Full text of Federal Reserve Bulletin : June 1985
The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
VOLUME 71 •
NUMBER 6 •
JUNE
1985
FEDERAL RESERVE
BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON,
D.C.
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield • S. David Frost
• Griffith L. Garwood • James L. Kichline • Edwin M. Truman
Naomi P. Salus,
Coordinator
The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for
opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Unit headed by Mendelle T. Berenson,
the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
373 THE FEDERALLY SPONSORED
AGENCIES: AN OVERVIEW
CREDIT
This article examines the impact of the five
privately owned financial intermediaries
that were established by the federal government to channel funds to particular sectors
of the economy that are deemed worthy of
special support.
389 THE GROWTH OF CONSUMER
DEBT
The surge in consumer installment credit
during the 1983-84 economic upswing has
raised concerns that household indebtedness could inhibit future spending.
403 INDUSTRIAL
PRODUCTION
Output rose an estimated 0.3 percent in
March.
405 STATEMENTS
TO
CONGRESS
E. Gerald Corrigan, President, Federal Reserve Bank of New York, discusses efforts
aimed at improving standards of capital
adequacy for dealers in U.S. government
securities, before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, April 1, 1985.
contribution to efforts to ameliorate the
problems of the state-chartered, privately
insured thrift institutions in Ohio, before
the Subcommittee on Commerce, Consumer and Monetary Affairs of the House Committee on Government Operations, April 3,
1985.
415 Karen N. Horn, President, Federal Reserve
Bank of Cleveland, examines the Federal
Reserve's response to the recent problems
experienced by thrift institutions insured by
the Ohio Deposit Guarantee Fund, before
the Subcommittee on Commerce, Consumer and Monetary Affairs of the House Committee on Government Operations, April 3,
1985.
418 Vice Chairman Martin discusses the recent
surge in merger and takeover activity, before the Subcommittee on Securities of the
Senate Committee on Banking, Housing,
and Urban Affairs, April 4, 1985. [Vice
Chairman Martin presented similar testimony before the Subcommittees on Oversight
and Select Revenue Measures of the House
Committee on Ways and Means, April 16,
1985.]
409 J. Charles Partee, Member, Board of Governors, reviews some of the concerns of the
Federal Reserve Board with respect to
evolving changes in the financial structure
that serve to link depository institutions and
other financial entities, before the Subcommittee on Telecommunications, Consumer
Protection, and Finance of the House Committee on Energy and Commerce, April 2,
1985.
422 Theodore E. Allison, Staff Director for Federal Reserve Bank Activities, Board of
Governors, outlines the Federal Reserve's
role in supplying cash to and accepting cash
from depository institutions and also addresses the Federal Reserve's record of
commitment in supporting government
agencies that are using currency data to
investigate criminal activity, before the
Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the
House Committee on Banking, Finance and
Urban Affairs, April 4, 1985.
412 Preston Martin, Vice Chairman, Board of
Governors, discusses the Federal Reserve's
424 Chairman Volcker reviews some of the issues involved in proposed banking legisla-
tion and focuses particularly on the longand short-term effects of chartering socalled nonbank banks and on the provisions
of the "Bank Definition Act," before the
Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the
House Committee on Banking, Finance and
Urban Affairs, April 17, 1985.
428 Vice Chairman Martin underscores the importance of assessing the implications of the
recent surge in merger and takeover activity, before the Subcommittee on Telecommunications, Consumer Protection, and Finance of the House Committee on Energy
and Commerce, April 23, 1985.
430 Chairman Volcker reviews the issues involved in interstate and regional banking
and says that the Federal Reserve Board
believes the time has come for the Congress
to authorize some interstate banking, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the House Committee on Banking,
Finance and Urban Affairs, April 24, 1985.
435 Governor Partee discusses the current difficulties being experienced by banks in agricultural communities and says that these
problems have been intensifying lately as
more farmers have been finding it difficult
to meet fully their loan obligations, before
the Subcommittee on Financial Institutions
of the Senate Committee on Banking,
Housing, and Urban Affairs, April 26, 1985.
440
ANNOUNCEMENTS
Amendment to Regulation AA.
Revised List of OTC Margin Stocks.
Revised Rules Regarding Equal Opportunity.
Proposal for a joint venture to deal in foreign currency options traded on a stock
exchange.
Changes in Board staff.
Admission of seven state banks to membership in the Federal Reserve System.
445 LEGAL
DEVELOPMENTS
Amendments to Regulations H and Y and
Rules of Procedure; amendments to Regulation AA; amendments to Rules Regarding
Delegation of Authority; various bank holding company, bank service corporation, and
bank merger orders; and pending cases.
A l FINANCIAL
AND BUSINESS
A3 Domestic Financial Statistics
A44 Domestic Nonfinancial Statistics
A53 International Statistics
A69 GUIDE TO TABULAR
PRESENTATION,
STATISTICAL RELEASES, AND SPECIAL
TABLES
A76 BOARD OF GOVERNORS
AND
STAFF
A78 FEDERAL OPEN MARKET
COMMITTEE
AND STAFF; ADVISORY
COUNCILS
Revisions to guidelines for capital adequacy.
A80 FEDERAL RESERVE
PUBLICATIONS
Publication of bank holding company performance report.
A85 INDEX TO STATISTICAL
Guidelines for purchase and sale of government-guaranteed loans.
A87 FEDERAL RESERVE
AND OFFICES
Publication of report on priced services in
1984.
A88 MAP OF FEDERAL RESERVE
STATISTICS
BOARD
TABLES
BANKS,
BRANCHES,
SYSTEM
The Federally Sponsored Credit Agencies:
An Overview
This article was prepared by Michael J. Moran
of the Board's Division of Research and Statistics. Michael Maryn provided research assistance.
One of the hallmarks of a sophisticated financial
system is a well-developed set of financial intermediaries. In the United States, such institutions
as commercial banks, savings and loan associations, insurance companies, pension funds, and
investment companies promote the efficient allocation of capital by offering people financial
instruments with features they could not obtain
by investing directly with the ultimate users of
the funds. The advantages of investing through a
financial intermediary include a more desirable
combination of risk and return, greater liquidity,
lower transaction costs, smaller denominations
for initial savings balances, and greater flexibility
for subsequent additions to these balances. Borrowers and equity issuers, in turn, find a larger
and more readily available pool of funds to
support their spending plans. In the U.S. economy, an average of roughly 75 percent of net funds
supplied and raised each year are channeled
through financial intermediaries.
The federal government has established five
privately owned intermediaries to channel funds
to particular sectors of the economy that are
deemed worthy of special support. These institutions are known collectively as the federally
sponsored credit agencies:
• Federal Home Loan Banks
• Federal Home Loan Mortgage Corporation
• Federal National Mortgage Association
• Farm Credit Banks
• Student Loan Marketing Association.
The Congress established the first three intermediaries to broaden the flow of credit to the
mortgage and housing markets, and the last two
to provide funds to support agriculture and higher education respectively.
The sponsored agencies are expected to facilitate a more desirable outcome at times when
market forces might allocate credit in ways that
are not socially optimal. For example, mortgage
originators and smaller commercial banks might
be unable to attract sufficient deposits to meet
the demands of potential homeowners and farmers—at least at interest rates that are deemed to
be, in some sense, appropriate. Similarly, private
lenders may be reluctant to make loans for higher
education because of their long maturities or
their complex servicing requirements. In other
instances, lenders and borrowers in these markets may be mismatched geographically. In the
first examples, the federally sponsored credit
agencies can channel funds from the money and
capital markets to the targeted sector; in the last
example, the sponsored agencies serve to transfer funds to the place they are needed and in
short supply.
Rather than lending directly to the ultimate
borrowers, most of the federally sponsored credit agencies provide funds that private institutions
make available to individuals and businesses.
The sponsored agencies obtain funds by selling
either debt or pass-through securities in the
money and capital markets; they channel these
funds to private lending institutions either
through loan agreements or by buying the assets
of the private lenders and thus providing them
with funds to make new loans. With these methods, the sponsored credit agencies represent a
second layer of intermediation that is built upon
the financial structure in the private sector.
Many programs under the direction of the
federal government serve an intermediary function, but two features of the federally sponsored
credit agencies set them apart. First, the sponsored agencies are wholly owned by the private
sector. Although they have certain unique ties
with the federal government—such as board
members appointed by the President and bor-
374 Federal Reserve Bulletin • June 1985
rowing privileges from the Treasury Department—ultimately it is the stockholders or the
borrowers (all private) that stand to benefit or
lose from their activities. As private entities,
these institutions are not subject to the appropriations process of the federal budget, nor does the
Congress directly influence their financing activity or rate of growth. Second, these intermediaries borrow directly in the financial markets to
raise funds, whereas other lenders under the
direction of the federal government obtain their
funds from the Federal Financing Bank, which,
in turn, borrows from the Treasury Department.
Because the sponsored agencies are privately
owned, their debt securities are not guaranteed
by the federal government.
One organization that frequently is associated
with the federally sponsored credit agencies, but
is quite different, is the Government National
Mortgage Association—often referred to as
GNMA, or Ginnie Mae. This organization is part
of the Department of Housing and Urban Development and currently does not issue debt in the
money and capital markets. The popular Ginnie
Mae securities that trade in the market place are
actually mortgage pass-through certificates issued by mortgage originators, but Ginnie Mae
guarantees the timely payment of interest and
principal. This institution is not discussed further
in this article.
The article next reviews the role of the federally sponsored credit agencies in the U.S. economy, including their growth over the long run and
their effectiveness in channeling funds to their
respective credit markets. It then discusses the
financing activity of the sponsored agencies in
the money and capital markets, and reviews their
net income performance. The article concludes
with a discussion of the future role of these
intermediaries in light of some important changes
unfolding in the financial system.
THE GROWTH AND CONTRIBUTION OF THE
FEDERALLY SPONSORED CREDIT AGENCIES
The simplified balance sheet for each federally
sponsored agency presented in table 1 reveals
the size and nature of their activities. In general,
the sponsored agencies are large participants in
the U.S. financial system. The combined assets
of all five sponsored agencies are about one-third
the size of those of the entire savings and loan
industry and about one-half the size of those of
private pension funds. The Federal Home Loan
Banks (FHLBs), the Federal National Mortgage
Association (FNMA, or Fannie Mae), and the
Farm Credit Banks (FCBs), taken alone, have
assets much larger than those of the largest thrift
institution and about the same size as those of
the third largest commercial bank. The Federal
Home Loan Mortgage Corporation (FHLMC, or
Freddie Mac) holds a much smaller volume of
total assets than does each of the three largest
sponsored agencies, but, as explained more fully
later, the balance sheet understates the magnitude of its activities in the financial markets. The
Student Loan Marketing Association (SLMA, or
Sallie Mae) is the smallest of the federally sponsored credit agencies, but is still a substantial
factor in the credit markets.
The federally sponsored credit agencies hold
primarily two types of assets: loans granted to
private lending institutions and loans to individuals or businesses that were purchased from
private lending institutions or originated directly.
The Federal Home Loan Banks issue loans
(called advances) to member savings and loan
associations and mutual savings banks. These
advances, which can have maturities of up to 20
years, are used by the depository institutions to
meet short-term liquidity needs and to expand
their asset portfolios. The Student Loan Marketing Association grants loans (called warehousing
advances) to many types of lenders, including
commercial banks, thrift institutions, educational institutions, and state lending agencies. Warehousing advances must be used to maintain or
expand the size of a lender's student loan portfolio. The Farm Credit Banks lend directly to
individuals and businesses as well as to farm
associations and cooperatives. The latter groups,
in turn, either lend to agricultural and aquatic
producers or provide services to the agricultural
sector.
The Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation provide secondary markets for mortgage
loans; that is, they purchase mortgage loans from
originating institutions. In addition to providing
funds for loan originations, these programs have
The Federally Sponsored Credit Agencies: An Overview
375
1. Balance sheets of federally sponsored credit agencies, year-end 1984
Millions of dollars
1. This amount includes loans made directly to individuals and businesses.
served to standardize the terms on conventional
mortgage loans. Fannie Mae holds a large portion of the purchased mortgages in its portfolio,
while Freddie Mac usually packages them into
pass-through certificates and in eflFect sells them
to other investors in the financial markets. Because the issuance of these pass-through securities represents the sale of the underlying mortgages, the total assets of Freddie Mac are not
large, and its balance sheet thus understates its
role in transferring funds from the money and
capital markets to mortgage lenders. Fannie Mae
also sells pass-through certificates to investors.
The Student Loan Marketing Association also
purchases student loans from private lenders,
making it the only sponsored agency to provide
both lending and secondary market facilities.
Most of the loans it purchases are guaranteed
either directly or indirectly by the federal government under the Guaranteed Student Loan
Program.
This brief description of the federally sponsored credit agencies outlines their role only in
general terms. The appendix provides a more
complete discussion.
The Growth of the Federally
Credit Agencies
of comparison, nominal gross national product
and total debt of nonfinancial sectors expanded
at compound annual rates of 93/t and 103A percent
respectively over this period. As chart 1 shows,
the growth of the sponsored agencies has not
been smooth. The total assets of the Farm Credit
Banks, for example, trended upward during the
mid-1970s and accelerated beginning in 1979, but
they have shown essentially no growth in recent
years. The combined assets of the three sponsored agencies in the mortgage market have
alternated between rapid growth and no growth,
in movements associated closely with cyclical
fluctuations in the housing sector. Sallie Mae
experienced its strongest growth in 1981, a period of heavy demand for student loans and the
1. Total assets of the federally sponsored
credit agencies
Billions of dollars
Sponsored
1970
Since 1970, the combined assets of the federally
sponsored credit agencies have grown at a compound annual rate of W/i percent. For purposes
1975
1980
1984
Data are for the year-end.
The sponsored agencies in the mortgage market are the Federal
Home Loan Banks, the Federal Home Loan Mortgage Corporation,
and the Federal National Mortgage Association.
376 Federal Reserve Bulletin • June 1985
year in which it began a transition from financing
itself with government loans to borrowing in the
financial markets.
Farm Credit Banks. The growth of total assets
at the Farm Credit Banks since 1970 has been
closely correlated with conditions in the agricultural sector. In 1972 and 1973, prices of farm
commodities increased sharply, paving the way
for strong growth in farm income and large gains
in the value of the farmland that frequently
serves as collateral for farm credit. In this environment, farmers began to take on larger volumes of debt, reflected in the upward trend in the
total assets of the Farm Credit Banks. Prices of
farm commodities surged again in 1978 and 1979,
and in consequence farm debt accelerated.
Beginning in 1980, farm prices began to stabilize while overall prices continued to climb. The
weakening in farm income caused many farmers
difficulty in servicing their debts. The high levels
of interest rates in the early 1980s exacerbated
the problems of farmers with short-term or variable-rate debt. As expectations for farm prices
and income were revised downward in the 1980s,
the value of farmland began to decline, with
sharp reductions realized each year from 1981
through 1984. Given the conditions confronting
them in the early part of this decade, farmers
were unwilling or unable to incur new debt, so
that the total assets of the Farm Credit Banks
leveled off. (A more complete discussion of
conditions in the agricultural sector is provided
by Emanuel Melichar, "A Financial Perspective
on Agriculture," FEDERAL RESERVE B U L L E T I N ,
January 1984.)
Sponsored Agencies in the Mortgage Market.
Over the last 14 years, the sponsored agencies
serving the housing market have experienced
three periods of rapid growth. The first two
periods, which began in 1973 and 1978, occurred
near peaks in housing and mortgage activity and
at times of diminishing growth in deposits at
thrift institutions (see chart 2). This confluence
of events suggests that the sponsored agencies in
the mortgage market were attempting to cushion
the cyclical swings in housing activity, which is
heavily dependent upon thrift institutions.
On the surface, the rapid growth of the spon-
2. Growth of total deposits at thrift institutions,
and housing starts
Thousands of units
Percent
i i i i i i i i i i i i i i
1970
1975
[980
1984
10
Quarterly data at annual rates.
sored agencies in the mortgage markets in 1984
closely resembles that in earlier episodes: assets
began to expand rapidly near the peak in housing
activity, thus helping to cushion the fall. Last
year, however, saw some important differences.
First, deposit growth at thrift institutions, although volatile, tended to be at much higher
levels than in previous years. Thus arguments
that the sponsored agencies were forestalling
problems of credit availability may be difficult to
make. Second, much of the expansion in the
assets of the mortgage agencies last year represented FHLB advances to ease the liquidity
problems of some financially weak institutions.
Finally, a small portion of the expansion of
Fannie Mae represented the acquisition of second mortgages, an asset that often supports
consumer spending rather than housing activity.
Student Loan Marketing Association. The
Student Loan Marketing Association experienced its most rapid rate of growth in the early
1980s: total assets increased from $2.8 billion at
the end of 1980 to $9.1 billion at the end of 1983.
Rising tuition costs and high levels of interest
rates increased the demand for the subsidized
student loans guaranteed by the federal government. The average volume of new originations in
the Guaranteed Student Loan Program increased
from about $2 billion in 1979 and 1980 to about $6
billion over the next three years. (Most of the
loans purchased by Sallie Mae are issued under
this program.) Sallie Mae's purchases were large
as many private lenders elected not to hold these
loans in their portfolios.
This burst in the growth of Sallie Mae's assets
The Federally Sponsored Credit Agencies: An Overview
was associated with a shift in its method of
financing. In its early years, the Sallie Mae
financed its activities with loans from the Federal
Financing Bank. In March 1981, however, Sallie
Mae and the Treasury agreed that its level of
debt at the Federal Financing Bank would not
exceed $5 billion and that it could not take down
new loans from this source after 1982. Sallie Mae
quickly moved to its limit with the Federal
Financing Bank and in 1981 issued debt in the
money and capital markets for the first time to
finance its rapid expansion.
Effectiveness
as Financial
3. Contributions of federally sponsored credit agencies1
Percent
10
Intermediaries
The size and growth of the federally sponsored
credit agencies suggest that they are important
participants in the U.S. financial system. One
measure of their contributions to their specific
credit markets is presented in chart 3. This chart
shows that the participation of these intermediaries has trended upward over the last 14 years;
currently they account for sizable portions of the
total volume of outstanding credit in their respective markets.
Although these intermediaries maintain a substantial presence in the financial markets, their
net long-run impact on the total volume of funds
allocated to each sector is open to question.
Changes in the behavior of other lenders and
borrowers in the private sector may mean that
the credit flows generated by the sponsored
agencies supplant rather than supplement funds
from other sources. Furthermore, even if the
sponsored agencies were successful in channeling funds to a particular credit market, real
economic activity in that sector might not be
affected. For example, if the sponsored agencies
in the mortgage market were able to increase the
volume of mortgage credit, housing construction
would not increase if households financed their
homes with less equity and more debt than they
otherwise would have or if they substituted the
mortgage credit for other types of borrowing to
finance the purchase of consumer goods.
The credit flows generated by the federally
sponsored credit agencies may have been offset
by disintermediation in the 1960s and 1970s.
Commercial banks and thrift institutions fre-
377
1. The curves, based on year-end data, are defined as follows:
The top panel shows the ratio of outstanding SLMA advances and
loans purchased to outstanding guaranteed student loans; the middle
panel shows the ratio of outstanding FHLB advances plus total Fannie
Mae and Freddie Mac mortgage assets to total residential mortgage
debt outstanding; the bottom panel shows the ratio of outstanding
loans from the Farm Credit Banks to total farm debt outstanding.
2. This graph understates the contribution of the sponsored agencies in the mortgage market because the pass-through securities issued
by Freddie Mac and Fannie Mae are not included.
quently had to constrain their lending activity as
they experienced weak or negative deposit
growth when market rates rose above their interest rate ceilings. The sponsored agencies channeled funds from the money and capital markets
to these private lenders to limit the number of
displaced borrowers. Over time, however, this
assistance may well have been partially negated
because the issuance of debt securities by the
federally sponsored credit agencies could itself
have put further upward pressure on market
rates, contributing to slower deposit inflows.
This pattern was especially prevalent in the
mortgage market because thrift institutions usually suffered heavy deposit outflows when market rates increased. As charts 1 and 2 make clear,
the rapid growth in the assets of the mortgage
agencies in 1973 and 1978 was associated with
378 Federal Reserve Bulletin • June 1985
weak deposit growth at thrift institutions. This
weakness probably was exacerbated as the
heavy volume of activity by the sponsored agencies maintained upward pressure on market interest rates and thus drew funds out of thrift
institutions.
Because interest rate ceilings on nearly all
types of deposit accounts now have been removed, disintermediation, per se, will not compromise the efficacy of the sponsored agencies.
However, responses of borrowers and of other
lenders to the changes in relative interest rates
associated with the financing activities of the
sponsored agencies still will influence the ultimate amount of funds allocated to each sector.
At the simplest level, the issuance of debt in the
capital markets and the use of the proceeds in a
particular sector will lower interest rates in the
targeted area relative to those in the financial
markets. In such circumstances, lenders in the
private sector will tend to reduce investments in
the targeted area and purchase the relatively
more attractive instruments in the money and
capital markets. This shift will offset the credit
flows provided by the federally sponsored agencies.
The sensitivity of borrowers in the targeted
sectors to changes in interest rates also affects
the ultimate impact of the sponsored agencies on
credit flows. If individuals and businesses increase their borrowing only a little as the sponsored agencies exert downward pressure on interest rates in a particular market, the change in
the volume of credit in the sector will be slight.
In this case, even though the sponsored agencies
may shift large amounts of funds to a particular
market, the interest rate in the market would
have to fall sharply to establish a new equilibrium and more private lenders will switch to other
markets. Alternatively, if borrowers are very
sensitive to changes in rates, they will readily
absorb most of the new funds advanced by the
sponsored agencies and the offsets will be slight.
The ultimate change in credit flows generated
by the activity of the sponsored credit agencies is
thus uncertain. The final outcome depends upon
the responses of borrowers and lenders to interest rates on the targeted type of credit and on
other instruments in the economy. In general, if
private lenders are prompt to alter their portfo-
lios in response to changes in relative interest
rates, and if borrowers in the targeted market are
insensitive to changes in interest rates, then the
sponsored agencies, on balance, will have little
impact. If the reverse holds—that is, if private
lenders are not sensitive to interest rate changes
and borrowers are—then the sponsored agencies
could direct large amounts of credit to a particular sector. Whether or not a broadened flow of
credit will influence the level of real economic
activity in that sector depends upon the amount
of debt that borrowers are willing to bear and the
degree of fungibility between credit of different
types.
In the mortgage market, borrowers seem highly sensitive to interest rates, so that the sponsored agencies may have an important influence
on credit flows. However, other lenders in this
market—such as commercial banks and life insurance companies—probably would alter their
portfolios quickly as relative rates changed.
Thrift institutions also may now shift larger
amounts of their assets out of mortgages as
interest rates change because their investment
powers have been expanded in recent years. The
Farm Credit Banks probably will have a greater
long-run effect on credit flows in their sector than
will the sponsored agencies in the mortgage
sector because some agricultural lenders, such as
commercial banks in rural areas, are less likely to
shift away from their accustomed loans to other
instruments.
Sallie Mae may be expected to have an appreciable impact on the volume of student loans.
The increases in the supply of funds for student
lending generated by this sponsored agency will
not depress interest rates because a subsidy by
the federal government ties the return to lenders
of guaranteed student loans to the rate on Treasury bills. Thus, as Sallie Mae expands its activity, private lenders will not have that kind of
incentive to switch to other assets. Also, the
liquidity that this sponsored agency provides will
make lenders more willing to write student loans.
Of course, Sallie Mae's activities might not expand college enrollments: students may simply
substitute the government-guaranteed loans for
others, or they may finance their education with
more debt than they would otherwise, or they
may attend a more expensive college.
The Federally Sponsored Credit Agencies: An Overview
THE MARKET FOR THE SECURITIES OF THE
FEDERALLY SPONSORED CREDIT AGENCIES
Federally sponsored credit agencies finance their
loan programs and secondary market purchases
primarily by issuing debt in the money and
capital markets. These securities are not guaranteed by the federal government, but because of
the ties of the sponsored agencies to the government, they are afforded certain privileges not
available to most other issues:
• exemption from the requirement to register
the issue with the Securities and Exchange Commission
• exemption of interest income from state and
local taxes (except for issues of the Federal
National Mortgage Association and the Federal
Home Loan Mortgage Corporation)
• eligibility as collateral when commercial
banks and thrift institutions borrow from the
Federal Reserve's discount window and when
thrift institutions borrow from a Federal Home
Loan Bank
• eligibility for purchase by the Federal Reserve in open market operations
• eligibility as collateral for public deposits,
including Treasury tax and loan accounts
• favorable status in the portfolios of depository institutions; for example, the shorter-term
securities may be used to meet the liquidity
requirements of thrift institutions belonging to
the Federal Home Loan Bank System, and national banks may invest and deal in these securities without limit.
Because of these advantages, as well as the
perception that the sponsored agencies are highly creditworthy, the securities are well received
by a broad range of investors, including depository institutions, pension funds, insurance companies, and mutual funds. Individual investors
also hold these securities, but their direct participation in the market is not great.
The sponsored agencies issue short-term securities known as discount notes in the money
market, and they tap the longer-term markets
through bonds. Those securities are sold in the
marketplace with the assistance of a fiscal agent,
which recommends to the sponsored agencies
the offering rates on the securities and allocates
the notes and bonds to securities dealers. Those
379
dealers, in turn, distribute the securities to the
public. The sponsored agencies meet the bulk of
their financing needs through the issuance of
discount notes and bonds, but they also have
used some of the more innovative techniques
that have emerged in the U.S. financial system in
recent years.
Discount Notes and
Bonds
Discount notes are short-term debt instruments
resembling commercial paper. They have maturities ranging from overnight to 360 days, depending upon their uses. The sponsored agencies use
discount notes for several purposes, such as
financing short-term loans, bridging gaps that
can arise between cash outflows and inflows, and
delaying the issuance of longer-term debt until
market conditions seem more favorable. Discount notes are offered to investors on a daily
basis at interest rates that typically are 15 to 25
basis points higher than those on Treasury bills
of similar maturity. At the end of 1984, the
sponsored agencies had about $33 billion of
discount notes outstanding, accounting for 14
percent of their credit market debt.
The sponsored agencies fill their longer-term
financing needs with bonds. The Federal Home
Loan Banks, the Farm Credit Banks, and the
Federal National Mortgage Association offer
bonds to the public each month according to a
fixed schedule, and they occasionally bring to
market unscheduled offerings as well. The Student Loan Marketing Association recently started to offer floating-rate notes on a monthly basis;
the issuance by the Federal Home Loan Mortgage Corporation is irregular. Some of these
securities have very short maturities. The Farm
Credit Banks, for example, issue six- and ninemonth bonds each month, and the other sponsored agencies also occasionally issue bonds
with maturities under one year. Most of the
longer-term securities issued by the sponsored
agencies, however, are in the range of two to ten
years; maturities in excess of that are infrequent.
Most of the sponsored agencies issue debt with
maturities that approximately match those of
their assets so that they are not exposed to
substantial interest rate risk.
380 Federal Reserve Bulletin • June 1985
The interest rates on intermediate-term bonds
issued by the sponsored agencies usually are 15
to 30 basis points higher than the rate on Treasury securities of similar maturity (chart 4).
These spreads typically are narrower than those
between Treasury securities and the highestrated corporate bonds with intermediate maturities. The lower rates on the securities of the
sponsored agencies result partly from their
unique features and partly from the strong financial condition of their issuers. In addition, the
sponsored agencies, either directly or indirectly,
have lines of credit with the Treasury Department (at the discretion of its secretary) should
they experience difficulty meeting their obligations. (The appendix lists the amounts of these
credit lines.) Beyond these factors, some investors believe that, although there is no explicit
guarantee, the federal government would not
allow a sponsored agency to default on a debt
issue.
Nevertheless, the confidence of investors in
the quality of sponsored-agency securities was
shaken in 1981 and early 1982, so that the interest
rate spreads over Treasury securities widened
(chart 4). The trigger was the weakening in the
net income of the Federal National Mortgage
Association (discussed below) and reports from
investment analysts that the securities of Fannie
Mae carried greater credit risk than previously
perceived. Interest rate spreads over Treasury
securities on Fannie Mae's debt averaged about
90 basis points in 1981, and some issues came to
market with spreads as high as 150 basis points.
The risk consciousness of investors during this
4. Average spread between yields on federally
sponsored agency securities and on Treasury
securities of corresponding maturity
Basis points
20
1980
'
'
1982
'
'
1984
Data are yearly averages for intermediate-term securities, which
have maturities of more than one year up to five years.
period affected the other sponsored agencies,
and their interest rate spreads widened some
even though their financial position was sound.
The concerns of investors were allayed in subsequent years as lower levels of interest rates and
new strategies adopted by Fannie Mae improved
its prospects for profitability. Fannie Mae securities still sell at slightly higher interest rates than
do those of the other sponsored agencies, reflecting some residual investor concern and the fact
that the interest income on FNMA's securities is
taxable at the state and local level.
Innovative
Financing
While the federally sponsored credit agencies
meet the bulk of their financing needs through
the traditional offerings of discount notes and
bonds, they also have been involved in innovative transactions in an effort to broaden their
investor base and to lower their overall interest
expense.
Large current interest savings for some of the
sponsored agencies have come from the issuance
of long-term, zero-coupon securities. These securities do not provide periodic interest payments to investors; rather, they are sold at a
substantial discount from the face value that is
paid at maturity. In 1984, Fannie Mae, Freddie
Mac, and Sallie Mae were able to offer these
securities to investors at interest rates as much
as 2Vi percentage points below the rates on longterm Treasury bonds because foreign investors,
especially the Japanese, were keenly interested
in them. Japanese investors could avoid paying
taxes on the income from foreign zero-coupon
securities if they sold them before maturity. The
Ministry of Finance in Japan, however, does not
permit its investors to hold securities that have
been altered in any way, so they cannot purchase
the popular zero-coupon securities that are
formed by stripping apart Treasury debt (although it appears that they will be permitted
to purchase zero-coupon securities under the
Treasury's new STRIPS program). The issues of
the sponsored agencies last year thus represented the highest quality zero-coupon security available. Late last year the Ministry of Finance
The Federally Sponsored Credit Agencies: An Overview
indicated that it was reviewing the tax treatment
of such securities, and in March of this year the
Japanese legislature voted to subject the gains on
the sale of those securities to ordinary income
tax rates. The sponsored agencies ceased issuing
zero-coupon securities last year after the tax
treatment was questioned by the Japanese government.
The sponsored agencies have made other efforts to broaden their investor base by issuing
securities in foreign countries. In 1984, Fannie
Mae and the Federal Home Loan Banks together
issued $500 million of debt in the Eurobond
market. Like many U.S. corporations, these
sponsored agencies were able to issue debt denominated in dollars in foreign countries at interest rates below those in the U.S. market. Fannie
Mae's Eurobond issue was sold with an interest
rate that was 7 basis points higher than that on a
Treasury security of comparable maturity; in the
domestic market, a similar issue probably would
have yielded at least 25 basis points more than a
Treasury security. In subsequent trading in the
secondary markets, however, the yields on these
securities moved to higher levels, and since then
the sponsored agencies have not attempted to
issue dollar-denominated debt in foreign countries.
Yet the federally sponsored credit agencies
have not avoided the foreign markets entirely.
Earlier this year, Fannie Mae and Sallie Mae
issued abroad securities that were denominated
in Japanese yen. Like the dollar-denominated
debt sold in foreign countries, these securities
resulted in substantial interest savings. To protect themselves from the risks of exchange rate
fluctuations from such an issue, Sallie Mae and
Fannie Mae utilized another innovative financing
technique, a currency swap.
Currency swaps involve two parties that issue
debt in each other's currencies, then exchange
their payment obligations so that each services
debt in its home currency. In the case of the
recent Sallie Mae and Fannie Mae yen issues,
those sponsored agencies could exchange their
interest payment obligations with a Japanese
firm that issued a comparable amount of debt
denominated in dollars. This technique allows a
borrower to raise funds in the market in which its
interest expenses are lowest, regardless of the
381
currency used in that market, without exposure
to exchange rate fluctuations.
The currency swap is similar to the interest
rate swap used extensively by Sallie Mae and to
a lesser extent by Fannie Mae. An interest rate
swap is a transaction in which two parties, one
with fixed-rate debt and the other with variablerate debt, agree to exchange interest-payment
obligations, thereby converting their type of payment from fixed-rate to variable-rate or vice
versa. With this type of transaction, the two
parties usually find that their overall funding
costs are lower than they would have been had
they issued their preferred fixed- or variable-rate
instrument directly. Sallie Mae, a pioneer in the
technique in the United States, wished to issue
variable-rate debt because most of its assets
carry variable interest rates. However, it had
issued so much debt of that type that investors
were willing to increase their holdings only at
higher rates. Sallie Mae found that it could keep
its funding costs low and still be protected from
interest rate risk by issuing fixed-rate debt and
engaging in an interest rate swap. Many types of
borrowers, such as savings and loan associations
and nonfinancial corporations, would be interested in being a counterparty to obtain fixed-rate
financing.
Perhaps the most important innovation in the
sponsored-agency market is the collateralized
mortgage obligation (CMO) introduced by the
Federal Home Loan Mortgage Corporation. As
its name implies, this security is simply a debt
issue backed with mortgages or mortgage-backed
securities. The unique feature introduced by
Freddie Mac was the division of an issue into
various classes, differing from one another in the
way principal value is repaid. Table 2 presents an
example. The investors in the class A-l securities receive interest payments as well as all of the
scheduled repayments and prepayments on the
underlying mortgages; the investors in the other
classes receive only interest payments until all
the class A-l securities are retired. Because
initially the class A-l securities receive the repayments on the underlying mortgages, their
expected life is relatively short. After the class
A-l bonds are retired, the class A-2 bonds receive both interest payments and mortgage repayments while the class A-3 bonds continue to
382 Federal Reserve Bulletin • June 1985
2. Characteristics of collateralized mortgage
obligations of the Federal Home Loan Mortgage
Corporation, Series A, June 1983
Amount sold (millions of dollars)
Maximum average life (years)
Quoted yield (percent)
Spread over yield on comparable
Treasury securities (basis
215
3.2
10.70
39
350
8.6
11.37
52
435«
20.4
11.98
84
Construction firms also have issued collateralized mortgage obligations. Many homebuilders
have established finance subsidiaries in order to
offer mortgage loans to potential buyers. After
originating these mortgages, they frequently use
them as collateral for both straight bond issues
and CMOs. (These issues are referred to as
builder bonds in the marketplace.) Savings and
loan associations have also started to use this
instrument as a source of funds.
1. Spread over closest Treasury constant-maturity yield on June 7,
1983.
FINANCIAL
receive only interest payments. After class A-2 is
retired, class A-3 receives both interest payments and mortgage repayments.
This innovation reduces (though it does not
eliminate) the major disadvantage of uncertainty
about maturity that is associated with mortgage
pass-through securities. Because all interest and
principal repayments on an underlying pool of
mortgages flow through to the holders of passthrough securities, these securities will be retired
earlier than expected if prepayments accelerate.
Moreover, mortgage prepayments and the paydown of pass-through securities frequently increase when interest rates drop, precisely the
time when investors wish to hold longer-term,
fixed-rate assets. When a mortgage-related security is divided into various maturity classes,
investors have a clearer expectation of when
their security will be repaid.
This financing technique has been widely imitated by other issuers in the financial markets.
Securities firms, for example, have issued large
volumes of bonds collateralized by Ginnie Mae
pass-through securities. They found that they
could buy the Ginnie Mae pass-throughs in the
secondary markets, package them into CMOs,
and issue them at lower rates because of the
enhanced certainty of maturity. These firms retained as profit the difference between the yield
on the Ginnie Mae pass-through securities and
the yield on the CMO. As they began buying
Ginnie Mae securities in volume, yields fell
sharply: Ginnie Maes were trading 13A to 2
percentage points over Treasury securities before CMOs were introduced, but subsequently
the spread narrowed to less than 1 percentage
point.
PERFORMANCE
For the most part, the financial performance of
the federally sponsored credit agencies, as measured by their net income, has been quite good.
They are able to issue debt in the financial
markets at attractive rates, and because most of
them do not expose themselves to substantial
interest rate risk, they have realized strong,
stable earnings. The Federal Home Loan Banks,
the Federal Home Loan Mortgage Corporation,
the Farm Credit Banks, and the Student Loan
Marketing Association carefully match the maturities of their debt liabilities and of their assets,
so that their positive interest rate spreads are not
wiped out by interest rate fluctuations. As table 3
shows, these sponsored agencies have consistently earned high income, as measured by the
ratio of net income to average assets. For purposes of comparison, this same aftertax income
measure has ranged from 0.50 to 0.60 for the
commercial banking industry in the early 1980s.
The net income of the Farm Credit Banks has
receded some in the last two years. Because
these banks are owned by farm cooperatives, the
only purpose of profits is to add to capital as total
assets increase so as to maintain the same relative cushion for potential loan losses. With asset
growth flat, the Farm Credit Banks could reduce
earnings. Their borrowers, many of them undergoing financial strain, consequently received
some interest rate relief. Increases in loan losses
and in nonperforming loans, however, also reduced profitability and limited the extent of
interest rate relief.
The Federal Home Loan Mortgage Corporation has reported remarkably strong income in
the last two years. The favorable performance of
The Federally Sponsored Credit Agencies: An Overview
3. Ratio of net income to average assets of federally
sponsored credit agencies
Percent
Year
Federal
Home
Loan
Banks
1978...
1979...
1980...
1981 . . .
1982 . . .
1983 . . .
1984...
1.30
1.29
.83
.82
1.24
.96
1.04
Federal
Federal
Home
National
Loan
Mortgage Mortgage
Associa- Corporation
tion
.54
.34
.03
-.32
-.16
.10
-.07
.69
.86
.67
.53
.97
2.13
2.42
Farm
Credit
Banks
Student
Loan
Marketing Association
.82
.86
1.12
1.13
1.19
.64
.52
.78
.50
.43
.45
.60
.80
.96
Freddie Mac in 1983 and 1984 is partly the result
of higher fee income. In 1981, the Federal Home
Loan Mortgage Corporation introduced its
"guarantor program," which led to a sharp increase in the issuance of its pass-through certificates as well as in its fees for guaranteeing these
securities. (The guarantor program is explained
in the appendix.) A more important factor behind
this income growth has been the corporation's
issuance of collateralized mortgage obligations.
Freddie Mac earns as income the spread between
the yields on the underlying pool of mortgages
and on collateralized mortgage obligations.
Fannie Mae has experienced earnings problems because the maturities of its assets and
liabilities are mismatched. In general terms, the
balance sheet of this sponsored agency resembles that of a typical thrift institution: its assets
are concentrated in long-term, fixed-rate mortgages and they are financed primarily with
shorter-term debt. As a result, Fannie Mae has
experienced the same earnings difficulties as
thrift institutions: in the late 1970s and early
1980s, interest expenses increased sharply as
market rates moved to high levels while interest
income grew much more slowly because of the
long maturities of its assets. Fannie Mae's income weakened in 1979 and 1980, and it turned
sharply negative in 1981 and 1982. The earnings
performance improved in 1983 and 1984 as interest rates moved to lower levels, but this sponsored agency continues to be burdened with a
large volume of long-term mortgages carrying
relatively low yields.
The lower level of interest rates in effect over
the last two years has been an important factor in
383
easing Fannie Mae's losses, but its management
also has launched an aggressive campaign to
improve its long-run earnings potential. For example, fee income has increased sharply since
1981, primarily because of the issuance of a large
volume of pass-through securities. Also, Fannie
Mae has shifted its new asset purchases toward
interest-sensitive instruments such as adjustablerate mortgages and second mortgages. Last year,
these types of mortgages accounted for nearly 40
percent of Fannie Mae's new purchases, compared with 5 percent in 1981. Finally, as explained above, Fannie Mae has adopted some
innovative financing techniques, such as zerocoupon bonds, interest rate swaps, and debt
issuance in foreign countries, to help reduce its
cost of funds.
THE FUTURE ROLE OF THE FEDERALLY
SPONSORED CREDIT
AGENCIES
Some analysts have speculated that the role of
the federally sponsored credit agencies in the
economy will shrink as important structural
changes in the financial system lessen the need
for intervention to support the credit flows to
particular sectors. As regulatory constraints are
removed and as new instruments are developed,
market participants in the private sector can
assume a more active role in efficiently allocating
credit.
Beginning in 1978, federal regulators allowed
depository institutions to offer accounts with
interest rate ceilings tied to the rates on certain
Treasury securities, and in 1980, they began to
dismantle the interest rate ceilings on deposits at
commercial banks and thrift institutions. Currently, nearly all categories of deposits can be
offered without interest rate limits. Thus depository institutions have greater control over their
deposit flows. Faced with large demands for
credit, they can offer higher rates to depositors,
thereby attracting the necessary funds; if they
have exhausted their profitable lending opportunities, they can lower their deposit rates, thus
discouraging their own inflows and allowing
funds to flow to institutions or regions with
greater credit demands. In this deregulated environment, depository institutions themselves can
384 Federal Reserve Bulletin • June 1985
perform one of the important functions of the
sponsored agencies—namely, transferring funds
from capital-surplus areas to capital-deficient
areas.
The need for the sponsored credit agencies to
redistribute funds geographically also will be
lessened with the erosion of the barriers to
interstate banking. Recently, regulators have approved several interstate mergers involving financially weak institutions. In addition, some
states have approved laws that allow out-of-state
bank holding companies to acquire banks within
their borders, and others are considering that
step. Finally, the initiative of the private sector
in moving toward interstate banking has been
evident in the development of so-called nonbank
banks, institutions that do not provide the full
array of banking services and therefore have won
approval in some cases to operate in different
states. In light of these developments, the Federal Reserve Board recently advocated that the
Congress establish a program to move gradually
toward interstate banking.
Other recent developments are making mortgage originators less dependent on the sponsored
agencies for funds. Depository institutions servicing the mortgage market now have greater
direct access to the capital markets through new
financial instruments. For example, savings and
loan associations are holding larger amounts of
mortgage-backed securities as assets, which can
readily serve as collateral for new borrowing.
The sponsored agencies are still important here,
however, because many of these mortgagebacked securities were obtained by exchanging
mortgage loans for pass-through certificates with
Freddie Mac and Fannie Mae. Also, the collateralized mortgage obligation has been widely accepted by investors, and thrift institutions are
beginning to issue their own mortgage-backed
bonds as a source of funds. Even institutions that
are not large enough to issue collateralized
mortgage obligations by themselves can form
consortiums to sell these securities in the financial markets. To the extent that depository institutions can tap the money and capital markets
directly, the need is lessened for the federally
sponsored credit agencies to channel funds to
certain areas.
credit agencies, one of their unique attributes
remains—namely, the implicit subsidy that their
sponsored status confers in the form of lower
costs. This implicit subsidy has the effect of
raising borrowing costs, to some degree, both to
private sectors that are not the beneficiaries of
sponsored-agency activities and to the Treasury.
With strong demands for credit by the federal
government and heightened emphasis on resource allocation through private markets, it is
not surprising that this subsidy has come under
question.
Most of the attention in this debate has focused on the sponsored agencies serving the
mortgage market. In public testimony and in
budget proposals, the Reagan administration has
advocated the complete privatization of Fannie
Mae and Freddie Mac. Thus far it has not
vigorously sought to cut the ties of Fannie Mae
and Freddie Mac to the government; rather, it
has concentrated on developing policies that
improve the competitive position of private firms
servicing the secondary mortgage market. The
major effort to date was the passage last year of
the Secondary Mortgage Market Enhancement
Act. Several provisions of this law make it easier
for private firms to market mortgage-backed
securities, and it limits to some extent the participation of Fannie Mae and Freddie Mac in this
market.
A more recent proposal by the administration
that would further alter the competitive position
of all the sponsored agencies is a provision in the
1986 budget to impose one-time origination fees
on their issuance of new debt and of passthrough securities. In the latest form of the
proposal, the fees would be phased in beginning
with 0.01 percent (1 basis point) of the amount of
debt issued in 1986 and eventually increasing to
0.05 percent in 1990. The administration views
the fee as a payment for special privileges that
the sponsored agencies or their securities receive
because of their affiliation with the federal government. Thus far, the Congress has not authorized these fees, but they remain an issue in
discussions of deficit reduction measures.
While these developments in financial markets
narrow the distinctive role of the sponsored
The federally sponsored credit agencies were
created to alter the flow of funds ki cases in
CONCLUSION
The Federally Sponsored Credit Agencies: An Overview
385
which, it was believed, the private markets were
not allocating resources to their optimal use. For
a long time, however, analysts have questioned
the ability of the sponsored agencies to alter
appreciably the ultimate allocation of financial
capital and real resources. In a system that
permits credit to flow with few impediments,
private lenders and borrowers can negate the
effects of the government-sponsored intermediation. As the U.S. financial system becomes less
regulated, the ability of the sponsored agencies
to influence the allocation of resources by serving as intermediaries may become even more
dubious. If the resulting market solution to re-
source allocation is still viewed as suboptimal
from a social point of view, some form of direct
subsidy may be necessary to achieve the desired
outcome.
For the time being, the sponsored agencies
must be regarded as important participants in the
money and capital markets. Their financial resources are substantial, they have developed
expertise in their areas, and they are well established among the borrowers and lenders in the
credit markets that they serve. Their activities
enhance the liquidity in these markets and foster
the integration of the various components of the
financial system.
•
APPENDIX: DESCRIPTION
FEDERALLY SPONSORED
loans (called advances). The Federal Home Loan
Banks finance their advances primarily by selling
debt securities in the money and capital markets
and by accepting deposits from member institutions. The debt securities are sold on a consolidated basis—that is, they are the joint obligations
of all 12 banks. The Federal Home Loan Banks
are the only sponsored agency that issues deposit
liabilities. Overnight accounts are the largest
category of deposit liability at the banks, as they
are used by member institutions to invest funds
temporarily that otherwise might lie idle. The
banks also issue demand and time deposits to
their members.
OF THE
CREDIT AGENCIES
The appendix table summarizes the organizational characteristics of the federally sponsored credit agencies whose activities are discussed in the
text. The following paragraphs examine each
agency in greater detail.
The Federal Home Loan
Banks
The Congress established the Federal Home
Loan Bank System in 1932 to supervise federally
chartered savings and loan associations and to
provide a credit facility for thrift institutions. The
system originally comprised only the Federal
Home Loan Bank Board, which serves primarily
as a regulatory agency, and 12 regional Federal
Home Loan Banks, which carry out the policies
of the Board and provide the credit facilities and
other services for member institutions. The Federal Savings and Loan Insurance Corporation
and the Federal Home Loan Mortgage Corporation were added to the system later, in 1934 and
1970 respectively.
The Federal Home Loan Banks are wholly
owned by the financial institutions that join the
system. The 12 banks operate individually, but
they must observe guidelines established by the
board. The most important activity of the banks
is to provide credit to members in the form of
Federal Home Loan Mortgage
Corporation
The Federal Home Loan Mortgage Corporation
also belongs to the Federal Home Loan Bank
System but performs a different function than the
12 Home Loan Banks do. Freddie Mac provides
a secondary market for mainly conventional
mortgage loans—that is, mortgages that are not
insured by the Federal Housing Administration
or guaranteed by the Veterans Administration.
When the corporation was established in 1970,
secondary market facilities for government-insured and -guaranteed mortgages already were in
place, but support for conventional home loans
was lacking. Freddie Mac was created to fill this
gap in the secondary market. It typically pur-
386 Federal Reserve Bulletin • June 1985
chases mortgages from institutions originating
the loans, thereby replenishing lenders' cash
positions so they can write new loans.
To a small extent, the Federal Home Loan
Mortgage Corporation purchases mortgage loans
to hold in its portfolio. More commonly, Freddie
Mac purchases mortgage loans, places them in
pools, and issues pass-through certificates
backed by these loans. When it issues passthrough certificates, the ownership of the underlying mortgage pool is transferred to a trustee,
who distributes the cash flow from the pool to
the certificate holders. Because Freddie Mac is
not the owner of the pool of mortgages, these
loans do not appear on its balance sheet. Thus
the $10 billion of mortgage holdings shown in
table 1 in the text greatly understates Freddie
Mac's participation in the secondary market.
The volume of pass-through securities issued
by Freddie Mac has increased sharply in the last
three years because of the introduction of its
guarantor program in 1981. Under this program,
mortgage investors can exchange whole mortgage loans for FHLMC participation certificates.
The interest rates on these pass-through securities are one-half percentage point below the rate
on the underlying mortgage loans; the difference
represents a fee to Freddie Mac for guaranteeing
the pass-through security. These transactions are
commonly referred to as mortgage swaps. From
1982 to 1984, about 85 percent of the new participation certificates issued by Freddie Mac were
associated with swaps. Mortgage investors engage in these transactions because the participation certificate has greater liquidity. Also, the
participation certificate can serve as collateral in
a repurchase agreement; thus mortgage investors
expand their borrowing capabilities by holding
the Freddie Mac pass-through securities rather
than mortgage loans.
The common stock of Freddie Mac is owned
by the 12 Federal Home Loan Banks. Recognizing that ultimately the thrift institutions that are
members of the Federal Home Loan Bank System have a claim on its income, Freddie Mac
issued $600 million of participating preferred
stock to these institutions in January 1985. The
distribution of this stock will be retroactive so it
can boost the earnings and net worth position of
thrift institutions for 1984; it also will allow a
direct payment of Freddie Mac dividends to
those institutions in future years.
The Federal National
Association
Mortgage
The Congress established the Federal National
Mortgage Association in 1938 to provide a secondary market for federally underwritten mortgages. Fannie Mae was once part of the federal
government, but it was separated in 1968 and
now is fully owned by private investors (its
shares are traded on the New York Stock Exchange). For many years Fannie Mae could deal
only in mortgages underwritten by the Federal
Housing Administration or guaranteed by the
Veterans Administration; but in 1970, it received
authority to buy and sell conventional mortgage
loans, and it made its first purchase in 1972.
At the end of 1984, Fannie Mae held $84 billion
in mortgages, making it the largest single investor in home loans in the country. This sponsored
agency also has issued a large amount of passthrough securities, which are not reflected on its
balance sheet. Most of its issuance of passthroughs is associated with a swap program
similar to that of the Federal Home Loan Mortgage Corporation.
Farm Credit
Banks
The Farm Credit System has the most complex
organizational structure of the five federally
sponsored credit agencies. The System is divided
geographically into 12 districts. Each district has
a Federal Land Bank, a Federal Intermediate
Credit Bank, and a Bank for Cooperatives. In
addition, a Central Bank for Cooperatives participates in large loans or loans that span more than
one district. These 37 banks, along with a large
number of cooperative associations that own the
banks, form the heart of the Farm Credit System.
The Farm Credit Administration, an independent
agency of the federal government, provides supervision at the national level.
The Farm Credit System is the oldest of the
federally sponsored credit agencies, dating back
to 1917, when the Federal Land Banks were
The Federally Sponsored Credit Agencies: An Overview
established. The other types of Farm Credit
Banks followed later: the Federal Intermediate
Credit Banks in 1923, and the Banks for Cooperatives in 1933. The underlying purpose of all
these banks is the same: to provide an adequate
flow of credit to the agricultural sector.
The three types of Farm Credit Banks and
their lending associations differ in the types of
loans they make. The Federal Land Banks,
387
through a total of about 435 land bank associations, issue primarily longer-term loans for the
purchase of farms, farm equipment, or rural real
estate. Most of these loans have variable interest
rates. The Federal Land Banks account for about
65 percent of the total assets of the Farm Credit
System. The Federal Intermediate Credit Banks
advance funds to about 370 production credit
associations and to other financing institutions,
Characteristics of federally sponsored credit agencies
Agency
Stockholders
Influence of
the
administration
Line of credit
with Treasury
Federal tax on
income of
sponsored
agency1
State and local
tax on interest
income of
investors
Federal Home Loan Banks
Owned by
member thrift
institutions but
operated by
the Federal
Home Loan
Bank Board
President
selects all 3
members of
the FHLBB
$4.0 billion
No
No
Federal National Mortgage Association
Owned
entirely by
private
stockholders
President
selects 5 of 18
board
members;
subject to
general
supervision by
HUD
$2.25 billion
Yes
Yes
Nonvoting
common stock
owned by 12
FHLBs;
participating
preferred stock
issued to
member thrift
institutions
Same as
FHLBs
Indirect line of
credit through
the FHLBs
Yes2
Yes
Farm Credit Banks
Owned by
farm
cooperatives
and credit
associations
President
selects 12
Board
members;
Secretary of
Agriculture, 1
$112 million
for Federal
Intermediate
Credit Banks;
$149 million
for Banks for
Cooperatives;
secretary may
deposit $6
million in
Federal Land
Banks
No
No
Student Loan Marketing Association
Lenders under
the
Guaranteed
Student Loan
Program may
hold voting
common
stock;
individual
investors may
hold nonvoting
common and
preferred stock
President
selects 7 of 21
Board
members
including the
chairman
$1.0 billion3
Yes
No
Federal Home Loan Mortgage
Corporation
1. Interest on all debt of the sponsored agencies is subject to federal
taxation.
2. Effective January 1, 1985.
3. Sallie Mae also has the authority to sell to the Federal Financing
Bank securities backed by student loans.
388 Federal Reserve Bulletin • June 1985
such as commercial banks, that make primarily
short-term loans for production or operating purposes. They also write a small volume of loans
for farm and rural homes and for farm-related
businesses. The Federal Intermediate Credit
Banks account for about 23 percent of the total
assets of the Farm-Credit System.
The Banks for Cooperatives make loans of all
types directly to cooperative organizations providing agricultural services. The services include
marketing farm products, purchasing farm supplies, or operating public utilities. As with the
other Farm Credit Banks, the Banks for Cooperatives are owned by the cooperative organizations that borrow from them.
At one time, the Federal Land Banks, the
Federal Intermediate Credit Banks, and the
Banks for Cooperatives each issued their own
debt in the financial markets. In 1977, they
issued their first consolidated debt (that is, a
security that was the joint obligation of all 37
Farm Credit Banks), and since 1979 all debt
issuance has been on a consolidated basis. The
Farm Credit Banks tap the short-term markets
for a large proportion of their funds because most
of their loans have either short terms or variable
interest rates.
Student Loan Marketing
Association
The Student Loan Marketing Association was
created by the Congress in 1972 to provide a
secondary market for student loans guaranteed
by the federal government. Sallie Mae also encourages the flow of credit to higher education
by providing loans to institutions, known as
warehousing advances, so that they can write
additional student loans.
Most of the student loans purchased by Sallie
Mae are granted under the Guaranteed Student
Loan Program. These loans are originated by
private lending institutions (such as commercial
banks, thrift institutions, and educational institutions), and they are guaranteed either directly or
indirectly by the federal government. The return
on the loans to the holders is adjusted quarterly
and set at 3Vi percentage points above the interest rate on three-month Treasury bills (bondequivalent basis). The federal government makes
the entire interest payment while the students are
in school; after graduation the students begin
repaying the loans based on a fixed interest rate
stated at the outset and the federal government
makes a "special allowance" payment to bring
the return to 3'/2 percentage points above the
Treasury bill rate. Sallie Mae also purchases
loans granted under other federal programs for
higher education, such as the HEAL program
(Health Education Assistance Loans) and the
PLUS program (loans to parents of dependent
undergraduate students and to independent students).
Sallie Mae is considerably smaller than other
federally sponsored credit agencies, but its rate
of growth over the last five years has been rapid.
In addition to acquiring a large volume of new
assets, Sallie Mae has broadened its array of
services by offering forward purchase commitments, developing special credit plans for law
and medical students, and issuing letters of credit
to back student loan revenue bonds issued by
state or local government agencies. In the summer of 1984, Sallie Mae acquired a savings and
loan association in North Carolina to assist in
providing its education-related financial services. The Congress at one time considered
legislation that would prohibit this type of activity by Sallie Mae, but no legislation is currently
pending.
389
The Growth of Consumer Debt
This article was prepared by Charles A. Luckett
and James D. August of the Board's Division of
Research and Statistics, with assistance from
Janice S. Westfall.
The surge in consumer installment credit during
the 1983-84 economic upswing has raised concerns that household indebtedness could inhibit
future spending—either directly, by diverting
income into debt service, or indirectly, by provoking greater caution on the part of lenders. In
this article, we review recent consumer borrowing and the burden of household debt from the
broad perspective of experience since World
War II. We examine factors underlying past and
current developments and identify influences
that may be most likely to affect the future
course of consumer credit.
In brief, several factors suggest that indebtedness has not yet become a serious problem.
Through the end of last year, the expansion of
consumer installment debt was apparently quite
consistent with past relationships between consumption and new borrowing and between repayments and the stock of debt. Moreover,
household survey information strongly suggests
that upper-income households, which should be
best equipped to handle debt, have accounted for
a large part of the growth in consumer debt.
Several other influences together may be pushing up the measured rate of credit growth a notch
or two without implying a proportional increase
in the true burden of debt. One factor is the
growing use of credit for "convenience" purposes. Many consumers use credit cards primarily as a convenient alternative to cash or checks
rather than as a means of borrowing, but both
borrowing and convenience use are counted in
the aggregate consumer credit series. Another
factor that may be giving a false picture of
consumer debt is some lengthening in maturities
of new consumer loans, which initially reduces
the volume of scheduled repayments and thereby
makes for faster growth in the stock of debt than
would occur under the shorter maturity.
Factors that may be contributing to credit
growth that has more significance for the burden
of debt are the increased lending efforts of savings and loan associations, the relaxation of
usury ceilings, and the introduction of adjustable-rate financing.
The growth of outstanding installment debt is
apt to slow during 1985, notwithstanding its
exceptional strength during the first two months
of the year. Repayment of debt associated with
earlier heavy borrowing is likely to increase
more rapidly than new gross borrowing (estimated from administration projections of consumption expenditures), thus curbing net additions to
the stock of consumer debt.
At the same time that growth of debt slackens,
however, the ratio of consumer installment debt
to disposable income—sometimes used as a measure of "debt burden" on household budgets—
could rise further, perhaps to a new high. Given
the earlier fast pace of debt expansion, even a
reduced rate of growth in debt could exceed the
rate of income growth. Nevertheless, a further
rise in the debt-to-income ratio would not necessarily violate the easing in that ratio's long-run
rate of increase, an easing that has persisted
since the mid-1950s.
In any case, additional considerations limit the
analytical significance of the debt-to-income ratio as a precise measure of the financial situation
of the household sector. These aspects include
the paucity of information about the underlying
distribution of aggregate consumer debt, the inadequacy of outstanding debt (which is usually
repayable over several years) as a measure of
near-term constraint on budgets, and the impact
of structural changes in consumer credit markets
such as the lengthening of maturities and the
development of new uses of credit.
390 Federal Reserve Bulletin • June 1985
POSTWAR GROWTH OF
INSTALLMENT
CREDIT
2. Ratio of installment credit outstanding to
disposable personal income
CONSUMER
Percent
Starting from a base of less than $3 billion at the
end of 1945, consumer installment credit expanded rapidly through the mid-1950s, frequently
recording annual increases greater than 20 percent (chart 1). Following this initial upsurge
came a 20-year period during which growth of
consumer credit fluctuated cyclically but generally remained within a range of 5 to 15 percent
per year. Since 1976, consumer credit growth has
pushed above this range by 3 to 5 percentage
points during two periods of major economic
upswing—1977-78 and 1983-84. In 1984, consumer debt rose 20 percent, the highest rate for a
full year since 1955.
The pattern of growth for consumer debt since
World War II—a rapid increase followed by a
long period of more subdued growth—has been
repeated in the movement of installment debt
relative to disposable personal income. This ratio
rose from less than 2 percent in 1945 to nearly 11
percent in 1955 (chart 2), a trend that many
observers at the time feared was incompatible
with continued prosperity. But after its initial
sharp climb, the debt-to-income ratio advanced
at a decelerating pace to reach 15 percent by the
mid-1960s, leveled off for several years, then
marked a new high of 17.8 percent in 1979. In
early 1985 the ratio was approaching 18 percent
again.
Rapid Growth,
1946-55
Several factors contributed to the powerful upsurge in consumer borrowing during the immedi1. Growth in consumer installment credit outstanding
Percent
Annual data.
"This break in series reflects the removal of mortgage debt held by
finance companies beginning in July 1980.
IliatllilttiaMlliMIMMMlitlBlli)
1950
1960
1970
1980 1984
Quarterly data.
ate postwar decade. Because of wartime controls
on production and credit, stocks of consumer
durable goods were at artificially low levels at
the war's end. The backlog of demands for such
goods and for the credit to help finance them
played a major role in the ensuing rapid expansion of debt. A sharply higher rate of family
formation during that period further stimulated
outlays for consumer durables, which increased
almost 11 percent per year in nominal terms from
1946 to 1955.
The strong uptrends in consumer spending and
borrowing also reflected changing attitudes on
the part of both borrowers and creditors. Goods
that consumers once treated as luxuries were
increasingly viewed as necessities, and consumers began to use installment debt for a wider
variety of purposes. At the same time, creditors
were reassessing the risks of consumer lending in
light of favorable industry experience with such
credit. Before World War II most consumer
credit was supplied by finance companies; after
the war commercial banks competed more aggressively. Banks were especially attracted to
the market for automobile loans, in which both
the projected volume of business and the soundness of the collateral created attractive profit
potential.
A substantial lengthening of maturities on new
loans contributed to the growth of outstanding
debt in the early postwar years. Other things
equal, a lengthening of maturity reduces the
amount of repayments to be made during a given
period of time; with debt thereby staying on the
books longer, the stock of debt becomes larger
than it otherwise would have been. Moreover,
because smaller monthly payments lighten the
The Growth of Consumer Debt
current debt burden on household budgets, demand for loans tends to rise when maturities
lengthen rapidly. Most observers regarded the
rapid adoption of the 36-month car loan (the
previous standard was 24 months) to have been a
principal spur to the boom in new-car sales in
1955.
Moderate
Growth,
1956-75
The deceleration in the rate of expansion in
consumer debt from the mid-1950s through the
mid-1970s in large part reflected a moderation in
the fundamental forces that initially stimulated
the earlier postwar surge. By the mid-1950s,
households had accumulated substantial stocks
of durables, the formation of new families had
begun to slow perceptibly, and average loan
maturities were lengthening at a progressively
slower pace.
Other factors also played a role. During the
Vietnam War, inflation began to raise the fears of
consumers about the economic future. These
fears apparently led households to increase their
desired levels of liquid asset holdings and reduce
their borrowing.1 On the supply side, higher
costs of lending in the face of statutory ceilings
on consumer loan rates may have tightened the
supply of credit in the early 1970s, though not
nearly so much as would the profit squeeze to
come a few years later.
Resurgence,
1977-78
The growth of consumer borrowing during 197778 exceeded the 5 to 15 percent range that had
prevailed for 20 years. Population trends and
social developments probably played a positive
but very limited role in this upsurge. The marriages of the original "baby boomers" created
something of a demographic echo effect during
the period, but as with any echo, the secondary
effect was muted compared with the original
impact.2
1. For example, in the 1962 Survey of Consumer Finances,
conducted by the Survey Research Center of the University
of Michigan, 50 percent of the respondents felt that their
holdings of liquid assets were inadequate; in the 1969 survey,
60 percent expressed that attitude.
2. Between 1970 and 1977, the 25-34 age group, which
carries a high level of debt, increased its share of population
391
Inflation accelerated after 1975, eventually
reaching double digits. In the 1960s, consumers
responded to the onset of inflation by reducing
spending and attempting to build liquid assets.
By 1977-78 the rapidity of inflation and the
perceived likelihood of its continuation overrode
consumers' caution, driving them to shun financial assets and buy goods in advance of further
price increases. During the last half of the 1970s,
the climb in housing prices, which considerably
exceeded the increase in the general level of
prices, provided further stimulus to consumer
borrowing.3
In the mid-1970s, maturities on new consumer
loans again began to lengthen considerably, a
trend best documented for new-car loans. At
commercial banks, for instance, the proportion
of new-car loans with maturities exceeding 36
months rose from about 5 percent in 1973, to 25
percent in 1976, to 61 percent in 1979.
The growing use of credit cards as a convenience in transactions that could have been made
with cash or checks probably added to the stock
of consumer debt measured in Federal Reserve
statistics.4 Several features of credit cards make
them an attractive medium of transaction: they
permit their users to carry less cash and to
economize on checking account balances, they
serve as a record of purchase and as leverage in
disputes over purchases, and they provide users
with free credit for short periods of time (up to
nearly 60 days, depending on the timing of a
purchase).
by 3 percentage points. However, the oldest age group,
which uses credit sparingly, also increased its share of
population, primarily at the expense of the 35-54 age group,
which is a relatively heavy user of consumer credit.
3. Much of the borrowing against inflated housing equity
was accomplished through mortgage instruments instead of
consumer loans. It is possible that the substitution of mortgage credit for traditional forms of consumer credit held
down growth of the latter more than the increased wealth of
homeowners (in illiquid form) stimulated it. There is little
question, however, that total household borrowing was
boosted by the enormous swelling of equity in homes.
4. Convenience use of credit cards reflects innovations in
payments technology and practices more than it does a
fundamental shift in consumers' acquisition of debt. Nonetheless, all credit card charges that are on an institution's
books at month-end are treated in the statistics as consumer
installment debt, regardless of the amount of those obligations that will be paid in a lump sum before interest charges
begin to accrue.
392 Federal Reserve Bulletin • June 1985
Slow Growth,
1980-82
After the sharp credit expansion of 1977-78 came
an extended period of sluggish growth associated
with a slack economy. Installment credit advanced by a still-robust 14 percent in 1979 but the
rate tapered off rapidly toward the end of the
year. In each of the three years 1980 through
1982, growth of consumer debt was less than 6
percent, the longest period of growth at such low
rates since World War II. Reduced demands for
consumer durables during the back-to-back recessions of the period contributed importantly to
slowing the growth of credit, but the market for
consumer credit in 1980-82 was also noteworthy
for supply constraints that were probably the
most stringent of the postwar period.
The increasing costs of funds in the late 1970s
and early 1980s severely squeezed profits from
consumer lending as state usury laws kept rates
on consumer loans from rising as much as freemarket rates. For example, the rate for prime
business loans at banks, usually several percentage points below the rate for new-car loans,
reached 21 percent near the end of 1980, while
ceilings held the most common rate for auto
loans at banks to an average of only about 15
percent.
The various state ceilings began to restrict
lending broadly in 1979, causing virtually every
state to revamp its rate-control laws within the
next three years; some states acted more than
once. Constraints on the supply of consumer
credit were probably greatest in 1980 and 1981,
when market rates were at their highest and
ceilings on rates for consumer loans were still
being adjusted.5 In addition, the consumer portion of the administration's 1980 program of
credit control provided lenders an opportunity to
impose annual user fees on credit cards and to
5. Commercial banks, the largest and most diversified
presence in the consumer credit market, reduced their lending more sharply than any other source. With just under 50
percent of total installment debt at the end of 1979, commercial banks cut their holdings by $3'/2 billion during the 198082 period, a drop in market share of 7 percentage points. By
contrast, finance companies increased their holdings by $30
billion and their market share by 6 percentage points during
the same period, in large part as a result of automobile
finance companies acting as lenders of last resort for buyers
of their parent companies' products.
adopt other restrictive measures with minimum
resistance from customers.
A CLOSER LOOK AT THE
DEBT-TO-INCOME
RATIO
High levels of consumer debt relative to income
imply that many borrowers might have trouble
meeting payment obligations, which in turn
could mean larger losses on loans and lower net
returns to creditors. Historically, creditor solvency has generally not been a problem; instead,
the concern has been that, with high debt burdens and rising loan losses, lenders simply will
curtail the availability of credit, thereby causing
consumer expenditures to weaken. However,
the chief economic problem attributed to a high
aggregate debt burden appears to be its direct
impact on spending, not its indirect effect via the
supply of credit. Elevated debt levels, in this
view, operate as a constraint on spending by
deflecting an increasing part of household income flows into the servicing of debt rather than
into current consumption. Any sharp increase in
debt burden, particularly to a level higher than
previously reached, provokes concern about its
effects on spending.
Quantitative
Estimates
It is interesting to note that the historical trend of
the debt-to-income ratio is consistent with that
predicted by a simple model devised by Alain
Enthoven in 1957.6 Enthoven's article was writ6. Alain Enthoven, "The Growth of Installment Credit and
the Future of Prosperity," American Economic Review, vol.
47 (December 1957), pp. 913-29. Enthoven argued that the
postwar rise was a normal, essentially benign adjustment
from a level of debt artificially depressed by wartime controls
and was stimulated by rapidly rising incomes and the large
segment of the population that was in the heavy-borrowing
phase of its life cycle. Enthoven's model was more an
illustrative exercise than a behavioral model, but one of its
important implications was that linear extrapolation of the
postwar trend of the debt-to-income ratio was erroneous—
that even with no shift in borrowing habits, the debt burden
ratio should tend toward some approximate ceiling determined by the long-term growth in income and propensities to
borrow. The actual trend of measured debt burden from the
late 1950s to the present has been quite consistent with
Enthoven's expectations.
The Growth of Consumer Debt
ten at a time when the ratio had increased rapidly
from its postwar low, and many observers were
voicing concern over the potentially damaging
economic consequences of a continued sharp
rise. But Enthoven anticipated a leveling off of
the ratio as it approached some upper limit
governed by the model's parameters. Replication
of the Enthoven model using historical data
suggests that the normal upper bound for the
ratio of installment debt to income is between 20
and 22 percent. Taking this rough estimate at
face value, it appears that the ratio still has some
margin for further increase.
Analytical
393
The size of the monthly payment is generally
more important to decisions on spending than is
the size of the total debt, which may be payable
over several years. However, only amounts outstanding are now available; the repayments series were discontinued at the end of 1982 for all
lenders except finance companies.
Although the repayments estimates were
dropped, in part to reduce the reporting required
of lenders, they also gave a misleading measure
of the burden of debt payments. In particular,
they represented actual repayments rather than
scheduled or minimum required payments,7 and
they were subject to distortions associated with
fluctuations in refinancing.8
Limitations
There is little to justify heavy reliance on such an
upper bound figure to estimate a precise ceiling
for debt burden that would be invariant over
time. It would be particularly questionable to
read the calculated boundary as a critical value
above which households would be overburdened
with debt. Changes in several parameters, such
as the structure of debt maturity, can alter the
implied ceiling for the debt-to-income ratio, and
practical problems of statistical measurement
also qualify the interpretation of the ratio. Some
of the major limitations on the usefulness of the
debt-to-income ratio are reviewed below.
Distribution of Debt. The aggregate ratio of
debt to income provides no information on the
distribution of debt among households. Problems
of repayment arising when a relatively limited
number of borrowers take on more debt might
well differ from those arising when a broader
range of households are borrowing. Similarly,
the aggregate ratio does not categorize income
and asset holdings of debtors, yet it seemingly
would make considerable difference whether it is
low-income, low-asset households or relatively
affluent consumers who are building up debts.
Relative Significance of Outstanding Debt and
Repayments. If consumer debt is of analytical
concern mainly as a near-term constraint on
household budgets, a measure of scheduled payment obligations per month or per year would be
preferable to a figure for total debt outstanding.
Incomplete Coverage of Household Indebtedness. Shifts among installment credit, noninstallment credit, and mortgage credit can reduce the
relevance of a measure that includes only installment debt. On the other hand, a consumer debt
series incorporating all these types may not be
any more useful. The stock of mortgage debt is a
particularly ambiguous proxy for budget constraint, partly because of the much longer maturity of mortgage debt compared with installment
debt. The home mortgage debt of all households
equals more than 50 percent of aggregate disposable income, but only a small fraction of the
stock of such debt is due within a year. Moreover, the mix in the stock between fixed-rate
mortgages and those whose scheduled payments
may fluctuate with interest rate movements further hinders interpretation.
As for noninstallment debt, a lack of good
sources of data makes it a difficult component to
measure, and a large portion of it could be
considered convenience credit, which is of little
7. Thus early payoffs of debt, which might stem from a
strong household balance sheet, would have the effect of
raising the measured repayments-to-income ratio; increased
delinquencies, reflecting repayment problems, would lower
the measured ratio.
8. When an existing loan was refinanced, often in the
process of borrowing additional funds, the repayment series
usually treated the amount of the old loan as being repaid and
the entire amount of the new loan as new borrowing. With the
refinanced portion of the loan thus included in both extensions and repayments, the net flow of debt and the total stock
were unaffected, but estimates of repayments would fluctuate
with the (unknown) volume of refinancing activity.
394 Federal Reserve Bulletin • June 1985
analytical import.9 Historically, because noninstallment debt has closely followed the path of
installment debt, its omission from the debt-toincome ratio appears to be unimportant for cyclical analysis. However, there has been some
secular shifting from noninstallment to installment debt, especially through the long-term
trend in retail stores to shift from 30-day "charge
account" credit to optional-payment "revolving" credit.
Other Factors. All of the factors discussed
earlier that may affect the use of debt or its
measurement would naturally affect the ratio of
debt to income. Thus the spreading practice of
using credit cards for their convenience in place
of cash or checks gives an upward nudge to the
debt-to-income ratio. The lengthening of maturities, which lowers the ratio of repayments to
income in the short run, raises the ratio of
outstanding debt to income in both the short and
the long run.
On balance, the ratio of installment debt to
income is a rather crude measure of the extent to
which debt obligations constrain current spending. Sharp and sustained increases in the ratio or
a surge to a level considerably higher than the
peak in the preceding credit cycle should not be
dismissed lightly but cannot be taken as definitive evidence of a dangerously overburdened
consumer sector.
A DETAILED LOOK AT
1983-84
We have discussed the major factors underlying
the growth of consumer credit from the end of
World War II through 1982. Here we examine
the 1983-84 growth phase for its consistency
with movements in consumer spending, offer
evidence from surveys on the distribution of debt
by income of households, and identify several
special factors that may help explain the data.
9. Noninstallment credit includes amounts owed to utility
companies and providers of services, such as doctors and
dentists. The largest component—single-payment loans at
banks—covers such uses as "bridge loans," which temporarily finance the purchase of one home while another is being
sold, and loans that may be used for financial investments
instead of consumption.
Consistency
with Consumption
Spending
The rate of advance in consumer installment
credit during 1983-84 was well above the growth
paths in any other upswing since 1955. Moreover, the rapid gains during the latest recovery
occurred despite a much slower pace of inflation
than attended the 1977-78 credit boom. Installment credit growth soared to an annual rate of 24
percent in 1984:2, more than 3 percentage points
higher than the rate in any other quarter in the
past 30 years. From mid-1984 to year's end,
credit growth ebbed, but it remained as strong as
it was at the peaks of many earlier credit expansions.
Credit growth has been exceptionally strong
even though spending increases have not been as
rapid as in some earlier periods of advance. It is
likely that repayments have provided an uncommonly low offset to new borrowing, which would
explain much of this seeming anomaly between
credit and spending growth.
The net growth of consumer credit is the
difference between gross new borrowing (extensions) and repayments of old debt. Since debt
repayments can be regarded as a function of the
credit extensions that took place in preceding
months (with the precise relationship determined
by the original loan maturities and the propensities of borrowers to prepay their debts), repayments will be relatively large or small depending
on the strength of new borrowings during a
relevant period of time—about three to four
years in the case of consumer credit.10
As discussed earlier, the 1980-82 period
marked the longest sustained weakness of new
borrowing by consumers since World War II.
Thus, for much of 1983-84, the rate of growth in
outstanding debt was probably boosted by the
comparatively small volume of repayments flowing from the weak earlier extensions. More recently, the robust recovery in extensions during
1983-84 has no doubt begun to enlarge the
stream of repayments, a process that should
retard credit growth as 1985 progresses.
In the absence of data on extensions and
repayments after 1982, we projected historical
10. Most consumer loans mature in three to four years.
The Growth of Consumer Debt
1. Ratio of extensions to consumption and of
repayments to outstanding debt, 1979-821
Extensions as
percent of
consumption
Repayments as
percent of
outstanding debt
1979:1
2
3
4
22.1
21.9
21.7
20.6
101.3
101.3
100.9
98.1
1980:1
22
3
4
20.1
16.7
18.6
18.4
98.7
94.7
100.7
101.3
1981:1
2
3
4
19.0
18.9
18.2
17.1
102.7
101.5
98.7
97.1
1982:1
2
3
4
17.0
18.2
17.2
18.1
98.1
100.7
98.6
100.7
Year and quarter
1. Extensions, consumption, and repayments are quarterly totals at
seasonally adjusted annual rates. Outstanding debt is the stock of
installment debt at the end of the previous quarter. Collection of data
on extensions and repayments of consumer installment credit was
discontinued beginning in 1983.
2. The credit controls program was in force during this period.
patterns of extensions relative to consumption
and of repayments relative to outstanding debt
into the period 1983:1-1984:4; we used these
projections together with observed consumption
outlays to generate a simulated path of growth in
the stock of debt. Values for the ratios of extensions to consumption and of repayments to outstanding debt for 1979-82 are shown in table 1,
and the simulated patterns of extensions, repayments, and net growth in credit outstanding are
presented in table 2.11
Comparisons of simulated credit expansion
(table 2, column 6) with actual credit growth
11. To simulate extensions for the period from 1983:1 to
1984:4, we assumed that the extensions-to-consumption ratio
would pick up gradually in early 1983 and accelerate toward
the top of its historical range as the economic recovery
gathered force. By applying this pattern to the actual figures
for consumption, simulated estimates of extensions were
calculated. To generate reasonable values for repayments,
the ratio of repayments to outstanding debt was begun at
approximately the 1982:4 level and increased gradually toward the upper end of its recent range. As extensions and
repayments for each quarter were derived, a resulting calculation for outstanding debt was made that provided a base
upon which to estimate the next period's outstanding debt. In
this manner, estimates of extensions, repayments, net
change, and outstanding debt could be made for each quarter
and would be consistent with historical relationships among
these series themselves and with consumption.
395
(column 8), and of simulated outstanding debt
(column 7) with actual outstanding debt (column
9), suggest that recent credit growth was consistent with the growth of consumption expenditures, based on historical patterns of consumption and credit. After eight quarters of calculations, the constructed debt total differed by
only $2 billion from the published total.
The paths of historical and simulated extensions and repayments relative to disposable income are shown in chart 3. If the constructed
series are reasonably accurate estimates of underlying extensions and repayments, the two
ratios were approaching previous highs toward
the end of 1984.
The analysis can be carried a step further to
examine reasonable expectations for consumer
credit growth during 1985, based on implicit
administration estimates for consumption expenditures (table 3). For instance, if the ratios of
extensions to consumption and of repayments to
outstanding debt were increased gradually to
their previous cyclical highs, the net change in
consumer credit would slide to about $50 billion
by 1985:4, equivalent to a 10 percent annualized
growth rate.
Several alternative projections (not shown
here) were based on somewhat different but
historically realistic assumptions about ratios of
extensions to consumption and of repayments to
outstanding debt; none of the alternative growth
paths varied by more than 2 percentage points
from that of table 3. Of course, substantial devi-
3. Ratios of extensions and repayments of consumer
installment credit to disposable personal income
Percent
Staff estimates
Extensions
/N^t^^^Repayments
I I i • M I ! I I H I I ! I • ! I! I I II I if I II
1950
1960
1970
1980 1984
Data are quarterly through 1982; data plotted in the shaded area are
staff estimates.
T w o breaks in the series occur: the first reflects the inclusion of
gasoline companies after 1970; the second reflects the removal of
mortgage debt held by finance companies beginning in July 1980.
396 Federal Reserve Bulletin • June 1985
2. Consumer credit aggregates, simulated and actual 1
Billions of dollars, seasonally adjusted annual rate, except as noted
Simulation
Actual
Consumer
spending
Ratio of
extensions to
consumption
(percent)
Extensions
Repayment
ratio
(percent)
Repayments
Net
change
Outstanding
Net
change
Outstanding
1983:1
2
3
• 4
(1)
2,070.4
2,141.6
2,181.4
2,230.2
(2)
17.5
17.8
18.3
19.0
(3)
362.3
381.2
399.2
423.7
(4)
101.5
101.5
101.7
101.7
(5)
333.2
340.6
351.7
363.8
(6)
29.1
40.6
47.5
59.9
(7)
335.6
345.8
357.7
372.7
(8)
28.0
38.8
50.8
73.6
(9)
335.3
345.0
357.7
376.1
1984:1
2
3
4
2,276.5
2,332.7
2,361.4
2,397.4
20.0
21.0
21.2
21.4
455.3
489.9
500.6
513.0
102.0
102.2
102.4
102.6
380.2
400.1
423.9
444.5
75.1
89.8
76.7
68.5
391.5
414.0
433.2
450.3
69.2
92.0
69.6
74.4
393.4
416.4
433.8
452.4
Year and
quarter
SOURCES. Col. 1: actual consumption expenditures, Bureau of
Economic Analysis.
Col. 2: authors' estimates based on historical relationships between extensions and consumption.
Col. 3: col. 1 times col. 2.
Col. 4: authors' estimates based on historical relationships between repayments and outstandings.
ations from these calculated paths of credit expansion could develop if, for instance, actual
consumption diverged significantly from its assumed path, or if marked shifts from historical
norms occurred in the underlying debt ratios.
3. Illustrative projections of consumer installment
credit, 1985
Col. 5:
Col. 6:
Col. 7:
Cols. 8
col. 4 times col. 7, previous period.
col. 3 minus col. 5.
col. 6 at quarterly rate plus col. 7, previous period.
and 9: Federal Reserve Board, G.19 statistical release.
One important survey result is that a large part
of the growth in installment debt between the
two years apparently was accounted for by
households in the highest income quintile (see
table 4). The lowest income group also increased
its share of debt somewhat, but that share nevertheless remained quite small. The top 20 percent
of households by income level owed about 45
percent of the debt in 1983, compared with 36
Billions of dollars
Period
Extensions
Repayments
Net
change
Outstanding
Growth
rate
1985:1...
2...
3...
4...
526.6
540.0
551.0
561.6
464.5
481.5
497.0
510.9
62.1
58.5
54.0
50.7
467.9
482.5
496.0
508.7
13.7
12.5
11.2
10.2
4. Proportion of households in debt and share of
total debt, by income quintile, 1970, 1977, and
19831
Percent
Income quintile
Year
Distribution
of Consumer
Lowest
Debt
Second
Third
Fourth
Highest
Proportion of households in debt
One problem in interpreting the aggregate debtto-income ratio is that it contains no information
about the distribution of the debt among households of differing economic characteristics. Two
major surveys of consumers, sponsored by the
Federal Reserve Board and conducted by the
Survey Research Center of the University of
Michigan in 1977 and 1983, help to address this
issue.
1970....
1977....
1983....
22.9
30.0
31.9
46.6
50.5
51.3
60.9
62.7
67.2
67.4
64.9
73.7
47.2
57.5
72.0
Share of total debt in survey
1970....
1977....
1983....
3.8
4.3
4.8
15.2
11.7
14.1
31.4
19.7
16.3
27.9
27.7
19.4
21.7
36.5
45.5
1. Includes credit card debt.
SOURCES. Consumer Credit Survey, 1970 and 1977, and 1983 Survey
of Consumer Finances.
The Growth of Consumer Debt
percent in 1977.12 Those in the lowest income
bracket held 5 percent of the debt covered in the
1983 survey, compared with AVi percent in 1977.
The proportion of households in debt rose in all
income groups, with particularly sizable gains in
the two highest groups.
To some extent, then, these six-year trends
tend to allay concerns that the rapid rise in debt
during 1983-84 has overburdened the household
sector with debt. An overburdening seems less
likely if, as the surveys suggest, the financially
better-off households are doing most of the borrowing and outstanding debt is more widely
distributed among households than before.
Factors Influencing Current and Future
Growth of Consumer Credit
That credit expansion during 1983-84 has been
consistent with consumer expenditure patterns
perhaps makes a search for a special explanation
of the expansion less imperative. However, various possible influences on the rate of growth in
credit may provide clues to the prospects for
future variations from the postwar paths of debt
and debt burden.
Convenience Use of Credit Cards. The expanding use of credit cards for their convenience
in transactions rather than for borrowing over a
period of months has biased upward the measures of debt and debt burden in recent years.
Convenience credit continues to be an important
issue for the future, as well, because it is plausible that convenience credit could either expand
or contract substantially.13
Revolving credit has been the fastest growing
component of installment debt during the 1983—
84 period. Over the 12 months through February
1985, revolving credit increased 26 percent, compared with 20 percent for automobile credit and
12. This result continued a trend that carried back at least
to 1970, when the highest income quintile owed 25 percent of
the debt.
13. For instance, if financial institutions were to impose
interest charges from date of purchase to date of payment on
bills paid in full, the long-term trend toward greater convenience use of credit cards might be sharply reversed; the
development of debit cards could also lower the convenience
use of credit cards.
397
20 percent for the large "other" credit category.
However, little hard evidence is available on
what proportion of credit card debt outstanding
represents convenience use.
An approximation of convenience use—represented by the proportion of card users who pay
in full within the billing period—is provided by
two household surveys. In each of the large
Board-sponsored surveys of 1977 and 1983, approximately 50 percent of the card-using respondents said that they "almost always" pay credit
card bills in full. Industry estimates of this proportion have generally been lower—more on the
order of 35 to 40 percent.14 But even at the lower
estimates, it seems that a substantial number of
people behave as convenience users.
The survey finding that the proportion of card
users that pay bills in full has not changed much
between 1977 and 1983 might suggest that convenience use may have been a constant share of
total debt for several years. However, such
proportions do not translate easily into the share
of debt attributable to convenience users because the size of their average balances relative
to those of other card users is not known and
may change over time. It is entirely possible that
convenience users have been increasing their
activity relative to borrowers without increasing
in relative numbers.
Nevertheless, a rough estimate was made of
the impact of convenience use on the aggregate
debt-to-income ratio in recent years. Starting
from 1977:1 (the point at which data on retail
revolving credit became available as a component separate from the "other" category), we
assumed that the growth in convenience credit
was a constant 40 percent of the growth in total
revolving credit throughout the period—roughly
equivalent to the proportion of convenience users in the card-holding population. We estimated
"convenience-adjusted" trends of revolving and
total debt by subtracting out all growth in convenience credit after 1977:1, thus holding the abso-
14. Industry estimates are more frequently based on actual
account activity during a given period. Since, for any particular month, some proportion of those who "almost always"
pay in full will not in fact do so, the measured proportion of
accounts paid in full will be smaller than the share of card
holders that usually pays in full.
398 Federal Reserve Bulletin • June 1985
lute volume of convenience use to its 1977:1
level.
Although such calculations are merely hypothetical, they suggest some reasonable magnitudes for the impact of convenience credit on the
installment debt series. Actual figures and estimates for total installment debt and the debt-toincome ratio are shown in table 5. The convenience-adjusted growth rate in installment credit
is about Vi to VA percentage points lower than
the reported rate in recent quarters, and the
adjusted debt-to-income ratio by 1984:4 is about
1 percentage point below its actual level. In other
words, because the reported series reflect convenience use of credit, debt growth has been somewhat faster recently and the debt burden is now 1
percentage point higher than it otherwise would
have been.
Lengthening of Maturities. For some types of
closed-end loans, maturities have begun to
lengthen recently. In the case of new-car loans at
major auto finance companies, the increasing use
of five-year car loans has extended the average
maturity to 50.2 months as of December 1984,
compared with 46.3 months at the end of 1983;
the average maturity continued to lengthen in
early 1985. Between the end of 1979 and 1983, in
contrast, the average maturity at these companies had lengthened by just two months. Qualitative information indicates that an increasing proportion of commercial banks and credit unions
also are making some five-year car loans.
The four-month increase in average maturity
for all newly originated auto loans during 1984
probably had a rather small impact on total
installment credit. Such a maturity shift could
have accounted for about XA percentage point of
the overall rise in the stock of debt in 1984.15
The impact of lengthening maturities will become more pronounced if the trend continues,
15. For auto loans of typical size and interest rate, a
maturity of 50 months would leave an outstanding balance at
the end of the first year 2Va percent higher than the corresponding balance on a 46-month loan. H o w e v e r , newly made
loans constitute only one-third to one-fourth of the auto loan
stock, which in turn constitutes about one-third of total
installment debt. Thus, the first-year impact of a four-month
increase in the average maturity on new auto loans would be
diluted considerably in the aggregate.
5. Growth of consumer installment debt, actual and
adjusted for convenience credit 1
Percent
Annual rate of
growth in
outstanding debt
Ratio of outstanding
debt to disposable
personal income
Year and quarter
Actual
Convenienceadjusted
Actual
Convenienceadjusted
1977:1
2
3
4
18.1
17.6
15.6
17.5
18.5
16.3
15.6
15.9
15.9
16.2
16.3
16.5
15.9
16.1
16.2
16.4
1978:1
2
3
4
16.7
20.8
16.0
15.8
16.0
19.8
14.8
15.1
16.8
17.2
17.3
17.5
16.6
16.9
17.0
17.1
1979:1
2
3
4
17.5
13.7
13.2
10.4
16.0
12.2
12.0
9.5
17.7
17.9
17.9
17.9
17.3
17.4
17.4
17.4
1980:1
2
3
4
7.4
-8.3
8.3
-9.7
(2)
(2)
2.2
1.8
17.7
17.1
16.02
15.5
17.2
16.6
15.52
15.0
1981:1
2
3
4
6.9
6.9
7.8
.4
6.3
5.9
7.6
.1
15.3
15.3
15.0
14.9
14.8
14.8
14.5
14.3
1982:1
2
3
4
5.0
6.5
2.8
5.0
4.5
5.8
2.5
4.9
14.9
14.8
14.7
14.7
14.3
14.3
14.2
14.1
1983:1
2
3
4
8.6
11.6
14.7
20.4
8.0
10.6
14.4
19.2
14.8
15.0
15.1
15.5
14.2
14.3
14.4
14.7
1984:1
2
3
4
18.5
17.4
15.7
14.9
23.4
16.8
17.1
22.0
16.3
16.3
16.3
16.6
17.1
15.4
15.7
16.2
1. "Convenience-adjusted" debt is actual debt minus an estimate
of the cumulative growth in convenience credit. Thus the difference
between the actual observations (which include convenience use) and
the convenience-adjusted estimates (which hold convenience use to
its level in 1977:1) indicates the overall impact of convenience use on
the growth rate and the debt-burden measure.
2. The discontinuity in these series reflects the removal of mortgage
debt held by finance companies beginning in July 1980.
but a precise estimate for 1985 and beyond is
problematic. Since a shift from 48 months to 60
months would represent a smaller percentage
change in maturity than, say, the earlier shift
from 24 to 36 months, the resulting enlargement
of the debt stock would be proportionately smaller. Likewise, the direct effect on the demand for
cars might be more moderate than before in view
of the smaller percentage reduction of monthly
payment size. On balance, however, it appears
that the debt stock should continue to receive at
The Growth of Consumer Debt
least a moderate boost over the next few years
from a stretching out of maturities, particularly
in the auto loan area, where some lengthening is
clearly in process.
Demographic Factors. Population trends have
probably had a slightly positive effect on the
growth of consumer credit in the last two years.
The movement of the baby boom generation into
the age groups characterized by high rates of
family formation, spending, and borrowing was
approaching a crest as the 1983-84 period got
under way. Whereas in 1977-78 the proportion of
people in the 35-44 age group had been declining
for several years, it was on the rise at the
beginning of 1983. The 25-34 age group was still
expanding as well. Together these two groups
represented 29 percent of the population in 1982,
compared with 26 percent in 1977 (and 23 Vz
percent in 1970). Further growth in the oldest age
category, which uses debt sparingly, offset this
trend to some extent.
In 1983 (the latest year for which data are
available) 42 percent of the nation's households
were headed by persons between 25 and 44.
According to survey responses, households
headed by these persons ranked highest in the
proportion of households in debt (table 6). In
addition, borrowers in the 35-44 age bracket also
had the highest mean level of debt of any age
category.
We estimated the overall impact of changes in
the age distribution by calculating what the average amount of debt for all households would be
using 1977 and 1983 age distributions in conjunc-
399
tion with 1983 average levels of debt within age
categories, as shown in table 6. We weighted the
average amounts of debt for each age group in
1983 (including those with no debt) by the proportion of the households headed by a person
within that age group for each of the two years
and computed two weighted-average means. The
1983-weighted estimate of debt was $2,693, 0.5
percent larger than the 1977-weighted average of
$2,679. This result suggests that the aggregate
level of debt in 1983 was 0.5 percent higher than
it would have been had there been no change at
all in the structure of the population between
1977 and 1983.
Marriage rates and birth rates rose 5-10 percent from 1977 to 1982, reinforcing the conclusion that demographic trends have been stimulating debt expansion during 1983-84. These rates
are still well below peaks in the late 1950s—
births, for instance, occurred at the rate of 25 per
1,000 people in 1955 and only 16 per 1,000 in
1982. But current trends appear to be unmistakably upward and should continue to foster consumer credit demands to a small degree.
Credit Market Innovations. Innovations in
lending to households can affect the growth of
the consumer installment credit series, positively
in some cases and negatively in others. An
innovation may consist of a new credit instrument, revival of an "old" instrument, a new
source of credit, or some change in the characteristics of loan contracts. The impacts of several
such factors are mentioned below, but we do not
make a detailed evaluation.
6. Effect of age on amount of debt outstanding
Age of head of household
(years)
Under 25
25-34
35-44
45-54
55-64
65 and over
All age groups
Distribution of households by
age of head (percent)
1977
1983
(1)
8.1
21.8
16.8
17.4
15.9
20.0
100.0
(2)
6.8
22.8
19.1
14.7
15.6
21.1
100.0
1. Mean is for all households in group, including those with no debt.
2. Population-weighted average amount of debt outstanding, calculated by summing the figures shown for individual age groups.
Percent in
debt, 1983
(3)
54.1
73.6
75.9
68.6
52.5
21.8
Mean amount
of debt, 1983'
(dollars)
(4)
1,564
3,586
4,097
3,459
2,530
388
Contribution of age groups to
overall average debt (dollars)
1977
1983
(5) = (1) x (4)
127
782
688
602
402
78
2,6792
(6) = (2) x (4)
106
818
783
509
395
82
2,6932
SOURCES. Bureau of the Census, Current Population Reports,
series P-20, selected issues; Federal Reserve Board, Consumer Credit
Survey, 1977 and 1983, data tapes.
400 Federal Reserve Bulletin • June 1985
• Securities brokerage firms in recent years
have begun offering "cash management accounts," which often include a line of credit
accessible by a credit card. Because brokerage
firms are not included in the official installment
credit statistics, this development tends to retard
the measured growth of the series to the extent
that consumers substitute brokerage credit for
credit from banks and other sources covered by
the statistics.16
• Savings and loan associations are becoming
increasingly important suppliers of consumer
credit, by virtue of provisions in the Depository
Institutions Deregulation and Monetary Control
Act of 1980 that widened the asset powers of
these institutions. In percentage terms, consumer credit at savings and loan associations grew
faster than any other component during 1983-84.
Savings and loans held $31.7 billion of consumer
debt in February 1985, nearly double the amount
at the end of 1982.17 How much of this gain
represents a net addition to household borrowing
and how much a replacement of one source by
another is uncertain; it seems likely that the
additional competition introduced into the market by savings and loans has operated to expand
the overall supply of credit, resulting in at least
somewhat greater borrowing on somewhat more
favorable terms than would otherwise have prevailed.
• Housing equity grew rapidly in the last half
of the 1970s, and financial institutions greatly
expanded their holdings of junior mortgages in
those years. Most junior mortgages properly
would be classified as mortgage credit instead of
consumer credit.18 Any expansion in junior mortgage debt that supplants consumer loans would
reduce the lending reported in the consumer debt
series.
A newer type of lending, secured by real estate
and used primarily for consumption, provides an
open-ended line of credit backed by housing
equity. Several institutions began offering such
plans in 1982, when certain changes in federal
regulations removed barriers that had made the
plans impractical.19 The volume of receivables
under such plans is believed to be comparatively
small; it is not known to what extent some
institutions may be misreporting such lending as
revolving consumer credit rather than as mortgage credit.
On the whole, individuals probably raised
more funds by tapping their housing equity during the 1977-78 period, when housing equity had
grown enormously, than they did during 198384, which followed a period of more slowly rising
home prices. Much of the housing equity mobilized in 1977-78 was raised in the process of
selling one home and purchasing another, rather
than by second mortgages. Undoubtedly, borrowing against home equity partly supplemented
traditional types of consumer loans and partly
substituted for them. On net, the 1977-78 surge
in housing-related borrowing for consumption
could partly explain why the reported rate of
growth in consumer credit during that period of
inflation, when people might have been expected
to borrow more, was not as rapid as it was during
1983-84, when prices were more stable.
• Adjustable-rate financing of consumer loans
is probably encouraging the growth of consumer
credit to some extent. Adjustable-rate contracts,
which shift interest rate risk to consumers, have
probably increased the willingness of creditors to
make consumer loans and to make them with
longer maturities. In general, though, any increase in demand for consumer loans because of
adjustable rates is likely to be small compared
16. Many of the credit card plans offered by brokerage
firms are operated for the firms by other institutions, which
actually carry the receivables. Credit extended under such
plans in many cases would be included in the statistical series
as receivables held by the ultimate credit source.
17. Savings and loans may soon surpass retail stores—
which hold $38 billion of consumer receivables—as the fourth
largest supplier of consumer credit. Commercial banks remain by far the largest supplier, with $218 billion of consumer
credit outstanding in February. Finance companies hold $99
billion, and credit unions hold $71 billion.
18. As a general principle, loans are classified in the
consumer credit statistics by type of collateral rather than by
purpose of borrowing, because the ultimate purpose—the
marginal endeavor financed by a loan—is rarely knowable to
a creditor.
19. The proper handling of sales under open-ended plans
secured by real estate was blocked by the right of borrowers,
under the Truth in Lending law, to rescind within three days
any transaction that mortgages their home and by the duty of
sellers to give notice of such right at the time of purchase.
The Congress amended the law in 1982 to require that notice
of the rescission right need be given only by creditors and
only at the time that the account is opened or a change made
in its terms or in the credit limit.
The Growth of Consumer Debt
with the boost such financing has given to mortgage lending. Because maturities are so much
shorter and loan amounts so much smaller in
consumer markets, the monthly payment is affected less by initially lower rates on a consumer
loan than it is on a mortgage.20 Thus demand
effects are likely minimal.
Given the fairly slow spread of adjustable rates
in the consumer market so far—perhaps 10 percent of consumer loans carry an adjustable rate
at present—and the questionable power of adjustable rates to generate demand for consumer
loans, it appears that their effect on growth in
1983-84 was minor. Still, adjustable rates should
exert a net positive influence on the supply of
credit over the longer term.
• The further development of secondary markets for consumer loans could stimulate growth
of consumer credit. To date, the purchase of
consumer loans has been limited primarily to the
small segments for home improvement, mobile
home, and student loans, but the purchase of
auto loans may be on the verge of rapid development. A major investment banking firm has been
privately selling "Certificates for Automobile
Receivables," representing packages of auto
loans, and expects a public market to emerge
soon.21
In general, secondary markets can bring to a
loan sector funds from investors who would not
otherwise provide financing for that purpose.
The data on consumer credit growth may understate such expansion, however, if it means the
transfer of receivables to the books of holders
not covered in the consumer credit statistics
from originators that are included in the statistics.
• Student loans outstanding have increased
strongly over the past decade, to $32 billion in
20. On a typical 48-month car loan, an increase of 1
percentage point in the interest rate raises the monthly
payments for interest and principal by $3 to $4. On a typical
30-year home mortgage, a 1 percentage point difference in
interest rate could mean a $50 difference in monthly payments.
21. In responding to a 1983 survey by the American
Bankers Association, nearly 28 percent of commercial banks
with assets of $500 million or more reported selling consumer
loans in the secondary market; smaller banks were less
active. The dollar volume of such transactions was not
reported. ABA, 1984 Retail Bank Credit Report (Washington:
ABA, 1984), table 18.
401
1984, reflecting the burgeoning costs of education and the expansion of federal guarantee programs.22 Because growth in this sector has been
steady rather than cyclical, it probably has contributed not so much to the 1983-84 upsurge in
credit as to a longer-run stimulus.
• "Private label" credit card plans have been
expanding rapidly, but this type of credit no
doubt represents mainly a substitution of one
source of credit for another. Private label credit
cards carry the logo of a retail store or supplier of
goods (two major computer firms are recent
entrants), and promotional materials for the firm
are included with monthly bills, but the operation
of the plan and the carrying of the receivables are
handled by another institution. Private label
credit should be reported as consumer credit
holdings by the ultimate carrier of the receivables, and for the most part this practice appears
to be followed.
• Loans on life insurance policies, now totaling
about $55 billion, are a source of credit to
consumers not included in the consumer credit
statistics. Borrowing against the cash value of
insurance policies was much heavier in 1979-81,
when low rates of interest were guaranteed in
many policies and market interest rates were
extraordinarily high, than it apparently was in
1983-84. If it substitutes for consumer credit, an
increased volume of policy loans would depress
the measure of consumer credit, and a reduced
volume would tend to raise it, but the degree of
substitution between the two is far from clear.
Much of the proceeds of earlier low-rate borrowing was redirected into high-yielding financial
assets rather than into consumption. On balance,
policy loans do not appear to have had a major
impact on the growth rate of consumer credit.
• The deductibility of interest payments in
figuring federal income taxes supports consumer
credit demands, especially when interest rates
are high, as they were in the late 1970s. If
enacted, the Treasury Department's proposal to
22. The loans are made by banks and other institutions
under the Department of Education's Guaranteed Student
Loan Program. The statistics on consumer credit treat student loans as noninstallment credit until regular monthly
payments are begun after the student's graduation; at that
point the loans become one of many elements of the "other"
component in the installment credit category.
402 Federal Reserve Bulletin • June 1985
limit the deductibility of personal interest expense should have but slight effect on consumer
credit demands. Under current law, all such
interest is deductible; under the proposal, deductibility would be limited to mortgage interest
on the taxpayer's principal residence and an
amount equal to net investment income plus
$5,000. In the overview to the reform proposal,
the Treasury points out that "in 1981, only 3.3
percent of individual tax returns claimed itemized deductions for nonmortgage interest in excess of $5,000." The $5,000 allowance should be
sufficient to allow the continued deductibility of
interest on loans to buy autos and major appliances and on a sizable amount of other personal
indebtedness.
• The development of tax-sheltered savings
plans such as individual retirement accounts
could lead to a higher volume of borrowing. Such
plans are generally quite illiquid and in most
cases substitute for other types of saving. Households are more likely to borrow to finance consumption when their savings are in illiquid form.
Moreover, some households may find it advantageous for tax reasons simultaneously to build up
tax-sheltered savings and borrow for consumption, rather than simply funneling income flows
directly into spending.
On the other hand, to the extent that taxsheltered savings plans promote saving at the
expense of consumption, they could provide
some deterrent to borrowing. Also, with the
recent sharp increase in money market deposit
accounts and other highly liquid assets, it is not
clear that household savings grew much less
liquid, on balance, during the 1983-84 upswing.
• Finally, the use of consumer credit for business needs or other nonconsumer purposes can
affect the measured growth of the consumer
credit series. No information on this practice has
been collected since the early 1950s. At one time,
the installment credit series were adjusted to
remove an estimate of nonconsumer use based
on 1952 relationships. Adjustments for installment credit were small (although noninstallment
debt contained a fairly high proportion of nonconsumer use), and were confined mainly to
home improvement credit. Such adjustments
were eventually discontinued for lack of information. There is no strong reason to believe that
nonconsumer use of consumer credit has intensified greatly during 1983-84, but in the absence of
relevant data nothing definitive can be said on
this point.
CONCLUSION
The pace of consumer credit expansion in 1983—
84 exceeded that of any period since the years
immediately following World War II. This rapid
growth, however, appears to be consistent with
typical relationships between consumption and
borrowing and between repayments and the
stock of debt. Several factors in combination
may have imparted a moderate upward push to
the measured rate of growth of installment debt
and the ratio of debt to income, notably some
lengthening of loan maturities and a growing
volume of convenience use of credit cards. The
continuation of normal linkages between consumption and debt expansion points to a slowing
of the rate of growth in consumer credit during
the near term. A miscellany of special factors
may, on balance, add from 1 to 3 percentage
points to the anticipated trend.
403
Industrial Production
Released for publication April 16
Industrial production increased an estimated 0.3
percent in March following a decline of 0.2
percent (revised) in February. At 165.4 percent
of the 1967 average, the index was 2.9 percent
above a year ago, but remained slightly below its
level in the summer of 1984. The preliminary
average for the first quarter is about 1 percent
1979
1981
1983
1985
All series are seasonally adjusted and are plotted on a ratio scale.
higher, at an annual rate, than the fourth quarter
of 1984.
In market groupings, output of consumer
goods was little changed in March following a 0.9
percent decline in February. Automotive products rose 0.4 percent as autos were assembled at
an annual rate of 8.3 million units following a rate
of 8.2 million units in February, but output of
home goods and nondurable consumer goods
1979
1981
1983
1985
Auto sales and stocks include imports. Latest figures: March.
404 Federal Reserve Bulletin • June 1985
1967 = 100
Percentage change from preceding month
1985
Grouping
Feb.
1984
Mar.
Nov.
1985
Dec.
Jan.
Feb.
Mar.
Percentage
change,
Mar. 1984
to Mar.
1985
Major market groupings
Total industrial production
164.9
165.4
.2
.0
.2
-.2
.3
2.9
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment..
Defense and s p a c e . . .
Intermediate products..
Construction supplies
Materials
167.7
166.1
161.1
161.2
161.1
188.9
145.9
173.7
158.5
160.6
168.0
166.2
161.3
161.5
161.2
188.5
146.9
174.5
159.2
161.3
.5
.6
.6
1.8
.2
.6
.8
-.2
-1.1
.0
.2
.3
-.2
-.3
-.2
.6
1.8
.1
.4
-.4
.1
.1
.2
-.2
.3
-.3
.8
-.1
-.1
.4
-.3
-.5
-.9
.3
-1.3
-.1
.1
.4
.7
.1
.2
.1
.1
.2
.1
-.2
.7
.5
.4
.4
4.3
4.8
.7
-1.0
1.3
9.5
12.9
2.5
.1
.6
Major industry groupings
Manufacturing
Durable
Nondurable
Mining
Utilities
166.5
157.7
179.1
123.1
184.6
167.1
158.5
179.5
123.5
184.7
.2
.3
.0
.0
-.2
-.1
3.1
4.7
.1
.0
-.3
1.1
1.0
-.3
-.5
-1.6
-.2
2.6
2.3
.6
NOTE. Indexes are seasonally adjusted.
changed little. In the equipment group, production of business equipment edged down again in
March largely as a result of further reductions in
oil and gas well drilling, while defense and space
equipment rose 0.7 percent. Output of construction products increased 0.4 percent following a
0.7 percent gain in February. Materials production rose 0.4 percent overall; among durable
materials, output rose 0.6 percent, primarily reflecting gains in basic metals. Nondurable mate-
rials, including paper and chemicals, also are
estimated to have increased in March after small
gains in January and February and a series of
reductions in the second half of 1984.
In industry groupings, manufacturing output
rose 0.4 percent in March as durable manufacturing increased 0.5 percent and nondurable
manufacturing, 0.2 percent. Mining output rose
0.3 percent after declining 1.6 percent in February, and the output of utilities was little changed.
405
Statements to Congress
Statement by E. Gerald Corrigan, President,
Federal Reserve Bank of New York, before the
Subcommittee on Domestic Monetary Policy of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives, April I,
1985.
I welcome the opportunity to appear before this
subcommittee to discuss efforts aimed at improving standards of capital adequacy for dealers in
U.S. government securities. This and related
efforts predate my appointment as President of
the Federal Reserve Bank of New York, but I am
generally familiar with the background leading to
today's hearing. I am also mindful that the events
of the past few weeks—growing out of the collapse of a Florida-based government securities
firm—have raised broader questions about the
operation and the integrity of parts of the government securities market. In that context, I thought
it would be useful to review briefly some background relating to the market, including the role
of the Federal Reserve Bank of New York in
providing a degree of oversight of that market.
Having done that, I will turn to the proposed
capital standards and conclude with some general observations about the future role of public
policy as it pertains to the oversight or regulation
of the government securities market.
BACKGROUND
At the outset, Mr. Chairman, I think it is important to stress again that the market for U.S.
government securities is the largest, the most
efficient, and the most liquid securities market in
the world. More importantly, given the sheer
size of the debt of the federal government and the
speed with which government debt is being accumulated, we all have a very large stake in seeing
to it that those traits of liquidity and efficiency
are preserved or, better still, improved. The
historic "breadth, depth and resiliency" of the
government securities market reflect, in the first
instance, the fact that the full faith and credit of
the United States stand behind each Treasury
bill, note, or bond, thus creating a financial
instrument that is "risk free."
While the unique character of the U.S. government security rests fundamentally with the issuer
of the security, it is also true that certain institutional factors, which have worked in the direction of enhancing the marketability of U.S. government securities, have developed over time.
For example, the primary dealers in government
securities—the true market-makers for government debt—clearly help to improve the liquidity
and the efficiency of the market by maintaining
two-way markets, by directly participating in
auctions of new government debt, and by serving
as the essential bridge between the Treasury and
the vast network of institutions and individuals
who are the ultimate holders of government debt.
Similarly, the Federal Reserve-Treasury bookentry system for government securities provides
a highly efficient method for market participants
to hold and to trade in government securities.
The resulting speed, efficiency, and relatively
low transaction costs associated with secondary
market transactions in government securities
contribute importantly to the liquidity of the
market and to the attractiveness of Treasury
securities to investors.
Because Treasury securities are issued by the
U.S. government and because of the way the
secondary market for such securities has developed over time, the volume of trading in such
securities is enormous. For example, it is not
uncommon for more than $200 billion in government securities to change hands in a single day
via the book-entry system. And even that number does not include the substantial trades that
take place outside the Federal Reserve-Treasury
book-entry system nor does it include the large
volume of trading in derivative instruments
406 Federal Reserve Bulletin • June 1985
such as options and futures in government
securities.
As this subcommittee knows, the direct interest of the Federal Reserve Bank of New York in
the operation of the government securities market grows out of the fact that day-to-day purchases and sales of government securities—
most, I might add, in the form of repurchase
agreements—are the primary vehicle used by the
Federal Reserve in seeking to influence the growth
of money and credit. During 1984, for example,
the aggregate value of such transactions conducted by the Fed with the primary dealers was $209
billion. The Fed also acts as agent for more than
100 foreign central banks and other foreign official institutions in the market. Transactions conducted by the Fed on behalf of these institutions
in 1984 amounted to $211 billion. All Fed transactions—whether for its own account or for the
accounts of foreign official institutions—are conducted with the primary dealers.
The origin of the role of the Federal Reserve
Bank of New York in providing a form of surveillance over the primary dealers was, in part, a
straightforward business proposition. Indeed,
given the enormous volume of public funds associated with the Fed's transactions in the marketplace, it was quite natural that, in conducting
such transactions, the New York Fed would be
guided by one of the oldest precepts in trading—
"know your counterparty."
Of course, the essence of our interest in the
workings of the market goes beyond our strict
business relationships with the primary dealers.
Indeed, the essence of that concern stems from
the fact that the government securities market is
the market that we use for monetary policy
implementation and that the Treasury uses for
financing the federal government. Over time and
in recognition of the larger public interest considerations associated with the operation of the
government market, the New York Fed's role in
the market evolved into an informal watch dog
function that loosely incorporated some elements of traditional regulatory functions.
This evolution of the Fed's interest in the
government securities market took place, however, in a framework in which the Fed had, and
has, no statutory authority and in a framework in
which the sheer growth of the debt, as well as
advances in communications and technology,
has made it possible for dozens, if not hundreds,
of new firms to enter the government securities
business and to operate nationwide from virtually any location in the country.
