Full text of Federal Reserve Bulletin : March 1979

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M ARCH

1979

FEDERAL RESERVE

BULLETIN
R e c e n t

D e v e lo p m e n ts

M o n e ta ry
T re a su ry

P o lic y
an d




in

R e p o rt

F e d e ra l

M o rtg a g e
to

a n d

H o u s in g

M a rk e ts

C o n g re ss

R e se rv e

F o re ig n

E x c h a n g e

O p e ra tio n s

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V O L U M E 65 □ N U M B E R 3 □ M A R C H 1979

FEDERAL RESERVE

BULLETIN
B o a rd

o f

G o v e rn o rs

W a s h in g to n ,

o f

th e

F e d e ra l

R e se rv e

S y s te m

D .C .

P U B L IC A T IO N S C O M M IT T E E
Joseph R. Coyne, Chairman □ Stephen H. Axilrod □ John M. Denkler
Janet O. Hart □ James L. Kichline □ Neal L. Petersen □ Edwin M. Truman
Michael J. Prell, Staff Director
The F ederal R eserve B ulletin is issued m onthly under the direction of the statt publications com m ittee. This comm ittee
is responsible for opinions expressed except in official statements and signed articles. Direction for the art work is provided
by Mack R. Rowe. Editorial support is furnished by the Econom ic Editing Unit headed by M endelle T. Berenson.




Table of Contents
173 R e c e n t D e v e l o p m e n t s i n M o r t g a g e

223

a n d H o u s in g M a r k e ts

Governor Nancy H. Teeters gives the
board’s recommended schedule for imple­
menting the Electronic Fund Transfer Act,
which would move up the effective date
for publication of the final regulations by
the board from June 10, to December 1,
1979; Mrs. Teeters also discusses alterna­
tives regarding the timing of and the entity
responsible for providing the general
statement of customer rights required
under section 1104(d) of the Right to Fi­
nancial Privacy Act of 1978, before the
Subcommittee on Consumer Affairs and
the Subcommittee on Financial Institutions
Supervision, Regulation and Insurance of
the House Committee on Banking, Fi­
nance and Urban Affairs, February 20,
1979.

After almost three years of strong growth,
homebuilding activity became stable at a
high rate in 1978 in an environment of
sharply rising market interest rates.
185

M o n e ta r y P o lic y R e p o r t to C o n g re ss

Submitted pursuant to the Full Employ­
ment and Balanced Growth Act of 1978,
the Board’s first monetary policy report
presents recent econom ic and financial de­
velopments, objectives and plans of the
Federal Reserve, and the relationship of
the Federal R eserve’s plans to the admin­
istration’s econom ic goals.
201

T rea su ry

and

F ederal

R eserve

F o r e ig n E x c h a n g e O p e r a tio n s

Following the series of actions announced
on November 1, 1978, by the President,
the Treasury, and the Federal Reserve, the
foreign exchange market came into greater
balance, according to the semiannual re­
port covering the period August 1978
through January 1979.
221

222

225

Chairman G. William Miller presents the
views of the Federal Reserve on the for­
mulation of the First Concurrent Budget
Resolution for fiscal year 1980 with the
overall recommendation that fiscal policy
be directed toward the easing of inflation­
ary pressures through reducing the federal
deficit and the size of the government
sector in the economy and through im­
proving the environment for capital
spending, before the Senate Committee on
the Budget, February 22, 1979.

229

Chairman Miller discusses the board’s
recommendations with regard to the Mon­
etary Policy Improvement Act of 1979 in
light of the decline in the proportion of
bank deposits subject to federal reserve
requirements, before the Senate Commit­
tee on Banking, Housing and Urban A f­
fairs, February 26, 1979.

S ta f f S tu d y

Summary of “ Geographic Expansion of
Banks and Changes in Banking Structure”
points out that geographic expansion of
banking organizations does not have a
measurable effect on local market structure
but does tend to increase statewide con­
centration.
I n d u s tr ia l P r o d u c tio n

Output expanded an estimated 0.3 percent
in February.




S ta te m e n ts to C o n g ress

236

Governor J. Charles Partee states that
passage of S. 332, a bill to consolidate
the bank supervisory functions of the
Comptroller of the Currency, the Federal
Deposit Insurance Corporation, and the
bank and bank holding company supervi­
sory functions of the Federal Reserve into
a newly created Federal Bank Commission
would not, in the view of the Federal
Reserve Board, be in the public interest,
before the Senate Committees on Banking,
Housing and Urban Affairs and on G ov­
ernmental Affairs, February 28, 1978.

239 Governor Teeters gives her opinions and
analyses of administration proposals for
improving control over federal credit pro­
grams including the recommendation that
formal rules be established to require the
reconvening at regular intervals of a bud­
getary commission to review new federal
credit programs and activities, before the
Senate Committee on Banking, Housing
and Urban Affairs, March 2, 1979.
242

245

Issuance of staff paper by the government
agencies supervising federally insured de­
positary institutions to answer frequently
received queries about the Community
Reinvestment Act.
Change in rules under which financial in­
stitutions issue six-month money market
certificates.
Proposed amendments to regulations gov­
erning corporations engaged in interna­
tional banking and financial operations;
proposed regulations to implement the Fi­
nancial Institutions Regulatory and Inter­
est Rate Control Act of 1978; and with­
drawal of proposed Statement of Customer
Rights under the Right to Financial Pri­
vacy Act of 1978.
Admission of five state banks to member­
ship in the Federal Reserve System.
249

L a w D e p a r tm e n t

Amendments to Regulations D, M, and Y,
revision of Regulation V, various rules
and bank holding company and bank
merger orders, and pending cases.

Governor Partee comments on two bills
that deal with the authority of the U .S.
Treasury to borrow directly from the Fed­
eral Reserve System and offers the judg­
ment of the board that the present directborrowing authority has functioned effec­
tively and that the Federal Reserve should
be empowered to continue lending directly
to the Treasury under the constraints of
the current authority, before the Subcom­
mittee on Domestic Monetary Policy of
the House Committee on Banking, Fi­
nance and Urban Affairs, March 5, 1979.

A70 B o a r d o f G o v e r n o r s a n d S t a f f

A n n o u n c e m e n ts

A ll

282

D ir e c to r s o f F e d e r a l R e s e r v e
B anks a n d B ran ch es

Al

Fin a n c ia l

Amendment to Regulation Y permitting
bank holding companies to sell money
orders, travelers checks, and U .S. savings
bonds to the public at their nonbank of­
fices. (See Law Department.)
Simplification of regulation on loan guar­
antees for defense production (V-loan
program).



