331 1,414' 971' 443' 1,424' 1,029' 395' 1,325' 987' 338' 1,263' 969' 294' 1,423 1,023 400 1,347 1,010 337 1,254 911 343 987 591 397 919 570 350 855 537 317 942 586 356 924 579 345 911 572 339 914 572 342 918 576 342 902 565 337 893 566 327 894 565 329 883 559 324 887 567 320 1,669 1,123 546 1,530 1,085 445 1,421 1,025 397 1,459 1,050 409 1,552 1,115 437 1,442 1,041 401 1,355 964 391 1,372 965 407 1,439 1,040 399 1,368 960 408 1,317 987 330 1,479 1,075 404 1,290 916 374 13 Mobile homes shipped 233 218 198 209' 202' 205 200' 179' 194 186' 190 189 189 Merchant builder activity in 1-family units 14 Number sold 15 Number for sale, end of period 672 365 675 366 649 362 555 377 607 377 653 380 647 377 738 369 723 364 640' 364' 637 364 696 363 629 362 6 7 Under construction, end of period 1 . 8 1-family 2-or-more-family 9 10 Completed 11 1-family 12 2-or-more-family Price (thousands of dollars)2 Median 16 Units sold 104.7 113.3 120.8 123.0 116.7 119.0 122.8 116.0 122.9 120.0' 123.0 125.0 130.1 17 127.9 139.0 148.8 149.0 144.7 145.1 153.6 140.3 158.6 151.1' 147.5 152.1 159.8 18 Number sold 3,530 3,594 3,438 3,400 3,400 3,210 3,360 3,330 3,480 3,520 3,490 3,560 3,560 Price of units sold ^ (thousands of dollars)' 19 Median 20 Average 85.6 106.2 89.2 112.5 93.0 118.0 92.0 116.1 92.9 118.0 92.6 118.0 93.4 118.8 96.7 122.1 94.8 120.8 94.3 118.4 92.4 117.2 93.1 118.3 92.5 117.0 Units sold EXISTING UNITS ( 1 - f a m i l y ) Value of new construction 3 (millions of dollars) CONSTRUCTION 21 Total put in place 397,721 409,663 414,677 416,779 411,891 416,540 412,523 410,269 416,279 416,176 414,590 417,294 414,588 27 23 24 320,108 194,656 125,452 328,738 198,101 130,637 330,661 163,865 166,796 338,065 202,083 135,982 332,537 200,735 131,802 330,591 196,984 133,607 329,035 194,229 134,806 328,785 195,165 133,620 331,884 194,393 137,491 329,564 192,765 136,799 329,782 193,124 136,658 328,762 192,279 136,483 323,525 190,974 132,551 25 26 77 28 Private Residential Nonresidential, total Buildings Industrial Commercial Other Public utilities and other 13,707 55,448 15,464 40,833 14,931 58,104 17,278 40,324 16,771 57,549 17,402 75,074 15,698 60,653 17,634 41,997 16,245 55,581 16,645 43,331 15,945 56,796 17,343 43,523 16,302 57,434 17,179 43,891 16,424 56,640 16,768 43,788 17,526 57,680 18,455 43,830 17,927 57,132 17,962 43,778 17,746 58,238 17,277 43,397 17,812 57,688 17,761 43,222 17,498 55,128 16,622 43,303 7.9 30 31 32 33 Public Military Highway Conservation and development... Other 77,612 4,327 25,343 5,162 42,780 80,922 3,579 28,524 4,474 44,345 44,223 3,669 27,597 4,755 25,995 78,714 3,740 26,091 4,210 44,673 80,420 2,054 27,772 3,068 47,526 85,130 3,870 27,432 6,053 47,775 81,914 4,324 27,321 4,699 45,570 81,484 3,194 26,128 4,567 47,595 84,395 3,779 27,367 4,708 48,541 86,612 4,916 27,581 4,906 49,209 84,807 3,342 26,062 5,860 49,543 88,532 3,955 28,894 4,414 51,269 91,062 3,959 31,565 5,581 49,957 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 previous 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. A52 2.15 Domestic Nonfinancial Statistics • April 1990 C O N S U M E R A N D P R O D U C E R PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 months earlier Change from 3 months earlier (at annual rate) Change from 1 month earlier 1989 1990 Item 1989 1990 Jan. Jan. Mar/ June' Sept/ Dec/ Sept/ Oct/ Nov / Dec/ Jan. Jan. CONSUMER PRICES 2 (1982-84=100) 1 All items 4.7 5.2 6.1 5.3 2.3 4.9 .2 .5 .3 .4 1.1 127.4 2 3 4 5 6 Food Energy items All items less food and energy Commodities Services 5.6 1.8 4.6 4.2 5.0 6.7 9.7 4.4 2.6 5.3 7.8 9.7 5.5 3.8 5.9 5.6 22.7 3.8 2.4 4.6 3.6 -12.6 3.5 1.3 4.5 5.5 3.9 4.7 3.4 5.7 .3 -.6 .3 .5 .2 .4 1.0 .5 .4 .5 .5 -.3 .4 .2 .4 .5 .3 .3 .2 .4 2.0 5.1 .6 .4 .7 130.4 97.6 132.0 121.0 138.4 PRODUCER PRICES (1982=100) 7 8 9 10 11 Finished goods Consumer foods Consumer energy Other consumer goods Capital equipment 4.5 5.6 2.7 4.6 3.7 5.8 5.9 19.7 4.1 3.4 9.0 11.2 33.0 5.4 4.6 5.8 -2.3 34.3 6.0 4.5 .4 .7 -15.3 2.3 4.4 5.0 12.0 -4.8 4.6 1.7 .7 -.3 6.6 .3 .7 .5 1.4 .2 .3 -.2 .1 .9 -3.2 .2 .4 .6 .6 1.9 .6 .2 1.8 2.1 13.6 .0 .2 117.5 123.6 72.8 126.9 121.1 12 13 Intermediate materials 3 Excluding energy 6.0 7.0 2.7 .3 7.9 5.5 2.9 .3 -.7 -.7 .4 -1.3 .4 .1 .2 .1 -.1 .0 .0 -.4 1.2 .1 113.4 119.9 14 15 16 Crude materials Foods Energy Other 15.7 .6 8.6 1.0 15.7 -5.8 14.8 48.3 9.7 -16.9 23.6 -7.7 -2.2 -7.0 .6 18.4 13.2 -16.3 -.6 3.5 .4 -.6 .7 -.1 2.3 .3 -2.2 2.5 2.2 -2.1 1.0 5.0 .2 113.6 82.4 132.1 1. Not seasonally adjusted. 2. Figures for consumer prices are those for all urban consumers and reflect a rental equivalence measure of homeownership after 1982. 3. Excludes intermediate materials for food manufacturing and manufactured animal feeds. SOURCE. Bureau of Labor Statistics. Selected Measures hAl 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1988 Account 1987 1988 1989 1989 Q4 Ql Q2 Q3 Q4 GROSS NATIONAL PRODUCT 1 Total 4,524.3 4,880.6 5,233.2 5,017.3 5,113.1 5,201.7 5,281.0 5,337.0 3,010.8 421.0 998.1 1,591.7 3,235.1 455.2 1,052.3 1,727.6 3,470.3 473.6 1,122.6 1,874.1 3,324.0 467.4 1,078.4 1,778.2 3,381.4 466.4 1,098.3 1,816.7 3,444.1 471.0 1,121.5 1,851.7 3,508.1 486.1 1,131.4 1,890.6 3,547.5 471.0 1,139.1 1,937.5 699.9 670.6 444.3 133.8 310.5 226.4 750.3 719.6 487.2 140.3 346.8 232.4 777.1 747.7 512.5 145.1 367.4 235.2 752.8 734.1 495.8 142.5 353.3 238.4 769.6 742.0 503.1 144.7 358.5 238.8 775.0 747.6 512.5 142.4 370.1 235.1 779.1 751.7 519.6 146.2 373.4 232.1 784.8 749.6 514.8 147.1 367.7 234.8 29.3 30.5 30.6 34.2 29.4 25.2 18.7 40.8 27.7 19.1 27.4 23.6 27.4 19.8 35.2 38.3 -112.6 448.6 561.2 -73.7 547.7 621.3 -50.9 624.4 675.2 -70.8 579.7 650.5 -54.0 605.6 659.6 -50.6 626.1 676.6 -45.1 628.5 673.6 -53.8 637.3 691.1 926.1 381.6 544.5 968.9 381.3 587.6 1,036.7 404.1 632.5 1,011.4 406.4 604.9 1,016.0 399.0 617.0 1,033.2 406.0 627.2 1,038.9 402.7 636.2 1,058.6 408.8 649.8 4,495.0 1,785.2 777.6 1,007.6 2,304.5 434.6 4,850.0 1,931.9 863.6 1,068.3 2,499.2 449.5 5,203.8 2,073.6 911.6 1,161.9 2,700.7 459.0 4,998.7 1,987.4 808.5 1,098.9 2,570.0 459.9 5,085.4 2,030.9 894.7 1,136.2 2,620.8 461.3 5,174.3 2,079.1 905.2 1,173.9 2,667.5 455.1 5,253.6 2,096.3 930.1 1,166.2 2,728.1 456.6 5,301.8 2,087.9 916.5 1,171.3 2,786.2 462.9 29.3 22.0 7.2 30.6 25.0 5.6 29.4 14.6 14.9 18.7 32.0 -13.3 27.7 22.0 5.7 27.4 6.0 21.4 27.4 5.2 22.2 35.2 25.0 10.2 3,853.7 4,024.4 4,142.6 4,069.4 4,106.8 4,132.5 4,162.9 4,168.1 30 Total 3,665.4 3,972.6 4,265.0 4,097.4 4,185.2 4,249.6 4,287.3 n.a. 31 Compensation of employees 32 Wages and salaries 33 Government and government enterprises 34 Other 35 Supplement to wages and salaries 36 Employer contributions for social insurance 37 Other labor income 2,690.0 2,249.4 419.2 1,830.1 440.7 227.8 212.8 2,907.6 2,429.0 446.5 1,982.5 478.6 249.7 228.9 3,145.4 2,632.0 476.9 2,155.1 513.4 265.1 248.3 2,997.2 2,505.1 456.3 2,048.9 492.0 255.6 236.5 3,061.7 2,560.7 466.9 2,093.8 501.0 259.7 241.3 3,118.2 2,608.8 473.5 2,135.3 509.4 263.4 246.0 3,171.9 2,654.7 480.2 2,174.5 517.2 266.6 250.7 3,230.1 2,704.0 487.1 2,216.9 526.1 270.7 255.3 311.6 270.0 41.6 327.8 288.0 39.8 352.2 305.9 46.3 328.3 296.3 32.0 359.3 300.3 59.0 355.5 304.2 51.3 343.3 307.2 36.1 350.9 312.0 38.8 2 3 4 5 By source Personal consumption expenditures Durable goods Nondurable goods Services 6 Gross private domestic investment 7 Fixed investment 8 Nonresidential 9 Structures 10 Producers' durable equipment 11 Residential structures 12 13 Change in business inventories Nonfarm 14 Net exports of goods and services 15 Exports 16 Imports 17 Government purchases of goods and services 18 Federal 19 State and local By major type of product 20 Final sales, total 21 Goods 22 Durable 23 Nondurable 24 Services 25 Structures 26 Change in business inventories 27 Durable goods 28 Nondurable goods MEMO 29 Total GNP in 1982 dollars NATIONAL INCOME 38 Proprietors' income1 39 Business and professional 1 40 Farm 1 41 Rental income of persons 2 13.4 15.7 8.0 16.1 11.8 9.8 5.4 5.1 42 Corporate profits1 3 43 Profits before tax 44 Inventory valuation adjustment 45 Capital consumption adjustment 298.7 266.7 -18.9 50.9 328.6 306.8 -25.0 46.8 298.2 287.3 -18.5 29.4 340.2 318.8 -20.1 41.5 316.3 318.0 -38.3 36.6 307.8 296.0 -20.5' 32.3 295.2 275.0 -6.3 26.5 n.a. n.a. -8.9 22.4 46 Net interest 351.7 392.9 461.1 415.7 436.1 458.4 471.5 478.4 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). A54 Domestic Nonfinancial Statistics • April 1990 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1989 1988 Account 1987 1988 1989 Q4 Ql Q2 Q3 Q4 PERSONAL INCOME AND SAVING 1 Total personal income 3,777.6 4,064.5 4,428.7 4,185.2 4,317.8 4,400.3 4,455.9 4,540.9 2 Wage and salary disbursements 3 Commodity-producing industries 4 Manufacturing 5 Distributive industries 6 Service industries 7 Government and government enterprises 2,249.4 649.9 490.3 531.9 648.3 419.2 2,429.0 696.3 524.0 571.9 714.4 446.5 2,632.0 738.3 553.0 615.1 801.7 476.9 2,505.1 714.7 538.1 587.5 746.7 456.3 2,560.7 726.6 546.3 598.8 768.4 466.9 2,608.8 733.7 549.9 610.8 790.8 473.5 2,654.7 742.6 555.7 619.4 812.4 480.2 2,704.0 750.4 559.9 631.2 835.3 487.1 14 Personal interest income 15 Transfer payments 16 Old-age survivors, disability, and health insurance benefits . . . 212.8 311.6 270.0 41.6 13.4 92.0 523.2 548.2 282.9 228.9 327.8 288.0 39.8 15.7 102.2 571.1 584.7 300.5 248.3 352.2 305.9 46.3 8.0 112.4 657.8 632.1 325.2 236.5 328.3 296.3 32.0 16.1 106.4 598.6 593.8 304.0 241.3 359.3 300.3 59.0 11.8 109.4 629.0 616.4 316.9 246.0 355.5 304.2 51.3 9.8 111.4 655.1 626.8 322.9 250.7 343.3 307.2 36.1 5.4 113.2 667.8 636.4 327.9 255.3 350.9 312.0 38.8 5.1 115.7 679.5 649.0 333.0 17 172.9 194.9 214.2 199.6 210.0 213.0 215.4 218.5 8 Other labor income 9 Proprietors' income1 10 Business and professional 11 Farm 1 12 Rental income of persons LESS: Personal contributions for social insurance 3,777.6 4,064.5 4,428.7 4,185.2 4,317.8 4,400.3 4,455.9 4,540.9 571.7 586.6 648.7 597.8 628.3 652.6 649.1 665.0 20 EQUALS: Disposable personal income 3,205.9 3,477.8 3,780.0 3,587.4 3,689.5 3,747.7 3,806.8 3,875.9 21 LESS: Personal outlays 3,104.1 3,333.1 3,573.7 3,424.0 3,483.8 3,547.0 3,611.7 3,652.2 22 EQUALS: Personal saving 101.8 144.7 206.3 163.4 205.7 200.7 195.1 223.7 15,793.9 10,302.0 10,970.0 3.2 16,332.8 10,545.5 11,337.0 4.2 16,650.3 10,725.5 11,681.0 5.5 16,455.3 10,625.6 11,466.0 4.6 16,566.4 10,653.5 11,625.0 5.6 16,629.8 10,678.9 11,622.0 5.4 16,711.8 10,799.3 11,717.0 5.1 16,685.7 10,765.8 11,761.0 5.8 27 Gross saving 553.8 642.4 700.7 647.4 693.5 695.8 709.9 n.a. 28 29 30 31 663.8 101.8 75.3 -18.9 738.6 144.7 80.3 -25.0 805.6 206.3 47.1 -18.5 769.3 163.4 81.7 -20.1 792.1 205.7 53.4 -38.3 793.7 200.7 52.0 -20.5' 809.7 195.1 49.3 -6.3 n.a. 223.7 n.a. -8.9 303.1 183.6 321.7 191.9 344.8 207.4 329.7 194.4 335.2 197.8 339.7 201.3 349.9 215.3 354.5 215.1 State and local -110.1 -161.4 51.3 -96.1 -145.8 49.7 -104.9 -149.9 45.0 -121.9 -167.6 45.7 -98.7 -147.5 48.8 -97.9 -145.4 47.5 -99.8 -144.7 44.9 37 Gross investment 549.0 632.8 677.4 630.8 669.3 677.5 684.3 678.3 699.9 -150.9 750.3 -117.5 777.1 -99.8 752.8 -122.0 769.6 -100.3 775.0 -97.5 779.1 -94.8 784.8 -106.5 -4.7 -9.6 -23.4 -16.6 -24.1 -18.3 -25.5 -25.5 18 EQUALS: Personal income 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 profits1 Corporate inventory valuation adjustment Capital consumption 32 Corporate 33 Noncorporate allowances 34 Government suiplus, or deficit ( - ) , national income and product accounts 36 38 Gross private domestic 39 Net foreign 40 Statistical discrepancy 1. With inventory valuation and capital consumption adjustments. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). n.a. n.a. n.a. Summary Statistics 3.10 U.S. INTERNATIONAL TRANSACTIONS A55 Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1989 1988 Item credits or debits 1 Balance on current account 2 Not seasonally adjusted Merchandise trade balance Merchandise exports Merchandise imports Military transactions, net 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, —) 1986 1987 1988 -133,249 -143,700 -126,548 -145,058 223,367 -368,425 -4,577 60,629 10,517 -4,049 -11,730 -159,500 250,266 -409,766 -2,856 71,151 10,585 -4,063 -10,149 -127,215 319,251 -446,466 -4,606 61,974 17,702 -4,279 -10,377 Q3 Q4 Ql Q2 Q3" -32,340 -36,926 -30,339 80,604 -110,943 -1,006 12,806 4,971 -1,088 -2,288 -28,677 -28,191 -32,019 83,729 -115,748 -1,604 21,329 5,475 -1,090 -3,928 -30,390 -25,994 -28,378 87,919 -116,297 -1,498 15,527 5,428 -1,186 -2,340 -32,084 -31,888 -27,554 91,423 -118,977 -1,518 13,400 5,977 -1,011 -1,857 -22,687 -27,718 -27,751 91,569 -119,320 -968 21,096 7,077 -1,099 -2,557 -2,024 997 2,999 1,961 3,413 1,049 -309 644 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 312 0 -246 1,501 -942 9,149 0 -509 2,070 7,588 -3,566 0 474 1,025 -5,064 -7,380 0 -35 202 -7,547 2,271 0 173 307 1,791 -4,000 0 -188 316 -4,128 -12,095 0 68 -159 -12,004 -5,996 0 -211 337 -6,122 17 Change in U.S. private assets abroad (increase, —). 18 Bank-reported claims 19 Nonbank-reported claims 20 U.S. purchase of foreign securities, net 21 U.S. direct investments abroad, net -97,953 -59,975 -7,396 -4,271 -26,311 -86,363 -42,119 5,201 -5,251 -44,194 -81,544 -54,481 -1,684 -7,846 -17,533 -32,467 -26,229 255 -1,592 -4,901 -38,332 -30,916 4,569 -3,047 -8,938 -28,367 -22,132 1,835 -2,568 -5,502 12,781 27,238 -2,954 -5,737 -5,766 -41,804 -20,702 -10,138 -10,964 22 Change in foreign official assets in 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 3 27 Other foreign official assets 5 35,594 34,364 -1,214 2,141 1,187 -884 45,193 43,238 1,564 -2,520 3,918 -1,007 38,882 41,683 1,309 -1,284 -331 -2,495 -2,234 -3,769 572 -232 1,703 -508 10,589 11,897 697 -232 -1,036 -737 7,477 4,634 721 -304 1,974 452 -5,201 -9,738 -97 417 3,620 597 11,246 12,068 190 -547 -1,117 652 28 Change in foreign private assets in United States (increase, +) „ 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 United States, net 186,011 79,783 -2,641 3,809 70,969 34,091 172,847 89,026 2,450 -7,643 42,120 46,894 180,417 68,832 6,558 20,144 26,448 58,435 48,413 23,291 2,350 3,422 7,454 11,896 70,170 32,223 2,702 5,336 6,871 23,038 52,529 13,261 2,852 8,590 8,665 19,161 3,412 -21,422 -361 2,252 9,676 13,267 61,236 25,688 0 11,308 0 1,878 0 -10,641 0 24,047 -4,556 0 -19,434 4,431 0 1,702 4,127 0 33,496 -2,311 0 -2,639 -5,115 11,308 1,878 -10,641 28,603 -23,865 -2,425 35,807 2,476 312 34 Allocation of SDRs 35 Discrepancy 36 Owing to seasonal adjustments 37 Statistical discrepancy in recorded data before seasonal adjustment 13,034 11,082 11,432 MEMO Changes in official assets U.S. official reserve assets (increase, —) Foreign official assets in United States (increase, +) excluding line 25 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 38 39 9,149 -3,566 -7,380 2,271 -4,000 -12,095 -5,996 33,453 47,713 40,166 -2,002 10,821 7,781 -5,618 11,793 -9,327 -9,956 -3,109 -459 672 7,143 433 3,776 96 53 92 7 40 12 13 15 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. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 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). A56 International Statistics • April 1990 3.11 U. S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1989 Item 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 3 Trade balance Customs value 1987 1988 1989 June July Aug. Sept. Oct. Nov/ Dec." 254,073 322,426 364,610 31,286 30,468 30,562 30,680 31,034 30,374 31,109 406,241 440,952 473,309 39,293 38,709 40,662 39,194 41,283 40,666 38,278 -152,169 -118,526 -108,699 -8,007 -8,241 -10,101 -8,513 -10,249 -10,292 -7,169 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; the previous month is revised to reflect late documents. 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 1989 Type 2 Gold stock, including Exchange Stabilization Fund 1 3 Special drawing rights 2 ' 3 4 Reserve position in International Monetary Fund Foreign currencies 4 1987c 1990 1988c July Aug. Sept. Oct. Nov. Dec. Jan. p 75,506 45,798 47,802 63,462 62,364 68,418 70,560 70,560 74,609 11,064 11,078 11,057 11,066 11,066 11,065 11,062 11,060 11,059 11,059 8,395 10,283 9,637 9,340 9,240 9,487 9,473 9,751 9,951 10,041 11,730 11,349 9,745 9,055 8,644 8,786 8,722 9,047 9,048 9,173 17,322 13,088 17,363 34,001 33,413 39,080 41,552 42,702 44,551 45,233 48,511 1 Total 5 1986c 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 BANKS 1 Millions of dollars, end of period 1989 Assets 1986 1987 July 1 Deposits Assets held in custody 2 U.S. Treasury securities 3 Earmarked gold Aug. Sept. Oct. Nov. Dec. Jan. p 287 244 347 371 265 325 252 307 589 251 155,835 14,048 195,126 13,919 232,547 13,636 233,170 13,530 238,007 13,516 235,597 13,506 230,804 13,460 231,059 13,458 224,911 13,456 225,618 13,458 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. 1990 1988 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 3.14 FOREIGN BRANCHES OF U.S. BANKS A57 Balance Sheet Data1 Millions of dollars, end of period 1989 Asset account 1986 1987 1988 June July Aug. Sept. Oct. Nov.' Dec. All foreign countries 1 Total, all currencies 2 Claims on United States 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 456,628 518,618 505,595 523,674 534,425' 522,489 520,845 533,641 548,039 545,266 114,563 83,492 13,685 17,386 312,955 96,281 105,237 23,706 87,731 138,034 105,845 16,416 15,773 342,520 122,155 108,859 21,832 89,674 169,111 129,856 14,918 24,337 299,728 107,179 96,932 17,163 78,454 177,445 132,380 14,218 30,847 303,720 115,913 94,902 16,709 76,196 179,839r 133,359r 15,744 30,736 310,426 117,438 95,621 16,948 80,419 177,299 134,479 15,225 27,595 299,265 108,893 92,465 16,656 81,251 182,440 142,339 14,164 25,937 289,9% 104,683 90,510 16,215 78,588 184,505 145,034 14,248 25,223 300,814 110,684 93,357 16,721 80,052 195,878 154,790 15,301 25,787 303,356 111,053 95,098 16,148 81,057 198,732 156,989 17,042 24,701 300,789 113,810 90,703 16,456 79,820 29,110 38,064 36,756 42,509 44,160' 45,925 48,409 48,322 48,805 45,745 12 Total payable in U.S. dollars 317,487 350,107 357,573 367,562 372,076' 369,287 359,924 369,898 380,247 382,314 H 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 110,620 82,082 12,830 15,708 195,063 72,197 66,421 16,708 39,737 132,023 103,251 14,657 14,115 202,428 88,284 63,707 14,730 35,707 163,456 126,929 14,167 22,360 177,685 80,736 54,884 12,131 29,934 169,520 127,352 13,207 28,961 180,013 88,874 50,627 11,815 28,697 171,265' 128,287' 14,734 28,244 181,441 90,077 49,913 11,616 29,835 170,497 130,168 14,688 25,641 177,911 83,036 50,885 11,774 32,216 174,628 137,481 13,217 23,930 164,461 77,858 46,786 11,646 28,171 176,228 139,224 13,597 23,407 171,691 83,945 47,349 11,579 28,818 188,070 149,873 14,543 23,654 168,677 79,585 48,%6 11,446 28,680 191,081 152,191 16,386 22,504 169,780 82,949 48,396 10,961 27,474 11,804 15,656 16,432 18,029 19,370' 20,879 20,835 21,979 23,500 21,453 11 Other assets 22 Other assets United Kingdom 23 Total, all currencies 140,917 158,695 156,835 153,968 161,882 158,860 157,673 164,155 164,916 161,947 24 Claims on United States 25 Parent bank 26 Other banks in United States 27 Nonbanks 28 Claims on foreigners 29 Other branches of parent bank 30 Banks 31 Public borrowers 32 Nonbank foreigners 24,599 19,085 1,612 3,902 109,508 33,422 39,468 4,990 31,628 32,518 27,350 1,259 3,909 115,700 39,903 36,735 4,752 34,310 40,089 34,243 1,123 4,723 106,388 35,625 36,765 4,019 29,979 38,014 33,763 1,125 3,126 103,773 34,948 37,357 3,599 27,869 42,147 37,713 1,121 3,313 106,586 35,440 36,519 3,788 30,839 41,914 38,031 1,112 2,771 102,231 32,392 36,073 3,586 30,180 40,085 36,046 1,265 2,774 102,097 32,611 37,146 3,265 29,075 42,424 38,938 1,200 2,286 106,430 35,252 38,048 3,346 29,784 44,661 40,848 1,199 2,614 105,349 35,064 36,317 3,181 30,787 39,212 35,847 1,058 2,307 107,657 37,728 36,159 3,293 30,477 6,810 10,477 10,358 12,181 13,149 14,715 15,491 15,301 14,906 15,078 34 Total payable in U.S. dollars 95,028 100,574 103,503 99,028 103,512 104,036 99,238 106,869 106,086 103,427 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 41 Banks 42 Public borrowers 43 Nonbank foreigners 23,193 18,526 1,475 3,192 68,138 26,361 23,251 3,677 14,849 30,439 26,304 1,044 3,091 64,560 28,635 19,188 3,313 13,424 38,012 33,252 964 3,7% 60,472 28,474 18,494 2,840 10,664 34,990 32,059 844 2,087 58,746 26,541 18,745 2,606 10,854 38,506 36,041 821 1,644 59,137 27,955 17,080 2,702 11,400 39,135 36,375 1,007 1,753 57,706 25,368 18,298 2,679 11,361 37,108 34,537 1,017 1,554 55,340 25,542 17,612 2,521 9,665 39,715 37,404 951 1,360 59,389 28,084 18,275 2,553 10,477 41,504 39,304 861 1,339 56,872 26,961 16,884 2,404 10,623 36,404 34,329 843 1,232 59,062 29,872 16,579 2,371 10,240 3,697 5,575 5,019 5,292 5,869 7,195 6,790 7,765 7,710 7,961 33 Other assets 44 Other assets Bahamas and Caymans 45 Total, all currencies 46 Claims on United States Parent bank 47 Other banks in United States 48 49 Nonbanks 50 Claims on foreigners Other branches of parent bank 51 52 Banks 53 Public borrowers 54 Nonbank foreigners 55 Other assets 56 Total payable in U.S. dollars 142,592 160,321 170,639 171,780 173,014' 165,401 164,684 164,836 172,762 175,949 78,048 54,575 11,156 12,317 60,005 17,296 27,476 7,051 8,182 85,318 60,048 14,277 10,993 70,162 21,277 33,751 7,428 7,706 105,320 73,409 13,145 18,766 58,393 17,954 28,268 5,830 6,341 109,800 70,735 12,116 26,949 54,537 22,324 21,202 5,540 5,471 108,055' 67,641' 13,712 26,702 57,135 24,462 21,591 5,405 5,677 106,693 69,404 13,294 23,995 50,808 16,802 20,688 5,407 7,911 111,043 76,426 12,141 22,476 45,962 14,688 20,162 5,435 5,677 109,910 75,900 12,059 21,951 47,214 16,961 19,579 5,289 5,385 118,037 82,605 13,185 22,247 46,391 14,414 21,641 5,340 4,9% 124,148 87,825 15,071 21,252 44,168 11,309 22,611 5,217 5,031 4,539 4,841 6,926 7,443 7,824' 7,900 7,679 7,712 8,334 7,633 136,813 151,434 163,518 165,676 167,484' 160,821 160,274 159,643 167,182 170,723 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. A58 International Statistics • April 1990 3.14—Continued Liability account 1986 1987 1988 June July Aug. Sept. Oct. All foreign countries 57 Total, all currencies 456,628 518,618 505,595 523,674 534,425' 522,489 520,845 533,641 548,039 545,266 58 Negotiable CDs 59 To United States 60 Parent bank 61 Other banks in United States 62 Nonbanks 31,629 152,465 83,394 15,646 53,425 30,929 161,390 87,606 20,355 53,429 28,511 185,577 114,720 14,737 56,120 28,116 179,902 113,395 12,951 53,556 28,882 177,769' 110,326 13,353r 54,090 29,524 177,542 110,917 13,269 53,356 26,679 183,203 121,003 13,015 49,185 26,776 183,576 123,229 11,476 48,871 26,555 190,149 128,799 10,811 50,539 23,500 197,182 138,130 11,462 47,590 63 To foreigners 64 Other branches of parent bank 65 Banks 66 Official institutions 67 Nonbank foreigners 68 Other liabilities 253,775 95,146 77,809 17,835 62,985 18,759 304,803 124,601 87,274 19,564 73,364 21,496 270,923 111,267 72,842 15,183 71,631 20,584 289,559 118,950 74,209 17,559 78,841 26,097 301,583' 119,765' 80,069 18,846 82,903 26,191' 288,566 113,752 75,589 17,591 81,634 26,857 283,435 104,853 77,618 17,349 83,615 27,528 294,486 114,180 75,758 19,361 85,187 28,803 302,346 115,484 81,200 18,938 86,724 28,989 296,850 119,591 76,452 16,750 84,057 27,734 69 Total payable in U.S. dollars . . . 