To summarize, the Fed's initial interest in the
safe functioning of the government securities
market was one that grew out of the timehonored tradition of knowing those with whom
you do business. Over time, that interest gradually took on some of the trappings of a more
generalized, but essentially voluntary, system of
oversight aimed at the primary dealers. That
system of general surveillance over the primary
dealers has, in my judgment, served the Treasury, the Fed, and the public well for a long
period of time.
More recently, and reflecting in part changes
in market structure, the Fed stepped up its
efforts to learn more about the activities of
nonprimary dealers in government securities.
This effort—also entirely voluntary in nature—
entailed a very limited form of monthly reporting
and efforts aimed at establishing voluntary capital adequacy standards. The current arrangements, especially as extended to the nonprimary
dealers with which we do not have a business
relationship, are not without problems.
Perhaps the more serious problem is that by
having an informal monitoring role, we may
create an appearance of providing much greater
protection from abuse than it is realistic to assume. Given our present role, we have to be
careful in dealing with suspected problems—
indeed there may be circumstances in which
efforts to move in on a suspected problem could
create a difficulty when none existed, or could
make a large problem out of a small one. Some
danger of this type probably exists with any
regulatory function, but it may be especially
acute in the case of the government securities
market, given the intricate interdependence of
that market with so many other parts of the
financial structure. Since there can never be a
fail-safe system of surveillance or even of regulation, I believe that recognition of these problems
must be central to our thinking as we seek ways
to guard against the abuses while at the same
time seeking to preserve the strength and the
dynamism of the market for our government's
debt and the market we rely on for the conduct of
monetary policy.
Statements to Congress
THE FED S VOLUNTARY
GUIDELINES
CAPITAL
The Fed's initial proposal for a system of voluntary capital guidelines for government securities
dealers was the subject of a hearing by this
subcommittee in May 1984. Reflecting the proceedings at that hearing, as well as the public
comments received on the initial proposal, a
revised approach was developed and issued for
public comment on February 7, 1985. The public
comment period ended on March 31. To date, we
have received about 20 comments, and they are
summarized in the attached appendix.1
At the risk of a gross oversimplification, and in
an effort to avoid a morass of technical detail, I
believe I can say that there are two major differences in the current proposal relative to the one
that was discussed with the subcommittee last
year. Those major differences are the following:
1. The current guidelines are targeted at those
firms that are not otherwise regulated by federal
banking supervisors, are not covered by Securities and Exchange Commission (SEC) restrictions and capital rules, or are not subject to the
reporting, the monitoring, and the capital fitness
standards of primary dealers. In other words, the
capital guidelines are aimed at unregulated
and/or unsupervised dealers in government securities. The universe of dealer firms that might be
subject to the guidelines is not known, in part,
because as dealers in exempt securities they are
not subject to a federal registration requirement.
Using a narrow definition of what constitutes a
dealer, we believe that there may be 100 or so
firms in this universe, 30 of which are now
providing the limited monthly reports referred to
earlier.
2. The second and more substantive change in
the proposed guidelines relates to the methodology used to determine risk profiles and corresponding levels of adequate liquid capital. The
approach is broadly similar to the financial responsibility rules used by the SEC, but has been
tailored to the characteristics associated with
positions and trading in government securities
and related instruments. The current proposal,
while more complex, centers on the more pene1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
407
trating—and, we think, more realistic—analysis
of risks associated with particular instruments
and classes of instruments in which dealers trade
and take positions. Also, there is greater attention to risk in offsetting positions within maturity
categories, and increased recognition of risk reduction embodied in arbitrage and hedging techniques employed by dealers. We have also expanded the number of maturity categories to
refine the measurement of risk and have included
risk factors that reflect recent price volatility.
Analysis of the risk of new instruments has also
been added, including treatment of zero coupon
securities, futures, and options.
While we believe the guidelines are technically
sound and especially well suited to a government
dealer operation, the question of how effective
the guideline program will be in reducing the
probability of new market abuses remains. Applied in the present setting, the program depends
on an unsupervised dealer taking action voluntarily to implement the guidelines and to stick
with them over time. The dealer must agree to
participate and then to monitor the level of risk
according to the guideline analysis; the level of
risk must be reduced when the dealer's liquid
capital falls below calculated requirements. We
believe dealers, as a group, will honor the voluntary system and that the presence of the guidelines, reinforced by the certification procedures,
will help all market participants, especially primary dealers and clearing banks, and will instill a
higher level of discipline and prudence in the
marketplace. In the final analysis, however, the
voluntary guidelines will provide that added
measure of discipline only to the extent that
market participants insist that affected dealers
comply with the guidelines and are willing to
certify to that effect.
Having said that, let me hasten to add that the
capital guidelines should not be viewed as anything approaching a panacea. They will help, but
by themselves they will not provide ironclad
protections against all forms of market and credit
risk. And, to be very sure, they will not restrain a
dealer willing to practice deception and to certify
falsely that it is in compliance. Clearly, there is
no regulatory regime that can prevent all fraud or
deception.
These qualifications notwithstanding, I do not
see why the guidelines cannot be in force within
408 Federal Reserve Bulletin • June 1985
a matter of weeks. The speed with which dealers
will adopt the guidelines is another matter and
will depend on how quickly market participants
can be made aware of their existence, on whether participants are prompt in demanding compliance by their counterparties, and on how
promptly internal and outside auditors turn to the
task of assessing individual firms' conformity to
the standards. This hearing, as well as other
educational efforts we contemplate, should help
to speed the process by focusing public attention
on the guidelines. However, the fact that we
have had very little direct commentary from
those who would be affected by these proposals
gives me some concern as to the speed with
which the guidelines will, in fact, be put in place.
In considering the utility and the effectiveness
of the capital guidelines, an obvious question, of
course, is whether the guidelines could have or
would have prevented the demise of E.S.M.
Government Securities, Inc. (ESM). Given the
truly extraordinary circumstances surrounding
ESM's operations—including allegations of fraud
and wholly inaccurate financial statements—I
believe the answer must be that the guidelines
would not—in and of themselves—have prevented the problem. On the other hand, as I said
earlier, I also believe that a case can be made
that the presence of such guidelines can, and
should, bring further awareness and discipline to
the marketplace and, absent the gross irregularities associated with an ESM-type operation,
provide customers and trading partners of these
unregulated firms with a vehicle to help them
assess the financial position of such firms. And,
given the experience at ESM, I would think that
any accounting firm would take a long hard look
at such financial statements before it was willing
to certify the accuracy of such statements. In
short, the ESM episode does not lessen the case
for the guidelines. Rather, it works in the opposite direction, keeping in mind, of course, that
such guidelines cannot eliminate all risks to the
marketplace and cannot contain those bent on
fraud and deception.
LOOKING
TO THE
FUTURE
Whatever else may be said of the ESM episode, I
think we can all agree that it does bring into even
sharper focus the question of whether the current
system of some self-regulation of parts of the
government securities market is adequate for the
future. In seeking to answer that question, there
are several aspects of recent experience—experience not limited to ESM—that seem to me highly
relevant. Among these are the following:
1. Despite the very troubling problem cases of
the recent past, the market as a whole continues
to function effectively in fair weather or foul.
2. Government securities dealers—like all economic agents—must follow the dictates of prudence and caution in their affairs. If they fail to
do so, they, as others, must be subject to the
disciplines of the marketplace, including the ultimate discipline of failure.
3. Because of the nature of their business,
problems or failures of government securities
dealers raise very difficult issues relating to investor protection and the threat that a particular
failure can cascade into a more generalized or
systemic problem.
Against this background and the background
of the problems of the recent past, there can be
little doubt that there are public policy issues of
broad importance associated with the safe operation of the government securities market. In
these circumstances, it is not surprising to hear
increasing calls for some type of more formal
regulation of the market backed up by statutory
authority vested with one or more government
agencies.
The Federal Reserve, in cooperation with the
SEC and the Treasury, is taking a fresh look at
that question and the results of that review are
expected to be made available to the Congress as
soon as possible. While I do not want to prejudge
the results of that effort, I would stress three
points. (1) In these deliberations, particular attention will have to be focused on the universe of
nonregulated, nonprimary dealers. Indeed, even
when such firms report monthly, as ESM did, the
mere presence of such a reporting relationship
may work to create a false and unwarranted
sense of confidence about such firms. (2) Any
effort aimed at reform must take account of the
imperative of preserving a smoothly functioning
market for government securities. (3) With or
without formal regulation, it seems to me that
recent experience points to the need for further
efforts to reduce the risks of more problems
Statements to Congress
409
down the road. In that connection, let me mention several areas that seem to me worthy of
further effort.
1. We in the Fed plan to step up, in a significant way, our education efforts, especially as
they pertain to political jurisdictions and subdivisions. Toward this end, we are developing some
new educational material, and—working with
trade groups at the national and local level as
well as with the other Federal Reserve Banks—
we plan to conduct a series of seminars nationwide over the coming months. While this effort
can reach only a small fraction of the market
participants who might be susceptible to the
abuses we have seen, we believe it can play a
constructive role in further heightening investor
awareness of the potential pitfalls associated
with repo (repurchase agreement)-type transactions.
2. I also believe that we may be able to do
more through the bank supervisory process to
educate further both depository institutions and
examiners about risks in repo-type transactions
and securities lending. As a first step, we will
recommend to the Federal Financial Institutions
Examination Council that a coordinated examination program for clearing banks, banks in
general, savings and loan associations, and credit
unions be developed. With that in progress, we
will also bring this area of concern to the Conference of State Bank Supervisors.
3. The Federal Reserve also is investigating
whether the operation of the book-entry system
for Treasury securities can be adapted in ways
that would facilitate steps to improve the safety
of repo-type transactions. The transfer of securities, for example, could possibly be earmarked in
a way that would identify the securities being
held under a repurchase agreement and the parties to such agreements. As an extension of that
procedure, consideration might be given to establishing a segregated account for repurchase
transactions at each depository institution. While
there may be some pay dirt in these areas, I
would want to stress at the outset that this is a
highly problematic and complex area, with numerous possible technical and legal impediments
that may stand in the way of getting useful
results.
These potential avenues for improvements
should and will be explored; the voluntary capital guidelines should and will be put in place;
and the question of a more formal system of
regulation of the government securities market
should and will be addressed. In the final analysis, however, none of these things can substitute
for the good old-time religion of knowing your
counterparty; performing rigorous credit checks;
limiting trading and position-taking to sound,
prudent levels; and resisting the complusion to
seek out those few extra basis points at the
expense of sound practice. Those disciplines
were never easy to instill and to maintain, but in
today's markets they are even more elusive. Yet,
as we have seen all too dramatically, the temptations in today's markets with their sheer size and
speed demand an even stricter adherence to that
old-time religion.
•
Statement by J. Charles Partee, Governor,
Board of Governors of the Federal Reserve System, before the Subcommittee on Telecommunications, Consumer Protection, and Finance of
the Committee on Energy and Commerce, U.S.
House of Representatives, April 2, 1985.
with those services that have been traditionally
provided by depository institutions, it seems to
me eminently reasonable to ask whether safeguards can be put in place to constrain or to
eliminate the potential for abuse, without at the
same time unduly limiting the benefits of the
merged activities. In my remarks, I will focus on
both the potential benefits and the costs of these
relationships and illustrate some of the problems
that may be involved by indicating how we at the
Federal Reserve have addressed similar issues
and conflicts in the recent past.
The basic framework within which the Board
approaches the issues arising from expanded
I appreciate the opportunity to appear before this
subcommittee today to review some of the concerns of the Federal Reserve Board with respect
to evolving changes in the financial structure that
serve to link depository institutions and other
financial entities. To the extent that previously
separate financial services come to be merged
410 Federal Reserve Bulletin • June 1985
relationships between depository institutions and
other financial entities can be summarized as
follows: (1) we want to encourage fair competition in the provision of banking services to
preserve impartial access to credit; (2) we want
to promote efficiency and reduced costs so that
customers may benefit in terms of lower prices
for existing services and gain from possible new
and innovative services; (3) we want to protect
against undue concentrations of economic resources that would result in unfair discrimination
among customers, conflicts of interest, and other
potential abuses; and (4) we want a strong and
stable banking system, with continued close attention to safety and soundness of banks and
other depository institutions, both as an objective in and of itself and because of the crucial
importance of banking stability to the smooth
operation of the economy.
These goals will, in some circumstances, be in
conflict so that each of the various avenues
toward financial consolidation will require an
examination of the particular issues raised and a
careful balancing of the likely costs and the
benefits involved. In approaching that balance,
the normal perception for most industries—that
one may simply look to the marketplace to
promote competition and efficiency—must be
tempered by a recognition of the need to maintain confidence in banking institutions and continuity in the provision of money and payments
services. In addition, any market perception that
diversification into new and riskier activities
significantly increases overall banking risk may
lead to higher funding costs and hence the cost to
the public of bank credit.
Longstanding policy in the United States has
been to prevent banking organizations from engaging directly in commercial enterprise. Concern over the commingling of banking and commerce was an important motivation for the Bank
Holding Company Act of 1956 and the 1970
amendments to that act. Potential abuses that
were of concern to the Congress may be divided
into four categories: (1) potential conflicts of
interest, (2) decreased or unfair competition, (3)
undue concentration of resources, and (4) increased risk to banks that might result from
affiliation with risky nonbank enterprises. With
respect to potential conflicts of interest and
decreased or unfair competition, particular con
cern has centered on avoiding such anticompetitive practices as the following: (1) tying arrangements involving banking services and nonbank
activities, (2) preferential treatment of nonbank
affiliates, and (3) unequal access to credit for
independent firms competing with the bank's
affiliates.
The Board has consistently supported the concept of maintaining the separation of banking and
commerce. In this regard, the recent proliferation of "nonbank banks" is a particularly disturbing development. Such institutions are allowed to exist along with conventionally defined
banks but, by virtue of a narrow definition of
what constitutes a "bank" in the Bank Holding
Company Act, may not be subject to that act and
to the rules governing holding company relationships. This is the case whenever the nonbank
bank is owned by a commercial, an industrial, or
a nonbank financial parent. Since by definition
these owners do not thereby become bank holding companies, the anti-tie-in provisions of the
act do not apply, nor are they subject to the
inspection and the enforcement powers of the
Federal Reserve. Yet nonbank banks can take
different forms of deposits, including transaction
accounts, and make consumer loans, as well as a
wide variety of other types of credit extensions.
By offering insured deposits, nonbank banks
could serve to increase the risks faced by the
deposit insurance funds since their parents may
not be subject to the safeguards embodied in the
Bank Holding Company Act.
Concern over conflicts of interest is not limited
to issues of separating banking and commerce. It
also relates to potential conflicts of interest that
may arise from combinations of financial firms
and from the diversity of activities allowed within the bank itself. The usual means of addressing
these issues in banking are through a system of
prohibitions, limitations, and insulation.
An example of this approach is the "Chinese
Wall" separation of bank trust departments from
the rest of the bank. Besides securities laws
against insider trading and laws specifying the
fiduciary responsibilities of trustees, the Board
issued a policy statement in 1978 that augmented
further these prohibitions and limitations for
banks. The Board advised that trust personnel
should be denied access to commercial credit
files; government, agency, and municipal securi-
Statements to Congress
ties underwriting files; and other pertinent records. Greater insulation was also recommended
through the physical separation of trust and
commercial bank lending and investing personnel. Such prohibitions and limitations on activities between trust and other departments appear
to have been successful in preventing abuses of
the potential conflicts of interest inherent in a
combination of trust and commercial bank activities.
In accordance with this general approach, the
Board has supported some expansion of bank
holding company powers into other financial
activities under appropriate regulatory safeguards. Such activities include the ability to
sponsor, control, and distribute the securities of
mutual funds; to underwrite and deal in municipal revenue bonds, one- to four-family residential mortgage-backed securities, and commercial
paper; and to engage in a limited way in a variety
of real estate brokerage, some types of insurance
underwriting, and travel products. Certain other
activities appear to raise serious risk and conflict-of-interest concerns, and thus the Board has
been much less willing to support bank involvement. For example, we recently denied the application of a bank holding company to acquire a
national bond rating service because of the pervasive conflicts of interest that would be present
in the combination. The Board has similar concerns with respect to proposals to permit banks
to underwrite corporate securities.
A related issue is whether a new activity
should take place "inside" the bank, as with
trust activities, or should be lodged in a separate
affiliate of the bank holding company to address
better the insulation and the conflict-of-interest
concerns. The Board believes that in many cases
the latter strategy is the most appropriate. Conduct of a nonbanking activity in a separate subsidiary would permit equivalent ground rules
across institutional lines and would also provide
a structural basis for at least partial insulation of
one activity from another.
An area in which the insulation issue has
emerged recently is that of direct equity involvement in real estate activities by banks. Such
investments have been suggested as one area in
which depository institutions might play a greater role in the future. Proponents argue that
permitting depository institutions to make direct
411
equity investments in real estate will permit
these institutions to diversify their portfolios, to
improve service to their real estate customers,
and to enable them to share in the profits of real
estate development more directly than through
the provision of real estate loans. On the other
hand, real estate development has historically
been a risky and a highly cyclical activity. And,
as often is the case regarding these new activities, diversification benefits could be swamped
by increased risks of loss if they are permitted to
exceed relatively low levels of concentration. To
better insulate the bank, we believe that such
activities should be placed in separate affiliates
of a bank holding company rather than be undertaken within the bank itself.
Lastly, considering the various ways in which
depository institutions in the past have sometimes been weakened by activities of their holding company affiliates, a number of common
elements emerge. These elements serve to illustrate possible limitations that could be considered to improve the insulation concept. It may be
desirable, for example, to require each subsidiary to maintain capital that is fully adequate to
meet its own commitments. Similarly, stricter
rules designed to prevent extensive or regular
support in the form of loan guarantees on behalf
of, preferential financing to, or cross collateralization clauses in financing for affiliates may be
desirable. Adherence to all of the formalities of
separate incorporation may also be desirable so
that the public is not led to believe that holding
company affiliates together constitute a single
entity, and therefore that losses at one affiliate
could spread throughout the organization.
In sum, there are obvious problems in insuring
that activities of nonbanking affiliates (and parents) do not unduly affect banks and other depository institutions. When risk is substantial and
could threaten the banking entity, we would seek
to insulate the bank to protect depositors and the
payments system. Quantitative limitations on
such investments, perhaps based on the capital
of the holding company, might also be usefully
employed. Insulation and other efforts to avoid
conflicts of interest cannot always be fully successful, and thus some risk will remain. Nevertheless, the marketplace is clearly evolving toward ever-broadening combinations of financial
services, and there may well be economies, as
412 Federal Reserve Bulletin • June 1985
well as the convenience and the other benefits of
increased competition, to be gained. In each
instance of broader corporate powers, whether
in banking, insurance, securities, or real estate
development, we would urge that these potential
benefits be compared with the probable costs,
taking into account whether, and what, workable
safeguards against injurious potential conflicts
need to be imposed.
•
Statement by Preston Martin, Vice Chairman,
Board of Governors of the Federal Reserve System, before the Subcommittee on Commerce,
Consumer, and Monetary Affairs of the Committee on Government Operations, U.S. House of
Representatives, April 3, 1985.
funds. At present, all but one of the ODGF thrift
institutions have reopened on either a full- or a
limited-service basis, although a permanent solution involving the remaining closed thrift institution, Home State, and those thrift institutions
that cannot qualify for federal insurance remains
to be worked out. The limited service reopenings
permit withdrawals of $750 per account per
month. The Federal Reserve is lending to the
reopened thrift institutions when necessary.
In reviewing this situation, it is helpful at the
outset to clarify the Federal Reserve's specific
regulatory responsibilities for various types of
banking institutions as well as its broader responsibilities as the nation's central bank. The Federal Reserve has primary supervisory responsibility at the federal level for state-chartered banks
that are members of the Federal Reserve System
and for all bank holding companies. Commercial
banks that are members of the Federal Reserve
System are insured by the Federal Deposit Insurance Corporation (FDIC), and commercial banks
that are subsidiaries of bank holding companies,
regardless of membership status, must by law be
federally insured. Of course, the Federal Reserve does not have supervisory responsibility
for thrift institutions, and the federal regulatory
agencies, including the Federal Reserve, generally do not have direct supervisory or regulatory
responsibility for state-chartered, nonfederally
insured depository institutions, such as the affected ODGF thrift institutions in Ohio. Normally, such institutions are supervised and regulated
by state authorities. The Federal Reserve is not
an insuring agency and does not have the authority to make direct equity investments in depository institutions. However, the Federal Reserve
does have the authority to lend through the
discount window and, in its role as the nation's
central bank, has a fundamental responsibility to
foster the stability and the orderly functioning of
the nation's banking and financial system.
I am pleased to appear before this subcommittee
to discuss the Federal Reserve's contribution to
efforts to ameliorate the problems of the statechartered, privately insured thrift institutions in
Ohio. The situation in Ohio was touched off by
reported losses suffered by Home State Savings
Bank (Home State) as a result of transactions
with E.S.M. Government Securities, Inc.
(ESM), a broker-dealer in government securities, but also was related to more systemic
weaknesses in the supervision and insurance of
some Ohio savings and loan associations. A
detailed chronology of the Federal Reserve System's response to events in Ohio is attached to
the statement of President Karen Horn of the
Federal Reserve Bank of Cleveland. [That statement follows this one.]
As this subcommittee is aware, reports of
losses at ESM precipitated a run on Home State
that led to its closing. This development subsequently contributed to more generalized deposit
outflows at other Ohio Deposit Guarantee Fund
(ODGF) savings and loan associations and savings banks in Ohio, and a number of these
institutions experienced heavy depositor withdrawals. Faced with this situation, Governor
Celeste of Ohio closed, on a temporary basis, all
70 of the remaining ODGF thrift institutions.
Subsequently, the state of Ohio adopted a plan
that allows certain institutions that were found to
qualify for federal insurance to reopen on a fullservice basis. Ohio authorities are pursuing other
remedial steps, including the potential merger of
weak thrift institutions with stronger federally
insured institutions, designed to resolve the situation and to promote the safety of depositor
Nonmember depository institutions, including
Statements to Congress
the state-chartered thrift institutions in Ohio,
became generally eligible for discount window
borrowing in 1980 as a result of the enactment in
that year of the Monetary Control Act. Under
this legislation, the discount window facilities of
the Federal Reserve System were made available
to all insured or uninsured depository institutions
throughout the nation that offer transaction accounts or hold nonpersonal time accounts.
In its capacity as the central bank, the Federal
Reserve may assist in efforts to deal with financial disturbances to prevent them from becoming
generalized financial crises or causing systemic
dislocations. An important policy tool to achieve
these ends is the discount window through which
the Federal Reserve serves as the ultimate
source of liquidity.
Throughout this difficult period in Ohio, the
Federal Reserve Bank of Cleveland has been
prepared to lend and has loaned through the
discount window to the affected thrift institutions
under the terms and conditions established by
law for such borrowing. Indeed, on March 6, one
day after the public disclosure of possible Home
State losses, Federal Reserve examiners were
dispatched to Cincinnati to meet with Home
State officials, to explain borrowing procedures,
and to begin to review potential collateral. In
addition, the eligibility of state-chartered depository institutions, including thrift institutions, for
discount window assistance was stressed in a
public statement by the Federal Reserve Bank of
Cleveland on March 10. Before the temporary
closings of the ODGF institutions, the Federal
Reserve Bank of Cleveland provided discount
window credit to certain affected institutions,
and as the institutions have reopened, they have
been eligible for liquidity assistance. The availability of this discount window assistance to
reopened institutions was stated publicly by
President Horn on March 15 and reiterated by
Chairman Volcker on March 20, 1985.
In carrying out its responsibilities as lender of
last resort, the supervisory and examination personnel of the Federal Reserve System have
worked closely with the affected institutions to
inform them of collateral and documentation
requirements and to assist them in understanding
fully and in meeting these requirements. Discount window loans to affected institutions have
been made at the regular discount rate, currently
413
8 percent, and, as required by the Federal Reserve Act, have been secured by adequate collateral. As is usually the case, this collateral has
consisted of government and agency securities,
commercial loans, one- to four-family residential
mortgage loans, and other loans, and the collateral has been evaluated within normal guidelines.
The Federal Reserve has, however, acted in an
expeditious manner to facilitate the access of
these institutions to the discount window under
normal terms and conditions.
Besides these responsibilities as lender of last
resort, the Federal Reserve has also played an
important role in monitoring events in Ohio and
in facilitating cooperative efforts among the various parties involved to resolve the situation, to
reestablish public confidence, and to promote
the safety of depositors' funds. In this capacity,
Federal Reserve officials have held or participated in numerous meetings with government and
supervisory officials from the state of Ohio as
well as with officials from the Federal Home
Loan Bank Board (FHLBB), the Federal Home
Loan Bank of Cincinnati, and other federal regulatory agencies. To enhance our understanding
of the financial condition of the affected thrift
institutions and to assist the state of Ohio and the
FHLBB, the Federal Reserve, within a few days
of the temporary closings, provided examiners to
participate in on-site examinations and asset
evaluations of the ODGF institutions. These
examinations have helped to determine the availability of collateral for facilitating access to the
discount window and, equally important, they
have played a critical role in the process of
reopening those institutions found to qualify for
federal insurance. The information developed in
our on-site visits and otherwise has been made
available promptly to other federal and state
authorities. We hope that these actions have
supported and complemented the steps taken by
Governor Celeste, the Ohio legislature, and the
federal insurance agencies to reopen the affected
thrift institutions.
As the primary supervisor of bank holding
companies and in response to a request by the
state, the Federal Reserve has also been in
contact with banking organizations, both within
and outside Ohio, to determine their interest, if any, in acquiring or merging with ODGF
institutions, including those that may be unable
414 Federal Reserve Bulletin • June 1985
to qualify for federal insurance or to reopen
without additional external support. The day
after the temporary closings, Reserve Bank officials telephoned the senior managements of bank
holding companies throughout the country to
inform them of imminent state plans to hold
meetings to discuss the possible sale or acquisitions of certain thrift institutions.
As the subcommittee is aware, the state of
Ohio has adopted a plan requiring federal insurance for essentially all savings and loan institutions, building and loan associations, and all
savings banks in the state. The state has also
implemented arrangements to provide depositors
at ODGF thrift institutions with limited access to
their funds. Further, the Ohio legislature acted
promptly to advance $50 million in state funds to
shore up the remaining ODGF institutions other
than Home State. To facilitate the federal insurance requirement, expedited arrangements have
been made for review of applications by the
FHLBB, the FDIC, and the Federal Reserve. In
this process, the Federal Reserve will continue
to make field examination personnel available to
the FHLBB and to authorities in Ohio to assist in
examinations and to expedite the process of
qualifying for federal deposit insurance. We have
been informed that as of March 29, 1985, the
state of Ohio had authorized 26 institutions to
reopen on a full-service basis. Included in this
group is a former thrift institution that has converted to commercial bank status and has reopened with FDIC insurance after the Federal
Reserve Board acted on a bank holding company
application. Also included in this number is a
thrift institution acquired by a bank holding
company in a transaction approved on an expedited basis by the Federal Reserve Board.
It may take some time for the thrift situation to
return to normal in Ohio. A number of ODGF
institutions have obtained federal deposit insurance. Others will, apparently, need an injection
of capital from present owners or new investors,
and still others may need to be acquired by
stronger depository institutions. I assure you
that the Federal Reserve will continue to provide
assistance through the discount window, the
provision of examination personnel to assist the
FHLBB and state authorities, and the expeditious review and action on applications for mergers or acquisitions that require our approval.
While a longer-range solution with respect to
all of the affected thrift institutions remains to be
worked out, the events in Ohio underscore the
importance of full cooperation among appropriate federal and state supervisory authorities in
dealing with any strains or pressures involving
depository institutions that could have adverse
systemic implications for the banking or financial
system. Such adverse developments must be met
with timely and effective action to restore confidence and to maintain the stability of the financial system. In the case of the thrift institutions in
Ohio, I believe that, in general, the remedial
procedures that have been taken should significantly reduce any lasting impacts on financial
markets.
One of the questions raised by the recent
events in Ohio relates to the role of private
deposit insurance funds. Clearly, deposit insurance is an important factor in maintaining public
confidence in depository institutions. Indeed, as
I have noted, commercial banks that are members of the Federal Reserve System are insured
by the FDIC, and all commercial banks that are
subsidiaries of bank holding companies are required by law to be federally insured. I believe
that it is too early to make a definitive judgment
about the role of sole-insurer, private insurance
funds and even state-sponsored funds in our
financial system.
There may be industry structures that could be
adequately supported by private arrangements as
sole insurers—structures involving large numbers of small institutions, having a substantial
reserve fund not dependent upon deposits by the
insured institutions, and featuring adequately
strong examinations and auditing procedures.
Such a structure might consist of a large number
of smaller credit unions. Any such arrangements
suffer from a certain degree of confusion as to
whether and to what extent the resources of state
government are behind the private sole insurers'
reserves. However, industry structures consisting in part or in whole of sizable depository
institutions, reserve funds dependent upon the
deposits of the members, and with an examination and regulatory procedure in part justified to
its membership as less rigorous than federal
procedures raise substantial questions as to
whether the public interest is served thereby.
The Board supports the movement of several
Statements to Congress
415
state legislatures away from private insurance
funds. Whatever approaches may ultimately
prove feasible, the events in Ohio do serve to
remind us of the potential consequences of the
loss of public confidence in individual depository
institutions and of the celerity with which that
loss can spread to other institutions. In view of
these concerns, the Federal Reserve System will
continue to cooperate fully with the state and the
federal authorities in seeking a long-run solution
to liquidity problems of thrift institutions in
Ohio.
•
Statement by Karen N. Horn, President, Federal
Reserve Bank of Cleveland, before the Subcommittee on Commerce, Consumer, and Monetary
Affairs of the Committee on Government Operations, U.S. House of Representatives, April 3,
1985.
The Federal Reserve Bank of Cleveland first
became aware of possible financial difficulties at
Home State Savings Bank of Cincinnati, Ohio,
on March 4, 1985, when an official of Home State
telephoned the Federal Reserve Bank of Cleveland to inquire about the procedures that Home
State should follow if it needed to borrow at the
discount window. The Federal Reserve Bank of
Cleveland did not have any financial information
on Home State. It is a state-chartered savings
and loan association, regulated and examined by
the Ohio Division of Savings and Loan Associations, and before this time it had never borrowed
at the discount window. We did know that Home
State's deposits were insured by the ODGF, but
we did not have access to any financial reports
on Home State. On March 5, the press reported
that Home State might suffer a large loss in
connection with the failure of E.S.M. Government Securities, Inc. (ESM), a Florida-based
broker-dealer in government securities. The
Federal Reserve began an effort to gather information on Home State's situation. Discussions
with the FHLB of Cincinnati confirmed that
Home State was not a member of the FHLB and
that the FHLB also had little financial information on Home State.
Reports from Cincinnati on Wednesday,
March 6, indicated a large volume of depositor
withdrawals at Home State. On that same day,
Federal Reserve examiners entered Home State
to examine available collateral in the event that it
became necessary for Home State to borrow at
the discount window. Depositor withdrawals on
Wednesday and Thursday were funded with
Home State's own liquidity and lending by the
ODGF. The withdrawals on March 6 totaled $55
million. On March 7, a meeting was held at the
Cincinnati Branch of the Federal Reserve Bank
of Cleveland with representatives from the state
of Ohio, ODGF, and Home State to discuss
liquidity assistance for Home State from the
I am pleased to appear before this subcommittee
to discuss the Federal Reserve's response to the
recent problems experienced by thrift institutions insured by the Ohio Deposit Guarantee
Fund (ODGF). This morning I will be reviewing
for you the response of the Federal Reserve
Bank of Cleveland. Attached to my statement is
a chronology that sets forth the Federal Reserve
System's response to recent events in Ohio.1
I would like to begin by stating that the role of
the Federal Reserve Bank of Cleveland throughout this period has been to assist the state of
Ohio and other federal regulators in fashioning a
solution. Our initial involvement was to ensure
that we could act quickly to provide liquidity
assistance at the discount window and to make
currency shipments—first to Home State and
subsequently to other institutions insured by the
Ohio Deposit Guarantee Fund. We have acted at
the request of the state of Ohio, and throughout
this period the Federal Reserve Bank of Cleveland and the Federal Home Loan Bank (FHLB)
of Cincinnati have shared information and staff in
a cooperative effort to deal with the problems
and to fashion solutions. I would also like to
recognize the substantial and supportive role of
the correspondent banks in Cincinnati. I believe
that the Federal Reserve has been helpful, and
we will continue to assist the state of Ohio and
other federal regulators until the problem is
solved.
1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
416 Federal Reserve Bulletin • June 1985
Federal Reserve Bank of Cleveland. Based on
collateral judged to be acceptable by the Federal
Reserve Bank, credit was extended on Friday,
March 8, and arrangements were put in place to
extend further credit.
Depositor withdrawals had continued on
March 7 and 8, reaching approximately $100
million for those two days. On Saturday, March
9, Home State did not open for business. Governor Celeste appointed a conservator for Home
State and announced on Sunday night, March 10,
that Home State would not reopen for business
on Monday.
Although the problems at Home State were
triggered by unique events growing out of its
transactions with ESM, the severity of the public
reaction made us concerned about possible deposit withdrawals at other ODGF-insured institutions. As I mentioned earlier, deposits at Home
State were insured by the ODGF, a private fund
that also insured 70 other state-chartered thrift
institutions in Ohio. According to state officials,
the insurance fund had assets of about $130
million before the run on Home State. Uncertainty regarding other ODGF-insured institutions
was increased by reports on the use of ODGF
funds to deal with Home State's heavy deposit
withdrawals. Financial information on all
ODGF-insured institutions was made available
to the Federal Reserve Bank of Cleveland late
Friday, March 8. Federal Reserve examiners and
discount window staff reviewed and analyzed
this information on Saturday and Sunday, March
9 and 10, with the assistance of senior examination personnel from the FHLB of Cincinnati.
Growing concern that other ODGF institutions
might confront problems on Monday led us on
Saturday, March 9, to develop a plan to monitor
and to deal with deposit withdrawals at other
ODGF institutions, should they occur. The plan
had several dimensions: (1) having a timely and
effective mechanism for sensing unusually heavy
deposit withdrawals; (2) informing ODGF institutions of collateral and other requirements for
borrowing at the discount window; and (3) planning and putting into place the logistics necessary to deliver currency, evaluate collateral, and
obtain documents for borrowing at the discount
window. The large number of ODGF institutions
and the need for prompt and effective action, if
action were required, made it imperative that we
be prepared to deal with the problem by Monday, March 11, when the ODGF institutions
opened. We were fortunate to be able to draw
upon staff from other Federal Reserve Banks to
assist in the contingency planning and logistics.
The weekend planning effort concluded with
meetings at 10:00 p.m. on Sunday, March 10, in
both Cleveland and Cincinnati to brief Federal
Reserve examiners on their role in the contingency plans. These plans called for examiners to be
strategically placed near ODGF institutions
throughout the state prepared to deliver borrowing documents upon request.
Also, late Sunday evening, March 10, after the
Governor's announcement that Home State
would not reopen on Monday, the Cleveland
Federal Reserve Bank publicly restated its discount window policy: "State-chartered savings
and loans and savings banks, like all depository
institutions, are eligible for liquidity assistance
through the discount window . . . under normal
terms and conditions." Our weekend efforts had
made it possible to implement the policy, to
monitor deposit flows, to lend at the discount
window, and to ship cash throughout the weeks
that followed to a large number of institutions,
most of which had not dealt with our discount
window and normally received their currency
from other sources.
Public confidence in ODGF institutions continued to decline. As financial institutions
opened on Monday, March 11, the evidence of
the loss in depositors' confidence was almost
immediate. At first the loss of confidence was
largely confined to Cincinnati, where Home
State is located. As the week progressed, the
number of ODGF institutions suffering heavy
cash drains increased, and the volume of withdrawals rose sharply. On Thursday, March 14,
for example, the seven most affected institutions
in the Cincinnati area lost more than $60 million
in deposits—almost triple the amount withdrawn
on Wednesday. Several institutions had lost onefifth of their deposits between Monday morning
and Thursday night, and there was clear evidence that the crisis was spreading to ODGFinsured institutions in other cities. The more
public confidence fell, the more serious the problem became. Federal Reserve examiners were
sent upon request to many institutions to begin
reviewing collateral as deposit withdrawals and
Statements to Congress
the potential for borrowing at the discount window increased. The Federal Reserve and other
commercial banks shipped currency to institutions that were experiencing heavy withdrawals,
but cash alone was not enough to restore confidence; without confidence even the strongest
financial institution can be severely impacted.
Our active and visible role was to provide
liquidity assistance to ODGF institutions at the
discount window. In performing this function,
the Federal Reserve Bank of Cleveland has not
modified the normal eligibility requirements for
discount window assistance in any way. The
Monetary Control Act of 1980 made the discount
window of the Federal Reserve Bank available to
any depository institution that holds transaction
accounts or nonpersonal time deposits. Regulation A of the Board of Governors, which prescribes standards for the operation of the discount window, provides for lending to eligible
depository institutions under two basic programs. One is the adjustment credit program; the
other supplies credit for seasonal and other limited purposes for more extended periods. Adjustment credit is available on a short-term basis to
assist borrowers in meeting temporary requirements for funds while an orderly adjustment is
being made in their assets and deposit liabilities.
All Federal Reserve advances must be secured
to the satisfaction of the Reserve Bank providing
the credit. Satisfactory collateral includes securities of the U.S. government and of federal agencies, and, if of acceptable quality, residential
mortgage notes and other assets. Although collateral is generally held in safekeeping at the
Federal Reserve Banks or acceptable third-party
custodians, in this instance field warehouses
were set up in most ODGF institutions in which
collateral was identified, evaluated, and earmarked for possible use in securing discount
window borrowings.
The Federal Reserve played another very important role during the ODGF savings and loan
problem—we served as a facilitator. During the
early morning hours of Friday, March 15, when
the full dimensions of the problem became clear,
Governor Celeste decided to close all ODGF
member institutions for a three-day period. Following that decision, the Governor requested
that the Federal Reserve assist him in calling a
meeting of large banking and thrift institutions in
417
Ohio to discuss the situation with them and to
propose a solution to the problem. A meeting
with representatives of 13 depository institutions
in Ohio—banks and savings and loan institutions
(S&Ls)—was convened that morning at the Federal Reserve Bank of Cleveland. At that meeting
Governor Celeste explained his decision to close
the ODGF institutions and discussed a legislative
proposal that would require the ODGF institutions to obtain federal insurance before reopening. He also presented a proposal for dealing
with the ODGF institutions that would not qualify for federal insurance. The state subsequently
decided that it would be useful to discuss the
situation with out-of-state banks, and two meetings were held with out-of-state institutions at
the Federal Reserve Bank of Cleveland—one on
Saturday, March 16, at 9:00 p.m. and another on
Sunday, March 17, at 11:00 a.m.
In the past two weeks, some elements of a
solution have fallen into place. Each ODGF
institution was examined on a case-by-case basis
to determine its financial condition and the likelihood of its qualifying for federal insurance. The
state Superintendent of Savings and Loan Associations requested assistance from the Federal
Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Ohio Division of Banks in
conducting these examinations. This process began on Saturday, March 16, with examiners
provided by the Federal Reserve Bank of Cleveland and, eventually, by every other Federal
Reserve Bank. Examiners were assigned to each
of the ODGF institutions. Virtually all examinations were completed on Sunday, March 17,
enabling us to conduct a preliminary review of
the condition of each institution to supplement
and update the information obtained the previous
Friday from the state. The results of the preliminary examinations made it clear that a large
number of these institutions were well managed,
in sound financial condition, and, consequently,
viable candidates for federal deposit insurance.
Others, for a variety of reasons, would have
difficulty qualifying for federal deposit insurance. The FHLB Board agreed to review on an
expedited basis the Federal Savings and Loan
Insurance Corporation (FSLIC) insurance applications of ODGF member institutions. Under
this arrangement, FSLIC qualification examinations were expedited, using the resources of the
418 Federal Reserve Bulletin • June 1985
FHLB System and the Federal Reserve. The
Federal Reserve offered its assistance to help
complete the FSLIC examinations as rapidly as
possible. We believed that we could facilitate
this process because our examiners were already
in place at the ODGF institutions and had gained
familiarity with these institutions through the
just-completed examinations conducted on
March 16 and 17.
As of Friday, March 29, according to the state
of Ohio, 26 of the former ODGF institutions had
been reopened for the full range of banking
functions, most with federal insurance. Confidence in these institutions seems to have been
fully restored. There has been no evidence of
unusual withdrawals or need for assistance
through either the credit facilities of the FHLB of
Cincinnati or the Federal Reserve discount window. The federal deposit insurance applications
of some ODGF institutions are still being considered. Other ODGF institutions have been informed of the changes and the improvements
that will be necessary to enable them to obtain
federal insurance.
The state of Ohio is making intense efforts to
develop an orderly plan for those institutions that
might not qualify for federal insurance. It is my
understanding that a final outline of such a plan is
not yet complete. A solution may have to involve
the sale of some ODGF institutions to other Ohio
financial institutions and, perhaps, also to out-ofstate institutions. The Federal Reserve Bank of
Cleveland has not participated in the discussions
involving plans for any single institution except
those for which Federal Reserve regulatory approval was required, such as the sale of Metropolitan Savings Bank of Youngstown to FNB
Corporation, a Pennsylvania bank holding company, and the conversion of Scioto Savings Association into a state-chartered commercial bank
insured by the FDIC under the continuing ownership of its parent company, Society Corporation, an Ohio bank holding company.
While this process is under way, the state has
authorized the ODGF institutions not yet qualified to reopen for full business to open for the
limited purposes of giving each depositor access
to a maximum of $750 per month and pledging
assets to and borrowing from correspondent
banks or from the Federal Reserve discount
window to fund the limited deposit withdrawals.
Complete confidence in the ODGF institutions
has not been restored, but the atmosphere is
much calmer than it was two weeks ago.
•
Statement by Preston Martin, Vice Chairman,
Board of Governors of the Federal Reserve System, before the Subcommittee on Securities of
the Committee on Banking, Housing, and Urban
Affairs, U.S. Senate, April 4, 1985.
merger activity (attachment l). 1 But the dollar
size of recent transactions exceeds by a wide
margin any past experience. The largest acquisition in 1984 totaled $13.3 billion, nearly twice as
large as any single merger of previous years.
Indeed, last year there were 14 mergers that
exceeded $1 billion each. These 14 combinations
alone accounted for more than $50 billion in
activity.
Many other smaller transactions bolstered the
total dollar volume of acquisition activity to
record levels last year; during 1984, nonfinancial
corporations retired an estimated $85 billion of
equity through mergers, takeovers, and share
repurchases. Included in this total is about $15
billion of equity retired through so-called lever-
I am pleased to appear before this committee to
discuss the recent surge in merger and takeover
activity and the potential effect of this activity on
credit market conditions.
The magnitude of recent merger trends underscores the importance of assessing the implications of this activity, as you are reviewing in
these hearings. The number of completed merger
transactions in 1984 totaled more than 2,800, and
it seems that almost every day we read in the
press of a new combination of firms or a threatened takeover. These figures may not be unprecedented; in the late years of the 1960s, for
example, more firms reportedly were involved in
1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
Statements to Congress
aged buyouts, which rely heavily on debt financing. In a typical leveraged buyout, an individual
or a small group of investors or management
purchases a company or a subsidiary of a company with the proceeds of loans collateralized by
the assets of the company, and then takes the
company private.
In my view, there is a legitimate place in our
economy for mergers and takeovers. They can
be important mechanisms for redeploying corporate assets to the most profitable—and socially
beneficial—uses, and for bringing about better
management. We must be careful in attempting
to impose the judgment of government authorities about which among thousands of private
transactions will be economically productive and
which will not; in most instances the parties
whose fortunes are at stake are likely to be better
judges. Government authorities are obliged to do
what they can to ensure that individual risktaking does not jeopardize the stability of our
financial system. As I will discuss later, the
Federal Reserve recognizes its responsibilities in
this area.
Assessing the implications of merger activity is
complex. From the perspective of the Federal
Reserve, concerns have focused on the effect
that this activity is likely to have on aggregate
credit flows and on the risk exposure of financial
institutions and markets. We all are aware that a
large portion of these merger transactions has
been financed, at least initially, with debt, including short-term bank credit. Leveraged
buyouts typically entail as much as 80 to 90
percent of debt financing; and among the largest
mergers last year, credit sources initially financed about 75 to 80 percent of the equity
purchases.
Estimates by Board staff indicate that growth
in the domestic nonfinancial debt aggregate—
which is one of the aggregates that the Federal
Reserve monitors in the course of its monetary
policy deliberations—was boosted about 1 to 1 Vi
percentage points in 1984 as a result of mergerrelated borrowings. Mergers and buyouts appear
likely to have had a much more limited impact on
the narrow money aggregate, Ml. The checking
accounts of merger participants may be increased temporarily as a result of the mergers,
but proceeds from merger sales are generally
reinvested in other assets, so that the effect on
419
Ml tends to be insignificant over periods of time
relevant for monetary policy deliberations. The
broader aggregates, M2 and M3, may be boosted
somewhat more than Ml, as some proceeds from
stock sales find their way into time deposits,
money market mutual funds, or other assets that
are included in these aggregates. But relative to
the large size of M2 and M3 this effect also would
be relatively minor.
The Board is aware of the influence of merger
activity and takes it into consideration when
evaluating the behavior of the money and debt
aggregates. Given our ability to monitor the size
and the timing of very large transactions, we can
anticipate possible distortions to the aggregates
in a particular period and thus avoid inadvertently reacting to these factors in policy deliberations. Moreover, distortions in the credit aggregate, in which the potential problems are largest,
are less likely to mislead policy deliberations. In
setting monitoring ranges for this aggregate, the
Federal Open Market Committee recognizes that
numerous factors, including merger activity,
may alter the behavior of credit growth relative
to gross national product. Thus, I do not believe
that mergers present for us a real operational
problem that would result in appreciable unintended variations in reserve market pressures.
More fundamental determinants of credit demand, including the behavior of the household
sector, capital expenditures of businesses, and,
of course, the fiscal position of the federal government, exert much more powerful and persistent pressures on credit markets than does takeover activity.
Some members of the public and the Congress
have expressed concerns that merger activity
absorbs credit that could be used to support
other, perhaps more productive, purposes. But
this would be true only in unusual circumstances
and for temporary periods. Basically, merger and
acquisition transactions involve transfers of
ownership of existing assets and do not absorb
net real savings in the economy. Proceeds from
the transactions either are returned to bank accounts or are reinvested in other financial instruments, thereby recycling the funds into the markets. Thus, these transactions should not
generate significant lasting reductions in the
amounts of financial resources available to other
borrowers.
420 Federal Reserve Bulletin • June 1985
However, mergers may alter the cost or the
amount of credit available to some borrowers if
banks that extend large amounts of takeover
credit are subject to capital or liquidity constraints and reduce their lending to other potential borrowers for a time. In this case, those
borrowers with limited access to financial markets would be vulnerable to the potential effects
of these transactions. However, in the case of
many mergers, corporations have begun to repay
loans, frequently within a month or so after the
takeover, with funds raised through sales of
assets or new equity or by borrowing in the
commercial paper or bond markets. More than
two-thirds of the $32 billion of bank loans extended to finance the largest mergers last year
has been repaid; the bulk of these repayments
occurred within six months of the loan extensions. A number of foreign banks also have
participated in the financing arrangements of
many of the larger mergers, thus expanding the
supply of funds in domestic markets. Among the
largest transactions completed last year, approximately $7 billion, about one-fifth, of the initial
bank financing reportly came from foreign
banks. Foreign banks have also purchased merger loans originally made at large U.S. banks,
though we have no statistics on the total volume
of this activity.
A more pertinent consideration regarding
merger financing from the Federal Reserve's
perspective is the potential for greater risk exposure of the financial system. The Board of Governors, as bank and bank holding company supervisor and lender of last resort, has
responsibility, along with the other regulatory
agencies, for maintaining the safety and the
soundness of financial institutions and markets.
In this regard, we are especially concerned about
potential financial risks involved with leveraging
and with acquisition activity financed with large
amounts of debt. Because many mergers and
leveraged buyouts have involved heavy reliance
on debt and retirement of existing equity, the
surviving firms have had balance sheets that
leave them more vulnerable to downturns in
earnings or sharp increases in interest rates.
When this development occurs, it of course
means that the institutions providing the credit
may in turn be more exposed to possible loss.
Leveraged buyouts may be of particular con
cern because these purchases are typically executed using larger proportions of debt and smaller amounts of equity than mergers. In 1984,
leveraged buyout deals involving U.S. companies are estimated to have amounted to more
than $15 billion, with buyers rarely putting up
more than 10 percent of the purchase price. The
ability of the firm to service this debt burden
depends on the value of the assets and on the
company's future earnings and on cash flow
prospects. These factors may be particularly
difficult to evaluate for buyouts if past operations
are not expected to be a guide to future profitability—which is, after all, the economic rationale of many buyouts. Because buyout loans
usually involve floating-rate debt, the companies
would be particularly vulnerable in the event that
interest rates rise substantially and cash flows
are not adequate to service heavy debt burdens.
But prudent lending practices established by
lenders take these possible outcomes into consideration, and thus help to ensure that any
failures associated with heavy leveraging would
be only isolated events.
The Federal Reserve has actively urged banks
to evaluate carefully loans used to finance
buyouts and other types of takeover transactions
and to apply prudent standards in their credit
decisions. Bank examiners have been instructed
to review banks' involvement with leveraged
buyout financing, and we have issued specific
guidelines for the examiners to follow in evaluating loans used for this purpose and for assessing
the total exposure of a bank to such lending. A
policy directive issued in 1984 to examiners at
each of the 12 District Federal Reserve Banks by
the Director of the Board's Division of Banking
Supervision and Regulation pointed out that the
high volume of debt relative to equity that is
characteristic of leveraged buyouts reduces the
cushion available to the purchased company to
withstand unanticipated financial pressures or
economic adversity.
The Board policy directive noted the following
two financial risks associated with leveraged
buyout financing: (1) the possibility that interest
rates may rise higher than anticipated and thereby significantly increase the purchased company's debt service burden; and (2) the possibility
that the company's earnings and cash flow will
decline or fail to meet projections, either because
Statements to Congress
of a general economic recession or because of a
downturn in a particular industry or sector of the
economy.
The Board directive stated that, given the
amount of debt involved in leveraged buyouts,
the value of collateral should be emphasized to
protect the creditworthiness of these loans. The
quality of a purchased company's management is
also important and represents another element in
the bank's evaluation of leveraged buyouts.
Management is important because it must oversee both the special financial risks associated
with the leveraged-buyout form of acquisition
financing as well as the normal day-to-day affairs
and operations of the purchased company's business.
The Board of Governors has expressed its
concerns about the potential hazards of mergers
and leveraged buyouts with leaders of the banking community through public statements and
informal discussions. Members of the banking
community have indicated that they are reviewing lending practices to ensure that prudent standards are applied to potential credit extensions
for takeovers. Reportedly a number of attempted
buyouts have been terminated as a result of
difficulties encountered in obtaining needed financing. At least $3 billion of proposed leveraged
buyouts were abandoned last year because financing was not available, and we have read in
the press recently of two or three sizable buyouts
that were terminated for this reason. These reports suggest some selectivity on the part of
lenders.
We hope that prudent lending standards will be
applied by all lenders, including purchasers of
so-called "junk bonds." Junk bonds are lowrated or unrated bond issues, which seem to have
gained popularity as a tool for financing mergers
and takeover attempts. The large investors who
purchase most of these bonds are relatively
sophisticated and should be aware of the risks
involved. But it would be fair to say that one
cannot really be entirely comfortable about such
assumptions, especially when the market has not
been tested by some significant negative surprises—which inevitably will come at some
point. The higher rates paid on the junk bonds
suggest that they are perceived by the market to
involve greater risks; the question is whether the
risk premiums will in fact prove to be adequate.
421
I should note that, while federally chartered
depository institutions may make loans to lowrated borrowers, they are prohibited from acquiring junk bonds in their investment portfolios
because they are not considered to be investment-grade securities. But some state-chartered
institutions may not be subject to such restrictions, and some state-chartered thrift institutions
have purchased these securities. Given the evident sensitivity of financial markets to the fortunes of individual banks and thrift institutions, I
think it is incumbent upon supervisors at both
the federal and state levels to keep a close eye on
developments in this area.
Lending on a prudent basis to finance mergers
and acquisitions need not weaken the financial
fabric. Although the companies that have been
created out of this recent surge in merger activity
are still relatively untested, to date we have not
seen significant problems for financial markets
arising out of this activity. In part, this may
reflect the favorable economic and financial
environment of the current expansion. Most sectors have experienced substantial increases in
corporate profits and cash flows over the past
year, and interest rates are appreciably below the
levels of the early 1980s. While some individual
firms have taken on greater leverage, other businesses have taken advantage of improved conditions to strengthen their balance sheets. For the
economy as a whole, retirements of equity
through mergers and merger-related activity
have been partially offset by improvements in the
market values of assets and by boosts to equity
from retained earnings growing out of the current
expansion.
We do not believe that arbitrary controls on
uses of credit can be effective or desirable. Nor
can a government agency determine among thousands of mergers which are good and which are
bad. A given transaction may be desirable from a
social and economic standpoint if it results in
economies of scale, better management, or a
more efficient allocation of resources. A blanket
prohibition of all merger financing would be
undesirable. Moreover, attempts to regulate
flows of credit for particular purposes run the
risk of creating unintended distortions in credit
flows and impeding the efficient allocation of
capital. When credit controls are in existence for
any length of time, they become increasingly
422 Federal Reserve Bulletin • June 1985
inequitable as borrowers and lenders seek to
circumvent them. Credit controls are usually
extremely difficult to enforce: since credit is
fungible, most financing can be achieved through
alternative channels, such as borrowing through
nonregulated intermediaries, foreign lenders, or
the like.
I do not wish to imply, however, that we
should be complacent about the implications of
lending for mergers and takeovers. The Federal
Reserve will continue to monitor this activity and
its effects on financial markets, and our examina-
tion standards in this regard are undergoing
further review. And the Congress and other
government agencies need to give close scrutiny
to the numerous offensive and defensive practices that have arisen in association with mergers, leveraged buyouts, and hostile takeovers to
ensure that institutions and investors are provided adequate protection. Also, a careful review
should be given to features of the tax system that
appear to encourage merger activity, and in
particular those features that favor the use of
debt
financing.
•
Vice Chairman Martin presented similar testimony before the Subcommittees on Oversight and Select
Revenue Measures of the House Committee on Ways and Means on April 16, 1985.
Statement by Theodore E. Allison, Staff Director
for Federal Reserve Bank Activities, Board of
Governors of the Federal Reserve System, before the Subcommittee on Financial Institutions
Supervision, Regulation and Insurance of the
Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, April 4,
1985.
I would like to discuss briefly the Federal Reserve's role in supplying cash to and accepting
cash from depository institutions. Then, I will
address our record of commitment in supporting
government agencies that are using currency
data to investigate criminal activity.
The Federal Reserve is responsible for meeting the public's demand for currency. Likewise,
there is also a responsibility for the Federal
Reserve to take back currency when the public
demand decreases sufficiently so that depository
institutions have excess inventories. During the
calendar year 1984, $170 billion was received by
Federal Reserve Banks from depository institutions and $181 billion in currency was paid to
depository institutions.
Yearly, each Federal Reserve District submits
an order to the Board for the estimated amount
of notes required to meet the expected demand
during the following year. The orders are carefully analyzed by Board staff to determine potential
changes in demand over the previous year. Subsequently, a printing order is submitted to the
Bureau of Engraving and Printing. Based on this
order, the Bureau establishes a production
schedule for the year.
During the 1970s, the Bureau was producing
currency at its maximum capacity level. Therefore, there was a continuing concern whether a
sufficient amount of new notes were available to
meet the demand. To determine the scope of the
demand, Board staff would question the Federal
Reserve Banks frequently on their needs for
increases in their printing orders. For example,
when the Federal Reserve Bank of Boston was
asked during this period about an increase in
demand for $100 notes, the explanation received
was that the First National Bank of Boston
needed the notes to meet a request for large bills
by foreign banks that historically had received
their currency from New York banks. Board
staff determined that the number of notes needed
to meet the additional demand would not excessively strain the inventory levels for new notes
and could be met by shipping notes printed for
other Federal Reserve Banks to the Federal
Reserve Bank of Boston.
It should be noted that there has long been a
demand for U.S. currency by residents of foreign
countries for a variety of reasons, including
economic or political difficulties that their countries may be experiencing. Indeed, once the
residents of a country begin to hold U.S. currency as a hedge against these uncertainties, the
demand for currency can multiply as it becomes
more readily transferable to others locally in
exchange for goods and services. These factors
Statements to Congress
have led at times to significant currency outflows
from the United States.
This foreign demand for currency has traditionally been met through private commercial
banking channels. Foreign banks have typically
placed currency orders with U.S. commercial
banks that in turn ship and receive currency as
part of their normal correspondent banking services.
Modest levels of currency inflows into the
United States are also commonplace. These
flows are often associated with countries that
cater to the American tourist trade. Other inflows appear to be related to successful exchange
rate strategies that lead foreign residents who
had used U.S. currency to hedge against devaluation risks to return to the use of local currencies. There are also modest inflows associated
with the normal servicing of the money stock in
countries in which the U.S. dollar is a principal
circulating currency of exchange.
The Federal Reserve's interest in cash does
not end with the provision of currency. The
Reserve Banks' Examination Divisions monitor
state member banks and Edge Act corporations
for compliance with government regulations
such as the Bank Secrecy Act. The Federal
Reserve's research staff develops macroeconomic analyses and projections that help us understand and project cash demand. And finally the
Board's Division of Federal Reserve Bank Operations supplies federal investigatory agencies
with data that are used in their monitoring and
investigatory programs.
It is important to point out that while the
Federal Reserve System is not an investigatory
agency and therefore cannot provide detailed
explanations for how cash sent into circulation is
used by individuals, it has cooperated with federal investigatory agencies to the fullest possible
extent. Data have been provided on currency
flows into and out of Reserve Banks. In addition,
general explanations that help account for shifts
in these flows have also been provided. These
data and the general explanations then can be
analyzed in detail by those federal entities
charged with investigating criminal activities.
Here are a few examples of the extent of the
ongoing cooperation and support that the Federal Reserve has provided for federal investigations:
423
• Currency flow reports were periodically supplied to the Joint Economic Committee in 1979
for its work on estimating the size of the underground economy.
• Reports on currency receipts from and payments to depository institutions are supplied
monthly to the following: (1) the Adviser of the
Financial Crimes and Frauds Group of the U.S.
Treasury Department, Washington, D.C.; (2) the
Director of the Treasury Financial Law Enforcement Center of the U.S. Customs Service in
Washington, D.C.; (3) the Drug Enforcement
Agency Office in Miami; (4) the Drug Enforcement Agency Office in Washington, D.C.;
(5) the U.S. Transportation Department Office in
Cambridge, Massachusetts.
• When requested, arrangements have been
made for federal investigators to visit Reserve
Bank offices to obtain more detailed information
about trends indicated in the reports that were
provided them by the Federal Reserve. For
example, the Adviser of the Financial Crimes
and Frauds Group of the U.S. Treasury has
received detailed information from several Reserve Banks and subsequently developed significant findings of interest to ongoing investigations. Roughly ten visits of this type have been
arranged in the past two years.
• Special reports on cash flows into and out of
depository institutions in the Miami and New
Orleans Reserve zones are supplied monthly to
the Miami and the New Orleans Customs Offices.
• The Federal Reserve and the Treasury are
looking at the feasibility of establishing a Systemwide Federal Reserve automation program
for providing data on cash flows to appropriate
government agencies on a monthly schedule.
This program would be an expansion of the pilot
efforts now under way in Miami and New
Orleans.
• In addition, special anticrime assistance has
been provided to others, such as the President's
Commission on Organized Crime, the Internal
Revenue Service, the Drug Enforcement Agency, the Central Intelligence Agency, and the
Federal Bureau of Investigation.
In closing, let me reaffirm the Federal Reserve's commitment to assisting federal agencies
that are charged with the very important task of
investigating currency transactions relating to
criminal activity.
•
424 Federal Reserve Bulletin • June 1985
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives, April 17,
1985.
I appreciate the opportunity to appear before this
subcommittee to review with you some of the
issues involved in proposed banking legislation.
You have requested me to focus my remarks
particularly on the long- and short-term effects of
chartering so-called nonbank banks and on the
provisions of H.R. 20, the "Bank Definition
Act," which addresses the proliferation of nonbank banks.
I have long supported legislation to close avenues for evasion of some of the basic tenets of
public policy, incorporated in the Bank Holding
Company Act, that have guided the evolution of
our banking system for decades. At the same
time, I want also to emphasize at the outset that,
while action to close the "nonbank bank loophole" is urgently needed, I hope the committee
and the Congress will also deal in this session
with other issues, ranging from powers of bank
holding companies to interstate banking, that
should be promptly resolved in the interest of a
competitive, safe, and healthy banking system.
Some of those points are addressed by H.R. 15,
the bill sponsored by Mr. Wylie, which also deals
with nonbank banks.
Public policy has long recognized that commercial banks perform a unique and critical role
in the economy and in the financial system. They
are operators of the payments system; they are
custodians of the bulk of liquid savings; they are
the principal suppliers of short-term credit; and
they are the critical link between monetary policy and the economy. Moreover, the fortunes of
individual institutions are so intertwined that
instability of one may infect another. In recognition of these circumstances, a federal safety
net—specifically the Federal Reserve discount
window and federal deposit insurance—has long
been provided to help protect the system. Individual banks are subject to a system of regulation
and supervision to help assure their safety and
soundness.
Integral to that approach, the Bank Holding
Company Act allows ownership of a bank by
another company only if that company engages
in activities that "are closely related to banking
and a proper incident thereto." That provision is
designed to enforce a basic separation of banking
and commerce, and thus to limit conflicts of
interest and avoid undue concentration of resources. The law also provides for some supervision and inspection of the holding company as a
whole, recognizing that, in practice, the fortunes
of one enterprise within a holding company cannot be wholly separated from those of its affiliates. The provisions of the Bank Holding Company Act also place restrictions on interstate
banking by a holding company, paralleling the
restrictions on interstate branching in the MacFadden Act.
In our judgment, the basic concerns about the
separation of commerce and banking remain
valid and should be your point of departure today
in considering the nonbank bank issue.
The definition of a bank is critical to a policy
that sets out to separate banking and commerce
and to enforce restrictions on interstate banking.
The Bank Holding Company Act defines a bank
as an institution that both accepts demand deposits and makes commercial loans. That definition
was designed to exclude savings and industrial
banks (which at the time had little or no demand
deposits or other transaction accounts or commercial lending authority) and limited-purpose
trust companies.
While thrift institutions today increasingly do
commercial lending and can accept transaction
accounts of individuals, institutions insured by
the Federal Savings and Loan Insurance Corporation (FSLIC) remain exempt under the terms
of the Garn-St Germain Act passed in 1982.
Moreover, as other forms of transaction accounts have developed with the basic characteristic of demand deposits, institutions with a bank
charter can also take all kinds of deposits from
the public (including under current court rulings
NOW accounts) other than demand deposits and
make commercial loans without coming under
the restrictions of the Bank Holding Company
Act. These are the so-called nonbank banks, for
which there have been hundreds of applications.
Specifically, one form of nonbank bank may
be owned by any company—a steel company, a
Statements to Congress
retailer, a securities firm, an insurance company,
or a real estate developer. The parent company is
not subject to any of the limitations of the Bank
Holding Company Act that is designed to limit
risk or conflicts of interest and to avoid unfair
competition or excessive concentration of economic power. Thus, in its present guise, the
nonbank bank undermines the basic separation
of banking and commerce—a concept with deep
roots in both the English and the American
traditions.
That seems to me the fundamental issue at
stake in closing the nonbank bank loophole. By
permitting commercial companies to provide
through subsidiaries almost all the same functions as full-service banks and to obtain access to
the payments system, the discount window, and
deposit insurance, both the principle and the
practical reality of the present restrictions of the
Bank Holding Company Act will be seriously
undermined over time. The competitive position
of those banks still subject to the act will inevitably be damaged, potentially weakening the system as a whole.
The nonbank bank is also, and today more
commonly, a device by which a bank holding
company or a commercial firm can escape the
restrictions on interstate banking encompassed
in the Douglas Amendment to the Bank Holding
Company Act. In fact, interstate banking is a
reality in many areas through Edge Act subsidiaries, loan production offices, finance company
and mortgage banking affiliates, credit card operations, automated teller machine networks, and
otherwise. The nonbank bank offers the added
avenue of on-site offices for a full range of
consumer business or commercial lending combined with deposit-taking. I will be testifying
with respect to interstate banking next week, and
I believe some liberalization of current restrictions is justified. However, in my judgment, that
question should be approached on its own merits
rather than by permitting interstate banking
through an unintended "back door" device, with
the inefficiencies and inequities that device involves.
I sense there is a broad consensus that it is
important to preserve the basic policies of the
Bank Holding Company Act and that, accordingly, it is essential to close the nonbank bank
loophole as part of any legislative approach
425
toward banking. Basically satisfactory legislative
provisions to achieve that were contained in
separate bills last year. One was reported by this
committee and another adopted by the full Senate. While detailed differences in approach were
not fully resolved, it appeared that other provisions of proposed banking legislation rather than
basic disagreements on the nonbank bank question stymied enactment.
H.R. 20 basically follows the approach of this
consensus. It broadly applies the provisions of
the Bank Holding Company Act to all commercial banks insured by the Federal Deposit Insurance Corporation (FDIC) whatever their particular mix of business. In addition, those uninsured
institutions that offer transaction accounts and
make commercial loans would continue to be
covered. This approach is broadly satisfactory so
far as it goes, as would be the similar provisions
of H.R. 15.
Before turning to areas of omission, I would
note particularly that these bills would bring socalled consumer banks clearly within the scope
of the provisions of the Bank Holding Company
Act. The suggestion has been made by others
that banks primarily aimed at serving the consumer might be exempted from the general principle of the separation of banking and commerce
and from any restrictions on interstate banking
applicable to ordinary banks.
However beguilingly presented as a "family
bank" proposal, such an initiative seems to me
misguided. I would emphasize that the great bulk
of existing banks and other depository institutions are already "family" or "small business"
oriented. We have in this country almost 20,000
banks and thrift institutions, nearly all actively
competing for consumer business. Many of them
do little commercial lending; for instance, almost
20 percent of commercial banks have 5 percent
or less of their assets in loans to businesses, and
nearly half have less than 20 percent of assets in
such loans.
I see no justification for permitting commercial, industrial, or securities firms to compete
with these institutions for insured deposits and
other banking services under different ground
rules as to ownership. The effect could only be to
undermine the public policy objectives incorporated in the Bank Holding Company Act generally, and there would be the appearance and reality
426 Federal Reserve Bulletin • June 1985
of unfair competition with banks subject to the
act.
Do we really want, for example, a retail business to be able to gather deposits under the
protection of federal insurance and to use those
deposits to fund a credit card they sponsor more
cheaply than retailing competitiors? Do we want
to bless interstate consumer banking simply because there is a nonbank owner? Do we want to
encourage joint marketing efforts and "tie-ins,"
implicit or explicit?
If we are not sensitive to these concerns, then
what is the justification for the present restrictions in the Bank Holding Company Act?
Some of the family bank concepts propose a
kind of sugarcoating in the form of higher capitalization, "lifeline" banking requirements, and
rules requiring prompt deposit availability. If
these are indeed valid objectives of legislation—
and I make no judgment on that point now—then
it seems to me the legislation should apply to all
depository institutions and not to just a special
few.
In other respects, I believe the coverage of
H.R. 20 must be broadened. As drafted, H.R. 20
has no provision with respect to the treatment of
thrift institutions—savings banks and savings
and loans.
For some federally insured thrift institutions—
namely, those owned by multiple savings and
loan holding companies—no legislative action
appears required because their holding companies would remain subject to the Savings and
Loan Holding Company Act, which has restrictions similar to those of the Bank Holding Company Act. However, others—including FDICinsured savings banks and privately insured thrift
institutions—would be subject to neither act, and
unitary savings and loans may engage in substantial nonresidential lending activities without any
limitations on the commercial or industrial activities of their corporate owners. Left unattended,
the effect would plainly be to deflect the energies
now reflected in nonbank banking into banking in
the guise of thrift institutions—"nonthrift
thrifts."
In recent years, powers available to thrift
institutions have become much more like those
available to banks, and indeed the range of thrift
powers today, particularly of state-chartered institutions, often exceeds that of banks. Parallel
ing that development, there has also been increasingly clear recognition of the need to adopt
rules to assure reasonably comparable regulatory
treatment.
Considerations of competitive equity alone
dictate that the privileges of, and restrictions on,
banks and thrift institutions be brought into a
more coherent relationship. But it is not just a
matter of competitive equity. Restrictions on
powers of bank holding companies and on nonbank banks will inevitably be undercut, and
rapidly, to the extent that thrift institutions with
banking powers can simply substitute as a vehicle for undertaking a wide range of banking
services, violating the basic separation of banking and commerce.
I recognize that there are difficult questions
posed by firms that already have operations on
both sides of the line between commerce and
"thrift" banking. A number of industrial or commercial firms own thrift institutions, and operate
those institutions as separate and distinct entities
without significant problems arising. Those combinations might logically be permitted to continue on their present basis. However, in the environment we now face, these questions need to be
approached with an eye toward the future, and a
firm policy established with respect to which
new combinations are acceptable and which are
not.
To deal with this problem, we have suggested
that only those thrift institutions that have a high
percentage of their assets in home mortgages
should be exempt from the same rules as to
ownership applicable to banks and multiple savings and loan holding companies. We have suggested that present law be strengthened to require that such a "qualified" thrift institution
have at least 65 percent of its assets in residential
mortgages or housing-related investments.
I do not believe there is a sound rationale for
including residential mortgage originations and
sales in such a calculation. Commercial banks,
mortgage banks, and others are all active mortgage originators. The distinguishing characteristic of a savings and loan and many savings banks
historically—and the characteristic that historically has justified special federal support—was
that they devoted relatively large portions of
their own resources to support housing. I believe
that a substantial commitment to investment in
Statements to Congress
housing should continue to be the test for exemption from certain policies embodied in the Bank
Holding Company Act and the Savings and Loan
Holding Company Act for multiple savings and
loan holding companies. Futhermore, any holdings of liquidity included in a thrift test should be
confined to amounts legally required.
A further step is necessary to limit conflicts of
interest and tie-ins when a qualified thrift institution has a commercial owner. Specifically, joint
marketing of services and products should be
prohibited.
I am not suggesting that nonthrift thrifts need
to be brought under the Bank Holding Company
Act administered by the Federal Reserve. I am
suggesting that institutions that have essentially
the same charcteristics as commercial banks
should have broadly parallel restrictions on combinations with commercial firms and that those
restrictions be administered by the appropriate
regulator—for savings and loans and federal savings banks, the Federal Home Loan Bank Board.
Moreover, we calculate that about three-quarters
of all savings and loans would meet the thrift test
I have proposed today and thus would not be
restricted as to commercial ownership.
H.R. 20 does not prohibit an affiliation of thrift
institutions and nonmember banks with securities firms. That existing loophole in the GlassSteagall Act should be closed in the interest of
competitive equity and the purposes of the
Glass-Steagall Act. Such a provision has been
recommended by the Federal Home Loan Bank
Board with respect to thrift institutions.
In all these areas, appropriate transition periods should be provided, and other detailed questions would need to be resolved. We would be
glad to work with the committee in developing
such provisions.
Finally, Mr. Chairman, I would like to comment on the provision of the bill that grandfathers certain nonbank banks acquired on or
before July 1, 1983. You and the Chairman of the
Senate Banking Committee have strongly supported July 1, 1983, as the appropriate date for
grandfathering nonbank banks. I would point out
that, even before that date, institutions were well
aware that the nonbank bank loophole was a
matter of policy and congressional concern.
427
We have reviewed both the institutions that
would be subject to grandfathering and the activities that are conducted by them. As far as we
can determine, H.R. 20 would grandfather about
24 FDIC-insured nonbank banks; most of these
are small in asset size, with at least 10 engaged
essentially in trust activities and 6 or 7 in credit
card operations. Given this situation, we believe
that grandfathering as of the July 1, 1983, date,
subject to appropriate conditions to assure that
their grandfather status is not abused by expansion geographically or otherwise, would not be
inconsistent with the objectives of the act.
Should the grandfather date be moved toward
the current date, an increasing number of insurance, securities, and retail firms that were fully
on notice about the likelihood of federal legislation would be permitted to retain bank operations. It is our understanding that few of these
institutions have yet made substantial investments, and the larger number of charter rights
that would be involved would increasingly impair
the objectives sought by H.R. 20.
In concluding my testimony, I would note that
one federal district court in Florida has enjoined
the Comptroller from issuing final nonbank bank
charters because it found, as a matter of law, that
the National Banking Act does not permit the
Comptroller to issue a charter that does not
provide for the exercise of full national banking
powers. As a result of that decision, final national bank charters for new nonbank banks are not
currently possible, and the Federal Reserve
Board has suspended processing such applications by bank holding companies. However,
state-chartered nonbank banks that are nonmembers can still be created. While final disposition
of the legal issues involved for the national banks
may take some time, any reversal of the district
court opinion will quickly touch off a flood of
new national nonbank banks.
Consequently, the need for clear and effective
action to deal with the nonbank bank question
continues to rest with the Congress. I urge you to
act expeditiously in this area and then to turn
your attention promptly to other areas of banking
that desperately need legislative resolution and
clarification.
•
428 Federal Reserve Bulletin • June 1985
Statement by Preston Martin, Vice Chairman,
Board of Governors of the Federal Reserve System, before the Subcommittee on Telecommunications, Consumer Protection, and Finance of
the Committee on Energy and Commerce, U.S.
House of Representatives, April 23, 1985.
I am pleased to appear before you to discuss the
recent surge in merger and takeover activity and
its potential effects on credit market conditions.
Previous testimony underscores the importance of assessing the implications of this activity. The dollar size of recent transactions exceeds
by a wide margin any past experience. Nonfinancial corporations as a whole retired more than
$85 billion of equity through mergers, takeovers,
and share repurchases last year; included in this
total is about $15 billion of equity retired through
leveraged buyouts. Equity retirements were bolstered also by firms that elected to repurchase
their own shares rather than to undertake new
investment or to acquire other firms. Some share
repurchases were prompted clearly as defensive
actions against possible hostile takeovers; excluding so-called "greenmail" purchases, available data suggest that more than $10 billion of
stocks were bought back by firms last year.
When a company believes that the value of its
assets is higher than the market value of its
stock, such buybacks may appear to be more
attractive than alternative investments.
The unprecedented level of stock retirements
associated with mergers, takeovers, and share
repurchases has given rise to concerns about the
potential erosion of the equity base of American
business. There have been offsets, however, to
this erosion. Aided by the new depreciation
rules, after-tax earnings of nonfinancial corporations have rebounded strongly in the current
expansion. With dividend growth remaining restrained, retained earnings have been a relatively
substantial source of new corporate equity in
recent quarters.
A typically less important source of equity is
new stock issues. In 1983, the stock market
advances attracted an unusually high volume of
new issuance. Last year, the volume of new
issues dropped two-thirds; and the wave of retirements associated with large debt-financed
mergers, leveraged buyouts, and stock repurchase programs greatly exceeded new issues.
Even so, retained earnings of all nonfinancial
firms offset the net retirement of equity, and net
additions to equity in the aggregate remained
positive, though quite low by historical standards, especially during a business expansion.
Another source of equity growth has come
from the appreciation of existing corporate assets. Reflecting the improvement in corporate
profits in this expansion and a more favorable
environment for future earnings, the market's
evaluation of corporate assets has risen. Moreover, even though a large portion of recent stock
retirements has been financed with debt, aggregate debt-to-equity ratios for nonfinancial business as a whole—based on market values of
equity—have remained well below the peaks
reached in the 1970s. Nonetheless, while these
aggregate measures have not changed dramatically, it is clear that some firms are retiring huge
amounts of their equity and are taking on appreciable amounts of debt to finance merger-related
activity. The Federal Reserve is concerned that
individual risktaking associated with leveraging
on such a large scale not impair the stability of
our financial system.
In my view, there is a legitimate place in our
economy for mergers and takeovers. They can
be important mechanisms for redeploying corporate assets to more profitable uses. Many combinations promote economies of scale or scope,
reinforce market incentives, and may bring about
better management. However, acquisitions do
not always lead to big businesses. We have seen
an increasing number of divestitures in which
larger companies sell operating units to smaller
firms or to management. Such spin-offs, which
not infrequently follow a merger between big
concerns, create enterprises that may function
more efficiently in a more specialized environment and with more direct management control.
The positive gains from mergers need not be
limited only to friendly takeovers, but can occur
in hostile situations as well. Thus, we must be
careful about imposing the judgment of government authorities concerning which private transactions will be economically productive and
which will not.
The Federal Reserve's concerns have focused
primarily on the effect that merger and takeover
activity may have on aggregate credit flows and
on the risk exposure of financial institutions and
Statements to Congress
markets. With respect to credit flows, our estimates indicate that growth in the domestic nonfinancial debt aggregate—which is one of the
aggregates that we monitor in the course of our
monetary policy deliberations—was boosted
about 1 to IV2 percentage points in 1984 as a
result of merger-related borrowings. But mergers
and buyouts appear likely to have had a much
more limited impact on the three monetary aggregates for which we establish target ranges.
Moreover, the Board is aware of the activity and
takes it into consideration when evaluating the
behavior of the money and debt aggregates.
Given our ability to monitor the size and timing
of very large transactions, we can anticipate
possible distortions to the aggregates in a particular period and thus avoid inadvertently reacting
to these factors in policy deliberations. I do not
believe mergers present a real operational problem for us that would result in appreciable unintended variations in reserve market pressures.
More fundamental determinants of credit demand, including the behavior of the household
sector, capital expenditures of businesses, and,
of course, the fiscal position of the federal government, exert much more powerful and persistent pressures on credit markets than does takeover activity.
Some members of the public and the Congress
have expressed concerns that merger activity
absorbs credit that could be used to support
other, perhaps more productive, purposes. But
this would be true only in unusual circumstances
and for temporary periods. Basically, merger and
acquisition transactions involve transfers of
ownership of existing assets and do not absorb
net real savings in the economy. Proceeds from
the transactions are either returned to bank accounts or reinvested in other financial instruments, thereby recycling the funds into the markets.
A more pertinent consideration regarding
merger financing from the Federal Reserve's
perspective is the potential for greater risk exposure of the financial system. Because many
mergers and leveraged buyouts have involved
heavy reliance on debt and retirement of existing
equity, the surviving firms are more vulnerable
to downturns in earnings or sharp increases in
interest rates. When this occurs, the institutions
providing the credit may in turn be more exposed
429
to possible loss. Leveraged buyouts may be of
particular concern because they typically involve
larger proportions of debt and smaller amounts
of equity than other types of mergers.
The Federal Reserve has actively urged bank
management to evaluate carefully loans used to
finance buyouts and other types of takeover
transactions and to apply prudent standards in
credit decisions. Reserve Bank examiners have
been instructed particularly to review bank involvement with leveraged buyout financing, and
we have issued specific guidelines for examiners
to follow in evaluating loans used for this purpose and in assessing the exposure of a bank
portfolio to such lending. A policy directive
issued in 1984 to examiners at each of the 12
District Federal Reserve Banks pointed out that
the high proportion of debt to equity that is
characteristic of leveraged buyouts reduces the
cushion available to withstand unanticipated financial pressures or economic adversity.
Moreover, the Board of Governors has expressed its concerns about the potential hazards
of mergers and leveraged buyout lending with
leaders of the banking community through public
statements and informal discussions. Members
of the banking community have indicated that
they are reviewing lending practices to ensure
that prudent standards are applied to potential
credit extensions for takeovers. Reportedly a
number of attempted buyouts have been terminated as a result of difficulties encountered in
obtaining needed financing, which suggests some
selectivity on the part of lenders.
We expect and demand that prudent lending
standards be applied by all lenders, including
those who take back so-called junk bonds in the
course of lending. The large investors who purchase most of these bonds are relatively sophisticated and should be aware of the risks involved.
The rating services also play a major role in
evaluating the nature of these investments. But it
would be fair to say that one cannot really be
entirely comfortable assuming that the risks are
clearly understood, especially when the market
has not been tested by some significant negative
surprises—which inevitably come. The much
higher rates paid on the junk bonds suggest that
they are perceived to involve greater risks; the
question is whether the risk premiums will in fact
prove to be adequate.
430 Federal Reserve Bulletin • June 1985
Lending to finance mergers and acquisitions
need not weaken the financial fabric, however.
Although the companies that have been created
out of this recent surge in merger activity are still
relatively untested, we have not seen to date any
significant problems for financial markets arising
out of this activity. In part, this reflects the
favorable economic and financial environment of
the current expansion. While some individual
firms have taken on greater leverage, other businesses have taken advantage of improved conditions to strengthen their balance sheets.
We do not believe that arbitrary controls on
uses of credit can be effective or desirable. As I
noted previously, any given merger, acquisition,
or divestiture may result in social and economic
benefits through economies of scale, better management, or generally a more efficient allocation
of resources. Attempts to regulate flows of credit
for particular purposes run the risk of creating
unintended distortions in credit flows and impeding the efficient allocation of capital.
I do not wish to imply, however, that we
should be complacent about the implications of
lending for mergers and takeovers. The Federal
Reserve will continue to monitor this activity and
its effects on financial markets, and our examination standards in this regard are undergoing
further review. In addition, the Congress and
government agencies need to give close scrutiny
to the numerous offensive and defensive practices that have arisen in association with mergers, leveraged buyouts, and hostile takeovers to
ensure that institutions and the stockholder population are provided adequate protection.
•
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives, April 24,
1985.
any substantive manner since 1933. The law
effectively prohibits national banks from branching interstate by limiting each national bank to
branching only within its home state, subject
within that state to any branching restrictions
imposed by that state on state-chartered banks.
The Douglas amendment to the Bank Holding
Company Act of 1956 prohibits interstate expansion by means of a bank holding company acquiring banks in another state unless such acquisitions are explicitly authorized by that state.
In spite of the statutory McFadden and Douglas prohibitions, de facto there has been a large
and increasing amount of interstate banking in
recent years. Some of that banking has taken
place through avenues specifically permitted by
law.
According to a study by the Federal Reserve
Bank of Atlanta, U.S. bank holding companies in
1982 had 202 loan production offices and 143
internationally oriented Edge act corporations
operating outside the parent's home state; foreign banking organizations had another 254
banking offices outside their home state. There
are probably more today. More important is the
variety of finance companies, mortgage companies, industrial banks, and other offices with at
least partial banking capabilities operated interstate by bank holding companies. The Atlanta
study counted some 5,500 such offices operating
I appreciate the opportunity to appear before this
subcommittee to review with you the issues
involved in interstate and regional banking.
These issues are inextricably related to the "nonbank bank" question that we discussed last
week, and to the still broader question of the
appropriate direction and structure of our banking system.
In sum, the Federal Reserve Board believes
the time has come for the Congress, as part of
more comprehensive banking legislation, to authorize some interstate banking. The approach
should take account of the desirability of transitional arrangements over a period of years before
moving to more general interstate banking; the
need to avoid undue concentration of banking
resources and to maintain a climate in which
small institutions can flourish; and the desirability of retaining a role for states in the evolution of
the banking structure within a state.
The basic federal branch banking law, the
McFadden Act of 1927, has not been amended in
Statements to Congress
outside the holding company's home state, and
many more exist now.
Technological advances are also providing
large opportunities for banks to expand geographically without brick and mortar offices. By
joining automated teller machine (ATM) networks, banks in some cases have been able to
reach out to existing or new customers over state
lines. Looking ahead, banking through home
computers would be difficult to confine within a
state's boundary. But even without exotic technology, the relative speed and simplicity of communications and transportation today makes it
much easier, particularly on the deposit side, to
conduct banking at a distance. Large businesses
routinely "sweep" deposits into "concentration
accounts" at selected banks. The combinations
of print and broadcast advertising, 800-number
telephone lines, deposit brokerage, and efficient
clearing mechanisms mean that the day of rather
insulated local deposit markets is gone. On the
loan side, nationwide credit cards are available
to customers throughout the country.
The substantial number of "nonbank bank"
applications by bank holding companies, stretching the fabric of existing law, is one indication of
the strength and depth of some banks' desires to
operate over a wider geographic area. The pressures toward interstate operations arise from a
number of sources. Competition from nondepository businesses that can and do provide financial services—including money market accounts
and other banklike services—through interstate
networks is strong and pervasive. Thrift institutions, which have no statutory bar to interstate
branching, offer interstate facilities in a significant number of cases. Moreover, banks in slower-growing areas naturally want to participate in
more rapidly expanding regions. Florida alone,
for instance, has attracted about 20 percent of all
nonbank bank applications by bank holding companies.
A number of relatively large banks that nevertheless rank well below the largest money center
institutions in size apparently feel, with some
urgency, that a stronger competitive position in
national and international markets requires a
larger size than can reasonably be attained within
the boundaries of a single state. Some of the
largest banks, conversely, urgently wish to attain
a wider and more stable base of "retail" deposits
431
and to expand their consumer lending. At the
other end of the spectrum, there are small banks
concerned about their ability to compete effectively without the power to combine with others
in a natural market area that may extend over
state boundaries.
Resistance to interstate banking for a variety
of reasons—including a desire of many banks to
continue as independent institutions—clearly remains strong. But the pressures for change are
apparent in initiatives by a number of states
toward more interstate banking. The growing
number of regional interstate banking arrangements is the most important reflection of that
change in attitude. Today fourteen states have
enacted laws permitting reciprocal entry by bank
affiliates of bank holding companies headquartered in states within a designated region; twelve
more states are actively considering such arrangements. Four states allow entry from any
other state, three without and one with reciprocity. These liberalized approaches toward interstate banking over recent years suggest a significant change in thinking since the MacFadden Act
and the Douglas amendment were enacted.
SUBSTANTIVE
IN INTERSTATE
ISSUES
BANKING
Against this background, the Federal Reserve
Board believes the time has come to review and
clarify national policy toward interstate banking,
recognizing the economic and competitive pressures driving toward liberalization of present
restrictions, while also protecting the safety and
the efficiency of the banking system, preventing
undue concentration of economic resources, and
assuring benefits to the users of banking services.
One continuing objective of public policy is to
assure competition in banking, as in other industries. Ordinarily, we would not expect that competition would be promoted by confining an
industry to a single geographic market or a single
state. Indeed, we rely on the ability of additional
firms to enter markets as a competitive force
leading to the best possible products at least
cost. Moreover, existing antitrust law appears to
provide considerable protection against local
432 Federal Reserve Bulletin • June 1985
markets becoming noncompetitive as the result
of entry of larger organizations.
Available empirical studies do not suggest that
large states with large banks and statewide
branching are experiencing increasing concentration of local markets. The presumption that
restrictions on entry into particular markets imply some loss of competitive vigor, unless overridden by other considerations of public policy,
suggests that some liberalization of interstate
banking is appropriate. That presumption has
added force in an environment in which other
large financial service firms are able to operate
nationwide, exploiting the economies of scale in
technology or marketing that may be available.
In effect, those firms may now be in a position to
skim off profitable areas of business from banks
committed to providing a full range of banking
services.
Historically, a counterargument to interstate
banking has been a strong antipathy to the concentration of economic power, particularly in the
banking system, and a desire to maintain banking
resources in significant measure under control of
local banks, knowledgeable about the needs and
circumstances of smaller businesses and individuals.
Experience in states with large banks and
statewide branching suggests that these are not
questions of "either-or." Attachments I and II
provide a brief analysis of experience in two of
our largest states, one that has had statewide
branching for decades and the other that has
permitted statewide operations only since 1976.1
In both cases, large numbers of relatively small
independent banks remain. In California, a rapidly growing state, new banks are being formed in
relatively large numbers; in New York, a state
that is growing more slowly, relatively few new
banks have been formed, but the number of small
independent banks (that is, less than $100 million) has dropped only modestly since statewide
branching was permitted. In both states, the
competitive environment appears healthy, with
the consumer and businessman able to choose
between some of the largest banking institutions
in the world and small, locally oriented banks.
1. The attachments to this statement are available upon
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
Should banks be permitted to expand interstate
more freely, we anticipate that similar patterns
would prevail.
We are aware that a rush to expand geographically could pose certain risks—temptations to
pay exceptionally high prices and to leverage
capital, to spread management thin, and to enter
into new types of lending or operations in which
experience may be limited. We believe that these
risks can be dealt with through normal supervisory processes, particularly in evaluating financial
and managerial factors with respect to applications. In particular, we believe that a banking
organization planning sizable expansion programs should be able to demonstrate its ability to
maintain fully adequate capital and liquidity positions, to avoid excessive use of good will on its
balance sheet, and to provide capable management for acquired institutions. I would also emphasize, in this connection, that the risks—actual
and potential—from expansion into new banking
markets are typically more identifiable, and often
less, than those risks posed by entry into new
nonbanking activities for which bank management may have little or no experience.
CONCENTRATION
Viewed from a national perspective, restrictions
on interstate banking have been effective in
forestalling large concentrations of domestic
banking resources, at least by the standards of
other countries. The 10 largest banking organizations control only about 20 percent of all domestic banking assets, and the 100 largest only a little
more than half.
Presumably, concentration ratios would tend
to rise with interstate banking, quite significantly
if such activity is unrestricted. At the same time,
the experiences in California and New York that
I referred to earlier suggest the process would
stop very far short of the concentration of institutions common in other countries. We would
anticipate thousands of independent organizations remaining.
Nevertheless, we believe that a variety of
safeguards should be included in legislation liberalizing interstate banking to encourage continuing diversification of banking resources. Taken
alone, antitrust laws—focused on the market
Statements to Congress
shares of competitors in particular markets—do
not appear fully responsive to that need. Essentially, those laws as applied to banking make
little distinction between the overall size of organizations competing in particular markets, but
rather focus on the size of their presence in a
single market. Consequently, those laws might
be consistent with considerably greater concentration, measured on a national or regional basis,
than would be desirable.
Two kinds of limitations, in our judgment,
might be taken to forestall any substantial risk of
excessive concentration. The approaches are not
mutually exclusive and would be complementary. Both approaches would, at the margin,
involve essentially arbitrary judgments, for they
would envisage a simple quantitative measure of
relative size. But, by responding directly and
logically to the concerns about concentration, I
believe that they would provide a more coherent
approach than the present "system" of implicitly
relying on an almost total prohibition on interstate acquisition as an indirect means of controlling concentration levels.
The first approach would envisage limitations
on the largest banking institutions acquiring other banks. For instance, the very largest holding
companies in terms of domestic banking assets
(or depository institution assets)—say, the top
25—might be prohibited from merging with each
other. In addition, banks could be prohibited
from obtaining through acquisition more than
some fixed share of the nationwide total of such
assets, although de novo or relatively small acquisitions in other states could be permitted.
The second approach would permit, or even
encourage, states to set limitations on the proportion of banking assets (or depository institution assets) within their own borders that could
be acquired through acquisitions or mergers of
institutions of significant size. Specifically, such
acquisitions could be denied if the resultant
institution would hold more than, for example,
15 or 20 percent of a state's banking assets. Any
such rule should be nondiscriminatory between
in-state and out-of-state banking organizations.
Of course, rules implementing these approaches would have to be carefully drawn to avoid
anomalous results. The important point is that
the national and statewide concentration limits
be observed fully.
433
We would strongly suggest that exceptions to
these limitations be permitted for failing institutions. Indeed, in light of the remaining strains
evident in some sectors of the thrift and banking
industries, we would propose that the emergency
arrangements for failing institutions in the GarnSt Germain Act be extended. They should be
liberalized in two ways: by not requiring that an
institution actually be "closed" to qualify for
emergency treatment, and by reducing or eliminating the $500 million size cut-off in the act.
THE DUAL BANKING
SYSTEM
Interstate banking, by its nature, has implications for the dual banking system. Indeed, it is
difficult to conceive of a system of interstate
branching that would enable state law and supervision to govern the operations of banks in sister
states. Consequently, interstate branching could
well lead to a massive expansion of the national
banking system.
If instead interstate banking operations are
generally confined to separately incorporated
and chartered components of a holding company, particular states could maintain authority
over the in-state operations of the holding company. Moreover, there would be opportunity for
a greater degree of local control. For those
reasons, a requirement that interstate acquisitions generally take the form of a holding company affiliate appears to fit more naturally our
banking traditions, at least over a long transitional period to a fully developed interstate banking
environment.
A POSSIBLE
POLICY
APPROACH
Various approaches toward interstate banking
have been proposed over the years, ranging from
modest changes in existing arrangements to nationwide branching. For instance, possible transitional approaches well short of nationwide
banking include the following: (1) branching
throughout metropolitan areas that extend across
state lines, of which there are 35 at present; (2)
expansion into contiguous states; (3) expansion
de novo or by acquisition into any metropolitan
area above a minimum size; (4) encouragement
434 Federal Reserve Bulletin • June 1985
of reciprocal arrangements among states; (5)
interstate banking limited to de novo operations
or small acquisitions (conversely, some have
proposed limiting or prohibiting small acquisitions in the interest of maintaining local banks);
and (6) regional arrangements.
Each of those approaches (and any others that
could be developed) has particular strengths and
weaknesses; each could be debated. However,
much of the recent thinking in states, and within
the banking community, has focused largely on
the last of those options—regional arrangements.
As a consequence, we believe that it is useful to
focus on that approach as a point of departure.
An advantage of regional arrangements seen
by many is the opportunity for regional organizations to reach a size necessary for an effective
national or international presence, and then to
become more effective competitors of the largest
banking institutions in all phases of banking.
However, the approach suffers from some
clear weaknesses. The regions may be defined in
a discriminatory way, aimed at encouraging particular combinations of banks and excluding others, without clear and objective rationale. Specifically, some proposals appear to be driven by a
desire to exclude New York and California
banks, or simply large money center banks. By
their nature, sizable regional arrangements
would permit combinations of banks that are
long distances (and several states) apart, without
permitting even limited operations in some contiguous states. Metropolitan areas might be left,
in a banking sense, bifurcated. Viewed as a
permanent arrangement, regional compacts
would tend to balkanize banking, with a tendency toward regional concentrations.
Because of these potential weaknesses, we
believe that a federal framework is required for
regional arrangements. For example, such weaknesses can be substantially ameliorated if states
entering into such regional arrangements were
also required after relatively few years—say,
three—to permit reciprocal entry by banks in any
state that has enacted a regional arrangement or
that otherwise provides for entry of banks from
any other states. 2
2. Regional arrangements are the subject of a constitutional challenge that is now before the Supreme Court. A federal
framework, such as suggested above, could be put in place if
In this approach, any state, if it so chose,
could continue entirely to "opt out" of full
interstate banking. But, if it chose to enter into a
regional arrangement, it would also have to be
prepared to consider those arrangements as a
transitional approach toward a broader arrangement encompassing all states willing to provide
reciprocal privileges.
As suggested above, all interstate acquisitions
would be subject to federal limitations designed
to protect against undue concentration, and
states would be able to limit the proportion of
their banking assets acquired by a single banking
organization. We would also suggest that it
would be appropriate, in the first stages at least,
for these interstate operations to be undertaken
by means of separately incorporated units of a
holding company rather than by direct branches.
The number of states that ultimately might
wish to enter into regional (or nationwide) arrangements within this broad framework must,
for the time being, remain unknown. Thus the
possibility exists that little progress would be
made toward interstate banking, even for limited
operations within metropolitan areas. Yet, the
status quo is hardly satisfactory, and the legitimate pressures toward interstate operations that
have impelled nonbank banks would continue to
seek "unnatural" channels. Consequently, we
would suggest that, with due notice, the Congress authorize interstate branching within metropolitan areas and for neighboring areas of
contiguous states.
CONCLUSION
I have, on a number of occasions in the past,
stressed the urgency of congressional action to
guide the orderly evolution of the banking system and to reaffirm certain basic principles that
have guided the banking and financial systems,
adapting them to present circumstances. Markets will continue to respond and change will
take place. The only question is whether that
the Supreme Court sustains regional arrangements or even if
the Court were to find them unconstitutional on grounds of
violation of commerce or compact clause requirements.
However, if the Court were to find that such arrangements
violate the equal protection clause, they could not be permitted even if sanctioned by federal law.
Statements to Congress
435
change will take place in a constructive framework of rules established by the Congress after a
careful weighing and balancing of the vital public
interests that are now before you for review. In
my judgment—and taking account of both market forces and recent state inititatives—a comprehensive approach now requires a resolution
of the issues involved in interstate expansion. •
Statement by J. Charles Partee, Member, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Financial Institutions of the Committee on Banking, Housing,
and Urban Affairs, U.S. Senate, April 26, 1985.
and abroad, so that by the start of this decade,
the potential for farm production had increased
considerably. At the same time, growth in demand for American agricultural products weakened. Farm exports in particular have been reduced by sluggish economic conditions abroad
and the high exchange value of the U.S. dollar,
as well as by the expanded ability of other
nations to meet consumption needs from their
own internal production. These market developments have kept farm prices persistently depressed. As a result, farm income has been low
for five years in a row, and land values have been
declining since 1981.
Farm debt, though no longer increasing, still is
high; and interest rates on farm loans, while
down from earlier levels, remain well above
those rates prevailing in the last decade when
much of the debt was incurred. Thus, many
farmers are faced with the problem of servicing a
large volume of debt, at relatively high interest
rates, with a substantially reduced level of farm
earnings. High interest rates and reduced income
flows also have added to the downward pressure
on land values, thus further limiting the ability of
farmers to pay down debt by selling these assets.
The earnings of all farmers have been adversely affected by lower product prices, but not all
are experiencing the same degree of financial
stress. Farmers that are relatively debt-free have
suffered declines in asset values but are not in
danger of falling into insolvency. In contrast,
producers who entered the 1980s with only a
relatively small equity cushion have been experiencing increasing financial difficulties. Estimates
indicate that perhaps a third of the full-time
producers on commercial-sized family farms
have debt burdens large enough to cause moderate to severe financial stress, and this group
owes about two-thirds of all farm debt. The
greater proportion of this debt is owed to the
Farm Credit System, the Farmers Home Administration, and individuals. Nonetheless, about
one-quarter of total farm credit is provided by
I appreciate the opportunity to appear before this
committee to discuss the current difficulties being experienced by banks in our agricultural
communities. As members of this committee are
well aware, these problems have been intensifying lately, as more farmers have been finding it
difficult, if not impossible, to meet fully the
contractual terms of their loan obligations.
The origin of these problems can be traced to
the 1970s. Our farm sector experienced a major
economic boom during that decade, and many
farmers expected the good times to continue in
the 1980s. There was, in particular, a general
perception of limits on potential world production of agricultural products that would continue
to encourage a rapid growth in farm exports, thus
fostering increasing returns to land and other
farm inputs. Many also believed that the more
rapid inflation of the decade would persist, so
that long-term indebtedness could be paid off
with less valuable future dollars. Acting on these
expectations, farmers and other investors acquired additional farm land, bidding up its price
in the process. Farmers also invested heavily in
new machinery and equipment. Moreover, in
view of the apparently favorable outlook for
agriculture and, for most of the decade, of interest rates that were low relative to the expected
rise in income and asset prices, many thought it
advantageous to finance a relatively large share
of these investments with borrowed money.
Consequently, farm indebtedness surged, rising,
after allowance for inflation, about 60 percent
from 1971 to 1979.
As it turned out, however, the agricultural
boom of the 1970s gave way to a bust in the
1980s. The high farm prices of the 1970s attracted
additional resources into agriculture both here
436 Federal Reserve Bulletin • June 1985
commercial banks, and a sizable proportion of
the farm loan portfolios of many banks has
become troubled to a greater or lesser degree.
Commercial banks experienced only minimal
problems in their farm loan portfolios during the
1970s. Such problems began to pick up in 1981
and have been increasing steadily since then.
One indication of the deterioration in the quality
of agricultural loans at banks that has occured
since then is provided by data on delinquencies
and charge-offs. While not all banks are required
to report such data for their farm loans, from
available information our staff estimates that at
the end of 1984 nonaccrual farm production loans
at all banks in the nation totaled about $1.5
billion, and other nonperforming loans—those
past due 90 days or more but still accruing
interest, plus renegotiated troubled loans—totaled about $0.5 billion. In addition, about $1.0
billion of farm production loans were past due 30
to 89 days. Altogether, these poor-performing
and nonperforming loans constituted about IVi
percent of all farm production loans.
In addition, net charge-offs of farm loans at all
commercial banks are estimated to have been
about $900 million in 1984, or a bit more than 2
percent of outstandings. Of this total, $240 million was reported by banks in California, representing about 6 percent of their outstanding farm
loans. While California banks led the nation in
charge-offs, these losses presented less of a
problem for these banks than for banks in many
other states. This was because most of the losses
were booked by major banks with large branching systems in which agricultural loans constituted a relatively small proportion of their total
asset portfolios. In contrast, many banks operating in agricultural areas of states that limit
branching—states found mainly in the Midwest—have had more trouble accommodating to
their loan losses because of the high concentration of these loans in their asset portfolios.
Last year's high charge-offs and an increase in
provision of loan-loss reserves had a markedly
depressing effect on the profitability of many
agricultural banks (banks at which the ratio of
farm loans to total loans exceeds the average of
such ratios at all banks, currently about 17
percent). On average, returns on equity fell to 9
percent, down from returns averaging between
14 and 16 percent in every year from 1973
through 1982. There was great variation in earnings recorded among agricultural banks, however, mainly reflecting a sharp difference in loanloss experience. Thus, 12 percent of these banks
reported negative earnings last year, and another
9 percent recorded only minimal positive earnings. At the same time, over half earned more
than 10 percent on equity, and nearly a fifth,
more than 15 percent.
In the aggregate, earnings of agricultural banks
were high enough to permit a further buildup in
the average capital ratio of these banks, and the
capital ratios of most agricultural banks remain
high relative to those at nonfarm banks. But
more farm banks seem certain to come under
financial strain if farm loan losses continue and
intensify. Moreover, as I have noted, a small but
troubling number of farm banks experiencing
relatively high loan losses have already suffered
an erosion of their capital base, thus increasing
their vulnerability to failure should such losses
continue.
Such extremely adverse results have been
occurring in small but increasing numbers. Last
year, 32 agricultural banks failed—mostly in the
second half of the year—compared with only 7 in
1983. Many of these banks came from a group
that had reported delinquent loans at the beginning of the year in excess of the capital of the
bank. Unfortunately, the number of agricultural
banks in this condition, while still a relatively
small proportion of the 5,000 agricultural banks,
rose further during 1984. At 102 agricultural
banks, nonperforming loans at the beginning of
this year exceeded total capital, up from 44 a
year earlier. Moreover, at 240 agricultural banks,
the combined sum of past-due and nonperforming loans exceeded total capital, up from 133 a
year earlier. Thus agricultural bank failures seem
likely to rise further in 1985—indeed 17 farm
bank failures already have occurred.
To sum up the current situation, while the
incomes of the great bulk of our farmers have
been reduced since the beginning of this decade,
those that got heavily into debt in the 1970s are
primarily the ones experiencing serious financial
strains, with the severity of these strains increasing with the degree of their leveraging. While
such farmers constitute only about one-third of
all farmers, they account for about two-thirds of
all agricultural debt. As many of these borrowers
Statements to Congress
have found it increasingly difficult to service
their loans, banks and other agricultural lenders
have been encountering increasing problems. To
date, information suggests that the great majority
of farm banks remain in good condition despite
these problems, but a significant and growing
number is experiencing an increasing degree of
strain.
That so many of our farm banks remain in
relatively strong condition after five years of
depressed conditions in the agricultural sector
stands, I believe, as a tribute to their management. This rather clearly suggests that these
banks generally followed prudent standards in
extending credit to their farm customers during
the boom times of the 1970s, standards that
tended to hold down the degree of leveraging
permitted individual customers—and in the process helped to dampen tendencies for these customers to become overextended. In addition,
many farm banks followed policies that permitted them to maintain reasonably diversified asset
portfolios.
Banks that failed to adhere to high standards of
quality and asset diversity have been considerably more vulnerable to the effects of deteriorating circumstances of agricultural borrowers. One
can point to situations in which a bank that is
failing or in extremely troubled condition is located in close proximity to one or more other
banks that remain in good condition. In addition,
I understand that the Federal Deposit Insurance
Corporation (FDIC), in a study it conducted of
the banks that failed in 1984, found evidence of
various kinds of abusive practices, including
improper insider transactions, instances of possible fraud, and other forms of irregular management activities.
The management policies and practices of
banks, of course, tend to vary along a continuum. Thus, the longer conditions in the agricultural sector remain depressed, the greater will be
the number of banks experiencing problems of
greater severity. As I have noted, that process is
already quite observable in the trends of recent
years. Since no dramatic change appears likely in
the current balance between supply and demand
in agricultural markets, such trends seem almost
certain to continue for some time to come. Put
more directly and graphically, it seems quite
possible that many more agricultural banks and
437
their farmer customers will experience severe
financial dislocations over the next several
years. I should hasten to add that at present it
still appears that most farmers and farm banks
have sufficient financial strength to weather
these conditions, although admittedly not without growing strains and problems.
The debt adjustment program, first announced
by the administration last September and then
modified in March, will offer farm banks and
their farmer customers some assistance in moving through the difficult transition period that
appears to lie ahead. As committee members
know, under this program the government will
guarantee most of the remainder of a troubled
farm loan after the lender reduces the principal
amount (or an equivalent in interest charges) 10
percent or more as needed to reduce the borrower's debt service burden to a level that he appears able to handle. As of April 15, the Farmers
Home Administration had received only 401 applications for such guarantees and had guaranteed 129 loans totaling $19.5 million. The flow of
applications has been increasing gradually since
the program was revised on March 13, however,
and it seems quite reasonable to expect banks
and their farm customers to make greater use of
these guarantees if problems in the agricultural
sector persist. I understand also that the Farmers
Home Administration, under its regular loan
guarantee program, this year has guaranteed a
substantially larger volume of farm operating
loans than in preceding years.
The Federal Reserve also revised and extended its seasonal lending program in March of this
year with the objective of making sure that
agricultural banks will have sufficient liquidity to
provide needed production loans to their farmer
customers. The regular seasonal program, in
place since 1973, provides discount window
credit to depository institutions with limited access to national money markets that experience
recurring seasonal swings in net needs for funds
because of the way their deposit flows fluctuate
relative to their loan demands. This existing
program was liberalized to increase the portion
of the seasonal funding needs that the Federal
Reserve stands ready to supply to small and
midsized institutions. In addition, a temporary,
simplified seasonal program has been established
as an alternative source of seasonal credit.
438 Federal Reserve Bulletin • June 1985
Aimed particularly at smaller banks substantially
involved in agricultural lending, this program
offers institutions with total loan growth above a
base amount of 2 percent the opportunity to fund
half of any further loan expansion through discount window loans, up to a maximum amount of
5 percent of the institution's total deposits.
In announcing the broadening of its seasonal
credit program, the Federal Reserve noted that
there were few if any signs to indicate that
agricultural banks generally would experience
any unusual shortfall of liquidity. The action was
taken, nevertheless, to have in place a means to
offset any unforeseen liquidity strains that might
arise in local areas or for individual banks, thus
threatening the necessary flow of credit to farmers. Thus far, total borrowing in our seasonal
program has been running somewhat below last
year's levels. But seasonal credit needs normally
continue to expand through the spring and summer and may yet begin to outpace the available
liquidity of some farm banks.
The Federal Reserve, as well as the other
federal banking agencies, has also recently reiterated its policy of instructing bank examiners to
refrain from taking supervisory actions that
would discourage banks from exercising appropriate forbearance when working with farmers or
other small businesses with delinquent loans. It
is not the intent of this policy to encourage or
permit loan decisions that are inconsistent with a
bank's long-term safety and soundness. The policy recognizes, however, that if there is good
reason to believe a borrower's difficulties are
temporary in nature, it is prudent banking policy
to extend due dates on his loans, and in some
cases to grant additional credit to carry him over
a period of distress. Reserve Banks have designated senior review examiners with expertise in
supervising farm banks to oversee the administration of this policy.
I was asked to comment today on another
proposal for assisting troubled agricultural lenders. Legislation has been introduced that would
extend the Net Worth Assistance Program—
currently targeted to provide assistance to real
estate lenders with low capital and weak earnings—to farm banks. Under this proposed program, the FDIC would stand ready to swap its
promissory notes for the net worth certificates of
those farm lenders whose capital positions have
fallen significantly below regulatory standards
and who have suffered negative earnings in two
preceding quarters. The swap is supposed to be
reversed when the institution regains its health.
While no new funds or permanent capital are
provided by this program, it would permit an
institution to continue operating with a level of
stockholder equity below that which regulatory
agencies ordinarily require. In addition, since the
FDIC's promise would be a general asset of the
bank and thus available to meet the demands of
depositors and other creditors in the event the
bank were liquidated, it would provide some
reassurance to the holders of uninsured liabilities
of troubled banks.
At present, the coverage of this proposed
program would be quite limited, since the vast
majority of farm banks remain well capitalized
and have positive earnings. Moreover, while the
number of banks that would be eligible for the
program seems likely to grow, there are other
important drawbacks to be considered. As presently formulated, the program would provide aid
to a bank regardless of whether its problems are
temporary or permanent in nature. If the latter, a
clearly better approach would be to achieve an
immediate shift of its resources to a healthy,
better-run institution. In addition, in cases in
which significant loan losses must be taken and
capital is thus eroded, it would be better for an
institution's capital base to be augmented with
new permanent funding sources rather than with
temporary accounting capital that would have to
be replaced over time by the retention of future
earnings.
Taking these points into consideration, I can
see relatively little long-term advantage in the net
worth assistance (NWA) proposal, barring a further substantial deterioration in the condition of
farm banks that reaches systemic proportions.
At present, in cases in which loan losses prove
enough to undermine seriously a bank's capital
position, I would think it better to encourage and
facilitate mergers with stronger banking institutions, particularly those that are not now so
heavily involved in agricultural lending. That
would offer several important advantages. First,
it would transfer control of the institution's lending resources to a bank with a better management record. Second, it would provide an infusion of real, permanent capital into the bank and
Statements to Congress
thus into agricultural lending in general rather
than temporary "accounting" capital as would
occur with NWA certificates. Finally, mergers
with banks outside the community of agricultural
banks would promote greater diversification of
portfolio risk. In this way, the banking system
would come to be better protected against unforeseen developments that, from time to time,
adversely affect the financial health of different
sectors of the economy.
There is no doubt that the agricultural sector
has been going through some very hard times
because of unanticipated weakness in farm product markets that will no longer support the built-
439
in structure of high indebtedness. Many banks
that have concentrated their lending in the farm
area thus are encountering difficulty because of
the inability of farmers to service their debts, and
it may be that more banks will be driven to the
point of bankruptcy. But, as I see it, the best way
to deal with an erosion of capital is to obtain
replacement funds from present or prospective
bank owners. And when the bank's problems
appear too severe and fundamental to handle in
this manner, the best solution is to seek mergers
with other institutions that promise a larger,
more stable, lending and deposit base.
•
440
Announcements
REVISIONS TO GUIDELINES
FOR CAPITAL
ADEQUACY
their primary capital ratios are considered adequate.
The Federal Reserve Board has announced revisions to its guidelines regarding capital adequacy
for state member banks and bank holding companies.
The revised guidelines raise the minimum capital levels for multinational and regional banking
organizations. By doing so, the revised guidelines eliminate the disparity in the minimum
capital requirements between these larger institutions and smaller community state member
banks and bank holding companies by setting a
uniform minimum ratio of primary capital to total
assets of 5.5 percent and a minimum ratio of total
capital to total assets of 6.0 percent. In general,
banking organizations are expected to operate
above the minimum primary and total capital
levels.