B

u sin e s s

S t a t is t ic s

A3 Domestic Financial Statistics
A46 Domestic Nonfinancial Statistics
A54 International Statistics

O pen M
A

Issuance of final Regulation O establishing
requirements for loans by member banks
to bank officials or their related interests.

and

arket

d v is o r y

C o m m it t e e

and

S taff;

C o u n c il s

A73 F e d e r a l R e s e r v e B a n k s , B r a n c h e s ,
a n d O ffic e s

A74 F e d e r a l R e s e r v e B o a r d P u b l i c a t i o n s
A76 I n d e x t o S t a t i s t i c a l T a b l e s
A78 M a p o f F e d e r a l R e s e r v e S y s t e m

I n sid e B a c k C o v e r :

Guide to Tabular Presentation and Statis­
tical Releases

Recent Developments in
Mortgage and Housing Markets
This article was p r e p a r e d by D a v id F. S eiders
of the M o r tg a g e and C onsum er Finance Section
of the D ivision of R esearch and Statistics.
F ollow in g nearly three years of strong grow th,
hom ebuilding stabilized at a high level during
1978 in an environm ent of sharply rising market
interest rates. Construction w as started on
slightly more than 2 m illion private housing
units for the year as a w hole. M oreover, sales
of sin gle-fam ily hom es reached the highest rates
on record, and average prices of hom es sold
continued to clim b rapidly. A ccom panying
these d evelopm en ts, form ation of residential
m ortgage debt rose to a record volum e in 1978.
H ousing starts and hom e sales have slack­
ened som ew hat in recent m onths, partly because
of weather (chart 1). Tightening conditions in
financial markets also have had a constraining
effect, although housing markets have been less
responsive to general monetary restraint than in
the past. During previous periods with similar
increases in market interest rates, residential
mortgage lending contracted m arkedly and
housing activity was sharply curtailed. W hile
1. Private housing starts
Millions of units

Census Bureau seasonally adjusted monthly data at annual
rates converted to quarterly averages by the Federal Reserve.
“ M ultifam ily” includes structures with two or more units.
Latest data, January-February average.




the m ortgage and housing markets still are likely
to be more responsive to changes in general
credit conditions than are other major sectors
o f the eco n o m y , the effect now appears to be
related more to the interest rate sensitivity of
borrowers and less to shifts in the availability
of funds at depositary institutions.
A lthough nom inal interest rates have risen
sharply since late 1977, dem ands for m ortgage
credit have rem ained substantial. D em ographic
developm ents have bolstered dem ands for
housing services. M oreover, hom es have b e­
com e even more attractive investm ents in the
recent inflationary environm ent, and accrued
capital gains have provided hom eow ners with
resources for trading up to better housing and
with collateral’ to support m ortgage borrowing
for nonhousing purposes. At the sam e tim e, new
types of m ortgage instruments have made hom e
purchase more feasib le for som e first-time
buyers. Federal subsidy programs have buoyed
the demand for m ultifam ily d w ellin gs and
mortgage funds.
On the supply sid e, more m ortgage funds
have been raised through the securities markets
than before. Various types of m ortgage-backed
passthrough securities have enhanced the appeal
of m ortgage assets to diversified private institu­
tions and have facilitated interregional flow s of
funds for housing. Greater am ounts of capital
have also been funneled into residential mort­
gages through tax-exem pt securities.
At the nonbank thrift institutions, net deposit
flows have becom e less sensitive to changes in
market interest rates, and thus the predominant
source of residential m ortgage credit has been
less volatile than in the past. R egulatory changes
during the 1970s permitted som e lengthening of
the maturity structure of deposits and estab­
lished substantial penalties for early withdrawal

174

Federal Reserve Bulletin □ March 1979

from longer-term accounts. The most striking
innovation in federal regulations occurred in
June 1978, when depositary institutions were
permitted to issue six-month savings certifi­
cates, the so-called money market certificates
(MMCs), with ceiling rates tied to Treasury bill
yields. This instrument has significantly im­
proved the ability of thrift institutions to com ­
pete for funds in periods of rising interest rates.
After the introduction of the certificates, deposit
growth at savings and loans surged during the
third quarter of last year, even in the face of
further increases in short- and intermediate-term
market interest rates, and a downswing in mort­
gage commitment and lending activity at the
associations was reversed.
Thrift institutions have not been completely
insulated from the effects of high yields on
market instruments. With a further rise in mar­
ket rates since the third quarter of 1978, the
growth of deposits at savings and loan associa­
tions has slowed, and mortgage commitments
outstanding as well as net mortgage acquisitions
have declined moderately from highs registered
in November.
Net inflows to fixed-ceiling accounts at the
thrift institutions have fallen sharply in recent
months, while net sales of MMCs have re­
mained large. In order to help reduce cost pres­
sures on the institutions and to moderate further
the flow of funds into the thrift institutions in
the current inflationary environment, the federal
regulatory agencies have made some adjust­
ments to the rules governing issuance of MMCs,
effective March 15.
In addition to the deposit slowdown, other
financial factors have tended to restrain the
expansion in mortgage and housing activity in
the past few months. Legal ceilings on home
mortgage rates have limited the ability of
households to compete for funds in a number
of states. Moreover, the overall debt levels and
repayment obligations of the household sector
have reached record proportions relative to in­
com e. As a result, some households may be less
willing to take on more mortgage debt in view
of the uncertain econom ic outlook.
In the short-term construction loan market,
sharp increases in interest rates have discour­
aged some building, particularly of unsubsi­



dized multifamily projects. High short-term in­
terest rates have also affected the profits and
activity of institutions that specialize in origi­
nating mortgages for sale. Since last fall, the
cost of carrying loan inventories has been above
coupon rates on long-term mortgages held in
inventory.
A potential physical imbalance has also
emerged, as stocks of unsold new homes have
approached their 1973-74 peaks. In the multi­
family sector, on the other hand, overbuilding
does not appear to be a current or potential
problem in most areas.
P o sit io n

in

A

ggregate

A

c t iv it y

Residential investment expenditures increased
significantly last year in current-dollar terms and
remained virtually flat in constant dollars. Dur­
ing 1978 these investment expenditures ac­
counted for about 5 percent of the gross national
product, close to the peak shares in the 1972-73
period (chart 2).

2. Residential investment expenditures
Billions of dollars

100

80
60
40
20
0

Percent

Com merce Department data on the current-dollar value of
gross residential investment expenditures, at seasonally ad­
justed annual rates. “ T o tal" includes mobile hom es, non­
housekeeping units, and brokers’ com m issions, not shown
separately. "S hare of G N P " based on current-dollar values
for both total residential and gross national product.

Recent Developm ents in M ortgage and Housing M arkets

175

of reductions in loan-to-value ratios on hom e
m ortgages as credit market conditions tightened.
The ex cess of debt form ation over residential
investm ent, w hich first appeared in the early
1970s, has been associated entirely with the
hom e m ortgage com ponent.

S i n g l e -F a m

Percent
Share of total funds
raised in credit markets a

H H
1970

1972

1974

H H I H i H H K
1976
1978

Quarterly mortgage debt by type o f structure estim ated— and
converted to seasonally adjusted annual rates— by the Federal
Reserve as required to supplem ent reports o f federal agencies
and private sources. “ Total funds raised in credit markets”
refers to all funds raised in U .S . credit markets— excluding
equities— by all nonfinancial sectors, both private and foreign.