336,406 361,438 367,483 378,331 382,104' 379,771 371,301 384,495 392,948 396,182 70 Negotiable CDs 71 To United States 72 Parent bank 73 Other banks in United States 74 Nonbanks 28,466 144,483 79,305 14,609 50,569 26,768 148,442 81,783 18,951 47,708 24,045 173,190 107,150 13,468 52,572 24,129 167,261 105,074 11,537 50,650 24,914 163,834' 100,726 11,875' 51,233 25,483 166,041 103,3% 11,964 50,681 22,927 170,512 112,255 11,837 46,420 22,260 171,458 115,314 10,273 45,871 22,539 179,927 122,910 9,512 47,505 19,619 187,229 132,281 10,277 44,671 75 To foreigners 76 Other branches of parent bank 77 Banks 78 Official institutions 79 Nonbank foreigners 80 Other liabilities 156,806 71,181 33,850 12,371 39,404 6,651 177,711 90,469 35,065 12,409 39,768 8,517 160,766 84,021 28,493 8,224 40,028 9,482 175,349 90,850 29,682 9,852 44,965 11,592 181,166' 91,907' 31,215 11,176 46,868 12,190' 175,270 87,123 31,939 10,680 45,528 12,977 165,321 77,987 30,232 10,195 46,907 12,541 177,703 85,781 31,986 11,445 48,491 13,074 177,459 82,912 33,370 11,713 49,464 13,023 176,460 87,636 30,537 9,873 48,414 12,874 United Kingdom 81 Total, all currencies 140,917 158,695 156,835 153,968 161,882 158,860 157,673 164,155 164,916 161,947 82 Negotiable CDs 83 To United States 84 Parent bank 85 Other banks in United States 86 Nonbanks 27,781 24,657 14,469 2,649 7,539 26,988 23,470 13,223 1,536 8,711 24,528 36,784 27,849 2,037 6,898 24,3% 30,013 22,037 1,648 6,328 25,342 29,954 19,885 1,852 8,217 25,905 31,551 21,841 1,767 7,943 23,122 31,076 24,013 1,687 5,376 23,152 34,181 25,061 2,002 7,118 22,837 33,101 25,430 1,0% 6,575 20,056 36,036 29,726 1,256 5,054 87 To foreigners 88 Other branches of parent bank 89 Banks 90 Official institutions 91 Nonbank foreigners 92 Other liabilities 79,498 25,036 30,877 6,836 16,749 8,981 98,689 33,078 34,290 11,015 20,306 9,548 86,026 26,812 30,609 7,873 20,732 9,497 88,381 24,974 31,066 8,650 23,691 11,178 94,335 26,556 33,047 9,586 25,146 12,251 88,661 24,326 30,790 8,868 24,677 12,743 91,101 24,769 31,330 8,878 26,124 12,374 93,700 26,936 30,688 10,132 25,944 13,122 %,509 26,656 33,016 9,724 27,113 12,469 92,307 27,397 29,780 8,551 26,579 13,548 93 Total payable in U.S. dollars 99,707 102,550 105,907 101,742 105,700 106,915 102,361 110,358 109,116 108,178 94 Negotiable CDs 95 To United States 96 Parent bank 97 Other banks in United States 98 Nonbanks 26,169 22,075 14,021 2,325 5,729 24,926 17,752 12,026 1,308 4,418 22,063 32,588 26,404 1,752 4,432 22,324 25,401 19,556 1,393 4,452 23,132 24,618 16,909 1,477 6,232 23,679 27,232 19,580 1,502 6,150 21,156 26,592 21,588 1,511 3,493 20,433 30,433 23,247 1,835 5,351 20,715 30,130 24,578 863 4,689 18,143 33,056 28,812 1,065 3,179 99 To foreigners 100 Other branches of parent bank 101 Banks 102 Official institutions 103 Nonbank foreigners 104 Other liabilities 48,138 17,951 15,203 4,934 10,050 3,325 55,919 22,334 15,580 7,530 10,475 3,953 47,083 18,561 13,407 4,348 10,767 4,173 48,491 16,467 13,545 5,579 12,900 5,526 52,179 18,388 14,173 6,131 13,487 5,771 49,913 17,060 13,578 5,825 13,450 6,091 48,557 16,673 12,331 5,532 14,021 6,056 52,902 18,926 13,177 6,605 14,194 6,590 52,135 16,845 13,587 6,755 14,948 6,136 50,517 18,384 12,244 5,454 14,435 6,462 Bahamas and Caymans 105 Total, all currencies 142,592 160,321 170,639 171,780 173,014' 165,401 164,684 164,836 172,762 175,949 106 Negotiable CDs 107 To United States 108 Parent bank 109 Other banks in United States 110 Nonbanks 847 106,081 49,481 11,715 44,885 885 113,950 53,239 17,224 43,487 953 122,332 62,894 11,494 47,944 696 117,781 61,642 10,034 46,105 717 116,324' 61,263 10,227' 44,834 691 113,179 58,765 10,076 44,338 669 117,611 64,859 10,026 42,726 669 114,701 66,292 8,088 40,321 671 121,021 70,107 8,438 42,476 678 124,802 74,906 8,641 41,255 111 To foreigners 112 Other branches of parent bank 113 Banks 114 Official institutions 115 Nonbank foreigners 116 Other liabilities 34,400 12,631 8,617 2,719 10,433 1,264 43,815 19,185 10,769 1,504 12,357 1,671 45,161 23,686 8,336 1,074 12,065 2,193 50,433 27,763 8,318 1,102 13,250 2,870 53,042' 29,279' 8,308 1,223 14,232 2,931' 48,712 25,770 8,613 1,081 13,248 2,819 43,818 20,678 8,802 928 13,410 2,586 46,906 23,086 8,985 1,003 13,832 2,560 47,521 23,352 9,137 1,131 13,901 3,549 47,382 23,414 8,823 1,097 14,048 3,087 117 Total payable in U.S. dollars . . . 138,774 152,927 162,950 165,593 167,213' 160,800 160,133 160,028 167,835 171,193 Summary Statistics A59 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1989 Item 1 Total 1 2 3 4 5 6 7 8 9 10 11 12 By type Liabilities reported by banks in the United States U.S. Treasury bills and certificates U.S. Treasury bonds and notes Marketable Nonmarketable 4 U.S. securities other than U.S. Treasury securities By area Western Europe 1 Canada Latin America and Caribbean Asia Other countries 1987 1988 June July Aug. Sept. Oct/ Nov/ Dec. p 259,556 299,782 302,299 307,516 317,591 314,782 315,501 314,899 307,463 31,838 88,829 31,519 103,722 37,490 87,190 39,216 87,734 38,171 88,325 36,393 86,350 42,561 81,465 39,013 82,474 35,647 77,062 122,432 300 16,157 149,056 523 14,962 160,462 545 16,612 163,281 549 16,736 173,238 553 17,304 174,037 557 17,445 173,017 561 17,897 174,703 564 18,145 176,006 568 18,180 124,620 4,961 8,328 116,098 1,402 4,147 125,097 9,584 10,099 145,608 1,369 7,501 122,670 9,604 5,925 155,454 1,271 6,830 126,533 9,424 7,166 155,786 949 7,113 134,232 9,560 7,986 157,197 810 7,257 133,694 8,989 9,511 154,315 867 6,849 134,336 8,609 10,014 154,110 910 6,962 137,708 9,051 9,908 149,708 1,019 6,941 134,134 9,474 8,898 146,983 982 6,422 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 1988 1985 Item 1 Banks' own liabilities 2 Banks* own claims 3 Deposits 4 Other claims 5 Claims of banks' domestic customers 15,368 16,294 8,437 7,857 580 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 1986 29,702 26,180 14,129 12,052 2,507 1989 1987 55,438 51,271 18,861 32,410 551 Dec. Mar. June Sept. 74,980 68,983 25,100 43,884 364 76,545 72,904 25,938 46,966 376 69,067 62,758 23,845 38,913 723 72,560 70,715 23,983 46,731 2,558 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. A60 International Statistics • April 1990 3.17 LIABILITIES TO FOREIGNERS Payable in U.S. dollars Reported by Banks in the United States1 Millions of dollars, end of period 1989 Holder and type of liability 1987 1988 1989 June July Aug. Sept. Oct/ Nov/ Dec." 1 All foreigners 618,874 685,339 731,886 673,402 665,330 679,994 694,304 704,598 726,793 731,886 2 Banks' own liabilities 3 Demand deposits 4 Time deposits Other. 5 6 Own foreign offices 4 470,070 22,383 148,374 51,677 247,635 514,532 21,863 152,164 51,366 289,138 574,849 21,710 170,186 65,228 317,724 511,877 21,223 153,783 60,916 275,955 503,147 21,363 149,753 64,303 267,728 516,883 19,718 155,494 63,732 277,939 530,517 21,550 157,273 56,157 295,536 543,946 21,069 162,372 64,979 295,526 563,701 21,312 165,319 65,802 311,267 574,849 21,710 170,186 65,228 317,724 148,804 101,743 170,807 115,056 157,037 90,578 161,524 98,893 162,184 99,365 163,111 99,683 163,787 99,209 160,652 95,278 163,093 %,356 157,037 90,578 16,776 30,285 16,426 39,325 17,199 49,260 17,077 45,555 16,893 45,925 17,260 46,168 17,091 47,487 16,741 48,633 16,819 49,918 17,199 49,260 7 Banks' custody liabilities5 8 U.S. Treasury bills and certificates 6 Other negotiable and readily transferable 9 instruments 10 Other 11 Nonmonetary international and regional organizations 4,464 3,224 4,772 3,817 4,240 4,418 4,945 5,769 5,841 4,772 12 Banks' own liabilities 13 Demand deposits 14 Time deposits 15 Other 2,702 124 1,538 1,040 2,527 71 1,183 1,272 3,156 % 927 2,132 2,895 32 1,454 1,409 2,716 41 918 1,756 3,402 66 1,079 2,257 3,347 89 1,702 1,555 3,733 53 1,043 2,638 4,523 62 1,012 3,449 3,156 % 927 2,132 16 Banks' custody liabilities5 17 U.S. Treasury bills and certificates 6 18 Other negotiable and readily transferable instruments 19 Other 1,761 265 698 57 1,616 197 922 181 1,524 345 1,016 107 1,598 84 2,036 568 1,318 321 1,616 197 1,497 0 641 0 1,417 2 731 10 1,179 0 909 1 1,479 35 1,454 14 996 0 1,417 2 20 Official institutions 9 120,667 135,241 112,709 124,680 126,951 126,4% 122,743 124,026 121,486 112,709 21 Banks' own liabilities 22 Demand deposits 23 Time deposits 24 Other 3 28,703 1,757 12,843 14,103 27,109 1,917 9,767 15,425 30,298 2,175 10,465 17,658 32,167 1,801 10,033 20,332 34,132 1,959 10,072 22,101 33,238 1,625 8,837 22,776 31,615 2,026 8,994 20,595 37,524 2,057 12,078 23,389 34,082 1,838 11,182 21,063 30,298 2,175 10,465 17,658 25 Banks' custody liabilities5 26 U.S. Treasury bills and certificates 6 27 Other negotiable and readily transferable instruments 28 Other 91,965 88,829 108,132 103,722 82,411 77,062 92,513 87,190 92,818 87,734 93,258 88,325 91,127 86,350 86,502 81,465 87,404 82,474 82,411 77,062 2,990 146 4,130 280 4,988 361 5,080 244 4,821 263 4,735 198 4,588 189 4,734 303 4,805 125 4,988 361 29 Banks 10 30 Banks' own liabilities 31 Unaffiliated foreign banks 32 Demand deposits 33 Time deposits 34 Other 3 35 Own foreign offices 4 414,280 459,523 513,868 452,396 443,172 457,463 476,027 482,104 505,672 513,868 371,665 124,030 10,898 79,717 33,415 247,635 409,501 120,362 9,948 80,189 30,226 289,138 453,343 135,618 10,347 92,184 33,087 317,724 396,662 120,707 9,677 77,874 33,156 275,955 387,306 119,578 10,145 75,166 34,267 267,728 400,975 123,036 9,101 80,603 33,333 277,939 415,761 120,225 10,695 80,789 28,741 295,536 420,918 125,392 9,884 83,913 31,594 295,526 443,340 132,073 10,742 87,354 33,978 311,267 453,343 135,618 10,347 92,184 33,087 317,724 36 Banks' custody liabilities5 37 U.S. Treasury bills and certificates 6 38 Other negotiable and readily transferable instruments 39 Other 42,615 9,134 50,022 7,602 60,525 9,278 55,734 7,759 55,865 7,674 56,488 7,838 60,265 9,032 61,186 9,251 62,332 9,499 60,525 9,278 5,392 28,089 5,725 36,694 4,715 46,531 5,314 42,662 5,326 42,866 5,284 43,365 5,095 46,138 4,770 47,165 4,446 48,388 4,715 46,531 40 Other foreigners 79,463 87,351 100,538 92,509 90,968 91,617 90,590 92,699 93,794 100,538 41 Banks' own liabilities 42 Demand deposits 43 Time deposits 44 Other. 67,000 9,604 54,277 3,119 75,3% 9,928 61,025 4,443 88,052 9,091 66,610 12,351 80,153 9,714 64,422 6,018 78,992 9,218 63,596 6,179 79,268 8,926 64,975 5,367 79,793 8,739 65,787 5,267 81,771 9,075 65,338 7,357 81,756 8,671 65,772 7,312 88,052 9,091 66,610 12,351 45 Banks' custody liabilities5 46 U.S. Treasury bills and certificates 6 47 Other negotiable and readily transferable instruments 48 Other 12,463 3,515 11,956 3,675 12,486 4,041 12,355 3,763 11,976 3,612 12,349 3,413 10,796 3,743 10,928 3,993 12,038 4,062 12,486 4,041 6,898 2,050 5,929 2,351 6,079 2,366 5,952 2,639 5,566 2,797 6,332 2,604 5,929 1,125 5,783 1,152 6,572 1,405 6,079 2,366 7,314 6,425 5,061 5,337 5,261 5,199 5,237 5,160 4,815 5,061 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotiable and readily transferable instruments." 3. Includes borrowing under repurchase agreements. 4. 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. 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official institutions of foreign countries. 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of deposit. 8. 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. 9. Foreign central banks, foreign central governments, and the Bank for International Settlements. 