This action parallels the recent actions of the
Office of the Comptroller of the Currency (OCC)
and the Federal Deposit Insurance Corporation
(FDIC), resulting in uniform minimum capital
levels being established for all federally supervised banking organizations.
Based on its experience, the Board has continued to include the substantive capital requirements for state member banks and bank holding
companies in guidelines rather than in the form
of a regulation. In addition, the Board has retained the use of total capital zones or target
ranges that help to define various levels of capitalization. The use of such zones or target ranges
provides the management of banking organizations with broad standards for future capital
planning and encourages banking organizations
to maintain total capital levels in excess of the
minimum. The zones are generally defined as the
following:
Zone 2. Institutions operating with total capital
equal to 6 to 7 percent of their total assets may be
considered capitalized at a minimally acceptable
level, subject to consideration of other financial
factors.
Zone 1. Institutions with total capital equal to
at least 7 percent of total assets are generally
considered adequately capitalized, provided
Zone 3. Banking organizations with total capital equal to less than 6 percent of their total
assets are generally considered undercapitalized,
in the absence of clear extenuating circumstances.
The Board has also included in the revised
guidelines a more detailed definitional section
dealing with mandatory convertible securities.
Finally, the Board has adopted a regulation establishing procedures by which the Board may
require a banking organization to maintain the
minimum capital levels, as defined in the revised
guidelines, or higher levels for institutions on a
case-by-case basis.
The Board has made three changes in its
existing capital guidelines for state member
banks in order to define capital more consistently
with the capital regulations of the OCC and the
FDIC. Specifically, the Board has amended the
capital guidelines for state member banks, but
not for bank holding companies: (1) to require
the automatic deduction of goodwill from primary and total capital; (2) to eliminate equity
commitment notes from primary capital; and (3)
to define the capital ratios in terms of average
assets rather than period-end figures.
The guidelines state that the Federal Reserve
will review liquidity and the relationship of all
on- and off-balance-sheet risks to capital, and
will require those institutions with high or inordinate levels of risk to hold additional primary
capital. The guidelines suggest that banking organizations avoid the practice of attempting to
meet capital requirements by decreasing the lev-
441
el of liquid assets in relation to total assets. The
guidelines also indicate that the Federal Reserve
will continue to review the need for more explicit
procedures for factoring on- and off-balancesheet risks into the assessment of capital adequacy.
PUBLICATION OF BANK
HOLDING
COMPANY PERFORMANCE
REPORT
The Federal Reserve Board has announced that
the Bank Holding Company Performance Report
(BHCPR) will be available for sale to the public
for the first time on Monday, April 29, 1985. The
report will also be sent to all bank holding
companies that file the Bank Holding Company
Financial Supplement (FR Y-9).
The BHCPR is a 16-page report containing
balance sheet and income items and financial
ratios that allows detailed financial analysis of
bank holding companies. It will be in the same
format as the Uniform Bank Performance Report
that is issued by the Federal Financial Institutions Examination Council.
The BHCPR will be available approximately
120 days after the December and June reporting
periods. For the December reporting period, the
full report containing consolidated and parent
data for approximately 1,020 bank holding companies will be available as well as a four-page
report on parent-only companies for approximately 800 bank holding companies that have
consolidated assets between $50 million and $100
million. The June BHCPR will be produced for
bank holding companies that are required to
submit the FR Y-9 semiannually.
Copies of individual bank holding company
BHCPRs may be obtained by the public for
$25.00 for the full report and $10.00 for the
parent-only report. BHCPR User's Guides may
be obtained for $6.00 per copy. Order forms may
be obtained from Publications Services, Board of
Governors of the Federal Reserve System,
Washington, D.C. 20551.
GUIDELINES FOR PURCHASE
GOVERNMENT-GUARANTEED
AND SALE OF
LOANS
The Federal Reserve Board has adopted a revised policy for supervising financial institutions
that participate in the purchase and sale of loans
guaranteed by the U.S. government. The policy
updates guidelines first approved in 1979, which
established prudential standards for handling
such loans.
The revised policy reminds financial institutions that premiums received in lieu of servicing
fees, with respect to the selling and servicing
bank, are to be amortized over the life of the
loan, and that, with respect to the purchasing
bank, the premiums paid over the face value of
the note are not guaranteed and are not paid by
the guaranteeing federal agency when the loans
are prepaid or in default. For this reason, the
statement cautions banks against paying inappropriate or excessive premiums.
PUBLICATION OF REPORT ON
PRICED SERVICES IN 1984
The Federal Reserve Board has issued a report
summarizing developments in the priced services
areas for 1984 and providing detailed financial
results of providing those services.
The Board issues a report on priced services
annually and a priced service balance sheet and
income statement quarterly. The financial statements are designed to reflect standard accounting practices, taking into account the nature of
the Federal Reserve's activities and its unique
position in this field.
AMENDMENT
TO REGULATION
AA
The Federal Reserve Board has announced a
final rule amending its Regulation AA (Unfair or
Deceptive Acts or Practices) that will carry out
the Credit Practices Rule recently adopted by the
Federal Trade Commission.
All banks except those savings banks that are
members of the Federal Home Loan Bank System will be affected by the new rule.
The Board's action, effective January 1, 1986,
prohibits banks from entering into any consumer
credit obligation that contains a confession of
judgment clause, a waiver of exemption, an
assignment of future wages to the creditor in the
event of default, or a security interest in the
consumer's household goods other than those
442 Federal Reserve Bulletin • June 1985
purchased with the credit.1 In addition, the rule
prohibits the enforcement of these provisions in
a consumer credit obligation purchased by a
bank.
The rule also forbids the pyramiding of late
charges. Through this practice, a creditor imposes multiple late charges based on a single late
payment that is subsequently paid in full on or
before the next timely payment. As the subsequent timely payments are made, and the late
charge extracted, the late charges begin to pyramid. In addition, the rule requires a creditor to
give a notice to cosigners informing them of the
nature of their obligation and potential liability.
Under the new rule, banks are given the option
of either providing the notice in a separate document or including the notice in the contract
document.
REVISED LIST OF OTC MARGIN
STOCKS
The Federal Reserve Board has published a
revised list of over-the-counter (OTC) stocks
that are subject to its margin regulations, effective May 14, 1985.
The list includes all over-the-counter securities
designated by the Board pursuant to its established criteria as well as all securities qualified
for trading in the national market system (NMS).
This list includes all securities qualified for trading in tier 1 of the NMS through May 14 and
those in tier 2 through April 16, 1985. Additional
OTC securities may be designated as NMS securities in the interim between the Board's quarterly publications and will be immediately marginable. The next publication of the Board's list is
scheduled for August 1985.
This List of Marginable OTC Stocks supersedes the revised List of Marginable OTC Stocks
that was effective on February 12, 1985. Changes
that have been made in the list, which now
includes 2,406 OTC stocks, are as follows: 175
stocks have been included for the first time, 149
under NMS designation; 20 stocks previously on
the list have been removed for substantially
failing to meet the requirements for continued
listing; and 33 stocks have been removed for
reasons such as listing on a national securities
exchange or involvement in an acquisition.
In addition to NMS-designated securities, the
Board will continue to monitor the market activity of other OTC stocks to determine which
stocks meet the requirements for inclusion and
continued inclusion on the list.
REVISED RULES REGARDING
OPPORTUNITY
The Federal Reserve Board has approved for
publication as a final rule its revised Rules Regarding Equal Opportunity, effective June 1,
1985.
The Board revised and expanded its Rules
Regarding Equal Opportunity to include the following procedures:
• Clarify responsibility within the Federal Reserve Board for implementation of the Board's
EEO Program.
• Provide for review of Board decisions on
complaints of discrimination by the Equal Employment Opportunity Commission.
• Provide Board employees and other persons
with the same rights that are provided to employees of other federal agencies and others by the
Age Discrimination in Employment Act, the
Equal Pay Act, and the Rehabilitation Act.
Copies of the Board's revised regulation and
the accompanying Federal Register notice may
be obtained upon request from the Federal Reserve Banks and the Board's Publications Services office.
PROPOSED
1. A confession of judgment clause is a statement by which
the consumer agrees in advance to permit the creditor to
obtain a judgment in the event of default without giving the
debtor prior notice or an opportunity to be heard in court.
Under a waiver of exemption, the consumer waives or limits
state law exemptions sheltering the consumer's home or
other necessities from attachment.
EQUAL
ACTION
The Federal Reserve Board has requested comment by May 28, 1985, on an application by
Compagnie Financiere de Suez and its subsidiary, Banque Indosuez, both of Paris, France, to
deal in foreign currency options traded on a
stock exchange through a joint venture.
Announcements
CHANGES IN BOARD
STAFF
The Board of Governors has announced the
appointment of Florence M. Young as Adviser in
the Division of Federal Reserve Bank Operations, effective April 8, 1985.
Ms. Young has an M.B.A. from Georgia State
University and has been a member of the
Board's staff since July 1972.
The Board has also announced the following
changes in the Legal Division, effective April 15,
1985:
J. Virgil Mattingly, Jr., has been promoted to
Deputy General Counsel.
Richard M. Ashton has been promoted to
Associate General Counsel for Litigation.
Oliver Ireland has been appointed Associate
General Counsel for Monetary Affairs.
Ricki Tigert has been appointed Assistant
General Counsel for International Banking.
Stephen Siciliano has been appointed Special
Assistant to the General Counsel for Administrative Law.
Mr. Ireland holds a B.A. from Yale University
and a J.D. from the University of Texas. He had
been the Associate General Counsel for the
Federal Reserve Bank of Chicago.
443
Ms. Tigert holds a B.A. from Vanderbilt University, an M.A. from the University of North
Carolina, and a J.D. from the University of
Chicago. She had been a senior attorney with the
Treasury Department.
SYSTEM
MEMBERSHIP:
ADMISSION OF STATE BANKS
The following banks were admitted to membership in the Federal Reserve System during the
period April 1 through April 30, 1985:
Arizona
Phoenix . . . . First Business Bank of Arizona
Florida
Orlando
Commercial State Bank
of Orlando
Minnesota
Mora
Kanabec State Bank
Montana
Seeley Lake
First Valley Bank
Texas
Denton
Provident Bank-Denton
Duncanville
First State Bank of Texas
Virginia
Abingdon
Highland Union Bank
445
Legal Developments
AMENDMENTS TO REGULATIONS H, Y, AND
RULES OF PROCEDURE
The Board of Governors of the Federal Reserve System has adopted revised capital adequacy guidelines
and a procedural regulation to permit the Board to
enforce compliance with the revised guidelines. The
amended guidelines and the procedural enforcement
regulation implement section 908 of the International
Lending Supervision Act of 1983 (Public Law 98-181,
Title IX, 97 Stat. 1153, codified at 12 U.S.C. § 3907),
which directs the federal bank supervisory agencies,
i.e., the Board, the Federal Deposit Insurance Corporation ("the FDIC") and the Comptroller of the Currency ("the Comptroller"), to establish minimum and
appropriate levels of capital for federally supervised
banking institutions. Pursuant to its supervisory authority, the Board is promulgating revised capital
guidelines for bank holding companies and state-chartered banks that are members of the Federal Reserve
System.
Capital adequacy is one of the critical factors the
Board is required to analyze in taking action on
various types of applications, such as mergers and
acquisitions by banks and bank holding companies,
and in the conduct of the Board's various supervisory
activities related to the safety and soundness of individual banks and bank holding companies and to the
stability of the banking system.
In amending its capital guidelines, the Board has
adopted, with some changes, the proposal published
for comment on July 30, 1984 (49 Federal Register
30,317).
Effective May 15, 1985, the Board hereby amends
12 C.F.R. parts 208, 225 and 263 as set forth below:
Part 208—Membership of State Banking
Institutions in the Federal Reserve System
1. 12 C.F.R. Part 208 is amended by revising the
authority for the Part, and by adding a new section
208.13 to read as follows:
Authority: 12 U.S.C. 248, 321-338, 486, 1814, 3907,
3909, unless otherwise noted.
Section 208.13—Capital Adequacy
The standards and guidelines by which the capital
adequacy of state member banks will be evaluated by
the Board are set forth in Appendix A to the Board's
Regulation Y, 12 C.F.R. Part 225.
Part 225—Bank Holding Companies and
Change in Bank Control
2. 12 C.F.R. Part 225 is amended, under authority
cited in this part including 12 U.S.C. 1844(b),
18170(13), 1818(b), and Pub. L 98-181, Title IX
(12 U.S.C. 3907 and 3909), by revising Appendix A to
read as follows:
Appendix A—Capital Adequacy Guidelines for
Bank Holding Companies and State Member
Banks
The Board of Governors of the Federal Reserve System has adopted minimum capital ratios and guidelines
to provide a framework for assessing the adequacy of
the capital of bank holding companies and state member banks (collectively "banking organizations"). The
guidelines generally apply to all state member banks
and bank holding companies regardless of size and are
to be used in the examination and supervisory process
as well as in the analysis of applications acted upon by
the Federal Reserve. The Board of Governors will
review the guidelines from time to time for possible
adjustments commensurate with changes in the economy, financial markets, and banking practices.
Two principal measurements of capital are used—
the primary capital ratio and the total capital ratio. The
definitions of primary and total capital for banks and
bank holding companies and formulas for calculating
the capital ratios are set forth below in the definitional
sections of these guidelines.
Capital Guidelines
The Board has established a minimum level of primary
capital to total assets of 5.5 per cent and a minimum
level of total capital to total assets of 6.0 per cent.
Generally, banking organizations are expected to operate above the minimum primary and total capital
446 Federal Reserve Bulletin • June 1985
levels. Those organizations whose operations involve
or are exposed to high or inordinate degrees of risk will
be expected to hold additional capital to compensate
for these risks.
In addition, the Board has established the following
three zones for total capital for banking organizations
of all sizes:
Capital Zones
Zone 1
Zone 2
Zone 3
Total Capital Ratio
Above 7.0%
6.0% to 7.0%
Below 6.0%
The capital guidelines assume adequate liquidity and
a moderate amount of risk in the loan and investment
portfolios and in off-balance sheet activities. The
Board is concerned that some banking organizations
may attempt to comply with the guidelines in ways
that reduce their liquidity or increase risk. Banking
organizations should avoid the practice of attempting
to meet the guidelines by decreasing the level of liquid
assets in relation to total assets. In assessing compliance with the guidelines, the Federal Reserve will take
into account liquidity and the overall degree of risk
associated with an organization's operations, including the volume of assets exposed to risk.
The Federal Reserve will also take into account the
sale of loans or other assets with recourse and the
volume and nature of all off-balance sheet risk. Particularly close attention will be directed to risks associated with standby letters of credit and participation in
joint venture activities. The Federal Reserve will
review the relationship of all on- and off-balance sheet
risks to capital and will require those institutions with
high or inordinate levels of risk to hold additional
primary capital. In addition, the Federal Reserve will
continue to review the need for more explicit procedures for factoring on- and off-balance sheet risks into
the assessment of capital adequacy.
The capital guidelines apply to both banks and bank
holding companies on a consolidated basis. 1 Some
banking organizations are engaged in significant nonbanking activities that typically require capital ratios
higher than those of commercial banks alone. The
1. The guidelines will apply to bank holding companies with less
than $150 million in consolidated assets on a bank-only basis unless (1)
the holding company or any nonbank subsidiary is engaged directly or
indirectly in any nonbank activity involving significant leverage or (2)
the holding company or any nonbank subsidiary has outstanding
significant debt held by the general public. Debt held by the general
public is defined to mean debt held by parties other than financial
institutions, officers, directors, and principal shareholders of the
banking organization or their related interests.
Board believes that, as a matter of both safety and
soundness and competitive equity, the degree of leverage common in banking should not automatically
extend to nonbanking activities. Consequently, in
evaluating the consolidated capital positions of banking organizations, the Board is placing greater weight
on the building-block approach for assessing capital
requirements. This approach generally provides that
nonbank subsidiaries of a banking organization should
maintain levels of capital consistent with the levels
that have been established by industry norms or
standards, by Federal or State regulatory agencies for
similar firms that are not affiliated with banking organizations, or that may be established by the Board after
taking into account risk factors of a particular industry. The assessment of an organization's consolidated
capital adequacy must take into account the amount
and nature of all nonbank activities, and an institution's consolidated capital position should at least
equal the sum of the capital requirements of the
organization's bank and nonbank subsidiaries as well
as those of the parent company.
Supervisory
Action
The nature and intensity of supervisory action will be
determined by an organization's compliance with the
required minimum primary capital ratio as well as by
the zone in which the company's total capital ratio
falls. Banks and bank holding companies with primary
capital ratios below the 5.5 per cent minimum will be
considered undercapitalized unless they can demonstrate clear extenuating circumstances. Such banking
organizations will be required to submit an acceptable
plan for achieving compliance with the capital guidelines and will be subject to denial of applications and
appropriate supervisory enforcement actions.
The zone in which an organization's total capital
ratio falls will normally trigger the following supervisory responses, subject to qualitative analysis:
For institutions operating in Zone 1, the Federal
Reserve will:
-consider that capital is generally adequate if the
primary capital ratio is acceptable to the Federal
Reserve and is above the 5.5 per cent minimum.
For institutions operating in Zone 2, the Federal
Reserve will:
-pay particular attention to financial factors, such as
asset quality, liquidity, off-balance sheet risk, and
interest rate risk, as they relate to the adequacy of
capital. If these areas are deficient and the Federal
Reserve concludes capital is not fully adequate, the
Federal Reserve will intensify its monitoring and
take appropriate supervisory action.
Legal Developments
For institutions operating in Zone 3, the Federal
Reserve will:
-consider that the institution is undercapitalized,
absent clear extenuating circumstances;
-require the institution to submit a comprehensive
capital plan, acceptable to the Federal Reserve,
that includes a program for achieving compliance
with the required minimum ratios within a reasonable time period; and
-institute appropriate supervisory and/or administrative enforcement action, which may include the
issuance of a capital directive or denial of applications, unless a capital plan acceptable to the Federal Reserve has been adopted by the institution.
Treatment of Intangible Assets for the Purpose of
Assessing the Capital Adequacy of Bank Holding
Companies and State Member Banks
In considering the treatment of intangible assets for
the purpose of assessing capital adequacy, the Federal
Reserve recognizes that the determination of the future benefits and useful lives of certain intangible
assets may involve a degree of uncertainty that is not
normally associated with other banking assets. Supervisory concern over intangible assets derives from this
uncertainty and from the possibility that, in the event
an organization experiences financial difficulties, such
assets may not provide the degree of support generally
associated with other assets. For this reason, the
Federal Reserve will carefully review the level and
specific character of intangible assets in evaluating the
capital adequacy of state member banks and bank
holding companies.
The Federal Reserve recognizes that intangible assets may differ with respect to predictability of any
income stream directly associated with a particular
asset, the existence of a market for the asset, the
ability to sell the asset, or the reliability of any
estimate of the asset's useful life. Certain intangible
assets have predictable income streams and objectively verifiable values and may contribute to an organization's profitability and overall financial strength. The
value of other intangibles, such as goodwill, may
involve a number of assumptions and may be more
subject to changes in general economic circumstances
or to changes in an individual institution's future
prospects. Consequently, the value of such intangible
assets may be difficult to ascertain. Consistent with
prudent banking practices and the principle of the
diversification of risks, banking organizations should
avoid excessive balance sheet concentration in any
category or related categories of intangible assets.
447
Bank Holding Companies. While the Federal Reserve
will consider the amount and nature of all intangible
assets, those holding companies with aggregate intangible assets in excess of 25 per cent of tangible primary
capital (i.e., stated primary capital less all intangible
assets) or those institutions with lesser, although still
significant, amounts of goodwill will be subject to
close scrutiny. For the purpose of assessing capital
adequacy, the Federal Reserve may, on a case-by-case
basis, make adjustments to an organization's capital
ratios based upon the amount of intangible assets in
excess of the 25 per cent threshold level or upon the
specific character of the organization's intangible assets in relation to its overall financial condition. Such
adjustments may require some organizations to raise
additional capital.
The Board expects banking organizations (including
state member banks) contemplating expansion proposals to ensure that pro forma capital ratios exceed the
minimum capital levels without significant reliance on
intangibles, particularly goodwill. Consequently, in
reviewing acquisition proposals, the Board will take
into consideration both the stated primary capital ratio
(that is, the ratio without any adjustment for intangible
assets) and the primary capital ratio after deducting
intangibles. In acting on applications, the Board will
take into account the nature and amount of intangible
assets and will, as appropriate, adjust capital ratios to
include certain intangible assets on a case-by-case
basis.
State Member Banks. State member banks with intangible assets in excess of 25 per cent of tangible primary
capital will be subject to close scrutiny. In addition,
for the purpose of calculating capital ratios of state
member banks, the Federal Reserve will deduct goodwill from primary capital and total capital. The Federal
Reserve may, on a case-by-case basis, make further
adjustments to a bank's capital ratios based on the
amount of intangible assets (aside from goodwill) in
excess of the 25 per cent threshold level or on the
specific character of the bank's intangible assets in
relation to its overall financial condition. Such adjustments may require some banks to raise additional
capital.
In addition, state member banks and bank holding
companies are expected to review periodically the
value at which intangible assets are carried on their
balance sheets to determine whether there has been
any impairment of value or whether changing circumstances warrant a shortening of amortization periods.
Institutions should make appropriate reductions in
carrying values and amortization periods in light of
this review, and examiners will evaluate the treatment
of intangible assets during on-site examinations.
448 Federal Reserve Bulletin • June 1985
Definition of Capital to be Used in Determining
Capital Adequacy of Bank Holding Companies
and State Member Banks
Primary Capital
Components
The components of primary capital are:
-common stock,
-perpetual preferred stock (preferred stock that does
not have a stated maturity date and that may not be
redeemed at the option of the holder),
-surplus (excluding surplus relating to limited-life preferred stock),
-undivided profits,
-contingency and other capital reserves,
-mandatory convertible instruments, 2
-allowance for possible loan and lease losses (exclusive of allocated transfer risk reserves),
-minority interest in equity accounts of consolidated
subsidiaries.
Secondary Capital
As secondary capital components approach maturity, the banking organization must plan to redeem or
replace the instruments while maintaining an adequate
overall capital position. Thus, the remaining maturity
of secondary capital components will be an important consideration in assessing the adequacy of total
capital.
Capital Ratios
The primary and total capital ratios for bank holding
companies are computed as follows:
Primary capital ratio:
Restrictions Relating to Capital
Components
To qualify as primary or secondary capital, a capital
instrument should not contain or be covered by any
covenants, terms, or restrictions that are inconsistent
with safe and sound banking practices. Examples of
such terms are those regarded as unduly interfering
with the ability of the bank or holding company to
conduct normal banking operations or those resulting
in significantly higher dividends or interest payments
in the event of a deterioration in the financial condition
of the issuer.
The secondary components must meet the following
conditions to qualify as capital:
-The instrument must have an original weighted-average maturity of at least seven years.
-The instrument must be unsecured.
-The instrument must clearly state on its face that it is
not a deposit and is not insured by a federal agency.
-Bank debt instruments must be subordinated to
claims of depositors.
2. See the definitional section below that lists the criteria for
mandatory convertible instruments to qualify as primary capital.
Primary capital components
Total assets + Allowance for loan
and lease losses (exclusive of
allocated transfer risk reserves)
Components
The components of secondary capital are:
-limited-life preferred stock (including related surplus)
and
-bank subordinated notes and debentures and unsecured long-term debt of the parent company and its
nonbank subsidiaries.
- F o r banks only, the aggregate amount of limited-life
preferred stock and subordinate debt qualifying as
capital may not exceed 50 per cent of the amount of
the bank's primary capital.
Total capital ratio:
Primary capital components +
Secondary capital components
Total assets + Allowance for loan
and lease losses (exclusive of
allocated transfer risk reserves)
The primary and total capital ratios for state member banks are computed as follows:
Primary
capital
ratio:
Primary capital
components - Goodwill
Average total assets + Allowance
for loan and lease losses
(exclusive of allocated transfer
risk reserves) - Goodwill
Total capital ratio:
Primary capital components +
Secondary capital
components - Goodwill
Average total assets + Allowance
for loan and lease losses
(exclusive of allocated transfer
risk reserves) - Goodwill
Generally, period-end amounts will be used to calculate bank holding company ratios. However, the
Federal Reserve will discourage temporary balance
sheet adjustments or any other "window dressing"
practices designed to achieve transitory compliance
with the guidelines. Banking organizations are expected to maintain adequate capital positions at all times.
Thus, the Federal Reserve will, on a case-by-case
basis, use average total assets in the calculation of
Legal Developments
bank holding company capital ratios whenever this
approach provides a more meaningful indication of an
individual holding company's capital position.
For the calculation of bank capital ratios, "average
total assets" will generally be defined as the quarterly
average total assets figure reported on the bank's
Report of Condition. If warranted, however, the Federal Reserve may calculate bank capital ratios based
upon total assets as of period-end. All other components of the bank's capital ratios will be based upon
period-end balances.
Criteria for Determining the Primary Capital
Status of Mandatory Convertible Securities of
Bank Holding Companies and State Member
Banks
Mandatory convertible securities are subordinated
debt instruments that are eventually transformed into
common or perpetual preferred stock within a specified period of time, not to exceed 12 years. To be
counted as primary capital, mandatory convertible
securities must meet the criteria set forth below. These
criteria cover the two basic types of mandatory convertible securities: "equity contract notes"—securities that obligate the holder to take common or perpetual preferred stock of the issuer in lieu of cash for
repayment of principal, and "equity commitment
notes"—securities that are redeemable only with the
proceeds from the sale of common or perpetual preferred stock. Both equity commitment notes and equity contract notes qualify as primary capital for bank
holding companies, but only equity contract notes
qualify as primary capital for banks.3
Criteria Applicable to Both Types of Mandatory
Convertible Securities
a. The securities must mature in 12 years or less.
b. The maximum amount of mandatory convertible
securities that may be counted as primary capital is
limited to 20 per cent of primary capital, exclusive of
mandatory convertible securities.4 (Amounts outstanding in excess of the 20 per cent limitation may be
counted as secondary capital provided they meet the
requirements of secondary capital instruments.)
c. The issuer may redeem securities prior to maturity
only with the proceeds from the sale of common or
3. Equity commitment notes that were issued by state member
banks prior to May 15, 1985 will continue to be included in primary
capital.
4. The maximum amount of equity commitment notes that may be
counted as primary capital is limited to 10 per cent of primary capital
exclusive of mandatory convertible securities.
449
perpetual preferred stock of the bank or bank holding
company. Any exception to this rule must be approved
by the Federal Reserve. The securities may not be
redeemed with the proceeds of another issue of mandatory convertible securities. Nor may the issuer
repurchase or acquire its own mandatory convertible
securities for resale or reissuance.
d. Holders of the securities may not accelerate the
payment of principal except in the event of bankruptcy, insolvency, or reorganization.
e. The securities must be subordinate in right of
payment to all senior indebtedness of the issuer. In the
event that the proceeds of the securities are reloaned
to an affiliate, the loan must be subordinated to the
same degree as the original issue.
f. An issuer that intends to dedicate the proceeds of an
issue of common or perpetual preferred stock to
satisfy the funding requirements of an issue of mandatory convertible securities (i.e., the requirement to
retire or redeem the notes with the proceeds from the
issuance of common or perpetual preferred stock)
generally must make such a dedication during the
quarter in which the new common or preferred stock is
issued.5 As a general rule, if the dedication is not made
within the prescribed period, then the securities issued
may not at a later date be dedicated to the retirement
or redemption of the mandatory convertible securities.6
Additional Criteria Applicable to Equity
Notes
Contract
a. The note must contain a contractual provision (or
must be issued with a mandatory stock purchase
contract) that requires the holder of the instrument to
take the common or perpetual stock of the issuer in
lieu of cash in satisfaction of the claim for principal
5. Common or perpetual preferred stock issued under dividend
reinvestment plans or issued to finance acquisitions, including acquisitions of business entities, may be dedicated to the retirement or
redemption of the mandatory convertible securities. Documentation
certified by an authorized agent of the issuer showing the amount of
common stock or perpetual preferred stock issued, the dates of issue,
and amounts of such issues dedicated to the retirement or redemption
of mandatory convertible securities will satisfy the dedication requirement.
6. The dedication procedure is necessary to ensure that the primary
capital of the issuer is not overstated. For each dollar of common or
perpetual preferred proceeds dedicated to the retirement or redemption of the notes, there is a corresponding reduction in the amount of
outstanding mandatory securities that may qualify as primary capital.
De minimis amounts (in relation to primary capital) of common or
perpetual preferred stock issued under arrangements in which the
amount of stock issued is not predictable, such as dividend reinvestment plans and employee stock option plans (but excluding public
stock offerings and stock issued in connection with acquisitions),
should be dedicated by no later than the company's fiscal year end.
450 Federal Reserve Bulletin • June 1985
repayment. The obligation of the holder to take the
common or perpetual preferred stock of the issuer may
be waived if, and to the extent that, prior to the
maturity date of the obligation, the issuer sells new
common or perpetual preferred stock and dedicates
the proceeds to the retirement or redemption of the
notes. The dedication generally must be made during
the quarter in which the new common or preferred
stock is issued.
b. A stock purchase contract may be separated from a
security only if (1) the holder of the contract provides
sufficient collateral 7 to the issuer, or to an independent
trustee for the benefit of the issuer, to assure performance under the contract and (2) the stock purchase
contract requires the purchase of common or perpetual preferred stock.
Additional Criteria Applicable to Equity
Commitment Notes
a. The indenture or note agreement must contain the
following two provisions:
1. The proceeds of the sale of common or perpetual
preferred stock will be the sole source of repayment
for the notes, and the issuer must dedicate the
proceeds for the purpose of repaying the notes.
(Documentation certified by an authorized agent of
the issuer showing the amount of common or perpetual preferred stock issued, the dates of issue, and
amounts of such issues dedicated to the retirement
or redemption of mandatory convertible securities
will satisfy the dedication requirement.)
2. By the time that one-third of the life of the
securities has run, the issuer must have raised and
dedicated an amount equal to one-third of the original principal of the securities. By the time that twothirds of the life of the securities has run, the issuer
must have raised and dedicated an amount equal to
two-thirds of the original principal of the securities.
At least 60 days prior to the maturity of the securities, the issuer must have raised and dedicated an
amount equal to the entire original principal of the
securities. Proceeds dedicated to redemption or
retirement of the notes must come only from the sale
of common or perpetual preferred stock. 8
b. If the issuer fails to meet any of these periodic
funding requirements, the Federal Reserve immediately will cease to treat the unfunded securities as primary capital and will take appropriate supervisory
action. In addition, failure to meet the funding requirements will be viewed as a breach of a regulatory
commitment and will be taken into consideration by
the Board in acting on statutory applications.
c. If a security is issued by a subsidiary of a bank or
bank holding company, any guarantee of the principal
by that subsidiary's parent bank or bank holding
company must be subordinate to the same degree as
the security issued by the subsidiary and limited to
repayment of the principal amount of the security at its
final maturity.
d. The maximum amount of equity commitment notes
that may be counted as primary capital for a bank
holding company is limited to 10 per cent of primary
capital exclusive of mandatory convertible securities.
Amounts outstanding in excess of the 10 per cent
limitation may be counted as secondary capital provided they meet the requirements of secondary capital
instruments.
Part 263—Rules of Practice for Hearings
3. 12. C.F.R. Part 263 is amended by adding a new
Subpart D, including a section of the authority under
which the Subpart is issued, to read as follows:
Part 263—Rules of Practice for Hearings
Subpart D—Procedures for Issuance and
Enforcement of Directives to Maintain Adequate
Capital
Section 263.35
Section 263.36
Section 263.37
Section 263.38
7. Collateral is defined as: (1) cash or certificates of deposit; (2)
U.S. government securities that will mature prior to or simultaneous
with the maturity of the equity contract and that have a par or maturity
value at least equal to the amount of the holder's obligation under the
stock purchase contract; (3) standby letters of credit issued by an
insured U.S. bank that is not an affiliate of the issuer; or (4) other
collateral as may be designated from time to time by the Federal
Reserve.
8. The funded portions of the securities will be deducted from
primary capital to avoid double counting.
Authority, Purpose, and Scope
(a) Authority
(b) Purpose and scope
Definitions
Establishment of Minimum Capital
Levels
Procedures for Requiring Maintenance of Adequate Capital
(a) Submission of capital improvement plan
(b) Issuance of directive
(1) Notice of intent to issue directive
(2) Contents of notice
(3) Response to notice
Legal Developments
(4) Failure to file response
(5) Board consideration of response
(6) Contents of directive
(7) Request for reconsideration of
directive
Section 263.39 Enforcement of Directive
(a) Judicial and administrative remedies
(b) Other enforcement actions
(c) Consideration in application proceedings
Section 263.40 Establishment of Increased Capital
Level for Individual Bank or Bank
Holding Company
(a) Establishment of capital levels
for individual institution
(b) Procedure to establish higher
capital requirement
(1) Notice
(2) Response
(3) Board decision
(4) Enforcement of higher capital
level
Subpart D—Procedures for Issuance and
Enforcement of Directives to Maintain
Adequate Capital
Section 263.35—Authority, Purpose, and Scope
(a) Authority. This subpart is issued under authority of
the International Lending Supervision Act of 1983
("ILSA"), 12 U.S.C. 3907, 3909; section 5(b) of the
Bank Holding Company Act ("BHC Act"), 12 U.S.C.
1844(b); the Financial Institutions Supervisory Act of
1966 ("FIS Act"), 12 U.S.C. 1818(b)-(n); and sections
9 and ll(i) of the Federal Reserve Act, 12 U.S.C. 248,
324, 329.
(b) Purpose and scope. This subpart establishes procedures under which the Board may issue a directive or
take other action to require a state member bank or a
bank holding company to achieve and maintain adequate capital. The information collection requirement
contained in this regulation has been approved by the
Office of Managment and Budget under the provisions
of 44 U.S.C. Chapter 35 and has been assigned OMB
No. 7100-0209.
Section 263.36—Definitions
(a) "Bank holding company" means any company that
controls a bank as defined in section 2 of the BHC Act,
12 U.S.C. 1841, and in the Board's Regulation Y
451
(12 C.F.R. 225.2(b)) or any direct or indirect subsidiary thereof other than a bank subsidiary as defined in
section 2(c) of the BHC Act, 12 U.S.C. 1841(c), and in
the Board's Regulation Y (12 C.F.R. 225.2(a)).
(b) "Capital Adequacy Guidelines" means those
guidelines for bank holding companies and state member banks contained in Appendix A to the Board's
Regulation Y (12 C.F.R. Part 225).
(c) "Directive" means a final order issued by the
Board pursuant to ILSA (12 U.S.C. 3907(b)(2)) requiring a state member bank or bank holding company to
increase capital to or maintain capital at the minimum
level set forth in the Board's Capital Adequacy Guidelines or as otherwise established under procedures
described in section 263.40 of this subpart.
(d) "State member bank" means any state-chartered
bank that is a member of the Federal Reserve System.
Section 263.37—Establishment of Minimum
Capital Levels
The Board has established minimum capital levels for
state member banks and bank holding companies in its
Capital Adequacy Guidelines. The Board may set
higher capital levels as necessary and appropriate for a
particular state member bank or bank holding company based upon its financial condition, managerial
resources, prospects, or similar factors, pursuant to
the procedures set forth in section 263.40 of this
subpart.
Section 263.38—Procedures for Requiring
Maintenance of Adequate Capital
(a) Submission of capital improvement plan. Any state
member bank or bank holding company that may not
be in compliance with the Board's Capital Adequacy
Guidelines on the date that this regulation becomes
effective shall, within 90 days, submit to its appropriate Federal Reserve Bank for review a plan describing
the means and the time schedule by which the bank or
bank holding company shall achieve the required
minimum level of capital.
(b) Issuance of directive.
(1) Notice of intent to issue directive. If a state
member bank or bank holding company is operating
with less than the minimum level of capital established in the Board's Capital Adequacy Guidelines,
or as otherwise established under the procedures
described in section 263.40 of this subpart, the
Board may issue and serve upon such state member
bank or bank holding company written notice of the
452 Federal Reserve Bulletin • June 1985
Board's intent to issue a directive to require the
bank or bank holding company to achieve and
maintain adequate capital within a specified time
period.
(2) Contents of notice. The notice of intent to issue a
directive shall include:
(i) the required minimum level of capital to be
achieved or maintained by the institution;
(ii) its current level of capital;
(iii) the proposed increase in capital needed to
meet the minimum requirements;
(iv) the proposed date or schedule for meeting
these minimum requirements;
(v) when deemed appropriate, specific details of a
proposed plan for meeting the minimum capital
requirements; and
(vi) the date for a written response by the bank or
bank holding company to the proposed directive,
which shall be at least 14 days from the date of
issuance of the notice unless the Board determines a shorter period is necessary because of the
financial condition of the bank or bank holding
company.
(3) Response to notice. The bank or bank holding
company may file a written response to the notice
within the time period set by the Board. The response may include:
(i) an explanation why a directive should not be
issued;
(ii) any proposed modification of the terms of the
directive;
(iii) any relevant information, mitigating circumstances, documentation or other evidence in support of the institution's position regarding the
proposed directive; and
(iv) the institution's plan for attaining the required
level of capital.
(4) Failure to file response. Failure by the bank or
bank holding company to file a written response to
the notice of intent to issue a directive within the
specified time period shall constitute a waiver of the
opportunity to respond and shall constitute consent
to the issuance of such directive.
(5) Board consideration of response. After considering the response of the bank or bank holding company, the Board may:
(i) issue the directive as originally proposed or in
modified form;
(ii) determine not to issue a directive and so notify
the bank or bank holding company; or
(iii) seek additional information or clarification of
the response by the bank or bank holding company.
(6) Contents of directive. Any directive issued by
the Board may order the bank or bank holding
company to:
(i) achieve or maintain the minimum capital requirement established pursuant to the Board's
Capital Adequacy Guidelines or the procedures in
section 263.40 of this subpart by a certain date;
(ii) adhere to a previously submitted plan or
submit for approval and adhere to a plan for
achieving the minimum capital requirement by a
certain date;
(iii) take other specific action as the Board directs
to achieve the minimum capital levels, including
requiring a reduction of assets or asset growth or
restriction on the payment of dividends; or
(iv) a combination of the above actions.
(7) Request for reconsideration of directive. Any
state member bank or bank holding company, upon
a change in circumstances, may request the Board
to reconsider the terms of a directive and may
propose changes in the plan under which it is
operating to meet the required minimum capital
level. The directive and plan continue in effect while
such request is pending before the Board.
Section 263.39—Enforcement of Directive
(a) Judicial and administrative
remedies.
(1) Whenever a bank or bank holding company fails
to follow a directive issued under this subpart, or to
submit or adhere to a capital adequacy plan as
required by such directive, the Board may seek
enforcement of the directive, including the capital
adequacy plan, in the appropriate United States
district court, pursuant to section 908(b)(2)(B)(ii) of
ILSA (12 U.S.C. 3907(b)(2)(B)(ii) and to section 8(i)
of the Federal Deposit Insurance Act (12 U.S.C.
1818(i)), in the same manner and to the same extent
as if the directive were a final cease and desist order.
(2) The Board, pursuant to section 910(d) of ILSA
(12 U.S.C. 3909(d)), may also assess civil money
penalties for violation of the directive against any
bank or bank holding company and any officer,
director, employee, agent, or other person participating in the conduct of the affairs of the bank or
bank holding company, in the same manner and to
the same extent as if the directive were a final cease
and desist order.
(b) Other enforcement actions. A directive may be
issued separately, in conjunction with, or in addition
to any other enforcement actions available to the
Board, including issuance of cease and desist orders,
the approval or denial of applications or notices, or
any other actions authorized by law.
(c) Consideration in application proceedings. In acting
upon any application or notice submitted to the Board
Legal Developments
pursuant to any statute administered by the Board, the
Board may consider the progress of a state member
bank or bank holding company or any subsidiary
thereof in adhering to any directive or capital adequacy plan required by the Board pursuant to this subpart,
or by any other appropriate banking supervisory agency pursuant to ILSA. The Board shall consider whether approval or a notice of intent not to disapprove
would divert earnings, diminish capital, or otherwise
impede the bank or bank holding company in achieving its required minimum capital level or complying
with its capital adequacy plan.
Section 263.40—Establishment of Increased
Capital Level for Individual Bank or Bank
Holding Company
(a) Establishment of capital levels for individual institutions. The Board may establish a capital level higher
than that specified in the Board's Capital Adequacy
Guidelines for an individual bank or bank holding
company pursuant to:
(1) a written agreement or memorandum of understanding between the Board or the appropriate Federal Reserve Bank and the bank or bank holding
company;
(2) a temporary or final cease and desist order issued
pursuant to section 8(b) or (c) of the FIS Act
(12 U.S.C. § 1818(b) or (c));
(3) a condition for approval of an application or
issuance of a notice of intent not to disapprove a
proposal;
(4) or other similar means; or
(5) the procedures set forth in subsection (b) of this
section.
(b) Procedure to establish higher capital requirement.
(1) Notice. When the Board determines that capital
levels above those in the Board's Capital Adequacy
Guidelines may be necessary and appropriate for a
particular bank or bank holding company under the
circumstances, the Board shall give the bank or
bank holding company notice of the proposed higher
capital requirement and shall permit the bank or
bank holding company an opportunity to comment
upon the proposed capital level, whether it should
be required and, if so, under what time schedule.
The notice shall contain the Board's reasons for
proposing a higher level of capital.
(2) Response. The bank or bank holding company
shall be allowed at least 14 days to respond, unless
the Board determines that a shorter period is necessary because of the financial condition of the bank
or bank holding company. Failure by the bank or
bank holding company to file a written response to
the notice within the time set by the Board shall
453
constitute a waiver of the opportunity to respond
and shall constitute consent to issuance of a directive containing the required minimum capital level.
(3) Board decision. After considering the response
of the institution, the Board may issue a written
directive to the bank or bank holding company
setting an appropriate capital level and the date on
which this capital level will become effective. The
Board may require the bank or bank holding company to submit and adhere to a plan for achieving such
higher capital level as the Board may set.
(4) Enforcement of higher capital level. The Board
may enforce the capital level established pursuant to
the procedures described in this section and any
plan submitted to achieve that capital level through
the procedures set forth in section 263.39 of this
subpart.
AMENDMENTS TO REGULATION
AA
The Board is publishing a final rule amending Regulation AA (Unfair or Deceptive Acts or Practices) to
implement, as to banks, the Credit Practices Rule
adopted by the Federal Trade Commission. The Federal Trade Commission Act requires the Board to
adopt a rule, subject to certain exceptions, that is
substantially similar to the Commission's rule. This
rule prohibits banks from entering into any consumer
credit obligation that contains certain prohibited provisions, from pyramiding late charges, or from obligating
a cosigner without a required notice. The rule also
prohibits the enforcement of any prohibited provisions
contained in a consumer credit obligation purchased
by a bank.
Effective January 1, 1986, the Board is amending
Regulation AA, 12 C.F.R. Part 227, by redesignating
the current provisions as Subpart A and adding a new
Subpart B, as follows:
Part 227—Unfair or Deceptive Acts or
Practices
Subpart A—Consumer
Complaints
Subpart B—Credit Practices
Section
Section
Section
Section
227.11
227.12
227.13
227.14
Section 227.15
Section 227.16
Rule
Authority, purpose, and scope
Definitions
Unfair credit contract provisions
Unfair or deceptive practices involving cosigners
Unfair late charges
State exemptions
454 Federal Reserve Bulletin • June 1985
Authority: 15 U.S.C. 57a.
Subpart A—Consumer Complaints
Subpart B—Credit Practices Rule
Section 227.11—Authority, Purpose, and Scope
(a) Authority. This subpart is issued by the Board
under section 18(f) of the Federal Trade Commission
Act, 15 U.S.C. 57a(f) (§ 202(a) of the Magnuson-Moss
Warranty—Federal Trade Commission Improvement
Act, Pub. L. 93-637).
(b) Purpose. Unfair or deceptive acts or practices in or
affecting commerce are unlawful under section 5(a)(1)
of the Federal Trade Commission Act, 15 U.S.C.
45(a)(1). This subpart defines unfair or deceptive acts
or practices of banks in connection with extensions of
credit to consumers.
(c) Scope. This subpart applies to all banks and their
subsidiaries, except savings banks that are members of
the Federal Home Loan Bank System. Compliance is
to be enforced by:
(1) the Comptroller of the Currency, in the case of
national banks and banks operating under the code
of laws for the District of Columbia;
(2) the Board of Governors of the Federal Reserve
System, in the case of banks that are members of the
Federal Reserve System (other than banks referred
to in paragraph (c)(1) of this section); and
(3) the Federal Deposit Insurance Corporation, in
the case of banks insured by the Federal Deposit
Insurance Corporation (other than banks referred to
in paragraphs (c)(1) and (c)(2) of this section).
Section 227.12—Definitions
For the purposes of this subpart, the following definitions apply:
(a) "Consumer" means a natural person who seeks or
acquires goods, services, or money for personal, family, or household use other than for the purchase of
real property.
(b)(1) "Cosigner" means a natural person who assumes
liability for the obligation of a consumer without
receiving goods, services, or money in return for the
obligation, or, in the case of an open-end credit
obligation, without receiving the contractual right to
obtain extensions of credit under the account.
(2) "Cosigner" includes any person whose signature
is requested as a condition to granting credit to a
consumer, or as a condition for forbearance on
collection of a consumer's obligation that is in
default. The term does not include a spouse whose
signature is required on a credit obligation to perfect
a security interest pursuant to state law.
(3) A person who meets the definition in this paragraph is a "cosigner," whether or not the person is
designated as such on the credit obligation.
(c) "Earnings" means compensation paid or payable
to an individual or for the individual's account for
personal services rendered or to be rendered by the
individual, whether denominated as wages, salary,
commission, bonus, or otherwise, including periodic
payments pursuant to a pension, retirement, or disability program.
(d) "Household goods" means clothing, furniture,
appliances, linens, china, crockery, kitchenware, and
personal effects of the consumer and the consumer's
dependents. The term "household goods" does not
include:
(1) works of art;
(2) electronic entertainment equipment (other than
one television and one radio);
(3) items acquired as antiques; that is, items over
one hundred years of age, including such items that
have been repaired or renovated without changing
their original form or character; and
(4) jewelry (other than wedding rings).
(e) "Obligation" means an agreement between a consumer and a creditor.
(f) "Person" means an individual, corporation, or
other business organization.
Section 227.13—Unfair Credit Contract
Provisions
It is an unfair act or practice for a bank to enter into a
consumer credit obligation that contains, or to enforce
in a consumer credit obligation purchased by the bank,
any of the following provisions:
(a) Confession of judgment. A cognovit or confession
of judgment (for purposes other than executory process in the State of Louisiana), warrant of attorney, or
other waiver of the right to notice and the opportunity
to be heard in the event of suit or process thereon.
(b) Waiver of exemption. An executory waiver or a
limitation of exemption from attachment, execution,
Legal Developments
455
or other process on real or personal property held,
owned by, or due to the consumer, unless the waiver
applies solely to property subject to a security interest
executed in connection with the obligation.
against the borrower, such as suing you, garnishing your
wages, etc. If this debt is ever in default, that fact may
become a part of your credit record.
This notice is not the contract that makes you liable for
the debt.
(c) Assignment of wages. An assignment of wages or
other earnings unless:
(1) the assignment by its terms is revocable at the
will of the debtor;
(2) the assignment is a payroll deduction plan or
preauthorized payment plan, commencing at the
time of the transaction, in which the consumer
authorizes a series of wage deductions as a method
of making each payment; or
(3) the assignment applies only to wages or other
earnings already earned at the time of the assignment.
(2) In the case of open-end credit, the disclosure
statement shall be given to the cosigner prior to the
time that the cosigner becomes obligated for fees or
transactions on the account.
(3) A bank that is in compliance with this paragraph
may not be held in violation of paragraph (a)(2) of
this section.
(d) Security interest in household goods. A nonpossessory security interest in household goods other than a
purchase money security interest.
Section 227.14—Unfair or Deceptive Practices
Involving Cosigners
(a) Prohibited practices. In connection with the extension of credit to consumers, it is:
(1) a deceptive act or practice for a bank to misrepresent the nature or extent of cosigner liability to
any person; and
(2) an unfair act or practice for a bank to obligate a
cosigner unless the cosigner is informed prior to
becoming obligated of the nature of the cosigner's
liability.
(b) Disclosure requirement.
(1) A clear and conspicuous disclosure statement
shall be given in writing to the cosigner prior to
becoming obligated. The disclosure statement shall
be substantially similar to the following statement
and shall either be a separate document or included
in the documents evidencing the consumer credit
obligation.
Notice to Cosigner
You are being asked to guarantee this debt. Think
carefully before you do. If the borrower doesn't pay the
debt, you will have to. Be sure you can afford to pay if
you have to, and that you want to accept this responsibility.
You may have to play up to the full amount of the debt
if the borrower does not pay. You may also have to pay
late fees or collection costs, which increase this amount.
The bank can collect this debt from you without first
trying to collect from the borrower. The bank can use the
same collection methods against you that can be used
Section 227.15—Unfair Late Charges
(a) In connection with collecting a debt arising out of
an extension of credit to a consumer, it is an unfair act
or practice for a bank to levy or collect any deliquency
charge on a payment, when the only delinquency is
attributable to late fees or delinquency charges assessed on earlier installments, and the payment is
otherwise a full payment for the applicable period and
is paid on its due date or within an applicable grace
period.
(b) For the purposes of this section, "collecting a
debt" means any activity, other than the use of judicial
process, that is intended to bring about or does bring
about repayment of all or part of money due (or alleged
to be due) from a consumer.
Section 227.16—State Exemptions
(a) General rule.
(1) An appropriate state agency may apply to the
Board for a determination that:
(i) there is a state requirement or prohibition in
effect that applies to any transaction to which a
provision of this subpart applies; and
(ii) the state requirement or prohibition affords a
level of protection to consumers that is substantially equivalent to, or greater than, the protection afforded by this subpart.
(2) If the Board makes such a determination, the
provision of this subpart will not be in effect in that
state to the extent specified by the Board in its
determination, for as long as the state administers
and enforces the state requirement or prohibition
effectively.
(b) Applications. The procedures under which a state
agency may apply for an exemption under this section
are the same as those set forth in Appendix B to
Regulation Z (12 C.F.R. Part 226).
456 Federal Reserve Bulletin • June 1985
AMENDMENTS 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
Supervision and Regulation, with the concurrence of
the General Counsel, the authority under the Board's
Procedures for Issuance and Enforcement of Directives to Maintain Adequate Capital, §§ 263.38 and
263.40 of Subpart D of the Board's Rules of Practice
for Hearings, to issue notices that state member banks
or bank holding companies have insufficent levels of
capital and that direct such banking organizations to
file capital improvement plans.
Effective May 15, 1985, the Board hereby amends
12 C.F.R. 265.2 by adding paragraph (c)(33) to read as
follows:
Part 265—Rules Regarding Delegation of
Authority
Section 265.2—Specific Functions Delegated to
Board Employees and to Federal Reserve
Banks
(33) Under the Provisions of sections 263.38 and
263.40 of the Board's Procedures for Issuance and
Enforcement of Directives to Maintain Adequate
Capital, Subpart D of the Board's Rules of Practice
for Hearings (12 C.F.R. 263), and with the concurrence of the General Counsel, to issue a notice that a
state member bank or bank holding company has
insufficient capital and that directs said banking
organization to file with its regional Reserve Bank a
capital improvement plan.
ORDERS ISSUED UNDER BANK HOLDING
COMPANY ACT, BANK MERGER ACT, AND BANK
SERVICE CORPORATION ACT
Orders Issued Under Section 3 of Bank Holding
Company Act
BankVermont Corporation
Burlington, Vermont
Order Approving
the Acquisition
of a Bank
BankVermont Corporation, Burlington, Vermont, a
bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended ( " A c t " ) ,
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 voting shares of Oxford Bank and Trust, Oxford,
Maine ("Bank").
Notice of the application, affording an opportunity
for interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant, with one banking subsidiary, is the second largest banking organization in Vermont, with
consolidated assets of $510 million and total domestic
deposits of $431.8 million. 1 Upon acquisition of Bank,
which has total assets of $31.4 million and total
domestic deposits of $25.2 million, 2 Applicant would
control the 15th largest banking organization in Maine
and 0.7 percent of the total deposits in commercial
banks in the state. 3
Section 3(d) of the Act (12 U.S.C. § 1842(d)) prohibits the Board from approving any application by a bank
holding company to acquire any bank located outside
of the state in which operations of the bank holding
company's subsidiaries are principally conducted, unless such acquisition is "specifically authorized by the
statute laws of the state in which such bank is located,
by language to that effect and not merely by implication."
Maine law expressly permits an out-of-state bank
holding company to acquire a bank in Maine without
any restrictions as to the geographic location of the
out-of-state bank holding company or reciprocity requirements. 4 Accordingly, the Board has determined
that the proposed acquisition conforms with Maine
law and is expressly authorized by the statute laws of
Maine. The Board has previously stated that statutes
such as Maine's are fully consistent with the Douglas
Amendment and provide a desirable means for creating a national market in banking services through state
action and without unnecessary restrictions on commerce in financial services across state lines. 5
Bank operates in two banking markets in Maine. It
is the seventh largest of eight banking organizations in
the Portland market, controlling 0.6 percent of total
1. Banking data are as of November 30, 1984.
2. Banking data are as of October 31, 1984.
3. Banking data are as of September 30, 1984.
4. Me. Rev. Stat. Ann. tit. 9-B, § 1013 (1984). Each proposal must
comply, however, with the "net new funds" provision of the statute.
The Maine Superintendent of Banking has stated that consummation
of this proposal will result in net new funds to the State.
5. Bank of Boston
174 ( 1 9 8 4 ) .
Corporation,
70 FEDERAL RESERVE BULLETIN
Legal Developments
deposits in commercial banks in the market, and is the
second largest of three banking organizations in the
Paris-Norway market, controlling 37.5 percent of total
deposits in commercial banks in the market. 6 Inasmuch as the proposed acquisition represents Applicant's initial entry into Maine, consummation of this
transaction would not eliminate existing competition
in these markets.
Certain of Applicant's nonbanking subsidiaries provide services, including investment advisory services,
to customers in the Portland banking market in which
Bank offers trust services. The trust services are
limited in scope, however, and Bank's market share
with respect to these services is small. Thus, the
Board concludes that the amount of existing competition in these services that might be eliminated by this
proposal is not significant.
The Board has considered the effects of this proposal on probable future competition in light of its proposed guidelines for assessing the competitive effects
of market extension mergers and acquisitions. 7 After
consideration of the specific facts of this case, including the number of potential entrants into the relevant
markets, the Board concludes that consummation of
this proposal would not have any significant adverse
effects on probable future competition in any relevant
market.
The financial and managerial resources of Applicant
and Bank are considered satisfactory and their prospects appear favorable. The Board has also determined that considerations relating to the convenience
and needs of the community to be served are consistent with approval of the application. Affiliation with
Applicant would enable Bank to expand the scope and
array of its services. New investment and deposit
products are proposed for Bank's customers, as are
expanded trust services. Bank would also be in a
position to expand its commercial lending and secondary mortgage lending services. Accordingly, it is the
Board's judgment that the proposed transaction would
be in the public interest and that the application should
be approved.
6. The Portland banking market is defined as the Portland Ranally
Metro Area (RMA) and portions of the Counties of Cumberland and
York. The Paris-Norway banking market is approximated by the
towns of Albany, Buckfield, Greenwood, Norway, Paris, Oxford,
Stoneham, Sumner, Waterford, and Woodstock, all in Oxford County, Maine, as well as the town of Otisfield in Cumberland County,
Maine.
7. "Proposed Policy Statement of the Board of Governors of the
Federal Reserve System for Assessing Competitive Factors under the
Bank Merger Act and the Bank Holding Company Act," 47 Federal
Register 9017 (1982). Although the proposed policy statement has not
been adopted by the Board, the Board is using the policy guidelines in
its analysis of the effects of a proposal on probable future competition.
457
Based on the foregoing and other facts of record, the
Board has determined that the application under section 3(a)(3) should be and hereby is approved for the
reasons set forth above. The transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order or later than three
months after the effective date of this Order, unless
such period is extended by the Board or by the Federal
Reserve Bank of Boston, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
April 1, 1985.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, Gramley, and Seger. Absent and not
voting: Governor Martin.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
Intermountain Bankshares, Inc.
Charleston, West Virginia
Order Approving Acquisition of Bank
Intermountain Bankshares, Inc., Charleston, West
Virginia, a bank holding company within the meaning
of the Bank Holding Company Act of 1956, as amended (the "Act") (12 U.S.C. § 1841 et seq.), has applied
for the Board's prior approval under section 3(a)(3) of
the Act (12 U.S.C. § 1842(a)(3)) to acquire 100 percent
of the voting shares of the successor by merger to the
Half Dollar Trust and Savings Bank, Wheeling, West
Virginia ("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act (12 U.S.C. § 1842(c)).
Applicant is the seventh largest banking organization in West Virginia, controlling one bank with total
deposits of $196.6 million, representing approximately
1.8 percent of total deposits in commercial banks in
West Virginia.1 Bank is the fifty-second largest bank in
West Virginia, with total deposits of $53.5 million,
representing approximately 0.6 percent of total deposits in commercial banks in West Virginia. Upon con-
1. Banking data are as of December 31, 1983.
458 Federal Reserve Bulletin • June 1985
summation of this proposal, Applicant would control
total deposits of $250.1 million and would be the fourth
largest commercial banking organization in West
Virginia.
Applicant's bank subsidiary, Kanawha Banking and
Trust Company, N.A. ("KB&T"), is located in
Charleston, West Virginia. Bank's two offices are
located in the Wheeling, West Virginia market, 2 approximately 160 miles north of KB&T. Bank is the
ninth largest commercial banking organization in the
market, controlling approximately 5.6 percent of total
deposits in commercial banks in the market. Consummation of this proposal would not result in any significant adverse effects upon existing or potential competition or increase in the concentration of banking
resources in any relevant area. Accordingly, the Board
concludes that competitive considerations are consistent with approval.
The financial and managerial resources of Applicant
and Bank are considered consistent with approval of
this application. Consummation of this proposal will
strengthen management of Bank and will provide Bank
with access to the greater financial and managerial
resources of Applicant. Applicant has proposed no
new services for Bank upon acquisition. However,
there is no evidence in the record that the banking
needs of the community to be served are not being
met. Accordingly, considerations relating to the convenience and needs of the communities to be served
are consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that approval of the application
would be consistent with the public interest and that
the application should be and hereby is approved. The
transaction shall not be consummated before the thirtieth calendar day following the effective date of this
Order, or later than three months after the effective
date of this Order, unless such period is extended for
good cause by the Board or the Federal Reserve Bank
of Richmond, acting pursuant to delegated authority.
By order of the Board of Governors, effective
April 1, 1985.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, Gramley, and Seger. Absent and not
voting: Governor Martin.
Midlantic Banks Inc.
Edison, New Jersey
Order Approving Merger of Bank Holding
Companies
Midlantic Banks Inc. ("Midlantic"), Edison, New
Jersey, a registered bank holding company within the
meaning of the Bank Holding Company Act ("the
BHC Act") (12 U.S.C. § 1841 et seq.), has applied for
the Board's approval under section 3(a)(5) of the Act
(12 U.S.C. § 1842(a)(5)), to acquire by merger Heritage Bancorporation ("Heritage"), Jamesburg, New
Jersey, a registered bank holding company by virtue of
its ownership of Heritage Bank, N.A., Jamesburg,
New Jersey.
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3 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 controls seven banks and is the second
largest banking organization in New Jersey. Applicant
has total assets of $7.2 billion and controls total
domestic deposits of $5.2 billion, representing 13.9
percent of the total deposits in commercial banks in
the state. 1 Heritage, which has approximately $2.0
billion in total assets, is the sixth largest commercial
banking organization in New Jersey. Heritage operates one bank, Heritage Bank, N.A., which controls
$1.5 billion in total deposits, representing 4.0 percent
of the total deposits in commercial banks in the state.
Douglas Amendment
Considerations
Heritage Bank, N.A., is chartered in New Jersey and
its articles of incorporation specify that its principal
office shall be in New Jersey. Heritage Bank operates
90 branches in New Jersey and one branch in Philadelphia, Pennsylvania, and is one of only two national
banks with branches in more than one state. 2 The
Philadelphia branch of Heritage Bank accounts for less
than two percent of the total deposits controlled by
Heritage Bank.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
2. The Wheeling markets consist of Ohio County, West Virginia,
the northern half of Marshall County, West Virginia and the eastern
third of Belmont County, Ohio. The market is approximated by the
Wheeling Ranally Metropolitan Area.
1. Asset and deposit data are as of December 31, 1984; bank market
share data are as of December 31, 1983 ; market share data for thrift
institutions are as of June 30, 1983.
2. Heritage Bank is expressly authorized by the McFadden Act to
retain its branch in Philadelphia because it was established prior to
February 25, 1927. 12 U.S.C. § 36. C/., Seattle Trust & Savings Bank
v. Bank of California N.A., 492 F.2d 48 (9th Cir.), cert, denied, 419
U.S. 844 (1974).
Legal Developments
The Douglas Amendment to the BHC Act prohibits
the Board from approving any application by a bank
holding company to acquire "any additional bank
located outside of the State" in which the acquiring
bank holding company is located, unless the acquisition is specifically authorized by the state in which the
bank to be acquired is located. For purposes of the
Douglas Amendment, a bank holding company is
deemed to be located in the state in which the total
deposits of its subsidiary banks were the largest on the
later of July 1, 1966 or the date it became a bank
holding company. Applicant is located in New Jersey
for purposes of the Douglas Amendment.
Based on all of the facts of record in this case, the
Board concludes that, for purposes of the Douglas
Amendment, Heritage Bank is located in New Jersey,
where it is chartered and principally conducts its
banking operations. The Board believes that the acquisition of Heritage Bank by a New Jersey bank holding
company is consistent with the purposes of the Douglas Amendment, provided the acquisition is not used
to allow the acquiring bank holding company to expand its operations outside of the state of its principal
operations in a manner inconsistent with the Douglas
Amendment. 3 In this regard, Applicant has advised
the Board that it has no present plans to expand the
banking operations of Heritage Bank in the State of
Pennsylvania. Applicant has also committed that it
will not expand in Pennsylvania by merger or acquisition of banks without state authorization and has
indicated it will request the Board to approve any
branch office expansion in Pennsylvania should present circumstances change.
Accordingly, under these circumstances and subject
to Applicant's commitments, the Board concludes that
Heritage Bank is not "located outside" of New Jersey
for purposes of the Douglas Amendment and that its
acquisition by Applicant—a New Jersey bank holding
company—is, therefore, permissible under the Douglas Amendment.
Competitive
459
believe that consummation of the proposed transaction would have a significant adverse effect on the
concentration of banking resources in New Jersey.
Subsidiary banks of Midlantic and Heritage compete
in eleven markets in New Jersey: the Greater Newark,
Lakewood-Toms River, Paterson, PhiladelphiaCamden, Trenton, Yineland, Atlantic City, Cape May,
Hackettstown, Morristown, and New Brunswick
banking markets. Based on all of the facts of record,
including the number of remaining bank competitors
and the number, size, and activities of thrift institutions competing in the relevant markets, 4 the Board
concludes that consummation of this proposal is not
likely to have significant adverse effects on competition in any relevant market.
Atlantic City Banking
Market
Midlantic is the third largest commercial banking
organization in the Atlantic City banking market,
controlling 15.6 percent of the total deposits in commercial banks in the market (hereafter "market deposits"). 5 Heritage controls approximately 5.0 percent of
total market deposits and is the fourth largest commercial banking organization in the market. The Atlantic
City banking market is concentrated, with the four
largest commercial banks in the market controlling
79.5 percent of total market deposits (hereafter, the
"four-firm concentration ratio"). The market's Herfindahl-Hirschman Index ( " H H I " ) is 2068. Upon consummation of the proposal, Midlantic would remain
the third largest banking organization in the market,
controlling approximately 20.6 percent of total market
deposits. The market's four-firm concentration ratio
would increase to 83.2 percent, and the HHI would
increase by 156 points to 2224.6
Although consummation of the proposal would eliminate some existing competition in the Atlantic City
banking market, there are a number of factors that
Considerations
Upon consummation of the proposed transaction,
Midlantic would remain the second largest commercial
banking organization in New Jersey, controlling approximately 17.9 percent of the total deposits in commercial banking organizations in the state. The proposed acquisition would increase the share of deposits
held by the four largest commercial banking organizations in the state to 51.1 percent. The Board does not
3. See The Mitsubishi
518 (1984).
Bank, Ltd.,
70 FEDERAL RESERVE BULLETIN
4. The Board has previously determined that thrift institutions have
become, or at least have the potential to become, major competitors of
commercial banks. NCNB Corporation, 70 FEDERAL RESERVE BULLETIN 2 2 5 ( 1 9 8 4 ) ; Sun
Banks,
Inc.,
6 9 F E D E R A L RESERVE B U L L E T I N
934 (1983); First Tennessee National Corporation, 69 FEDERAL RESERVE B U L L E T I N 2 9 8 ( 1 9 8 3 ) ) .
5. The Atlantic City market is defined to include all of Atlantic
County and adjacent portions of Burlington, Cape May, and Ocean
Counties in New Jersey.
6. Under the revised Department of Justice Merger Guidelines, a
market is considered "highly concentrated" if it has a post-acquisition
HHI greater than 1800. In such markets, the Department of Justice
will decide on a case-by-case basis whether to challenge a merger that
produces an increase in the HHI of between 50 and 100 points. If the
increase in the HHI exceeds 100 and the HHI substantially exceeds
1800, only in extraordinary cases will the Department of Justice
determine that the facts indicate that the merger is not likely to
substantially lessen competition.
460 Federal Reserve Bulletin • June 1985
mitigate the anticompetitive effects of the proposal.
Ten commercial banks would continue to operate in
the market after consummation of the proposal, including two of the largest banking organizations in
New Jersey. In addition, twelve thrift institutions hold
45.1 percent of total deposits in commercial banking
organizations and thrift institutions in the market.
These thrift institutions offer a full range of consumer
banking services and make commercial real estate
loans. Five of the institutions engage in commercial
lending activities. 7
Cape May Banking
Market
Midlantic is the third largest of seven commercial
banking organizations in the Cape May banking market, controlling 23.9 percent of total market deposits. 8
Heritage is the smallest organization in the market,
controlling 1.2 percent of total market deposits. The
Cape May banking market is considered concentrated,
with a four-firm concentration ratio of 90.9 percent
and an HHI of 2463. Upon consummation of the
proposed transaction, Midlantic would remain the
third largest commercial banking organization in the
market, controlling approximately 25.1 percent of total
market deposits, and the HHI would increase by 57
points to 2520.
The Board believes that the anticompetitive effects
of this proposal are mitigated by the extent of competition afforded by thrift institutions in the market. Seven
thrift institutions control 39.4 percent of the total
deposits in the Cape May market. 9 The fourth and fifth
largest depository institutions in the market are thrift
institutions and control 14 percent and 11.7 percent,
respectively, of the total deposits in the Cape May
market. Three thrift institutions in the market currently offer commercial checking accounts, and all thrifts
in the Cape May market offer NOW accounts. The
Board also notes that the commercial loan portfolios of
commercial banks in the Cape May market resemble
those of thrift institutions in that market.
Hackettstown
Banking
Market
controlling 17.3 percent of total market deposits. 10
Heritage ranks sixth in the market, and controls 4.9
percent of the total market deposits. The Hackettstown banking market is considered concentrated,
with a four-firm concentration ratio of 76.4 percent
and an HHI of 1773. Upon consummation of the
proposed acquisition, Midlantic would rank second in
the market, controlling approximately 22.2 percent of
total market deposits, and the HHI would increase by
170 points to 1943.
The Board believes that the presence of thrift institutions in the market mitigates the anticompetitive
effects of the proposal. 11 Nine thrift institutions control 41 percent of the total deposits in commercial
banking organizations and thrift institutions in the
market. All nine thrift institutions operating in the
market offer a full range of consumer banking services
and make commercial real estate loans. Two thrift
institutions in the market actively engage in commercial lending activities.
Morristown Banking
Market
Midlantic is the seventh largest of eleven commercial
banking organizations in the Morristown banking market, controlling 7.2 percent of total market deposits. 12
Heritage is the third largest commercial banking organization in the market with 14.2 percent of total market
deposits. Upon consummation of the proposed acquisition, Midlantic would become the largest commercial
banking organization in the market, with 21.4 percent
of total market deposits.
The Morristown banking market is not considered
highly concentrated, with a four-firm concentration
ratio of 62.3 percent and an HHI of 1308. Upon
consummation of the proposal, the market would
remain only moderately concentrated with an HHI of
1513. Moreover, nine commercial banking organizations would remain in the market. The Board notes
that 17 thrift institutions operate in the market and
control 52.5 percent of the market's total deposits. 13
All of the thrift institutions operating in this market
offer a full range of consumer services, including
transaction accounts, and make commercial real estate
Midlantic is the third largest of nine commercial banking organizations in the Hackettstown banking market,
7. If 50 percent of thrift deposits were included in the calculation of
market concentration, upon consummation of the proposal, the HHI
would rise by 80 points, from 1223 to 1303, and the four-firm
concentration ratio would be 42.7 percent.
8. The Cape May market is defined to include Cape May County,
excluding Ocean City, in New Jersey.
9. If 50 percent of the deposits held by thrift institutions were
included in the calculation of market concentration, consummation of
the proposal would increase the HHI by 34 points to 1593, and the
four-firm concentration ratio would be 73.0 percent.
10. The Hackettstown market is defined to include adjacent portions of Morris and Warren Counties in New Jersey.
11. If 50 percent of thrift deposits were included in the calculation
of market concentration, upon consummation of the proposal, the
market would be considered only moderately concentrated, with a
four-firm concentration ratio of 60.3 percent. The HHI would increase
upon consummation of the proposal by 93 points from 1094 to 1187.
12. The Morristown market is defined to include adjacent portions
of Morris and Somerset Counties in New Jersey.
13. If 50 percent of thrift deposits were included in the calculation
of market concentration, the market HHI would be 911 and would rise
by 85 points to 996 upon consummation of the proposal. The four-firm
concentration ratio upon consummation of the proposal would be 54.8
percent.
Legal Developments
loans, and five thrift institutions engage in commercial
lending activities.
New Brunswick Banking
Market
Midlantic is the third largest commercial banking
organization in the New Brunswick banking market,
with 10.7 percent of total market deposits. 14 Heritage
ranks second in the market, with 13.2 percent of total
market deposits. Upon acquisition of Heritage, Midlantic would become the largest commercial banking
organization in the market, with 23.9 percent of total
market deposits. The New Brunswick banking market
is not highly concentrated, with a four-firm concentration ratio of 52.2 percent and an HHI of 975.
The Board notes that the New Brunswick banking
market will remain relatively unconcentrated upon
consummation of the proposal, with a four-firm concentration level of 62.5 percent and an HHI of 1257.
Moreover, 15 commercial banking organizations, including eight of the ten largest banking organizations
in the state, will remain. The Board has also considered the presence in the market of 25 thrift institutions,
which include the three largest depository institutions
in the market. Thrift institutions control 58.7 percent
of total deposits in commercial banks and thrift institutions in the market. 15
Other Banking
Markets
None of the remaining banking markets in which both
Midlantic and Heritage compete are considered highly
concentrated 16 and the increase in concentration in
these markets as a result of the proposed transaction
would not be substantial. 17
14. The New Brunswick market is defined to include adjacent
portions of Middlesex and Somerset Counties in New Jersey.
15. If 50 percent of thrift deposits were included in the calculation
of market concentration, the HHI would increase by 97 points from
530 to 627 upon consummation of the proposal, and the four-firm
concentration ratio would become 40.3 percent.
16. These markets are: the Greater Newark, Lakewood-Toms
River, Paterson, Philadelphia-Camden, Trenton, and Vineland banking markets.
17. The combined market share of Midlantic and Heritage in each
of these markets represents less than 20 percent of total market
deposits and numerous other competitors would remain in each
market.
In considering the effect of the proposal on competition in the
Lakewood-Toms River banking market, the Board took into account a
noncontrolling investment made by Midlantic in Statewide Bancorp.
70 FEDERAL RESERVE BULLETIN 776 (1984). In light of all of the facts
and circumstances surrounding the investment by Midlantic in Statewide Bancorp, including the commitments made by Midlantic to
insure that Midlantic would not exercise control over Statewide, the
fact that Statewide is under the control of its management and others,
and the absence of director interlocks between Midlantic and Statewide, the Board concludes that Midlantic does not control Statewide
Bancorp and that consummation of this proposal would not otherwise
substantially lessen competition in the Lakewood-Toms River market.
See Sun Banks,
Inc.,
71 FEDERAL RESERVE BULLETIN 243 (1985).
Potential
461
Competition
The Board has considered the effects of this proposal
on probable future competition in the six markets in
which Midlantic or Heritage do not both compete. 18 In
none of these markets would the proposed transaction
require extensive analysis under the Board's proposed
guidelines. 19 Five markets are not considered concentrated under the guidelines, and in the sixth market
there are numerous potential entrants. Accordingly,
the Board concludes that consummation of this proposal is not likely to have any significant adverse
effects on probable future competition in any relevant
market.
Financial and Managerial
Considerations
In evaluating this application, the Board has considered the financial and managerial resources of Applicant and the effect on those resources of the proposed
acquisition of Heritage. The Board has stated and
continues to believe that capital adequacy is an especially important factor in the analysis of bank holding
company expansion proposals, particularly where significant acquisitions are proposed. 20
In this case, the Board notes that Applicant's primary capital ratio is above the minimum level for bank
holding companies under the Board's capital adequacy
guidelines. As a result of the proposed acquisition
Applicant's primary capital ratio would decrease
somewhat, but would continue to be above the minimum levels specified in both the Board's current 21 and
proposed capital adequacy guidelines. 22 In its assessment of Applicant's capital adequacy, the Board has
considered the fact that the proposed acquisition
would increase the amount of goodwill as a percentage
of Applicant's primary capital. However, Applicant's
primary capital ratio, on a pro forma basis, would
remain above the minimum required under the Board's
current guidelines without any reliance on intangible
capital, and would meet the minimum capital required
under the Board's proposed guidelines without any
reliance on goodwill and without undue reliance on
other types of intangible capital.
18. These markets are: Asbury Park, Freehold, Newton, Flemington, and Plainfield, New Jersey, and Wilmington, Delaware.
19. "Policy Statement of the Board of Governors of the Federal
Reserve System for Assessing Competitive Factors Under the Bank
Merger Act and the Bank Holding Company Act" (47 Federal
Register 19,017 (1982)). Although the proposed policy statement has
not been approved by the Board, the Board is using the policy
guidelines as part of its analysis of the effect of the proposal on
probable future competition.
20. See, e.g., The Chase Manhattan Corporation, 70 FEDERAL
RESERVE BULLETIN 529 (1984); NCNB
Corporation,
70 FEDERAL
RESERVE B U L L E T I N 2 2 5 ( 1 9 8 4 ) .
21. Capital Adequacy Guidelines, 12 C.F.R. Part 225, Appendix A.
22. Proposed Minimum Capital Guidelines for Bank Holding Companies, 49 Federal Register 30,317 (1984).
462 Federal Reserve Bulletin • June 1985
In addition, Applicant has indicated that, within 12
months, under Applicant's current operating plans, its
primary capital ratio, taking into account the proposed
acquisition of Heritage and exclusive of intangibles,
will be above the minimum primary capital ratio under
the Board's proposed capital adequacy guidelines.
Based on these facts, and in view of Applicant's and
Heritage's satisfactory financial and managerial resources and future prospects, the Board believes that
banking factors are consistent with approval. Considerations relating to the convenience and needs of the
communities to be served are also consistent with
approval of the application. Accordingly, the Board
finds that the proposed acquisition would be in the
public interest.
Based on all the facts of record and the commitments made by Applicant and subject to the conditions
explained above, the Board has determined that the
application under section 3 of the Act should be, and
hereby is, approved. The acquisition shall not be made
before the thirtieth calendar day following the date of
this Order, or 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.
By order of the Board of Governors, effective
April 1, 1985.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, Gramley, and Seger. Absent and not
voting: Governor Martin.
JAMES M C A F E E
[SEAL]
Associate
Secretary
Orders Issued Under Section
Company
Act
of the
4 of Bank
Board
Holding
The Chase Manhattan Corporation
New York, New York
Order Approving
Acquisition
Loan
Associations
of Stock
Savings
and
The Chase Manhattan Corporation, New York, New
York, a bank holding company within the meaning of
the Bank Holding Company Act (the "BHC Act"),
has applied for the Board's approval under section
4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)), and
section 225.25(b)(1) of the Board's Regulation Y
(12 C.F.R. § 225.25(b)(1)), to acquire all of the shares
of Mentor Savings Bank, Mentor, Ohio ("Mentor"),
and of Federated Savings Bank, Cincinnati, Ohio
("Federated"), two state-chartered savings and loan
associations insured by the Ohio Deposit Guarantee
Fund ("ODGF"). Upon consummation of the proposed acquisition, Applicant will engage through Mentor and Federated in the activity of operating savings
and loan associations in Ohio. Although the Board has
not added the operation of a thrift institution to the list
of activities specified in section 225.25(b) of Regulation Y as generally permissible for bank holding companies, the Board has determined in several individual
cases that the operation of a thrift institution is closely
related to banking. 1
As a result of amendments to the BHC Act contained in the Garn-St Germain Depository Institutions
Act of 1982, section 4(c)(8) of the BHC Act provides
that the Board may dispense with the notice and
hearing requirements of section 4(c)(8) with regard to
the acquisition of a thrift institution if the Board finds
that an emergency exists that requires immediate
action and the primary federal regulator of the institution concurs in this finding. (12 U.S.C. § 1843(c)(8);
12 C.F.R. § 225.23(i)). Mentor and Federated are
thrift institutions as that term is defined in section 2(i)
of the BHC Act, and Mentor and Federated do not
have federal regulators.
By letters dated April 9, 1985, the Ohio Superintendent of Savings and Loan Associations ("Superintendent") requested that the Board act expeditiously on
these applications in light of the recent events in Ohio
and the financial condition of Federated and Mentor.
In this regard, the Board notes that a number of Ohio
savings and loan associations that are members of the
ODGF, including Mentor and Federated, experienced
substantial deposit withdrawals after the announcement of the closing of Home State Savings Bank. On
March 15, 1985, the Governor of Ohio declared an
emergency bank holiday closing all Ohio savings and
loan associations insured by the ODGF, immobilizing
the funds of over 500,000 depositors in institutions
with assets in excess of $5.4 billion. The Ohio legislature passed emergency legislation on March 19, 1985,
providing that the closed Ohio savings and loan associations could reopen only for the purpose of permitting
limited withdrawals and other depositor transactions,
unless they obtained FSLIC or FDIC deposit insurance, or the Superintendent has determined that they
1. F.N.B.
Corporation,
(1985); American
Fletcher
8 6 8 ( 1 9 7 4 ) ; D.H.
Baldwin
(1977); Interstate
71 FEDERAL RESERVE BULLETIN 340
Corp., 60 FEDERAL RESERVE BULLETIN
&Co.,
Financial
6 3 F E D E R A L RESERVE B U L L E T I N 2 8 0
Corp.,
68 FEDERAL RESERVE BULLETIN
3 1 6 ( 1 9 8 2 ) ; Citicorp,
6 8 F E D E R A L RESERVE B U L L E T I N 6 5 6 ( 1 9 8 2 ) ;
Stone
6 9 F E D E R A L RESERVE B U L L E T I N 8 1 2 ( 1 9 8 3 ) .
Corporation,
Old
A
Board staff study of thrift institutions supports the view that operating
a thrift institution is closely related to banking. Bank Holding Company Acquisitions of Thrift Institutions (September, 1981).
Legal Developments
could qualify for federal deposit insurance, or otherwise finds that the interests of depositors will not be
jeopardized by the reopening. 2 To date, 48 previously
closed Ohio savings and loan associations have been
reopened on a full service basis, and 20 institutions
remain closed except for the purpose of accepting
deposits and permitting limited withdrawals.
Federated has not been authorized by the Ohio
Superintendent to reopen except for the purpose of
permitting limited withdrawals by its depositors. The
Ohio Superintendent permitted Mentor to reopen on a
full service basis only after determining that Mentor
should qualify for FSLIC insurance as a result of a
$4.0 million deposit provided by Applicant to Mentor.
Applicant's deposit, which was essential to Mentor's reopening, may be withdrawn after 60 days if
Applicant is not permitted to acquire Mentor. The
Board has been informed by the Superintendent that
Mentor would not be permitted to remain open if
Applicant's deposit is withdrawn. Mentor has not yet
qualified for FSLIC insurance and has experienced
deposit withdrawals since its reopening on April 5,
1985.
In the event that Mentor and Federated are required
to write-off their investment in the ODGF, the net
worth of both Mentor and Federated would be below
the levels required by all federal and state regulatory
authorities and would not be sufficient to allow the
institutions to operate independently on a full service
basis. Consummation of Applicant's proposal involves
continuing financial support of Mentor and Federated
which should stabilize these institutions by eliminating
uncertainty concerning their future ability to serve the
needs of their communities. Moreover, the Superintendent has indicated that Applicant's acquisition of
Federated and Mentor is part of an overall effort to
restore full public confidence in the former ODGF
thrift institutions.
In view of these and the other facts of record, the
Board believes that an emergency exists that requires
expeditious action to assure restoration of Mentor and
Federated to permanent full-service operations as
soon as possible and to contribute to the process of
achieving a resolution to the problems faced by former
ODGF institutions generally. Accordingly, the Board
has determined that it is appropriate in these cases to
shorten the period for interested persons to submit
comments regarding these applications. In this regard,
the Board promptly published notice of the application
in the Federal Register and in newspapers of general
circulation in Cincinnati and in Cleveland, and an-
2. Ohio Am. Sub. S.B. No. 119 § 8 (March 19, 1985).
463
nounced its acceptance of the applications in press
statements released by the Board in Washington,
D.C., and by the Federal Reserve Banks of New York
and Cleveland. These publications and announcements provided interested persons until April 17, 1985,
to comment on the applications. The Board has determined that no further action is necessary to authorize
the Board to dispense with opportunity for hearing.
In response to its request for comment on these
applications, the Board received nine written comments, each of which argued that expeditious action
by the Board is not required in these cases and would
frustrate the attempts of Ohio institutions to bid for
Mentor, Federated and similar Ohio thrift institutions.
They also suggest as evidence of an absence of a need
for early action by the Board, that Applicant has
offered to pay a price for Mentor stock well in excess
of book value. Several Protestants have also argued
that the Board should deny these applications because, the Protestants allege, the acquisition of an
Ohio savings and loan association by an out-of-state
bank holding company is not consistent with the
purpose or procedures established by section 123 of
the Garn-St Germain Depository Institutions Act of
1982 where a viable and bona fide offer to acquire the
institution has been made by an Ohio bank holding
company. One Protestant has requested that the Board
hold a formal hearing regarding the condition of Mentor and the circumstances and procedures involved in
the negotiations by Applicant to acquire Mentor.
The Board has carefully considered these comments, the applications, and all of the facts of record in
the light of the factors set forth in section 4(c)(8) of the
Act. In the preceding pages of this Order, the Board
has carefully examined the circumstances that have
given rise to the Superintendent's request for emergency action and the serious and uncertain conditions
that still exist for the former ODGF thrifts in Ohio.
The Board has also considered the financial situations
of Mentor and Federated and the need to improve and
stabilize the condition of the former and place the
latter in a position where it may reopen for business.
These factors were evaluated in the context of the
contribution that such stabilization and reopening
would make toward resolving the overall problems of
ODGF institutions generally and restoring public confidence. Based on these considerations, evaluated in
the light of the comments of Protestants, the Board
believes that emergency action is required and that a
hearing would be inappropriate and inconsistent with
the need to take immediate action.
The Board, in particular, has considered the contentions made regarding the manner in which the bidding
process for Mentor and Federated was conducted. In
this regard, the Board was informed that the Governor
464 Federal Reserve Bulletin • June 1985
of Ohio and his representatives have met several times
with a number of Ohio banking organizations, including at general meetings on March 15 and 16, for the
purpose of determining the role that Ohio banking
organizations could play in resolving the problems
faced by privately insured Ohio savings and loan
associations and inviting interested Ohio institutions
to submit bids to acquire these savings and loan
associations. Indeed, several of the Protestants made
inquiries into, and conducted negotiations directed
toward, acquiring Mentor.
With respect to Protestants' suggestion that the
Superintendent's approval of Applicant's proposal is
inconsistent with the intention of the provisions of the
Garn-St Germain Act, the Board notes that the provisions of the Act establishing a priority for the acceptance of bids for failing savings and loan associations
apply only to institutions that are insured by the
FSLIC. These provisions were intended to assure that
the federal regulatory authorities conducted the bidding process for failing federally insured thrift institutions in a manner that preserved, to the extent possible, the interest of the states in securing an in-state
purchaser. The Garn-St Germain Act does not by its
terms, and was not intended to, require state authorities to follow the order of bidding priorities established
for federal regulators by that Act when the States
attempt to find a purchaser for a privately insured state
thrift institution, particularly where the state determines that the interest of the state is best served by a
different procedure.
In this regard, the Board notes that the State of Ohio
has consulted with in-state bidders and that the determination whether the proposed affiliation of a closed
Ohio savings and loan association with another institution justifies reopening the thrift institution is a matter
committed by Ohio law to the jurisdiction of the Ohio
Superintendent of Savings and Loan Associations, and
he has exercised this jurisdiction in accordance with
the terms of Ohio law with regard to Applicant's
affiliation with Mentor and Federated. The BHC Act
assigns to the Board the responsibility under section
4(c)(8) of the Act for evaluating the public benefits and
adverse effects of the application actually before the
Board. The Board's determination under section
4(c)(8) of the Act does not prevent competing bank
holding companies from continuing to bid to acquire
that institution or prejudice the Board's ability to
approve similar applications by those competing bank
holding companies. 3
3. See Comerica
Incorporated,
69 FEDERAL RESERVE BULLETIN
911 (1983); NBD Bancorp Inc., 69 FEDERAL RESERVE BULLETIN 917
(1983) (both orders approving applications to acquire Pontiac State
Bank, Pontiac, Michigan).
As noted above, this application has been filed
under section 4(c)(8) of the BHC Act as a nonbanking
activity. The BHC Act defines a " b a n k " as an institution that accepts deposits that the depositor has a legal
right to withdraw on demand and that is engaged in the
business of making commercial loans. (12 U.S.C.
§ 1841(c)).
Both Mentor and Federated are, and will continue to
be after the proposed acquisition, "thrift institutions"
as that term is defined in section 2(i) of the BHC Act.
(12 U.S.C. § 1841(i)). Applicant has committed that
prior to obtaining FSLIC insurance, neither Mentor
nor Federated will make commercial loans, and subsequent to obtaining such insurance, Mentor and Federated will exercise only those powers permitted to
federally chartered savings and loan associations.
Thus, the acquisition of Mentor and Federated qualifies as a nonbanking acquisition, and after they have
obtained FSLIC insurance, Mentor and Federated
may be retained by Applicant as nonbanking institutions under the provisions of the Garn-St Germain
Act, which provide that any institution that is insured
by FSLIC is exempt from the definition of bank in the
BHC Act. Thus, the Board concludes that this application may properly be considered under section 4 of the
Act as a nonbanking application.
Applicant, with total assets of $86.9 billion, controls
three bank subsidiaries, including The Chase Manhattan Bank, N.A., New York, New York, and is the
second largest commercial banking organization in
New York State. Applicant also operates in Ohio a
commercial finance subsidiary, Chase Commercial
Corporation, and an economic forecasting and data
processing subsidiary, Chase Econometrics/Inter Active Data Corporation. Mentor, a stock savings and
loan association, controls $107.4 million in assets and
operates in the Cleveland, Ohio banking market. Federated, which operates in the Cincinnati, Ohio banking
market, is also a stock savings and loan association,
and controls $53.2 million in assets. (All financial data
are as of December 31, 1984.)
In view of the fact that Applicant's bank subsidiaries, Mentor and Federated, operate in separate banking markets and there is no significant amount of direct
competition between them, consummation of the proposed acquisition would not have a significant effect
on existing competition in any relevant market. Similarly, there is no significant competition between either Mentor or Federated and the nonbanking subsidiaries of Applicant, and consummation of the proposal
would not have a significant effect on competition in
any nonbanking activities in any relevant market. In
view of the relatively small size of both Mentor and
Federated, and the number of potential entrants into
their respective markets, the Board finds that this
Legal Developments
acquisition would not have any significant adverse
effect on potential competition. Indeed, the proposed
acquisition would have a substantial beneficial effect
on competition by ensuring the continued operation of
Mentor and Federated as effective competitors.
Section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8))
authorizes a bank holding company to acquire a nonbank company where the activities of the nonbank
company are determined by the Board to be "so
closely related to banking or managing or controlling
banks as to be a proper incident thereto." The Act
provides that the Board may make such determinations by order or by regulation. As earlier stated, the
Board has determined previously that the operation of
a thrift institution is closely related to banking, and
reaffirms that determination in this Order.
With respect to the "proper incident" requirement,
section 4(c)(8) of the Act requires the Board to consider whether the performance of the activity by an
affiliate of a holding company "can reasonably be
expected to produce benefits to the public, such as
greater convenience, increased competition, or gains
in efficiency that outweigh possible adverse effects,
such as undue concentration of resources, decreased
or unfair competition, conflicts of interests, or unsound banking practices."
In 1977, the Board considered the question whether
savings and loan association ("S&L") activities are a
proper incident to banking. At that time, the Board
determined that, as a general matter, S&L activities
were not a proper incident to banking because the
potential adverse effects of allowing affiliations of
banks and S&Ls were then sufficiently strong to
outweigh any public benefits that might result in
individual cases. (D.H. Baldwin & Co., 63 FEDERAL
RESERVE B U L L E T I N 2 8 0 ( 1 9 7 7 ) ) .
Because of the considerations elaborated in D.H.
Baldwin & Co., the Board has not been prepared to
permit bank holding companies to acquire thrift institutions on a general basis. However, the Board has
consistently regarded the BHC Act as authorizing the
Board to permit such an acquisition, and the Board has
approved several such proposals involving failing
thrift institutions on the basis that any adverse effects
of bank/thrift affiliations would be overcome by the
public benefits of preserving the failing thrift institution. 4 In addition, Congress has recognized the need to
allow bank holding companies to acquire failing federally insured thrift institutions in the Garn-St Germain
Act.
4. See, e.g., Interstate Financial Corp., supra; Citicorp, supra; Old
Stone Corporation, supra.
465
The Board has reexamined, in the context of these
applications, the adverse factors cited in the Board's
1977 D.H. Baldwin decision, including regulatory conflict, erosion of institutional rivalry, and the potential
for undermining interstate banking prohibitions. The
Board has also considered the adverse factors that
might be associated with this particular application, 5
including the potential for unfair competition, conflicts
of interests, financial risks, diversion of funds, and
participation in impermissible activities.
In view of the unique circumstances that led to the
closing of Mentor, Federated and other privately insured institutions by the Governor of Ohio, the emergency legislation recently enacted by the Ohio legislature to remedy the problems faced by these
institutions and their depositors, 6 the need for a
prompt solution in this case, and the other considerations detailed in this Order, the Board has determined
that there are substantial benefits to the public associated with preserving Mentor and Federated as thrift
competitors in their respective markets that are sufficient to outweigh the generalized adverse effects found
by the Board in the D.H. Baldwin case.
The Board believes that Applicant's acquisition of
Mentor and Federated will result in substantial and
compelling public benefits by providing Mentor and
Federated with sufficient new capital funds to enable
them to continue their operations and to remain effective competitors, thus ensuring the continuation of
services by Mentor and Federated to their customers
and protecting the interests of their depositors. The
record establishes that Applicant has the financial and
managerial resources and commitment to serving the
convenience and needs of the public to achieve this
result. While the Board would normally consider as an
adverse factor any significant dilution of capital or
increase in leverage by a bank holding company in
connection with a proposed acquisition, the Board
notes that the proposed acquisitions have a de minimis
impact on the capital and leverage positions of Applicant.
The affiliation of Applicant and Mentor and Federated is not likely to result in unfair competition. To
guard against possible adverse effects of affiliation in
this case between a banking organization and a savings
5. As stated above, the Board has examined the competitive effects
associated with these particular applications and has concluded that
there are no significant adverse effects associated with the proposed
acquisition.
6. Ohio Am. Sub. S.B. No. 119 § 8 (March 19, 1985).
466 Federal Reserve Bulletin • June 1985
and loan association, including the potential for unfair
competition and diversion of funds, the Board has
relied on the following commitments offered by Applicant:
1. Applicant will operate Mentor and Federated as
savings and loan associations having as their primary purpose the provision of residential housing
credit. Mentor and Federated will limit their activities to those currently permitted to federal savings
and loan associations under the Home Owners'
Loan Act, but shall not engage in any activity
prohibited to bank holding companies and their
subsidiaries under section 4(c)(8) of the Bank Holding Company Act.
2. Neither Mentor nor Federated will establish or
operate a remote service unit at any location outside
Ohio.
3. Neither Mentor nor Federated will establish or
operate branches at locations not permissible for
national or state banks located in Ohio. 7
4. Mentor and Federated will be operated as separate, independent, profit-oriented corporate entities
and shall not be operated in tandem with any other
subsidiary of Applicant, except that Applicant may
merge Mentor and Federated together and operate
the successor in accordance with this commitment.
Applicant, Mentor, and Federated will limit their
operations to effect this condition, and will observe
the following conditions:
a. No banking or other subsidiary of Applicant
will link its deposit-taking activities to accounts at
Mentor or Federated in a sweeping arrangement
or similar arrangement.
b. Neither Applicant nor any of its subsidiaries
will solicit deposits or loans for Mentor or Federated, nor shall either Mentor or Federated solicit
deposits or loans for any other subsidiary of
Applicant.
5. Applicant will not change the name of Mentor or
Federated in any manner that might confuse the
public regarding the status of these institutions or
their successor by merger as a nonbank thrift institution.
6. Neither Mentor nor Federated will convert its
charter to that of a national or state commercial
bank without the Board's prior approval.
7. To the extent necessary to insure the operation of
Mentor and Federated as independent of Applicant
and to prevent the improper diversion of funds,
there shall be no transactions between either Mentor
or Federated and Applicant or any of its subsidiaries
without the prior approval of the Federal Reserve
Bank of New York. This limitation encompasses the
transfer, purchase, sale or loan of any assets or
liabilities, but does not include infusions of capital
from Applicant, the payment of dividends by Mentor or Federated to Applicant, or the sale of residential real estate loans from Mentor or Federated to
any subsidiary of Applicant.
8. Applicant will cooperate with Mentor and Federated in applying for and obtaining FSLIC insurance.
The Board concludes that consummation of the
proposal, subject to the commitments set out above,
may reasonably be expected not to result in conflicts
of interests, unsound banking practices, undue concentration of resources, or other adverse effects.
Based upon the foregoing and other facts and circumstances reflected in the record, the Board has
determined that the acquisition of Mentor and Federated by Applicant would result in substantial and
compelling public benefits that are sufficient to outweigh any adverse effects that may reasonably be
expected to result from this proposal, including any
potential adverse effects of the affiliation of a commercial banking organization with a thrift institution.
Accordingly, these applications are approved, subject
to the commitments described in this Order and the
record of this application.
The Board's decision is further subject to the conditions set forth in Regulation Y, including sections
225.4(d) and 225.23(b), and to the Board's authority to
require such modification or termination of the activities of a holding company or any of its subsidiaries as
the Board finds necessary to assure compliance with,
or to prevent evasion of, the provisions and purposes
of the Act and the Board's regulations and orders
issued thereunder. The acquisitions shall be made not
later than three months after the effective date of this
Order, unless that period is extended for good cause
by the Board or by the Federal Reserve Bank of New
York pursuant to authority hereby delegated.
By order of the Board of Governors, effective
April 19, 1985.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Rice, and Gramley. Absent and not
voting: Governor Seger.
7. The Federal Reserve Bank of New York is hereby delegated
authority to act on applications by Applicant to open additional offices
of Mentor or Federated under section 225.25(b)(1) of Regulation Y.
(12 C.F.R. § 225.25(b)(1)).
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
Legal Developments
First Interstate Bancorp
Los Angeles, California
Order Approving Application to Purchase and Sell
Precious Metals for the Account of Customers
First Interstate Bancorp, Los Angeles, California, a
bank holding company within the meaning of the Bank
Holding Company Act, 12 U.S.C. § 1841 et seq.
("BHC Act"), has applied pursuant to section 4(c)(8)
of the BHC Act and section 225.21(a) of the Board's
Regulation Y, 12 C.F.R. § 225.21(a), to engage
de novo through its wholly owned subsidiary, First
Interstate Discount Brokerage ("FIDB"), Los Angeles, California, in the purchase and sale of precious
metals for the account of its customers.
Notice of the application, affording interested persons an opportunity to submit comments on the relation of the proposed activity to banking and on the
balance of the public interest factors regarding the
application, has been duly published, 50 Federal Register 3976 (1985). The time for filing comments and
views has expired and the Board has considered the
application in light of the public interest factors set
forth in section 4(c)(8) of the BHC Act.
FIDB proposes to engage in the purchase and sale of
silver and gold bullion and coins for the account of
customers. FIDB will not engage in the purchase and
sale of platinum and palladium,' nor will it deal in gold
or silver for its own account. In addition, Applicant
does not propose to extend credit, and does not
propose to offer investment advice to customers in
connection with the proposed services.
Applicant is a multi-bank holding company with 22
subsidiary banks holding total domestic deposits of
approximately $29.8 billion.2 Applicant's lead bank,
First Interstate Bank of California, is the fourth largest
banking organization in California with total domestic
deposits of approximately $12.7 billion, representing
7.2 percent of the total deposits in commercial banks
in the state. Applicant is also engaged, directly and
through certain of its subsidiaries, in a broad range of
permissible nonbanking activities throughout the United States. FIDB is a discount broker that engages in
securities brokerage activities permissible for bank
holding companies under section 225.25(b)(15) of the
Board's Regulation Y, 12 C.F.R. § 225.25(b)(15).
1. In Standard and Chartered Banking Group Ltd., 38 Federal
Register 27,552 (1973), the Board found that the activities of dealing in
platinum and palladium were not authorized for national banks, and
were not closely related to banking.
2. As of June 30, 1984.
467
The Board has previously determined that "buying
and selling gold and silver bullion and silver coin . . .
are activities closely related to banking or managing or
controlling banks." Standard and Chartered Banking
Group Ltd., 38 Federal Register 27,552 (1973).
The proposed activities of FIDB are essentially
identical to those activities previously approved by the
Board. In addition, banks have traditionally engaged
in the purchase and sale of gold and silver bullion. 3
Thus, the Board concludes that Applicant's proposal
to engage in the purchase and sale of precious metals
for the account of customers is closely related to
banking.
In order to approve this application, the Board is
also required to determine that the performance of the
proposed activities by Applicant "can reasonably be
expected to produce benefits to the public . . . that
outweigh possible adverse effects . . . . " (12 U.S.C.
§ 1843(c)(8)). Consummation of Applicant's proposal
will result in increased convenience resulting from the
offering of additional services to customers. In addition, the Board expects that the entry of Applicant into
the market for these services will increase the level of
competition among providers of these services. Accordingly, the Board concludes that the performance
of the proposed activities by Applicant can reasonably
be expected to produce benefits to the public.
The Board has also considered the potential for
adverse effects that may be associated with this proposal. There is no evidence in the record that consummation of the proposed transactions would result in
any adverse effects such as decreased competition,
undue concentration of resources, unfair competition,
conflicts of interest, or unsound banking practices.
Based upon a consideration of all the relevant facts,
the Board concludes that the balance of the public
interest factors that the Board is required to consider
under section 4(c)(8) is favorable. Accordingly, the
application is hereby approved.
This determination is subject to all of the conditions
set forth in the Board's Regulation Y, including those
in section 225.4(d) and 225.23(b), and to the Board's
authority to require such modification or termination
of the activities of a bank holding company or any of
its subsidiaries as the Board finds necessary to assure
compliance with the provisions and purposes of the
Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
The transaction shall be consummated not later than
three months after the effective date of this Order,
unless such period is extended for good cause by the
3. E.g., 12 U.S.C. § 24(7).
468 Federal Reserve Bulletin • June 1985
Board or by the Federal Reserve Bank of San Francisco pursuant to delegated authority.
By order of the Board of Governors, effective
April 8, 1985.
Voting for this action: Vice Chairman Martin and Governors Wallich, Partee, Rice, and Seger. Absent and not voting:
Chairman Volcker and Governor Gramley.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
NBC Bank Corp
El Dorado, Arkansas
Exchange Bancshares, Inc.
El Dorado, Arkansas
Order Approving Application to Engage in Data
Processing Activities Through a Joint Venture
NBC Bank Corp, El Dorado, Arkansas ("NBC"), and
Exchange Bancshares, Inc., El Dorado, Arkansas
("Exchange") (together "Applicants"), bank holding
companies within the meaning of the Bank Holding
Company Act ("Act") (12 U.S.C. §§ 1841-1849),
have applied for the Board's approval under section
4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section
225.21(a) of the Board's Regulation Y (12 C.F.R.
§ 225.21(a)), for each to acquire 50 percent of the
voting shares of Consolidated Data Services, Inc., El
Dorado, Arkansas ("Consolidated"). Applicants intend to form Consolidated, a de novo joint venture, to
provide electronic data processing services such as
deposit, loan, trust, and other bank accounting services for Applicant's bank subsidiaries and financial
data processing services for other businesses in Union
County, Arkansas. The Board has previously determined that such activities are closely related to banking and permissible for bank holding companies.
12 C.F.R. § 225.25(b)(7).
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published. 49 Federal Register 47,334 (1984). 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.
Applicants each control one bank. NBC controls the
National Bank of Commerce, El Dorado, Arkansas
("Commerce Bank"), with deposits of $86.6 million.1
Exchange controls the Exchange Bank and Trust
Company, El Dorado, Arkansas ("Exchange Bank"),
with deposits of $67.9 million. Both banks operate in
the Union County banking market, which is coextensive with Union County, Arkansas. Of the six banks in
the market, Commerce Bank is the second largest and
Exchange Bank is the third largest. Commerce Bank
holds 22.3 percent of the total deposits in commercial
banks in the market; Exchange Bank holds 17.4 percent.
Under Applicants' proposal, Consolidated would
lease data processing equipment from Applicants and,
for a fee, would provide data processing services to
Applicants and their subsidiaries. If Consolidated has
excess computer capacity, it may also provide such
services to other local businesses. NBC and Exchange
would each name two of Consolidated's five directors.
The fifth director would be a data processing professional who would not be affiliated with either Applicant.
In considering this application, the Board must
determine whether the proposed joint venture can
reasonably be expected to produce benefits to the
public that outweigh the possible adverse affects.
12 U.S.C. § 1843(c)(8). The Board has repeatedly expressed its concern that joint ventures not lead to a
matrix of relationships between the co-venturers that,
as relevant here, could lessen competition between the
co-venturers, create conflicts of interest, and impair or
give the appearance of impairing the ability of a
banking organization to function effectively as an
independent and impartial provider of credit. 2 The
Board believes that these concerns are of particular
significance in a case such as this, where the joint
venturers directly compete in providing banking services and together control a substantial share of the
deposits in commercial banks in the market. In such a
case, the Board will scrutinize all the facts and circumstances to ensure that the business relationship between the joint venturers would not be likely to result
in serious adverse effects.
To address these concerns, Applicants have made
several commitments to the Board, including the following:
(1) Neither Applicant will engage in any business
cooperation with the other Applicant except in
connection with Consolidated;
(2) Consolidated's operations will be kept at arm's
length from those of Applicants and their subsidiaries;
(3) Although an Applicant may name one or more of
its officers or directors to Consolidated's board of
directors, no officer or director of an Applicant or
2. See, e.g., Amsterdam-Rotterdam Bank, N.V., 70 FEDERAL
RESERVE B U L L E T I N 8 3 5 ( 1 9 8 4 ) ; Deutsche
1. Banking data are as of June 30, 1984.
RESERVE B U L L E T I N 4 4 9 ( 1 9 8 1 ) .
Bank
AG,
67
FEDERAL
Legal Developments
any of its subsidiaries will serve as an officer or
employee of Consolidated;
(4) No officer, director, or employee of an Applicant
or any of its subsidiaries will perform services for
Consolidated other than as a representative of that
Applicant on Consolidated's board of directors; and
(5) No officer, director, or employee of one Applicant or any of its subsidiaries will deal with or have
access to confidential information about the financial condition of the other Applicant or its subsidiaries. 3
These commitments, by narrowly circumscribing
the relationship involved in the joint venture, are
designed to ensure that competition between Applicants would not be diminished. In addition, the
Board's concerns about this proposal are mitigated by
the fact that the joint venture is limited to data
processing, an activity which does not involve basic
banking functions, such as granting credit. In light of
this fact, and in view of the commitments offered by
Applicants, the Board concludes that the proposal
would be unlikely to have adverse effects in the
banking market. A different conclusion might be in
order, however, if the proposed activity were broader
in scope, or more directly related to Applicants'
lending activities. 4
The proposed joint venture would not eliminate any
existing competition in providing data processing services to the public. Commerce Bank currently provides data processing services for itself and one local
merchant. Exchange Bank performs no data processing for outside businesses and does only part of its own
data processing work.
The joint venture also would not significantly reduce
potential competition in providing data processing
services. According to a survey conducted by the
Federal Reserve Bank of St. Louis, Union County has
three firms primarily engaged in providing data processing services to other businesses ("data processing
service organizations"), and one of those organizations is a recent entrant. El Dorado also has at least six
computer dealers, and inexpensive desktop computers
enable businesses to do their own data processing and
thus avoid any dependence on data processing service
organizations.
Moreover, the geographic market for data processing services extends well beyond local banking mar-
kets. The Board has previously noted that data processing services can be provided by the "batch"
method at a distance of 100-150 miles and by the
"remote" method at an even greater distance. 5 Within
120 miles of El Dorado, there are six major centers of
population and trade: the Little Rock, Pine Bluff, Hot
Springs, and Texarkana metropolitan areas in Arkansas, and the Shreveport and Monroe metropolitan
areas in Louisiana. The Reserve Bank's survey indicates that those metropolitan areas contain more than
100 data processing service organizations, as well as
many other firms that offer or are capable of offering
such services to the public.
The area surrounding El Dorado thus contains so
many existing and potential providers of data processing services that the joint venture would be unlikely to
result in any significant reduction in potential competition between Applicants. On this basis, the Board
concludes that the joint venture would not significantly lessen potential competition in any relevant market.
There is no evidence that the joint venture would
result in unfair competition, unsound banking practices, conflicts of interests, or an undue concentration
of resources.
The joint venture would be likely to increase the
efficiency of Applicants' data processing operations by
allowing Applicants to eliminate duplicate facilities.
Moreover, if Consolidated offers data processing services to outside businesses, the public will also benefit
through the increased competition in such services.
The financial and managerial resources of Applicants and Consolidated are consistent with approval of
the application.
Based on the foregoing and other facts of record, the
Board has determined 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),
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 Act
and the Board's regulations and orders issued thereunder.
5. BankAmerica
3. No officer or director of one Applicant serves as an officer or
director of the other Applicant. Moreover, no such interlock could be
created without violating the Depository Management Interlocks Act
(12 U . S . C . § 3202).
4. See, e.g., Deutsche Bank AG, 67 FEDERAL RESERVE BULLETIN
449 (1981); Maryland National
Corp., 65 FEDERAL RESERVE BULLETIN 2 7 1 ( 1 9 7 9 ) .
469
Corporation,
66 FEDERAL RESERVE BULLETIN
511, 512 (1980). "In batch processing, typically the information to be
processed is physically delivered to the servicer for processing at the
end of a business day and the processed information is delivered to the
customer the following morning. In remote processing, the information to be processed is transmitted between the servicer and the
customer through telephone lines or other forms of electronic communications." Id.
470 Federal Reserve Bulletin • June 1985
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 St. Louis, pursuant to
delegated authority, or by the Board.
By order of the Board of Governors, effective
April 11, 1985.
Voting for this action: Governors Partee, Rice, and Seger.
Voting against this action: Chairman Volcker. Abstaining
from this action: Governors Wallich and Gramley. Absent
and not voting: Governor Martin.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
Statement of Chairman Volcker Concurring in Part
I do not share the majority opinion in one limited
respect. The Board has expressed its concern regarding a joint venture offering services to the general
public between directly competing banking organizations that together control a substantial share of the
same banking market. The majority believed in this
particular case commitments offered by Applicants,
and the fact the proposal is limited to data processing,
would be sufficient to overcome potential adverse
effects. I would have preferred to condition approval
on prohibition of such services to others than financial
institutions on the basis that the relatively slight public
benefits associated with this proposal are not sufficient
to outweigh the possible adverse effects. I have no
objection to other portions of the application providing
for services to the applicants themselves or other
depository institutions which, as I understand it, provides the main rationale for the proposal.
pursuant to section 4(c)(8) of the Bank Holding Company Act ("Act"), 12 U.S.C. § 1843(c)(8), and section
225.23(a) of the Board's Regulation Y, 12 C.F.R.
§ 225.23(a), to enter into a joint venture with Gooch &
Wagstaff, a partnership whose principal place of business is London, England. Applicants and Gooch &
Wagstaff would each own 50 percent of Union, Gooch
& Wagstaff ("Company"), a de novo joint venture.
Company would provide real estate investment advisory services and advisory services related to the
leasing of real and personal property. The Board has
determined that these activities are closely related to
banking. 12 C.F.R. §§ 225.25(b)(4) and (5).
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published, 50 Federal Register 9129 (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 Act.
Union, a bank holding company within the meaning
of the Act, is the sixth largest banking organization in
California, and has one subsidiary bank, Union Bank
("Bank"), Los Angeles, California. 1 Bank has total
deposits of $5.9 billion, which represents 3.0 percent
of the deposits in commercial banks in California. 2
Union also is engaged in nonbanking activities through
its nonbank subsidiaries, including a discount brokerage subsidiary, an export trading company, a commercial finance company, a consumer finance company,
and an investment company.
Gooch & Wagstaff is a partnership of chartered
surveyors. 3 Other offices of Gooch & Wagstaff are
located in Amsterdam, Holland; Frankfurt, West Germany; and Denver, Colorado. In 1983, Gooch &
Wagstaff entered into a joint venture with Raynd
Ventures, Inc., Denver, Colorado, to provide real
April 11, 1985
Standard Chartered Bank PLC
London, England
Standard Chartered Overseas Holdings, Ltd.
London, England
Union Bancorp
Los Angeles, California
Order Approving Proposal to Engage in Investment
Advisory Services
Standard Chartered Bank PLC ("Standard Bank"),
London, England; Standard Chartered Overseas
Holdings, Ltd. ("Overseas Holdings"), London, England; and Union Bancorp ("Union"), Los Angeles,
California, have applied for the Board's approval
1. Overseas Holdings and The Chartered Bank ("Chartered"),
London, England, own 87.4 percent and 12.6 percent, respectively, of
Union. Overseas Holdings and Chartered are wholly owned by
Standard Bank. Standard Bank is a bank holding company within the
meaning of the Act by virtue of its indirect control of Bank, 12 C.F.R.
§§ 225.2(b)(1) and (2).