The real value of new construction put in
p lace, including additions and alterations to
existing housing as w ell as new d w ellin gs, held
up w ell during 1978, w hile investm ent in m obile
hom es remained near the low levels registered
in the three previous years. Sales com m ission s
associated with transactions in new and existing
hom es accounted for a record share of total
residential investm ent expenditures in 1978.
On the financial sid e, residential m ortgages
claim ed alm ost one-third of total funds raised
in U .S . credit markets in 1978, despite substan­
tial increases in market interest rates and rising
dem ands for credit by nonfinancial businesses
(chart 3). In the face of increases in other types
of credit dem ands and constraints posed by
ceilin gs on m ortgage interest rates, the strength
of m ortgage lending has been striking.
Formation of residential m ortgage debt e x ­
ceeded residential investm ent expenditures by
a substantial amount in 1978. The margin of
difference w as, h ow ever, som ew hat narrower
than in the latter part of 1977, partly because




il y

Sector

S ingle-fam ily hom es accounted for about 70
percent of total private housing starts during
1978 and early 1979. In terms o f m ortgage debt
form ation, the sin gle-fam ily sector has been
even more dominant: last year, hom e m ortgages
accounted for more than nine-tenths of the in­
crease in residential m ortgage debt outstanding.
S om e of the strength of this com ponent has been
associated with borrowing against equity in the
stock of h ousing, largely in connection with
transactions in existing hom es at inflated prices.

S a le s an d P rices
In late 1978, total sales of new and existing
hom es reached the highest rates on record (chart
4 ). They then declined som ew hat as m ortgage
market conditions stiffened and unusually severe
weather lim ited sales activity in som e areas.
Prices of hom es sold rose at an extrem ely rapid
pace throughout 1978 and early 1979. Since the
early 1970s, price increases for both new and
existing hom es have far exceed ed increases in
broad-based indexes of consum er or producer
prices. M oreover, average prices of new hom es
sold have risen som ew hat faster than those of
existing hom es, reflecting an on going rise in
quality, in terms of size and am enities.
S a les, prices, and quality of hom es have
reflected the strengthening of underlying d e­
mands because o f dem ographic forces and a
variety of so cio eco n o m ic d evelopm ents. The
number of households has been increasing rap­
idly, ow in g both to the growth in population
and to the trend toward sm aller households.
M oreover, the proportion of households with a
head in the prime hom ebuying years— 25 to
39— has been rising as a legacy o f the postwar
baby boom . The incidence o f two-earner
households in this group has also increased.
In addition to these factors, the strengthening

176

Federal Reserve Bulletin □ March 1979

of demand for hom es has apparently been a sso ­
ciated with the rapid inflation of recent years.
Since a house is a real asset providing services
over a long period, it serves as a hedge against
inflation. H ousing also carries a number of in­
com e tax advantages that are not shared by other
types of assets available to consum ers, and the
degree of favorable tax treatment for hom eow nership is tied to inflation— a phenom enon that
is accentuated w hen inflation m oves h om eow n ­
ers into higher marginal tax brackets. In 1978
the federal tax treatment of capital gains was
liberalized, further enhancing the attractiveness
of hom es as investm ents.

A ffo rd a b ility o f H om es
A verage dow npaym ents on conventional hom e
loans have increased substantially because of the
rapid acceleration in hom e prices during the past
several years and rising equity requirements by
lenders in recent quarters (chart 4). R ising hom e
prices have also been largely responsible for
rapid increases in m onthly paym ents on new ly

originated m ortgages, although the rise in m ort­
gage interest rates since late 1977 also has been
a significant factor (chart 4 ). Increases in interest
rates accounted for about 30 percent of the rise
in average m onthly paym ents on new ly origi­
nated conventional m ortgages during 1978.
H ousehold financial assets and incom e flows
also have been rising on average, but at less
rapid rates than average dow npaym ents and
m onthly m ortgage paym ents in recent years.
O b viou sly, households differ in incom e and
w ealth, and hom es vary w id ely in size and
price. That qualification apart, it seem s para­
doxical that the dem and for houses has been
quite strong (as reflected in hom e sales and
prices) w hile the standard aggregate indicators
of the ability to afford hom es have deteriorated.
This apparent paradox fades in the light of
the substantial capital appreciation of houses.
H om e occupancy appears much more affordable
when accrued capital gains are view ed as current
additions to household resources. N evertheless,
a house is an illiquid and indivisible asset, and
a hom eow ner may not be able to make other

4. Sales of single-family housing
Millions of units
UNITS SOLD

Thousands of dollars
18
15

New homes

Thousands of dollars

12

Dollars

AVERAGE PRICE
New homes

400

300

Merehant-builder sales of new homes as reported monthly
by the Census Bureau, and existing home sales as reported
by the National Association of Realtors, both at seasonally
adjusted annual rates. Average prices of new and existing
homes sold, also reported by these sources, seasonally adjusted




by the Federal Reserve. Average downpayments and monthly
payments on newly originated conventional home mortgages
calculated by Federal Reserve from monthly data reported by
the Federal Home Loan Bank Board, and converted to threemonth moving averages.

Recent Developm ents in M ortgage and Housing M arkets

adjustments in his balance sheet— by using fi­
nancial asset balances or by borrowing— to
convert accrued capital gains into current cash
flow without jeopardizing liquidity or incurring
large interest or transactions costs. Furthermore,
potential capital appreciation does not help a
would-be homebuyer to meet the large down­
payment ordinarily required in today’s market.
The capital gains aspect of houses suggests
that the financial constraints on home purchase
and occupancy are quite different for those who
already own homes and for those who are just
entering the market. Repurchasers recently have
been accounting for nearly three-fourths of new
homes sold and about three-fifths of existing
homes that have changed hands. The windfall
capital gains realized by sellers of existing
homes often have been used to finance large
downpayments on housing of equivalent or
higher quality.
First-time buyers have not had such opportu­
nities, and they have faced problems associated
with inflation. The appreciation in home prices
recently has exceeded the rate of increase in
virtually all sources of income, and thus many
potential buyers have had difficulty accumulat­
ing funds to meet downpayment requirements.
In addition, increases in mortgage interest rates
have exacerbated the cash-flow problem that
younger, first-time buyers often encounter in the
early years of the standard level-payment mort­
gage.
Some first-time buyers have obtained govern­
ment-underwritten loans with relatively low
downpayment requirements, and others have
been able to secure high loan-to-value conven­
tional mortgages by purchasing private mort­
gage insurance. In addition, graduated-payment
mortgages, which provide for relatively low
monthly payments in the early years of the
contract and relatively high payments later, have
helped alleviate the cash-flow problems for a
number of borrowers. More than $114 billion
of graduated-payment mortgages insured by the
Federal Housing Administration (FHA) were
originated in 1978. Late last year, the Federal
Home Loan Bank Board adopted regulations
that authorize federally chartered savings and




111

loan associations to make conventional gradu­
ated-payment home loans.

