Full text of Federal Reserve Bulletin : June 1987
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VOLUME 73 •
NUMBER 6 •
JUNE 1987
FEDERAL RESERVE
Vv BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost
• Griffith L. Garwood • James L. Kichline • Edwin M. Truman
The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for
opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T.
Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
411 MEASURING
VALUE
THE
OF THE
and the Bank of England for the establishment of a risk-based capital framework and
says that he believes that adoption by U.S.
regulators of a framework along the lines of
the U.S.-U.K. proposal represents a reasonable step toward a more rational framework for relating the analysis of capital
needs to risk considerations, before the
Subcommittee on General Oversight and
Investigations of the House Committee on
Banking, Finance and Urban Affairs, April
30, 1987.
FOREIGN-EXCHANGE
DOLLAR
This article first describes the uses of
weighted average exchange-rate indexes; it
then focuses on measures of exchange rates
suitable for analyzing trade flows and compares their performance in the context of
the equations used by the staff of the Federal Reserve Board to forecast trade components and priced deflators for exports and
imports.
4 2 3 INDUSTRIAL
PRODUCTION
Industrial production declined 0.3 percent
in March.
425 STATEMENTS
TO
CONGRESS
Paul A. Volcker, Chairman, Board of Governors, reviews some aspects of the world
economic situation, particularly exchange
market developments and international
debt, before the Subcommittee on International Finance and Monetary Policy of the
Senate Committee on Banking, Housing,
and Urban Affairs, April 7, 1987.
430 Martha R. Seger, Member, Board of Governors, discusses proposed legislation to require disclosures of prices and terms in
credit card applications and solicitations
and to establish a nationwide ceiling on
credit card interest rates; Governor Seger
says that the Board believes it is important
for consumers to have adequate information to shop for credit and that the Board
does not believe the imposition of a federal
ceiling on credit card rates is appropriate,
before the Subcommittee on Consumer Affairs of the Senate Committee on Banking,
Housing, and Urban Affairs, April 21, 1987.
435 Chairman Volcker discusses the joint proposal of the U.S. federal banking agencies
441
ANNOUNCEMENTS
Adoption of policy statement on responsibilities of bank holding companies to their
subsidiary banks.
Report available on priced service operations in 1986.
Issuance of revised List of Stocks Subject
to OTC Margin Regulations.
Proposal to amend Regulation T.
Admission of four state banks to membership in the Federal Reserve System.
443 RECORD OF POLICY ACTIONS
OF THE
FEDERAL OPEN MARKET
COMMITTEE
At its meeting on February 10-11, 1987, the
Committee established monetary growth
ranges for 1987 of 5Vi to 8V2 percent for both
M2 and M3. The associated range for
growth in total domestic nonfinancial debt
was set at 8 to 11 percent. The Committee
anticipated that growth in Ml would slow in
1987 from its very rapid pace in 1986, but
the members decided not to establish a
precise target for the year; instead, the
appropriateness of Ml changes would be
evaluated during the year in the light of the
behavior of Ml velocity, developments in
the economy and financial markets, and the
nature of emerging price pressures.
With regard to the implementation of
policy for the period immediately ahead,
the Committee adopted a directive that
called for no change in the current degree of
pressure on reserve positions. The members expected this approach to policy implementation to be consistent with some
reduction in the growth of M2 and M3 to
annual rates of about 6 to 7 percent over the
two-month period from January to March.
Over the same interval, growth in Ml was
expected to moderate substantially from an
extraordinarily high rate in the closing
months of 1986. The members indicated
that somewhat greater reserve restraint
might be acceptable, over the intermeeting
period depending on the behavior of the
monetary aggregates, taking into account
the strength of the business expansion, the
performance of the dollar in foreign exchange markets, progress against inflation,
and conditions in domestic and international credit markets. The members agreed that
the intermeeting range for the federal funds
rate, which provides a mechanism for initiating consultation of the Committee when
its boundaries are persistently exceeded,
should be left unchanged at 4 to 8 percent.
4 5 3 LEGAL
DEVELOPMENTS
Various bank holding company, bank service corporation, and bank merger orders;
and pending cases.
A i FINANCIAL
AND BUSINESS
STATISTICS
A3 Domestic Financial Statistics
A44 Domestic Nonfinancial Statistics
A53 International Statistics
A 6 9 GUIDE TO TABULAR
STATISTICAL
RELEASES,
TABLES
PRESENTATION,
AND
SPECIAL
A 8 2 BOARD
AND
OF GOVERNORS
A 8 4 FEDERAL
OPEN MARKET
AND STAFF, ADVISORY
A 8 6 FEDERAL RESERVE
PUBLICATIONS
A 8 9 INDEX
PERIODIC
A 9 3 FEDERAL
AND
A 9 4 MAP
COMMITTEE
COUNCILS
BOARD
TO STATISTICAL
A 9 1 SCHEDULE
STAFF
OF RELEASE
TABLES
DATES
FOR
RELEASES
RESERVE
BANKS,
BRANCHES,
OFFICES
OF FEDERAL
RESERVE
SYSTEM
Measuring the Foreign-Exchange Value
of the Dollar
B. Dianne Pauls, of the Board's Division of
International Finance, prepared this article.
Some observers, disappointed with the response
of the U.S. trade balance to the depreciation of
the dollar since February 1985, have concluded
that the established weighted average indexes of
exchange rates have overstated the dollar's decline. In particular, they note, the dollar has
depreciated much less against the currencies of
some key newly industrialized trading partners
than it has against the currencies of the industrial
countries represented in the traditional indexes.
This discrepancy has spawned a plethora of new
exchange-rate indexes, with the frequent implication that an ideal index exists.
This article first describes the uses of weighted
average exchange-rate indexes. An index of the
dollar's value may be helpful in assessing the
effect of changes in various bilateral exchange
rates on a country's trade position. But such
indexes have many other uses, and the selection
of an index varies with the application. Although
the inclusion of currencies of developing countries in an index may be useful for analyzing
trade developments, it is not appropriate for
some other purposes, such as providing information about monetary conditions. The latter part
of the article focuses on measures of exchange
rates suitable for analyzing trade flows and compares their performance in the context of the
equations used by the staff of the Federal Reserve Board to forecast trade components and
price deflators for exports and imports. The
results suggest that the addition of the currencies
of important developing-country trading partners
in an index of exchange rates improves its performance in forecasting export volumes and import prices but makes little difference for the
forecasts of export prices.
USES OF WEIGHTED AVERAGE
OF EXCHANGE
RATES
INDEXES
An index of weighted average exchange rates is a
summary measure of a set of often divergent
changes in bilateral exchange rates. The advent
of more frequent adjustments in exchange rates
in the 1970s and the broad-based pattern of U.S.
trade and capital flows made such a measure
necessary because no single bilateral exchange
rate could adequately reflect changes in the
dollar's value. The index developed by the staff
of the Federal Reserve Board in 1971, when the
system of fixed exchange rates first broke down,
was intended as a summary measure of how the
dollar was faring against the currencies of the 10
major foreign countries that participated in the
Smithsonian Accord of December 1971.
Generally, an index of weighted average exchange rates may be used to summarize the
influence of prices of the dollar, expressed in
various foreign currencies, on some macroeconomic variable or policy objective. Because the
choice of an index varies with the application,
examining the alternative uses of such indexes is
crucial to understanding their construction.
Exchange rates potentially play a role in determining at least four important macroeconomic
variables, and summary measures of exchange
rates for each application should reflect the specific manner in which exchange rates influence
the variable of interest.
First, exchange rates affect the price competitiveness of U.S. goods, which is a principal
determinant of the country's trade balance. For
example, a decline in the average foreign-currency price of the dollar tends to improve U.S. price
competitiveness by lowering the average price of
U.S. goods relative to the average dollar price of
foreign goods. As a result, over time the volume
412
Federal Reserve Bulletin • June 1987
of U.S. exports tends to increase and that of
U.S. imports tends to decrease. Moreover, relative movements in prices in the United States
and abroad and in the factors that influence these
prices also affect price competitiveness. Thus to
construct a summary measure of U.S. price
competitiveness requires an index of foreigncurrency prices of the dollar—a nominal exchange-rate index—as well as indicators of relative prices in the United States and abroad.
These measures can be combined into a weighted
average index of real exchange rates.
Second, changes in exchange rates affect the
domestic price level. After a depreciation of the
dollar, the dollar prices of imported goods and
the prices of domestically produced goods that
compete with imports tend to rise, thereby putting upward pressure on U.S. prices. In addition,
an increase in the demand for U.S. exports,
stimulated by a decline in the dollar, contributes
to a rise in domestic prices in the United States.
A summary measure of the influence of
changes in the dollar prices of foreign goods on
domestic prices requires both an index of nominal exchange rates and an index of foreign prices.
Foreign exporters may respond differently to
changes in production costs in terms of their
home currency and to variations in exchange
rates; changes in production costs may be regarded as more permanent and hence may appear more readily in import prices. If such differences in response are important, then nominal
exchange rates and foreign prices should be
treated as separate determinants of domestic
inflation rather than combined into a single index
of real weighted average exchange rates. In
addition, exchange rates influence U.S. inflation
indirectly through their effect on U.S. export
demand, which, as noted above, is best captured
by variations in an index of real exchange rates.
Third, changes in exchange rates may influence asset demands. For example, alternatives
to holding domestic currency are offered by
holding foreign currencies, or deposits or securities denominated in either foreign or domestic
currencies. In this case, expected rates of return
on assets denominated in foreign currencies,
which consist of the nominal rate of interest on
these deposits along with the expected rate of
change in the exchange rate, could affect the
demand for money. Movements in domestic
prices will also influence the demand for money,
and changes in exchange rates thus affect the
demand for money indirectly by altering domestic prices.
Furthermore, according to one school of
thought, exchange rates are a source of information about monetary conditions. Changes in
nominal interest rates can reflect changes either
in real rates or in inflation expectations, so that
movements in nominal interest rates alone can
give ambiguous signals about the stance of monetary policy. In contrast, exchange rates should
respond differently to these two phenomena. A
rise in real rates of return on assets denominated
in dollars increases the demand for such assets,
causing the dollar to appreciate. An increase in
U.S. inflation tends to make U.S. goods less
competitive, so that a future depreciation of the
dollar is needed to maintain the relative price of
U.S. versus foreign products. Thus the spot
exchange rate is relatively unaffected by a rise in
nominal interest rates resulting from an increase
in expectations of inflation: the rise in the nominal rate of return is offset by an expected depreciation of the dollar. Because of the different
responses of exchange rates, the nexus of interest rates and exchange rates may reflect monetary conditions better than the interest rate alone
does. For exchange rates to be a useful indicator
of monetary conditions, however, they should
influence asset demands, including the demand
for money, which has yet to be firmly established
empirically.
Finally, an index of exchange rates may be
used to assess changes in the real value of the
wealth of U.S. residents. This use corresponds
most closely to the classic application of consumer price indexes in evaluating changes in the
standard of living of U.S. residents. However,
information about the foreign-currency composition of assets and liabilities required for such an
analysis is not available, making such an application difficult.
CONSTRUCTION
OF WEIGHTED
EXCHANGE
RATES
AVERAGE
Indexes of the dollar's weighted average foreignexchange value are constructed by averaging the
Measuring the Foreign-Exchange
dollar's bilateral exchange rates in terms of a
number of foreign currencies. The construction
of such indexes poses at least four questions:
How should the currencies in an index be weighted? Should the indexes summarize nominal or
real exchange rates? What are the appropriate
deflators for a real index? What currencies
should be included? Answers to these questions
depend on the purpose of the index.
Weighting
Schemes
In principle, the weights assigned to each foreign
currency in an index should reflect the importance of that currency with respect to the economic problem being analyzed. Specifically, the
weights should be derived from economic models relating the macroeconomic variable of interest to each of the individual bilateral exchange
rates as well as to its other determinants. Such
weights capture both the direct effect of changes
in exchange rates on the variable being analyzed
and their indirect influence through other economic variables; they should also capture the
relative strength of those effects.
Most indexes of exchange rates are aimed at
assessing the effect of changes in exchange rates
on U.S. trade flows. Thus the weight of any
particular bilateral exchange rate in such indexes
depends in part on the extent of competition
between the two countries involved. Take the
mark-dollar rate, for example. Because the United States and Germany compete in other markets
besides their own two, changes in the markdollar bilateral rate will influence U.S. exports to
third markets and U.S. imports from third markets. Such effects are referred to as third-country
effects.
In an index used to measure how changes in
the foreign-exchange value of the dollar affect
U.S. trade, the appropriate weights for individual currencies come from equations relating U.S.
trade components to exchange rates as well as to
their other determinants. For the mark, the
weight obtained in this way reflects competition
between U.S. and German producers in U.S.,
German, and other markets and the sensitivity of
producers and consumers to prices in each of
these markets.
Value of the Dollar
413
One problem in taking a strict theoretical approach to constructing an index of weighted
average exchange rates is that reliable estimates
of these price sensitivities generally are not available. The International Monetary Fund derives
the weights in its index of weighted average
exchange rates from its model of multilateral
exchange rates; however, some of the price
sensitivities are simply assumed. The difficulty in
obtaining reliable estimates of these parameters
generally forces the analyst to use some measure
of trade shares as an approximation to the theoretically preferred weights. The two most common weighting schemes are bilateral trade
shares—used by Morgan Guaranty, the U.S.
Treasury, the Department of Commerce, the
Bundesbank, and the Federal Reserve Banks of
Atlanta and Dallas—and multilateral trade
shares, which the Federal Reserve Board staff
uses. In an index of the dollar's foreign-exchange
value, bilateral weights correspond to each country's share of total U.S. exports plus imports
(sometimes the weights for imports and exports
are calculated separately). By contrast, multilateral weights are the shares of each country in the
combined total trade of all the foreign countries
included in the index. The mathematical expressions for these weights are given in equations 1
and 2 in the accompanying box.
Each weighting scheme has conceptual advantages and disadvantages. Bilateral weights emphasize trade between two countries but neglect
the effects of competition in third markets. In an
index of dollar exchange rates, for example, a
bilateral weight on the German mark allows for a
decline in U.S. demand for German machinery
after a depreciation of the dollar against the
mark; but it does not allow for a shift in demand
toward U.S. machinery and away from German
machinery in other markets in which Germany
and the United States compete. Bilateral weights
are appropriate conceptually only if such thirdcountry effects are absent, which seems an unrealistic assumption.
Multilateral trade weights reflect the role of
each country as a competitor in the world market; their use is therefore an attempt to capture
the effects of competition in markets besides the
home market. However, they do not take account of the specific markets in which countries
414
Federal Reserve Bulletin • June 1987
TRADE-WEIGHTING
ALTERNATIVE
FOR THE
SCHEMES
INDEXES
USED
IN
OF EXCHANGE
RATES
DOLLAR
1. Bilateral weights
X
Wj =
US + mus
^{xbs + mvs)
2. Multilateral weights
xi + m,
vI
£ (xk + mk)
k
k*US
3. Modified bilateral weights, as defined in the
indexes of the European Communities and the
Organisation for Economic Co-operation and
Development
X
y,-
W;
US
x
us + yus
x 4 + y,
k
k<tUS
xji
+
jii \ X 4
k
k
xy
II
+
k
yp \ X
J
US
+
yus
k
4. Modified bilateral weights, as defined in Morgan Guaranty's broad index
w,-
y,2 4 + yj
X
US
x
usl
mvs
X mus
where
Wj = weight of currency i
x*j
= exports by country i to country j
mus = U.S. imports from country i
Xj
= exports from country / to the rest of the
countries in the index
mi - imports to country i from the rest of the
countries in the index
y,
= sales by country i in its own domestic
market.
SOURCES. Martine Durand, "Method of Calculating Effective
Exchange Rates and Indicators of Competitiveness," OECD
Working Paper 29, February 1986; European Communities,
"The Influence of Exchange Rate Changes on Prices: A Study
of 18 Industrial Countries—Technical Annex: The Calculation
of Effective Exchange Rates and Indices of Competitiveness,"
mimeo, September 1986; Morgan Guaranty, World Financial
Markets, October/November 1986.
compete. If countries trade in very different
markets, an index that embodies this weighting
scheme will misrepresent changes in overall
competitiveness. For example, the yen and the
Dutch guilder have appreciated in similar degree
against the dollar since its peak in early 1985, and
hence those two currencies have also shown
similar changes against other currencies. Because a multilateral index weights these other
currencies similarly in constructing weighted average exchange rates for the yen and guilder,
those two currencies will display roughly comparable appreciation on a weighted-average basis.
Yet, Japan obviously has suffered a greater loss
of overall competitiveness than the Netherlands
has: Japan relies more heavily on the U.S. market and also competes extensively with the newly industrialized countries in Asia, whose currencies have depreciated against the yen, whereas
the Netherlands trades mostly with other European countries, whose currencies have changed
little against the guilder.
To provide a perspective on the practical significance of this difference in weighting schemes,
chart 1 compares bilateral and multilateral tradeweighted indexes of the dollar's value against the
currencies of the other Group of Ten countries.
(In recent years, Switzerland has joined the
Group of Ten, making in fact 11 countries.
Nonetheless, by convention, the name remains
the Group of Ten.) Both indexes were constructed using average weights for 1978-83. (The index
with multilateral weights differs slightly from the
current index compiled by the Board staff, which
is based on 1972-76 average trade shares.) The
bilaterally weighted index shows a less pronounced rise in the dollar's value through early
1. Exchange value of the dollar
against the G-10 currencies
March 1973 = 100
1975
1980
1986
Monthly series. Percentage changes are computed logarithmically.
Indexes use 1978-83 average weights.
Measuring the Foreign-Exchange
1985 and a smaller decline subsequently. Overall, both indexes suggest that about two-thirds to
three-fourths of the dollar's rise after the fourth
quarter of 1980 had been reversed by the end of
1986 (see table 1).
The difference in the magnitude of the dollar's
swings based on the indexes weighted by multilateral and bilateral trade reflects differences in
the weight of the Canadian dollar, which has
changed relatively little in terms of the U.S.
dollar during this period. Because Canada accounts for such a large share of total U.S. trade,
in this 10-currency index Canada's bilateral
weight is four times as great as its multilateral
weight. Whether it is appropriate to assign the
Canadian dollar such a large weight is an open
question. More than 50 percent of U.S. trade
with Canada consists of intracompany transactions in the automotive industry, and of homogeneous commodities, whose prices are determined in world markets. Because the prices of
these goods may be relatively insensitive to
changes in U.S.-Canadian exchange rates, bilateral weights may overstate the importance of the
Canadian dollar in a summary measure of the
price competitiveness of U.S. goods.
Multilateral weighting schemes overlook the
importance of specific markets to specific countries. Alternative weighting schemes, used by the
European Communities (EC) and the Organisation for Economic Co-operation and Development (OECD), incorporate third-country effects
in a more detailed way by taking account of
which countries compete in which markets.
These so-called modified bilateral weighting
schemes begin with estimates of each country's
share in each market, or importing country.
Germany's market share in France, for example,
is calculated as the ratio of German exports to
France to total sales to France, including sales of
French products. If the index is for the dollar,
these market shares do not include U.S. sales in
the French market because their purpose is to
capture the role of each U.S. competitor. Next,
the proportion that the French market represents
in total U.S. sales, including sales in the United
States, is calculated. Finally, these measures are
combined to obtain a set of currency weights that
reflect the importance of each U.S. competitor
overall. The weight for the mark is the sum of
Germany's market share in each market weight
Value of the Dollar
415
1. Movements in the value of the dollar, alternative
indexes of exchange rates
Percent
Index
Nominal indexes
G-10, multilateral weights 2 ...
Federal Reserve Board3
G-10, bilateral weights (total
trade)2
IMF4
Morgan Guaranty,
15 countries4
Atlanta Federal Reserve5
Dallas Federal Reserve6
Real indexes
G-10, multilateral weights 2 ...
G-10, bilateral U.S. non-oil
import weights2
G-10 and 8 developing
countries, multilateral
weights2
G-10 and 8 developing
countries, bilateral U.S.
non-oil import weights 2 ...
1.
2.
3.
4.
5.
6.
Appreciation,
1980:4February
19851
Depreciation,
February
1985December 1986'
Proportion of
appreciation reversed
58
58
40
40
69
69
37
47
27
31
73
66
40
34
61
29
21
3
73
62
5
52
40
77
32
28
88
48
31
65
30
18
60
Percentage changes are computed logarithmically.
1978-83 weights.
1972-76 weights.
1980 weights.
1984 weights.
Annual weights, moving.
ed by the importance of that market to the
United States (see equation 3 in the box).
Compared with the standard weighting schemes,
these alternatives broaden the definition of competing goods to include a country's sales in its
own domestic market. Nonetheless, they limit
the home country's sales to so-called tradable
goods, under the assumptions that such a distinction can be made and that shifts in demand for
nontradable goods in response to a change in the
price of tradable goods are negligible.
Morgan Guaranty, in its recently developed
broad index, employs a slightly different modified bilateral weighting scheme for exports,
which does not incorporate third-country effects
as fully as the EC and OECD measures do.
These weights are combined with simple bilateral
import shares to obtain a set of trade weights. In
this scheme, the export weight for the mark in an
index for the dollar is the bilateral share of U.S.
exports to Germany, weighted by the share of
German sales in the German market (equation 4
in the box). Unlike the EC and OECD procedures, Morgan's weighting scheme omits the role
of German producers in third markets in which
the United States and Germany compete, al-
416
Federal Reserve Bulletin • June 1987
though it takes account of U.S. competition with
other countries besides Germany in the German
market. Moreover, while those measures include
U.S. sales in the home market in defining the
importance of each market to the United States,
Morgan's index uses simple bilateral U.S. export
shares.
To compare these alternative weighting
schemes with simple bilateral and multilateral
weighting schemes in the context of a standard
set of currencies, indexes of the dollar's value
against the other G-10 currencies were calculated
using two modified bilateral weighting schemes,
those of the OECD and Morgan Guaranty. These
measures display less absolute variation in the
dollar's value than do the indexes of the Board
staff or the IMF, which use multilateral weights
(chart 2). The index based on Morgan Guaranty's
weighting scheme closely parallels the simple
bilateral index, which is not surprising given that
it uses simple bilateral weights for imports and
that its modified bilateral export weights only
partially capture third-country effects. (Recall
that indexes based on bilateral trade shares show
smaller swings in the dollar's value because they
assign a larger weight to the Canadian dollar.)
The OECD construct tells a different story, suggesting that more than 80 percent of the dollar's
appreciation after late 1980 had been reversed by
the end of 1986. This result stems from the larger
weight assigned to the yen in the OECD scheme,
as the depreciation of the dollar against the yen
has more than reversed the rise after late 1980, in
contrast to its movements against other G-10
currencies. The larger weight of the yen in the
OECD weighting scheme apparently indicates a
sizable role for Japanese firms as competitors in
their home markets and in U.S. markets, as well
as with the United States in third markets.
When the object of analysis is something other
than trade, the optimal theoretical weights are
different. In a weighted average index of the
dollar's value focusing on the influence of
changes in exchange rates on import prices, the
weight for, say, the mark reflects the bilateral
share of U.S. imports from Germany, the price
sensitivity of U.S. demand for German goods,
and the sensitivity of the profit margins of German exporters to a change in the mark-dollar
bilateral rate. The weight depends, in addition,
2. Exchange value of the dollar against the
G-10 currencies, alternative trade weights
1980:4=100
Monthly series. Percentage changes are computed logarithmically.
The IMF index, OECD index, and Morgan broad (modified bilateral)
index were renormalized to obtain indexes for the G-10 alone based on
each weighting scheme.
on the bilateral shares of U.S. imports from other
countries and on the sensitivity of import prices
for these goods to a change in the mark-dollar
rate. These influences introduce the same type of
third-country considerations raised in the discussion of the trade-volume case. However, because empirical evidence suggests that import
prices of French goods, for example, are affected
little by changes in the mark-dollar exchange
rate, simple bilateral import shares generally are
regarded as acceptable weights for applications
involving import prices.
If the objective, more generally, is to assess
the influence of changes in exchange rates on
U.S. consumer prices, then imports from Germany as a share of U.S. consumption, rather than as
a share of the volume of U.S. imports, appear in
the weight along with the relevant price sensitivities described above. In addition, to capture the
way changes in exchange rates affect consumer
prices indirectly through their influence on the
price of competing domestic goods, the weight
should depend on the share of domestically produced tradable goods in U.S. consumption and
the price sensitivity of demand for these goods.
Still other factors matter in other analyses.
Take asset demands: the degree to which they
respond to changes in exchange rates depends on
Measuring the Foreign-Exchange
3. Nominal and real exchange value of the dollar
against the G-10 currencies,
multilateral trade weights
Value of the Dollar
417
4. Nominal and real exchange value of the dollar
against the currencies of eight developing
countries, multilateral trade weights
March 1973 = 100
Ratio scale. 1980:4=100
% 400
300
Nominal
Monthly series. Percentage changes are computed logarithmically.
Indexes use 1972-76 average weights; the real index is adjusted with
the CPI.
their sensitivity to changes in expected rates of
return, including the change attributable to expected rates of change in exchange rates. In a
weighted average index used as a source of
information about monetary conditions, the
weights should reflect these same sensitivities as
well as the currency composition of asset portfolios. In the absence of these data and reliable
estimates of these parameters, some regard
weights based on gross national product as a
good proxy.
Real versus Nominal
Indexes
As noted previously, a real exchange-rate index
is appropriate for examining the effect of changes
in exchange rates on trade developments. However, because most standard price measures are
available at best monthly, daily movements in
nominal exchange-rate indexes often are used as
a proxy for changes in real or price-adjusted
measures over short intervals. For indexes of the
dollar's value against the G-10 currencies, this
practice is valid; these measures display about
the same behavior in real and nominal terms,
reflecting the similarity in inflation rates in the
United States and the foreign G-10 economies,
on average (chart 3).
In contrast, the nominal value of the dollar
against the currencies of certain developing
countries behaves quite differently from its real
counterpart. Chart 4 depicts the dollar's value in
terms of the currencies of eight key developingcountry trading partners of the United States:
Brazil, Hong Kong, Malaysia, Mexico, the Phil
Monthly data. The eight countries are Mexico, Brazil, Hong Kong,
Malaysia, the Philippines, Singapore, South Korea, and Taiwan. The
real index is adjusted with the CPI.
ippines, Singapore, South Korea, and Taiwan.
Although the dollar has appreciated several hundred percent in nominal terms against a multilateral trade-weighted average of these currencies
since late 1980, its real appreciation is much
smaller because of the enormous rates of inflation in Mexico and Brazil.
Thus, if it includes the currencies of countries
with very high rates of inflation, a nominal index
of the dollar's value will present a particularly
misleading picture of changes in U.S. price competitiveness; this point can be seen by contrasting the behavior of the original index compiled
by the Federal Reserve Bank of Dallas, which
5. Indexes of the weighted average foreign-exchange
value of the dollar
1980:4=100
1980
1982
1984
Percentage changes are computed logarithmically.
1986
418
Federal Reserve Bulletin • June 1987
includes the currencies of virtually all U.S. trading partners, with that of the more traditional
indexes as well as the recently developed index
of the Federal Reserve Bank of Atlanta (chart 5).
Although the Atlanta Bank's index also includes
the currencies of some developing countries,
these are mainly newly industrialized countries
in Asia, whose inflation rates are not appreciably
different from those in the United States. (Subsequently, the Dallas Bank developed a real index
for the dollar that includes the currencies of 101
U.S. trading partners.)
ment problems associated with fluctuations in
profit margins in response to changes in exchange rates. However, they have some important drawbacks as a gauge of competitiveness:
they omit other components of production costs
such as costs of capital and material inputs, and
thus their use overlooks longer-run changes in
their relationship to output prices. In view of the
deficiencies of each of these individual measures, more than one real exchange-rate measure
should be used for assessing competitiveness.
Alternative
Currency
Real Exchange-Rate
Indexes
For applications involving real indexes, one issue is which price index to use as a deflator.
None of the standard measures is ideal for assessing changes in U.S. competitiveness; each
has advantages and disadvantages, both theoretical and empirical. Consumer prices provide a
broad measure of the prices of domestic finished
goods and services, and they are available on a
relatively consistent and timely basis across countries. However, they include the prices of some
nontraded items, such as housing and a wide range
of services. Indexes of wholesale prices focus
more narrowly on the goods sector, but their
coverage can vary substantially across countries.
Ill particular, in many countries these indexes
give heavy weight to the prices of basic commodities and therefore imperfectly reflect underlying
domestic manufacturing costs and output prices.
Furthermore, for some developing countries that
might be considered in a broader index, these
standard measures of domestic consumer and
producer prices may be biased downward by the
presence of price controls.
Export prices capture the prices of goods
actually traded, but they exclude the prices of
potentially tradable goods, such as domestic
import substitutes. Moreover, to the extent that
firms price in the short run to meet competition
in foreign markets, varying profit margins to
absorb fluctuations in exchange rates, short-run
changes in export prices will not mirror changes
in underlying cost and price pressures. Unit
labor costs reflect a major component of domestic production costs, while avoiding measure-
Coverage
If the focus of attention is how exchange rates
influence trade and inflation, then currencies of
countries with either a significant share in world
trade (if multilateral weights are used) or U.S.
trade (under a bilateral weighting scheme) are
candidates for inclusion in the index. For applications involving asset demands, the index
should encompass countries whose assets are
widely traded in financial markets.
In addition to these theoretical criteria, several
practical considerations arise. First, countries
included should have well-developed foreignexchange markets. When developing countries
use multiple exchange rates, determining the
appropriate exchange rate for inclusion presents
difficulties. Second, currencies linked directly to
currencies in the index as a result of policy
decisions about exchange rates may be omitted
provided the weights are appropriately adjusted.
In general, so long as the excluded currencies
move in close parallel with the currencies in the
index, their absence will not appreciably affect
the behavior of the index or its usefulness in
forecasting other macroeconomic variables.
When the application involves real exchange
rates, movements in the real value of currencies
omitted from the index should be highly correlated with those of currencies in the index.
A comparison between an index of the OECD
currencies and one for the G-10 alone offers an
illustration (chart 6). The nominal indexes move
in parallel because of the relatively small trade
shares of those OECD countries that are not
among the G-10 and because several of those
Measuring the Foreign-Exchange
currencies are linked to the G-10 currencies. The
difference in the movements in nominal exchange rates in the G-10 countries and in the
OECD countries that are not in the G-10, which
accounts for the spread in the top panel of the
chart, largely reflects different inflation experiences; thus the similarity in the behavior of these
indexes is even more striking on a CPI-adjusted
basis, as shown in the bottom panel.
In contrast, an index of the dollar's value in
terms of a weighted average of the currencies of
certain developing countries behaves much differently from an index based on the G-10 currencies alone. Take for illustration an index of the
dollar's value against the currencies of eight key
developing-country trading partners of the United States. Together, these countries account for
about 35 percent of world trade by nonindustrialized countries, and in 1978-83 they accounted
for the largest shares of U.S. non-oil imports
from nonindustrialized countries outside the Organization of Petroleum Exporting Countries.
(Recently, the importance of countries that are
large producers of primary products, such as
Malaysia and the Philippines, has diminished.)
From early 1985 through the fourth quarter of
1986, the dollar appreciated about 3 percent in
real terms against an index of the currencies of
these eight countries weighted by multilateral
trade; by contrast, it declined about 40 percent in
Value of the Dollar
419
real terms vis-a-vis a comparably weighted average of the G-10 currencies (chart 7).
This overall figure belies substantial differences in movements in the dollar's real value
against the individual currencies of these developing countries. None of the Asian currencies,
except the Philippine peso, changed much
against the dollar on a CPI-adjusted basis from
the first quarter of 1985 through the fourth quarter of 1986. Inasmuch as the inflation rates in
these countries are broadly similar to that in the
United States, this relative stability in exchange
rates reflects the policy in many of these countries during this period of essentially pegging the
currency to the dollar's value, with periodic
adjustments in the peg. One prominent example
of a sliding peg is the Taiwan dollar, which
appreciated 5 percent in real terms against the
dollar during this period. Political pressure to
appreciate its currency developed as Taiwan
amassed large current account surpluses and
foreign exchange reserves. The Philippine peso,
in contrast, depreciated about 13 percent on a
CPI-adjusted basis against the dollar from the
first quarter of 1985 through the end of 1986 as a
7. Indexes of the real exchange value of the dollar
March 1973 = 100
Multilateral weights, total trade
6. Indexes of the exchange value of the dollar,
multilateral trade weights
March 1973 =
100
developing countries
Nominal
150
G-10+ 8 developing countries
125
Bilateral weights, U.S. non-oil imports
100
G-10
125
developing countries
100
G-10+ 8 developing countries
Quarterly data. Indexes use 1978-83 average weights. The real
index is adjusted with the CPI.
Quarterly data. Percentage changes are computed logarithmically.
Indexes use 1978-83 average weights.
420
Federal Reserve Bulletin • June 1987
result of several factors: an attempt to rectify the
real appreciation of the peso during the previous
two years; the difficulties the Philippines has had
in servicing its international debts; and the
growth in trade of many other Asian countries in
the index.
Among the Latin American currencies, the
Mexican peso depreciated more than 50 percent
in real terms against the dollar from the first
quarter of 1985 through the fourth quarter of 1986
as Mexico corrected the real appreciation of the
peso in 1984-85 and adjusted to the loss in
revenues resulting from the fall in oil prices. The
Brazilian cruzado, on the other hand, appreciated nearly 15 percent on a CPI-adjusted basis
against the dollar from the first quarter of 1985
through the fourth quarter of 1986. (This figure
understates the actual appreciation of the cruzado in real terms because price controls introduce
a downward bias in the Brazilian CPI.) Following
the rapid depreciation, in parallel with inflation,
of the cruzeiro, the predecessor currency, the
cruzado was introduced in February 1986.
Throughout most of 1986 the nominal value of
the cruzado was pegged to the dollar as part of
the Cruzado Plan, which was intended to check
inflation expectations. With the nominal value of
the cruzado fixed or experiencing only minidevaluations, while inflation was much more
rapid in Brazil than in the United States, the real
value of the cruzado in terms of the dollar rose.
To compare the performance of a broader
index of the dollar's value with that of an index
based on the G-10 currencies, alternate indexes
that include the currencies of these eight developing countries along with those of the G-10
were constructed using two different sets of
weights: multilateral trade weights and bilateral
U.S. non-oil import weights. (The construction
of these indexes is described in the appendix.)
According to an index with multilateral trade
weights (the upper panel of chart 7), the real
dollar depreciated nearly 30 percent against a
weighted average of the currencies of all 18
countries from the first quarter of 1985 through
the fourth quarter of 1986, in contrast with a
decrease of almost 40 percent vis-a-vis the G-10
currencies alone. With bilateral non-oil import
weights (the lower panel of chart 7), the index
shows a decline in the real value of the dollar of
about 20 percent against the currencies of the 18
countries, versus 30 percent against the G-10
currencies alone. Overall, the more comprehensive indexes indicate that roughly two-thirds of
the dollar's rise from the fourth quarter of 1980
had been reversed by the end of 1986, compared
with the three-fourths or more that the narrower
indexes indicate (see table 1). Since the end of
1986, the dollar has depreciated further in general, but particularly against the yen and European
currencies.
FORECASTING
OF ALTERNATIVE
PERFORMANCE
INDEXES
The inclusion of a representative sample of currencies of developing countries in an index of
weighted average exchange rates tends to reduce
the proportion of the dollar's rise in the first half
of the 1980s that has been reversed. The ultimate
question, however, is whether a broader index
can better account for and forecast movements
in the U.S. trade balance and import prices. For
insight on this question, the performance of
alternative indexes was evaluated in the context
of equations used by the Federal Reserve Board
staff to forecast the volume of nonagricultural
exports and the prices of nonagricultural exports
and non-oil imports. This investigation examined
indexes of the dollar's value against the currencies of eight developing countries and the G-10
and, alternatively, an index of the G-10 currencies alone weighted by multilateral trade. For
non-oil import prices, the broader indexes were
based on multilateral trade weights and bilateral
non-oil import weights, as constructed in the
manner described above. For nonagricultural
export volume and prices, these indexes were
based on multilateral trade weights and bilateral
nonagricultural export weights. The tests did not
include other components of U.S. trade flows
because (1) the volume of oil imports is not
particularly sensitive to changes in exchange
rates, according to empirical studies; (2) in the
equations used by the Board staff, exchange
rates affect the volume of non-oil imports only
indirectly, through import prices; and (3) extensive subsidies and restrictions in markets for
agricultural products complicate the modeling of
agricultural exports.
Measuring the Foreign-Exchange
2. Average absolute prediction errors for selected
international trade variables, alternative exchange
rate indexes'
Percent of dependent variable
Dependent variable
Non-oil import price deflator
Nonagricultural export volume
Nonagricultural export price
deflator
G-10,
multilateral
weights
G-10 and 8
developing
countries
Multilateral
weights
Bilateral
weights
(1)
(2)
(3)
2.39
4.06
1.10
1.28
.76
1.46
.47
.47
.58
1. The underlying equations were estimated from 1966 through
1983, and the prediction errors were calculated for 1984 and 1985. The
multilateral weights are shares of total trade. The bilateral weights are
shares of U.S. non-oil imports for the non-oil import price equation
and shares of U.S. nonagricultural exports for the nonagricultural
export volume and price deflator equations.
Over the whole sample period, from 1966 to
1985, the overall fit of the equations for all three
variables differed little across the three indexes;
the estimated parameters essentially adjust so as
to offset the reduction in the depreciation of the
dollar during the recent period exhibited by a
broader index.
An evaluation of the forecasting performance
of the indexes is presented in table 2. For this
analysis, the estimation period was truncated to
provide an out-of-sample test. For the prices of
nonagricultural exports, the three indexes per-
APPENDIX:
CONSTRUCTION
AGAINST THE CURRENCIES
OF INDEXES
OF THE G-10
421
formed similarly. However, the broader measures substantially improved the predictions for
the prices of non-oil imports and the volume of
nonagricultural exports, reducing the average
absolute forecast error significantly (compare
columns 2 and 3 with column 1). Moreover, the
improvement in the forecast during this period is
greater when an index based on bilateral non-oil
import shares is used for predicting import prices
and when an index with multilateral trade
weights is used for predicting export volume.
CONCLUSION
In summary, no single measure of weighted
average exchange rates is suitable for all purposes. The appropriate measure for each application should reflect the unique way changes in
bilateral exchange rates affect the variable of
interest. Several important macroeconomic applications serve as illustrations here, but weighted average exchange rates have many other uses.
If, for example, the outlook for U.S. exports of
steel is at issue, it seems reasonable that only the
currencies of countries that are large steel producers rather than some other set of U.S. trading
partners, should be included in the index. In
principle, a myriad of such applications exist,
each requiring a different index of weighted
average exchange rates.
OF THE DOLLAR S VALUE
AND EIGHT DEVELOPING
Initially, the individual currencies of the Group
of Ten countries and eight developing countries
are assigned weights based on 1978-83 average
multilateral trade shares, bilateral non-oil import
shares, or bilateral nonagricultural export
shares. Because the G-10 countries account for
roughly 60 percent of world trade by industrial
countries while the eight developing countries
account for only 35 percent of world trade by
nonindustrialized countries, the weights of the
various currencies are adjusted so that the two
Value of the Dollar
COUNTRIES
samples reflect the proportions of world trade,
U.S. non-oil imports, or U.S. nonagricultural
exports accounted for by industrialized and nonindustrialized countries respectively. For example, the weights for each of the G-10 currencies
are renormalized to sum to the 78 percent share
of world trade accounted for by industrial countries (for the index with multilateral trade
weights) and the 71 percent share of U.S. non-oil
imports from industrial countries (for the index
based on bilateral non-oil import weights).
422
Federal Reserve Bulletin • June 1987
The alternative weights are displayed in table
A.l. For comparison, the weights currently used
in the index compiled by the Federal Reserve
Board staff are presented in column 1; column 2
shows these weights based on 1978-83 average
global trade shares. The weights for the broader
indexes constructed here are presented in columns 3, 4, and 5.
A.l. Trade-share weights in alternative indexes of dollar exchange rates
Percent
G-10
Country
G-10 countries
Belgium
Canada
France
Germany
Italy
Japan
Netherlands
Sweden
Switzerland
United Kingdom
Developing countries
Brazil
Mexico
Hong Kong
Malaysia
Philippines
Singapore
South Korea
Taiwan
Current index,
multilateral
trade weights,
1972-76
G-10 and 8 developing countries
Multilateral
trade weights,
1978-83
Multilateral
trade
weights
Bilateral
non-oil
import
weights
Bilateral nonagricultural
export
weights
(1)
(2)
(3)
(4)
(5)
100.0
6.4
9.1
13.1
20.8
9.0
13.6
8.3
4.2
3.6
11.9
100.0
7.1
7.8
13.0
20.4
9.5
15.4
8.1
3.4
3.5
11.8
78.2
7.1
7.8
13.0
20.4
9.5
15.4
8.1
3.4
3.5
11.8
71.0
1.9
36.9
4.7
10.5
4.2
29.8
1.7
1.5
2.2
6.6
64.5
4.9
42.1
6.3
8.5
3.9
14.8
4.2
1.6
3.0
10.7
21.8
15.2
11.1
15.0
3.8
4.8
15.5
15.8
14.3
29.0
11.3
20.0
14.9
5.6
5.1
5.6
14.9
22.6
35.5
11.4
39.2
7.6
5.1
5.7
10.1
11.4
9.5
423
Industrial Production
Released for publication April 15
was in the fourth quarter of 1986. However, the
level of output in March 1987, at 126.7 percent of
the 1977 average, was essentially the same as it
was in December 1986.
In market groupings, production of durable
consumer goods declined about 1 percent in
March, reflecting a cutback in output of motor
vehicles and a further reduction in home goods
such as appliances. Autos were assembled at an
Industrial production declined an estimated 0.3
percent in March, reflecting widespread reductions in output. Revised levels now indicate a
decline of 0.1 percent for January, while the gain
in February remained at 0.5 percent. The average level of production in the first quarter of 1987
was 2.6 percent higher, at an annual rate, than it
Ratio scale, 1977 = 100
Products
140
TOTAL INDEX
120
/
100
Materials
I
J
MANUFACTURING
Durable
MATERIALS
Nondurable
Durable
—
Nondurable
'
S/
/
/
100
80
160
CONSUMER GOODS
Nondurable
140
INTERMEDIATE PRODUCTS
Business supplies
120
/
Durable
100
/
80
J
— Construction supplies
L
240
FINAL PRODUCTS
200
Defense and space
160
140
20
100
80
1981
1983
1985
1987
All series are seasonally adjusted. Latest figures: March.
1981
1983
1985
1987
424
Federal Reserve Bulletin • June 1987
1977 = 100
Percentage change from preceding month
1987
Group
Feb.
1986
Mar.
Nov.
1987
Dec.
Jan.
Feb.
Mar.
Percentage
change,
Mar. 1986
to Mar.
1987
Major market groups
Total industrial production
127.1
126.7
.6
.5
-.1
.5
-.3
2.5
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment..
Defense and space...
Intermediate products..
Construction supplies
Materials
135.7
134.5
127.2
122.0
129.2
139.7
186.8
139.7
127.5
115.5
135.2
134.0
126.5
120.6
128.7
139.2
187.2
139.3
127.3
115.1
.4
.4
.8
1.8
.4
-.4
.2
.4
.5
.9
.4
.4
1.3
2.7
.8
-1.1
.5
.4
.9
.8
-.5
-.4
-.8
-1.3
-.6
.2
.0
-.8
-.6
.5
1.0
1.0
.8
1.7
.5
1.7
.6
.8
.3
-.2
-.3
-.4
-.5
-1.1
-.3
-.4
.2
-.3
-.2
-.3
3.0
2.6
3.9
7.3
2.7
1.1
6.2
4.5
3.8
1.6
-.2
3.3
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
131.7
129.8
134.3
95.9
113.0
131.4
129.7
133.8
95.1
113.2
.3
.4
.3
1.9
1.7
-.2
-.5
.3
1.2
2.2
1.1
.1
-2.0
.1
-.1
-.3
-.8
.1
2.2
4.8
-7.6
3.5
NOTE. Indexes are seasonally adjusted.
annual rate of 7.9 million units—down from a
rate of 8.3 million units in February. Nondurable
consumer goods also were off in March, owing
largely to reduced production of apparel and
consumer fuels. Output of business equipment
declined 0.4 percent as reductions in manufacturing, power, and transit equipment were only
partially offset by gains in output of farm equipment, which continued to rebound from strikeaffected levels. Following strong growth in 1986,
production of construction supplies slowed in the
first quarter of 1987. Output of supplies for both
construction and business declined in March.
Production of durable materials decreased during the month despite some strike-related come-
back in steel. Output of nondurable materials,
which had been rising quite rapidly in 1986 and
early 1987, edged down in March for a second
month.
In industry groupings, manufacturing output
decreased 0.2 percent in March after a gain of 0.6
percent in February. The motor vehicle industry
as well as construction-related industries such as
lumber and stone, clay, and glass shared in the
decline along with electrical machinery and
transportation equipment. Nondurable manufacturing was off 0.3 percent, and mining—particularly coal—also declined. Output at utilities
edged up in March.
425
Statements to Congress
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve System,
before the Subcommittee on International Finance and Monetary Policy, Committee on
Banking, Housing, and Urban Affairs, U.S. Senate, April 7, 1987.
I welcome the opportunity to appear before you
today to review some aspects of the world economic situation. In particular, you asked me to
concentrate on exchange market developments
and international debt. These issues are in turn
related to the overall functioning of the world
economy. Indeed, I would argue that the problems of economic growth, balance of payments
adjustment, protectionism, and international
debt are so intertwined today that a failure to
deal constructively with any one of them would
risk failure across the board.
INSTABILITY
IN EXCHANGE
RATES
So far in this decade we have experienced tremendous swings in the value of the dollar. Measured in terms of a multilateral trade-weighted
average against the currencies of the other Group
of Ten (G-10) countries, the dollar's value rose
about 80 percent from 1980 to the first quarter of
1985. It has since retraced most of that rise and is
now at a level only about 10 percent above its
average in 1980 when our current account was
close to balance.
Large swings in exchange rates among industrialized countries over periods of several years
were also characteristic of most of the 1970s.
However, if anything, the fluctuations have appeared to become greater, rather than less, as the
period of floating rates has been extended.
In themselves, such wide swings in exchange
rates are troublesome. When exchange rates
among nations fluctuate much more widely than
relative changes in domestic prices, productivity, and other basic economic variables, econom
ic units producing internationally tradable goods
receive misleading price "signals" over time.
Investment decisions may be distorted, and individual firms and workers can be whipsawed by
fluctuations in price competitiveness internationally. For the economy generally, deflationary or
inflationary impulses may complicate the task of
economic management and affect the stability of
financial markets.
However, it does little good merely to rail
against excessive fluctuations in exchange rates
without being prepared to do something about
them. And that "something," in the end, involves appropriate national economic policies
and reasonable consistency and complementarity among the policies and performance of major
nations. In fact, national policies during much of
the 1980s have, in important respects, diverged
in ways that put pressure on exchange rates and
distorted trade positions, even though inflation
rates have tended to converge at much lower
levels.
For one thing, the U.S. federal budget deficit
was high and rising as budget deficits in other
countries were being reduced. For several years,
growth in the United States was substantially
stronger than elsewhere and our interest rates
were relatively high. Although U.S. growth overall has since slackened, expanded consumption
has depressed further our chronically low personal saving rate.
As a result, there have been strong incentives
for a flow of capital from abroad into the United
States. For a time, that flow pushed up the
dollar, and that strength was probably amplified
by more speculative forces. The result of the
strong dollar and of our relatively rapid growth in
domestic demand was a sharp deterioration in
our international competitive position and in our
trade and current accounts.
The rising trade deficit, lower interest rates,
and slower growth have all worked in the direction of reducing dollar exchange rates over the
426
Federal Reserve Bulletin • June 1987
past two years. Relative to the Japanese yen and
the German mark, the dollar is at, or close to, alltime lows.
No doubt a sizable realignment of currency
values has been a necessary part of the process
of restoring better balance to our trade and
current accounts. Moreover, I believe sustained
economic growth and financial stability in the
United States over the next few years are importantly dependent on improvements in our trade
balance. But I do not believe we can be successful in that effort if we fail to recognize the
importance of factors other than exchange rates
in redressing our trade balance. There are clear
dangers in relying too much on exchange rates
alone.
The hard fact is that we have been spending
more at home than we have been producing—
about 3V2 percent more last year. The decline in
the dollar has provided incentives for more exports and for less imports. But if we are to
improve our trade balance, and do so with a
minimum of inflationary pressures, we will also
have to slow the growth of spending at home,
particularly for consumption. We want to maintain investment. However, we will have to
achieve a better balance between that investment
and domestic savings if we are to be in a position
to dispense with foreign capital. In terms of
laying the groundwork for future growth, progress in making these adjustments seems to me
more important than achieving a particular rate
of growth overall this year.
The constructive way to work in the needed
direction would be to reduce our budget deficit,
year by year, paving the way for improvements
in our trade accounts. In contrast, looking toward depreciation of the dollar alone to improve
our trade balance would clearly pose substantial
risks of renewed inflationary momentum and
undermine confidence in future financial stability—developments that could jeopardize prospects for sustained economic expansion. You are
well aware that some warning signs of just such
developments have appeared in recent weeks.
I know of no reliable way of judging now
whether several years ahead the dollar vis-a-vis
other currencies will ultimately need to be higher
or lower, consistent with restoration of a sustainable trade position. Too much depends upon
other important factors and policies affecting
relative growth and competitive performance
here and abroad. What we do know is that a
substantial adjustment in the exchange rate has
already been made. That adjustment should be
large enough, in a context of a growing world
economy and fiscal restraint in the United
States, to support the widespread expectations
of a narrowing in the real trade deficit in the
period ahead. There are indications that the
volume of our exports is now growing substantially, and some slowdown in the growth, or even
a decline, in the volume of imports seems possible this year. In real terms, the deficit in our
trade narrowed in the fourth quarter of last year.
Whether, and how soon, improvement in the
real trade balance this year will be accompanied
by a reduced trade deficit in dollar terms—the
data published each month—is more problematical. The trouble is that higher dollar prices of
imports as the dollar depreciates—the wellknown "J-curve" effect—might offset improvement in the volume of net exports for some time.
That phenomenon itself points to one of the
dangers of looking to depreciation of the dollar
alone to deal with the trade problem: it generates
inflationary pressures and could actually prolong
J-curve effects, perhaps, raising more doubts
about our ability to finance our current account
deficit.
Prospects for achieving solid and steady improvement in our external trade—and doing so in
a context of sustained world growth—is critically
dependent upon the strength of markets abroad,
and on whether they are open to us. Unfortunately, the evidence on that score is not entirely
favorable.
Specifically, growth of real gross national
product in foreign G-10 countries on average
slowed to about 2XA percent last year (fourth
quarter to fourth quarter), almost V2 percent less
than in 1985. To be sure, much of that slowdown
reflected reduced export growth rather than reduced domestic demand. But clearly, domestic
expansion in those countries was not enough to
offset the effects of the trade adjustment. And the
clear danger now in most other industrialized
countries is that growth may be slowing further.
In that kind of situation, further sizable depreciation of the dollar could well be counterproduc-
Statements
tive. It will take time and other policy changes
both here and abroad to achieve the shift in
resources necessary to achieve better international balance. Excessive volatility in exchange
rates could jeopardize, instead of speed, the
process by further impairing prospects for investment and growth in the surplus countries.
That, I believe, is the sense of the understandings reached among the leading industrial countries in Paris in February, looking toward greater
stability of exchange rates around current levels.
Those understandings have been reflected in
active intervention in the exchange markets in
recent weeks. But intervention, taken alone, is of
course a limited tool.
Confidence in the current exchange rate levels
will, in the end, depend upon perceptions that
more fundamental policies than intervention will
in fact be brought to bear. I have emphasized the
need for complementary changes in fiscal policies in the United States, Germany, and Japan.
The conduct of monetary policy, here and
abroad, will be relevant as well. The performance of the dollar in the exchange market might
become a factor bearing on our provision of
reserves; I should think our central banking
colleagues abroad may wish to take account of
such circumstances as well.
In sum, we plainly do want, and need, improvement in our trade balance. There are some
encouraging signs in that respect. But there are
also practical limits as to how fast the necessary
massive shift in resources can be accomplished if
the momentum of world expansion is to be
maintained.
Undercutting investment
and
growth abroad at a time when growth prospects
are already relatively weak is neither in their
interest nor in ours. Undercutting our own prospects for price and financial stability by a weak
dollar is equally unattractive.
What we need now, instead of more depreciation, is action here and abroad to carry through
on those other measures needed to support
growth and adjustment—specifically action to
reduce the budget deficit here and to provide
stimulus abroad. We need time for those actions
and the earlier depreciation to work their effects.
And we need the patience to see it through,
without embarking on self-destructive protectionist policies.
THE WORLD DEBT
AND
PROBLEMS
to Congress
427
SITUATION—PROGRESS
Patience is difficult enough for rich countries like
the United States; for the heavily indebted countries of the developing world, the plea wears thin
without supportable prospects for greater economic growth and stability. In that connection, I
do not share the sense of some that radical new
approaches to the debt problem are necessary or
practicable—indeed, writing down and forgiving
debts that can reasonably be serviced would risk
undermining growth and stability in the borrowing countries. But I also believe that we would be
blind to fail to recognize shortcomings in implementing present approaches.
Specifically, there is clearly a danger that
adequate financing arrangements are not being
negotiated and put in place in a timely way.
Borrowing countries that have demonstrated
their intent and ability to carry out effective
economic programs need to be able to proceed
with confidence that necessary funds will in fact
be available to support those programs.
More broadly, sluggish growth in the industrialized world has affected the export markets of
the heavily indebted countries, slowing their
return to full economic and financial health. For
a while, in 1983 and 1984, as the United States
led world recovery, markets of the borrowing
countries expanded at a rapid pace. Then the
growth rate for industrialized countries dropped
to 3 percent in 1985 and to less than 2VI percent
last year. As things stand, prospects are no
better—and perhaps worse—in 1987. Taking the
whole period since 1982, Europe and Japan have
increased their imports from Latin America very
little. Plainly, it is in our collective interest, as
well as that of the indebted countries, to do
better.
Meanwhile, my sense is that there has been
too little appreciation of how much progress the
heavily indebted countries themselves have
made toward laying the groundwork for renewed
and more sustainable growth. To take one key
measure of adjustment, the combined current
account deficit of the so-called Baker-15 countries declined from the $50 billion range in 1981—
82 to essentially zero in 1984-85. The aggregate
deficit widened again about $10 billion in 1986,
428
Federal Reserve Bulletin • June 1987
but that almost entirely reflected the decline in
oil and other commodity prices. Even under
those circumstances, the deficits have collectively been within the amounts envisaged when
Secretary Baker outlined the "Program for Sustained Growth" in Korea in 1985. At the same
time, capital flight in most borrowing countries
has tended to slow; it has even reversed in some.
Reflecting those factors, growth in the external
debt of the most heavily indebted countries has
slowed sharply, averaging less than V/i percent a
year in dollar terms since 1982. With reasonable
rates of economic expansion both in the borrowing countries and in the world at large, that rate
of increase in external debt should be manageable and consistent both with declining debt
burdens for borrowers relative to gross domestic
product or exports and with reduced exposures
of lenders relative to their capital and assets.
I realize neither world growth nor growth by
borrowing countries has recovered to "pre-crisis" levels. Nonetheless, along with the progress
in external adjustment, many of the major borrowing countries have also experienced significant recovery in economic activity. A few—
Brazil, Chile, Colombia, and Morocco—have
achieved a substantial pickup in economic
growth, averaging more than 4 percent per year
during the past three years. For the 15 heavily
indebted countries as a group, real GNP has
grown some 8.8 percent since 1983.
Measured against the performance of the
1970s, when foreign finance was so freely available, or against prospective needs, the improvement in economic activity, employment, and
living standards has not been satisfactory. But a
full measure of success by those criteria was
hardly possible in so short a period of time.
Plainly, the earlier amounts of lending from
abroad are simply not available today. Instead,
some fundamental economic adjustments have
been required to build a more solid foundation
for sustained growth.
Naturally, the degree of success in making
those adjustments has varied from country to
country. In difficult economic and political circumstances, punctuated by natural disasters and
external shocks, some setbacks have been inevitable. But what is so striking overall is the
amount of progress that has been achieved.
In country after country, fiscal deficits are
under better control than they were at the beginning of the decade. Chronically overvalued exchange rates have been brought into more realistic competitive alignments, enabling their
industries to compete more effectively in world
markets. At the same time, the exchange rate
and fiscal changes have helped create conditions
in which the borrowing countries could be more
open to international competition—quantitative
import restrictions, licensing requirements, and
tariffs have, on balance, been reduced. Other
efforts are under way to limit the role of the state
in the economic system by cutting back on
subsidies, credit allocation, and in some instances public ownership of industry.
One area that has been squeezed that reflects
adversely on future prospects is investment.
That points up the need for some margin of fresh
funds from abroad to support growth. The provision of such funds from both public and private
sources has been, of course, one of the basic
elements of the "Baker Plan."
Both the International Monetary Fund (IMF)
and the World Bank have played important roles
in that respect. In particular, the World Bank
over the past year, complementing the efforts of
the Fund, has embarked on an ambitious program to define and to support financially structural changes that would provide a basis for
debtor countries to resume more vigorous economic growth. This program has entailed an
intensive process of consultation with each of the
largest indebted countries to develop policy approaches that are both strategically important for
improving economic efficiency and politically
feasible.
During the past two years, the most significant
structural changes adopted by the major indebted countries have been in the area of trade
policy. Nigeria, Mexico, Chile, Colombia, and
Ecuador have each taken steps to liberalize their
import restrictions—and at the same time, have
been able to achieve impressive growth rates for
their nontraditional exports. In other instances,
huge credit subsidies to agriculture or other
sectors have been reduced while other measures
have been taken to enhance the efficiency of
those sectors.
Overall, disbursements by the World Bank and
Statements
the regional development banks to the "Baker
15" countries increased to %1VI billion in 1986,
almost 40 percent above the rate of 1983-85.
Disbursements should increase further this year
to the levels envisaged by the Baker Plan. These
institutions will certainly provide a substantially
larger proportion of new funds flowing to Mexico
and other heavily indebted countries than in
earlier years.
Both governmental and private lenders have
restructured outstanding debts of the borrowers,
and interest rates on many bank credits have
been negotiated downward. More importantly,
world interest rates have declined in both nominal and real terms. As a result, the burden of
external interest payments has been falling despite some increases in debt.
From the perspective of the commercial bank
lenders, progress has been more striking. Exposure to the heavily indebted countries relative to
their capital bases has declined sharply. For all
U.S. banks, the ratios of such loans to capital
have by now declined almost 50 percent. Relative exposure of foreign banks has probably
declined even more since 1982 as a result of the
depreciation of the dollar.
That progress is welcome in terms of the
implications of reduced financial pressure on
lenders and borrowers alike. However, there is
another side to the coin. The heavily indebted
countries need to be able to count on receiving in
a timely way those funds that are reasonably
necessary to support well-conceived economic
programs—and, in particular, necessary levels of
domestic investment. Available data suggest that
net new commercial bank lending virtually
ceased in 1985 and 1986 and certainly was below
amounts assumed in the approach outlined by
Secretary Baker.
Part of the difficulty has been the length of
time required to negotiate and syndicate the large
new Mexican loan—the gestation period is now
approaching nine months. Underlying the delay
in that instance and others have been evident
differences in viewpoint and emphasis among
banks—those with large exposures as against
those with limited exposures, those in one country as against those in others, those with continuing interests in international lending and those
who want to withdraw.
to Congress
429
While differences in approach and priority are
natural, and have been present from the start,
what is disturbing to many bankers and borrowers alike is the increasing difficulty in arriving at
a consensus, and once reached, implementing
that consensus effectively and speedily. What
has been lacking is the sense of urgency and
willingness to cooperate in the larger general
interest that was so evident in 1982 and 1983. The
irony is that it is precisely a failure to arrive more
expeditiously at mutually satisfactory financing
agreements that may be the greatest threat to the
success of the overall effort. In some instances,
doubts about financing undermine the resolve to
carry out needed economic reforms. And an
environment of successive financing crises can
hardly be in the interests of the banking community itself.
Fortunately, a sense of renewed effort and
commitment seems to be emerging. Restructuring agreements were recently completed with
Venezuela and the Philippines and financing arrangements with Chile modified, in each case
after months of discussions. Initiatives are under
way among U.S. regional banks, looking toward
the development of innovative approaches to
broaden the choices of banks in structuring their
participation in new financing programs. Discussions among banks at an international level
should help deal with points of friction.
In all these discussions, the issue of "free
riders" will need to be dealt with effectively; the
cohesion of the entire effort will be undermined
to the extent that some creditors "opt out" of
participation in new credits or restructurings
while continuing to receive interest and principal
payments.
The success of all this renewed effort is being
tested in important negotiations with Argentina.
That country is among those that are making
substantial progress in recent years toward greater domestic stability and restoring growth, despite its heavy dependence on severely depressed world grain markets. Argentina has been
working closely with the IMF for several years,
and the World Bank is prepared to provide
additional financing to support sectoral reforms.
But it is also clear that restructuring of outstanding loans and some margin of new credit will be
necessary to support growth and to maintain
430
Federal Reserve Bulletin • June 1987
continuity in debt service. Early agreement on
those matters seems to me obviously in the
interests of Argentina and lenders alike, providing a base for greater confidence that their objectives—some common and some different—can
be reached.
The largest developing country debtor—Brazil—is obviously in a difficult position today.
After a period of strong domestic growth and
large trade surpluses, strong inflationary forces
again developed, the external position deteriorated, and the momentum of expansion has been
interrupted. In the circumstances, with international reserves rapidly falling, the government
suspended servicing medium- and longer-term
bank debt.
Given its enormous human and material resources, Brazil clearly has the potential for becoming one of the world's leading economic
powers; its competitive strength, vitality, and
adaptability have been demonstrated again and
again in recent years. At the same time, as for
any country, realization of that potential over an
extended period will clearly be dependent upon
both consistent and effective economic policies
at home and strong and harmonious trade and
financial relationships with other countries.
As a practical matter, the necessary regularization of external payments by Brazil will take
concerted effort. The key prerequisite is clearly
in the hands of Brazilian authorities—shaping an
economic program that commands the support
and confidence of Brazilians themselves and the
world community. Given that base, both Brazil
and its creditors, official and private, seem to me
to have the strongest kind of incentive to work
together to develop external financing arrangements consistent with strong and sustained
growth.
Statement by Martha R. Seger, Member, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Consumer Affairs of
the Committee on Banking, Housing, and Urban
Affairs, U.S. Senate, April 21, 1987.
I appreciate the opportunity to appear before this
subcommittee to discuss the legislation that has
CONCLUSION
In more general terms, that is, of course, the
challenge for all the heavily indebted countries
and their creditors. It seems to me a challenge
that will continue to be approached best case by
case, taking account of the different circumstances and problems of each country. But there
are, of course, common needs that run through
all the particulars.
First, a successful approach needs to be premised on the requirements for growth. That is
not simply a matter of providing external financing, critical as that may be at the margin. It is,
first of all, a matter of the intelligent design of
effective domestic programs.
Second, sustained economic growth, and the
growing imports and exports that are an indispensable part of that process, is importantly
dependent on access to world financial markets.
Continuity in debt service and negotiated settlements are critically important in maintaining
those relationships.
Finally, success in the common effort will
depend upon growing and open markets in the
industrialized world. That responsibility plainly
lies mainly with the United States and its principal trading partners.
It is an effort that, in my judgment, needs to be
reinforced by appropriate fiscal and other policies here and abroad. It is an effort that would be
placed at risk by excessive instability in exchange rates. And it is an effort that would be
undermined entirely by a retreat into protectionism.
I trust that we will have the collective will and
wisdom to take those steps that are necessary
and to reject those that could only be counterproductive. Too much is at stake to do otherwise.
been introduced to require price and term disclosures in credit card applications and solicitations
and to establish a nationwide ceiling on credit
card interest rates.
All of the disclosure bills that have been introduced (S. 241, S. 242, S. 616, and S. 647) would
add an early disclosure requirement to the Truth
in Lending Act for credit card plans or open-end
Statements
credit plans. Generally, the Board believes in
disclosure, and feels it is important for consumers to have adequate information to shop for
credit. In considering specific disclosure legislation, such as that before the subcommittee, the
Board is guided by several basic principles.
First, early disclosure rules should be structured
to provide consumers with essential information,
without overloading them with less important
information or unnecessarily raising creditor
costs. Second, the legislation should limit creditors' compliance costs by providing adequate
time to comply with any new disclosure rules.
Third, any requirements that are adopted should
apply evenhandedly to all competitors.
The credit card interest rate bills would limit
the interest rate charged on any credit card
transactions. S. 242 would limit the credit card
interest rate to 4 percentage points above the rate
established under section 6621 of the Internal
Revenue Code, and S. 647 would limit the rate to
6 percentage points above the average Federal
Reserve discount rate for the six-month period
preceding the determination. The Board does not
believe it would be appropriate to impose a
federal ceiling on credit card rates. Among other
things, a federal ceiling could have undesirable
side effects in the form of reduced credit availability and could lead to changes in nonrate
credit card terms.
431
in the solicitation, the law does not require that
price and term information about the plan be
given at that time. Consequently, while the act,
and the Board's regulation, do at times require
that consumers receive price information with
solicitations, if a card issuer does not advertise
certain price information consumers will not
necessarily be given this information before they
receive a credit card.
Under the current law, consumers must, however, be given full disclosure of the terms and
conditions of the credit card program no later
than the time that they receive the card. In
addition, the regulation provides that a consumer
may not be obligated on a credit program before
receiving complete disclosures; this would include, for example, the obligation to pay an
annual membership fee. Therefore, consumers
do have an opportunity to review all of the terms
and conditions of a credit card plan before using
the card or being obligated to pay an annual fee.
The issue of how much disclosure to require in
credit transactions led the Congress to revise the
Truth in Lending Act in 1980. At that time, the
Congress cut back on the disclosures required in
open-end credit advertisements in the hope that
reducing the disclosure requirements would promote more advertising, thereby increasing competition.
LEGISLATIVE
CURRENT
to Congress
PROPOSALS
LAW
Currently, the truth in lending law requires early
disclosures for open-end credit plans and credit
cards only when creditors engage in advertising.
Solicitations for credit card accounts are thus
subject to some truth in lending disclosure requirements, since they are considered "advertisements" under the statute and the Board's
implementing regulation, Regulation Z. The
creditor must give price information about the
credit plan, however, only if certain credit terms
are stated in an advertisement. For example, if
the creditor advertises the plan's annual fee, the
advertisement must state the annual percentage
rate, as well as any finance charges that may be
imposed.
If none of the specified credit terms are stated
The proposed bills go beyond the present law by
requiring the creditor to include certain disclosures in applications or solicitations without regard to whether the creditor mentions a particular term. The proposed legislation expands the
current statutory requirements for advertising in
other ways as well. For example, all of the bills
except S. 242 would require creditors to disclose
whether or not any time period exists for credit
to be repaid without incurring a finance charge—
a disclosure that is not required by the current
advertising rules. Under S. 616, creditors would
be required to include a notice in solicitations
telling consumers how the balance on which the
finance charge is computed is determined. S. 647
would require the disclosure of virtually every
charge that might be imposed under an open-end
432
Federal Reserve Bulletin • June 1987
credit plan, including late payment charges. To
the extent that the proposed disclosure requirements might discourage open-end credit advertisements, this legislation could have the unintended effect of decreasing rather than increasing
competition. We are inclined to think, however,
that if the scope of the increased disclosure
requirements in the bills is limited, the legislation
would not have this effect. For example, we
believe that disclosing the annual percentage
rate, annual fee, and grace period in mail solicitations would not be burdensome or complex. Our
impression is that many card issuers are already
including in their mail solicitations much of this
information and, presumably, have not viewed
this as an impediment to advertising. Requiring
extensive, complex disclosures, on the other
hand, may detract from more important disclosures and increase creditor compliance costs.
CONTROLLING
COSTS
Increased disclosure requirements invariably result in some increased costs to the industry. The
extent of the compliance costs is largely affected
by three factors: (1) the breadth of the coverage
of the legislation; (2) the number and complexity
of the disclosures required by the legislation; and
(3) the amount of time that creditors are given to
implement the changes required by the legislation and implementing regulations.
Even though all of the bills have the same
goal—to require disclosure for all types of credit
cards, including bank credit cards, travel and
entertainment cards, and retail cards—the bills
are not the same in their scope. S. 241 deals with
applications and solicitations for any "credit
card account;" S. 242 calls for disclosures in
initial applications for a "credit card;" S. 616
requires disclosures in applications and solicitations for "open-end credit card accounts;" and
S. 647 calls for disclosures in applications and
solicitations for any "open-end consumer credit
plan." These different phrases—credit card accounts, credit cards, open-end credit card accounts, and open-end consumer credit plans—
result in different credit plans and accounts being
subject to the new disclosure requirements. The
bills also vary in the number and complexity of
the disclosures they require. It is important that
the legislation not be broader than necessary to
address the concerns of the Congress, and to
ensure that compliance costs for any legislation
are minimized. For example, if the concern is
with credit card solicitations, we would urge that
the legislation be limited to those solicitations.
We would be glad to work with your staff to
ensure that the coverage of any legislation reflects the intent of the Congress.
The Board believes that one way to help
control costs is to provide sufficient time for
creditors to implement the changes made by the
legislation. We believe that the time periods
provided in the bills should be lengthened to
avoid unnecessary transition costs and burden
for creditors.
One final point that I would like to make is that
any new disclosure requirements should apply
equally to all credit card issuers. One of the
bills—S. 647—applies only to banks. We believe
that, if additional disclosures are required for
credit card solicitations, the requirements should
apply equally to all credit card issuers.
CREDIT
CARD
CEILINGS
The Board has commented several times on bills
that would set floating ceilings on credit card
rates that would supersede generally less restrictive state-imposed limits. The Board has on
those occasions stated its opposition to those
bills that were very similar to the current interest
rate bills—S. 242 and S. 647. In doing so, the
Board has endorsed the principle that—as with
other types of credit—consumer loans are most
fairly and efficiently allocated when there are no
regulatory constraints on interest rates. Indeed,
the Board has been concerned about the adverse
impact that interest rate ceilings can have on the
availability of funds in local credit markets and
on individuals with limited access to credit.
In response to a congressional request made
last year, the Board staff prepared an analysis of
the economic effects of proposed ceilings on
credit card interest rates. A condensed version of
the study, which appeared in the FEDERAL RESERVE BULLETIN, accompanies this statement.
(See "The Economic Effects of Proposed Ceil-
Statements
ings on Credit Card Interest Rates" in the January 1987 issue, pp. 1-13.) The following comments focus on the Board's major concerns with
proposed limitations on interest rates.
An effort to establish a federally mandated
ceiling on credit card interest rates would encounter substantial difficulties. From experience
with the imposition of credit controls in 1980 and
the sharp, unexpected contraction in consumer
spending that accompanied them, we know that
regulatory measures can have unpredictable and
unwanted consequences. Setting a federal ceiling
on credit card rates below those that currently
prevail in many states would likely reduce the
amount of credit made available, forcing consumers to rely instead on less convenient and
possibly more expensive substitutes, or to lose
access to credit at any rate. Moreover, such a
curtailment would be apt to fall most heavily on
less affluent borrowers with relatively limited
access to other sources of credit. The current
ceiling for credit card rates under the proposed
bills would be between 11.5 and 12 percent, well
below the finance rates that have been typical
since credit cards emerged in the early 1960s as a
major method of consumer financing.
Furthermore, the imposition of stringent rate
ceilings might be countered by a tightening of
nonrate credit card terms by card issuers, for
example, by increasing annual fees, by levying
processing charges on each credit card purchase
or cash advance, and by stiffening penalties for
late payment or for exceeding the authorized
credit limit. Some card issuers also might begin
applying the reduced finance charges from the
date of purchase, when permitted, rather than
after the grace period expires, and might seek to
increase the discount fees charged to merchants
who submit credit card vouchers to the card
issuers for payment.
Turning to the specific provisions of the bills
before the Congress, it should be emphasized
that credit cards are issued by a broad variety of
retail merchants and financial institutions that
differ both as to their sources of funding and their
liability structures. Under these circumstances, a
single index rate would be unlikely to mirror
changes in costs for such a diverse array of card
issuers. In any case, short-term rates, such as the
Federal Reserve discount rate, fluctuate a good
to Congress
433
deal more widely than costs of funds of most
lenders. They do so because a lender's overall
average cost of funds at any point is a blend of
current interest rates and rates on previously
issued liabilities, and because market rates on
longer-term liabilities—which usually make up
part of the cost of funds—typically vary less than
short-term rates.
If the Congress should nonetheless decide to
enact legislation, the Federal Reserve strongly
recommends against designating the discount
rate as an index for setting ceilings on credit card
rates. The discount rate, as you know, is the
interest rate charged by the Federal Reserve
Banks on extensions of short-term credit to
depository institutions. Because it typically applies to very short-term loans, the discount rate
is an inexact measure of either marginal or
average costs of loanable funds, which may
reflect a wide range of maturities. Furthermore,
the discount rate is a tool of monetary policy. As
such, it is an administered rate that reflects broad
policy considerations that frequently are complex and so may deviate from other market rates,
even those for instruments of comparable maturity. It would be wrong, in the Board's view, to
employ a tool of monetary policy for this purpose.
Another question is whether any regulation of
credit card interest rates is more appropriately a
matter for federal or for state regulation. The
establishment of interest rate ceilings on consumer loans has long been a state prerogative,
and one that the Board feels should not be
preempted. In recent years, virtually every state
has reviewed and overhauled its laws regulating
consumer interest rates. After studying the situation in their own jurisdictions, many of these
states have opted to raise or remove interest rate
ceilings for credit card borrowings. The Board
respects the collective judgment of a growing
number of states that higher—not lower—ceilings are appropriate to assure that an adequate
supply of credit card services is available from
lenders located there. Of course, these states
retain the authority to lower or restore ceilings if
convincing evidence of excessive rates appears.
I would like to reemphasize the Board's conviction that financial markets distribute credit
most efficiently and productively when interest
434
Federal Reserve Bulletin • June 1987
rates are determined in markets that are as free
from artificial restraints as possible. Efforts to
constrain credit card rates through federal regulation are likely to have undesirable side effects
in the form of reduced credit availability, especially for those consumers that these bills would
seek to aid. Moreover, these bills may encourage
less efficient means of offsetting costs of credit
card operations. Accordingly, the Board concludes that it would be inappropriate to impose a
federal ceiling on credit card rates.
REPORTING
FOR CREDIT
REQUIREMENTS
CARD
TERMS
I would like to make a final point concerning the
proposed credit card legislation. S. 241 and
S. 242 require the Board to collect credit card
price and term information from all credit card
issuers. While our recently completed Annual
Percentage Rate Demonstration Project suggests
that shoppers guides enhance competition and
are useful to some consumers—especially those
who are inclined to shop for credit—the Board
urges the Congress not to adopt the proposed
reporting requirements. There are three reasons
for the Board's opposition to these reporting
requirements.
First, a variety of shoppers guides for credit
cards are currently prepared by consumer
groups, general circulation newspapers, including one with national circulation, and other members of the private sector. Second, if the Congress adopts additional disclosure requirements
for credit cards, more credit card price and term
information will be readily available to consumers. This information can be used by consumers
to shop for credit cards and by others to prepare
shoppers guides. Last, and possibly most important, the reporting requirements would be burdensome and costly. Even though the burden to
individual credit card issuers may not be great,
the total cost may be substantial since many
thousands of financial institutions and retailers
issue credit cards, many credit card issuers offer
more than one type of card, and card issuers
would be required to report several times a year.
The cost to the Federal Reserve will be substantial. Since the information from the reporting
requirements will be voluminous, a great deal of
time will be required to input the information into
our computer systems. This data must then be
extensively refined to be of value to the public.
We anticipate that the list of credit card issuers
and their associated price information would be
several hundred pages in length. The reporting
requirements will also make it more difficult for
the Board to meet the objectives set by the
Congress in the Paperwork Reduction Act of
1980, since the requirements will result in an
increase in the number of reporting hours imposed on the public due to Federal Reserve
Board requirements.
CONDITIONS
OF CREDIT
FOR CHANGING
INSURANCE
PROVIDERS
The subcommittee also asked the Board to comment on the appropriate conditions that might be
required of banks that choose to change providers of credit insurance. This is a subject that the
Board dealt with several months earlier when it
revised the rules concerning the ability of bank
holding companies to underwrite credit life and
credit disability insurance. At that time, the
Board was asked to impose specific requirements on bank holding companies if the holding
company wanted to change credit life insurance
underwriters.
A large credit life insurance company asked
the Board to require that any bank holding
company changing underwriters of credit life
insurance on credit card accounts notify all of the
holding company's customers that were purchasers of such insurance of the proposed replacement coverage and of any changes or limitations
in the insurance benefits under the new coverage. In addition, the insurance company asked
that bank holding companies be required to obtain a new application from each credit card
customer with credit life insurance before continuing the credit life insurance coverage with the
new underwriter.
The Board declined to adopt the company's
proposal when the Board revised its insurance
regulation last October. The Board based its
decision on the belief that the concerns raised by
the credit insurance company are more appropriately handled by the individual states that are
Statements
to Congress
435
charged with regulating credit life insurance and
that set specific rates for such insurance. In
addition, the Board believed that the policyholder's contract rights under state law provide adequate protection and that a prior notification
requirement would place an unnecessary burden
on bank holding companies.
In light of this, the Board does not believe that
new requirements for banks that choose to
change providers of credit insurance are necessary or appropriate. In fact, imposing a requirement such as soliciting customers for new applications could be so burdensome as to actually
preclude banks from changing underwriters.
Statement by Paul A. Volcker, Chairman, Board
of Governors of the Federal Reserve
System,
before the Subcommittee on General Oversight
and Investigations of the Committee on Banking,
Finance and Urban Affairs, U.S. House of Representatives, April 30, 1987.
public confidence in the banking system as a
whole.
I appreciate the opportunity to appear before this
committee to discuss the joint proposal of the
U.S. federal banking agencies and the Bank of
England for the establishment of a risk-based
capital framework. As you may be aware, the
U.S.-U.K. proposal, as well as the Federal
Reserve's implementing guidelines, are still out
for public comment. Thus, the final shape of the
risk-based framework is subject to revision in
light of the public comments and further consideration of the important issues involved.
In developing this proposal, the U.S. and U.K.
banking authorities faced a number of difficult
supervisory and competitive questions, as well
as numerous technical questions. They have
been at least tentatively resolved in a process of
discussion and reasonable compromise. The net
result promises, I believe, a framework for significantly strengthening our current regulatory
procedures for assessing capital adequacy. In
addition, the U . S - U . K . proposal constitutes an
important concrete step in the direction of greater harmonization and convergence of supervisory policies among countries with major banking
institutions.
Concern about capital adequacy stems largely
from capital's role as a buffer to absorb unexpected losses that a banking organization's current earnings cannot cover. In so doing, capital
reduces the likelihood of bank failures and thereby protects depositors, other bank creditors, and
the deposit insurance funds. The protection that
bank capital provides also serves to maintain
CAPITAL TRENDS AND FEDERAL
GUIDELINES
PROGRAM
RESERVE
Throughout most of the 1970s and early 1980s,
bank capital ratios, particularly those of the
larger banking organizations, declined significantly. During this period, banks were forced to
operate in a difficult environment characterized
by accelerating inflation, high and volatile interest rates, and a rising incidence of corporate
bankruptcies. The deregulation of interest ceilings on deposits and the growing competition in
the market for financial services added to these
pressures. At the same time, overseas expansion
and competition with foreign banks resulted in
significant growth in assets for the large international institutions; and in the process spreads
between the cost of money and loans tended to
narrow. As a result, the declining capital ratios of
some of the larger organizations became of growing concern to regulators. Those concerns were
reinforced by evidence that risks in the banking
system, both domestically and internationally,
had clearly increased.
Against that background, the federal bank
regulatory agencies first adopted formal capital
guidelines in 1981. These guidelines, which set
minimum capital requirements based on the ratios of "primary" and "total" capital to total
assets, have been modified and strengthened on
several occasions since their adoption. At present, all banks and bank holding companies are
required to meet a minimum primary capital-toassets requirement of 5.5 percent and a minimum
total capital-to-assets requirement of 6.0 per-
436
Federal Reserve Bulletin • June 1987
cent. 1 Since these requirements are minimums,
most banking organizations are expected to, and
in fact do, operate above the supervisory standards.
When we implemented the more formal capital
requirements, we stated that, besides arresting
the decline in capital ratios, we intended to
modify our regulatory and supervisory policies
to encourage banking organizations to strengthen
their capital positions over time. The present
requirements are higher than the ratios that were
established in 1981. The Federal Reserve expects
banking institutions seeking to undertake significant expansion to maintain particularly strong
capital positions, well above the minimum supervisory standards. In addition, we have encouraged banks with poor earnings or other financial
problems to conserve their capital by adopting
more conservative dividend policies. Finally, we
have used the enforcement process, when appropriate, to require banking organizations to restore or strengthen their capital bases.
From our perspective, these guidelines and
procedures have worked reasonably well. Since
their adoption in 1981, the banking system has
raised significant amounts of new capital, and
capital ratios in the industry, particularly those
of the larger institutions, have shown marked
improvement. For example, at year-end 1981,
the average primary capital ratio for the nation's
50 largest bank holding companies stood at 4.7
percent. By the end of 1986, this ratio had
climbed to 7.1 percent—well above the minimum
guideline level of 5.5 percent.
While helping to encourage the reversal in the
earlier downtrend in capital ratios, the guidelines
may also have had some unintended side effects.
Because the current capital standards are based
on simple ratios of capital to total assets, they
have created an incentive for banks to move or
keep certain exposures off their balance sheets.
In recent years, new financing and hedging techniques have, in any event, induced a very large
1. Primary capital consists of stockholders' equity, perpetual preferred stock, loan-loss reserves, and certain debt
instruments that must be converted to common or preferred
stock at maturity. Total capital consists of primary capital
plus secondary capital instruments—such as limited-life preferred stock and certain qualifying debt instruments.
growth in off-balance-sheet liabilities of major
banks, none of which are factored into our
current capital standards. In addition, because
our existing capital standards treat all bank assets alike, they have had the effect of encouraging some institutions to scale back their holdings
of relatively liquid, low-risk assets. These developments suggest that the improvement we have
seen in capital ratios in recent years overstates
the real improvement in capital positions, measured against more realistic measures of risks.
In an effort to address these shortcomings, the
Board issued for public comment in early 1986 a
proposal for a risk-adjusted capital ratio. The
specific objectives of this proposal were to require an appropriate level of capital support for
off-balance-sheet exposures and to temper incentives in the existing guidelines that might encourage banks to reduce their holdings of low-risk
assets. An equally important objective of this
proposal was to move capital policies of U.S.
banks more closely in line with those of other
major industrial countries.
INTERNATIONAL
CONVERGENCE
This latter objective is particularly important in
light of the increased involvement of banks in
overseas activities and the growing interdependence of world financial markets. Because of this
interdependency, supervisory authorities need to
ensure that prudential rules and standards are
sufficient to guarantee the stability and smooth
functioning of the international banking system.
The globalization of markets has also brought
about a dramatic increase in international competition and an awareness that differences in
rules among supervisory authorities around the
world can create competitive distortions. The
competitive disadvantages this could cause
might make some supervisors more reluctant, or
less able, to take otherwise necessary desirable
supervisory actions, knowing that the end result
of such actions could be a loss of competitiveness for their banking systems.
In light of these concerns, greater comparability in the prudential standards of major industrial
countries has been discussed by regulators
around the world for several years. Much
Statements
groundwork has been laid in such international
supervisory forums as the Committee on Bank
Regulatory and Supervisory Practices ("Basle
Supervisors' Committee"). In addition, the U.S.
Congress, as you are aware, has recognized the
importance of adequate capital levels for banking
organizations and has been instrumental in encouraging the bank supervisory authorities to
take further action in this area. In particular, the
International Lending Supervision Act of 1983
directed the Federal Reserve and the U.S. Treasury Department to ". . .encourage governments, central banks, and regulatory authorities
of other major banking countries to work toward
maintaining, and, where appropriate, strengthening the capital bases of banking institutions involved in international lending."
Critical to achieving this objective, of course,
is a more internationally consistent definition of
capital and comparable procedures for assessing
capital adequacy in relation to banking risks.
DESCRIPTION
OF U.S.-U.K.
CAPITAL
PROPOSAL
In developing the capital proposal, we wanted a
framework that could meet, as effectively as
possible, several partly conflicting objectives.
First, the approach needed to address the rapid
growth in off-balance-sheet exposure and avoid
disincentives to holding liquid, low-risk assets.
Second, we wanted to avoid any sense that
capital requirements would be used as a tool for
encouraging the allocation of credit to particular
sectors, and we also wanted to avoid excessive
complexity. Finally, we sought a framework
that, while providing a clear basic structure for
analysis, could be sufficiently flexible to enable
supervisory authorities, as they evaluate individual banks, to take into account the many factors
that affect overall risk that cannot be incorporated in any single formula.
The approach that we have agreed upon
among the U.S. authorities and with the Bank of
England has three fundamental elements: a common definition of capital, a common risk weighting framework for relating capital to risk assets
and off-balance-sheet items, and a common minimum capital requirement.
to Congress
437
The proposal defines primary capital to include the basic elements of common stockholders' equity and general loan-loss reserves. In
addition, the definition provides for the inclusion
in primary capital of other instruments such as
perpetual and long-term preferred stock as well
as debt securities that meet certain conditions
relating to permanence and loss absorption capacity. While the primary capital definition gives
banking organizations some flexibility in building
their capital bases, the proposal contains provisions to ensure that common stockholders' equity remains the predominant form of bank capital.
In the past, the U.S. regulatory authorities have
accommodated reasonable innovations in the development of primary capital instruments. In a
similar fashion, this proposal also provides room
for an appropriate degree of flexibility, consistent with the basic need for an adequate equity
cushion.
The second element, the risk weighting system, is the heart of the proposal. This component
establishes a framework for ranking the relative
riskiness of broad categories of assets and offbalance-sheet exposures. For practical reasons,
we tried to avoid developing a risk measurement
system that would attempt to gauge all of the
various types of, and subtle differences in, risk
faced by banking institutions. Instead, we focused primarily on credit risk, although interest
rate risk and liquidity considerations are taken
into account to a limited extent.
The proposed risk weighting system establishes five risk categories that reflect in a general
way the relative magnitude of risk of the obligations assigned to the category. A bank's assets
would be divided among the five categories according to the degree of credit risk of the borrower or obligor. Low-risk assets, such as U.S.
government securities and short-term bank
claims, would be assigned lower weights and,
therefore, require less capital than they do under
our present system. Normal commercial and
individual loans would generally be assigned to
the standard risk category, thereby requiring
more capital than the lower-risk assets. Offbalance-sheet exposures that involve risks analogous to loans are treated in the same manner as
direct extensions of credit. Other contingent
items are also included in the risk framework,
438
Federal Reserve Bulletin • June 1987
but only after the face or principal value of such
items is adjusted to arrive at an equivalent onbalance-sheet amount.
In formulating this framework, we made some
basic assumptions. Domestic governments, for
example, are assumed to be generally less risky
than other obligors because of their power to
levy taxes and create money. Short-term claims
on banks are also accorded low risk treatment
because of supervision and "safety nets" provided by most governments to their banking systems and to facilitate the smooth functioning of
the interbank markets. Most private sector loans
are assigned to the standard risk category without regard to the industry in which the borrower
operates, the purpose of the loan, or, with a few
exceptions, the collateral backing the loan. Obviously, the assignment of assets to risk categories,
as I have already suggested, involves some arbitrary judgments at the margin and is certainly not
an exact science.
The third element of the proposed agreement
is the supervisory ratio requirement. The U . S . U.K. proposal calls for a minimum, publicly
announced ratio that would represent a common
and equitable standard against which all U.S.
and U.K. banks would be compared.
The decision on where to set the minimum
risk-based ratio has not yet been made. Obviously, the establishment of the minimum requirement will involve important considerations of
safety and soundness, as well as a sensitivity to
the effect of the minimum on pricing and competitive factors. Banks with a high level of quality
liquid assets and a low level of off-balance-sheet
liabilities will not be affected by the proposal,
whereas those banks with large contingent exposure and lower liquidity levels may require adjustment. In any respect, the proposal would be
implemented in the context of a minimum capital
standard. It is primarily the largest banking organizations that are engaged in the activities addressed by the risk-based capital proposal; the
overwhelming majority of smaller banks will
probably be unaffected.
Even among the larger institutions, the impact
of the minimum risk-based ratio will vary. Some
institutions may find it necessary to strengthen
their capital bases or reduce their overall level of
risk, including off-balance-sheet exposures; oth-
ers may find that on a risk-adjusted basis their
capital positions look even stronger. Absent other supervisory concerns, such institutions may
have room for further prudent growth and expansion.
We at the Federal Reserve intend to use the
risk-based ratio to supplement our existing capital guidelines program, at least until sufficient
experience is gained with the risk-based standard
to justify relying on it more fully as a measure of
capital adequacy. The effect of this use of the
risk-based ratio is to maintain a reasonable floor
below which, under normal circumstances, ratios of capital to total assets would not be allowed to fall. The interest of the government in
maintaining some maximum leverage constraint
or, put in different words, some minimum ratio of
capital to total assets seems entirely consistent
with the freedom of banks to change the composition of their assets and the nature of their
business within broad limits.
It is important to point out that the risk-based
ratio would be but one element in the assessment
of a bank's capital position. The on-site examination, together with other important components
of our supervisory program, will continue to be
the principal means for evaluating a bank's overall financial condition. Thus, those critical factors that affect a bank's soundness, but which are
not factored into the risk-based ratio, such as
earnings, loan diversification, liquidity, asset
quality and collateral, operational risks, and
management, will continue to play a central role
in our final judgments on capital adequacy.
PRICING AND
CONSIDERATIONS
COMPETITIVE
I cannot emphasize strongly enough our interest
in the competitiveness of U.S. banks. Only a
strong, competitive, and profitable banking system can remain healthy in the long run and fulfill
the strategic role that banks play in our economic
and financial system.
In considering the issue of competitiveness, it
is possible that banks that are permitted to
operate with lower capital levels may have a
competitive advantage, at least in the short run,
Statements
over banks that are required to meet higher
capital standards. But, from the standpoint of
appropriate public policy, those considerations
have to be balanced against the long-run safety
and soundness of the banking system.
In striking that balance, questions have inevitably been raised about the effects of the riskbased proposal on U.S. banks' ability to price
competitively certain banking services. This is
especially true of those off-balance-sheet instruments, such as loan commitments, letters of
credit, and interest rate and foreign exchange
rate contracts, that are being explicitly factored
into our capital ratios for the first time. As I have
indicated, one of the major objectives of riskbased capital is to address the rapid growth of
off-balance-sheet exposures, and bankers themselves clearly acknowledge that these instruments involve some credit risks. In addition,
logic and experience suggest that certain indirect
extensions of credit or financial guarantees can
involve risks that are similar to those stemming
from direct loans.
We are aware of the potential pricing implications of the risk-based proposal, and have sought
specific comment on how the proposal may
affect the ability of banks to compete in the
provision of certain services. And we will, of
course, carefully consider the comments we receive. However, I am concerned that competitive pressures may have eroded spreads on some
of these instruments to the point that banks are
not being fully compensated for the credit risks
involved. To the extent that this is the case, the
risk-based capital proposal may encourage a
more rational and appropriate pricing structure
that is consistent with the long-run stability and
health of our banking system.
Another dimension of this issue relates to the
capital requirements of nonbank financial institutions that have become major competitors of
commercial banks. In my view, as U.S. banks
come into increasing competition with nonbank
financial institutions, including thrift institutions
and investment banks, appropriate efforts should
be made to ensure that capital requirements
among different institutions conducting the same
activities are brought into closer alignment. For
this reason, we strongly support the steps taken
by the Federal Home Loan Bank Board to en-
to Congress
439
courage thrift institutions to strengthen their
capital positions.
The need for parity of capital standards on an
international basis is no less pressing. And, of
course, as I have indicated before, that parity is
an important objective of the U.S.-U.K. proposal. The prospect of major international banking
organizations operating throughout the world
with vastly different capital requirements and
capital resources is not, in my view, in the best
long-run interest of sound, stable, and competitive international banking and financial markets.
Thus, it is our hope that banking supervisors in
other major industrial countries will examine the
risk-based capital proposal with a view toward
bringing their policies—to the extent possible—
into closer alignment with the type of framework
spelled out in the U.S.-U.K. agreement.
In the past, we have not applied extraterritorially U.S. bank capital standards on a consolidated basis to foreign banking organizations seeking
to expand in the United States. However, the
U.S.-U.K. risk-based capital proposal represents a step toward a more consistent and equitable international norm for assessing capital adequacy. For this reason, we believe that such a
framework can, under appropriate circumstances, assist in evaluating the capital positions
of foreign banks applying to acquire U.S. institutions.
CONCLUSION
The internationalization of banking and financial
markets and the intensification of competition
among multinational institutions underscore the
importance of efforts to better rationalize and
harmonize the competitive and prudential framework within which banks must operate. Despite
the progress embodied in the U.S.-U.K. proposal, however, much remains to be done. We
recognize that significant differences among
countries in banking, accounting, and supervisory and regulatory practices suggest that progress
toward achieving greater consistency on an international level may be gradual and involve difficult and complex discussions.
Nonetheless, I can assure you that the Federal
440
Federal Reserve Bulletin • June 1987
Reserve is committed to working with supervisors from other countries to encourage the development and adoption of more consistent and
broadly accepted international capital standards.
In the meantime, I believe that adoption by U.S.
regulators of a framework along the lines of the
U.S.-U.K. proposal, while far from perfect,
represents a reasonable step toward a more
rational framework for relating the analysis of
capital needs to risk considerations.
•
441
Announcements
ADOPTION
ON BANK
OF POLICY
HOLDING
STATEMENT
COMPANIES
The Federal Reserve Board adopted a policy
statement on April 24, 1987, on the responsibility
of bank holding companies to act as sources of
financial and managerial strength to their subsidiary banks.
The Board's statement reiterates in detail a
general policy that has been expressed on numerous occasions in accordance with authority that
is provided under the Bank Holding Company
Act and the enforcement provisions of the Federal Deposit Insurance Act.
The policy statement is effective immediately.
However, the Board will accept comment for
review through July 1, 1987.
REPORT AVAILABLE
IN 1986
ON PRICED
SERVICES
The Federal Reserve Board has issued a report
summarizing developments in the priced services
areas for 1986 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.
ISSUANCE
STOCKS
OF REVISED
SUBJECT
TO
LIST
OF
OTC
MARGIN
that was effective on February 10, 1987. Changes
that have been made in the list, which now
includes 3,103 OTC stocks, are as follows: 181
stocks have been included for the first time, 163
under national market system (NMS) designation; 29 stocks previously on the list have been
removed for substantially failing to meet the
requirements for continued listing; and 37 stocks
have been removed for reasons such as listing on
a national securities exchange or involvement in
an acquisition.
The list includes all OTC securities designated
by the Board pursuant to its established criteria
as well as all securities qualified for trading in the
NMS. This list includes all securities qualified
for trading in tier 1 of the NMS through May 12
and those in tier 2 through April 21, 1987. 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 July 1987.
Besides 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.
PROPOSED
ACTION
The Federal Reserve Board has issued for public
comment a proposal to amend its Regulation T
(Margin Credit Extended by Brokers and Dealers) to revise the definition of an OTC margin
bond. Comment is requested by May 26.
REGULATIONS
The Federal Reserve Board has published a
revised list of over-the-counter (OTC) stocks
that are subject to its margin regulations, effective May 12, 1987.
This List of Marginable OTC Stocks supersedes the revised List of Marginable OTC Stocks
SYSTEM
STATE
MEMBERSHIP-.
BANKS
ADMISSION
OF
The following banks were admitted to membership in the Federal Reserve System during the
period April 1 through April 30, 1987:
442
Federal Reserve Bulletin • June 1987
Arizona
Fountain Hills
Pennsylvania
Newtown
Bank of Fountain Hills
Philadelphia
Rittenhouse Trust
Company
Commonwealth State Bank
Texas
Mineral W e l l s . . . First State Bank of Mineral
Wells
443
Record of Policy Actions of the
Federal Open Market Committee
MEETING
HELD
ON FEBRUARY
Domestic
Policy
Directive
10-11,
1987
The information reviewed at this meeting suggested on balance that economic activity was
continuing to grow at a moderate pace. Nonfarm
payroll employment expanded sharply in January, partly reflecting unusual seasonal developments. Industrial production rose considerably
in December and over the fourth quarter as a
whole. However, consumer spending in real
terms changed little during the last quarter of
1986 and business capital spending generally
appears to have remained sluggish. Activity in
the housing sector picked up toward year-end.
The deficit in the merchandise trade balance
apparently increased slightly in the fourth quarter; however, net exports of goods and services,
after adjusting for changes in prices, improved
somewhat during the quarter. Basic trends in
wage and price inflation still appear to have been
moderate in recent months, although prices of oil
and some other industrial commodities have
turned up.
Total nonfarm payroll employment rose almost Vi million further in January, after picking
up in the latter part of the year. Service-producing industries were responsible for much of this
growth. Outside the service-producing sector,
the construction industry accounted for the balance of job growth in January, reflecting favorable weather conditions during the survey reference week. Manufacturing employment was
essentially unchanged in January, after some
improvement in the fourth quarter. The civilian
unemployment rate held at 6.7 percent.
The industrial sector of the economy expanded
appreciably in the latter part of the year. The
index of industrial production rose 0.5 percent in
December and for the fourth quarter as a whole
increased at an annual rate of 3LA percent, the
largest quarterly advance since late 1984. Recent
gains were widespread, with particularly sharp
increases in home goods and in defense and
space equipment. Production of business equipment, however, remained lackluster. Capacity
utilization in manufacturing, mining, and utilities
rose 0.2 percentage point in December to 79.6
percent, but was still below its level at the end of
1985.
Consumer spending declined slightly in real
terms in the fourth quarter as new car and truck
sales slumped. Auto sales revived temporarily in
December, when consumers took advantage of
sales tax deductions that were to be eliminated
after year-end, but fell dramatically in January.
Consumer expenditures on items other than autos continued to rise somewhat at the end of 1986
but at a pace considerably slower than that
experienced earlier in the year.
Business investment appears to have remained
sluggish. On the equipment side, capital outlays
were depressed in the fourth quarter by the drop
in motor vehicle purchases. However, that drop
was almost offset by a pickup in spending on
other equipment, which was motivated in part by
efforts to take advantage of the favorable depreciation schedules for some types of equipment
placed in service before January 1, 1987. Leading
indicators of investment spending suggested that
overall outlays will remain sluggish in the early
months of 1987. New orders for nondefense
capital goods other than aircraft dropped in the
last quarter of 1986. Also, outlays for nonresidential construction have continued to trend
down in recent months, and the value of construction put-in-place in December was more
than 10 percent below a year earlier.
Activity in the housing sector picked up at the
end of the year. Housing starts rose to an annual
rate of 1.8 million units in December, after
drifting lower since late spring. Single-family
starts were near the pace recorded earlier in the
444
Federal Reserve Bulletin • June 1987
year. In addition, sales of both new and existing
homes rose in December partly in response to
lower mortgage interest rates. Multifamily starts
rebounded in December, but declined for the
fourth quarter as a whole as high vacancy rates
and recent tax changes constrained construction
of rental housing.
Price and wage increases remained relatively
moderate in the latter part of 1986, although the
prices of a number of commodities, including oil,
have posted large gains in recent months. Consumer prices rose 0.3 percent in November and
0.2 percent in December, remaining within the
range of monthly increases evident since last
summer. World crude oil prices rose in midDecember following the latest agreement by the
Organization of Petroleum Exporting Countries
(OPEC) to restrict output, and that rise pushed
retail energy prices up in December. At the same
time, increases in consumer food prices slowed
after several months of sharp advances. Consumer prices, apart from food and energy, continued to rise about in line with the pace registered for 1986 as a whole. Wage increases slowed
in 1986 from the rates in other recent years.
The trade-weighted value of the dollar against
other G-10 currencies declined about V/A percent, on balance, since the December 15-16
FOMC meeting. Since that meeting, the dollar
has depreciated 10 percent against the mark and
about 6 percent against the yen. Over the period,
exchange rates were affected in part by data on
the U.S. trade balance for November. However,
the announcement by the German Federal Bank
in late January of a cut in the discount rate and
the improvement in U.S. trade figures shown
when preliminary December data were released,
along with indications of a stronger U.S. economy, tended to relieve downward pressures on the
dollar, which had rebounded from its lows in late
January. Indicators of economic activity in the
major foreign industrial countries still showed
low rates of expansion. Available data for the
U.S. merchandise trade deficit in the fourth
quarter suggested a slight increase from the third
quarter as nonpetroleum imports increased more
than exports. However, after allowing for price
changes, net exports of goods and services improved somewhat during the quarter.
the existing degree of pressure on reserve positions. This action was expected to be consistent
with growth in both M2 and M3 at an annual rate
of about 7 percent from November to March.
The Committee agreed that the growth in Ml
would continue to be evaluated in light of the
behavior of the broader monetary aggregates and
other factors. The members also decided that
slightly greater or somewhat lesser reserve restraint would be acceptable depending on the
behavior of the monetary aggregates, taking into
account the strength of the business expansion,
developments in foreign exchange markets,
progress against inflation, and conditions in domestic and international credit markets. The
intermeeting range for federal funds was maintained at 4 to 8 percent.
Growth of M2 and M3 accelerated in December before slowing a little in January. Expansion
of these two aggregates for 1986 as a whole was
near the upper end of their respective ranges
established by the Committee for the year. Ml
growth slowed in January from an exceptionally
rapid pace in late 1986. Growth of the monetary
aggregates was boosted by an unusually large
volume of transactions around year-end prompted in part by incentives to complete certain types
of transactions before the new tax law took effect
at the start of 1987. As a result of these transactions, demand deposits rose at an unprecedented
rate from mid-December through early January;
by late January the bulge in such deposits had
run off. In addition, banks stepped up their
issuance of managed liabilities, especially CDs,
over the past two months to help fund the rise in
credit.
Paralleling the bulge in transaction balances
around year-end, growth in total reserves surged
in December, but then subsided during January.
Excess reserves also increased rapidly in December. The federal funds rate rose sharply at
year-end and adjustment plus seasonal borrowing averaged around $900 million in the statement period ending December 31. Borrowing
receded to $290 million in the first half of January
but bulged again in the second half, reflecting
another rise in excess reserves. The federal
funds rate dropped back to 6 percent or a little
above after early January.
At its meeting in December, the Committee
adopted a directive that called for maintaining
Most other short-term rates rose around yearend as credit demands intensified and the federal
Record of Policy Actions of the FOMC
funds market tightened, but subsequently those
increases were largely reversed. On balance,
rates on short-term Treasury securities were up
about 25 basis points over the intermeeting period, while rates on private obligations were narrowly mixed. In long-term markets, yields on
Treasury securities also were higher than at the
time of the December meeting, reflecting market
reactions to incoming economic data, but rates in
corporate and mortgage markets declined into
more typical alignment with Treasury rates.
Stock prices soared to new highs over the intermeeting period.
The staff projections presented at this meeting
suggested that real gross national product would
continue to grow at a moderate rate through the
end of 1987. A key element shaping the forecast
continued to be the prospects for an improvement in real net exports of goods and services.
Export growth was expected to accelerate and
import growth to slow as U.S. competitiveness
increased. At the same time, the growth in
domestic demand was expected to be moderate,
primarily reflecting the damping influence of
higher import prices on real income gains, a less
expansive fiscal policy, and the weakness in
nonresidential construction. In contrast, equipment spending was projected to grow moderately
as domestic production expanded, and residential construction was expected to provide some
stimulus to economic activity over the projection
horizon. The rate of inflation was anticipated to
rise somewhat as a result of the depreciation of
the dollar and a firming in world oil prices.
However, the remaining margins of slack in labor
and product markets were expected to exert a
moderating influence on prices and wages during
the year.
In the Committee's discussion of the economic
situation and outlook, most of the members
viewed recent developments as pointing on balance toward continuing expansion at a moderate
pace, in line with that experienced on average
over the past two to three years. The members
generally agreed that special factors—the delayed effects of the dollar's depreciation and the
turnaround in oil prices—were likely to contribute to a modest upturn in the rate of inflation
during 1987. The members acknowledged that
there were appreciable risks that economic activity and prices might deviate significantly from
445
current expectations, especially given the uncertainties stemming from persisting—though hopefully diminishing—imbalances in the federal budget and the balance of trade. Financial strains
associated with weaknesses in important sectors
of the economy such as agriculture and energy
and generally rising debt burdens also were cited
as sources of vulnerability in the economy.
In keeping with the usual practice at meetings
when the Committee considers its long-run objectives for monetary growth, the members of
the Committee and the Federal Reserve Bank
presidents not currently serving as members had
prepared specific projections of economic activity, the rate of unemployment, and the overall
level of prices. For the period from the fourth
quarter of 1986 to the fourth quarter of 1987, the
forecasts for growth of real GNP had a central
tendency of Vh to 3 percent and a full range of 2
to 4 percent. Forecasts of nominal GNP centered
on growth rates of 53/t to 6V2 percent and ranged
from 4V2 to IV2 percent. Estimates of the civilian
rate of unemployment in the fourth quarter of
1987 were in a range of 6!/2 to 63/4 percent. With
regard to the rate of inflation, as indexed by the
GNP deflator, the projections centered on rates
of 3 to 3'/2 percent and had an overall range of 2VI
to 4 percent. In making these forecasts, the
members took account of the Committee's objectives for monetary growth in 1987. The members
also assumed that future fluctuations in the foreign exchange value of the dollar would not be of
sufficient magnitude to have any significant effect on the projections. In addition, the members
anticipated that considerable progress would be
made in reducing the size of the federal budget
deficit.
As they had at previous meetings, members
emphasized that sustained economic expansion
would depend to an important extent on the
achievement of significant improvement in the
nation's balance of trade. While indications of
some improvement in net exports were multiplying, the members expressed a range of views
regarding prospects for the year ahead. On the
export side, several observed that the outlook for
relatively sluggish economic activity in key industrial nations—and indeed around the world
more generally—suggested that continuing gains
in exports might be relatively limited. Nonetheless, reports from many parts of the country
446
Federal Reserve Bulletin • June 1987
indicated that the depreciation of the dollar and
the concomitant improvement in the competitive
position of U.S. firms were being reflected in
new exporting opportunities, if not in a substantial increase in actual exports to date.
With regard to imports, some members saw
considerable potential for the substitution of
domestic goods for foreign imports as prices of
the latter rose. In this view the more recent
depreciation of the dollar would tend to be felt
more fully in import prices because foreign suppliers had less room than earlier to absorb a
depreciated dollar through reductions in their
profit margins. Other members were less optimistic about the outlook for imports. In their
view, foreign competitors would tend to hold
down their prices to maintain their sales, especially given the ample availability of production
resources worldwide. Moreover, the import penetration into U.S. markets had become embedded in contractual and other trading arrangements that were difficult to change, and
competitive gains against imports would be restrained to the extent that domestic producers
responded to rising import prices by raising their
own prices, as had already occurred in a major
U.S. industry. However, as in the case of exports, a growing number of business contacts
were reporting increasing opportunities to compete with imports on the basis of price, including
examples of actual or prospective sales to domestic firms that previously had tended to look
abroad to meet their outsourcing requirements.
With regard to domestic developments bearing
on the outlook, several members commented
that the evidence of the last few months suggested, on the whole, that the expansion retained
momentum despite its comparative longevity. To
some extent, the favorable year-end statistics
undoubtedly reflected tax-related spending that
had been moved up from 1987 into late 1986, and
a number of members observed that the recent
statistics should therefore be viewed with a degree of caution. Looking ahead, members observed that overall demands from domestic sectors might moderate over the year. They referred
in particular to the possibility that growth in
consumer spending, which had been a mainstay
of the expansion, might provide less stimulus,
especially in the context of an already low saving
rate. One member noted that the underlying
demand for new automobiles appeared to be
relatively weak, after allowing for the year-end
surge related to tax considerations and for the
impact of temporary sales incentive programs.
Another commented, however, that reduced
withholdings of personal income taxes were seen
by some business firms as a positive development for retail sales.
In the Committee's discussion of the prospects
for inflation, the members generally agreed that
the outlook remained basically favorable even
though rising import prices and the apparent
turnaround in oil prices could be expected to
result in somewhat higher average prices over
the next several quarters. Price competition remained intense in many industries, notably those
subject to competition from abroad, and recent
labor contract settlements continued favorable in
terms of holding down business costs. Moreover,
many business firms were still making vigorous
efforts to improve their operating efficiencies and
otherwise to curb costs. Nonetheless, several
members suggested that the risks of a deviation,
if any, from current inflation forecasts appeared
to be in the direction of more inflation. Some
referred to the risk that rapid monetary growth
and buildup of liquidity might exert a delayed
impact on future prices, though there was no
current evidence of such an impact. One member
expressed the view that a key uncertainty in the
outlook for inflation was not so much the direct
effects of rising import prices, but the price
responses of competing domestic producers.