2. As of December 31, 1984.
3. The partners and associates of Gooch & Wagstaff are members
of the Royal Institution of Chartered Surveyors ("Institution"). The
Institution is a professional association that specializes in matters
concerning real property that are not performed by lawyers and
architects. Gooch & Wagstaff provides several types of services: (1)
acting as agent in the selling and leasing of commercial property; (2)
furnishing advice to lessors and lessees and appearing as expert
witnesses injudicial proceedings regarding these matters; (3) acting as
real estate investment advisors; (4) providing property valuations; (5)
managing the physical facilities and portfolios of commercial buildings; and (6) furnishing advice in connection with the planning and
zoning of land.
Legal Developments
estate advisory services in Colorado. 4 Gooch & Wagstaff is affiliated with G&W Architect, an architectural
firm that operates in London, England. Gooch &
Wagstaff also is affiliated with PSI Limited, a management firm in Amsterdam, Holland. At present, Gooch
& Wagstaff does not have any plans to open additional
offices elsewhere in the world.
Gooch & Wagstaff s clientele consists primarily of
foreign-based individuals and institutions, including
pension funds, financial institutions, banks, insurance
companies, industrial corporations, accountants and
solicitors. In general, each office provides services
with respect to properties located within that office's
geographic area. The geographic area served by the
Denver office is generally limited to the state of
Colorado.
Company will provide general investment advisory
services to foreign and domestic investors with respect
to income-producing real property located primarily in
the Western United States. The operations of Company will be limited to the following activities:
(1) promoting and assisting direct investment by
foreign and domestic individuals and institutions
with respect to income-producing real properties
located in California, Arizona, Oregon, Washington,
Nevada and other states; 5
(2) advising open and closed-end property funds,
and evaluating and advising on open and closed-end
property funds for foreign investors; 6 and
(3) publishing information periodically on real estate
market conditions for dissemination in selected markets. 7
Applicants also have indicated that Company will
provide advisory services with respect to the leasing of
property. The Board has determined that the proposed
4. In addition, in 1983, the Board approved an application by
Southeast Banking Corporation ("Southeast"), Miami, Florida, to
provide real estate investment advisory services by means of a joint
venture with Gooch & Wagstaff and a subsidiary of Southeast.
Southeast
Banking Corporation,
69 FEDERAL RESERVE BULLETIN 564
(1983). Southeast and Gooch & Wagstaff recently dissolved this joint
venture. Prior to its dissolution, the joint venture provided real estate
investment advice related to income-producing real property located
in the southeastern United States and Texas.
5. This activity involves the distribution of brochures to prospective foreign customers, informing such customers when potentially
suitable real estate investments become available, assisting such
customers in negotiating the terms of the purchase or sale of real
property (if desired), and other related activities. In this regard,
Applicants have committed that Company will not solicit properties to
be sold, list or advertise properties for sale, or hold itself out or
advertise as a real estate broker.
6. These property funds are investment companies registered under
the Investment Company Act of 1940, 15 U.S.C. § 80a-2(a)(20).
Applicants have committed that any advisory services provided by
Company to such property funds will be provided in accordance with
all of the requirements of the Board's Published Interpretation regarding investment advisory activities when advice is provided to an
investment company. 12 C.F.R. § 225.125 (1984).
7. Applicants have committed that these services will be provided
in accordance with footnote 2 of section 225.25(b)(4) of Regulation Y.
471
activities of the joint venture are permissible under
sections 225.25(b)(4) and (5) of Regulation Y,
12 C.F.R. §§ 225.25(b)(4) and (5).8
The proposal involves a de novo acquisition and
normally consummation of such a proposal would not
have any adverse effects upon either existing or potential competition. The Board, however, has considered
the effect of the proposal on existing and potential
competition because it involves a joint venture between a banking and a nonbanking institution. 9
With respect to existing competition between Union
and Gooch & Wagstaff in the relevant market for
investment advisory services, the record indicates that
Union and Gooch & Wagstaff currently engage in
similar activities. Union, through the trust department
of Bank, currently engages in advising individual foreign investors with respect to California real estate
opportunities. Gooch & Wagstaff provides global investment counseling, but does not provide any real
estate investment advice with respect to properties
located in California. Accordingly, consummation of
the proposal would not have a significant adverse
effect on existing competition between Union and
Gooch & Wagstaff in any relevant market.
With respect to potential competition, Company will
act as a real estate investment advisor with particular
emphasis on foreign investors. The record indicates
that numerous other competitors currently provide
similar advisory services, including many banks, trust
companies, insurance companies, real estate consultants and real estate brokers. Moreover, the market
for such services is unconcentrated. The record also
indicates that Gooch & Wagstaff is not likely to enter
the market de novo, since it lacks knowledge of real
estate opportunities available in the Western region of
the United States, has limited local contacts, and lacks
knowledge of local financing alternatives for real estate projects. Accordingly, consummation of this proposal would not appear to have a significant adverse
impact on potential competition in any relevant market.
The Board also finds that consummation of the
proposal can be expected to result in public benefits.
Company expects to act as a conduit for attracting and
8. Applicants have committed that any advisory services offered in
connection with the leasing of property will be limited to leases that
conform with all of the requirements of section 225.25(b)(5) of the
Board's Regulation Y, 12 C.F.R. § 225.25(b)(5).
9. The Board in previous cases involving joint ventures has expressed a concern that joint ventures not lead to a matrix of relationships that could undermine the legally mandated separation between
banking and commerce. E.g., Amsterdam-Rotterdam Bank, N.V., 70
FEDERAL RESERVE BULLETIN 835 (1984); The Maybaco Company
and
Equitable
Bancorporation,
69 FEDERAL RESERVE BULLETIN 375
(1983); Deutsche
Bank AG, 67 FEDERAL RESERVE BULLETIN 449
(1981).
472 Federal Reserve Bulletin • June 1985
directing capital flows iinto a high-growth region of the
United States. Moreover, the long-term nature of the
real estate investments is expected to have a stabilizing impact on the economies of the region. Company
also anticipates that large clients will invest in industrial and commercial enterprises and thereby create
employment in the region.
There is no evidence in the record that consummation of the proposal would result in other adverse
effects, such as conflicts of interest, concentration of
resources, or unsound banking practices.
Based upon the foregoing, the Board concludes that
the balance of public interest factors that it must
consider under section 4(c)(8) of the Act is favorable.
Accordingly, the application should be and hereby is
approved. This determination is subject to all the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
the Board's authority to require such modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with the provisions
and purposes of the Act and the Board's regulations
and orders issued thereunder, or to prevent evasion
thereof.
The proposed activity shall be commenced not later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of San
Francisco, acting pursuant to delegated authority.
By order of the Board of Governors, effective
April 2, 1985.
Voting for this action: Chairman Volcker and Governors
Wallich, Partee, Rice, Gramley, and Seger. Absent and not
voting: Governor Martin.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Orders Issued Under Sections 3 and 4 of Bank
Holding Company Act
B-Banc Corp.
Odessa, Texas
Order Approving Formation of a Bank Holding
Company and Application to Engage In Leasing
Activities
B-Banc Corp., Odessa, Texas, has applied for
the Board's approval under section 3(a)(1) of the
Bank Holding Company Act ("Act") (12 U.S.C.
§ 1842(a)(1)) to become a bank holding company by
acquiring all of the voting shares of Andrews Financial
Corporation, Odessa, Texas ("Andrews Financial"),
and thereby indirectly acquire First National Bank of
Hamilton, Hamilton, Texas, and Andrews Bancshares, Inc., Odessa, Texas, and its subsidiary bank,
Commercial State Bank, Andrews, Texas; De Leon
Bancshares, Inc., Odessa, Texas, and thereby indirectly acquire Farmers and Merchants Bank,
De Leon, Texas; Dublin Bancshares, Inc., Odessa,
Texas, and thereby indirectly acquire The Dublin
National Bank, Dublin, Texas; Glen Rose Bancshares,
Inc., Odessa, Texas, and thereby indirectly acquire
First National Bank in Glen Rose, Glen Rose, Texas;
Ranger Bancshares, Inc., Odessa, Texas, and thereby
indirectly acquire First State Bank, Ranger, Texas (collectively "the bank holding companies and Banks").
Applicant also has applied for the Board's approval
under section 4(c)(8) of the Act (12 U.S.C.
§ 1843(c)(8)) to engage directly in leasing activities
presently being conducted by Andrews Financial and
Andrews Bancshares. This activity has previously
been determined by the Board to be closely related to
banking and permissible for bank holding companies
(12 C.F.R. § 225.25(b)(5)).
Notice of the applications, affording opportunity for
interested persons to submit comments, has been
given in accordance with sections 3 and 4 of the Act
(50 Federal Register 12,870 (1985)). The time for filing
comments has expired, and the Board has considered
the applications and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)) and the considerations specified
in section 4(c)(8) of the Act.
Applicant is a nonoperating corporation formed for
the purpose of becoming a bank holding company by
acquiring six bank holding companies, currently affiliated through common ownership, and their subsidiary
banks. Following consummation of the proposal, the
acquired bank holding companies will be liquidated
and Applicant will directly control Banks' shares.
Thus, this proposal represents a restructuring of existing ownership interests.
All of the Banks to be acquired are small; each
controls less than 0.1 percent of total deposits in
commercial banks in the state. 1 Upon consummation
of this proposal, Applicant would become the 47th
largest commercial banking organization in Texas,
controlling six banks with total deposits of $189 million, representing approximately 0.1 percent of total
deposits in commercial banks in the state. Consummation of this proposal would have no significant adverse
effects on the concentration of banking resources in
Texas.
None of the Banks compete in the same banking
market. Based upon the facts of record, consumma1. Deposit data are as of June 30, 1984; banking structure data are
as of December 31, 1984.
Legal Developments
tion of this proposal would have no significant adverse
effects on competition in any relevant banking market.
This proposal represents a reorganization of existing
ownership interests. The financial and managerial resources and future prospects of Applicant and Banks
are considered to be generally satisfactory, especially
in light of certain commitments made by Applicant to
the Board. Applicant has proposed no new activities
for the Banks upon consummation of this proposal.
However, there is no evidence in the record that the
needs of the communities to be served are not being
met. Accordingly, considerations relating to the convenience and needs of the communities to be served
are consistent with approval.
Applicant also has applied under section 4(c)(8) of
the Act to acquire the leasing portfolios of Andrews
Financial and Andrews Bancshares and to engage
directly in leasing activities under the leasing provisions of Regulation Y. 12 C.F.R. § 225.25(b)(5). There
is no evidence in the record that approval of this
proposal would result in any undue concentration of
resources, decreased or unfair competition, conflicts
of interests, unsound banking practices, or other adverse effects on the public interest. Accordingly, the
Board has determined that the balance of public interest factors it must consider under section 4(c)(8) of the
Act is consistent with approval of this proposal.
Based on the foregoing and the facts of record, the
Board has determined that the applications under
sections 3(a)(1) and 4(c)(8) of the Act are consistent
with the public interest, and should be and hereby are
approved. The transactions shall not be consummated
before the thirtieth calendar day following the effective
date of this Order, or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Dallas, pursuant to delegated
authority. The determinations as to Applicant's nonbanking activities are subject to the conditions set
forth in sections 225.4(d) and 225.23(b)(3) of Regulation Y (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)) and the
Board's authority to require such modifications or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
By order of the Board of Governors, effective
April 15, 1985.
Voting for this action: Chairman Volcker and Governors
Martin, Gramley, and Seger. Absent and not voting: Governors Wallich, Partee, and Rice.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
473
Citizens Financial G r o u p , Inc.
Providence, R h o d e Island
Order Approving Formation of a Bank Holding
Company and Acquisition of a Federal Savings Bank
and a Consumer Finance Company
Citizens Financial Group, Inc., Providence, Rhode
Island, has applied for the Board's approval under
section 3(a)(1) of the Bank Holding Company Act
(12 U.S.C. § 1842(a)(1)) ("Act") to become a bank
holding company through the acquisition of Citizens
Corporation, Providence, Rhode Island, a bank holding company within the meaning of the Act, and its
subsidiary bank, Citizens Trust Company, Providence, Rhode Island ("Trust Company"). Applicant
has also applied for the Board's approval under section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and
section 225.23 of the Board's Regulation Y (12 C.F.R.
§ 225.23) to acquire Citizens Savings Bank, F.S.B.,
Providence, Rhode Island ("Savings Bank"), currently the parent of Citizens Corporation, 1 and 80 percent
of the voting shares of The Money Store/Georgia, Inc.,
Atlanta, Georgia ("Money Store"), a subsidiary of
Citizens Corporation.
Savings Bank is a federally chartered mutual savings
bank, which will convert to a federal stock savings
bank after the Board's approval of this application.
Under section 2(c) of the Act, Savings Bank is not a
"bank" for purposes of the Act because its accounts
would be insured by the Federal Savings and Loan
Insurance Corporation and because it would be chartered by the Federal Home Loan Bank Board. Accordingly, the application to acquire Savings Bank is
properly filed under section 4(c)(8) of the Act.
The Board has not added the operation of a federal
savings bank in Rhode Island to the list of activities
specified in section 225.25(b) of Regulation Y as
generally permissible for bank holding companies. As
discussed below, however, on a number of occasions
the Board has determined that the operation of a thrift
institution is closely related to banking in Rhode
Island. Moreover, with the exception of real estate
development activities, which Applicant has commit-
1. These applications are made necessary by the proposed corporate reorganization of Savings Bank, which now indirectly controls
Trust Company through its ownership of Citizens Corporation. Since
Savings Bank is a mutual savings bank whose control of a bank
predates the 1970 Bank Holding Company Act Amendments, it is
exempt from the Act under section 2(a)(5)(F) of the Act. Under the
terms of its proposed reorganization, however, Savings Bank will
convert to a federal stock savings bank, thereby losing its section
2(a)(5)(F) exemption. Upon Savings Bank's conversion to stock form,
Applicant will acquire all of the capital stock issued by Savings Bank
in its conversion and Savings Bank will transfer ownership of Citizens
Corporation to Applicant.
474 Federal Reserve Bulletin • June 1985
ted to discontinue, 2 all of the activities of Savings
Bank have been determined by the Board to be closely
related to banking and permissible for bank holding
companies. 3
Money Store, which is operated pursuant to a joint
venture with The Money Store, Inc., Springfield, New
Jersey, engages in the origination, sale, and servicing
of mortgage loans and other consumer finance loans
and acts as agent for the sale of credit-related life and
accident and health insurance in the State of Georgia. 4
These activities have been determined by the Board to
be permissible for bank holding companies (12 C.F.R.
§ 225.25(b)(1) and (8)).
Notice of the applications, affording opportunity for
interested persons to submit comments, has been
given in accordance with sections 3 and 4 of the Act
(49 Federal Register 50,783 (1984)). The time for filing
comments has expired, and the Board has considered
the applications and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)) and the considerations specified
in section 4(c)(8) of the Act.
Applicant is a de novo bank holding company
formed for the purpose of holding Trust Company and
Savings Bank. Trust Company, a state-chartered commercial bank, controls $269 million in total deposits,
and Savings Bank controls total deposits of $907
million.5 With consolidated assets of $1.3 billion,6
Savings Bank is the fourth largest banking organization in Rhode Island. Neither Applicant nor any of its
principals is affiliated with any other banking organization in any relevant area. Since the proposed transactions are solely a corporate reorganization, they would
have no effect on the statewide banking structure or on
competition in any relevant area.
Because Savings Bank's exemption under section
2(a)(5)(F) would not be transferred to Applicant upon
Savings Bank's reorganization, the Board must consider Applicant's acquisition of Savings Bank under
the standards of section 4(c)(8) of the Act. Section
4(c)(8) authorizes a bank holding company to acquire a
company engaged in nonbanking activities that are
determined by the Board to be "so closely related to
banking or managing or controlling banks as to be a
proper incident thereto." The Board has determined
on numerous occasions that the operation of a thrift
2. Applicant has committed that Savings Bank will limit its real
estate development activities to completion of its one current project
and will not invest in additional real estate development projects
unless such investments are authorized by the Board.
3. 12 C.F.R. § 225.25(a) and (b) and § 225.25(b)(1), (8), and (12);
U.S.
Trust
Corporation,
7 0 F E D E R A L RESERVE B U L L E T I N 3 7 1 ( 1 9 8 4 ) .
4. Citizens Corporation received Board approval on February 2,
1984, to acquire 80 percent of the voting shares in Money Store.
Citizens
Corporation,
7 0 F E D E R A L RESERVE B U L L E T I N 2 3 2 ( 1 9 8 4 ) .
5. Deposit data are as of September 30, 1984.
6. As of December 31, 1984.
institution satisfies the first, or closely related to
banking, test of section 4(c)(8).7
Under the second, or "proper incident," test, the
Board is required to consider whether the performance
of the activity by a bank holding company or a
subsidiary of a bank holding company "can reasonably be expected to produce benefits to the public,
such as greater convenience, increased competition,
or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interests,
or unsound banking practices." In 1977, the Board
determined that, as a general matter, the activity of
operating a savings and loan is not a "proper incident"
to banking because the potential adverse effects of
generally allowing affiliations of banks and thrift institutions were then sufficiently strong to outweigh the
benefits that might result in individual cases. 8
The Board has, however, recognized an exception
to this general rule in the case of affiliations between
thrift institutions and commercial banks in Rhode
Island. In each case where the Board has considered a
proposal by a Rhode Island bank holding company to
engage in the activities of a thrift institution, the Board
has recognized the "history of close affiliation of
mutual thrift institutions and commercial banks in
Rhode Island," 9 and has determined that engaging in
the activities of a thrift institution is " s o closely
related to Rhode Island banking as to be a proper
incident thereto." 10 There is no evidence in the record
that the structure of the banking industry in Rhode
Island has changed in such a way as to invalidate this
7. Citicorp (First Federal),
(1984); Old Stone Corporation,
(1983); D.H. Baldwin & Co.,
70 FEDERAL RESERVE BULLETIN 149
69 FEDERAL RESERVE BULLETIN 812
63 FEDERAL RESERVE BULLETIN 280
(1977); American Fletcher Corporation, 60 FEDERAL RESERVE BULLETIN 868 (1974).
8 . D.H.
Baldwin
&
Co.,
63
F E D E R A L RESERVE B U L L E T I N
280
(1977).
9. Newport Savings and Loan Association, 58 FEDERAL RESERVE
BULLETIN 313, 315 (1972). In Old Colony Co-Operative Bank, 66
FEDERAL RESERVE BULLETIN 665, 666 n.6 (1980), the Board stated:
The activities and powers of depository institutions in the state
are uniquely integrated, and have been for a long time. Each of
Rhode Island's seven mutual savings banks . . . had acquired a
commercial bank by 1967. Congress enacted section 2(a)(5)(F) of
the Act in order to exempt these combined savings-commercial
bank institutions from bank holding company status. In order
partially to redress the competitive imbalance resulting from the
superior competitive position of the seven savings-commercial
bank institutions, the Rhode Island legislature, in May 1970,
authorized state-chartered building-loan associations to establish
or acquire stock in a bank or trust company.
10. Newport Savings and Loan Association,
supra at 315; Old
Colony Co-Operative
Bank, 58 FEDERAL RESERVE BULLETIN 417
(1972); Old Colony Co-Operative Bank, 69 FEDERAL RESERVE BULLE-
TIN 377 (1983); Newport Savings and Loan Association, 69 FEDERAL
RESERVE BULLETIN 562 (1983). Both Old Colony and Newport are
Rhode Island mutual building-loan associations that became bank
holding companies in 1972.
Legal Developments
finding. In addition, the Board notes that Savings
Bank and Trust Company have been affiliated since
1947 and that the proposed transaction merely represents the reorganization of Savings Bank and Trust
Company into a bank holding company structure. For
the above reasons, the Board concludes that Applicant's operation of Savings Bank is so closely related
to banking as to be a proper incident thereto.
Notwithstanding this general finding, the Board
must consider the particular facts of this case to
determine whether the proposed transaction can reasonably be expected to produce benefits to the public
that outweigh possible adverse effects. Savings Bank's
conversion to stock form and inclusion in a holding
company organization will provide Applicant greater
resources for expansion and greater flexibility for
diversification of business activities than Savings
Bank, as a mutual institution, currently could provide.
The proposed reorganization thus should allow Applicant to continue to compete effectively with other
large Rhode Island financial organizations and will
enable Applicant to take advantage of interstate banking opportunities open to Rhode Island bank holding
companies. 11
The affiliation of Applicant and Savings Bank following the proposed reorganization is not likely to
result in unfair competition. Savings Bank and Trust
Company have been affiliated since 1947 and Applicant has stated that it will continue to operate Savings
Bank as a savings bank in substantially the same
manner as it has been operated historically. In addition, as noted previously, every Rhode Island thrift
institution of any size now owns a commercial bank.
Furthermore, the Board has relied on the following
commitments offered by Applicant:
(1) that Savings Bank's activities will be limited to
those permitted to federal savings banks under the
Home Owners' Loan Act; and
(2) that Savings Bank, subject to completion of its
one current real estate development project, 12 shall
not engage in any activity prohibited to bank holding
companies and their subsidiaries under section 4 of
the Act.
In view of the potential for interstate expansion by
Applicant following reorganization, Applicant's proposal raises a concern that the commercial banksavings bank affiliation might be extended beyond the
11. Massachusetts, Connecticut, and Rhode Island have enacted
regional reciprocal interstate banking statutes that permit the acquisition of banks in each state by bank holding companies located in other
New England states that have enacted no less restrictive interstate
bank acquisition statutes. Rhode Island's interstate banking statute
will allow bank holding companies from any state with reciprocal
interstate banking legislation to acquire banks in Rhode Island effective July 1, 1986. R.I. Gen. Laws § 19-30-1 (1984).
12. See supra n.2.
475
State of Rhode Island, resulting in conflict with the
Board's general rule that operation of a thrift institution is not a permissible activity for bank holding
companies. In this regard, Applicant has committed
that Savings Bank will not expand outside of Rhode
Island through merger, branching, de novo acquisition, or any other means without the Board's prior
approval.
The Board concludes that its approval of this proposal, subject to the commitments set forth above,
may reasonably be expected not to result in unfair
competition, conflicts of interest, unsound banking
practices, undue concentration of resources, or other
potential adverse effects on the public interest. Based
on the foregoing and all of the other facts of record, the
Board has determined that the balance of the public
interest factors it must consider under section 4(c)(8)
of the Act is favorable and consistent with approval of
these applications.
Accordingly, the applications under sections 3 and 4
of the Act are approved. The transactions shall not be
consummated before the thirtieth day following the
effective date of this Order, or later than three months
after the effective date of this Order, unless such
period is extended for good cause by the Board or by
the Federal Reserve Bank of Boston, pursuant to
delegated authority. The determinations with respect
to Applicant's acquisition of Savings Bank and Money
Store are subject to all the conditions set forth in
Regulation Y, including sections 225.4(d) and
225.23(b) (12 C.F.R. §§ 254.4(d) and 225.23(b)), and to
the Board's authority to require such modifications or
termination of activities of a holding company or any
of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
In addition, Savings Bank may not engage directly
or indirectly in any activity other than those approved
by the Board in this Order. Any expansion of Savings
Bank's activities beyond those approved in this Order
would require the Board's prior approval as provided
in section 4 of the Act and the Board's Regulation Y. 13
By order of the Board of Governors, effective
April 22, 1985.
Voting for this action: Chairman Volcker and Governors
Martin, Wallich, Partee, Rice, Gramley, and Seger.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
13. In this regard, the Board notes that because Savings Bank is not
considered a bank under the Act, the provisions of section 225.22(d) of
Regulation Y would not be applicable to exempt the acquisitions or
activities of Savings Bank.
476 Federal Reserve Bulletin • June 1985
Commerce Group, Inc.
Lincoln, Nebraska
Order Approving Acquisition of Bank Holding
Companies and to Engage in the Underwriting of
Credit Life and Credit Accident and Health
Insurance
Commerce Group, Inc., Lincoln, Nebraska, a bank
holding company within the meaning of the Bank
Holding Company Act ("Act") (12 U.S.C. § 1841
et seq.), has applied for the Board's approval under
section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to
acquire at least 80 percent of the voting shares of the
following one-bank holding companies: Commerce
Group Kearney, Inc., Kearney, Nebraska, and thereby indirectly First National Bank and Trust Co. of
Kearney, Kearney, Nebraska; Commerce Group Hastings, Inc., Hastings, Nebraska, and thereby indirectly
City National Bank and Trust Co., Hastings, Nebraska; Commerce Group West Point, Inc., West Point,
Nebraska, and thereby indirectly First National Bank
of West Point, West Point, Nebraska; Commerce
Group Grand Island, Inc., Grand Island, Nebraska,
and thereby indirectly Overland National Bank of
Grand Island, Grand Island, Nebraska; Commerce
Group North Platte, Inc., North Platte, Nebraska, and
thereby indirectly North Platte National Bank, North
Platte, Nebraska. Applicant also has applied for the
Board's approval under section 3(a)(3) of the Act to
retain currently owned shares of Commerce Savings
Lincoln, Inc., Lincoln, Nebraska, Commerce Savings
Scottsblufif, Inc., Scottsbluflf, Nebraska, and Commerce Savings Columbus, Inc., Columbus, Nebraska
(collectively the "industrial banks").
Applicant has also applied for the Board's approval
under section 4(c)(8) of the Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23(a)(2) of the Board's
Regulation Y (12 C.F.R. § 225.23(a)(2)), to indirectly
acquire, through the acquisition of the previously
named bank holding companies, an additional 83.35
percent of the voting shares of Commerce Affiliated
Life Insurance Company, Phoenix, Arizona ("Affiliated"). Affiliated engages in underwriting as reinsurer
credit life and credit accident and health insurance
directly related to extensions of credit by Applicant
and the bank holding companies to be acquired. This
activity has been determined by the Board to be
closely related to banking under section 225.25(b)(9) of
Regulation Y (12 C.F.R. § 225.25(b)(9)). The principals of Applicant currently control all of the bank
holding companies to be acquired, and this proposal
represents the reorganization of six affiliated one bank
holding companies into a single multibank holding
company.
Notice of these applications, affording an opportunity for interested persons to submit comments and
views, has been given in accordance with sections 3
and 4 of the Act (50 Federal Register 3975 (1985)). The
time for filing comments and views has expired and the
Board has considered the applications and all comments received in light of the factors set forth in
section 3(c) of the Act (12 U.S.C. § 1842(c)) and the
considerations specified in section 4(c)(8) of the Act.
Applicant controls the National Bank of Commerce
Trust and Savings Association ("NBCT"), Lincoln,
Nebraska, which holds deposits of $299.8 million.1
In addition, Applicant controls three industrial bank
subsidiaries that make commercial loans, accept NOW
accounts and are insured by the Federal Deposit
Insurance Corporation. Although Applicant previously obtained Board approval under section 4(c)(8) of the
Act to acquire these industrial banks, Applicant has
applied under section 3(a)(3) of the Act to retain them
as banks pursuant to Regulation Y.
Applicant's four deposit taking subsidiaries control
deposits of $349 million, making Applicant the fourth
largest banking organization in Nebraska with 2.8
percent of total state deposits. Upon consummation,
Applicant would become the third largest banking
organization in Nebraska, controlling deposits of
$665.9 million in nine banking subsidiaries. Applicant's share of total deposits in commercial banks in
the state would increase to 5.4 percent, and consummation of this proposal would not result in a significant
increase in the concentration of banking resources in
Nebraska.
Each of the five bank holding companies to be
acquired by Applicant operates in a separate banking
market in which neither Applicant nor its subsidiaries
is represented. Accordingly, consummation of these
proposals would not have any significant adverse
effects on either existing or potential competition in
any relevant market.
The financial and managerial resources and future
prospects of Applicant, its subsidiaries, and the holding companies to be acquired are consistent with
approval. Considerations relating to the convenience
and needs of the community to be served are also
consistent with approval.
Applicant has also applied, pursuant to section
4(c)(8) of the Act, to acquire the 83.35 percent of the
voting shares of Affiliated owned by the bank holding
companies to be acquired. Affiliated engages in the
activity of reinsuring credit-related insurance sold to
customers of affiliated banks. Due to the fact that
Applicant and the one-bank holding companies it
1. All banking data are as of December 31, 1983.
Legal Developments
proposes to acquire are currently engaged in jointly
operating Affiliated, it does not appear that Applicant's acquisition of the remainder of Affiliated's
shares would result in any adverse competitive effects.
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. Accordingly, the Board has
determined that the balance of public interest factors it
must consider under section 4(c)(8) of the Act is
favorable and consistent with approval of this application.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
section 3(a)(3) and 4(c)(8) of the Act should be and
hereby are approved. The transactions shall not be
consummated before the thirtieth calendar day following the effective date of this Order or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Kansas City, acting
pursuant to delegated authority. The approval of Applicant's request to acquire additional shares of Affiliated is subject to the conditions set forth in section
225.23(b) of Regulation Y (12 C.F.R. § 225.23(b)) and
to the Board's authority to require modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
By order of the Board of Governors, effective
April 17, 1985.
Voting for this action: Vice Chairman Martin and Governors Rice, Gramley, and Seger. Absent and not voting:
Chairman Volcker and Governors Wallich and Partee.
JAMES MCAFEE
[SEAL]
Associate Secretary of the Board
Cook Investment, Inc.
Beatrice, Nebraska
Order Approving Acquisition of Bank Holding
Companies and Engaging in General Insurance
Agency Activities
Cook Investment, Inc., Beatrice, Nebraska, a bank
holding company within the meaning of the Bank
Holding Company Act ("the BHC 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.
All
§ 1842(a)(3)) to acquire all of the voting shares of the
following one-bank holding companies: Pickrell, Inc.,
Pickrell, Nebraska, and Wymore, Inc., Wymore, Nebraska. Applicant would thereby acquire control of
Pickrell State Bank, Pickrell, Nebraska ("Pickrell"),
and Wymore State Bank, Wymore, Nebraska ("Wymore").
Applicant has also applied for the Board's approval
under section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23(a) of the Board's
Regulation Y (12 C.F.R. 225.23(a)), to acquire indirectly, through Pickrell, Inc., 50 percent of the voting
shares of Pickrell Insurance Agency, also of Pickrell
("Agency"), and thereby to engage in the activities of
a general insurance agency in a town with a population
not exceeding 5,000.
Notice of these applications, affording an opportunity for interested persons to submit comments and
views, has been given in accordance with sections 3
and 4 of the BHC Act (50 Federal Register 176 (1985)).
The time for filing comments and views has expired
and the Board has considered the applications and all
comments received in light of the factors set forth in
section 3(c) of the BHC Act (12 U.S.C. § 1842(c)) and
the considerations specified in section 4(c)(8) of the
BHC Act, including the comments of the Independent
Insurance Agents of America, National Association of
Casualty and Surety Agents, National Association of
Surety Bond Producers, National Association of Professional Insurance Agents, and National Association
of Life Underwriters.
Applicant is a one-bank holding company by virtue
of its control of Beatrice National Bank, Beatrice,
Nebraska ("Beatrice National"). Applicant's principals control Wymore and Pickrell, and this proposal
represents the reorganization of control of these three
banking organizations into a single multibank holding
company. Applicant, with deposits of $63 million,1 is
the 33rd largest commercial banking organization in
the state, controlling 0.51 percent of the total deposits
in commercial banking organizations in the state.
Upon consummation of this proposal, Applicant
would become the 22nd largest commercial banking
organization in the state, controlling deposits of $78.5
million, representing 0.64 percent of total deposits in
commercial banking organizations in the state. Consummation of the transaction would not have any
significant adverse effects upon the concentration of
banking resources in the state.
Applicant, through its control of Beatrice National,
is the largest of twelve commercial banking organiza-
1. All banking data are as of December 31, 1983.
478 Federal Reserve Bulletin • June 1985
tions operating in the Gage County banking market, 2
controlling 34.2 percent of deposits in commercial
banks in the market. Both Wymore and Pickrell also
operate in the Gage County market. Wymore, with
deposits of $10.5 million, is the 4th largest commercial
bank operating in the Gage County banking market,
controlling 5.7 percent of commercial banking deposits
in the market. Pickrell, with $5 million in deposits, is
the ninth largest commercial bank in the market,
controlling 2.7 percent of commercial banking deposits
in the market. Upon consummation of this proposal,
Applicant would remain the largest banking organization in the market, controlling 42.6 percent of total
commercial banking deposits in the market.
In analyzing the competitive effects of an application to reorganize and restructure ownership of banking organizations where an individual or family controlling more than one banking organization in the
market seeks to transfer control of the banking organizations to a single holding company, the Board takes
into consideration the competitive effects of the transaction whereby common ownership was established. 3
In its approval of prior transactions whereby Beatrice
National Corporation and Applicant acquired control
of Beatrice National, 4 the Board analyzed the transactions as a result of which Beatrice National and
Pickrell and Wymore were placed under common
control. Based on the small size of Pickrell (approximately $600,000 in deposits) and Wymore (approximately $3 million in deposits) in 1965 and 1969, respectively, the poor record of Pickrell and Wymore as
competitors in the market, and their long-run viability
based on the very small and declining population base
of the townships of Wymore and Pickrell, the Board
concluded that the initial affiliation of these three
banking organizations did not result in any significant
elimination of competition or other adverse competitive effects. For these same reasons, consummation of
the instant proposal would not appear to have any
adverse effects upon competition or increase the concentration on banking resources in any relevant area.
The financial and managerial resources and future
prospects of Applicant, its banking subsidiary, the
bank holding companies to be acquired and their
affiliates are considered consistent with approval. Although Applicant proposes to incur debt in connection
with its proposal, it appears that Applicant will be able
to service its debt while maintaining required capital
within the Board's guidelines. Considerations relating
to the convenience and needs of the communities to be
2. The Gage County banking market consists of Gage County,
Nebraska.
3. See Mid Nebraska Bancshares, Inc. v. Board of Governors of
the Federal Reserve System, 627 F.2d 266 (D.C. Cir. 1980).
4. Beatrice
National
TIN 3 7 6 ( 1 9 7 5 ) .
Corporation,
61 FEDERAL RESERVE BULLE-
served are also consistent with approval.
Applicant has also applied, pursuant to section
4(c)(8) of the Act, to acquire the 50 percent of the
shares of Agency held by Pickrell and thus to engage in
general insurance agency activities in Pickrell, a community with a population not exceeding 5,000. Upon
consummation of this proposal, the principal place of
banking business of Applicant will be Beatrice, a town
with a population of approximately 13,000. Several
insurance agents' groups have protested this application. They assert that the Garn-St Germain Depository Institutions Act of 1982 ("the Garn Act"), which
amended section 4(c)(8) of the BHC Act, 12 U.S.C.
1843(c)(8)(C), permits only those bank holding companies that have their principal place of banking business
in a town of less than 5,000 to engage in general
insurance agency activities in such small towns.
Section 225.25(b)(8)(ii) of the Board's Regulation Y
(12 C.F.R. § 225.25(b)(8)(ii)) permits bank holding
companies to sell any insurance in a community that
has a population not exceeding 5,000, provided the
principal place of banking business of the bank holding
company is also located in a community with a population not exceeding 5,000. The Board's regulation predates the Garn Act, and the Board has published a
notice of proposed rulemaking regarding permissible
insurance activities to conform to the Garn Act. The
Board has specifically requested public comment on
the question whether bank holding companies should
be permitted to engage in general insurance agency
activities in communities that have populations not
exceeding 5,000 without requiring the bank holding
company's principal place of banking business to be
located in a community with a population not exceeding 5,000 (49 Federal Register 9215 (1984)).
The Board notes that these applications involve a
reorganization and restructuring of affiliated companies in which the insurance activities play a minor role.
Applicant has not sought the Board's approval to
expand Agency's insurance activities in any manner or
to engage in general insurance agency activities at any
of its own offices. Agency will continue to engage in
general insurance activities only from a location in the
village of Pickrell, which had a population of 184 in
1980. In view of the limited nature of this application,
the hardship involved in requiring divestiture, and the
commitments of Applicant to conform its insurance
activities to the results of the rulemaking, including a
complete divestiture of any of Agency's insurance
activities that might be impermissible under the
Board's final regulation, the Board believes it is appropriate to permit Agency to continue to engage in
general insurance activities pending the outcome of
the rulemaking. The Board notes that the Garn Act
does not, on its face, impose a "principal place of
banking business" requirement, and the Board has
Legal Developments
previously permitted retention of such insurance activities in similar limited circumstances pending completion of the rulemaking proceeding. See Midwest Bancorporation,
Inc.,
70 FEDERAL RESERVE BULLETIN
533 (1984). The Board believes it is advisable to
address the issues raised by protestants in the context
of the rulemaking proceeding and protestants' comments will be made a part of that proceeding.
There is no evidence in the record to indicate that
approval of this application 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, in view of Applicant's commitment discussed above, the Board has determined that the
balance of public interest factors it must consider
under section 4(c)(8) of the Act is favorable and
consistent with approval of the application.
Based on the foregoing and other facts of record, the
Board has determined that the applications under
sections 3(a)(3) and 4(c)(8) of the Act should be, and
hereby are, approved. The determination as to Applicant's nonbanking activities is subject to all the conditions set forth in the Board's Regulation Y, including
479
those in sections 225.4(d) and 225.23(b), and to the
Board's authority to require such modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with the provisions
and purposes of the Act and the Board's regulations
and orders issued thereunder, or to prevent evasion
thereof.
The transaction shall not be consummated before
the thirtieth calendar day following the effective date
of this Order, or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board, or by the
Federal Reserve Bank of Kansas City, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
April 29, 1985.
Voting for this action: Governors Wallich, Partee, Gramley, and Seger. Governor Wallich abstained from the insurance portion of the application. Absent and not voting:
Chairman Volcker and Governors Martin and Rice.
JAMES M C A F E E
[SEAL]
Associate
Secretary of the Board
ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT
By the Board of Governors
During April 1985 the Board of Governors approved the applications listed below. Copies are available upon
request to Publications Services, Division of Support Services, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551
Section 3
Applicant
First Holding Company,
Livingston, Tennessee
One Valley Bancorp of West Virginia,
Inc.,
Charleston, West Virginia
RB Bancorp,
San Diego, California
Sun Banks, Inc.,
Orlando, Florida
Sunset Financial Corporation,
Miami, Florida
Bank(s)
First National Bank of Livingston,
Livingston, Tennessee
One Valley National Bank of
Hurricane,
Hurricane, West Virginia
The Bank of Rancho Bernardo,
San Diego, California
SunTrust Banks, Inc.,
Atlanta, Georgia
Hernando Banking Corporation,
Brooksville, Florida
Hernando State Bank,
Brooksville, Florida
Universal Bank,
Boynton Beach, Florida
Board Action
(effective
date)
April 8, 1985
April 15, 1985
April 9, 1985
March 28, 1985
April 29, 1985
480 Federal Reserve Bulletin • June 1985
Section 4
Nonbank
company
A
t
Applicant
FirsTier, Inc.,
Omaha, Nebraska
Effective
,A
date
Investors Mortgage Access Corp.,
Des Moines, Iowa
April 19, 1985
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies of the orders are
available upon request to the Reserve Banks.
Section 3
Applicant
Allied Bankshares, Inc.,
Thomson, Georgia
American Bankshares, Ltd.,
Denver, Colorado
American National Bancshares
of Westlink, Inc.,
Wichita, Kansas
Arcadia Bancshares, Inc.,
Overland Park, Kansas
Bancenter One Group, Inc.,
Ellisville, Missouri
BBA, Inc.,
Shepherds ville, Kentucky
Calumet Bancorporation,
Chilton, Wisconsin
Central Jersey Bancorp,
Freehold, New Jersey
Chemung Financial Corporation,
Elmira, New York
Chicago Commerce Bancorporation,
Chicago, Illinois
Citadel Bancorporation,
Colorado Springs, Colorado
City Bancorp Inc.,
Murphysboro, Illinois
Colonial Bancorporation, Inc.,
Peru, Illinois
Bank(s)
Bank of Rutledge,
Rutledge, Georgia
American Bank of Commerce,
Denver, Colorado
American National Bank of
Westlink,
Wichita, Kansas
Home State Bank,
Arcadia, Kansas
Bankcenter One/St. Charles,
N.A.,
St. Charles, Missouri
Bullitt County Bank,
Shepherdsville, Kentucky
State Bank of Chilton,
Chilton, Wisconsin
The Central Jersey Bank and
Trust Company,
Freehold, New Jersey
Chemung Canal Trust Company,
Elmira, New York
Reserve
Bank
Effective
date
Atlanta
April 18, 1985
Kansas City
April 8, 1985
Kansas City
April 19, 1985
Kansas City
April 2, 1985
St. Louis
April 12, 1985
St. Louis
April 12, 1985
Chicago
April 19, 1985
New York
April 19, 1985
New York
April 10, 1985
Chicago Bank of Commerce,
Chicago, Illinois
Chicago
March 29, 1985
Citadel Bank,
Colorado Springs, Colorado
Gorham Bancorp, Inc.,
Murphysboro, Illinois
The City Bank of Carbondale,
Carbondale, Illinois
Colonial Trust & Savings Bank of
Bureau County,
Depue, Illinois
Kansas City
March 28, 1985
St. Louis
April 12, 1985
Chicago
February 15, 1985
Legal Developments
Section 3—Continued
Applicant
Commerce National Corporation,
Winter Park, Florida
Community Independent Bank,
Inc.,
Bernville, Pennsylvania
Fairfax Banc shares, Inc.,
Fairfax, Missouri
Farmers Bancshares, Inc.,
Pomeroy, Ohio
Financial Bankshares, Inc.,
Miami, Florida
First American Bancorp,
Decatur, Alabama
First American Bank Corporation,
Elk Grove Village, Illinois
First Bancorp of Taylorville,
Inc.,
Taylorville, Illinois
First Bancorporation of Cleveland, Inc.,
Cleveland, Texas
First Dubuque Corp.,
Dubuque, Iowa
First Guthrie Bancshares, Inc.,
Guthrie, Oklahoma
First National Bancor, Inc.,
Lee's Summit, Missouri
First National Corporation,
Grand Forks, North Dakota
First National Lincoln Corporation,
Damariscotta, Maine
First NH Banks, Inc.,
Manchester, New Hampshire
First State Corp.,
West Blocton, Alabama
First Union Bancorp,
Blairsville, Georgia
Bank(s)
Reserve
Bank
Effective
date
National Bank of Commerce,
Winter Park, Florida
Atlanta
April 5, 1985
Bernville, Bank, N.A.,
Bernville, Pennsylvania
Philadelphia
April 4, 1985
Exchange Bank of Fairfax,
Fairfax, Missouri
The Farmers Bank and Savings
Company,
Pomeroy, Ohio
First National Bank of Miami,
Miami, Florida
First American Bank,
Decatur, Alabama
Riverside National Bank,
Riverside, Illinois
Kansas City
March 29, 1985
Cleveland
March 28, 1985
Atlanta
April 3, 1985
Atlanta
March 25, 1985
Chicago
April 3, 1985
First National Bank in
Taylorville,
Taylorville, Illinois
First Bank of Conroe,
Conroe, Texas
Chicago
April 11, 1985
Dallas
April 8, 1985
The First National Bank of
Dubuque,
Dubuque, Iowa
Liberty State Bancshares, Inc.,
Tahlequah, Oklahoma
The Liberty State Bank of
Tahlequah,
Tahlequah, Oklahoma
First National Bank,
Lee's Summit, Missouri
North wood State Bank,
North wood, North Dakota
The First National Bank of
Damariscotta,
Damariscotta, Maine
The National Bank of Lebanon,
Lebanon, New Hampshire
First State Bank of Bibb County,
West Blocton, Alabama
First National Bank of Union
County,
Blairsville, Georgia
Chicago
April 19, 1985
Kansas City
April 9, 1985
Kansas City
April 11, 1985
Minneapolis
March 27, 1985
Boston
April 22, 1985
Boston
April 16, 1985
Atlanta
April 22, 1985
Atlanta
March 25, 1985
481
482 Federal Reserve Bulletin • June 1985
Section 3—Continued
..
Applicant
First United Financial Services,
Inc.,
Arlington Heights, Illinois
First Western Holding Company,
Carrollton, Texas
Firstway Financial, Inc.,
Waynesboro, Pennsylvania
FNB Bankshares,
Bar Harbor, Maine
Ganado Bancshares, Inc.,
Ganado, Texas
Gateway Bancorp, Inc.,
Staten Island, New York
Great Neck Bancorp,
Great Neck, New York
Heritage Bankshares, Inc.,
Dallas, Texas
Heritage Racine Corporation,
Racine, Wisconsin
Hyden Citizens Bancorp, Inc.,
Hyden, Kentucky
Kingsley Banc Corp,
Kingsley, Iowa
Liberty Bancorp, Inc.,
Carbondale, Pennsylvania
Liberty State Bancshares, Inc.,
Tahlequah, Oklahoma
r. w x
Bank(s)
Oak Park Bancorp, Inc.,
Oak Park, Illinois
MSPBancorp, Inc.,
Mount Prospect, Illinois
Oak Park Trust and Savings
Bank,
Oak Park, Illinois
The Dunham Bank,
St. Charles, Illinois
Mount Prospect State Bank,
Mount Prospect, Illinois
United National Bank,
Arlington Heights, Illinois
Unibancorp, Inc.,
Chicago, Illinois
First Western National Bank of
Carrollton,
Carrollton, Texas
First National Bank and Trust
Co.,
Waynesboro, Pennsylvania
The First National Bank of Bar
Harbor,
Bar Harbor, Maine
The Citizens State Bank of Ganado,
Ganado, Texas
Gateway State Bank,
Staten Island, New York
Bank of Great Neck,
Great Neck, New York
Turtle Creek National Bank,
Dallas, Texas
American State Bank,
Kenosha, Wisconsin
Farmers State Bancorp, Inc.,
Bonneville, Kentucky
Kingsley State Bank,
Kingsley, Iowa
Liberty Discount and Savings
Bank,
Carbondale, Pennsylvania
The Liberty State Bank of
Tahlequah,
Tahlequah, Oklahoma
Reserve
Bank
Effective
date
Chicago
April 5, 1985
Dallas
April 5, 1985
Philadelphia
March 27, 1985
Boston
April 1, 1985
Dallas
April 4, 1985
New York
March 29, 1985
New York
April 19, 1985
Dallas
April 22, 1985
Chicago
April 22, 1985
Cleveland
March 27, 1985
Chicago
April 8, 1985
Philadelphia
April 12, 1985
Kansas City
April 9, 1985
Legal Developments
Section 3—Continued
,.
,
A
Applicant
Louisiana Bancshares, Inc.,
Baton Rouge, Louisiana
Lowry Facilities, Inc.,
Clinton, Oklahoma
Merchants Bancorp, Inc.,
Allentown, Pennsylvania
MSB Bancshares, Inc.,
Mesquite, Texas
Minooka Bancorp, Inc.,
Minooka, Illinois
Northeastern Oklahoma Bancorporation, Inc.,
Inola, Oklahoma
Pioneer American Holding Company Corp.,
Carbondale, Pennsylvania
Polo Bancshares, Inc.,
Richmond, Missouri
Quinlan Bancshares, Inc.,
Quinlan, Texas
Red Bud Bancorp, Inc.,
Red Bud, Illinois
Sacramento Bancorp,
Sacramento, Kentucky
St. Mary Holding Corporation,
Franklin, Louisiana
Texas American Bancshares,
Inc.,
Fort Worth, Texas
Texas Independent Bancshares,
Inc.,
Texas City, Texas
Westbanco, Inc.,
Westville, Illinois
r. i / %
Bank(s)
Reserve
B ank
Effective
date
Atlanta
April 19, 1985
Kansas City
March 22, 1985
Philadelphia
April 22, 1985
Dallas
April 8, 1985
Chicago
April 12, 1985
Kansas City
April 17, 1985
First National Bank,
Carbondale, Pennsylvania
Philadelphia
April 2, 1985
Farmers Bank of Polo,
Polo, Missouri
Quinlan State Bank,
Quinlan, Texas
First State Bank of Red Bud,
Red Bud, Illinois
Sacramento Deposit Bank,
Sacramento, Kentucky
The St. Mary Bank and Trust
Company,
Franklin, Louisiana
Southwestern Bank,
Stafford, Texas
Kansas City
May 18, 1985
Dallas
April 8, 1985
St. Louis
March 29, 1985
St. Louis
April 23, 1985
Atlanta
March 28, 1985
Dallas
April 2, 1985
Gulf Shores Bank,
Crystal Beach, Texas
Dallas
April 19, 1985
Minooka Bancorp, Inc.,
Minooka, Illinois
Tri-County Bank of Minooka,
Minooka, Illinois
Chicago
April 12, 1985
The Raceland Bank & Trust
Company,
Raceland, Louisiana
Oklahoma Bancorporation, Inc.,
Clinton, Oklahoma
Oklahoma Bank and Trust,
Clinton, Oklahoma
The Wyoming National Bank of
Wilkes-Barre, Pennsylvania,
Wilkes-Barre, Pennsylvania
Mesquite National Bank,
Mesquite, Texas
Tri-County Bank of Minooka,
Minooka, Illinois
Bank of Inola,
Inola, Oklahoma
483
484 Federal Reserve Bulletin • June 1985
Section 4
Applicant
CB&T Bancshares, Inc.,
Columbus, Georgia
Dunlap Iowa Holding Company,
Dunlap, Iowa
FAM Financial, Inc.,
Macks ville, Kansas
First Bank System, Inc.,
Minneapolis, Minnesota
First Cordell Banco, Inc.,
Cordell, Oklahoma
First Metropolitan Financial
Corporation,
Baton Rouge, Louisiana
Peoples Bankshares, Ltd.,
Waterloo, Iowa
West Brook Bancshares, Inc.,
Westchester, Illinois
Nonbanking
company
Calumet Financial Associates,
Inc.,
Knoxville, Tennessee
engage in making and servicing
loans or other extensions of
credit
Johnson Insurance Agency,
St. John, Kansas
Austin-Osterud Agency, Inc.,
Austin, Minnesota
Flemming Insurance Agency,
Cordell, Oklahoma
First Metropolitan Mortgage
Corp.,
Baton Rouge, Louisiana
Bankers Plus, Inc.,
Minneapolis, Minnesota
West Brook Insurance Agency,
Inc.,
Westchester, Illinois
Reserve
Bank
Effective
date
Atlanta
April 18, 1985
Chicago
April 10, 1985
Kansas City
April 11, 1985
Minneapolis
March 29, 1985
Kansas City
March 25, 1985
Atlanta
April 9, 1985
Chicago
March 28, 1985
Chicago
April 5, 1985
Sections 3 and 4
Applicant
First Antlers Bancorporation,
Inc.,
Antlers, Oklahoma
Bank(s)/Nonbanking
Company
First Antlers Bancshares, Inc.,
Antlers, Oklahoma
First National Bank of Antlers,
Antlers, Oklahoma
First Antlers Insurance Agency,
Antlers, Oklahoma
Reserve
Bank
Kansas City
' Effective
date
April 3, 1985
Legal Developments
485
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.
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).
Florida Department of Banking v. Board of Governors, No. 84-3832 (11th Cir., filed Feb. 15, 1985).
Dimension Financial Corporation v. Board of Governors, No. 84-1274 (U.S., filed Feb. 6, 1985).
Citicorp v. Board of Governors, No. 85-4009 (2d Cir.,
filed Jan. 15, 1985).
Citicorp v. Board of Governors, No. 84-4173 (2d Cir.,
filed Dec. 31, 1984).
Citicorp v. Board of Governors, No. 84-754 (U.S.,
filed Oct. 12, 1984).
David Bolger Revocable Trust v. Board of Governors,
No. 84-4141 (2d Cir., filed Aug. 31, 1984).
Citicorp v. Board of Governors, No. 84-4121 (2d Cir.,
filed Aug. 27, 1984).
Seattle Bancorporation, et al. v. Board of Governors,
No. 84-7535 (9th Cir., filed Aug. 15, 1984).
Bank of New York Co., Inc. v. Board of Governors,
No. 84-4091 (2d Cir., filed June 14, 1984).
Citicorp v. Board of Governors, No. 84-4081 (2d Cir.,
filed May 22, 1984).
Lamb v. Pioneer First Federal Savings and Loan
Association, No. C84-702 (D. Wash., filed May 8,
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, No. 84-3269 and No. 84-3270 (11th Cir., filed
Apr. 20, 1984).
Northeast Bancorp, Inc. v. Board of Governors, No.
84-363 (U.S., filed Mar. 27, 1984).
De Young v. Owens, et al., No. SC 9782-20-6 (D., N.
Dist., Iowa, filed Mar. 8, 1984).
Huston v. Board of Governors, No. 84-1361 (8th Cir.,
filed Mar. 20, 1984); and No. 84-1084 (8th Cir. filed
Jan. 17, 1984).
State of Ohio, v. Board of Governors, No. 84-1270
(10th Cir., filed Jan. 30, 1984).
Ohio Deposit Guarantee Fund v. Board of Governors,
No. 84-1257 (10th Cir., filed Jan. 28, 1984).
Colorado Industrial Bankers Association v. Board of
Governors, No. 84-1122 (10th Cir., filed Jan. 27,
1984).
Financial Institutions Assurance Corp. v. Board of
Governors, No. 84-1101 (4th Cir., filed Jan. 27,
1984).
First Bancorporation v. Board of Governors, No. 841011 (10th Cir., filed Jan. 5, 1984).
Oklahoma Bankers Association v. Federal Reserve
Board, No. 83-2591 (10th Cir., filed Dec. 13, 1983).
The Committee for Monetary Reform, et al. v. Board
of Governors, No. 84-5067 (D.C. Cir., filed June 16,
1983).
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).
A. G. Becker, Inc. v. Board of Governors, No. 802614 (D.C. Cir., filed Oct. 14, 1980); and No. 802730 (D.C. Cir., filed Oct. 14, 1980).
1
Financial and Business Statistics
WEEKLY REPORTING COMMERCIAL BANKS
CONTENTS
Domestic 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 Federal funds and repurchase agreements—
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
A l l Maturity distribution of loan and security
holdings
MONETARY AND CREDIT AGGREGATES
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks
COMMERCIAL BANKING INSTITUTIONS
All 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
2 Federal Reserve Bulletin • June 1985
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
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
REAL
ESTATE
A38 Mortgage markets
A39 Mortgage debt outstanding
CONSUMER INSTALLMENT
CREDIT
A54 U.S. reserve assets
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
REPORTED BY BANKS IN THE UNITED STATES
A57
A58
A60
A61
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A61 Banks' own claims on unaffiliated foreigners
A62 Claims on foreign countries—Combined
domestic offices and foreign branches
REPORTED BY NONBANKING
BUSINESS
ENTERPRISES IN THE UNITED STATES
A40 Total outstanding and net change
A41 Terms
A63 Liabilities to unaffiliated foreigners
A64 Claims on unaffiliated foreigners
FLOW OF FUNDS
SECURITIES HOLDINGS AND
A42 Funds raised in U.S. credit markets
A43 Direct and indirect sources of funds to credit
markets
A65 Foreign transactions in securities
A66 Marketable U.S. Treasury bonds and notes—
Foreign holdings and transactions
Domestic
Nonfinancial
INTEREST AND EXCHANGE
SELECTED
MEASURES
Statistics
A44 Nonfinancial business activity—Selected
measures
A45 Labor force, employment, and unemployment
A46 Output, capacity, and capacity utilization
A47 Industrial production—Indexes and gross value
A49 Housing and construction
A50 Consumer and producer prices
A51 Gross national product and income
A52 Personal income and saving
International
SUMMARY
Statistics
STATISTICS
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
TRANSACTIONS
RATES
A67 Discount rates of foreign central banks
A67 Foreign short-term interest rates
A68 Foreign exchange rates
A69 Guide to Tabular
Presentation,
Statistical Releases, and Special
Tables
SPECIAL TABLES
A70 Terms of lending at commercial banks,
November 1984
Money Stock and Bank Credit
1.10
A3
RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
M o n e t a r y and credit aggregates
(annual rates o f c h a n g e , s e a s o n a l l y adjusted in percent)'
Item
1
2
3
4
Reserves
of depository
Total
Required
Nonborrowed
Monetary base3
5
6
7
8
9
Concepts
Ml
M2
M3
L
Debt
of money,
Nontransaction
10 In M 2 5
11 In M3 o n l y 6
1984
1985
Q4
Q2
Q3
8.6
10.3
-10.8
7.0
6.8
6.6
-44.6
7.2
Q1
1984
Nov.
1985
Dec.
Jan.
Feb.'
Mar.
institutions2
liquid
assets,
and
-.7
-1.5
30.7
3.9
21.2
20.7
61.9
8.7
11.3
9.1
66.3
7.6
18.8
14.0
72.6
8.0
31.1
35.2
94.4
8.0
19.8
15.2
23.8
12.2
5.7
10.3
-3.4
5.9
debt4
6.5
7.1
10.5
12.4'
13.2'
4.5
6.8
9.5
12.2'"
12.5'
3.2
9.0
11.0
9.4'
12.5
10.5
12.1
10.6
7.6
13.3
12.0
14.0
14.2
9.8'
14.5'
10.2
13.1
14.3'
12.(X
14.3'
9.0
13.9'
10.2'
n.a.
13.(K
14.1
11.1
8.2
n.a.
12.3
5.5
4.0
5.2
n.a.
n.a.
7.2
24.9
7.6
20.3
10.8
18.9
12.6
5.0
14.6
15.2'
14.1
18.6>-
15.4'
-3.8'
10.2
-2.7
3.5
9.9
-6.7
13.1
21.8
-5.6
13.4
19.3
-10.4
6.9
12.2
-8.7
-1.8
2.4
-10.6
4.4
1.8
-9.8
-7.1'
-9.5
-2.0
-8.4
9.6
-11.9
2.5
22.2
-.7
13.4
48.1
-6.5'
17.0
38.1
-6.6
14.8
31.3
2.4
1.9
19.8
-5.7
10.8
42.9
-6.5
11.2'
39.0
7.2
-2.9^
20.5
8.6
-4.1
3.1
2.9
1.5
-10.0
13.1
13.2 r
11.0
14.7
11.8'
9.1
16.1
12.5
n.a.
20.0
12.8'
12.8
17.7
13.3'
9.5
16.2'
12.V
n.a.
14.4
11.7
n.a.
n.a.
n.a.
n.a.
components
Time and savings
deposits
Commercial banks
Savings7
Small-denomination t i m e 8
Large-denomination time 9 ' 1 0
Thrift institutions
15
Savings7
16
Small-denomination time
17
Large-denomination t i m e 9
12
13
14
Debt
components4
18 Federal
19 N o n f e d e r a l
20 Total l o a n s and securities at c o m m e r c i a l b a n k s "
1. U n l e s s o t h e r w i s e n o t e d , rates o f c h a n g e are c a l c u l a t e d f r o m a v e r a g e
a m o u n t s outstanding in preceding m o n t h or quarter.
2. Figures incorporate a d j u s t m e n t s for discontinuities a s s o c i a t e d w i t h the
implementation o f the M o n e t a r y Control A c t and o t h e r regulatory c h a n g e s t o
reserve requirements. T o adjust for discontinuities d u e t o c h a n g e s in r e s e r v e
requirements o n reservable n o n d e p o s i t liabilities, t h e s u m o f s u c h required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary b a s e , required clearing b a l a n c e s and a d j u s t m e n t s t o
c o m p e n s a t e for float a l s o are subtracted f r o m the actual series.
3. T h e m o n e t a r y base not adjusted f o r d i s c o n t i n u i t i e s c o n s i s t s o f total
r e s e r v e s plus required clearing b a l a n c e s and a d j u s t m e n t s t o c o m p e n s a t e for float
at F e d e r d R e s e r v e B a n k s plus the c u r r e n c y c o m p o n e n t o f the m o n e y stock l e s s
the a m o u n t o f vault c a s h h o l d i n g s o f thrift institutions that is included in the
currency c o m p o n e n t o f the m o n e y s t o c k plus, for institutions not h a v i n g required
reserve b a l a n c e s , the e x c e s s o f current vault c a s h o v e r t h e a m o u n t applied to
satisfy current reserve requirements. A f t e r the introduction o f c o n t e m p o r a n e o u s
reserve requirements (CRR), c u r r e n c y and vault c a s h figures are m e a s u r e d o v e r
the w e e k l y c o m p u t a t i o n period e n d i n g M o n d a y .
B e f o r e C R R , all c o m p o n e n t s o f the m o n e t a r y b a s e o t h e r than e x c e s s r e s e r v e s
are seasonally adjusted as a w h o l e , rather than by c o m p o n e n t , and e x c e s s
r e s e r v e s are a d d e d o n a not s e a s o n a l l y adjusted basis. A f t e r C R R , the s e a s o n a l l y
adjusted series c o n s i s t s o f s e a s o n a l l y adjusted total r e s e r v e s , w h i c h include
e x c e s s r e s e r v e s o n a not s e a s o n a l l y adjusted basis, plus the s e a s o n a l l y adjusted
currency c o m p o n e n t o f the m o n e y s t o c k plus t h e remaining i t e m s s e a s o n a l l y
adjusted a s a w h o l e .
4. C o m p o s i t i o n o f the m o n e y s t o c k m e a s u r e s and debt is a s f o l l o w s :
M l : (1) currency o u t s i d e the T r e a s u r y , Federal R e s e r v e B a n k s , and the vaujts
o f c o m m e r c i a l banks; (2) travelers c h e c k s o f nonbank i s s u e r s ; (3) d e m a n d d e p o s i t s
at all c o m m e r c i a l b a n k s o t h e r than t h o s e due t o d o m e s t i c b a n k s , the U . S .
g o v e r n m e n t , and foreign banks and official institutions l e s s c a s h i t e m s in the
p r o c e s s o f c o l l e c t i o n and F e d e r a l R e s e r v e float; and (4) o t h e r c h e c k a b l e d e p o s i t s
( O C D ) c o n s i s t i n g o f negotiable o r d e r o f withdrawal ( N O W ) and automatic transfer
service ( A T S ) a c c o u n t s at d e p o s i t o r y institutions, credit union share draft
a c c o u n t s , and d e m a n d d e p o s i t s at thrift institutions. T h e c u r r e n c y and d e m a n d
deposit c o m p o n e n t s e x c l u d e the e s t i m a t e d a m o u n t o f vault c a s h and d e m a n d
d e p o s i t s r e s p e c t i v e l y held b y thrift institutions t o s e r v i c e their O C D liabilities.
M2: M l plus overnight (and continuing contract) repurchase a g r e e m e n t s (RPs)
issued b y all c o m m e r c i a l b a n k s and o v e r n i g h t Eurodollars i s s u e d t o U . S . residents
b y foreign b r a n c h e s o f U . S . banks w o r l d w i d e , M M D A s , s a v i n g s and smalld e n o m i n a t i o n time d e p o s i t s (time d e p o s i t s — i n c l u d i n g retail R P s — i n a m o u n t s o f
l e s s than $100,000), and b a l a n c e s in both taxable a n d t a x - e x e m p t general p u r p o s e
and broker/dealer m o n e y market mutual f u n d s . E x c l u d e s individual retirement
a c c o u n t s (IRA) and K e o g h b a l a n c e s at d e p o s i t o r y institutions and m o n e y market
15.6
11.5'
9.1
-11.6
7.8
3.6
f u n d s . A l s o e x c l u d e s all b a l a n c e s held by U . S . c o m m e r c i a l b a n k s , m o n e y market
f u n d s (general p u r p o s e and broker/dealer), foreign g o v e r n m e n t s and c o m m e r c i a l
banks, and the U . S . g o v e r n m e n t . A l s o subtracted is a c o n s o l i d a t i o n adjustment
that r e p r e s e n t s the e s t i m a t e d a m o u n t o f d e m a n d d e p o s i t s and vault c a s h held by
thrift institutions t o s e r v i c e their time and savings d e p o s i t s .
M3: M 2 plus large-denomination time d e p o s i t s and term R P liabilities (in
a m o u n t s o f $ 1 0 0 , 0 0 0 or m o r e ) i s s u e d b y c o m m e r c i a l b a n k s and thrift institutions,
term Eurodollars held by U . S . residents at foreign b r a n c h e s o f U . S . banks
w o r l d w i d e and at all banking o f f i c e s in the U n i t e d K i n g d o m and C a n a d a , and
b a l a n c e s in both taxable and t a x - e x e m p t , institution-only m o n e y market mutual
f u n d s . E x c l u d e s a m o u n t s held b y d e p o s i t o r y institutions, the U . S . g o v e r n m e n t ,
m o n e y market f u n d s , and foreign banks and official institutions. A l s o subtracted is
a c o n s o l i d a t i o n adjustment that represents the e s t i m a t e d a m o u n t o f overnight R P s
and Eurodollars held b y institution-only m o n e y market mutual f u n d s .
L: M 3 plus the n o n b a n k public holdings o f U . S . s a v i n g s b o n d s , short-term
Treasury securities, c o m m e r c i a l paper and bankers a c c e p t a n c e s , net o f m o n e y
market mutual fund h o l d i n g s o f t h e s e a s s e t s .
D e b t : D e b t o f d o m e s t i c nonfinancial s e c t o r s c o n s i s t s o f o u t s t a n d i n g credit
market debt o f the U . S . g o v e r n m e n t , state and local g o v e r n m e n t s , and private
nonfinancial s e c t o r s . Private debt c o n s i s t s o f corporate b o n d s , m o r t g a g e s , c o n s u m e r credit (including bank l o a n s ) , o t h e r bank l o a n s , c o m m e r c i a l paper, bankers
a c c e p t a n c e s , and other debt instruments. T h e s o u r c e o f data o n d o m e s t i c
nonfinancial d e b t is the Federal R e s e r v e B o a r d ' s flow o f f u n d s a c c o u n t s . D e b t
data are o n an e n d - o f - m o n t h basis. G r o w t h rates for d e b t reflect a d j u s t m e n t s for
discontinuities o v e r time in the l e v e l s o f debt p r e s e n t e d in o t h e r tables.
5. S u m o f overnight R P s and Eurodollars, m o n e y market fund b a l a n c e s
(general p u r p o s e and broker/dealer), M M D A s , and s a v i n g s and small time
d e p o s i t s l e s s the e s t i m a t e d a m o u n t o f d e m a n d d e p o s i t s and vault c a s h held b y
thrift institutions t o s e r v i c e their time and savings d e p o s i t liabilities.
6. S u m o f large time d e p o s i t s , term R P s , and Eurodollars o f U . S . r e s i d e n t s ,
m o n e y market fund b a l a n c e s (institution-only), l e s s a c o n s o l i d a t i o n adjustment
that represents the e s t i m a t e d a m o u n t o f overnight R P s and Eurodollars held b y
institution-only m o n e y market mutual f u n d s .
7. E x c l u d e s M M D A s .
8. S m a l l - d e n o m i n a t i o n time d e p o s i t s — i n c l u d i n g retail R P s — a r e t h o s e i s s u e d
in a m o u n t s o f l e s s than $100,000. All I R A and K e o g h a c c o u n t s at c o m m e r c i a l
banks and thrifts are subtracted f r o m small time d e p o s i t s .
9. L a r g e - d e n o m i n a t i o n time d e p o s i t s are t h o s e i s s u e d in a m o u n t s o f $ 1 0 0 , 0 0 0
or m o r e , e x c l u d i n g t h o s e b o o k e d at international banking facilities.
10. L a r g e - d e n o m i n a t i o n time d e p o s i t s at c o m m e r c i a l b a n k s l e s s t h o s e held b y
m o n e y market mutual f u n d s , d e p o s i t o r y institutions, and foreign b a n k s and
official institutions.
11. C h a n g e s calculated from figures s h o w n in table 1.23.
A4 Domestic Financial Statistics • June 1985
1.11
RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT
Millions of dollars
Monthly averages of
d a i l y figures
Factors
W e e k l y a v e r a g e s o f d a i l y figures f o r w e e k e n d i n g
1985
Jan.
1985
Feb.
Mar.
182,763
180,077
182,130
179,550
179,690
180,318
182,198
181,497
182,192
181,141
159,619
158,152
1,467
8,526
8,389
137
0
1,567
1,203
11,848
11,095
4,618
16,453
157,221
155,848
1,373
8,565
8,378
187
0
1,278
1,248
11,765
11,094
4,618
16,501
159,896
159,737
159
8,386
8,372
14
0
1,646
540
11,662
11,093
4,618
16,565
156,656
155,694
962
8,692
8,382
310
0
1,095
720
12,387
11,094
4,618
16,492
157,641
154,608
3,033
8,628
8,372
256
0
994
959
11,468
11,094
4,618
16,506
157,589
157,589
0
8,372
8,372
0
0
1,354
1,624
11,380
11,094
4,618
16,520
160,037
159,679
358
8,426
8,372
54
0
1,691
811
11,234
11,093
4,618
16,533
159,115
159,115
0
8,372
8,372
0
0
2,038
506
11,466
11,093
4,618
16,550
159,983
159,614
369
8,415
8,372
43
0
1,681
318
11,794
11,093
4,618
16,568
159,736
159,736
0
8,372
8,372
0
0
897
240
11,896
11,093
4,618
16,586
180,036
526
178,273
550
179,085
549
178,479
549
178,700
556
178,134
555
178,553
538
179,430
549
179,306
552
178,860
554
3,875
219
1,961
4,344
223
1,191
3,804
229
1,242
4,797
210
1,590
3,819
236
1,886
4,038
229
1,693
3,364
253
1,715
4,061
207
1,993
3,818
254
1,577
4,280
205
1,538
F e b . 13
Feb. 20
F e b . 27
Mar. 6
M a r . 13
Mar. 20
Mar. 27
SUPPLYING RESERVE F U N D S
1 Reserve Bank credit
2
U . S . government securities1
3
B o u g h t outright
4
Held under repurchase agreements
5
Federal agency obligations
6
Bought outright
7
Held under repurchase a g r e e m e n t s . . . .
8
Acceptances
9
Loans
10
Float
11
Other Federal R e s e r v e assets
12 G o l d s t o c k
13 Special d r a w i n g rights c e r t i f i c a t e a c c o u n t
14 T r e a s u r y c u r r e n c y o u t s t a n d i n g
ABSORBING RESERVE F U N D S
15 C u r r e n c y in c i r c u l a t i o n
16 T r e a s u r y c a s h h o l d i n g s
Deposits, other than reserve balances, with
Federal Reserve Banks
17
Treasury
18
Foreign
19 S e r v i c e - r e l a t e d b a l a n c e s a n d a d j u s t m e n t s
20
Other
21 O t h e r F e d e r a l R e s e r v e l i a b i l i t i e s a n d
capital
22 R e s e r v e balances with Federal
Reserve Banks2
479
533
628
521
508
466
520
440
1,205
473
6,200
6,061
6,099
6,008
6,026
6,182
5,849
5,907
6,101
6,262
21,634
21,115
22,772
19,599
20,176
21,253
23,652
21,171
21,658
21,266
M a r . 13
Mar. 20
End-of-month
figures
Wednesday
1985
figures
1985
Jan.
Feb.
Mar.
177,890
181,786
184,711
182,424
182,216
178,271
182,305
186,424
180,792
180,313
154,555
154,555
0
8,389
8,389
0
0
2,139
502
12,305
159,632
157,124
2,508
8,752
8,372
380
0
2,329
-56
11,129
160,983
160,983
0
8,372
8,372
0
0
2,582
298
12,476
157,651
157,651
0
8,372
8,372
0
0
1,613
2,189
12,599
158,072
154,743
3,329
8,676
8,372
304
0
1,168
2,885
11,415
155,501
155,501
0
8,372
8,372
0
0
1,939
588
11,871
160,235
160,235
0
8,372
8,372
0
0
1,509
791
11,398
160,156
160,156
0
8,372
8,372
0
0
5,840
359
11,697
158,869
158,869
0
8,372
8,372
0
0
1,465
219
11,867
159,169
159,169
0
8,372
8,372
0
0
385
274
12,113
11,095
4,618
16,476
11,093
4,618
11,093
4,618
16,602
11,094
4,618
16,504
11,094
4,618
16,518
11,093
4,618
16,532
11,093
4,618
16,548
11,093
4,618
16,565
11,093
4,618
16,583
11,093
4,618
16,602
177,569
535
178,416
557
179,210
554
178,779
556
178,934
555
178,130
557
179,091
549
179,566
552
179,189
554
179,015
554
5,349
244
1,164
3,308
332
1,226
3,063
253
1,359
3,974
268
1,164
3,916
244
1,213
3,099
223
1,213
4,002
199
1,226
3,698
232
1,226
3,623
211
1,224
4,204
216
1,224
F e b . 13
Feb. 20
F e b . 27
Mar. 6
Mar. 27
SUPPLYING RESERVE F U N D S
23 Reserve Bank credit
24
25
26
27
28
29
30
31
32
33
U . S . government securities1
B o u g h t outright
Held under repurchase agreements
Federal agency obligations
B o u g h t outright
Held under repurchase agreements
Acceptances
Loans
Float
Other Federal Reserve assets
34 Gold stock
35 S p e c i a l d r a w i n g rights certificate a c c o u n t
36 Treasury currency outstanding
...
16,531'"
ABSORBING RESERVE F U N D S
3 7 C u r r e n c y in c i r c u l a t i o n
38 Treasury c a s h holdings
Deposits, other than reserve balances with
Federal Reserve Banks
39
Treasury
40
Foreign
41 S e r v i c e - r e l a t e d b a l a n c e s a n d a d j u s t m e n t s . . . .
42
Other
43 Other Federal R e s e r v e liabilities and
capital
44 Reserve balances with Federal
Reserve Banks2
560
461
347
479
473
452
433
411
721
439
5,964
5,863
6,600
5,860
5,926
5,963
5,741
5,934
5,894
6,101
18,694
23,866
25,638
23,559
23,185
20,877
23,322
27,082
21,671
20,873
1. Includes
securities loaned—fully guaranteed by U . S government securities
p l e d g e d w i t h F e d e r a l R e s e r v e B a n k s — a n d excludes
(if a n y ) s e c u r i t i e s s o l d a n d
scheduled to be bought back under matched sale-purchase transactions.
2. E x c l u d e s required clearing b a l a n c e s and adjustments to c o m p e n s a t e for
float.
NOTE. F o r a m o u n t s o f c u r r e n c y a n d c o i n h e l d a s r e s e r v e s , s e e t a b l e 1 . 1 2 .
Money Stock and Bank Credit
1.12 RESERVES AND BORROWINGS
A5
Depository Institutions
Millions of dollars
Monthly averages8
Reserve classification
1984
Dec.
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks1
Total vault c a s h 2
Vault cash used to satisfy reserve requirements3
Surplus vault cash4
Total reserves5
Required reserves
E x c e s s r e s e r v e b a l a n c e s at R e s e r v e B a n k s 6
T o t a l b o r r o w i n g s at R e s e r v e B a n k s
S e a s o n a l b o r r o w i n g s at R e s e r v e B a n k s
E x t e n d e d c r e d i t at R e s e r v e B a n k s 7
24,939
20,392
17,049
3,343
41,853
41,353
500
697
33
187
21,138
20,755
17,908
2,847
38,894
38,333
561
774
96
2
1985
1984
21,738
22,316
18,958
3,358
40,696
39,843
853
3,186
113
2,604
Sept.
Oct.
20,143
21,232
17,900
3,333
38,043
37,415
20,099
21,875
18,413
3,462
38,512
37,892
620
6,017
299
5,057
628
7,242
319
6,459
20,843
21,827
18,392
3,434
39,235
38,542
693
4,617
212
3,837
21,738
22,316
18,958
3,358
40,696
39,843
853
3,186
113
2,604
21,577
23,044
19,547
3,497
41,125
40,380
745
1,395
62
1,050
20,417
23,927
19,857
4,070
40,273
39,370
903
1,289
71
803
22,063
21,863
18,428
3,437
40,489
39,729
761
1,593
88
1,059
B i w e e k l y a v e r a g e s o f d a i l y figures f o r w e e k s e n d i n g
F e b . 13
Dec. 5
11
12
13
14
15
16
17
18
19
20
Reserve balances with Reserve Banks1
Total vault c a s h 2
Vault cash used to satisfy reserve requirements
Surplus vault c a s h 4
Total reserves5
Required reserves
E x c e s s r e s e r v e b a l a n c e s at R e s e r v e B a n k s 6
T o t a l b o r r o w i n g s at R e s e r v e B a n k s
S e a s o n a l b o r r o w i n g s at R e s e r v e B a n k s
E x t e n d e d c r e d i t at R e s e r v e B a n k s 7
21,184
21,196
18,320
3,385
39,516
38,602
914
4,251
184
3,488
21,584
21,596
18,547
3,120
40,143
39,617
526
3,231
115
2,774
22,171
22,129
19,701
19,703
41,832
40,625
1,207
2,691
81
2,038
1. E x c l u d e s r e q u i r e d c l e a r i n g b a l a n c e s a n d a d j u s t m e n t s t o c o m p e n s a t e f o r
float.
2. D a t e s r e f e r t o t h e m a i n t e n a n c e p e r i o d s in w h i c h t h e v a u l t c a s h c a n b e u s e d t o
satisfy reserve requirements. U n d e r contemporaneous reserve requirements,
m a i n t e n a n c e p e r i o d s e n d 3 0 d a y s a f t e r t h e l a g g e d c o m p u t a t i o n p e r i o d s in w h i c h
the b a l a n c e s are held.
3. E q u a l t o all v a u l t c a s h h e l d d u r i n g t h e l a g g e d c o m p u t a t i o n p e r i o d b y
i n s t i t u t i o n s h a v i n g r e q u i r e d r e s e r v e b a l a n c e s at F e d e r a l R e s e r v e B a n k s p l u s t h e
a m o u n t o f v a u l t c a s h e q u a l t o r e q u i r e d r e s e r v e s d u r i n g t h e m a i n t e n a n c e p e r i o d at
institutions having no required reserve balances.
4 . T o t a l v a u l t c a s h at i n s t i t u t i o n s h a v i n g n o r e q u i r e d r e s e r v e b a l a n c e s l e s s t h e
a m o u n t o f vault c a s h equal t o their required r e s e r v e s during the m a i n t e n a n c e
period.
5. T o t a l r e s e r v e s n o t a d j u s t e d f o r d i s c o n t i n u i t i e s c o n s i s t o f r e s e r v e b a l a n c e s
with Federal R e s e r v e Banks, w h i c h e x c l u d e required clearing balances and
a d j u s t m e n t s t o c o m p e n s a t e f o r float, p l u s v a u l t c a s h u s e d t o s a t i s f y r e s e r v e
r e q u i r e m e n t s . S u c h v a u l t c a s h c o n s i s t s o f all v a u l t c a s h h e l d d u r i n g t h e l a g g e d
1.13
22,819
22.819
22,089
19,002
41.820
41,187
634
1,631
58
1,371
20,375
20,379
23,828
19,995
40,374
39,590
785
976
63
593
A p r . 10
19,924
24,893
20,624
4,269
40,548
39,537
1,012
1,369
20,734
23,203
19,270
3,933
40,003
39,198
806
1,174
81
603
60
988
22,407
21,518
18,093
3,425
40,500
39,719
782
1,865
69
1,224
21,458
22,353
18,828
3,525
40,286
39,477
810
1,289
98
839
23,063
21,274
18,100
3,174
41,163
40,645
519
1,775
121
1,295
c o m p u t a t i o n p e r i o d b y i n s t i t u t i o n s h a v i n g r e q u i r e d r e s e r v e b a l a n c e s at F e d e r a l
R e s e r v e B a n k s plus the a m o u n t of vault c a s h equal to required r e s e r v e s during the
m a i n t e n a n c e p e r i o d at i n s t i t u t i o n s h a v i n g n o r e q u i r e d r e s e r v e b a l a n c e s .
6. R e s e r v e b a l a n c e s with Federal R e s e r v e B a n k s plus vault c a s h u s e d to satisfy
reserve requirements less required reserves.
7 . E x t e n d e d c r e d i t c o n s i s t s o f b o r r o w i n g at t h e d i s c o u n t w i n d o w u n d e r t h e
terms and conditions established for the e x t e n d e d credit program to help
d e p o s i t o r y i n s t i t u t i o n s d e a l w i t h s u s t a i n e d l i q u i d i t y p r e s s u r e s . B e c a u s e t h e r e is
not the s a m e n e e d to repay s u c h borrowing promptly as there is with traditional
s h o r t - t e r m a d j u s t m e n t c r e d i t , t h e m o n e y m a r k e t i m p a c t o f e x t e n d e d c r e d i t is
s i m i l a r t o that o f n o n b o r r o w e d r e s e r v e s .
8. B e f o r e F e b r u a r y 1984, d a t a a r e p r o r a t e d m o n t h l y a v e r a g e s o f w e e k l y
a v e r a g e s ; b e g i n n i n g F e b r u a r y 1984, d a t a a r e p r o r a t e d m o n t h l y a v e r a g e s o f
biweekly averages.
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s H . 3 ( 5 0 2 ) r e l e a s e . F o r a d d r e s s , s e e
inside front cover.
FEDERAL FUNDS AND REPURCHASE AGREEMENTS
Large Member Banks'
Averages of daily figures, in millions of dollars
1985 w e e k e n d i n g M o n d a y
B y maturity and source
F e b . 18
F e b . 25
61,529
58,363
29,116
8,404
30,655
27,655
9,055
32,282
One day and continuing
contract
1 Commercial banks in U n i t e d States
2 Other depository institutions, foreign banks and foreign
official i n s t i t u t i o n s , a n d U . S . g o v e r n m e n t a g e n c i e s .
3 Nonbank securities dealers
4 All other
All other
maturities
5 C o m m e r c i a l b a n k s in U n i t e d S t a t e s
6 Other depository institutions, foreign banks and foreign
official i n s t i t u t i o n s , a n d U . S . g o v e r n m e n t a g e n c i e s .
7 Nonbank securities dealers
All
o
ther
8
MEMO: F e d e r a l f u n d s a n d r e s a l e a g r e e m e n t l o a n s in
maturities o f o n e d a y o r continuing contract
9 Commercial banks in U n i t e d States
10 N o n b a n k s e c u r i t i e s d e a l e r s
1. B a n k s w i t h a s s e t s o f $1 b i l l i o n o r m o r e a s o f D e c . 3 1 , 1977.
Mar. 4
M a r . 11
M a r . 18
Mar. 25
Apr. 1
Apr. 8
A p r . 15
60,758
62,875
59,617
55,739
56,025
65,950
63,319
25,753
8,973
32,281
27,269
8,992
30,605
26,391
9,082
29,390
25,724
8,195
29,512
24,661
8,652
28,436
24,529
6,940
22,905
25,117
7,835
25,598
8,472
8,468
8,633
8,916
9,354
9,495
9,299
10,036
9,697
6,981
7,507
8,998
7,715
7,772
8,707
8,068
7,600
9,010
8,282
7,540
8,753
8,401
8,366
8,946
8,597
8,010
9,167
8,357
8,641
8,887
8,795
8,371
13,879
8,334
8,072
11,258
28,703
6,137
26,434
6,117
26,737
6,883
24,874'
6,410
26,775r
6,505
26,885
6,521
27,747
6,902
31,380
6,281
29,772
6,595
A6 Domestic Financial Statistics • June 1985
1.14
FEDERAL RESERVE BANK INTEREST RATES
Percent per annum
Current and previous l e v e l s
E x t e n d e d credit 2
Short-term a d j u s t m e n t credit
and s e a s o n a l credit 1
Federal R e s e r v e
Bank
Rate o n
4/26/85
Effective
date
Previous
rate
Boston
N e w York
Philadelphia
Cleveland
Richmond
Atlanta
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
81/2
Chicago
St. L o u i s
Minneapolis
K a n s a s City . . . .
Dallas
San F r a n c i s c o . . .
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
First 60 d a y s
o f borrowing
Rate o n
4/26/85
N e x t 90 d a y s
o f borrowing
Previous
rate
Rate o n
4/26/85
8W
E f f e c t i v e date
for current rates
Previous
rate
Rate o n
4/26/85
Previous
rate
9Vi
10
10W
9
8W
8W
A f t e r 150 d a y s
9
9W
10
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
12/24/84
10 W
Range o f rates in recent years 3
R a n g e (or
level)—
All F . R .
Banks
F.R.
Bank
of
N.Y.
7'/2
7W-8
8
7V+-8
73/4
7Vi
8
8
73/4
7 3 /4
71/4—7V4
7!/4-7 3 /4
71/4
6 3 /4-7l/4
6 3 /4
6l/4-6 3 /4
61/4
6-61/4
6
73/4
71/4
71/4
63/4
6 3 /4
61/4
61/4
6
6
19
23
N o v . 22
26
51/2-6
5Vi
51/4-51/2
51/4
5!h
5W
51/4
51/4
1977— A u g . 30
31
Sept. 2
Oct. 26
5'/4-5 3 /4
5'/4-5 3 /4
55/4
6
51/4
53/4
53/4
6
6 - 6 Vi
6Vi
E f f e c t i v e date
In effect D e c . 31, 1973
1974— Apr. 25
30
Dec.
9
16
1975— Jan.
6
10
24
Feb.
5
7
Mar. 10
14
M a y 16
23
1976— Jan.
1978— Jan.
9
20
M a y 11
12
61h
6V2-7
1
6V2
1
E f f e c t i v e date
July
3
10
A u g . 21
Sept. 22
Oct. 16
20
Nov. 1
3
7-7'/»
71/4
73/4
8
8 - 8 Vi
8W
8!/2-9'/2
9W
F.R.
Bank
of
N.Y.
E f f e c t i v e date
7V4
7'/4
7%
8
8'/2
8W
1981—May
9!-A
1982— July
9>/2
Nov.
Dec.
5
8
2
6
4
20
23
2
3
16
27
30
Oct. 12
13
N o v . 22
26
D e c . 14
15
17
Aug.
July 20
A u g . 17
20
Sept. 19
21
Oct.
8
10
Feb.
May
June
July
Sept.
Nov.
Dec.
15
19
29
30
13
16
28
29
26
17
5
7
1. A temporary simplified s e a s o n a l program w a s established o n Mar. 8, 1985,
and the interest rate w a s set at 8W p e r c e n t at that time.
2. A p p l i c a b l e t o a d v a n c e s w h e n e x c e p t i o n a l c i r c u m s t a n c e s or practices i n v o l v e
o n l y a particular d e p o s i t o r y institution and t o a d v a n c e s w h e n an institution is
under sustained liquidity p r e s s u r e s . A s an alternative, f o r l o a n s outstanding for
m o r e than 150 d a y s , a Federal R e s e r v e B a n k m a y charge a flexible rate that t a k e s
into a c c o u n t rates o n market s o u r c e s o f f u n d s , but in n o c a s e will the rate charged
be l e s s than the basic rate plus o n e p e r c e n t a g e point. W h e r e credit provided t o a
particular d e p o s i t o r y institution is anticipated t o b e outstanding for an unusually
prolonged period and in relatively large a m o u n t s , the time period in w h i c h e a c h
rate under this structure is applied m a y b e shortened. S e e s e c t i o n 201.3(b)(2) o f
Regulation A .
3. R a t e s for short-term adjustment credit. For d e s c r i p t i o n and earlier data s e e
the f o l l o w i n g publications o f the B o a r d o f G o v e r n o r s : Banking and
Monetary
Range (or
level)—
All F . R .
Banks
10
10-10'/!
10W
10W-11
11
11-12
12
12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
10
10W
10W
11
11
12
12
13
13
13
12
11
11
10
10
11
12
13
13
1984— Apr.
9
13
N o v . 21
26
D e c . 24
In effect Apr. 26, 1985
R a n g e (or
level)—
All F . R .
Banks
13-14
14
13-14
13
12
HV2-H
W/2
11—11 Vi
11
10^
10-101/2
10
9W-10
9W
9-9W
9
8W-9
81/2-9
8!/2
8W-9
9
8W-9
8W
8
8
F.R.
Bank
of
N.Y.
14
14
13
13
12
II'/!
11W
11
11
10W
10
10
91/2
91/2
9
9
9
8W
S'/2
9
9
8W
8W
8
8
Statistics,
1914-1941,
and 1941-1970; Annual Statistical
Digest, 1970-1979,
1980,
1981, and 1982.
In 1980 and 1981, the Federal R e s e r v e applied a surcharge t o short-term
adjustment credit b o r r o w i n g s by institutions with d e p o s i t s o f $500 million or m o r e
that had b o r r o w e d in s u c c e s s i v e w e e k s or in m o r e than 4 w e e k s in a calendar
quarter. A 3 p e r c e n t surcharge w a s in effect from Mar. 17, 1980, through M a y 7,
1980. There w a s n o surcharge until N o v . 1 7 , 1 9 8 0 , w h e n a 2 p e r c e n t surcharge w a s
a d o p t e d ; the surcharge w a s s u b s e q u e n t l y raised t o 3 percent o n D e c . 5, 1980, and
t o 4 percent o n M a y 5, 1981. T h e surcharge w a s r e d u c e d t o 3 p e r c e n t e f f e c t i v e
Sept. 22, 1981, and to 2 p e r c e n t e f f e c t i v e O c t . 12. A s of Oct. 1, the f o r m u l a f o r
applying the surcharge w a s c h a n g e d from a calendar quarter to a m o v i n g 1 3 - w e e k
period. T h e surcharge w a s eliminated o n N o v . 17, 1981.
Policy Instruments
1.15
A7
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS'
Percent of deposits
Type of deposit, and
d e p o s i t interval
Member bank requirements
before implementation of the
Monetary Control Act
Percent
Net
$10 million-$100 million
$100 million-$400 million
Over $400 million
Time and savings2
Savings
12/30/76
12/30/76
12/30/76
12/30/76
12/30/76
3
Time4
$0 million-$5 million, by maturity
30-179 days
180 d a y s t o 4 y e a r s
4 years or more
O v e r $5 m i l l i o n , b y m a t u r i t y
30-179 days
180 d a y s t o 4 y e a r s
4 years or more
3
Effective date
Net transaction
accounts1'*
$ 0 - $ 2 9 . 8 million
O v e r $29.8 million
3
12
1/1/85
1/1/85
Nonpersonal
time
deposits9
B y original maturity
L e s s t h a n 1'/% y e a r s
1 Vi y e a r s o r m o r e
3
0
10/6/83
10/6/83
Eurocurrency
All t y p e s
3
11/13/80
3/16/67
3
21/2
1
3/16/67
1/8/76
10/30/75
6
2Vi
1
12/12/74
1/8/76
10/30/75
1. F o r c h a n g e s in r e s e r v e r e q u i r e m e n t s b e g i n n i n g 1963, s e e B o a r d ' s
Annual
Statistical
Digest,
1971-1975,
a n d f o r p r i o r c h a n g e s , s e e B o a r d ' s Annual
Report
f o r 1976, t a b l e 13. U n d e r p r o v i s i o n s o f t h e M o n e t a r y C o n t r o l A c t , d e p o s i t o r y
institutions include c o m m e r c i a l banks, mutual savings b a n k s , savings and loan
associations, credit u n i o n s , a g e n c i e s and b r a n c h e s of foreign b a n k s , and E d g e A c t
corporations.
2. R e q u i r e m e n t s c h e d u l e s a r e g r a d u a t e d , a n d e a c h d e p o s i t i n t e r v a l a p p l i e s t o
that part o f t h e d e p o s i t s o f e a c h b a n k . D e m a n d d e p o s i t s s u b j e c t t o r e s e r v e
r e q u i r e m e n t s w e r e g r o s s d e m a n d d e p o s i t s m i n u s c a s h i t e m s in p r o c e s s o f
collection and demand balances due from domestic banks.
T h e F e d e r a l R e s e r v e A c t a s a m e n d e d t h r o u g h 1978 s p e c i f i e d d i f f e r e n t r a n g e s o f
requirements for reserve city banks and for other banks. R e s e r v e cities were
d e s i g n a t e d u n d e r a c r i t e r i o n a d o p t e d e f f e c t i v e N o v . 9 , 1972, b y w h i c h a b a n k
having net d e m a n d deposits of m o r e than $400 million w a s c o n s i d e r e d to h a v e the
character o f business o f a reserve city bank. The presence o f the head office o f
s u c h a b a n k c o n s t i t u t e d d e s i g n a t i o n o f that p l a c e a s a r e s e r v e c i t y . C i t i e s in w h i c h
there were Federal R e s e r v e B a n k s or b r a n c h e s w e r e also reserve cities. A n y
banks having net d e m a n d d e p o s i t s o f $400 million or less w e r e c o n s i d e r e d to h a v e
the character of business of banks outside of reserve cities and w e r e permitted to
m a i n t a i n r e s e r v e s at r a t i o s s e t f o r b a n k s n o t in r e s e r v e c i t i e s .
E f f e c t i v e A u g . 2 4 , 1978, t h e R e g u l a t i o n M r e s e r v e r e q u i r e m e n t s o n n e t b a l a n c e s
d u e f r o m d o m e s t i c b a n k s t o t h e i r f o r e i g n b r a n c h e s a n d o n d e p o s i t s that f o r e i g n
branches lend to U . S . residents w e r e reduced to zero from 4 percent and 1 percent
respectively. T h e Regulation D reserve requirement o f borrowings from unrelated
banks abroad was also reduced to zero from 4 percent.
E f f e c t i v e w i t h t h e r e s e r v e c o m p u t a t i o n p e r i o d b e g i n n i n g N o v . 16, 1978,
domestic deposits of Edge corporations were subject to the same reserve
requirements as deposits of member banks.
3. N e g o t i a b l e o r d e r o f w i t h d r a w a l ( N O W ) a c c o u n t s a n d t i m e d e p o s i t s s u c h a s
Christmas and vacation c l u b a c c o u n t s w e r e subject to the s a m e requirements as
savings deposits.
T h e a v e r a g e r e s e r v e r e q u i r e m e n t o n s a v i n g s and o t h e r t i m e d e p o s i t s b e f o r e
i m p l e m e n t a t i o n o f t h e M o n e t a r y C o n t r o l A c t had t o b e at l e a s t 3 p e r c e n t , t h e
minimum specified by law.
4 . E f f e c t i v e N o v . 2 , 1978, a s u p p l e m e n t a r y r e s e r v e r e q u i r e m e n t o f 2 p e r c e n t
w a s i m p o s e d o n large t i m e d e p o s i t s o f $ 1 0 0 , 0 0 0 or m o r e , o b l i g a t i o n s o f a f f i l i a t e s ,
and ineligible a c c e p t a n c e s . T h i s s u p p l e m e n t a r y requirement w a s eliminated with
t h e m a i n t e n a n c e p e r i o d b e g i n n i n g J u l y 2 4 , 1980.
E f f e c t i v e w i t h t h e r e s e r v e m a i n t e n a n c e p e r i o d b e g i n n i n g O c t . 2 5 , 1979, a
m a r g i n a l r e s e r v e r e q u i r e m e n t o f 8 p e r c e n t w a s a d d e d t o m a n a g e d l i a b i l i t i e s in
e x c e s s o f a b a s e a m o u n t . T h i s m a r g i n a l r e q u i r e m e n t w a s i n c r e a s e d t o 10 p e r c e n t
b e g i n n i n g A p r . 3 , 1980, w a s d e c r e a s e d t o 5 p e r c e n t b e g i n n i n g J u n e 12, 1980, a n d
w a s e l i m i n a t e d b e g i n n i n g J u l y 2 4 , 1980. M a n a g e d l i a b i l i t i e s a r e d e f i n e d a s large
time deposits, Eurodollar borrowings, repurchase agreements against U . S .
government and federal a g e n c y securities, federal funds borrowings from nonm e m b e r i n s t i t u t i o n s , a n d c e r t a i n o t h e r o b l i g a t i o n s . In g e n e r a l , t h e b a s e f o r t h e
m a r g i n a l r e s e r v e r e q u i r e m e n t w a s o r i g i n a l l y t h e g r e a t e r o f (a) $ 1 0 0 m i l l i o n o r (b)
the a v e r a g e a m o u n t o f the m a n a g e d liabilities held b y a m e m b e r bank, E d g e
corporation, or family of U . S . b r a n c h e s and a g e n c i e s o f a foreign bank for the t w o
r e s e r v e c o m p u t a t i o n p e r i o d s e n d i n g S e p t . 2 6 , 1979. F o r t h e c o m p u t a t i o n p e r i o d
b e g i n n i n g M a r . 2 0 , 1980, t h e b a s e w a s l o w e r e d b y (a) 7 p e r c e n t o r ( b ) t h e d e c r e a s e
in a n i n s t i t u t i o n ' s U . S . o f f i c e g r o s s l o a n s t o f o r e i g n e r s a n d g r o s s b a l a n c e s d u e
from foreign offices o f other institutions b e t w e e n the base period (Sept. 13-26,
1979) a n d t h e w e e k e n d i n g M a r . 12, 1980, w h i c h e v e r w a s g r e a t e r . F o r t h e
c o m p u t a t i o n p e r i o d b e g i n n i n g M a y 2 9 , 1980, t h e b a s e w a s i n c r e a s e d b y i V i
p e r c e n t a b o v e t h e b a s e u s e d t o c a l c u l a t e t h e m a r g i n a l r e s e r v e in t h e s t a t e m e n t
D e p o s i t o r y institution requirements
after implementation of the
Monetary Control A c t 6
Percent
Effective date
demand2
7
9l/i
11 3 /4
12 3 /4
16'/4
T y p e of deposit, and
deposit interval5
liabilities
w e e k o f M a y 1 4 - 2 1 , 1980. In a d d i t i o n , b e g i n n i n g M a r . 19, 1 9 8 0 , t h e b a s e w a s
r e d u c e d t o t h e e x t e n t that f o r e i g n l o a n s a n d b a l a n c e s d e c l i n e d .
5. T h e G a r n - S t G e r m a i n D e p o s i t o r y I n s t i t u t i o n s A c t o f 1982 ( P u b l i c L a w 9 7 320) p r o v i d e s that $ 2 m i l l i o n o f r e s e r v a b l e liabilities ( t r a n s a c t i o n a c c o u n t s ,
n o n p e r s o n a l time d e p o s i t s , a n d E u r o c u r r e n c y liabilities) o f e a c h d e p o s i t o r y
institution be subject t o a z e r o p e r c e n t r e s e r v e requirement. T h e B o a r d is to adjust
the a m o u n t o f reservable liabilities subject to this z e r o p e r c e n t r e s e r v e requirement e a c h year for the next s u c c e e d i n g calendar year by 80 percent of the
p e r c e n t a g e i n c r e a s e in t h e t o t a l r e s e r v a b l e l i a b i l i t i e s o f all d e p o s i t o r y i n s t i t u t i o n s ,
m e a s u r e d o n an annual basis as o f June 30. N o c o r r e s p o n d i n g adjustment is t o b e
m a d e in t h e e v e n t o f a d e c r e a s e . E f f e c t i v e D e c . 9 , 1982, t h e a m o u n t o f t h e
e x e m p t i o n w a s e s t a b l i s h e d at $ 2 . 1 m i l l i o n . E f f e c t i v e w i t h t h e r e s e r v e m a i n t e n a n c e
p e r i o d b e g i n n i n g J a n . 1, 1985, t h e a m o u n t o f t h e e x e m p t i o n is $ 2 . 4 m i l l i o n . In
determining the reserve requirements of a depository institution, the e x e m p t i o n
shall a p p l y in t h e f o l l o w i n g o r d e r : (1) n o n p e r s o n a l m o n e y m a r k e t d e p o s i t a c c o u n t s
( M M D A s ) a u t h o r i z e d u n d e r 12 C F R s e c t i o n 1 2 0 4 . 1 2 2 ; (2) n e t N O W a c c o u n t s
( N O W a c c o u n t s l e s s a l l o w a b l e d e d u c t i o n s ) ; (3) n e t o t h e r t r a n s a c t i o n a c c o u n t s ;
and (4) nonpersonal time d e p o s i t s or E u r o c u r r e n c y liabilities starting with t h o s e
w i t h t h e h i g h e s t r e s e r v e ratio. W i t h r e s p e c t t o N O W a c c o u n t s a n d o t h e r
transaction a c c o u n t s , the e x e m p t i o n applies only to s u c h a c c o u n t s that w o u l d b e
subject to a 3 percent reserve requirement.
6 . F o r n o n m e m b e r b a n k s a n d thrift i n s t i t u t i o n s that w e r e n o t m e m b e r s o f t h e
F e d e r a l R e s e r v e S y s t e m o n o r a f t e r J u l y 1, 1979, a p h a s e - i n p e r i o d e n d s S e p t . 3 ,
1987. F o r b a n k s that w e r e m e m b e r s o n o r a f t e r J u l y 1, 1979, b u t w i t h d r e w o n o r
b e f o r e M a r . 3 1 , 1980, t h e p h a s e - i n p e r i o d e s t a b l i s h e d b y P u b l i c L a w 9 7 - 3 2 0 e n d s
o n O c t . 2 4 , 1985. F o r e x i s t i n g m e m b e r b a n k s t h e p h a s e - i n p e r i o d o f a b o u t t h r e e
y e a r s w a s c o m p l e t e d o n F e b . 2 , 1984. All n e w i n s t i t u t i o n s will h a v e a t w o - y e a r
phase-in beginning with the date that they o p e n for b u s i n e s s , e x c e p t for t h o s e
i n s t i t u t i o n s that h a v e t o t a l r e s e r v a b l e l i a b i l i t i e s o f $ 5 0 m i l l i o n o r m o r e .
7. T r a n s a c t i o n a c c o u n t s i n c l u d e all d e p o s i t s o n w h i c h t h e a c c o u n t h o l d e r i s
permitted to make withdrawals by negotiable or transferable instruments, paym e n t o r d e r s o f w i t h d r a w a l , a n d t e l e p h o n e a n d p r e a u t h o r i z e d t r a n s f e r s (in e x c e s s
o f t h r e e p e r m o n t h ) f o r t h e p u r p o s e o f m a k i n g p a y m e n t s t o third p e r s o n s o r o t h e r s .
H o w e v e r , M M D A s and similar a c c o u n t s offered b y institutions not subject to the
rules of the D e p o s i t o r y Institutions Deregulation C o m m i t t e e ( D I D C ) that permit
n o more than six preauthorized, automatic, or other transfers per m o n t h o f w h i c h
no more than three c a n be c h e c k s — a r e not transaction a c c o u n t s (such a c c o u n t s
are s a v i n g s d e p o s i t s subject to time d e p o s i t r e s e r v e r e q u i r e m e n t s . )
8. T h e M o n e t a r y C o n t r o l A c t o f 1980 r e q u i r e s that t h e a m o u n t o f t r a n s a c t i o n
accounts against w h i c h the 3 percent reserve requirement applies be modified
a n n u a l l y b y 8 0 p e r c e n t o f t h e p e r c e n t a g e i n c r e a s e in t r a n s a c t i o n a c c o u n t s h e l d b y
all d e p o s i t o r y i n s t i t u t i o n s d e t e r m i n e d a s o f J u n e 3 0 e a c h y e a r . E f f e c t i v e D e c . 3 1 ,
1981, t h e a m o u n t w a s i n c r e a s e d a c c o r d i n g l y f r o m $25 m i l l i o n t o $ 2 6 m i l l i o n ;
e f f e c t i v e D e c . 3 0 , 1982, t o $ 2 6 . 3 m i l l i o n ; e f f e c t i v e D e c . 2 9 , 1983, t o $ 2 8 . 9 m i l l i o n ;
a n d e f f e c t i v e J a n . 1, 1985, t o $ 2 9 . 8 m i l l i o n .
9. In g e n e r a l , n o n p e r s o n a l t i m e d e p o s i t s are t i m e d e p o s i t s , i n c l u d i n g s a v i n g s
d e p o s i t s , that are n o t t r a n s a c t i o n a c c o u n t s a n d in w h i c h a b e n e f i c i a l i n t e r e s t is
h e l d b y a d e p o s i t o r that is n o t a natural p e r s o n . A l s o i n c l u d e d are c e r t a i n
t r a n s f e r a b l e t i m e d e p o s i t s h e l d b y natural p e r s o n s , a n d c e r t a i n o b l i g a t i o n s i s s u e d
to depository institution offices located outside the U n i t e d States. F o r details, see
section 204.2 of Regulation D.
NOTE. R e q u i r e d r e s e r v e s m u s t b e h e l d in t h e f o r m o f d e p o s i t s w i t h F e d e r a l
R e s e r v e B a n k s or vault c a s h . N o n m e m b e r s m a y maintain reserve b a l a n c e s with a
Federal R e s e r v e Bank indirectly o n a pass-through basis with certain approved
institutions.
A8 Domestic Financial Statistics • June 1985
1.16
MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions1
Percent per annum
Type of deposit
Commercial banks
Savings and loan associations and
m u t u a l s a v i n g s b a n k s (thrift i n s t i t u t i o n s ) 1
In e f f e c t A p r . 3 0 , 1985
In e f f e c t A p r . 3 0 , 1985
Effective date
1
2
3
4
Savings
Negotiable order of withdrawal accounts
N e g o t i a b l e order o f w i t h d r a w a l a c c o u n t s o f $ 1,000 or m o r e 2
Money market deposit account2
Time
accounts
5 7-31 days of less than $1,0004
6 7-31 days of $1,000 or more2
7 M o r e t h a n 31 d a y s
1. E f f e c t i v e O c t . 1, 1983, r e s t r i c t i o n s o n t h e m a x i m u m r a t e s o f i n t e r e s t p a y a b l e
b y c o m m e r c i a l b a n k s a n d thrift i n s t i t u t i o n s o n v a r i o u s c a t e g o r i e s o f d e p o s i t s w e r e
r e m o v e d . F o r i n f o r m a t i o n r e g a r d i n g p r e v i o u s i n t e r e s t r a t e c e i l i n g s o n all c a t e g o ries o f a c c o u n t s s e e e a r l i e r i s s u e s o f t h e FEDERAL RESERVE BULLETIN, t h e
Federal
Home Loan Bank Board Journal,
a n d t h e Annual Report
of the
Federal
Deposit
Insurance
Corporation.
2. E f f e c t i v e D e c . 1, 1983, I R A / K e o g h ( H R 1 0 ) P l a n a c c o u n t s a r e n o t s u b j e c t t o
m i n i m u m d e p o s i t r e q u i r e m e n t s . E f f e c t i v e J a n . 1, 1985, t h e m i n i m u m d e n o m i n a tion requirement w a s l o w e r e d f r o m $2,500 to $1,000.
3. E f f e c t i v e D e c . 14, 1982, d e p o s i t o r y i n s t i t u t i o n s a r e a u t h o r i z e d t o o f f e r a n e w
a c c o u n t w i t h a r e q u i r e d initial b a l a n c e o f $ 2 , 5 0 0 a n d a n a v e r a g e m a i n t e n a n c e
b a l a n c e o f $ 2 , 5 0 0 n o t s u b j e c t t o i n t e r e s t rate r e s t r i c t i o n s . E f f e c t i v e J a n . 1, 1985,
SVi
SVt
0)
SVi
1/1/84
12/31/80
1/5/83
12/14/82
1/1/84
1/5/83
10/1/83
Percent
5'/4
(3)
SVi
Effective date
7/1/79
12/31/80
1/5/83
12/14/82
9/1/82
1/5/83
10/1/83
the minimum denomination and average maintenance balance requirements w a s
l o w e r e d t o $1,000. N o m i n i m u m maturity period is required for this a c c o u n t , but
d e p o s i t o r y i n s t i t u t i o n s m u s t r e s e r v e t h e right t o r e q u i r e s e v e n d a y s , n o t i c e b e f o r e
withdrawals. W h e n the a v e r a g e balance is less than $1,000, the a c c o u n t is subject
to the m a x i m u m ceiling rate o f interest for N O W a c c o u n t s ; c o m p l i a n c e w i t h the
average balance requirement may be determined over a period of o n e month.
D e p o s i t o r y i n s t i t u t i o n s m a y n o t g u a r a n t e e a rate o f i n t e r e s t f o r t h i s a c c o u n t f o r a
period longer t h a n o n e m o n t h or c o n d i t i o n t h e p a y m e n t of a rate o n a r e q u i r e m e n t
that t h e f u n d s r e m a i n o n d e p o s i t f o r l o n g e r t h a n o n e m o n t h .
4. E f f e c t i v e J a n . 1, 1985, t h e m i n i m u m d e n o m i n a t i o n r e q u i r e m e n t w a s l o w e r e d
from $2,500 to $1,000. D e p o s i t s of less than $1,000 issued to g o v e r n m e n t a l units
c o n t i n u e t o be subject t o a n interest rate ceiling o f 8 p e r c e n t .
Policy Instruments
1.17
A9
FEDERAL RESERVE OPEN MARKET TRANSACTIONS
Millions of dollars
1985
1984
T y p e of transaction
1982
1983
1984
Sept.
Aug.
Nov.
Oct.
Dec.
Jan.
Feb.
U . S . GOVERNMENT SECURITIES
Outright transactions ( e x c l u d i n g m a t c h e d
transactions)
Treasury
bills
Gross purchases
Gross sales
3
Exchange
Redemptions
4
17,067
8,369
0
3,000
18,888
3,420
0
2,400
20,036
8,557
0
7,700
187
1,491
0
800
3,249
71
0
0
507
1,300
0
2,200
4,463
0
0
0
3,410
0
0
0
0
2,668
0
1,600
2,976
214
0
400
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
312
0
17,295
-14,164
0
484
0
18,887
-16,553
87
1,126
0
16,354
-20,840
0
0
0
3,811
-2,274
0
600
0
872
0
0
0
0
8%
-1,497
0
146
0
1,348
-3,363
0
182
0
771
-966
0
0
0
596
-625
0
0
0
1,987
-2,739
0
10
11
1?
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
1,797
0
-14,524
11,804
1,896
0
-15,533
11,641
1,638
0
-13,709
16,039
0
0
-3,811
1,443
0
0
-872
0
0
0
-896
1,497
830
0
594
1,763
0
0
-771
966
0
0
-596
625
0
0
-1,902
1,645
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
388
0
-2,172
2,128
890
0
-2,450
2,950
536
300
-2,371
2,750
0
0
52
500
0
0
0
0
0
0
0
0
335
0
-1,893
850
0
0
0
0
0
100
0
0
0
0
-54
600
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
307
0
-601
234
383
0
-904
1,962
441
0
-275
2,052
0
0
-52
332
0
0
0
0
0
0
0
0
164
0
-49
750
0
0
0
0
0
0
0
0
0
0
-30
493
19,870
8,369
3,000
22,540
3,420
2,487
23,476
7,553
7,700
0
187
800
3,849
71
0
507
1,300
2,200
5,938
0
0
3,591
0
0
0
2,768
1,600
2,976
214
400
1
?
5
6
7
8
9
22
73
24
All
maturities
Gross purchases
Gross sales
Redemptions
26
Matched transactions
Gross sales
Gross purchases
543,804
543,173
578,591
576,908
808,986
810,432
79,087
78,842
52,893
55,776
89,689
85,884
51,904
55,516
63,674
61,537
66,668
66,367
57,076
57,283
77
28
Repurchase agreements
Gross purchases
Gross sales
130,774
130,286
105,971
108,291
139,441
139,019
4,992
166
26,040
30,867
0
0
12,063
12,063
3,888
2,261
20,225
21,852
19,584
17,077
8,358
12,631
8,908
2,478
1,835
-6,798
9,549
3,080
-6,295
5,077
0
0
189
0
0
292
0
0
256
0
0
5
0
0
1
0
0
14
0
0
90
0
0
0
0
0
0
0
0
17
18,957
18,638
8,833
9,213
1,205
817
381
12
3,743
4,112
0
0
698
698
506
119
1,463
1,851
2,428
2,048
130
-672
132
364
-370
-14
-90
388
388
363
1,285
-1,062
-418
0
0
0
0
0
0
0
9,773
10,897
6,116
2,842
1,465
-6,811
9,459
3,468
-6,683
5,440
2 9 N e t c h a n g e in U . S . g o v e r n m e n t s e c u r i t i e s
FEDERAL AGENCY OBLIGATIONS
Outright transactions
30
Gross purchases
31
Gross sales
32
Redemptions
33
34
Repurchase agreements
Gross purchases
Gross sales
35 N e t c h a n g e in f e d e r a l a g e n c y o b l i g a t i o n s
BANKERS ACCEPTANCES
36 R e p u r c h a s e a g r e e m e n t s , net
37
Total net change in System Open Market
Account
NOTE: S a l e s , r e d e m p t i o n s , a n d n e g a t i v e f i g u r e s r e d u c e h o l d i n g s o f t h e S y s t e m
O p e n M a r k e t A c c o u n t ; all o t h e r figures i n c r e a s e s u c h h o l d i n g s . D e t a i l s m a y n o t
add to totals b e c a u s e of rounding.