B o rro w in g a g a in st H ou sin g E q u ity
The capital gains associated with the rapid ap­
preciation in home prices not only have pro­
vided homeowners with resources to help buy
equivalent or better housing, but also have gen­
erated collateral for mortgage credit that may
be used for other purposes. During 1978, the
household sector raised an estimated $42 billion
of mortgage funds against equity in the stock
of existing homes. This represented about twofifths of total net home mortgage borrowing—
down somewhat from 1977, but still well above
the share registered in earlier years.
Some of these funds have been raised apart
from sell-buy transactions, primarily by home­
owners’ taking out junior mortgages or increas­
ing the size of outstanding first mortgages
through refinancing. The volume of junior
mortgages, or “ home equity” loans, has picked
up substantially in some areas during the past
few years, particularly where increases in prices
of homes have been relatively rapid, as on the
West Coast. Although interest rates charged on
junior mortgages generally are significantly
higher than those on first mortgages, junior
mortgages are often more economical than re­
financing, particularly when rates are apprecia­
bly higher on new than on outstanding first
mortgages, and balances on the outstanding
loans are large.
Although borrowing against housing equity
by nonsellers has increased in recent years, the
bulk of the mortgage funds raised by the house­
hold sector against inflated housing equity has
been generated in connection with sales of ex­
isting homes. This practice has occurred as
many sellers of existing homes have “ mone­
tized” accumulated equity through highly le­
veraged purchases of their next homes. Accord­
ing to survey data for 1977, repurchasers gen­
erally have raised funds in this way, and house­
holds in the latter stages of the life cycle— who
have stopped trading up and need more financial

178

Federal Reserve Bulletin □ March 1979

a sse ts— have m o n etized r e la tiv e ly large
amounts of equity.
The opportunity to monetize housing equity
in connection with transactions in existing
homes has probably encouraged some house­
holds to substitute relatively long-term, low-cost
borrowing on first mortgages for consumer
credit. However, aggregate statistics suggest
that much of this mortgage borrowing has rep­
resented a net addition to the level of house­
hold sector debt. The volume of funds raised
against housing equity, of course, is contingent
upon the availability of mortgage credit, re­
gardless of the trend in home prices and home­
owner equity.

S o u rces o f H om e M o rtg a g e C re d it
The strong demands for home mortgage credit,
whether or not associated with demands for
housing services, have exerted considerable up­
ward pressure on mortgage interest rates. As a
result, such rates have risen to record levels
5. Yields on home mortgages and bonds

“ Conventional mortgages” refers to monthly average con­
tract interest rates on new commitments for conventional newhome mortgage loans in the primary market, based on HUD
(FHA) field-office reports. “ Corporate bonds” refers to
monthly average implied yields on newly issued Aaa-rated
utility bonds with five-year call protection, estimated by the
Federal Reserve. “ Yield spread” is mortgage yield less bond
yield.




despite developments that have tended to bolster
the supply of mortgage funds. Even though
bond rates have increased markedly since the
fall of 1977, gross yields on long-term home
loans have remained well above yields on cor­
porate bonds (chart 5), and expected net yields
on mortgages have risen further during this
period as nonrate loan terms have tightened.
Moreover, rapid appreciation in prices of homes
has helped to sustain the quality of mortgage
credit on single-family homes.
Because of favorable expected net yields,
various private institutions have been willing to
make commitments to acquire long-term home
mortgages, either directly or indirectly through
mortgage-backed securities. Such commitments
have provided the backup needed by builders
to secure short-term funds for the construction
of homes.

Private financial institutions. Savings and
loan associations supplied about half, and
commercial banks more than a third, of all
short-term mortgage credit for the construction
of homes in 1978 (chart 6). In addition, banks
extended a significant volume of construction
loans not collateralized by real estate. Average
effective rates on home construction loans at
banks, whether or not secured by real estate,
increased about 3 percentage points during the
year.
In the markets for permanent financing, sav­
ings and loans accounted for nearly half of total
net acquisitions of home mortgages in 1978
(chart 6), although their share declined signifi­
cantly in the latter half of the year in lagged
reaction to the earlier slowdown in deposit
flows. The share of commercial banks in long­
term lending for home mortgages has continued
to rise from the low level in 1975 and was more
than 20 percent in 1978. Reflecting the attractive
yields available on mortgages, the proportion
of total assets of commercial banks invested in
home loans increased in 1978 despite heavier
demands for bank loans by nonfinancial busi­
nesses.
Life insurance companies, which have had
large and growing cash flows, sharply increased
their commitments to acquire long-term home
mortgages during 1978, and their holdings of

R ecent Developm ents in M ortgage and Housing M arkets

6. Home mortgages
Construction loans
Lender share, percent
Billions of dollars 20
O t h e r |H ^

REITs*
Mortgage companies

22
J

U

16
"

*

16
|

22

33

■ * ■ 5

38
r~

fj

Commercial banks

Savings and loans

Long-term loans
Billions of dollars 77
Other rn
Federal credit agencies-^U
Mutual savings banks Ig
Mortgage pools |
Commercial banks

Savings and loans

Based on data for 11 major lender groups accounting for
about 93 percent of total one- to four-family mortgage debt
outstanding, as reported by HUD. “ Construction loans” are
in terms of originations; “ long-term loans” are in terms of
net acquisitions— originations plus purchases less sales.

such assets rose somewhat in the latter half of
the year, for the first time in more than a decade.
The relatively high yields on home mortgages
have drawn a number of life insurance compa­
nies back into direct mortgage acquisitions— the
so-called whole-loan market— and their invest­
ments generally have involved the purchase of
blocks of conventional loans with servicing re­
sponsibilities retained by the originators.
M o rtg a g e -b a c k e d securities and federally re­
lated agencies. Mortgage-backed passthrough

securities, representing ownership interests in
pools of mortgage loans, have become an im­
portant element of the long-term home mortgage
financing system. New issues of federally




179

guaranteed passthrough securities accounted for
one-eighth of total net acquisitions of home
mortgages in 1978. Issues of privately insured
passthrough securities, first offered publicly in
1977, amounted to less than $1 billion last year.
The privately insured securities ordinarily in­
volve pools of seasoned mortgages, and is­
suance may not be attractive to financial institu­
tions in periods of rising interest rates if capital
losses have to be booked under such conditions.
The federally related passthrough securities,
generally issued against pools of newly origi­
nated mortgages, include those guaranteed by
the Government National Mortgage Association
(GNM A), the Federal Home Loan Mortgage
Corporation (FHLMC), and the Farmers Home
Administration (FmHA). In recent years such
securities issued and insured by FmHA have
been sold exclusively to the Federal Financing
Bank (FFB), and thus funds raised by the
Treasury for the FFB have been flowing into
Fm HA’s rural home loan programs through this
channel. In 1978 the amount of home loans in
FmHA pools increased about $2 billion.
Securities issued and guaranteed by FHLMC
represent interests in pools of conventional loans
acquired by FHLMC, primarily from savings
and loans, through its various purchase pro­
grams. Issues of FHLMC securities increased
to a record $6 billion in 1978. With a number
of security dealers making a secondary market
in the instruments, investors other than the non­
bank thrift institutions acquired about two-thirds
of the amount issued last year.
GNMA-guaranteed passthrough securities
(GNM As), issued by private mortgage origina­
tors against pools of government-underwritten
loans, are the predominant type of passthrough
security in the market. Yields on these instru­
ments move closely with rates on interme­
diate-term Treasury securities, and the partici­
pation by diversified private investors, including
pension funds, has expanded markedly as the
primary and secondary markets have developed.
Issues of GNMAs amounted to $15 billion in
1978, down somewhat from the previous year
and well below the record annual rate of $20
billion in the last half of 1977 (chart 7).
New issues of GNM As typically contract
when long-term market interest rates rise rap-

