Full text of Federal Reserve Bulletin : February 1987
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VOLUME 7 3 •
NUMBER 2 •
FEBRUARY 1987
FEDERAL RESERVE
I BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost
• Griffith L. Garwood • James L. Kichline • Edwin M. Truman
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
79 INTERSTATE
BANKING
DEVELOPMENTS
This article offers data on interstate banking
and discusses the continuing deregulation
of geographic expansion by banking organizations.
93 STRUCTURE AND USES OF THE MPS
QUARTERLY ECONOMETRIC
MODEL
OF THE UNITED
STATES
This article describes the components of a
quarterly model of the U.S. economy and
presents simulations to demonstrate the
model's properties, particularly in the short
run. It also discusses the model as a forecasting and an analytic tool.
110 INDUSTRIAL
PRODUCTION
Industrial production increased an estimated 0.6 percent in November.
112
ANNOUNCEMENTS
Resignation of Governor Henry C. Wallich
as a member of the Board of Governors.
New members appointed to Consumer Advisory Council.
Change in Regulation Z.
Proposals to reduce and control the payments system risk involved in large-dollar
wire transfer networks, book-entry transfer
systems, and automated clearinghouses; issuance of a series of questions and answers
relating to an earlier proposal involving
automated clearinghouse transactions; proposed rulemaking to permit bank holding
companies to engage in certain real estate
investment activities.
Changes in Board staff.
Admission of one state bank to membership
in the Federal Reserve System.
117 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET
COMMITTEE
At its meeting on November 5, 1986, all of
the members of the Committee indicated
that they favored a directive that called for
no change in the current degree of pressure
on reserve positions. The members expected this approach to policy implementation
to be consistent with growth of M2 and M3
at annual rates of 7 to 9 percent over the
fourth quarter from a September base. Over
the same period, growth in Ml was expected to moderate from its exceptional pace
during most of the period since early spring.
Because the behavior of Ml remained subject to unusual uncertainty, the Committee
decided to continue its recent practice of
not specifying a rate of expected growth for
purposes of short-run policy implementation but to evaluate this aggregate in the
light of the performance of the broader
monetary aggregates and other factors. The
members indicated that slightly greater or
slightly lesser reserve pressures might be
acceptable over the intermeeting period depending on the behavior of the monetary
aggregates, taking into account the strength
of the business expansion, the performance
of the dollar in foreign exchange markets,
progress against inflation, and conditions in
domestic and international credit markets.
The members agreed that the intermeeting
range for the federal funds rate, which
provides a mechanism for initiating consultation of the Committee when its boundaries are persistently exceeded, should be
left unchanged at 4 to 8 percent.
123 LEGAL
DEVELOPMENTS
Various bank holding company, bank service corporation, and bank merger orders;
and pending cases.
177 MEMBERSHIP OF THE BOARD OF
GOVERNORS
OF THE FEDERAL
RESERVE SYSTEM,
1913-87
L i s t of a p p o i n t i v e a n d ex officio
A i FINANCIAL
AND BUSINESS
members.
STATISTICS
A3 Domestic Financial Statistics
A44 D o m e s t i c Nonfinancial Statistics
A53 International Statistics
A 6 9 GUIDE TO TABULAR
PRESENTATION,
STATISTICAL RELEASES, AND
SPECIAL
TABLES
A 7 6 BOARD
OF GOVERNORS
AND
STAFF
A 7 8 FEDERAL OPEN MARKET
COMMITTEE
AND STAFF, ADVISORY
COUNCILS
A 8 0 FEDERAL RESERVE
PUBLICATIONS
A 8 3 INDEX
BOARD
TO STATISTICAL
A 8 5 FEDERAL RESERVE
AND OFFICES
A 8 6 MAP OF FEDERAL
TABLES
BANKS,
RESERVE
BRANCHES,
SYSTEM
Interstate Banking Developments
Donald T. Savage of the Board's Division of
Research and Statistics prepared this article.
Elaine J. Peterson provided research
assistance.
After years of confinement to a single state, and
in many cases to a single location within that
state, banking organizations are now being permitted to expand their deposit-taking operations
over wider geographic areas. Federal laws have
not been changed, but the states are lowering the
barriers to interstate bank expansion by exercising an option provided by the Bank Holding
Company Act of 1956. This article offers data on
interstate banking and discusses the continuing
deregulation of geographic expansion by banking
organizations.
A BRIEF
HISTORY
The first and second Bank of the United States,
which combined commercial banking with some
central banking functions, operated branch offices throughout the country. After the 1836
decision not to recharter the second Bank, however, commercial banking came under the regulatory control of the individual states. Each state
chartered its own banks, and no state provided a
general method for the entry of banks chartered
in other states. Banking became an industry
characterized by relatively small, locally oriented firms.
The national banking system, following the
pattern of state banking laws, made no provision
for a bank to expand beyond the borders of its
home state. Indeed, the general interpretation of
the National Banking Act of 1863 was that a
national bank could not operate branches even in
its home state. This interpretation created a
competitive disadvantage for those national
banks operating in states that allowed statechartered banks to operate branch offices.
Therefore, many national banks in the branch
banking states converted from national to state
charters; the pressure of these conversions contributed to the passage of federal branching legislation in 1927 (McFadden Act) and 1933 (GlassSteagall Act). These relaxations of federal law
gave the national banks in each state the same
branching powers enjoyed by the state-chartered
banks in that state.
Early in the twentieth century, the bank holding company became a second vehicle for banking organizations to expand the geographic scope
of their operations. A bank holding company
could own and operate subsidiary banks in any
number of states. The formation of a few large,
multistate, multibank holding companies, especially in the upper midwest, led to numerous
attempts to regulate the corporate ownership of
more than one bank. The Glass-Steagall Act of
1933, better known for the separation of commercial and investment banking, also called for
limited regulation of bank holding companies by
the Federal Reserve System but did not prohibit
their interstate expansion.
Although there were many subsequent proposals for more comprehensive regulation of multibank holding companies, further legislation was
not forthcoming until the passage of the Bank
Holding Company Act of 1956. The act increased
Federal Reserve Board regulation of multibank
holding companies and established standards for
regulatory approval of future bank and nonbank
acquisitions by bank holding companies. An
amendment to the draft act, which came to be
known as the Douglas Amendment, prohibited
bank holding companies from acquiring banks in
more than one state unless acquisitions were
specifically permitted by the statutes of the state
in which the bank to be acquired was located.
The 1956 legislation permitted the continued
operation of the small number of multistate bank
holding companies that existed when the law was
passed. Most of the smaller multistate companies
80
Federal Reserve Bulletin • February 1987
restructured or divested themselves of one or
more of their banks in order to avoid regulation
as multibank holding companies. Seven major
domestic interstate bank holding companies remained in operation; the largest of these organizations now operates in 12 states.
With the Bank Holding Company Act of 1956
regulating multibank holding companies, subsequent federal legislative proposals focused on the
extension of bank holding company regulation to
one-bank holding companies and the nonbank
activities of all bank holding companies. The
1970 Amendments to the Bank Holding Company Act of 1956 extended regulation to one-bank
holding companies and established standards for
the approval of proposed nonbank activities of
holding companies. State legislation focused on
branch banking laws and regulation of intrastate
multibank holding companies. Most discussions
of interstate banking were on an academic level,
and the limited efforts to change the federal law
were unsuccessful.
Except for some minor state provisions allowing additional bank acquisitions by the grandparented interstate bank holding companies, no
state took advantage of its right to allow acquisitions by out-of-state bank holding companies
until 1975. In that year, Maine passed the first
state law providing for general entry by out-ofstate bank holding companies under the provisions of the Douglas Amendment to the Bank
Holding Company Act of 1956. No more state
laws were enacted until 1982, when Massachusetts adopted a New England regional reciprocal
law and New York enacted a nationwide reciprocal law.
The New England regional laws were challenged in the courts because they did not provide
equal entry rights for banks headquartered in all
states. The United States Supreme Court ruled in
favor of the regional laws in June 1985 in Northeast Bancorp, Inc. v. Board of Governors of the
Federal Reserve System. Knowing that they
could allow entry by bank holding companies
from selected states without having to open their
borders to the states containing the money center
banks, more states revised their laws. By the end
of 1986, 36 states and the District of Columbia
had enacted some provisions allowing entry by
out-of-state bank holding companies. Other
states had adopted laws permitting entry to ac
quire a failing bank or entry by limited-purpose
banks, such as those only issuing credit cards.
THE CAUSES
OF
CHANGE
After the protracted legislative battles that usually have accompanied even relatively minor
changes in state branch banking and bank holding company laws, the speed with which the
states have adopted interstate banking laws is
surprising. There may be no one explanation for
the speed of change, but several factors have
played a role in various states. Maine's motivation in enacting the first interstate banking law
was to attract new capital into the state. It was
thought that the ownership of Maine financial
institutions by out-of-state firms might expand
the supply of economic development funds.
Some also believed that the purchase of Maine
institutions by out-of-state firms would free
Maine funds for other uses, and that new banks
organized by out-of-state firms would augment
the supply of capital.
A second factor, also related to economic
development, has contributed to the spread of
regional interstate banking laws. Especially in
the southeast, those advocating regional interstate banking laws argue that the development of
large regional banks promotes the area's economic growth. The theory is that such banks, by
understanding and supporting regional industries, will do more for economic growth than the
money center banks would if they were permitted to acquire the major regional banks under a
national interstate banking law.
Third, the reduction of barriers to entry affords
bank holding companies expansion opportunities
more nearly equal to those of other financial
service firms. Nondepository financial institutions are not subject to expansion restrictions,
and some thrift institutions have been able to
expand interstate by acquiring troubled thrifts in
other states. Banking organizations, however,
were able to supply only limited financial services on an interstate basis. Loan production
offices, nonbank subsidiaries of the bank holding
company, and Edge act offices provided a way to
offer some services across state lines, but fullservice deposit-taking offices could not be operated outside the home state.
In addition, regional interstate deposit-taking
Interstate Banking Developments
constitutes a recognition of the fact that some
banks have always offered nearly all their other
services throughout a particular region. For example, the large Boston and Hartford banks had
supplied certain services, usually to business
firms, throughout the region long before they
were permitted to take retail deposits in other
New England states.
Fourth, in some states, the desire to maximize
the number of potential acquirors of troubled
institutions was a motivating factor in the passage of interstate banking laws. Some states have
limited interstate acquisitions to the purchase of
failed or failing banks; others, though motivated
by the same fear of failures, have made all banks
eligible for interstate acquisition.
Finally, an imitation effect has been at work in
the spread of interstate banking laws. This effect
is reminiscent of the rapid spread of the bank
holding company form of organization in the
1970s. Seeing their colleagues in other states
receiving new powers, bankers have desired
equal expansion rights and have pressed for
legislation. Moreover, many of the larger banks
have feared being left out of a new alignment of
the banking industry. The imitation effect has
been strengthened by the perceived effect of the
interstate banking laws on the price of the stock
of those banks regarded as possible acquisition
targets. The likely positive effect of interstate
banking on bank stock prices is strengthened by
the prohibition in many states of de novo entry
by out-of-state bank holding companies. Thus
entry can be gained only by acquiring the stock
of banks already operating in the state.
Given these factors, most of which have been
present to some degree throughout the country,
many state laws have been liberalized to lower
the barriers to out-of-state entry. But despite the
rapid change in the laws, actual change in the
geographic structure of the banking industry has
only begun. Part of the framework of an interstate banking system has been erected, but its
utilization to build interstate banking organizations will take time.
INTERSTATE
BANKING
NOW
The details of the laws of those states that have
passed statutes providing for interstate banking
81
are presented in table 1. This and subsequent
tables exclude state laws that provide for entry
only by limited-service banks. Of the 37 state
laws listed in table 1, 7 have not yet become
effective, and not many acquisitions have
taken place under the laws that are already in
effect.
Eighteen of the interstate banking laws provide for eventual entry from all other states,
although in some states the move to nationwide
entry is preceded by a period of entry from a
limited number of states. Only one major banking state, Texas, and a few smaller states—
Arizona, Alaska, Maine, Oklahoma, Nevada,
and Utah—do not require reciprocal entry rights
for their banks as a condition for out-of-state
entry. Those states are not the home of large
numbers of major banks that would be expected
to make numerous interstate acquisitions.
In geographic terms, regional interstate banking has proven to be most popular in the southeast. All of the states along the coast from
Maryland through Louisiana have adopted the
regional approach, although not all have defined
their region in the same way. An upper mid western region has also been formed, but it involves
fewer states and its definition is even less uniform. The New England region, which began
developing the earliest, does not yet embrace all
six states because New Hampshire and Vermont
have yet to enact interstate banking laws.
Approximately 77 percent of all federally insured U.S. commercial banks are located in
states that have enacted interstate banking laws;
they hold more than 91 percent of all U.S.
domestic banking assets. Although most banks
now have some opportunity for interstate expansion, few organizations have been able to
achieve a full banking operation in a large number of states because of the limited time that
most laws have been in effect.
Table 2 presents another view of the state
laws, taking into account interactions between
the state laws, the effects of reciprocity requirements, and delays in the effectiveness of some of
the laws. This table, which includes laws in effect
or enacted as of January 1, 1987, indicates the
opportunities for expansion available to bank
holding companies in each state. It tells when a
banking organization in a given state can enter
each other state (the columns), and by the same
82
Federal Reserve Bulletin • February 1987
1. Interstate banking legislation, by state, January 1, 1987
State
Effective date
Alabama
July 1, 1987
Alaska...
Currently
Arizona..
Currently
California
July 1, 1987
January 1, 1991
Connecticut
District of Columbia
Florida.
Currently
Currently
Currently
Georgia . .
Currently
Idaho
Currently
Illinois . . .
Currently
Indiana . .
Currently
Kentucky
Louisiana
Currently
July 1, 1987
January 1, 1989
Maine
Currently
Maryland.
Currently
Area covered by
interstate legislation1
Reciprocal, 12 states
(AR, FL, GA, KY,
LA, MD, MS, NC,
SC, TN, VA, WV)
and DC
National, no
reciprocity
National, no
reciprocity
Reciprocal, 11 states
(AK, AZ, CO, HI,
ID, NV, NM, OR,
TX, UT, WA)
National, reciprocal
Reciprocal, 5 states
(MA, ME, NH, RI,
VT)
Reciprocal, 11 states
(AL, FL, GA, LA,
MD, MS, NC, SC,
TN, VA, WV)
Reciprocal, 11 states
(AL, AR, GA, LA,
MD, MS, NC, SC.
TN, VA, WV) and
DC
Reciprocal, 9 states
(AL, FL, KY, LA,
MS, NC, SC, TN,
VA)
Reciprocal, 6 states
(MT, NV, OR, UT,
WA, WY)
Reciprocal, 6 states
(IA, IN, KY, MI,
MO, WI)
Reciprocal, 4 states
(IL, KY. MI, OH)
National, reciprocal
Reciprocal, 14 states
(AL, AR, FL, GA,
KY, MD, MS, NC,
OK, SC, TN, TX,
VA, WV) and DC
National, reciprocal
National, no
reciprocity
Reciprocal, 3 states
(DE, VA, WV, and
DC)
Reciprocal, 14 states
(AL, AR, DE, FL,
GA, KY, LA, MS.
NC, PA, SC, TN,
VA, WV) and DC
State
Nevada
Effective date
Currently
January 1, 1989
New Jersey.
Currently
Trigger of 13
states with
reciprocity for NJ.
4 of 13 must be
among 10 states
with largest bank
deposits.
New York
North Carolina.
Currently
Currently
Ohio.
Currently
October 17, 1988
Oklahoma.
July 1, 1987
Oregon
Currently
Pennsylvania
Currently
March 4, 1990
Rhode Island
Currently
July 1, 1988
Massachusetts
Currently
Michigan
Currently
October 10, 1988
Minnesota.
Currently
Mississippi
July 1, 1988
July 1, 1990
Missouri
Currently
Reciprocal, 5 states
(CT, ME, NH, RI,
VT)
Reciprocal, 5 states
(IL, IN, MN, OH,
WI)
National, reciprocal
Reciprocal, 4 states
(IA, ND, SD, WI)
Reciprocal, 4 states
(AL, AR, LA. TN)
Reciprocal, 13 states
(AL, AR, FL, GA,
KY, LA, MO, NC,
SC, TN, TX, VA,
WV)
Reciprocal, 8 states
(AR, IA, IL, KS,
KY, NE, OK, TN)
1. Several states prohibit acquisition of banks in operation for less
South Carolina.
Currently
Tennessee.
July 1, 1987
Currently
Texas.
Utah..
Currently
Currently
December 31, 1987
Virginia.
Currently
Washington..
West Virginia
Wisconsin...
July 1, 1987
January 1, 1988
Currently
Area covered by
interstate legislation1
Reciprocal, 11 states
(AK, AZ, CO, HI,
ID, MT, NM, OR,
UT, WA, WY)
National, no reciprocity
Reciprocal, 13 states
(DE, IL, IN, KY,
MD, MI, MO, OH,
PA, VA, TN, WI,
WV) and DC
National, reciprocal
National, reciprocal
Reciprocal, 12 states
(AL, AR, FL, GA,
KY, LA, MD, MS,
SC, TN, VA. WV)
and DC
Reciprocal, 13 states
(DE, IL, IN, KY,
MD, MI, MO, NJ,
PA, TN, VA, WV,
WI) and DC
National, reciprocal
National. After initial
entry, BHC must be
from state offering
reciprocity or wait 4
years to expand.
8 states, no
reciprocity (AK, AZ,
CA, HI, ID, NV,
UT, WA)
Reciprocal, 7 states
(DE, KY, MD, NJ,
OH, VA, WV) and
DC
National, reciprocal
Reciprocal, 5 states
(CT, MA, ME, NH,
VT)
National, reciprocal
Reciprocal. 12 states
(AL, AR, FL, GA,
KY, LA, MD, MS,
NC, TN, VA, WV)
and DC
Reciprocal, 13 states
(AL, AR, FL, GA,
IN, KY, LA, MO,
MS, NC, SC, VA,
WV)
National, no reciprocity
Reciprocal, 11 states
(AK, AZ, CO, HI,
ID, MT, NM, NV,
OR, WA, WY)
National, no reciprocity
Reciprocal, 12 states
(AL, AR, FL, GA,
KY, LA, MD, MS,
NC, SC, TN, WV)
and DC
National, reciprocal
National, reciprocal
Reciprocal, 8 states
(IA, IL, IN, KY, MI,
MN, MO, OH)
than a specified number of years. Some allow out-of-state firms to
acquire problem institutions.
Interstate Banking Developments
token, when banks in other states can enter that
state (the rows).
Because of unmet reciprocity requirements
and the distant effective dates of some statutes,
banks have fewer opportunities for expansion
than expected given the number of laws. In only
334 (13 percent) of the 2,550 possible combinations (indicated by " n o w " ) is entry currently
permitted. Even if all of the laws that have been
enacted were fully in effect at the moment, that
percentage would rise to only 28 percent.
Fifty-one banking organizations have subsidiary banks in one or more states besides their
home state. On average, these bank holding
companies have bank subsidiaries in only two
other states; only 11 own banks in three or more
additional states, and 4 of these are grandparented organizations that predate the current move to
interstate banking.
Banking assets held by bank holding companies outside their home states total $148.4 billion,
or approximately 6 percent of total U.S. domestic commercial banking assets (see table 2A).
The table does not include other means by which
banking organizations have been able to attain an
interstate presence, such as nonbank subsidiaries of bank holding companies, limited-purpose
banks, nondeposit trust companies, Edge act
subsidiaries, or thrift institutions owned by bank
holding companies.
Again reflecting the early stage of interstate
banking and the relative importance of their
grandparented bank holding companies, California and Minnesota bank holding companies hold
a relatively large percentage of the interstate
banking assets, as table 2A suggests. The collective interstate banking assets of grandparented
interstate organizations account for 35.5 percent
of the interstate banking assets, a percentage that
reveals the early stage of the current interstate
banking movement.
While the assets of the grandparented banks
remain important, acquisitions under the new
state interstate banking laws account for 55.8
percent of the interstate banking assets reported
in table 2A. In only a few years, such assets have
come to exceed those held under the grandparent
provisions of the federal law. Given the short
time that these laws have been in effect, the
volume of assets that has been acquired is impressive.
83
A variety of state and federal statutes are
responsible for the remaining 8.7 percent of
interstate assets. The provisions for emergency
interstate acquisitions of large failed banks resulted in entry into Florida and Oklahoma. A
state emergency acquisition law allowed one
large interstate bank acquisition. In a few instances, bank holding companies were permitted
by the states and by the Federal Reserve System
to acquire failed state-insured thrift institutions
and convert them to commercial banks. These
commercial banks are included in table 2A,
which excludes several thrift institutions acquired by bank holding companies and maintained as such.
EARLY
TRENDS
Interstate banking is still in its initial stages. But,
in light of its significance for the structure of the
banking system, the early trends are important.
At this point, any perceived problems can still be
addressed by state or federal legislation.
The first clear trend is the attempt by banking
organizations to enter states whose volume or
growth of deposits makes them especially attractive. Thus substantial interstate activity has involved the acquisition of Florida banks, particularly by Georgia and North Carolina organizations under the regional interstate banking
laws. Florida banking organizations, on the other
hand, have not yet completed any out-of-state
acquisitions, contrary to the expectation that
Florida would become the region's banking center. Florida banks, already in an attractive market, had less incentive to enter other markets
than other banks had to enter Florida.
In a second trend, nearly all interstate expansion has been via acquisition rather than de novo
entry. Thus, although interstate banking has not
reduced the number of firms competing in local
banking markets, it has not yet increased that
number. Therefore, interstate banking has neither increased nor decreased local banking market concentration.
Banking organizations generally prefer to enter new markets by acquisition; moreover, de
novo entry in the context of interstate banking is
prohibited by many interstate banking laws. The
usual means of preventing de novo entry is
84
Federal Reserve Bulletin • February 1987
2. Interstate banking laws, January 1, 19871—Continued
Date of permitted entry
State whose banks are permitted entry
State permitting
entry
Alabama2
Alaska
Arizona
Arkansas
California
Alaska
Arizona
Arkansas
now
Alabama
now
now
California
Colorado
Connecticut
Delaware
District
of Columbia
Florida
Georgia
Hawaii
Idaho
now
now
now
now
now
now
now
now
JL 87
now
now
JL 87
now
now
JL 87
now
now
now
now
now
now
<31
(3)
(31
(3)
(3)
(3)
(3)
O)
(5)
<3)
(5)
(3)
now
now
(3)
(3)
(3)
now
now
now
JL 87
(3)
Colorado
Connecticut 2
Delaware
District of Columbia2
Florida2
JL 87
JL 874
JL 87"
(3)
now
now
(5)
JL 874
Georgia2
Hawaii
Idaho2
Illinois2
Indiana2
Iowa
Kansas
JL 874
JL 87
now
2
Maryland
Massachusetts 2
Minnesota2
Mississippi2
now
now
JA 89
now
now
JA 89
now
(5)
<3)
now
JL91 4
JL 916
now
(3)
(3)
(5)
(3)
now
now
now
OC 88
OC 88
(3)
<5>
(5)
JL 87
now
JL 87
now
now
JL 87
now
JL 87
(3)
(3)
(3)
JL 90
(5)
(3)
JL %
(51
(3)
JL 87
01
(5)
now
JL 916
now
(3>
(3)
now
(3)
(3)
(3)
JL 88
2
(51
Missouri
Montana
Nebraska
JA 89
JA 89
JA 895
JA 89
JA 89
JA 89
JA 89
JA 89
JA 895
now
(8)
(8)
(8)
(8)
(81
(5)
«}
(8)
(8)
(8)
(8)
now
<5)
15)
JL91 4
(5)
(51
(5)
(5)
(5)
(5)
(3)
JL 916
JL87"
now
JL 916
JL 916
JA 89
now
now
(8)
m
(5)
now
New Hampshire . . .
New Jersey 2
New Mexico
New York2
North Carolina2
North Dakota
Ohio2
JL 874
0)
JL 879
h)
m
OC 88 OC 889
JL 87» JL87
now
now
MR 90 MR 90
JL 88
JL 88
JL 87*
(3)
(31
JL 874
now
now
now
now
JL 87
JA 88
JL 87
JA 88
JL 874
(3)
2
West Virginia . . . .
JA 88
now
Iffir'
(3)
(5)
(5)
(3)
(3)
(3)
(3)
JL 879
JL 8 P
JL 879
JL87 9
JL879
JL 879
JL87 9
now
JL 879
now
(3)
(31
<3)
now
(5)
13)
(5)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
0)
now
now
now
now
now
DE 87
now
now
DE 87
(5)
JL 87
now
DE 87
Utah10
(5)
now
(3)
(5)
4
South Carolina 2 ....
(5)
now
now
DE 87
now
DE 87
now
DE 875
now
DE 87
now
DE 87
now
DE 87
(5)
(3)
(31
JL 916
JL 916
now
(3)
(3)
(3)
(3)
(3)
(3)
JA 88
JA 88
(3)
(3)
now
now
now
(3)
(3)
*
now
now
DE 875
(3)
(3)
JL 87
(3)
Wyoming
Notes appear on page 87.
to require that banks that are the object of out-ofstate acquisition must have been in existence for
some minimum number of years before their
acquisition. Many states adopted prohibitions
against de novo entry to answer concerns that
allowing large banks to enter de novo would
destroy the franchise value of existing bank
charters.
Third, a trend has developed toward control
by out-of-state organizations of banking in states
with relatively low deposits and relatively small
banking organizations. Maine illustrates this development. Banks that have entered that state
own its five largest commercial banking organizations and control 83 percent of its commercial
banking assets.
Interstate Banking Developments
85
2. Continued
State whose banks are permitted entry
State permitting
entry
Alabama2
Alaska
Arizona
Arkansas
California
Illinois
Indiana
Iowa
now
now
now
now
now
now
(3)
(3)
(31
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
now
now
JL 87
now
now
JL 87
now
now
now
now
JL 87
now
now
now
now
now
now
(3)
JA 91
JA 91
JA 91
Kansas
Iowa
Kansas
Kentucky 2
Louisiana 2
Maine
Maryland2
Massachusetts 2
Michigan2
Minnesota2
Mississippi2
Missouri2
Montana
Nebraska
Nevada 7
New Hampshire . . .
now
Vermont
Virginia2
Washington2
West Virginia
Wisconsin2
Wyoming
(3)
JL 886
now
now
(31
Missouri
now
now
Illllpll
(31
(5}
now
(3>
(5)
(3)
(51
(3)
now
now
now
JL 874
J L 87
now
now
(3)
(5)
(3)
(51
now
(5)
JA 89
JA 89
JA 89
JA 89
(51
(5)
(8)
(8)
(51
(51
<s>
(5)
now
JA 89
now
OC 88
JA S9
now
OC 88
JA 89
now
now
now
JA 89
JA 89
(8)
(81
(51
(81
OC 884
(81
(81
(5)
4
(51
4
JA 89
JL 874
now
(3)
(3)
<3>
(3)
(3)
(31
now
JL 88
MR 90 MR 90
now
JA 89*
now
(3)
(3)
now
JL 874
now
(3)
now
(31
now
now
DE 87
JL87
now
DE 87
now
DE 87
now
JL 87
JA 88
now
JL 87"
JA 89*
JA 88
JL 87
JA 88
(5)
JL 874
(5>
<3>
JL 879
JL87 9
JL 874
(3)
(3)
now
OC88
JA 88
(51
(51
now
JL 879
(31
(3>
(51
JL 879
JL 879
JL 879
MR 906
OC 88
(31
(31
(31
(31
(31
<31
JL 904
now
DE 87
now
DE 87
now
DE 87
(31
(3>
OC 88"
OC 886
now
(31
(3)
JL 88"
now
DE 87
now
now
DE 87
JL 904
now
(31
(51
JL90 4
JL 874
now
DE 87
JA 89
flBMB
mml^
4
Fourth, the Maine experience also indicates
the greater possibilities offered by nationwide
rather than regional interstate entry. Entry into
Maine came from Boston, Hartford, and Providence, as expected, but bank holding companies
from outside New England also have been important participants. One money center bank
from outside New England established a de novo
bank, and two upstate New York bank holding
<3>
JA 89
<3(
<31
(3)
<3>
(5)
151
JA 89
JA 89* OC 88
JL 879 JL 879
(31
(31
(5)
(3)
JA 89
now
JL 87*
ij)
(31
(31
JA 89
(31
now
DE 87
now
JA 89
JL 879
now
DE 87
now
JL 904
JL 886
now
now
(31
(5j
(51
(3)
(3)
JL 879
now
DE 87
OC 88"
JA 89
now
JL 88
now
JL 879
now
DE 87
(5)
(3)
(3)
6
JL87*
<51
JL87 4
JL 87
now
now
JL 87
JL 90
now
JL 904
now
now
JL 87
now
(51
JL 904
now
now
now
now
now
now
JL 874
now
Pennsylvania 2
Rhode IslandSouth Carolina 2 ....
South Dakota
Tennessee 2
Texas
Utah10
JA 91
now
JL 874
JL87*
JL 874
New Jersey 2
New Mexico
New York2
North Carolina 2 ....
North Dakota
Ohio2
Oklahoma
(31
now
now
Mississippi
*
Colorado
Connecticut 2
Delaware
District of Columbia2
Florida2
Georgia2
Hawaii
Idaho 2
Illinois2
Indiana2
(31
Minnesota
now
(3)
JL 90"
(31
(31
(5)
companies acquired major Maine organizations.
These entrants would have been excluded had
Maine chosen a New England regional banking
policy.
A fifth trend is the development of "superregional" banking organizations formed by the
merger of major banking organizations from two
or more of a region's states. The regional banking laws have prevented the acquisition of a
86
Federal Reserve Bulletin • February 1987
2. Interstate banking laws, January 1, 1987'—Continued
Date of permitted entry
State whose banks are permitted entry
State permitting
entry
Nebraska
Nevada
New
Hampshire
New
Jersey
New
Mexico
New
York
North
Carolina
North
Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
now
now
now
now
now
now
now
now
now
now
now
now
now
now
JL 87
now
now
now
now
now
now
now
now
now
now
now
now
(3)
Alabama2
Alaska
Arizona
Arkansas
California 2
Montana
(3)
(31
(81
(3)
JA 91
JA 91
JL 87
JA 91
JA 89*
Colorado
Connecticut 2
Delaware
District of Columbia2
Florida2
JA 91
(3)
(3)
(5)
now
now
Georgia2
Hawaii
Idaho2
Illinois2
Indiana2
(J>
Iowa
Kansas
Kentucky 2
Louisiana 2
Maine
(5)
(3)
now
now
now
now
now
Maryland 2
Massachusetts 2
Michigan2
Minnesota 2
Mississippi2
(51
(31
now
JA 89*
JA 89
now
(51
(31
now
now
(8)
(5)
(31
now
now
now
JA 89
now
now
JL 87
now
(5)
(3)
now
now
JA 89
now
JL 874
JL 87
now
(5)
(3)
now
JL 87
(3)
n i • ..
JA 89"
(5)
(31
OC 88
(31
OC 88
(3)
now
MR 906
now
JL 87
«)
now
(31
OC 88
MR 90*
(5)
JL 90
Missouri2
Montana
Nebraska
Nevada 7
New Hampshire . . .
New Jersey 2
New Mexico
New York 2
North Carolina 2 ....
North Dakota
Ohio2
Oklahoma
Oregon
Pennsylvania 2
Rhode Island2
(51
JL 87"
JA 895
JA 89
(8)
(81
(Si
(51
JA 89
JA 89*
JL 879
now
MR 90
JA 89"
(3)
(3)
JL 879
JL 879
(31
(31
(3!
01
JA 89
JK 89
4
JA 89
JA 89
(8)
(81
(8l
(Hi
(8)
(8)
($)
(5)
(5)
(5)
(5)
(31
now
JL 879
JL 87"
OC 88
JL 879
(31
13)
MR 90
JL 88
JL 879
<31
(51
now
(8l
(31
2
South Carolina ....
South Dakota
Tennessee 2
Texas
Utah10
Vermont
Virginia2
Washington2
West Virginia2
Wisconsin2
Wyoming
(3)
JL 879
(!)
(3)
(3)
now
OC 88"
(31
JL87 9
JA 89
(3)
J L 87s
JA 89
(81
now
(8)
4
now MR 90
OC 88* JL 88
now
MR 904
JL 87
OC 88
JA 89
JL 879
now
JL 879
(3)
(3)
MR 90*
(31
now
now
DE 875
(3)
(3)
now
DE 87
•S,
now
now
now
DE 87
now
DE 87
now
DE 875
now
DE 87
JL 87
JA 89*
(31
(31
(81
(3)
(31
JL 87
JA 88
now
now
DE 87
now
DE 87
now
DE 87
now
DE 87
now
now
now
DE 87
BS
OC 88*
JA 88
now
JL 87
JA 88
JL 87
MR 90*
JA 88
now
(3)
(3)
JA 88
region's major banks by money center banks.
Thus banks with a strong regional orientation
have grown through mergers to a size that now
limits the number of potential acquirors.
Finally, interstate banking appears likely to
increase the concentration of banking assets in
the nation over the long run because most geo
JA 89
JA 89<
(3)
JA 88
(3)
(3)
graphic expansion is attributable to large banks
and is conducted through mergers and acquisitions. In the case of interstate banking, many of
the organizations resulted from mergers between
relatively large banks. Of the 51 interstate organizations noted in table 2A, all but 6 rank among
the country's top 200 banking firms.
Interstate Banking Developments
87
2. Continued
State whose banks are permitted entry
State permitting
entry
South
Carolina
now
now
Alabama 2
Alaska
Arizona
Arkansas
California
Rhode
Island
JL 87
now
now
JA 91
Colorado
Connecticut 2
Delaware
District of Columbia2
Florida 2
(3>
South
Dakota
now
now
(3)
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West
Virginia
JL 87
now
now
now
now
now
now
now
now
JL 87
now
now
now
now
JL 87
DE 87s
JL 87
(3)
(3)
Wyoming
JA 886
now
now
now
now
now
now
JA 91
(3)
(31
(5)
now
0)
now
now
JA 884
JA 884
now
now
now
now
Georgia2
Hawaii
Idaho2
Illinois2
Indiana 2
(3)
Wisconsin
now
now
JL 874
now
(5)
now
Iowa
Kansas
Kentucky 2
Louisiana 2
Maine
JL 884
JA 89
now
2
Maryland
Massachusetts 2
Michigan2
Minnesota 2
Mississippi2
Missouri 2
Montana
Nebraska
Nevada 7
New Hampshire
New Jersey 2
New Mexico
New York 2
North Carolina 2
North Dakota
Ohio2
Oklahoma
Oregon
Pennsylvania 2
Rhode Island 2
South Carolina
South Dakota
Tennessee 2
Texas
Utah1®
now
JL 87
now
(3)
(31
now
o>
(3)
(5)
(5)
(3)
now
now
JL 87
now
JL87 4
JA 89
now
OC 88
(5)
(3)
JL 90
OC 88
(3)
JA 88"
JA 886
now
JA88
OC 88
JL 90
now
(3)
(5)
(3)
now
now
now
now
(3)
4
OC 88
JL 90
now
JA 89
JA 89
JA 89
JA 89
JA 89
(8)
(8)
(8)
(J)
(8)
4
JL 88
(5)
(5)
now
MR 90
(5)
now
JA 89
<8)
4
DE 87
JA 89
JL 874
JA 89
JA 89
JA 895
(8)
now
(5)
(8)
JA88 4
(5)
(8)
4
(5)
now
(5)
(3)
(3)
(5)
JL 879
JL879
OC 88
JL87 9
(3)
(3)
(3)
(3)
(3)
(3)
MR 90
JL 88
OC 88
JL 879
now
MR 90
JL 88
(3)
(5)
JL87 9
JL 879
(3)
(5)
<5)
(3)
now
now
DE 87
JL 886
JL 886
now
now
DE 87
now
DE 87
JA 88
JA 88
JA 884
(5)
(5)
OC 88
JL87 9
now
MR 90
JL 88
JA 884
JL 87*
now
JL 87s
JL87 9
JA 884
JL 88
(3)
<3)
(3)
now
DE 87
now
DE87 5
(3)
(3)
(3)
(3)
JL87
now
now
DE 87
now
now
DE 87
now
DE 87
now
DE 87
(3)
(3)
(3)
JA 88
1. Laws already in effect or with established effective dates.
2. Reciprocity required.
3. Entry would be allowed at a future date, but the state in the
column has not enacted a law granting reciprocity to the state in the
row.
4. Entry would be allowed now, but the reciprocity requirement is
not met. The state in the column has enacted a law providing for entry
from the state in the row, but the law does not become effective until
the date given.
5. Entry would be allowed now. but the reciprocity requirement is
not met. The state in the column has not enacted a law permitting
JL 87
JA 88
JL 87
JA 88
(3)
(3)
(3)
JA 88
now
JL 874
JA88 4
now
DE 87
JA 884
JA 886
(3)
JA 88
(3)
4
now
now
(3)
4
now
JL 87s
2
DE 874
JA 89
now
now
(3)
JL 88
JL 90
OC 88
JL 879
Vermont
Virginia2
Washington 2
West Virginia2
Wisconsin2
Wyoming
now
JL 87
now
(3)
JL 87
now
OC 88
now
JL 87
now
JA 88
entry from the state in the row.
6. Entry would be allowed at an earlier date, but the law of the state
in the column granting reciprocity will not be effective until this later
date.
7. Reciprocity is required until January 1989.
8. Future reciprocity is provided for, but the trigger date is indeterminate because it depends on the action of other states.
9. Entry is permitted but subsequent expansion depends on reciprocity.
10. Reciprocity is required until December 1987.
88
Federal Reserve Bulletin • February 1987
Since the days of the first and second Bank of
the United States, concentration has been a
concern in the regulation of American banking.
Unlike other countries, where a relatively small
number of banks hold the vast bulk of banking
assets, the United States has designed a policy
that avoids concentration of control over the
allocation of credit. Whether the nation would be
better served by a small number of large banks or
a large number of small banks is a central question in all discussions of branch banking and
bank holding company expansion policy.
The issue of aggregate concentration embodies
both economic and sociopolitical questions. On
the economic side, higher concentration means
fewer, but larger, banks. In face of the difficulties
arising from the failure of a large bank and the
limited number of firms able to acquire a large
failed bank, should economic policy foster even
larger banks? On the sociopolitical side, how
dispersed should power over the allocation of
credit be in a free enterprise society? Credit is a
key input in the production and distribution of all
other goods, and the access to credit on fair and
competitive terms has always been important to
policymakers. Therefore, heavy emphasis has
been placed on ensuring that no firm or group of
firms gains monopoly control over the allocation
of credit.
While traditional policy is oriented toward
preventing an increase in the aggregate concentration of banking, other views suggest that ag-
2A. Interstate banking assets1
Millions of dollars
State whose banks are permitted entry
State permitting
entry
Alaska
Arizona
Colorado
Connecticut
District of Columbia
Florida
Georgia
Idaho
Illinois
Indiana
California
New Mexico
New York
North Dakota
Ohio
Oklahoma
Oregon
Rhode Island
South Carolina
South Dakota
Tennessee
District
of Columbia
Georgia
Idaho
Illinois
Indiana
Kentucky
Massachusetts
Michigan
Minnesota
9,542
15,347
347
789
910
339
603
2,130
117
1,928
845
2,594
88
301
2,873
1,424
2,844
931
956
2,467
1,754
BS
I
(•§(§•
272
5,418
3
3,555
446
3,167
2,915
397
Utah
Virginia
Washington
Wisconsin
Wyoming
12,184
Total
38,489
Missouri
10,281
2.568
Iowa
Kentucky
Maine
Maryland
Massachusetts
Michigan
Montana
Nebraska
Nevada
New Jersev
Connecticut
943
352
2,601
1,303
476
2,597
4,799
18,513
624
347
204
339
15,025
603
13,111
::
:
1,355
Interstate Banking Developments
gregate concentration poses less threat than it
did in the past. Such views stress the larger
number of credit-granting organizations in the
economy. These include U.S. agencies and
branches of foreign banks and thrift institutions
that have only recently gained the power to make
commercial and industrial loans and all types of
consumer loans. In addition, the wide variety of
nondepository institutions would offer competition if large banks were not allocating credit to its
most efficient uses. The ease of entry into the
banking industry would permit the formation of
new banks to seek profits by meeting those credit
needs. According to this view, aggregate concentration would be a problem only if there were
89
substantial barriers both to the formation of new
banking organizations and to the expanded lending activity of entities other than domestic commercial banks.
For a long time, the barriers to interstate
banking have maintained a relatively deconcentrated banking industry because the inability to
acquire banks in other states has limited the
share of national banking assets that any one firm
could acquire. The shares of total domestic banking assets held by the 5, 10, 25, 50, and 100
largest insured banking organizations are indicated in table 3. In recent years, the shares of
banking assets held by the 50 and 100 largest
banking organizations have increased. With in-
2A. Continued
State whose banks are permitted entry
State permitting
entry
Nebraska
New
York
19
North
Carolina
Pennsylvania
558
1,127
Alaska
Arizona
Colorado
Connecticut
District of Columbia
Utah
Vermont
Virgin-
Washington
Wisconsin
243
1,753
2,163
987
4,721
7,923
2,599
168
703
779
1,975
484
39
235
6,357
5
446
3,174
1,424
3,055
2,070
359
211
2,070
931
956
2,467
394
1,754
394
Oregon
Rhode Island
South Carolina
South Dakota
Tennessee
128
5,818
3,558
6,887
2,915
842
3,721
Utah
Virginia
Washington
Wisconsin
Wyoming
1,335
2,601
12,184
1,303
543
41
68
53
5,287
11,695
2,568
11,042
1,854
30,253
9.988
2,543
910
3,839
13,979
9,988
33
Total2
130
1,854
580
New Mexico
New York
North Dakota
Ohio
Oklahoma
27,688
3,959
2,305
1. All the data on assets are as of June 30, 1986, except for
California banks in Oklahoma, for which data are as of March 31,
Tennessee
26
Michigan
Montana
Nebraska
Nevada
New Jersey
Total
Rhode
Island
1,501
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kentucky
Maine
Maryland
Massachusetts
Ohio
2,285
168
2,058
39
8,212
130
243
148,432
1986. The table reflects acquisitions and mergers reported in the
FEDERAL RESERVE BULLETIN t h r o u g h t h e i s s u e f o r N o v e m b e r 1 9 8 6 .
2. Details may not add to totals because of rounding.
90
Federal Reserve Bulletin • February 1987
3. Shares of domestic commercial banking assets
held by largest banking organizations1
FEDERAL RESERVE POLICY
INTERSTATE
BANKING
TOWARD
Percent
Year
Top 5
Top 10
Top 25
Top 50
Top 100
1970..
1971..
1972..
1973..
1974..
14.0
13.4
13.5
13.3
14.2
21.4
20.5
20.7
20.9
22.2
32.8
31.7
31.8
32.4
33.9
41.1
40.1
40.3
41.1
42.3
50.4
49.5
50.3
51.2
52.3
1975..
1976..
1977..
1978..
1979..
13.7
13.4
13.5
13.4
13.4
21.3
20.8
21.0
21.1
21.3
32.6
31.7
32.0
32.4
32.6
41.1
40.2
40.5
41.1
41.5
50.8
49.9
50.2
50.8
51.2
1980..
1981..
1982..
1983..
1984..
1985..
13.5
13.2
13.4
13.1
13.0
12.8
21.6
21.1
21.8
21.0
20.3
20.3
33.1
33.1
34.2
33.8
33.1
33.1
41.6
41.6
43.0
43.2
43.5
45.7
51.4
51.7
53.6
54.3
55.0
57.7
1. Banks are ranked by domestic banking assets. Only insured
commercial banks are included; nondeposit trust companies are
excluded.
terstate banking expected to result in higher
concentration, the choice is either to develop
new methods to maintain deconcentration or to
accept the greater banking concentration on the
hypothesis that it does not necessarily mean
greater control over the allocation of credit.
Various proposals have been advanced for the
prevention of a substantially higher level of nationwide banking concentration under a system
of interstate banking. One relatively simple alternative would be to bar mergers among the 10, 25,
or 50 largest banking organizations. These large
organizations, which are the most likely to become regional or nationwide organizations,
would be forced to expand either on a de novo
basis or by acquiring organizations outside the
top tier. Any bank ranked below the top 50
nationwide holds less than V percent of nation2
wide banking assets. Therefore, expansion of the
major banks by acquisitions outside the top 50
would have no real effect on the level of banking
concentration in the short term, although it might
in the long run.
An alternative way of controlling aggregate
concentration would be to establish a limit on the
percentage of total nationwide banking assets
that any one banking organization could hold.
Once a firm reached this limit, it could not
expand by merger, although it would still be free
to increase its national share by internal growth
or de novo entry into new markets.
The Federal Reserve Board has supported the
concept of interstate banking. In 1956, the Board
supported the original draft of proposed bank
holding company legislation that did not yet
contain the Douglas Amendment barrier to interstate banking. Then-Chairman William McC.
Martin, Jr., added the Board's support to a
proposal advanced in 1969 that would have permitted interstate banking within the Washington,
D.C., area. Hearings were held by the Senate
Committee on Banking and Currency, but the bill
did not advance.
One interstate banking measure the Board
suggested was the provision for emergency interstate acquisitions, which was ultimately included
in the Garn-St Germain Act of 1982. This technique for dealing with the failure of a large
banking organization was proposed annually by
the Board after the difficulties in arranging an
acquisition of Franklin National Bank in 1974.
The most recent Board statement on interstate
banking is the testimony by Chairman Paul A.
Volcker before a subcommittee of the House
Committee on Banking, Finance and Urban Affairs on April 24, 1985. In his testimony, the
chairman focused on the survival of small banks,
aggregate concentration, states' rights, and the
potential "Balkanization" of the banking industry. He stressed that small banks continue to
operate profitably in all varieties of banking
markets. Probably because substantial economies of scale are not available in banking, no
evidence suggests that small banks cannot compete with much larger organizations. Indeed,
even in large metropolitan markets, small banks
can compete with larger ones and frequently earn
higher rates of return on assets.
Chairman Volcker described a variety of approaches to limiting aggregate concentration in
banking. The plan he suggested would prohibit
mergers among banks ranked in the top 25 nationwide. In addition, no organization could acquire, through large acquisitions, more than 2.5
percent of total domestic deposits in depository
institutions.
While recognizing the value of the dual banking system and the right of the states to enact
Interstate Banking Developments
their own legislation, Chairman Volcker expressed the Board's concern over the regionalization of the banking industry resulting from the
new state laws. To reconcile the desire for a
uniform national policy with the desire to maintain a dual system of bank regulation, Chairman
Volcker recommended a federally legislated limit
on the number of years that states could maintain
a system of regional interstate banking. After a
suggested interval of three years, the state would
have to allow entry from any state that was open
to its banking organizations. A draft interstate
banking bill incorporating most of the Board's
recommendations was adopted by the House
Banking Committee, but was not acted upon by
the full House of Representatives.
LIKELY
FUTURE
DEVELOPMENTS
If the experience of the last few years persists,
most of the states that have not already done so
will pass some form of interstate banking legislation. Because the major banking states already
have enacted laws, however, the initial legislative phase of interstate banking is already over.
The next phase will focus on attempts to expand
the limited regions that have been selected by
many states. If the process depends on a gradual
state-by-state expansion of interstate banking
rights, however, full nationwide banking is likely
to be achieved only in the distant future, and the
expansion opportunities of the money center
banks will remain limited.
The current high level of interstate mergers, as
well as intrastate mergers, gives every sign of
persisting. A few bank holding companies will
acquire more banks as they attempt to develop
nationwide banking organizations, and a larger
number will form regional organizations. These
organizations will be seeking added diversification of their deposit bases and loan portfolios.
They may also expect their growth to yield lower
costs, although the empirical evidence does not
support this view.
Over the longer run, the merger activity may
involve more relatively small banks. For the
short term, however, the development of interstate banking will continue to involve mainly
91
large banking organizations. The development of
the superregional banks is likely to continue;
their growth and expansion into new states and
markets will result from the acquisition of relatively large banking organizations.
Thus far interstate banking has not increased
concentration in local banking markets because
the interstate banks are acquiring banks in markets in which they were not previously allowed
to operate a full-service bank. Their entry into a
new market via the acquisition of a firm already
in that market has merely replaced one competitor with another without changing market concentration.
As noted, the expansion of interstate banking
does not appear to threaten the small banks. In
the long run, as interstate organizations expand
beyond major banking markets into smaller cities
and towns, fewer small banks will be isolated
from large bank competitors. Yet, just as the
small banks have survived decades of competition from major branch banks in the relatively
concentrated statewide banking states, they will
survive competition from the nationwide banking
organizations.
Nevertheless, the issue of the aggregate concentration of the banking industry will continue
to be important as the expansion of interstate
banking intensifies nationwide concentration of
assets beyond the degree attainable before interstate banking. Taking a long view and assuming
no restrictions on mergers among large banks,
one can argue that the banking system will
comprise thousands of small banks, and a few
very large banking organizations operating in
most major banking markets and collectively
holding a large share of the nation's banking
assets. These large banks will be competing
against both the small banks and many other
depository and nondepository financial institutions.
Finally, at some point in the development of
interstate banking, efforts will be made to change
the state laws to allow interstate branch banking
as well as interstate bank holding companies.
Generally, after the liberalization of state
branching laws, banking organizations have
sought to reduce costs by consolidating many
subsidiary banks into one bank with many
branch offices.
92
Federal Reserve Bulletin • February 1987
SUMMARY
After being prohibited for most of the nation's
history, interstate banking is now being permitted by state statutes. Although the laws have
been changed only recently in most states, many
interstate acquisitions have already taken place
as firms have attempted to build regional or
national bank holding companies.
Interstate banking will continue to develop in
the next several years and will significantly affect
the structure of the American banking system.
While the aggregate concentration of banking is
the issue that has raised the most concern, it
could be addressed by appropriate policies. In
the long run, geographic deregulation could be as
important to the banking system as the deregulation of interest rates and the provision of new
bank products and services.
93
Structure and Uses of the MPS Quarterly
Econometric Model of the United States
Flint Brayton and Eileen Mauskopf
of the
Board's Division of Research and Statistics prepared this article.
In the late 1960s, staff members of the Board of
Governors of the Federal Reserve System, along
with several university economists, undertook to
build a quarterly model of the U.S. economy.
Their goal was to develop a model that focused
more intensively than did existing models on the
channels through which monetary policy affected
the real sectors of the economy. The model has
generally become known by the abbreviation
MPS, which reflects the academic affiliations of
two of its key developers, Franco Modigliani
(Massachusetts Institute of Technology) and Albert Ando (University of Pennsylvania), and the
organization (Social Science Research Council)
through which Federal Reserve support for the
project was channeled. 1
1. Papers describing early versions of the model and citing
contributors to the development of the model include Frank
de Leeuw and Edward Gramlich, "The Federal ReserveMIT Econometric Model," F E D E R A L R E S E R V E B U L L E T I N ,
vol. 54 (January 1968), pp. 11-40; Frank de Leeuw and
Edward Gramlich, "The Channels of Monetary Policy: A
Further Report on the Federal Reserve-MIT Econometric
Model," F E D E R A L R E S E R V E B U L L E T I N , vol. 55 (June 1969),
pp. 472-91; Robert H. Rasche and Harold T. Shapiro, "The
F.R.B.-M.I.T. Econometric Model: Its Special Features,"
American Economic Review, vol. 58 (May 1968, Papers and
Proceedings, 1967), pp. 123-49; and Albert Ando and Franco
Modigliani, "Econometric Evaluation of Stabilization Policies," American Economic Review, vol. 59 (May 1969,
Papers and Proceedings, 1968), pp. 296-314.
Jared Enzler. Associate Director of the Division of Research and Statistics, was involved in the model development
work, managed the model through much of its first decade of
operation, and continues to maintain an active interest in and
oversight of model developments. Other current and former
Board staff who have worked with the model in its operational phase include Robert Anderson, Douglas Battenberg,
Richard Berner, Flint Brayton, Tim Grunwald, William Lee,
Eileen Mauskopf, Stephan Thurman, David Wilcox, Anne
Williams, and David Wyss.
Since 1970, when the first working version was
completed, the Board's Division of Research and
Statistics has used the model for forecasting, for
analyzing the consequences of exogenous economic shocks and alternative monetary or fiscal
policies, and for various research projects. Although many key elements of the original model
remain intact, considerable effort has been devoted over the years to maintaining and improving the model. These efforts stem from new
insights provided by theoretical and applied economic research, from revisions in data, and from
institutional and technological developments that
have caused the performance of some equations
to deteriorate. This article provides a general
description of the current structure and uses of
the model. 2
SUMMARY
OF MODEL
STRUCTURE
As of late 1986, the MPS model consists of 334
equations, of which 128 are stochastic and 206
are identities. In addition, it has 188 exogenous
variables. The theoretical core of the model is
based on the behavior of cost-minimizing producers and utility-maximizing consumers.
In the long run, when markets clear and expectations are fulfilled, the model behaves like a
neoclassical growth model. The long-run growth
rate of the economy is determined by the rate of
population growth and the rate of technological
progress, both of which are exogenous to this
model. The level of per capita output depends on
the capital-output ratio and the characteristics of
2. A more detailed description of the model, containing a
complete list of the equations (as of 1985), is presented in
Flint Brayton and Eileen Mauskopf, "The Federal Reserve
Board MPS Quarterly Econometric Model of the U . S . Economy, "Economic Modelling, vol. 2 (July 1985), pp. 170-292.
94
Federal Reserve Bulletin • February 1987
the production function. 3 Although an optimal
capital-output ratio exists at which the sustainable level of per capita consumption is highest,
there is no guarantee that the actual path to
which the model converges is this "golden rule"
path. The capital-output ratio that prevails in the
long run will be affected by fiscal policy, among
other things. The long-run unemployment rate
will be consistent with nonaccelerating inflation—which, in the model, depends both on the
pace of productivity growth and the ratio of
unemployment benefits to take-home pay. In the
long run, the rate of inflation will equal the
excess of the rate of growth of money over that
needed to support the growth rate of real activity; inflation also will depend on any exogenous
trend in the ratio of income to money. Money is
neutral in the long run in the sense that a
permanent change in the amount of money in the
economy will cause a proportionate change in
the price level, leaving all real magnitudes unchanged. A permanent change in the rate of
growth of money, however, will not be neutral in
the long run. The consequent changes in the rate
of inflation and the nominal rate of interest will
have real effects because the demand for money
depends on the nominal rate of interest and
because some provisions of the tax code are
defined with respect to nominal, rather than real,
magnitudes.
In the short run, the properties of the model
are quite different. Because wages and prices are
estimated to adjust slowly, neither labor nor
goods markets are continuously in equilibrium.
This disequilibrium reflects the presence of adjustment costs and the assumption that expectations are formed autoregressively (for example,
expected inflation depends on past inflation).
Thus, in the short run, the model has properties
that may be characterized as Keynesian: aggregate demand largely determines the level of
output, and the unemployment rate of labor (and
the utilization rate of capital) may be either
below or above the natural rate; fiscal policy
3. The level of per capita output also depends upon the
level of technology embodied in the existing capital stock and
on the relative price of energy. The latter determines the
energy intensity of production. Energy prices are exogenous
in the model.
affects real output directly through the contribution of government spending to aggregate demand and less directly through the impact of tax
policy on disposable income and investment incentives; changes in the supply of money affect
both nominal and real interest rates, and the
latter influence investment and consumption.
The transition from the short-run responses of
the model to the long-run state after either a
change in policy or some other disturbance is
often lengthy. As shown in simulation results
described below, however, after about one year
wages and prices are sufficiently flexible that the
short-run effects of fiscal and monetary policy on
demand begin to be offset by supply responses
reflected in movements in wages, prices, and
interest rates.
A crucial issue in building economic models is
the appropriate way to model expectations. The
use in the MPS model of autoregressive (AR)
expectations contrasts to the approach using
rational expectations (RE) that has prevailed in
theoretical macroeconomic analysis during the
past decade. The rational expectations hypothesis is based on the assumption that economic
agents use all available information in forming
expectations. In its strong form (SRE), this hypothesis requires that expectations appearing in
a model be consistent with the forecasts of that
model. 4 For several reasons, the MPS model has
not adopted this constraint on modeling expectations. One is practical: the computational difficulties in estimating and simulating a large-scale
model incorporating SRE are formidable; consequently, most of the empirical models that have
incorporated this approach have been small.
Another reason is our belief that the SRE approach is extreme. The economy is sufficiently
complex that economic agents are likely to un4. A weaker definition of rational expectations postulates
that expectations are optimal forecasts based on available
information. Costs of acquiring and evaluating information
could cause economic agents to make use solely of past
observations of a variable in forming their expectations of its
future values. In this restricted case, the AR model would be
rational, but its parameters need not be constant over time:
they could vary with changes in policy rules. The distinction
between strong and weak rational expectations is made by
P. A. V. B. Swamy, J. R. Barth, and P. A. Tinsley, "The
Rational Expectations Approach to Economic Modelling,"
Journal of Economic Dynamics and Control, vol. 4 (May
1982), pp. 125-47.
Structure and Uses of the MPS Quarterly Econometric
derstand it only imperfectly. Moreover, once
sluggish adjustments owing to sources other than
expectational lags (such as long-term contracts)
are introduced into economic behavior, SRE
models show characteristics similar to those of
models with AR expectations: both types of
models generate business cycles and permit (expected) policy actions to affect real outcomes. 5
Nevertheless, the AR expectations approach
does have some limitations, and it may not be
well suited for the analysis of issues such as the
consequences of large, well-understood shifts in
policy, policy changes that are widely anticipated before they occur, or policies that would
continuously surprise economic agents who were
assumed to be using AR expectations. In these
cases, we accept Lucas's critique that macroeconomic models not based on rational expectations
may fail to predict correctly the response to a
policy action. 6 In general, however, the practical
importance of the Lucas critique may not be that
substantial. Sims argues that policymaking
should be viewed as a gradually evolving random
process (and that it is viewed as such by the
public), not as discrete shifts in policy regimes. 7
Blanchard and Blinder present evidence that,
even after the major policy changes of the past
decade, key macroeconomic equations with AR
expectations do not show the signs of instability
that should have emerged if the Lucas critique
were important. 8
5. One area of research on sources of adjustment lags
unrelated to the formation of expectations is that on nominal
contracts. See, for example, Stanley Fisher, "Long-Term
Contracts, Rational Expectations, and the Optimal Money
Supply Rule," Journal of Political Economy, vol. 85 (February 1977), pp. 191-205, and John B. Taylor, "Aggregate
Dynamics and Staggered Contracts," Journal of Political
Economy, vol. 88 (February 1980), pp. 1-23.
6. Robert E. Lucas, Jr., "Econometric Policy Evaluation:
A Critique," in Karl Brunner and Allan H. Meltzer, eds., The
Phillips Curve and Labor Markets, Carnegie-Rochester Conference Series on Public Policy, vol. 1 (Amsterdam: North
Holland, 1976), pp. 19-46.
7. Christopher A. Sims, "Policy Analysis with Econometric Models," Brookings Papers on Economic
Activity,
1:1982, pp. 107-52.
8. Olivier J. Blanchard, "The Lucas Critique and the
Volcker Deflation," American Economic Review, vol. 74
(May 1984, Papers and Proceedings, 1983), pp. 211-15; Alan
S. Blinder, "Reaganomics and Growth: The Message in the
Models," in Charles R. Hulten and Isabel V. Sawhill, eds.,
The Legacy
of Reaganomics
(Urban Institute, 1984),
pp. 199-228.
Model of the United States
95
To describe the structure of the model in more
detail, we split it into aggregate demand, aggregate supply, and financial components, although
a precise division between the demand and supply components of the model does not exist.
Aggregate
Demand
The categories of aggregate demand specified in
the model follow the National Income and Product Account (NIPA) disaggregation of gross national product into consumption, investment,
government purchases, and exports and imports.
Within each category, further disaggregation has
been made to ensure that the components modeled are reasonably homogeneous.
Consumption. The key variable in the consumption sector (CON) consists of spending on
nondurable goods and services plus the imputed
value of services from the stock of consumer
durables. CON measures consumption of durables and thus differs from the NIPA measure of
personal consumption because the latter includes
the purchase of durables rather than their use.
The modeling of the behavior of CON is based
on the life-cycle theory, which maintains that
consumers maximize utility over their lifetimes,
subject to the initial value of their wealth and
their expectations regarding nonproperty income
and the rate of interest. The rate of interest
measures the return to postponing consumption
to a later period. In the equation, nonproperty
income is disaggregated into labor and transfer
components because of the different life-cycle
characteristics of the two—labor income ceases
with retirement whereas transfer income may
continue for the remainder of an individual's
lifetime. The estimated long-run marginal propensities to consume (MPC) out of labor and
transfer income are 0.52 and 0.93 respectively.
Wealth also is disaggregated into two components—corporate equities and all other types of
wealth—with estimated MPCs of 0.05 and 0.09
respectively. In theory, the nonproperty income
and wealth MPCs are not simply constants but
are functions of the rate of interest. Only in the
case of the wealth MPCs, however, is this dependence recognized in the estimated equation, and
96
Federal Reserve Bulletin • February 1987
it is recognized indirectly through the inclusion
of property income—the product of the rate of
interest and wealth—as an additional explanatory variable. 9 The estimated long-run MPC out
of property income is 0.40.
Because both property income and the market
value of wealth depend on the rate of interest,
the model has two channels through which
interest rates alfect consumption. The latter
channel—variations in the market value of
wealth—is estimated to be by far the stronger
one, except over very long periods. An increase
in the rate of interest, for example, quickly
reduces the market value of wealth, lowering
consumption and raising saving. But the higher
level of saving then causes wealth to grow more
rapidly, and thus the effect of wealth gradually
diminishes over time. 10 The effects of interest
rates on consumption through the former channel—variations in property income—occur more
gradually because property income reflects the
average returns on existing assets and thus responds slowly to changes in interest rates. The
estimated MPC out of property income is positive but less than one, and therefore an increase
in the rate of interest raises both consumption
and saving through this channel. However, because the proportion of the increase in property
income that is consumed is less than the propen-
9. This formulation is based on the simplifying assumption
that the wealth MPCs are linear functions of the rate of
interest. Property income is measured as the sum of rental,
interest, dividend, and proprietors' income, corporate retained earnings, and imputed income on consumer durables,
less an adjustment for losses due to inflation on fixed interest
assets.
10. In the life-cycle model, the gradual lessening of the
wealth effect reflects the fact that only those cohorts of
consumers subject to unexpected gains or losses on their
assets change their consumption plans. As time passes, these
cohorts form a smaller and smaller fraction, weighted by
wealth, of the aggregate population of consumers. From this
perspective, the rate at which the wealth effect diminishes
should be gradual, and the parameter estimates in the CON
equation support this conclusion. Assuming that saving flows
into (or out of) the same wealth category that is subject to the
shock to its market value, the rate at which the initial wealth
effect dies out over time equals the corresponding wealth
MPC. Thus the induced changes in saving reduce the effect of
wealth on consumption about 5 percent per year in the case of
a change in the market value of corporate equities and about 9
percent per year for changes in the value of other forms of
wealth.
sity to consume out of nonproperty income, the
ratio of consumption to total income (property
and nonproperty income) falls, and the ratio of
saving to income rises. The effect on the saving
ratio is very small given the estimated MPCs: in
the long run each percentage point change in the
real after-tax rate of interest moves the private
saving ratio in the same direction 0.1 to 0.2
percentage point. 11
The consumption sector of the model also
includes equations for the purchase of consumer
durables; these purchases are treated as investment decisions. Consumer durables are disaggregated into two components—new automobiles
and other consumer durables—and the equations
for both are specified in stock-adjustment form
with the desired stocks depending on income, the
real rate of interest, relative prices, and the rate
of depreciation. The desired stock of cars is also
a function of the price of gasoline and the fuel
efficiency of cars.
Investment. Fixed investment is divided into
four categories: residential structures, producers' durable equipment, producers' structures
excluding public utility structures and those used
in petroleum drilling and mining, and other nonresidential structures. The last category is exogenous. Equations for the other three are based on
11. The exact relation between the saving ratio and the
rate of interest is derived in Brayton and Mauskopf, "Federal
Reserve Board MPS Quarterly Econometric Model," p. 184.
The private saving measure determined by the equation for
CON differs from NIPA private saving in the definitions of
both the consumption and the income measures upon which
the measure is based. The definition of consumption for the
model includes the service flow of the durable stock, measured by the sum of the real interest rate and the depreciation
rate times the durable stock. By contrast, the NIPA consumption measure includes the purchase of durables. On
average, this difference is likely to be small and would, in
fact, be zero if the real rate of interest equaled the real growth
rate of the stock of consumer durables. The income measure
in the CON equation differs from aggregate business and
household income in the NIPA accounts by including the
imputed income on the stock of consumer durables and by
excluding the inflation premium in the return on private
holdings of government- and foreign-issued debt. The difference in the income measure is more important than the
difference in the consumption measure in accounting for the
divergence of the two saving measures. Note that NIPA
private saving equals the sum of personal and business
saving, and that the saving concept in the model includes
business saving because retained earnings are part of the
household income measure.
Structure and Uses of the MPS Quarterly Econometric
the neoclassical approach, in which producers
add to the capital stock until its marginal product
equals its implicit rental price. The implicit rental
price, which is often called the cost of capital, is
calculated from the purchase price of capital, the
after-tax costs of debt and equity finance, economic depreciation, tax depreciation allowances,
and other tax parameters.
For producers' durable equipment and the
endogenous component of producers' structures,
it is assumed that the production technologies in
which each is used are of the constant-elasticityof-substitution class. This assumption implies
that the long-run response of each capital-output
ratio has a constant elasticity with respect to
changes in the cost of capital. For producers'
structures, the estimated elasticity is about 0.5
(in absolute value); therefore, the percentage
change in the long-run ratio of structures to
output is one-half the percentage change in the
inverse of its cost of capital. In the case of
equipment, the estimated elasticity is not significantly different from one (in absolute value);
and, to simplify elements of the supply side of
the model, an elasticity of one is imposed. The
long-run ratio of equipment to output thus moves
proportionately to the inverse of its cost of
capital.
The equations for these two categories of
business fixed investment also indicate differences in the paths of adjustment of the types of
capital to their new, desired levels following a
change in the cost of capital. Investment in
producers' durable equipment adjusts only gradually to the cost of capital, with the maximum
response achieved in the long run. By contrast,
the short-run response of investment in producers' structures to its cost of capital exceeds the
long-run effect. These dynamic response patterns suggest that the two types of capital differ
in the degree to which existing units of capital
can be modified for use with new quantities of
other inputs (labor and energy). On the one hand,
when the factor proportions embodied in the
initial design cannot be changed subsequently
(putty-clay capital), investment occurs only to
replace existing production capacity as it wears
out, assuming output is constant. A change in the
cost of capital thus modifies only the amount of
investment associated with this stream of re-
Model of the United States
97
placement capacity. On the other hand, investment in capital whose existing units can be freely
modified {putty-putty capital) responds more in
the short run than in the long run to a change in
the cost of capital. The short-run response is
greater because it includes the one-time alteration of existing capital as well as the replacement of depreciating capital. The estimated paths
of adjustment indicate that producers' durable
equipment is more likely to be putty-clay and
producers' structures to be putty-putty. 1 2
The principal housing equation explains real
per capita expenditures on nonsubsidized housing exclusive of brokers' commissions. The desired stock depends on consumption (serving as
a proxy for permanent income) and on the ratio
of the rental price to the consumption deflator.
The rental price is a function of the real after-tax
mortgage rate, of tax parameters, and of the
price of new residential construction. The desired housing stock also depends on the nominal
mortgage rate, which is a proxy for qualification
standards imposed by mortgage lenders based on
the level of monthly mortgage payments. The
elasticity of the housing stock with respect to the
rental price is not constant, and the adjustment
pattern of expenditures is consistent with a putty-putty response. Brokers' commissions, which
are a significant fraction of NIPA housing expenditures, are a function of the value of expenditures on new single-family housing and of capital
gains on existing homes. The latter is a proxy for
sales of existing houses.
Real inventory investment is divided into four
categories: nondurable, retail durable, nonretail
durable, and farm. The first three are modeled
using a stock-adjustment specification in which
the desired inventory-sales ratios are functions
of the real rate of interest and tax parameters. In
addition, short-run movements in inventories are
influenced by the degree to which sales are higher
or lower than the level anticipated by firms. The
unexpected component of sales is likely to cause
unintended changes in inventory stocks because of
time lags in the process of producing and distribut-
12. The pattern of estimated response to the cost of capital
is not a precise indication of whether or not capital is ex post
malleable because the response may also reflect adjustment,
expectational, and decisionmaking lags.
98
Federal Reserve Bulletin • February 1987
ing most goods. This buffer-stock element of inventory behavior is captured by including the
change in sales in the inventory equations. Farm
inventories are exogenous.
Government Purchases. Federal, state, and
local government purchases are each divided
into three components: employee compensation,
construction spending, and other purchases. The
federal components are exogenous. Behavioral
equations explain the three categories of state
and local purchases. The principal explanatory
variables are the level and growth rate of disposable income, the fraction of the population that is
of school age, the unemployment rate, and the
amount of federal grants-in-aid.
Exports and Imports. Exports and imports are
each divided into three general groups: merchandise trade, service receipts and payments, and
factor income flows. The principal behavioral
equations in the merchandise trade group are for
nonagricultural exports and nonpetroleum imports. In each case the key explanatory variables
are the level of GNP—domestic GNP for imports
and foreign GNP for exports—and the relative
prices of goods produced domestically and
abroad. Agricultural exports are exogenous, and
petroleum imports depend on the difference between domestic petroleum demand and supply.
Service exports and imports depend on the appropriate GNP measure, the relative prices for
foreign and domestic goods, and the magnitude
of trade flows. Factor-income flows are modeled
as the product of interest rates and stocks of
assets.
In the model, the U.S. exchange rate (defined
as a weighted average of 10 bilateral exchange
rates) is determined endogenously by the requirement that the net capital inflow (outflow)
equal the current account deficit (surplus). The
specification of the capital account includes
equations for domestic investors' holdings of
foreign assets and foreign investors' holdings of
domestic assets. The demand for these assets
depends mainly on the differential between the
short-term interest rate on domestic assets and
that on foreign assets, adjusted for the expected
rate of change of the exchange rate. This expected rate of change is represented by several
proxies: the exchange rate forward premium,
past changes in the exchange rate, and the deviation of the real exchange rate from a level that
was consistent historically with balance of the
current account. Equation estimates indicate
that expectations of the level of the exchange
rate are regressive: a movement of the exchange
rate in one direction generates the expectation
that the exchange rate will move in the opposite
direction.
Aggregate
Supply
The supply side of the model includes the production technology, the specification of firms'
production and pricing behavior, and the demand
for inputs into the production process—labor,
capital, and energy. Besides treating these facets
of the model, this section describes wage dynamics and briefly discusses how the model's structure relates to several supply-side issues. These
issues include the interest elasticity of private
saving, the response of consumption to debtfinanced tax cuts, and the response of labor
supply to changes in marginal tax rates.
The Behavior of Producers: Factor Demands
and Prices. The cornerstone of the supply side of
the model is the production function. Output of
the principal sector of the economy—nonfarm
business exclusive of services of the housing
stock—is assumed to be produced using labor,
capital, and energy inputs with a Cobb-Douglas
production function. Thus, for a given level of
production, the minimizing of costs by firms
causes the demand for each input to be inversely
proportional to its own price relative to the price
of output. This relation between factor demands
and factor prices is based on the estimated
parameters in the equation for producers' durable equipment, which is the only type of capital
included in the production function for this sector. 13 As described below, however, the demand
for energy does not appear to be based on the
13. The role of the stock of producers' structures in the
production process is much less clear than the role of
equipment. Clearly, structures are required for most forms of
production to occur, but the degree to which structures
contribute to output and can be substituted for other input
Structure and Uses of the MPS Quarterly Econometric
simple Cobb-Douglas technology, and research
is planned to resolve this inconsistency in the
structure of the model.
The specification of the supply side is complicated by the empirical observation that producers' durable equipment is putty-clay. In designing this type of capital, producers choose
particular amounts of labor and energy to be
used with the capital from the possibilities offered by the ex ante Cobb-Douglas production
function. Once designed and installed, however,
that unit of capital is operable only with those
amounts of labor and energy. Because of this
characteristic, it is important to distinguish between the determination of the optimal factor
intensities on a particular vintage of capital and
the specification of the aggregate demands for
capital, labor, and energy. In general, only the
demands for these inputs associated with new
vintages of capital will be responsive to changes
in factor prices; consequently, the aggregate
input demands will be relatively insensitive to
factor prices in the short run. 14 Only in the longer
run, when the capital stock has been totally
replaced, will the full (inverse) proportionality
between factor prices and aggregate factor demands hold. These characteristics were described above for investment in producers' durable equipment.
The aggregate demand for energy is the sum of
energy required on each vintage of capital in use.
factors (particularly labor and equipment) is difficult to
define. For this reason, they are not included in the production function.
This specification of production technology and firm behavior is for the nonfarm business sector exclusive of the
services of the housing stock (the implicit rental value). The
other sectors of the economy have much simpler production
relationships: output is proportional to labor input (government, household, and institution sectors) and to capital input
(housing output) and is exogenous (farm) or equal to net
factor income (the rest of the economy). The discussion in the
remainder of this section applies only to the nonfarm business
sector exclusive of housing output.
14. On the one hand, the factor intensities on the current
vintage of capital depend, in principle, not only on current
real factor prices but also on their expected values over the
lifetime of the vintage because of the putty-clay characteristic. On the other hand, lags in decisionmaking and delivery
cause the factor proportions on the current vintage to depend
on lagged real factor prices. The use of lagged factor prices in
the model equations should thus be interpreted as reflecting
both autoregressive expectations and these other sources of
lagged adjustment.
Model of the United States
99
It may be expressed as the product of output and
a weighted average of the energy-output ratios
on the various vintages in use, where the weights
represent the share of output produced by each
vintage. The energy-output ratios for each vintage depend on the real price of energy at the
time the capital was installed. In the estimated
equation, no attempt is made to use specific
vintage weights. Rather, the aggregate energyoutput ratio is made a function of a long distributed lag on the relative price of energy, and the
slow estimated response of the aggregate ratio to
the relative price is consistent with the puttyclay characteristic. However, the estimated
long-run real price elasticity of - 0 . 3 3 is lower
than expected and casts doubt on the appropriateness of the Cobb-Douglas production function.
Analogous to the aggregate demand for energy, the aggregate demand for labor (measured in
hours) is the sum of labor required across the
different vintages of capital in use. Because the
optimal labor intensity of each vintage is modeled as a function of the optimal intensities of
capital and energy and the parameters of the ex
ante production function, aggregate labor demand depends on actual output and the average
capital-output and energy-output ratios in use.
In addition, the ex ante production function
assumes a constant rate of labor-augmenting
technological change; and, therefore, the intensity of the labor input in production falls over time,
ceteris paribus. Hours per unit of output also
depend on the level of capacity utilization: an
increase in utilization rates increases labor productivity as overhead labor is used more efficiently, but it reduces productivity as machines
with higher operating costs (due primarily to
higher labor requirements) must be brought into
production. The latter relation between capacity
utilization and productivity attempts to capture
indirectly variations over time in the vintages
actually used.
Prices are set as a markup over unit labor
costs. 15 The existence of the markup stems from
15. An alternative but equivalent way of specifying prices
is as a markup over unit factor costs. In this case, prices
move proportionately with all factor costs (with the sum of
the elasticities of factor costs equal to unity) and inversely
with the rate of technological progress.
100
Federal Reserve Bulletin • February 1987
the assumption that firms generally operate as
oligopolists, setting prices above the level that
would obtain under perfect competition, but not
so high as to induce additional firms to enter the
market. As specified in the equation, the actual
markup varies positively with the degree of utilization of capital and labor and inversely with the
degree of price competition from foreign goods.
In principle, the putty-clay nature of capital also
complicates the specification of price behavior.
Prices should be set such that the revenue stream
of the newest vintage of capital equals the markup times the cost stream, both discounted over
the lifetime of the capital. A consequence of this
rule for setting prices is that labor productivity of
only the most recent vintage of capital rather
than labor productivity averaged across all vintages of capital should affect the price. The
model's price equation, by contrast, uses average labor productivity, a use that may be justified
in part on the basis of short-run adjustment costs
for investment in new capital.
Wage Determination and the Natural Unemployment Rate. The rate of change in compensation per hour is explained by an expectationsaugmented Phillips curve. Each percentage point
decrease in the unemployment rate is estimated
to raise the rate of change in hourly compensation in the same quarter by 0.85 percentage point
at an annual rate. The behavior of compensation
per hour also depends on the rate of inflation in
the prices of consumer goods, the change in the
minimum wage, the ratio of unemployment benefits to wages, the change in female representation
in the labor force, and changes in employer
contributions to social security and unemployment insurance. 16
As is well known, when the wage equation is
of the Phillips-curve variety, the coefficient on
price change determines the existence of a longrun tradeoff between inflation and unemployment. If the coefficient is less than unity, there is
such a long-run tradeoff. If the coefficient is
unity, as it is estimated to be in the model's
equation, the long-run Phillips curve is vertical,
16. Compensation is inclusive of employee and employer
social security insurance contributions and of other fringe
benefits.
and a natural rate of unemployment exists. 17 This
rate is consistent with the maintenance of a
constant rate of inflation but is independent of
the actual inflation rate. The economy cannot
deviate permanently from the natural rate without causing an unbounded acceleration or deceleration of prices. In the model, the natural rate
moves positively with the ratio of unemployment
benefits to wages and negatively with the rate of
growth of productivity. With trend productivity
growth of 1.0 percent and unemployment benefits
at their current level, the natural rate of unemployment is 6.4 percent.
Labor Supply. The specification of labor supply depends largely on demographic factors, with
some cyclical influence by the employment rate.
Although the responsiveness of the labor supply
to the real after-tax wage rate is a critical element
in the revival of classical economics, the equation for aggregate labor supply does not contain
such a term. The failure to find empirical support
for this hypothesis may stem from (1) offsetting
income and substitution effects generated by a
change in the real wage of primary workers, and
(2) the behavior of nonprimary workers, who
respond positively to their own real wage but
negatively to the real wage of primary workers.
Private Saving. Another tenet of supply-side
theory that our empirical work fails to substantiate is a large positive response of the saving rate
to the real after-tax rate of interest. As described
above, the consumption equation indicates that,
although the response of the saving rate to the
real after-tax rate of interest is positive, the effect
in the long run is weak. In addition, net foreign
saving is estimated to be relatively insensitive to
the differential between interest rates on U.S.
assets and those on foreign assets. One consequence of the relative insensitivity to the real
interest rate of both private and net foreign
saving is that persistent government budget deficits—which are a form of dissaving—reduce the
17. The equation imposes a unitary price response, but the
coefficient value when freely estimated is not significantly
different from this value. The existence of a natural unemployment rate also requires that the elasticities of the output
price with respect to factor prices sum to one. The model's
price equation implicitly has this characteristic.
Structure and Uses of the MPS Quarterly Econometric
amount of wealth in individuals' portfolios allocated to the private capital stock. Thus, in the
long run, per capita output is smaller than it
would otherwise be. 18
The relation between government debt policy
and private saving also hinges on the extent to
which individuals' consumption decisions are
sensitive to expected future tax liabilities. Under
what has become known as the Ricardian equivalence proposition, a shift between tax and deficit
(bond) finance of government expenditures has
no effect on consumption. 19 This conclusion is
based on the intertemporal budget constraint
faced by the government, which ensures that
short-run changes in the financing mix change
only the time profile of tax liabilities, not their
present value. This view also requires that consumers are forward-looking and see that changes
in the short-run financing mix do not affect their
own intertemporal budget constraints.
For both empirical and theoretical reasons, the
specification of the model's consumption equation is not based on the Ricardian equivalence
approach. The specification used has explained
past consumption well, even over recent years,
when there has been a marked shift toward
deficit finance. In the Ricardian view, the resulting increase in aftertax income should have been
saved. Instead, consumption has increased and
private saving has remained low, as predicted by
the model's consumption equation. From a theoretical perspective, the Ricardian equivalence
proposition is not valid if such factors as liquidity
constraints, finite planning horizons, or uncertainty significantly influence consumer behavior. 20
18. In the long run, government deficits always crowd out
gross output; and, unless the capital-output ratio exceeds
that consistent with maximum sustainable net output, deficits
crowd out net output also.
19. Robert J. Barro, "Are Government Bonds Net
Wealth?" Journal of Political Economy, vol. 82 (November/
December 1974), pp. 1095-117.
20. See Robert B. Barsky, N. Gregory Mankiw, and Stephen R. Zeldes, "Ricardian Consumers with Keynesian Propensities," American Economic Review, vol. 76 (September
1986), pp. 676-91, and the references cited therein. To the
extent that these potential factors affect the sensitivity of
consumption to contemporaneous aftertax income, they are
consistent with the general specification of the model's consumption equation, which freely estimates this parameter.
Financial
Model of the United States
101
Sectors
The financial sector includes equations for the
components of the money stock measures Ml
and M2 and for the behavior of bank reserves. A
term-structure equation links the long-term rate
of interest to the current and past values of a
short-term interest rate and the rate of inflation.
Another equation equates the expected rate of
return on equity (net of a risk premium) to the
expected rate of return on bonds.
Ml andM2 Components. Ml is modeled as the
sum of four components: currency plus travelers
checks, demand deposits, Super NOWs, and
other checking deposits excluding Super NOWs.
The specification of each equation is based on
the inventory-theoretic transactions model. The
principal explanatory variables are the opportunity cost (market rate of interest less any explicit
return on the deposit), the price level (with
homogeneity of degree one imposed), and real
output or consumption. Except in the case of
currency, the elasticity of deposits with respect
to the opportunity cost increases as the opportunity cost rises, and it approaches zero as the
opportunity cost approaches zero. The demand
for currency has a constant elasticity with respect to the opportunity cost.
At the M2 level, all deposit categories in M2
but not in Ml,except overnight RPs and Eurodollars, are aggregated for modeling purposes. The
share of household wealth allocated to this aggregate depends on measures of the opportunity
cost as well as on the change in wealth due to
personal saving (to reflect a temporary rise in the
share of wealth allocated to these more liquid
deposits when saving increases).
The Yields on Bonds and Equity. The termstructure equation relates the yield on corporate
bonds to current and lagged values of the commercial paper rate and the rate of inflation.
Because the effective duration or maturity of a
coupon bond shortens as interest rates rise, the
length of the distributed lags on both the commercial paper and inflation rates is allowed to
vary with the recent level of the commercial
paper rate. 21 The lag length is estimated to be
21. The duration shortens as the interest rate rises because a
larger fraction of the present value of all payments on a bond—
102
Federal Reserve Bulletin • February 1987
shorter the higher are recent values of the shortterm rate. The real return on equity is calculated
as a weighted average of dividends and cash
flow, divided by the market value of equity; most
of the weight is on dividends. This real rate is
equated to the real return on bonds—the corporate bond rate less a long distributed lag on the
rate of inflation—plus a constant to reflect a risk
premium.
MODEL
PROPERTIES
The previous sections have described key components of the structure of the model. This part
presents simulations to demonstrate more concretely the properties of the model, particularly
in the short run. Each case has a base simulation
in which the model is adjusted to replicate the
historical path of the economy. Then a second
simulation, in which the time path of an exogenous variable is altered, is performed. The results presented below are differences between
the second simulation and the base simulation. 22
Response
to a Fiscal
Shock
In this simulation, real federal purchases are
permanently increased by 1 percent of real GNP.
All tax rates are held constant. The simulation is
performed four different ways to show the relative importance of demand and supply responses
and the dependence of the outcome on the stance
of monetary policy. In the first case, the supply
side of the model is suppressed by holding
wages, prices, and relative factor proportions at
their base values to highlight the demand effects
of the fiscal change; thus the supply of output is
assumed to move one for one with changes in
demand at an unchanged price. Monetary policy
is characterized by holding the federal funds rate
at its base value. From the perspective of the
loanable funds market, fixing the federal funds
rate requires the monetary authority to increase
both the coupon and the repayment of principal—is then due to
the nearer-term payments.
22. Because the model is nonlinear, the size of the multiplier
depends on the characteristics of the base simulation. Experiments have shown that this dependence on initial conditions
can be significant.
Ml by purchasing through open market operations the fraction of the increase in government
debt that the nongovernment sectors do not wish
to hold at the base value of the short-term
interest rate. As shown in entry 1 in table 1, these
assumptions result in a response of the level of
real GNP that peaks at 3.8 percent after four
years and subsides a bit thereafter. This is a
typical multiplier-accelerator pattern: the adjustment dynamics of most of the investment equations cause the short-run response to exceed the
long-run response. The size of the long-run response depends inversely on the degree to which
increases in income escape from the domestic
spending chain in the form of increases in saving,
a rise in taxes, and purchases of foreign goods.
The second entry shows the consequence of
altering the monetary policy assumption to one
in which Ml is held at its base path. The higher
level of activity generated by the change in fiscal
policy requires an increase in interest rates to
hold money demand equal to the fixed supply.
(In the loanable funds market, the rise in interest
rates is necessary to induce the nongovernment
sectors to hold all of the increase in government
debt.) Under this monetary policy assumption,
the boost to real GNP is considerably damped as
the higher level of the interest rate crowds out
some interest-sensitive private spending. The
peak response is 1.4 percent after two to four
quarters.
In entry 3, prices are endogenized, but wages
are still exogenous. 23 Monetary policy is again
characterized by fixed M l . In this case, producers are permitted to choose the price at which to
supply output although labor is still available at
the fixed wage rate. Given these assumptions,
the real GNP response is further damped after
the first two years, but only by a little. After the first
two quarters, prices rise slightly, reflecting some
upward slope to the supply curve for output. The
higher price level retards aggregate demand
through a shift in the distribution of income
toward profits and away from real disposable
income (such a shift reduces demand in the short
run but not in the long run when households
recognize their gains as shareholders). It retards
23. The mix of inputs in the production process also is
allowed to change, but this change is of only small quantitative
importance over the period being simulated.
Structure and Uses of the MPS Quarterly Econometric
Model of the United States
103
1. Simulated responses to an increase in purchases by the federal government1
Percent, except where noted
Quarter following shock
Type of simulation
1
2
4
8
12
16
20
1.3
1.7
2.3
3.1
3.7
3.8
3.1
2. Exogenous supply side: Ml fixed
Real GNP
Federal funds rate (percentage points)
1.2
1.02
1.4
1.24
1.4
1.12
1.2
.80
1.1
.89
.8
.68
.4
.32
3. Exogenous wages: MI fixed
Real GNP
GNP deflator
Federal funds rate (percentage points)
1.3
0
.98
1.5
0
1.36
1.4
.1
1.30
1.2
.3
1.05
1.0
.4
1.18
.5
.5
.98
.1
.5
.48
4. Full model: Ml fixed
Real GNP
GNP deflator
Federal funds rate (percentage points)
1.3
0
1.00
1.4
.1
1.42
1.3
.3
1.49
1.0
.9
1.67
.2
1.8
2.20
-.9
2.7
2.15
-2.0
3.0
1.31
1. Exogenous supply side: federal funds rate
Real GNP
fixed
1. Real federal purchases are increased by 1 percent of the base
value of real gross national product. The responses were calculated
over the period 1981-85, with the base simulation constructed to
replicate historical values.
aggregate demand also by further raising interest
rates, given the fixed Ml policy.
In each of these three cases, the more expansionary fiscal policy leads to a permanent increase in output because of the suppression of
one or more elements of the supply side of the
model. In a fourth case, when wages are endogenized and the full model is simulated (with
fixed Ml), the picture changes dramatically. The
stimulative fiscal policy now has only a transitory positive effect on real activity. No longer
can firms boost employment at a fixed wage rate;
rather, the increase in employment required to
produce the initially higher level of output leads
to higher wages. Higher wages boost prices,
which in turn put further upward pressure on
wages. The wage-price acceleration (relative to
the values of wages and prices in the base
simulation) stops as higher prices push up interest rates and crowd out private spending. Private
spending is fully displaced by the higher level of
1
government purchases after about 3 /2 years. The
response of output then turns negative because
the higher price level is inconsistent with the
unchanged supply of money. In general, the
dynamic path to the long-run equilibrium will be
characterized by gradually damped oscillations. 24 The expansive fiscal policy also sets off a
supply-side response that will cause the long-run
real output multiplier to be negative: the crowding out of private investment lowers the private
capital stock. This is a very gradual process,
however, and is not apparent over the five-year
period shown in the table.
Comparing entries 2 and 4 indicates the relative importance of the supply side of the model
over short periods. Both of these multipliers are
based on the same monetary policy assumption,
but entry 2 suppresses the supply side of the
model whereas entry 4 includes it. The results
for real GNP are virtually the same for the first
quarter and are fairly close after one year, but
then diverge significantly. For the period simulated, supply-side influences work primarily
through the wage-price sectors; however, in the
long run, the effect on potential output of
changes in the private capital stock becomes the
dominant factor.
The response of the model to other exogenous
shifts in aggregate demand, such as a shift in the
investment function, is similar over a five-year
period to that from a change in government
purchases. Over longer periods, however, the
responses will not be the same to the extent that
24. The model tends to oscillate after a shock, especially if
monetary policy takes the form of holding a monetary aggregate
unchanged. There are two basic reasons for the cycling. One is
the longer lag between interest rates and real activity compared
with the lag between interest rates and money demand. With a
fixed supply of money, an increase in real activity requires that
interest rates rise to hold money demand equal to the unchanged supply. The higher interest rates eventually lower
activity. The scenario is then repeated in reverse. The other,
and more important, source of cycling is the specification of the
wage equation in growth-rate form. As a result, the real wage
oscillates in response to a shock.
104
Federal Reserve Bulletin • February 1987
they have different implications for the private
capital stock and potential output.
Response
to a Shock
in the Level
of
Money
Because a principal reason for building the model
was to focus on monetary and financial forces,
much attention has been paid over the years to
exploring the channels through which monetary
factors affect the real economy. This issue has
long been a subject of controversy at both the
theoretical and the empirical levels. The role of
money in the model lies well between the extremes of the monetarist school, on the one
hand, and the view that money is a relatively
unimportant factor in business cycles, on the
other. There is, however, a fundamental difference between the short- and the long-run effects
of money in the model. Over the short run, an
autonomous change in the money supply significantly affects aggregate demand because of the
estimated importance of the real interest rate and
of wealth in influencing demand. Nevertheless,
the effect on demand occurs solely through
changes in the interest rate—neither the level nor
the rate of growth of money enters the behavioral
equations (except, of course, the money demand
equations). In the long run, an autonomous
change in the level of money has no effect on the
real economy and, instead, will determine only
the level of prices.
To isolate some of the factors influencing the
full model response to a permanent change in the
level of money, the simulations were decomposed into several steps. The results are presented in table 2.
In the first stage, the level of Ml is permanently increased by 1 percent relative to the baseline
value of M l . Only interest rates and the interestsensitive components of wealth are endogenized. 25 Because prices and output are held fixed,
changes in the rest of the economy do not feed
back to the financial sectors, so we can measure
25. Although market values of housing, consumer durables,
and bonds (with a maturity in excess of one period) would also
change with interest rates, the model captures changes only in
the capitalized values of the stock market and of land.
the direct effect of monetary policy on financial
markets. The effects on selected financial variables are presented in the top third of the table.
An increase in Ml initially depresses the shortterm interest rate by a disproportionately large
amount. The "overshooting" of interest rates
stems from the small contemporaneous elasticity
of Ml (relative to its long-run elasticity) with
respect to the short-term interest rate. Because
the corporate bond rate is modeled by a distributed lag on the commercial paper rate—and the
dividend-price ratio by a distributed lag on the
bond rate—these rates can also overshoot initially. By the end of the fifth year, the effect on the
commercial paper rate is close to 1 percentage
point; the effect on the bond rate is slightly
smaller; and the change in the dividend-price
ratio is about half the change in the bond rate,
reflecting the historical average of the dividendearnings payout ratio. The percentage increase in
stock market wealth equals the percentage decline in the dividend-price ratio, and the change
in land prices moves inversely but slowly with
the decline in the bond rate. By quarter 20, the
percentage increase in land prices is about 70
percent of the long-run change consistent with
the decline in the bond rate. 26
In panel 2, the changes in interest rates and
wealth after 20 quarters, as reported in the last
column of panel 1, are fed through to the equations for the components of demand. By using
the long-run changes in interest rates and wealth
(that is, those that appear after 20 quarters)
rather than the complete path as reported in
panel 1, the simulation compresses the period
over which these demand responses would appear. Each component of demand is treated
separately from all other components, and aggregate output and income are held fixed to abstract
from multiplier-accelerator effects on spending.
Thus the direct effects of changes in interest
rates and wealth on individual components of
demand are isolated. 27
26. The estimated long-run elasticities of land values with
respect to the bond rate are (in absolute value) 0.81 for
farmland, 0.73 for household ownership of land, and 1.02 for
other noncorporate land.
27. The percentage change in land prices that is used for the
simulations reported in panel 2 is the change in land prices in
evidence when land prices have fully adjusted to the changes in
the bond rate.
Structure and Uses of the MPS Quarterly Econometric
Model of the United States
105
level of output. The modeling of consumer durables, business fixed investment, housing, and
inventory investment explicitly recognizes this
link between the cost of capital and investment
spending.