A10 DomesticNonfinancialStatistics • June 1985
1.18
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements
Millions of dollars
Account
End of month
1985
1985
M a r . 13
Mar. 6
F e b . 27
Wednesday
Mar. 20
Jan.
Mar. 27
Feb.
Consolidated condition statement
ASSETS
1 Gold certificate a c c o u n t
2 S p e c i a l d r a w i n g rights c e r t i f i c a t e a c c o u n t
3 Coin
Loans
4
T o depository institutions
5
Other
A c c e p t a n c e s — B o u g h t outright
6
Held under repurchase agreements . . . .
Federal agency obligations
7
B o u g h t outright
8
Held under repurchase agreements . . . .
U . S . government securities
B o u g h t outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright1
13
Held under repurchase agreements
14 T o t a l U . S . g o v e r n m e n t s e c u r i t i e s
15 Total loans and securities .
16 C a s h i t e m s in p r o c e s s o f c o l l e c t i o n . . .
17 B a n k p r e m i s e s
Other assets
18
D e n o m i n a t e d in f o r e i g n c u r r e n c i e s 2 .
19
All o t h e r 3
20 Total assets.
11,093
4,618
555
11,093
4,618
560
11,093
4,618
565
11,093
4,618
561
11,093
4,618
548
11,095
4,618
497
11,093
4,618
551
11,093
4,618
566
1,939
1,509
5,840
1,465
385
2,139
2,329
2,582
8,372
8,372
8,372
8,372
8,372
8,389
8,372
380
8,372
67,413
64,644
23,444
155,501
70,721
66,070
23,444
160,235
70,642
66,070
23,444
160,156
69,355
66,070
23,444
158,869
69,655
66,070
23,444
159,169
66,467
65,137
22,951
154,555
71,469
66,070
23,444
160,983
155,501
160,235
160,156
158,869
159,169
154,555
69,036
64,644
23,444
157,124
2,508
159,632
165,812
170,116
174,368
168,706
167,926
165,083
170,713
171,937
6,814
571
7,871
572
6,433
572
6,609
572
6,429
576
6,161
570
6,241
571
6,127
572
3,790
7,510
3,627
7,199
3,637
7,488
3,638
7,657
3,643
7,894
3,631
8,104
3,498
7,060
3,971
7,933
200,763
205,656
208,774
203,454
202,727
199,759
204,345
206,817
162,710
163,653
164,117
163,720
163,515
162,125
162,992
163,728
22,090
3,099
223
452
24,548
4,002
199
433
28,308
3,698
232
411
22,895
3,623
211
721
22,097
4,204
216
439
19,858
5,349
244
560
25,092
3,308
332
461
26,997
3,063
253
347
25,864
29,182
32,649
27,450
26,956
26,011
29,193
30,660
6,226
2,321
7,080
2,318
6,074
2,261
6,390
2,218
6,155
2,412
5,659
2,355
6,297
2,463
5,829
2,445
197,121
202,233
205,101
199,778
199,038
196,150
200,945
202,662
1,669
1,670
1,617
136
1,677
1,617
379
1,687
1,624
365
1,685
1,624
380
1,639
1,669
1,626
347
1,626
1,626
344
105
1,687
1,624
844
200,763
205,656
208,774
203,454
202,727
199,759
204,345
206,817
115,296
114,354
115,506
116,649
116,519
114,890
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
160,983
LIABILITIES
21 F e d e r a l R e s e r v e n o t e s
Deposits
22
T o depository institutions
23
U.S. Treasury—General account.
24
Foreign—Official accounts
25
Other
26 Total deposits.
27 D e f e r r e d a v a i l a b i l i t y c a s h i t e m s
28 O t h e r l i a b i l i t i e s a n d a c c r u e d d i v i d e n d s 4 .
29 Total liabilities .
CAPITAL ACCOUNTS
3 0 C a p i t a l p a i d in
31 S u r p l u s
32 O t h e r c a p i t a l a c c o u n t s
33 Total liabilities and capital accounts
3 4 MEMO: M a r k e t a b l e U . S . g o v e r n m e n t s e c u r i t i e s h e l d in
c u s t o d y for foreign and international account
Federal Reserve note statement
35 F e d e r a l R e s e r v e n o t e s o u t s t a n d i n g
36
LESS: H e l d b y b a n k
37
Federal Reserve notes, net
Collateral
held against
notes
net:
38
Gold certificate account
39
S p e c i a l d r a w i n g rights c e r t i f i c a t e a c c o u n t
Other eligible a s s e t s
40
U . S . government and agency securities
41
42
Total collateral
194,549
31,839
162,710
194,688
31,035
163,653
195,045
30,928
164,117
195,559
31,839
163,720
196,165
32,650
163,515
193,440
31,315
162,125
194,635
31,643
162,992
196,021
32,293
163,728
11,093
4,618
0
146,999
11,093
4,618
0
147,942
11,093
4,618
0
148,406
11,093
4,618
0
148,009
11,093
4,618
0
147,804
11,095
4,618
0
146,412
11,093
4,618
0
147,281
11,093
4,618
0
148,017
162,710
163,653
164,117
163,720
163,515
162,125
162,992
163,728
1. Includes
securities l o a n e d — f u l l y guaranteed by U . S . g o v e r n m e n t securities
p l e d g e d w i t h F e d e r a l R e s e r v e B a n k s — a n d excludes
(if a n y ) s e c u r i t i e s s o l d a n d
scheduled to be bought back under matched sale-purchase transactions.
2. A s s e t s s h o w n in t h i s l i n e a r e r e v a l u e d m o n t h l y a t m a r k e t e x c h a n g e r a t e s .
3. I n c l u d e s s p e c i a l i n v e s t m e n t a c c o u n t at C h i c a g o o f T r e a s u r y b i l l s m a t u r i n g
within 90 days.
4. Includes e x c h a n g e - t r a n s l a t i o n a c c o u n t reflecting the m o n t h l y revaluation at
market e x c h a n g e rates of foreign-exchange c o m m i t m e n t s .
NOTE: S o m e o f t h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s H . 4 . 1 ( 5 0 3 ) r e l e a s e . F o r
address, see inside front c o v e r .
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
All
Maturity Distribution of Loan and Security Holdings
Millions of dollars
T y p e and maturity groupings
Wednesday
End o f m o n t h
1985
1985
Mar. 13
F e b . 28
Mar. 29
2,139
2,125
14
0
2,329
2,320
9
0
2,582
2,558
24
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
158,869
8,512
33,327
44,479
37,309
14,546
20,696
159,169
5,393
34,744
46,481
37,309
14,546
20,696
154,555
3,249
32,498
47,474
37,101
14,000
20,233
159,632
5,276
33,214
49,056
36,844
14,546
20,696
160,983
4,565
37,280
46,587
37,309
14,546
20,696
8,372
196
481
1,880
4,152
1,264
399
8,372
142
461
1,942
4,164
1,264
399
8,389
97
755
1,644
4,248
1,246
399
8,752
615
514
1,738
4,222
1,264
399
8,372
142
461
1,942
4,164
1,264
399
Mar. 20
Mar. 27
F e b . 27
Mar. 6
1 Loans—Total
2
Within 15 d a y s
3
16 d a y s to 90 d a y s
91 d a y s to 1 year
4
1,939
1,936
3
0
1,509
1,455
54
0
5,840
5,827
13
0
1,465
1,451
14
0
385
365
20
0
5 Acceptances—Total
Within 15 d a y s
6
7
16 d a y s t o 90 d a y s
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
155,501
4,207
33,057
46,136
36,859
14,546
20,696
160,235
9,504
31,185
46,995
37,309
14,546
20,696
160,156
9,365
31,636
46,604
37,309
14,546
20,696
8,372
234
514
1,739
4,222
1,264
399
8,372
135
598
1,769
4,207
1,264
399
8,372
74
603
1,881
4,151
1,264
399
9 U . S . government securities—Total
10
Within 15 d a y s 1
11
16 d a y s t o 9 0 d a y s
13
14
15
O v e r 1 year to 5 years
O v e r 5 years t o 10 years
O v e r 10 years
16 Federal a g e n c y obligations—Total
17
Within 15 d a y s '
18
16 d a y s t o 90 d a y s
19
91 d a y s t o 1 year
20
O v e r 1 year to 5 years
21
O v e r 5 years t o 10 years
22
O v e r 10 years
Jan. 31
1. H o l d i n g s under repurchase a g r e e m e n t s are c l a s s i f i e d as maturing within 15 d a y s in a c c o r d a n c e with m a x i m u m maturity o f the a g r e e m e n t s .
A12 DomesticNonfinancialStatistics • June 1985
1.20
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY
BASE
Billions of dollars, averages o f daily figures
1984
Item
1981
Dec.
1982
Dec.
1985
1984
Dec.
1983
Dec.
Sept.
Aug.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS'
1 Total reserves2
2
3
4
5
Nonborrowed reserves
N o n b o r r o w e d reserves plus e x t e n d e d credit3
Required reserves
Monetary base4
32.10
34.28
36.14
38.71
38.39
38.14
37.76
38.11
38.71
39.71
31.46
31.61
31.78
158.10
33.65
33.83
33.78
170.14
35.36
35.37
35.58
185.49
35.52
38.13
37.86
198.74
30.37
37.41
37.70
195.78
30.90
37.36
37.52
196.25
31.74
36.80
37.14
196.18
33.50
37.33
37.42
197.43
35.52
38.13
37.86
198.74
38.32
39.37
38.97
200.07
40.37
39.08
39.88
39.46'
202.1C
40.56
38.97
40.03
39.80
203.10
N o t seasonally adjusted
6 Total reserves2
7
8
9
10
Nonborrowed reserves
N o n b o r r o w e d reserves plus e x t e n d e d credit3
Required reserves
Monetary base4
32.82
35.01
36.86
40.13
37.70
37.88
37.95
38.69
40.13
40.70
32.18
32.33
32.50
160.94
34.37
34.56
34.51
173.17
36.09
36.09
36.30
188.76
36.94
39.55
39.28
202.02
29.68
36.72
37.01
196.11
30.64
37.10
37.25
196.07
31.94
36.99
37.33
196.13
34.07
37.91
37.99
198.22
36.94
39.55
39.28
202.02
39.31
40.36
39.96
200.93
41.92
41.85
38.89
40.70
37.26
38.04
38.51
39.23
40.70
41.12
41.29
41.44
41.61
170.47
41.22
41.41
41.35
180.52
38.12
38.12
38.33
192.36
37.51
40.09
39.84
202.59
29.25
36.29
36.57
195.68
30.80
37.29
37.41
196.23
32.50
37.37
37.89
196.69
34.62
38.54
38.54
198.77
37.51
40.09
39.84
202.59
39.73
40.88
40.38
201.35
39.88
38.59
39.39
38.97r
199.54'
40.06
38.47
39.53
39.30
200.95
N O T ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 5
11 T o t a l r e s e r v e s 2
12
13
14
15
Nonborrowed reserves
N o n b o r r o w e d reserves plus extended credit3
Required reserves
Monetary base4
1. F i g u r e s i n c o r p o r a t e a d j u s t m e n t s f o r d i s c o n t i n u i t i e s a s s o c i a t e d w i t h t h e
implementation of the M o n e t a r y Control A c t and other regulatory c h a n g e s to
r e s e r v e r e q u i r e m e n t s . T o a d j u s t f o r d i s c o n t i n u i t i e s d u e t o c h a n g e s in r e s e r v e
requirements o n reservable n o n d e p o s i t liabilities, the s u m o f such required
r e s e r v e s is s u b t r a c t e d f r o m t h e a c t u a l s e r i e s . S i m i l a r l y , in a d j u s t i n g f o r d i s c o n t i n u i t i e s in t h e m o n e t a r y b a s e , r e q u i r e d c l e a r i n g b a l a n c e s a n d a d j u s t m e n t s t o
c o m p e n s a t e f o r float a l s o a r e s u b t r a c t e d f r o m t h e a c t u a l s e r i e s .
2. T o t a l r e s e r v e s n o t a d j u s t e d f o r d i s c o n t i n u i t i e s c o n s i s t o f r e s e r v e b a l a n c e s
with Federal R e s e r v e B a n k s , w h i c h e x c l u d e required clearing balances and
a d j u s t m e n t s t o c o m p e n s a t e f o r float, p l u s v a u l t c a s h u s e d t o s a t i s f y r e s e r v e
r e q u i r e m e n t s . S u c h v a u l t c a s h c o n s i s t s o f all v a u l t c a s h h e l d d u r i n g t h e l a g g e d
c o m p u t a t i o n p e r i o d b y i n s t i t u t i o n s h a v i n g r e q u i r e d r e s e r v e b a l a n c e s at F e d e r a l
R e s e r v e B a n k s plus the a m o u n t o f vault c a s h equal to required r e s e r v e s during the
m a i n t e n a n c e p e r i o d at i n s t i t u t i o n s h a v i n g n o r e q u i r e d r e s e r v e b a l a n c e s .
3. E x t e n d e d c r e d i t c o n s i s t s o f b o r r o w i n g a t t h e d i s c o u n t w i n d o w u n d e r t h e
terms and conditions established for the e x t e n d e d credit program to help
d e p o s i t o r y i n s t i t u t i o n s d e a l w i t h s u s t a i n e d l i q u i d i t y p r e s s u r e s . B e c a u s e t h e r e is
not the s a m e n e e d t o repay s u c h b o r r o w i n g promptly as there is with traditional
s h o r t - t e r m a d j u s t m e n t c r e d i t , t h e m o n e y m a r k e t i m p a c t o f e x t e n d e d c r e d i t is
s i m i l a r t o that o f n o n b o r r o w e d r e s e r v e s .
4 . T h e monetary b a s e not adjusted for discontinuities c o n s i s t s of total r e s e r v e s
p l u s r e q u i r e d c l e a r i n g b a l a n c e s a n d a d j u s t m e n t s t o c o m p e n s a t e f o r float at F e d e r a l
Reserve Banks and the currency c o m p o n e n t of the m o n e y stock less the amount
40.27
38.98
39.83
39.37
199.94'
40.49
38.89
40.03
39.73
201.37
o f v a u l t c a s h h o l d i n g s o f thrift i n s t i t u t i o n s t h a t i s i n c l u d e d in t h e c u r r e n c y
c o m p o n e n t o f the m o n e y stock plus, for institutions not having required r e s e r v e
balances, the e x c e s s of current vault cash o v e r the amount applied to satisfy
current reserve requirements. After the introduction o f c o n t e m p o r a n e o u s r e s e r v e
r e q u i r e m e n t s ( C R R ) , c u r r e n c y a n d v a u l t c a s h figures a r e m e a s u r e d o v e r t h e
w e e k l y computation period ending M o n d a y .
B e f o r e C R R , all c o m p o n e n t s o f t h e m o n e t a r y b a s e o t h e r t h a n e x c e s s r e s e r v e s
are seasonally adjusted a s a w h o l e , rather than b y c o m p o n e n t , and e x c e s s
r e s e r v e s are a d d e d o n a not s e a s o n a l l y adjusted basis. A f t e r C R R , the s e a s o n a l l y
adjusted series c o n s i s t s o f s e a s o n a l l y adjusted total r e s e r v e s , w h i c h include
e x c e s s reserves o n a not seasonally adjusted basis, plus the seasonally adjusted
currency c o m p o n e n t of the m o n e y stock and the remaining items seasonally
adjusted as a whole.
5. R e f l e c t s a c t u a l r e s e r v e r e q u i r e m e n t s , i n c l u d i n g t h o s e o n n o n d e p o s i t liabilities, with n o adjustments t o eliminate the effects of discontinuities a s s o c i a t e d
with implementation of the Monetary Control A c t or other regulatory changes to
reserve requirements.
NOTE. L a t e s t m o n t h l y a n d b i w e e k l y figures a r e a v a i l a b l e f r o m t h e B o a r d ' s
H.3(502) statistical release. Historical data and e s t i m a t e s o f the i m p a c t o n
r e q u i r e d r e s e r v e s o f c h a n g e s in r e s e r v e r e q u i r e m e n t s a r e a v a i l a b l e f r o m t h e
Banking Section, Division of Research and Statistics, Board of G o v e r n o r s of the
Federal Reserve S y s t e m , Washington, D . C . 20551.
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Billions of dollars, averages of daily figures
1985
1984
1981
Dec.
1982
Dec.
1983
Dec.
1984
Dec.
Dec.
Jan.
Feb.
Mar.
562.7
2,398.8'
3,020.6'
n.a.
6,000.8
569.3
2,420.9'
3,041.3'
n.a.
6,062.5'
159.4
5.3
249.1
148.9
160.6
5.3
251.7
151.7
1,836.1'
621.8'
1,851.6'
620.4'
1,857.2
625.6
S e a s o n a l l y adjusted
1 Ml
7 M2
M3
4 L
5 Debt2
Ml components
Currency2
Travelers c h e c k s 3
Demand deposits4
Other c h e c k a b l e d e p o s i t s 5
6
7
8
9
Nontransactions components
In M2 6
11
In M3 o n l y 7
10
441.9
1,796.6
2,236.7
2,598.4
4,323.8
480.5
1,965.3
2,460.3
2,868.7
4,710.1
525.4
2,196.3
2,710.4
3,178.7
5,224.6
558.5
2,371.3'
2,995.1'
3,543.9'
5,936.6'
124.0
4.3
236.2
77.4
134.1
4.3
239.7
102.4
148.0
4.9
243.7
128.9
158.7
5.2
248.6
1,354.6
440.2
1,484.8
495.0
1,670.9
514.1
1,812.9
623.8
ne.O'
558.5
2,371.3'
2,995.1'
3,543.9'
5,936.6'
158.7
5.2
248.6
146.C
1,812.9
623.8
572.0
2,429.2
3,054.8
n.a.
n.a.
161.3
5.4
251.8
153.5
17
13
Savings deposits9
Commercial Banks
Thrift institutions
159.7
186.1
164.9
197.2
134.6
178.2
122.6
166.0'
122.6
166.0'
121.6
167.0'
121.4
168.2'
120.3
168.7
14
15
Small d e n o m i n a t i o n time d e p o s i t s 9
Commerical B a n k s
Thrift institutions
349.6
477.7
382.2
474.7
353.1
440.0
387.0
498.0'
387.0
498.0'
384.7'
496.8'
382.0'
495.1'
382.8
495.7
16
17
M o n e y market mutual f u n d s
General p u r p o s e and broker/dealer
Institution-only
150.6
36.2
185.2
48.4
138.2
43.2
167.7
62.7
167.7
62.7
172.2
65.0
175.4
62.2
177.9
59.5
18
19
Large d e n o m i n a t i o n time d e p o s i t s 1 0
Commercial B a n k s 1 1
Thrift institutions
247.3
54.3
261.8
66.1
225.1
100.4
264.4
152.4
264.4
152.4
262.3
155.0
264.4'
155.4'
269.4
154.1
70
21
Debt components
Federal debt
N o n - f e d e r a l debt
830.1
3,493.7
991.4
3,718.7
1,173.1
4,051.6
1,367.1
4,569.6'
1,367.1
4,569.9'
1,385.5'
4,615.3'
1,402.2
4,660.3
n.a.
n.a.
558.5
2,414.4'
3,034.6'
n.a.
6,038.6'
564.7
2,429.5
3,056.5
n.a.
n.a. '
N o t s e a s o n a l l y adjusted
452.3
1,798.7
2,242.7
2,605.6
4,323.8
491.9
1,967.4
2,466.6
2,876.5
4,710.1
537.9
2,198.1
2,716.5
3,189.4
5,218.5
570.4
2,376.3
3,002.3
3,545.2'
5,930.2'
570.4
2,376.3
3,002.3
3,545.2'
5,930.2'
568.2
2,404.0'
3,024.3'
n.a.
5,992.3
126.1
4.1
243.6
78.5
136.4
4.1
247.3
104.1
150.5
4.6
251.6
131.3
160.9
4.9
257.4
147.2
160.9
4.9
257.4
147.2
158.3
4.9
254.9
150.1
158.6
5.0
244.9
150.0
1,346.3
444.1
1,475.5
499.2
1,660.2
518.4
1,805.9
626.0
1,805.9
626.0
1,835.8'
620.3'
1,855.9'
620.2'
1,864.7
627.0
26.3
16.6
230.0
145.9
267.1
147.9'
267.1
147.9'
280.4
153.2'
289.3
158.9'
294.0
163.8
157.5
184.7
162.1
195.5
132.0
176.5
121.4
164.9'
121.4
164.9'
121.1
165.8'
120.4
166.7'
120.6
168.5
Small d e n o m i n a t i o n time d e p o s i t s 9
Commercial Banks
Thrift institutions
347.7
475.6
380.1
472.4
351.0
437.6
387.6
498.8
387.6
498.8
386.3'
501.6
384.1'
499.C
383.7
496.1
39
40
M o n e y market mutual f u n d s
General p u r p o s e and broker/dealer
Institution-only
150.6
36.2
185.2
48.4
138.2
43.2
167.7
62.7
167.7
62.7
172.2
65.0
175.4
62.2
177.9
59.5
41
42
Large d e n o m i n a t i o n time d e p o s i t s 1 0
Commercial B a n k s 1 1
Thrift institutions
252.1
54.3
266.2
66.2
228.5
100.7
265.9
151.6
265.9
151.6
263.0'
154.5
263.9'
155.3
269.7
153.2
43
44
Debt c o m p o n e n t s
Federal debt
N o n - f e d e r a l debt
830.1
3,943.7
991.4
3,718.7
1,170.2
4,048.3
77
73
74
75
26
Ml
M2
M3
L
Debt2
77
78
79
30
Ml components
Currency 2
Travelers c h e c k s 3
Demand deposits4
Other c h e c k a b l e d e p o s i t s 5
31
32
Nontransactions components
M26
M3 o n l y 7
33
34
M o n e y market d e p o s i t a c c o u n t s
Commercial banks
Thrift institutions
n.a.
n.a.
35
36
Savings deposits8
Commercial Banks
Thrift institutions
37
38
For n o t e s see f o l l o w i n g page.
1,364.7
4,565.5'
1,364.7
4,565.5'
1,383.1
4,609.2
1,383.1'
4,641.1'
159.8
5.1
246.3
153.5'
n.a.
n.a.
A14 DomesticNonfinancialStatistics • June 1985
NOTES TO T A B L E
1.21
1. C o m p o s i t i o n o f t h e m o n e y s t o c k m e a s u r e s a n d d e b t is a s f o l l o w s :
M l : (1) c u r r e n c y o u t s i d e t h e T r e a s u r y , F e d e r a l R e s e r v e B a n k s , a n d t h e v a u l t s
o f c o m m e r c i a l b a n k s ; (2) t r a v e l e r s c h e c k s o f n o n b a n k i s s u e r s ; (3) d e m a n d d e p o s i t s
at all c o m m e r c i a l b a n k s o t h e r t h a n t h o s e d u e t o d o m e s t i c b a n k s , t h e U . S .
g o v e r n m e n t , a n d f o r e i g n b a n k s a n d o f f i c i a l i n s t i t u t i o n s l e s s c a s h i t e m s in t h e
p r o c e s s o f c o l l e c t i o n a n d F e d e r a l R e s e r v e float; a n d (4) o t h e r c h e c k a b l e d e p o s i t s
( O C D ) consisting of negotiable order of withdrawal ( N O W ) and automatic transfer
s e r v i c e ( A T S ) a c c o u n t s a t d e p o s i t o r y i n s t i t u t i o n s , c r e d i t u n i o n s h a r e draft
a c c o u n t s , a n d d e m a n d d e p o s i t s a t thrift i n s t i t u t i o n s . T h e c u r r e n c y a n d d e m a n d
deposit c o m p o n e n t s e x c l u d e the estimated a m o u n t o f vault c a s h and d e m a n d
d e p o s i t s r e s p e c t i v e l y h e l d b y thrift i n s t i t u t i o n s t o s e r v i c e t h e i r O C D l i a b i l i t i e s .
M2: M l plus overnight (and continuing contract) repurchase a g r e e m e n t s (RPs)
i s s u e d b y all c o m m e r c i a l b a n k s a n d o v e r n i g h t E u r o d o l l a r s i s s u e d t o U . S . r e s i d e n t s
by foreign branches o f U . S . banks worldwide, M M D A s , savings and smalld e n o m i n a t i o n t i m e d e p o s i t s ( t i m e d e p o s i t s — i n c l u d i n g retail R P s — i n a m o u n t s o f
l e s s t h a n $ 1 0 0 , 0 0 0 ) , a n d b a l a n c e s in b o t h t a x a b l e a n d t a x - e x e m p t g e n e r a l p u r p o s e
and broker/dealer m o n e y market mutual funds. E x c l u d e s individual retirement
a c c o u n t s ( I R A ) a n d K e o g h b a l a n c e s at d e p o s i t o r y i n s t i t u t i o n s a n d m o n e y m a r k e t
f u n d s . A l s o e x c l u d e s all b a l a n c e s h e l d b y U . S . c o m m e r c i a l b a n k s , m o n e y m a r k e t
funds (general purpose and broker/dealer), foreign governments and commercial
banks, and the U . S . g o v e r n m e n t . A l s o subtracted is a c o n s o l i d a t i o n adjustment
that r e p r e s e n t s t h e e s t i m a t e d a m o u n t o f d e m a n d d e p o s i t s a n d v a u l t c a s h h e l d b y
thrift i n s t i t u t i o n s t o s e r v i c e t h e i r t i m e a n d s a v i n g s d e p o s i t s .
M3: M 2 plus l a r g e - d e n o m i n a t i o n time d e p o s i t s and term R P liabilities (in
a m o u n t s o f $ 1 0 0 , 0 0 0 o r m o r e ) i s s u e d b y c o m m e r c i a l b a n k s a n d thrift i n s t i t u t i o n s ,
term Eurodollars held b y U . S . residents at foreign b r a n c h e s o f U . S . banks
w o r l d w i d e a n d at all b a n k i n g o f f i c e s in t h e U n i t e d K i n g d o m a n d C a n a d a , a n d
b a l a n c e s in b o t h t a x a b l e a n d t a x - e x e m p t , i n s t i t u t i o n - o n l y m o n e y m a r k e t m u t u a l
funds. E x c l u d e s a m o u n t s held b y depository institutions, the U . S . g o v e r n m e n t ,
m o n e y market f u n d s , and f o r e i g n b a n k s and official institutions. A l s o subtracted is
a consolidation adjustment that r e p r e s e n t s the estimated a m o u n t o f overnight R P s
and Eurodollars held by institution-only m o n e y market mutual funds.
L: M 3 plus the n o n b a n k public holdings of U . S . savings b o n d s , short-term
Treasury securities, commercial paper and bankers a c c e p t a n c e s , net of m o n e y
market mutual fund holdings of these assets.
Debt: D e b t of d o m e s t i c nonfinancial s e c t o r s consists of outstanding credit
market debt o f the U . S . g o v e r n m e n t , state and local g o v e r n m e n t s , a n d 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
n o n f i n a n c i a l d e b t is t h e F e d e r a l R e s e r v e B o a r d ' s flow o f f u n d s a c c o u n t s . D e b t
data are o n an e n d - o f - m o n t h basis.
2. C u r r e n c y o u t s i d e t h e U . S . T r e a s u r y , F e d e r a l R e s e r v e B a n k s , a n d v a u l t s o f
c o m m e r c i a l b a n k s . E x c l u d e s t h e e s t i m a t e d a m o u n t o f v a u l t c a s h h e l d b y thrift
institutions to service their O C D liabilities.
3. O u t s t a n d i n g a m o u n t o f U . S . d o l l a r - d e n o m i n a t e d t r a v e l e r s c h e c k s o f n o n b a n k i s s u e r s . T r a v e l e r s c h e c k s i s s u e d b y d e p o s i t o r y i n s t i t u t i o n s a r e i n c l u d e d in
demand deposits.
4 . D e m a n d d e p o s i t s at c o m m e r c i a l b a n k s a n d f o r e i g n - r e l a t e d i n s t i t u t i o n s o t h e r
than t h o s e d u e t o d o m e s t i c b a n k s , the U . S . g o v e r n m e n t , and foreign b a n k s and
official i n s t i t u t i o n s l e s s c a s h i t e m s in t h e p r o c e s s o f c o l l e c t i o n a n d F e d e r a l
R e s e r v e float. E x c l u d e s t h e e s t i m a t e d a m o u n t o f d e m a n d d e p o s i t s h e l d a t
c o m m e r c i a l b a n k s b y thrift i n s t i t u t i o n s t o s e r v i c e t h e i r O C D l i a b i l i t i e s .
5. C o n s i s t s o f N O W a n d A T S b a l a n c e s at all d e p o s i t o r y i n s t i t u t i o n s , c r e d i t
u n i o n s h a r e draft b a l a n c e s , a n d d e m a n d d e p o s i t s a t thrift i n s t i t u t i o n s . O t h e r
c h e c k a b l e deposits seasonally adjusted equals the difference b e t w e e n the s e a s o n ally adjusted s u m o f d e m a n d d e p o s i t s plus O C D a n d s e a s o n a l l y a d j u s t e d d e m a n d
d e p o s i t s . I n c l u d e d a r e all c e i l i n g f r e e " S u p e r N O W s , " a u t h o r i z e d b y t h e
D e p o s i t o r y Institutions Deregulation c o m m i t t e e to be offered beginning Jan. 5,
1983.
6. S u m o f overnight R P s and overnight Eurodollars, m o n e y market f u n d
b a l a n c e s (general purpose and broker/dealer), M M D A s , and savings and small
t i m e d e p o s i t s , l e s s t h e c o n s o l i d a t i o n a d j u s t m e n t that r e p r e s e n t s t h e e s t i m a t e d
a m o u n t o f d e m a n d d e p o s i t s a n d v a u l t c a s h h e l d b y thrift i n s t i t u t i o n s t o s e r v i c e
their time and s a v i n g s d e p o s i t s liabilities.
7 . S u m o f large t i m e d e p o s i t s , t e r m R P s a n d t e r m E u r o d o l l a r s o f U . S .
residents, m o n e y market fund balances (institution-only), less a consolidation
a d j u s t m e n t that r e p r e s e n t s t h e e s t i m a t e d a m o u n t o f o v e r n i g h t R P s a n d E u r o d o l lars h e l d b y i n s t i t u t i o n - o n l y m o n e y m a r k e t f u n d s .
8. S a v i n g s d e p o s i t s e x c l u d e M M D A s .
9. S m a l l - d e n o m i n a t i o n t i m e d e p o s i t s — i n c l u d i n g retail R P s — a r e t h o s e i s s u e d
in a m o u n t s o f l e s s t h a n $ 1 0 0 , 0 0 0 . All i n d i v i d u a l r e t i r e m e n t a c c o u n t s ( I R A ) a n d
K e o g h a c c o u n t s at c o m m e r c i a l b a n k s a n d t h r i f t s a r e s u b t r a c t e d f r o m s m a l l t i m e
deposits.
10. L a r g e - d e n o m i n a t i o n t i m e d e p o s i t s a r e t h o s e i s s u e d in a m o u n t s o f $ 1 0 0 , 0 0 0
o r m o r e , e x c l u d i n g t h o s e b o o k e d at i n t e r n a t i o n a l b a n k i n g f a c i l i t i e s .
11. L a r g e - d e n o m i n a t i o n t i m e d e p o s i t s at c o m m e r c i a l b a n k s l e s s t h o s e h e l d b y
m o n e y market mutual funds, d e p o s i t o r y institutions, and foreign banks and
official institutions.
NOTE: L a t e s t m o n t h l y a n d w e e k l y figures a r e a v a i l a b l e f r o m t h e B o a r d ' s H . 6
(508) release. Historical data are available f r o m the B a n k i n g S e c t i o n , D i v i s i o n o f
Research and Statistics, Board of G o v e r n o r s of the Federal R e s e r v e S y s t e m ,
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.
1984
Sept.
1985
Oct.
Nov.
Dec.
Jan.
Feb.
Seasonally adjusted
DEBITS TO
2
Demand deposits
1
All i n s u r e d b a n k s
2
Major N e w Y o r k City banks
3
Other banks
4 A T S - N O W accounts3
5 Savings deposits4
80,858.7
34,108.1
46,966.5
761.0
679.6
90,914.4
37,932.9
52,981.5
1,036.2
720.3
109,642.3
47,769.4
61,873.1
1,405.5
741.4
124,117.4
55,591.4
68,526.0
1,640.6
566.8
142,907.3
67,488.7
75,418.5
1,698.6
597.2
134,016.3
60,992.8
73,023.5
1,678.5
579.1
137,512.0
62,341.0
75,171.0
1,677.5
486.0
140,678.6
64,474.7
76,203.9
1,552.0
501.3
143,281.5
63,157.0
80,124.5
1,618.6
499.8
285.8
1,116.7
185.9
14.4
4.1
324.2
1,287.6
211.1
14.5
4.5
379.7
1,528.0
240.9
15.6
5.4
424.5
1,822.5
261.7
16.2
4.6
486.8
2,199.6
286.9
16.9
4.9
448.2
1,917.5
273.3
16.5
4.7
453.4
1,903.0
277.8
16.3
4.0
468.6
2,008.6
284.2
14.6
4.2
471.4
1,902.2
295.9
15.0
4.2
DEPOSIT TURNOVER
6
7
8
9
10
Demand deposits2
All i n s u r e d b a n k s
Major N e w York City banks
Other banks
A T S - N O W accounts3
Savings deposits4
N o t seasonally adjusted
DEBITS TO
2
Demand deposits
11
All i n s u r e d b a n k s
12
Major N e w York City banks
Other banks
N
14 A T S - N O W a c c o u n t s 3
15 M M D A 5
16 S a v i n g s d e p o s i t s 4
81,197.9
34,032.0
47,165.9
737.6
91,031.8
38,001.0
53,030.9
1,027.1
672.9
720.0
286.4
1,114.2
186.2
14.0
325.0
1,295.7
211.5
14.4
4.1
4.5
109,517.6
47,707.4
64,310.2
1,397.0
567.4
742.0
120,120.8
54,329.0
65,791.8
1,523.7
821.6
543.1
141,249.5
64,790.2
76,459.2
1,665.7
901.1
616.2
131,791.6
61,148.7
70,643.0
1,524.8
819.7
538.7
140,166.0
64,498.9
75,667.1
1,625.4
899.7
470.6
148,880.1
68,203.1
80,677.0
1,838.9
1,103.9
544.7
129,297.2
57,337.4
71,959.8
1,524.4
980.9
455.5
379.9
1,510.0
240.5
15.5
2.8
5.4
408.9
1,786.4
249.8
15.2
3.4
4.5
479.9
2,120.7
289.9
16.6
3.7
5.1
438.8
1,944.6
262.7
14.9
3.2
4.4
447.1
1,910.8
270.5
15.4
3.4
3.9
486.0
2,025.9
295.9
17.1
4.0
4.6
437.2
1,780.6
273.0
14.3
3.4
3.9
DEPOSIT TURNOVER
Demand deposits2
17
All insured banks
18
Major N e w York City banks
19
Other banks
70 A T S - N O W a c c o u n t s 3
'1 M M D A 5
22 S a v i n g s d e p o s i t s 4
1. A n n u a l a v e r a g e s o f m o n t h l y
figures.
2. R e p r e s e n t s a c c o u n t s o f i n d i v i d u a l s , p a r t n e r s h i p s , a n d c o r p o r a t i o n s a n d o f
states and political subdivisions.
3. A c c o u n t s a u t h o r i z e d f o r n e g o t i a b l e o r d e r s o f w i t h d r a w a l ( N O W ) a n d a c counts authorized for automatic transfer to d e m a n d deposits (ATS). A T S data
a v a i l a b i l i t y starts w i t h D e c e m b e r 1978.
4. E x c l u d e s A T S and N O W a c c o u n t s , M M D A and special club a c c o u n t s , s u c h
as Christmas and v a c a t i o n clubs.
5. M o n e y m a r k e t d e p o s i t a c c o u n t s .
NOTE. H i s t o r i c a l d a t a f o r d e m a n d d e p o s i t s are a v a i l a b l e b a c k t o 1970 e s t i m a t e d
in part f r o m t h e d e b i t s s e r i e s f o r 2 3 3 S M S A s that w e r e a v a i l a b l e t h r o u g h J u n e
1977. H i s t o r i c a l d a t a f o r A T S - N O W a n d s a v i n g s d e p o s i t s a r e a v a i l a b l e b a c k t o
July 1977. B a c k d a t a are a v a i l a b l e o n r e q u e s t f r o m t h e B a n k i n g S e c t i o n , D i v i s i o n
of R e s e a r c h and Statistics, Board of G o v e r n o r s of the Federal R e s e r v e S y s t e m ,
Washington, D . C . 20551.
T h e s e data also appear o n the B o a r d ' s G . 6 (406) release. F o r address, see inside
front cover.
A16 DomesticNonfinancialStatistics • June 1985
1.23
LOANS A N D SECURITIES
All C o m m e r c i a l Banks1
Billions of dollars; averages o f W e d n e s d a y figures
1984
Apr.
May
June
July
1985
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Seasonally adjusted
1
Total loans and securities2
2 U . S . government securities
3 Other securities
4 Total loans and leases2
5
C o m m e r c i a l and industrial
6
Bankers acceptances held3..
Other commercial and
7
industrial
8
U.S. addressees4
9
Non-U.S. addressees4....
Real estate
10
Individual
11
12
Security
13
Nonbank
financial
institutions
14
Agricultural
15
State and political
subdivisions
16
Foreign banks
17
F o r e i g n official i n s t i t u t i o n s . . .
18
L e a s e financing r e c e i v a b l e s . . .
All other loans
19
1,612.9
1,629.8
1,636.6
1,652.6
1,662.1
1,674.9
1,682.8
1,701.1
1,714.8
1,724.0
1,742.1'
1,759.0
257.6
142.1
1,213.2
438.5
5.2
257.3
140.5
1,232.0
448.0
5.8
253.7
139.7
1,243.2
452.2
5.8
256.4
139.5
1,256.7
455.0
6.5
257.1
140.8
1,264.2
458.1
6.1
258.0
141.9
1,275.0
460.0
5.7
257.0
141.5
1,284.3
463.0
5.9
259.4
141.1
1,300.6
467.1
6.2
260.2
139.9
1,314.7
468.1
5.4
260.1
142.5
1,321.4
468.5
5.1
265.7
141.1'
1,335.3'
473.8
6.3
267.1
139.0
1,353.0
480.4
6.5
433.2
420.8
12.4
347.2
224.9
29.6
442.2
430.2
12.0
350.7
229.0
30.1
446.3
434.7
11.7
354.7
233.0
28.6
448.5
436.8
11.6
358.3
236.3
28.0
451.9
440.3
11.6
361.2
238.5
26.1
454.3
443.2
11.1
364.8
241.3
28.8
457.1
446.5
10.6
367.7
243.5
30.3
460.8
450.5
10.3
371.8
246.7
30.2
462.7
453.1
9.6
375.6
251.0
31.5
463.4
453.7
9.7
377.9
254.6
31.9
467.6'
457.4
10.2
381.9
257.7
31.6
473.9
463.6
10.3
385.7
262.0
32.8
30.5
40.1
31.4
40.3
31.4
40.4
31.4
40.6
30.9r
40.5
31.3'
40.7
31.2'
40.6
31.2
40.5
31.4
40.3
31.3'
40.2
30.9
40.2
30.7
40.3
36.8'
12.7
8.9
14.0
29^
ll.ff
12.3
8.9
14.1
29.6'
IS.P
12.3
8.8'
14.3
28.8'
40.3'
12.2
9.3
14.5
30^
41.1'
12.0
9.4
14.8
31.7'
41.6'
11.5
8.9'
15.0
31.2'
41.2'
11.4
8.5'
15.1
31.9'
42.1'
11.7
8.4
15.3
35.7'
44.0'
11.4
8.3
15.5
37.5'
46.8'
11.3
7.8'
15.6
35.2'
46^
11.4
7.9
15.8
37.4'
46.8
11.1
7.7
16.1
39.4
N o t seasonally adjusted
20
Total loans and securities2
21 U . S . g o v e r n m e n t s e c u r i t i e s
22 Other securities
23 Total l o a n s and l e a s e s 2
24
Commercial and i n d u s t r i a l . . . .
Bankers acceptances held3..
25
26
Other commercial and
industrial
27
U.S. addressees4
28
Non-U.S. addressees4
29
Real estate
Individual
30
Security
31
32
Nonbank
financial
institutions
Agricultural
33
34
State and political
subdivisions
35
Foreign banks
36
F o r e i g n official i n s t i t u t i o n s . . .
37
L e a s e financing r e c e i v a b l e s . . .
38
All other loans
1,613.7
1,626.6
1,637.6
1,646.7
1,656.1
1,673.3
1,684.0
1,701.9
1,725.8
1,732.0
1,740.2'
1,755.2
263.0
141.8
1,209.0
438.7
5.3
259.4
141.1
1,226.1
446.8
5.7
257.2
139.4
1,241.0
450.9
6.0
256.2
138.2
1,252.4
454.3
6.4
255.5
140.4
1,260.2
456.1
5.9
255.8
141.3
1,276.3
459.9
5.6
254.1
140.9
1,289.0
463.8
5.8
255.3
141.2
1,305.5
467.3
6.1
256.9
141.5
1,327.4
471.2
5.8
260.0
143.4
1,328.6
470.4
5.2
266.6
141.3'
1,332.2'
473.3
6.1
269.2
139.2
1,346.8
480.0
6.4
433.4
421.7
11.7
346.0
222.9
29.6
441.0
429.5
11.6
349.8
227.2
28.9
444.8
433.5
11.3
354.1
231.3
28.5
447.9
436.2
11.7
357.7
234.7
26.6
450.1
438.5
11.6
361.4
238.3
25.4
454.3
443.0
11.3
365.9
242.4
27.7
458.0
447.0
11.1
368.9
245.3
30.2
461.2
450.2
372.8
248.4
31.7
465.3
454.8
10.6
376.2
254.0
35.2
465.2
455.4
9.8
378.5
257.1
33.0
467.2
457.6'
9.7
381.5
257.4
30.8
473.6
463.8
9.8
384.6
259.8
32.2
30.7
39.4
31.2
40.2
31.4
40.9
31.4
41.3
31.(K
41.4
31.4'
41.5
31.1
41.2
31.1
40.6
31.5
40.0
31.4
39.6
30.7
39.4
30.7
39.3
36.8'
12.3
8.9
14.0
29.5'
37.&
12.0
8.9
14.1
29.6'
38.9'
11.8
8.8'
14.3
30.1'
40.3'
12.0
9.3
14.4
30.3'
41.1'
11.7
9.4
14.7
29.8'
41.6'
11.7
8.9'
14.9
30.5'
41.2'
11.8
8.5'
15.0
32.1'
42.1'
12.0
8.4
15.1
35.8'
44.C
12.0
8.3
15.5
39.5'
46.8'
11.6
7.8'
15.8
36.4'
46.6'
11.4
7.9
16.0
37.2'
46.8
10.9
7.7
16.2
38.6
1. D a t a a r e p r o r a t e d a v e r a g e s o f W e d n e s d a y e s t i m a t e s f o r d o m e s t i c a l l y c h a r tered insured banks, b a s e d o n w e e k l y s a m p l e reports and quarterly universe
reports. F o r foreign-related institutions, data are a v e r a g e s o f m o n t h - e n d e s t i m a t e s
b a s e d o n w e e k l y reports f r o m large U . S . a g e n c i e s and b r a n c h e s and quarterly
r e p o r t s f r o m all U . S . a g e n c i e s a n d b r a n c h e s , N e w Y o r k i n v e s t m e n t c o m p a n i e s
majority o w n e d b y foreign banks, and E d g e A c t corporations o w n e d by d o m e s t i cally chartered and foreign banks.
11.0
2. E x c l u d e s l o a n s t o c o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s .
3. I n c l u d e s n o n f i n a n c i a l c o m m e r c i a l p a p e r h e l d .
4. U n i t e d States includes the 50 states and the District o f C o l u m b i a .
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s G . 7 ( 4 0 7 ) r e l e a s e . F o r a d d r e s s , s e e
inside front cover.
Commercial Banking Institutions
1.24
A17
MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS'
Monthly averages, billions of dollars
1985
1984
Source
Apr.
Total nondeposit funds
Seasonally adjusted2
N o t seasonally adjusted
Federal funds, RPs, and other
borrowings from nonbanks3
3
Seasonally adjusted
4
N o t seasonally adjusted
5 N e t balances due to foreign-related
institutions, not seasonally
adjusted
1
2
MEMO
6 Domestically chartered banks' net
positions with o w n foreign
branches, not seasonally
adjusted4
7
Gross due from balances
8
Gross due to balances
9 Foreign-related institutions' net
positions with directly related
institutions, not seasonally
adjusted5
10
Gross due from balances
11
Gross due to balances
Security R P borrowings
12
S e a s o n a l l y adjusted®
13
N o t seasonally adjusted
U . S . Treasury demand balances7
14
Seasonally adjusted
15
N o t seasonally adjusted
Time deposits, $100,000 or more8
16
Seasonally adjusted
17
N o t seasonally adjusted
May
June
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
102.1
105.0
109.1
113.8
99.4
101.8
100.3
99.9
103.5
105.7
106.5
107.0
107.9
109.6
112.0
117.5
108.6
111.1
102.2
104.6
113.7'
117.1
116.6
119.0
135.7
138.7
137.4
142.1
133.2
135.7
134.5
134.0
139.3
141.5
141.6
142.1
141.4
143.1
145.0
150.5
140.5
143.1
138.7
141.1
146.7
150.2
147.2
149.6
-33.5
-28.2
-33.9
-34.2
-35.8
-35.1
-33.5
-33.1
-32.0
-36.5
-33.1
-30.6
-33.1
73.6
40.4
-29.8
73.5
43.6
-32.9
73.8
40.9
-33.1
71.2
38.1
-35.0
72.8
37.7
-35.2
71.5
36.3
-34.2
69.8
35.6
-32.7
68.3
35.6
-31.4
69.0
37.6
-34.9
71.4
36.5
-31.8
70.6
38.8
-29.8
71.5
41.7
-0.3
49.6
49.2
1.6
49.7
51.2
-0.9
50.7
49.7
-1.0
51.9
50.8
-0.7
51.6
50.8
0.1
51.7
51.8
0.7
50.8
51.5
-0.4
50.7
50.4
-0.6
52.0
51.4
-1.6
52.9
51.3
-1.3
54.0
52.7
-0.8
53.3
52.5
80.9
81.3
79.6
81.9
76.1
76.0
77.5
74.6
79.9
79.6
81.4
79.4
82.0
81.2
84.0
87.0
81.1
81.1
82.3
82.2
90.1
91.1
92.0
92.0
15.6
16.5
13.4
12.8
14.1
12.4
12.8
11.9
13.1
10.3
16.0
17.5
8.0
11.0
17.3
10.4
16.1
12.5
14.7
18.5
13.0
15.8
11.8
12.8
292.2
290.1
302.2
300.2
309.9
309.0
314.8
313.7
314.2
315.6
315.4
316.8
321.4
322.2
323.0
322.9
325.8
327.3
324.8
325.6
1. C o m m e r c i a l b a n k s a r e t h o s e in t h e 5 0 s t a t e s a n d t h e D i s t r i c t o f C o l u m b i a
with national o r state charters plus a g e n c i e s and b r a n c h e s o f foreign banks, N e w
York i n v e s t m e n t c o m p a n i e s majority o w n e d by foreign b a n k s , and E d g e A c t
corporations o w n e d by domestically chartered and foreign banks.
2. Includes s e a s o n a l l y adjusted federal f u n d s , R P s , and other b o r r o w i n g s f r o m
nonbanks and not seasonally adjusted net Eurodollars. Includes averages of
W e d n e s d a y data for domestically chartered banks and averages of current and
previous month-end data for foreign-related institutions.
3. O t h e r b o r r o w i n g s a r e b o r r o w i n g s o n a n y i n s t r u m e n t , s u c h a s a p r o m i s s o r y
n o t e o r d u e bill, g i v e n f o r t h e p u r p o s e o f b o r r o w i n g m o n e y f o r t h e b a n k i n g
business. This includes borrowings f r o m Federal R e s e r v e Banks and from foreign
July
325.3'"
324.9
329.8
330.1
banks, term federal funds, overdrawn due from bank balances, loan RPs, and
participations in p o o l e d loans.
4. A v e r a g e s o f d a i l y figures f o r m e m b e r a n d n o n m e m b e r b a n k s .
5. A v e r a g e s o f d a i l y d a t a .
6 . B a s e d o n d a i l y a v e r a g e d a t a r e p o r t e d b y 122 large b a n k s .
7 . I n c l u d e s U . S . T r e a s u r y d e m a n d d e p o s i t s a n d T r e a s u r y t a x - a n d - l o a n n o t e s at
commercial banks. A v e r a g e s o f daily data.
8. A v e r a g e s o f W e d n e s d a y
figures.
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s G . 10 ( 4 1 1 ) r e l e a s e . F o r a d d r e s s s e e
inside front cover.
A18 DomesticNonfinancialStatistics • June 1985
1.25
ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS
Billions of dollars
1983
Last-Wednesday-of-Month Series
1984
1985
Account
Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.'
Feb.'
Mar.
1.680.62
7.4
6.1
1.3
.0
1,249.32
111.42
1,137.92
419.4
332.4'
217.6'
168.52
1,764.1
381.2
248.2
133.0
14.6
1,368.3
122.8
1,245.5
452.9
354.6
232.8
205.2
1,765.3
378.2
246.5
131.7
15.7
1,371.4
118.6
1,252.8
454.4
356.8
235.2
206.5
1,784.5
376.2
243.5
132.7
20.0
1,388.4
127.1
1,261.2
455.2
361.8
240.0
204.2
1,798.9
377.3
243.5
133.8
20.9
1,400.6
123.3
1,277.3
459.9
366.7
243.4
207.3
1,822.7
375.2
241.2
134.0
22.5
1,424.9
126.1
1,298.8
467.7
369.8
247.1
214.2
1,822.7
374.4
240.4
133.9
21.9
1,426.4
122.6
1,303.8
468.7
374.4
249.6
211.1
1,864.0
377.5
242.5
134.9
22.9
1,463.7
126.9
1,336.8
476.8
377.7
255.5
226.8
1,854.6
380.9
245.0
136.0
24.2
1,449.5
125.2
1,324.3
470.0
380.7
257.4
216.1
1,874.4
382.0
248.0
134.0
27.6
1,464.8
128.6
1,336.2
476.8
382.6
258.1
218.7
1.879.1
383.6
250.8
132.8
23.7
1,471.7
124.3
1,347.4
482.7
385.9
260.6
218.3
219.6
23.5
23.4
73.2
185.6
19.1
21.8
63.7
179.1
19.4
21.6
60.2
177.3
17.4
22.2
60.7
176.0
.8
21.6
63.2
188.0
18.1
21.4
70.2
188.4
20.4
23.9
66.5
201.9
20.5
23.3
75.9
187.8
20.9
21.9
66.9
189.2
19.6
21.8
68.8
183.6
20.0
21.3
63.9
995
30.8
50.1
29.3
48.6
29.5
47.5
31.2
59.3
32.0
46.3
30.9
46.7
34.5
47.7
30.8
47.3
32.2
46.7
31.5
46.9
ALL COMMERCIAL BANKING
INSTITUTIONS 1
1 L o a n s and securities
2
Investment securities
3
U . S . government securities
4
Other
5
Trading account assets
6
Total loans
7
Interbank loans
8
L o a n s excluding interbank
9
C o m m e r c i a l and industrial
10
Real estate
11
Individual
12
All o t h e r
13 T o t a l c a s h a s s e t s
14
Reserves with Federal Reserve Banks
15
C a s h in v a u l t
16
C a s h i t e m s in p r o c e s s o f c o l l e c t i o n . . .
17
D e m a n d b a l a n c e s at U . S . d e p o s i t o r y
institutions
18
Other cash assets
J
19 O t h e r a s s e t s
201.2'
201.6'
190.1'
196.8'
195.2,
192.7
20
Total assets/total liabilities and capital . . .
2,093.8
193.6
2,141.4'
2,135.6'
2,152.4'
2,176.1'
2,212.2'
2,201.2'
2,262.6'
2,234.2
2,258.8
2,255.3
21
22
23
24
25
26
27
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual ( a s s e t s l e s s liabilities)
1,508.9
374.62
457.22
677.1
273.22
164.42
147.32
1,532.9
445.9
369.5
717.4
292.8
173.8'
141.9
1,535.5
441.4
368.5
725.6
292.0
167.9'
140.2
1,539.0
440.0
365.1
734.0
301.5
169.7'
142.1
1,549.9
442.3
364.9
742.7
307.1
172.9'
146.2
1,578.9
462.7
371.1
745.0
314.3
175.1'
144.0
1,578.2
453.1
378.1
747.0
298.8
179.4'
144.8
1,631.2
491.1
386.3
753.8
304.1
181.1'
146.2
1,604.5
456.9
400.0
747.5
306.7
174.2
148.9
1,617.9
459.3
406.8
751.8
309.0
182.6
149.3
1,625.2
457.6
409.8
757.8
300.2
180.5
149.4
254.I2
256.5
255.6
255.1
255.5
256.3
255.2
256.9
262.0
269.5
268.4
177.22
139.3
138.3
141.0
142.7
141.5
141.1
143.4
143.1
140.1
139.0
1.591.32
n.a.
n.a.
n.a.
n.a.
1.167.42
87.02
1,080.42
381.32
327.2
217.4
154.62
1,671.0
374.5
243.1
131.4
14.6
1,281.8
94.7
1,187.1
412.9
350.5
232.6
191.1
1,676.7
371.2
241.4
129.8
15.7
1,289.8
95.2
1,194.6
414.0
353.1
235.1
192.4
1,688.4
369.1
238.5
130.7
20.0
1,299.4
97.6
1,201.8
414.5
358.0
239.8
189.6
1,708.0
370.0
238.5
131.5
20.9
1,317.0
100.0
1,217.1
418.8
362.4
243.2
192.6
1,728.5
367.9
236.1
131.8
22.5
1,338.0
103.3
1,234.7
423.0
365.5
246.9
199.3
1,726.7
367.5
235.8
131.6
21.9
1,337.3
96.1
1,241.2
424.7
369.1
249.4
198.0
1,765.4
370.5
237.9
132.6
22.9
1,372.1
102.8
1,269.3
430.2
372.1
255.3
211.7
1,759.6
373.7
240.2
133.5
24.2
1,361.7
100.6
1,261.2
425.7
375.1
257.2
203.1
1,774.6
374.7
243.2
131.5
27.6
1,372.3
100.9
1,271.4
431.5
377.3
257.9
204.8
1,781.9
376.7
246.6
130.1
23.7
1,381.4
99.9
1,281.5
435.5
380.8
260.4
204.9
173.2
18.4
21.8
63.5
166.7
18.0
21.6
60.1
165.9
16.7
22.2
60.5
164.0
.1
21.6
63.0
176.6
17.1
21.4
69.9
176.8
19.7
23.9
66.3
190.3
19.2
23.3
75.7
175.7
20.2
21.9
66.7
177.8
18.7
21.8
68.5
172.4
19.2
21.3
63.7
29.4
40.1
27.9
39.2
28.2
38.3
29.7
49.6
30.7
37.5
29.4
37.5
32.9
39.3
29.5
37.5
30.9
37.9
30.2
38.0
MEMO
28 U . S . g o v e r n m e n t securities (including
trading a c c o u n t )
29 Other securities (including trading
account)
191.8
191.3'
191.9,
DOMESTICALLY CHARTERED
COMMERCIAL BANKS 3
30 L o a n s and securities
31
Investment securities
32
U . S . government securities
33
Other
34
Trading account assets
35
Total loans
36
Interbank loans
37
L o a n s excluding interbank
38
C o m m e r c i a l and industrial
39
Real estate
40
Individual
41
All other
42 Total cash assets
43
Reserves with Federal Reserve Banks
44
C a s h in v a u l t
45
C a s h i t e m s in p r o c e s s o f c o l l e c t i o n . . .
46
D e m a n d b a l a n c e s at U . S . d e p o s i t o r y
institutions
47
Other cash assets
207.0
19.9
23.4
73.0
\
„
150.4
141.5
138.9
140.6
145.6
147.9
139.7
142.1
137.6
139.0
137.3
49
Total assets/total liabilities and capital...
1,948.7
1,985.7
1,982.3
1,995.0
2,017.6
2,053.1
2,043.2
2,097.8
2,072.9
2,091.4
2,091.7
50
51
52
53
54
55
56
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual ( a s s e t s l e s s liabilities)
1,468.1
368.52
456.62
643.0
214.12
122.32
144.12
1,492.5
439.6
368.6
684.3
229.6
124.4
139.1
1,495.4
434.8
367.5
693.1
228.0
121.5
137.4
1,500.3
433.7
364.2
702.4
236.0
119.3
139.3
1,510.9
435.9
363.9
711.1
243.5
119.7
143.4
1,539.1
456.2
370.1
712.8
251.3
120.5
142.1
1,538.0
446.8
377.1
714.1
240.9
122.3
142.0
1,587.8
484.5
385.2
718.1
243.1
123.5
143.4
1,561.8
450.6
398.9
712.3
246.5
118.4
146.1
1,573.7
452.9
405.6
715.2
247.0
124.2
146.5
1,580.6
451.4
408.6
720.6
239.9
124.6
146.6
48 Other assets
1. C o m m e r c i a l b a n k i n g i n s t i t u t i o n s i n c l u d e i n s u r e d d o m e s t i c a l l y c h a r t e r e d
commercial banks, branches and a g e n c i e s o f foreign banks, Edge A c t and
Agreement corporations, and N e w York State foreign investment corporations.
2. D a t a a r e n o t c o m p a r a b l e w i t h t h o s e o f l a t e r d a t e s . S e e t h e A n n o u n c e m e n t s
s e c t i o n o f t h e M a r c h 1985 BULLETIN f o r a d e s c r i p t i o n o f t h e d i f f e r e n c e s .
3. I n s u r e d d o m e s t i c a l l y c h a r t e r e d c o m m e r c i a l b a n k s i n c l u d e all m e m b e r b a n k s
and insured n o n m e m b e r banks.
NOTE. F i g u r e s a r e p a r t l y e s t i m a t e d . T h e y i n c l u d e all b a n k - p r e m i s e s s u b s i d i a r ies and other significant majority-owned d o m e s t i c subsidiaries. L o a n and securities data for d o m e s t i c a l l y chartered c o m m e r c i a l b a n k s are e s t i m a t e s f o r the last
W e d n e s d a y of the m o n t h based o n a sample of w e e k l y reporting b a n k s and
quarter-end condition report data. D a t a for other banking institutions are estim a t e s m a d e f o r t h e last W e d n e s d a y o f t h e m o n t h b a s e d o n a w e e k l y r e p o r t i n g
sample of foreign-related institutions and quarter-end condition reports.
Weekly Reporting Commercial Banks
A19
1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1.4 Billion or More on
December 31, 1982, Assets and Liabilities
M i l l i o n s o f dollars, W e d n e s d a y
figures
1985
Feb. 13'
1 Cash and balances due from depository institutions
2 Total loans, leases and securities, net
3 U . S . Treasury and government agency
4
Trading account
5
Investment account, by maturity
One year or l e s s
6
Over one through five years
7
8
Over five years
9 Other securities
10
Trading account
11
Investment account
12
States and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks, and securities
16 Other trading account assets
17 Federal funds sold 1
18
T o commercial banks
19
T o nonbank brokers and dealers in securities
20
T o others
21 Other loans and leases, gross 2
22
Other loans, gross 2
23
Commercial and industrial 2
24
Bankers acceptances and commercial paper
25
All other
26
,
U . S . addressees
27
N o n - U . S . addressees
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Real estate loans 2
T o individuals for personal expenditures
T o depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions .
For purchasing and carrying securities
T o finance agricultural production
T o states and political subdivisions
T o foreign governments and official institutions
All other
L e a s e financing receivables
LESS: Unearned income
Loan and lease reserve 2
Other loans and leases, net 2
All other assets
44 Total assets
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U . S . government
Depository institutions in United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' 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 b a n k s . .
Liabilities for borrowed m o n e y
Borrowings from Federal R e s e r v e Banks
Treasury tax-and-loan notes
All other liabilities for borrowed m o n e y 3
Other liabilities and subordinated note and debentures
65 Total liabilities
66 Residual (total assets minus total liabilities) 4
67
68
69
70
71
72
73
MEMO
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 M M D A s ) . . .
Feb. 27'
Mar. (?
Mar. 13'
Mar. 20
Mar. 27
Apr. 3
93.186
105,799
90,937
91,565
94,050
90,761
87,073
92,397
823,236
827,490
828,532
830,350
829,742
827,400
829,298
836,345
85,711
17,610
68,102
20.187
34,476
13,438
47,934
3,551
44,382
39,828
5,340
34,488
4,554
3,435
51,377
36,863
10,403
4,111
651,311
638,450
251,284
3,945
247,338
241,727
5,612
162,827
114,714
42,066
11,386
6,410
24,270
13,187
6,921
29,380
3,851
14,220
12,860
5,260
11,272
634,779
132,311
90,052
20,289
69,762
19,958
37,044
12,760
47,799
3,571
44,228
39,678
5,329
34,349
4,550
3,238
91,520
21,500
70,020
20,318
36,711
12,991
47,251
3,169
44,082
39,529
5,252
34,278
4,552
2,956
91,954
22,234
69,720
21,652
34,968
13,100
47,185
3,247
43,938
39,363
5,245
34,118
4,575
2,965
90,327
20,417
69,910
21,687
35,002
13,220
46,710
3,248
43,463
38,886
4,922
33,964
4,577
3,047
86,954
17,652
69,302
21,043
35,224
13,035
46,742
3,610
43,132
38,577
4,559
34,018
4,556
2,490
86,950
17,512
69,438
21,211
35,213
13,013
47,143
3,802
43,341
38,737
4,542
34.195
4,604
2,427
87,428
17,316
70,112
21,576
35,254
13,282
45,845
2,614
43,231
38,471
4,543
33,928
4,761
3,018
49,599
34,612
10,619
4,368
653,379
640,394
252,335
3,844
248,492
242,797
5,694
49,087
33,724
11,048
4,315
654,350
641,193
253,256
3,928
249,329
243,615
5,714
47,357
31,169
11,698
4,490
657,627
644,422
255,601
4,403
251,198
245,440
5,758
51,504
35,205
11,514
4,785
654,985
641,780
254,935
4,138
250,797
245,080
5,717
48,994
33,478
10,368
5,148
659,004
645,800
256,079
3,758
252,322
246,554
5,768
51,804
36,335
10,281
5,187
657,592
644,3%
255,670
3,795
251,875
246,263
5,612
54,904
38,245
11,080
5,579
163,013
114,875
41,125
10,956
6,092
24,077
14,019
6,914
29,593
3,720
14,799
12,985
5,263
11,314
636,802
129,766
163,506
115,312
40,843
11,228
5,838
23,777
13,613
6,910
29,536
3,967
14,249
13,157
5,294
11,337
637,718
131,355
163,898
115,526
40,257
10,780
5,797
23,680
14,890
7,010
29.493
3,649
14,098
13,205
5,243
11.494
640,889
130,982
164,360
115,693
39,254
9,774
5.846
23,634
13,857
6,991
29,563
3,640
13,487
13,205
5,274
11,556
638,154
128,705
164,306
115,956
39,492
9,883
5,888
23,722
15,684
7,055
29,725
3,646
13,856
13,204
5,264
11,520
642,220
129,456
164,536
116,282
38,550
9,855
5,381
23,314
14,952
7,076
29,766
3,839
13,725
13.196
5,293
11,325
640,974
129,192
Apr. 10
661,828
648,580
256,355
3,735
252,620
247,078
5,542
164,469
116,552
39,635
10,068
5,518
24,049
16,496
7,018
29,631
3,876
14,549
13,249
5,223
11,457
645,149
134,017
1,048,734 1,063,055 1,050,824 1,052,898 1,052,497 1,047,617 1,045,563 1,062,759
7,106
184,854
97,090
194,793
145,332
4,693
4,512
23,456
6,050
850
9,900
38,852
465,610
430,602
22,953
342
9,073
2,640
193,651
500
4,597
188,554
96,021
974,260
972,226
988,927
73,357
73,337
73,832
800,824
664,638
156,978
2,897
1,974
923
176,916
799,726
663,206
157,742
2,828
1,927
900
177,132
804,711
668,420
156,796
2,855
1,962
893
178,585
181,664
141,993
4,408
1,156
20,259
4,989
690
8,169
36,597
462,460
426,942
23,170
355
9,242
2,750
199,639
5,521
2,164
191,954
98,458
185,023
140,153
5,169
4,040
21,427
5,429
776
8,029
36,409
463,404
427,898
23,452
349
8,991
2,714
193,034
1,043
8,675
183,316
96,391
979,303
978,817
73,595
73,679
2,822
805,138
663,035
157,026
2,828
1,880
942
176,302
942
176,755
801,594
661,510
156,689
2.847
1,918
929
176,492
188,257
145,246
4,684
1,617
20,951
6,131
922
8,705
35,851
460,175
424,908
22,841
449
9,006
2,970
197,168
1,369
8,269
187,530
93,819
197,177
148,877
5,515
1,897
25,266
6,366
821
8,435
35,960
460,259
424,992
22,935
447
8,968
2,917
200,258
780
9,147
190,331
96,134
185,247
140,364
4,883
2,713
22,190
5,740
744
8,612
35,478
462,500
426,428
23,360
423
9,334
2,955
197,142
1,544
10,360
185,238
97,436
184,905
140,530
5,154
2,286
22,104
5,392
736
8,703
37,317
462,928
427,604
22,967
455
9,117
2,784
197,169
975,270
989,788
977,804
73,464
73,268
73,020
791,518
654,438
156,125
2,811
1,872
939
174,802
798,500
657,411
155,714
2,841
1,910
931
175,664
800,212
658,485
157,194
1. Includes securities purchased under agreements to resell.
2. L e v e l s of major loan items were affected by the Sept. 26, 1984 transaction
b e t w e e n Continental Illinois National Bank and the Federal D e p o s i t 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 D e c . 31, 1977, s e e table 1.13.
4. This is not a measure of equity capital for use in capital adequacy analysis or
for other analytic uses.
Feb. 2(V
1,200
3,693
192,276
96,983
U
182,381
139,204
4.719
2,581
21,511
5,302
810
8,254
36,111
464,684
428,768
23,682
347
9,167
2.720
191,960
5. Exclusive of loans and federal funds transactions with domestic commercial
banks.
6. Loans sold are those sold outright to a bank's o w n foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank's holding c o m p a n y (if
not a bank), and nonconsolidated nonbank subsidiaries of the holding c o m p a n y .
NOTE. These data also appear in the Board's H . 4 . 2 (504) release. For address,
s e e inside front cover.
A20 DomesticNonfinancialStatistics • June 1985
1.28
LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities
Millions of dollars, Wednesday figures
1985
Account
F e b . 13
1 Cash and balances due from depository institutions
2
Total loans, leases and securities, net1
Feb. 20
F e b . 27
Mar. 6
M a r . 13
Mar. 20
Mar. 27
Apr.
3
Apr.
10
26,683
27,586
22,661
21,904
24,355
22,556
20,303
21,876
22,600
171,345
173,601
174,709
174,882
176,578'
175,223
174,424
176,765
175,284
10,499
1,658
6,944
1,897
12,756
1,764
9,683
1,309
13,243
2,200
9,631
1,412
13,207
2,256
9,447
1,504
13,335
2,257
9,447
1,631
13,411
2,276
9,527
1,609
13,365
2,255
9,494
1,615
13,404
2,293
9,365
1,747
13,335
2,321
9,280
1,734
9,655
8,800
1,253
7,547
855
9,592
8,729
1,239
7,490
862
9,571
8,715
1,229
7,486
856
9,522
8,677
1,219
7,458
845
9,254
8,360
995
7,365
894
9,137
8,269
909
7,360
868
9,194
8,349
933
7,416
845
9,171
8,291
908
7,383
880
9,231
8,354
910
7,444
877
20,082
11,936
4,760
3,386
136,667
134,404
61,840
825
61,016
60,359
657
25,486
16,251
10,932
1,975
1,782
7,174
7,219
486
7,915
788
3,487
2,264
1,505
3,379
131,783
68,061
20,452
11,175
5,558
3,719
138,536
136,279
61,988
800
61,188
60,533
654
25,268
16,320
11,711
2,425
1,990
7,296
8,307
466
7,842
840
3,536
2,257
1,457
3,341
133,738
68,778
21,640
13,469
5,330
2,841
135,944
133,671
61,210
798
60,412
59,729
683
25,359
16,357
11,129
1,920
2,035
7,174
7,064
487
7,874
900
3,289
2,273
1,470
3,396
131,078
66,996
Securities
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Investment
One year
Over one
O v e r five
account, by maturity
or less
t h r o u g h five y e a r s
years
Investment account
States and political subdivisions, by maturity
One year or less
Over one year
Other bonds, corporate stocks and securities
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Loans
and
leases
Federal funds sold3
To commercial banks
T o n o n b a n k b r o k e r s a n d d e a l e r s in securities
T o others
Other loans and leases, gross
Other loans, gross
C o m m e r c i a l and industrial
Bankers a c c e p t a n c e s and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
T o individuals for personal expenditures
T o d e p o s i t o r y a n d financial i n s t i t u t i o n s
C o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s
B a n k s in f o r e i g n c o u n t r i e s
N o n b a n k d e p o s i t o r y a n d o t h e r financial i n s t i t u t i o n s
For purchasing and carrying securities
T o finance a g r i c u l t u r a l p r o d u c t i o n
T o states and political subdivisions
T o foreign g o v e r n m e n t s a n d official institutions
All other
L e a s e financing r e c e i v a b l e s
LESS: U n e a r n e d i n c o m e
Loan and lease reserve
Other loans and leases, net
All other a s s e t s 4
20,214
12,478
5,353
2,383
135,793
133,729
61,334'
1,121
60,212'
59,566'
646
24,781
16,026
12,450
2,403
2,297
7,750
6,446
414'
7,732
917
3,629
2,064
1,472
3,344
130,976
68,871
20,598
12,728
5,228
2,642
135,496
133,352
60,926'
1,008
59,918'
59,275'
643
24,719
16,057
12,200
2,346
2,137
7,717
6,473
417'
7,897
811
3,853
2,144
1,478
3,363
130,655
70,046
20,884
12,713
5,487
2,684
135,885
133,599
61,345'
969
60,376'
59,722'
654
24,989
16,053
11,896
2,510
1,894
7,492
6,388
411'
7,884
1,045
3,587
2,286
1,500
3,374
131,010
70,073
19,281
10,979
5,398
2,904
137,768
135,490
62,331'
1,071
61,26C
60,606'
653
25,162
16,084
11,946
2,588
1,896
7,462
7,537
446r
7,840
794
3,350
2,277
1,472
3,424
132,871
70,962
1,973'
1,989'
7,427
7,054'
438'
7,910
793'
3,413'
2,267
1,490
3,450
131,601'
67,786'
19,894
11,735
4,822
3,338
137,709
135,435
62,146
773
61,373
60,712
660
25,359
16,185
11,467
1,976
2,026
7,464
7,682
472
7,886
799
3,439
2,274
1,488
3,440
132,781
67,642
44
Total assets
266,899
271,232
267,443
267,748
268,720'
265,421
262,788
267,420
264,880
50,468
34,964
815
378
4,813
4,556
726
4,216
49,593
34,137
834
237
5,033
4,764
631
3,957
47,565
32,122
733
637
5,077
4,235
576
4,184
45,784
31,334
785
321
4,647
3,976
551
4,169
44,348'
31,420'
687
166
4,028'
3,675'
5UY
3,862
47,193
32,189
799
841
4,896
4,146
526
3,795
44,275
30,741
615
548
4,683
3,984
610
3,093
47,910
31,732
665
853
5,058
4,665
674
4,262
46,144
31,702
657
428
4,127
4,226
811
4,192
3,854
84,011
75,959
3,905
83
2,445
1,620
64,418
500
2,298
61,620
40,669
3,787
84,471
76,312
3,979
81
2,504
1,596
67,959
3,888
85,200
77,145
4,008
70
2,488
1,489
67,925
3,794
84,555
76,552
4,011
65
2,466
1,461
65,248
4,133
84,935
77,235
3,887
62
2,354
1,397
65,241
875
67,050
41,321
3,830
84,581
76,478
4,037
69
2,537
1,460
68,962'
2,776
524
65,662'
43,442
3,823
84,715
76,760
4,044
65
2,386
1,460
64,374
2,497
65,462
41,997
3,756
85,226
76,761
4,084
70
2,678
1,632
65,645
425
2,894
62,326
41,943
2,446
61,928
41,946
1,765
63,483
41,621
1,072
64,169
41,669
4,233
84,642
77,038
3,860
61
2,360
1,324
64,412
950
9
63,453
41,864
243,421
247,807
244,135
244,120
245,164'
242,052
239,494
243,888
241,296
23,478
23,425
23,308
23,628
23,556
23,369
23,294
23,532
23,584
161,280
141,126
33,139
163,369
141,021
33,367
164,360
141,546
33,520
166,211
143,481
33,612
165,955'
143,366'
33,436'
166,440
143,892
33,395
165,396
142,838
33,173
167,963
145,388
33,083
164,761
142,195
32,582
Deposits
45 D e m a n d d e p o s i t s
46
Individuals, partnerships, and corporations
States and political subdivisions
47
48
U.S. government
D e p o s i t o r y institutions in the U n i t e d S t a t e s
49
B a n k s in f o r e i g n c o u n t r i e s
50
51
Foreign g o v e r n m e n t s and official institutions
Certified and officers' c h e c k s
52
53 Transaction balances other than d e m a n d d e p o s i t s
A T S , N O W , Super N O W , telephone transfers)
54 Nontransaction balances
55
Individuals, partnerships and corporations
States and political s u b d i v i s i o n s
56
57
U.S. government
58
D e p o s i t o r y institutions in the U n i t e d S t a t e s
F o r e i g n g o v e r n m e n t s , official institutions and b a n k s
59
60 Liabilities for borrowed m o n e y
61
Treasury tax-and-loan notes
62
All other liabilities for b o r r o w e d m o n e y 5
63
64 Other liabilities and subordinated note and d e b e n t u r e s
65
Total liabilities
66 R e s i d u a l (total a s s e t s m i n u s total liabilities)6
MEMO
67 Total loans and leases (gross) and investments adjusted1-7
68 Total loans and leases (gross) adjusted7
6 9 T i m e d e p o s i t s in a m o u n t s o f $ 1 0 0 , 0 0 0 o r m o r e
1. E x c l u d e s t r a d i n g a c c o u n t s e c u r i t i e s .
2. N o t a v a i l a b l e d u e t o c o n f i d e n t i a l i t y .
3. I n c l u d e s s e c u r i t i e s p u r c h a s e d u n d e r a g r e e m e n t s t o resell.
4. Includes trading a c c o u n t securities.
5. I n c l u d e s f e d e r a l f u n d s p u r c h a s e d a n d s e c u r i t i e s s o l d u n d e r a g r e e m e n t s
repurchase.
to
22,388
13,590
5,812
2,986
136,541'
134,274'
61,824'
902
60,922'
60,265'
656
25,328
16,125
11,39c
6. N o t a m e a s u r e o f e q u i t y capital for u s e in capital a d e q u a c y a n a l y s i s o r f o r
other analytic uses.
7. E x c l u s i v e o f l o a n s a n d f e d e r a l f u n d s t r a n s a c t i o n s w i t h d o m e s t i c c o m m e r c i a l
banks.
N O T E . T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s H . 4 . 2 ( 5 0 4 ) r e l e a s e . F o r a d d r e s s ,
see inside front cover.
Weekly Reporting Commercial Banks
1.30
A21
LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS WITH ASSETS OF
$750 MILLION OR MORE ON JUNE 30, 1980 Assets and Liabilities •
Millions of dollars, Wednesday figures
1985
Account
F e b . 13
1 Cash and due from depository institutions.
2 Total loans and securities
3 U . S . Treasury and govt, agency securities
4 Other securities
5 Federal funds sold1
6
T o c o m m e r c i a l b a n k s in the U n i t e d S t a t e s
7
T o others
O
t
8 her loans, gross
C o m m e r c i a l and industrial
9
10
Bankers acceptances and commercial
paper
11
All o t h e r
12
U.S. addressees
Non-U.S. addressees
13
14
T o financial i n s t i t u t i o n s
C
o
m m e r c i a l b a n k s in the U n i t e d S t a t e s .
15
16
B a n k s in f o r e i g n c o u n t r i e s
17
N o n b a n k financial i n s t i t u t i o n s
18
T o foreign g o v t s , and official institutions . .
For purchasing and carrying securities . .
19
All other
20
21 O t h e r a s s e t s (claims o n n o n r e l a t e d p a r t i e s ) . .
22 N e t due from related institutions
23 Total a s s e t s
24 D e p o s i t s or credit b a l a n c e s due to other
than directly related institutions
25
Credit balances
26
Demand deposits
27
Individuals, partnerships, and
corporations
28
Other
29
Time and savings deposits
Individuals, partnerships, and
30
corporations
Other
31
32 B o r r o w i n g s f r o m o t h e r t h a n d i r e c t l y
related institutions
33
Federal funds purchased2
34
F r o m c o m m e r c i a l b a n k s in t h e
United States
35
From others
36
O t h e r liabilities f o r b o r r o w e d m o n e y . . . .
37
T o c o m m e r c i a l b a n k s in t h e
United States
T o others
38
39 Other liabilities to nonrelated parties
40 N e t due to related institutions
41 T o t a l l i a b i l i t i e s
MEMO
42 Total loans (gross) and securities adjusted3
43 Total l o a n s (gross) adjusted3
7,412'
45,180'
4,022
Feb. 20
F e b . 27
Mar. 20
Mar. 27
Apr. 3
A p r . 10
6,583
45,461'
3,610
1,628'
4,788
4,382
406
35,435
20,043'
6,484
44,208
3,445
1,471
4,564
4,118
446
34,727
20,004'
6,346
45,032
3,581
1,460
4,035
3,661
374
35,956
21,272
6,152
46,013
3,630
1,442
4,582
4,186
396
36,359
21,405
6,296
44,727
3,466
1,542
3,172
2,673
500
36,546
21,411
6,751
44,792
3,461
1,575
4,002
3,611
390
35,754
21,300
5,070
4,629
442
34,558
20,248
4,397
3,993
404
35,326
20,470
1,733
18,515
17,369
1,146
10,484
8,233
1,432
819
666
1,001
2,158
18,763'
82,015'
1,900
18,569
17,434
1,135
10,968
8,722
1,344
902
650
1,015
2,223
18,686'
11,112
81,403'
1,759
18,652
17,456
1,196
11,158
8,914
1,322
923
702
978
2,165
19,245'
11,130
83,189
1,794
18,249'
16,937'
1,311
11,405
9,142
1,243
1,021
654
1,166'
2,167
19,158'
11,004
82,206
1,843
18,161'
16,925'
1,236
11,013
8,855
1,262
8%
653
896'
2,161
19,061'
9,871
79,623'
1,871
19,401
18,163
1,238
11,081
8,893
1,256
932
654
870
2,077
18,864
10,904
81,146
1,798
19,607
18,383
1,224
11,344
8,929
1,258
1,156
651
939
2,020
18,282
9,786
80,233
1,960
19,451
18,198
1,253
11,416
9,055
1,332
1,029
660
1,047
2,012
17,940
11,689
80,652
1,899
19,400
18,195
1,205
10,604
8,374
1,166
1,063
685
1,084
2,082
17,989
10,664
80,197
24,035'
193
1,613'
24,093'
140
1,67C
24,968'
232
1,621'
25,188'
146
1,745'
25,019'
130
1,64C
24,934
128
1,601
25,479
152
1,630
25,326
253
1,692
25,003
135
1,532
821
792'
22,229
916
754'
22,283
844'
777
23,115
857'
888'
23,297
822
817'
23,249
809
792
23,205
844
786
23,697
871
821
23,380
836
697
23,335
18,105
4,124
18,111
4,172
18,701
4,414
18,893
4,404
18,949
4,300
18,965
4,240
19,396
4,301
18,981
4,399
18,803
4,532
30,499
12,675
29,653
12,017
28,88C
10,742
28,427
10,542
27,122
9,851
28,257
11,421
28,450
11,212
30,304
13,262
29,532
12,547
9,940
2,735
17,824
9,365
2,652
17,636
8,396
2,346
18,137'
7,964
2,578
17,885
7,516
2,335
17,270
8,913
2,508
16,836
8,397
2,815
17,238
10,948
2,314
17,042
10,237
2,310
16,985
16,407
1,417
20,329
7,151'
82,015'
16,216
1,420
20,332
7,325
81,403'
16,687
1,45C
20,875
8,466
83,189
16,434
1,451
20,931'
7,661'
82,206
15,920
1,351
20,813'
6,669
79,623'
15,604
1,232
20,508
7,447
81,146
15,953
1,285
20,606
5,698
80,233
15,889
1,153
19,833
5,190
80,652
15,823
1,162
19,689
5,972
80,197
32,319'
26,767
32,528
27,008
32,468'
26,904
31,938'
26,700
31,234
26,318
32,478
27,437
32,897
27,826
32,999
27,991
32,807
27,770
10,66c
1,48c
A L e v e l s o f m a n y a s s e t a n d liability i t e m s w e r e r e v i s e d b e g i n n i n g O c t . 3 1 ,
1984. F o r d e t a i l s , s e e t h e H . 4 . 2 ( 5 0 4 ) s t a t i s t i c a l r e l e a s e d a t e d N o v . 2 3 , 1984.
1. I n c l u d e s s e c u r i t i e s p u r c h a s e d u n d e r a g r e e m e n t s t o r e s e l l .
2. I n c l u d e s s e c u r i t i e s s o l d u n d e r a g r e e m e n t s to r e p u r c h a s e .
M a r . 13
6,445
46,369'
4,050
1,513'
5,390
4,987
403
35,415
20,412
1,53c
6,362'
45,243'
4,040
Mar. 6
3. E x c l u s i v e o f l o a n s t o a n d f e d e r a l f u n d s s o l d t o c o m m e r c i a l b a n k s in t h e
United States.
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s H . 4 . 2 ( 5 0 4 ) r e l e a s e . F o r a d d r e s s ,
s e e inside front cover.
A22 DomesticNonfinancialStatistics • June 1985
1.31
G R O S S D E M A N D D E P O S I T S Individuals, Partnerships, and Corporations'
Billions of dollars, estimated daily-average balances
Commercial banks
Type of holder
1979 2
Dec.
1983
1980
Dec.
1981
Dec.
1984
1982
Dec.
Sept.
Dec.
Mar.
June
Sept.
Dec.
1
All holders—Individuals, partnerships, and
corporations
302.3
315.5
288.9
291.8
280.3
293.5
279.3
285.8
284.7
304.5
2
3
4
5
6
Financial business
Nonfinancial business
Consumer
Foreign
Other
27.1
157.7
99.2
3.1
15.1
29.8
162.8
102.4
3.3
17.2
28.0
154.8
86.6
2.9
16.7
35.4
150.5
85.9
3.0
17.0
32.1
150.2
77.9
2.9
17.1
32.8
161.1
78.5
3.3
17.8
31.7
150.3
78.1
3.3
15.9
31.7
154.9
78.3
3.4
17.4
31.3
154.8
78.4
3.3
16.8
33.0
166.3
81.7
3.6
19.9
W e e k l y reporting banks
19793
Dec.
1983
1980
Dec.
1981
Dec.
Sept.
7
8
9
10
11
12
All holders—Individuals, partnerships, and
corporations
Financial business
Nonfinancial business
Consumer
Foreign
Other
Dec.4
Mar.
June
Sept.
Dec.
139.3
147.4
137.5
144.2
136.3
146.2
139.2
145.3
145.3
157.1
20.1
74.1
34.3
3.0
7.8
21.8
78.3
35.6
3.1
8.6
21.0
75.2
30.4
2.8
8.0
26.7
74.3
31.9
2.9
8.4
23.6
72.9
28.1
2.8
8.9
24.2
79.8
29.7
3.1
9.3
23.5
76.4
28.4
3.2
7.7
23.6
79.7
29.9
3.2
8.9
23.7
79.2
29.8
3.2
9.3
25.3
87.1
30.5
3.4
10.9
1. F i g u r e s i n c l u d e c a s h i t e m s in p r o c e s s o f c o l l e c t i o n . E s t i m a t e s o f g r o s s
d e p o s i t s are b a s e d o n reports supplied b y a sample o f c o m m e r c i a l b a n k s . T y p e s of
d e p o s i t o r s in e a c h c a t e g o r y a r e d e s c r i b e d in t h e J u n e 1971 BULLETIN, p. 4 6 6 .
2. B e g i n n i n g w i t h t h e M a r c h 1979 s u r v e y , t h e d e m a n d d e p o s i t o w n e r s h i p
survey sample w a s reduced to 232 banks from 349 banks, and the estimation
p r o c e d u r e w a s m o d i f i e d s l i g h t l y . T o aid in c o m p a r i n g e s t i m a t e s b a s e d o n t h e o l d
a n d n e w r e p o r t i n g s a m p l e , t h e f o l l o w i n g e s t i m a t e s in b i l l i o n s o f d o l l a r s f o r
D e c e m b e r 1978 h a v e b e e n c o n s t r u c t e d u s i n g t h e n e w s m a l l e r s a m p l e ;
financial
b u s i n e s s , 27.0; nonfinancial b u s i n e s s , 146.9; c o n s u m e r , 98.3; foreign, 2.8; and
o t h e r , 15.1.
3. A f t e r t h e e n d o f 1978 t h e large w e e k l y r e p o r t i n g b a n k p a n e l w a s c h a n g e d t o
170 large c o m m e r c i a l b a n k s , e a c h o f w h i c h h a d total a s s e t s in d o m e s t i c o f f i c e s
1984
1982
Dec.
e x c e e d i n g $ 7 5 0 m i l l i o n a s o f D e c . 3 1 , 1977. B e g i n n i n g in M a r c h 1979, d e m a n d
d e p o s i t o w n e r s h i p e s t i m a t e s f o r t h e s e large b a n k s a r e c o n s t r u c t e d q u a r t e r l y o n t h e
b a s i s o f 97 s a m p l e b a n k s a n d are n o t c o m p a r a b l e w i t h e a r l i e r d a t a . T h e f o l l o w i n g
e s t i m a t e s in b i l l i o n s o f d o l l a r s f o r D e c e m b e r 1978 h a v e b e e n c o n s t r u c t e d f o r t h e
n e w l a r g e - b a n k p a n e l ; financial b u s i n e s s , 1 8 . 2 ; n o n f i n a n c i a l b u s i n e s s , 6 7 . 2 ;
c o n s u m e r , 32.8; foreign, 2.5; other, 6.8.
4. In J a n u a r y 1984 t h e w e e k l y r e p o r t i n g p a n e l w a s r e v i s e d ; it n o w i n c l u d e s 168
b a n k s . B e g i n n i n g w i t h M a r c h 1984, e s t i m a t e s a r e c o n s t r u c t e d o n t h e b a s i s o f 9 2
s a m p l e b a n k s a n d are n o t c o m p a r a b l e w i t h e a r l i e r d a t a . E s t i m a t e s in b i l l i o n s o f
d o l l a r s f o r D e c e m b e r 1983 b a s e d o n t h e n e w l y w e e k l y r e p o r t i n g p a n e l are:
financial b u s i n e s s , 2 4 . 4 ; n o n f i n a n c i a l b u s i n e s s , 8 0 . 9 ; c o n s u m e r , 3 0 . 1 ; f o r e i g n , 3 . 1 ;
other, 9.5.
Financial Markets
1.32
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES
A23
OUTSTANDING
Millions of dollars, end o f period
19843
1979 1
Dec.
Instrument
1980
Dec.
1981
Dec.
1982
Dec.2
1985
1983
Dec.
Sept.
Oct.
Nov.
Dec.
Jan/
Feb.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
2
3
4
5
6
Financial c o m p a n i e s 4
Dealer-placed
paper5
Total
Bank-related (not seasonally
adjusted)
Directly
placed
paper6
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies7
112,803
124,374
165,829
166,436
188,312
225,127
228,194
235,363
239,117
245,322
247,095
17,359
19,599
30,333
34,605
44,622
52,543
54,527
55,176
56,917
59,713
60,186
2,784
3,561
6,045
2,516
2,441
1,959
2,060
1,9%
2,035
2,137
2,265
64,757
67,854
81,660
84,393
96,918
107,537
105,379
109,419
110,474
113,101
114,824
17,598
30,687
22,382
36,921
26,914
53,836
32,034
47,437
35,566
46,772
41,066
65,047
38,112
68,288
40,185
70,768
42,105
71,726
43,046
72,508
42,759
72,085
Bankers dollar a c c e p t a n c e s (not seasonally adjusted)8
7 Total
Holder
Accepting banks
O w n bills
Bills bought
Federal Reserve Banks
O w n account
Foreign correspondents
Others
Basis
14 I m p o r t s i n t o U n i t e d S t a t e s
15 E x p o r t s f r o m U n i t e d S t a t e s
16 All o t h e r
8
9
10
11
12
13
45,321
54,744
69,226
79,543
78,309
77,928
75,741'
75,179
75,470
72,273
76,109
9,865
8,327
1,538
10,564
8,963
1,601
10,857
9,743
1,115
10,910
9,471
1,439
9,355
8,125
1,230
11,065
8,729
2,336
10,534
8,960
1,574
10,397
9,113
1,284
10,255'
9,065
1,191
10,060
8,839
1,220
10,569
9,672
897
704
1,382
33,370
776
1,791
41,614
195
1,442
56,731
1,480
949
66,204
418
729
68,225
0
686
66,177
0
658
64,549'
0
615
64,167'
0
671
64,543'
0
679
61,603
0
761
64,779
10,270
9,640
25,411
11,776
12,712
30,257
14,765
15,400
39,060
17,683
16,328
45,531
15,649
16,880
45,781
17,196
15,985
44,746
16,256
16,312
43,172
16,433
15,849
42,897
16,975
15,859
42,635
16,733
15,445
40,095
17,115
15,881
43,113
1. A c h a n g e in r e p o r t i n g i n s t r u c t i o n s r e s u l t s in o f f s e t t i n g s h i f t s in t h e d e a l e r p l a c e d a n d d i r e c t l y p l a c e d financial c o m p a n y p a p e r in O c t o b e r 1979.
2. E f f e c t i v e D e c . 1 , 1 9 8 2 , t h e r e w a s a b r e a k in t h e c o m m e r c i a l p a p e r s e r i e s . T h e
k e y c h a n g e s in t h e c o n t e n t o f t h e d a t a i n v o l v e d a d d i t i o n s t o t h e r e p o r t i n g p a n e l ,
the e x c l u s i o n of broker or dealer placed borrowings under any master note
a g r e e m e n t s f r o m t h e r e p o r t e d d a t a , a n d t h e r e c l a s s i f i c a t i o n o f a large p o r t i o n o f
bank-related paper from dealer-placed to directly placed.
3. C o r r e c t i o n o f a p r e v i o u s m i s c l a s s i f i c a t i o n o f p a p e r b y a r e p o r t e r h a s c r e a t e d
a b r e a k in t h e s e r i e s b e g i n n i n g D e c e m b e r 1983. T h e c o r r e c t i o n a d d s s o m e p a p e r t o
n o n f i n a n c i a l a n d t o d e a l e r - p l a c e d financial p a p e r .
4. I n s t i t u t i o n s e n g a g e d p r i m a r i l y in a c t i v i t i e s s u c h a s , b u t n o t l i m i t e d t o ,
commercial, savings, and mortgage banking; sales, personal, and mortgage
1.33
financing;
f a c t o r i n g , finance l e a s i n g , a n d o t h e r b u s i n e s s l e n d i n g ; i n s u r a n c e
underwriting; and other investment activities.
5. I n c l u d e s all financial c o m p a n y p a p e r s o l d b y d e a l e r s in t h e o p e n m a r k e t .
6. A s r e p o r t e d b y financial c o m p a n i e s that p l a c e t h e i r p a p e r d i r e c t l y w i t h
investors.
7. I n c l u d e s p u b l i c u t i l i t i e s a n d firms e n g a g e d p r i m a r i l y in s u c h a c t i v i t i e s a s
c o m m u n i c a t i o n s , c o n s t r u c t i o n , m a n u f a c t u r i n g , m i n i n g , w h o l e s a l e a n d retail t r a d e ,
transportation, and services.
8 . B e g i n n i n g O c t o b e r 1984, t h e n u m b e r o f r e s p o n d e n t s in t h e b a n k e r s a c c e p t a n c e s u r v e y w i l l b e r e d u c e d f r o m 3 4 0 t o 160 i n s t i t u t i o n s — t h o s e w i t h $ 5 0 m i l l i o n o r
m o r e in total a c c e p t a n c e s . T h e n e w r e p o r t i n g g r o u p a c c o u n t s f o r o v e r 95 p e r c e n t
o f total a c c e p t a n c e s activity.
P R I M E R A T E C H A R G E D B Y B A N K S on Short-Term Business Loans
Percent per annum
Rate
11.00
10.50
11.00
11.50
12.00
12.50
13.00
Effective Date
Rate
1984-— S e p t . 2 7
O c t . 17
29
Nov. 9
28
D e c . 20
12.75
12.50
12.00
11.75
11.25
10.75
1985- —Jan.
10.50
15
Month
1983—Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1984—Jan
Feb
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s H . 1 5 ( 5 1 9 ) r e l e a s e . F o r a d d r e s s ,
see inside front cover.
Month
Average
rate
11.16
10.98
10.50
10.50
10.50
10.50
10.50
10.89
11.00
11.00
11.00
11.00
11.00
11.00
1984—Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1985—Jan
Feb
Mar
Apr
A24 DomesticNonfinancialStatistics • June 1985
1.35
I N T E R E S T R A T E S M o n e y and Capital Markets
Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted.
1982
1983
1985, w e e k e n d i n g
1985
1984
Instrument
1984
Dec.
Jan.
Feb.
Mar.
Mar. 1
Mar. 8
M a r . 15
Mar. 22
Mar. 29
MONEY MARKET RATES
1 Federal funds1-2
2 Discount w i n d o w borrowing1'2 3
Commercial paper4'5
3
1-month
4
3-month
5
6-month
Finance paper, directly placed4'5
6
1-month
7
3-month
8
6-month
Bankers acceptances5'6
9
3-month
10
6-month
Certificates o f d e p o s i t , s e c o n d a r y m a r k e t 7
11
1-month
12
3-month
13
6-month
14 E u r o d o l l a r d e p o s i t s , 3 - m o n t h 8
U . S . Treasury bills5
Secondary market9
15
3-month
16
6-month
17
1-year
Auction average10
18
3-month
19
6-month
20
1 year
12.26
11.02
9.09
8.50
10.23
8.80
8.38
8.37
8.35
8.00
8.50
8.00
8.58
8.00
8.40
8.00
8.63
8.00
8.52
8.00
8.75
8.00
8.38
8.00
11.83
11.89
11.89
8.87
8.88
8.89
10.05
10.10
10.16
8.39
8.44
8.55
7.99
8.03
8.15
8.46
8.54
8.69
8.74
8.90
9.23
8.55
8.75
9.05
8.80
9.06
9.42
8.77
8.93
9.26
8.72
8.86
9.21
8.67
8.75
9.02
11.64
11.23
11.20
8.80
8.70
8.69
9.97
9.73
9.65
8.25
8.12
8.09
7.95
7.81
7.82
8.42
8.25
8.20
8.70
8.67
8.65
8.54
8.48
8.41
8.78
8.73
8.62
8.75
8.67
8.64
8.65
8.68
8.73
8.61
8.60
8.67
11.89
11.83
8.90
8.91
10.14
10.19
8.45
8.54
8.01
8.11
8.55
8.69
8.88
9.20
8.80
9.13
9.10
9.41
8.90
9.27
8.83
9.19
8.68
8.91
12.04
12.27
12.57
13.12
8.96
9.07
9.27
9.56
10.17
10.37
10.68
10.73
8.47
8.60
8.85
8.90
8.05
8.14
8.45
8.37
8.50
8.69
9.04
9.05
8.73
9.02
9.60
9.32
8.62
8.91
9.47
9.35
8.80
9.22
9.86
9.61
8.74
9.04
9.62
9.30
8.74
9.01
9.58
9.20
8.64
8.82
9.31
9.14
10.61
11.07
11.07
8.61
8.73
8.80
9.52
9.76
9.92
8.06
8.28
8.60
7.76
8.00
8.33
8.27
8.39
8.56
8.52
8.90
9.06
8.47
8.70
8.84
8.69
8.97
9.09
8.55
8.95
9.09
8.51
8.96
9.15
8.29
8.71
8.90
10.686
11.084
11.099
8.63
8.75
8.86
9.58
9.80
9.91
8.16
8.36
8.38
7.76
8.03
8.39
8.22
8.34
8.46
8.57
8.92
9.24
8.36
8.53
8.73
8.98
8.48
8.79
8.64
9.04
9.24
8.41
8.86
12.27
12.80
9.57
10.21
10.89
11.65
9.33
10.18
9.02
9.93
9.29
10.17
9.86
10.71
9.89
10.73
10.45
10.80
11.02
11.10
11.34
11.18
11.89
12.24
12.40
12.44
12.48
12.39
10.56
11.07
11.45
11.50
11.64
11.52
10.43
10.93
11.27
11.38
11.58
11.45
10.55
11.13
11.44
11.51
11.70
11.47
11.05
11.52
11.82
11.86
12.06
11.81
11.07
11.51
11.83
11.87
12.09
11.85
9.91
10.73
10.85
11.08
11.54
11.84
11.85
12.06
11.80
9.97
10.81
12.92
13.01
13.06
13.00
12.92
12.76
9.61
10.53
10.45
10.91
11.47
11.78
11.83
12.06
11.80
11.13
11.60
11.90
11.92
12.11
11.87
9.68
10.59
10.95
10.93
11.43
11.73
11.77
11.97
11.73
12.23
10.84
11.99
11.21
11.15
11.35
11.78
11.77
11.81
11.77
11.83
11.70
10.88
12.48
11.66
8.80
10.17
9.51
9.61
10.38
10.10
9.54
10.45
9.95
9.08
10.16
9.51
8.98
10.05
9.65
9.18
10.18
9.77
9.05
10.10
9.71
9.20
10.20
9.75
9.15
10.20
9.76
9.20
10.20
9.82
9.15
10.10
9.75
14.94
13.79
14.41
15.43
16.11
12.78
12.04
12.42
13.10
13.55
13.49
12.71
13.31
13.74
14.19
12.74
12.13
12.50
12.92
13.40
12.64
12.08
12.43
12.80
13.26
12.66
12.13
12.49
12.80
13.23
13.13
12.56
12.91
13.36
13.69
12.93
12.47
12.69
13.06
13.51
13.05
12.55
12.80
13.19
13.63
13.17
12.58
12.97
13.42
13.70
13.21
12.62
12.98
13.47
13.75
13.13
12.50
12.93
13.41
13.68
15.49
12.73
13.81
12.88
12.78
12.76
13.17
13.18
13.14
13.23
13.22
13.06
12.53
5.81
11.02
4.40
11.59
4.64
11.21
4.68
11.13
4.51
10.88
4.30
10.97
4.37
10.94
4.32
10.96
4.33
10.97
4.40
11.01
4.38
10.95
4.38
CAPITAL MARKET RATES
U . S . Treasury notes and b o n d s "
Constant maturities12
21
1-year
22
2-year
73
24
3-year
25
5-year
26
7-year
27
10-year
28
20-year
29
30-year
Composite14
30
O v e r 10 y e a r s ( l o n g - t e r m )
State and local notes and b o n d s
Moody's series15
31
Aaa
32
Baa
33
Bond Buyer s e r i e s 1 6
Corporate bonds
Seasoned issues17
34
All i n d u s t r i e s
35
Aaa
36
Aa
37
A
38
Baa
39
A - r a t e d , r e c e n t l y - o f f e r e d utility
bonds18
MEMO: D i v i d e n d / p r i c e r a t i o 1 9
40
Preferred stocks
41
Common stocks
1. W e e k l y a n d m o n t h l y figures a r e a v e r a g e s o f all c a l e n d a r d a y s , w h e r e t h e
rate f o r a w e e k e n d o r h o l i d a y is t a k e n t o b e t h e rate p r e v a i l i n g o n t h e p r e c e d i n g
b u s i n e s s d a y . T h e d a i l y rate i s t h e a v e r a g e o f t h e r a t e s o n a g i v e n d a y w e i g h t e d b y
t h e v o l u m e o f t r a n s a c t i o n s at t h e s e r a t e s .
2. W e e k l y figures a r e a v e r a g e s f o r s t a t e m e n t w e e k e n d i n g W e d n e s d a y .
3. R a t e f o r t h e F e d e r a l R e s e r v e B a n k o f N e w Y o r k .
4 . U n w e i g h t e d a v e r a g e o f o f f e r i n g r a t e s q u o t e d b y at l e a s t five d e a l e r s (in t h e
c a s e o f c o m m e r c i a l p a p e r ) , o r finance c o m p a n i e s (in t h e c a s e o f finance p a p e r ) .
B e f o r e N o v e m b e r 1979, m a t u r i t i e s f o r d a t a s h o w n a r e 3 0 - 5 9 d a y s , 90—119 d a y s ,
and 1 2 0 - 1 7 9 d a y s for c o m m e r c i a l paper; and 3 0 - 5 9 d a y s , 9 0 - 1 1 9 d a y s , and 1 5 0 179 d a y s f o r finance p a p e r .
5. Y i e l d s a r e q u o t e d o n a b a n k - d i s c o u n t b a s i s , rather t h a n a n i n v e s t m e n t y i e l d
b a s i s ( w h i c h w o u l d g i v e a h i g h e r figure).
6. D e a l e r c l o s i n g offered rates f o r top-rated b a n k s . M o s t representative rate
(which m a y be, but n e e d not b e , the a v e r a g e o f the rates quoted by the dealers).
7. U n w e i g h t e d a v e r a g e o f o f f e r e d r a t e s q u o t e d b y at l e a s t five d e a l e r s e a r l y in
the day.
8. C a l e n d a r w e e k a v e r a g e . F o r i n d i c a t i o n p u r p o s e s o n l y .
9. U n w e i g h t e d a v e r a g e o f c l o s i n g bid r a t e s q u o t e d b y at l e a s t five d e a l e r s .
10. R a t e s a r e r e c o r d e d in t h e w e e k in w h i c h bills are i s s u e d . B e g i n n i n g w i t h t h e
T r e a s u r y bill a u c t i o n h e l d o n A p r . 18, 1983, b i d d e r s w e r e r e q u i r e d t o s t a t e t h e
p e r c e n t a g e y i e l d ( o n a b a n k d i s c o u n t b a s i s ) that t h e y w o u l d a c c e p t t o t w o d e c i m a l
p l a c e s . T h u s , a v e r a g e i s s u i n g r a t e s in bill a u c t i o n s will b e r e p o r t e d u s i n g t w o
rather t h a n t h r e e d e c i m a l p l a c e s .
11. Y i e l d s a r e b a s e d o n c l o s i n g bid p r i c e s q u o t e d b y at l e a s t five d e a l e r s .
12. Y i e l d s a d j u s t e d t o c o n s t a n t m a t u r i t i e s b y t h e U . S . T r e a s u r y . T h a t i s , y i e l d s
a r e r e a d f r o m a y i e l d c u r v e at fixed m a t u r i t i e s . B a s e d o n o n l y r e c e n t l y i s s u e d ,
actively traded securities.
13. E a c h b i w e e k l y figure is t h e a v e r a g e o f five b u s i n e s s d a y s e n d i n g o n t h e
M o n d a y f o l l o w i n g t h e d a t e i n d i c a t e d . U n t i l M a r . 3 1 , 1983, t h e b i w e e k l y r a t e
d e t e r m i n e d t h e m a x i m u m i n t e r e s t rate p a y a b l e in t h e f o l l o w i n g t w o - w e e k p e r i o d
o n 2-'/2-year small saver certificates. ( S e e table 1.16.)
14. A v e r a g e s ( t o m a t u r i t y o r c a l l ) f o r all o u t s t a n d i n g b o n d s n e i t h e r d u e n o r
c a l l a b l e in l e s s t h a n 10 y e a r s , i n c l u d i n g s e v e r a l v e r y l o w y i e l d i n g " f l o w e r " b o n d s .
15. G e n e r a l o b l i g a t i o n s b a s e d o n T h u r s d a y figures; M o o d y ' s I n v e s t o r s S e r v i c e .
16. G e n e r a l o b l i g a t i o n s o n l y , w i t h 2 0 y e a r s t o m a t u r i t y , i s s u e d b y 2 0 s t a t e a n d
l o c a l g o v e r n m e n t a l u n i t s o f m i x e d q u a l i t y . B a s e d o n figures f o r T h u r s d a y .
17. D a i l y figures f r o m M o o d y ' s I n v e s t o r s S e r v i c e . B a s e d o n y i e l d s t o m a t u r i t y
on selected long-term bonds.
18. C o m p i l a t i o n o f t h e F e d e r a l R e s e r v e . T h i s s e r i e s is a n e s t i m a t e o f t h e y i e l d
o n r e c e n t l y - o f f e r e d , A - r a t e d utility b o n d s w i t h a 3 0 - y e a r m a t u r i t y a n d 5 y e a r s o f
call p r o t e c t i o n . W e e k l y d a t a are b a s e d o n F r i d a y q u o t a t i o n s .
19. S t a n d a r d a n d P o o r ' s c o r p o r a t e s e r i e s . P r e f e r r e d s t o c k r a t i o b a s e d o n a
s a m p l e o f t e n i s s u e s : f o u r p u b l i c u t i l i t i e s , f o u r i n d u s t r i a l s , o n e financial, a n d o n e
t r a n s p o r t a t i o n . C o m m o n s t o c k r a t i o s o n t h e 5 0 0 s t o c k s in t h e p r i c e i n d e x .
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s H . 1 5 ( 5 1 9 ) a n d G . 13 ( 4 1 5 ) r e l e a s e s .
F o r address, see inside front c o v e r .
Financial Markets
1.36
STOCK MARKET
Selected Statistics
1984
Indicator
1982
1983
Common stock
prices
1 N e w York Stock E x c h a n g e
(Dec. 31, 1965 = 50)
2
Industrial
Transportation
3
Utility
4
5
Finance
6 Standard & Poor's Corporation (1941-43 = 10)' . . .
7 American Stock E x c h a n g e 2
(Aug. 31, 1973 = 100)
of
1985
1984
July
Volume of trading (thousands
8 N e w York Stock E x c h a n g e
9 American Stock E x c h a n g e
A25
Aug.
Sept.
Oct.
Nov.
Dec.
Prices and trading (averages of daily
figures)
Jan.
Feb.
Mar.
68.93
78.18
60.41
39.75
71.99
119.71
92.63
107.45
89.36
47.00
95.34
160.41
92.46
108.01
85.63
46.44
89.28
160.50
87.08
102.29
76.72
44.17
79.03
151.08
94.49
111.20
86.86
46.69
87.92
164.42
95.68
112.18
86.88
47.47
91.59
166.11
95.09
110.44
86.82
49.02
92.94
164.82
95.85
110.91
87.37
49.93
95.28
166.27
94.85
109.05
88.00
50.58
95.29
164.48
99.11
113.99
94.88
51.95
101.34
171.61
104.73
120.71
101.76
53.44
109.58
180.88
103.92
119.64
98.30
53.91
107.59
179.42
141.31
216.48
207.96
192.82
207.90
214.50
210.39
209.47
202.28
211.82
228.40
225.62
64,617
5,283
85,418
8,215
91,084
6,107
79,156
5,141
109,892
7,477
93,108
5,967
91,676
5,587
83,692
6,008
89,032
7,254
121,545
9,130
115,489
10,010
102,591
8,677
shares)
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers 3
13,325
23,000
11 Margin stock
12 Convertible bonds
13 Subscription issues
12,980
344
22,720
279
t
5,735
8,390
6,620
8,430
7,015
10,215
Free credit balances
14 Margin-account
15 Cash-account
at
brokers4
22,470 22,980
t
6,430
8,125
22,810
22,800
22,330
22,350
22,470
22,090
6,855
8,185
6,690
8,315
6,580
8,650
6,699
8,420
7,015
10,215
6,770
9,725
t t t
t
t
t
Margin-account debt at brokers (percentage distribution, end of period)
16 Total
17
18
19
20
21
22
By equity class (in
Under 4 0
40-49
50-59
60-69
70-79
80 or more
100.0
100.0
100.0
100.0
100.0
21.0
24.0
24.0
14.0
9.0
8.0
41.0
22.0
16.0
9.0
6.0
6.0
46.0
18.0
16.0
9.0
5.0
6.0
52.0
17.0
12.0
8.0
5.0
6.0
40.0
22.0
16.0
9.0
6.0
7.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
44.0
21.0
14.0
9.0
6.0
6.0
47.0
19.0
13.0
9.0
6.0
6.0
46.0
18.0
16.0
9.0
5.0
6.0
35.0
19.0
20.0
36.0
20.0
18.0
7.0
8.0
8.0
8.0
38.0
20.0
18.0
10.0
7.0
7.0
percent)5
42.0
22.0
15.0
9.0
6.0
6.0
11.0
11.0
Special miscellaneous-account balances at brokers (end of period)
23 Total balances (millions of dollars)*
Distribution
by equity status
24 N e t credit status
Debt status, equity of
25
60 percent or more
26
L e s s than 60 percent
35,598
58,329
75,840 70,588
62.0
63.0
59.0
29.0
9.0
28.0
9.0
29.0
71,840
72,350
71,914
73,904
75,840
79,600
81,830
83,729
57.0
58.0
58.0
59.0
30.0
13.0
31.0
31.0
30.0
59.0
59.0
59.0
59.0
60.0
29.0
12.0
29.0
30.0
10.0
31.0
10.0
30.0
10.0
(percent)
11.0
11.0
11.0
11.0
11.0
Margin requirements (percent of market value and effective date) 7
Mar. 11, 1968
27 Margin stocks
28 Convertible bonds
29 Short sales
June 8, 1968
70
50
70
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Beginning July 1983, under the revised Regulation T, margin credit at
broker-dealers includes credit e x t e n d e d against stocks, convertible bonds, stocks
acquired through e x e r c i s e of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues w a s discontinued in April 1984, and margin credit at
broker-dealers b e c a m e the total that is distributed by equity class and s h o w n on
lines 17-22.
4. Free credit balances are in a c c o u n t s with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
80
60
80
May 6, 1970
65
50
65
D e c . 6, 1971
55
50
55
N o v . 24, 1972
65
50
65
Jan. 3, 1974
50
50
50
5. Each customer's equity in his collateral (market value of collateral l e s s net
debit balance) is expressed as a percentage of current collateral values.
6. 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.
7. Regulations G, T, and U of the Federal R e s e r v e Board of Governors,
prescribed in accordance with the Securities E x c h a n g e A c t 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 e x t e n d e d .
Margin requirements are the difference b e t w e e n the market value (100 percent)
and the maximum loan value. The term "margin s t o c k s " is defined in the
corresponding regulation.