10. Excludes central banks, which are included in "Official institutions." Nonbank-Reported Data 3.17—Continued 1989 Area and country 1987 1988 1989 June July Aug. Sept. Oct. Nov.' Dec/ 1 Total 618,874 685,339 731,886 673,402 665,330 679,994 694,304 704,598r 726,793 731,886 2 Foreign countries 614,411 682,115 727,115 669,585 661,091 675,576 689,359 698,829r 720,953 727,115 234,641 920 9,347 760 377 29,835 7,022 689 12,073 5,014 1,362 801 2,621 1,379 33,766 703 116,852 710 9,798 32 582 231,912 1,155 10,022 2,200 285 24,777 6,772 672 14,599 5,316 1,559 903 5,494 1,284 34,199 1,012 111,811 529 8,598 138 591 236,518 1,223 10,147 1,409 639 26,686 7,305 1,012 16,138 6,565 2,399 2,405 4,341 1,987 34,278 1,815 101,746 1,490 13,468 350 1,115 222,164 1,508 8,631 1,179 451 23,868 9,363 889 13,965 4,875 1,485 1,100 5,090 1,478 28,811 737 103,173 558 14,342 164 499 222,146 1,417 8,949 1,348 436 22,290 8,875 862 12,892 5,029 1,522 1,419 5,910 1,248 28,581 1,053 105,310 604 13,667 175 559 226,366 1,404 9,286 1,956 460 24,864 7,651 828 14,597 5,106 1,453 1,945 5,390 2,002 28,931 1,022 104,055 691 13,824 201 699 222,040 1,345 10,158 1,265 519 23,031 8,345 797 14,542 4,989 1,698 2,206 5,277 1,680 29,001 1,085 102,210 774 12,312 244 562 232,513r 1,193 10,841 l,442 r 464 23,882' 8,700 845' 14,220 5,426' 1,342 2,292' 4,986 1,663 29,554' 1,199 106,285' 858 16,389' 338 595' 241,658 1,467 10,322 1,912 577 25,923 9,088 1,024 14,649 7,204 1,952 2,248 4,888 1,920 31,497 1,370 108,483 1,016 15,163 286 668 236,518 1,223 10,147 1,409 639 26,686 7,305 1,012 16,138 6,565 2,399 2,405 4,341 1,987 34,278 1,815 101,746 1,490 13,468 350 1,115 3 Europe 4 Austria Belgium-Luxembourg 5 6 Denmark Finland 7 8 France Germany 9 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Spain 16 Sweden 17 Switzerland 18 Turkey 19 United Kingdom 20 Yugoslavia 21 Other Western Europe 22 U.S.S.R Other Eastern Europe 23 30,095 21,062 18,754 17,514 17,472 16,958 17,960 16,670 18,182 18,754 25 Latin America and Caribbean 26 Argentina Bahamas 27 Bermuda 28 29 Brazil 30 British West Indies Chile 31 32 Colombia 33 Cuba 34 Ecuador 35 Guatemala 36 Jamaica 37 Mexico 38 Netherlands Antilles 39 Panama 40 Peru 41 Uruguay Venezuela 42 Other 43 220,372 5,006 74,767 2,344 4,005 81,494 2,210 4,204 12 1,082 1,082 160 14,480 4,975 7,414 1,275 1,582 9,048 5,234 271,146 7,804 86,863 2,621 5,314 113,840 2,936 4,374 10 1,379 1,195 269 15,185 6,420 4,353 1,671 1,898 9,147 5,868 308,483 7,184 100,093 2,972 6,059 136,484 3,172 4,513 10 1,370 1,290 276 14,800 6,263 4,193 1,945 2,261 9,405 6,191 271,445 6,320 82,312 2,321 5,004 121,385 2,690 4,127 10 1,351 1,251 294 14,270 6,316 4,278 1,761 2,429 9,423 5,903 266,403 7,397 84,526 2,269 5,3% 113,243 2,683 4,235 9 1,411 1,297 227 13,705 6,434 4,357 1,770 2,152 9,500 5,790 275,557 8,047 90,317 2,209 5,539 115,870 2,739 4,365 10 1,376 1,279 231 13,769 6,071 4,400 1,778 2,121 9,398 6,039 284,9% 8,446 90,622 2,124 5,892 122,677 2,765 4,199 14 1,363 1,293 233 14,981 6,062 4,424 1,828 2,340 9,520 6,213 286,588' 8,069' 93,171' 2,458 6,080' 120,932' 3,014' 4,887 10 1,342 1,276 206 14,642' 5,939' 4,393 1,902' 2,214 9,552' 6,503' 296,595 7,693 %,294 2,549 6,228 128,324 3,061 4,681 15 1,324 1,289 189 13,847 6,249 4,359 1,921 2,315 9,799 6,459 308,483 7,184 100,093 2,972 6,059 136,484 3,172 4,513 10 1,370 1,290 276 14,800 6,263 4,193 1,945 2,261 9,405 6,191 44 121,288 147,838 155,076 148,449 144,106 145,917 153,564 150,975' 150,964 155,076 1,162 21,503 10,180 582 1,404 1,292 54,322 1,637 1,085 1,345 13,988 12,788 1,895 26,058 12,248 699 1,180 1,461 74,015 2,541 1,163 1,236 12,083 13,260 1,870 19,472 12,119 774 1,276 1,229 80,837 3,022 1,608 2,071 13,324 17,475 1,432 27,025 12,134 812 1,232 1,088 71,198 3,047 984 1,274 13,612 14,612 1,522 27,128 11,346 871 1,096 1,058 68,700 3,556 936 1,254 12,368 14,271 1,700 25,427 12,268 940 1,042 953 71,028 2,907 1,083 1,776 12,524 14,270 1,804 24,119 12,292 875 1,042 1,041 78,824 3,037 1,055 1,430 13,021 15,024 1,985 22,403' 12,127' 836 1,144 2,221 73,573' 3,099 1,158' 1,686 13,450 17,293 1,635 21,231 12,028 984 1,300 1,081 75,215 3,339 1,242 1,887 13,574 17,448 1,870 19,472 12,119 774 1,276 1,229 80,837 3,022 1,608 2,071 13,324 17,475 3,945 1,151 194 202 67 1,014 1,316 3,991 911 68 437 85 1,017 1,474 3,783 679 75 202 86 1,122 1,618 3,904 748 67 188 98 1,100 1,702 3,618 738 66 231 92 942 1,548 3,265 549 72 201 87 897 1,459 3,536 574 % 246 81 1,036 1,502 3,486 577 71 220 71 1,047' 1,501 3,747 633 75 291 60 1,118 1,569 3,783 679 75 202 86 1,122 1,618 64 Other countries 65 Australia 66 All other 4,070 3,327 744 6,165 5,293 872 4,501 3,833 668 6,108 5,192 916 7,346 6,620 726 7,513 6,721 792 7,262 6,518 744 8,597 8,046 552' 9,807 9,115 692 4,501 3,833 668 67 Nonmonetary international and regional organizations International Latin American regional Other regional 4,464 2,830 1,272 362 3,224 2,503 589 133 4,772 3,825 684 263 3,817 3,030 613 175 4,240 2,881 961 397 4,418 3,084 690 644 4,945 3,390 1,201 353 5,769' 4,450' 919 400 5,841 4,704 586 551 4,772 3,825 684 263 24 Canada 45 46 47 48 49 50 51 52 53 54 55 56 China Mainland Taiwan Hong Kong India Indonesia Israel Japan Korea Philippines Thailand Middle-East oil-exporting countries Other 57 58 59 60 61 62 63 Egypt Morocco South Africa Zaire 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." A61 A62 International Statistics • April 1990 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1989 Area and country 1987 1988 1989 June July Aug. Sept. Oct. Nov.' Dec/' 1 Total 459,877 491,165 534,186 491,103 481,051 488,861 499,388 514,686r 534,375 534,186 2 Foreign countries 456,472 489,094 530,554 487,626 477,264 485,737 496,466 512,009' 531,638 530,554 102,348 793 9,397 717 1,010 13,548 2,039 462 7,460 2,619 934 477 1,853 2,254 2,718 1,680 50,823 1,700 619 389 852 116,928 483 8,515 483 1,065 13,243 2,329 433 7,936 2,541 455 261 1,823 1,977 3,895 1,233 65,706 1,390 1,152 1,255 754 118,930 505 6,388 582 1,026 16,146 2,850 788 6,661 1,902 611 375 1,868 1,840 6,137 1,049 65,401 1,329 1,302 1,234 937 112,201 809 7,781 774 1,175 15,575 3,695 632 6,813 2,032 667 328 2,190 1,946 5,485 886 56,844 1,359 1,161 1,212 838 106,459 854 7,558 562 1,395 16,008 3,461 602 5,994 1,957 796 283 2,092 2,003 4,123 891 53,464 1,406 974 1,227 810 107,359 549 7,510 768 1,401 16,415 3,316 624 5,494 1,454 665 264 1,738 2,046 4,479 960 54,809 1,346 1,247 1,456 819 111,180 480 7,404 557 1,233 16,249 3,463 634 6,043 1,994 644 252 1,684 2,286 5,018 1,028 57,187 1,338 1,312 1,574 799 113,398' 575' 7,497' 513 1,707 16,391 3,371 650 5,577 1,886' 647 258 1,733 2,087 4,522 1,021 59,838' 1,373 1,504 1,453 794 111,992 559 6,606 609 1,129 16,055 2,657 700 5,718 2,259 635 275 1,840 2,555 4,940 1,044 59,919 1,281 1,245 1,080 883 118,930 505 6,388 582 1,026 16,146 2,850 788 6,661 1,902 611 375 1,868 1,840 6,137 1,049 65,401 1,329 1,302 1,234 937 3 Europe 4 Austria 5 Belgium-Luxembourg 6 Denmark 7 Finland 8 France 9 Germany 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Spain 16 Sweden 17 Switzerland 18 Turkey 19 United Kingdom 20 Yugoslavia 21 Other Western Europe 2 22 U.S.S.R 23 Other Eastern Europe 24 Canada 25,368 18,889 16,181 16,236 14,493 15,073 14,763 13,800 16,177 16,181 25 Latin America and Caribbean 26 Argentina 27 Bahamas 28 Bermuda 29 Brazil 30 British West Indies Chile 31 32 Colombia 33 Cuba 34 Ecuador 35 Guatemala 4 36 Jamaica 37 Mexico 38 Netherlands Antilles 39 Panama 40 Peru 41 Uruguay 42 Venezuela 43 Other Latin America and Caribbean 214,789 11,996 64,587 471 25,897 50,042 6,308 2,740 1 2,286 144 188 29,532 980 4,744 1,329 963 10,843 1,738 214,264 11,826 66,954 483 25,735 55,888 5,217 2,944 1 2,075 198 212 24,637 1,306 2,521 1,013 910 10,733 1,612 230,212 9,444 78,108 1,315 23,891 67,991 4,353 2,707 1 1,698 197 297 23,520 1,835 1,739 770 928 9,688 1,729 219,855 10,840 66,611 391 25,675 65,359 4,863 2,583 1 1,895 201 286 23,703 1,179 2,423 874 896 10,569 1,503 217,371 10,705 70,488 463 25,824 59,670 4,793 2,525 9 1,933 189 270 23,369 1,159 2,320 867 854 10,269 1,665 216,073 10,730 68,113 522 25,597 61,493 4,803 2,504 1 1,918 203 272 23,169 1,022 2,030 870 866 10,024 1,936 219,948 10,460 70,906 1,104 24,999 63,543 4,707 2,477 1 1,905 196 282 22,813 1,103 1,834 823 899 10,064 1,833 220,182' 10,444' 71,420' 804 25,075 63,023' 4,601 2,800 1 1,864 188 270 22,751 1,120' 1,832' 851 903 10,269 1,965' 231,958 10,274 78,568 842 24,418 68,530 4,474 2,784 1 1,858 190 260 23,292 1,018 1,792 836 915 10,119 1,787 230,212 9,444 78,108 1,315 23,891 67,991 4,353 2,707 1 1,698 197 297 23,520 1,835 1,739 770 928 9,688 1,729 44 Asia China Mainland 46 Taiwan 47 Hong Kong 48 India 49 Indonesia 50 Israel 51 Japan 52 Korea 53 Philippines 54 Thailand 55 Middle East oil-exporting countries 56 Other Asia 106,096 130,881 156,987 130,590 130,369 137,687 140,704 153,737' 158,752 156,987 968 4,592 8,218 510 580 1,363 68,658 5,148 2,071 496 4,858 8,635 762 4,184 10,143 560 674 1,136 90,149 5,213 1,876 848 6,213 9,122 635 2,734 11,119 621 651 812 110,876 5,332 1,344 1,153 10,150 11,559 920 4,058 8,557 537 671 1,021 91,103 5,608 1,763 1,056 6,550 8,745 644 3,949 8,153 477 645 964 91,806 5,774 1,607 1,060 5,550 9,741 575 3,356 8,800 547 614 911 96,118 6,007 1,543 1,117 8,879 9,221 615 3,331 10,358 638 615 859 97,699 5,686 1,617 1,203 8,581 9,502 594 2,831 10,047' 617 685 1,185 110,425' 5,713 1,549 1,058 8,365' 10,669 610 2,677 10,442 637 655 758 114,498 5,838 1,478 1,076 8,675 11,408 635 2,734 11,119 621 651 812 110,876 5,332 1,344 1,153 10,150 11,559 57 Africa 58 Egypt 59 Morocco 60 South Africa Zaire 61 62 Oil-exporting countries 6 63 Other 4,742 521 542 1,507 15 1,003 1,153 5,718 507 511 1,681 17 1,523 1,479 5,929 502 559 1,628 16 1,689 1,535 6,075 534 531 1,746 17 1,503 1,744 6,066 577 518 1,702 17 1,587 1,664 6,032 494 535 1,713 16 1,608 1,666 6,028 501 524 1,709 20 1,629 1,645 5,763 475 538 1,679 15 1,546 1,510 6,009 471 547 1,686 16 1,641 1,648 5,929 502 559 1,628 16 1,689 1,535 64 Other countries 65 Australia 66 All other 3,129 2,100 1,029 2,413 1,520 894 2,315 1,785 530 2,670 1,307 1,363 2,505 1,518 987 3,512 2,499 1,013 3,843 3,078 765 5,129 4,301 828 6,750 6,174 576 2,315 1,785 530 67 Nonmonetary international and regional organizations' 3,404 2,071 3,631 3,477 3,787 3,124 2,922 2,677' 2,737 3,631 1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 2. Includes the Bank for International Settlements. Beginning April 1978, also includes Eastern European countries not listed in line 23. 3. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, and Romania. 4. Included in "Other Latin America and Caribbean" through March 1978. 5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 6. Comprises Algeria, Gabon, Libya, and Nigeria. 7. 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 1989 Type of claim 1987 1988 1989 June July Aug. Sept. 1 Total 497,635 538,689 2 Banks' own claims on foreigners Foreign public borrowers 3 4 Own foreign offices 5 Unaffiliated foreign banks Deposits 6 7 Other 8 All other foreigners 459,877 64,605 224,727 127,609 60,687 66,922 42,936 491,165 62,658 257,436 129,425 65,898 63,527 41,646 37,758 3,692 47,524 8,289 49,531 11,153 52,154 11,259 26,696 25,700 22,017 24,286 7,370 13,535 16,362 16,609 23,107 19,5% 16,810 12,828 40,909 45,568 9 Claims of banks' domestic customers 3 ... 11 540,634 491,103 63,164 258,548 128,295 68,177 60,119 41,095 534,186 60,484 295,567 134,725 77,826 56,899 43,410 Oct/ Nov/ Dec. p 514,686 63,425 276,547 131,249 72,048 59,200 43,464 534,375 62,259 2%,754 133,909 75,595 58,314 41,452 534,186 60,484 295,567 134,725 77,826 56,899 43,410 44,665 46,220 n.a. 551,543 481,051 62,832 248,987 128,919 68,888 60,031 40,313 488,861 62,765 252,281 132,478 72,576 59,903 41,336 499,388 62,051 265,786 131,124 72,654 58,470 40,428 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 . . . . n.a. 46,740 48,485 49,575 46,486r parent foreign bank. 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. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 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 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1988 Maturity; by borrower and area 1 Total 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 By borrower Maturity of 1 year or less Foreign public borrowers All other foreigners Maturity over 1 y e a r Foreign public borrowers All other foreigners By area Maturity of 1 year or less Europe Canada Latin America and Caribbean Asia Africa All other 3 Maturity of over 1 y e a r Europe Canada Latin America and Caribbean Asia Africa All other 3 1985 1989 1987 Dec. Mar. June Sept/ 227,903 232,295 235,130 233,184 231,686 231,374 236,330 160,824 26,302 134,522 67,078 34,512 32,567 160,555 24,842 135,714 71,740 39,103 32,637 163,997 25,889 138,108 71,133 38,625 32,507 172,634 26,562 146,071 60,550 35,291 25,259 168,608 24,479 144,129 63,078 37,935 25,142 167,307 23,759 143,548 64,067 38,108 25,959 169,100 24,200 144,900 67,230 41,839 25,391 56,585 6,401 63,328 27,966 3,753 2,791 61,784 5,895 56,271 29,457 2,882 4,267 59,027 5,680 56,535 35,919 2,833 4,003 55,909 6,282 57,991 46,224 3,337 2,891 57,741 5,119 53,268 45,727 3,610 3,143 58,340 5,693 50,605 45,303 3,601 3,765 52,437 6,206 52,010 51,195 3,516 3,735 7,634 1,805 50,674 4,502 1,538 926 6,737 1,925 56,719 4,043 1,539 111 6,6% 2,661 53,817 3,830 1,747 2,381 4,666 1,922 47,547 3,613 2,301 501 4,508 2,309 49,790 3,699 2,292 480 4,664 2,592 50,107 3,823 2,408 472 8,856 2,459 48,627 4,232 2,472 584 1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 1986 2. Remaining time to maturity, 3. Includes nonmonetary international and regional organizations. A63 A64 3.21 International Statistics • April 1990 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2 Billions of dollars, end of period 1987 Area or country 1 Total 1985 1988 1989 1986 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 389.1 386.5 387.9 382.4 370.9' .ISl^ 354.0' 346.3' 345.3' 339.2 344.6 147.0 9.4 12.3 10.5 9.7 3.8 2.8 4.4 63.3 6.8 24.1 156.6 8.4 13.6 11.6 9.0 4.6 2.4 5.8 70.9 5.2 25.1 154.8 8.1 13.6 10.5 6.8 4.8 2.6 5.4 72.0 4.6 26.4 159.7 10.0 13.7 12.6 7.5 4.1 2.1 5.6 68.8 5.5 29.8 156.3'" 9.1 11.8 11.8 7.4 3.3 2.1 5.1 71.7 4.7 29.2' 150.7' 9.2 10.9 10.6 6.3 3.2 1.9 5.6 70.4 5.3 27.3' 148.7' 9.5 10.3 9.2 5.6 2.9 1.9 5.2 67.6 4.9 31.6' 152.7' 9.0 10.5 10.3 6.8 2.7 1.8 5.4 66.2 5.0 34^ 145.1' 8.6 11.2 10.2 5.2 2.8 2.3 5.1 65.3 4.0 30.4' 144.7 7.8 10.8 10.6 6.1 2.8 1.8 5.4 64.2 5.1 30.1 145.7 6.9 11.1 10.4 6.8 2.4 2.0 6.1 63.3 5.9 30.8 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 30.3 1.6 2.4 1.6 2.6 2.9 1.3 5.8 2.0 2.0 3.2 5.0 26.1 1.7 1.7 1.4 2.3 2.4 .9 5.8 2.0 1.5 3.0 3.4 26.3 1.8 1.6 1.4 1.9 2.0 .9 7.4 1.9 1.6 2.9 2.9 26.4 1.9 1.7 1.2 2.0 2.2 .6 8.0 2.0 1.6 2.9 2.4 26.4 1.6 1.4 1.0 2.3 1.9 .5 8.9 2.0 1.9 2.8 2.0 24.0 1.6 1.1 1.2 2.1 1.9 .4 7.2 1.8 1.7 2.8 2.2 23.0 1.6 1.2 1.3 2.1 2.0 .4 6.3 1.6 1.9 2.7 1.8 21.0 1.5 1.1 1.1 1.8 1.8 .4 6.2 1.5 1.3 2.4 1.8 21.0 1.4 1.1 1.0 2.1 1.6 .4 6.6 1.3 1.1 2.2 2.4 21.1 1.7 1.4 1.0 2.3 1.8 .6 6.2 1.1 1.1 2.1 1.9 20.9 1.5 1.1 1.1 2.3 1.4 .4 6.9 1.1 1.0 2.1 2.1 25 OPEC countries 3 26 Ecuador 27 Venezuela 28 Indonesia 29 Middle East countries 30 African countries 21.5 2.1 9.0 3.0 5.4 2.0 19.4 2.2 8.7 2.5 4.3 1.8 19.2 2.1 8.3 2.0 5.0 1.8 17.4 1.9 8.1 1.9 3.6 1.9 17.6 1.9 8.1 1.8 3.9 1.9 17.0 1.8 8.0 1.8 3.5 1.9 17.9 1.8 7.9 1.8 4.6 1.9 16.6 1.7 7.9 1.7 3.4 1.9 16.2 1.6 7.9 1.7 3.3 1.7 16.0 1.5 7.5 1.9 3.4 1.6 16.2 1.5 7.3 2.0 3.5 1.9 105.0 99.6 98.0 97.8 94.4 91.8 87.2 85.3 85.4 83.1 80.8 8.9 25.5 7.0 2.6 24.3 1.8 3.5 9.5 25.3 7.1 2.1 24.0 1.4 3.1 9.4 25.1 7.1 2.0 24.7 1.2 2.8 9.5 24.7 6.9 2.0 23.5 1.1 2.8 9.6 23.8 6.6 2.0 22.4 1.1 2.8 9.5 23.7 6.4 2.2 21.1 .9 2.6 9.3 22.4 6.3 2.1 20.4 .8 2.5 9.0 22.4 5.6 2.1 18.8 .8 2.6 8.4 22.7 5.7 1.9 18.0 .7 2.7 7.9 22.0 5.1 1.7 17.5 .6 2.6 7.6 20.8 4.9 1.6 17.0 .6 2.9 2 G-10 countries and Switzerland Belgium-Luxembourg 3 4 France 5 Germany 6 Italy Netherlands 7 8 Sweden 9 Switzerland 10 United Kingdom 11 Canada 12 Japan 31 Non-OPEC developing countries 32 33 34 35 36 37 38 Latin America Argentina Brazil Chile Colombia Mexico Peru Other Latin America 39 40 41 42 43 44 45 46 47 Asia China Mainland Taiwan India Israel Korea (South) Malaysia Philippines Thailand Other Asia .5 4.5 1.2 1.6 9.3 2.4 5.7 1.4 1.0 .4 4.9 1.2 1.5 6.7 2.1 5.4 .9 .7 .3 6.0 1.9 1.3 5.0 1.6 5.4 .7 .7 .3 8.2 1.9 1.0 5.0 1.5 5.2 .7 .7 .4 6.1 2.1 1.0 5.7 1.5 5.1 1.0 .7 .4 4.9 2.3 1.0 5.9 1.5 4.9 1.1 .8 .2 3.2 2.0 1.0 6.0 1.7 4.7 1.2 .8 .3 3.7 . 2.1 1.2 6.1 1.6 4.5 1.1 .9 .5 4.9 2.6 .9 6.1 1.7 4.4 1.0 .8 .3 5.2 2.4 .8 6.6 1.6 4.4 1.0 .8 .3 5.0 2.7 .7 6.5 1.7 4.0 1.3 1.0 48 49 50 51 Africa Egypt Morocco Zaire Other Africa 4 1.0 .9 .1 1.9 .7 .9 .1 1.6 .6 .9 .1 1.3 .6 .9 .0 1.3 .5 .9 .1 1.2 .6 .9 .1 1.2 .5 .8 .0 1.2 .4 .9 .0 1.1 .5 .9 .0 1.1 .6 .9 .0 1.1 .5 .8 .0 1.0 52 Eastern Europe 53 U.S.S.R 54 Yugoslavia 55 Other 4.4 .1 2.4 1.9 3.5 .1 2.0 1.4 3.6 .4 1.9 1.2 3.2 .3 1.8 1.1 3.1 .3 1.9 1.0 3.3 .4 1.9 1.0 3.1 .4 1.8 1.0 3.6 .7 1.8 1.1 3.5 .7 1.7 1.1 3.4 .6 1.7 1.1 3.5 .8 1.7 1.1 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 64 Singapore 65 Others 6 64.0 21.5 .7 12.2 2.2 6.0 .1 11.5 9.8 .0 61.5 22.4 .6 12.3 1.8 4.0 .1 11.1 9.2 .0 63.7 25.7 .6 11.9 1.2 3.7 .1 12.3 8.1 .0 54.5 17.3 .6 13.5 1.2 3.7 .1 11.2 7.0 .0 51.5 15.9 .8 11.6 1.3 3.2 .1 11.3 7.4 .0 43.0 8.9 1.0 10.3 1.2 3.0 .1 11.6 6.9 .0 47.3 12.9 .9 11.9 1.2 2.6 .1 10.5 7.0 .0 44.2 48.5 15.8 1.1 12.0 .9 2.2 .1 9.6 6.8 .0 43.1 .9 12.9 1.0 2.5 .1 9.6 6.1 .0 .7 10.8 .9 1.9 .1 10.4 7.3 .0 48.7 11.2 1.3 15.1 1.0 1.5 .1 10.7 7.8 .0 66 Miscellaneous and unallocated 7 16.9 19.8 22.3 23.2 21.5 22.2 26.7 22.6 25.1 27.4 28.4 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 11.0 11.0 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 A65 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1989 1988 Type, and area or country 1985 1986 1987 June Sept. Dec. Mar. June Sept. 1 Total 27,825 25,587 28,302 30,154 32,405 33,624 37,440 36,967 34,855 2 Payable in dollars 3 Payable in foreign currencies 24,2% 3,529 21,749 3,838 22,785 5,517 24,852 5,302 27,176 5,229 28,037 5,586 31,649 5,790 31,894 5,073 30,042 4,813 By type 4 Financial liabilities 5 Payable in dollars 6 Payable in foreign currencies 13,600 11,257 2,343 12,133 9,609 2,524 12,424 8,643 3,781 13,934 10,274 3,660 15,079 11,485 3,594 15,118 11,250 3,868 17,532 13,452 4,080 16,920 13,060 3,860 16,028 12,224 3,804 14,225 6,685 7,540 13,039 1,186 13,454 6,450 7,004 12,140 1,314 15,878 7,305 8,573 14,142 1,737 16,220 6,768 9,452 14,578 1,642 17,325 6,480 10,845 15,691 1,635 18,506 6,454 12,052 16,788 1,718 19,908 7,009 12,899 18,197 1,711 20,047 6,339 13,708 18,834 1,213 18,827 6,415 12,412 17,818 1,009 7,700 349 857 376 861 610 4,305 7,917 270 661 368 542 646 5,140 8,320 213 382 551 866 558 5,557 9,071 282 371 544 862 638 6,201 10,497 339 372 690 9% 687 7,243 9,912 289 267 749 879 1,163 6,418 12,511 320 249 741 933 954 9,121 11,217 357 274 838 834 936 7,799 10,135 308 262 807 853 839 6,859 7 Commercial liabilities 8 Trade payables 9 Advance receipts and other liabilities . . 10 Payable in dollars 11 Payable in foreign currencies 12 13 14 15 16 17 18 By area or country Financial liabilities Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 19 Canada 839 399 360 412 431 650 616 544 599 20 21 22 23 24 25 26 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 3,184 1,123 4 29 1,843 15 3 1,944 614 4 32 1,146 22 0 1,189 318 0 25 778 13 0 1,448 250 0 0 1,154 26 0 1,057 238 0 0 812 2 0 1,239 184 0 0 645 1 0 677 189 0 0 471 15 0 1,216 165 0 0 621 17 0 1,315 186 0 0 698 4 0 27 28 29 Asia Japan Middle East oil-exporting countries . 1,815 1,198 82 1,805 1,398 8 2,451 2,042 8 2,928 2,331 11 3,088 2,435 4 3,313 2,563 3 3,722 2,950 1 3,842 3,082 12 3,878 3,130 2 30 Africa 12 0 1 1 4 1 2 1 3 1 1 0 5 3 3 2 4 2 50 67 100 74 3 2 2 97 97 4,074 62 453 607 364 379 976 4,446 101 352 715 424 385 1,341 5,516 132 426 909 423 559 1,599 5,755 147 408 791 508 482 1,804 6,688 206 438 1,185 647 486 2,110 7,348 170 459 1,699 591 417 2,063 7,944 134 579 1,372 670 458 2,585 7,865 117 549 1,190 689 458 2,709 7,985 138 767 1,196 549 416 2,729 31 32 33 34 35 36 37 38 39 40 Oil-exporting countries All other" Commercial liabilities Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom Canada 1,449 1,405 1,301 1,167 1,109 1,218 1,163 1,132 1,191 41 42 43 44 45 46 47 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 1,088 12 77 58 44 430 212 924 32 156 61 49 217 216 864 18 168 46 19 189 162 1,035 61 272 54 28 233 140 997 19 222 58 30 177 204 1,118 49 286 95 34 179 177 1,267 35 426 103 31 198 179 1,669 34 388 541 42 182 185 1,092 27 305 113 30 191 140 48 49 50 Asia Japan Middle East oil-exporting countries ' 6,046 1,799 2,829 5,080 2,042 1,679 6,565 2,578 1,964 6,286 2,659 1,320 6,638 2,763 1,298 6,916 3,091 1,386 7,329 3,059 1,526 6,970 2,712 1,431 6,838 2,639 1,406 51 52 Africa Oil-exporting countries 587 238 619 197 574 135 626 115 477 106 578 202 706 272 768 253 643 246 53 All other 4 982 980 1,057 1,351 1,415 1,328 1,499 1,643 1,078 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. A66 International Statistics • April 1990 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS United States1 Reported by Nonbanking Business Enterprises in the Millions of dollars, end of period 1988 Type, and area or country 1985 1986 1989 1987 June Sept. Dec. Mar. June Sept. 1 Total 28,876 36,265 30,964 37,924 38,465 33,574 31,667 33,833 32,110r 2 Payable in dollars 3 Payable in foreign currencies 26,574 2,302 33,867 2,399 28,502 2,462 35,828 2,097 35,967 2,498 31,252 2,323 29,371 2,296 31,727 2,106 29,873r 2,Til' 18,891 15,526 14,911 615 3,364 2,330 1,035 26,273 19,916 19,331 585 6,357 5,005 1,352 20,363 14,903 13,775 1,128 5,460 4,646 814 26,537 19,750 18,964 786 6,787 5,892 895 27,341 19,383 18,370 1,013 7,958 7,016 942 21,638 15,906 14,820 1,086 5,732 5,001 731 19,743 14,838 13,942 896 4,905 4,012 893 21,774 17,043 16,131 911 4,731 4,016 716 19,403' 13,007' 12,093' 914 6,396' 5,556' 840 11 Commercial claims 12 Trade receivables 13 Advance payments and other claims 9,986 8,696 1,290 9,992 8,783 1,209 10,600 9,535 1,065 11,387 10,347 1,040 11,123 10,124 1,000 11,937 10,858 1,079 11,924 10,660 1,265 12,059 10,857 1,202 12,707' 11,343' 1,364' 14 15 9,333 652 9,530 462 10,081 519 10,971 415 10,581 543 11,432 505 11,417 507 11,581 479 12,225'' 483' 6,929 10 184 223 161 74 6,007 10,744 41 138 116 151 185 9,855 9,531 7 332 102 350 65 8,467 11,580 16 181 168 335 105 10,498 10,719 49 278 123 356 84 9,503 10,051 10 224 138 344 215 8,768 9,208 11 230 180 383 203 7,890 8,629 155 191 218 290 70 7,390 7,764' 166 209 147 292 123 6,567' By type 4 Financial claims 5 Deposits 6 Payable in dollars V Payable in foreign currencies 8 Other financial claims 9 Payable in dollars Payable in foreign currencies 10 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 3,260 4,808 2,844 2,917 3,612 2,339 2,210 2,606 2,428' 24 25 26 27 28 29 30 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 7,846 2,698 6 78 4,571 180 48 9,291 2,628 6 86 6,078 174 21 7,012 1,994 7 63 4,433 172 19 10,952 4,176 87 46 6,142 146 27 11,862 4,069 188 44 7,098 133 27 8,142 1,857 19 47 5,733 151 21 7,233 2,172 25 49 4,566 117 25 9,340 1,880 125 78 6,848 114 31 8,309 1,707' 33' 70 6,111 105 36 31 32 33 Asia Japan Middle East oil-exporting countries 2 731 475 4 1,317 999 7 879 605 8 971 647 5 1,027 737 5 830 561 5 951 627 8 1,082 630 8 801' 440 7 34 35 Africa Oil-exporting countries 3 103 29 85 28 65 7 60 9 95 9 106 10 89 8 80 8 75 8 21 28 33 58 26 170 52 37 27 3,533 175 426 346 284 284 898 3,725 133 431 444 164 217 999 4,180 178 650 562 133 185 1,073 4,713 158 687 774 172 262 1,107 4,313 172 544 615 146 183 1,191 5,016 177 673 612 208 322 1,306 4,930 201 760 646 158 249 1,283 4,934 201 775 642 194 220 1,355 5,168' 208 817' 668' 175' 217 1,466' 36 37 38 39 40 41 42 43 All other 4 Commercial claims Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 44 Canada 1,023 934 936 939 979 975 1,114 1,181 1,221' 45 46 47 48 49 50 51 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 1,753 13 93 206 6 510 157 1,857 28 193 234 39 412 237 1,930 19 170 226 26 368 283 2,067 13 174 232 25 411 304 2,104 12 161 234 22 463 266 2,229 36 229 298 21 457 226 2,103 34 234 277 23 477 211 2,083 14 236 313 29 428 228 2,112' 10 270 231' 32 499' 187 52 53 54 Asia Japan Middle East oil-exporting countries 2 2,982 1,016 638 2,755 881 563 2,915 1,158 450 2,992 1,169 446 3,028 967 437 2,954 934 441 3,097 1,038 421 3,115 990 423 3,443' 1,176' 398' 55 56 Africa Oil-exporting countries 3 437 130 500 139 401 144 425 136 425 137 435 122 386 95 401 111 387' 79 57 All other 4 257 222 238 251 274 328 294 345 377 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 A67 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1989 1989 Transactions, and area or country 1988 1989 Jan.Dec. June July Aug. Sept. Oct. Nov/ Dec. p 19,595 17,047 22,350 20,988 13,829 14,947 16,211 16,868 U.S. corporate securities STOCKS 1 2 Foreign purchases Foreign sales 181,185 183,185 213,778 203,386 213,778 203,386 24,316 20,646 17,122 15,087 22,112 20,942 3 Net purchases, or sales (—) -2,000 10,392 10,392 3,670 2,035 1,171 2,548 1,363 -1,118 -657 4 Foreign countries -1,825 10,636 10,636 3,688 2,052 1,154 2,599 1,340 -1,116 -609 5 6 7 8 9 10 11 12 13 14 15 16 17 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Japan Africa Other countries -3,350 -281 218 -535 -2,243 -954 1,087 1,238 -2,474 1,365 1,922 188 121 1,049 -700 -865 168 -3,470 4,528 -864 3,101 3,530 3,414 3,348 131 274 1,049 -700 -865 168 -3,470 4,528 -864 3,101 3,530 3,414 3,348 131 274 418 -15 -155 131 -114 329 168 166 1,679 1,201 1,215 16 40 779 75 -79 12 -23 546 8 109 456 729 626 2 -30 -98 -251 -238 -63 -333 773 14 250 554 423 424 22 -11 1,461 -5 -65 37 64 894 -265 602 110 631 611 24 38 -107 -265 -117 226 -244 -34 -140 149 112 1,138 975 -6 193 -1,655 -296 -119 -34 -509 -718 -137 -24 303 342 310 19 37 520 -255 -41 -9 -442 1,193 -459 -478 69 -124 -53 9 -147 18 Nonmonetary international and regional organizations -176 -245 -245 -18 -17 17 -52 23 -1 -48 13,587 BONDS 2 19 Foreign purchases 86,381 120,346 120,346 10,855 10,045 10,944 8,603 10,930 11,133 20 Foreign sales 58,417 86,254 86,254 9,185 7,552 9,361 6,857 6,772 6,656 9,300 21 Net purchases, or sales ( - ) 27,964 34,093 34,093 1,670 2,494 1,583 1,746 4,158 4,476 4,287 22 Foreign countries 28,506 33,748 33,748 1,542 2,516 1,607 1,740 4,106 4,464 4,235 23 74 7A 76 7,7 78 2.9 30 31 37, 33 34 35 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Japan Africa Other countries 17,239 143 1,344 1,514 505 13,084 711 1,931 -178 8,900 7,686 -8 -89 19,791 372 -239 850 -165 18,405 1,112 3,682 -171 9,060 6,331 56 218 19,791 372 -239 850 -165 18,405 1,112 3,682 -171 9,060 6,331 56 218 2,132 6 -162 395 -110 1,881 -188 271 -619 -59 -209 1 4 1,976 121 -53 -22 81 1,937 79 300 19 35 -44 3 103 -138 -35 -121 96 -201 -9 76 63 44 1,574 1,167 5 -17 1,400 78 -33 28 -27 1,311 155 233 20 -108 -179 -3 42 1,986 -41 113 30 74 1,711 175 247 140 1,553 1,263 0 4 2,712 -14 -117 143 54 2,328 -86 539 -57 1,343 1,045 8 4 1,328 6 -33 41 -277 1,852 204 492 242 1,954 1,728 27 -11 36 Nonmonetary international and regional organizations -542 345 345 128 -22 -24 6 53 12 52 Foreign securities 37 38 39 Stocks, net purchases, or sales ( - ) 3 Foreign purchases Foreign sales -1,959 -13,683 -13,683 -2,100 -808 -1,706 -648 -L,341R -921 -2,008 75,356 77,315 103,054 116,737 103,054 116,737 9,124 11,225 7,640 8,448 9,489 11,195 8,473 9,121 10,309 11,650' 9,417 10,338 9,637 11,645 -5,462 234,183 239,645 -1,506 21,061 22,567 -1,406 20,222 21,628 1,005 24,106 23,101 -1,845 18,325 20,170 -615 21,266 21,881 514 20,492 19,977 -18 18,668 18,686 -3,607 -2,214 -701 -2,493 -l,956r -1,926 40 41 42 Bonds, net purchases, or sales ( - ) Foreign purchases Foreign sales -7,434 218,521 225,955 -5,462 234,183 239,645 43 Net purchases, or sales (—), of stocks and bonds . . . . -9,393 -19,145 -19,145 44 Foreign countries -9,873 -19,120 -19,120 -3,407 -2,366 -887 45 46 47 48 49 50 Europe Canada Latin America and Caribbean -7,864 -3,747 1,384 979 -54 -571 -18,409 -4,066 435 3,014 93 -187 -18,409 -4,066 435 3,014 93 -187 -3,945 -705 27 1,262 3 -49 -2,534 -697 -75 921 12 8 -860 -250 314 327 -4 -414 -2,099 -201 -61 412 -3 26 480 -25 -25 -200 152 186 -568 51 Africa Other countries 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- -2,487 924 187 R -232 12 -21 -338 -407 -2,026 -484 -2,034 -181 -325 -102 3 13 108 -563 -967 -269 -458 56 168 77 8 ties sold abroad by U.S. corporations organized to finance direct investments abroad. 3. As a result of the merger of a U.S. and U.K. company in July 1989, the former stockholders of the U.S. company received $5,453 million in shares of the new combined U.K. company. This transaction is not reflected in the data above. A68 International Statistics • April 1990 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1989 Country or area 1988 1989 1989 Jan.Dec. June July Aug. Sept. Oct. Nov. Dec. p Transactions, net purchases or sales ( - ) during period 1 1 Estimated total 2 48,832 54,691 54,691 -5,202 -1,317 21,979 4,616 -2,050 r 8,196 48,170 52,714 52,714 -5,322 -761 22,409 5,698 -3,304 r 8,312 -362 3 Europe 2 Belgium-Luxembourg 4 5 Germany 6 Netherlands 7 Sweden Switzerland 2 8 9 United Kingdom 10 Other Western Europe Eastern Europe 11 12 Canada 14,319 923 -5,268 -356 -323 -1,074 9,640 10,786 -10 3,761 36,035 1,053 7,922 -1,137 889 1,097 20,217 5,982 14 621 36,035 1,053 7,922 -1,137 889 1,097 20,217 5,982 14 621 -1,305 13 -1,106 -674 647 378 -133 -423 -6 -478 4,357 82 2,622 100 110 -361 1,024 786 -5 -533 15,191 413 2,503 1,304 241 -748 9,863 1,614 0 1,028 2,494 216 510 302 -50 374 339 802 0 -373 —2,137r 90 137 -1,200 140 -187 -9iy -199 0 150 4,260 210 1,666 54 -232 -780 3,799 -481 26 375 2,434 -85 1,735 -386 29 -355 1,277 209 10 164 13 Latin America and Caribbean 14 Venezuela 15 Other Latin America and Caribbean 16 Netherlands Antilles 17 Asia 18 Japan 19 20 M o t h e r 713 -109 1,130 -308 27,603 21,750 -13 1,786 494 311 -292 475 14,008 2,393 116 1,439 494 311 -292 475 14,008 2,393 116 1,439 643 1 -14 656 -5,581 -7,780 66 1,332 839 71 104 665 -4,941 -5,360 -5 -478 -280 120 217 -617 7,121 3,009 -48 -602 23 29 -506 500 2,857 2,402 0 697 -1,439 72 34 -1,545 -131r 1,330 13 240 1,372 163 576 634 1,646 1,085 9 650 -886 -36 -610 -240 -2,669 -1,036 39 555 661 1,106 -31 1,978 1,473 231 1,978 1,473 231 120 -253 191 -557 -546 3 -431 -576 75 -1,082 -719 -228 1,254 1,158 160 -116 -143 0 1,511 1,335 0 48,170 26,624 21,546 52,714 26,949 25,764 52,714 26,949 25,764 -5,322 449 -5,772 -761 2,819 -3,580 22,409 9,957 12,452 5,698 799 4,900 -3,304' —2,284r -1,02c 8,312 1,686 6,627 -362 1,303 -1,665 1,963 1 8,146 -1 8,146 -1 667 0 435 0 3,681 0 695 0 -2,183 0 -26 -1 -640 0 2 Foreign countries 2 21 Nonmonetary international and regional organizations International 22 23 Latin America regional Memo 24 Foreign countries 2 25 Official institutions 26 Other foreign 27 28 Oil-exporting countries Middle East 3 Africa 4 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. 1,149 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 A69 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on Feb. 28, 1990 Rate on Feb. 28, 1990 Country Rate on Feb. 28, 1990 Country Percent Month effective 6.0 10.25 49.0 13.25 10.5 June 1989 Oct. 1989 Mar. 1981 Feb. 1990 Oct. 1989 Country Percent Germany, Fed. Rep. o f . . . Italy 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 10.0 6.0 13.5 4.25 7.0 Month effective Dec. Oct. Mar. Dec. Oct. 1989 1989 1989 1989 1989 Percent Month effective 8.0 6.0 June 1983 Oct. 1989 8.0 Oct. 1985 or makes advances against eligible commercial paper and/or government cornmercial 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 1989 Country, or type 1 2 3 4 5 6 7 8 9 10 Eurodollars United Kingdom Canada Germany Switzerland Netherlands France Italy Belgium Japan 1987 1988 1990 1989 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 7.07 9.65 8.38 3.97 3.67 7.85 10.28 9.63 4.28 2.94 9.16 13.87 12.20 7.04 6.83 8.71 13.86 12.30 6.99 7.01 8.85 13.99 12.32 7.37 7.42 8.67 15.03 12.29 8.08 7.63 8.42 15.07 12.35 8.22 7.68 8.39 15.07 12.34 8.06 8.14 8.22 15.13 12.24 8.22 9.35 8.24 15.07 12.96 8.27 9.31 5.24 8.14 11.15 7.01 3.87 4.72 7.80 11.04 6.69 3.96 7.28 9.27 12.44 8.65 4.73 7.15 8.95 12.52 8.44 4.80 7.53 9.20 12.40 8.66 4.88 8.08 9.89 12.63 9.51 5.25 8.40 10.41 12.67 9.81 5.71 8.47 10.71 12.83 10.03 5.80 8.82 11.19 12.88 10.48 6.02 8.93 10.93 13.22 10.54 6.22 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. A70 International Statistics • April 1990 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1989 Country/currency 1 2 3 4 5 6 Australia/dollar^ Austria/schilling Belgium/franc Canada/dollar China, P.R./yuan Denmark/krone 1987 1988 1990 1989 Sept. Oct. Nov. Dec. Jan. Feb. 70.137 12.649 37.358 1.3259 3.7314 6.8478 78.409 12.357 36.785 1.2306 3.7314 6.7412 79.186 13.236 39.409 1.1842 3.7673 7.3210 77.271 13.733 40.841 1.1828 3.7314 7.5872 77.421 13.140 39.197 1.1749 3.7314 7.2781 78.295 12.860 38.403 1.1697 3.7314 7.1138 78.586 12.241 36.544 1.1613 4.1825 6.7610 78.111 11.904 35.451 1.1720 4.7339 6.5620 75.932 11.803 34.998 1.1965 4.7339 6.4729 7 8 9 10 11 12 13 Finland/markka France/franc Germany/deutsche mark Greece/drachma Hong Kong/dollar India/rupee Ireland/punt 4.4037 6.0122 1.7981 135.47 7.7986 12.943 148.79 4.1933 5.9595 1.7570 142.00 7.8072 13.900 152.49 4.2963 6.3802 1.8808 162.60 7.8008 16.213 141.80 4.4219 6.5855 1.9502 169.03 7.8078 16.745 136.71 4.2817 6.3339 1.8662 165.88 7.8081 16.819 142.50 4.2619 6.2225 1.8300 164.97 7.8140 16.925 144.73 4.1231 5.9391 1.7378 160.32 7.8102 16.932 151.65 4.0080 5.7568 1.6914 157.68 7.8116 16.963 156.31 3.9642 5.6897 1.6758 158.04 7.8103 16.990 158.28 14 15 16 17 18 19 20 Italy/lira Japan/yen Malaysia/ringgit Netherlands/guilder New Zealand/dollar 2 . . . Norway /krone Portugal/escudo ,297.03 144.60 2.5186 2.0264 59.328 6.7409 141.20 1,302.39 128.17 2.6190 1.9778 65.560 6.5243 144.27 1,372.28 138.07 2.7079 2.1219 59.354 6.9131 157.53 1,404.18 145.07 2.6980 2.1992 59.144 7.1264 163.36 1,369.24 142.21 2.6945 2.1072 55.937 6.9502 159.08 1,343.83 143.53 2.7028 2.0652 56.301 6.9010 157.65 1,291.93 143.69 2.7032 1.9619 59.458 6.7021 152.34 1,261.87 144.98 2.7041 1.9073 60.220 6.5462 149.17 1,243.68 145.69 2.7137 1.8892 59.156 6.4760 147.71 21 22 23 24 25 26 27 28 29 30 Singapore/dollar South Africa/rand South Korea/won Spain/peseta Sri Lanka/rupee Sweden/krona Switzerland/franc Taiwan/dollar Thailand/baht . United Kingdom/pound 2 2.1059 2.0385 825.94 123.54 29.472 6.3469 1.4918 31.753 25.775 163.98 2.0133 2.2773 734.52 116.53 31.820 6.1370 1.4643 28.636 25.312 178.13 1.9511 2.6215 674.29 118.44 35.947 6.4559 1.6369 26.407 25.725 163.82 1.9769 2.7882 672.73 122.14 39.572 6.6103 1.6865 25.737 26.012 157.15 1.9622 2.6403 673.86 118.77 40.018 6.4580 1.6302 25.739 25.868 158.74 1.9588 2.6295 674.94 116.58 40.017 6.4306 1.6189 26.029 25.877 157.26 1.9183 2.5679 677.66 112.24 40.018 6.2920 1.5686 26.139 25.778 159.65 1.8873 2.5532 686.18 109.71 40.018 6.1776 1.5175 26.081 25.745 165.12 1.8641 2.5449 692.47 108.27 40.018 6.1250 1.4879 26.118 25.733 169.61 96.94 92.72 98.60 98.92 97.99 94.88 93.00 92.25 MEMO 31 United States/dollar 3 ... 1. 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. 2. Value in U.S. cents. 3. Index of weighted-average exchange value of U.S. dollar against the 101.87 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, vol. 64, August 1978, p. 700). A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c e p r * 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) 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 General 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 RELEASES—List 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. Published Semiannually, with Latest BULLETIN Anticipated schedule of release dates for periodic releases SPECIAL TABLES—Published Irregularly, with Latest BULLETIN Reference Issue December 1989 Page A84 Issue Page Reference Title and Date Assets and liabilities of commercial banks December 31, 1988 March 31, 1989 June 30, 1989 September 30, 1989 August December January February 1989 1989 1990 1990 A78 A72 A72 All Terms of lending at commercial banks February 1989 May 1989 August 1989 November 1989 June March November March 1989 1990 1989 1990 A84 A73 A73 A79 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1988 March 31, 1989 June 30, 1989 September 30, 1989 June August November March 1989 1989 1989 1990 A90 A84 A78 A84 August September February March 1988 1989 1990 1990 A70 A72 A78 A88 Pro forma balance sheet and income statements for priced service operations March 31, 1988 March 31, 1989 June 30, 1989 September 30, 1989 A72 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MANUEL H . JOHNSON, Vice Chairman MARTHA R . SEGER WAYNE D . ANGELL OFFICE OF BOARD DIVISION MEMBERS JOSEPH R. COYNE, Assistant to the Board DONALD J. WINN, 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. S I E G M A N , Senior Associate D A V I D H . H O W A R D , Deputy Associate ROBERT F. GEMMILL, Staff LEGAL DIVISION J. VIRGIL MATTINGLY, JR., General Counsel RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Associate General Counsel SCOTT G. ALVAREZ, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General Counsel OFFICE OF THE WILLIAM W . WILES, Secretary JENNIFER