Panel 2 reveals considerable variation in the
way various kinds of investment respond to a
decline in the interest rate. Several factors account for this variation. A change in the interest
rate has a bigger impact on the cost of capital the
In the model, the principal channel through
which money and interest rates affect spending is
the cost of capital, which is the gross return on
capital given the rate of return on investor equity, the rate at which capital depreciates, the tax
rate, the cost of debt, and the rate of inflation. A
reduction in the rate of return on equity or debt—
holding fixed the rate of inflation—lowers the
cost of capital and raises the optimal capitaloutput ratio and the rate of spending at a given
2. Simulated responses to an increase in money1
Quarter following shock
1
4
8
12
16
20
1. Ml increased: only interest rates endogenous
Commercial paper rate (basis points)
Corporate bond rate (basis points)
Dividend-price ratio (basis points)
Corporate equity
Billions of dollars
Percent
Noncorporate land
Billions of dollars
Percent
-252
-81
-47
-111
-76
-51
-83
-51
-30
-89
-59
-25
-99
-88
-42
-97
-94
-44
149
141
103
130
203
293
12.2
9
28
47
68
86
104
4.1
2. Interest rate and wealth changed by long-run effect
(as reported in quarter 20 of panel one);
aggregate output, income, and prices exogenous
Producers' durable equipment
Billions of 1982 dollars
Percent
Producers' structures
Billions of 1982 dollars
Percent
Housing investment
Billions of 1982 dollars
Percent
Inventory investment
Billions of 1982 dollars
Consumer purchases of new autos
Billions of 1982 dollars
Percent
Consumer durables other than autos
Billions of 1982 dollars
Percent
Consumption 2
Without consumption price change
Billions of 1982 dollars
Percent
With consumption price change
Billions of 1982 dollars
Percent
.7
.3
2.4
1.0
4.2
2.0
8.4
3.2
10.7
3.6
13.2
4.1
3.7
2.4
5.3
3.9
7.4
5.6
7.5
5.1
6.9
4.5
2.6
1.9
10.0
9.1
8.6
7.4
9.6
6.0
7.8
4.6
6.3
3.5
.5
1.7
1.7
1.1
.8
.7
.8
1.9
1.0
1.7
1.0
1.4
.9
1.2
.8
1.1
.2
.1
1.7
.8
2.9
1.4
3.2
1.4
3.1
1.2
3.1
1.2
2.2
.1
8.7
.4
13.1
.6
21.0
1.0
25.2
1.1
27.9
1.2
4.7
.2
14.6
.7
20.0
.9
29.0
1.3
33.2
1.5
35.8
1.5
0
0
0
0
3. Full-model responses for Ml increase
Real GNP
Billions of 1982 dollars
Percent
GNP deflator (percent)
Commercial paper rate (basis points)
Corporate bond rate (basis points)
Unemployment rate (percentage points)
Exchange rate (percent)
1. The level of Ml is permanently increased by 1 percent. The
responses were calculated over the period 1981-85 with the base
simulation constructed to replicate historical values.
11
.3
0
-229
-82
-.1
-2.9
38
1.2
.1
-15
-20
-.4
-2.4
36
1.1
.6
53
34
-.5
-2.8
17
.5
1.4
89
34
-.4
-.3
-24
-.7
2.1
56
49
0
.1
-61
-1.7
2.4
1
41
.6
2.8
2. Includes the service flow from the stock of consumer durables
but not expenditure on new durables,
106
Federal Reserve Bulletin • February 1987
longer the life of the capital. 28 Therefore, housing
and nonresidential structures are more sensitive
to interest rate changes than are consumer and
producers' durables, ceteris paribus. Differences
in the estimated elasticity of each type of capital
to the cost of capital also matter. The larger
response of producers' durable equipment to the
cost of capital, compared with that of structures,
offsets some of the greater sensitivity of the cost
of capital to interest rates that longer-lived structures have. In addition, because the figures in
panel 2 represent the dynamic paths of spending
rather than the steady-state effects, the responses reflect differences among the markets
for the various capital goods in the time between
placing an order and receiving the capital and in
the speed with which actual changes in interest
rates lead to expected changes. Equally important for the dynamic paths is the ex post possibility for factor substitution. Because of its puttyclay nature, producers' durable equipment adjusts relatively slowly to the change in interest
rates, and the short-run response of investment
in this type of capital never exceeds the long-run
response. By contrast, all other categories of
capital show a tendency to overshoot in the short
run.
Another way financial variables affect the real
economy is by inducing short-run variations in
household net worth. In the model, the market
value of corporate equity is determined by capitalizing the dividend stream by the dividendprice ratio, and the market value of land is
determined by capitalizing the expected real output of land by the real rate of interest on bonds.
A dollar increase in the value of the stock market
and the value of land is estimated to increase
consumption by five cents and nine cents respectively. The first consumption row in panel 2
shows the dynamic response of consumption to
changes in wealth (consistent with a decline in
the bond rate of a little less than 1 percentage
point), assuming no change in property income.
By quarter 20, the effects of wealth on consumption approximately equal the sum of the effects of
the cost of capital on the other categories of
demand.
28. This effect occurs because for longer-lived assets the rate
of interest is a larger fraction and the depreciation rate a smaller
fraction of the cost of capital.
The second consumption row in panel 2 allows
for an additional influence of interest rate
changes on consumption spending. The model
definition of consumption includes the imputed
flow of services from the stock of consumer
durables. Because an element of the price of
these services is the (real) interest expense on a
unit of consumer durables, a decline in the
interest rate directly lowers the price of consumption, thus stimulating consumption for a
given level of nominal income. 29 As shown in the
last row, including this effect boosts the consumption response about 50 percent.
Another channel that at one time was important in linking the financial and real sectors of the
model was nonprice credit rationing in the mortgage market. However, the causes of credit
rationing—deposit rate ceilings, usury constraints on mortgage rates, and the lack of integration of the mortgage and general capital markets—have diminished considerably over the
past decade with the deregulation of both the
deposit and the mortgage markets. The structure
of the model's housing sector thus assumes that
the influence of credit rationing has been negligible since the mid-1970s.
The full-model response to a permanent increase in the level of M l , reported in panel 3,
allows for the feedback from output to prices and
interest rates and for multiplier-accelerator effects on output. Initially, interest rates are lowered and output is stimulated by the factors
described in the first two panels of the table. The
higher level of output then leads to increases in
prices, and the higher output and higher prices
together subsequently raise interest rates—despite the increase in M l . Higher interest rates
then depress spending relative to the base path,
and prices and interest rates will eventually
reverse direction. By quarter 20, the model solution remains far from its steady-state response:
the increase in the price level (2.4 percent) is well
above the 1 percent that in the long run is
29. One component of the model's measure of nominal
property income is not held constant in this case. A decline in
consumption prices—given past prices—initially reduces the
capital gains households earn on their holdings of government
and foreign debt. Because this change in the price level is
permanent, the rate of inflation is ultimately unchanged, so this
effect does die out.
Structure and Uses of the MPS Quarterly Econometric
consistent with the change in money, and the
level of output is 1.7 percent below its long-run
response of no change.
MODEL
Forecasting
The staff of the Federal Reserve Board regularly
prepares forecasts of the economy, and one
element in the forecasts is a projection derived
from the quarterly model. The model forecast is
not a purely mechanical projection; rather, it
typically depends on constant adjustments (add
factors) applied to many of the behavioral equations. Add factors are introduced for three reasons: (1) to adjust equations whose post-sample
errors have deviated from the estimated error
characteristics and for which there has been
either insufficient time to reestimate the equation
or lack of success at respecifying the equation;
(2) to reflect shocks to behavior that can be
identified with events not captured by the structure of an equation and whose magnitude and
persistence can be roughly predicted; and (3) to
incorporate an estimate of an equation's nearterm error based on high-frequency data observations. In the last case, a pooled forecast from
the quarterly model and a monthly short-term
forecasting model are used as aids in generating
add factors. 30 The monthly model combines direct observations on high-frequency data with a
mix of behavioral and autoregressive equations. 31
As part of the forecasting process, a stochastic
simulation technique is used to generate confidence ranges or probability distributions for the
model projection. The approach involves repeatedly simulating the model, subjecting each behavioral equation and most exogenous variables
to random shocks based on their historical error
characteristics. The errors for exogenous varia30. Carol Corrado and Mark Greene, "Reducing Uncertainty in Short-Term Projections: The Linkage of Monthly and
Quarterly Models" (Board of Governors of the Federal Reserve
System, Division of Research and Statistics, Special Studies
Section, December 1983).
31. Carol Corrado and David Reifschneider, "A Monthly
Forecasting Model of the U.S. Economy" (Board of Governors
of the Federal Reserve System, Division of Research and
Statistics, Special Studies Section, September 1986).
107
bles are derived as residuals from autoregressive
equations 32
Policy
USES OF THE
Model of the United States
Alternatives
The model offers a convenient framework for
analyzing the effects of alternative monetary and
fiscal policies or of changes in other exogenous
variables. Despite the complexity of the model,
such simulations often require judgmental adjustments or adaptations of model equations to capture fully the important aspects of the issue being
analyzed. For instance, in simulating the effect of
lower energy prices, a judgmental adjustment
has to be made both to the projection of domestic
production of petroleum and to investment in
petroleum drilling rigs because those variables
are exogenous to the current structure of the
model.
Special
Uses of the
Model
In addition to its use for forecasting and shortrun multiplier analysis, the model has served
other purposes over the years. Often it has been
simulated to determine the long-run implications
of policy changes. A study by Anderson, Ando,
and Enzler, for example, examined the effect of
various fiscal policies on the steady-state values
of output and the real rate of interest. 33 In one set
of simulations reported, the long-term ratio of
net federal debt to nominal GNP was increased
from 0 to 100 percent with the consequence that
the new steady state had a real rate of interest
that was higher by 5 percentage points and a
level of real GNP that was 5 percent lower. In
another study of fiscal policy, Brayton and Clark
used the model to investigate the longer-run
consequences of the 1981 Economic Recovery
Tax Act (ERTA). 34 In this case, rather than
32. The stochastic simulation methodology was developed
and implemented by Peter Tinsley, James Berry, Gerhard
Fries, Doug Handler, and Arthur Kennickell. It has also been
extensively used for the analysis of policy strategies as described in the text.
33. Robert Anderson, Albert Ando, and Jared Enzler, "Interaction between Fiscal and Monetary Policy and the Real
Rate of Interest," American Economic Review, vol. 74 (May
1984, Papers and Proceedings, 1983), pp. 55-60.
34. Flint Brayton and Peter B. Clark, The Macroeconomic
and Sectoral Effects of the Economic Recovery Tax Act:
Some Simulation Results, Staff Studies 148 (Board of Governors of the Federal Reserve System, 1985).
108
Federal Reserve Bulletin • February 1987
simulating the model until it reached an equilibrium growth path, they adjusted monetary policy
to offset the impact of ERTA on real output.
Several results emerged from the study: real
interest rates were significantly higher as a result
of ERTA; investment was depressed as the increase in real interest rates more than offset the
stimulus to investment from the acceleration of
depreciation allowances; and the shift from tax
to bond finance of federal expenditures, implicit
in ERTA, would have led eventually to an unstable budgetary position in which government debt
grew explosively.
Some other special uses of the model have
centered on the analysis of alternative strategies
for conducting monetary policy. Two papers by
Kalchbrenner and Tinsley in the mid-1970s applied optimal control techniques to this topic. 35
Subsequent studies have used the stochastic
simulation methodology, described above, to analyze a wider range of policy design issues than
can be studied using deterministic simulations
(for example, policies that react to shocks) and to
evaluate policies on the basis of the degree of
control achieved over ultimate targets such as
inflation and unemployment. A series of papers
by Tinsley and von zur Muehlen used stochastic
model simulations for three purposes: (1) to rank
strategies that focused directly on the ultimate
targets with those based on intermediate targets
(Ml, M2, nominal GNP, the federal funds rate,
and the monetary base); (2) to determine whether
the choice of an intermediate target more closely
related to the ultimate targets was superior to
targeting on variables causally further removed;
and (3) to evaluate conditional intermediate targeting in which policy settings were revised in
light of events affecting the ultimate targets. 36
35. J. H. Kalchbrenner and P. A. Tinsley, "On the Use of
Optimal Control in the Design of Monetary Policy," Special
Studies Papers 76 (Board of Governors of the Federal Reserve
System, Division of Research and Statistics, Special Studies
Section, July 1975), and J. H. Kalchbrenner and P. A. Tinsley,
"On the Use of Feedback Control in the Design of Aggregate
Monetary Policy,"American Economic Review, vol. 66 (May
1976, Papers and Proceedings, 1975), pp. 349-55.
36. P. Tinsley, and P. von zur Muehlen, "A Maximum
Probability Approach to Short-Run Policy, "Journal of
Econometrics, vol. 15 (January 1981), pp. 31—48; P. Tinsley
and P. von zur Muehlen, "The Reliability of Alternative
Intermediate Targets (Board of Governors of the Federal
Reserve System, Division of Research and Statistics, Special
Most recently, Anderson and Enzler extended
this approach to develop a hierarchical policy
reaction function and used stochastic simulation
to contrast it to the case of Ml targeting. 37 This
study also investigated these types of policies in
a forward-looking framework that permits the
policy setting in each period to depend on the
consequences of the policy as given by deterministic simulations of the model.
CHANGES TO THE
OF THE MODEL
STRUCTURE
All macroeconomic models are at best approximations to the true structure of the economy.
Exact models cannot be created because of the
complexity of the economy. Moreover, empirical
methods are limited to estimating behavioral
relations based on available data, however imperfect. Although one hopes to model the important features of the economy accurately, the
passage of time inevitably reveals the failure of
parts of a model's structure to explain adequately economic events. Thus a need to reexamine
the structure of a model persists.
The process of reexamination has led over
time to many modifications of the quarterly
model structure. Among the most important
changes was the replacement of the original wage
equation—which implied a long-run tradeoff between inflation and unemployment—with one in
which no such tradeoff existed. 38 The long-run
characteristics of the model's supply side also
were altered with the inclusion of the average
capital-output ratio (and, at a later time, the
energy-output ratio) in the productivity equa-
Studies Section, November 1983); and P. A. Tinsley and
P. von zur Muehlen, "Conditional Intermediate Targetting"
(Board of Governors of the Federal Reserve System, Division of Research and Statistics, Special Studies Section,
October 1983).
37. Robert Anderson and Jared Enzler, "Policy Design:
Policy Rules That Use Forecasts," in R. Dornbush and
S. Fisher, eds., Macroeconomics
and Finance: Essays in
Honor of Franco Modigliani (Cambridge, Mass., and London: M.I.T. Press, forthcoming).
38. The original wage equation embodying the long-run
tradeoff is described in George de Menil and Jared Enzler,
"Prices and Wages in the FR-MIT-Penn Econometric Model," in O. Eckstein, ed., The Econometrics of Price Determination (Board of Governors of the Federal Reserve System,
1972), pp. 277-308.
Structure and Uses of the MPS Quarterly Econometric
tion. The foreign sector of the model was elaborated considerably in the mid-1970s in response
to the shift from fixed to floating exchange rates
and to the expansion of international trade. As
mentioned above, the structure of the model's
housing sector has changed from one in which
credit rationing and the supply of mortgage funds
played an important role to one in which interest
rates capture all supply factors.
Work is now planned in several areas to improve the current structure of the model. Recently, considerable effort has been devoted to explaining the surprisingly strong growth of Ml
since 1985. New equations are anticipated for
components of Ml and M2 as well as for the own
rates of return on several components. 39 The
39. This research, which is being undertaken by Richard
Porter, George Moore, David Small, Jong Park, and Dan
Bagatell, is summarized in Richard D. Porter, Paul A. Spindt,
and David E. Lindsey, "Econometric Modeling of the Demands for the U.S. Monetary Aggregates: Conventional and
Experimental Approaches" (paper presented at the Pacific
Basin Central Bank Conference on Economic Modeling,
Sydney, Australia, December 1986). Over the years, money
demand has proved to be a difficult area to model, and it has
been the subject of considerable research by members of the
Division of Research and Statistics as well as by other
researchers. Previous studies of money demand by division
economists include Jared Enzler, Lewis Johnson, and John
Model of the United States
109
portfolio equations that determine international
capital flows have been another source of problems. These equations do not adequately capture
the portfolio shifts and exchange rate movements
that have taken place since the early 1980s.
Finally, the role of energy in the production
technology will be reexamined, given the inconsistency between the estimated price elasticity of
the demand for energy and the use of a CobbDouglas production function. Work in this area is
likely to affect the labor demand equation, and it
may have implications for the specification of the
investment equations.
•
Paulus, "Some Problems of Money Demand," Brookings
Papers on Economic Activity, 1:1976, pp. 261-80; Richard D.
Porter, Thomas D. Simpson, and Eileen Mauskopf, "Financial Innovation and the Monetary Aggregates,"Brookings
Papers on Economic Activity, 1:1979, pp. 213-29; P. A.
Tinsley and B. Garrett, with M. E. Friar, "The Measurement
of Money Demand," Special Studies Papers 133 (Board of
Governors of the Federal Reserve System, Division of Research and Statistics, Special Studies Section, October 1978);
Thomas D. Simpson and Richard D. Porter, "Some Issues
Involving the Definition and Interpretation of the Monetary
Aggregates," in Federal Reserve Bank of Boston, Controlling the Monetary Aggregates
III, Conference Series 23
(FRBB, October 1980), pp. 161-234; and Flint Brayton, Terry
Farr, and Richard Porter, "Alternative Money Demand
Specifications and Recent Growth in M l " (Board of Governors of the Federal Reserve System, Division of Research
and Statistics, Econometric and Computer Applications Section, May 1983).
110
Industrial Production
Released for publication
December
15
125.9 percent of the 1977 average, industrial
output in November was less than 1 percent
higher than it was a year earlier.
In market groups, output of total consumer
goods rose 0.7 percent in November—the first
gain since July. Autos were assembled at an
annual rate of 7.3 million units—the same as
October; schedules for output were not met in
part because of a strike at a parts manufacturing
Industrial production increased an estimated 0.6
percent in November following three months of
virtually no change. Gains prevailed in all major
market groups except energy materials, which
edged down further. Nondurable materials,
home goods, defense equipment, and construction supplies continued to show strength. At
Ratio scale, 1977 = 100
140
TOTAL INDEX
170
-
-
_
Products
„
—
100
v .
Materials
I
80
——
——.
SM. •-•.— .
/
^
/
i
i
i
i
MATERIALS
i
Durable
Nondurable
160
I
CONSUMER GOODS
140
_ INTERMEDIATE PRODUCTS
Business supplies
120
J
100
Construction supplies
j
140
i
i
240
FINAL PRODUCTS
MOTOR VEHICLES AND PARTS
200
120
Defense and space
160
100
Business equipment
140
120
100
60
C o n s u m e r goods
1980
1982
1984
1986
All series are seasonally adjusted. Latest figures: November.
1980
1982
1984
1986
Ill
1977 = 100
1986
Group
Oct.
Percentage change from preceding month
1986
Nov.
Dec.
Aug.
Sept.
Oct.
Nov.
Percentage
change,
Nov. 1985
to Nov.
1986
Major market groups
Total industrial production
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment..
Defense and space
Intermediate products..
Construction supplies
Materials
125.2
133.8
132.7
124.7
115.9
127.9
139.4
183.6
137.8
125.0
113.3
125.9
.5
.1
.0
.1
.6
.8
134.6
133.5
125.6
116.8
128.8
140.1
184.4
138.4
125.7
113.9
.6
.7
.6
1.7
.3
1.0
.7
.2
-.1
.4
.4
.4
.0
-.5
.1
1.0
.8
.4
-.2
-.1
-.3
1.5
-.9
.1
.6
-.5
-.6
.2
.2
.1
.0
-1.3
.4
.0
.9
.4
.3
-.1
.6
.6
.7
.7
.7
.5
.4
.5
.5
.5
1.3
.3
2.4
1.2
2.8
-.5
4.1
5.0
4.3
.0
.1
-.1
.3
-.7
1.0
.7
.6
.8
-.7
.4
2.1
.3
4.6
-11.9
-.5
-J
Major industry groups
Manufacturing.
Durable
Nondurable .
Mining
Utilities
129.6
127.9
132.0
94.9
110.9
130.5
128.6
133.1
94.2
111.3
.7
1.0
.4
-1.8
1.0
.2
.1
.4
-.7
-1.2
.0
.4
-.5
-1.0
1.3
NOTE. Indexes are seasonally adjusted.
plant. Besides another strong increase in production of home goods, output increased in nondurable consumer goods—in particular clothing,
food, and other staples. Production of equipment
strengthened 0.5 percent in November, with
gains in most types of equipment. Nevertheless,
production of equipment is below year-earlier
levels as a result of weakness earlier this year in
output of business equipment and in oil and gas
well drilling. In particular, although activity in oil
and gas well drilling has improved somewhat in
recent months, it is still almost 50 percent lower
than it was in November 1985.
Production of construction and business supplies expanded further in November, about in
line with the pace of the past year. Output of
materials also posted a gain in November follow-
ing a lackluster performance throughout most of
1986. Sizable increases occurred in both durable
and nondurable components, with gains especially strong for nondurable groups such as textile,
paper, and chemicals.
In industry groups, manufacturing output advanced 0.7 percent in November after little
change in recent months. Most durable goods
industries, including metals, appliances, lumber,
and furniture, increased during November, but
total durable manufacturing remained about the
same as a year earlier. In contrast, nondurable
manufacturing, which also increased in November, is almost 5 percent higher than it was in the
same month last year. Utility output rose 0.4
percent in November, but mining activity was
reduced further.
112
Announcements
HENRY C.
WALLICH:
RESIGNATION
AS A MEMBER
OF THE BOARD OF
GOVERNORS
Henry C. Wallich resigned as a member of the
Board of Governors, effective December 15. The
text of Governor Wallich's letter of resignation
to President Reagan and a Board announcement
follow:
December 15, 1986
The President
The White House
Washington, D.C.
My dear Mr. President:
It is with great sadness that, because of poor health,
I submit my resignation as a Member of the Board of
Governors of the Federal Reserve System. The resignation is to be effective as of the date of this letter.
My association with the Federal Reserve System
began over forty years ago when, in 1941,1 joined the
staff of the Federal Reserve Bank of New York. After
many years at Yale University, I resumed this association when I was appointed a Member of the Board of
Governors of the Reserve System. It is an office to
which I was proud to be called and in which I have
been honored to have served for the past twelve years.
Throughout these four decades, the Federal Reserve
System has been the cornerstone of our monetary
system. I have every confidence that its strength and
soundness will continue and I wish it well in the future.
Very sincerely yours,
Henry C. Wallich
On December 15, Henry C. Wallich resigned,
after long service as a member of the Board of
Governors, due to poor health.
Governor Wallich has been the senior member
of the Board in terms of service, having joined
the Board on March 8, 1974. He was appointed
by President Richard Nixon. That appointment
came after an already distinguished career as an
economist engaged in central banking, teaching,
and writing.
Educated in Germany, at Oxford University in
England, and at Harvard University, Governor
Wallich was Professor of Economics at Yale
University for 23 years immediately before joining the Board in 1974. He began his career with
the Federal Reserve 45 years ago at the Federal
Reserve Bank of New York and served as chief
of that bank's Foreign Research Division from
1946 to 1951. He took leave from Yale on two
occasions, first when he served as Assistant to
the Secretary of the Treasury in 1958-59 and
later from 1959-61 when he was appointed by
President Eisenhower as a member of the President's Council of Economic Advisers. Governor
Wallich also served as chief economic consultant
to the Treasury Department for a number of
years before his appointment to the Federal
Reserve Board.
Paul A. Volcker, Chairman of the Federal
Reserve Board, paid special tribute to Governor
Wallich's long service to the Board, to the profession of economics, and to his country. His
statement follows:
Henry brought unique talents to the Board. He has
been widely known throughout his career as a prolific
writer, bringing to a large public audience incisive
analysis of a variety of economic issues, large and
small, in highly readable form. He has a lot to say, and
said it exceptionally well in books, in speeches, in
magazine columns, and informal commentary.
Many fewer were privileged to work with him at the
Board table and within the Federal Open Market
Committee.
Henry is, first of all, an inflation fighter, deeply
committed to the need for currency and financial
stability. That belief motivated his service on the
Board, and he brought to that effort a combination of
theoretical insight and practical experience rare in any
individual. And all his colleagues came to know him as
a man to combine incisiveness and persistence with
wit, goodwill, and unfailing courtesy.
Throughout his time at the Board, Henry also car-
113
ried particular responsibilities for maintaining and
enlarging the international work of the Federal Reserve. It was an area for which he was exceptionally
well fitted by training and personal interest. To many
abroad, he came to be the personification of the
Federal Reserve, and his financial diplomacy stands as
a lasting contribution to international monetary cooperation.
To all of us at the Board, he has been not only a
colleague but a friend. We wish him well in official
retirement, while looking forward to further contributions from his vast experience.
NEW MEMBERS APPOINTED
TO
CONSUMER ADVISORY
COUNCIL
The Federal Reserve Board on December 18,
1986, named seven new members to its Consumer Advisory Council to replace those members
whose terms are expiring and designated a new
Chairman and Vice Chairman of the Council for
1987.
The Consumer Advisory Council was established by the Board in 1976, at the direction of
the Congress, to represent the interests of the
financial industry and consumers. The Council
advises and consults with the Board in the exercise of the Board's functions under the Consumer Credit Protection Act and with regard to other
consumer-related matters of interest to the
Board. The Council consists of 30 members
whose three-year terms are staggered.
Mr. Edward N. Lange was designated as
Chairman to succeed Ms. Margaret M. Murphy.
Mr. Lange is a partner with the law firm of
Davis, Wright, Todd, Riese, and Jones in Seattle, Washington. His term on the Council runs
through December 1987.
Mr. Steven W. Hamm was named to a oneyear term as Vice Chairman to succeed Mr.
Lawrence S. Okinaga. Mr. Hamm is the Administrator for the South Carolina Department of
Consumer Affairs. He will serve on the Council
through December 1988.
The seven new members, named for threeyear terms beginning January 1, 1987, are the
following:
Judith N. Brown, Edina, Minnesota, serves as the
National Treasurer of the American Association of
Retired Persons (AARP), an organization representing
the interests of 24 million older Americans. She is a
member of the Ad Hoc Advisory Committee on the
Women's Initiative, an advisory group to the National
Board of Directors of AARP. She is a licensed investment adviser, and since 1980 has headed her own
financial planning firm. Ms. Brown recently co-authored A Second Start: A Widow's Guide to Financial
Survival at a Time of Emotional Crisis, published by
Simon and Schuster. She currently is on the Board of
the Minnesota Women's Network, is a member of the
National Business and Professional Women's Council,
and serves on the Governor's Appointments Commission. She also is a member of the Board of Governors
at Mt. Sinai Hospital. Ms. Brown previously served on
the Board of the National Women's Alliance for
Professional and Executive Women.
Richard B. Doby, Denver, Colorado, is the Bank
Commissioner for the state of Colorado and chairs the
State Banking Board. He previously spent 12 years as
a commercial banker with the United Bank of Denver.
Mr. Doby is a member of the Board of Directors of the
Conference of State Bank Supervisors. He also serves
on the Advisory Board of the Salvation Army. He is a
past president of the Colorado Consumer Credit Counseling Service, past chairman of the Colorado Urban
League's membership committee, past member of the
Board of Directors of the Mile High United Way, and
past chairman (appointed by the Governor) of the
Colorado Health Facilities Authority. Mr. Doby has
been a guest lecturer on banking and economic financial issues at the University of Denver and Colorado
University. He has an undergraduate degree in banking and finance and holds a degree from the Graduate
School of Banking at the University of Wisconsin. In
1983, Mr. Doby led a delegation of Colorado bankers
to Russia and China to study their monetary systems.
Richard H. Fink, Washington, D.C., is founder and
President of Citizens for a Sound Economy, a 250,000member citizens organization. He also founded and is
Chairman of the Center for the Study of Market
Processes at George Mason University and is on the
Board of Trustees of the Center for the Study of Public
Choice, also at George Mason University. Mr. Fink is
editor of Supply-Side Economics: A Critical Appraisal
and A Nation in Debt: Economists Debate the Federal
Budget Deficit. His articles have appeared in numerous newspapers, magazines, and journals, including
the American Economic Review. He holds a Master's
degree in economics from the University of California,
Los Angeles, and is a magna cum laude graduate of
Rutgers University.
Stephen Gardner, Dallas, Texas, is an Assistant
Attorney General of the state of Texas for the Dallas
regional office. He is a member of the Council of the
Consumer Law Section of the State Bar of Texas and
of a Texas State Bar Committee. Mr. Gardner has
been active in conducting training conferences for
lawyers and non-lawyers in consumer law and trial
tactics, and has authored numerous publications on
114
Federal Reserve Bulletin • February 1987
consumer law. He was formerly with the New York
State Bureau of Consumer Frauds and Protection and
the Legal Aid Society of Central Texas. He also
served as the Students' Attorney at the University of
Texas at Austin and was a Consumer Law Fellow at
the National Consumer Law Center in Boston during
1980.
Elena G. Hanggi, Little Rock, Arkansas, is National
President of the Association of Community Organizations for Reform Now (ACORN), a community-based
organization in 26 states with a membership that
exceeds 60,000 low- and moderate-income families.
She has been an active participant in local and national
discussions pertaining to the credit needs of low- and
moderate-income communities. Ms. Hanggi has
worked with ACORN chapters around the country
regarding efforts to bring about basic banking offerings
by financial institutions. She has also consulted with
these groups in negotiations with financial institutions
concerning compliance with the federal Community
Reinvestment Act. Ms. Hanggi is a member of the
Coalition of Women's Economic Needs in Arkansas
and is on the Board of the Arkansas Peace Center. She
also serves on the Board of Directors of a community
radio station, KABF, in Little Rock. She holds a B.A.
from the University of Arkansas, Little Rock, with a
major in English and Sociology and a minor in Urban
Affairs, and will graduate in January 1987 from the
University of Arkansas Law School.
Ramon E. Johnson, Salt Lake City, Utah, is Professor of Finance in the Graduate School of Business at
the University of Utah. He also conducts research on
a variety of matters concerning finance and business
management, including the structure of interest rates.
Dr. Johnson has been an administrator at the university, serving six years as Chairman of the Department of
Finance and four years as Associate Dean of the
Graduate School of Business. He has also served as
President of the University of Utah Credit Union. As a
Chartered Financial Analyst, Dr. Johnson has consulted with the U.S. Federal Home Loan Bank Board, as
well as numerous savings and loan associations, commercial banks, and other corporate organizations in
Salt Lake City. In 1981 and 1982, he served on the
Mayor's blue ribbon panel to evaluate the financial
status of Salt Lake City.
Richard L.D. Morse, Manhattan, Kansas, is a Professor of Family Economics at Kansas State University, actively involved in research on consumer credit
and consumer savings. He has testified before committees of the U.S. Senate and House of Representatives,
and drafted the U.S. Department of Defense's Directive on Consumer Credit. As a member of President
Kennedy's Consumer Advisory Council, he developed
the concepts of APR (annual percentage rate) and PPR
(periodic percentage rate). Dr. Morse has been a
consultant to the New York State Banking Department for drafting Truth in Savings regulations, and is
frequently quoted in consumer finance articles appearing in national publications. He has written several
textbooks and is the author of more than 100 professional articles and publications including Check Your
Interest and Cents-ible Interest.
The other members of the Council are the following
(the date each term expires appears in parentheses):
Edwin B. Brooks
President
Security Federal
Savings & Loan Association
Richmond, Virginia (December 31, 1988)
Jonathan A. Brown
Director, BankWatch
Washington, D.C. (December 31, 1987)
Michael S. Cassidy
Senior Vice President, Chase Manhattan Bank
New York, New York (December 31, 1988)
Theresa Faith Cummings
Social Services Consultant
Springfield, Illinois (December 31, 1987)
Neil J. Fogarty
Senior Attorney, Hudson County Legal Services
Jersey City, New Jersey (December 31, 1988)
Kenneth A. Hall
President, Great Southern National Bank
Jackson, Mississippi (December 31, 1988)
Robert J. Hobbs
Senior Attorney, National Consumer Law Center
Boston, Massachusetts (December 31, 1988)
Robert W. Johnson
Professor of Management and Director
Credit Research Center, Purdue University
West Lafayette, Indiana (December 31, 1988)
John M. Kolesar
President, Ameritrust Development Bank
Cleveland, Ohio (December 31, 1988)
Alan B. Lerner
Senior Executive Vice President
Associates Corporation of North America
Dallas, Texas (December 31, 1988)
Fred S. McChesney
Visiting Fellow of Law and Economics
University of Chicago Law School
Chicago, Illinois (December 31, 1987)
Helen E. Nelson
President, Consumer Research Foundation
Mill Valley, California (December 31, 1987)
Announcements
Sandra R. Parker
Chairman, Banking Committee
Richmond United Neighborhoods
Richmond, Virginia (December 31, 1988)
Joseph L. Perkowski
Chief Executive Officer
Minneapolis Federal Employees Credit Union
Centerville, Minnesota (December 31, 1987)
Brenda L. Schneider
Director of Community Relations
Manufacturers National Bank
Detroit, Michigan (December 31, 1987)
115
At the same time, the Board withdrew its
proposal, issued on August 6, to exempt refinancings secured by the consumer's principal
dwelling by other than the original creditor. The
proposal would have excluded refinancings when
(1) no new advances of money are made to the
consumer, (2) the annual percentage rate on the
new obligation is not subject to increase after
consummation and is the same as or lower than
the annual percentage rate on the obligation
being replaced, and (3) the new transaction does
not have a balloon payment feature.
Jane Shull
Director, Institute for the Study of Civic Values
Philadelphia, Pennsylvania (December 31, 1988)
Ted L. Spurlock
Vice President and Director
of Credit and Consumer Banking Services
J.C. Penney Company, Inc.
Dallas, Texas (December 31, 1987)
Mel R. Stiller
Executive Director
Consumer Credit Counseling Service
of Eastern Massachusetts
Boston, Massachusetts (December 31, 1987)
Christopher J. Sumner
President and CEO
Western Savings & Loan Company
Salt Lake City, Utah (December 31, 1987)
Edward J. Williams
Senior Vice President, Consumer Banking Group
Harris Trust and Savings Bank
Chicago, Illinois (December 31, 1988)
Michael Zoroya
Retail Services Consultant
The May Department Stores
St. Louis, Missouri (December 31, 1987)
CHANGE
IN REGULATION
Z
The Federal Reserve Board issued on December
18, 1986, a final rule that modifies a provision of
Regulation Z (Truth in Lending), exempting refinancings by original creditors from the right of
rescission. The rule states that if the original
creditor finances nonfinance charges such as
attorney's fees, title examination fees, and insurance premiums, the right of rescission will not
apply. This final rule is effective immediately.
PROPOSED
ACTIONS
The Federal Reserve Board on December 10,
1986, issued for comment a series of proposals to
reduce and control the payments system risk
faced by the Federal Reserve and individual
depository institutions participating in large-dollar wire transfer networks, book-entry transfer
systems, and automated clearinghouses (ACHs).
These proposals supplement the payment system
risk policy announced by the Board on May 17,
1985.
The Board also issued for public comment a
revised interpretation to its official staff commentary on Regulation Z. The proposed revision to
the commentary describes what constitutes a
new advance of money in a refinancing that is
exempt from the rescission provision. Comment
is requested by January 30.
The Federal Reserve Board on December 8,
1986, issued a series of questions and answers
relating to its ACH proposal that was issued on
September 17. The proposal relates to the cost of
float generated by ACH transactions processed
during the night cycle and a corresponding reduction in the current per-item surcharge assessed on night-cycle ACH transactions. These
questions and answers have been developed to
aid the public with its comments on the proposal.
Comment is requested by December 22.
The Federal Reserve Board also requested
comment by February 23, 1987, on proposed
rulemaking to permit bank holding companies to
engage in real estate investment activity within
certain limits.
116
Federal Reserve Bulletin • February 1987
CHANGES
IN BOARD
STAFF
The Board of Governors has announced the
temporary appointment of Franklin D. Dreyer as
Deputy Director in the Division of Banking Supervision and Regulation.
The Board announced the retirement of Frederick R. Dahl, Associate Director, Division of
Banking Supervision and Regulation, effective
December 31, 1986.
The Board also announced the retirement of
Walter W. Kreimann, Associate Director, Division of Support Services, effective January 2,
1987.
Mr. Dreyer is currently Vice President for
Supervision and Regulation at the Federal Reserve Bank of Chicago and will be on loan to the
Board for one year. Mr. Dreyer began his assignment with the Board on January 5, 1987.
SYSTEM
MEMBERSHIP:
ADMISSION OF STATE
BANKS
The following bank was admitted to membership
in the Federal Reserve System during the period
December 1 through December 31, 1986:
Illinois
Bartonville
Bartonville Bank
117
Record of Policy Actions of the
Federal Open Market Committee
MEETING
1. Domestic
HELD ON NOVEMBER
Policy
5,
1986
Directive
The information reviewed at this meeting suggested that economic activity grew at a moderate
rate in the third quarter, after rising only slightly
in the previous quarter. Payroll employment
expanded somewhat further in September, although manufacturing jobs declined following
little change in August. Consumer spending,
which had been quite robust in the first half of
the year, strengthened further in the third quarter. Business capital spending, however, remained sluggish, reflecting declines in outlays for
nonresidential construction; new orders rose in
September and equipment spending picked up.
Residential construction expenditures advanced
further in the third quarter, but housing starts fell
in September. Wage increases have continued to
moderate, while prices have increased a bit because of developments in food and energy markets.
Industrial production rose another 0.1 percent
in September. The gain partly reflected a surge in
the production of cars and light trucks. Other
production was unchanged on balance; production of defense equipment rose, but output of
nondefense goods edged down and materials
production remained sluggish. Domestic automakers apparently cut back assemblies during
October, but still were planning relatively large
production for the fourth quarter as a whole.
Capacity utilization in manufacturing, mining,
and utilities was unchanged in September at 79.2
percent. The utilization rate in mining continued
to decline, while the rate in manufacturing edged
up, reflecting the pickup in motor vehicle production.
Total nonfarm payroll employment grew
somewhat further in September. The sluggish
pace of industrial production was reflected in a
decline in manufacturing jobs that more than
offset the increase reported for August. Employment in trade, finance, and services advanced
further in September, but at a less rapid rate than
in earlier months of the year. The civilian unemployment rate moved back up to 7 percent in
September, close to its average level earlier in
the year.
Total retail sales increased 4.6 percent in September because of a substantial jump in auto
sales following the expansion of sales incentive
programs by domestic automakers in late August. During September, domestic cars sold at a
record 113A million unit annual rate, compared
with an average 8 m i l l i o n unit pace in the
preceding five months. Light trucks and foreign
cars also sold at record monthly rates in September. Outside of the auto group, sales were virtually unchanged from August levels.
In the business sector, spending has remained
sluggish. Business purchases of motor vehicles
were up sharply in the third quarter, but spending for other equipment declined, and outlays for
nonresidential structures dropped substantially
further. However, new orders for nondefense
capital goods rose sharply in September; although aircraft orders accounted for half of the
increase, bookings for many other types of
equipment also posted sizable gains. For structures, data on new commitments have continued
to point to further declines in office building, but
the drop in oil- and gas-well drilling appears to
have ended.
Housing starts have declined since earlier in
the year, but residential construction expenditures rose through the summer. Total private
housing starts dropped in September to an annual rate of 1.68 million units from a rate of about
1.8 million units during July and August. Single
family starts fell somewhat in September, regis-
118
Federal Reserve Bulletin • February 1987
tering the lowest monthly reading since December, but sales of new and existing homes increased during the month. Multifamily housing
starts declined further, apparently reflecting in
part record high vacancy rates and prospectively
diminished rates of return on rental properties as
a result of tax reform.
Labor cost increases have moderated further
over the past year, but price increases have been
a bit higher in recent months than earlier in the
year due mainly to developments in food and
energy markets. Consumer food prices rose
sharply during the summer, reflecting in part
weather-related disruptions in some supplies. By
September conditions had improved, and increases in retail food prices slowed noticeably.
In the energy sector, petroleum prices moved up
at the wellhead and refinery levels in the September PPI, reflecting the OPEC agreement in early
August to curtail production. This increase in
crude oil costs apparently has already reached
the retail level as gasoline and heating oil prices
turned up in the September CPI, after steep
declines throughout much of the year. Excluding
food and energy, consumer prices have risen
recently at about the same pace as earlier in the
year.
The trade-weighted value of the dollar against
major foreign currencies continued to decline for
several weeks after the September 23 FOMC
meeting, but it subsequently recovered and has
risen somewhat on balance. Short-term and longterm interest rate differentials increased a bit
during the intermeeting period; foreign rates
moved up, particularly at the short end, while
rates in the United States eased slightly. Real net
exports of goods and services dropped further in
the third quarter, mainly reflecting a surge in the
volume of oil imports. After the recovery in real
economic activity in most major foreign industrial countries in the second quarter, available data
for the third quarter indicate further moderate
expansion in Germany, France, the United Kingdom, and to a lesser extent in Japan.
to 9 percent. Growth in M l over the same period
was expected to moderate from the exceptionally
large increase during the previous several
months. The Committee agreed that the growth
in Ml would continue to be evaluated in view of
the behavior of the broader aggregates and other
factors. The members also decided that slightly
greater reserve restraint would, or slightly lesser
reserve restraint might, be acceptable depending
on the behavior of the monetary aggregates,
taking into account the strength of the business
expansion, developments in foreign exchange
markets, progress against inflation, and conditions in domestic and international credit markets. The intermeeting range for the federal
funds rate was maintained at 4 to 8 percent.
M2 and M3 increased at annual rates of 83/4 and
V/2 percent respectively, on average over September and October, well below their rates of
growth since early spring. Through October,
both aggregates were very close to the upper
ends of their 6 to 9 percent annual growth ranges
established by the Committee for 1986. Growth
in Ml still was quite strong over September and
October, but down substantially from its average
over the previous several months.
Adjustment plus seasonal borrowing at the
discount window averaged about $325 million in
the two complete maintenance periods after the
September meeting. Federal funds generally continued to trade close to 57/s percent over the
intermeeting period. Most other interest rates
eased somewhat on balance, with short-term
rates about unchanged to down 15 basis points
and long-term rates off as much as 35 basis
points. Bond prices increased in the days just
before the meeting in part reflecting perceptions
of stronger foreign demand for dollar assets,
prompted to some extent by the cut in the
Japanese discount rate on October 31. In addition, market participants reportedly interpreted
the cut in the Japanese rate as giving the Federal
Reserve more leeway to ease domestic monetary
policy.
At its meeting in September, the Committee
adopted a directive that called for maintaining
the existing degree of pressure on reserve positions. The members expected such an approach
to policy to be consistent with growth in M2 and
M3 from August to December at annual rates of 7
The staff projections presented at this meeting
suggested that real GNP would continue to grow
at a moderate rate through the end of 1987.
Anticipations of sustained growth in real exports, reflecting the improvement in the price
competitiveness of U.S. goods, continued to be a
Record of Policy Actions of the FOMC
key element supporting the expected expansion
in domestic production. Growth in domestic
spending was projected to be relatively sluggish
over the forecast horizon. The s t a f f s projection
for inflation continued to show some step-up
early next year associated with the effects of
rapidly rising import prices on the prices of U.S.
goods and with the turnaround in energy prices.
In the Committee's discussion of the economic
situation and outlook, the members agreed that
incoming data on business activity and reports
on specific conditions in many industries were
broadly consistent with the staff forecast of continuing expansion at a moderate pace. There
were uncertainties nonetheless about the prospective performance of individual sectors of the
economy and thus of the economy generally. In
the view of most members the risks of a deviation from the staff projection appeared to be
evenly balanced, but a few felt the risks were
greater in the direction of less growth.
As they had at several previous meetings, the
members focused on the performance of net
exports as a key factor in the outlook for economic activity. The most recent data could be
interpreted as suggesting that the trade balance
was no longer worsening. However, clear evidence of an actual turnaround in the trade balance had not yet emerged and it was far from
certain that there would be significant improvement during the months ahead. Some members
reported that a growing number of firms were
experiencing increases in orders from abroad, a
development that lent support to expectations of
a significant pickup in export sales over the next
few quarters. To an important degree, the outlook for U.S. exports remained contingent on
growing demands from major industrial nations.
In that regard it was noted that the evidence was
mixed. Domestic expansion—and also the demand for foreign goods—appeared to be
strengthening in some major countries, but the
outlook was less promising in others. On the
import side, members observed that foreign competition remained intense, notably from countries whose exchange rates had not appreciated
against the dollar. Nonetheless, there were reports that rising import prices were improving
the competitive position of at least some domestic producers.
119
In the Committee's review of the outlook for
spending by domestic sectors of the economy,
the members generally expected demand to continue to increase, but at a slower pace than in
recent quarters. Individual members again highlighted the uneven conditions in different industries and parts of the country. One member
commented that the complex tax reform legislation constituted a major source of uncertainty.
The members agreed that total consumer spending would tend to be held down in the current
quarter by reduced purchases of automobiles
following the bulge associated with attractive
incentive programs. One member observed,
however, that some offsetting expenditures on
high-priced items might be induced before yearend because the deductibility of sales taxes in
computing personal income taxes would be terminated starting in 1987. On the negative side,
one member suggested that the adjustment in
automobile sales might take longer than many
observers currently expected and also stressed
that consumer debt burdens were an important
inhibiting factor on spending. In the area of
business investment, members noted that construction activity would probably be held down
by relatively high vacancy rates in office buildings, multifamily housing, and other commercial
facilities such as hotels, especially in the context
of the reportedly adverse impact of the tax
reform legislation on such investments. Members also referred to a number of plant closings in
the manufacturing sector. On the other hand,
some current economic indicators pointed to a
strengthening in the demand for business equipment. One member also commented that the
prospects for improvement in the nation's balance of trade, if realized, would require more
investment in domestic productive facilities over
time. In regard to agriculture current conditions
were mixed, but one member indicated that the
overall situation in that industry and also in
energy no longer appeared to be worsening and
accordingly those key sectors of the economy
had probably ceased to exert a negative influence
on general economic activity. Likewise, the outlook for reduced government deficits, including
surpluses for state and local governments, and
the apparently favorable prospects for foreign
trade implied a reduction in major structural
120
Federal Reserve Bulletin • February 1987
imbalances and an improved basis for sustained
economic expansion.
With regard to the outlook for inflation, the
members agreed that the lagged impacts of the
dollar's depreciation along with developments in
energy markets were likely to contribute to
somewhat faster price increases during the year
ahead. Many domestic businesses reportedly
continued to look for competitive opportunities
to raise prices and widen profit margins. One
member observed that a potential inflation risk,
and one for business activity generally, would be
the emergence of new protectionist measures in
response to unsatisfactory progress in reducing
the nation's trade deficit. On the favorable side,
wages generally appeared to be continuing to rise
more slowly than earlier and businesses were
continuing to devote considerable attention to
paring costs and improving their productivity.
Some food prices might also tend to decline
following increases in recent months. More generally, the prospect that capacity utilization rates
were likely to remain relatively low in most
industries over the year ahead implied that inflationary pressures would be muted during that
period.
At its meeting in July the Committee reviewed
the basic policy objectives that it had established
in February for growth of the monetary and
credit aggregates in 1986 and it set tentative
objectives for expansion in 1987. For the period
from the fourth quarter of 1985 to the fourth
quarter of 1986, the Committee reaffirmed the
ranges established in February for growth of 6 to
9 percent for both M2 and M3. The associated
range for expansion in total domestic nonfinancial debt also was reaffirmed at 8 to 11 percent
for the current year. With respect to M l , the
Committee decided that growth in excess of the 3
to 8 percent range set in February would be
acceptable and that such growth would be evaluated in relation to the velocity of M l , the expansion of the broader aggregates, developments in
the economy and financial markets, and price
pressures. For 1987 the Committee agreed on
tentative monetary growth objectives that included reductions of Vi percentage point to
ranges of 5Yi to 8V2 percent for both M2 and M3.
In the case of M l the Committee expressed the
preliminary view that retaining the 1986 range of
3 to 8 percent, which implied a considerable
reduction from the likely rate of growth in 1986,
appeared appropriate for 1987 in the light of most
historical experience. The Committee also retained the range of 8 to 11 percent for growth of
total domestic nonfinancial debt in 1987. It was
understood that all the ranges were provisional
and that, notably in the case of M l , they would
be reviewed in early 1987 against the background
of intervening developments.
The Committee's discussion of policy implementation for the weeks immediately ahead reflected the sense that the economy was continuing to expand at a moderate rate and that, while
price pressures could be strengthening somewhat
in response to higher import prices, those price
increases should be well contained. Externally,
some signs of greater stability seemed to be
emerging in exchange markets. In those circumstances, all of the members indicated that they
were in favor of continuing to direct open market
operations toward maintaining unchanged conditions of reserve availability. That conclusion was
also warranted by indications that monetary
growth had moderated somewhat over September and October, and an expectation that the
broad aggregates might stay close to the Committee's earlier expectations for growth near the
upper ends of their long-term ranges in the
closing months of the year, assuming no significant changes in reserve conditions and in shortterm interest rates.
In the Committee's discussion of possible intermeeting adjustments in the degree of reserve
pressure, the members suggested that developments calling for more than a slight change in
reserve conditions would be unlikely during the
weeks ahead. Although a few members felt that
policy implementation should remain especially
alert to the potential need for some easing of
reserve conditions, notably the need to respond
to emerging indications, if any, of relatively
weak business activity, most felt that there
should be no presumptions about the likely direction of any small intermeeting adjustments,
should they be desirable. With respect to the
monetary aggregates, some members commented that a shortfall from current expectations
would be a welcome development, given the
rapid growth earlier in the year, and within limits
Record of Policy Actions of the FOMC
a shortfall should be tolerated provided it occurred in the context of satisfactory economic
performance and did not appear to be associated
with upward pressures on market interest rates.
One member commented, however, that a sharp
and abrupt slowdown in M l growth might well
signal a weaker economy and, depending on the
circumstances, might require more than a slight
adjustment in policy implementation.
At the conclusion of the Committee's discussion, all of the members indicated that they
favored a directive that called for no change in
the current degree of pressure on reserve positions. The members expected this approach to
policy implementation to be consistent with
growth of M2 and M3 at annual rates of 7 to 9
percent over the fourth quarter from a September base. Over the same period, growth in Ml
was expected to moderate from its exceptional
pace during most of the period since early spring.
Because the behavior of Ml remained subject to
unusual uncertainty, the Committee decided to
continue its recent practice of not specifying a
rate of expected growth for purposes of short-run
policy implementation but to evaluate this aggregate in the light of the performance of the broader monetary aggregates and other factors. The
members indicated that slightly greater or slightly lesser reserve pressures might be acceptable
over the intermeeting period depending on the
behavior of the monetary aggregates, taking into
account the strength of the business expansion,
the performance of the dollar in foreign exchange
markets, progress against inflation, and conditions in domestic and international credit markets. The members agreed that the intermeeting
range for the federal funds rate, which provides a
mechanism for initiating consultation of the
Committee when its boundaries are persistently
exceeded, should be left unchanged at 4 to 8
percent.
At the conclusion of the meeting, the following
domestic policy directive was issued to the Federal Reserve Bank of New York:
The information reviewed at this meeting indicates
that economic activity grew at a moderate pace in the
third quarter. In September total nonfarm payroll
employment grew somewhat further, although employment in manufacturing fell after changing little in
August. The civilian unemployment rate moved back
121
up to 7.0 percent in September, close to its average
level earlier in the year. Industrial production rose
slightly further in September and posted a moderate
gain over the third quarter. Consumer spending has
remained strong in recent months, with gains in retail
sales in August and especially in September paced by a
sharp rise in auto sales. Housing starts fell in September, but residential investment increased further in the
third quarter as a whole. Business capital spending
appears to have remained sluggish; equipment spending picked up in the third quarter and new orders were
strong in September, but outlays for nonresidential
construction continued to decline. Real net exports of
goods and services dropped further in the third quarter, reflecting in large part a surge in the volume of oil
imports. Increases in labor compensation have slowed
over the course of the year, while broad measures of
prices have firmed somewhat recently due to developments in food and energy markets.
Growth of M2 moderated further in September, but
appears to have picked up in October, while growth of
M3 has tended to slow. Expansion of these two
aggregates for the year through September has been at
the upper end of their respective ranges established by
the Committee for 1986. Growth of Ml slowed in the
September-October period from the very rapid pace
experienced since early spring. Expansion in total
domestic nonfinancial debt remains appreciably above
the Committee's monitoring range for 1986. Most
interest rates have declined somewhat since the September 23 meeting of the Committee. Although the
trade-weighted value of the dollar against major foreign currencies continued to decline for several weeks
after the September meeting, it subsequently recovered and has risen somewhat on balance.
The Federal Open Market Committee seeks monetary and financial conditions that will foster reasonable
price stability over time, promote growth in output on
a sustainable basis, and contribute to an improved
pattern of international transactions. In furtherance of
these objectives the Committee agreed at the July
meeting to reaffirm the ranges established in February
for growth of 6 to 9 percent for both M2 and M3,
measured from the fourth quarter of 1985 to the fourth
quarter of 1986. With respect to Ml, the Committee
recognized that, based on the experience of recent
years, the behavior of that aggregate is subject to
substantial uncertainties in relation to economic activity and prices, depending among other things on the
responsiveness of Ml growth to changes in interest
rates. In light of these uncertainties and of the substantial decline in velocity in the first half of the year, the
Committee decided that growth of Ml in excess of the
previously established 3 to 8 percent range for 1986
would be acceptable. Acceptable growth of Ml over
the remainder of the year will depend on the behavior
of velocity, growth in the other monetary aggregates,
developments in the economy and financial markets,
and price pressures. Given its rapid growth in the early
part of the year, the Committee recognized that the
122
Federal Reserve Bulletin • February 1987
increase in total domestic nonfinancial debt in 1986
may exceed its monitoring range of 8 to 11 percent, but
felt an increase in that range would provide an inappropriate benchmark for evaluating longer-term trends
in that aggregate.
For 1987 the Committee agreed on tentative ranges
of monetary growth, measured from the fourth quarter
of 1986 to the fourth quarter of 1987, of 5>/2 to 8!/2
percent for M2 and M3. While a range of 3 to 8 percent
for Ml in 1987 would appear appropriate in the light of
most historical experience, the Committee recognized
that the exceptional uncertainties surrounding the behavior of Ml velocity over the more recent period
would require careful appraisal of the target range at
the beginning of 1987. The associated range for growth
in total domestic nonfinancial debt was provisionally
set at 8 to 11 percent for 1987.
In the implementation of policy for the immediate
future, the Committee seeks to maintain the existing
degree of pressure on reserve positions. This action is
expected to be consistent with growth in M2 and M3
over the period from September to December at
annual rates of 7 to 9 percent. While growth in Ml over
the same period is expected to moderate from its
exceptional pace during the previous several months,
growth in this aggregate will continue to be judged in
the light of the behavior of M2 and M3 and other
factors. Slightly greater reserve restraint or slightly
lesser reserve restraint might be acceptable depending
on the behavior of the aggregates, taking into account
the strength of the business expansion, developments
in foreign exchange markets, progress against inflation, and conditions in domestic and international
credit markets. The Chairman may call for Committee
consultation if it appears to the Manager for Domestic
Operations that reserve conditions during the period
before the next meeting are likely to be associated with
a federal funds rate persistently outside a range of 4 to
8 percent.
Votes for this action: Messrs. Volcker, Corrigan,
Angell, Guffey, Heller, Mrs. Horn, Messrs.
Johnson, Melzer, Morris, Rice, and Ms. Seger.
Votes against this action: None. Absent and not
voting: Mr. Wallich.
2. Authorization
Operations
for Domestic
Open
Market
Effective December 3, 1986, the Committee approved a temporary increase of $1 billion, to $7
billion, in the limit between Committee meetings
on changes in System Account holdings of U.S.
government and federal agency securities specified in paragraph 1(a) of the authorization for
domestic open market operations. The increase
was effective for the intermeeting period ending
with the close of business on December 16, 1986.
Votes for this action: Messrs. Volcker, Corrigan,
Angell, Guffey, Heller, Mrs. Horn, Messrs.
Johnson, Melzer, Morris, Rice, and Ms. Seger.
Votes against this action: None. Absent and not
voting: Mr. Wallich.
This action was taken on the recommendation
of the Manager for Domestic Operations. The
Manager had advised that outright purchases of
securities in the intermeeting interval through
December 1, 1986, had reduced the leeway under
the usual $6 billion limit to about $3.5 billion.
Additional purchases of securities in excess of
that leeway likely would be necessary over the
remainder of the intermeeting period, chiefly
reflecting seasonal increases in currency in circulation and required reserves.
123
Legal Developments
AMENDMENT TO REGULATION Z
The Board of Governors is amending 12 C.F.R. Part
226, its Regulation Z, by issuing a final rule modifying
the existing provision that exempts original creditors
from providing the right of rescission in certain refinancings secured by the consumer's principal dwelling.
The regulation provides that the right of rescission will
not apply if the original creditor finances nonfinance
charges such as attorney's fees, title examination fees,
and insurance premiums.
Effective December 16, 1986, but reliance optional
until October 1, 1987, the Board amends 12 C.F.R.
Part 226 as follows:
Part 226—Truth In
Lending
1. The authority citation for 12 C.F.R. Part 226 continues to read as follows:
Authority: 15 U.S.C. § 1601 et seq.
2. Part 226 is amended by revising section 226.23(f)(2)
to read as follows:
Supervision and Regulation with the concurrence of
the Board's General Counsel, and to the Reserve
Banks with the concurrence of the Director of the
Division of Banking Supervision and Regulation and
the Board's General Counsel, authority to waive the
publication and solicitation of public comment requirements of the Change in Bank Control Act, 12 U.S.C.
§ 1817(j), as amended by the Anti-Drug Abuse Act of
1986, No. 99-750 (October 27, 1986), where it is
determined in writing that such disclosure or solicitation would seriously threaten the safety or soundness
of a bank. The Board has delegated similar authority to
waive, dispense with or modify the procedural requirements, including publication requirements, of the
Bank Holding Company Act, 12 U.S.C. § 1841 etseq.,
where expeditious action is required. 12 C.F.R.
§§ 262.3(k)(l) and 265.2(c)(30).
Effective December 15, 1986, the Board amends
12 C.F.R. Part 265 as follows:
Part 265—Rules Regarding
Authority
Delegation
of
1. The authority citation for 12 C.F.R. Part 265 continues to read as follows:
Section 226.23—Right of Rescission
Authority: Sec. 11, 38 Stat. 261 and 80 Stat. 1314;
12 U.S.C. 248.
(f) Exempt transactions.
2. Part 265 is amended by adding new paragraphs
265.2(c)(35) and 265.2(f)(48) to read as follows:
(2) A refinancing or consolidation by the same
creditor of an extension of credit already secured by
the consumer's principal dwelling. The right of
rescission shall apply, however, to the extent the
new amount financed exceeds the unpaid principal
balance, any earned unpaid finance charge on the
existing debt, and amounts attributed solely to the
costs of the refinancing or consolidation.
AMENDMENT TO RULES REGARDING
DELEGATION OF AUTHORITY
The Board of Governors is amending 12 C.F.R. Part
265, its Rules Regarding Delegation of Authority, to
delegate to the Director of the Division of Banking
Section 265.2—Specific Functions Delegated to
Board Employees and to Federal Reserve
Banks
(c)(35) Under section 1817(j)(2) of the Change in Bank
Control Act (12 U.S.C. 18170)), and with the concurrence of the Board's General Counsel, to waive,
dispense with, modify, or excuse the failure to
comply with the requirement for publication and
solicitation of public comment regarding a notice
filed under the Change in Bank Control Act provided that a written finding is made that such disclosure
or solicitation would seriously threaten the safety or
soundness of a bank holding company or bank.
124
Federal Reserve Bulletin • February 1987
j|c
sjc
%
*
(f)(48) Under section 18170X2) of the Change in Bank
Control Act (12 U.S.C. 1817(j)) and with the concurrence of the Board's Director of Banking Supervision and Regulation and the Board's General Counsel or their designees, to waive, dispense with,
modify, or excuse the failure to comply with the
requirement for publication and solicitation of public comment regarding a notice filed under the
Change in Bank Control Act provided that a written
finding is made that such disclosure or solicitation
would seriously threaten the safety or soundness of
a bank holding company or bank.
ORDERS ISSUED UNDER BANK HOLDING
COMPANY ACT, BANK MERGER ACT, BANK
SERVICE CORPORATION ACT, AND FEDERAL
RESERVE ACT
Orders Issued Under Section 3 of the Bank
Holding Company Act
Banc One Corporation
Columbus, Ohio
American Fletcher Corporation
Indianapolis, Indiana
Order Approving Acquisition of a Bank Holding
Company
Banc One Corporation, Columbus, Ohio, a bank holding company within the meaning of the Bank Holding
Company Act (12 U.S.C. § 1841 et seq.) ("Act" or
"BHC Act"), has applied for the Board's approval
under sections 3 and 4 of the Act (12 U.S.C. §§ 1842
and 1843) to acquire American Fletcher Corporation,
Indianapolis, Indiana ("AFC"), also a bank holding
company. As a result of this acquisition, Applicant
would acquire indirectly AFC's five banking and four
nonbanking subsidiaries.1
On the basis of the record, the application under
section 3 of the Act is approved for the reasons set
forth in the Board's Statement, which will be released
at a later date. The transaction shall not be consummated before the thirtieth calendar day following the
effective date of this Order or later than three months
after the effective date of this Order, unless such
period is extended for good cause by the Board or by
1. Applicant's proposed acquisition of AFC's nonbanking subsidiaries under section 4 of the Act will be considered separately by the
Board.
the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority.
By order of the Board of Governors, effective
December 23, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governor Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
STATEMENT BY THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM REGARDING THE
APPLICATION OF BANC ONE CORPORATION TO
ACQUIRE AMERICAN FLETCHER CORPORATION
By Order dated December 23, 1986, the Board approved the application of Banc One Corporation,
Columbus, Ohio, to acquire American Fletcher Corporation, Indianapolis, Indiana ("AFC"), pursuant to
section 3(a)(3) of the Bank Holding Company Act
("BHC Act" or "Act"). 12 U.S.C. § 1842(a)(3). In
this Statement, the Board sets forth its reasons for
approving the application.
Applicant, with assets of $11.2 billion, is the largest
commercial banking organization in Ohio. Its 22 Ohio
subsidiary banks control deposits of approximately
$8.8 billion, representing 13.4 percent of the total
deposits in commercial banks in Ohio.1 AFC (assets of
$4.4 billion) is the second largest commercial banking
organization in Indiana. Its five subsidiary banks control deposits of approximately $3.0 billion, representing 7.4 percent of the total deposits in commercial
banks in Indiana. AFC controls nonbank subsidiaries
engaged in mortgage banking, consumer finance and
reinsurance activities and also engages in certain insurance agency activities.2
Section 3(d) of the Act (12 U.S.C. § 1843(d)) prohibits the Board from approving an application by a bank
holding company to acquire control of any bank located outside of the holding company's home state,3
unless such acquisition is "specifically authorized by
the statute laws of the state in which such bank is
located, by language to that effect and not merely by
implication."
1. Banking data are as of June 30, 1986. Applicant also controls
banking subsidiaries in Indiana, Michigan and Kentucky.
2. Applicant's proposed acquisition of AFC's nonbanking subsidiaries under section 4 of the Act will be considered separately by the
Board.
3. A bank holding company's home state is that state in which the
operations of the bank holding company's banking subsidiaries were
principally conducted on July 1, 1966, or on the date on which the
company became a bank holding company, whichever is later. Applicant's home state is Ohio.
Legal Developments
The Board previously has concluded that Indiana
has by statute expressly authorized an Ohio bank
holding company, such as Applicant, to acquire an
Indiana bank or bank holding company, such as AFC,
subject to approval from the Indiana state banking
commissioner. Banc One Corporation, 7 2 F E D E R A L
R E S E R V E B U L L E T I N 4 2 2 ( 1 9 8 6 ) . By letter dated December 4, 1986, the Director of the Indiana Department of Financial Institutions stated, pursuant to
section 2 8 - 2 - 1 5 - 1 7 of the Indiana Code, that the
statute laws of Indiana and Ohio are reciprocal and
specifically authorize this interstate acquisition. Accordingly, the Board concludes that approval of Applicant's proposal to acquire indirectly AFC's banks in
Indiana is not barred by the Douglas Amendment.
AFC's bank subsidiaries operate in four Indiana
banking markets.4 Applicant operates five subsidiary
banks in Indiana and is the seventh largest commercial
banking organization in the state, controlling approximately 2.2 percent of statewide commercial bank
deposits. None of Applicant's Indiana banks operates
in those banking markets in which AFC competes.
Accordingly, consummation of the proposed acquisition would have no adverse effects on existing competition in any relevant market.
The Board also has considered the effects of the
proposed acquisition on probable future competition
in Ohio, Indiana, Michigan and Kentucky. In view of
the existence of numerous other potential entrants
from states within the interstate banking regions into
each of the markets served by AFC or Applicant, the
Board has concluded that consummation of the proposed transaction would not have any significant adverse effects on probable future competition in any
relevant market.
The financial and managerial resources of Applicant, AFC, and their subsidiary banks are considered
satisfactory and consistent with approval. In considering the convenience and needs of the communities to
be served, the Board also has taken into account the
records of Applicant and AFC under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.)
("CRA"). 5 The Board has received comments from
five organizations (collectively, "Protestants") 6 regarding the performance of two of Applicant's subsidiary banks, Bank One, Columbus, N.A., Columbus,
4. These markets are the Indianapolis, Elkhart-Niles-South Bend,
and the Bluffton and Jay Counties, Indiana, banking markets.
5. The CRA requires the Board, in its evaluation of a bank holding
company application, to assess the record of an applicant in meeting
the credit needs of the entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation.
6. The commenting organizations are: The Main Street Business
Association ("MSBA"); The Committee for Economic Justice
("CFEJ"); and The CRA Task Force ("CRA Task Force"), all of
Columbus, Ohio; The Indianapolis Reinvestment Alliance, Indianapolis, Indiana ("IRA"); and The Northwest Indiana Open Housing
Center, Gary, Indiana ("NWIOHC").
125
Ohio ("Columbus Bank") and Bank One, Merriville,
N.A., Merriville, Indiana ("Merriville Bank") and of
AFC's lead bank subsidiary, American Fletcher National Bank & Trust Company, Indianapolis, Indiana
("Indianapolis Bank"). The Protestants have alleged
that Columbus Bank, Merriville Bank, and Indianapolis Bank failed to adequately meet the credit needs of
their respective communities, particularly with respect
to individuals residing in low-income and minority
neighborhoods.7
In an attempt to resolve differences among the
individual parties, Applicant met privately with individual protestants on various occasions and also participated in joint meetings with representatives of the
Federal Reserve Bank of Cleveland, the Financial
Institutions Department, State of Indiana, and the
individual community groups. Applicant reached
agreement with two of the five organizations and has
narrowed, but not entirely resolved, its differences
with the remaining community groups.
The Board has carefully reviewed the records of
Applicant and AFC in meeting the convenience and
needs of all segments of their communities. Initially,
the Board notes that Applicant's and AFC's subsidiary
banks have achieved a satisfactory overall CRA rating
based upon the most recent compliance examinations
conducted by the Office of the Comptroller of the
Currency.8
In addition, the Board has considered that Applicant
has adopted the following corporate policies on behalf
of its existing and future bank subsidiaries in order to
enhance the provision of services to their local communities. Applicant has committed to:
(1) Adopt expanded guidelines for CRA programs at
subsidiary banks, including ascertainment of community credit needs and the use of such information
by Applicant product development personnel;
(2) Develop marketing plans designed to increase
loan penetration in low- and moderate-income
neighborhoods;
(3) Develop a regularly scheduled program designed
to assure the adequate provision of information to
subsidiary bank personnel regarding CRA require-
7. The Protestants generally allege that Applicant and AFC bank
subsidiaries have had inadequate real estate lending records in minority/low-income neighborhoods, particularly in the Columbus community; that Applicant's efforts to ascertain community credit needs have
been inadequate; that Applicant's credit practices have been discriminatory with respect to individuals residing in and/or companies
located in low-income neighborhoods; and that Applicant's marketing
effort to make members of the community aware of the credit services
offered and provided by Applicant has been ineffective.
8. While Columbus Bank's record of mortgage lending to its
community declined during 1985, Applicant attributes this trend to a
decrease in mortgage lending generally, and not only with respect to
minority and low-income areas. Applicant also states that it is now
committed to undertake an active mortgage lending program generally
within these sectors of the Columbus community.
126
Federal Reserve Bulletin • February 1987
ments and the 12 assessment factors of the Board's
Regulation BB;
(4) Develop programs to train personnel to utilize
more effectively programs for community and economic development; and
(5) Establish and maintain an officer-level CRA
committee reporting directly to Applicant's Board
of Directors, in order to monitor and evaluate subsidiary bank CRA compliance.
In order to increase its service to low- and moderate-income sectors of the Columbus community, Applicant has established goals, consistent with prudent
banking practices, for residential, small business and
home improvement lending totaling $50 million over
five years. Applicant further has pledged to increase
market penetration in low- and moderate-income
neighborhoods through targeted advertising in neighborhood newspapers, creation of a neighborhood services guide, and development of a marketing plan
directed to such neighborhoods. Applicant also has
agreed to provide written reports to the community
groups regarding Columbus Bank's home mortgage
and small business lending activity in minority and
low-income areas.9
Applicant has agreed to assist in the capitalization
and funding of a community development corporation
("CDC") in Columbus to purchase, rehabilitate and
sell homes and businesses in designated low- and
moderate-income areas, at lower effective interest
rates, and to participate in other local community
economic revitalization programs. Applicant further
has agreed to establish a loan review board, comprised
of local small business representatives, representatives of community groups, and Columbus Bank loan
officers, in order to investigate and review denied loan
applications.
As a result of these commitments and programs,
Applicant has reached an agreement with the MSBA in
Columbus, which has withdrawn its protest to the
acquisition. Another protest group in Columbus, the
CRA Task Force, indicates its general acceptance of
Applicant's CRA pledges and commitments, but
claims that Applicant can only achieve such goals by
providing interest rate incentives to credit recipients.
Applicant states that its revised CRA programs and
9. Applicant also has pledged to adopt more flexible lending
criteria, including the financing of loan points and closing costs
(consistent with prudent lending practices), the consideration of all
sources of family income, and allowing lower down payments and long
term financing. Applicant also has agreed to participate in public/
private consortia designed to stimulate rehabilitation of homes and
businesses and to lower effective interest rates in residential and
commercial areas.
commitments outlined above as well as its enhanced
relationship with neighborhood groups will enable
Applicant to meet its improved lending objectives
without the provision of below-market rates of interest. The Board previously has determined that neither
the CRA nor the BHC Act requires it to establish the
terms and conditions upon which lending activities
must be conducted to meet community needs.10 Accordingly, the Board declines to require Applicant to
provide extensions of credit at below-market rates of
interest, as urged by the CRA Task Force.
With respect to Merriville Bank's service to the
Gary community, Applicant has committed to adopt
programs substantially similar to those proposed in
Columbus, including specific monetary goals over the
next five years for residential, home improvement and
small business lending in low-income and minority
census tracts. In reliance on this commitment, the
NWIOHC also has withdrawn its protest.
Upon acquisition of the Indianapolis Bank, Applicant has committed to implement in Indianapolis the
general CRA programs outlined above for the Columbus and Gary communities, including targeted advertising, increased financing flexibility, and active cooperation with local CDCs. Applicant also will conduct
an immediate inquiry to ascertain the credit needs of
the low-income and minority neighborhoods served by
the Indianapolis Bank. Where appropriate, Applicant
has agreed to establish in Indianapolis programs substantially identical to those proposed in Columbus,
including targeted monetary goals for residential,
home improvement and small business lending. Applicant further has committed to implement its own
branch closing procedures by providing advance notice to customers of a proposed closing, by consulting
with the community regarding the restoration of a
branch to efficient operation, and by offering assistance to customers in finding alternative sources of
credit.11
Finally, Applicant will provide the Federal Reserve
Bank of Cleveland with regular written reports detailing the progress of Applicant's subsidiary banks in
implementing the proposed programs to assess and
serve the credit needs of their respective communities
and in fulfilling the commitments made in connection
with this application.
Accordingly, based upon all of the evidence, including the programs and measures that Applicant has
10. Hibernia
Corporation,
72 FEDERAL RESERVE BULLETIN 656,
658 (1986); Commerce
Bancshares,
Inc., 64 FEDERAL RESERVE BULLETIN 5 7 6 , 5 7 9 ( 1 9 7 8 ) .
11. In addition, after Applicant gains control of AFC's mortgage
banking subsidiary, it will gather and report loan origination data by
census tract as if the mortgage company were a bank.
Legal Developments
proposed in order to enhance its service to the convenience and needs of its communities, including lowand moderate-income segments of the communities,
and the additional monitoring of Applicant's programs
by the Federal Reserve Bank of Cleveland, the Board
concludes that convenience and needs considerations
are consistent with approval of this application.12
Based on the foregoing and other facts of record, the
Board has determined that consummation of the proposed acquisition would be in the public interest and
that the application should be approved.13 Accordingly, the application is approved for the reasons summarized above.
December 31, 1986.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
First Bancshares of Valley City, Inc.
Valley City, North Dakota
Order Approving the Acquisition of a Bank
First Bancshares of Valley City, Inc., Valley City,
North Dakota, has applied for Board approval under
12. Certain Protestants also have requested that the Board order a
public meeting or hearing to receive public testimony on the issues
presented by these applications. Although section 3(b) of the Act does
not require a formal hearing in this instance, the Board may, in any
case, order a formal or informal hearing. In the Board's view, the
parties have had ample opportunity to present their arguments in
writing and to respond to one another's submissions. In light of these
facts, the proposals by Applicant to expand its services, and other
facts of record, the Board has determined that a hearing would serve
no useful purpose. Accordingly, the Protestants' request for a public
hearing is hereby denied. The Protestants' request for a public
meeting is denied for the same reason.
13. The American Council of Life Insurance, the American Insurance Association, the National Association of Independent Insurers,
and the Alliance of American Insurers submitted comments protesting
Board approval of this application on the grounds that the general
insurance agency activities conducted by a department of AFC's
subsidiary bank, Union Bank and Trust Company, Franklin, Indiana
("Franklin Bank"), are prohibited under the amendments to section 4
of the BHC Act contained in the 1982 Garn-St Germain Depository
Institutions Act. The Independent Insurance Agents of America Inc.,
the National Association of Casualty and Surety Agents, and the
National Association of Surety Bond Producers filed additional comments raising substantially the same arguments. In response to these
protests, Applicant has agreed that Franklin Bank will divest or
terminate its general insurance agency activities within two years of
consummation of the acquisition, unless during such period Applicant
receives approval pursuant to an application under section 4(c)(8) of
the BHC Act to retain such activities. During this two-year period or
unless authorization is granted pursuant to the BHC Act for broader
activities, Applicant will limit the insurance agency activities of
Franklin Bank to the renewal of existing policies and those creditrelated insurance agency activities permitted under section 4(c)(8)(A)
of the BHC Act. The Board believes that Applicant's divestiture
commitments adequately address the issues raised by these protestants.
127
section 3 of the Bank Holding Company Act of 1956,
as amended ("Act") (12 U.S.C. §§ 1841 et seq.), to
acquire voting shares of First National Bank of Valley
City, Valley City, North Dakota ("Bank"), and thereby become a bank holding company.
Notice of the application, affording an opportunity
for interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant is a non-operating corporation formed for
the purpose of acquiring Bank. Bank is the 20th largest
banking organization in the state,1 with total domestic
deposits of $45.8 million, representing 0.8 percent of
total deposits in commercial banking organizations in
the state. Consummation of this proposal would not
result in the concentration of banking resources or in
any significant adverse competitive effects in the state.
Bank operates in the Jamestown market,2 where it is
the fourth largest commercial banking organization,
controlling 8.2 percent of total deposits in commercial
banking organizations in the state. None of the principals of Applicant or Bank is associated with any other
financial institutions located within the relevant banking market. Accordingly, consummation of this transaction would not result in the concentration of banking
resources or in any significant adverse competitive
effects in the relevant geographic area. Thus, competitive factors are consistent with approval.
The Board has indicated on previous occasions that
a bank holding company should serve as a source of
financial and managerial strength to its subsidiary
banks, and that the Board would closely examine the
condition of an applicant in each case with this consideration in mind.3 This application represents the first
of a number of proposals involving the divestiture by
First Bank System, Inc., a large regional bank holding
company, of small, rural banks to individuals or small
bank holding companies. Under these circumstances,
the Board is particularly concerned with the financial
1. Deposit data are as of June 30, 1985.
2. The Jamestown market is comprised of the counties of Eddy,
Foster, Stutsman, Lamoure, and Barnes, and parts of Steel and Griggs
counties, North Dakota.
3. The Bank Holding Company Act requires that before an organization is permitted to become a bank holding company and thus obtain
the benefits associated with the holding company structure, it must
secure the Board's approval. Section 3(c) of the Act provides that the
Board must, in every case, consider, among other things, the financial
and managerial resources of both the applicant company and the bank
to be acquired. The Board's action in this case is based on a
consideration of such factors.
128
Federal Reserve Bulletin • February 1987
strength and future prospects of the banks to be
divested, in part because of the uncertainty associated
with a change in ownership from a large regional
banking organization to individuals or bank holding
companies with substantially fewer resources to support the banks.
These concerns are mitigated in this case by several
factors. First, the proposal has been strengthened by
the contribution of additional equity capital to Applicant by Applicant's principals. Second, First Bank
System, Inc. has improved Bank's overall asset quality by purchasing a large portion of Bank's nonperforming and classified loans. Third, First Bank
System, Inc. has agreed to retain an investment, in the
form of a capital note, in Applicant until Applicant's
initial leverage is reduced. This investment will not
entail any debt service burden on Applicant or Bank
and will be available to support Applicant's capital
structure. Fourth, although Applicant will incur a
certain amount of debt in connection with the proposed transaction, it appears that Applicant will have
sufficient flexibility to retire the debt without adversely affecting the capital position of Bank, particularly in
light of the foregoing considerations. All of these
factors are designed to strengthen the acquiring organization and to facilitate the transfer of Bank to new
ownership, thus ensuring that Bank will be financially
protected following divestiture.
In light of these and other facts of record, the Board
concludes that the financial and managerial resources
and future prospects of Applicant and Bank are consistent with approval of the application.
Although Applicant does not anticipate any immediate changes in the services offered by Bank, considerations relating to the convenience and needs of the
community to be served are also consistent with
approval of the application.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The acquisition shall not be
consummated before the thirtieth calendar day following the effective date of this Order, or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
the Federal Reserve Bank of Minneapolis, acting
pursuant to delegated authority.
By order of the Board of Governors, effective
December 8, 1986.
First Chicago Corporation
Chicago, Illinois
American National Corporation
Chicago, Illinois
Order Approving Acquisition of a Bank
First Chicago Corporation, Chicago, Illinois, and its
wholly owned subsidiary, American National Corporation, Chicago, Illinois (together "Applicants"), both
bank holding companies within the meaning of the
Bank Holding Company Act of 1956, as amended (the
"BHC Act") (12 U.S.C. § 1841 et seq.), have each
applied for the Board's prior approval under section
3(a)(3) of the BHC Act (12 U.S.C. § 1842(a)(3)) to
acquire all of the outstanding voting shares of Bank of
Lansing, Lansing, Illinois ("Lansing Bank").
Notice of the applications, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the BHC Act.
The time for filing comments has expired and the
Board has considered the applications and all comments received in light of the factors set forth in
section 3(c) of the BHC Act (12 U.S.C. § 1842(c)).
Applicants comprise the largest commercial banking
organization in Illinois, with five banks holding total
deposits of $14.4 billion, representing 14 percent of the
total deposits in commercial banks in the state.1 Lansing Bank is the 150th largest commercial banking
organization in Illinois, with total deposits of $102
million, representing 0.1 percent of the total deposits
in commercial banks in the state. Upon consummation
of the proposal, Applicants would remain the largest
commercial banking organization in Illinois, with total
deposits of $14.5 billion, representing 14.1 percent of
the total deposits in commercial banks in the state.
Consummation of the proposal would not result in a
significant increase in the concentration of banking
resources in Illinois.
Applicants are the largest of 234 commercial banking organizations in the Chicago banking market,2
controlling 21.6 percent of the total deposits in commercial banks therein. Lansing Bank also competes in
the Chicago banking market, where it is the 97th
largest commercial banking organization, controlling
0.2 percent of the total deposits in commercial banks.
Upon consummation of the proposal, Applicants
would remain the largest commercial banking organi-
Voting for this action: Chairman Volcker and Governors
Seger, Angell, and Heller. Absent and not voting: Governors
Johnson, Wallich, and Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
1. All banking data are as of December 31, 1985.
2. The Chicago banking market is approximated by Cook, DuPage
and Lake Counties, all in Illinois.
Legal Developments
zation in the market, controlling 21.8 percent of the
total deposits in commercial banks.
The Chicago banking market is not highly concentrated, with the four largest commercial banking organizations holding 51.7 percent of the total deposits in
commercial banks and a Herfindahl-Hirschman Index
("HHI") of 818 points. Upon consummation of the
proposal, the four-firm concentration ratio would increase by 0.2 percent to 51.9 percent and the HHI
would increase by 9 points to 827 points. Based upon
these facts, the Board has determined that consummation of the proposal would not have any significant
adverse competitive effects in any relevant banking
market.
In its evaluation of Applicants' managerial resources, the Board has considered certain violations
by Applicants' subsidiary banks, First National Bank
of Chicago, Chicago, Illinois ("First Bank"), and
American National Bank and Trust Company of Chicago, Chicago, Illinois ("American Bank"), of the
Currency and Foreign Transactions Reporting Act
("CFTRA") and the regulations thereunder.3 The
Board notes that First Bank and American Bank have
consulted with and cooperated with the appropriate
supervisory authorities and law enforcement agencies
following discovery of the violations.
In addition, First Bank and American Bank have
filed corrective currency transaction reports and implemented comprehensive remedial programs to prevent further violations of the CFTRA, including:
1. Appointment of senior officials as compliance
officers responsible for compliance by the banks
with the CFTRA;
2. Institution of intensive training and periodic retraining for bank personnel in the requirements of
the CFTRA;
3. Preparation of extensive and comprehensive manuals and policy statements so that bank personnel
are aware of the requirements of the CFTRA and the
procedures implemented by the banks to insure that
all covered transactions are reported and that all
currency transaction forms are properly completed;
4. Institution of review procedures, including review
by senior bank officials, to insure that exemptions
are properly granted, that exemption limits on currency transactions are appropriate, and that the
exempt status of customers and exemption limits are
periodically reviewed regarding whether such status
and limits continue to be appropriate;
5. Institution of review procedures, including review
by computer programs, to insure that all covered
transactions are captured and reported; and
3. 31 U.S.C. § 5311 et seq.; 31 U . S . C . § 103.
129
6. Expanded internal audits of their CFTRA programs to insure compliance with the CFTRA.
The sufficiency of the remedial programs has been
reviewed by the Office of the Comptroller of the
Currency. The Board has also consulted with appropriate enforcement agencies and has considered Applicants' past record of compliance with the law. For the
foregoing reasons and based on all of the facts of
record, the Board has determined that the managerial
resources of Applicants are consistent with approval
of the proposal.
The financial resources and future prospects of
Applicants and Lansing Bank are consistent with
approval of the proposal. Considerations relating to
the convenience and needs of the communities to be
served are also consistent with approval of the proposal.
Based on the foregoing and all of the facts of record,
the Board has determined that approval of the transaction is consistent with the public interest, and that the
applications should be, and hereby are, approved. The
transaction shall not be consummated before the thirtieth calendar day following the effective date of this
Order, or later than three months after the effective
date of this Order, unless the latter period is extended
for good cause by the Board, or by the Federal
Reserve Bank of Chicago, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
James Madison Limited
Washington, D.C.
Order Approving Acquisition of a Bank
James Madison Limited, Washington, D. C., a bank
holding company within the meaning of the Bank
Holding Company Act (12 U.S.C § 1841 et seq.)
("Act"), has applied for the Board's approval under
section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to
acquire the successor by merger to First Continental
Bank of Maryland, Silver Spring, Maryland ("Bank").
Notice of the application, affording an opportunity
for interested persons to submit comments, has been
given in accordance with section 3 of the Act. The time
130
Federal Reserve Bulletin • February 1987
for filing comments has expired, and the Board has
considered the application and all comments received
in light of the factors set forth in section 3(c) of the
Act.
Applicant, a one-bank holding company, is the
seventh largest commercial banking organization in
the District of Columbia ("District"). Applicant controls total domestic deposits of $475.2 million, representing 3.5 percent of the total deposits in commercial
banks in the District. Bank is the 52nd largest commercial banking organization in Maryland, controlling
total domestic deposits of $28.5 million, representing
0.1 percent of the total deposits in commercial banks
in Maryland.1
Section 3(d) of the Act (12 U.S.C. § 1842(d)), the
Douglas Amendment, prohibits the Board from approving an application by a bank holding company to
acquire control of any bank located outside of the
holding company's home state,2 unless such acquisition is "specifically authorized by the statute laws of
the state in which such bank is located, by language to
that effect and not merely by implication."
The statute laws of Maryland authorize the acquisition of a bank or bank holding company in Maryland
by a bank holding company located in another state in
a defined southeastern region, including the District, if
the laws of that state permit Maryland bank holding
companies to acquire banks and bank holding companies in that state.3 The District has enacted a similar
regional interstate banking statute, which permits the
acquisition of a District bank holding company or bank
by a bank holding company located in Maryland.4
The District statute appears to satisfy the requirements of Maryland Fin. Inst. Code § 5-1003. Based on
the foregoing, the Board has determined that the
proposed acquisition is specifically authorized by the
statute laws of Maryland and is thus permissible under
1. Deposit data are as of December 31, 1985, and include Applicant's recent acquisition of UNB Bancshares, Washington, D.C., and
Applicant's proposed acquisition of the successor by merger to The
McLean Bank, McLean, Virginia, approved by the Board on November 3, 1986.
2. A bank holding company's home state is that state in which the
operations of the bank holding company's banking subsidiaries were
principally conducted on July 1, 1966, or the date on which the
company became a bank holding company, whichever is later. Applicant's home state is the District of Columbia.
3. Md. Fin. Inst. Code Ann. § 5-1001 et seq. (Supp. 1985). The
states in the region defined by Maryland law include, through June 30,
1987, Maryland, Delaware, Virginia, West Virginia, and the District of
Columbia; and, on or after July 1, 1987, Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi,
North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia,
West Virginia, and the District of Columbia.
4. D.C. Code Ann. § 26-801 et seq. (Supp. 1986), as amended by
the District of Columbia Regional Interstate Banking Act of 1985
Amendments Act of 1985, D. C. Law 6-276.
the Douglas Amendment, subject to Applicant's receipt of the approval of the Maryland Commissioner of
Banking pursuant to Maryland Fin. Inst. Code §
5-1003. The Board's Order is specifically conditioned
upon satisfaction of the state regulatory approval
requirement.
Applicant's subsidiary bank competes with Bank in
the Washington, D.C., banking market.5 Applicant is
the 14th largest of 70 commercial banking organizations in the Washington, D.C., market, and controls
deposits of $417.6 million, representing 1.9 percent of
the total deposits in commercial banks therein.6 Bank
is the 54th largest commercial banking organization in
the market, controlling domestic deposits of $19.5
million, representing less than 0.1 percent of the total
deposits in commercial banks in the market. Upon
acquisition of Bank, Applicant would become the 11th
largest commercial banking organization in the Washington, D.C., market and would control 2.0 percent of
the total deposits in commercial banks in the market.
The Washington, D.C., banking market is unconcentrated, and would remain unconcentrated after
consummation of the proposed acquisition. The share
of deposits held by the four largest commercial banking organizations in the market is 50.4 percent and the
Herfindahl-Hirschman Index ("HHI") for the market
is 817.7 Moreover, a large number of commercial
banking organizations would remain in the Washington, D.C., market after the proposed acquisition. On
the basis of these and all other facts of record, the
Board concludes that consummation of the acquisition
would not have a significant adverse effect on existing
competition in the Washington, D.C., market. In view
of the existence of numerous other potential entrants
into the relevant banking market, the Board has concluded that consummation of the proposed transaction
would not have any significant adverse effects on
probable future competition in any relevant market.
The financial and managerial resources and future
prospects of Applicant, Bank, and their respective
subsidiaries are consistent with approval of the application. Considerations relating to the convenience and
needs of the communities to be served are also consistent with approval.
5. The Washington, D. C., banking market is defined as the
Washington, D. C., Ranally Metropolitan Area, which comprises the
District of Columbia and the surrounding suburban areas of Maryland
and Virginia.
6. Market data are as of June 30, 1985.
7. Consummation of the proposed transaction would increase the
market's HHI by 0.4 points. Thus, the transaction is not likely to be
challenged by the Department of Justice under its merger guidelines,
49 Federal Register 26,823 (1984).
Legal Developments
Based on the foregoing and other facts of record, the
Board has determined that this application should be,
and hereby is, approved, subject to the express condition that Applicant obtain the approval of the Maryland Commissioner of Banking pursuant to section
5-1003 of the Maryland Financial Institutions Code.
The acquisition of Bank shall not be consummated
before the thirtieth calendar day following the effective
date of the Order, or later than three months after the
effective date of the Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Richmond, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Mid AmeriBancorp, Inc.
Chicago, Illinois
Order Denying Formation of a Bank Holding
Company
Mid AmeriBancorp, Inc., Chicago, Illinois, has applied for the Board's approval pursuant to section
3(a)(1) of the Bank Holding Company Act (12 U.S.C.
§ 1842(a)(1)) ("Act") to become a bank holding company by acquiring 42.6 percent of the voting shares of
Mid-America National Bank of Chicago, Chicago,
Illinois ("Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act.
Applicant is a nonoperating corporation formed for
the purpose of becoming a bank holding company by
acquiring Bank. Bank is the 541st largest commercial
banking organization in Illinois, controlling deposits of
$39.2 million representing less than 0.1 percent of the
total deposits in commercial banking organizations in
the state.1 Consummation of this acquisition would not
131
result in a significant increase in the concentration of
banking resources in Illinois.
Bank operates in the Chicago metropolitan banking
market,2 where it is the 265th largest commercial
banking organization, controlling 0.1 percent of the
total deposits in commercial banks therein. Applicant's principal is also a principal of three banks and/
or their respective bank holding companies in the
Chicago metropolitan banking market. Together these
institutions would rank as the 59th largest commercial
banking organization in the Chicago metropolitan
banking market and would control 0.3 percent of the
deposits in commercial banking organizations in the
Chicago metropolitan banking market. Consummation
of this proposal is not likely to have a significant
adverse effect upon competition in the Chicago banking market.
The Board has indicated on previous occasions that
a bank holding company should serve as a source of
financial and managerial strength to its subsidiary
bank, and that the Board would closely examine the
condition of an applicant in each case with this consideration in mind. In this regard, the Board has cautioned against the assumption of substantial amounts
of debt by a bank holding company because the Board
was concerned that the bank holding company would
no longer have the financial flexibility to meet unexpected problems of its subsidiary bank or would be
forced to place substantial demands on its subsidiary
bank to meet its debt servicing requirements. In connection with this proposal, Applicant would incur a
sizeable amount of debt and would be dependent upon
the earnings of Bank to service the debt. Bank has
experienced declining earnings in recent years and,
using projections based on Bank's past performance, it
does not appear that Applicant would have sufficient
financial flexibility to service its debt while maintaining adequate capital levels at Bank. In addition, Applicant would be an owner of less than a majority interest
in Bank and would not be in a position to control the
operations of bank and therefore improve its earnings
prospects.3 Accordingly, based on these and other
facts of record, the Board concludes that considerations relating to Applicant's financial resources and
future prospects are adverse and weigh against approval of this application.
Applicant has proposed no new services for Bank
upon consummation of this proposal. Thus, considerations relating to the convenience and needs of the
2. The Chicago banking market is approximated by Cook, Lake and
DuPage Counties, Illinois.
3 . See
1. All banking data are as of December 31, 1985.
Lloyds
( 1 9 8 6 ) a n d NBC
Bank
Co.,
Pic,
7 2 F E D E R A L RESERVE B U L L E T I N
841
6 0 F E D E R A L RESERVE B U L L E T I N 7 8 2 ( 1 9 7 4 ) .
132
Federal Reserve Bulletin • February 1987
community to be served are consistent with, but lend
no weight toward, approval of this application.
On the basis of all the facts of record, the Board
concludes that the banking considerations involved in
this proposal are adverse and are not outweighed by
any relevant competitive or convenience and needs
considerations. Accordingly, it is the Board's judgment that approval of the application would not be in
the public interest and that the application should be,
and hereby is, denied for the reasons summarized
above.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Minnwest, Inc.
Minnetonka, Minnesota
Order Approving Formation of Bank Holding
Company
Minnwest, Inc., Minnetonka, Minnesota, has applied
for the Board's approval under section 3(a)(1) of the
Bank Holding Company Act of 1956, as amended
("BHC Act") (12 U.S.C. § 1842(a)(1)), to become a
bank holding company by acquiring 100 percent of the
voting shares of each of the following de novo Minnesota banks: Minnwest Bank Dawson, Dawson; Minnwest Bank Luverne, Luverne; Minnwest Bank Montevideo, Montevideo; and Minnwest Bank Ortonville,
Ortonville (collectively, "Banks"). Each of these
banks is being formed to purchase certain assets and
assume certain liabilities of each of the following
existing Minnesota banks, respectively: Norwest
Bank Dawson, Dawson; Norwest Bank Luverne, Luverne; Norwest Bank Montevideo, Montevideo; and
Norwest Bank Ortonville, Ortonville.
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the BHC Act
(51 Federal Register 31,370 (1986)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the BHC Act
(12 U.S.C. § 1842(c)).
Applicant is a non-operating corporation formed for
the purpose of acquiring Banks. Norwest Bank Dawson is the 162nd largest commercial banking organiza
tion in Minnesota, with total deposits of $28.8 million,
representing .08 percent of total deposits in commercial banks in the state.1 Norwest Bank Luverne is the
140th largest commercial banking organization in Minnesota, with total deposits of $31.4 million, representing .09 percent of total deposits in commercial banks in
the state. Norwest Bank Montevideo is the 95th largest commercial banking organization in Minnesota,
with total deposits of $38.4 million, representing .11
percent of total deposits in commercial banks in the
state. Norwest Bank Ortonville is the 190th largest
commercial banking organization in Minnesota, with
total deposits of $25.5 million, representing .07 percent
of total deposits in commercial banks in the state.
Upon consummation, Applicant would become the
16th largest bank holding company in Minnesota, and
would control approximately .35 percent of deposits in
commercial banks in the state. Consummation of this
proposal would not result in the concentration of
banking resources or in any significant adverse competitive effects in Minnesota.
Further, since Applicant does not have a presence in
any of the relevant banking markets, consummation of
this transaction would not result in the concentration of
banking resources or in any significant adverse competitive effects in any relevant geographic area. Thus,
competitive factors are consistent with approval.
The Board has indicated on previous occasions that
a bank holding company should serve as a source of
financial and managerial strength to its subsidiary
banks, and that the Board would closely examine the
condition of an applicant in each case with this consideration in mind.2 This application represents the divestiture by Norwest Corporation, a large regional bank
holding company, of small, rural banks to individuals
or small bank holding companies. Under these circumstances, the Board is particularly concerned with the
financial strength and future prospects of the banks to
be divested, in part because of the uncertainty associated with a change in ownership from a large regional
banking organization to individuals or bank holding
companies with substantially fewer resources to support the banks.
These concerns are mitigated in this case by several
factors. First, a significant portion of the purchase
1. Banking data are as of June 30, 1985.
2. The Bank Holding Company Act requires that before an organization is permitted to become a bank holding company and thus obtain
the benefits associated with the holding company structure, it must
secure the Board's approval. Section 3(c) of the Act provides that the
Board must, in every case, consider, among other things, the financial
and managerial resources of both the applicant company and the bank
to be acquired. The Board's action in this case is based on a
consideration of such factors.