A26 DomesticNonfinancialStatistics • June 1985
1.37
SELECTED FINANCIAL INSTITUTIONS
S e l e c t e d A s s e t s and Liabilities
Millions of dollars, end of period
1985
1984
1982
Account
1983
Apr.
May
June
Aug.
July
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
898,537'
558,276'
119,673'
220,588'
898,086
556,184
119,724
222,178
Savings and loan associations
773,417
494,789
104,274
174,354
808,264
510,670
106,863
190,731
825,557
519,628
110,033
195,896
840,682
528,172
109,752
202,758
850,780
535,814
108,456
206,510
860,088
540,644
108,820
210,624
877,642
550,129
112,350
215,163
881,627
552,516
112,023
217,088
887,696
556,229
114,879
216,588
902,449
555,277
125,358
221,814
707,646
773,417
808,264
825,557
840,682
850,780
860,088
877,642
881,627
887,696
902,449
898,537'
898,086
567,961
97,850
63,861
33,989
9,934
15,602
634,455
92,127
52,626
39,501
21,117
15,968
660,663
98,275
51,951
46,324
23,938
17,524
670,666
103,119
53,485
49,634
24,761
19,832
681,947
108,417
56,558
51,859
25,726
17,586
687,817
110,238
57,115
53,123
26,122
19,970
691,704
114,747
60,178
54,569
26,773
20,599
704,558
121,329
63,627
57,702
27,141
18,050
708,846
119,305
63,412
55,893
26,754
19,894
714,780
117,775
63,383
54,392
26,683
21,302
724,301
126,169
64,207
61,962
26,959
17,215
730,709'
114,806'
63,152'
51,654'
26,546'
18,358'
726,308
116,879
63,452
53,427
26,636
19,857
12 N e t w o r t h 3
26,233
30,867
31,802
31,940
32,732
32,755
33,038
33,705
33,582
33,839
34,764
34,664'
35,042
13 MEMO: M o r t g a g e l o a n c o m m i t m e n t s
outstanding4
18,054
32,9%
41,732
45,274
44,878
43,878
41,182
40,089
38,530
37,856
34,841
33,305'
34,217
1
2
3
4
Assets
Mortgages
Cash and investment securities'
Other
....
5 Liabilities and net worth
6
7
8
9
10
11
Savings capital
Borrowed money
FHLBB
Other
L o a n s in p r o c e s s 2
Other
707,646
483,614
85,438
138,594
Mutual savings banks5
14 Assets
15
16
17
18
19
20
21
Loans
Mortgage
Other
Securities
U.S. government6
State and local g o v e r n m e n t
Corporate and other7
Cash
Other assets
22 Liabilities
23
24
25
26
27
28
29
30
Deposits
Regular8
Ordinary savings
Time
Other
Other liabilities
General reserve accounts
MEMO: M o r t g a g e l o a n c o m m i t m e n t s
outstanding9
174,197
193,535
198,000
200,087
198,864
199,128
200,722
201,445
203,274
204,499' 203,898' 204,835
206,175
94,091
16,957
97,356
19,129
99,017
22,531
99,881
22,907
99,433
23,198
100,091
23,213
101,211
24,068
101,621
24,535
102,704
24,486
102,953
24,884'
102,895'
24,954'
103,394
25,747
103,654
26,456
9,743
2,470
36,161
6,919
7,855
15,360
2,177
43,580
6,263
9,670
15,913
2,033
43,122
5,008
10,376
16,404
2,024
43,200
5,031
10,640
15,448
2,037
42,479
5,452
10,817
15,457
2,037
42,682
4,896
10,752
15,019
2,055
42,632
4,981
10,756
14,965
2,052
42,605
4,795
10,872
15,295
2,080
43,003
4,605
11,101
15,034'
2,077
43,361'
4,795'
11,395'
14,643'
2,077
42,%2'
4,954'
11,413'
14,616
2,054
43,349
4,141
11,534
14,917
2,069
43,063
4,423
11,593
174,197
193,535
198,000
200,087
198,864
199,128
200,722
201,445
203,274
204,499' 203,898' 204,835
206,175
175,875
173,010
37,329
96,920
2,865
11,211
10,466
176,253
173,310
37,147
97,236
2,943
12,861
10,554
174,972
171,858
36,322
97,168
3,114
12,999
10,404
174,823
171,740
35,511
98,410
3,083
13,269
10,495
176,085
172,990
34,787
101,270
3,095
13,604
10,498
177,345
174,2%
34,564
102,934
3,049
12,979
10,488
178,624
175,727
34,221
104,151
2,897
13,853
10,459
180,073'
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
155,196
152,777
46,862
96,369
2,419
8,336
9,235
172,665
170,135
38,554
95,129
2,530
10,154
10,368
1,285
2,387
177,13c
34,009'
104,849'
2,943'
13,453'
10,535'
n.a.
180,616'
177,418'
33,739'
104,732'
3,198'
12,504'
lO^llX
n.a.
181,013
177,904
33,48C
104,067
3,109
12,962
10,613
n.a.
181,849
178,791
33,413
103,536
3,058
13,387
10,670
n.a.
Life insurance companies
31 Assets
32
33
34
35
36
37
38
39
40
41
42
Securities
Government
United States10
State and local.
Foreign"
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
588,163
654,948
671,259
673,518
679,449
684,573
694,082
699,9%
705,827
712,271
720,807
730,120
36,499
16,529
8,664
11,306
287,126
231,406
55,720
141,989
20,264
52,961
48,571
50,752
28,636
9,986
12,130
322,854
257,986
64,868
150,999
22,234
54,063
54,046
52,828
31,358
9,192
12,278
334,634
271,296
63,338
152,373
23,237
54,365
53,822
53,422
31,706
9,239
12,477
334,151
273,212
60,939
152,968
23,517
54,399
55,061
53,970
32,066
9,213
12,691
338,508
276,902
61,606
153,845
23,792
54,430
54,904
54,688
32,654
9,236
12,798
341,802
281,113
60,689
154,299
24,019
54,441
55,324
56,263
33,886
9,357
13,020
348,614
283,673
64,941
155,438
24,117
54,517
55,133
57,552
35,586
9,221
12,745
350,512
285,543
64,%9
155,802
24,685
54,551
56,894
59,825
37,594
9,344
12,887
352,059
287,607
64,452
156,064
24,947
54,574
58,358
62,678
40,288
9,385
13,005
354,815
291,021
63,794
156,691
25,467
54,571
58,049
64,683
41,970
9,757
12,956
354,902
290,731
64,171
157,283
25,985
54,610
63,344
65,367
42,183
9,895
13,289
364,617
297,666
66,951
157,583
26,343
54,442
61,768
n.a.
Credit unions12
43 Total assets/liabilities and capital
44
45
Federal
State
46 L o a n s outstanding
47
Federal
48
State
49 Savings
50
Federal (shares)
51
State (shares and deposits)
69,585
45,493
24,092
81,961
54,482
27,479
86,594
58,127
28,467
88,350
59,636
28,714
90,276
61,316
28,960
90,145
61,163
28,982
90,503
61,500
29,003
91,651
62,107
29,544
91,619
61,935
29,684
92,521
62,690
29,831
93,036
63,205
29,831
94,646
64,505
30,141
%,183
65,989
30,194
43,232
27,948
15,284
62,990
41,352
21,638
50,083
32,930
17,153
74,739
49,889
24,850
53,247
35,286
17,961
79,413
53,587
25,826
54,437
36,274
18,163
80,702
54,632
26,070
55,915
37,547
18,368
82,578
56,261
26,317
57,286
38,490
18,7%
82,402
56,278
26,124
58,802
39,578
19,224
82,135
56,205
25,930
59,874
40,310
19,564
83,172
56,734
26,438
60,483
40,727
19,756
83,129
56,655
26,474
62,170
41,762
20,408
84,000
57,302
26,698
62,561
42,337
20,224
84,348
57,539
26,809
62,662
42,220
20,442
86,047
58,820
27,227
62,393
42,283
20,110
86,048
59,914
26,134
Financial Markets
1.37
All
Continued
1984
Account
1982
1985
1983
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
98,747
57,667
15,378
25,702
106,657
60,938
17,511
28,208
Feb.
FSLIC-insured federal savings banks
52 Assets
6,859
3,353
64,969
38,698
10,436
15,835
77,374
45,900
12,762
18,712
56 Liabilities and net worth
6,859
64,969
57
58
59
60
61
62
5,877
53,227
7,477
4,640
2,837
1,157
3,108
53 M o r t g a g e s
54 C a s h and i n v e s t m e n t s e c u r i t i e s 1
55 O t h e r
S a v i n g s and capital
Borrowed money
FHLBB
Other
Other
Net worth3
MEMO
6 3 L o a n s in p r o c e s s 2
64 Mortgage loan c o m m i t m e n t s
outstanding4
98
78,952
46,791
12,814
19,347
81,310
48,084
13,071
20,155
83,989
49,996
13,184
20,809
77,374
78,952
81,310
62,495
9,707
5,491
4,216
1,548
3,624
63,026
10,475
5,900
4,575
1,747
3,704
64,364
11,489
6,538
4,951
1,646
3,811
82,174
48,841
12,867
20,466
87,743
51,554
13,615
22,574
94,536
55,861
14,826
23,849
98,559
57,429
16,001
25,129
83,989
87,209
82,174
87,743
94,536
98,559
98,747
106,657
66,227
12,060
6,897
5,163
1,807
3,895
68,443
12,863
7,654
5,209
1,912
3,991
65,079
11,828
6,600
5,228
1,610
3,657
70,080
11,935
6,867
5,068
1,896
3,832
76,167
11,937
7,041
4,8%
2,259
4,173
79,572
12,798
7,515
5,283
1,903
4,286
80,091
12,372
7,361
5,011
1,982
4,302
85,632
14,079
8,023
6,056
2,356
4,590
1,264
1,716
1,787
1,839
1,901
1,895
1,505
1,457
1,689
1,738
1,685
1,747
2,151
3,714
3,763
3,583
3,988
3,860
2,970
2,925
3,298
3,234
3,510
3,646
1. H o l d i n g s o f s t o c k o f t h e F e d e r a l H o m e L o a n B a n k s are in " o t h e r a s s e t s . "
2. B e g i n n i n g in 1982, l o a n s in p r o c e s s are c l a s s i f i e d a s c o n t r a - a s s e t s a n d are
n o t i n c l u d e d in total liabilities a n d n e t w o r t h . T o t a l a s s e t s are n e t o f l o a n s in
process.
3. I n c l u d e s net u n d i s t r i b u t e d i n c o m e a c c r u e d b y m o s t a s s o c i a t i o n s .
4. E x c l u d e s figures f o r l o a n s in p r o c e s s .
5. T h e N a t i o n a l C o u n c i l r e p o r t s d a t a o n m e m b e r m u t u a l s a v i n g s b a n k s a n d o n
s a v i n g s b a n k s that h a v e c o n v e r t e d t o s t o c k i n s t i t u t i o n s , a n d t o f e d e r a l s a v i n g s
banks.
6. B e g i n n i n g April 1979, i n c l u d e s o b l i g a t i o n s o f U . S . g o v e r n m e n t a g e n c i e s .
B e f o r e that d a t e , this i t e m w a s i n c l u d e d in " C o r p o r a t e a n d o t h e r . "
7. I n c l u d e s s e c u r i t i e s o f f o r e i g n g o v e r n m e n t s a n d i n t e r n a t i o n a l o r g a n i z a t i o n s
a n d , b e f o r e April 1979, n o n g u a r a n t e e d i s s u e s o f U . S . g o v e r n m e n t a g e n c i e s .
8. E x c l u d e s c h e c k i n g , c l u b , a n d s c h o o l a c c o u n t s .
9. C o m m i t m e n t s o u t s t a n d i n g ( i n c l u d i n g l o a n s in p r o c e s s ) o f b a n k s in N e w
Y o r k S t a t e a s r e p o r t e d t o t h e S a v i n g s B a n k s A s s o c i a t i o n o f the S t a t e o f N e w
York.
10. D i r e c t and g u a r a n t e e d o b l i g a t i o n s . E x c l u d e s f e d e r a l a g e n c y i s s u e s n o t
g u a r a n t e e d , w h i c h are s h o w n in t h e t a b l e u n d e r " B u s i n e s s " s e c u r i t i e s .
87,209
52,039
13,331
21,839
11. I s s u e s o f f o r e i g n g o v e r n m e n t s a n d their s u b d i v i s i o n s a n d b o n d s o f t h e
International Bank for R e c o n s t r u c t i o n and D e v e l o p m e n t .
12. A s o f J u n e 1982, d a t a i n c l u d e o n l y f e d e r a l or f e d e r a l l y i n s u r e d s t a t e c r e d i t
u n i o n s s e r v i n g natural p e r o n s .
NOTE. Savings
and loan associations:
E s t i m a t e s b y t h e F H L B B f o r all
a s s o c i a t i o n s in t h e U n i t e d S t a t e s . D a t a are b a s e d o n m o n t h l y r e p o r t s o f f e d e r a l l y
insured associations and annual reports of other associations. E v e n w h e n revised,
d a t a f o r current a n d p r e c e d i n g y e a r are s u b j e c t t o further r e v i s i o n .
Mutual savings banks: E s t i m a t e s o f N a t i o n a l C o u n c i l o f S a v i n g s I n s t i t u t i o n s f o r
all s a v i n g s b a n k s in t h e U n i t e d S t a t e s .
Life insurance
companies:
E s t i m a t e s o f the A m e r i c a n C o u n c i l o f L i f e I n s u r a n c e
f o r all life i n s u r a n c e c o m p a n i e s in t h e U n i t e d S t a t e s . A n n u a l figures are a n n u a l s t a t e m e n t a s s e t v a l u e s , w i t h b o n d s carried o n a n a m o r t i z e d b a s i s a n d s t o c k s at
year-end market value. Adjustments for interest d u e and accrued and for
d i f f e r e n c e s b e t w e e n m a r k e t a n d b o o k v a l u e s are n o t m a d e o n e a c h i t e m s e p a r a t e l y
but are i n c l u d e d , in t o t a l , in " o t h e r a s s e t s . "
Credit unions: E s t i m a t e s b y the N a t i o n a l C r e d i t U n i o n A d m i n i s t r a t i o n f o r a
g r o u p o f f e d e r a l a n d f e d e r a l l y i n s u r e d s t a t e credit u n i o n s s e r v i n g natural p e r s o n s .
F i g u r e s are p r e l i m i n a r y a n d r e v i s e d a n n u a l l y t o i n c o r p o r a t e r e c e n t d a t a .
A28 DomesticNonfinancialStatistics • June 1985
1.38
FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Calendar year
Fiscal
year
1982
Type of account or operation
Fiscal
year
1983
Fiscal
year
1984
1983
HI
U.S.
budget
1 Receipts1
2 Outlays1
3 Surplus, or deficit ( - )
4
Trust funds
5
Federal funds2-3
Off-budget
entities
(surplus,
or deficit
6 Federal Financing Bank outlays
7 Other3 4
H2
HI
1985
Jan.
Feb.
Mar.
617,766
728,375
-110,609
5,456
-116,065
600,562
795,917
-195,355
23,056
-218,410
666,457
841,800
-175,343
30,565
-205,908
306,331
3%,477
-90,146
22,680
-112,822
306,584
406,849
-100,265
7,745
-108,005
341,808
420,700
-78,892
18,080
-96,971
70,454
76,838
-6,384
-188
-6,198
54,021
74,851
-20,830
2,313
-23,140
49,606
78,067
-28,461
-1,682
-26,780
-14,142
-3,190
-10,404
-1,953
-7,277
-2,719
-5,418
-528
-3,199
-1,206
-2,813
-838
-840
-789
0
-421
0
-615
-127,940
-207,711
-185,339
-96,094
-104,670
-84,884
-8,013
-21,251
-29,076
134,993
212,425
170,817
102,538
84,020
80,592
12,675
15,994
13,159
-11,911
4,858
-9,889
5,176
5,636
8,885
-9,664
3,222
-16,294
4,358
-3,127
7,418
-7,969
3,307
9,094
4,033
-3,212
-13,133
29,164
10,975
18,189
37,057
16,557
20,500
22,345'
3,791'
18,553'
27,997
19,442
8,764
11,817
3,661
8,157
13,567
4,397
9,170
26,502
5,349
21,153
17,160
3,308
13,852
13,868
3,063
10,805
(-))
U.S. budget plus off-budget,
including
Federal
Financing
Bank
8 Surplus, or deficit ( - )
Source of
financing
9
Borrowing from the public
10
Cash and monetary assets (decrease, or
increase ( - ) ) 4
11
Other5
MEMO
12 T r e a s u r y o p e r a t i n g b a l a n c e ( l e v e l , e n d o f
period)
13
Federal Reserve B a n k s
14
Tax and loan accounts
1. E f f e c t i v e F e b . 8 , 1982, s u p p l e m e n t a l m e d i c a l i n s u r a n c e p r e m i u m s a n d
v o l u n t a r y h o s p i t a l i n s u r a n c e p r e m i u m s , p r e v i o u s l y i n c l u d e d in o t h e r i n s u r a n c e
r e c e i p t s , h a v e b e e n r e c l a s s i f i e d a s o f f s e t t i n g r e c e i p t s in t h e h e a l t h f u n c t i o n .
2 . H a l f - y e a r figures a r e c a l c u l a t e d a s a r e s i d u a l (total s u r p l u s / d e f i c i t l e s s t r u s t
fund surplus/deficit).
3. O t h e r o f f - b u d g e t i n c l u d e s P o s t a l S e r v i c e F u n d ; Rural E l e c t r i f i c a t i o n a n d
T e l e p h o n e R e v o l v i n g F u n d ; Rural T e l e p h o n e Bank; and petroleum acquisition
a n d t r a n s p o r t a t i o n a n d s t r a t e g i c p e t r o l e u m r e s e r v e e f f e c t i v e N o v e m b e r 1981.
4. Includes U . S . T r e a s u r y operating c a s h a c c o u n t s ; S D R s ; gold tranche
drawing rights; l o a n s to International M o n e t a r y F u n d ; and o t h e r c a s h and
monetary assets.
1984
5. Includes a c c r u e d interest p a y a b l e to the public; a l l o c a t i o n s o f special
d r a w i n g r i g h t s ; d e p o s i t f u n d s ; m i s c e l l a n e o u s liability ( i n c l u d i n g c h e c k s o u t s t a n d ing) a n d a s s e t a c c o u n t s ; s e i g n i o r a g e ; i n c r e m e n t o n g o l d ; n e t g a i n / l o s s f o r U . S .
currency valuation adjustment; net gain/loss for I M F valuation adjustment; and
profit o n t h e s a l e o f g o l d .
SOURCE. " M o n t h l y T r e a s u r y S t a t e m e n t o f R e c e i p t s a n d O u t l a y s o f t h e U . S .
G o v e r n m e n t " Treasury
Bulletin,
a n d t h e Budget
of the U.S. Government,
Fiscal
Year
1985.
Federal Finance
1.39
A29
U.S. BUDGET RECEIPTS AND OUTLAYS
Millions of dollars
Calendar year
Source or type
Fiscal
year
1983
Fiscal
year
1984
1983
1982
1985
1984
H2
HI
H2
HI
Jan.
Feb.
Mar.
RECEIPTS
600,563
666,457
286,337
306,331
305,122
341,808
70,454
54,021
49,606
288,938
266,010
36
83,586
60,692
295,955
279,345
35
81,346
64,771
145,676
131,567
5
20,041
5,938
144,551
135,531
30
63,014
54,024
147,663
133,768
6
20,703
6,815
144,691
140,657
29
61,463
57,458
37,852
24,778
0
12,642
-433
23,769
23,127
1
1,683
1,041
15,254
23,952
8
3,136
11,842
61,780
24,758
74,179
17,286
25,660
11,467
33,522
13,809
31,064
8,921
40,328
10,045
4,373
1,594
2,673
919
10,304
1,888
209,001
241,902
94,277
110,520
100,832
131,372
23,394
23,080
20,551
179,010
203,476
85,064
90,912
88,388
106,436
21,661
19,433
19,045
6,756
18,799
4,436
8,709
25,138
4,580
177
6,856
2,180
6,427
10,984
2,197
398
8,714
2,290
7,667
14,942
2,329
602
1,328
406
664
2,615
362
610
515
380
35,300
8,655
6,053
15,594
37,361
11,370
6,010
16,965
16,555
4,299
3,444
7,890
16,904
4,010
2,883
7,751
19,586
5,079
3,050
7,811
18,304
5,576
3,102
8,481
3,267
1,085
605
1,471
2,585
842
504
1,488
2,739
998
430
1,218
18 All types
795,917
841,800
390,847
396,477
406,849
420,700
76,838
74,851
78,067
19
20
21
22
23
24
National defense
I n t e r n a t i o n a l affairs
General science, space, and technology . . .
Energy
Natural r e s o u r c e s and e n v i r o n m e n t
Agriculture
210,461
8,927
7,777
4,035
12,676
22,173
227,405
13,313
8,271
2,464
12,677
12,215
100,419
4,406
3,903
2,058
6,941
13,259
105,072
4,705
3,486
2,073
5,892
10,154
108,967
6,117
4,216
1,533
6,933
5,278
114,639
5,426
3,981
1,080
5,463
7,129
19,367
1,254
654
369
1,082
3,372
19,785
884
715
215
786
2,054
21,782
1,416
740
207
929
1,732
25
26
27
28
C o m m e r c e and housing credit
Transportation
C o m m u n i t y and regional d e v e l o p m e n t
E d u c a t i o n , training, e m p l o y m e n t , social
services
4,721
21,231
7,302
5,198
24,705
7,803
2,244
10,686
4,187
2,164
9,918
3,124
2,648
13,323
4,327
2,572
10,616
3,154
-737
2,053
589
-805
1,505
438
75
1,583
538
25,726
26,616
12,186
12,801
13,246
13,445
2,547
2,628
2,233
30,435
235,764
96,714
39,072
133,779
41,206
143,001
42,150
15,748
135,579
65,212
2,822
20,930
11,600
2,778
20,583
10,220
2,685
21,031
11,530
25,640
5,616
4,836
6,577
111,007
-15,454
13,240
2,373
2,323
3,153
44,948
-8,332
11,334
2,522
2,434
3,124
42,358
-8,887
13,621
2,628
2,479
3,290
47,674
-7,262
12,849
2,807
2,462
2,943
53,729
-7,333
928
585
244
1,250
10,440
-2,513
2,218
453
699
116
11,820
-2,238
2,296
471
343
75
10,517
-2,118
1 All sources
2 Individual i n c o m e t a x e s , net
3
Withheld
4
Presidential Election Campaign F u n d . . .
5
Nonwithheld
6
Refunds
Corporation income taxes
7
Gross receipts
8
Refunds
9 Social insurance taxes and contributions,
net
10
Payroll e m p l o y m e n t taxes and
contributions1
11
Self-employment taxes and
contributions2
12
Unemployment insurance
13
Other net receipts3
14
15
16
17
Excise taxes
Customs deposits
E s t a t e a n d gift t a x e s
Miscellaneous receipts4
OUTLAYS
29 Health
30 Social security and medicare
31 I n c o m e s e c u r i t y
32
33
34
35
36
37
Veterans benefits and s e r v i c e s
Administration of justice
General government
G e n e r a l - p u r p o s e fiscal a s s i s t a n c e
N e t interest"
Undistributed offsetting receipts7
28,655]
223,311 ?
106,211J
24,845
5,014
4,991
6,287
89,774
-21,424
1. O l d - a g e , d i s a b i l i t y , a n d h o s p i t a l i n s u r a n c e , a n d r a i l r o a d r e t i r e m e n t a c c o u n t s .
2. O l d - a g e , d i s a b i l i t y , a n d h o s p i t a l i n s u r a n c e .
3. F e d e r a l e m p l o y e e r e t i r e m e n t c o n t r i b u t i o n s a n d c i v i l s e r v i c e r e t i r e m e n t a n d
disability fund.
4. D e p o s i t s o f e a r n i n g s b y F e d e r a l R e s e r v e B a n k s a n d o t h e r m i s c e l l a n e o u s
receipts.
5. In a c c o r d a n c e w i t h t h e S o c i a l S e c u r i t y A m e n d m e n t s A c t o f 1983, t h e
Treasury n o w provides social security and medicare outlays as a separate
f u n c t i o n . B e f o r e F e b r u a r y 1984, t h e s e o u t l a y s w e r e i n c l u d e d in t h e i n c o m e
security and health functions.
6. N e t i n t e r e s t f u n c t i o n i n c l u d e s i n t e r e s t r e c e i v e d b y trust f u n d s .
7. C o n s i s t s o f r e n t s a n d r o y a l t i e s o n t h e o u t e r c o n t i n e n t a l s h e l f a n d U . S .
government contributions for e m p l o y e e retirement.
SOURCE. " M o n t h l y T r e a s u r y S t a t e m e n t o f R e c e i p t s a n d O u t l a y s o f t h e U . S .
G o v e r n m e n t " a n d t h e Budget
of the U.S. Government,
Fiscal
Year
1985.
A30 DomesticNonfinancialStatistics • June 1985
1.40
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1982
1983
1984
Item
D e c . 31
M a r . 31
Sept. 30
June 30
D e c . 31
M a r . 31
June 30
Sept. 30
D e c . 31
1 Federal debt outstanding
1,201.9
1,249.3
1,324.3
1,381.9
1,415.3
1,468.3
1,517.2
1,576.7
1,667.4
2 Public debt securities
3
Held b y public
4
Held by agencies
1,197.1
987.7
209.4
1,244.5
1,043.3
201.2
1,319.6
1,090.3
229.3
1,377.2
1,138.2
239.0
1,410.7
1,174.4
236.3
1,463.7
1,223.9
239.8
1,512.7
1,255.1
257.6
1,572.3
1,309.2
264.1
1,663.0
1,373.4
289.6
4.8
3.7
1.2
4.8
3.7
1.1
4.7
3.6
1.1
4.7
3.6
1.1
4.6
3.5
1.1
4.6
3.5
1.1
4.5
3.4
1.1
4.5
3.4
1.1
4.5
3.4
1.1
5 A g e n c y securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
1,197.9
1,245.3
1,320.4
1,378.0
1,411.4
1,464.5
1,513.4
1,573.0
1,663.7
9 Public debt securities
10 O t h e r d e b t 1
1,196.5
1.4
1,243.9
1.4
1,319.0
1.4
1,376.6
1.3
1,410.1
1.3
1,463.1
1.3
1,512.1
1.3
1,571.7
1.3
1,662.4
1.3
11 MEMO: S t a t u t o r y d e b t limit
1,290.2
1,290.2
1,389.0
1,389.0
1,490.0
1,490.0
1,520.0
1,573.0
1,823.8
1. I n c l u d e s g u a r a n t e e d d e b t o f g o v e r n m e n t a g e n c i e s , s p e c i f i e d p a r t i c i p a t i o n
certificates, notes to international lending organizations, and District of Columbia
stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
NOTE. D a t a f r o m Treasury
Bulletin
( U . S . Treasury Department),
Types and Ownership
Billions of dollars, end of period
1984
T y p e and holder
1980
1982
1981
Q2
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
Nonmarketable1
State and local g o v e r n m e n t series
Foreign issues2
Government
Public
Savings bonds and notes
Government account series3
Q1
Q4
1,028.7
1,197.1
1,410.7
1,512.7
1,572.3
1,663.0
1,710.7
928.9
623.2
216.1
321.6
85.4
305.7
23.8
24.0
17.6
6.4
72.5
185.1
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
1,501.1
1,126.6
343.3
632.1
151.2
374.5
39.9
8.8
8.8
.0
72.3
253.2
1,559.6
1,176.6
356.8
661.7
158.1
383.0
41.4
8.8
8.8
.0
73.1
259.5
1,660.6
1,247.4
374.4
705.1
167.9
413.2
44.4
9.1
9.1
.0
73.3
286.2
1,695.2
1,271.7
379.5
713.8
178.4
423.6
47.7
9.1
9.1
0
74.4
292.2
11.6
12.7
2.3
15.5
1.3
1.4
1.6
9.8
15
16
17
18
19
20
21
22
192.5
121.3
616.4
112.1
3.5
24.0
19.3
87.9
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
23
24
25
26
Individuals
Savings bonds
Other securities
Foreign and international5
Other miscellaneous investors6
72.5
44.6
129.7
122.8
68.1
42.7
136.6
163.0
68.3
48.2
149.5
217.0
71.5
61.9
166.3
259.8
1. I n c l u d e s ( n o t s h o w n s e p a r a t e l y ) : S e c u r i t i e s i s s u e d t o t h e R u r a l E l e c t r i f i c a tion Administration; d e p o s i t o r y b o n d s , retirement plan b o n d s , and individual
retirement bonds.
2. N o n m a r k e t a b l e d o l l a r - d e n o m i n a t e d a n d f o r e i g n c u r r e n c y - d e n o m i n a t e d s e ries held b y foreigners.
3. H e l d a l m o s t e n t i r e l y b y U . S . g o v e r n m e n t a g e n c i e s a n d trust f u n d s .
4 . D a t a f o r F e d e r a l R e s e r v e B a n k s a n d U . S . g o v e r n m e n t a g e n c i e s a n d trust
f u n d s a r e a c t u a l h o l d i n g s ; d a t a f o r o t h e r g r o u p s are T r e a s u r y e s t i m a t e s .
Q3
930.2
By
holder*
U . S . g o v e r n m e n t a g e n c i e s and trust f u n d s
Federal Reserve Banks
Private investors
Commercial banks
M o n e y market funds
Insurance companies
Other companies
State and local g o v e r n m e n t s
14 N o n - i n t e r e s t - b e a r i n g d e b t
1985
1983
257.6
152.9
1,102.2
182.3
14.9
61.6"
45.3
165.0"
263.1
155.0
1,154.1
183.0
13.6
58.6P
47.IP
n.a.
72.9
69.3
171.5
319.4
73.7
73.8
175.5
n.a.
289.6
160.9
1,212.5
185.5?
26.0
73.9P
50.2"
n.a.
n .a.
74.5
70.8
193.IP
n.a.
5. C o n s i s t s o f i n v e s t m e n t s o f f o r e i g n a n d i n t e r n a t i o n a l a c c o u n t s . E x c l u d e s n o n interest-bearing notes issued to the International Monetary Fund.
6. I n c l u d e s s a v i n g s a n d l o a n a s s o c i a t i o n s , n o n p r o f i t i n s t i t u t i o n s , c r e d i t u n i o n s ,
m u t u a l s a v i n g s b a n k s , c o r p o r a t e p e n s i o n trust f u n d s , d e a l e r s a n d b r o k e r s , c e r t a i n
U . S . government deposit accounts, and U . S . government-sponsored agencies.
SOURCES. D a t a b y t y p e o f s e c u r i t y , U . S . T r e a s u r y D e p a r t m e n t ,
Monthly
Statement
of the Public
Debt of the United
States;
data by holder.
Treasury
Bulletin.
Federal Finance
1.42
U.S. GOVERNMENT SECURITIES DEALERS
A31
Transactions
Par value; averages of daily figures, in millions of dollars
1985 w e e k e n d i n g W e d n e s d a y
1985
Item
1982'
1983
1984
Jan.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Immediate delivery1
U . S . government securities
By
maturity
Bills
Other within 1 year
1-5 years
5 - 1 0 years
O v e r 10 y e a r s
By type of
customer
U . S . government securities
dealers
U . S . government securities
brokers
All others2
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures transactions3
T r e a s u r y bills
Treasury coupons
Federal agency securities
Forward transactions4
U . S . government securities
Federal agency securities
Mar.
Feb. 20
Feb. 27'
Mar. 6
M a r . 13
Mar. 20
Mar. 27
64,531
42,135
52,786'
71,683'
71,544
72,848
69,48(K
77,302
67,414
66,064
66,218
77,482
36,790
1,620
12,543
7,112
6,466
22,393
708
8,758
5,279
4,997
26,04C
1,305
11,734
7,607
6,IOC
32,185
1,758
17,677'
12,049
8,014
33,354
1,650
17,452
10,419
8,669
37,978
1,720
15,975
10,404
6,771
35,788
1,765'
16,464'
8,231'
7,233'
33,718
1,740
19,967
14,264
7,613
33,773
1,709
13,504
11,724
6,705
36,427
1,931
12,618
9,304
5,784
38,976
1,671
12,042
7,625
5,903
37,620
1,766
22,003
10,033
6,060
3,539
2,257
2,920
4,288
4,356
3,968
4,272
3,985
3,953
3,202
4,104
31,453
30,041
8,282
10,001
5,004
15,190
21,045
18,832
5,576
4,333
2,642
8,036
25,584'
24,282'
7,845'
4,947
3,244
10,018
32,617
34,778'
9,846
5,431'
3,759'
10,780
33,844
33,343
9,479
4,591
3,218
9,956
36,263
32,618
8,705
3,713
2,915
10,142
32,198
33,193'
l l ^ C
3,929
2,860
10,066
36,117
36,913
8,923
4,651
3,358
9,277
33,995
29,434
7,483
3,810
3,391
10,544
33,830
28,281
8,161
3,771
3,043
9,589
33,564
29,452
10,129
3,458
2,399
10,525
36,480
36,898
8,185
3,649
2,790
10,429
10,086
2,977
520
6,655
2,501
265
6,947
4,503
262
5,512'
5,147
155
7,123
6,097
127
8,034
5,068
115
5,891
5,353
218
7,203
7,204
117
7,932
6,374
69
7,367
5,319
109
10,710
4,776
109
6,018
3,736
119
1,670
1,960
1,493
1,646
1,362
2,841'
1,042
3,538
1,557
3,292
1,332
2,137
1,188
4,373
1,631
3,293
679
2,174
1,086
2,116
1,502
2,609
2,065
1,768
1. B e f o r e 1981, d a t a f o r i m m e d i a t e t r a n s a c t i o n s i n c l u d e f o r w a r d t r a n s a c t i o n s .
2. I n c l u d e s , a m o n g o t h e r s , all o t h e r d e a l e r s a n d b r o k e r s in c o m m o d i t i e s a n d
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal R e s e r v e S y s t e m .
3. F u t u r e s c o n t r a c t s a r e s t a n d a r d i z e d a g r e e m e n t s a r r a n g e d o n a n o r g a n i z e d
e x c h a n g e in w h i c h p a r t i e s c o m m i t t o p u r c h a s e o r sell s e c u r i t i e s f o r d e l i v e r y at a
future date.
4 . F o r w a r d t r a n s a c t i o n s a r e a g r e e m e n t s a r r a n g e d in t h e o v e r - t h e - c o u n t e r
m a r k e t in w h i c h s e c u r i t i e s a r e p u r c h a s e d ( s o l d ) f o r d e l i v e r y a f t e r 5 b u s i n e s s d a y s
Feb.'
4,090
from the date of the transaction for g o v e r n m e n t securities (Treasury bills, n o t e s ,
and bonds) or after 30 d a y s for mortgage-backed a g e n c y issues.
NOTE. A v e r a g e s f o r t r a n s a c t i o n s are b a s e d o n n u m b e r o f t r a d i n g d a y s in t h e
period.
Transactions are market p u r c h a s e s and sales o f U . S . g o v e r n m e n t securities
d e a l e r s r e p o r t i n g t o t h e F e d e r a l R e s e r v e B a n k o f N e w Y o r k . T h e figures e x c l u d e
allotments of, and e x c h a n g e s for, n e w U . S . government securities, redemptions
of called or matured securities, p u r c h a s e s or sales of securities under repurchase
a g r e e m e n t , reverse r e p u r c h a s e (resale), or similar c o n t r a c t s .
A32 DomesticNonfinancialStatistics • June 1985
1.43
U.S. GOVERNMENT SECURITIES DEALERS
Positions and Financing
Averages of daily figures, in millions of dollars
1985
Jan.
Feb.
1985 w e e k e n d i n g W e d n e s d a y
Mar.
Mar. 6
M a r . 13
Mar. 20
14,574
14,181
2,068
791
-1,677
-917
20,157
8,753
4,191
5,587
11,666
14,672
1,749
-783
-2,615
-1,574
20,346
7,894
3,758
4,529
8,573
13,809
1,157
-1,147
-2,828
-2,678
19,377
7,492
3,041
4,065
10,816
14,342
625
2,011
-3,216
-3,256
18,456
7,883
3,249
4,586
4,387
4,496
-66
3,522
5,225
-42
1,635
5,327
-149
-2,658
6,729
-168
-1,498'
-8,001
-1,410
-8,751
-1,582
-8,709
-535
-8,136
-1,428
-7,686
Feb. 27
Mar. 27
Positions
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
N e t immediate1
U . S . government securities
Bills
Other within 1 year
1-5 years
5 - 1 0 years
O v e r 10 y e a r s
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
T r e a s u r y bills
Treasury coupons
Federal agency securities
Forward positions
U . S . government securities
Federal agency securities
....
13,663
7,297
972
3,256
-318
2,026
4,145
5,532
2,832
3,317
10,701
8,020
394
1,778
-78
528
7,232
5,839
3,332
3,159
5,538'
5,50(K
63
2,159
-1,119
-1,174
15,294
7,369
3,874
3,788
14,111
11,629
-111
5,685
-4,024
823
19,429
10,251
4,839
4,880
-2,507
-2,303
-224
-4,125
-1,032
171
-4,525
1,794'
233
-13,133
1,336
-55
-2,549
3,143
-9
-788
-1,432
-1,936
-3,561
-1,643
-9,205'
-845
-6,990
-1,745'
-8,156
12,441
851
3,078'
-2,898
48
19,603'
9,487
4,728'
5,226
11,200
13,979
1,316
449
-2,548
-2,240
19,305
8,005
3,562
4,646
1,215
5,572
-101
-1,320
-8,250
15,842'
13,495
1,132
2,254'
-1,434
294
18,795'
8,935
4,386'
5,118
2,306
3,391
-255
Financing2
Reverse repurchase agreements
Overnight and c o n t i n u i n g . . . .
Term agreements
Repurchase agreements4
18
Overnight and c o n t i n u i n g . . . .
19
Term agreements
16
17
26,754
48,247
29,099
52,493
44,078
68,357
57,000
72,387
59,989
71,570
60,818
75,298
59,690
71,618
63,672
70,344
61,988
74,138
58,873
76,213
59,096
78,752
49,695
43,410
57,946
44,410
75,717
57,047
93,727
63,188
96,535
62,327
96,019
62,890
100,117
60,975
102,523
61,142
99,639
61,379
91,341
63,137
91,832
65,514
1. I m m e d i a t e p o s i t i o n s a r e n e t a m o u n t s (in t e r m s o f par v a l u e s ) o f s e c u r i t i e s
o w n e d b y n o n b a n k d e a l e r firms a n d d e a l e r d e p a r t m e n t s o f c o m m e r c i a l b a n k s o n a
c o m m i t m e n t , that i s , t r a d e - d a t e b a s i s , i n c l u d i n g a n y s u c h s e c u r i t i e s that h a v e
b e e n sold under agreements to repurchase (RPs). T h e maturities of s o m e
r e p u r c h a s e a g r e e m e n t s a r e s u f f i c i e n t l y l o n g , h o w e v e r , t o s u g g e s t that t h e s e c u r i t i e s i n v o l v e d are n o t a v a i l a b l e f o r t r a d i n g p u r p o s e s . Prior t o 1984, s e c u r i t i e s
o w n e d , a n d h e n c e d e a l e r p o s i t i o n s , d o n o t i n c l u d e all s e c u r i t i e s a c q u i r e d u n d e r
r e v e r s e R P s . A f t e r J a n u a r y 1984, i m m e d i a t e p o s i t i o n s i n c l u d e r e v e r s e s t o m a t u r i t y , w h i c h are s e c u r i t i e s t h a t w e r e s o l d a f t e r h a v i n g b e e n o b t a i n e d u n d e r r e v e r s e
repurchase a g r e e m e n t s that mature o n the s a m e day a s the securities. B e f o r e
1981, d a t a f o r i m m e d i a t e p o s i t i o n s i n c l u d e f o r w a r d p o s i t i o n s .
2. F i g u r e s c o v e r financing i n v o l v i n g U . S . g o v e r n m e n t a n d f e d e r a l a g e n c y
securities, negotiable C D s , bankers acceptances, and commercial paper.
3. I n c l u d e s all r e v e r s e r e p u r c h a s e a g r e e m e n t s , i n c l u d i n g t h o s e t h a t h a v e b e e n
arranged to m a k e delivery o n short sales and t h o s e for w h i c h the securities
o b t a i n e d h a v e b e e n u s e d a s c o l l a t e r a l o n b o r r o w i n g s , that i s , m a t c h e d a g r e e m e n t s .
4 . I n c l u d e s b o t h r e p u r c h a s e a g r e e m e n t s u n d e r t a k e n t o finance p o s i t i o n s a n d
"matched b o o k " repurchase agreements.
NOTE. D a t a f o r p o s i t i o n s are a v e r a g e s o f d a i l y figures, in t e r m s o f par v a l u e ,
b a s e d o n t h e n u m b e r o f t r a d i n g d a y s in t h e p e r i o d . P o s i t i o n s a r e s h o w n n e t a n d a r e
o n a c o m m i t m e n t b a s i s . D a t a f o r financing are b a s e d o n W e d n e s d a y figures, in
terms of actual m o n e y b o r r o w e d or lent.
Federal Finance
1.44
FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES
A33
Debt Outstanding
Millions of dollars, end of period
1985
1984
Agency
1981
1982
1983
Sept.
1 Federal and federally sponsored agencies
2 Federal agencies
Defense Department1
3
4
Export-Import Bank2,3
5
Federal Housing Administration4
6
Government National Mortgage Association
participation certificates5
7
Postal Service6
8
Tennessee Valley Authority
United States Railway Association6
9
10 F e d e r a l l y s p o n s o r e d a g e n c i e s 7
11
Federal H o m e L o a n B a n k s
12
Federal H o m e L o a n Mortgage Corporation
13
Federal National Mortgage Association8
14
Farm Credit B a n k s
15
Student L o a n Marketing Association
Oct.
Nov.
Dec.
Jan.
Feb.
221,946
237,085
239,716
267,399
268,964
270,314
271,564
270,965
271,479
31,806
484
13,339
413
33,055
354
14,218
288
33,940
243
14,853
194
34,754
153
15,733
140
35,012
149
15,721
139
35,078
146
15,721
138
35,145
142
15,882
133
35,235
133
15,882
132
35,360
122
15,881
129
2,715
1,538
13,115
202
2,165
1,471
14,365
194
2,165
1,404
14,970
111
2,165
1,337
15,160
51
2,165
1,337
15,450
51
2,165
1,337
15,520
51
2,165
1,337
15,435
51
2,165
1,337
15,535
51
2,165
1,337
15,675
51
190,140
54,131
5,480
58,749
71,359
421
204,030
55,967
4,524
70,052
71,896
1,591
205,776
48,930
6,793
74,594
72,409
3,050
232,645
65,616
8,950
80,123
73,131
4,824
233,952'
66,126
9,634
80,357
72,859
5,143
235,236
66,230
10,299
81,119
72,267
5,321
236,419
65,085
10,270
83,720
71,255
5,369
235,730
64,705
10,195
84,612
70,642
5,576
236,119"
64,706
11,237
84,701
70,012
5,463
110,698
126,424
135,791
144,836
144,978
145,174
145,217
146,034
146,611
12,741
1,288
5,400
11,390
202
14,177
1,221
5,000
12,640
194
14,789
1,154
5,000
13,245
111
15,690
1,087
5,000
13,435
51
15,690
1,087
5,000
13,725
51
15,690
1,087
5,000
13,795
51
15,852
1,087
5,000
13,710
51
15,852
1,087
5,000
13,810
51
15,852
1,087
5,000
13,950
51
48,821
13,516
12,740
53,261
17,157
22,774
55,266
19,766
26,460
59,511
20,587
29,475
59,021
20,694
29,710
58,801
20,889
29,861
58,971
20,693
29,853
59,066
20,653
30,515
59,041
20,804
30,826
MEMO
16 Federal Financing Bank debt
Lending
17
18
19
20
21
to federal
and federally
sponsored
Export-Import Bank3
Postal Service6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association6
Other
Lending10
22 Farmers H o m e Administration
2 3 Rural E l e c t r i f i c a t i o n A d m i n i s t r a t i o n
24 Other
1. C o n s i s t s o f m o r t g a g e s a s s u m e d b y t h e D e f e n s e D e p a r t m e n t b e t w e e n 1957
and 1963 u n d e r f a m i l y h o u s i n g a n d h o m e o w n e r s a s s i s t a n c e p r o g r a m s .
2. I n c l u d e s p a r t i c i p a t i o n c e r t i f i c a t e s r e c l a s s i f i e d a s d e b t b e g i n n i n g O c t . 1 , 1 9 7 6 .
3. O f f - b u d g e t A u g . 17, 1974, t h r o u g h S e p t . 30, 1976; o n - b u d g e t t h e r e a f t e r .
4. C o n s i s t s o f d e b e n t u r e s i s s u e d in p a y m e n t o f F e d e r a l H o u s i n g A d m i n i s t r a t i o n
insurance claims. O n c e issued, these securities may b e sold privately o n the
securities market.
5. C e r t i f i c a t e s o f p a r t i c i p a t i o n i s s u e d b e f o r e fiscal 1969 b y t h e G o v e r n m e n t
National Mortgage A s s o c i a t i o n acting as trustee for the Farmers H o m e Administration; D e p a r t m e n t o f H e a l t h , E d u c a t i o n , a n d W e l f a r e ; D e p a r t m e n t o f H o u s i n g
and Urban D e v e l o p m e n t ; Small B u s i n e s s Administration; and the Veterans
Administration.
6. O f f - b u d g e t .
7. I n c l u d e s o u t s t a n d i n g n o n c o n t i n g e n t liabilities: N o t e s , b o n d s , a n d d e b e n tures.
8. B e f o r e late 1981, t h e A s s o c i a t i o n o b t a i n e d financing t h r o u g h t h e F e d e r a l
Financing Bank.
9. T h e F F B , w h i c h b e g a n o p e r a t i o n s in 1974, is a u t h o r i z e d t o p u r c h a s e o r sell
obligations issued, sold, or guaranteed by other federal agencies. Since F F B
i n c u r s d e b t s o l e l y f o r t h e p u r p o s e o f l e n d i n g t o o t h e r a g e n c i e s , its d e b t is n o t
i n c l u d e d in t h e m a i n p o r t i o n o f t h e t a b l e in o r d e r t o a v o i d d o u b l e c o u n t i n g .
10. I n c l u d e s F F B p u r c h a s e s o f a g e n c y a s s e t s a n d g u a r a n t e e d l o a n s ; t h e latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular a g e n c y b e i n g g e n e r a l l y s m a l l . T h e F a r m e r s H o m e A d m i n i s t r a t i o n i t e m
c o n s i s t s e x c l u s i v e l y o f a g e n c y a s s e t s , w h i l e the Rural E l e c t r i f i c a t i o n A d m i n i s t r a t i o n e n t r y c o n t a i n s b o t h a g e n c y a s s e t s and g u a r a n t e e d l o a n s .
A34 DomesticNonfinancialStatistics • June 1985
1.45
NEW SECURITY ISSUES State and Local Governments
Millions of dollars
1984
Type of issue or issuer,
or use
1982
1983
June
1 All issues, new and refunding
1
1985
1984'
July
Aug.
Sept.
Oct/
Nov/
Dec/
Jan.
79,138
86,421
105,793
7,680
7,537
11,726
7,967
12,511
13,333
17,128
6,141
21,094
225
58,044
461
21,566
%
26,486
16
79,307
17
2,857
0
4,823
0
1,919
1
5,618
I
1,781
1
9,945
1
1,433
4
6,534
1
3,764
64,855
253
8,748
3
2,680
3
10,653
1
2,125
2
15,003
0
1,767
3
4,374
3
Type of
issuer
6 State
7 Special district and statutory authority
8 Municipalities, counties, t o w n s h i p s , s c h o o l districts
8,438
45,060
25,640
7,140
51,297
27,984
9,128
63,023
33,643
447
4,313
2,920
465
5,121
1,951
2,157
7,321
2,248
596
5,202
2,169
1,109
7,072
4,330
405
7,153
5,775
725
11,494
4,909
368
3,752
2,021
9 Issues for new capital, total
74,804
72,441
93,303
6,959
6,592
10,749
7,454
11,104
12,169
15,202
4,771
Use of
proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
6,482
6,256
14,259
26,635
8,349
12,822
8,099
4,387
13,588
26,910
7,821
11,637
7,514
7,510
17,744
29,700
15,067
15,768
877
464
1,195
2,239
463
1,721
466
118
385
3,728
884
1,011
627
423
1,015
4,823
1,055
2,806
333
590
2,013
3,018
679
821
743
1,018
2,782
3,500
1,492
1,569
992
2,136
512
3,627
3,803
1,099
651
1,312
4,078
3,444
5,317
1,010
650
341
1,308
1,133
718
621
2
3
4
5
10
11
12
13
14
15
Type of issue
General obligation
U . S . government loans2
Revenue
U.S. government loans2
1. P a r a m o u n t s o f l o n g - t e r m i s s u e s b a s e d o n d a t e o f s a l e .
2. C o n s i s t s o f t a x - e x e m p t i s s u e s g u a r a n t e e d b y the F a r m e r s H o m e Administration.
1.46
1
SOURCE. P u b l i c S e c u r i t i e s A s s o c i a t i o n .
NEW SECURITY ISSUES Corporations
Millions of dollars
1984
Type of issue or issuer,
or u s e
1982
1983
1985
1984
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
1 All i s s u e s 1 ' 2
84,638
98,948
95,986
7,641
10,917
7,758
12,350
11,931
6,940
7,294
6,732
2 Bonds
54,076
47,369
73,357
6,309
8,863
6,225
10,403
9,524
5,918
5,739
4,016
Type of
offering
3 Public
4 Private p l a c e m e n t
44,278
9,798
47,369
n.a.
73,357
n.a.
6,309
n.a.
8,863
n.a.
6,225
n.a.
10,403
n.a.
9,524
n.a.
5,918
n.a.
5,739
n.a.
4,016
n.a.
12,822
5,442
1,491
12,327
2,390
19,604
7,842
5,186
1,039
7,241
3,159
22,900
14,438
8,745
1,272
6,754
2,407
39,741
950
875
40
650
31
3,763
2,484
776
183
765
0
4,654
1,614
576
200
758
0
3,076
2,989
988
161
1,150
240
4,875
1,447
1,198
19
555
1,557
4,749
1,741
555
110
575
169
2,768
1,326
144
297
309
375
3,288
1,476
469
30
80
353
1,607
11 S t o c k s 3
30,562
51,579
22,628
1,332
2,054
1,533
1,947
2,407
1,022
1,555
2,716
Type
12 P r e f e r r e d
13 C o m m o n
5,113
25,449
7,213
44,366
4,118
18,510
209
1,123
334
1,720
155
1,378
555
1,392
655
1,752
91
931
170
1,385
218
2,498
5,649
7,770
709
7,517
2,227
6,690
14,135
13,112
2,729
5,001
1,822
14,780
4,054
6,277
589
1,624
419
9,665
204
382
28
136
0
582
258
558
0
44
123
1,071
212
378
87
92
9
755
712
489
16
146
69
515
227
1,025
66
150
3
936
137
112
71
66
26
610
172
234
0
225
271
653
229
760
153
283
101
1,190
5
6
7
8
9
10
14
15
16
17
18
19
Industry
group
Manufacturing
Commercial and miscellaneous
Transportation
P u b l i c utility
Communication
R e a l e s t a t e a n d financial
Industry
group
Manufacturing
Commercial and miscellaneous
Transportation
P u b l i c utility
Communication
R e a l e s t a t e a n d financial
1. F i g u r e s , w h i c h r e p r e s e n t g r o s s p r o c e e d s o f i s s u e s m a t u r i n g in m o r e t h a n o n e
y e a r , s o l d f o r c a s h in t h e U n i t e d S t a t e s , a r e p r i n c i p a l a m o u n t o r n u m b e r o f u n i t s
multiplied by offering price. E x c l u d e s offerings o f less than $100,000, s e c o n d a r y
o f f e r i n g s , u n d e f i n e d o r e x e m p t e d i s s u e s a s d e f i n e d in t h e S e c u r i t i e s A c t o f 1933,
e m p l o y e e stock plans, investment c o m p a n i e s other than closed-end, intracorporate t r a n s a c t i o n s , a n d s a l e s t o f o r e i g n e r s .
2. D a t a f o r 1983 i n c l u d e o n l y p u b l i c o f f e r i n g s .
3. B e g i n n i n g in A u g u s t 1981, g r o s s s t o c k o f f e r i n g s i n c l u d e n e w e q u i t y v o l u m e
from swaps of debt for equity.
SOURCE. S e c u r i t i e s a n d E x c h a n g e C o m m i s s i o n a n d t h e B o a r d o f G o v e r n o r s o f
the Federal R e s e r v e S y s t e m .
Securities Market and Corporate Finance
1.47
OPEN-END INVESTMENT COMPANIES
A35
Net Sales and Asset Position
Millions of dollars
1984
Item
1983
1985
1984
July
Aug.
Sept.
Nov.
Oct.
Dec.
Jan/
Feb.
INVESTMENT COMPANIES 1
1
2
3
Sales of o w n shares2
Redemptions of o w n shares3
Net sales
4
5
6
Assets4
Cash position5
Other
84,345
57,100
27,245
113,599
8,343
105,256
7,488
5,777
1,711
8,956
6,497
2,459
8,156
6,185
1,971
9,517
6,766
2,751
9,458
6,343
3,115
10,006
8,948
1,058
19,152
9,183
9,969
14,780
8,006
6,774
115,481
11,620
103,861
128,209
12,698
115,511
129,657
13,221
116,436
131,539
11,417
120,122
132,709
11,518
121,191
137,126
11,978
125,148
151,534
13,114
138,420
154,770
14,554
140,216
107,496
76,38C
31,1 ^
137,126
11,978
125,148
1. E x c l u d i n g m o n e y m a r k e t f u n d s .
2. I n c l u d e s r e i n v e s t m e n t o f i n v e s t m e n t i n c o m e d i v i d e n d s . E x c l u d e s r e i n v e s t ment o f capital gains distributions and share issue o f c o n v e r s i o n s f r o m o n e f u n d to
a n o t h e r in t h e s a m e g r o u p .
3. E x c l u d e s s h a r e r e d e m p t i o n r e s u l t i n g f r o m c o n v e r s i o n s f r o m o n e f u n d t o
a n o t h e r in t h e s a m e g r o u p .
4. M a r k e t v a l u e at e n d o f p e r i o d , l e s s c u r r e n t l i a b i l i t i e s .
1.48
5. A l s o i n c l u d e s all U . S . g o v e r n m e n t s e c u r i t i e s a n d o t h e r s h o r t - t e r m
securities.
debt
NOTE. I n v e s t m e n t C o m p a n y I n s t i t u t e d a t a b a s e d o n r e p o r t s o f m e m b e r s , w h i c h
c o m p r i s e s u b s t a n t i a l l y all o p e n - e n d i n v e s t m e n t c o m p a n i e s r e g i s t e r e d w i t h t h e
Securities and E x c h a n g e C o m m i s s i o n . D a t a reflect n e w l y f o r m e d c o m p a n i e s after
t h e i r initial o f f e r i n g o f s e c u r i t i e s .
CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1983
1982
Account
1
1983
1984
1984''
Ql
Q2
Q3
Q4
Ql
Q2
Q3
Q4'
2
3
4
5
6
Corporate profits with i n v e n t o r y valuation and
capital c o n s u m p t i o n a d j u s t m e n t
Profits b e f o r e tax
P r o f i t s t a x liability
Profits after tax
Dividends
Undistributed profits
159.1
165.5
60.7
104.8
69.2
35.6
225.2
203.2
75.8
127.4
72.9
54.5
285.7
235.7
89.8
145.9
80.5
65.3
179.1
161.7
59.1
102.6
71.1
31.4
216.7
198.2
74.8
123.4
71.7
51.7
245.0
227.4
84.7
142.6
73.3
69.3
260.0
225.5
84.5
141.1
75.4
65.6
277.4
243.3
92.7
150.6
77.7
72.9
291.1
246.0
95.8
150.2
79.9
70.2
282.8
224.8
83.1
141.7
81.3
60.3
291.6
228.7
87.7
141.0
83.1
58.0
7
8
Inventory valuation
Capital c o n s u m p t i o n a d j u s t m e n t
-9.5
3.1
-11.2
33.2
-5.6
55.7
-4.3
21.7
-12.1
30.6
-19.3
36.9
-9.2
43.6
-13.5
47.6
-7.3
52.3
-.2
58.3
-1.6
64.5
SOURCE. Survey
of Current
Business
(Department of Commerce).
A36 DomesticNonfinancialStatistics • June 1985
1.49
NONFINANCIAL CORPORATIONS
Assets and Liabilities
Billions of dollars, except for ratio
1984
1983
Account
1978
1 Current assets
2
3
4
5
6
Cash
U . S . government securities
N o t e s and accounts receivable
Inventories
Other
1979
1980
1981
1982
Q4
Q1
Q2
Q3'
Q4
1,043.7
1,214.8
1,327.0
1,418.4
1,432.7
1,557.3
1,600.6
1,630.6
1,667.2
1,680.9
105.5
17.2
388.0
431.8
101.1
118.0
16.7
459.0
505.1
116.0
126.9
18.7
506.8
542.8
131.8
135.5
17.6
532.0
583.7
149.5
147.0
22.8
519.2
578.6
165.2
165.8
30.6
577.8
599.3
183.7
159.3
35.1
596.9
623.1
186.3
155.0
36.7
612.4
633.3
193.2
150.6
32.3
628.1
662.2
194.0
161.6
36.4
617.7
659.0
206.3
7 Current liabilities
669.5
807.3
889.3
970.0
976.8
1,043.0
1,079.0
1,111.9
1,143.3
1,149.6
8 N o t e s and accounts payable
9 Other
383.0
286.5
460.8
346.5
513.6
375.7
546.3
423.7
543.0
433.8
577.9
465.2
584.1
495.0
604.6
507.3
624.8
518.5
627.7
521.9
10 Net working capital
374.3
407.5
437.8
448.4
455.9
514.3
521.6
518.6
523.9
531.4
11 MEMO: C u r r e n t r a t i o 1
1.559
1.505
1.492
1.462
1.467
1.493
1.483
1.466
1.458
1.462
Statistics, Board of Governors of the Federal R e s e r v e S y s t e m , Washington, D . C .
20551.
SOURCE. F e d e r a l T r a d e C o m m i s s i o n a n d B u r e a u o f t h e C e n s u s .
1. R a t i o o f t o t a l c u r r e n t a s s e t s t o t o t a l c u r r e n t liabilities.
NOTE. F o r a d e s c r i p t i o n o f t h i s s e r i e s , s e e " W o r k i n g C a p i t a l o f N o n f i n a n c i a l
C o r p o r a t i o n s " in t h e J u l y 1 9 7 8 BULLETIN, p p . 5 3 3 - 3 7 .
A l l d a t a in t h i s t a b l e r e f l e c t t h e m o s t c u r r e n t b e n c h m a r k s . C o m p l e t e d a t a are
available u p o n request f r o m the F l o w of F u n d s Section, Division o f R e s e a r c h and
1.50
TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment •
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1984
1983
Industry1
1983
1984
Q4
Q3
1 Total nonfarm business
Manufacturing
2 Durable g o o d s industries
3 Nondurable g o o d s industries
Nonmanufacturing
4 Mining
Transportation
5
Railroad
6
Air
7
Other
Public utilities
8
Electric
9
G a s and other
10 C o m m e r c i a l a n d o t h e r 2
Ql
Q2
Q3
Q4
Ql'
Q2'
304.78
353.74
384.40
309.25
325.45
337.48
348.34
361.12
367.21
380.05
388.86
53.08
63.12
65.95
72.43
75.01
78.62
54.15
62.59
57.56
66.19
61.26
68.71
63.12
72.21
68.31
73.72
71.13
75.07
74.01
77.00
76.84
80.16
15.19
16.88
16.49
15.66
16.27
17.61
16.01
16.96
16.93
16.93
16.21
4.88
4.36
4.72
6.77
3.55
6.17
7.35
3.86
6.33
5.31
4.20
4.69
6.04
3.75
5.48
5.76
3.23
5.96
7.46
3.52
6.06
7.47
3.73
6.50
6.40
3.73
6.16
6.21
3.64
6.11
7.20
3.90
6.21
37.27
7.70
114.45
37.09
10.30
134.39
36.13
12.27
148.35
37.64
7.13
117.88
37.79
8.07
124.30
38.36
8.77
127.83
37.82
10.07
132.07
36.82
11.07
136.55
35.37
11.31
141.10
36.73
11.97
148.17
36.14
12.45
149.10
• T r a d e and s e r v i c e s are n o l o n g e r b e i n g reported separately. T h e y are included
in C o m m e r c i a l a n d o t h e r , l i n e 10.
1. A n t i c i p a t e d b y b u s i n e s s .
1985
19851
2. " O t h e r " c o n s i s t s o f c o n s t r u c t i o n ; w h o l e s a l e a n d retail t r a d e ; finance
insurance; personal and business services; and communication.
SOURCE. Survey of Current
Business
(Department of Commerce).
and
Securities Markets and Corporate Finance
1.51
DOMESTIC FINANCE COMPANIES
A37
A s s e t s and Liabilities
Billions of dollars, end o f period
1983
Account
1979
1978
1980
1984
1982
1981
Q4
Q3
Q2
QL
Q3
ASSETS
1
2
3
4
5
6
7
8
Accounts receivable, gross
Consumer
Business
Total
LESS: R e s e r v e s f o r u n e a r n e d i n c o m e a n d l o s s e s . . . .
Accounts receivable, net
Cash and bank deposits
Securities
All other
52.6
63.3
116.0
15.6
100.4
3.5
1.3
17.3
9
Total assets
65.7
70.3
136.0
20.0
116.0
73.6
72.3
145.9
23.3
122.6
85.5
80.6
166.1
28.9
137.2
89.5
81.0
170.4
30.5
139.8
92.3
86.8
179.0
30.1
148.9
92.8
95.2
188.0
30.6
157.4
96.9
101.1
198.0
31.9
166.1
99.6
104.2
203.8
33.4
170.4
103.4
103.2
206.6
34.7
171.9
24.91
27.5
34.2
39.7
45.0
45.3
47.1
48.1
49.1
122.4
140.9
150.1
171.4
179.5
193.9
202.7
213.2
218.5
220.9
6.5
34.5
8.5
43.3
13.2
43.4
15.4
51.2
18.6
45.8
17.0
49.7
19.1
53.6
14.7
58.4
15.3
62.0
16.0
60.1
8.1
43.6
12.6
17.2
8.2
46.7
14.2
19.9
7.5
52.4
14.3
19.4
9.6
54.8
17.8
22.8
8.7
63.5
18.7
24.2
8.7
66.2
24.4
27.9
11.3
65.4
27.1
26.2
12.2
68.7
29.8
29.4
15.0
67.6
29.0
29.6
15.1
71.2
29.2
29.2
122.4
140.9
150.1
171.4
179.5
193.9
202.7
213.2
218.5
220.9
1
\
J
LIABILITIES
10 B a n k l o a n s
11 C o m m e r c i a l p a p e r
Debt
12
Short-term, n.e.c
13
Long-term, n.e.c
14
Other
15 C a p i t a l , s u r p l u s , a n d u n d i v i d e d p r o f i t s
16
Total liabilities and capital
1. B e g i n n i n g Q 1 1979, a s s e t i t e m s o n l i n e s 6 , 7 , a n d 8 a r e c o m b i n e d .
NOTE. C o m p o n e n t s m a y n o t a d d t o t o t a l s d u e t o r o u n d i n g .
1.52
DOMESTIC FINANCE COMPANIES
T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s G . 2 0 ( 4 2 2 ) r e l e a s e . F o r a d d r e s s ,
inside front cover.
see
B u s i n e s s Credit
Millions of dollars, seasonally adjusted e x c e p t as noted
C h a n g e s in a c c o u n t s
receivable
Type
Accounts
receivable
outstanding
Feb. 28,
1985'
1984
Dec.
1 Total
2
3
4
5
6
7
8
9
10
Retail financing o f i n s t a l l m e n t s a l e s
Automotive (commercial vehicles)
B u s i n e s s , industrial, and farm e q u i p m e n t
Wholesale
financing
Automotive
Equipment
All other
Leasing
Automotive
Equipment
L o a n s o n c o m m e r c i a l a c c o u n t s receivable and factored c o m mercial a c c o u n t s receivable
All o t h e r b u s i n e s s c r e d i t
1. N o t s e a s o n a l l y a d j u s t e d .
Extensions
1985
Jan.
1984
Feb.
Repayments
1984
1985
1985
Dec.
Jan.
Feb.
Dec.
Jan.
Feb.
137,947
2,969
4,368
869
27,088
28,010
26,444
24,119
23,642
25,575
11,213
20,332
-20
477
-25
-218
43
-25
720
1,491
720
1,254
797
1,272
740
1,014
745
1,472
754
1,297
20,186
4,778
6,597
1,295
-82
212
1,096
157
147
709
-15
106
9,898
573
1,690
10,165
711
1,824
9,394
485
1,690
8,603
655
1,478
9,069
554
1,677
8,685
500
1,584
13,436
36,399
377
453
623
928
305
39
917
1,528
1,121
1,767
966
916
540
1,075
498
839
661
877
16,037
10,969
226
31
1,659
1
-687
394
9,285
986
9,475
973
9,650
1,274
9,059
955
7,816
972
10,337
880
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s G . 2 0 ( 4 2 2 ) r e l e a s e . F o r a d d r e s s ,
see inside front cover.
A38 DomesticNonfinancialStatistics • June 1985
1.53
MORTGAGE MARKETS
Millions of dollars; exceptions noted.
1984
Item
1982
1983
1985
1984
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
T e r m s a n d y i e l d s in primary a n d s e c o n d a r y m a r k e t s
PRIMARY MARKETS
Conventional mortgages on new homes
1
2
3
4
5
6
Terms1
Purchase price ( t h o u s a n d s o f dollars)
A m o u n t of loan (thousands of dollars)
L o a n / p r i c e ratio ( p e r c e n t )
Maturity (years)
F e e s and charges (percent of loan amount)2
C o n t r a c t rate ( p e r c e n t p e r a n n u m )
Yield (percent
per
7 F H L B B series5
8 H U D series4
94.6
69.8
76.6
27.6
2.95
14.47
92.8
69.5
77.1
26.7
2.40
12.20
96.8
73.7
78.7
27.8
2.64
11.87
97.4
72.5
77.3
27.6
2.63
12.03
98.4
74.0
78.2
27.6
2.58
12.27
99.5
75.2
77.9
27.5
2.54
12.27
102.6
76.9
77.9
28.0
2.65
12.05
94.8
71.4
77.9
27.7
2.65
11.77
15.12
15.79
12.66
13.43
12.37
13.80
12.53
13.98
12.77
13.59
12.75
13.20
12.55
13.05
12.27
12.88
15.30
14.68
13.11
12.25
13.81
13.13
13.99
13.36
13.43
13.09
12.90
12.71
12.99
12.54
13.01
annum)
SECONDARY MARKETS
Yield (percent
per
annum)
9 F H A mortgages ( H U D series)5.
10 G N M A s e c u r i t i e s 6
12.26
A c t i v i t y in s e c o n d a r y m a r k e t s
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage
holdings
(end
11 T o t a l
12
FHA/VA-insured
13
Conventional
Mortgage
transactions
14 P u r c h a s e s
15 S a l e s
of
(during
period)
66,031
39,718
26,312
74,847
37,393
37,454
83,339
35,148
48,191
84,851
34,844
50,006
85,539
34,791
50,749
86,416
34,752
51,664
87,940
34,711
53,229
89,353
34,602
54,751
90,369
34,553
55,816
91,975
34,585
57,391
15,116
2
17,554
3,528
16,721
978
1,145
0
1,087
0
1,297
0
1,962
0
1,943
0
1,559
0
2,256
100
22,105
7,606
18,607
5,461
21,007
6,384
1,142
6,235
1,638
6,656
2,150
5,916
2,758
6,384
1,230
5,678
1,895
5,665
1,636
5,019
5,131
1,027
4,102
5,9%
974
5,022
9,283
910
8,373
9,447
8%
8,551
9,726
891
8,835
9,900
886
9,014
10,399
881
9,518
10,362
876
9,485
23,673
24,170
23,089
19,686
21,886
18,506
1,262
1,137
2,864
2,573
2,241
1,961
4,137
3,635
2,197
2,162
n.a.
n.a.
28,179
7,549
32,852
16,964
32,603
26,990
3,440
22,013
2,663
25,676
4,158
27,550
4,174
26,990
4,264
29,654
period)
Mortgage
commitments7
16 C o n t r a c t e d (during p e r i o d )
17 O u t s t a n d i n g ( e n d o f p e r i o d )
FEDERAL HOME LOAN MORTGAGE CORPORATION
Mortgage
holdings
18 T o t a l
19
FHA/VA
20
Conventional
Mortgage
transactions
21 P u r c h a s e s
22 Sales
(end
of
(during
Mortgage
commitments9
23 C o n t r a c t e d (during p e r i o d )
24 Outstanding (end of period)
period)8
period)
1. W e i g h t e d a v e r a g e s b a s e d o n s a m p l e s u r v e y s o f m o r t g a g e s o r i g i n a t e d b y
m a j o r institutional l e n d e r g r o u p s ; c o m p i l e d b y the F e d e r a l H o m e L o a n B a n k
B o a r d in c o o p e r a t i o n w i t h t h e F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n .
2. I n c l u d e s all f e e s , c o m m i s s i o n s , d i s c o u n t s , a n d " p o i n t s " p a i d ( b y the
b o r r o w e r o r t h e seller) t o o b t a i n a l o a n .
3. A v e r a g e e f f e c t i v e i n t e r e s t r a t e s o n l o a n s c l o s e d , a s s u m i n g p r e p a y m e n t at t h e
e n d o f 10 y e a r s .
4. A v e r a g e c o n t r a c t r a t e s o n n e w c o m m i t m e n t s f o r c o n v e n t i o n a l first m o r t gages; from Department of H o u s i n g and Urban D e v e l o p m e n t .
5. A v e r a g e g r o s s y i e l d s o n 3 0 - y e a r , m i n i m u m - d o w n p a y m e n t , F e d e r a l H o u s i n g
A d m i n i s t r a t i o n - i n s u r e d first m o r t g a g e s f o r i m m e d i a t e d e l i v e r y in t h e p r i v a t e
s e c o n d a r y m a r k e t . A n y g a p s in d a t a are d u e t o p e r i o d s o f a d j u s t m e n t t o c h a n g e s in
m a x i m u m permissible contract rates.
6. A v e r a g e n e t y i e l d s t o i n v e s t o r s o n G o v e r n m e n t N a t i o n a l M o r t g a g e A s s o c i a tion guaranteed, mortgage-backed, fully modified pass-through securities, assuming p r e p a y m e n t i n 12 y e a r s o n p o o l s o f 3 0 - y e a r F H A / V A m o r t g a g e s c a r r y i n g t h e
p r e v a i l i n g c e i l i n g rate. M o n t h l y figures a r e a v e r a g e s o f F r i d a y figures f r o m t h e
Wall Street
Journal.
7. I n c l u d e s s o m e m u l t i f a m i l y a n d n o n p r o f i t h o s p i t a l l o a n c o m m i t m e n t s in
a d d i t i o n t o 1- t o 4 - f a m i l y l o a n c o m m i t m e n t s a c c e p t e d in F N M A ' s f r e e m a r k e t
auction s y s t e m , and through the F N M A - G N M A tandem plans.
8. I n c l u d e s p a r t i c i p a t i o n a s w e l l a s w h o l e l o a n s .
9. I n c l u d e s c o n v e n t i o n a l a n d g o v e r n m e n t - u n d e r w r i t t e n l o a n s . F H L M C ' s m o r t g a g e c o m m i t m e n t s and m o r t g a g e t r a n s a c t i o n s i n c l u d e a c t i v i t y u n d e r m o r t g a g e /
securities s w a p programs, while the corresponding data for F N M A e x c l u d e s w a p
activity.
Real Estate
1.54
MORTGAGE DEBT
A39
OUTSTANDING
Millions of dollars, end o f period
1983
T y p e of holder, and type of property
1982
1983
Q4
1 All holders
1- t o 4 - f a m i l y
3 Multifamily
4 Commercial
5
?
6 M a j o r financial i n s t i t u t i o n s
7
Commercial banks1
1- t o 4 - f a m i l y
8
9
Multifamily
10
Commercial
Farm
11
1984
1984'
Q1
Q2
Q4'
Q3
1,658,450
1,827,563
2,031,459
1,827,563
1,874,489
1,934,437
1,987,130
2,031,459
1,110,315
140,063
301,362
106,710
1,219,145
150,149
348,958
109,311
1,350,576
164,017
406,059
110,807
1,219,145
150,149
348,958
109,311
1,250,678
153,655
360,540
109,616
1,287,537
158,349
377,974
110,577
1,320,515
161,893
393,600
111,122
1,350,576
164,017
406,059
110,807
1,024,680
301,272
173,804
16,480
102,553
8,435
1,110,165
328,323
181,300
18,288
119,411
9,324
1,247,047
374,186
197,944
21,142
144,623
10,477
1,110,165
328,323
181,300
18,288
119,411
9,324
1,138,931
340,797
185,530
20,005
125,550
9,712
1,183,480
353,946
190,706
20,670
132,447
10,123
1,221,779
365,386
194,933
21,412
138,774
10,267
1,247,047
374,186
197,944
21,142
144,623
10,477
97,805
66,777
15,305
15,694
29
136,054
96,569
17,785
21,671
29
160,301
114,061
20,119
26,090
31
136,054
96,569
17,785
21,671
29
143,180
101,868
18,441
22,841
30
147,517
105,063
18,752
23,672
30
150,462
106,944
19,138
24,349
31
160,301
114,061
20,119
26,090
31
17
13
14
15
16
Mutual savings banks
1- t o 4 - f a m i l y
Multifamily
Commercial
Farm
17
18
19
20
Savings and loan associations
1- t o 4 - f a m i l y
Multifamily
Commercial
483,614
393,323
38,979
51,312
494,789
390,883
42,552
61,354
555,277
431,450
48,309
75,518
494,789
390,883
42,552
61,354
503,509
397,017
43,553
62,939
528,172
414,087
45,951
68,134
550,129
429,101
47,861
73,167
555,277
431,450
48,309
75,518
71
Life insurance companies
1- t o 4 - f a m i l y
Multifamily
Commercial
Farm
141,989
16,751
18,856
93,547
12,835
150,999
15,319
19,107
103,831
12,742
157,283
14,180
19,017
111,642
12,444
150,999
15,319
19,107
103,831
12,742
151,445
14,917
19,083
104,890
12,555
153,845
14,437
19,028
107,796
12,584
155,802
14,204
18,828
110,149
12,621
157,283
14,180
19,017
111,642
12,444
138,138
4,227
676
3,551
147,370
3,395
630
2,765
157,901
2,301
585
1,716
147,370
3,395
630
2,765
150,784
2,900
618
2,282
152,669
2,715
605
2,110
153,355'
2,389
594
1,795
157,901
2,301
585
1,716
n
73
74
25
76 Federal and related agencies
27
Government National Mortgage Association
7,8
1- t o 4 - f a m i l y
29
Multifamily
30
31
37
33
34
Farmers H o m e Administration
1- t o 4 - f a m i l y
Multifamily
Commercial
Farm
1,786
783
218
377
408
2,141
1,159
173
409
400
1,800
449
124
652
575
2,141
1,159
173
409
400
2,094
1,005
303
319
467
1,344
281
463
81
519
35
36
37
Federal Housing and Veterans
Administration
1- t o 4 - f a m i l y
Multifamily
5,228
1,980
3,248
4,894
1,893
3,001
4,782
2,007
2,775
4,894
1,893
3,001
4,832
1,956
2,876
4,753
1,894
2,859
38
39
40
Federal National Mortgage Association
1- t o 4 - f a m i l y
Multifamily
71,814
66,500
5,314
78,256
73,045
5,211
87,940
82,175
5,765
78,256
73,045
5,211
80,975
75,770
5,205
83,243
77,633
5,610
84,850
79,175
5,675
87,940
82,175
5,765
41
47
43
Federal Land B a n k s
1- t o 4 - f a m i l y
Farm
50,350
3,068
47,282
51,052
3,000
48,052
50,679
2,948
47,731
51,052
3,000
48,052
51,004
2,982
48,022
51,136
2,958
48,178
51,182
2,954
48,228
50,679
2,948
47,731
44
45
46
Federal H o m e L o a n Mortgage Corporation
1- t o 4 - f a m i l y
Multifamily
4,733
4,686
47
7,632
7,559
73
10,399
9,654
745
7,632
7,559
73
8,979
8,847
132
9,478
8,931
547
9,447
8,841
606
10,399
9,654
745
216,654
118,940
115,831
3,109
285,073
159,850
155,801
4,049
331,532
179,981
175,084
4,897
285,073
159,850
155,801
4,049
296,481
166,261
161,943
4,318
305,051
170,893
166,415
4,478
317,548
175,770
171,095
4,675
331,532
179,981
175,084
4,897
47 Mortgage pools or trusts2
48
Government National Mortgage Association
49
1- t o 4 - f a m i l y
Multifamily
50
738
206
126
113
293
4,749'
1,982'
2,767'
1,800
449
124
652
575
4,782
2,007
2,775
51
5?
53
Federal H o m e L o a n Mortgage Corporation
1- t o 4 - f a m i l y
Multifamily
42,964
42,560
404
57,895
57,273
622
70,822
70,253
569
57,895
57,273
622
59,376
58,776
600
61,267
60,636
631
63,964
63,352
612
70,822
70,253
569
54
55
56
Federal National Mortgage Association3
1- t o 4 - f a m i l y
Multifamily
14,450
14,450
n.a.
25,121
25,121
n.a.
36,215
35,965
250
25,121
25,121
n.a.
28,354
28,354
n.a.
29,256
29,256
n.a.
32,888
32,730
158
36,215
35,965
250
57
58
59
60
61
Farmers H o m e Administration
1- t o 4 - f a m i l y
Multifamily
Commercial
Farm
40,300
20,005
4,344
7,011
8,940
42,207
20,404
5,090
7,351
9,362
44,514
21,578
5,835
7,403
9,698
42,207
20,404
5,090
7,351
9,362
42,490
20,573
5,081
7,456
9,380
43,635
21,331
5,081
7,764
9,459
44,926
21,595
5,618
7,844
9,869
44,514
21,578
5,835
7,403
9,698
278,978
189,121
30,208
30,868
28,781
284,955
189,189
31,433
34,931
29,402
294,979
192,243
32,754
40,131
29,851
284,955
189,189
31,433
34,931
29,402
288,293
190,522
31,776
36,545
29,450
293,237
193,304
32,169
38,080
29,684
294,448
192,809
32,622
39,204
29,813
294,979
192,243
32,754
40,131
29,851
67 I n d i v i d u a l a n d o t h e r s 4
63
1- t o 4 - f a m i l y 5
Multifamily
64
65
Commercial
Farm
66
1. I n c l u d e s l o a n s h e l d b y n o n d e p o s i t t r u s t c o m p a n i e s b u t n o t b a n k trust
departments.
2 . O u t s t a n d i n g p r i n c i p a l b a l a n c e s o f m o r t g a g e s b a c k i n g s e c u r i t i e s i n s u r e d or
guaranteed by the agency indicated.
3. O u t s t a n d i n g b a l a n c e s o n F N M A ' s i s s u e s o f s e c u r i t i e s b a c k e d b y p o o l s o f
c o n v e n t i o n a l m o r t g a g e s h e l d i n t r u s t . I m p l e m e n t e d b y F N M A in O c t o b e r 1981.
4. Other holders include m o r t g a g e c o m p a n i e s , real e s t a t e i n v e s t m e n t trusts,
state and local credit a g e n c i e s , state a n d local retirement f u n d s , n o n i n s u r e d
p e n s i o n funds, credit u n i o n s , and U . S . a g e n c i e s f o r w h i c h a m o u n t s are small or
for w h i c h separate data are not readily available.
5. Includes estimate o f residential mortgage credit p r o v i d e d by individuals.
NOTE. B a s e d o n d a t a f r o m v a r i o u s i n s t i t u t i o n a l a n d g o v e r n m e n t a l s o u r c e s , w i t h
s o m e q u a r t e r s e s t i m a t e d i n part b y t h e F e d e r a l R e s e r v e i n c o n j u n c t i o n w i t h t h e
Federal H o m e L o a n Bank Board and the Department of C o m m e r c e . Separation of
n o n f a r m m o r t g a g e d e b t b y t y p e o f p r o p e r t y , if n o t r e p o r t e d d i r e c t l y , a n d
interpolations and extrapolations w h e n required, are estimated mainly by the
F e d e r a l R e s e r v e . M u l t i f a m i l y d e b t r e f e r s t o l o a n s o n s t r u c t u r e s o f five o r m o r e
units.
A40 DomesticNonfinancialStatistics • June 1985
1.55
CONSUMER INSTALLMENT CREDIT' Total Outstanding, and Net ChangeA
Millions of dollars
1984'
Holder, and type of credit
1983
1985
1984
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Amounts outstanding (end of period)
383,701
460,500
414,738
422,008
430,795
437,469
441,358
447,783
460,500
461,530
464,940
By major
holder
Commercial banks
Finance c o m p a n i e s
Credit unions
Retailers 2
Savings and loans
Gasoline companies . . .
Mutual savings banks . .
171,978
87,429
53,471
37,470
23,108
4,131
6,114
212,391
96,747
67,858
40,913
29,945
4,315
8,331
191,519
91,006
59,893
35,242
25,428
4,289
7,361
195,265
92,534
61,151
35,058
26,057
4,472
7,471
199,654
94,070
62,679
35,359
26,922
4,452
7,659
202,452
95,594
63,808
35,595
27,880
4,328
7,812
204,582
95,113
64,716
35,908
28,781
4,290
7,968
206,635
95,753
66,528
37,124
29,358
4,217
8,168
212,391
96,747
67,858
40,913
29,945
4,315
8,331
213,951
96,732
68,538
38,978
30,520
4,329
8,482
215,778
97,360
70,251
37,483
31,405
4,012
8,651
By major type of credit
9 Automobile
10
Commercial b a n k s . . .
11
Credit unions
12
Finance companies . .
143,114
67,557
25,574
49,983
172,589
85,501
32,456
54,632
158,215
78,018
28,646
51,551
161,834
80,103
29,248
52,483
165,177
81,786
29,979
53,412
167,231
82,706
30,519
54,006
168,923
83,620
30,953
54,350
170,731
84,326
31,820
54,585
172,589
85,501
32,456
54,632
173,769
86,223
32,781
54,765
176,119
87,333
33,601
55,185
13 Revolving
14
Commercial b a n k s . . .
15
Retailers
16
Gasoline companies .
81,977
44,184
33,662
4,131
101,555
60,549
36,691
4,315
85,027
49,374
31,364
4,289
86,003
50,358
31,173
4,472
88,202
52,313
31,437
4,452
90,231
54,258
31,645
4,328
91,505
55,276
31,939
4,290
93,944
56,641
33,086
4,217
101,555
60,549
36,691
4,315
100,565
61,445
34,791
4,329
99,316
61,978
33,326
4,012
17 Mobile home
18
Commercial b a n k s . . .
19
Finance companies . .
20
Savings and loans . . .
21
Credit unions
23,862
9,842
9,547
3,906
567
24,556
9,610
9,243
4,985
718
24,300
9,621
9,729
4,316
634
24,639
9,681
9,883
4,428
647
24,947
9,711
9,992
4,581
663
25,198
9,761
10,065
4,697
675
24,573
9,627
9,470
4,791
685
24,439
9,613
9,235
4,887
704
24,556
9,610
9,243
4,985
718
24,281
9,498
9,053
5,005
725
24,393
9,456
9,044
5,150
743
22 Other
23
Commercial b a n k s . . .
24
Finance companies . .
25
Credit unions
26
Retailers
27
Savings and loans . . .
28
Mutual savings banks
134,748
50,395
27,899
27,330
3,808
19,202
6,114
161,800
56,731
32,872
34,684
4,222
24,960
8,331
147,196
54,506
29,726
30,613
3,878
21,112
7,361
149,532
55,123
30,168
31,256
3,885
21,629
7,471
152,469
55,844
30,666
32,037
3,922
22,341
7,659
154,809
55,727
31,523
32,614
3,950
23,183
7,812
156,357
56,059
31,293
33,078
3,969
23,990
7,968
158,669
56,055
31,933
34,004
4,038
24,471
8,168
161,800
56,731
32,872
34,684
4,222
24,960
8,331
162,915
56,785
32,914
35,032
4,187
25,515
8,482
165,112
57,011
33,131
35,907
4,157
26,255
8,651
1 Total
2
3
4
5
6
7
8
N e t change (during period) 3 ''
48,742
76,799
7,082
6,481
6,022
4,982
5,631
6,080
6,819
7,223
10,373
By major
holder
Commercial banks
Finance companies
Credit unions
Retailers 2
Savings and loans
Gasoline companies . . .
Mutual savings banks . .
19,488
18,572
6,218
5,075
7,285
68
1,322
40,413
18,636
14,387
3,443
6,837
184
2,217
3,835
942
1,049
330
813
37
76
3,192
1,138
1,360
36
586
-23
192
2,631
1,381
927
197
804
-63
145
1,384
1,571
871
225
770
-38
199
2,756
398
1,224
128
864
98
163
2,483
778
1,731
278
546
86
178
3,028
1,196
1,336
389
576
117
177
3,799
901
1,290
251
922
-91
151
5,071
1,203
2,755
269
997
-102
180
By major type of credit
31 Automobile
38
Commercial b a n k s . . .
39
Credit unions
40
Finance companies . .
16,856
8,002
2,978
11,752
29,475
17,944
6,882
9,298
2,725
1,907
503
315
3,087
1,852
650
585
2,482
1,150
444
888
1,513
434
416
663
2,504
1,057
587
860
2,549
1,019
828
702
2,687
1,275
640
772
2,887
1,616
598
673
3,837
1,790
1,335
712
41 Revolving
42
Commercial b a n k s . . .
43
Retailers
44
Gasoline companies .
12,353
7,518
4,767
68
19,578
16,365
3,029
184
1,356
1,047
272
37
772
764
31
-23
1,263
1,159
167
-63
1,484
1,323
199
-38
1,488
1,279
111
98
1,614
1,289
239
86
1,445
1,001
327
117
1,957
1,809
239
-91
2,527
2,429
200
-102
45 Mobile home
46
Commercial b a n k s . . .
47
Finance companies . .
48
Savings and loans . . .
49
Credit unions
1,452
237
776
763
64
694
-232
-608
1,079
151
191
10
46
123
12
334
31
137
152
14
217
4
63
140
10
127
4
19
95
9
-392
-91
-381
67
13
-91
-1
-192
84
18
117
29
-13
88
13
-159
-89
-144
60
14
296
41
33
192
30
50 Other
51
Commercial b a n k s . . .
52
Finance companies . .
53
Credit unions
54
Retailers
55
Savings and loans . . .
56
Mutual savings banks
18,081
3,731
6,044
3,176
308
6,522
1,322
27,052
6,336
9,946
7,354
414
5,758
2,217
2,810
871
581
534
58
690
76
2,288
545
416
696
5
434
192
2,060
318
430
473
30
664
145
1,858
-377
889
446
26
675
199
2,031
511
-81
624
17
797
163
2,008
176
268
885
39
462
178
2,570
723
437
683
62
488
177
2,538
463
372
678
12
862
151
3,713
811
458
1,390
69
805
180
29 Total
30
31
32
33
34
35
36
• T h e s e data have not been revised this month due to revisions that were not
available at time of publication.
1. The Board's series c o v e r most short- and intermediate-term credit extended
to individuals through regular business channels, usually to finance the purchase
of consumer goods and services or to refinance debts incurred for such purposes,
and scheduled to be repaid (or with the option of repayment) in t w o or more
installments.
2. Includes auto dealers and e x c l u d e s 30-day charge credit held by travel and
entertainment companies.
3. For 1982 and earlier, net change equals extensions, seasonally adjusted l e s s
liquidations, seasonally adjusted. Beginning 1983, net change equals outstandings,
seasonally adjusted l e s s outstandings of the previous period, seasonally adjusted.
NOTE. Total consumer noninstallment credit outstanding—credit scheduled to
be repaid in a lump sum, including single-payment loans, charge a c c o u n t s , and
service credit—amounted to, not seasonally adjusted, $80.7 billion at the end of
1981, $85.9 billion at the end of 1982, and $96.9 billion at the end of 1983.
These data also appear in the Board's G.19 (421) release. For address, see
inside front cover.
Consumer Installment Credit
1.56
A41
TERMS OF CONSUMER INSTALLMENT CREDIT
Percent unless noted otherwise
1984
Item
1983
1982
1985
1984
Aug.
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
INTEREST RATES
1
2
3
4
6
Commercial banks1
48-month new car2
24-month personal
120-month mobile h o m e 2
Credit card
A u t o finance c o m p a n i e s
N e w car
U s e d car
16.82
18.64
18.05
18.51
13.92
16.50
16.08
18.78
13.71
16.47
15.58
18.77
14.08
16.75
15.72
18.81
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
13.91
16.63
15.60
18.82
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
13.37
16.21
15.42
18.85
16.15
20.75
12.58
18.74
14.62
17.85
15.01
17.99
15.16
18.10
15.18
18.19
15.24
18.30
15.24
18.34
15.11
17.88
13.78
17.91
45.9
37.0
45.9
37.9
48.3
39.7
49.2
39.8
49.5
39.9
49.7
39.9
50.0
39.9
50.2
39.8
50.7
41.3
51.4
41.1
85
90
86
92
88
92
88
93
89
93
88
93
89
93
89
93
90
93
90
93
8,178
4,746
8,787
5,033
9,333
5,691
9,409
5,753
9,402
5,792
9,449
5,826
9,577
5,900
9,707
5,975
9,654
5,951
9,196
5,968
OTHER TERMS 3
7
8
9
10
11
12
Maturity (months)
N e w car
U s e d car
L o a n - t o - v a l u e ratio
N e w car
U s e d car
A m o u n t financed ( d o l l a r s )
N e w car
U s e d car
1. D a t a f o r m i d m o n t h o f q u a r t e r o n l y .
2. B e f o r e 1983 t h e m a t u r i t y f o r n e w c a r l o a n s w a s 3 6 m o n t h s , a n d f o r m o b i l e
h o m e loans w a s 84 m o n t h s .
3. A t a u t o finance c o m p a n i e s .
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s G . 1 9 ( 4 2 1 ) r e l e a s e . F o r a d d r e s s ,
see inside front cover,
A42 Domestic Financial Statistics • June 1985
1.57
FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1982
HI
1983
H2
1984
HI
H2
HI
H2
Nonfinancial sectors
1 Total net borrowing by domestic
By sector and
instrument
2 U.S. government
3
Treasury securities
4
A g e n c y i s s u e s and m o r t g a g e s
nonfinancial sectors
386.0
344.6
380.4
404.1
526.4
715.3
358.1
450.1
448.9
563.8
697.9
732.6
37.4
38.8
-1.4
79.2
79.8
-.6
87.4
87.8
-.5
161.3
162.1
-.9
186.6
186.7
-.1
198.8
199.0
-.2
104.1
105.5
-1.4
218.4
218.8
-.4
222.0
222.1
-.1
151.1
151.2
-.1
177.4
177.6
-.2
220.2
220.3
-.1
5 Private d o m e s t i c nonfinancial s e c t o r s
D e b t capital i n s t r u m e n t s
6
7
Tax-exempt obligations
8
Corporate b o n d s
9
Mortgages
10
H o m e mortgages
11
Multifamily residential
12
Commercial
13
Farm
348.6
211.2
30.3
17.3
163.6
120.0
7.8
23.9
11.8
265.4
192.0
30.3
26.7
135.1
96.7
8.8
20.2
9.3
293.1
159.1
22.7
21.8
114.6
76.0
4.3
24.6
9.7
242.8
158.9
53.8
18.7
86.5
52.5
5.5
23.6
5.0
339.8
239.3
56.3
15.7
167.3
108.7
8.4
47.3
2.9
516.5
288.4
54.6
32.2
201.5
128.9
13.8
57.3
1.6
254.0
140.7
43.9
12.0
84.8
53.6
5.1
19.7
6.5
231.7
177.2
63.7
25.3
88.2
51.3
5.8
27.5
3.5
266.9
214.4
62.8
23.0
128.6
83.8
2.8
40.3
1.6
412.7
264.2
49.7
8.4
206.0
133.6
13.9
54.3
4.1
520.5
280.4
37.9
24.1
218.3
140.9
17.1
58.5
1.8
512.4
296.4
71.3
40.3
184.8
116.9
10.4
56.1
1.3
14
15
16
17
18
Other debt i n s t r u m e n t s
C o n s u m e r credit
Bank loans n.e.c
O p e n market paper
Other
137.5
45.4
51.2
11.1
29.7
73.4
6.3
36.7
5.7
24.8
134.0
26.7
54.7
19.2
33.4
83.9
21.0
55.5
-4.1
11.5
100.5
51.3
27.3
-1.2
23.1
228.1
100.6
71.5
23.8
32.3
113.2
20.6
69.0
10.0
13.6
54.6
21.4
42.0
-18.2
9.4
52.5
35.9
13.3
-10.6
13.9
148.5
66.6
41.2
8.3
32.3
240.2
103.0
83.2
31.5
22.4
216.1
98.2
59.7
16.0
42.1
19
20
21
22
23
24
By borrowing sector
State and local g o v e r n m e n t s
Households
Farm
Nonfarm noncorporate
Corporate
348.6
17.6
179.3
21.4
34.4
96.0
265.4
17.2
122.1
14.4
33.7
78.1
293.1
6.2
127.5
16.3
40.2
102.9
242.8
31.3
94.5
7.6
39.5
70.0
339.8
36.7
175.4
4.3
63.9
59.5
516.5
33.0
241.6
2.2
76.3
163.5
254.0
24.1
94.7
9.6
36.6
89.0
231.7
38.5
94.3
5.6
42.3
51.0
266.9
41.9
134.8
.8
50.1
39.3
412.7
31.6
216.0
7.9
77.6
79.6
520.5
18.9
236.6
.6
86.1
178.3
512.4
47.0
246.6
3.8
66.5
148.6
20.2
3.9
2.3
11.2
2.9
27.2
.8
11.5
10.1
4.7
27.2
5.4
3.7
13.9
4.2
15.7
6.7
-6.2
10.7
4.5
18.9
3.8
4.9
6.0
4.3
1.7
2.7
-6.2
.4
4.8
10.2
2.4
-7.6
12.5
3.0
21.2
11.0
-4.7
9.0
6.0
15.3
4.6
11.3
-4.6
3.9
22.5
2.9
-1.5
16.5
4.6
19.2
1.1
-6.0
18.9
5.3
-15.7
4.4
-6.3
-18.1
4.4
406.2
371.8
407.6
419.8
545.3
717.0
368.3
471.4
504.2
586.3
717.1
717.0
25 Foreign net b o r r o w i n g in U n i t e d S t a t e s
Bonds
26
27
Bank loans n.e.c
O p e n market paper
28
29
U . S . government loans
30
Total domestic plus foreign
Financial s e c t o r s
31 Total net borrowing by financial sectors
By
instrument
32 U . S . g o v e r n m e n t related
33
S p o n s o r e d credit a g e n c y securities
34
Mortgage p o o l securities
35
36 Private financial s e c t o r s
37
Corporate b o n d s
Mortgages
38
Bank l o a n s n . e . c
39
O p e n market paper
40
41
L o a n s from Federal H o m e L o a n B a n k s
By
sector
42 S p o n s o r e d credit a g e n c i e s
43 Mortgage p o o l s
44 Private financial s e c t o r s
45
C o m m e r c i a l banks
46
B a n k affiliates
47
S a v i n g s and loan a s s o c i a t i o n s
Finance companies
48
49
REITs
82.4
62.9
84.1
69.0
90.7
126.5
84.2
53.8
74.0
107.3
121.0
131.9
47.9
24.3
23.1
.6
34.5
7.8
47.4
30.5
15.0
1.9
36.7
-.8
-.5
.9
20.9
16.2
64.9
14.9
49.5
.4
4.1
2.5
.1
1.9
-1.2
.8
67.8
1.4
66.4
74.2
30.0
44.2
66.2
-4.1
70.3
69.4
6.9
62.5
69.1
30.8
38.3
79.2
29.2
50.0
22.9
17.1
52.3
14.5
38.0
18.9
51.9
14.9
52.7
14.1
*
*
*
*
.9
21.2
15.7
-16.0
7.6
.1
.6
-14.7
-9.5
7.8
15.2
-.2
13.0
-7.0
60.0
22.4
36.8
.8
24.2
-2.5
.1
3.2
12.3
11.1
69.7
7.5
62.2
-.5
18.0
9.2
44.8
24.4
19.2
1.2
18.1
7.1
-.1
-.9
4.8
7.1
-2.5
7.2
-12.1
2.2
18.8
-2.0
.1
21.2
15.7
1.7
21.1
15.7
24.8
23.1
34.5
1.6
6.5
12.6
16.5
-1.3
25.6
19.2
18.1
.5
6.9
7.4
5.8
-2.2
32.4
15.0
36.7
.4
8.3
15.5
12.8
.2
15.3
49.5
4.1
1.2
1.9
2.5
-.9
.1
1.4
66.4
22.9
.5
8.6
-2.7
17.0
.2
30.0
44.2
52.3
2.7
10.8
20.1
19.5
.1
.1
7.5
62.2
-16.0
1.7
-5.8
-9.3
-1.9
.1
-4.1
70.3
7.8
.8
6.1
-10.0
11.4
.2
6.9
62.5
38.0
.2
11.1
4.5
22.7
.2
30.8
38.3
51.9
4.8
20.0
18.2
9.6
.1
29.2
50.0
52.7
.6
1.5
21.9
29.4
.1
*
*
*
23.2
36.8
24.2
.7
9.7
14.3
*
All s e c t o r s
50
51
52
53
54
55
56
57
58
Total net borrowing
U . S . g o v e r n m e n t securities
State and local obligations
Corporate and foreign b o n d s
Mortgages
C o n s u m e r credit
Bank loans n.e.c
O p e n market paper
Other l o a n s
488.7
434.7
491.8
488.8
635.9
843.5
452.5
525.1
578.2
693.6
838.1
848.9
84.8
30.3
29.0
163.5
45.4
52.9
40.3
42.4
122.9
30.3
34.6
134.9
6.3
47.3
20.6
37.8
133.0
22.7
26.4
113.9
26.7
59.3
54.0
55.8
225.9
53.8
27.8
86.5
21.0
51.2
5.4
17.2
254.4
56.3
36.5
167.2
51.3
32.0
17.8
20.3
273.1
54.6
49.4
201.5
100.6
66.2
45.3
52.8
163.5
43.9
11.8
84.8
20.6
64.6
34.8
28.5
288.3
63.7
43.8
88.2
21.4
37.9
-23.9
5.9
288.4
62.8
42.8
128.5
35.9
22.1
-8.0
5.7
220.5
49.7
30.3
206.0
66.6
41.9
43.6
35.0
246.7
37.9
40.1
218.2
103.0
77.3
71.5
43.4
299.5
71.3
58.8
184.7
98.2
55.1
19.0
62.2
External corporate equity f u n d s raised in U n i t e d States
59
60
61
62
63
64
Total new share issues
Mutual f u n d s
All other
Nonfinancial corporations
Financial c o r p o r a t i o n s
F o r e i g n shares p u r c h a s e d in U n i t e d S t a t e s
-3.8
22.2
-4.1
35.3
67.8
-29.8
23.3
47.2
83.5
52.0
-43.3
-16.4
.1
-3.9
-7.8
3.2
.8
5.2
17.1
12.9
2.1
2.1
6.3
-10.4
-11.5
.8
.3
18.4
16.9
11.4
4.0
1.5
32.8
34.9
28.3
2.7
4.0
38.1
-67.9
-72.1
3.0
1.1
12.5
10.9
7.0
3.9
-.1
24.3
22.9
15.8
4.1
3.0
36.8
46.8
38.2
2.8
5.7
28.9
23.1
18.4
2.5
2.2
39.0
-82.3
-84.5
2.9
-.7
37.2
-53.6
-59.6
3.2
2.9
Flow of Funds
1.58
A43
DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
Billions of dollars, e x c e p t as noted; half-yearly data are at seasonally adjusted annual rates.
1982
1979
Transaction c a t e g o r y , or sector
1
Total funds advanced in credit markets to domestic
nonfinanciat sectors
1980
1981
1982
1983
1984
1983
1984
HI
H2
HI
H2
HI
H2
386.0
344.6
380.4
404.1
526.4
715.3
358.1
450.1
488.9
563.8
697.9
732.6
By public agencies
and
foreign
Total net a d v a n c e s
U . S . government securities
Residential mortgages
F H L B a d v a n c e s to savings and loans
Other loans and securities
75.2
-6.3
35.8
9.2
36.5
97.0
15.7
31.7
7.1
42.4
97.7
17.2
23.5
16.2
40.9
109.1
18.0
61.0
.8
29.3
117.1
27.6
76.1
-7.0
20.5
142.6
35.8
56.5
15.7
34.6
100.8
9.7
47.6
11.1
32.4
117.3
26.2
74.4
-9.5
26.2
119.7
40.5
80.1
-12.1
11.1
114.6
14.6
72.0
-2.0
29.9
123.7
33.4
52.0
15.7
22.6
161.5
38.2
61.1
15.7
46.6
7
8
9
10
Total advanced, by sector
U.S. government
S p o n s o r e d credit a g e n c i e s
Monetary authorities
Foreign
19.0
53.0
7.7
-4.6
23.7
45.6
4.5
23.2
24.1
48.2
9.2
16.3
16.0
65.3
9.8
18.1
9.7
69.5
10.9
27.1
16.7
71.8
8.4
45.7
14.8
61.8
3.8
20.4
17.1
68.7
15.7
15.8
9.1
68.2
15.6
26.8
10.3
70.7
6.2
27.4
6.1
73.0
17.1
27.5
27.2
70.6
-.3
64.0
11
12
A g e n c y a n d f o r e i g n b o r r o w i n g n o t in l i n e 1
S p o n s o r e d credit agencies and mortgage pools
Foreign
47.9
20.2
44.8
27.2
47.4
27.2
64.9
15.7
67.8
18.9
74.2
1.7
60.0
10.2
69.7
21.2
66.2
15.3
69.4
22.5
69.1
19.2
79.2
-15.7
Private
domestic
funds
advanced
13 T o t a l n e t a d v a n c e s
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: F e d e r a l H o m e L o a n B a n k a d v a n c e s
379.0
91.1
30.3
18.5
91.9
156.3
9.2
319.6
107.2
30.3
19.3
73.7
96.2
7.1
357.3
115.8
22.7
18.8
56.7
159.5
16.2
375.6
207.9
53.8
14.8
-3.2
103.2
.8
495.9
226.9
56.3
14.6
40.9
150.2
-7.0
648.6
237.3
54.6
17.4
86.1
268.9
15.7
327.5
153.7
43.9
-.1
11.0
130.2
11.1
423.8
262.0
63.7
29.6
-17.4
76.3
-9.5
450.8
247.8
62.8
22.9
6.4
98.7
-12.1
541.1
205.9
49.7
6.3
75.5
201.7
-2.0
662.5
213.2
37.9
18.0
105.9
303.2
15.7
634.7
261.3
71.3
16.9
66.2
234.7
15.7
Private
financial
intermediation
20 Credit market f u n d s a d v a n c e d b y private
institutions
Commercial banking
71
Savings institutions
77
73
Insurance and pension funds
24
O t h e r finance
313.9
123.1
56.5
85.9
48.5
281.5
100.6
54.5
94.3
32.1
323.4
102.3
27.8
97.4
96.0
285.6
107.2
31.3
108.8
38.3
376.7
136.1
136.8
98.8
5.0
541.9
176.1
147.7
113.2
104.9
274.4
99.9
25.2
111.4
37.9
296.7
114.5
37.4
106.3
38.6
323.2
121.6
128.9
89.5
-16.8
430.1
150.6
144.6
108.1
26.8
522.2
192.8
157.0
95.6
76.7
561.6
159.4
138.4
130.8
133.1
75 S o u r c e s o f f u n d s
76
Private d o m e s t i c d e p o s i t s and R P s
27
Credit market b o r r o w i n g
313.9
137.4
34.5
281.5
169.6
18.1
323.4
211.9
36.7
285.6
174.7
4.1
376.7
203.5
22.9
541.9
283.9
52.3
274.4
147.6
24.2
296.7
201.9
-16.0
323.2
192.7
7.8
430.1
214.2
38.0
522.2
277.0
51.9
561.6
290.7
52.7
78
79
30
31
32
142.0
27.6
.4
72.8
41.2
93.9
-21.7
-2.6
83.9
34.2
74.8
-8.7
-1.1
90.4
-5.9
106.7
-26.7
6.1
104.6
22.8
150.4
22.1
-5.3
99.2
34.4
205.8
20.8
3.8
108.2
72.9
102.6
-28.3
-2.0
111.4
21.5
110.8
-25.1
14.1
97.8
24.1
122.8
-14.2
10.1
90.0
36.8
177.9
58.5
-20.8
108.4
31.9
193.2
15.7
.9
107.6
69.0
218.3
25.9
6.8
108.9
76.8
Private
domestic
nonfinancial
investors
33 D i r e c t l e n d i n g in c r e d i t m a r k e t s
34
U . S . government securities
35
State and local obligations
Corporate and foreign bonds
36
37
O p e n market paper
38
Other
99.6
52.5
9.9
-1.4
8.6
30.0
56.1
24.6
7.0
-5.7
-3.1
33.3
70.6
29.3
10.5
-8.1
2.7
36.3
94.2
37.4
34.4
-5.2
-.1
27.8
142.1
88.7
42.5
2.0
3.9
5.0
159.0
114.0
31.8
-6.2
1.0
18.4
77.3
35.3
30.1
-17.7
3.5
26.2
111.0
39.5
38.7
7.3
-3.7
29.3
135.3
95.9
52.7
-1.7
-8.1
-3.4
148.9
81.4
32.3
5.7
15.9
13.5
192.3
139.4
21.5
7.8
3.0
20.7
125.7
88.6
42.1
-20.1
-1.0
16.2
39 D e p o s i t s a n d c u r r e n c y
40
Currency
41
Checkable deposits
47
Small time and savings a c c o u n t s
43
M o n e y market fund shares
44
Large time deposits
45
Security RPs
46
D e p o s i t s in f o r e i g n c o u n t r i e s
146.8
8.0
18.3
59.3
34.4
18.8
6.6
1.5
181.1
10.3
5.2
82.9
29.2
45.8
6.5
1.1
221.9
9.5
18.0
47.0
107.5
36.9
2.5
.5
181.9
9.7
15.7
138.2
24.7
-7.7
3.8
-2.5
222.6
14.3
21.7
219.1
-44.1
-7.5
14.3
4.8
294.6
14.2
16.4
148.0
47.2
69.8
2.4
-3.4
152.1
6.7
1.9
83.2
39.4
21.9
1.1
-2.2
211.7
12.7
29.5
193.1
10.0
-37.3
6.6
-2.9
214.5
14.8
48.0
278.6
-84.0
-61.0
11.0
7.0
230.7
13.8
-4.7
159.7
-4.2
45.9
17.5
2.7
290.2
17.7
36.6
124.9
30.2
80.0
5.3
-4.5
299.0
10.7
-3.9
171.2
64.2
59.7
- s
-2.3
322.7
?
3
4
5
6
financial
Other sources
Foreign funds
Treasury balances
Insurance and pension reserves
Other, net
47
Total of credit market instruments, deposits and
currency
246.5
237.2
292.5
276.1
364.7
453.6
229.4
349.8
379.6
482.5
424.8
48
49
50
Public holdings as p e r c e n t o f total
P r i v a t e financial i n t e r m e d i a t i o n (in p e r c e n t )
Total foreign funds
18.5
82.8
23.0
26.1
88.1
1.5
24.0
90.5
7.6
26.0
76.0
-8.6
21.5
76.0
49.2
19.9
83.5
66.5
27.4
83.8
-7.9
24.9
70.0
-9.3
23.7
71.7
12.6
19.5
79.5
85.9
17.2
78.8
43.1
22.5
88.5
89.9
-3.8
22.2
-4.1
35.3
67.8
-29.8
83.5
52.0
-43.3
-16.4
5.2
17.1
24.9
-2.7
6.3
-10.4
20.1
-24.2
18.4
16.9
39.2
-3.9
32.8
34.9
57.5
10.2
38.1
-67.9
19.4
-49.2
23.3
12.5
10.9
47.2
.1
-3.9
12.9
-16.7
24.3
22.9
67.3
-20.1
36.8
46.8
75.9
7.6
28.9
23.1
39.2
12.8
39.0
-82.3
7.6
-50.8
37.2
-53.6
31.3
-47.6
MEMO: C o r p o r a t e e q u i t i e s n o t i n c l u d e d a b o v e
51 Total net issues
5?
Mutual fund shares
53
Other equities
5 4 A c q u i s i t i o n s b y financial i n s t i t u t i o n s
5 5 O t h e r net p u r c h a s e s
NOTES BY LINE NUMBER.
1. L i n e 1 o f t a b l e 1.58.
2. S u m o f l i n e s 3 - 6 o r 7 - 1 0 .
6. I n c l u d e s f a r m a n d c o m m e r c i a l m o r t g a g e s .
11. C r e d i t m a r k e t f u n d s r a i s e d b y f e d e r a l l y s p o n s o r e d c r e d i t a g e n c i e s , a n d n e t
issues of federally related mortgage pool securities.
13. L i n e 1 l e s s l i n e 2 p l u s l i n e 11 a n d 12. A l s o l i n e 2 0 l e s s l i n e 2 7 p l u s l i n e 3 3 . A l s o
s u m o f l i n e s 28 a n d 4 7 l e s s l i n e s 4 0 a n d 4 6 .
18. I n c l u d e s f a r m a n d c o m m e r c i a l m o r t g a g e s .
26. Line 39 less lines 4 0 and 46.
2 7 . E x c l u d e s e q u i t y i s s u e s a n d i n v e s t m e n t c o m p a n y s h a r e s . I n c l u d e s line 19.
29. F o r e i g n d e p o s i t s at c o m m e r c i a l b a n k s , b a n k b o r r o w i n g s f r o m f o r e i g n
branches, and liabilities o f f o r e i g n banking a g e n c i e s to foreign affiliates.
3 0 . D e m a n d d e p o s i t s at c o m m e r c i a l b a n k s .
31. E x c l u d e s n e t i n v e s t m e n t o f t h e s e r e s e r v e s in c o r p o r a t e e q u i t i e s .
11.0
12.3
32. Mainly retained earnings and n e t m i s c e l l a n e o u s liabilities.
3 3 . L i n e 12 l e s s l i n e 2 0 p l u s l i n e 27.
3 4 - 3 8 . L i n e s 1 4 - 1 8 l e s s a m o u n t s a c q u i r e d b y p r i v a t e f i n a n c e . L i n e 38 i n c l u d e s
mortgages.
40. Mainly an offset to line 9.
4 7 . L i n e s 3 3 p l u s 3 9 , o r l i n e 13 l e s s l i n e 2 8 p l u s 4 0 a n d 4 6 .
4 8 . L i n e 2/line 1.
4 9 . L i n e 2 0 / l i n e 13.
5 0 . S u m o f l i n e s 10 a n d 2 9 .
51. 53. I n c l u d e s i s s u e s b y financial institutions.