Members also noted that for technical reasons
the rise in import and oil prices, to the extent that
they occurred, would have a relatively large
effect on consumer prices. The latter, because of
their high visibility, could exacerbate inflationary expectations, with adverse implications for
future price and wage decisions. Disappointing
progress toward reducing the federal budget deficit also could tend to fuel inflationary sentiment.
At this meeting the Committee completed the
review, begun at the December meeting, of the
ranges for growth in the monetary and debt
aggregates in 1987; those ranges had been set on
a tentative basis in July in keeping with the
requirements of the Full Employment and Balanced Growth Act of 1978 (the Humphrey-Hawkins Act). The tentative ranges included growth
of 5'/2 to SVi percent for both M2 and M3 for the
Record of Policy Actions of the FOMC
period from the fourth quarter of 1986 to the
fourth quarter of 1987. In the case of Ml the
Committee had indicated in July on a more
tentative basis than usual that it might retain the
1986 range of 3 to 8 percent for 1987, but there
had been considerable sentiment against using
any numerical range for Ml at the December
meeting. The associated range for growth in total
domestic nonfinancial debt had been set provisionally in July at 8 to 11 percent for 1987.
During the Committee's discussion of appropriate ranges for growth of M2 and M3 in 1987,
most of the members expressed a preference for
retaining the tentative range of 5VI to 8V2 percent
for both of the broader aggregates. That range
represented a reduction of Vi percentage point
from the one that had been targeted for 1986.
Several members stressed the importance of
some moderation in money growth and the desirability of adopting reduced ranges from the
standpoints of both the substance and the perception of an appropriately anti-inflationary
monetary policy. Moreover, a substantial slowing in money growth—perhaps to around the
middle of the ranges—could well be consistent
with satisfactory economic performance, given
the assessment of the economy by Committee
members and assuming considerably less movement in interest rates than had been experienced
in recent years. Members also commented that
the ranges in question were likely to provide
adequate room for any policy adjustments that
might be needed during the year, assuming that
developments bearing on policy formulation did
not diverge greatly from current expectations.
While a range of 5V2 to 8Y2 percent for M2 and
M3 was acceptable to all of the members, there
was some sentiment for slightly higher or lower
ranges. Retention of the slightly higher 6 to 9
percent ranges employed in 1986 would accommodate more comfortably the possibility of another sizable decline in the velocities of the
broader aggregates (that is, the ratios of nominal
GNP to the aggregates). Such a decline might be
induced if substantial further reductions in interest rates were needed to sustain economic expansion. On the other hand, slightly lower ranges
would provide more leeway on the downside in
the event that velocity growth rebounded from
the previous marked declines. Insofar as the
risks were on the side of greater inflation, a
447
rebound in velocity appeared more likely and in
such circumstances a lower range could provide
needed scope for a policy designed to maintain
progress toward price stability.
Turning to M l , the members recognized that
its prospective behavior remained subject to
exceptional uncertainties. To a greater extent
than for the broader aggregates, the demand for
Ml balances had become highly sensitive to
movements in interest rates over the course of
recent years; this development evidently reflected in considerable measure the deregulation of
deposit rate ceilings and a related increase in the
interest-bearing components of Ml as a repository for savings as well as for transactions funds.
Adaptations to deregulation were probably not
completed and in conjunction with an accelerated pace of other financial innovations and a
surging volume of financial transactions, it had
become very difficult to assess or predict the
implications of specific rates of Ml growth for
the future course of business activity and the rate
of inflation.
Accordingly, while most members clearly
wished to take account of changes in Ml in
reaching policy judgments, they felt the meaning
of fluctuations in Ml could only be appraised in
the light of other economic developments. Consequently, they did not want to specify a numerical target range for this aggregate, at least at this
time. Some slowing in 1987 was expected and
was felt to be necessary to sustain progress
toward price stability, but the appropriate
amount of slowing was difficult to predict, given
the uncertainties about velocity behavior. These
members felt that it would not be meaningful to
establish a range that was so wide that it would
cover all foreseeable circumstances or a conventional range that might well need to be exceeded
in either direction. For example, relatively slow
growth in Ml might be desirable—and might
require some firming of reserve conditions—if in
the context of expanding economic activity, inflation appeared to be worsening, possibly because of a weakening dollar, and the broader
monetary aggregates were growing rapidly. Conversely, relatively rapid expansion in Ml might
be indicated—and accommodated—in a situation
in which economic activity was relatively sluggish, progress was being maintained toward
achieving eventual price stability and a sustain-
448
Federal Reserve Bulletin • June 1987
able pattern of international transactions, and
interest rates were declining.
A few of the members preferred that a specific,
numerical range be established for Ml growth in
1987, although they also wanted to make clear
that growth outside the range might be desirable
or acceptable under some circumstances. These
members gave considerable emphasis to the possible usefulness of targeting on a narrow monetary aggregate, as well as on the broader aggregates, in underscoring the System's longer-run
commitment to an anti-inflationary policy. They
also felt the Committee might well want to increase emphasis on Ml in the future, and that a
current target would represent appropriate continuity. Moreover, a specific range would have the
advantage of indicating the Committee's best
judgment regarding appropriate Ml growth if
economic and financial conditions did not deviate markedly from current expectations. In contrast, one member felt that Ml provided little or
no useful information at present and a more
predictable relationship between Ml and economic performance was not likely to be reestablished. Consequently, the Committee should
concentrate instead on other broad financial aggregates including the measure for liquidity.
After discussion, the members agreed that the
Committee would need to monitor and evaluate
Ml developments closely in the light of the
behavior of its velocity, the performance of the
economy, including the nature of emerging price
pressures, and conditions in domestic and international financial markets. While the precise
circumstances under which Ml developments
might directly influence operating decisions
could not be predicted, the members contemplated the possible desirability of reintroducing Ml
explicitly during the year as a benchmark, along
with the broader monetary aggregates, for making short-run operating decisions. For now, the
Committee would indicate in broad terms that
the operational significance of Ml could only be
judged in the perspective of concurrent economic and financial developments, including the behavior of M2 and M3.
The Committee members also agreed on the
desirability of continuing to monitor the growth
of total domestic nonfinancial debt. The growth
in total debt had exceeded the expansion in
nominal GNP by substantial margins in recent
years, and some members expressed concern
about the resulting increase in the financial vulnerability of the economy. One member observed that under some circumstances a further
rapid growth in debt might lend some weight
toward implementing some policy restraint that
also was deemed to be advisable for other reasons. The growth in total domestic nonfinancial
debt was expected to moderate considerably in
1987, but it appeared likely to remain in excess of
the expansion in nominal GNP. The members
agreed that the tentative range of 8 to 11 percent
contemplated last July for 1987 continued to
encompass likely developments.
At the conclusion of the Committee's discussion, all of the members indicated that they
favored, or could accept, the ranges for M2 and
M3 and the monitoring range for total debt that
had been adopted on a tentative basis in July. No
numerical range would be established for Ml
growth in 1987, but Ml developments would
receive careful evaluation in the context of
emerging economic and financial conditions and
the behavior of the broader monetary aggregates.
It was understood that under some circumstances Ml might again be targeted explicitly
during the year to provide a guide, along with M2
and M3, for the short-run implementation of
monetary policy.
Thereupon, the Committee approved the following paragraphs relating to its objectives for
monetary and debt aggregates in 1987:
The Federal Open Market Committee seeks monetary and financial conditions that will foster reasonable
price stability over time, promote growth in output on
a sustainable basis, and contribute to an improved
pattern of international transactions. In furtherance of
these objectives the Committee established growth
ranges of 5Vz to 8V2 percent for both M2 and M3,
measured from the fourth quarter of 1986 to the fourth
quarter of 1987. The associated range for growth in
total domestic nonfinancial debt was set at 8 to 11
percent for 1987.
With respect to Ml, the Committee recognized that,
based on experience, the behavior of that aggregate
must be judged in the light of other evidence relating to
economic activity and prices; fluctuations in Ml have
become much more sensitive in recent years to
changes in interest rates, among other factors. During
1987, the Committee anticipates that growth in Ml
should slow. However, in the light of its sensitivity to
a variety of influences, the Committee decided not to
establish a precise target for its growth over the year
as a whole at this time. Instead, the appropriateness of
Record of Policy Actions of the FOMC
changes in Ml during the course of the year will be
evaluated in the light of the behavior of its velocity,
developments in the economy and financial markets,
and the nature of emerging price pressures.
In that connection, the Committee believes that,
particularly in the light of the extraordinary expansion
of this aggregate in recent years, much slower monetary growth would be appropriate in the context of
continuing economic expansion accompanied by signs
of intensifying price pressures, perhaps related to
significant weakness of the dollar in exchange markets, and relatively strong growth in the broad monetary aggregates. Conversely, continuing sizable increases in Ml could be accommodated in
circumstances characterized by sluggish business activity, maintenance of progress toward underlying
price stability, and progress toward international equilibrium. As this implies, the Committee in reaching
operational decisions during the year, might target
appropriate growth in Ml from time to time in the light
of circumstances then prevailing, including the rate of
growth of the broader aggregates.
Votes for this action: Messrs. Volcker, Corrigan,
Angell, Guffey, Heller, Johnson, Keehn, Melzer,
Morris, and Ms. Seger. Votes against this action:
None. Absent and not voting: Mrs. Horn. Mr.
Keehn voted as alternate for Mrs. Horn.
In the Committee's discussion of policy implementation for the weeks immediately ahead,
most of the members indicated that they were in
favor of directing open market operations, at
least initially, toward maintaining the existing
degree of pressure on reserve positions. One
member preferred to move promptly toward
somewhat firmer reserve conditions. A number
of others observed that they would be prepared
to accept some firming later if recent indications
of some strengthening in economic activity were
to persist in the context of further rapid monetary
expansion and signs of growing inflationary pressures. However, these members felt that the
desirability of an immediate move toward restraint had not been established. In particular,
they felt that economic and financial developments in the period around the year-end needed
to be interpreted with caution, especially because of the tax effects that were probably involved, and that confirming evidence should be
awaited before any adjustments in policy implementation were undertaken.
The members anticipated that current conditions in reserve markets were likely to be associated with slower growth in M2 and M3 over the
period ahead than the average pace in recent
449
months. To a considerable extent, the anticipated slowing would represent a reversal of special
factors that had contributed to faster expansion—including a bulge in Ml—around the yearend. Because of the distortions created by yearend developments, the members generally
agreed that use of a January base, instead of
November as in the previous directive, or December, would convey more meaningful information regarding the Committee's expectations
for growth of the broader aggregates through the
remainder of the first quarter. Given the uncertainties that were involved and in keeping with
the Committee's decision on the longer-run targets, the members accepted a proposal not to
indicate a numerical expectation for the growth
of Ml over the period immediately ahead, but to
note in a general way that the expansion of this
aggregate was likely to moderate substantially.
Over a longer perspective, the growth of the
aggregates, especially Ml, might display a moderating trend as the effects of earlier declines in
interest rates subsided.
With regard to possible adjustments during the
intermeeting period, the members generally felt
that policy implementation should be especially
alert to the potential need for some firming of
reserve conditions. In this view, somewhat
greater reserve restraint would be warranted if
monetary growth did not slow in line with current expectations and there were concurrent
indications of intensifying inflationary pressures
against the background of stronger economic
data. One indicator of the possibility of potential
pressures on prices might be a further tendency
for the dollar to weaken. One member preferred
a directive that did not contemplate any easing
during the weeks ahead, but most of the members did not want to rule out the possibility of
some slight easing during the intermeeting period, although they did not view the conditions for
such a move as likely to emerge.
At the conclusion of the Committee's discussion, all but one member indicated that they
could vote for a directive that called for no
change in the current degree of pressure on
reserve positions. The members expected this
approach to policy implementation to be consistent with some reduction in the growth of M2 and
M3 to annual rates of about 6 to 7 percent over
the two-month period from January to March.
450
Federal Reserve Bulletin • June 1987
Over the same interval, growth in Ml was expected to moderate substantially from an extraordinarily high rate in the closing months of
1986. The members indicated that somewhat
greater reserve restraint would be acceptable,
and slightly less reserve restraint might be acceptable, over the intermeeting period depending
on the behavior of the monetary aggregates,
taking into account the strength of the business
expansion, the performance of the dollar in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. The members agreed that the
intermeeting range for the federal funds rate,
which provides a mechanism for initiating consultation of the Committee when its boundaries
are persistently exceeded, should be left unchanged at 4 to 8 percent.
At the conclusion of the meeting, the following
domestic policy directive was issued to the Federal Reserve Bank of New York:
The information reviewed at this meeting suggests
on balance that economic activity continues to grow at
a moderate pace. Total nonfarm payroll employment
grew sharply in January in part reflecting unusual
seasonal developments. The civilian unemployment
rate remained at 6.7 percent in January. Industrial
production increased considerably in December and
over the fourth quarter as a whole. Total retail sales
rose substantially in December, largely reflecting a
year-end surge in automobile sales, but were little
changed on balance in the fourth quarter. Housing
starts also strengthened in December after trending
lower since late spring. Business capital spending
generally appears to have remained sluggish. Available data for the U.S. merchandise trade deficit in the
fourth quarter suggest a slight increase from the third
quarter; however, after allowing for price changes, net
exports of goods and services improved somewhat
during the quarter. In late 1986 consumer and producer prices generally were continuing to rise at moderate
rates, although prices of crude oil and some other
industrial commodities firmed. Labor cost increases
were more restrained in 1986 than in other recent
years.
Growth of M2 and M3 picked up substantially in
December before slowing a little in January. For 1986
as a whole, expansion of these two aggregates was
near the upper end of their respective ranges established by the Committee for the year. Growth of Ml
slowed in January from an exceptionally rapid pace in
late 1986. Expansion in total domestic nonfinancial
debt remained appreciably above the Committee's
monitoring range for 1986. Although short-term interest rates generally firmed around year-end, on balance
interest rates have shown small mixed changes since
the December 15-16 meeting of the Committee; rates
on Treasury securities, including bonds, have risen a
little over the period while rates on most private
obligations have declined slightly. In foreign exchange
markets the trade-weighted value of the dollar against
the other G-10 currencies has declined substantially on
balance since the December meeting.
The Federal Open Market Committee seeks monetary and financial conditions that will foster reasonable
price stability over time, promote growth in output on
a sustainable basis, and contribute to an improved
pattern of international transactions. In furtherance of
these objectives the Committee established growth
ranges of 5'/2 to SV2 percent for both M2 and M3,
measured from the fourth quarter of 1986 to the fourth
quarter of 1987. The associated range for growth in
total domestic nonfinancial debt was set at 8 to 11
percent for 1987.
With respect to Ml, the Committee recognized that,
based on experience, the behavior of that aggregate
must be judged in the light of other evidence relating to
economic activity and prices; fluctuations in Ml have
become much more sensitive in recent years to
changes in interest rates, among other factors. During
1987, the Committee anticipates that growth in Ml
should slow. However, in the light of its sensitivity to
a variety of influences, the Committee decided not to
establish a precise target for its growth over the year
as a whole at this time. Instead, the appropriateness of
changes in Ml during the course of the year will be
evaluated in the light of the behavior of its velocity,
developments in the economy and financial markets,
and the nature of emerging price pressures.
In that connection, the Committee believes that,
particularly in the light of the extraordinary expansion
of this aggregate in recent years, much slower monetary growth would be appropriate in the context of
continuing economic expansion accompanied by signs
of intensifying price pressures, perhaps related to
significant weakness of the dollar in exchange markets, and relatively strong growth in the broad monetary aggregates. Conversely, continuing sizable
increases in Ml could be accommodated in circumstances characterized by sluggish business activity,
maintenance of progress toward underlying price stability, and progress toward international equilibrium.
As this implies, the Committee in reaching operational
decisions during the year, might target appropriate
growth in Ml from time to time in the light of circumstances then prevailing, including the rate of growth of
the broader aggregates.
In the implementation of policy for the immediate
future, the Committee seeks to maintain the existing
degree of pressure on reserve positions. This action is
expected to be consistent with growth in M2 and M3
over the period from January through March at annual
rates of about 6 to 7 percent. Growth in Ml is expected
to slow substantially from the high rate of earlier
months. Somewhat greater reserve restraint would, or
slightly lesser reserve restraint might, be acceptable
depending on the behavior of the aggregates, taking
Record of Policy Actions of the FOMC
into account the strength of the business expansion,
developments in foreign exchange markets, progress
against inflation, and conditions in domestic and international credit markets. The Chairman may call for
Committee consultation if it appears to the Manager
for Domestic Operations that reserve conditions during the period before the next meeting are likely to be
associated with a federal funds rate persistently outside a range of 4 to 8 percent.
Votes for the short-run operational paragraph:
Messrs. Volcker, Corrigan, Angell, Guffey, Heller,
Johnson, Keehn, Morris, and Ms. Seger. Vote
against this action: Mr. Melzer. Absent and not
voting: Mrs. Horn. Mr. Keehn voted as alternate
for Mrs. Horn.
Mr. Melzer favored some tightening of reserve
conditions. He noted the strong growth in bank
loans in the November through January period
451
and the firm federal funds rate that had prevailed
despite the extraordinary pace of reserve
growth. In addition, he cited the recent declines
in the foreign exchange value of the dollar.
Finally, looking ahead, he pointed out the potential for a further rise in inflationary expectations
and, accordingly, he believed that prompt action
toward restraint might avert the need for more
substantial tightening later.
At a telephone conference on February 23, the
Committee heard a report from the Chairman
regarding the deliberations in Paris during the
previous weekend of the Ministers of Finance
and Central Bank Governors of several major
industrial countries. The Committee members
discussed the possible implications of the decisions reached in Paris for U.S. intervention in
the foreign exchange markets.
453
Legal Developments
AMENDMENT
AVAILABILITY
TO RULES
REGARDING
OF INFORMATION
The Board of Governors is amending 12 C.F.R. Part
261, its Rules Regarding Availability of Information, to
implement the Freedom of Information Reform Act
("FOI Reform Act"), Pub. L. 99-570, by revising the
schedule of fees applicable to requests for Board
records pursuant to the Freedom of Informaton Act
("FOIA").
Effective May 27, 1987, the Board amends
12 C.F.R. Part 261 as follows:
Part 261—Rules Regarding Availability of
Information
1. The authority citation for 12 C.F.R. Part 261 continues to read as follows:
Authority: 5 U.S.C. 552.
2. Part 261.4—Records Available to the Public Upon
Request, is amended by removing paragraph (g).
3. Section 261.8 is added to read as follows:
Section 261.8—Fee Schedules; Waiver of Fees
(a) Fee schedules. Records of the Board available for
public inspection and copying are subject to a written
Schedule of Fees for search, review, and duplication.
(See the Appendix to section 261.8 for Schedule of
Fees.) The fees set forth in the Schedule of Fees
reflect the full allowable direct costs of search, duplication, and review, and may be adjusted from time to
time by the Secretary to reflect changes in direct costs.
(b) Fees charged. The fees charged only cover the full
allowable direct costs of search, duplication, or review.
(1) "Direct costs" mean those expenditures which
the Board actually incurs in searching for and duplicating (and in the case of commercial requesters,
reviewing) documents to respond to a request made
under section 261.4 of this Part. Direct costs include, for example, the salary of the employee
performing work (the basic rate of pay for the
employee plus a factor to cover benefits) and the
cost of operating duplicating machinery. Not included in direct costs are overhead expenses such as
costs of space, and heating or lighting the facility in
which the records are stored.
(2) "Duplication" refers to the process of making a
copy of a document necessary to respond to a
request for disclosure of records or for inspection of
original records that contain exempt material or that
otherwise cannot be inspected directly. Such copies
may take the form of paper copy, microform, audiovisual materials, or machine readable documentation (e.g., magnetic tape or disk), among others.
(3) "Review" refers to the process of examining
documents located in response to a request that is
for a commercial use to determine whether any
portion of any document located is permitted to be
withheld. It also includes processing any documents
for disclosure, e.g., doing all that is necessary to
excise them and otherwise to prepare them for
release. Review does not include time spent resolving general legal or policy issues regarding the
application of exemptions.
(c) Commercial use.
(1) The fees in the Schedule of Fees for document
search, duplication, and review apply when records
are requested for commercial use.
(2) "Commercial use request" refers to a request
from or on behalf of one who seeks information for a
use or purpose that furthers the commercial, trade,
or profit interests of the requester or the person on
whose behalf the request is made.
(3) In determining whether a requester properly
belongs in this category, the Secretary shall look
first to the use to which a requester will put the
documents requested. Where a requester does not
explain its purpose, or where its explanation is
insufficient, the Secretary may seek additional clarification from the requester before categorizing the
request as one for commercial use.
(d) Educational, research, or media use.
(1) Only the fees in the Schedule of Fees for
document duplication apply when records are not
sought for commercial use and the requester is a
representative of the news media, or an educational
454
Federal Reserve Bulletin • June 1987
or noncommercial scientific institution, whose purpose is scholarly or scientific research. However,
there is no charge for the first one hundred pages of
duplication.
(2) "Educational institution" refers to a preschool, a
public or private elementary or secondary school,
an institution of undergraduate higher education, an
institution of graduate higher education, an institution of professional education, and an institution of
vocational education, which operates a program of
scholarly research.
(3) "Noncommercial scientific institution" refers to
an independent nonprofit institution whose purpose
is to conduct scientific research.
(4) "Representative of the news media" refers to
any person that is actively gathering news for an
entity that is organized and operated to publish or
broadcast news to the public. The term "news"
means information that is about current events or
that would be of current interest to the public.
Examples of news media entities include, but are
not limited to, television or radio stations broadcasting to the public at large, and publishers of periodicals (but only in those instances when they can
qualify as disseminators of "news") who make their
products available for purchase or subscription by
the general public. "Freelance" journalists may be
regarded as working for a news organization if they
can demonstrate a solid basis for expecting publication through that organization, even though not
actually employed by it.
(e) Other uses. For all other requests, the fees in the
Schedule of Fees for document search and duplication
apply. However, there is no charge for the first one
hundred pages of duplication or the first two hours of
search time.
(f) Aggregated requests. A requester may not file
multiple requests at the same time, each seeking
portions of a document or documents solely in order to
avoid payment of fees. If the Secretary reasonably
believes that a requester or group of requesters is
attempting to break a request down into a series of
requests for the purpose of evading the assessment of
fees, the Secretary may aggregate any such requests
and charge accordingly. It is considered reasonable for
the Secretary to presume that multiple requests of this
type made within a 30-day period have been made to
avoid fees.
(g) Payment procedures.
(1) Fee payment. The Secretary may assume that a
person requesting records pursuant to section 261.4
of this Part will pay the applicable fees, unless a
request includes a limitation on fees to be paid or
seeks a waiver or reduction of fees pursuant to
paragraph (h) of this section.
(2) Advance Notification. If the Secretary estimates
that charges are likely to exceed $25, the requester
shall be notified of the estimated amount of fees,
unless he has indicated in advance his willingness to
pay fees as high as those anticipated. Upon receipt
of such notice the requester may confer with the
Secretary as to the possibility of reformulating the
request in order to lower the costs.
(3) Advance payment.
(i) The Secretary may require advance payment of
any fee estimated to exceed $250. The Secretary
may also require full payment in advance where a
requester has previously failed to pay a fee in a
timely fashion.
(ii) For purposes of computing the time period for
responding to requests under section 261.4(d) of
this Part, the running of the time period will begin
only after the Secretary receives the required
payment.
(4) Late charges. The Secretary may assess interest
charges when fee payment is not made within 30
days of the date on which the billing was sent.
Interest will be at the rate prescribed in section 3717
of Title 31 U.S.C.A. and will accrue from the date of
the billing. This rate of interest is published by the
Secretary of the Treasury before November 1 each
year and is equal to the average investment rate for
Treasury tax and loan accounts for the 12-month
period ending on September 30 of each year. The
rate is effective on the first day of the next calendar
quarter after publication.
(5) Fees for nonproductive search. Fees for record
searches and review may be charged even if no
responsive documents are located or if the request is
denied, particularly if the requester insists upon a
search after being informed that it is likely to be
nonproductive or that any records found are likely
to be exempt from disclosure. The Secretary shall
apply the standards set out in paragraph (h) of this
section in determining whether to waive or reduce
fees.
(h) Waiver or reduction of fees.
(1) Standards for determining waiver or reduction.
The Secretary or his or her designee shall grant a
waiver or reduction of fees chargeable under paragraph (b) of this section where it is determined both
that disclosure of the information is in the public
interest because it is likely to contribute significantly to public understanding of the operations or
activities of the government, and that the disclosure
of information is not primarily in the commercial
Legal Developments
interest of the requester. The Secretary or his or her
designee shall also waive fees that are less than the
average cost of collecting fees. In determining
whether disclosure is in the public interest, the
following factors will be considered:
(i) The subject of the request: whether the subject
of the requested records concerns "the operations
or activities of the government";
(ii) The informative value of the information to be
disclosed: whether the disclosure is "likely to
contribute" to an understanding of government
operations or activities;
(iii) The contribution to an understanding of the
subject by the general public likely to result from
disclosure: whether disclosure of the requested
information will contribute to "public understanding";
(iv) The significance of the contribution to the
public understanding: whether the disclosure is
likely to contribute "significantly" to public understanding of government operations or activities;
(v) The existence and magnitude of a commercial
interest: whether the requester has a commercial
interest that would be furthered by the requested
disclosure; and, if so
(vi) The primary interest in disclosure: whether
the magnitude of the identified commercial interest of the requester is sufficiently large, in comparison with the public interest in disclosure, that
disclosure is "primarily in the commercial interest
of the requester".
(2) Contents of request for waiver. The Secretary
will normally deny a request for a waiver of fees that
does not include:
(i) a clear statement of the requester's interest in
the requested documents;
(ii) the use proposed for the documents and
whether the requester will derive income or other
benefit from such use;
(iii) a statement of how the public will benefit from
such use and from the Board's release of the
requested documents; and
(iv) if specialized use of the documents or information is contemplated, a statement of the requester's qualifications that are relevant to the
specialized use.
(3) Burden of proof. In all cases the burden shall be
on the requester to present evidence or information
in support of a request for a waiver of fees.
(4) Employee requests. In connection with any request by an employee, former employee, or applicant for employment, for records for use in prosecuting a grievance or complaint of discrimination
against the Board, fees shall be waived where the
total charges (including charges for information pro
455
vided under the Privacy Act) are $50 or less; but the
Secretary may waive fees in excess of that amount.
Appendix to Section 261.8
Freedom of Information Fee Schedule
Duplication:
Photocopy, per standard page
Paper copies of microfiche, per frame
Duplicate microfiche, per microfiche
$.08
$.07
$.10
Search and review:
Clerical (Grades FR4-FR7),
hourly rate
Technical (Grades FR8-FR11),
hourly rate
Management/professional,
hourly rate
Computer search and
$8.50
$12.80
$25.90
production:
For each request the Secretary will separately determine the actual direct cost of providing the service,
including computer search time, tape or printout
production, and operator salary.
Special
services:
The Secretary of the Board may agree to provide,
and set fees to recover the costs of, special services
not covered by the Freedom of Information Act,
such as certifying records or information and sending records by special methods such as express mail.
The Secretary may provide self-service photocopy
machines and microfiche printers as a convenience
to requesters and set separate per-page fees reflecting the cost of operation and maintenance of those
machines.
Fee waivers:
For qualifying educational and noncommercial scientific institution requesters and representatives of
the news media the Board will not assess fees for
review time, for the first 100 pages of reproduction,
or, when the records sought are reasonably described, for search time. For other noncommercial
use requests no fees will be assessed for review
time, for the first 100 pages of reproduction, or for
the first two hours of search time. For requesters
qualifying for 100 free pages of reproduction, the
fees for duplicate microfiche will be prorated to
eliminate the charge for 100 frames.
456
Federal Reserve Bulletin • June 1987
The Board will waive in full fees that total less
than $4.
The Secretary of the Board or his or her designee
will also waive or reduce fees, upon proper request, if
disclosure of the information is in the public interest
because it is likely to contribute significantly to public
understanding of the operations or activities of the
government and is not primarily in the commercial
interest of the requester. A fee reduction is available to
employees, former employees, and applicants for employment who request records for use in prosecuting a
grievance or complaint or discrimination against the
Board.
ORDERS
COMPANY
SERVICE
RESERVE
ISSUED
ACT,
UNDER
BANK
CORPORATION
BANK
HOLDING
MERGER
ACT,
ACT,
AND
BANK
FEDERAL
ACT
Orders Issued Under Section 3 of the Bank
Holding Company Act
Capital City Bank Group, Inc.
Tallahassee, Florida
Order Approving Acquisition of Bank
Capital City Bank Group, Inc., Tallahassee, Florida, a
bank holding company within the meaning of the Bank
Holding Company Act (12 U.S.C. § 1841 et seq.)
("Act"), has applied for the Board's approval under
section 3(a)(3) of the Act to acquire all the voting
shares of Gadsden National Bank, Quincy, Florida
("Bank"), a de novo 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
(52 Federal Register 2806 (1987)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)).
Applicant, the sixteenth largest commercial banking
organization in Florida, controls eight subsidiary
banks, with total deposits of $434.8 million, representing approximately 0.6 percent of the total deposits in
commercial banks in the state.1 Bank is a de novo bank
which will assume the deposit liabilities and certain
assets of the Quincy branch ("Quincy") of Pioneer
Savings Bank, Clearwater, Florida ("Pioneer"). Quincy, the 110th largest banking organization in Florida,
controls total deposits of $31.4 million, representing
less than 0.1 percent of the total deposits in commercial banks in the state.2 Upon consummation of the
proposal, Applicant would remain the sixteenth largest
commercial banking organization in Florida, with total
deposits of $466.2 million, representing 0.6 percent of
total deposits in commercial banks in the state. Consummation of this proposal would not have a significant effect on the concentration of banking resources
in Florida.
Applicant and Quincy compete in the Gadsden
banking market.3 Applicant is the fifth largest of the
six commercial banking organizations operating in the
market, and controls total deposits of $12.4 million,
representing 8.7 percent of the deposits in commercial
banks in the market.4 Quincy is the second largest
banking organization in the market, with deposits of
$31.4 million, representing 22.2 percent of total deposits in commercial banks in the market. The market is
considered to be highly concentrated, with the four
largest commercial banks controlling 86.4 percent of
the deposits in commercial banks in the market. The
Herfindahl-Hirschman Index ("HHI") on a banksonly basis is 2299, and would increase by 386 points to
2685 upon consummation of this proposal.5
Although consummation of the proposal would eliminate some competition between Applicant and Quincy
in the Gadsden banking market, several factors mitigate the anticompetitive effects of this transaction.
First, Pioneer will continue to operate two offices in
the Gadsden banking market, so the number of competitors will remain the same. In addition, the presence of two thrift institutions that control approximately 19.4 percent of the market's total deposits
mitigates the anticompetitive effects of the transaction.6 Thrift institutions already exert a considerable
2. Quincy is treated as a commercial bank in this analysis.
3. The Gadsden banking market is approximated by Gadsden
County plus part of Jackson County, Florida.
4. Market data are as of June 30, 1985.
5. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), a market in which the postmerger HHI is above 1800 is considered highly concentrated. In such
markets, the department is likely to challenge a merger that increases
the HHI by more than 50 points. The Department has informed the
Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by at least 200 points. The Justice Department has
stated that the higher than normal HHI thresholds for screening bank
mergers for anticompetitive effects implicitly recognizes the competitive effect of limited-purpose lenders and other non-depository financial entities.
6. The Board has previously indicated that thrift institutions have
become, or have the potential to become, major competitors of
commercial banks. National City Corporation, 70 FEDERAL RESERVE
BULLETIN 743 (1984); NCNB
Bancorporation,
70 FEDERAL RESERVE
BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL
RESERVE BULLETIN 802 (1983); First Tennessee National Corpora1. State deposit data are as of June 30, 1986.
tion, 69 FEDERAL RESERVE BULLETIN 298 (1983).
Legal Developments
competitive influence in the market as providers of
NOW accounts and consumer loans. Based upon the
above considerations, the Board concludes that consummation of the proposal is not likely to substantially
lessen competition in the Gadsden banking market.7
The financial and managerial resources of Applicant, its subsidiary banks, and Bank are consistent
with approval. Considerations relating to the convenience and needs of the communities to be served are
also consistent with approval. Based on the foregoing
and other facts of record, the Board has determined
that consummation of the proposed transaction would
be in the public interest and that the application should
be approved.
On the basis of the record, the application is approved for the reasons summarized above. The transaction shall not be made before the thirtieth day
following the effective date of this Order, or later than
three months after the effective date of this Order, and
Bank shall be opened for business not later than six
months after the effective date of this Order. The latter
two periods may be extended for good cause by the
Board or by the Federal Reserve Bank of Atlanta,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
April 21, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
Crescent Holding Company
Napoleon, Ohio
Order Approving Formation of a Bank Holding
Company
Crescent Holding Company, Napoleon, Ohio, has
applied pursuant to section 3(a)(1) of the Bank Holding
Company Act ("BHC Act" or "Act"), 12 U.S.C.
§ 1841 et seq., to become a bank holding company by
acquiring up to 39 percent of the voting shares of
Henry County Bank, Napoleon, Ohio ("Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
7. If 50 percent of deposits held by thrift institutions in the
Gadsden banking market were included in the calculation of market
concentration, the share of total deposits held by the four largest
organizations in the market would be 77.1 percent. Applicant would
control 7.8 percent and Bank would control 19.8 percent of the
market's deposits. The HHI would increase by 309 points to 2199.
457
given in accordance with section 3(b) of the Act, 51
Federal Register 43,974 (1986). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act.
Applicant is a non-operating company with no subsidiaries formed for the purpose of becoming a bank
holding company by acquiring Bank. Bank is the 91st
largest commercial banking organization in Ohio, controlling deposits of $54.8 million representing less than
0.1 percent of the total deposits in commercial banking
organizations in the state.' None of the principals of
Applicant or Bank is associated with any other financial institutions located within the relevant banking
market.2 Accordingly, consummation of this proposal
would not have any significant effect on existing or
probable future competition, nor would it significantly
increase the concentration of banking resources in any
relevant banking market or the State of Ohio.
Existing management of Bank has submitted comments opposing this proposal. In addition, the Board
has received more than 60 comment letters and petitions in opposition to this proposal from members of
the community and customers of Bank.
These commenters are concerned that Bank will
cease to be an independent, community-owned bank if
this application is approved because Applicant, although locally owned, is acquiring this interest in Bank
in order to profit from a sale of Bank to a larger nonlocal bank holding company. In addition, the commenters argue that this proposed transaction will not
serve the needs of the community and will adversely
affect the future prospects of Bank. They argue that
Applicant will not be a source of financial and managerial strength for Bank. Specifically, some commenters
suggest that customers will terminate their relationship
with Bank if ownership and management changes and
that the proposed acquisition of less than an absolute
majority of the voting shares of Bank will cause
dissension in the management and operation of Bank.
Commenters have requested a public hearing on this
application.
In response, Applicant has stated its intention to
retain Bank as a locally owned, independent bank and
has offered to provide Bank a right of first refusal for a
period of four years to purchase Bank shares held by
Applicant in the event of an offer by a non-local
organization. Applicant has stated that it has no plans
to make any significant changes in the corporate
structure or operations of Bank or in the services
1. All banking data are as of September 30, 1986.
2. The Henry County banking market is approximated by Henry
County, Ohio, except for the townships of Flatrock and Pleasant.
458
Federal Reserve Bulletin • June 1987
provided by Bank to the community. Applicant has
specifically offered to retain Bank's senior management and to expand the board of directors of Bank to
permit Applicant's principals to be added rather than
to displace existing directors.
The Board has carefully considered the comments in
opposition to this proposal. The Board notes that
Applicant's principals are local residents or from local
families, and several have prior affiliations with Bank.
This application does not raise the concerns addressed
by many commenters about elimination of an independent, locally controlled bank. Moreover, any future
sale by Applicant of its interest in Bank to a larger
bank holding company will require Board approval
and provide an adequate opportunity to raise concerns
about local control.
The Board has evaluated the financial and managerial resources of Applicant and Bank and finds them to
be consistent with approval of this application. Applicant has indicated its intention to continue the present
policies of Bank and the services that it offers to the
community and to do so under the direction of the
existing management that has been responsible for
implementing those policies.3 Applicant has also indicated that it will assume a limited role in directing the
operations of Bank, since Applicant plans to provide
for retention of current directors and to promote
management from within Bank rather than to assume a
direct role in Bank's operational management. Applicant's principals have the financial resources and
experience to justify a finding by the Board that
financial and managerial considerations are consistent
with approval, particularly since Bank's condition is
satisfactory. The outpouring of community support for
Bank's management and policies supports a conclusion that Bank's policies are meeting the needs of the
community and the continued provision of those services to the community Bank serves is consistent with
approval of this application.
The commenters also contend that the Board should
deny the application in this case because the acquisition by Applicant of a minority interest in Bank would
only cause dissension and uncertainty in the management of Bank without permitting Applicant to gain
actual control. In this case, however, Applicant will
become the largest single shareholder of Bank and is
not precluded, as in NBC Co., 60 FEDERAL RESERVE
BULLETIN 782 (1974), by an absolute majority shareholder from seeking to acquire a majority of the shares
of Bank over time. The Board has previously permitted acquisitions of less than absolute control where
there is a possibility or likelihood that the applicant
will eventually gain control, despite claims by management of possible dissension, and where, unlike the
NBC Co. case, the applicant or applicant's principals
had adequate resources so that the applicant would not
be totally dependent upon dividends from Bank to
meet its debt servicing requirements. Lloyds Bank, 72
FEDERAL RESERVE BULLETIN 841 (1986); First Jersey
National Corporation, 71 FEDERAL RESERVE B U L L E TIN 638 (1985); and City Holding Company, 71 FEDERAL RESERVE BULLETIN 575 (1985).
The position taken by the commenters would preclude the Board from approving any proposal to
acquire less than an absolute majority of the shares of
a bank holding company if the management of the
bank holding company opposes the acquisition. Moreover, as in this case, it would limit arbitrarily the
market for the stock of locally owned community
banks to the detriment of shareholders. The BHC Act
recognizes that control is possible without ownership
of an absolute majority of voting shares. After careful
review of the comments submitted, Applicant's response to these comments, and all of the facts of
record in this case, the Board has determined that the
comments submitted do not warrant denial of this
application.
The Board has also considered the commenters'
requests for a hearing. The BHC Act requires the
Board to hold a formal hearing regarding an application submitted under section 3 of the BHC Act only in
the event that the state supervisory authority, in the
case of a state bank such as Bank, expresses written
disapproval of the proposed transaction.4 This hearing
requirement is not triggered in this case because the
Superintendent of Banking for the State of Ohio,
although suggesting the Board might use a hearing to
gather information on the depth of community feeling,
has not expressed written disapproval of the proposed
transaction.
Further, commenters have been given the opportunity to submit written facts and arguments to the
Board regarding this application. There is no indication that the substantial number of comments already
before the Board present an incomplete or insufficient
basis to permit the Board to evaluate the concerns of
the commenters with respect to this application, or
that further investigation would produce significant
3. The retention of Bank or its current management is not a
condition of the Board's action in this case. The Board expects that all
future actions that Applicant takes regarding Bank will be consistent
with relevant law, the Board's regulations, this Order, and safe and
sound banking practice.
4. 12 U.S.C. § 1842(b); Northwest Bancorporation v. Board of
Governors, 303 F.2d 832, 843-44 (8th Cir. 1962); Grandview Bank &
Trust Co. v. Board of Governors, 550 F.2d 415 (8th Cir.), cert, denied,
434 U.S. 821 (1977); and, Farmers & Merchants Bank of Las Cruces
v. Board of Governors, 567 F.2d 1082 (D.C. Cir. 1977).
Legal Developments
additional facts upon which to base a decision. The
Board is aware of the depth of the community concern
about the future direction of Bank and the effects of
this proposed acquisition. The Board concludes, however, that a hearing would not assist it in gathering
additional facts upon which to base its decision and
hereby denies the requests of commenters for a hearing.
Based on the foregoing and other facts of record, the
Board has determined that the application should be
and hereby is approved. This transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order, or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Cleveland pursuant to
delegated authority.
By order of the Board of Governors, effective
April 7, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
First Midwest Bancorp, Inc.
Naperville, Illinois
Order Approving Merger of Bank Holding
Companies
First Midwest Bancorp, Inc., Naperville, Illinois, a
bank holding company within the meaning of the Bank
Holding
Company
Act
("Act")
(12 U.S.C.
§ 1842(a)(1)), has applied for the Board's approval
pursuant to section 3(a)(5) of the Act (12 U.S.C.
§ 1842(a)(5)) to merge with Bancorp of Mundelein
Inc., Mundelein, Illinois ("Bancorp"), and thereby
indirectly to acquire Bank of Mundelein, Mundelein,
Illinois ("Mundelein Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act.
Applicant is the ninth largest commercial banking
organization in Illinois holding deposits of $1.2 billion,
representing 1.2 percent of the total deposits in commercial banking organizations in the state.1 Mundelein
1. All banking data are as of December 31, 1985.
459
Bank is among the smaller commercial banking organizations in the state, controlling deposits of $34.4
million, representing less than one percent of the total
deposits in commercial banking organizations in the
state. Upon consummation of this proposal, Applicant
would remain the ninth largest commercial banking
organization in Illinois and would control 1.23 percent
of the total deposits in commercial banking organizations in the state. Consummation of this proposal
would not result in a significant increase in the concentration of banking resources in Illinois.
Applicant's subsidiary banks compete directly with
Mundelein Bank in the Chicago banking market.2
Currently, Applicant controls less than one percent of
the total deposits in commercial banks in the market.
Upon consummation, Applicant would be the 33rd
largest commercial banking organization in the market, and would continue to control less than one
percent of the market's deposits in commercial
banks.3 Accordingly, the Board concludes that consummation of the proposal would not have any significant adverse effect on competition in the Chicago
banking market.
In its evaluation of Applicant's managerial resources, the Board has considered certain violations
by Applicant's subsidiary banks of the Currency and
Foreign Transactions Reporting Act ("CFTRA") and
the regulations thereunder.4 Applicant has taken appropriate remedial action as a result of the discovery
of these violations. The corrective measures include
the implementation of a revised audit program and the
development of a compliance monitoring program.
The audit program was implemented on March 1, 1987
and Applicant has committed to implement its compliance program at all its subsidiary banks by March 31,
1987. Based on the foregoing and other facts of record,
the Board concludes that the managerial resources of
Applicant, its subsidiary banks and Bancorp are consistent with approval.
The Board also finds that the financial resources of
Applicant are consistent with approval. Applicant will
serve as a source of financial and managerial strength
for Mundelein Bank. In addition, Applicant has committed that it will maintain adequate capital in Mundelein Bank.
2. The Chicago banking market is approximated by Cook, Lake and
DuPage Counties, Illinois. Mundelein Bank and five of Applicant's
subsidiary banks are located in Lake County.
3. The Chicago banking market is considered unconcentrated, with
the four largest commercial banks controlling 50.5 percent of the total
deposits in commercial banking organizations in the market. The
Herfindahl-Hirschman Index ("HHI") for the market is 807, and
would increase by less than 1 point upon consummation of the
proposal.
4. 31 U.S.C. § 5311 et seq.\ 31 C.F.R. § 103.
460
Federal Reserve Bulletin • June 1987
In considering the convenience and needs of the
communities to be served, the Board has taken into
account the records of Applicant and Bancorp under
the Community Reinvestment Act ("CRA"),
12 U.S.C. § 2901 et seq.5 The Board has received
comments from a Protestant regarding Applicant's
CRA record. The Protestant has alleged that Applicant, and specifically its subsidiary bank, First Midwest Bank/North Chicago, Chicago, Illinois ("North
Chicago Bank"), have failed generally to comply with
the terms of the CRA, and more specifically has failed
to serve the credit needs of minority and low- and
moderate-income communities within its service
area.6
The Board has carefully reviewed the records of
Applicant and Bancorp in meeting the convenience
and needs of their communities. Initially, the Board
notes that, with one exception,7 all of Applicant's
subsidiary banks and Mundelein Bank have achieved
satisfactory overall CRA ratings based upon the most
recent compliance examinations conducted by the
Office of the Comptroller of the Currency.
In response to the Protestant's allegations, the
Board has reviewed the record of North Chicago
Bank. An analysis of North Chicago Bank's HMDA
data for the past five years reveals that relatively little
real estate mortgage lending was originated by the
Bank during that period. Applicant asserts that it was
constrained to deemphasize fixed-rate long-term realestate mortgage lending at the North Chicago Bank in
order to match more closely the Bank's asset and
liability structure. It appears, moreover, that the majority of the mortgage loans (both by number and
dollar amount) originated by North Chicago Bank
were within the Bank's service area, and specifically
within minority and/or low- and moderate-income areas. Furthermore, when HMDA data of loans originated by Applicant's other bank subsidiaries located near
5. The CRA requires the Board, in its evaluation of a bank holding
company application, to assess the record of an applicant in meeting
the credit needs of the entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation.
6. The Protestant alleges: that complete Home Mortgage Disclosure Act ("HMDA"), 12 U.S.C. § 2804-11, statements were not
available at Mundelein Bank or North Chicago Bank; that Applicant
failed to provide him with a map of North Chicago Bank's delineated
service area; and that North Chicago Bank used the funds of minority
depositors to make loans to affluent white customers outside of its
service area. With respect to the first two concerns, Applicant has
made the necessary corrections to the HMDA statements and provided Protestant with all requested information.
7. That exception is First Midwest Bank/Bradley, Bradley, Illinois
("Bradley Bank"). Applicant has entered into a preliminary agreement to sell its Bradley Bank subsidiary. If Bradley Bank is not sold
by April 20, 1987, Applicant has commited to implement a comprehensive CRA program at the institution, including: a comprehensive
community survey; design of new consumer-oriented credit products
and accompanying advertising program; enhanced contact with community groups; and the filing of quarterly written reports with the
Federal Reserve Bank of Chicago regarding CRA compliance.
North Chicago Bank are reviewed, it appears that they
are also engaged in substantial lending in the North
Chicago area.8 Accordingly, it appears that neither
North Chicago Bank nor Applicant is discouraging
loans to minority or low-income groups within North
Chicago Bank's service area.
Moreover, a review of North Chicago Bank's home
improvement lending record reflects a large number
(from 58 to 77 percent in dollar amount) of such loans
originated within its service area.9 Analysis of census
tract data reveals that low- and moderate-income
residents, as well as minority residents of the Bank's
service area, received home improvement loans from
North Chicago Bank correlative with the number of
owner-occupied homes in each area, regardless of
each area's racial or income characteristics. In the
Board's view, the record does not support the Protestant's assertion that North Chicago Bank used the
deposits of minority customers to make loans to
affluent customers outside of its service area.
In order to enhance real estate lending activities,
North Chicago Bank and Applicant's remaining bank
subsidiaries in Lake County, Illinois have established
a new mortgage lending program in conjunction with
Midwest Mortgage Services, Inc., a secondary market
intermediary. This program has recently become operational and Applicant has provided the Board with
projections of dollar volumes of mortgage loans to be
originated by North Chicago Bank within its service
area.10 Mortgage originations within the service area
by year-end 1987 alone are projected to increase over
tenfold from year-end 1986 originations. Moreover,
Applicant is committed to sustaining this increased
level of mortgage lending in its service area to the
extent economic conditions allow.
North Chicago Bank also serves the credit needs of
its community through its participation in the Illinois
Guaranteed Student Loan Program. Applicant expects
that the total volume of student loans extended by
North Chicago Bank will equal or exceed 1986 levels
for each of the next two years. In addition, North
Chicago Bank will continue to send representatives to
area colleges and universities to inform students of its
program, and as well will continue its advertising
campaign to increase public awareness of student loan
availability at the bank.
8. HMDA data reflect that for each of the past 5 years from 10 to 48
percent of the conventional real estate lending by these subsidiary
banks in total dollar amount (29 to 52 percent of total number of loans
originated) occured within North Chicago Bank's designated service
area.
9. North Chicago Bank originated an even higher percentage of its
home improvement loans (from 60 to 81 percent) within its service
area during this five-year period.
10. Mortgage loans originated by North Chicago Bank within its
service area are projected to increase to $1.8 million by year-end 1988.
Legal Developments
North Chicago Bank also engages in substantial
small business lending within its service area. Analysis
of loan data reveals that North Chicago Bank extended
approximately 50 loans to small businesses in its
service area during 1986, representing a substantial
portion of its total loan portfolio. North Chicago Bank
projects that the volume of new loans to small businesses in its service area will remain at these levels for
each of the next two years, and has committed to
continue to serve the credit needs of local small
businesses beyond that period. In addition, North
Chicago Bank will initiate a program of increased
officer calls on local businesses to enhance awareness
of the Bank's credit and other services available to
small businesses.
Accordingly, based upon all the evidence, including
the measures proposed by Applicant in order to enhance its provisions of credit and other services to
local communities, the Board concludes that convenience and needs considerations are consistent with
approval of the application.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is approved. The acquisition shall not be
consummated before the thirtieth calendar day following the effective date of this Order or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
the Federal Reserve Bank of Chicago, pursuant to
delegated authority.
By order of the Board of Governors, effective
April 6, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
First Tennessee National Corporation
Memphis, Tennessee
461
given in accordance with section 3(b) of the Act (52
Federal Register 4385 (1987)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)).
Applicant is the third largest banking organization in
Tennessee, with total deposits of $3.9 billion,1 representing 13.0 percent of the total deposits in commercial banks in the state. Bank is the 31st largest banking
organization in Tennessee and controls deposits of
$108.5 million, representing 0.4 percent of the deposits
in commercial banks in Tennessee. Upon consummation of the proposed transaction, Applicant would
remain the third largest banking organization in Tennessee and would control deposits of $4.0 billion,
representing 13.3 percent of state deposits in commercial banks in the state.
Applicant and Bank compete directly in the Nashville banking market.2 Applicant is the fifth largest of
17 commercial banking organizations operating in the
market, with total deposits of $276.7 million, representing 4.4 percent of the total deposits in commercial
banks in the market. Bank is the sixth largest commercial banking organization in the market, with total
deposits of $108.5 million, representing 1.6 percent of
the total deposits in commercial banks in the market.
Upon consummation of the proposal, Applicant's
share of the deposits in commercial banks in the
market would increase to 6.0 percent. The Nashville
banking market is considered to be highly concentrated, with the four largest commercial banks controlling
89.8 percent of the deposits in commercial banks in the
market. The Herfindahl-Hirschman Index ("HHI")
for the market is 2306 and would increase by 14 points
to 2320 upon consummation of the proposal.3
Although consummation of the proposal would eliminate some competition between Applicant and Bank
in the Nashville market, certain factors mitigate the
anticompetitive effects of the proposal. Numerous
other commercial banking organizations will continue
Order Approving Acquisition of a Bank
First Tennessee National Corporation, Memphis, Tennessee, 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 90 percent or more of the
voting shares of Lebanon Bank, Lebanon, Tennessee
("Bank").
Notice of the application, affording opportunity for
interested persons to submit comments, has been
1. All banking data are as of June 30, 1986.
2. The Nashville banking market is approximated by the Tennessee
counties of Davidson, Rutherford, Williamson, and Wilson, plus the
southern halves of Robertson and Sumner counties.
3. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), a market in which the postmerger HHI is above 1800 is considered highly concentrated. The
Department has informed the Board that a bank merger or acquisition
generally will not be challenged (in the absence of other factors
indicating anticompetitive effects) unless the post-merger HHI is at
least 1800 and the merger increases the HHI by at least 200 points.
The Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognizes the competitive effect of limited-purpose lenders
and other non-depository financial entities.
462
Federal Reserve Bulletin • June 1987
to operate in the market after consummation of the
proposal. In addition, the increase in concentration in
the Nashville banking market is small. Based upon the
above considerations, the Board concludes that consummation of the proposal is not likely to substantially
lessen competition in the Nashville banking market.
The financial and managerial resources of Applicant, its subsidiary bank, and Bank are consistent with
approval of this application.
In considering the convenience and needs of the
communities to be served, the Board has also taken
into consideration Applicant's and Bank's records
under the Community Reinvestment Act (12 U.S.C.
§ 2901 et seq., ("CRA")). The CRA requires the
Board, in its evaluation of a bank holding company
application, to assess the record of an applicant in
meeting the credit needs of the entire community,
including low- and moderate-income neighborhoods,
consistent with safe and sound operation of the bank.
The Board notes that Applicant's subsidiary bank,
First Tennessee Bank, N.A., Memphis, Tennessee
("First Tennessee"), has a less than satisfactory CRA
record. First Tennessee, however, has recently instituted measures to strengthen its CRA compliance
programs to the satisfaction of its primary regulator. In
this regard, the bank has adopted a formal CRA
compliance system to centralize and coordinate its
efforts. Moreover, the Board notes that First Tennessee has participated in a range of government-sponsored lending programs and community development
programs. Based on these measures and on the
Board's own review of First Tennessee's compliance
efforts, the Board concludes that convenience and
needs considerations are consistent with approval of
this application.
Based on the foregoing and other facts of record, the
Board has determined that consummation of the proposed transaction would be in the public interest and
that the application should be approved. Accordingly,
the application is approved for the reasons summarized above. The transaction shall not be consummated before the thirtieth calendar day following the
effective date of this Order, or later than three months
after the effective date of this Order, unless such
period is extended for good cause by the Board or the
Federal Reserve Bank of St. Louis, acting pursuant to
delegated authority.
By order of the Board of Governors, effective
April 29, 1987.
Poplar Bluff Bancshares, Inc.
Poplar Bluff, Missouri
Order Approving the Merger of Bank Holding
Companies
Poplar Bluff Bancshares, Inc., Poplar Bluff, Missouri,
a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended
(12 U.S.C. § 1841 et seq.) ("Act"), has applied for the
Board's approval under section 3(a)(5) of the Act to
merge with Mingo Bancshares, Inc., Poplar Bluff,
Missouri ("Company"), and thereby to acquire all of
the voting shares of Puxico State Bank, Puxico, Missouri ("Puxico").
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act (52
Federal Register 2809 (1987)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act.
Applicant is a one-bank holding company by virtue
of its control of First National Bank of Poplar Bluff,
Poplar Bluff, Missouri ("Poplar Bluff"). Applicant is
the 121st largest commercial banking organization in
Missouri, with total deposits of $37.3 million,1 representing 0.09 percent of the total deposits in commercial banks in the state. Company is the 289th largest
commercial banking organization in Missouri and controls deposits of $12.8 million, representing 0.03 percent of total deposits in commercial banks in Missouri.
Upon consummation of its proposal, Applicant will
become the 86th largest commercial banking organization in Missouri and control deposits of $50.1 million,
representing 0.12 percent of the total deposits in
commercial banking organizations in the state. Because Applicant's principal already owns a controlling
interest in Company, the proposed transaction represents a reorganization of existing ownership interests.
Accordingly, consummation of this proposal would
not have any significant adverse effect upon the concentration of banking resources in Missouri.
Applicant operates in the Poplar Bluff banking market,2 where it is the third largest of four commercial
banking organizations, controlling 16.5 percent of the
total deposits in commercial banks in the market.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
1. All banking data are as of June 30, 1986.
2. The Poplar Bluff banking market is approximated by Butler
County, Missouri.
Legal Developments
Company operates in the Dexter banking market,3
where it is the smallest of five commercial banking
organizations, controlling 8.0 percent of the total deposits in commercial banks in the market. Because
Poplar Bluff and Puxico operate in different banking
markets, consummation of this proposal would not
substantially lessen competition in these markets. Applicant's principal also controls four other commercial
banking organizations in Missouri, one of which, First
State Bank of Dexter, has banking offices in the
Dexter market where Puxico operates. Because these
banks are currently controlled by the same principal,
consummation of the transaction will not lessen competition in the market. Accordingly, the Board believes that competitive considerations under the Act
are consistent with approval.
In evaluating this application, the Board also has
considered the financial and managerial resources of
Applicant, Company, and their subsidiary banks, as
well as the chain of affiliated banks controlled by
Applicant's principal, within the context of the
Board's multi-bank holding company standards. Applicant proposes to merge with Company by means of
an exchange of shares and an assumption of debt. In
its consideration of this proposal, the Board has taken
into account the measures that Poplar Bluff and Puxico
have adopted to improve their asset quality. The
Board believes these measures should result in continued improvement in the earnings and capital base of
Poplar Bluff and Puxico.
In addition, as part of this proposal, the Comptroller
of the Currency has approved the merger of Applicant's and Company's subsidiary banks. As a result,
consummation of Applicant's proposal would eliminate the need for duplicate operating costs, which in
turn would provide further capital support and increased earnings potential. Applicant's principal also
has committed to provide continued financial support
as necessary for debt servicing. Accordingly, based on
the facts of record, the Board believes that the financial and managerial resources of Applicant are consistent with approval of this application.
In addition, considerations relating to the convenience and needs of the communities to be served by
Poplar Bluff and Puxico are consistent with approval
of this application.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order, or later than three
months after the effective date of this Order, unless
3. The Dexter banking market is approximated by that portion of
Stoddard County, Missouri, which lies north of Highways D and H.
463
such period is extended for good cause by the Board or
by the Federal Reserve Bank of St. Louis, acting
pursuant to delegated authority.
By order of the Board of Governors, effective
April 20, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
Sun west Financial Services, Inc.
Albuquerque, New Mexico
Order Disapproving the Acquisition of a Bank
Holding Company
Sunwest Financial Services, Inc., Albuquerque, New
Mexico, a bank holding company within the meaning
of the Bank Holding Company Act ("Act" or "BHC
Act") (12 U.S.C. § 1841 et seq.), has applied for the
Board's approval under section 3 of the Act to acquire
Rio Grande Bancshares, Inc., Las Cruces, New Mexico ("Company"), and thereby indirectly to acquire
First National Bank of Dona Ana County, Las Cruces,
New Mexico; First National Bank of Chaves County,
Roswell, New Mexico; and First State Bank of Silver
City, Silver City, New Mexico. In order to effect the
acquisition, Sunwest Financial Corporation, Albuquerque, New Mexico, a wholly owned subsidiary of
Applicant, will merge with Company. Sunwest Financial Corporation also has applied to become a bank
holding company.
Notice of the application, affording opportunity for
interested persons to submit comments and views, has
been given in accordance with section 3(b) of the Act.
12 U.S.C. § 1842(b). The time for filing comments has
expired, and in acting on the application in light of the
factors set forth in section 3(c) of the Act (12 U.S.C.
§ 1842(c)), the Board has considered all materials
submitted concerning the application, including comments from interested parties.1
Applicant is the largest banking organization in New
Mexico, controlling 12 subsidiary banks with total
deposits of $2.1 billion, representing 26.3 percent of
1. In connection with this application, the Board received comments from the Director of the Financial Institutions Division of the
Regulation and Licensing Department of the State of New Mexico
urging the Board to consider "the long-term effects the proposed
merger would have on New Mexico should it be approved." Specifically, the letter expressed the concern that the resulting organization
would be sufficiently large to have the potential for undue political or
economic influence in the state.
464
Federal Reserve Bulletin • June 1987
the total deposits in commercial banks in the state.2
Company is the sixth largest commercial banking
organization in New Mexico, controlling three bank
subsidiaries with total deposits of $253.0 million, representing 3.1 percent of the total deposits in commercial banks in the state.
Applicant and Company each operate banks in three
geographic areas in New Mexico: Dona Ana County,
Grant County, and Chaves County. As a result, this
application raises the question whether consummation
of the proposal would substantially lessen competition
or in any other manner restrain trade in any section of
the country. If consummation of the proposal would
have this effect, the Board is prohibited by section
3(c)(2) of the Act from approving the application
unless the Board finds that the anticompetitive effects
of the proposal are clearly outweighed in the public
interest by the convenience and needs of the community to be served. 12 U.S.C. § 1842(c)(2).
After considering all the facts of record with respect
to this issue, a majority of the Board members present
did not vote to approve the application and, therefore,
the application is not approved. As set forth in the
attached statements, two members of the Board voted
to approve the application on the basis that the proposed acquisition would not substantially lessen competition in any relevant geographic market, while two
members voted against approval on the basis of the
current record that indicated that the proposed acquisition would substantially lessen competition in two of
the three relevant geographic banking markets involved in the proposed acquisition.
By order of the Board of Governors, effective
April 3, 1987.
Voting to approve this application: Governors Johnson and
Heller. Voting against approval of this application: Chairman
Volcker and Governor Angell. Absent and not voting: Governor Seger.
JAMES M C A F E E
Associate Secretary of the Board
[SEAL]
STATEMENT
GOVERNOR
BY CHAIRMAN
ANGELL
VOLCKER
AND
On the basis of the record before the Board, we
believe that consummation of the proposed acquisition
by Sunwest Financial Services, Inc., Albuquerque,
New Mexico of Rio Grande Bancshares, Las Cruces,
New Mexico ("Company") would substantially lessen
competition in two of the three relevant banking
markets in which Applicant and Company compete:
2. All banking data are as of June 30, 1986.
the Las Cruces and Silver City, New Mexico markets.
Accordingly, we cannot vote to approve this application. This Statement sets forth the reasons for our
conclusion.
Applicant does not dispute the relevant geographic
markets used by the Board for analyzing the competitive effects of the proposed acquisition in the Silver
City and Roswell, New Mexico areas.1 Applicant
asserts, however, that the Las Cruces banking market
should encompass not only the New Mexico county of
Dona Ana, where the city of Las Cruces is located, but
also the Texas county of El Paso, including the city of
El Paso. We disagree.
Relevant Geographic Market—Las Cruces
The Board previously has indicated that the relevant
geographic banking market must reflect commercial
and banking realities and should consist of the localized area where customers can practicably turn for
alternatives.2
Applying the foregoing principles to the facts contained in the record of this case, including a field
investigation of the Dona Ana County and El Paso
County areas conducted by staffs of the Federal Reserve Banks of Kansas City and Dallas and the Board,
we conclude that the Las Cruces banking market is
approximated by Dona Ana County, except the towns
of Anthony and Santa Teresa, and does not include El
Paso County, Texas.3 This conclusion is based on our
analysis of local patterns of trade and commerce,
geographic distribution of deposits and loans, labor
force commutation and highway traffic count statistics, and newspaper circulation and broadcast area
data.
The Las Cruces area and El Paso area have distinct
local trade patterns with little interaction to integrate
them commercially. Each city has the resources to
meet the basic shopping needs of their citizens, and
major state universities operate near each city. Although each city operates specialty shopping malls and
1. The Silver City banking market is approximated by Grant
County, New Mexico. The Roswell banking market is approximated
by Chaves County, New Mexico, and the northern one-fourth of Eddy
County, New Mexico, including the town of Artesia.
2. Pikeville
National
Corporation,
TIN 240 (1985); Dacotah
71 FEDERAL RESERVE BULLE-
Bank Holding Company,
RESERVE BULLETIN 347 (1984); Wyoming
Bancorporation,
70 FEDERAL
68 FEDER-
AL RESERVE BULLETIN 313 (1982), ajfd, 729 F.2d 687 (10th Cir. 1984);
Independent
Bank Corporation,
67 FEDERAL RESERVE BULLETIN 436
(1981).
See, United States v. Philadelphia National Bank, 374 U.S. 321,
357 and 359 (1963); United States v. Phillipsburg National Bank, 399
U.S. 350, 365-65 (1970).
3. Anthony and Santa Teresa, New Mexico, are part of the El Paso
Ranally Metropolitan Area and are included in the El Paso banking
market.
Legal Developments
El Paso operates a regional hospital in the area, these
factors do not indicate enough commercial interaction
to warrant including El Paso and Las Cruces in the
same banking market. The central business districts of
Las Cruces and El Paso are separated by 43 miles, and
the two cities are central communities of separate
Ranally Metropolitan Areas ("RMAs")4 and Metropolitan Statistical Areas ("MSAs").5 Although Las
Cruces and El Paso may be part of a larger regional
trade area that includes significant portions of southern New Mexico, western Texas and northern Chihuahua State in Mexico, such regional patterns of trade
and commerce are not sufficient to establish that Las
Cruces and El Paso are located in the same local
banking market.
We note that loan and deposit data provide no
indication that banking offices in one area constitute a
reasonable alternative source of banking services for
residents of the other area. A review of data submitted
by Applicant indicates that in terms of dollar volume,
Applicant's Las Cruces bank derives only 0.5 percent
of its certificates of deposit, 0.5 percent of its demand
deposits, and 1.7 percent of its savings deposits from
El Paso County. In terms of dollar volume, the bank
generates only 0.3 percent of its installment loans and
1.7 percent of its commercial loans in El Paso County.
Company's Las Cruces bank derives 4.9 percent of its
aggregate deposits and 8.6 percent of its aggregate
loans from customers in Texas.6 Much of this overlap,
however, appears to result from Company's two Las
Cruces bank branches in the New Mexico cities of
Santa Teresa and Anthony, both suburbs of El Paso
across the Texas state line. These two branches report
combined deposits of $31.3 million or 15.1 percent of
the total deposits of Company's Las Cruces bank. The
Las Cruces area branches of Company's Las Cruces
bank do not appear to generate significant loan or
deposit business in the El Paso area.7
In analyzing this case, we also considered interviews conducted by the Board and Reserve Bank staff
with numerous bankers and other lenders in the Las
Cruces and El Paso areas. The bankers in one city
stated that they generally would not solicit loans from
residents in the other city. Evidence from field inter-
4. Rand McNally Commercial Atlas and Marketing Guide, Chicago: Rand McNally and Company, 1986.
5. United States Bureau of Census.
6. Applicant provided no breakdown of these data to reflect the
distribution of loans and deposits in the El Paso area.
7. Applicant submitted certain data on check clearing at its Las
Cruces bank, in an effort to show a significant commercial linkage of
El Paso with Las Cruces. We regard this check clearing data as
ambiguous, however, and can reach no determination from the data as
to whether residents of one area regard the other area as a significant
alternative source of goods and services.
465
views and other sources (such as geographic loan
distribution data furnished by Applicant) also indicate
that an El Paso bank generally would not consider
making loans in the Las Cruces area unless requested
to do so by an El Paso customer conducting business
(or with a business project) in Las Cruces, or unless
the loan were for an unusually large amount. Officials
of the El Paso regional office of the Small Business
Administration ("SBA") stated that of all SBA guaranteed loans made by El Paso banks in the past two
years, only two were extended to Las Cruces area
customers. On the basis of these facts, it appears that
banks in the Las Cruces and El Paso areas do not
regard banks in the other area as being within a
common banking market.
Commuting patterns traditionally have provided important indications of economic and commercial integration in defining banking markets. Employment
commuting between El Paso and Las Cruces appears
to be insignificant. Of the 168,683 persons residing in
El Paso County and reporting their place of work in
conjunction with the 1980 Census, 2,979 persons (1.8
percent) were employed in Dona Ana County, and
only 240 persons (or 0.1 percent) were employed in
Las Cruces. Of the 31,178 persons residing in Dona
Ana County and reporting their place of work in the
1980 Census, 2,183 persons (7.0 percent) were employed in El Paso County. Of the 16,171 persons
residing in the city of Las Cruces, however, only 216
(1.3 percent) were employed in El Paso County. It
appears the labor force commuting into El Paso County from nearby New Mexico originates largely from
Dona Ana County communities that are remote suburbs of El Paso. We therefore conclude that these
communities properly are included in the El Paso,
rather than the Las Cruces banking market.
Traffic flow data collected by the Federal Highway
Administration in 1985 show an average of about
20,000 vehicles traveling between Las Cruces and El
Paso each day. Much of the traffic flow, however, is
attributed to vehicles engaged in long distance travel
over Interstate Highways 10 and 25, two major cross
country routes converging south of Las Cruces. Another substantial portion of the traffic flow between El
Paso and nearby areas of New Mexico is attributed to
work-related commuting and supply traffic into the
White Sands Missile Range. As of March 31, 1986, that
facility employed 9,521 persons, of which approximately 36 percent lived in El Paso.
We also observe that newspaper circulation and
broadcast transmission data for the El Paso and Las
Cruces areas provide little indication that residents in
one area are well informed about banking services in
the other. The major El Paso newspaper, the El Paso
Times, delivers 3.2 percent of its daily press run of
87,271 copies to Las Cruces. The major Las Cruces
466
Federal Reserve Bulletin • June 1987
newspaper, The Las Cruces Sun-News, does not distribute any of its daily press run to El Paso, however.
While Las Cruces has only one television station with
limited programming, El Paso television programming
is transmitted to the Las Cruces area, giving banks in
Las Cruces the option of reaching Las Cruces area
consumers through advertising on El Paso stations.
There is no indication, however, that Applicant's
expenditures for advertising on El Paso television
stations are intended to market its services to El Paso
rather than Las Cruces area residents. Neither Applicant nor Company advertises its services in any other
broadcast medium originating in El Paso. Based on
relevant broadcast transmission and newspaper circulation data, we find that there is minimal commercial
interaction between the Las Cruces and El Paso areas.
Competitive Effects—Las Cruces Banking Market
Within the relevant Las Cruces banking market, Applicant is the fourth largest of six commercial banking
organizations, controlling deposits of $42.9 million,
representing 9.9 percent of the total deposits in commercial banks in the market.8 Company is the largest
banking organization in the market, controlling deposits of $191.0 million, which represents 43.9 percent of
the total deposits in commercial banks in the market.
The Las Cruces banking market is highly concentrated, with the four largest commercial banks controlling
94.4 percent of the deposits in commercial banks in the
market. Upon consummation of the proposed acquisition of Company, Applicant would become the largest
commercial banking organization in the market, controlling $234.0 million in deposits, representing 53.8
percent of the market. The four-firm concentration
ratio would increase by 3.6 percentage points to 98.0
percent, and the number of commercial banking competitors would be reduced from six to five. The
Herfindahl-Hirschman Index ("HHI") for the market
would increase by 868 points to 3738, and would be
subject to challenge under the Department of Justice
("DOJ") Merger Guidelines.9
In previous decisions, the Board has indicated that
thrift institutions have become, or at least have the
8. Market data are as of June 30, 1986.
9. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), any market in which the postmerger HHI is above 1800 is considered highly concentrated. The
Department has informed the Board that a bank merger or acquisition
generally will not be challenged (in the absence of other factors
indicating anticompetitive effects) unless the post-merger HHI is at
least 1800 and the merger increases the HHI by at least 200 points.
The Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anticompetitive effects
implicitly recognizes the competitive effect of limited-purpose lenders
and other nondepository financial entities.
potential to become, major competitors of commercial
banks.10 In this instance, however, we conclude that
the substantial anticompetitive effects of the transaction are not sufficiently mitigated by the presence of
thrift institutions in the Las Cruces banking market to
allow for approval of the proposed acquisition. The
record indicates that six thrift institutions operate in
this market and control 33.2 percent of the total
deposits in the market. If, in accordance with Board
practice, 50 percent of the deposits held by thrift
institutions were included in the calculation of market
statistics, Applicant and Company would have market
shares of 7.9 percent and 35.2 percent, respectively.
The four-firm concentration ratio would be 75.6 percent. Upon consummation of the proposal, Applicant
would become the largest commercial banking organization with a 43.1 percent market share. The four-firm
concentration ratio would increase by 5.7 percentage
points to 81.3 percent, and the HHI would increase by
557 points to 2487.11 On the basis of the substantial
increase in concentration in the market, even after
giving substantial weight to the competition afforded
by thrift institutions, and Applicant's resulting dominant position in the market, we believe that consummation of this proposal would substantially lessen
competition in the Las Cruces banking market.
We have considered Applicant's contention that, in
evaluating market concentration, the competitive effects of credit unions and other financial institutions
that provide loan and deposit services should be taken
into account. In delineating the relevant product market in which to assess the probable competitive effects
of a bank acquisition or merger, the Supreme Court
has determined that "commercial banking" is the
appropriate line of commerce12 on the basis that the
10. National City Corporation,
743 (1984); NCNB Bancorporation,
70 FEDERAL RESERVE BULLETIN
70 FEDERAL RESERVE BULLETIN
225 (1984); General Bancshares Corporation, 69 FEDERAL RESERVE
BULLETIN 802 (1983); First Tennessee National Corporation, 69
F E D E R A L RESERVE B U L L E T I N 2 9 8 ( 1 9 8 3 ) .
11. If 100 percent of the deposits of thrift institutions were included
in the Las Cruces banking market, an assessment that these members
of the Board deems unwarranted in this case, Applicant and Company
would control 6.6 and 29.4 percent, respectively, of total deposits in
the market. Upon consummation of the proposal, Applicant would
become the largest depository organization in the market, controlling
36.0 percent of the deposits in the market. The HHI would increase by
388 points to 1915 and the market would become highly concentrated.
Thus, even with full inclusion of thrift deposits in the market,
Applicant's proposal would be subject to challenge under the DOJ
Merger Guidelines.
12. United States v. Philadelphia National Bank, 114 U.S. 321, 356
(1963). In United States v. Phillipsburg National Bank, 399 U.S. 350
(1970), the Court stressed that banks were the only financial institution in which a wide variety of financial products and services were
gathered in one place and that this "clustering" of financial products
and services facilitated convenient access to them for all banking
customers.
Legal Developments
"cluster of products . . . and services" provided by
commercial banks is unique relative to other institutions. In United States v. Connecticut National
Bank,13 the Court rejected the contention that savings
banks should be included in the commercial banking
line of commerce because of their lack of competition
with banks in the provision of certain products and
services. The Court acknowledged, however, that at
the same point in the development of savings banks,
their products and economic behavior could make
them indistinguishable from commercial banks for
purposes of the antitrust laws. The Court noted particularly that "that point may well be reached when and
if savings banks become significant participants in the
marketing of bank services to commercial enterprises." 418 U.S. at 666.
Since the Connecticut National decision, legislation
at the federal and state level has significantly expanded the power of thrifts, such that they are now in many
cases direct competitors or potentially direct competitors of commercial banks. The Board has recognized
these developments in the powers and competitive
importance of thrifts and accordingly, as in this case,
has given substantial weight to such institutions in its
analysis of the competitive effects of a bank merger or
acquisition.
This expansion of the powers of thrift institutions as
well as the expansion of the products and services of
other non-depository members of the financial services industry in recent years has raised the question
whether the "commercial banking" line of commerce
enunciated in the Philadelphia National and Connecticut National cases should be retained or modified. In
this case, we acknowledge the existence in the Las
Cruces banking market of credit unions, consumer and
commercial finance companies, securities brokerage
firms, and other providers of financial services. We do
not believe, however, that the record in this case
provides evidence to allow us to determine the extent
and nature of the services these institutions offer or
whether they constitute effective competitive alternatives to bank products and services. Nonetheless, we
are willing to consider any additional facts or information that Applicant may be able to submit regarding
this issue.
Competitive Effects—Silver City Banking Market
In the Silver City market, Applicant is the largest of
three commercial banking organizations and controls
total deposits of $68.1 million, representing 49.2 percent of the total deposits in commercial banks in the
13. 418 U.S. 656, 660-66 (1974).
467
market. Company is the smallest banking organization, controlling total deposits of $10.6 million, representing 7.6 percent of the total deposits in commercial
banks in the market. The Silver City banking market is
considered highly concentrated with a three-firm concentration ratio of 100 percent and an HHI of 4340
points. Upon consummation of this proposal, Applicant would remain the largest banking organization in
the market and would control total deposits of $78.7
million, representing 56.8 percent of deposits in commercial banks in the market. The Silver City market
would remain highly concentrated and only two banks
would operate in the market. The HHI would increase
by 752 points to 5092. On the basis of commercial bank
deposits only, we consider the effect of this acquisition
on existing competition in the Silver City market to be
substantially adverse.
Moreover, we do not believe that the anticompetitive effects of this transaction in the market are
sufficiently mitigated by the presence of thrift institutions to allow for approval of the acquisition. Two
thrifts operate in the market and control 29.6 percent
of the total deposits in the market. The record indicates, however, that these firms offer commercial and
industrial loans, commercial checking accounts, and
consumer installment loans only to a limited extent.
Even if 50 percent of the deposits held by thrifts were
included in the calculation of market statistics, Applicant would control a 40.6 percent market share. Company would be the fourth largest depository institution, with a 6.3 percent market share. The four-firm
concentration ratio would be 94.1 percent. Upon consummation, Applicant would control a 46.9 percent
market share, and the market would remain highly
concentrated, with the four-firm concentration ratio of
100 percent. The HHI would increase by 513 points to
3642.
The BHC Act authorizes the Board to approve a
proposal even if the effect of the transaction would
otherwise be substantially anticompetitive if the "anticompetitive effects of the transaction are clearly outweighed in the public interest by the convenience and
needs of the community to be served."14 The facts of
record do not support Applicant's contention that the
anticompetitive effects of its proposal are mitigated by
adverse economic conditions in the Silver City market
and by the poor prospects for financial viability of its
Silver City bank. Economic conditions in the Silver
City market are significantly affected by the local
copper mining industry. That industry is depressed
throughout New Mexico as a result of foreign competition, weakened demand, and excess capacity in the
mining industry. Although the poor condition of the
14. 12 U.S.C. § 1843(c)(2).
468
Federal Reserve Bulletin • June 1987
mining industry has had a depressive effect on the
local economy, available data show that other economic forces have had offsetting favorable effects in
the Silver City banking market.
The total population in the Grant County area has
remained stable over the three-year period ending in
August 1986. During this same period, unemployment
decreased from 17.4 percent to 12.3 percent. During a
two-year period ending December 31, 1985, commercial bank deposits in Grant County increased at an
annual rate of 9.6 percent, compared to 3.7 percent for
statewide commercial bank deposits during the same
period. We note that Company undertook to charter
its Silver City bank in 1982, at a time when economic
conditions in Grant County were severely depressed.
Since the bank opened for business, moreover, it has
reported reasonably strong deposit growth (total deposits of $10.6 million as of June 30, 1986) and, since
its creation, has operated in satisfactory financial
condition.
We therefore conclude that the prospects for commercial bank profitability and long-term viability in the
Silver City banking market are not unfavorable. Accordingly, neither the condition of the local economy
nor the condition of Applicant's or Company's Silver
City banks may be regarded as factors that would
mitigate the substantial anticompetitive effects of the
proposed transaction.
Competitive Effects—Roswell Banking Market
In the Roswell banking market, Applicant is the largest
of seven commercial banking organizations, controlling deposits of $112.6 million, representing 22.2 percent of the total deposits in commercial banks in that
market. Company is the smallest commercial banking
organization in the Roswell market, controlling deposits of $13.0 million, representing 2.6 percent of the
total deposits in commercial banks in the market. The
Roswell banking market is considered highly concentrated with a four-firm concentration ratio of 81.7 and
an HHI of 1815. Upon consummation of the proposed
acquisition, the four-firm concentration ratio would
increase by 2.6 points to 84.3 percent, and the HHI
would increase by 113 points to 1928. Applicant would
remain the largest commercial banking organization,
and would control deposits of $125.6 million, representing 24.7 percent of the deposits in commercial
banks in the market. Although consummation of this
transaction would eliminate some existing competition
in the Roswell banking market, we believe that the
competition eliminated would not be substantial.
We also have considered the presence of thrift
institutions in the Roswell market to alleviate the
adverse competitive effects of Applicant's proposal. In
this case, four thrift institutions control 43.0 percent of
the total deposits in all commercial banks and thrifts.
Thrifts also compete directly with banks in the Roswell market to offer a wide range of consumer services
and transaction accounts and some commercial and
industrial loans.15
No adverse competitive effects would arise in the El
Paso banking market,16 where, in the cities of Anthony
and Santa Teresa, Company's Las Cruces bank operates two branches. Because Applicant does not currently operate a banking office in the El Paso market,
consummation of the proposal would not eliminate any
existing competition in this market. Consummation of
this proposal would not eliminate any significant probable future competition in the El Paso market.
In light of our conclusion on the basis of the record
presently before the Board that the proposed acquisition would result in a substantial lessening of competition in the Las Cruces and Silver City banking markets, we are unable to vote to approve this application.
STATEMENT
HELLER
BY GOVERNORS
JOHNSON
AND
Although this application did not receive the necessary
majority for Board approval on the basis of the present
record before the Board, we believe it is important to
state the reasons why we would not object to approval
of this application.
We believe that consummation of the proposal
would not substantially reduce competition in any
relevant market. We believe that the concentration
ratios and other statistics set out in the statement of
the other Board members do not reflect the true state
of competition in the Las Cruces and Silver City
markets. While these statistics give consideration to
the competition afforded by savings and loan institutions, they ignore the substantial competition banks
face from a broad array of products and services
provided by other financial institutions in these markets.
Since 1974, the last time the Supreme Court considered the appropriateness of commercial banking as a
distinct line of commerce, the powers of thrift institutions have been broadly expanded, and they are now
15. If 50 percent of deposits held by thrift institutions in the Roswell
banking market were included in the calculation of market concentration, the share of total deposits held by the four largest organizations
in the market would be 59.3 percent. Applicant would control 16.1
percent of the market's deposits and Company would control 1.9
percent of the market's deposits. The market would remain moderately concentrated, and the HHI would increase by 59 points to 1233.
16. The El Paso banking market is approximated by El Paso
County, Texas, plus the towns of Anthony and Santa Teresa in Dona
Ana County, New Mexico.
Legal Developments
providing in many areas, or have the potential to
provide, checking accounts, commercial lending, and
other products and services traditionally offered by
commercial banks. In addition, there are a variety of
financial products offered by nondepository institutions that are reasonably interchangeable with and
compete with bank products. These products are
offered by mortgage banking firms, securities brokerage firms, insurance companies, consumer and commercial finance companies, and other financial institutions. Moreover, consumers are no longer confined to
their neighborhood bank as the sole source of banking
services. Improved technology, communications, and
marketing has broadened significantly the alternatives
available to customers for both credit and deposit
services.
In our judgment, these significant developments in
the financial services industry in recent years have
seriously eroded the commercial banking product market that the Board and the courts have traditionally
used in analyzing bank mergers. That product market
was developed at a time when commercial banks
provided a unique cluster of products and services, a
situation that no longer prevails in most banking
markets.
This case, in our view, demonstrates the need for a
reassessment by the Board of the method it uses to
evaluate the competitive effects of bank acquisitions
and mergers to take into account the fundamental
transformation the financial services industry has undergone in recent years and the significant competitive
influence exerted in local banking markets by thrifts,
credit unions, securities and insurance companies,
consumer and commercial finance companies, and
other providers of bank-like products and services.
We recognize that this would be a fundamental change
in policy that must be supported by an adequate record
that demonstrates the competitive vitality of these
alternative providers of banking products and services. Accordingly, we would welcome this information to support applications for acquisitions where
competitive problems otherwise might be present.
Union Planters Corporation
Memphis, Tennessee
Order Approving Acquisition of a Bank Holding
Company
Union Planters Corporation, Memphis, Tennessee, 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
469
section 3 of the Act, to acquire 90 percent of the voting
shares of Merchants State Holding Company, Humboldt, Tennessee ("Merchants"), and thereby indirectly to acquire Merchants State Bank, also of Humboldt ("Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
duly published (52 Federal Register 2809 (1987)). The
time for filing comments has expired, and the Board
has considered the application and all comments received, including those of The National Association of
Life Underwriters and the The National Association of
Professional Insurance Agents, in light of the factors
set forth in section 3(c) of the Act.
Applicant is the fifth largest commercial banking
organization in Tennessee, with deposits of $1.4 billion, representing 4.8 percent of the total deposits in
commercial banking organizations in the state.1 Bank,
with deposits of $78.9 million, is among the smaller
commercial banking organizations in Tennessee, controlling less than 1 percent of the total deposits in
commercial banking organizations in the state. Upon
consummation of this proposal, Applicant would remain the fifth largest commercial banking organization
in Tennessee, controlling deposits of $1.5 billion,
representing 5.0 percent of total deposits in commercial banking organizations in the state. Consummation
of the proposal would not have any significant adverse
effect on the concentration of commercial banking
resources in Tennessee.
Both Applicant and Bank compete in the Gibson
County banking market.2 Applicant is the fourth largest of thirteen commercial banking organizations in the
market, with deposits of $25.1 million, representing
7.4 percent of the total deposits in the market. Bank is
the largest commercial banking organization in the
Gibson County market, controlling 20.9 percent of the
total deposits in commercial banking organizations in
the market. Upon consummation of the proposal,
Applicant would become the largest commercial banking organization in the market, with a 28.3 percent
market share.3
Although consummation of the proposal would eliminate some existing competition between Applicant
and Bank in the Gibson County banking market,
numerous other commercial banks would remain as
1. Statewide banking data are as of June 30, 1986.
2. The Gibson County banking market is approximated by Gibson
County, Tennessee.
3. Market data are as of June 30, 1985. The Gibson County banking
market is considered to be moderately concentrated, with the four
largest commercial banking organizations controlling 58.3 percent of
the total deposits. Upon consummation of this proposal, the Herfindahl-Hirschman Index ("HHI") would increase by 311 points to 1,456
and the four-firm concentration ratio would increase to 64.3 percent.
The market would remain moderately concentrated.
470
Federal Reserve Bulletin • June 1987
competitors in the market. In addition, three thrift
institutions compete with commercial banks in the
Gibson County banking market, controlling 20.8 percent of the combined deposits in banks and thrifts in
the market. All of the thrift institutions in the Gibson
County banking market offer consumer loans and two
offer commercial loans, in addition to traditional thrift
services. Based upon the above considerations, the
Board concludes that consummation of the proposal is
not likely to substantially lessen competition in the
Gibson County banking market.4
The Board has considered the effect of the proposal
on probable future competition in the other banking
markets where Applicant has branch offices, in light of
its proposed guidelines for assessing the competitive
effects of market extension mergers and acquisitions.5
In evaluating the effects of a proposed acquisition
upon probable future competition, the Board considers market concentration, the number of probable
future entrants into the market, the size and market
position of the bank to be acquired, and the attractiveness of the market for entry on a de novo basis, absent
approval of the acquisition. After consideration of
these factors, the Board concludes that consummation
of this proposal would not have any significant adverse
effects on probable future competition in any relevant
market.6
In connection with Applicant's proposal, The National Association of Life Underwriters and the National Association of Professional Insurance Agents
("Protestants") submitted comments opposing approval of this application, alleging that Bank, by
making available to its depositors membership in The
Financial Services Association ("FSA"), a nationwide
organization offering various free or discounted services, including accidental death and travel insurance
benefits, is engaged in the sale of life insurance. Such
action is prohibited under the amendments to section 4
of the Act, contained in the Garn-St Germain Depository Institutions Act of 1982 ("Garn-St Germain
Act").
Bank, as a sponsor member of FSA, makes FSA
membership available to its non-business checking
account depositors. Depositors who are FSA members
pay monthly dues to the Bank and in return receive
from FSA a series of benefits, including group accidental death and travel insurance.7 The entire portion
of the FSA membership dues attributable to the purchase of insurance and other nonbanking benefits is
passed by Bank to FSA. The Bank retains only that
portion of FSA membership dues attributable to recovering its costs (and earning a slight margin) on the
establishment and maintenance of its depositors' accounts, without regard to the provision of insurance by
FSA to such depositors. Thus, Bank's depositors
receive insurance coverage by virtue of their membership in FSA, and not by virtue of being Bank's
depositors or by purchasing insurance from Bank.
Bank does not function as an insurance agent, as it
neither advertises nor sells insurance policies. The
insurance is offered as a benefit, along with other
benefits, to depositors who become FSA members.
Bank receives no compensation in connection with the
insurance its depositors receive by virtue of their FSA
membership. On these facts, Bank cannot be characterized as engaged in the sale of insurance. Indeed, by
making available FSA membership to its customers,
Bank's activity is closely analogous to the routine
placement by banks, for a fee, of "statement stuffers"
from various organizations in the monthly account
statements mailed to depositors.
The insurance agency activities that are the subject
of the Garn-St Germain Act prohibitions cited by the
Protestants, in contrast, concern fee or commission
income accruing to the bank holding company or its
subsidiaries from the sale of insurance.8 In this instance, the Bank receives no income from the insurance offered by FSA. Accordingly, the offering of FSA
membership does not appear to fall within the Garn-St
Germain Act insurance prohibitions.
Based upon the above facts, the Board has determined that Bank is not engaged in an independent,
entrepreneurial activity for purposes of section 4(a)(2)
of the Act, in connection with the accidental death and
4. If 50 percent of deposits held by thrift institutions in the Gibson
County banking market were included in the calculation of market
concentration, Applicant would control 6.6 percent and Bank would
control 18.5 percent of the market's deposits. Upon consummation,
the HHI would increase by 243 points to 1201.
5. "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 (March 3, 1982). While 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 a proposal on probable
future competition.
6. Bank, with assets of $93.7 million, is not considered to be a
probable future entrant into the banking markets in which Applicant
operates branch offices.
7. Other FSA benefits include: travel discounts; member magazines; no-service-charge checking; personalized club checks; nationwide personal check cashing privileges; the provision of travelers
checks, cashiers checks and money orders without charge; local
merchant discounts; and an association membership card.
8. For example, Exemption C (allowing bank holding companies
located in places with a population not exceeding 5,000 to engage in
insurance agency activities) and Exemption F (allowing bank holding
companies with assets of $50 million or less to engage in similar
activities) were designed to allow small banking organizations to
generate income from insurance sales in order to take advantage of tax
benefits designed to facilitate the ownership and transfer of small
banks. See e.g., H.R. Rep. No. 845, 96th Cong., 2d Sess. 5, 6 (1980);
and 126 Cong. Rec. H4871 (daily ed. June 12, 1980) (remarks of Rep.
McGuire).
Legal Developments
travel benefits made available through FSA to its
members who are depositors of Bank. Accordingly,
the availability of insurance through the FSA membership offered to Bank's depositors is not an activity
subject to the prohibitions of the Act. 9
In its evaluation of Applicant's managerial resources, the Board has considered certain violations
by Applicant's subsidiary bank, Union Planters National Bank of Memphis, Memphis, Tennessee, of the
Currency and Foreign Transactions Reporting Act
("CFTRA") and the regulations thereunder. Applicant has taken appropriate remedial action to correct
such violations and prevent their recurrence. The
corrective measures include the development of a new
compliance policy, enhanced audit procedures, and
compliance-procedure meetings with branch managers. In addition, the Office of the Comptroller of the
Currency has indicated that all violations were corrected at its most recent compliance examination.
Based on the foregoing and other facts of record, the
Board concludes that the financial and managerial
resources and future prospects of Applicant, Merchants, and Bank are consistent with approval of the
proposal. Considerations relating to the convenience
and needs of the communities to be served also are
consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. This transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order, or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
the Federal Reserve Bank of St. Louis, acting pursuant to delegated authority.
By order of the Board of Governors, effective
April 21, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
9. In addition, the Protestants implicitly argue that the Act's
nonbanking prohibitions, including the Garn-St Germain Act insurance prohibitions, apply to the activities of state bank subsidiaries of a
bank holding company as well as to the activities of a bank holding
company and its nonbanking subsidiaries. The Board previously has
determined that it is appropriate to reserve judgment on the issue of
the applicability of the prohibitions of the Act to state bank subsidiaries of bank holding companies and to resolve the matter in the context
of pending rulemaking proceedings. NCNB Corporation, 72 FEDERAL
RESERVE B U L L E T I N 5 7 ( 1 9 8 6 ) .
All
U.S. Bancorp
Portland, Oregon
Order Approving Acquisition of a Bank Holding
Company
U.S. Bancorp, Portland, Oregon, a bank holding company within the meaning of the Bank Holding Company Act (12 U.S.C. § 1841 etseq. ("Act")), has applied
for the Board's approval under section 3 of the Act to
acquire Valley National Corporation, Forest Grove,
Oregon ("Company"), and thereby indirectly to acquire Valley National Bank of Oregon, Forest Grove,
Oregon ("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 (52
Federal Register 3346 (1987)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)).
In 1980, the Board denied Applicant's proposal to
acquire Bank.1 The Board's denial was based on the
substantial adverse competitive effect in the Portland
banking market that would have resulted from consummation of the proposal. In addition, the Board
concluded that consummation of the proposal would
reverse the trend of deconcentration in the state of
Oregon, which exhibited one of the highest levels of
concentration of banking resources in the country.
Applicant now asserts that the competitive circumstances in the state and the relevant banking market
have changed since 1980 such that consummation of
the proposal would not have a substantial anticompetitive effect in any relevant banking market.
The Board has considered the record of this case in
light of developments since 1980 and has determined
that the effect of the proposed acquisition is not likely
substantially to lessen competition in any relevant
banking market. Since the Board denied Applicant's
1980 proposal, the financial services industry has
undergone significant changes. The Consumer Checking Account Equity Act of 19802 authorized thrift
institutions to offer NOW accounts, and the Garn-St
Germain Depository Institutions Act of 19823 greatly
expanded the commercial lending powers of federal
thrift institutions. In addition, regulatory actions by
the Federal Home Loan Bank Board and various state
1. U.S. Bancorp,
67 FEDERAL RESERVE BULLETIN 60 (1981).
2. Title III, 96 Stat. 132, 145, codified at 12 U.S.C. § 1832.
3. Title III, 96 Stat. 1469, 1499-1500, codified at 12 U.S.C.
§ 1464(c)(1).
472
Federal Reserve Bulletin • June 1987
statutes also have significantly expanded the services
that thrifts may offer. In recognition of these developments, the Board in recent years has included thrift
institutions in its analysis of the competitive factors of
an acquisition or merger because of the competitive
alternatives offered by these institutions.4 In addition,
Oregon now permits out-of-state bank holding companies to expand into Oregon.5
Applicant, the largest commercial banking organization in Oregon, controls four subsidiary banks with
total deposits of $5.3 billion, representing approximately 39.4 percent of total deposits in commercial
banks in the state.6 Company is the tenth largest
commercial banking organization in the state, with
total deposits of $79.0 billion, representing 0.6 percent
of the total deposits in commercial banks in the state.
Upon consummation of the proposed transaction, Applicant would control deposits of $5.4 billion, representing 40.0 percent of the total deposits in commercial banks in the state. The state of Oregon would
remain highly concentrated with the four largest commercial banking organizations controlling 80.1 percent
of the deposits in commercial banks in the state.
Although the Board is concerned about the increase
in the concentration of banking resources within the
state, certain conditions that would exist after the
proposed merger mitigate that concern. The Board
notes that 39.6 percent of the combined deposits of
banks and thrift institutions in the state are controlled
by thrift institutions that compete actively with commercial banks throughout the state. Two of the four
depository institutions with deposits of over $1.0 billion are thrifts, while the other two are commercial
banks. If 50 percent of deposits held by thrift institutions in the state were included in the calculation of
statewide concentration, the share of total deposits
held by the four largest organizations in the market
would be 63.0 percent. Based upon these facts, the
Board does not believe consummation of this proposal
would have any significant effect on the concentration
of banking resources in Oregon.
Both Applicant and Company compete directly in
the Portland banking market.7 Applicant is the largest
of 29 commercial banking organizations operating in
4. See, e.g., National City Corporation,
BULLETIN 743 (1984); NCNB
Corporation,
70 FEDERAL RESERVE
70 FEDERAL RESERVE
BULLETIN 225 (1984); First Tennessee National Corporation,
69
FEDERAL RESERVE B U L L E T I N 2 9 8 ( 1 9 8 3 ) .
5. Or. Rev. Stat. § 715.065(1).
6. State deposit data are as of June 30, 1986. Market and thrift data
are as of June 30, 1985.
7. The Portland banking market is approximated by the Portland
RMA, and consists of Multnomah County and parts of Clackamas,
Columbia, Marion, Washington, and Yamhill Counties, all in Oregon;
and part of Clark County, Washington.
the market, and controls total deposits of $2.5 billion,
representing 39.2 percent of the deposits in commercial banks in the market. Company is the tenth largest
commercial banking organization in the market, with
total deposits of $49 million, representing 0.8 percent
of market deposits. Upon consummation of the proposal, Applicant's share of the deposits in commercial
banks in the market would increase to 40.0 percent.
The Portland banking market is considered to be
highly concentrated, with the four largest commercial
banks controlling 81.7 percent of the deposits in commercial banks in the market. The Herfindahl-Hirschman Index ("HHI") for the market is 2448, and would
increase by 60 points to 2508 upon consummation of
the proposal.8
Although consummation of the proposal would eliminate some existing competition between Applicant
and Company in the Portland banking market, 27 other
commercial banking organizations would remain as
competitors in the market. In addition, the presence of
twelve thrift institutions, controlling approximately
39.6 percent of the market's total deposits, mitigates
the anticompetitive effects of the transaction. As noted
earlier, thrift institutions already exert a considerable
competitive influence as providers of a wide array of
deposits and lending services to consumers and commercial customers. Based upon the above considerations, the Board concludes that consummation of the
proposal is not likely substantially to lessen competition in the Portland banking market.9
The financial and managerial resources of Applicant, its subsidiary banks, and Bank are consistent
with approval. In its evaluation of Applicant's managerial resources, the Board considered certain violations by Bank of the Currency and Foreign Transactions Reporting Act ("CFTRA") and the regulations
thereunder.10 Bank has taken remedial action as a
8. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), a market in which the postmerger HHI is above 1800 is considered highly concentrated. In such
markets, the Department is likely to challenge a merger that increases
the HHI by more than 50 points. The Department has informed the
Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by at least 200 points. The Justice Department has
stated that the higher than normal HHI thresholds for screening bank
mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities.
9. If 50 percent of deposits held by thrift institutions in the Portland
banking market were included in the calculation of market concentration, the share of total deposits held by the four largest organizations
in the market would be 64.0 percent. Applicant would control 29.5
percent of the market's deposits and Company would control 0.6
percent of the market's deposits. The HHI would increase by 35
points to 1522.
10. 31 U.S.C. § 5311 et seq.; 31 C.F.R. § 103.
Legal Developments
result of the discovery of these violations. Applicant
has committed to implement its compliance program at
Bank within 30 days of consummation and to undertake a compliance review at Bank within 90 days of
consummation to ensure Bank's compliance. Considerations relating to the convenience and needs of the
communities to be served are also consistent with
approval. Based on the foregoing and other facts of
record, the Board has determined that consummation
of the proposed transaction would be in the public
interest and that the application should be approved.
On the basis of the record, the application is approved for the reasons summarized above. The 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
San Francisco pursuant to delegated authority.
By order of the Board of Governors, effective
April 27, 1987.
Voting for this action: Chairman Volcker and Governors
Seger, Angell, and Heller. Absent and not voting: Governor
Johnson.
BARBARA R . LOWREY
[SEAL]
Associate Secretary of the Board
Orders Issued Under Section 4 of the Bank
Holding Company Act
Citicorp
New York, New York
J.P. Morgan & Co. Incorporated
New York, New York
Bankers Trust New York Corporation
New York, New York
Order Approving Applications to Engage in Limited
Underwriting and Dealing in Certain Securities
Citicorp, J.P. Morgan & Co. Incorporated, and Bankers Trust New York Corporation, New York, New
York (collectively "Applicants"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have each applied for the
Board's approval under 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 through wholly
owned subsidiaries, Citicorp Securities, Inc. ("CSI"),
J.P. Morgan Securities Inc. ("JPMS"), J.P. Morgan
All
Municipal Finance Inc. ("JPMMF"), and BT Securities Corporation ("BTSC"), respectively, in underwriting and dealing in, on a limited basis, certain
securities that member banks may not underwrite and
deal in, specifically:
(1) municipal revenue bonds, including so-called
"public ownership" industrial development bonds;1
(2) mortgage-related securities (obligations secured
by or representing an interest in residential real
estate);
(3) consumer-receivable-related securities ("CRRs")
(obligations secured by or representing an interest in
loans or receivables of a type generally made to or
due from consumers); and
(4) commercial paper.2
These securities (hereinafter "ineligible securities")
may be held by member banks for investment purposes under section 16 of the Banking Act of 1933 (the
"Glass-Steagall Act") (12 U.S.C. § 24, Seventh), but
may not under that section be underwritten or dealt in
by member banks.
Applicants have previously received Board approval under section 4(c)(8) of the BHC Act for the abovementioned subsidiaries (collectively the "underwriting
subsidiaries") to underwrite and deal in U.S. government and agency and state and municipal securities
that state member banks are authorized to underwrite
and deal in under section 16 of the Glass-Steagall Act
(hereinafter "eligible securities").3 These eligible securities include certain municipal revenue bonds (issued for certain housing, university or dormitory purposes) as well as mortgage-related securities issued or
sold by certain agencies of the federal government.
The proposed new underwriting and dealing activities
would be provided in addition to the previously approved activities, with the subsidiaries serving customers through offices in New York and, in the case of
Citicorp, in several other cities in the United States.4
1. The industrial development bonds covered by the applications
are only those tax exempt bonds in which the governmental issuer, or
the governmental unit on behalf of which the bonds are issued, is the
owner for federal income tax purposes of the financed facility (such as
airports, mass commuting facilities, and water pollution control
facilities).
2. J.P. Morgan has not proposed to underwrite and deal in CRRs.
Citicorp's present application does not cover commercial paper,
although it has filed a separate application with the Board to underwrite commercial paper.
3. These activities are authorized for bank holding companies
under section 225.25(b)(16) of Regulation Y.
12 C.F.R.
§ 225.25(b)(16). In general, member banks may underwrite and deal in
obligations of the United States, general obligations of states and
political subdivisions, and certain securities issued or guaranteed by
government agencies. 12 U.S.C.§§ 24 Seventh, and 335.
4. For purposes of the Order, in accordance with common industry
usage, the term dealing refers to the business activity of holding
oneself out to the public as being willing to buy and sell securities as
principal in the secondary market.
474
Federal Reserve Bulletin • June 1987
Citicorp, with total consolidated assets of $196
billion, is the largest banking organization in the
nation.5 It operates eight banking subsidiaries and
engages directly and through subsidiaries in a broad
range of permissible nonbanking activities. J.P. Morgan & Co. Incorporated, with total consolidated assets
of $76 billion, is the fourth largest banking organization in the nation. It operates two subsidiary banks and
engages directly and through subsidiaries in a variety
of permissible nonbanking activities. Bankers Trust
New York Corporation, with total consolidated assets
of $56.4 billion, is the eighth largest banking organization in the nation. It also operates two subsidiary
banks and engages directly and through subsidiaries in
a variety of nonbanking activities.
Notice of the applications, affording interested persons an opportunity to submit comments on the proposals, has been published (50 Federal Register 20,847
and 41,025 (1985) and 51 Federal Register 16,590
(1986)). In addition, on December 31, 1986, the Board
announced that it would hold a public hearing on
February 3, 1987, on the applications, and requested
specific comment on certain major issues, including a
framework of prudential limitations to address the
potential for conflicts of interest, unsound banking
practices and other adverse effects raised by the
proposals.
Four commenters, including the Securities Industry
Association ("SIA"), a trade association of the investment banking industry, and the Investment Company
Institute ("ICI"), a trade association of the mutual
fund industry, opposed one or more of the proposals
(collectively the "protestants"). The majority of the
written comments were from banking organizations
and trade associations representing segments of the
banking industry and were in favor of the proposals.
The Antitrust Division of the U.S. Department of
Justice and the U.S. Treasury Department also supported approval of the proposals.
Because each of the underwriting subsidiaries that
propose to underwrite and deal in the ineligible securities would be affiliated through common ownership
with a member bank, the Board must determine
whether, upon consummation, the subsidiaries would
be "engaged principally" in underwriting or the public
sale of securities within the meaning of section 20 of
the Glass-Steagall Act.6 If so, the Board may not
5. All asset data are as of December 31, 1986.
6. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) provides
that:
". . .no member bank shall be affiliated . . . with any corporation
. . . engaged principally in the issue, flotation, underwriting,
public sale, or distribution at wholesale or retail or through
syndicate participation of stocks, bonds, debentures, notes, or
other securities . . . ."
approve the applications.7 In addition, the Board must
determine whether the proposed activities are so
closely related to banking as to be a proper incident
thereto within the meaning of section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) and are, on this
basis, activities in which bank holding companies may
engage.
In two previous decisions, the Board considered
some of the issues that are raised in the applications
now before the Board. On December 24, 1986, the
Board approved the application of Bankers Trust New
York Corporation ("Bankers Trust") to engage in the
placement of commercial paper issued by third parties
as one activity of a commercial lending affiliate.8 In
that decision, the Board concluded that the placement
activity involved did not constitute underwriting, distributing, or the public sale of securities for purposes
of section 20. The Board further concluded that, even
assuming this activity is covered by section 20, the
term "engaged principally" in section 20 of the GlassSteagall Act would allow the activity in an affiliate of a
member bank if it is relatively insubstantial in terms of
the total activity of the affiliate and the size of the
market. Specifically, the Board cited the fact that
since the gross revenues generated by the commercial
paper activities of the affiliate would be no more than 5
percent of the affiliate's total gross revenues and that
the affiliate's share of the total market for dealer
placed commercial paper would not exceed 5 percent,
the proposal would not violate section 20. In addition,
the Board established a number of conditions to assure
that the conduct of the activity was consistent with
safe and sound banking practices and avoided conflicts
of interest, concentration of resources, and other
adverse effects. The Board applied this same framework of analysis in approving, on March 18, 1987, an
application by The Chase Manhattan Corporation
("Chase") to engage in underwriting and dealing in
commercial paper in a commercial finance subsidiary
Because Applicants propose that certain of their officers and
directors will also be officers and directors of the underwriting
subsidiaries, the proposal raises an issue under section 32 of the
Glass-Steagall Act (12 U.S.C.§ (78) which provides that:
No officer, director, or employee of any corporation . . . primarily engaged in the issue, flotation, underwriting, public sale, or
distribution, at wholesale or retail, or through syndicate participation, of stocks, bonds, or other similar securities shall serve [at]
the same time as an officer, director, or employee of any member
bank except in limited classes of cases in which the Board of
Governors of the Federal Reserve System may allow such service
by general regulations when in the judgment of the said Board it
would not unduly influence the investment policies of such
member bank or the advice it gives its customers regarding
investments.
7. See Securities Industry Association v. Board of Governors of the
Federal Reserve System, 468 U.S. 207, 216 (1984) (hereinafter
"Schwab").
8 . 7 3 F E D E R A L RESERVE B U L L E T I N 1 3 8 ( 1 9 8 7 ) .
Legal Developments
of the parent bank holding company.9 The Board has
been guided by these two decisions in deciding the
applications now before the Board.
An index to this decision is contained in Appendix A
to this Order.
Part I. Introduction & Summary of Findings
These applications raise fundamental questions concerning the scope of the Glass-Steagall Act's restrictions on the securities activities of member bank
affiliates. Their resolution requires application of a
statute adopted over 50 years ago in very different
circumstances to a financial services marketplace that
technology and other competitive forces have altered
in a manner and to an extent never envisioned by the
enacting Congress. Applicants' member bank affiliates
seek to activate until now dormant provisions in
section 20 of the Glass-Steagall Act to participate in
underwriting and dealing in certain securities, so long
as they are not engaged principally in this activity.
In its evaluation of the issues raised by the applications, the Board has been guided, as it must, by the
terms of the statute and the underlying Congressional
intent and purposes of the Act as evident in its
structure and legislative history. Thus, the Board fully
recognizes that Congress, through the Glass-Steagall
Act, intended to separate commercial banks from
general securities underwriting firms. Both the Board
and the federal courts have often articulated the potential dangers to commercial banks from general underwriting activities that motivated the Congress in enacting the Glass-Steagall Act. The Board remains fully
sensitive to these concerns.
Nevertheless, despite these dangers, the Congress
drew a clear distinction between member banks and
their affiliates in the Glass-Steagall Act. Except for
certain specifically enumerated securities, including
government securities, member banks were prohibited
under the Glass-Steagall Act from engaging in any
underwriting whatsoever. Member bank affiliates, on
the other hand, were given a different statutory treatment under section 20 of the Act.
Member bank affiliates are permitted to participate
in otherwise impermissible securities underwriting so
long as they are not "engaged principally" in this
activity. While prior to this time, there apparently has
been no incentive to test the meaning of this authorization, the Board is now asked to apply it to specific
proposals to engage in certain underwriting activities.
Thus, the Board's task is to apply this explicit Congressional authorization to the proposed activities, but
9. The Chase Manhattan Corporation, 73 FEDERAL RESERVE BULLETIN 367 (Order dated March 18, 1987).
All
in a manner that gives effect to the Congressional
intent in adopting the Glass-Steagall Act. Because of
the precedent-setting nature of these applications, the
Board has given them careful attention, extending
over a period in excess of a year, during which time
the statutory language, the legislative history, and the
implications of these proposals for banking organizations and the financial markets generally have been
carefully analyzed by the Board on a number of
occasions. In addition, the Board conducted a hearing
before the Board members on these important issues.
For the reasons set out in its decisions in the
Bankers Trust and Chase cases, the Board believes it
is bound by the statutory language of section 20 to
conclude that a member bank affiliate may underwrite
and deal in the ineligible securities proposed in the
applications, provided that this line of business does
not constitute a principal or substantial activity for the
affiliate. The Board reaffirms its conclusion in those
cases that Congress intended that the "engaged principally" standard permit a level of otherwise impermissible underwriting activity in an affiliate that would not
be quantitatively so substantial as to present a danger
to affiliated banks. The Board believes that it is only
on this basis—that the activity would be insubstantial—that Congress concluded that, despite the hazards from underwriting that caused it to ban banks
from engaging in underwriting, this activity would be
permissible for the affiliates of member banks.