J. JOHNSON, Associate BARBARA R. LOWREY, Associate 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 E L L E N M A L A N D , Assistant Director DOLORES S . S M I T H , Assistant Director DIVISION Staff Director D O N E . K L I N E , 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 . B I E R N , Assistant Director JOE M. CLEAVER, Assistant Director ROGER T . COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D . GOETZINGER, Assistant Director MICHAEL G . M A R T I N S O N , Assistant Director ROBERT S . PLOTKIN, Assistant Director S I D N E Y M . S U S S A N , Assistant Director L A U R A M . H O M E R , Securities Credit Officer WILLIAM TAYLOR, Adviser OF RESEARCH AND STATISTICS MICHAEL J. PRELL, Director E D W A R D C . E T T I N , Deputy Director THOMAS D . SIMPSON, Associate Director Director D A V I D J. STOCKTON, Associate Director MARTHA B E T H E A , Deputy Associate Director PETER A . TINSLEY, Deputy Associate Director MYRON L . K W A S T , Assistant Director PATRICK M . PARKINSON, Assistant Director MARTHA S . S C A N L O N , 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 OF MONETARY AFFAIRS D O N A L D L . K O H N , Director D A V I D E . L I N D S E Y , Deputy Director BRIAN F . M A D I G A N , Assistant Director RICHARD D . PORTER, DIVISION OF BANKING SUPERVISION AND REGULATION Director Director Director 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 LAWRENCE SLIFMAN, Associate SECRETARY FINANCE Assistant Director NORMAND R.V. BERNARD, Special Assistant OFFICE OF THE INSPECTOR BRENT L. BOWEN, Inspector BARRY R. SNYDER, Assistant to the GENERAL General Inspector General Board A73 and Official Staff EDWARD W . K E L L E Y , JR. JOHN P . L A WARE 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 WILLIAM SCHNEIDER, Special Assignment: Project THEODORE E. ALLISON, Staff Director, National Information Center PORTIA W . THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF HUMAN MANAGEMENT RESOURCES 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 OFFICE OF THE DIVISION (Programs and Assistant Controller (Finance) OF SUPPORT SERVICES ROBERT E . FRAZIER, Director GEORGE M . L O P E Z , Assistant Director D A V I D L . WILLIAMS, Assistant Director OFFICE OF THE EXECUTIVE INFORMATION RESOURCES DIRECTOR FOR MANAGEMENT A L L E N E . B E U T E L , Executive Director STEPHEN R . M A L P H R U S , Deputy Executive MARIANNE M. EMERSON, Assistant DIVISION SYSTEMS OF HARDWARE Director Director AND SOFTWARE Director Assistant Director Assistant Director BRUCE M . BEARDSLEY, DAY W . RADEBAUGH, JR., ELIZABETH B . RIGGS, DIVISION OF APPLICATIONS STATISTICAL SERVICES DEVELOPMENT WILLIAM R . JONES, Director ROBERT J. ZEMEL, Associate Director Po K Y U N G K I M , Assistant Director R A Y M O N D H . M A S S E Y , Assistant Director RICHARD C . S T E V E N S , Assistant Director Director LOUISE L . R O S E M A N , Assistant FLORENCE M . Y O U N G , Assistant Budgets) DARRELL R . P A U L E Y , RESERVE C L Y D E H . FARNSWORTH, J R . , Director D A V I D L . ROBINSON, Associate Director C . WILLIAM SCHLEICHER, J R . , Associate Director BRUCE J. SUMMERS, Associate Director CHARLES W . B E N N E T T , Assistant Director JACK D E N N I S , J R . , Assistant Director E A R L G . H A M I L T O N , Assistant Director JOHN H. PARRISH, Assistant CONTROLLER GEORGE E . LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller DIVISION OF FEDERAL BANK OPERATIONS Director AND Director Director 74 Federal Reserve Bulletin • April 1990 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE MEMBERS A L A N GREENSPAN, Chairman W A Y N E D . ANGELL E D W A R D G . BOEHNE ROBERT H . BOYKIN E . GERALD CORRIGAN, W . LEE HOSKINS M A N U E L H . JOHNSON E D W A R D W . KELLEY, JR. ALTERNATE ROBERT P . BLACK ROBERT P . FORRESTAL Vice Chairman JOHN P . L A W A R E MARTHA R . SEGER GARY H . STERN MEMBERS SILAS KEEHN JAMES H . OLTMAN ROBERT T . PARRY STAFF RICHARD W. LANG, Associate DAVID E. LINDSEY, Associate LARRY J. PROMISEL, Associate ARTHUR J. ROLNICK, Associate HARVEY ROSENBLUM, Associate CHARLES J. SIEGMAN, Associate THOMAS D . SIMPSON, Associate DAVID J. STOCKTON, Associate DONALD L. KOHN, Secretary and Economist NORMAND R . V . BERNARD, Assistant Secretary GARY P . GILLUM, Deputy Assistant Secretary J. VIRGIL MATTINGLY, JR., General ERNEST T . PATRIKIS, Counsel Deputy General Counsel MICHAEL J. PRELL, Economist EDWIN M . TRUMAN, Economist JOHN M. DAVIS, Associate Economist RICHARD G. DAVIS, Associate Economist PETER D . STERNLIGHT, Manager SAM Y . CROSS, Manager for FEDERAL ADVISORY for Domestic Operations, System Open Market Account Foreign Operations, System Open Market Account COUNCIL THOMAS H . O'BRIEN, PAUL HAZEN, IRA STEPANIAN, First District WILLARD C . BUTCHER, Second District TERRENCE A . LARSEN, Third District THOMAS H . O ' B R I E N , Fourth District FREDERICK D E A N E , JR., Fifth District KENNETH L . ROBERTS, Sixth District Economist Economist Economist Economist Economist Economist Economist Economist President Vice President B . KENNETH WEST, Seventh District DAN W. MITCHELL, Eighth District LLOYD P . JOHNSON, Ninth District JORDAN L . HAINES, Tenth District RONALD G . STEINHART, Eleventh District PAUL H A Z E N , Twelfth District HERBERT V . PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary A75 and Advisory Councils CONSUMER ADVISORY COUNCIL WILLIAM E . O D O M , Dearborn, Michigan, Chairman JAMES W . H E A D , Berkeley, California, Vice Chairman GEORGE H . BRAASCH, Oakbrook, Illinois BETTY TOM C H U , Arcadia, California KATHLEEN E. KEEST, Boston, Massachusetts CLIFF E. COOK, Tacoma, Washington JERRY D . CRAFT, Atlanta, Georgia D O N A L D C. D A Y , Boston, Massachusetts R.B. (JOE) D E A N , JR., Columbia, South Carolina WILLIAM C. DUNKELBERG, Philadelphia, Pennsylvania JAMES FLETCHER, Chicago, Illinois GEORGE C. GALSTER, Wooster, Ohio E . THOMAS G ARM A N , Blacksburg, Virginia DEBORAH B . GOLDBERG, Washington, D.C. MICHAEL M. GREENFIELD, St. Louis, Missouri ROBERT A . HESS, W a s h i n g t o n , D . C . BARBARA K A U F M A N , San Francisco, California THRIFT INSTITUTIONS ADVISORY A . J. (JACK) K I N G , Kalispell, Montana COLLEEN D. MCCARTHY, Kansas City, Missouri MICHELLE S . MEIER, W a s h i n g t o n , D . C . L I N D A K. PAGE, Columbus, Ohio BERNARD F. PARKER, JR., Detroit, Michigan SANDRA PHILLIPS, Pittsburgh, Pennsylvania VINCENT P. QUAYLE, Baltimore, Maryland CLIFFORD N. ROSENTHAL, New York, New York A L A N M. SILBERSTEIN, New York, New York RALPH E . SPURGIN, Columbus, Ohio NANCY HARVEY STEORTS, Dallas, Texas D A V I D P. W A R D , Chester, New Jersey LAWRENCE WINTHROP, Portland, Oregon COUNCIL DONALD B . SHACKELFORD, Columbus, Ohio, President MARION O. SANDLER, Oakland, California, Vice President CHARLOTTE CHAMBERLAIN, Los Angeles, California D A V I D L. HATFIELD, Kalamazoo, Michigan L Y N N W . HODGE, Greenwood, South Carolina A D A M A . JAHNS, Chicago, Illinois ELLIOT K . K N U T S O N , Seattle, Washington JOHN W M . LAISLE, Oklahoma City, Oklahoma PHILIP E . LAMB, Springfield, Massachusetts JOHN A. PANCETTI, New York, New York H. C. KLEIN, Jacksonville, Arkansas CHARLES B. STUZIN, Miami, Florida A76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, MS-138, Board of Governors of the Federal Reserve System, Washington, D.C. 20551 or telephone (202) 4523244. When a charge is indicated, payment should accompany request and be made payable to the Board of Governors of the Federal Reserve System. Payment from foreign residents should be drawn on a U.S. bank. Federal Reserve Regulatory Service, $250.00 per year. Each Handbook, $90.00 per year. THE U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A MULTICOUNTRY M O D E L , May 1984. 590 pp. $14.50 each. WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. INDUSTRIAL P R O D U C T I O N — 1 9 8 6 EDITION. December 1986. 440 pp. $9.00 each. FINANCIAL FUTURES A N D OPTIONS IN THE U . S . ECONOMY. December 1986. 264 pp. $10.00 each. T H E FEDERAL RESERVE SYSTEM—PURPOSES AND TIONS. 1984. 120 p p . A N N U A L REPORT. A N N U A L REPORT: BUDGET REVIEW, 1988-89. FUNC- RESERVE BULLETIN Monthly. $25.00 per year or $2.50 each in the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $3.00 each. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint of Part I only) 1976. 682 pp. $5.00. FEDERAL A N N U A L STATISTICAL DIGEST 1974-78. 1981. 1982. 1983. 1984. 1985. 1986. 1987. 1988. 1980. 305 pp. $10.00 per copy. 1982. 239 pp. $ 6.50 per copy. 1983. 266 pp. $ 7.50 per copy. 1984. 264 pp. $11.50 per copy. 1985. 254 pp. $12.50 per copy. 1986. 231 pp. $15.00 per copy. 1987. 288 pp. $15.00 per copy. 1988. 272 pp. $15.00 per copy. 1989. 256 pp. $25.00 per copy. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $.80 each. T H E FEDERAL RESERVE A C T and other statutory provisions affecting the Federal Reserve System, as amended through August 1988. 608 pp. $10.00 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— Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one address, $2.00 each. INTRODUCTION TO FLOW OF F U N D S . 1980. 68 pp. $1.50 each; 10 or more to one address, $1.25 each. FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated at least monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $75.00 per year. Monetary Policy and Reserve Requirements Handbook. $75.00 per year. Securities Credit Transactions Handbook. $75.00 per year. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. 3 vols. (Contains all three Handbooks plus substantial additional material.) $200.00 per year. Rates for subscribers outside the United States are as follows and include additional air mail costs: 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 Federal Reserve Glossary A Guide to Business Credit and the Equal Credit Opportunity Act A Guide to Federal Reserve Regulations How to File A Consumer Credit Complaint 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 A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs A Consumer's Guide to Mortgage Refinancing Making Deposits: When Will Your Money Be Available? When Your Home is on the Line: What You Should Know About Home Equity Lines of Credit PAMPHLETS FOR FINANCIAL INSTITUTIONS Short pamphlets on regulatory compliance, primarily suitable for banks, bank holding companies, and creditors. Limit of 50 copies 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 All Timing Requirements for Adverse Action Notices: Regulation B What An Adverse Action Notice Must Contain: Regulation B Understanding Prepaid Finance Charges: Regulation Z STAFF STUDIES: Summaries Only Printed in the 157. M 2 PER U N I T OF POTENTIAL G N P AS AN ANCHOR FOR THE PRICE L E V E L , by Jeffrey J. Hallman, Richard D . Porter, and David H. Small. April 1989. 28 pp. 1 5 8 . T H E ADEQUACY A N D CONSISTENCY OF MARGIN R E QUIREMENTS IN THE MARKETS FOR STOCKS A N D DERIVATIVE PRODUCTS, by Mark J. Warshawsky with the assistance of Dietrich Earnhart. September 1989. 23 pp. Bulletin 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 114-145 are out of print. 1 4 6 . T H E ROLE OF THE PRIME RATE IN THE PRICING OF BUSINESS L O A N S BY COMMERCIAL BANKS, 1977-84, by Thomas F. Brady. November 1985. 25 pp. 1 4 7 . REVISIONS IN THE MONETARY SERVICES (DIVISIA) INDEXES OF THE MONETARY AGGREGATES, b y H e l e n T . Farr and Deborah Johnson. December 1985. 42 pp. 1 4 8 . T H E MACROECONOMIC A N D SECTORAL EFFECTS OF THE ECONOMIC RECOVERY T A X ACT: SOME SIMULATION RESULTS, by Flint Brayton and Peter B. Clark. December 1985. 17 pp. 149. T H E OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE A N D AFTER ACQUISITION, b y S t e p h e n A. Rhoades. April 1986. 32 pp. 1 5 0 . STATISTICAL COST ACCOUNTING MODELS IN BANKING: A REEXAMINATION A N D AN APPLICATION, by John T. Rose and John D. Wolken. May 1986. 13 pp. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice P. White, Paul F. O'Brien, and Mary M. McLaughlin. January 1987. 30 pp. 1 5 2 . DETERMINANTS OF CORPORATE MERGER ACTIVITY: A REVIEW OF THE LITERATURE, by Mark J. Warshawskv. April 1987. 