NOTE. Full s t a t e m e n t s f o r s e c t o r s a n d t r a n s a c t i o n t y p e s in flows a n d in a m o u n t s
outstanding may be obtained from F l o w of Funds Section, Division of Research
and Statistics, Board o f Governors of the Federal R e s e r v e S y s t e m , Washington,
D . C . 20551.
A44 DomesticNonfinancialStatistics • June 1985
2.10
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures
1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1984
Measure
1982
1983
1985
1984
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.'
Feb.'
Mar.
1
Industrial production
138.6
147.6
166.3
165.9
166.0
165.0
164.4
164.8
164.8'
165.2
164.9
165.4
2
3
4
5
6
7
Market
groupings
P r o d u c t s , total
Final, total
Consumer goods
Equipment
Intermediate
Materials
141.8
141.5
142.6
139.8
143.3
133.7
149.2
147.1
151.7
140.8
156.6
145.2
164.7
162.7
161.7
164.1
172.3
161.2
167.4
165.2
163.8
167.0
175.8
163.5
167.2
165.1
162.5
168.7
175.1
164.0
166.4
164.6
161.6
168.9
173.0
162.8
166.9
165.2
161.6
170.1
173.4
160.4
167.7
166.2
162.6
171.2
173.1
160.4
168.1'
166.7'
162.2'
172.8'
173.2'
159.8'
168.2
166.9
162.5
172.9
173.0
160.5
167.7
166.1
161.1
172.9
173.7
160.6
168.0
166.2
161.3
173.0
174.5
161.3
137.6
148.2
164.8
167.3
167.6
166.6
166.2
166.6
166.6»-
166.8
166.5
167.1
71.1
70.1
75.2
75.2
81.6
82.0
82.9
83.1
82.8
83.3
82.2
82.4
81.7
81.0
81.6
80.9
81.4'
80.4'
81.3
80.5
80.9
80.4
81.0
80.5
Industry
groupings
8 Manufacturing
Capacity utilization (percent)1
9
Manufacturing
10
Industrial materials industries
11 C o n s t r u c t i o n c o n t r a c t s ( 1 9 7 7 = 1 0 0 )
2
12
13
14
15
16
17
18
19
20
21
Nonagricultural e m p l o y m e n t , total3
G o o d s - p r o d u c i n g , total
Manufacturing, total
Manufacturing, production-worker
Service-producing
Personal i n c o m e , total
W a g e s and salary d i s b u r s e m e n t s
Manufacturing
Disposable personal i n c o m e 4
Retail sales5
22
23
Prices6
Consumer
P r o d u c e r finished
goods
...
111.0
137.(K
149.C
150 .(K
148.(V
146.0'
145.0'
151.0
150.C
153.0
145.0
162.0
136.1
102.2
96.6
89.1
154.7
410.3
367.4
285.5
398.0
326.0
137.0
100.4
95.1
87.9
157.1
435.6
388.6
294.7
427.1
373.0
143.1
106.8
100.7
94.0
163.0
478.1
422.5
323.6
470.3
412.0
143.4
107.5
101.3
94.6
163.1
480.6
424.4
324.4
472.5
411.0
143.6
107.7
101.4
94.8
163.4
483.5
425.5
326.2
475.5
410.4
144.1
107.3
100.9
94.0
164.2
487.0
428.4
325.7
479.1
414.1
144.6
107.6
101.2
94.3
164.9
488.8
428.8
326.7
480.6
416.4
145.1
107.8
101.4
94.4
165.6
491.7
432.6
330.0
482.9
421.3
145.4
108.4
101.8
94.8
165.7
493.9
436.7
333.2
484.5
422.3
146.0
108.7
101.9
94.8
166.4
496.7
438.5
334.4
487.5
424.0
146.1
108.2
101.5
94.3
166.9
498.4
440.4
332.9
483.6
430.8
146.7
108.7
101.4
94.1
167.6
500.9
443.8
334.5
481.3
422.4
289.1
280.7
298.4
285.2
311.1
291.2
311.7
292.3
313.0
291.3
314.5
289.5
315.3
291.5
315.3
292.3
315.5
292.4
316.1
292.7
317.4
292.5
318.8
292.4
1. R a t i o s o f i n d e x e s o f p r o d u c t i o n t o i n d e x e s o f c a p a c i t y . B a s e d o n d a t a f r o m
Federal Reserve, McGraw-Hill E c o n o m i c s Department, Department of Commerce, and other sources.
2. I n d e x o f dollar v a l u e o f total c o n s t r u c t i o n contracts, including residential,
nonresidential and h e a v y engineering, from McGraw-Hill Information S y s t e m s
Company, F. W. D o d g e Division.
3 . B a s e d o n d a t a in Employment
and Earnings
(U.S. Department of Labor).
S e r i e s c o v e r s e m p l o y e e s o n l y , e x c l u d i n g p e r s o n n e l in t h e A r m e d F o r c e s .
4 . B a s e d o n d a t a i n Survey
of Current
Business
( U . S . Department of C o m merce).
5 . B a s e d o n B u r e a u o f C e n s u s d a t a p u b l i s h e d i n Survey of Current
Business.
6. D a t a w i t h o u t s e a s o n a l a d j u s t m e n t , a s p u b l i s h e d in Monthly
Labor
Review.
S e a s o n a l l y a d j u s t e d d a t a f o r c h a n g e s in t h e p r i c e i n d e x e s m a y b e o b t a i n e d f r o m
the Bureau of Labor Statistics, U . S . Department o f Labor.
NOTE. B a s i c d a t a ( n o t i n d e x n u m b e r s ) f o r s e r i e s m e n t i o n e d in n o t e s 4 , 5 , a n d 6 ,
a n d i n d e x e s f o r s e r i e s m e n t i o n e d in n o t e s 3 a n d 7 m a y a l s o b e f o u n d in t h e
Survey
of Current
Business.
F i g u r e s f o r industrial p r o d u c t i o n for the last t w o m o n t h s are preliminary a n d
estimated, respectively.
Selected Measures
2.11
A45
LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data are seasonally adjusted. E x c e p t i o n s noted.
1984
1982
Category
1983
1985
1984
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.
HOUSEHOLD SURVEY DATA
1
Noninstitutional population1
174,450
176,414
178,602
178,821
179,005
179,181
179,353
179,524
179,600
179,742
179,891
112,383
110,204
113,749
111,550
115,763
113,544
115,867
113,629
116,006
113,764
116,241
114,016
116,292
114,074
116,682
114,464
117,091
114,875
117,310
115,084
117,738
115,514
96,125
3,401
97,450
3,383
101,685
3,321
101,884
3,264
102,075
3,319
102,480
3,169
102,598
3,334
102,888
3,385
103,071
3,320
103,345
3,340
103,757
3,362
10,678
9.7
62,067
10,717
9.6
62,665
8,539
7.5
62,839
8,481
7.5
62,954
8,370
7.4
62,999
8,367
7.3
62,940
8,142
7.1
63,061
8,191
7.2
62,842
8,484
7.4
62,509
8,399
7.3
62,432
8,396
7.3
62,153
Nonagricultural payroll employment3
89,566
90,138
94,166
94,523
94,807
95,157
95,497
95,681
96,045'
96,157
96,538
Manufacturing
Mining
Contract construction
T r a n s p o r t a t i o n a n d p u b l i c utilities
Trade
Finance
Service
Government
18,781
1,128
3,905
5,082
20,457
5,341
19,036
15,837
18,497
957
3,940
4,958
20,804
5,467
19,665
15,851
19,589
999
4,315
5,169
21,790
5,665
20,666
15,973
19,725
1,017
4,356
5,202
21,839
5,679
20,748
15,957
19,616
1,020
4,374
5,213
21,930
5,684
20,861
16,109
19,686
1,012
4,382
5,225
22,080
5,705
20,964
16,103
19,718
1,009
4,396
5,226
22,267
5,725
21,030
16,126
19,801
1,000
4,457
5,249
22,267
5,749
21,095
16,063
19,808'
1,000'
4,530'
5,266'
22,372'
5,764'
21,231
16,074'
19,739
999
4,489
5,279
22,427
5,800
21,331
16,093
19,713
997
4,618
5,266
22,521
5,828
21,474
16,121
2 Labor force (including Armed Forces)1
3
Civilian labor force
Employment
4
Nonagricultural industries2
5
Agriculture
Unemployment
Number
6
7
Rate (percent of civilian labor force)
8 N o t in labor f o r c e
...
ESTABLISHMENT SURVEY DATA
9
10
11
12
13
14
15
16
17
1. P e r s o n s 16 y e a r s o f a g e a n d o v e r . M o n t h l y f i g u r e s , w h i c h are b a s e d o n
s a m p l e d a t a , relate to the c a l e n d a r w e e k that c o n t a i n s t h e 12th d a y ; a n n u a l d a t a
are a v e r a g e s o f m o n t h l y figures. B y d e f i n i t i o n , s e a s o n a l i t y d o e s n o t e x i s t in
p o p u l a t i o n figures. B a s e d o n d a t a f r o m Employment
and Earnings
( U . S . Department of Labor).
2. I n c l u d e s s e l f - e m p l o y e d , u n p a i d f a m i l y , and d o m e s t i c s e r v i c e w o r k e r s .
3. D a t a i n c l u d e all full- a n d p a r t - t i m e e m p l o y e e s w h o w o r k e d d u r i n g , o r
r e c e i v e d p a y f o r , the p a y p e r i o d that i n c l u d e s the 12th d a y o f t h e m o n t h , and
e x c l u d e proprietors, s e l f - e m p l o y e d persons, d o m e s t i c servants, unpaid family
w o r k e r s , and m e m b e r s o f t h e A r m e d F o r c e s . D a t a are a d j u s t e d t o the M a r c h 1983
b e n c h m a r k a n d o n l y s e a s o n a l l y a d j u s t e d d a t a are a v a i l a b l e at this t i m e . B a s e d o n
and Earnings
( U . S . Department of Labor).
d a t a f r o m Employment
A46 Domestic Nonfinancial Statistics • June 1985
2.12
OUTPUT, CAPACITY, AND CAPACITY UTILIZATION
Seasonally adjusted
1984
Q2
Q3
1985
Q4'
Output (1967 =
Q1
100)
1984
Q2
1985
Q4
Q3
Q1
1984
Q2
C a p a c i t y ( p e r c e n t o f 1967 o u t p u t )
Q3
1985
Q4'
Q1
Utilization rate ( p e r c e n t )
1 Total industry
163.1
165.6
164.7
165.2
199.7
201.1
202.4
204.0
81.7
82.4
81.3
80.9
2 Mining
3 Utilities
125.1
183.1
129.0
181.1
124.3
183.0
123.9
184.3
165.9
215.3
166.1
216.8
166.3
218.3
166.5
219.8
75.4
85.0
77.7
83.5
74.7
83.8
74.4
83.8
4 Manufacturing
164.4
167.2
166.5
166.8
201.0
202.5
204.0
205.7
81.8
82.5
81.6
81.1
5 Primary processing . . .
6 Advanced processing .
162.5
165.2
162.2
169.7
159.8
169.6
160.8
170.4
197.2
203.0
198.0
204.9
198.7
206.8
199.7
208.9
82.4
81.4
81.9
82.8
80.4
82.0
80.5
81.6
7 Materials
162.1
163.4
160.2
160.8
195.9
197.2
198.4
199.7
82.7
82.9
80.7
80.5
8 Durable g o o d s
9
Metal materials . . . .
10 N o n d u r a b l e g o o d s . . . .
11
Textile, paper, and c h e m i c a l . .
12
Paper
13
Chemical
162.0
100.3
186.6
195.9
168.5
240.4
164.6
97.2
185.7
194.9
171.0
238.4
162.1
91.0
181.5
189.6
168.3
233.5
161.4
92.0
181.5
189.4
n.a.
n.a.
198.3
138.5
223.4
236.2
169.5
305.2
199.5
137.9
225.2
238.2
170.5
308.0
200.8
137.3
226.9
240.3
171.5
310.9
202.4
136.8
228.4
242.0
n.a.
n.a.
81.7
72.4
83.5
82.9
99.4
78.8
82.5
70.5
82.5
81.8
100.3
77.4
80.7
66.3
80.0
79.0
98.1
75.1
79.8
67.3
79.5
78.3
n.a.
n.a.
14 E n e r g y m a t e r i a l s
132.4
133.1
129.4
133.7
156.4
157.0
157.6
158.4
84.6
84.8
82.1
84.4
Previous cycle1
High
Low
Latest cycle2
1984
Low
Mar.
High
1984
July
Aug.
Sept.
1985
Oct.
Nov.
Dec/
Jan/
Feb/
Mar.
C a p a c i t y u t i l i z a t i o n rate ( p e r c e n t )
15 T o t a l i n d u s t r y
88.4
71.1
87.3
69.6
80.9
82.7
82.5
81.9
81.4
81.4
81.2
81.2
80.8
80.8
16 M i n i n g
17 U t i l i t i e s
91.8
94.9
86.0
82.0
88.5
86.7
69.6
79.0
74.7
84.0
78.3
84.1
77.3
83.3
77.4
83.2
74.3
82.9
75.1
84.6
74.8
83.9
75.1
83.7
73.9
84.0
74.1
83.8
18 M a n u f a c t u r i n g
87.9
69.0
87.5
68.8
81.0
82.8
82.8
82.0
81.7
81.6
81.4
81.3
80.9
81.0
19 P r i m a r y p r o c e s s i n g . . .
20 A d v a n c e d processing .
93.7
85.5
68.2
69.4
91.4
85.9
66.2
70.0
82.2
80.6
82.3
83.0
82.1
83.1
81.5
82.4
81.2
81.8
80.6
82.0
79.5
82.2
80.2
82.1
80.6
81.3
80.7
81.3
21 M a t e r i a l s
92.6
69.3
88.9
66.6
82.2
83.1
83.2
82.4
81.0
80.9
80.4
80.5
80.4
80.5
22 D u r a b l e g o o d s
23
Metal materials
91.4
97.8
63.5
68.0
88.4
95.4
59.8
46.2
80.7
71.5
82.5
70.8
82.9
70.8
82.2
69.8
81.3
67.6
80.8
66.7
80.0
64.5
80.0
65.2
79.5
67.2
79.7
69.4
24 N o n d u r a b l e g o o d s
25
Textile, paper, and
chemical
26
Paper
27
Chemical
94.4
67.4
91.7
70.7
83.6
83.0
82.9
81.5
80.5
80.2
79.4
79.3
79.3
79.7
95.1
99.4
95.5
65.4
72.4
64.2
92.3
97.9
91.3
68.6
86.3
64.0
83.1
96.8
79.5
82.5
101.5
77.9
82.4
99.7
78.1
80.5
99.7
76.1
79.7
98.7
75.7
79.1
97.2
75.7
78.0
98.5
73.9
78.1
98.0
74.5
78.1
96.2
74.7
78.5
n.a.
n.a.
28 Energy materials
94.5
84.4
88.9
78.5
84.1
85.3
84.7
84.3
81.0
82.1
83.2
83.9
84.7
84.6
1. M o n t h l y h i g h 1973; m o n t h l y l o w 1975.
2 . M o n t h l y h i g h s 1978 t h r o u g h 1980; m o n t h l y l o w s 1982.
NOTE. T h e s e d a t a a l s o a p p e a r i n t h e B o a r d ' s G . 3 (402) r e l e a s e . F o r a d d r e s s , s e e
inside front cover.
Selected Measures
2.13
INDUSTRIAL PRODUCTION
A47
Indexes and Gross Value
Monthly data are seasonally adjusted
Grouping
1967
proportion
1984
avg.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
I n d e x (1967 = 100)
MAJOR MARKET
100.00
163.3
160.8
162.1
162.8
164.4
165.9
166.0
165.0
164.4
164.8
164.8
165.2
60.71
47.82
27.68
20.14
12.89
39.29
164.7
162.7
161.6
164.1
172.3
161.2
161.1
158.6
160.2
156.4
170.2
160.4
162.5
160.2
161.4
158.5
171.0
161.5
163.3
161.1
161.7
160.3
171.6
162.0
165.3
163.1
163.0
163.3
173.5
162.9
167.4
165.2
163.8
167.0
175.8
163.5
167.2
165.1
162.5
168.7
175.1
164.0
166.4
164.6
161.6
168.9
173.0
162.8
166.9
165.2
161.6
170.1
173.4
160.4
167.7
166.2
162.6
171.2
173.1
160.4
168.1
166.7
162.2
172.8
173.2
159.8
168.2
166.9
162.5
172.9
173.0
160.5
7.89
2.83
2.03
1.90
.80
5.06
1.40
1.33
1.07
2.59
162.0
181.3
158.1
135.3
240.2
151.1
134.3
137.5
179.2
148.6'
163.1
184.1
164.1
142.4
234.7
151.3
134.4
138.0
180.2
148.5
162.2
180.9
158.4
134.5
238.0
151.7
136.1
138.8
181.0
148.0
161.4
179.8
155.9
132.9
240.6
151.1
134.0
136.7
179.6
148.6
163.6
184.3
158.7
136.2
249.3
152.0
134.9
138.0
179.4
150.0
163.7
185.0
159.6
173.0
145.6
121.1
242.7
152.0
136.4
140.2
179.3
149.2
158.7
171.9
145.0
123.6
240.2
151.4
133.5
136.8
178.1
150.0
161.5
184.1
161.5
138.9
241.2
148.9
130.5
133.2
177.5
147.0
161.0
186.0
138.7
245.8
151.8
133.4
136.9
179.5
150.3
162.6
181.8
159.2
134.3
239.1
151.9
132.3
135.9
180.8
150.6
164.7
142.5
239.9
147.0
133.0
136.0
173.2
143.8
160.7
192.0
174.3
151.5
236.8
143.2
121.9
124.2
169.9
143.6
18 N o n d u r a b l e c o n s u m e r g o o d s
19
Clothing
20
Consumer staples
21
C o n s u m e r f o o d s and t o b a c c o
22
N o n f o o d staples
23
Consumer chemical products
24
Consumer paper products
25
Consumer energy products
26
R e s i d e n t i a l utilities
19.79
4.29
15.50
8.33
7.17
2.63
1.92
2.62
1.45
161.5'
159.1
161.1
161.8
162.7
163.9
162.4
162.4
162.7
163.0
162.7
163.2
ni.y
168.0
157.6
170.2
160.4
171.6
184.2
240.7'
145.7'
155.6
177.9
180.1
181.6
231.3
141.8
156.8
177.7
233.4
144.0
157.1
177.4
247.1
151.5
155.3
178.6
172.7
161.8
185.4
244.3
148.7
153.3
175.0
173.1
162.1
185.9
247.3
146.7
153.0
174.1
173.8
162.4
187.0
247.5
146.9
155.6
177.4
173.9
161.2
183.9
235.9
145.6
159.8
181.1
173.2
161.9
186.3
241.5
147.9
159.0
182.4
174.5
162.9
245.7
148.5
160.7
186.5
173.2
162.1
186.1
246.4
146.7
154.4
178.6
173.6
162.7
186.2
247.6
147.7
152.7
177.9
Equipment
27 B u s i n e s s
28
Industrial
29
Building and mining
30
Manufacturing
31
Power
12.63
6.77
1.44
3.85
1.47
181.0
140.6
187.6
127.4
128.8
172.1
134.8
175.2
124.2
122.7
173.5
135.9
173.6
126.2
124.1
176.5
138.5
182.9
127.4
124.1
181.1
140.4
185.8
185.5
143.1
190.0
130.1
131.0
187.6
143.3
191.6
129.7
131.2
186.4
143.5
190.7
129.8
133.0
187.3
145.3
194.6
131.0
134.5
188.4
145.6
197.2
129.9
135.8
189.6
147.0
199.8
130.9
137.3
189.0
144.6
195.0
129.3
135.2
5.86
3.26
1.93
.67
227.6'
325.1'
115.4
76.4
215.3
306.9
109.2
75.0
217.0
309.6
108.9
78.0
220.5
315.5
109.7
77.1
228.1
326.3
115.1
76.1
234.5
333.4
120.4
81.8
238.9
339.2
124.5
80.3
235.9
336.5
121.4
76.4
235.8
338.5
117.8
76.1
237.9
342.1
118.2
76.2
238.8
343.5
119.6
72.2
240.2
347.4
118.5
69.2
36 D e f e n s e a n d s p a c e
7.51
135.6'
130.1
133.2
133.1
133.5
135.9
136.8
139.5
141.1
142.2
144.7
145.8
Intermediate
products
37 C o n s t r u c t i o n s u p p l i e s
38 B u s i n e s s s u p p l i e s
39
Commercial energy products
6.42
6.47
1.14
158.9'
185.7
193.5
159.1
181.3
187.0
159.6
182.3
190.0
159.5
183.5
190.8
160.9
186.1
195.3
161.9
189.5
194.9
160.9
189.1
193.3
158.2
187.6
194.5
158.6
194.8
156.9
189.2
199.8
157.5
188.8
196.1
157.4
188.4
196.0
20.35
4.58
5.44
10.34
5.57
161.6
134.4
212.5
146.9
100.9'
159.5
133.0
206.7
146.3
103.0
161.3
133.2
210.9
147.7
105.7
161.6
132.6
210.6
148.6
104.5
163.0
134.7
214.0
148.7
104.1
164.2
135.1
218.8
148.3
103.4
165.3
136.6
220.1
149.2
102.0
164.3
136.2
219.6
147.7
99.8
162.9
136.3
216.1
146.7
97.8
162.3
134.8
216.4
146.0
95.7
161.0
136.9
215.0
143.3
91.7
161.6
138.3
212.2
145.2
93.5
10.47
184.3
185.9
185.7
187.4
186.7
186.5
186.7
184.0
182.1
181.9
180.4
180.9
7.62
1.85
195.3
120.6
163.5
241.1
176.0
137.7
195.0
118.9
166.7
240.0
175.7
138.6
196.8
121.9
169.2
241.1
176.6
140.5
195.8
119.6
169.5
240.2
176.7
140.5
195.9
4.15
1.70
1.14
193.3
117.1
168.2'
237.2'
175.5
137.3'
172.8
239.3
176.6
138.8
196.3
120.1
170.0
240.6
175.3
139.6
192.4
115.6
170.3
235.3
175.8
140.8
190.7
112.0
168.9
234.5
174.3
136.0
190.2
109.3
166.7
235.5
176.5
134.7
187.8
108.8
169.2
230.5
177.2
135.7
188.7
107.2
168.7
232.9
175.5
137.2
8.48
4.65
3.82
131.5'
119.5
146.3
131.3
119.6
145.4
132.1
119.5
147.3
131.9
119o8
146.5
133.2
120.1
149.0
133.7
122.7
147.1
133.0
121.8
146.8
132.7
121.6
146.1
127.6
113.1
145.2
129.4
115.3
146.7
131.3
117.9
147.6
132.7
119.5
148.8
9.35
12.23
3.76
8.48
139.4
142.5'
167.1
131.5'
140.1
141.9
141.0
142.8
167.1
132.1
139.8
143.3
169.2
131.9
139.6
144.5
170.0
133.2
139.7
144.0
167.3
133.7
139.6
143.0
165.4
133.0
138.9
142.8
165.5
132.7
138.3
139.8
167.5
127.6
137.2
142.7
172.6
129.4
136.7
142.3
167.0
131.3
135.2
142.9
165.9
132.7
1 Total index
2 Products
3
Final p r o d u c t s
Consumer goods
4
5
Equipment
Intermediate products
6
7 Materials
Consumer
goods
8 Durable c o n s u m e r g o o d s
9
Automotive products
10
A u t o s a n d utility v e h i c l e s
11
Autos
12
A u t o parts a n d a l l i e d g o o d s
13
Home goods
14
Appliances, A / C , and T V
15
Appliances and T V
16
C a r p e t i n g a n d furniture
17
Miscellaneous home goods
32
33
34
35
C o m m e r c i a l transit, f a r m
Commercial
Transit
Farm
Materials
40 Durable g o o d s materials
41
Durable c o n s u m e r parts
42
E q u i p m e n t parts
43
Durable materials n . e . c
44
Basic metal materials
45 N o n d u r a b l e g o o d s m a t e r i a l s
46
Textile, paper, and chemical
materials
47
Textile materials
48
Paper materials
49
Chemical materials
50
Containers, nondurable
51
Nondurable materials n . e . c
52 E n e r g y m a t e r i a l s
53
Primary energy
54
Converted fuel materials
Supplementary
groups
55 H o m e g o o d s a n d c l o t h i n g
5 6 E n e r g y , total
57
Products
58
Materials
1.62
160.6'
166.0
131.3
161.0
128.6
126.7
161.1
188.0
118.8
188.0
188.6
Feb."
Mar,
A48 Domestic Nonfinancial Statistics • June 1985
2.13
INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued
Grouping
1967
proportion
SIC
code
1985
1984
1984
avg.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
Feb.?
Mar/
I n d e x ( 1 9 6 7 = 100)
MAJOR INDUSTRY
12.05
6.36
5.69
3.88
87.95
35.97
51.98
1 Mining and utilities
2
Mining
3
Utilities
4
Electric
5 Manufacturing
6
Nondurable
7
Durable
8
9
10
11
Mining
Metal
Coal
Oil a n d g a s e x t r a c t i o n
S t o n e and earth minerals
12
13
14
15
16
152.0
125.7
181.5'
205.4'
164.8
179.4
154.6'
150.4
123.8
180.0
204.6
162.1
177.6
151.4
151.3
123.3
182.7
207.7
163.4
179.1
152.6
152.1
125.0
182.3
206.8
164.2
179.9
153.3
154.1
127.0
184.3
209.6
165.7
181.3
154.9
154.4
129.9
181.8
205.9
167.3
181.8
157.2
153.0
128.3
180.6
204.0
167.6
181.7
157.8
153.3
128.7
180.9
204.4
166.6
180.3
157.1
150.5
123.6
180.6
203.8
166.2
179.4
157.1
153.1
124.8
184.7
209.1
166.6
179.6
157.6
152.4
124.4
183.7
205.3
166.5
179.5
157.6
152.6
125.1
183.5
206.5
166.6
179.6
157.9
152.2
123.1
184.6
208.3
166.5
179.1
157.7
152.4
123.5
184.7
207.9
167.1
179.5
158.5
156.8
118.9
10
11.12
13
14
.51
.69
4.40
.75
91.7
155.8
121.7
145.0
100.0
164.0
118.2
135.8
98.5
151.4
118.8
140.4
98.0
153.9
120.4
144.0
96.8
161.5
121.6
147.9
96.4
176.5
122.8
151.9
83.4
171.7
122.5
153.5
84.5
173.7
122.4
154.6
91.2
127.8
122.6
147.8
87.5
134.4
123.8
147.5
76.3
142.1
123.6
146.0
82.8
144.5
123.2
146.7
78.7
154.8
119.4
146.0
Nondurable
manufactures
Foods
Tobacco products
T e x t i l e mill p r o d u c t s
Apparel products
Paper and products
20
21
22
23
26
8.75
.67
2.68
3 31
3.21
163.2
115.2
138.6'
161.2
111.8
143.5
163.1
113.3
140.0
164.2
112.8
140.5
165.1
118.3
140.7
164.9
115.1
139.8
164.7
113.8
140.3
164.3
113.1
135.4
164.0
119.5
133.3
162.9
117.4
132.0
164.1
120.5
132.0
164.9
116.7
131.5
130.3
174.4
173.8
172.4
174.1
174.6
176.7
176.7
177.5
173.5
173.0
173.7
174.1
176.0
175.9
17
18
19
20
21
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastic products
Leather and products
27
28
29
30
31
4.72
7.74
1.79
2.24
.86
169.7'
228.1'
124.4
331.7'
59.9
165.2
225.0
127.0
323.8
63.9
166.3
228.3
126.8
328.0
63.5
167.5
227.9
127.9
334.1
61.4
169.0
231.0
127.5
341.0
60.0
172.6
232.0
124.7
341.4
60.6
173.1
231.6
124.3
341.5
59.1
170.5
230.8
122.6
338.4
57.9
172.3
228.0
122.9
338.6
55.0
174.0
230.2
124.0
332.2
55.9
174.1
228.1
120.3
331.3
56.6
175.0
227.8
117.0
334.7
54.1
175.3
227.2
119.3
333.8
54.6
175.3
22
23
24
25
Durable
manufactures
O r d n a n c e , private and g o v e r n m e n t
L u m b e r and products
F u r n i t u r e a n d fixtures
Clay, glass, stone products
19.91
24
25
32
3.64
1.64
1.37
2.74
103.5
148.7'
190.2
159.7'
100.6
149.3
184.6
160.2
101.4
151.2
186.6
160.0
100.8
146.3
190.5
160.6
101.7
148.5
191.9
159.7
102.7
146.0
192.6
160.9
105.5
148.8
195.3
160.0
107.1
149.2
194.3
158.0
107.7
152.6
194.7
160.1
108.6
152.2
192.1
159.0
108.3
150.4
190.6
158.9
107.4
150.4
188.0
161.2
107.9
148.5
189.6
161.0
26
27
28
29
30
Primary metals
Iron a n d s t e e l
Fabricated metal products
Nonelectrical machinery
Electrical machinery
33
331.2
34
35
36
6.57
4.21
5.93
9.15
8.05
95.1'
79.8
137.5'
181.5'
217.4'
97.5
84.4
134.9
171.9
212.0
99.3
84.0
135.5
174.9
214.6
98.2
83.5
136.5
178.8
214.5
97.9
83.5
138.7
182.0
216.0
94.5
76.5
140.6
186.9
221.5
94.4
77.7
140.0
189.1
221.5
94.1
77.5
139.5
187.9
222.8
92.7
74.6
140.7
187.7
222.3
91.5
73.9
139.0
188.9
222.5
87.8
72.1
140.2
188.3
224.5
89.7
72.2
139.8
189.2
220.9
92.8
76.1
140.4
188.4
219.8
141.7
189.0
220.6
37
371
9.27
4.50
137.6
165.7
135.8
165.8
134.5
161.9
135.0
163.0
137.2
165.3
140.6
169.0
141.0
169.6
137.6
162.4
137.2
161.7
141.3
170.8
143.3
171.8
145.8
176.3
144.2
172.3
144.7
172.8
372-9
38
39
4.77
2.11
1.51
111.2
174.2
148.9
107.5
169.7
152.3
108.8
171.0
152.1
108.6
171.8
151.5
110.8
174.5
150.8
113.8
176.7
152.4
113.9
177.4
149.2
114.2
178.5
147.0
114.1
176.5
148.3
113.6
177.5
143.5
116.4
180.3
137.7
117.2
179.3
140.0
117.8
178.3
141.6
118.2
179.3
142.0
31 T r a n s p o r t a t i o n e q u i p m e n t
32
M o t o r v e h i c l e s and parts
33
A e r o s p a c e and m i s c e l l a n e o u s
transportation e q u i p m e n t . .
34 I n s t r u m e n t s
35 M i s c e l l a n e o u s m a n u f a c t u r e s
G r o s s v a l u e ( b i l l i o n s o f 1972 d o l l a r s , a n n u a l r a t e s )
MAJOR MARKET
3 6 P r o d u c t s , total
507.4 670.1
37 F i n a l
38
Consumer goods .
39
Equipment
40 Intermediate
390.9
277.5
113.4
116.6
516.9'
348.2'
168.7
153.2
661.8
661.1
665.9
671.5
682.4
678.2
673.6
674.7
679.1
680.5
682.1
509.6
347.7
161.9
152.2
509.0
347.8
161.2
152.2
514.0
349.5
164.4
151.9
518.1
350.9
167.2
153.4
525.9
353.2
172.8
156.5
522.3
347.4
174.9
155.9
519.7
345.4
174.4
153.8
521.3
346.7
174.5
153.5
525.8
350.1
175.7
153.3
527.0
349.4
177.6
153.5
527.5
350.1
177.4
154.6
NOTE. T h e s e d a t a a l s o a p p e a r in t h e B o a r d ' s G . 1 2 . 3 ( 4 1 4 ) r e l e a s e . F o r a d d r e s s ,
see inside front cover.
120.6
108.0
93.8
Selected Measures
2.14
A49
HOUSING AND CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates e x c e p t as noted.
1984
1981
Item
1985
1982
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.'
Feb.
P r i v a t e r e s i d e n t i a l real e s t a t e a c t i v i t y ( t h o u s a n d s o f u n i t s )
N E W UNITS
1 Permits authorized
2
1-family
3
2-or-more-family
986
564
421
1,000
546
454
1,605
902
703
1,774
943
831
1,819
941
878
1,590
849
741
1,508
835
673
1,481
865
616
1,436
817
619
1,613
838
775
1,627
852
775
1,676
924
752
1,636
957
679
4 Started
1-family
2-or-more-family
1,084
705
379
1,062
663
400
1,703
1,067
635
1,787
1,118
669
1,837
1,077
760
1,730
996
734
1,590
962
628
1,669
1,009
660
1,564
979
585
1,600
1,043
557
1,630
1,112
518
1,849
1,060
789
1,631
1,123
508
682
382
301
720
400
320
1,003
524
479
1,090
585
505
1,098
587
511
1,100
582
518
1,091
574
517
1,088
568
520
1,081
571
510
1,077
574
503
1,073
579
495
1,074
573
501
1,035
561
473
1,266
818
447
1,005
631
374
1,390
924
466
1,731
1,072
659
1,718
1,045
673
1,699
1,062
637
1,681
1,035
646
1,657
1,040
617
1,614
972
642
1,587
1,001
586
1,635
985
650
1,710
1,112
598
1,746
1,036
710
241
240
296
295
298
301
302
282
302
291
282
273
276
436
278
413
255
622
304
617
332
636
338
615
340
557
343
670
343
652
346
596
349
604
356
622
356
641
362
6
7 Under construction, end of period1
8
1-family
9
2-or-more-family
10 C o m p l e t e d
11
1-family
12
2-or-more-family
13 M o b i l e h o m e s s h i p p e d
Merchant
builder activity
in 1-family
14 N u m b e r s o l d
15 N u m b e r f o r s a l e , e n d o f p e r i o d 1
Price (thousands
Median
16
Units sold
17
of
units
dollars)2
Units sold
68.8
69.3
75.5
81.4
80.5
80.7
82.0
81.3
80.1
82.5
78.3
82.9
83.4
83.1
83.8
89.9
101.9
98.8
97.1
96.9
101.3
95.7
101.4
96.3
98.8
98.5
2,418
1,991
2,719
2,970
2,920
2,790
2,770
2,730
2,740
2,830
2,870
3,000
2,880
66.1
78.0
67.7
80.4
69.8
82.5
72.7
85.9
73.4
87.2
74.2
87.9
73.5
87.6
71.9
85.4
71.9
86.2
71.9
85.1
72.1
85.9
73.8
87.7
73.5
87.2
EXISTING UNITS ( 1 - f a m i l y )
18 N u m b e r s o l d
Price of units
19 M e d i a n
20 Average
sold
(thousands
of
dollars)2
Value o f n e w construction3 (millions of dollars)
CONSTRUCTION
21
Total put in place
77, P r i v a t e
73
Residential
24
N o n r e s i d e n t i a l , total
Buildings
75
Industrial
76
Commercial
7,7
Other
28
Public utilities a n d o t h e r
79
30
31
32
33
Public
Military
Highway
Conservation and development
Other
239,112 230,068 262,167 316,398 315,279 314,223 318,031 318,685 312,849' 308,111' 307,579 316,218 320,572
179,090
74,808
104,282
211,369
111,727
99,642
261,182
138,401
122,781
257,789
136,418
121,371
258,245
137,818
120,427
261,165
138,926
122,239
17,031
34,243
9,543
38,380
17,346
37,281
10,507
39,148
12,863
35,787
11,660
39,332
15,170
49,718
13,821
44,072
14,065
48,947
13,327
45,032
13,784
48,436
12,744
45,463
14,613
49,496
12,059
46,071
14,917
50,861
12,079
45,908
14,867'
53,509'
12,111'
44,491'
15,287'
54,579'
11,975'
43,860'
53,346
1,966
13,599
5,300
32,481
50,977
2,205
13,428
5,029
30,315
50,798
2,544
14,225
4,822
29,207
55,216
2,649
16,949
4,356
31,262
57,490
2,703
16,824
4,492
33,471
55,979
2,345
17,136
4,520
31,978
56,866
2,851
17,322
4,520
32,173
57,814
3,508
17,209
4,890
32,207
56,729'
2,89C
16,794'
4,591'
32,454'
56,504'
3,082'
17,458'
5,073'
30,891'
1. N o t at a n n u a l r a t e s .
2. N o t s e a s o n a l l y a d j u s t e d .
3. V a l u e o f n e w c o n s t r u c t i o n d a t a in r e c e n t p e r i o d s m a y n o t b e s t r i c t l y
c o m p a r a b l e w i t h d a t a in p r i o r p e r i o d s b e c a u s e o f c h a n g e s b y t h e B u r e a u o f t h e
C e n s u s in its e s t i m a t i n g t e c h n i q u e s . F o r a d e s c r i p t i o n o f t h e s e c h a n g e s s e e
Construction
Reports
( C - 3 0 - 7 6 - 5 ) , i s s u e d b y the B u r e a u in J u l y 1976.
260,871 256,121' 251,607' 251,283
137,106 131,143' 125,906' 122,727
123,765 124,978' 125,701' 128,556
185,761
86,564
99,197
258,967
128,515
130,452
264,125
132,465
131,660
15,353
56,661
12,396
44,146
15,058
58,458
11,876
45,060
15,575
59,234
12,018
44,833
56,296
2,974
17,588
4,555
31,179
57,252
3,249
17,735
4,585
31,683
56,448
3,330
17,475
4,622
31,021
NOTE. C e n s u s B u r e a u e s t i m a t e s f o r all s e r i e s e x c e p t (a) m o b i l e h o m e s , w h i c h
are private, d o m e s t i c s h i p m e n t s as reported b y the M a n u f a c t u r e d H o u s i n g
I n s t i t u t e a n d s e a s o n a l l y a d j u s t e d b y t h e C e n s u s B u r e a u , a n d (b) s a l e s a n d p r i c e s o f
e x i s t i n g u n i t s , w h i c h a r e p u b l i s h e d b y t h e N a t i o n a l A s s o c i a t i o n o f R e a l t o r s . All
b a c k a n d c u r r e n t figures a r e a v a i l a b l e f r o m o r i g i n a t i n g a g e n c y . P e r m i t a u t h o r i z a tions are t h o s e reported to the C e n s u s Bureau f r o m 1 6 , 0 0 0 j u r i s d i c t i o n s beginning
w i t h 1978.
A50 Domestic Nonfinancial Statistics • June 1985
2.15
C O N S U M E R A N D P R O D U C E R PRICES
Percentage changes based on seasonally adjusted data, except as noted
C h a n g e f r o m 12
m o n t h s earlier
C h a n g e f r o m 3 m o n t h s earlier
(at a n n u a l rate)
C h a n g e f r o m 1 m o n t h earlier
Index
level
Mar.
1985
(1967
= 100) 1
Item
1984
1984
Mar.
1985
1984
1985
1985
Mar.
June
Sept.
Dec.
Mar.
Nov.
Dec.
Jan.
Feb.
Mar.
CONSUMER PRICES 2
1
AU items
2 Food
3 Energy items
4 All items less f o o d and e n e r g y
5
Commodities
6
Services
4.7
3.7
3.2
4.5
3.0
4.1
.2
.3
.2
.3
.5
318.8
4.0
4.6
5.0
4.5
5.3
2.5
-.4
4.8
3.8
5.3
-.5
.3
4.8
3.9
5.2
3.9
.1
5.3
3.8
6.2
3.7
-.7
3.5
.9
5.0
2.6
-.8
5.5
6.6
5.0
.2
.1
.2
.0
.4
.4
-.2
.3
.2
.4
.2
-.8
.4
.5
.4
.5
-1.4
.6
.8
.4
.0
1.9
.4
.3
.4
309.7
416.6
310.8
259.3
369.4
2.8
5.9
-2.1
2.7
2.3
.3
-.9
-8.4
2.4
2.5
-.4
-7.5
5.0
.8
2.2
.0
4.5
-19.7
2.5
2.3
1.8
4.5
5.7
.0
.0
.3
-3.6
-21.1
6.5
5.4
.3
.5'
.6
.2'
.y
.2
.7'
-.6
.2
.0
.0
-.6
-2.4
.7
.4
-.1
-.1
-2.5
.2
.5
.2
-.2
-.9
.6
.4
292.4
274.2
694.0
250.6
299.5
3.0
3.6
.1
.8
2.7
2.0
-1.1
.9
1.1
1.3
-2.4
-.9
.2
.1'
-.1
.0
.0
.0
-.5
-.2
-.1
-.1
324.7
305.2
8.3
-2.7
12.3
-9.7
-4.2
-7.0
-19.2
4.0
14.3
-1.7
.4
-15.3
12.0
-6.5
-10.7
-25.0
-13.7
-13.4
3.5'
-1.1'
-.2'
-2.4
-2.2
-1.4
-2.0
-.4
-4.3
-2.8
-1.0
2.3
243.6
747.3
255.2
PRODUCER PRICES
7 Finished goods
8
Consumer foods
9
Consumer energy
10
Other consumer g o o d s
11
Capital e q u i p m e n t
12 I n t e r m e d i a t e m a t e r i a l s 3
13
Excluding energy
14
15
16
Crude materials
Foods
Energy
Other
1. N o t s e a s o n a l l y a d j u s t e d .
2. F i g u r e s f o r c o n s u m e r p r i c e s a r e t h o s e f o r all u r b a n c o n s u m e r s a n d r e f l e c t a
rental e q u i v a l e n c e m e a s u r e o f h o m e o w n e r s h i p a f t e r 1982.
.5'
-.4'
-.6r
3. E x c l u d e s i n t e r m e d i a t e m a t e r i a l s f o r f o o d m a n u f a c t u r i n g a n d m a n u f a c t u r e d
animal f e e d s .
SOURCE. B u r e a u o f L a b o r S t a t i s t i c s .
Selected Measures
2.16
A51
GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars e x c e p t as noted; quarterly data are at seasonally adjusted annual rates.
1984
Account
1982
1983
1985
1984
Q2
Ql
Q3
Q4
Ql
GROSS NATIONAL PRODUCT
1
Total
3,069.3
3,304.8
3,662.8
3,553.3
3,644.7
3,694.6
3,758.7
3,819.9
2
3
4
5
By
source
Personal consumption expenditures
Durable g o o d s
Nondurable goods
Services
1,984.9
245.1
757.5
982.2
2,155.9
279.8
801.7
1,074.4
2,341.8
318.8
856.9
1,166.1
2,276.5
310.9
841.3
1,124.4
2,332.7
320.7
858.3
1,153.7
2,361.4
317.2
861.4
1,182.8
2,396.5
326.3
866.5
1,203.8
2,442.8
333.1
877.9
1,231.8
6 G r o s s private d o m e s t i c i n v e s t m e n t
7
Fixed investment
8
Nonresidential
9
Structures
10
Producers' durable equipment
11
Residential structures
12
Nonfarm
414.9
441.0
349.6
142.1
207.5
91.4
86.6
471.6
485.1
352.9
129.7
223.2
132.2
127.6
637.8
579.6
425.7
150.4
275.3
153.9
148.8
623.8
550.0
398.8
142.2
256.7
151.2
146.4
627.0
576.4
420.8
150.0
270.7
155.6
150.5
662.8
591.0
435.7
151.4
284.2
155.3
150.1
637.8
601.1
447.7
157.9
289.7
153.5
148.3
657.4
610.8
455.9
164.5
291.4
155.0
149.7
13
14
-26.1
-24.0
-13.5
-3.1
58.2
49.6
73.8
60.6
50.6
47.0
71.8
63.7
36.6
27.2
46.6
40.5
15 N e t e x p o r t s o f g o o d s a n d s e r v i c e s
16
Exports
17
Imports
19.0
348.4
329.4
-8.3
336.2
344.4
-64.2
364.3
428.5
-51.5
358.9
410.4
-58.7
362.4
421.1
-90.6
368.6
459.3
-56.0
367.2
423.2
-73.0
361.4
434.4
18 G o v e r n m e n t p u r c h a s e s o f g o o d s a n d s e r v i c e s
19
Federal
20
State and local
650.5
258.9
391.5
685.5
269.7
415.8
747.4
295.4
452.0
704.4
267.6
436.8
743.7
2%.4
447.4
761.0
302.0
458.9
780.5
315.7
464.8
792.6
320.2
472.5
3,095.4
1,276.7
499.9
776.9
1,510.8
281.7
3,318.3
1,355.7
555.3
800.4
1,639.3
309.8
3,604.6
1,542.9
655.6
887.3
1,763.3
356.5
3,479.5
1,498.0
632.3
865.7
1,713.7
341.6
3,594.1
1,544.8
647.9
896.9
1,742.6
357.2
3,622.8
1,549.1
654.7
894.4
1,783.3
362.1
3,722.1
1,579.8
687.7
892.1
1,813.7
365.2
3,773.3
1,590.9
673.9
917.0
1,856.4
372.5
-26.1
-18.0
-8.1
-13.5
-2.1
-11.3
58.2
30.4
27.8
73.8
34.9
38.9
50.6
18.2
32.4
71.8
41.7
30.1
36.6
26.7
9.9
46.6
26.1
20.5
1,480.0
1,534.7
1,639.3
1,610.9
1,638.8
1,645.2
1,662.4
1,668.0
2,446.8
2,646.7
2,959.9r
2,873.5
2,944.8
2,984.9
3,036.y
n.a.
1,864.2
1,568.7
306.6
1,262.2
295.5
140.0
155.5
1,984.9
1,658.8
328.2
1,331.1
326.2
153.1
173.1
2,173.2
1,804.1
349.8
1,454.2
369.0
173.5
195.5
2,113.4
1,755.9
342.9
1,413.0
357.4
169.4
188.1
2,159.2
1,793.3
347.5
1,445.8
365.9
172.4
193.5
2,191.9
1,819.1
352.0
1,467.1
372.8
174.7
198.1
2,228.1
1,848.2
357.2
1,490.9
380.0
177.5
202.5
2,272.7
1,882.8
365.5
1,517.3
389.9
183.6
206.3
111.1
121.7
107.9
13.8
154.4
126.2
28.2
154.9
122.5
32.5
149.8
126.3
23.4
153.7
126.4
27.3
159.1
129.7
29.4
156.7
134.4
22.4
C h a n g e in b u s i n e s s i n v e n t o r i e s
Nonfarm
By major type of
7.1 F i n a l s a l e s , total
77
Goods
73
Durable
74
Nondurable
7.5
Services
26
Structures
product
27 C h a n g e in b u s i n e s s i n v e n t o r i e s
28
Durable goods
29
Nondurable goods
30 MEMO: Total G N P in 1 9 7 2 d o l l a r s
NATIONAL INCOME
31
Total
32 C o m p e n s a t i o n of e m p l o y e e s
33
W a g e s and salaries
34
G o v e r n m e n t and g o v e r n m e n t enterprises
35
Other
Supplement to w a g e s and salaries
36
37
Employer contributions for social insurance
Other labor i n c o m e
38
39 P r o p r i e t o r s ' i n c o m e 1
40
Business and professional1
41
Farm1
42 Rental i n c o m e of p e r s o n s 2
89.2
21.8
51.5
58.3
61.0
62.0
63.0
64.1
65.2
4 3 C o r p o r a t e profits 1
44
Profits before tax3
45
Inventory valuation adjustment
46
Capital c o n s u m p t i o n a d j u s t m e n t
159.1
165.5
-9.5
3.1
225.2
203.2
-11.2
33.2
285.7r
235.7r
-5.7
55.7
277.4
243.3
-13.5
47.6
291.1
246.0
-7.3
52.3
282.8
224.8
-.2
58.3
291.6'
228.7r
-1.6
64.5
n.a.
n.a.
-.6
71.0
47 N e t i n t e r e s t
260.9
256.6
284.1
266.8
282.8
293.5
293.4
288.8
1. W i t h i n v e n t o r y v a l u a t i o n a n d capital c o n s u m p t i o n a d j u s t m e n t s .
2. W i t h capital c o n s u m p t i o n a d j u s t m e n t .
62.5
3. F o r a f t e r - t a x profits, d i v i d e n d s , a n d t h e l i k e , s e e t a b l e 1.48.
SOURCE. Survey of Current Business
(Department of Commerce).
A52 Domestic Nonfinancial Statistics • June 1985
2.17
PERSONAL INCOME A N D SAVING
Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1984
1985
1984
Account
Q1
Q2
Q3
Q4
PERSONAL INCOME AND SAVING
1 Total personal income
2 W a g e and salary d i s b u r s e m e n t s
3
C o m m o d i t y - p r o d u c i n g industries
4
Manufacturing
5
Distributive industries
6
Service industries
7
G o v e r n m e n t and g o v e r n m e n t enterprises
8
9
10
11
12
13
14
15
16
17
Other labor i n c o m e
Proprietors' income1
Business and professional1
Farm1
Rental i n c o m e of p e r s o n s 2
Dividends
Personal interest i n c o m e
Transfer payments
O l d - a g e survivors, disability, and health insurance benefits.
LESS: P e r s o n a l c o n t r i b u t i o n s f o r s o c i a l i n s u r a n c e
18 EQUALS: P e r s o n a l i n c o m e
2.584.6
2,744.2
3,012.1
2,920.5
2,984.6
3,047.3
3,096.2
1.568.7
509.3
382.9
378.6
374.3
306.6
1,659.2
519.3
395.2
398.6
413.1
328.2
1.804.0
569.3
433.9
432.0
452.9
349.8
1,755.7
555.9
424.6
419.2
437.9
342.8
1,793.1
567.0
432.2
429.5
449.3
347.3
1,819.5
573.3
436.4
436.4
457.3
352.4
1,847.6
580.9
442.4
443.1
466.9
356.7
155.5
173.1
121.7
107.9
13.8
58.3
70.3
376.3
405.0
221.6
195.5
154.4
188.1
193.5
149.8
126.3
23.4
62.0
77.2
425.6
415.2
235.2
198.1
153.7
126.4
27.3
63.0
78.5
449.3
418.6
238.2
202.5
159.1
129.7
29.4
64.1
80.2
456.1
421.8
243.5
111.1
89.2
21.8
51.5
66.5
366.6
376.1
204.5
126.2
28.2
154.9
122.5
32.5
62.5
77.7
433.7
416.7
237.3
75.0
403.9
411.3
232.1
61.0
111.4
119.6
132.5
129.6
131.8
133.4
135.2
2,584.6
2,744.2
3.012.1
2.920.5
2,984.6
3.047.3
3,0%.2
404.1
404.2
435.3
418.3
430.3
440.9
451.7
2 0 EQUALS: D i s p o s a b l e p e r s o n a l i n c o m e
2,180.5
2,340.1
2,576.8
2,502.2
2,554.3
2.606.4
2,644.5
21
LESS: P e r s o n a l o u t l a y s
2,044.5
2,222.0
2,420.7
2.349.6
2,409.5
2,442.3
2,481.5
22 EQUALS: P e r s o n a l s a v i n g
136.0
118.1
156.1
152.5
144.8
164.1
163.0
6,369.7
4,145.9
4,555.0
6.2
6,543.4
4,302.8
4,670.0
5.0
6,926.1
4,488.7
4,939.0
6.829.4
4.426.5
4,865.0
6.1
6.1
6.933.2
4.502.3
4,930.0
5.7
6,943.2
4,498.4
4,965.0
6.3
6,998.3
4,527.1
4,9%.0
6.2
27 Gross saving.
408.8
437.2
551.8'
543.9
551.0
556.4
sse.O'
28
29
30
31
524.0
136.0
29.2
-9.5
571.7
118.1
76.5
-11.2
674.8
156.1
115.4'
-5.7
651.3
152.5
107.0
-13.5
660.2
144.8
115.3
-7.3
689.4
164.1
118.4
-.2
698.2'
163.0
120.8'
-1.6
221.8
137.1
.0
231.2
145.9
.0
246.2
157.0
.0
239.9
151.8
.0
244.1
156.0
.0
248.1
158.8
.0
252.8
161.5
.0
-115.3
-148.2
32.9
-134.5
-178.6
44.1
-122.9'
-175.8
-107.4
-161.3
53.9
-109.2
-163.7
54.5
-133.0
-180.6
47.6
-142.2'
-197.8'
.0
.0
.0
.0
.0
.0
.0
39 Gross investment
408.3
437.7
544.4
546.1
542.0
543.4
546.1
40 G r o s s private d o m e s t i c
41 N e t f o r e i g n
414.9
-6.6
471.6
-33.9
637.8
-93.4
623.8
-77.7
627.0
-85.0
662.8
-119.4
637.8
-91.6
-7.4'
2.2
-9.0
-13.0
19
23
24
25
26
LESS: P e r s o n a l t a x a n d n o n t a x p a y m e n t s
MEMO
Per capita (1972 dollars)
G r o s s national product
Personal consumption expenditures
Disposable personal i n c o m e
S a v i n g rate ( p e r c e n t )
GROSS SAVING
G r o s s private saving
Personal saving
Undistributed corporate profits'
Corporate inventory valuation adjustment
Capital
consumption
allowances
32 C o r p o r a t e
33 N o n c o r p o r a t e
34 W a g e accruals less d i s b u r s e m e n t s
35 G o v e r n m e n t s u r p l u s , o r d e f i c i t ( - ) , n a t i o n a l i n c o m e a n d
product accounts
36
Federal
37
State and local
38 Capital grants r e c e i v e d by the U n i t e d S t a t e s , net
42 Statistical discrepancy.
1. W i t h i n v e n t o r y v a l u a t i o n a n d c a p i t a l c o n s u m p t i o n a d j u s t m e n t s .
2. W i t h c a p i t a l c o n s u m p t i o n a d j u s t m e n t .
-.5
52^
SOURCE. Survey
of Current
Business
55^
-9.9'
(Department of Commerce).
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A53
Summary
Millions of dollars; quarterly data are seasonally adjusted except as noted.1
1983
1982
Item credits or debits
1984
1984P
1983
Q4
Q2
Ql
Q4P
Q3
-9,199
-41,563
-101,647
-17,213
-15,964
-19,669
-18,616
-24,704
-24,380
-33,599
-36,190
-23,679
-22,461
-36,469
211,198
-247,667
195
27,802
7,331
-61,055
200,257
-261,312
515
23,508
4,121
-107,435
220,343
-327,778
-1,635
18,115
506
-19,407
51,829
-71,236
-273
5,119
434
-25,813
53,920
-79,733
-370
7,744
917
-25,802
54,548
-80,350
-404
3,455
204
-32,941
55,616
-88,557
-320
2,876
-352
-22,879
56,259
-79,138
-542
4,039
-263
-2,635
-5,423
-2,590
-6,060
-2,946
-8,253
-688'
-2,398
-717
-1,430
-726
-1,431
-693
-2,169
-811
-3,223
11 C h a n g e in U . S . g o v e r n m e n t a s s e t s , o t h e r t h a n o f f i c i a l
reserve assets, net (increase, - )
-6,143
-5,013
-5,460
-1,429
-2,037
-1,235
-1,440
-748
12 C h a n g e in U . S . official r e s e r v e a s s e t s ( i n c r e a s e , - )
13
Gold
14
S p e c i a l d r a w i n g rights ( S D R s )
15
R e s e r v e p o s i t i o n in I n t e r n a t i o n a l M o n e t a r y F u n d
16
Foreign currencies
-4,965
0
-1,371
-2,552
-1,041
-1,196
0
-66
-4,434
3,304
-3,130
0
-979
-995
-1,156
-953
0
545
-1,996
498
-657
0
-226
-200
-231
-565
0
-288
-321
44
-799
0
-271
-331
-197
-1,109
0
-194
-143
-772
17 C h a n g e in U . S . p r i v a t e a s s e t s a b r o a d ( i n c r e a s e , - ) 3
18
Bank-reported claims
19
Nonbank-reported claims
20
U . S . purchase of foreign securities, net
21
U . S . direct i n v e s t m e n t s abroad, net3
-107,790
-111,070
6,626
-8,102
4,756
-43,281
-25,391
-5,333
-7,676
-4,881
-12,574
-7,337
5,566
-4,761
-6,043
-12,461
-8,239
-1,671
-983
-1,568
742
1,955
1,659
637
-3,509
-17,200
-20,612
2,120
-820
2,112
19,245
16,871
1,787
-1,322
1,909
-15,362
-5,551
n.a.
-3,257
-6,554
2 2 C h a n g e in f o r e i g n official a s s e t s in t h e U n i t e d S t a t e s
(increase, + )
23
U . S . Treasury securities
24
Other U . S . government obligations
25
Other U . S . g o v e r n m e n t liabilities4
26
Other U . S . liabilities reported b y U . S . banks
27
O t h e r f o r e i g n official a s s e t s 5
3,318
5,728
-694
382
-1,747
-351
5,339
6,989
-487
199
433
-1,795
2,998
4,644
12
333
676
-2,667
6,555
2,603
417
161
3,498
-124
-2,784
-288
-8
242
-2,131
-599
-345
-310
147
448
349
-979
-830
-577
85
-153
302
-487
6,956
5,819
-212
-205
2,156
-602
2 8 C h a n g e in f o r e i g n p r i v a t e a s s e t s in t h e U n i t e d S t a t e s
(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
F o r e i g n d i r e c t i n v e s t m e n t s in t h e U n i t e d S t a t e s , n e t 3
91,863
65,922
-2,383
7,062
6,396
14,865
76,383
49,059
-1,318
8,731
8,612
11,299
89,800
27,571
5,529
22,487
13,036
21,177
27,249
22,325
-228
1,673
1,134
2,345
18,444
8,775
4,404
1,358
1,516
2,391
40,750
20,789
4,055
6,477
587
8,842
3,662
-5,410
-2,930
5,121
1,609
5,272
26,945
3,417
n.a.
9,531
9,325
4,672
0
32,916
0
9,331
0
30,015
0
-1,748
2,657
0
5,961
-195
0
3,299
-140
0
13,761
-2,410
0
6,997
2,748
32,916
9,331
30,015
-4,405
6,156
3,439
16,171
4,249
-4,965
-1,196
-3,131
-953
-657
-566
-799
-1,110
-3,026
-793
-677
7,161
1 Balance o n current a c c o u n t
->
3
4
6
7
8
9
10
Merchandise trade balance2
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net3
Other service transactions, net
Remittances, pensions, and other transfers
U . S . g o v e r n m e n t grants (excluding military)
29
30
31
32
33
34 A l l o c a t i o n o f S D R s
35 D i s c r e p a n c y
36
37
S t a t i s t i c a l d i s c r e p a n c y in r e c o r d e d d a t a b e f o r e s e a s o n a l
adjustment
MEMO
C h a n g e s in official a s s e t s
U . S . official r e s e r v e a s s e t s ( i n c r e a s e , - )
F o r e i g n official a s s e t s in t h e U n i t e d S t a t e s
(increase, + )
4 0 C h a n g e in O r g a n i z a t i o n o f P e t r o l e u m E x p o r t i n g C o u n t r i e s
official a s s e t s in t h e U n i t e d S t a t e s (part o f l i n e 2 2
above)
41 T r a n s f e r s u n d e r m i l i t a r y g r a n t p r o g r a m s ( e x c l u d e d f r o m
l i n e s 4 , 6 , a n d 10 a b o v e )
38
39
1. S e a s o n a l f a c t o r s a r e n o l o n g e r c a l c u l a t e d f o r
and 3 8 - 4 1 .
2. D a t a are o n a n i n t e r n a t i o n a l a c c o u n t s ( I A )
b a s i s d a t a , s h o w n in t a b l e 3 . 1 1 , f o r r e a s o n s o f
e x p o r t s are e x c l u d e d f r o m m e r c h a n d i s e data and
3. I n c l u d e s r e i n v e s t e d e a r n i n g s .
2,936
5,140
2,665
6,394
7,291
-8,639
-4,198
-1,640
-2,447
-2,170
-494
913
593
205
187
84
41
44
45
58
l i n e s 6 , 10, 1 2 - 1 6 , 1 8 - 2 0 , 2 2 - 3 4 ,
basis. Differs from the C e n s u s
c o v e r a g e and timing; military
a r e i n c l u d e d in line 6.
4. P r i m a r i l y a s s o c i a t e d w i t h m i l i t a r y s a l e s c o n t r a c t s a n d o t h e r t r a n s a c t i o n s
a r r a n g e d w i t h o r t h r o u g h f o r e i g n official a g e n c i e s .
5. C o n s i s t s o f i n v e s t m e n t s in U . S . c o r p o r a t e s t o c k s a n d in d e b t s e c u r i t i e s o f
private corporations and state and local g o v e r n m e n t s .
NOTE. D a t a are f r o m B u r e a u o f E c o n o m i c A n a l y s i s , Survey of Current
Business
(Department of Commerce).
A54 International Statistics • June 1985
3.11
U.S. FOREIGN
TRADE
Millions of dollars; m o n t h l y data are seasonally adjusted.
1984
Item
1982
1981
1985
1983
Aug.
Nov.
Oct.
Sept.
Dec.
Jan.
Feb.
1
E X P O R T S of domestic and foreign
m e r c h a n d i s e e x c l u d i n g grant-aid
shipments
233,677
212,193
200,486
18,123
18,210
18,411
18,395
19,142
19,401
17,853
2
G E N E R A L I M P O R T S including merchandise for immediate c o n s u m p tion plus entries into b o n d e d
warehouses
261,305
243,952
258,048
26,866
28,409
26,783
27,331
25,933
28,297
27,985
-27,628
-31,759
-57,562
-8,743
-10,199
-8,372
-8,936
-6,791
-8,896
-10,131
3 Trade balance
NOTE. T h e d a t a t h r o u g h 1981 in t h i s t a b l e a r e r e p o r t e d b y t h e B u r e a u o f C e n s u s
d a t a o f a f r e e - a l o n g s i d e - s h i p ( f . a . s . ) v a l u e b a s i s — t h a t i s , v a l u e at t h e p o r t o f
e x p o r t . B e g i n n i n g in 1981, f o r e i g n t r a d e o f t h e U . S . V i r g i n I s l a n d s is i n c l u d e d in
t h e C e n s u s b a s i s t r a d e d a t a ; t h i s a d j u s t m e n t h a s b e e n m a d e f o r all d a t a s h o w n in
the table. B e g i n n i n g w i t h 1982 data, t h e v a l u e of imports are o n a c u s t o m s
valuation basis.
T h e C e n s u s b a s i s d a t a d i f f e r f r o m m e r c h a n d i s e trade d a t a s h o w n in t a b l e 3 . 1 0 ,
U . S . International Transactions S u m m a r y , for reasons o f c o v e r a g e and timing. On
t h e export side, t h e l a r g e s t a d j u s t m e n t s are: (1) t h e a d d i t i o n o f e x p o r t s t o C a n a d a
3.12
U.S. RESERVE
n o t c o v e r e d in C e n s u s s t a t i s t i c s , a n d (2) t h e e x c l u s i o n o f m i l i t a r y s a l e s ( w h i c h a r e
c o m b i n e d w i t h o t h e r m i l i t a r y t r a n s a c t i o n s a n d r e p o r t e d s e p a r a t e l y in t h e " s e r v i c e
a c c o u n t " in t a b l e 3 . 1 0 , line 6). O n t h e import side, a d d i t i o n s a r e m a d e f o r g o l d ,
ship purchases, imports of electricity from Canada, and other transactions;
m i l i t a r y p a y m e n t s are e x c l u d e d a n d s h o w n s e p a r a t e l y a s i n d i c a t e d a b o v e .
SOURCE. F T 9 0 0 " S u m m a r y o f U . S . E x p o r t a n d I m p o r t M e r c h a n d i s e T r a d e "
(Department of C o m m e r c e , Bureau of the Census).
ASSETS
Millions of dollars, end of period
1984
1982
1981
Type
Sept.
1 Total
2
G o l d s t o c k , including E x c h a n g e Stabilization Fund1
3
Special drawing rights2
4
R e s e r v e p o s i t i o n in I n t e r n a t i o n a l M o n e tary F u n d 2
5
Foreign currencies
3
4
Nov.
Oct.
Jan.
Dec.
Feb.
Mar.
30,075
33,958
33,747
34,306
34,570
34,727
34,934
34,380
34,272'
35,493
11,151
11,148
11,121
11,097
11,096
11,096
11,096
11,095
11,093
11,093
4,095
5,250
5,025
5,554
5,539
5,693
5,641
5,693
5,781
5,973
5,055
7,348
11,312
11,619
11,618
11,675
11,541
11,322
11,097'
11,386
9,774
10,212
6,289
6,036
6,317
6,263
6,656
6,270
6,301
7,041
1. G o l d h e l d u n d e r e a r m a r k at F e d e r a l R e s e r v e B a n k s f o r f o r e i g n a n d i n t e r n a t i o n a l a c c o u n t s i s n o t i n c l u d e d in t h e g o l d s t o c k o f t h e U n i t e d S t a t e s ; s e e t a b l e
3 . 1 3 . G o l d s t o c k i s v a l u e d at $ 4 2 . 2 2 p e r fine t r o y o u n c e .
2 . B e g i n n i n g J u l y 1974, t h e I M F a d o p t e d a t e c h n i q u e f o r v a l u i n g t h e S D R b a s e d
o n a weighted average of e x c h a n g e rates for the currencies o f m e m b e r countries.
F r o m J u l y 1974 t h r o u g h D e c e m b e r 1 9 8 0 , 16 c u r r e n c i e s w e r e u s e d ; f r o m J a n u a r y
1981, 5 c u r r e n c i e s h a v e b e e n u s e d . T h e U . S . S D R h o l d i n g s a n d r e s e r v e p o s i t i o n in
t h e I M F a l s o are v a l u e d o n t h i s b a s i s b e g i n n i n g J u l y 1974.
3.13
1985
1983
3. I n c l u d e s a l l o c a t i o n s b y t h e I n t e r n a t i o n a l M o n e t a r y F u n d o f S D R s a s f o l l o w s :
$ 8 6 7 m i l l i o n o n J a n . 1, 1970; $ 7 1 7 m i l l i o n o n J a n . 1, 1971; $ 7 1 0 m i l l i o n o n J a n . 1,
1972; $ 1 , 1 3 9 m i l l i o n o n J a n . 1, 1979; $ 1 , 1 5 2 m i l l i o n o n J a n . 1, 1980; a n d $ 1 , 0 9 3
m i l l i o n o n J a n . 1, 1981; p l u s t r a n s a c t i o n s in S D R s .
4 . V a l u e d at c u r r e n t m a r k e t e x c h a n g e r a t e s .
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE
BANKS
Millions of dollars, end of period
1984
Assets
1982
1981
Sept.
1 Deposits
Assets
held in
custody
2 U . S . Treasury securities1
3 Earmarked gold2
Nov.
Oct.
Jan.
Dec.
Feb.
Mar.
505
328
190
206
270
392
253
244
331
253
104,680
14,804
112,544
14,716
117,670
14,414
115,678
14,256
115,542
14,260
117,433
14,265
118,267
14,265
117,330
14,261
115,179
14,260
113,532
14,264
1. M a r k e t a b l e U . S . T r e a s u r y b i l l s , n o t e s , a n d b o n d s ; a n d n o n m a r k e t a b l e U . S .
T r e a s u r y s e c u r i t i e s p a y a b l e in d o l l a r s a n d in f o r e i g n c u r r e n c i e s .
2 . E a r m a r k e d g o l d is v a l u e d at $ 4 2 . 2 2 p e r fine t r o y o u n c e .
1985
1983
NOTE. E x c l u d e s d e p o s i t s a n d U . S . T r e a s u r y s e c u r i t i e s h e l d f o r i n t e r n a t i o n a l
and regional organizations. E a r m a r k e d gold is gold held for foreign and international a c c o u n t s a n d is n o t i n c l u d e d in t h e g o l d s t o c k o f t h e U n i t e d S t a t e s .
Summary Statistics
3.14
FOREIGN BRANCHES OF U.S. BANKS
A55
Balance Sheet Data
Millions of dollars, end of period
1985
1984
Asset account
1983
1981
Aug.
Sept.
Oct.'
Nov.'
Dec.'
Jan.
Feb.''
All foreign c o u n t r i e s
1
Total, all currencies
?, Claims o n U n i t e d S t a t e s
Parent bank
Other b a n k s in U n i t e d States 1
Nonbanks1
6 Claims o n foreigners
7
Other b r a n c h e s o f parent bank
8
9
Public b o r r o w e r s
10
N o n b a n k foreigners
4
1
Total payable in U.S. dollars
n Claims o n U n i t e d S t a t e s
14
Parent bank
15
Other b a n k s in U n i t e d S t a t e s 1
16
Nonbanks1
17 Claims o n foreigners
18
Other b r a n c h e s o f parent bank
19
Banks
70
Public b o r r o w e r s
21
N o n b a n k foreigners
469,712
477,090
462,028'
453,711'
448,499
452,914
452,205
445,588
453,414
63,743
43,267
91,805
61,666
115,542
82,026
116,620'
81,979'
13,209
21,432
324,474
93,507
103,346
22,654
104,967
113,789'
79,664'
13,125
21,000
319,375
92,646
101,567
22,568
102,594
109,292
75,736
12,591
20,965
319,075
90,821
102,258
23,053
102,943
112,815
77,958
13,554
21,303
319,431
91,313
103,050
22,907
102,161
113,435
78,151
13,915
21,369
318,710
94,738
100,307
22,872
100,793
115,523
79,324
13,931
22,268
309,712
87,476
100,004
22,532
99,700
119,022
84,062
13,978
20,982
314,790
89,360
104,483
22,303
98,644
33,Mb
378,954
87,821
150,763
28,197
112,173
11 Other a s s e t s
12
462,847
1
22 Other a s s e t s
358,493
91,168
133,752
24,131
109,442
342,689
96,004
117,668
24,517
107,785
20,150
19,414
18,859
20,934
20,547
20,132
20,668
20,060
20,353
19,602
350,735
361,982
371,508
352,334'
346,54y
340,675
345,685
349,542
343,834
352,158
62,142
42,721
90,085
61,010
113,436
80,909
276,937
69,398
122,110
22,877
62,552
259,871
73,537
106,447
18,413
61,474
247,406
78,431
93,332
17,890
60,977
114,281'
80,833'
12,890
20,558'
227,132
75,969
77,402
16,783
56,978
111,291'
78,476'
12,769
20,046'
224,603
75,509
76,566
16,946
55,582
106,651
74,366
12,338
19,947
223,376
73,472
76,915
17,337
55,652
110,442
76,763
13,356
20,323
224,251
74,600
77,096
17,374
55,181
111,468
77,271
13,745
20,452
227,303
78,300
76,851
17,160
54,992
113,269
78,398
13,732
21,139
220,154
72,451
75,877
17,084
54,742
116,715
83,052
13,699
19,964
225,139
74,423
79,324
16,847
54,545
11,656
12,026
10,666
10,648
10,992
10,771
10,411
10,304
10,921
10,649
United K i n g d o m
23
Total, all currencies
74 Claims o n U n i t e d S t a t e s
75
Parent bank
76
Other banks in U n i t e d S t a t e s 1
77
Nonbanks1
78 Claims on foreigners
79
Other b r a n c h e s o f parent bank
30
Banks
31
Public b o r r o w e r s
32
N o n b a n k foreigners
161,067
158,732
154,250
147,696
147,562
149,377
144,385
146,130
149,534
11,823
7,885
27,354
23,017
34,433
29,111
138,888
41,367
56,315
7,490
33,716
127,734
37,000
50,767
6,240
33,727
119,280
36,565
43,352
5,898
33,465
31,691
26,054
1,087
4,550
117,255
39,313
39,906
5,510
32,526
29,333
23,772
1,327
4,234
113,299
37,499
39,133
5,330
31,337
28,952
23,283
1,214
4,455
113,524
37,638
38,6%
5,441
31,749
29,502
23,773
1,484
4,245
114,264
37,395
39,262
5,424
32,183
27,731
21,918
1,429
4,384
111,772
37,897
37,443
5,334
31,098
28,783
22,296
1,540
4,947
112,284
36,367
39,063
5,345
31,509
31,910
25,313
1,561
5,036
112,937
35,381
40,%1
5,296
31,299
1
33 Other a s s e t s
34
157,229
Total payable in U.S. dollars
35 Claims o n U n i t e d S t a t e s
36
Parent bank
37
Other b a n k s in U n i t e d S t a t e s 1
3H
Nonbanks1
39 Claims o n foreigners
40
Other b r a n c h e s o f parent bank
41
Banks
47
Public b o r r o w e r s
N o n b a n k foreigners
43
44 Other a s s e t s
6,518
5,979
5,019
5,304
5,064
5,086
5,611
4,882
5,063
4,687
115,188
123,740
126,012
118,337
114,358
113,437
114,895
112,809
112,919
116,212
11,246
7,721
26,761
22,756
33,756
28,756
99,850
35,439
40,703
5,595
18,113
92,228
31,648
36,717
4,329
19,534
88,917
31,838
32,188
4,194
20,697
30,641
25,509
950
4,182
84,553
33,623
27,961
3,983
18,986
28,282
23,323
1,195
3,764
83,082
32,704
27,986
3,879
18,513
27,917
22,825
1,113
3,979
82,456
32,461
27,093
4,063
18,839
28,610
23,378
1,437
3,795
82,971
32,669
27,290
4,094
18,918
26,924
21,551
1,363
4,010
82,889
33,551
26,805
4,030
18,503
27,807
21,960
1,496
4,351
82,161
31,899
27,465
4,021
18,776
30,945
24,911
1,498
4,536
82,268
31,099
28,523
3,964
18,682
4,092
4,751
3,339
3,143
2,994
3,064
3,314
2,9%
2,951
2,999
B a h a m a s and C a y m a n s
45
Total, all currencies
46 Claims o n U n i t e d S t a t e s
47
Parent bank
48
Other banks in U n i t e d States 1
49
50 Claims o n foreigners
51
Other branches o f parent bank
57
53
Public b o r r o w e r s
54
N o n b a n k foreigners
55 Other a s s e t s
56
Total payable in U.S. dollars
-i
149,108
145,156
152,083
146,861'
144,207'
138,981
141,610
146,811
142,140
144,986
46,546
31,643
59,403
34,653
75,309
48,720
98,057
12,951
55,151
10,010
19,945
81,450
18,720
42,699
6,413
13,618
72,868
20,626
36,842
6,093
12,592
78,424'
50,926'
11,540
15,958
64,263
16,093
30,505
5,883
11,782
76,642'
49,707'
11,072
15,863
63,545
15,639
30,075
6,119
11,712
71,911
45,641
10,716
15,554
63,031
15,117
30,263
6,057
11,594
75,655
48,202
11,284
16,169
62,024
13,837
30,529
6,075
11,583
77,296
49,449
11,795
16,052
65,598
17,682
30,225
6,089
11,602
76,872
48,892
11,571
16,409
61,493
14,447
29,331
6,253
11,462
76,457
50,044
11,546
14,867
64,719
16,330
31,016
6,175
11,198
4,505
4,303
3,906
143,743
139,605
145,641
1. D a t a for a s s e t s v i s - a - v i s o t h e r b a n k s in the U n i t e d S t a t e s and vis-a-vis
n o n b a n k s are c o m b i n e d for d a t e s prior t o June 1984.
4,174
140,666'
4,020
138,307'
4,039
3,931
3,917
3,775
3,810
133,002
136,211
141,562
137,392
139,860
A56 International Statistics • June 1985
3.14
Continued
1984
Liability a c c o u n t
1981
1982
1985
1983
Aug.
Sept.
Oct/
Nov/
Dec/
Jan.
Feb.''
AH foreign c o u n t r i e s
57 Total, all currencies
462,847
469,712
477,090
462,028'
453,711'
448,499
452,914
452,205
445,588
453,414
58 N e g o t i a b l e C D s 2
59 T o United S t a t e s
60
Parent bank
61
Other b a n k s in U n i t e d S t a t e s .
62
Nonbanks
n.a.
137,767
56,344
19,197
62,226
n.a.
179,015
75,621
33,405
69,989
n.a.
188,070
81,261
29,453
77,356
41,656
152,177'
76,702'
19,693
55,782
39,866
146,632'
74,655'
20,120
51,857
38,520
139,567
74,757
18,937
45,873
37,915
138,498
70,346
18,601
49,551
37,725
146,955
78,111
18,394
50,450
38,804
143,980
75,459
18,124
50,397
41,798
141,218
72,606
17,970
50,642
63 To foreigners
64
Other b r a n c h e s o f parent bank
65
Banks
66
Official institutions
67
N o n b a n k foreigners
68 Other liabilities
305,630
86,396
124,906
25,997
68,331
19,450
270,853
90,191
9*,860
19,614
64,188
19,844
269,685
90,615
92,889
18,896
68,845
19,335
246,565
90,747
78,796
20,238
56,784
21,630
245,746
90,426
77,471
21,566
56,283
21,467
248,164
89,492
82,235
19,501
56,936
22,248
253,925
90,681
86,822
20,883
55,539
22,576
246,894
93,206
78.203
20,281
55.204
20,631
241,591
87,844
79,361
19,488
54,898
21,213
249,297
90,016
84,043
19,362
55,876
21,101
69 Total payable in U.S. dollars
364,447
379,270
388,291
369,898'
363,876'
356,601
361,875
365,859
358,329
366,495
70 N e g o t i a b l e C D s 2
71 T o U n i t e d States
72
Parent bank
73
Other banks in United S t a t e s .
74
Nonbanks
n.a.
134,700
54,492
18,883
61,325
n.a.
175,528
73,295
33,040
69,193
n.a.
184,305
79,035
28,936
76,334
39,610
147,644'
74,116'
19,019
54,509
37,629
142,111'
71,883'
19,457
50,771
36,102
135,2%
72,246
18,283
44,767
35,608
134,303
67,821
18,052
48,430
35,227
142,943
75,626
17,920
49,397
36,295
140,107
73,118
17,585
49,404
39,544
137,455
70,350
17,440
49,665
75 T o foreigners
76
Other b r a n c h e s of parent bank
77
Banks
78
Official institutions
79
N o n b a n k foreigners
80 Other liabilities
217,602
69,299
79,594
20,288
48,421
12,145
192,510
72,921
57,463
15,055
47,071
" 11,232
194,139
73,522
57,022
13,855
51,260
9,847
171,880
73,501
42,373
15,476
40,530
10,764
173,610
73,412
42,772
16,850
40,576
10,526
174,107
72,204
46,227
14,850
40,826
11,096
180,841
74,552
50,509
16,068
39,712
11,123
177,638
77,222
45,131
15,773
39,512
10,051
171,655
72,770
44,975
14,865
39,045
10,272
178,904
75,040
48,766
14,657
40,441
10,592
United Kingdom
157,229
161,067
158,732
154,250
147,6%
147,562
149,377
144,385
146,130
149,534
82 N e g o t i a b l e C D s 2
83 T o U n i t e d States
84
Parent bank
85
Other b a n k s in U n i t e d S t a t e s .
86
Nonbanks
n.a.
38,022
5,444
7,502
25,076
n.a.
53,954
13,091
12,205
28,658
n.a.
55,799
14,021
11,328
30,450
38,265
29,667
18,127
3,548
7,992
36,600
27,280
16,130
3,451
7,699
34,948
26,558
16,598
3,388
6,572
34,269
25,338
15,116
3,002
7,220
34,413
25,250
14,651
3,110
7,489
35,455
27,757
16,714
3,556
7,487
38,281
23,439
13,763
3,086
6,590
87 T o foreigners
88
Other branches of parent bank
89
Banks
90
Official institutions
91
N o n b a n k foreigners
92 Other liabilities
112,255
16,545
51,336
16,517
27,857
6,952
99,567
18,361
44,020
11,504
25,682
7,546
95,847
19,038
41,624
10,151
25,034
7,086
78,469
22,252
30,735
10,480
15,002
7,849
75,901
21,536
28,996
10,625
14,744
7,915
77,985
21,023
32,436
9,650
14,876
8,071
81,217
20,846
34,739
10,505
15,127
8,553
77,424
21,631
30,436
10,154
15,203
7,298
75,039
20,199
31,216
9,084
14,540
7,879
80,188
22,146
33,789
9,374
14,879
7,626
81 Total, all currencies
93 Total payable in U.S. dollars . . . .
120,277
130,261
131,167
124,260
119,337
118,103
119,287
117,497
117,198
120,623
94 N e g o t i a b l e C D s 2
95 T o U n i t e d S t a t e s
96
Parent bank
97
Other b a n k s in United S t a t e s .
98
Nonbanks
n.a.
37,332
5,350
7,249
24,733
n.a.
53,029
12,814
12,026
28,189
n.a.
54,691
13,839
11,044
29,808
37,219
28,027
17,701
3,244
7,082
35,398
25,763'
15,679
3,131
6,953
33,703
25,178
16,209
3,144
5,825
33,168
24,024
14,742
2,792
6,490
33,070
24,105
14,339
2,965
6,801
34,084
26,587
16,349
3,407
6,831
37,033
22,386
13,506
2,942
5,938
99 T o foreigners
100
Other branches of parent bank
101
Banks
102
Official institutions
103
N o n b a n k foreigners
104 Other liabilities
79,034
12,048
32,298
13,612
21,076
3,911
73,477
14,300
28,810
9,668
20,699
3,755
73,279
15,403
29,320
8,279
20,277
3,197
55,337
18,384
16,984
8,920
11,049
3,677
54,590
18,175
16,015
9,375
11,025
3,586
55,482
17,600
18,309
8,306
11,267
3,740
58,163
17,562
20,262
9,072
11,267
3,932
56,923
18,294
18,356
8,871
11,402
3,399
52,954
16,940
17,889
7,748
10,377
3,563
57,654
18,772
20,022
7,854
11,006
3,550
B a h a m a s and C a y m a n s
149,108
145,156
152,083
146,861'
144,207'
138,981
141,610
146,811
142,140
144,986
106 N e g o t i a b l e C D s 2
107 T o U n i t e d S t a t e s
108
Parent bank
109
Other b a n k s in U n i t e d States
110
Nonbanks
n.a.
85,759
39,451
10,474
35,834
n.a.
104,425
47,081
18,466
38,878
n.a.
111,299
50,980
16,057
44,262
905
103,457'
41,915'
14,742
46,800
788
100,311'
41,693'
15,459
43,159
878
95,249
42,851
14,167
38,231
898
95,975
40,517
14,187
41,271
615
102,955
47,161
13,938
41,855
734
98,753
43,999
13,332
41,422
953
99,503
43,625
13,591
42,287
111 T o foreigners
112
Other b r a n c h e s o f parent bank
113
Banks
Official institutions
114
115
N o n b a n k foreigners
116 Other liabilities
60,012
20,641
23,202
3,498
12,671
3,337
38,274
15,796
10,166
1,967
10,345
2,457
38,445
14,936
11,876
1,919
11,274
2,339
39,598
14,446
12,200
2,674
10,278
2,901
40,213
15,283
11,978
3,028
9,924
2,895
39,872
14,823
13,068
2,211
9,770
2,982
41,764
16,455
13,993
2,376
8,940
2,973
40,302
16,782
12,405
2,054
9,079
2,921
39,802
16,014
12,287
2,020
9,481
2,851
41,543
17,111
12,982
1,992
9,458
2,987
Total payable in U.S. dollars
145,284
141,908
148,278
142,836'
140,531'
135,326
137,874
143,590
138,505
141,293
105
117
Total, all currencies
2. B e f o r e June 1984, liabilities o n negotiable C D s w e r e included in liabilities to
the U n i t e d States or liabilities to f o r e i g n e r s , a c c o r d i n g t o the address o f the initial
purchaser.
Summary Statistics
3.15
A57
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1984
Item
1982
Aug.
1 Total1
2
3
4
5
6
7
8
9
10
11
12
By
type
L i a b i l i t i e s r e p o r t e d b y b a n k s in t h e U n i t e d S t a t e s 2
U . S . Treasury bills and certificates3
U . S . Treasury bonds and notes
Marketable
Nonmarketable4
U . S . securities other than U . S . Treasury securities5
By area
Western Europe1
Canada
Latin America and Caribbean
Asia
Africa
Other countries6
Sept.
Oct.
Nov.
Dec.
Jan.?
Feb.P
172,718
177,950
177,276
173,407
176,177
178,158
180,640
176,806
173,179
24,989
46,658
25,534
54,341
26,381
54,022
24,038
54,627
26,893
55,780
25,789
59,570
26,197
59,976
23,288
56,662
23,266
52,474
67,733
8,750
24,588
68,514
7,250
22,311
70,441
5,800
20,632
68,471
5,800
20,471
67,647
5,800
20,057
67,003
5,800
19,996
68,995
5,800
19,672
71,522
5,800
19,534
72,845
5,300
19,294
61,298
2,070
6,057
96,034
1,350
5,909
67,645
2,438
6,248
92,572
958
8,089
70,399
1,434
8,170
90,464
838
5,971
68,091
1,069
7,053
90,403
897
5,894
68,682
1,321
8,109
91,491
967
5,607
70,384
1,466
8,894
90,047
1,316
6,051
69,755
1,528
8,646
93,951
1,291
5,469
68,261
1,491
7.451
93,031
1,120
5.452
67,215
1,136
7,279
91,024
1,397
5,128
5. D e b t s e c u r i t i e s o f U . S . g o v e r n m e n t c o r p o r a t i o n s a n d f e d e r a l l y s p o n s o r e d
agencies, and U . S . corporate stocks and bonds.
6 . I n c l u d e s c o u n t r i e s in O c e a n i a a n d E a s t e r n E u r o p e .
NOTE. B a s e d o n T r e a s u r y D e p a r t m e n t d a t a a n d o n d a t a r e p o r t e d t o t h e
Treasury Department by banks (including Federal R e s e r v e Banks) and securities
d e a l e r s in t h e U n i t e d S t a t e s .
1. I n c l u d e s t h e B a n k f o r I n t e r n a t i o n a l S e t t l e m e n t s .
2. P r i n c i p a l l y d e m a n d d e p o s i t s , t i m e d e p o s i t s , b a n k e r s a c c e p t a n c e s , c o m m e r cial p a p e r , n e g o t i a b l e t i m e c e r t i f i c a t e s o f d e p o s i t , a n d b o r r o w i n g s u n d e r repurchase agreements.
3. I n c l u d e s n o n m a r k e t a b l e c e r t i f i c a t e s o f i n d e b t e d n e s s ( i n c l u d i n g t h o s e p a y a b l e in f o r e i g n c u r r e n c i e s t h r o u g h 1974) a n d T r e a s u r y b i l l s i s s u e d t o official
institutions of foreign countries.
4. E x c l u d e s n o t e s i s s u e d t o f o r e i g n official n o n r e s e r v e a g e n c i e s . I n c l u d e s
b o n d s a n d n o t e s p a y a b l e in f o r e i g n c u r r e n c i e s .
3.16
1985
1983
LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, end of period
1984
Item
1981
1982
1983
Mar.
1 B a n k s ' o w n liabilities
2 Banks' o w n claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers1
1. A s s e t s o w n e d b y c u s t o m e r s o f t h e r e p o r t i n g b a n k l o c a t e d in t h e U n i t e d
S t a t e s that r e p r e s e n t c l a i m s o n f o r e i g n e r s h e l d b y r e p o r t i n g b a n k s f o r t h e a c c o u n t s
o f their d o m e s t i c c u s t o m e r s .
3,523
4,980
3,398
1,582
971
4,844
7,707
4,251
3,456
676
5,219
7,231
2,731
4,501
1,059
5,817
9,034
4,024
5,010
361
June
6,402
9,623
4,280
5,344
227
Sept.
Dec.
5,901
9,006
3,6%
5,310
281
NOTE. D a t a o n c l a i m s e x c l u d e f o r e i g n c u r r e n c i e s h e l d b y
authorities,
U.S.
7,501
10,801
3,964
6,837
569
monetary
A58 International Statistics • June 1985
3.17
LIABILITIES TO FOREIGNERS
P a y a b l e in U . S .
R e p o r t e d b y B a n k s in t h e U n i t e d S t a t e s
dollars
Millions o f dollars, end o f period
1984
H o l d e r and t y p e o f liability
1981 •
1982
Aug.
1
All foreigners
2 B a n k s ' o w n liabilities
3
Demand deposits
4
Time deposits1
5
Other2
6
O w n foreign offices3
7 Banks' c u s t o d y liabilities4
8
U . S . T r e a s u r y bills a n d c e r t i f i c a t e s 3
9
Other negotiable and readily transferable
instruments6
10
Other
11
Nonmonetary international and regional
organizations7
12 B a n k s ' o w n liabilities
Demand deposits
13
14
Time deposits1
15
Other2
16 B a n k s ' c u s t o d y l i a b i l i t i e s 4
17
U . S . T r e a s u r y bills a n d c e r t i f i c a t e s
18
Other negotiable and readily transferable
instruments6
19
Other
1985
1983
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.P
243,889
307,056
369,607
396,436
398,598
388,951
398,481
406,381'
400,295
404,783
163,817
19,631
29,039
17,647
97,500
227,089
15,889
68,797
23,184
119,219
279,087
17,470
90,632
25,874
145,111
296,595
16,229
107,604
23,630
149,132
299,732
17,198
111,901
22,087
148,546
290,282
16,490
109,612
24,423
139,758
296,833
17,448
112,678
23,642
143,065
306,758r
19,542'
110,235r
26,332
150,650'
302,536
17,976
114,260
23,710
146,590
311,208
19,368
117,041
25,353
149,446
80,072
55,315
79,967
55,628
90,520
68,669
99,842
74,148
98,866
73,160
98,669
73,295
101,648
76,531
100,074
75,838
97,759
73,635
93,575
69,189
18,788
5,970
20,636
3,702
17,467
4,385
20,567
5,127
20,833
4,873
20,281
5,094
19,703
5,414
18,775
5,460
18,128
5,997
17,995
6,391
2,721
4,922
5,957
5,748
6,279
4,801
5,831
4,083
6,929
5,812
638
262
58
318
1,909
106
1,664
139
4,632
297
3,584
750
1,960
325
1,446
189
3,305
209
2,526
570
2,053
144
1,513
396
2,779
354
2,114
311
1,644
263
1,093 r
288
3,571
417
2,682
472
2,092
341
936
815
2,083
541
3,013
1,621
1,325
463
3,788
2,722
2,975
1,834
2,748
1,455
3,052
1,448
2,440
916
3,358
1,921
3,719
2,258
1,542
0
1,392
0
862
0
1,067
0
1,140
0
1,292
0
1,604
0
1,524
0
1,429
8
1,461
1
Official institutions8
79,126
71,647
79,876
80,403
78,665
82,673
85,359
86,17Y
79,950
75,740
21 B a n k s ' o w n liabilities
22
Demand deposits
23
Time deposits1
24
Other2
17,109
2,564
4,230
10,315
16,640
1,899
5,528
9,212
19,427
1,837
7,318
10,272
18,222
2,003
8,060
8,158
16,274
1,969
7,877
6,429
19,247
1,725
8,695
8,828
18,748
2,133
9,457
7,159
19,065'
1,823
9,391'
7,852
16,958
1,780
8,356
6,821
17,115
1,881
8,654
6,580
25 B a n k s ' c u s t o d y l i a b i l i t i e s 4
26
U . S . T r e a s u r y bills a n d c e r t i f i c a t e s 5
27
Other negotiable and readily transferable
instruments6
28
Other
62,018
52,389
55,008
46,658
60,448
54,341
62,181
54,022
62,391
54,627
63,426
55,780
66,611
59,570
67,108
59,976
62,992
56,662
58,625
52,474
9,581
47
8,321
28
6,082
25
8,149
10
7,746
18
7,626
20
7,010
31
7,038
94
6,267
63
6,064
87
136,008
185,881
226,887
243,552
246,077
233,654
238,349
248,360'
242,858
249,848
124,312
26,812
11,614
8,720
6,477
97,500
169,449
50,230
8,675
28,386
13,169
119,219
205,347
60,236
8,759
37,439
14,038
145,111
218,081
68,949
7,884
46,901
14,164
149,132
221,185
72,640
8,453
49,763
14,424
148,546
209,529
69,771
8,389
46,755
14,627
139,758
214,783
71,718
8,528
47,703
15,488
143,065
225,512'
74,862'
10,526'
47,059'
17,278
150,650'
220,141
73,551
9,030
48,762
15,759
146,590
227,494
78,047
9,656
51,053
17,338
149,446
11,696
1,685
16,432
5,809
21,540
10,178
25,471
12,766
24,892
12,234
24,124
11,828
23,566
11,409
22,848
10,927
22,717
10,933
22,355
10,488
4,400
5,611
7,857
2,766
7,485
3,877
8,172
4,534
8,421
4,236
7,802
4,494
7,360
4,797
7,156
4,766
6,489
5,295
6,217
5,650
26,035
44,606
56,887
66,733
67,576
67,824
68,942
68,215'
70,557
73,383
21,759
5,191
16,030
537
39,092
5,209
33,219
664
49,680
6,577
42,290
813
58,332
6,017
51,195
1,120
58,968
6,567
51,735
665
59,453
6,232
52,648
573
60,523
6,433
53,405
685
60,537'
6,930'
52,693'
914
61,866
6,748
54,460
658
64,507
7,490
56,399
619
4,276
699
5,514
1,540
7,207
3,686
8,401
4,639
8,609
4,465
8,372
4,232
8,419
4,103
7,678
4,020
8,692
4,118
8,876
3,970
3,265
312
3,065
908
3,038
483
3,180
582
3,525
619
3,560
580
3,730
586
3,058
601
3,943
631
4,253
653
10,747
14,307
10,346
11,415
11,048
10,714
10,437
10,476
9,287
9,126
20
29
Banks9
30 B a n k s ' o w n liabilities
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits1
34
Other2
35
O w n foreign offices3
36 B a n k s ' c u s t o d y liabilities 4
37
U . S . T r e a s u r y bills a n d c e r t i f i c a t e s
38
Other negotiable and readily transferable
instruments6
39
Other
40
Other foreigners
41 B a n k s ' o w n liabilities
Demand deposits
42
43
Time deposits
44
Other2
45 B a n k s ' c u s t o d y l i a b i l i t i e s 4
46
U . S . T r e a s u r y bills a n d c e r t i f i c a t e s
47
O t h e r n e g o t i a b l e and r e a d i l y t r a n s f e r a b l e
instruments6
Other
48
4 9 MEMO: N e g o t i a b l e t i m e c e r t i f i c a t e s o f
d e p o s i t in c u s t o d y f o r f o r e i g n e r s
• L i a b i l i t i e s a n d c l a i m s o f b a n k s in t h e U n i t e d S t a t e s w e r e i n c r e a s e d ,
b e g i n n i n g in D e c e m b e r 1981, b y t h e shift f r o m f o r e i g n b r a n c h e s t o international
b a n k i n g f a c i l i t i e s in the U n i t e d S t a t e s o f liabilities to, a n d c l a i m s o n , f o r e i g n
residents.
1. E x c l u d e s n e g o t i a b l e t i m e c e r t i f i c a t e s o f d e p o s i t , w h i c h are i n c l u d e d in
" O t h e r n e g o t i a b l e and readily t r a n s f e r a b l e i n s t r u m e n t s . "
2. I n c l u d e s b o r r o w i n g u n d e r r e p u r c h a s e a g r e e m e n t s .
3. U . S . b a n k s : i n c l u d e s a m o u n t s d u e t o o w n f o r e i g n b r a n c h e s a n d f o r e i g n
s u b s i d i a r i e s c o n s o l i d a t e d in " C o n s o l i d a t e d R e p o r t o f C o n d i t i o n " filed w i t h bank
regulatory agencies. A g e n c i e s , b r a n c h e s , and majority-owned subsidiaries of
f o r e i g n b a n k s : p r i n c i p a l l y a m o u n t s d u e t o h e a d o f f i c e or p a r e n t f o r e i g n b a n k , a n d
f o r e i g n b r a n c h e s , a g e n c i e s or w h o l l y o w n e d s u b s i d i a r i e s o f h e a d o f f i c e or p a r e n t
foreign bank.
4. F i n a n c i a l c l a i m s o n r e s i d e n t s o f the U n i t e d S t a t e s , o t h e r t h a n l o n g - t e r m
s e c u r i t i e s , held b y or t h r o u g h r e p o r t i n g b a n k s .
5. I n c l u d e s n o n m a r k e t a b l e c e r t i f i c a t e s o f i n d e b t e d n e s s a n d T r e a s u r y bills
i s s u e d t o official i n s t i t u t i o n s o f f o r e i g n c o u n t r i e s .
6. Principally b a n k e r s a c c e p t a n c e s , c o m m e r c i a l p a p e r , a n d n e g o t i a b l e t i m e
certificates of deposit.
7. Principally t h e I n t e r n a t i o n a l B a n k f o r R e c o n s t r u c t i o n a n d D e v e l o p m e n t , a n d
the I n t e r - A m e r i c a n a n d A s i a n D e v e l o p m e n t B a n k s .
8. F o r e i g n central b a n k s a n d f o r e i g n c e n t r a l g o v e r n m e n t s , a n d the B a n k f o r
International S e t t l e m e n t s .
9. E x c l u d e s central b a n k s , w h i c h are i n c l u d e d in "Official i n s t i t u t i o n s . "
Nonbank-Reported
3.17
Data
Continued
1984
Area and country
1981A
1982
Aug.
243,889
1
2 Foreign countries
3 Europe
4
Austria
5
Belgium-Luxembourg
6
7
Finland
8
France
9
Germany
10
Greece
11
Italy
1?
Netherlands
n
Norway
14
Portugal
IS
Spain
16
Sweden
17
Switzerland
18
Turkey
19
United Kingdom
?0
Yugoslavia
Other Western Europe 1
21
??
U.S.S.R
Other Eastern E u r o p e 2
23
307,056
1985
1983
369,607
396,436
241,168
302,134
363,649
390,688
91,275
596
4,117
333
296
8,486
7,645
463
7,267
2,823
1,457
354
916
1,545
18,716
518
28,286
375
6,541
49
493
117,756
519
2,517
509
748
8,171
5,351
537
5,626
3,362
1,567
388
1,405
1,390
29,066
296
48,172
499
7,006
50
576
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
150,785
758
4,789
408
489
11,539
3,758
566
8,356
5,116
2,026
539
1,971
2,095
32,919
354
67,976
435
6,114
47
532
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.P
388,951
398,481
406,831 r
400,295
404,783
392,319
384,151
392,650
402,748'
393,365
398,971
147,244
693
4,278
341
638
11,547
3,036
567
8,266
5,239
1,912
434
1,984
2,008
32,995
320
65,445
514
6,247
41
738
146,413
744
4,093
337
407
11,641
3,331
609
8,976
4,421
1,895
540
1,905
1,945
32,461
557
65,384
579
6,062
50
476
149,577
627
3,613
434
487
11,935
3,405
602
11,056
5,077
1,693
552
1,873
1,839
31,494
457
66,944
565
6,387
54
481
152,395'
615
4,114
438
418
12,701
3,353'
699
10,757
4,799
1,548
597
2,082
1,676'
31,054'
584
68,553'
602
7,184'
79
542'
149,461
734
4,007
452
425
11,908
3,581
615
9,657
4,663
1,717
570
2,016
2,133
31,397
495
68,043
545
5,855
66
581
152,165
598
4,636
545
789
12,430
3,258
583
9,148
4,622
1,647
613
1,887
1,551
31,542
501
70,216
602
6,500
66
432
398,598
24 Canada
10,250
12,232
16,026
18,170
17,536
16,767
16,549
16,048'
16,233
18,163
? s Latin America and Caribbean
76
Argentina
77
Bahamas
78
Bermuda
79
Brazil
30
British West Indies
31
Chile
37
Colombia
33
Cuba
34
Ecuador
35
Guatemala
36
Jamaica
37
Mexico
38
Netherlands Antilles
39
Panama
40
Peru
Uruguay
41
Venezuela
47
Other Latin A m e r i c a and Caribbean
43
85,223
2,445
34,856
765
1,568
17,794
664
2,993
9
434
479
87
7,235
3,182
4,857
694
367
4,245
2,548
114,163
3,578
44,744
1,572
2,014
26,381
1,626
2,594
9
455
670
126
8,377
3,597
4,805
1,147
759
8,417
3,291
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
150,972
4,411
60,077
2,763
4,697
33,789
2,070
1,791
7
951
831
126
12,268
4,261
6,506
1,273
1,319
10,046
3,786
152,069
4,384
58,321
3,177
4,427
35,926
1,874
1,957
8
931
810
180
12,869
4,179
6,811
1,343
1,418
9,615
3,839
145,771
4,484
52,912
3,043
4,714
34,419
2,052
2,022
8
924
855
122
12,466
4,187
6,578
1,304
1,361
10,367
3,952
149,574
4,607
55,102
3,222
4,978
34,336
2,185
2,057
8
1,029
884
110
13,422
4,180
6,847
1,258
1,309
10,013
4,027
153,985'
4,424
56,955'
2,370
5,332
36,949'
2,001
2,514
10
1,092
896
183'
12,695'
4,153
6,928
1,247
1,394
10,545
4,297'
151,228
4,523
55,394
2,704
4,928
35,271
1,944
2,356
26
912
920
157
13,297
4,346
6,872
1,152
1,485
10,667
4,275
154,174
4,361
56,789
3,456
6,136
34,568
1,916
2,453
8
981
915
182
13,061
4,662
7,156
1,063
1,413
10,742
4,311
44
49,822
48,716
58,570
61,559
66,397
66,028
67,182
71,139'
67,393
65,288
158
2,082
3,950
385
640
592
20,750
2,013
874
534
12,992
4,853
203
2,761
4,465
433
857
606
16,078
1,692
770
629
13,433
6,789
249
4,051
6,657
464
997
1,722
18,079
1,648
1,234
747
12,976
9,748
671
4,799
6,110
800
1,137
726
19,792
1,641
1,084
782
13,200
10,815
876
4,970
6,977
644
939
750
21,310
1,572
1,020
741
13,754
12,844
861
5,041
6,236
616
1,339
2,017
19,644
1,552
1,097
980
13,890
12,755
844
5,355
6,535
606
884
1,023
20,750
1,609
1,252
1,458
13,436
13,432
1,153
4,975'
7,240
507
1,033
1,268
20,929
1,691
1,396
1,257
16,804'
12,886'
1,078
5,098
7,417
554
1,136
1,003
21,662
1,561
1,334
1,161
15,970
9,418
1,068
5,231
6,642
721
914
995
22,726
1,623
1,144
1,062
15,219
7,945
3,180
360
32
420
26
1,395
946
3,124
432
81
292
23
1,280
1,016
2,827
671
84
449
87
620
917
3,052
743
119
350
101
775
964
3,018
629
136
318
148
821
966
3,329
763
115
459
141
998
852
3,492
739
117
460
163
1,034
978
3,506'
757
118
328
153
1,189
961'
3,431
798
115
376
76
1,187
878
3,572
649
121
371
79
1,450
903
64 Other countries
65
Australia
All other
66
1,419
1,223
196
6,143
5,904
239
8,067
7,857
210
6,150
5,749
401
6,055
5,687
368
5,844
5,464
379
6,277
5,598
679
5,674'
5,290'
384'
5,619
5,241
379
5,608
5,043
564
67 N o n m o n e t a r y international and regional
organizations
International
Latin American regional
Other regional 5
2,721
1,661
710
350
4,922
4,049
517
357
5,957
5,273
419
265
5,748
4,973
445
330
6,279
5,411
488
381
4,801
4,086
518
196
5,831
5,055
593
183
4,083
3,376
587
120
6,929
6,165
600
165
5,812
4,453
580
778
45
46
47
48
49
50
51
57
51
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle-East oil-exporting countries 3
Other Asia
57
58
59
60
61
62
63
Egypt
Morocco
South Africa
Zaire
Oil-exporting countries 4
Other Africa
68
69
70
A Liabilities and claims of banks in the United States w e r e increased, beginning
in D e c e m b e r 1981, by the shift f r o m foreign branches to international banking
facilities in the United States o f liabilities to, and claims o n , foreign residents.
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 c o m p r i s e s Bulgaria, C z e c h o s l o v a k i a , the German
Democratic Republic, Hungary, Poland, and Romania.
3. C o m p r i s e s Bahrain, Iran, Iraq, K u w a i t , O m a n , Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. C o m p r i s e s Algeria, Gabon, L i b y a , and Nigeria.
5. Asian, African, Middle Eastern, and European regional organizations,
e x c e p t the Bank for International Settlements, w h i c h is included in " O t h e r
Western E u r o p e . "
A59
A60 International Statistics • June 1985
3.18
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1984
Area and country
1981A
1982
1985
1983
Aug.
Sept.
Oct.
Nov.
Dec/
Jan.
Feb.P
1
Total
251,589
355,705
391,312
396,232
393,959
383,444
384,517
398,722
387,197
392,684
2
Foreign countries
251,533
355,636
391,148
396,034
393,888
382,762
383,954
398,048
386,273
392,388
49,262
121
2,849
187
546
4,127
940
333
5,240
682
384
529
2,095
1,205
2,213
424
23,849
1,225
211
377
1,725
85,584
229
5,138
554
990
7,251
1,876
452
7,560
1,425
572
950
3,744
3,038
1,639
560
45,781
1,430
368
263
1,762
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
100,084
581
6,156
1,088
872
9,985
1,257
974
7,832
1,440
649
1,433
3,700
2,404
1,580
1,145
54,752
1,857
732
175
1,471
98,173
572
6,286
1,057
882
9,094
1,220
1,086
7,803
1,470
649
1,387
3,355
2,596
1,741
1,132
53,676
1,888
660
176
1,442
95,370
521
5,363
544
887
8,822
1,097
929
7,820
1,190
676
1,346
3,189
2,362
2,067
1,145
53,269
1,868
660
159
1,454
97,812
532
4,988
520
1,098
9,299
1,261
819
8,854
1,229
602
1,262
3,017
2,313
2,275
1,097
54,520
1,866
625
169
1,467
97,%2
433
4,794
648
898
9,085
1,305
817
9,079
1,351
675
1,243
2,884
2,220
2,201
1,130
55,184
1,886
5%
142
1,391
%,038
339
4,683
589
817
8,617
988
896
8,040
1,480
651
1,209
2,848
2,497
2,308
1,232
54,849
1,862
668
118
1,345
97,981
367
5,097
589
907
9,601
939
840
8,483
1,490
808
1,269
3,134
2,580
2,112
1,197
54,565
1,783
683
219
1,318
3 Europe
4
Austria
3
Belgium-Luxembourg
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
11
Italy
12
Netherlands
13
Norway
14
Portugal
15
Spain
Sweden
16
17
Switzerland
18
Turkey
19
United Kingdom
20
Yugoslavia
21
Other Western Europe1
22
U.S.S.R
23
Other Eastern Europe2
24 Canada
9,193
13,678
16,341
16,326
16,604
16,634
15,778
16,343
19,080
138,347
7,527
43,542
346
16,926
21,981
3,690
2,018
3
1,531
124
62
22,439
1,076
6,794
1,218
157
7,069
1,844
187,969
10,974
56,649
603
23,271
29,101
5,513
3,211
3
2,062
124
181
29,552
839
10,210
2,357
686
10,643
1,991
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
203,465
11,021
56,612
509
25,991
35,390
6,619
3,444
0
2,380
130
216
35,016
1,302
8,202
2,401
930
11,137
2,165
203,001
11,108
55,216
508
26,140
36,002
6,836
3,438
0
2,365
120
225
35,602
1,296
7,639
2,397
934
10,982
2,191
198,372
11,014
52,006
551
26,146
34,866
6,795
3,343
0
2,452
141
234
35,364
1,337
7,540
2,416
962
11,029
2,175
199,058
10,983
54,084
635
26,275
33,722
6,703
3,406
0
2,431
148
222
35,288
1,337
7,360
2,358
990
10,994
2,123
207,577
11,043
58,027
592
26,307
38,105
6,839
3,499
0
2,420
158
252
34,697
1,350
7,707
2,384
1,088
11,017
2,091
199,663
11,453
54,604
594
25,886
35,372
6,746
3,369
0
2,477
154
244
34,057
1,273
6,864
2,414
1,053
10,968
2,135
200,256
11,203
55,022
429
26,146
36,824
6,713
3,406
1
2,489
157
253
33,654
1,393
6,200
2,337
1,021
10,929
2,079
49,851
60,952
67,837
65,979
66,006
62,356
61,398
66,380
64,395
65,348
107
2,461
4,132
123
352
1,567
26,797
7,340
1,819
565
1,581
3,009
214
2,288
6,787
222
348
2,029
28,379
9,387
2,625
643
3,087
4,943
292
1,908
8,489
330
805
1,832
30,354
9,943
2,107
1,219
4,954
5,603
639
1,573
6,809
295
906
1,869
29,005
9,547
2,756
1,262
4,924
6,396
563
1,651
7,139
354
886
1,802
30,601
9,586
2,578
1,113
4,506
5,227
409
1,588
7,155
302
821
1,890
26,862
9,253
2,510
1,072
4,650
5,844
543
1,679
6,945
381
797
1,938
26,421
8,8%
2,487
1,112
4,687
5,512
710
1,849
7,368
425
734
2,088
29,059
9,285
2,550
1,125
5,054
6,133
507
1,745
6,801
299
710
1,993
28,495
8,807
2,499
1,123
5,004
6,412
646
1,921
7,346
354
780
2,041
29,110
8,795
2,560
1,076
4,856
5,860
57 A f r i c a
58
Egypt
59
Morocco
60
South Africa
61
Zaire
62
Oil-exporting countries5
63
Other
3,503
238
284
1,011
112
657
1,201
5,346
322
353
2,012
57
801
1,802
6,654
747
440
2,634
33
1,073
1,727
6,969
613
556
3,281
30
996
1,493
6,830
650
545
3,152
18
944
1,522
6,862
674
582
3,140
18
938
1,510
6,719
693
536
2,960
19
911
1,600
6,615
728
583
2,795
18
842
1,649
6,536
668
552
2,791
41
812
1,672
6,375
584
582
2,666
29
791
1,724
64 Other countries
65
Australia
66
All other
1,376
1,203
172
2,107
1,713
394
2,898
2,256
642
3,210
2,582
628
3,274
2,673
601
3,169
2,508
661
3,189
2,487
702
3,456
2,778
678
3,297
2,593
704
3,348
2,635
713
56
68
164
198
71
681
562
674
925
295
25 L a t i n A m e r i c a a n d C a r i b b e a n
26
Argentina
27
Bahamas
28
Bermuda
29
Brazil
30
British W e s t Indies
31
Chile
32
Colombia
33
Cuba
34
Ecuador
35
Guatemala3
36
Jamaica3
37
Mexico
38
Netherlands Antilles
Panama
39
40
Peru
41
Uruguay
42
Venezuela
43
Other Latin A m e r i c a 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 countries4
Other Asia
67 N o n m o n e t a r y international and regional
organizations6
• L i a b i l i t i e s a n d c l a i m s o f b a n k s in t h e U n i t e d S t a t e s w e r e i n c r e a s e d ,
b e g i n n i n g in D e c e m b e r 1981, b y t h e s h i f t f r o m f o r e i g n b r a n c h e s t o i n t e r n a t i o n a l
b a n k i n g f a c i l i t i e s in t h e U n i t e d S t a t e s o f l i a b i l i t i e s t o , a n d c l a i m s o n , f o r e i g n
residents.
1. I n c l u d e s t h e B a n k f o r I n t e r n a t i o n a l S e t t l e m e n t s . B e g i n n i n g A p r i l 1978, a l s o
i n c l u d e s E a s t e r n E u r o p e a n c o u n t r i e s n o t l i s t e d in l i n e 2 3 .
2. B e g i n n i n g A p r i l 1 9 7 8 c o m p r i s e s B u l g a r i a , C z e c h o s l o v a k i a , t h e G e r m a n
Democratic Republic, Hungary, Poland, and Romania.
16,057
3. I n c l u d e d in " O t h e r L a t i n A m e r i c a a n d C a r i b b e a n " t h r o u g h M a r c h 1 9 7 8 .
4. C o m p r i s e s B a h r a i n , I r a n , Iraq, K u w a i t , O m a n , Q a t a r , S a u d i A r a b i a , a n d
United A r a b Emirates (Trucial States).