The Board devoted a considerable effort to evaluation of the factors that should be used to determine the
level of ineligible underwriting and dealing activity
that would not exceed the substantiality threshold.
Taking into account its precedent in the administration
of the Glass-Steagall Act and the comments at the
hearing on this issue, the Board again concluded that
the principal factors that should be included in this
judgment are gross revenue and market share. As
explained in detail below, the Board believes that
these factors are not susceptible to manipulation to
increase artificially levels of activity and fairly reflect
the amount of involvement of a bank affiliate in
securities underwriting.
With respect to the appropriate quantitative level of
ineligible activity permitted under section 20, the
Board concludes that a member bank affiliate would
not be substantially engaged in underwriting or dealing
in ineligible securities if its gross revenue from that
activity does not exceed a range of between five to ten
percent of its total gross revenues. The Board also
believes that a similar range should apply to the
market share test it believes is appropriate under
section 20. This range was established by reference to
the Board's interpretations of the "primarily engaged"
standard in section 32 of the Glass-Steagall Act. As
476
Federal Reserve Bulletin • June 1987
discussed below, under these interpretations, a company would not generally be considered engaged substantially in ineligible securities activity if its gross
revenues from that activity did not exceed 5 percent of
its total gross revenues. Where underwriting volume
was not large in absolute terms, however, somewhat
higher levels of revenue were permitted, but generally
not greater than 10 percent of total gross revenues.
Applying this framework to the current applications,
the Board came to the conclusion that, in view of the
fact that the volume of ineligible securities activity
projected by Applicants would be very large in absolute terms, the lower end of the permissible range, 5
percent, should determine whether Applicants' gross
income or market share from ineligible activity would
be substantial. The Board recognizes that this 5 percent threshold for measuring the concept of "engaged
principally" is a conservative interpretation of the
level of activity permitted by section 20. The Board
believes that a conservative, step by step approach is
merited in applying the provision of a statute that was
intended to deal with a crisis in our banking system
and that has not been extensively interpreted by the
courts as applied to the applications now before the
Board. In the light of experience, the Board will
consider, not later than one year from the date of this
Order, whether, under the framework established by
the Board in this Order, somewhat higher levels of
activity would be consistent with the Board's finding
that underwriting and dealing in ineligible securities in
an affiliate of a member bank is permissible so long as
the level of this activity measured by gross revenue
and market share is not substantial.
In addition, the three applications now before the
Board raise an important issue that was not present in
the Bankers Trust and Chase applications. In those
two cases, the applicants proposed to place or underwrite commercial paper in a subsidiary that was not
engaged in securities underwriting activities at all.
Here, the three Applicants propose to underwrite and
deal in securities in a subsidiary that is otherwise
engaged in underwriting and dealing in government
securities and other securities that banks may underwrite and deal in pursuant to section 16 of the GlassSteagall Act.
Thus, in the three pending applications the Board
must consider whether underwriting U.S. government
securities and other securities that a bank may underwrite pursuant to section 16 of the Glass-Steagall Act
should be considered a permissible activity for the
purposes of applying section 20 of the Glass-Steagall
Act to the proposed underwriting subsidiaries. If underwriting these securities, and particularly U.S. government securities, is considered permissible under
section 20, as it is under section 16, an affiliate engaged
principally in these activities could be then less than
principally engaged in underwriting the otherwise impermissible securities proposed in the applications,
including commercial paper, mortgage-backed securities and municipal revenue bonds. The answer to this
question has vital significance for bank holding companies seeking to underwrite and deal in ineligible securities. Because of the operation of the net capital rules
established by the Securities and Exchange Commission for broker-dealers, as a practical matter it is not
feasible for bank affiliates to underwrite and deal in
ineligible securities, other than commercial paper,
within the confines of section 20 unless the subsidiary
in which this activity takes place is engaged principally
in underwriting and dealing in eligible securities—
essentially U.S. government securities.
The question as to whether underwriting and dealing
in government securities is included within the prohibition of section 20 of the Glass-Steagall Act depends
upon an analysis of the language of the statute, the
intention of Congress and the Board's own practice in
administering the Act. The Board decided, in December 1986, not to resolve this question until after a
hearing had given the parties an opportunity to develop further the record on this matter.
In the light of these considerations, the Board has
concluded that U.S. government and other securities
specifically made eligible for underwriting and dealing
by member banks in section 16 should not be viewed
as the kind of activity proscribed by section 20. The
Board took into account, first, the fact that the Board
has previously decided that a member bank affiliate is
not engaged principally in impermissible activities if its
sole business is underwriting and dealing in U.S.
government and other eligible securities.10 Second, the
Board considered that Congress did not intend to
apply a more restrictive underwriting standard to
member bank affiliates than it legislated for member
banks themselves.
The Board's conclusion with respect to the content
and meaning of the authorization of section 20 to
member bank affiliates to be less than engaged principally in otherwise impermissible underwriting activities is all the more compelling because the Board has
reached the conclusion that the activities proposed in
these applications can be conducted by bank affiliates
on a safe and sound basis and without undue risk to
affiliated banks. On the contrary, the evidence seems
to indicate that without this authority banking organizations will be at a disadvantage in the competition to
supply the credit needs of the most creditworthy
borrowers with access to the less costly commercial
10. See 12 C.F.R. § 225.25(b)(16).
Legal Developments
paper market, with a consequent continuing decline in
the overall quality of bank loan portfolios.
The Board has also evaluated whether the activities
proposed in the applications are closely related to
banking and a proper incident thereto under section
4(c)(8) of the BHC Act. 12 U.S.C. § 1843(c)(8). As
stated in detail below, the Board has concluded that,
because of the considerable experience of banks in
underwriting and dealing in eligible securities, which
are closely analogous to the proposed ineligible securities activities, and because the proposed commercial
paper activities are functionally equivalent to traditional commercial banking functions, banking organizations are fully familiar with the proposed activities
and have the expertise and capability to carry out the
proposed functions. The Board also concluded that the
proposed de novo participation in this activity would
have the beneficial effect of substantially increasing
competition, particularly in the highly concentrated
commercial paper market, with the substantial expected public benefits of lowering financing costs as well
as providing greater convenience to customers and
increased efficiency in the proposed services.
As noted above, Congress recognized that a member bank affiliate that is not engaged principally in
underwriting activities covered by section 20 could
engage in otherwise impermissible securities underwriting even though it was aware that this activity
could give rise to subtle hazards that could impair
public confidence in depository institutions. The
Board believes Congress was prepared to accept these
risks because they could be contained within fully
acceptable limits through maintaining the corporate
separateness of the underwriting firm and the affiliated
bank and through limitations on the relative size of the
otherwise impermissible activities to assure their insubstantiality. These prudential limits have been fully
implemented in the Board's interpretation of the
Glass-Steagall Act.
In addition, other safeguards, both as a practical
matter and under other statutory authorities, will be in
place. As a practical matter, the securities which the
Applicants propose to underwrite and the Board is
prepared to authorize are securities that member
banks are eligible to purchase for their own account,
are of high quality and involve minimum risk. In terms
of the statutory framework, the Board notes that bank
holding company affiliates that engage in securities
underwriting would be subject to SEC jurisdiction
under the securities laws. Moreover, although not
required by the Glass-Steagall Act, the Board believes
it is appropriate to require that member bank affiliates
underwriting otherwise impermissible securities observe a number of prudential considerations to assure
capital adequacy and to limit both transactions and the
All
flow of information between an underwriting subsidiary and other affiliates of the parent banking organization. These prudential considerations are explained in
Part III below.
Accordingly, the Board has concluded that, subject
to the limitations established in this Order, approval of
each of the three applications would not result in a
violation of the Glass-Steagall Act and would be
consistent with the closely related and proper incident
to banking standards of section 4(c)(8) of the Bank
Holding Company Act.
Part II. Glass-Steagall
Act
A. Applicants' Contentions
The Applicants contend that the underwriting subsidiaries would not be "engaged principally" in underwriting securities within the meaning of section 20 of
the Glass-Steagall Act because the subsidiaries will
limit the volume of their ineligible activity to a small
percentage of their total business and so that the
subsidiaries would not have a significant share of the
market for any of the ineligible securities underwritten
or dealt in.11
The Applicants contend that the term "engaged
principally" in section 20 means the chief or single
largest activity, and that, therefore, their underwriting
subsidiaries may underwrite and deal in ineligible
securities so long as this ineligible activity does not
constitute more than 50 percent of the subsidiaries'
11. Citicorp proposes (in the third year and thereafter) to limit the
total sales volume of underwriting by CSI in ineligible municipal
revenue bonds, mortgage-related securities and CRRs to no more than
10 percent of all securities (both eligible and ineligible) underwritten
by the affiliate during the previous year. Citicorp would similarly limit
the affiliate's dealing in ineligible securities to 10 percent of its total
securities dealing activity. Citicorp would also restrict the affiliate's
underwriting of each type of security to no more than 3 percent of the
total amount of each type of ineligible security underwritten domestically during the previous calendar year by all firms (mortgage-related
securities and CRRs constitute a single category for this purpose). It
would also limit the amount of each type of securities it may hold for
dealing so as not to exceed this market cap.
Morgan proposes to limit ineligible underwriting and dealing activity by its affiliates (JPMS and JPMMF) in municipal revenue bonds,
mortgage-related securities and commercial paper so that the activity
will not, over any two year-period, account for more than 15 percent
of the total consolidated eligible and ineligible securities activity of the
affiliates as measured by two of the following three criteria: gross
income, sales volume and average assets acquired in connection with
the activity. Morgan would adopt the same market limitations as
Citicorp, except that it proposes a 10 percent market share limitation
for commercial paper based upon the average amount of dealer-placed
commercial paper outstanding during the previous four calendar
quarters.
Bankers Trust proposes to conduct, through its affiliate BTSC,
ineligible underwriting and dealing activity involving municipal revenue bonds, commercial paper, and mortgage- and-consumer-receivable-related securities under the same tests as proposed by Morgan.
478
Federal Reserve Bulletin • June 1987
total business activity or represent its single largest
business activity.12 On this basis and subject to the
proposed limitations on each subsidiary's ineligible
securities underwriting and dealing activity, Applicants contend their underwriting subsidiaries would be
"engaged principally" in underwriting and dealing in
eligible securities, which is permissible under section
20, and, therefore, the subsidiaries could not by definition be engaged principally in underwriting ineligible
securities in violation of section 20 of the GlassSteagall Act. Applicants further claim that, even under
the broadest reading of "principally" as denoting any
substantial activity, their subsidiaries would not be
engaged principally in ineligible securities activity
under the limitations proposed in their applications.
Applicants also argue that the proposed dealing
activities are not covered by section 20 of the GlassSteagall Act, which they claim is limited to activities
involving the initial distribution of securities. They
base this claim on the fact that section 20 does not
refer to "dealing" per se, but to the functions of
issuance, flotation, underwriting, public sale, or distribution of securities.
be "engaged principally" in underwriting securities
under section 20.
The protestants also contend that the terms "stocks,
bonds, debentures, notes, or other securities" in section 20 include all securities, both eligible and ineligible. Thus, they argue that, even under Applicants'
interpretation of "engaged principally," the proposals
to conduct ineligible securities activity in a government securities underwriting subsidiary would violate
section 20 because the subsidiary's largest activity
would be underwriting and dealing in "securities,"
albeit the preponderance of these securities would be
bank-eligible U.S. government, state, and municipal
securities.
Applicants counter that the term "securities" in
section 20 does not include government securities and
other securities member banks are authorized to underwrite and deal in under section 16, on the theory
that a member bank affiliate may engage in any activity
authorized for the member bank under the GlassSteagall Act.
B. Protestants' Comments
1. Securities that a Member Bank May Underwrite
are not Covered by the Prohibition of Section 20.
The protestants claim that Applicants' view of the
term "principally" would vitiate the central purpose
of the Glass-Steagall Act by allowing member banks
to reestablish "security affiliates" that could rival the
largest investment banking firms. For this reason, the
protestants contend that the term "principally" must
be interpreted consistent with Congressional intent to
denote any substantial, significant, regular or nonincidental activity, whether or not it is the largest
activity of the affiliate.
ICI further contends that the "engaged principally"
standard of section 20 also would cover any company
"formed for the purpose o f ' underwriting securities of
any sort, the description of a securities company that
was contained in the now repealed section 19(e) of the
Glass-Steagall Act.13 ICI contends that each of the
underwriting subsidiaries was formed for the purpose
of underwriting securities and thus, in its view, would
12. The Applicants rely on a dictionary definition of the term
"principally" to mean the single largest activity and statements in the
U.S. Supreme Court decision in Board of Governors of the Federal
Reserve System v. Agnew, 329 U.S. 441, 446, 448 (1947), concerning
section 32 of the Glass-Steagall Act, which they argue indicate that
"principally" as used in section 20 means more than 50 percent of the
company's business.
13. Banking Act of 1933, Pub. L. No. 66, § 19(e), 48 Stat. 162, 188
(codified at 12 U.S.C. § 61(e) (1964)), repealed by Act to Amend the
Bank Holding Company Act of 1956, Pub. L. No. 89-485, § 13(c), 80
Stat. 236 (1966).
C. Analysis of Glass-Steagall Act Issues
Protestants contend that the term securities in section
20 encompasses all securities—both ineligible as well
as bank eligible securities—and that, therefore, the
proposed subsidiaries would be "engaged principally"
in underwriting securities for purposes of section 20
even under Applicants' view of the term "principally."
The Board notes that, on its face, section 20 draws
no distinction between eligible and ineligible securities, as is the case under other sections of the GlassSteagall Act. The section simply contains a prohibition
on a member bank's affiliation with any corporation
engaged principally in underwriting "stocks, bonds,
debentures, notes, or other securities."
Looking at the statute as a whole, however, the
Board believes that Congress did not intend to include
the eligible securities activity authorized for member
banks under section 16 of the Glass-Steagall Act
within the scope of section 20's prohibition against an
affiliate's being engaged principally in the underwriting
Section 19(e) prohibited a holding company affiliate, which was
defined to include a bank holding company, from voting the shares of
its subsidiary member bank if the holding company affiliate controlled,
or participated in the management or direction of, any business
organization "formed for the purpose of, or engaged principally in, the
issue, flotation, underwriting, public sale, or distribution . . . of
stocks, bonds, debentures, notes, or other securities of any sort."
Legal Developments
or public sale of "stocks, bonds, debentures, notes, or
other securities." In the Board's view, the structure
and Congressional intent of the Glass-Steagall Act
make clear that in light of the express authorization in
section 16 for member banks to underwrite eligible
securities, the limitation of section 20 against a member bank affiliate being engaged principally in underwriting securities does not encompass bank eligible
securities. In this regard, the Supreme Court has
stated that the structure of the Glass-Steagall Act
reveals a Congressional intent to impose a "less
stringent standard" on member bank affiliates under
section 20 than is applied to the direct activities of
member banks under section 16 of the Act14 and that
under the Glass-Steagall Act "a bank affiliate may
engage in activities that would be impermissible for the
bank itself."15
As section 16 expressly provides, and as was clear
prior to its enactment, banks have the power to
underwrite and deal in government obligations.16 Given that section 20 establishes a less rigorous standard
for member bank affiliates than is applicable to a
member bank, it follows, a fortiori, that such bank
eligible underwriting and dealing activity is permitted
for a member bank affiliate. In reaching this conclusion, the Board has applied a fundamental principle of
statutory construction that the various provisions of a
statute should be construed as a whole and that a
particular section of a statute may not be interpreted in
isolation without regard to other sections of the statute
of which it is a part.17
In accordance with this interpretation, the Board
has for some time authorized bank holding companies,
including those that controlled member banks, to
establish subsidiaries to underwrite and deal in securities that are expressly authorized for member banks to
underwrite and deal in under section 16,18 and in 1984
authorized such activity for bank holding companies
generally by regulation.19 The Board's decision in
14. Board of Governors of the Federal Reserve System v. Investment Company Institute, 450 U.S. 46, 61 n.26 ('7C7 //").
15. ICIII, 450 U.S. at 63-64.
16. 2 F. Redlich, The Molding of American Banking: Men and
Ideas 389 (1951); W. Peach, The Security Affiliates of National Banks
43-44 (1941).
17. See United States v. Morton, 467 U.S. 822, 828, rehearing
denied, 468 U.S. 1226 (1984); Philbrook v. Glodgett, 421 U.S. 707,
713 (1975); United Mine Workers of America v. Andrews, 581 F.2d
888, 892 (D.C. Cir.), cert, denied, 439 U.S. 928 (1978). 2A Sutherland
Statutory Construction § 46.05 (4th ed. 1984).
18. United Bancorp, 64 FEDERAL RESERVE BULLETIN 222 (1978);
Stepp, Inc., 64 FEDERAL RESERVE BULLETIN 223 (1978); United
Oklahoma
Bankshares,
Inc., 65 FEDERAL RESERVE BULLETIN 363
(1979); Citicorp, 68 FEDERAL RESERVE BULLETIN 249 (1982).
19. 12 C.F.R.§ 225.25(b)(16). The Board notes that protestants did
not challenge the Board's rule authorizing this activity for bank
holding companies or any of its approvals for bank holding companies
to engage in this activity.
All
these cases was premised upon its view that the
conduct of such bank eligible securities activities by
member bank affiliates is not the type of activity
prohibited by section 20 or 32 of the Glass-Steagall
Act.
The interpretation of section 20 urged by protestants
that a member bank affiliate may not underwrite
securities that are expressly authorized for a member
bank itself not only runs counter to the Supreme
Court's statements regarding the scope of section 20,
but is also inconsistent with the fundamental purpose
of the Glass-Steagall Act. The Glass-Steagall Act was
enacted with one central purpose in mind, to protect
bank depositors from the hazards that Congress
viewed as attributable to the combination of commercial and investment banking. However, Congress did
not view the traditional underwriting activities of
banks in government securities as giving rise to these
dangers to the bank and its depositors and on this basis
permitted the continuation of that activity within the
bank itself.20
Section 20 was designed to limit the scope of activities of member bank affiliates as a complement to the
restrictions on banks' direct underwriting and dealing
activities,21 and as a means of enforcing the separation
of commercial from investment banking.22 Clearly,
therefore, section 20 was not designed to prohibit
affiliates from engaging in activity a bank could lawfully conduct.23 Moreover, there is some evidence in the
legislative history of the Glass-Steagall Act that section 20 was not meant to prohibit the underwriting of
government securities. 76 Cong. Rec. 2000, 2274
(1933) (remarks of Sen. Long); 76 Cong. Rec. 1941
(1933) (remarks of Sen. Glass).
To read the statute otherwise would mean that
Congress intended to impose a substantially stricter
standard on an affiliate than on the member bank itself,
an interpretation that would be out of harmony with
the central purpose of the Act to protect the bank and
its depositors. Moreover, with respect to the analogous question raised in ICIII, as to whether an activity
could be prohibited under section 21 that was authorized under section 16, the Supreme Court stated that
section 21 "surely was not intended to require banks
to abandon an accepted banking practice that was
20. See ICIII, 450 U.S. at 61-62.
21. The Senate Report on the bill that subsequently became the
Glass-Steagall Act indicates that Congress was concerned with the
fact that banks had formed affiliates to conduct activity "never
contemplated by the National Banking Act." S. Rep. No. 77, 73d
Cong., 1st Sess. 10 (1933). Accord: 75 Cong. Rec. 9887 (1932)
(remarks of Sen. Glass) and 75 Cong. Rec. 9911 (1932) (remarks of
Sen. Bulkley). See also Investment Company Institute v. Camp, 401
U.S. 617, 629 (1971) ("/C/ /").
22. See ICI II, 450 U.S. at 61-62.
23. Id.
480
Federal Reserve Bulletin • June 1987
subjected to regulation under section 16." 450 U.S. at
63. In affirming the Board's decision authorizing bank
holding companies to act as discount brokers, the
Court also noted that the fact that section 16 authorizes the activity for member banks suggested that it
was not the type of activity at which the GlassSteagall Act was aimed.24
Similarly, the United States Court of Appeals for the
D.C. Circuit has recently stated that "those activities
of commercial banks that section 16 places on the
acceptable commercial banking side of the line [between commercial and investment banking] cannot be
placed by section 21 on the impermissible investment
banking side of the line."25 Accordingly, the court
concluded that section 21 of the Glass-Steagall Act
would not prohibit a bank from selling securities to the
extent authorized for member banks under section 16,
even before the amendment to section 21 in 1935
excepting from section 21's prohibition activities authorized for member banks under section 16.
The court reached this conclusion on two separate
and independent grounds, both of which, in the
Board's view, support the conclusion that section 20
does not cover activity authorized under section 16.
First, the court noted, as Applicants point out, that the
1935 Amendment to section 21 was termed a clarifying
amendment "to make it clear that [section 21] does not
prohibit any financial institution or private banker
from engaging in the securities business to the limited
extent permitted to national banks under [section
16]."26 This the court felt necessarily implied that the
authorization under section 16 also applied to the
prohibition of section 21 against selling and underwriting securities generally, even before the 1935 amendment. Second, the court noted that, unless the authorization of section 16 was read as an exception to
section 21, a member bank would be prohibited by
section 21 from conducting activities the bank was
expressly authorized to conduct under section 16, a
result the court termed absurd. Id. at 1058.
The Board believes this reasoning is directly applicable to section 20, which by its terms covers the same
types of securities and the same underwriting and
selling activities described in section 21. Thus, in order
to avoid the illogic of barring a member bank affiliate
from activity expressly authorized for the member
24. Schwab, 468 U.S. at 221.
25. Securities Industry Association v. Board of Governors of the
Federal Reserve System, 807 F.2d 1052, 1058 (D.C. Cir. 1987),
petition for cert, pending No. 86-1429 ("Bankers Trust II").
26. H. Rep. No. 742,74th Cong., 1st Sess. 16 (1935). Relying on the
legislative history, the court in Bankers Trust II said the 1935
amendment to section 21 was "simply to leave no doubt of the need to
read the two sections [16 and 21] harmoniously . . . ." 807 F.2d at
1058.
bank, the Board believes that section 20 must necessarily not cover securities activity authorized for member banks under section 16.27 Moreover, given the fact
that Congress has legislated a less stringent standard
for member bank affiliates than for banks and that
Congress, as the court concludes, did not intend
section 21 even before its amendment to bar member
banks from activity authorized under section 16, it
follows that Congress must necessarily have intended
not to bar their affiliates from such activity.28
Finally, the Board notes that the limited expansion
of the activities of Applicants' government securities
subsidiaries, as proposed in the applications and limited by this Order, would not transform these subsidiaries, which would derive substantially all of their income from permissible eligible underwriting activities
and would not engage in a full investment banking
business, into the type of general securities underwriting affiliates Congress intended to divorce from member banks in 1933.
Since eligible securities cannot reasonably be
viewed as securities for purposes of section 20, member bank affiliates that conduct such eligible securities
underwriting activity cannot be viewed as engaged in
the securities underwriting business proscribed by
section 20 and thus may—as may any other member
bank affiliate—engage in ineligible underwriting and
dealing activity where such activity is not a principal
27. The SIA claims that an interpretation of section 20 that prohibits a bank affiliate from underwriting and dealing in even eligible
securities is not unreasonable because Congress may have intended
the underwriting of government securities to be conducted directly by
the bank—a federally regulated entity. Such an explanation is implausible, in the Board's view, because when Congress undertook to
regulate broker-dealers generally shortly after passage of the GlassSteagall Act, companies dealing only in government securities were
expressly exempted from federal regulation. Thus, any company that
underwrote only government securities would not have been subject
to federal regulation.
28. Protestants contend that the failure of Congress to amend
section 20 in 1935 to permit member bank affiliates to underwrite
securities authorized under section 16 demonstrates member bank
affiliates were not intended to be permitted to conduct such activity.
The Board, however, believes that the better view is that articulated in
Bankers Trust II that the 1935 amendment merely clarified the
preexisting state of affairs and that, just as banks were not prohibited
by section 21 from engaging in activity permitted under section 16
even before the amendment, member bank affiliates must necessarily
not have been prohibited from engaging in such activity under section
20. Thus, Congress' failure to amend section 20 in 1935 does not mean
that Congress intended to bar member bank affiliates from activity
permitted for member banks. Moreover, it was necessary to clarify
section 21 because it is a criminal statute and the Attorney General
had expressed the view with respect to certain aspects of section 21
that clarification would be desirable. Banking Act of 1935: Hearings
on S.1715 and H.R. 7617 Before a Subcomm. of the Senate Comm. on
Banking and Currency, 74th Cong., 1st Sess. 139-140 (1935) (Testimony of J.F.T. O'Connor). Section 20, however, is not a criminal statute
and in light of the Board's ability to issue interpretations of that
statute, there was no pressing need for clarification, as was the case
with section 21.
Legal Developments
line of business for the affiliate. In the Board's view,
there is no basis in the terms or legislative intent of
section 20 to prohibit an eligible securities underwriting subsidiary from underwriting and dealing in any
ineligible securities activity while allowing a subsidiary engaged in commercial finance, mortgage banking, securities brokerage or other nonbanking activity
permissible for bank holding companies to engage to
some extent in ineligible securities activities.
In this regard, the Board has considered the proposed limited expansion of Applicants' government
securities subsidiaries' activities in light of the hazards
to the bank and its customers that the Glass-Steagall
Act is intended to prevent. As noted, Congress clearly
did not view the underwriting of bank-eligible securities as harmful to the bank or its depositors and
Congress plainly permitted ineligible underwriting activity so long as it did not amount to a principal
activity. Moreover, as noted, the Board's order in this
case goes further than Congress under the GlassSteagall Act and establishes limitations on the conduct
of the activity under the Bank Holding Company Act
to assure that the activity will not produce significant
conflicts of interest, unsound banking practices, unfair
or decreased competition, undue concentration of
resources or other adverse effects.29
For the above reasons, the Board believes that the
term "securities" in section 20 must be read as not
including those securities that member banks are expressly authorized to underwrite and deal in under
section 16.
2. Dealing Constitutes the Underwriting or Public
Sale of Securities Under Section 20.
Applicants maintain that "dealing" is not an activity
covered by the terms "issue, flotation, underwriting,
public sale, or distribution" in section 20, particularly
All
if dealing is limited only to secondary market sales and
does not involve an initial distribution of securities.
For the reasons set out below and more fully in the
attached Appendix B, the Board concludes that the
securities activity covered by section 20 is not limited
to the initial distribution of securities, but also includes
the activity of holding oneself out to the public as
being willing to buy and sell securities as a principal in
the secondary market, or "dealing" as that term is
used by the Applicants. This conclusion is consistent
with the literal meaning of the term "public sale" in
section 20, the legislative history of the section, judicial interpretation, the purposes of the Act, and the
Board's longstanding practice.
Literally, the term "public sale" in section 20 is
broad enough to encompass dealing in securities. A
dealer commonly refers to a person who holds himself
out to the public as being willing to buy and sell
securities for its own account. 2 L. Loss, Securities
Regulation 1215, 1297 (2d ed. 1961). Moreover, the
legislative history of the Glass-Steagall Act indicates
that Congress intended to cover not only underwriting
activity but also stock speculation, market making and
participation in trading pools—activities attributable
to dealing and not generally associated with initial
distribution activities.30
On this basis, the Board for many years has consistently ruled that dealing is covered by section 32 of the
Act, which, as noted, is identical to section 20 in terms
of its coverage of issuance, flotation, underwriting,
public sale, or distribution activities.31
The conclusion that dealing constitutes the "public
sale" of securities under section 20 is also supported
by the Supreme Court's observation in Schwab, 468
U.S. at 217-18, that the activities described in section
20 refer, at a minimum, to operations in which the
affiliate acts as a principal.
3. The Term "Engaged Principally" in Section 20
Denotes any Substantial Activity.
29. In its evaluation of this case, the Board has carefully considered
the fact that Applicants' underwriting subsidiaries were formed in
major part through the transfer to the subsidiaries of government
securities activities previously conducted as departments or divisions
of the Applicants' member bank subsidiaries. As indicated, the Board
has previously approved the transfer of such activities to the holding
companies' underwriting subsidiaries as a permissible nonbanking
activity under the BHC Act. Accordingly, the Applicants are engaged
in this activity pursuant to law and regulatory authorization. While the
transfer of these functions could result in the deliberate creation of a
large base of eligible activity, the size of the ineligible activity that
may be conducted by these affiliates is sharply limited by the
"engaged principally" provisions of the Glass-Steagall Act as interpreted by the Board. As discussed below, these provisions involve the
concept of a quantitative limitation on underwriting activity which is
embodied in the income and market share criteria for establishing
"substantiality" contained in this Order. The Board wishes to stress
that the latter criterion, in particular, creates a limitation on underwriting activity which is independent of the size of the affiliate that
might be established by purposeful transfer of activities from the bank
to the underwriting affiliate.
In its Bankers Trust decision, the Board concluded
that, even if the placement as agent of commercial
30. See S. Rep. No. 77, 73d Cong., 1st Sess. 10 (1933). See also
Operation of the National and Federal Reserve Banking Systems,
1931: Hearings on S. Res. 71 Before a Subcomm. of the Senate
Comm. on Banking and Currency, 71st Cong., 3d Sess. 198-199, 306309, 1063-1064. The conclusion that section 20 covers dealing is also
more consistent with the purposes of the Glass-Steagall Act to
address the Congress' concern over the "subtle hazards" of a bank
having a pecuniary interest in the purchase and sale of particular
securities. ICI /, 401 U.S. at 629-34; Securities Industry Association
v. Board of Governors of the Federal Reserve System, 468 U.S. 137,
145 (1984) ("Bankers Trust /"); Schwab, 468 U.S. at 220.
31. 20
FEDERAL
RESERVE
BULLETIN
393
(1934);
20
FEDERAL
RESERVE B U L L E T I N 7 5 0 ( 1 9 3 4 ) ; 5 1 F E D E R A L RESERVE B U L L E T I N 8 1 0
(1965); 12 C.F.R. § 218.110(d).
482
Federal Reserve Bulletin • June 1987
paper were deemed to constitute an activity covered
by section 20 of the Glass-Steagall Act, Bankers
Trust's commercial lending affiliate would not be
"engaged principally" in underwriting or dealing in
securities within the meaning of section 20 under the 5
percent income and market share limits at issue in that
case. The Board held that the term "engaged principally" in section 20 denotes any activity of the underwriting affiliate that is substantial, even if the activity
does not represent more than 50 percent of the affiliate's total business activity or its single largest or most
important activity. A similar decision was made in the
Chase case.
After considering the submissions by the parties and
other interested persons at the hearing and in posthearing materials, the Board continues to be of the
view, for the reasons expressed in full in Bankers
Trust, that the term "engaged principally" in section
20 denotes any substantial activity of the affiliate.
In this regard, the Board has considered the argument by ICI regarding the now repealed section 19(e)
of the Glass-Steagall Act. While section 19(e) and
section 20 were designed to accomplish the same
general objective and overlap to some extent in the
case of a securities company affiliated with a member
bank within a bank holding company system, section
20 does not contain the "formed for the purpose of"
language found in section 19(e).
Moreover, nothing in the legislative history of the
Glass-Steagall Act or the 1966 legislation which repealed section 19(e) indicates that the "engaged principally" standard of section 20 incorporated the
"formed for the purpose o f ' standard. Section 19(e)
was repealed, at the recommendation of the Board,
because it was "doubtful" whether section 19(e) was
"sufficiently useful" to justify its retention in light of
the enactment of the Bank Holding Company Act.32
The Board has also considered the Supreme Court's
discussion of section 19(e) in ICI II, 450 U.S. at 70
n.43. In the Board's view, the Court's statements
merely reflect the view that if a company is formed in
order to underwrite securities, one would expect the
company to be "engaged principally" in that activity.
The Court was not presented with a situation, such as
that presented here, in which the company's largest
activity is permissible government securities underwriting activities and its ineligible activities are insubstantial. In this regard, the Board is unaware of any
32. S. Rep. No. 1179, 89th Cong., 2d Sess. 12 (1966); Bank Holding
Company Act, Report of the Board of Governors of the Federal
Reserve System to the Comm. on Banking and Currency, U.S.
Senate, 85th Cong., 2d Sess. 26 (Comm. Print 1958).
instance of a member bank affiliated in a bank holding
company system with a securities company that was
covered by the "formed for the purpose o f ' language
of section 19(e), but not by "engaged principally"
language.
Finally, the Board notes that the "formed for the
purpose o f ' language—like the "engaged principally"
terminology in section 20—is susceptible to different
meanings. For example, the "formed for the purpose
o f ' language could be construed to refer to the situation where the company was specifically formed to
underwrite ineligible securities and would not cover
the situation where the company was formed for the
purpose of commercial finance (as in the Bankers
Trust and Chase cases previously approved by the
Board) or to underwrite bank-eligible securities as in
these cases.
Nevertheless, while the Board does not believe the
"formed for the purpose o f ' standard has been incorporated in the "engaged principally" standard of section 20, the Board does note that section 19(e), because of its overlap with and close relationship to
section 20, does tend to confirm the Board's conclusion that the "engaged principally" standard of section 20 must be read to cover any substantial ineligible
activity of the affiliate in order to carry out Congressional intent to separate member banks from securities
affiliates.
The Board has also considered Applicants' contention, reiterated at the hearing and in post-hearing
materials, that the Board is required by the Supreme
Court's Agnew decision to determine that the "engaged principally" standard of section 20 denotes only
that activity of the affiliate that constitutes more than
50 percent of its total business activity or its single
largest activity. The Board has carefully considered
Applicants' position, but remains of the view that the
Supreme Court in the Agnew case did not determine
dispositively the meaning of "engaged principally" in
section 20. As the Board noted in its Bankers Trust
Order, section 20 was not at issue in Agnew because of
the absence of a stockholder affiliation between the
member bank and the securities company involved. 73
FEDERAL RESERVE BULLETIN 143, 144 (1987). Nor
was any such determination necessary to the Court's
decision regarding the term "primarily engaged" in
section 32, since even if the Court determined that the
two standards were identical, it would not have been
precluded from reaching the same conclusion—that
"primarily" meant any substantial activity, given that
"principally" can also mean any substantial activity.
As was explained in the Bankers Trust Order, at the
time the Glass-Steagall Act was passed, an accepted
dictionary definition of principally included "important" and "primarily."
Legal Developments
As noted in Bankers Trust, the Board believes its
conclusion regarding the meaning of section 20 is
particularly appropriate in light of the fact that to hold
otherwise would mean that section 20 would apply to
no one, since investment banking firms typically engage in numerous other activities in addition to securities underwriting and dealing. This rationale led the
Court in Agnew to affirm the Board's interpretation
that section 32 denoted any substantial activity. Indeed, such a view would permit member banks to
establish the very affiliations with the nation's largest
investment banking businesses that section 20 was
precisely designed to prohibit.33
At the hearing, Applicants also disputed the Board's
conclusion that common sense would suggest that
Congress could not have intended to apply a less
stringent standard where a member bank and an
underwriter were affiliated through common stock
ownership than was applied where a member bank and
an unaffiliated underwriter merely shared a common
director. In Bankers Trust, the Board pointed out that
Applicants' view of principally would mean that a
member bank could be affiliated through common
stock ownership with a securities company substantially but not predominantly engaged in underwriting,
but could not establish a single management interlock
with the company, a seemingly anomalous result in
light of the greater potential in common ownership
situations for adverse effects of the type that led
Congress to enact the Glass-Steagall Act.34 Applicants
contend that Congress in fact intended to apply a more
lenient standard in common ownership situations because the securities affiliate of a member bank would
be subject to examination and rules limiting transactions between the member bank and its affiliates.
At the outset, the Board notes that there is nothing
in the legislative history to support Applicants' view.
Moreover, the Supreme Court has stated that Congress in 1933 rejected the view that examination and
regulation of bank securities affiliates would address
33. In order to support its strict interpretation of section 32, the
Agnew Court observed that the Act distinguished between firms
primarily engaged and engaged principally in underwriting. 329 U.S.
at 448. In the Board's view, the Agnew Court reached its decision on
the meaning of "primarily engaged" on the basis of the terms and
legislative intent of the statute. 329 U.S at 447. Its subsequent
references in the opinion to "principally" in section 20 were clearly
meant to bolster its decision made on the basis of the terms and
legislative intent of the statute. While the Court's observation is a part
of the Court's reasoning, it is not a legally binding ruling on the scope
of section 20. In addition, in the Board's view, the Court's supplemental argumentation should not be accorded controlling weight here,
given that the Court in Agnew had no occasion to consider the fact
that viewing "principally" to mean the chief or single largest activity
would produce results that are inconsistent with what the Court
understood to be the basic purpose of the legislation.
3 4 . 7 3 F E D E R A L RESERVE B U L L E T I N at 1 4 3 , 1 4 4 .
All
the concerns Congress perceived when commercial
and investment banking functions are combined.
Bankers Trust I, 468 U.S. at 147. Rather, Congress felt
that most commercial and investment banking functions were "fundamentally incompatible." Id. The
Board also notes that the examination authority and
affiliate transaction restrictions contained in the
Glass-Steagall Act were not comprehensive and did
not foreclose the possibility of the type of adverse
effects that concerned Congress and resulted in enactment of the Glass-Steagall Act. For example, section
23A of the Federal Reserve Act,35 to which Applicants
point, did not apply to purchases of assets by a
member bank from an affiliate until 1982, thus allowing
dumping of securities in a member bank or the purchase by a member bank of low quality assets from a
securities affiliate, a hazard Congress was specifically
concerned with in 1933.
APPROPRIATE
PRINCIPALLY"
MEASURES
OF
"ENGAGED
Having determined that the "engaged principally"
standard of section 20 denotes any substantial activity,
the Board must determine whether, under the limitations proposed by the Applicants, their subsidiaries'
ineligible underwriting and dealing activity would be
substantial. In making this determination, the Board
has been guided by the Congressional intent underlying section 20 of the Glass-Steagall Act to insulate
member banks from the dangers Congress associated
with the combination of commercial and investment
banking by allowing member bank affiliates to underwrite and deal in ineligible securities only at a level
that would not be substantial. Taking these factors into
account in the Bankers Trust and Chase cases, the
Board determined that where ineligible activity would
not exceed 5 percent of the affiliate's gross revenues or
5 percent of the market for the type of security being
placed or underwritten, the activity would not be
substantial.
Applicants have suggested a number of differing
methods for determining when an affiliate is "engaged
principally" in underwriting activity, including limitations based on sales volume alone or on sales volume,
assets devoted to the activity or income on a two out
of three basis. The Board, however, continues to
believe that the most appropriate measure of "engaged
principally" is the gross revenue the affiliate derives
from the ineligible underwriting and dealing activity
35. Banking Act of 1933, Pub. L. No. 66, § 13, 48 Stat. 162, 183
(codified at 12 U.S.C. 371c (1976), amended by Garn-St Germain
Depository Institutions Act of 1982, Pub. L. No. 97-320, § 410, 96
Stat. 1469, 1515.
484
Federal Reserve Bulletin • June 1987
relative to the revenue derived from its total business
activities. This is consistent with the Board's practice
under the "primarily engaged" standard of section 32
of the Glass-Steagall Act, which gives substantial
weight to the size of the company's revenue from
underwriting activity relative to its total revenue.36 In
addition, the Board believes it appropriate to consider
the significance of the organization's presence in the
market for the particular activity, also a factor considered by the Board in prior rulings under the GlassSteagall Act.37
As noted in the Bankers Trust Order, the Board
believes that gross revenue is the appropriate test to
determine whether a subsidiary is "engaged principally" because it is an objective and meaningful measure
of the importance of the activity to the subsidiary as a
whole and also reflects the level of risk involved in the
activity, a major consideration behind enactment of
the Glass-Steagall Act. In addition, a gross revenue
test goes some way toward avoiding the potential for
manipulation present in a test based solely on sales
volume. Although gross revenues may be influenced
to enlarge ineligible operations, the sales volume of a
government securities subsidiary could be easily inflated by daily "matched book" operations38 or be
increased through churning of the affiliate's dealing
activity in permissible securities in order to create a
larger base against which ineligible activity would not
appear to be substantial. The Board also notes that the
average assets test suggested would not take into
account ineligible underwriting activities which do not
entail substantial or lengthy investment of the underwriting subsidiary's own funds.39
The Board has considered Applicants' comments at
the hearing regarding the desirability of their proposed
tests, including their view that the volume tests would
not be subject to artificial increases because of increased costs and legal constraints. The Board, however, continues to be of the view that a revenue test is
the best overall measure under section 20, posing the
fewest operational difficulties and giving the most
36. Letter from the Board to the Federal Reserve Banks (August
11, 1958), reprinted in Federal Reserve Regulatory
Service
("F.R.R.S."), 11 3-895.
37. Id.
38. Matched book activities would consist of repurchase and reverse repurchase agreements for government securities, used by
dealers and their financial institutions customers for short term
funding, hedging and arbitrage. As government securities dealers,
Applicants' subsidiaries would have a high volume of such activity.
39. Bankers Trust's and Morgan's reliance on tests based on assets
devoted to the activity, income and sales volume, on a "two out of
three" basis, are similarly flawed because an affiliate could derive a
substantial amount of its income from ineligible activity even though
the ineligible activity met the asset and sales volume test, both of
which, in the Board's judgment, would be open to increasing the base
of eligible activity to support ineligible activity.
accurate indication of the importance of the activity to
the affiliate's total business operations. While Applicants argue there are a variety of different tests that
could be applied to measure engaged principally status
and that the tests should be tailored for each applicant,
the Board believes that a uniform standard measure is
desirable to assure a rule that would be simple to apply
and enforce and to avoid unfairness in application
among various applicants.
The Board also believes that in determining whether
a company's underwriting activity is substantial it is
important to consider in connection with gross revenue the affiliate's market share for the particular type
of security underwritten. In the Board's judgment, the
fact that an affiliate would be a major force in a
particular securities market would be an evidentiary
factor suggesting that the affiliate is "engaged principally" in underwriting securities. Thus, the Board has
taken into account a firm's market share in decisions
under the Glass-Steagall Act, particularly as it is
related to the scope and extent of the firm's ineligible
activity.40
In addition, the Board believes that a market share
test would provide a useful and objective proxy for
sales volume, which the Board believes is an important factor to be taken into account under the engaged
principally test of section 20, and which the Board has
considered in its decisions under section 32. Unlike
the test based on sales volume of the subsidiary, the
market share test would not be subject to manipulation, but would provide for consideration of the volume of business activity of the affiliate in absolute
terms.41
Finally, the Board believes that any decision regarding engaged principally status should take into account
other factors and circumstances present in the pending
applications. In the instant cases, the Board believes it
significant that each of the three underwriting subsidiaries will maintain their fundamental nature as government securities dealers. They will underwrite a
limited range of securities that are closely analogous to
securities presently underwritten by member banks or
to commercial banking functions, and at levels that
would not be substantial relative to their eligible
40. Letter from the Board to the Federal Reserve Banks (August
11, 1958) F.R.R.S. 11 3-895. See also, e.g., Board letter dated
September 30, 1947.
41. Applicants and the Antitrust Division of the Department of
Justice argue that the Board is precluded from considering market
share information in applying section 20, noting that the "engaged
principally" terminology focuses on the relative amount of activity
within a particular company. However, the Board is not relying on
market share information per se, but as a qualitative factor and as a
substitute for a volume test, which is related solely to the activities of
a particular affiliate but which the Board believes, in the context of
these proposals, is not a reliable measurement criterion alone.
Legal Developments
securities activities. Thus, the proposed limited expansion would not transform the government securities
dealers into the type of securities affiliates engaged in
the general investment banking and securities underwriting business that Congress intended to separate
from member banks through section 20.
QUANTITATIVE
UNDER
LEVEL
SECTION
OF ACTIVITY
PERMITTED
20
With respect to the appropriate quantitative level of
activity permissible under the section 20 authorization, the Board has determined that a member bank
affiliate would not be engaged principally or substantially in underwriting or dealing activity covered by
section 20 if its gross revenue from that activity does
not exceed a range of between 5 and 10 percent of its
total gross revenues. The Board believes a similar
range should apply to the market share test the Board
has adopted under section 20.
The Board established this range by reference to the
Board's past practice for many years in interpreting
the "primarily engaged" standard in section 32,
which, as noted, covers any substantial underwriting
and dealing activity. This approach is, in the Board's
judgment, consistent with the Congressional intent
underlying section 20 to allow member bank affiliates
to engage in underwriting and dealing activities at
levels that are not substantial and thus would not raise
problems of safety or soundness or risk for affiliated
member banks.
In a number of cases over the years, the Board has
developed a general guideline that a company would
not be primarily or substantially engaged in activities
covered by section 32 where those activities accounted for no more than 10 percent of the company's total
revenue and the company's volume of such activities
was not large in absolute terms or relative to other
market participants.42 If the firm was a leading securities underwriter with a large absolute volume of ineligible securities activities, however, the Board has
found the firm to be primarily engaged in section 32
activities where the revenue the firm derived from
these activities was between 5 and 10 percent of its
total gross revenue.43 Generally, where gross revenues
from ineligible activity were less than 5 percent, the
Board has not found the securities company to be
primarily or substantially engaged in ineligible activity.44
42. Letter, dated December 14, 1981, reprinted in F.R.R.S. 1 3939, and Board letter dated May 6, 1953.
43. Id. and, e.g., Board letters, dated May 12 and June 22, 1954
May 22, 1959, reprinted in F.R.R.S. 11 3-896.
44. E.g., Board letters, dated May 5, 1934 and May 7, 1962.
All
In applying these principles to the present proposals, the Board notes that the volume of ineligible
securities activity projected by Applicants could be
large in absolute terms, and under their projections
Applicants could be a substantial factor in the markets
they propose to enter. Accordingly, the Board believes that the lower 5 percent end of the permissible
range of activity under section 20 is the appropriate
quantitative level for applying the gross revenue and
market share tests to these proposals. The Board
recognizes that this 5 percent threshold for gross
income and market share represents a conservative
approach to measuring the level of ineligible underwriting and dealing within the framework established
by this Order and the Board's prior decisions under
section 32. The Board will review this determination,
within one year, after Applicants have gained some
experience in operating the proposed underwriting
subsidiaries, to assess whether somewhat higher levels
of activity up to 10 percent may be permissible consistent with the Board's interpretation of the term engaged principally as encompassing any activity that is
substantial.
Applicants contend that the activity permitted under
their proposed 10 to 15 percent of activity tests would
not be substantial in the context of a government
securities subsidiary that would derive 85 to 90 percent
or more of activity from permissible activities under
their standards for measurement. However, as noted
above, the Board has carefully considered the standards and quantitative measures for determining
whether an affiliate would be "engaged principally"
under the provisions of section 20. The quantitative
standards proposed by Applicants exceed the levels
which the Board believes represent an appropriate
interpretation of the provisions of section 20 that is
consistent with both its language and the intention of
Congress. In the Board's judgment, at the levels
proposed by Applicants, the proposed affiliates would
be clearly engaged principally in underwriting and
dealing in securities.
In sum, the Board will not consider the underwriting
subsidiaries to be engaged principally in ineligible
underwriting and dealing activities under section 20 of
the Glass-Steagall Act under the conditions established below for the conduct of the activity under the
BHC Act, if
(1) the underwriting subsidiaries derive no more
than 5 percent of their total gross revenues from
ineligible underwriting and dealing activity on average over any two year period,
(2) their underwriting activities in connection with
each particular type of ineligible security do not
account for more than 5 percent of the total amount
of that type of security underwritten domestically by
486
Federal Reserve Bulletin • June 1987
all firms (or, in the case of commercial paper, the
average amount of dealer-placed commercial paper
outstanding) during the previous calendar year, and
(3) they limit the amount of each particular type of
security held for dealing so as not to exceed the
amount of the underwriting market share limitation
described in paragraph (2) above.45
4. Proposed Interlocks Between Applicants' and
Their Underwriting Subsidiaries are not
Prohibited by Section 32.
Applicants anticipate that one or more officers of the
bank holding company will serve as officers or directors of the subsidiaries that would conduct the proposed limited underwriting and dealing activity. The
Board has previously applied the restrictions of section 32 to interlocking relationships between a securities firm and a bank holding company with one or more
member bank subsidiaries. 12 C.F.R. §218.114;
F.R.R.S. 11 3-912. See also F.R.R.S. 1f 3-948. The
Board, however, has permitted an interlocking relationship between a securities firm and a bank holding
company that mainly conducted nonbanking activities.
F.R.R.S. 11 3-889.
In this case, the proposed interlocking relationships
between the parent bank holding company and the
underwriting subsidiaries would be permissible under
section 32 because, even if it is assumed that the
restrictions of section 32 should be applied to the
parent holding company, under the limitations discussed above on the level of ineligible activity permitted to the subsidiaries, they would not be "substantially" or "primarily engaged" in ineligible activity.
None of the Applicants has proposed that an officer,
director, or employee of its bank affiliates serve as an
officer, director, or employee of the underwriting
subsidiaries and, as discussed in Part III below, the
Board has relied upon the absence of such interlocking
relationships in its evaluation of the applications under
the proper incident to banking standard of section
4(c) (8) of the BHC Act.
45. J.P. Morgan proposed to measure the amount of ineligible
activity it would conduct through JPMS and JPMMF on a consolidated basis. Under that proposal, the total gross income from eligible and
ineligible activity of both entities would be combined for purposes of
the section 20 "engaged principally" limitation. The Board does not
believe that section 20 permits two or more affiliates to combine their
ineligible and eligible activity in order to determine whether as a whole
the affiliates would be "engaged principally." By its terms, section 20
applies to each individual company affiliated with a member bank.
Thus, JPMS and JPMMF each must adhere to the section 20 limitation.
Part III. Bank Holding Company Act Analysis
In every application under section 4(c)(8) of the Bank
Holding Company Act, the Board must find that the
proposed activity is "so closely related to banking . . .
as to be a proper incident thereto." This statutory
standard requires that two separate tests be met for an
activity to be permissible for a bank holding company.
First, the Board must determine that the activity is, as
a general matter, "closely related to banking." Second, the Board must find in a particular case that the
performance of the activity by the applicant bank
holding company may reasonably be expected to produce public benefits that outweigh possible adverse
effects.46
Based on guidelines established in National Courier
Association v. Board of Governors of the Federal
Reserve System, 516 F.2d 1229, 1237 (D.C. Cir. 1975),
a particular activity may be found to meet the "closely
related to banking" test if it is demonstrated that:
(1) banks generally have in fact provided the proposed activity;
(2) banks generally provide services that are operationally or functionally so similar to the proposed
activity so as to equip them particularly well to
provide the proposed activity; or
(3) banks generally provide services that are so
integrally related to the proposed activity as to
require their provision in a specialized form.
The National Courier guidelines are not, however,
the exclusive basis for finding a proposed activity
closely related to banking,47 and the Board may consider any other basis that may demonstrate that the
activity has a reasonable or close relationship to
banking. 49 Federal Register 806 (1984). The U.S.
Supreme Court stated in Schwab that the use of these
factors by the Board in determining the closely-relatedness of an activity is reasonable and within the
Board's discretion. 468 U.S. at 210 n.5, 214.
As a threshold matter, Citicorp and certain other
commenters argue that the fact that these proposals
are consistent with section 20 represents a Congressional determination that they are permissible for bank
holding companies, a determination that may not be
limited or revised under section 4(c)(8). This argument
is premised on the Supreme Court's observation in
ICl II that the BHC Act does not impose restrictions
on the securities activities of banking institutions that
are more severe than those in the Glass-Steagall Act.
450 U.S. at 60-61 n.26.
46. See Schwab, 468 U.S. at 210; ICIII, 450 U.S. at 57 n.22.
47. 516 F.2d at 1237.
Legal Developments
In the Board's view, however, the restrictions of the
Glass-Steagall Act on the securities activities of member bank affiliates and the closely related to banking
and proper incident to banking tests in section 4(c)(8)
are by their terms independent provisions, each of
which must be satisfied before a bank holding company may engage in securities activities. The ICI II
opinion, the Board believes, supports this analysis.
In ICI II, the lower court had ruled that the BHC
Act was intended to prohibit the Board from approving
any securities activities for bank holding companies,
even if they were permissible under the Glass-Steagall
Act. The Supreme Court rejected this ruling, finding
no implicit prohibition in section 4(c)(8) that is more
restrictive than the Glass-Steagall Act.48 However,
the Court's opinion did not address the relevant issue
here—the scope of the Board's discretion under section 4(c)(8) to deny or place prudential limitations on
securities activities that, while consistent with the
Glass-Steagall Act, may not comply with the separate
requirements of the BHC Act. Moreover, Applicants
have produced no evidence in the legislative history
that the Board was not to exercise its discretion under
the closely related to banking and public benefits tests
of section 4(c)(8) regarding specific proposals merely
because they involve securities activities that are not
unlawful under the Glass-Steagall Act.
A. Closely Related to Banking Analysis.
After carefully considering the facts of record, the
Board concludes that underwriting and dealing in
commercial paper, municipal revenue bonds and 1-4
family mortgage-related securities, under the limitations discussed in this Order, are closely related to
banking, because banks provide services that are so
operationally and functionally similar to the proposed
services that banking organizations are particularly
well equipped to provide such services. As the Board
has previously noted, the proposed activities are a
natural extension of activities currently conducted by
banks, involving little additional risk or new conflicts
of interest under the framework established in this
Order, and potentially yielding significant public bene-
48. 450 U.S. at 77. The Court stated "Congress did not intend the
BHC Act to limit the Board's discretion to approve securities-related
activities as closely related to banking beyond the prohibitions already
contained in the Glass-Steagall Act." (emphasis added). The Board
notes that the legislative history to which the Court refers to support
this conclusion indicates that the BHC Act was not intended to
liberalize the Glass-Steagall Act. That legislative history does not
indicate, as Applicants claim, that activities that do not violate the
Glass-Steagall Act are exempt from scrutiny under the standards of
the BHC Act. Under the plain terms of the BHC Act, such activities
clearly are not permissible for bank holding companies unless they
pass muster under the standards of section 4(c)(8) of the Act.
All
fits in the form of increased competition and convenience and lower cost.49 On this basis, the Board has
urged the Congress to authorize these activities for
bank holding companies as part of a Congressional
reevaluation of the powers of banking organizations
generally. This view is not held by the Board alone.
The other federal banking agencies as well as the U.S.
Departments of Treasury and Justice have also supported these activities.50
Accordingly, and for the reasons set forth in the
Chase decision, the Board believes that underwriting
and dealing in commercial paper is closely related to
banking within the meaning of section 4(c)(8) of the
BHC Act. For the reasons set out below, the Board
also concludes that underwriting and dealing in the
proposed municipal revenue bonds and 1-4 family
mortgage-related securities is closely related to banking.51
Member banks are actively engaged pursuant to
specific legislative authorization in a variety of underwriting and dealing activities that are closely analogous to the proposed municipal revenue bond and
mortgage-related securities underwriting activities.
Section 16 of the Glass-Steagall Act authorizes member banks to underwrite and deal in certain municipal
revenue bonds (generally, those issued for housing,
university or dormitory purposes), as well as municipal general obligation bonds ("GOs").52 12 U.S.C. 24
Seventh. Bank-eligible municipal revenue bonds accounted for between 31 and 52 percent of all municipal
revenue bonds issued during the years 1980 to 1984,
with banks accounting for between 19 to 26 percent of
49. See, e.g., Financial Restructuring: The Road Ahead: Hearings
on H.R. 5342, 4506 and 3537 Before the Subcomm. on Telecommunications, Consumer Protection, and Finance of the House Comm. on
Energy and Commerce, 98th Cong., 2d Sess. 91 (1984) (Statement by
Paul A. Volcker, Chairman, Board of Governors of the Federal
Reserve System), reprinted in 70 FEDERAL RESERVE BULLETIN 312,
316 (1984); Statement of Chairman Volcker Before the Subcomm. on
Commerce, Consumer & Monetary Affairs of the House Comm. on
Government Operations (June 11, 1986), reprinted in 72 FEDERAL
RESERVE BULLETIN 541, 549 (1986). See also S. Rep. No. 560, 98th
Cong. 2d Sess. 15-16 (1984).
50. Competitive Equity in the Financial Services Industry: Hearings on S.2181 Before the Senate Comm. on Banking, Housing, and
Urban Affairs ("Hearings on S.2181"), 98th Cong., 2d Sess. 1221,
1274, 1550, 1714 (1984) (Statements of C. Todd Conover, Comptroller
of the Currency, William M. Isaac, Chairman, F.D.I.C., Douglas H.
Ginsburg, Deputy Assistant Attorney General, U.S. Department of
Justice, and Donald T. Regan, Secretary of the Treasury, respectively).
51. While Applicants have applied to underwrite and deal in
mortgage-related securities generally, the Board believes that,at least
on the current record, only underwriting and dealing in mortgagerelated securities backed by 1-4 family residential mortgages will
avoid significant risks and other adverse effects, as explained below.
52. GOs represent a general debt obligation of a municipality, while
a revenue bond represents a charge against the revenues of a facility
or project financed by the bonds.
488
Federal Reserve Bulletin • June 1987
the underwriting market.53 Banks have also historically underwritten a major share of new general obligation bond issues.54
Section 16 also authorizes member banks to underwrite and deal in mortgage-related securities that are
issued or guaranteed by federal agencies. As Congress
has recognized, banks are extensively involved in this
activity.55
In addition to the fact that banks already underwrite
and deal in certain types of municipal revenue bonds
and mortgage-related securities, banks have developed extensive expertise in underwriting and dealing
in U.S. government and agency securities and are
among the nation's leading underwriters of these securities. For example, banks or bank affiliates constitute
17 of the 40 primary dealers in the government securities market and are among its largest participants.56 In
addition, banks are among the nation's largest underwriters of general obligation bonds.
In the Board's view, definite functional and operational similarities exist between the securities that
member banks may underwrite and deal in and the
municipal revenue and mortgage-related securities
proposed by Applicants for their underwriting subsidiaries. The techniques involved in underwriting and
dealing in these bank-eligible securities are the same,
or substantially the same, as those that would be
involved in conducting the proposed municipal revenue and mortgage-related securities activities. In each
case the underwriter must perform substantially identical functions of credit evaluation and analysis, negotiation or bidding, distribution, and dealing. For example, investment banking firms that underwrite and deal
in municipal revenue bonds generally utilize the same
personnel and marketing techniques for their activity
in general obligation bonds.57
The Board also notes that the evaluation and credit
analysis that would be performed in connection with
underwriting municipal revenue bonds and mortgage-
53. Bank Eligible Revenue Bonds Compared to Total Revenue
Bonds (Exhibit E) and Bank-Eligible Revenue Bonds Managed By
Banks (Exhibit F), Citicorp Application.
54. Dealer Bank Ass'n Comment, Exhibit III, Tables lib and IHb
(July 22, 1985); Citicorp Application, p. 20, citing data obtained from
Securities Data Corporation.
55. See S. Rep. No. 293, 98th Cong., 1st Sess. (1983).
56. For example, in 1984, banks accounted for nearly 30 percent of
all U.S. government obligations underwritten. Department of Treasury, Treasury Bulletin, Fall 1984, Table PD04.
57. R. Plotkin, What Meaning Does Glass-Steagall Have For
Today's Financial World?, 95 Banking L.J. 404, 412 (1978).
Municipal securities dealers and brokers, including bank dealers,
are subject to the same regulatory system developed by the Municipal
Securities Rulemaking Board under Section 15B of the Securities
Exchange Act. 15 U.S.C. § 78o-4.
related securities is functionally and operationally
similar to the evaluation and credit analysis banks
conduct when making loans to customers and in
connection with their investment advisory and trust
activities. In addition, Applicants' role in advising
issuers in structuring an offering and contacting potential purchasers is functionally and operationally similar
to a bank's role in advising customers and arranging
loan participations and syndications.
The Board also believes that underwriting and dealing in these securities is functionally and operationally
similar to the role of a bank in underwriting and
dealing in money market instruments, establishing
mortgage pools and evaluating the underlying risks of
the constituent elements in a pool, advising municipalities and other issuers and assisting them in the private
placement of their notes, and generally assessing credit and interest rate risk.58
Protestants contend that there is a major difference
between underwriting activities permitted member
banks under the Glass-Steagall Act and those proposed by Applicants, because bank-eligible securities
are generally offered to dealers through competitive
bidding while the price of most revenue bonds and
other securities involved in Applicants' proposals is
usually negotiated. Given the wide commercial bank
participation in the underwriting of and dealing in U.S.
government, municipal and other bank-eligible securities as a whole, the Board believes that banks are
sufficiently familiar with negotiating processes as well
as those involved in competitive bidding. The Board
also notes that banks are involved in the negotiating
process through their private placement activities for
ineligible securities, including ineligible municipal revenue bonds, and their securities activities overseas.59
Moreover, in the case of municipal securities specifically, this distinction is not significant because many
revenue issues are offered by public bid, and the
number of general obligations bonds sold by negotiation has been increasing.60
With respect to mortgage-related securities, the
Board notes that the operations and functions (including credit and cash flow analysis, bidding process,
distribution and dealer activities) involved in underwriting and dealing in bank-eligible mortgage-related
securities and 1-4 family mortgage-backed securities
58. See Hearings on S.2181 at 1612 (Statement of Paul A. Volcker).
59. See Comptroller of the Currency, Federal Deposit Insurance
Company, and Federal Reserve Board, Commercial Bank Private
Placement Activities (1978); 12 C.F.R. 211.5(d)(13) (underwriting,
distributing, and dealing in debt and equity securities outside the
United States).
60. F. Fabozzi, S. Feldstein, I. Pollack, F. Zarb, The Municipal
Bond Handbook, Volume One 172-73 (1983).
Legal Developments
are virtually identical, regardless of whether a federal
or private entity issues or guarantees the securities
involved.61 Because the mortgage-backed securities
proposed for the subsidiaries are not directly issued or
guaranteed by the federal government or governmentsponsored agencies, the subsidiaries will be required
to conduct a more extensive credit analysis and evaluation of issuers and underlying mortgages than in
underwriting bank-eligible mortgage-related securities. Given the experience of Applicants and banking
organizations generally in evaluating credit in lending
and investment functions62 as well as in permissible
underwriting activities where credit analyses are commonly made, for example, in connection with underwriting general obligations of States and municipalities, the Board does not believe this difference
between bank-eligible mortgage-related securities and
Applicants' proposed activity is significant. In this
regard, the Board notes that banks underwrite substantial amounts of housing-related municipal bonds,63
an activity that involves substantially the same credit
analysis function as will be required for Applicants'
mortgage-related securities.
Based on the foregoing analysis, the Board concludes that banking organizations, including Applicants, perform services that are functionally and operationally similar to the proposed activities of
underwriting and dealing in certain municipal revenue
bonds and 1-4 family mortgage-related securities and
that they would be particularly well equipped to provide these underwriting and dealing services.
Citicorp and Bankers Trust also propose to underwrite and deal in CRRs. Although they note certain
similarities between CRRs and mortgage-related securities and between banking activities involving the
underlying loan obligations represented by those securities, the Board does not believe that the record
before the Board at the present time provides a
sufficient basis for it to make the formal finding
required by the BHC Act that underwriting and dealing in CRRs is closely related to banking and a proper
incident thereto. The market for CRRs is relatively
new and untested compared to the market for the 1-4
family mortgage-related securities and municipal revenue bonds involved in these proposals. As Citicorp
notes, the securitization of consumer loans and receivables is now in its early stages, and for that reason, "it
is impossible to predict with certainty the direction in
61. See generally C. Edson and B. Jacobs, Secondary Mortgage
Market Guide (1985).
62. See, e.g., 12 C.F.R. 1.5, 1.8; M. Stigum, The Money Market
657 (2d ed. 1983).
63. See S. Rep. No. 293, 98th Cong. 1st Sess. 9 (1983) ("National
banks . . . are currently intimately involved in mortgage finance
including mortgage revenue bonds and the federal mortgage market
agencies.")
All
which this activity will evolve." 64 The Board, however, will reconsider this matter within the next sixty
days on the basis of fuller submissions by Applicants
regarding the types of assets that will be securitized,
the manner in which this will be accomplished, and
other matters bearing on risk. This will enable the
Board to examine appropriately the risks involved and
whether any safeguards are necessary to meet the
requirements of the BHC Act.
B. Proper Incident to Banking Analysis.
In order to approve an application to engage in a
nonbanking activity under section 4(c)(8) of the Act,
the Board must determine that a proposed activity is a
"proper incident" to banking by determining whether
the performance of the activity by the applicant bank
holding company may reasonably be expected to produce public benefits, such as greater convenience,
increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking
practices. 12 U.S.C. § 1843(c)(8). Based upon the
facts of record and for the reasons and subject to the
limitations set out below, the Board finds that the
proposed underwriting and dealing activities (other
than for CRRs) may reasonably be expected to result
in substantial public benefits that outweigh possible
adverse effects.
/ . Public Benefits.
The Board believes that the expansion of Applicants'
activities to include underwriting and dealing in municipal revenue bonds, 1-4 family mortgage-related securities, and commercial paper should result in substantial public benefits in the form of increased
competition, greater convenience and gains in efficiency.
Increased Competition. The Board has previously
recognized that the de novo expansion by a bank
holding company into nonbanking activities generally
may be expected to be pro-competitive and result in
increased competition.65 These proposals represent a
64. Letter, dated April 19, 1985, to Federal Reserve Bank of New
York, 8-9.
65. See, e.g., section 225.24 of Regulation Y (12 C.F.R. 225.24); 49
Federal Register 814 (1984). Congress has also recognized that public
benefits of increased competition and innovation may be anticipated
through de novo expansion by bank holding companies into nonbanking activities. H. R. Rep. No. 1747, 91st Cong. 2d Sess. 16-17 (1970);
S. Rep. No. 1084, 91st Cong. 2d Sess. 15-16 (1970); Alabama Ass'n of
Insurance Agents v. Board of Governors of the Federal Reserve
System, 533 F.2d 224, 249 (5th Cir. 1976), cert, denied, 435 U.S. 904
(1978).
490
Federal Reserve Bulletin • June 1987
de novo expansion by Applicants into new segments of
the markets for commercial paper, municipal revenue
and 1-4 family mortgage-related securities, and thus
may be expected to increase competition. The Board
concluded in the Chase case that the expansion of a
bank holding company's activities in the commercial
paper market, which is highly concentrated, would
foster competition.
Concentration ratios for those segments of the mortgage-related and municipal securities markets in which
banking organizations have not participated are significantly higher than those for the bank-eligible segments
of these markets. The introduction of new competitors
into these markets may be expected to reduce concentration levels and, correspondingly, to reduce financing costs, underwriting spreads, and increase the availability of services to issuers.66 Increased competition
may be expected to benefit smaller and infrequent
issuers, such as rural communities, which currently
have relatively few choices among underwriters.
Benefits in the form of reduced financing costs and
increased availability may be expected to accrue as
well to the original borrowers under mortgage-related
and municipal securities—homeowners and public entities—whose ability to borrow is directly related to
the secondary market for their liabilities. Increased
competition may also foster innovation among participants in these markets.
In this regard, the report of the Senate Committee
on Banking, Housing and Urban Affairs on the proposed Financial Services Competitive Equity Act (S.
2851, 98th Cong., 2d Sess. (1984)) concluded that
authorization for bank holding companies to underwrite municipal revenue bonds "will result in significant benefits to governmental issuers of these obligations and thus to their residents and taxpayers who
must ultimately bear the cost of public borrowing."67
The Board also notes that associations of state and
municipal governmental organizations, including the
National Governors Association and the National
League of Cities, support bank holding company entry
into municipal revenue bond underwriting in order "to
increase competition for underwriting municipal revenue bonds and in view of the potential for this initiative
to reduce significantly the cost of revenue financ-
66. See U.S. Department of the Treasury, Public Policy Aspects of
Bank Securities Activities 34 (1975); Bank Holding Company Legislation and Related Issues: Hearings on H.R. 2255, 2747, 2856 and 4004
Before the Subcomm. on Financial Institutions Supervision, Regulation and Insurance of the House Comm. on Banking, Finance and
Urban Affairs, 96th Cong., 1st Sess. 1299-1302 (1979) (statement by J.
Charles Partee, Member, Board of Governors of the Federal Reserve
System); S. Rep. No. 560, 98th Cong., 2d Sess. 15-16 (1984).
67. S. Rep. No. 560, 98th Cong., 2d Sess. 16 (1984).
ing."68 National trade associations of home builders
and realtors support bank holding company entry into
the mortgage-backed securities underwriting business
in order to increase competition.69
Greater Convenience and Increased Efficiency. The
Board also finds that approval would result in public
benefits in the form of greater convenience to customers and increased efficiency in the provision of the
proposed services. As the Board has previously concluded, underwriting and dealing in commercial paper
by a bank holding company would produce these
public benefits.
Bank holding companies would be able to offer their
borrowing customers an additional service and means
of financing that may be more economical for the
borrower. In addition, Applicants would be able to
offer commercial paper to the same institutional investor customers that currently purchase other money
market instruments, such as short-term U.S. government securities, certificates of deposit and bankers'
acceptances, thereby increasing services to buyers of
money market instruments and leading to greater
efficiency in the market for short-term debt.
Issuer-customers of Applicants' existing underwriting services in municipal and mortgage-related securities would no longer be restricted to the bank-eligible
segments of the markets for those securities when
doing business with these bank holding companies.
The increase in the number of dealers in these securities would also be likely to enhance liquidity in the
markets for these securities, thereby increasing market efficiency.
More efficient operation of the markets for the
proposed securities would benefit investors and issuers who are customers of Applicants and other market
participants by narrowing the underwriter's and dealer's spread on sales transactions and making it easier
to match buyers and sellers of the proposed securities.
2. Adverse Effects.
In the Board's December 1986 decision permitting
Bankers Trust to place commercial paper as agent, the
Board adopted a framework which had been put in
place by Bankers Trust in order to address the possibility of adverse effects, such as unsound banking
practices or conflicts of interest, that the Board must
68. Letter from the National Governors Association to Jake Garn,
Chairman, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate (June 12, 1984), quoted in S. Rep. No. 560, 98th Cong., 2d
Sess. 16 (1984); letter to the Board from the National League of Cities
(July 19, 1985) (commenting on Citicorp application).
69. Letters to the Board from the National Association of Home
Builders (July 22, 1985) and from the National Association of Realtors
(July 18, 1985) (commenting on Citicorp application).
Legal Developments
consider under the "public benefits" test in section
4(c)(8).70 When the Board ordered a hearing on these
applications, the Board requested specific comment
on whether the Bankers Trust framework or other
limitations that the Board was considering and that
were listed in the Hearing Order should be adopted
with respect to these proposals.
Comments of Interested Persons. The protestants
believe that significant adverse effects are presented
by the proposal, including potential conflicts of interest caused by the underwriting subsidiaries' "salesman's stake" and promotional incentives in the securities it underwrites or deals in, loss of public confidence
in the bank if the affiliate experiences losses on its
securities activities, risk to the bank holding company
as a result of possible underwriting losses by the
affiliate, undue concentration of resources resulting
from greater domination of financial markets by banking organizations, and unfair competition, such as the
affiliate obtaining funding from low cost bank deposits
or access to confidential customer information held by
the bank.
The protestants and several other commenters also
expressed doubts as to the effectiveness of the suggested conditions and limitations to address these
concerns. The SIA believes conditions such as those
listed in the Board's Hearing Order would be inadequate to address all possible concerns. Salomon
Brothers expressed the view that where the same or
affiliated entities are both lenders and underwriters, no
safeguards would be fully adequate to prevent abuses.
Other protestants believe that restrictions must also be
directed at establishing a "level playing field" for
banking organizations and investment banking firms
engaged in the proposed activities.
Applicants and certain other commenters contend
no significant adverse effects would arise under these
limited proposals involving securities with which bank
holding companies have experience, particularly in
light of the voluntary controls Applicants would impose on themselves to limit risk and prevent conflicts
and the applicable requirements of securities laws and
regulations. A few commenters believe the Board
should establish further conditions to address risk or
conflicts and to insulate the underwriting subsidiaries
from their affiliated banks, such as a capital adequacy
requirement for the underwriting subsidiary and limitations on transactions between the subsidiary and
bank affiliates.
Applicants and certain other banking organizations
objected to a number of the conditions listed in the
70. The Board adopted a similar set of limitations to address
possible adverse effects in approving the application by Chase to
underwrite and deal in commercial paper.
All
Board's Hearing Order. In general, Applicants believe
that any conflicts presented by the proposals are
similar to the conflicts already successfully handled by
bank holding companies and investment banking firms
and that existing regulation by the SEC of brokerdealers, rules of the National Association of Securities
Dealers ("NASD") and the Municipal Securities Rulemaking Board ("MSRB") applicable to broker-dealers
trading in the proposed securities, and fiduciary requirements under common law and banking regulation
are adequate to address the Board's concerns. They
commented that a number of the conditions being
considered by the Board to address possible conflicts
of interest could interfere with their ability to compete
or would be unnecessary or confusing in light of
existing regulation.
Based on the record of the applications, and after
careful consideration of the comments of interested
parties, the Board finds that the potential for conflicts
of interest, unsound banking practices, as well as other
adverse effects are not likely to result from these
proposals under the conditions and limitations established by the Board in this Order for the conduct of the
proposed activities as well as the various statutory
protections Congress has provided over the years to
regulate the conduct of these activities. As discussed
below, the Board has carefully considered the comments relating to the need for specific limitations and
has concluded that, although existing regulation addresses certain of the concerns of the Board, there are
areas in which the existing regulatory framework has
not been demonstrated on the present record to be
effective where commercial banking and investment
banking organizations are affiliated. The Board notes
that the BHC Act addresses broader concerns relating
to safety and soundness and maintenance of public
confidence in banking organizations and impartiality in
the credit-granting process, concerns that are not
addressed by the statutory and regulatory provisions
relating to investor protection to which Applicants
refer. Accordingly, the Board has determined that this
existing regulatory framework needs to be supplemented through additional limitations drawn from the
list on which the Board sought comments at the
hearing in order to address issues peculiar to the
affiliation of ineligible securities underwriters and
banking organizations.
General Considerations. At the outset, the Board
notes that there are several general considerations that
support a finding that these proposals as limited by
Applicants and in this Order would not produce significant adverse effects. First, a great many of the adverse
effects the Board is charged with considering under the
public benefits test of section 4(c)(8), such as unsound
banking practices and conflicts of interest, relate to
492
Federal Reserve Bulletin • June 1987
potential damage to the holding company's subsidiary
bank that might result from the conduct of proposed
nonbanking activity. Accordingly, while a bank cannot
be completely insulated from the fortunes of an affiliated nonbanking subsidiary, the Board believes that the
greater the extent to which the nonbanking activity of
a nonbank subsidiary of a holding company is insulated, both structurally and operationally, from the holding company's subsidiary banks, the less likely it is
that adverse effects related to the conduct of the
nonbanking activity will affect affiliated banks.71
In determining that adverse effects are not likely in
these cases, the Board places substantial reliance on
the fact that the proposed underwriting and dealing
activities would be separated from the activities of
Applicants' subsidiary banks, both through separate
incorporation and through financial and operational
limitations, explained below, that are specifically designed to ensure that all aspects of the proposed
securities activities are insulated in operation from
subsidiary depository institutions. For example, the
proposed activities will not be conducted by Applicants' subsidiary banks or by the banks' personnel.
Each Applicant has agreed that its underwriting subsidiary will have no common officers, directors, or
employees with Applicant's subsidiary banks. The
Board believes that the prohibition on personnel interlocks should extend to any thrift subsidiary, as well, in
order to assure that all federally-insured depositors are
protected as much as possible. In addition, the Board
requires that affiliated banks may not act as agents for
or engage in marketing activities on behalf of the
underwriting subsidiaries. The underwriting subsidiaries should also have offices separate from any affiliated
bank.72
Moreover, transactions between the affiliated banks
and the underwriting subsidiaries will be strictly limited, as discussed below. The underwriting subsidiaries
will also be subject to a number of disclosure requirements designed to ensure that the public will not
confuse the underwriting subsidiaries with their affiliated banks, including a requirement that the underwriting subsidiaries provide their customers with a
special disclosure statement describing the difference
between them and their affiliated banks. Limitations
71. Bankers Trust, 73 FEDERAL RESERVE BULLETIN at 149, quoting
National Westminster
Bank, PLC, 72 FEDERAL RESERVE BULLETIN
584, 588 (1986), petition for review pending. No. 86-1412, (D.C. Cir.).
72. The Board notes that the FDIC has recently proposed to amend
its regulations governing the securities activities of affiliates of nonmember banks to provide that if the bank conducts business in the
same location as the affiliate the bank must use physically separate
offices or office space from that used by the affiliate. Such offices
would have to be clearly and prominently identified so as to distinguish the bank from the affiliate. 52 Federal Register 11,492, 11,498
(April 9, 1987).
are also imposed preventing self-dealing in transactions between these subsidiaries and their affiliated
banks acting in a fiduciary capacity. The Board also
requires that the underwriting subsidiaries' access to
customer records of the affiliated banks be limited and
that the subsidiaries' affiliates be restricted in extending credit to customers for the purchase of securities
from the subsidiaries during the course of the underwriting.
Under limitations imposed by the Board, the underwriting subsidiaries would be capitalized on a standalone basis, that is, each subsidiary must be capitalized independently of the parent company and its
subsidiary banks in accordance with industry norms.
Second, the limited expansion of activity proposed
in the applications and the fact that the subsidiaries
would remain fundamentally government securities
dealers further support the findings that the specific
adverse effects cited by the protestants are not likely
to be a significant product of these proposals. The
activity of each underwriting subsidiary with regard to
ineligible securities would be limited in terms of income and market share so that they would not be
substantial in the context of the subsidiary's overall
operations and, moreover, each subsidiary would underwrite only a limited number of securities that are
closely analogous, if not in most respects identical, to
securities banks are authorized to underwrite and deal
in or to commercial banking products. The fundamental nature of these subsidiaries would not be changed.
They would remain government securities dealers and
would in no sense be engaged in a full investment
banking business.
Unsound Banking Practices.The Board has considered the extent to which these proposals would result
in unsound banking practices or excessive financial
risk to Applicants or their subsidiary banks through
the underwriting subsidiaries' activities or through
imprudent financial transactions with the underwriting
subsidiaries or made for their benefit. In addition, the
Board has considered whether the public association
and economic union between the underwriting subsidiaries and their banking affiliates could lead to a loss of
public confidence in Applicants' subsidiary banks if
losses are sustained by the underwriting subsidiaries
or by persons dealing with those subsidiaries.
Risk of Loss. Protestants allege that the proposals
will result in unsound banking practices because the
underwriting subsidiaries, acting as principals with
respect to ineligible securities, could lose their own
funds as a result of these operations. Such losses,
protestants allege, could damage public confidence in
affiliated banks and the parent company's ability to
raise funds to provide to subsidiary banks.
The Board finds, however, that the risk of loss to
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Applicants or their underwriting subsidiaries as a
result of these proposals is not excessive or inconsistent with prudent banking standards. As a preliminary
matter, the Board notes that Applicants have applied
to conduct a restricted form of underwriting and
dealing that would be limited to securities that Congress has specifically authorized member banks to
hold for their own account in the exercise of prudent
banking judgment.73 In fact, Congress recently authorized national banks to invest without limitation in
private mortgage-related securities subject to regulations of the Comptroller of the Currency74 on the basis
that these securities do not jeopardize the safety and
soundness of depository institutions because of the
low-risk characteristics of the investment, i.e., "a pool
of many mortgages with relatively low default risk as
well as mortgage insurance on both the individual
mortgages and the pool."75 Thus, to the extent the
underwriting subsidiaries may hold ineligible securities for their own account as a result of these proposals, they will not be subject to any excessive or
unmanageable risk of loss.
The Board, however, recognizes that in addition to
credit risk, an underwriter and market maker also
assume the risk of adverse changes in the market price
of the securities involved. In addition, an underwriter
or market maker may hold at any one time a substantially greater proportion of securities of a particular
issuer than would be likely in the case of investors and
must generally be prepared to provide liquidity for an
issue. Nevertheless, the Board believes that the limited extension of activities proposed for the underwriting subsidiaries, which is substantially similar to operations safely and soundly being conducted presently
by member banks, would not result in significant or
73. A bank may exercise its prudent banking judgment to invest in
any amount of the proposed mortgage-related securities if it is
satisfied with the creditworthiness of the obligor. 12 U.S.C. § 24
Seventh; 12 C.F.R. 1.3 and 1.4. In the exercise of its prudent banking
judgment, a bank may invest in the proposed municipal revenue bonds
if it believes the obligor is creditworthy and the security is marketable.
12 U.S.C. § 24 Seventh; 12 C.F.R. 1.3 and 1.5. Banks have traditionally purchased commercial paper for their own account. See Bankers
Trust I, 468 U.S. at 158 n . l l .
74. Pub. L. No. 98-440, 98 Stat. 1691 (Oct. 3, 1984), amending
12 U.S.C. § 24.
75. S. Rep. No. 293, 98th Cong., 1st Sess. 6 (1983). Statistics also
indicate that the performance of mortgage-related securities based on
conventional (i.e., non-federally insured) mortgages has been comparable to those issued by or backed by the Federal agencies and/or
Federal Housing Administration ("FHA") insurance. M. Waldman
and S. Guterman, Mortgage Securities: 1972-84, Historical Performance and Implications for Investors (Salomon Brothers Inc., March
1985).
All
excessive risk.76 The risks associated with underwriting and dealing in any revenue bond, whether eligible
or not, are generally a function of the price volatility of
the security, as well as the cash flow and viability of
the project being financed. These risks are not, in the
Board's view, significantly greater for ineligible revenue bonds than for eligible bonds, given the very close
functional similarity between the two kinds of obligations.77 The same analysis applies to the proposed
underwriting of ineligible mortgage-backed securities,
whose risk characteristics are only slightly different
from those of certain kinds of eligible mortgagebacked securities.
Finally, as the Board recognized in Chase, underwriting and dealing in commercial paper is an activity
that is similar to loan syndication and other similar
operations presently conducted safely and soundly by
member banks and involves a security that member
banks may invest in as principal.78
The risk of underwriting and dealing in these securities is further mitigated by Applicants' experience in
performing key functions that are similar to those
performed by an underwriter or dealer in these types
of debt securities, including credit analysis, evaluation
of interest rate risk, financial planning, advice to
issuers and assisting them in the private placement of
their notes, and risk reduction techniques, such as
hedging, diversification and other precautions applicable to the proposed activities.
Moreover, the Board notes that the underwriting
subsidiaries will be subject to regulation under the
federal securities laws. In particular, the subsidiaries
will register with the SEC as broker-dealers and will be
subject to financial reporting, anti-fraud and financial
76. See S. Rep. No. 560, 98th Cong., 2d Sess 16 (1984).
The record does not show that there has been any particular safety
and soundness or conflict of interest problems or abuses in the case of
banks underwriting municipal general obligation bonds. See Moratorium Legislation and Financial Institutions Deregulation: Hearings
Before the Senate Comm. on Banking, Housing and Urban Affairs,
98th Cong., 1st Sess. 192 (1983) (statement of Paul A. Volcker).
77. In some cases, ineligible revenue bonds have higher ratings and
lower yields than municipal securities eligible for underwriting by
banks, including general obligation bonds. For example, according to
Moody's 1985 Municipal and Government Manual, the general obligation bonds of New York City, which are eligible for bank underwriting, were rated "Baa," whereas the ineligible revenue bonds of
related agencies, such as the New York City Transit Authority and the
Triborough Bridge and Tunnel Authority were rated "Aaa" and
"Aa," respectively.
78. In addition, the Board has previously noted that the market risk
associated with underwriting commercial paper is minimal. Before
commercial paper is issued, dealers usually survey prospective purchasers to ascertain likely interest. Thus, the probability that the
underwriter would incorrectly assess market conditions and would
accordingly be required to hold large amounts of commercial paper for
its own account is small. In any event, the short-term maturity of
commercial paper, thirty days on average, limits the potential for large
capital losses to the underwriting subsidiary.
494
Federal Reserve Bulletin • June 1987
responsibility rules applicable to broker-dealers.
These rules include the SEC's net capital rule (SEC
Rule 15c3-l), which imposes capital requirements on
broker-dealers that vary with the degree to which a
broker-dealer acts as a principal and deals with the
public. As noted below, Applicants' subsidiaries will
maintain capital in excess of these requirements. In
addition, the underwriting subsidiaries will be subject
to the rules and regulations of the NASD and the
MSRB. These requirements provide further protection
against financial loss as a result of the proposed
activities. The Board has previously recognized that in
certain areas regulation under the federal securities
laws is relevant to and may mitigate the Board's
concerns over the possibility of adverse effects under
section 4(c)(8) of the BHC Act.79
While the Board finds that the proposed activities do
not generally present concerns about undue financial
loss, the Board believes that underwriting and dealing
in certain limited types of ineligible securities could
give rise to unacceptable risk of loss, at least as
indicated by the record currently before the Board.
Therefore, the Board believes it prudent at this stage
to place conditions on the types of ineligible securities
that may be underwritten and dealt in pursuant to this
Order. While municipal revenue bonds have not generally been characterized by substantial risk, certain
new types of revenue bonds are being developed,
particularly in the area of securities used to promote
industrial development, that are riskier than traditional
municipal securities or that may be operationally and
functionally similar to corporate debt securities. Accordingly, the Board believes it appropriate to require
that the underwriting subsidiaries may not, without
further authorization from the Board, underwrite or
deal in municipal securities other than those that are
rated as investment quality (i.e., in one of the top 4
categories) by a nationally recognized rating agency.80
The Board notes that most of the types of revenue
bonds Applicants propose to underwrite have not
generally been associated with excessive risk and are
frequently backed by insurance or letters of credit
furnished by third parties, which further reduces the
risk associated with these securities.
79. E.g., BankAmerica
Corporation,
69 FEDERAL RESERVE BULLETIN 105, 113 (1983); Fidelcor, Inc., 70 FEDERAL RESERVE BULLETIN
368, 369 (1984).
80. The Board notes that the underwriting subsidiaries proposed to
underwrite "public ownership" industrial development bonds
("IDBs"), i.e., tax exempt bonds where the issuing municipality or
the state or local governmental unit on behalf of which the bonds are
issued is treated for federal income tax purposes as the sole owner of
the facility being financed. Without further approval from the Board,
the underwriting subsidiaries may underwrite or deal in only these
IDBs.
In light of recent adverse developments in the
market for mortgage-related securities involving banking and thrift organizations, the Board also believes it
appropriate to impose specific limitations on the types
of such securities offered by the underwriting subsidiaries. Accordingly, the Board believes that Applicants' proposals to underwrite and deal in ineligible
residential mortgage-related securities should be limited to obligations that are secured by or represent an
interest in 1-4 family residential mortgages until additional experience is gained in other residential mortgage-related securities. In the Board's view, there are
potentially greater risks associated with larger multifamily housing projects, which often have an element
of commercial real estate development. The Board
believes that mortgage-related securities (other than
those collateralized by 1-4 family residential mortgages) may in many instances involve significantly
different and greater risk characteristics more akin to
corporate underwriting, which the current record does
not demonstrate may be handled safely with minimum
risk within a bank holding company system. In addition, the mortgage-related securities collateralized by
1-4 family residential mortgages must be rated as
investment quality (i.e., in one of the top 4 categories)
by a nationally recognized rating agency.
Finally, to insure that the subsidiaries' commercial
paper activities remain limited to the kinds of obligations normally sold in the recognized commercial
paper market, the underwriting subsidiaries may underwrite and deal in only prime quality, short-term
obligations that are exempt from the registration requirements of the Securities Act of 1933 and that have
minimum denominations of at least $100,000.81
The Board also finds that even if the underwriting
subsidiaries were to encounter losses associated with
the conduct of the proposed activities, these losses are
not likely to represent any unwarranted risk of loss to
the parent companies or Applicants' other subsidiaries
under the various limitations and conditions discussed
in this Order, which insulate the underwriting and
dealing activities, both structurally and operationally
from Applicants' subsidiary banks. These limitations
serve to prevent the underwriting subsidiaries' functions from draining the resources of the banks or from
otherwise producing unsound banking practices.
Damage to Public Confidence. The Board also has
determined that the proposed activities are not likely
to damage public confidence in Applicants' subsidiary
81. Commercial paper that qualifies for exemption under that Act
typically is short-term (maturity of less than nine months), has large
minimum denominations, and is issued by the largest and financially
strongest corporations.
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banks. First, the Board notes that damage to the
reputation of affiliated banks is most likely to occur if
the underwriting subsidiaries or customers who buy
securities from them suffer losses. As explained
above, the risk of loss on the kinds of securities that
the underwriting subsidiary will underwrite or deal in
is carefully circumscribed. Also as explained above,
under this proposal as approved by the Board, there
are strict barriers between the underwriting subsidiaries and the affiliated banks, so that neither Applicants
nor their subsidiary banks are responsible for any
losses suffered by the underwriting subsidiaries.
Finally, in order to reduce further the association in
the public mind between the bank holding company
and its underwriting subsidiary and to prevent the
direct or indirect involvement by the holding company
in the ineligible activity approved only for the underwriting subsidiary, the Board requires that each underwriting subsidiary provide to each of its customers a
special disclosure statement describing the difference
between the underwriting subsidiary and its banking
affiliates and pointing out that the obligations of the
underwriting subsidiary are not obligations of an affiliate bank and that the bank is not responsible for
securities sold by the subsidiary. The statement should
also disclose that an affiliated bank may be a lender to
an issuer of ineligible securities underwritten or dealt
in by the subsidiary and refer the customer to relevant
disclosure documents for details. The Board notes that
the Federal Deposit Insurance Corporation has recently proposed to require such disclosure in the case of
affiliates of nonmember banks (52 Federal Register
11,492, 11,497 (April 9, 1987)) and that Citicorp has
indicated it proposes to provide a similar disclosure
statement.
In the Board's view, the underwriting subsidiary
should also disclose any material lending relationship
between the issuer and a bank or lending affiliate of
that subsidiary, as required under the securities laws,
and in every case whether the proceeds of that issue
will be used to repay outstanding indebtedness to
affiliates. In this regard, the Board notes that Citicorp,
for example, recognizes that there should be extensive
disclosure in the offering documents of any interest of
an affiliated bank related to securities underwritten by
CSI ,82
82. Morgan and Bankers Trust object to these conditions on the
grounds that similar types of disclosures are required under the federal
securities laws. In the Board's view, however, specific articulation of
these disclosure requirements as a condition of the approval of these
applications will help assure that public confidence in the subsidiary
banks will not be impaired.
All
The Board also requires that each underwriting
subsidiary and any affiliated bank or thrift institution
not engage in advertising or enter into an agreement
stating or suggesting that an affiliated bank or thrift
institution is responsible for the underwriting subsidiary's obligations. Applicants have each agreed to this
limitation and certain other limits related to bank
safety and soundness that are contained in the proposed section 23B of the Federal Reserve Act.83
To guard further against possible erosion of the
public confidence in affiliated banks, no bank or thrift
affiliate should act as agent for, or engage in marketing
activities on behalf of, an underwriting subsidiary. The
Board notes that Citicorp and Morgan have voluntarily
agreed to such restrictions. In this regard, prospectuses and sales literature relating to securities underwritten or traded by the underwriting subsidiaries may
not be distributed by bank or thrift affiliates; nor
should any such literature be made available to the
public at any offices of any such affiliate, unless
specifically requested by a customer. (See 12 C.F.R.
225.125(h) regarding similar limitations on certain investment advisory activities of bank holding companies with respect to investment companies). Additionally, affiliated banks or thrift institutions may not
express an opinion with respect to the advisability of
the purchase of ineligible securities underwritten or
dealt in by the underwriting subsidiary, unless the
bank or thrift affiliate notifies the customer that its
affiliated underwriting subsidiary is underwriting or
making a market in the security.
Conflicts of Interest. In determining whether the
proposed underwriting and dealing activities, as limited above, are a proper incident to banking, the Board
also has considered whether the activities would result
in conflicts of interest. Given that the proposed activities would not be a substantial activity of the underwriting subsidiaries, the fact that banks have engaged
in substantially similar activities without giving rise to
significant conflicts, and the limitations on the activity
as discussed below, the Board believes that any potential conflicts arising from the proposal are manageable
and would not be significant.
At the outset, there are, in the Board's view, certain
factors that limit the potential conflicts of interest that
can reasonably be expected as a result of these proposals. First, as explained above, the limited underwriting
and dealing operations in municipal revenue bonds,
private mortgage-backed securities, and commercial
paper would be performed by separate subsidiaries
83. See S. 2851, 98th Cong., 2d Sess. (1984), 130 Cong. Rec. S
11162, S 11166-67 (September 13, 1984).
496
Federal Reserve Bulletin • June 1987
that are substantially insulated from the operations of
the affiliated banks. Second, although to some extent
the potential for conflicts of interest exists in connection with permissible securities and lending activities
presently engaged in by member banks, there is no
evidence that bank underwriting of eligible securities
over the past 50 years has produced serious conflicts
of interest or other abuses or encouraged imprudent
lending practices.84 Because the proposed activities
involve securities that are substantially similar to
those presently underwritten and dealt in by banks,
the Board believes that the potential for significant or
new conflicts of interest with respect to the proposed
ineligible securities would be manageable.
In this regard, the Board notes that in approving
proposed legislation to allow bank holding companies
to underwrite municipal revenue bonds, the Committee on Banking, Housing, and Urban Affairs of the
U.S. Senate relied on the similarity of the activity to
bank eligible underwriting activity and the fact that
banks have competed in the activity "safely and fairly
for more than 50 years."85
The Board notes that, in the case of municipal
revenue bonds, the fact that the issuer is a public
entity makes potential conflicts less likely since these
entities generally do not rely on bank lending for most
of their funding. Similarly, issuers of securities backed
by mortgages on 1-4 family residences do not rely
significantly on bank funding.86 Moreover, as the
Board noted in approving commercial paper agency
and principal activities in Bankers Trust and Chase,
serving as a dealer in commercial paper is very similar
in function to that of a lead bank in arranging loan
participations or syndications, an operation that banks
have traditionally performed. There is no evidence
that banks' loan participation activities have produced
serious conflicts of interest. Finally, while these general factors clearly reduce the potential for conflicts of
interest, the Board believes that certain additional
limitations, similar to those applied in the Bankers
Trust and Chase decisions, are appropriate.
Credit to Purchasers of Securities. Protestants allege that Applicants' subsidiary banks may be encouraged to make imprudent loans to depositors for the
84. See Federal Reserve Board Staff Study, Commercial Bank
Private Placement Activities 64-65 (1977); U.S. Department of the
Treasury, Public Policy Aspects of Bank Securities Activities 34
(1975); S. Rep. No. 560, 98th Cong., 2d Sess. 15-16 (1984); Moratorium
Legislation and Financial Institutions Deregulation: Hearings Before
the Senate Comm. on Banking, Housing and Urban Affairs, 98th
Cong., 1st Sess. 192 (1983) (statement of Paul A. Volcker, Chairman,
Board of Governors of the Federal Reserve System).
85. S. Rep. No. 560, 98th Cong., 2d Sess. 15 (1984).
86. See Hearings on S. 2181, at 1612 (statement of Paul A. Volcker,
Chairman, Board of Governors of the Federal Reserve System).
purchase of securities underwritten by their affiliates.
The Board notes that the possible temptation to extend
credit for such purchases was a major concern leading
to the enactment of the Glass-Steagall Act and that
preserving the soundness and impartiality of credit
granting is a major concern of the Board and other
bank regulators under the banking laws. In order to
address these concerns, the Board believes that it is
appropriate to require that no lending affiliate of the
underwriting subsidiary may extend credit to a customer that is secured by, or for the purpose of purchasing, any ineligible security that the subsidiary
underwrites during the course of the underwriting or
for the purpose of purchasing from the underwriting
subsidiary any ineligible security in which the underwriting subsidiary makes a market.87 The Board notes
Citicorp proposed a substantially similar limitation in
connection with CSI's underwriting activities.
Credit to Issuers of Securities. The protestants also
assert that a related conflict may also arise when
Applicants' bank affiliates extend credit to issuers of
securities underwritten or dealt in by the underwriting
subsidiaries. It is argued that banks might be tempted
to make unwise loans to improve the financial condition of companies whose securities are underwritten or
dealt in by an affiliated underwriting subsidiary, either
to assist in the marketing of the securities or to prevent
the customers of the underwriting subsidiary from
incurring losses on securities sold by the subsidiary. In
order to assure that this conflict does not arise, the
Board believes that neither Applicants nor any of their
subsidiaries may make loans to issuers of ineligible
securities underwritten by the underwriting subsidiaries for the purpose of the payment of principal and
interest on such securities. To assure compliance with
the foregoing limitation, any lines of credit extended
by any lending subsidiary of Applicants to an issuer of
ineligible securities underwritten by the underwriting
subsidiaries must be for a documented special purpose, or have substantial participation by other lenders, and have substantially different timing, terms,
conditions, and maturities from the ineligible securities being underwritten.
Applicants must adopt appropriate procedures, including maintenance of necessary documentary records, to assure that any extensions of credit by Applicants or any of their subsidiaries to the issuer of
ineligible securities underwritten or dealt in by the
underwriting subsidiary are on an arm's length basis
for purposes other than the payment of principal or
87. This limitation extends to credit to all customers of the lending
affiliates, including brokers, dealers, and unaffiliated banks, but does
not include lending to a broker-dealer for the purchase of securities
where an affiliated bank is the clearing bank for such broker-dealer.
Legal Developments
interest on ineligible securities underwritten or dealt in
by the securities subsidiaries. An extension of credit is
considered to be on an arm's length basis if the terms
and conditions are substantially the same as those
prevailing at the time for comparable transactions with
issuers whose securities are not underwritten or dealt
in by the underwriting subsidiaries.
In addition, the Board also believes that, to the
extent the creditworthiness of securities sold by the
underwriting subsidiaries depends on the existence of
explicit financial backing of the issuer, that backing
should be supplied by lenders unaffiliated with Applicants. Thus, the Board believes it appropriate to
require that neither Applicants nor any of their subsidiaries issue or enter into a stand-by letter of credit,
asset purchase agreement, indemnity, insurance, or
other facility that might be viewed as enhancing the
creditworthiness or marketability of ineligible securities underwritten, placed or dealt in by the underwriting subsidiaries. This limitation will further assure that
the proposed activities do not encourage less than
sound credit practices. For example, without such a
prohibition, an affiliated bank might be tempted to
provide a letter of credit to support a commercial
paper issue that would otherwise not be of prime
quality in an effort to make the issue marketable.
The Board believes that the above requirements
relating to credit extensions to issuers should also
apply to extensions of credit to parties that will be
major users of the projects that are financed by
industrial revenue bonds underwritten by the underwriting subsidiary. This restriction will avoid the potential conflict that a bank may be tempted to make
imprudent loans to those who will benefit from a
particular industrial revenue bond project in order to
ensure the success of the project being financed.
Applicants generally oppose any broad restriction
on the provision of credit support by affiliated banks to
issuers whose securities are sold by the underwriting
subsidiaries. Applicants contend that banks currently
provide letters of credit and similar facilities to issuers
of municipal securities underwritten by the bank.
Applicants also argue that economic reality would
deter preferential lending in support of an underwriting
subsidiary's activity because the potential exposure to
the bank on an unsound loan would be greater than the
underwriting and trading profits to be gained by the
subsidiary.
However, the Board believes that the risk that a
bank's credit judgment may be impaired by the existence of an investment banking relationship between a
borrower and the bank's affiliate is one of the fundamental hazards at which the Glass-Steagall Act was
aimed and is a significant consideration under the
standards of section 4(c)(8) of the BHC Act, which are
All
designed to maintain impartiality in the credit-granting
process and thereby promote public confidence in
banking organizations. A similar restriction was relied
on by the Board in the Bankers Trust and Chase
decisions.
Credit and Advances to Underwriting Subsidiaries.
The protestants also assert that Applicants' subsidiary
banks may be tempted to make imprudent extensions
of credit or other investments to support the underwriting subsidiaries if they encounter financial difficulties. This conflict is inherent in transactions between
banks and their affiliates generally and is addressed by
section 23A of the Federal Reserve Act. (12 U.S.C.
§ 371c(c)(l)). That provision limits extensions of credit
by a bank to its nonbank affiliates, as well as asset
purchases from an affiliate, to 10 percent of the bank's
capital and requires that any extensions of credit be
collateralized {e.g., 110 percent of the extension of
credit if the collateral is composed of revenue bonds).
Section 23 A also prohibits a bank from purchasing low
quality assets or accepting them as collateral. Section
23A thus imposes limits on the techniques that might
be used to transfer funds of an affiliated bank to an
underwriting subsidiary. Applicants have also agreed
to comply with certain of the limits contained in the
proposed section 23B of the Federal Reserve Act.88
These limitations require that all purchases and sales
of assets between a bank affiliate of Applicants and the
underwriting subsidiaries, including transactions with
third parties if the underwriting subsidiaries are a
participant or have a financial interest in the third
party or act as agent or broker or receive a fee for their
services, be at arm's length and on terms no less
stringent than those applicable to unrelated third parties.89
An additional potential conflict that might occur is
the possibility that Applicants' subsidiary banks might
make unwarranted purchases of securities underwritten or dealt in by the underwriting subsidiaries in order
to assist the subsidiaries' marketing efforts or to
prevent losses by the subsidiaries. The possibility that
such securities might be dumped into the bank's
inventory was a major concern underlying the GlassSteagall Act. That such transactions represent a potential adverse effect is also evidenced by the fact that
88. See S. 790, 100th Cong., 1st Sess. § 102(a) (1987), 133 Cong.
Rec. S 4061, S 4063 (March 27, 1987).
89. In particular, the transactions must be on terms and under
circumstances, including credit standards, that are substantially the
same, or at least as favorable to such bank or its subsidiary, as those
prevailing at the time for comparable transactions with or involving
other nonaffiliated companies or, in the absence of comparable
transactions, those terms and circumstances that in good faith would
be offered to, or would apply to, nonaffiliated companies.
498
Federal Reserve Bulletin • June 1987
legislation recently considered by Congress contained
a provision (the proposed new section 23B of the
Federal Reserve Act) expressly dealing with this possibility in connection with eligible underwriting conducted directly by banks. Applicants maintain that the
possibility of this adverse effect is mitigated on the
basis that the securities being underwritten by the
underwriting subsidiaries are eligible investments for
banks and by existing regulatory requirements. Applicants point in particular to rules of the NASD, which
prohibit a member engaged in a fixed price offering of
securities (other than U.S. government or municipal
securities) from selling such securities or placing them
with an affiliate during the course of the underwriting.90
While the underwriting subsidiaries would be NASD
members and subject to this rule against sales to
affiliates, the rule does not apply to the offering of
municipal securities, which is likely to be an important
part of the subsidiaries' ineligible operations, and does
not appear to address possible sales of unsold securities to an affiliate at the termination of the underwriting syndicate. In addition, although the limitations in
section 23A would also be applicable in this situation,
section 23A does not reach all inter-affiliate transactions.91
Accordingly, the Board believes that, in view of the
significance of this concern, and a record indicating a
basis for the Board's concern in these cases, Applicants and their subsidiaries (other than the underwriting subsidiaries) should not purchase, as principal,
ineligible securities underwritten by the underwriting
subsidiary during the underwriting period and for 60
days after termination of the underwriting and should
not purchase from the underwriting subsidiary any
ineligible security in which the underwriting subsidiary
makes a market. The Board believes this requirement
is essential to address the potential for conflicts of
interest that could have a detrimental impact on the
financial resources of the affiliates of the underwriting
subsidiaries.
Biased Investment Advice. Protestants also raise
concerns relating to whether the proposals will impair
Applicants' obligation to provide unbiased investment
advice to trust department customers.92 Applicants
object to a proposed condition that would address this
90. Article II, § l(m); Article III, § 36, NASD Rules of Fair
Practice, NASD Manual (March 1985), f 201-2196.
91. Under section 23A, a bank affiliate could invest up to 10 percent
of its capital in securities underwritten by an affiliate. In addition,
section 23A does not apply in the case of assets having a readily
identifiable and publicly available market quotation. Finally, section
23A does not apply to purchases by the parent holding company or
other nonbank affiliates of securities underwritten by the underwriting
subsidiary.
92. See Bankers Trust 1,468 U.S. at 146-147;/C//, 401 U.S. at 633.
concern by precluding Applicants and their subsidiaries from purchasing as trustee or in any other fiduciary
capacity ineligible securities underwritten or dealt in
by their underwriting subsidiaries or from recommending to their customers the purchase of such securities.
Applicants note that banks and broker-dealers are
already subject to extensive restrictions against selfdealing under the securities laws and banking regulation as well as under common law fiduciary requirements and that an absolute prohibition is unnecessary
given these restrictions and may not in fact be in the
best interests of the bank's customers. In accordance
with these standards, a bank or other investment
adviser must disclose to an advisory customer any
interest of its affiliate as underwriter or market maker
in the securities being purchased or recommended and
may not purchase such securities for a customer
unless the purchases are specifically authorized under
the instrument creating the fiduciary relationship, by
court order, or by the law of the jurisdiction under
which the trust is administered. For example, OCC
Trust Banking Circular 19 generally prohibits national
banks from purchasing in a fiduciary capacity securities underwritten by a commercial department of the
bank either individually or as a syndicate member
during the period of any underwriting or selling syndicate and creates a presumption that such purchases
made for a period of 60 days after termination of the
syndicate are also unlawful, except where authorized
under the provisions of the governing trust instrument
as noted above.
In addition, under fiduciary principles, affiliated
banks may not express opinions about the advisability
of investing in ineligible securities underwritten by the
bank or its affiliates without disclosure. This limitation, which the Board believes should be explicitly
applied to the underwriting subsidiaries, will assure
that less than objective advice will not be provided by
Applicants.93 Moreover, each Applicant has committed that any dealings with the underwriting subsidiaries (or a company in which the subsidiary has an
interest or for which it is acting as agent or underwriter) will be conducted on an arm's length basis and will
not involve preferential terms or conditions. As discussed abbve, each Applicant will also provide cus93. Protestants have also raised the possibility that Applicants
might not provide impartial advice to customers about the best
method of obtaining funds or might not provide sound investment
advice to correspondent banks. Under the terms of the Board's
approval, the underwriting subsidiaries here would be insulated from
the lending and other departments of affiliated banks and, to a large
extent, the issuers of the ineligible securities that will be sold by the
underwriting subsidiaries are financially sophisticated and are able to
make their own assessment about various financing methods. Likewise, correspondent banks have significant expertise in investing in
municipal and mortgage-related securities and have traditionally purchased commercial paper for their own account.
Legal Developments
tomers with a specific disclosure statement describing
the difference between affiliated banks and the underwriting subsidiary. The Board believes these disclosure and fiduciary requirements, if followed by the
bank holding company and its bank, thrift, investment
adviser and trust company subsidiaries, are sufficient
to address concerns regarding conflicts of interest
involving bank affiliates acting in a fiduciary capacity.
Securities Issued by Affiliates. An additional concern has been raised regarding the potential conflicts
that might arise if an underwriting subsidiary underwrites or deals in securities of affiliated entities, particularly those that may be experiencing financial difficulties.
In the Board's view, the incentives for a conflict of
interest to arise in underwriting and dealing in an
affiliate's securities could be substantial, depending on
factors such as the extent, regularity, or purpose of
such underwriting and dealing. The Board notes that
Congressional concern over bank securities affiliates'
underwriting and making markets in the securities
issued by their bank affiliates was cited as one of the
principal reasons for the Glass-Steagall Act. ICI II,
450 U.S. at 61-62. Specifically, where the underwriting subsidiary offers securities representing interests
in pools of assets created by its affiliates, the temptation exists that the affiliates' least creditworthy assets
would be securitized.
Applicants maintain that investment banking firms
that are part of an integrated holding company organization are subject to the same conflict in selling their
affiliates' securities and that this conflict has been
addressed by the disclosure requirements under the
securities laws and by NASD rules. The Board is
unable to conclude on the basis of the record of these
applications, however, that these requirements alone
would be adequate. First, the fact that investment
banking firms that are not affiliated with banks face
this kind of conflict in underwriting affiliates' obligations is not probative here. These firms are not subject
to the public benefits test in section 4(c)(8), which
imposes an affirmative duty on the Board to consider
potential conflicts of interest associated with bank
holding companies' nonbanking activities.
Second, the Board's concern in this case is not
limited to the protection of investors. The reputation
of affiliated banks could be damaged if the underwriting subsidiary sells securities issued by its affiliates to
the public and those securities subsequently deteriorate in quality. Nor is it clear that disclosure requirements alone would be adequate, since the underwriting subsidiary may have an incentive to be less
objective in evaluating creditworthiness and in describing all material facts when the subsidiary seeks to
market obligations of entities under common control
All
with it. The requirement of an unaffiliated underwriter
will tend to ensure that an independent and impartial
credit judgment will be made in connection with
securities issued by a banking organization.