180

Federal Reserve Bulletin □ March 1979

7. FNMA and GNMA-security activity
Billions of dollars
GNMA security issuesA
A

FNMA FHA-VA purchases

1972

/

^

/

1974

^

1976

1

2°

10

1978

Monthly data from the Federal National M ortgage Associa­
tion and the Governm ent National M ortgage Association, con­
verted to three-month moving averages by Federal Reserve.
Issues of G NM A-guaranteed securities and FNM A purchases
of FHA and VA loans include small amounts of multifamily
m ortgages.

idly. Especially at these times, many potential
issuers of GNM As, primarily mortgage compa­
nies, sell government-underwritten loans to the
Federal N atio n a l M ortgage A sso c ia tio n
(FNMA) under optional-delivery commitments
secured in previous periods of lower interest
rates (higher mortgage prices). Together,
GNMA issues plus FNM A purchases have ab­
sorbed a predominant share of the volume of
FHA-insured and VA-guaranteed home loans
originated in the last few years. FNMA has been
the primary investor in FHA-insured, gradu­
ated-payment loans, which were ineligible for
pooling during this period.
FNM A, the only federal or federally related
agency to increase significantly its holdings of
home mortgages in 1978, added some $9 billion
to its portfolio. The other major agencies
operating in the secondary markets, GNM A and
FHLMC, reduced somewhat their holdings of
home mortgages.

Tax-exempt financing.

Funds have been
flowing into home mortgages through the mu­
nicipal securities markets in recent years, and
amounts have tended to increase as market in­
terest rates have risen. About three-fourths of
the states have housing finance agencies that use
issues of tax-exempt bonds to provide long-term
mortgage funds at below-market rates to lowand moderate-income borrowers. Most agencies
supply funds to these borrowers indirectly via
mortgage purchase or loan-to-lender programs,




although a few have direct single-family loan
programs.
Since m id-1978, some municipal govern­
ments have been issuing tax-exempt mortgage
revenue bonds to provide funds to local financial
institutions for relending at below-market rates
to families meeting criteria set-by the issuers.
Some of these subsidized loans have been pro­
vided to borrowers in the middle- and upper-in­
come groups. The President’s recent budget
message proposed to limit the beneficiaries of
tax-exempt funds for mortgage financing to lowand moderate-income families.

M o rtg a g e In te re st R a te C eilin g s
Federal and state ceilings on rates that may be
charged for long-term home mortgage credit
have posed some constraints on borrowing. A l­
though the ceiling rate for FHA-insured and
VA-guaranteed home loans was adjusted up­
ward a full percentage point in the first half of
1978, by early 1979 lenders required about 5
discount points, on average, on 9 l/z percent
contracts. To the extent that such discounts are
not absorbed by home sellers, they are shifted
through increased home prices to buyers, who
must pay them indirectly at the loan closing.
State-imposed ceilings on interest rates for
conventional home mortgages have also con­
strained lending in some areas. Some states
recently eliminated or raised ceilings, and some
have converted to floating-rate ceilings. Even
so, in early March depositary institutions (ex­
cluding national banks) and other lenders in
about a third of the states were subject to rate
ceilings below
national-average mortgage
yields. In those states in which usury ceilings
are binding and discount points are prohibited
or limited, lenders may adjust nonrate terms in
order to raise expected net yields. Such adjust­
ments, however, can ration many borrowers out
of the market.
While state usury limits undoubtedly have
reduced home mortgage and building activity
within some states, the impact on aggregate
levels of activity apparently has been alleviated
to some extent by the flow of mortgage credit
across state lines. Lenders in low-rate states may
buy loans at competitive yields in the secondary

Recent Developm ents in M ortgage and Housing M arkets

m ortgage m arkets, w hich are im m une from the
direct effects of usury ceilin g s, and thus increase
the supply of m ortgage credit in areas without
binding ceilin gs. Recent developm ents in the
secondary markets for conventional w hole loans
and passthrough securities backed by pools of
conventional m ortgages have helped facilitate
such adjustm ents.

B u ild er In ven to ries
In general, the prices of new hom es sold have
been rising more rapidly than building costs,
even with the sharp increases in construction
loan rates since late 1977, and this differential
has provided considerable stim ulus to hom e­
building. In such an environm ent, inventories
of unsold hom es at merchant builders have risen
considerably (chart 8). At the end of 1978 the
inventory level was near the peak reached in
1973, before the major contraction in new
housing activity.
The high inventory levels apparently have not
yet significantly discouraged starts of sin gle­
fam ily hom es. M ost new ly com pleted units have
sold quickly, and the inventory build-up has
represented primarily units still under co n ­
struction. M oreover, the inventory-to-sales ratio
for new sin gle-fam ily hom es has increased only
a little in the past tw o years and has remained
8. Home stocks at builders
Thousands of units

300
Number of months
10

M erchant-builder stocks of unsold single-fam ily homes are
seasonally adjusted end-of-month figures reported by the
Census Bureau. “ M onths’ supply” is the ratio of end-of-month
stocks to seasonally adjusted sales during that month.




181

w ell below the highs reached in 1974 and early
1975. This ratio could increase if new hom e
sales should falter, and the inventories could then
present a greater deterrent to starts.

M

u lt if a m il y

Sector

M ultifam ily housing starts have picked up sig ­
nificantly from their trough in 1975. Even so,
the number of units started in 1978 was less
than half the unprecedented rates recorded in
the peak years 1973 and 1974. A lthough rental
markets have tightened, the expected profita­
bility of rental properties has been insufficient
to spur new construction of unsubsidized proj­
ects on a w ide scale. In this environm ent, the
recovery in m ultifam ily starts has been a sso ­
ciated in part with federal subsidy programs for
rental projects. The condom inium market also
has show n som e strength, apparently related in
part to the investm ent aspects of hom eow nership.