Legal Developments
price will be funded by capital provided by the principals of Applicant, and consequently, Applicant will
not be highly leveraged. Second, Norwest has agreed
to retain an investment, in the form of a capital note, in
Applicant and Banks until Applicant's initial leverage
is reduced. This investment will not entail any debt
service burden on Applicant or Banks, will be available to support Applicant's capital structure, and will
convert into common stock under certain circumstances. Third, although Applicant will incur a certain
amount of debt in connection with the proposed transaction, it appears that Applicant will have sufficient
flexibility to retire the debt without adversely affecting
the capital position of Banks, particularly in light of the
foregoing considerations. In addition, in contemplation of this transaction, Norwest has significantly
strengthened the loan-loss reserves at each of the Banks.
All of these factors are designed to strengthen the
acquiring organization and to facilitate the transfer of
Banks to new ownership, thus ensuring that Banks will
be financially protected following divestiture.
In light of these and other facts of record, the financial
and managerial resources and future prospects of Applicant and Banks are consistent with approval of the
proposal.
Considerations
relating
to
the
convenience and needs of the community to be served
are also consistent with approval of the proposal.
Based on the foregoing and all the facts of record, the
Board has determined that the application should be and
hereby is approved. The transaction shall not be consummated before the thirtieth calendar day following the
effective date of this Order or later than three months
after the effective date of this Order, unless such period
is extended by the Board or by the Federal Reserve
Bank of Minneapolis acting pursuant to delegated authority.
By order of the Board of Governors, effective
December 18, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governor Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Northern Trust Corporation
Chicago, Illinois
Order Approving Acquisition of a Bank Holding
Company and a Bank
Northern Trust Corporation, Chicago, Illinois, a bank
holding company within the meaning of the Bank
133
Holding Company Act (12 U.S.C. § 1841 et seq.
("BHC Act")), has applied for the Board's approval
under section 3 of the BHC Act (12 U.S.C. § 1842) to
acquire First Lake Forest Corporation, Lake Forest,
Illinois ("FLFC"), and thereby indirectly acquire The
First National Bank of Lake Bluff, Lake Bluff, Illinois;
The First National Bank of Lake Forest, Lake Forest,
Illinois; and Lake Forest National Bank, Lake Forest,
Illinois (collectively, "Illinois Banks"). Applicant has
also filed an application under section 3 of the BHC
Act to acquire Northern Trust Bank of Arizona, N.A.,
Phoenix, Arizona ("Arizona Bank"), 1 the successor
by merger of The Northern Trust Company of Arizona
and Phoenix National Bank, both of Phoenix, Arizona.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the BHC Act.
The time for filing comments has expired, and the
Board has considered the applications and all comments received in light of the factors set forth in
section 3(c) of the BHC Act (12 U.S.C. § 1842(c)).
Applicant, the fourth largest commercial banking
organization in Illinois, controls five subsidiary banks
in Illinois with total deposits of $3.6 billion, representing 3.5 percent of total deposits in commercial banks in
the state.2 FLFC is the fortieth largest commercial
banking organization in the state, controlling three
subsidiary banks with total deposits of $336.7 million,
representing 0.3 percent of total deposits in commercial banking organizations in the state. Upon consummation of the proposed transaction, Applicant would
remain the fourth largest commercial banking organization in the state, with total deposits of $3.9 billion,
representing 3.8 percent of total deposits in commercial banking organizations in the state. Consummation
of this proposal would not have a significant effect
upon the concentration of banking resources in Illinois.
Applicant and FLFC both compete in the Chicago
banking market.3 Applicant is the fourth largest of 387
commercial banking organizations in the market, with
five bank subsidiaries controlling 5.4 percent of total
deposits in commercial banking organizations in the
market. FLFC is the 29th largest commercial banking
1. In a related application, Nortrust of Arizona Holding Corporation ("NAHC"), Applicant's wholly owned subsidiary, has applied
under section 3(a)(1) of the BHC Act (12 U.S.C. § 1842(a)(1), for
approval to become a bank holding company through its acquisition of
Arizona Bank. NAHC has no significance except as a means to
facilitate Applicant's acquisition of Arizona Bank.
2. All banking data are as of December 31, 1985. In addition,
Applicant controls four subsidiary banks in Florida.
3. The Chicago banking market is approximated by Cook, Lake and
DuPage Counties, all in Illinois.
134
Federal Reserve Bulletin • February 1987
organization in the market with three bank subsidiaries
controlling 0.5 percent of total deposits in commercial
banking organizations in the market. Upon consummation of this proposal, Applicant would remain the
fourth largest commercial banking organization in the
market, controlling 5.9 percent of total deposits in
commercial banking organizations in the market. The
Chicago banking market is considered unconcentrated, with the four largest commercial banking organizations controlling 46.7 percent of the deposits in commercial banking organizations in the market. The
Herfindahl-Hirschman Index ("HHI") for the market
is 711 and would increase by only 5 points to 716 upon
consummation of the proposal.4
Although consummation of the proposal would eliminate some existing competition between Applicant
and FLFC in the Chicago banking market, numerous
other commercial banking organizations would remain
as competitors in the market upon consummation.
Based upon the above considerations, the Board concludes that consummation of the proposal is not likely
to substantially lessen competition in the Chicago
banking market.
Regarding Applicant's proposed acquisition of Arizona Bank, section 3(d) of the BHC Act (12 U.S.C.
§ 1842(d)), the Douglas Amendment, prohibits the
Board from approving an application by a bank holding company to acquire a bank located outside the
holding company's home state, unless such acquisition
is "specifically authorized by the statute laws of the
state in which such bank is located, by language to that
effect and not merely by implication." The statute
laws of Arizona authorize an out-of-state bank holding
company, with the approval of the Arizona Superintendent of Banks, to acquire an Arizona bank that had
applied to operate in Arizona before May 31, 1984.5
The Arizona Superintendent of Banks has informed
the Board that the proposal does not present any of the
grounds for denial of the application under Arizona
Revised Statutes § 6-326 and that the Superintendent
anticipates approving the proposal. Based on the foregoing, the Board has determined that the proposed
acquisition is specifically authorized by the statute
laws of Arizona and is thus permissible under the
Douglas Amendment, subject to Applicant's obtaining
the approval of the Superintendent pursuant to section
4. Consummation of the proposed transaction would increase the
market's HHI by only a slight amount. The market is considered
unconcentrated under the Department of Justice Merger Guidelines,
49 Federal Register 26,823 (1984), and the increase in the HHI
resulting from the transaction is not within the parameters the
Department of Justice has stated are likely to result in its challenging
the transaction.
5. Arizona Revised Statutes §§ 6-322 and 6-323 (effective October 1, 1986).
6-322 of Arizona Revised Statutes. The Board's Order
is specifically conditioned upon satisfaction of the
state regulatory approval requirement.
Applicant does not provide banking services in the
Phoenix banking market, where Phoenix National
Bank now competes, or elsewhere in Arizona.6 Applicant's indirect Arizona subsidiary, Northern Trust
Company of Arizona, Phoenix, Arizona, has operated
only as a trust company.7 The Arizona interstate
banking statute permits banking organizations from
any state to enter Arizona, and, accordingly, there are
numerous potential entrants into the state and into the
Phoenix market in which Phoenix National Bank now
competes. Based on the foregoing, the Board concludes that the proposal would not have any adverse
effects on the concentration of banking resources in
any relevant area, and that the proposal would not
result in the elimination of substantial existing or
probable future competition in any relevant market.
Thus, the competitive effects of the proposal are
consistent with approval.
In its evaluation of Applicant's managerial resources, the Board has considered certain violations
by two of Applicant's subsidiary banks, one of
FLFC's subsidiary banks, and Phoenix National Bank
of the Currency and Foreign Transactions Reporting
Act ("CFTRA") and the regulations thereunder.8
With regard to the CFTRA violations, the Board notes
that Applicant brought violations of its lead bank to
the attention of the appropriate supervisory authorities
after the violations were discovered through its internal audit and has cooperated with law enforcement
agencies.
Applicant has undertaken a comprehensive corporate-wide remedial program to correct the violations at
both banks and to prevent violations from occurring in
the future in any of its subsidiary banks. Applicant has
advised the Board that it has filed corrective currency
transaction reports and established a central control
unit which has day-to-day responsibility for monitoring all reportable transactions and ensuring that reports are properly filed. Applicant has increased the
scope and frequency of its audits of the compliance of
its subsidiary banks with the CFTRA. Applicant has
also instituted an intensive internal training program
for bank personnel regarding compliance with the
CFTRA.
The sufficiency of the compliance procedures adopted to address Applicant's subsidiary banks' CFTRA
6. The Phoenix banking market is approximated by the Phoenix,
Arizona RMA.
7. As of June 30, 1986, Northern Trust Company of Arizona,
Phoenix, Arizona, administered $1.1 billion in trust assets.
8. 31 U.S.C. § 5311, et seq.\31 C.F.R. § 103.
Legal Developments
violations has been reviewed by examiners from the
Office of the Comptroller of the Currency and the
Federal Reserve System. The Board also has consulted with appropriate enforcement agencies, and has
considered Applicant's past record of compliance with
the law. In addition, Applicant has committed to
implement its compliance program at the subsidiary
banks of FLFC and NAHC within 30 days of consummation and to undertake a compliance review at those
banks within 120 days of consummation.
Based upon a review of all of the facts of record, the
Board concludes that the financial and managerial
resources and future prospects of Applicant, FLFC,
NAHC, and their respective subsidiary banks and
Arizona Bank are consistent with approval of these
transactions. Considerations relating to the convenience and needs of the communities to be served also
are consistent with approval of these transactions.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be,
and hereby are, approved, subject to the express
condition that with regard to the Arizona acquisition,
Applicant obtain the approval of the Arizona Superintendent of Banks pursuant to section 6-322 of the
Arizona Revised Statutes. The transactions shall not
be consummated before the thirtieth calendar day
following the effective date of this Order or later than
three months after the effective date of this Order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Chicago,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
135
Bank is a state-chartered mutual savings and loan
association, the accounts of which are insured by the
Federal Savings and Loan Insurance Corporation
("FSLIC"). Bank has adopted a conversion plan by
which it will convert to a state-chartered mutual
savings bank insured by the Federal Deposit Insurance
Corporation ("FDIC"), and will then convert to a
state-chartered stock savings bank.1
The Board has previously determined that a statechartered savings bank is a "bank" under section 2(c)
of the Act if it accepts demand deposits, engages in the
business of making commercial loans, and is not
covered by the exemption created by the Garn-St
Germain Depository Institutions Act of 1982 ("GarnSt Germain Act") for thrift institutions insured by the
FSLIC.2 Bank accepts demand deposits and engages
in the business of making commercial loans, and its
deposits will not be insured by the FSLIC. Accordingly, Bank is a "bank" for purposes of the Act, and
Applicant has applied to acquire Bank under section 3
of the Act, which governs the acquisition of banks by
bank holding companies.
Section 3(d) of the Act (12 U.S.C. § 1842(d)), the
Douglas Amendment, prohibits the Board from approving the application by a bank holding company to
acquire control of any bank located outside of the
holding company's home state,3 unless such acquisition is "specifically authorized by the statute laws of
the state in which such bank is located, by language to
that effect and not merely by implication."
The statute laws of Connecticut authorize the acquisition of a Connecticut bank by a bank holding company located in a state in the New England region,4 if
that state has enacted legislation that permits the
acquisition of a bank located in that state by a Connecticut bank holding company.5 Maine has enacted a
statute that permits the acquisition of a Maine bank by
JAMES MCAFEE
Associate Secretary of the Board
[SEAL]
STATEMENT
FEDERAL
RESERVE
APPLICATION
BANK
OF
BY BOARD
OF GOVERNORS
SYSTEM
OF THE
REGARDING
OF THE ONE BANCORP
TO
THE
ACQUIRE
HARTFORD
1. In connection with the proposed acquisition, a newly chartered
Connecticut stock savings bank, all of the shares of which are owned
by Applicant and which has been formed solely to facilitate the
acquisition, will be merged with and into Bank subsequent to Bank's
conversion to a state-chartered stock savings bank and all of the
shares of the interim bank will be automatically converted into the
shares of Bank.
2 . The
By Order dated November 7, 1986, the Board approved the application of The One Bancorp, Portland,
Maine, under section 3(a)(3) of the Bank Holding
Company Act ("Act"), to acquire the successor by
merger to Bank of Hartford, Inc., Hartford, Connecticut ("Bank").
In this Statement, the Board sets forth its reasons
for approving this application.
First
NH
One
Banks,
Bancorp,
Inc.,
7 0 F E D E R A L RESERVE B U L L E T I N 3 5 9 ( 1 9 8 4 ) ;
6 9 F E D E R A L RESERVE B U L L E T I N 8 7 4 ( 1 9 8 3 ) .
3. A bank holding company's home state is that state in which the
operations of the bank holding company's banking subsidiaries were
principally conducted on July 1, 1966, or the date on which the
company became a bank holding company, whichever is later. Applicant's home state is Maine.
4. Connecticut's regional interstate banking statute defines states in
the New England region to include Maine, Massachusetts, New
Hampshire, Rhode Island and Vermont, in addition to Connecticut.
Conn. G ,n. Stat. Ann. § 36-552 (West 1986).
5. Conn. Gen. Stat. Ann. § 36-553 (West 1986).
136
Federal Reserve Bulletin • February 1987
a bank holding company located in any state.6 In this
regard, the Connecticut Banking Commissioner has
informed the Board that the proposed transaction
appears to satisfy the requirements of Connecticut law
regarding regional interstate banking acquisitions in
Connecticut.
Based on the foregoing, the Board has determined
that the proposed acquisition is specifically authorized
by the statute laws of Connecticut and is thus permissible under the Douglas Amendment, subject to Applicant's obtaining the approval of the Connecticut Banking Commissioner pursuant to Conn. Gen. Stat. Ann.
§ 36-553. The Board's Order is specifically conditioned upon satisfaction of the state regulatory approval requirement.
Applicant is the second largest depository institution among commercial banks and thrift institutions in
Maine, with deposits of approximately $935 million,
representing 10.7 percent of the total deposits in
commercial banks and thrift institutions in the state.
Bank is the 42d largest depository institution among
commercial banks and thrift institutions in Connecticut, with deposits of approximately $209 million, representing 0.4 percent of the total deposits in commercial banks and thrift institutions in the state.7
Since Applicant's subsidiary bank does not operate
in Connecticut, and Bank does not operate in Maine,
consummation of the proposed acquisition would have
no effect on existing competition in any Connecticut or
Maine market. In view of the existence of numerous
other potential entrants into each of the markets
served by Batnk or Applicant, the Board has concluded
that consummation of the proposed transaction would
not have any significant adverse effects on probable
future competition in any relevant market.
The financial and managerial resources and future
prospects of Applicant and its subsidiaries and Bank
are consistent with approval of the application. Considerations relating to the convenience and needs of
the communities to be served are also consistent with
approval.
The Board notes that this application involves the
acquisition of a bank that results from a conversion of
a nonfailing FSLIC-insured savings and loan association. The acquisition proposed here, however, does
not fall within the scope of the Board's policy and
rulings regarding acquisitions of thrift institutions under section 4 of the Act8 or the provisions of the GarnSt Germain Act regarding acquisitions of thrift institutions. The Garn-St Germain Act does not treat savings
6. Me. Rev. Stat. Ann. tit. 9-B, § 1013 sub. 2 (as amended,
February 7, 1984).
7. Banking data are as of December 31, 1985.
8 . D.H.
Baldwin
Company,
(1977).
6 3 F E D E R A L RESERVE B U L L E T I N 2 8 0
banks like Bank as "thrift institutions" subject to the
detailed provisions of that Act relating to acquisitions
of thrift institutions, but rather treats them as "banks"
under the Act, provided that they accept demand
deposits and engage in commercial lending, as Bank
does. Under this proposal, Applicant will acquire and
operate Bank as a "bank" subject to all the banking
standards of the Bank Holding Company Act, including the Douglas Amendment. As noted above, the
proposal is consistent with those banking standards.
The Board notes that the Federal Home Loan Bank
Board ("FHLBB") has promulgated a regulation that
requires prior FHLBB approval for transfers of assets
by insured institutions, whether by statutory conversion, merger, or consolidation.9 In addition, the
FHLBB has issued a letter to Bank stating that institutions, like Bank, that voluntarily terminate FSLIC
insurance of accounts must pay a final insurance
premium in an amount twice that of its last annual
premium pursuant to the National Housing Act,
12 U.S.C. § 1730.10
The Board expects that Applicant will comply with
all state and federal requirements necessary for consummation of the acquisition, and the Board's approval of this application under the Act is not intended to
preempt any such requirements.11 The Board has
previously stated that its approval of transactions
under section 3 of the Act does not relieve an applicant
or the bank involved of the responsibility to obtain
approval under other federal or state laws and regulations and does not shield an applicant from the consequences of violations of other laws.12
Based on the foregoing and other facts of record, the
Board has determined that the application should be
approved. Accordingly, the application is approved
for the reasons summarized above.
December 31, 1986
JAMES M C A F E E
Associate Secretary of the Board
[SEAL]
9. 12 C.F.R. § 563.22(b). The Board notes that the promulgation of
this FHLBB regulation has been challenged in litigation brought by
Barnett Banks of Florida against the FHLBB. United First Federal
Savings and Loan Association, et al., v. Federal Home Loan Bank
Board, No. 86-661-Civ-J-16 (Order denying Defendant's motion to
dismiss Plaintiff's complaint and granting Plaintiff's motion for preliminary injunction, M.D. Florida, Jacksonville Div., December 19,
1986). The FHLBB has appealed from the district court decision and
moved to expedite the appeal.
10. See Letter of September 22, 1986, from Julie L. Williams,
Deputy General Counsel, Federal Home Loan Bank Board, to
H. Langedon Bell, Jr., Chairman and President, The Bank of Hartford, Inc.
11. The Board may not approve an application that would result in
a violation of federal or state law. Whitney National Bank v. Bank of
New Orleans, 379 U.S. 411 (1964).
12. Crocker
National
Corporation,
TIN 66 (1979); Royal Trust Company,
18,415 (1972).
6 6 F E D E R A L RESERVE B U L L E -
37 Federal Register
18,414,
Legal Developments
SafraCorp
Miami, Florida
Order Approving Acquisition of a Bank
SafraCorp, Miami, Florida, a bank holding company
within the meaning of the Bank Holding Company Act
(12 U.S.C. § 1841 et seq.) ("Act") has applied for the
Board's approval under section 3(a)(3) of the Act
(12 U.S.C. § 1842(a)(3)) to acquire all of the voting
shares of Colonial Savings Bank, N.A., Ocala, Florida
("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act (51
Federal Register 37,237 (1986)). The time for filing
comments has expired and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)).
Applicant is the 18th largest commercial banking
organization in Florida, with total deposits of $169
million, representing less than one percent of the total
deposits in commercial banking organizations in the
state.1 Bank is among the smaller commercial banking
organizations in Florida, with total deposits of $14
million, also representing less than one percent of the
total deposits in commercial banking organizations in
the state. Consummation of this proposal would not
result in a significant increase in the concentration of
banking resources in Florida.
Bank operates in the Marion County banking market,2 a market where Applicant does not operate.
Based on all the facts of record, consummation of the
proposed transaction would not result in any significant adverse effects on existing or potential competition or increase the concentration of banking resources in any relevant area.
The financial and managerial resources and future
prospects of Applicant and its subsidiary banks and of
Bank are considered satisfactory and consistent with
approval. Considerations related to the convenience
and needs of the communities to be served also are
consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. This approval is subject to
Applicant's compliance with all state and federal requirements necessary for consummation of the acquisition. The transaction shall not be consummated
1. Banking data are as of December 31, 1985.
2. The Marion County banking market is approximated by Marion
County, Florida.
137
before the thirtieth calendar day following the effective
date of this Order or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or the Federal
Reserve Bank of Atlanta, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
December 23, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governor Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Orders Issued Under Section 4 of the Bank
Holding Company Act
BankEast Corporation
Manchester, New Hampshire
Order Approving the Acquisition of a Discount
Broker
BankEast Corporation, Manchester, New Hampshire,
a bank holding company within the meaning of the
Bank Holding Company Act ("Act"), 12 U.S.C.
§§ 1841-48, has applied for the Board's approval under section 4(c)(8) of the Act, 12 U.S.C. § 1843(c)(8),
and section 225.23 of the Board's Regulation Y,
12 C.F.R. § 225.23, to acquire all of the voting shares
of Royal/Grimm & Davis, Inc., New York, New York
("Company"), a discount broker. The Board has
previously determined that discount brokerage is
closely related to banking and permissible for bank
holding companies. 12 C.F.R. § 225.25(b)(15).
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published. 51 Federal Register 26,058 (1986). The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the public interest factors set forth in
section 4(c)(8) of the Act.
Applicant, with consolidated assets of $953 million,1
is the fourth largest commercial banking organization
in New Hampshire. Applicant's subsidiary banks have
deposits of $737 million, representing 9.1 percent of all
deposits in commercial banks in the state. In addition,
Applicant engages in mortgage lending, trust, and
other activities through nonbank subsidiaries.
1. All data are as of June 30, 1986.
138
Federal Reserve Bulletin • February 1987
Company, with assets of $399,070, provides discount brokerage services from a single office in New
York City. Under Applicant's proposal, Company's
brokerage activities would be limited to buying and
selling securities solely upon the order and for the
account of its customers, and would not include underwriting, dealing, investment advice, or research services.
The market for discount brokerage services is nationwide and unconcentrated. Because Applicant does
not currently provide such services, the proposed
acquisition would not eliminate any existing competition. The acquisition could make Company a stronger
competitor by enabling it to raise capital at a lower
cost and by giving it access to Applicant's marketing,
managerial, financial, and technical resources. In view
of the large number of prospective providers of discount brokerage services, the acquisition would have
no significant adverse effect on probable future competition. The Board accordingly concludes that competitive factors lend weight toward approval of the
application.
Company's president and chief executive officer,
Mr. Jay V. Grimm ("Protestant"), has protested the
proposed acquisition, asserting that it would violate
his contractual rights to manage Company and thus
expose Applicant to litigation and possible liability;
would cause Company to lose money and could result
in the loss of valuable employees and customers; and
would yield no offsetting public benefits. He also
asserts that Applicant has exercised control over Company without the prior approval required under section
4(c)(8) of the Act.
Having reviewed Protestant's arguments, the Board
concludes that they do not warrant denial of the
application. In light of the entire record, the Board
concludes that Applicant has the financial and managerial resources to handle any foreseeable problems
associated with the proposed acquisition or with Protestant's contractual claims. The Board also finds that
Applicant has not exercised control over Company.
Accordingly, the Board concludes that financial and
managerial considerations are consistent with approval of the application.2
There is no evidence of record indicating that the
proposed acquisition would result in conflicts of interest, undue concentration of resources, unsound banking practices, or other adverse effects.
2. Protestant's request for a formal hearing was untimely, having
been submitted more than two months after the close of the comment
period. See 12 C.F.R. § 262.3(e). Moreover, the parties have had
ample opportunity to present evidence and arguments in writing, and
to respond to one another's submissions. The Board has accordingly
denied Protestant's request for a formal hearing.
Based on the foregoing and other facts of record, the
Board concludes that the balance of the public interest
factors it is required to consider under section 4(c)(8)
favors approval of the application. Accordingly, the
application is hereby approved. This approval is subject to all of the conditions set forth in Regulation Y,
including those in sections 225.4(d) and 225.23(b),
12 C.F.R. §§ 225.4(d), 225.23(b), and to the Board's
authority to require such modification or termination
of the activities of a bank holding company or any of
its subsidiaries as the Board finds necessary to assure
compliance with, and to prevent evasions of, the
provisions and purposes of the Act and the Board's
regulations and orders issued thereunder.
The proposed acquisition shall not be consummated
later than three months after the effective date of this
Order unless that period is extended for good cause by
the Federal Reserve Bank of Boston, pursuant to
delegated authority, or by the Board.
By order of the Board of Governors, effective
December 23, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger and Heller. Abstaining from this action:
Governor Angell. Absent and not voting: Governor Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Bankers Trust New York Corporation
New York, New York
Order Approving Application to Engage in
Commercial Paper Placement to a Limited Extent
Bankers Trust New York Corporation, New York,
New York, a bank holding company within the meaning of the Bank Holding Company Act, 12 U.S.C.
§ 1841 et seq. ("BHC Act"), has applied pursuant to
section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.21(a) of the Board's
Regulation Y (12 C.F.R. 225.21(a)) to act as agent and
adviser to issuers of commercial paper in connection
with the placement of such commercial paper with
institutional purchasers. The activity will be conducted through BT Commercial Corporation, Chicago,
Illinois ("Company"), a wholly owned commercial
finance subsidiary of Applicant's direct subsidiary,
B.T. Leasing Services, Inc., New York, New York.
Pursuant to prior Board approval under section
4(c)(8) of the BHC Act, Company engages in making
and servicing loans and leasing, activities that are
permissible for bank holding companies under sections
225.25(b)(1) and 225.25(b)(5) of Regulation Y
Legal Developments
(12 C.F.R. 225.25(b)(1) and (5)). Company would provide the proposed commercial paper placement activity in addition to the previously approved commercial
finance activities, with Company serving customers
through offices in New York, Chicago and Los Angeles.
Applicant, with consolidated assets of $50.7 billion,1
is the sixth largest banking organization in New York.
It operates two subsidiary banks and engages in a
broad range of permissible nonbanking activities in the
United States and abroad.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been duly published, 50 Federal Register
25,465 (1985). The majority of the written comments
were in favor of the proposals. The Board received
three written comments opposing the application from
the Securities Industry Association ("SIA"), a trade
association of the investment banking industry, the
Investment Company Institute ("ICI"), a trade association of the mutual fund industry, and Merrill Lynch
Money Markets, Inc., a dealer in commercial paper,
who contended that the activity would violate the
Glass-Steagall Act.
Under this proposal, Company would assume the
commercial paper placement activity currently conducted by Applicant's subsidiary, Bankers Trust Company ("Bankers Trust"), a state member bank. Thus,
Company would enter into agreements with corporate
issuers of commercial paper to act as the issuer's agent
in facilitating the placement of the issuer's commercial
paper in minimum denominations of $250,000 with a
limited number of institutions, such as banks, insurance companies, mutual funds, and nonfinancial businesses.2 Company may also advise the issuers of
commercial paper with respect to the rates and maturities of the proposed issue that are likely to be accepted
in the market.
Because Company would be affiliated through common ownership with a member bank,3 the Board must
determine whether, upon consummation of the proposal, Company would be "engaged principally" in
the "issue, flotation, underwriting, public sale, or
1. Asset data are as of September 30, 1986.
2. Commercial paper refers to prime quality, short-term promissory
notes (maturities not exceeding nine months) issued or backed by
large financial, industrial, and commercial companies to finance
seasonal or other current needs. Commercial paper is placed with a
limited number of large institutions and is not offered to the general
public. Issuers placing commercial paper in the recognized market do
not register the paper pursuant to the Securities Act of 1933, relying
on the exemption in section 3(a)(3) of that Act. 15 U.S.C. 377c(a)(3).
3. Under the Glass-Steagall Act, companies are affiliated if, as
relevant here, more than 50 percent of their voting shares is held by
the same shareholder. 12 U.S.C. § 221a(b).
139
distribution" of securities within the meaning of section 20 of the Banking Act of 1933 (the "Glass-Steagall
Act"). 4 If so, the Board may not approve the proposal.5 In addition, the Board must determine whether the
proposed activity is so closely related to banking as to
be a proper incident thereto within the meaning of
section 4(c)(8) of the BHC Act and is, on this basis, a
permissible activity for bank holding companies.
Part I. Glass-Steagall Act Analysis
A. Commercial Paper Placement
Covered By Section 20
Is Not
Applicant contends that Company would not be engaged in underwriting, distributing or any other activity covered by section 20 of the Glass-Steagall Act on
the basis of the Board's conclusions in its 1985 ruling
with respect to the commercial paper placement activities of Bankers Trust. Statement Concerning Applicability of the Glass-Steagall Act to the Commercial
Paper Placement Activities of Bankers Trust Company
(June 4, 1985) ("Statement"). In the Statement, the
Board ruled that the commercial paper placement
activity as conducted by the bank as an agent for
customers is a permissible securities activity and does
not constitute the "underwriting," "distribution" or
impermissible "selling" of such securities for purposes of section 16 or 21 of the Glass-Steagall Act
(12 U.S.C. §§ 24 Seventh and 378(a)(1)), the provisions of the Act applying directly to banks.6
In the Board's view, Company would not be engaged in underwriting, distributing or the public sale of
4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) provides
that
. . . no member bank shall be affiliated . . . with any . . . organization
engaged principally in the issue, flotation, underwriting, public sale, or
distribution at wholesale or retail or through syndicate participation of
stocks, bonds, debentures, notes, or other securities. . . .
In Securities Industry Ass'n. v. Board of Governors of the Federal
Reserve System, 468 U.S. 137 (1984) (hereinafter "Bankers Trust"),
the Court held that commercial paper is a security for purposes of
sections 16 and 21 of the Glass-Steagall Act (12 U.S.C. §§ 24 Seventh
and 378), which taken together prohibit banks, such as Bankers Trust,
from underwriting any issue of securities or stock, subject to certain
exceptions for U.S. government and agency securities, state and
municipal general obligations, and other specified securities. On the
basis of this decision, the Board concludes that commercial paper is a
security for purposes of section 20.
5. See Securities Industry Ass'n v. Board of Governors of the
Federal Reserve System, 468 U.S. 207, 216 (1984) (hereinafter
"Schwab").
6. In its Statement, the Board concluded that so long as the bank
acted only as agent for the issuer and did not assume the risk of a
principal by making commercial paper-related loans, letters of credit
or other credit facilities, it would be engaged in selling activity as
agent, which does not violate sections 16 and 21 of the Glass-Steagall
Act and is authorized for member banks. In addition, the Board
concluded that the bank would not be "underwriting" or "distributing" securities because there would be no public ofiFering of commercial paper.
140
Federal Reserve Bulletin • February 1987
securities for purposes of section 20 for the same
reasons the Board concluded in its Statement that
Bankers Trust would not be engaged in these types of
activities under sections 16 and 21, so long as Company's activity conforms to that approved for Bankers
Trust under the Board's Statement. As the Supreme
Court's opinions interpreting the Glass-Steagall Act
indicate, where a particular activity is found not to be
the type of activity prohibited to banks by sections 16
and 21, it should not be viewed as the kind of activity
described in section 20.7
The protestants have disputed the Board's conclusions concerning the permissibility of this activity for a
member bank under the Glass-Steagall Act, and the
SI A has also challenged the Board's Statement in
court. On December 23, 1986, the United States Court
of Appeals for the District of Columbia Circuit upheld
the Board's determination that Bankers Trust's commercial paper placement activity does not constitute
"underwriting" or the impermissible "selling" of
commercial paper under sections 16 and 21 of the
Glass-Steagall Act. Securities Industry Ass'n v. Board
of Governors of the Federal Reserve System, Nos. 865089 et al. ("Bankers Trust I f ) .
Applicant argues, however, that even if the proposed commercial paper placement activity is viewed
as "underwriting" or similar activity covered by section 20 of the Glass-Steagall Act, the proposal would
nevertheless comply with section 20 because Company would not be "engaged principally" in such activity. The Board believes it should respond to this
alternative basis for approval of the proposal advanced
by Applicant.
The Board also believes it is appropriate to act on
this application at this time because it does not involve
the same complex factual and legal issues that arise
from the separate applications of Applicant, Citicorp,
and J.P. Morgan & Co. Incorporated to underwrite
commercial paper, mortgage-backed securities, municipal revenue bonds and consumer-related receivables in an affiliate that also underwrites U.S. government securities. These applications are substantially
different from the Applicant's commercial lending
affiliate proposal because the proposed underwriting
would be conducted in an affiliate predominantly engaged in underwriting U.S. government securities and
because of issues concerning the effectiveness of the
sales volume limitations proposed in these applications.
7. Board of Governors of the Federal Reserve System v. Investment Company Institute, 450 U.S. 46, 60-61 n.26 (1981) ( " 7 C 7 I I " ) .
See also Schwab, 468 U.S. at 219.
The Board has ordered a hearing on these applications and the legal and factual issues that prompted
this decision are explained in a statement issued by the
Board today. Press Release, dated December 24, 1986.
This Order, therefore, examines the question of
whether Applicant's commercial paper placement proposal is consistent with the "engaged principally"
provisions of section 20 and the Bank Holding Company Act.
B. The Term "Engaged Principally"
20 Denotes Substantial
Activity
in Section
Applicant's Contentions
Applicant contends that, even if Company's commercial paper placement activities were deemed to constitute underwriting under section 20, Company would
not be "engaged principally" in underwriting securities under section 20 because its placement activity
would represent only a minor aspect of Company's
overall business activity. To assure that the activity
will be relatively insubstantial, Applicant has committed that Company will limit its commercial paper
placement activity so that its gross revenue (fee and
similar income) from the activity will not in any year
exceed 5 percent of Company's gross revenues.
The Applicant and other commenters supporting
approval of the application contend that under the
"engaged principally" test in section 20, Company
may underwrite commercial paper so long as this
activity does not constitute more than 50 percent of its
total business activity or represent its single largest
business activity.8 On this basis and subject to the
proposed limitation on its commercial paper activity,
Applicant contends Company would be "engaged
principally" in commercial lending activities and,
therefore, Company could not by definition be engaged principally in underwriting securities in violation of section 20 of the Glass-Steagall Act. Applicant
further claims that, even under the narrowest reading
of "principally" as denoting any substantial activity,
Company would not be engaged principally in underwriting securities under the 5 percent gross revenue
limitation proposed in its application.
8. Applicant and some of the commenters rely on a dictionary
definition of the term "principally" to mean the single largest activity
and statements in the U.S. Supreme Court decision in Board of
Governors of the Federal Reserve System v. Agnew, 329 U.S. 441,
446, 448 (1947), concerning section 32 of the Glass-Steagall Act,
which prohibits member banks and companies "primarily engaged" in
the underwriting or public sale of securities from having a common
officer, director or employee. 12 U.S.C. § 78.
Legal Developments
Protestants' Comments
The protestants claim that Applicant's view of the
term "principally" would vitiate the central purpose
of the Glass-Steagall Act by allowing member banks
to reestablish "security affiliates" that could rival the
largest investment banking firms. For this reason, the
protestants contend that the term "principally" must
be interpreted consistent with Congressional intent to
denote any substantial, significant, regular or nonincidental activity, whether or not it is the largest
activity of the affiliate.
Protestants also contend that the proposed activity
is not closely related to banking under the BHC Act
and would result in substantial risk and conflicts of
interest not outweighed by public benefits.
Literal Terms and Structure of the Glass-Steagall
Act
In interpreting a statute, the Board must be guided by
the ordinary meaning of the words Congress chose to
express its intention and the underlying purpose of the
statute as evident in its structure and legislative history.9 In interpreting the term "engaged principally"
in section 20, the Board believes it important to note at
the outset that, while the overall objective of the
Glass-Steagall Act is to separate commercial and
investment banking,10 section 20 by its terms does not
require that this separation be complete. In contrast to
the flat prohibitions of sections 16 and 21 on securities
underwriting and dealing by banks (other than as
specifically authorized),11 section 20 prohibits underwriting and dealing activity by a member bank affiliate
only where the affiliate would be "engaged principally" in such activity. In other words, Congress has not
9. See, e.g., Steadman
v. S.E.C.,
450 U . S . 91, 97 (1981); Southeastern Community
College v. Davis, 442 U . S . 397, 405 (1979). See
also e.g., Bankers
Trust 468 U . S . at 149; Schwab,
468 U . S . at 217;
Agnew, 329 U . S . at 447.
10. See Bankers Trust, 468 U . S . at 147; ICIII,
450 U . S . at 6 1 - 6 2 ,
70, citing S. R e p . N o . 77, 73d C o n g . , 1st S e s s . 10 (1933);
Investment
Company Institute
v. Camp, 401 U . S . 617, 629 (1971) ( ' 7 C / / " ) .
11. S e c t i o n 16 p r o v i d e s :
The business of dealing in securities and stock by [a member bank] shall
be limited to purchasing and selling such securities and stock without
recourse, solely upon the order, and for the account of, customers, and in no
case for its own account, and [a member bank] shall not underwrite any issue
of securities or stock . . .
The limitations and restrictions herein contained as to dealing in, underwriting and purchasing for its own account, investments securities shall not
apply to obligations of the United States, or general obligations of any State
or any political subdivision thereof, or [other specified obligations].
141
abolished underwriting affiliates of member banks, but
has allowed such affiliates where their conduct of
underwriting activity would not represent a principal
line of business for the affiliate. S. Rep. No. 77, 73d
Cong., 1st Sess. 10 (1933).
As the Supreme Court has recognized, it is evident
in the terms and structure of the Glass-Steagall Act
that Congress intended to "treat banks separately
from their affiliates"12 and to apply a "significantly
less stringent" standard to affiliates than to banks
under the Act.13 Indeed, the Court has stated that
under the Glass-Steagall Act "a bank affiliate may
engage in activities that would be impermissible for the
bank itself."14
Thus, the Board's decision in this case does not turn
upon whether a member bank affiliate may engage in
section 20 activity. The statute by its terms plainly
authorizes such activity by member bank affiliates
where the affiliate is not "engaged principally" in the
activity. Rather, the Board must determine at what
level and by what measurement a member bank affiliate would be "engaged principally" in this activity.
Given the fact that section 20 plainly permits some
amount of otherwise impermissible securities underwriting activity, but that a fundamental purpose of the
Act as a whole is to separate securities affiliates as far
as possible from member banks, the Board believes,
for the reasons set out below, that the term "engaged
principally" in section 20 denotes an activity of the
affiliate that is substantial, even if the activity does not
represent more than 50 percent of the affiliate's total
business activity or its single largest or most important
activity.
While the term "engaged principally" may, as Applicant and others contend, mean that activity accounting for more than 50 percent of the firm's business or its single largest activity, the term may also
mean engaged "primarily" or "in a principal manner"
and refer to a number of different activities that are
12 U . S . C . § 24 S e v e n t h .
S e c t i o n 21 m a k e s it u n l a w f u l —
For any person . . . engaged in the business of issuing, underwriting,
selling, or distributing . . . stocks, bonds, debentures, notes, or other
securities, to engage at the same time to any extent whatever in the business
of receiving deposits . . . Provided, That the provisions of this paragraph
shall not prohibit . . . banks . . . or other financial institutions . . . from
dealing in, underwriting, purchasing and selling investment securities, or
issuing securities, to the extent permitted to [member banks under section
16].
12 U . S . C . § 378(a)(1).
12. ICI II, 450 U . S . at 58 n.24.
13. Id. at 71 n.46 a n d 60 n.26.
14. Id. at 64. In t h e Agnew c a s e , t h e C o u r t a l s o r e c o g n i z e d t h a t t h e
Glass-Steagall Act does not mandate a complete separation between
m e m b e r b a n k s a n d u n d e r w r i t i n g firms. 329 U . S . at 447, 449.
142
Federal Reserve Bulletin • February 1987
"main," "leading," "important" or "outstanding."15
For example, Webster's 1933 dictionary—the version
available at the time the Glass-Steagall Act was enacted—states that the term "principal" may refer to a
number of the most considerable or important objects,
as in "the principal officers; the principal men; the
principal productions; the principal arguments." The
Board also notes that courts often use the term "principal" to denote a number of important or leading
objects, as in the "principal cities" of a nation.16
Moreover, the Supreme Court has held in the context of section 32 of the Glass-Steagall Act that the
term "primarily," which as noted can be a synonym
for "principally," denotes any substantial activity
even if not the most important activity. Agnew, 329
U.S. at 446.
In light of the two alternative meanings for the term
"principally," the decision as to the proper meaning of
that term in section 20 must, in the Board's judgment,
be made on the basis of legislative intent. This was the
rationale adopted by the Supreme Court in the Agnew
case in upholding, as "more consonant with the legislative purpose" of the Glass-Steagall Act, the Board's
decision that the term "primarily engaged" in section
32 of the Glass-Steagall Act must be given its alternative meaning as denoting a substantial, even if not the
largest, activity. 329 U.S. at 446-447. Given the
similarity in language of sections 20 and 32 and the fact
that they were enacted at the same time for the same
purpose and that "principally" and "primarily" can
be synonyms, the Board believes that these sections
15. Webster's New International Dictionary of the English Language 1706 (1933); Webster's New International Dictionary of the
English Language 1966 (2d ed. 1934), 1802; Webster's Third New
International Dictionary of the English Language 1802-03 (1981).
The Board finds no support in the accepted definition of the term
"principally" or, as discussed below, in prior Board rulings for
protestants' assertion that the term also denotes activity that is regular
or non-incidental, even if not substantial or important. See note 28,
below.
16. E.g., Marquette National Bank of Minneapolis v. First of
Omaha Service Corp., 439 U.S. 299, 315 n.29 (1978) ("the principal
cities along the Atlantic coast"); B. & O. R. Co. v. United States, 386
U.S. 372, 380 (1967) ("the principal cities [served by a railroad
system]"); Chicago & N.W. Ry. Co. v. Atchison, T. <& S. F. Ry. Co.,
387 U.S. 326, 340 (1967) ("eight principal Midwestern roads");
National Labor Relations Board v. Fruehauf Trailer Co., 301 U.S. 49,
53 (1937) ("principal cities of the country").
The fact that "principally" is used in other statutory or regulatory
contexts to denote the single largest activity {e.g., 12 U.S.C.
§ 1861(b)(7) and 12 C.F.R. 211.23(b) and 211.32 implementing 12
U.S.C. §§ 1841(h) and 1843(c)(14)(F)) is not dispositive under section
20. For example, the term is used in other regulatory contexts to
denote a number of main or important objects: e.g., 12 C.F.R.
347.4(d) ("principal locations"); 12 C.F.R. 335.312, Item 1(b)(3)
("principal services" and "principal markets"). In any event, these
interpretations pertain to statutes that were enacted for different
purposes than section 20 and the use of the alternative definition of
"principally" was determined to be appropriate in the context of
those statutes to carry out their different legislative purposes.
should be construed together and that the term "principally" in section 20 must, like the term "primarily"
in section 32, denote any substantial activity.17 In the
Schwab case, the Supreme Court also observed that,
because of the parallels between sections 20 and 32, a
long accepted interpretation of section 32 should apply
equally to section 20. 468 U.S. at 219.
Legislative History of Section 20
The Board believes that a construction of the term
"engaged principally" to denote any substantial line of
business activity is the only reasonable construction
that would carry out the legislative intent of the GlassSteagall Act to separate commercial and investment
banking in the country as far as possible18 and of
section 20 in particular "to provide for the divorce of
security affiliates from member banks." 19
In this regard, the Board is concerned that Applicant's interpretation would substantially negate the
purpose of section 20 by allowing affiliations between
large member banks and the largest investment banks
in the country, the precise situation at which the
Glass-Steagall Act was directed.20 As the Supreme
Court noted in the Agnew case, because investment
banking concerns engage in numerous activities other
than underwriting, an interpretation of "primarily en-
17. In prior rulings under the Glass-Steagall Act, the Board has
applied the terms "principally" and "primarily" to the same levels of
activity and treated the sections in a parallel fashion. See, e.g., 20
FEDERAL RESERVE BULLETIN 485-86 (1934); letter from the Board to
the Federal Reserve Bank of Kansas City (August 8, 1935) (concerning First Trust Company of Lincoln, Lincoln, Nebraska); 12 C.F.R.
218.104.
18. ICIII, 450 U.S. at 61-62; ICII 401 U.S. at 629-633; S. Rep.
No. 77, 73rd Cong., 1st Sess. 10 (1933). Accord: 75 Cong. Rec. 98889889 (1932) (statement of Sen. Glass); 15 Cong. Rec. 9905 (1932)
(statement of Sen. Walcott); 77 Cong. Rec. 3835 (1933) (statement of
Rep. Steagall); and 77 Cong. Rec. 3907 (1933) (statement of Rep.
Koppleman).
19. Operation of the National and Federal Reserve Banking Systems, 1932: Hearings on S. 4115 before the Senate Comm. on Banking
and Currency, 72d Cong., 1st Sess. 388 (1932) (statement of Governor
Eugene Meyer delivering Federal Reserve Board's Comments and
Recommendations on the Glass Bill (S. 4115)) (hereinafter "1932
Hearings").
20. On this basis, the Board in connection with the withdrawal of an
earlier proposal by Citicorp to underwrite corporate debt, municipal
revenue bonds, and mortgage-backed securities through a subsidiary
engaged predominantly in underwriting U.S. government and other
securities authorized under section 16 of the Glass-Steagall Act,
stated its preliminary view that the proposal was inconsistent with the
Glass-Steagall Act, where the proposal would have allowed the
applicant to underwrite a volume of securities equal to or greater than
that of the largest securities underwriters. Board Press Release, dated
February 27, 1985.
This conclusion is also supported by the court of appeals emphasis
in Bankers Trust II on the fact that Congress intended, through the
Glass-Steagall Act, to prevent member banks from establishing
affiliates "having a far-flung retail network to distribute securities to
the public." Slip op. at 27.
Legal Developments
gaged" as denoting the largest activity would mean
that section 32 of the Glass-Steagall Act "would apply
to no one." 2 ' This same reasoning applies to the
"engaged principally" standard of section 20.
The Board's interpretation of principally as denoting
any substantial line of business activity also seems
appropriate in light of the fact that the alternative
interpretation advanced by Applicant and other commenters would produce the anomalous result that a
member bank could be affiliated through common
stock ownership with an investment banking concern
that is "substantially" but not "predominantly" engaged in underwriting activities, but could not, under
section 32 of the Glass-Steagall Act, have an officer,
director or employee in common with the affiliate. In
other words, in such a situation, the Act would prohibit management interlocks because of the potential for
conflicts, unsound practices and other hazards that
Congress found could arise when commercial banking
and investment banking functions were combined, but
would permit the member bank and the securities
company to be commonly owned, share a common
name and pursue common policies dictated by the
corporate owner, a situation that raises a far greater
potential for the types of adverse effects that lead
Congress to enact section 20 of Glass-Steagall Act.
The Board has considered the reliance by some
commenters on the statement by Senator Bulkley in
urging deletion of the term "principally" from the
"engaged principally in the business" language in the
proposed section 21 of the Glass-Steagall Act, that "at
least some of the great investment houses are engaged
in so many forms of business that there is some doubt
as to whether the investment business is the principal
one."22 The Board does not, however, believe that the
phraseology of this remark should be given controlling
weight in interpreting the provisions of section 20.
Senator Bulkley was a major proponent of the GlassSteagall Act and was in accord with the other propo-
21. 329 U.S. at 447. The Board also notes that, under Applicant's
interpretation, section 20 would have failed to accomplish its basic
purpose of requiring the separation of member banks from their
security affiliates, because, at least in certain cases, the most important activity of some security affiliates in the early 1930s was not
underwriting and dealing, but operating as an investment trust or
holding the stock of affiliated companies. See W. Peach, The Security
Affiliates of Banks 85 (1941); Operation of the National and Federal
Reserve Banking Systems: Hearings Pursuant to S. Res. 71 Before a
Subcommittee of the Senate Comm. on Banking and Currency, 71st
Cong., 3d Sess. 1057-61 (1931). However, there is little doubt that
securities underwriting was a substantial activity of these security
affiliates.
22. 77 Cong. Rec. 4180 (1933). Section 21 prohibits a firm "engaged
in the business of issuing, underwriting, selling or distributing"
securities from accepting deposits. 12 U.S.C. § 378(a)(1). As originally
drafted, section 21 would have applied to firms "engaged principally
in the business o f ' issuing or underwriting securities. S. 1631, 73d
Cong., 1st Sess. (1933).
143
nents of the Act in believing that the legislation would
require a separation between member banks and their
security affiliates.23 As explained above, this objective
would not be accomplished if the term "engaged
principally" meant only the single largest activity of an
affiliate. The implications of interpreting the word
"principally" to mean the single largest activity would
be that—insofar as the Glass-Steagall Act is concerned—major banks could affiliate with major investment banks and large investment banks could acquire
commercial banks.24
Moreover, Senator Bulkley's amendment was to the
proposed section 21, which as originally drafted, covered a company "engaged principally in the business"
of underwriting or similar activity. Accordingly, his
remark concerning the use of "principally" in section
21 is not necessarily applicable to section 20, which
does not contain the words "engaged principally in the
business . . . ." 25
The Agnew Decision
As noted above, the Board believes the reasoning of
the Agnew case supports the Board's conclusion that
the term "principally" in section 20 means substantially because this interpretation is "more consonant with
the legislative purpose" of the Glass-Steagall Act and
section 20 in particular. 329 U.S. at 447.
In this regard, the Board has considered Applicant's
reliance on statements in the Agnew case suggesting
that through the use of different terminology in section
32 ("primarily" engaged) and section 20 ("principally" engaged), Congress meant to describe different
levels of underwriting activity in the two sections, and
that "primarily" denoted any substantial activity,
suggesting that "principally" meant the single most
important activity. 329 U.S. at 448. The Board notes,
however, that the meaning of the term "principally" in
section 20 was not before the Court in the Agnew case
because there was no affiliation through common
23. 75 Cong. Rec. 9909-13 (1932).
24. In any event, the statements of a single legislator are not
dispositive as to the meaning of a statute. Consumer Product Safety
Comm'n v. GTE Sylvania, 447 U.S. 102, 118 (1979).
25. For the same reasons, the statement by Senator Glass (77 Cong.
Rec. 3730) that section 21 would prohibit large "private banks, whose
chief business is an investment business, from receiving deposits,"
does not mean that the term principally in section 20 denotes the single
largest activity.
Certain commenters also note that Representative Bacon described
section 20 as applying to companies "chiefly engaged in the flotation,
underwriting, or sale of investment securities." 77 Cong. Rec. 3954
(1933). However, "chiefly" like "principally" may refer to more than
one leading activity. There is no evidence that Representative Bacon
intended chiefly to be limited to the single largest activity, since he,
like Senator Bulkley, was a proponent of the separation of security
affiliates from member banks. Id.
144
Federal Reserve Bulletin • February 1987
stock ownership between Eastman, Dillon & Co., the
underwriter in that case, and the member bank involved. Thus, the Agnew case does not as a legal
matter compel a finding that "principally" in section
20 means the single most important activity, particularly in view of the broad inconsistency of such an
interpretation with the purpose of section 20 of the
Glass-Steagall Act.
Moreover, there is nothing in the legislative history
of the Glass-Steagall Act suggesting that Congress
meant to describe different levels of underwriting
activity in sections 20 and 32. If anything, the legislative history of section 20 indicates that section 20 was
intended to be more rigorous than section 32, which
was described as "ineffective" in many cases to
achieve the Congressional goal of separating commercial and investment banking and "capable of easy
evasion."26 Further, as noted, common sense would
suggest that a stricter standard for underwriting should
be applied in the case of affiliations through common
stock ownership than in the case of interlocking relationships between otherwise unaffiliated companies.
Prior Board Interpretations
The Board notes that the Applicant's interpretation of
section 20 is also inconsistent with the Board's prior
interpretations, in which the Board has viewed the
engaged principally test as calling on it to weigh the
substantiality of the securities activity even though the
activity in question is not the single largest activity of
the firm. On this basis, the Board has long permitted
bank holding company subsidiaries affiliated with
member banks to issue securities—an activity described in section 20—so long as the issuing activity
did not become frequent and in substantial amounts27
or "necessary to permit maintenance of the holding
company's activities without substantial contraction"
or an "integral part of [the holding company's] operations."28 The Board has also allowed bank holding
26. 1932 Hearings at 387.
27. 12 C.F.R. 218.104(b). See also 12 C.F.R. 225.125(c).
28. 12 C.F.R. 250.221(d). Protestants' reliance on these Board
rulings for the proposition that any frequent or recurring underwriting
activity is covered by section 20 regardless of whether the activity is
important or substantial is misplaced. In these cases, the Board held—
consistent with its decision in this case—that the underwriting or
issuing activity must not only be frequent but must also be substantial
relative to the affiliate's total business activity.
In the case of the Board's closed-end mutual fund interpretation
(12 C.F.R. 225.125(c)), the Board noted that a closed-end fund does
not, after the initial distribution, obtain a substantial or material
portion of its capital structure from issuing securities, as opposed to
an open-end fund which must continually issue securities to maintain
its capital and prevent shrinkage of its assets. ICIII, 450 U.S. at 51,
60-61 n.26. If the fund, however, issued securities frequently, it would
be obtaining a major portion of its capital and could be engaged
principally within the context of prior Board interpretations of section
20.
company consumer finance subsidiaries affiliated with
member banks to issue thrift note securities that did
not exceed 25 percent of the issuer's total consolidated
assets on the basis that the activity would not be "a
principal activity" of the company.29
Subtle Hazards Implicated by the Glass-Steagall Act
Finally, the Board believes that constraining the level
of otherwise impermissible securities activity to the
point where it represents only an insubstantial line of
activity for the affiliate would minimize the potential
for conflicts of interest and the other so-called "subtle
hazards" that Congress concluded are raised when
investment and commercial banking functions are
combined.30 This is consistent in the Board's view
with the Congressional intent underlying section 20
that an insubstantial quantitative level of activity that
is not conducted within a bank but by an affiliate of a
bank is acceptable from the point of view of the safety
and soundness of the bank and the interests of its
depositors.
On the other hand, the interpretation advanced by
the Applicant and certain commenters permitting a
substantial amount of possibly speculative and hazardous securities activity, so long as it is not the single
largest activity, would not necessarily lead to a reduction in the potential for subtle hazards. For example,
the potential for conflicts and damage to a bank's
reputation would not appear to be reduced simply
because the affiliate's underwriting activity constitutes
49 percent of its total activity rather than 51 percent.
The fact that, under the Board's interpretation, the
potential for "subtle hazards" may continue to exist,
albeit at a minimized level, even where underwriting
activity is not substantial does not, however, alter the
clear Congressional decision to allow some limited
level of underwriting by member bank affiliates. As the
Supreme Court recognized in Agnew, even though the
potential for conflicts and other hazards may exist
29. Letters from the Board to Philadelphia National Corporation,
Centran Corporation and Virginia National Bankshares (September 9,
1974). See also Financial Services Corporation of the Midwest, 63
FEDERAL RESERVE BULLETIN 948 (1977); and letter f r o m the Board t o
the SIA (December 27, 1977) (concerning a $25 million notes issue by
Citicorp).
The Board's determination to permit a member bank affiliate to
obtain 25 percent of its funding through issuance of securities does not
constitute a test that would allow a company to provide underwriting
services to third parties up to 25 percent of total activity. In the thrift
note cases, the companies issued their own notes as an activity
incidental to their main consumer finance business and therefore a
finding that they were not "engaged principally" in securities activity
was consistent with the terms and purposes of section 20. Moreover,
as a share of total business, thrift note issuance would have been
considerably less than 25 percent.
30. See ICI I, 401 U.S. at 629-638; ICI II, 450 U.S. at 66-67;
Schwab, 468 U.S. at 220-221; Bankers Trust, 468 U.S. at 145-148.
Legal Developments
whatever proportion of the firm's business derives
from underwriting, the Glass-Steagall Act does not by
its terms establish a complete barrier between banks
and underwriting firms. 329 U.S. at 447.
In any event, the potential for these subtle hazards
and other conflicts of interest and unsound banking
practices that Congress identified when commercial
banking and investment banking are combined would
not be present to any significant degree under the
limitations described in Part II of this Order for the
conduct of the activity under the proper incident to
banking standard of section 4(c)(8) of the BHC Act. As
the Board has previously noted, the Supreme Court in
ICI II, 450 U.S. at 62, 67, explicitly recognized that
where a particular activity is permissible under the
terms of the Act, the Board may rely upon restrictions
to insure that the activity is insulated from the subtle
hazards associated with investment banking.31 The
court of appeals in Bankers Trust II, also recognized
that the Board may examine the realities of a particular
situation, including representations by an applicant as
to the manner in which an activity will be conducted,
in determining whether the potential for conflicts of
interest and other subtle hazards are present in a
particular proposal. Slip op. at 30.
C. Appropriate
Principally"
Measure of ' 'Engaged
Having determined that the "engaged principally"
standard of section 20 denotes any substantial activity
by a member bank affiliate, the Board must determine
whether under the limitations proposed by Applicant,
Company's proposed commercial placement activity,
assuming that it constitutes underwriting, would be
substantial.
Applicant has suggested that Company would not be
"engaged principally" in underwriting activity based
on a gross revenue test, i.e., the annual gross revenue
from its commercial placement activity will not exceed
5 percent of its total gross revenues, which otherwise
will be derived from commercial lending operations.
Applicant also notes that the amount of Company's
assets devoted to the commercial paper activity will be
"virtually nil" and has projected that commercial
paper activity would not be large, accounting for less
31. National Westminster Bank PLC, 72 FEDERAL RESERVE BULLETIN 584, 595 (1986). Moreover, reliance on these restrictions does
not constitute the kind of regulatory approach the Supreme Court has
disfavored in construction of the Glass-Steagall Act. Bankers Trust,
468 U.S. at 149-154. In that case, the Court indicated that an agency
may not rely on regulatory limitations to overcome the explicit
language of the Glass-Steagall Act. Here, as noted, the Glass-Steagall
Act explicitly permits some level of otherwise impermissible underwriting activity for member bank affiliates.
145
than 5 percent of the average outstanding volume for
all dealer-placed commercial paper.
The Board believes that the gross revenue a member
bank affiliate derives from commercial paper activity
relative to its total gross revenue would be an appropriate measure of "engaged principally," when coupled with the affiliate's overall share of the market for
the particular type of security underwritten. This is
consistent with the Board's practice under the "primarily engaged" standard of section 32 of the GlassSteagall Act, which gives controlling weight to the
revenues derived by the company from underwriting
activity relative to its total business revenues and the
significance of the organization's presence in the market for the particular activity.32
The Board believes that revenue is an appropriate
test to determine whether a subsidiary is "principally
engaged" because it is an objective and meaningful
measure of the importance of the activity to the
enterprise as a whole and often reflects the level of risk
involved in the activity, a major consideration under
the Glass-Steagall Act.33 In addition, a gross revenue
test avoids the potential for manipulation present in a
test based solely or predominantly on sales volume.
The sales volume of an affiliate, particularly of a
government securities subsidiary, could be increased
through churning of the affiliate's dealing activity in
U.S. government and other authorized securities in
order to create a larger base against which the section
20 securities activity would not appear to be substantial. The Board has ordered a hearing to take evidence
on these questions in connection with the underwriting
applications by Applicant, Citicorp and J.P. Morgan &
Co., which propose to use sales volume to measure
"engaged principally" status under section 20.34
In addition, in the Board's judgment, the fact that an
affiliate would be a relatively substantial force in a
particular securities market would be a factor suggesting that the affiliate is "engaged principally" in underwriting securities. Thus, the Board has consistently
taken into account a firm's market share in decisions
under section 32 the Glass-Steagall Act.
32. Letter from the Board to the Federal Reserve Banks (August
11, 1958), reprinted in F.R.R.S. 1 3-895.
1
33. The Board notes that the protestant SI A is of the view that
gross revenue (as well as assets devoted to the activity), not sales
volume, is the appropriate measure of an affiliate's section 20 activities on the basis that revenue is a better indicator of the risk involved
in securities activities. Protestant Merrill Lynch claims that to avoid
manipulation, net, not gross, revenues are the appropriate standard.
However, a test based on net revenues is itself subject to manipulation, since by allowing its costs to rise, an affiliate could reduce its net
revenue but the volume and gross revenues from its securities
operations would not necessarily decrease and could even increase.
34. Board Press Release, dated December 24, 1986.
146
Federal Reserve Bulletin • February 1987
The Board also believes that a market share test
could provide a useful and objective proxy for volume,
which the Board believes is an important factor to be
taken into account under the principally engaged test
of section 20. Unlike the sales volume test, the market
share test would not be subject to manipulation, but
would provide for consideration of the volume of
business activity of the affiliate.
In the Board's view, where Company would not be
engaged in a general securities or investment banking
business and where its gross revenue from commercial
paper activities in any one year would constitute less
than 5 percent of its total gross revenue and the
volume of commercial paper outstanding at any one
time placed by Company represents less than 5 percent of the average amount of dealer-placed commercial paper outstanding during the previous four calendar quarters, Company would not be "engaged
principally" in underwriting securities within the
meaning of section 20. The conduct of the commercial
paper placement activity at these less than 5 percent
levels is consistent with the Board's past practice for
many years under the "primarily engaged" standard
of section 32,35 and would, in the Board's judgment, be
within the Congressional intent underlying section 20
to allow member bank affiliates to engage in underwriting activities at levels that are not substantial and thus
minimize problems of safety or soundness or risk for
affiliated member banks.
The Board recognizes that its past decisions have
permitted somewhat higher levels of activity as consistent with the "primarily engaged" test under section 32. Accordingly, the Board does not determine
definitively in this case at what quantitative level of
activity a company would be "engaged principally" in
section 20 activity or whether this level should be the
same in all cases.
In its evaluation of this case, the Board has carefully
considered the fact that, in connection with the transfer of the commercial paper placement activity to
Company, Applicant will also transfer to Company a
portion of the commercial finance activity of Bankers
Trust. As indicated, Company is currently engaged in
commercial finance pursuant to approval by the Board
under the BHC Act. Accordingly, although hardly a
welcome result from some perspectives, Applicant's
proposed transfer of a segment of its commercial
finance activities to Company is necessary in order to
meet the engaged principally test of section 20 and is
authorized under both the BHC Act and Board regulations. While the transfer could result in the deliberate
The National Courier guidelines are not the exclusive
basis for finding a proposed activity closely related to
banking (516 F.2d at 1237), and the Board may consider any other basis that may demonstrate that the
activity has a reasonable or close relationship to
banking. 49 Federal Register 806 (1984). The U.S.
Supreme Court stated in Schwab that the use of these
35. See letter, dated December 14, 1981, reprinted in F.R.R.S. 1
3-939.
36. See ICI II, 450 U.S. at 57 n.22; National Courier Ass' n v. Board
of Governors of the Federal Reserve System, 516 F.2d 1229, 1237
(D.C. Cir. 1975).
creation of a large base of permissible non-section 20
activity, the size of the securities activity that may be
conducted by the affiliate on this basis is limited by the
"engaged principally" provisions of the Glass-Steagall Act as interpreted by the Board. As previously
noted, these provisions involve the concept of a quantitative limitation on underwriting activity which is
embodied in the revenue and market share criteria for
establishing "substantiality" contained in this Order.
The Board wishes to stress that the latter criterion, in
particular, creates a limitation on underwriting activity
which is independent of the size of the affiliate that
might be established by purposeful transfer of activities from the bank to the holding company affiliate.
Part II. Bank Holding Company Act Analysis
In every application under section 4(c)(8) of the BHC
Act, the Board must find that the proposed activity is
"so closely related to banking . . . as to be a proper
incident thereto." This statutory standard requires
that two separate tests be met for an activity to be
permissible for a bank holding company. First, the
Board must determine that the activity is, as a general
matter, "closely related to banking." Second, the
Board must find in a particular case that the performance of the activity by the applicant bank holding
company may reasonably be expected to produce
public benefits that outweigh possible adverse effects.36
Based on guidelines established in the National
Courier decision, a particular activity may be found to
meet the "closely related to banking" test if it is
demonstrated that:
(1) banks generally have in fact provided the proposed activity;
(2) banks generally provide services that are operationally or functionally so similar to the proposed
activity so as to equip them particularly well to
provide the proposed activity; or
(3) banks generally provide services that are so
integrally related to the proposed activity as to
require their provision in a specialized form.
Legal Developments
factors by the Board in determining the closely-relatedness of an activity is reasonable and within the
Board's discretion. 468 U.S. at 210 n. 5.
A. Closely Related to Banking
Analysis
After carefully considering the facts of record, the
Board concludes that placing commercial paper with
institutional purchasers, as the agent of third party
issuers, is closely related to banking, because banks
provide services that are operationally and functionally so similar to the proposed services that banking
organizations are particularly well equipped to provide
the proposed services. As noted below, the proposed
activity is a natural extension of commercial lending
activities traditionally conducted by banks, involving
little additional risk or new conflicts of interest, and
potentially yielding significant public benefits in the
form of increased competition and convenience.37 On
this basis, the Board has urged the Congress to authorize bank holding companies to engage in a wider
range of activities than that proposed here—underwriting and distributing commercial paper as principals, underwriting certain other types of securities that
are very similar to obligations currently underwritten
by banks, i.e., municipal revenue bonds and mortgage
related securities, and sponsoring mutual funds. This
view is not held by the Board alone. The other federal
banking agencies as well as the U.S. Departments of
Treasury and Justice support the conduct of these
activities by bank holding companies.38
As noted above, the Board's June 1985 Statement
concludes that the proposed activity is lawful for
member banks and that determination has been upheld
by the court of appeals. Applicant's subsidiary bank,
Bankers Trust, and certain other banks have placed
commercial paper, in some cases using procedures
slightly different than those proposed here, since the
37. See, e.g., Statement of Chairman Volcker Before the SubComm. on Commerce, Consumer & Monetary Affairs of the House
Comm. on Government Operations (June 11, 1986), reprinted in 72
FEDERAL RESERVE BULLETIN 541, 549 (1986); Financial
late 1970's. Protestants argue that the lawfulness of
this activity has been continuously under challenge
and that there is little if any evidence that banks
traditionally acted on behalf of issuers in the commercial paper market.39 However, even if it were assumed
that banks historically have not and legally may not
engage in the proposed placement activity, the Board
nevertheless has the discretion to determine that this
activity is closely related to banking.40
Placing commercial paper as the agent of the issuer
is an activity that is similar in function to the traditional commercial banking function of arranging loan
participations or syndications with other banks and
institutional lenders. Although commercial paper technically is a security for purposes of the Glass-Steagall
Act, this kind of instrument has many of the characteristics of a traditional commercial loan.41 A commercial
loan in its traditional form represents a short-term
extension of credit to a business to finance working
capital needs. (E.g., United States v. Connecticut
Nat'I Bank, 418 U.S. 656, 665 (1974)). Because of its
short term, commercial paper is customarily held to
maturity—like a commercial loan. There is virtually no
secondary market. Because of its large denominations,
commercial paper is generally purchased only by
large, financially sophisticated institutions, such as
trust departments of banks, money market mutual
funds, insurance companies, and pension funds. As
the activity is proposed by Applicant, Company will
sell commercial paper only to these large institutions.
Thus, Company's role will be, in effect, that of arranging short-term commercial loans from the institutional
buyers of commercial paper to the issuers of the paper.
In arranging a loan participation or syndication, a
bank, serving as the lead bank, solicits other institutional lenders that may be interested in lending funds
to a borrowing firm. The lead bank furnishes financial
information concerning the borrower to the prospective lenders. In certain types of shared loan arrangements, i.e., syndications, the lead bank sells a note
issued by the borrower to the participating lenders.
The lead bank ordinarily receives a fee from the
borrower for its services in arranging the participation
or syndication, and this reimbursement is contingent
Restructur-
ing: The Road Ahead: Hearings on H.R. 5342, 4506 and 3537 Before
the Subcomm. on Telecommunications,
Consumer Protection, and
Finance of the House Comm. on Energy and Commerce, 98th Cong.,
2d Sess. 91 (1984) (statement by Paul A. Volcker, Chairman, Board of
Governors of the Federal Reserve System), reprinted in 70 FEDERAL
RESERVE BULLETIN 312, 316 (1984); S. Rep. No. 560, 98th Cong., 2d
Sess. 15-16 (1984).
38. Competitive Equity in the Financial Services Industry: Hearings on S.2181 Before the Senate Comm. on Banking, Housing, and
Urban Affairs, 98th Cong., 2d Sess. 1221, 1274, 1550, 1714 (1984)
(Statements of C. Todd Conover, Comptroller of the Currency,
William M. Isaac, Chairman, F.D.I.C., Douglas H. Ginsburg, Deputy
Assistant Attorney General, U.S. Department of Justice, and Donald
T. Regan, Secretary of the Treasury, respectively).
147
39. See Bankers Trust, 468 U.S. at 160.
40. ICIII, 450 U.S. at 64 ("In both the Glass-Steagall Act itself and
in the [BHC] Act, Congress indicated that a bank affiliate may engage
in activities that would be impermissible for the bank itself.").
41. In Bankers Trust, the Supreme Court found that commercial
paper fell within the literal terminology of the Act ("notes, or other
securities"), but did not directly dispute the Board's determination
that commercial paper has the functional characteristics of a commercial loan. 468 U.S. at 150-59.
148
Federal Reserve Bulletin • February 1987
on the lead bank's successful completion of the arrangement function.42
Accordingly, the Board concludes that the proposed
commercial paper placement activity is so functionally
and operationally similar to the role of a bank that
arranges a loan participation or syndication that banking organizations are particularly well suited to perform the commercial paper placement function.43
that market. Moreover, the establishment of this activity in a holding company subsidiary will allow applicant to provide greater convenience to customers of
the service and to offer the service more efficiently on
a nationwide scale. The Board considers these two
factors—increased competition and more convenient
service to investors and borrowers—to be substantial
and important public benefits.
B. Proper Incident to Banking
Adverse Effects
Analysis
In order to approve an application to engage in a
nonbanking activity under section 4(c)(8), the Board
must also determine that a proposed activity is a
"proper incident" to banking by determining whether
the performance of the activity by the applicant bank
holding company may reasonably be expected to produce public benefits, such as greater convenience,
increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking
practices. 12 U.S.C. § 1843(c)(8). Based upon the
facts of record and for the reasons and subject to the
limitations set out below, the Board finds that consummation of this proposal may reasonably be expected to
result in public benefits that outweigh possible adverse
effects.
Public Benefits
The Board believes that consummation of this proposal will produce significant benefits to the public in the
form of increased competition and greater convenience and efficiency. Company will offer the proposed commercial paper placement service on a nationwide basis. In light of the fact that currently the
commercial paper market is dominated by a small
number of dealers, the expansion of Applicant's commercial paper activities can only foster competition in
42. E.g., Note, Loan Participation Agreements as Securities: Judicial Interpretations of the Securities Act of 1933 and the Securities
Exchange Act of 1934, 24 Wm. & Mary L. Rev. 295, 296-297 (1983);
Pollock, Notes Issued in Syndicated Loans—A New Test to Define
Securities, 32 Bus. Law. 537, 538 (1977); Comment, International
Loan Syndication, the Securities Acts, and the Duties of a Lead Bank,
64 Va. L. Rev. 897, 899-900 (1978).
43. For many years, banks have also acted as agents on behalf of
issuers of long-term debt and equity securities in soliciting a limited
number of institutions to purchase the securities in private placement
transactions. See Federal Reserve Board Staff, Commercial Bank
Private Placement Activities (1977); Comptroller of the Currency,
Federal Deposit Insurance Corporation, Federal Reserve Board,
Commercial Bank Private Placement Activities (1978). These private
placement operations of banks regarding various other types of
securities are clearly very close in function to the proposed commercial paper placement activities.
After a review of the application and other facts of
record the Board finds no evidence that Applicant's
conduct of the activity through Company, acting solely as the agent for issuers, is likely to result in any
significant adverse effects under the framework for
conducting this activity proposed by Bankers Trust
and approved in this Order.
The Board's Statement concluded that placing commercial paper as the agent of the issuer within the
terms of that Statement would not give rise to any
significant conflicts of interest and other hazards the
Glass-Steagall Act was enacted to eliminate. In its
recent opinion the court of appeals affirmed this determination, with one exception that, as explained below,
is not material to this application.44
In addition, the Board believes that the consideration of potential hazards that has been employed in
analyzing the legality of a particular activity conducted
directly by a bank is less controlling where, as here,
the same activity would be performed by an affiliate of
the bank. As explained above, section 20 of the GlassSteagall Act by its terms allows member bank affiliates
to engage, to a limited extent, in general securities
underwriting and distributing, activities that clearly
involve the promotional incentive and subtle hazards
Congress associated with investment banking activity.
In any event, a proposal by a bank holding company
to engage in securities activities that is consistent with
section 20 must also comply with the public benefits
test of section 4(c)(8); the expected benefits to the
public from the proposal must outweigh likely adverse
effects. Moreover, unlike the Glass-Steagall Act, the
BHC Act authorizes the Board to impose conditions
on a proposal to assure the specific adverse effects do
not result.
Insulation of Proposed Activities from Affiliated
Banks. At the outset, the Board notes that a great
many of the adverse effects it is charged with considering under the proper incident to banking test of section
4(c)(8), like unsound banking practices and conflicts of
interest, relate to potential damage to the holding
44. Bankers Trust II, slip op. at 29-34.
Legal Developments
company's subsidiary bank that might result from the
proposed nonbanking activity. The Board has previously indicated that although a bank cannot be completely insulated from the fortunes of an affiliated
nonbanking subsidiary, the greater the extent to which
the nonbanking activity of a nonbank subsidiary of a
holding company is insulated, both structurally and
operationally, from the holding company's subsidiary
bank, the less likely it is that these kinds of adverse
effects will result from the conduct of the nonbanking
activity.45
While the Board has found that the proposed placement activity may be conducted directly by a bank
without danger of significant conflicts of interest,
unsound banking practices, or other abuses, the transfer of this activity to a separate subsidiary of Applicant
will negate further any possibility of adverse effects. In
particular, under the proposal made by Applicant, the
activity would be separated from the activities of
Applicant's subsidiary banks, both through separate
incorporation and through financial and operational
limitations specifically designed to ensure that the
proposed placement activity is insulated from the
subsidiary banks. For example, as explained below,
under section 23A of the Federal Reserve Act
(12 U.S.C. § 371c), transactions between the affiliated
banks and Company will be strictly limited, and under
Applicant's proposal Company will not have officers,
directors, or employees in common with Applicant's
subsidiary banks. Similarly, as explained in greater
detail below, Company's lending affiliates will be
restricted in extending credit to issuers of commercial
paper placed by Company and, significantly, these
affiliates will not purchase, as principal or fiduciary, or
recommend to customers the purchase of, commercial
paper placed by Company. The Board also requires
that Company's access to customer records of the
affiliated banks be limited.
Finally, although to some extent the potential for
conflicts of interest and other adverse effects exists in
connection with permissible loan participation and
private placement activities of member banks, there is
no evidence in recent experience or in the past that
these operations have produced conflicts of interest or
other abuses.46
Unsound Banking Practices. The Board has considered the extent to which the proposal would result in
unsound banking practices or excessive financial risk
to Applicant, Company, or Applicant's other subsid-
45. National Westminster Bank, PLC, 72 FEDERAL RESERVE BULLETIN a t 5 8 8 .
46. See Federal Reserve Board Staff Study, Commercial
Private Placement Activities 65 (1977).
Bank
149
iaries through Company's activity or through imprudent financial transactions with Company or made for
its benefit. In addition, the Board has considered
whether the public association and corporate linkages
between Company and Applicant's subsidiary banks
could lead to a loss of public confidence in the banks if
losses are sustained by Company or by persons dealing with Company. The Board is of the view that the
proposal as structured will not produce any unsound
banking practices, as discussed below.
Protestants first allege that Company could lose its
own funds as a result of the commercial paper placement activity. The Board finds, however, that the risk
of loss to Applicant or to Company as a result of this
proposal is not excessive or inconsistent with prudent
banking standards. As the activity is proposed by
Applicant, Company would not purchase or repurchase any commercial paper for its own account or
inventory unsold portions of a commercial paper issue
in connection with its proposed placement activity.
Since Company would act solely as agent, it would not
assume any credit or market risk with respect to the
paper it places.47
The Board also has determined that, contrary to
protestants' assertions, the proposed activities are not
likely to damage public confidence in Applicant's
subsidiary banks. First, damage to the reputation of
affiliated banks is most likely to occur if Company or
depositors of these banks suffer losses. As noted,
Company will not purchase commercial paper for its
own account. Moreover, Company would not advertise or offer commercial paper to the public generally,
but would place the paper in private transactions with
a limited number of institutions, only some of whom
may be depositors of Applicant's subsidiary banks.
In addition, under Applicant's proposal, its subsidiary banks will not purchase, for accounts managed or
advised by their trust departments, commercial paper
placed by Company or even recommend that a customer purchase such paper, and no affiliate of Company will purchase such commercial paper for an account for which the affiliate has investment discretion
or acts as investment adviser.48 Moreover, under this
proposal, commercial paper will be placed by Company, not by Applicant's subsidiary banks, so that commercial paper will be purchased not from the bank but
from Company, which is not a bank, and has no
depositors, and whose operations will be separated
47. Moreover, as explained below, neither Company nor its affiliates will make any loans that are the functional equivalent of purchasing the paper being placed.
48. Bankers Trust will execute orders for commercial paper placed
by Company only when specifically directed by the purchaser.
150
Federal Reserve Bulletin • February 1987
from the functions of Applicant's subsidiary banks.49
Thus, there is no reasonable likelihood that the reputation of Applicant's subsidiary banks will be damaged
by Company's activities or that the banks will be
associated or identified by the public with the success
or failure of specific obligations or issuers.
Conflicts of Interest. In determining whether the
proposed placement activities are a proper incident to
banking, the Board also has considered whether the
activities would result in conflicts of interest. Given
that the proposed activities would not be a significant
activity of Company, the fact that banks have engaged
in substantially similar activities for a number of years
without giving rise to significant conflicts, and the
limitations on the activity as proposed by Applicant,
the Board believes that any potential conflicts arising
from the proposal would not be significant.
In particular, the protestants allege that Company's
"salesman's interest" in the success of its commercial
paper placement activity may affect its affiliate banks'
ability to function as an impartial source of credit and
as a disinterested financial advisor to its corporate,
trust, correspondent, and other customers.50 First, the
protestants allege that Applicant's subsidiary banks
may be encouraged to make imprudent loans to finance the purchase of commercial paper placed by the
affiliate. However, because the yields on commercial
paper are generally lower than the rates charged for
loans by banks, purchase of commercial paper with
borrowed funds is unprofitable. Thus, the potential for
this kind of abuse as a result of this proposal is
negligible.
Protestants also assert that a related conflict might
also arise because Applicant's subsidiary banks may
not be objective in extending credit to issuers of the
commercial paper placed by Company. In conducting
this activity at present, Bankers Trust does not provide any letter of credit or other guarantee arrangement to support an issue of commercial paper placed
by the bank. Nor does Bankers Trust make loans to
issuers of commercial paper it places where the loans
are the functional equivalent of purchasing the paper
49. The court of appeals decision in Bankers Trust II stated that the
Supreme Court had rejected the argument that commercial paper
placement would not damage the reputation of the bank because
purchasers are financially sophisticated institutions. Slip op. at 32-33.
However, the Supreme Court's finding was made where bank depositors could purchase commercial paper "through their bank." Id. at 32.
In contrast, here the bank's affiliate, not the bank, is placing the
paper. Moreover, as was the case in the court of appeals GlassSteagall analysis in Bankers Trust II, the existence of a potential
unsound practice is not fatal to a proposal under section 4(c)(8), since
the likelihood of that adverse effect can be outweighed by the benefits
to the public expected from the proposal.
50. See generally 1CI 1 at 630-632; Bankers Trust, 468 U.S. at
145-47.
for its own account, since any credit it extends to the
issuer of paper being placed is under different terms, at
different times and for different purposes than the
terms and timing of the paper being placed.
Moreover, to insure that in practice funds borrowed
from Bankers Trust are not used to support commercial paper placed by the bank, the bank assures itself
that any advances by the bank to an issuer of commercial paper under any line of credit are not used to repay
paper placed by the bank or to cover any unsold
portion of a commercial paper issue placed by the
bank.51
Since under Applicant's proposal Company would
conduct its placement activity in a manner identical to
the procedures currently followed by Bankers Trust,
Company's operations and the lending operations of
Applicant's subsidiary banks and other lending subsidiaries will also be conducted within these limitations.
The Board also finds that there is no significant
potential for Applicant's subsidiary banks to make
unsound loans to issuers of commercial paper placed
by Company in an attempt to improve the issuer's
financial condition. The potential loss to the bank if
such loans are not repaid would greatly exceed the
very small commissions Company would receive for
its placement services, typically one-eighth of one
percent of the amount of paper placed, so that it is
unreasonable to expect the bank to make such loans.
In sum, Applicant and its affiliates will not use their
credit to support commercial paper placed by Company, and the danger of imprudent loans to commercial
paper issuers as a result of the application is not
significant.
Protestants also assert that Applicant's subsidiary
banks may be tempted to make imprudent extensions
of credit or other investments to support Company if it
encounters financial difficulties. This conflict is inherent in transactions between banks and their affiliates
generally and is addressed by section 23A of the
Federal Reserve Act. (12 U.S.C. § 371c). That provision limits extensions of credit by a bank to its
nonbank affiliates, as well as asset purchases from an
affiliate, to 10 percent of the bank's capital and requires that any extensions of credit be well collateralized (e.g., 110 percent of the extension of credit if the
collateral is composed of revenue bonds). Section 23A
also prohibits a bank from purchasing low quality
assets from an affiliate or accepting them as collateral
for loans to an affiliate. In addition, the likelihood that
51. It is clear that lines of credit are not for these purposes if there is
documentary evidence, for example, of substantial participation in the
credit by other lenders or that the loan is for a documented special
purpose, such as equipment financing, plant expansion, or inventory
or receivables.
Legal Developments
Company will encounter losses that might motivate
Bankers Trust or other subsidiaries of Applicant to
make unsound loans or investments to shore up Company is not significant, given that Company will not
hold or maintain an inventory of any paper with its
own funds, and that the placement operation will not
constitute a significant activity of Company or involve
any significant amount of its assets.
An additional potential conflict cited by protestants
is the possibility that commercial paper placed by
Company might be "palmed off' on Applicant's subsidiary banks. Currently, none of Bankers Trust's
affiliates purchases for its own account commercial
paper placed by Bankers Trust. After the function is
transferred to Company, none of Company's affiliates
(including Bankers Trust) will purchase paper being
placed by Company either for its own account or a
customer's account, and accordingly, there is no significant possibility that this conflict of interest will
occur.
Protestants also raise concerns relating to whether
the proposals will impair Applicant's obligation to
provide unbiased investment advice to trust department customers and customers relying on Applicant's
advice in seeking to raise funds.52 This conflict will not
arise as a result of this proposal because Company's
affiliates will not purchase commercial paper placed by
Company for accounts they manage or advise or
provide investment advice to customers concerning
the purchase of commercial paper placed by Company. The Board understands this limitation to mean that
affiliates of Company will not advertise or distribute
sales literature relating to commercial paper placed by
Company.53
The final category of potential conflicts of interest
cited by protestants involves possible harm to the
interests of those who purchase commercial paper
placed by Company. For example, protestants contend that Company might encourage issuers to issue
commercial paper the proceeds of which will be used
to repay loans made by Applicant's subsidiary banks,
especially where the issuer is having difficulty repay-
52. See Bankers Trust, 468 U.S. at 146-147; ICI I, 401 U.S. at 633.
53. Protestants have also raised the possibility that Applicant might
not provide impartial advice to customers about the best method of
obtaining funds. However, the potential financial benefit to Company
from the placement service is so small in relation to other services
offered by Applicant that it would not be reasonable for Company to
provide this kind of biased advice. Moreover, commercial paper is
issued only by a small number of the nation's largest and financially
strongest corporations, which clearly have the resources and expertise to evaluate independently the best methods of obtaining shortterm financing. Indeed, Applicant states that this activity was developed in response to the decision of Bankers Trust's most creditworthy
borrowers to seek short-term funds in the commercial paper market
rather than through bank loans.
151
ing the loans. The Board notes that because of the
existence of commercial paper rating services, it is
extremely difficult for corporations experiencing financial difficulties to obtain the high rating necessary
to raise funds in the commercial paper market. In
addition, the disclosure requirements of the federal
securities laws require disclosure of material facts
concerning the issuer's financial condition and the
intended use of the proceeds of the offering. In the
Board's view, these requirements mean at a minimum
that if Company or any of its affiliates has a lending
relationship with a particular issuer of commercial
paper being placed, Company would disclose the
existence of that relationship to each purchaser of that
issuer's paper.
Accordingly, subject to the foregoing limitations as
proposed by Bankers Trust, the Board believes that
the proposal does not pose the potential for any
significant conflicts of interest.54
Unfair Competition. The Board has also considered
protestants' contention that Company would have
unfair competitive advantages over nonbank-affiliated
commercial paper dealers. In particular, the SI A alleges that Company would enjoy unfair advantages in,
for example, the rates it would pay for funding and
having access to the credit files of affiliate banks to
obtain information useful in marketing its services to
issuers. The Board finds that this limited proposal
would not result in unfair competition for the following
reasons.
With respect to the unfair funding claim, the Board
notes at the outset that since Company will act only as
agent in placing commercial paper, it will not be
required to finance holdings or inventory of commercial paper purchased with its own funds. In addition,
funding for Company would be provided by its parent
holding company, which is not a bank. Rates paid by
Applicant and other bank holding companies on their
commercial paper have generally been the same as
those paid by corporations of similar size and credit
ratings.
Moreover, since Company would be a corporation
legally separate and apart from Applicant's subsidiary
banks, Company could not obtain funding directly
through federally insured deposits or the Federal Reserve's discount window, which is ordinarily available
only to depository institutions. Furthermore, the
Board does not believe that funds from such sources
could effectively be provided to Company in view of
54. In light of the fact that the placement activity would, as a result
of the proposal, be conducted by an affiliate of Bankers Trust rather
than by the bank itself, any disclosure should also describe the
difference between Company and its affiliated banks.
152
Federal Reserve Bulletin • February 1987
the statutory lending limitations and collateral requirements of section 23 A of the Federal Reserve Act, and
the fact that any such loans or investments would be
subject to review in the supervision and examination
process.
In any event, as the Board noted in its BankAmerica/Schwab decision, the legislative history of section
4(c)(8) of the Act indicates that the term "unfair
competition" was intended to refer to unfair or unethical business conduct under the law, and not to disparities established by existing federal regulation of providers of financial services.55 Accordingly, for the
reasons set out in BankAmericalSchwab, even if Company might obtain some funding advantage by reason
of its affiliation with Applicant, the Board finds that
any such advantage is not unfair competition within
the meaning of section 4(c)(8) of the Act.
The Board has also considered the allegation that
unfair competition would result from sharing of confidential information between Company and its affiliates, such as granting Company access to the credit
files of its affiliates so that Company could identify
potential issuers of commercial paper and thus have an
advantage in offering its services to those prospective
issuers. There is no evidence that in conducting the
commercial paper placement activity Bankers Trust
has obtained any unfair advantage as a result of its
purported access to confidential financial information
concerning prospective customers.
In any event, to remove even the possibility that
some unwarranted competitive advantage might occur, as a condition of the Board's approval of this
application, no lending affiliate of Company may disclose to Company any non-public customer information concerning an evaluation of the financial condition of an issuer whose paper is placed by Company or
of any other customer of Company, except as expressly required by securities law or regulation.
The Board does not believe that unfair competition
or conflicts could arise from the potential for disclosure of confidential information held by Company to
its affiliates. The Board notes that trading on inside
information about issuers would violate the federal
securities laws. Moreover, Applicant would have little
incentive to gain access to confidential information
possessed by Company since, as discussed above,
Applicant and Company's other affiliates may not
purchase as principal or in a fiduciary capacity any
commercial paper placed by Company.
Undue Concentration of Resources or Decreased
Competition. The Board has carefully considered the
possibility that these proposals would result in an
5 5 . 6 9 FEDERAL RESERVE B U L L E T I N 1 0 5 , 111 ( 1 9 8 3 ) , a f f i r m e d b y
the Supreme Court in Schwab.
undue concentration of resources, in view of the size
of Applicant and the concern expressed in the BHC
Act regarding the concentration of control over credit
resources.56 The Board finds that this proposal is not
likely to lead to undue concentration of resources or
decreased competition under the facts and circumstances of record.
Applicant seeks to transfer an existing operation
currently being conducted by Bankers Trust to Applicant's commercial finance subsidiary. Thus, the proposal does not involve any combination of existing
competitors or elimination of any existing provider of
these services, but would instead enable the existing
service to be offered on a nationwide basis. Moreover,
as explained above, Company's share of the commercial paper market as a result of this proposal would be
relatively insubstantial.
In sum, the Board finds that this proposal, as limited
by Applicant, is consistent with section 20 of the
Glass-Steagall Act, and may reasonably be expected
to result in public benefits that outweigh possible
adverse effects. Accordingly, the Board finds that
Applicant may conduct the proposed activities to the
extent and in the manner described in this Order
consistent with section 20 of the Glass-Steagall Act
and section 4(c)(8) of the BHC Act.57 The Board's
approval of this application extends only to the activity conducted within the following limitations proposed
by Applicant for Company and Applicant's subsidiary
banks and other subsidiaries, and the placement of
commercial paper in any manner other than as described below and in this Order is not within the scope
of the Board's approval here and is not authorized for
Company:
1. Company will place only commercial paper that is
prime quality, short-term (with maturities not exceeding nine months), in minimum denominations of
at least $250,000, and that is exempt from the
registration and prospectus requirements of the Securities Act of 1933 pursuant to section 3(a)(3) of
that Act.
2. Company will place only commercial paper with a
limited number of financially sophisticated institutions, which normally purchase large amounts of
56. See Conf. Rep. No. 1747, 91st Cong., 2d Sess. 17 (1970)
(Statement of the Managers on the Part of the House).
57. Merrill Lynch requested the Board to hold a hearing on the
application. Since the proposal involves only the transfer to Company
of the commercial paper placement activity currently being conducted
by Bankers Trust, this application presents no disputed issue of
material fact and raises only questions that are legal in nature. The
Board notes that it has ordered a hearing with regard to certain similar
applications by Applicant and other bank holding companies, where
the proposals are structured differently than this application and do
raise factual issues. Merrill Lynch may participate in this hearing.
Accordingly, the Board denies the hearing request with respect to this
application. See 12 C.F.R. 262.3(e) and 225.23(g).
Legal Developments
other short-term money market obligations, and will
not place paper with individuals. Company will
make no general solicitation or general advertising
for commercial paper it places and such paper will
not be purchased by the general public.
3. Company will not purchase or repurchase for its
own account the commercial paper being placed or
inventory unsold portions of the paper.
4. The gross revenues derived from Company's
commercial paper placement service will not in any
year exceed 5 percent of Company's gross revenues.
5. The amount of commercial paper outstanding at
any one time placed by Company will be less than 5
percent of the average amount of all dealer-placed
commercial paper outstanding during the last four
calendar quarters.
6. Neither Company nor any of its affiliates will
provide any letter of credit or other guarantee to
support commercial paper placed by Company.
7. Neither Company nor any of its affiliates will
make loans to issuers of commercial paper placed by
Company that are the functional equivalent of purchasing the paper for the account of its affiliate.
Thus, any credit extended by any of these companies to the issuer will be under different terms, at
different times, and for different purposes than the
paper being placed. It would be clear that any such
credit is for different purposes if there is documentary evidence of, for example, substantial participation in the credit by other lenders or that the loan is
for a documented special purpose, such as equipment financing, plant expansion, or inventory or
receivables.
8. Company and its affiliates will assure themselves
that any advances to an issuer of commercial paper
placed by Company are not used to repay the paper
or to cover any unsold portion of a commercial
paper issue placed by Company.
9. Neither Applicant nor any of Company's affiliates
will purchase for its own account commercial paper
placed by Company.
10. Applicant's subsidiary banks will not purchase
commercial paper placed by Company for accounts
managed or advised by their trust departments and
neither the banks nor any of their affiliates will
purchase commercial paper placed by Company for
any other accounts they advise or for which they
have investment discretion.
11. No affiliate of Company will provide investment
advice to the purchasers of commercial paper placed
by Company and will not advertise or distribute
sales literature concerning such commercial paper.
Moreover, where Company or any of its affiliates
has a lending relationship with an issuer of commercial paper being placed by Company, Company will
153
at a minimum disclose the existence of that relationship to each purchaser of that issuer's paper. Any
disclosure made by Company will also describe the
difference between Company and Applicant's subsidiary banks.
12. Company will not have officers, directors, or
employees in common with Applicant's subsidiary
banks.58
In addition, with respect to the following limited
area, the Board has also required that no lending
affiliate of Company will disclose to Company any
non-public customer information concerning an evaluation of the financial condition of an issuer whose
paper is placed by Company or of any other customer
of Company, except as expressly required by securities law or regulation.
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 the holding company or
any of its subsidiaries as the Board finds necessary to
ensure that the commercial paper placement activity
of Company is consistent with safety and soundness
and conflict of interest considerations and to assure
compliance with the provisions of the BHC Act and
the Board's regulations and orders issued thereunder,
or to prevent evasion thereof.59
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
December 24, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governor Rice.
WILLIAM W . WILES
[SEAL]
Secretary of the Board
58. The fact that conditions and limitations are relied on by the
Board here to assure that this proposal complies with the public
benefits test of section 4(c)(8) does not indicate that the activity
approved violates the Glass-Steagall Act. The public benefits standard in section 4(c)(8) establishes a test that is independent of the
Glass-Steagall Act. It is clear, for example, that certain securities
activities that are lawful under the Glass-Steagall Act, such as
providing investment advice and portfolio management, may raise the
potential for adverse effects under section 4(c)(8) which may be
addressed through the types of limitations established in this Order.
See 12 C.F.R. 225.25(b)(4) n.l; ICI II, 450 U.S. at 62, 67.
59. As provided in section 225.23(b)(1), no reorganization of Company, such as the establishment of a subsidiary of Company to
conduct the approved activity, may be consummated without prior
Board approval.
154
Federal Reserve Bulletin • February 1987
Concurring Statement by Chairman Volcker
I join with the majority of the Board in giving approval
for the Bankers Trust application to engage in commercial paper placement in a commercial lending
affiliate. I also concur in the Board's decision to
request additional information before proceeding to a
final decision on the applications by Bankers Trust,
Citicorp, and J.P. Morgan to engage in underwriting
commercial paper, mortgage-backed securities, municipal revenue bonds and consumer related receivables in a government securities underwriting affiliate.
As an administrative agency, we are bound to carry
out the function assigned by Congress of applying
existing law to applications submitted to us. Today's
decision, applying the Glass-Steagall Act, makes as
much good sense as is possible to draw from applying
a statute, adopted a half century ago, to a banking
marketplace that technology and other competitive
forces have altered in a manner and to an extent never
envisioned by the enacting Congress.
The Glass-Steagall Act authorizes the affiliates of
banks to engage in underwriting securities so long as
they are not "engaged principally" in this activity. In
the light of the intent of the Act, which has long been
considered, in short hand, to require the divorce of
investment and commercial banking, the Board's conclusion that the term "engaged principally" includes
any substantial activity, even though that function is
less than 50 percent of the total, seems to me to be
correct. It gives effect to what I believe was Congressional intent to assure that even limited underwriting
activities not passing the threshold of "engaged principally" would be separated from the bank itself in a
distinct corporate entity and that any possible adverse
impact on an affiliated bank would be minimized.