On the basis of the foregoing, the Board requires, as
a condition to its Order in order to avoid this potential
conflict, that an underwriting subsidiary may not underwrite or deal in any ineligible securities issued by
its affiliates or representing interests in, or secured by,
obligations originated or sponsored by its affiliates
(except for grantor trusts or special purpose corporations created to facilitate underwriting of securities
backed by residential mortgages originated by a nonaffiliated lender).
Securities to Repay Loans. The final category of
potential conflicts of interest cited by protestants
involves possible harm to the interests of those who
purchase securities sold by the underwriting subsidiaries. Protestants contend that Applicants might encourage issuers to issue securities, the proceeds of which
will be used to repay loans made by affiliated banks.
The Board believes that incentives to convert a
risky loan held by an affiliate to a security sold to the
public by the underwriting subsidiary are minimized
by the condition in this Order that precludes underwriting or dealing in ineligible securities issued by
affiliates, and by the economic disincentive for a bank
holding company to jeopardize the reputation of its
underwriting subsidiary as well as of its bank and other
lending subsidiaries by engaging in underwriting for
this purpose. The Board further believes that this
abuse is made unlikely by the requirements, explained
earlier in this Order, that the underwriting subsidiary
should disclose to purchasers any material lending
relationship between the issuer and a bank or lending
affiliate of the underwriting subsidiary as required
under the securities laws and in every case whether
the proceeds of the issue will be used to repay outstanding indebtedness to affiliates.
Finally, the Board also notes that the ineligible
securities underwritten and dealt in by the underwriting subsidiaries will be rated by independent rating
services. The necessity for objective credit ratings
makes it extremely difficult for issuers experiencing
financial difficulties to issue securities that will be
accepted by the market. Accordingly, subject to the
foregoing limitations, the Board believes that the proposal does not pose conflicts of interest sufficient to
outweigh the public benefits of the proposal.
Unfair Competition. The Board has also considered
protestants' contention that the proposed underwriting
affiliates would have unfair competitive advantages
over other underwriters and dealers that are not affiliated with banks. Protestants allege that Applicants
would enjoy unfair advantages in, for example, the
500
Federal Reserve Bulletin • June 1987
rates they would pay for funding; access to the credit
files of banking affiliates to obtain information useful
in marketing their services to issuers; and tax advantages available only to banks that hold municipal
securities. The Board finds that this limited proposal
would not result in unfair competition for the following
reasons.
Access to Low-Cost Funds. With respect to protestants' funding claim, there is no evidence that Applicants' underwriting subsidiaries would, by reason of
their affiliation with federally insured banks, enjoy
access to lower cost funds than their competitors that
are not affiliated with banks.94 Funding for the underwriting subsidiaries would be provided by their parent
holding companies, which are not banks. A corporation's funding costs are a function of a variety of
economic factors, including size, capital and earnings.
While the regulatory framework under which a corporation operates is a factor that may affect cost of funds,
the same bank regulatory structure that provides deposit insurance imposes restraints and important costs
on the operation of banks and their affiliates that are
not imposed on other corporations. In addition, rates
paid by Applicants and other bank holding companies
on their commercial paper have generally been the
same as those paid by corporations of similar size and
credit ratings.
As noted above, the underwriting subsidiaries
would be corporations legally separate and apart from
Applicants' banking affiliates. Accordingly, the underwriting subsidiaries would not obtain funding directly
through federally insured deposits or the Federal Reserve's discount window, which is available to depository institutions. Moreover, the Board does not believe that there would be a strong likelihood that
insured deposits or the proceeds of discount window
loans could be transferred from affiliated banks to the
underwriting subsidiaries, in view of the lending limitations and collateral requirements of section 23A of
the Federal Reserve Act, and the fact that any other
inter-affiliate transactions not subject to section 23A
must be conducted on an arm's length basis.
In any event, as the Board noted in BankAmerica/
Schwab, the legislative history of section 4(c)(8) of the
Act indicates that the term "unfair competition" was
intended to refer to unfair or unethical business conduct under the law, and not to disparities established
by existing federal regulation of providers of financial
services.95 Accordingly, for the reasons set out in
BankAmerica!Schwab, even if the underwriting sub94. The Board notes that banks do not dominate the markets for
bank-eligible securities, suggesting that the alleged funding advantages for banks are not a significant competitive factor.
95. 69 FEDERAL RESERVE BULLETIN 105, 111 (1983), affirmed by
the Supreme Court in Schwab.
sidiaries might obtain some funding advantage by
reason of their affiliation with Applicants, the Board
finds that such advantage is not unfair competition
within the meaning of section 4(c)(8) of the Act.
Access to Confidential Information. The Board has
also considered the allegation that unfair competition
would result from sharing of confidential information
between the underwriting subsidiaries and their affiliates, such as granting the underwriting subsidiaries
access to the credit files of their affiliates to determine
the financial needs of issuers and potential issuers to
enable the subsidiaries to offer their services to issuers
in advance of competitors.
To address the possibility of potential unfair competition or conflicts arising as a result of information
sharing, Applicants state that they will voluntarily
establish appropriate "Chinese walls" to prevent information acquired by the organization in one capacity
from being improperly used in another area.
However, the Board does not believe that these
commitments are sufficiently strong to assure that this
conflict will not occur. Accordingly, as a condition of
the Board's approval of these applications, no lending
affiliate of the underwriting subsidiaries may disclose
to the underwriting subsidiaries any nonpublic customer information consisting of an evaluation of the
creditworthiness of an issuer or other customer of the
underwriting subsidiary, other than as required by
securities laws.
With respect to the potential for adverse effects
from the disclosure of confidential information held by
an underwriting subsidiary to its affiliates, the Board
notes that trading on inside information about issuers
would violate the federal securities laws. Moreover,
the incentive to gain access to confidential information
possessed by the underwriting subsidiary is reduced
by the prohibition discussed above on the purchase by
any affiliate as principal or trustee from the underwriting subsidiary of securities distributed by the subsidiary. Nevertheless, the Board believes it appropriate
to require that the officers or employees of an underwriting subsidiary may not disclose nonpublic customer information consisting of an evaluation of the creditworthiness of an issuer or other customer of the
underwriting subsidiary to its affiliates.96
Tax Treatment. Finally, the Board has considered
protestants' argument that Applicants' subsidiary
banks receive different tax treatment than general
corporations with regard to interest expense for carrying municipal securities. However, the Board finds
that banks' differing tax treatment does not constitute
96. The Board notes that explicit tying of services offered by
Applicants' subsidiary banks and by the underwriting subsidiaries is
prohibited by section 106 of the Bank Holding Company Act Amendments of 1970. 12 U.S.C. §§ 1972-78.
Legal Developments
an unfair competitive practice. First, the Tax Reform
Act of 1986 has significantly reduced the tax advantages available to banks with respect to interest expense for municipal securities.97 The underwriting
subsidiaries are not banks and would not have the
benefit of tax provisions applicable to banks. In addition, under this Order the underwriting subsidiaries
may not sell ineligible municipal securities to affiliates
during the underwriting period and there is no evidence that Applicants intend to engage in transactions
to place the underwriting subsidiaries' eligible municipal securities temporarily with affiliated banks to obtain any tax advantage.98
In any event, banks' tax treatment, like their coverage by deposit insurance, is a result of federal regulation, rather than of unethical or unfair business practice. As the Board specifically noted in BankAmerica/
Schwab, any competitive advantage accruing from the
favorable tax treatment accorded bank municipal securities dealers does not represent the type of adverse
effect about which the Act was concerned.99
Undue Concentration of Resources or Decreased
Competition. The Board has carefully considered the
possibility that these proposals would result in an
undue concentration of resources, in view of the size
of Applicants and the concern expressed in the BHC
Act regarding the concentration of control over credit
resources.100 The Board has also considered the contentions of protestant Salomon Brothers and others
that the existence of severe limitations on banking
institutions' securities activities prevents a concentration of resources and promotes competitive innovation
between banking institutions and investment banking
firms. The Board finds that these proposals are not
likely to lead to undue concentration of resources or
decreased competition under the facts and circumstances of and subject to the limitations imposed on
the activities herein.
Applicants seek an expansion of authority to underwrite and deal in limited kinds of securities on a de
novo basis and these proposals do not involve any
combination of existing competitors. Thus, the proposals would not eliminate any existing provider of the
services involved, but would add the underwriting
subsidiaries as new competitors. Addition of new
competitors may reasonably be expected to increase
competition and promote deconcentration in the un-
97. Pub. L. No. 99-514, § 902 (Oct. 22, 1986).
98. The possibility of such tandem operations occurring is also
minimized by the fact that there will be no interlocking directors,
management or employees among the underwriting subsidiaries and
bank or thrift affiliates.
9 9 . 6 9 FEDERAL RESERVE B U L L E T I N at 1 1 1 .
100. See H.R. Conf. Rep. No. 1747, 91st Cong., 2d Sess. 17 (1970)
(Statement of the Managers on the Part of the House).
All
derwriting market for the types of ineligible securities
proposed. The likelihood that these proposals would
result in concentrations of resources is further reduced
by the fact that in order to comply with the restrictions
of section 20, the volume of ineligible revenue bonds
and ineligible mortgage-backed securities underwritten by the underwriting subsidiaries in any one year
will not exceed 5 percent of the total amount of each
such kind of security underwritten domestically by all
firms during the previous calendar year. Similarly, the
volume of such ineligible securities held by the underwriting subsidiaries as a result of their secondary
market activity may not exceed 5 percent of the total
amount of that type of security underwritten domestically by all firms during the previous calendar year.
Similar market limits apply to commercial paper activities.
Finally, the Board notes that, as authorized by
section 16 of the Glass-Steagall Act, banks underwrite
and deal in eligible securities without any market size
limitation, and this authority has not led to adverse
effects with respect to concentration of resources. In
fact, the markets for bank eligible securities are markedly less concentrated that those for ineligible securities.
Financial Factors. In evaluating these applications,
the Board has carefully considered the financial resources of each Applicant, including its capital position, and the effect on these resources of the proposed
activities. The Board has also considered the comments of the SIA and several other protestants that,
after the initial capitalization of the underwriting subsidiaries, Applicants should be precluded from providing any additional capital support to the subsidiaries.
The Board has indicated on previous occasions that
a bank holding company should be a source of financial strength to its subsidiaries, in particular to its
banking subsidiaries, and that the Board will evaluate
an application for expanding nonbanking activity with
this consideration in mind. The Board has required
holding companies seeking approval for new activities
to have the financial resources to capitalize the nonbanking entity in accordance with industry standards
generally and the risk factors involved in the activity in
particular, with the aims of assuring, to the extent
feasible, that the new activity can support itself on a
stand-alone basis, while at the same time maintaining
the bank holding company's ability to serve as a
source of financial strength to its subsidiary banks.101
101. See Statement of Paul A. Volcker, Chairman, Board of
Governors of the Federal Reserve System, Before the Subcomm. on
Commerce and Monetary Affairs of the Comm. on Government
Operations, U.S. House of Representatives (June 11, 1986), reprinted
in 72 FEDERAL RESERVE BULLETIN 541, 545 (1986); State Bond and
Mortgage Company, 71 FEDERAL RESERVE BULLETIN 722 (1985).
502
Federal Reserve Bulletin • June 1987
In these cases, the Board believes it is appropriate
to exclude the capital (and related assets) of the
underwriting subsidiaries from the consolidated capital that Applicants are required to maintain under the
Board's Capital Adequacy Guidelines. In the Board's
view, this exclusion of the capital of the underwriting
subsidiaries is consistent with the preservation of the
bank holding company's resources for subsidiary
banks, and, in the Board's view, a general prohibition
against additional funding of the underwriting subsidiary by the parent holding company is unnecessary,
provided that in each specific case the provision of
funds to the subsidiary is not detrimental to subsidiary
banks.
The Board further notes that the underwriting subsidiaries will be subject to a separate regulatory capital
requirement—the SEC's net capital rule. Accordingly,
the Board finds the proposed capitalization of each of
the underwriting subsidiaries in these cases will be
adequate under the generally accepted norms for companies engaged in similar activities. The Board will
monitor the development and risk profiles of the
underwriting subsidiaries in order to determine if their
capital is adequate.
C. Pending Legislation.
In its consideration of this case, the Board has noted
that on March 27, 1987, the United States Senate
passed legislation that, if enacted, would prohibit
Board approval between March 6, 1987 and March 1,
1988, of any application, such as the present proposals, that would permit a bank holding company to
engage in the underwriting or public sale of securities
on the basis that it was not "engaged principally" in
such activity within the meaning of section 20 of the
Glass-Steagall Act.102 This prohibition would not apply to applications pending prior to the date of enactment of the legislation if the Board delays the effective
date of the decision until the expiration of the moratorium.
This moratorium legislation, however, has not yet
been enacted into law. Accordingly, and as the Board
stated in the Chase decision, the Board is required as
provided in existing law to act on these applications
within mandated time periods and in accordance with
the applications processing schedule prescribed by
Regulation Y. Moreover, the applications, as noted,
comply with existing law under the framework established by the Board in this Order.
While the Board believes it must proceed to reach a
decision on the applications, the Board calls to Appli102. Competitive Equality Banking Act of 1987 (S. 790), 100th
Cong., 1st Sess. § 201; 133 Cong. Rec. S 4061, S 4067 (March 27,
1987).
cants' attention that they may be required by subsequent Congressional action to cease their ineligible
underwriting and dealing activities approved in this
Order. The Board retains jurisdiction over the applications to act to carry out the requirements of any
legislation adopted by Congress that would affect
Applicants' conduct of underwriting and dealing activities under this Order and the Bank Holding Company
Act.
Conclusion
In sum, the Board finds that these proposals, as
limited by this Order, are consistent with section 20 of
the Glass-Steagall Act and may reasonably be expected to result in public benefits that outweigh possible
adverse effects. Accordingly, the Board finds that
Applicants may conduct the proposed activities to the
extent and in the manner described in this Order
consistent with section 20 of the Glass-Steagall Act
and section 4(c)(8) of the BHC Act. The Board's
approval of these applications extends only to the
activities conducted within the limitations of this Order as summarized below (and subject to the gross
revenue and market share limitations discussed
above), and underwriting or dealing in ineligible securities in any manner other than as described below and
in this Order103 is not within the scope of the Board's
approval and is not authorized for the underwriting
subsidiaries:
A. Types of Securities to be Underwritten
1. The underwriting subsidiaries shall limit their underwriting and dealing in ineligible securities to the following:
a. Municipal revenue bonds that are rated as investment quality (i.e., in one of the top four categories)
by a nationally recognized rating agency, except
that industrial development bonds in these categories shall be limited to "public ownership" industrial development bonds (i.e., those tax exempt bonds
where the issuer, or the governmental unit on behalf
of which the bonds are issued, is the sole owner, for
federal income tax purposes, of the financed facility
(such as airports and mass commuting facilities)).
b. Mortgage-related securities (obligations secured
by or representing an interest in 1-4 family residential real estate), rated as investment quality {i.e., in
103. The underwriting subsidiaries may also provide services that
are necessary incidents to these approved activities. The incidental
services should be taken into account in computing the gross revenue
and market share limits on the underwriting subsidiaries' ineligible
underwriting and dealing activities, to the extent such limits apply to
particular incidental activities.
Legal Developments
All
3. The underwriting subsidiary shall maintain at all
times capital adequate to support its activity and cover
reasonably expected expenses and losses in accordance with industry norms.
4. Applicants shall submit quarterly to the Federal
Reserve Bank of New York FOCUS reports filed with
the NASD or other self-regulatory organizations, and
detailed information breaking down the underwriting
subsidiaries' business with respect to eligible and
ineligible securities, in order to permit monitoring of
the underwriting subsidiaries' compliance with the
provisions of this Order.
an affiliated underwriting subsidiary for the purpose of
the payment of principal and interest on such securities. To assure compliance with the foregoing, any
credit lines extended to an issuer by any lending
subsidiary of the bank holding company shall provide
for substantially different timing, terms, conditions
and maturities from the ineligible securities being
underwritten. It would be clear, for example, that a
credit has substantially different terms and timing if it
is for a documented special purpose (other than the
payment of principal and interest) or there is substantial participation by other lenders.
8. Each Applicant shall adopt appropriate procedures,
including maintenance of necessary documentary records, to assure that any extensions of credit to issuers
of ineligible securities underwritten or dealt in by an
underwriting subsidiary are on an arm's length basis
for purposes other than payment of principal and
interest on the issuer's ineligible securities being underwritten or dealt in by the subsidiary. An extension
of credit is considered to be on an arm's length basis if
the terms and conditions are substantially the same as
those prevailing at the time for comparable transactions with issuers whose securities are not underwritten or dealt in by the underwriting subsidiaries.
9. The requirements relating to credit extensions to
issuers noted in paragraphs 5-8 above shall also apply
to extensions of credit to parties that are major users
of projects that are financed by industrial revenue
bonds.
D. Credit Extensions by Lending Affiliates to
Customers of the Underwriting Subsidiary
E. Limitations to Maintain Separateness of an
Underwriting Affiliate's Activity
one of the top 4 categories) by a nationally recognized rating agency.
c. Commercial Paper that is exempt from the registration and prospectus requirements of the S.E.C.
pursuant to the Securities Act of 1933 and that is
short term, of prime quality, and issued in denominations no smaller than $100,000.
B. Capital Investment
2. Each Applicant's investment in an underwriting
subsidiary and the assets of the underwriting subsidiary shall be excluded in determining the holding
company's consolidated primary capital under the
Board's Capital Adequacy Guidelines.
C. Capital Adequacy
5. No Applicant or subsidiary shall extend credit, issue
or enter into a stand-by letter of credit, asset purchase
agreement, indemnity, insurance or other facility that
might be viewed as enhancing the creditworthiness or
marketability of an ineligible securities issue underwritten by an affiliated underwriting subsidiary.
6. No lending affiliate of an underwriting subsidiary
shall knowingly extend credit to a customer secured
by, or for the purpose of purchasing, any ineligible
security that an affiliated underwriting subsidiary underwrites during the period of the underwriting, or to
purchase from the underwriting subsidiary any ineligible security in which the underwriting subsidiary
makes a market. This limitation extends to all customers of lending affiliates, including brokers-dealers, and
unaffiliated banks, but does not include lending to a
broker-dealer for the purchase of securities where an
affiliated bank is the clearing bank for such brokerdealer.
7. No Applicant or any of its subsidiaries may make
loans to issuers of ineligible securities underwritten by
10. There will be no officer, director, or employee
interlocks between an underwriting subsidiary and any
of the holding company's bank or thrift subsidiaries.
The underwriting subsidiary will have separate offices
from any affiliated bank.
F. Disclosure by the Underwriting Subsidiary
11. An underwriting subsidiary will provide each of its
customers with a special disclosure statement describing the difference between the underwriting subsidiary
and its banking affiliates and pointing out an affiliated
bank could be a lender to an issuer and referring the
customer to the disclosure documents for details. The
statement shall also indicate that the obligations of the
underwriting subsidiary are not those of any affiliated
bank and that the bank is not responsible for securities
sold by the underwriting subsidiary. The underwriting
subsidiary should disclose any material lending relationship between the issuer and a bank or lending
affiliate of the underwriting subsidiary as required
504
Federal Reserve Bulletin • June 1987
under the securities laws and in every case whether
the proceeds of the issue will be used to repay outstanding indebtedness to affiliates.
12. No underwriting subsidiary nor any affiliated bank
or thrift institution will engage in advertising or enter
into an agreement stating or suggesting that an affiliated bank is responsible in any way for the underwriting
subsidiary's obligations.
13. No bank or thrift affiliate of the underwriting
subsidiary will act as agent for, or engage in marketing
activities on behalf of, the underwriting subsidiaries.
In this regard, prospectuses and sales literature of an
underwriting subsidiary may not be distributed by a
bank or thrift affiliate; nor should any such literature
be made available to the public at any offices of any
such affiliate, unless specifically requested by a customer.
17. An underwriting subsidiary may not underwrite or
deal in any ineligible securities issued by its affiliates
or representing interests in, or secured by, obligations
originated or sponsored by its affiliate (except for
grantor trusts or special purpose corporations created
to facilitate underwriting of securities backed by residential mortgages originated by a non-affiliated
lender).
18. All purchases and sales of assets between bank (or
thrift) affiliates and an underwriting subsidiary (or
third parties in which the underwriting subsidiary is a
participant or has a financial interest or acts as agent
or broker or receives a fee for its services) will be at
arm's length and on terms no less stringent than those
applicable to unrelated third parties, and will not
involve low-quality securities, as defined in section
23A of the Federal Reserve Act.
G. Investment Advice by Bank/Thrift Affiliates
I. Limitations to Address Possible Unfair
Competition
14. An affiliated bank or thrift institution may not
express an opinion with respect to the advisability of
the purchase of ineligible securities underwritten or
dealt in by an underwriting subsidiary unless the bank
or thrift affiliate notifies the customer that its affiliated
underwriting subsidiary is underwriting or making a
market in the security.
H. Conflicts of Interest
15. No Applicant nor any of its subsidiaries, other than
the underwriting subsidiary, shall purchase, as principal, ineligible securities that are underwritten by the
underwriting subsidiary during the period of the underwriting and for 60 days after the close of the underwriting period, or shall purchase from the underwriting
subsidiary any ineligible security in which the underwriting subsidiary makes a market.
16. No Applicant nor any of its bank, thrift, or trust or
investment advisory company subsidiaries shall purchase, as a trustee or in any other fiduciary capacity,
for accounts over which they have investment discretion ineligible securities
(i) underwritten by the underwriting subsidiary as
lead underwriter or syndicate member during the
period of any underwriting or selling syndicate,
and for a period of 60 days after the termination
thereof, and
(ii) from the underwriting subsidiary if it makes a
market in that security, unless, in either case,
such purchase is specifically authorized under the
instrument creating the fiduciary relationship, by
court order, or by the law of the jurisdiction under
which the trust is administered.
19. No lending affiliate of an underwriting subsidiary
may disclose to the underwriting subsidiary any nonpublic customer information consisting of an evaluation of the creditworthiness of an issuer or other
customer of the underwriting subsidiary (other than as
required by securities laws and with the issuer's
consent) and no officers or employees of the underwriting subsidiary may disclose such information to its
affiliates.
J. Formation of Subsidiaries of an Underwriting
Subsidiary to Engage in Underwriting and
Dealing
20. Pursuant to Regulation Y, no corporate reorganization of an underwriting subsidiary, such as the establishment of subsidiaries of the underwriting subsidiary
to conduct the activities, may be consummated without prior Board approval.
Because these proposals represent the first major
entry of banking organizations into the field of underwriting and dealing in ineligible securities, the Board
believes it appropriate to proceed cautiously and has
established an extensive framework of prudential limitations to address conflicts of interest, unsound banking practices, and other adverse effects. After the
underwriting subsidiaries have established a record of
experience in the proposed activities, the Board may
review the continued appropriateness of particular
limitations. Similarly, the Board may from time to
time, based upon experience with the activities, establish additional limitations on the conduct of the activities to ensure that the subsidiary's activities are consistent with safety and soundness, conflict of interest,
Legal Developments
and other considerations relevant under the BHC Act.
Based on the foregoing and other considerations
reflected in the record, and as set forth in the Appendix, the Board finds that these proposals, as limited in
this Order are consistent with section 4(c)(8) of the
Bank Holding Company Act and section 20 of the
Glass-Steagall Act, and may reasonably be expected
to result in public benefits that outweigh possible
adverse effects.104 Accordingly, the Board finds that
Citicorp, J.P. Morgan and Bankers Trust may conduct
the proposed activities to the extent and in the manner
described in this Order and Appendix consistent with
section 4(c)(8) of the BHC Act.
The Board's determination is subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of the holding companies
or any of their subsidiaries as the Board finds necessary to ensure that the underwriting subsidiaries'
activities are consistent with safety and soundness and
conflict of interest considerations and to assure compliance with the provisions of the BHC Act and the
Board's regulations and orders issued thereunder, or
to prevent evasion thereof.
These transactions shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
April 30, 1987.
Voting for these actions: Governors Johnson, Seger, and
Heller. Voting against these actions: Chairman Volcker and
Governor Angell.
WILLIAM W . WILES
[SEAL]
Secretary of the Board
104. The SIA has requested the Board to release data submitted by
Applicants in connection with these proposals concerning the volume
of sales and income derived from underwriting and dealing in eligible
securities since 1982, and their projected volume and income to be
derived from underwriting and dealing in ineligible securities. The
Board has accorded this information confidential treatment since
public disclosure of this data could significantly impair Applicants'
competitive position. The SIA states that disclosure of the data is
necessary to ascertain the extent to which Applicants' capital will be
at risk as a result of the proposals. The Board notes, however, that the
underwriting and dealing activities of the underwriting subsidiaries in
ineligible securities may not exceed 5 percent of the total market in
such securities. Since these market limitations determine the maximum scope of the proposed activities and since market data are
publicly available, release of the confidential data submitted by
Applicants does not appear necessary. The additional information
requested by the SIA is publicly available and involves the kinds of
transactions with affiliates that are not permitted under this Order.
In addition, the Board does not believe this information is necessary
for resolution of the other issues raised by the SIA. With respect to
All
Dissenting Statement of Chairman Volcker and
Governor Angell
We regret we are unable to join the majority in
approving the pending applications.
The regret reflects the fact that, as a matter of
policy, we support the idea that affiliates of bank
holding companies underwrite and deal in commercial
paper, municipal revenue bonds, and 1-4 family mortgage-related securities, the activities involved in the
Board's decision.1 Moreover, we agree generally with
the nature of the limitations placed upon the activities
in the Board decision, assuming the threshold question
of their legality in the particular form proposed can be
answered affirmatively.
Our point of difference involves precisely that question of law. Section 20 of the Glass-Steagall Act
provides that no member bank may be affiliated with
any corporation engaged principally in the underwriting of stocks, bonds, debentures, notes or other securities. We believe the plain words of the statute, read
together with earlier Supreme Court and circuit court
opinions, as we understand them, indicate that government securities are indeed "securities" within the
meaning of section 20. Consequently, it appears to us
that the applications approved today, as a matter of
law, involve affiliations of member banks with corporations that are in fact not only "principally engaged"
in dealing and underwriting in securities, but in fact
would be wholly engaged in such activities, thereby
exceeding the authority of law.2
Our point is not merely one of legal formalisms. The
interpretation adopted by the majority would appear to
make feasible, as a matter of law if not Board policy,
the affiliations of banks with some of the principal
underwriting firms or investment houses of the country. Such a legal result, we feel, is inconsistent with
the intent of Congress in passing the Glass-Steagall
Act.
risk to Applicants' capital, the Board has required that Applicants
may invest in the underwriting subsidiaries only to the extent that
such funds would be in excess of the Board's capital requirements for
bank holding companies and, as discussed above, the Board does not
believe the potential for loss to Applicants or their other affiliates from
the underwriting subsidiaries is substantial.
1. We have joined earlier decisions of the Board authorizing some
of these activities in non-securities affiliates.
2. Without elaborating on the legal debate reviewed in the Board's
order, we wish to reiterate that we fully support earlier Board
decisions allowing the underwriting and dealing of government securities to take place in an affiliate. Our point of disagreement is whether
that authority can, in elfect, be used to bootstrap securities activities
that Congress clearly wished to restrain or prohibit.
506
Federal Reserve Bulletin • June 1987
As the Board as a whole has repeatedly urged, the
plain and desirable remedy to this legal and substantive morass is a fresh Congressional mandate. We urge
the Congress to provide straightforwardly the authority for bank holding companies to conduct, with appropriate safeguards, the kinds of activities permitted by
the Board in its decision, the practical import of which
is confined to a relative handful of large bank holding
companies with substantial government securities operations.
Appendix A
Table of Contents
93
96
99
101
102
102
104
106
Conclusion
112
Page
Part I. Introduction & Summary of Findings
Part II. Glass-Steagall
Act
A. Closely Related to Banking Analysis
B. Proper Incident to Banking Analysis
1. Public Benefits
—Increased Competition
—Greater Convenience and Increased
Efficiency
2. Adverse Effects
—Comments of Interested Persons
—General Considerations
—Unsound Banking Practices
•Risk of Loss
• Damage to Public Confidence
107
109
111
7
17
17
A. Applicants' Contentions
20
B. Protestants' Comments
21
C. Analysis of Glass-Steagall Act Issues
1. Securities That a Member Bank May
Underwrite Are Not Covered by the
21
Prohibition of Section 20.
2. Dealing Constitutes the Underwriting or
Public Sale of Securities Under Section 20. 32
3. The Term "Engaged Principally" in
Section 20 Denotes any Substantial Activity. 33
—Appropriate Measure of "Engaged
40
Principally"
—Quantitative Level of Activity
45
Permitted Under Section 20
4. Proposed Interlocks Between Applicants
and Their Underwriting Subsidiaries Are Not
49
Prohibited by Section 32.
Part III. Bank Holding Company Act
Analysis
86
89
89
—Conflicts of Interest
• Credit to Purchasers of Securities
• Credit to Issuers of Securities
• Credit and Advances to Underwriting
Subsidiaries
• Biased Investment Advice
• Securities Issued by Affiliates
• Securities to Repay Loans
—Unfair Competition
• Access to Low-Cost Funds
• Access to Confidential Information
• Tax Treatment
—Undue Concentration of Resources
or Decreased Competition
—Financial Factors
C. Pending Legislation
51
54
63
63
63
66
67
68
71
75
75
83
Appendix B
The Board issues the following statement setting forth
in more detail its findings and analysis underlying
certain of the Board's conclusions in its Order of April
30, 1987, regarding the applications of Citicorp, J.P.
Morgan & Co. Incorporated and Bankers Trust New
York Corporation, to engage in limited underwriting
and dealing in certain securities proposed in the applications through wholly owned subsidiaries. The Appendix will address the Board's conclusion that the
term "public sale" contained in section 20 of the
Glass-Steagall Act covers dealing in securities. Section 20 provides that no member of the Federal Reserve System shall be affiliated with any corporation
engaged principally in the "issue, flotation, underwriting, public sale, or distribution" of securities.
12 U.S.C. § 377.
The Board concludes that the term "public sale," as
used in section 20 of the Glass-Steagall Act, covers
the proposed dealing activities. The Board believes
this result is consistent with the terms of section 20,
the legislative history, the rationale of the Supreme
Court's decision in Securities Industry Association v.
Board of Governors of the Federal Reserve System,
468 U.S. 207 (1984)(il Schwab"), the Board's longheld view that dealing is covered by the term "public
sale" in section 32 of the Glass-Steagall Act—a companion provision to section 20, and Congressional
purposes underlying section 20.
In reaching this conclusion the Board has carefully
considered the arguments of the Applicants, who
contend that "dealing" is not covered by the terms
"issue, flotation, underwriting, public sale, or distribution" as used in section 20. In support of this
Legal Developments
contention, the arguments are advanced that the term
"public sale" should be read to refer to underwriting
or initial distribution activity because other terms used
in section 20 refer to underwriting or initial distributions of securities, that the word "public" used in
public sale carries the connotation of a distribution,
and that the legislative history would support a distinction between dealing and distributing.
Literally, the term "public sale" in section 20 is
broad enough to encompass dealing in securities. In
common industry usage, a "dealer" in securities
"holds himself out as one engaged in buying and
selling securities at a regular place of business"1 and
"sells securities to his customer which he has purchased or intends to purchase elsewhere or buys
securities from his customer with a view to disposing
of them elsewhere."2 Thus, a dealer, acting for his
own account, maintains an inventory of particular
issues of securities in the secondary market—frequently acting as a market maker in these securities.
The term "sale", used in a commercial context, has
been interpreted as referring to transactions in which a
seller acting as principal transfers title to a buyer.3 In
the Board's view, since a dealer holds himself out to
the public as being willing to buy and sell securities for
his own account, the dealer can reasonably be viewed
as engaging in the "public sale" of particular securities.
The legislative history indicates that Congress intended dealing in securities to be covered by section
20, the provision designed to require member banks to
divorce their securities affiliates. In its 1933 report
following hearings on the Glass bill, the Senate Banking Committee stated that it proposed to separate
member banks from affiliates that devoted themselves
not only to underwriting but also to "stock speculation" and "maintaining a market for the banks' own
stock."4 Senator Glass was particularly critical of
bank affiliates that "dealt in the stocks of the parent
bank." 75 Cong. Rec. 9887 (1932)(emphasis added). In
describing the activity of a bank securities affiliate to
1. 2 L. Loss, Securities Regulation 1297 (2d ed. 1961).
2. SEC, Report on the Feasibility and Advisability of the Complete
Segregation of the Functions of Dealer and Broker xiv-xvi (1936);
reprinted in 2 L. Loss, id. at 1215-17.
3. See Webster's Third New International Dictionary (1961);
Black's Law Dictionary 1200 (5th ed. 1979); U.C.C. § 2-106 (1978);
see also Gross v. Vogel, 81 A.D.2d 576, 437 N.Y.S. 2d 431 (1981), and
E. F. Hutton v. Zaferson, 509 S.W. 2d 950, 952 (Texas 1974).
4. S. Rep. No. 77, 73d Cong., 1st Sess. 10 (1933). Members of
Congress criticized the association of banks with the "speculative
business of dealing in securities" (75 Cong. Rec. 9904 (1932) (statement of Sen. Walcott)) and banks' establishment of departments that
not only began "to engage in the origination, underwriting, and
distribution" of investment securities, but also "to trade in them" (75
Cong. Rec. 9911 (1932) (statement of Sen. Bulkley)).
All
be divorced under the Act, Senator Walcott specifically noted that its business was to underwrite, purchase
or sell various securities as they come along in the
market.5
In Schwab, the Supreme Court interpreted the term
"public sale" in section 20 as not applying to a
discount broker that buys and sells securities solely
upon the unsolicited order of customers and not for its
own account (as contrasted with a securities dealer,
which takes a position in securities). Among other
things, the Court stated that "public sale" should be
interpreted by reference to the activities described by
the terms surrounding it in section 20—the "issue,"
"flotation," "underwriting," and "distribution" of
securities.6
Reference to the other activities listed along with
"public sale" in section 20, such as "underwriting,"
supports the Board's view that dealing activities are
covered by that statute. As the Court in Schwab
recognized, in the typical underwriting transaction the
underwriter purchases securities from an issuer and
resells them to the public and thus, like a dealer,
normally acts as a principal in the transaction.7 Like
an underwriter, a dealer in securities "buys and sells
securities on its own account thereby assuming all risk
of loss." 8 Indeed, the Court in Schwab stated that
section 20 would prohibit a bank affiliate from "dealing in" securities for its own account.9
The Board's view that dealing in securities is covered by the language in section 20 is further supported
by the Board's longstanding and consistent interpretation that dealing is covered by the related language of
section 32 of the Glass-Steagall Act (12 U.S.C. § 78).
Section 32 prohibits interlocking officer, director or
employee relationships between a member bank and
any entity "primarily engaged" in the issue, flotation,
underwriting, public sale or distribution of securities.
5. 75 Cong. Rec. 9905 (1932). See also 75 Cong. Rec. 9912 (1932)
(statement of Sen. Bulkley) ("Obviously, the banker who has nothing
to sell his depositors is much better qualified to advise disinterestedly" than is the banker who is to receive "an underwriting profit. . . or
a trading pro/i/")(emphasis added).
6. 468 U.S. at 218.
7. Id. at 217-18 & n.17.
8. Id. at 218 n.18.
9. Id. at 219 n.20. The Board notes that the heading given section 20
in its codification in Title 12 of the United States Code indicates that
the statute applies to affiliation with "an organization dealing in
securities." 12 U.S.C. § 377 (1934). The heading for section 20 in a
compilation of national banking laws published under the direction of
the Comptroller of the Currency shortly after section 20 was enacted
was "Relationships between Member Banks and Securities Dealers."
The National Bank Act as Amended and Other Laws Relating to
National Banks (U.S. Government Printing Office, July 1, 1933).
508
Federal Reserve Bulletin • June 1987
For example, in 1934, the year that the Glass-Steagall
Act became effective, the Board ruled that "it is the
purpose of section 32 to restrict relationships between
member banks and organizations which are directly
interested in issues of securities through underwriting,
distributing, or dealing in such issues."10 Similarly, in
1965, the Board stated that " . . . acting as a dealer, or
generally speaking, selling or distributing securities as
a principal, is covered by [the language of section
32]."11 In its Schwab decision, the Supreme Court
expressly stated that, because sections 32 and 20 are
complementary provisions of the Glass-Steagall Act,
contain identical language and were enacted for similar
purposes, long-accepted Board interpretations of section 32 "should apply as well to § 20."12
Finally, interpreting "public sale" to include securities dealing activities is consistent with the basic
purposes of the Glass-Steagall Act. Since a dealer
operates for its own account in particular securities,
i.e., with its own funds, the dealer is subject to the
"inherent risks of the securities business" and to the
"more subtle hazards" that arise when a banking
organization has a pecuniary interest in the purchase
and sale of particular securities.13 In Schwab, the
Supreme Court stated that "[a]ll these 'subtle hazards'
are attributable to the promotional pressures that arise
from affiliation with entities that purchase and sell
particular investments on their own account."
468 U.S. at 220 n.23.
The hazards and abuses presented by the business
of trading in securities for one's own account are not
limited to the distribution of securities but may also
10. 20 FEDERAL RESERVE BULLETIN 393 (1934) (emphasis added).
Accord, 20 FEDERAL RESERVE BULLETIN 750 (1934), where the Board
interpreted section 32 to apply to the manager of a branch of a dealer
in securities. As originally enacted, section 32 prohibited an interlock
with a firm engaged "primarily in the business of purchasing, selling
or negotiating securities." 48 Stat. 194. While an amendment to the
statute in 1935 changed this provision to conform to the other
provisions of the Act (49 Stat. 709), the amendment was not intended
to change the scope of coverage of section 32. See H.R. Rep. No. 742,
74th Cong., 1st Sess. 17 (1935).
11.51
FEDERAL
RESERVE
BULLETIN
810
(1965);
United Community Financial Corporation
Wayland, Michigan
Order Denying Acquisition of an Insurance Agency
United Community Financial Corporation, Wayland,
Michigan, a bank holding company within the meaning
of the Bank Holding Company Act ("BHC Act")
(12 U.S.C. § 1841 et seq.), has applied under section
4(c)(8) of the BHC Act (12 U.S.C. § 843(c)(8)) to
acquire Mclntyre & Associates Insurance ("Insurance
Agency"), a general insurance agency with offices in
the village of Clarksville, Ionia County, and in Georgetown Township, Ottawa County, Michigan.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been duly published (52 Federal Register
4190 (1987)). The time for filing comments has expired,
and the Board has considered the application and all
comments received, including those of various insurance trade associations,1 in light of the public interest
factors set forth in section 4(c)(8) of the BHC Act.
Applicant proposes to engage in general insurance
activities in a place of fewer than 5,000 residents,
pursuant to exemption C of section 4(c)(8) of the BHC
14. See Investment Company Institute v. Camp, 401 U.S. 617, 62934 (1971).
12 C . F . R
§ 218.110. The fact that these Board interpretations were issued prior
to the Supreme Court's Schwab decision is not persuasive. As noted
above, the Supreme Court in Schwab stated, consistent with the
Board's interpretation, that section 20 prohibits a bank affiliate from
dealing in securities. 468 U.S. at 219 n.20.
12. 468 U.S. at 219.
13. Securities Industry Ass'n v. Board of Governors of the Federal
Reserve System, 468 U.S. 137, 145 (1984); Schwab, 468 U.S. at 220.
arise in the context of secondary market trading where
the activities are conducted on a principal basis.14 For
example, a bank might be tempted to promote to its
customers the sale of securities held in an affiliate's
dealer inventory, particularly when the affiliate is a
market maker in particular securities. There may also
be the temptation for the bank to make loans to
customers in order to facilitate the purchase of securities dealt in by an affiliate or to extend credit or other
aid to the affiliate when it is faring badly due to losses
from dealing operations.
Moreover, the fact that section 16 of the GlassSteagall Act (12 U.S.C. § 24 Seventh) expressly prohibits banks from engaging in general securities dealing activities suggests that this function is the kind of
activity Congress viewed as giving rise to unwarranted
risks and hazards when conducted by a banking organization.
1. The Board has received comments protesting the application
from, inter alios, the National Association of Life Underwriters,
National Association of Professional Insurance Agents, Independent
Insurance Agents of America, Inc., National Association of Casualty
and Surety Agents, and National Association of Surety Bond Producers.
Legal Developments
Act and section 225.25(b)(8)(iii) of the Board's Regulation Y (12 C.F.R. 225.25(b)(8)(iii)), in Clarksville,
Ionia County, Michigan, and in Georgetown Township, Ottawa County, Michigan. The Board's Regulation Y, as amended in November 1986,2 states that a
bank holding company may engage in general insurance agency activities in a place of 5,000 residents if it
has a lending office in that place.3
Protesting insurance agents and insurance trade
associations have argued that the Board must deny
this application for a variety of reasons. Protestants
suggest that although applicant is headquartered in,
and has its principal and largest banking office in
Way land, Michigan, a place with a population of
approximately 2,000 residents, Applicant maintains
lending facilities in places with populations of more
than 5,000 residents. Protestants also argue that the
Georgetown Township office of Insurance Agency
serves a "place" of more than 5,000 residents, in
violation of the BHC Act.
The Board has previously decided in adopting the
insurance amendments to Regulation Y that exemption C does not require a bank holding company to
have its principal place of banking business in a town
with a population of fewer than 5,000 residents. For
reasons stated in detail in adopting its insurance regulation, the Board finds no merit to the argument
advanced by Protestants that a bank holding company
engaged in general insurance agency activities in a
town of fewer than 5,000 residents must have not only
its principal place of banking business in such a small
town (as Applicant does), but also must have all
lending offices in such small towns. Historically, the
Board has never imposed such a requirement, and the
suggestion by Protestants that even a bank holding
company headquartered in a small town must cease its
insurance agency activities if it establishes a branch
bank or lending office in a town of greater than 5,000
inhabitants has no basis in the statutory language of
exemption C, the legislative history of that provision,
or in prior Board practice.
Protestants also assert that the Georgetown Township office operates in a place of greater than 5,000
residents. Applicant has stated that Insurance Agency's Georgetown Township office is located in a
2. 51 Federal Register 36,201 (October 9, 1986).
3. The acquisition of the office in the village of Clarksville raises no
significant issues since it is a place of fewer than 5,000 residents,
according to the 1980 census, and since Applicant has an office of a
lending subsidiary in Clarksville.
All
"place" of fewer than 5,000 residents that consists of a
split portion of census tract 216 with a 1980 census
population of approximately 1,800. Applicant argues
that since the Board's insurance regulation does not
define a "place of 5,000" and since it appears to
permit any "place" for which census data are available, a census tract is clearly the type of "place"
contemplated by the BHC Act and the Board's regulation. The Board has stated, in amending its insurance
regulation in November, 1986, that the Board would
not define the term "place,"4 preferring to permit
bank holding companies to demonstrate on a case-bycase basis that a particular location qualifies. The
Board stated, however, that the reference to the
decennial census in exemption C implies that the
"place" must be a cognizable political subdivision
such as a village, town, municipality, or township for
which population figures are available.
The facts in the record, however, do not indicate
that a split portion of a census tract in Georgetown
Township is a place of fewer than 5,000 residents, as
contemplated in section 4 of the BHC Act and the
Board's Regulation Y.
On-site inspection by Federal Reserve staff of the
area has revealed that the partial census tract cannot
be distinguished as a separate community. It is not
separated from the more populous, adjacent, unincorporated community of Jennison or the surrounding
Georgetown Township by significant distance, physical barriers or even political subdivisions. Residents
do not identify the census tract as a separate community or even have a name to identify the area. The census
line is artificial, and there is no practical basis for the
Board to find that Applicant's proposed office is in a
separate community or "place" from the shopping
area across the street simply because they are in
separate portions of census tract 216.
Even under the Census Bureau's standards it does
not appear that Applicant's delineated insurance service area would be a "place." Rather, the Census
Bureau would view Applicant's proposed "place"
only as the remaining portion of a census tract after a
Census-designated place, consisting of an unincorporated community of 10,000 or more (Jennison, Michigan), has been excluded.
4. Also, the term "place" is not defined in the BHC Act.
510
Federal Reserve Bulletin • June 1987
In addition, the record indicates that the census
tract in question and Georgetown Township are fully
integrated with, and a part of, the Grand Rapids,
Michigan (population approximately 182,000), metropolitan area. There is uninterrupted economic development present from Grand Rapids to Insurance
Agency's Georgetown Township office, and commuting and shopping patterns suggest that the Georgetown
Township population is not locally limited. Acceptance of Applicant's proposal would extend the socalled "small town" exemption in the BHC Act to
metropolitan areas. For example, there are approximately 975 census tracts in the Chicago Metropolitan
Statistical Area with a population under 5,000. The
Board, however, has interpreted the "town of 5,000"
exemption, which is based on a similar provision in the
National Bank Act for national banks, 12 U.S.C. § 92,
as a means of providing insurance in small towns.
Moreover, the area in which Applicant proposes to
sell insurance appears unrealistically limited or artificial because the proposed service area, consisting
primarily of a sparsely populated flood plain, extends
more than three miles from the office, but excludes the
shopping area directly across the street from the
insurance office as well as that portion of the census
tract with a population of more than 10,000 residents.
Even if Applicant does not actively solicit insurance
sales from this part of the census tract, the office is
likely to derive the major portion of its business from
outside the proposed service area.
In view of all the facts of record, the Board concludes that the split portion of census tract 216 in
Georgetown Township does not constitute a cognizable city, town, village, other political subdivision, or
community and thus is not a place of fewer than 5,000
residents for purposes of exemption C of the BHC Act
and section 225.25(b)(8)(iii) of the Board's Regulation
Y.5
Because the proposal does not, as described above,
fulfill the requirements of section 225.25(b)(8)(iii) of
the Board's Regulation Y or section 4(c)(8) of the BHC
Act, the proposed acquisition of Insurance Agency
would not be permissible under the BHC Act and,
accordingly, there is no need for the Board to analyze
the public benefits of this proposed acquisition. On the
basis of all the facts of record, the Board has deter-
mined that the application should be, and hereby is,
denied for the reasons summarized above.6
By order of the Board of Governors, effective
April 16, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Angell, and Heller. Abstaining from this action:
Governor Seger.
WILLIAM W . WILES
[SEAL]
Secretary of the Board
Orders Approved Under Sections 3 and 4 of the
Bank Holding Company Act
RepublicBank Corporation
Dallas, Texas
Order Approving Acquisition of a Bank Holding
Company
RepublicBank Corporation, Dallas, Texas ("Applicant"), a bank holding company within the meaning of
the Bank Holding Company Act (12 U.S.C. § 1841
et seq.) (the "Act"), has applied for the Board's
approval under section 3 of the Act (12 U.S.C. § 1842)
to acquire the successor by merger of InterFirst Corporation, Dallas, Texas ("IFC"), and thereby indirectly acquire its banking subsidiaries listed in Appendix A
to this Order.1 Applicant also has applied under section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) to
acquire the nonbanking subsidiaries of IFC listed in
Appendix B to this Order. Applicant also has provided
notice to the Board under section 4(c)(14) of the Act of
its intention to acquire InterFirst World Trade Corporation, an export trading company. Upon consummation of this proposal, Applicant will operate under the
name of First RepublicBank Corporation, Dallas, Texas ("FRB").
6. In light of the Board's conclusion that the application should be
denied, it is unnecessary to deal with the protestants' request for a
hearing.
5. Applicant has not indicated that it would be possible to sever the
transaction to acquire only the Clarksville office. Therefore, the
application has been processed as an integrated proposal to acquire
both offices of Insurance Agency and, thus, a denial of the acquisition
of the Georgetown Township office also precludes the acquisition of
the Clarksville office.
1. Applicant will acquire IFC through a merger of IFC with RB-IF
Merger Company, a wholly owned subsidiary of Applicant. RB-IF
Merger Company will change its name to IFRB Corporation and
become the surviving corporation. In connection with this application,
RB-IF Merger Company has applied to become a bank holding
company and to acquire the nonbanking subsidiaries listed in Appendix B to this Order and InterFirst World Trade Corporation.
Legal Developments
Notice of the applications, affording opportunity for
interested persons to submit comments, has been
published (52 Federal Register 5,834 (1987)). The time
for filing comments has expired, and the Board has
considered the applications and all comments received
in light of the factors set forth in sections 3(c) and
4(c)(8) of the Act.
Applicant, with approximately $14.4 billion in domestic deposits representing approximately 9.5 percent of the total deposits in commercial banks in
Texas, is the second largest commercial banking organization in Texas.2 IFC is the third largest commercial
banking organization in Texas with domestic deposits
of approximately $13.6 billion, representing approximately 8.9 percent of the total deposits in commercial
banks in Texas. Upon consummation of this proposal,
Applicant would become the largest commercial banking organization in Texas, controlling 18.4 percent of
the total deposits in commercial banks in the state.
All
The Board has considered carefully the effects of the
combination of the second and third largest commercial banking organizations in Texas on the concentration of banking resources in the state. Upon consummation of the proposal, Texas would remain
unconcentrated, with the market share of the four
largest commercial banking organizations in Texas
increasing from 37.6 percent to 44.9 percent. In addition, numerous banking alternatives would remain in
Texas upon consummation of the proposal. On the
basis of these considerations, the Board concludes
that consummation of the proposed transaction will
have no substantial adverse effects on the concentration of banking resources in Texas.
In evaluating these applications, the Board has
considered the financial resources of Applicant and
the effect on those resources of the proposed acquisition. The Board has stated and continues to believe
that capital adequacy is an especially important factor
in the analysis of bank holding company proposals,
particularly in transactions such as this in which the
acquisition of a large organization experiencing financial problems is proposed. The Board expects that
banking organizations experiencing substantial growth
by acquisition should maintain a strong capital position substantially above the minimum levels specified
in the Board's Capital Adequacy Guidelines.
In this case, FRB's pro forma tangible primary
capital ratio will be above Applicant's year-end 1986
tangible primary capital ratio, which is well above the
minimum primary capital ratio under the Board's
Guidelines. In addition, Applicant's pro forma total
capital will be in excess of 10 percent. This acquisition
has been structured as an exchange of shares, and
Applicant will not incur any debt in connection with
this proposal. The Board has given special attention to
Applicant's commitment to issue significant additional
primary capital to augment its capital base prior to
consummation of this proposal. This increase in primary capital is considered to be a significant factor
weighing in favor of the proposal.
After a review of Applicant's proposal in light of
IFC's financial condition and the current difficulties in
the Texas economy, the Board concludes that the pro
forma financial and managerial resources of Applicant
and its subsidiary banks are consistent with approval.
In reaching this decision, the Board has noted as a
matter of particular importance the circumstances
under which this merger has been arranged. Due in
part to a weak regional economy, Applicant recently
has experienced a decline in operating performance,
and IFC has suffered significant financial losses in
recent years. The merger of the two companies and
resulting cost savings are anticipated to position FRB
to better withstand the current difficult economic
situation in the energy and real estate sectors of the
economy. Further, Applicant's pro forma capital base
will provide a substantial cushion to absorb losses.
The Board also has considered the recommendations for approval of the transaction by the other
federal bank regulatory agencies and in particular, the
fact that this proposal, under the circumstances, represents the best available alternative to address IFC's
financial difficulties. Based on all of the preceding
financial factors and other facts of record, the Board
concludes that on balance the financial resources of
FRB and its subsidiary banks are consistent with
approval of these applications.
Applicant and IFC compete directly in the Dallas,
Houston, San Antonio, Fort Worth, Austin, Waco,
Tyler, and Brown County markets.
Applicant is the largest commercial banking organization in the Dallas banking market,3 controlling $8.2
2. Deposit data are as of June 30, 1986, and structure data are as of
December 31, 1986.
3. The Dallas banking market is approximated by Dallas County,
the southeast quadrant of Denton County (including Denton and
Lewisville); the southwest quadrant of Collin County (including
McKinney and Piano); the northern half of Rockwall County; the
communities of Forney and Terrell in Kaufman County, Midlothian,
Waxahachie and Ferris in Ellis County; and Grapevine and Arlington
in Tarrant County.
512
Federal Reserve Bulletin • June 1987
billion in deposits, representing 25.0 percent of total
deposits in commercial banks in the market. IFC is the
third largest banking organization in the market, controlling $4.2 billion in deposits, representing 12.6 percent of the market's bank deposits. The market is
moderately concentrated with a Herfindahl-Hirschman Index ("HHI")4 of 1216. Upon consummation of
the proposal, Applicant would control approximately
37.6 percent of the market's bank deposits, and the
HHI would increase by 630 points to 1846.
Applicant is the largest commercial banking organization in the Waco banking market,5 controlling $408.5
million in deposits, representing 27.6 percent of total
deposits in commercial banks in the market. IFC is the
fourth largest banking organization in the market,
controlling $120 million in deposits, representing 8.1
percent of the deposits in commercial banks in the
market. Upon consummation of the proposal, Applicant would control approximately 35.7 percent of the
market's bank deposits, and the HHI would increase
by 346 points to 1883.
Applicant is the fifth largest commercial banking
organization in the Austin banking market,6 controlling $395.4 million in deposits, representing 6.3 percent of total deposits in commercial banks in the
market. IFC is the largest banking organization in the
market, controlling $1.5 billion in deposits, representing 23.7 percent of total deposits in the market. Upon
consummation of the proposal, Applicant would become the largest commercial banking organization in
the market, with a market share of approximately 30.0
percent, and the HHI would increase by 300 points to
1516.
Applicant is the third largest commercial banking
organization in the Tyler banking market,7 controlling
$280.0 million in deposits, representing 17.0 percent of
total deposits in commercial banks in the market. IFC
is the largest banking organization in the market,
controlling $348.0 million in deposits, representing
21.2 percent of the market's bank deposits. Upon
4. Under the revised Department of Justice Merger Guidelines
(49 Federal Register 26,823) a market in which the post-merger HHI is
between 1000 and 1800 is considered moderately concentrated. In
such markets, the Department is likely to challenge a merger that
increases the HHI by more than 100 points. The Department has
informed the Board that a bank merger or acquisition generally will
not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the
merger increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal HHI thresholds for
screening bank mergers for anticompetitive effects implicitly recognizes the competitive effect of limited purpose lenders and other nondepository financial entities.
5. The Waco banking market is approximated by McLennan
County.
6. The Austin banking market is approximated by the Austin
RMA.
7. The Tyler banking market is approximated by Smith County.
consummation of the proposal, Applicant would control approximately 38.2 percent of the market's bank
deposits, and the HHI would increase by 719 points to
2126.
Although consummation of this proposal would
eliminate some existing competition between Applicant and IFC in these banking markets, certain facts of
record mitigate the adverse competitive effects of the
proposal in these markets. Numerous other commercial banking organizations would continue to operate
in each market after consummation of the proposal.
Moreover, the Board has considered as an extenuating
factor in its evaluation of the competitive effects of this
proposal, the fact, as discussed above, that IFC has
experienced financial difficulties over the last several
years and that this proposal is designed to ensure the
continued overall competitiveness of the resulting
banking organization.
In addition, the Board has considered the presence
of thrift institutions in the Dallas, Waco, Austin, and
Tyler banking markets in its analysis of this proposal.
The Board previously has indicated that thrift institutions have become, or have the potential to become,
major competitors of commercial banks.8 Thrift institutions already exert a considerable competitive influence in the market as providers of checking, money
market deposit accounts, NOW accounts, Super
NOW accounts, and consumer loans, and many are
engaged in the business of making commercial loans.
Based upon the number, size, market shares, and
commercial lending activities of thrift institutions in
these markets, the Board has concluded that thrift
institutions exert a significant competitive influence
that mitigates the anticompetitive effects of this proposal in the Dallas, Waco, Austin, and Tyler markets.
In accordance with the Board's practice, the Board
has included in the calculation of market concentration
50 percent of the deposits controlled by thrift institutions.
Taking into account all of these factors, the Board
notes that Applicant and IFC would control 20.4
percent and 10.3 percent of the total market deposits,
respectively, in the Dallas market. The HHI would
increase by 422 points to 1245 upon consummation of
the proposal. In the Waco market, Applicant and IFC
would control 21.0 percent and 6.2 percent of the total
market deposits, respectively. The HHI would increase by 260 points to 1234 upon consummation of
8. National City Corporation,
743 (1984); The Chase Manhattan
B U L L E T I N 5 2 9 ( 1 9 8 4 ) ; NCNB
70 FEDERAL RESERVE BULLETIN
Corporation,
70 FEDERAL RESERVE
Bancorporation
, 7 0 FEDERAL RESERVE
BULLETIN 225 (1984); General Banc shares Corporation,
69 FEDERAL
RESERVE BULLETIN 802 (1983); First Tennessee
Corporation,
69
FEDERAL RESERVE B U L L E T I N 2 9 8 ( 1 9 8 3 ) .
Legal Developments
the proposal. In the Austin market, Applicant and IFC
would control 4 percent and 20.1 percent of the total
market deposits, respectively. The HHI would increase by 160 points to 1187 upon consummation of
the proposal. In the Tyler market, Applicant and IFC
would control 14.4 percent and 17.9 percent of the
total market deposits, respectively. The HHI would
increase by 513 points to 1570 upon consummation of
the proposal. These market shares and concentration
ratios are consistent with prior decisions by the Board
involving acquisitions of direct competitors.
Even without the deposits controlled by thrift institutions in the Houston, San Antonio, and Fort Worth
banking markets,9 Applicant's resulting market share
in each of these markets would be less than 25 percent
and the markets would remain moderately concentrated after consummation of the proposal. Moreover,
numerous competitors would remain in each of these
markets. Accordingly, consummation of the proposal
would not have a substantial adverse competitive
effect in these markets.
Applicant is the largest commercial banking organization in the Brown County market,10 controlling
$102.8 million in deposits, representing 40.1 percent of
total deposits in commercial banks in the market. IFC
is the third largest commercial banking organization in
the market, controlling $58.5 million in deposits, representing 22.8 percent of total deposits in the market.
Applicant has committed to divest IFC's bank in order
to eliminate the adverse competitive effects that would
otherwise result from consummation of this proposal.
On the basis of this divestiture commitment, the Board
concludes that consummation of the proposal would
not tend substantially to lessen competition in the
Brown County market.
Where, as in this case, a divestiture is proposed to
avoid the otherwise substantial anticompetitive effects
resulting from a proposed acquisition, the Board's
policy requires that the divestiture take place on or
before the date of consummation of the acquisition.11
Although the Board anticipates that every effort will
be made to complete the divestiture before consummation of the acquisition of IFC, divestiture may not be
possible before the expected consummation date be-
All
cause of the inability of the purchaser to obtain
regulatory approval due to time constraints.12
The Board also has considered the effects of Applicant's proposal on probable future competition in the
markets in which Applicant and IFC do not both
compete. In light of the number of probable future
entrants into those markets, the Board concludes that
consummation of this proposal would not have a
significant adverse effect on probable future competition in any relevant banking market.13
In considering the convenience and needs of the
communities to be served, the Board has taken into
account the records of Applicant and IFC under the
Community Reinvestment Act ("CRA"), 12 U.S.C.
§ 2901 et seq.u The Board has received comments
from the Texas Association of Community Organizations for Reform Now, Dallas, Texas ("ACORN"),
and the District 6 Land Use Committee, Dallas, Texas
("LUC"), regarding the CRA records of Applicant
and IFC. ACORN has commented favorably on the
application. However, LUC has alleged that Applicant
and IFC have failed to serve the credit and deposit
taking needs of the South Dallas community. In an
attempt to resolve the concerns raised by the protest,
Applicant has met and is continuing to meet with
LUC; however, the parties have been unable to reach
final agreements regarding LUC's concerns. Applicant
has committed to pursue further discussions with LUC
in an effort to reach an accommodation that will
benefit the community and further the purposes of
CRA along the lines of the agreements it has reached
with other community groups, as discussed below.
In response to LUC's allegations, the Board has
reviewed the records of Applicant and IFC in serving
the credit and deposit needs of the South Dallas
community. The Board's analysis indicates that Applicant and InterFirst do not treat minority neighbor-
12. If the purchaser is unable to acquire the bank prior to
Applicant's acquisition of IFC because of delay in securing regulatory
approval, an independent trustee must be appointed for the bank prior
to consummation with instructions to divest the bank promptly. This
is consistent with the need to consummate Applicant's acquisition of
IFC expeditiously in order to assure the expected improvements in
IFC's performance and avoid managerial or other problems that could
result from delay. See, Wells Fargo & Company, 72 FEDERAL
RESERVE B U L L E T I N 4 2 4 ( 1 9 8 6 ) .
9. The Houston banking market is approximated by the Houston
RMA. The San Antonio banking market is approximated by the San
Antonio RMA. The Fort Worth banking market is approximated by
Tarrant County (excluding Grapevine and Arlington), Cleburne in
Johnson County, the eastern half of Parker County (including Weatherford and Springtown), the communities of Boyd and Rhome in Wise
County, and the community of Roanoke in Denton County.
10. The Brown County banking market is approximated by Brown
County.
11. Barnett Banks of Florida, Inc.,
TIN 190 (1982); InterFirst Corporation,
TIN 243 (1982).
68 FEDERAL RESERVE BULLE68 FEDERAL RESERVE BULLE-
13. Both Applicant and IFC own limited service commercial banks
in Delaware. These banks were established primarily to offer consumer credit card services. The market for such credit card services is
nationwide and unconcentrated, and the market shares controlled by
Applicant and IFC are de minimis. Accordingly, consummation of the
proposed transaction will not have a significant adverse effect on
existing or probable future competition in any relevant market.
14. The CRA requires the Board, in its evaluation of a bank holding
company application, to assess the record of an applicant in meeting
the credit needs of the entire community, including the low- and
moderate-income neighborhoods, consistent with safe and sound
operation.
514
Federal Reserve Bulletin • June 1987
hoods in Dallas in a disparate manner with regard to
home mortgage and home improvement lending.
In this regard, the Board notes that Applicant has
recently entered into agreements with other community based organizations in Dallas and San Antonio that
provide for Applicant to enhance its efforts to help
meet local credit needs in those communities. Applicant's agreement with ACORN, for example, concerned four areas: housing-related activities, small
business and personal loans, basic banking services,
and community awareness. Specifically, Applicant
agreed to make a good faith effort to reach a home
mortgage and home improvement lending goal of a
specific dollar amount to qualified borrowers in lowand moderate-income census tracts in Dallas; to meet
with small businesses and small business groups and to
improve its efforts to create flexible financing policies;
to expand its money order business; to provide a lifeline checking plan; and to expand its community
awareness program through advertising, attendance at
community group meetings, and development of a
marketing plan.
On March 16, 1987, the San Antonio Reinvestment
Alliance, San Antonio, Texas, and several other community groups also signed an agreement with Applicant. Specifically, Applicant agreed to make a good
faith effort to achieve mortgage loan and home improvement loan goals of specific dollar amounts in
target markets; to make a good faith effort to meet
construction and commercial loan goals of specific
dollar amounts in target markets; to expand its senior
citizen checking service; and to develop a marketing
plan in certain target markets.
The Board also notes that the primary supervisors of
Applicant's banks have determined that all of Applicant's banks have satisfactory CRA records. Applicant has committed to implement its practices and
procedures with regard to CRA at IFC banks in order
to ensure those banks' compliance with CRA. Finally,
Applicant will file a detailed report of its review of its
CRA procedures in order that the Federal Reserve
System may evaluate Applicant's progress in meeting
its CRA objectives and may ensure that Applicant
improves the CRA performance of IFC's banks. Accordingly, based on all the facts of record, the Board
concludes that convenience and needs considerations
are consistent with approval of the applications.15
Applicant also has applied, pursuant to section
15. LUC has also requested that the Board order a public hearing to
enable LUC to present evidence substantiating its allegations. Although section 3(b) of the Act does not require a formal hearing in this
instance, the Board may, in any case, order an informal or formal
hearing. In light of the commitments made by Applicant and other
facts of record, the Board has determined that a hearing would serve
no useful purpose. Accordingly, LUC's request for a public hearing is
denied.
4(c)(8), to acquire IFC's nonbanking subsidiaries. Applicant operates mortgage lending and discount brokerage subsidiaries that compete with Company's nonbanking subsidiaries in these activities. Because of the
large number of companies that engage in these activities, however, Applicant's acquisition of these subsidiaries will not have a significantly adverse effect on
competition. Further, although both Applicant and
Company have subsidiaries that provide credit life and
accident and health insurance, the subsidiaries do not
compete directly in the provision of this service because this type of insurance is not provided except in
connection with extensions of credit made by each
organization's credit-granting subsidiaries. Accordingly, the Board concludes that this proposal will not
have any significant adverse effect upon competition
in any relevant market.
The National Association of Life Underwriters, the
National Association of Professional Insurance
Agents, the Independent Insurance Agents of America, Inc., the National Association of Casualty and
Surety Agents, and the National Association of Surety
Bond Producers submitted comments questioning the
permissibility of the insurance activities conducted by
Company's subsidiary, InterFirst Finance Company.
InterFirst Finance Company acts as a managing general agent in connection with the sale of property and
casualty insurance on the real and personal property
used in the operations of Company and its subsidiaries
and the sale of group insurance that protects the
employees of Company and its subsidiaries. These
activities are permissible under section 4(c)(8)(E) of
the Act and section 225.25(b)(8)(v) of the Board's
Regulation Y. These activities are also permissible
servicing activities under sections 4(a)(2)(A) and
4(c)(1)(C) of the Act, and section 225.22(a)(2)(ix) of the
Board's Regulation Y. The Board previously has determined that the prohibition on insurance activities
now contained in section 4(c)(8) of the Act as a result
of the 1982 Garn-St Germain Depository Institutions
Act has no bearing on the internal operations of a bank
holding company. 49 Federal Register 808 (1984).
Accordingly, the Board concludes that the insurance
activities of Interfirst Finance Company are consistent
with the Act.
There is no evidence in the record to indicate that
approval of this proposal would result in undue concentration of resources, decreased or unfair competition, conflicts of interests, unsound banking practices,
or other adverse effects on the public interest. Accordingly, the Board has determined that the balance of
public interest factors it must consider under section
4(c)(8) of the Act is favorable and consistent with
approval of the applications to acquire Company's
nonbanking subsidiaries and activities.
Legal Developments
The Board also has considered the notice of Applicant's proposed investment in InterFirst World Trade
Corporation under section 4(c)(14) of the Act. Based
on the facts of record, the Board has determined that
disapproval of the proposed investment is not warranted.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be,
and hereby are, approved. The acquisition of IFC 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,
acting pursuant to delegated authority. The determinations as to Applicant's nonbanking activities are subject to all of the conditions contained in Regulation Y,
including those in sections 225.4(d) and 225.23(b)(3)
(12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the
Board's authority to require such modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with the provisions and purposes of
the Act and the Board's regulations and orders issued
thereunder, or to prevent evasion thereof.
By order of the Board of Governors, effective
April 29, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate Secretary of the Board
Appendix A
Banking Subsidiaries to be Acquired
InterFirst Bank Delaware, New Castle, Delaware;
InterFirst Bank Abilene, N.A., Abilene, Texas; InterFirst Bank South Abilene, Abilene, Texas; InterFirst
Bank Addison, Addison, Texas; InterFirst Bank
Alamo Heights, N.A. Alamo Heights, Texas; InterFirst Bank SW Arlington, N.A., Arlington, Texas;
InterFirst Bank Arlington, N.A., Arlington, Texas;
InterFirst Bank Northwest, N.A., Austin, Texas; InterFirst Bank Westlake, N.A., Austin, Texas; InterFirst Bank Austin, N.A., Austin, Texas; InterFirst
Bank North Austin, N.A., Austin, Texas; InterFirst
Bank Baytown, Baytown, Texas; InterFirst Bank
Beaumont, Beaumont, Texas; InterFirst Bank SWHouston, N.A., Bellaire, Texas; InterFirst Bank
Brownwood, Brownwood, Texas; InterFirst Bank
Carrollton, Carrollton, Texas; InterFirst Bank Cleburne, N.A., Cleburne, Texas; InterFirst Bank Clif
All
ton, Clifton, Texas; InterFirst Bank Conroe, N.A.,
Conroe, Texas; InterFirst Bank Corsicana, N.A., Corsicana, Texas; InterFirst Bank Oak Cliff, Dallas, Texas; InterFirst Bank Dallas, N.A., Dallas, Texas; InterFirst Bank Pleasant Grove, Dallas, Texas; InterFirst
Bank Galleria, N.A., Dallas, Texas; InterFirst Bank
Park Cities, Dallas, Texas; InterFirst Bank Denison,
N.A., Denison, Texas; InterFirst Bank El Paso, N.A.,
El Paso, Texas; InterFirst Bank Chelmont, N.A., El
Paso, Texas; InterFirst Bank Ennis, N.A., Ennis,
Texas; InterFirst Bank Forney, Forney, Texas; InterFirst Bank Fort Worth, N.A. Fort Worth, Texas;
InterFirst Bank Gateway, N.A., Fort Worth, Texas;
InterFirst Bank River Oaks, Fort Worth, Texas; InterFirst Bank South Fort Worth, Fort Worth, Texas;
InterFirst Bank University Drive, Fort Worth, Texas;
InterFirst Bank Galveston, N.A., Galveston, Texas;
InterFirst Bank Greenville, N.A., Greenville, Texas;
InterFirst Bank Harlingen, N.A., Harlingen, Texas;
InterFirst Bank Hillsboro, Hillsboro, Texas; InterFirst
Bank Fannin, Houston, Texas; InterFirst Bank Post
Oak, Houston, Texas; InterFirst Bank East Houston,
Houston, Texas; InterFirst Bank Greenspoint, Houston, Texas; InterFirst Bank Houston, N.A., Houston,
Texas; InterFirst Bank San Felipe, N.A., Houston,
Texas; InterFirst Bank Hutchins, Hutchins, Texas;
InterFirst Bank DFW Freeport, N.A., DFW Freeport,
Texas; InterFirst Bank Las Colinas, Irving, Texas;
InterFirst Bank Irving, Irving, Texas; InterFirst Bank
Malakoflf, Malakoflf, Texas; InterFirst Bank Mount
Pleasant, N.A., Mount Pleasant, Texas; InterFirst
Bank Nassau Bay, N.A., Houston, Texas; InterFirst
Bank Nederland, Nederland, Texas; InterFirst Bank
Richland, N.A., Richland Hills, Texas; InterFirst
Bank Oak Hill, N.A., Oak Hill, Texas; InterFirst Bank
Odessa, N.A., Odessa, Texas; InterFirst Bank Paris,
Paris, Texas; InterFirst Bank Pasadena, Pasadena,
Texas; InterFirst Bank San Antonio, N.A., San Antonio, Texas; InterFirst Bank Stephenville, N.A., Stephenville, Texas; InterFirst Bank SW Temple, N.A.,
Temple, Texas; InterFirst Bank Temple, N.A., Temple, Texas; InterFirst Bank Tomball, Tomball, Texas;
InterFirst Bank Tyler, N.A., Tyler, Texas; InterFirst
Bank Victoria, Victoria, Texas; InterFirst Bank
Waco, N.A., Waco, Texas; InterFirst Bank Wichita
Falls, N.A., Wichita Falls, Texas; and InterFirst Bank
NW San Antonio, N.A., San Antonio, Texas.
Appendix B
Nonbanking Subsidiaries to be Acquired
InterFirst Funding Corporation, InterFirst Mortgage
Company, InterFirst Financial Corporation, and InterFirst Lending Corporation, all of Dallas, Texas, and
516
Federal Reserve Bulletin • June 1987
thereby engage in commercial, consumer, and mortgage lending activities pursuant to section 225.25(b)(1)
of the Board's Regulation Y; InterFirst Investment
Management, Inc., Dallas, Texas, and thereby engage
in investment advisory services pursuant to section
225.25(b)(4) of the Board's Regulation Y; InterFirst
Services Corporation, and InterFirst Services Corporation in Houston, both of Dallas, Texas, and thereby
engage in data processing pursuant to section
225.25(b)(7) of the Board's Regulation Y; InterFirst
ORDERS APPROVED
UNDER
BANK
HOLDING
Insurance Company, InterFirst Life Insurance Company, InterFirst Finance Company, all of Dallas, Texas, and thereby engage in insurance agency and underwriting activities related to extensions of credit made
by the banks and the bank holding company pursuant
to section 225.25(b)(8) of the Board's Regulation Y;
and InterFirst Securities Company, Dallas, Texas, and
thereby engage in discount brokerage activities pursuant to section 225.25(b)(15) of the Board's Regulation Y.
COMPANY
ACT
By the Board of Governors
Recent applications have been approved by the Board as listed below. Copies are available upon request to
Publications Services, Division of Support Services, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Section 3
Applicant
International Bancorporation, Inc.,
Brownsville, Texas
Effective
,A
date
Bank(s)
International Bank, N.A.,
Brownsville, Texas
April 29, 1987
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon
request to the Reserve Banks.
Section 3
Applicant
Alpha Financial Corporation,
Chicago, Illinois
Amoskeag Bank Shares, Inc.,
Manchester, New Hampshire
Arcadia Financial Corporation,
Kalamazoo, Michigan
B Bank, Inc.,
Downs, Kansas
Bank of Granite Corporation,
Granite Falls, North Carolina
Banks(s)
The District National Bank of
Chicago,
Chicago, Illinois
The Archer National Bank of
Chicago,
Chicago, Illinois
NTC Corp.,
Nashua, New Hampshire
Arcadia Bank,
Kalamazoo, Michigan
The State Bank of Downs,
Downs, Kansas
Bank of Granite,
Granite Falls, North Carolina
Reserve
Bank
Effective
date
Chicago
March 27, 1987
Boston
April 17, 1987
Chicago
April 16, 1987
Kansas City
March 25, 1987
Richmond
March 30, 1987
Legal Developments
Section 3—Continued
.
Applicant
Bank of New Hampshire
Corporation,
Manchester, New Hampshire
Bonner Springs Bancshares,
Inc.,
Bonner Springs, Kansas
Cherokee Bancorp, Inc.,
Cherokee, Oklahoma
CITIZENS BANKING
CORPORATION,
Flint, Michigan
CNB Bancshares, Inc.,
Evansville, Indiana
The Colonial BancGroup, Inc.,
Montgomery, Alabama
Continental Illinois Bancorp,
Inc.,
Chicago, Illinois
Dominion Bankshares
Corporation,
Roanoke, Virginia
DU PAGE COUNTY
BANCORP, INC.,
Glendale Heights, Illinois
Enots, Ltd.,
George Town, Grand Cayman
Nebema, Ltd.,
George Town, Grand Cayman
Farmers Capital Bank
Corporation,
Frankfort, Kentucky
Fayette County Bancshares,
Inc.,
St. Elmo, Illinois
Financial Services Bancorp,
Inc.,
Miami, Florida
First of America Bank
Corporation,
Kalamazoo, Michigan
r» i / x
Banks(s)
Bank of New HampshirePortsmouth,
Portsmouth, New Hampshire
First State Bank of Lansing,
Lansing, Kansas
Reserve
^
Effective
^
Boston
April 3, 1987
Kansas City
March 19, 1987
Kansas City
March 19, 1987
Chicago
April 1, 1987
St. Louis
April 7, 1987
Atlanta
April 16, 1987
Chicago
April 17, 1987
Richmond
April 1, 1987
Chicago
April 16, 1987
Atlanta
April 6, 1987
Horse Cave State Bank,
Horse Cave, Kentucky
St. Louis
April 15, 1987
Fayette County Bank,
St. Elmo, Illinois
St. Louis
April 7, 1987
Eagle Bank of Broward, N.A.,
Fort Lauderdale, Florida
Atlanta
March 24, 1987
WB FINANCIAL CORP.,
Wayne, Michigan
Chicago
April 17, 1987
Alfalfa County Bancshares, Inc.,
Cherokee, Oklahoma
Commercial National Bank of
Berwyn,
Berwyn, Illinois
The Farmers National Bank of
Princeton,
Princeton, Indiana
Jackson County Bancshares, Inc.,
Scottsboro, Alabama
Continental Illinois Bank of
Deerfield, N.A.,
Deerfield, Illinois
Continental Bank of Buffalo
Grove,
Buffalo Grove, Illinois
Continental Bank of Oakbrook
Terrace,
Oakbrook Terrace, Illinois
Continental Illinois Bank of
Western Springs, N.A.,
Western Springs, Illinois
First National Financial
Corporation,
Clarksville, Tennessee
SOUTHWEST BANCORP,
INC.,
Worth, Illinois
Ocean Bankshares, Inc.,
Miami, Florida
All
518
Federal Reserve Bulletin • June 1987
Section 3—Continued
.
Applicant
First Bancorp, Inc.,
Oneida, Tennessee
First State Bank of Miller Profit
Sharing Trust No. 1,
Miller, South Dakota
First Union Corporation,
Charlotte, North Carolina
First Virginia Banks, Inc.,
Falls Church, Virginia
First Wisconsin Corporation,
Milwaukee, Wisconsin
First Wisconsin Corporation,
Milwaukee, Wisconsin
FNB Corporation,
Holly Hill, South Carolina
Fort Wayne National
Corporation,
Fort Wayne, Indiana
Galva Bancshares, Inc.,
Galva, Kansas
Gideon Financial Corporation,
Silver Lake, Kansas
Heritage Bancorp Co.,
Cleveland, Oklahoma
K. Roberts, Inc.,
Hendrum, Minnesota
Leachville State Bancshares,
Inc.,
Leachville, Arkansas
Lyons Bancorp, Inc.,
Lyons, New York
M&H Financial Services, Inc.,
Miller, South Dakota
Mcintosh County Bank Holding
Company, Inc.,
Ashley, North Dakota
MGeorgia Bankshares, Inc.,
Hawkinsville, Georgia
Putnam-Greene Financial
Corporation,
Eatonton, Georgia
Raritan Bancorp Inc.,
Raritan, New Jersey
Sentry Bancorp, Inc.,
Minneapolis, Minnesota
r. i / ^
Banks(s)
The First National Bank of
Oneida,
Oneida, Tennessee
M&H Financial Services, Inc.,
Miller, South Dakota
Reserve
Bank
Effective
date
Atlanta
March 25, 1987
Minneapolis
March 31, 1987
First North Port Bancorp,
North Port, Florida
Tri-City Bancorp, Inc.,
Blountville, Tennessee
Du Page Bancshares, Inc.,
Glen Ellyn, Illinois
Naper Financial Corporation,
Naperville, Illinois
The First National Bank of
Holly Hill,
Holly Hill, South Carolina
Exchange Bank,
Warren, Indiana
Richmond
April 10, 1987
Richmond
April 21, 1987
Chicago
March 25, 1987
Chicago
March 25, 1987
Richmond
March 25, 1987
Chicago
April 20, 1987
Geneseo Bancshares, Inc.,
Geneseo, Kansas
Silver Lake Bank,
Silver Lake, Kansas
The First National Bank of
Cleveland,
Cleveland, Oklahoma
Viking Bank,
Hendrum, Minnesota
Leachville State Bank,
Leachville, Arkansas
Kansas City
April 15, 1987
Kansas City
April 17, 1987
Kansas City
March 19, 1987
Minneapolis
April 14, 1987
St. Louis
April 17, 1987
The Lyons National Bank,
Lyons, New York
First State Bank of Highmore,
Highmore, South Dakota
Mcintosh County Bank,
Ashley, North Dakota
New York
April 20, 1987
Minneapolis
March 31, 1987
Minneapolis
April 10, 1987
The Pulaski Banking Company,
Hawkinsville, Georgia
The Farmers Bank,
Union Point, Georgia
The Farmers and Merchants
Bank,
Eatonton, Georgia
Raritan Savings Bank,
Raritan, New Jersey
Cannon Valley Bank,
Dundas, Minnesota
Atlanta
March 27, 1987
Atlanta
April 8, 1987
New York
April 9, 1987
Minneapolis
March 27, 1987
Legal Developments
Section 3—Continued
Applicant
Smith Associated Banking
Corporation,
Little Rock, Arkansas
Southeastern Bancshares, Inc.
Nashville, Tennessee
SOUTHWEST BANCORP,
INC.,
Worth, Illinois
State Bank of Lake Elmo
Employee Stock Ownership
Plan and Trust,
Lake Elmo, Minnesota
Sterling Financial Corporation,
Lancaster, Pennsylvania
Straz Investment Company,
Inc.,
Belleair Shore, Florida
Totalbank Corporation of
Florida,
Miami, Florida
Union Planters Corporation,
Memphis, Tennessee
Union Planters Corporation,
Memphis, Tennessee
Waconia Bancorporation, Inc.,
Waconia, Minnesota
Washington Bancorp, Inc.,
Hoboken, New Jersey
Banks(s)
Reserve
Bank
Effective
date
Stephens Security Bank,
Stephens, Arkansas
St. Louis
April 15, 1987
Quality Financial Services
Corporation,
Alexandria, Tennessee
M. G. Bancorporation, Inc.,
Chicago, Illinois
WORTH BANCORP, INC.,
Chicago, Illinois
ILLINI BANCORP, INC.,
Danville, Illinois
Lake Elmo Bancorp., Inc.,
Lake Elmo, Minnesota
Atlanta
April 17, 1987
Chicago
April 16, 1987
Minneapolis
March 31, 1987
Bank of Lancaster County, N.A.,
Strasburg, Pennsylvania
First Gulf Bank,
Gulfport, Florida
Philadelphia
April 21, 1987
Atlanta
April 13, 1987
Trade National Bank,
Miami, Florida
Atlanta
April 8, 1987
BoRC Financial Corporation,
Harriman, Tennessee
First Citizens Bank of
Hohenwald,
Hohenwald, Tennessee
Waconia State Bank,
Waconia, Minnesota
Washington Savings Bank,
Hoboken, New Jersey
St. Louis
April 7, 1987
St. Louis
April 7, 1987
Minneapolis
April 8, 1987
New York
April 9, 1987
Section 4
Applicant
AMCORE Financial, Inc.,
Rockford, Illinois
Amoskeag Bank Shares, Inc.,
Manchester, New Hampshire
Nonbanking
Company/Activity
engage in originating, acquiring,
selling and servicing mortgage
loans
Entrepo Financial Resources,
Inc.,
Jenkintown, Pennsylvania
Reserve
Bank
Effective
date
Chicago
April 17, 1987
Boston
April 15, 1987
All
520
Federal Reserve Bulletin • June 1987
Section 4—Continued
Applicant
Banc One Corporation,
Columbus, Ohio
Bank of New England
Corporation,
Boston, Massachusetts
The Chase Manhattan
Corporation,
New York, New York
Norwest Corporation,
Minneapolis, Minnesota
PKbanken,
Stockholm, Sweden
The Summit Bancorporation,
Summit, New Jersey
SunTrust Banks, Inc.,
Atlanta, Georgia
Trustcorp, Inc.,
Toledo, Ohio
United Financial Banking
Companies, Inc.,
Vienna, Virginia
Nonbanking
Company/Activity
Worthington Leasing Corporation
(WLC),
Worthington, Ohio
Plymouth, Inc.,
Miami Lakes, Florida
Financial Enterprises Corp.,
Canton, Massachusetts
acquire certain assets and assume
certain liabilities of Freedom
Mortgage Company,
Tampa, Florida
Gross & Webster, Inc.,
Omaha, Nebraska
The English Association,
Incorporated,
New York, New York
National Machine Tool Finance
Corporation,
Bridgewater, New Jersey
providing financial advisory
services to issuers of municipal
securities
William Fall, Inc.,
Perrysburg, Ohio
First Government Investors
Corporation,
Landover, Maryland
Reserve
Bank
Effective
date
Cleveland
March 31, 1987
Boston
March 27, 1987
New York
April 15, 1987
Minneapolis
March 25, 1987
New York
April 17, 1987
New York
April 20, 1987
Atlanta
April 1, 1987
Cleveland
March 24, 1987
Richmond
March 25, 1987
Sections 3 and 4
Applicant
The Citizens and Southern
Corporation,
Atlanta, Georgia
The Citizens and Southern
Georgia Corporation,
Atlanta, Georgia
Pacific Western Bancshares,
San Jose, California
Bank(s)/Nonbanking
Company
Reserve
Bank
Effective
date
Peoples Equity Shares, Inc.
Carrollton, Georgia
Atlanta
March 25, 1987
Cobanco, Inc.,
Santa Cruz, California
San Francisco
April 17, 1987
Legal Developments
ORDERS APPROVED
UNDER BANK
MERGER
All
ACT
By the Board of Governors
Applicant
Effective
date
Bank(s)
Community Bank-Northwest,
Houston, Texas
Community Bank-I 10, West, N.A.,
Katy, Texas
April 15, 1987
By Federal Reserve Banks
Applicant
Chemical Bank Clare,
Clare, Michigan
County Bank and Trust,
Santa Cruz, California
First American Bank,
Rosemead, California
The New Colonial Bank,
Opelika, Alabama
Texas Capital Bank-Richmond,
Richmond, Texas
PENDING
CASES INVOLVING
Reserve
date
Bank(s)
Mount Pleasant, Michigan, office
of Michigan National Bank—
Valley,
Midland, Michigan
Pacific Valley Bank,
San Jose, California
First Arroyo Bank,
South Pasadena, California
Colonial Bank,
Montgomery, Alabama
Texas Capital Bank-Katy, N.A.,
Katy, Texas
THE BOARD
OF
Effective
Chicago
April 17, 1987
San Francisco
April 17, 1987
San Francisco
April 16, 1987
Atlanta
April 9, 1987
Dallas
March 25, 1987
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.
Securities Industry Association v. Board of Governors, et al., No. 87-1169 (D.C. Cir., filed April 17,
1987).
Jones v. Volcker, No. 87-0427 (D.D.C., filed Feb. 19,
1987).
Bankers Trust New York Corp. v. Board of Governors,
No. 87-1035 (D.C. Cir., filed Jan. 23, 1987).
Securities Industry Association v. Board of Governors, et al., No. 87-1030 (D.C.Cir., filed Jan. 20,
1987).
Grimm v. Board of Governors, No. 87-4006 (2nd Cir.,
filed Jan. 16, 1987).
Independent Insurance Agents of America, et al. v.
Board of Governors, Nos. 86-1572, 1573, 1576
(D.C. Cir., filed Oct. 24, 1986).
Securities Industry Association v. Board of Governors, No. 86-2768 (D.D.C., filed Oct. 7, 1986).
Independent Community Bankers Association of
South Dakota v. Board of Governors, No. 86-5373
(8th Cir., filed Oct. 3, 1986).
Jenkins v. Board of Governors, No. 86-1419 (D.C.
Cir., filed July 18, 1986).
Securities Industry Association v. Board of Governors, No. 86-1412 (D.C. Cir., filed July 14, 1986).
Adkins v. Board of Governors, No. 86-3853 (4th Cir.,
filed May 14, 1986).
Optical Coating Laboratory, Inc. v. United States,
No. 288-86C (U.S. Claims Ct., filed May 6, 1986).
CBC, Inc. v. Board of Governors, No. 86-1001 (10th
Cir., filed Jan. 2, 1986).
522
Federal Reserve Bulletin • June 1987
Myers, et al. v. Federal Reserve Board, No. 85-1427
(D. Idaho, filed Nov. 18, 1985).
Souser, et al. v. Volcker, et al., No. 85-C-2370, et al.
(D. Colo., filed Nov. 1, 1985).
Podolak v. Volcker, No. C85-0456, et al. (D. Wyo.,
filed Oct. 28, 1985).
Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa,
filed Oct. 22, 1985).
Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D.
Minn., filed Oct. 21, 1985).
Kurkowski v. Wilkinson, et al.., No. CV-85-0-916 (D.
Neb., filed Oct. 16, 1985).
Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D.,
filed Oct. 8, 1985).
Independent Community Bankers Associaton of South
Dakota v. Board of Governors, No. 84-1496 (D.C.
Cir., filed Aug. 7, 1985).
Urwyler, et al. v. Internal Revenue Service, et al., No.
85-2877 (9th Cir., filed July 18, 1985).
Wight, et al. v. Internal Revenue Service, et al., No.
85-2826 (9th Cir., filed July 12, 1985).
Florida Bankers Association v. Board of Governors,
No. 84-3883 and No. 84-3884 (11th Cir., filed Feb.
15, 1985).
Florida Department of Banking v. Board of Governors, No. 84-3831 (11th Cir., filed Feb. 15, 1985),
and No. 84-3832 (11th Cir., filed Feb. 15, 1985).
Lewis v. Volcker, et al., No. 86-3210 (6th Cir., filed
Jan. 14, 1985).
Brown v. United States Congress, et al., No. 84-28876(IG) (S.D. Cal., filed Dec. 7, 1984).
Melcher v. Federal Open Market Committee, No. 841335 (D.D.C., filed Apr. 30, 1984).
Florida Bankers Association, et al. v. Board of Governors, Nos. 84-3269, 84-3270 (11th Cir., filed April
20, 1984).
Securities Industry Association v. Board of Governors, No. 86-5089, et al. (D.C. Cir., filed Oct. 24,
1980)
A1
Financial and Business Statistics
CONTENTS
Domestic
MONEY
WEEKLY REPORTING
Financial
Statistics
STOCK AND BANK
CREDIT
Reserves, money stock, liquid assets, and debt
measures
A4 Reserves of depository institutions, Reserve
Bank credit
A5 Reserves and borrowings—Depository
institutions
A6 Selected borrowings in immediately available
funds—Large member banks
A19
A20
A21
A22
COMMERCIAL
BANKS
Assets and liabilities
All reporting banks
Banks in New York City
Branches and agencies of foreign banks
Gross demand deposits—individuals,
partnerships, and corporations
A3
POLICY
A7
A8
A9
INSTRUMENTS
Federal Reserve Bank interest rates
Reserve requirements of depository institutions
Federal Reserve open market transactions
FEDERAL RESERVE
BANKS
A10 Condition and Federal Reserve note statements
A l l Maturity distribution of loan and security
holdings
MONETAR Y AND CREDIT
AGGREGATES
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks
COMMERCIAL
BANKING
INSTITUTIONS
A17 Major nondeposit funds
A18 Assets and liabilities, last-Wednesday-of-month
series
FINANCIAL
MARKETS
A23 Commercial paper and bankers dollar
acceptances outstanding
A23 Prime rate charged by banks on short-term
business loans
A24 Interest rates—money and capital markets
A25 Stock market—Selected statistics
A26 Selected financial institutions—Selected assets
and liabilities
FEDERAL
FINANCE
A28
A29
A30
A30
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types and
ownership
A31 U.S. government securities dealers—
Transactions
A32 U.S. government securities dealers—Positions
and financing
A3 3 Federal and federally sponsored credit
agencies—Debt outstanding
SECURITIES MARKETS AND
CORPORATE
FINANCE
A34 New security issues—State and local
governments and corporations
A35 Open-end investment companies—Net sales and
asset position
A35 Corporate profits and their distribution
2
Federal Reserve Bulletin • June 1987
A36 Nonfinancial corporations—Assets and
liabilities
A36 Total nonfarm business expenditures on new
plant and equipment
A37 Domestic finance companies—Assets and
liabilities and business credit
A54 Foreign official assets held at Federal Reserve
Banks
A55 Foreign branches of U.S. banks—Balance sheet
data
A57 Selected U.S. liabilities to foreign official
institutions
REAL
REPORTED BY BANKS
ESTATE
A38 Mortgage markets
A39 Mortgage debt outstanding
CONSUMER
INSTALLMENT
CREDIT
A40 Total outstanding and net change
A41 Terms
IN THE UNITED
A57
A58
A60
A61
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A61 Banks' own claims on unaffiliated foreigners
A62 Claims on foreign countries—Combined
domestic offices and foreign branches
REPORTED BY NONBANKING
BUSINESS
ENTERPRISES IN THE UNITED STATES
FLOW OF FUNDS
A42 Funds raised in U.S. credit markets
A43 Direct and indirect sources of funds to credit
markets
A63 Liabilities to unaffiliated foreigners
A64 Claims on unaffiliated foreigners
Domestic
SECURITIES HOLDINGS
SELECTED
Nonfinancial
Statistics
MEASURES
A44 Nonfinancial business activity—Selected
measures
A45 Labor force, employment, and unemployment
A46 Output, capacity, and capacity utilization
A47 Industrial production—Indexes and gross value
A49 Housing and construction
A50 Consumer and producer prices
A51 Gross national product and income
A52 Personal income and saving
International
SUMMARY
STATES
Statistics
STATISTICS
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
A54 U.S. reserve assets
AND
TRANSACTIONS
A65 Foreign transactions in securities
A66 Marketable U.S. Treasury bonds and notes—
Foreign transactions
INTEREST AND EXCHANGE
RATES
A67 Discount rates of foreign central banks
A67 Foreign short-term interest rates
A68 Foreign exchange rates
A69 Guide to Tabular
Presentation,
Statistical Releases, and Special
Tables
SPECIAL
TABLES
A70 Assets and liabilities of commercial banks,
March 31, 1986
A76 Assets and liabilities of commercial banks,
June 30, 1986
Money Stock and Bank Credit
1.10
A3
R E S E R V E S , M O N E Y STOCK, L I Q U I D A S S E T S , A N D D E B T M E A S U R E S
Monetary and credit aggregates
(annual rates of change, seasonally adjusted in percent) 1
Item
Q2
Q4
Q3
1986
Nov.
Ql
1987
Dec.
Jan.
Feb.'
Mar.
2
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
S
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
Nontransaction
10 In M2 5
11 In M3 only 6
1987
1986
institutions
17.8
19.8
17.6'
8.9
22.9
23.8
23.2
10.0
21.5
19.9
22.4
10.3
18.6
18.7
20.8
11.9
32.6
27.7'
35.2
13.4
40.5
32.3
39.3
14.1
21.6
28.8
27.3
15.9
-3.2
-6.4
-2.7
7.1
-4.9
1.4
-4.3
2.3
15.5
9.4
8.7
7.1
10.2
16.5
10.6
9.6
8.0
12.3
17.0
9.2
8.0
8.2'
12.1
13.0
6.4
6.6
6.6
12.2
18.8
6.4
6.4
7.7'
12.2'
30.5
10.5'
10.3
9.7'
15.4
11.7
9.5
9.2'
9.8'
13.5'
-.7
-.3
1.4
2.7
8.9
3.3
1.8
1.8
n.a.
n.a.
7.5'
6.0 r
8.6
5.7'
6.6
3.4
4.1
7.5
2.2
6.5'
3.7
9.1
8.7'
8.2'
-.1
8.1
1.3
2.1
13.4
-2.5
-3.5
25.0
-7.5
-1.5
36.9
-10.7
.4
37.0
-4.9
9.5
36.2
-13.3
7.1
34.4
-3.9
8.3'
41.2
.0
15.6'
34.5
-6.9
.8
27.7
-8.6
12.6
16.0
.3
11.2
21.0
-3.4
2.8
23.0
-6.4
-7.3
27.9
-4.8
-10.0
21.7
-8.2
-12.2
19.6
-6.8
-5.4
33.2
-3.9
-14.0
29.1
.7
-9.5
11.6
9.8
4.9
14.5
11.7
10.6'
4.6
10.2
.9
n.a.
n.a.
3.8
components
Time and savings deposits
Commercial banks
Savings 7
Small-denomination time 8
Large-denomination t i m e 9 1 0
Thrift institutions
Savings 7
15
16
Small-denomination time
17
Large-denomination time 9
12
13
14
Debt
components4
18 Federal
19 Nonfederal
20 Total loans and securities at commercial b a n k s "
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. The monetary base not adjusted for discontinuities consists of total
reserves plus required clearing balances and adjustments to compensate for float
at Federal Reserve Banks plus the currency component of the money stock less
the amount of vault cash holdings of thrift institutions that is included in the
currency component of the money stock plus, for institutions not having required
reserve balances, the excess of current vault cash over the amount applied to
satisfy current reserve requirements. After the introduction of contemporaneous
reserve requirements (CRR), currency and vault cash figures are measured over
the weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock plus the remaining items seasonally
adjusted as a whole.
4. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their OCD liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts
(MMDAs), savings and small-denomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and
tax-exempt general purpose and broker/dealer money market mutual funds.
Excludes individual retirement accounts (IRA) and Keogh balances at depository
institutions and money market funds. Also excludes all balances held by U.S.
12.1'
12.1
8.8
10.2
12.8
10.1
14.6'
11.4
6.4'
19.1'
14.2'
15.0
29.5
-4.7
-10.1
8.6'
15.(K
16.1
commercial banks, money market funds (general purpose and broker/dealer),
foreign governments and commercial banks, and the U.S. government. Also
subtracted is a consolidation adjustment that represents the estimated amount of
demand deposits and vault cash held by thrift institutions to service their time and
savings deposits.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt
data are based on monthly averages. Growth rates for debt reflect adjustments for
discontinuities over time in the levels of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker/dealer), MMDAs, and savings and small time
deposits less the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposit liabilities.
6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents,
money market fund balances (institution-only), less a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by
institution-only money market mutual funds.
7. Excludes MMDAs.
8. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All IRA and Keogh accounts at commercial
banks and thrifts are subtracted from small time deposits.
9. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
10. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.
11. Changes calculated from figures shown in table 1.23.
A4
Domestic Financial Statistics • June 1987
1.11
RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE B A N K CREDIT
Millions of dollars
Monthly a v e r a g e s of
daily figures
Weekly a v e r a g e s of daily figures for w e e k ending
1987
1987
Factors
Jan.
Feb.
Mar.
F e b . 11
F e b . 18
230,490
222,882
221,583
221,303
222,021
219,067
220,347
202,966
199,842
3,124
8,268
7,786
482
0
586
1,712
16.958
11,060
5,018
17,593
195,023
194,910
113
7,750
7,719
31
0
554
2,085
17,470
11,070
5,018
17,652
195,925
195,619
306
7,772
7,719
53
0
535
466
16,885
11,083
5,018
17,711
193,738
193,738
0
7,719
7,719
0
0
401
530
17,914
11,059
5,018
17,639
194,716
194,716
0
7,719
7,719
0
0
745
865
17,975
11,066
5,018
17,653
193,374
193,374
0
7,719
7,719
0
0
614
544
16,817
11,082
5,018
17,667
194,762
194,762
0
7,719
7,719
0
0
512
629
16,725
11,085
5,018
17,681
207,943
456
206,450
484
207,265
506
206,422
476
206,994
480
206,477
494
9,824
226
4,834
228
3,161
238
3,832
202
4,271
248
2,353
506
2,519
424
2,026
442
3,726
405
2,168
373
6,412
6,602
6,345
6,973
6,243
6,421
6,164
6,180
6,348
6,429
35,081
35,412
32,983
34,980
32,514
35,002
35,729
34,468
35,148
M a r . 11
M a r . 18
M a r . 25
F e b . 25
Mar. 4
M a r . 11
M a r . 18
M a r . 25
221,937
221,286
221,096
196,540
195,334
1,006
7,856
7,719
137
0
419
435
16,687
11,083
5,018
17,695
195,737
195,388
349
7,818
7,719
99
0
502
384
16,845
11,083
5,018
17,709
195,389
195,389
0
7,719
7,719
0
0
553
373
17,063
11,082
5,018
17,723
206,263
511
207,255
498
207,704
500
207,318
507
4,208
219
3,327
244
3,391
237
3,255
208
2,865
254
2,101
399
2,098
522
2,043
399
2,145
468
1,975
423
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit
2
U . S . g o v e r n m e n t securities'
3
Bought outright
4
Held under r e p u r c h a s e a g r e e m e n t s . . . .
5
F e d e r a l agency obligations
6
Bought outright
7
Held 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 . . . .
8
Acceptances
9
Loans
10
Float
11
O t h e r Federal R e s e r v e a s s e t s
12 Gold s t o c k 2
13 Special drawing rights certificate account
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 FUNDS
15 C u r r e n c y in circulation
16 T r e a s u r y cash holdings 2
Deposits, o t h e r than 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
17
Treasury
18
Foreign
19
Service-related b a l a n c e s and
adjustments
20
Other
21 Other F e d e r a l R e s e r v e liabilities and
capital
22 R e s e r v e balances with F e d e r a l
Reserve Banks3
36,441
End-of-month
figures
Wednesday
1987
Jan.
Feb.
figures
1987
Mar.
Feb. 11
F e b . 18
F e b . 25
Mar. 4
SUPPLYING RESERVE FUNDS
23 Reserve Bank credit
24
25
26
27
28
29
30
31
32
33
U . S . g o v e r n m e n t securities 1
Bought outright
Held 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 . . . .
F e d e r a l agency obligations
Bought outright
Held 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 . . . .
Acceptances
Loans
Float
Other Federal Reserve assets
34 Gold s t o c k 2
35 Special drawing rights certificate account
36 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
...
230,331
220,180
227,578
220,661
222,443
216,786
219,837
225,473
220,131
220,344
202,486
199,318
3,168
8,576
7,719
857
0
513
716
18,040
194,178
194,178
0
7,719
7,719
0
0
514
1,023
16,746
196,409
196,409
0
7,719
7,719
0
0
1,587
5,241
16,622
194,122
194,122
0
7.719
7,719
0
0
452
337
18,031
195,295
195,295
0
7,719
7,719
0
0
446
2,125
16,858
190,043
190,043
0
7,719
7,719
0
0
1,239
935
16,850
194,457
194,457
0
7,719
7,719
0
0
538
260
16,863
199,340
196,059
3,281
8,191
7,719
472
0
455
368
17,119
194,413
194,182
231
7,826
7,719
107
0
420
387
17,085
194,544
194,544
0
7,719
7,719
0
0
573
249
17,259
11,062
5,018
17,623
11,085
5,018
17,679
11,081
5,018
17,735
11.059
5,018
17,651
11,074
5,018
17,665
11,085
5,018
17,679
11,084
5,018
17,693
11,082
5,018
17,707
11,082
5,018
17,721
11,082
5,018
17,735
205,355
465
205,988
510
207,818
206,819
479
207,312
484
206,223
507
206,782
514
207,773
497
207,692
505
207,331
515
15,746
226
3,482
201
3,576
268
3,541
177
5,370
222
4,151
172
3,939
249
2,715
196
2,437
190
2,953
226
1,786
453
1,799
539
1,817
577
1,786
402
1,800
479
1,799
640
1,810
417
1,810
412
1,807
498
1,807
610
ABSORBING RESERVE FUNDS
37 C u r r e n c y in circulation
38 T r e a s u r y cash holdings 2
D e p o s i t s , o t h e r t h a n r e s e r v e b a l a n c e s with
Federal Reserve Banks
39
Treasury
40
Foreign
41
Service-related b a l a n c e s and
adjustments
42
Other
43 O t h e r F e d e r a l R e s e r v e liabilities and
capital
44 R e s e r v e balances with F e d e r a l
Reserve Banks3
SIS
7,201
6,110
6,682
6,124
6,085
6,214
6,099
6,252
6,140
6,267
32,802
35,334
40,156
35.060
34,448
30,861
33,822
39,625
34,684
34,470
1. Includes securities l o a n e d — f u l l y g u a r a n t e e d by U . S g o v e r n m e n t securities
pledged with F e d e r a l R e s e r v e B a n k s — a n d excludes
any securities sold a n d
scheduled t o b e b o u g h t b a c k u n d e r m a t c h e d sale-purchase t r a n s a c t i o n s .
2. Revised f o r periods b e t w e e n O c t o b e r 1986 and F e b r u a r y 1987. During this
interval, o u t s t a n d i n g gold certificates w e r e inadvertently in e x c e s s of the gold
stock. Revised d a t a not included in this table are available f r o m the Division of
R e s e a r c h and Statistics, Banking Section.
3. E x c l u d e s 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 f o r
float.
NOTE. For a m o u n t s of c u r r e n c y and coin held a s r e s e r v e s , see table 1.12.
Money Stock and Bank Credit
1.12
RESERVES A N D BORROWINGS
A5
Depository Institutions
Millions of dollars
Monthly a v e r a g e s 8
R e s e r v e classification
1
2
3
4
5
6
7
8
9
10
R e s e r v e b a l a n c e s with R e s e r v e B a n k s '
Total vault c a s h 2
Vault cash u s e d to satisfy r e s e r v e r e q u i r e m e n t s 1 .
S u r p l u s vault c a s h 4
Total r e s e r v e s 5
Required r e s e r v e s
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
Total b o r r o w i n g s at R e s e r v e B a n k s
Seasonal 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 credit at R e s e r v e B a n k s 7
1984
1985
1986
Dec.
Dec.
Dec.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
21,738
22,313''
18,958
3,355 r
40,696
39,843
853
3,186
113
2,604
27,620
22,953'
20,522
2,431'
48,142
47,085
1,058
1,318
56
499
37,360
24,071
22,199
1,872
59,560
58,191
1,369
827
38
303
30,165
23,451
21,112
2,339
51,277
50,538
740
872
144
465
31,922
23,384
21,267
2,117
53,189
52,463
726
1,008
137
570
32,947
23,753
21,676
2,078
54,623
53,877
746
841
99
497
34,803
23,543
21,595
1,947
56,399
55,421
978
752
70
418
37,360
24,071
22,199
1,872
59,560
58,191
1,369
827
38
303
36,584
25,049
23,084
1,965
59,668
58,600
1,068
580
34
225
33,625
25,899
23,435
2,454
57,060
55,849
1,211
556
71
283
1986
1987
Biweekly a v e r a g e s of daily figures f o r w e e k s ending
1986
11
12
13
14
15
16
17
18
19
20
R e s e r v e b a l a n c e s with R e s e r v e B a n k s '
Total vault c a s h 2
Vault c a s h used t o satisfy r e s e r v e r e q u i r e m e n t s 3 .
S u r p l u s vault c a s h 4
Total r e s e r v e s 5
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
Total 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 credit at R e s e r v e B a n k s 7
1987
Dec. 17
D e c . 31
Jan. 14
J a n . 28
F e b . 11
F e b . 25
Mar. 11
Mar. 25
A p r . 8?
A p r . 22'*'
36,527
23,458
21,725
1,733
58,251
57,511
740
514
34
310
38,659
24,729
22,758
1,971
61,417
59,369
2,048
1,186
37
282
38,710
24,583
22,815
1,768
61,525
60,680
845
505
28
215
35,228
25,028
23,012
2,017
58,239
57,033
1,206
689
36
227
32,991
27,327
24,677
2,650
57,667
56,208
1,459
425
56
265
33,742
25,237
22,857
2,380
56,599
55,530
1,070
680
81
299
35,400
23,662
21,582
2,080
56,982
56,021
961
466
83
275
34,809
24,077
22,038
2,039
56,847
55,866
981
528
96
263
36,357
23,198
21,345
1,853
57,702
57,003
699
641
98
248
38,704
23,479
21,783
1,697
60,487
59,559
928
956
110
267
1. E x c l u d e s required clearing b a l a n c e s and a d j u s t m e n t s to 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 to the m a i n t e n a n c e periods in which the vault cash can be used to
satisfy r e s e r v e r e q u i r e m e n t s . U n d e r 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 ,
m a i n t e n a n c e p e r i o d s end 30 d a y s a f t e r the lagged c o m p u t a t i o n periods in which
the b a l a n c e s are held.
3. Equal to all vault cash held during the lagged c o m p u t a t i o n period by
institutions having required r e s e r v e balances at Federal R e s e r v e B a n k s plus the
a m o u n t of vault cash equal t o required r e s e r v e s during the m a i n t e n a n c e period at
institutions having n o required r e s e r v e balances.
4. Total vault cash at institutions having no required r e s e r v e balances less the
a m o u n t of vault c a s h equal to their required reserves during the m a i n t e n a n c e
period.
5. Total r e s e r v e s not a d j u s t e d f o r discontinuities consist of r e s e r v e balances
with F e d e r a l R e s e r v e B a n k s , which e x c l u d 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 f o r float, plus vault cash used to satisfy r e s e r v e
r e q u i r e m e n t s . Such vault c a s h consists of all vault cash held during the lagged
c o m p u t a t i o n period by institutions having required 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 cash equal t o required r e s e r v e s during the
m a i n t e n a n c e period at institutions having no required r e s e r v e b a l a n c e s .
6. Reserve balances with Federal R e s e r v e B a n k s plus vault cash u s e d to satisfy
reserve r e q u i r e m e n t s less required r e s e r v e s .
7. E x t e n d e d credit consists of b o r r o w i n g at the d i s c o u n t w i n d o w u n d e r the
terms and conditions established f o r the e x t e n d e d credit p r o g r a m t o help
depository institutions deal with sustained liquidity p r e s s u r e s . B e c a u s e t h e r e is
not the same need to repay such b o r r o w i n g p r o m p t l y a s t h e r e is with traditional
short-term a d j u s t m e n t credit, the m o n e y m a r k e t impact of e x t e n d e d credit is
similar to that of n o n b o r r o w e d r e s e r v e s .
8. Before F e b r u a r y 1984, d a t a are p r o r a t e d m o n t h l y a v e r a g e s of weekly
averages; beginning F e b r u a r y 1984, d a t a are p r o r a t e d m o n t h l y a v e r a g e s of
biweekly averages.
NOTE. T h e s e d a t a also a p p e a r in the B o a r d ' s H . 3 (502) release. F o r a d d r e s s , see
inside front cover.