18 pp. by Carolyn D. Davis and Alice P. White. September 1987. 14 pp. 1 5 3 . STOCK MARKET VOLATILITY, 1 5 4 . T H E EFFECTS ON CONSUMERS AND CREDITORS OF PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, b y Glenn B. Canner and James T. Fergus. October 1987. 26 pp. 155. T H E F U N D I N G OF PRIVATE PENSION PLANS, by Mark J. Warshawsky. November 1987. 25 pp. 156. INTERNATIONAL TRENDS FOR U . S . BANKS AND B A N K - ING MARKETS, by James V. Houpt. May 1988. 47 pp. 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. 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. 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. 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. Home Equity Lines of Credit. 6/88. U.S. International Transactions in 1988. 5/89. Mutual Recognition: Integration of the Financial Sector in the European Community. 9/89. The Activities of Japanese Banks in the United Kingdom and in the United States, 1980-88. 2/90. A78 Index to Statistical Tables References are to pages A3-A70 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Agricultural loans, commercial banks, 19, 20 Assets and liabilities (See also Foreigners) Banks, by classes, 18-20 Domestic finance companies, 36 Federal Reserve Banks, 10 Financial institutions, 26 Foreign banks, U.S. branches and agencies, 21 Automobiles Consumer installment credit, 39, 40 Production, 49, 50 BANKERS acceptances, 9, 23, 24 Bankers balances, 18-20. (See also Foreigners) Bonds (See also U.S. government securities) New issues, 34 Rates, 24 Branch banks, 21, 57 Business activity, nonfinancial, 46 Business expenditures on new plant and equipment, 35 Business loans (See Commercial and industrial loans) CAPACITY utilization, 48 Capital accounts Banks, by classes, 18 Federal Reserve Banks, 10 Central banks, discount rates, 69 Certificates of deposit, 24 Commercial and industrial loans Commercial banks, 16, 19 Weekly reporting banks, 19-21 Commercial banks Assets and liabilities, 18-20 Commercial and industrial loans, 16, 18, 19, 20, 21 Consumer loans held, by type and terms, 39, 40 Loans sold outright, 19 Nondeposit funds, 17 Real estate mortgages held, by holder and property, 38 Time and savings deposits, 3 Commercial paper, 23, 24, 36 Condition statements (See Assets and liabilities) Construction, 46, 51 Consumer installment credit, 39, 40 Consumer prices, 46, 48 Consumption expenditures, 53, 54 Corporations Nonfinancial, assets and liabilities, 35 Profits and their distribution, 35 Security issues, 34, 67 Cost of living (See Consumer prices) Credit unions, 27, 39. (See also Thrift institutions) Currency and coin, 18 Currency in circulation, 4, 13 Customer credit, stock market, 25 DEBITS to deposit accounts, 15 Debt (See specific types of debt or securities) Demand deposits Banks, by classes, 18-21 Ownership by individuals, partnerships, and corporations, 22 Demand deposits—Continued 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 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, 47 Eurodollars, 24 FARM mortgage loans, 38 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, 37, 38 Federal Housing Administration, 33, 37, 38 Federal Land Banks, 38 Federal National Mortgage Association, 33, 37, 38 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, 36 Business credit, 36 Loans, 39, 40 Paper, 23, 24 Financial institutions Loans to, 19, 20, 21 Selected assets and liabilities, 26 Float, 4 Flow of funds, 41, 43, 44, 45 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, 70 Foreign trade, 56 Foreigners Claims on, 57, 59, 62, 63, 64, 66 Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 A79 GOLD Certificate account, 10 Stock, 4, 56 Government National Mortgage Association, 33, 37, 38 Gross national product, 53 HOUSING, new and existing units, 51 INCOME, personal and national, 46, 53, 54 Industrial production, 46, 49 Installment loans, 39, 40 Insurance companies, 26, 30, 38 Interest rates Bonds, 24 Consumer installment credit, 40 Federal Reserve Banks, 7 Foreign central banks and foreign countries, 69 Money and capital markets, 24 Mortgages, 37 Prime rate, 23 International capital transactions of United States, 55-69 International organizations, 59, 60, 62, 65, 66 Inventories, 53 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, 38 Federal Reserve Banks, 10, 11 Financial institutions, 26, 38 LABOR force, 47 Life insurance companies (See Insurance companies) Loans (See also specific types) Banks, by classes, 18-20 Commercial banks, 3, 16, 18-20 Federal Reserve Banks, 4, 5, 7, 10, 11 Financial institutions, 26, 38 Insured or guaranteed by United States, 37, 38 MANUFACTURING Capacity utilization, 48 Production, 48, 50 Margin requirements, 25 Member banks (See also Depository institutions) Federal funds and repurchase agreements, 6 Reserve requirements, 8 Mining production, 50 Mobile homes shipped, 51 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, 53 OPEN market transactions, 9 PERSONAL income, 54 Prices Consumer and producer, 46, 52 Stock market, 25 Prime rate, 23 Producer prices, 46, 52 Production, 46, 49 Profits, corporate, 35 REAL estate loans Banks, by classes, 16, 19, 20, 38 Financial institutions, 26 Terms, yields, and activity, 37 Type of holder and property mortgaged, 38 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 Reserves Commercial banks, 18 Depository institutions, 3, 4, 5, 12 Federal Reserve Banks, 10 U.S. reserve assets, 56 Residential mortgage loans, 37 Retail credit and retail sales, 39, 40, 46 SAVING Flow of funds, 41, 43, 44, 45 National income accounts, 53 Savings and loan associations, 26, 38, 39, 41. (See also Thrift institutions) Savings banks, 26, 38, 39 Savings deposits (See Time and savings deposits) Securities (See also specific types) Federal and federally sponsored credit agencies, 33 Foreign transactions, 67 New issues, 34 Prices, 25 Special drawing rights, 4, 10, 55, 56 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 Trade, foreign, 56 Treasury cash, Treasury currency, 4 Treasury deposits, 4, 10, 28 Treasury operating balance, 28 UNEMPLOYMENT, 47 U.S. government balances Commercial bank holdings, 18, 19, 20 Treasury deposits at Reserve Banks, 4, 10, 28 U.S. government securities Bank holdings, 18-20, 21, 30 Dealer transactions, positions, and financing, 32 Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, 30, 68 Open market transactions, 9 Outstanding, by type and holder, 26, 30 Rates, 24 U.S. international transactions, 55-69 Utilities, production, 50 VETERANS Administration, 37, 38 WEEKLY reporting banks, 19-21 Wholesale (producer) prices, 46, 52 YIELDS (See Interest rates) A80 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK branch, or facility Zip Chairman Deputy Chairman President First Vice President BOSTON* 02106 Richard N. Cooper Richard L. Taylor Richard F. Syron Robert W. Eisenmenger NEW YORK* 10045 Cyrus R. Vance Ellen V. Futter Mary Ann Lambertsen E. Gerald Corrigan James H. Oltman Buffalo 14240 James O. Aston PHILADELPHIA 19105 Peter A. Benoliel Gunnar E. Sarsten Edward G. Boehne William H. Stone, Jr. CLEVELAND* 44101 Charles W. Parry John R. Miller To be announced Robert P. Bozzone W. Lee Hoskins William H. Hendricks Hanne M. Meniman Anne Marie Whittemore John R. Hardesty, Jr. William E. Masters Robert P. Black Jimmie R. Monhollon Larry L. Prince Edwin A. Huston A. G. Trammell Lana Jane Lewis-Brent Robert D. Apelgren Victoria B. Jackson To be announced Robert P. Forrestal Jack Guynn Marcus Alexis Charles S. McNeer Phyllis E. Peters Silas Keehn Daniel M. Doyle H. Edwin Trusheim Robert H. Quenon L. Dickson Flake Raymond M. Burse Katherine H. Smythe Thomas C. Melzer James R. Bowen Michael W. Wright Delbert W. Johnson J. Frank Gardner Gary H. Stern Thomas E. Gainor Fred W. Lyons, Jr. Burton A. Dole, Jr. Barbara B. Grogan John F. Snodgrass Herman Cain Roger Guffey Henry R. Czerwinski Bobby R. Inman Hugh G. Robinson Donald G. Stevens Andrew L. Jefferson, Jr. Roger R. Hemminghaus Robert H. Boykin William H.Wallace Robert F. Erburu Carolyn S. Chambers Yvonne B. Burke William A. Hilliard Don M. Wheeler Bruce R. Kennedy Robert T. Parry Carl E. Powell Cincinnati Pittsburgh 45201 15230 RICHMOND* 23219 Baltimore 21203 Charlotte 28230 Culpeper Communications and Records Center 22701 ATLANTA Birmingham Jacksonville Miami Nashville New Orleans 30303 35283 32231 33152 37203 70161 CHICAGO* 60690 Detroit 48231 ST. LOUIS 63166 Little Rock Louisville Memphis 72203 40232 38101 MINNEAPOLIS 55480 Helena KANSAS CITY Denver Oklahoma City Omaha DALLAS El Paso Houston San Antonio 59601 64198 80217 73125 68102 75222 79999 77252 78295 SAN FRANCISCO 94120 Los Angeles Portland Salt Lake City Seattle 90051 97208 84125 98124 Vice President in charge of branch Charles A. Cerino1 Harold J. Swart1 Robert D. McTeer, Jr.1 Albert D. Tinkelenberg1 John G. Stoides1 Donald E. Nelson Fred R. Herr1 James D. Hawkins1 James T. Curry III Melvyn K. Purcell Robert J. Musso Roby L. Sloan1 John F. Breen' Howard Wells Ray Laurence John D. Johnson Kent M. Scott David J. France Harold L. Shewmaker Tony J. Salvaggio1 Sammie C. Clay Robert Smith, III1 Thomas H. Robertson Thomas C. Warren2 Angelo S. Carella1 E. Ronald Liggett1 Gerald R. Kelly1 * Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New 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. 2. Executive Vice President. A81 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1984 ALASKA © i i> ii ii i As? •AN LEGEND " Boundaries of Federal R e s e r v e Districts Boundaries o f Federal R e s e r v e Branch Territories ® Federal R e s e r v e Bank Cities * Federal R e s e r v e Branch Cities Federal R e s e r v e Bank Facility ^ Board of G o v e r n o r s o f the Federal R e s e r v e 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 explains how to use the credit laws to shop for credit, apply for it, keep up credit ratings, and complain about an unfair credit. A Consumer** Quid* to Mortgage Lock-Ins Three booklets on the mortgage process are also available: A Consumer's Guide to Mortgage Refinancings, A Consumer's Guide to Mortgage Lock-Ins, and A Consumer's Guide to Mortgage Settlement Costs. These booklets were prepared in conjunction with the Federal Home Loan Bank Board and in consultation with other federal agencies and trade and consumer groups. 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 NEW HANDBOOK AVAILABLE REGULATORY SERVICE FROM THE The Federal Reserve Board has announced publication of The Payment System Handbook. The new handbook, which is part of the Federal Reserve Regulatory Service, deals with expedited funds availability, check collection, wire transfers, and risk-reduction policy. It includes Regulation CC (Availability of Funds and Collection of Checks), Regulation J (Collection of Checks and Other Items and Wire Transfers of Funds by Federal Reserve Banks), the Expedited Funds Availability Act and related statutes, official Board commentary on Regulation CC, and policy statements on risk reduction in the payment system. In addition, it contains detailed subject and citation indexes. It is published in loose-leaf binder form and is updated monthly. To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a three-volume loose-leaf 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, consumer affairs, and, available for the first time in September 1988, The Payment System Handbook. For domestic subscribers, the annual rate for The Payment System Handbook is $75. For subscribers outside the United States, the price, including additional air mail costs, is $90. For the Federal Reserve Regulatory Service, not including handbooks, the annual rate is $200 for domestic subscribers and $250 for subscribers outside the United States. All subscription requests must be accompanied by a check payable to "Board of Governors of the Federal Reserve System." Orders should be addressed to Publications Services, Mail Stop 138, Board of Governors of the Federal Reserve System, Washington, D.C. 20551.