I also agree that the tests of 5 percent of income and
5 percent of market share constitute a reasonable
threshold, consistent with the legislative intent, for
determining what is a relatively insubstantial activity.
Among other things, it seems to me a company that
has a relatively large share of an investment market
would, in most circumstances, be substantially engaged in that line of activity even if it is a relatively
small fraction of the activity of a large affiliate.
Nevertheless, it seems to me evident that application of the plain language and legislative intent in the
far different circumstances now prevailing produces
some odd results that point to the need for review and
change of the basic legislation. For instance, it seems
to me that no useful public policy goal is served by the
incentive created by the Glass-Steagall Act, as we
must interpret it, to shift assets (such as commercial
loans) out of a bank and into nonbank affiliates of a
holding company so that the affiliates are large enough
to permit significant amounts of underwriting without
being "principally engaged" in that activity. A sensible financial framework would not encourage artificially such a transfer of ordinary banking assets out of an
insured bank that is a beneficiary of the federal safety
net and subject to banking regulations. Moreover,
certain quantitative and other limitations on the scale
of the proposed underwriting activity to fit it into the
framework of Glass-Steagall may be unnecessary or
undesirable to protect the public interest.
The limited decision taken by the Board today only
emphasizes the fact that authority for underwriting of
securities by banking organizations urgently needs to
be legislatively reviewed and updated. Our common
objective is a framework reconciling the requirements
for a safe and sound banking and financial system with
effective competition and the need for efficiency. My
sense is that this sensible and reasonable result cannot
be achieved within the four corners of existing law.
The Supreme Court has recently admonished us in
the Dimension case that the law must be applied as
written, even though it produces curious results. The
Board has, in my judgment, conscientiously followed
that precept.
The Court also noted in that case that the cure for
anomalies brought about by change and time is in the
hands of Congress. It is to that body that we must turn
for wise action.
I believe legislation should be adopted promptly to
give straightforward authority for bank holding companies to engage in certain underwriting activities—
underwriting commercial paper, mortgage-backed securities, revenue bonds and mutual funds—with such
protections against conflicts of interest and self-dealing as may be appropriate. In addition, while apparently not ripe for action immediately, I would suggest the
time has come for Congress to undertake a study of the
need for change in the current prohibitions on corporate underwriting, recognizing that today, unlike 1933,
bank holding companies conduct such activities
abroad in substantial volume, and technological and
other changes increasingly encourage "securitization"
of some bank loans.
I fully realize that these are hotly contested issues,
with large private economic interests at stake. Although the legislative process has hitherto been paralyzed by this conflict, a new Congress provides new
opportunity for prompt action in the public interest. I
join the entire Board in pressing for prompt constructive legislation.
December 24, 1986
Legal Developments
Bayerische Vereinsbank AG
Munich, Federal Republic of Germany
Order Approving Application to Provide Investment
Advisory Services
Bayerische Vereinsbank AG, Munich, Federal Republic of Germany, a foreign bank subject to certain
provisions of the Bank Holding Company Act ("BHC
Act"), 12 U.S.C. §§ 1841-48, 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 continue
to provide investment advisory services through AE
Capital Management, Inc., New York, New York
("AECM"), serving as investment adviser to registered investment companies and providing portfolio
investment advice to existing customers and to institutional and large private accounts.1 The Board has
previously determined that those activities are closely
related to banking and permissible for bank holding
companies. 12 C.F.R. § 225.25(b)(4)(ii)-(iii).
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published. 51 Federal Register 31,982 (1986). The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the public interest factors set forth in
section 4(c)(8) of the Act.
Applicant, with total assets of approximately $53
billion, is the forty-second largest bank in the world
and the fourth largest in the Federal Republic of
Germany.2 Applicant engages in a wide range of retail,
wholesale, and investment banking activities in Germany and abroad. In the United States, Applicant has
branches in New York and Chicago; has agencies in
Atlanta, Los Angeles, and Miami; owns all of the
voting shares of AECM, a registered investment adviser; and owns 95 percent of the voting shares of
Associated European Capital Corporation, New York,
New York ("AEC"), a registered broker/dealer.3
AEC operates pursuant to section 8(c) of the International Banking Act ("IBA"), which permits a foreign
bank such as Applicant to engage in any nonbanking
activity in which it was engaged on July 26, 1978.
1. Applicant commenced the activities in question through AECM
in 1984 without obtaining the prior approval required under section
4(c)(8). Having reviewed the relevant facts, the Board concludes that
the failure to obtain prior approval was inadvertent and does not
reflect adversely on the management of Applicant or AECM.
2. As of December 31, 1985.
3. Although AECM is currently owned by AEC, it will become a
direct subsidiary either of Applicant or of a holding company to be
formed and owned by Applicant.
155
12 U.S.C. § 3106(c). That authority is subject to review by the Board, which may, after opportunity for a
hearing, require termination of any grandfathered activity if necessary to prevent unfair competition, conflicts of interests, or other adverse effects.
AECM currently serves as investment adviser to
eight investment companies, of which one is closedend and seven are technically open-end, and it wishes
to serve as investment adviser to additional investment companies of the same kind. The seven open-end
investment companies (collectively the "Investment
Companies") differ from the usual mutual fund, which
continuously offers new shares to the public. See
generally 12 C.F.R. § 225.125(c). None of the Investment Companies has made an offering of securities,
continuous or otherwise, in the United States or
abroad. Each Investment Company's shares have
been privately placed in the Federal Republic of
Germany, and are owned by four or fewer West
German corporations. To maintain favorable tax treatment under the tax treaty between the United States
and the Federal Republic of Germany,4 each shareholder has a strong interest in continuing to own at
least 25 percent of the Investment Company's shares,
and thus also has an interest in restricting the issuance
of new shares.5
Since their initial capitalization, the Investment
Companies have issued shares only infrequently. One
company went from two shareholders to three shortly
after its organization; another from one to two. Several of the companies issue new shares annually so that
shareholders may reinvest their dividends. With those
exceptions, none of the Investment Companies has
issued shares since its initial capitalization. There have
been no redemptions to date. As each Investment
Company has a stable shareholder base of institutional
investors, it is not under pressure to issue shares
frequently so as to offset redemptions.
The Board has long maintained that an investment
company that is open-end for purposes of the Investment Company Act, see 15 U.S.C. § 80a-5(a), may be
closed-end for purposes of section 225.25(b)(4)(ii) of
4. Convention for the Avoidance of Double Taxation with Respect
to Taxes on Income, July 22, 1954, 5 U.S.T. 2768, T.I.A.S. No. 3133,
as amended by Protocol Modifying the Convention of July 22, 1954,
Sept. 17, 1965, 16 U.S.T. 1875, T.I.A.S. No. 5920.
5. Under the tax treaty, dividends paid to a West German corporation by a U.S. corporation are not immediately subject to West
German taxation if the U.S. corporation is subject to U.S. taxation
and the West German corporation holds at least 25 percent of the U.S.
corporation's outstanding voting shares. Art. XV(l)(b)l.(aa), 16
U.S.T. at 1886. Although a regulated investment company (as defined
in the Internal Revenue Code) is a U.S. corporation subject to U.S.
taxation for purposes of the tax treaty, such a company pays no U.S.
taxes at the corporate level so long as it distributes its earnings to its
shareholders.
156
Federal Reserve Bulletin • February 1987
Regulation Y if it issues shares only infrequently.6
Based on the particular facts of record, the Board
concludes that the Investment Companies should be
treated as closed-end companies for purposes of section 225.25(b)(4)(ii). Accordingly, the activities in
question are permissible under that section regardless
of whether Applicant organized, sponsored, or controls the Investment Companies.
In cases under section 4(c)(8) of the BHC Act, the
Board evaluates the financial resources of the applicant, including its subsidiaries, and the effect of the
proposed transaction on those resources. 12 C.F.R.
§ 225.24. In accordance with the principles of national
treatment and competitive equity, the Board expects a
foreign bank to meet the same general standards of
financial strength as domestic bank holding companies. On the other hand, the Board is aware that
outside the United States foreign banks operate under
different regulatory and supervisory requirements, accounting principles, asset quality standards, and banking practices and traditions, and that these differences
make it difficult to compare foreign banks' capital
positions with those of domestic bank holding companies.
The appropriate balancing of these concerns raises
complex issues that require careful consideration and
that the Board currently has under review. The Board
is reexamining the capital standards applicable to
domestic bank holding companies and considering
revisions that might make those standards more readily comparable to those of foreign banks. The Board is
also pursuing consultations with foreign banking authorities about appropriate capital standards for banks
operating internationally. Pending the outcome of
those deliberations and consultations, the Board is
considering case-by-case the issues raised by foreign
banks' applications to engage in activities in the United States.
In this instance, Applicant's primary capital ratio, as
publicly reported, is below the Board's Capital Adequacy Guidelines. However, after certain adjustments
to take account of German banking and accounting
practices (particularly the practice of carrying securities at or below historical cost, which in this case is
substantially below their market value) as well as
consideration of all available information relating to
Applicant's overall financial condition, Applicant's
capital ratio more nearly approximates U.S. standards. The Board notes that well over half of Applicant's assets are mortgage loans funded by mortgagebacked bonds, and that some 64 percent of those loans
are to state and local governments in the Federal
6. See Letter dated March 8, 1974, to Mr. G. Duane Vieth.
Republic of Germany. The Board also notes that the
application involves nonbanking activities that generate fee income and that require only a minimal commitment of capital. In light of all the facts of record,
the Board has determined that financial factors are
consistent with approval of the application.
To approve the application, the Board must find that
Applicant's performance of the activities in question
"can reasonably be expected to produce benefits to
the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."
12 U.S.C. § 1843(c)(8). In evaluating those factors, the
Board considered that Applicant, through AEC, engages in securities activities in the United States that
are not permissible for U.S. bank holding companies.
As a result, Applicant could conceivably gain an unfair
competitive advantage over domestic bank holding
companies by combining grandfathered securities activities with activities permissible under section
4(c)(8). That could occur if the grandfathered activities
were used to support or enhance the section 4(c)(8)
activities, thus allowing Applicant to offer a wide array
of services not permissible for domestic bank holding
companies. Moreover, the combination of AEC's underwriting activities and AECM's investment advisory
activities could give rise to conflicts of interests.
Applicant has, however, made a series of commitments aimed at separating the operations of AEC and
AECM and avoiding conflicts of interests: Apart from
clerical and support staff, AEC and AECM will have
separate officers, directors, and employees. AEC and
AECM will not solicit customers for each other in the
United States. No customer lists or confidential information about customers will be passed between AEC
and AECM. AEC will not sell or purchase securities,
either as a principal or as a broker, to, from, or for any
investment company advised by AECM, or otherwise
perform for such an investment company any service
that AEC might have authority to provide under the
IB A. No employee of AEC will serve as a portfolio
manager of any investment company advised by
AECM. AECM will not provide investment advice
about the securities of Applicant or its subsidiaries or
affiliates. AECM will not give investment advice about
securities that are being underwritten by one of its
affiliates, or in which an affiliate is making a market,
unless AECM has independently analyzed those securities in the same manner and to the same extent as if
they were not underwritten by an affiliate; discloses
the affiliate's involvement with the securities and
relationship to AECM; and obtains the customer's
consent before any such securities are purchased for
Legal Developments
the customer's account. AECM will not engage in any
promotional activities relating to any distribution of
securities that are being underwritten by one of its
affiliates.
In light of these and other commitments, as well as
applicable legal restrictions,7 the Board believes that
Applicant would not have an unfair competitive advantage in conducting the activities in question under
section 4(c)(8), and that those activities would not give
rise to conflicts of interests. The Board notes, moreover, that Applicant will limit its investment advisory
services to existing customers and to investment companies and institutional and large private accounts,
and will not provide such services to the general
public.
There is no evidence of record indicating that the
activities in question would result in undue concentration of resources, unsound banking practices, or other
adverse effects. By commencing the activities de
novo, Applicant increased the number of firms providing investment advisory services; thus competitive
factors lend weight toward approval of the application.
Managerial factors are consistent with approval.
Based on the foregoing and other facts of record, the
Board concludes that the balance of the public interest
factors it is required to consider under section 4(c)(8)
favors approval of the application. Accordingly, the
application is hereby approved. This approval is subject to all of the conditions set forth in Regulation Y,
including those in sections 225.4(d) and 225.23(b),
12 C.F.R. §§ 225.4(d), 225.23(b), and to the Board's
authority to require such modification or termination
of the activities of a bank holding company or any of
its subsidiaries as the Board finds necessary to assure
compliance with, and to prevent evasions of, the
provisions and purposes of the BHC Act and the
Board's regulations and orders issued thereunder.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
JAMES MCAFEE
[SEALI
Associate Secretary of the Board
7. The Securities Exchange Act, the Investment Company Act, and
the Investment Advisers Act also tend to separate the operations of
AEC and AECM and to reduce the risk of conflicts of interests. For
example, the Investment Company Act generally prohibits an investment company advised by AECM from purchasing any securities of
which AEC is a principal underwriter or from engaging in any
principal transaction with AEC. 15 U.S.C. §§ 80a-10(f), -17(a).
In keeping with the Investment Advisers Act, AECM will disclose
its relationship with its affiliates to each of its customers, and will have
no arrangement with any distributor of securities regarding the advice
AECM gives concerning such securities.
157
Citicorp
New York, New York
Order Approving Application to Execute and Clear
Futures Contracts on Stock Indexes
Citicorp, New York, New York, a bank holding company within the meaning of the Bank Holding Company Act, 12 U.S.C. § 1841 et seq. ("BHC Act"), has
applied pursuant to section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23(a)(3) of the
Board's Regulation Y (12 C.F.R. § 225.23(a)(3)) to
engage de novo through its wholly owned subsidiary,
Citicorp Futures Corporation ("CFC"), in the execution and clearance, on major commodity exchanges, of
futures contracts on stock indexes and options on such
futures contracts.
CFC proposes to execute and clear the Standard and
Poor's 100 Stock Price Index futures contract, the
Standard & Poor's 500 Stock Price Index futures
contract ("S&P 500") and options on the S&P 500, all
of which are currently traded on the Index and Option
Division of the Chicago Mercantile Exchange.
Applicant proposes to offer these services to major
corporations, financial institutions, and other sophisticated customers in the United States and abroad.
Notice of the application, affording interested persons an opportunity to submit comments on the relation of the proposed activities to banking and on the
balance of public interest factors, has been duly published (50 Federal Register 27,684 (1985)). 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.
Citicorp, with total consolidated assets of $186.0
billion,1 is the largest banking organization in the
United States. It presently operates eight banking
subsidiaries and engages, directly and through subsidiaries, in a variety of nonbanking activities. CFC is a
futures commission merchant ("FCM") registered
with the Commodity Futures Trading Commission
("CFTC") that engages in the execution and clearance
of options contracts on bullion, foreign exchange,
government securities and money market instruments,
and options on futures contracts based on these commodities and instruments on major commodities exchanges for nonaffiliated persons.
The Board has previously determined that the execution and clearance of futures contracts, and options
on futures contracts, based on stock indexes is closely
1. As of September 30, 1986.
158
Federal Reserve Bulletin • February 1987
related to banking. J.P. Morgan & Co. Incorporated,
71 FEDERAL RESERVE BULLETIN 251 (1985). T h e p r o -
posed activities of CFC are essentially identical to
those activities previously approved by the Board.
Thus, the Board concludes that Applicant's proposal
to execute and clear futures contracts on stock indexes
is closely related to banking.
In order to approve this application, the Board is
also required to determine that the performance of the
proposed activities by Applicant "can reasonably be
expected to produce benefits to the public . . . that
outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking
practices." (12 U.S.C. § 1843(c)(8)).
Consummation of Applicant's proposal would provide added convenience to those clients of Applicant
and its subsidiaries that trade in the cash, forward and
futures markets for these instruments. The Board
expects that the de novo entry of Applicant into the
market for these services would increase the level of
competition among providers of these services already
in operation. Accordingly, the Board concludes that
the performance of the proposed activities by Applicant can reasonably be expected to provide benefits to
the public.
The Board also has considered the potential for
adverse effects that may be associated with this proposal. There is no evidence in the record that consummation of the proposed FCM activities would result in
any adverse effects such as undue concentration of
resources, decreased or unfair competition, conflicts
of interests, or unsound banking practices. In addition,
the Board has taken into account and has relied on the
regulatory framework established pursuant to law by
the CFTC for the trading of futures, as well as the
conditions set forth in section 225.25(b)(18) of Regulation Y with respect to executing and clearing futures
contracts.
Based upon a consideration of all the relevant facts,
the Board concludes that the balance of the public
interest factors that the Board is required to consider
under section 4(c)(8) is favorable.
This determination is also subject to all of the
conditions set forth in Regulation Y, including 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
bank holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with the
provisions and purposes of the BHC Act and the
Board's regulations and orders issued thereunder, or
to prevent evasion thereof.
The transaction shall be made not later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of New York pursuant to
delegated authority.
By order of the Board of Governors, effective
December 12, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
BARBARA R . LOWREY
[SEAL]
Associate Secretary of the Board
Commonwealth Bancshares Corporation
Williamsport, Pennsylvania
Order Approving Provision of Employee Benefits
Consulting Services
Commonwealth Bancshares Corporation, Williamsport, Pennsylvania, a bank holding company within
the meaning of the Bank Holding Company Act
("Act"), 12 U.S.C. § 1841 et seq., has applied for the
Board's approval under section 4(c)(8) of the Act,
12 U.S.C. § 1843(c)(8), and section 225.23 of the
Board's Regulation Y, 12 C.F.R. § 225.23, to acquire
all of the voting shares of Commonwealth Employer
Services, Inc., Williamsport, Pennsylvania.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been duly published (51 Federal
Register
41,836 (1986)). The time for filing comments has
expired, and the Board has considered the application
and all comments received in light of the public
interest factors set forth in section 4(c)(8) of the Act.
Applicant, a bank holding company by virtue of its
ownership of Commonwealth Bank and Trust Company, N.A., Williamsport, Pennsylvania, has total consolidated assets of $864 million.1 Applicant also engages in certain nonbanking activities, including
community development and underwriting credit life,
accident and health insurance for the subsidiaries of
the bank holding company.
Applicant proposes to acquire Company, which will
be an employee benefits consulting firm that will
provide services with regard to self-directed employee
group health benefit programs. Company's activities
can be divided into four basic categories:
1. Plan Design—designing employee health benefit plans, including determining funding levels and
cost estimates;
1. Data are as of September 30, 1986.
Legal Developments
2. Plan Implementation—providing assistance in
implementing the health plans, including assistance
in the preparation of plan documents and the implementation of employee benefit administration systems, and arranging for services from outside agencies;
3. Administrative Services—providing administrative services, including recordkeeping services and
preparing periodic and other reports and government filings;
4. Employee Communications—developing employee communication programs, including participation in seminars, public programs and other forums relating to such developments.
The Board has previously approved applications by
bank holding companies to provide employee benefits
consulting services with regard to defined benefit,
defined contribution plans, and other employee benefit
plans, including health care plans.2 In its orders, the
Board has determined that the provision of services
for these types of plans encompassed the type of
services banks have traditionally performed and that
the provision of employee benefits consulting services
for these plans was operationally or functionally related to the trust services that banks traditionally provide
to customers. The Board also stated that the activity
essentially involved the provision of financial information and thus, was similar to a number of financial
services, such as the provision of investment and
general economic information, and financial data processing and transmission, all of which are activities that
are permissible for bank holding companies.3 Thus,
the Board concluded that the provision of employee
benefits consulting services for employee benefit
plans, including health care plans, is closely related to
banking.
In order to approve this application, the Board must
also find that the performance of the proposed activity
"can reasonably be expected to produce benefits to
the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."
With respect to the proposed employee benefits consulting activities of Applicant, it appears from the
record that authorizing the activity would enhance
competition and provide greater convenience and in-
2.
Norstar
Bancorp,
Inc.,
7 2 F E D E R A L RESERVE B U L L E T I N
(1986); BankVermont Corporation, 72 FEDERAL RESERVE
337 (1986); Norstar Bancorp, Inc., 71 FEDERAL RESERVE
656 (1985).
3. 12 C.F.R. § 225.25(b)(4), (7), (20), & (21) (1986).
729
159
creased efficiencies, without resulting in any adverse
consequences.
Clients will have the option of obtaining a complete
package of employee benefits consulting services from
a single company, including those services that can be
provided by other subsidiaries of Applicant, resulting
in increased convenience to the customers for this
service. In addition, the increase in the number of
companies that can conduct a broad array of services
with regard to employee benefits consulting is likely to
enhance competition in the provision of this service.
There is no evidence in the record to indicate that
Applicant's performance of the proposed activity
would lead to any undue concentration of resources,
decreased or unfair competition, unsound banking
practices, or other adverse effects. Clients will have
the option to use any component of Applicant's employee benefits consulting services individually, or the
entire package of services, and Applicant has committed to avoid tying any employee benefits consulting
service to the purchase of the entire employee benefits
package or to any other service offered by Applicant
or its subsidiaries.
In its evaluation of Applicant's managerial resources, the Board has considered certain violations
by Applicant of the Currency and Foreign Transactions Reporting Act ("CFTRA") and the regulations
thereunder.4 The Board notes that Applicant has cooperated with law enforcement agencies and has established comprehensive policies and procedures to ensure compliance with the CFTRA. Examiners of the
Office of the Comptroller of the Currency have reviewed the sufficiency of the compliance procedures
adopted and their efficacy in correcting the deficiencies. The Board also has consulted with appropriate
enforcement agencies, and has considered Applicant's
past record of compliance with law. The Board, therefore, concludes that the managerial resources of Applicant and Bank are consistent with approval.
Based upon the foregoing and all the facts of record,
including certain commitments made by Applicant, the
Board has determined that the balance of public interest factors it is required to consider under section
4(c)(8) is favorable. Accordingly, the application is
hereby approved. This determination is subject to the
conditions set forth in sections 225.4(d) and
225.23(b)(3) of the Board's Regulation Y, 12 C.F.R.
§§ 225.4(d) and 225.23(b)(3). The approval is also
subject to the Board's authority to require modification or termination of the activities of the holding
company or any of its subsidiaries as the Board finds
necessary to assure compliance with the provisions
BULLETIN
BULLETIN
4. 31 U.S.C. § 5311 et seq.\ 31 C.F.R. § 103.
160
Federal Reserve Bulletin • February 1987
and purposes of the Act and the Board's regulations
and orders issued thereunder, or to prevent evasion
thereof.
This transaction shall not be commenced later than
three months after the effective date of this Order,
unless such period is extended for good cause by the
Board, or by the Federal Reserve Bank of Philadelphia, pursuant to delegated authority.
By order of the Board of Governors, effective
December 16, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governors Wallich and Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Credit Suisse
Zurich, Switzerland
Order Approving Acquisition of Investment Advisor
Credit Suisse, Zurich, Switzerland, a foreign bank
subject to certain provisions of the Bank Holding
Company Act ("Act"), 12 U.S.C. §§ 1841-1848, has
applied for the Board's approval under section 4(c)(8)
of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23
of the Board's Regulation Y (12 C.F.R. § 225.23), to
acquire through its indirect subsidiary, Financiere
Credit Suisse-First Boston ("FCSFB"), Zug, Switzerland, substantially all of the assets of John M. Blewer,
Inc. ("Company"), New York, New York, a registered investment advisor. FCSFB will acquire the
assets of Company through a new subsidiary formed
for that purpose and will thereby engage in providing
portfolio advice and portfolio management services to
institutions and individuals. Such activities have been
determined by the Board to be closely related to
banking and permissible for bank holding companies.
12 C.F.R. § 225.25(b)(4)(iii).
Notice of the application, affording interested persons the opportunity to submit comments, has been
duly published. 51 Federal Register 34,689 (1986). The
time for filing comments has expired and the Board
has considered the application and all comments received in light of the public interest factors set forth in
section 4(c)(8) of the Act.
Applicant, with total assets of approximately U. S.
$50.5 billion, is the 61st largest banking organization in
the world and the third largest in Switzerland.1 In the
1. Data are as of June 30, 1986.
United States, Applicant maintains branches in New
York and Los Angeles and an agency in Miami. As a
result, Applicant is subject to the nonbanking restrictions of section 4 of the Act as if it were a bank holding
company.
Applicant also engages in activities in the United
States through subsidiaries, described below, that are
grandfathered under section 8(c) of the International
Banking Act of 1978 ("IBA") (12 U.S.C. § 3106(c)).
Section 8(c) of the IBA permits a foreign bank such as
Applicant to continue to engage in any nonbanking
activities in which it was engaged on July 26, 1978.
This authority is subject to review by the Board, which
may, after opportunity for a hearing, require termination of any grandfathered activity if necessary to
prevent adverse effects.
Applicant controls two subsidiaries, Swiss American
Asset
Management
International,
Inc.
("SAAMI"), and Swiss American Securities, Inc.
("SASI"), that engage in certain securities activities,
including investment advisory activities, in the United
States pursuant to section 8(c) of the IBA. In addition,
through FCSFB, Applicant holds approximately 35
percent of the shares of First Boston, Inc., New York,
New York, a publicly held company that is a registered broker-dealer in the United States and also
engages in investment banking activities outside the
United States. Applicant's interest in First Boston,
which is considered a domestically-controlled affiliate
of Applicant under section 8(c) of the IBA, is also
grandfathered under the IBA.
Company is a registered investment advisor under
the Investment Advisers Act of 1940 and provides
investment advice and portfolio management services
to individuals and institutions. The acquisition of
Company will be made by FCSFB in order to establish
an investment advisory presence in the United States
independent of Applicant and its other affiliates. Section 8(c) generally does not authorize the expansion of
a grandfathered nonbanking activity through the acquisition of a going concern. Therefore, Applicant has
applied for the Board's approval of the acquisition
under section 4(c)(8) and Regulation Y.
In applications under section 4(c)(8) of the Act, the
Board evaluates the financial resources of the applicant, including its subsidiaries, and the effects of the
proposed transaction on those resources. The Board
has considered the financial resources of Applicant
and notes that the publicly reported primary capital
ratio of Applicant is in conformance with the capital
guidelines established by the Board for bank holding
companies. The Board also notes that the application
involves activities that generate fee income and do not
require a substantial commitment of capital. In light of
these and other facts of record, the Board has deter-
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mined that the financial resources of Applicant are
satisfactory and consistent with approval of the application.
As noted above, the activities of Company have
been determined by the Board to be closely related to
banking. In order to approve this application, the
Board must also find that the performance of the
proposed activity by Applicant "can reasonably be
expected to produce benefits to the public, such as
greater convenience, increased competition, or gains
in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased
or unfair competition, conflicts or interests, or unsound banking practices." 12 U.S.C. § 1843(c)(8).
In its evaluation of these factors, the Board considered the fact that Applicant indirectly engages in a
wide range of securities activities in the United States
that are not permissible either for United States bank
holding companies or for other foreign banking organizations that do not have grandfathered securities affiliates. The Board has considered the potential for unfair
competition through the combination of grandfathered
securities activities with permissible activities under
section 4(c)(8). This could arise if grandfathered securities affiliates were used to support and enhance the
activities of a company operating under section
4(c)(8), thereby enabling the company to offer to
customers a wide array of services not permitted for
bank holding companies. In addition, the combination
of permissible investment advisory activities and impermissible securities underwriting activities in the
United States creates the potential for conflicts of
interest.
In this case, the facts of record indicate that Company is intended to establish for FCSFB an investment
advisory presence in the United States and will operate independently of First Boston, SAAMI and SASI.
There will be no director, officer or employee interlocks between Company and any of these affiliates. In
addition, there will be no joint marketing efforts undertaken by Company and any of its grandfathered affiliates. Company will not share fees, profits or customer
information, will not make customer referrals, and will
not engage in cross-marketing involving these affiliates.
In order to further the separation of the companies,
thereby reducing the potential for competitive advantage, and in order to prevent conflicts of interest that
may arise from the fact that Applicant will operate
both grandfathered underwriting affiliates and an investment advisory company, Applicant has also made
certain commitments. Company will not provide advice on any securities of Applicant, First Boston or
any other affiliate, and Company will disclose to its
clients its relationships with its affiliates. Company
161
will not provide investment advice to a client with
respect to securities that are part of a distribution by
an affiliate or in which an affiliate makes a market,
unless Company has conducted an independent analysis of such securities in the same manner and to the
same extent as if the securities were not underwritten
or dealt in by an affiliate, discloses the fact of the
affiliation to its client, and obtains the client's prior
consent to the purchase of any such securities. Company will not engage in promotional activities with
respect to any distribution of securities being underwritten by an affiliate. The Board notes that these
commitments reduce the potential for conflicts of
interest and enhance the separation of the companies,
thereby reducing the potential for any competitive
advantage to accrue to Applicant.
The Board has also considered whether other adverse effects on competition may result from the
proposal and notes that, although Company engages in
activities that are also provided by Applicant's affiliates, Company is relatively small and its acquisition by
FCSFB will not eliminate substantial competition in
any relevant area. Moreover, acquisition of Company
can be expected to result in some increase in competition due to the financial support provided by FCSFB,
enabling Company to become a stronger competitor.
In light of the facts of record and the commitments
offered by Applicant to enhance the separation of
Company from its grandfathered securities affiliates,
the Board finds that the proposal would not result in
conflicts of interest or decreased or unfair competition. There is also no evidence in the record that
indicates that Applicant's proposal would result in any
undue concentration of resources, unsound banking
practices or other adverse effects.
Based on the foregoing and other facts of record, the
Board has determined that the balance of public interest factors it is required to consider under section
(4)(8) of the BHC Act is favorable. Accordingly, the
application is hereby approved. The Board's determination in this case is subject to all of the conditions set
forth in Regulation Y, including those in sections
225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) and
225.23(b)), and to the Board's authority to require
such modification or termination of the activities of a
bank holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with, and
prevent evasions of, the provisions and purposes of
the BHC Act and the Board's regulations and orders
issued thereunder.
The transaction shall not be consummated later than
three months after the date of this Order, unless such
period is extended for good cause by the Board or by
the Federal Reserve Bank of New York, pursuant to
delegated authority.
162
Federal Reserve Bulletin • February 1987
By order of the Board of Governors, effective
December 2, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
First United Bancshares, Inc.
Ord, Nebraska
Order Approving Acquisition of Insurance Agencies
First United Bancshares, Inc., Ord, Nebraska, a bank
holding company within the meaning of the Bank
Holding Company Act ("BHC Act") (12 U.S.C.
§ 1841 et seq.), has applied pursuant to section 4(c)(8)
of the Act (12 U.S.C. § 1843(c)(8)) to engage in general
insurance activities:
(1) by acquiring all of the assets of Ord Insurance
Agency, Ord, Nebraska, and Wolbach Insurance
Agency, Wolbach, Nebraska; and
(2) by acquiring indirect control of Grant Insurance
Agency, Grant, Nebraska, through the acquisition
of its parent company Grant Bancshares, Inc.,
Grant, Nebraska.1
Notice of the applications, affording interested persons an opportunity to submit comments on the proposal, has been duly published (51 Federal Register
37,650 (1986). The time for filing comments has expired, and the Board has considered the applications
and all comments received, including those of various
insurance associations,2 in light of the public interest
factors set forth in section 4(c)(8) of the BHC Act.
Applicant proposes to engage in general insurance
activities, pursuant to exemption C of section 4(c)(8)
of BHC Act, in Ord, Wolbach, and Grant, Nebraska,
each a town with a population of fewer than 5000
residents, according to the 1980 census. In reviewing
1. These applications are part of a restructuring of a chain of three
bank holding companies and five subsidiary banks under common
ownership into a single multibank holding company. The Board
approved this restructuring, including Applicant's acquisition of control of Grant Bancshares, Inc., by Order dated November 25, 1986,
but it delayed consideration of the proposed restructuring of the three
existing insurance agency subsidiaries to allow additional time for
public comment.
2. The Board has considered the comments of the Association of
Life Underwriters, National Association of Professional Insurance
Agents, Independent Insurance Agents of America, Inc., National
Association of Casualty and Surety Agents, and National Association
of Surety Bond Producers.
the applications, the Board has considered the comments of the insurance groups that the Board deny
these applications because Applicant has its principal
place of banking business in North Platte, Nebraska, a
town with a population of more than 5000 inhabitants.
In addition, the insurance groups argue the Board
should consider the cumulative financial and economic
impact of permitting a single banking organization to
operate insurance agencies in several small towns. The
insurance groups apparently would have the Board
find that several small-town insurance agencies could
jointly serve an area or "place" with a population in
excess of 5000 inhabitants.
The Board has previously decided that exemption C
of section 4(c)(8) of the BHC Act does not require a
bank holding company to have its principal place of
banking business in a town with a population of fewer
than 5000 residents. The Board discussed its findings
and provided detailed reasons in support of this conclusion in its recently adopted amendment to Regulation Y governing permissible insurance activities for
bank holding companies. See 51 Federal Register
36,201 (October 9, 1986). For reasons stated in the
commentary accompanying the insurance regulation,
the Board finds no merit to the argument of the
insurance groups that a bank holding company engaged in general insurance agency activities in a town
of fewer than 5000 inhabitants must have its principal
place of banking business in such a small town.
The Board also finds there is no merit to the
insurance parties second argument, that the Board
must consider the cumulative impact of permitting a
single bank holding company to operate general insurance agency subsidiaries in more than one town. The
insurance parties cannot point to statutory language in
exemption C, the legislative history, or Board precedent, either under the new Board insurance regulation
(12 C.F.R. § 225.25(b)(8)(iii)) or under its prior regulation (12 C.F.R. § 225.25(b)(8)(ii)( 1986)), that supports
their position. For over 10 years, the Board has
examined each insurance agency subsidiary proposed
to be located in a small town to determine that that
subsidiary properly served the limited geographic area
of the small town and surrounding environs and to
determine that the proposed agency would not solicit
business from places having more than 5000 residents.
At no time has the Board aggregated either the populations to be served or the service areas of bank holding
companies with two or more small-town insurance
agency subsidiaries in order to limit the total activities
of all such small town agency subsidiaries. The Board
finds nothing in exemption C and no policy considerations to compel a change in its longstanding practice
and the imposition of a substantial additional restriction now proposed by the insurance parties.
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Applicant has provided a sufficient record that Ord,
Wolbach and Grant are towns of fewer than 5000
residents. Applicant has described the proposed service area of each subsidiary and demonstrated that
each will include fewer than 5000 inhabitants. There is
some additional basis to rely on Applicant's figures,
since the proposed subsidiaries have operated for
some time as subsidiaries of Applicant's predecessor
bank holding companies and were subject to Board
supervision and regulation. Each proposed subsidiary
is a separate company with a history of independent
operation. Finally, since Applicant's three proposed
subsidiaries are located 40 miles to more than 190
miles apart, it is implausible to believe that these
entities might jointly serve a single large market area.
Thus the Board not only rejects the criterion suggested
by the insurance parties but also finds it is inapplicable
in this case.
Consummation of the proposal would not result in
the elimination of any competition. Furthermore,
there is no evidence in the record to indicate that
approval of this proposal would result in undue concentration of resources, decreased or unfair competition, conflicts of interest, unsound banking practices,
or other adverse effects on the public interest. Accordingly, the Board has determined that the balance of the
public interest factors it must consider under section
4(c)(8) of the Act is consistent with approval of the
application.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be
and hereby are approved. This determination is subject to all of the conditions set forth in Regulation Y,
including 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 bank holding company or any of its
subsidiaries as the Board finds necessary to assure
compliance with the provisions and purposes of the
Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof. These
transactions 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 Kansas City, pursuant
to delegated authority.
By order of the Board of Governors, effective
December 16, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller. Absent and not voting:
Governors Wallich and Rice.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
163
Orders Approved Under Sections 3 and 4 of the
Bank Holding Company Act
Fidelcor, Inc.
Philadelphia, Pennsylvania
Order Approving Acquisition of a Bank Holding
Company and Underwriting Credit-Related
Insurance
Fidelcor, Inc., Philadelphia, Pennsylvania, a bank
holding company within the meaning of the Bank
Holding Company Act of 1956, as amended ("BHC
Act" or "Act") (12 U.S.C. § 1841 et seq.), has applied for the Board's approval under section 3(a)(3) of
the Act (12 U.S.C. § 1842(a)(3)), to acquire Merchants
Bancorp., Inc., Allentown, Pennsylvania ("Merchants"), and thereby indirectly to acquire Merchants
Bank, N.A., Allentown, Pennsylvania ("Merchants
Bank"), and Merchants Bank North, Wilkes-Barre,
Pennsylvania ("Merchants North"). Applicant has
also filed a section 4(c)(8) application (12 U.S.C.
§ 1843(c)(8)) to acquire Merchants' nonbanking subsidiary, Merchants Life Insurance Company, Phoenix,
Arizona, and thereby to underwrite credit-related life
and accident and health insurance.
Notice of these applications, affording an opportunity for interested persons to submit comments, has
been given in accordance with section 3(b) of the BHC
Act (51 Federal Register 33,804 (1986)). The time for
filing comments has expired, and the Board has considered these applications and all comments received
in light of the factors set forth in section 3(c) of the
BHC Act (12 U.S.C. § 1842(c)) and the considerations
in section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)).
Applicant is the fourth largest commercial banking
organization in Pennsylvania, holding deposits of $5.7
billion, representing 5.9 percent of total deposits in
commercial banks in the state.1 Merchants is the 12th
largest commercial banking organization in Pennsylvania, controlling deposits of $1.8 billion, representing
1.8 percent of total deposits in commercial banks in
the state. Upon consummation of this proposal, Applicant would become the third largest banking organization in the state and would control approximately 7.7
percent of deposits in commercial banks in the state.
Consummation of the proposal would not have a
significant adverse effect on the concentration of banking resources in the state.
1. AH banking data are as of June 30, 1986, unless otherwise
specified.
164
Federal Reserve Bulletin • February 1987
Applicant and Merchants compete in the Allentown/
Bethlehem market.2 Applicant is the sixth largest of 38
commercial banking organizations in the market, with
total deposits of $154.2 million, representing 3.1 percent of total deposits in commercial banks.3 Merchants is the largest commercial banking organization
in the market, with total deposits of $1.13 billion,
representing 22.6 percent of total deposits in commercial banks in the market. After consummation of the
proposal, Applicant's share of the deposits in commercial banks in the market would be 25.7 percent. The
Allentown/Bethlehem market is considered moderately concentrated, with the four largest banks controlling
62.1 percent of the deposits in commercial banks. The
Herfindahl-Hirschman Index ("HHI") will increase
by 152 points to 1,377 and the four-firm concentration
ratio will increase to 65.2 percent.4
Although consummation of the proposal would eliminate some existing competition between Applicant
and Merchants in the Allentown/Bethlehem banking
market, numerous other commercial banking organizations would remain as competitors in the market
after consummation. In addition, the presence of 22
thrift institutions that control approximately 27 percent of the market's total deposits mitigates the anticompetitive effects of the transaction.5 Thrift institutions already exert a considerable competitive
influence in the market as providers of NOW accounts
and consumer loans. In addition, several of the thrift
institutions make commercial loans and provide an
alternative for such services in the Allentown/Bethlehem market. Based upon the above considerations,
the Board concludes that consummation of the propos-
2. The Allentown/Bethlehem market is defined by the Allentown/
Bethlehem Metropolitan Statistical Area and includes Carbon, Lehigh, Northampton and Warren Counties in Pennsylvania.
3. Market structure data are as of June 30, 1985, and account for all
acquisitions that have been consummated as of September 29, 1986.
4. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), any market in which the
post-merger HHI is between 1000 and 1800 is considered moderately
concentrated, and the Department is likely to challenge a merger that
increases the HHI by more than 100 points, unless other facts of
record indicate that the merger is not likely substantially to lessen
competition. The Department has informed the Board that a bank
merger or acquisition generally will not be challenged (in the absence
of other factors indicating anticompetitive effects) unless the postmerger HHI is at least 1800 and the merger increases the HHI by at
least 200 points.
5. The Board has previously indicated that thrift institutions have
become, or have the potential to become, major competitors of
commercial banks. National City Corporation, 70 FEDERAL RESERVE
BULLETIN 743 (1984); NCNB
Bancorporation,
70 FEDERAL RESERVE
BULLETIN 2215 (1984); GeneralBancshares Corporation, 69 FEDERAL
RESERVE BULLETIN 802 (1983); First Tennessee National Corporation, 69 FEDERAL RESERVE BULLETIN 298 (1983).
al is not likely to substantially lessen competition in
the Allentown/Bethlehem banking market.6
The Board has also considered the effects of this
proposal on probable future competition in the markets in which either Applicant or Merchants, but not
both, competes. In light of the number of probable
future entrants into each of these markets and other
facts of record, the Board concludes that consummation of this proposal would not have any significant
adverse effect on probable future competition in any
market.
In its evaluation of Applicant's managerial resources, the Board has considered certain violations
by Applicant and its subsidiary bank and Merchants
and its subsidiary banks of the Currency and Foreign
Transactions Reporting Act ("CFTRA") and the regulations thereunder.7 In this regard, the Board notes
that Applicant brought these matters to the attention
of the appropriate supervisory authorities after the
violations were discovered through an internal audit.
Applicant and its subsidiary bank and Merchants and
its subsidiaries have also undertaken comprehensive
remedial programs to correct these violations and to
prevent violations from occurring in the future. Applicant has advised the Board that it has: completely
restructured its compliance function and instituted a
new compliance committee; designated a compliance
officer with responsibility for compliance management; created a new unit to manage all aspects of
CFTRA and provided this unit with the authority and
capacity to examine every reportable transaction, including multiple deposits or withdrawals involving a
single account on a given day, and to review all CTR
reports for accuracy and completeness before filing;
reviewed, revised, automated and centralized the exemption lists which are regularly distributed to all
branches; prepared a handbook exclusively on the
subject of CFTRA compliance and distributed the
handbook throughout the branches and appropriate
operations areas; developed a separate policies and
procedures manual for CFTRA compliance; provided
training for personnel in the branch system, the money
center, bookkeeping, and other areas affected by the
CFTRA regulations; and incorporated CFTRA training into all new branch staff training sessions.
The sufficiency of the compliance procedures adopted by Applicant and their efficacy in correcting the
6. If 50 percent of deposits held by thrift institutions in the
Allentown/Bethlehem banking market were included in the calculation
of market concentration, the share of total deposits held by the four
largest organizations would be 52.2 percent. Applicant would control
21.8 percent of the market's deposits upon consummation. The HHI
would increase by 100 points to 995.
7. 31 U.S.C. § 5311 et seq.\ 31 C.F.R. § 103.
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deficiencies have been reviewed by examiners of the
Office of the Comptroller of the Currency. The Board
notes that Applicant has cooperated fully with law
enforcement agencies. The Board has also consulted
with appropriate enforcement agencies with respect to
this matter, and has considered Applicant's past record of compliance with the law.
The Board has also considered certain violations of
CFTRA by Merchants' subsidiary banks. Merchants
has taken remedial action as a result of the discovery
of these violations, including the formation of a compliance unit and additional staff training. Applicant has
stated that following the acquisition, it will extend its
compliance system to Merchants' subsidiaries.
For the foregoing reasons and based upon a review
of all of the facts of record, the Board concludes that
the managerial resources of Applicant and Merchants
are consistent with approval. The Board also finds that
the financial resources and future prospects of Applicant and Merchants are consistent with approval of the
applications. Considerations relating to convenience
and needs of the communities to be served also are
consistent with approval.
Applicant has also applied, pursuant to section
4(c)(8) of the Act, to acquire Merchants Life Insurance
Company, Phoenix, Arizona ("Merchants Life"), the
nonbanking subsidiary of Merchants, and thereby to
engage in reinsuring credit-related life and accident
and health insurance in conjunction with consumer
lending. These activities are permissible for bank
holding companies under section 225.25 (b)(8) of the
Board's Regulation Y (12 C.F.R. § 225.25(b)(8)). Consummation of the proposal would not result in the
elimination of any competition. Furthermore, there is
no evidence in the record to indicate that approval of
this proposal would result in undue concentration of
resources, decreased or unfair competition, conflicts
of interest, unsound banking practices, or other adverse effects on the public interest. Accordingly, the
Board has determined that the balance of the public
interest factors it must consider under section 4(c)(8)
of the Act is consistent with approval of the application.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
sections 3 and 4 of the Act should be and hereby are
approved. The banking acquisition shall not be consummated before the thirtieth calendar day following
the effective date of this Order, and neither the banking acquisition nor the nonbanking acquisition shall
occur later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
Philadelphia, acting pursuant to delegated authority.
The determination with respect to Applicant's non
165
banking activities is subject to all of the conditions set
forth in Regulation Y, including sections 225.4(d) and
225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to
the Board's authority to require such modification or
termination of activities of the 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 Act and the Board's
regulations and orders issued thereunder.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
NBD Bancorp, Inc.
Detroit, Michigan
Order Approving Acquisition of a Bank Holding
Company and a Nonbanking Company
NBD Bancorp, Inc., Detroit, Michigan, a bank holding
company within the meaning of the Bank Holding
Company Act (12 U.S.C. § 1841 et seq.) ("Act"), has
applied for the Board's approval under section 3 of the
Act (12 U.S.C. § 1842) to acquire Omnibank Corp.,
Wyandotte, Michigan ("Omni"), and thereby indirectly to acquire Wyandotte Savings Bank, Wyandotte,
Michigan ("Bank"). 1
Applicant has also applied for the Board's approval
under section 4(c)(8) of the Act (12 U.S.C.
§ 1843(c)(8)) to acquire Computer Communications of
America, Inc., Detroit, Michigan ("CCA"), which
engages in providing loan servicing and data processing services to financial institutions. CCA is presently
a subsidiary of Applicant's lead bank, National Bank
of Detroit, Detroit, Michigan.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the applications and all comments
1. Applicant has also applied under section 3(a)(1) of the Act
(12 U.S.C. § 1842(a)(1)) for approval for its wholly owned subsidiary,
NBD Southern Corporation ("NBDSC"), to become a bank holding
company through acquisition of Omni. NBDSC has no significance
except as a means to facilitate the acquisition of Omni.
166
Federal Reserve Bulletin • February 1987
received in light of the factors set forth in section 3(c)
and the considerations specified in section 4(c)(8) of
the Act.
Applicant, the largest commercial banking organization in Michigan, controls 25 subsidiary banks with
total deposits of $12.1 billion, representing 21 percent
of total deposits in commercial banks in the state.2
Omni is the fifteenth largest commercial banking organization in the state, controlling one bank subsidiary
with total deposits of $315 million, representing 0.5
percent of total deposits in commercial banking organizations in the state. Upon consummation of this
acquisition, Applicant would remain the largest commercial banking organization in the state, controlling
total deposits of $12.4 billion, representing 21.5 percent of total deposits in commercial banking organizations in the state. Consummation of this proposal
would not significantly increase the concentration of
banking resources in Michigan.
Applicant and Omni compete in the Detroit banking
market.3 Applicant is the largest commercial banking
organization in the Detroit banking market, controlling
28.6 percent of the total deposits in commercial banking organizations in the market. Omni is the eighth
largest commercial banking organization in the Detroit
banking market, controlling 1.1 percent of the total
deposits in commercial banking organizations in the
market. Upon consummation of this proposal, Applicant would remain the largest commercial banking
organization in the market, controlling 29.7 percent of
the total deposits in commercial banking organizations
in the market. After consummation of this proposal,
the Detroit banking market would become highly
concentrated, with the four largest commercial banking organizations controlling 77 percent of the deposits
in commercial banking organizations in the market and
the Herfindahl-Hirschman Index ("HHI") would increase by 64 points to 1806.4
Although consummation of the proposal would eliminate some existing competition between Applicant
and Omni in the Detroit banking market, numerous
other commercial banking organizations would remain
as competitors in the market upon consummation.
Based upon the above considerations, the Board concludes that consummation of the proposal is not likely
2. All banking data are as of December 31, 1985.
3. The Detroit banking market is approximated by the Detroit
RMA.
4. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)) ("Guidelines"), a market in
which the post-merger HHI is over 1800 is considered highly concentrated. In such markets, the Department is likely to challenge a merger
that produces an increase in the HHI of 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 increases the HHI by at least 200
points.
to substantially lessen competition in the Detroit banking market.
In its evaluation of Applicant's managerial resources, the Board has considered certain violations
by two of Applicant's subsidiary banks of the Currency and Foreign Transactions Reporting Act
("CFTRA") and the regulations thereunder. With
regard to the CFTRA violations, the Board notes that
Applicant has cooperated with law enforcement agencies, has subsequently reported previously unreported
transactions to the Internal Revenue Service and has
adopted measures designed to prevent recurrence of
such violations. Applicant had incorrectly defined
exempt customers, and it has clarified its procedures
for identifying exempt customers. Applicant has also
redesigned its exempt customer cards to insure that
adequate information is provided, has redefined its
procedures for the periodic review of currency transaction report forms, and has developed new training
programs to familiarize all customer contact personnel
with CFTRA requirements. An automated system has
been implemented which produces a listing of the
previous day's large cash transactions for each branch
location, and Applicant will acquire software which
permits aggregating transactions throughout its branch
system.
The sufficiency of the compliance procedures adopted to address Applicant's subsidiary banks' CFTRA
violations has been reviewed by examiners from the
Office of the Comptroller of the Currency. The Board
also has consulted with appropriate enforcement agencies, and has considered Applicant's past record of
cooperation with supervisory and enforcement agencies to comply with the law.
For the foregoing reasons, and based upon a review
of all of the facts of record, the Board concludes that
the managerial resources of NBD, Omni and their
respective subsidiary banks are consistent with approval. The Board also finds that the financial resources and future prospects of Applicant, Omni, and
their subsidiary banks are satisfactory. Based upon a
review of all of the facts of record, the Board concludes that the financial and managerial resources of
Applicant, Omni and their respective subsidiary banks
are consistent with approval of this transaction. Considerations related to the convenience and needs of the
communities to be served also are consistent with
approval of the transaction.
Applicant has also applied, pursuant to section
4(c)(8) of the Act, to acquire CCA and thereby engage
in the provision of loan servicing and data processing
services to financial institutions. The Board has determined that the activity of loan servicing and data
processing services are permissible for bank holding
companies (12 C.F.R. §§ 225.25(b)(1) and (7)). CCA
previously conducted these activities as a subsidiary
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of Applicant's lead bank, and there is no evidence in
the record to indicate that approval of this proposal
would result in undue concentration of resources,
decreased or unfair competition, conflicts of interest,
unsound banking practices, or other adverse effects on
the public interest. Accordingly, the Board has determined that the balance of the public interest factors it
must consider under section 4(c)(8) of the Act is
consistent with approval of the application.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
sections 3 and 4 of the Act should be, and hereby are,
approved. The acquisition of Omni shall not be consummated before the thirtieth calendar day following
the effective date of this Order, and neither the acquisition of Omni nor the acquisition of CCA shall be
made later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or the Federal Reserve Bank of
Chicago, pursuant to delegated authority. The determination with respect to Applicant's nonbanking activities is subject to all of the conditions set forth in
Regulation Y, including sections 225.4(d) and
225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to
the Board's authority to require such modifications or
termination of activities of the 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 Act and the Board's
regulations and orders issued thereunder.
By order of the Board of Governors, effective
December 1, 1986.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, and Heller. Absent and not voting: Governors Wallich, Rice, and Angell.
167
company subsidiaries, Standard Chartered Holdings,
Inc., and Union Bancorp, both of Los Angeles, California, have applied for the prior approval of the Board
under section 3 of the Bank Holding Company Act
(12 U.S.C. § 1842) ("BHC Act") to acquire United
Bancorp of Arizona, Phoenix, Arizona, and thereby to
acquire indirectly United Bank of Arizona, Phoenix,
Arizona ("Bank"). Applicant has also applied for the
prior approval of the Board under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) to acquire H.S.
Pickrell Company, Phoenix, Arizona, and thereby
engage in mortgage banking. This activity is authorized for bank holding companies pursuant to the
Board's Regulation Y, 12 C.F.R. § 225.25(b)(1). Further, Applicant has provided notice to the Board under
section 4(c)(14) to acquire United Bancorp Export
Trading Company, Phoenix, Arizona, and thereby
engage in export trading.
Notice of the applications, affording opportunity for
interested persons to submit comments, has been
published (51 Federal Register 36,757 (1986)). The
time for filing comments has expired, and the Board
has considered the applications and all comments
received in light of the factors set forth in sections 3(c)
and 4 of the BHC Act.1
Union Bancorp is the fifth largest commercial banking organization in California with domestic deposits
of approximately $6.2 billion, representing 3.2 percent
of the total deposits in commercial banks in California.2 Bank is the fourth largest commercial banking
organization in Arizona with domestic deposits of
approximately $1.9 billion, representing 8.6 percent of
the total deposits in commercial banks in Arizona.
Section 3(d) of the BHC Act (12 U.S.C. § 1842(d)),
the Douglas Amendment, prohibits the Board from
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Standard Chartered PLC, Standard Chartered
Bank, and Standard Chartered Overseas
Holdings Ltd.
London, England
Standard Chartered Holdings, Inc., and Union
Bancorp
Los Angeles, California
Order Approving Acquisition of a Bank Holding
Company and Certain Nonbanking Subsidiaries
Standard Chartered PLC, Standard Chartered Bank,
and Standard Chartered Overseas Holdings Ltd., all of
London, England, and their domestic bank holding
1. In connection with these applications, the American Council of
Life Insurance, the American Insurance Association, the National
Association of Independent Insurers, and the Alliance of American
Insurers submitted comments protesting Board approval of these
applications on the grounds that the general insurance agency activities conducted by a subsidiary of Bank are prohibited under the
amendments to section 4 of the BHC Act contained in the Garn-St
Germain Depository Institutions Act. The Board also received comments from the National Association of Life Underwriters, the
National Association of Professional Insurance Agents, the Independent Insurance Agents of America Incorporated, the National Association of Casualty and Surety Agents, and the National Association of
Surety Bond Producers, raising substantially the same arguments. In
response to the protest, Applicant has agreed that, within two years of
consummation of its acquisition of Bank, Bank will divest or terminate
its general insurance agency activities, unless during such period
Applicant receives approval pursuant to an application under section
4(c)(8) of the BHC Act to retain such activities. During this two-year
period or unless authorization is granted pursuant to the BHC Act for
broader activities, Applicant will limit the insurance agency activities
of Bank and its subsidiaries to the renewal of existing policies and
those credit-related insurance agency activities permitted under section 4(c)(8)(A) of the BHC Act. In the Board's view, these divestiture
commitments address the issues raised by Protestants.
2. Banking data are as of June 30, 1986.
168
Federal Reserve Bulletin • February 1987
approving any application by a bank holding company
to acquire control of any bank located outside of the
holding company's home state,3 unless such acquisition is "specifically authorized by the statute laws of
the State in which [the] bank is located, by language to
that effect and not merely by implication." The Board
has previously determined that the statute laws of
Arizona authorize an out-of-state financial institution
to acquire any Arizona financial institution that has
applied to operate in Arizona before May 31, 1984,
subject to approval by the State Banking Superintendent.4 The Arizona State Banking Superintendent has
informed the Board that the proposal does not present
any of the grounds for denial of the application under
Ariz. Rev. Stat. § 6-326 and, accordingly, the Superintendent anticipates approving the application. Based
on the foregoing, the Board has determined that the
proposed acquisition is specifically authorized by the
statute laws of Arizona and is thus permissible under
the Douglas Amendment, subject to Applicant's obtaining the approval of the Superintendent pursuant to
section 6-322 of the Arizona Revised Statutes. The
Board's order is specifically conditioned upon satisfaction of the state regulatory approval requirement.
Applicant does not operate a bank in any market in
which Bank operates. Applicant does, however, operate a consumer lending subsidiary that competes with
Bank and its subsidiaries in Arizona. Applicant's
market share is small and consummation of the proposal would not result in any significant decrease in
competition or increase in concentration in any relevant market. Accordingly, consummation of the proposal is not likely to result in the elimination of any
significant existing competition. In view of the numerous entrants into the relevant markets, the Board
concludes that the proposal would not have any significant adverse effect on probable future competition.
Section 3(c) of the BHC Act requires in every case
that the Board consider the financial resources of the
applicant organization and the bank or bank holding
company to be acquired. As the Board has previously
stated, review of the financial resources of foreign
banking organizations raises a number of complex
issues that the Board believes requires careful consideration and that the Board continues to have under
review.5 In this regard, the Board has initiated consul3. A bank holding company's home state is that state in which the
operations of the bank holding company's banking subsidiaries were
principally conducted on July 1, 1966, or the date on which the
company became a bank holding company, whichever is later.
4. Ariz. Rev. Stat. § 6-321 et seq. (effective October 1, 1986). See
Marshall & Ilsley, 72 FEDERAL RESERVE BULLETIN 720 (1986).
5. Bank of Montreal,
70 FEDERAL RESERVE BULLETIN 664 (1984);
Mitsubishi
Bank, Ltd., 70 FEDERAL RESERVE BULLETIN 518 (1984).
See also Policy Statement on Supervision and Regulation of ForeignBased Bank Holding Companies, 1 Federal Reserve Regulatory
Service 1 4-835 (1979).
1
tations with appropriate foreign bank supervisors and
notes that work is currently in progress among foreign
and domestic bank supervisory officials to develop
more fully the concept of functional equivalency of
capital ratios for banks of different countries. Pending
the outcome of these consultations and deliberations,
the Board has determined to consider the issues raised
by applications by foreign banks to acquire domestic
banks on a case-by-case basis.
In this case, the Board notes that the capital ratio of
Applicant, as publicly reported, is above the minimum
level established by the Board for domestic bank
holding companies. As in similar cases, the Board has
considered appropriate adjustments to Applicant's
capital ratio to reflect differences in accounting and
regulatory requirements in the United States and
abroad, including discounting for the practice of revaluation of certain assets and giving positive weight to
the issuance by Applicant of a significant amount of
undated loan capital, which is recognized by the Bank
of England and the Board as primary capital. Based
upon these considerations, the Board notes that the
primary capital ratio of Applicant is currently, and will
remain upon consummation, above the minimum capital guidelines established by the Board for U.S. bank
holding companies. Further, Applicant is in compliance with the capital and other financial requirements
of the appropriate supervisory authorities in England
and Applicant's resources and prospects are viewed as
satisfactory by those authorities. Finally, the Board
notes that Applicant's current U.S. operations are
satisfactory.
The Board expects that Applicant will use its capacity to raise capital to increase the tangible primary
capital level of Union Bancorp and United Bancorp
and to maintain Union Bancorp, Union Bank, United
Bancorp and Bank as among the more strongly capitalized banking organizations of comparable size in the
United States. The Board notes as a positive factor
that Applicants have raised additional capital equal to
a significant portion of the purchase price in anticipation of the proposed acquisition. Based on these and
all of the other facts of record, the Board concludes
that the financial and managerial factors are consistent
with approval of this application. Factors related to
the convenience and needs of the communities to be
served are also consistent with approval.
There is no evidence in the record to indicate that
approval of this proposal would result in undue concentration of resources, decreased or unfair competition, conflicts of interests, unsound banking practices,
or other adverse effects on the public interest. Accordingly, the Board has determined that the balance of
public interest factors it must consider under section
4(c)(8) of the BHC Act is favorable and consistent with
Legal Developments
approval of the application to acquire Bank's nonbanking subsidiaries and activities.
The Board has also considered the notice of Applicant's proposed investment in United Bancorp Export
Trading Company under section 4(c)(14) of the BHC
Act. Based on the facts of record, the Board has
determined that disapproval of the proposed investment is not warranted.
Based on the foregoing and other facts of record,
and conditioned upon certain commitments made by
Applicant, the Board has determined that the applications under sections 3 and 4 of the BHC Act should be
and hereby are approved, subject to the express
condition that Applicant obtain the approval of the
Arizona Superintendent of Banks pursuant to section
6-322 of the Arizona Revised Statutes. The acquisition
of Bank shall not be consummated before the thirtieth
calendar day following the effective date of this Order
or later than three months after the effective date of
this Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
ORDERS
APPROVED
By Federal Reserve
UNDER
BANK
HOLDING
169
San Francisco, pursuant to delegated authority. The
determinations as to the nonbanking activities are
subject to all of the conditions contained in Regulation
Y, including those in sections 225.4(d) and 225.23(b)(3)
(12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the
Board's authority to require such modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with, or to prevent evasion of, the
provisions and purposes of the BHC Act and the
Board's regulations and orders issued thereunder.
By order of the Board of Governors, effective
December 9, 1986.
Voting for this action: Chairman Volcker and Governors
Seger, Angell, and Heller. Absent and not voting: Governors
Johnson, Wallich, and Rice.
JAMES M C A F E E
[SEAL]
COMPANY
Associate Secretary of the Board
ACT
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
Allied Bankshares, Inc.,
Thomson, Georgia
AmTex Bancshares, Inc.,
Bridge City, Texas
Ballard Kevil Bancorp, Inc.,
Kevil, Kentucky
Bank Corporation of Georgia,
Fort Valley, Georgia
Bank South Corporation,
Atlanta, Georgia
Bankers' Bancorporation of
Missouri, Inc.,
Jefferson City, Missouri
Boynton Holding Company,
Boynton, Oklahoma
Brannen Banks of Florida, Inc.
Inverness, Florida
Broadway Bancshares, Inc.,
San Antonio, Texas
Bank(s)
Bank of Columbia County,
Harlem, Georgia
Pavillion National Bank,
Dallas, Texas
The Kevil Bank,
Kevil, Kentucky
Southern Bank and Trust
Company,
Savannah, Georgia
Southern Bancorp, Inc.,
Way cross, Georgia
Missouri Independent Bank,
Jefferson City, Missouri
First National Bank,
Boynton, Oklahoma
The Bank of Brooksville,
Brooksville, Florida
Heights National Bank,
San Antonio, Texas
Reserve
Bank
Effective
date
Atlanta
November 26, 1986
Dallas
December 12, 1986
St. Louis
December 1, 1986
Atlanta
November 19, 1986
Atlanta
November 28, 1986
St. Louis
December 1, 1986
Kansas City
December 1, 1986
Atlanta
December 3, 1986
Dallas
November 21, 1986
170
Federal Reserve Bulletin • February 1987
Section 3—Continued
,• .
A
Applicant
CB&T Financial Corp.,
Fairmont, West Virginia
Central Bancshares, Inc.,
Louisville, Kentucky
Central Illinois Community
Bancorp, Inc.,
Peoria, Illinois
Charter 17 Bancorp, Inc.,
Richmond, Indiana
Cherry Valley Bancshares, Inc.,
Cherry Valley, Arkansas
CNB Bancshares, Inc.,
Whitehouse, Texas
Citizens Bancorp Investment,
Inc.,
Lafayette, Tennessee
Citizens Bancshares of Eldon,
Inc.,
Eldon, Missouri
Citizens Southern Bancshares,
Inc.,
Vernon, Alabama
Commercial Bancorporation of
Colorado,
Denver, Colorado
Commercial Bank Investment
Company,
Denver, Colorado
County Bancorporation, Inc.,
Jackson, Missouri
Crockett County National
Bancshares, Inc.,
Ozona, Texas
DuPage Financial Corporation,
Naperville, Illinois
F & M Financial Services
Corporation,
Menomonee Falls, Wisconsin
Faith Bank Holding Company,
Pierre, South Dakota
FCB Corporation,
Manchester, Tennessee
r> w \
Bank(s)
The Union Bank of Harrisville,
Harrisville, West Virginia
The Central Bank of North
Pleasure ville,
Pleasure ville, Kentucky
Northwest Community Bank of
Peoria,
Peoria, Illinois
FIRST TAZEWELL BANCORP,
INC.,
East Peoria, Illinois
First National Bancorp,
New Castle, Indiana
Bank of Cherry Valley,
Cherry Valley, Arkansas
City National Bank,
Whitehouse, Texas
Dale Hollow Holding Company,
Celina, Tennessee
Reserve
^
Effective
^
Richmond
November 28, 1986
St. Louis
November 20, 1986
Chicago
November 28, 1986
Chicago
November 26, 1986
St. Louis
December 1, 1986
Dallas
December 10, 1986
Atlanta
December 3, 1986
Citizens Bank of Eldon,
Eldon, Missouri
St. Louis
December 9, 1986
Citizens State Bank,
Vernon, Alabama
Atlanta
December 10, 1986
Rocky Mountain Bank & Trust
Company,
Fort Collins, Colorado
Kansas City
November 26, 1986
Delta Counties Bank,
Sikeston, Missouri
Crockett County National Bank,
Ozona, Texas
St. Louis
December 15, 1986
Dallas
December 2, 1986
ALLIED BANCSHARES OF
ILLINOIS, INC.,
Joliet, Illinois
Bank of Fond du Lac,
Fond du Lac, Wisconsin
Chicago
November 24, 1986
Chicago
November 28, 1986
Minneapolis
November 21, 1986
Atlanta
November 20, 1986
Farmers State Bank,
Faith, South Dakota
The Meltons Bank,
Gassaway, Tennessee
Legal Developments
171
Section 3—Continued
Applicant
Financial Bancshares, Inc.,
Topeka, Kansas
First Bancorp of Russell
County, Inc.,
Russell Springs, Kentucky
First Columbus Financial
Corporation,
Columbus, Mississippi
First Community Shares, Inc.,
Carmel, California
First Interstate Corporation of
Wisconsin,
Sheboygan, Wisconsin
First Michigan Bank
Corporation,
Zeeland, Michigan
First Mid-Illinois Bancshares,
Inc.,
Mattoon, Illinois
FIRST NORTHBROOK
BANCORP, INC.,
Northbrook, Illinois
First Ohio Bancshares, Inc.,
Toledo, Ohio
1st State Corporation,
Harwood Heights, Illinois
Franklin Capital Corporation,
Morton Grove, Illinois
GreatBanc, Inc.,
Itasca, Illinois
Hemet Bancorp,
Hemet, California
Hopedale Investment Company,
Quincy, Illinois
Hub Financial Corporation,
Lubbock, Texas
Illinois Marine Bancorp, Inc.,
Elmhurst, Illinois
Jack Banshares, Inc.,
Commerce, Oklahoma
Key Centurion Bancshares,
Inc.,
Charleston, West Virginia
Bank(s)
Reserve
Bank
Effective
date
Financial Diversified Investment
Corporation,
Topeka, Kansas
Citizens Bank and Trust
Company,
Campbellsville, Kentucky
First Columbus National Bank,
Columbus, Mississippi
Kansas City
December 4, 1986
St. Louis
November 25, 1986
St. Louis
November 17, 1986
Centennial Bank,
Hay ward, California
Mid-Continental Bancorporation,
Inc.,
Milwaukee, Wisconsin
State Savings Bank,
Lowell, Michigan
San Francisco
November 19, 1986
Chicago
December 1, 1986
Chicago
November 25, 1986
Tuscola Bancorp, Inc.,
Springfield, Illinois
Chicago
November 28, 1986
First Cary-Grove Corp.,
Cary, Illinois
Chicago
November 24, 1986
The Home Banking Company,
Gibsonburg, Ohio
Parkway Bank and Trust
Company,
Harwood Heights, Illinois
First State Bank & Trust
Company of Franklin Park,
Franklin Park, Illinois
Burlington Capital Corporation,
Wilmette, Illinois
FNB Bancorp., Inc.,
Chicago Heights, Illinois
The Bank of Hemet,
Hemet, California
Community Bank of Hopedale,
Hopedale, Illinois
City Bank, N.A.,
Lubbock, Texas
Colonial Bancorporation, Inc.,
Peru, Illinois
The First State Bank of
Commerce,
Commerce, Oklahoma
Nicholas County Bank,
Summersville, West Virginia
Cleveland
December 8, 1986
Chicago
December 1, 1986
Chicago
November 28, 1986
Chicago
November 28, 1986
San Francisco
November 28, 1986
Chicago
December 1, 1986
Dallas
December 5, 1986
Chicago
November 21, 1986
Kansas City
November 19, 1986
Richmond
November 26, 1986
172
Federal Reserve Bulletin • February 1987
Section 3—Continued
Applicant
Lake Bank Shares, Inc.,
Albert Lea, Minnesota
Lane Financial, Inc.,
Northbrook, Illinois
Longview Capital Corporation,
Longview, Illinois
Lunenburg Community
Bankshares, Inc.,
Kenbridge, Virginia
Mercantile Bancorporation Inc.,
St. Louis, Missouri
Merchants National
Corporation,
Indianapolis, Indiana
Mid States Bancshares, Inc.,
Moline, Illinois
Mid-Continental Holdings, Inc.,
Sheboygan, Wisconsin
Middleburg Bancorp, Inc.,
Middleburg, Kentucky
Midstate Bancorp,
Hinton, Oklahoma
Norstar Bancorp, Inc.,
Albany, New York
Northern of Tennessee Corp.,
Clarksville, Tennessee
Northwest Arkansas
Bancshares, Inc.,
Bentonville, Arkansas
PNB Financial Corporation,
Warrenton, Virginia
Premier Bankshares
Corporation,
Tazewell, Virginia
Bank(s)
Security State Bank of Albert
Lea,
Albert Lea, Minnesota
Emmons Agency, Inc.,
Emmons, Minnesota
Bank of Westmont,
Westmont, Illinois
The First National Bank of
Ogden,
Ogden, Illinois
The Lunenburg County Bank,
Kenbridge, Virginia
First Bancshares Corporation of
Illinois,
Alton, Illinois
The Citizens National Bank of
Tipton,
Tipton, Indiana
NBG Financial Corporation,
Greenwood, Indiana
Mid-Southern Indiana Bancorp,
Seymour, Indiana
First National Bank of Moline,
Moline, Illinois
Continental Bank & Trust Co.,
Milwaukee, Wisconsin
Farmers Deposit Bank,
Middleburg, Kentucky
First State Bank,
Hinton, Oklahoma
Peconic Bancshares, Inc.,
Riverhead, New York
Central Bancorp, Inc.,
Murfreesboro, Tennessee
Bedford County Bank,
Shelbyville, Tennessee
Bank of Pea Ridge,
Pea Ridge, Arkansas
Mcllroy Bank and Trust,
Fayetteville, Arkansas
Siloam Springs Bancshares, Inc.,
Bentonville, Arkansas
The Peoples National Bank of
Warrenton,
Warrenton, Virginia
Peoples Bank, Inc.,
Honaker, Virginia
Reserve
Bank
Effective
date
Minneapolis
December 8, 1986
Chicago
November 21, 1986
Chicago
November 28, 1986
Richmond
December 1, 1986
St. Louis
December 8, 1986
Chicago
November 21, 1986
Chicago
November 28, 1986
Chicago
December 1, 1986
St. Louis
November 24, 1986
Kansas City
December 4, 1986
New York
December 1, 1986
Atlanta
November 24, 1986
St. Louis
November 25, 1986
Richmond
November 25, 1986
Richmond
November 28, 1986
Legal Developments
173
Section 3—Continued
,.
A
Applicant
R. Darryl Fisher, M.D., Inc.
Pension Trust,
Ada, Oklahoma
Republic Bancorp Inc.,
Flint, Michigan
Ridgeland Bancorp, Inc.,
Phillips, Wisconsin
Rio Grande City Bancshares,
Inc.,
Rio Grande City, Texas
Security Bancorp, Inc.,
Southgate, Michigan
Security Bancorporation, Inc.,
Newport, Minnesota
Southeast Banking Corporation,
Miami, Florida
STAR Financial Group, Inc.,
Marion, Indiana
Stark County Bancorp, Inc.,
Toulon, Illinois
State National Bancorp, Inc..
Maysville, Kentucky
Stigler Bancorporation, Inc.,
Stigler, Oklahoma
Sturm Investment, Inc.,
Omaha, Nebraska
Summcorp,
Fort Wayne, Indiana
i/ \
Bank(s)
Reserve
„ .
Bank
Effective
,
date
Pontotoc County Bank,
Roff, Oklahoma
Kansas City
December 9, 1986
Peoples State Bank,
Williamston, Michigan
Farmers State Bank,
Ridgeland, Wisconsin
Bank of Dallas,
Dallas, Wisconsin
Floresville Bancshares, Inc.,
Floresville, Texas
Chicago
November 24, 1986
Minneapolis
November 28, 1986
Dallas
November 25, 1986
Chicago
November 25, 1986
Minneapolis
November 26, 1986
Atlanta
November 28, 1986
Chicago
November 26, 1986
Chicago
November 28, 1986
Cleveland
November 24, 1986
Kansas City
November 24, 1986
Chicago
November 28, 1986
Chicago
November 26, 1986
Trenton Bank and Trust
Company,
Trenton, Michigan
The State Bank of Hudson,
Hudson, Wisconsin
Florida State Bank,
Destin, Florida
First National Bank of Madison
County,
Anderson, Indiana
Citizens National Bank of
Whitley County,
Columbia City, Indiana
Security Bank,
Elwood, Indiana
The Hamilton Bank,
Hamilton, Indiana
Citizens National Bank of Grant
County,
Marion, Indiana
Central Bank and Trust,
Muncie, Indiana
Bank of Henry County,
New Castle, Indiana
State Bank of Toulon,
Toulon, Illinois
Peoples Bank of Morehead,
Morehead, Kentucky
First Oklahoma National
Corporation,
Stigler, Oklahoma
First Holdings, Inc.,
Omaha, Nebraska
American State Bancorp,
Sheridan, Indiana
Western State Bank,
South Bend, Indiana
174
Federal Reserve Bulletin • February 1987
Section 3—Continued
Applicant
Tennessee State Bancshares,
Inc.,
Gatlinburg, Tennessee
Texas Commerce Bancshares,
Inc.,
Houston, Texas
Traders Bankshares, Inc.,
Spencer, West Virginia
Tri-County Bancorp, Inc.,
Corbin, Kentucky
Unibancorp, Inc.,
Chicago, Illinois
United Bancorp, Inc.,
Martins Ferry, Ohio
Valley Bancorporation,
Appleton, Wisconsin
Valley Holding Company,
Ronan, Montana
Warranty Bancorporation,
Ottumwa, Iowa
Wesbanco, Inc.,
Wheeling, West Virginia
Wesbanco, Inc.,
Wheeling, West Virginia
Western Bancshares of Clovis,
Inc.,
Clovis, New Mexico
Bank(s)
Reserve
Bank
Effective
date
Tennessee State Bank,
Gatlinburg, Tennessee
Atlanta
November 24, 1986
Texas Commerce Bank-San
Antonio,
Loop 410, San Antonio, Texas
Texas Commerce BankRichardson, N.A.,
Richardson, Texas
The Traders Bank,
Spencer, West Virginia
Tri-County National Bank,
Corbin, Kentucky
DuPage County Bank of Glendale
Heights,
Glendale Heights, Illinois
The Citizens State Bank of
Strasburg,
Strasburg, Ohio
Suburban State Bank,
Hartland, Wisconsin
Valley Bank of Ronan,
Ronan, Montana
South Ottumwa Savings Bank,
Ottumwa, Iowa
South Hills Bank,
Charleston, West Virginia
Wirt County Bank,
Elizabeth, West Virginia
Western Bank of Clovis,
Clovis, New Mexico
Dallas
November 28, 1986
Richmond
November 26, 1986
Cleveland
November 24, 1986
Chicago
November 19, 1986
Cleveland
November 25, 1986
Chicago
November 28, 1986
Minneapolis
November 24, 1986
Chicago
December 1, 1986
Cleveland
December 1, 1986
Cleveland
December 1, 1986
Dallas
November 25, 1986
Section 4
Applicant
Chemical New York
Corporation,
New York, New York
Norwest Corporation,
Minneapolis, Minnesota
The Standard Life Assurance
Company,
Edinburgh, Scotland
Bank of Scotland,
Edinburgh, Scotland
Nonbanking
Company/Activity
Reserve
Bank
Effective
date
Penmark Investments Inc.,
Chicago, Illinois
New York
November 20, 1986
acquire general insurance agency
assets from Bayly, Martin, and
Fay International, Inc.,
Fort Worth, Texas
IF A, Incorporated,
Palatine, Illinois
Minneapolis
November 26, 1986
New York
November 21, 1986
Legal Developments
175
Sections 3 and 4
Bank(s)/Nonbanking
Company
Applicant
Barnett Banks of Florida, Inc.
Jacksonville, Florida
BMR Bancorp, Inc.,
Decatur, Georgia
First of America Bank
Corporation,
Kalamazoo, Michigan
First of America
Bancorporation—Illinois,
Inc.,
Kalamazoo, Michigan
Trustcorp, Inc.,
Toledo, Ohio
First City Bancorp, Inc.,
Marietta, Georgia
nonbanking activities
The Citizens Bank of
Swainsboro,
Swainsboro, Georgia
nonbanking activities
Premier Bancorporation, Inc.,
Libertyville, Illinois
Premier Life Insurance Company,
Liberty ville, Illinois
Premier Bancorporation, Inc.,
Liberty ville, Illinois
Premier Life Insurance Company,
Liberty ville, Illinois
St. Joseph Bancorporation,
South Bend, Indiana
St. Joseph Mortgage Company,
Inc.,
South Bend, Indiana
Indiana Inc.,
Goshen, Indiana
Reserve
Bank
Effective
date
Atlanta
November 28, 1986
Atlanta
November 28, 1986
Chicago
November 20, 1986
Chicago
November 20, 1986
Cleveland
December 1, 1986
ORDERS APPROVED UNDER BANK MERGER ACT
By Federal Reserve
Banks
Applicant
Community Bank of Lunenburg,
Kenbridge, Virginia
First Virginia Bank-Citizens,
Clint wood, Virginia
First Virginia BankCommonwealth,
Grafton, Virginia
New Lowell State Bank,
Lowell, Michigan
Security Bank of Richmond,
Richmond, Michigan
Shelby County State Bank,
Shelbyville, Illinois
The Traders Bank,
Spencer, West Virginia
Bank(s)
Reserve
Bank
Effective
date
The Lunenburg County Bank,
Kenbridge, Virginia
Peoples Bank of Pound,
Pound, Virginia
First Virginia Bank-Surry,
Surry, Virginia
Richmond
December 1, 1986
Richmond
November 28, 1986
Richmond
December 1, 1986
State Savings Bank,
Lowell, Michigan
Security Bank Imlay City,
Imlay City, Michigan
Windsor State Bank,
Windsor, Illinois
The Traders Interim Bank, Inc.,
Spencer, West Virginia
Chicago
November 25, 1986
Chicago
November 25, 1986
Chicago
November 24, 1986
Richmond
November 26, 1986
176
Federal Reserve Bulletin • February 1987
PENDING
CASES INVOLVING
THE BOARD
OF
GOVERNORS
This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of
Governors is not named a party.
Independent Insurance Agents of America, et al. v.
Board of Governors, Nos. 86-1572, 1573, 1576
(D.C. Cir., filed Oct. 24, 1986).
Securities Industry Association v. Board of Governors, No. 86-2768 (D.D.C., filed Oct. 7, 1986).
Independent Community Bankers Association v.
Board of Governors, No. 86-5373 (8th Cir., filed
Oct. 3, 1986).
Jenkins v. Board of Governors, No. 86-1419 (D.C.
Cir., filed July 18, 1986).
Securities Industry Association v. Board of Governors, No. 86-1412 (D.C. Cir., filed July 14, 1986).
Adkins v. Board of Governors, No. 86-3853 (4th Cir.,
filed May 14, 1986).
Optical Coating Laboratory, Inc. v. United States,
No. 288-86C (U.S. Claims Ct., filed May 6, 1986).
CBC, Inc. v. Board of Governors, No. 86-1001 (10th
Cir., filed Jan. 2, 1986).
Howe v. United States, et al., No. 86-1430 (1st Cir.,
filed Dec. 6, 1985).
Myers, et al. v. Federal Reserve Board, No. 85-1427
(D. Idaho, filed Nov. 18, 1985).
Souser, et al. v. Volcker, et al., No. 85-C-2370, et al.
(D. Colo., filed Nov. 1, 1985).
Podolak v. Volcker, No. C85-0456, et al. (D. Wyo.,
filed Oct. 28, 1985).
Kolb v. Wilkinson,
et al., No. C85-4184 (N.D. Iowa,
filed Oct. 22, 1985).
Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D.
Minn., filed Oct. 21, 1985).
Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D.
Neb., filed Oct. 16, 1985).
Jensen v. Wilkinson, et al., No. 85-4436-S, et al. (D.
Kan., filed Oct. 10, 1985).
Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D.,
filed Oct. 8, 1985).
First National Bank of Blue Island Employee Stock
Ownership Plan v. Board of Governors, No. 852615 (7th Cir., filed Sept. 23, 1985).
First National Bancshares II v. Board of Governors,
No. 85-3702 (6th Cir., filed Sept. 4, 1985).
McHuin v. Volcker, et al., No. 85-2170 WARB (W.D.
Okl., filed Aug. 29, 1985).
Independent Community Bankers Associaton of South
Dakota v. Board of Governors, No. 84-1496 (D.C.
Cir., filed Aug. 7, 1985).
Urwyler, et al. v. Internal Revenue Service, et al., No.
85-2877 (9th Cir., filed July 18, 1985).
Johnson v. Federal Reserve System, et al., No. 864536 (5th Cir., filed July 16, 1985).
Wight, et al. v. Internal Revenue Service, et al., No.
85-2826 (9th Cir., filed July 12, 1985).
Cook v. Spillman, et al., No. 86-1642 (9th Cir., filed
July 10, 1985).
Florida Bankers Association v. Board of Governors,
No. 84-3883 and No. 84-3884 (11th Cir., filed Feb.
15, 1985).
Florida Department of Banking v. Board of Governors, No. 84-3831 (11th Cir., filed Feb. 15, 1985),
and No. 84-3832 (11th Cir., filed Feb. 15, 1985).
Lewis v. Volcker, et al., No. 86-3210 (6th Cir., filed
Jan. 14, 1985).
Brown v. United States Congress,
et al., No. 84-28876(IG) (S.D. Cal., filed Dec. 7, 1984).
Melcher v. Federal Open Market Committee, No. 841335 (D.D.C., filed Apr. 30, 1984).
Florida Bankers Association, et al. v. Board of Governors, Nos. 84-3269, 84-3270 (11th Cir., filed April
20, 1984).
Securities Industry Association v. Board of Governors, No. 80-2614 (D.C. Cir., filed Oct. 24., 1980),
and No. 80-2730 (D.C. Cir., filed Oct. 24, 1980).
177
Membership of the Board of Governors
of the Federal Reserve System, 1913-87
Name
Federal Reserve
District
Date of initial
oath of office
Other dates and information relating
to membership 2
Aug. 10, 1914
Reappointed in 31916 and 1926. Served until
Feb. 3, 1936.
Term expired Aug. 9, 1918.
Resigned July 21, 1918.
Term expired Aug. 9, 1922.
Reappointed in 1924. Reappointed in 1934
from the Richmond District. Served until
Feb. 3, 1936.3
Resigned Mar. 15, 1920.
Term expired Aug. 9, 1920.
Reappointed in 1928. Resigned Sept. 14,
1930.
Term expired Mar. 4, 1921.
Resigned May 12, 1923.
Died Mar. 22, 1923.
Resigned Sept. 15, 1927.
Reappointed in 1931. Served until Feb. 3,
1936.4
Died Nov. 28, 1930.
Resigned Aug. 31, 1930.
Resigned May 10, 1933.
Term expired Jan. 24, 1933.
Resigned Aug. 15, 1934.
Reappointed in 1936 and 1948. Resigned May
31, 1961.
Served until Feb. 10, 1936.3
Reappointed in 1936, 1940, and 1944.
Resigned July 14, 1951.
Resigned Sept. 30, 1937. 3
Served until Apr. 4, 1946.
Reappointed in 1942. Died Dec. 2, 1947.
Resigned July 9, 1936.
Reappointed in 1940. Resigned Apr. 15, 1941.
Served until Sept. 1, 1950.33
Served until Aug. 13, 1954.
Resigned Nov. 30, 1958.
Died Dec. 4, 1949.
Resigned Mar. 31, 1951.
Resigned Jan. 31, 1952.
Resigned June 30, 1952.
Reappointed in 1956. Term expired Jan. 31,
1970.
Reappointed in 1958. Resigned Feb. 28, 1965.
Reappointed in 1964. Resigned Apr. 30, 1973.
Served through Feb. 28, 1966.
Died Oct. 21, 1954.
Retired Apr. 30, 1967.
Reappointed in 1960. Resigned Sept. 18,
1963.
Reappointed in 1962. Served until Feb. 13,
1976.3
Charles S. Hamlin
Boston
Paul M. Warburg
Frederic A. Delano
W.P.G. Harding
Adolph C. Miller
New York
Chicago
Atlanta
San Francisco
Albert Strauss
Henry A. Moehlenpah
Edmund Piatt
New York
Chicago
New York
Oct. 26, 1918
Nov. 10, 1919
June 8, 1920
David C. Wills
John R. Mitchell
Milo D. Campbell
Daniel R. Crissinger
George R. James
Cleveland
Minneapolis
Chicago
Cleveland
St. Louis
Sept. 29, 1920
May 12, 1921
Mar. 14, 1923
May 1, 1923
May 14, 1923
Edward H. Cunningham...Chicago
Roy A. Young
Minneapolis
Eugene Meyer
New York
Wayland W. Magee
Kansas City
Eugene R. Black
Atlanta
M.S. Szymczak
Chicago
do
Oct. 4, 1927
Sept. 16, 1930
May 18, 1931
May 19, 1933
June 14, 1933
J.J. Thomas
Marriner S. Eccles
do
Nov. 15, 1934
Kansas City
San Francisco
.do
.do
.do
.do,
Joseph A. Broderick
New York
John K. McKee
Cleveland
Ronald Ransom
Atlanta
Ralph W. Morrison
Dallas
Chester C. Davis
Richmond
Ernest G. Draper
New York
Rudolph M. Evans
Richmond
James K. Vardaman, Jr. ..St. Louis
Lawrence Clayton
Boston
Thomas B. McCabe
Philadelphia
Edward L. Norton
Atlanta
Oliver S. Powell
Minneapolis
Wm. McC. Martin, Jr
New York
Feb. 3, 1936
do
do
Feb. 10, 1936
June 25, 1936
Mar. 30, 1938
Mar. 14, 1942
Apr. 4, 1946
Feb. 14, 1947
Apr. 15, 1948
Sept. 1, 1950
do
April 2, 1951
A.L. Mills, Jr
J.L. Robertson
C. Canby Balderston
Paul E. Miller
Chas. N. Shepardson
G.H. King, Jr
San Francisco
Kansas City
Philadelphia
Minneapolis
Dallas
Atlanta
Feb. 18, 1952
do
Aug. 12, 1954
Aug. 13, 1954
Mar. 17, 1955
Mar. 25, 1959
George W. Mitchell
Chicago
Aug. 31, 1961
178
MEMBERS1
APPOINTIVE
Federal Reserve
District
Name
Date of initial
oath of office
Other dates and information relating
to membership 2
Served until Mar. 8, 1974.3
Served through May 31, 1972.
Resigned Aug. 31, 1974.
Reappointed in 1968. Resigned Nov. 15, 1971.
Term began Feb. 1, 1970. Resigned Mar. 31,
1978.
Resigned June 1, 1975.
Resigned Jan. 2, 1976.
Resigned May 15, 1976.
Resigned Dec. 15, 1986.
Served through Feb. 29, 1980.
Resigned Nov. 17, 1978. 3
Served until Feb. 7, 1986.
Died Nov. 19, 1978.
Resigned Feb. 24, 1978.
Resigned Aug. 6, 1979.
Served through June 27, 1984.
Resigned Dec. 31, 1986.
Served through Feb. 11, 1982.
J. Dewey Daane
Sherman J. Maisel ...
Andrew F. Brimmer.
William W. Sherrill..
Arthur F. Burns
Richmond
San Francisco
Philadelphia
Dallas
New York
Nov. 29, 1963
Apr. 30, 1965
Mar. 9, 1966
May 1, 1967
Jan. 31, 1970
John E. Sheehan
Jeffrey M. Bucher....
Robert C. Holland ...
Henry C. Wallich
Philip E. Cold well....
Philip C. Jackson, Jr.
J. Charles Partee
Stephen S. Gardner..
David M. Lilly
G. William Miller
Nancy H. Teeters....
Emmett J. Rice
Frederick H. Schultz
Paul A. Volcker
Lyle E. Gramley
Preston Martin
Martha R. Seger
Wayne D. Angell
Manuel H. Johnson..
H. Robert Heller
St. Louis
San Francisco
Kansas City
Boston
Dallas
Atlanta
Richmond
Philadelphia
Minneapolis
San Francisco
Chicago
New York
Atlanta
Philadelphia
Kansas City
San Francisco
Chicago
Kansas City
Richmond
San Francisco
Jan. 4, 1972
June 5, 1972
June 11, 1973
Mar. 8, 1974
Oct. 29, 1974
July 14, 1975
Jan. 5, 1976
Feb. 13, 1976
June 1, 1976
Mar. 8, 1978
Sept. 18, 1978
June 20, 1979
July 27, 1979
Aug. 6, 1979
May 28, 1980
Mar. 31, 1982
July 2, 1984
Feb. 7, 1986
Feb. 7, 1986
Aug. 19, 1986
Chairmen4
Charles S. Hamlin
Aug. 10, 1914-Aug. 9, 1916
W.P.G. Harding
Aug. 10, 1916-Aug. 9, 1922
Daniel R. Crissinger
May 1, 1923-Sept. 15, 1927
Roy A. Young
Oct. 4, 1927-Aug. 31, 1930
Eugene Meyer
Sept. 16, 1930-May 10, 1933
Eugene R. Black
May 19, 1933-Aug. 15, 1934
MarrinerS. Eccles
Nov. 15, 1934-Jan. 31, 1948
Thomas B. McCabe
Apr. 15, 1948-Mar. 31, 1951
Wm. McC. Martin, Jr. ...Apr. 2, 1951-Jan. 31, 1970
Arthur F. Burns
Feb. 1, 1970-Jan. 31, 1978
G. William Miller
Mar. 8, 1978-Aug. 6, 1979
Paul A. Volcker
Aug. 6, 1979-
EX-OFFICIO
Resigned Sept. 1, 1985.
Resigned April 30, 1986.
Vice Chairmen*
Frederic A. Delano
Paul M. Warburg
Albert Strauss
Edmund Piatt
J.J. Thomas
Ronald Ransom
C. Canby Balderston
J.L. Robertson
George W. Mitchell
Stephen S. Gardner
Frederick H. Schultz
Preston Martin
Manuel H. Johnson
Aug. 10, 1914-Aug. 9, 1916
Aug. 10, 1916-Aug. 9, 1918
Oct. 26, 1918-Mar. 15, 1920
July 23, 1920-Sept. 14, 1930
Aug. 21, 1934-Feb. 10, 1936
Aug. 6, 1936-Dec. 2, 1947
Mar. 11, 1955-Feb. 28, 1966
Mar. 1, 1966-Apr. 30, 1973
May 1, 1973-Feb. 13, 1976
Feb. 13, 1976-Nov. 19, 1978
July 27, 1979-Feb. 11, 1982
Mar. 31, 1982-Mar. 31, 1986
Aug. 22, 1986-
MEMBERS1
Secretaries of the Treasury
W.G. McAdoo
Dec. 23, 1913-Dec. 15, 1918
Carter Glass
Dec. 16, 1918-Feb. 1, 1920
David F. Houston
Feb. 2, 1920-Mar. 3, 1921
Andrew W. Mellon
Mar. 4, 1921-Feb. 12, 1932
Ogden L. Mills
Feb. 12, 1932-Mar. 4, 1933
William H. Woodin
Mar. 4, 1933-Dec. 31, 1933
Henry Morgenthau, Jr. ..Jan. 1, 1934-Feb. 1, 1936
Comptrollers of the Currency
John Skelton Williams ...Feb. 2, 1914-Mar. 2, 1921
Daniel R. Crissinger
Mar. 17, 1921-Apr. 30, 1923
Henry M. Dawes
May 1, 1923-Dec. 17, 1924
Joseph W. Mcintosh
Dec. 20, 1924-Nov. 20, 1928
J.W. Pole
Nov. 21, 1928-Sept. 20, 1932
J.F.T. O'Connor
May 11, 1933-Feb. 1, 1936
1. Under the provisions of the original Federal Reserve Act, the
Federal Reserve Board was composed of seven members, including
five appointive members, the Secretary of the Treasury, who was exofficio chairman of the Board, and the Comptroller of the Currency.
The original term of office was ten years, and the five original
appointive members had terms of two, four, six, eight, and ten years
respectively. In 1922 the number of appointive members was increased to six, and in 1933 the term of office was increased to twelve
years. The Banking Act of 1935, approved Aug. 23, 1935, changed the
name of the Federal Reserve Board to the Board of Governors of the
Federal Reserve System and provided that the Board should be
composed of seven appointive members; that the Secretary of the
Treasury and the Comptroller of the Currency should continue to
serve as members until Feb. 1, 1936, or until their successors were
appointed and had qualified; and that thereafter the terms of members
should be fourteen years and that the designation of Chairman and
Vice Chairman of the Board should be for a term of four years.
2. Date after words "Resigned" and "Retired" denotes final day of
service.
3. Successor took office on this date.
4. Chairman and Vice Chairman were designated Governor and
Vice Governor before Aug. 23, 1935.