A6
1.13
Domestic Financial Statistics • June 1987
S E L E C T E D B O R R O W I N G S IN I M M E D I A T E L Y A V A I L A B L E F U N D S
Large Member Banks'
Averages of daily figures, in millions of dollars
1987 week ending Monday
By maturity and source
Jan. 12
1
2
3
4
Federal funds purchased, repurchase agreements, and other
selected borrowing in immediately available funds
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and
foreign official institutions, and United States
government agencies
For one day or under continuing contract
For all other maturities
Jan. 19'
Jan. 26
Feb. 2
Feb. 9
Feb. 16
Feb. 23
Mar. 2 r
Mar. 9 f
84,218
7,915
81,475
8,788
78,829''
8,331
78,255
8,052
80,428
8,229
76,927
8,764
77,242
8,315
75,122
9,130
80,561
8,677
37,498
6,646
35,465
7,242
32,454f
7,220
38,995
6,175
39,005
5,920
39,000
6,603
39,390
6,021
40,802
6,631
43,033
6,504
Repurchase agreements on United States
government
and federal agency securities in immediately
available funds
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities
12,948
7,731
11,670
9,759
13,593
9,611
13,194
9,043
12,909
9,734
13,906
10,469
14,289
9,155
14,033
10,542
12,682
9,618
30,806
10,247
29,309
10,097
28,293 r
10,719
28,016
10,690
27,793
10,431
26,148
10,623
27,380
9,983
27,176
10,204
27,408
9,674
MEMO: Federal funds loans and resale agreements in
immediately available funds in maturities of one day
or under continuing contract
9 To commercial banks in the United States
10 To all other specified customers 2
33,777
10,424
30,790
10,219
29,211
11,606
34,026
12,671
31,178
10,978
28,123
12,235
28,591
11,852
27,305
11,786
27,952
10,762
5
6
7
8
1. Banks with assets of $1 billion or more as of Dec. 31, 1977.
2. Brokers and nonbank dealers in securities; other depository institutions;
foreign banks and official institutions; and United States government agencies.
Policy Instruments
1.14
A7
FEDERAL RESERVE BANK INTEREST RATES
Percent per annum
Current and previous levels
Extended credit 2
Short-term adjustment credit
and seasonal credit 1
Federal Reserve
Bank
Rate on
4/24/87
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City . . . .
Dallas
San F r a n c i s c o . . .
5'/2
51/2
Effective
date
First 60 days
of borrowing
Next 90 days
of borrowing
Previous
rate
Rate on
4/24/87
Previous
rate
Rate on
4/24/87
Previous
rate
Rate on
4/24/87
6
5'/2
6
6'/2
7
IVi
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
6
51/2
6
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
7'/2
7'/2-8
71/2
8
73/4-8
73/4
73/4
73/4
7i/4-73/4
7l/4-73/4
71/4
63/4-7'/4
63/4
6'/4-63/4
6'/4
6-61/4
6
73/4
71/4
71/4
63/4
63/4
6'/4
6'/4
6
6
19
23
Nov. 22
26
51/2-6
5 !/2
51/4-51/2
51/4
51/2
51/2
51/4
51/4
1977— Aug. 30
31
Sept. 2
Oct. 26
5'/4-53/4
5'/4-53/4
53/4
6
5'/4
53/4
53/4
6
6-6'/2
6V2
61/2-7
7
7-71/4
71/4
6'/2
61/2
7
7
71/4
71/4
In effect Dec. 31, 1973
1974— Apr. 25
30
Dec. 9
16
1975— Jan.
6
10
24
Feb. 5
7
Mar. 10
14
May 16
23
1976— Jan.
1978— Jan.
9
20
May 11
12
July
3
July 10
Effective date
1981-
Effective date
for current rates
Previous
rate
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
IVi
3
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
1982— July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
111/2-12
111/2
11-111/2
11
9'/2
9-9'/2
9
8'/2-9
8'/2-9
8'/2
111/2
111/2
11
11
101/2
10
10
91/2
91/2
9
9
9
81/2
81/2
9
9
8'/!
Effective date
Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
3
73/4
8
8-8'/2
81/2
81/2-91/2
91/2
73/4
8
July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10
10-101/2
101/2
101/2-1 1
11
11-12
12
10
101/2
101/2
11
11
12
12
Feb. 15
19
May 29
30
June 13
16
July 28
29
Sept. 26
Nov. 1 /
Dec. 5
8
12-13
13
12-13
12
11-12
13
13
13
12
11
1984— Apr.
9
13
Nov. 21
26
Dec. 24
8'/>-9
9
8'/2-9
10-11
10
10
10
1985— May 20
24
71/2-8
71/2
71/2
71/2
12
12-13
13
12
13
13
1986— Mar.
13-14
14
13-14
13
12
14
14
13
13
12
7
10
Apr. 21
23
July 11
Aug. 21
22
7-71/2
7
61/2-7
6'/2
6
51/2-6
51/2
7
7
61/2
61/2
6
51/2
In effect April 24, 1987
51/2
51/2
May
5
Nov.
2
6
4
Dec.
1. After May 19, 1986, the highest rate within the structure of discount rates
may be charged on adjustment credit loans of unusual size that result from a major
operating problem at the borrower's facility.
A temporary simplified seasonal program was established on Mar. 8, 1985, and
the interest rate was a fixed rate Vi percent above the rate on adjustment credit.
The program was re-established on Feb. 18, 1986 and again on Jan. 28, 1987; the
rate may be either the same as that for adjustment credit or a fixed rate Vi percent
higher.
2. Applicable to advances when exceptional circumstances or practices involve
only a particular depository institution and to advances when an institution is
under sustained liquidity pressures. As an alternative, for loans outstanding for
more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes
into account rates on market sources of funds, but in no case will the rate charged
be less than the basic rate plus one percentage point. Where credit provided to a
particular depository institution is anticipated to be outstanding for an unusually
prolonged period and in relatively large amounts, the time period in which each
7
61/2
Range of rates in recent years
Effective date
After 150 days
81/2
91/2
91/5
l0'/2
10-101/2
10
9V2-W
S'A
8
8
51/i
rate under this structure is applied may be shortened. See section 201.3(b)(2) of
Regulation A.
3. Rates for short-term adjustment credit. For description and earlier data see
the following publications of the Board of Governors: Banking and Monetary
Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980,
1981, and 1982.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than 4 weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7,
1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was
adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and
to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective
Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. I, the formula for
applying the surcharge was changed from a calendar quarter to a moving 13-week
period. The surcharge was eliminated on Nov. 17, 1981.
A8
Domestic Financial Statistics • June 1987
1.15
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS'
Percent of deposits
Type of deposit, and
deposit interval 2
Depository institution requirements
after implementation of the
Monetary Control Act
Effective date
Net transaction
accounts
$0 million-$36.7 million . . .
More than $36.7 million . . .
12/30/86
12/30/86
Nonpersonal time deposits5
By original maturity
Less than 1 Vi years
1 '/2 years or more
10/6/83
10/6/83
Eurocurrency
All types
liabilities
1. Reserve requirements in effect on Dec 31, 1986. Required reserves must be
held in the form of deposits with Federal Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a Federal Reserve Bank indirectly on a
pass-through basis with certain approved institutions. For previous reserve
requirements, see earlier editions of the Annual Report and of the FEDERAL
RESERVE BULLETIN. Under provisions of the Monetary Control Act, depository
institutions include commercial banks, mutual savings banks, savings and loan
associations, credit unions, agencies and branches of foreign banks, and Edge
corporations.
2. The Garn-St. Germain Depository Institutions Act of 1982 (Public Law 97320) requires that $2 million of reservable liabilities (transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities) of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabiliiies subject to this zero percent reserve requirement each year for the succeeding calendar year by 80 percent of the percentage
increase in the total reservable liabilities of all depository institutions, measured
on an annual basis as of June 30. No corresponding adjustment is to be made in the
event of a decrease. On Dec. 30, 1986, the exemption was raised from $2.6 million
to $2.9 million. In determining the reserve requirements of depository institutions,
the exemption shall apply in the following order: (1) net NOW accounts (NOW
accounts less allowable deductions); (2) net other transaction accounts; and (3)
nonpersonal time deposits or Eurocurrency liabilities starting with those with the
11/13/80
highest reserve ratio. With respect to NOW accounts and other transaction
accounts, the exemption applies only to such accounts that would be subject to a 3
percent reserve requirement.
3. Transaction accounts include all deposits on which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers in excess of
three per month for the purpose of making payments to third persons or others.
However. MMDAs and similar accounts subject to the rules that permit no more
than six preauthorized, automatic, or other transfers per month, of which no more
than three can be checks, are not transaction accounts (such accounts are savings
deposits subject to time deposit reserve requirements).
4. The Monetary Control Act of 1980 requires that the amount of transaction
accounts against which the 3 percent reserve requirement applies be modified
annually by 80 percent of the percentage increase in transaction accounts held by
all depository institutions, determined as of June 30 each year. Effective Dec. 30,
1986, the amount was increased from $31.7 million to $36.7 million.
5. In general, nonpersonal time deposits are time deposits, including savings
deposits, that are not transaction accounts and in which a beneficial interest is
held by a depositor that is not a natural person. Also included are certain
transferable time deposits held by natural persons and certain obligations issued
to depository institution offices located outside the United States. For details, see
section 204.2 of Regulation D.
Policy Instruments
1.17
FEDERAL RESERVE OPEN MARKET TRANSACTIONS
Millions of dollars
1987
1986
Type of transaction
1984
1985
1986
Aug.
Sept.
Nov.
Oct.
Dec.
Jan.
U.S. GOVERNMENT SECURITIES
Outright transactions (excluding matched
transactions)
1
2
3
4
Treasury bills
Gross purchases
Gross sales
Exchange
Redemptions
5
6
7
8
9
20,036
8,557
0
7,700
22,214
4,118
0
3,500
22,602
2,502
0
1,000
2,940
0
0
0
861
0
0
0
928
0
0
0
3,318
0
0
0
5,422
0
0
0
997
583
0
0
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
1,126
0
16,354
-20,840
0
1,349
0
19,763
-17,717
0
190
0
18,673
-20,179
0
0
0
1,715
-4,087
0
0
0
1,053
-1,892
0
0
0
974
-529
0
190
0
2,974
-1,810
0
0
0
1,280
-1,502
0
0
0
611
0
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
1,638
0
-13,709
16,039
2,185
0
-17,459
13,853
893
0
-17,058
16,984
0
0
-1,194
2,587
0
0
-1,053
1,892
0
0
-969
529
893
0
-2,414
1,510
0
0
-1,280
1,502
0
0
-591
0
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
536
300
-2,371
2,750
458
100
-1,857
2,184
236
0
-1,620
2,050
0
0
-520
1,000
0
0
0
0
0
0
-5
0
236
0
-560
200
0
0
0
0
0
0
-20
0
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
441
0
-275
2,052
293
0
-447
1,679
158
0
0
1,150
0
0
0
500
0
0
0
0
0
0
0
0
158
0
0
100
0
0
0
0
0
0
0
0
22
23
24
All maturities
Gross purchases
Gross sales
Redemptions
23,776
8,857
7,700
26,499
4,218
3,500
24,078
2,502
1,000
2,940
0
0
861
0
0
928
0
0
4,795
0
0
5,422
0
0
997
583
0
25
26
Matched transactions
Gross sales
Gross purchases
808,986
810,432
866,175
865,968
927,997
927,247
60,460
60,011
73,179
70,817
77,262
81,892
60,146
60,232
91,404
88,730
63,865
65,145
27
28
Repurchase agreements
Gross purchases
Gross sales
127,933
127,690
134,253
132,351
170,431
160,268
0
0
14,717
8,403
5,670
11,984
16,888
15,471
44,303
32,028
36,373
46,897
8,908
20,477
29,989
2,491
4,814
-756
6,298
15,023
-8,830
0
0
256
0
0
162
0
0
398
0
0
90
0
0
0
0
93
0
0
125
0
0
0
0
0
110
11,509
11,328
22,183
20,877
31,142
30,522
0
0
2,678
869
952
2,761
1,622
1,274
5,488
3,522
4,714
6,171
-76
1,144
222
-90
1,809
-1,902
223
1,965
-1,567
36 Repurchase agreements, net
-418
0
0
0
0
0
0
0
0
37 Total net change in System Open Market
Account
8,414
21,621
30,211
2,401
6,623
-2,658
6,522
16,988
-10,397
29 Net change in U.S. government securities
FEDERAL AGENCY OBLIGATIONS
30
31
32
Outright transactions
Gross purchases
Gross sales
Redemptions
33
34
Repurchase agreements
Gross purchases
Gross sales
35 Net change in federal agency obligations.
BANKERS ACCEPTANCES
NOTE. Sales, redemptions, and negative figures reduce holdings of the System
Open Market Account; all other figures increase such holdings. Details may not
add to totals because of rounding.
A9
A10
1.18
Domestic Financial Statistics • June 1987
FEDERAL RESERVE BANKS
Condition and Federal Reserve N o t e Statements
Millions of dollars
Account
Mar. 4
Feb. 25
Wednesday
End of month
1987
1987
Mar. 11
Mar. 18
Mar. 25
Jan.
Feb.
Mar.
Consolidated condition statement
ASSETS
11,059
5,018
579
11,059
5,018
577
11,085
5,018
578
11,084
5,018
579
11,083
5,018
572
11,075
5,018
553
11,059
5,018
578
11,081
5,018
569
1,239
0
538
0
455
0
420
0
573
0
513
0
514
0
1,587
0
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4
To depository institutions
5
Other
Acceptances—Bought outright
6
Held under repurchase agreements
Federal agency obligations
7
Bought outright
8
Held under repurchase agreements
U.S. government securities
Bought outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright 1
13
Held under repurchase agreements
14 Total U.S. government securities
0
0
0
0
0
0
0
0
7,719
0
7,719
0
7.719
472
7,719
107
7,719
0
7,719
857
7,719
0
7,719
0
96,446
67,673
25,924
190,043
0
190,043
100,860
67,673
25,924
194,457
0
194,457
102,462
67,673
25,924
196,059
3,281
199,340
100,585
67,673
25,924
194,182
231
194,413
100,947
67,673
25,924
194,544
0
194,544
105,468
68,126
25,724
199,318
3,168
202,486
100,581
67,673
25,924
194,178
0
194,178
102,812
67,673
25,924
196,409
0
196,409
15 Total loans and securities
199,001
202,714
207,986
202,659
202,836
211,575
202,411
205,715
6,682
666
6,920
669
5,945
673
6,744
674
5,542
672
5,947
665
6,338
669
13,284
671
10,237
5,947
9,960
6,234
9,966
6,480
9,991
6,420
10,003
6,584
10,276
7,099
9,960
6,117
9,467
6,484
239,189
243,151
247,731
243,169
242,310
252,208
242,150
252,289
16 Items in process of collection
17 Bank premises
Other assets
18
Denominated in foreign currencies 2
19
All other 3
20 Total assets
LIABILITIES
189,605
190,155
191,144
191,056
190,684
188,763
189,370
191,170
22
23
24
25
32,660
4,151
172
640
35,632
3,939
249
417
41,435
2,715
196
412
36,491
2,437
190
498
36,277
2,953
226
610
34,588
15,746
226
453
37,133
3,482
201
539
41,973
3,576
268
577
26 Total deposits
37,623
40,237
44,758
39,616
40,066
51,013
41,355
46,394
5,747
2,126
6,660
2,239
5,577
2,146
6,357
2,025
5,293
2,153
5,231
2,268
5,315
2,189
8,043
2,219
235,101
239,291
243,625
239,054
238,196
247,275
238,229
247,826
1,910
1,873
305
1,914
1,859
87
1,913
1,873
320
1,913
1,874
328
1,914
1,873
327
1,877
1,873
1,183
1,910
1,860
151
1,916
1,874
673
33 Total liabilities and capital accounts
239,189
243,151
247,731
243,169
242,310
252,208
242,150
252,289
34 MEMO: Marketable U.S. government securities held in
custody for foreign and international account
168,348
170,010
167,964
169,898
168,582
163,927
166,449
175,569
21 Federal Reserve notes
Deposits
To depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends 4
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding
36
LESS: Held by bank
37
Federal Reserve notes, net
Collateral held against notes net:
38
Gold certificate account
39
Special drawing rights certificate account
40
Other eligible assets
41
U.S. government and agency securities
233,765
44,160
189,605
234,707
44,552
190,155
235,413
44,269
191,144
235,925
44,869
191,056
236,427
45,743
190,684
231,694
42,931
188,763
234,114
44,744
189,370
236,868
45,698
191,170
11,059
5,018
0
173,528
11,059
5,018
0
174,078
11,085
5,018
0
175,041
11,084
5,018
0
174,954
11,084
5,018
0
174,582
11,075
5,018
0
172,670
11,059
5,018
0
173,293
11,081
5,018
0
175,071
42 Total collateral
189,605
190,155
191,144
191,056
190,684
188,763
189,370
191,170
1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Assets shown in this line are revalued monthly at market exchange rates.
3. Includes special investment account at Chicago of Treasury bills maturing
within 90 days.
4. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
Maturity Distribution of Loan and Security Holdings
Millions of dollars
End of month
Wednesday
Type and maturity groupings
1 Loans—Total
2
Within 15 days
3
16 days to 90 days
4
91 days to 1 year
5 Acceptances—Total
6
Within 15 days
7
16 days to 90 days
8
91 days to I year
Feb. 25
Mar. 4
Mar. II
1,239
1,231
538
524
14
455
444
0
0
0
0
0
0
0
0
0
0
0
0
0
Mar. 18
420
412
0
0
0
0
Jan. 30
Feb. 27
573
566
7
513
508
5
514
502
12
Mar. 25
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9 U.S. government securities—Total
10
Within 15 days 1
11
16 days to 90 days
12
91 days to 1 year
13
Over 1 year to 5 years
14
Over 5 years to 10 years
15
Over 10 years
190,043
8,656
43,970
59,482
39,042
15,627
23,266
194,457
10,498
46,477
59,612
38,978
15,626
23,266
199,340
14,282
47,571
59,616
38,978
15,627
23,266
194,413
9,863
49,360
57,319
38,978
15,627
23,266
194,544
7,367
49,533
59,773
38,978
15,627
23,266
202,486
8,522
57,100
61,883
36,484
15,431
23,066
194,178
4,662
52,118
59,463
39,042
15,627
23,266
16 Federal agency obligations—Total.
17
Within 15 days 1
18
16 days t o 90 d a y s
19
91 days to 1 year
20
Over 1 year to 5 years
21
Over 5 years to 10 years
22
Over 10 years
7,719
301
640
1,307
3,819
1,372
280
7,719
78
848
1,361
3,780
1,372
280
8,191
584
736
1,436
3,825
1,330
280
7,826
474
554
1,363
3,825
1,330
280
7,719
260
549
1,370
3,918
1,342
280
8,576
1,041
801
1,338
3,733
1,305
358
7,719
301
640
1,307
3,819
1,372
280
1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements.
Al 1
A12
1.20
DomesticNonfinancialStatistics • June 1987
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE
Billions of dollars, averages of daily figures
1986
Item
1983
Dec.
1984
Dec/
1985
Dec/
1987
1986
Dec.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Seasonally a d j u s t e d
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS1
1 Total reserves 2
36.16
39.51
45.61
55.64
51.32
51.81
52.40
53.82
55.64
56.64
56.49
56.26
2
3
4
5
35.38
35.38
35.59
85.38
36.32
38.93
38.66
199.20
44.29
44.79
44.55
216.80
54.81
55.11
54.27
238.84
50.45
50.91
50.58
230.60
50.80
51.37
51.08
231.69
51.56
52.06
51.66
233.46
53.07
53.49
52.85
236.07
54.81
55.11
54.27
238.84
56.06
56.29
55.57
242.02
55.93
56.22
55.28
243.45
55.73
56.00
55.34
243.91
Nonborrowed reserves
N o n b o r r o w e d r e s e r v e s plus e x t e n d e d c r e d i t 3
Required reserves
Monetary base4
N o t seasonally a d j u s t e d
6 Total reserves 2
7
8
9
10
Nonborrowed reserves
N o n b o r r o w e d r e s e r v e s plus e x t e n d e d c r e d i t 3
Required reserves
Monetary base4
36.87
40.57
46.84
57.16
50.62
51.55
52.34
54.11
57.17
58.25
36.09
36.10
36.31
188.65
37.38
39.98
39.71
202.34
45.52
46.02
45.78
220.36
56.34
56.64
55.80
243.04
49.75
50.21
49.88
230.76''
50.54
51.11
50.82
231.51
51.50
52.00
51.60
233.04
53.36
53.77
53.13
236.91
56.34
56.64
55.80
243.04
57.67
57.89
57.18
242.81
38.89
40.70
48.14
59.56
51.28
53.19
54.62
56.40
59.56
38.12
38.12
38.33
192.26
37.51
40.09
39.84
204.18
46.82
47.41
47.08
223.53
58.73
59.04
58.19
247.71
50.41
50.90
50.54
233.32
52.18
52.76
52.46
235.07
53.78
54.15
53.88
237.26
55.65
56.15
55.42
241.27
58.73
59.04
58.19
247.71
55.60'
55.56
55.04
55.32
54.38
240.26
55.04
55.30
54.65
241.31
59.67
57.06
57.06
59.09
59.32
58.60
246.75
56.50
56.74
55.85
244.22
56.53
56.82
56.14
244.97
NOT ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS5
11 Total reserves 2
12
13
14
15
Nonborrowed reserves
N o n b o r r o w e d r e s e r v e s plus e x t e n d e d c r e d i t 3
Required r e s e r v e s
Monetary base4
1. Figures 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 discontinuities a s s o c i a t e d with the
implementation of the M o n e t a r y C o n t r o l A c t a n d o t h e r regulatory c h a n g e s t o
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 discontinuities d u e to 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 o n r e s e r v a b l e n o n d e p o s i t liabilities, the s u m of s u c h required
r e s e r v e s is s u b t r a c t e d f r o m the actual series. Similarly, in a d j u s t i n g f o r discontinuities in the m o n e t a r y b a s e , r e q u i r e d clearing b a l a n c e s and a d j u s t m e n t s to
c o m p e n s a t e f o r float also a r e s u b t r a c t e d f r o m the actual series.
2. Total r e s e r v e s not a d j u s t e d f o r discontinuities consist of r e s e r v e b a l a n c e s
with F e d e r a l R e s e r v e B a n k s , which 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, plus vault cash u s e d t o satisfy r e s e r v e
r e q u i r e m e n t s . Such vault c a s h c o n s i s t s of all vault cash held during the lagged
c o m p u t a t i o n period by institutions having r e q u i r e d r e s e r v e b a l a n c e s at Federal
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 r e q u i r e d r e s e r v e s during the
m a i n t e n a n c e period at institutions h a v i n g n o required r e s e r v e b a l a n c e s .
3. E x t e n d e d credit c o n s i s t s of b o r r o w i n g at the d i s c o u n t w i n d o w u n d e r the
t e r m s and conditions e s t a b l i s h e d f o r the e x t e n d e d credit p r o g r a m t o help
d e p o s i t o r y institutions deal with sustained liquidity 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 need t o r e p a y s u c h b o r r o w i n g promptly a s t h e r e is with traditional
short-term a d j u s t m e n t c r e d i t , the m o n e y m a r k e t impact of e x t e n d e d credit is
similar t o that of n o n b o r r o w e d r e s e r v e s .
4. T h e m o n e t a r y b a s e not a d j u s t e d f o r discontinuities c o n s i s t s of total r e s e r v e s
plus r e q u i r e d clearing 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
R e s e r v e B a n k s and the c u r r e n c y c o m p o n e n t of the m o n e y s t o c k less the a m o u n t
of vault cash holdings of thrift institutions that is included in the c u r r e n c y
c o m p o n e n t of the m o n e y stock plus, f o r institutions not having required r e s e r v e
balances, the e x c e s s of c u r r e n t vault cash o v e r the a m o u n t applied t o s a t i s f y
c u r r e n t r e s e r v e r e q u i r e m e n t s . A f t e r the introduction of 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 (CRR), c u r r e n c y a n d vault cash figures are m e a s u r e d o v e r t h e
weekly c o m p u t a t i o n 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 of 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 a d j u s t e d a s a w h o l e , r a t h e r t h a n by c o m p o n e n t , a n d e x c e s s
r e s e r v e s are a d d e d on a not seasonally a d j u s t e d basis. A f t e r C R R , the seasonally
a d j u s t e d series consists of seasonally a d j u s t e d 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 on a not seasonally a d j u s t e d basis, plus the seasonally a d j u s t e d
c u r r e n c y c o m p o n e n t of the m o n e y stock and the remaining items seasonally
a d j u s t e d as a whole.
5. Reflects actual r e s e r v e r e q u i r e m e n t s , including t h o s e on n o n d e p o s i t liabilities, with n o a d j u s t m e n t s t o eliminate the effects of discontinuities a s s o c i a t e d
with implementation of the M o n e t a r y Control Act o r o t h e r regulatory c h a n g e s t o
reserve requirements.
NOTE. L a t e s t monthly and biweekly figures are available f r o m the B o a r d ' s
H.3(502) statistical release. Historical d a t a and e s t i m a t e s of the impact o n
required r e s e r v e s of 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 are available f r o m the
Banking Section, Division of R e s e a r c h a n d Statistics, B o a r d of G o v e r n o r s of t h e
F e d e r a l R e s e r v e S y s t e m , W a s h i n g t o n , D . C . 20551.
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Billions of dollars, averages of daily figures
1987
1986
1983
Dec.
1984
Dec.
1985
Dec.
1986
Dec.
Dec.
Jan.
Feb.
Mar.
737.6
2,822.0
3,515.7'
4,174.6'
7,711.8'
737.2
2,821.4'
4,183.9
7,768.8
739.2
2,825.6
3,525.3
n.a.
n.a.
186.0
6.5
305.1
240.1'
187.2
6.7
300.7
242.7
187.8
6.8
299.1
245.5
Seasonally adjusted
1 Ml
7 M2
M3
4 L
5 Debt
526.9
2,184.6
2,692.8
3,154.6
5,206.3
557.5
2,369.1
2,985.3''
3,528.9'
5,946.0
627.0
2,569.5'
3,205.5'
s.sss.y
6,774.9
730.5
2,799.8
3,488.9'
4,140.9'
7,626.0-
730.5
2,799.8
3,488.9'
4,140.9'
7,626.0'
158.5
5.2
248.3
145.5
170.6
5.9
272.2
178.3
183.5
6.4
308.3
232.3
183.5
6.4
308.3
232.3
l,811.5 r
616.2'
l,942.5 r
636.0
2,069.3
689.1'
2,069.3
689.1'
2,084.3'
693.8
2,084.2'
698.5'
3,519.?
6
7
8
9
M l components
Currency 2
Travelers c h e c k s 3
D e m a n d deposits 4
Other checkable deposits 5
in
11
Nontransactions c o m p o n e n t s
In M2«
In M3 only 7
i?
13
Savings deposits 9
Commercial Banks
Thrift institutions
133.2
173.0
122.2
166.6
124.6
179.0
154.5
211.7
154.5
211.7
159.8
216.9
164.4
222.9
168.2
228.3
14
15
Small denomination time deposits 9
Commercial Banks
Thrift institutions
350.9
432.9
386.6
498.6
383.9
500.3
364.7
488.5
364.7
488.5
364.7
486.6
362.6'
485.0-
360.0
485.3
16
17
Money market mutual f u n d s
General purpose and broker/dealer
Institution-only
138.2
43.2
167.5
62.7
176.5
65.1
207.6
84.1
207.6
84.1
209.0
84.0
210.7'
84.7
211.6
84.9
18
19
Large denomination time deposits 1 0
Commercial Banks 1 1
Thrift institutions
230.0
96.2
269.6
147.3
284.1
152.1
292.0^
155.1
292.0'
155.1
295.8
153.8
296.0'
152.0
299.1
150.8
70
21
Debt components
Federal debt
Non-federal debt
1,172.8
4,033.5
1,367.6
4,578.4
1,587.0
5,187.9
1,804.8'
5,821.2'
1,804.8'
5,821.2'
148.3
4.9
242.3
131.4
1,657.7
508.2
2,086.4
699.7
1,817.8
5,894.0-
1,824.7
5,944.0
n.a.
n.a.
744.3
2,832.2
3,526.5
4,185.9'
7,706.0
723.1
2,809.5'
3,510.2'
4,175.7
7,752.4
728.7
2,819.4
3,522.5
n.a.
n.a.
184.8
6.2
291.9
240.2'
186.0
6.4
291.4
244.9
2,087.8'
694.3'
2,086.4'
700.7'
2,090.7
703.1
Not seasonally adjusted
77
73
7,4
75
26
Ml
M2
M3
L
Debt
7.7
78
79
30
M l components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
31
32
Nontransactions components
M2 6
M3 only 7
33
34
Money market deposit accounts
Commercial banks
Thrift institutions
35
36
538.3
2,191.6
2,702.4
3,163.1
5,200.7
570.3
2,378.3
2,997.1'
3,539.fr5,940.2
641.0
2,580.5'
3,218.7'
3,850.7'
6,768.3
746.6
2,813.3
3,504.1'
4,154.3'
7,618.7'
746.6
2,813.3
3,504.1'
4,154.3'
7,618.7'
160.8
4.9
257.2
147.4
173.1
5.5
282.0
180.4
186.2
6.0
319.5
235.0
1,808.0''
6I8.9 r
1,939.5'
638.2'
2.066.7
690.8'
230.4
148.5
267.4
150.0
332.5
180.7
379.0
192.3
379.0
192.3
381.7
192.4
378.5
192.2
378.1
192.2
Savings deposits 8
Commercial Banks
Thrift institutions
132.2
172.4
121.4
166.2
123.9
178.8
153.8'
211.7
153.8'
211.7
159.2
217.2
162.8
221.9'
167.1
228.2
37
38
Small denomination time deposits 9
Commercial Banks
Thrift institutions
351.1
433.5
386.7
499.6
383.8
501.5
364.4
489.6
364.4
489.6
364.4
489.6'
362.1
487.5'
359.6
485.6
39
40
Money market mutual f u n d s
General p u r p o s e and broker/dealer
Institution-only
138.2
43.2
167.5
62.7
176.5
65.1
207.6
84.1
207.6
84.1
209.0
84.0
210.7'
84.7
211.6
84.9
41
42
Large denomination time deposits 1 0
Commercial B a n k s "
Thrift institutions
231.6
96.3
271.2
147.3
285.6
151.9
293.4
154.7
293.4
154.7
297.0
154.2'
298.2'
152.8
301.5
150.9
43
44
Debt components
Federal debt
Non-federal debt
1,170.2
4,030.5
1,364.7
4,575.5
1,583.7
5,184.6
1,801.2'
5,817.5'
1,801.2'
5,817.5'
1,816.9
5,889.1'
1,826.7
5,925.7
F o r notes see following page.
150.6
4.6
251.0
132.2
1,653.3
510.8
186.2
6.0
319.5
235.0
2,066.7
690.8'
184.6
6.0
311.0
242.8
n.a.
n.a.
A14
DomesticNonfinancialStatistics • June 1987
N O T E S T O T A B L E 1.21
1. C o m p o s i t i o n of the m o n e y stock m e a s u r e s and d e b t is as follows:
M l : (1) c u r r e n c y outside the 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 , and the vaults
of commercial b a n k s ; (2) travelers c h e c k s of n o n b a n k issuers; (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 , the U . S .
g o v e r n m e n t , a n d foreign b a n k s a n d official institutions less cash items in the
process of collection and 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
(OCD) consisting of negotiable o r d e r of w i t h d r a w a l ( N O W ) and a u t o m a t i c t r a n s f e r
service (ATS) a c c o u n t s at d e p o s i t o r y institutions, credit union share d r a f t
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 of vault cash and d e m a n d
deposits respectively held by thrift institutions t o service their O C D liabilities.
M2: M l plus overnight (and continuing c o n t r a c t ) r e p u r c h a s e a g r e e m e n t s (RPs)
issued by all commercial 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 issued t o U . S . residents
by foreign b r a n c h e s of U . S . b a n k s w o r l d w i d e , M M D A s , savings and smalld e n o m i n a t i o n time d e p o s i t s (time deposits—including retail RPs—in a m o u n t s of
less t h a n $100,000), and b a l a n c e s in both t a x a b l e and t a x - e x e m p t general p u r p o s e
and b r o k e r / d e a l e r m o n e y m a r k e t mutual f u n d s . E x c l u d e s individual r e t i r e m e n t
a c c o u n t s (IRA) 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 institutions and m o n e y m a r k e t
f u n d s . Also e x c l u d e s all b a l a n c e s held by U . S . commercial b a n k s , m o n e y m a r k e t
f u n d s (general p u r p o s e and b r o k e r / d e a l e r ) , foreign g o v e r n m e n t s and c o m m e r c i a l
b a n k s , and the U . S . g o v e r n m e n t . Also s u b t r a c t e d is a consolidation a d j u s t m e n t
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 of d e m a n d deposits a n d vault cash held by
thrift institutions t o service their time and savings deposits.
M3: M2 plus large-denomination time d e p o s i t s and t e r m R P liabilities (in
a m o u n t s of $100,000 o r m o r e ) issued by c o m m e r c i a l banks and thrift institutions,
t e r m E u r o d o l l a r s held by U . S . r e s i d e n t s at foreign b r a n c h e s of U . S . b a n k s
worldwide and at all banking offices in the United K i n g d o m and C a n a d a , and
balances in both taxable and t a x - e x e m p t , institution-only m o n e y m a r k e t mutual
f u n d s . E x c l u d e s a m o u n t s held by 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 m a r k e t f u n d s , and foreign b a n k s and official institutions. Also s u b t r a c t e d is
a consolidation a d j u s t m e n t that r e p r e s e n t s the estimated a m o u n t of overnight R P s
and E u r o d o l l a r s held by institution-only m o n e y market mutual f u n d s .
L: M3 plus the n o n b a n k public holdings of U . S . savings b o n d s , short-term
T r e a s u r y securities, c o m m e r c i a l p a p e r and b a n k e r s a c c e p t a n c e s , net of m o n e y
m a r k e t mutual f u n d holdings of t h e s e a s s e t s .
Debt: Debt of d o m e s t i c nonfinancial s e c t o r s consists of outstanding credit
m a r k e t debt of 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 d e b t c o n s i s t s of c o r p o r a t e b o n d s , mortgages, consumer credit (including b a n k loans), o t h e r b a n k loans, commercial p a p e r , b a n k e r s
a c c e p t a n c e s , and o t h e r d e b t i n s t r u m e n t s . T h e source of d a t a on d o m e s t i c
nonfinancial debt is the F e d e r a l R e s e r v e B o a r d ' s flow of f u n d s a c c o u n t s . Debt
d a t a are based on monthly a v e r a g e s .
2. C u r r e n c y outside the 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 vaults of
c o m m e r c i a l b a n k s . E x c l u d e s the e s t i m a t e d a m o u n t of vault c a s h held by 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 of U . S . dollar-denominated travelers c h e c k s of nonbank issuers. T r a v e l e r s c h e c k s issued by d e p o s i t o r y institutions are included in
demand deposits.
4. D e m a n d d e p o s i t s at commercial b a n k s a n d foreign-related institutions 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 institutions less cash items in the p r o c e s s of collection and F e d e r a l
R e s e r v e float. E x c l u d e s the estimated a m o u n t of d e m a n d deposits held at
commercial b a n k s by thrift institutions t o service their O C D liabilities.
5. C o n s i s t s of N O W and A T S b a l a n c e s at all d e p o s i t o r y institutions, credit
union share d r a f t b a l a n c e s , and d e m a n d d e p o s i t s at thrift institutions. O t h e r
c h e c k a b l e d e p o s i t s seasonally a d j u s t e d equals the difference b e t w e e n the seasonally a d j u s t e d s u m of d e m a n d deposits plus O C D and seasonally a d j u s t e d d e m a n d
deposits. Included are all ceiling free " S u p e r N O W s , " authorized by the
D e p o s i t o r y Institutions Deregulation c o m m i t t e e t o be offered beginning J a n . 5,
1983.
6. S u m of overnight R P s and overnight E u r o d o l l a r s , m o n e y m a r k e t f u n d
balances (general p u r p o s e and broker/dealer), M M D A s , a n d savings a n d small
time d e p o s i t s , less the consolidation a d j u s t m e n t 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 of d e m a n d d e p o s i t s and vault cash held by thrift institutions to service
their time and savings d e p o s i t s liabilities.
7. S u m of large time deposits, t e r m R P s and t e r m E u r o d o l l a r s of U . S .
residents, m o n e y m a r k e t f u n d 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 the e s t i m a t e d a m o u n t of overnight R P s and E u r o d o l lars held by institution-only m o n e y m a r k e t f u n d s .
8. Savings deposits e x c l u d e M M D A s .
9. Small-denomination time deposits—including retail R P s — are those issued
in a m o u n t s of less t h a n $100,000. All individual retirement a c c o u n t s (IRA) a n d
Keogh a c c o u n t s at commercial b a n k s and thrifts are s u b t r a c t e d f r o m small time
deposits.
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 are t h o s e issued in a m o u n t s of $100,000
o r m o r e , excluding t h o s e b o o k e d at international banking facilities.
11. L a r g e - d e n o m i n a t i o n time deposits at c o m m e r c i a l b a n k s less t h o s e held by
m o n e y m a r k e t 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.
NOTE: L a t e s t monthly and weekly figures are available f r o m the B o a r d ' s H . 6
(508) release. Historical d a t a are available f r o m the Banking Section, Division of
R e s e a r c h and Statistics, B o a r d of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m ,
W a s h i n g t o n , D . C . 20551.
Monetary and Credit Aggregates
1.22
A15
B A N K D E B I T S A N D DEPOSIT T U R N O V E R
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
1986
1987
Bank g r o u p , or t y p e of c u s t o m e r
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
Seasonally a d j u s t e d
DEBITS TO
2
D e m a n d deposits
1
All insured b a n k s
2
M a j o r N e w Y o r k City b a n k s
3
Other banks
4 A T S - N O W accounts3
5 Savings d e p o s i t s 4
128,440.8
57,392.7
71,048.1
1,588.7
633.1
154,556.0
70,445.1
84,110.9
1,920.8
539.0
189,534.1
91,212.9
98,321.4
2,351.1
410.3
197,997.9
95,252.0
102,745.9
2,704.8
428.4
197,222.5
95,919.7
101,302.9
2,292.5
456.5
187,594.4
96,829.5
90,764.9
2,501.0
424.9
206,689.6
95,831.3
110,858.4
2,960.8
533.7
210,574.2
99,357.1
111,217.1
2,255.7
459.2
211,169.4
98,712.3
112,457.1
2,306.0
477.7
434.4
1,843.0
268.6
15.8
5.0
496.5
2,168.9
301.8
16.7
4.5
561.8
2,460.6
327.4
16.8
3.1
573.9
2,519.8
334.5
18.4
3.1
569.6
2,493.4
329.2
15.2
3.2
538.2
2,513.2
292.8
16.1
2.9
560.7
2,251.6
340.0
18.3
3.5
580.3
2,426.4
345.5
13.4
2.9
594.7
2,461.0
357.0
13.5
2.9
167,465.5
85,849.7
81,615.8
2,255.1
1,434.0
382.7
226,263.1
106,935.2
119,327.9
2,841.5
2,058.2
503.6
216,638.7
102,274.2
114,364.5
2,679.2
1,913.3
499.0
191,572.9
89,866.7
101,706.2
2,173.2
1,600.7
434.6
476.4
2,225.4
260.8
14.6
3.8
2.6
600.3
2,483.2
357.4
17.4
5.5
3.3
579.9
2,345.5
346.6
15.7
5.1
3.1
550.0
2,273.2
329.4
12.9
4.3
2.7
DEPOSIT TURNOVER
6
7
8
9
10
Demand deposits2
All insured b a n k s
M a j o r N e w Y o r k City b a n k s
Other banks
A T S - N O W accounts3
Savings d e p o s i t s 4
11
12
13
14
15
16
Demand deposits2
All insured b a n k s
M a j o r N e w Y o r k City b a n k s
Other b a n k s
A T S - N O W accounts3
MMDA5
Savings d e p o s i t s 4
17
18
19
20
21
22
D e m a n d deposits 2
All insured b a n k s
M a j o r N e w Y o r k City b a n k s
Other banks
A T S - N O W accounts3
MMDA5
Savings deposits 4
N o t seasonally a d j u s t e d
DEBITS TO
128,059.1
57,282.4
70,776.9
1,579.5
848.8
632.9
154,108.4
70,400.9
83,707.8
1,903.4
1,179.0
538.7
189,443.3
91,294.4
98,149.0
2,338.4
1,599.3
404.3
198,433.5
96,489.1
101,944.4
2,524.1
1,612.9
414.2
433.5
1,838.6
267.9
15.7
3.5
5.0
497.4
2,191.1
301.6
16.6
3.8
4.5
564.0
2,494.3
327.9
16.8
4.5
3.1
577.6
2,603.6
332.6
17.3
4.4
3.0
204,618.4
98,837.9
105,780.4
2,231.9
1,607.4
449.2
DEPOSIT TURNOVER
1. A n n u a l a v e r a g e s of 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 of individuals, p a r t n e r s h i p s , and c o r p o r a t i o n s and of
states and political subdivisions.
3. A c c o u n t s authorized f o r negotiable o r d e r s of withdrawal ( N O W ) and acc o u n t s authorized f o r a u t o m a t i c t r a n s f e r to d e m a n d d e p o s i t s (ATS). A T S d a t a
availability starts with 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 , such
as C h r i s t m a s and vacation clubs.
5. M o n e y m a r k e t deposit a c c o u n t s .
593.5
2,656.9
343.9
14.9
4.3'
3.2
NOTE. Historical d a t a for d e m a n d d e p o s i t s are available b a c k to 1970 e s t i m a t e d
in part f r o m the debits series for 233 S M S A s that w e r e available t h r o u g h J u n e
1977. Historical data f o r A T S - N O W and savings d e p o s i t s are available b a c k t o
July 1977. Back d a t a are available on r e q u e s t f r o m the Banking Section, Division
of R e s e a r c h and Statistics, B o a r d of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m ,
W a s h i n g t o n , D . C . 20551.
T h e s e data also a p p e a r on the B o a r d ' s G . 6 (406) release. F o r a d d r e s s , see inside
front c o v e r .
A16
1.23
DomesticNonfinancialStatistics • June 1987
LOANS AND SECURITIES
All Commercial Banks'
Billions of dollars; averages of Wednesday figures
1987 r
1986'
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Seasonally adjusted
1 Total loans and securities 2
2 U . S . government securities
3 Other securities
4 Total loans and leases 2
Commercial and industrial
5
6
Bankers acceptances h e l d 3 . .
7
Other commercial and
industrial
U . S . addressees 4
8
9
N o n - U . S . addressees 4
Real estate
10
11
Individual
12
Security
13
N o n b a n k financial
institutions
14
Agricultural
15
State and political
subdivisions
Foreign banks
16
17
Foreign official institutions . . .
Lease financing r e c e i v a b l e s . . .
18
19
All other loans
1,960.5
1,969.8
1,978.3
1,998.2
2,022.6
2,044.6
2,052.4
2,063.5
2,089.8
2,118.3
2,119.7
2,126.3
272.0
186.3
1,502.2
510.0
5.4
275.7
185.6
1,508.5
509.9
6.1
275.7
187.0
1,515.6
513.0
6.3
284.7
189.7
1,523.7
512.6
6.1
291.5
196.0
1,535.1
515.2
6.5
294.9
204.2
1,545.4
517.3
6.6
299.6
199.8
1,553.0
520.0
6.7
304.1
197.9
1,561.5
525.7
6.4
309.9
196.9
1,583.0
541.4
6.4
316.3
190.2
1,611.8
554.1
6.7
315.2
193.8
1,610.7
553.8
6.8
314.3
195.5
1,616.5
551.7
6.1
504.6
494.9
9.7
444.2
302.3
47.8
503.8
493.9
9.9
449.3
303.7
45.8
506.6
497.3
9.4
453.6
305.1
42.0
506.5
497.7
8.9
458.3
306.3
45.0
508.7
499.8
8.9
464.8
308.1
43.9
510.7
501.7
9.0
468.9
309.9
43.7
513.3
504.6
8.8
474.2
311.2
38.8
519.2
510.7
8.5
479.6
312.6
40.0
535.0
525.7
9.4
489.0
314.2
37.2
547.3
537.8
9.5
499.2
314.9
38.6
547.0
537.9
9.1
504.0
315.2
39.3
545.6
536.9
8.7
511.0
315.7
40.3
32.0
34.6
33.4
34.2
34.7
33.7
34.5
33.3
34.7
33.0
35.2
32.7
35.8
32.4
35.2
32.1
35.3
31.7
35.7
31.5
34.5
31.6
34.7
31.6
60.5
9.7
6.0
20.2
34.9
60.3
10.0
6.1
20.2
35.6
60.1
10.3
6.0
20.4
36.7
59.9
10.3
6.1
20.5
36.9
60.1
10.1
6.1
20.7
38.5
60.0
10.1
6.0
21.1
40.5
59.3
10.0
6.0
21.8
43.3
58.7
10.0
5.9
22.0
39.8
57.9
10.4
5.8
22.2
37.9
57.8
10.6
5.9
22.1
41.4
57.2
10.3
6.1
22.2
36.7
56.9
9.7
6.7
22.3
35.7
Not seasonally adjusted
20 Total loans and securities 2
1,961.5
1,967.8
1,978.2
1,993.7
2,015.1
2,042.3
2,044.0
2,064.2
2,105.2
2,123.7
2,121.6
2,127.9
21 U.S. government securities
22 Other securities
23 Total loans and leases 2
24
Commercial and i n d u s t r i a l . . . .
25
Bankers acceptances h e l d 3 . .
26
Other commercial and
industrial
27
U.S. addressees 4
28
N o n - U . S . addressees 4
Real estate
29
30
Individual
31
Security
32
N o n b a n k financial
institutions
33
Agricultural
34
State and political
subdivisions
35
Foreign banks
36
Foreign official institutions . . .
37
Lease financing r e c e i v a b l e s . . .
38
All other loans
274.1
184.7
1,502.7
512.3
5.3
275.5
185.1
1,507.2
511.8
6.0
276.2
185.7
1,516.3
514.2
6.4
285.6
187.5
1,520.6
512.1
6.2
290.5
196.2
1,528.4
512.8
6.3
293.8
205.0
1,543.5
516.1
6.7
296.1
200.1
1,547.8
517.8
6.6
303.2
198.3
1,562.6
525.2
6.6
308.3
198.1
1,598.7
544.3
6.7
314.6
193.7
1,615.4
552.4
6.6
318.9
194.1
1,608.6
551.7
6.6
317.2
194.4
1,616.3
554.5
6.2
507.0
497.3
9.7
443.2
300.0
48.1
505.8
495.8
9.9
448.5
301.8
45.0
507.8
498.4
9.4
453.3
303.8
42.3
506.0
496.8
9.2
458.4
305.2
43.2
506.5
497.3
9.1
464.9
307.9
41.1
509.4
500.2
9.2
469.9
310.8
41.7
511.2
502.1
9.1
475.1
312.3
38.3
518.5
509.5
9.1
480.7
313.7
41.1
537.6
528.8
8.8
489.9
317.8
41.8
545.9
537.1
8.8
499.3
317.9
40.4
545.1
536.3
8.8
503.1
314.7
38.6
548.4
539.9
8.4
509.8
313.3
39.7
31.9
33.8
33.2
34.0
34.7
34.1
34.5
34.0
34.8
33.9
35.6
33.7
35.6
33.2
35.4
32.2
36.4
31.4
35.7
30.8
33.8
30.6
33.8
30.6
60.5
9.4
6.0
20.3
37.3
60.3
9.7
6.1
20.3
36.5
60.1
10.1
6.0
20.5
37.3
59.9
10.3
6.1
20.5
36.4
60.1
9.9
6.1
20.6
36.3
60.0
10.3
6.0
21.0
38.6
59.3
10.0
6.0
21.5
38.6
58.7
10.1
5.9
21.8
37.9
57.9
10.9
5.8
22.2
40.4
57.8
10.8
5.9
22.4
41.9
57.2
10.5
6.1
22.4
39.7
56.9
9.7
6.7
22.5
38.7
1. Data have been revised because of benchmarking to new Call Reports
beginning July 1985 and to new seasonal factors. Back data are available from the
Banking Section, Board of G o v e r n o r s of the Federal Reserve System, Washington, D.C., 20551. These data also appear in the Board's 0.1 (407) release.
2. Excludes loans to commercial banks in the United States,
3. Includes nonfinancial commercial paper held.
4. United States includes the 50 states and the District of Columbia,
Commercial Banking Institutions
1.24
All
MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS'
Monthly averages, billions of dollars
1987
1986
Source
Apr.
Total nondeposit f u n d s
Seasonally a d j u s t e d 2
N o t seasonally a d j u s t e d
Federal funds, RPs, and other
borrowings from nonbanks3
3
Seasonally a d j u s t e d
4
N o t seasonally a d j u s t e d
5 N e t b a l a n c e s d u e t o foreign-related
institutions, not seasonally
adjusted
1
2
6
7
8
9
10
11
12
13
14
15
16
17
MEMO
Domestically c h a r t e r e d b a n k s ' net
positions with o w n foreign
b r a n c h e s , not seasonally
adjusted4
Gross due from balances
Gross due to balances
Foreign-related institutions' net
positions with directly related
institutions, n o t seasonally
adjusted5
Gross due from balances
Gross due to balances
Security R P b o r r o w i n g s
Seasonally adjusted®
N o t seasonally a d j u s t e d
U.S. Treasury demand balances7
Seasonally a d j u s t e d
N o t seasonally a d j u s t e d
Time d e p o s i t s , $100,000 o r m o r e 8
Seasonally a d j u s t e d
N o t seasonally a d j u s t e d
May
June
Sept.
Oct.
Nov.
Dec
Jan.
Feb.
Mar.
134.5'
134.8'
137.4
138.5
134.3
132.1
136.1
132.9
137.9
137.8
142.6
141.9
140.5
139.5'
144.2
145.7'
144.9
HS.O'
154.2
153.7
158.2
160.9'
163.5
165.8
160 0 '
160.3'
158.8
159.9
158.0
155.7
165.5
162.4
167.4
167.3
166.9
166,2
167.8
166.9
166.0
167.5
164.0
164.1
169.2
168.7
170.1
172.8
169.1
171.4
-25.5
-21.3
-23.7
-29.5
-29.5
-24.3
-27.3
-21.8
-19.1'
-15.0
-11.9
-5.6
-30.2
75.2
45.1
-29.3
72.9
43.6
-30.5
72.2
41.7
-33.8
73.9
40.1
-31.2
75.2
44.0
-29 2
74.0
44.8
-31.9
73.5
41.6
-28.7
70.8
42.1
-30.7
73.4
42.7'
-25.5'
70.7'
45.2
-23.8
68.4
44.7
-20.3
65.3
44.9
4.7
62.5
67.2
8.0
60.0
67.9
6.8
62.8
69.6
4.3
64.2
68.6
1.7
66.3
67.9
4,9
67.9
72.7
4.6'
68.3
72.9
6.9
68.7
75.6'
l l ^
70.8
82.5
10.5
74.6
85.1
11.9
72.9
84.7
14.7
71.1
85.8
90.1
90.4
89.9
91.0
90.2
87.9
95.2
92.0
95.9
95.8
95,9
95.2
97.0
96.1
96.9
98.5
96.9
97.1
99.4
98.9
96.3
99^
93.9
96.2
17.0
17.8
19.1
21.8
17.7
16.1
15.4
16.8
14.5
11.1
16.5
18.2
17.1
15.3
23.2
15.3
21.2
19.2
21.3
27.5
23.2
28.6
17.8
17.2
346.3
343.6
341.9
340.5
341.8
339.2
341.1
338.3
344.3
344.0
344.2
345.5
342.7
343.8
343.3
344.1
345.7
347.1
350.2
351.4
351.1'
353.3
1. C o m m e r c i a l b a n k s are t h o s e in the 50 states a n d the District of C o l u m b i a
with national o r state c h a r t e r s plus agencies and b r a n c h e s of foreign b a n k 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 by foreign b a n k s , and E d g e Act
c o r p o r a t i o n s o w n e d by domestically c h a r t e r e d and foreign b a n k s .
2. Includes seasonally a d j u s t e d federal f u n d s , R P s , and o t h e r b o r r o w i n g s f r o m
n o n b a n k s a n d n o t seasonally a d j u s t e d net E u r o d o l l a r s . I n c l u d e s a v e r a g e s of
W e d n e s d a y d a t a f o r domestically c h a r t e r e d b a n k s and a v e r a g e s of current a n d
previous m o n t h - e n d d a t a f o r foreign-related institutions.
3. O t h e r b o r r o w i n g s are b o r r o w i n g s o n any i n s t r u m e n t , s u c h as a promissory
note o r d u e bill, given f o r the p u r p o s e of b o r r o w i n g m o n e y f o r the banking
Aug.
July
354.1
356.4
b u s i n e s s . This includes b o r r o w i n g s f r o m F e d e r a l R e s e r v e B a n k s and f r o m foreign
b a n k s , t e r m federal f u n d s , o v e r d r a w n d u e f r o m b a n k b a l a n c e s , loan R P s , and
participations in pooled loans.
4. A v e r a g e s of daily figures f o r m e m b e r and n o n m e m b e r b a n k s .
5. A v e r a g e s of daily d a t a .
6. B a s e d o n daily a v e r a g e d a t a r e p o r t e d by 122 large b a n k s .
7. Includes U . S . T r e a s u r y d e m a n d d e p o s i t s and T r e a s u r y tax-and-loan n o t e s at
c o m m e r c i a l b a n k s . A v e r a g e s of daily d a t a .
8. A v e r a g e s of W e d n e s d a y figures.
A18
1.25
DomesticNonfinancialStatistics • June 1987
Last-Wednesday-of-Month Series 1
A S S E T S A N D L I A B I L I T I E S OF C O M M E R C I A L B A N K I N G I N S T I T U T I O N S
Billions of dollars
1986'
1987'
Account
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
2,112.6
433.9
257.6
176.4
26.9
1,651.8
145.4
1,506.4
509.5
449.6
302.1
245.2
2,117.8
435.9
259.5
176.4
27.3
1,654.7
138.9
1,515.8
516.2
454.3
304.6
240.8
2,144.5
449.0
269.1
179.9
28.6
1,666.9
148.7
1,518.2
510.6
459.8
305.8
242.1
2,164.8
460.0
272.9
187.1
29.3
1,675.6
145.5
1,530.1
513.8
466.5
308.8
241.0
2,179.7
469.4
276.6
192.8
27.9
1,682.4
139.8
1,542.5
515.9
470.5
311.2
244.9
2,183.2
471.9
282.8
189.1
26.0
1,685.3
141.2
1,544.1
517.2
476.2
312.8
237.8
2,227.3
475.4
287.3
188.0
28.1
1,723.8
154.7
1,569.1
524.9
481.8
314.1
248.2
2,314.3
479.6
292.6
187.0
27.8
1,807.0
168.9
1,638.1
568.2
497.5
320.4
252.0
2,284.8
482.2
296.1
186.1
26.4
1,776.3
160.1
1,616.2
551.1
499.9
317.0
248.3
2,279.4
484.7
298.8
185.9
29.0
1,765.6
156.7
1,608.9
551.5
503.5
314.7
239.2
2,279.2
486.2
299.5
186.7
25.2
1,767.8
154.3
1,613.5
555.3
510.7
313.1
234.4
223.0
30.5
23.9
84.7
198.7
28.3
23.0
67.3
209.0
28.6
23.3
72.2
208.3
28.3
23.7
73.5
199.3
28.2
22.9
66.2
203.5
31.6
23.5
66.2
227.0
32.2
22.2
86.5
273.7
41.2
25.7
111.3
214.4
33.4
23.7
74.5
206.3
28.4
23.5
71.4
203.8
31.1
22.9
68.1
37.2
46.8
32.5
47.5
34.3
50.7
34.0
48.7
32.8
49.2
33.1
49.0
38.3
47.9
43.3
52.3
34.0
48.8
33.0
50.1
32.7
49.0
ALL COMMERCIAL BANKING
INSTITUTIONS2
1 L o a n s a n d securities
2
I n v e s t m e n t securities
3
U . S . g o v e r n m e n t securities
4
Other
5
Trading account assets
6
Total loans
7
I n t e r b a n k loans
8
L o a n s excluding i n t e r b a n k
9
C o m m e r c i a l and industrial
Real e s t a t e
10
11
Individual
12
All o t h e r
13 Total cash a s s e t s
14
R e s e r v e s with F e d e r a l R e s e r v e B a n k s
15
C a s h in vault
16
C a s h items in p r o c e s s of collection . . .
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
O t h e r cash a s s e t s
192.8
195.2
195.3
194.8
201.4
198.6
202.2
224.8
201.3
201.1
202.1
20 Total assets/total liabilities and capital . . .
19 O t h e r a s s e t s
2,528.4
2,511.7
2,548.9
2,567.8
2,580.4
2,585.3
2,656.5
2,812.8
2,700.5
2,686.8
2,685.2
21
22
23
24
25
26
27
1,810.6
543.9
478.5
788.3
369.1
172.9
175.7
1,796.1
524.8
484.0
787.3
370.0
168.8
176.7
1,822.4
541.6
492.5
788.3
381.7
168.7
176.0
1,837.6
545.7
499.2
792.6
379.8
173.8
176.7
1,834.5
538.9
505.5
790.1
391.6
176.3
178.1
1,847.1
548.8
516.0
782.2
383.3
175.7
179.2
1,900.2
596.3
522.9
781.1
397.4
180.0
178.9
2,018.0
691.1
535.0
791.9
414.5
199.6
180.6
1,898.3
577.8
532.3
788.2
432.7
188.0
181.5
1,895.5
569.2
535.9
790.3
425.6
184.6
181.2
1,899.6
568.8
539.7
791.2
414.9
188.7
181.9
275.0
276.4
288.4
290.6
293.2
299.5
304.8
308.4
314.5
320.1
316.7
185.8
186.8
189.2
198.7
204.1
198.4
198.8
198.9
194.1
193.7
194.7
1,991.5
418.0
249.5
168.5
26.9
1,546.6
122.0
1,424.6
450.9
443.6
301.7
228.3
1,996.7
420.9
252.7
168.2
27.3
1,548.5
116.6
1,431.9
453.8
448.4
304.3
225.4
2,020.1
433.8
262.5
171.3
28.6
1,557.7
124.0
1,433.7
448.9
453.8
305.4
225.6
2,034.6
443.0
265.0
178.0
29.3
1,562.3
119.7
1,442.7
449.4
460.4
308.5
224.4
2,044.8
450.5
267.9
182.5
27.9
1,566.4
115.6
1,450.8
448.1
464.3
310.9
227.5
2,052.1
452.9
273.6
179.3
26.0
1,573.2
118.8
1,454.3
449.0
470.0
312.5
222.7
2,094.7
457.1
279.0
178.2
28.1
1,609.5
133.0
1,476.4
455.7
475.1
313.8
231.8
2,154.4
459.3
283.0
176.3
27.8
1,667.3
137.9
1,529.5
488.2
490.3
320.1
230.9
2,136.7
461.5
286.8
174.8
26.4
1,648.8
134.3
1,514.5
475.5
493.2
316.7
229.2
2,130.3
463.3
289.2
174.1
29.0
1,638.0
130.5
1,507.5
474.1
497.0
314.4
221.9
2,121.7
463.6
289.4
174.2
25.2
1,632.9
124.1
1,508.8
474.6
504.1
312.7
217.4
42 Total cash a s s e t s
R e s e r v e s with F e d e r a l R e s e r v e B a n k s
43
44
C a s h in vault
C a s h items in p r o c e s s of collection . . .
45
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
O t h e r cash a s s e t s
207.3
28.7
23.8
84.2
182.3
26.4
23.0
66.7
190.1
27.2
23.3
71.7
191.2
26.6
23.7
73.1
182.5
26.9
22.9
65.8
185.6
29.7
23.5
65.6
210.0
29.8
22.2
86.1
253.5
39.7
25.7
110.9
196.6
31.2
23.6
74.0
188.9
27.1
23.5
71.0
186.5
29.7
22.8
67.7
35.5
35.1
30.7
35.6
32.5
35.4
32.3
35.5
30.9
36.0
31.3
35.5
36.3
35.6
40.8
36.4
32.2
35.6
31.1
36.4
31.1
35.2
48 O t h e r a s s e t s
140.7
142.6
140.4
139.3
143.5
141.0
141.6
165.0
141.5
144.0
143.4
2,339.6
2,321.5
2,350.6
2,365.0
2,370.8
2,378.7
2,446.3
2,572.8
2,474.8
2,463.2
2,451.5
1,762.8
536.5
476.9
749.5
296.0
108.2
172.6
1,746.3
516.9
482.3
747.1
296.2
105.5
173.6
1,771.6
533.5
490.8
747.3
302.2
103.9
172.9
1,784.2
537.6
497.4
749.3
296.8
110.5
173.5
1,779.3
530.6
503.7
745.0
306.9
109.6
174.9
1,792.8
540.9
514.1
737.7
301.3
108.6
176.0
1,844.8
588.2
520.8
735.8
314.1
111.7
175.8
1,957.0
682.2
533.0
741.8
322.9
115.5
177.5
1,840.8
569.4
530.3
741.1
341.7
114.0
178.3
1,838.2
561.3
533.9
743.0
336.1
110.8
178.1
1,840.7
560.5
537.7
742.5
319.1
113.0
178.8
Deposits
Transaction deposits
Savings deposits
T i m e deposits
Borrowings
O t h e r liabilities
Residual (assets less liabilities)
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 O t h e r securities (including trading
account)
DOMESTICALLY CHARTERED
COMMERCIAL BANKS3
30 L o a n s and securities
31
I n v e s t m e n t securities
32
U . S . g o v e r n m e n t securities
33
Other
34
Trading a c c o u n t a s s e t s
35
Total loans
36
I n t e r b a n k loans
37
L o a n s excluding i n t e r b a n k
C o m m e r c i a l and industrial
38
39
Real estate
40
Individual
41
All o t h e r
49 Total assets/total liabilities and capital . . .
50
51
52
53
54
55
56
Deposits
T r a n s a c t i o n deposits
Savings deposits
T i m e deposits
Borrowings
O t h e r liabilities
Residual (assets less liabilities)
1. D a t a h a v e b e e n revised b e c a u s e of b e n c h m a r k i n g t o n e w Call R e p o r t s and
n e w seasonal f a c t o r s beginning July 1985. B a c k d a t a are available f r o m the
Banking Section, B o a r d of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m , Washingt o n , D . C . , 20551.
Figures are partly e s t i m a t e d . T h e y include all b a n k - p r e m i s e s subsidiaries and
o t h e r significant m a j o r i t y - o w n e d d o m e s t i c subsidiaries. L o a n and securities d a t a
f o r domestically c h a r t e r e d 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 day of the m o n t h based on 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 f o r o t h e r banking institutions are e s t i m a t e s m a d e f o r
the last W e d n e s d a y of the m o n t h b a s e d o n a weekly reporting sample of foreignrelated institutions and q u a r t e r - e n d condition r e p o r t s .
2. C o m m e r c i a l banking institutions include insured domestically c h a r t e r e d
c o m m e r c i a l b a n k s , b r a n c h e s and agencies of foreign b a n k s , E d g e A c t a n d
A g r e e m e n t c o r p o r a t i o n s , and N e w Y o r k S t a t e foreign i n v e s t m e n t c o r p o r a t i o n s .
3. Insured domestically c h a r t e r e d c o m m e r c i a l b a n k s include all m e m b e r b a n k s
and insured n o n m e m b e r b a n k s .
Weekly Reporting Commercial
Banks
A19
1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1.4 Billion or More on
December 31, 1982, Assets and Liabilities
Millions of dollars, Wednesday figures
1987
Account
J a n . 28
1 C a s h and b a l a n c e s d u e f r o m d e p o s i t o r y institutions
2 Total loans, leases and securities, net
105,562
Feb. 4 '
104,237
Feb. l l r
95,853
1,015,586 1,009,386 1,011,619
F e b . 18'
F e b . 25'
117,784
97,014
Mar. 4
103,334
1,008,677 1,008,876 1,009,014
M a r . 11
105,003
M a r . 18
102,540
1,004,971 1,001,509
3 U.S. Treasury and government agency
4
Trading a c c o u n t
5
I n v e s t m e n t a c c o u n t , by maturity
6
O n e y e a r or less
7
O v e r o n e t h r o u g h five y e a r s
8
O v e r five y e a r s
9 O t h e r securities
10
Trading a c c o u n t
11
Investment account
12
States a n d political subdivisions, by maturity
O n e y e a r or less
13
14
Over one year
15
O t h e r b o n d s , c o r p o r a t e s t o c k s , a n d securities
16 O t h e r trading a c c o u n t a s s e t s
113,804
18,311
95,492
17,594
40,627
37,272
68,309
3,720
64,589
53,555
7,383
46,172
11,034
4,326
114,429
18,525
95,904
18,117
41,295
36,491
68,268
3,772
64,4%
53,233
7,262
45,970
11,263
4,809
113,779
17,237
96,542
18,110
41,801
36,631
67,658
3,296
64,363
53,050
7,056
45,994
11,313
4,762
115,717
19,220
%,497
17,470
42,425
36,602
67,697
3,453
64,244
52,951
6,994
45,957
11,293
4,960
116,663
21,312
95,351
17,265
41,730
36,355
67,532
3,321
64,212
52,878
6,%3
45,915
11,334
4,471
117,832
21,586
%,245
17,287
41,494
37,464
67,371
3,523
63,848
52,343
6,870
45,473
11,505
4,394
115,499
19,414
%,086
17,418
40,998
37,670
67,497
3,405
64,092
52,150
6,766
45,384
11,942
4,562
113,048
18,314
94,734
16,630
40,614
37,490
67,290
3,335
63,955
51,829
6,702
45,127
12,126
5,046
17 F e d e r a l f u n d s sold 1
18
T o commercial banks
19
T o n o n b a n k b r o k e r s and d e a l e r s in securities
20
To others
21 O t h e r loans and leases, g r o s s 2
22
O t h e r loans, g r o s s 2
23
C o m m e r c i a l a n d industrial 2
24
B a n k e r s a c c e p t a n c e s a n d commercial p a p e r
25
All o t h e r
26
U.S. addressees
27
Non-U.S. addressees
63,949
37,141
16,857
9,951
787,387
769,328
282,255
2,471
279,784
276,024
3,760
58,955
35,938
15,539
7,478
785,352
767,327
283,747
2,691
281,056
277,325
3,730
64,086
39,461
15,716
8,908
783,876
765,766
282,725
2,530
280,195
276,453
3,742
56,939
33,192
15,250
8,498
785,964
767,736
281,736
2,634
279,101
275,320
3,782
59,712
35,804
15,904
8,005
783,118
764,854
280,778
2,354
278,424
274,634
3,791
57,238
34,774
14,932
7,532
785,026
766,794
281,231
2,484
278,747
275,068
3,679
59,833
35,942
16,565
7,326
780,457
762,180
280,279
2,652
277,627
274,035
3,592
54,540
31,009
15,863
7,668
784,473
766,180
281,021
2,428
278,592
275,197
3,3%
214,233
143,372
51,916
20,758
5,732
25,426
15,434
5,339
34,859
3,264
18,655
18,059
4,901
17,288
765,198
123,844
214,911
142,979
50,531
20,092
5,254
25,185
13,620
5,348
34,641
3,272
18,279
18,025
4,828
17,600
762,924
127,716
215,696
142,270
51,382
20,386
5,587
25,408
12,805
5,324
34,421
3,221
17,922
18,110
4,822
17,720
761,333
127,904
216,311
142,083
52,960
20,765
6,545
25,650
13,154
5,307
34,430
3,223
18,533
18,227
4,877
17,722
763,364
125,993
215,661
142,179
50,776
20,785
5,812
24,179
14,2%
5,324
34,387
3,245
18,207
18,264
4,869
17,752
760,497
127,509
216,439
141,397
51,497
20,745
5,571
25,181
15,213
5,326
34,561
3,272
17,858
18,232
4,833
18,014
762,178
130,599
217,513
140,992
50,658
20,313
4,975
25,369
12,915
5,339
34,278
3,231
16,975
18,277
4,829
18,050
757,578
126,381
218,752
140,744
51,453
20,908
5,063
25,482
13,606
5,368
34,266
3,263
17,707
18,293
4,830
18,058
761,584
126,%7
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Real e s t a t e loans 2
T o individuals f o r p e r s o n a l e x p e n d i t u r e s
T o d e p o s i t o r y a n d financial institutions
C o m m e r c i a l b a n k s in the United States
B a n k s in foreign c o u n t r i e s
N o n b a n k depository and other financial institutions .
F o r p u r c h a s i n g and c a r r y i n g securities
T o finance agricultural 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 o t h e r
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
L o a n a n d lease r e s e r v e 2
O t h e r loans and leases, n e t 2
All o t h e r a s s e t s
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, 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
States a n d political subdivisions
U.S. government
D e p o s i t o r y institutions in United States
B a n k s in foreign c o u n t r i e s
Foreign g o v e r n m e n t s a n d official institutions
Certified a n d officers' c h e c k s
T r a n s a c t i o n b a l a n c e s o t h e r t h a n d e m a n d deposits
Nontransaction balances
Individuals, p a r t n e r s h i p s and c o r p o r a t i o n s
States and political subdivisions
U.S. government
D e p o s i t o r y institutions in the United States
Foreign g o v e r n m e n t s , official institutions a n d b a n k s . .
Liabilities f o r b o r r o w e d m o n e y
Borrowings from Federal Reserve Banks
T r e a s u r y tax-and-loan n o t e s
All o t h e r liabilities f o r b o r r o w e d m o n e y 3
O t h e r liabilities and s u b o r d i n a t e d note and d e b e n t u r e s
65 Total liabilities
66 Residual (total a s s e t s m i n u s total liabilities) 4
67
68
69
70
71
72
73
MEMO
T o t a l loans and l e a s e s (gross) a n d i n v e s t m e n t s a d j u s t e d 5
Total loans and leases (gross) a d j u s t e d 2 ' 5
Time d e p o s i t s in a m o u n t s of $100,000 o r m o r e
L o a n s sold outright t o affiliates—total 6
C o m m e r c i a l a n d industrial
Other
N o n t r a n s a c t i o n savings d e p o s i t s (including M M D A s ) . . .
1,244,992 1,241,338 1,235,376
228,412
174,114
5,311
2,373
25,535
7,158
789
13,132
57,282
515,414
476,759
26,156
680
10,749
1,070
268,150
3,447
19,646
245,056
88,674
215,288
166,253
4,948
2,743
23,743
6,784
697
10,119
58,351
516,514
478,071
26,544
697
10,163
1,038
271,965
25
19,558
252,382
86,179
1,157,932 1,154,497 1,148,298
1,252,455 1,233,399 1,242,947
240,653
182,375
5,386
2,006
30,394
7,145
715
12,631
58,567
516,947
478,735
26,354
678
10,109
1,071
266,163
0
19,994
246,169
83,182
220,672
170,240
5,315
2,118
25,767
6,662
788
9,783
57,732
518,181
478,998
27,127
711
10,281
1,064
263,922
720
19,454
243,748
86,245
230,710
176,384
5,259
4,894
25,982
6,365
700
11,125
60,727
519,119
480,590
26,589
733
10,196
1,011
259,176
100
10,506
248,570
86,036
1,165,512 1,146,753 1,155,768
1,236,355 1,231,016
223,636
173,264
4,610
2,765
23,328
6,217
849
12,605
59,672
518,950
480,390
26,714
746
10,092
1,007
258,035
0
6,111
251,924
88,750
225,521
172,538
5,191
4,160
24,521
6,663
590
11,858
59,457
519,643
480,972
26,811
731
10,098
1,031
251,450
0
14,004
237,446
87,794
1,149,042 1,143,865
87,060
86,841
87,078
86,942
86,646
87,179
87,312
87,151
979,875
793,436
156,570
1,821
1,260
561
229,668
975,783
788,276
155,552
1,829
1,269
560
231,438
974,314
788,114
156,742
1,7%
1,254
542
230,984
977,320
788,946
156,608
1,717
1,192
525
232,084
974,908
786,242
158,542
2,093
1,592
501
231,510
976,342
786,744
158,330
2,037
1,551
485
232,676
971,593
784,034
158,202
1,942
1,470
472
232,966
972,481
787,0%
158,470
1,954
1,482
472
233,517
1. I n c l u d e s securities 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.
2. L e v e l s of m a j o r loan i t e m s w e r e affected by the Sept. 26, 1984, transaction
b e t w e e n Continental Illinois N a t i o n a l B a n k and the 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 . F o r details see the H . 4 . 2 statistical r e l e a s e d a t e d O c t . 5, 1984.
3. Includes federal f u n d s p u r c h a s e d a n d securities sold 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 ; f o r i n f o r m a t i o n on t h e s e liabilities at b a n k s with a s s e t s of $1 billion or
m o r e on D e c . 31, 1977, see table 1.13.
230,546
175,410
6,268
5,152
25,820
6,314
725
10,855
59,398
515,963
477,906
26,088
697
10,203
1,068
262,045
0
17,667
244,378
86,546
4. This is not a m e a s u r e of equity capital f o r use in capital a d e q u a c y analysis o r
f o r o t h e r analytic uses.
5. Exclusive of loans and federal f u n d s t r a n s a c t i o n s with d o m e s t i c c o m m e r c i a l
banks.
6. L o a n s sold are those sold outright t o a b a n k ' s o w n foreign b r a n c h e s ,
nonconsolidated n o n b a n k affiliates of the b a n k , the b a n k ' s holding c o m p a n y (if
not a b a n k ) , and n o n c o n s o l i d a t e d n o n b a n k subsidiaries of the holding c o m p a n y .
A20
1.28
DomesticNonfinancialStatistics • June 1987
L A R G E W E E K L Y R E P O R T I N G C O M M E R C I A L B A N K S IN N E W Y O R K CITY A s s e t s and Liabilities
Millions of dollars, Wednesday figures except as noted
1987
Account
Jan. 28
1 Cash and balances due from depository institutions
2 Total loans, leases and securities, net'
Securities
3 U.S. Treasury and government agency 2
4
Trading account 2
5
Investment account, by maturity
6
One year or less
7
Over one through five years
8
Over five years
9 Other securities 2
10
Trading account 2
11
Investment account
12
States and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks and securities
16 Other trading account assets 2
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Loans and leases
Federal funds sold 3
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans and leases, net
All other assets 4
44 Total assets
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
ATS, NOW, Super N O W , telephone transfers)
Nontransaction balances
Individuals, partnerships and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions and banks
Liabilities for borrowed money
Borrowings from Federal Reserve Banks
Treasury tax-and-loan notes
All other liabilities for borrowed money 5
Other liabilities and subordinated note and debentures
65 Total liabilities
66 Residual (total assets minus total liabilities) 6
MEMO
67 Total loans and leases (gross) and investments adjusted 1 ' 7
68 Total loans and leases (gross) adjusted 7
69 Time deposits in amounts of $100,000 or more
Feb. 11
Feb. 18
Feb. 25
Mar. 4
Mar. 11
Mar. 18
Mar. 25
32,952
26,884
24,688
33,441
25,306
24,497
30,317
26,221
25,419
224,049
217,429
222,500
220,775
221,734
218,318
219,405
217,071
216,671
0
0
13,335
1,357
4,440
7,538
0
0
16,154
13,940
1,587
12,353
2,214
0
0
0
13,397
1,307
4,642
7,447
0
0
16,214
13,918
1,586
12,332
2,295
0
0
0
13,416
1,290
4,746
7,380
0
0
16,284
13,901
1,467
12,433
2,384
0
0
0
13,927
1,377
5,180
7,370
0
0
16,275
13,909
1,471
12,439
2,365
0
0
0
13,924
1,688
4,608
7,628
0
0
16,342
13,916
1,470
12,446
2,426
0
0
0
14,214
1,655
4,623
7,936
0
0
16,418
13,996
1,436
12,560
2,423
0
0
0
13,844
1,732
4,116
7,995
0
0
16,440
13,923
1,393
12,530
2,517
0
0
0
13,663
1,609
4,124
7,930
0
0
16,513
13,981
1,407
12,573
2,532
0
0
0
13,604
1,508
4,146
7,951
0
0
16,549
13,974
1,392
12,582
2,575
0
26,680
10,076
8,583
8,022
174,402
170,081
65,909
768
65,141
64,686
455
38,541
20,695
21,460
12,204
2,979
6,277
6,980
240
8,749
1,062
6,446
4,321
1,583
4,940
167,879
61,762
22,532
9,355
7,262
5,916
171,903
167,567
66.310
810
65,500
65,032
468
38,513
20,667
20,285
11,439
2,511
6,334
5,874
265
8,682
1,073
5,897
4,336
1,555
5,062
165,286
63,870
28,188
13,909
6,738
7,540
171,376
167,000
66,003
744
65,259
64,730
529
38,619
20,627
20,938
11,502
2,985
6,452
5,265
266
8,532
1,017
5,732
4,376
1,557
5,207
164,611
62,530
23,929
10,232
6,808
6,889
173,437
169,048
65,889
826
65,064
64,518
546
38,979
20,610
21,796
11,689
3,839
6,268
6,001
264
8,604
976
5,929
4,389
1,600
5,194
166,643
63,814
24,280
11,484
7,034
5,762
174,008
169,601
66,212
625
65,587
65,001
586
39,146
20,603
20,760
11,546
3,279
5,935
6,932
257
8,620
1,027
6,044
4,406
1,595
5,225
167.187
66,176
20,539
8,617
5,803
6,119
173,987
169,610
65,631
762
64,869
64,300
569
39,568
20,576
20,844
11,550
2,993
6,301
7,396
244
8,537
1,036
5,776
4,377
1,591
5,250
167,146
66,908
25,273
11,732
7,832
5,709
170,769
166,366
65,127
859
64,268
63,772
496
39,868
20,385
20,052
11,223
2,445
6,384
5,799
249
8,331
993
5,560
4,403
1,594
5,326
163,849
61,421
21,124
8,247
7,377
5,500
172,667
168,254
64,737
691
64,046
63,671
375
40,407
20,402
21,012
11,532
2,625
6,855
6,631
261
8,304
1,038
5,461
4,413
1,596
5,300
165,771
62,150
21,742
10,123
6,662
4,956
171,639
167,199
64,615
610
64,005
63,593
412
40,463
20,411
20,095
11,109
2,652
6,334
6,781
252
8,348
977
5,258
4,440
1,598
5,264
164,776
59,148
318,762
308,184
309,718
318,030
313,216
309,723
311,143
305,442
301,238
65,564
43,905
686
439
7,285
5,848
617
6,783
60,018
41,623
907
1,122
5,942
5,100
560
4,763
54,456
36,570
605
452
5,797
5,549
549
4,933
66,579
43,938
624
292
7,866
5,819
538
7,501
60,240
41,459
610
372
7,368
5,434
646
4,350
59,784
40,732
547
992
6,502
5,199
556
5,254
59,288
39,546
574
518
5,477
5,080
679
7,413
61,214
41,292
636
782
6,058
5,452
438
6,557
57,256
39,860
729
355
5,952
4,822
605
4,932
7,449
98,517
89,336
6,165
38
2,448
530
81,178
2,990
4,824
73,364
38,053
7,672
99,271
90,290
6,180
38
2,178
585
77,602
0
4,130
73,472
35,378
7,558
98,981
89,887
6,302
32
2,184
576
85,547
0
4,609
80,938
34,797
7,551
99,873
90,829
6,174
33
2,205
631
82,840
0
4,824
78,017
33,099
7,440
99,775
90,551
6,374
34
2,192
624
83,370
450
4,497
78,423
34,462
7,753
99,740
90,650
6,259
35
2,189
608
80,216
0
2,362
77,855
33,888
7,675
99,024
90,035
6,262
37
2,085
605
79,832
0
1,403
78,429
36,904
7,764
99,657
90,800
6,203
36
2,004
613
71,597
0
3,690
67,907
36,765
7,774
98,670
90,045
6.168
26
1,897
534
72,171
0
2,536
69,636
36,044
290,760
279,941
281,340
289,942
285,287
281,382
282,724
276,997
271,916
28,002
28,242
28,377
28,088
27,929
28,341
28,419
28,445
29,322
208,292
178,802
35,885
203,252
173,641
36,016
203,854
174,153
36,508
205,647
175,445
36,774
205,525
175,258
36,440
204,992
174,359
36,428
203,370
173,086
36,263
204,188
174,012
36,172
202,302
172,149
35,633
1. Excludes trading account securities.
2. Not available due to confidentiality.
3. Includes securities purchased under agreements to resell.
4. Includes trading account securities.
5. Includes federal funds purchased and securities sold under agreements to
repurchase.
Feb. 4
6. Not a measure of equity capital for use in capital adequacy analysis or for
other analytic uses.
7. Exclusive of loans and federal funds transactions with domestic commercial
banks.
NOTE. These data also appear in the Board's H.4.2 (504) release. For address,
see inside front cover.
Weekly Reporting
1.30
Commercial
LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS'
Liabilities
Banks
A21
Assets and
Millions of dollars, Wednesday figures
1987
Account
J a n . 28
I
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Cash and due from depository institutions.
T o t a l loans a n d securities
U . S . T r e a s u r y a n d govt, a g e n c y securities
O t h e r securities
F e d e r a l f u n d s sold 2
T o commercial banks in the United States
To others
O t h e r l o a n s , gross
C o m m e r c i a l a n d industrial
Bankers acceptances and commercial
paper
All o t h e r
U.S. addressees
Non-U.S. addressees
T o financial institutions
Commercial b a n k s in the United 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 financial institutions
T o foreign govts, and official institutions..
F o r p u r c h a s i n g a n d carrying securities . .
All o t h e r
Other assets (claims on nonrelated p a r t i e s ) . .
N e t d u e f r o m related institutions
Total a s s e t s
D e p o s i t s o r credit b a l a n c e s d u e t o o t h e r
t h a n directly related institutions
Transaction accounts and credit balances 3
Individuals, p a r t n e r s h i p s , and
corporations
Other
Nontransaction accounts4
Individuals, p a r t n e r s h i p s , a n d
corporations
Other
B o r r o w i n g s f r o m o t h e r t h a n directly
related institutions
Federal funds purchased5
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
From others
O t h e r liabilities f o r b o r r o w e d m o n e y
T o c o m m e r c i a l b a n k s in t h e
United States
To others
O t h e r liabilities t o n o n r e l a t e d parties
N e t d u e t o related institutions
Total liabilities
MEMO
41 Total loans (gross) a n d securities a d j u s t e d 6
42 Total loans (gross) a d j u s t e d 6
Feb. 4
F e b . 11
F e b . 25
Mar. 4
M a r . 11
M a r . 18
M a r . 25
10,191
86,073 r
6,428
6,454
6,645
4,880
1,765
66,545'
40,759'
10,386
82,63C
6,634
6,628
5,190
3,958
1,232
64,178'
40,070'
9,967
83,102'
6,704
6,771
6,190
5,488
702
63,437'
40,452'
9,799
84,772'
7,002
6,727
5,808
4,826
982
65,235'
41,264'
9,698
85,96c
6,555
6,852
6,069
4,660
1,408
66,484'
41,895'
8,886
84,929
6,414
7,161
4,270
3,227
1,044
67,084
42,067
9,343
85,732
6,964
7,183
5,102
4,189
913
66,483
41,921
9,423
87,041
6,986
7,103
4,920
3,667
1,253
68,033
42,748
9,834
90,502
6,856
7,189
6,499
5,755
744
69,957
43,484
2,998
37,762'
35,399
2,363'
15,798
12,044
1,048
2,706
576
3,610
5,802
22,878
13,744'
132,886
2,969
37,101'
35,042
2,059'
14,684
11,119
9%
2,569
556
3,119
5,748
22,408
16,268'
131,692
3,161
37,290'
35,158
2,132'
14,576
11,007
927
2,643
573
2,196
5,639
22,417
14,667'
130,154
3,067
38,197'
35,823
2,374'
15,266
11,723
987
2,556
543
2,502
5,659'
21,653
15,876'
132,101
2,841
39,054'
36,851
2,203'
15,639
12,250
949
2,440
776
2,769
5,405'
22,121
14,046'
131,826
2,798
39,269
36,960
2,310
15,935
12,318
1,134
2,483
844
2,799
5,438
22,433
15,527
131,776
2,808
39,113
36,887
2,226
15,970
12,445
942
2,582
895
2,402
5,294
22,978
14,794
132,848
2,707
40,041
37,776
2,265
16,226
12,777
884
2,565
978
2,654
5,427
23,390
15,696
135,550
2,616
40,868
38,621
2,246
17,089
13,592
884
2,613
1,035
2,899
5,450
23,308
14,387
138,030
39,025'
3,288'
38,462
3,361
38,476
3,148
39,316
3,446
39,354
3,016
39,778
3,133
40,129
3,181
40,407
3,243
40,667
3,136
1,859
1,429'
35,737
1,958
1,403
35,101
1,707
1,441
35,329
1,827
1,620
35,870
1,824
1,192
36,338
1,979
1,154
36,645
1,852
1,328
36,948
1,767
1,476
37,164
1,706
1,430
37,531
28,868
6,869
28,012
7,089
27,901
7,428
28,500
7,370
29,048
7,290
29,281
7,364
29,467
7,480
29,627
7,538
30,408
7,124
51,434'
26,191
55,158
30,034
51,822
26,400
54,015
27,256
50,437
22,344
53,698
25,808
52,504
23,789
55,278
25,212
54,013
22,928
16,001
10,190
25,242'
19,244
10,790
25,124
16,436
9,964
25,422
16,869
10,387
26,759
12,343
10,001
28,092
15,352
10,457
27,890
13,525
10,264
28,715
15,014
10,197
30,066
13,419
9,510
31,084
21,864
3,378'
24,967
17,460
132,886
21,609
3,515
24,590
13,482
131,692
21,952
3,470
24,289
15,566
130,154
23,052
3,707
23,594
15,176
132,101
23,797
4,296
23,991
18,044
131,826
24,316
3,574
24,576
13,724
131,776
24,986
3,729
24,767
15,447
132,848
26,265
3,801
25,272
14,593
135,550
26,606
4,478
25,538
17,813
138,030
69,149'
56,267'
67,553'
54,291'
69,384
55,810
69,098
54,950
70,597
56,509
71,155
57,109
66,607'
53,132'
1. Effective J a n . 1, 1986, the reporting panel i n c l u d e s 65 U . S . b r a n c h e s a n d
agencies of foreign b a n k s t h a t include t h o s e b r a n c h e s a n d agencies with a s s e t s of
$750 million o r m o r e o n J u n e 30, 1980, plus those b r a n c h e s a n d agencies that had
r e a c h e d the $750 million asset level on D e c . 31, 1984.
2. I n c l u d e s securities 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.
3. I n c l u d e s c r e d i t b a l a n c e s , d e m a n d deposits, a n d o t h e r c h e c k a b l e deposits.
F e b . 18
68,222'
54,494'
69,049'
55,642'
4. I n c l u d e s savings d e p o s i t s , 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 , a n d time
deposits.
5. Includes securities sold u n d e r a g r e e m e n t s t o r e p u r c h a s e .
6. Exclusive of loans t o and federal f u n d s sold t o c o m m e r c i a l b a n k s in the
United States.
A22
1.31
DomesticNonfinancialStatistics • June 1987
GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations'
Billions of dollars, estimated daily-average balances, not seasonally adjusted
Commercial banks
T y p e of holder
1981
Dec.
1982
Dec.
Sept.
1 All holders—Individuals, partnerships, and
corporations
2
3
4
5
6
Financial b u s i n e s s
Nonfinancial business
Consumer
Foreign
Other
1986
1985
1984
Dec.
1983
Dec.
34
Dec.
Mar.
Sept.
June
Dec."
288.9
291.8
293.5
302.7
299.3
321.0
307.4
322.4
333.6
363.5
28.0
154.8
86.6
2.9
16.7
35.4
150.5
85.9
3.0
17.0
32.8
161.1
78.5
3.3
17.8
31.7
166.3
81.5
3.6
19.7
28.1
167.2
82.0
3.5
18.5
32.3
178.5
85.5
3.5
21.2
31.8
166.6
84.0
3.4
21.6
32.3
180.0
86.4
3.0
20.7
35.9
185.9
86.3
3.3
22.2
41.4
202.0
91.0
3.3
25.8
Weekly reporting b a n k s
1981
Dec.
1982
Dec.
1985
1984
Dec.2
1983
Dec.
Sept. 3 - 4
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial b u s i n e s s
Nonfinancial business
Consumer
Foreign
Other
Dec.
Mar.
June
Sept.
Dec.
137.5
144.2
146.2
157.1
153.6
168.6
159.7
168.5
174.7
195.1
21.0
75.2
30.4
2.8
8.0
26.7
74.3
31.9
2.9
8.4
24.2
79.8
29.7
3.1
9.3
25.3
87.1
30.5
3.4
10.9
22.7
85.5
31.6
3.3
10.5
25.9
94.5
33.2
3.1
12.0
25.5
86.8
32.6
3.3
11.5
25.7
93.1
34.9
2.9
11.9
28.9
94.8
35.0
3.2
12.8
32.5
106.4
37.5
3.3
15.4
1. Figures include cash i t e m s in p r o c e s s of collection. E s t i m a t e s of gross
deposits are based on r e p o r t s supplied by a sample of commercial b a n k s . T y p e s of
depositors 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 the June 1971 BULLETIN, p. 466.
Figures may not add to totals b e c a u s e of rounding.
2. Beginning in M a r c h 1984, t h e s e d a t a reflect a change in the panel of weekly
reporting b a n k s , and are not c o m p a r a b l e t o earlier data. E s t i m a t e s in billions of
dollars for D e c e m b e r 1983 based on the n e w w e e k l y reporting panel are: financial
b u s i n e s s , 24.4; nonfinancial b u s i n e s s , 80.9; c o n s u m e r , 30.1; f o r e i g n , 3.1; o t h e r ,
9.5.
3. Beginning M a r c h 1985, financial b u s i n e s s d e p o s i t s a n d , by implication, total
gross d e m a n d deposits h a v e b e e n redefined t o e x c l u d e d e m a n d d e p o s i t s d u e t o
1986
thrift institutions. Historical d a t a h a v e not b e e n revised. T h e e s t i m a t e d v o l u m e of
such deposits f o r D e c e m b e r 1984 is $5.0 billion at all insured c o m m e r c i a l b a n k s
and $3.0 billion at weekly reporting b a n k s .
4. Historical data back to M a r c h 1985 h a v e been revised to a c c o u n t f o r
c o r r e c t i o n s of bank reporting e r r o r s . Historical d a t a b e f o r e M a r c h 1985 h a v e not
b e e n revised, and may contain reporting e r r o r s . Data f o r all c o m m e r c i a l b a n k s f o r
M a r c h 1985 were revised as follows (in billions of dollars): all holders, - . 3 ;
financial b u s i n e s s , - . 8 ; nonfinancial b u s i n e s s , - . 4 ; c o n s u m e r , .9; foreign, .1;
o t h e r , - . 1 . Data f o r w e e k l y reporting b a n k s f o r M a r c h 1985 w e r e revised a s
follows (in billions of dollars): all holders, - . 1 ; financial b u s i n e s s , - . 7 ; nonfinancial business, - . 5 ; c o n s u m e r , 1.1; foreign, .1; o t h e r , - . 2 .
Financial Markets
1.32
A23
COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1987
1986
Instrument
Dec.
Dec.
Dec.
Dec.
Dec.
Sept.
Oct.
Nov.
Dec.
Jan/
Feb.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
2
3
4
5
6
Financial companies 3
Dealer-placed
paper4
Total
Bank-related (not seasonally
adjusted)
Directly placed paper5
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies 6
166,436
187,658
237,586
300,899
330,828
325,406
328,275
322,292
330,828
336,996
336,550
34,605
44,455
56,485
78,443
99,980
97,799
99,186
95,015
99,980
101,731
102,784
2,516
2,441
2,035
1,602
2,265
1,980
2,172
2,031
2,265
2,284
2,174
84,393
97,042
110,543
135,504
152,385
146,293
147,056
146,856
152,385
157,252
158,954
32,034
47,437
35,566
46,161
42,105
70,558
44,778
86,952
40,860
78,463
37,455
81,314
38,957
82,033
39,205
80,421
40,860
78,463
45,085
78,013
45,722
74,812
Bankers dollar acceptances (not seasonally adjusted) 7
7 Total
Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others
Basis
14 Imports into United States
15 Exports from United States
16 All other
8
9
10
11
12
13
79,543
78,309
78,364
68,413
64,974
67,009
65,920
64,952
64,974
65,049
65,144
10,910
9,471
1,439
9,355
8,125
1,230
9,811
8,621
1,191
11,197
9,471
1,726
13,423
11,707
1,716
13,101
11,001
2,101
12,569
10,178
2,391
12,787
10,951
1,835
13,423
11,707
1,716
13,224
10,662
2,561
11,828
10,006
1,821
1,480
949
66,204
418
729
67,807
0
671
67,881
0
937
56,279
0
1,317
50,234
0
924
52,984
0
1,131
52,220
0
1,052
51,113
0
1,317
50,234
0
983
50,843
0
1,230
52,087
17,683
16,328
45,531
15,649
16,880
45,781
17,845
16,305
44,214
15,147
13,204
40,062
14,670
12,940
37,364
16,612
12,693
37,704
15,980
12,612
37,327
15,354
12,699
36,899
14,670
37,344 r
14,459
12,783
37,807
14,615
12,897
37,632
1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The
key changes in the content of the data involved additions to the reporting panel,
the exclusion of broker or dealer placed borrowings under any master note
agreements from the reported data, and the reclassification of a large portion of
bank-related paper from dealer-placed to directly placed.
2. Correction of a previous misclassification of paper by a reporter has created
a break in the series beginning December 1983. The correction adds some paper to
nonfinancial and to dealer-placed financial paper.
3. Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
1.33
4. Includes all financial company paper sold by dealers in the open market.
5. As reported by financial companies that place their paper directly with
investors.
6. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
7. Beginning October 1984, the number of respondents in the bankers acceptance survey were reduced from 340 to 160 institutions—those with $50 million or
more in total acceptances. The new reporting group accounts for over 95 percent
of total acceptances activity.
PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per annum
Rate
11.50
12.00
12.50
13.00
12.75
12.50
12.00
11.75
11.25
10.75
Effective Date
1985—Jan. 15
May 20
June 18
1986—Mar.
Apr.
July
Aug.
7
21
11
26
Rate
10.50
10.00
9.50
9.00
8.50
8.00
7.50
NOTE. These data also appear in the Board's H.15 (519) release. For address,
see inside front cover.
12,96c
Month
Average
rate
1984—Jan.
Feb.
Mar.
Apr.
May.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
11.00
11.00
1985—Jan.
Feb.
Mar.
Apr.
May.
June
July.
Aug.
10.61
10.50
10.50
10.50
10.31
9.78
9.50
9.50
11.21
11.93
12.39
12.60
13.00
13.00
12.97
12.58
11.77
11.06
1985—Sept.
Oct..
Nov.
Dec.
1986—Jan..
Feb..
Mar.
Apr..
May.
June.
July.
Aug.
Sept.
Oct..
Nov.
Dec.
1987—Jan. .
Feb..
A24
1.35
DomesticNonfinancialStatistics • June 1987
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.
1986
Instrument
1984
1985
1987
1987, w e e k ending
1986
Dec.
Jan.
Feb.
Mar.
F e b . 27
Mar. 6
M a r . 13
M a r . 20
M a r . 27
MONEY MARKET RATES
1 F e d e r a l funds 1 - 2
2 D i s c o u n t w i n d o w borrowing 1 - 2 ' 3
C o m m e r c i a l paper 4 - 5
1-month
3
4
3-month
6-month
5
F i n a n c e p a p e r , directly placed 4 - 5
6
1-month
7
3-month
8
6-month
B a n k e r s acceptances 5 - 6
9
3-month
10
6-month
Certificates of deposit, secondary market 7
11
1-month
3-month
12
6-month
13
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 . T r e a s u r y bills 5
Secondary market9
3-month
15
16
6-month
1-year
17
Auction a v e r a g e 1 0
18
3-month
6-month
19
1-year
20
10.22
8.80
8.10
7.69
6.80
6.33
6.91
5.50
6.43
5.50
6.10
5.50
6.13
5.50
5.95
5.50
6.06
5.50
6.12
5.50
6.08
5.50
6.14
5.50
10.05
10.10
10.16
7.94
7.95
8.01
6.62
6.49
6.39
6.63
6.10
5.88
5.95
5.84
5.76
6.12
6.05
5.99
6.22
6.16
6.10
6.08
6.04
6.00
6.12
6.07
6.01
6.20
6.15
6.08
6.21
6.16
6.09
6.29
6.22
6.15
9.97
9.73
9.65
7.91
7.77
7.75
6.58
6.38
6.31
6.32
5.81
5.74
5.86
5.59
5.60
6.02
5.88
5.79
6.11
5.95
5.88
5.95
5.89
5.85
6.02
5.89
5.82
6.09
5.94
5.84
6.08
5.94
5.86
6.17
5.99
5.93
10.14
10.19
7.92
7.96
6.39
6.29
5.96
5.78
5.74
5.65
5.99
5.93
6.09
6.02
6.01
5.94
5.96
5.91
6.06
6.00
6.08
6.01
6.17
6.09
10.17
10.37
10.68
10.73
7.97
8.05
8.25
8.28
6.61
6.52
6.51
6.71
6.66
6.04
5.95
6.23
5.94
5.87
5.85
6.10
6.10
6.10
6.10
6.32
6.18
6.17
6.18
6.37
6.11
6.11
6.12
6.36
6.10
6.10
6.11
6.33
6.16
6.15
6.16
6.34
6.17
6.16
6.17
6.38
6.24
6.22
6.22
6.36
9.52
9.76
9.92
7.48
7.65
7.81
5.98
6.03
6.08
5.53
5.55
5.55
5.43
5.44
5.46
5.59
5.59
5.63
5.59
5.60
5.68
5.45
5.43
5.57
5.54
5.55
5.61
5.66
5.64
5.72
5.55
5.55
5.64
5.60
5.61
5.71
9.57
9.80
9.91
7.49
7.66
n.a.
5.97
6.02
n.a.
5.49
5.53
5.60
5.45
5.47
5.44
5.59
5.60
5.74
5.56
5.56
5.68
5.40
5.41
n.a.
5.47
5.51
n.a.
5.63
5.59
n.a.
5.58
5.58
5.68
5.55
5.55
n.a.
10.89
11.65
11.89
12.24
12.40
12.44
12.48
12.39
8.43
9.27
9.64
10.13
10.51
10.62
10.97
10.79
6.46
6.87
7.06
7.31
7.55
7.68
7.85
7.80
5.87
6.27
6.43
6.67
6.97
7.11
7.28
7.37
5.78
6.23
6.41
6.64
6.92
7.08
n.a.
7.39
5.96
6.40
6.56
6.79
7.06
7.25
n.a.
7.54
6.03
6.42
6.58
6.79
7.06
7.25
n.a.
7.55
5.90
6.35
6.52
6.74
7.01
7.20
n.a.
7.50
5.94
6.36
6.52
6.71
6.99
7.18
n.a.
7.47
6.06
6.43
6.56
6.77
7.04
7.22
n.a.
7.52
5.99
6.40
6.53
6.76
7.03
7.21
n.a.
7.52
6.07
6.45
6.63
6.83
7.08
7.27
n.a.
7.59
11.99
10.75
8.14
7.67
7.60
7.69
7.62
7.61
7.56
7.60
7.59
7.65
9.61
10.38
10.10
8.60
9.58
9.11
6.95
7.76
7.32
6.29
7.25
6.86
6.12
6.93
6.61
6.05
6.98
6.61
6.25
7.25
6.66
6.05
6.90
6.59
6.00
7.00
6.54
6.20
7.20
6.61
6.35
7.35
6.68
6.45
7.45
6.79
13.49
12.71
13.31
13.74
14.19
12.05
11.37
11.82
12.28
12.72
9.71
9.02
9.47
9.95
10.39
9.23
8.49
9.02
9.41
9.97
9.04
8.36
8.86
9.23
9.72
9.03
8.38
8.88
9.20
9.65
8.99
8.36
8.84
9.13
9.61
9.01
8.36
8.86
9.17
9.64
8.98
8.34
8.83
9.14
9.60
8.99
8.36
8.84
9.15
9.61
8.98
8.36
8.83
9.13
9.58
8.98
8.36
8.83
9.11
9.62
13.81
12.06
9.61
9.08
8.92
8.82
8.84
8.79
8.80
8.83
8.86
8.91
11.59
4.64
10.49
4.25
8.76
3.48
8.18
3.38
7.91
3.17
7.93
3.02
7.52
2.90
7.98
3.00
7.57
2.94
7.50
2.94
7.50
2.85
7.51
2.97
CAPITAL MARKET RATES
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
U . S . T r e a s u r y notes and b o n d s 1 1
C o n s t a n t maturities 1 2
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
Composite13
O v e r 10 y e a r s (long-term)
State and local notes a n d b o n d s
M o o d y ' s series 1 4
Aaa
Baa
Bond Buyer series 1 5
Corporate bonds
S e a s o n e d issues 1 6
All industries
Aaa
Aa
A
Baa
A-rated, recently-offered utility
bonds17
MEMO: Dividend/price ratio 1 8
39
Preferred stocks
Common stocks
40
1. W e e k l y and m o n t h l y figures are a v e r a g e s of all c a l e n d a r d a y s , w h e r e the
rate for a w e e k e n d or holiday is t a k e n t o be the rate prevailing on the preceding
b u s i n e s s d a y . T h e daily rate is the a v e r a g e of the rates on a given day weighted by
the v o l u m e of t r a n s a c t i o n s at t h e s e r a t e s .
2. Weekly figures are a v e r a g e s f o r s t a t e m e n t week ending W e d n e s d a y .
3. Rate f o r the F e d e r a l R e s e r v e B a n k of 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 of offering rates q u o t e d by at least five dealers (in the
c a s e of c o m m e r c i a l paper), or finance c o m p a n i e s (in the c a s e of finance paper).
B e f o r e N o v e m b e r 1979, maturities f o r d a t a s h o w n are 30-59 d a y s , 90-119 d a y s ,
and 120-179 d a y s f o r c o m m e r c i a l p a p e r ; and 30-59 d a y s , 90—119 d a y s , and 150—
179 d a y s f o r finance p a p e r .
5. Yields are q u o t e d o n a b a n k - d i s c o u n t basis, rather than an investment yield
basis (which would give a higher figure).
6. Dealer closing offered rates f o r top-rated b a n k s . M o s t representative rate
(which may b e , but need not b e , the a v e r a g e of the rates quoted by the dealers).
7. U n w e i g h t e d a v e r a g e of offered r a t e s q u o t e d by at least five dealers early in
the d a y .
8. C a l e n d a r w e e k a v e r a g e . F o r indication p u r p o s e s only.
9. U n w e i g h t e d a v e r a g e of closing bid r a t e s quoted by at least five dealers.
10. Rates are r e c o r d e d in the w e e k in which bills are issued. Beginning with the
T r e a s u r y bill auction held on A p r . 18, 1983, b i d d e r s were required to state the
p e r c e n t a g e yield (on a b a n k d i s c o u n t basis) that t h e y would accept to t w o decimal
places. T h u s , a v e r a g e issuing rates in bill a u c t i o n s will be r e p o r t e d using t w o
rather than three decimal places.
11. Yields are based on closing bid prices q u o t e d by at least five d e a l e r s .
12. Yields a d j u s t e d t o c o n s t a n t maturities by the U . S . T r e a s u r y . T h a t is, yields
are read f r o m a yield c u r v e at fixed maturities. Based on only recently issued,
actively traded securities.
13. A v e r a g e s (to maturity or call) f o r all outstanding b o n d s n e i t h e r d u e n o r
callable in less than 10 y e a r s , including o n e very low yielding " f l o w e r " b o n d .
14. G e n e r a l obligations based on 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 .
15. G e n e r a l obligations only, with 20 y e a r s t o maturity, issued by 20 state a n d
local g o v e r n m e n t a l units of mixed quality. B a s e d on figures f o r T h u r s d a y .
16. Daily figures f r o m M o o d y ' s I n v e s t o r s Service. Based on yields t o m a t u r i t y
on selected long-term b o n d s .
17. Compilation of the F e d e r a l R e s e r v e . This series is an e s t i m a t e of the yield
on recently-offered, A-rated utility b o n d s with a 30-year maturity a n d 5 y e a r s of
call protection. Weekly d a t a are b a s e d on Friday q u o t a t i o n s .
18. S t a n d a r d and P o o r ' s c o r p o r a t e series. P r e f e r r e d stock ratio b a s e d on a
sample o f t e n issues: f o u r public utilities, f o u r industrials, o n e financial, and o n e
transportation. C o m m o n stock ratios on the 500 stocks in the price index.
NOTE. T h e s e d a t a also a p p e a r in the B o a r d ' s H . 1 5 (519) and G . 1 3 (415) releases.
F o r a d d r e s s , see inside f r o n t c o v e r .
Financial Markets
1.36
STOCK MARKET
A25
Selected Statistics
1986
Indicator
1984
1985
1987
1986
July
Aug.
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
Mar.
Prices and trading (averages of daily figures)
Common stock prices
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance
6 Standard & Poor's Corporation (1941-43 = 10)' . . .
7 American Stock Exchange 2
(Aug. 31, 1973 = 50)
92.46
108.01
85.63
46.44
89.28
160.50
108.09
123.79
104.11
56.75
114.21
186.84
136.00
155.85
119.85
71.35
147.18
236.34
138.32
158.06
112.03
74.20
150.23
240.18
140.91
160.10
111.24
77.84
152.90
245.00
137.06
156.52
114.06
74.56
145.56
238.27
136.74
156.56
120.04
73.38
143.89
237.36
140.84
162.10
122.27
75.77
142.97
245.09
142.12
163.85
121.26
76.07
144.29
248.61
151.17
175.60
126.61
78.54
153.32
264.51
160.23
189.17
135.49
78.19
158.41
280.93 r
166.43
198.95
138.55
77.15
162.41
292.47
207.96
229.10
264.38
269.93
268.55
264.30
257.82
265.14
264.65
289.02
315.60
332.55
Volume of trading (thousands
8 New York Stock Exchange
9 American Stock Exchange
91,084 109,191 141,306
8,355 11,846
6,107
131,155 154,770
8,930 10,513
148,228
12,272
192,419 183,478
14,755 14,962
180,251
15,678
of shares)
137,709 128,661 150,831
9,885 10,853
10,320
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers 3
Free credit balances at
11 Margin-account 5
12 Cash-account
22,470
28,390
36,840
33,170
34,550
34,580
36,310
37,090
36,840
34,960
35,740
38,080
1,755
10,215
2,715
12,840
4,880
19,000
2,570
14,600
3,035
14,210
3,395
14,060
3,805
14,445
3,765
15,045
4,880
19,000
5,060
17,395
4,470
17,325
4,730
17,370
n a.
n.a.
brokers4
Margin-account debt at brokers (percentage distribution, end of period) 6
13 Total
14
15
16
17
18
19
By equity class (in
Under 40
40-49
50-59
60-69
70-79
80 or more
100.0
100.0
18.0
18.0
16.0
9.0
5.0
6.0
34.0
20.0
19.0
11.0
8.0
8.0
percent)1
n. f>.
n a.
1
I
n a.
n a.
n a.
n a.
n a.
1
1
n.a.
1
t t t 1 t t 1 t 1 I
1 1 1 1 i 1 1 1 I 1
Special miscellaneous-account balances at brokers (end of period) 6
20 Total balances (millions of dollars)8 . . .
Distribution by equity status
21 Net credit status
Debt status, equity of
22
60 percent or more
23
Less than 60 percent
75,840
99,310
59.0
58.0
29.0
11.0
31.0
11.0
(percent)
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Margin requirements (percent of market value and effective date) 9
Mar. 11, 1968
24 Margin stocks
25 Convertible bonds
26 Short sales
June 8, 1968
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 extended against stocks, convertible bonds, stocks
acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues was discontinued in April 1984, and margin credit at
broker-dealers became the total that is distributed by equity class and shown on
lines 17-22.
4. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
5. New series beginning June 1984.
6. In July 1986, the New York Stock Exchange stopped reporting certain data
items that were previously obtained in a monthly survey of a sample of brokers
80
60
80
May 6, 1970
65
50
65
Dec. 6, 1971
55
50
55
Nov. 24, 1972
65
50
65
Jan. 3, 1974
50
50
50
and dealers. Data items that are no longer reported include distributions of margin
debt by equity status of the account and special miscellaneous-account
balances.
7. Each customer's equity in his collateral (market value of collateral less net
debit balance) is expressed as a percentage of current collateral values.
8. Balances that may be used by customers as the margin deposit required for
additional purchases. Balances may arise as transfers based on loan values of
other collateral in the customer's margin account or deposits of cash (usually sales
proceeds) occur.
9. Regulations G, T, and U of the Federal Reserve Board of Governors,
prescribed in accordance with the Securities Exchange Act of 1934, limit the
amount of credit to purchase and carry margin stocks that may be extended on
securities as collateral by prescribing a maximum loan value, which is a specified
percentage of the market value of the collateral at the time the credit is extended.