5. C o m p r i s e s Algeria, G a b o n , L i b y a , and Nigeria.
6 . E x c l u d e s t h e B a n k f o r I n t e r n a t i o n a l S e t t l e m e n t s , w h i c h i s i n c l u d e d in
"Other Western Europe."
NOTE. D a t a f o r p e r i o d b e f o r e A p r i l 1978 i n c l u d e c l a i m s o f b a n k s ' d o m e s t i c
customers on foreigners.
Nonbank-Reported
3.19
Data
BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
Millions of dollars, end of period
1984
1981A
Type of claim
1982
1985
1983
Sept.
Aug.
Oct.
Nov.
383,444
61,361
143,576
120,873
46,778
74,094
57,634
384,517
61,443
144,329
121,258
45,788
75,469
57,487
Dec.'
1 Total
287,557
3%,015
426,215
2
3
4
5
6
7
8
251,589
31,260
96,653
74,704
23,381
51,322
48,972
355,705
45,422
127,293
121,377
44,223
77,153
61,614
391,312
57,569
146,393
123,837
47,126
76,711
63,514
35,968
1,378
40,310
2,491
34,903
2,969
34,026
4,575
32,916
3,380
26,352
30,763
26,064
23,3%
23,805
8,238
7,056
5,870
6,055
5,732
29,952
38,153
37,715
38,586
36,575
40,369
42,499
45,856
Banks' o w n claims on foreigners
Foreign public borrowers
O w n foreign offices1
Unaffiliated foreign b a n k s
Deposits
Other
All other foreigners
9 Claims of banks' domestic customers2
..
427,985
396,232
58,477
153,652
123,716
46,990
76,725
60,387
Jan.
Feb."
387,197
61,321
153,829
116,965
45,070
71,894
55,083
392,684
61,673
154,004
121,589
47,763
73,826
55,418
431,639
393,959
59,617
152,030
122,482
47,379
75,103
59,830
398,722
61,371
156,497
123,775
48,112
75,663
57,080
11 N e g o t i a b l e a n d r e a d i l y t r a n s f e r a b l e
12 O u t s t a n d i n g c o l l e c t i o n s a n d o t h e r
13 MEMO: C u s t o m e r l i a b i l i t y o n
D o l l a r d e p o s i t s in b a n k s a b r o a d , reported by nonbanking business ent e r p r i s e s in t h e U n i t e d S t a t e s 4 . . . .
1. U.S. banks:
includes amounts due from o w n foreign branches and foreign
subsidiaries c o n s o l i d a t e d in " C o n s o l i d a t e d R e p o r t o f C o n d i t i o n " filed w i t h b a n k
r e g u l a t o r y a g e n c i e s . Agencies,
branches,
and majority-owned
subsidiaries
of
foreign
banks: p r i n c i p a l l y a m o u n t s d u e f r o m h e a d o f f i c e o r p a r e n t f o r e i g n b a n k ,
and foreign branches, agencies, or w h o l l y o w n e d subsidiaries of head office or
parent foreign bank.
2. A s s e t s o w n e d b y c u s t o m e r s o f t h e r e p o r t i n g b a n k l o c a t e d i n t h e U n i t e d
States that represent c l a i m s o n f o r e i g n e r s h e l d by reporting b a n k s for the a c c o u n t
o f their d o m e s t i c c u s t o m e r s .
3. P r i n c i p a l l y n e g o t i a b l e t i m e c e r t i f i c a t e s o f d e p o s i t a n d b a n k e r s a c c e p t a n c e s .
3.20
44,615'
44,201'
42,774'
43,931'
39,924
41,667
n.a.
4. Includes d e m a n d and time d e p o s i t s and negotiable and n o n n e g o t i a b l e
certificates o f d e p o s i t d e n o m i n a t e d in U . S . dollars i s s u e d b y b a n k s a b r o a d . F o r
d e s c r i p t i o n o f c h a n g e s in d a t a r e p o r t e d b y n o n b a n k s , s e e J u l y 1 9 7 9 B U L L E T I N ,
p. 550.
• L i a b i l i t i e s a n d c l a i m s o f b a n k s in t h e U n i t e d S t a t e s w e r e i n c r e a s e d ,
b e g i n n i n g in D e c e m b e r 1981, b y the shift f r o m f o r e i g n b r a n c h e s t o international
b a n k i n g f a c i l i t i e s in t h e U n i t e d S t a t e s o f l i a b i l i t i e s t o , a n d c l a i m s o n , f o r e i g n
residents.
NOTE. B e g i n n i n g A p r i l 1 9 7 8 , d a t a f o r b a n k s ' o w n c l a i m s a r e g i v e n o n a m o n t h l y
basis, but the data for claims of banks' o w n d o m e s t i c c u s t o m e r s are available o n 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
1984
Maturity; by borrower and area
1981A
1982
1983
Mar.
June
Sept.
Dec.'
1
Total
154,590
228,150
243,715
238,819
249,646
240,674
243,049
2
3
4
5
6
7
By
borrower
Maturity of 1 year or less1
Foreign public borrowers
All other foreigners
Maturity of o v e r 1 year1
Foreign public borrowers
All o t h e r foreigners
116,394
15,142
101,252
38,197
15,589
22,608
173,917
21,256
152,661
54,233
23,137
31,095
176,158
24,039
152,120
67,557
32,521
35,036
163,567
20,453
143,114
75,252
36,333
38,919
172,144
21,018
151,126
77,501
37,797
39,704
162,914
21,059
141,854
77,760
38,410
39,350
165,200
22,076
143,124
77,849
39,620
38,229
28,130
4,662
48,717
31,485
2,457
943
50,500
7,642
73,291
37,578
3,680
1,226
56,117
6,211
73,660
34,403
4,199
1,569
54,393
6,509
65,658
31,206
4,472
1,330
59,666
6,925
65,109
34,002
4,790
1,652
56,769
5,8%
61,479
32,252
4,798
1,720
58,170
5,978
60,692
33,450
4,442
2,468
8,100
1,808
25,209
1,907
900
272
11,636
1,931
35,247
3,185
1,494
740
13,576
1,857
43,888
4,850
2,286
1,101
13,334
2,038
51,233
5,150
2,291
1,206
12,827
2,203
54,271
5,098
1,865
1,237
11,269
1,801
56,577
5,106
1,857
1,150
9,590
1,890
57,834
5,386
2,033
1,116
8
9
10
11
12
13
By
area
Maturity of 1 year or less1
Europe
Canada
Latin America and Caribbean
Africa
All other2
Maturity of over 1 year1
14
Europe
15
Canada
Latin America and Caribbean
16
17
18
Africa
19
All other2
• L i a b i l i t i e s a n d c l a i m s o f b a n k s in t h e U n i t e d S t a t e s w e r e i n c r e a s e d ,
b e g i n n i n g in D e c e m b e r 1 9 8 1 , b y t h e s h i f t f r o m f o r e i g n b r a n c h e s t o i n t e r n a t i o n a l
b a n k i n g f a c i l i t i e s in t h e U n i t e d S t a t e s o f l i a b i l i t i e s t o , a n d c l a i m s o n , f o r e i g n
residents.
1. R e m a i n i n g t i m e t o m a t u r i t y ,
2. I n c l u d e s n o n m o n e t a r y i n t e r n a t i o n a l a n d r e g i o n a l o r g a n i z a t i o n s ,
A61
A62 International Statistics • June 1985
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1
3.21
Billions of dollars, end of period
1982
A r e a or c o u n t r y
Total
1980
1983
1984
1981
Dec.
Mar.
June
Sept.
Dec.
Mar.
June 7
Sept.
Dec.P
352.0
415.2
438.7
443.7
439.9
431.0
437.3
434.2
429.2
409.7
407.6
162.1
13.0
14.1
12.1
8.2
4.4
2.9
5.0
67.4
8.4
26.5
175.5
13.3
15.3
12.9
9.6
4.0
3.7
5.5
70.1
10.9
30.2
179.7
13.1
17.1
12.7
10.3
3.6
5.0
5.0
72.1
10.4
30.2
182.5
13.8
17.1
13.4
10.2
4.3
4.3
4.5
73.4
12.5
29.0
177.1
13.3
17.1
12.6
10.5
4.0
4.7
4.8
70.8
10.8
28.5
168.8
12.6
16.2
11.6
9.9
3.6
4.9
4.2
67.8
8.9
29.0
168.0
12.4
16.3
11.3
11.4
3.5
5.1
4.3
65.4
8.3
29.9
166.1
11.0
15.9
11.7
11.2
3.4
5.2
4.3
65.1
8.6
29.8
157.8
10.8
14.3
11.0
11.5
3.0
4.3
4.2
60.2
8.9
29.5
148.1
9.8
14.3
10.0
9.7
3.4
3.5
3.9
57.4
8.1
27.9
147.5
8.8
14.0
9.0
10.1
3.9
3.2
4.0
59.7
7.8
27.1
13 Other d e v e l o p e d countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other W e s t e r n E u r o p e
23
South Africa
24
Australia
21.6
1.9
2.3
1.4
2.8
2.6
.6
4.4
1.5
1.7
1.1
1.3
28.4
1.9
2.3
1.7
2.8
3.1
1.1
6.6
1.4
2.1
2.8
2.5
33.7
1.9
2.4
2.2
3.0
3.3
1.5
7.5
1.4
2.3
3.7
4.4
34.0
2.1
3.3
2.1
2.9
3.3
1.4
7.0
1.5
2.3
3.6
4.6
34.5
2.1
3.4
2.1
2.9
3.4
1.4
7.2
1.4
2.0
3.9
4.5
34.3
1.9
3.3
1.8
2.9
3.2
1.4
7.1
1.5
2.1
4.7
4.4
36.1
1.9
3.4
2.4
2.8
3.3
1.5
7.1
1.7
1.8
4.7
5.5
35.7
2.0
3.4
2.1
3.0
3.2
1.4
7.1
1.9
1.8
4.8
5.2
37.1
2.0
3.1
2.3
3.3
3.2
1.7
7.3
2.0
1.9
4.7
5.7
36.3
1.8
2.9
1.9
3.2
3.2
1.6
6.9
2.0
1.7
5.0
6.2
33.8
1.7
2.2
1.9
2.9
3.0
1.4
6.5
1.9
1.7
4.5
6.1
25 O P E C c o u n t r i e s 2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle E a s t c o u n t r i e s
30
African countries
22.7
2.1
9.1
1.8
6.9
2.8
24.8
2.2
9.9
2.6
7.5
2.5
27.4
2.2
10.5
3.2
8.7
2.8
28.5
2.2
10.4
3.5
9.3
3.0
28.3
2.2
10.4
3.2
9.5
3.0
27.2
2.1
9.8
3.4
9.1
2.8
28.9
2.2
9.9
3.8
10.0
3.0
28.6
2.1
9.7
4.0
9.8
3.0
26.7
2.1
9.5
4.0
8.4
2.7
25.0
2.1
9.2
3.8
7.4
2.5
25.6
2.2
9.3
3.7
8.2
2.3
31 N o n - O P E C d e v e l o p i n g c o u n t r i e s
77.4
96.3
107.1
108.1
108.8
109.8
111.6
112.1
112.7
111.9
112.3
7.9
16.2
3.7
2.6
15.9
1.8
3.9
9.4
19.1
5.8
2.6
21.6
2.0
4.1
8.9
22.9
6.3
3.1
24.5
2.6
4.0
9.0
23.2
6.0
2.9
25.1
2.4
4.2
9.4
22.7
5.8
3.2
25.3
2.6
4.3
9.5
23.1
6.3
3.2
25.9
2.4
4.2
9.5
23.1
6.4
3.2
26.1
2.4
4.2
9.5
25.1
6.5
3.1
25.6
2.3
4.4
9.2
25.4
6.7
3.0
26.0
2.3
4.0
9.1
26.3
7.1
2.9
26.1
2.2
3.9
8.7
26.3
7.0
2.9
25.8
2.2
3.9
1
2 G - 1 0 c o u n t r i e s and S w i t z e r l a n d
3
Belgium-Luxembourg
4
France
5
Germany
6
Italy
1
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan
32
33
34
35
36
37
38
Latin
America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other Latin A m e r i c a
39
40
41
42
43
44
45
46
47
Asia
China
Mainland
Taiwan
India
Israel
K o r e a (South)
Malaysia
Philippines
Thailand
Other A s i a
.2
4.2
.3
1.5
7.1
1.1
5.1
1.6
.6
.2
5.1
.3
2.1
9.4
1.7
6.0
1.5
1.0
.2
5.3
.6
2.3
10.9
2.1
6.3
1.6
1.1
.2
5.1
.7
2.0
10.9
2.5
6.6
1.6
1.4
.2
5.1
.7
2.3
10.9
2.6
6.4
1.8
1.2
.2
5.2
.8
1.7
10.9
2.8
6.2
1.8
1.0
.3
5.3
1.0
1.9
11.3
2.9
6.2
2.2
1.0
.3
4.9
1.0
1.6
11.1
2.8
6.7
2.1
.9
.6
5.3
1.0
1.9
11.2
2.7
6.3
1.9
1.1
.5
5.2
1.1
1.7
10.3
3.0
5.9
1.8
1.0
.7
5.1
1.0
1.8
10.7
2.8
6.0
1.8
1.1
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 3
.8
.7
.2
2.1
1.1
.7
.2
2.3
1.2
.7
.1
2.4
1.1
.8
.1
2.3
1.3
.8
.1
2.2
1.4
.8
.1
2.4
1.5
.8
.1
2.3
1.4
.8
.1
2.2
1.4
.8
.1
1.9
1.2
.8
.1
1.9
1.2
.8
.1
2.1
52 E a s t e r n E u r o p e
53
U.S.S.R
54
Yugoslavia
55
Other
7.4
.4
2.3
4.6
7.8
.6
2.5
4.7
6.2
.3
2.2
3.7
5.7
.3
2.2
3.2
5.8
.4
2.3
3.0
5.3
.2
2.3
2.8
5.3
.2
2.4
2.8
4.9
.2
2.3
2.5
4.9
.2
2.3
2.4
4.5
.2
2.3
2.1
4.5
.1
2.3
2.1
56 Offshore banking c e n t e r s
57
Bahamas
58
Bermuda
59
C a y m a n Islands and other British W e s t Indies
60
N e t h e r l a n d s Antilles
61
Panama4
62
Lebanon
63
Hong Kong
64
Singapore
65
Others 5
47.0
13.7
.6
10.6
2.1
5.4
.2
8.1
5.9
.3
63.7
19.0
.7
12.4
3.2
7.7
.2
11.8
8.7
.1
66.8
19.0
.9
12.9
3.3
7.6
.1
13.9
9.2
.0
68.0
18.6
1.0
12.6
3.1
7.1
.1
15.1
10.4
.0
69.3
20.7
.8
12.7
2.6
6.6
.1
14.5
11.2
.0
68.7
21.6
.8
10.5
4.1
5.7
.1
15.2
10.5
.1
70.5
21.8
.9
12.2
4.2
6.0
.1
15.0
10.3
.0
70.5
24.6
.7
11.2
3.3
6.3
.1
14.4
10.0
.0
73.0
27.3
.7
11.3
3.3
6.6
.1
13.5
10.2
.0
66.5
23.7
1.0
10.7
3.1
5.7
.1
12.7
9.5
.0
66.8
21.6
.9
11.7
3.4
6.8
.1
12.5
9.8
.0
66 M i s c e l l a n e o u s and u n a l l o c a t e d 6
14.0
18.8
17.9
16.9
16.2
16.9
17.0
16.3
17.3
17.3
17.2
1. The banking o f f i c e s c o v e r e d b y t h e s e data are the U . S . offices and foreign
branches o f U . S . - o w n e d b a n k s and o f U . S . subsidiaries o f f o r e i g n - o w n e d banks.
Offices not c o v e r e d include (1) U . S . a g e n c i e s and b r a n c h e s o f foreign b a n k s , and
(2) foreign subsidiaries o f U . S . b a n k s . T o minimize duplication, the data are
adjusted t o e x c l u d e the c l a i m s o n foreign b r a n c h e s held by a U . S . office or another
foreign branch o f the s a m e banking institution. The data in this table c o m b i n e
foreign branch c l a i m s in table 3 . 1 4 (the s u m o f lines 7 through 10) with the claims
of U . S . offices in table 3.18 ( e x c l u d i n g t h o s e held by a g e n c i e s and b r a n c h e s o f
foreign banks and t h o s e constituting c l a i m s o n o w n foreign branches).
2. B e s i d e s the Organization o f P e t r o l e u m Exporting Countries s h o w n individually, this group i n c l u d e s other m e m b e r s o f O P E C (Algeria, G a b o n , Iran, Iraq,
K u w a i t , L i b y a , Nigeria, Qatar, Saudi Arabia, and U n i t e d A r a b E m i r a t e s ) a s well
as Bahrain and O m a n (not formally m e m b e r s o f O P E C ) .
3. E x c l u d e s Liberia.
4. I n c l u d e s Canal Z o n e beginning D e c e m b e r 1979.
5. Foreign branch claims o n l y .
6. I n c l u d e s N e w Zealand, Liberia, and international and regional organizations.
7. Beginning with June 1984 data, reported c l a i m s held b y f o r e i g n b r a n c h e s
have b e e n r e d u c e d b y an increase in the reporting threshold f o r " s h e l l " b r a n c h e s
from $50 million t o $150 million equivalent in total a s s e t s , t h e threshold n o w
applicable to all reporting b r a n c h e s .
Nonbank-Reported Data
3.22
A63
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States1
Millions of dollars, end of period
1984
1983
T y p e , and area or country
980
1982
1981
Dec.
Sept.
Mar.
Sept.
June
1 Total
29,434
28,618
27,512
26,325
25,197'
29,481'
34,013
30,734
2 P a y a b l e in d o l l a r s
3 P a y a b l e in f o r e i g n c u r r e n c i e s
25,689
3,745
24,909
3,709
24,280
3,232
23,546
2,780
22,176'
3,020'
26,243'
3,237'
30,815
3,198'
27,923
2,811
By
type
4 Financial liabilities
5
P a y a b l e in d o l l a r s
6
P a y a b l e in f o r e i g n c u r r e n c i e s
11,330
8,528
2,802
12,157
9,499
2,658
11,066
8,858
2,208
10,900
9,025
1,875
10,423'
8,644'
1,779'
14,177'
12,159'
2,018'
18,339'
16,297
2,043
15,879
14,082
1,797
7 C o m m e r c i a l liabilities
8
Trade payables
9
A d v a n c e receipts and o t h e r liabilities . . .
18,104
12,201
5,903
16,461
10,818
5,643
16,446
9,438
7,008
15,425
8,567
6,858
14,774'
7,765'
7,009'
15,304'
7,893'
7,411'
15,674
7,897
7,776
14,855
6,921
7,934
17,161
943
15,409
1,052
15,423
1,023
14,521
904
13,533'
1,241'
14,085'
1,219'
14,518
1,155
13,841
1,014
6,481
479
327
582
681
354
3,923
6,825
471
709
491
748
715
3,565
6,501
505
783
467
711
792
3,102
6,014
379
785
449
730
500
3,014
5,691'
302
843'
492'
581
486
2,839
7,087'
428
956'
514'
527
641
3,790
7,230
359
900
561
583
563
4,013
6,679
428
910
521
595
514
3,463
964
963
746
788
764'
795'
735
825
3,136
964
1
23
1,452
99
81
3,356
1,279
7
22
1,241
102
98
2,751
904
14
28
1,027
121
114
2,737
784
13
32
1,095
185
117
2,607'
751
13
32
1,018
213'
124
4,912'
1,419
51
37
2,635
243
121
8,888
3,603
13
25
4,457
237
124
6,780
2,606
11
33
3,250
260
130
723
644
38
976
792
75
1,039
715
169
1,327
896
201
1,332'
898'
170
1,355
947
170
1,462'
1,013'
180
1,566
1,085
144
11
1
14
0
17
0
19
0
19
0
19
0
16
0
16
1
15
24
12
15
10
9
9
14
4,402
90
582
679
219
499
1,209
3,770
71
573
545
220
424
880
3,831
52
598
468
346
367
1,027
3,633
47
523
472
243
460
967
3,245
62
437
427
268
241
732
3,567
40
488
417
259
477
847
3,409
45
525
501
265
246
794
3,967
34
430
552
238
417
1,133
10
11
12
13
14
15
16
17
18
19
P a y a b l e in d o l l a r s
P a y a b l e in f o r e i g n c u r r e n c i e s
By area or
country
F i n a n c i a l liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British W e s t Indies
Mexico
Venezuela
27
28
29
Asia
Japan
Middle East oil-exporting c o u n t r i e s 2 . .
30
Africa
31
32
33
34
35
36
37
38
39
Oil-exporting countries3
All o t h e r 4
C o m m e r c i a l liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
888
897
1,495
1,418
1,841
1,776
1,840
1,923
1,300
8
75
111
35
367
319
1,044
2
67
67
2
340
276
1,570
16
117
60
32
436
642
1,508
1
77
48
14
512
539
1,473'
1
67
44
6
585
432'
1,807'
14
158
68
33
682
56C
1,705
17
124
31
5
568
630
1,758
1
110
68
8
641
628
10,242
802
8,098
9,384
1,094
7,008
8,144
1,226
5,503
7,638
1,305
4,817
6,741
1,247
4,178
6,620
1,291
3,735
6,989
1,235
4,190
5,554
1,388
2,361
Africa
Oil-exporting countries3
817
517
703
344
753
277
628
231
553
167
539
243
684
217
587
251
All o t h e r 4
456
664
651
600
921'
995'
1,046
1,067
40
Canada
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British W e s t Indies
Mexico
Venezuela
48
49
50
Asia
Japan
M i d d l e E a s t o i l - e x p o r t i n g c o u n t r i e s 2 5.
51
52
53
1. F o r a d e s c r i p t i o n o f t h e c h a n g e s in t h e I n t e r n a t i o n a l S t a t i s t i c s t a b l e s , s e e
July 1979 BULLETIN, p. 5 5 0 .
2. C o m p r i s e s B a h r a i n , I r a n , Iraq, K u w a i t , O m a n , Q a t a r , S a u d i A r a b i a , a n d
United Arab Emirates (Trucial States).
3. C o m p r i s e s Algeria, G a b o n , L i b y a , and N i g e r i a .
4. Includes n o n m o n e t a r y international and regional organizations.
5. R e v i s i o n s include a reclassification o f transactions, w h i c h a l s o affects the
totals for A s i a and the grand totals.
A64 International Statistics • June 1985
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
United States1
Reported by Nonbanking Business Enterprises in the
Millions of dollars, end of period
1983
T y p e , and area or country
1980
1981
1984
1982
Sept.
Mar.
Dec.
June
Sept.
1 Total
34,482
36,185
28,725
32,934
34,932'
33,645'
31,740
30,078
2 P a y a b l e in d o l l a r s
3 P a y a b l e in f o r e i g n c u r r e n c i e s
31,528
2,955
32,582
3,603
26,085
2,640
30,029
2,905
31,842'
3,09c
30,755'
2,89C
28,77C
2,97C
27,286
2,792
19,763
14,166
13,381
785
5,597
3,914
1,683
21,142
15,081
14,456
625
6,061
3,599
2,462
17,684
13,058
12,628
430
4,626
2,979
1,647
22,038
16,907
16,463
445
5,130
3,279
1,851
23,801'
18,356'
17,859'
497
5,445'
3,489'
1,956'
22,781'
17,486'
17,057'
429'
5,296'
3,506<1,79C
21,292'
16,124'
15,614'
510
5,168'
3,407'
1,761'
19,794
15,014
14,574
439
4,781
3,088
1,693
11 C o m m e r c i a l c l a i m s
12
Trade receivables
13
A d v a n c e p a y m e n t s and other claims
14,720
13,960
759
15,043
14,007
1,036
11,041
9,994
1,047
10,896
9,562
1,334
11,131
9,721
1,410
10,864'
9,540
1,323'
10,448
9,105
1,343
10,283
8,867
1,416
14
15
14,233
487
14,527
516
10,478
563
10,287
609
10,494
637
10,193'
671
9,749
699
9,624
659
6,069
145
298
230
51
54
4,987
4,596
43
285
224
50
117
3,546
4,873
15
134
178
97
107
4,064
6,232
25
135
161
89
34
5,577
6,434'
37
15C
159
71
38
5,767'
6,252'
30
171'
148
57
90
5,548'
6,364'
37
151
161
158
61
5,543'
5,569
15
146
187
62
64
4,863
4
5
6
7
8
9
10
16
17
18
19
20
21
22
By
type
Financial claims
Deposits
P a y a b l e in d o l l a r s
P a y a b l e in f o r e i g n c u r r e n c i e s
O t h e r financial c l a i m s
P a y a b l e in d o l l a r s
P a y a b l e in f o r e i g n c u r r e n c i e s
Payable in dollars
P a y a b l e in f o r e i g n c u r r e n c i e s
By area or
country
Financial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
5,036
6,755
4,377
5,244
6,166'
5,665'
5,18C
4,419
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British W e s t Indies
Mexico
Venezuela
7,811
3,477
135
96
2,755
208
137
8,812
3,650
18
30
3,971
313
148
7,546
3,279
32
62
3,255
274
139
9,500
3,829
62
49
4,457
315
137
10,144'
4,745
96
53
4,163'
291
134
9,823'
3,927'
3
87
4,903'
279
130
8,469'
3,213'
5
83
4,348'
230
124
8,633
3,255
5
84
4,423
232
128
31
32
33
Asia
Japan
Middle East oil-exporting countries2
607
189
20
758
366
37
698
153
15
764
257
8
764
297
4
753
309
7
963
307
8
900
371
7
34
35
Africa
Oil-exporting countries3
208
26
173
46
158
48
151
45
147
55
144
42
158
35
160
37
32
48
31
148
145
145
158
113
5,544
233
1,129
599
318
354
929
5,405
234
776
561
299
431
985
3,826
151
474
357
350
360
811
3,394
116
486
382
282
292
738
3,670
135
459
348
334
317
809
3,555
142
408
443
306
250
812
3,563
128
410
367
303
289
888
36
37
38
39
40
41
42
43
All other*
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
3,61C
173
413
363
31C
336
787
44
Canada
914
967
633
792
829
1,061
933
1,024
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British W e s t Indies
Mexico
Venezuela
3,766
21
108
861
34
1,102
410
3,479
12
223
668
12
1,022
424
2,526
21
261
258
12
775
351
2,870
15
246
611
12
898
282
2,695
8
190
493
7
884
272
2,419
8
216
357
7
745
268
2,042
4
89
310
8
577
241
1,886
14
88
219
10
509
242
52
53
54
Asia
Japan
Middle East oil-exporting countries2
3,522
1,052
825
3,959
1,245
905
3,050
1,047
751
2,934
1,033
719
3,063
1,114
737
2,997
1,186
701
3,085
1,178
710
2,879
1,087
702
55
56
Africa
Oil-exporting countries3
653
153
772
152
588
140
562
131
588
139
497
132
536
128
594
135
321
461
417
344
286
280
297
338
57
All other
4
1. F o r a d e s c r i p t i o n o f t h e c h a n g e s in t h e I n t e r n a t i o n a l S t a t i s t i c s t a b l e s , s e e
J u l y 1979 BULLETIN, p . 5 5 0 .
2. C o m p r i s e s B a h r a i n , I r a n , I r a q , K u w a i t , O m a n , Q a t a r , S a u d i A r a b i a , a n d
United A r a b Emirates (Trucial States).
3. C o m p r i s e s A l g e r i a , G a b o n , L i b y a , a n d N i g e r i a .
4. Includes n o n m o n e t a r y international and regional organizations.
Securities Holdings and Transactions
3.24
A65
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1984
1985
Transactions, and area or country
1985
1984
1983
Jan.Feb.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb."
U . S . corporate securities
STOCKS
69,770
64,360
60,462'
63,394
12,107
12,828
7,255
7,399
4,052
4,892
4,657
5,398
4,838
4,752
4,487'
5,049
5,005
5,701
7,102
7,127
3 N e t p u r c h a s e s , o r s a l e s (—)
5,410
—2,932''
-721
-144
-840
-741
86
-562'
-696
-26
4 Foreign countries
5,312
-3,047'
-734
-290
-909
-752
74
-461'
-713
-21
3,979
-97
1,045
-109
1,325
1,799
1,151
529
-808
395
42
24
-2,992
-405
-50
-315
-1,490
-664
1,673
493
-1,998
-372'
-23
171
-770
-60
-243
-151
-292
-51
215
288
-153
-363
-10
59
-410
-28
-125
-19
-358
146
129
213
-214
-57
-5
54
-690
-67
-63
-66
-335
-131
149
9
-207
-160
-6
-3
-529
-37
-10
-47
-130
-251
150
-89
-270
-92
-8
87
-96
-46
11
-15
-34
11
47
30
-12
74
-8
39
-359
-54
-105
-29
-249
91
134
67
-196
-91'
-6
-11
-558
-19
-134
-44
-159
-178
46
103
-52
-264
-7
19
-212
-41
-109
-107
-133
127
169
185
-101
-99
-2
40
98
115
12
147
69
11
11
2,885
2,030
3,356
2,035
6,994
3,060
4,899
2,556
6,403'
2,900'
1 Foreign purchases
2 Foreign sales
5
6
7
8
9
10
11
12
13
14
15
16
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin A m e r i c a and Caribbean
Middle East1
Other Asia
Africa
Other countries
17 N o n m o n e t a r y international a n d
regional o r g a n i z a t i o n s
-101
17
-5
5,937
3,106
8,220
3,701
BONDS 2
24,000
23,097
39,198'
26,029'
14,158
6,807
20 N e t p u r c h a s e s , o r sales ( - )
903
13,169'
7,351
855
1,321
3,934
2,342
3,503'
2,831
4,520
21 F o r e i g n c o u n t r i e s
888
12,872'
7,274
902
1,278
3,954
2,130
3,527'
2,835
4,439
909
-89
344
51
583
434
123
100
-1,161
865
0
52
11,693'
207
1,731'
93
644
8,421'
-71
390
-1,011
1,862
1
9
6,780
38
-87
54
327
6,459
49
87
-207
477
0
89
502
17
181
16
49
311
54
76
1
265
1
3
1,004
8
19
2
9
922
3
64
-19
223
1
3
3,956
143
606
22
253
2,860
-3
42
-232
192
0
0
1,950
-11
139
-1
159
1,599
13
44
-45
169
-2
2
3,338'
24
184'
15
276
2,776'
14
78
-179
276
1
0
2,635
55
67
9
12
2,441
59
90
-123
140
0
35
4,144
-17
-153
44
315
4,018
-11
-2
-84
337
0
54
43
-20
213
-24
-4
81
18 F o r e i g n p u r c h a s e s
19 F o r e i g n s a l e s
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 East1
Other Asia
Africa
Other countries
34 N o n m o n e t a r y i n t e r n a t i o n a l a n d
regional o r g a n i z a t i o n s
15
297
77
-48
Foreign securities
35 S t o c k s , n e t p u r c h a s e s , or s a l e s ( - )
36
Foreign purchases
37
Foreign sales
-3,765
13,281
17,046
-1,074
14,584
15,658
-1,429
2,820
4,249
-489
1,284
1,773
-340
921
1,261
-318
1,333
1,651
-177
1,147
1,324
-221
1,169
1,390
-764
1,160
1,924
-666
1,659
2,325
38 B o n d s , n e t p u r c h a s e s , o r s a l e s ( - )
39
Foreign purchases
40
Foreign sales
-3,239
36,333
39,572
-3,586'
57,335'
60,921'
349
10,675
10,327
-287
5,770
6,057
-481
4,122
4,604
-1,187
4,527
5,714
-231
6,601
6,832
-1,159'
5,134'
6,293'
168
5,383
5,216
181
5,292
5,111
41 N e t p u r c h a s e s , or sales (—), o f s t o c k s a n d b o n d s . . . .
-7,004
-4,660'
-1,081
-777
-821
-1,505
-408
— 1,379''
-596
-485
42
43
44
45
46
47
48
49
-6,559
-5,492
-1,328
1,120
-855
141
-144
-4,271'
-8,532'
413
2,474
1,345'
-107
137
-1,510
-839
-346
149
-650
-7
183
-613
-602
-7
127
-136
11
-5
-884
-962
-198
28
169
-14
92
-1,470
-1,574
-68
217
-30
-19
6
-561
-707
-23
207
88
-16
-110
-671'
-1,086'
254
104
-115'
3
169
-725
-730
75
210
-395
-4
120
-785
-109
-422
-60
-255
-3
64
429
-163
64
-36
153
129
300
Foreign countries
Europe
Canada
Latin America and Caribbean
Asia
Africa
Other countries
Nonmonetary international and
regional o r g a n i z a t i o n s
-445
-389
1. C o m p r i s e s o i l - e x p o r t i n g c o u n t r i e s a s f o l l o w s : B a h r a i n , Iran, Iraq, K u w a i t ,
O m a n , Qatar, S a u d i A r a b i a , a n d U n i t e d A r a b E m i r a t e s (Trucial S t a t e s ) .
2. I n c l u d e s state a n d l o c a l g o v e r n m e n t s e c u r i t i e s , a n d s e c u r i t i e s o f U . S .
government agencies and corporations. A l s o includes issues o f new debt securi-
-709
ties sold abroad by U . S . corporations organized to
abroad.
finance
direct i n v e s t m e n t s
A66 International Statistics • June 1985
3.25
MARKETABLE U.S. TREASURY BONDS AND NOTES
Foreign Holdings and Transactions
Millions of dollars
1985
C o u n t r y or a r e a
1983
1984
1985
1984
Jan.Feb.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
T r a n s a c t i o n s , n e t p u r c h a s e s o r s a l e s ( - ) during p e r i o d
1 Estimated total2
2 Foreign countries
2
3 Europe2
Belgium-Luxembourg
4
5
Germany2
6
Netherlands
Sweden
7
8
Switzerland2
9
United Kingdom
10
Other Western Europe
11
Eastern Europe
12 C a n a d a
13
14
15
16
17
18
19
20
Latin America and Caribbean
Venezuela
Other Latin A m e r i c a and Caribbean
Netherlands Antilles
Asia
Japan
Africa
All o t h e r
21 N o n m o n e t a r y i n t e r n a t i o n a l a n d r e g i o n a l o r g a n i z a t i o n s
22
International
23
Latin American regional
MEMO
24 Foreign countries2
25
Official i n s t i t u t i o n s
26
Other foreign2
27
28
Oil-exporting countries
Middle East3
Africa4
3,693
21,387
3,162
16,407
6,5%
-3,799
2,931
2,197
7,508
2,312
2,321
5,962
5,576
-1,736
6,226
-431
2,450
375
170
-421
1,966
2,118
0
699
11,014
289
2,958
454
46
635
5,175
1,458
0
1,526
1,092
2,293
5,066
3,797
2,165
451
122
-249
-60
140
323
77
98
0
-324
3,990
33
1,036
13
-52
67
2,857
35
0
231
-718
20
-747
-6
77
99
-313
153
0
288
795
27
-39
458
-1
-172
742
-219
0
237
776
41
36
-7
1
-288
244
748
0
193
1,300
46
336
16
-88
26
716
248
0
249
532
104
-120
-71
150
-35
419
86
0
-92
-81
18
-129
11
-10
358
-342
12
0
-231
-212
-124
60
-149
-3,535
2,315
3
-17
1,413
14
528
871
2,376
6,062
-67
145
886
-6
71
820
4,819
1,137
3
127
313
1
231
80
1,000
529
-100
142
165
3
92
69
-1,475
-18
27
-23
320
1
61
258
-302
851
-1
43
965
7
57
902
369
1,287
-5
-5
380
-10
213
177
3,218
1,585
2
-83
149
5
-2
146
3,093
578
2
113
737
-11
73
674
1,726
559
1
14
535
218
0
4,982
4,612
0
-1,331
-1,171
1
1,020
1,099
0
-2,063
-2,149
0
1,839
1,651
0
-96
-188
0
2,442
2,361
0
-1,485
-1,675
0
154
504
1
3,162
779
2,382
16,407
477
15,930
5,962
3,850
2,113
5,576
1,366
4,210
-1,736
-1,968
232
1,092
-823
1,915
2,293
-602
2,895
5,066
1,919
3,147
3,797
2,527
1,270
2,165
1,322
843
-5,419
-1
-6,277
-101
-345
0
-411
-100
-144
0
-983
0
-1,284
0
-200
0
27
0
-372
0
1. E s t i m a t e d official a n d p r i v a t e t r a n s a c t i o n s in m a r k e t a b l e U . S . T r e a s u r y
s e c u r i t i e s w i t h a n original m a t u r i t y o f m o r e t h a n 1 y e a r . D a t a are b a s e d o n
monthly transactions reports. E x c l u d e s nonmarketable U . S . Treasury bonds and
n o t e s h e l d b y official i n s t i t u t i o n s o f f o r e i g n c o u n t r i e s .
2. I n c l u d e s U . S . T r e a s u r y n o t e s p u b l i c l y i s s u e d t o p r i v a t e f o r e i g n r e s i d e n t s
d e n o m i n a t e d in f o r e i g n c u r r e n c i e s .
4,633
3. C o m p r i s e s B a h r a i n , Iran, Iraq, K u w a i t , O m a n , Q a t a r , S a u d i A r a b i a , a n d
U n i t e d A r a b E m i r a t e s (Trucial S t a t e s ) .
4. C o m p r i s e s A l g e r i a , G a b o n , L i b y a , a n d N i g e r i a ,
Interest and Exchange Rates
3.26
A67
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Country
Country
Percent
4.5
11.0
49.0
10.65
7.0
Austria..
Belgium.
Brazil...
Canada..
Denmark
Percent
Month
effective
June
Feb.
Mar.
Mar.
Oct.
1984
1984
1981
1985
1983
France1
Germany, Fed. Rep. of
Italy
Japan
Netherlands
1. A s o f t h e e n d o f F e b r u a r y 1981, t h e r a t e i s that at w h i c h t h e B a n k o f F r a n c e
d i s c o u n t s T r e a s u r y b i l l s f o r 7 t o 10 d a y s .
2. M i n i m u m l e n d i n g r a t e s u s p e n d e d a s o f A u g . 2 0 , 1981.
NOTE. R a t e s s h o w n are m a i n l y t h o s e at w h i c h t h e c e n t r a l b a n k e i t h e r d i s c o u n t s
3.27
R a t e o n M a r . 3 1 , 1985
R a t e o n M a r . 3 1 , 1985
R a t e o n M a r . 3 1 , 1985
Country
10.50
4.5
15.5
5.0
5.5
Feb.
June
Jan.
Oct.
Feb.
1985
1984
1985
1983
1985
Month
effective
Percent
Month
effective
8.0
4.0
Norway
Switzerland
United Kingdom2.
Venezuela
June 1979
M a r . 1983
M a y 1983
or m a k e s a d v a n c e s against eligible c o m m e r c i a l paper and/or g o v e r n m e n t c o m m e r cial b a n k s o r b r o k e r s . F o r c o u n t r i e s w i t h m o r e t h a n o n e r a t e a p p l i c a b l e t o s u c h
d i s c o u n t s o r a d v a n c e s , t h e r a t e s h o w n is t h e o n e at w h i c h it i s u n d e r s t o o d t h e
c e n t r a l b a n k t r a n s a c t s t h e l a r g e s t p r o p o r t i o n o f its c r e d i t o p e r a t i o n s .
FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1985
1984
Country, or type
1
7
3
4
5
Eurodollars
United Kingdom
Canada
Germany
Switzerland
6 Netherlands
7
8
9
10 J a p a n
1982
1983
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
12.24
12.21
14.38
8.81
5.04
9.57
10.06
9.48
5.73
4.11
10.75
9.91
11.29
5.96
4.35
11.67
10.79
12.20
5.81
5.04
10.77
10.60
11.99
6.06
5.23
9.50
9.87
11.09
5.92
5.03
8.90
9.74
10.41
5.81
4.96
8.37
11.63
9.70
5.84
5.13
9.05
13.69
10.63
6.13
5.66
9.32
13.52
11.42
6.36
5.77
8.26
14.61
19.99
14.10
6.84
5.58
12.44
18.95
10.51
6.49
6.08
11.66
17.08
11.41
6.32
6.23
11.00
17.28
11.16
6.33
6.16
10.75
17.13
11.00
6.31
5.87
10.54
17.13
10.81
6.32
5.77
10.66
16.86
10.75
6.33
5.87
10.43
15.82
10.75
6.27
6.90
10.60
15.79
10.75
6.29
7.14
10.71
15.82
10.75
6.30
NOTE. R a t e s are f o r 3 - m o n t h i n t e r b a n k l o a n s e x c e p t f o r C a n a d a ,
1984
finance
c o m p a n y paper; B e l g i u m , 3-month Treasury bills; and Japan, G e n s a k i rate.
A68 International Statistics • June 1985
3.28
FOREIGN E X C H A N G E RATES
Currency units per dollar
1984
Country/currency
1982
1983
1985
1984
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Australia/dollar1
Austria/schilling
Belgium/franc
Brazil/cruzeiro
Canada/dollar
China, P.R./yuan
Denmark/krone
101.65
17.060
45.780
179.22
1.2344
1.8978
8.3443
90.14
17.968
51.121
573.27
1.2325
1.9809
9.1483
87.937
20.005
57.749
1841.50
1.2953
2.3308
10.354
83.64
21.557
62.048
2453.64
1.3189
2.6488
11.090
85.88
21.075
60.475
2734.16
1.3168
2.6785
10.824
84.00
21.802
62.380
3008.55
1.3201
2.7953
11.126
81.51
22.267
63.455
3346.67
1.3240
2.8160
11.330
73.74
23.190
66.310
3768.17
1.3547
2.8347
11.807
69.70
23.247
66.308
4158.19
1.3840
2.8533
11.797
8
9
10
11
12
13
14
15
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/pound1
Israel/shekel
4.8086
6.5793
2.428
66.872
6.0697
9.4846
142.05
24.407
5.5636
7.6203
2.5539
87.895
7.2569
10.1040
124.81
55.865
6.0007
8.7355
2.8454
112.73
7.8188
11.348
108.64
n.a.
6.3726
9.4108
3.0678
126.06
7.8242
12.027
100.85
n.a.
6.2653
9.1981
2.9985
123.63
7.8235
12.078
103.41
n.a.
6.4563
9.5083
3.1044
127.26
7.8287
12.293
100.37
n.a.
6.6368
9.7036
3.1706
129.38
7.8110
12.612
98.23
n.a.
6.8616
10.093
3.3025
134.73
7.8017
12.922
94.23
n.a.
6.8464
10.078
3.2982
140.62
7.8009
12.861
94.58
n.a.
16
17
18
19
20
21
22
23
24
Italy/lira
Japan/yen
Malaysia/ringgit
Mexico/peso
Netherlands/guilder
N e w Zealand/dollar1
Norway/krone
Philippines/peso
Portugal/escudo
1354.00
249.06
2.3395
72.990
2.6719
75.101
6.4567
8.5324
80.101
1519.30
237.55
2.3204
155.01
2.8543
66.790
7.3012
11.0940
111.610
1756.10
237.45
2.3448
192.31
3.2083
57.837
8.1596
n.a.
147.70
1898.98
246.75
2.4076
203.33
3.4597
48.614
8.8721
n.a.
163.36
1863.05
243.63
2.4300
210.79
3.3817
49.278
8.7175
n.a.
163.10
1912.52
247.%
2.4164
219.56
3.5035
48.260
8.9805
n.a.
167.31
1948.76
254.18
2.4804
227.56
3.5819
47.040
9.1765
n.a.
172.56
2042.00
260.48
2.5513
236.06
3.7387
45.223
9.4695
n.a.
183.24
2078.50
257.92
2.5734
246.15
3.7290
45.276
9.4608
n.a.
183.98
25
26
27
28
29
30
31
32
33
34
35
Singapore/dollar
South Africa/rand1
South Korea/won
Spain/peseta
Sri L a n k a / r u p e e
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound1
Venezuela/bolivar
2.1406
92.297
731.93
110.09
20.756
6.2838
2.0327
n.a.
23.014
174.80
4.2981
2.1136
89.85
776.04
143.500
23.510
7.6717
2.1006
n.a.
22.991
151.59
10.6840
2.1325
69.534
807.91
160.78
25.428
8.2706
2.3500
39.633
23.582
133.66
n.a.
2.1667
56.54
820.03
172.15
25.906
8.6887
2.5245
39.226
23.020
121.%
n.a.
2.1554
55.47
818.89
168.10
26.075
8.5957
2.4700
39.419
26.736
123.92
n.a.
2.1732
52.66
825.73
171.98
26.213
8.8614
2.5602
39.509
27.091
118.61
n.a.
2.2011
46.34
832.16
175.13
26.392
9.0716
2.6590
39.209
27.330
112.71
n.a.
2.2557
50.57
839.16
182.35
26.605
9.3364
2.8045
39.228
27.961
109.31
n.a.
2.2582
50.33
850.71
183.13
26.836
9.4135
2.8033
39.542
28.097
112.53
n.a.
116.57
125.34
138.19
147.56
144.92
149.24
152.83
158.43
158.14
1
2
3
4
5
6
7
MEMO
36 U n i t e d States/dollar2
1. V a l u e in U . S . c e n t s .
2. I n d e x o f w e i g h t e d - a v e r a g e e x c h a n g e v a l u e o f U . S . dollar against currencies
o f o t h e r G - 1 0 c o u n t r i e s p l u s S w i t z e r l a n d . M a r c h 1973 = 100. W e i g h t s are 1 9 7 2 - 7 6
g l o b a l t r a d e o f e a c h o f t h e 10 c o u n t r i e s . S e r i e s r e v i s e d a s o f A u g u s t 1978. F o r
description and back data, s e e " I n d e x o f the W e i g h t e d - A v e r a g e E x c h a n g e Value
o f t h e U . S . D o l l a r : R e v i s i o n " o n p . 7 0 0 o f t h e A u g u s t 1978 BULLETIN.
NOTE. A v e r a g e s o f c e r t i f i e d n o o n b u y i n g r a t e s in N e w Y o r k f o r c a b l e t r a n s f e r s .
D a t a in t h i s t a b l e a l s o a p p e a r i n t h e B o a r d ' s G . 5 ( 4 0 5 ) r e l e a s e . F o r a d d r e s s , s e e
inside front cover.
A69
Guide to Tabular Presentation,
Statistical Releases, and Special Tables
GUIDE TO TABULAR
PRESENTATION
Symbols and Abbreviations
c
e
p
r
*
Corrected
Estimated
Preliminary
Revised (Notation appears on column heading when
about half of the figures in that column are changed.)
Amounts insignificant in terms of the last decimal place
shown in the table (for example, less than 500,000
when the smallest unit given is millions)
0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs
Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable
General Information
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed
issues of U.S. government agencies (the flow of funds figures
also include not fully guaranteed issues) as well as direct
STATISTICAL
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
June 1985
Anticipated schedule of release dates for periodic releases
SPECIAL
Page
A83
TABLES
Published Irregularly, with Latest Bulletin Reference
Assets and liabilities of commercial banks, March 31, 1983
Assets and liabilities of commercial banks, June 30, 1983
Assets and liabilities of commercial banks, September 30, 1983
Assets and liabilities of commercial banks, December 31, 1983
Assets and liabilities of U.S. branches and agencies of foreign banks,
Assets and liabilities of U.S. branches and agencies of foreign banks,
Assets and liabilities of U.S. branches and agencies of foreign banks,
Assets and liabilities of U.S. branches and agencies of foreign banks,
Terms of lending at commercial banks, November 1984
Special tables begin on next page.
December 31, 1983
March 31, 1984
June 30, 1984
September 30, 1984
August
December
March
June
June
November
April
April
June
1983
1983
1984
1984
1984
1984
1985
1985
1985
A70
A68
A68
A66
All
A4
A70
A74
A70
A70 Special Tables • June 1985
4.23
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 4-8, 1985'
A. Commercial and Industrial Loans
Characteristics
Amount
of loans
(thousands
of dollars)
Average
size
(thousands
o f dollars)
Weighted
average
maturity2
Days
L o a n rate ( p e r c e n t )
Weighted
average
"effective 3
Standard
Interquartile
range5
Loans
made under
commitment
(percent)
Participation
loans
(percent)
ALL LOANS
1 Overnight6
»
15,055,130
8,922
9.36
.69
8.98-9.59
74.1
4.1
2 One month and under
F i x e d rate
3
4
F l o a t i n g rate
7,455,435
6,090,143
1,365,292
397
412
341
18
18
19
9.98
9.84
10.57
.56
.65
.32
9.32-10.20
9.25-10.06
9.72-11.03
69.3
66.6
81.7
10.7
10.8
10.2
5 Over one month and under a year
6
F i x e d rate
7
F l o a t i n g rate
7,470,662
4,005,981
3,464,681
64
50
94
138
109
173
11.35
11.13
11.61
.31
.42
.31
9.78-12.52
9.38-12.35
10.87-12.55
63.2
56.5
70.8
5.6
5.4
5.8
3,784,929
1,143,819
2,641,110
176
210
165
*
10.83
9.93
11.22
.12
.67
.15
9.52-11.85
9.05-10.20
10.92-12.13
78.5
81.1
77.4
7.9
11.1
6.5
11 Total short term
33,766,156
213
40
10.10
.33
9.14-10.54
71.1
6.3
12 F i x e d rate ( t h o u s a n d s o f d o l l a r s ) .
13
1-24
14
25-49
15
50-99
16
100-499
17
500-999
18
1000 and o v e r
26,113,902
602,140
293,957
315,844
561,472
251,408
24,089,081
257
7
31
69
154
654
7,668
23
104
112
94
81
40
17
9.77
14.50
13.68
13.63
12.52
10.51
9.48
.49
.23
.35
.41
.63
.22
.12
9.06-9.92
13.38-15.58
13.24-14.65
11.84-15.98
10.92-14.93
9.64-11.07
9.03-9.78
69.8
15.4
13.2
40.0
42.2
64.4
72.9
5.6
.1
.3
.3
4.1
11.4
5.9
19 Floating rate ( t h o u s a n d s o f d o l l a r s ) .
20
1-24
21
25-49
22
50-99
23
100-499
24
500-999
25
1000 a n d o v e r
7,652,254
276,318
293,730
512,086
1,547,981
723,034
4,299,106
134
9
34
62
189
645
3,224
125
154
182
152
155
146
102
11.25
13.14
12.61
12.48
11.93
11.59
10.58
.24
.24
.16
.31
.11
.14
.25
10.08-12.13
12.13-13.88
11.85-13.31
11.57-13.24
11.02-12.55
11.02-12.13
9.54-11.23
75.6
56.7
52.0
65.8
66.9
73.1
83.2
8.6
1.7
1.6
2.2
5.3
7.9
11.6
26 Total long term
4,675,130
152
50
11.10
.36
9.65-12.01
80.9
9.8
27 F i x e d rate ( t h o u s a n d s o f d o l l a r s )
28
1-99
29
100-499
30
500-999
31
1000 a n d o v e r
1,631,773
242,086
98,036
47,493
1,244,157
84
13
123
623
8,704
42
36
27
64
43
11.02
16.29
12.88
11.42
9.84
1.08
1.19
.56
.88
.80
9.18-12.13
14.37-16.08
12.86-13.24
9.75-13.00
9.06-10.10
82.7
41.3
15.3
62.1
96.8
3.9
.1
5.6
23.6
3.8
32 Floating rate (thousands o f dollars)
33
1-99
34
100-499
35
500-999
36
1000 and o v e r
3,043,357
210,147
291,740
190,140
2,351,330
272
23
205
678
5,598
54
42
46
45
57
11.14
12.92
12.12
11.54
10.82
.22
.18
.18
.33
.19
10.06-12.01
12.13-13.24
11.07-12.96
10.92-12.13
9.90-11.60
79.9
32.6
63.7
80.7
86.1
13.0
2.3
9.6
13.6
14.3
4.1
11.8
7.8
9.6
8 Demand7
9
F i x e d rate
10
F l o a t i n g rate
*
*
Months
L o a n rate ( p e r c e n t )
Prime Rate9
Days
Effective
3
Nominal
8
LOANS MADE BELOW PRIME 10
Overnight6
O n e m o n t h and u n d e r
O v e r o n e month and under a year
Demand7
14,842,322
6,328,878
3,347,345
1,567,359
9,981
2,839
461
1,058
17
125
41 Total short term
26,085,904
2,095
4 2 F i x e d rate
4 3 F l o a t i n g rate
23,719,738
2,366,166
2,218
1,346
44 Total long term
2,158,867
908
45 F i x e d rate . . . .
4 6 F l o a t i n g rate . .
1,088,075
1,070,792
739
1,181
37
38
39
40
9.33
9.61
9.67
9.41
8.92
9.20
9.33
9.07
10.50
10.51
10.57
10.51
74.2
71.6
75.7
86.9
22
9.45
9.05
10.51
74.5
6.8
17
89
9.43
9.63
9.03
9.24
10.51
10.54
73.1
89.2
6.0
15.2
46
9.76
9.45
10.66
93.5
7.5
35
56
9.60
9.91
9.41
9.48
10.68
10.63
95.5
91.4
4.6
10.4
*
Months
For notes see end of table.
Financial Markets
4.23
A71
Continued
A. Continued
Characteristics
Amount
of loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
L o a n rate ( p e r c e n t )
Weighted
average
maturity2
Days
Weighted
average
effective3
Standard
Interquartile
range5
Loans
made under
commitment
(percent)
Participation
loans
(percent)
48 LARGE BANKS
1 Overnight6
12,634,640
11,022
*
9.36
.02
8.98-9.62
76.0
4.8
74.7
71.7
89.2
10.8
10.7
11.6
2 One month and under
3
F i x e d rate
4
F l o a t i n g rate
5,717,495
4,717,469
1,000,025
2,435
3,873
885
18
17
18
9.78
9.64
10.40
.02
.05
.22
9.28-10.08
9.25-9.89
9.73-11.02
5 Over one month and under a year
6
F i x e d rate
7
F l o a t i n g rate
3,674,726
2,258,664
1,416,062
393
1,478
181
127
107
160
10.37
9.88
11.16
.09
.11
.05
9.37-11.30
9.31-10.25
10.30-12.13
78.5
73.5
86.4
4.4
5.1
3.5
1,887,515
801,058
1,086,457
393
1,009
271
*
*
10.52
9.66
11.16
.02
.08
.10
9.29-11.30
9.05-9.65
10.92-12.01
86.3
94.8
80.0
9.5
15.7
5.0
8 Demand7
F i x e d rate
9
10
F l o a t i n g rate
*
11 Total short term
23,914,376
1,356
27
9.71
.00
9.06-9.99
76.9
6.6
12 F i x e d rate ( t h o u s a n d s o f d o l l a r s ) .
13
1-24
14
25-49
15
50-99
16
100-499
17
500-999
18
1000 and o v e r
20,247,890
11,330
11,113
16,434
99,237
114,039
19,995,736
4,342
9
34
66
207
649
8,958
18
101
91
76
72
31
17
9.50
13.16
12.03
11.81
11.33
10.38
9.48
.03
.04
.06
.15
.02
.10
.03
9.01-9.80
11.91-14.37
11.63-13.31
11.57-12.75
10.41-12.13
9.55-11.07
9.01-9.80
75.2
48.8
64.6
62.9
77.4
76.4
75.2
6.0
.6
3.1
1.1
5.6
13.4
5.9
19 Floating rate (thousands o f dollars).
20
1-24
21
25-49
22
50-99
23
100-499
24
500-999
25
1000 and o v e r
3,666,486
55,257
75,701
137,389
519,658
309,662
2,568,819
283
11
34
66
196
650
3,899
95
184
187
191
155
139
72
10.88
12.63
12.35
12.19
11.77
11.54
10.48
.11
.01
.06
.05
.04
.05
.11
9.91-11.85
12.01-13.24
11.85-12.96
11.63-12.68
11.02-12.13
11.02-12.13
9.63-11.02
85.9
73.7
73.2
76.1
74.8
77.1
90.4
9.9
2.6
3.1
3.9
5.7
8.6
11.6
26 Total long term
3,223,270
1,293
49
10.46
.05
9.45-11.46
91.2
4.7
27 F i x e d rate ( t h o u s a n d s o f d o l l a r s )
28
1-99
29
100-499
30
500-999
31
1000 and o v e r
1,258,558
8,464
19,856
32,383
1,197,855
1,983
22
229
637
9,976
43
51
45
51
43
9.84
13.51
11.62
10.83
9.76
.20
.08
.49
.36
.22
9.06-10.10
11.91-14.65
11.02-12.86
9.71-11.30
9.06-9.94
95.8
12.4
56.3
86.6
97.3
4.6
1.5
25.6
19.6
3.9
32 Floating rate (thousands o f dollars)
33
1-99
34
100-499
35
500-999
36
1000 a n d o v e r
1,964,712
27,409
119,425
108,245
1,709,632
1,058
30
226
664
6,712
52
38
41
44
54
10.85
12.64
11.83
11.49
10.71
.03
.02
.02
.09
.05
9.90-11.85
12.01-13.24
11.02-12.55
10.92-12.13
9.81-11.46
88.2
65.3
78.0
84.8
89.5
4.8
3.7
9.8
17.5
3.6
76.3
74.3
79.2
94.7
4.8
11.5
5.1
13.2
Months
L o a n rate ( p e r c e n t )
Prime Rate9
Days
Effective3
Nominal8
LOANS MADE BELOW PRIME 1 0
Overnight6
One month and under
Over one month and under a year
Demand7
12,523,809
5,187,426
2,394,759
509,236
11,403
5,364
4,001
3,020
17
113
41 Total short term
21,056,230
7,069
19
4 2 F i x e d rate
43 F l o a t i n g rate
19,563,402
1,492,828
7,898
2,977
16
52
44 Total long term
1,863,649
7,639
43
45 F i x e d rate . . . .
46 F l o a t i n g rate . .
1,020,410
843,239
6,889
8,799
34
54
37
38
39
40
*
8.94
9.19
9.29
9.02
10.50
10.50
10.50
10.50
9.44
9.04
10.50
77.0
6.9
9.43
9.68
9.03
9.29
10.50
10.50
75.6
94.5
6.0
18.0
9.52
9.25
10.50
99.0
4.4
9.33
9.75
9.18
9.33
10.50
10.50
99.4
98.5
4.9
3.7
9.35
9.61
9.63
9.36
Months
For notes see end of table.
A70
4.23
Special Tables • June 1985
Continued
A . Continued
Characteristics
Amount
of loans
(thousands
o f dollars)
Average
size
(thousands
o f dollars)
Weighted
average
maturity2
Days
L o a n rate ( p e r c e n t )
Weighted
average
effective3
Standard
Interquartile
range5
Loans
made under
commitment
(percent)
Participation
loans
(percent)
OTHER BANKS
*
1 Overnight6
2,420,489
4,474
9.33
.69
9.03-9.42
64.3
.3
2 O n e month and under
3
F i x e d rate
F l o a t i n g rate
4
1,737,941
1,372,674
365,267
106
101
127
21
21
22
10.64
10.53
11.06
.56
.64
.24
9.37-11.30
9.37-11.02
9.52-12.14
51.5
49.0
61.2
10.3
11.3
6.5
5 Over one month and under a year
F i x e d rate
6
F l o a t i n g rate
7
3,795,936
1,747,317
2,048,619
35
22
70
149
111
182
12.30
12.74
11.91
.30
.40
.31
10.92-13.65
10.13-14.93
10.98-13.03
48.3
34.5
60.1
6.7
5.9
7.4
8 Demand7
F i x e d rate
9
10
F l o a t i n g rate
1,897,414
342,761
1,554,653
114
74
130
*
*
11.13
10.55
11.26
.12
.67
.12
9.60-12.13
9.01-10.92
10.92-12.13
70.8
49.1
75.6
6.2
.1
7.6
11 Total short term
9,851,780
70
76
11.05
.33
9.28-12.14
57.1
5.7
12 F i x e d rate ( t h o u s a n d s o f d o l l a r s ) .
13
1-24
14
25-49
15
50-99
16
100-499
17
500-999
18
1000 a n d o v e r
5,866,012
590,811
282,845
299,410
462,235
137,368
4,093,345
60
7
30
70
146
658
4,502
41
104
112
94
83
47
19
10.69
14.53
13.74
13.73
12.78
10.61
9.48
.49
.23
.34
.39
.63
.20
.12
9.19-11.30
13.38-15.59
13.24-14.93
12.01-15.98
10.92-14.93
9.66-11.07
9.04-9.69
51.0
14.7
11.2
38.8
34.7
54.5
61.6
4.4
.0
.1
.3
3.8
9.9
5.6
19 Floating rate (thousands o f dollars).
20
1-24
21
25-49
22
50-99
23
100-499
24
500-999
25
1000 a n d o v e r
3,985,767
221,061
218,029
374,696
1,028,323
413,372
1,730,286
91
9
34
61
186
642
2,565
157
146
181
139
155
150
163
11.58
13.27
12.70
12.59
12.01
11.62
10.73
.21
.24
.15
.30
.11
.13
.22
10.92-12.40
12.13-14.37
12.01-13.31
11.57-13.31
11.06-12.68
11.02-12.13
9.52-11.63
66.2
52.4
44.6
62.1
62.9
70.2
72.6
7.5
1.4
1.1
1.5
5.2
7.3
11.7
26 Total long term
1,451,860
51
53
12.52
.36
11.01-13.24
58.0
21.1
373,214
233,622
78,180
15,110
46,302
20
13
110
595
2,024
35
36
23
92
36
15.01
16.39
13.20
12.69
11.87
1.07
1.19
.26
.80
.77
13.24-15.50
14.45-16.08
13.24-13.24
9.98-14.37
10.92-12.94
38.3
42.4
4.9
9.6
83.6
1.5
.1
.5
32.2
.0
1,078,645
182,738
172,314
81,895
641,698
116
22
193
696
3,882
59
42
50
46
68
11.66
12.96
12.32
11.59
11.12
.22
.18
.18
.32
.18
10.92-12.41
12.13-13.24
11.46—13.24
10.92-12.13
10.75-11.85
64.8
27.7
53.8
75.4
77.0
27.9
2.1
9.5
8.5
42.6
*
Months
27 F i x e d rate ( t h o u s a n d s o f d o l l a r s )
28
1-99
29
100-499
30
500-999
31
1000 a n d o v e r
32 Floating rate (thousands o f dollars)
33
1-99
34
100-499
35
500-999
36
1000 a n d o v e r
L o a n rate ( p e r c e n t )
Prime Rate9
Days
LOANS MADE BELOW PRIME 10
Overnight6
One month and under
Over o n e month and under a year
Demand7
„
Nominal
8
*
9.24
9.62
9.78
9.49
8.84
9.21
9.44
9.13
10.50
10.55
10.76
10.54
63.2
59.4
66.7
75.0
.3
13.5
14.7
3.9
39
9.46
9.07
10.56
64.4
6.5
21
177
9.45
9.54
9.05
9.17
10.56
10.60
61.1
80.2
5.6
10.4
62
11.25
10.69
11.65
58.9
27.4
57
64
13.68
10.53
12.87
10.04
13.43
11.12
37.1
65.3
.0
35.5
2,318,513
1,141,453
952,586
617,123
5,964
904
143
529
20
155
41 Total short term
5,029,674
531
4 2 F i x e d rate
43 F l o a t i n g rate
4,156,336
873,338
506
695
295,218
138
51
281
37
38
39
40
Effective
3
Months
44 Total long term
45 F i x e d rate
4 6 F l o a t i n g rate . .
For notes see end of table.
67,664
227,553
Financial Markets
4.23
A73
Continued
B. Construction and Land Development Loans
L o a n rate ( p e r c e n t )
Characteristics
Amount
of loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity
(months)2
Weighted
average
effective3
Standard
error4
Loans
made under
commitment
(percent)
Interquartile
range5
Participation
loans
(percent)
ALL BANKS
$1,535,632
92
8
12.05
.62
10.64-13.24
63.8
15.7
F i x e d rate ( t h o u s a n d s o f d o l l a r s )
1 24
25-49
50-99
100-499
5 0 0 and o v e r
747,253
41,095
57,592
100,331
91,306
456,928
80
8
37
65
118
9,886
6
9
12
4
32
1
12.13
15.54
14.28
14.61
14.59
10.52
.68
.70
.39
.72
1.01
10.42-14.90
14.72-15.51
13.65-14.93
13.60-15.77
14.90-14.90
10.27-10.64
67.2
58.3
0.9
42.7
5.8
93.9
22.5
.0
.0
.0
.4
36.7
8 F l o a t i n g rate ( t h o u s a n d s o f d o l l a r s )
9
1 24
25-49
10
50-99
11
100-499
1?
500 and o v e r
13
788,379
25,345
52,841
26,467
278,228
406,299
108
6
41
67
209
1,854
11
7
11
12
12
10
11.97
13.07
13.02
12.57
11.67
11.94
.24
.21
.18
.11
.29
.37
11.02-12.68
12.55-13.31
12.96-13.24
12.13-13.10
10.92-12.40
11.46-12.68
60.5
87.8
89.8
67.0
39.6
69.0
9.2
2.8
1.8
9.1
5.7
13.0
371,563
114,404
1,049,665
32
225
236
8
14
8
13.33
12.94
11.50
.38
.59
.60
12.19-14.93
12.13-13.80
10.47-12.13
59.1
44.5
67.5
.5
13.5
21.3
1
?
3
4
5
6
7
By type of
construction
14 S i n g l e f a m i l y
IS M u l t i f a m i l y
16 N o n r e s i d e n t i a l
*
48 LARGE BANKS
1
695,920
916
4
11.07
.46
10.46-12.00
89.5
24.4
7 F i x e d rate ( t h o u s a n d s o f d o l l a r s )
3
1 24
4
25 4 9
S
50-99
100-499
6
7
5 0 0 and o v e r
401,266
565
3,826
11
1
7
10.46
14.26
10.27-10.64
13.87-15.60
96.3
61.3
34.2
.0
*
*
*
.21
.37
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
397,721
15,072
1
10.44
.09
10.27-10.64
96.4
34.4
8 F l o a t i n g rate ( t h o u s a n d s o f d o l l a r s )
9
1 24
10
25-49
11
50-99
100-499
1?
500 and o v e r
13
294,654
2,411
3,660
5,016
42,134
241,433
450
10
36
68
260
3,468
8
7
7
9
11
7
11.89
12.75
12.55
12.57
12.45
11.75
.04
.04
.01
.06
.05
.06
11.46-12.13
12.19-13.31
12.13-12.68
12.13-12.96
12.13-12.68
11.46-12.13
80.2
95.3
97.0
81.5
89.6
78.1
11.0
2.0
.0
.0
6.6
12.2
By type of
construction
14 S i n g l e f a m i l y
IS M u l t i f a m i l y
16 N o n r e s i d e n t i a l
66,973
34,903
594,044
265
264
1,585
5
15
3
10.66
12.60
11.02
.21
.48
.45
9.48-12.13
12.13-12.68
10.47-11.73
94.1
59.1
90.7
.0
3.9
28.3
1
839,712
53
13
12.86
.42
11.02-14.17
42.4
8.5
7 F i x e d rate ( t h o u s a n d s o f d o l l a r s )
3
1 24
25 49
4
S
50-99
100-499
6
500 and o v e r
7
345,987
40,530
57,159
100,027
89,063
37
7
37
65
117
13
9
12
4
33
14.06
15.56
14.27
14.61
14.64
.65
.59
.32
.49
.71
13.60-14.93
14.72-15.51
13.65-14.93
13.60-15.77
14.90-14.90
33.4
58.3
.5
42.5
3.4
8.8
.0
.0
.0
.0
*
*
*
*
*
*
8 Floating rate (thousands o f dollars)
9
1 24
10
25-49
11
50-99
100-499
17
500 and o v e r
13
493,725
22,934
48,381
21,451
236,094
164,865
74
6
42
67
202
1,103
13
7
11
12
13
15
12.02
13.10
13.06
12.57
11.53
12.20
.24
.21
.18
.09
.28
.36
10.92-13.03
12.55-13.31
13.24-13.24
12.13-13.18
10.92-12.13
11.55-13.52
48.8
87.0
89.2
63.6
30.7
55.7
8.2
2.9
1.9
11.2
5.6
14.2
By type of
construction
14 S i n g l e f a m i l y
IS M u l t i f a m i l y
16 N o n r e s i d e n t i a l
304,590
79,501
455,621
26
211
112
9
13
17
13.94
13.09
12.11
.32
.35
.39
13.24-15.03
12.13-13.80
10.92-13.37
51.4
38.1
37.2
.7
17.7
12.1
OTHER BANKS
For n o t e s s e e end of table.
*
*
A74 Special Tables • June 1985
4.23
Continued
C. Loans to Farmers"
Size class of loans (thousands)
Characteristics
All s i z e s
$10-24
$1-9
$250
and o v e r
$100-249
$50-99
$25-49
ALL BANKS
1 A m o u n t of loans (thousands o f dollars)
2 Number of loans
3 Weighted average maturity (months)2
4 W e i g h t e d a v e r a g e i n t e r e s t rate ( p e r c e n t ) 3
5
Standard error4
Interquartile r a n g e 5
6
7
8
9
10
11
By purpose
of loan
Feeder livestock
Other livestock
O t h e r current o p e r a t i n g e x p e n s e s
Farm machinery and e q u i p m e n t
Other
Percentage
of amount
of
12 W i t h floating r a t e s
13 M a d e u n d e r c o m m i t m e n t
14
15
16
17
18
$1,185,227
56,474
6.8
$132,846
38,327
6.2
$133,565
9,215
7.6
$138,408
4,120
8.1
$171,334
2,597
11.4
$276,439
1,753
5.8
$332,636
462
4.8
13.49
.49
12.63-14.49
14.06
.30
13.43-14.91
13.77
.51
13.08-14.48
13.94
.28
13.00-14.79
13.72
.27
13.37-14.34
13.65
.37
13.00-14.49
12.72
.77
11.02-15.04
13.79
13.65
13.98
13.43
12.42
13.92
13.79
14.28
14.02
13.26
13.85
13.25
14.05
13.48
13.42
13.70
13.20
14.35
13.83
12.99
12.70
14.45
13.69
13.42
13.57
12.60
14.15
39.0
34.5
23.3
20.6
26.1
26.9
36.3
25.6
17.3
7.0
42.5
8.3
24.9
9.4
11.7
55.2
14.1
9.6
6.4
8.7
51.7
16.1
17.1
$282,920
3,073
5.2
$5,532
1,369
7.1
11.69
.43
10.92-12.55
*
*
14.16
13.18
13.48
11.08
34.6
36.2
26.7
23.1
64.0
55.4
12.2
5.2
52.4
16.3
13.9
7.9
19.7
50.4
11.2
10.7
9.5
38.4
49.6
34.8
37.9
$9,011
604
8.1
$13,277
401
6.3
$19,976
298
6.4
$34,174
224
8.0
$200,950
177
4.4
12.92
.19
12.13-13.65
12.74
.20
12.13-13.31
12.51
.15
11.63-13.24
12.45
.08
11.83-13.10
12.04
.16
11.21-12.75
11.42
.51
10.40-12.13
11.78
12.24
12.46
12.82
11.22
12.05
12.88
12.98
13.13
13.35
12.34
12.54
12.79
12.35
12.11
12.79
12.13
12.32
12.52
11.87
11.59
12.24
12.35
12.98
12.14
12.72
11.93
11.08
90.0
76.7
79.3
69.0
87.4
70.6
91.8
74.1
88.8
79.2
90.8
83.5
90.3
76.0
20.7
7.1
20.7
1.6
49.9
12.7
8.0
57.2
4.1
17.8
14.9
13.9
46.7
18.7
9.8
48.5
30.6
10.3
31.1
43.4
16.4
*
*
*
*
21.6
19.2
19.6
17.2
$902,307
53,401
7.3
127,314
36,958
6.2
$124,554
8,611
7.6
$125,131
3,720
8.3
$151,359
2,299
12.0
$242,265
1,529
5.5
*
14.05
.23
13.45-15.04
14.10
.23
13.43-14.92
13.84
.47
13.16-14.49
14.09
.23
13.25-15.02
13.89
.26
13.45-14.34
13.88
.33
13.42-14.49
*
14.59
14.09
14.18
13.46
13.51
14.03
13.82
14.34
14.03
13.25
14.14
13.93
14.13
13.49
13.46
14.51
13.86
13.12
13.81
23.0
21.2
20.9
18.5
21.7
23.7
30.4
20.5
27.5
30.5
16.3
7.0
49.3
10.3
17.1
9.2
11.9
55.1
14.6
9.3
*
*
52.0
17.1
16.8
52.8
17.6
13.3
*
*
loans
By purpose
of loan
Feeder livestock
Other livestock
O t h e r current o p e r a t i n g e x p e n s e s
Farm machinery and equipment
Other
*
*
19.6
*
48 LARGE B A N K S "
1 A m o u n t of loans (thousands of dollars)
2 Number of loans
3 Weighted average maturity (months)2
4 W e i g h t e d a v e r a g e i n t e r e s t rate ( p e r c e n t ) 3
5
Standard error4
6
Interquartile r a n g e 5
7
8
9
10
11
By purpose
of loan
Feeder livestock
Other livestock
Other current operating e x p e n s e s
Farm machinery and e q u i p m e n t
Other
Percentage
of amount of
12 W i t h floating rates
13 M a d e u n d e r c o m m i t m e n t
14
15
16
17
18
*
*
*
*
*
*
loans
By purpose
of loan
Feeder livestock
Other livestock
Other current operating e x p e n s e s
Farm machinery and equipment
Other
*
*
30.5
14.0
*
62.7
OTHER B A N K S "
1 A m o u n t of loans (thousands o f dollars)
2 Number of loans
3 Weighted average maturity (months)2
4 W e i g h t e d a v e r a g e i n t e r e s t rate ( p e r c e n t ) 3
5
Standard error4
6
Interquartile r a n g e 5
7
8
9
10
11
By purpose
of loan
Feeder livestock
Other livestock
Other current operating e x p e n s e s
Farm machinery and equipment
Other
Percentage
of amount
of
12 W i t h floating r a t e s
13 M a d e u n d e r c o m m i t m e n t
14
15
16
17
18
*
*
13.78
*
*
*
14.32
*
*
*
*
*
*
loans
By purpose
of loan
Feeder livestock
Other livestock
Other current operating e x p e n s e s
Farm machinery and equipment
Other
For notes see following page.
*
*
5.8
11.5
17.7
14.5
*
*
*
*
*
*
53.0
52.3
*
*
*
*
9.5
Financial Markets
A75
N O T E S T O T A B L E 4.23
1. T h e survey o f terms o f bank lending t o b u s i n e s s c o l l e c t s data o n g r o s s loan
e x t e n s i o n s made during the first full b u s i n e s s w e e k in the m i d m o n t h of e a c h
quarter by a sample o f 340 c o m m e r c i a l banks o f all s i z e s . T h e s a m p l e data are
b l o w n up to estimate the lending t e r m s at all insured c o m m e r c i a l banks during that
w e e k . The e s t i m a t e d terms o f bank lending are not i n t e n d e d for u s e in collecting
the terms o f l o a n s e x t e n d e d o v e r the entire quarter or residing in the portfolios o f
t h o s e b a n k s . C o n s t r u c t i o n and land d e v e l o p m e n t l o a n s include both u n s e c u r e d
loans and l o a n s s e c u r e d b y real e s t a t e . T h u s , s o m e o f the c o n s t r u c t i o n and land
d e v e l o p m e n t l o a n s w o u l d b e reported o n the statement o f c o n d i t i o n as real estate
loans and the remainder a s b u s i n e s s loans. T h e survey o f t e r m s o f bank lending to
farmers c o v e r s about 250 b a n k s s e l e c t e d to represent all s i z e s o f b a n k s . Mortgage
loans, purchased l o a n s , foreign l o a n s , and loans o f l e s s than $ 1 , 0 0 0 are e x c l u d e d
from the survey.
A s o f D e c . 31, 1983, a v e r a g e d o m e s t i c a s s e t s o f 48 large b a n k s w e r e $14.3
billion and a s s e t s of the smallest o f t h e s e b a n k s w e r e $ 2 . 9 billion. F o r all insured
banks total d o m e s t i c a s s e t s a v e r a g e d $140 million.
2. T h e w e i g h t e d a v e r a g e maturity is calculated o n l y for l o a n s w i t h a stated date
o f maturity (that i s , l o a n s p a y a b l e o n d e m a n d are e x c l u d e d ) . In c o m p u t i n g the
average, e a c h loan is w e i g h t e d by its dollar amount.
3. The approximate c o m p o u n d e d annual interest rate o n e a c h loan is calculated
from survey data o n the stated rate and other terms o f the loan; t h e n , in c o m p u t i n g
the average o f t h e s e a p p r o x i m a t e e f f e c t i v e rates, e a c h loan is w e i g h t e d b y its
dollar amount.
4. T h e c h a n c e s are a b o u t t w o out of three that the a v e r a g e rate s h o w n w o u l d
differ b y l e s s than this a m o u n t f r o m the a v e r a g e rate that w o u l d be f o u n d b y a
c o m p l e t e s u r v e y of lending at all b a n k s .
5. T h e interquartile range s h o w s the interest rate range that e n c o m p a s s e s the
middle 50 percent of the total dollar a m o u n t o f l o a n s m a d e .
6. Overnight loans are loans that mature o n the f o l l o w i n g b u s i n e s s day.
7. D e m a n d loans h a v e n o stated date o f maturity.
8. The approximate annual interest rate on e a c h l o a n — w i t h o u t regard t o
c o m p o u n d i n g — i s calculated from survey data o n the stated rate and other t e r m s
o f the loan; then in c o m p u t i n g the a v e r a g e o f t h e s e a p p r o x i m a t e nominal rates,
e a c h loan is w e i g h t e d by its dollar a m o u n t .
9. T h e prime rate reported by e a c h bank is w e i g h t e d by the v o l u m e o f l o a n s
e x t e n d e d and then averaged.
10. This survey p r o v i d e s data o n g r o s s loan e x t e n s i o n s m a d e during o n e w e e k
o f e a c h quarter. The proportion o f t h e s e loan e x t e n s i o n s that is m a d e at rates
b e l o w prime may vary substantially f r o m the proportion o f s u c h l o a n s o u t s t a n d i n g
in bank loan portfolios.
11. A m o n g banks reporting l o a n s t o farmers, m o s t "large b a n k s " had o v e r $ 5 0 0
million in total a s s e t s , and m o s t " o t h e r b a n k s " had total a s s e t s b e l o w $500
million.
A76
Federal Reserve Board of Governors
PAUL A . VOLCKER, Chairman
PRESTON MARTIN, Vice Chairman
HENRY C . WALLICH
J . CHARLES PARTEE
OFFICE OF BOARD
OFFICE OF STAFF DIRECTOR
MONETARY AND FINANCIAL
MEMBERS
JOSEPH R. COYNE, Assistant
DONALD J. WINN, Assistant
STEVEN M . ROBERTS,
to the
to the
Board
Board
FOR
POLICY
STEPHEN H . A X I L R O D , Staff Director
D O N A L D L . K O H N , Deputy Staff Director
Assistant to the Chairman
ANTHONY F. COLE, Special Assistant to the Board
NAOMI P. SALUS, Special Assistant
to the Board
STANLEY J. SIGEL, Assistant
to the Board
NORMAND R . V . BERNARD, Special Assistant
LEGAL
DIVISION
DIVISION
MICHAEL BRADFIELD, General
J. VIRGIL M A T T I N G L Y , J R . ,
Counsel
Deputy General Counsel
RICHARD M. ASHTON, Associate
General
Counsel
OLIVER IRELAND, Associate
General
Counsel
RICKI TIGERT, Assistant General
Counsel
STEPHEN SICILIANO, Special Assistant to the General
Counsel
MARYELLEN A . BROWN, Assistant
to the General
Counsel
OF RESEARCH
SECRETARY
WILLIAM W . WILES,
Secretary
BARBARA R. LOWREY, Associate
Secretary
JAMES MCAFEE, Associate
Secretary
DIVISION OF CONSUMER
AND COMMUNITY
AFFAIRS
DIVISION OF BANKING
SUPERVISION AND
REGULATION
ROBERT F. GEMMILL, Staff
Director
(Administration)
DIVISION
1. On loan from the Federal Reserve Bank of Boston.
Associate
H E L M U T F . W E N D E L , Deputy Associate Director
MARTHA B E T H E A , Assistant Director
ROBERT M . FISHER, Assistant Director
D A V I D B . H U M P H R E Y , Assistant Director
S U S A N J. LEPPER, Assistant Director
RICHARD D . PORTER, Assistant Director
PETER A . TINSLEY, Assistant Director
L E V O N H . G A R A B E D I A N , Assistant Director
GRIFFITH L . GARWOOD,
Director
JERAULD C . K L U C K M A N , Associate Director
G L E N N E . L O N E Y , Assistant Director
DOLORES S . S M I T H , Assistant Director
WILLIAM TAYLOR, Director
1
THOMAS E . CIMENO, J R . , Deputy Director
FREDERICK R . D A H L , Associate Director
D O N E . K L I N E , Associate Director
FREDERICK M . STRUBLE, Associate Director
HERBERT A . B I E R N , Assistant Director
A N T H O N Y C O R N Y N , Assistant Director
ROBERT S . PLOTKIN, Assistant Director
STEPHEN C . SCHEMERING, Assistant Director
RICHARD SPILLENKOTHEN, Assistant Director
S I D N E Y M . S U S S A N , Assistant Director
L A U R A M . HOMER, Securities Credit Officer
STATISTICS
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
MICHAEL J. PRELL, Deputy Director
JOSEPH S . ZEISEL, Deputy Director
JARED J. E N Z L E R , Associate Director
D A V I D E . L I N D S E Y , Associate Director
ELEANOR J. STOCKWELL, Associate Director
THOMAS D . SIMPSON, Deputy Associate Director
LAWRENCE SLIFMAN, Deputy
OFFICE OF THE
AND
to the
OF INTERNATIONAL
FINANCE
E D W I N M . T R U M A N , Director
LARRY J. PROMISEL, Senior Associate Director
CHARLES J. SIEGMAN, Senior Associate Director
D A L E W . H E N D E R S O N , Associate Director
Adviser
PETER HOOPER I I I , Assistant Director
D A V I D H . H O W A R D , Assistant Director
RALPH W . SMITH, J R . , Assistant Director
Board
and Official Staff
MARTHA R . SEGER
EMMETT J . RICE
LYLE E . GRAMLEY
OFFICE OF
STAFF DIRECTOR FOR
MANAGEMENT
S . D A V I D FROST, Staff Director
E D W A R D T . M U L R E N I N , Assistant Staff Director
CHARLES L . H A M P T O N , Senior Technical Adviser
PORTIA W . THOMPSON, Equal Employment Opportunity
OFFICE OF STAFF DIRECTOR FOR
FEDERAL RESERVE BANK
ACTIVITIES
THEODORE E. ALLISON, Staff
Director
Adviser, Equal Employment
Opportunity Programs, Federal Reserve System
JOSEPH W . D A N I E L S , S R . ,
Programs Officer
DIVISION
OF COMPUTING
SERVICES
BRUCE M . BEARDSLEY, Director
THOMAS C . J U D D , Assistant Director
ELIZABETH B . RIGGS, Assistant Director
ROBERT J. ZEMEL, Assistant Director
DIVISION
WILLIAM
STEPHEN
RICHARD
WILLIAM
DIVISION
OF INFORMATION
SERVICES
R . JONES, Director
R . M A L P H R U S , Assistant Director
J. MANASSERI, Assistant Director
C . SCHNEIDER, J R . , Assistant Director
OF
DIVISION OF FEDERAL
BANK
OPERATIONS
CLYDE H . FARNSWORTH, J R . , Director
ELLIOTT C . M C E N T E E , Associate Director
D A V I D L . ROBINSON, Associate Director
C . WILLIAM SCHLEICHER, J R . , Associate Director
WALTER A L T H A U S E N , Assistant Director
CHARLES W . B E N N E T T , Assistant Director
A N N E M . D E B E E R , Assistant Director
JACK D E N N I S , J R . , Assistant Director
EARL G . H A M I L T O N , Assistant Director
2
WILLIAM E . PASCOE I I I , Assistant Director
FLORENCE M . Y O U N G ,
Adviser
PERSONNEL
D A V I D L . S H A N N O N , Director
JOHN R . W E I S , Assistant Director
CHARLES W . W O O D , Assistant Director
OFFICE OF THE
CONTROLLER
GEORGE E . LIVINGSTON, Controller
B R E N T L . B O W E N , Assistant Controller
DIVISION
OF SUPPORT
SERVICES
Director
Associate Director
Assistant Director
ROBERT E . FRAZIER,
WALTER W . K R E I M A N N ,
GEORGE M . LOPEZ,
2. On loan from the Federal Reserve Bank of Richmond (Baltimore Branch).
RESERVE
A78 Federal Reserve Bulletin • June 1985
Federal Open Market Committee
FEDERAL
OPEN MARKET
PAUL A . VOLCKER,
COMMITTEE
Chairman
JOHN J. BALLES
ROBERT P . BLACK
ROBERT P. FORRESTAL
STEPHEN H . AXILROD,
LYLE E . GRAMLEY
SILAS KEEHN
PRESTON MARTIN
Staff Director and Secretary
NORMAND R.V. BERNARD, Assistant
NANCY M . STEELE,
Secretary
Deputy Assistant Secretary
MICHAEL BRADFIELD, General
JAMES H . OLTMAN,
E . GERALD CORRIGAN,
Counsel
Deputy General Counsel
JAMES L . KICHLINE,
E D W I N M . TRUMAN,
Economist
Economist (International)
JOSEPH R. BISIGNANO, Associate
Economist
J. CHARLES PARTEE
EMMETT J. RICE
MARTHA R . SEGER
HENRY C . WALLICH
J. ALFRED BROADDUS, Associate
Economist
RICHARD G. DAVIS, Associate
Economist
Economist
DONALD L. KOHN, Associate
DAVID E. LINDSEY, Associate
Economist
MICHAEL J. PRELL, Associate
Economist
KARL A. SCHELD, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
SHEILA L. TSCHINKEL, Associate
Economist
PETER D . STERNLIGHT, Manager for Domestic Operations, System Open Market Account
SAM Y . CROSS, Manager for Foreign Operations, System Open Market Account
FEDERAL ADVISORY
COUNCIL
LEWIS T. PRESTON,
President
PHILIP F . SEARLE, Vice President
WILLIAM H . B O W E N , E . PETER GILLETTE, AND N . BERNE HART,
ROBERT L . N E W E L L , First District
LEWIS T. PRESTON, Second District
GEORGE A . BUTLER, Third District
JULIEN L . MCCALL, Fourth District
JOHN G . MEDLIN, JR., Fifth District
PHILIP F. SEARLE, Sixth District
Directors
HAL C. KUEHL, Seventh District
WILLIAM H . B O W E N , Eighth District
E. PETER GILLETTE, JR., Ninth District
N. BERNE HART, Tenth District
NAT S. ROGERS, Eleventh District
G . ROBERT TRUEX, JR., Twelfth District
HERBERT V . PROCHNOW,
Secretary
WILLIAM J. KORSVIK, Associate
Secretary
Vice Chairman
A79
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
TIMOTHY D. MARRINAN, Minneapolis, Minnesota, Chairman
THOMAS L. CLARK, JR., New York, New York, Vice Chairman
RACHEL G. BRATT, Medford, Massachusetts
JONATHAN BROWN, W a s h i n g t o n , D . C .
LAWRENCE S. OKINAGA, Honolulu, Hawaii
JOSEPH L. PERKOWSKI, Centerville, Minnesota
ELVA QUIJANO, San Antonio, Texas
BRENDA L. SCHNEIDER, Detroit, Michigan
PAULA A. SLIMAK, Cleveland, Ohio
GLENDA G . SLOANE, W a s h i n g t o n , D . C .
HENRY J. SOMMER, Philadelphia, Pennsylvania
JEAN A. CROCKETT, Philadelphia, Pennsylvania
THERESA FAITH CUMMINGS, Springfield, Illinois
STEVEN M. GEARY, Jefferson City, Missouri
RICHARD M. HALLIBURTON, Kansas City, Missouri
CHARLES C. HOLT, Austin, Texas
E D W A R D N. LANGE, Seattle, Washington
KENNETH V. LARKIN, Berkeley, California
FRED S. MCCHESNEY, Atlanta, Georgia
FREDERICK H . MILLER, Norman, Oklahoma
MARGARET M. MURPHY, Columbia, Maryland
ROBERT F . MURPHY, Detroit, Michigan
HELEN NELSON, Mill Valley, California
THRIFT INSTITUTIONS
ADVISORY
TED L. SPURLOCK, New York, New York
MEL STILLER, Boston, Massachusetts
CHRISTOPHER J. SUMNER, Salt Lake City, Utah
W I N N I E F. TAYLOR, San Francisco, California
MICHAEL M . V A N BUSKIRK, Columbus, Ohio
MERVIN WINSTON, Minneapolis, Minnesota
MICHAEL ZOROYA, St. Louis, Missouri
COUNCIL
THOMAS R . BOMAR, Miami, Florida, President
RICHARD H. DEIHL, LOS Angeles, California, Vice President
ELLIOTT G . CARR, Harwich Port, Massachusetts
T O D D COOKE, Philadelphia, Pennsylvania
J. MICHAEL CORNWALL, Dallas, Texas
HAROLD W . GREENWOOD, JR., Minneapolis, Minnesota
JOHN A. HARDIN, Rock Hill, South Carolina
FRANCES LESNIESKI, East Lansing, Michigan
JOHN T. MORGAN, New York, New York
SARAH R. WALLACE, Newark, Ohio
M.
MICHAEL
R.
WISE,
Denver, Colorado
A80
Federal Reserve Board Publications
Copies are available from PUBLICATIONS SERVICES,
Mail Stop 138, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551. When a charge is indicated, remittance should accompany request and be made
payable to the order of the Board of Governors of the Federal
Reserve System. Remittance from foreign residents should
be drawn on a U.S. bank. Stamps and coupons are not
accepted.
THE FEDERAL RESERVE SYSTEM—PURPOSES
TIONS. 1984. 120 p p .
A N N U A L REPORT.
AND
FUNC-
SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $15.00 per year or $.40 each in
the United States, its possessions, Canada, and Mexico;
10 or more of same issue to one address, $13.50 per year
or $.35 each. Elsewhere, $20.00 per year or $.50 each.
THE FEDERAL RESERVE ACT, as amended through August 30,
1984, with an appendix containing provisions of certain
other statutes affecting the Federal Reserve System. 576
pp. $7.00.
REGULATIONS OF THE BOARD OF GOVERNORS OF THE F E D ERAL RESERVE SYSTEM.
REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHANISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Each
volume, $3.00; 10 or more to one address, $2.50 each.
THE ECONOMETRICS OF PRICE DETERMINATION
CONFER-
FEDERAL RESERVE BULLETIN.
Monthly. $20.00 per year or
$2.00 each in the United States, its possessions, Canada,
and Mexico; 10 or more of same issue to one address,
$18.00 per year or $1.75 each. Elsewhere, $24.00 per
year or $2.50 each.
BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint
of Part I only) 1976. 682 pp. $5.00.
BANKING AND MONETARY STATISTICS. 1941-1970. 1976.
1,168 pp. $15.00.
ENCE, October 30-31, 1970, Washington, D.C. 1972. 397
pp. Cloth ed. $5.00 each; 10 or more to one address,
$4.50 each. Paper ed. $4.00 each; 10 or more to one
address, $3.60 each.
A N N U A L PERCENTAGE RATE TABLES (Truth in Lending—
Regulation Z) Vol. I (Regular Transactions). 1969. 100
pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each
volume $2.25; 10 or more of same volume to one
address, $2.00 each.
A N N U A L STATISTICAL DIGEST
FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY
1974-78.
1980.
1981.
1982.
1983.
1980. 305 pp.
1981. 241 pp.
1982. 239 pp.
1983. 266 pp.
1984. 264 pp.
$10.00 per copy.
$10.00 per copy.
$ 6.50 per copy.
$ 7.50 per copy.
$11.50 per copy.
FEDERAL RESERVE CHART BOOK. Issued four times a year in
February, May, August, and November. Subscription
includes one issue of Historical Chart Book. $7.00 per
year or $2.00 each in the United States, its possessions,
Canada, and Mexico. Elsewhere, $10.00 per year or
$3.00 each.
HISTORICAL CHART BOOK. Issued annually in Sept. Subscription to the Federal Reserve Chart Book includes one
issue. $1.25 each in the United States, its possessions,
Canada, and Mexico; 10 or more to one address, $1.00
each. Elsewhere, $1.50 each.
UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one
address, $1.50 each.
THE BANK HOLDING COMPANY MOVEMENT TO 1978:
A
COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to
one address, $2.25 each.
FLOW OF F U N D S ACCOUNTS. 1 9 4 9 - 1 9 7 8 . 1979. 171 p p . $ 1 . 7 5
each; 10 or more to one address, $1.50 each.
1980. 68 pp. $1.50 each;
10 or more to one address, $1.25 each.
INTRODUCTION TO FLOW OF F U N D S .
PUBLIC POLICY AND CAPITAL FORMATION.
1981. 326 pp.
$13.50 each.
N E W MONETARY CONTROL PROCEDURES: FEDERAL RESERVE STAFF S T U D Y . 1981.
SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES:
REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL
ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each.
A81
Looseleaf; updated at least monthly. (Requests must be prepaid.)
Consumer and Community Affairs Handbook. $60.00 per
year.
Monetary Policy and Reserve Requirements Handbook.
$60.00 per year.
Securities Credit Transactions Handbook. $60.00 per year.
Federal Reserve Regulatory Service. 3 vols. (Contains all
three Handbooks plus substantial additional material.)
$175.00 per year.
Rates for subscribers outside the United States are as
follows and include additional air mail costs:
Federal Reserve Regulatory Service, $225.00 per year.
Each Handbook, $75.00 per year.
FEDERAL RESERVE REGULATORY SERVICE.
THE U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A
MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each.
WELCOME TO THE FEDERAL RESERVE.
PROCESSING BANK HOLDING COMPANY A N D MERGER APPLICATIONS.
THE MONETARY AUTHORITY OF THE FEDERAL RESERVE,
May 1984. (High School Level.)
WRITING IN STYLE AT THE FEDERAL RESERVE. A u g u s t 1 9 8 4 .
93 pp. $2.50 each.
REMARKS BY CHAIRMAN PAUL A . VOLCKER, AT X I I I AMERICAN-GERMAN BIENNIAL CONFERENCE, M a r c h 1985
STAFF STUDIES.-
Bulletin
Summaries Only Printed in the
Studies and papers on economic and financial subjects that
are of general interest. Requests to obtain single copies of
the full text or to be added to the mailing list for the series
may be sent to Publications Services.
Staff Studies 115-125 are out of print.
114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE 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
W. Henderson. August 1983. 5 pp.
127. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: JANUARY-MARCH 1 9 7 5 , by Margaret L .
Greene. August 1984. 16 pp.
128. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: SEPTEMBER 1977-DECEMBER 1 9 7 9 , b y M a r -
garet L. Greene. October 1984. 40 pp.
129. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1 9 8 1 , by Margaret
L. Greene. August 1984. 36 pp.
130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTERNATIONAL TRADE A N D OTHER ECONOMIC VARIABLES: A REVIEW OF THE LITERATURE, by Victoria S.
CONSUMER EDUCATION
PAMPHLETS
Short pamphlets suitable for classroom use. Multiple copies
available without charge.
Farrell with Dean A. DeRosa and T. Ashby McCown.
January 1984. 21 pp.
131. CALCULATIONS OF PROFITABILITY FOR U . S . D O L L A R DEUTSCHE MARK INTERVENTION, by Laurence R.
Jacobson. October 1983. 8 pp.
Alice in Debitland
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection Laws
The Equal Credit Opportunity Act and . . . Age
The Equal Credit Opportunity Act and . . . Credit Rights in
Housing
The Equal Credit Opportunity Act and . . . Doctors, Lawyers, Small Retailers, and Others Who May Provide Incidental Credit
The Equal Credit Opportunity Act and . . . Women
Fair Credit Billing
Federal Reserve Glossary
Guide to Federal Reserve Regulations
How to File A Consumer Credit Complaint
If You Borrow To Buy Stock
If You Use A Credit Card
Instructional Materials of the Federal Reserve System
Series on the Structure of the Federal Reserve System
The Board of Governors of the Federal Reserve System
The Federal Open Market Committee
Federal Reserve Bank Board of Directors
Federal Reserve Banks
Monetary Control Act of 1980
Organization and Advisory Committees
Truth in Leasing
U.S. Currency
What Truth in Lending Means to You
132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES A N D INTERVENTION: A
REVIEW OF THE TECHNIQUES A N D LITERATURE, b y
Kenneth Rogoff. October 1983. 15 pp.
133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVENTION, A N D INTEREST RATES: A N EMPIRICAL IN-
VESTIGATION, by Bonnie E. Loopesko. November
1983. 20 pp.
134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: A REVIEW OF THE LITERATURE, b y
Ralph W. Tryon. October 1983. 14 pp.
135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: APPLICATIONS TO C A N A D A , GERMA-
NY, AND JAPAN, by Deborah J. Danker, Richard A.
Haas, Dale W. Henderson, Steven A. Symansky, and
Ralph W. Tryon. April 1985. 27 pp.
136. T H E EFFECTS OF FISCAL POLICY ON THE U . S . ECONO-
MY, by Darrell Cohen and Peter B. Clark. January
1984. 16 pp.
137. THE IMPLICATIONS FOR BANK MERGER POLICY OF
FINANCIAL DEREGULATION, INTERSTATE BANKING,
AND
FINANCIAL
SUPERMARKETS,
by
Stephen
A.
Rhoades. February 1984. 8 pp.
138. ANTITRUST L A W S , JUSTICE DEPARTMENT GUIDELINES, AND THE LIMITS OF CONCENTRATION IN LOCAL BANKING MARKETS, by James Burke. June 1984.
14 pp.
A82
139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN
THE UNITED STATES, by Thomas D. Simpson and
REPRINTS OF BULLETIN
ARTICLES
Most of the articles reprinted do not exceed 12 pages.
Patrick M. Parkinson. August 1984. 20 pp.
140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF
THE LITERATURE, by John D. Wolken. November
1984. 38 pp.
141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAYMENT COSTS, by William Dudley. November 1984. 15
pp.
142. MERGERS
AND
BANKS, 1 9 6 0 - 8 3 ,
ACQUISITIONS
A.
by Stephen
BY
COMMERCIAL
Rhoades. December
1984. 30 pp.
143. COMPLIANCE COSTS A N D CONSUMER BENEFITS OF
THE ELECTRONIC F U N D TRANSFER ACT: RECENT
SURVEY EVIDENCE, by Frederick J. Schroeder. April
1985. 23 pp.
144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CONSUMER CREDIT REGULATIONS: THE TRUTH IN L E N D ING A N D EQUAL CREDIT OPPORTUNITY L A W S , b y
Gregory E. Elliehausen and Robert D. Kurtz. May
1985. 10 pp.
The Commercial Paper Market since the Mid-Seventies. 6/82.
Applying the Theory of Probable Future Competition. 9/82.
International Banking Facilities. 10/82.
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.
U.S. International Transactions in 1983. 4/84.
Survey of Consumer Finances, 1983. 9/84.
Bank Lending to Developing Countries. 10/84.
Survey of Consumer Finances, 1983: A Second Report. 12/
84.
Union Settlements and Aggregate Wage Behavior in the
1980s. 12/84.
The Thrift Industry in Transition. 3/85.
A83
ANTICIPATED SCHEDULE OF RELEASE
OF THE FEDERAL RESERVE
SYSTEM1
DATES FOR PERIODIC RELEASES—BOARD
Weekly Releases
iroximate
release days
OF
GOVERNORS
Date or period
to which data refer
Aggregate Reserves of Depository Institutions and Monetary
Base. H.3 (502) [1.20]
Thursday
Week ended previous
Wednesday
Actions of the Board; Applications and Reports. H.2 (501)
Friday
Week ended previous Saturday
Assets and Liabilities of Commercial Banking Institutions. H.8
(510) [1.25]
Wednesday
Wednesday, 2 weeks earlier
Changes in State Member Banks. K.3 (615)
Tuesday
Week ended previous Saturday
Factors Affecting Reserves of Depository Institutions and
Condition Statement of Federal Reserve Banks. H.4.1 (503)
[1.11]
Thursday
Week ended previous
Wednesday
Foreign Exchange Rates. H.10 (512) [3.28]
Monday
Week ended previous Friday
Money Stock, Liquid Assets, and Debit Measures. H.6 (508)
Thursday
Week ended Wednesday of
previous week
Selected Borrowings in Immediately Available Funds of Large
Member Banks. H.5 (507) [1.13]
Wednesday
Week ended Thursday of
previous week
Selected Interest Rates. H. 15 (519) [ 1.35]
Monday
Week ended previous Saturday
Weekly Consolidated Condition Report of Large Commercial
Banks and Domestic Subsidiaries. H.4.2 (504) [1.26, 1.28,
1.29, 1.30]
Friday
Wednesday, 1 week earlier
Capacity Utilization: Manufacturing, Mining, Utilities and
Industrial Materials. G.3 (402) [2.12]
Midmonth
Previous month
Changes in Status of Banks and Branches. G.4.5 (404)
1st of month
Previous month
Commercial and Industrial Loan Commitments at Selected Large
Commercial Banks. G.21 (423)
2nd week of month
2nd month previous
Consumer Installment Credit. G. 19 (421) [1.55, 1.56]
Midmonth
2nd month previous
Debits and Deposit Turnover at Commercial Banks. G.6 (406)
[1.22]
12th of month
Previous month
Finance Companies. G.20 (422) [1.51, 1.52]
5th working day of
month
2nd month previous
Foreign Exchange Rates. G.5 (405) [3.28]
1st of month
Previous month
Industrial Production. G.12.3 (414) [2.13]
Midmonth
Previous month
Loans and Securities at all Commercial Banks. G.7 (407) [1.23]
3rd week of month
Previous month
[1.21]
Monthly Releases
Major Nondeposit Funds of Commercial Banks. G.10 (411) [1.24]
3rd week of month
Previous month
Maturity Distribution of Negotiable Time Certificates of Deposit
at Large Commercial Banks. G.9 (410)
3rd week of month
Last Wednesday of previous
month
Monthly Report of Assets and Liabilities of International Banking
Facilities. G.14 (416)
2nd week of month
Wednesday, 2 weeks earlier
Research Library—Recent Acquisitions. G.15 (417)
1st of month
Previous month
1. Release dates are those anticipated or usually met. However, please note that for some releases there is normally a certain variability because
of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later
than anticipated.
The BULLETIN table that reports these data is designated in brackets.
A84
Monthly Releases—Continued
Selected Interest Rates. G.13 (415) [1.35]
Approximate
release days
Date or period
to which data refer
3rd working day of
month
Previous month
Agricultural Finance Databook. E.15 (125)
End of March,
June, September,
and December
January, April, July, and
October
Country Exposure Lending Survey. E.16 (126)
January, April,
July, and
October
Domestic Offices, Commercial Bank Assets and Liabilities
Consolidated Report of Condition. E.3.4 (113) [1.26, 1.28]
March, June,
September, and
December
Flow of Funds: Seasonally adjusted and unadjusted. Z.l (780)
[1.58, 1.59]
23rd of February,
May, August,
and November
Flow of Funds Summary Statistics Z.l. (788) [1.57, 1.58]
15th of February,
May, August,
and November
Previous quarter
Geographical Distribution of Assets and Liabilities of Major
Foreign Branches of U.S. Banks. E . l l (121)
15th of March,
June, September,
and December
Previous quarter
Survey of Terms of Bank Lending. E.2 (111) [1.34]
Midmonth of
March, June,
September, and
December
February, May, August, and
November
List of OTC Margin Stocks. E.7 (117)
January, April,
July, and
October
February, May, August, and
November
February
End of previous June
Quarterly Releases
Previous 3 months
Previous 6 months
Previous quarter
Annual Releases
Aggregate Summaries of Annual Surveys of Security Credit
Extension. C.2 (101)
A85
Index to Statistical Tables
References are to pages A3-75 although the prefix "A" is omitted in this index
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 (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
Business loans, 70-73
Commercial and industrial loans, 16, 19, 21, 70-72
Consumer loans held, by type, and terms, 40, 41
Loans sold outright, 19
Nondeposit funds, 17
Number, by classes, 18
Real estate mortgages held, by holder and
property, 39
Time and savings deposits, 3
Commercial paper, 23, 24, 37
Condition statements (See Assets and liabilities)
Construction, 44, 49, 73
Consumer installment credit, 40, 41
Consumer prices, 44, 50
Consumption expenditures, 51, 52
Corporations
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 26, 40 (See also Thrift institutions)
Currency and coin, 18
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 15
Debt (See specific types of debt or securities)
Demand deposits
Adjusted, commercial banks, 15
Demand deposits—Continued
Banks, by classes, 18-21
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 (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, 38
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
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 37
Business credit, 36
Loans, 19, 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
A86
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 and industrial loans, 70-72
Federal Reserve Banks, 6
Foreign central banks and foreign countries, 67
Money and capital markets, 24
Mortgages, 38
Prime rate, commercial banks, 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
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 (See Interest rates)
Money stock measures and components, 3,13
Mortgages (See Real estate loans)
Mutual funds (See Investment companies)
Mutual savings banks, 8, 26, 39, 40 (See also Thrift
institutions)
NATIONAL defense outlays, 29
National income, 51
Nontransaction balances, 3, 13, 19, 20
OPEN market transactions, 9
PERSONAL income, 52
Prices
Consumer and producer, 44, 50
Stock market, 25
Prime rate, commercial banks, 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 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, 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 (See
also Transaction and Nontransaction balances)
Trade, foreign, 54
Transaction balances, 13, 19, 20
Treasury currency, Treasury cash, 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, 17, 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)
A87
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK, Chairman
branch, or facility
Zip
Deputy Chairman
President
First Vice President
BOSTON*
02106
Joseph A. Baute
Thomas I. Atkins
Frank E. Morris
Robert W. Eisenmenger
NEW YORK*
10045
John Brademas
Clifton R. Wharton, Jr.
M. Jane Dickman
E. Gerald Corrigan
Thomas M. Timlen
Buffalo
14240
John T. Keane
PHILADELPHIA
19105
Robert M. Landis
Nevius M. Curtis
Edward G. Boehne
Richard L. Smoot
CLEVELAND*
44101
William H. Knoell
E. Mandell de Windt
Robert E. Boni
Milton G. Hulme, Jr.
Karen N. Horn
William H. Hendricks
Leroy T. Canoles, Jr.
Robert A. Georgine
Robert L. Tate
Wallace J. Jorgenson
Robert P. Black
Jimmie R. Monhollon
John H. Weitnauer, Jr.
Bradley Currey, Jr.
Martha Mclnnis
E. William Nash, Jr.
Eugene E. Cohen
Condon S. Bush
Leslie B. Lampton
Robert P. Forrestal
Jack Guynn
Stanton R. Cook
Robert J. Day
Russell G. Mawby
Silas Keehn
Daniel M. Doyle
W.L. Hadley Griffin
Mary P. Holt
Sheffield Nelson
Henry F. Frigon
Donald B. Weis
Thomas C. Melzer
Joseph P. Garbarini
John B. Davis, Jr.
Michael W. Wright
Gene J. Etchart
Gary H. Stern
Thomas E. Gainor
Irvine O. Hockaday, Jr.
Robert G. Lueder
James E. Nielson
Patience Latting
Kenneth L. Morrison
Roger Guflfey
Henry R. Czerwinski
Robert D. Rogers
Bobby R. Inman
John R. Sibley
Robert T. Sakowitz
Robert F. McDermott
Robert H. Boykin
William H. Wallace
Alan C. Furth
Fred W. Andrew
Richard C. Seaver
Paul E. Bragdon
Don M. Wheeler
John W. Ellis
John J. Balles
Richard T. Griffith
Cincinnati
Pittsburgh
45201
15230
RICHMOND*
23219
Baltimore
21203
Charlotte
28230
Culpeper Communications
and Records Center 22701
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
30301
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
59601
64198
80217
73125
68102
16222
79999
77252
78295
SAN FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino
Harold J. Swart
Robert D. McTeer, Jr.
Albert D. Tinkelenberg
John G. Stoides
Fred R. HenJames D. Hawkins
Patrick K. Barron
Jeffrey J. Wells
Henry H. Bourgaux
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
Joel L. Koonce, Jr.
J.Z. Rowe
Thomas H. Robertson
Richard C. Dunn
Angelo S. Carella
E. Ronald Liggett
Gerald R. Kelly
•"Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016;
Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West
Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202.
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
Helena
j
Minneapolis^
© i
V
Chicagc
Omaha'
•
;
i
D
.
(u
:inci»i
Kansas
)klahor
a Ciiyt
. S. /
\ r,
iitle
Rock | Birmingkan^^^
Dallas®
"
i®
, Houston}
San Antonio
April
1984
LEGEND
Q
Boundaries of Federal Reserve Districts
® Federal Reserve Bank Cities
Boundaries of Federal Reserve Branch
Territories
*
Federal Reserve Branch Cities
'
Federal Reserve Bank Facility
Board of Governors of the Federal Reserve
System
Publications of Interest
FEDERAL RESERVE REGULATORY SERVICE
To promote public understanding of its regulatory
functions, the Board publishes the Federal Reserve
Regulatory Service, a three-volume looseleaf service
containing all Board regulations and related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are
published separately as handbooks pertaining to monetary policy, securities credit, and consumer affairs.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each
contains conversion tables, citation indexes, and a
subject index.
The Monetary Policy and Reserve Requirements
Handbook contains Regulations A, D, and Q plus
related materials. For convenient reference, it also
contains the rules of the Depository Institutions
Deregulation Committee.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with all related statutes, Board interpretations, rulings, and staff opinions. Also included is the Board's
list of OTC margin stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, and BB and
associated materials.
For domestic subscribers, the annual rate is $175 for
the Federal Reserve Regulatory Service and $60 for
each handbook. For subscribers outside the United
States, the price including additional air mail costs is
$225 for the Service and $75 for each Handbook. All
subscription requests must be accompanied by a check
or money order payable to Board of Governors of the
Federal Reserve System. Orders should be addressed
to Publications Services, Mail Stop 138, Federal Reserve Board, 20th Street and Constitution Avenue,
N.W., Washington, D.C. 20551.
Publications of Interest
FEDERAL RESERVE CONSUMER CREDIT
PUBLICATIONS
The Federal Reserve Board publishes a series of
pamphlets covering individual credit laws and topics,
as pictured below. The series includes such subjects as
how the Equal Credit Opportunity Act protects women against discrimination in their credit dealings, how
to use a credit card, and how to use Truth in Lending
information to compare credit costs.
The Board also publishes the Consumer Handbook
to Credit Protection Laws, a complete guide to con-
sumer credit protections. This 44-page booklet explains how to use the credit laws to shop for credit,
apply for it, keep up credit ratings, and complain about
an unfair deal.
Protections offered by the Electronic Fund Transfer
Act are explained in Alice in Debitland. This booklet
offers tips for those using the new "paperless" systems for transferring money.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 138,
Board of Governors of the Federal Reserve System,
Washington, D.C. 20551. Multiple copies for classroom use are also available free of charge.
LMMO
LE4SING
LE4SMG
LE4SMG
TRUTH MLE4SING
The
Equal Credit
Opportunity
Act and
Credit Rights
In Housing
What
Ttuthln
Lending
Means
To You
The
Equal
Credit
Opportunity
Act
and...
If You
Use A
Credit
Card
Fair
Credit
Billing
E = 3
WOMEN
The
Equal
Credit
| Opportunity
Act
|
[1
1
I
11
.. .and A G E !
@FedFRASER