1
Financial and Business Statistics
CONTENTS
Domestic
WEEKLY REPORTING COMMERCIAL BANKS
Financial
Statistics
MONEY STOCK AND BANK CREDIT
A3 Reserves, money stock, liquid assets, and debt
measures
A4 Reserves of depository institutions, Reserve
Bank credit
A5 Reserves and borrowings—Depository
institutions
A5 Selected borrowings in immediately available
funds—Large member banks
POLICY INSTRUMENTS
A6 Federal Reserve Bank interest rates
A7 Reserve requirements of depository institutions
A8 Maximum interest rates payable on time and
savings deposits at federally insured institutions
A9 Federal Reserve open market transactions
FEDERAL RESERVE BANKS
A10 Condition and Federal Reserve note statements
All Maturity distribution of loan and security
holdings
MONETARY AND CREDIT AGGREGATES
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks
COMMERCIAL BANKING
INSTITUTIONS
A17 Major nondeposit funds
A18 Assets and liabilities, last-Wednesday-of-month
series
A19
A20
A21
A22
Assets and liabilities
All reporting banks
Banks in New York City
Branches and agencies of foreign banks
Gross demand deposits—individuals,
partnerships, and corporations
FINANCIAL MARKETS
A23 Commercial paper and bankers dollar
acceptances outstanding
A23 Prime rate charged by banks on short-term
business loans
A24 Interest rates—money and capital markets
A25 Stock market—Selected statistics
A26 Selected financial institutions—Selected assets
and liabilities
FEDERAL FINANCE
A28
A29
A30
A30
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types and
ownership
A31 U.S. government securities dealers—
Transactions
A32 U.S. government securities dealers—Positions
and financing
A33 Federal and federally sponsored credit
agencies—Debt outstanding
SECURITIES MARKETS AND
CORPORATE FINANCE
A34 New security issues—State and local
governments and corporations
A35 Open-end investment companies—Net sales and
asset position
A35 Corporate profits and their distribution
2
Federal Reserve Bulletin • February 1987
A36 Nonfinancial corporations—Assets and
liabilities
A36 Total nonfarm business expenditures on new
plant and equipment
A37 Domestic finance companies—Assets and
liabilities and business credit
A54 Foreign official assets held at Federal Reserve
Banks
A55 Foreign branches of U.S. banks—Balance sheet
data
A57 Selected U.S. liabilities to foreign official
institutions
REAL ESTATE
REPORTED BY BANKS IN THE UNITED STATES
A38 Mortgage markets
A39 Mortgage debt outstanding
A57
A58
A60
A61
CONSUMER INSTALLMENT CREDIT
A40 Total outstanding and net change
A41 Terms
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A61 Banks' own claims on unaffiliated foreigners
A62 Claims on foreign countries—Combined
domestic offices and foreign branches
REPORTED BY NONBANKING BUSINESS
ENTERPRISES IN THE UNITED STATES
FLOW OF FUNDS
A42 Funds raised in U.S. credit markets
A43 Direct and indirect sources of funds to credit
markets
A63 Liabilities to unaffiliated foreigners
A64 Claims on unaffiliated foreigners
Domestic
SECURITIES HOLDINGS AND TRANSACTIONS
Nonfinancial
Statistics
SELECTED MEASURES
A44 Nonfinancial business activity—Selected
measures
A45 Labor force, employment, and unemployment
A46 Output, capacity, and capacity utilization
A47 Industrial production—Indexes and gross value
A49 Housing and construction
A50 Consumer and producer prices
A51 Gross national product and income
A52 Personal income and saving
International
Statistics
A65 Foreign transactions in securities
A66 Marketable U.S. Treasury bonds and notes—
Foreign transactions
INTEREST AND EXCHANGE RATES
A67 Discount rates of foreign central banks
A67 Foreign short-term interest rates
A68 Foreign exchange rates
A69 Guide to Tabular
Statistical Releases,
Tables
Presentation,
and Special
SUMMARY STATISTICS
SPECIAL
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
A54 U.S. reserve assets
A70 Terms of lending at commercial banks,
November 1986
TABLES
Money Stock and Bank Credit
1.10
A3
RESERVES, MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Monetary and credit aggregates
(annual rates of change, seasonally adjusted in percent) 1
Item
1985
Q4
institutions2
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
5
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
Nontransaction
10 In M25
11 In M3 only 6
1986
1986
Q2
Q1
Q3
July
Aug.
Sept.'
Oct.
Nov.
12.5
11.5
10.4
8.2
13.1
12.3
19.1
8.6
17.8
19.8
17.6
8.8
22.9
23.9
23.2
9.9
25.3
26.3
27.3
8.8
19.7
24.2
16.8
12.0
11.5
12.0
8.4
5.4
13.7'
13.4
17.9
9.4'
32.8
27.7
35.4
12.8
10.7
6.1
6.6
9.5
13.6'
7.7
4.3
7.6
8.4
15.4'
15.8
10.5'
9.0
7.0
10.2'
17.3
11.1
10.2'
8.5'
12.(K
16.6
12.8
13.0
9.1
11.2'
20.6
11.2'
9.1'
8.3'
\2.9r
9.6
7.3
8.8
8.6
11.8
14.0
10.&6.5'
6.5
8.7
20.9
6.7
5.6
n.a.
n.a.
4.6
8.5
3.3
20.6
8.7
3.4
9.1
6.3
11.5'
13.8'
S.W
6.4
14.7
9.6'
-10.0'
1.9
1.2
3.2
-1.6
14.1
1.9
5.3
18.5
11.8
-3.1
-8.8
25.5
-9.0
-2.5
22.9
-5.3
-1.3'
30.6
-12.6
7.7
36.0
-10.9
-2.6
41.7
-15.8
-10.2'
37.9
-12.1
9.5
7.5
-2.9
5.2
3.1
6.6
10.0
20.9
2.6
11.0
23.6
-3.8
2.7
22.9
-.5
8.7
18.2
-6.0
2.2
16.1
-6.0
-2.2
26.5
-11.3'
-13.0
28.3
-8.7
-16.1
13.7
13.5r
9.3
17.C
15.(K
12.7
11.^
9.8'
4.1
14.5
11.3'
10.5'
14.7'
10.1'
13.0
8.8
14.1'
13.8
11.4
11.9
13.0
9.9
8.3
2.2
n.a.
n.a.
8.9
components
Time and savings deposits
Commercial banks
Savings7
Small-denomination time 8
Large-denomination time 9 1 0
Thrift institutions
15 Savings7
16 Small-denomination time
17 Large-denomination time9
12
13
14
Debt components4
18 Federal
19 Nonfederal
20 Total loans and securities at commercial banks"
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. The monetary base not adjusted for discontinuities consists of total
reserves plus required clearing balances and adjustments to compensate for float
at Federal Reserve Banks plus the currency component of the money stock less
the amount of vault cash holdings of thrift institutions that is included in the
currency component of the money stock plus, for institutions not having required
reserve balances, the excess of current vault cash over the amount applied to
satisfy current reserve requirements. After the introduction of contemporaneous
reserve requirements (CRR), currency and vault cash figures are measured over
the weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock plus the remaining items seasonally
adjusted as a whole.
4. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their OCD liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts
(MMDAs), savings and small-denomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and
tax-exempt general purpose and broker/dealer money market mutual funds.
Excludes individual retirement accounts (IRA) and Keogh balances at depository
institutions and money market funds. Also excludes all balances held by U.S.
commercial banks, money market funds (general purpose and broker/dealer),
foreign governments and commercial banks, and the U.S. government. Also
subtracted is a consolidation adjustment that represents the estimated amount of
demand deposits and vault cash held by thrift institutions to service their time and
savings deposits.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt
data are based on monthly averages. Growth rates for debt reflect adjustments for
discontinuities over time in the levels of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker/dealer), MMDAs, and savings and small time
deposits less the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposit liabilities.
6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents,
money market fund balances (institution-only), less a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by
institution-only money market mutual funds.
7. Excludes MMDAs.
8. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All IRA and Keogh accounts at commercial
banks and thrifts are subtracted from small time deposits.
9. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
10. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.
11. Changes calculated from figures shown in table 1.23.
A4
Domestic Financial Statistics • February 1987
1.11
R E S E R V E S OF DEPOSITORY INSTITUTIONS A N D R E S E R V E B A N K CREDIT
Millions of dollars
Monthly averages of
daily figures
Weekly averages of daily figures for week ending
1986
1986
Factors
Sept.
Oct.
Nov.
215,130
214,197
219,190
213,770
216,092
213,851
188,598
187,237
1,361
8,252
8,047
205
0
1,046
734
16,500
11,084
5,018
17.42CK
188,195
187,944
251
8,030
7,975
55
0
779
560
16,633
11,084
5,018
17,465
193,043
192,284
759
7,968
7,867
101
0
802
974
16,403
11,084
5,018
17,516
187,677
187,677
0
7,988
7,988
0
0
653
761
16,690
11,084
5,018
17.459
189,717
188,605
1,112
8,217
7,973
244
0
888
628
16,642
11,084
5,018
17,469
188,083
188,083
0
7,954
7,954
0
0
715
342
16,757
11,084
5,018
17,478
201,433
495
202,301
492
205,069
474
203,045
493
202,751
493
5,677
285
3,305
215
3,117
233
2,701
217
1,886
497
1,971
516
2,064
522
1,939
576
6,405
6,302
6,345
6,302
6,289
6,266
6,363
6,401
6,322
6,275
32,663
34,984
32,059
33,967
32,815
34,298
34,392
35,527
35,198
Nov. 12
Nov. 19
Nov. 26
Oct. 15
Oct. 22
Oct. 29
Nov. 5
Nov. 12
Nov. 19
Nov. 26
216,206
218,842
220,660
218,971
189,770
189,770
0
7,954
7,954
0
0
1,082
572
16,827
11,084
5,018
17,489
192,168
192,168
0
7,900
7,900
0
0
518
1,164
17,092
11,084
5.018
17,503
193,626
192,005
1,621
7,961
7,829
132
0
1,103
1,416
16,555
11,084
5,018
17,517
194,251
193,459
792
7,928
7,829
99
0
639
587
15,566
11,084
5,018
17,531
201,937
492
202,793
484
204,686
483
205,566
475
205,493
468
3,552
210
3,332
231
2,919
255
3,730
239
3,696
204
2,474
224
1,926
475
1,907
453
2,042
643
1,970
545
1,980
510
2,044
428
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit
2
U.S. government securities 1
3
Bought outright
Held under repurchase a g r e e m e n t s . . . .
4
5
Federal agency obligations
Bought outright
6
Held under repurchase agreements....
7
8
Acceptances
9
Loans
10 Float
11 Other Federal Reserve assets
12 Gold stock
13 Special drawing rights certificate a c c o u n t . . . .
14 Treasury currency outstanding
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17 Treasury
18 Foreign
19 Service-related balances and
adjustments
20
Other
21 Other Federal Reserve liabilities and
capital
22 Reserve balances with Federal
Reserve Banks 2
31,974
End-of-month figures
Wednesday figures
1986
1986
Sept.
Oct.
Nov.
219,358
215,993
221,673
216,106
221,974
214,647
218,943
220,267
226,011
219,141
190,751
184,437
6,314
9,856
8,047
1,809
0
879
849
17,023
189,995
189.995
0
7,954
7,954
0
0
806
441
16,797
196,293
194,876
1,417
8,177
7,829
348
0
557
748
15,898
188,988
188,988
0
7,988
7,988
0
0
638
1.917
16.575
193,130
188,055
5,075
8,877
7,954
923
0
2,261
739
16,967
188,302
188,302
0
7,954
7,954
0
0
807
517
17,067
190,424
190,424
0
7,954
7,954
0
0
3,502
404
16,659
192,841
192,841
0
7,829
7,829
0
0
572
1,842
17,183
196,369
191,850
4,519
8,087
7,829
258
0
3,980
1,841
15,734
193,261
191,627
1,634
8,215
7,829
386
0
481
1,391
15,793
11,084
5,018
17,438r
11,084
5,018
17,488
11,084
5,018
17,543
11.084
5,018
17,467
11,084
5,018
17,477
11,084
5,018
17,487
11,084
5,018
17,501
11,084
5,018
17,515
11,084
5,018
17,529
11,084
5,018
17,543
200,630
492
202,517
485
206,904
459
203,417
493
202,404
492
202,242
491
203,296
483
205,528
476
205,415
469
206,786
459
7,514
342
2,491
303
2,529
225
3,105
240
3,349
206
3,594
238
3,746
272
3,327
234
2,850
174
2,591
337
1,681
663
1,744
479
1,744
425
1,717
625
1,717
439
1,743
455
1,744
526
1,726
524
1,727
486
1,802
430
Oct. 15
Oct. 22
Oct. 29
Nov. 5
SUPPLYING RESERVE FUNDS
23 Reserve Bank credit
24
25
26
27
28
29
30
31
32
33
U.S. government securities 1
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Federal agency obligations
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Acceptances
Loans
Float
Other Federal Reserve assets
34 Gold stock
35 Special drawing rights certificate account
36 Treasury currency outstanding
...
ABSORBING RESERVE FUNDS
37 Currency in circulation
38 Treasury cash holdings
Deposits, other than reserve balances with
Federal Reserve Banks
39 Treasury
40
Foreign
41
Service-related balances and
adjustments
42
Other
43 Other Federal Reserve liabilities and
capital
44 Reserve balances with Federal
Reserve Banks 2
6,463
6,342
6,480
6,138
6,212
6,081
6,233
6,262
6,223
6,094
35,113
35,222
36,552
33,941
40,735
33,392
36,247
35,808
42,298
34,287
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. Excludes required clearing balances and adjustments to compensate for
float.
NOTE. For amounts of currency and coin held as reserves, see table 1.12.
Money Stock and Bank Credit
1.12
R E S E R V E S A N D BORROWINGS
A5
Depository Institutions
Millions of dollars
Monthly averages 8
Reserve classification
Reserve balances with Reserve Banks 1
Total vault cash 2
Vault cash used to satisfy reserve requirements 3 .
Surplus vault cash 4
Total reserves 5
Required reserves
Excess reserve balances at Reserve Banks 6
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks 7
1984
1985
Dec.
1
2
3
4
5
6
7
8
9
10
1983
1986
Dec.
Dec.
Apr.
May
June
July
Aug.
Sept.
Oct.
21,138
20,755
17,908
2,847
38,894
38,333
561
774
96
2
21,738
22,316
18,958
3,358
40,696
39,843
853
3,186
113
2,604
27,620
22,956
20,522
2,434
48,142
47,085
1,058
1,318
56
499
28,892
22,231
19,990
2,241
48,882
48,081
801
893
73
634
28,279
22,474
20,140
2,334
48,419
47,581
838
876
94
584
29,499
22,805
20,439
2,366
49,938
49,007
931
803
108
531
30,313
23,098
20,716
2,381
51,029
50,118
910
741
116
378
30,165
23,451
21,112
2,339
51,277
50,538
740
872
144
465
31,922
23,384
21,267
2,117
53,189
52,463
726
1,008
137
570
32,947
23,753
21,676
2,078
54,623
53,877
746
841
99
497
Biweekly averages of daily figures for weeks ending
1986
Aug. 13
11
12
13
14
15
16
17
18
19
20
Reserve balances with Reserve Banks 1
Total vault cash 2
Vault cash used to satisfy reserve requirements 3 .
Surplus vault cash 4
Total reserves 5
Required reserves
Excess reserve balances at Reserve Banks 6
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks 7
Aug. 27
Sept. 10
Sept. 24
Oct. 8
Oct. 22
Nov. 5
Nov. 19'
Dec. 3
Dec. 17
30,185
23,323
20,992
2,331
51,177
50,592
585
759
134
373
29,758r
23,792
21,388
2,404
51,146
50,279
867
910
152
515
31,527
22,671
20,534
2,137
52,061
51,268
793
1,111
149
592
32,103
23,623
21,567
2,056
53,670
52,964
706
981
135
569
32,156
24,015
21,790
2,225
53,946
53,287
660
902
125
538
33,007
23,955
21,914
2,041
54,921
54,170
751
771
88
488
33,557'
23,208
21,204
2,004
54,761'
53,947'
814'
899
93
476
34,945
23,405
21,570
1,835
56,515
55,599
916
811
68
437
35,215
23,871
21,809
2,062
57,024
55,867
1,157
610
63
368
36,511
23,458
21,725
1,733
58,235
57,510
725
514
34
310
1. Excludes required clearing balances and adjustments to compensate for
float.
2. Dates refer to the maintenance periods in which the vault cash can be used to
satisfy reserve requirements. Under contemporaneous reserve requirements,
maintenance periods end 30 days after the lagged computation periods in which
the balances are held.
3. Equal to all vault cash held during the lagged computation period by
institutions having required reserve balances at Federal Reserve Banks plus the
amount of vault cash equal to required reserves during the maintenance period at
institutions having no required reserve balances.
4. Total vault cash at institutions having no required reserve balances less the
amount of vault cash equal to their required reserves during the maintenance
period.
5. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
1.13
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy
reserve requirements less required reserves.
7. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
8. Before February 1984, data are prorated monthly averages of weekly
averages; beginning February 1984, data are prorated monthly averages of
biweekly averages.
NOTE. These data also appear in the Board's H.3 (502) release. For address, see
inside front cover.
S E L E C T E D BORROWINGS IN IMMEDIATELY A V A I L A B L E F U N D S
Large Member Banks 1
Averages of daily figures, in millions of dollars
1986 week ending Monday
By maturity and source
Oct. 20
1
2
3
4
Federal funds purchased, repurchase agreements, and other
selected borrowing in immediately available funds
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and
foreign official institutions, and United States
government agencies
For one day or under continuing contract
For all other maturities
Oct. 27
Nov. 3
Nov. 10
Nov. 17
Nov. 24
Dec. 1
Dec. 8
Dec. 15
72,919'
9,966
68,940
9,403
72,150
9,465
78,023
9,448
75,888
9,135
75,244
8,448
80,123
9,088
84,359
7,728
81,851
7,418
40,503
6,142
38,472
5,824
36,804
5,698
40,272'
5,330
39,350
5,085
38,907
4,941
35,348
5,702
39,599
5,236
38,279
5,199
Repurchase agreements on United States government
and federal agency securities in immediately
available funds
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities
13,711
8,769
13,586
9,455
11,847
9,829
11,596
9,652
11,311
10,537
11,181
10,396
9,276
11,236
11,220
9,039
10,114
9,630
27,179
10,432
28,346
10,810
29,725
10,915
28,079'
11,048
28,156
10,824
29,541
10,711
28,018
14,211
29,046
10,426
29,165
10,374
MEMO; Federal funds loans and resale agreements in
immediately available funds in maturities of one day
or under continuing contract
9 To commercial banks in the United States
10 To all other specified customers 2
29,987
10,917
26,244
10,568
29,120
10,261
28,968
10,482
28,506
10,245
27,235
10,070
30,473
10,631
26,230
9,916
26,266
10,064
5
6
7
8
with assets of $1 billion
1. Banks
or more as of Dec. 31, 1977.
2. Brokers and nonbank dealers in securities; other depository institutions;
foreign banks and official institutions; and United States government agencies.
A6
Domestic Financial Statistics • February 1987
1.14
F E D E R A L R E S E R V E B A N K INTEREST RATES
Percent per annum
Current and previous levels
Extended credit 2
Short-term adjustment credit
and seasonal credit 1
Federal Reserve
Bank
First 60 days
of borrowing
Next 90 days
of borrowing
After 150 days
Rate on
12/26/86
Effective
date
Previous
rate
Rate on
12/26/86
Previous
rate
Rate on
12/26/86
Previous
rate
Rate on
12/26/86
SVi
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
6
5Vi
6
6 Vi
7
Effective date
for current rates
7Vi
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City . . . .
Dallas
San F r a n c i s c o . . .
5Vi
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
6
5 Vi
6
7
Previous
rate
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
7V4
Range of rates in recent years 3
Effective date
In effect Dec. 31, 1973
1974— Apr. 25
30
Dec. 9
16
Range (or
levelsAll F.R.
Banks
7Vi
m-%
8
7V+-8
73/4
F.R.
Bank
of
N.Y.
IVi
Effective
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
73/4
m
1978-— Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
8>/2-9>/2
1979-- J u l y 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10
IO-IOV2
lOVi
10>/>-ll
11
11-12
12
6 Vi
1980-- Feb. 15
19
May 29
30
June 13
16
July 28
29
Sept. 26
Nov. 1/
Dec. 5
8
12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
13
13
13
12
11
11
10
10
11
12
13
13
7
1981-— May
5
8
2
6
4
13-14
14
13-14
13
12
14
14
13
13
12
8
8
m
73/4
8
8 - 8 Vi
8Vi
9Vi
1975— Jan.
6
10
24
Feb. 5
7
Mar. 10
14
May 16
23
1976— Jan.
19
23
Nov. 22
26
1977— Aug. 30
31
Sept. 2
Oct. 26
1978— Jan.
9
20
May 11
12
July
3
July 10
7V4-73/4
7!/4-73/4
71/4
6V4-7V4
63/4
73/4
71/4
7V4
63/4
63/4
6'/4-6 /4
6V4
6-61/4
6
6V4
6V4
6
6
51/2-6
5'/>
3
SVi
SVi
51/4-5 Vi
5V4
51/4
51/4
5V4-53/4
53/4
5>/4
53/4
53/4
6
6
5'/4-53/4
6-6/2
6/2
6Vi-7
7
1-1 Vi
71/4
6</2
7
7'/4
7</4
Nov.
Dec.
1. After May 19, 1986, the highest rate within the structure of discount rates
may be charged on adjustment credit loans of unusual size that result from a major
operating problem at the borrower's facility.
A temporary simplified seasonal program was established on Mar. 8, 1985, and
the interest rate was a fixed rate Vi percent above the rate on adjustment credit.
The program was re-established on Feb. 18, 1986; the rate may be either the same
as that for adjustment credit or a fixed rate Vi percent higher.
2. Applicable to advances when exceptional circumstances or practices involve
only a particular depository institution and to advances when an institution is
under sustained liquidity pressures. As an alternative, for loans outstanding for
more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes
into account rates on market sources of funds, but in no case will the rate charged
be less than the basic rate plus one percentage point. Where credit provided to a
particular depository institution is anticipated to be outstanding for an unusually
prolonged period and in relatively large amounts, the time period in which each
8
8VS
81/!
91/2
9 Vi
10
10>/2
10V^
11
11
12
12
Range(or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
llVi-12
llVi
11—11 Vi
11
lOVi
10-10'/!
10
9Vi-10
9Vi
9 - 9 Vi
9
8/2-9
8'/2-9
8'/>
11 Vi
llVi
11
11
lOVi
10
10
9Vi
1984— Apr.
9
13
Nov. 21
26
Dec. 24
8Vi-9
9
8Vi-9
8Vi
8
9
9
8Vi
8V2
8
1985— May 20
24
7Vi-8
7Vi
7Vi
71/2
1986— Mar.
7
10
Apr. 21
23
July 11
Aug. 21
22
7-7 Vi
7
6'/i
6
5/2-6
5'/!
7
7
6Vi
6Vi
6
5</>
5Vi
In effect Dec. 26, 1986
5Vi
5Vi
Effective date
1982— July
20
23
2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
Aug.
m-i
9Vi
9
9
9
8Vi
8Vi
rate under this structure is applied may be shortened. See section 201.3(b)(2) of
Regulation A.
3. Rates for short-term adjustment credit. For description and earlier data see
the following publications of the Board of Governors: Banking and Monetary
Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980,
1981, and 1982.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than 4 weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7,
1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was
adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and
to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective
Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for
applying the surcharge was changed from a calendar quarter to a moving 13-week
period. The surcharge was eliminated on Nov. 17, 1981.
Policy Instruments
1.15
R E S E R V E R E Q U I R E M E N T S OF DEPOSITORY INSTITUTIONS'
Percent of deposits
Type of deposit, and
deposit interval
Member bank requirements
before implementation of the
Monetary Control Act
Percent
Net
A7
Time and savings2^
Savings
Time 4
$0 million-$5 million, by maturity
30-179 days
180 days to 4 years
4 years or more
Over $5 million, by maturity
30-179 days
180 days to 4 years
4 years or more
Effective date
3
12
12/31/85
12/31/85
Nonpersonal time deposits9
By original maturity
Less than IV2 years
1V2 years or more
3
0
10/6/83
10/6/83
Eurocurrency
All types
7
9 Vi
123/4
161/4
12/30/76
12/30/76
12/30/76
12/30/76
12/30/76
3
3
11/13/80
Net transaction accounts1
$0-$36.7 million
3/16/67
113/4
3
2!*
1
6
2l/2
1
liabilities
3/16/67
1/8/76
10/30/75
12/12/74
1/8/76
10/30/75
1. For changes in reserve requirements beginning 1963, see Board's Annual
Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report
for 1976, table 13. Under provisions of the Monetary Control Act, depository
institutions include commercial banks, mutual savings banks, savings and loan
associations, credit unions, agencies and branches offoreign banks, and Edge Act
corporations.
2. Requirement schedules are graduated, and each deposit interval applies to
that part of the deposits of each bank. Demand deposits subject to reserve
requirements were gross demand deposits minus cash items in process of
collection and demand balances due from domestic banks.
The Federal Reserve Act as amended through 1978 specified different ranges of
requirements for reserve city banks and for other banks. Reserve cities were
designated under a criterion adopted effective Nov. 9, 1972, by which a bank
having net demand deposits of more than $400 million was considered to have the
character of business of a reserve city bank. The presence of the head office of
such a bank constituted designation of that place as a reserve city. Cities in which
there were Federal Reserve Banks or branches were also reserve cities. Any
banks having net demand deposits of $400 million or less were considered to have
the character of business of banks outside of reserve cities and were permitted to
maintain reserves at ratios set for banks not in reserve cities.
Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances
due from domestic banks to their foreign branches and on deposits that foreign
branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent
respectively. The Regulation D reserve requirement of borrowings from unrelated
banks abroad was also reduced to zero from 4 percent.
Effective with the reserve computation period beginning Nov. 16, 1978,
domestic deposits of Edge corporations were subject to the same reserve
requirements as deposits of member banks.
3. Negotiable order of withdrawal (NOW) accounts and time deposits such as
Christmas and vacation club accounts were subject to the same requirements as
savings deposits.
The average reserve requirement on savings and other time deposits before
implementation of the Monetary Control Act had to be at least 3 percent, the
minimum specified by law.
4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent
was imposed on large time deposits of $100,000 or more, obligations of affiliates,
and ineligible acceptances. This supplementary requirement was eliminated with
the maintenance period beginning July 24, 1980.
Effective with the reserve maintenance period beginning Oct. 25, 1979, a
marginal reserve requirement of 8 percent was added to managed liabilities in
excess of a base amount. This marginal requirement was increased to 10 percent
beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and
was eliminated beginning July 24, 1980. Managed liabilities are defined as large
time deposits, Eurodollar borrowings, repurchase agreements against U.S.
government and federal agency securities, federal funds borrowings from nonmember institutions, and certain other obligations. In general, the base for the
marginal reserve requirement was originally the greater of (a) $100 million or (b)
the average amount of the managed liabilities held by a member bank, Edge
corporation, or family of U.S. branches and agencies of a foreign bank for the two
reserve computation periods ending Sept. 26, 1979. For the computation period
beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease
in an institution's U.S. office gross loans to foreigners and gross balances due
from foreign offices of other institutions between the base period (Sept. 13-26,
1979) and the week ending Mar. 12, 1980, whichever was greater. For the
computation period beginning May 29, 1980, the base was increased by V/i
percent above the base used to calculate the marginal reserve in the statement
week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was
reduced to the extent that foreign loans and balances declined.
Depository institution requirements
after implementation of the
Monetary Control Act 6
Percent
Effective date
demand2
$2 million $10 million
$10 million-$100 million
$100 million-$400 million
Over $400 million
Type of deposit, and
deposit interval 5
5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97320) provides that $2 million of reservable liabilities (transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities) of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabilities subject to this zero percent reserve requirement each year for the next succeeding calendar year by 80 percent of the
percentage increase in the total reservable liabilities of all depository institutions,
measured on an annual basis as of June 30. No corresponding adjustment is to be
made in the event of a decrease. Effective Dec. 9, 1982, the amount of the
exemption was established at $2.1 million. Effective with the reserve maintenance
period beginning Jan. 1, 1985, the amount of the exemption was established at $2.4
million. Effective with the reserve computation period beginning Dec. 31, 1985,
the amount of the exemption was established at $2.6 million. Effective Dec. 30,
1986, the amount of the exemption is $2.5 million. In determining the reserve
requirements of a depository institution, the exemption shall apply in the
following order: (1) nonpersonal money market deposit accounts (MMDAs)
described in 12 CFR section 204.2 (d)(2); (2) net NOW accounts (NOW accounts
less allowable deductions); (3) net other transaction accounts; and (4) nonpersonal
time deposits or Eurocurrency liabilities starting with those with the highest
reserve ratio. With respect to NOW accounts and other transaction accounts, the
exemption applies only to such accounts that would be subject to a 3 percent
reserve requirement.
6. For nonmember banks and thrift institutions that were not members of the
Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3,
1987. For banks that were members on or after July 1, 1979, but withdrew on or
before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends
on Oct. 24, 1985. For existing member banks the phase-in period of about three
years was completed on Feb. 2, 1984. All new institutions will have a two-year
phase-in beginning with the date that they open for business, except for those
institutions that have total reservable liabilities of $50 million or more.
7. Transaction accounts include all deposits on which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers (in excess
of three per month) for the purpose of making payments to third persons or others.
However, MMDAs and similar accounts offered by institutions not subject to the
rules that permit no more than six preauthorized, automatic, or other transfers per
month of which no more than three can be checks—are not transaction accounts
(such accounts are savings deposits subject to time deposit reserve requirements.)
8. The Monetary Control Act of 1980 requires that the amount of transaction
accounts against which the 3 percent reserve requirement applies be modified
annually by 80 percent of the percentage increase in transaction accounts held by
all depository institutions determined as of June 30 each year. Effective Dec. 31,
1981, the amount was increased accordingly from $25 million to $26 million;
effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million;
effective Jan. 1, 1985, to $29.8 million; and effective Dec. 31, 1985, to $31.7
million. Effective Dec. 30, 1986, the amount was increased to $36.7 million.
9. In general, nonpersonal time deposits are time deposits, including savings
deposits, that are not transaction accounts and in which a beneficial interest is
held by a depositor that is not a natural person. Also included are certain
transferable time deposits held by natural persons, and certain obligations issued
to depository institution offices located outside the United States. For details, see
section 204.2 of Regulation D.
NOTE. Required reserves must be held in the form of deposits with Federal
Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a
Federal Reserve Bank indirectly on a pass-through basis with certain approved
institutions.
A8
Domestic Financial Statistics • February 1987
1.16
M A X I M U M I N T E R E S T RATES P A Y A B L E on Time and Savings Deposits at Federally Insured Institutions'
Percent per annum
Commercial banks
In effect Dec. 31, 1986
Type of deposit
Savings and loan associations and
mutual savings banks (thrift institutions) 1
In effect Dec. 31, 1986
Percent
1 Savings
2 Negotiable order of withdrawal accounts
3 Money market deposit account
(2)
(3)
(4)
Time accounts
4 7-31 days
(5)
1. Effective Oct. 1, 1983, restrictions on the maximum rates of interest payable
by commercial banks and thrift institutions on various categories of deposits were
removed. For information regarding previous interest rate ceilings on all categories of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the
Federal Home Loan Bank Board Journal, and the Annual Report of the Federal
Deposit Insurance Corporation.
2. Effective Apr. 1, 1986, the interest rate ceiling on savings deposits was
removed. Before Apr. 1, 1986, savings deposits were subject to an interest rate
ceiling of 5V2 percent.
3. Before Jan. 1, 1986, NOW accounts with minimum denomination requirements of less than $1,000 were subject to an interest rate ceiling of 5'/4 percent.
NOW accounts with minimum required denominations of $1,000 or more and
IRA/Keough (HR10) Plan accounts were not subject to interest rate ceilings.
Effective Jan. 1, 1986, the minimum denomination requirement was removed.
Effective date
4/1/86
1/1/86
12/14/82
1/1/86
10/1/83
Percent
2
(3)
(4)
()
(5)
Effective date
4/1/86
1/1/86
12/14/82
9/1/86
10/1/83
4. Effective Dec. 14, 1982, depository institutions are authorized to offer a new
account with a required initial balance of $2,500 and an average maintenance
balance of $2,500 not subject to interest rate restrictions. Effective Jan. 1, 1985,
the minimum denomination and average balance maintenance requirements was
lowered to $1,000. Effective Jan. 1,1986, the minimum denomination and average
balance maintenance requirements were removed. No minimum maturity period
is required for this account, but depository institutions must reserve the right to
require seven days, notice before withdrawals.
5. Before Jan. 1, 1986, deposits of less than $1,000 were subject to an interest
rate ceiling of 5 Vi percent. Deposits of less than $1,000 issued to governmental
units were subject to an interest rate ceiling of 8 percent. Effective Jan. 1, 1986,
the minimum denomination requirement was removed.
Policy Instruments
1.17
A9
F E D E R A L R E S E R V E OPEN M A R K E T T R A N S A C T I O N S
Millions of dollars
1986
Type of transaction
1983
1984
1985
Apr.
June
May
July
Aug.
Oct.
Sept.
U . S . GOVERNMENT SECURITIES
Outright transactions (excluding matched
transactions)
1
2
3
4
Treasury bills
Gross purchases
Gross sales
Exchange
Redemptions
5
6
7
8
9
18,888
3,420
0
2,400
20,036
8,557
0
7,700
22,214
4,118
0
3,500
2,988
0
0
0
3,196
0
0
0
1,402
0
0
0
867
0
0
0
2,940
0
0
0
861
0
0
0
928
0
0
0
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
484
0
18,887
-16,553
87
1,126
0
16,354
-20,840
0
1,349
0
19,763
-17,717
0
0
0
447
-1,129
0
0
0
1,847
-1,819
0
0
0
1,152
-1,957
0
0
0
579
-1,253
0
0
0
1,715
-4,087
0
0
0
1,053
-1,892
0
0
0
974
-529
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
1,896
0
-15,533
11,641
1,638
0
-13,709
16,039
2,185
0
-17,459
13,853
0
0
-447
1,134
0
0
-1,532
1,019
0
0
-1,152
1,957
0
0
-386
1,253
0
0
-1,194
2,587
0
0
-1,053
1,892
0
0
-969
529
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
890
0
-2,450
2,950
536
300
-2,371
2,750
458
100
-1,857
2,184
0
0
-5
0
0
0
-315
500
0
0
0
0
0
0
-193
0
0
0
-520
1,000
0
0
0
0
0
0
-5
0
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
383
0
-904
1,962
441
0
-275
2,052
293
0
-447
1,679
0
0
0
0
0
0
0
300
0
0
0
0
0
0
0
0
0
0
0
500
0
0
0
0
0
0
0
0
22
23
24
All maturities
Gross purchases
Gross sales
Redemptions
22,540
3,420
2,487
23,776
8,857
7,700
26,499
4,218
3,500
2,988
0
0
3,1%
0
0
1,402
0
0
867
0
0
2,940
0
0
861
0
0
928
0
0
25
26
Matched transactions
Gross sales
Gross purchases
578,591
576,908
808,986
810,432
866,175
865.968
109,253
103,957
62,663
67,147
80,219
80,674
70,928
69,659
60,460
60,011
73,179
70,817
77,262
81,892
27
28
Repurchase agreements
Gross purchases
Gross sales
105,971
108,291
127,933
127,690
134,253
132,351
21,156
13,634
12,395
19,917
5,640
5,640
18,657
18,657
0
0
14,717
8,403
5,670
11,984
12,631
8,908
20,477
5,214
158
1,857
-403
2,491
4,814
-756
0
0
292
0
0
256
0
0
162
0
0
0
0
0
50
0
0
0
0
0
0
0
90
0
0
*
0
0
93
8,833
9,213
11,509
11,328
22,183
20,877
3,369
1,955
3,135
4,567
1,691
1,691
4,984
4,984
0
0
2,678
869
952
2,761
-672
-76
1,144
1,432
-1,482
0
#
-90
1,809
-1,902
-1,062
-418
0
0
0
0
0
0
0
0
10,897
8,414
21,621
6,647
-1,324
1,857
-403
2,401
6,623
-2,658
29 Net change in U.S. government securities
FEDERAL AGENCY OBLIGATIONS
30
31
32
Outright transactions
Gross purchases
Gross sales
Redemptions
33
34
Repurchase agreements
Gross purchases
Gross sales
35 Net change in federal agency obligations
*
BANKERS ACCEPTANCES
36 Repurchase agreements, net
37 Total net change in System Open Market
Account
NOTE. Sales, redemptions, and negative figures reduce holdings of the System
Open Market Account; all other figures increase such holdings. Details may not
add to totals because of rounding.
A10
1.18
Domestic Financial Statistics • February 1987
FEDERAL RESERVE BANKS
Millions of dollars
Condition and Federal Reserve Note Statements
Wednesday
1986
Account
1986
Nov. 12
Nov. 5
Oct. 29
End of month
Nov. 19
Nov. 26
Oct.
Sept.
Nov.
Consolidated condition statement
ASSETS
11,084
5,018
507
11,084
5,018
525
11,084
5,018
506
11,084
5,018
510
11,084
5,018
508
11,084
5,018
507
11,084
5,018
508
11,084
5,018
507
807
0
3,502
0
572
0
3,980
0
481
0
879
0
806
0
557
0
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4 To depository institutions
5
Other
Acceptances—Bought outright
6
Held under repurchase agreements
Federal agency obligations
7
Bought outright
8
Held under repurchase agreements
U.S. government securities
Bought outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright 1
13 Held under repurchase agreements
14 Total U.S. government securities
0
0
0
0
0
0
0
0
7,954
0
7,954
0
7,829
0
7,829
258
7,829
386
8,047
1,809
7,954
0
7,829
348
95,929
66,597
25,776
188,302
0
188,302
98,051
66,597
25,776
190,424
0
190,424
100,468
66,597
25,776
192,841
0
192,841
98,000
68,126
25,724
191,850
4,519
196,369
97,777
68,126
25,724
191,627
1,634
193,261
92,064
66,597
25,776
184,437
6,314
190,751
97,622
66,597
25,776
189,995
0
189,995
101,026
68,126
25,724
194,876
1,417
196,293
15 Total loans and securities
197,063
201,880
201,242
208,436
201,957
201,486
198,755
205,027
6,091
649
6,812
649
7,127
648
9,381
651
7,818
654
9,125
647
6,104
649
4,721
654
9,156
7,262
9,134
6,876
9,140
7,395
9,145
5,938
9,095
6,044
9,126
7,250
9,133
7,015
9,179
6,065
236,830
241,978
242,160
250,163
242,178
244,243
238,266
242,255
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies 2
19 All other 3
20 Total assets
LIABILITIES
185,753
186,802
188,994
188,865
190,210
184,191
186,022
190,327
22
23
24
25
35,135
3,594
238
455
37,991
3,746
272
526
37,534
3,327
234
524
44,025
2,850
174
486
36,089
2,591
337
430
36,794
7,514
342
663
36,966
2,491
303
479
38,296
2,529
225
425
26 Total deposits
39,422
42,535
41,619
47,535
39,447
45,313
40,239
41,475
5,574
2,067
6,408
2,258
5,285
2,245
7,540
2,110
6,427
2,074
8,276
2,193
5,663
2,275
3,973
2,242
232,816
238,003
238,143
246,050
238,158
239,973
234,199
238,017
1,853
1,781
380
1,858
1,781
336
1,860
1,781
376
1,859
1,781
473
1,860
1,781
379
1,849
1,780
641
1,854
1,781
432
1,860
1,781
597
33 Total liabilities and capital accounts
236,830
241,978
242,160
250,163
242,178
244,243
238,266
242,255
34 MEMO: Marketable U.S. government securities held in
custody for foreign and international account
166,086
164,174
164,654
164,518
164,567
163,236
164,020
164,411
21 Federal Reserve notes
Deposits
To depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends 4
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding
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. government and agency securities
227,605
41,852
185,753
227,859
41,057
186,802
228,750
39,756
188,994
229,916
41,051
188,865
231,208
40,998
190,210
223,928
39,737
184,191
227,605
41,583
186,022
231,281
40,954
190,327
11,084
5,018
0
169,651
11,084
5,018
0
170,700
11,084
5,018
0
172,892
11,084
5,018
0
172,763
11,084
5,018
0
174,108
11,084
5,018
0
168,089
11,084
5,018
0
169,920
11,084
5,018
0
174,225
42 Total collateral
185,753
186,802
188,994
188,865
190,210
184,191
186,022
190,327
1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Assets shown in this line are revalued monthly at market exchange rates.
3. Includes special investment account at Chicago of Treasury bills maturing
within 90 days.
4. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
Millions of dollars
All
Maturity Distribution of Loan and Security Holdings
Wednesday
1986
Type and maturity groupings
End of month
1986
Oct. 29
Nov. 5
Nov. 12
Nov. 19
1 Loans—Total
2 Within 15 days
3
16 days to 90 days
4 91 days to 1 year
807
802
5
0
3,502
3,470
32
0
572
539
33
0
3,980
3,976
4
0
481
471
10
0
879
855
24
0
806
783
23
0
557
545
12
0
5 Acceptances—Total
6
Within 15 days
7
16 days to 90 days
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
9 U.S. government securities—Toted
10 Within 15 days'
11
16 days to 90 days
12 91 days to 1 year
13 Over 1 year to 5 years
14 Over 5 years to 10 years
15 Over 10 years
188,302
9,673
46,627
56,915
36,703
15,575
22,809
190,424
11,371
45,279
59,131
36,259
15,575
22,809
192,841
7,567
50,035
60,596
36,259
15,575
22,809
196,369
14,6%
47,200
58,950
37,006
15,451
23,066
193,261
11,263
49,947
56,528
37,006
15,451
23,066
190,751
11,681
46,290
57,693
36,698
15,580
22,809
189,995
6,964
48,533
59,855
36,259
15,575
22,809
196,293
7,625
54,077
59,068
37,006
15,451
23,066
16 Federal agency obligations—Total
17 Within 15 days'
18
16 days to 90 days
19 91 days to 1 year
20 Over 1 year to 5 years
21 Over 5 years to 10 years
22 Over 10 years
7,954
279
940
1,360
3,808
1,193
374
7,954
125
1,064
1,390
3,808
1,193
374
7,829
30
1,094
1,330
3,808
1,193
374
8,087
506
876
1,330
3,808
1,193
374
8,215
691
789
1,438
3,730
1,193
374
9,856
2,118
755
1,502
3,905
1,152
424
7,954
279
940
1,360
3,808
1,193
374
8,177
653
851
1,376
3,730
1,193
374
Nov. 26
Sept. 30
Oct. 31
1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements.
Nov. 28
A12
1.20
Domestic Financial Statistics • February 1987
AGGREGATE R E S E R V E S OF DEPOSITORY INSTITUTIONS A N D M O N E T A R Y B A S E
Billions of dollars, averages of daily figures
Item
1982
Dec.
1983
Dec.
1984
Dec.
1986
1985
Dec.
Apr.
1 Total reserves2
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
June
July
Aug.
Sept.
Oct.
Nov.
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 1
2
3
4
5
May
34.28
36.14
39.51
45.61
47.28
48.58
49.45
50.49
51.32
51.81
52.40
53.84
33.65
33.83
33.78
170.04
35.36
35.37
35.58
185.39
36.32
38.93
38.66
199.17
44.29
44.79
44.55
216.72
46.38
47.02
46.47
222.36
47.70
48.29
47.74
224.90
48.64
49.17
48.51
226.63
49.75
50.13
49.58
228.30
50.45
50.91
50.58
230.59
50.80
51.37
51.08
231.63
51.56
52.06'
51.66'
233.44
53.09
53.50
52.84
235.93
Not seasonally adjusted
6 Total reserves2
7
8
9
10
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
35.01
36.86
40.57
46.84
47.94
47.71
49.20
50.32
50.62
51.55
52.34
54.12
34.37
34.56
34.51
173.07
36.09
36.09
36.30
188.66
37.38
39.98
39.71
202.34
45.52
46.02
45.78
220.36
47.04
47.68
47.14
222.13
46.84
47.42
46.87
223.61
48.40
48.93
48.27
227.04
49.58
49.96
49.41
230.02
49.75
50.22
49.88
230.76
50.54
51.11
50.82
231.51
51.50
52.00
51.60'
233.04
53.37
53.79
53.12
236.92
41.85
38.89
40.70
48.14
48.88
48.42
49.94
51.03
51.28
53.19
54.62
56.41
41.22
41.41
41.35
180.42
38.12
38.12
38.33
192.26
37.51
40.09
39.84
204.18
46.82
47.41
47.09
223.53
47.99
48.22
48.08
224.88
47.54
48.24
47.58
226.12
49.14
49.81
49.01
229.68
50.29
50.68
50.12
232.55
50.41
50.90
50.54
233.32
52.18
52.76
52.46
235.07
53.78
54.15
53.88'
237.26
55.66
56.16
55.41
241.28
N O T ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 5
11 Total reserves2
12
13
14
15
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
1. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
2. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
3. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
4. The monetary base not adjusted for discontinuities consists of total reserves
plus required clearing balances and adjustments to compensate for float at Federal
Reserve Banks and the currency component of the money stock less the amount
of vault cash holdings of thrift institutions that is included in the currency
component of the money stock plus, for institutions not having required reserve
balances, the excess of current vault cash over the amount applied to satisfy
current reserve requirements. After the introduction of contemporaneous reserve
requirements (CRR), currency and vault cash figures are measured over the
weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock and the remaining items seasonally
adjusted as a whole.
5. Reflects actual reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated
with implementation of the Monetary Control Act or other regulatory changes to
reserve requirements.
NOTE. Latest monthly and biweekly figures are available from the Board's
H.3(502) statistical release. Historical data and estimates of the impact on
required reserves of changes in reserve requirements are available from the
Banking Section, Division of Research and Statistics, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.
Monetary and Credit Aggregates
1.21
A13
M O N E Y STOCK, LIQUID A S S E T S , A N D D E B T M E A S U R E S
Billions of dollars, averages of daily figures
1986
1982
Dec.
1983
Dec.
1984
Dec.
1985
Dec.
Aug.
Sept.
Oct.
Nov.
Seasonally adjusted
1 Ml
? M2
M3
4 L
5 Debt
6
7
8
9
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
10
11
Nontransactions components
In M26
In M3 only 7
Savings deposits 9
Commercial Banks
13 Thrift institutions
\?
479.9
1,952.6
2,443.5
2,850.1
4,661.7'
527.1
2,186.0
2,697.3
3,162.7
5,210.1'
558.5
2,373.8
2,986.5
3,532.4
5,950.0r
626.6
2,566.5
3,201.2
3,839.5
6,771.8'
687.6
2,724.3'
3,400.7'
4,030.7'
7,306.2'
693.1
2,740.8'
3,425.5'
4,059.6'
7,375.8'
701.2
2,764.9'
3,444.5'
4,082.2
7,427.9
134.3
4.3
237.9
103.4
148.3
4.9
242.7
131.3
158.5
5.2
248.4
146.3
170.6
5.9
271.5
178.6
179.0
6.5
291.8
210.4
179.7
6.5
292.2
214.8
181.2
6.4
293.2
220.4
182.2
6.4
298.4
226.4
1,472.7
490.9
1,658.9
511.3
1,815.4
612.7
1,939.9
634.6
2,036.7'
676.4'
2,047.6'
684.7'
2.063.7'
679.5'
2,066.7
680.5
163.7
194.2
133.4
173.2
122.3
167.3
124.5
179.1
136.8
200.8
140.9
203.5
145.8
208.0
150.4
212.8
713.4
2,780.1
3,460.6
n.a.
n.a.
14
15
Small denomination time deposits 9
Commercial Banks
Thrift institutions
380.4
472.4
351.1
434.1
387.2
500.3
384.1
496.2
376.0
501.2
372.6
498.7
367.7
494.0'
363.9
490.4
16
17
Money market mutual funds
General purpose and broker/dealer
Institution-only
185.2
51.1
138.2
43.2
167.5
62.7
176.5
64.6
200.5
80.8
202.2
84.4
206.7
84.5
206.6
84.4
18
19
Large denomination time deposits 10
Commercial Banks 11
Thrift institutions
262.1
65.8
228.7
101.1
263.7
150.2
279.2
157.3
282.C
166.1
281.4'
165.8
279.2'
164.0
281.6
161.8
70
21
Debt components
Federal debt
Non-federal debt
979.7
3,682.1
1,172.8
4,037.3'
1,367.6^
4,582.4'
1,587.0
5,184.8'
1,725.1'
5,581.8'
1,741.6'
5,634.2'
1,755.9
5,672.1
n.a.
n.a.
Not seasonally adjusted
?? Ml
?3 M2
74 M3
L
26 Debt
490.9
1,958.6
2,453.3
2,856.4
4,655.8
538.8
2,192.8
2,707.9
3,169.3
5,204.5'
570.5
2,380.8
2,997.8
3,537.6
5,944.2'
639.9
2,574.7
3,213.9
3,845.7
6,765.2'
684.6
2,719.2'
3,395.4'
4,027.0'
7,276.0'
690.7
2,731.5'
3,418.2'
4,054.5'
7,354.0'
698.4
2,758.9'
3,440.4'
4,078.1
7,410.4
714.9
2,778.0
3,464.2
n.a.
n.a.
136.5
4.1
246.2
104.1
150.5
4.6
251.3
132.4
160.9
4.9
257.3
147.5
173.1
5.5
281.3
180.1
179.9
7.3
289.0
208.5
179.6
6.9
290.8
213.5
180.9
6.5
292.5
218.5
183.2
6.1
299.6
226.0
1,467.7
494.7
1,654.0
515.1
1,810.3
617.0
1.934.7
639.2
2,034.6'
676.3
2,040.7'
686.7'
2,060.5'
681.5'
2,063.0
686.2
26.3
16.9
230.5
148.7
267.2
149.7
332.4
179.6
363.5'
189.5
368.1
190.2
371.7'
192.1
375.1
193.0
27
28
79
30
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
31
32
Nontransactions components
M26
M3 only 7
33
34
Money market deposit accounts
Commercial banks
Thrift institutions
35
36
Savings deposits 8
Commercial Banks
Thrift institutions
162.1
193.1
132.2
172.3
121.4
166.5
123.5
178.3
137.3
199.7
140.7
202.5
146.1
208.7
149.9
212.9
37
38
Small denomination time deposits 9
Commercial Banks
Thrift institutions
380.1
471.7
351.1
434.2
387.6
501.2
384.8
497.6
377.9
500.5
375.2'
498.4
370.4
496.9'
365.9
493.2
39
40
Money market mutual funds
General purpose and broker/dealer
Institution-only
185.2
51.1
138.2
43.2
167.5
62.7
176.5
64.6
200.5
80.8
202.2
84.4
206.7
84.5
206.6
84.4
41
42
Large denomination time deposits 10
Commercial Banks 11
Thrift institutions
265.2
65.8
230.8
101.4
265.4
150.6
280.9
157.8
282.3
166.0
283.5'
165.7
281.9'
164.4'
283.3
162.5
43
44
Debt components
Federal debt
Non-federal debt
1,170.2
4,034.3'
1,364.7
4,579.5'
1,583.7
5,181.5'
1,713.3
5,562.7'
1,734.5'
5,619.5'
1,748.6
5,661.8
For notes see following page.
976.4
3,679.3
n.a.
n.a.
A14
Domestic Financial Statistics • February 1987
NOTES TO TABLE 1.21
1. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their OCD liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, MMDAs, savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of
less than $100,000), and balances in both taxable and tax-exempt general purpose
and broker/dealer money market mutual funds. Excludes individual retirement
accounts (IRA) and Keogh balances at depository institutions and money market
funds. Also excludes all balances held by U.S. commercial banks, money market
funds (general purpose and broker/dealer), foreign governments and commercial
banks, and the U.S. government. Also subtracted is a consolidation adjustment
that represents the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposits.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt
data are based on monthly averages.
2. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of
commercial banks. Excludes the estimated amount of vault cash held by thrift
institutions to service their OCD liabilities.
3. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in
demand deposits.
4. Demand deposits at commercial banks and foreign-related institutions other
than those due to domestic banks, the U.S. government, and foreign banks and
official institutions less cash items in the process of collection and Federal
Reserve float. Excludes the estimated amount of demand deposits held at
commercial banks by thrift institutions to service their OCD liabilities.
5. Consists of NOW and ATS balances at all depository institutions, credit
union share draft balances, and demand deposits at thrift institutions. Other
checkable deposits seasonally adjusted equals the difference between the seasonally adjusted sum of demand deposits plus OCD and seasonally adjusted demand
deposits. Included are all ceiling free "Super NOWs," authorized by the
Depository Institutions Deregulation committee to be offered beginning Jan. 5,
1983.
6. Sum of overnight RPs and overnight Eurodollars, money market fund
balances (general purpose and broker/dealer), MMDAs, and savings and small
time deposits, less the consolidation adjustment that represents the estimated
amount of demand deposits and vault cash held by thrift institutions to service
their time and savings deposits liabilities.
7. Sum of large time deposits, term RPs and term Eurodollars of U.S.
residents, money market fund balances (institution-only), less a consolidation
adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds.
8. Savings deposits exclude MMDAs.
9. Small-denomination time deposits—including retail RPs— are those issued
in amounts of less than $100,000. All individual retirement accounts (IRA) and
Keogh accounts at commercial banks and thrifts are subtracted from small time
deposits.
10. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
11. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.
NOTE: Latest monthly and weekly figures are available from the Board's H.6
(508) release. Historical data are available from the Banking Section, Division of
Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Monetary and Credit Aggregates
1.22
A15
B A N K DEBITS A N D DEPOSIT T U R N O V E R
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
1986
IVOJ
iy©4
May
1
2
3
4
5
6
7
8
9
10
Demand deposits 2
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts 3
Savings deposits 4
Aug.
Sept.
Oct.
Seasonally adjusted
DEBITS TO
Demand deposits 2
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts 3
Savings deposits 4
July
June
109,642.3
47,769.4
61,873.1
1,405.5
741.4
128,440.8
57,392.7
71,048.1
1,588.7
633.1
154,556.0
70,445.1
84,110.9
1,920.8
539.0
189,819.7
87,846.7
101,973.0
2,255.6
389.7
187,035.1
89,201.2
97,833.9
2,188.0
382.6
188,874.2
91,040.8
97,833.4
2,320.1
417.4
194,457.3
92,961.7
101,495.6
2,414.8
421.0
197,997.9
95,252.0
102,745.9
2,704.8
428.4
197,222.5
95,919.7
101,302.9
2,292.5
456.5
379.7
1,528.0
240.9
15.6
5.4
434.4
1,843.0
268.6
15.8
5.0
496.5
2,168.9
301.8
16.7
4.5
569.7
2,457.8
342.8
17.0
3.1
553.3
2,504.5
323.5
16.2
3.0
556.4
2,417.2
324.2
16.8
3.2
567.6
2,437.0
333.4
16.9
3.2
573.9
2,519.8
334.5
18.4
3.1
569.6
2,493.4
329.2
15.2
3.2
DEPOSIT TURNOVER
Not seasonally adjusted
DEBITS TO
2
Demand deposits
11 All insured banks
12 Major New York City banks
13 Other banks
14 ATS-NOW accounts 3
15 MMDA 5
16 Savings deposits 4
109,517.6
47,707.4
64,310.2
1,397.0
567.4
742.0
128,059.1
57,282.4
70,776.9
1,579.5
848.8
632.9
154,108.4
70,400.9
83,707.8
1,903.4
1,179.0
538.7
184,827.4
85,189.6
99,637.8
2,256.6
1,557.9
377.8
188,924.1
91,315.2
97,608.9
2,356.3
1,697.2
385.9
198,657.9
96,686.1
101,971.8
2,240.4
1,575.9
419.9
186,892.9
88,807.6
98,085.3
2,140.8
1,530.6
413.7
198,433.5
96,489.1
101,944.4
2,524.1
1,612.9
414.2
204,618.4
98,837.9
105,780.4
2,231.9
1,607.4
449.2
379.9
1,510.0
240.5
15.5
2.8
5.4
433.5
1,838.6
267.9
15.7
3.5
5.0
497.4
2,191.1
301.6
16.6
3.8
4.5
569.4
2,487.0
343.2
17.1
4.5
3.0
564.1
2,570.0
326.0
17.4
4.8
3.0
587.8
2,620.6
338.7
16.3
4.4
3.2
554.7
2,421.9
326.6
15.1
4.2
3.1
577.6
2,603.6
332.6
17.3
4.4
3.0
593.5
2,656.9
343.9
14.9
4.3
3.2
DEPOSIT TURNOVER
17
18
19
20
21
22
Demand deposits 2
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts 3
MMDA 5
Savings deposits 4
1. Annual averages of monthly figures.
2. Represents accounts of individuals, partnerships, and corporations and of
states and political subdivisions.
3. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data
availability starts with December 1978.
4. Excludes ATS and NOW accounts, MMDA and special club accounts, such
as Christmas and vacation clubs.
5. Money market deposit accounts.
NOTE. Historical data for demand deposits are available back to 1970 estimated
in part from the debits series for 233 SMSAs that were available through June
1977. Historical data for ATS-NOW and savings deposits are available back to
July 1977. Back data are available on request from the Banking Section, Division
of Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
These data also appear on the Board's G.6 (406) release. For address, see inside
front cover.
A16
1.23
Domestic Financial Statistics • February 1987
L O A N S A N D SECURITIES
All Commercial Banks 1
Billions of dollars; averages of Wednesday figures
1985
Dec.
1986
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept/
Oct/
Nov.
Seasonally adjusted
1 Total loans and securities2
2 U.S. government securities
3 Other securities
4 Total loans and leases 2
5 Commercial and industrial
6
Bankers acceptances held 3 ..
7
Other commercial and
industrial
8
U.S. addressees 4
9
Non-U.S. addressees 4
10 Real estate
11 Individual
12 Security
13 Nonbank financial
institutions
14 Agricultural
15 State and political
subdivisions
16 Foreign banks
1/
Foreign official institutions . . .
18 Lease financing receivables...
19 All other loans
1,900.4
1,930.0
1,935.5
1,944.6
1,947.9
1,957.5
1,963.7
1,985.0
2,007.7
2,029.6
2,034.0
2,049.0
273.1
177.6
1,449.7
499.5
4.9
268.2
192.5
1,469.3
502.1
4.9
273.6
188.1
1,473.7
502.4
4.8
269.5
183.3
1,491.8
506.1
4.9
270.0
182.1
1,495.8
507.8
5.2
274.1
181.9
1,501.5
506.7
5.6
274.8
183.6
1,505.3
508.7
6.1
285.4
186.1
1,513.4
508.7
5.8
290.9
192.3
1,524.5
510.4
5.9
294.3
200.7
1,534.7
512.1
6.3
299.6
196.7
1,537.7
514.1
6.4
304.8
194.8
1,549.5
520.3
6.1
494.7
486.0
8.7
422.4
291.5
40.1
497.2
488.0
9.3
427.1
294.6
44.1
497.6
488.4
9.2
431.4
297.4
43.4
501.2
491.3
9.9
436.1
299.5
50.4
502.6
492.7
9.8
440.7
301.1
48.0
501.0
490.6
10.5
446.4
303.0
46.4
502.6
493.1
9.5
450.7
304.5
42.5
502.8
493.8
9.0
455.9
305.6
44.8
504.4
495.4
9.1
461.4
306.9
44.2
505.8
496.9
8.9
465.9
308.8
44.4
507.8
499.0
8.8
470.8
309.8
39.5
514.1
505.4
8.7
476.5
311.1
40.1
32.6
36.3
32.6
35.9
31.8
35.4
32.2
34.9
32.3
34.6
33.3
34.1
34.7
33.7
34.2
33.3
34.4
33.3
35.1
33.2
35.6
33.3
35.3
33.6
52.8
9.1
6.9
18.8
39.6
60.5
9.1
7.0
19.4
36.9
60.3
9.2
7.0
19.6
35.8
60.2
9.2
6.8
19.8
36.6
59.8
9.2
5.3
19.9
37.3
59.5
9.3
5.1
19.8
37.9
59.4
9.5
6.4
20.0
35.4
59.0
9.5
6.5
20.0
35.9
59.4
9.3
6.5
20.2
38.5
59.4
9.4
6.4
20.4
39.7
58.5
9.2
6.4
20.4
40.1
57.8
9.0
6.2
21.0
38.5
Not seasonally adjusted
20 Total loans and securities2
1,912.6
1,934.8
1,932.4
1,944.1
1,950.5
1,956.7
1,965.4
1,981.4
1,999.8
2,027.3
2,029.2
2,048.6
21 U.S. government securities
11 Other securities
li Total loans and leases 2
14 Commercial and industrial
25
Bankers acceptances held 3 ..
26
Other commercial and
industrial
27
U.S. addressees 4
28
Non-U.S. addressees 4 ....
29 Real estate
30
Individual
31
Security
32 Nonbank financial
institutions
33 Agricultural
34
State and political
subdivisions
35 Foreign banks
36
Foreign official institutions . . .
3/
Lease financing receivables...
38 All other loans
271.0
178.7
1,462.9
501.5
5.2
267.7
193.8
1,473.3
501.4
4.9
275.0
188.9
1,468.5
500.1
4.7
273.2
183.9
1,487.1
506.9
5.0
274.0
181.8
1,494.7
510.0
5.2
275.4
182.2
1,499.0
508.5
5.5
276.2
182.5
1,506.7
509.4
6.0
285.3
183.9
1,512.1
508.6
6.0
289.1
192.1
1,518.7
508.3
5.9
292.6
200.7
1,534.0
511.2
6.1
295.2
196.3
1,537.7
513.1
6.2
302.5
194.8
1,551.3
519.3
6.2
496.4
487.3
9.0
423.3
294.8
45.4
496.5
487.3
9.2
427.3
297.0
46.8
495.4
486.3
9.1
430.6
296.3
42.6
501.9
492.7
9.2
434.9
296.8
49.5
504.9
495.4
9.5
439.5
298.6
48.5
503.0
493.3
9.7
445.2
301.1
45.6
503.4
494.0
9.4
450.2
303.1
42.5
502.6
493.3
9.3
455.8
304.9
43.0
502.4
493.1
9.4
461.7
307.2
41.3
505.2
495.9
9.3
466.9
310.2
41.8
506.9
497.7
9.2
472.2
311.4
38.7
513.0
503.8
9.2
478.0
312.4
41.3
33.4
36.0
32.8
35.2
31.2
34.5
31.6
34.0
32.2
33.9
33.1
34.1
34.6
34.2
34.3
34.1
34.6
34.1
35.3
34.0
35.4
33.8
35.4
33.7
52.8
9.5
6.9
18.8
40.5
60.5
9.3
7.0
19.6
36.4
60.3
9.3
7.0
19.8
36.6
60.2
9.1
6.8
19.8
37.5
59.8
9.0
5.3
19.9
38.1
59.5
9.1
5.1
19.9
37.9
59.4
9.2
6.4
20.0
37.7
59.0
9.4
6.5
20.0
36.5
59.4
9.1
6.5
20.1
36.3
59.4
9.4
6.4
20.3
39.0
58.5
9.3
6.4
20.3
38.6
57.8
9.3
62
20.9
37.0
1. Data are prorated averages of Wednesday estimates for domestically chartered insured banks, based on weekly sample reports and quarterly universe
reports. For foreign-related institutions, data are averages of month-end estimates
based on weekly reports from large U.S. agencies and branches and quarterly
reports from all U.S. agencies and branches, New York investment companies
majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks.
2. Excludes loans to commercial banks in the United States.
3. Includes nonfinancial commercial paper held.
4. United States includes the 50 states and the District of Columbia.
NOTE. These data also appear in the Board's G.7 (407) release. For address, see
inside front cover.
Commercial
1.24
Banking Institutions
All
MAJOR N O N D E P O S I T F U N D S OF COMMERCIAL B A N K S 1
Monthly averages, billions of dollars
1986
1985
Source
Dec.
Total nondeposit funds
Seasonally adjusted 2
Not seasonally adjusted
Federal funds, RPs, and other
borrowings from nonbanks 3
3 Seasonally adjusted
4
Not seasonally adjusted
5 Net balances due to foreign-related
institutions, not seasonally
adjusted
1
2
Jan.
Feb.
Mar.
Apr.
May
June
July'
Aug.'
Sept.
Oct.
Nov.
128.2
127.9
131.7
131.8
131.7
134.4
141.2
143.7
134.1
135.0
135.7
137.9'
132.6
131.3
136.1
132.2
138.1
137.1
143.cc
141.3'
140.5'
138.7'
143.2
144.4
154.1
153.7
151.6
151.6
152.7
155.3
160.6
163.1
160.4
161.3
157.9
160.0
157.1
155.8
166.4
162.5
168.4
167.3
166.3'
168.4'
166.7'
165.7
166.8
-25.9
-19.9
-21.0
-19.4
-26.3
-22.2
-24.5
-30.3
-30.3
-25.0
-28^
-22.5
-31.6
76.3
44.7
-28.0
74.3
46.4
-25.8
69.4
43.6
-26.5
71.7
45.2
-30.2
75.2
45.1
-29.3
72.9
43.6
-30.5
72.2
41.7
-33.8
73.9
40.1
-31.2
75.2
44.0
-29.2
74.0
44.8
-31.9
73.5
41.6
-28.7
70.8
42.1
5.7
56.7
62.5
8.1
57.6
65.7
4.8
60.0
64.8
7.1
3.9
62.5
66.4
60.0
67.1
6.0
62.8
68.7'
3.5
64.1
67.7
66.2
67.1
4.2
67.9
72.0'
4.0
60.7
67.8
68.3
72.2'
6.2
68.8
75.0
89.4
87.6
89.5
92.2
89.7
90.6
89.0
91.2
89.3'
88.0
95.9
92.0
96.8
95.7
96.7'
95^
96.3
87.7
89.7
92.2
97.4'
89.0
95.6'
97.4
18.5
16.1
14.7
16.8
13.1
13.2
11.0
16.0
18.2
15.3
26.5
15.2
339.8
338.1
338.5
337.5
342.9
343.2
342.5
344.6
340.1
342.8
341.1
342.9
MEMO
6 Domestically chartered banks' net
positions with own foreign
branches, not seasonally
adjusted 4
7 Gross due from balances
8 Gross due to balances
9 Foreign-related institutions' net
positions with directly related
institutions, not seasonally
adjusted 5
10 Gross due from balances
11 Gross due to balances
Security RP borrowings
12 Seasonally adjusted 6
Not seasonally adjusted
13
U.S. Treasury demand balances 7
Seasonally adjusted
14
15 Not seasonally adjusted
Time deposits, $100,000 or more 8
16
Seasonally adjusted
17
Not seasonally adjusted
14.6
19.0
24.0
21.1
24.2
15.7
15.7
17.4
17.8
21.3
21.8
337.6
339.4
349.4
348.3
351.9
350.7
347.7
348.3
346.9
343.5
340.4
339.7
17.5
1. Commercial banks are those in the 50 states and the District of Columbia
with national or state charters plus agencies and branches of foreign banks, New
York investment companies majority owned by foreign banks, and Edge Act
corporations owned by domestically chartered and foreign banks.
Data for lines 1-4 and 12-17 have been revised in light of benchmarking and
revised seasonal adjustment.
2. Includes seasonally adjusted federal funds, RPs, and other borrowings from
nonbanks and not seasonally adjusted net Eurodollars. Includes averages of
Wednesday data for domestically chartered banks and averages of current and
previous month-end data for foreign-related institutions.
7.1
.9
3. Other borrowings are borrowings on any instrument, such as a promissory
note or due bill, given for the purpose of borrowing money for the banking
business. This includes borrowings from Federal Reserve Banks and from foreign
banks, term federal funds, overdrawn due from bank balances, loan RPs, and
participations in pooled loans.
4. Averages of daily figures for member and nonmember banks.
5. Averages of daily data.
6. Based on daily average data reported by 122 large banks.
7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at
commercial banks. Averages of daily data.
8. Averages of Wednesday figures.
A18
1.25
Domestic Financial Statistics • February 1987
A S S E T S A N D LIABILITIES OF COMMERCIAL B A N K I N G INSTITUTIONS
Billions of dollars
Last-Wednesday-of-Month Series
1986
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
2,065.2
432.5
251.9
180.6
30.1
1,602.6
140.4
1,462.2
496.7
428.7
297.4
239.4
2,078.8
432.8
255.1
177.7
34.0
1,612.0
143.5
1,468.5
501.8
431.5
296.4
238.7
2,091.4
427.2
253.7
173.5
30.1
1,634.2
146.0
1,488.1
508.5
435.9
296.9
246.9
2,113.4
429.5
255.8
173.6
27.8
1,656.1
155.7
1,500.4
510.5
441.7
300.4
247.8
2,101.3
430.9
257.7
173.2
27.0
1,643.5
146.2
1,497.2
506.2
446.4
301.1
243.6
2,105.5
432.6
259.6
173.0
27.4
1,645.5
139.2
1,506.3
512.3
451.4
304.0
238.7
2,134.0
445.7
269.6
176.1
28.7
1,659.6
148.6
1,511.0
507.3
457.6
305.6
240.5
2,154.4
455.1
272.2
183.0
29.3
1,670.0
149.4
1,520.6
510.1
463.2
308.4
238.8
2,171.1
464.6
275.9
188.7
27.9
1,678.5
145.3
1,533.2
512.1
467.7
310.5
242.9
2,173.2
467.4
281.8
185.6
26.0
1,679.9'
146.8'
1,533.1
512.6
473.5
311.8
235.2
2,218.1
470.4
286.2
184.3
28.1
1,719.5
161.0
1,558.6
520.2
479.3
312.8
246.3
187.3
21.9
23.0
64.2
193.7
26.2
22.7
66.9
198.1
29.1
21.8
68.8
209.9
25.5
22.3
80.7
221.0
30.2
23.9
84.6
196.0
27.9
23.0
67.3
206.2
28.2
23.3
72.1
205.8
27.9
23.7
73.5
196.6
27.8
22.9
66.3
200.4
31.2
23.5
66.2'
223.9
31.7
22.2
86.5
31.3
47.0
31.8
46.1
31.1
47.4
34.7
46.7
36.8
45.5
32.0
45.8
33.8
48.7
33.6
47.1
32.3
47.4
32.6
46^
37.7
45.8
Oct.
Nov.
ALL COMMERCIAL BANKING
INSTITUTIONS 1
1 Loans and securities
2 Investment securities
3
U.S. government securities
4
Other
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
187.0
186.5
195.3
207.0
195.9
196.6
196.6
196.2
200.8
198.2'
201.9
20 Total assets/total liabilities and capital . . .
19 Other assets
2,439.6
2,458.9
2,484.8
2,530.3
2,518.3
2,498.1
2,536.7
2,556.4
2,568.4
2,571.8'
2,643.9
21
22
23
24
25
26
27
1,739.5
488.8
454.2
796.5
364.4
167.6
168.2
1,746.4
492.1
457.2
797.1
374.7
169.1
168.8
1,762.8
502.5
462.0
798.3
373.1
179.3
169.7
1,798.4
540.7
467.8
789.9
390.7
170.4
170.8
1,807.4
542.7
477.3
787.5
367.4
173.1
170.3
1,791.9
523.3
482.4
786.3
366.8
168.5
170.9
1,819.5
540.0
490.8
788.7
379.2
168.6
169.4
1,833.6
544.2
497.7
791.7
377.3
174.7
170.8
1,830.8
537.4
504.4
789.0
388.1
177.5
172.1
1,843.7'
547.5
514.8
781.4'
380.0
175.1
173.1'
1,896.8
594.8
521.7
780.3
394.1
180.2
172.8
269.8
278.4
273.7
274.0
275.1
276.5
288.8
289.8
292.5
298.5'
303.6
192.8
188.4
183.6
183.3
182.8
183.5
185.6
194.6
200.0
194.8
195.0
1,954.3
421.1
247.0
174.1
30.1
1,503.1
115.8
1,387.3
442.5
423.6
297.1
224.1
1,964.0
420.8
249.6
171.2
34.0
1,509.2
115.8
1,393.5
446.2
426.4
296.2
224.7
1,972.4
416.0
248.5
167.5
30.1
1,526.3
120.2
1,406.1
448.2
430.7
296.6
230.7
1,993.3
416.1
248.8
167.2
27.8
1,549.4
129.3
1,420.1
452.3
436.3
300.1
231.4
1,985.3
417.1
250.2
166.9
27.0
1,541.3
123.3
1,418.0
449.8
440.7
300.8
226.7
1,990.0
419.6
253.1
166.5
27.4
1,543.0
117.3
1,425.8
452.5
445.8
303.6
223.9
2,014.0
432.5
263.2
169.4
28.7
1,552.8
122.7
1,430.1
448.4
451.9
305.3
224.6
2,029.4
440.2
264.5
175.7
29.3
1,559.8
123.1
1,436.7
448.4
457.3
308.1
222.9
2,039.8
448.0
267.5
180.5
27.9
1,564.0
118.9
1,445.1
447.2
461.7
310.1
226.1
171.1
21.0
23.0
63.8
179.1
25.5
22.6
66.5
182.7
28.4
21.7
68.4
194.3
24.4
22.2
80.3
205.8
28.7
23.8
84.2
180.1
26.3
22.9
66.7
187.8
27.2
23.2
71.7
189.3
26.6
23.7
73.1
180.4
26.9
22.8
65.9
183.1
29.7
23.4
65.5
207.6
29.8
22.2
86.1
29.4
34.0
30.1
34.3
29.4
34.7
33.0
34.3
35.1
34.0
30.2
34.0
32.0
33.6
31.9
34.1
30.5
34.4
30.9'
33.6'
35.8
33.7
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 2
30 Loans and securities
31
Investment securities
32
U.S. government securities
33
Other
34 Trading account assets
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
2,046.2
450.6'
272.9
177.8
26.0
1,569.6'
122.5'
1,447.1'
447.2
467.6'
311.5
220.8
2,090.2
454.4
278.1
176.4
28.1
1,607.6
137.8
1,469.9
453.9
472.7
312.4
230.8
137.8
134.6
144.0
150.3
142.8
144.1
143.2
141.7
145.5
49 Total assets/total liabilities and capital . . .
2,263.1
2,277.8
2,299.1
2,337.9
2,334.0
2,314.1
2,345.0
2,360.3
2,365.7
2,372.1
2,440.8
50
51
52
53
54
55
56
1,689.6
481.6
452.4
755.7
298.0
110.5
165.0
1,698.2
484.8
455.3
758.1
304.9
109.0
165.6
1,713.1
495.0
460.1
758.1
304.8
114.6
166.5
1,749.1
533.1
465.8
750.1
309.1
112.0
167.7
1,758.7
535.3
475.2
748.1
294.2
113.9
167.2
1,741.4
515.5
480.3
745.6
293.5
111.5
167.8
1,768.0
532.1
488.7
747.2
300.5
110.3
166.2
1,779.9
536.1
495.5
748.2
295.5
117.3
167.7
1,775.2
529.3
502.1
743.8
305.2
116.4
168.9
1,788.6
539.7
512.5
736.5
299.3
114.2'
169.9'
1,840.5
586.8
519.2
734.5
312.6
118.0
169.6
48 Other assets
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
1. Commercial banking institutions include insured domestically chartered
commercial banks, branches and agencies of foreign banks, Edge Act and
Agreement corporations, and New York State foreign investment corporations.
2. Insured domestically chartered commercial banks include all member banks
and insured nonmember banks.
142.7'
143.0
NOTE. Figures are partly estimated. They include all bank-premises subsidiaries and other significant majority-owned domestic subsidiaries. Loan and securities data for domestically chartered commercial banks are estimates for the last
Wednesday of the month based on a sample of weekly reporting banks and
quarter-end condition report data. Data for other banking institutions are estimates made for the last Wednesday of the month based on a weekly reporting
sample of foreign-related institutions and quarter-end condition reports.
Weekly Reporting Commercial Banks
1.26
A L L L A R G E W E E K L Y REPORTING COMMERCIAL B A N K S with Domestic Assets of $1.4 Billion or More on
December 31, 1982, Assets and Liabilities
Millions of dollars, Wednesday figures
Oct. 1
1 Cash and balances due from depository institutions
Total loans, leases and securities, net
U.S. Treasury and government agency
Trading account
Investment account, by maturity
One year or less
Over one through five years
Over five years
Other securities
Trading account
Investment account
States and political subdivisions, by maturity
One year or less
Over one year
Other bonds, corporate stocks, and securities
Other trading account assets
Federal funds sold 1
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross 2
Other loans, gross 2
Commercial and industrial 2
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans 2
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions .
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve 2
Other loans and leases, net 2
All other assets
Total assets
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45 Demand deposits
46 Individuals, partnerships, and corporations
47
States and political subdivisions
48
U.S. government
49
Depository institutions in United States
50
Banks in foreign countries
51
Foreign governments and official institutions
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
Certified and officers' c h e c k s
Transaction balances other than demand deposits
Nontransaction balances
Individuals, partnerships and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions and banks . . .
Liabilities for borrowed money
Borrowings from Federal Reserve Banks
Treasury tax-and-loan notes
All other liabilities for borrowed money 3
Other liabilities and subordinated note and debentures.
Total liabilities
Residual (total assets minus total liabilities)4
MEMO
67
68
69
70
71
72
73
A19
Total loans and leases (gross) and investments adjusted 5 .
Total loans and leases (gross) adjusted 2 - 5
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates—total 6
Commercial and industrial
Other
Nontransaction savings deposits (including MMDAs)
Oct. 15
Oct. 22
Oct. 29
Nov. 5
Nov. 12
Nov. 19
Nov. 26
107,770
92,984
117,960'
100,525'
92,889'
100,823
117,402
106,498
106,729
973,244
965,268
967,647'
961,594'
957,305'
974,218
975,304
983,395
988,788
104,097
20,348
83,749
17,274
38,932
27,544
75,762
5,821
69,941
60,448
11,007
49,441
9,492
5,346
64,656
39,054
17,219
8,383
744,423
727,987
259,659
2,257
257,402
253,510
3,892
198,294
140,101
49,250
16,644
5,260
27,347
16,791
5,997
36,080
3,194
18,620
16,436
4,877
16,163
723,382
133,767
105,279
20,742
84,536
17,310
39,826
27,400
74,484
4,901
69,584
60,126
11,107
49,020
9,457
5,375
62,627
39,012
13,939
9,677
738,664
722,193
258,542
2,286
256,255
252,398
3,857
104,505'
19,31C
85,196'
17,257
40,307'
27,631
73,875
4,866
69,009
59,466
10,916
48,550
9,543
5,399
63,450
38,846
15,636
8,967
741,602'
725,315'
259,145
2,484
256,660
252,757
3,903
199,568'
140,460
48,757'
15,631'
5,858
27,268'
14,855
5,922
35,724
3,224
17,660
16,287
4,933
16,251
720,418'
127,797'
104,229'
18,823
85,406'
17,141
40,103
28,162'
73,575
5,074
68,501
59,024
10,805'
48,2^
9,477
4,580
60,516
35,750
14,772
9,994
739,912'
723,62C
258,701
2,390
256,311
252,469
3,842
107,780
20,023
87,757
17,087
39,946
30,724
72,350
4,535
67,816
58,287
10,245'
48,041'
9,529
5,0%
110,485
22,113
88,372
16,749
40,168
31,455
72,412
4,767
67,645
57,548
9,669
47,879
10,097
5,364
64,195
40,841
15,862
7,492
743,303
726,773
261,735
2,492
259,244
255,078
4,166
200,575
141,110
48,025
16,435
4,706
26,883
13,572
5,791
35,300
3,213
17,450
16,529
4,925
16,617
721,761
133,054
110,478
20,750
89,727
16,549
40,336
32,842
72,926
5,183
67,743
57,769
9,616
48,153
9,974
4,780
61,757
37,930
15,893
7,934
746,914
730,368
262,730
2,442
260,288
256,126
4,162
201,464
141,369
48,419
16,456
4,770
27,193
14,270
5,723
35,247
3,124
18,023
16,546
4,946
16,606
725,363
128,208
111,961
21,321
90,640
16,924
41,762
31,953
71,947
4,792
67,155
57,510
9,672
47,838
9,645
4,910
65,465
40,749
16,198
8,518
750,758
734,140
263,512
2,638
260,874
256,796
4,077
202,709
141,800
49,270
16,848
5,222
27,200
15,032
5,707
35,304
3,247
17,557
16,619
4,998
16,647
729,113
122,057
113,889
21,462
92,427
17,209
41,992
33,226
72,061
5,488
66,574
56,836
9,319
47,517
9,737
5,728
61,012
36,426
16,643
7,943
757,894
740,397
263,460
2,496
260,964
257,074
3,890
202,835
142,208
50,831
17,974
6,366
26,491
18,602
5,684
35,230
3,342
18,205
17,497
5,033
16,763
736,098
123,916
1,187,996' 1,213,405' 1,186,584' 1,174,966' 1,208,095
1,220,914
1,211,950
1,219,433
229,330
174,349
5,576
4,464
25,514
6,134
954
12,339
53,125
499,928
461,367
26,084
916
10,389
1,172
255,334
2,831
2,598
249,905
85,832
244,445
189,342
5,224
1,921
27,726
6,485
1,252
12,493
53,128
500,135
461,972
25,955
807
10,240
1,160
257,890
110
5,756
252,024
80,522
224,562
169,926
5,209
4,004
25,911
6,828
838
11,847
52,698
500,418
462,351
26,132
804
9,980
1,152
263,653
3,319
8,891
251,442
85,943
238,550
181,634
5,694
2,749
27,887
6,866
1,004
12,718
53,313
500,632
462,729
26,053
781
9,935
1,133
255,894
25
10,450
245,419
86,706
1,104,135' 1,129,642' 1,102,698' 1,091,002' 1,123,549
1,214,781
241,097
185,025
6,103
1,490
29,18(X
7,063'
927
11,310
50,510
501,642
463,27C
25,653
860
10,605'
1,254
255,179
230
18,470
236,479
82,911
198,712
140,135
48,738
15,581
6,035
27,122
14,473
6,008
35,908
3,153
16,524
16,472
4,910
16,252
717,503
129,743'
215,89c
167,357
4,828
2,785
23,733'
6,846'
794
9,547
51,391
500,976'
462,28C
25,926
870
10,617'
1,283
256,123'
1,680
6,362
248,081'
79,754'
246,526'
186,941'
6,030
3,238
31,249
7,598'
874
10,595
51,361'
501,354'
463,037'
25,875'
878
10,345'
1,218
249,974'
100
2,267
247,607'
80,427'
200,696
140,712
48,150'
15,675'
4,810
27,664
13,816
5,909
35,531
3,248
16,856
16,292
4,944
16,273
718,695'
124,464'
212,827'
163,278'
5,458
2,495
24,214
6,476'
911
9,995
50,927
499,49c
461,168'
25,926
893
10,286'
1,218
254,958
1,688
6,514
246,755
84,496'
55,978
33,418
14,327
8,233
737,312'
721,010'
257,394'
2,387
255,008'
251,161'
3,846
200,268
141,026
47,249'
15,689'
4,575
26,984
12,962
5,776
35,472
3,246
17,614
16,302
4,950
16,261
716,100'
124,772'
212,303'
163,712'
4,912'
2,582'
24,294'
6,103'
828
9,872
50,502
498,868'
460,388'
25,868
910
10,489
1,213
244,891
195
6,846
237,850
84,438
1,136,121
1,127,275
1,135,095
83,441
83,861
83,762
83,885
83,964
84,546
84,794
84,675
84,338
938,586
753,381
153,604
1,744
1,047
698
218,645'
931,837
746,699
153,593'
1,729
1,027
702
218,107
934,354'
750,575
152,532
1,705
1,007
698
220,231'
931,386'
749,002
152,852
1,736
1,039
697
218,505'
929,409'
744,182'
152,051'
1,703
1,006
697
218,458'
938,483
750,221
152,477
1,750
1,055
695
220,198
942,470
754,286
152,551
1,746
1,029
717
220,478
947,444
758,626
152,556
1,688
975
712
221,016
956,184
764,506
151,812
1,651
971
680
221,745
1,131,340
1. Includes securities purchased under agreements to resell.
2. Levels of major loan items were affected by the Sept. 26, 1984, transaction
between Continental Illinois National Bank and the Federal Deposit Insurance
Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984.
3. Includes federal funds purchased and securities sold under agreements to
repurchase; for information on these liabilities at banks with assets of $1 billion or
more on Dec. 31, 1977, see table 1.13.
Oct. 8
4. This is not a measure of equity capital for use in capital adequacy analysis or
for other analytic uses.
5. Exclusive of loans and federal funds transactions with domestic commercial
banks.
6. Loans sold are those sold outright to a bank's own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank's holding company (if
not a bank), and nonconsolidated nonbank subsidiaries of the holding company.
A20
1.28
Domestic Financial Statistics • February 1987
L A R G E W E E K L Y REPORTING COMMERCIAL B A N K S IN N E W YORK CITY Assets and Liabilities
Millions of dollars, Wednesday figures except as noted
1986
Account
Oct. 1
1 Cash and balances due from depository institutions
2 Total loans, leases and securities, net1
Securities
3 U.S. Treasury and government agency 2
4 Trading account 2
5
Investment account, by maturity
6
One year or less
Over one through five years
7
8
Over five years
9 Other securities 2
10 Trading account 2
11 Investment account
12
States and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks and securities
16 Other trading account assets 2
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
Loans and leases
Federal funds sold 3
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
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 4
Total assets
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
ATS, 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 5
Other liabilities and subordinated note and debentures
65 Total liabilities
66 Residual (total assets minus total liabilities)6
Oct. 8
Oct. 15
Oct. 22
Oct. 29
Nov. 5
Nov. 12
Nov. 19
Nov. 26
30,803
21,423
28,967
28,537
22,071'
26,292
30,864
28,990
28,236
207,604
205,670
207,479
205,107
203,001'
207,485
211,404
216,149
216,398
0
0
11,159
1,311
5,290
4,557
0
0
16,933
14,859
2,423
12,436
2,073
0
0
0
11,404
1,322
5,490
4,592
0
0
16,722
14,702
2,374
12,328
2,020
0
0
0
11,346
1,342
5,594
4,410
0
0
16,510
14,492
2,333
12,160
2,017
0
0
0
11,437
1,348
5,690
4,400
0
0
16,343
14,325
2,354
11,970
2,018
0
0
0
13,582
1,398
5,659
6,525
0
0
16,188
14,112
2,099
12,012
2,076
0
0
0
13,524
1,221
5,360
6,943
0
0
16,178
13,969
1,924
12,045
2,209
0
0
0
13,826
1,234
5,566
7,027
0
0
16,407
14,381
1,885
12,497
2,025
0
0
0
13,701
1,234
5,521
6,945
0
0
16,318
14,301
1,902
12,400
2,017
0
0
0
14,108
1,233
5,874
7,001
0
0
16,261
14,237
1,833
12,404
2,024
0
28,340
12,364
9,119
6,858
157,044
153,786
58,221
457
57.764
57,337
427
33,553
19,575
18,076
8,432
2,526
7,118
8,654
362
8,830
868
5,646
3,259
1,477
4,396
151,172
72,822
28,823
13,994
6,703
8,126
154,724
151,445
58,338
454
57,884
57,490
394
33,616
19,596
18,069
7,857
3,064
7,149
7,355
353
8,787
845
4,486
3,279
1,510
4,492
148,722
70,463
30,596
15,647
7,585
7,363
155,029
151,745
58,801
558
58,243
57,843
400
33,563
19,701
17,607
7,599
2,926
7,082
7.018
300
8,710
916
5,129
3,284
1,512
4,489
149,028
69,516
28,731
12,971
7,711
8,049
154.608
151,305
58,647
622
58,025
57,628
397
33,943
19,740
17,358
7,707
2,437
7,215
7,159
309
8,669
918
4,561
3,304
1,516
4,497
148,595
66,785'
24,443
10,704
6,958
6,780
154,837'
151,519'
58,148
629
57,519
57,154
366
34,190
19,702
16,996'
7,679'
2,015
7,302
6,784
282
8,676
899
5,842
3,317
1,518
4,530
148,789'
68,856
27,294
13,213
7,974
6,107
156,658
153,264
60,479
637
59,841
59,450
392
34,266
19,717
16,803
7,762
2,120
6,921
6,950
282
8,632
948
5,188
3,393
1,495
4,675
150,488
73,288
28,474
14,290
7,871
6,312
158,903
155,517
60,893
739
60,154
59,751
404
34,498
19,799
17,116
7,661
2,176
7,278
7,511
260
8,652
884
5,902
3,386
1,494
4,712
152,697
69,237
31,204
16,303
8,419
6,482
161,179
157,738
61,192
806
60,386
59,954
432
34,914
19,841
18,028
8,274
2,534
7,221
8,241
284
8,706
892
5,638
3,441
1,535
4,718
154,926
65,100
24,826
10,167
8,374
6,285
167,565
163,284
61,422
740
60,682
60,275
407
35,165
19,918
19,908
9,417
3,455
7,035
10,772
310
8,674
1,005
6,110
4,281
1,575
4,787
161,203
67,094
311,228
297,556
305,963
300,429'
293,928'
307,064
311,505
310,239
311,728
66,457
45,477
1,115
213
8,276
5,772
776
4,830
55,279
38,034
654
592
5,594
5,490
659
4,255
65,283
43,773
1,200
565
7,707
6,410
731
4,896
54,491'
36,234'
792
514
6,035
5,276
758
4,882
54,354'
37,350'
544
495
6,089
4,948
672
4,255
59,369
40,140
698
834
5,775
4,895
780
6,246
62,932
42,515
572
257
6,411
5,176
1,093
6,908
59,115
38,844
640
747
6,387
5,638
665
6,194
62,274
42,064
590
524
6,524
5,527
843
6,201
6,064
94,969
85,871
5,779
68
2,603
648
80,615
0
3,748
76,867
35,804
6,190
93,852
84,554
5,941
73
2,632
651
81,933
1,450
1,207
79,275
32,878
6,171
95,261
86,182
5,821
78
2,554
626
77,863
0
501
77,361
33,929
6,126
94,472
85,255
5,953
80
2,549
634
81,937
1,380
2,005
78,552
35,974
6,113
93,896
84,846
5,947
79
2,399
626
76,552
0
1,751
74,801
35,799
6,379
94,828
85,535
6,229
82
2,387
595
81,982
1,245
632
80,105
36,973
6,579
94,633
85,416
6,175
80
2,355
606
86,430
0
1,742
84,688
33,350
6,509
94,943
85,759
6,164
74
2,337
607
84,697
750
2,154
81,793
37,414
6,595
95,344
86,022
6,244
63
2,413
602
82,484
0
2,390
80,093
37,784
283,910
270,131
278,507
273,000'
266,714'
279,530
283,924
282,678
284,481
27,318
27,424
27,456
27,428
27,214
27,534
27,580
27,561
27,247
192,680
164,588
33,560
189,822
161,696
33,429
190,234
162,378
33,607
190,442
162,661
33,669
190,666
160,896
33,418
192,680
162,977
33,851
195,658
165,425
34,022
197,826
167,806
34,215
203,176
172,806
34,127
MEMO
67 Total loans and leases (gross) and investments adjusted 1 ' 7
68 Total loans and leases (gross) adjusted 7
69 Time deposits in amounts of $100,000 or more
1. Excludes trading account securities.
2. Not available due to confidentiality.
3. Includes securities purchased under agreements to resell.
4. Includes trading account securities.
5. Includes federal funds purchased and securities sold under agreements to
repurchase.
6. Not a measure of equity capital for use in capital adequacy analysis or for
other analytic uses.
7. Exclusive of loans and federal funds transactions with domestic commercial
banks.
NOTE. These data also appear in the Board's H.4.2 (504) release. For address,
see inside front cover.
Weekly Reporting Commercial Banks
1.30
L A R G E W E E K L Y REPORTING U . S . B R A N C H E S A N D A G E N C I E S OF FOREIGN B A N K S 1
Liabilities
Millions of dollars, Wednesday figures
A21
Assets and
1986
Account
Oct.
37
38
39
40
Cash and due from depository institutions.
Total loans and securities
U.S. Treasury and govt, agency securities
Other securities
Federal funds sold 2
To commercial banks in the United States
To others
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial
paper
All other
U.S. addressees
Non-U.S. addressees
To financial institutions
Commercial banks in the United States .
Banks in foreign countries
Nonbank financial institutions
To foreign govts, and official institutions ..
For purchasing and carrying securities ..
All other
Other assets (claims on nonrelated parties)..
Net due from related institutions
Total assets
Deposits or credit balances due to other
than directly related institutions....
Transaction accounts and credit balances3
Individuals, partnerships, and
corporations
Other
Nontransaction accounts 4
Individuals, partnerships, and
corporations
Other
Borrowings from other than directly
related institutions
Federal funds purchased 5
From commercial banks in the
United States
From others
Other liabilities for borrowed m o n e y . . . .
To commercial banks in the
United States
To others
Other liabilities to nonrelated parties
Net due to related institutions
Total liabilities
41
42
Total loans (gross) and securities adjusted 6
Total loans (gross) adjusted 6
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
1
Oct.
8
Oct.
15
Oct.
22
Oct.
29
Nov.
5
Nov.
12
Nov.
19
Nov.
26
9,352
76,737
5,931
5,712
4,093
3,089
1,004
61,000
36,724
10,380
75,876
6,011
5,712
5,377
4,352
1,026
58,776
35,588
10,020
75,644
5,768
5,788
5,773
4,594
1,178
58,316
35,503
10,245
73,183
5,750
5,374
5,480
4,174
1,306
56,580
35,678
10,592
74,011
6,230
5,371
4,682
3,902
780
57,728
36,307
10,092
73,508
5,239
5,511
4,045
3,096
948
58,713
36,840
10,131
75,640
5,376
5,424
5,639
4,823
816
59,200
37,052
10,467
75,329
5,592
5,408
6,285
5,437
848
58,044
36,515
9,879
74,922
5,757
5,477
3,823
3,110
713
59,865
36,937
3,305
33,419
31,156
2,263
15,877
12,535
1,291
2,051
561
3,257
4,581
23,087
15,675
124,850
3,064
32,524
30,294
2,229
15,350
12,196
1,064
2,089
567
2,802
4,468
23,221
15,791
125,268
2,977
32,526
30,183
2,343
14,776
11,458
1,109
2,209
702
2,841
4,492
22,958
15,050
123,673
3,058
32,620
30,240
2,381
13,922
10,786
986
2,150
541
2,022
4,417
23,303
13,708
120,438
3,036
33,271
30,955
2,316
14,174
11,022
1,038
2,114
532
2,249
4,465
23,280
12,934
120,817
2,969
33,870
31,546
2,325
14,187
11,037
1,066
2,083
527
2,588
4,572
23,292
14,043
120,936
2,980
34,071
31,810
2,261
14,196
10,791
1,116
2,290
536
2,514
4,902
23,022
13,582
122,376
2,919
33,596
31,397
2,199
14,211
10,721
1,149
2,341
521
1,975
4,821
23,360
14,287
123,444
2,990
33,947
31,742
2,206
14,453
11,113
1,077
2,263
545
2,925
5,005
23,226
14,627
122,654
36,775
3,097
36,344
3,312
36,446
3,574
35,342
3,050
36,608
3,284
36,034
3,124
36,986
3,333
36,744
3,229
37,279
3,260
1,721
1,376
33,677
1,994
1,318
33,032
1,882
1,692
32,872
1,825
1,224
32,292
1,811
1,473
33,324
1,924
1,200
32,909
1,821
1,513
33,653
1,973
1,255
33,515
1,827
1,432
34,019
27,646
6,031
26,748
6,284
26,642
6,230
26,014
6,278
27,129
6,195
26,738
6,171
27,252
6,400
27,082
6,434
27,160
6,859
50,875
27,680
52,898
31,046
50,873
28,947
46,956
25,278
46,772
24,966
50,393
29,328
47,412
25,862
48,359
25,375
46,948
21,466
19,103
8,577
23,195
21,302
9,744
21,852
19,317
9,630
21,926
15,266
10,012
21,678
16,527
8,439
21,805
19,534
9,793
21,065
17,523
8,340
21,550
16,519
8,856
22,984
13,807
7,658
25,482
20,811'
2,384'
24,750
12,450
124,850
19,651
2,201
24,931
11,095
125,268
19,841
2,085
24,570
11,784
123,673
19,303
2,374
24,805
13,335
120,438
19,741
2,065
24,833
12,605
120,817
18,932
2,134
24,885
9,624
120,936
19,146
2,404
24,708
13,270
122,376
20,397
2,587
25,095
13,246
123,444
22,738
2,745
25,113
13,313
122,654
61,113
49,469
59,328
47,605
59,591
48,035
58,224
47,100
59,086
47,486
59,374
48,624
60,026
49,226
59,171
48,171
60,699
49,465
MEMO
1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and
agencies of foreign banks that include those branches and agencies with assets of
$750 million or more on June 30, 1980, plus those branches and agencies that had
reached the $750 million asset level on Dec. 31, 1984.