U n su b sid ized M u ltifa m ily A c tiv ity
The supply of new m ultifam ily units has been
trending upward since early 1976, but the num ­
ber of com pletions still am ounts to less than half
the peak of 1973 (chart 9). A significant portion
of new ly com pleted m ultifam ily units has been
destined for condom inium ow nership rather than
for rental occupancy, and the sales rate for new
condom inium units has been quite rapid. In­
deed, the strength of this market in som e areas
of the country has stim ulated conversions of
rental projects to condom inium s.
W ith increases in the total supply of rental
units apparently sm all, the overall rental va­
cancy rate has fallen to the low est level on
record— 5 percent in the second half of 1978
(chart 9). The substantial decline in the national
vacancy rate since 1975 has resulted in large
part from a reduction of 3 percentage points in
the South, although vacancy rates also have
declined elsew here except the Northeast.
A s vacancy rates have d eclined, new m ulti­
fam ily rental units com ing onto the market
typically have been leased quickly, and the rise
in average rents has picked up despite rent co n ­
trols in various parts of the country, particularly

182

Federal Reserve Bulletin □ March 1979

the Northeast. At the same time, delinquency and
foreclosure rates on long-term conventional mul­
tifamily mortgages have declined from the ex ­
tremely high levels recorded several years ago.
Despite these developments, investors have
had only limited interest in unsubsidized multi­
family rental properties. Interest rates on multi­
family construction loans have risen sharply,
and those on long-term multifamily mortgage
loans are also up substantially— by about 150
basis points since late 1977 to nearly 11 percent.
Moreover, the costs of operating rental projects
have continued to rise more rapidly than average
rents (chart 9). The prospect for rent increases
may also have been depressed by threats of rent
controls in some areas, such as California, and
by the demographic and econom ic forces that
have been strengthening the demand for homeownership.
Some federal tax advantages have been
available to investors in multifamily projects.
For tax purposes, owners of new rental
9. Rental market indicators
Millions of units

1967=100

Multifamily units completed and under construction are
Census Bureau seasonally adjusted data with completions at
annual rates. “ Rental vacancy rate,” as reported by Census
Bureau, is the percentage of all year-round rental units in all
types of structures that are vacant and available for rent.
“ Operating costs” index calculated by the Federal Reserve
as a weighted average of various consumer and wholesale price
indexes related to apartment-owner costs; weights based on
expense data for multifamily structures published by the Insti­
tute of Real Estate Management. “ Rents” index is the rental
rate component of the consumer price index.




properties may depreciate the cost of the struc­
ture at an accelerated rate, involving deductions
in the early years substantially above those
available for other income-producing assets.
Preferential treatment as a tax shelter for limited
partnerships also gives real estate some edge
over other types of investment in competing for
private capital. Also available in recent years
has been a front-end subsidy, associated with
the treatment of interest and property tax pay­
ments as current business costs during the con­
struction period, although this provision has
been phased down under the Tax Reform Act
of 1976.

F ed era lly S u b sid ize d A c tiv ity
Federally subsidized units have become a larger
share of total multifamily construction as un­
certainties have clouded the profitability of ren­
tal projects. In 1978 about one-fourth of the total
units started were under the section 8 rental
subsidy program of the Department of Housing
and Urban Development (H UD), the corner­
stone of federal housing assistance during the
past few years. Remaining budget authority for
the fiscal year 1979, as well as amounts in the
proposed 1980 federal budget, suggests that this
program will continue to provide substantial
support to multifamily construction.
The section 8 program is directed toward
lower-income families and to a certain extent
generates effective demand for new rental units
that otherwise would have been lacking. More­
over, the program guarantees private developers
fair market rents, as determined by HUD of­
fices, and provides for periodic reviews of rental
rates. The review process is intended to preclude
the squeeze on net income that might arise be­
cause of escalating operating expenses.
Private developers of section 8 projects may
also secure permanent mortgage financing at
interest rates significantly below market yields.
In many cases, the mortgage financing has been
provided by state housing finance agencies,
which raise funds through issuance of tax-exempt bonds and pass their low borrowing rates
through to the developers. Interest rate subsidies
may also be obtained through a GNMA “ tan­
dem plan” for multifamily projects. Under tan­

Recent Developm ents in M ortgage and Housing M arkets

dem plans, GNMA purchases low-rate, FHAinsured multifamily mortgages from private
lenders at prices close to par and resells them
at market prices. Tandem plans for multifamily
projects have been available since early 1976,
and in 1978 one specifically tied to section 8
projects was created.

S o u rces o f M u ltifa m ily M o rtg a g e C re d it
Commercial banks accounted for more than half
of the total volume of multifamily construction
loans made last year, while the share for savings
and loan associations fell to about a fourth (chart
10). The real estate investment trusts (REITs),
10. Multifamily mortgages
Construction loans
Lender share, percent
Billions of dollars 12

13

11

6

6

8

10

13

12

13

16

16

□

Mutual savings banks
Mortgage companies

Commercial banks

Savings and loans

Long-term loans
Billions of dollars 14
Other 1 11

13
11

1

Federal credit agencies

183

which grew rapidly during the last housing
boom and accounted for nearly one-third of the
multifamily construction loans made in 1973,
were only a minor source of supply in 1978.
Indexes of share prices for the REIT industry
have recovered somewhat from the extremely
low levels reached in 1975, but access to funds
through the money and capital markets has
continued to be severely restricted for most
mortgage-oriented trusts.
In the markets for permanent financing, sav­
ings and loans accounted for about two-fifths
of total net acquisitions of multifamily mort­
gages in 1978, down somewhat from the two
previous years (chart 10). Life insurance com ­
panies increased their investments in long-term
multifamily mortgages to some extent last year,
and their commitments outstanding to acquire
such loans rose about a third during 1978. State
and local government credit agencies supplied
a relatively large amount of long-term multi­
family mortgage credit last year, reflecting to
a considerable extent loans acquired in connec­
tion with rental projects subsidized under
H U D ’s section 8 program.
GNM A purchased $1.3 billion of long-term,
FHA-insured multifamily mortgages in 1978
under its tandem plans— the only type of loan
it acquired during this period— and had nearly
$5 billion of purchase commitments outstanding
at the end of the year. Net acquisitions of
multifamily mortgages by other federal or fed­
erally related agencies were negligible in 1978.
Issues of federally guaranteed passthrough se­
curities backed by pools of multifamily loans
increased about $1.4 billion during the year.

Mutual savings banks
Life insurance
companies
Commercial banks

Savings and loans

Based on data for 11 major lender groups accounting for
about 95 percent of total mortgage debt outstanding on struc­
tures with five or more units, as reported by HUD. “ Con­
struction loans” are in terms of originations; “ long-term loans”
are in terms of net acquisitions— originations plus purchases less
sales.