Margin requirements are the difference between the market value (100 percent)
and the maximum loan value. The term "margin stocks" is defined in the
corresponding regulation.
A26
1.37
DomesticNonfinancialStatistics • June 1987
SELECTED FINANCIAL INSTITUTIONS
Selected Assets and Liabilities
Millions of dollars, end of period
1987
1986
Account
1984
1985
Mar.
Apr.
May
July
June
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
Savings and loan associations
1 Assets
903,488
948,781
947,302
954,869
963,274
954,226
957,945'
965,027'
957,231' 961,902' 964,114' 963,380
2 Mortgages
555,277
4 Cash and investment securities1 .
5 Other
124,801
223,396
585,462
97,303
126,712
238,833
574,732
99,332
131,464
241,104
575,177
103,415
132,351
247,339
574,992
108,324
134,881
253,400
565,037
113,158
130,877
258,310
565,353
113,100r
132,78V
259,798'
566,438
113,621'
138,86c
259,723'
557,137 557,303 556,780 553,552
117,698' 121,604' 122,681' 123,186
138,559' 138,240' 141,536' 142,758
261,518' 266,507' 265,892' 267,538
6 Liabilities and net worth
903,488
948,781
947,302
954,869
963,274
954,226
957,945'
965,027'
957,231' %1,902' 964,114' 963,380
725,045
125,666
64,207
61,459
17,944
750,071
138,798
73,888
64,910
19,045
752,056
133,407
70,464
62,943
20,078
750,299
140,427
73,815
66,612
21,978
751,138
145,032
73,520
71,512
24,722
744,026
148,054
73,553
74,501
20,792
747,020
146,578
75,058
71,520
22,785'
749,020
148,536'
75,594
72,942'
24,706'
743,518' 742,747' 740,066' 740,963
155,748' 152,567' 156,920' 159,647
80,364
75,295
80,194
75,626
75,384' 77,272' 81,294' 79,453
15,461' 23,262' 24,089' 20,170
12 Net worth 2
34,833
41,064
41,760
42,163
42,382
41,353
41,560'
42,765'
42,505'
43,326'
43,039'
42,600
MEMO
13 Mortgage loan commitments
outstanding 5
61,305
56,051
64,737'
57,151'
59,831'
59,858'
59,059'
56,747'
56,038'
53,530'
52,748'
46,703
7 Savings capital
8 Borrowed money
9
FHLBB
10
Other
11 Other
n. a.
FSLIC-insured federal savings banks
98,559
131,868
152,823
155,686
164,129
180,124
183,317
186,810
196,228' 202,106' 204,918' 211,605
15 Mortgages
16 Mortgage-backed s e c u r i t i e s . . . .
17 Other
57,429
9,949
10,971
72,355
15,676
11,723
85,028
17,851
13,923
86,598
18,661
14,590
89,108
19,829
15,083
99,758
21,598
16,774
101,758
23,247
17,027
103,019
24,097
17,056
108,216'
26,439'
18,500'
18 Liabilities and net worth
98,559
131,868
152,823
155,686
164,129
180,124
183,317
186,810
196,228' 202,106' 204,918' 211,605
140,610
28,722
15,866
12,856
4,564
9,422
142,858
29,390
16,123
13,267
4,914
9,647
149,074
32,319
16,853
15,466
4,666
10,168'
152,834
33,430
17,382
16,048
5,330
10,511'
9,770
10,221
9,356
14 Assets
19
20
21
22
23
24
Savings capital
Borrowed money
FHLBB
Other
Other
Net worth
MEMO
25 Mortgage loan commitments
outstanding 3
79,572
12,798
7,515
5,283
1,903
4,286
103,462
19,323
10,510
8,813
2,732
6,351
119,434
22,747
12,064
10,683
3,291
7,349
121,133
23,196
12,476
10,720
3,758
7,599
126,123
25,686
12,830
12,856
4,338
7,982
138,168
28,502
15,301
13,201
4,279
9,175
3,234
5,355
8,330
8,287
8,762
9,410
10,139'
110,826'
27,516
18,697
112,117'
28,324
19,266'
113,638
29,766
20,138
154,447
33,937
17,863
16,074
5,652
10,883'
157,859
37,329
19,897
17,432
5,277
11,140
9,952'
8,686
n a.
Savings banks
203,898
216,776
221,256
222,542
226,495
223,367
224,569
227,011
228,854
230,919
232,577
236,866
235,603
102,895
24,954
110,448
30,876
110,271
34,873
111,813
34,591
112,417
35,500
110,958
36,692
111,971
36,421
113,265
37,350
114,188
37,298
116,648
36,130
117,612
36,149
118,323
35,167
119,199
36,122
14,643
19,215
2,077
23,747
4,954
11,413
13,111
19,481
2,323
21,199
6,225
13,113
12,313
21,593
2,306
20,403
5,845
13,652
12,013
21,885
2,372
20,439
5,570
13,859
13,210
22,546
2,343
20,260
6,225
13,994
12,115
22,413
2,281
2,036
5,301
13,244
12,297
22,954
2,309
20,862
4,651
13,104
12,043
21,161
2,400
20,602
5,018
13,172
12,357
23,216
2,407
20,902
4,811
13,675
12,585
23,437
2,347
21,156
5,195
13,421
13,037
24,051
2,290
20,749
5,052
13,637
14,209
25,836
2,185
20,459
6,894
13,793
13,332
26,220
2,180
19,795
5,239
13,516
35 Liabilities
203,898
216,776
221,256
222,542
226,495
223,367
224,569
227,011
228,854
230,919
232,577
236,866
235,603
36 Deposits
37
Regular 4
38
Ordinary savings
39
Time
40
Other
41 Other liabilities
42 General reserve accounts
180,616
177,418
33,739
104,732
3,198
12,504
10,510
185,972
181,921
33,018
103,311
4,051
17,414
12,823
188,960
184.704
33,021
105,562
4,256
18,412
13,548
189,025
184,580
33,057
105,550
4,445
19,074
14,114
190,310
185,716
33,577
105,146
4,594
21,384
14,519
189,109
183,970
34,008
103,083
5,139
19,226
14,731
188,615
183,433
34,166
102,374
5,182
20,641
15,084
189,937
184,764
34,530
102,668
5,173
21,360
15,427
190,210
185,002
35,227
102,191
5,208
21,947
16,319
190,334
185,254
36,165
101,125
5,080
23,319
16,896
190,858
185,958
36,739
101,240
4,900
24,254
17,146
192,194
186,345
37,717
100,809
5,849
25,274
18,105
191,441
186,385
38,467
100,604
5,056
24,710
18,236
26 Assets
27
28
29
30
31
32
33
34
Loans
Mortgage
Other
Securities
U.S. government
Mortgage-backed securities...
State and local government...
Corporate and other
Cash
Other assets
Financial Markets
All
1.37—Continued
1986
Account
1984
1987
1985
Mar.
Apr.
May
June
July
Credit unions
Aug.
Sept.
Oct.
Nov.
Dec/
43 Total assets/liabilities and capital .
93,036
118,010
126,653
128,229
132,415
134,703
137,901
139,233
140,496
143,662
145,653
147,726
44
45
63,205
29,831
77.861
40,149
82,275
44,378
83,543
44,686
86,289
46,126
87,579
47,124
89,539
48,362
90,367
48,866
91,981
48,515
93,257
50,405
94,638
51,015
95,483
52,243
62,561
42,337
20,224
84,348
57,539
26,809
73.513
47.933
25.580
105.963
70.926
35.037
75,300
48,633
26,667
114,579
75,698
38,881
76,385
49,756
26,629
116,703
77,112
39,591
76,774
49,950
26,824
120,331
79,479
40,852
77,847
50,613
27,234
122,952
80,975
41,977
79,647
51,331
28,316
125,331
82,596
42,735
80,656
52,007
28,649
126,268
83,132
43,136
81,820
53,042
28,778
128,125
84,607
43,518
83,388
53,434
29,954
130,483
86,158
44,325
84,635
53,877
30,758
131,778
87,009
44,769
86,137
55,304
30,833
134,327
87,954
46,373
Federal
State
46 Loans outstanding
47
Federal
48
State
49 Savings
50
Federal
51
State
Jan.
5
n a.
Life insurance companies
52 Assets
53
54
55
56
57
58
59
60
61
62
63
Securities
Government
United States 6
State and local
Foreign 7
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
722,979 825,901
848,535
855,605
63,899 75.230
42,204 51.700
8,713
9.708
12,982
13.822
359,333 423.712
295,998 346.216
63,335 77.496
156,699 171.797
25,767 28.822
54,505 54.369
63,776 71.971
77,965
78,494
54,289
54,705
9,674
9,869
14,002
13,920
440,963 445,573
357,196 361,306
83,767
84,267
174,823 175,951
29,804
30,059
54,273
54,272
70,707'
71,256'
863,610
872,359
877,919
887,255
892,304
860,682
910,691
920,771
79,051
55,120
9,930
14,001
450,279
364,122
86,157
177,554
30,025
54,351
72,352'
78,284
54,197
10,114
13,973
455,119
367,966
87,153
180,041
30,350
57,342
74,223'
78,722
54,321
10,350
14,051
455,013
369,704
85,309
182,542
31,151
54,249
76,214'
79,188
54,487
10,472
14,229
463,135
374,670
88,465
183,943
31,844
54,247
74,898'
81,636
56,698
10,606
14,332
462,540
378,267
84,273
185,268
31,725
54,273
76,862'
82,047
84,858
57,511
59.802
10,212
10,712
14,324
14,344
467,433 473,860
381,381 386,293
86,052
87,567
186,976 189,460
31,918
32,184
54,199
54,152
77,798'
76,177'
85,849
61,494
10,267
14,088
474,485
386,994
87,491
192,975
32,079
54,016
81,367
1. Holdings of stock of the Federal Home Loan Banks are in "other assets."
2. Includes net undistributed income accrued by most associations.
3. As of July 1985, data include loans in process.
4. Excludes checking, club, and school accounts.
5. Data include all federally insured credit unions, both federal and state
chartered, serving natural persons.
6. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under " B u s i n e s s " securities.
7. Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
NOTE. Savings and loan associations:
Estimates by the F H L B B for all
associations in the United States based on annual benchmarks for non-FSLICinsured associations and the experience of FSLIC-insured associations.
n a.
FSLlC-insured federal savings banks: Estimates by the F H L B B for federal
savings banks insured by the FSLIC and based on monthly reports of federally
insured institutions.
Savings banks: Estimates by the National Council of Savings Institutions for all
savings banks in the United States and for FDlC-insured savings banks that have
converted to federal savings banks.
Credit unions: Estimates by the National Credit Union Administration for
federally chartered and federally insured state-chartered credit unions serving
natural persons.
Life insurance companies: Estimates of the American Council of Life Insurance
for all life insurance companies in the United States. Annual figures are annualstatement asset values, with bonds carried on an amortized basis and stocks at
year-end market value. Adjustments for interest due and accrued and for
differences between market and book values are not made on each item separately
but are included, in total, in "other assets."
A28
1.38
DomesticNonfinancialStatistics • June 1987
FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Calendar year
Type of account or operation
U.S. budget1
1 Receipts, total
2
On-budget
Off-budget
3
4 Outlays, total
5
On-budget
Off-budget
6
7 Surplus, or deficit ( - ) , total
8
On-budget
Off-budget
9
Source of financing (total)
Borrowing from the public
Cash and monetary assets (decrease, or
increase ( - ) ) 2
12
Other 3
10
11
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
15
Tax and loan accounts
Fiscal
year
1984
Fiscal
year
1985
Fiscal
year
1986
769,091
568,862
200,228
989,815
806,318
183,498
-220,725
-237,455
16,371
1987
Oct.
Nov.
Dec.
59,012
43,865
15,147
84,267
68,780
15,486
-25,255
-24,915
-340
52,967
38,158
14,809
79,973
63,639
16,334
-27,006
-25,481
-1,524
78,035
60,694
17,341
89,158'
74,669'
14,489
-11,123'
-13,976'
2,853
Jan.
Feb.
Mar.
81,771
62,981
18,790
83,942
68,176
15,766
-2,170
-5,195
3,024
55,463
37,919
17,544
83,828
67,138
16,690
-28,366
-29,219
854
56,515
38,469
18,046
84,527
67,872
16,655
-28,012
-29,403
1,391
666,457
500,382
166,075
851,781
685,968
165,813
-185,324
-185,586
262
734,057
547,886
186,171
946,316
769,509
176,807
-212,260
-221,623
9,363
170,817
197,269
236,284
5,936
40,352
22,824
4,353
15,248
7,884
6,631
7,875
13,367
1,630
-14,324
-1,235
18,131
1,188
-2,721
-10,625
-14,751
4,004
-9,564
7,381
16,574
-3,456
15,621
4,506
30,426
8,514
21,913
17,060
4,174
12,886
31,384
7,514
23,870
41,307
15,746
25,561
24,816
3,482
21,334
8,969
3,576
5,394
1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. The Federal
Financing Bank (FFB) activities are now shown as separate accounts under the
agencies that use the F F B to finance their programs. The act has also moved two
social security trust funds (Federal old-age survivors insurance and Federal
disability insurance trust funds) off-budget.
2. Includes U.S. Treasury operating cash accounts; SDRs; reserve position on
the U.S. quota in the IMF; loans to International Monetary Fund; and other cash
and monetary assets.
1986
13,617'
2,491
11,126
17,007
2,529
14,478
30,946'
7,588
23,357
3. Includes accrued interest payable to the public; allocations of special
drawing rights; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S.
currency valuation adjustment; net gain/loss for IMF valuation adjustment; and
profit on the sale of gold.
SOURCES. "Monthly Treasury Statement of Receipts and Outlays of the U.S.
Government" and the Budget of the U.S.
Government.
Federal Finance
1.39
A29
U.S. BUDGET RECEIPTS AND OUTLAYS
Millions of dollars
Calendar year
Source or type
Fiscal
year
1985
Fiscal
year
1986
1987
1986
1985
HI
H2
HI
H2
Jan.
Feb.
Mar.
RECEIPTS
1 All sources
7 Individual income taxes, net
3
Withheld
4
Presidential Election Campaign F u n d . . .
Nonwithheld
6
Refunds
Corporation income taxes
7
Gross receipts
8
Refunds
9 Social i n s u r a n c e t a x e s and contributions,
net
10
Employment taxes and
contributions'
Self-employment taxes and
II
contributions2
Unemployment insurance
1?
O t h e r net receipts3
13
14
IS
16
17
Excise taxes
Customs deposits
E s t a t e a n d gift t a x e s
Miscellaneous receipts4
734,057
769,091
380,618
364,790
394,345
387,524
81,771
55,463
56,515
334,531
298,941
35
101,328
65,743
348,959
314,838
36
105,994
71,873
166,783
149,288
29
76,155
58,684
169,987
155,725
6
22,295
8,038
169,444
153,919
31
78,981
63,488
183,156
164,071
4
27,733
8,652
46,466
26,375
0
20,254
163
22,805
25,486
2
1,320
4,003
14,240
27,608
10
4,106
17,482
77,413
16,082
80,442
17,298
42,193
8,370
36,528
7,751
41,946
9,557
42,108
8,230
4,332
872
2,369
1,433
15,948
2,834
265,163
283,901
144,598
128,017
156,714
134,006
25,664
25,590
23,689
234,646
255,062
126,038
116,276
139,706
122,246
24,266
22,594
23,128
10,468
25,758
4,759
11,840
24,098
4,742
9,482
16,213
2,350
985
9,281
2,458
10,581
14,674
2,333
1,338
9,328
2,429
795
1,024
375
809
2,633
364
669
186
375
35,992
12,079
6,422
18,539
32,919
13,323
6,958
19,887
17,259
5,807
3,204
9,144
18,470
6,354
3,323
9,861
15,944
6,369
3,487
10,002
15,947
7,282
3,649
9,605
2,840
1,135
652
1,554
2,291
1,052
553
2,235
2,511
1,220
570
1,171
OUTLAYS
946,223
989,789
463,842
487,188
486,037
504,785
83,942
83,828
84,527
19
70
71
77
73
24
National defense
International affairs
General science, space, and technology . . .
Energy
Natural resources and environment
Agriculture
252,748
16,176
8,627
5,685
13,357
25,565
273,369
14,471
9,017
4,792
13,508
31,169
124,186
6,675
4,230
680
5,892
11,705
134,675
8,367
4,727
3,305
7,553
15,412
135,367
5,384
12,519
2,484
6,245
14,482
138,544
8,876
4,594
2,735
7,141
16.160
22,057
358
562
390
1,003
4,063
23,475
1,319
791
189
871
2,293
24,742
681
703
441
1,092
2,453
75
76
27
78
C o m m e r c e and housing credit
Transportation
Community and regional development . . . .
E d u c a t i o n , t r a i n i n g , e m p l o y m e n t , social
services
4,229
25,838
7,680
4,258
28,058
7,510
-260
11,440
3,408
644
15,360
3,901
860
12,658
3,169
3.647
14,745
3,494
717
1,870
477
-334
1,697
380
1,677
1,982
490
29,342
29,662
14,149
14,481
14,712
15,268
2,358
2,669
2,440
17,872
135,214
60.786
19,814
138,2%
59,628
3,148
22,640
11,301
3,166
23,081
10,551
3,263
23,407
10,910
12,193
3,352
3,566
2,179
68,054
-17,193
14,497
3,360
2,786
2,767
65,816
-17,426
2,227
482
166
-21
12,583
-2,440
2,053
619
631
120
12,967
-2,708
1,137
570
439
61
10,971
-2,932
18 All types
79 H e a l t h
30 S o c i a l s e c u r i t y a n d m e d i c a r e
31 I n c o m e s e c u r i t y
33,542
254,446
128,200
35,936
190,850
120,686
16,945
128,351
65,246
17,237
129,037
59,457
37
33
34
35
36
37
26,352
6,277
5,228
6,353
129,436
-32,759
26,614
6,555
6,796
6,430
135,284
-33,244
11,956
3,016
2,857
2,659
65,143
-14,436
14,527
3,212
3,634
3,391
67,448
-17,953
Veterans benefits and services
A d m i n i s t r a t i o n of j u s t i c e
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
Net interest'
Undistributed offsetting receipts6
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 civil s e r v i c e r e t i r e m e n t a n d
disability f u n d .
4. D e p o s i t s of 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. 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 t r u s t f u n d s .
6. C o n s i s t s of 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
government contributions for employee retirement.
U.S.
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 1988.
A30
1.40
DomesticNonfinancialStatistics • June 1987
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1985
1984
1986
Item
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
1 Federal debt outstanding
1,667.4
1,715.1
1,779.0
1,827.5
1,950.3
1,991.1
2,063.6
2,129.5
2,218.9
2 Public debt securities
3
Held by public
4
Held by agencies
1,663.0
1,373.4
289.6
1,710.7
1,415.2
295.5
1,774.6
1,460.5
314.2
1,823.1
1,506.6
316.5
1,945.9
1,597.1
348.9
1,986.8
1,634.3
352.6
2,059.3
1,684.9
374.4
2,125.3
1,742.4
382.9
2,214.8
1,811.7
403.1
4.5
3.4
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.3
3.2
1.1
4.3
3.2
1.1
4.2
3.2
1.1
4.0
3.0
1.1
5 Agency securities
6
Held by public
7
Held by agencies
1,663.7
1,711.4
1,775.3
1,823.8
1,932.4
1,973.3
2,060.0
2,111.0
2,200.5
9 Public debt securities
10 Other debt 1
1,662.4
1.3
1,710.1
1.3
1,774.0
1.3
1,822.5
1.3
1,931.1
1.3
1,972.0
1.3
2,058.7
1.3
2,109.7
1.3
2,199.3
1.3
11 MEMO: Statutory debt limit
1,823.8
1,823.8
1,823.8
1,823.8
2,078.7
2,078.7
2,078.7
2,111.0
2,300.0
8 Debt subject to statutory limit
1. Includes guaranteed debt of government agencies, specified participation
certificates, notes to international lending organizations, and District of Columbia
stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
SOURCES. Treasury Bulletin and Monthly Statement
United States.
of the Public Debt of the
Types and Ownership
Billions of dollars, end of period
1986
Type and holder
1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
Bx type
Interest-bearing debt
Marketable
Bills
Notes
Bonds
Nonmarketable 1
State and local government series
Foreign issues 2
Government
Public
Savings bonds and notes
Government account series 3
14 Non-interest-bearing debt
1984
1983
1985
1986
Ql
Q2
Q4
Q3
1,410.7
1,663.0
1,945.9
2,214.8
1,986.8
2,059.3
2,125.3
2,214.8
1,400.9
1,050.9
343.8
573.4
133.7
350.0
36.7
10.4
10.4
.0
70.7
231.9
1,660.6
1,247.4
374.4
705.1
167.9
413.2
44.4
9.1
9.1
.0
73.1
286.2
1,943.4
1,437.7
399.9
812.5
211.1
505.7
87.5
7.5
7.5
.0
78.1
332.2
2,212.0
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
1,984.2
1,472.8
393.2
842.5
223.0
511.4
88.5
6.7
6.7
.0
79.8
336.0
2,056.7
1,498.2
396.9
869.3
232.3
558.5
98.2
5.3
5.3
.0
82.3
372.3
2,122.7
1,564.3
410.7
896.9
241.7
558.4
102.4
4.1
4.1
.0
85.6
365.9
2,212.0
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
9.8
2.3
2.5
2.8
2.6
2.6
2.6 r
2.8
236.3
151.9
1,022.6
188.8
22.8
56.7
39.7
155.1
289.6
160.9
1,212.5
183.4
25.9
76.4
50.1
179.4
348.9
181.3
1,417.2
192.2
25.1
93.2
59.0
n.a.
403.1
211.3
1,602.0
225.0
28.6
n.a.
68.8
n.a.
352.6
184.8
1,473.1
195.1
29.9
95.8
59.6
n.a.
374.4
183.8
1,502.7
197.2
22.8
n.a.
59.8
n.a.
382.9
190.8
1,553.3
212.5
24.9
n.a.
67.0
n.a.
403.1
211.3
1,602.0
225.0
28.6
n.a.
68.8
n.a.
71.5
61.9
166.3
259.8
74.5
69.3
192.9
360.6
79.8
75.0
214.6
n.a.
92.3
68.0
257.0
n.a.
81.4
76.2
225.4
n.a.
83.8
73.9
239.8
n.a.
87.1
69.0
256.3
n.a.
92.3
68.0
257.0
n.a.
4
15
16
17
18
19
20
21
22
23
24
25
26
By holder
U.S. government agencies and trust funds
Federal Reserve Banks
Private investors
Commercial banks
Money market funds
Insurance companies
Other companies
State and local governments
Individuals
Savings bonds
Other securities
Foreign and international 5
Other miscellaneous investors 6
1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual
retirement bonds.
2. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners.
3. Held almost entirely by U.S. government agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust
funds are actual holdings; data for other groups are Treasury estimates.
5. Consists of investments of foreign and international accounts. Excludes noninterest-bearing notes issued to the International Monetary Fund.
6. Includes savings and loan associations, nonprofit institutions, credit unions,
mutual savings banks, corporate pension trust funds, dealers and brokers, certain
U.S. government deposit accounts, and U.S. government-sponsored agencies.
SOURCES. Data by type of security, U.S. Treasury Department, Monthly
Statement of the Public Debt of the United States; data by holder, Treasury
Bulletin.
Federal Finance
1.42
U.S. GOVERNMENT SECURITIES DEALERS
A31
Transactions'
Par value; averages of daily figures, in millions of dollars
1987
Item
1
2
3
4
5
6
V
8
9
10
11
12
13
14
15
16
17
18
Immediate delivery 2
U.S. government securities
By maturity
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
By type of customer
U.S. government securities
dealers
U.S. government securities
brokers
All others 3
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures transactions 4
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions 5
U.S. government securities
Federal agency securities
1984
1985
Jan.
Feb.
Mar.
Feb. 18
Feb. 25
Mar. 4
Mar. 11 Mar. 18 Mar. 25
52,778
75,331
95,422
112,317
124,519
102,209
124,336
135,383
101,860
97,424
89,063
101,618
26,035
1,305
11,733
7,606
6,099
32,900
1,811
18,361
12,703
9,556
34,249
2,116
24,664
20,435
13,959
45,127
3,013
24,698
23,967
15,512
48,972
2,815
30,231
24,326
18,174
37,027
2,647
24,322
22,444
15,769
55,324
2,635
30,459
18,301
17,618
53,627
2,639
33,226
25,662
20,228
33,402
2,741
22,295
25,950
17,473
36,480
2,918
21,992
21,282
14,751
38,810
2,487
17,972
17,600
12,195
34,142
2,218
30,147
20,567
14,544
2,919
3,336
3,646
3,437
4,082
3,506
4.495
3,703
3,884
2,942
3,087
3,337
25,580
24,278
7,846
4,947
3,243
10,018
36,222
35,773
11,640
4,016
3,242
12,717
49,355
42,205
16,726
4,352
3,273
16,645
59,844
48,338
21,416
6,105
3,390
19,339
67,913
51,853
22,764
4,750
3.272
16,513
52,671
45.446
20,984
3,570
2,917
15,489
69,404
50,437
24,297
5,160
3,413
17,114
72,620
59,059
29,892
4,830
3,721
16,691
53,440
44,535
19,251
3,577
3,306
17,924
50,338
44,143
17,362
3,858
3,114
16,326
45,831
40,143
25,735
3,944
2,855
16,279
51,619
46,661
23,023
3,227
2,509
15,058
6,947
4,503
262
5,561
6,069
240
3,311
7,170
12
2,879
7,029
0
4,898
8,092
0
3,577
6,891
9
3,830
7,175
8,005
8,266
0
5,319
8,245
*
*
4,840
7,368
39
2,437
5,361
0
3,231
4,853
0
1,364
2,843
1,283
3,857
1,873
7,823
2,055
10,696
4,074
11,440
1,952
10,656
2,254
14,374
3,405
11,582
1,439
8,249
1,665
10,330
1,274
13,690
3,059
11,268
1. Transactions are market purchases and sales of securities as reported to the
Federal Reserve Bank of New York by the U.S. government securities dealers on
its published list of primary dealers.
Averages for transactions are based on the number of trading days in the period.
The figures exclude allotments of, and exchanges for, new U.S. government
securities, redemptions of called or matured securities, purchases or sales of
securities under repurchase agreement, reverse repurchase (resale), or similar
contracts.
2. Data for immediate transactions do not include forward transactions.
3. Includes, among others, all other dealers and brokers in commodities and
1987
1986
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal Reserve System.
4. Futures contracts are standardized agreements arranged on an organized
exchange in which parties commit to purchase or sell securities for delivery at a
future date.
5. Forward transactions are agreements arranged in the over-the-counter
market in which securities are purchased (sold) for delivery after 5 business days
from the date of the transaction for government securities (Treasury bills, notes,
and bonds) or after 30 days for mortgage-backed agency issues.
NOTE. Data for the period May 1 to Sept. 30, 1986, are partially estimated.
A32
1.43
DomesticNonfinancialStatistics • June 1987
U.S. G O V E R N M E N T SECURITIES DEALERS
Positions and Financing 1
Averages of daily figures, in millions of dollars
1987
1987
Jan.
Feb.
Mar.
F e b . 25
Mar. 4
M a r . 11
M a r . 18
M a r . 25
Positions
1
1
3
4
5
6
7
8
9
10
II
12
13
14
15
N e t immediate 2
U . S . g o v e r n m e n t securities
Bills
O t h e r within 1 y e a r
1-5 years
5-10 years
O v e r 10 y e a r s
Federal a g e n c y securities
Certificates of d e p o s i t
Bankers acceptances
Commercial paper
F u t u r e s positions
T r e a s u r y bills
Treasury coupons
F e d e r a l agency securities
F o r w a r d positions
U . S . g o v e r n m e n t securities
F e d e r a l agency securities
5,429
5,500
63
2,159
-1,119
-1,174
15,294
7,369
3,874
3,788
7,391
10,075
1,050
5,154
-6,202
-2,686
22,860
9,192
4,586
5,570
13,049
12,726
3,698
9,297
-9,504
-3,169
33,075
10,533
5,533
8,087
13,179'
13,382'
3,462
9,209
-7,179'
-5,695
31,239'
9,439
4,756
9,973
6,057'
7,365'
3,709
7,399
-5,890
-6,526
32,048'
9,671'
4,934
9,215
7,883'
7,087'
3,511'
7,476'
-5,206
-4,985
33,323'
8,617
5,015
8,956
8,355'
8,264'
3,233'
6,030'
-3,532
-5,639
32,163'
9,516
4,862
8,639
16,717
9,459
3,683
10,997
-2,171
-5,252
32,255
8,610
4,633
9,626
9,158
8,471
4,103
7,138
-5,633
-4,921
32,768
8,444
5,474
9,147
10,060
9,711
3,377
7,545
-5,567
-5,006
34,729
8,995
5,610
9,327
3,603
6,967
3,372
5,135
-6,673
-5,199
33,835
8,848
4,858
9,052
-4,525
1,794
233
-7,322
4,465
-722
-18,063
3,493
-153
-15,245'
5,229
-92
-13,476'
6,669
-94
-10,806'
4,325
-98
-13,855'
6,376
-95
-13,814
4,280
-95
-10,926
4,100
-97
-11,059
4,382
-99
-10,744
4,436
-97
-1,643
-9,205
-911
-9,420
-2,303
-11,920
179'
-16,646'
357
-16,383'
-2,151
-16,6%'
-356
-13,612'
-2,959
-12,991
-2,603
-15,579
-1,931
-19,492
-1,781
-17,980
Financing 3
Reverse repurchase agreements4
Overnight and continuing
Term agreements
Repurchase agreements5
Overnight a n d continuing
18
19
Term agreements
16
17
44,078
68,357
68,035
80,509
98,954
108,693
131,592
126,179
128,668
132,531
127,183
130,489
125,240
126,149
132,801
126,745
130,357
130,403
121,665
135,051
119,814
130,769
75,717
57,047
101,410
70,076
141,735
102,640
175,858
115,452
174,370
115,522
177,021
112,078
174,867
109,751
183,061
110,638
178,807
112,738
174,001
114,607
172,241
114,914
1. D a t a f o r dealer positions a n d s o u r c e s of financing are obtained f r o m r e p o r t s
submitted t o the F e d e r a l R e s e r v e B a n k of N e w York by the U . S . g o v e r n m e n t
securities dealers on its published list of p r i m a r y dealers.
D a t a f o r positions are a v e r a g e s of daily figures, in t e r m s of p a r value, based on
the n u m b e r of trading d a y s in the period. Positions are net a m o u n t s and are s h o w n
on a c o m m i t m e n t basis. D a t a f o r financing are in t e r m s of actual a m o u n t s
b o r r o w e d or lent and are b a s e d on W e d n e s d a y figures.
2. I m m e d i a t e positions are net a m o u n t s (in terms of par values) of securities
o w n e d by n o n b a n k dealer firms a n d d e a l e r d e p a r t m e n t s of commercial b a n k s on a
c o m m i t m e n t , that is, t r a d e - d a t e basis, including any such securities that h a v e
b e e n sold u n d e r a g r e e m e n t s t o r e p u r c h a s e (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 are sufficiently long, h o w e v e r , t o suggest that the securities involved are not available f o r trading p u r p o s e s . I m m e d i a t e positions include
r e v e r s e s to maturity, which are securities that w e r e sold a f t e r having b e e n
obtained u n d e r 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 that m a t u r e on t h e s a m e d a y a s the
securities. D a t a for immediate positions d o not include f o r w a r d positions.
3. Figures c o v e r financing involving U . S . g o v e r n m e n t a n d federal a g e n c y
securities, negotiable C D s , b a n k e r s a c c e p t a n c e s , a n d c o m m e r c i a l p a p e r .
4. Includes 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 , including t h o s e that h a v e b e e n
arranged t o m a k e delivery on short sales a n d t h o s e f o r which the securities
obtained h a v e b e e n u s e d as collateral on b o r r o w i n g s , that is, m a t c h e d a g r e e m e n t s .
5. Includes both 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 positions a n d
"matched b o o k " repurchase agreements.
NOTE. D a t a on positions f o r the period M a y 1 t o S e p t . 30, 1986, are partially
estimated.
Federal Finance
1.44
FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES
A33
Debt Outstanding
Millions of dollars, end of period
1987
1986
1983
Agency
1984
1985
Sept.
Oct.
Nov.
Dec.
Jan.
240,068
271,220
293,905
302,411
305,199
305,097
307,361
33,940
243
14.853
194
35,145
142
15,882
133
36,390
71
15,678
115
36,473
37
14,274
117
36,716
36
14,274
123
36,952
35
14,274
124
36,958
33
14,211
138
37,041
32
14,211
136
2,165
1,404
14,970
111
2,165
1,337
15,435
51
2,165
1,940
16,347
74
2,165
3,104
16,702
74
2,165
3,104
16,940
74
2,165
3,104
17,176
74
2,165
3,104
17,222
85
2,165
3,104
17,308
85
10 Federally sponsored agencies 7
11
Federal Home Loan Banks
12
Federal Home Loan Mortgage Corporation
13
Federal National Mortgage Association
14
Farm Credit Banks
15
Student Loan Marketing Association 8
206,128
48,930
6,793
74,594
72,816
3,402
236,075
65,085
10,270
83,720
71,193
5,745
257,515
74,447
11,926
93,8%
68,851
8,395
265,938
87,133
13,548
91,629
63,073
10,555
268,483
87,146
14,007
93,272
63,079
10,979
268,145
86,891
13,606
93,477
62,693
11,478
270,403
88,752
13,589
93,563
62,328
12,171
n.a.
90,225
n.a.
92,588
59,984
11,784
MEMO
16 Federal Financing Bank debt
135,791
145,217
153,373
156,873
157,371
157,452
157,510
157,650
14,789
1,154
5,000
13,245
111
15,852
1,087
5,000
13,710
51
15,670
1,690
5,000
14,622
74
14,268
2,854
4,970
15,077
74
14,268
2,854
4,970
15,515
74
14,268
2,854
4,970
15,751
74
14,205
2,854
4,970
15,797
85
14,250
2,854
4,970
15,928
85
55,266
19,766
26,460
58,971
20,693
29,853
64,234
20,654
31,429
65,374
21,460
32,796
65,374
21,506
32,810
65,374
21,531
32,630
65,374
21,680
32,545
65,374
21,719
32,515
1 Federal and federally sponsored agencies
2 Federal agencies
3
Defense Department 1
4
Export-Import Bank 2 ' 3
5
Federal Housing Administration 4
6
Government National Mortgage Association
participation certificates 5
7
Postal Service 6
8
Tennessee Valley Authority
9
United States Railway Association 6
Lending
17
18
19
20
21
to federal
and federally
n.a.
n a.
n a.
91,313
n a.
91,522
59,367
12,481
sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
Other Lending10
22 Farmers Home Administration
23 Rural Electrification Administration
24 Other
1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. Once issued, these securities may be sold privately on the
securities market.
5. Certificates of participation issued before fiscal 1969 by the Government
National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
Feb.
n a.
7. Includes outstanding noncontingent liabilities: Notes, bonds, and debentures. Some data are estimated.
8. Before late 1981, the Association obtained financing through the Federal
Financing Bank.
9. The FFB, which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since F F B
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
10. Includes F F B purchases of agency assets and guaranteed loans; the latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular agency generally being small. The Farmers Home Administration item
consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans.
A34
1.45
DomesticNonfinancialStatistics • June 1987
NEW SECURITY ISSUES Tax-Exempt State and Local Governments
Millions of dollars
1986
Type of issue or issuer,
or use
1984
1985
Aug.
1 A11 issues, new and refunding1
1987
1986
Sept.
Oct.
Nov.
Dec.
Jan.
Feb/
Mar.
106,641
214,189
134,606
25,965
4,532
8,825
10,085
14,082
6,829
8,738
13,984
Type of issue
2 General obligation
3 Revenue
26,485
80,156
52,622
161.567
44,801
89,806
5,931
20,034
1,267
3,265
2,104
6,721
1,427
8,658
4,254
9,828
960
5,869
3,543
5,195
3,689
10,295
Type of issuer
4 State
5 Special district and statutory authority 2
6 Municipalities, counties, townships
9,129
63,550
33,962
13,004
134,363
66,822
14,935
79,291
40,374
2,121
15,714
8,125
9
3,275
1,248
697
5,757
2,371
111
7,761
2,213
%1
9,414
3,707
153
5,044
1,632
1,441
5,634
1,663
1,217
9,640
3,127
7 Issues for new capital, total
94,050
156,050
79,195
17,810
2,558
3,789
4,085
8,831
2,556
2,699
4,557
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
7,553
7,552
17,844
29,928
15,415
15,758
16,658
12,070
26,852
63,181
12,892
24,398
16,948
11,666
35,383
17,332
5,594
47,433
2,926
1,460
6,292
2,554
489
12,245
558
827
1,365
812
138
832
928
1,195
2,3%
2,098
499
1,708
1,486
976
3,239
2,635
331
1,418
1,588
588
2,330
3,944
2,159
3,473
823
146
2,574
1,670
101
1,515
1,291
604
2,861
1,080
165
2,738
1,666
292
4,568
2,329
600
4,529
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning April 1986.
1.46
SOURCES. Securities Data Company beginning April 1986. Public Securities
Association for earlier data. This new data source began with the November
BULLETIN.
NEW SECURITY ISSUES Corporations
Millions of dollars
Type of issue or issuer,
or use
1986
1984
1985
1987
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
1 All issues1
132,531
155,074'
294,326'
21,093
24,245
16,093
28,582
28,835'
25,181'
23,041'
23,687
2 Bonds2
109,903
155,074'
294,326'
16,766
18,481
12,830
23,476
22,236'
18,933^
20,126'
20,075
73,579
36,324
119,559
46,195
232,4%'
n.a.
16,766
n.a.
18,481
n.a.
12,830
n.a.
23,476
n.a.
22,236'
n.a.
18,933'
n.a.
20,126'
n.a.
20,075
n.a.
Type of offering
3 Public
4 Private placement
5
6
7
8
9
10
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
24,607
13,726
4,694
10,679
2,997
53,199
52,128'
15,140
5,743
12,957
10,456
69,332'
53,358'
19,188'
4,262
25,585
13,430
116,675'
2,535
3,409
497
1,470
465
8,390
4,536
1,030'
550
2,098
1,615
8,652'
2,345
1,387'
375
1,915
417
6,39C
2,055
1,067
170
2,537
1,255
16,392
3,378
1,213
0
2,587
1,158
13,901'
3,276
2,067
70
2,498
776
9,736'
4,165'
1,074
0
1,491'
65
13,331'
3,656
1.714
100
2.715
250
11,640
11 Stocks3
22,628
35,515
61,830
4,327
5,764
3,263
5,106
6,599
6,248
2,915
3,612
Type
12 Preferred
13 Common
4,118
18,510
6,505
29,010
11,514
50,316
726
3,601
1,290
4,474
402
2,861
817
4,289
1,390
5,209
1,293
4,955
429
2,486
904
2,708
4,054
6,277
589
1,624
419
9,665
5,700
9,149
1,544
1,966
978
16,178
14,234
9,252
2,392
3,791
1,504
30,657
746
917
179
305
107
2,073
982
803
57
208
379
3,335
250
1,009
28
174
0
1,802
570
1,271
511
410
59
2,285
2,565
535
15
218
104
3,162
1,781
709
183
873
101
2,601
365
148
0
237
16
2,149
796
341
187
508
9
1,771
14
15
16
17
18
19
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1. Figures, which represent gross proceeds of issues maturing in more than one
year, sold for cash in the United States, are principal amount or number of units
multiplied by offering price. Excludes offerings of less than $100,000, secondary
offerings, undefined or exempted issues as defined in the Securities Act of 1933,
employee stock plans, investment companies other than closed-end, intracorporate transactions, and sales to foreigners.
2. Monthly data include only public offerings.
3. Beginning in August 1981, gross stock offerings include new equity volume
from swaps of debt for equity.
SOURCES. IDD Information Services, Inc., Securities and Exchange Commission and the Board of Governors of the Federal Reserve System.
Securities Market and Corporate Finance
1.47
O P E N - E N D INVESTMENT COMPANIES
A35
Net Sales and Asset Position
Millions of dollars
1986
Item
1985
1987
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
r
Feb.
INVESTMENT COMPANIES'
1 Sales of own shares 2
2 Redemptions of own shares 3
3 Net sales
4
5
6
Assets 4
Cash position 5
Other
222,670
132,440
90,230
41 l,739 r
239,3%
172,343'
35,684
21,508
14,176
32,636
20,102
12,534
34,690
21,338
13,352
37,150
20,782
16,368
33,672
20,724
12,948
44,796
34,835
9,%1
50,116
26,565
23,551
36,308
20,399
15,929
251,695
20,607
231,088
424,156
30,716
393,440
360,050
28,080
331,970
387,547
28,682
358,865
381,872
29,540
352,332
402,644
30,826
371,818
416,939
29,579
387,360
424,156
30,716
393,440
464,415
34,098
430,317
490,347
35,313
455,034
5. Also includes all U.S. government securities and other s h o r t - t e r m debt
securities.
1. Excluding money market funds.
2. Includes reinvestment of investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund to
another in the same group.
3. Excludes share redemption resulting from conversions from one fund to
another in the same group.
4. Market value at end of period, less current liabilities.
NOTE. Investment Company Institute data based on reports of members, which
comprise substantially all o p e n - e n d investment companies registered with the
Securities and Exchange Commission. Data reflect newly formed companies after
their initial offering of securities.
1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
Account
1984
1985
1986
1986r
Ql
Q2
Q3
Q4
QI
Q2
Q3
Q4'
1 Corporate profits with inventory valuation and
capital consumption adjustment
Profits before tax
Profits tax liability
Profits after tax
Dividends
Undistributed profits
264.7
235.7
95.4
140.3
78.3
62.0
280.6
223.1
91.8
131.4
81.6
49.8
300.7
237.5
103.5
134.0
87.8
46.2
266.4
213.8
87.8
126.0
80.9
45.1
274.3
213.8
87.1
126.7
81.4
45.3
296.3
229.2
95.8
133.4
81.6
51.8
285.6
235.8
%.4
139.4
82.5
57.0
2%.4
222.5
95.7
126.9
85.2
41.7
293.1
227.7
99.0
128.8
87.5
41.2
302.0
240.4
104.4
135.9
88.8
47.2
311.2
259.6
115.1
144.5
89.7
54.8
7
8
-5.5
34.5
-.6
58.1
6.5
56.6
-.5
53.2
1.6
58.9
6.1
61.0
-9.4
59.2
16.5
57.3
10.6
54.8
6.1
55.5
-7.2
58.8
2
3
4
5
6
Inventory valuation
Capital consumption adjustment
SOURCE. Survey of Current Business (Department of Commerce).
A36
1.49
DomesticNonfinancialStatistics • June 1987
NONFINANCIAL CORPORATIONS
Assets and Liabilities
Billions of dollars, except for ratio
1985
Account
1980
1981
1982
1983
1986
1984
Ql
Q2
Q3
Q4
Ql
1,328.3
1,419.6
1,437.1
1,575.9
1,703.0
1,722.7
1,734.6
1,763.0
1,784.6
1,795.7
127.0
18.7
507.5
543.0
132.1
135.6
17.7
532.5
584.0
149.7
147.8
23.0
517.4
579.0
169.8
171.8
31.0
583.0
603.4
186.7
173.6
36.2
633.1
656.9
203.2
167.5
35.7
650.3
665.7
203.5
167.1
35.4
654.1
666.7
211.2
176.3
32.6
661.0
675.0
218.0
189.2
33.0
671.5
666.0
224.9
195.3
31.0
663.4
679.6
226.3
7 Current liabilities
890.6
971.3
986.0
1,059.6
1,163.6
1,174.1
1,182.9
1,211.9
1,233.6
1,222.3
8 Notes and accounts payable
9 Other
514.4
376.2
547.1
424.1
550.7
435.3
595.7
463.9
647.8
515.8
636.9
537.1
651.7
531.2
670.4
541.5
682.7
550.9
668.4
553.9
10 Net working capital
437.8
448.3
451.1
516.3
539.5
548.6
551.7
551.1
551.0
573.4
11
1.492
1.462
1.458
1.487
1.464
1.467
1.466
1.455
1.447
1.469
1 Current assets
2
3
4
5
6
Cash
U.S. government securities
Notes and accounts receivable
Inventories
Other
Statistics, Board of Governors of the Federal Reserve System, Washington, D.C.
20551.
SOURCE. Federal Trade Commission and Bureau of the Census.
1. Ratio of total current assets to total current liabilities.
NOTE. For a description of this series, see "Working Capital of Nonfinancial
Corporations" in the July 1978 BULLETIN, pp. 533-37.
All data in this table reflect the most current benchmarks. Complete data are
available upon request from the Flow of Funds Section, Division of Research and
1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment •
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
Industry
1 Total nonfarm business
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
Nonmanufacturing
4 Mining
Transportation
5
Railroad
6
Air
7
Other
Public utilities
8
Electric
9
Gas and other
10 Commercial and other 2
1985
1986
Q3
Q4
Ql
Q2
Q3
Q4
Ql'
Q2'
387.13
397.27
390.80
389.23
397.88
377.94
375.92
374.55
388.69
384.02
396.22
73.27
80.21
69.08
73.65
70.60
74.27
72.99
81.48
75.47
82.79
68.01
76.02
68.33
73.35
69.31
69.89
70.68
75.33
69.06
73.89
73.02
74.37
15.88
11.25
10.10
15.89
15.25
12.99
11.22
10.15
10.63
10.22
10.54
7.08
4.79
6.15
6.63
6.26
5.86
6.15
6.48
6.44
7.79
5.17
5.85
6.74
6.07
6.34
6.22
6.58
5.42
6.77
5.77
5.74
7.31
5.69
6.03
6.25
6.99
6.24
5.92
6.93
6.18
6.46
6.05
6.59
36.11
12.71
150.93
33.93
12.51
160.10
32.58
13.62
170.55
35.58
12.86
151.62
36.38
13.41
155.42
34.21
12.82
155.67
33.81
12.74
158.18
33.91
11.99
160.25
33.78
12.49
166.31
32.33
13.13
166.36
32.82
13.55
172.80
• T r a d e and services are no longer being reported separately. They are included
in Commercial and other, line 10.
1. Anticipated by business.
1987
1986
1987'
2. " O t h e r " consists of construction; wholesale and retail trade; finance and
insurance; personal and business services; and communication.
SOURCE. Survey of Current Business (Department of Commerce).
Securities Markets and Corporate Finance
1.51
DOMESTIC FINANCE COMPANIES
A37
Assets and Liabilities
Billions of dollars, end of period
1985
Account
1982
1983
1986
1984
Q2
Q3
Q4
Q3
Q2
Ql
Q4
ASSETS
A c c o u n t s receivable, gross
Consumer
Business
Real estate
Total
75.3
100.4
18.7
194.3
83.3
113.4
20.5
217.3
89.9
137.8
23.8
251.5
97.9
147.3
25.9
271.1
108.6
143.7
26.3
278.6
113.4
158.3
28.9
300.6
117.2
165.9
29.9
312.9
125.1
167.7
30.8
323.6
137.1
161.0
32.1
330.2
136.6
174.2
33.6
344.4
Less:
5 Reserves for unearned income
6 R e s e r v e s f o r losses
29.9
3.3
30.3
3.7
33.8
4.2
35.7
4.5
38.0
4.6
39.2
4.9
40.0
5.0
40.7
5.1
42.4
5.4
41.5
5.8
7 A c c o u n t s receivable, net
8 All o t h e r
161.1
30.4
183.2
34.4
213.5
35.7
230.9
39.8
236.0
46.3
256.5
45.3
268.0
48.8
277.8
49.5
282.5
60.0
297.1
58.6
9 Total assets
191.5
217.6
249.2
270.7
282.3
301.9
316.8
327.2
342.5
355.7
16.5
51.4
18.3
60.5
20.0
73.1
18.7
82.2
18.9
93.2
21.1
99.2
20.0
104.3
22.2
108.4
24.7
112.8
30.3
117.7
11.9
63.7
21.6
26.4
11.1
67.7
31.2
28.9
12.9
77.2
34.5
31.5
12.7
85.0
38.7
33.4
12.4
85.5
38.2
34.1
12.5
92.5
41.0
35.7
13.4
99.9
42.4
36.7
15.3
102.0
41.1
38.1
16.0
105.3
44.2
39.4
17.2
106.3
44.7
39.5
191.5
217.6
249.2
270.7
282.3
301.9
316.8
327.2
342.5
355.7
1
2
3
4
LIABILITIES
10 Bank loans
11 C o m m e r c i a l p a p e r
Debt
12
O t h e r short-term
13
Long-term
14
All o t h e r liabilities
15 Capital, surplus, and undivided profits
16 Total liabilities and capital
NOTE. C o m p o n e n t s may not add to totals b e c a u s e of rounding.
1.52
DOMESTIC FINANCE COMPANIES
Business Credit
Millions of dollars, seasonally adjusted except as noted
Extensions
C h a n g e s in a c c o u n t s
receivable
Type
Accounts
receivable
outstanding
F e b . 28,
1987'
1986
1987
Dec.
1 Total
2
3
4
5
6
7
8
9
10
Retail financing of installment sales
A u t o m o t i v e (commercial vehicles)
Business, industrial, a n d f a r m e q u i p m e n t
Wholesale financing
Automotive
Equipment
All o t h e r
Leasing
Automotive
Equipment
L o a n s on c o m m e r c i a l a c c o u n t s receivable and f a c t o r e d commercial a c c o u n t s receivable
All o t h e r b u s i n e s s credit
1987'
1986
Feb.
1987
1986
Dec.
Jan.
Feb.
Dec.
Jan/
Feb.
175,356
1,558
157
534
30,501
26,089
25,161
28,943
25,932
24,626
26,828
22,466
-570
-100
185
-417
602
'-429
861
1,407
801
1,112
1,036
1,067
1,431
1,506
616
1,529
434
1,4%
23,228
5,328
8,424
-1,717
170
37
-301
-46
918
-235
31
-41
9,347
811
2,989
8,527
597
3,219
8,541
658
2,919
11,064
641
2,952
8,828
643
2,301
8,776
626
2,960
19,856
39,113
1,553
1,634
-373
827
161
121
1,8%
1,817
1,263
1,009
1,259
885
343
183
1,636
182
1,099
764
16,377
13,736
-203
753
-22
-615
238
86
8,945
2,428
7,841
1,719
7,619
1,177
9,148
1,675
7,862
2,334
7,381
1,092
T h e s e d a t a also a p p e a r in the B o a r d ' s G . 2 0 (422) release. F o r a d d r e s s , see
inside f r o n t c o v e r .
Jan/
Repayments
I. N o t seasonally a d j u s t e d ,
A38
1.53
DomesticNonfinancialStatistics • June 1987
MORTGAGE MARKETS
Millions of dollars; exceptions noted.
1986
1984
Item
1985
1987
1986
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Terms and yields in primary and secondary markets
PRIMARY MARKETS
Conventional mortgages on new homes
1
2
3
4
5
6
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan/price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount) 2
Contract rate (percent per annum)
Yield (percent per
1 F H L B B series 5
8 H U D series 4
96.8
73.7
78.7
27.8
2.64
11.87
104.1
77.4
77.1
26.9
2.53
11.12
118.1
86.2
75.2
26.6
2.48
9.82
124.0
90.4
75.2
27.1
2.49
9.74
127.5
93.9
75.6
27.9
2.66
9.57
124.2
92.5
76.2
27.3
2.64
9.45
124.8
93.2
76.4
27.4
2.46
9.28
132.6
97.3
75.5
27.7
2.23
9.14
135.6'
99. 1'
75.3'
27.6'
2.21'
8.87'
127.1
94.1
74.8
27.1
2.22
8.77
12.37
13.80
11.58
12.28
10.25
10.07
10.17
9.96
10.02
9.89
9.91
9.47
9.69
9.33
9.51
9.09
9.23'
9.04
9.15
9.19
13.81
13.13
12.24
11.61
9.91
9.30
9.90
9.17
9.80
9.06
9.26
8.83
9.21
8.62
8.79
8.46
8.81
8.28
8.94
8.18
annum)
SECONDARY MARKETS
Yield (percent per annum)
9 FHA mortgages (HUD series) 5
10 GNMA securities 6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
12
FHA/VA-insured
13
Conventional
83,339
35,148
48,191
94,574
34,244
60,331
98,048
29,683
68,365
97,717
26,658
71,059
98,402
25,435
72,967
98,210
24,300
73,910
97,895
23,121
74,774
96,382
22,155
74,227
95,514
22,042
73,472
95,140
21,824
73,316
Mortgage transactions
14 Purchases
16,721
21,510
30,826
4,649
3,784
2,549
2,336
1 346
9/9
1,435
21,007
6,384
20.155
3,402
32,987
3,386
4,248
7,252
2,375
5,740
1,811
4,625
1,272
3,386
948
2,258
912
2,175
2,668
3,402
9,283
910
8,373
12,399
841
11,558
13,517
746
12,837
13,359
729
12,630
12.905
722
12,183
12,315
707
11,607
11,564
694
10,870
21,886
18,506
44,012
38,905
103,474
100,236
12,486
13,072
11,566
11,417
9,862
10,510
11,305
11,169
n .a.
n.a.
n a.
32,603
48,989
110,855
10,658
9,356
11,233
8,742
1during period)
Mortgage
commitments1
15 Contracted (during period)
16 Outstanding (end of period)
FEDERAL HOME LOAN MORTGAGE CORPORATION
Mortgage holdings (end of period)8
17 Total
18
FHA/VA
19
Conventional
Mortgage transactions
20 Purchases
21 Sales
(during
Mortgage
commitments9
22 Contracted (during period)
period)
1. Weighted averages based on sample surveys of mortgages originated by
major institutional lender groups; compiled by the Federal Home Loan Bank
Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and " p o i n t s " paid (by the
borrower or the seller) to obtain a loan.
3. Average effective interest rates on loans closed, assuming prepayment at the
end of 10 years.
4. Average contract rates on new commitments for conventional first mortgages; from Department of Housing and Urban Development.
5. Average gross yields on 30-year, minimum-downpayment, Federal Housing
Administration-insured first mortgages for immediate delivery in the private
secondary market. Based on transactions on first day of subsequent month. Large
monthly movements in average yields may reflect market adjustments to changes
in maximum permissable contract rates.
6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities, assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the
prevailing ceiling rate. Monthly figures are averages of Friday figures from the
Wall Street Journal.
7. Includes some multifamily and nonprofit hospital loan commitments in
addition to 1- to 4-family loan commitments accepted in F N M A ' s free market
auction system, and through the FNMA-GNMA tandem plans.
8. Includes participation as well as whole loans.
9. Includes conventional and government-underwritten loans. F H L M C ' s mortgage commitments and mortgage transactions include activity under mortgage/
securities swap programs, while the corresponding data for F N M A exclude swap
activity.
Real Estate
1.54
A39
MORTGAGE D E B T O U T S T A N D I N G '
Millions of dollars, end of period
1986
1985
Type of holder, and type of property
1984
1985
1986
Q4
Ql
Q2
Q3
Q4'
1 All holders
2,033,654'
2,266,92y
2,564,825
2,266,923'
2,315,962'
2,383,791'
2,469,680'
2,564,825
?
3
4
5
1,317,94c
185,414
418,300
112,000
1,466,773'
213,816
480,719
105,615
1.668,022
246,143
552,999
97,661
1,466,773'
213.816
480,719
105,615
1,494,603'
221,587
495,879
103,893
1,543,685'
229,186
509,337
101,583
1,607,86c
237,037'
524,606'
100,177'
1,668.022
246,143
552,999
97,661
1,269,702'
379,498
196,163
20,264
152,894
10,177
154,441
107,302
19,817
27,291
31
1,390,394'
429,196
213,434
23,373
181,032
11,357
177,263
121,879
23,329
31,973
82
1,506,196
502,308
238,171
30,456
220,944
12,737
224,232'
154.801'
30,161'
39,166'
104
1,390,394'
429,196
213,434
23,373
181,032
11,357
177,263
121,879
23,329
31,973
82
1,408,665'
441,096
216,290
25.389
187,620
11,797
188,154
131,381
23,980
32,707
86
1,435,239'
455,965
221,644
26,840
195,247
12,234
203,398
142,174
26,543
34,577
104
1,464,097'
474,542
229,340
28,250
204,480
12,472
215,036
149,786
28,400
36,762
88
1,506,196
502,308
238,171
30,456
220,944
12,737
224,232
154,801
30,161
39,166
104
555,277
421,489
55,750
77,605
433
156,699
14,120
18,938
111,175
12,466
23,787'
583,236
432,422
66,410
83,798
606
171.797
12,381
19,894
127,670
583,236
432,422
66,410
83,798
606
171,797
12,381
19,894
127,670
28,902'
574,732
420.073
67,140
86,860
659
174,823
12,605
20,009
130,569
11,640
29.86C
565,037
413,865
66,020
84,618
534
180,041
12,608
20,181
135.924
11,328
30,798'
557,139
408,152
65,827
82,644
516
185,269
12,927
20,709
140,213
28,902'
553,080
403,611
66,898
82,070
501
192,975
12,763
20,847
148,367
10,998
33,601
32,111'
553,080
403,611
66,898
82,070
501
192,975
12,763
20,847
148,367
10,998
33,601
158,993
2,301
585
1,716
1,276
213
119
497
447
166,928
1,473
539
934
733
183
113
159
278
203,800
889
47
842
48,421
21,625
7,608
8,446
10,742
166,928
1,473
539
934
733
183
113
159
278
165,041
1,533
527
1,006
704
217
33
217
237
161,398
876
49
827
570
146
66
111
247
159,505
887
48
839
457
132
57
115
153
203,800
889
47
842
48,421
21,625
7,608
8.446
10,742
4,816
2,048
2,768
87,940
82,175
5,765
52,261
3,074
49,187
10,399
9,654
745
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
2,141
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11.564
10,010
1,554
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
4,964
2,309
2,655
98,795
92,315
6,480
45,422
2,673
42,749
13,623
12,231
1,392
5,094
2,449
2,645
97,295
90,460
6,835
43,369
2,552
40,817
14,194
11,890
2,304
4,966
2,331
2,635
97,717
90,508
7,209
42,119
2,478
39,641
13,359
11,127
2,232
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11,564
10,010
1,554
49 Mortgage pools or trusts 5
50
Government National Mortgage Association
51
1- to 4-family
5?
53
Federal Home Loan Mortgage Corporation
1- to 4-family
55
Multifamily
56
Federal National Mortgage Association
57
58
Multifamily
59
Farmers Home Administration 4
60
1- to 4-family
61
Multifamily
67
Commercial
63
Farm
332,057
179,981
175,589
4,392
70,822
70,253
569
36,215
35,965
250
45,039
21,813
5,841
7,559
9,826
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
529,763
260,869
255,132
5,737
171,372
166,667
4,705
97,174
95,791
1,383
348
142
n.a.
132
74
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
440,701
220,348
215,148
5,200
110,337
108,020
2,317
62,310
61,117
1,193
47,706
22,082
6,943
8,150
10,531
475,615
229,204
223,838
5,366
125,903
123,676
2,227
72,377
71,153
1,224
48,131
21,987
7,170
8,347
10,627
522,721
241,230
235,664
5,566
146,871
143,734
3,137
86,359
85,171
1,188
48,261
21,782
7,353
8,409
10,717
529,763
260,869
255,132
5,737
171,372
166,667
4,705
97,174
95,791
1,383
348
142
0
132
74
64 Individuals and others 6
65
1- to 4-family
66
67
68
Farm
272,902
153,710
48,480
41,279
29,433
294,559
165,199
55,195
47,897
26,268
325,066
180,204
66,114
53,874
24,874
294,559
165,199
55,195
47,897
26,268
301,555
167,755
57,850
49,756
26,194
311,539
174,396
60,938
50,513
25,692
323,357'
182,569'
63,635'
51,983'
25,17C
325,066
180,204
66,114
53,874
24,874
6 Selected financial institutions
7
Commercial banks 2
8
1- to 4-family
9
Multifamily
10
11
1?
13
1- to 4-family
14
Multifamily
15
16
Farm
17
18
19
?0
71
??
73
?4
75
76
27
Savings and loan associations
1- to 4-family
Multifamily
Life insurance companies
1- to 4-family
Multifamily
Finance companies 3
78 Federal and related agencies
79
Government National Mortgage Association
30
1- to 4-family
31
Multifamily
37
Farmers Home Administration 4
33
1- to 4-family
34
Multifamily
35
Commercial
36
Farm
37
38
39
40
41
4~>
43
44
45
46
47
48
Federal Housing and Veterans
Administration
1- to 4-family
Multifamily
Federal National Mortgage Association
1- to 4-family
Federal Land Banks
Federal Home Loan Mortgage Corporation
1- to 4-family
Multifamily
54
1. Based on data from various institutional and governmental sources, with
some quarters estimated in part by the Federal Reserve. Multifamily debt refers to
loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not bank trust
departments.
3. Assumed to be entirely 1- to 4-family loans.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were
11,852
11,881
11,852
11,420
reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986: 4,
because of accounting changes by the Farmers Home Administration.
5. Outstanding principal balances of mortgage pools backing securities insured
or guaranteed by the agency indicated.
6. Other holders include mortgage companies, real estate investment trusts,
state and local credit agencies, state and local retirement funds, noninsured
pension funds, credit unions, and other U.S. agencies.
A40
1.55
DomesticNonfinancialStatistics • June 1987
CONSUMER INSTALLMENT CREDIT 14 Total Outstanding, and Net Change, seasonally adjusted
Millions of dollars
1986
June
July
Aug.
Sept.
1987
Oct.
Nov.
Dec.
Jan/
Feb.
Amounts outstanding (end of period)
522,805
577,784
551,770
558,059
563,660
571,280
576,874
577,656
577,784
578,578
580,351
Bv major holder
Commercial banks
Finance companies 2
Credit unions
Retailers 3
Savings institutions
Gasoline companies
242,084
113,070
72,119
38,864
52,433
4,235
261,604
136,494
77,857
40,586
58.037
3,205
253,378
125,146
74,243
39,983
55,569
3,452
255.744
127,380
74,865
40.158
56.500
3,411
257,482
129,265
75,637
40,379
57,524
3,372
258,990
135,516
76,299
40.455
56.687
3,333
260,940
138,038
76,995
40,565
57,046
3,289
262,949
136,314
77,508
40,496
57,168
3,221
261,604
136,494
77,857
40,586
58,037
3,205
261,694
135,802
78,284
40,617
58,906
3,276
262,600
136,009
78,728
40,644
59,060
3,311
By major type of credit
8 Automobile
9
Commercial banks
Credit unions
10
11
Finance companies
12
Savings institutions
208.057
93,003
35,635
70,091
9,328
245,055
100,709
39,029
93.274
12,043
224,407
95,265
37,217
80,945
10,980
227,822
95.972
37.529
83,066
11,255
231,200
96,871
37,916
84,868
11,545
239.014
98.057
38.248
91.241
11.468
243,400
99.385
38,597
93,786
11.632
243,005
100,221
38,854
92,188
11,742
245,055
100,709
39,029
93,274
12,043
245,472
101,389
39,243
92,617
12,223
246,188
101,688
39,465
92,780
12,255
13 Revolving
14
Commercial banks
15
Retailers
16
Gasoline companies
17
Savings institutions
Credit unions
18
122,021
75,866
34,695
4,235
5,705
1,520
134,938
85,652
36,240
3,205
7,713
2,128
130,737
82,911
35,678
3,452
6,899
1,797
132.181
83,987
35,827
3.411
7,105
1,851
133,180
84,545
36,028
3.372
7,325
1,910
133.123
84,430
36.086
3,333
7.308
1.966
133,816
84,868
36,190
3,289
7,445
2,024
134,391
85,426
36,137
3,221
7,529
2,078
134,938
85,652
36.240
3,205
7.713
2,128
134,916
85,395
36,277
3,276
7,829
2,139
135,957
86,338
36,308
3,311
7,849
2,152
19 Mobile home
20
Commercial banks
21
Finance companies
22
Savings institutions
25,488
9,538
9,391
6.559
25,710
8,812
9,028
7,870
25,806
9,188
9,450
7,168
25,891
9,126
9,414
7,351
25,939
9,055
9,337
7,547
25.732
9.016
9,216
7,500
25,784
9.025
9,149
7,610
25,731
8,951
9,091
7,689
25,710
8,812
9,028
7,870
25,852
8.787
9.077
7,988
25,793
8,739
9,045
8,008
23 Other
24
Commercial banks
25
Finance companies
26
Credit unions
27
Retailers
28
Savings institutions
167,239
63,677
33,588
34,964
4,169
30,841
172,081
66,431
34,192
36,700
4,346
30,412
170,820
66,014
34,751
35,229
4,305
30,521
172,165
66,659
34,900
35,485
4,331
30,790
173,341
67,011
35,061
35,811
4,351
31,107
173,411
67.487
35.059
36.085
4,369
30.411
173,874
67,662
35,104
36,374
4,375
30,359
174,529
68,351
35,035
36,576
4,359
30,208
172,081
66,431
34,192
36,700
4,346
30,412
172,338
66,122
34,108
36,901
4,340
30,867
172,412
65,835
34,183
37,111
4,336
30,947
1 Total
2
3
4
6
7
Net change (during period)
29 Total
76,622
54,979
5,008
6,289
5,601
7,620
5,594
782
128
794
1,773
By major holder
Commercial banks
Finance companies 2
Credit unions
Retailers 3
Savings institutions
Gasoline companies
32,926
23,566
6,493
1,660
12,103
-126
19,520
23,424
5,738
1,722
5,604
-1,030
995
2,674
510
83
873
-127
2,366
2,234
622
175
931
-41
1,738
1,885
772
221
1,024
-39
1.508
6,251
662
76
-837
-39
1,950
2,522
696
110
359
-44
2,009
-1,724
513
-69
122
-68
-1,345
180
349
90
869
-16
90
-692
427
31
869
71
906
207
444
27
154
35
By major type of credit
36 Automobile
37
Commercial banks
Credit unions
38
39
Finance companies
40
Savings institutions
35,705
9,103
5.330
17,840
3,432
36,998
7,706
3,394
23,183
2,715
3,395
316
255
2,373
451
3,415
707
312
2,121
275
3.378
899
387
1,802
290
7.814
1,186
332
6,373
-77
4,386
1,328
349
2,545
164
-395
836
257
-1,598
110
2,050
488
175
1,086
301
417
680
214
-657
180
716
299
222
163
32
41 Revolving
42
Commercial banks
43
Retailers
44
Gasoline companies
45
Savings institutions
46
Credit unions
22,401
17,721
1,488
-126
2,771
547
12,917
9,786
1,545
-1,030
2,008
608
1,114
882
72
-127
236
51
1,444
1,076
149
-41
206
54
999
558
201
-39
220
59
-57
-115
58
-39
-17
56
693
438
104
-44
137
58
575
558
-53
-68
84
54
547
226
103
-16
184
50
-22
-257
37
71
116
11
1,041
943
31
35
20
13
47 Mobile home
48
Commercial banks
49
Finance companies
Savings institutions
50
778
-85
-405
1,268
222
-726
-363
1,311
133
-43
25
151
85
-62
-36
183
48
-71
-77
196
-207
-39
-121
-47
52
9
-67
110
-53
-74
-58
79
-21
-139
-63
181
142
-25
49
118
-59
-48
-32
20
51 Other
52
Commercial banks
53
Finance companies
54
Credit unions
55
Retailers
56
Savings institutions
17,738
6,187
6,131
616
172
4,632
4,842
2,754
604
1,736
177
-429
366
-160
276
204
11
35
1,345
645
149
256
26
269
1,176
352
161
326
20
317
70
476
-2
274
18
-696
463
175
45
289
6
-52
655
689
-69
202
-16
-151
-2,448
-1,920
-843
124
-13
204
257
-309
-84
201
-6
455
74
-287
75
210
-4
80
30
31
32
33
34
35
1. The Board's series cover most short- and intermediate-term credit extended
to individuals that is scheduled to be repaid (or has the option of repayment) in
two or more installments.
2. More detail for finance companies is available in the G.20 statistical release,
3. Excludes 30-day charge credit held by travel and entertainment companies,
4. All data have been revised.
Consumer Installment
Credit
A41
1.56 TERMS OF CONSUMER INSTALLMENT CREDIT
Percent unless noted otherwise
1987
1986
1984
Item
1985
1986
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
INTEREST RATES
1
2
3
4
6
Commercial banks'
48-month n e w car 2
24-month p e r s o n a l
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
OTHER TERMS
7
8
9
10
11
12
Maturity ( m o n t h s )
N e w car
U s e d car
Loan-to-value ratio
N e w car
U s e d car
A m o u n t financed (dollars)
N e w car
Used car
12.91
15.94
14.96
18.69
11.33
14.82
13.99
18.26
14.70
13.95
18.15
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.58
14.19
13.49
18.09
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.35
14.10
13.42
18.10
14.62
17.85
11.98
17.59
9.44
15.95
9.29
15.56
5.40
15.23
6.12
15.17
11.83
15.20
11.71
15.12
11.65
14.62
10.78
14.56
48.3
39.7
51.5
41.4
50.0
42.6
50.4
42.9
44.5
42.5
45.3
42.2
53.4
42.6
53.3
42.7
53.8
44.8
53.6
44.7
88
92
91
94
91
97
90
97
92
98
92
97
93
97
93
98
94
98
94
99
9,333
5,691
9,915
6,089
10,665
6,555
10,756
6.569
11,162
6,763
11,340
6,746
11,160
6,946
10,835
7,168
10,902
7,067
10,602
7,075
3
1. D a t a for m i d m o n t h of q u a r t e r only.
2. B e f o r e 1983 the maturity f o r n e w car loans w a s 36 m o n t h s , and f o r mobile
h o m e loans w a s 84 m o n t h s .
11.00
13.71
16.47
15.58
18.77
3. At a u t o finance c o m p a n i e s .
NOTE. T h e s e d a t a also a p p e a r in the B o a r d ' s G . 1 9 (421) release. F o r a d d r e s s ,
see inside front c o v e r .
A42
1.57
DomesticNonfinancialStatistics • June 1987
F U N D S R A I S E D IN U . S . CREDIT M A R K E T S
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1984
HI
1985
H2
HI
1986
H2
HI
H2
Nonfinancial sectors
375.8
387.4
548.8
756.3
869.3
827.7
727.8
784.8
732.6
1,006.1
705.2
950.7
87.4
87.8
-.5
161.3
162.1
-.9
186.6
186.7
-.1
198.8
199.0
-.2
223.6
223.7
-.1
214.3
214.7
-.3
181.3
181.5
-.2
216.3
216.4
-.1
201.8
201.9
-.1
245.5
245.5
-.1
211.3
211.4
-.1
217.5
218.0
-.5
5 Private domestic nonfinancial sectors
6
Debt capital instruments
7
Tax-exempt obligations
8
Corporate bonds
9
Mortgages
10
Home mortgages
11
Multifamily residential
12
Commercial
13
Farm
288.5
155.5
23.4
22.8
109.3
72.2
4.8
22.2
10.0
226.2
148.3
44.2
18.7
85.4
50.5
5.4
25.2
4.2
362.2
252.8
53.7
16.0
183.0
117.1
14.1
49.0
2.8
557.5
314.0
50.4
46.1
217.5
129.9
25.1
63.3
-.8
645.7
461.7
152.4
73.9
235.4
150.3
29.2
62.4
-6.4
613.3
447.0
48.5
109.2
289.4
200.6
30.4
64.4
-6.0
546.5
298.4
42.8
31.2
224.5
135.2
27.5
62.9
-1.1
568.5
329.6
58.0
61.1
210.5
124.7
22.7
63.7
-.5
530.8
355.4
67.5
72.7
215.2
133.1
24.6
60.3
-2.8
760.6
568.0
237.3
75.1
255.7
167.5
33.7
64.4
-10.0
494.0
384.3
15.9
129.2
239.2
156.4
30.9
59.3
-7.4
733.2
509.7
81.1
89.1
339.5
244.7
29.9
69.5
-4.6
14
15
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
133.0
22.6
57.0
14.7
38.7
77.9
17.7
52.9
-6.1
13.4
109.5
56.8
25.8
-.8
27.7
243.5
95.0
80.1
21.7
46.6
184.0
96.6
41.3
14.6
31.4
166.3
67.9
80.2
-9.3
27.4
248.1
98.7
91.9
24.8
32.7
238.9
91.3
68.4
18.7
60.5
175.4
97.3
24.9
12.3
40.9
192.6
95.9
57.7
16.9
22.0
109.6
75.3
22.0
-15.7
28.1
223.5
61.2
138.4
-2.9
26.8
19
20
21
22
23
24
By borrowing sector
State and local governments
Households
Farm
Nonfarm noncorporate
Corporate
288.5
6.8
121.4
16.6
38.5
105.2
226.2
21.5
88.4
6.8
40.2
69.2
362.2
34.0
188.0
4.3
76.6
59.3
557.5
27.4
239.5
.1
97.1
193.4
645.7
107.8
295.0
-13.6
92.8
163.7
613.3
60.0
291.2
-11.7
100.7
173.2
546.5
25.2
232.8
-.4
101.4
187.4
568.5
29.6
246.2
.5
92.7
199.5
530.8
56.8
253.6
-5.9
85.6
140.7
760.6
158.7
336.4
-21.3
99.9
186.8
494.0
35.7
231.8
-15.2
95.7
145.9
733.2
84.2
351.1
-8.3
105.7
200.5
25 Foreign net borrowing in United States
26
Bonds
27
Bank loans n.e.c
28
Open market paper
29
U.S. government loans
23.5
5.4
3.0
3.9
11.1
16.0
6.7
-5.5
1.9
13.0
17.4
3.1
3.6
6.5
4.1
6.1
1.3
-6.6
6.2
5.3
1.7
4.0
-2.8
6.2
-5.7
14.4
5.2
-2.1
11.5
-.2
35.5
1.1
-2.2
18.0
18.7
-23.3
1.5
-11.1
-5.6
-8.1
-4.1
5.5
-6.1
4.2
-7.8
7.5
2.6
.4
8.2
-3.6
24.3
7.1
1.4
20.6
-4.8
4.4
3.3
-5.6
2.4
4.4
399.3
403.4
566.2
762.4
871.0
842.0
763.3
761.5
728.4
1,013.5
729.5
955.1
1 Total net borrowing by domestic nonfinancial sectors
By sector and instrument
2 U.S. government
3
Treasury securities
4
Agency issues and mortgages
30 Total domestic plus foreign
Financial sectors
31 Total net borrowing by financial sectors
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
By instrument
U.S. government related
Sponsored credit agency securities
Mortgage pool securities
Loans from U.S. government
Private financial sectors
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Loans from Federal Home Loan Banks
By sector
Sponsored credit agencies
Mortgage pools
Private financial sectors
Commercial banks
Bank affiliates
Savings and loan associations
Finance companies
REITs
101.9
90.1
94.0
139.0
186.9
242.0
134.2
143.8
154.8
218.9
189.0
295.0
47.4
30.5
15.0
1.9
54.5
4.4
64.9
14.9
49.5
.4
25.2
12.5
.1
1.9
9.9
.8
67.8
1.4
66.4
74.9
30.4
44.4
80.0
31.8
48.2
92.9
25.3
67.6
64.4
17.3
.4
-.1
31.1
15.7
63.8
29.3
.4
1.4
17.0
15.7
61.9
35.3
-.1
21.3
-7.0
64.1
23.3
.4
.7
24.1
15.7
171.1
12.4
159.0
-.4
71.0
22.3
.1
3.6
25.2
19.8
69.8
29.1
40.7
26.2
12.1
101.5
20.6
79.9
1.1
85.3
36.5
.1
2.6
32.0
14.2
.9
13.9
11.7
110.2
15.9
92.1
2.2
108.8
37.7
.1
4.2
50.1
16.7
129.5
4.4
124.3
.8
59.6
28.7
.6
2.4
14.4
13.5
212.7
20.5
193.7
-1.5
82.4
15.9
-.5
4.7
36.1
26.2
1.4
66.4
26.2
5.0
12.1
-2.1
11.4
-.2
30.4
44.4
64.1
7.3
15.6
22.7
17.8
.8
21.7
79.9
85.3
-4.9
14.5
22.3
52.8
.5
12.1
159.0
71.0
-2.2
4.5
31.3
36.9
.5
29.1
40.7
64.4
15.4
23.7
20.2
4.3
.8
31.8
48.2
63.8
-.9
7.5
25.1
31.3
.8
25.3
67.6
61.9
-9.2
13.7
12.1
44.8
.5
18.1
92.1
108.8
-.6
15.3
32.6
60.9
.5
5.2
124.3
59.6
-6.7
1.7
23.1
40.6
.9
18.9
193.7
82.4
2.3
7.2
39.5
33.2
.1
*
1.2
32.7
16.2
32.4
15.0
54.5
11.6
9.2
15.5
18.5
-.2
15.3
49.5
25.2
11.7
6.8
2.5
4.3
*
*
*
All sectors
50 Total net borrowing
501.3
493.5
660.2
901.4
1057.8
1084.1
897.5
905.3
833.3
1,232.4
918.6
1250.1
51
52
53
54
55
56
57
58
133.0
23.4
32.6
109.2
22.6
61.2
51.3
68.0
225.9
44.2
37.8
85.4
17.7
49.3
5.7
27.6
254.4
53.7
31.2
183.0
56.8
29.3
26.9
24.8
273.8
50.4
70.7
217.8
95.0
74.2
52.0
67.6
324.2
152.4
114.4
235.4
96.6
41.0
52.8
41.0
385.8
48.5
136.6
289.4
67.9
81.7
27.4
46.7
251.2
42.8
49.6
224.8
98.7
89.6
73.8
67.1
296.4
58.0
91.9
210.8
91.3
58.8
30.1
68.1
294.8
67.5
113.5
215.2
97.3
19.8
30.4
44.8
353.5
237.3
115.3
255.7
95.9
62.3
75.2
37.3
340.0
15.9
165.0
239.7
75.3
25.9
19.3
37.5
431.7
81.1
108.3
339.0
61.2
137.5
35.5
55.8
U.S. government securities
State and local obligations
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans
External corporate equity funds raised in United States
59 Total new share issues
60
61
62
63
64
Mutual funds
All other
Nonfinancial corporations
Financial corporations
Foreign shares purchased in United States
-3.3
33.6
67.0
-31.1
37.5
115.3
-40.1
-22.2
33.3
41.6
149.6
81.1
6.0
-9.3
-11.5
1.9
.3
16.8
16.8
11.4
4.0
1.5
32.1
34.9
28.3
2.7
3.9
38.0
-69.1
-77.0
6.7
1.2
103.4
-65.9
-81.6
11.7
4.0
187.6
-72.3
-80.8
6.7
1.8
39.3
-79.4
-84.5
5.9
-.7
36.6
-58.8
-69.4
7.6
3.0
93.6
-60.4
-75.7
113.1
-71.5
-87.5
12.4
3.6
201.5
-52.0
-68.7
8.3
8.5
173.6
-92.6
-92.7
5.1
-4.9
11.0
4.3
Flow of Funds
1.58
A43
DIRECT A N D I N D I R E C T S O U R C E S O F F U N D S TO C R E D I T M A R K E T S
Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates.
1985
1984
Transaction category, or sector
1981
1982
1983
1984
1985
1986
1986
HI
H2
HI
H2
HI
H2
1 Total funds advanced in credit markets to domestic
nonfinancia! sectors
375.8
387.4
548.8
756.3
869.3
827.7
727.8
784.8
732.6
1,006.1
705.2
950.7
Bv public agencies and foreign
? Total net advances
3
U.S. government securities
4
Residential mortgages
5
F H L B advances to savings and loans
6
Other loans and securities
104.4
17.1
23.5
16.2
47.7
115.4
22.7
61.0
.8
30.8
115.3
27.6
76.1
-7.0
18.6
154.6
36.0
56.5
15.7
46.5
203.3
47.2
94.6
14.2
47.3
313.0
85.5
156.5
19.8
51.2
132.5
26.8
52.7
15.7
37.5
176.6
45.2
60.2
15.7
55.5
201.8
53.1
85.6
11.7
51.4
204.9
41.3
103.7
16.7
43.2
261.3
77.4
121.0
13.5
49.4
364.6
93.5
191.9
26.2
53.0
7
8
9
10
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
24.0
48.2
9.2
23.0
15.9
65.5
9.8
24.1
9.7
69.8
10.9
24.9
17.4
73.3
8.4
55.5
17.8
101.5
21.6
62.4
14.2
170.6
30.2
98.0
9.0
74.0
8.8
40.7
25.7
72.5
8.0
70.4
28.8
98.2
23.7
51.0
6.7
104.9
19.5
73.8
14.6
127.3
9.8
109.7
13.8
214.0
50.6
86.2
11
12
Agency and foreign borrowing not in line 1
Sponsored credit agencies and mortgage pools
Foreign
47.4
23.5
64.9
16.0
67.8
17.4
74.9
6.1
101.5
1.7
171.1
14.4
69.8
35.5
80.0
-23.3
92.9
-4.1
110.2
7.5
129.5
24.3
212.7
4.4
Private domestic funds
advanced
13 Total net advances
14
U.S. government securities
15
State and local obligations
Corporate and foreign bonds
16
17
Residential mortgages
18
Other mortgages and loans
19
LESS: Federal Home Loan Bank advances
342.3
115.9
23.4
19.8
53.5
145.9
16.2
352.9
203.1
44.2
14.8
-5.3
96.9
.8
518.7
226.9
53.7
14.6
55.0
161.5
-7.0
682.7
237.8
50.4
32.6
98.5
279.1
15.7
769.2
277.0
152.4
41.2
84.8
228.1
14.2
700.1
300.3
48.5
75.3
74.5
221.3
19.8
700.5
224.4
42.8
25.6
109.9
313.6
15.7
664.9
251.2
58.0
39.6
87.0
244.7
15.7
619.6
241.7
67.5
49.7
72.0
200.4
11.7
918.8
312.2
237.3
32.7
97.5
255.9
16.7
597.7
262.5
15.9
96.4
66.2
170.1
13.5
803.2
338.2
81.1
54.3
82.7
273.0
26.2
Private financial intermediation
20 Credit market funds advanced by private financial
institutions
Commercial banking
71
7?
Savings institutions
23
Insurance and pension funds
24
Other finance
320.2
106.5
26.2
93.5
94.0
261.9
110.2
21.8
86.2
43.7
391.9
144.3
135.6
97.8
14.1
550.5
168.9
149.2
124.0
108.3
554.4
186.3
83.4
141.0
143.6
659.2
203.2
109.6
137.3
209.1
581.8
184.2
173.5
144.5
79.5
519.1
153.5
124.9
103.5
137.2
471.3
133.8
63.0
121.8
152.7
637.4
238.8
103.9
160.1
134.5
572.5
106.9
101.4
124.6
239.6
746.6
299.8
117.8
150.1
178.8
?5
26
27
Private domestic deposits and RPs
Credit market borrowing
320.2
214.5
54.5
261.9
195.2
25.2
391.9
212.2
26.2
550.5
317.6
64.1
554.4
204.8
85.3
659.2
253.3
71.0
581.8
300.2
64.4
519.1
334.9
63.8
471.3
203.0
61.9
637.4
206.6
108.8
572.5
224.5
59.6
746.6
282.3
82.4
28
29
30
31
32
Other sources
Foreign funds
Treasury balances
Insurance and pension reserves
Other, net
51.2
-23.7
-1.1
89.6
-13.6
41.5
-31.4
6.1
92.5
-25.7
153.4
16.3
-5.3
110.6
31.8
168.8
5.4
4.0
112.5
46.8
264.2
17.7
10.3
107.0
129.2
334.9
14.7
1.9
120.2
198.1
217.2
3.0
-.1
146.5
67.8
120.4
7.8
8.2
78.5
25.9
206.5
11.2
14.4
97.4
83.5
322.0
24.3
6.1
116.6
175.0
288.4
.9
-5.5
104.5
188.5
381.9
28.6
9.4
135.9
208.1
Private domestic nonfinancial
investors
33 Direct lending in credit markets
34
U.S. government securities
35
State and local obligations
Corporate and foreign bonds
36
37
Open market paper
38
Other
76.6
37.1
11.1
-4.0
1.4
31.0
116.3
69.9
25.0
2.0
-1.3
20.6
153.0
95.5
39.0
-12.7
15.1
16.2
196.4
132.9
29.6
-3.4
8.9
28.3
300.2
150.9
59.2
13.2
51.8
25.1
111.9
65.7
6.4
11.5
7.0
21.3
183.1
142.2
25.0
-26.8
15.7
26.9
209.6
123.6
34.3
19.9
2.2
29.7
210.2
130.8
20.5
25.4
7.3
26.3
390.2
171.0
98.0
1.0
96.3
24.0
84.8
53.4
-24.5
44.6
-13.0
24.3
139.0
78.2
37.3
-21.6
27.1
18.0
39 Deposits and currency
40
41
Checkable deposits
42
Small time and savings accounts
43
Money market fund shares
44
Large time deposits
45
Security RPs
46
Deposits in foreign countries
222.4
9.5
18.5
47.3
107.5
36.0
5.2
-1.7
204.5
9.7
18.6
135.7
24.7
5.2
11.1
-.4
229.7
14.3
28.8
215.3
-44.1
-6.3
18.5
3.1
321.1
8.6
27.8
150.7
47.2
84.9
7.0
-5.1
215.1
12.4
42.0
137.5
-2.2
14.0
13.4
-2.1
274.9
14.4
99.2
117.9
20.8
1.6
13.7
7.1
311.3
13.1
29.4
136.4
30.2
93.4
10.8
-2.0
330.9
4.1
26.3
164.9
64.2
76.5
3.1
-8.2
215.9
15.8
18.2
167.1
4.2
-.8
14.3
-2.9
214.3
9.0
65.8
108.0
-8.6
28.9
12.5
-1.3
241.6
10.9
83.9
117.5
29.0
2.0
-7.9
6.2
308.3
18.0
114.6
118.3
12.7
1.3
35.3
8.1
47 Total of credit market instruments, deposits and
currency
299.0
320.7
382.7
517.4
515.3
386.7
494.4
540.5
426.0
604.5
326.4
447.3
26.2
93.6
-.7
28.6
74.2
-7.3
20.4
75.5
41.3
20.3
80.6
60.9
23.3
72.1
80.1
37.2
94.2
112.7
17.4
83.1
43.7
23.2
78.1
78.2
27.7
76.1
62.2
20.2
69.4
98.1
35.8
95.8
110.5
38.2
93.0
114.8
-3.3
6.0
-9.3
19.9
-23.2
33.6
16.8
16.8
27.6
6.0
67.0
32.1
34.9
46.8
20.2
-31.1
38.0
-69.1
8.2
-39.4
37.5
103.4
-65.9
33.3
4.1
115.3
187.6
-72.3
27.8
87.5
-40.1
39.3
-79.4
-4.1
-36.0
-22.2
36.6
-58.8
20.6
-42.7
33.3
93.6
-60.4
54.0
-20.7
41.6
113.1
-71.5
12.6
29.0
149.6
201.5
-52.0
35.4
114.2
81.1
173.6
-92.6
20.3
60.7
48
49
50
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
MEMO: Corporate equities not included above
51 Total net issues
5?
Mutual fund shares
53
Other equities
54 Acquisitions by financial institutions
55 Other net purchases
NOTES BY LINE NUMBER.
1. Line 1 of table 1.57.
2. Sum of lines 3 - 6 or 7-10.
6. Includes farm and commercial mortgages.
11. Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also
sum of lines 28 and 47 less lines 40 and 46.
18. Includes farm and commercial mortgages.
26. Line 39 less lines 40 and 46.
27. Excludes equity issues and investment company shares. Includes line 19.
29. Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates, less
claims on foreign affiliates and deposits by banking in foreign banks.
30. Demand deposits and note balances at commercial banks.
31. Excludes net investment of these reserves in corporate equities.
32. Mainly retained earnings and net miscellaneous liabilities.
33. Line 13 less line 20 plus line 27.
34-38. Lines 14-18 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 38 includes mortgages.
40. Mainly an offset to line 9.
47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46.
48. Line 2/line 1.
49. Line 20/line 13.
50. Sum of lines 10 and 29.
51. 53. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types in flows and in amounts
outstanding may be obtained from Flow of Funds Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.
A44
2.10
Domestic Nonfinancial Statistics • June 1987
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures'
1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1986
Measure
1984
1985
1987
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan/
Feb/
Mar.
1 Industrial production
121.4
123.8
125.0
124.9
125.1
124.9
125.3
126.0
126.7'
126.5
127.1
126.7
Market
groupings
P r o d u c t s , total
Final, total
Consumer goods
Equipment
Intermediate
Materials
126.7
127.3
118.0
139.6
124.7
114.2
130.8
131.1
120.2
145.4
130.0
114.2
133.2
132.3
124.4
142.7
136.4
113.9
133.2
132.0
125.2
141.0
137.3
113.6
133.8
132.6
125.1
142.5
137.8
113.2
133.3
132.2
124.2
142.8
137.0
113.5
134.0
132.7
124.7
143.3
138.7
113.3
134.5
133.1
125.6
143.1
139.2
114.3
135.0
133.7
127.2
142.2
139.7'
115.2'
134.4
133.1
126.2
142.3
138.6
115.7
135.7
134.5
127.2
144.2
139.7
115.5
135.2
134.0
126.5
144.0
139.3
115.1
123.4
126.4
129.1
129.2
129.5
129.5
129.9
130.3
131.1'
130.8
131.7
131.4
80.5
82.0
80.1
80.2
79.8
78.5
79.7
78.3
79.7
77.9
79.6
78.1
79.6
77.8
79.8
78.4
80.0
78.9
79.9
78.9
80.1
78.9
79.8
78.6
2
3
4
5
6
7
Industry
groupings
8 Manufacturing
Capacity utilization (percent) 2
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 (1982 = 100) 3
12
13
14
15
16
17
18
19
20
21
Nonagricultural e m p l o y m e n t , total 4
G o o d s - p r o d u c i n g , total
M a n u f a c t u r i n g , total
Manufacturing, production-worker
Service-producing
Personal i n c o m e , total
W a g e s a n d salary d i s b u r s e m e n t s
Manufacturing
Disposable p e r s o n a l i n c o m e 5
Retail sales 6
22
23
Prices 7
C o n s u m e r (1967 = 100)
P r o d u c e r finished g o o d s (1967=100)
...
135.0
148.0
155.0
157.0
155.0
155.0
151.0
156.0
155.0
150.0
145.0
160.0
114.6'
101.6
98.4'
94.1
120.0
193.5
184.8
164.6
193.6
179.0
118.4
102.4
98.1
92.9
125.0
206.2
197.8
172.5
205.0
190.6
121.5
102.4'
97.5
92.1
129.4
216.8'
208.6
176.7
215.5
199.9
121.4
102.2
97.1
91.7
129.4
217.2
208.5
175.5
215.8
198.9
121.6
102.2
97.1
91.7
129.7
217.6
209.6
176.6
215.9
201.7
121.9
102.1
97.0
91.7
130.2
218.2
210.1
176.5
216.4
213.0
122.3
102.1
97.1
91.8
130.7
218.8
211.5
179.0
216.7
201.9
122.6
102.3
97.3
92.1
131.1
219.2
212.5
177.8
216.8
200.9
122.9
102.4
97.5
92.3
131.4
220.4
212.8
178.1
217.5
211.8'
123.2
102.7
97.4
92.2
131.8
221.1
214.2
178.7
219.2
196.8
123.5
102.9
97.6
92.5
132.3
223.9
215.8
179.6
223.0
206.5
123.7
102.6
97.5
92.4
132.6
224.2
216.6
179.2
223.8
206.9
311.1
291.1
322.2
293.7
328.4
289.6
328.0
287.6
328.6
288.1
330.2
287.3
330.5
290.5
330.8
290.7
331.1
289.9
333.1
291.7
334.4
292.3
335.9
292.3
1. A m a j o r revision of the industrial p r o d u c t i o n index and the capacity
utilization r a t e s w a s released in July 1985. S e e " A Revision of the Index of
Industrial P r o d u c t i o n " a n d a c c o m p a n y i n g tables that c o n t a i n revised indexes
(1977=100) through D e c e m b e r 1984 in the FEDERAL RESERVE BULLETIN, vol. 71
(July 1985), pp. 487-501. T h e revised i n d e x e s f o r J a n u a r y through J u n e 1985 were
s h o w n in the S e p t e m b e r BULLETIN.
2. Ratios of indexes of p r o d u c t i o n t o i n d e x e s of capacity. B a s e d on d a t a f r o m
F e d e r a l R e s e r v e , M c G r a w - H i l l E c o n o m i c s D e p a r t m e n t , D e p a r t m e n t of C o m m e r c e , and o t h e r s o u r c e s .
3. I n d e x of dollar value of total c o n s t r u c t i o n c o n t r a c t s , including residential,
nonresidential and heavy engineering, f r o m McGraw-Hill I n f o r m a t i o n S y s t e m s
C o m p a n y , F . W. D o d g e Division.
4. B a s e d on d a t a in Employment
and Earnings ( U . S . D e p a r t m e n t of L a b o r ) .
Series c o v e r s e m p l o y e e s only, excluding p e r s o n n e l in t h e A r m e d F o r c e s .
5. B a s e d on d a t a in Survey of Current Business ( U . S . D e p a r t m e n t of C o m merce).
6. Based on Bureau of C e n s u s d a t a published in Survey of Current
Business.
7. D a t a without seasonal a d j u s t m e n t , as published in Monthly Labor
Review.
Seasonally adjusted d a t a f o r c h a n g e s in the price indexes m a y b e o b t a i n e d f r o m
the B u r e a u of L a b o r Statistics, U . S . D e p a r t m e n t of L a b o r .
NOTE. Basic data (not index n u m b e r s ) f o r series m e n t i o n e d in n o t e s 4, 5, a n d 6,
and i n d e x e s f o r series m e n t i o n e d in n o t e s 3 a n d 7 m a y also be f o u n d in the Survey
of Current
Business.
Figures for industrial production f o r the last t w o m o n t h s are preliminary a n d
e s t i m a t e d , respectively.
Selected Measures
2.11
A45
LABOR FORCE, EMPLOYMENT, A N D U N E M P L O Y M E N T
Thousands of persons; monthly data are seasonally adjusted. Exceptions noted.
1986
1984r
Category
1985
1987
1986
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.
HOUSEHOLD SURVEY DATA
1
178,602
180,440
182,822
183,074
183,261
183,450
183,628
183,815
184,092
184,259
184,436
115,763
113,544
117,695
115,461
120,078
117,834
120,370
118,124
120,536
118,272
120,678
118,414
120,940
118,675
120,854
118,586
121,299
119,034
121,610
119,349
121,479
119,222
101,685
3,321
103,971
3,179
106,434
3,163
107,010
3,057
106,845
3,142
107,030
3,162
107,217
3,215
107,476
3,161
107,866
3,145
108,146
3,236
108,084
3,284
8,539
7.5
62,839
8,312
7.2
62,745
8,237
7.0
62,744
8,057
6.8
62,704
8,285
7.0
62,725
8,222
6.9
62,772
8,243
6.9
62,688
7,949
6.7
62,961
8,023
6.7
62,793
7,967
6.7
62,649
7,854
6.6
62,957
9 Nonagricultural payroll employment 3
94,496
97,614
100,167'
100,283
100,560
100,826
101,068
101,322
101,626'
101,862
102,026
Manufacturing
Mining
Contract construction
Transportation and public utilities
19,378
966
4,383
5,159
22,100
5,689
20,797
16,023
19,314
930
4,687
5,242
23,100
5,953
21,974
16,415
19,186r
792
4,960'
5,286'
23,831'
6,305'
23,072'
16,735'
19,123
753
5,012
5,255
23,893
6,364
23,255
16,628
19,105
743
5,010
5,316
23,924
6,388
23,300
16,774
19,118
746
5,001
5,316
24,007
6,409
23,359
16,870
19,156
742
4,993
5,351
24,056
6,429
23,451
16,890
19,186
738
4,996
5,359
24,065
6,472
23,578
16,928
19,168'
731'
5,109
5,382'
24,153'
6,495'
23,67C
16,918'
19,214
732
5,094
5,389
24,252
6,518
23,759
16,904
19,190
735
5,047
5,411
24,291
6,554
23,832
16,966
1 Noninstitutional population
2 Labor force (including Armed Forces) 1
3
Civilian labor force
2
4
5
Nonagricultural industries
Agriculture
Unemployment
6
Number
7
Rate (percent of civilian labor force) . . .
8 Not in labor force
ESTABLISHMENT SURVEY DATA
10
11
12
13
14
15
16
17
Finance
Service
Government
1. Persons 16 years of age and over. Monthly figures, which are based on
sample data, relate to the calendar week that contains the 12th day; annual data
are averages of monthly figures. By definition, seasonality does not exist in
population figures. Based on data from Employment and Earnings (U.S. Department of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.
3. Data include all full- and part-time employees who worked during, or
received pay for, the pay period that includes the 12th day of the month, and
exclude proprietors, self-employed persons, domestic servants, unpaid family
workers, and members of the Armed Forces. Data are adjusted to the March 1984
benchmark and only seasonally adjusted data are available at this time. Based on
data from Employment and Earnings (U.S. Department of Labor).
A46
Domestic Nonfinancial Statistics • June 1987
2.12
O U T P U T , C A P A C I T Y , A N D CAPACITY U T I L I Z A T I O N
Seasonally adjusted
1986
1987
1987
1986
1986
1987
oeries
Q3
Q2
Q4
Ql
Output (1977 = 100)
Q2
Q4
Q3
Ql
Q2
Capacity (percent of 1977 output)
Q3
Q4
Ql
Utilization rate (percent)
1 Total industry
124.4
125.0
125.9
126.8
157.1
157.9
158.7
159.6
79.2
79.1
79.3
79.4
2 Mining
3 Utilities
99.9
108.9
96.6
108.8
96.7
110.2
96.3
113.1
132.1
136.9
131.9
137.5
131.7
138.1
131.3
138.7
75.6
79.5
73.2
79.1
73.4
79.8
73.3
81.5
4 Manufacturing
128.4
129.4
130.4
131.3
161.4
162.4
163.4
164.4
79.5
79.7
79.8
79.9
5 Primary processing . . .
6 Advanced processing
111.1
138.9
112.1
139.7
114.0
140.4
115.0
141.0
134.0
177.9
134.6
179.1
135.1
180.4
135.6
181.7
82.9
78.0
83.3
78.0
84.4
77.8
84.8
77.6
7 Materials
113.3
113.4
114.3
115.4
144.7
145.3
145.8
146.3
78.3
78.1
78.4
78.9
8 Durable goods
9
Metal materials . . . .
10 Nondurable g o o d s . . . .
11
Textile, paper, and chemical..
12
Paper
13
Chemical
118.8
75.1
116.9
117.0
130.1
115.4
118.8
73.1
119.7
120.4
135.1
117.7
120.1
75.7
121.1
122.1
135.0
120.1
120.8
106.8
123.2
124.7
160.7
114.5
139.5
138.8
138.1
144.3
161.5
114.0
139.9
139.2
138.9
144.7
162.2
113.4
140.4
139.6
139.7
145.0
163.0
112.7
141.0
140.4
73.9
65.6
83.8
84.3
94.2
80.0
73.6
64.2
85.6
86.5
97.3
81.4
74.0
66.7'"
86.4'
87.6'
96.3'
82.8
74.1
67.1
87.4
88.9
14 Energy materials
100.6
98.6
98.1
99.2
121.3
121.4
121.6
121.6
82.9
81.2
80.7
81.6
Previous cycle 1
High
Low
Latest cycle 2
High
Low
1986
Mar.
1986
July
Aug.
Sept.
1987
Oct.
Nov.
Dec.
Jan.''
Feb.'
Mar.
Capacity utilization rate (percent)
15 Total industry
88.6
72.1
86.9
69.5
79.0
79.2
79.2
79.0
79.0
79.4
79.6
79.4
79.7
79.2
16 Mining
17 Utilities
92.8
95.6
87.8
82.9
95 2
88.5
76.9
78.0
77.9
80.1
73.5
79.9
73.1
78.8
72.9
78.7
72.5
79.3
73.9
80.5
73.8
79.5
74.4
81.6
73.0
81.5
72.6
81.5
18 Manufacturing
87.7
69.9
86.5
68.0
79.1
79.7
79.7
79.6
79.6
79.8
80.0
79.8
80.1
79.8
19 Primary processing . . .
20 Advanced processing .
91.9
86.0
68.3
71.1
89.1
85.1
65.1
69.5
82.4
77.4
82.9
78.4
83.2
78.0
83.7
77.6
83.8
77.8
84.4
77.7
85.0
77.9
84.9
77.5
84.9
77.9
84.7
77.4
21 Materials
92.0
70.5
89.1
68.4
78.5
78.3
77.9
78.1
77.8
78.4
78.9
79.2
78.9
78.6
22 Durable goods
23
Metal materials
91.8
99.2
64.4
67.1
89.8
93.6
60.9
45.7
74.5
66.0
73.7
63.8
73.5
63.8
73.5
64.8
73.6
65.2
74.2
68.4
74.3
66.5 r
74.0
66.0
74.4
67.4
74.1
67.9
24 Nondurable goods . . . .
25
Textile, paper, and
chemical
26
Paper
27
Chemical
91.1
66.7
88.1
70.6
82.5
85.0
85.5
86.1
85.8
85.7
87.7'-
87.8
87.4
86.9
92.8
98.4
92.5
64.8
70.6
64.4
89.4
97.3
87.9
68.6
79.9
63.3
83.4
93.0
79.4
85.6
97.8
80.2
86.5
97.9
81.2
87.4
96.1
82.6
87.0
95.7
82.5
86.7
96.0
81.7
89.2'
100.2'
84.3
89.4
98.3
85.7
88.8
97.8
84.4
88.4
28 Energy materials
94.6
86.9
94.0
82.2
83.7
82.3
80.6
80.7
79.7
81.2
81.2'
82.9
81.2
80.7
1. Monthly high 1973; monthly low 1975.
2. Monthly highs 1978 through 1980; monthly lows 1982.
NOTE. These data also appear in the Board's G.3 (402) release. For address, see
inside front cover.
Selected Measures
2.13
INDUSTRIAL PRODUCTION
A47
Indexes and Gross Value A
Monthly data are seasonally adjusted
Grouping
1977
proportion
1987
1986
1986
avg.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
Feb.?
Mar.*"
Index (1977 = 100)
MAJOR MARKET
100.00
125.0
123.6
124.7
124.2
124.2
124.9
125.1
124.9
125.3
126.0
126.7
126.5
127.1
126.7
2 Products
3
Final products
4
Consumer goods
5
Equipment
57.72
44.77
25.52
19.25
133.2
132.3
124.4
142.7
131.2
130.6
121.8
142.3
132.7
132.1
124.5
142.3
132.4
131.6
124.3
141.2
132.4
131.1
124.4
140.0
133.2
132.0
125.2
141.0
133.8
132.6
125.1
142.5
133.3
132.2
124.2
142.8
134.0
132.7
124.7
143.3
134.5
133.1
125.6
143.1
135.0
133.7
127.2
142.2
134.4
133.1
126.2
142.3
135.7
134.5
127.2
144.2
135.2
134.0
126.5
144.0
6
Intermediate products
7 Materials
12.94
42.28
136.4
113.9
133.3
113.3
134.5
113.8
135.1
113.0
137.0
113.1
137.3
113.6
137.8
113.2
137.0
113.5
138.7
113.3
139.2
114.3
139.7
115.2
138.6
115.7
139.7
115.5
139.3
115.1
6.89
2.98
1.79
1.16
.63
1.19
3.91
1.24
1.19
.%
1.71
116.2
115.1
112.9
97.3
141.8
118.4
117.1
139.5
141.6
125.8
96.0
112.4
110.4
106.3
93.7
129.6
116.6
113.9
133.7
136.0
121.2
95.5
115.9
116.4
115.1
100.8
141.5
118.4
115.5
138.8
140.6
121.8
95.0
113.8
113.2
110.3
94.8
139.1
117.4
114.3
133.9
135.8
123.3
95.0
114.3
113.7
112.2
99.3
136.1
116.1
114.8
137.5
139.1
122.5
94.1
116.3
116.4
114.5
95.3
150.3
119.1
116.3
138.9
141.6
126.6
94.1
115.7
114.5
110.4
87.8
152.4
120.7
116.7
139.4
142.5
125.8
95.1
117.4
117.0
116.8
96.2
155.1
117.3
117.7
141.2
143.5
126.2
96.0
116.3
112.7
107.7
91.9
137.1
120.1
119.0
142.6
144.3
128.8
96.5
118.4
114.6
107.6
92.3
136.0
125.2
121.2
148.1
150.0
131.1
96.3
121.5
117.7
115.6
99.5
145.6
120.8
124.4
153.2
155.1
132.0
99.4
119.9
117.6
117.9
94.3
161.9
117.0
121.7
146.6
148.5
129.4
99.3
122.0
122.5
125.2
105.3
120.6
120.3
121.4
100.9
118.4
121.6
145.1
146.6
129.4
100.2
118.1
120.9
144.1
19 Nondurable consumer goods
20
Consumer staples
21
Consumer foods and tobacco
22
Nonfood staples
23
Consumer chemical products . .
24
Consumer paper products
25
Consumer energy
26
Consumer fuel
27
Residential utilities
18.63
15.29
7.80
7.49
2.75
1.88
2.86
1.44
1.42
127.5
97.0
134.1
131.9
136.5
161.2
147.4
105.7
92.8
125.3
131.6
130.3
133.0
156.4
143.1
104.0
92.2
116.1
127.7
134.3
131.9
136.7
163.1
145.1
106.0
93.7
118.4
128.1
135.0
132.4
137.7
162.4
148.6
106.8
96.4
117.5
128.1
135.1
133.3
137.0
163.6
147.1
104.8
91.8
118.1
128.4
135.3
132.2
138.5
166.4
146.4
106.6
91.2
122.3
128.6
135.5
133.2
137.9
163.4
147.7
107.1
94.9
119.6
126.7
133.6
131.0
136.3
161.1
145.7
106.3
92.0
120.9
127.8
134.4
131.6
137.2
161.7
150.3
105.2
90.8
119.8
128.3
135.0
132.6
137.4
161.0
151.5
105.5
91.7
119.6
129.4
136.0
133.9
138.2
163.1
150.1
106.4
92.2
120.8
120.6
135.1
132.3
138.1
163.3
149.3
106.6
95.5
117.8
129.2
135.8
133.5
138.3
164.0
149.9
106.1
93.3
128.7
135.6
Equipment
28 Business and defense equipment
29
Business equipment
30
Construction, mining, and farm . .
31
Manufacturing
32
Power
33
Commercial
34
Transit
35
Defense and space equipment
18.01
14.34
2.08
3.27
1.27
5.22
2.49
3.67
147.1
138.6
59.8
112.0
81.6
214.6
109.2
180.3
145.5
137.7
59.5
112.4
82.0
214.3
104.3
176.2
146.6
138.6
58.6
111.9
83.0
213.4
112.1
178.0
146.0
137.9
60.9
111.9
82.9
212.9
107.3
178.0
145.1
136.6
61.9
111.7
83.5
208.2
108.8
178.4
146.4
137.9
60.6
112.6
81.7
214.5
103.9
179.5
147.8
139.3
58.3
113.3
81.7
217.5
106.9
181.0
148.0
139.3
58.1
113.0
80.3
215.1
113.3
182.0
148.4
139.1
58.0
112.7
80.5
215.4
111.8
184.6
148.1
138.6
56.6
109.6
79.5
217.3
110.7
184.9
147.0
137.1
58.2
108.8
80.2
213.7
108.9
185.8
147.2
137.4
56.6
109.0
78.9
215.0
109.5
185.7
149.3
139.7
57.2
110.0
79.9
216.3
117.6
186.8
149.0
139.2
5.95
6.99
5.67
1.31
124.7
146.4
150.6
128.3
122.6
142.5
146.4
125.6
123.6
143.8
148.0
125.8
123.5
145.0
148.3
130.7
124.1
147.9
151.6
131.9
124.0
148.6
153.3
128.3
125.4
148.4
152.5
130.6
125.9
146.4
151.2
125.8
126.3
149.3
154.1
128.8
126.8
149.7
153.7
132.4
127.9
149.8
154.3
130.3
127.1
148.4
153.6
125.8
127.5
150.1
154.8
129.6
127.3
20.50
4.92
5.94
9.64
4.64
119.7
98.5
153.9
109.4
80.0
119.3
99.9
153.7
108.0
79.6
120.2
99.3
154.8
109.4
82.9
118.4
96.4
152.3
108.8
78.9
117.8
96.3
151.8
107.9
76.7
118.8
96.7
154.3
108.2
77.4
118.8
95.2
155.6
108.1
76.9
118.9
95.3
154.8
108.8
78.4
119.2
97.0
153.5
109.4
78.8
120.4
98.0
154.5
110.7
82.1
120.7
98.8
154.2
111.2
80.3
120.4
98.1
153.8
111.2
79.4
121.2
99.7
154.6
111.5
80.4
120.9
99.2
154.C
111.7
45 Nondurable goods materials
46
Textile, paper, and chemical
materials
47
Textile materials
48
Pulp and paper materials
49
Chemical materials
50
Miscellaneous nondurable materials
10.09
118.3
114.8
116.5
116.5
117.7
118.9
119.7
120.6
120.3
120.2
123.2
123.6
123.2
122.8
7.53
1.52
1.55
4.46
2.57
118.9
110.6
132.1
117.1
116.5
115.5
105.7
128.0
114.5
112.8
115.9
106.7
129.0
114.5
118.2
116.9
108.4
128.6
115.7
115.3
118.2
109.5
132.7
116.1
116.4
119.0
111.2
135.6
115.9
118.3
120.5
113.4
136.0
117.5
117.2
121.8
116.0
133.7
119.7
117.1
121.3
114.3
133.5
119.5
117.5
121.0
115.6
134.2
118.5
117.6
124.7
116.1
140.2
122.3
118.5
125.2
114.5
137.9
124.5
118.6
124.6
116.3
137.7
122.9
124.3
51 Energy materials
52
Primary energy
53
Converted fuel materials
11.69
7.57
4.12
99.9
105.5
89.6
101.4
107.4
90.5
100.4
106.2
89.7
100.5
106.7
89.2
100.8
106.5
90.4
99.9
104.8
90.9
97.9
103.7
87.3
98.0
103.8
87.4
96.9
102.7
86.2
98.7
104.8
87.6
98.8
105.1
87.3
100.9
105.8
91.8
98.7
102.6
91.6
98.0
1 Total index
Consumer goods
8 Durable consumer goods
9
Automotive products
10
Autos and trucks
11
Autos, consumer
12
Trucks, consumer
13
Auto parts and allied goods
14
Home goods
15
Appliances, A/C and TV
16
Appliances and TV
17
Carpeting and furniture
18
Miscellaneous home goods
Intermediate
products
36 Construction supplies
37 Business supplies
38
General business supplies
39
Commercial energy products
Materials
40 Durable goods materials
41
Durable consumer parts
42
Equipment parts
43
Durable materials n.e.c
44
Basic metal materials
137.8
109.5
79.6
216.4
114.4
187.2
A48
2.13
Domestic Nonfinancial Statistics • June 1987
INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued
SIC
code
Grouping
1977
proportion
1986
avg.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec
Jan.