2. Includes securities purchased under agreements to resell.
3. Includes credit balances, demand deposits, and other checkable deposits.
4. Includes savings deposits, money market deposit accounts, and time
deposits.
5. Includes securities sold under agreements to repurchase.
6. Exclusive of loans to and federal funds sold to commercial banks in the
United States.
A22
1.31
DomesticNonfinancialStatistics • February 1987
GROSS D E M A N D DEPOSITS Individuals, Partnerships, and Corporations'
Billions of dollars, estimated daily-average balances, not seasonally adjusted
Commercial banks
Type of holder
1981
Dec.
1982
Dec.
1985
1984
Dec.
1983
Dec.
Mar. 3 4
1986
Sept.
June
Dec.
Mar.
June
1 All holders—Individuals, partnerships, and
corporations
288.9
291.8
293.5
302.7
286.3
298.4
299.3
321.0
307.4
322.4
2
3
4
5
6
28.0
154.8
86.6
2.9
16.7
35.4
150.5
85.9
3.0
17.0
32.8
161.1
78.5
3.3
17.8
31.7
166.3
81.5
3.6
19.7
27.3
157.9
78.9
3.6
18.7
27.9
164.5
82.8
3.7
19.5
28.1
167.2
82.0
3.5
18.5
32.3
178.5
85.5
3.5
21.2
31.8
166.6
84.0
3.4
21.6
32.3
180.0
86.4
3.0
20.6
Financial business
Nonfinancial business
Consumer
Foreign
Other
Weekly reporting banks
1981
Dec.
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial business
Nonfinancial business
Consumer
Foreign
Other
1982
Dec.
1985
1984
Dec. 2
Mar. 3 ' 4
June
1986
Sept.
Dec.
Mar.
June
137.5
144.2
146.2
157.1
147.7
151.2
153.6
168.6
159.7
168.5
21.0
75.2
30.4
2.8
8.0
26.7
74.3
31.9
2.9
8.4
24.2
79.8
29.7
3.1
9.3
25.3
87.1
30.5
3.4
10.9
21.9
82.3
30.2
3.4
9.8
22.1
83.7
31.0
3.5
10.9
22.7
85.5
31.6
3.3
10.5
25.9
94.5
33.2
3.1
12.0
25.5
86.8
32.6
3.3
11.5
25.7
93.1
34.9
2.9
11.9
1. Figures include cash items in process of collection. Estimates of gross
deposits are based on reports supplied by a sample of commercial banks. Types of
depositors in each category are described in the June 1971 BULLETIN, p. 466.
Figures may not add to totals because of rounding.
2. Beginning in March 1984, these data reflect a change in the panel of weekly
reporting banks, and are not comparable to earlier data. Estimates in billions of
dollars for December 1983 based on the new weekly reporting panel are: financial
business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other,
9.5.
3. Beginning March 1985, financial business deposits and, by implication, total
gross demand deposits have been redefined to exclude demand deposits due to
1983
Dec.
thrift institutions. Historical data have not been revised. The estimated volume of
such deposits for December 1984 is $5.0 billion at all insured commercial banks
and $3.0 billion at weekly reporting banks.
4. Historical data back to March 1985 have been revised to account for
corrections of bank reporting errors. Historical data before March 1985 have not
been revised, and may contain reporting errors. Data for all commercial banks for
March 1985 were revised as follows (in billions of dollars): all holders, - . 3 ;
financial business, - . 8 ; nonfinancial business, —.4; consumer, .9; foreign, .1;
other, - . 1 . Data for weekly reporting banks for March 1985 were revised as
follows (in billions of dollars): all holders, - . 1 ; financial business, - . 7 ; nonfinancial business, - . 5 ; consumer, 1.1; foreign, .1; other, - . 2 .
Financial Markets
1.32
A23
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1986
Instrument
Dec.
Dec.
Dec.
Dec.
Dec.
May
June
July
Aug.
Sept.
Oct.
Commercial paper (seasonally adjusted unless noted otherwise)
165,829
1 AH issuers
2
3
4
5
6
Financial companies 3
Dealer-placed paper4
Total
Bank-related (not seasonally
adjusted)
Directly placed paper5
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies 6
166,436
187,658
237,586
300,899
309,843
310,711
311,435
326,601
326,567
329,516
30,333
34,605
44,455
56,485
78,443
87,423
89,757
90,038
94,084
97,994
99,688
6,045
2,516
2,441
2,035
1,602
1,575
1,568
1,772
1,799
1,980
2,172
81,660
84,393
97,042
110,543
135,504
142,252
142,933
142,121
149,200
147,497
147,163
26,914
53,836
32,034
47,437
35,566
46,161
42,105
70,558
44,778
86,952
39.009
80,168
40,147
78,021
39,067
79,276
40,415
83,317
37,455
81,076
38,957
82,665
Bankers dollar acceptances (not seasonally adjusted) 7
69,226
11
12
13
77,121
68,115
66,759
67,080
66,437
64,480
67,009
65,920
10,910
9,471
1,439
9,355
8,125
1,230
9,811
8,621
1,191
11,174
9,448
1,726
12,216
10,254
1,962
12,789
10,641
2,147
11,577
9,257
2,320
12,127
9,794
2,333
13,101
11,001
2,101
12,569
10,178
2,391
1,480
949
66,204
418
729
67,807
0
671
66,639
0
937
56,004
0
664
53,880
0
896
53,396
0
931
53,929
0
897
51,456
0
924
52,984
0
1,131
52,220
14,765
15,400
39,060
Basis
14 Imports into United States
15 Exports from United States
16 All other
8
9
10
78,309
195
1,442
56,731
Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others
79,543
10,857
9,743
1,115
7 Total
17,683
16,328
45,531
15,649
16,880
45,781
17,560
15,859
43,702
15,147
13,204
39,765
15,094
13,574
38,091
15,106
13,721
38,254
15,601
13,781
37,056
15,796
12,948
35,736
16,612
12,693
37,704
15,980
12,612
37,328
1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The
key changes in the content of the data involved additions to the reporting panel,
the exclusion of broker or dealer placed borrowings under any master note
agreements from the reported data, and the reclassification of a large portion of
bank-related paper from dealer-placed to directly placed.
2. Correction of a previous misclassification of paper by a reporter has created
a break in the series beginning December 1983. The correction adds some paper to
nonfinancial and to dealer-placed financial paper.
3. Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
1.33
4. Includes all financial company paper sold by dealers in the open market.
5. As reported by financial companies that place their paper directly with
investors.
6. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
7. Beginning October 1984, the number of respondents in the bankers acceptance survey were reduced from 340 to 160 institutions—those with $50 million or
more in total acceptances. The new reporting group accounts for over 95 percent
of total acceptances activity.
PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per annum
Average
rate
Effective Date
1985-- J a n . 15
May 20
June 18
10.50
10.00
9.50
1986-- M a r . 7
Apr. 21
July 11
Aug. 26
9.00
8.50
8.00
7.50
NOTE. These data also appear in the Board's H.15 (519) release. For address,
see inside front cover.
1984—Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
11.00
11.00
11.21
11.93
12.39
12.60
13.00
13.00
12.97
12.58
11.77
11.06
1985—Jan
Feb
Mar
Apr
May
June
11.50
12.00
12.50
13.00
12.75
12.50
12.00
11.75
11.25
10.75
10.61
10.50
10.50
10.50
10.31
9.78
Month
1985—July
Aug
Sept
Oct
Nov
Dec
1986—Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
A24
1.35
DomesticNonfinancialStatistics • February 1987
I N T E R E S T RATES Money and Capital Markets
Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted.
1986
Instrument
1983
1984
1986, week ending
1985
Aug.
Sept.
Oct.
Nov.
Oct. 31
Nov. 7
Nov. 14 Nov. 21
Nov. 28
MONEY MARKET RATES
1 Federal funds 1 - 2
2 Discount window borrowing 1 - 2 ' 3
Commercial paper 4 - 5
1-month
3
4
3-month
5
6-month
Finance paper, directly placed 4 5
1-month
6
7
3-month
8 6-month
Bankers acceptances 5 - 6
9
3-month
10 6-month
Certificates of deposit, secondary market7
11
1-month
12 3-month
13 6-month
14 Eurodollar deposits, 3-month 8
U.S. Treasury bills5
Secondary market 9
15
3-month
6-month
16
1-year
17
Auction average 10
3-month
18
19
6-month
1-year
20
9.09
8.50
10.22
8.80
8.10
7.69
6.17
5.82
5.89
5.50
5.85
5.50
6.04
5.50
5.86
5.50
6.02
5.50
5.98
5.50
6.13
5.50
6.00
5.50
8.87
8.88
8.89
10.05
10.10
10.16
7.94
7.95
8.01
6.02
5.92
5.83
5.74
5.68
5.61
5.74
5.68
5.61
5.84
5.76
5.69
5.74
5.69
5.61
5.77
5.69
5.62
5.83
5.77
5.71
5.87
5.78
5.72
5.88
5.81
5.72
8.80
8.70
8.69
9.97
9.73
9.65
7.91
7.77
7.75
5.98
5.94
5.90
5.76
5.61
5.54
5.74
5.56
5.50
5.79
5.67
5.58
5.69
5.55
5.46
5.75
5.57
5.49
5.77
5.68
5.62
5.81
5.70
5.63
5.84
5.73
5.60
8.90
8.91
10.14
10.19
7.92
7.96
5.80
5.71
5.60
5.56
5.58
5.52
5.67
5.59
5.59
5.53
5.60
5.54
5.71
5.66
5.69
5.61
5.71
5.58
8.96
9.07
9.27
9.56
10.17
10.37
10.68
10.73
7.97
8.05
8.25
8.28
5.97
5.92
5.92
6.06
5.73
5.71
5.71
5.88
5.71
5.69
5.70
5.88
5.80
5.76
5.76
5.96
5.69
5.68
5.69
5.94
5.70
5.69
5.69
5.84
5.82
5.81
5.81
5.96
5.83
5.80
5.79
5.98
5.84
5.76
5.76
5.99
8.61
8.73
8.80
9.52
9.76
9.92
7.48
7.65
7.81
5.53
5.58
5.60
5.21
5.35
5.45
5.18
5.26
5.41
5.35
5.41
5.48
5.19
5.27
5.43
5.26
5.35
5.45
5.41
5.49
5.56
5.36
5.41
5.47
5.39
5.42
5.45
8.52
8.76
8.86
9.57
9.80
9.91
7.47
7.64
7.76
5.57
5.58
5.82
5.19
5.31
5.33
5.18
5.26
5.44
5.35
5.42
5.45
5.18
5.21
5.44
5.23
5.30
n.a.
5.41
5.54
n.a.
5.39
5.44
n.a.
5.35
5.39
5.45
9.57
10.21
10.45
10.80
11.02
11.10
11.34
11.18
10.89
11.65
11.89
12.24
12.40
12.44
12.48
12.39
8.43
9.27
9.64
10.13
10.51
10.62
10.97
10.79
5.93
6.33
6.49
6.80
7.01
7.17
7.28
7.33
5.77
6.35
6.62
6.92
7.28
7.45
7.56
7.62
5.72
6.28
6.56
6.83
7.24
7.43
7.61
7.70
5.80
6.28
6.46
6.76
7.08
7.25
7.42
7.52
5.74
6.30
6.57
6.80
7.17
7.39
7.59
7.68
5.76
6.27
6.48
6.76
7.12
7.31
7.49
7.58
5.89
6.37
6.55
6.85
7.18
7.34
7.49
7.59
5.79
6.26
6.44
6.75
7.04
7.21
7.38
7.47
5.77
6.21
6.39
6.66
6.99
7.14
7.31
7.42
10.84
11.99
10.75
7.72
8.08
8.04
7.81
7.96
7.87
7.95
7.74
7.71
8.80
10.17
9.51
9.61
10.38
10.10
8.60
9.58
9.11
7.11
7.81
7.21
6.91
7.59
7.11
6.44
7.23
7.08
6.19
7.13
6.85
6.10
6.95
6.94
6.10
6.95
6.94
6.30
7.20
6.92
6.20
7.15
6.78
6.15
7.20
6.74
12.78
12.04
12.42
13.10
13.55
13.49
12.71
13.31
13.74
14.19
12.05
11.37
11.82
12.28
12.72
9.44
8.72
9.22
9.64
10.18
9.55
8.89
9.36
9.73
10.20
9.54
8.86
9.33
9.72
10.24
9.37
8.68
9.20
9.51
10.07
9.49
8.80
9.30
9.65
10.19
9.41
8.73
9.26
9.56
10.09
9.42
8.77
9.25
9.54
10.12
9.34
8.65
9.16
9.48
10.04
9.28
8.55
9.11
9.43
9.99
12.73
13.81
12.06
9.51
9.56
9.48
9.31
9.32
9.42
9.37
9.22
9.16
11.02
4.40
11.59
4.64
10.49
4.25
8.42
3.36
8.10
3.43
8.17
3.49
8.07
3.40
8.09
3.44
8.10
3.36
8.01
3.37
8.03
3.50
8.13
3.35
CAPITAL MARKET RATES
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
U.S. Treasury notes and bonds 11
Constant maturities 12
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
Composite 13
Over 10 years (long-term)
State and local notes and bonds
Moody's series 14
Aaa
Baa
Bond Buyer series 15
Corporate bonds
Seasoned issues 16
All industries
Aaa
Aa
A
Baa
A-rated, recently-offered utility
bonds 17
MEMO: Dividend/price ratio 18
39 Preferred stocks
40
Common stocks
1. Weekly and monthly figures are averages of all calendar days, where the
rate for a weekend or holiday is taken to be the rate prevailing on the preceding
business day. The daily rate is the average of the rates on a given day weighted by
the volume of transactions at these rates.
2. Weekly figures are averages for statement week ending Wednesday.
3. Rate for the Federal Reserve Bank of New York.
4. Unweighted average of offering rates quoted by at least five dealers (in the
case of commercial paper), or finance companies (in the case of finance paper).
Before November 1979, maturities for data shown are 30-59 days, 90—119 days,
and 120-179 days for commercial paper; and 30-59 days, 90—119 days, and 150179 days for finance paper.
5. Yields are quoted on a bank-discount basis, rather than an investment yield
basis (which would give a higher figure).
6. Dealer closing offered rates for top-rated banks. Most representative rate
(which may be, but need not be, the average of the rates quoted by the dealers).
7. Unweighted average of offered rates quoted by at least five dealers early in
the day.
8. Calendar week average. For indication purposes only.
9. Unweighted average of closing bid rates quoted by at least five dealers.
10. Rates are recorded in the week in which bills are issued. Beginning with the
Treasury bill auction held on Apr. 18, 1983, bidders were required to state the
percentage yield (on a bank discount basis) that they would accept to two decimal
places. Thus, average issuing rates in bill auctions will be reported using two
rather than three decimal places.
11. Yields are based on closing bid prices quoted by at least five dealers.
12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields
are read from a yield curve at fixed maturities. Based on only recently issued,
actively traded securities.
13. Averages (to maturity or call) for all outstanding bonds neither due nor
callable in less than 10 years, including one very low yielding "flower" bond.
14. General obligations based on Thursday figures; Moody's Investors Service.
15. General obligations only, with 20 years to maturity, issued by 20 state and
local governmental units of mixed quality. Based on figures for Thursday.
16. Daily figures from Moody's Investors Service. Based on yields to maturity
on selected long-term bonds.
17. Compilation of the Federal Reserve. This series is an estimate of the yield
on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of
call protection. Weekly data ar? based on Friday quotations.
18. Standard and Poor's corporate series. Preferred stock ratio based on a
sample o f t e n issues: four public utilities, four industrials, one financial, and one
transportation. Common stock ratios on the 500 stocks in the price index.
NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases.
For address, see inside front cover.
Financial Markets
1.36
STOCK MARKET
A25
Selected Statistics
1986
Indicator
1983
1984
1985
Mar.
May
Apr.
July
June
Aug.
Sept.
Nov.
Oct.
Prices and trading (averages of daily figures)
Common stock prices
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
Industrial
2
3 Transportation
Utility
4
5 Finance
6 Standard & Poor's Corporation (1941-43 = 10)1 . . .
7 American Stock Exchange 2
(Aug. 31, 1973 = 50)
92.63
107.45
89.36
47.00
95.34
160.41
92.46
108.01
85.63
46.44
89.28
160.50
108.09
123.79
104.11
56.75
114.21
186.84
133.97
152.75
128.66
68.06
153.94
232.33
137.25
157.35
125.92
69.35
154.83
237.97
137.37
158.59
122.21
68.65
151.28
238.46
140.82
163.15
120.65
70.69
151.73
245.30
138.32
158.06
112.03
74.20
150.23
240.18
140.91
160.10
111.24
77.84
152.90
245.00
137.06
156.52
114.06
74.56
145.56
238.27
136.74
156.56
120.04
73.38
143.89
237.36
140.84
162.10
122.27
75.77
142.97
245.09
216.48
207.96
229.10
264.91
270.59
274.22
281.18
269.93
268.55
264.30
257.82
265.14
Volume of trading (thousands of shares)
X New York Stock Exchange
American Stock Exchange
9
85,418
8,215
91,084 109,191
6,107
8,355
160,755 146,330 127,624 126,151 137,709
15,902 13,503 11,870 12,795 10,320
128,661
9,885
150,831
10,853
131,155
8,930
154,770
10,513
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers3
23,000
22,470
28,390
29,090
30,760
32,370
32,480
33,170
34,550
34,580
36,310
Free credit balances at brokers4
11 Margin-account 5
12 Cash-account
8,430
1,755
10,215
2,715
12,840
2,715
13,920
3,065
14,340
2,405
12,970
2,585
13,570
2,570
14,600
3,035
14,210
3,395
14,060
3,805
14,445
Margin-account debt at brokers (percentage distribution, end of period) 6
100.0
14
15
16
17
18
19
By equity class (in percentf
Under 40
40-49
50-59
60-69
70-79
80 or more
100.0
100.0
100.0
100.0
100.0
100.0
22.0
22.0
16.0
9.0
6.0
6.0
13 Total
18.0
18.0
16.0
9.0
5.0
6.0
34.0
20.0
19.0
11.0
8.0
8.0
29.0
19.0
22.0
13.0
8.0
9.0
29.0
20.0
20.0
13.0
9.0
9.0
30.0
19.0
22.0
12.0
8.0
9.0
31.0
20.0
20.0
13.0
8.0
8.0
n.a.
n.a.
n a.
n a.
n a.
Special miscellaneous-account balances at brokers (end of period) 6
20 Total balances (millions of dollars)8 . . .
Distribution by equity status
21 Net credit status
Debt status, equity of
22
60 percent or more
23
Less than 60 percent
58,329
75,840
99,310
103,450
105,790
109,620
112,401
28.0
29.0
31.0
31.0
33.0
8.0
8.0
33.0
9.0
32.0
9.0
(percent)
9.0
11.0
11.0
Margin requirements (percent of market value and effective date) 9
Mar. 11, 1968
24 Margin stocks
25 Convertible bonds
26 Short sales
June 8, 1968
May 6, 1970
Dec. 6, 1971
Nov. 24, 1972
Jan. 3, 1974
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
50
50
50
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Beginning July 1983, under the revised Regulation T, margin credit at
broker-dealers includes credit extended against stocks, convertible bonds, stocks
acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues was discontinued in April 1984, and margin credit at
broker-dealers became the total that is distributed by equity class and shown on
lines 17-22.
4. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
5. New series beginning June 1984.
6. In July 1986, the New York Stock Exchange stopped reporting certain data
items that were previously obtained in a monthly survey of a sample of brokers
and dealers. Data items that are no longer reported include distributions of margin
debt by equity status of the account and special miscellaneous-account
balances.
7. Each customer's equity in his collateral (market value of collateral less net
debit balance) is expressed as a percentage of current collateral values.
8. Balances that may be used by customers as the margin deposit required for
additional purchases. Balances may arise as transfers based on loan values of
other collateral in the customer's margin account or deposits of cash (usually sales
proceeds) occur.
9. Regulations G, T, and U of the Federal Reserve Board of Governors,
prescribed in accordance with the Securities Exchange Act of 1934, limit the
amount of credit to purchase and carry margin stocks that may be extended on
securities as collateral by prescribing a maximum loan value, which is a specified
percentage of the market value of the collateral at the time the credit is extended.
Margin requirements are the difference between the market value (100 percent)
and the maximum loan value. The term "margin stocks" is defined in the
corresponding regulation.
A26
1.37
DomesticNonfinancialStatistics • February 1987
S E L E C T E D F I N A N C I A L INSTITUTIONS
Millions of dollars, end of period
Selected Assets and Liabilities
1986
Account
1983
1984
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Savings and loan associations
1 Assets.
773,417
903,488
938,467
943,029
947,302
954,089' 962,484'
2
3
4
5
494,789
555,277
104,274
174,354
124,801
223,396
578,472
96,891
123,415
236,850
576,608
98,482
127,028
239,394
574,732
99,332
131,464
241,104
575,288
102,398'
132,347
246,454'
Mortgages
Mortgage-backed securities...
Cash and investment securities'
Other
6 Liabilities and net worth.
7 Savings capital...
8 Borrowed money
9
FHLBB
10 Other
11 Other
12 Net worth 2 .
575,097
107,308'
134,868'
252,578'
953,527' 958,049' 965,071' 957,503' 961,305
565,148
112,154'
130,960'
257,417'
565,376
113,095'
132,801'
259,870'
566,506
113.62C
138,858'
259,706'
557,429
117,64C
138,357'
261,715'
557,521
120,304
137,988
265,794
773,417
903,488
938,467
943,029
947,302
954,089'
962,484' 953,527'
958,049' 965,071' 957,503' 961,305
634,455
92,127
52,626
39,501
15,968
725,045
125,666
64,207
61,459
17,944
745,218
131,521
71,488
60,033
21,024
747,016
131,671
71,214
60,457
23,125
752,056
133,407
70,464
62,943
20,078
750,299
139,574
73,815
65,759
22,046'
751,138
144,179
73,520
70,659
24,783'
744,021'
147,205'
73,555
73,650'
20,907'
747,020' 749,023' 743,496' 742,192
146,589' 148,525' 155,484' 152,098
80,36C 75,279
75,058' 75,594
71,531' 72,931' 75,124' 76,819
15,423' 23,277
22,856' 24,709'
30,867
34,833
40,704
41,217r
41,760
42,17c
42,384'
41,393'
41,583'
42,815'
43,099'
43,738
54,113
61,305
51,130
52,542
54,366
55,818
57,997
57,183
55,687
53,164
51,531
49,927
n a.
MEMO
13 Mortgage loan commitments
outstanding 3
FSLIC-insured federal savings banks
14 Assets
64,969
98,559
142,136
146,508
152,823
155,684
164,129
180,129'
183,309' 186,763' 196,279' 201,759
15 Mortgages
16 Mortgage-backed securities....
17 Other
38,698
7,172
6,595
57,429
9,949
10,971
78,984
16,620
13,274
81,641
16,367
13,759
85,028
17,851
13,923
865,598'
18,661
14,590
89,108
19,829
15,083
99,636'
21,61C
16,784'
101,797' 103,040' 108,207' 110,251
23,249' 24,098' 26,445' 27,507
18,641
17,01C 17,036'
18.37C
18 Liabilities and net worth
64,969
98,559
142,136
146,508
152,823
155,684
164,129
180,129'
183,309' 186,763' 196,279' 201,759
19
20
21
22
23
24
53,227
7,477
4,640
2,837
1,157
3,108
79,572
12,798
7,515
5,283
1,903
4,286
111,879
20,419
11,151
9,268
2,983
6,855
114,743
21,254
11,283
9,971
3,397
7,114
119,434
22,747
12,064
10,683
3,291
7,349
121,133
23,196
12,476
10,720
3,758'
7,599
126,123
25,686
12,830
12,856
4,338
7,982
138,168
28,502
15,301
13,201
4,279
9,179'
140,610 142,808' 149,071' 152,481
28,722' 29,39C 32,32C 33,432
16,157
16,845
17, 388
15,866
12,856' 13,233' 15,475' 16,044
4,555'
4,918'
4,6%'
5,325
9,424'
9,647'
10,191' 10,520
2,151
3,234
6,707
7,718
8,330
8,762
9,410'
10,134
Savings capital
Borrowed money
FHLBB
Other
Other
Net worth
n a.
MEMO
25 Mortgage loan commitments
outstanding 3
8,287
9,770'
10.22C
9,371
Savings banks
193,535
203,898
216,673
218,119
221,256
222,542
226,495
223,367
224,569
227,011
228,854
97,356
19,129
102,895
24,954
108,973
31,752
109,702
32,501
110,271
34,873
111,813'
34,591
112,417
35,500
110,958
36,692
111,971
36,421
113,265
37,350
114,188
37,298
15,360
18,205
2,177
25,375
6,263
9,670
14,643
19,215
2,077
23,747
4,954
11,413
12,568
21,372
2,298
20,828
5,645
13,237
12,474
21,525
2,297
20,707
5,646
13,267
12,313
21,593
2,306
20,403
5,845
13,652
12,013
21,885
2,372
20,439
5,570
13,859
13,210
22,546
2,343
20,260
6,225
13,994
12,115
22,413
2,281
2,036
5,301
13,244
12,297
22,954
2,309
20,862
4,651
13,104
12,043
21,161
2,400
20,602
5,018
13,172
12,357
23,216
2,407
20,902
4,811
13,675
35 Liabilities
193,535
203,898
216,673
218,119
221,256
222,542
226,495
223,367
224,569
227,011
228,854
36 Deposits
37
Regular 4
38
Ordinary savings
39
Time
40
Other
41 Other liabilities
42 General reserve accounts
172,665
170,135
38,554
95,129
2,530
10,154
10,368
180,616
177,418
33,739
104,732
3,198
12,504
10,510
186,321
182,399
32,365
104,436
3,922
17,086
12,925
186,777
182,890
32,693
104,588
3,887
17,793
13,211
188,960
184,704
33,021
105,562
4,256
18,412
13,548
189,025
184,580
33,057
105,550
4,445
19,074
14,114
190,310
185,716
33,577
105,146
4,594
21,384
14,519
189,109
183,970
34,008
103,083
5,139
19,226
14,731
188,615
183,433
34,166
102,374
5,182
20,641
15,084
189,937
184,764
34,530
102,668
5,173
21,360
15,427
190,210
185,002
35,227
102,191
5,208
21,947
16,319
26 Assets
27
28
29
30
31
32
33
34
Loans
Mortgage
Other
Securities
U.S. government
Mortgage-backed securities . . .
State and local government...
Corporate and other
Cash
Other assets
n a.
n a.
Financial Markets
All
1.37—Continued
1986
Account
1983
1984
Jan.
Feb.
Mar.
Apr.
May
June
Credit unions
July
Aug.
Sept.
Oct.
Nov.
5
43 Total assets/liabilities and capital .
81,961
93,036
118,933
122,623
126,653
128,229
132,415
134,703
137,901
139,233
140,496
44
45
54,482
27,479
63,205
29,831
78,619
40,314
80,024
42,599
82,275
44,378
83,543
44,686
86,289
46,126
87,579
47,124
89,539
48,362
90,367
48,866
91,981
48,515
50,083
32,930
17,153
74,739
49,889
24,850
62,561
42,337
20,224
84,348
57,539
26,809
73,513
48,055
25,458
107,238
72,166
35,072
74,207
48,059
26,148
110,541
73,227
37,314
75,300
48,633
26,667
114,579
75,698
38,881
76,385
49,756
26,629
116,703
77,112
39,591
76,774
49,950
26,824
120,331
79,479
40,852
77,847
50,613
27,234
122,952
80,975
41,977
79,647
51,331
28,316
125,331
82,596
42,735
80,656
52,007
28,649
126,268
83,132
43,136
81,820
53,042
28,778
128,125
84,607
43,518
Federal
State
46 Loans outstanding
47
Federal
48
State
49 Savings
50
Federal
State
51
n a.
n a.
n.a.
n a.
Life insurance companies
52 Assets
53
54
55
56
57
58
59
60
61
62
63
Securities
Government
United States 6
State and local
Foreign 7
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
654,948 722,979
831,716
839,856
848,535
855,605
863,610
872,359
877,919
887,255
892,304
50,752 63,899
28,636 42,204
9,986
8,713
12,130 12,982
322,854 359,333
257,986 295,998
64,868 63,335
150,999 156,699
22,234 25,767
54,063 54,505
54,046 63,776
75,937
52,243
9,869
13,825
428,979
351,402
77,577
172,324
29,035
54,264
57,090
76,761
53,264
9,588
13,909
435,758
354,911
80,847
172,997
29,356
54,267
57,351
77,965
54,289
9,674
14,002
440,963
357,196
83,767
174,823
29,804
54,273
57,753
78,494
54,705
9,869
13,920
445,573
361,306
84,267
175,951
30,059
54,272
57,492
79,051
55,120
9,930
14,001
450,279
364,122
86,157
177,554
30,025
54,351
57,802
78,284
54,197
10,114
13,973
455,119
367,966
87,153
180,041
30,350
57,342
58,290
78,722
54,321
10,350
14,051
455,013
369,704
85,309
182,542
31,151
54,249
58,792
79,188
54,487
10,472
14,229
463,135
374,670
88,465
183,943
31,844
54,247
57,905
81,636
56,698
10,606
14,332
462,540
378,267
84,273
185,268
31,725
54,273
58,086
1. Holdings of stock of the Federal Home Loan Banks are in "other assets."
2. Includes net undistributed income accrued by most associations.
3. As of July 1985, data include loans in process.
4. Excludes checking, club, and school accounts.
5. Data include all federally insured credit unions, both federal and state
chartered, serving natural persons.
6. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under "Business" securities.
7. Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
NOTE. Savings and loan associations: Estimates by the FHLBB for all
associations in the United States based on annual benchmarks for non-FSLICinsured associations and the experience of FSLIC-insured associations.
FSLIC-insured federal savings banks: Estimates by the FHLBB for federal
savings banks insured by the FSLIC and based on monthly reports of federally
insured institutions.
Savings banks: Estimates by the National Council of Savings Institutions for all
savings banks in the United States and for FDIC-insured savings banks that have
converted to federal savings banks.
Credit unions: Estimates by the National Credit Union Administration for
federally chartered and federally insured state-chartered credit unions serving
natural persons.
Life insurance companies: Estimates of the American Council of Life Insurance
for all life insurance companies in the United States. Annual figures are annualstatement asset values, with bonds carried on an amortized basis and stocks at
year-end market value. Adjustments for interest due and accrued and for
differences between market and book values are not made on each item separately
but are included, in total, in "other assets."
A28
1.38
DomesticNonfinancialStatistics • February 1987
FEDERAL FISCAL A N D FINANCING OPERATIONS
Millions of dollars
Calendar year
Type of account or operation
Fiscal
year
1984
Fiscal
year
1985
Fiscal
year
1986
1986
June
July
Aug.
77,024
58,400
18,624
78,034
60,982
17,052
-1,011
-2,583
1,572
62,974
47,571
15,402
85,203
69,604
15,599
-22,229
-22,033
-1%
56,523
41,404
15,119
84,434
68,112
16,322
-27,911
-26,708
-1,203
Sept.
Oct.
Nov.
59,012
43,865
15,147
84,267
68,780
15,486
-25,255
-24,915
-340
52,%7
38,158
14,809
79,973
63,639
16,334
-27,006
-25,481
-1,524
1
U.S. budget
1 Receipts, total
2 On-budget
3 Off-budget
4 Outlays, total
5 On-budget
6 Off-budget
7 Surplus, or deficit ( - ) , total
8 On-budget
9 Off-budget
Source of financing (total)
Borrowing from the public
Cash and monetary assets (decrease, or
increase ( - ) ) 2
12 Other 3
10
11
666,457
n.a.
n.a.
851,7%
n.a.
n.a.
-185,339
n.a.
n.a.
734,057
547,886
186,170
945,987
769,180
176,807
-211,931
-221,294
9,363
170,817
197,269
235,745
18,500
14,980
20,278
22,188
5,936
40,352
5,636
8,885
10,673
3,989
-18,044
2,997
-13,065
-4,424
3,972
3,277
10,298
-2,665
-21,313
2,862
18,131
1,188
-2,721
-10,625
22,345
3,791
18,553
17,060
4,174
12,886
31,384
7,514
23,870
24,641
3,143
21,498
20,810
3,983
16,827
10,428
1,106
9,322
31,384
7,514
23,870
13,616
2,491
11,126
17,007
2,529
14,478
769,091
568,862
200,228
989,789
806,291
183,498
-220,698
-237,428
16,371
78,013
59,978
18,035
81,750
65,614
16,136
-3,737
-5,636
1,898
MEMO
13 Treasury operating balance (level, end of
period)
14 Federal Reserve Banks
15 Tax and loan accounts
1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. The Federal
Financing Bank (FFB) activities are now shown as separate accounts under the
agencies that use the FFB to finance their programs. The act has also moved two
social security trust funds (Federal old-age survivors insurance and Federal
disability insurance trust funds) off-budget.
2. Includes U.S. Treasury operating cash accounts; SDRs; reserve position on
the U.S. quota in the IMF; loans to International Monetary Fund; and other cash
and monetary assets.
3. Includes accrued interest payable to the public; allocations of special
drawing rights; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S.
currency valuation adjustment; net gain/loss for IMF valuation adjustment; and
profit on the sale of gold.
SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S.
Government," and the "Daily Treasury Statement."
Federal Finance
1.39
A29
U.S. B U D G E T RECEIPTS A N D O U T L A Y S
Millions of dollars
Calendar year
Source or type
Fiscal
year
1985
Fiscal
year
1986
1986
1986
1985
HI
Nov.
Sept.
RECEIPTS
734,057
1 AU 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 1
11
Self-employment taxes and
contributions 2
12
Unemployment insurance
13
Other net receipts 3
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts 4
769,091
341,392
380,618
364,790
394,345
78,013
59,012
52, % 7
334,560
298,941
35
101,328
65,743
348,959
314,803
36
105,994
71,873
157,229
145,210
5
19,403
7,387
166,783
149,288
29
76,155
58,684
169,987
155,725
6
22,295
8,038
169,444
153,919
31
78,981
63,488
37,125
24,707
31,123
29,556
24,122
24,242
0
0
14,199
1,782
3,122
1,554
1,143
1,263
77,413
16,082
80,442
17,298
35,190
6,847
42,193
8,370
36,528
7,751
41,946
9,557
13,162
1,713
3,219
2,679
2,716
%8
265,163
283,901
128,017
156,714
23,507
21,179
21,751
234,646
255,062
105,624
126,038
116,276
139,706
22,819
19,583
19,015
10,468
25,758
4,759
11,840
24,098
4,741
1,086
10,706
2,360
9,482
16,213
2,350
985
9,281
2,458
10,581
14,674
2,333
1,379
314
374
0
223
2,377
360
35,992
12,079
6,422
18,510
32,919
13,323
6,958
19,887
18,961
6,329
3,029
18,470
6,354
3,323
9,861
15,944
6,369
3,487
10,002
2,653
1,236
599
1,445
2,708
8,812
17,259
5,807
3,204
9,144
647
1,534
,090
488
,279
946,223
989,789
446,944
463,842
487,188
486,037
81,750
84,267
79,973
23,177
1,259
794
405
1,200
3,573
20,907
1,986
708
553
973
3,162
182
2,399
478
1
1,135
459
1,281
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
252,748
16,176
8,627
5,685
13,357
25,565
273,369
14,471
9,017
4,792
13,508
31,169
118,286
8,550
4,473
1,423
7,370
8,524
124,186
6,675
4,230
680
5,892
11,705
134,675
8,367
4,727
3,305
7,553
15,412
135,367
5,384
12,519
2,484
6,245
14,482
23,964
2,603
876
228
1,227
2,801
25
26
27
28
Commerce and housing credit
Transportation
Community and regional development . .
Education, training, employment, social
services
4,229
25,838
7,680
4,258
28,058
7,510
2,663
13,673
4,836
-260
11,440
3,408
644
15,360
3,901
860
12,658
3,169
1,884
2,969
516
593
2,107
735
13,737
14,149
14,481
14,712
2,507
2,332
29 Health
30 Social security and medicare
31 Income security
33,542
254,446
128,200
35,936
190,850
120,686
15,692
119,613
61,558
16,945
128,351
65,246
17,237
129,037
59,457
17,872
135,214
60,786
2,997
22,756
8,574
4,266
23,700
9,367
32
33
34
35
36
37
26,352
6,277
5,228
6,353
129,436
-32,759
26,614
6,555
6,796
6,430
135,284
-33,244
13,317
2,992
2,552
3,458
61,293
-17,061
11,956
3,016
2,857
2,659
65,143
-14,436
14,527
3,212
3,634
3,391
67,448
-17,953
12,193
3,352
3,566
2,179
68,054
-17,193
829
513
525
1,139
8,640
-3,7%
3,491
539
209
284
9,951
-3,719
Veterans benefits and services
Administration of justice
General government
General-purpose fiscal assistance
Net interest'
Undistributed offsetting receipts 6
29,342
1. Old-age, disability, and hospital insurance, and railroad retirement accounts.
2. Old-age, disability, and hospital insurance.
3. Federal employee retirement contributions and civil service retirement and
disability fund.
4. Deposits of earnings by Federal Reserve Banks and other miscellaneous
receipts.
3,153
22,182
9,130
797
505
371
- 2
12,441
-2,455
5. Net interest function includes interest received by trust funds.
6. Consists of rents and royalties on the outer continental shelf and U.S.
government contributions for employee retirement.
SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S.
Government," and the Budget of the U.S. Government, Fiscal Year 1987.
A30
1.40
DomesticNonfinancialStatistics • February 1987
F E D E R A L D E B T S U B J E C T TO STATUTORY LIMITATION
Billions of dollars
1984
1985
1986
Item
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
1 Federal debt outstanding
1,576.7
1,667.4
1,715.1
1,779.0
1,827.5
1,950.3
1,991.1
2,063.6
2,129.5
2 Public debt securities
3
Held by public
4
Held by agencies
1,572.3
1,309.2
263.1
1,663.0
1,373.4
289.6
1,710.7
1,415.2
295.5
1,774.6
1,460.5
314.2
1,823.1
1,506.6
316.5
1,945.9
1,597.1
348.9
1,986.8
1,634.3
352.6
2,059.3
1,684.9
374.4
2,125.3
1,742.4
382.9
4.5
3.4
1.1
4.5
3.4
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.3
3.2
1.1
4.3
3.2
1.1
4.2
3.2
1.1
5 Agency securities
6
Held by public
Held by agencies
7
1,573.0
1,663.7
1,711.4
1,775.3
1,823.8
1,932.4
1,973.3
2,060.0
2,111.0
9 Public debt securities
10 Other debt 1
1,571.7
1.3
1,662.4
1.3
1,710.1
1.3
1,774.0
1.3
1,822.5
1.3
1,931.1
1.3
1,972.0
1.3
2,058.7
1.3
2,109.7
1.3
11 MEMO: Statutory debt limit
1,573.0
1,823.8
1,823.8
1,823.8
1,823.8
2,078.7
2,078.7
2,078.7
2,111.0
8 Debt subject to statutory limit
1. Includes guaranteed debt of government agencies, specified participation
certificates, notes to international lending organizations, and District of Columbia
stadium bonds.
1.41
GROSS P U B L I C D E B T OF U . S . T R E A S U R Y
Billions of dollars, end of period
NOTE. Data from Treasury Bulletin and Daily Treasury Statement
Treasury Department),
Types and Ownership
1985
Type and holder
1982
1981
1986
1983
Q4
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 2
Government
Public
Savings bonds and notes
Government account series 3
14 Non-interest-bearing debt
15
16
17
18
19
20
21
22
23
74
25
26
By holder*
U.S. government agencies and trust funds
Federal Reserve Banks
Private investors
Commercial banks
Money market funds
Insurance companies
Other companies
State and local governments
Individuals
Savings bonds
Other securities
Foreign and international 5
Other miscellaneous investors 6
Q2
Ql
Q3
1,028.7
1,197.1
1,410.7
1,663.0
1,945.9
1,986.8
2,059.3
2,125.3
1,027.3
720.3
245.0
375.3
99.9
307.0
23.0
19.0
14.9
4.1
68.1
196.7
1,195.5
881.5
311.8
465.0
104.6
314.0
25.7
14.7
13.0
1.7
68.0
205.4
1,400.9
1,050.9
343.8
573.4
133.7
350.0
36.7
10.4
10.4
.0
70.7
231.9
1,660.6
1,247.4
374.4
705.1
167.9
413.2
44.4
9.1
9.1
.0
73.1
286.2
1,943.4
1,437.7
399.9
812.5
211.1
505.7
87.5
7.5
7.5
.0
78.1
332.2
1,984.2
1,472.8
393.2
842.5
223.0
511.4
88.5
6.7
6.7
.0
79.8
336.0
2,056.7
1,498.2
396.9
869.3
232.3
558.5
98.2
5.3
5.3
.0
82.3
372.3
2,122.7
1,564.3
410.7
896.9
241.7
558.4
102.4
4.1
4.1
.0
85.6
365.9
1.4
1.6
9.8
2.3
2.5
2.6
2.6
.4
203.3
131.0
694.5
111.4
21.5
29.0
17.9
104.3
209.4
139.3
848.4
131.4
42.6
39.1
24.5
127.8
236.3
151.9
1,022.6
188.8
22.8
56.7
39.7
155.1
289.6
160.9
1,212.5
183.4
25.9
76.4
50.1
179.4
348.9
181.3
1,417.2
192.2
25.1
93.2
59.0
n.a.
352.6
184.8
1,473.1
195.1
29.9
95.8
59.6
n.a.
374.4
183.8
1,502.7
197.2
22.8
n.a.
59.8
n.a.
382.9
190.8
1,553.3
212.5
24.9
n.a.
67.0
n.a.
68.1
42.7
136.6
163.0
68.3
48.2
149.5
217.0
71.5
61.9
166.3
259.8
74.5
69.3
192.9
360.6
79.8
75.0
214.6
n.a.
81.4
76.2r
225.4
n.a.
1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual
retirement bonds.
2. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners.
3. Held almost entirely by U.S. government agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust
funds are actual holdings; data for other groups are Treasury estimates.
(U.S.
83.8
73.9'
239.8'
n.a.
87.1
69.0
256.3
n.a.
5. Consists of investments of foreign and international accounts. Excludes noninterest-bearing notes issued to the International Monetary Fund.
6. Includes savings and loan associations, nonprofit institutions, credit unions,
mutual savings banks, corporate pension trust funds, dealers and brokers, certain
U.S. government deposit accounts, and U.S. government-sponsored agencies.
SOURCES. Data by type of security, U.S. Treasury Department, Monthly
Statement of the Public Debt of the United States; data by holder. Treasury
Bulletin.
Federal Finance
1.42
U . S . G O V E R N M E N T SECURITIES D E A L E R S
Par value; averages of daily figures, in millions of dollars
Transactions'
1986 week ending Wednesday
1986
Item
1983
1984
A31
1985
Sept.
Oct.
Nov.
Oct. 22'
Oct. 29
Nov. 5
Nov. 12 Nov. 19 Nov. 26
1
Immediate delivery 2
U.S. government securities
42,135
52,778
75,331
102,015
93,308'
96,844
85,855
100,241
99,483
100,720
104,395
100,142
2
3
4
5
6
By maturity
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
22,393
708
8,758
5,279
4,997
26,035
1,305
11,733
7,606
6,099
32,900
1,811
18,361
12,703
9,556
35,526
2,263
29,743
21,718
12,766
32,634'
2,221
25,480'
21,186'
11,787'
32,218
2,122
25,954
20,976
15,574
30,595
1,536
24,953
17,533
11,238
33,796
2,411
25,672'
25,502'
12,861
32,487
2,452
26,187
23,593
14,765
33,707
2,496
25,197
20,784
18,536
36,723
2,430
28,717
19,678
16,847
30,424
2,112
27,730
24,941
14,935
7
8
9
10
11
17
13
14
15
16
17
18
By type of customer
U.S. government securities
dealers
U.S. government securities
brokers
All others 3
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures transactions 4
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions 5
U.S. government securities
Federal agency securities
2,257
2,919
3,336
4,232
3,905
3,902
2,747
3,637
4,972
4,396
3,552
3,346
21,045
18,833
5,576
4,333
2,642
8,036
25,580
24,278
7,846
4,947
3,243
10,018
36,222
35,773
11,640
4,016
3,242
12,717
54,585
43,199
17,693
4,724
3,452
16,058
49,366
40,037'
18,302
4,372'
3,348
17,078
50,707
42,235
20,111
3,861
2,859
16,705
45,456
37,651
23,729
3,993
3,549
17,401
53,876
42,728'
20,221'
4,221'
2,534
17,014
51,373
43,138
17,050
3,759
3,160
17,558
54,249
42,076
15,095
3,558
3,335
17,108
56,416
44,429
26,247
3,641
2,849
17,074
51,757
45,040
23,840
4,990
2,873
17,997
6,655
2,501
265
6,947
4,503
262
5,561
6,069
240
3,056
7,784
4
1,754
5,416
0
2,801
6,387
11
2,728
5,307
*
1,361
5,430
2
2,084
6,247
1
3,172
6,568
1
3,361
7,016
23
2,682
6,570
36
1,493
1,646
1,364
2,843
1,283
3,857
1,838
8,685'
1,731'
8,450
2,403
10,258
3,082
10,913
1,968
7,581
2,254
7,055
3,063
8,151
3,243
14,356
1,367
11,579
1. Transactions are market purchases and sales of securities as reported to the
Federal Reserve Bank of New York by the U.S. government securities dealers on
its published list of primary dealers.
Averages for transactions are based on the number of trading days in the period.
The figures exclude allotments of, and exchanges for, new U.S. government
securities, redemptions of called or matured securities, purchases or sales of
securities under repurchase agreement, reverse repurchase (resale), or similar
contracts.
2. Data for immediate transactions do not include forward transactions.
3. Includes, among others, all other dealers and brokers in commodities and
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal Reserve System.
4. Futures contracts are standardized agreements arranged on an organized
exchange in which parties commit to purchase or sell securities for delivery at a
future date.
5. Forward transactions are agreements arranged in the over-the-counter
market in which securities are purchased (sold) for delivery after 5 business days
from the date of the transaction for government securities (Treasury bills, notes,
and bonds) or after 30 days for mortgage-backed agency issues.
NOTE. Data for the period May 1 to Sept. 30, 1986, are partially estimated.
A32
1.43
DomesticNonfinancialStatistics • February 1987
U . S . G O V E R N M E N T SECURITIES D E A L E R S
Averages of daily figures, in millions of dollars
Positions and Financing 1
1986
Sept.
Oct.
1986 week ending Wednesday
Nov.
Oct. 29
Nov. 5
Nov. 12
Nov. 19
Nov. 26
Positions
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Net immediate 2
U.S. government securities
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
Treasury bills
Treasury coupons
Federal agency securities
Forward positions
U.S. government securities
Federal agency securities
14,082
10,800
921
1,912
-78
528
7,313
5,838
3,332
3,159
5,429
5,500
63
2,159
-1,119
-1,174
15,294
7,369
3,874
3,788
7,391
10,075
1,050
5,154
-6,202
-2,686
22,860
9,192
4,586
5,570
11,302
8,676
2,847
11,917
-9,181
-2,957
30,165
11,289
5,665
8,991
8,297'
11,060'
2,704
9,676'
-11,127
-4,017
29,066'
9,511
5,897
8,302
14,368'
14,967
2,030
8,419
-8,131
-2,916
30,257
9,956
5,244
9,630
10,039'
11,633
2,150
10,946
-11,098
-3,593
28,155
8,944
5,074
7,250
12,512
15,008
1,611
11,493
-11,680
-3,921
28,593
9,933
5,445
9,710
14,083
12,667
1,790
11,612
-9,584
-2,403
29,313
9,841
5,718
10,862
11,611
13,083
2,053
5,870
-6,954
-2,440
31,296
9,307
5,290
9,554
17,618
18,338
2,299
6,663
-6,554
-3,128
30,922
10,353
4,654
8,380
-4,125
-1,033
171
-4,525
1,794
233
-7,322
4,465
-722
-15,996
4,234
-64
-15,845
3,424
-70
-15,972
4,022
-82
-13,900
3,132
-75
-14,595
2,917
-80
-14,857
3,801
-80
-15,981
4,216
-82
-17,360
4,360
-83
-1,936
-3,561
-1,643
-9,205
-911
-9,420
-3,769
-10,224
-122'
-11,322'
-781
-14,622
410
-11,378
190
-11,323
-1,294
-13,815
-1,262
-15,408
-629
-15,661
Financing 3
Reverse repurchase agreements 4
Overnight and continuing
Term agreements
Repurchase agreements 5
18 Overnight and continuing
19 Term agreements
16
17
29,099
52,493
44,078
68,357
68,035
80,509
112,717'
106,049'
115,847
110,294
n.a.
n.a.
112,095'
111,118'
106,699
117,147
112,752
113,195
114,482
114,179
n.a.
n.a.
57,946
44,410
75,717
57,047
101,410
77,748
148,687'
104,168'
150,662
108,375
n.a.
n.a.
141,865'
110,059'
147,499
114,015
155,517
105,989
154,786
109,099
n.a.
n.a.
1. Data for dealer positions and sources of financing are obtained from reports
submitted to the Federal Reserve Bank of New York by the U.S. government
securities dealers on its published list of primary dealers.
Data for positions are averages of daily figures, in terms of par value, based on
the number of trading days in the period. Positions are net amounts and are shown
on a commitment basis. Data for financing are in terms of actual amounts
borrowed or lent and are based on Wednesday figures.
2. Immediate positions are net amounts (in terms of par values) of securities
owned by nonbank dealer firms and dealer departments of commercial banks on a
commitment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase (RPs). The maturities of some
repurchase agreements are sufficiently long, however, to suggest that the securities involved are not available for trading purposes. Immediate positions include
reverses to maturity, which are securities that were sold after having been
obtained under reverse repurchase agreements that mature on the same day as the
securities. Data for immediate positions do not include forward positions.
3. Figures cover financing involving U.S. government and federal agency
securities, negotiable CDs, bankers acceptances, and commercial paper.
4. Includes all reverse repurchase agreements, including those that have been
arranged to make delivery on short sales and those for which the securities
obtained have been used as collateral on borrowings, that is, matched agreements.
5. Includes both repurchase agreements undertaken to finance positions and
"matched book" repurchase agreements.
NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially
estimated.
Federal Finance
1.44
F E D E R A L A N D F E D E R A L L Y S P O N S O R E D CREDIT A G E N C I E S
Millions of dollars, end of period
A33
Debt Outstanding
1986
1983
Agency
1984
1985
May
10 Federally sponsored agencies 1
11 Federal Home Loan Banks
12 Federal Home Loan Mortgage Corporation
13 Federal National Mortgage Association
14 Farm Credit Banks
15 Student Loan Marketing Association 8
Sept.
Oct.
271,220
293,905
294,961
296,226
298,361
n.a.
n.a.
n.a.
33,940
243
14,853
194
35,145
142
15,882
133
36,390
71
15,678
115
36,110
52
15,256
118
35,826
48
14,953
115
35,768
45
14,953
115
36,132
40
14,953
115
36,473
37
14,274
117
36,716
36
14,274
123
2,165
1,404
14,970
111
2,165
1,337
15,435
51
2,165
1,940
16,347
74
2,165
1,940
16,505
74
2,165
1,854
16,617
74
2,165
1,854
16,562
74
2,165
1,854
16,931
74
2,165
3,104
16,702
74
2,165
3,104
16,940
74
206,128
48,930
6,793
74,594
72,816
3,402
236,075
65,085
10,270
83,720
71,193
5,745
257,515
74,447
11,926
93,896
68,851
8,395
258,851
78,718
12,475
92,629
64,629
10,400
260,400
81,558
12,276
92,562
63,585
10,419
262,593
83,081
12,818
93,417
62,857
10,420
n.a.
85,997
n.a.
92,286
61,575
10,420
n.a.
87,133
n.a.
91,629
63,073
10,555
n.a.
87,146
n.a.
93,272
63,079
10,791
145,217
153,373
155,076
155,222
155,526
156,132
156,873'
157,371
14,789
1,154
5,000
13,245
111
15,852
1,087
5,000
13,710
51
15,670
1,690
5,000
14,622
74
15,250
1,690
5,000
14,830
74
14,947
1,604
5,000
14,942
74
14,947
1,604
5,000
14,937
74
14,947
1,604
5,000
15,306
74
14,268
2,854
4,970'
15,077
74
14,268
2,854
4,970
15,515
74
55,266
19,766
26,460
58,971
20,693
29,853
64,234
20,654
31,429
64,544
21,154
32,534
64,924
21,255
32,476
65,174
21,321
32,469
65,274
21,398
32,529
65,374
21,460
32,796'
65,374
21,506
32,810
sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
Other Lending10
22 Farmers Home Administration
23 Rural Electrification Administration
24 Other
1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. Once issued, these securities may be sold privately on the
securities market.
5. Certificates of participation issued before fiscal 1969 by the Government
National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
Aug.
240,068
MEMO
16 Federal Financing Bank debt
17
18
19
20
21
July
135,791
1 Federal and federally sponsored agencies
2 Federal agencies
3 Defense Department 1
Export-Import Bank 2 ' 3
4
5
Federal Housing Administration 4
6
Government National Mortgage Association
participation certificates 5
7
Postal Service 6
8
Tennessee Valley Authority
9
United States Railway Association 6
Lending to federal and federally
June
7. Includes outstanding noncontingent liabilities: Notes, bonds, and debentures. Some data are estimated.
8. Before late 1981, the Association obtained financing through the Federal
Financing Bank.
9. The FFB, which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since FFB
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
10. Includes FFB purchases of agency assets and guaranteed loans; the latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular agency being generally small. The Farmers Home Administration item
consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans.
A34
1.45
DomesticNonfinancialStatistics • February 1987
N E W SECURITY I S S U E S Tax-Exempt State and Local Governments
Millions of dollars
1986
Type of issue or issuer,
or use
1983
1984
1985
Mar.
1 All issues, new and refunding
1
Apr.
May
June
July
Aug.
Sept.
Oct.
86,421
106,641
214,189
8,008
12,578
13,215
12,611
19,833
25,965
4,532
8,825
Type of issue
2 General obligation
3 Revenue
21,566
64,855
26,485
80,156
52,622
161,567
2,720
5,288
5,459
7,120
7,115
6,100
6,326
6,285
6,531
13,302
5,931
20,034
1,267
3,265
2,104
6,721
Type of issuer
4
5 Special district and statutory authority 2
6 Municipalities, counties, townships
7,140
51,297
27,984
9,129
63,550
33,962
13,004
134,363
66,822
1,088
4,383
2,537
1,956
7,350
3,273
2,825
6,427
3,962
1,705
6,351
4,554
2,879
10,589
6,365
2,121
15,714
8,125
9
3,275
1,248
697
5,757
2,371
7 Issues for new capital, total
72,441
94,050
156,050
3,314
6,938
7,155
8,178
13,165
17,810
2,558
3,789
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
8,099
4,387
13,588
26,910
7,821
11,637
7,553
7,552
17,844
29,928
15,415
15,758
16,658
12,070
26,852
63,181
12,892
24,398
624
795
4,082
337
37
2,132
1,706
815
4,554
579
313
4,610
1,827
273
3,450
1,424
264
5,978
1,694
947
1,583
1,518
255
6,614
2,800
3,164
4,425
1,186
975
7,281
2,926
1,460
6,292
2,554
489
12,245
558
827
1,365
812
138
832
928
1,195
2,396
2,098
499
1,708
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning April 1986.
SOURCES. Securities Data Company beginning April 1986. Public Securities
Association for earlier data. This new data source began with the November
BULLETIN.
1.46
N E W SECURITY I S S U E S Corporations
Millions of dollars
Type of issue or issuer,
or use
1986
1983
1984
1985
Mar.
1 All issues1
Apr.
May
June
July
Aug.
Sept/
Oct.
119,949
132,531
201,269
30,444
33,489
19,564
25,776
21,093
24,245
16,093
28,230
2 Bonds2
68,370
109,903
165,754
24,923
27,883
13,050
20,756
16,766
18,481
12,830
23,295
Type of offering
3 Public
4 Private placement
47,244
21,126
73,579
36,324
119,559
46,195
24,923
n.a.
27,883
n.a.
13,050
n.a.
20,756
n.a.
16,766
n.a.
18,481
n.a.
12,830
n.a.
23,295
n.a.
17,001
7,540
3,833
9,125
3,642
27,227
24,607
13,726
4,694
10,679
2,997
53,199
52,228
15,215
5,743
12,957
10,456
69,157
8,895
790
303
2,133
1,907
10,895
7,975
2,640
614
3,330
3,115
10,210
3,939
1,776
427
1,709
712
4,487
5,368
2,206
250
1,948
810
10,174
2,535
3,410
497
1,470
465
8,389
4,536
1,045
550
2,098
1,615
8,638
2,345
1,405
375
1,915
417
6,373
2,055
1,092
170
2,537
1,255
16,185
11 Stocks3
51,579
22,628
35,515
5,521
5,606
6,514
5,020
4,327
5,764
3,263
4,935
Type
12 Preferred
13 Common
7,213
44,366
4,118
18,510
6,505
29,010
1,160
4,361
751
4,855
856
5,658
1,284
3,736
726
3,601
1,290
4,474
402
2,861
727
4,208
14,135
13,112
2,729
5,001
1,822
14,780
4,054
6,277
589
1,624
419
9,665
5,700
9,149
1,544
1,966
978
16,178
851
607
355
357
0
3,351
1,434
910
158
165
27
2,912
1,827
953
372
346
74
2,942
1,132
421
154
406
140
2,767
746
917
179
305
107
2,073
982
803
57
208
379
3,335
250
1,009
28
174
0
1,802
701
1,217
511
410
59
2,037
5
6
7
8
9
10
14
15
16
17
18
19
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1. Figures, which represent gross proceeds of issues maturing in more than one
year, sold for cash in the United States, are principal amount or number of units
multiplied by offering price. Excludes offerings of less than $100,000, secondary
offerings, undefined or exempted issues as defined in the Securities Act of 1933,
employee stock plans, investment companies other than closed-end, intracorporate transactions, and sales to foreigners.
2. Monthly data include only public offerings.
3. Beginning in August 1981, gross stock offerings include new equity volume
from swaps of debt for equity.
SOURCES. IDD Information Services, Inc., Securities and Exchange Commission and the Board of Governors of the Federal Reserve System.
Securities Market and Corporate Finance
1.47
O P E N - E N D I N V E S T M E N T COMPANIES
A35
Net Sales and Asset Position
Millions of dollars
1986
Item
1984
1985
Mar.
Apr.
May
June
July
Aug.
Sept/
Oct.
INVESTMENT COMPANIES 1
1 Sales of own shares 2
2 Redemptions of own shares 3
3 Net sales
107,480
77,032
30,448
222,670
132,440
90,230
33,764
15,085
18,679
37,656
21,699
15,957
31,251
16,706
14,545
30,619
18,921
11,698
35,684
21,508
14,176
32,636
20,102
12,534
34,690
21,338
13,352
37,095
20,808
16,287
4 Assets 4
5
Cash position 5
Other
6
137,126
12,181
124,945
251,695
20,607
231,088
315,245
27,639
287,606
329,684
29,599
300,085
343,926
28,184
315,742
356,040
28,083
327,957
360,050
28,080
331,970
387,547
28,682
358,865
381,872
29,540
352,332
402,516
30,954
371,562
5. Also includes all U.S. government securities and other short-term debt
securities.
1. Excluding money market funds.
2. Includes reinvestment of investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund to
another in the same group.
3. Excludes share redemption resulting from conversions from one fund to
another in the same group.
4. Market value at end of period, less current liabilities.
1.48
NOTE. Investment Company Institute data based on reports of members, which
comprise substantially all open-end investment companies registered with the
Securities and Exchange Commission. Data reflect newly formed companies after
their initial offering of securities.
CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1984
Account
1983
1984
1985
1986'
1985
Q4
Ql
Q2
Q3
Q4
Ql
Q2
Q3
2
3
4
5
6
1 Corporate profits with inventory valuation and
capital consumption adjustment
Profits before tax
Profits tax liability
Profits after tax
Dividends
Undistributed profits
213.7
207.6
77.2
130.4
71.5
58.8
264.7
235.7
95.4
140.3
78.3
62.0
280.6
223.1
91.8
131.4
81.6
49.8
265.0
221.9
87.8
134.1
80.1
54.0
266.4
213.8
87.8
126.0
80.9
45.1
274.3
213.8
87.1
126.7
81.4
45.3
296.3
229.2
95.8
133.4
81.6
51.8
285.6
235.8
96.4
139.4
82.5
57.0
296.4
222.5
95.7
126.9
85.2
41.7
293.1
227.7
99.0
128.8
87.5
41.2
302.0
240.4
104.4
135.9
88.8
47.2
7 Inventory valuation
8 Capital consumption adjustment
-10.9
17.0
-5.5
34.5
-.6
58.1
-1.6
44.7
-.5
53.2
1.6
58.9
6.1
61.0
-9.4
59.2
16.5
57.3
10.6
54.8
6.1
55.5
SOURCE. Survey of Current Business (Department of Commerce).
A36
1.49
DomesticNonfinancialStatistics • February 1987
N O N F I N A N C I A L CORPORATIONS
Billions of dollars, except for ratio
Assets and Liabilities
1986
1985
Account
1980
1981
1983
1982
1984
Q1
1 Current assets
Q2
Q3
Q4
Ql
1,328.3
1,419.6
1,437.1
1,575.9
1,703.0
1,722.7
1,734.6
1,763.0
1,784.6
1,795.7
127.0
18.7
507.5
543.0
132.1
135.6
17.7
532.5
584.0
149.7
147.8
23.0
517.4
579.0
169.8
171.8
31.0
583.0
603.4
186.7
173.6
36.2
633.1
656.9
203.2
167.5
35.7
650.3
665.7
203.5
167.1
35.4
654.1
666.7
211.2
176.3
32.6
661.0
675.0
218.0
189.2
33.0
671.5
666.0
224.9
195.3
31.0
663.4
679.6
226.3
7 Current liabilities
890.6
971.3
986.0
1,059.6
1,163.6
1,174.1
1,182.9
1,211.9
1,233.6
1,222.3
8 Notes and accounts payable
9 Other
514.4
376.2
547.1
424.1
550.7
435.3
595.7
463.9
647.8
515.8
636.9
537.1
651.7
531.2
670.4
541.5
682.7
550.9
668.4
553.9
10 Net working capital
437.8
448.3
451.1
516.3
539.5
548.6
551.7
551.1
551.0
573.4
11 MEMO; Current ratio 1
1.492
1.462
1.458
1.487
1.464
1.467
1.466
1.455
1.447
1.469
2
3
4
5
6
Cash
U.S. government securities
Notes and accounts receivable
Inventories
Other
Statistics, Board of Governors of the Federal Reserve System, Washington, D.C.
20551.
SOURCE. Federal Trade Commission and Bureau of the Census.
1. Ratio of total current assets to total current liabilities.
NOTE. For a description of this series, see "Working Capital of Nonfinancial
C o r p o r a t i o n s " in t h e J u l y 1978 BULLETIN, p p . 5 3 3 - 3 7 .
All data in this table reflect the most current benchmarks. Complete data are
available upon request from the Flow of Funds Section, Division of Research and
1.50
TOTAL N O N F A R M B U S I N E S S E X P E N D I T U R E S on N e w Plant and Equipment A
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
Industry
1984
1985
Q2
1 Total nonfarm business
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
Nonmanufacturing
4 Mining
Transportation
5
Railroad
Air
6
7
Other
Public utilities
8
Electric
9
Gas and other
10 Commercial and other 2
Q3
Q4
Ql
Q2
Q31
Q4
Ql'
354.44
387.13
380.69
387.86
389.23
397.88
377.94
375.92
374.55
394.34
386.82
66.24
72.58
73.27
80.21
69.96
74.81
74.34
79.91
72.99
81.48
75.47
82.79
68.01
76.02
68.33
73.35
69.31
69.89
74.17
80.00
67.86
73.36
16.86
15.88
11.24
16.56
15.89
15.25
12.99
11.22
10.15
10.62
10.36
6.79
3.56
6.17
7.08
4.79
6.15
6.72
6.04
5.87
7.38
3.71
6.35
7.79
5.17
5.85
6.74
6.07
6.34
6.22
6.58
5.42
6.77
5.77
5.74
7.31
5.69
6.03
6.60
6.12
6.30
6.37
7.22
6.26
37.03
10.44
134.75
36.11
12.71
150.93
33.96
12.57
159.50
36.00
12.61
150.99
35.58
12.86
151.62
36.38
13.41
155.42
34.21
12.82
155.67
33.81
12.74
158.18
33.91
11.99
160.25
33.91
12.72
163.91
33.34
12.97
169.08
ATrade and services are no longer being reported separately. They are included
in Commercial and other, line 10.
1. Anticipated by business.
1987
1986
1986 lr
2. "Other" consists of construction; wholesale and retail trade; finance and
insurance; personal and business services; and communication.
SOURCE. Survey of Current Business (Department of Commerce).
Securities Markets and Corporate Finance
1.51
DOMESTIC F I N A N C E COMPANIES
Billions of dollars, end of period
Assets and Liabilities
1985
Account
A37
1982
1983
1986
1984
Ql
Q2
Q4
Q3
Q2
Ql
Q3
ASSETS
Accounts receivable, gross
Consumer
Business
Real estate
Total
78.1
101.4
20.2
199.7
87.4
113.4
22.5
223.4
96.7
135.2
26.3
258.3
99.1
142.1
27.2
268.5
106.0
144.6
28.4
279.0
116.4
141.4
29.0
286.5
120.8
152.8
30.4
304.0
125.5
159.7
31.5
316.7
134.7
160.3
32.4
327.5
146.7
152.7
33.8
333.2
Less:
5 Reserves for unearned income
6 Reserves for losses
31.9
3.5
33.0
4.0
36.5
4.4
36.6
4.9
38.6
4.8
41.0
4.9
40.9
5.0
41.3
5.1
41.8
5.2
43.6
5.5
7 Accounts receivable, net
8 All other
164.3
30.7
186.4
34.0
217.3
35.4
227.0
35.9
235.6
39.5
240.6
46.3
258.1
46.8
270.3
50.6
280.4
52.1
284.1
63.1
9 Total assets
195.0
220.4
252.7
262.9
275.2
286.9
304.9
321.0
332.5
347.2
18.3
51.1
18.7
59.7
21.3
72.5
19.8
79.1
18.5
82.6
18.2
93.6
21.0
96.9
20.4
102.0
22.9
106.4
25.3
110.6
12.7
64.4
21.2
27.4
13.9
68.1
30.1
29.8
16.2
77.2
33.1
32.3
16.8
78.3
35.4
33.5
16.6
85.7
36.9
34.8
16.6
86.4
36.6
35.7
17.2
93.0
39.6
37.1
18.5
100.0
41.4
38.8
20.9
101.8
40.4
40.2
21.6
105.3
43.2
41.3
195.0
220.4
252.7
262.9
275.2
286.9
304.9
321.0
332.5
347.2
1
2
3
4
LIABILITIES
10 Bank loans
11 Commercial paper
Debt
12 Other short-term
13 Long-term
14 All other liabilities
15 Capital, surplus, and undivided profits
16 Total liabilities and capital
NOTE. Components may not add to totals due to rounding.
These data also appear in the Board's G.20 (422) release. For address, see
inside front cover.
1.52
DOMESTIC F I N A N C E COMPANIES Business Credit
Millions of dollars, seasonally adjusted except as noted
Changes in accounts
receivable
Type
Extensions
Repayments
1986
1986
1986
Accounts
receivable
outstanding
Oct. 31,
1986'
Aug.
1 Total
2
3
4
5
6
7
8
9
10
Retail financing of installment sales
Automotive (commercial vehicles)
Business, industrial, and farm equipment
Wholesale financing
Automotive
Equipment
All other
Leasing
Automotive
Equipment
Loans on commercial accounts receivable and factored commercial accounts receivable
All other business credit
1. Not seasonally adjusted.
Sept.
Oct.
Aug.
Sept.
Oct.
Aug.
Sept.
Oct.
158,739
190
-6,552
5,751
28,014
26,662
32,469
27,824
33,214
26,718
18,350
20,113
291
-91
1,290
-212
281
11
1,302
786
2,299
986
1,359
965
1,011
876
1,009
1,197
1,078
954
20,727
4,781
7,709
127
-44
33
-9,172
36
113
4,592
134
149
10,220
845
1,703
7,536
829
1,881
13,818
715
2,043
10,093
889
1,669
16,708
793
1,768
9,226
581
1,893
16,610
40,606
185
22
549
286
248
-10
892
1,540
1,075
1,574
1,018
1,770
707
1,518
526
1,289
770
1,780
16,850
12,993
-307
-27
539
19
-267
613
9,429
1,298
9,298
1,183
9,201
1,580
9,735
1,325
8,760
1,164
9,468
966
NOTE. These data also appear in the Board's G.20 (422) release. For address,
see inside front cover.
A38
1.53
Domestic Financial Statistics • February 1987
MORTGAGE M A R K E T S
Millions of dollars; exceptions noted.
1986
item
May
June
July
Aug.
Sept.
Oct.
Nov.
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
6
Conventional mortgages on new homes
Terms1
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan/price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount) 2
Contract rate (percent per annum)
Yield (percent per annum)
7 FHLBB series 5
8 HUD series 4
92.8
69.5
77.1
26.7
2.40
12.20
96.8
73.7
78.7
27.8
2.64
11.87
104.1
77.4
77.1
26.9
2.53
11.12
114.7
83.0
74.7
25.8
2.19
9.84
122.1
88.0
74.9
26.6
2.40
9.74
115.7
83.4
73.9
26.2
2.35
9.89
117.9
84.8
74.5
26.5
2.40
9.84
124.0
90.4
75.2
27.1
2.49
9.74
127.5''
93.9'
75.6
2.66'
9.57'
122.6
91.9
76.5
27.4
2.69
9.46
12.66
13.43
12.37
13.80
11.58
12.28
10.22
10.32
10.15
10.38
10.30
10.28
10.26
9.88
10.17
9.96
10.02'
9.89
9.93
n.a.
13.11
12.25
13.81
13.13
12.24
11.61
10.07
9.23
9.98
9.57
10.01
9.31
9.80
9.11
9.90
9.17
9.80
9.06
n.a.
8.83
27.Y
SECONDARY MARKETS
Yield (percent per annum)
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
74,847
37,393
37,454
83,339
35,148
48,191
94,574
34,244
60,331
98,096
32,558
65,538
97,295
31,241
66,054
97,255
30,766
66,489
%,675
28,451
68,224
97,717
26,658
71,059
98,402
25,435
72,%7
98,210
24,300
73,910
Mortgage transactions (during period)
14 Purchases
15
17,554
3,528
16,721
978
21,510
1,301
1,978
n.a.
3,000
n.a.
3,343
n.a.
3,800
n.a.
4,649
n.a.
3,784
n a.
2,549
n.a.
Mortgage
commitments1
16 Contracted (during period)
17 Outstanding (end of period)
18,607
5,461
21,007
6,384
20,155
3,402
3,538
8,444
3,049
7,862
3,270
7,706
3,840
7,671
4,248
7,252
2,375
5,740
1,811
4,625
5,9%
974
5,022
9,283
910
8,373
12,399
841
11,558
14,302
769
13,533
14,194
742
13,452
13,795
692
13,103
14,010
688
13,322
23,089
19,686
21,886
18,506
44,012
38,905
8,947
7,354
10,505
9,588
8,518
8,113
10,458
10,132
n.a.
n.a.
n.a.
32,852
16,964
32,603
13,318
48,989
16,613
10,612
n.a.
10,338
n.a.
7,863
n.a.
13,707
n.a.
FEDERAL H O M E LOAN MORTGAGE CORPORATION
Mortgage holdings (end of period)8
18 Total
19 FHA/VA
20
Conventional
Mortgage transactions (during period)
21 Purchases
22
9
Mortgage
commitments
23 Contracted (during period)
24 Outstanding (end of period)
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.
Real Estate
1.54
A39
MORTGAGE D E B T O U T S T A N D I N G
Millions of dollars, end of period
1986
1985
Type of holder, and type of property
1983
1984
1985
Q3
Q4
Q1
Q2
Q3
1 All holders
1,813,856
2,034,602
2,266,267
2,200,561
2,266,267
2,315,038
2,381,232
2,456,496'
2
3
4
5
1,189,822
160,805
350,389
112,840
1,318,888
185,414
418,300
112,000
1,466,117
213,817
480,718
105,615
1,425,357
203,626
463,272
108,306
1,466,117
213,817
480,718
105,615
1,493,772
221,508
495,865
103,893
1,541,478
228,255
509,873
101,626
1,595,308'
236,094'
524,947'
100,147'
1,130,781
330,521
182,514
18,410
120,210
9,387
131,940
93,649
17,247
21,016
28
1,272,206
379,498
196,163
20,264
152,894
10,177
154,441
107,302
19,817
27,291
31
1,392,084
429,386
213,624
23,374
181,031
11,357
177,263
121,879
23,329
31,973
82
1,357,483
415,599
209,119
22,254
173,190
11,036
174,427
119,952
22,604
31,757
114
1,392,084
429,386
213,624
23,374
181,031
11,357
177,263
121,879
23,329
31,973
82
1,410,541
441,293
216,580
25,310
187,606
11,797
188,154
131,381
23,980
32,707
86
1,437,054
456,146
222,144
26,306
195,459
12,237
203,238
142,215
26,549
34,370
104
1,463,625'
472,048
228,471
27,709
203,217
12,651
214,156'
148,010'
28,467'
37,59c
89'
494,789
387,924
44,333
62,403
129
150,999
15,319
19,107
103,831
12,742
22,532
555,277
421,489
55,750
77,605
433
156,699
14,120
18,938
111,175
12,466
26,291
583,236
432,422
66,410
83,798
606
171,797
12,381
19,894
127,670
11,852
30,402
573,682
425,596
62,390
85,061
635
164,760
13,454
19,074
120,183
12,049
29,015
583,236
432,422
66,410
83,798
606
171,797
12,381
19,894
127,670
11,852
30,402
574,732
420,073
67,140
86,860
659
174,823
12,605
20,009
130,569
11,640
31,539
565,205
413,952
65,966
84,755
532
180,041
12,608
20,181
135,924
11,328
32,424
558,409
408,584
65,902
83,409
514
185,241
12,958
20,981
140,124
11,178
33,771
148,328
3,395
630
2,765
2,141
1,159
173
409
400
158,993
2,301
585
1,716
1,276
213
119
497
447
166,928
1,473
539
934
733
183
113
159
278
166,248
1,640
552
1,088
577
185
139
72
181
166,928
1,473
539
934
733
183
113
159
278
165,041
1,533
527
1,006
704
217
33
217
237
161,398
876
49
827
570
146
66
111
247
159,879'
826
44
782
457
132
57
115
153
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
4,894
1,893
3,001
78,256
73,045
5,211
52,010
3,081
48,929
7,632
7,559
73
4,816
2,048
2,768
87,940
82,175
5,765
52,261
3,074
49,187
10,399
9,654
745
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
4,918
2,251
2,667
96,769
90,590
6,179
49,255
2,895
46,360
13,089
11,457
1,632
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
4,964
2,309
2,655
98,795
92,315
6,480
45,422
2,673
42,749
13,623
12,231
1,392
5,094
2,449
2,645
97,295
90,460
6,835
43,369
2,552
40,817
14,194
11,890
2,304
4,966
2,331
2,635
97,717
90,508
7,209
42,119'
2,478'
39,641'
13,794
10,890
2,904
49 Mortgage pools or trusts 3
50 Government National Mortgage Association
51
1- to 4-family
52
Multifamily
53
Federal Home Loan Mortgage Corporation.
54
1- to 4-family
55
Multifamily
56
Federal National Mortgage Association
57
1- to 4-family
58
Multifamily
59
Farmers Home Administration
60
1- to 4-family
61
Multifamily
62
Commercial
63
Farm
285,073
159,850
155,950
3,900
57,895
57,273
622
25,121
25,121
n.a.
42,207
20,404
5,090
7,351
9,362
332,057
179,981
175,589
4,392
70,822
70,253
569
36,215
35,965
250
45,039
21,813
5,841
7,559
9,826
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
388,948
201,026
196,198
4,828
91,915
90,997
918
48,769
47,857
912
47,238
22,090
6,415
8,192
10,541
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
440,701
220,348
215,148
5,200
110,337
108,020
2,317
62,310
61,117
1,193
47,706
22,082
6,943
8,150
10,531
475,615
229,204
223,838
5,366
125,903
123,676
2,227
72,377
71,153
1,224
48,131
21,987
7,170
8,347
10,627
520,675
241,230
235,582
5,648
144,825
142,638
2,187
86,359
85,171
1,188
48,261
21,782
7,353
8,409
10,717
64 Individuals and others 4
65
1- to 4-family
66
Multifamily
67
Commercial
68
Farm
249,674
141,769
40,873
35,169
31,863
271,346
152,154
48,480
41,279
29,433
292,213
162,853
55,195
47,897
26,268
287,882
163,149
52,526
44,817
27,390
292,213
162,853
55,195
47,897
26,268
298,755
164,955
57,850
49,756
26,194
307,165
169,935
60,589
50,907
25,734
312,317'
171,958
63,072
52,083
25,204'
1- to 4-family
Multifamily
Commercial
Farm
6 Selected financial institutions
Commercial banks'
7
8
1- to 4-family
9
Multifamily
10
Commercial
11
Farm
12 Savings banks
13
1- to 4-family
14
Multifamily
15
Commercial
16
Farm
17
18
19
20
21
22
23
24
25
26
27
Savings and loan associations
1- to 4-family
Multifamily
Commercial
Farm
Life insurance companies
1- to 4-family
Multifamily
Commercial
Farm
Finance companies 2
28 Federal and related agencies
29 Government National Mortgage Association
30
1- to 4-family
31
Multifamily
32
Farmers Home Administration
33
1- to 4-family
34
Multifamily
35
Commercial
36
Farm
37
38
39
40
41
42
43
44
45
46
47
48
1. Includes loans held by nondeposit trust companies but not bank trust
departments.
2. Assumed to be entirely 1- to 4-family loans.
3. Outstanding principal balances of mortgage pools backing securities insured
or guaranteed by the agency indicated.
4. Other holders include mortgage companies, real estate investment trusts,
state and local credit agencies, state and local retirement funds, noninsured
pension funds, credit unions, and other U.S. agencies.
NOTE. Based on data from various institutional and governmental sources, with
some quarters estimated in part by the Federal Reserve. Multifamily debt refers to
loans on structures of five or more units.
A40
1.55
DomesticNonfinancialStatistics • February 1987
C O N S U M E R I N S T A L L M E N T C R E D I T 1 4 Total Outstanding, and Net Change, seasonally adjusted
Millions of dollars
1986
noiuer, anu lype oi creuii
1984
1985
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept/
Oct.
Amounts outstanding (end of period)
1 Total
453,580
535,098
547,852
550,939
555,810
562,267
567,653
573,216
576,609
584,334
591,117
By major holder
2 Commercial banks
3 Finance companies 2
4 Credit unions
5 Retailers 3
6 Savings institutions
V Gasoline companies
209,158
96,126
66,544
37,061
40,330
4,361
240,796
120,095
75,127
39,187
55,555
4,337
244,761
126,001
76,431
39,497
57,048
4,114
245,172
127,422
76,953
39,844
57,573
3,975
247,498
128,728
77,957
39,826
58,024
3,777
248,681
131,172
78,474
40,139
60,247
3,554
249,753
134,933
79,095
40,076
60,352
3,445
251,197
137,197
80,130
40,251
61,051
3,389
251,908
138,938
80,622
40,351
61,421
3,368
253,329
144,559
81,374
40,445
61,331
3,295
255,766
146,862
82,448
40,641
62,079
3,320
By major type of credit
8 Automobile
y Commercial banks
10 Credit unions
n
Finance companies
12 Savings institutions
173,122
83,900
28,614
54,663
5,945
206,482
92,764
30,577
73,391
9,750
213,342
93,828
31,107
78,310
10,097
214,361
93,377
31,320
79,416
10,248
215,814
93,013
31,728
80,685
10,386
218,965
93,157
31,939
83,221
10,648
222,606
93,261
32,191
86,520
10,634
226,234
94,014
32,613
88,862
10,745
228,814
94,686
32,813
90,578
10,736
236,280
95,842
33,119
96,598
10,721
240,327
97,218
33,556
98,695
10,858
13 Revolving
14 Commercial banks
15 Retailers
16 Gasoline companies
17 Savings institutions
98,514
58,145
33,064
4,361
2,944
118,296
73,893
34,560
4,337
5,506
120,724
75,953
34,843
4,114
5,813
122,131
77,021
35,188
3,975
5,947
123,442
78,421
35,170
3,777
6,075
124,545
79,151
35,449
3,554
6,392
124,720
79,397
35,390
3,445
6,488
125,577
79,998
35,542
3,389
6,649
125,915
80,133
35,639
3,368
6,775
126,012
80,160
35,688
3,295
6,869
126,609
80,406
35,861
3,320
7,021
18 Mobile home
19 Commercial banks
20
Finance companies
21
Savings institutions
24,184
9,623
9,161
5,400
25,461
9,578
9,116
6,767
25,573
9,566
9,161
6,846
25,584
9,348
9,327
6,909
25,513
9,264
9,286
6,963
25,560
9,215
9,115
7,230
25,479
9,196
9,077
7,206
25,398
9,156
8,989
7,253
25,215
9,086
8,882
7,248
24,958
9,071
8,681
7,206
24,954
9,074
8,611
7,269
22 Other
23 Commercial banks
24
Finance companies
25
Credit unions
26 Retailers
27
Savings institutions
157,760
57,490
32,302
37,930
3,997
26,041
184,859
64,561
37,588
44,550
4,627
33,533
188,212
65,414
38,530
45,323
4,653
34,291
188,863
65,427
38,678
45,633
4,656
34,469
191,041
66,800
38,757
46,228
4,656
34,600
193,197
67,158
38,836
46,535
4,690
35,977
194,847
67,898
39,336
46,903
4,686
36,024
196,007
68,030
39,345
47,517
4,710
36,405
196,665
68,003
39,479
47,809
4,712
36,662
197,084
68,256
39,281
48,255
4,758
36,535
199,226
69,068
39,556
48,892
4,780
36,931
Net change (during period)
28 Total
77,341
81,518
5,099
3,087
4,871
6,457
5,386
5,563
3,393
7,725
6,783
By major holder
Commercial banks
Finance companies 2
Credit unions
Retailers 3
Savings institutions
Gasoline companies
39,819
9,961
13,456
2,900
11,038
167
31,638
23,969
8,583
2,126
15,225
-24
1,505
2,284
621
81
758
-150
411
1,421
522
347
525
-139
2,326
1,306
1,004
-18
451
-198
1,183
2,444
517
313
2,223
-223
1,072
3,761
621
-63
105
-109
1,444
2,264
1,035
175
699
-56
711
1,741
492
100
370
-21
1,421
5,621
752
94
-90
-73
2,437
2,303
1,074
196
748
25
By major type of credit
35 Automobile
36 Commercial banks
37
Credit unions
38 Finance companies
39
Savings institutions
27,214
16,352
3,223
4,576
3,063
33,360
8,864
1,963
18,728
3,805
2,681
339
252
1,900
190
1,019
-451
213
1,106
151
1,453
-364
408
1,269
138
3,151
144
211
2,536
262
3,641
104
252
3,299
-14
3,628
753
422
2,342
111
2,580
672
200
1,716
-9
7,466
1,156
306
6,020
-15
4,047
1,376
437
2,097
137
40 Revolving
41
Commercial banks
42
Retailers
43 Gasoline companies
44
Savings institutions
20,145
15,949
2,512
167
1,517
19,782
15,748
1,496
-24
2,562
1,042
962
73
-150
156
1,407
1,068
345
-139
134
1,311
1,400
-18
-198
128
1,103
730
279
-223
317
175
246
-59
-109
96
857
601
152
-56
161
338
135
97
-21
126
97
27
49
-73
94
597
246
173
25
152
45 Mobile home
46
Commercial banks
47
Finance companies
48
Savings institutions
1,990
-199
544
1,645
1,277
-45
-45
1,367
202
109
36
57
11
-218
166
63
-71
-84
-41
54
47
-49
-171
267
-81
-19
-38
-24
-81
-40
-88
47
-183
-70
-107
-5
-257
-15
-201
-42
-4
3
-70
63
49 Other
50
Commercial banks
51
Finance companies
52
Credit unions
53
Retailers
54
Savings institutions
27,992
7,717
4,841
10,233
388
4,813
27,099
7,071
5,286
6,620
630
7,492
1,173
95
348
368
7
354
651
13
148
310
3
178
2,178
1,373
79
595
0
131
2,156
358
79
307
34
1,377
1,650
740
500
368
-4
47
1,160
132
9
614
24
381
658
-27
134
292
2
257
419
253
-198
446
46
-127
2,142
812
275
637
22
396
29
30
31
32
33
34
1. The Board's series cover most short- and intermediate-term credit extended
to individuals that is scheduled to be repaid (or has the option of repayment) in
two or more installments.
2. More detail for finance companies is available in the G.20 statistical release,
3. Excludes 30-day charge credit held by travel and entertainment companies,
4. All data have been revised.
Consumer Installment Credit
1.56
A41
TERMS OF C O N S U M E R I N S T A L L M E N T CREDIT
Percent unless noted otherwise
1986
Item
1983
1984
1985
Apr.
May
June
July
Aug.
Sept.
Oct.
INTEREST RATES
1
2
3
4
5
6
Commercial banks'
48-month new car 2
24-month personal
120-month mobile home 2
Credit card
Auto finance companies
New car
Used car
13.92
16.68
16.08
18.78
13.71
16.47
15.58
18.77
12.91
15.94
14.96
18.69
n.a.
n.a.
n.a.
n.a.
11.45
14.89
13.97
18.32
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
11.00
14.70
13.95
18.15
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
12.58
18.74
14.62
17.85
11.98
17.59
10.55
16.67
9.49
16.56
9.35
16.06
9.31
15.83
9.29
15.56
5.40
15.23
6.12
15.17
45.9
37.9
48.3
39.7
51.5
41.4
50.6
42.5
49.4
42.5
49.5
42.7
49.9
42.8
50.4
42.9
44.5
42.5
45.3
42.2
86
92
88
92
91
94
89
96
89
97
89
97
89
97
90
97
92
98
92
97
8,787
5,033
9,333
5,691
9,915
6,089
10,402
6,281
10,521
6,393
10,608
6,611
10,748
6,614
10,756
6,569
11,162
6,763
11,340
6,746
OTHER TERMS 3
/
8
9
10
11
12
Maturity (months)
New car
Used car
Loan-to-value ratio
New car
Used car
Amount financed (dollars)
New car
Used car
1. Data for midmonth of quarter only.
2. Before 1983 the maturity for new car loans was 36 months, and for mobile
home loans was 84 months.
3. At auto finance companies.
NOTE. These data also appear in the Board's G.19 (421) release. For address,
see inside front cover.
A42
1.57
DomesticNonfinancialStatistics • February 1987
F U N D S R A I S E D IN U . S . CREDIT M A R K E T S
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1980
1981
1982
1985r
1984r
1983r
Transaction category, sector
1986
1984
1983
HI
H2
H2
HI
H2
HI'
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors . . . .
By sector and instrument
? U.S. government
3 Treasury securities
4
Agency issues and mortgages
5 Private domestic nonfinancial sectors
6
Debt capital instruments
Tax-exempt obligations
7
8
9
in
Home mortgages
Multifamily residential
n
Commercial
i?
13
Farm
14
n
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
19
?0
?1
??
r\
24
By borrowing sector
State and local governments
Nonfarm noncorporate
Corporate
25 Foreign net borrowing in United States
76
?7
Bank loans n.e.c
28
Open market paper
29
U.S. government loans
30 Total domestic plus foreign
344.9
375.8
387.4
548.8
756.3
869.3
592.2
727.8
784.8
732.6 1,006.1
705.4
79.2
79.8
-.6
87.4
87.8
-.5
161.3
162.1
-.9
186.6
186.7
-.1
198.8
199.0
-.2
223.6
223.7
-.1
156.1
156.3
-.1
181.3
181.5
-.2
216.3
216.4
-.1
201.8
201.9
-.1
245.5
245.5
-.1
211.3
211.4
-.1
265.7
189.1
30.3
27.7
131.2
94.2
7.6
19.2
10.2
288.5
155.5
23.4
22.8
109.3
72.2
4.8
22.2
10.0
226.2
148.3
44.2
18.7
85.4
50.5
5.4
25.2
4.2
362.2
252.8
53.7
16.0
183.0
117.1
14.1
49.0
2.8
557.5
314.0
50.4
46.1
217.5
129.9
25.1
63.3
-.8
645.7
461.7
152.4
73.9
235.4
150.3
29.2
62.4
-6.4
436.0
278.0
51.8
11.5
214.7
135.1
20.4
55.3
3.9
546.5
298.4
42.8
31.2
224.5
135.2
27.5
62.9
-1.1
568.5
329.6
58.0
61.1
210.5
124.7
22.7
63.7
-.5
530.8
355.4
67.5
72.7
215.2
133.1
24.6
60.3
-2.8
760.6
568.0
237.3
75.1
255.7
167.5
33.7
64.4
-10.0
494.1
384.5
19.9
129.1
235.4
153.1
29.0
60.6
-7.3
76.6
4.5
37.8
4.0
30.3
133.0
22.6
57.0
14.7
38.7
77.9
17.7
52.9
-6.1
13.4
109.5
56.8
25.8
-.8
27.7
243.5
95.0
80.1
21.7
46.6
184.0
96.6
41.3
14.6
31.4
158.0
75.1
42.1
4.3
36.5
248.1
98.7
91.9
24.8
32.7
238.9
91.3
68.4
18.7
60.5
175.4
97.3
24.9
12.3
40.9
192.6
95.9
57.7
16.9
22.0
109.7
75.3
22.1
-15.7
28.1
265.7
17.2
120.0
15.2
31.8
81.5
288.5
6.8
121.4
16.6
38.5
105.2
226.2
21.5
88.4
6.8
40.2
69.2
362.2
34.0
188.0
4.3
76.6
59.3
557.5
27.4
239.5
.1
97.1
193.4
645.7
107.8
295.0
-13.6
92.8
163.7
436.0
33.7
223.4
6.7
91.7
80.6
546.5
25.2
232.8
-.4
101.4
187.4
568.5
29.6
246.2
.5
92.7
199.5
530.8
56.8
253.6
-5.9
85.6
140.7
760.6
158.7
336.4
-21.3
99.9
186.8
494.1
40.7
228.5
-15.'
95.2
144.8
23.8
.8
11.8
2.4
8.8
23.5
5.4
3.0
3.9
11.1
16.0
6.7
-5.5
1.9
13.0
17.4
3.1
3.6
6.5
4.1
6.1
1.3
-6.6
6.2
5.3
1.7
4.0
-2.8
6.2
-5.7
15.5
2.3
-3.4
6.0
10.7
35.5
1.1
-2.2
18.0
18.7
-23.3
1.5
-11.1
-5.6
-8.1
-4.1
5.5
-6.1
4.2
-7.8
7.5
2.6
.4
8.2
-3.6
24.3
7.1
1.4
20.6
-4.8
368.7
399.3
403.4
566.2
762.4
871.0
607.7
763.3
761.5
728.4 1,013.5
729.7
Financial sectors
31 Total net borrowing by financial sectors
By instrument
37 U.S. government related
31 Sponsored credit agency securities
34
Mortgage pool securities
36 Private financial sectors
37 Corporate bonds
38
Mortgages
19
Bank loans n.e.c
40
Open market paper
41
Loans from Federal Home Loan Banks
By sector
4? Sponsored credit agencies
43
44 Private financial sectors
Commercial banks
45
46
Bank affiliates
47
Savings and loan associations
48
Finance companies
49
REITs
65.4
101.9
90.1
94.0
139.0
186.9
123.2
134.2
143.8
154.8
218.9
189.0
44.8
24.4
19.2
1.2
20.6
1.6
47.4
30.5
15.0
1.9
54.5
4.4
64.9
14.9
49.5
.4
25.2
12.5
.1
1.9
9.9
.8
67.8
1.4
66.4
74.9
30.4
44.4
68.8
8.1
60.7
69.8
29.1
40.7
80.0
31.8
48.2
92.9
25.3
67.6
26.2
12.1
54.3
13.1
2.2
40.9
-1.8
64.4
17.3
.4
-.1
31.1
15.7
63.8
29.3
.4
1.4
17.0
15.7
61.9
35.3
-.1
21.3
-7.0
64.1
23.3
.4
.7
24.1
15.7
101.5
20.6
79.9
1.1
85.3
36.5
.1
2.6
32.0
14.2
.9
13.9
11.7
110.2
15.9
92.1
2.2
108.8
37.7
.1
4.2
50.1
16.7
129.5
4.4
124.3
.8
59.6
28.7
.6
2.4
14.4
13.5
1.4
66.4
26.2
5.0
12.1
-2.1
11.4
-.2
30.4
44.4
64.1
7.3
15.6
22.7
17.8
.8
21.7
79.9
85.3
-4.9
14.5
22.3
52.8
.5
8.1
60.7
54.3
17.1
14.9
4.6
18.0
-.3
29.1
40.7
64.4
15.4
23.7
20.2
4.3
.8
31.8
48.2
63.8
-.9
7.5
25.1
31.3
.8
25.3
67.6
61.9
-9.2
13.7
12.1
44.8
.5
18.1
92.1
108.8
-.6
15.3
32.6
60.9
.5
5.2
124.3
59.6
-6.7
1.7
21.3
42.4
.9
*
*
-1.0
12.9
7.1
1.2
32.7
16.2
25.6
19.2
20.6
8.3
6.7
7.4
-1.3
-.5
32.4
15.0
54.5
11.6
9.2
15.5
18.5
-.2
*
15.3
49.5
25.2
11.7
6.8
2.5
4.3
*
*
*
All se :tors
50 Total net borrowing
434.1
501.3
493.5
660.2
901.4
1057.8
730.8
897.5
905.3
833.3 1,232.4
918.7
51
52
53
54
55
56
57
58
122.9
30.3
30.1
131.1
4.5
48.5
19.3
47.5
133.0
23.4
32.6
109.2
22.6
61.2
51.3
68.0
225.9
44.2
37.8
85.4
17.7
49.3
5.7
27.6
254.4
53.7
31.2
183.0
56.8
29.3
26.9
24.8
273.8
50.4
70.7
217.8
95.0
74.2
52.0
67.6
324.2
152.4
114.4
235.4
96.6
41.0
52.8
41.0
225.0
51.8
26.8
214.6
75.1
40.8
51.2
45.4
251.2
42.8
49.6
224.8
98.7
89.6
73.8
67.1
296.4
58.0
91.9
210.8
91.3
58.8
30.1
68.1
294.8
67.5
113.5
215.2
97.3
19.8
30.4
44.8
353.5
237.3
115.3
255.7
95.9
62.3
75.2
37.3
340.0
19.9
164.9
236.0
75.3
25.9
19.3
37.5
U.S. government securities
State and local obligations
Corporate and foreign bonds
Consumer credit
Open market paper
Other loans
External corporate equity funds raised in United States
59 Total new share issues
21.2
-3.3
33.6
67.0
-31.1
37.5
52.1
-40.1
-22.2
33.3
41.6
153.4
60
61
62
63
64
4.5
16.8
12.9
1.8
2.1
6.0
-9.3
-11.5
1.9
.3
16.8
16.8
11.4
4.0
1.5
32.1
34.9
28.3
2.7
3.9
38.0
-69.1
-77.0
6.7
1.2
103.4
-65.9
-81.6
11.7
4.0
28.7
23.4
18.4
2.9
2.1
39.3
-79.4
-84.5
5.9
-.7
36.6
-58.8
-69.4
7.6
3.0
93.6
-60.4
-75.7
11.0
4.3
113.1
-71.5
-87.5
12.4
3.6
203.9
-50.4
-67.5
8.6
8.5
Mutual funds
All other
Nonfinancial corporations
Financial corporations
Foreign shares purchased in United States
Flow of Funds
1.58
A43
DIRECT A N D INDIRECT S O U R C E S OF F U N D S TO CREDIT MARKETS
Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates.