M

o b il e

H om es

Shipments by manufacturers of mobile homes
to dealers and developers, which are excluded
from the series on housing starts, have been
increasing gradually from the trough in mid1975 (chart 11). In 1978 mobile home ship­
ments accounted for only an eighth of all types
of housing units completed, compared with
more than a fifth in the boom years 1972 and
1973. Sales of new mobile homes have roughly
paralleled the modest growth of shipments dur­
ing the past few years, and dealer inventories

184

Federal Reserve Bulletin □ March 1979

11. Mobile home shipments
Millions of units

Private domestic shipments of new mobile homes as reported
monthly by the Manufactured Housing Institute, seasonally
adjusted and converted to annual rates by the Census Bureau
and to quarterly averages by the Federal Reserve. Latest data,
January-February average.

of unsold units have remained well below their
1974 highs.
Relative weakness in the mobile home market
has been associated with a number of factors,
both nonfinancial and financial. Zoning restric­
tions have been a persistent problem. In addi­
tion, in an inflationary environment, the invest­
ment appeal of site-built, single-family homes
and condominium units in multifamily struc­
tures has been greater than that of mobile
homes. Survey data for 1977 suggest that about
half of mobile home owners perceived a decline




in the value of their homes since purchase, com ­
pared with less than 5 percent of the owners of
single-family homes conventionally built on lots.
In the wake of the serious loan delinquency
and repossession experience in 1974 and 1975,
many lenders withdrew from mobile home fi­
nancing com pletely, and others became more
selective in granting uninsured loans for the
purchase of mobile homes. While delinquency
and repossession rates declined significantly in
1978, interest rates on mobile home loans have
held near the highs reached in 1975. Average
contract maturities, which had lengthened con­
siderably in the early 1970s, increased only a
little further in 1978.
The sources of supply for mobile home credit
have shifted significantly since 1975, as com ­
mercial banks and finance companies have re­
duced such lending and savings and loan asso­
ciations have expanded it. The associations have
found the financing of double-width units to be
particularly compatible with their traditional ac­
tivities in home financing, and some have
shortened the average maturity of their asset
portfolios by acquiring more mobile home
loans.
□

185

Monetary Policy Report to Congress
Report submitted to the Congress on February
20, 1979 , pursuant to the Full Employment and
Balanced Growth A ct of 1978 1
R

ecent

E

c o n o m ic

Fin a n c ia l D

and

evelopm ents

O v e rv ie w
The current econ om ic expansion is about to
enter its fifth year. It thus outranks in longevity
every prior cyclical upsw ing of the postwar era
with the exception of that in the 1960s. Yet it
has maintained considerable vigor, with real
gross national product rising more than 4 per­
cent during the past year. The attendant in­
creases in em ploym ent and industrial capacity
utilization have reduced considerably the margin
of unutilized productive resources in the ec o n ­
om y.
The narrowing of the gap betw een actual and
potential output im plies that a tighter hold on
the nation’s aggregate demand for goods and
services is necessary if inflationary forces are
to be contained. The urgency of such restraint
is reinforced by the fact that there has already
been an acceleration in the rise of w ages and
prices. A ggregate m easures of unit labor costs
and prices advanced around 9 percent in 1978,
appreciably more than in the preceding years
of this econom ic expansion.
Apart from the hardship that this large and
generally unanticipated surge in inflation created
for many fam ilies and business enterprises, the
behavior of prices deepened concerns around the
world regarding the stability of the U .S . econ ­
om y and the soundness of the dollar. The value
of the dollar on foreign exchange markets d e­

clined through m ost of 1978, exacerbating d o ­
m estic inflationary pressures in the process. To
prevent a serious disruption of the international
financial system , a broad program of corrective
actions was initiated last N ovem ber. The dollar
has since strengthened but remains vulnerable
to shifts in sentim ent am ong exchange-m arket
participants.
The longer-range strength of the U .S . ec o n ­
om y and of the dollar depends greatly on our
success in retarding inflation. This was recog­
nized during the past year in actions taken to
reduce the size of the federal budget deficit, in
the establishm ent of voluntary w a g e-p rice
standards, and in efforts to curtail the inflation­
ary impact of federal regulation. In the monetary
sphere, too, there was m ovem ent toward m od­
eration of growth in aggregate dem and and
restraint of inflation as the Federal R eserve acted
to prevent ex cessiv e growth of m oney and
credit.

A g g r e g a te E co n o m ic A c tiv ity

The current econom ic upsw ing, which began in
the spring of 1975, ranks am ong the m ost dura­
ble in this nation’s history. In the period since
World War II, only the expansion in the 1960s
was longer, and it was marked by m assive
increases in military outlays associated with the
Vietnam War.
The past four years have seen sizable gains
in production and em ploym ent. B etw een the
first quarter of 1975 and the fourth quarter of
1978, real gross national product rose more than
20 percent. By last m onth, industrial production
had increased about 35 percent and nonfarm
payroll em ploym ent more than 14 percent from
their levels at the cyclical trough in March 1975.
1.
The charts for this report are available from Pub­
The m omentum of expansion, furthermore,
lications Services, D ivision of Support Services, Board
has been w ell m aintained. Real G N P increased
of Governors of the Federal Reserve System , W ashing­
4 .3 percent from the fourth quarter of 1977 to
ton, D .C . 20551.




186

Federal Reserve Bulletin □ March 1979

the fourth quarter of 1978— a bit slower than
the average pace over the earlier part of the
expansion, but still well above the trend growth
of potential output in the econom y. The persis­
tent strength of aggregate demand was demon­
strated by the surge in activity during the final
quarter of last year, when GNP grew at an
annual rate in excess of 6 percent. Available
indicators suggest that the economy has re­
mained generally strong in the opening months
of 1979.
Residential construction, which provided a
good deal of impetus to the early recovery,
stayed on a high plateau last year in the face
of rising interest rates and a continued rapid
escalation in building costs. Household de­
mands for shelter have been bolstered by demo­
graphic trends as well as by an inflation-hedging
motive. The sustained advance in economic
activity also has been fostered in good part by
strength in consumer spending. A marked turn­
around in the willingness of consumers to
spend— reflected in a sharp drop in the personal
saving rate— provided much of the impetus to
overall expansion in the early stages of the
economic recovery, and consumption expendi­
tures have remained unusually robust through­
out the upswing.
In the business sector, spending on new plant
and equipment has continued to rise, but there
have not as yet been the large increases seen
in some earlier cycles. Business fixed invest­
ment actually declined during the initial quarters
of the economic expansion as firms concentrated
on the repair of strained financial positions in
an environment of low capacity utilization.
Capital spending policies have continued to be
characterized by considerable caution, and it
was not until m id-1978 that the previous peak
level of real outlays was reattained. Firms also
have exercised caution in managing their inven­
tory positions, and stocks generally have re­
mained lean relative to sales.
Government purchases of goods and services
rose briskly at both the federal and state and
local levels during the second half of 1978 but
have been a moderating influence on overall
activity during most of the cyclical upswing.
The overall budgetary position of the govern­
ment sector, including transfer payments and



revenues, has remained stimulative throughout
the expansion, albeit in diminishing degree. An
improving net export position contributed to the
expansion of GNP during the early recovery
phase, but deterioration in the trade balance was
a decidedly negative factor from 1976 to early
1978. The U .S. trade deficit did narrow over
the course of 1978, however, owing in part to
the strengthening of economic expansion in
other major industrial countries.