Feb.''
Mar.
Index (1977 = 100)
MAJOR INDUSTRY
105.4
103.0
109.3
127.2
127.7
126.8
104.2
101.0
109.4
128.7
129.6
128.1
103.1
99.8
108.5
128.2
129.9
127.0
102.6
98.9
108.6
128.3
131.2
126.2
101.8
97.1
109.7
129.2
131.7
127.4
100.9
96.4
108.3
129.5
132.2
127.5
100.8
96.2
108.3
129.5
131.4
128.1
100.7
95.6
109.3
129.9
132.3
128.1
102.6
97.4
111.2
130.3
132.7
128.6
101.9
96.7
110.6
131.1
133.7
129.2
103.6
97.9
113.0
130.8
134.2
128.5
102.4
95.9
113.0
131.7
134.3
129.8
75.9
124.7
99.2
111.6
76.0
124.4
96.2
115.0
72.0
124.0
95.1
112.4
65.9
127.3
93.3
114.5
69.2
120.2
92.4
111.8
70.9
122.2
90.7
114.8
70.7
120.8
91.0
111.7
68.5
117.6
90.5
116.4
68.3
130.1
90.4
115.2
73.5
124.3
90.9
109.6
133.5
90.8
107.0
127.6
89.0
110.0
133.6
96.6
113.2
103.6
136.4
132.2
93.6
108.0
102.8
132.4
133.1
100.3
111.4
103.1
134.1
133.7
101.6
111.3
102.6
133.2
134.6
97.6
112.6
101.7
137.2
134.3
97.9
113.4
102.5
138.1
135.1
97.1
114.7
102.5
138.6
134.3
89.8
116.0
102.7
136.9
133.7
100.1
116.1
104.2
137.8
134.4
96.8
117.8
105.1
139.5
135.3
92.9
118.4
135.2
89.2
116.9
117.8
141.6
139.8
140.6
4.54
8.05
2.40
163.4
133.0
92.1
153.3
61.3
157.8
130.2
88.6
147.8
62.7
161.6
132.8
91.3
146.8
61.5
161.9
131.5
95.7
150.1
59.5
164.0
134.2
91.8
152.2
57.9
165.4
134.1
90.6
155.5
61.9
164.6
134.4
94.0
155.5
62.0
163.0
133.9
93.3
154.9
59.4
167.8
133.9
91.1
157.6
60.2
168.5
132.3
92.0
159.0
61.3
167.7
134.6
92.5
160.7
59.4
167.4
138.1
94.5
159.3
58.0
166.6
137.5
92.0
160.2
58.7
24
25
32
2.30
1.27
2.72
123.4
146.7
120.2
120.7
142.9
120.0
121.3
145.9
121.6
121.6
146.2
120.2
120.9
147.1
120.8
120.8
149.5
119.6
122.5
148.3
119.7
125.0
147.7
121.6
125.9
149.2
118.1
129.5
148.6
120.6
133.1
150.5
121.7
128.8
147.3
122.6
150.4
122.4
33
331.2
34
35
36
5.33
3.49
6.46
9.54
7.15
75.8
63.4
107.4
141.9
166.5
76.3
64.3
107.6
141.7
165.2
78.1
65.6
108.2
140.8
166.8
74.8
60.2
106.5
141.3
166.0
71.4
58.3
106.6
140.4
163.2
73.6
61.7
105.7
142.6
166.8
73.4
60.8
105.9
142.6
167.2
74.1
61.1
107.3
140.9
166.9
74.2
62.2
108.3
142.2
167.7
76.8
64.8
107.1
141.2
168.3
73.5
60.5
108.3
139.9
170.2
73.7
60.2
107.1
139.7
168.7
76.3
62.9
107.5
140.8
168.3
107.6
141.1
167.7
37
371
9.13
5.25
125.8
110.9
122.6
108.1
126.2
112.6
124.1
108.7
125.1
110.6
125.6
111.2
125.1
108.2
127.7
112.2
125.2
107.1
125.6
107.9
127.0
111.2
127.7
112.2
131.7
117.8
130.3
115.3
372-6.9
38
39
3.87
2.66
1.46
146.1
141.3
99.3
142.4
142.0
99.0
144.8
142.4
99.2
145.0
140.3
101.0
144.7
139.9
98.3
145.2
141.7
97.5
148.0
142.0
98.3
148.7
141.7
97.7
149.7
140.3
99.0
149.6
141.1
98.9
148.4
142.4
103.1
148.7
141.4
101.1
150.5
141.7
101.7
150.5
141.2
1 Mining and utilities
2
Mining
3
Utilities
4 Manufacturing
5
Nondurable
6
Durable
7
8
9
10
Mining
Metal
Coal
Oil and gas e x t r a c t i o n
Stone and earth minerals
11
12
13
14
15
Nondurable
manufactures
Foods
Tobacco products
Textile mill p r o d u c t s
Apparel p r o d u c t s
P a p e r and p r o d u c t s
16
17
18
19
20
Printing a n d publishing
C h e m i c a l s and p r o d u c t s
Petroleum products
R u b b e r and plastic p r o d u c t s . . .
L e a t h e r and p r o d u c t s
10
11.12
13
14
Durable
manufactures
21 L u m b e r and p r o d u c t s
22 F u r n i t u r e and fixtures
23 Clay, glass, stone p r o d u c t s . . . .
24
25
26
27
28
Primary metals
Iron and steel
F a b r i c a t e d metal p r o d u c t s
Nonelectrical m a c h i n e r y
Electrical m a c h i n e r y
....
29 T r a n s p o r t a t i o n e q u i p m e n t
30
M o t o r vehicles and p a r t s . . . .
31
A e r o s p a c e and miscellaneous
transportation equipment
32 I n s t r u m e n t s
33 Miscellaneous m a n u f a c t u r e s . . .
15.79
9.83
5.96
84.21
35.11
49.10
103.4
99.6
109.6
129.1
130.9
127.9
.50
1.60
7.07
.66
124.2
94.7
113.9
7.96
.62
2.29
2.79
3.15
101.9
95.1
113.2
131.4
133.8
129.7
Utilities
34 Electric
G r o s s value (billions of 1982 dollars, annual rates)
MAJOR MARKET
1,660.8 1,686.3 1,687.6 1,676.7 1,669.9 1,681.3 1,677.8 1,683.9 1,690.8 1,701.9 1,702.1 1,781.2 1,707.9
35 Products, total .
517.5 1,702.2
36 Final
37
Consumer goods .
38
Equipment
39 I n t e r m e d i a t e
405.7 1,314.5 1,282.5 1,307.0 1,301.1 1,289.5 1,282.7 1,292.6 1,292.3 1,292.5 1,297.6 1,306.7 1,311.8 1,328.8 1,317.2
272.7 853.8 832.0 852.3 852.4 843.8 842.4 846.9 839.8 839.3 847.2
860.5 863.8 868.9 859.7
133.0 458.2 450.4 454.7 448.7 445.7 440.4 445.7 452.5 453.2 450.4 446.2 448.0 459.8 457.5
111.9 387.6 378.3 379.3 386.4 387.2
387.1 388.7 385.5 391.4 393.2
395.3 390.3 389.4
390.7
• A m a j o r revision of the industrial production index and the capacity
utilization rates w a s released in July 1985. See " A Revision of the Index of
Industrial P r o d u c t i o n " and a c c o m p a n y i n g tables that contain revised indexes
(1977=100) through D e c e m b e r 1984 in the FEDERAL RESERVE BULLETIN, vol. 71
(July 1985), pp. 487-501. T h e revised i n d e x e s f o r J a n u a r y through J u n e 1985 w e r e
s h o w n in the S e p t e m b e r BULLETIN.
NOTE. T h e s e data also a p p e a r in the B o a r d ' s G.12.3 (414) release. For a d d r e s s ,
see inside f r o n t c o v e r .
Selected Measures
2.14
A49
HOUSING A N D CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1986
1984
Item
1985
1987
1986
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Private residential real estate activity (thousands of units)
NEW UNITS
1 Permits authorized
2
1-family
3
2-or-more-family
1,682
922
759
1,733
957
111
1,750
1,071
679
1,788
1,092
696
1,792
1,12!
671
1,759
1,093
666
1,673
1,039
634
1,603
1,047
556
1,565
1,006
559
1,613
99!
622
1,910
1,168
742
1,690
1,091
599
1,763
1,227
536
4 Started
5
1-family
6
2-or-more-family
1,749
1,084
665
1,742
1,072
669
1,805
1,179
626
1,848
1,219
629
1,842
1,212
630
1.786
1,147
639
1,800
1,180
620
1,689
1,123
566
1,657
1,114
543
1,637
1,129
508
1,813
1,233
580
1,816
1,253
563
1,833
1,299
534
7 Under construction, end of period 1
8
1-family
9
2-or-more-family
1,051
556
494
1,063
539
524
1,074'
583'
490 r
1,128
595
532
1,147
609
537
1,154
620
534
1,163
628
534
1,154
627
527
1,142
625
518
1,125
619
506
1,104'
610'
494'
1,088
608
479
1,101
623
477
1,652
1,025
627
1,703
1,072
631
1,756
1,120'
637
1,801
1,130
671
1,644
1,068
576
1,750
1,074
676
1,757
1,124
633
1,740
1,113
627
1.745
1,165
580
1,774
1,158
616
1,894'
1,184'
710
1,955
1,216
739
1,670
1,085
585
296
284
244
239
232
238
231
243
241
237
251
242
231
639
358
688
350
748
364'
777
338
723
340
691
350
623
352
744
355
675
357
691
353
765
360
699
361
680
363
10 Completed
11
1-family
12
2-or-more-family
13 Mobile homes shipped
Merchant builder activity in 1-family
14 Number sold
15 Number for sale, end of period 1
Price (thousands
Median
Units sold
Average
17
Units sold
units
of dollars)2
16
80.0
84.3
92.2
92.1
91.2
94.1
91.5
95.0
96.4
94.0
94.5
99.9
96.3
97.5
101.0
112.1'
114.6
110.9
116.8
113.2
114.0
114.9
113.6'
118.5'
123.7
124.5
2,868
3,217
3,566
3,450
3,390
3,470
3,610
3,770
3.810
3,910
4,060
3,480
3,690
72.3
85.9
75.4
90.6
80.2
98.2
83.2
101.7
82.6
102.1
79.9
99.2
82.0
100.3
79.4
96.8
79.4
97.3
80.4
99.1
80.8
100.6
82.1
100.1
85.0
104.3
380,722 382,603 382,581 388,471' 383,142' 378,527' 374,807
378,361
308,617 315,267' 311,668' 305,489' 299,695
178,480 186,962' 185,716' 181,514' 181,480
130,137 128,305' 125,952' 123,975' 118,215
300,361
179,368
120,993
EXISTING UNITS (1-family)
18 Number sold
Price of units sold (thousands
19 Median
20 Average
of dollars)2
Value of new construction 3 (millions of dollars)
CONSTRUCTION
21 Total put in place
327,209 355,570 377,903' 374,483 375,397
?? Private
73
Residential
24
Nonresidential, total
Buildings
75
Industrial
?6
Commercial
77
Other
Public utilities and other
28
271,973 292.792 306,697' 302,573 304,567 309,003 310,155
155,148 158,818 175,597' 172,491 174,478 178,821 178,761
116,825 133,974 131.100' 130,082 130.089 130,182 131,394
79 Public
30
Military
31
Highway
32
Conservation and development
33
Other
13,746
48,100
12,547
42,432
15,769
59,626
12,619
45,960
13,653
52,084
13,433
51,930'
13,658
57,368
13,131
45.925
13,027
57.443
13,263
46,356
12.866
58,132
13,277
45,907
12.543
60.054
13,315
45,482
13.180
58,001
14,001
44,955
12.948
56.220'
14,324'
44,813'
13,532'
54,884'
13,937'
43,599'
12,582' 10,565
54,419' 50,353
13,880' 13,494
43,094' 43,803
10,682
52,557
14,148
43,606
55,232
2,839
16,343
4,654
31,396
62,777
3,283
19,998
4,952
34,544
71,204'
3,893'
21,260
4,728'
41,323'
71,910
3,637
23,240
4,729
40,304
70,830
3,761
22,001
4.657
40,411
71,719
3,553
21,603
4.415
4.2.148
72.448
4,132
21,607
4,294
42.415
73.964
5,050
20,552
4.841
43,521
73,204'
3,540'
20,48C
4,754'
44,430'
71.474'
3,980'
18,425'
4,516'
44,553''
73,039' 75,113
4,295'
3,998
18,989' 22,706
5,038'
5,144
44,717' 43,265
78,000
3,655
23,311
5,107
45,927
1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in prior periods because of changes by the Bureau of the
Census in its estimating techniques. For a description of these changes see
Construction Reports (C-30-76-5), issued by the Bureau in July 1976.
NOTE. Census Bureau estimates for all series except (a) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of
existing units, which are published by the National Association of Realtors. All
back and current figures are available from originating agency. Permit authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning
with 1978.
A50
2.15
Domestic Nonfinancial Statistics • June 1987
CONSUMER AND PRODUCER 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 from 3 m o n t h s earlier
(at annual rate)
Item
1987
1986
1986
Mar.
C h a n g e f r o m I m o n t h earlier
1986
Index
level
Mar.
1987
(1967
= 100)'
1987
1987
Mar.
June
Sept.
Dec.
Mar.
Nov.
Dec.
Jan.
Feb.
Mar.
CONSUMER PRICES2
1 AU items
2 Food
3 Energy items
4 All items less f o o d and energy
Commodities
5
Services
6
2.3
3.0
1.6
2.0
2.5
6.2
.2
.2
.7
.4
.4
335.9
1.8
-8.5
4.1
1.0
6.0
4.6
-5.6
4.0
2.4
4.8
3.9
-12.6
3.3
.3
4.9
8.4
-21.0
3.7
2.6
4.3
4.1
-9.9
3.7
1.4
5.1
2.5
26.1
5.2
5.1
5.3
.4
-.5
.3
.1
.4
.2
-.2
.2
.1
.3
.4
3.0
.5
.6
.5
.3
1.9
.3
.0
.4
-.1
1.0
.5
.7
.4
330.0
360.0
336.4
268.4
410.4
-1.4
-.8
-20.1
2.2
1.7
1.5
3.2
-10.9
2.6
2.0
.7
8.2
-20.7
.9
2.4
-.4
11.2
-42.7
2.3
2.0
i.l
1.1
-18.4
4.1
3.3
4.6
-6.9
69.1
3.7
.3
.0
-.2
-.2'
.2
.4
-.1
-.4
-1.1'
.1
.1
.6
-1.8
9.8
.5
.2
.1
-.5
4.0
-.3
-.3
.4
.5
-.2
.8
.1
292.3
280.4
493.8
262.7
310.3
-2.8
-.2
.0
1.2
-5.1
-1.2
-1.5
1.5
-1.2
1.1
8.0
3.4
.0
.1
.0
.0
1.0
.4
.5
.2
.4
.3
315.4
308.1
-7.6
-17.7
-2.9
2.1
-5.4
2.7
5.9
-29.1
6.6
18.1
-19.6
-24.1
-3.8
-10.4
26.0
-10.2
56.7
.2
-1.5'
.5'
.7
- l ^
-3.3'
4.1'
-3.0
10.0
.9'
.0
2.6
.C
.4
-.9
-.9
229.1
581.2
254.6
PRODUCER PRICES
7 Finished goods
Consumer foods
8
C o n s u m e r energy
9
Other consumer goods
10
Capital e q u i p m e n t
11
12 I n t e r m e d i a t e materials 3
Excluding energy
13
14
15
16
C r u d e materials
Foods
Energy
Other
1. N o t seasonally a d j u s t e d .
2. Figures for c o n s u m e r prices are t h o s e f o r all urban c o n s u m e r s and reflect a
rental equivalence m e a s u r e of h o m e o w n e r s h i p a f t e r 1982.
3. E x c l u d e s intermediate materials f o r f o o d m a n u f a c t u r i n g and 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 of L a b o r Statistics.
Selected Measures
2.16
A51
GROSS N A T I O N A L PRODUCT A N D INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.
1986
Account
1984
1985
1987
1986
Q1
Q2
Q4
Q3
Q1
GROSS NATIONAL PRODUCT
1
3,765.0
3,998.1
4,206.1
4,149.2
4,175.6
4,240.7
4,258.7
4,339.2
By
source
2 Personal consumption expenditures
3
Durable goods
4
Nondurable goods
Services
5
2,428.2
331.2
870.1
1,227.0
2,600.5
359.3
905.1
1,336.1
2,762.5
388.1
932.7
1,441.7
2,697.9
360.8
929.7
1,407.4
2,732.0
373.9
928.4
1,429.8
2,799.8
414.5
932.8
1,452.4
2,820.4
403.1
940.1
1,477.2
2,854.3
385.4
962.8
1,506.1
662.1
598.0
416.5
139.3
277.3
181.4
661.1
650.0
458.2
154.8
303.4
191.8
683.6
677.0
460.0
143.3
316.7
217.0
708.3
664.4
459.2
154.6
304.6
205.3
687.3
672.8
457.5
141.5
316.0
215.3
675.8
680.3
459.0
139.5
319.5
221.3
663.2
690.3
464.3
137.5
326.8
226.0
704.8
672.0
447.0
130.2
316.8
225.0
64.1
56.6
11.1
12.2
6.7
7.7
43.8
41.2
14.5
10.5
-4.5
-10.3
-27.1
-10.8
32.7
30.1
14 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
15 E x p o r t s
Imports
16
-58.7
382.7
441.4
-78.9
369.8
448.6
-104.3
373.0
477.3
-93.7
374.8
468.5
-104.5
363.0
467.5
-108.9
370.8
479.7
-110.2
383.5
493.7
-112.0
384.8
496.8
17 G o v e r n m e n t p u r c h a s e s of g o o d s a n d s e r v i c e s
18
Federal
19
S t a t e a n d local
733.4
311.3
422.2
815.4
354.1
461.3
864.2
366.2
498.0
836.7
355.7
480.9
'860.8
367.6
493.3
874.0
369.3
504.7
885.3
372.1
513.2
892.1
369.2
522.9
3,700.9
1,576.7
675.0
901.7
1,813.1
375.1
3,987.0
1,630.2
700.2
930.0
1,959.8
408.1
4,199.4
1,670.5
716.8
953.7
2,105.6
430.0
4,105.4
1,669.0
710.6
958.4
2,057.7
422.6
4,161.2
1,661.6
703.1
958.5
2,087.4
426.7
4,245.2
1,680.2
730.1
950.1
2,125.2
435.3
4,285.8
1,671.3
723.5
947.8
2,152.1
435.3
4,306.4
n.a.
743.0
973.9
2,193.0
429.3
64.1
39.2
24.9
11.1
6.6
4.5
6.7
-1.0
7.7
43.8
28.6
15.3
14.5
-.1
14.6
-4.5
-15.6
11.1
-27.1
-16.9
-10.2
32.7
24.9
7.9
3,489.9
3,585.2
3,674.9
3,655.9
3,661.4
3,686.4
3,696.1
3,735.2
30
3,032.0
3,222.3
3,386.4'
3,340.7
3,376.4
3,396.1
3,432.y
n.a.
31 C o m p e n s a t i o n of e m p l o y e e s
3?
Wages and salaries
33
Government and government enterprises
Other
34
35
Supplement to wages and salaries
36
E m p l o y e r c o n t r i b u t i o n s f o r social i n s u r a n c e
37
Other labor income
2,214.7
1,837.0
346.2
1,490.6
377.7
193.1
184.5
2,368.2
1,965.8
372.2
1,593.9
402.4
205.5
196.9
2,498.0
2,073.5
395.7
1,677.8
424.5
215.7
208.8
2,461.5
2,044.1
387.2
1,656.8
417.4
212.9
204.5
2,480.2
2,058.8
392.5
1,666.3
421.3
214.1
207.3
2,507.4
2,081.1
398.4
1,682.7
426.3
215.9
210.4
2,542.8
2,109.8
404.4
1,705.4
433.0
220.1
213.0
2,577.5
2,142.2
413.0
1,729.2
435.2
219.9
215.4
236.9
205.3
31.5
254.4
225.2
29.2
278.8
252.7
26.1
265.3
240.9
24.4
289.1
249.6
39.5
277.5
258.0
19.6
283.2
262.2
21.0
297.9
269.5
28.4
6 Gross private domestic investment
7
Fixed investment
8
Nonresidential
9
Structures
10
Producers' durable equipment
Residential structures
11
12
13
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
?0 Final sales, total
?1 G o o d s
Durable
??
23
Nondurable
Services
?4
Structures
25
product
76 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
27
Durable goods
Nondurable goods
28
29 MEMO: Total G N P in 1982 dollars
NATIONAL INCOME
38 P r o p r i e t o r s ' i n c o m e 1
39
Business and professional1
40
Farm1
8.3
7.6
12.8
16.3
16.2
42 C o r p o r a t e p r o f i t s
43
Profits before t a x 3
44
Inventory valuation adjustment
45
Capital c o n s u m p t i o n a d j u s t m e n t
264.7
235.7
-5.5
34.5
280.7
223.2
-.6
58.1
299.7
237.5'
6.5
56.6
296.4
222.5
16.5
57.3
293.1
227.7
10.6
54.8
302.0
240.4
46 N e t i n t e r e s t
307.4
311.4
294.0
304.9
297.7
292.9
41 R e n t a l i n c o m e o f p e r s o n s 2
1
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 .
15.0
6.1
55.5
14.8
15.1
311.2'
259.6'
-7.2
58.8
n.a.
n.a.
-7.3
74.8
280.4
281.8
3. F o r a f t e r - t a x p r o f i t s , d i v i d e n d s , a n d t h e like, s e e t a b l e 1.48.
SOURCE. Survey of Current Business
( D e p a r t m e n t of C o m m e r c e ) .
A52
2.17
Domestic Nonfinancial Statistics • June 1987
PERSONAL INCOME A N D SAVING
Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1987
1986
1985
1986
Q1
Q3
Q2
Q4
PERSONAL INCOME AND SAVING
1 Total personal income
3,110.2
3,314.5
3,485.7
3,432.6
3,483.3
3,498.8
3,527.9
2 W a g e a n d 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
Manufacturing
4
5
Distributive i n d u s t r i e s
Service industries
6
7
Government and government enterprises
1.836.8
577.8
439.1
442.2
470.6
346.2
1,966.1
607.7
460.1
469.8
516.4
372.2
2.073.5
623.2
471.2
487.9
566.7
395.7
2,044.1
622.0
470.5
485.2
549.6
387.2
2,058.8
620.8
468.8
484.3
561.3
392.5
2,081.1
621.8
470.0
488.3
572.6
398.4
2.109.8
628.3
475.4
493.9
583.2
404.4
184.5
236.9
205.3
31.5
8.3
74.7
446.9
455.6
235.7
196.9
254.4
225.2
29.2
7.6
76.4
476.2
487.1
253.4
208.8
278.8
252.7
26.1
15.0
204.5
265.3
240.9
24.4
12.8
79.1
480.8
504.7
263.2
207.3
289.1
249.6
39.5
16.3
81.1
480.1
510.1
264.1
210.4
277.5
258.0
19.6
16.2
82.0
473.8
518.5
269.6
213.0
283.2
262.2
21.0
14.8
82.7
465.2
521.8
270.2
8
9
10
11
12
13
14
15
16
17
O t h e r labor i n c o m e
Proprietors' income1
Business and professional1
Farm1
R e n t a l i n c o m e of p e r s o n s 2
Dividends
Personal interest income
Transfer payments
O l d - a g e s u r v i v o r s , disability, a n d h e a l t h i n s u r a n c e b e n e f i t s . . .
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 social 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
81.2
475.0
513.8
266.8
133.5
150.2
160.3
158.6
159.5
160.8
162.4
3,1)0.2
3,314.5
3,485.7
3,432.6
3,483.3
3.498.8
3.527.9
439.6
486.5
514.1
497.5
504.8
519.0
534.9
20 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
2,670.6
2,828.0
2.971.6
2,935.1
2,978.5
2.979.9
2,993.0
21
LESS: P e r s o n a l o u t l a y s
2.501.9
2,684.7
2,857.4
2,789.4
2,825.5
2,895.8
2,918.8
22 EQUALS: P e r s o n a l saving
168.7
143.3
114.1
145.6
153.1
14,721.1
9,475.4
10,421.0
6.3
14,982.0
9,713.7
10,563.0
5.1
15,216.9
10,015.3
10,773.0
3.8
15,188.0
9,857.1
10,723.0
5.0
15,178.9
9,984.4
10,886.0
5.1
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
P e r c a p i t a (1982 dollars)
Gross national product
Personal consumption expenditures
Disposable personal income
Saving rate ( p e r c e n t )
74.2
15,245.6
10,124.0
10,776.0
2.8
15,247.9
10,089.9
10,708.0
2.5
GROSS SAVING
27 Gross saving.
573.3
551.5
538.7'
583.2
539.7
517.2
514.9'
28
29
30
31
674.8
168.7
91.0
-5.5
687.8
143.3
107.3
679.0'
114.1
109.4'
6.5
708.3
145.6
115.5
16.5
713.0
153.1
106.6
10.6
650.5
84.1
108.8
6.1
644.3'
74.2
106.4'
-7.2
253.9
161.2
.0
268.2
169.0
.0
280.3
175.1
.0
275.3
171.8
.0
278.9
174.4
.0
281.6
176.0
.0
285.5
178.2
.0
-101.5
-170.0
68.5
-136.3
-198.0
61.7
-140.3'
-203.3'
63.1'
-125.1
-195.0
69.9
-173.3
-232.2
58.9
-133.3
-197.4
64.0
-129.4'
.0
.0
.0
.0
.0
.0
.0
541.7
579.6
544.3
527.5
515.5
661.1
683.6
-141.9
708.3
-128.6
687.3
-143.0
675.8
-148.3
663.2
-147.7
G r o s s p r i v a t e saving
P e r s o n a l saving
U n d i s t r i b u t e d c o r p o r a t e profits 1
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 a c c r u a l s 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 deficit ( - ) , n a t i o n a l i n c o m e a n d
product accounts
36
Federal
37
S t a t e a n d local
38 Capital g r a n t s r e c e i v e d by t h e U n i t e d S t a t e s , n e t
-.6
39 Gross investment
571.4
545.9
40 G r o s s p r i v a t e d o m e s t i c
41 N e t foreign
662.1
-90.7
-115.2
42 Statistical discrepancy.
-1.9
-5.5
1. With 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. With capital c o n s u m p t i o n a d j u s t m e n t .
SOURCE. Survey
of Current
Business
-188.8'
59.4
( D e p a r t m e n t of C o m m e r c e ) .
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A53
Summary
Millions of dollars; quarterly data are seasonally adjusted except as noted. 1
1985
1985
Item credits or debits
1986
1986
Q4
9
10
Merchandise trade balance 2
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net 3
Other service transactions, net
Remittances, pensions, and other transfers
U.S. government grants (excluding military)
11 Change in U.S. government assets, other than official
reserve assets, net (increase, - )
Q2
Q3
-117,677
-140,569
-33,695
-31,510
-34,040
-31,020
-34,397
-35,458
-35,299
-39,245
-36,837
-34,847
-112,522
219,900
-332,422
-1,827
18,751
1,288
-124,439
214,424
-338,863
-2,917
25,188
-525
-147,708
221,753
-369,461
-2,402
22,865
1,821
-37,352
52,727
-90,079
-1,322
9,255
-32
-36,489
53,588
-90,077
6,500
6
-35,700
55,075
-90,775
-695
5,328
717
-37,149
55,764
-92,913
-570
6,146
437
-38,370
57,326
-95,696
-71
4,890
659
-3,621
-8,536
-3,787
-11,196
-3,320
-11,825
-937
-3,307
-922
-2,069
-802
-3,245
-744
-3,419
-853
-3,092
-5,523
-2,824
1 Balance on current account
2
Not seasonally adjusted
3
4
5
6
7
8
Ql
-1,066
-540
-250
-209
12 Change in U.S. official reserve assets (increase, - )
13
Gold
14
Special drawing rights (SDRs)
15
Reserve position in International Monetary Fund
16
Foreign currencies
-3,130
-3,858
312
-3,148
-115
16
280
132
-979
-995
-1,156
-897
908
-3,869
-246
1,501
-942
-189
168
-3,126
-274
344
-185
-104
366
-246
163
508
-391
-31
283
-120
17 Change in U.S. private assets abroad (increase, - ) 3
18
Bank-reported claims
19
Nonbank-reported claims
20
U.S. purchase of foreign securities, net
21
U.S. direct investments abroad, net 3
-14,987
-11,127
5,081
-5,082
-3,859
-25,754
-691
1,665
-7,977
-18,752
-98,149
-57,312
-4,150
-4,765
-31,922
-19,579
-8,485
418
-1,411
-10,101
-12,644
6,333
-2,842
-6,133
-27,052
-19,326
-32,985
-29,932
-10,002
-25,468
-14,387
-1,220
-1,664
-8,197
349
-7,987
2,683
-5,736
22 Change in foreign official assets in the United States
(increase, +)
23
U.S. Treasury securities
24
Other U.S. government obligations
25
Other U.S. government liabilities 4
26
Other U.S. liabilities reported by U.S. banks
27
Other foreign official assets 5
3,037
4,690
13
436
555
-2,657
-1,324
-546
-295
483
522
33,394
34,495
-1,214
1,067
-126
-828
-1,322
-1,976
-171
263
722
-160
2,469
3,256
-177
288
-1,261
363
14,704
14,538
-644
679
662
-531
15,448
12,193
-276
900
2,933
-302
774
4,508
-117
-799
-2,460
-358
28 Change in foreign private assets in the United States
(increase, +) 3
U.S. bank-reported liabilities
29
30
U.S. nonbank-reported liabilities
31
Foreign private purchases of U.S. Treasury securities, net
32
Foreign purchases of other U.S. securities, net
33
Foreign direct investments in the United States, net 3
99,730
33,849
4,704
23,059
12,759
25,359
128,430
40,387
-1,172
20,500
50,859
17,856
179,900
77,435
-3,112
9,334
70,658
25,585
53,158
20,427
2,232
5,676
22,441
2,382
34,151
8,434
-2,057
7,666
18,686
1,422
32,822
3,553
-1,644
3,807
23,018
4,088
54,075
30,128
589
541
17,185
5,632
58,851
35,320
34 Allocation of SDRs
35 Discrepancy
36
Owing to seasonal adjustments
37
Statistical discrepancy in recorded data before seasonal
adjustment
38
39
40
41
MEMO
Changes in official assets
U.S. official reserve assets (increase, - )
Foreign official assets in the United States
(increase, +)
Change in Organization of Petroleum Exporting Countries
official assets in the United States (part of line 22
above)
Transfers under military grant programs (excluded from
lines 4, 6, and 10 above)
1. Seasonal factors are not calculated for lines
38-41.
2. Data are on an international accounts (IA)
basis data, shown in table 3.11, for reasons of
exports are excluded from merchandise data and
3. Includes reinvested earnings.
0
0
0
0
0
0
0
0
0
0
0
0
-91
0
0
-88
0
-2,680
11,769
14,442
0
27,338
23,006
27,091
5,125
3,771
10,429
1,329
12,532
-1,410
-6,023
-3,956
10,156
4,040
27,338
23,006
27,091
1,354
9,100
13,942
-2,068
6,116
-3,130
-3,858
312
-3,148
-115
16
280
132
2,601
-1,807
32,327
-1,585
2,181
14,025
14,548
1,573
-4,304
-6,599
-8,649
-1,002
1,421
-1,938
-2,847
-5,285
190
64
73
28
22
19
19
6, 10, 12-16, 18-20, 22-34, and
basis. Differs from the Census
coverage and timing; military
are included in line 6.
12
4. Primarily associated with military sales contracts and other transactions
arranged with or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of
private corporations and state and local governments.
NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business
(Department of Commerce).
A54
3.11
International Statistics • June 1987
U.S. FOREIGN TRADE
Millions of dollars; monthly data are not seasonally adjusted.
1986
Item
1984
1983
1987
1985
Aug.
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.
1
EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments
200,486
217,865
2
G E N E R A L IMPORTS including merchandise for immediate consumption plus entries into bonded
warehouses
258,048
325,726
345,276
29,476
28,695
30,018
36,187
27,795
27,466
32,307
3
Trade balance
-57,562
107,861
-132,129
-11,871
-11,177
-10,688
-17,592
-9,364
-11,045
-13,647
213,146
NOTE. The data through 1981 in this table are reported by the Bureau of Census
data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of
export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in
the Census basis trade data; this adjustment has been made for all data shown in
the table. Beginning with 1982 data, the value of imports are on a customs
valuation basis.
The Census basis data differ from merchandise trade data shown in table 3.10,
U.S. International Transactions Summary, for reasons of coverage and timing. On
3.12
17,604
17,518
19,330
18,595
18,431
16,421
18,660
the export side, the largest adjustments are: (1) the addition of exports to Canada
not covered in Census statistics, and (2) the exclusion of military sales (which are
combined with other military transactions and reported separately in the "service
account" in table 3.10, line 6). On the import side, additions are made for gold,
ship purchases, imports of electricity from Canada, and other transactions;
military payments are excluded and shown separately as indicated above. As of
Jan. 1, 1987 census data are released 45 days after the end of the month.
SOURCE. FT900 "Summary of U.S. Export and Import Merchandise T r a d e "
(Department of Commerce, Bureau of the Census).
U.S. RESERVE ASSETS
Millions of dollars, end of period
1986
Type
1984
1983
1
Total
2
Gold stock, including Exchange Stabilization Fund 1
3
Special drawing rights 2
4
Reserve position in International Monetary Fund 2
5
Foreign currencies 4
3
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.P
33,747
34,934
43,191
48,087
47,089
47,824
48,427
49,348
49,358
48,824
11,121
11,096
11,090
11,084
11,066
11,070
11,064
11,062
11,085
11,081
5,025
5,641
7,293
8,295
8,090
8,310
8,395
8,470
8,615
8,740
11,312
11,541
11,952
11,922
11,575
11,659
11,730
11,872
11,699
11.711
6,289
6,656
12,856
16,786
16,358
16,785
17,328
17,982
17,959
17,292
1. Gold held under earmark at Federal Reserve Banks for foreign and international accounts is not included in the gold stock of the United States; see table
3.13. Gold stock is valued at $42.22 per fine troy ounce.
2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based
on a weighted average of exchange rates for the currencies of member countries.
From July 1974 through December 1980, 16 currencies were used; from January
1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in
the IMF also are valued on this basis beginning July 1974.
3.13
1987
1985
3. Includes allocations by the International Monetary Fund of SDRs as follows:
$867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1,
1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093
million on Jan. 1, 1981; plus transactions in SDRs.
4. Valued at current market exchange rates.
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS
Millions of dollars, end of period
1986
Assets
1984
1983
Sept.
1 Deposits
Assets held in custody
2 U.S. Treasury securities 1
3 Earmarked gold 2
Nov.
Oct.
Dec.
Jan.
Mar.P
Feb.
190
267
480
342
303
224
287
226
255
268
117,670
14,414
118,000
14,242
121,004
14,245
152,275
14,115
156,076
14,110
156,919
14,057
155,835
14,048
159,597
14,041
160,942
14,046
167,423
14,036
1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S.
Treasury securities payable in dollars and in foreign currencies.
2. Earmarked gold is valued at $42.22 per fine troy ounce.
1987
1985
NOTE. Excludes deposits and U.S. Treasury securities held for international
and regional organizations. Earmarked gold is gold held for foreign and international accounts and is not included in the gold stock of the United States.
Summary Statistics
3.14
FOREIGN BRANCHES OF U.S. BANKS
A55
Balance Sheet Data1
Millions of dollars, end of period
1987
1986
1985
1983
Asset a c c o u n t
Aug.
Sept.
Nov.
Dec.
Jan.
Feb.''
446,581
446,612
456,627
458,305
457,819
113,177'
81,984
13,685
17,508'
314,34C
97,788
105,237'
23,584'
87,731'
115,273
83,185
12,723
19,365
311,411
93,290
105,377
23,337
89,407
113,673
81,953
13,158
18,562
312,238
91,568
109,892
23,192
87,586
29,110
31,621
31,908
Oct.
All foreign c o u n t r i e s
477,090
1 Total, all currencies
7 Claims o n U n i t e d S t a t e s
Parent bank
4
O t h e r b a n k s in U n i t e d S t a t e s 2
5
Nonbanks2
6 Claims on f o r e i g n e r s
O t h e r b r a n c h e s of p a r e n t b a n k
7
8
Banks
9
Public b o r r o w e r s
Nonbank foreigners
10
458,012
461,440
474,567
342,689
96,004
117,668
24,517
107,785
113,393
78,109
13,664
21,620
320,162
95,184
100,397
23,343
101,238
119,713
87,201
13,057
19,455
315,680
91,399
102,960
23,478
97,843
117,661
83,779
13,072
20,810
315,583
93,435
102,849
23,720
95,579
116,392
82,302
13,624
20,466
328,553
103,278
107,503
23,505
94,267
112,078
79,999
11,659
20,420
305,562
90,412
100,707
24,215
90,228
108,420
76,262
12,034'
20,124'
308,316'
91,570
103,293'
23,314'
90,139'
18,859
20,101
22,619
28,196
29,622
28,941
29,876'
115,542
82,026
1
11 O t h e r a s s e t s
453,656
12 Total payable in U.S. dollars
371,508
350,636
336,288
318,375
330,597
309,087
306,677'
317,486'
309,719
311,669
N Claims on U n i t e d S t a t e s
14
P a r e n t bank
15
O t h e r b a n k s in U n i t e d S t a t e s 2
16
Nonbanks2
17 Claims o n f o r e i g n e r s
O t h e r b r a n c h e s of p a r e n t b a n k
18
19
Banks
?0
Public b o r r o w e r s
21
Nonbank foreigners
113,436
80,909
247,406
78,431
93,332
17,890
60,977
111,426
77,229
13,500
20,697
228,600
78,746
76,940
17,626
55,288
116,645
85,971
12,454
18,220
209,905
72,689
71,748
17,252
48,216
113,636
82,261
12,180
19,195
194,643
68,604
64,940
16,788
44,311
112,133
80,753
12,802
18,578
207,701
78,400
68,5%
16,521
44,184
107,612
78,335
10,544
18,733
190,030
67,835
62,836
17,455
41,904
104,281
74,762
10,986
18,533
190,65C
67,835
64,920'
16,82C
41,075'
109,234'
80,574
12,830
15,830'
196,448
73,704
66,421
16,586
39,737
110,5%
81,423
11,531
17,642
187,2%
67,479
63,637
16,459
39,721
109,197
80,359
12,102
16,736
190,019
66,462
68,464
16,320
38,773
10,666
10,610
9,738
10,096
10,763
11,445
11,746
11,804
11,827
12,453
22 O t h e r a s s e t s
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
O t h e r b a n k s in U n i t e d S t a t e s 2
Nonbanks2
27
2.8 Claims o n f o r e i g n e r s
29
O t h e r b r a n c h e s of p a r e n t b a n k
30
Banks
31
Public b o r r o w e r s
Nonbank foreigners
32
158,732
144,385
148,599
145,619
151,596
142,398
143,800
140,917
144,093
146,188
34,433
29,111
27,675
21,862
1,429
4,384
111,828
37,953
37,443
5,334
31,098
33,157
26,970
1,106
5,081
110,217
31,576
39,250
5,644
33,747
29,839
23,466
1,448
4,925
109,024
31,828
38,048
5,336
33,812
30,879
24,291
2,092
4,4%
113,368
34,678
40,204
5,086
33,400
30,747
24,800
1,314
4,633
105,534
31,268
37,836
5,157
31,273
28,940
22,671
1,534
4,735
108,147
29,960
41,145
5,038
32,004
24,599
19,085
1,612
3,902
109,508
33,422
39,468
4,990
31,628
28,720
23,330
1,220
4,170
108,720
30,218
40,677
4,942
32,883
28,853
23,326
1,258
4,269
110,272
29,575
43,189
4,983
32,525
1
119,280
36,565
43,352
5,898
33,465
33 O t h e r a s s e t s
34 Total payable in U.S. dollars
35 Claims on U n i t e d S t a t e s
36
Parent bank
O t h e r b a n k s in U n i t e d S t a t e s 2
37
Nonbanks2
38
39 Claims o n f o r e i g n e r s
40
O t h e r b r a n c h e s of p a r e n t b a n k
41
Banks
47
Public b o r r o w e r s
Nonbank foreigners
43
44 O t h e r a s s e t s
5,019
4,882
5,225
6,756
7,349
6,117
6,713
6,810
6,653
7,063
126,012
112,809
108,626
97,771
103,228
97,295
97,119
95,028
95,359
97,568
33,756
28,756
88,917
31,838
32,188
4,194
20,697
26,868
21,495
1,363
4,010
82,945
33,607
26,805
4,030
18,503
32,092
26,568
1,005
4,519
73,475
26,011
26,139
3,999
17,326
28,446
22,972
1,194
4,280
66,465
24,657
21,636
3,838
16,334
29,512
23,826
1,848
3,838
70,325
27,151
22,917
3,778
16,479
29,312
24,323
1,110
3,879
64,873
24,632
21,011
3,859
15,371
27,564
22,106
1,364
4,094
66,298
23,223
24,020
3,811
15,244
23,193
18,526
1,475
3,192
68,138
26,361
23,251
3,677
14,849
27,070
22,673
996
3,401
65,022
22,720
23,656
3,683
14,%3
27,290
22,749
1,061
3,480
66,872
22,578
25,685
3,716
14,893
3,339
2,9%
3,059
2,860
3,391
3,110
3,257
3,697
3,267
3,406
Bahamas and Caymans
45 Total, all currencies
46 Claims o n United S t a t e s
Parent bank
47
48
O t h e r b a n k s in U n i t e d S t a t e s 2
49
Nonbanks2
50 Claims on f o r e i g n e r s
51
O t h e r b r a n c h e s of p a r e n t b a n k
Banks
57
53
Public b o r r o w e r s
Nonbank foreigners
54
55 O t h e r a s s e t s
56 Total payable in U.S. dollars
1
152,083
146,811
142,055
137,526
143,082
134,060
131,363
142,592
135,627
133,229
75,309
48,720
ton
77,2%
49,449
11,544
16,303
65,598
17,661
30,246
6,089
11,602
74,864
50,553
11,204
13,107
63,882
19,042
28,192
6,458
10,190
73,047
47,694
10,813
14,540
60,167
16,539
27,065
6,675
9,888
71,918
46,635
10,641
14,652
66,610
22,763
27,779
6,434
9,634
68,624
44,476
9,557
14,591
59,612
16,985
26,205
7,263
9,159
66,078
42,223
9,628
14,227
59,436
18,139
25,743
6,697
8,857
76,663
53,068
11,156
12,439
61,390
18,803
27,476
6,929
8,182
72,643
48,036
10,625
13,982
57,825
16,258
26,366
7,026
8,175
68,094
44,124
10,924
13,046
59,815
17,393
28,283
6,974
7,165
72,868
20,626
36,842
6,093
12,592
3,906
3,917
3,309
4,312
4,544
5,824
5,849
4,539
5,159
5,320
145,641
141,562
136,794
130,723
136,615
127,361
124,801
136,813
129,474
126,605
1. Beginning with J u n e 1984 d a t a , r e p o r t e d claims held by foreign b r a n c h e s
h a v e b e e n r e d u c e d by a n i n c r e a s e in t h e reporting threshold f o r " s h e l l " b r a n c h e s
f r o m $50 million t o $150 million e q u i v a l e n t in total a s s e t s , the threshold n o w
applicable t o all r e p o r t i n g b r a n c h e s .
2. D a t a for a s s e t s vis-a-vis 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 f o r d a t e s b e f o r e J u n e 1984.
A56
3.14
International Statistics • June 1987
Continued
1986
Liability account
1983
1984
1987
1985
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.P
All foreign countries
57 Total, all currencies
477,090
453,656
458,012
461,440
474,567
446,581
446,612
456,627
458,305
457,819
58 Negotiable C D s 3
59 To United States
60
Parent b a n k
61
Other banks in United States .
62
Nonbanks
n.a.
188,070
81,261
29,453
77,356
37,725
147,583
78,739
18,409
50,435
34,607
155,538
83,914
16,894
54,730
31,475
145,488
79,564
15,151
50,773
33,642
151,281
87,927
14,153
49,201
32,444
141,126
75,777
14,791
50,558
32,926
137,158
75,062
14,661
47,435
31,629
151,606
82,535
15,650
53,421
33,395
140,053
70,011
15,068
54,974
36,074
140,053
73,095
13,609
53,349
63 To foreigners
64
Other branches of parent b a n k
65
Banks
66
Official institutions
67
N o n b a n k foreigners
68 Other liabilities
269,685
90,615
92,889
18,896
68,845
19,335
247,907
93,909
78,203
20,281
55,514
20,441
245,942
89,529
76,814
19,523
60,076
21,925
262,978
91,307
85,239
20,637
65,795
21,499
269,322
102,245
81,953
20,109
65,015
20,322
253,202
87,883
80,709
19,436
65,174
19,809
256,476
87,853
83,655
18,831
66,137
20,052
253,775
95,146
77,806
17,835
62,988
19,617
264,499
90,339
89,199
19,532
65,429
20,358
261,937
88,612
86,239
19,818
67,268
19,755
69 Total payable in U.S. dollars
388,291
367,145
353,470
333,581
349,259
323,699
320,342 r
336,406
323,900
325,826
70 Negotiable C D s 3
71 To United States
72
Parent bank
73
Other banks in United States .
74
Nonbanks
n.a.
184,305
79,035
28,936
76,334
35,227
143,571
76,254
17,935
49,382
31,063
150,161
80,888
16,264
53,009
28,091
137,805
75,391
14,364
48,050
30,560
143,627
83,790
13,173
46,664
29,206
133,301
71,858
13,768
47,675
29,752
129,353
71,017
13,808
44,528
28,466
143,626
78,448
14,613
50,565
29,921
131,521
65,383
14,047
52,091
32,407
131,617
68,540
12,505
50,572
75 T o foreigners
76
Other branches of parent bank
77
Banks
78
Official institutions
79
N o n b a n k foreigners
80 Other liabilities
194,139
73,522
57,022
13,855
51,260
9,847
178,260
77,770
45,123
15,773
39,594
10,087
163,361
70,943
37,323
14,354
40,741
8,885
158,931
66,878
36,460
14,125
41,468
8,754
167,356
77,464
35,358
13,697
40,837
7,716
153,536
65,077
33,802
13,320
41,337
7,656
153,837'
64,038'
35,177
13,139
41,483
7,400
156,806
71,181
33,847
12,371
39,407
7,508
155,218
64,416
37,159
13,688
39,955
7,240
154,218
63,360
37,128
13,189
40,541
7,584
United Kingdom
81 Total, all currencies
158,732
144,385
148,599
145,619
151,596
142,398
143,800
140,917
144,093
146,188
82 Negotiable CDs 3
83 To United States
84
Parent bank
85
Other banks in United States .
86
Nonbanks
n.a.
55,799
14,021
11,328
30,450
34,413
25,250
14,651
3,125
7,474
31,260
29,422
19,330
2,974
7,118
28,279
22,831
14,188
2,148
6,495
30,352
26,540
17,399
2,062
7,079
28,847
24,610
14,014
2,382
8,214
28,984
22,714
13,811
2,313
6,590
27,781
24,657
14,469
2,649
7,539
29,432
19,465
10,004
2,154
7,307
32,233
22,508
12,735
2,161
7,612
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
95,847
19,038
41,624
10,151
25,034
7,086
77,424
21,631
30,436
10,154
15,203
7,298
78,525
23,389
28,581
9,676
16.879
9,392
84.880
24,962
32,250
9,330
18,338
9,629
85,554
28,272
31,190
8,652
17,440
9,150
80,252
24,194
31,001
8,068
16,989
8,689
83,320
23,733
34,192
7,875
17,520
8,782
79,498
25,036
30,877
6,836
16,749
8,981
86,229
23,595
36,479
8,484
17,671
8,967
82,411
21,230
35,427
7,832
17,922
9,036
131,167
117,497
112,697
101,397
108,249
99,820
99,321
99,707
98,741
101,478
94 Negotiable CDs 3
95 T o United States
%
Parent bank
97
Other banks in United States .
98
Nonbanks
n.a.
54,691
13,839
11,044
29,808
33,070
24,105
14,339
2,980
6,786
29,337
27,756
18,956
2,826
5,974
26,114
20,403
13,707
1,879
4,817
28,490
24,039
16,984
1,735
5,320
26,927
21,960
13,591
2,108
6,261
27,166
20,184
13,438
2,009
4,737
26,169
22,075
14,021
2,325
5,729
27,701
16,829
9,451
1,887
5,491
30,175
19,894
12,157
1,926
5,811
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
73,279
15,403
29,320
8,279
20,277
3,197
56,923
18,294
18,356
8,871
11,402
3,399
51,980
18,493
14,344
7,661
11,482
3,624
50,855
17,790
15,056
6,724
11,285
4,025
52,645
21,305
14,491
6,015
10,834
3,075
47,491
17,289
14,123
5,685
10,394
3,442
48,921
16,689
15,855
5,655
10,722
3,050
48,138
17,951
15,203
4,934
10,050
3,325
51,174
16,386
18,626
6,0%
10,066
3,037
48,117
14,323
18,082
5,176
i0,536
3,292
93 Total payable in U.S. dollars
Bahamas and Caymans
105 Total, all currencies
152,083
146,811
142,055
137,526
143,082
134,060
131,363
142,592
135,627
133,229
106 Negotiable C D s 3
107 To United States
108
Parent bank
109
Other banks in United States .
110
Nonbanks
n.a.
111,299
50,980
16,057
44,262
615
102,955
47,162
13,938
41,855
610
103,813
44,811
12,778
46,224
470
99,585
44,417
11,952
43,216
527
102,012
49,981
10,986
41,045
683
95,840
43,470
11,144
41,226
784
94,493
43,572
11,131
39,790
847
105,229
48,629
11,719
44,881
995
98,733
40,845
11,687
46,201
855
95,221
40,409
10,151
44,661
111 T o foreigners
112
Other branches of parent bank
113
Banks
114
Official institutions
115
N o n b a n k foreigners
116 Other liabilities
38,445
14,936
11,876
1,919
11,274
2,339
40,320
16,782
12,405
2,054
9,079
2,921
35,053
14,075
10,669
1,776
8,533
2,579
35,216
13,368
10,216
2,386
9,246
2,255
38,447
15,918
10,158
2,834
9,537
2,0%
35,427
13,574
8,964
2,665
10,224
2,110
33,841
12,527
8,545
2,577
10,192
2,245
34,400
12,631
8,614
2,719
10,436
2,116
33,831
12,323
8,402
2,808
10,298
2,068
35,053
13,060
8,507
3,013
10,473
2,100
148,278
143,582
138,322
133,256
138,733
130,084
127,309
138,774
131,572
129,183
117 Total payable in U.S. dollars
3. Before June 1984, liabilities on negotiable CDs were included in liabilities to
the United States or liabilities to foreigners, according to the address of the initial
purchaser.
Summary Statistics
3.15
A57
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1987
1986'
Item
1 Total 1
2
3
4
5
6
1
8
9
10
11
12
By type
Liabilities reported by b a n k s in the United States 2
U.S. T r e a s u r y bills and certificates 3
U . S . T r e a s u r y b o n d s and notes
Marketable
Nonmarketable4
U . S . securities o t h e r than U . S . T r e a s u r y securities 5
By area
Western E u r o p e 1
Canada
Latin America and Caribbean
Asia
Africa
Other countries 6
1984
1985'
Sept.
Nov.
Oct.
Dec.
Jan.
Feb.''
180,552
178,385
204,522
209,743
211,297
211,121
211,356
212,313
214,206
26,089
59,976
26,734
53,252
26,654
74,766
29,722
75,095
27,392
75,457
27,777
75,132
27,288
75,650
26,534
75,718
28,313
75,434
69,019
5,800
19,668
77,154
3,550
17,695
85,626
1,300
16,176
87,503
1,300
16,123
91,092
1,300
16,056
91,225
1,300
15,687
91,521
1,300
15,597
93,023
1,300
15,738
93,693
1,300
15,466
69,776
1,528
8,561
93,954
1,264
5,469
74,418
1,314
11,144
86,490
1,824
3,195
84,565
1,535
10,779
102,856
1,958
2,829
87,314
1,626
10,328
105,704
1,864
2,907
88,658
1,699
10,136
105,422
1,716
3,666
87,725
1,891
9,086
105,580
1,545
5,294
87,859
2,004
8,358
106,119
1,503
5,513
88,509
3,382
7,676
107,526
1,299
3,921
89,976
3,761
7,416
108,534
1,164
3,355
5. Debt securities of U.S. g o v e r n m e n t c o r p o r a t i o n s and federally sponsored
agencies, and U . S . corporate stocks and bonds.
6. Includes countries in Oceania and Eastern E u r o p e .
NOTE. Based on Treasury D e p a r t m e n t data and on data reported to the
Treasury Department by banks (including Federal R e s e r v e Banks) and securities
dealers in the United States.
1. Includes the Bank f o r International Settlements.
2. Principally d e m a n d deposits, time deposits, 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 paper, negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes n o n m a r k e t a b l e certificates of indebtedness (including those payable in foreign currencies through 1974) and T r e a s u r y bills issued to official
institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes
bonds and notes payable in foreign currencies.
3.16
Aug.
LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, end of period
1986
Item
1983
1984
1985
Mar.'
1 Banks' o w n liabilities
2 B a n k s ' own claims
3
Deposits
4
O t h e r claims
5 Claims of b a n k s ' domestic c u s t o m e r s 1
1. Assets owned by c u s t o m e r s of the reporting b a n k located in the United
States that represent claims on foreigners held by reporting banks for the a c c o u n t s
of their domestic c u s t o m e r s .
5.219
7,231
2,731
4,501
1,059
8.586
11,984
4,998
6,986
569
15.368
16,294
8,437
7,857
580
21,264
19,728
11,311
8,417
1,426
June'
24,130
21,264
11,413
9,851
1,385
Sept.'
29,353
24,567
13,716
10,851
1,659
NOTE. Data on claims exclude foreign currencies held by U . S .
authorities,
Dec.''
29,897
25,361
13,359
12,002
2,613
monetary
A58
3.17
International Statistics • June 1987
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States
Millions of dollars, end of period
1986
H o l d e r a n d t y p e of liability
1983
1984
1987
1985
Aug/
Sept/
Oct/
Nov.
Dec/
Jan.
Feb.P
1 All foreigners
369,607
407,306
435,726
487,914
506,104
501,095
512,653'
537,778
525,220
521,757
2 B a n k s ' o w n liabilities
3
Demand deposits
4
Time deposits1
5
Other2
O w n foreign offices3
6
279,087
17,470
90,632
25,874
145,111
306,898
19,571
110,413
26,268
150,646
341,070
21,107
117,278
29,305
173,381
355,979
20,249
122,059
34,223
179,450
372,533
21,347
125,241
37,795
188,150
365,956
21,730
123,752
36,332
184,142
378,023'
24,772
125,618'
35,915'
191,718
404,395
23,786
131,281
40,545
208,782
391,036
22,504
124,926
39,132
204,475
387,804
22,439
126,516
40,675
198,174
90,520
68,669
100,408
76,368
94,656
69,133
131,935
89,586
133,571
90,467
135,139
91,305
134,630'
90,351
133,383
90,257
134,184
89,267
133,953
90,695
17,467
4,385
18,747
5,293
17,964
7,558
15,591
26,757
15,303
27,800
15,649
28,184
15,343
28,936'
16,523
26,603
15,358
29,558
13,991
29,267
11 Nonmonetary international and regional
organizations 7
5,957
4,454
5,821
5,253
3,038
3,902
4,315
4,826
5,263
4,768
12 B a n k s ' o w n liabilities
13
Demand deposits
14
Time deposits'
15
Other2
4,632
297
3,584
750
2,014
254
1,267
493
2,621
85
2,067
469
4,090
165
3,233
691
1,721
180
1,243
299
2,426
175
1,939
312
2,944
135
2,299
511
2,977
199
2,166
611
3,914
183
2,670
1,061
2,442
157
1,736
548
16 B a n k s ' c u s t o d y liabilities 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
Other negotiable and readily transferable
18
instruments6
19
Other
1,325
463
2,440
916
3,200
1,736
1,163
129
1,317
218
1,476
308
1,371
262
1,849
259
1,349
86
2,326
1,213
862
0
1,524
0
1,464
0
1,033
1
1,099
0
1,162
6
1,104
5
1,590
0
1,261
2
1,112
1
20 Official institutions 8
79,876
86,065
79,985
101,419
104,818
102,849
102,909
102,938
102,250
103,748
21 B a n k s ' o w n liabilities
22
Demand deposits
23
Time deposits1
Other2
24
19,427
1,837
7,318
10,272
19,039
1,823
9.374
7.842
20,835
2,077
10,949
7,809
23,882
1,582
10,307
11.993
26,%9
1,895
10,923
14,151
24,268
1,840
10,593
11,835
25,165
2,188
11,271
11,706
24,796
2,267
10,577
11,952
24,307'
1,487
10,672'
12,147'
25,611
1,513
10,464
13,634
25 B a n k s ' c u s t o d y liabilities 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
Other negotiable and readily transferable
27
instruments6
Other
28
60,448
54,341
67.026
59.976
59,150
53,252
77,538
74,766
77,849
75,095
78,581
75,457
77,744
75,132
78,142
75,650
77,944
75,718
78,136
75,434
6,082
25
6,966
84
5,824
75
2,624
148
2,554
199
2,920
204
2,480
132
2,347
145
2,158
69
2,562
140
29 Banks 9
226,887
248,893
275,589
302,283
319,013
314,433
325,392'
349,605
339,698
335,753
30 B a n k s ' o w n liabilities
31
Unaffiliated foreign b a n k s
32
Demand deposits
33
Time deposits1
34
Other2
35
O w n foreign offices3
205,347
60,236
8,759
37,439
14,038
145,111
225,368
74,722
10,556
47,095
17,071
150,646
252,723
79,341
10.271
49,510
19,561
173,381
260,775
81,325
9,306
52,132
19,887
179,450
276,511
88,361
9,254
57,412
21,694
188,150
271,790
87,648
9,714
55,601
22,333
184,142
282,785'
91,067'
11,626
57,515'
21,927'
191,718
309,792
101,010
10,301
64,480
26,229
208,782
296.899
92,424
10,433
58,149
23,842
204,475
293,971
95,796
10,097
61,637
24,063
198,174
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
Other negotiable and readily transferable
38
instruments6
Other
39
21,540
10,178
23,525
11,448
22.866
9,832
41.508
10,543
42,502
10,635
42,643
10,601
42,607'
10,491
39,812
9,962
42,799
9,821
41,782
10,486
7,485
3,877
7,236
4,841
6,040
6,994
5,871
25,095
5,803
26,064
5,600
26,442
5,550
26,566'
5,513
24,338
5.542
27,436
4,340
26,956
4 0 Other foreigners
56,887
67,894
74,331
78,959
79,236
79,911
80,037'
80,411
78,008
77,489
41 B a n k s ' o w n liabilities
Demand deposits
42
Time deposits
43
44
Other2
49,680
6,577
42,290
813
60,477
6,938
52,678
861
64,892
8,673
54,752
1,467
67,233
9,1%
56.387
1,651
67,333
10,018
55,664
1,651
67,472
10,000
55,620
1,852
67,129'
10,824
54,533
1,772'
66,830
11,019
54,059
1,752
65,916
10,400
53,435
2,081
65,780
10,672
52,678
2,430
7,207
3,686
7,417
4,029
9,439
4,314
11,726
4,149
11,903
4,519
12,439
4,939
12,908
4,465
13,580
4,387
12,092
3,643
11,710
3,563
3,038
483
3,021
367
4,636
489
6,064
1,514
5,846
1,537
5,968
1,532
6,209
2,234
7,074
2,120
6,397
2,052
5,976
2,170
10,346
10,476
9,845
6,569
6,584
6,759
6,609
7,343
7,189
7,668
7 B a n k s ' c u s t o d y liabilities 4
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 5
9
Other negotiable and readily transferable
instruments6
Other
10
45 B a n k s ' c u s t o d y liabilities 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
Other negotiable and readily transferable
47
instruments6
Other
48
49 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 of
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
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 of d e p o s i t , w h i c h a r e i n c l u d e d in
" O t h e r negotiable and readily transferable 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 of C o n d i t i o n " filed w i t h b a n k
regulatory agencies. Agencies, 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 office 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 o r 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 office o r 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 of t h e 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 o r 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 of 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 of f o r e i g n c o u n t r i e s .
6. P r i n c i p a l l y 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
c e r t i f i c a t e s of d e p o s i t .
7. P r i n c i p a l l y 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 Inter-American and Asian D e v e l o p m e n t Banks.
8. F o r e i g n c e n t r a l 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 t h e B a n k f o r
International Settlements.
9. E x c l u d e s c e n t r a l b a n k s , w h i c h a r e i n c l u d e d in " O f f i c i a l i n s t i t u t i o n s . "
Bank-Reported
3.17
Data
A59
Continued
1986
Area and country
1983
1984
1987
1985
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.''
1 Total
369,607
407,306
435,726
487,914'
506,104'
501,095'
512,653'
537,778'
525,220
521,757
2 Foreign countries
363,649
402,852
429,905
482,662'
503,066'
497,193'
508,338'
532,953'
519,957
516,989
138,072
585
2,709
466
531
9,441
3,599
520
8,462
4,290
1,673
373
1,603
1,799
32,246
467
60,683
562
7,403
65
596
153,145
615
4,114
438
418
12,701
3,358
699
10,762
4,731
1,548
597
2,082
1,676
31,740
584
68,671
602
7,192
79
537
164,114
693
5,243
513
496
15,541
4,835
666
9,667
4,212
948
652
2,114
1,422
29,020
429
76,728
673
9,635
105
523
166,949'
1,035
5,114
643
365
21,469
6,062
570
9,269
4,495
542
791
1,979
944
29,014'
285
79,964'
482
3,342'
32
553
173,702'
1,073
6,165
483
406
21,339
5,609'
623
8,836
4,952
538'
758
2,082
1,253'
29,177'
448
85,96C
562
2,809'
84
545
173,578'
972'
6,07(y
478
606
21,243'
6,624
646
8,807
4,858'
654
738
2,297
1,016
29,695'
401
84,308'
515
3,141'
25
484
176,077'
1,197
6,863
576
448
21,917'
5,856
755
9,304
4,410
512
685
2,197
1,301
30,406
418
84,913'
544
3,308
16
452
180,521'
1,186
6,788'
485
580
22,849
5,688'
706
10,866'
5,558
745
700
2,393
889
31,239
454
85,336'
631'
2,705'
23
702
178,943
978
6,754
451
565
21,392
6,573
749
9,379
5,179
680
658
2,243
908
30,020
575
87,748
554
2,981
21
536
180,641
944
7,526
520
811
22,670
5,587
749
8,411
5,277
554
709
2,345
1,087
28,374
659
89,797
565
3,418
23
615
3 Europe
4
Austria
Belgium-Luxembourg
5
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
11
Italy
1?
Netherlands
13
Norway
14
Portugal
15
Spain
16
Sweden
17
Switzerland
18
Turkey
19
United Kingdom
20
Yugoslavia
21
Other Western Europe 1
17
U.S.S.R
23
Other Eastern E u r o p e 2
24 Canada
75 Latin America and Caribbean
26
Argentina
27
Bahamas
78
Bermuda
79
Brazil
30
British West Indies
31
Chile
37
Colombia
33
Cuba
Ecuador
34
35
Guatemala
36
Jamaica
37
Mexico
38
Netherlands Antilles
39
Panama
40
Peru
41
Uruguay
47
Venezuela
Other Latin America and Caribbean
43
44
45
46
47
48
49
50
51
57
53
54
55
56
57
58
59
60
61
67
63
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Japan
Philippines
Thailand
Middle-East oil-exporting countries 3
Other Asia
Morocco
South Africa
Oil-exporting countries 4
Other Africa
64 Other countries
65
Australia
All other
66
16,026
16,059
17,427
23,933
24,150
24,340
25,753
26,256
26,077
25,106
140,088
4,038
55,818
2,266
3,168
34,545
1,842
1,689
8
1,047
788
109
10,392
3,879
5,924
1,166
1,244
8,632
3,535
153,381
4,394
56,897
2,370
5,275
36,773
2,001
2,514
10
1,092
896
183
12,303
4,220
6,951
1,266
1,394
10,545
4,297
167,856
6,032
57,657
2,765
5,373
42,674
2,049
3,104
11
1,239
1,071
122
14,060
4,875
7,514
1,167
1,552
11,922
4,668
188,349'
6,096
67,044
2,248
5,168
56,372'
2,139
3,315
8
1,233
1,140
177
13,609
4,383
6,392
1,149
1,636
11,560
4,681'
197,526'
6,069
69,173'
2,209'
5,359
62,141'
2,426
3,373
7
1,261'
1,129
187
13,137
5,045'
6,415
1,256
1,589
11,709
5,041'
191,916'
5,718'
64,106
1,918
8,895'
59,143'
2,398
3,775
6
1,217'
1,126
151
13,209'
4,645
6,524'
1,167
1,608
11,392
4,917
189,773'
5,202
62,613
2,549
4,684
61,855'
2,325
3,873
6
1,199
1,129
153
13,488
4,706
6,729
1,146
1,610
11,592
4,914
208,057'
4,754
72,347'
2,965
4,321
70,918'
2,053'
4,281
7
1,235
1,122
136
13,631
4,903'
6,865'
1,163'
1,537
10,452'
5,368'
195,362
4,503
64,918
2,362
3,815
66,390
2,209
4,299
6
1,049
1,124
149
13,486
5,582
7,376
1,110
1,619
10,522
4,845
191,002
4,668
60,643
4,300
3,850
65,440
2,046
4,267
7
1,118
1,080
145
13,362
5,627
6,488
1,130
1,579
10,288
4,962
58,570
71,187
72,280
96,048'
100,097'
99,360'
107,054'
108.973'
112,222
113,515
249
4,051
6,657
464
997
1,722
18,079
1,648
1,234
747
12,976
9,748
1,153
4,990
6,581
507
1,033
1,268
21,640
1,730
1,383
1,257
16,804
12,841
1,607
7,786
8,067
712
1,466
1,601
23,077
1,665
1,140
1,358
14,523
9,276
1,185
15,608
9,026
685
1,474
1,686
38,248'
1,251
1,458
1,080
13,227
11,121
1,940'
16,132'
9,349
651
1,611
2,109
39,986'
1,282
1,400
1,100
13,056
11,481
1,585
16,534'
8,663'
755
1,530
1,986
41,340'
1,446
1,707
1,115
12,045
10,654
1,450
17,540
9,347
701
1,528
2,380
46,184'
1,128
1,720
1,083
13,010
10,984
1,476
18,903
9,517'
673
1,548
1,890
47,436'
1,146
1,865
1,120
12,356
11,042
2,045
19,554
9,532
664
1,411
1,763
49,997
1,063
1,809
1,283
12,329
10,770
1,680
20,856
9,538
686
1,591
1,887
50,955
1,022
1,776
1,224
12,158
10,142
2,827
671
84
449
87
620
917
3,396
647
118
328
153
1,189
961
4,883
1,363
163
388
163
1,494
1,312
4,227
1,088
82
438
60
1,371
1,189
4,166'
843
91
325'
80
1,625
1,203
3,973
640
86
347
79
1,623
1,199
4,018
710
84
264
96
1,593
1,272
4,018'
706
92
271'
74
1,518
1,358
3,663
608
74
341
54
1,336
1,249
3,500
791
76
200
42
1,156
1,233
8,067
7,857
210
5,684
5,300
384
3,347
2,779
568
3,155
2,459
696
3,425
2,785
639'
4,026
2,943
1,083
5,662
4,286
1,376
5,128'
4,205'
922'
3,690
2,692
997
3,226
2,459
767
5,957
5,273
419
265
4,454
3,747
587
120
5,821
4,806
894
121
5,253
4,147
916
190
3,038
1,759
972
307
3,902
2,748
957
197
4,315
3,232
927
157
4,826
3,512'
1,033'
281
5,263
3,958
960
346
4,768
3,694
762
312
67 Nonmonetary international and regional
68
69
70
International
Latin American regional
Other regional 5
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern E u r o p e a n countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, H u n g a r y , Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, O m a n , Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Asian, African, Middle Eastern, and E u r o p e a n regional organizations,
except the Bank for International Settlements, which is included in " O t h e r
Western E u r o p e . "
A60
3.18
International Statistics • June 1987
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1986
Area and country
1983
1984
1987
1985
Aug.
Sept.
Oct.
Nov.
Dec.'
Jan.
Feb.P
1 Total
391,312
400,162
401,608
403,748'
416,601'
407,832'
418,485'
444,458'
420,621
409,799
2 Foreign countries
391,148
399,363
400,577
403,328'
416,401'
407,460'
418,313'
441,475'
420,559
409,622
91,927
401
5,639
1,275
1,044
8,766
1,284
476
9,018
1,267
690
1,114
3,573
3,358
1,863
812
47,364
1,718
477
192
1,598
99,014
433
4,794
648
898
9,157
1,306
817
9,119
1,356
675
1,243
2,884
2,230
2,123
1,130
56,185
1,886
596
142
1,389
106,413
598
5,772
706
823
9,124
1,267
991
8,848
1,258
706
1,058
1,908
2,219
3,171
1,200
62,566
1,964
998
130
1,107
100,323
694
6,990
783
964
9,483
1,181
660
5,981
1,254
698
757
1,757
2,3%
3,306
1,649
57,856
1,852
508
528
1,026
106,755'
654
6,574
807
1,085
10,209
1,609'
706
6,795'
2,040'
732
734
1,995
2,487
2,665
1,586
62,017'
1,871
791
405
992r
104,647'
595'
7,712'
796
1,111
9,600'
1,432'
626
7,713'
2,592'
711
699
1,922
2,375
2,832'
1,612
58,248'
1,886
799
296
1,090'
107,047'
748
8,149
764
1,176
9,574'
1,769'
792
8,391'
2,427'
712
682
1,722
2,343
3,574
1,539'
59,120'
1,813'
600
225
927
107,549
738
7,511
700
947
11,401
1,826
648
9,051
3,314
654
706
1,459
1,945
3,049
1,541
58,380
1,833
556
345
944
100,815
654
7,571
667
797
9,086
2,277
635
7,916
2,087
741
675
1,479
2,280
2,622
1,469
55,775
1,773
536
396
1,382
102,363
559
8,882
630
1,050
9,992
1,736
628
7,341
2,064
766
679
1,637
2,446
2,397
1,450
56,288
1,766
491
557
1,000
3 Europe
4
Austria
5
Belgium-Luxembourg
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
Italy
11
12
Netherlands
Norway
13
14
Portugal
Spain
15
16
Sweden
Switzerland
17
Turkey
18
19
United Kingdom
Yugoslavia
20
21
Other Western Europe 1
22
U.S.S.R
23
Other Eastern Europe 2
16,341
16,109
16,482
19,401
18,112
19,532
20,338
20,957
20,749
19,170
205,491
11,749
59,633
566
24,667
35,527
6,072
3,745
0
2,307
129
215
34,802
1,154
7,848
2,536
977
11,287
2,277
207,862
11,050
58,009
592
26,315
38,205
6,839
3,499
0
2,420
158
252
34,885
1,350
7,707
2,384
1,088
11,017
2,091
202,674
11,462
58,258
499
25,283
38,881
6,603
3,249
0
2,390
194
224
31,799
1,340
6,645
1,947
960
10,871
2,067
197,867'
12,009
55,453'
373
24,762
39,836
6,449
2,642
0
2,375
127
209
30,839
1,060
5,862
1,677
936
11,289
1,969
205,584'
12,119
61,705
320
24,856
40,364
6,489
2,633
0
2,387
135
224
31,037
1,133
6,377
1,600
1,051
11,177
1,977
196,861'
12,243
53,557
452
24,74C
39,981'
6,514
2,674
0
2,420
122
209
31,061
%7'
6,094
1,625
930
11,185'
2,086
1%,768'
12,017
54,196'
447
25,882'
39,694'
6,526
2,665
1
2,395
138
216
30,659
931'
5,354
1,618
943
11,0^
2,067'
208,902
12,079
59,877
418
25,586
46,305
6,533
2,819
0
2,430
140
198
30,490
1,039
5,423
1,637
940
11,052
1,937
195,091
12,103
51,959
415
25,685
41,088
6,462
2,801
2
2,406
133
199
30,157
960
5,270
1,618
937
10,992
1,903
195,234
13,533
51,117
380
25,857
40,729
6,508
2,743
1
2,403
145
199
29,770
1,072
5,150
1,610
932
11,145
1,940
67,837
66,316
66,212
77,811
78,073
78,631'
86,236'
96,148
95,982
85,299
292
1,908
8,489
330
805
1,832
30,354
9,943
2,107
1,219
4,954
5,603
710
1,849
7,293
425
724
2,088
29,066
9,285
2,555
1,125
5,044
6,152
639
1,535
6,7%
450
698
1,991
31,249
9,226
2,224
845
4,298
6,260
526
1,637
8,632
375
729
1,541
43,327
8,495
2,128
736
2,764
6,921
758
1,903
8,883
355
689
1,622
42,751
7,846
2,148
636
3,724
6,758
758
1,528
8,337
316
694
1,630
45,240'
7,023
2,071
611
3,3%
7,027
793
1,812
7,575'
327
722
1,615
53,351'
6,533'
1,972
595
3,778
7,162
787
2,675
8,250
321
718
1,645
59,852
7,155
2,202
577
4,122
7,845
983
2,617
8,443
333
699
1,611
58,315
6,783
2,141
521
5,483
8,053
873
2,891
9,340
325
679
1,555
48,918
6,188
2,108
556
4,944
6,922
57 Africa
58
Egypt
59
Morocco
South Africa
60
61
Zaire
Oil-exporting countries 5
62
Other
63
6,654
747
440
2,634
33
1,073
1,727
6,615
728
583
2,795
18
842
1,649
5,407
721
575
1,942
20
630
1,520
4,693
633
617
1,683
21
445
1,294
4,651
593
636
1,607
33
512'
1,270'
4,531
577
621
1,549
35
545
1,203
4,737
560
621
1,586
27
690
1,253
4,621
567
598
1,531
28
688
1,208
4,599
577
590
1,516
36
725
1,156
4,627
592
585
1,498
42
742
1,168
64 Other countries
65
Australia
All other
66
2,898
2,256
642
3,447
2,769
678
3,390
2,413
978
3,232
2,293
940
3,225
2,221
1,004
3,259
2,143
1,115
3,187
1,980'
1,207'
3,297
1,952
1,345
3,323
2,081
1,242
2,929
1,958
971
164
800
1,030
420
200
372
2,983
62
178
24 Canada
25 Latin America and Caribbean
26
Argentina
27
Bahamas
Bermuda
28
29
Brazil
30
British West Indies
31
Chile
32
Colombia
33
Cuba
34
Ecuador
Guatemala 3
35
36
Jamaica 3
37
Mexico
Netherlands Antilles
38
39
Panama
Peru
40
41
Uruguay
42
Venezuela
Other Latin America and Caribbean
43
44
45
46
47
48
49
50
51
52
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle East oil-exporting countries 4
Other Asia
67 Nonmonetary international and regional
organizations 6
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in " O t h e r Latin America and C a r i b b e a n " through March 1978.
171
4. Comprises Bahrain, Iran, Iraq, Kuwait, O m a n , Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in
" O t h e r Western E u r o p e . "
Nonbank-Reported
3.19
Data
BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
Millions of dollars, end of period
1986
T y p e of claim
1983
1984
Aug.
1 Total
2
3
4
5
6
7
8
Banks' own claims on foreigners
Foreign public b o r r o w e r s
O w n foreign offices1
Unaffiliated foreign b a n k s
Deposits
Other
All o t h e r f o r e i g n e r s
9 C l a i m s of b a n k s ' d o m e s t i c c u s t o m e r s 2
..
1987
1985
Oct.'
Nov.'
407,832
60,745
182,548
117,865
53,546
64,319
46,675
418,485
60,785
189,732
120,485
53,300
67,185
47,483
Sept.'
448,375
Dec.'
426,215
433,078
430,489
391,312
57,569
146,393
123,837
47,126
76,711
63,514
400,162
62,237
156,216
124,932
49,226
75,706
56,777
401,608
60,507
174,261
116,654
48,372
68,282
50,185
34,903
2,969
32,916
3,380
28,881
3,335
31,774
3,668
33,971
4,413
26,064
23,805
19,332
22,337
24,044
5,870
5,732
6,214
5,769
5,514
37,715
37,103
28,487
27,082
25,606
46,337
40,714
37,780
403,748'
60,046
182,158'
115,922
52,410
63,512
45,621
416,601
60,603
193,350
116,837
52,178
64,660
45,811
Jan.
Feb.P
478,429
444,458
63,582
212,023
122,819
57,349
65,471
46,034
420,621
61,365
192,355
121,049
54,228
66,821
45,853
409,799
60,945
183,532
120,447
55,307
65,139
44,875
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 liability 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 , r e ported 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: i n c l u d e s a m o u n t s d u e f r o m 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 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 office o r 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 , o r w h o l l y o w n e d s u b s i d i a r i e s of h e a d office o r
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 in t h e U n i t e d
States that represent claims on foreigners held by reporting b a n k s for the account
of t h e i r d o m e s t i c c u s t o m e r s .
3.20
48,653'
42,771
43,753
44,772
43,358
45,935
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 .
4. I n c l u d e s d e m a n d a n d t i m e d e p o s i t s a n d n e g o t i a b l e a n d n o n n e g o t i a b l e
c e r t i f i c a t e s of d e p o s i t d e n o m i n a t e d in U . S . d o l l a r s 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 1979 BULLETIN,
p . 550.
NOTE. B e g i n n i n g A p r i l 1978, 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 o f b a n k s ' o w n domestic 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
1986
Maturity; by borrower and area
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
By
borrower
Maturity of 1 y e a r or less1
Foreign public b o r r o w e r s
All o t h e r f o r e i g n e r s
M a t u r i t y of o v e r 1 y e a r 1
Foreign public b o r r o w e r s
All o t h e r f o r e i g n e r s
By area
Maturity of 1 y e a r or less1
Europe
Canada
Latin America and Caribbean
Africa
All o t h e r 2
M a t u r i t y of o v e r 1 y e a r 1
14
Europe
Canada
15
16
Latin America and Caribbean
17
18
Africa
All o t h e r 2
19
1. R e m a i n i n g t i m e t o m a t u r i t y .
1983
1984
n.a.
1985
Mar/
June'
Sept/
Dec.
243,715
243,952
227,903
221,294
222,597
224,693
229,922
176,158
24,039
152,120
67,557
32,521
35,036
167,858
23,912
143,947
76,094
38,695
37,399
160,824
26,302
134,522
67,078
34,512
32,567
152,782
23,883
128,900
68,512
36,875
31,637
152,589
23,171
129,418
70,008
37,365
32,643
155,116
22,527
132,589
69,577
38,189
31,388
158,437
24,542
133,895
71,485
39,651
31,835
56,117
6,211
73,660
34,403
4,199
1,569
58,498
6,028
62,791
33,504
4,442
2,593
56,585
6,401
63,328
27,966
3,753
2,791
53,432
6,013
59,550
28,013
3,331
2,443
57,948
6,074
57,397
25,802
3,297
2,073
59,383
6,160
58,191
26,474
3,071
1,838
61,042
5,747
55,424
29,343
2,854
4,027
13,576
1,857
43,888
4,850
2,286
1,101
9,605
1,882
56,144
5,323
2,033
1,107
7,634
1,805
50,674
4,502
1,538
926
7,812
1,925
52,167
4,251
1,634
722
7,934
2,256
53,572
4,034
1,497
714
7,297
1,930
54,093
3,976
1,479
802
6,791
1,951
56,334
4,084
1,534
790
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 1987
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 12
3.21
Billions of dollars, end of period
1985
Area or country
1 Total
1982
1983
1986
1984
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
Dec.P
436.1
433.9
405.7
405.5
396.8
394.9
391.9
394.4
391.0
391.3
395.5
179.6
13.1
17.1
12.7
10.3
3.6
5.0
5.0
72.1
10.4
30.2
167.8
12.4
16.2
11.3
11.4
3.5
5.1
4.3
65.3
8.3
29.9
148.1
8.7
14.1
9.0
10.1
3.9
3.2
3.9
60.3
7.9
27.1
153.0
9.3
14.5
8.9
10.0
3.8
3.1
4.2
65.4
9.1
24.7
146.7
8.9
13.5
9.6
8.6
3.7
2.9
4.0
65.7
8.1
21.7
152.0
9.5
14.8
9.8
8.4
3.4
3.1
4.1
67.1
7.6
24.3
148.5
9.3
12.3
10.5
9.8
3.7
2.8
4.4
64.6
7.0
24.2
156.3
8.3
13.8
11.2
8.5
3.5
2.9
5.4
68.5
6.2
28.1
159.9
9.0
15.1
11.5
9.3
3.4
2.9
5.6
68.9
6.8
27.4
158.9
8.5
14.6
12.5
8.1
3.9
2.7
4.8
70.0
6.1
27.7
159.6
8.5
13.8
11.2
9.2
4.6
2.4
5.5
72.0
5.4
26.9
13 Other developed countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia
33.5
1.9
2.4
2.2
3.0
3.3
1.5
7.5
1.4
2.3
3.7
4.3
36.0
1.9
3.4
2.4
2.8
3.3
1.5
7.1
1.7
1.8
4.7
5.4
33.6
1.6
2.2
1.9
2.9
3.0
1.4
6.5
1.9
1.7
4.5
6.0
32.8
1.6
2.1
1.8
2.9
2.9
1.4
6.4
1.9
1.7
4.2
6.1
32.3
1.6
1.9
1.8
2.9
2.9
1.3
5.9
2.0
1.8
3.9
6.2
32.0
1.7
2.1
1.8
2.8
3.4
1.4
6.1
2.1
1.7
3.3
5.6
30.4
1.6
2.4
1.6
2.6
2.9
1.3
5.8
1.9
2.0
3.2
5.0
31.6
1.6
2.5
1.9
2.5
2.7
1.1
6.4
2.3
2.4
3.2
4.9
30.6
1.7
2.4
1.6
2.6
3.0
1.0
6.4
2.5
2.1
3.1
4.2
29.4
1.7
2.3
1.7
2.3
2.7
1.0
6.7
2.1
1.6
3.1
4.1
26.2
1.7
1.7
1.4
2.3
2.4
.9
5.8
2.0
1.5
3.1
3.5
25 OPEC countries 3
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
26.9
2.2
10.5
2.9
8.5
2.8
28.4
2.2
9.9
3.4
9.8
3.0
24.9
2.2
9.3
3.3
7.9
2.3
24.5
2.2
9.3
3.3
7.4
2.3
22.8
2.2
9.3
3.1
6.1
2.2
22.7
2.2
9.0
3.1
6.2
2.3
21.6
2.1
8.9
3.0
5.5
2.0
20.7
2.2
8.7
3.3
4.8
1.8
20.6
2.1
8.8
3.0
5.0
1.7
20.0
2.1
8.7
2.8
4.6
1.7
19.6
2.2
8.6
2.6
4.5
1.7
2 G-10 countries and Switzerland
3
Belgium-Luxembourg
4
France
5
Germany
6
Italy
/
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan
31 Non-OPEC developing countries
106.5
110.8
111.8
110.8
110.0
107.8
105.1
103.5
101.5
99.7
100.1
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other Latin America
8.9
22.9
6.3
3.1
24.2
2.6
4.0
9.5
23.1
6.4
3.2
25.8
2.4
4.2
8.7
26.3
7.0
2.9
25.7
2.2
3.9
8.6
26.4
7.0
2.8
25.5
2.2
3.8
8.6
26.6
6.9
2.7
25.3
2.1
3.7
8.9
25.5
6.6
2.6
24.4
1.9
3.5
8.9
25.6
7.0
2.7
24.2
1.8
3.4
8.9
25.6
7.0
2.3
24.0
1.7
3.3
9.2
25.3
7.1
2.2
23.8
1.6
3.3
9.3
25.2
7.1
2.0
23.8
1.5
3.3
9.5
25.3
7.1
2.1
23.9
1.4
3.7
39
40
41
42
43
44
45
46
47
Asia
China
Mainland
Taiwan
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
5.3
.s
2.3
10.7
2.1
6.3
1.6
1.1
.3
5.2
.9
1.9
11.2
2.8
6.1
2.2
1.0
.7
5.1
.9
1.8
10.6
2.7
6.0
1.8
1.1
.7
5.3
.9
1.7
10.4
2.7
6.1
1.7
1.1
.3
5.5
.9
2.3
10.0
2.8
6.0
1.6
.9
1.1
5.1
1.1
1.5
10.4
2.7
6.0
1.7r
.9
.5
4.5
1.2
1.6
9.4
2.4
5.7
1.4
1.0
.6
4.3
1.2
1.3
9.5
2.2
5.6
1.3
.9
.6
3.7
1.3
1.6
8.7
2.0
5.7
1.1
.8
.6
4.3
1.3
1.4
7.3
2.1
5.4
1.0
.7
.4
4.9
1.2
1.6
6.8
2.1
5.4
.9
.7
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 4
1.2
.7
.1
2.4
1.5
.8
.1
2.3
1.2
.8
.1
2.1
1.1
.8
.1
2.2
1.0
.8
.1
2.0
1.0
.9
.1
2.0
1.0
.9
.1
1.9
.9
.9
.1
1.9
.9
.9
.1
1.7
.7
.9
.1
1.6
.7
.9
.1
1.6
52 Eastern Europe
53
U.S.S.R
54
Yugoslavia
55
Other
6.2
.3
2.2
3.7
5.3
.2
2.4
2.8
4.4
.1
2.3
2.0
4.3
.2
2.2
1.9
4.3
.3
2.2
1.8
4.6
.2
2.4
1.9
4.2
.1
2.2
1.8
4.0
.3
2.0
1.7
4.0
.3
2.0
1.7
3.4
.1
1.9
1.4
4.0
.4
1.7
1.9
56 Olfshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama 5
62
Lebanon
63
Hong Kong
64
Singapore
65
Others 6
66.0
19.0
.9
12.8
3.3
7.5
.1
13.3
9.1
.0
68.9
21.7
.9
12.2
4.2
5.8
.1
13.8
10.3
.0
65.6
21.5
.9
11.8
3.4
6.7
.1
11.4
9.8
.0
63.2
20.1
.7
12.3
3.3
5.5
.1
11.4
9.9
.0
63.9
21.1
.9
12.1
3.2
5.4
.1
11.4
9.7
.0
58.8
16.6
.8
12.3
2.3
6.1
.0
11.4
9.4
.0
65.4
21.4
.7
13.4
2.3
6.0
.1
11.5
9.9
.0
61.6
21.5
.7
11.3
2.3
5.9
.1
11.4
8.4
.0
57.2
17.3
.4
12.8
2.3
5.5
.1
9.4
9.3
.0
62.6
20.0
.4
13.2
1.9
6.8
.1
10.4
9.7
.0
65.6
22.6
.7
14.6
1.9
5.1
.1
11.2
9.4
.0
66 Miscellaneous and unallocated 7
17.5
16.8
17.3
16.9
16.9
17.3
16.9
16.7
17.2
17.5
20.3
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
3. Besides the Organization of Petroleum Exporting Countries shown individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well
as Bahrain and Oman (not formally members of OPEC).
4. Excludes Liberia.
5. Includes Canal Zone beginning December 1979.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.
Nonbank-Reported
3.22
Data
A63
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States'
Millions of dollars, end of period
1986
1985
Type, and area or country
982
1984
1983
Mar.'
Dec.
June'
Sept.
Dec.^
1 Total
27,512
25,346
29,357
27,741'
26,301
24,698
24,460
25,336
2 Payable in dollars
3 Payable in foreign currencies
24,280
3,232
22,233
3,113
26,389
2,968
24,352
3,389'
22,544
3,757
21,040
3,657
20,633
3,827
21,568
3,768
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
11,066
8,858
2,208
10,572
8,700
1,872
14,509
12,553
1,955
13,516'
11,313
2,203'
12,971
10,705
2,267
11,578
9,515
2,063
11,700
9,418
2,281
12,070
9,705
2,365
7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities . .
16,446
9,438
7,008
14,774
7,765
7,009
14,849
7,005
7,843
14,225
6,685
7,540
13,329
5,618
7,711
13,120
5,472
7,648
12,760
5,592
7,168
13,267
6,306
6,961
15,423
1.023
13,533
1,241
13,836
1,013
13,039
1,186
11,839
1,490
11,525
1,595
11,214
1,546
11,863
1,404
6,501
505
783
467
711
792
3,102
5,742
302
843
502
621
486
2,839
6,728
471
995
489
590
569
3,297
7,616
329
857
434
745
676
4,254
7,460
338
851
388
630
692
4,217
7,022
288
686
280
635
561
4,274
7,254
322
501
319
708
692
4,272
7,851
245
729
372
701
714
4,790
10
11
12
13
14
15
16
17
18
19
Payable in dollars
Payable in foreign currencies
By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
746
764
863
839'
832
367
362
403
2,596
751
13
32
1,041
213
124
5,086
1,926
13
35
2,103
367
137
3,184
1,123
4
29
1,843
15
3
2,810
958
4
26
1,639
20
3
2,443
874
14
27
1,386
30
3
2,269
863
4
28
1.256
18
5
1,969
621
4
32
1,160
22
3
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,751
904
14
28
1,027
121
114
27
28
29
Asia
Japan
Middle East oil-exporting countries 2 .
1,039
715
169
1,424
991
170
1,777
1,209
155
1,815
1,198
82
1,824
1,217
78
1,685
1,214
43
1,790
1,354
3
1,767
1,352
8
30
Africa
17
0
19
0
14
0
12
0
12
0
12
0
4
2
1
1
12
27
41
50
32
49
21
79
3,831
52
598
468
346
367
1,027
3,245
62
437
427
268
241
732
4,001
48
438
622
245
257
1,095
4,074
62
453
607
364
379
976
3,925
66
382
546
545
261
957
3,826
58
358
561
586
284
864
4,337
75
369
628
613
360
1,086
4,422
99
314
693
493
384
1,279
31
32
33
34
35
36
37
38
39
40
Oil-exporting countries 3
All other 4
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
1,495
1,841
1,975
1,449
1,445
1,357
1,240
1,387
1,473
1
67
44
6
585
432
1,871
7
114
124
32
586
636
1,088
12
77
58
44
430
212
1,107
26
218
64
7
256
364
1,242
10
294
45
35
235
488
843
37
172
43
45
196
207
856
19
132
59
46
211
215
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,570
16
117
60
32
436
642
48
49
50
Asia
Japan
Middle East oil-exporting countries 2 - 5 .
8,144
1,226
5,503
6,741
1,247
4,178
5,285
1.256
2,372
6,046
1,799
2,829
5,384
2,039
2,171
5,075
2.100
1,787
4,781
2,114
1,490
5,018
2,046
1,668
51
52
Africa
Oil-exporting countries 3
753
277
553
167
588
233
587
238
486
148
567
215
578
176
622
197
53
All other 4
651
921
1,128
982
983
1,053
980
962
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
A64
3.23
International Statistics • June 1987
CLAIMS ON UNAFFILIATED FOREIGNERS
United States'
Reported by Nonbanking Business Enterprises in the
Millions of dollars, end of period
1985
Type, and area or country
1982
1983
1986
1984
Mar.
Dec.
June'
Sept.
Dec."
1 Total
28,725
34,911
29,901
28,437
31,383'
33,282
32,599
32,847
2 Payable in dollars
3 Payable in foreign currencies
26,085
2,640
31,815
3,0%
27,304
2,597
26,135
2,302
29,196'
2,187
31,100
2,182
30,123
2,475
30,244
2,603
By type
4 Financial claims
5
Deposits
6
Payable in dollars
7
Payable in foreign currencies
8
Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
17,684
13,058
12,628
430
4,626
2,979
1,647
23,780
18,496
17,993
503
5,284
3,328
1,956
19,254
14,621
14,202
420
4,633
3,190
1,442
18,451
15,204
14,589
615
3,248
2,213
1,035
21,996'
18,612'
18,155'
457
3,384'
2,291'
1,093
24,139
20,833
20,278
555
3,306
2,285
1,021
23,503
18,566
18,078
488
4,937
3,717
1,220
23,277
18,573
18,024
549
4,704
3,406
1,298
11 Commercial claims
12
Trade receivables
13
Advance payments and other claims
11,041
9,994
1,047
11,131
9,721
1,410
10,646
9,177
1,470
9,986
8,6%
1,290
9,387
8,087'
1,300'
9,142
7,802
1,341
9,0%
7,924
1,172
9,570
8,424
1,146
14
15
10,478
563
10,494
637
9,912
735
9,333
652
8,750
637
8,537
606
8,329
767
8,814
756
4,873
15
134
178
97
107
4,064
6,488
37
150
163
71
38
5,817
5,762
15
126
224
66
66
4,864
6,530
10
184
223
61
74
5,725
7,183'
10
217
174'
61
166
6,310'
9,626
11
257
148
17
177
8,799
9,548
67
418
129
44
138
8,525
8,466
41
131
86
87
134
7,736
16
17
18
19
20
21
22
Payable in dollars
Payable in foreign currencies
By area or country
Financial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
4,377
5,989
3,988
3,260
4,020'
4,429
3,817
4,119
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
7,546
3,279
32
62
3,255
274
139
10,234
4,771
102
53
4,206
293
134
8,216
3,306
6
100
4,043
215
125
7,841
2,698
6
78
4,571
180
48
10,073'
3,516'
2
77
6,034'
178
43
9,253
3,310
17
75
5,402
176
42
9,300
2,912
19
101
5,871
173
40
9,245
2,574
13
67
6,068
173
24
31
32
33
Asia
Japan
Middle East oil-exporting countries 2
698
153
15
764
297
4
%1
353
13
696
475
4
619'
350
2
723
499
2
673
387
2
1,335
1,003
11
34
35
Africa
Oil-exporting countries 3
158
48
147
55
210
85
103
29
87
27
89
25
84
18
85
26
31
159
117
21
14
20
81
27
3,826
151
474
357
350
360
811
3,670
135
459
349
334
317
809
3,801
165
440
374
335
271
1,063
3,533
175
426
346
284
284
898
3,390'
148
384
399'
221
247'
795'
3,304
131
391
418
230
228
674
3,344
123
412
397
183
232
830
3,530
129
386
429
199
213
822
36
37
38
39
40
41
42
43
All other 4
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
633
829
1,021
1,023
1,061'
%5
929
902
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,526
21
261
258
12
775
351
2,695
8
190
493
7
884
272
2,052
8
115
214
7
583
206
1,753
13
93
206
6
510
157
1,592'
27
82
217'
7
388
172
1,611
24
148
193
29
323
181
1,665
29
132
206
23
299
190
1,827
29
157
228
54
385
219
52
53
54
Asia
Japan
Middle East oil-exporting countries 2
3,050
1,047
751
3,063
1,114
737
3,073
1,191
668
2,982
1,016
638
2,609'
801
630
2,574
845
622
2,471
788
597
2,630
842
507
55
56
Africa
Oil-exporting countries 3
588
140
588
139
470
134
437
130
491
167
450
170
456
168
463
135
57
All other 4
417
286
229
257
244
237
231
218
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
Securities Holdings and Transactions
3.24
A65
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1987
1987
1986
T r a n s a c t i o n s , a n d a r e a or c o u n t r y
Jan.-Feb.
Sept.
Aug.
Oct.
Nov.
Dec.
Feb.?
Jan.
U . S . c o r p o r a t e securities
STOCKS
81,995
77,054
1 Foreign p u r c h a s e s
2 Foreign sales
148,134
129,436
38,364
33,617
12,045
10,617'
12,250'
10,991'
10,979
12,300
12,033
12,086
14,096'
12,320'
17,617
15,956
20,748
17,661
3 Net purchases, or sales ( - )
4,941
18,698
4,747
1,428'
1,259'
-1,322
-52
1,776'
1,661
3,087
4 Foreign countries
4,857
18,905
4,927
1,468'
1,304'
-1,179
-19
1,696'
1,741
3,186
2,057
-438
730
-123
-75
1,665
356
1,718
238
296
24
168
9,559
459
341
936
1,560
4,826
807
3,029
975
3,865
297
373
2,819
586
78
144
200
1,616
-16
639
-39
1,247
14
263
824
105
-42
50
44
521
95'
108
78
376
-1
-13
573'
30
9
36
71'
448'
106'
147'
58
346
-13
86
-1,124
-92
-104
-19
-405
-481
-115
154
-51
16
39
-97
-485
-69
-3
-50
-236
-114
41
367
-92
80
23
48
557'
113
24
14
47
363'
102
220'
267'
450
17
84
1,061
140
62
53
101
647
100
308
136
88
-1
49
1,758
446
16
91
99
969
-116
331
-175
1,159
15
214
84
-208
-180
-40
-45
-143
-34
80
-80
-100
86,587
42,455
122,743
71,840
17,329
12,630
9,426'
5,354'
9,752'
5,539'
9,277
6,105
11,879
7,733
9,308
7,178
8,022
5,453
5
6
7
8
9
10
11
1?
13
14
15
16
Europe
France
Germany
Netherlands
Switzerland
United K i n g d o m
Canada
Latin A m e r i c a and C a r i b b e a n
Middle E a s t 1
Other Asia
Africa
Other c o u n t r i e s
17 Nonmonetary international and
regional organizations
BONDS2
18 Foreign p u r c h a s e s
19 Foreign sales
10,235'
5,597'
20 Net purchases, or sales (—)
44,132
50,903
4,699
4,072
4,638'
4,213'
3,172
4,147
2,130
2,569
21 Foreign countries
44,227
50,056
4,401
4,077
4,934'
4,455'
2,853
4,251
2,218
2,183
40,047
210
2,001
222
3,987
32,762
190
498
-2,648
6,091
11
38
39,307
388
-251
387
4,529
33,899
548
1,468
-2,961
11,539
16
139
2,781
23
-69
-36
144
2,574
261
200
-196
1,386
2
-32
2,484
20
-81
98
564
1,917
110
160
-40
1,329
5
29
3,445'
-29
26
51
30
3,468'
2
64
-169
1,59C
6
-4
3,475
0
82
-55
265
3,177
88
101
-33
817'
-3
11
2,100
328
-108
113
204
1,416
154
66
-355
902
3
-15
3,074
32
-19
52
-117
2,770
153
102
-258
1,174
3
3
1,375
6
-213
-7
66
1,392
-103
103
-57
917
0
-16
1,406
17
145
-29
78
1,182
364
98
-139
469
1
-16
-95
847
298
-296
-243'
319
-104
-88
386
n
73
74
75
76
77
78
79
30
31
37
33
Europe
France
Germany
Netherlands
Switzerland
United K i n g d o m
Canada
Latin A m e r i c a and C a r i b b e a n
Middle E a s t 1
Other Asia
Africa
Other c o u n t r i e s
34 Nonmonetary international and
regional organizations
-4
Foreign securities
R
35 Stocks, net p u r c h a s e s , o r sales ( - )
Foreign p u r c h a s e s
36
Foreign sales
37
-3,941
20,861
24,803'
-1,452
50,292
51,744
-624
12,254
12,879
-92'
4,627'
4,718'
679'
5,120'
4,440'
1,311'
6,426'
5,115'
391
4,190
3,799
65'
4,709
4,644'
-161
5,008
5,169
-463
7,247
7,710
38 B o n d s , n e t p u r c h a s e s , or sales ( - )
39
Foreign p u r c h a s e s
Foreign sales
40
-3,999
81,216
85,214
-3,098
166,700
169,798
136
27,227
27,092
1,211'
14,124'
12,913'
-2,34C
15,239'
17,578'
2,125'
16,274'
14,149'
-683'
12,663'
13,346'
-441'
16,316'
16,756'
360
11,425
11,065
-225
15,802
16,026
41 Net purchases, or sales ( - ) , of stocks and bonds . . . .
—7,940'
-4,550
-489
1,1W
-1,660'
3,436'
-292'
-376'
199
-688
42 Foreign countries
-9,ooy
-5,665
-740
1,064'
-1,598'
3,117'
-294'
-825'
57
-797
43
44
45
46
47
48
-9,887
-1,686
1,797'
659
75
38
-17,675
-875
3,469
11,342
52
-1,977
-1,426
-1,019
513
1,103
5
84
-669'
263
127
1,330'
1
12'
-3,390'
109'
351
1,764'
3
-434'
-657'
94'
502
3,237'
-1
-59'
-1,010'
-106
16
820
4
-19'
-1,369'
-264
203'
1,511
3
-909'
-147
-396
389
168
4
39
-1,279
-622
124
935
0
45
1,115
251
55'
143
109
Europe
Canada
Latin A m e r i c a a n d C a r i b b e a n
Africa
Other c o u n t r i e s
49 Nonmonetary international and
regional organizations
1,063
1. C o m p r i s e s oil-exporting c o u n t r i e s as follows: B a h r a i n , Iran, Iraq, K u w a i t ,
O m a n , Q a t a r , Saudi A r a b i a , a n d United A r a b E m i r a t e s (Trucial States).
2. Includes state a n d local g o v e r n m e n t securities, and securities of U . S .
g o v e r n m e n t agencies and c o r p o r a t i o n s . A l s o includes issues of n e w d e b t securi-
-63
320'
2
449
ties sold abroad by U . S . c o r p o r a t i o n s organized t o finance direct i n v e s t m e n t s
abroad.
A66
3.25
International Statistics • June 1987
MARKETABLE U.S. TREASURY BONDS AND NOTES
Foreign Transactions
Millions of dollars
1987
C o u n t r y or a r e a
1986
1987
1986'
1985
Jan.Feb.
Aug.'
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.''
T r a n s a c t i o n s , net p u r c h a s e s or sales ( - ) during period 1
1 Estimated total 2
29,208
24,173
7,574
744
5,105 r
3,032'
-2,259'
991'
-152
-7,726
2 Foreign countries 2
28.768
25,277
2,366
2.207
4.062 r
2,717'
-301'
-488'
584
1,781
4,303
476
1,917
269
976
773
-1,810
1.701
0
-188
16.851
349
7.531
1,283
132
310
4,648
2,598
0
881
3,076
270
1,698
-324
141
408
1.171
-292
3
443
2,431
186
1.030
-64
-25
52
1.210
43
0
105
-722r
239
1.098'
-313
85
-53
-1,912'
195
0
- 190'
3,046'
4
2,497'
112
-6
449
141'
-149'
0
-230
-727'
-53
700
38
-70
-498
-335'
-510
0
19
1,001'
75
-487
-58
-236
-428
1,036'
1,099
0
297
1,376
59
581
-366
-229
-135
1,227
236
3
846
1,700
211
1,118
41
370
543
-56
-528
0
-403
4,315
248
2.336
1.731
19,919
17,909
112
308
878
-95
1,131
-159
5,466
4.048
-54
1.255
-1.295
-14
-70
-1.210
284
1,690
-28
-114
-62
-320
255
i
-106
709
-1
-160
220
266
32
-78
4.942 r
4.489'
11
-200
-219
69
-314
26
-3<K
-450'
-13
163
75
-139
6
208
-152'
188'
2
482
97
29
96
-28
-2.067'
-2,086
-14
198
-1,002
-33
-441
-528
-922
-76
6
280
-293
18
371
-682
1,206
1,766
-34
-395
442
-436
18
-1.105
-1,430
157
5,207
5,143
0
-1.463
-1,511
0
1,043'
937'
39
315'
365
-5
-1.958'
-2.010
0
1,478
1,412
0
-736
-791
0
5,943
5,934
0
28,768
8,135
20,631
25,277
14.366
10.913
2,366
2,172
194
2,207
36
2,171
4,062'
1,878'
2,183'
2,717'
3.589'
-872'
-301'
133'
-434'
-488'
295'
-782'
584
1.502
-918
1,781
670
1,112
-1,547
7
-1473
5
-1,683
2
-239
-1
-205
2
-377
-1
-1,014
1
-21'
0
-721
1
-962
1
3 Europe2
4
Belgium-Luxembourg
5
Germany2
6
Netherlands
7
Sweden
8
Switzerland 2
9
United K i n g d o m
10
Other W e s t e r n E u r o p e
11
Eastern Europe
12 C a n a d a
13
14
15
16
17
18
19
20
Latin A m e r i c a and C a r i b b e a n
Venezuela
O t h e r Latin A m e r i c a and C a r i b b e a n
N e t h e r l a n d s Antilles
Asia
Japan
Africa
All o t h e r
21 N o n m o n e t a r y international and regional organizations
22
International
23
Latin A m e r i c a n regional
MEMO
24 Foreign countries 2
25
Official institutions
O t h e r foreign 2
26
27
28
Oil-exporting countries
Middle E a s t 3
Africa4
1. E s t i m a t e d official and private 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
securities with a n original maturity of m o r e t h a n 1 year. Data are based on
monthly t r a n s a c t i o n s r e p o r t s . E x c l u d e s n o n m a r k e t a b l e U . S . T r e a s u r y b o n d s and
notes held by official institutions of foreign c o u n t r i e s .
2. Includes U . S . T r e a s u r y notes publicly issued to private foreign residents
d e n o m i n a t e d in foreign c u r r e n c i e s .
3. C o m p r i s e s Bahrain. Iran. Iraq, K u w a i t , O m a n , Q a t a r , Saudi A r a b i a , and
United A r a b E m i r a t e s (Trucial States).
4. C o m p r i s e s Algeria, G a b o n . Libya, and Nigeria,
Interest and Exchange Rates
3.26
A67
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Rate on M a r . 31, 1987
R a t e on M a r . 31, 1987
Country
Percent
3.5
8.5
49.0
7.14
7.0
Austria..
Belgium .
Brazil...
Canada..
Denmark
Country
Percent
Month
effective
Jan.
Jan.
Mar.
Mar.
Oct.
1987
1987
1981
1987
1983
France1
G e r m a n y , F e d . R e p . of
Italy
Japan
Netherlands
1. A s of the end of F e b r u a r y 1981, the rate is that at which the B a n k of F r a n c e
d i s c o u n t s T r e a s u r y bills f o r 7 to 10 d a y s .
2. M i n i m u m lending rate s u s p e n d e d as of Aug. 20, 1981.
NOTE. R a t e s s h o w n are mainly t h o s e at which the central bank either d i s c o u n t s
3.27
Rate on M a r . 31, 1987
Country
7.75
3.5
11.5
2.5
4.5
Month
effective
Mar.
Mar.
Mar.
Feb.
Mar.
1987
1986
1987
1987
1986
Norway
Switzerland
United K i n g d o m 2 .
Venezuela
Percent
Month
effective
8.0
3.5
J u n e 1983
J a n . 1987
O c t . 1985
or m a k e s a d v a n c e s against eligible commercial p a p e r 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 with m o r e than o n e rate applicable to such
d i s c o u n t s or a d v a n c e s , the rate s h o w n is the o n e at which it is u n d e r s t o o d the
central b a n k t r a n s a c t s the largest p r o p o r t i o n of its credit o p e r a t i o n s .
FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1986
Country, or type
1
2
3
4
5
6
7
8
9
10
1984
1985
1987
1986
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Eurodollars
United K i n g d o m
Canada
Germany
Switzerland
10.75
9.91
11.29
5.96
4.35
8.27
12.16
9.64
5.40
4.92
6.70
10.87
9.18
4.58
4.19
5.88
10.05
8.38
4.48
4.13
5.88
11.08
8.45
4.56
3.96
5.96
11.12
8.39
4.67
3.88
6.23
11.30
8.34
4.80
4.08
6.10
10.98
7.95
4.45
3.63
6.32
10.79
7.44
3.94
3.58
6.37
9.90
7.14
3.97
3.93
Netherlands
France
Italy
Belgium
Japan
6.08
11.66
17.08
11.41
6.32
6.29
9.91
14.86
9.60
6.47
5.56
7.68
12.60
8.04
4.96
5.17
7.07
10.84
7.25
4.71
5.32
7.38
10.85
7.29
4.75
5.48
7.51
11.05
7.38
4.39
6.03
7.92
11.40
7.39
4.40
5.58
8.49
11.39
7.88
4.23
5.31
8.36
11.13
7.75
3.98
5.38
7.85
10.65
7.49
4.00
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 loans e x c e p t for C a n a d a , finance c o m p a n y p a p e r ; Belgium, 3-month T r e a s u r y bills; and J a p a n , G e n s a k i r a t e .
A68
3.28
International Statistics • June 1987
FOREIGN E X C H A N G E RATES
Currency units per dollar
1986
Country/currency
1984
1985
Oct.
1
2
3
4
5
6
7
Australia/dollar 1
Austria/schilling
Belgium/franc
Brazil/cruzeiro
Canada/dollar
China, P.R./yuan
Denmark/krone
8
9
10
11
12
13
14
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
H o n g Kong/dollar
India/rupee
Ireland/pound 1
15
16
17
18
19
20
21
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
N e w Zealand/dollar 1
Norway/krone
Portugal/escudo
22
73
24
25
26
2.7
28
29
30
31
Singapore/dollar
South Africa/rand 1
South K o r e a / w o n
Spain/peseta
Sri L a n k a / r u p e e
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United K i n g d o m / p o u n d 1
MEMO
32 United States/dollar 2
Nov.
Dec.
Jan.
Feb.
Mar.
87.937
20.005
57.749
1841.50
1.2953
2.3308
10.354
70.026
20.676
59.336
6205.10
1.3658
2.9434
10.598
67.093
15.260
44.662
13.051
1.3896
3.4615
8.0954
63.83
14.111
41.635
13.98
1.3885
3.7257
7.5607
64.45
14.251
42.069
14.10
1.3863
3.7314
7.6444
65.95
13.996
41.381
14.54
1.3801
3.7314
7.5235
66.09
13.087
38.616
15.58
1.3605
3.7314
7.0591
66.77
12.833
37.789
18.08
1.3340
3.7314
6.8939
68.17
12.905
38.029
20.56
1.3194
3.7314
6.9166
6.0007
8.7355
2.8454
112.73
7.8188
11.348
108.64
6.1971
8.9799
2.9419
138.40
7.7911
12.332
106.62
5.0721
6.9256
2.1704
139.93
7.8037
12.597
134.14
4.8684
6.5628
2.0054
135.44
7.7999
12.848
135.89
4.9576
6.6206
2.0243
139.12
7.7974
13.076
134.64
4.8980
6.5296
1.9880
140.13
7.7931
13.149
136.78
4.6419
6.2007
1.8596
134.80
7.7698
13.029
143.90
4.5556
6.0760
1.8239
133.88
7.7952
13.062
145.93
4.5102
6.1091
1.8355
134.68
7.8017
12.924
145.54
1756.10
237.45
2.3448
3.2083
57.837
8.1596
147.70
1908.90
238.47
2.4806
3.3184
49.752
8.5933
172.07
1491.16
168.35
2.5830
2.4484
52.456
7.3984
149.80
1387.67
156.47
2.6245
2.2663
50.392
7.3611
147.24
1401.08
162.85
2.6131
2.2870
51.382
7.5401
149.54
1379.44
162.05
2.5966
2,2470
51.339
7.5294
148.61
1317.17
154.83
2.5701
2.0978
53.605
7.1731
142.90
1297.74
153.41
2.5418
2.0592
54.815
7.0067
141.62
1305.90
151.43
2.5230
2.0731
56.333
6.9335
141.48
2.1325
69.534
807.91
160.78
25.428
8.2706
2.3500
39.633
23.582
133.66
2.2008
45.57
861.89
169.98
27.187
8.6031
2.4551
39.889
27.193
129.74
2.1782
43.952
884.61
140.04
27.933
7.1272
1.7979
37.837
26.314
146.77
2.1777
44.42
879.22
133.43
28.407
6.8901
1.6433
36.647
26.129
142.64
2.1922
44.37
873.54
136.10
28.471
6.9683
1.6858
36.438
26.278
142.38
2.1900
44.94
868.43
134.49
28.532
6.9081
1.6647
36.001
26.239
143.93
2.1510
47.70
862.86
129.54
28.578
6.6188
1.5616
35.304
26.037
150.54
2.1410
47.97
857.38
128.62
28.662
6.5016
1.5403
35.056
25.933
152.80
2.1418
48.21
856.11
128.86
28.823
6.4202
1.5391
34.681
25.881
159.23
138.19
143.01
112.22
106.58
107.90
106.54
101.13
1. Value in U . S . c e n t s .
2. Index of weighted-average e x c h a n g e value of U . S . dollar against c u r r e n c i e s
of other G-10 c o u n t r i e s plus S w i t z e r l a n d . M a r c h 1973 = 100. Weights are 1972-76
global t r a d e of e a c h of the 10 c o u n t r i e s . Series revised as of A u g u s t 1978. F o r
description and b a c k d a t a , see " I n d e x of 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
of the U . S . Dollar: R e v i s i o n " o n p. 700 of the August 1978 BULLETIN.
1987
1986
99.46
98.99
3. C u r r e n c y r e f o r m .
NOTE. A v e r a g e s of certified n o o n buying r a t e s in N e w Y o r k f o r cable t r a n s f e r s .
Data in this table also a p p e a r in the B o a r d ' s G . 5 (405) release. F o r a d d r e s s , see
inside f r o n t c o v e r .
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
Anticipated schedule of release dates for periodic releases
SPECIAL
June 1987
Page
A89
TABLES
Published Irregularly, with Latest Bulletin Reference
Assets and liabilities of commercial banks, September 30, 1983
Assets and liabilities of commercial banks, December 31, 1985
Assets and liabilities of commercial banks, March 31, 1986
Assets and liabilities of commercial banks, June 30, 1986
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, May 1986
Terms of lending at commercial banks, August 1986
Terms of lending at commercial banks, November 1986
Terms of lending at commercial banks, February 1987
Special tables begin on next page.
March 31, 1986
June 30, 1986
September 30, 1986
December 31, 1986
March
January
June
June
November
December
March
May
July
December
February
May
1984
1987
1987
1987
1986
1986
1987
1987
1986
1986
1987
1987
A68
A70
A70
A76
A70
A76
A70
A76
A70
A70
A70
A70
A70
4.20
Special Tables • June 1987
DOMESTIC AND FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities'2
Consolidated Report of Condition, March 31, 1986
Millions of dollars
Banks with domestic
offices only 5
Banks with foreign offices 3 - 4
Item
Total
Total
1 Total assets6
2 Cash and balances due from depository institutions
3
Cash items in process of collection, unposted debits, and currency
4
Cash items in process of collection and unposted debits and coin
Currency and coin
5
6
Balances due from depository institutions in the United States
7
Balances due from banks in foreign countries and foreign central banks
8
Balances due from Federal Reserve Banks
MEMO
9
Noninterest-bearing balances due from commercial banks in the United
States (included in balances due from depository institutions in the U.S.)
Foreign
Domestic
Over 100
Under 100
2,705,192
1,582,211
429,769
1,209,193
707,619
415,363
325,851
229,624
80,039
n.a.
n.a.
36,471
93,714
19,400
114,375
1,954
n.a.
n.a.
21,705
90,483
232
115,249
78,084
68,171
9,914
14,766
3.231
19,168
61,643
25,982
18,821
7,161
20,930
6,670
8,061
34,585
n.a.
n.a.
9,882
13,218
14,217
n.a.
n.a.
615,909
362,197
f
n.a.
1
1
T
n.a.
r
n.a.
|
1
T
2,165,051
1,186,945
429,339
158,852
19,449
139,403
154,576
115,911
244,001
n.a.
n.a.
73,876
55.517
18,358
176
165
73,699
55,352
18,347
90,483
62,725
27,758
79,643
n.a.
n.a.
21,265
n.a.
148,106
37,232
n.a.
12,005
6,353
58,695
26,281
6,216
10
713
18,560
312
12,004
6,343
57,982
7,721
5,904
5,223
22,536
56,022
8,071
7,593
4,037
n.a.
33,389
2,879
1,173
15,515
n.a.
693
5,523
20,065
3
309
18,248
690
5,214
1,817
304
7,289
478
176
2,703
132,730
1,644,563
16,943
1,627,620
24,550
88
1,602,982
59,327
991,207
7,002
984,205
15,352
87
968,766
232
246,105
1,946
244,159
n.a.
n.a.
n.a.
59,096
745,101
5,056
740,046
n.a.
n.a.
n.a.
42,142
431,605
6,327
425,278
6,088
0
419,190
31,260
221,751
3,615
218,137
3,110
488,263
n.a.
n.a.
n.a.
n.a.
n.a.
64,860
n.a.
n.a.
n.a.
211,708
n.a.
n.a.
n.a.
n.a.
n.a.
58,721
14,845
4,592
39,284
14,591
n.a.
n.a.
n.a.
n.a.
n.a.
35,872
1,233
408
34,231
197.118
61,312
1,455
79,060
6,578
48,713
22,849
13,612
4,183
5,053
148,973
23,636
3,023
71,222
4,808
46,285
5,581
4,563
794
224
87,582
7,968
7,302
48,189
1,698
22,425
557
n.a.
n.a.
n.a.
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
To U.S. addressees (domicile)
To non-U.S. addressees (domicile)
Acceptances of other banks
U.S. banks
Foreign banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
48
Credit cards and related plans
49
Other (includes single payment and installment)
34,315
578,438
n.a.
n.a.
4,216
n.a.
n.a.
6,457
405,651
291,178
114,472
1,200
372
828
530
128,757
19,273
109,484
622
100
522
5,927
276,894
271,905
4,989
579
272
307
7,018
119,387
118,960
427
1,634
n.a.
n.a.
20,839
53,401
n.a.
n.a.
1,382
n.a.
n.a.
300,819
74,077
226,741
133,442
43,211
90,231
9,794
n.a.
n.a.
123,648
n.a.
n.a.
116,414
29,113
87,301
50,963
1,753
49,209
50 Obligations (other than securities) of states and political subdivisions in the U.S. .
51
Nonrated industrial development obligations
52
Other obligations (excluding securities)
53 All other loans
54
Loans to foreign governments and official institutions
55
Other loans
Loans for purchasing and carrying securities
56
57
All other loans
61,822
46,372
15,450
127,087
n.a.
n.a.
n.a.
n.a.
39,405
28,889
10,515
114,051
40,137
73,914
n.a.
n.a.
660
125
535
50,963
36,896
14,067
n.a.
n.a.
38,745
28,764
9,981
63,088
3,241
59,847
21,145
38,702
19,380
15,424
3,956
9,649
210
9,439
2,262
7,177
3,037
2,059
979
3,387
n.a.
n.a.
n.a.
n.a.
24,743
44,362
40,753
7,631
2,315
46,741
n.a.
2,804
69,684
20,571
43,411
20,546
3,045
1,831
46,398
n.a.
1,637
48,772
4,317
13,722
i
t
1
n.a.
1
16,254
29,689
n.a.
n.a.
n.a.
n.a.
45,395
n.a.
n.a.
3,570
781
12,463
2,355
421
319
n.a.
1,019
12,709
603
170
7,744
2,230
63
24
n.a.
148
8,203
10 Total securities, loans and lease financing receivables, net
U Total securities, book value
12
U.S. Treasury securities and U.S. government agency and corporation
obligations
U.S. Treasury securities
13
14
U.S. government agency and corporation obligations
15
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
16
All other
17
Securities issued by states and political subdivisions in the United States
18
Other securities
19
Other domestic securities
20
All holdings of private certificates of participation in pools of
residential mortgages
21
All other
Foreign
securities
22
23
24
25
26
27
28
29
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
LESS: Allowance for loan and lease losses
LESS: Allocated transfer risk reserves
EQUALS: Total loans and leases, net
Total loans, gross, by category
30 Loans secured by real estate
31
Construction and land development
Farmland
32
1-4 family residential properties
33
34
Multifamily (5 or more) residential properties
35
Nonfarm nonresidential properties
36 Loans to depository institutions
37
To commercial banks in the United States
38
To other depository institutions in the United States
39
To banks in foreign countries
40
41
42
43
44
45
46
47
58
59
60
61
62
63
64
65
66
Lease financing receivables
Assets held in trading accounts
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs . . .
Intangible assets
Other assets
11
1
t
1
215,026
Commercial Banks
4.20
Continued
B a n k s with f o r e i g n offices 3
Banks with domestic
offices o n l y 5
4
O v e r !00
Foreign
707,619
67 Total liabilities, limited-life preferred stock and equity capital
2,705,192
1,582,211
68 Total liabilities 7
69
Limited-life p r e f e r r e d s t o c k
2,533,926
14
1,497,450
0
429,654
n.a.
1,124,547
657,018
14
70 Total d e p o s i t s
71
Individuals, 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
72
U.S. government
73
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
74
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
75
O t h e r d e p o s i t o r y institutions in t h e United S t a t e s
76
B a n k s in f o r e i g n c o u n t r i e s
77
F o r e i g n g o v e r n m e n t s a n d official institutions
78
Certified a n d official c h e c k s
79
All o t h e r 8
2,095,522
1,135,616
332,691
172,310
802,925
707,770
2,281
34,964
31,918
4,565
7,507
2,315
11,606
590,218
532,316
1,417
38,810
10,410
2,390
199
188
4,487
80 Total t r a n s a c t i o n a c c o u n t s
81
Individuals, partnerships, and corporations
82
U.S. government
83
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
84
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
85
O t h e r d e p o s i t o r y institutions in t h e U n i t e d S t a t e s
86
B a n k s in f o r e i g n c o u n t r i e s
87
F o r e i g n g o v e r n m e n t s a n d official institutions
88
Certified a n d official c h e c k s
89
All o t h e r
286,436
232,004
1,349
7,089
22,497
3,972
6,765
1,155
11,606
167,694
146,967
971
7,205
6,339
1,644
66
15
4,487
90 D e m a n d d e p o s i t s (included in total t r a n s a c t i o n a c c o u n t s )
91
Individuals, 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
U.S. government
92
93
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
94
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
95
O t h e r d e p o s i t o r y i n s t i t u t i o n s in the 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
97
F o r e i g n g o v e r n m e n t s a n d official institutions
98
Certified a n d official c h e c k s
99
All o t h e r
100
Total nontransaction accounts
101
Individuals, partnerships, and corporations
102
U.S. government
103
S t a t e s a n d political s u b d i v i s i o n s in the United S t a t e s
104
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
105
U . S . b r a n c h e s a n d a g e n c i e s of f o r e i g n b a n k s
106
O t h e r 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
107
O t h e r d e p o s i t o r y institutions in t h e U n i t e d S t a t e s
108
B a n k s in f o r e i g n c o u n t r i e s
109
F o r e i g n b r a n c h e s o f o t h e r U.S. b a n k s
110
O t h e r b a n k s in f o r e i g n c o u n t r i e s
111
F o r e i g n g o v e r n m e n t s a n d official institutions
112
Allother
239,972
186,595
1,308
6,077
22,497
3,972
6,765
1,153
11,606
117,435
99,560
955
4,380
6,337
1,637
66
14
4,487
516,490
475,766
932
27,875
9,422
509
8,913
592
742
27
715
1,160
422,524
385,350
446
31,605
4,071
776
3,295
746
133
0
133
173
522
n.a.
24,637
10,348
180,519
6,219
41,891
36,258
n.a.
11,356
43,299
2,202
9,120
319
1,820
n.a.
10,039
50,587
240
7,795
18,610
23,943
211
265
26,419
21,447
5,328
1,098
1,421
25,297
2,625
1,861
834
4,230
208,630
135,655
143,576
28,628
40,720
162,297
562.952
1,027
167,887
168,401
81,695
4,541
46,069
119,190
472,783
717,307
419,230
38,923
146,487
18,876
81,312
354,614
332,213
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
A71
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 sold 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
D e m a n d n o t e s i s s u e d to the U . S . T r e a s u r y
Other borrowed money
B a n k s liability o n a c c e p t a n c e s e x e c u t e d and o u t s t a n d i n g
N o t e s a n d d e b e n t u r e s s u b o r d i n a t e d to d e p o s i t s
N e t d u e t o o w n f o r e i g n offices, E d g e a n d A g r e e m e n t subsidiaries a n d I B F s
All o t h e r liabilities
Total e q u i t y c a p i t a l 9
Perpetual preferred stock
C o m m o n stock
Surplus
U n d i v i d e d p r o f i t s a n d capital r e s e r v e s
Cumulative foreign currency translation adjustments
n.a.
I
19,281
n.a.
227,529
n.a.
76,317
46,949
15,363
n.a.
63,159
171,252
997
28,909
59,197
82,487
n.a.
I
28,976
12.259
n.a.
181,041
n.a.
66,528
46,607
13,298
n.a.
48,141
84,761
667
14,191
27,775
42,466
-338
MEMO
H o l d i n g s of c o m m e r c i a l p a p e r i n c l u d e d in toted l o a n s , g r o s s
T o t a l individual 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 plan a c c o u n t s
Total brokered deposits
T o t a l b r o k e r e d retail d e p o s i t s
I s s u e d in d e n o m i n a t i o n s of $100,000 o r less
I s s u e d in d e n o m i n a t i o n s g r e a t e r t h a n $100,000 a n d participated o u t b y the
b r o k e r in s h a r e s of $100,000 o r l e s s
Nontransaction savings deposits
T o t a l time d e p o s i t s of l e s s t h a n $100,000
T i m e c e r t i f i c a t e s of d e p o s i t of $100,000 or m o r e
O p e n - a c c o u n t t i m e d e p o s i t s o f $100,000 o r m o r e
Super N O W accounts
Money market deposit accounts (MMDAs)
Total time a n d s a v i n g s d e p o s i t s
Quarterly
averages
139 T o t a l l o a n s
140 Obligations ( o t h e r t h a n securities) of s t a t e s a n d political subdivisions
in the U n i t e d S t a t e s
141 T i m e certificates of d e p o s i t of $100,000 o r m o r e
142 S u p e r N O W a c c o u n t s , 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 , a n d time d e p o s i t s ( o t h e r
t h a n c e r t i f i c a t e s of d e p o s i t s of $100,000 o r m o r e )
143 N u m b e r of b a n k s
F o o t n o t e s a p p e a r at t h e e n d of t a b l e 4.22
14,258
n.a.
263
26,661
653
133,067
n.a.
2,232
U n d e r 100
A72
4.21
Special Tables • June 1987
D O M E S T I C O F F I C E S , Insured Commercial Banks with A s s e t s of $100 Million or more or with foreign offices '-2-3
Consolidated Report of Condition, March 31, 1986
Millions of dollars
Members
Item
Total
1 Total assets
6
? Cash and balances due from depository institutions
Cash items in process of collection and unposted debits
Currency and coin
Balances due from depository institutions in the United States
Balances due from banks in foreign countries and foreign central banks
Balances due from Federal Reserve Banks
4
5
6
7
8 Total securities, loans and lease financing receivables, (net of unearned income)
9 Total securities, book value
U.S. Treasury securities
to
U.S. government agency and corporation obligations
11
All holdings of U.S. government-issued or guaranteed certificates of
12
participation in pools of residential mortgages
All other
n
14
Securities issued by states and political subdivisions in the United States
Other domestic securities
15
16
All holdings of private certificates of participation in pools of residential mortgages
All other
17
Foreign securities
18
19 Federal funds sold and securities purchased under agreements to resell
7,0 Total loans and lease financing receivables, gross
LESS: Unearned income on loans
71
22 Total loans and leases (net of unearned income)
74
75
26
27
28
79
30
31
32
Total loans, gross, by category
Loans secured by real estate
Construction and land development
Farmland
1-4 family residential properties
Multifamily (5 or more) residential properties
Nonfarm nonresidential properties
Loans to commercial banks in the United States
Loans to other depository institutions in the United States
Loans to banks in foreign countries
Loans to finance agricultural production and other loans to farmers
33 Commercial and industrial loans
34
To U.S. addressees (domicile)
To non-U.S. addressees (domicile)
35
36 Acceptances of other banks 1 0
Of U.S. banks
37
38
Of foreign banks
39 Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
40 Loans to foreign governments and official institutions
41 Obligations (other than securities) of states and political subdivisions in the United States
Nonrated industrial development obligations
42
43
Other obligations (excluding securities)
Other
loans
44
45
46
47
48
49
50
Lease financing receivables
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining assets
Nonmembers
Total
National
State
1,916,811
1,579,658
1,233,619
346,039
337,154
176,892
86,992
17,074
35,695
9,901
27,229
148,854
79,868
14,100
23,888
7,391
23,608
116,739
60,558
11,647
20,211
5,956
18,367
32,115
19,310
2,453
3,677
1,435
5,242
28,038
7,124
2,974
11,808
2,510
3,621
1,560,542
1,267,989
1,005,260
262,730
292,552
293,979
118,077
46,105
223,134
90,441
32,656
175,145
72,806
27,270
47,990
17,635
5,386
70,845
27,636
13,449
17,227
28,878
114,005
13,498
994
12,504
2,295
14,201
18,455
89,188
9,009
735
8,274
1,839
12,132
15,138
66,967
7,423
537
6,886
679
2,069
3,317
22,221
1,587
199
1,388
1,160
3,026
10,423
24,816
4,489
259
4,230
455
101,238
85,185
63,581
21,604
16,053
1,176,706
11,383
1,165,325
968,361
8,692
959,670
773,150
6,617
766,534
195,210
2,075
193,136
208,346
2,691
205,654
346,091
84,948
4,477
150,282
11,386
94,997
18,175
4,978
5,277
12,945
269,257
70,061
3,110
115,632
8,752
71,703
14,263
4,776
5,057
10,664
228,644
57,190
2,782
100,058
7,550
61,065
11,127
3,710
2,955
9,411
40,613
12,871
328
15,575
1,202
10,638
3,137
1,065
2,102
1,253
76,833
14,888
1,367
34,649
2,634
23,295
3,912
202
220
2,281
396,280
390,865
5,416
331,447
326,443
5,004
256,120
251,911
4,210
75,327
74,532
794
64,833
64,422
412
2,213
726
366
1,585
562
285
1,421
519
249
165
44
36
628
164
81
240,062
3,450
58,125
44,188
13,936
69,286
23,407
45,880
196,324
3,253
49,148
36,739
12,409
64,786
22,365
42,421
163,640
2,494
36,477
26,714
9,763
42,892
11,753
31,139
32,684
759
12,671
10,025
2,646
21,894
10,612
11,282
43,738
197
8,976
7,449
1,527
4,500
1,042
3,458
19,823
35,474
45,395
143,904
17,799
34,824
41,568
127,990
14,259
25,482
30,197
86,138
3,539
9,342
11,371
41,852
2,025
650
3,827
15,914
Commercial
4.20
Banks
A71
Continued
Members
Item
Nonmembers
Total
National
State
51 Total liabilities and equity capital
1,916,811
1,579,658
1,233,619
346,039
337,154
7
1,781,565
1,469,350
1,148,414
320,936
312,215
51 Total deposits
Individuals, partnerships, and corporations
54
55
U.S. government
56
States and political subdivisions in the United States
Commercial banks in the United States
57
58
Other depository institutions in the United States
59
Banks in foreign countries
Foreign governments and official institutions
60
61
Certified and official checks
1,393,143
1,240,087
3,698
73,774
42,328
6,955
7,706
2,503
16,093
1,109,287
983,013
3,059
55,615
38,673
5,664
7,266
2,302
13,695
894,043
798,944
2,745
46,982
28,693
3,960
3,280
1,042
8,397
215,244
184,068
314
8,633
9,980
1,704
3,986
1,261
5,298
283,856
257,074
639
18,160
3,655
1,291
440
200
2,397
6? Total transaction accounts
63
Individuals, partnerships, and corporations
64
65
States and political subdivisions in the United States
66
Commercial banks in the United States
67
Other depository institutions in the United States
Banks in foreign countries
68
69
Foreign governments and official institutions
70
454,130
378,971
2,320
14,294
28,835
5,617
6,831
1,170
16,093
375,848
308,492
1,894
11,696
27,318
4,948
6,674
1,131
13,695
291,792
244,812
1,637
9,610
20,555
3,323
2,927
531
8,397
84,056
63,680
257
2,086
6,763
1,625
3,747
600
5,298
78,282
70,479
426
2,598
1,517
669
157
38
2,397
71 Demand deposits (included in total transaction accounts)
Individuals, partnerships, and corporations
72
73
U.S. government
States and political subdivisions in the United States
74
75
Commercial banks in the United States
76
Other depository institutions in the United States
Banks in foreign countries
77
Foreign governments and official institutions
78
Certified and official checks
79
357,407
286,155
2,263
10,457
28,834
5,609
6,831
1,166
16,093
301,796
237,398
1,838
8,799
27,318
4,945
6,674
1,130
13,695
228,849
184,249
1,583
7,288
20,555
3,320
2,927
530
8,397
72,948
53,149
255
1,510
6,763
1,625
3,747
600
5,298
55,611
48,757
425
1,659
1,516
663
157
37
2,397
80 Total nontransaction accounts
81
Individuals, partnerships, and corporations
U.S. government
8?
83
States and political subdivisions in the United States
Commercial banks in the United States
84
85
U.S. branches and agencies of foreign banks
86
Other commercial banks in the United States
Other depository institutions in the United States
87
88
89
Foreign branches of other U.S. banks
Other banks in foreign countries
90
91
Foreign governments and official institutions
939,014
861,116
1,378
59,480
13,493
1,285
12,208
1,338
875
27
848
1,333
733,439
674,521
1,166
43,919
11,355
837
10,518
716
592
27
565
1,171
602,251
554,132
1,108
37,372
8,138
757
7,381
637
353
19
334
511
131,188
120,389
57
6,547
3,217
80
3,137
79
239
8
231
660
205,575
186,595
212
15,561
2,138
449
1,689
622
284
0
283
162
223,818
8,422
51,011
36,577
1,820
11,356
66,774
208,159
7,478
46,544
35,927
1,189
10,627
60,767
150,545
5,316
28,169
26,600
1,060
8,819
42,681
57,613
2,162
18,374
9,328
129
1,809
18,086
15,659
944
4,467
650
631
729
6,008
135,247
110,308
85,205
25,103
24,939
1,686
51,716
24,072
7,189
1,932
1,066
40,444
21,186
6,393
1,502
898
33,730
17,687
5,647
1,456
168
6,714
3,498
745
47
620
11,272
2,886
797
430
5,257
376,518
304,056
225,271
33,169
86,790
281,487
1,035,736
4,890
296,584
230,484
176,673
29,700
66,482
222,920
807,490
4,191
241,975
196,402
144,011
19,863
56,369
181,438
665,193
699
54,609
34,082
32,661
9,837
10,113
41,482
142,297
367
79,934
73,572
48,599
3,470
20,308
58,567
228,246
1,136,537
57,799
227,799
934,171
49,234
178,405
745,566
36,114
145,189
188,605
13,121
33,216
202,366
8,565
49,394
686,827
532,229
444,083
88,147
154,598
2,495
1,456
1,238
218
1,039
Total
52 Total liabilities
92
93
94
95
%
97
98
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs
99 Total equity capital9
100
101
10?
103
104
105
106
107
108
109
110
111
112
113
114
115
116
MEMO
Holdings of commercial paper included in total loans, gross
Total individual retirement accounts (IRA) and Keogh plan accounts
Total brokered deposits
Total brokered retail deposits
Issued in denominations of $100,000 or less
Issued in denominations greater than $100,000 and participated out by the broker in shares
of $100,000 or less
Nontransaction savings deposits
Total time deposits of less than $100,000
Time certificates of deposit of $100,000 or more
Open-account time deposits of $100,000 or more
Super NOW accounts
Money market deposit accounts (MMDAs)
Total time and savings deposits
Quarterly
averages
Total loans
Obligations (other than securities) of states and political subdivisions in the United States
Time certificates of deposit of $100,000 or more
Super NOW accounts, money market deposit accounts, and time deposits (other than
certificates of deposits of $100,000 or more)
117 Number of banks
Footnotes appear at the end of table 4.22
A74
4.22
Special Tables • June 1987
D O M E S T I C O F F I C E S , Insured Commercial Bank Assets and Liabilities 1 2 - 3
Consolidated Report of Condition, March 31, 1986
Millions of dollars
Members
Nonmembers
Item
Total
1 Total assets6
National
State
2,332,174
1,755,850
1,379,409
376,441
576,324
211,477
21,216
37,318
152,943
164,079
15,902
21,368
126,810
129,516
13,150
17,720
98,646
34,563
2,752
3,648
28,164
47,398
5,314
15,950
26,134
1,925,849
1,422,466
1,132,833
289,634
503,383
409,890
243,825
147,393
18,672
1,170
17,501
132,498
1,398,458
14,998
1,383,461
269,755
154,475
103,149
12,131
808
11,324
99,546
1,063,405
10,241
1,053,166
213,288
125,604
78,504
9,179
588
8,592
75,575
851,851
7,883
843,970
56,467
28,871
24,644
2,952
220
2,732
23,971
211,554
2,358
209,196
140,135
89,351
44,245
6,540
363
6,177
32,952
335,053
4,757
330,296
433,673
92,917
11,779
198,471
13,084
117,422
306,626
73,839
5,608
136,441
9,491
81,248
259,354
60,429
4,775
116,911
8,157
69,083
47,272
13,410
833
19,530
1,333
12,166
127,047
19,078
6,171
62,030
3,593
36,174
28,987
33,785
449,681
3,595
24,378
18,337
355,358
2,196
18,033
15,562
276,307
1,913
6,346
2,774
79,051
282
4,609
15,448
94,323
1,399
291,025
61,162
46,247
14,915
76,124
20,426
35,498
45,395
159,350
218,558
50,404
37,588
12,816
69,462
18,085
34,835
41,568
134,470
182,056
37,567
27,446
10,121
46,575
14,484
25,491
30,197
91,570
36,502
12,837
10,143
2,695
22,887
3,601
9,345
11,371
42,900
72.466
10,758
8,659
2,099
6,662
2,341
663
3,827
24,881
36 Total liabilities and equity capital
2,332,174
1,755,850
1,379,409
376,441
576,324
37 Total liabilities7
2,161,023
1,630,374
1,281,731
348,643
530,650
38 Total deposits
39
Individuals, partnerships, and corporations
40
U.S. government
41
States and political subdivisions in the United States
42
Commercial banks in the United States
43
Other depository institutions in the United States
44
Certified and official checks
45
All other
1,762,831
1,575,852
4,463
101,452
43,870
8,057
18,629
10,509
1,265,607
1,125,377
3,384
66,456
39,617
6,221
14,830
9,722
1,023,538
916,838
3,018
56,001
29,466
4,449
9,334
4,432
242,069
208,539
366
10,454
10,151
1,773
5,4%
5,290
497,224
450,475
1,079
34,996
4,254
1,835
3,799
787
549,230
464,016
2,848
20,241
29,237
6,171
18,629
8,089
416,489
344,842
2,122
14,012
27,609
5,219
14,830
7,854
325,720
275,203
1,829
11,547
20,747
3,563
9,334
3,497
90,769
69,639
293
2,466
6,862
1,657
5,4%
4,357
132,742
119,174
726
6,228
1,629
952
3,799
235
415,012
337,081
2,771
13,075
29,232
6,155
18,629
8,070
326,887
259,509
2,056
9,827
27,608
5,212
14,830
7,845
249,851
202,811
1,766
8,146
20,746
3,557
9,334
3,491
77,036
56,698
290
1,681
6,862
1,656
5,4%
4,354
88,126
77,572
715
3,248
1,624
942
3,799
225
1,213,601
1,111,836
1,615
81,211
14,633
1,886
2,420
849,118
780,535
1,262
52,444
12,008
1,002
1,867
697,819
641,635
1,189
44,455
8,719
886
934
151,300
138,900
73
7,989
3,289
116
933
364,483
331,301
353
28,768
2,625
884
552
227,006
9,088
51,680
36,601
2,065
11,356
71,753
209,997
7,785
46,956
35,938
1,295
10,627
62,797
151,965
5,568
28,538
26,608
1,152
8,819
44,361
58,031
2,216
18,418
9,330
142
1,809
18,436
17,010
1,303
4,724
663
770
729
8,957
2 Cash and balances due from depository institutions
3
Currency and coin
4
Noninterest-bearing balances due from commercial banks
5
Other
6 Total securities, loans, and lease financing receivables (net of unearned income)
7
8
9
10
11
12
13
14
15
16
Total securities, book value
U.S. Treasury securities and U.S. government agency and corporation obligations
Securities issued by states and political subdivisions in the United States
Other securities
All holdings of private certificates of participation in pools of residential mortgages
All other
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
Total loans, gross, by category
17 Loans secured by real estate
18
Construction and land development
19
Farmland
20
1-4 family residential properties
21
Multifamily (5 or more) residential properties
22
Nonfarm nonresidential properties
23
24
25
26
27
28
29
30
31
32
33
34
35
Loans to depository institutions
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
Acceptances of other banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
Obligations (other than securities) of states and political subdivisions in the United States
Nonrated industrial development obligations
Other obligations (excluding securities)
All other loans
Lease financing receivables
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining assets
46 Total transaction accounts
47
Individuals, partnerships, and corporations
49
50
51
52
53
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Certified and official checks
All other
54 Demand deposits (included in total transaction accounts)
55
Individuals, partnerships, and corporations
56
U.S. government
57
States and political subdivisions in the United States
58
Commercial banks in the United States
59
Other depository institutions in the United States
60
Certified and official checks
61
All other
62 Total nontransaction accounts
63
Individuals, partnerships, and corporations
65
66
67
68
69
70
71
72
73
74
75
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
All other
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining liabilities
Commercial Banks
4.20
A71
Continued
Members
Total
76 Total equity capital
9
MEMO
77 Assets held in trading accounts 1 0
78
U.S. Treasury securities
79
U.S. government agency corporation obligations
80
Securities issued by states and political subdivisions in the United States
81
Other bonds, notes and debentures
82
Certificates of deposit
83
Commercial paper
84
Bankers acceptances
85
Other
86 Total individual retirement accounts (IRA) and Keogh plan accounts
87 Total brokered deposits
88 Total brokered retail deposits
89
Issued in denominations of $100,000 or less
90
Issued in denominations greater than $100,000 and participated out by the broker in
shares of $100,000 or less
91 Nontransaction savings deposits
92 Total time deposits of less than $100,000
93 Time certificates of deposit of $100,000 or more
94 Open-account time deposits of $100,000 or more
95 Super NOW accounts
96 Money market deposit accounts (MMDAs)
97 Total time and savings deposits
Quarterly averages
98 Total loans
99 Time certificates of deposit of $100,000 or more
100 Super NOW accounts, money market deposit accounts, and time deposits (other than
certificates of deposit of $100,000 or more)
101 Number of banks
1. Effective Mar. 31, 1984, the report of condition was substantially revised
for commercial banks. Some of the changes are as follows: (1) Previously, banks
with international banking facilities (IBFs) that had no other foreign offices were
considered domestic reporters. Beginning with the Mar. 31, 1984 call report these
banks are considered foreign and domestic reporters and must file the foreign and
domestic report of condition; (2) banks with assets greater than $1 billion have
additional items reported; (3) the domestic office detail for banks with foreign
offices has been reduced considerably; and (4) banks with assets under $25 million
have been excused from reporting certain detail items.
2. The " n . a . " for some of the items is used to indicate the lesser detail
available from banks without foreign offices, the inapplicability of certain items to
banks that have only domestic offices and/or the absence of detail on a fully
consolidated basis for banks with foreign offices.
3. All transactions between domestic and foreign offices of a bank are
reported in "net due from" and "net due t o . " All other lines represent
transactions with parties other than the domestic and foreign offices of each bank.
Since these intraoffice transactions are nullified by consolidation, total assets and
total liabilities for the entire bank may not equal the sum of assets and liabilities
respectively, of the domestic and foreign offices.
4. Foreign offices include branches in foreign countries, Puerto Rico, and in
U.S. territories and possessions; subsidiaries in foreign countries; all offices of
Edge Act and Agreement corporations wherever located and IBFs.
Nonmembers
Total
Item
National
State
171,151
125,477
97,678
27,799
45,674
30,640
16,017
4,828
4,222
263
911
212
3,007
531
30,245
15,971
4,828
4,198
260
910
212
2,999
474
15,920
7,485
2,453
2,364
115
540
212
2,134
255
14,325
8,486
2,376
1,835
145
371
0
865
218
396
46
0
24
3
0
0
8
57
65,771
24,496
7,463
2,144
46,085
21,392
6,514
1,593
38,415
17,855
5,739
1,527
7,670
3,537
775
66
19,686
3.104
949
551
5,319
462,816
444,746
270,836
35.205
121,644
339,465
1,347,818
4,921
334,341
286,451
197,824
30,504
81,019
248,638
938,719
4,212
273,025
242.187
162,064
20,543
68,521
202,751
773,686
709
61,316
44,264
35,760
9,961
12,497
45,887
165,033
398
128,475
158,296
73,012
4,701
40,626
90,827
409,099
1,352,904
272,588
1,026,849
199,134
822,456
162,889
204,393
36,244
326,056
73,454
921,118
628,169
523,558
104,610
292,950
14,258
5,970
4,888
1,082
8,288
5. The 'over 100' column refers to those respondents whose assets, as of June
30 of the previous calendar year, were equal to or exceeded $100 million. (These
respondents file the F F I E C 032 or FF1EC 033 call report.) The 'under 100' column
refers to those respondents whose assets, as of June 30 of the previous calendar
year, were less than $100 million. (These respondents filed the F F I E C 034 call
report.)
6. Since the domestic portion of allowances for loan and lease losses and
allocated transfer risk reserve are not reported for banks with foreign offices, the
components of total assets (domestic) will not add to the actual total (domestic).
7. Since the foreign portion of demand notes issued to the U.S. Treasury is not
reported for banks with foreign offices, the components of total liabilities (foreign)
will not add to the actual total (foreign).
8. The definition of 'all other' varies by report form and therefore by column
in this table. See the instructions for more detail.
9. Equity capital is not allocated between the domestic and foreign offices of
banks with foreign offices.
10. Components of assets held in trading accounts are only reported for banks
with total assets of $1 billion or more; therefore the components will not add to the
totals for this item.
A76
4.20
Special Tables • June 1987
D O M E S T I C A N D F O R E I G N O F F I C E S , Insured Commercial Bank A s s e t s and Liabilities 1 2
Consolidated Report of Condition, June 30, 1986
Millions of dollars
B a n k s with d o m e s t i c
offices only 5
B a n k s with foreign offices 3 - 4
Item
Total
Total
Total assets 6
7 C a s h and b a l a n c e s d u e f r o m d e p o s i t o r y institutions
C a s h items in p r o c e s s of collection, u n p o s t e d debits, and c u r r e n c y
C a s h items in p r o c e s s of collection and u n p o s t e d debits and coin
4
C u r r e n c y and coin
5
6
Balances d u e f r o m d e p o s i t o r y institutions in the United States
B a l a n c e s d u e f r o m b a n k s in foreign c o u n t r i e s and foreign central b a n k s
7
8
Balances due from Federal Reserve Banks
MEMO
9
N o n i n t e r e s t - b e a r i n g b a l a n c e s d u e f r o m commercial b a n k s in the United
States (included in balances due from depository institutions in the U.S.)
2,747,052
1,601,393
425,633
1,236,594
721,930
423,728
332,360
229,991
84,054
n.a.
n.a.
34,299
93,075
18,564
112,139
1,698
n.a.
n.a.
20,305
89,596
539
117,852
82,356
72,060
10,296
13,993
3,478
18,024
64,923
28,052
20,687
7,364
22,119
6,006
8,746
37,446
A
T
1
n.a.
1
I
t
n.a.
A
T
1
n.a.
1
1
T
13,933
15,232
n.a.
626,643
367,621
165,439
21,111
144,328
155,326
118,498
79,6%
56,946
22,750
653
640
13
79,042
56,306
22,737
92,409
62,381
30,028
81,776
n.a.
n.a.
27,971
n.a.
143,435
41,946
n.a.
15,132
7,618
57,354
28,389
7,247
1
12
757
19,701
381
15,131
7,606
56,597
8,688
6,865
7,137
22,891
53,484
9,433
8,978
5,701
n.a.
32,598
4,124
2,303
18,045
n.a.
1,349
5,898
21,142
8
373
19,320
1,341
5,525
1,823
587
8,390
456
367
3,757
133,624
1,672,103
16,555
1,655,548
25,918
95
1,629,535
59,595
1,006,586
7,001
999,585
16,367
94
983,124
267
242,427
2,004
240,423
n.a.
n.a.
n.a.
59,329
764,159
4,9%
759,163
n.a.
n.a.
n.a.
43,669
440,082
6,085
433,998
6,350
0
427,647
30,360
225,435
3,470
221,965
3,201
1
218,763
463,535
n.a.
n.a.
n.a.
n.a.
n.a.
65,694
n.a.
n.a.
n.a.
219,261
n.a.
n.a.
n.a.
n.a.
n.a.
59,447
15,635
4,731
39,082
15,408
n.a.
n.a.
n.a.
n.a.
n.a.
34,400
1,132
378
32,890
203,853
64,102
1,561
80,847
6,713
50,629
25,048
14,503
4,353
6,192
153,979
24,749
3,106
72,989
4,969
48,166
5,632
4,505
916
212
90,295
8,265
7,555
49,389
1,813
23,273
614
n.a.
n.a.
n.a.
L o a n s to finance agricultural p r o d u c t i o n and other loans t o f a r m e r s
C o m m e r c i a l and industrial loans
T o U . S . a d d r e s s e e s (domicile)
T o n o n - U . S . a d d r e s s e e s (domicile)
A c c e p t a n c e s of o t h e r b a n k s
U.S. banks
34,623
579,425
n.a.
n.a.
3,666
n.a.
n.a.
6,395
405,208
293,512
111,695
1,193
373
820
472
126,065
19,088
106,977
528
25
504
5,923
279,143
274,424
4,719
665
348
317
7,035
120,402
119,929
473
1,324
n.a.
n.a.
21,193
53,816
n.a.
n.a.
1,149
n.a.
n.a.
L o a n s to individuals f o r h o u s e h o l d , family and other personal e x p e n d i t u r e s
(includes p u r c h a s e d p a p e r )
Credit c a r d s and related plans
O t h e r (includes single p a y m e n t a n d installment)
308,918
76,777
232,142
138,312
44,693
93,619
10,624
n.a.
n.a.
127,687
n.a.
n.a.
119,171
30,185
88,985
51,436
1,899
49,537
60,694
46,326
14,369
130,578
n.a.
n.a.
n.a.
n.a.
38,782
29,072
9,709
117,304
39,986
77,319
n.a.
n.a.
586
104
482
50,104
36,315
13,789
n.a.
n.a.
38,195
28, % 8
9,227
67,200
3,671
63,529
22,549
40,980
18,909
15,238
3,671
9,948
236
9,712
2,211
7,501
3,004
2,016
988
3,325
n.a.
n.a.
n.a.
n.a.
24,969
43,165
41,111
8,095
2,151
44,510
n.a.
3,391
69,847
20,684
41,988
20,771
3,240
1,821
44,163
n.a.
2,139
49,123
4,239
13,392
16,445
28,596
n.a.
n.a.
n.a.
n.a.
51,277
n.a.
n.a.
3,684
942
12,565
2,468
266
329
n.a.
1,098
12,696
601
235
7,775
2,387
64
18
n.a.
153
8,029
Federal f u n d s sold and securities p u r c h a s e d under a g r e e m e n t s to resell
Total loans and lease financing r e c e i v a b l e s , gross
LESS: U n e a r n e d i n c o m e on loans
Total loans and leases (net of u n e a r n e d income)
LESS: Allowance f o r loan and lease losses
LESS: Allocated t r a n s f e r risk r e s e r v e s
EQUALS: Total loans and leases, net
50 Obligations (other than securities) of s t a t e s and political subdivisions in the U . S . .
N o n r a t e d industrial d e v e l o p m e n t obligations
51
O t h e r obligations (excluding securities)
52
53 All o t h e r loans
L
o a n s t o foreign g o v e r n m e n t s and official institutions
54
55
O t h e r loans
56
L o a n s f o r p u r c h a s i n g and carrying securities
57
58
59
60
61
62
63
64
65
66
U n d e r 100
9,608
Total loans, gross, by category
30 L o a n s s e c u r e d by real e s t a t e
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
31
Farmland
32
1 - 4 family residential p r o p e r t i e s
33
Multifamily (5 or m o r e ) residential p r o p e r t i e s
34
N o n f a r m nonresidential p r o p e r t i e s
35
36 L o a n s to d e p o s i t o r y institutions
37
T o c o m m e r c i a l b a n k s in the United States
38
T o o t h e r d e p o s i t o r y institutions in the United States
39
T o b a n k s in foreign c o u n t r i e s
48
49
O v e r 100
n.a.
11 Total securities, b o o k value
U . S . T r e a s u r y securities and U . S . g o v e r n m e n t agency and corporation
12
obligations
U . S . T r e a s u r y securities
13
U . S . g o v e r n m e n t agency a n d c o r p o r a t i o n obligations
14
All holdings of U . S . g o v e r n m e n t - i s s u e d o r g u a r a n t e e d certificates of
15
participation in pools of residential mortgages
All o t h e r
16
17
Securities issued by states a n d political subdivisions in the United States
O t h e r securities
18
19
O t h e r d o m e s t i c securities
All holdings of private certificates of participation in pools of
20
residential mortgages
All o t h e r
21
Foreign securities
22
40
41
42
43
44
45
46
47
Domestic
n.a.
10 Total securities, loans and lease financing receivables, net
23
24
25
26
27
28
29
Foreign
A s s e t s held in trading a c c o u n t s
P r e m i s e s and fixed a s s e t s (including capitalized leases)
O t h e r real estate o w n e d
I n v e s t m e n t s in unconsolidated subsidiaries a n d associated c o m p a n i e s
C u s t o m e r s ' liability on a c c e p t a n c e s o u t s t a n d i n g
N e t d u e f r o m o w n foreign offices, E d g e a n d A g r e e m e n t subsidiaries and I B F s . . .
Intangible a s s e t s
n.a.
2,202,422
1,208,158
439,263
253,881
n.a.
n.a.
!
A
1
n.a.
|
1
t
Commercial Banks A71
4.20
Continued
Banks with domestic
offices only 5
Banks with foreign offices 3 - 4
Item
Total
Foreign
Total
Domestic
Over 100
Under 100
67 Total liabilities, limited-life preferred stock and equity capital
2,747,052
1,601,393
n.a.
721,930
423,728
68 Total liabilities7
Limited-life preferred stock
69
2,573,391
75
1,515,505
61
423,269
n a.
1,153,070
n.a.
670,553
12
387,333
1
70 Total deposits
71
Individuals, partnerships, and corporations
72
U.S. government
73
States and political subdivisions in the United States
Commercial banks in the United States
74
75
Other depository institutions in the United States
76
Banks in foreign countries
Foreign governments and official institutions
77
78
Certified and official checks
All other*
79
2,127,017
1,147,592
321,068
167,540
826,524
726,638
2,876
35,725
33,388
5,119
8,276
2,676
11,825
602,259
542,491
1,603
39,190
10,767
2,622
174
145
5,265
377,166
342,868
765
27,707
1,628
1,283
n.a.
n.a.
2,868
47
307,297
245,894
1,838
9,621
24,206
4,612
7,573
1,728
11,825
178,316
154,135
1,190
9,230
6,667
1,756
63
10
5,265
99,577
88,494
578
6,670
358
598
n.a.
n.a.
2,868
9
258,302
198,426
1,781
8,153
24,206
4,611
7,573
1,727
11,825
125,882
105,293
1,166
5,685
6,664
1,736
63
9
5,265
519,227
480,745
1,037
26,104
9,182
292
8,890
508
703
24
679
948
423,943
388,357
413
29,959
4,100
648
3,452
867
111
0
111
136
60,590
53,330
560
2,883
358
583
n.a.
n.a.
2,868
8
277,589
254,373
187
21,036
1,270
n.a.
n.a.
684
n.a.
n.a.
n.a.
n.a.
38
178,708
17,142
38,236
34,441
n.a.
9,557
i
t
1
n.a.
1
I
41,640
3,786
10,550
329
1,996
n.a.
9,994
51,365
261
7,810
18,816
24,477
3,490
634
794
18
228
n.a.
5,003
36,395
97
6,997
12,988
16,313
267
28,460
20,165
5,212
1,188
1,294
27,016
2,918
1,878
803
n.a.
15,190
491
341
268
4,024
219,104
135,300
136,942
27,882
44,025
169,599
568,223
1,075
173,749
167,397
78,315
4,482
49,623
122,334
476,377
73
90,068
140,280
45,238
2,002
37,099
60,091
316,575
725,331
426,013
219,230
38,936
138,584
18,653
79,966
n.a.
45,244
367,095
340,719
238,839
2,205
11,717
80 Total transaction accounts
Individuals, partnerships, and corporations
81
82
U.S. government
81
States and political subdivisions in the United States
Commercial banks in the United States
84
85
Other depository institutions in the United States
86
Banks in foreign countries
87
Foreign governments and official institutions
88
Certified and official checks
All
other
89
90 Demand deposits (included in total transaction accounts)
Individuals, partnerships, and corporations
91
92
93
States and political subdivisions in the United States
94
Commercial banks in the United States
95
Other depository institutions in the United States
%
Banks in foreign countries
Foreign governments and official institutions
97
Certified and official checks
98
99
All other
100
Total nontransaction accounts
101
Individuals, partnerships, and corporations
102
U.S. government
103
States and political subdivisions in the United States
104
Commercial banks in the United States
105
U.S. branches and agencies of foreign banks
106
Other commercial banks in the United States
Other depository institutions in the United States
107
108
Banks in foreign countries
109
Foreign branches of other U.S. banks
110
Other banks in foreign countries
111
Foreign governments and official institutions
112
113
114
115
116
117
118
119
120
121
12?
173
124
125
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and lBFs
All other liabilities
Total equity capital 9
Common stock
Undivided profits and capital reserves
Cumulative foreign currency translation adjustments
MEMO
126 Holdings of commercial paper included in total loans, gross
127 Total individual retirement accounts (IRA) and Keogh plan accounts
128 Total brokered deposits
129
130
Issued in denominations of $100,000 or less
131
Issued in denominations greater than $100,000 and participated out by the
broker in shares of $100,000 or less
132 Nontransaction savings deposits
133 Total time deposits of less than $100,000
134 Time certificates of deposit of $100,000 or more
135 Open-account time deposits of $100,000 or more
136 Super NOW accounts
137 Money market deposit accounts (MMDAs)
138 Total time and savings deposits
Quarterly averages
139
140 Obligations (other than securities) of states and political subdivisions
in the United States
141 Time certificates of deposit of $100,000 or more
142 Super N O W accounts, money market deposit accounts, and time deposits (other
than certificates of deposits of $100,000 or more)
143 Number of banks
Footnotes appear at the end of table 4.22
n a.
n a.
n a.
20,555
30,748
12,421
28,072
596
124,860
i
n a.
n a.
n a.
n.a.
n.a.
n a.
224,642
n.a.
74,673
44,759
16,049
n.a.
64,689
173,586
1,257
28,455
59,661
84.565
179,512
n.a.
63,329
44,412
13,825
n a.
49,693
85,827
S98
13,647
27,858
43,775
352
804
n a.
25,094
9,970
601
334
n.a.
n.a.
T
n. a.
n.a.
n. a.
n a.
*
n.a.
R
14,182
r
260
n.a.
n.a.
A78
4.21
Special Tables • June 1987
DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices
Consolidated Report of Condition, June 30, 1986
Millions of dollars
Members
Item
1 Total assets 6
2 C a s h and balances d u e f r o m d e p o s i t o r y institutions
3
C a s h items in p r o c e s s of collection and u n p o s t e d debits
4
C u r r e n c y and coin
5
Balances due f r o m d e p o s i t o r y institutions in the United S t a t e s
6
B a l a n c e s d u e f r o m b a n k s in foreign c o u n t r i e s and foreign central b a n k s
7
Balances d u e f r o m F e d e r a l R e s e r v e B a n k s
8 Total securities, loans and lease financing receivables, (net of unearned income)
9 Total securities, b o o k value
10
U . S . T r e a s u r y securities
11
U . S . g o v e r n m e n t agency a n d c o r p o r a t i o n obligations
All holdings of U . S . g o v e r n m e n t - i s s u e d o r guaranteed certificates of
12
participation in pools of residential mortgages
H
All o t h e r
14
Securities issued by states a n d political subdivisions in the United States
15
O t h e r d o m e s t i c securities
16
All holdings of private certificates of participation in pools of residential mortgages
17
All o t h e r
18
Foreign securities
Nonmembers
Total
Total
National
12 3
State
1,958,524
1,611,881
1,259,736
352,145
346,643
182,775
92,747
17,660
36,113
9,485
26,770
153,908
84,889
14,620
24,312
7,144
22,943
120,408
64,658
12,041
19,848
5,726
18,134
33,500
20,231
2,579
4,464
1,418
4,809
28,867
7,858
3,040
11,801
2,341
3,827
1,595,812
1,294,370
1,029,086
265,284
301,442
299,654
118,686
52,765
228,068
90,989
38,380
179,264
73,095
32,362
48,804
17,894
6,018
71,586
27,698
14,385
22,269
30,496
110,081
15,843
1,928
13,915
2,278
18,518
19,862
86,365
10,622
1,557
9,065
1,713
16,009
16,352
64,510
8,649
1,116
7,533
648
2,508
3,510
21,855
1,973
441
1,532
1,065
3,751
10,634
23,717
5,221
371
4,850
566
102,998
85,257
66,545
18,712
17,741
1,204,241
11,081
1,193,160
989,608
8,564
981,045
789,824
6,546
783,278
199,785
2,017
197,767
214,632
2,517
212,115
357,831
88,851
4,667
153,836
11,682
98,796
19,007
5,269
6,403
12,958
278,014
72,995
3,258
118,327
8,959
74,476
15,108
5,058
6,256
10,552
236,485
59,856
2,912
102,468
7,836
63,412
11,812
3,978
3,762
9,321
41,530
13,139
346
15,859
1,123
11,064
3,296
1,080
2,494
1,231
79,817
15,856
1,409
35,509
2,723
24,320
3,899
211
147
2,406
399,545
394,353
5,192
332,397
327,627
4,771
257,378
253,407
3,971
75,019
74,220
799
67,147
66,726
421
1,988
674
343
1,443
565
250
1,311
531
221
132
33
29
545
110
93
39 L o a n s to individuals for h o u s e h o l d , family and other personal e x p e n d i t u r e s
(includes p u r c h a s e d p a p e r )
40 L o a n s to foreign g o v e r n m e n t s and official institutions
41 Obligations (other than securities) of states and political subdivisions in the United States . . . .
42
N o n r a t e d industrial d e v e l o p m e n t obligations
O t h e r obligations (excluding securities)
43
44 O t h e r loans
45
L o a n s for purchasing and carrying securities
46
All o t h e r loans
246,858
3,907
57,104
44,206
12,898
73,241
24,760
48,481
202,381
3,719
48,105
36,552
11,554
68,556
23,599
44,957
168,434
2,661
35,802
26,700
9,102
44,485
12,029
32,455
33,946
1,059
12,303
9,851
2,452
24,072
11,570
12,502
44,477
188
8,999
7,654
1,345
4,685
1,161
3,524
47 L e a s e financing receivables
48 C u s t o m e r s ' liability on a c c e p t a n c e s o u t s t a n d i n g
49 N e t d u e f r o m o w n foreign offices, E d g e and A g r e e m e n t subsidiaries and I B F s
50
20,129
33,663
51,277
146,274
18,018
32,854
47,396
130,749
14,395
23,481
32,363
86,761
3,622
9,374
15,033
43,988
2,111
809
3,881
15,525
19 Federal f u n d s sold and securities p u r c h a s e d u n d e r a g r e e m e n t s to resell
20 Total loans and lease financing r e c e i v a b l e s , gross
21
LESS: U n e a r n e d i n c o m e on loans
22 Total loans and leases (net of u n e a r n e d income)
23
24
25
26
27
28
29
30
31
32
Total loans, gross, by category
L o a n s secured by real estate
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
1-4 family residential p r o p e r t i e s
Multifamily (5 or m o r e ) residential p r o p e r t i e s
N o n f a r m nonresidential p r o p e r t i e s
L o a n s to commercial b a n k s in the United S t a t e s
L o a n s t o o t h e r d e p o s i t o r y institutions in the United States
L o a n s to b a n k s in foreign c o u n t r i e s
L o a n s to finance agricultural p r o d u c t i o n a n d other loans to f a r m e r s
33 C o m m e r c i a l and industrial loans
34
T o U . S . a d d r e s s e e s (domicile)
T o n o n - U . S . a d d r e s s e e s (domicile)
35
36 A c c e p t a n c e s of other b a n k s 1 0
37
Of U . S . b a n k s
Of foreign b a n k s
38
Commercial Banks
4.20
A71
Continued
Members
Item
Nonmembers
Total
Total
National
State
51 Total liabilities and equity capital
1,958,524
1,611,881
1,259,736
352,145
346,643
52 Total liabilities7
1,823,623
1,502,335
1,175,928
326,407
321,288
53
54
55
56
57
58
59
60
61
1,428,783
1,269,130
4,479
74,915
44,155
7,742
8,451
2,822
17,090
1,138,074
1,006,179
3,810
56,677
40,300
6,304
8,022
2,570
14,211
915,569
817,140
3,326
46,777
29,487
4,299
4,246
1,535
8,757
222,505
189,039
484
9,900
10,813
2,005
3,776
1,034
5,454
290,709
262,951
669
18,238
3,855
1,438
428
252
2,879
485,612
400,029
3,028
18,851
30,873
6,367
7,636
1,738
17,090
402,484
325,963
2,542
15,642
29,353
5,602
7,482
1,688
14,211
312.128
258,907
2,140
12,126
21,472
3,699
3,941
1,087
8,757
90,355
67,056
402
3,517
7,881
1,903
3,541
601
5,454
83,129
74,066
486
3,209
1,520
765
155
50
2,879
71 Demand deposits (included in total transaction accounts)
Individuals, partnerships, and corporations
72
73
U.S. government
States and political subdivisions in the United States
74
75
Commercial banks in the United States
Other depository institutions in the United States
76
77
Foreign governments and official institutions
78
79
384,184
303,719
2,946
13,838
30,870
6,347
7,636
1,736
17,090
324,586
251,978
2,463
11,814
29,351
5,599
7,482
1,687
14,211
246,169
196,122
2,062
9,034
21,470
3,697
3,941
1,086
8,757
78,417
55,856
401
2,780
7,881
1,902
3,541
601
5,454
59,598
51,741
483
2,024
1,519
748
155
50
2,879
80
81
87
83
84
85
86
87
88
89
90
91
943,170
869,101
1,450
56,063
13,283
940
12,342
1,375
814
24
791
1,084
735,590
680,216
1,267
41,035
10,947
612
10,335
702
541
23
517
882
603,440
558,233
1,186
34,652
8,015
526
7,490
600
305
19
287
448
132,150
121,983
81
6,383
2,932
86
2,846
102
235
5
231
434
207,580
188,885
183
15,029
2,335
328
2,007
673
274
0
273
202
220,348
20,928
48,786
34,770
1,996
9,557
68,012
204,291
19,274
45,167
33,961
1,377
7,144
60,190
149,552
14,332
28,093
24,736
1,202
5,664
42,446
54,739
4,942
17,074
9,226
176
1,479
17,744
16,057
1,655
3,619
809
618
2,413
7,822
134,902
109,546
83,808
25,738
25,355
1,560
55,476
23,083
7,090
1,991
1,081
43,222
20,105
6,298
1,473
893
35,942
17,328
5,558
1,415
188
7,281
2,777
740
58
479
12,254
2,979
792
518
5,099
392,853
302,697
215,258
32,363
93,648
291,933
1,044,599
4,825
309,796
228,753
168,328
28,715
71,927
231,538
813,488
4,144
252,012
194,605
137,885
18,938
60,836
188,099
669,400
682
57,784
34,148
30,442
9,777
11,091
43,439
144,088
274
83,057
73,945
46,930
3,648
21,721
60,394
231,111
1,151,345
57,589
218,550
944,107
48,944
171,135
751,281
35,966
139,833
192,826
12,979
31,302
207,238
8,645
47,415
707,814
550,006
455,346
94,660
157,808
2,465
1,436
1.221
215
1,029
6?
63
64
65
66
67
68
69
70
92
93
94
95
96
97
98
Individuals, partnerships, and corporations
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and official checks
Individuals, partnerships, and corporations
U.S. government
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Foreign governments and official institutions
Certified and official checks
Individuals, partnerships, and corporations
States and political subdivisions in the United States
Commercial banks in the United States
U.S. branches and agencies of foreign banks
Other commercial banks in the United States
Other depository institutions in the United States
Banks in foreign countries
Foreign branches of other U.S. banks
Other banks in foreign countries
Foreign governments and official institutions
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs
99
MEMO
100 Holdings of commercial paper included in total loans, gross
101 Total individual retirement accounts (IRA) and Keogh plan accounts
102
103 Total brokered retail deposits
Issued in denominations of $100,000 or less
104
105
Issued in denominations greater than $100,000 and participated out by the broker in shares
of $100,000 or less
106
107 Total time deposits of less than $100,000
108 Time certificates of deposit of $100,000 or more
109 Open-account time deposits of $100,000 or more
110 Super N O W accounts
111 Money market deposit accounts (MMDAs)
112 Total time and savings deposits
Quarterly
averages
113
114 Obligations (other than securities) of states and political subdivisions in the United States
115 Time certificates of deposit of $100,000 or more
116 Super N O W accounts, money market deposit accounts, and time deposits (other than
certificates of deposits of $100,000 or more)
117
Footnotes appear at the end of table 4.22
A80
4.22
Special Tables • June 1987
D O M E S T I C O F F I C E S , Insured Commercial Bank A s s e t s and Liabilities 1 2 - 3
Consolidated Report of Condition, June 30, 1986
Millions of dollars
Members
Nonmembers
Item
Total
1 Total assets
6
2 Cash and balances due from depository institutions
3
Currency and coin
4
Noninterest-bearing balances due from commercial banks
5
Other
6 Total securities, loans, and lease financing receivables (net of unearned income)
7
8
9
10
11
12
13
14
15
16
Total securities, book value
U.S. Treasury securities and U.S. government agency and corporation obligations
Securities issued by states and political subdivisions in the United States
Other securities
All holdings of private certificates of participation in pools of residential mortgages
All other
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
Total loans, gross, by category
17 Loans secured by real estate
18
Construction and land development
19
Farmland
20
1 4 family residential properties
21
Multifamily (5 or more) residential properties
22
Nonfarm nonresidential properties
23
24
25
26
27
28
29
30
31
32
33
34
35
Loans to depository institutions
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
Acceptances of other banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
Obligations (other than securities) of states and political subdivisions in the United States
Nonrated industrial development obligations
Other obligations (excluding securities)
All other loans
Lease financing receivables
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining assets
National
State
2,382,253
1,792,580
1,409,060
383,520
589,673
220,221
21,970
38,773
159,479
170,584
16,507
22,162
131,915
134,379
13,597
17,934
102,848
36,205
2,910
4,228
29,067
49,638
5,462
16,611
27,564
1,966,634
1,451,918
1,159,025
292,893
514,716
418,151
253,227
142,679
22,245
2,295
19,950
133,358
1,429,676
14,551
1,415,125
275,838
161,623
99,949
14,266
1,699
12,567
99,693
1,086,452
10,066
1,076,387
218,326
131,607
75,746
10,973
1,235
9,738
78,738
869,731
7,770
861,961
57,512
30,016
24,203
3,293
464
2,829
20,955
216,721
2,296
214,426
142,313
91,604
42,730
7,979
596
7,383
33,664
343,223
4,485
338,739
448,127
97,116
12,222
203,225
13,495
122,069
316,574
76,866
5,866
139,689
9,726
84,428
268,101
63,173
4,995
119,744
8,462
71,728
48,473
13,692
871
19,945
1,264
12,700
131,553
20,250
6,356
63,537
3,769
37,641
31,294
34,151
453,360
3,138
26,749
18,303
356,604
1,993
19,837
15,507
277,670
1,748
6,912
2,797
78,934
245
4,545
15,848
96,756
1,144
298,294
60,108
46,221
13,887
80,474
20,730
33,681
51,277
161,716
224,892
49,350
37,390
11,960
73,677
18,309
32,865
47,396
137,214
187,058
36,878
27,415
9,463
48,306
14,625
23,488
32,363
92,168
37,833
12,473
9,975
2,497
25,371
3,684
9,377
15,033
45,046
73,402
10,758
8,831
1,926
6,797
2,421
817
3,881
24,502
36 Total liabilities and equity capital
2,382,253
1,792,580
1,409,060
383,520
589,673
37 Total liabilities7
2,210,956
1,667,652
1,312,658
354,994
543,304
38 Total deposits
39
Individuals, partnerships, and corporations
40
U.S. government
41
States and political subdivisions in the United States
42
Commercial banks in the United States
43
Other depository institutions in the United States
44
Certified and official checks
45
All other
1,805,949
1,611,997
5,244
102,622
45,783
9,024
19,959
11,319
1,298,435
1,152,389
4,151
67,539
41,267
6,948
15,509
10,631
1,048,269
938,089
3,612
55,804
30,253
4,860
9,832
5,819
250,166
214,301
539
11,736
11,013
2,088
5,677
4,812
507,514
459,608
1,092
35,082
4,517
2,076
4,450
688
46 Total transaction accounts
47
Individuals, partnerships, and corporations
48
U.S. government
49
States and political subdivisions in the United States
50
Commercial banks in the United States
51
Other depository institutions in the United States
52
Certified and official checks
53
All other
585,189
488,523
3,606
25,522
31,231
6,966
19,959
9,383
445,172
363,953
2,805
18,240
29,602
5,889
15,509
9,174
347,662
290,581
2,360
14,294
21,608
3,955
9,832
5,031
97,510
73,371
444
3,946
7,994
1,934
5,677
4,143
140,017
124,570
802
7,281
1,629
1,077
4,450
209
54 Demand deposits (included in total transaction accounts)
55
Individuals, partnerships, and corporations
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Certified and official checks
All other
444,774
357,049
3,506
16,721
31,228
6,930
19,959
9,381
351,085
275,275
2,717
12,931
29,600
5,880
15,509
9,173
268,280
215,620
2,275
9,969
21,606
3,948
9,832
5,029
82,805
59,655
442
2,962
7,994
1,932
5,677
4,143
93,688
81,773
789
3,790
1,628
1,050
4,450
208
62 Total nontransaction accounts
63
Individuals, partnerships, and corporations
64
U.S. government
65
States and political subdivisions in the United States
66
Commercial banks in the United States
67
Other depository institutions in the United States
68
All other
1,220,760
1,123,475
1,637
77,100
14,553
2,059
1,936
853,263
788,437
1,347
49,299
11,665
1,059
1,457
700,607
647,507
1,252
41,509
8,645
905
788
152,656
140,929
95
7,790
3,020
154
669
367,496
335,038
291
27,801
2,888
1,000
479
223,838
21,562
49,579
34,789
2,224
9,557
73,015
206,298
19,575
45,662
33,972
1,475
7,144
62,235
151,102
14,581
28,536
24,743
1,287
5,664
44,139
55,195
4,994
17,126
9,229
188
1,479
18,096
17,540
1,987
3,917
817
749
2,413
10,779
57
58
59
60
61
69
70
71
72
73
74
75
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining liabilities
Commercial Banks
4.20
A71
Continued
Members
Total
76 Total equity capital9
MEMO
77 Assets held in trading accounts 1 0
78
U.S. Treasury securities
79
U.S. government agency corporation obligations
80
Securities issued by states and political subdivisions in the United States
81
Other bonds, notes and debentures
82
Certificates of deposit
83
Commercial paper
84
Bankers acceptances
85
Other
86 Total individual retirement accounts (IRA) and Keogh plan accounts
87 Total brokered deposits
88 Total brokered retail deposits
89
Issued in denominations of $100,000 or less
90
Issued in denominations greater than $100,000 and participated out by the broker in
shares of $100,000 or less
91 Nontransaction savings deposits
92 Total time deposits of less than $100,000
93 Time certificates of deposit of $100,000 or more
94 Open-account time deposits of $100,000 or more
95 Super NOW accounts
96 Money market deposit accounts (MMDAs)
97 Total time and savings deposits
Quarterly averages
98 Total loans
99 Time certificates of deposit of $100,000 or more
100 Super N O W accounts, money market deposit accounts, and time deposits (other than
certificates of deposit of $100,000 or more)
101 Number of banks
1. Effective Mar. 31, 1984, the report of condition was substantially revised for
commercial banks. Some of the changes are as follows: (1) Previously, banks
with international banking facilities (IBFs) that had no other foreign offices were
considered domestic reporters. Beginning with the Mar. 31, 1984 call report these
banks are considered foreign and domestic reporters and must file the foreign and
domestic report of condition; (2) banks with assets greater than $1 billion have
additional items reported; (3) the domestic office detail for banks with foreign
offices has been reduced considerably; and (4) banks with assets under $25 million
have been excused from reporting certain detail items.
2. The " n . a . " for some of the items is used to indicate the lesser detail available
from banks without foreign offices, the inapplicability of certain items to banks
that have only domestic offices and/or the absence of detail on a fully consolidated
basis for banks with foreign offices.
3. All transactions between domestic and foreign offices of a bank are reported
in "net due f r o m " and "net due t o . " All other lines represent transactions with
parties other than the domestic and foreign offices of each bank. Since these
intraoffice transactions are nullified by consolidation, total assets and total
liabilities for the entire bank may not equal the sum of assets and liabilities
respectively, of the domestic and foreign offices.
4. Foreign offices include branches in foreign countries, Puerto Rico, and in
U.S. territories and possessions; subsidiaries in foreign countries; all offices of
Edge Act and Agreement corporations wherever located and IBFs.
Nonmembers
Total
Item
National
State
171,297
124,928
96,402
28,526
46,369
29,773
14,269
4,312
4,560
245
1,675
188
2,929
952
29,429
14,226
4,309
4,542
245
1,675
188
2,914
940
15,795
6,018
2,230
2,768
147
1,449
188
2,054
577
13,634
8,208
2,080
1,774
99
226
0
860
363
344
43
3
18
0
0
0
15
11
70,666
23,574
7,430
2,259
49,357
20,325
6,458
1,585
41,024
17,507
5,690
1,510
8,333
2,818
768
76
21,309
3,249
972
674
5,172
482,921
442,978
260,4%
34,366
130,747
352,024
1,361,175
4,873
349,470
284,761
189,522
29,511
87,430
258,469
947,350
4,181
284,661
240,381
155,954
19,611
73,739
210,441
779,989
693
64,809
44,380
33,568
9,900
13,691
48,027
167,361
298
133,451
158,217
70,974
4,854
43,317
93,555
413,825
1,370,575
263,794
1,038,249
192,192
829,184
157,802
209,066
34,389
332,326
71,602
946,652
648,442
536,682
111,760
298,211
14,182
5,953
4,866
1,087
8,229
5. The 'over 100' column refers to those respondents whose assets, as of June
30 of the previous calendar year, were equal to or exceeded $100 million. (These
respondents file the FFIEC 032 or FFIEC 033 call report.) The 'under 100' column
refers to those respondents whose assets, as of June 30 of the previous calendar
year, were less than $100 million. (These respondents filed the F F I E C 034 call
report.)
6. Since the domestic portion of allowances for loan and lease losses and
allocated transfer risk reserve are not reported for banks with foreign offices, the
components of total assets (domestic) will not add to the actual total (domestic).
7. Since the foreign portion of demand notes issued to the U.S. Treasury is not
reported for banks with foreign offices, the components of total liabilities (foreign)
will not add to the actual total (foreign).
8. The definition of 'all other' varies by report form and therefore by column in
this table. See the instructions for more detail.
9. Equity capital is not allocated between the domestic and foreign offices of
banks with foreign offices.
10. Components of assets held in trading accounts are only reported for banks
with total assets of $1 billion or more; therefore the components will not add to the
totals for this item.
A82
Federal Reserve Board of Governors
PAUL A . VOLCKER,
Chairman
Vice Chairman
MARTHA R . SEGER
MANUEL H . JOHNSON,
WAYNE D . ANGELL
OFFICE OF BOARD
OFFICE OF STAFF DIRECTOR
MONETARY AND FINANCIAL
MEMBERS
JOSEPH R. COYNE, Assistant to the Board
DONALD J. WINN, Assistant to the Board
STEVEN M . ROBERTS, Assistant to the Chairman
BOB S. MOORE, Special Assistant to the Board
Deputy Staff Director
NORMAND R.V. BERNARD, Special Assistant to the Board
DONALD L . KOHN,
DIVISION
LEGAL
FOR
POLICY
OF RESEARCH
AND
STATISTICS
DIVISION
MICHAEL BRADFIELD, General Counsel
J. VIRGIL MATTINGLY, J R . , Deputy General Counsel
RICHARD M. ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
RICKI R. TIGERT, Assistant General Counsel
MARYELLEN A. BROWN, Assistant to the General Counsel
OFFICE OF THE
SECRETARY
WILLIAM W . W I L E S ,
Secretary
BARBARA R. LOWREY, Associate Secretary
JAMES MCAFEE, Associate Secretary
DIVISION OF CONSUMER
AND COMMUNITY
AFFAIRS
JAMES L . KICHLINE, Director
E D W A R D C . E T T I N , Deputy
Director
MICHAEL J. PRELL, 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
MARTHA B E T H E A , Deputy Associate
Director
THOMAS D . SIMPSON, Deputy Associate
Director
LAWRENCE SLIFMAN, Deputy Associate Director
PETER A . TINSLEY, Deputy Associate
Director
S U S A N J. LEPPER, Assistant
Director
RICHARD D . PORTER, Assistant
Director
MARTHA S . SCANLON, Assistant
Director
JOYCE K . ZICKLER, Assistant
Director
LEVON H . G A R A B E D I A N , Assistant
Director
(Administration)
DIVISION
GRIFFITH L . GARWOOD,
Director
G L E N N E . L O N E Y , Assistant
Director
E L L E N M A L A N D , Assistant
Director
DOLORES S . S M I T H , Assistant
Director
DIVISION OF BANKING
SUPERVISION AND
REGULATION
Director
Deputy Director'
D O N E . K L I N E , Associate
Director
FREDERICK M . STRUBLE, Associate
Director
WILLIAM A . RYBACK, Deputy Associate
Director
STEPHEN C . SCHEMERING, Deputy Associate
Director
RICHARD SPILLENKOTHEN, Deputy Associate
Director
HERBERT A . B I E R N , Assistant
Director
JOE M. CLEAVER, Assistant Director
A N T H O N Y CORNYN, Assistant
Director
JAMES I. GARNER, Assistant
Director
JAMES D . GOETZINGER, Assistant
Director
MICHAEL G . MARTINSON, Assistant
Director
ROBERT S . PLOTKIN, Assistant
Director
S I D N E Y M . S U S S A N , Assistant
Director
L A U R A M . HOMER, Securities Credit Officer
WILLIAM TAYLOR,
FRANKLIN D . DREYER,
1. On loan from the Federal Reserve Bank of Chicago.
OF INTERNATIONAL
FINANCE
E D W I N M . T R U M A N , Director
LARRY J. PROMISEL, Senior Associate
CHARLES J. SIEGMAN, Senior Associate
D A V I D H . H O W A R D , Deputy Associate
Director
Director
Director
ROBERT F. GEMMILL, Staff Adviser
D O N A L D B . A D A M S , Assistant
Director
PETER HOOPER I I I , Assistant
Director
KAREN H . JOHNSON, Assistant
Director
RALPH W . SMITH, J R . , Assistant
Director
A83
and Official Staff
H . ROBERT HELLER
OFFICE OF
STAFF DIRECTOR FOR
OFFICE OF STAFF DIRECTOR FOR
FEDERAL RESERVE BANK
ACTIVITIES
MANAGEMENT
S . D A V I D FROST, Staff Director
E D W A R D T . M U L R E N I N , Assistant Staff Director
PORTIA W . THOMPSON, Equal Employment
Opportunity
Programs Officer
DIVISION
OF
THEODORE E. ALLISON, Staff Director
DIVISION OF FEDERAL
BANK
OPERATIONS
PERSONNEL
C L Y D E H . FARNSWORTH, J R . , Director
ELLIOTT C . M C E N T E E , Associate
Director
D A V I D L . ROBINSON, Associate
Director
C . WILLIAM SCHLEICHER, J R . , Associate
Director
CHARLES W . B E N N E T T , Assistant
Director
A N N E M . D E B E E R , Assistant
Director
JACK D E N N I S , J R . , Assistant
Director
EARL G . H A M I L T O N , Assistant
Director
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
JOHN H. PARRISH, Assistant
GEORGE E . LIVINGSTON, Controller
B R E N T L . B O W E N , Assistant
Controller
DIVISION
OF SUPPORT
FLORENCE M. YOUNG,
SERVICES
Director
Assistant Director
ROBERT E . FRAZIER,
GEORGE M . LOPEZ,
OFFICE OF THE EXECUTIVE
INFORMATION RESOURCES
DIRECTOR FOR
MANAGEMENT
A L L E N E . B E U T E L , Executive
Director
STEPHEN R . M A L P H R U S , Associate
Director
DIVISION
SYSTEMS
OF HARDWARE
AND
SOFTWARE
BRUCE M . BEARDSLEY, Director
THOMAS C . J U D D , Assistant
Director
ELIZABETH B . RIGGS, Assistant
Director
ROBERT J. Z E M E L , Assistant
Director
DIVISION OF APPLICATIONS
STATISTICAL
SERVICES
WILLIAM R . JONES, Director
D A Y W . R A D E B A U G H , Assistant
RICHARD C . S T E V E N S , Assistant
PATRICIA A . W E L C H , Assistant
DEVELOPMENT
Director
Director
Director
RESERVE
AND
Director
Adviser
A84
Federal Reserve Bulletin • June 1987
Federal Open Market Committee
FEDERAL
OPEN MARKET
COMMITTEE
MEMBERS
PAUL A . VOLCKER,
E . GERALD CORRIGAN,
Chairman
MARTHA R . SEGER
GARY H . STERN
H . ROBERT HELLER
M A N U E L H . JOHNSON
SILAS KEEHN
W A Y N E D . ANGELL
E D W A R D G . BOEHNE
ROBERT H . BOYKIN
ALTERNATE
MEMBERS
ROBERT T . PARRY
ROBERT P. BLACK
THOMAS M . TIMLEN
Vice Chairman
ROBERT P. FORRESTAL
STAFF
DONALD L. KOHN, Secretary and Staff Adviser
NORMAN R . V . BERNARD, Assistant
ROSEMARY R . LONEY,
Deputy Assistant
MICHAEL BRADFIELD, General
JAMES H . OLTMAN,
Secretary
Secretary
Counsel
Deputy General Counsel
JAMES L . KICHLINE,
E D W I N M . TRUMAN,
Economist
Economist
PETER FOUSEK, Associate
(International)
Economist
PETER D . STERNLIGHT, Manager
SAM Y . CROSS, Manager for
FEDERAL ADVISORY
RICHARD W. LANG, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
MICHAEL J. PRELL, Associate
Economist
ARTHUR J. ROLNICK, Associate
Economist
HARVEY ROSENBLUM, Associate
Economist
KARL A. SCHELD, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
THOMAS D. SIMPSON, Associate
Economist
for Domestic Operations, System Open Market Account
Foreign Operations, System Open Market Account
COUNCIL
JOHN G. MEDLIN JR.,
President
JULIEN L . MCCALL, Vice President
JOHN F . MCGILLICUDDY, D E W A L T H . ANKENY, JR., AND F . PHILLIPS GILTNER,
JOHN P. L A WARE, First District
JOHN F. MCGILLICUDDY, Second District
SAMUEL A . MCCULLOUGH, Third District
JULIEN L . M C C A L L , Fourth District
JOHN G . M E D L I N , JR., Fifth District
BENNETT A . BROWN, Sixth District
Directors
CHARLES T. FISHER III, Seventh District
DONALD N. BRANDIN, Eighth District
D E W A L T H . A N K E N Y , JR., Ninth District
F . PHILLIPS GILTNER, Tenth District
GERALD W . FRONTERHOUSE, Eleventh District
JOHN D. MANGELS, Twelfth District
HERBERT V . PROCHNOW, SECRETARY
WILLIAM J. KORSVIK, ASSOCIATE SECRETARY
A85
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
E D W A R D N . LANGE, Seattle, Washington,
STEVEN W . HAMM, Columbia, South Carolina,
E D W I N B . BROOKS, JR., Richmond, Virginia
JONATHAN A . B R O W N , W a s h i n g t o n , D . C .
JUDITH N. BROWN, Edina, Minnesota
MICHAEL S . CASSIDY, New York, New York
THERESA FAITH CUMMINGS, Springfield, Illinois
RICHARD B. DOBY, Denver, Colorado
RICHARD H . F I N K , Washington, D.C.
NEIL J. FOGARTY, Jersey City, N e w Jersey
STEPHEN GARDNER, Dallas, Texas
KENNETH A. H A L L , Jackson, Mississippi
ELENA G . HANGGI, Little Rock, Arkansas
ROBERT J. HOBBS, Boston, Massachusetts
RAMON E. JOHNSON, Salt Lake City, Utah
ROBERT W. JOHNSON, West Lafayette, Indiana
THRIFT INSTITUTIONS
ADVISORY
JOHN
M.
Chairman
Vice Chairman
KOLESAR,
Cleveland, Ohio
ALAN B. LERNER, Dallas, Texas
FRED S. MCCHESNEY, Chicago, Illinois
RICHARD L. D. MORSE, Manhattan, Kansas
HELEN E . NELSON, Mill Valley, California
SANDRA R. PARKER, Richmond, Virginia
JOSEPH L. PERKOWSKI, Centerville, Minnesota
BRENDA L. SCHNEIDER, Detroit, Michigan
JANE SHULL, Philadelphia, Pennsylvania
TED L. SPURLOCK, Dallas, Texas
MEL R. STILLER, Boston, Massachusetts
CHRISTOPHER J. SUMNER, Salt Lake City, Utah
E D W A R D J. WILLIAMS, Chicago, Illinois
MICHAEL ZOROYA, St. Louis, Missouri
COUNCIL
MICHAEL R. WISE, Denver, Colorado, President
JAMIE J. JACKSON, Houston, Texas, Vice President
GERALD M. CZARNECKI, Mobile, Alabama
JOHN C. DICUS, Topeka, Kansas
BETTY GREGG, Phoenix, Arizona
THOMAS A. K I N S T , Hoffman Estates,
RAY MARTIN, Los Angeles, California
DONALD F. MCCORMICK, Livingston, N e w Jersey
JANET
M.
PAVLISKA,
Arlington, Massachusetts
HERSCHEL ROSENTHAL, Miami, Florida
Illinois
WILLIAM G . SCHUETT, Milwaukee, Wisconsin
GARY L. SIRMON, Walla Walla, Washington
A86
Federal Reserve Board Publications
Copies are available from PUBLICATIONS SERVICES,
Mail Stop 138, Board of Governors of the Federal Reserve
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Board of Governors of the Federal Reserve System. Payment
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THE
FEDERAL RESERVE SYSTEM—PURPOSES AND F U N C TIONS. 1984. 120 p p .
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A N N U A L REPORT: BUDGET REVIEW, 1 9 8 5 - 8 6 .
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BANKING AND MONETARY STATISTICS. 1 9 1 4 - 1 9 4 1 . (Reprint
of Part I only) 1976. 682 pp. $5.00.
BANKING
AND
MONETARY
STATISTICS.
1941-1970.
1976.
1,168 pp. $15.00.
A N N U A L STATISTICAL DIGEST
1974_78.
1981.
1982.
1983.
1984.
1980. 305 pp.
1982. 239 pp.
1983. 266 pp.
1984. 264 pp.
1985. 254 pp.
1986. 231 pp.
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1985.
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HISTORICAL CHART BOOK. Issued annually in Sept. $ 1 . 2 5
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SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $21.00 per year or $.50 each in
the United States, its possessions, Canada, and Mexico;
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THE FEDERAL RESERVE ACT, and other statutory provisions
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through April 20, 1983, with Supplements covering
amendments through August 1986. 576 pp. $7.00.
REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
A N N U A L PERCENTAGE RATE TABLES (Truth in Lending—
Regulation Z) Vol. I (Regular Transactions). 1969. 100
pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each
volume $2.25; 10 or more of same volume to one
address, $2.00 each.
FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY
UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one
address, $1.50 each.
THE BANK
HOLDING
COMPANY MOVEMENT TO 1978:
A
COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to
one address, $2.25 each.
1980. 68 pp. $1.50 each;
10 or more to one address, $1.25 each.
INTRODUCTION TO FLOW OF F U N D S .
PUBLIC POLICY AND CAPITAL FORMATION.
1981. 3 2 6 p p .
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Consumer and Community Affairs Handbook. $75.00 per
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Monetary Policy and Reserve Requirements Handbook.
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Federal Reserve Regulatory Service. 3 vols. (Contains all
three Handbooks plus substantial additional material.)
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Rates for subscribers outside the United States are as
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FEDERAL RESERVE REGULATORY SERVICE.
THE U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A
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WELCOME TO THE FEDERAL RESERVE.
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WRITING IN STYLE AT THE FEDERAL RESERVE. A u g u s t 1984.
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INDUSTRIAL PRODUCTION—1986 EDITION.
December 1986.
440 pp. $9.00 each.
FINANCIAL FUTURES AND OPTIONS IN THE U . S . ECONOMY.
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CONSUMER EDUCATION
PAMPHLETS
Short pamphlets suitable for classroom use. Multiple copies
are available without charge.
Alice in Debitland
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection Laws
Fair Credit Billing
Federal Reserve Glossary
A Guide to Business Credit and the Equal Credit Opportunity
Act
Guide to Federal Reserve Regulations
How to File A Consumer Credit Complaint
If You Borrow To Buy Stock
If You Use A Credit Card
Series on the Structure of the Federal Reserve System
The Board of Governors of the Federal Reserve System
The Federal Open Market Committee
Federal Reserve Bank Board of Directors
Federal Reserve Banks
Organization and Advisory Committees
What Truth in Lending Means to You
A87
PAMPHLETS FOR FINANCIAL
INSTITUTIONS
Short pamphlets on regulatory compliance, primarily suitable for banks, bank holding companies and creditors.
REVIEW OF THE TECHNIQUES AND LITERATURE, b y
Kenneth Rogoff. October 1983. 15 pp.
133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVENTION, A N D INTEREST RATES: A N EMPIRICAL IN-
VESTIGATION, by Bonnie E. Loopesko. November
1983. Out of print.
Limit of 50 copies
134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: A REVIEW OF THE LITERATURE, b y
The Board of Directors' Opportunities in Community Reinvestment
The Board of Directors' Role in Consumer Law Compliance
Combined Construction/Permanent Loan Disclosure and
Regulation Z
Community Development Corporations and the Federal Reserve
Construction Loan Disclosures and Regulation Z
Finance Charges Under Regulation Z
How to Determine the Credit Needs of Your Community
Regulation Z: The Right of Rescission
The Right to Financial Privacy Act
Signature Rules in Community Property States: Regulation B
Signature Rules: Regulation B
Timing Requirements for Adverse Action Notices: Regulation B
What An Adverse Action Notice Must Contain: Regulation B
Understanding Prepaid Finance Charges: Regulation Z
Ralph W. Tryon. October 1983. 14 pp. Out of print.
135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: APPLICATIONS TO C A N A D A , GERMA-
NY, AND JAPAN, by Deborah J. Danker, Richard A.
Haas, Dale W. Henderson, Steven A. Symansky, and
Ralph W. Tryon. April 1985. 27 pp. Out of print.
136. THE EFFECTS OF FISCAL POLICY ON THE U . S . ECONO-
MY, by Darrell Cohen and Peter B. Clark. January
1984. 16 pp. Out of print.
137. THE IMPLICATIONS FOR BANK MERGER POLICY OF
FINANCIAL DEREGULATION, INTERSTATE BANKING,
AND
FINANCIAL
SUPERMARKETS,
by
Stephen
A.
Rhoades. February 1984. Out of print.
138. ANTITRUST L A W S , JUSTICE DEPARTMENT GUIDELINES, AND THE LIMITS OF CONCENTRATION IN LOCAL BANKING MARKETS, by James Burke. June 1984.
14 pp. Out of print.
139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN
THE UNITED STATES, by Thomas D. Simpson and
Patrick M. Parkinson. August 1984. 20 pp.
140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF
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.
THE LITERATURE, by John D. Wolken. November
1984. 38 pp. Out of print.
141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAYMENT COSTS, by William Dudley. November 1984.
15 pp. Out of print.
142. MERGERS
AND
BANKS, 1960-83,
ACQUISITIONS
BY
COMMERCIAL
by Stephen A . Rhoades. December
1984. 30 pp. Out of print.
Staff Studies 115-125 are out of print.
114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ON COMPETITION AND PERFORMANCE IN
BANKING MARKETS, by Timothy J. Curry and John T.
Rose. Jan. 1982. 9 pp.
126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR-
KET INTERVENTION, by Donald B. Adams and Dale
W. Henderson. August 1983. 5 pp. Out of print.
127. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: JANUARY-MARCH 1975, BY Margaret L .
Greene. August 1984. 16 pp. Out of print.
128. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: SEPTEMBER 1 9 7 7 - D E C E M B E R 1 9 7 9 , b y M a r -
garet L. Greene. October 1984. 40 pp. Out of print.
129. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1981, by Margaret
L. Greene. August 1984. 36 pp.
130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTERNATIONAL TRADE AND OTHER ECONOMIC VARIABLES: A REVIEW OF THE LITERATURE, by Victoria S .
Farrell with Dean A. DeRosa and T. Ashby McCown.
January 1984. Out of print.
131. CALCULATIONS OF PROFITABILITY FOR U . S . D O L L A R DEUTSCHE MARK INTERVENTION, by Laurence R .
Jacobson. October 1983. 8 pp.
132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES AND INTERVENTION: A
143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF
THE ELECTRONIC F U N D TRANSFER ACT: RECENT
SURVEY EVIDENCE, by Frederick J. Schroeder. April
1985. 23 pp. Out of print.
144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CONSUMER CREDIT REGULATIONS: THE TRUTH IN L E N D ING AND EQUAL CREDIT OPPORTUNITY L A W S , b y
Gregory E. Elliehausen and Robert D. Kurtz. May
1985. 10 pp.
145. SERVICE CHARGES AS A SOURCE OF BANK INCOME
AND THEIR IMPACT ON CONSUMERS, by Glenn B .
Canner and Robert D. Kurtz. August 1985. 31 pp. Out
of print.
146. THE ROLE OF THE PRIME RATE IN THE PRICING OF
BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84,
by Thomas F. Brady. November 1985. 25 pp.
147. REVISIONS IN THE MONETARY SERVICES (DIVISIA)
INDEXES OF THE MONETARY AGGREGATES, by Helen
T. Farr and Deborah Johnson. December 1985. 42 pp.
148. THE MACROECONOMIC A N D SECTORAL EFFECTS OF
THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA-
TION RESULTS, by Flint Brayton and Peter B. Clark.
December 1985. 17 pp.
149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS
IN BANKING BEFORE A N D AFTER ACQUISITION, b y
Stephen A. Rhoades. April 1986. 32 pp.
150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: A REEXAMINATION AND AN APPLICATION, b y
John T. Rose and John D. Wolken. May 1986. 13 pp.
A88
151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT
PRICING FROM 1 9 8 3 THROUGH 1 9 8 5 , b y P a t r i c k I.
Mahoney, Alice P. White, Paul F. O'Brien, and Mary
M. McLaughlin. January 1987. 30 pp.
152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A
REVIEW OF THE LITERATURE, by Mark J. War-
shawsky. April 1987. 18 pp.
REPRINTS OF BULLETIN
ARTICLES
Most of the articles reprinted do not exceed 12 pages.
Limit of 10 copies
Foreign Experience with Targets for Money Growth. 10/83.
Intervention in Foreign Exchange Markets: A Summary of
Ten Staff Studies. 11/83.
A Financial Perspective on Agriculture. 1/84.
Survey of Consumer Finances, 1983. 9/84.
Bank Lending to Developing Countries. 10/84.
Survey of Consumer Finances, 1983: A Second Report.
12/84.
Union Settlements and Aggregate Wage Behavior in the
1980s. 12/84.
The Thrift Industry in Transition. 3/85.
A Revision of the Index of Industrial Production. 7/85.
Financial Innovation and Deregulation in Foreign Industrial
Countries. 10/85.
Recent Developments in the Bankers Acceptance Market.
1/86.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
U. S. International Transactions in 1986. 5/87.
Prices, Profit Margins, and Exchange Rates. 6/86.
Agricultural Banks under Stress. 7/86.
Foreign Lending by Banks: A Guide to International and
U.S. Statistics. 10/86.
Recent Developments in Corporate Finance. 11/86.
A89
ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES—BOARD
OF THE FEDERAL RESERVE SYSTEM' (Payment must accompany requests)
Weekly Releases
Annual
rate
jroximate
release days
OF
GOVERNORS
Date or period
to which data refer
• Aggregate Reserves of Depository Institutions and
the Monetary Base. H.3 (502) [1.20]
$12.00
Thursday
Week ended previous
Wednesday
• Actions of the Board: Applications and Reports
Received. H.2 (501)
$21.00
Friday
Week ended previous Saturday
• Assets and Liabilities of Insured Domestically
Chartered and Foreign Related Banking
Institutions. H.8 (510) [1.25]
$12.00
Monday
Wednesday, 3 weeks earlier
• Changes in State Member Banks. K.3 (615)
$12.00
Tuesday
Week ended previous Saturday
• Factors Affecting Reserves of Depository
Institutions and Condition Statement of Federal
Reserve Banks. H.4.1 (503) [1.11]
$12.00
Thursday
Week ended previous
Wednesday
• Foreign Exchange Rates. H.10 (512) [3.28]
$12.00
Monday
Week ended previous Friday
• Money Stock, Liquid Assets, and Debt Measures.
H.6 (508) [1.21]
$21.00
Thursday
Week ended Monday of
previous week
• Selected Borrowings in Immediately Available
Funds of Large Member Banks. H.5 (507) [1.13]
$12.00
Wednesday
Week ended Thursday of
previous week
• Selected Interest Rates. H.15 (519) [1.35]
$12.00
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]
$12.00
Friday
Wednesday, 1 week earlier
• Capacity Utilization: Manufacturing, Mining,
Utilities and Industrial Materials. G.3 (402) [2.12]
$ 3.00
Midmonth
Previous month
• Changes in Status of Banks and Branches. G.4.5
(404)
$9.00
1st of month
Previous month
• Commercial and Industrial Loan Commitments at
$ 3.00
2nd week of month
2nd month previous
Monthly Releases
Selected Large Commercial Banks. G.21 (423)
• Consumer Installment Credit. G.19 (421) [1.55, 1.56]
$ 3.00
Midmonth
2nd month previous
• Debits and Deposit Turnover at Commercial Banks.
G.6 (406) [1.22]
$3.00
12th of month
Previous month
• Finance Companies. G.20 (422) [1.51, 1.52]
$ 3.00
5th working day of
month
2nd month previous
• Foreign Exchange Rates. G.5 (405) [3.28]
$3.00
1st of month
Previous month
• Industrial Production. G.12.3 (414) [2.13]
$ 7.00
Midmonth
Previous month
• Loans and Securities at all Commercial Banks. G.7
(407) [1.23]
$ 3.00
3rd week of month
Previous month
• Major Nondeposit Funds of Commercial Banks.
G.10 (411) [1.24]
$ 3.00
3rd week of month
Previous month
• Maturity Distribution of Outstanding Negotiable
Time Certificates of Deposit at Large Commercial
Banks. G.9 (410)
$ 3.00
3rd week of month
Last Wednesday of 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 respective BULLETIN tables that report the data are designated in brackets.
A90
Monthly Releases—Continued
• Monthly Report of Assets and Liabilities of
International Banking Facilities. G. 14 (416)
Annual
rate
Date or period
to which data refer
2nd week of month
Wednesday, 2 weeks earlier
1st of month
Previous month
$ 3.00
3rd working day of
month
Previous month
• Agricultural Finance Databook. E.15 (125)
$4.00
End of March,
June, September,
and December
January, April, July, and
October
• Country Exposure Lending Survey. E.16 (126)
$4.00
January, April,
July, and
October
Previous 3 months
• Domestic Offices, Commercial Bank Assets and
Liabilities Consolidated Report of Condition.
E.3.4 (113) [1.26, 1.28]
$3.00
March, June,
September, and
December
Previous 6 months
• Flow of Funds: Seasonally Adjusted and
Unadjusted. Z.l (780) [1.58, 1.59]
$7.00
23rd of February,
May, August,
and November
Previous quarter
• Flow of Funds Summary Statistics Z.l. (788) [1.57,
1.58]
$2.00
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
$2.00
15th of March,
June, September,
and December
Previous quarter
• Survey of Terms of Bank Lending. E.2 (111) [1.34]
$2.00
Midmonth of
March, June,
September, and
December
February, May, August, and
November
• List of OTC Margin Stocks. E.7 (117)
$4.00
January, April,
July, and
October
February, May, August, and
November
• Aggregate Summaries of Annual Surveys of
Securities Credit Extension. C.2 (101)
$ .50
February
End of previous June
• Balance Sheets of the U.S. Economy. C.9 (108)
$2.00
October
Previous year
• Research Library—Recent Acquisitions. G. 15 (417)
• Selected Interest Rates. G.13 (415) [1.35]
$ 3.00
, jroximate
release days
Free of
charge
Quarterly Releases
(121)
Annual Releases
A91
Index to Statistical Tables
References are to pages A3-A81 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20
Assets and liabilities (See also Foreigners)
Banks, by classes, 18-20, 70-81
Domestic finance companies, 37
Federal Reserve Banks, 10
Financial institutions, 26
Foreign banks, U.S. branches and agencies, 21
Nonfinancial corporations, 36
Automobiles
Consumer installment credit, 40, 41
Production, 47, 48
BANKERS acceptances, 9, 23, 24
Bankers balances, 18-20, 70, 72, 74, 76, 78, 80.
(See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 24
Branch banks, 21, 55
Business activity, nonfinancial, 44
Business expenditures on new plant and equipment, 36
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 46
Capital accounts
Banks, by classes, 18, 71, 73, 75, 77, 79, 81
Federal Reserve Banks, 10
Central banks, discount rates, 67
Certificates of deposit, 24
Commercial and industrial loans
Commercial banks, 16, 19, 70, 72, 74, 76, 78, 80
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20, 70-81
Commercial and industrial loans, 16, 18, 19, 20, 21
Consumer loans held, by type, and terms, 40, 41
Loans sold outright, 19
Nondeposit funds, 17
Number, by classes, 71, 73, 75, 77, 79, 81
Real estate mortgages held, by holder and property, 39
Time and savings deposits, 3
Commercial paper, 23, 24, 37
Condition statements (See Assets and liabilities)
Construction, 44, 49
Consumer installment credit, 40, 41
Consumer prices, 44, 50
Consumption expenditures, 51, 52
Corporations
Nonfinancial, assets and liabilities, 36
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 26, 40. (See also Thrift institutions)
Currency and coin, 18, 70, 72, 74, 76, 78, 80
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 15
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 18-21, 71, 73, 75, 77, 79, 81
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 22
Turnover, 15
Depository institutions
Reserve requirements, 8
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 18-20, 21, 71, 73, 75, 77, 79, 81
Federal Reserve Banks, 4, 10
Turnover, 15
Discount rates at Reserve Banks and at foreign central
banks and foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 35
EMPLOYMENT, 45
Eurodollars, 24
FARM mortgage loans, 39
Federal agency obligations, 4, 9, 10, 11, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and
ownership of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 28, 33
Federal funds, 6, 17, 19, 20, 21, 24, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 38, 39
Federal Housing Administration, 33, 38, 39
Federal Land Banks, 39
Federal National Mortgage Association, 33, 38, 39
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 4, 10, 11, 30
Federal Reserve credit, 4, 5, 10, 11
Federal Reserve notes, 10
Federal Savings and Loan Insurance Corporation insured
institutions, 26
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 37
Business credit, 37
Loans, 40, 41
Paper, 23, 24
Financial institutions
Loans to, 19, 20, 21
Selected assets and liabilities, 26
Float, 4
Flow of funds, 42, 43
Foreign banks, assets and liabilities of U.S. branches and
agencies, 21
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4, 10, 19, 20
Foreign exchange rates, 68
Foreign trade, 54
Foreigners
Claims on, 55, 57, 60, 61, 62, 64
Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66
A92
GOLD
Certificate account, 10
Stock, 4, 54
Government National Mortgage Association, 33, 38, 39
Gross national product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 44, 51, 52
Industrial production, 44, 47
Installment loans, 40, 41
Insurance companies, 26, 30, 39
Interest rates
Bonds, 24
Consumer installment credit, 41
Federal Reserve Banks, 7
Foreign central banks and foreign countries, 67
Money and capital markets, 24
Mortgages, 38
Prime rate, 23
International capital transactions of United States, 53-67
International organizations, 57, 58, 60, 63, 64
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18, 19, 20, 21, 26
Commercial banks, 3, 16, 18-20, 39, 70, 76
Federal Reserve Banks, 10, 11
Financial institutions, 26, 39
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18-20
Commercial banks, 3, 16, 18-20, 70, 72, 74, 76, 78, 80
Federal Reserve Banks, 4, 5, 7, 10, 11
Financial institutions, 26, 39
Insured or guaranteed by United States, 38, 39
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 25
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 6
Reserve requirements, 8
Mining production, 48
Mobile homes shipped, 49
Monetary and credit aggregates, 3, 12
Money and capital market rates, 24
Money stock measures and components, 3, 13
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks, (See Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 9
PERSONAL income, 52
Prices
Consumer and producer, 44, 50
Stock market, 25
Prime rate, 23
Producer prices, 44, 50
Production, 44, 47
Profits, corporate, 35
REAL estate loans
Banks, by classes, 16, 19, 20, 39
Financial institutions, 26
Terms, yields, and activity, 38
Type of holder and property mortgaged, 39
Repurchase agreements, 6, 17, 19, 20, 21
Reserve requirements, 8
Reserves
Commercial banks, 18, 71, 77
Depository institutions, 3, 4, 5, 12
Federal Reserve Banks, 10
U.S. reserve assets, 54
Residential mortgage loans, 38
Retail credit and retail sales, 40, 41, 44
SAVING
Flow of funds, 42, 43
National income accounts, 51
Savings and loan associations, 26, 39, 40, 42. (See also
Thrift institutions)
Savings banks, 26, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 65
New issues, 34
Prices, 25
Special drawing rights, 4, 10, 53, 54
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 19, 20, 26
Rates on securities, 24
Stock market, selected statistics, 25
Stocks (See also Securities)
New issues, 34
Prices, 25
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 3. (See also Credit unions and Savings
and loan associations)
Time and savings deposits, 3, 13, 17, 18, 19, 20, 21, 71, 73,
75, 77, 79, 81
Trade, foreign, 54
Treasury cash, Treasury currency, 4
Treasury deposits, 4, 10, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 18, 19, 20
Treasury deposits at Reserve Banks, 4, 10, 28
U.S. government securities
Bank holdings, 18-20, 21, 30, 70, 72, 74, 76, 78, 80
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)
A93
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
George N. Hatsopoulos
Frank E. Morris
Robert W. Eisenmenger
NEW YORK*
10045
John R. Opel
Virginia A. Dwyer
Mary Ann Lambertsen
E. Gerald Corrigan
Thomas M. Timlen
Buffalo
14240
John T. Keane
PHILADELPHIA
19105
Nevius M. Curtis
George E. Bartol III
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Charles W. Parry
E. Mandell de Windt
Owen B. Butler
James E. Haas
vacancy
William H. Hendricks
Leroy T. Canoles, Jr.
Robert A. Georgine
Gloria L. Johnson
Wallace J. Jorgenson
Robert P. Black
Jimmie R. Monhollon
Bradley Currey, Jr.
Larry L. Prince
Margaret E. M. Tolbert
Andrew A. Robinson
Robert D. Apelgren
C. Warren Neel
Caroline K. Theus
Robert P. Forrestal
Jack Guynn
Robert J. Day
Marcus Alexis
Robert E. Brewer
Silas Keehn
Daniel M. Doyle
W.L. Hadley Griffin
Robert L. Virgil, Jr.
James R. Rodgers
Raymond M. Burse
Katherine H. Smythe
Thomas C. Melzer
Joseph P. Garbarini
John B. Davis, Jr.
Michael W. Wright
Warren H. Ross
Gary H. Stern
Thomas E. Gainor
Irvine O. Hockaday, Jr.
Robert G. Lueder
James E. Nielson
Patience S. Latting
Kenneth L. Morrison
Roger Guffey
Henry R. Czerwinski
Bobby R. Inman
Hugh G. Robinson
Mary Carmen Saucedo
Walter M. Mischer, Jr.
Robert F. McDermott
Robert H. Boy kin
William H. Wallace
Fred W. Andrew
Robert F. Erburu
Richard C. Seaver
Paul E. Bragdon
Don M. Wheeler
John W. Ellis
Robert T. Parry
Carl E. Powell
Cincinnati
Pittsburgh
45201
15230
RICHMOND*
23219
Baltimore
21203
Charlotte
28230
Culpeper Communications
and Records Center 22701
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
59601
64198
80217
73125
68102
75222
79999
77252
78295
SAN FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino
Harold J. Swart
Robert D. McTeer, Jr.
Albert D. Tinkelenberg
John G. Stoides
Delmar Harrison
Fred R. HenJames D. Hawkins
Patrick K. Barron
Jeffrey J. Wells
Henry H. Bourgaux
Roby L. Sloan
John F. Breen
James E. Conrad
Paul I. Black, Jr.
Robert F. McNellis
Enis Alldredge, Jr.
William G. Evans
Robert D. Hamilton
Tony J. Salvaggio
Sammie C. Clay
J. Z. Rowe
Thomas H. Robertson
Thomas C. Warren
Angelo S. Carella
E. Ronald Liggett
Gerald R. Kelly
•Additional offices of these Banks are located at 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.
A94
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
April 1984
LEGEND
Boundaries of Federal Reserve Districts
®
Federal Reserve Bank Cities
Boundaries of Federal Reserve Branch
Territories
•
Federal Reserve Branch Cities
Federal Reserve Bank Facility
Q
Board of Governors of the Federal Reserve
System
Publications of Interest
FEDERAL RESERVE
REGULATORY
SERVICE
To promote public understanding of its regulatory
functions, the Board publishes the Federal Reserve
Regulatory Service, a three-volume looseleaf service
containing all Board regulations and related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are
published separately as handbooks pertaining to monetary policy, securities credit, and consumer affairs.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each
contains conversion tables, citation indexes, and a
subject index.
The Monetary Policy and Reserve Requirements
Handbook contains Regulations A, D, and Q plus
related materials. For convenient reference, it also
contains the rules of the Depository Institutions
Deregulation Committee.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with all related statutes, Board interpretations, rulings, and staff opinions. Also included is the Board's
list of OTC margin stocks.
The Consumer and Community Affairs Handbook
contains Regulations B, C, E, M, Z, AA, and BB and
associated materials.
For domestic subscribers, the annual rate is $200 for
the Federal Reserve Regulatory Service and $75 for
each handbook. For subscribers outside the United
States, the price including additional air mail costs is
$250 for the Service and $90 for each Handbook. All
subscription requests must be accompanied by a check
or money order payable to Board of Governors of the
Federal Reserve System. Orders should be addressed
to Publications Services, Mail Stop 138, Federal Reserve Board, 20th Street and Constitution Avenue,
N.W., Washington, D.C. 20551.
Publications of Interest
FEDERAL RESERVE
PUBLICATIONS
CONSUMER
CREDIT
The Federal Reserve Board publishes a series of
pamphlets covering individual credit laws and topics,
as pictured below. The series includes such subjects as
how the Equal Credit Opportunity Act protects women against discrimination in their credit dealings, how
to use a credit card, and how to 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.
Fair
Credit
Billing
— —
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