1983'
Transaction category, or sector
1980
1981
1982
1983
1984
H2
I Total funds advanced in credit markets to domestic
nonfinancial sectors
1984'
1985'
1986
1985r
HI
H2
HI
H2
HI'
344.9
375.8
387.4
548.8
756.3
869.3
592.2
727.8
784.8
732.6 1,006.1
705.4
By public agencies and foreign
Total net advances
U.S. government securities
Residential mortgages
FHLB advances to savings and loans
Other loans and securities
94.9
15.8
31.7
7.1
40.2
104.4
17.1
23.5
16.2
47.7
115.4
22.7
61.0
.8
30.8
115.3
27.6
76.1
-7.0
18.6
154.6
36.0
56.5
15.7
46.5
203.3
47.2
94.6
14.2
47.3
107.9
20.0
71.5
-1.8
18.2
132.5
26.8
52.7
15.7
37.5
176.6
45.2
60.2
15.7
55.5
201.8
53.1
85.6
11.7
51.4
204.9
41.3
103.7
16.7
43.2
269.9
81.5
121.0
13.5
53.9
7
8
9
10
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
23.7
45.6
4.5
21.1
24.0
48.2
9.2
23.0
15.9
65.5
9.8
24.1
9.7
69.8
10.9
24.9
17.4
73.3
8.4
55.5
17.8
101.5
21.6
62.4
9.7
70.5
12.4
15.3
9.0
74.0
8.8
40.7
25.7
72.5
8.0
70.4
28.8
98.2
23.7
51.0
6.7
104.9
19.5
73.8
14.6
127.3
9.8
118.2
11
12
Agency and foreign borrowing not in line 1
Sponsored credit agencies and mortgage pools
Foreign
44.8
23.8
47.4
23.5
64.9
16.0
67.8
17.4
74.9
6.1
101.5
1.7
68.8
15.5
69.8
35.5
80.0
-23.3
92.9
-4.1
110.2
7.5
129.5
24.3
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
318.7
107.1
30.3
20.3
70.0
98.1
7.1
342.3
115.9
23.4
19.8
53.5
145.9
16.2
352.9
203.1
44.2
14.8
-5.3
96.9
.8
518.7
226.9
53.7
14.6
55.0
161.5
-7.0
682.7
237.8
50.4
32.6
98.5
279.1
15.7
769.2
277.0
152.4
41.2
84.8
228.1
14.2
568.6
205.0
51.8
9.1
84.0
217.0
-1.8
700.5
224.4
42.8
25.6
109.9
313.6
15.7
664.9
251.2
58.0
39.6
87.0
244.7
15.7
619.6
241.7
67.5
49.7
72.0
200.4
11.7
918.8
312.2
237.3
32.7
97.5
255.9
16.7
589.3
258.5
19.9
93.5
61.1
169.8
13.5
Private financial intermediation
20 Credit market funds advanced by private financial
institutions
71
Commercial banking
??. Savings institutions
23
Insurance and pension funds
24
Other finance
286.2
107.6
51.3
93.2
34.0
320.2
106.5
26.2
93.5
94.0
261.9
110.2
21.8
86.2
43.7
391.9
144.3
135.6
97.8
14.1
550.5
168.9
149.2
124.0
108.3
554.4
186.3
83.4
141.0
143.6
449.3
168.8
143.9
105.7
30.9
581.8
184.2
173.5
144.5
79.5
519.1
153.5
124.9
103.5
137.2
471.3
133.8
63.0
121.8
152.7
637.4
238.8
103.9
160.1
134.5
573.0
106.9
102.0
130.9
233.2
2
3
4
5
6
2.6
27
Sources of funds
Private domestic deposits and RPs
Credit market borrowing
286.2
170.8
20.6
320.2
214.5
54.5
261.9
195.2
25.2
391.9
212.2
26.2
550.5
317.6
64.1
554.4
204.8
85.3
449.3
235.5
54.3
581.8
300.2
64.4
519.1
334.9
63.8
471.3
203.0
61.9
637.4
206.6
108.8
573.0
222.9
59.6
2.8
29
30
31
32
Other sources
Foreign funds
Treasury balances
Insurance and pension reserves
Other, net
94.8
-25.1
-2.6
88.9
33.6
51.2
-23.7
-1.1
89.6
-13.6
41.5
-31.4
6.1
92.5
-25.7
153.4
16.3
-5.3
110.6
31.8
168.8
5.4
4.0
112.5
46.8
264.2
17.7
10.3
107.0
129.2
159.5
46.2
-22.4
122.4
13.3
217.2
3.0
-.1
146.5
67.8
120.4
7.8
8.2
78.5
25.9
206.5
11.2
14.4
97.4
83.5
322.0
24.3
6.1
116.6
175.0
290.6
.2
-5.5
109.2
186.7
53.1
34.2
7.0
-11.7
-4.6
28.2
76.6
37.1
11.1
-4.0
1.4
31.0
116.3
69.9
25.0
2.0
-1.3
20.6
153.0
95.5
39.0
-12.7
15.1
16.2
196.4
132.9
29.6
-3.4
8.9
28.3
300.2
150.9
59.2
13.2
51.8
25.1
173.6
87.3
37.7
-4.5
31.9
21.2
183.1
142.2
25.0
-26.8
15.7
26.9
209.6
123.6
34.3
19.9
2.2
29.7
210.2
130.8
20.5
25.4
7.3
26.3
390.2
171.0
98.0
1.0
96.3
24.0
75.9
50.5
-19.4
34.9
-14.7
24.6
39 Deposits and currency
40
Currency
41
Checkable deposits
42
Small time and savings accounts
Money market fund shares
43
44
Large time deposits
45
Security RPs
46
Deposits in foreign countries
183.9
10.3
6.5
82.3
29.2
45.9
6.8
2.8
222.4
9.5
18.5
47.3
107.5
36.0
5.2
-1.7
204.5
9.7
18.6
135.7
24.7
5.2
11.1
-.4
229.7
14.3
28.8
215.3
-44.1
-6.3
18.5
3.1
321.1
8.6
27.8
150.7
47.2
84.9
7.0
-5.1
215.1
12.4
42.0
137.5
-2.2
14.0
13.4
-2.1
248.7
17.5
16.9
147.8
-4.2
53.2
21.8
-4.3
311.3
13.1
29.4
136.4
30.2
93.4
10.8
-2.0
330.9
4.1
26.3
164.9
64.2
76.5
3.1
-8.2
215.9
15.8
18.2
167.1
4.2
-.8
14.3
-2.9
214.3
9.0
65.8
108.0
-8.6
28.9
12.5
-1.3
240.0
10.9
84.9
117.5
29.0
3.5
-11.9
6.2
47 Total of credit market instruments, deposits and
currency
237.0
299.0
320.7
382.7
517.4
515.3
422.3
494.4
540.5
426.0
604.5
315.9
48
49
50
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
25.7
89.8
-4.0
26.2
93.6
-.7
28.6
74.2
-7.3
20.4
75.5
41.3
20.3
80.6
60.9
23.3
72.1
80.1
17.8
79.0
61.4
17.4
83.1
43.7
23.2
78.1
78.2
27.7
76.1
62.2
20.2
69.4
98.1
37.0
97.2
118.4
MEMO: Corporate equities not included above
51 Total net issues
57
Mutual fund shares
53 Other equities
54 Acquisitions by financial institutions
55 Other net purchases
21.2
4.5
16.8
22.2
-1.0
-3.3
6.0
-9.3
19.9
-23.2
33.6
16.8
16.8
27.6
6.0
67.0
32.1
34.9
46.8
20.2
-31.1
38.0
-69.1
8.2
-39.4
37.5
103.4
-65.9
33.3
4.1
52.1
28.7
23.4
35.6
16.5
-40.1
39.3
-79.4
-4.1
-36.0
-22.2
36.6
-58.8
20.6
-42.7
33.3
93.6
-60.4
54.0
-20.7
41.6
113.1
-71.5
12.6
29.0
153.4
203.9
-50.4
34.8
118.7
75
Private domestic nonfinancial investors
33 Direct lending in credit markets
34
U.S. government securities
35
State and local obligations
36 Corporate and foreign bonds
37 Open market paper
38
Other
NOTES BY LINE NUMBER.
1.
2.
6.
11.
13.
18.
26.
27.
29.
30.
Line 1 of table 1.57.
Sum of lines 3-6 or 7-10.
Includes farm and commercial mortgages.
Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also
sum of lines 28 and 47 less lines 40 and 46.
Includes farm and commercial mortgages.
Line 39 less lines 40 and 46.
Excludes equity issues and investment company shares. Includes line 19.
Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates, less
claims on foreign affiliates and deposits by banking in foreign banks.
Demand deposits and note balances at commercial banks.
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
2.10
Domestic Nonfinancial Statistics • February 1987
N O N F I N A N C I A L B U S I N E S S ACTIVITY Selected Measures'
1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1986
Measure
1983
1984
1985
Mar.
Apr.
May
June
July
Aug.
Sept/
Oct/
Nov.
1 Industrial production
109.2
121.8
124.5
123.6
124.7
124.2
124.2
124.9
125.1
125.1
125.2
125.9
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
113.9
114.7
109.3
121.7
111.2
102.8
127.1
127.8
118.2
140.5
124.9
114.6
131.7
132.0
120.7
147.1
130.6
114.7
131.2
130.6
121.8
142.3
133.3
113.3
132.7
132.1
124.5
142.3
134.5
113.8
132.4
131.6
124.3
141.2
135.1
113.0
132.4
131.1
124.4
140.0
137.0
113.1
133.2
132.0
125.2
141.0
137.3
113.6
133.8'
132.6r
125.1
142.5r
137.8
113.2
133.6
132.5
125.7
142.8
137.2
113.5
133.8
132.7
124.7
143.3
137.8
113.3
134.6
133.5
125.6
144.1
138.4
113.9
110.2
123.9
127.1
127.2
128.7
128.2
128.3
129.2
129.5
129.5
129.6
130.5
79.9
78.2
2
3
4
5
6
7
Industry groupings
8 Manufacturing
Capacity utilization (percent) 2
9
Manufacturing
10 Industrial materials industries
11 Construction contracts (1977 = 100)3
r
74.0
75.3
80.8
82.3
80.3
80.2
79.1
78.5
79.9
78.7
79.4
78.1
79.3
78.0
79.7
78.3
79.7
77.9r
79.6
78.0
79.5
77.8
138.0
150.0
161.0
149.0
176.0
160.0
161.0
163.0
168.0
158.0
170.0
171.0
12
13
14
15
16
17
18
19
20
21
Nonagricultural employment, total 4
Goods-producing, total
Manufacturing, total
Manufacturing, production-worker . . .
Service-producing
Personal income, total
Wages and salary disbursements
Manufacturing
Disposable personal income 5
Retail sales (1977 = 100)6
109.4
95.9
93.6
88.6
115.0
176.6
168.7
149.0
176.0
162.0
114.5
101.6
98.6
94.1
120.0
193.5
184.8
164.6
193.6
179.0
118.5
102.9
98.7
93.5
125.0
206.2
197.8
172.5
205.0
190.6
120.6
102.5
97.8
92.4
128.2
214.3
206.4
176.4
213.7
193.7
121.0
102.9
97.8
92.4
128.6
216.9
206.8
175.8
216.5
195.4
121.2
102.6
97.5
92.1
129.0
216.6
207.1
176.1
215.9
197.0
121.1
102.1
97.2
91.8
129.0
216.6
207.6
175.4
215.5
197.5
121.4
102.2
97.1
91.7
129.4
217.2'
208.5
175.5
215.8r
198.9
121.6
102.2
97.1
91.7
129.7
217.6''
209.6
176.6
215.9'
201.7
121.9
102.1
97.0
91.7
130.2
218.2
210.1
176.5
216.4
213.0
122.3
102.2
97.2
91.8
130.7
219.0
211.5
179.0
216.9
201.9
122.6
102.3
97.3
92.2
131.0
219.7
212.6
178.0
217.2
202.9
22
23
Prices 7
Consumer
Producer finished goods
298.4
285.2
311.1
291.1
322.2
293.7
326.0
288.0
325.3
287.2
326.3
288.9
327.9
289.3
328.0
287.6r
328.6
288.3
330.2
287.5
330.5
290.5
330.8
290.7
1. A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See " A Revision of the Index of
Industrial Production" and accompanying tables that contain revised indexes
( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE BULLETIN, v o l . 71
(July 1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September BULLETIN.
2. Ratios of indexes of production to indexes of capacity. Based on data from
Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential,
nonresidential and heavy engineering, from McGraw-Hill Information Systems
Company, F. W. Dodge Division.
4. Based on data in Employment and Earnings (U.S. Department of Labor).
Series covers employees only, excluding personnel in the Armed Forces.
5. Based on data in Survey of Current Business (U.S. Department of Commerce).
6. Based on Bureau of Census data published in Survey of Current Business.
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
A45
LABOR FORCE, E M P L O Y M E N T , 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.
1986
Category
1983
1984
1985
Apr.
May
June
July
Aug.
Sept.
Oct.'
Nov.
HOUSEHOLD SURVEY DATA
1 Noninstitutiona! population1
176,414
178,602
180,440
182,387
182,545
182,732
182,906
183,074
183,261
183,450
183,628
2 Labor force (including Armed Forces) 1
3 Civilian labor force
Employment
Nonagricultural industries 2
4
5
Agriculture
Unemployment
6
Number
7
Rate (percent of civilian labor force) . . .
8 Not in labor force
113,749
111,550
115,763
113,544
117,695
115,461
119,473
117,234
119,898
117,664
120,345
118,116
120,296
118,072
120,428
118,182
120,484
118,220
120,746
118,482
120,919
118,654
97,450
3,383
101,685
3,321
103,971
3,179
105,670
3,222
105,950
3,160
106,508
3,165
106,769
3,112
107,107
3,048
106,770
3,121
107,091
3,149
107,146
3,225
10,717
9.6
62,665
8,539
7.5
62,839
8,312
7.2
62,745
8,342
7.1
62,914
8,554
7.3
62,647
8,443
7.1
62,387
8,190
6.9
62,610
8,027
6.8
62,646
8,329
7.0
62,777
8,242
7.0
62,704
8,283
7.0
62,709
90,196
94,461
97,698
99,783
99,918
99,843
100,105
100,283
100,560"
100,820
101,069
18,434
952
3,948
4,954
20,881
5,468
19,694
15,869
19,412
974
4,345
5,171
22,134
5,682
20,761
15,984
19,426
969
4,661
5,300
23,195
5,924
21,929
16,295
19,245
821
4,972
5,266
23,715
6,228
22,825
16,711
19,201
790
4,974
5,265
23,783
6,261
22,924
16,720
19,135
772
4,947
5,167
23,773
6,295
23,072
16,682
19,121
768
4,980
5,288
23,841
6,334
23,176
16,597
19,123
753
5,012
5,255
23,893
6,364
23,255
16,628
19,105'
743'
5,010'
5,316'
23,924'
6,388'
23,300'
16,774'
19,128
747
4,997
5,318
24,003
6,407
23,361
16,859
19,163
741
5,008
5,346
24,022
6,436
23,481
16,872
ESTABLISHMENT SURVEY DATA
9 Nonagricultural payroll employment3
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).
A46
2.12
Domestic Nonfinancial Statistics • February 1987
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION
Seasonally adjusted
1985
1985
1986
Series
Q4
Q1
Q2
Q3
Output (1977 = 100)
1 Total industry
124.7
125.0
124.3
107.1
112.8
105.4
110.5
100.1
109.5
127.4
128.4
128.3
5 Primary processing
110.3
137.8
111.5
138.5
111.1
138.8
111.9
140.1
6 Advanced processing
114.3
114.5
113.4
7 Materials
121.1
82.6
113.9
114.0
124.8
113.4
120.9
79.0
115.7
116.2
128.8
115.3
118.8
75.2
116.8
117.0
130.2
115.4
102.6
102.2
100.8
3 Utilities
8 Durable goods
9
Metal materials
10 Nondurable goods
11 Textile, paper, and chemical
12
Paper
13 Energy materials
Chemical
14
Previous cycle 1
Latest cycle 2
High
Q2
Q3
Q1
Q4
Q2
Q3'
Utilization rate (percent)
155.4
156.3
157.1
157.9
80.2
80.0
79.2
79.2
132.5
135.7
132.1
136.3
132.1
136.9
137.5
149.0
80.9
83.2
79.6
81.1
75.6
79.5
73.0
79.4
159.5
160.5
161.4
162.3
79.9
80.0
79.5
79.7
133.1
175.3
133.6
176.7
134.0
177.9
134.5
179.2
82.8
78.6
83.5
78.4
82.9
78.0
83.2
78.0
113.4
143.6
144.2
144.7
145.3
79.6
79.4
78.3
78.1
118.7
72.6
118.9
119.6
159.0
115.5
138.6
138.0
136.5
143.6
159.9
115.0
139.0
138.4
137.3
144.0
160.7
114.5
139.5
138.8
138.1
144.3
161.5
114.0
139.9
139.2
76.2
71.5
82.2
82.7
91.4
79.0
75.6
68.7
83.2
83.9
93.8
80.1
73.9
65.6 r
83.8
84.3
94.2r
80.CK
73.6
64.1
85.6
86.5
97.3
81.3
99.4
120.9
121.1
121.3
121.4
84.9
84.4
82.9
81.2
Apr.
May
96.6
110.6
1985
High
Q1
Capacity (percent of 1977 output)
2 Mining
4 Manufacturing
Q4
Aug.
Low
Low
June
July
Aug/
Sept.
Oct.'
Capacity utilization rate (percent)
15 Total industry
88.6
72.1
86.9
69.5
80.6
79.0
79.5
79.1
79.0
77.2
79.2
79.0
79.0
79.3
16 Mining
92.8
95.6
87.8
82.9
95.2
88.5
76.9
78.0
81.6
81.5
77.9
80.1
76.4
80.0
75.5
79.3
74.9
79.2
73.5
79.9
73.1
78.8
72.4
79.7
72.0
80.4
71.5
80.6
17 Utilities
18 Manufacturing
19 Primary processing . . .
87.7
69.9
86.5
68.0
80.3
79.1
79.9
79.4
79.3
79.7
79.8
79.6
79.5
79.9
91.9
86.0
68.3
71.1
89.1
85.1
65.1
69.5
82.5
79.3
82.4
77.4
83.2
78.5
82.9
78.0
82.7
77.7
82.9
78.4
83.2
78.0
83.6
77.7
83.5
77.7
83.9
78.1
20 Advanced processing .
92.0
70.5
89.1
68.4
79.8
78.5
78.7
78.1
78.0
78.3
77.9
78.0
77.8
78.2
21 Materials
91.8
99.2
64.4
67.1
89.8
93.6
60.9
45.7
76.8
70.2
74.5
66.0
74.9
68.3
73.7
65.2
73.2
63.2
73.7
63.8
73.5
63.8
73.5
64.7
73.5
65.1
74.0
65.9
22 Durable goods
23
Metal materials
24 Nondurable goods . . . .
25
Textile, paper, and
chemical
26
Paper
27
Chemical
28 Energy materials
91.1
66.7
88.1
70.6
81.6
82.5
83.6
83.5
84.3
85.0
85.5
86.1
85.9
86.3
92.8
98.4
92.5
64.8
70.6
64.4
89.4
97.3
87.9
68.6
79.9
63.3
81.7
89.7
78.7
83.4
93.0
79.4
83.6
93.6
79.4
84.2
93.1
80.2
85.1
95.9
80.4
85.6
97.8
80.2
86.5
97.9
81.2
87.4
96.1
82.6
86.9
95.9
82.0
87.4
94.6
86.9
94.0
82.2
84.8
83.7
82.8
82.9
83.1
82.3
80.6
80.6
79.8
79.8
1. Monthly high 1973; monthly low 1975.
2. Monthly highs 1978 through 1980; monthly lows 1982.
NOTE. These data also appear in the Board's G.3 (402) release. For address, see
inside front cover.
Selected Measures
2.13
INDUSTRIAL PRODUCTION
Indexes and Gross Value
A47
•
Monthly data are seasonally adjusted
Grouping
1977
proportion
1985
avg.
1985
Nov.
1986
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug/
Sept.
Oct.''
Nov/
Index (1977 = 100)
MAJOR MARKET
100.00
123.8
124.8
125.6
126.2
125.3
123.6
124.7
124.2
124.2
124.9
125.1
125.1
125.2
125.9
2 Products
3 Final products
Consumer goods
4
5
Equipment
57.72
44.77
25.52
19.25
130.8
131.1
120.2
145.4
132.8
133.1
122.7
147.0
133.0
133.2
123.3
146.4
134.0
133.9
123.8
147.5
132.9
132.8
123.3
145.4
131.2
130.6
121.8
142.3
132.7
132.1
124.5
142.3
132.4
131.6
124.3
141.2
132.4
131.1
124.4
140.0
133.2
132.0
125.2
141.0
133.8
132.6
125.1
142.5
133.6
132.5
124.7
142.8
133.8
132.7
124.7
143.3
134.6
133.5
125.6
144.1
Intermediate products
6
7 Materials
12.94
42.28
130.0
114.2
131.8
113.9
132.0
115.4
134.2
115.5
133.4
114.8
133.3
113.3
134.5
113.8
135.1
113.0
137.0
113.1
137.3
113.6
137.8
113.2
137.2
113.5
137.8
113.3
138.4
113.9
6.89
2.98
1.79
1.16
.63
1.19
3.91
1.24
1.19
.96
1.71
112.9
114.0
112.0
98.9
136.3
116.9
112.2
131.0
131.8
119.8
94.3
115.4
115.6
114.1
95.6
148.6
117.7
115.3
138.8
141.3
124.6
93.1
115.3
113.9
110.4
94.6
139.8
119.0
116.4
140.4
143.2
123.3
95.1
116.0
116.2
118.2
105.5
141.7
113.3
115.8
133.2
135.7
125.1
98.0
116.6
117.6
119.4
107.1
142.1
114.9
115.8
135.1
137.6
124.4
97.0
112.4
110.4
106.3
93.7
129.6
116.6
113.9
133.7
136.0
121.2
95.5
115.9
116.4
115.1
100.8
141.5
118.4
115.5
138.8
140.6
121.8
95.0
113.8
113.2
110.3
94.8
139.1
117.4
114.3
133.9
135.8
123.3
95.0
114.3
113.7
112.2
99.3
136.1
116.1
114.8
137.5
139.1
122.5
94.1
116.3
116.4
114.5
95.3
150.3
119.1
116.3
138.9
141.6
126.6
94.1
115.7
114.5
110.4
87.8
152.4
120.7
116.7
139.4
142.5
125.8
95.1
117.4
117.0
116.8
96.2
155.1
117.4
117.7
141.2
143.5
126.2
96.0
115.9
112.1
107.7
91.9
137.1
118.6
118.9
141.9
143.5
128.1
97.1
116.8
112.4
107.5
92.3
19 Nondurable consumer goods
20 Consumer staples
21
Consumer foods and tobacco
22
Nonfood staples
23
Consumer chemical products ..
24
Consumer paper products
25
Consumer energy
26
Consumer fuel
27
Residential utilities
18.63
15.29
7.80
7.49
2.75
1.88
2.86
1.44
1.42
122.9
129.0
128.8
129.2
149.1
141.9
101.8
88.6
115.3
125.3
131.3
130.5
132.1
154.8
143.2
103.1
89.8
116.6
126.3
132.5
131.6
133.4
153.6
146.5
105.4
91.7
119.4
126.6
132.8
130.1
135.6
156.3
148.9
107.0
94.1
120.1
125.8
132.3
131.1
133.5
158.3
143.4
103.2
92.0
114.5
125.3
131.6
130.3
133.0
156.4
143.1
104.0
92.2
116.1
127.7
134.3
131.9
136.7
163.1
145.1
106.0
93.7
118.4
128.1
135.0
132.4
137.7
162.4
148.6
106.8
96.4
117.5
128.1
135.1
133.3
137.0
163.6
147.1
104.8
91.8
118.1
128.4
135.3
132.2
138.5
166.4
146.4
106.6
91.2
122.3
128.6
135.5
133.2
137.9
163.4
147.7
107.1
94.9
119.6
127.4
134.3
132.2
136.4
161.1
145.7
106.7
92.5
121.2
127.9
134.7
131.9
137.7
161.7
149.3
106.9
92.2
128.8
135.6
Equipment
28 Business and defense equipment
29
Business equipment
30
Construction, mining, and farm ..
31
Manufacturing
32
Power
33
Commercial
34
Transit
35
Defense and space equipment
18.01
14.34
2.08
3.27
1.27
5.22
2.49
3.67
146.0
139.6
64.3
110.7
83.5
217.9
105.4
170.6
148.2
140.8
65.1
110.5
84.1
218.6
109.7
177.2
147.8
140.0
66.3
111.6
85.4
217.0
105.5
178.5
149.1
141.5
65.3
113.0
82.9
217.8
112.7
178.7
147.8
140.5
63.0
112.9
82.3
216.8
111.7
176.3
145.5
137.7
59.5
112.4
82.0
214.3
104.3
176.2
146.6
138.6
58.6
111.9
83.0
213.4
112.1
178.0
146.0
137.9
60.9
111.9
82.9
212.9
107.3
178.0
145.1
136.6
61.9
111.7
83.5
208.2
108.8
178.4
146.4
137.9
60.6
112.6
81.7
214.5
103.9
179.5
147.8
139.3
58.3
113.3
81.7
217.5
106.9
181.0
148.1
139.4
58.1
113.0
80.3
215.1
113.8
182.0
148.4
139.4
57.8
113.2
80.4
215.7
112.4
183.6
149.1
140.1
5.95
6.99
5.67
1.31
118.3
140.0
143.9
122.9
120.5
141.5
145.3
125.4
119.8
142.4
146.2
126.2
124.0
142.9
147.2
124.4
122.6
142.6
146.7
124.9
122.6
142.5
146.4
125.6
123.6
143.8
148.0
125.8
123.5
145.0
148.3
130.7
124.1
147.9
151.6
131.9
124.0
148.6
153.3
128.3
125.4
148.4
152.5
130.6
124.6
147.8
152.2
129.0
125.0
148.6
152.7
131.1
125.7
20.50
4.92
5.94
9.64
4.64
121.4
100.3
158.0
109.7
84.8
121.2
100.7
154.0
111.4
87.8
121.9
101.1
154.1
112.8
87.9
122.2
103.5
153.8
112.2
85.2
121.3
103.2
153.0
111.0
83.0
119.3
99.9
153.7
108.0
79.6
120.2
99.3
154.8
109.4
82.9
118.4
96.4
152.3
108.8
78.9
117.8
96.3
151.8
107.9
76.7
118.8
96.7
154.3
108.2
77.4
118.8
95.2
155.6
108.1
76.9
118.8
95.2
154.8
108.7
78.2
119.1
96.0
154.3
109.3
78.7
120.0
97.3
155.1
110.0
1 Total index
Consumer goods
8 Durable consumer goods
9 Automotive products
10
Autos and trucks
11
Autos, consumer
12
Trucks, consumer
13
Auto parts and allied goods
14 Home goods
15
Appliances, A/C and TV
16
Appliances and TV
17
Carpeting and furniture
18
Miscellaneous home goods
Intermediate products
36 Construction supplies
37 Business supplies
38 General business supplies
39 Commercial energy products
Materials
40 Durable goods materials
41
Durable consumer parts
42
Equipment parts
43
Durable materials n.e.c
44
Basic metal materials
119.8
120.2
143.8
138.3
113.5
81.0
216.8
113.1
184.4
45 Nondurable goods materials
46
Textile, paper, and chemical
materials
47
Textile materials
48
Pulp and paper materials
49
Chemical materials
50
Miscellaneous nondurable materials
10.09
112.2
113.3
114.9
116.2
116.1
114.8
116.5
116.5
117.7
118.9
119.7
120.6
120.4
121.2
7.53
1.52
1.55
4.46
2.57
112.2
98.7
124.1
112.7
112.1
113.4
106.1
123.6
112.4
112.8
115.0
103.8
129.0
114.0
114.4
116.5
104.1
129.7
116.2
115.4
116.5
107.5
128.8
115.4
115.0
115.5
105.7
128.0
114.5
112.8
115.9
106.7
129.0
114.5
118.2
116.9
108.4
128.6
115.7
115.3
118.2
109.5
132.7
116.1
116.4
119.0
111.2
135.6
115.9
118.3
120.5
113.4
136.0
117.5
117.2
121.8
116.4
133.7
119.6
117.1
121.3
116.0
133.7
118.8
117.7
122.1
51 Energy materials
52 Primary energy
53 Converted fuel materials
11.69
7.57
4.12
103.4
107.2
96.4
101.8
106.5
93.3
104.5
108.1
97.9
103.0
106.9
95.8
102.1
106.7
93.6
101.4
107.4
90.5
100.4
106.2
89.7
100.5
106.7
89.2
100.8
106.5
90.4
99.9
104.8
90.9
97.9
103.7
87.3
97.9
103.1
88.3
97.0
101.6
88.6
97.0
A48
2.13
Domestic Nonfinancial Statistics • February 1987
INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued
Grouping
SIC
code
1977
proportion
1986
1985
avg.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug/
Sept.
Oct.?
Nov.
Index (1977 = 100)
MAJOR INDUSTRY
1 Mining and utilities
Mining
2
3
Utilities
4 Manufacturing
Nondurable
5
6
Durable
15.79
9.83
5.96
84.21
35.11
49.10
110.0
108.8
111.9
126.4
125.1
127.3
108.8
106.9
111.9
127.8
127.2
128.2
110.2
107.4
114.8
128.2
127.5
128.7
109.8
108.1
112.5
129.4
129.3
129.5
106.8
105.1
109.7
128.7
128.7
128.7
105.4
103.0
109.3
127.2
127.7
126.8
104.2
101.0
109.4
128.7
129.6
128.1
103.1
99.8
108.5
128.2
129.9
127.0
102.6
98.9
108.6
128.3
131.2
126.2
101.8
97.1
109.7
129.2
131.7
127.4
100.9
96.4
108.3
129.5
132.2
127.5
100.9
95.5
109.7
129.5
131.6
128.0
100.9
94.9
110.9
129.6
132.0
127.9
100.7
94.2
111.3
130.5
133.1
128.6
10
11.12
13
14
.50
1.60
7.07
.66
75.0
126.8
106.2
118.3
78.3
125.8
103.6
118.0
77.3
128.4
104.2
114.6
73.5
130.8
104.9
113.5
77.2
126.5
101.1
116.8
75.9
124.7
99.2
111.6
76.0
124.4
96.2
115.0
72.0
124.0
95.1
112.4
65.9
127.3
93.3
114.5
69.2
120.2
92.4
111.8
70.9
122.2
90.7
114.8
120.8
90.2
110.7
116.1
90.0
112.8
88.2
7
8
9
10
Mining
Metal
Coal
Oil and gas extraction
Stone and earth minerals
11
12
13
14
15
Nondurable
manufactures
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
20
21
22
23
26
7.96
.62
2.29
2.79
3.15
130.2
100.2
103.2
100.9
127.6
131.5
102.8
110.0
103.8
128.9
132.1
100.3
107.7
104.5
131.3
132.0
93.8
107.9
105.5
133.6
132.9
97.0
109.9
102.8
132.6
132.2
93.6
108.0
102.8
132.4
133.1
100.3
111.4
103.1
134.1
133.7
101.6
111.3
102.6
133.2
134.6
97.6
112.6
101.7
137.2
134.3
97.9
113.4
102.5
138.1
135.1
97.1
114.7
102.5
138.6
134.4
97.2
116.0
102.7
137.2
133.3
16
17
18
19
20
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastic products
Leather and products
27
28
29
30
31
4.54
8.05
2.40
2.80
.53
153.9
127.1
86.8
146.9
68.5
156.8
128.2
87.6
150.1
68.7
157.6
128.1
88.9
149.4
66.4
160.9
131.7
94.7
150.2
65.4
156.7
132.0
90.1
151.1
64.8
157.8
130.2
88.6
147.8
62.7
161.6
132.8
91.3
146.8
61.5
161.9
131.5
95.7
150.1
59.5
164.0
134.2
91.8
152.2
57.9
165.4
134.1
90.6
155.5
61.9
164.6
134.4
94.0
155.5
62.0
162.9
133.9
93.3
155.1
60.9
167.0
133.5
92.0
156.4
59.8
Durable manufactures
21 Lumber and products
22 Furniture and fixtures
23 Clay, glass, stone p r o d u c t s . . . .
24
25
32
2.30
1.27
2.72
113.4
139.7
115.5
115.0
142.2
116.7
116.1
140.5
118.2
120.5
141.2
120.0
120.3
143.2
119.3
120.7
142.9
120.0
121.3
145.9
121.6
121.6
146.2
120.2
120.9
147.1
120.8
120.8
149.5
119.6
122.5
148.3
119.7
121.8
147.9
121.6
148.0
119.0
Primary metals
Iron and steel
Fabricated metal products . . . .
Nonelectrical machinery
Electrical machinery
33
331.2
34
35
36
5.33
3.49
6.46
9.54
7.15
80.5
70.4
107.3
145.3
168.4
82.9
73.9
107.6
144.8
166.9
81.7
71.6
108.2
146.2
168.7
82.4
72.2
109.2
144.9
166.1
80.3
69.5
108.5
143.9
164.8
76.3
64.3
107.6
141.7
165.2
78.1
65.6
108.2
140.8
166.8
74.8
60.2
106.5
141.3
166.0
71.4
58.3
106.6
140.4
163.2
73.6
61.7
105.7
142.6
166.8
73.4
60.8
105.9
142.6
167.2
74.0
61.0
107.2
140.9
167.2
73.8
61.3
107.9
142.0
167.6
108.0
142.8
168.9
29 Transportation equipment
30
Motor vehicles and p a r t s . . . .
31
Aerospace and miscellaneous
transportation equipment
32 Instruments
33 Miscellaneous manufactures...
37
371
9.13
5.25
121.4
111.5
124.8
112.6
124.0
111.4
128.2
116.5
127.5
116.4
122.6
108.1
126.2
112.6
124.1
108.7
125.1
110.6
125.6
111.2
125.1
108.2
127.7
112.2
125.1
107.0
125.6
107.8
372-6.9
38
39
3.87
2.66
1.46
134.9
139.1
96.1
141.3
139.9
94.8
141.0
140.4
96.6
143.9
141.5
100.9
142.6
141.9
100.9
142.4
142.0
99.0
144.8
142.4
99.2
145.0
140.3
101.0
144.7
139.9
98.3
145.2
141.7
97.5
148.0
142.0
98.3
148.8
141.7
98.1
149.6
140.8
99.9
149.9
140.8
4.17
119.7
120.1
122.4
119.7
119.5
119.8
121.6
121.7
123.1
125.4
122.4
123.8
125.3
24
25
26
27
28
Utilities
34 Electric
116.9
103.5
137.5
167.8
91.3
75.0
Gross value (billions of 1978 dollars, annual rates)
MAJOR MARKET
35 Products, total
517.5 1,650.9 1,680.6 1,676.6 1,702.1 1,686.5 1,660.8 1,686.3 1,687.6 1,676.7 1,669.9 1,681.3 1,682.2 1,685.9 1,694.5
36 Final
37
Consumer goods .
38
Equipment
39 Intermediate
405.7 1,282.3 1,304.9 1,302.5 1,321.2 1,310.3 1,282.5 1,307.0 1,301.1 1,289.5 1,282.7 1,292.6 1,296.5 1,295.2 1,303.2
272.7 820.7 838.1 841.7 850.7 845.3 832.0 852.3 852.4 843.8 842.3 846.9 843.6 841.6 848.6
133.0 461.7 466.8 460.8 470.5 465.1 450.4 454.7 448.7 445.7 440.4 445.7 452.9 453.7 454.6
111.9 368.6 375.7 374.1 380.8 376.2 378.3 379.3 386.4 387.2 387.1 388.7 385.7 390.7 391.2
• A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See " A Revision of the Index of
Industrial Production" and accompanying tables that contain revised indexes
( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE BULLETIN, v o l . 71
(July 1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September BULLETIN.
NOTE. These data also appear in the Board's G. 12.3 (414) release. For address,
see inside front cover.
Selected Measures
2.14
A49
HOUSING A N D CONSTRUCTION
M o n t h l y figures are at s e a s o n a l l y adjusted annual rates e x c e p t as noted.
1986
Item
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Private residential real estate activity (thousands of units)
N E W UNITS
1 Permits authorized
2
1-family
3
2-or-more-family
1,605
902
703
1,682
922
759
1,733
957
777
1,861
1,060
801
1,808
1,033
775
1,834
1,043
791
1,885
1,139
746
1,788
1,092
696
1,792
1,121
671
1,759
1,093
666
1,673
1,039
634
1,603
1,047
556
1,565
1,006
559
4 Started
5
1-family
6
2-or-more-family
1,703
1,067
635
1,749
1,084
665
1,742
1,072
669
2,034
1,335
699
2,001
1,202
799
1,960
1,221
739
2,019
1,242
777
1,853
1,241
612
1,852
1,230
622
1,782
1,137
645
1,795
1,186
609
1,664
1,102
562
1,628
1,090
538
7 Under construction, end of period 1
8
1-family
9
2-or-more-family
1,003
524
479
1,051
556
494
1,063
539
524
1,094
571
522
1,110
581
529
1,099
574
526
1,135
586
549
1,132
597
534
1,151
612
539
1,157
623
533
1,164
630
533
1,154
626
528
1,145
626
519
1,390
924
466
1,652
1,025
627
1,703
1,072
631
1,778
1,075
703
1,725
1,038
687
1,806
1,153
653
1,693
1,127
566
1,829
1,140
689
1,620
1,060
560
1,761
1,067
694
1,763
1,128
635
1,733
1,109
624
1,736
1,170
566
13 Mobile homes shipped
296
296
284
280
266
240
249
239
226
236
232
244
244
Merchant builder activity in 1-family units
14 Number sold
15 Number for sale, end of period 1
622
304
639
358
688
350
735
352
741
352
924
338
880
336
787
336
722
340
698'
349
618
353
732
356
662
359
10 Completed
11
1-family
12 2-or-more-family
Price (thousands of dollars)2
Median
16 Units sold
75.5
80.0
84.3
86.6
89.7
88.7
92.5
92.1
91.2
94.1'
91.1
91.7
93.6
17
89.9
97.5
101.0
104.1
106.6
108.0
110.3
114.6
110.9
116.8'
114.6
112.4
111.6
2,719
2,868
3,217
3,300
3,270
3,200
3,570
3,450
3,390
3,470
3,610
3,770
3,810
69.8
82.5
72.3
85.9
75.4
90.6
77.1
93.0
77.4
93.1
79.8
96.8
80.2
98.1
83.2
101.7
82.6
102.1
79.9
99.2
82.0
100.3
79.4
96.8
79.4
97.3
Units sold
EXISTING UNITS ( 1 - f a m i l y )
18 Number sold
2
Price of units sold (thousands of dollars)
19 Median
20 Average
Value of new construction 3 (millions of dollars)
CONSTRUCTION
21 Total put in place
279,240 327,209 355,570 373,378 373,947 368,027 373,904 374,483 375,397 380,722' 382,603' 382,581' 379,676'
22 Private
23
Residential
24
Nonresidential, total
Buildings
25
Industrial
26
Commercial
27
Other
28
Public utilities and other
228,527 271,973 292,792 305,366 305,682 298,868 303,320 302,573 304,567 309,003' 310,155' 308,617' 307,736'
126,553 155,148 158,818 163,413 164,713 165,645 170,520 172,491 174,478 178,821' 178,761' 178,480' 178,642'
101,974 116,825 133,974 141,953 140,969 133,223 132,800 130,082 130,089 130,182' 131,394' 130,137' 129,094'
29 Public
30
Military
31
Highway
32
Conservation and development
33
Other
12,863
35,789
11,838
41,484
13,746
48,100
12,547
42,432
15,769
59,626
12,619
45,960
15,783
65,222
12,781
48,167
16,381
63,494
13,065
48,029
13,354
60,716
13,131
46,022
14,557
59,763
13,006
45,474
13,658
57,368
13,131
45,925
13,027
57,443
13,263
46,356
12,866'
58,132'
13,277'
45,907'
12,543' 13,18c
60,054' 58,001'
13,315' 14,001'
45,482' 44,955'
12,913'
56,430'
14,435'
45,316'
50,715
2,544
14,143
4,820
29,208
55,232
2,839
16,343
4,654
31,396
62,777
3,283
19,998
4,952
34,544
68,013
3,407
22,129
5,614
36,863
68,264
3,974
22,273
4,372
37,645
69,150
3,673
22,673
4,598
38,215
70,583
3,725
23,240
4,947
38,756
71,910
3,637
22,001
4,729
40,304
70,830
3,761
21,771
4,657
40,411
71,719'
3,553'
21,603'
4,415'
42,148'
72,448' 73,964'
4,132' 5,050'
21,607' 20,552'
4,294' 4,841'
42,415' 43,521'
71,940'
3,695'
20,274'
4,843'
43,128'
1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in prior periods because of changes by the Bureau of the
Census in its estimating techniques. For a description of these changes see
Construction Reports (C-30-76-5), issued by the Bureau in July 1976.
NOTE. Census Bureau estimates for all series except (a) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of
existing units, which are published by the National Association of Realtors. All
back and current figures are available from originating agency. Permit authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning
with 1978.
A50
2.15
Domestic Nonfinancial Statistics • February 1987
CONSUMER A N D PRODUCER PRICES
Percentage changes based o n seasonally adjusted data, e x c e p t as noted
Change from 12
months earlier
Item
Change from 3 months earlier
(at annual rate)
1985
1985
Nov.
Change from 1 month earlier
1986
Index
level
Nov.
1986
(1967
= 100)'
1986
1986
Nov.
Dec.
Mar.
June
Sept.
July
Aug.'
Sept.
Oct.
Nov.
CONSUMER PRICES 2
1 All items
3.6
1.3
5.3
-1.9
1.5
2.2
.0
.2
.3
.2
.3
330.8
2 Food
3 Energy items
4 All items less food and energy
5 Commodities
6
Services
2.3
.8
4.4
2.2
5.7
4.4
-19.6
3.8
1.3
5.2
5.9
3.3
5.4
3.6
6.5
-1.4
-34.2
4.1
.3
6.5
3.4
-12.5
3.1
-.5
5.2
9.4
-19.5
3.7
3.1
4.1
.9
-4.1
.4
.2
.4
.9
-1.9
.3
.3
.3
.4
.7
.3
.2
.3
.3
-2.2
.4
.2
.5
.5
-.7
.3
.2
.4
324.6
341.7
332.5
266.1
405.0
1.4
-.1
-2.4
2.8
2.5
-1.9
4.1
-37.9
3.0
2.2
9.2
16.0
20.7
4.4
5.6
-12.5
-8.1
-66.9
2.5
.7
.4
5.9
-22.3
2.0
2.3
.7
13.0
-36.9
2.2
2.2
-.6'
1.8'
-13.9'
.2
.1
.4
1.4
-.2
.1
.1
.4
-.2
3.7
.2
.4
.3
.9
-4.3
.8
.5
.2
-.1
.0
.3
.3
290.7
283.0
452.9
262.7
310.5
-.5
-.2
-4.3
.3
2.9
.0
-11.8
-1.0
-5.3
-1.3
-.8
2.0
-.6
.2
-.1
.1
.5
.3
-.3
.1
.2
.2
310.4
305.1
-6.4
-5.3
-4.3
-.3
-27.4
.0
47.0
-4.0
1.5
-24.7
-51.3
-.2
1.6
-29.1
7.0
20.1
-13.3
-18.1
3.3'
-6.2'
.3'
2.1
-.8
-5.6
-.8
3.7
.5
2.6
-.9
1.7
-.2
-.7
1.6
235.9
535.3
244.5
PRODUCER PRICES
7 Finished goods
8 Consumer foods
9 Consumer energy
10 Other consumer goods
11 Capital equipment
12 Intermediate materials 3
13 Excluding energy
14
15
16
Crude materials
Foods
Energy
Other
1. Not seasonally adjusted.
2. Figures for consumer prices are those for all urban consumers and reflect a
rental equivalence measure of homeownership after 1982.
3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds.
SOURCE. Bureau of Labor Statistics.
Selected Measures
2.16
A51
GROSS NATIONAL PRODUCT A N D INCOME
Billions of current dollars e x c e p t as noted; quarterly data are at seasonally adjusted annual rates.
1986
1985
Account
1983
1984
1985
Q4
Q3
Ql
Q2
Q3'
GROSS NATIONAL PRODUCT
1 Total
3,405.7
3,765.0
3,998.1
4,030.5
4,087.7
4,149.2
4,175.6
4,240.7
2,234.5
289.1
816.7
1,128.7
2,428.2
331.2
870.1
1,227.0
2,600.5
359.3
905.1
1,336.1
2,627.1
373.3
907.4
1,346.4
2,667.9
362.0
922.6
1,383.2
2,697.9
360.8
929.7
1,407.4
2,732.0
373.9
928.4
1,429.8
2,799.8
414.5
932.8
1,452.4
6 Gross private domestic investment
Fixed investment
7
8
Nonresidential
9
Structures
10
Producers' durable equipment
11
Residential structures
502.3
509.4
356.9
124.0
232.8
152.5
662.1
598.0
416.5
139.3
277.3
181.4
661.1
650.0
458.2
154.8
303.4
191.8
657.4
654.3
459.8
155.0
304.7
194.5
669.5
672.6
474.0
157.2
316.8
198.6
708.3
664.4
459.2
154.6
304.6
205.3
687.3
672.8
457.5
141.5
316.0
215.3
675.8
680.3
459.0
139.5
319.5
221.3
12
13
-7.1
.4
64.1
56.6
11.1
12.2
3.1
3.2
-3.1
16.7
43.8
41.2
14.5
10.5
-4.5
-10.3
14 Net exports of goods and services
15
Exports
16 Imports
-6.1
352.5
358.7
-58.7
382.7
441.4
-78.9
369.8
448.6
-83.7
362.3
446.0
-105.3
368.2
473.6
-93.7
374.8
468.5
-104.5
363.0
467.5
-108.9
370.8
479.7
17 Government purchases of goods and services
18 Federal
19 State and local
675.0
283.5
391.5
733.4
311.3
422.2
815.4
354.1
461.3
829.7
360.9
468.8
855.6
380.9
474.7
836.7
355.7
480.9
860.8
367.6
493.3
874.0
369.3
504.7
3,412.8
1,396.1
573.3
822.7
1,682.5
327.1
3,700.9
1,576.7
675.0
901.7
1,813.1
375.1
3,987.0
1,630.2
700.2
930.0
1,959.8
408.1
4,027.4
1,642.8
710.3
932.5
1,971.9
415.9
4,090.8
1,644.1
709.1
935.0
2,025.5
418.1
4,105.4
1,669.0
710.6
958.4
2,057.7
422.6
4,161.2
1,661.6
703.1
958.5
2,087.4
426.7
4,245.2
1,680.2
730.1
950.1
2,125.2
435.3
-7.1
-1.0
-6.1
64.1
39.2
24.9
11.1
6.6
4.5
3.1
-2.7
5.8
-3.1
9.5
-12.7
43.8
28.6
15.3
14.5
-.1
14.6
-4.5
-15.6
11.1
3,279.1
3,489.9
3,585.2
3,603.8
3,622.3
3,655.9
3,661.4
3,686.4
30 Total
2,719.5
3,032.0
3,222.3
3,243.4
3,287.3
3,340.7
3,376.4
3,396.1
31 Compensation of employees
32
Wages and salaries
Government and government enterprises
33
34
Other
35
Supplement to wages and salaries
36
Employer contributions for social insurance
Other labor income
37
2,020.7
1,676.2
324.3
1,352.3
344.5
170.9
173.6
2,214.7
1,837.0
346.2
1,490.6
377.7
193.1
184.5
2,368.2
1,965.8
372.2
1,593.9
402.4
205.5
196.9
2,380.9
1,976.0
374.2
1,601.8
404.9
206.1
198.8
2,423.6
2,012.8
381.6
1,631.1
410.9
209.1
201.7
2,461.5
2,044.1
387.2
1,656.8
417.4
212.9
204.5
2,480.2
2,058.8
392.5
1,666.3
421.3
214.1
207.3
2,507.4
2,081.1
398.4
1,682.7
426.3
215.9
210.4
190.9
178.4
12.4
236.9
205.3
31.5
254.4
225.2
29.2
249.3
227.7
21.6
262.1
232.7
29.4
265.3
240.9
24.4
289.1
249.6
39.5
277.5
258.0
19.6
2
3
4
5
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
Change in business inventories
Nonfarm
By major type of product
20 Final sales, total
21
Goods
Durable
22
Nondurable
23
24
Services
25
Structures
26 Change in business inventories
27
Durable goods
28
Nondurable goods
29 MEMO: Total GNP in 1982 dollars
NATIONAL INCOME
38 Proprietors' income 1
39
Business and professional 1
40
Farm 1
41 Rental income of persons 2
13.2
8.3
7.6
7.3
8.3
12.8
16.3
16.2
42 Corporate profits 1
Profits before tax 3
43
44
Inventory valuation adjustment
45
Capital consumption adjustment
213.7
207.6
-10.9
17.0
264.7
235.7
-5.5
34.5
280.7
223.2
-.6
58.1
296.3
229.2
6.1
61.0
285.6
235.8
-9.4
59.2
296.4
222.5r
16.5
57. y
293.1
221.1'
10.6
54.8'
302.0
240.4
6.1
55.5
46 Net interest
281.0
307.4
311.4
309.7
307.6
304.9
297.7
292.9
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. Survey of Current Business (Department of Commerce).
A52
2.17
Domestic Nonfinancial Statistics • February 1987
PERSONAL INCOME A N D SAVING
B i l l i o n s o f current dollars; quarterly data are at s e a s o n a l l y a d j u s t e d annual rates. E x c e p t i o n s n o t e d .
1985
1984
Account
Ql
Q4
Q3
Q2
PERSONAL INCOME AND SAVING
2,838.6
1 Total personal income
2 Wage and salary disbursements
3
Commodity-producing industries
4
Manufacturing
5
Distributive industries
6
Service industries
7
Government and government enterprises.
8
9
10
11
12
13
14
15
16
17
Other labor income
Proprietors' income 1
Business and professional 1
Farm 1
Rental income of persons 2
Dividends
Personal interest income
Transfer payments
O l d - a g e survivors, disability, and health insurance benefits.
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
3,110.2
3,314.5
3,323.2
3,382.9
3,432.6
3,483.3
2,012.8
2,044.1
622.0
2,058.8
617.7
467.5
478.9
534.6
381.6
470.5
485.2
549.6
387.2
468.8
484.3
561.3
392.5
201.7
204.5
265.3
240.9
24.4
12.8
79.1
480.8
504.7
263.2
207.3
289.1
249.6
39.5
16.3
1,676.6
523.1
397.4
404.2
425.1
324.3
1.836.8
577.8
439.1
442.2
470.6
346.2
1,966.1
607.7
460.1
469.8
516.4
372.2
1,976.0
608.3
460.7
472.4
521.1
374.2
173.6
190.9
178.4
12.4
13.2
68.7
393.1
442.6
221.7
184.5
236.9
205.3
31.5
8.3
74.7
446.9
455.6
235.7
196.9
254.4
225.2
29.2
7.6
76.4
476.2
487.1
253.4
198.8
249.3
227.7
21.6
7.3
76.3
475.2
491.1
256.5
262.1
232.7
29.4
8.3
76.7
480.6
493.6
256.8
620.8
81.1
480.1
510.1
264.1
120.1
133.5
150.2
150.7
152.9
158.6
159.5
2,838.6
3,110.2
3,314.5
3,323.2
3,382.9
3,432.6
3,483.3
410.5
439.6
486.5
491.2
500.7
497.5
504.8
20 EQUALS: Disposable personal income
2,428.1
2,670.6
2,828.0
2,832.0
2,882.2
2,935.1
2,978.5
21
LESS: Personal outlays
2,297.4
2.501.9
2,684.7
2,712.4
2,756.4
2,789.4
2,825.5
22 EQUALS: Personal saving
130.6
168.7
143.3
119.6
125.8
145.6
153.1
13,963.7
9,138.5
9,930.0
5.4
14,721.1
9,475.4
10,421.0
6.3
14,980.9
9,713.0
10,563.0
5.1
15,040.5
9,774.4
10,537.0
4.2
15,080.3'
9,790.6'
10,577.0
4.4
15,188.6'
9,857.5'
10,723.0
5.0
15,179.9
9,985.0
10,886.0
5.1
27 Gross saving.
463.6
573.3
551.5
541.7
524.1
583.2
539.7
28
29
30
31
592.2
130.6
65.0
-10.9
674.8
168.7
91.0
-5.5
687.8
143.3
107.3
-.6
679.6
119.6
118.8
679.2
125.8
713.0'
153.1
106.6'
-9.4
708.3'
145.6
115.5'
16.5
242.7
153.9
253.9
268.2
161.2
270.1
171.2
273.3
173.4
.0
275.3
171.8
.0
278.9
174.4
.0
-138.0
-197.5
59.5
-155.1
-217.6
62.5
-125.1'
-195.C
69.9'
-173.3'
-232.2'
58.9'
19
LESS: Personal tax and nontax payments
MEMO
Per capita (1982 dollars)
23
Gross national product
24
Personal consumption expenditures
25
Disposable personal income
26 Saving rate (percent)
GROSS SAVING
Gross private saving
Personal saving
Undistributed corporate profits 1
Corporate inventory valuation adjustment.
Capital consumption
allowances
32 Corporate
33 Noncorporate
34 Wage accruals less disbursements
35 Government surplus, or deficit ( - ) , national income and
product accounts
36
Federal
37
State and local
.0
.0
169.0
.0
-128.6
-176.0
47.5
-101.5
-170.0
68.5
-136.3
-198.0
61.7
106.8
6.1
10.6
.0
.0
.0
.0
.0
.0
.0
.0
39 Gross investment
468.8
571.4
545.9
536.2
525.7
579.6
544.3
40 Gross private domestic
41 Net foreign
502.3
-33.5
662.1
661.1
657.4
-90.7
-115.2
-121.2
669.5
-143.8
708.3
-128.6
687.3
-143.0
-3.6
4.6
38 Capital grants received by the United States, net
42 Statistical discrepancy.
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
5.2
-5.5
SOURCE. Survey of Current Business
(Department of Commerce).
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A53
Summary
Millions o f dollars; quarterly data are s e a s o n a l l y adjusted e x c e p t as n o t e d . 1
1985
Item credits or debits
1983
1984
9
10
Q2
Q3"
-46,605
Remittances, pensions, and other transfers
U.S. government grants (excluding military)
-117,677
-28,455'
-32,275
-33,695'
-31,510
-34,038
-31,020
-34,413
-35,458
-36,280
-40,206
-112,522
219,900
-332,422
-1,827
18,751
1,288
-124,439
214,424
-338,863
-2,917
25,188
-525
-31,675
52,498
-84,173
-619
8,262
-422'
-37,352
52,727
-90,079
-1,322
9,255
-32'
-36,459
53,661
-90,120
-1,066
6,517
-7
-35,669
55,149
-90,818
-695
5,325
705
-37,669
55,318
-92,987
-624
5,509
681
-3,194
-6,286
Merchandise trade balance 2
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net 3
Other service transactions, net
-106,466
-67,080
201,820
-268,900
-370
24,841
5,484
1 Balance on current account
6
7
8
Ql
Q4
Q3
3
4
1986
1985
-3,621
-8,536
-3,787
-11,196
-914
-3,087
-937
-3,307
-954
-2,069
-834
-3,245
-789
-3,388
11 Change in U.S. government assets, other than official
-5,005
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 3
3
-5,523
-2,824
-422
-540
-250
-209
-1,346
-1,196
0
-66
-4,434
3,304
-3,130
0
-979
-995
-1,156
-3,858
0
-897
908
-3,869
-121
0
-264
388
-245
-3,148
0
-189
168
-3,126
-115
0
-274
344
-185
16
0
-104
366
-246
280
0
163
508
-391
-43,821
-29,928
-6,513
-7,007
-373
-14,987
-11,127
5,081
-5,082
-3,859
-25,754
-691
1,665
-7,977
-18,752
-5,324
4,009
-1,517
-1,664
-6,152
-19,579
-8,485
418
-1,411
-10,101
-12,533
6,333
-2,842
-6,133
-9,891
-25,357
-14,387
-28,016
-20,507
5,968
6,972
-476
725
545
-1,798
3,037
4,690
13
436
555
-2,657
-1,324
-546
-295
483
522
-1,488
2,577
-81
46
58
2,932
-378
-1,322
-1,976
-171
263
722
-160
79,528
50,342
-118
8,721
8,636
11,947
99,730
33,849
4,704
23,059
12,759
25,359
128,430
40,387
-1,172
20,500
50,859
17,856
33,088
7,276
589
7,484
53,158
20,427
2,232
5,676
22,441
2,382
0
11,130
reserve assets, net (increase, - )
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
0
27,338
0
23,006
0
-1,343'
-3,687'
11,130
27,338
23,006
-1,196
-3,130
5,243
2,601
-8,283
194
-1,220
n.a.
-1,664
-8,806
163
-7,672
2,469
3,256
-177
288
-1,261
363
14,704
14,538
-644
679
662
-531
15,839
12,262
-276
954
3,201
-302
34,151
8,434
-2,057
7,666
18,686
1,422
32,822
3,553
-1,644
3,807
23,018
4,088
53,294
32,187
0
5,125'
3,771'
0
10,316
1,216
0
12,437
-1,505
0
-3,771
-3,993
2,344
1,354
9,100
13,942
222
-3,858
-121
-3,148
-115
16
280
-1,807
2,519
-1,585
2,181
14,025
14,885
-4,304
-6,599
-1,831
-1,002
1,421
-1,938
-2,828
190
64
15
28
22
12
15
22 Change in foreign official assets in the United States
23
24
25
26
27
(increase, +)
U.S. Treasury securities
Other U.S. government obligations
Other U.S. government liabilities 4
Other U.S. liabilities reported by U.S. banks
Other foreign official assets 5
28 Change in foreign private assets in the United States
29
30
31
3?
33
(increase, +) 3
U.S. bank-reported liabilities
U.S. nonbank-reported liabilities
Foreign private purchases of U.S. Treasury securities, net
Foreign purchases of other U.S. securities, net
Foreign direct investments in the United States, net 3
34 Allocation of SDRs
35 Discrepancy
36
37
Statistical discrepancy in recorded data before seasonal
adjustment
11,628
6,111
n.a.
597
17,078
3,432
MEMO
Changes in official assets
U.S. official reserve assets (increase, - )
Foreign official assets in the United States
(increase, +)
4 0 Change in Organization of Petroleum Exporting Countries
official assets in the United States (part of line 22
above)
41 Transfers under military grant programs (excluded from
lines 4, 6, and 10 above)
38
39
1. Seasonal factors are not calculated for lines
38-41.
2. Data are on an international accounts (IA)
basis data, shown in table 3.11, for reasons of
exports are excluded from merchandise data and
3. Includes reinvested earnings.
6, 10, 12-16, 18-20, 22-34, and
basis. Differs from the Census
coverage and timing; military
are included in line 6.
4. Primarily associated with military sales contracts and other transactions
arranged with or through foreign officii agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of
private corporations and state and local governments.
NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business
(Department of Commerce).
A54
International Statistics • February 1987
3.11
U . S . FOREIGN T R A D E
Millions of dollars; monthly data are not seasonally adjusted.
1986
Item
1984
1983
1985
Apr.
1
EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments
Aug.
July
217,865
258,048
325,726
345,276
28,762
30,272
31,764
34,121
29,476
28,695
30,018
3
-57,562
107,861
-132,129
-10,797
-12,842
-12,694
-16,414
-11,871
-11,177
-10,688
NOTE. The data through 1981 in this table are reported by the Bureau of Census
data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of
export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in
the Census basis trade data; this adjustment has been made for all data shown in
the table. Beginning with 1982 data, the value of imports are on a customs
valuation basis.
The Census basis data differ from merchandise trade data shown in table 3.10,
U.S. International Transactions Summary, for reasons of coverage and timing. On
3.12
17,431
19,070
17,604
Oct.
200,486
17,965
17,707
Sept.
2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded
warehouses
Trade balance
213,146
June
May
17,518
193,300
the export side, the largest adjustments are: (1) the addition of exports to Canada
not covered in Census statistics, and (2) the exclusion of military sales (which are
combined with other military transactions and reported separately in the "service
account" in table 3.10, line 6). On the import side, additions are made for gold,
ship purchases, imports of electricity from Canada, and other transactions;
military payments are excluded and shown separately as indicated above.
SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade"
(Department of Commerce, Bureau of the Census).
U.S. RESERVE ASSETS
Millions of dollars, end of period
1986
Type
1984
1983
1985
May
Aug.
Sept.
Oct.
Nov.?
33,747
1 Total
2
Gold stock, including Exchange Stabilization Fund 1
3
Special drawing rights2-3
4
Reserve position in International Monetary Fund 2
5
Foreign currencies 4
34,934
43,191
45,260
46,635
47,430
48,161
48,086
47,166
48,054
11,121
11,096
11,090
11,085
11,084
11,084
11,084
11,084
11,143
11,300
5,025
5,641
7,293
8,066
8,213
8,085
8,250
8,295
8,090
8,310
11,312
11,541
11,952
11,789
12,109
12,114
12,017
11,922
11,575
11,659
6,289
6,656
12,856
14,320
15,229
16,147
16,810
16,785
16,358
16,785
1. Gold held under earmark at Federal Reserve Banks for foreign and international accounts is not included in the gold stock of the United States; see table
3.13. Gold stock is valued at $42.22 per fine troy ounce.
2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based
on a weighted average of exchange rates for the currencies of member countries.
From July 1974 through December 1980, 16 currencies were used; from January
1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in
the IMF also are valued on this basis beginning July 1974.
3.13
July
June
3. Includes allocations by the International Monetary Fund of SDRs as follows:
$867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1,
1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093
million on Jan. 1, 1981; plus transactions in SDRs.
4. Valued at current market exchange rates.
FOREIGN OFFICIAL A S S E T S H E L D AT F E D E R A L R E S E R V E B A N K S
Millions of dollars, end of period
1986
Assets
1984
1983
1985
May
1 Deposits
Assets held in custody
2 U.S. Treasury securities'
3 Earmarked gold2
July
Aug.
Sept.
Oct.
Nov.
190
267
480
253
354
233
227
342
303
224
117,670
14,414
118,000
14,242
121,004
14,245
136,762
14,145
137,820
14,128
144,527
14,131
148,263
14,120
152,275
14,115
156,076
14,110
156,919
14,057
1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S.
Treasury securities payable in dollars and in foreign currencies.
2. Earmarked gold is valued at $42.22 per fine troy ounce.
June
NOTE. Excludes deposits and U.S. Treasury securities held for international
and regional organizations. Earmarked gold is gold held for foreign and international accounts and is not included in the gold stock of the United States.
Summary Statistics
3.14
FOREIGN BRANCHES OF U.S. B A N K S
A55
Balance Sheet Data 1
Millions of dollars, end of period
1986
1983
Asset account
Apr.
May
June
July
Aug.
Sept.
Oct.''
All foreign countries
477,090
453,656
458,012
475,158
459,587
467,565
454,886
461,404
474,567
446,581
115,542
82,026
1 Total, all currencies
? Claims on United States
Parent bank
4 Other banks in United States 2
5 Nonbanks 2
6 Claims on foreigners
7 Other branches of parent bank
8
Banks
9 Public borrowers
10 Nonbank foreigners
113,393
78,109
13,664
21,620
320,162
95,184
100,397
23,343
101,238
119,713
87,201
13,057
19,455
315,680^
91,399
102,960
23,478
97,843r
122,593'
88,975
12,823'
20,795'
326,185'
95,238
107,212'
23,676'
100,059'
117,724'
83,404
13,206'
21,114'
316,337'
90,447
103,958'
23,846'
98,086'
117,812'
82,565'
14,039"
21,208'
324,216'
98,406"
105,648'
23,279"
96,883'
113,474'
79,387
13,527'
20,56c
314,354'
92,641
103,095'
23,578'
95,040'
117,661
83,779
13,072'
20,810"
315,583
93,435
102,849
23,720
95,579
116,382
82,302
13,624
20,456
328,563
103,278
107,503
23,505
94,277
112,068
79,999
11,659
20,410
305,647
90,412
100,707
24,091
90,437
342,689
96,004
117.668
24,517
107,785
20,101
28,160
29,622
28,866
371,508
350,636
336,288
331,511
322,837
327,639
313,703
318,357
330,597
309,087
n Claims on United States
14 Parent bank
15 Other banks in United States 2
16 Nonbanks 2
17 Claims on foreigners
18 Other branches of parent bank
19 Banks
70 Public borrowers
21 Nonbank foreigners
113,436
80,909
247,406
78,431
93,332
17,890
60,977
111,426
77,229
13,500
20,697
228,600
78,746
76,940
17,626
55,288
116,645
85,971
12,454
18,220
209,905'
72,689
71,748
17,252
48,216"
118,735'
87,597
11,922'
19,216'
202,670'
73,109
66,077'
16,783'
46,701'
113,864'
82,110
12,293'
19,461'
198,358'
69,684
65,160"
17,203'
46,311'
113,519"
81,073"
12,907'
19,539'
203,934'
75,883'
66,751'
16,498'
44,802'
109,263'
78,025
12,373'
18,865"
194,102"
69,135
65,033"
16,684'
43,250'
113,636
82,261
12,180"
19,195'
194,643
68,604
64,940
16,788
44,311
112,133
80,753
12,802
18,578
207,701
78,400
68,596
16,521
44,184
107,612
78,335
10,544
18,733
190,086
67,835
62,836
17,355
42,060
10,666
10,610
9,738'
10,106'
10,615'
10,186'
10,338'
10,078
10,763
11,389
11 Other assets
22 Other assets
22,619'
26,380'
25,537"
18,859
12 Total payable in U.S. dollars
25,526"
27,058'
United Kingdom
158,732
74 Claims on United States
?5
Parent bank
2
?fi Other banks in United States
77
Nonbanks 2
78 Claims on foreigners
?9
Other branches of parent bank
30 Banks
31
Public borrowers
Nonbank foreigners
32
155,867
152,075
151,593
145,448
145,619
151,596
142,398
33,157
26,970
1,106
5,081
110,217
31,576
39,250
5,644
33,747
34,234
28,058
1,386
4,790
115,485
32,516
41,593
5,642
35,734
34,231
28,001
1,312
4,918
111,823
31,984
39,222
5,427
35,190
31,364
25,106
1,365
4,893
113,739
34,670
39,430
5,236
34,403
30,223
24,252
1,369
4,602
108,156
31,613
38,393
5,229
32,921
29,839
23,466
1,448
4,925
109,024
31,828
38,048
5,336
33,812
30,879
24,291
2,092
4,4%
113,368
34,678
40,204
5,086
33,400
30,747
24,800
1,314
4,633
105,609
31,268
37,836
5,033
31,472
119,280
36,565
43,352
5,898
33,465
5,019
1
4,882
5,225
6,148
6,021
6,490
7,069
6,756
7,349
6,042
126,012
34 Total payable in U.S. dollars
44 Other assets
148,599
27,675
21,862
1,429
4,384
111,828
37,953
37,443
5,334
31,098
"
1
33 Other assets
35 Claims on United States
36
Parent bank
37 Other banks in United States 2
38 Nonbanks 2
39 Claims on foreigners
Other branches of parent bank
40
Banks
41
Public borrowers
4?
Nonbank foreigners
43
144,385
34,433
29,111
23 Total, all currencies
112,809
108,626
107,364
106,716
104,013
97,641
97,771
103,228
97,295
33,756
28,756
~
88,917
31,838
32,188
4,194
20,697
26,868
21,495
1,363
4,010
82,945
33,607
26,805
4,030
18,503
32,092
26,568
1,005
4,519
73,475
26,011
26,139
3,999
17,326
32,959
27,629
1,225
4,105
71,058
26,224
23,310
4,012
17,512
32,872
27,584
1,152
4,136
70,406
26,265
23,134
3,937
17,070
29,944
24,693
1,102
4,149
70,697
27,559
22,825
3,777
16,536
28,848
23,888
1,131
3,829
65,472
24,258
21,938
3,793
15,483
28,446
22,972
1,194
4,280
66,465
24,657
21,636
3,838
16,334
29,512
23,826
1,848
3,838
70,325
27,151
22,917
3,778
16,479
29,312
24,323
1,110
3,879
64,929
24,632
21,011
3,759
15,527
3,339
2,9%
3,059
3,347
3,438
3,372
3,321
2,860
3,391
3,054
134,238
137,526
143,082
134,060
71,918
46,635
10,641
14,642
66,620
22,763
27,779
6,434
9,644
68,614
44,476
9,557
14,581
59,622
16,985
26,205
7,263
9,169
Bahamas and Caymans
45 Total, all currencies
46 Claims on United States
47
48
Other banks in United States 2
49
Nonbanks 2
50 Claims on foreigners
51
Other branches of parent bank
5?
Banks
53 Public borrowers
54 Nonbank foreigners
55 Other assets
56 Total payable in U.S. dollars
152,083
146,811
75,309
48,720
77,296
49,449
11,544
16,303
65,598
17,661
30,246
6,089
11,602
72,868
20,626
36,842
6,093
12,592
142,055
74,864
50,553
11,204
13,107
63,882'
19,042
28,192
6,458
10,19c
72,861'
47,613
10,476'
14,772'
60,473'
18,286
25,880'
6,357'
9,950"
3,906
3,917
3,309'
3,938'
145,641
141,562
136,794
130,530
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.
137,272
132,122
68,807'
42,868
10,916'
15,023'
59,292'
15,703
26,397'
6,717'
10,475'
4,023'
125,681
138,944
70,883'
44,183'
11,730'
14,970"
64,043'
20,585'
27,078'
6,405'
9,975'
69,812'
43,867
11,201'
14,744'
60,363'
16,682
27,160'
6,551'
9,970"
73,047
47,694
10,813'
14,540"
60,167
16,539
27,065
6,675
9,888
4,018'
4,063'
4,312
4,544
5,824
132,353
127,910
130,723
136,615
127,361
2. Data for assets vis-a-vis other banks in the United States and vis-a-vis
nonbanks are combined for dates before June 1984.
A56
3.14
International Statistics • February 1987
Continued
1986
Apr.
May
June
July
Aug.
Sept.
Oct.?
All foreign countries
57 Total, all currencies
477,090
453,656
458,012
475,158
459,587
467,565
454,886
461,404
474,567
446,581
58 Negotiable CDs 3
59 To United States
60
Parent bank
61
Other banks in United States
Nonbanks
62
n.a.
188,070
81,261
29,453
77,356
37,725
147,583
78,739
18,409
50,435
34,607
155,538
83,914
16,894
54,730
33,229
150,395'
81,594
14,270
54,531'
35,006
144,241
77,484
14,347
52,410
34,683
149,848
85,126
16,118
48,604
32,656
141,599
81,299
14,191
46,109
31,475
145,488
79,564'
15,151'
50,773
33,642
151,281
87,927
14,153
49,201
32,267
141,303
75,773
14,791
50,739
63 To foreigners
64
Other branches of parent bank
65
Banks
66
Official institutions
67
Nonbank foreigners
68 Other liabilities
269,685
90,615
92,889
18,896
68,845
19,335
247,907
93,909
78,203
20.281
55,514
20,441
245,942
89,529
76,814
19,523
60,076
21,925
269,809'
93,768
89,608
20,744
65,689'
21,725
258,700
90,228
83,251
20,792
64,429
21,640
262,329
97,717
81,008
20,480
63,124
20,705
259,133
91,144
82,854
20,608
64,527
21,498
262,978
91,307
85,239
20,637
65,795
21,463
269,322
102,245
81,953
20,109
65,015
20,322
253,316
87,883
80,709
19,436
65,288
19,695
69 Total payable in U.S. dollars
388,291
367,145
353,470
347,587
340,176
346,428
330,183
333,581
349,259
323,699
70 Negotiable CDs 3
71 To United States
72
Parent bank
73
Other banks in United States
74
Nonbanks
n.a.
184,305
79,035
28.936
76,334
35,227
143,571
76,254
17,935
49,382
31,063
150,161
80,888
16,264
53,009
29,912
143,606'
78,061
13,477
52,068'
31,513
137,694
73,950
13,575
50,169
31,076
142,730
81,066
15,323
46,341
28,970
133,908
77,048
13,507
43,353
28,091
137,805
75,391'
14,364'
48,050
30,560
143,627
83,790
13,173
46,664
29,029
133,478
71,854
13,768
47.856
75 To foreigners
76
Other branches of parent bank
77
Banks
Official institutions
78
79
Nonbank foreigners
80 Other liabilities
194,139
73,522
57,022
13,855
51,260
9,847
178,260
77,770
45,123
15,773
39,594
10,087
163,361
70,943
37,323
14,354
40,741
8,885
166,224'
71,841
37,240
14,746
42,397'
7,845
162,528
69,978
36,335
14,049
42,166
8,441
163,943
75,805
33,745
13,772
40,621
8,679
158,314
68,065
34,827
14,091
41,331
8,991
158,931
66,878
36,460
14,125
41,468
8,754
167,356
77,464
35,358
13,697
40,837
7,716
153,598
65,077
33,802
13,320
41,399
7,594
United Kingdom
81 Total, all currencies
158,732
144,385
148,599
155,867
152,075
151,593
145,448
145,619
151,596
142,398
82 Negotiable CDs 3
83 To United States
84
Parent bank
85
Other banks in United States
86
Nonbanks
n.a.
55,799
14,021
11,328
30,450
34,413
25,250
14,651
3,125
7,474
31,260
29,422
19,330
2,974
7,118
29,898
28,450
17,231
1,966
9,253
31,734
27,505
16,624
2,175
8,706
31,396
26,270
15,892
1,997
8,381
29,295
22,671
13,300
1,999
7,372
28,279
22,831
14,188
2,148
6,495
30,352
26,540
17,399
2,062
7,079
28,847
24,610
14,014
2,382
8,214
87 To foreigners
88
Other branches of parent bank
89
Banks
90
Official institutions
91
Nonbank foreigners
92 Other liabilities
95,847
19,038
41,624
10,151
25,034
7,086
77,424
21,631
30,436
10,154
15,203
7,298
78,525
23,389
28,581
9,676
16,879
9,392
87,773
25,379
34,294
9,757
18,343
9,746
83,067
23,838
31,584
9,548
18,097
9,769
84,362
27,029
30,505
9,543
17,285
9,565
83,707
25,106
31,678
9,074
17,849
9,775
84,880
24,962
32,250
9,330
18,338
9,629
85,680
28,272
31,190
8,652
17,440
9,150
80,366
24,194
31,001
8,068
17,103
8,575
131,167
117,497
112,697
110,378
109,337
108,375
101,095
101,397
108,249
99,820
94 Negotiable CDs 3
95 To United States
Parent bank
96
97
Other banks in United States
Nonbanks
98
93 Total payable in U.S. dollars
n.a.
54,691
13,839
11,044
29,808
33,070
24,105
14,339
2,980
6,786
29,337
27,756
18,956
2,826
5,974
27,978
26,411
16,867
1,774
7,770
29,542
25,490
16,233
1,944
7,313
29,135
24,214
15,331
1,817
7,066
27,015
20,065
12,648
1,738
5,679
26,114
20,403
13,707
1,879
4,817
28,490
24,039
16,984
1,735
5,320
26,927
21,960
13,591
2,108
6,261
99 To foreigners
100 Other branches of parent bank
101
Banks
102
Official institutions
103 Nonbank foreigners
104 Other liabilities
73,279
15,403
29,320
8,279
20,277
3,197
56,923
18,294
18,356
8,871
11,402
3,399
51,980
18,493
14,344
7,661
11,482
3,624
52,262
19,297
14,125
7,449
11,391
3,727
50,441
18,043
14,114
6,953
11,331
3,864
51,056
20,455
13,073
6,914
10,614
3,970
49,932
17,868
14,251
6,658
11,155
4,083
50,855
17,790
15,056
6,724
11,285
4,025
52,645
21,305
14,491
6,015
10,834
3,075
47,553
17,289
14,123
5,685
10,456
3,380
137,526
Bahamas and Caymans
105 Total, all currencies
152,083
146,811
142,055
137,272
132,122
138,944
134,238
143,082
134,060
106 Negotiable CDs
107 To United States
108
Parent bank
109 Other banks in United States
110
Nonbanks
n.a.
111,299
50,980
16,057
44,262
615
102,955
47,162
13,938
41,855
610
103,813
44,811
12,778
46,224
629
98,621
43,662
11,014
43,945
634
94,128
40,757
10,738
42,633
567
98,897
47,014
12,868
39,015
565
96,636
47,862
11,131
37,643
470
99,585
44,417'
11,952'
43,216
527
102,012
49,981
10,986
41,045
506
96,017
43,466
11,144
41,407
111 To foreigners
112
Other branches of parent bank
113
Banks
114 Official institutions
115 Nonbank foreigners
116 Other liabilities
38,445
14,936
11,876
1,919
11,274
2,339
40,320
16,782
12,405
2,054
9,079
2,921
35,053
14,075
10,669
1,776
8,533
2,579
35,901
14,077
10,788
2,176
8,860
2,121
35,139
13,731
10,318
2,144
8,946
2,221
37,340
15,882
9,991
2,427
9,040
2,140
34,827
13,561
9,636
2,468
9,162
2,210
35,216
13,368
10,216
2,386
9,246
2,255
38,447
15,918
10,158
2,834
9,537
2,096
35,427
13,574
8,964
2,665
10,224
2,110
148,278
143,582
138,322
132,966
127,918
134,606
130,075
133,256
138,733
130,084
3
117 Total payable in U.S. dollars
3. Before June 1984. liabilities on negotiable CDs were included in liabilities to
the United States or liabilities to foreigners, according to the address of the initial
purchaser.
Summary Statistics
3.15
A57
S E L E C T E D U . S . LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1986
Item
1984
1985
Apr.
1 Total1
2
3
4
5
6
7
8
9
10
11
12
June
July
Aug.
Sept.
Oct.?
180,552
By area
Western Europe 1
Canada
Latin America and Caribbean
Asia
Africa
Other countries 6
178,356
188,914
190,159
194,562
198,784
203,364
209,823
210,306
26,089
59,976
26,734
53,252
27,028
59,547
24,911
63,614
26,142
65,790
25,143
70,721
25,482
74,766
29,342
75,095
26,248
75,457
69,019
5,800
19,668
77,108
3,550
17,712
82,345
2,300
17,694
82,501
1,800
17,333
84,113
1,800
16,717
85,561
1,300
16,059
85,622
1,300
16,194
87,945
1,300
16,140
91,220
1,300
16,081
69,776
1,528
8,561
93,954
1,264
5,469
By type
Liabilities reported by banks in the United States 2
U.S. Treasury bills and certificates 3
U.S. Treasury bonds and notes
Marketable
Nonmarketable 4
U.S. securities other than U.S. Treasury securities 5
74,418
1,314
11,141
86,459
1,824
3,200
76,354
1,711
10,785
94,653
1,833
3,578
76,405
1,502
10,595
96,487
1,718
3,452
79,641
1,529
11,046
97,359
1,717
3,270
81,524
1,627
11,242
100,070
1,525
2,796
83,874
1,535
10,801
102,362
1,958
2,834
87,060
1,626
10,346
106,017
1,864
2,910
87,504
1,699
9,901
105,818
1,715
3,669
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.
1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness (including those payable in foreign currencies through 1974) and Treasury bills issued to official
institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes
bonds and notes payable in foreign currencies.
3.16
May
LIABILITIES TO A N D CLAIMS O N FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, end of period
1985
Item
1982
1983
Dec.
1 Banks' own liabilities
2 Banks' own claims
3 Deposits
4
Other claims
5 Claims of banks' domestic customers'
1. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the accounts
of their domestic customers.
4,844
7,707
4,251
3,456
676
5,219
7,231
2,731
4,501
1,059
1986
1984
8,586
11,984
4,998
6,986
569
15,368
16,161
8,304
7,857
580
Mar.
21,364
19,736
11,318
8,418
1,426
June'
24,077
20,985
11,313
9,672
1,385
Sept.
29,227
24,516
13,818
10,698
1,660
NOTE. Data on claims exclude foreign currencies held by U.S. monetary
authorities,
A58
3.17
International Statistics • February 1987
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States
Millions of dollars, end of period
1986
Holder and type of liability
1983
1984
1985
Apr.
May
June
July
Aug.
Sept.
Oct.''
1 AH foreigners
369,607
407,306
435,726
443,456
444,528
457,350
469,720
486,514'
505,328
459,673
2 Banks' own liabilities
3
Demand deposits
4 Time deposits 1
5
Other 2
Own foreign offices 3
6
279,087
17,470
90,632
25,874
145,111
306,898
19,571
110,413
26,268
150,646
341,070
21,107
117,278
29,305
173,381
346,469
19,751
114,209
33,220
179,289
342,074
19,651
114,055
31,686
176,683
345,663
21,332
115,246
31,712
177,373
342,267
19,607
117,010
30,650
174,999
355,003'
20,277'
122,322'
33,026
179,378
372,233
21,380
125,917
36,621
188,316
360,964
21,726
123,361
35,222
180,654
90,520
68,669
100,408
76,368
94,656
69,133
96,987
74,631
102,454
80,192
111,687
82,701
127,453
86,789
131,511
89,586
133,095
90,467
134,710
91,305
17,467
4,385
18,747
5,293
17,964
7,558
13,776
8,580
13,917
8,346
14,729
14,257
14,702'
25,%2'
14,507'
27,417'
14,430
28,198
14,991
28,413
11 Nonmonetary international and regional
organizations7
5,957
4,454
5,821
3,495
4,519
3,441
3,974
5,253
3,038
3,882
12 Banks' own liabilities
13 Demand deposits
14 Time deposits 1
15 Other 2
4,632
297
3,584
750
2,014
254
1,267
493
2,621
85
2,067
469
1,749
138
681
931
2,388
99
1,109
1,179
891
79
551
262
1,857
156
1,209
492
4,090
165
3,233
691
1,721
180
1,243
299
2,406
175
1,919
312
16 Banks' custody liabilities4
U.S. Treasury bills and certificates
17
18 Other negotiable and readily transferable
instruments 6
19 Other
1,325
463
2,440
916
3,200
1,736
1,746
768
2,131
1,282
2,550
1,619
2,118
991
1,163
129
1,317
218
1,476
308
862
0
1,524
0
1,464
0
970
7
849
0
918
13
1,126
0
1,033
1
1,099
0
1,162
6
7 Banks' custody liabilities4
U.S. Treasury bills and certificates 5
8
9
Other negotiable and readily transferable
instruments 6
10 Other
20 Official institutions
8
79,876
86,065
79,985
86,576
88,526
91,932
95,863
100,247
104,439
101,705
21 Banks' own liabilities
22
Demand deposits
Time deposits 1
23
Other 2
24
19,427
1,837
7,318
10,272
19,039
1,823
9,374
7,842
20,835
2,077
10,949
7,809
23,927
1,832
9,368
12,728
22,018
1,810
9,850
10,358
22,928
2,131
10,347
10,450
22,044
1,609
10,116
10,319
22,710
1,582
9,892
11,236
26,619
1,893
10,924
13,802
23,187
1,840
10,336
11,011
25 Banks' custody liabilities4
U.S. Treasury bills and certificates 5
26
27
Other negotiable and readily transferable
instruments 6
Other
28
60,448
54,341
67,026
59,976
59,150
53,252
62,648
59,547
66,508
63,614
69,004
65,790
73,820
70,721
77,538
74,766
77,819
75,095
78,518
75,457
6,082
25
6,966
84
5,824
75
2,916
185
2,754
139
2,9%
218
2,892
207
2,624
148
2,524
199
2,857
204
29 Banks9
226,887
248,893
275,589
277,856
275,047
284,637
291,827'
301,549'
317,985
310,283
30 Banks' own liabilities
31
Unaffiliated foreign banks
32
Demand deposits
Time deposits 1
33
34
Other 2
35
Own foreign offices 3
205,347
60,236
8,759
37,439
14,038
145,111
225,368
74,722
10,556
47,095
17,071
150,646
252,723
79,341
10,271
49,510
19,561
173,381
254,617
75,328
8,689
48,484
18,155
179,289
251,126
74,444
9,036
46,780
18,627
176,682
255,673
78,300
10,277
48,480
19,544
177,373
251,779
76,780
9,180
49,418
18,181
174,999
260,950'
81,573'
9,304'
52,811
19,458
179,378
276,542
88,226
9,302
58,043
20,881
188,316
268,343
87,690
9,714
55,916
20,059
180,654
21,540
10,178
23,525
11,448
22,866
9,832
23,239
9,914
23,922
10,841
28,964
10,688
40,048'
10,934
40,598'
10,543
41,443
10,635
41,940
10,601
7,485
3,877
7,236
4,841
6,040
6,994
5,423
7,901
5,451
7,629
5,448
12,828
5,585
23,529'
5,526
24,530'
5,538
25,270
5,501
25,838
36 Banks' custody liabilities4
U.S. Treasury bills and certificates
37
Other negotiable and readily transferable
38
instruments 6
Other
39
40 Other foreigners
56,887
67,894
74,331
75,530
76,436
77,339
78,055'
79,465'
79,867
79,803
41 Banks' own liabilities
42
Demand deposits
43 Time deposits
Other 2
44
49,680
6,577
42,290
813
60,477
6,938
52,678
861
64,892
8,673
54,752
1,467
66,176
9,093
55,677
1,406
66,543
8,705
56,316
1,521
66,170
8,845
55,869
1,456
66,587
8,663
56,267
1,657
67,253'
9,227
56,386'
1,641
67,351
10,005
55,707
1,639
67,028
9,997
55,191
1,840
7,207
3,686
7,417
4,029
9,439
4,314
9,354
4,401
9,893
4,454
11,169
4,604
11,468'
4,143
12,212'
4,149
12,516
4,519
12,776
4,939
3,038
483
3,021
367
4,636
489
4,465
487
4,862
577
5,367
1,198
5,099'
2,226
5,325'
2,738
5,268
2,729
5,472
2,365
10,346
10,476
9,845
6,286
6,269
6,419
6,492
6,569
6,554
5,605
45 Banks' custody liabilities4
46
U.S. Treasury bills and certificates
Other negotiable and readily transferable
47
instruments 6
Other
48
49 MEMO: Negotiable time certificates of
deposit in custody for foreigners
1. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
2. Includes borrowing under repurchase agreements.
3. U.S. banks: includes amounts due to own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due to head office or parent foreign bank, and
foreign branches, agencies or wholly owned subsidiaries of head office or parent
foreign bank.
4. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
5. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
6. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
7. Principally the International Bank for Reconstruction and Development, and
the Inter-American and Asian Development Banks.
8. Foreign central banks and foreign central governments, and the Bank for
International Settlements.
9. Excludes central banks, which are included in "Official institutions."
Nonbank-Reported
3.17
Data
Continued
1986
Area and country
1983
1984
1985
Apr.
May
June
July
Aug.
Sept.
Oct.?
1 Total
369,607
407,306
435,726
443,456
444,528
457,350
469,720
486,514'
505,328
495,673
2 Foreign countries
363,649
402,852
429,905
439,961
440,009
453,909
465,745
481,261'
502,290
491,791
138,072
585
2,709
466
531
9,441
3,599
520
8,462
4,290
1,673
373
1,603
1,799
32,246
467
60,683
562
7,403
65
596
153,145
615
4,114
438
418
12,701
3,358
699
10,762
4,731
1,548
597
2,082
1,676
31,740
584
68,671
602
7,192
79
537
164,114
693
5,243
513
496
15,541
4,835
666
9,667
4,212
948
652
2,114
1,422
29,020
429
76,728
673
9,635
105
523
165,193
931
5,737
752
619
19,322
6,718
559
6,553
4,320
731
674
1,919
1,313
27,247
363
81,983
547
4,233
38
634
165,795
897
5,425
523
514
19,423
4,964
552
7,875
4,183
850
796
1,879
1,299
26,848
434
83,885
556
4,165
34
693
166,382
1,013
5,224
519
484
19,862
4,639
657
8,918
4,224
710
795
2,069
1,118
27,812
586
82,314
661
3,997
89
690
163,016
988
5,343
560
449
20,129
5,646
604
8,828
4,682
497
711
1,894
1,267
28,455
310
78,193
542
3,366
48
506
166,145'
1,035
5,114
643
365
21,469'
5,290'
570
9,269
4,495
542
791
1,979
944
29,064'
285
79,947
482
3,277
32
553
173,730
1,106
6,132
483
407
21,338
5,360
623
8,819
4,952
575
758
2,083
1,295
29,207
448
86,209
562
2,729
84
562
172,324
1,020
5,837
478
606
21,243
5,800
645
8,757
4,817
664
737
2,293
1,032
29,832
459
83,908
515
2,938
25
719
3 Europe
4 Austria
5 Belgium-Luxembourg
6 Denmark
Finland
7
8 France
9 Germany
10 Greece
Italy
11
1? Netherlands
13 Norway
14 Portugal
15 Spain
16 Sweden
17 Switzerland
18 Turkey
19 United Kingdom
70
Yugoslavia
Other Western Europe 1
21
U.S.S.R
77
2
23 Other Eastern Europe
16,026
16,059
17,427
20,450
21,257
22,926
22,359
23,933
24,150
24,339
140,088
4,038
55,818
2,266
3,168
34,545
1,842
1,689
8
1,047
788
109
10,392
3,879
5,924
1,166
1,244
8,632
3,535
153,381
4,394
56,897
2,370
5,275
36,773
2,001
2,514
10
1,092
896
183
12,303
4,220
6,951
1,266
1,394
10,545
4,297
167,856
6,032
57,657
2,765
5,373
42,674
2,049
3,104
11
1,239
1,071
122
14,060
4,875
7,514
1,167
1,552
11,922
4,668
164,801
5,627
57,865
2,270
5,788
41,354
2,147
3,101
7
1,199
1,128
173
13,126
4,859
6,960
1,116
1,646
11,727
4,708
161,405
6,075
53,680
2,016
5,542
42,116
2,223
3,053
7
1,166
1,097
201
13,153
4,798
7,042
1,132
1,703
11,712
4,689
169,650
6,229
60,081
2,513
5,185
43,278
2,270
3,419
8
1,262
1,108
185
13,633
4,358
6,686
1,254
1,664
11,734
4,783
181,737
6,336
60,764
2,201
5,134
55,552
2.227
3,334
7
1,196
1,123
184
12,985
4,382
6,639
1,158
1,687
12,058
4,770
187,780'
6,096
67,096
2,195
5,179
55,614
2,139
3,315
8
1,232
1,140
177
13,609'
4,383
6,390'
1,149
1,636
11,668
4,753'
196,765
6,069
69,119
2,199
5,359
61,557
2,426
3,373
75
1,260
1,129
187
13,137
4,765
6,415
1,253
1,589
11,708
5,144
187,819
5,819
64,022
1,930
5,358
58,576
2,400
3,773
6
1,216
1,126
151
13,201
4,646
6,521
1,167
1,608
11,446
4,852
58,570
71,187
72,280
81,682
83,817
86,977
91,669
96,021'
100,051
99,310
249
4,051
6,657
464
997
1,722
18,079
1,648
1,234
747
12,976
9,748
1,153
4,990
6,581
507
1,033
1,268
21,640
1,730
1,383
1,257
16,804
12,841
1,607
7,786
8,067
712
1,466
1,601
23,077
1,665
1,140
1,358
14,523
9,276
1,550
11,027
8,757
574
1,787
1,490
28,279
1,337
1,051
993
14,418
10,419
973
12,687
8,745
577
1,758
1,671
29,689
1,336
1,331
1,155
14,537
9,355
1,469
13,683
8,656
695
1,416
1,725
31,325
1,414
1,306
1,068
14,581
9,638
1,795
14,331
8,934
562
1,572
1,731
36,286
1,392
1,363
1,104
12,739
9,861
1,185
15,608
9,026
685
1,474
1,686
38,221
1,251
1,458
1,080
13,227
11,121
1,947
16,130
9,339
651
1,611
2,109
39,954
1,282
1,400
1,100
13,047
11,481
1,585
16,534
8,650
755
1,529
1,984
41,336
1,442
1,696
1,106
12,045
10,648
57 Africa
58 Egypt
59 Morocco
South Africa
60
61
Zaire
67
Oil-exporting countries 4
Other Africa
63
2,827
671
84
449
87
620
917
3,396
647
118
328
153
1,189
961
4,883
1,363
163
388
163
1,494
1,312
4,173
960
85
386
90
1,442
1,210
4,227
910
92
414
105
1,490
1,216
4,291
1,079
87
414
92
1,463
1,156
4,041
820
93
609
65
1,368
1,086
4,227
1,088
82
438
60
1,371
1,189
4,168
843
91
328
80
1,584
1,244
3,973
640
86
347
79
1,623
1,199
64 Other countries
65
Australia
66 All other
8,067
7,857
210
5,684
5,300
384
3,347
2,779
568
3,662
3,058
604
3,507
2,744
763
3,682
2,943
739
2,924
2,173
751
3,155
2,459
696
3,425
2,785
640
4,026
2,943
1,083
67 Nonmonetary international and regional
organizations
International
Latin American regional
Other regional 5
5,957
5,273
419
265
4,454
3,747
587
120
5,821
4,806
894
121
3,495
2,512
823
160
4,519
3,669
748
102
3,441
2,471
845
126
3,974
2,714
922
338
5,253
4,147
916
190
3,038
1,759
972
307
3,882
2,728
957
197
24 Canada
75 Latin America and Caribbean
76 Argentina
77
Bahamas
78
Bermuda
29
Brazil
British West Indies
30
31
Chile
Colombia
37
33
Cuba
Ecuador
34
35
Guatemala
36 Jamaica
37 Mexico
38 Netherlands Antilles
39 Panama
40
Peru
Uruguay
41
47, Venezuela
Other Latin America and Caribbean
43
44
45
46
47
48
49
50
51
5?
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle-East oil-exporting countries 3
Other Asia
68
69
70
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Asian. African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in "Other
Western Europe."
A59
A60
3.18
International Statistics • February 1987
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end o f period
1986
Area and country
1983
1984
1985
Apr.
May
June
July
Aug.
Sept.
Oct.P
1 Total
391,312
400,162
401,608
401,109
394,667
403,843
403,494
403,729
416,645
406,569
2 Foreign countries
391,148
399,363
400,577
400,607
394,259
403,387
403,002
403,309
416,444
406,197
91,927
401
5,639
1,275
1,044
8,766
1,284
476
9,018
1,267
690
1,114
3,573
3,358
1,863
812
47,364
1,718
477
192
1,598
99,014
433
4,794
648
898
9,157
1,306
817
9,119
1,356
675
1,243
2,884
2,230
2,123
1,130
56,185
1,886
596
142
1,389
106,413
598
5,772
706
823
9,124
1,267
991
8,848
1,258
706
1,058
1,908
2,219
3,171
1,200
62,566
1,964
998
130
1,107
101,250
429
5,502
794
795
8,902
1,341
764
6,709
1,380
786
874
1,701
1,924
2,978
1,584
60,602
1,950
649
477
1,111
100,903
501
5,6%
882
866
8,861
1,176
723
6,806
1,384
746
850
1,986
2,239
3,134
1,649
59,332
1,928
491
489
1,164
104,441
609
7,243
750
983
9,455
1,095
629
7,474
1,407
905
776
2,001
2,478
3,553
1,856
58,224
2,005
1,253
568
1,176
100,321
619
6,113
856
1,041
9,583
1,426
622
7,266
1,427
614
789
1,863
2,906
2,617
1,709
56,249
1,902
1,102
504
1,112
100,323
694
6,990
783
%1
9,483
1,181
660
5,981
1,254
698
757
1,749
2,404
3,306
1,649
57,846
1,852
521
528
1,026
106,734
654
6,593
807
1,085
10,189
1,601
706
6,797
2,038
732
734
1,995
2,487
2,665
1,585
61,935
1,876
791
462
1,002
103,459
619
7,689
796
1,111
9,512
1,174
626
7,679
2,114
711
699
1,907
2,383
2,666
1,614
58,082
1,882
803
296
1,097
3 Europe
4
Austria
5
Belgium-Luxembourg
6
Denmark
Finland
7
8
France
9 Germany
10 Greece
11 Italy
12 Netherlands
13 Norway
14 Portugal
Spain
15
16 Sweden
17 Switzerland
18 Turkey
19 United Kingdom
Yugoslavia
20
Other Western Europe 1
21
22
U.S.S.R
Other Eastern Europe 2
23
24 Canada
16,341
16,109
16,482
18,814
17,910
18,270
18,303
19,401
18,112
19,502
205,491
11,749
59,633
566
24,667
35,527
6,072
3,745
0
2,307
129
215
34,802
1,154
7,848
2,536
977
11,287
2,277
207,862
11,050
58,009
592
26,315
38,205
6,839
3,499
0
2,420
158
252
34,885
1,350
7,707
2,384
1,088
11,017
2,091
202,674
11,462
58,258
499
25,283
38,881
6,603
3,249
0
2,390
194
224
31,799
1,340
6,645
1,947
960
10,871
2,067
199,032
11,803
55,260
275
25,363
38,932
6,540
2,861
0
2,388
124
216
32,367
839
6,133
1,767
953
11,295
1,917
193,625
11,921
52,537
238
25,271
37,072
6,537
2,820
0
2,382
112
218
31,493
1,075
5,919
1,757
951
11,326
1,997
200,733
12,079
57,075
274
24,855
40,043
6,507
2,789
0
2,397
136
244
31,399
1,086
5,860
1,738
931
11,304
2,015
202,204
12,282
56,250
432
24,915
41,923
6,514
2,776
0
2,366
113
209
31,168
996
6,280
1,703
927
11,364
1,985
197,866
12,009
55,453
373
24,762
39,836"
6,449
2,642
0
2,375
127
209
30,839
1,060
5,862
1,677
936
11,289
1,969"
205,575
12,119
61,702
320
24,856
40,357
6,488
2,634
0
2,387
135
224
31,037
1,133
6,377
1,600
1,051
11,175
1,979
196,914
12,243
53,565
452
24,728
40,040
6,514
2,674
2
2,418
122
247
31,024
972
6,094
1,625
930
11,180
2,086
67,837
66,316
66,212
73,421
73,965
72,033
74,253
77,792
78,082
78,652
292
1,908
8,489
330
805
1,832
30,354
9,943
2,107
1,219
4,954
5,603
710
1,849
7,293
425
724
2,088
29,066
9,285
2,555
1,125
5,044
6,152
639
1,535
6,7%
450
698
1,991
31,249
9,226
2,224
845
4,298
6,260
593
1,151
8,134
398
717
1,611
38,781
9,286
2,325
775
3,838
5,812
703
1,446
8,315
420
736
1,766
38,629
9,176
2,263
716
3,948
5,845
567
1,238
7,526
440
675
1,772
38,524
8,977
2,393
706
3,680
5,535
779
1,089
8,445
372
720
1,567
40,902
8,900
2,168
711
2,919
5,680
526
1,637
8,632
375
729
1,541
43,327
8,476
2,128
736
2,764
6,921
758
1,903
8,883
355
689
1,621
42,751
7,855
2,148
636
3,724
6,759
758
1,532
8,142
508
694
1,630
45,167
7,000
2,071
611
3,513
7,027
57 Africa
58
Egypt
Morocco
59
South Africa
60
61
Zaire
Oil-exporting countries 5
62
63
Other
6,654
747
440
2,634
33
1,073
1,727
6,615
728
583
2,795
18
842
1,649
5,407
721
575
1,942
20
630
1,520
5,007
639
662
1,716
17
465
1,508
4,890
619
640
1,743
17
417
1,455
4,971
740
642
1,705
17
415
1,452
4,817
701
615
1,661
17
413
1,410
4,693
633
617
1,683
21
445
1,294
4,660
593
636
1,607
42
511
1,271
4,411
577
617
1,428
35
545
1,207
64 Other countries
Australia
65
66
All other
2,898
2,256
642
3,447
2,769
678
3,390
2,413
978
3,082
2,237
845
2,966
2,050
916
2,939
2,023
916
3,103
2,159
945
3,232
2,293
940
3,281
2,277
1,004
3,259
2,143
1,115
164
800
1,030
502
408
456
493
420
200
372
25 Latin America and Caribbean
Argentina
26
27
Bahamas
Bermuda
28
29
Brazil
British West Indies
30
31
Chile
32 Colombia
Cuba
33
Ecuador
34
Guatemala 3
35
36
Jamaica 3
37
Mexico
Netherlands Antilles
38
39 Panama
Peru
40
Uruguay
41
Venezuela
42
43
Other Latin America and Caribbean
44
45
46
47
48
49
50
51
52
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle East oil-exporting countries 4
Other Asia
67 Nonmonetary international and regional
organizations 6
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in "Other Latin America and Caribbean" through March 1978.
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in
"Other Western Europe."
Nonbank-Reported
3.19
Data
A61
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
Millions of dollars, end of period
1986
Type of claim
1983
1984
1985
Apr.
May
401,109
60,157
179,662
111,832
46,393
65,439
49,458
394,667
59,972
173,094
112,522
47,493
65,029
49,079
July
Aug.
403,494
60,667
181,590
114,101
49,326
64,775
47,137
403,729
59,947r
182,151
115,922'
52,410
63,512'
45,708'
June
Sept.
1 Total
426,215
433,078
430,489
2
3
4
5
6
7
8
391,312
57,569
146.393
123,837
47,126
76,711
63.514
400,162
62,237
156,216
124,932
49,226
75,706
56,777
401,608
60,507
174,261
116,654
48,372
68,282
50,185
34,903
2,969
32,916
3,380
28,881
3,335
28,483
3,475
31,849
3,743
26,064
23,805
19,332
20,294
22,337
5,870
5,732
6,214
4,715
5,769
37,715
37,103
28,487
28,328
27,172
46,337
40,714
37,399
Oct .p
Banks' own claims on foreigners
Foreign public borrowers
Own foreign offices 1
Unaffiliated foreign banks
Deposits
Other
All other foreigners
9 Claims of banks' domestic customers2 ..
448,494
432,326
403,843
60,622
181,867
112,996
47,041
65,955
48,358
416,645
60,598
193,353
116,882
52,230
64,653
45,812
406,569
60,889
182,915
117,158
53,052
64,106
45,606
11 Negotiable and readily transferable
12 Outstanding collections and other
13 MEMO: Customer liability on
acceptances
Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 4 . . . .
1. U.S. banks: includes amounts due from own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due from head office or parent foreign bank,
and foreign branches, agencies, or wholly owned subsidiaries of head office or
parent foreign bank.
2. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the account
of their domestic customers.
3.20
42,771
47,351
46,200
47,464
48,575'
44,515
n.a.
3. Principally negotiable time certificates of deposit and bankers acceptances.
4. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad. For
description of changes in data reported by nonbanks, see July 1979 BULLETIN,
p. 550.
NOTE. Beginning April 1978, data for banks' own claims are given on a monthly
basis, but the data for claims of banks' own domestic customers are available on a
quarterly basis only.
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1985
Maturity ; by borrower and area
1982
1983
1986
1984
Dec.
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
By borrower
Maturity of 1 year or less 1
Foreign public borrowers
All other foreigners
Maturity of over 1 year 1
Foreign public borrowers
All other foreigners
By area
Maturity of 1 year or less 1
Europe
Canada
Latin America and Caribbean
Africa
All other 2
Maturity of over 1 year 1
14 Europe
15 Canada
16 Latin America and Caribbean
17
18 Africa
19 All other 2
1. Remaining time to maturity.
Mar.
June
Sept.P
228,150
243,715
243,952
227,903
221,177
222,255'
224,317
173,917
21,256
152,661
54,233
23,137
31,095
176,158
24,039
152,120
67,557
32,521
35,036
167,858
23,912
143,947
76,094
38,695
37,399
160,824
26,302
134,522
67,078
34,512
32,567
152,696
23,845
128,851
68,481
36,681
31,800
152,247'
23,183
129,065'
70,008
37,177
32,830
154,731
22,392
132,339
69,586
38,115
31,471
50,500
7,642
73,291
37,578
3,680
1,226
56,117
6,211
73,660
34,403
4,199
1,569
58,498
6,028
62,791
33,504
4,442
2,593
56,585
6,401
63,328
27,966
3,753
2,791
53,462
5,899
59,538
28,034
3,331
2,433
57,929
6,043
57,134
25,772
3,297
2,073
59,331
5,968
57,814
26,713
3,038
1,866
11,636
1,931
35,247
3,185
1,494
740
13,576
1,857
43,888
4,850
2,286
1,101
9,605
1,882
56,144
5,323
2,033
1,107
7,634
1,805
50,674
4,502
1,538
926
7,783
1,925
52,165
4,251
1,634
722
7,934
2,256
53,572
4,034
1,497
714
7,285
1,861
54,147
3,990
1,479
824
2. Includes nonmonetary international and regional organizations.
A62
International Statistics • February 1987
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 1 2
3.21
Billions of dollars, end of period
1984
Area or country
1982
1985
1986
1983
Sept.
1 Total
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.P
436.1
433.9
406.4
405.7
405.5
396.8
394.9
391.9
394.3'
390.9'
391.4
179.6
13.1
17.1
12.7
10.3
3.6
5.0
5.0
72.1
10.4
30.2
167.8
12.4
16.2
11.3
11.4
3.5
5.1
4.3
65.3
8.3
29.9
147.5
9.8
14.3
10.0
9.7
3.4
3.5
3.9
57.1
8.1
27.7
148.1
8.7
14.1
9.0
10.1
3.9
3.2
3.9
60.3
7.9
27.1
153.0
9.3
14.5
8.9
10.0
3.8
3.1
4.2
65.4
9.1
24.7
146.7
8.9
13.5
9.6
8.6
3.7
2.9
4.0
65.7
8.1
21.7
152.0
9.5
14.8
9.8
8.4
3.4
3.1
4.1
67.1
7.6
24.3
148.5
9.3
12.3
10.5
9.8
3.7
2.8
4.4
64.6
7.0
24.2
156.4'
8.3
13.8
11.2
8.5
3.5
2.9
5.4
68.5'
6.2'
28.1
159.8'
9.0
15.1'
11.5
9.3
3.4
2.9
5.6
68.9
6.8'
27.4
158.6
8.5
14.6
12.5
8.1
3.9
2.7
4.8
70.1
6.1
27.4
13 Other developed countries
14 Austria
15 Denmark
16 Finland
17 Greece
18 Norway
19 Portugal
Spain
20
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia
33.5
1.9
2.4
2.2
3.0
3.3
1.5
7.5
1.4
2.3
3.7
4.3
36.0
1.9
3.4
2.4
2.8
3.3
1.5
7.1
1.7
1.8
4.7
5.4
36.2
1.8
2.9
1.9
3.2
3.2
1.6
6.9
2.0
1.7
5.0
6.1
33.6
1.6
2.2
1.9
2.9
3.0
1.4
6.5
1.9
1.7
4.5
6.0
32.8
1.6
2.1
1.8
2.9
2.9
1.4
6.4
1.9
1.7
4.2
6.1
32.3
1.6
1.9
1.8
2.9
2.9
1.3
5.9
2.0
1.8
3.9
6.2
32.0
1.7
2.1
1.8
2.8
3.4
1.4
6.1
2.1
1.7
3.3
5.6
30.4
1.6
2.4
1.6
2.6
2.9
1.3
5.8
1.9
2.0
3.2
5.0
31.6'
1.6
2.5
1.9
2.5
2.7
1.1
6.4
2.3
2.4
3.2
4.9
30.6
1.7
2.4
1.6
2.6
3.0
1.0
6.4
2.5
2.1
3.1
4.2
29.4
1.7
2.3
1.7
2.3
2.7
1.0
6.7
2.1
1.6
3.1
4.2
25 OPEC countries 3
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
26.9
2.2
10.5
2.9
8.5
2.8
28.4
2.2
9.9
3.4
9.8
3.0
24.4
2.1
9.2
3.2
7.3
2.5
24.9
2.2
9.3
3.3
7.9
2.3
24.5
2.2
9.3
3.3
7.4
2.3
22.8
2.2
9.3
3.1
6.1
2.2
22.7
2.2
9.0
3.1
6.2
2.3
21.6
2.1
8.9
3.0
5.5
2.0
20.7'
2.2
8.7
3.3
4.8
1.8
20.6
2.1
8.8
3.0
5.0
1.7
20.0
2.1
8.7
2.8
4.7
1.7
106.5
110.8
111.6
111.8
110.8
110.0
107.8
105. 1'
103.5'
101.4'
99.6
8.9
22.9
6.3
3.1
24.2
2.6
4.0
9.5
23.1
6.4
3.2
25.8
2.4
4.2
9.1
26.3
7.1
2.9
26.0
2.2
3.9
8.7
26.3
7.0
2.9
25.7
2.2
3.9
8.6
26.4
7.0
2.8
25.5
2.2
3.8
8.6
26.6
6.9
2.7
25.3
2.1
3.7
8.9
25.5
6.6
2.6
24.4
1.9
3.5
8.9
25.6
7.0
2.7
24.2'
1.8
3,4
8.9
25.7
7.0
2.3
24.(K
1.7
3.3
9.2
25.3
7.1
2.2
23.8'
1.6
3.3
9.3
25.2
7.1
2.0
23.8
1.5
3.4
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
.2
5.3
.5
2.3
10.7
2.1
6.3
1.6
1.1
.3
5.2
.9
1.9
11.2
2.8
6.1
2.2
1.0
.5
5.1
1.0
1.7
10.3
2.9
5.9
1.8
.9
.7
5.1
.9
1.8
10.6
2.7
6.0
1.8
1.1
.7
5.3
.9
1.7
10.4
2.7
6.1
1.7
1.1
.3
5.5
.9
2.3
10.0
2.8
6.0
1.6
.9
1.1
5.1
1.1
1.5
10.4
2.7
6.0
1.6
.9
.5
4.5
1.2
1.6
9.4
2.4
5.7
1.4
1.0
.6
4.3
1.2
1.3
9.5
2.2
5.6
1.3
.9
.6
3.7'
1.3
1.6
8.6'
2.0
5.7
1.1
.8
.6
4.3
1.3
1.4
7.3
2.1
5.4
1.0
.7
Africa
Egypt
Morocco
Zaire
Other Africa 4
1.2
.7
.1
2.4
1.5
.8
.1
2.3
1.2
.8
.1
1.9
1.2
8
.1
2.1
1.1
.8
.1
2.2
1.0
.8
.1
2.0
1.0
.9
.1
2.0
1.0
.9
.1
1.9
.9
.9
.1
1.9
.9
.9
.1
1.7
.7
.9
.1
1.6
52 Eastern Europe
53
U.S.S.R
54
Yugoslavia
55
Other
6.2
.3
2.2
3.7
5.3
.2
2.4
2.8
4.5
.2
2.3
2.1
4.4
.1
2.3
2.0
4.3
.2
2.2
1.9
4.3
.3
2.2
1.8
4.6
.2
2.4
1.9
4.2
.1
2.2
1.8
4.0
.3
2.0
1.7
4.0
.3
2.0
1.7
3.3
.1
1.9
1.4
56 Offshore banking centers
57
Bahamas
58
Bermuda
59 Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama 5
62
Lebanon
63
Hong Kong
64
Singapore
65
Others 6
66.0
19.0
.9
12.8
3.3
7.5
.1
13.3
9.1
.0
68.9
21.7
.9
12.2
4.2
5.8
.1
13.8
10.3
.0
65.1
23.3
1.0
11.1
3.1
5.6
.1
11.6
9.4
.0
65.6
21.5
.9
11.8
3.4
6.7
.1
11.4
9.8
.0
63.2
20.1
.7
12.3
3.3
5.5
.1
11.4
9.9
.0
63.9
21.1
.9
12.1
3.2
5.4
.1
11.4
9.7
.0
58.8
16.6
.8
12.3
2.3
6.1
.0
11.4
9.4
.0
65.4
21.4
.7
13.4
2.3
6.0
.1
11.5
9.9
.0
61.5
21.5
.7
11.3
2.3
5.9
.1
11.4
8.4
.0
57.2
17.3
.4
12.8
2.3
5.5
.1
9.4
9.3
.0
62.6
20.0
.5
13.2
1.9
6.8
.1
10.4
9.7
.0
66 Miscellaneous and unallocated 7
17.5
16.8
17.1
17.3
16.9
16.9
17.3
16.9
16.7'
17.2
17.8
2 G-10 countries and Switzerland
3 Belgium-Luxembourg
4
France
5 Germany
6
Italy
7 Netherlands
8 Sweden
9 Switzerland
10 United Kingdom
11 Canada
12 Japan
31 Non-OPEC developing countries
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other Latin America
Asia
China
Mainland
Taiwan
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
3. Besides the Organization of Petroleum Exporting Countries shown individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well
as Bahrain and Oman (not formally members of OPEC).
4. Excludes Liberia.
5. Includes Canal Zone beginning December 1979.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.
Nonbank-Reported
3.22
Data
A63
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States 1
Millions of dollars, end o f period
1986
1985
Type, and area or country
982
1984
1983
Sept.
June
Dec.
JuneP
Mar.
1 Total
27,512
25,346
29,357
24,574
25,256
27,230
25,635
24,222
2 Payable in dollars
3 Payable in foreign currencies
24,280
3,232
22,233
3,113
26,389
2,968
21,899
2,675
22,408
2,848
23,994
3,236
22,022
3,613
20,692
3,530
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
11,066
8,858
2,208
10,572
8,700
1,872
14,509
12,553
1,955
11,528
9,543
1,985
11,815
9,824
1,991
13,005
10,955
2,050
12,328
10,205
2,123
11,117
9,177
1,940
7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities...
16,446
9,438
7,008
14,774
7,765
7,009
14,849
7,005
7,843
13,046
5,797
7,249
13,441
5,694
7,747
14,225
6,685
7,540
13,307
5,598
7,710
13,105
5,503
7,602
15,423
1,023
13,533
1,241
13,836
1,013
12,356
690
12,584
857
13,039
1,186
11,817
1,490
11,516
1,590
6,501
505
783
467
711
792
3,102
5,742
302
843
502
621
486
2,839
6,728
471
995
489
590
569
3,297
5,944
351
865
474
604
566
2,835
6,568
367
849
493
624
593
3,351
7,270
329
857
419
745
676
3,924
6,971
338
851
371
630
702
3,736
6,705
288
701
262
651
561
3,960
746
764
863
850
826
760
753
287
10
11
12
13
14
15
16
17
18
Payable in dollars
Payable in foreign currencies
By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
19
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,751
904
14
28
1,027
121
114
2,596
751
13
32
1,041
213
124
5,086
1,926
13
35
2,103
367
137
3,106
1,107
10
27
1,734
32
3
2,619
1,145
4
23
1,234
28
3
3,152
1,120
4
29
1,814
15
3
2,788
954
13
26
1,610
20
4
2,404
859
14
27
1,362
30
3
27
28
29
Asia
Japan
Middle East oil-exporting countries 2 ..
1,039
715
169
1,424
991
170
1,777
1,209
155
1,584
994
147
1,767
1,136
82
1,790
1,173
82
1,799
1,192
78
1,660
1,189
43
30
Africa
17
0
19
0
14
0
14
0
14
0
12
0
12
0
12
0
12
27
41
30
22
21
4
49
3,831
52
598
468
346
367
1,027
3,245
62
437
427
268
241
732
4,001
48
438
622
245
257
1,095
3,461
53
423
428
284
349
730
3,897
56
431
601
386
289
858
4,074
62
453
607
364
379
976
3,915
66
382
546
545
251
957
3,761
58
357
512
587
283
861
31
32
33
34
35
36
37
38
39
40
Oil-exporting countries 3
All other 4
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
1,495
1,841
1,975
1,494
1,383
1,449
1,442
1,351
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,570
16
117
60
32
436
642
1,473
1
67
44
6
585
432
1,871
7
114
124
32
586
636
1,225
12
77
90
1
492
309
1,262
2
105
120
15
415
311
1,088
12
77
58
44
430
212
1,097
26
210
64
7
256
364
1,304
10
294
107
35
235
488
48
49
50
Asia
Japan
Middle East oil-exporting countries 2 ' 5 ,
8,144
1,226
5,503
6,741
1,247
4,178
5,285
1,256
2,372
5,246
1,219
2,396
5,353
1,567
2,109
6,046
1,799
2,829
5,384
2,039
2,171
5,068
2,095
1,731
51
52
Africa
Oil-exporting countries 3
753
277
553
167
588
233
631
265
572
235
587
238
486
148
569
215
53
All other 4
651
921
1,128
988
975
982
983
1,053
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
A64
International Statistics • February 1987
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
United States'
Reported by Nonbanking Business Enterprises in the
Millions of dollars, end o f period
1985
Type, and area or country
1982
1983
1986
1984
June
Sept.
Dec.
Mar.
JuneP
1 Total
28,725
34,911
29,901
26,750
28,610
28,085
30,927
32,519
2 Payable in dollars
3 Payable in foreign currencies
26,085
2,640
31,815
3,0%
27,304
2,597
24,121
2,629
25,743
2,866
25,783
2,302
28,740
2,187
30,337
2,182
By type
4 Financial claims
5 Deposits
6
Payable in dollars
7
Payable in foreign currencies
8 Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
17,684
13,058
12,628
430
4,626
2,979
1,647
23,780
18,4%
17,993
503
5,284
3,328
1,956
19,254
14,621
14,202
420
4,633
3,190
1,442
16,695
12,839
12,283
556
3,856
2,375
1,480
19,203
15,315
14,611
704
3,889
2,351
1,538
18,099
14,852
14,237
615
3,248
2,213
1,035
21,540
18,146
17,689
457
3,394
2,301
1,093
23,324
20,034
19,479
555
3,290
2,269
1,021
11 Commercial claims
12 Trade receivables
13 Advance payments and other claims
11,041
9,994
1,047
11,131
9,721
1,410
10,646
9,177
1,470
10,055
8,688
1,367
9,406
7,932
1,475
9,986
8,6%
1,290
9,387
8,086
1,301
9,195
7,858
1,337
14
15
10,478
563
10,494
637
9,912
735
9,463
592
8,782
624
9,333
652
8,750
637
8,589
606
4,873
15
134
178
97
107
4,064
6,488
37
150
163
71
38
5,817
5,762
15
126
224
66
66
4,864
5,477
15
51
175
46
16
4,900
6,463
12
132
158
127
53
5,736
6,327
10
184
223
61
74
5,522
6,859
10
217
172
61
166
5,986
8,877
11
257
148
17
177
8,051
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
4,377
5,989
3,988
3,756
4,037
3,256
4,024
4,464
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
7,546
3,279
32
62
3,255
274
139
10,234
4,771
102
53
4,206
293
134
8,216
3,306
6
100
4,043
215
125
6,616
2,204
6
%
3,747
206
100
7,603
2,315
5
92
4,632
201
73
7,697
2,685
6
78
4,440
180
48
9,934
3,500
2
77
5,904
178
43
9,151
3,251
17
75
5,359
176
42
698
153
15
764
297
4
%1
353
13
640
281
6
969
725
6
696
475
4
621
350
2
723
499
2
158
48
147
55
210
85
111
25
104
31
103
29
87
27
89
25
31
159
117
95
26
21
14
20
3,826
151
474
357
350
360
811
3,670
135
459
349
334
317
809
3,801
165
440
374
335
271
1,063
3,680
212
408
375
301
376
950
3,235
158
360
336
286
208
779
3,533
175
426
346
284
284
898
3,387
148
384
396
221
248
793
3,304
131
390
414
237
221
668
31
32
33
34
35
36
37
38
39
40
41
42
43
Japan
Middle East oil-exporting countries 2
Africa
Oil-exporting countries 3
All other
4
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
52
53
54
55
56
57
633
Japan
Middle East oil-exporting countries 2
Africa
Oil-exporting countries 3
All other
4
829
1,021
1,065
1,100
1,023
1,060
970
2,526
21
261
258
12
775
351
2,695
8
190
493
7
884
272
2,052
8
115
214
7
583
206
1,803
11
65
193
29
468
181
1,660
18
62
211
7
416
149
1,753
13
93
206
6
510
157
1,599
27
82
231
7
388
172
1,590
24
148
194
24
320
180
3,050
1,047
751
3,063
1,114
737
3,073
1,191
668
2,707
954
593
2,712
884
541
2,982
1,016
638
2,606
801
630
2,649
846
691
588
140
588
139
470
134
464
137
434
131
437
130
491
167
447
171
417
286
229
336
264
257
244
235
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
3.24
and Transactions
A65
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1986
Transactions, and area or country
1984
1986
1985
Jan.Oct.
Apr.
May
June
July
Aug.
Sept.
Oct.?
U.S. corporate securities
STOCKS
1
2
Foreign purchases
Foreign sales
3
Net purchases, or sales (—)
59,834
62,814
81,995
77,054
121,897
104,943
-2,980
4,941
16,954
15,414
11,468
13,244
10,388
11,176
10,832
3,947
2,856
2,814
12,260
10,948
10,948
12,281
13,268
11,258
12,045'
10,615'
344
2,010
1,430'
1,258
-1,333
1,470'
1,303
-1,189
Foreign countries
-3,109
4,857
17,208
3,883
464
2,075
5
6
7
8
9
10
11
12
13
14
15
16
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Africa
Other countries
-3,077
-405
-50
-357
-1,542
-677
1,691
495
-1,992
-378
-22
175
2,057
-438
730
-123
-75
1,665
356
1,718
238
296
24
168
9,493
418
320
972
1,748
4,579
643
2,437
801
3,334
258
241
2,066
36
47
123
569
733
52
880
339
399
48
100
1,571
99
99
236
376
563
44
489
117
472
43
78
192
219
-174
97
-134
38
131
60
-236
288
-3
32
576
182
-130
52
-198
481
214
269
181
830
30
-23
824'
105
-42
50
44
521'
97
108
78
376
-1
-13
587
30
9
36
70
462
93
145
58
346
-13
86
-1,126
-92
-104
-19
-405
-484
-125
154
-51
16
39
-97
17
Nonmonetary international and
regional organizations
129
84
-254
63
42
-121
-65
-40
-45
-143
39,296
26,399
86,587
42,439
101,456
57,913
13,483
8,855
12,044
5,252
8,964
5,686
8,937
5,679
9,420
5,348
10,160
5,585
9,718
5,494
4
BONDS 2
18
19
Foreign purchases
Foreign sales
20
Net purchases, or sales (—)
12,897
44,149
43,543
4,628
6,792
3,278
3,259
4,072
4,575
4,223
21
Foreign countries
12,600
44,244
42,926
4,438
6,696
2,798
3,197
4,077
4,871
4,481
22
23
24
25
26
27
28
29
30
31
32
33
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Africa
Other countries
11,697
207
1,724
100
643
8,429
-62
376
-1,230
1,817
1
0
40,047
210
2,001
222
3,987
32,762
190
498
-2,631
6,091
11
38
34,126
28
-125
222
4,442
29,705
240
1,301
-2,338
9,458
12
127
3,641
-22
-73
2
1,231
2,578
74
263
-396
840
3
13
6,221
83
205
89
456
5,631
54
142
-186
464
-2
3
2,763
-6
-3
-37
490
2,214
55
63
-632
480
3
66
2,395
6
-91
-39
180
2,213
85
250
-718
1,177
-3
11
2,484
20
-81
98
564
1,917
110
160
-40
1,329
5
29
3,386
-29
26
51
30
3,414
2
64
-169
1,586
6
-4
3,501
0
81
-55
265
3,203
86
101
-33
816
-1
11
34
Nonmonetary international and
regional organizations
297
-95
617
190
96
480
61
-4
-296
-258
Foreign securities
35
36
37
Stocks, net purchases, or sales ( - )
Foreign purchases
Foreign sales
-1,101
14,816
15,917
-3,894
20,851
24,746
-1,960
41,033
42,993
-1,668
4,390
6,057
-221
3,454
3,675
-238
3,775
4,013
404
4,310
3,907
-83
4,610
4,694
676
5,091
4,415
1,207
6,233
5,026
38
39
40
Bonds, net purchases, or sales ( - )
Foreign purchases
Foreign sales
-3,930
56,017
59,948
-3,996
81,214
85,210
-2,029
136,854
138,883
-1,251
15,296
16,546
188
13,491
13,303
1,540
15,632
14,091
359
13,559
13,200
1,232
14,086
12,854
-2,231
15,182
17,412
2,150
16,239
14,089
41
Net purchases, or sales (—), of stocks and bonds . . . .
-5,031
-7,891
-3,988
-2,918
-33
1,302
762
1,149
-1,555
3,357
42
Foreign countries
-4,642
-8,954
-4,520
-2,788
-106
1,122
438
1,090
-1,492
3,173
43
44
45
46
47
48
Europe
Canada
Latin America and Caribbean
-8,655
542
2,460
1,356
-108
-238
-9,887
-1,682
1,845
658
75
38
-15,153
-508
3,194
8,901
44
-997
-2,649
-286
176
-124
6
89
208
82
363
-746
3
-16
-1,332
16
742
1,639
3
55
-683
245
278
659
9
-70
-714
263
127
1,337
1
75
-3,379
111
351
1,852
3
-430
-504
88
449
3,201
-2
-59
49
Nonmonetary international and
regional organizations
-389
1,063
532
-130
73
180
324
59
-63
184
Africa
Other countries
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
2. Includes state and local government securities, and securities of U.S.
government agencies and corporations. Also includes issues of new debt securi-
ties sold abroad by U.S. corporations organized to finance direct investments
abroad.
A66
3.25
International Statistics • February 1987
MARKETABLE U.S. TREASURY BONDS A N D NOTES
Foreign Transactions
Millions of dollars
1986
Country or area
1984
1986
1985
Jan.Oct.
Apr.
May
June
July
Aug.
Sept.
Oct.?
Transactions, net purchases or sales ( - ) during period 1
1 Estimated total2
21,501
29,047
25,686
8,658
-2,132
3,112
-254
752
5,480
2 Foreign countries 2
16,496
28,591
26,409
8,398
-252
2,230
2,705
2,215
4,485
2,678
11,014
287
2,929
449
40
656
5,188
1,466
0
1,586
4,145
476
1,917
269
976
760
-1,954
1,701
0
-188
16,501
321
7,295
1,303
447
1,161
3,955
2,019
0
559
1,625
29
139
81
113
163
-206
1,307
0
55
1,436
39
468
-31
236
365
698
-339
0
908
2,562
82
357
-64
16
349
698
1,125
0
-302
2,544
-46
818
1,756
42
-278
610
-358
0
67
2,442
180
1,050
-64
-25
52
1,207
43
0
105
-685
239
1,133
-313
85
-53
-1,970
195
0
-198
2,943
4
2,419
112
4
373
170
-139
0
-230
1,418
14
536
869
2,431
6,289
-67
114
4,312
238
2,343
1,731
19,899
17,920
112
311
725
-84
1,148
-339
8,093
5,816
-45
576
1,234
196
173
865
5,092
2,267
-1
394
-954
36
372
-1,363
-1,617
-1,148
-2
-22
-460
-170
-290
0
515
223
-5
-80
28
-72
96
5
-137
273
6
198
-37
-294
255
2
-133
683
-1
-160
220
266
32
-78
5,336
4,395
11
-200
-224
-55
-195
26
41
-453
-15
163
5,009
4,612
0
457
-420
18
-721
-929
157
260
198
30
-1,880
-1,889
0
882
899
5
-2,959
-2,804
0
-1,462
-1,511
0
995
890
39
239
290
-5
16,496
505
15,992
28,591
8,088
20,503
26,409
14,112
12,298
8,398
3,862
4,537
-252
157
-409
2,230
1,612
619
2,705
1,448
1,257
2,215
61
2,154
4,485
2,324
2,161
2,678
3,274
-596
-6,270
-101
-1,581
7
-465
4
1,334
1
-14
-290
0
14
2
-239
-205
2
-377
3 Europe 2
4
Belgium-Luxembourg
5 Germany 2
6 Netherlands
7
Sweden
8
Switzerland 2
9
United Kingdom
10 Other Western Europe
11 Eastern Europe
12 Canada
13
14
15
16
17
18
19
20
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
All other
21 Nonmonetary international and regional organizations
22
International
23
Latin American regional
2,917
MEMO
24 Foreign countries 2
25
Official institutions
26
Other foreign 2
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
-1
-1
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria,
Interest and Exchange Rates
3.26
A67
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Rate on Nov. 30, 1986
Rate on Nov. 30, 1986
Country
Percent
Aug. 1985
May 1986
Mar. 1981
Nov. 1986
Oct. 1983
Country
Month
effective
4.0
8.0
49.0
8.47
7.0
Austria..
Belgium .
Brazil...
Canada..
Denmark
Percent
France 1
Germany, Fed. Rep. of
Italy
Japan
Netherlands
1. As of the end of February 1981, the rate is that at which the Bank of France
discounts Treasury bills for 7 to 10 days.
2. Minimum lending rate suspended as of Aug. 20, 1981.
NOTE. Rates shown are mainly those at which the central bank either discounts
3.27
Rate on Nov. 30, 1986
Country
Month
effective
7.0
3.5
12.0
3.0
4.5
June 1986
Mar. 1986
May 1986
Oct. 1986
Mar. 1986
Percent
Month
effective
8.0
Norway
Switzerland
United Kingdom 2 .
Venezuela
June 1983
Mar. 1983
4.0
Oct. 1985
or makes advances against eligible commercial paper and/or government commercial banks or brokers. For countries with more than one rate applicable to such
discounts or advances, the rate shown is the one at which it is understood the
central bank transacts the largest proportion of its credit operations.
FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1986
Country, or type
1983
1984
1985
May
1
2
3
4
5
6
7
8
9
10
June
July
Aug.
Sept.
Oct.
Nov.
Eurodollars
United Kingdom
Canada
Germany
Switzerland
9.57
10.06
9.48
5.73
4.11
10.75
9.91
11.29
5.96
4.35
8.27
12.16
9.64
5.40
4.92
6.86
10.16
8.60
4.58
4.32
6.95
9.70
8.72
4.59
4.96
6.54
9.91
8.45
4.61
4.80
6.06
9.79
8.50
4.56
4.30
5.88
10.05
8.38
4.48
4.13
5.88
11.08
8.45
4.56
3.96
5.96
11.12
8.39
4.67
3.88
Netherlands
France
Italy
Belgium
Japan
5.58
12.44
18.95
10.51
6.49
6.08
11.66
17.08
11.41
6.32
6.29
9.91
14.86
9.60
6.47
5.76
7.21
12.35
7.90
4.58
5.90
7.23
11.78
7.27
4.64
5.69
7.13
11.70
7.25
4.62
5.28
7.09
11.18
7.25
4.68
5.17
7.07
10.84
7.25
4.71
5.32
7.38
10.85
7.29
4.75
5.48
7.51
11.05
7.38
4.39
NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate.
A68
3.28
International Statistics • February 1987
FOREIGN EXCHANGE RATES
Currency units per dollar
1986
Country/currency
1983
1984
1985
June
1
2
3
4
5
6
7
1
July
Aug.
Sept.
Oct.
Nov.
Australia/dollar
Austria/schilling
Belgium/franc
Brazil/cruzeiro
Canada/dollar
China, P.R./yuan
Denmark/krone
90.14
17.968
51.121
573.27
1.2325
1.9809
9.1483
87.937
20.005
57.749
1841.50
1.2953
2.3308
10.354
70.026
20.676
59.336
6205.10
1.3658
2.9434
10.598
68.89
15.699
45.633
13.84
1.3899
3.2115
8.2822
62.91
15.117
44.304
13.84
1.3808
3.6435
8.0635
61.23
14.502
42.701
13.84
1.3885
3.7129
7.7657
62.21
14.349
42.315
13.84
1.3872
3.7150
7.7278
63.83
14.111
41.635
13.98
1.3885
3.7257
7.5607
64.45
14.251
42.069
14.10
1.3863
3.7314
7.6444
8
9
10
11
12
13
14
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/pound 1
5.5636
7.6203
2.5539
87.895
7.2569
10.1040
124.81
6.0007
8.7355
2.8454
112.73
7.8188
11.348
108.64
6.1971
8.9799
2.9419
138.40
7.7911
12.332
106.62
5.1954
7.1208
2.2337
140.98
7.8107
12.599
135.68
5.0744
6.9323
2.1517
138.40
7.8123
12.508
139.00
4.9377
6.7215
2.0621
134.68
7.8003
12.567
134.67
4.9190
6.6835
2.0415
135.07
7.8026
12.676
134.53
4.8684
6.5628
2.0054
135.44
7.7999
12.848
135.89
4.9576
6.6206
2.0243
139.12
7.7974
13.076
134.64
15
16
17
18
19
20
21
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar 1
Norway/krone
Portugal/escudo
1519.30
237.55
2.3204
2.8543
66.790
7.3012
111.610
1756.10
237.45
2.3448
3.2083
57.837
8.1596
147.70
1908.90
238.47
2.4806
3.3184
49.752
8.5933
172.07
1533.10
167.54
2.6231
2.5154
54.585
7.6117
151.09
1478.31
158.61
2.6455
2.4236
53.176
7.4800
148.67
1420.33
154.18
2.6121
2.3242
50.068
7.3534
146.17
1410.23
154.73
2.6174
2.3050
47.950
7.3429
146.83
1387.67
156.47
2.6245
2.2663
50.392
7.3611
147.24
1401.08
162.85
2.6131
2.2870
51.382
7.5401
149.54
22
23
24
25
26
27
28
29
30
31
Singapore/dollar
South Africa/rand 1
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound 1
2.1136
89.85
776.04
143.500
23.510
7.6717
2.1006
n.a.
22.991
151.59
2.1325
69.534
807.91
160.78
25.428
8.2706
2.3500
39.633
23.582
133.66
2.2008
45.57
861.89
169.98
27.187
8.6031
2.4551
39.889
27.193
129.74
2.2232
39.49
890.74
142.91
27.955
7.2124
1.8406
38.163
26.400
150.85
2.1861
39.04
888.59
137.58
28.065
7.0715
1.7445
38.119
26.204
150.71
2.1601
38.39
886.45
134.11
28.187
6.9365
1.6616
37.422
26.093
148.61
2.1680
43.36
883.06
134.10
28.297
6.9191
1.6537
36.885
26.120
146.98
2.1777
44.42
879.22
133.43
28.407
6.8901
1.6433
36.647
26.129
142.64
2.1922
44.37
873.54
136.10
28.471
6.9683
1.6858
36.438
26.278
142.38
125.34
138.19
143.01
113.77
110.38
107.50
107.15
106.58
107.90
MEMO
32 United States/dollar 2
1. Value in U.S. cents.
2. Index of weighted-average exchange value of U.S. dollar against currencies
of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76
global trade of each of the 10 countries. Series revised as of August 1978. For
description and back data, see "Index of the Weighted-Average Exchange Value
of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN.
3. Currency reform.
NOTE. Averages of certified noon buying rates in New York for cable transfers.
Data in this table also appear in the Board's G.5 (405) release. For address, see
inside front cover.
A69
Guide to Tabular Presentation,
Statistical Releases, and Special Tables
GUIDE TO TABULAR
Symbols and
c
e
p
r
*
PRESENTATION
Abbreviations
Corrected
Estimated
Preliminary
Revised (Notation appears on column heading when
about half of the figures in that column are changed.)
Amounts insignificant in terms of the last decimal place
shown in the table (for example, less than 500,000
when the smallest unit given is millions)
General
0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs
Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable
Information
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed
issues of U.S. government agencies (the flow of funds figures
also include not fully guaranteed issues) as well as direct
STATISTICAL
obligations of the Treasury. "State and local government"
also includes municipalities, special districts, and other political subdivisions.
In some of the tables details do not add to totals because of
rounding.
RELEASES
List Published Semiannually,
with Latest Bulletin
Reference
Issue
December 1986
Anticipated schedule of release dates for periodic releases
Page
A87
SPECIAL TABLES
Published Irregulary, with Latest Bulletin Reference
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Terms
Terms
Terms
Terms
and liabilities of commercial banks, March 31, 1983
and liabilities of commercial banks, June 30, 1983
and liabilities of commercial banks, September 30, 1983
and liabilities of commercial banks, December 31, 1985
and liabilities of U.S. branches and agencies of foreign banks,
and liabilities of U.S. branches and agencies of foreign banks,
and liabilities of U.S. branches and agencies of foreign banks,
and liabilities of U.S. branches and agencies of foreign banks,
of lending at commercial banks, February 1986
of lending at commercial banks, May 1986
of lending at commercial banks, August 1986
of lending at commercial banks, November 1986
Special tables begin on next page.
September 30, 1985
December 31, 1985
March 31, 1986
June 30, 1986
August
December
March
January
May
September
November
December
May
July
December
February
1983
1983
1984
1987
1986
1986
1986
1986
1986
1986
1986
1987
A70
A68
A68
A70
A74
A70
A70
A76
A70
A70
A70
A70
A70
4.23
Special Tables • February 1987
TERMS OF L E N D I N G AT COMMERCIAL B A N K S Survey of Loans Made, November 3-7, 19861
A. Commercial and Industrial Loans2
Characteristics
Amount
of loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity 3
Days
Loan rate (percent)
Weighted
average
effective 4
Standard
error 5
Interquartile
range 6
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
ALL BANKS
1 Overnight 8
2 One month and under
3
Fixed rate
4
Floating rate
5 Over one month and under a year
6
Fixed rate
7
Floating rate
8 Demand 9
9
Fixed rate
10
Floating rate
18,042,062
7,415
9,138,063
7,227.320
1,910,743
657
844
358
10,836,499
5,317,993
5,518,506
126
130
123
6,306,616
1,560,525
4,746,092
78.3
174
618
141
18
31,768,686
295,394
163,721
197,270
597,956
280,882
30,233,463
584
8
32
64
213
677
7,874
19 Floating rate (thousands of dollars).
20
1-24
21
25-49
22
50-99
23
100-499
24
500-999
25
1000 and over
12,554,554
407,448
455,089
765,387
2,464,770
1,178,220
7,283,639
149
9
34
66
196
640
3,978
26 Total long term
6,635,816
27 Fixed rate (thousands of dollars)
28
1-99
29
100-499
30
500-999
31
1000 and over
7.97
7.78
8.16
6.79-8.65
6.70-8.23
6.98-8.87
72.8
74.0
71.6
7.8
9.5
6.1
8.01
6.93
8.37
6.91-8.84
6.38-7.11
7.76-8.87
80.7
76.6
82.0
5.7
4.2
6.54-7.76
77.0
4.8
22
106
107
6.96
11.24
10.22
10.18
130
60
9.14
7.51
6.83
77.3
18.8
32.9
18.3
51.1
80.9
79.0
3.5
112
6.49-7.11
9.93-12.55
8.83-11.73
8.87-11.36
8.03-10.47
6.79-7.79
6.48-6.98
4.5
3.7
126
158
8.10
9.70
9.54
9.29
8.75
8.45
7.53
6.98-8.84
8.84-10.25
8.82-9.93
8.57-9.92
7.85-9.38
7.76-9.11
6.58-8.30
76.4
71.0
72.8
70.8
76.1
3.9
4.1
1.7
4.1
77.0
10.7
8.24
7.49-9.04
76.5
7.9
11.35
9.49
9.92
7.56
6.99-8.84
9.49-12.40
8.30-10.75
9.76-11.02
6.79-8.06
67.6
19.6
24.9
21.5
78.1
1.9
.0
17.7
7.71-9.04
8.57-9.96
8.03-9.38
7.76-8.84
7.64-8.84
79.8
56.8
65.8
76.2
84.3
10.1
1.1
11.3
78.2
78.2
76.7
76.8
1.3
7.6
12.8
3.4
195
696
8,109
4,836,150
273,875
563,406
450,929
3,547,940
135
96
171
179
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35
500-999
36
1000 and over
7.7
4.7
19.0
265
1,799,667
144,382
132,431
57,597
1,465,256
77.1
76.6
79.0
44,323,240
12 Fixed rate (thousands of dollars) .
13
1-24
14
25-49
15
50-99
16
100-499
17
500-999
18
1000 and over
6.51-7.43
6.47-7.19
6.66-8.33
7.28
11 Total short term
18
20
7.11
6.98
7.61
322
25
194
652
5,521
18
161
158
143
168
110
80.8
6.2
.1
.1
.9
1.1
8.0
6.2
Months
16
8.30
9.41
8.79
8.49
8.11
Loan rate (percent)
Effective
Nominal
6.3
11.1
Prime rate 11
Days
4
.0
10
LOANS MADE BELOW PRIME 1 2
Overnight 8
One month and under
Over one month and under a year .
Demand 9
17,572,718
7,413,630
4,828,488
2,060,771
9,467
4,110
907
2,561
41 Total short term
31,875,608
42 Fixed rate
43 Floating rate
27,957,590
3,918,017
4,042
1,365
6.66
3,256
37
38
39
40
6.45
6.53
6.64
16
101
6.48
7.50
7.51
7.60
7.51
6.70
17
126
6.50
7.52
77.9
4.7
6.70
6.71
6.50
6.51
7.51
7.56
77.8
78.3
10.2
7.75
89.5
14.6
6.73
6.87
6.60
6.67
7.70
7.80
86.2
2.3
26.2
6.74
6.81
6.62
3.9
Months
44 Total long term
1,927,756
1,184
45 Fixed rate . . . .
46 Floating rate . .
935,092
992,664
1,093
1,285
For notes see end of table.
47
92.7
Financial Markets
4.23
Continued
A. Commercial and Industrial Loans
Characteristics
Amount
of loans
(thousands
of dollars)
Continued
Average
size
(thousands
of dollars)
Loan rate (percent)
Weighted
average
maturity 3
Days
Weighted
average
effective 4
Standard
Interquartile
range 6
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
LARGE BANKS
1 Overnight 8
6.45-6.88
12,542,083
9,774
2 One month and under
3
Fixed rate
4
Floating rate
6,537,372
5,695,923
841,449
2,953
4,798
820
18
17
21
6.95
6.88
7.40
6.53-7.21
6.47-7.19
6.76-7.78
79.7
78.6
87.3
4.3
3.5
9.1
5 Over one month and under a year
6
Fixed rate
7
Floating rate
6,518,756
3,643,926
2,874,830
831
2,269
461
123
82
175
7.49
7.40
7.61
6.70-8.23
6.70-8.23
6.65-8.33
81.6
88.5
73.0
5.6
5.4
5.8
8 Demand 9
9
Fixed rate
10
Floating rate
3,110,547
811,651
2,298,896
354
3,095
269
7.78
6.80
8.12
6.70-8.77
6.37-6.75
7.71-8.84
75.9
59.0
81.9
5.1
1.5
6.3
11 Total short term
28,708,758
1,425
7.07
6.51-7.49
79.9
12 Fixed rate (thousands of dollars) .
13
1-24
14
25-49
15
50-99
16
100-499
17
500-999
18
1000 and over
22,451,611
8,266
7,285
13,041
99,787
159,883
22,163,348
5,233
10
33
64
224
677
9,394
19
92
75
71
63
48
19
6.89
10.03
9.30
9.14
7.54
6.87
6.49-7.10
8.96-10.48
8.78-9.92
8.33-9.92
7.59-8.81
6.79-7.79
6.48-7.09
80.6
37.4
36.6
45.4
71.6
79.5
80.7
2.5
.9
.0
3.1
3.9
4.7
2.5
19 Floating rate (thousands of dollars).
20
1-24
21
25-49
22
50-99
23
100-499
24
500-999
25
1000 and over
6,257,146
61,632
78,033
161,312
774,947
418,935
4,762,288
395
132
129
136
139
140
141
130
7.73
9.36
9.21
9.02
8.63
8.33
7.44
6.72-8.51
8.77-9.%
8.57-9.92
8.30-9.65
7.79-9.11
7.76-8.87
6.57-8.24
77.5
77.1
73.8
74.5
6.2
34
67
206
653
4,668
82.6
76.6
.4
.7
.7
1.4
5.5
7.4
26 Total long term
4,471,849
1,011
8.09
7.06-8.77
83.3
4.4
27 Fixed rate (thousands of dollars)
28
1-99
29
100-499
30
500-999
31
1000 and over
1,229,545
6,918
15,600
12,550
1,194,478
2,779
29
217
702
10,122
7.90
10.93
9.46
9.12
7.85
6.99-8.06
9.17-11.57
8.47-10.47
7.25-12.13
6.99-8.06
78.3
23.3
42.4
67.3
79.2
5.0
.0
.9
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35
500-999
36
1000 and over
3,242,304
81,289
197,256
161,682
2,802,077
815
35
8.17
8.70
8.52
7.64-9.04
8.03-8.87
7.98-9.04
7.71-8.77
7.64-9.04
85.2
86.0
89.7
94.3
84.3
5.7
.7
7.2
11.6
5.4
1.3
4.3
7.1
1.0
11
8.18
81.2
Months
211
662
6,302
8.20
8.13
1.0
.0
Loan rate (percent)
Days
Prime r a t e "
Effective 4
Nominal 10
LOANS M A D E BELOW P R I M E 1 2
37
38
39
40
Overnight 8
One month and under
Over one month and under a year
Demand 9
41 Total short term
42 Fixed rate
43 Floating rate
12,118,445
5,718,113
3,718,708
1,215,213
10,976
6,128
5,801
4,096
17
134
6.69
6.76
6.77
6.57
6.47
6.55
6.58
6.43
7.50
7.50
7.50
7.50
80.1
79.0
80.9
62.3
22,770,479
7,654
28
6.71
6.51
7.50
79.0
8,326
4,815
17
129
6.72
6.69
6.51
6.49
7.50
7.50
79.3
76.4
7.01
6.91
6.61
7.50
7.50
94.2
%.5
20,027,982
2,742,497
2.6
5.7
Months
44 Total long term
1,373,605
674,229
699,376
8,960
4,240
4.5
5,719
45 Fixed rate
46 Floating rate . .
For notes see end of table.
.0
6.80
8.9
A71
A70
4.23
Special Tables • February 1987
T E R M S O F L E N D I N G A T C O M M E R C I A L B A N K S S U R V E Y of L o a n s M a d e , N o v e m b e r 3 - 7 , 1 9 8 6 ' — C o n t i n u e d
A. Commercial and Industrial Loans — Continued 2
Characteristics
Amount
of loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity 3
Days
Loan rate (percent)
Weighted
average
effective 4
Standard
Interquartile
range 6
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
OTHER BANKS
1 Overnight 8
5,499,979
4,783
6.62
6.45-6.71
2 One month and under
3
Fixed rate
4
Floating rate
2,600,692
1,531,398
1,069,294
222
208
248
20
20
19
7.52
7.34
7.77
6.49-8.05
6.49-7.63
6.38-8.84
70.5
69.1
72.4
26.8
5 Over one month and under a year
6
Fixed rate
Floating rate
7
4,317,742
1,674,066
2,643,676
55
43
152
128
167
8.69
8.59
8.75
7.71-9.42
6.94-10.35
7.76-9.38
59.5
42.6
70.2
18.4
6.5
8 Demand 9
9
Fixed rate
10 Floating rate
3,196,069
748,874
2,447,195
331
97
8.24
7.06
8.59
7.70-8.84
6.41-7.11
7.76-9.11
85.3
95.7
82.1
6.4
7.2
6.1
11 Total short term
7.67
6.56-8.57
71.8
7.13
69.4
18.3
32.8
16.4
47.0
6.0
10.26
10.25
9.33
7.49
6.71
6.50-7.11
9.93-12.56
8.84-11.73
8.87-11.58
8.27-10.47
6.82-7.76
6.45-6.85
82.8
4.3
74.3
6.8
8.48
9.77
9.61
9.35
8.80
8.51
7.70
7.76-9.32
8.84-10.47
8.84-9.95
8.57-9.92
8.03-9.38
7.76-9.11
6.58-8.33
75.4
69.9
72.6
69.9
73.8
79.9
77.7
9.7
4.6
4.8
1.9
5.3
16.8
15.0
116
15,614,483
132
12 Fixed rate (thousands of dollars) .
13
1-24
14 25-49
15 50-99
16
100-499
17 500-999
18
1000 and over
9,317,075
287,127
156,436
184,229
498,169
120,999
8,070,115
186
8
32
64
676
5,452
19 Floating rate (thousands of dollars).
20
1-24
21 25-49
22 50-99
23
100-499
24
500-999
25
1000 and over
6,297,408
345,816
377,056
604,075
1,689,824
759,286
2,521,351
92
9
34
65
192
632
3,110
211
29
107
109
115
144
76
16
120
161
164
161
144
181
72
11.28
16.3
9.0
11.1
.0
.6
6.6
Months
2,163,968
105
8.54
7.71-9.38
62.5
27 Fixed rate (thousands of dollars)
28
1-99
29
100-499
30
500-999
31
1000 and over
570,122
137,465
116,832
45,046
270,779
59
15
192
694
4,319
8.48
11.37
9.49
10.14
6.29
6.72-10.52
9.50-12.47
8.30-10.75
9.79-11.02
4.75-8.43
44.6
19.4
4.0
22.6
8.7
72.8
19.3
.0
.0
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
1,593,846
192,586
366,150
289,247
745,862
144
23
185
647
3,766
8.56
9.71
8.94
8.66
8.04
7.76-9.31
8.84-10.47
8.30-9.42
7.79-9.38
7.45-8.77
68.9
44.5
52.9
66.2
84.1
19.0
1.3
5.8
10.8
33.3
74.1
75.4
26 Total long term
.0
Loan rate (percent)
Days
Effective 4
Nominal 10
6.61
6.69
6.97
6.74
6.40
6.48
6.77
6.56
7.50
7.56
7.93
7.53
LOANS M A D E BELOW P R I M E 1 2
Overnight 8
One month and under
Over one month and under a year
Demand 9
5,454,273
1,695,517
1,109,780
845,559
7,251
1,947
237
1,665
97.7
1.4
18.7
32.1
6.9
41 Total short term
9,105,129
1,336
6.68
6.47
7.56
75.2
8.9
42 Fixed rate
43 Floating rate
7,929,609
1,175,520
1,757
511
6.67
6.75
6.46
6.54
7.54
7.71
74.1
82.6
7.1
20.6
44 Total long term
554,151
399
45 Fixed rate . . . .
46 Floating rate . .
260,864
293,287
334
483
8.23
8.50
65.5
83.5
37
38
39
40
17
101
62.8
Months
For notes see end of table.
6.34
5.99
7.03
5.80
6.81
39.6
8.3
67.5
Financial Markets
4.23
A73
Continued
B. Construction and Land Development Loans
Loan rate (percent) 13
Characteristics
Amount
of loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity
(months) 3
Weighted
average
effective 4
Standard
error 5
Loans
made under
commitment
(percent)
Interquartile
range 6
Participation
loans
(percent)
A L L BANKS
1,824,092
1 Total
112
9
8.84
.26
7.90-9.38
78.6
17.2
.44
.48
.58
.37
.50
.22
7.90-9.11
11.57-12.40
11.03-12.40
10.43-13.49
9.65-11.58
7.86-8.17
83.3
71.1
71.5
16.1
83.5
90.2
24.9
.5
.0
.0
4.8
31.3
2 Fixed rate (thousands of dollars) . . . .
1-24
25-49
50-99
100-499
6
7 500 and over
866,332
58,913
37,502
53,150
33,614
683,153
115
11
37
71
184
6,270
5
7
13
19
11
4
8.79
12.29
11.91
11.61
10.44
8.02
8 Floating rate (thousands of dollars) ..
9
1-24
10 25-49
11 50-99
100-499
1?
13 500 and over
957,760
49,853
32,736
49,785
242,978
582,408
109
9
32
70
183
1,959
14
10
8
9
12
15
8.87
9.78
9.53
9.22
8.85
8.74
.16
.16
.28
.18
.17
.14
8.30-9.38
8.87-10.20
8.84-9.78
8.84-9.92
8.57-9.65
8.03-9.38
74.3
83.8
74.9
74.4
80.9
70.7
10.3
2.1
2.2
2.7
7.5
13.2
408,526
231,210
1,184,355
37
356
262
13
8
9
9.93
8.26
8.57
.32
.22
.19
8.84-11.03
7.72-8.57
7.90-9.06
76.2
64.6
82.1
2.2
2.2
25.3
1,052,717
838
7
8.25
.17
7.85-8.57
86.1
22.8
646,615
1,470
2,297
10
3
7
7.99
10.49
.47
.55
7.86-8.05
9.92-11.02
91.1
72.4
33.3
14.2
*
*
*
*
#
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
4
By type of construction
14 Single family
IS Multifamily
16 Nonresidential
LARGE BANKS 1 4
1 Total
2 Fixed rate (thousands of dollars) . . . .
3
1-24
25-49
4
S
50-99
100-499
6
500 and over
7
*
*
*
*
638,358
7,167
3
7.98
.02
7.86-8.05
91.4
33.5
8 Floating rate (thousands of dollars) ..
9
1-24
10 25-49
50-99
11
100-499
1?
13 500 and over
406,102
3,612
4,086
6,562
57,411
334,430
417
10
34
71
209
2,350
12
13
16
17
13
12
8.67
9.08
9.06
8.93
8.91
8.61
.17
.21
.12
.35
.14
.20
7.76-9.11
8.57-9.38
8.30-9.84
8.30-9.38
8.57-9.38
7.76-9.06
78.1
93.4
81.8
94.6
88.6
75.8
6.0
5.5
.0
4.4
11.3
5.2
By type of construction
14 Single family
IS Multifamily
16 Nonresidential
52,643
206,224
793,850
123
940
1,305
13
7
6
9.08
8.15
8.23
.19
.20
.13
8.84-9.38
7.72-8.24
7.90-8.43
78.9
63.6
92.4
8.5
1.0
29.4
OTHER BANKS 1 4
1 Total
771,375
51
14
9.63
.38
8.84-9.96
68.4
9.6
2 Fixed rate (thousands of dollars) . . . .
3
1-24
25-49
4
50-99
6
100-499
7 500 and over
219,717
57,443
36,753
52,495
28,231
30
11
37
71
174
11
7
13
19
10
11.15
12.34
11.95
11.62
10.83
.53
.48
.78
.52
.79
9.84-12.13
11.58-12.57
11.03-12.40
10.47-13.49
10.47-11.58
60.5
71.1
71.4
15.8
87.0
.0
.1
.0
.0
.0
*
*
8 Floating rate (thousands of dollars) ..
9
1-24
10 25-49
50-99
11
100-499
1?
13 500 and over
551,658
46,240
28,649
43,224
185,567
247,978
70
9
32
70
176
1,599
15
10
7
8
12
21
9.03
9.84
9.59
9.27
8.83
8.92
.25
.13
.44
.09
.32
.21
8.84-9.42
9.11-10.25
8.84-9.77
8.84-9.92
8.69-9.92
8.84-9.38
71.5
83.1
73.9
71.3
78.6
63.9
13.4
1.9
2.5
2.5
6.3
24.0
By type of construction
14 Single family
IS Multifamily
16 Nonresidential
355,883
24,986
390,505
33
58
100
13
9
16
10.06
9.14
9.27
.58
.29
.26
8.84-11.58
8.30-9.84
8.84-9.42
75.8
73.1
61.3
1.2
11.6
17.1
For notes see end of table.
*
*
*
*
*
*
A70
4.23
Special Tables • February 1987
TERMS OF L E N D I N G AT COMMERCIAL B A N K S S U R V E Y of Loans Made, November 3 - 7 , 1986'—Continued
C. Loans to Farmers14
Size class of loans (thousands)
Characteristics
$10-24
$1-9
All sizes
$250
and over
$100-249
$50-99
$25-49
A L L BANKS
1 Amount of loans (thousands of tlQllars)
2 Number of loans
3 Weighted average maturity (mohths)?
4 Weighted average interest rate (percent) 4
5
Standard error 5
Interquartile range 6
6
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
7
8
9
10
11
12
Percentage of amount of loans
13 With floating rates
14 Made under commitment
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
15
16
17
18
19
20
989,660
44,034
8.3
97,735
27,209
5.5
135,549
8,952
7.4
118,401
3,460
7.9
181,806
2,732
12.1
187,495
1,285
5.5
268,674
397
9.4
10.87
.49
9.65-12.01
11.87
.29
11.07-12.68
11.35
.41
10.52-12.10
11.34
.58
10.59-12.35
10.98
.66
10.20-12.10
10.90
.26
9.31-12.28
9.98
.39
8.30-11.35
10.77
10.65
11.10
11.93
9.86
10.20
11.78
11.81
11.77
12.80
10.72
12.11
11.14
11.64
11.40
11.83
10.98
10.75
11.70
11.40
11.11
10.97
10.20
11.28
11.08
9.76
10.92
10.71
10.97
10.87
10.77
54.5
51.6
43.4
32.7
39.4
29.3
43.4
32.0
41.2
38.4
57.1
55.3
78.3
84.7
31.4
6.8
46.5
2.7
1.1
11.4
15.2
8.2
59.5
7.0
.7
9.4
16.9
9.0
47.0
13.1
3.1
11.0
37.3
9.8
42.9
41.4
9.7
36.7
39.9
4.8
41.7
29.4
*
*
*
*
*
*
*
*
8.6
11.3
13.0
*
248,210
4,206
6.6
7,495
1,848
6.7
13,919
907
6.7
16,951
500
5.8
25,512
392
5.8
57,607
394
6.5
126,726
164
7.0
8.88
.45
8.12-9.58
9.90
.25
9.00-10.38
9.67
.37
8.84-10.20
9.34
.56
8.78-9.93
9.19
.39
8.77-9.65
8.96
.14
8.30-9.58
8.58
.34
7.90-9.31
8.82
9.11
8.94
10.09
9.15
8.69
9.30
9.57
10.03
10.87
10.60
9.68
9.46
10.09
9.64
10.14
9.45
8.96
9.43
9.14
8.99
9.50
9.18
9.12
8.77
8.57
*
*
*
*
*
*
9.66
9.07
9.13
8.90
83.1
80.9
84.2
71.4
83.2
69.6
92.7
80.4
98.6
90.2
96.8
92.0
72.3
75.9
31.0
9.0
32.7
1.2
2.9
23.1
18.7
3.6
53.5
4.5
5.6
14.0
11.5
5.0
56.2
4.8
19.2
9.7
47.8
22.7
16.7
22.7
30.4
11.5
40.5
37.4
*
*
*
*
*
*
*
*
20.6
17.2
31.6
15.5
*
741,451
39,828
8.6
90,240
25,361
5.4
121,630
8,045
7.4
101,450
2,960
8.2
156,294
2,340
12.8
129,889
891
5.1
*
11.54
.18
11.04-12.22
12.04
.13
11.31-12.73
11.54
.15
11.04-12.23
11.67
.11
11.05-12.44
11.27
.53
10.52-12.13
11.75
.21
11.78-12.36
*
12.03
11.88
11.90
12.90
11.26
11.73
11.65
11.90
11.88
11.12
*
*
*
*
*
*
9.48
*
*
*
*
53.0
LARGE BANKS 1 4
1 Amount of loans (thousands of dollars)
2 Number of loans
3 Weighted average maturity (months) 3
4 Weighted average interest rate (percent) 4
Interquartile range 6
6
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
1
8
9
10
11
12
Percentage of amount of loans
13 With floating rates
14 Made under commitment
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
15
16
17
18
19
20
*
*
8.53
*
*
*
*
25.4
OTHER BANKS 1 4
1 Amount of loans (thousands of dollars)
2 Number of loans
3 Weighted average maturity (months) 3
4 Weighted average interest rate (percent) 4
5
Standard error 5
6
Interquartile range 6
7
8
9
10
11
12
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
For notes see end of table.
11.41
11.42
11.56
12.16
*
11.77
*
12.42
*
11.00
*
11.43
*
*
11.74
*
11.45
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Financial Markets
4.23
A75
Continued
C. L o a n s to Farmers 1 4 —Continued
Size class of loans (thousands)
Characteristics
All sizes
Percentage of amount of loans
13 With floating rates
14 Made under commitment
15
16
17
18
19
20
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
$1-9
$25-49
$50-99
$250
and over
$100-249
45.0
41.8
40.0
29.5
34.4
24.7
35.2
24.0
31.8
29.9
39.4
39.0
*
31.6
6.1
51.1
3.3
14.9
8.5
60.0
7.2
17.5
9.4
46.0
14.0
40.3
44.5
*
*
*
*
*
42.1
39.0
*
*
*
*
*
*
7.5
9.0
9.9
7.1
*
*
*
*
*Fewer than 10 sample loans.
1. The survey of terms of bank lending to business collects data on gross loan
extensions made during the first full business week in the mid-month of each
quarter by a sample of 340 commercial banks of all sizes. A subsample of 250
banks also report loans to farmers. The sample data are blown up to estimate the
lending terms at all insured commercial banks during that week. The estimated
terms of bank lending are not intended for use in collecting the terms of loans
extended over the entire quarter or residing in the portfolios of those banks.
Construction and land development loans include both unsecured loans and loans
secured by real estate. Thus, some of the construction and land development
loans would be reported on the statement of condition as real estate loans and the
remainder as business loans. Mortgage loans, purchased loans, foreign loans, and
loans of less than $1,000 are excluded from the survey.
As of Dec. 31, 1985, assets of most of the large banks were at least $5.5 billion.
For all insured banks total assets averaged $165 million.
2. Beginning with the August 1986 survey respondent banks provide information on the type of base rate used to price each commercial and industrial loan
made during the survey week. This reporting change is reflected in the new
column on the most common base pricing rate in table A and footnote 13 from
table B.
3. Average maturities are weighted by loan size and exclude demand loans.
4. Effective (compounded) annual interest rates are calculated from the stated
rate and other terms of the loan and weighted by loan size.
5. The chances are about two out of three that the average rate shown would
differ by less than this amount from the average rate that would be found by a
complete survey of lending at all banks.
$10-24
*
*
*
*
*
*
*
6. The interquartile range shows the interest rate range that encompasses the
middle 50 percent of the total dollar amount of loans made.
7. The most common base rate is that rate used to price the largest dollar
volume of loans. Base pricing rates include the prime rate (sometimes referred to
as a bank's "basic" or "reference" rate); the federal funds rate; domestic money
market rates other than the federal funds rate; foreign money market rates; and
other base rates not included in the foregoing classifications.
8. Overnight loans are loans that mature on the following business day.
9. Demand loans have no stated date of maturity.
10. Nominal (not compounded) annual interest rates are calculated from survey
data on the stated rate and other terms of the loan and weighted by loan size.
11. The prime rate reported by each bank is weighted by the volume of loans
extended and then averaged.
12. The proportion of loans made at rates below prime may vary substantially
from the proportion of such loans outstanding in banks' portfolios.
13. 73.4 percent of construction and land development loans were priced
relative to the prime rate.
14. Among banks reporting loans to farmers (Table 5), most "large banks"
(survey strata 1 to 3) had over $600 million in total assets, and most "other banks"
(survey strata 4 to 6) had total assets below $600 million.
The survey of terms of bank lending to farmers now includes loans secured by
farm real estate. In addition, the categories describing the purpose of farm loans
have now been expanded to include "purchase or improve farm real estate." In
previous surveys, the purpose of such loans was reported as "other".
A76
Federal Reserve Board of Governors
P A U L A . V O L C K E R , Chairman
M A R T H A R . SEGER
M A N U E L H . J O H N S O N , Vice
OFFICE OF BOARD
Chairman
OFFICE OF STAFF DIRECTOR
MONETARY
AND FINANCIAL
MEMBERS
JOSEPH R . C O Y N E , Assistant
to the
Board
D O N A L D J. W I N N , Assistant
to the
Board
STEVEN M . ROBERTS, Assistant
to the
Chairman
BOB S. MOORE, Special Assistant
WAYNE D . ANGELL
DONALD L. KOHN, Deputy Staff Director
NORMAND R.V. BERNARD, Special Assistant
OF RESEARCH
AND
STATISTICS
DIVISION
MICHAEL B R A D F I E L D , General
Counsel
J. VIRGIL MATTINGLY, JR., Deputy General Counsel
RICHARD M. ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
RICKI R. TIGERT, Assistant General Counsel
MARYELLEN A. BROWN, Assistant to the General Counsel
OFFICE
to the Board
to the Board
DIVISION
LEGAL
FOR
POLICY
OF THE
SECRETARY
WILLIAM W . W I L E S ,
Secretary
BARBARA R . L O W R E Y , Associate
Secretary
JAMES M C A F E E , Associate
Secretary
JAMES L . K I C H L I N E ,
Director
E D W A R D C . E T T I N , Deputy
Director
Director
MICHAEL J. PRELL, Deputy
JARED J. E N Z L E R , Associate
Director
DAVID E. LINDSEY, Associate
Director
ELEANOR J. STOCKWELL, Associate
Director
MARTHA BETHEA, Deputy Associate Director
THOMAS D. SIMPSON, Deputy Associate Director
LAWRENCE SLIFMAN, Deputy Associate Director
PETER A. TINSLEY, Deputy Associate Director
S U S A N J. LEPPER, Assistant
RICHARD D . PORTER, Assistant
MARTHA S . S C A N L O N , Assistant
Director
Director
Director
JOYCE K. ZICKLER, Assistant
Director
LEVON H . G A R A B E D I A N , Assistant
Director
(Administration)
DIVISION OF
CONSUMER
AND COMMUNITY
AFFAIRS
DIVISION
GRIFFITH L . G A R W O O D ,
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
EDWIN M . TRUMAN,
ROBERT F . GEMMILL, Staff
D O N A L D B . A D A M S , Assistant
PETER HOOPER I I I , Assistant
KAREN H. JOHNSON, Assistant
Director'
DON E. KLINE, Associate Director
FREDERICK M. STRUBLE, Associate Director
WILLIAM A. RYBACK, Deputy Associate Director
STEPHEN C. SCHEMERING, Deputy Associate Director
RICHARD SPILLENKOTHEN, Deputy Associate Director
HERBERT A . B I E R N , Assistant
Director
Director
A N T H O N Y C O R N Y N , Assistant
Director
JAMES I. GARNER, Assistant
Director
JAMES D . GOETZINGER, Assistant
Director
MICHAEL G . M A R T I N S O N , Assistant
ROBERT S . PLOTKIN, Assistant
S I D N E Y M . S U S S A N , Assistant
Director
RALPH W . S M I T H , J R . , Assistant
WILLIAM TAYLOR,
Director
FRANKLIN D . DREYER, Deputy
FINANCE
LARRY J. PROMISEL, Senior Associate
Director
CHARLES J. SIEGMAN, Senior Associate Director
DAVID H. HOWARD, Deputy Associate Director
DIVISION OF
BANKING
SUPERVISION
AND
REGULATION
JOE M. CLEAVER, Assistant
OF INTERNATIONAL
Director
Director
Director
LAURA M. HOMER, Securities Credit Officer
1. On loan from the Federal Reserve Bank of Chicago.
Adviser
Director
Director
Director
Director
All
and Official Staff
H . ROBERT H E L L E R
OFFICE OF
STAFF DIRECTOR
FOR
S. DAVID FROST, Staff
OFFICE OF STAFF DIRECTOR
FOR
FEDERAL RESERVE BANK
ACTIVITIES
MANAGEMENT
THEODORE E. ALLISON, Staff Director
Director
EDWARD T. MULRENIN, Assistant Staff Director
CHARLES L. HAMPTON, Senior Technical Adviser
PORTIA W. THOMPSON, Equal Employment Opportunity
Programs Officer
DIVISION OF FEDERAL
BANK
OPERATIONS
DIVISION
ELLIOTT C. MCENTEE, Associate
RESERVE
CLYDE H . FARNSWORTH, JR.,
OF
PERSONNEL
DAVID L. ROBINSON, Associate
DAVID L. SHANNON,
Director
JOHN R. WEIS, Assistant
OFFICE OF THE
Director
EARL G. HAMILTON, Assistant Director
JOHN H. PARRISH, Assistant Director
CONTROLLER
FLORENCE M . Y O U N G ,
GEORGE E . LIVINGSTON,
Controller
BRENT L. BOWEN, Assistant
DIVISION
Controller
OF SUPPORT
ROBERT E . FRAZIER,
SERVICES
Director
GEORGE M. LOPEZ, Assistant
Director
OFFICE OF THE EXECUTIVE
INFORMATION
RESOURCES
DIRECTOR
FOR
MANAGEMENT
ALLEN E. BEUTEL, Executive
Director
STEPHEN R. MALPHRUS, Assistant
Director
DIVISION
SYSTEMS
OF HARDWARE
BRUCE M . BEARDSLEY,
AND
SOFTWARE
Director
THOMAS C. JUDD, Assistant
Director
ELIZABETH B. RIGGS, Assistant
Director
ROBERT J. ZEMEL, Assistant
Director
DIVISION OF APPLICATIONS
STATISTICAL
SERVICES
WILLIAM R . JONES,
DEVELOPMENT
Director
DAY W. RADEBAUGH, Assistant
Director
RICHARD C. STEVENS, Assistant
PATRICIA A . WELCH, Assistant
Director
Director
Director
Director
C. WILLIAM SCHLEICHER, JR., Associate
Director
CHARLES W. BENNETT, Assistant
Director
ANNE M. DEBEER, Assistant
Director
JACK DENNIS, JR., Assistant
Director
Director
CHARLES W . WOOD, Assistant
Director
AND
Adviser
A78
Federal Reserve Bulletin • February 1987
Federal Open Market Committee
FEDERAL
OPEN
MARKET
P A U L A . VOLCKER,
COMMITTEE
E. GERALD CORRIGAN, Vice Chairman
Chairman
W A Y N E D . ANGELL
ROGER G U F F E Y
H . ROBERT HELLER
KAREN N . HORN
M A N U E L H . JOHNSON
THOMAS C . MELZER
NORMAND R . V . BERNARD, Assistant
Secretary
MICHAEL BRADFIELD, General
Counsel
JAMES H. OLTMAN, Deputy General Counsel
JAMES L . KICHLINE,
Economist
EDWIN M . TRUMAN, Economist
(International)
ANATOL B. BALBACH, Associate
Economist
JOHN M. DAVIS, Associate
Economist
FRANK E . MORRIS
MARTHA R . SEGER
RICHARD G. DAVIS, Associate
THOMAS E. DAVIS, Associate
DONALD L. KOHN, Associate
DAVID E. LINDSEY, Associate
ALICIA H . MUNNELL, Associate
MICHAEL J. PRELL, Associate
CHARLES J. SIEGMAN, Associate
Economist
Economist
Economist
Economist
Economist
Economist
Economist
PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account
SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account
FEDERAL
ADVISORY
COUNCIL
JOHN P. LA WARE, First District
JOHN F. MCGILLICUDDY, Second District
SAMUEL A. MCCULLOUGH, Third District
JULIEN L. MCCALL, Fourth District
JOHN G. MEDLIN, JR., Fifth District
BENNETT A. BROWN, Sixth District
CHARLES T. FISHER, III, Seventh District
DONALD N. BRANDIN, Eighth District
DEWALT H. ANKENY, JR., N i n t h District
F. PHILLIPS GILTNER, Tenth District
GERALD W. FRONTERHOUSE, Eleventh District
JOHN D. MANGELS, Twelfth District
HERBERT V . PROCHNOW, SECRETARY
WILLIAM J. KORSVIK, ASSOCIATE SECRETARY
A79
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
EDWARD N. LANGE, Seattle, Washington, Chairman
STEVEN W. HAMM, COLUMBIA, South Carolina, Vice Chairman
E D W I N B . BROOKS, JR., R i c h m o n d , V i r g i n i a
JONATHAN A . B R O W N , W a s h i n g t o n , D . C .
JUDITH N . B R O W N , E d i n a , M i n n e s o t a
MICHAEL S . CASSIDY, N e w Y o r k , N e w Y o r k
THERESA FAITH CUMMINGS, S p r i n g f i e l d , I l l i n o i s
RICHARD B . D O B Y , D e n v e r , C o l o r a d o
RICHARD H . F I N K , W a s h i n g t o n , D . C .
NEIL J. FOG ARTY, Jersey City, New Jersey
STEPHEN GARDNER, D a l l a s , T e x a s
KENNETH A . HALL, J a c k s o n , M i s s i s s i p p i
Massachusetts
RAMON E. JOHNSON, Salt Lake City, Utah
ROBERT W. JOHNSON, West Lafayette, Indiana
THRIFT
INSTITUTIONS
ADVISORY
HELEN E. NELSON, Mill Valley, California
SANDRA R . PARKER, R i c h m o n d , V i r g i n i a
JOSEPH L . PERKOWSKI, C e n t e r v i l l e , M i n n e s o t a
BRENDA L . SCHNEIDER, D e t r o i t , M i c h i g a n
JANE S H U L L , P h i l a d e l p h i a , P e n n s y l v a n i a
TED L. SPURLOCK, Dallas, Texas
MEL R. STILLER, Boston, Massachusetts
CHRISTOPHER J. SUMNER, Salt Lake City, Utah
ELENA G. HANGGI, Little Rock, Arkansas
ROBERT J. HOBBS, B o s t o n ,
JOHN M . KOLESAR, C l e v e l a n d , O h i o
A L A N B . LERNER, D a l l a s , T e x a s
FRED S . M C C H E S N E Y , C h i c a g o , I l l i n o i s
RICHARD L . D . MORSE, M a n h a t t a n , K a n s a s
E D W A R D J. WILLIAMS, C h i c a g o , I l l i n o i s
MICHAEL ZOROYA, S t . L o u i s , M i s s o u r i
COUNCIL
MICHAEL R. WISE, Denver, Colorado, President
JOHN C . D I C U S , T o p e k a , K a n s a s
JAMIE J. JACKSON, H o u s t o n , T e x a s
D O N A L D F . MCCORMICK, L i v i n g s t o n , N e w J e r s e y
HERSCHEL ROSENTHAL, M i a m i , F l o r i d a
GARY L. SIRMON, Walla, Walla, Washington
A80
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copies
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A81
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REVIEW OF THE TECHNIQUES A N D LITERATURE,
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133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVENTION, A N D INTEREST RATES: A N EMPIRICAL IN-
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Combined Construction/Permanent Loan Disclosure and
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135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: APPLICATIONS TO C A N A D A , GERMA-
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137. THE IMPLICATIONS FOR B A N K MERGER POLICY OF
FINANCIAL DEREGULATION, INTERSTATE B A N K I N G ,
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Rhoades. February 1984. Out of print.
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CAL BANKING MARKETS, by James Burke. June 1984.
14 pp. Out of print.
139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN
THE UNITED STATES, by Thomas D. Simpson and
Patrick M. Parkinson. August 1984. 20 pp.
140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF
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141. A COMPARISON OF DIRECT DEPOSIT A N D CHECK PAY-
MENT COSTS, by William Dudley. November 1984.
15 pp. Out of print.
142. MERGERS
AND
ACQUISITIONS
BY
COMMERCIAL
BANKS, 1960-83, by Stephen A. Rhoades. December
1984. 30 pp. Out of print.
Staff Studies 115-125 are out of print.
114. MULTIBANK HOLDING COMPANIES: RECENT E V I DENCE ON COMPETITION A N D PERFORMANCE IN
BANKING MARKETS, by Timothy J. Curry and John T.
Rose. Jan. 1982. 9 pp.
126. DEFINITION A N D MEASUREMENT OF EXCHANGE MAR-
KET INTERVENTION, by Donald B. Adams and Dale
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129. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1 9 8 1 , b y M a r g a r e t
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130. EFFECTS OF EXCHANGE R A T E VARIABILITY ON INTERNATIONAL TRADE A N D OTHER ECONOMIC VARIABLES: A REVIEW OF THE LITERATURE, b y V i c t o r i a S .
Farrell with Dean A. DeRosa and T. Ashby McCown.
January 1984. Out of print.
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Jacobson. October 1983. 8 pp.
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143. COMPLIANCE COSTS A N D CONSUMER BENEFITS OF
THE ELECTRONIC F U N D TRANSFER A C T : RECENT
SURVEY EVIDENCE, by Frederick J. Schroeder. April
1985. 23 pp. Out of print.
144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR C O N SUMER CREDIT REGULATIONS: T H E TRUTH IN L E N D ING A N D E Q U A L CREDIT OPPORTUNITY L A W S , b y
Gregory E. Elliehausen and Robert D. Kurtz. May
1985. 10 pp.
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A N D THEIR IMPACT ON CONSUMERS, b y G l e n n B .
Canner and Robert D. Kurtz. August 1985. 31 pp. Out
of print.
146. T H E ROLE OF THE PRIME RATE IN THE PRICING OF
BUSINESS LOANS BY COMMERCIAL B A N K S , 1 9 7 7 - 8 4 ,
by Thomas F. Brady. November 1985. 25 pp.
147. 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.
148. THE MACROECONOMIC A N D SECTORAL EFFECTS OF
THE ECONOMIC RECOVERY TAX A C T : SOME SIMULA-
TION RESULTS, by Flint Brayton and Peter B. Clark.
December 1985. 17 pp.
149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS
IN BANKING BEFORE A N D AFTER ACQUISITION, b y
Stephen A. Rhoades. April 1986. 32 pp.
150. STATISTICAL COST ACCOUNTING MODELS IN B A N K ING: A REEXAMINATION A N D AN APPLICATION, b y
John T. Rose and John D. Wolken. May 1986. 13 pp.
A82
1 5 1 . RESPONSES TO DEREGULATION: RETAIL DEPOSIT
PRICING FROM 1 9 8 3 THROUGH 1 9 8 5 , b y P a t r i c k I.
Mahoney, Alice P. White, Paul F. O'Brien, and Mary
M. McLaughlin. January 1987. 30 pp.
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OF BULLETIN
ARTICLES
Most of the articles reprinted do not exceed 12 pages.
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.
Limit of 10 copies
Foreign Experience with Targets for Money Growth. 10/83.
Intervention in Foreign Exchange Markets: A Summary of
Ten Staff Studies. 11/83.
A Financial Perspective on Agriculture. 1/84.
Survey of Consumer Finances, 1983. 9/84.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
U. S. International Transactions in 1985. 5/86.
Prices, Profit Margins, and Exchange Rates. 6/86.
Agricultural Banks under Stress. 7/86.
Foreign Lending by Banks: A Guide to International and
U.S. Statistics. 10/86.
Recent Developments in Corporate Finance. 11/86.
A83
Index to Statistical Tables
References
are to pages A3-A75
although the prefix 'A"
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20, 74
Assets and liabilities (See also Foreigners)
Banks, by classes, 18-20
Domestic finance companies, 37
Federal Reserve Banks, 10
Financial institutions, 26
Foreign banks, U.S. branches and agencies, 21
Nonfinancial corporations, 36
Automobiles
Consumer installment credit, 40, 41
Production, 47, 48
BANKERS acceptances, 9, 23, 24
Bankers balances, 18-20, 70, 72, 74 (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 24
Branch banks, 21, 55
Business activity, nonfinancial, 44
Business expenditures on new plant and equipment, 36
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 46
Capital accounts
Banks, by classes, 18
Federal Reserve Banks, 10
Central banks, discount rates, 67
Certificates of deposit, 24
Commercial and industrial loans
Commercial banks, 16, 19, 70-72
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20
Commercial and industrial loans, 16, 18, 19, 20, 21, 70-72
Consumer loans held, by type, and terms, 40, 41
Loans sold outright, 19
Nondeposit funds, 17
Real estate mortgages held, by holder and property, 39
Terms of Lending, 70-75
Time and savings deposits, 3
Commercial paper, 23, 24, 37
Condition statements (See Assets and liabilities)
Construction, 44, 49, 73
Consumer installment credit, 40, 41
Consumer prices, 44, 50
Consumption expenditures, 51, 52
Corporations
Nonfinancial, assets and liabilities, 36
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 26, 40 (See also Thrift institutions)
Currency and coin, 18, 70, 72, 74
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 15
Debt (See specific types of debt or
Demand deposits
Banks, by classes, 18-21
securities)
is omitted in this index
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 22
Turnover, 15
Depository institutions
Reserve requirements, 7
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 18-20, 21
Federal Reserve Banks, 4, 10
Turnover, 15
Discount rates at Reserve Banks and at foreign central
banks and foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 35
EMPLOYMENT, 45
Eurodollars, 24
FARM mortgage loans, 39
Federal agency obligations, 4, 9, 10, 11, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and
ownership of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 28, 33
Federal funds, 5, 17, 19, 20, 21, 24, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 38, 39
Federal Housing Administration, 33, 38, 39
Federal Land Banks, 39
Federal National Mortgage Association, 33, 38, 39
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 4, 10, 11, 30
Federal Reserve credit, 4, 5, 10, 11
Federal Reserve notes, 10
Federal Savings and Loan Insurance Corporation insured
institutions, 26
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 37
Business credit, 37
Loans, 40, 41
Paper, 23, 24
Financial institutions
Loans to, 19, 20, 21
Selected assets and liabilities, 26
Float, 4
Flow of funds, 42, 43
Foreign banks, assets and liabilities of U.S. branches and
agencies, 21
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4, 10, 19, 20
Foreign exchange rates, 68
Foreign trade, 54
Foreigners
Claims on, 55, 57, 60, 61, 62, 64
Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66
A84
GOLD
Certificate account, 10
Stock, 4, 54
Government National Mortgage Association, 33, 38, 39
Gross national product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 44, 51, 52
Industrial production, 44, 47
Installment loans, 40, 41
Insurance companies, 26, 30, 39
Interest rates
Bonds, 24
Commercial banks, 70-75
Consumer installment credit, 41
Federal Reserve Banks, 6
Foreign central banks and foreign countries, 67
Money and capital markets, 24
Mortgages, 38
Prime rate, 23
Time and savings deposits, 8
International capital transactions of United States, 53-67
International organizations, 57, 58, 60, 63, 64
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18, 19, 20, 21, 26
Commercial banks, 3, 16, 18-20, 39
Federal Reserve Banks, 10, 11
Financial institutions, 26, 39
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18—20
Commercial banks, 3, 16, 18-20, 70-75
Federal Reserve Banks, 4, 5, 6, 10, 11
Financial institutions, 26, 39
Insured or guaranteed by United States, 38, 39
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 25
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 5
Reserve requirements, 7
Mining production, 48
Mobile homes shipped, 49
Monetary and credit aggregates, 3, 12
Money and capital market rates, 24
Money stock measures and components, 3, 13
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks, 8 (See also Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 9
PERSONAL income, 52
Prices
Consumer and producer, 44, 50
Stock market, 25
Prime rate, 23
Producer prices, 44, 50
Production, 44, 47
Profits, corporate, 35
REAL estate loans
Banks, by classes, 16, 19, 20, 39
Financial institutions, 26
Terms, yields, and activity, 38
Type of holder and property mortgaged, 39
Repurchase agreements, 5, 17, 19, 20, 21
Reserve requirements, 7
Reserves
Commercial banks, 18
Depository institutions, 3, 4, 5, 12
Federal Reserve Banks, 10
U.S. reserve assets, 54
Residential mortgage loans, 38
Retail credit and retail sales, 40, 41, 44
SAVING
Flow of funds, 42, 43
National income accounts, 51
Savings and loan associations, 8, 26, 39, 40, 42 (See also
Thrift institutions)
Savings banks, 26, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 65
New issues, 34
Prices, 25
Special drawing rights, 4, 10, 53, 54
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 19, 20, 26
Rates on securities, 24
Stock market, selected statistics, 25
Stocks (See also Securities)
New issues, 34
Prices, 25
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 3 (See also Credit unions, Mutual
savings banks, and Savings and loan associations)
Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21
Trade,foreign, 54
Treasury cash, Treasury currency, 4
Treasury deposits, 4, 10, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 18, 19, 20
Treasury deposits at Reserve Banks, 4, 10, 28
U.S. government securities
Bank holdings, 18-20, 21, 30
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 4, 10, 11, 30
Foreign and international holdings and transactions, 10,
30, 66
Open market transactions, 9
Outstanding, by type and holder, 26, 30
Rates, 24
U.S. international transactions, 53-67
Utilities, production, 48
VETERANS Administration, 38, 39
WEEKLY reporting banks, 19-21
Wholesale (producer) prices, 44, 50
YIELDS (See Interest rates)
A85
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK,
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Joseph A. Baute
George N. Hatsopoulos
Frank E. Morris
Robert W. Eisenmenger
N E W YORK*
10045
John R. Opel
Virginia A. Dwyer
Mary Ann Lambertsen
E. Gerald Corrigan
Thomas M. Timlen
Buffalo
14240
Vice President
in charge of branch
John T. Keane
PHILADELPHIA
19105
Nevius M. Curtis
George E. Bartol III
Edward G. Boehne
Richard L. Smoot
CLEVELAND*
44101
(to be announced)
E. Mandell de Windt
Owen B. Butler
James E. Haas
Karen N. Horn
William H. Hendricks
Leroy T. Canoles, Jr.
Robert A. Georgine
Gloria L. Johnson
Wallace J. Jorgenson
Robert P. Black
Jimmie R. Monhollon
Bradley Currey, Jr.
Larry L. Prince
Margaret E. M. Tolbert
Andrew A. Robinson
Robert D. Apelgren
C. Warren Neel
Caroline K. Theus
Robert P. Forrestal
Jack Guynn
Robert J. Day
Marcus Alexis
Robert E. Brewer
Silas Keehn
Daniel M. Doyle
W.L. Hadley Griffin
Robert L. Virgil, Jr.
(to be announced)
(to be announced)
(to be announced)
Thomas C. Melzer
Joseph P. Garbarini
John B. Davis, Jr.
Michael W. Wright
Warren H. Ross
Gary H. Stern
Thomas E. Gainor
Irvine O. Hockaday, Jr.
Robert G. Lueder
James E. Nielson
Patience S. Latting
Kenneth L. Morrison
Roger Guffey
Henry R. Czerwinski
Bobby R. Inman
Hugh G. Robinson
(to be announced)
(to be announced)
(to be announced)
Robert H. Boykin
William H. Wallace
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
N e w Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
K A N S A S CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
S A N FRANCISCO
59601
64198
80217
73125
68102
75222
79999
77252
78295
94120
Los Angeles
90051
Fred W. Andrew
Robert F. Erburu
Richard C. Seaver
Portland
Salt Lake City
Seattle
97208
84125
98124
Paul E. Bragdon
Don M. Wheeler
John W. Ellis
Charles A. Cerino
Harold J. Swart
Robert D. McTeer, Jr.
Albert D. Tinkelenberg
John G. Stoides
Delmar Harrison
Fred R. Herr
James D. Hawkins
Patrick K. Barron
Jeffrey J. Wells
Henry H. Bourgaux
Roby L. Sloan
John F. Breen
James E. Conrad
Paul I. Black, Jr.
Robert F. McNellis
Wayne W. Martin
William G. Evans
Robert D. Hamilton
James L. Stull
Joel L. K o o n c e , Jr.
J. Z. R o w e
Thomas H. Robertson
Thomas C. Warren
(Acting)
Angelo S. Carella
E. Ronald Liggett
Gerald R. Kelly
*Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 060%; 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.
A86
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
Por
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LEGEND
~ Boundaries of Federal Reserve Districts
®
Federal Reserve Bank Cities
Boundaries of Federal Reserve Branch
Territories
*
Federal Reserve Branch Cities
Federal Reserve Bank Facility
Q
Board of Governors of the Federal Reserve
System
@FedFRASER