P erso n a l C on su m ption E xpen ditu res
Consumer outlays grew 3.8 percent over 1978
after averaging 5Vi percent, at an annual rate,
earlier in the economic recovery and expansion.
The slower growth of spending reflected rela­
tively smaller recent gains in real disposable
income; increases in real personal income were
eroded by larger tax burdens related to higher
contributions for social security and the interac­
tion of inflation and a progressive tax system.
The proportion of consumption in gross na­
tional product has held at a high level over the
course of this upswing. In prior cycles this share
typically fell as the expansion matured. In par­
ticular, household spending for durable goods
has hovered at around 10 percent of GNP
throughout the past three years, while during
other economic expansions it accounted, on
average, for about IVi percent. This exceptional
strength in consumption and the associated rapid
increase in installment credit and low saving
rates can be attributed, in part, to the higher
relative number of younger households. But it
also appears to be in some degree a reaction
of households to persistently high inflation rates.
For example, opinion surveys suggest that many
consumers have been buying durable goods in
anticipation of price increases.

B u sin ess F ixed In vestm en t
Real business fixed investment rose 8 Vi percent
over 1978. This was nearly the same pace of
advance as in the two previous years and almost
twice the rate of expansion in aggregate activity.
Recently, nonresidential construction activity
has become an important source of business
investment growth. In 1978, real spending for

M onetary Policy R eport to Congress

such structures increased 12% percent as outlays
for commercial and industrial buildings showed
particularly impressive gains. On the other
hand, investment in producers’ durable equip­
ment grew about 6 V2 percent in real terms during
1978 compared with increases of more than 10
percent in each of the previous two years. D e­
mands for motor vehicles, which were excep­
tionally strong earlier in the expansion, began
to tail off in 1978, while machinery outlays
continued to advance at about the same moder­
ate pace experienced since early 1976.

187

counts introduced in June of last year buoyed
deposit growth at key mortgage lenders and
helped maintain the high rate of housing con­
struction.
Within the housing sector, the rise in single­
family starts led activity early in the recovery.
More recently, multifamily starts— supported by
an increase in federally subsidized rental
units— have increased while single-family starts
have remained above their 1972-73 peak levels.
Indeed, in the fourth quarter of 1978, total
housing starts averaged an annual rate of 2.1
million units, the same as a year earlier.

In ven to ry In vestm en t
Investment in business inventories was charac­
terized by caution in 1978, as it generally was
in the three previous years. As a result, aggre­
gate inventory-sales ratios remained at or below
historical averages. This caution, which can be
traced back to the severe inventory cycle of
1974-75, appears to have been responsible for
the avoidance of the types of overhangs that
preceded several prior cyclical downturns. In­
cipient buildups of stocks have been met with
prompt increases in sales promotion or curtail­
ments of orders and production. Most recently,
overhangs that developed at general merchan­
dise retail outlets in the fall apparently were
corrected by the sharp rise in sales during the
holiday season and a slowing of production of
durable home goods.

R e sid e n tia l C on stru ction
The rate of private housing starts advanced
briskly during the 1975-77 period and in 1978
they were sustained at the high annual rate of
2 million units. Spending for residential con­
struction in real terms increased at an average
annual rate of 21 percent from the 1975 trough
before leveling off in 1978. In addition to con­
straints on production capacity, the recent de­
velopments in housing activity reflect the tight­
ening in financial markets. Interest rates on both
construction loans and long-term mortgages rose
appreciably in 1978 and by year-end they had
reached usury ceilings in a number of states and
record postwar highs in many other areas. Even
so, the variable-ceiling, six-month time ac­



In tern ation al T rade
After providing some initial stimulus to eco­
nomic growth during the early recovery period
in 1975, the U .S. balance of trade began deteri­
orating. In large part this reflected the relatively
stronger rate of economic expansion in the
United States compared with our major trading
partners. The deficit in net exports narrowed
during 1978, however, as activity abroad picked
up in contrast to the moderation in the U .S.
expansion. In addition, the more favorable trade
balance reflected a 20 percent rise in agricultural
exports last year, associated with unusually poor
harvests of wheat and soybeans in the Southern
Hemisphere.

G o vern m en t
Growth of purchases by the federal government
has been uneven in this expansion. In real terms,
such purchases increased little during 1975 and
1976, rose substantially in 1977, and then—
despite a surge in the second half of the year—
declined slightly in 1978. Total expenditures,
however, have risen consistently, reflecting in­
creased grants to state and local governments
and transfers to individuals for social security,
food stamps, and retirement benefits. Revenues
have increased even more than outlays over the
past several years, so that the federal budget
deficit has declined from $66.4 billion in fiscal
year 1976 to a projected $37 billion for the
current fiscal year that ends next September.
State and local government purchases also
have grown irregularly over the past four years.

188

Federal Reserve Bulletin □ March 1979

In real terms, outlays by this sector for goods
and services expanded at a 214 percent annual
rate during the second half of 1978, m atching
the average pace over the expansion as a w hole.
This is w ell below the trend rate of increase
experienced during the 1960s and early 1970s.
The slow in g of growth reflects changing re­
quirements for services, associated with d em o­
graphic developm en ts, and a degree of fiscal
conservatism prompted partly by the financial
difficulties encountered by som e com m unities in
recent years. In 1978, h ow ever, a tendency
toward tax relief— occasioned in part by voter
preferences expressed in C alifornia’s Proposi­
tion 13 and like measures elsew h ere— out­
w eighed the impact of spending econ om ies on
budgets. A s a result, although the aggregate
operating surplus of state and local governm ents
totaled $6 billion for the year, this was only
half the size of the 1977 surplus.

L a b o r M a rk ets
Labor demand has been strong throughout the
current econom ic expansion. During the three
years follow in g the cyclical trough in early
1975, nonfarm payroll em ploym ent advanced at
an average annual rate of 3 .7 percent— co m ­
pared with a 2 .8 percent median rate of gain
during the five previous postwar expansions.
During the past year— at a stage when in earlier
cycles em ploym ent levels had begun to level
off or even to fall— payroll em ploym ent has
continued to advance at a 4 .2 percent annual
rate. Over the alm ost four years of expansion,
em ploym ent has increased by 12 m illion, and
today the ratio of em ploym ent to total civilian
population aged 16 and over stands at the high­
est level on record.
Em ploym ent in the goods-producing sector of
the econom y rose rather slow ly early in this
recovery, reflecting in part the sluggish behavior
of business fixed investm ent. It was not until
late 1978— as a result of large hiring increases
in the hard good s industries— that factory em ­
ploym ent reached its prerecession peak. S im i­
larly, construction hiring show ed only small
increases for nearly three years after the trough.




During 1978, h ow ever, em ploym ent in contract
construction surged ahead to record lev els.
In the private service-producing sector, em ­
ploym ent dipped only briefly in early 1975 and
has been on a steady uptrend since then— far
exceeding the gains of previous expansions. The
trade and service industries have continued to
grow faster than other sectors, and by the end
of 1978 they accounted for more than 4 of every
10 jobs in nonfarm establishm ents. In contrast
to the private sector, governm ent hiring has
been m odest. Federal governm ent civilian em ­
ploym ent has been fairly stable at around 2 3A
m illion over the past four years, about the same
level that has prevailed since the late 1960s.
State and local governm ent em ploym ent has
risen, but growth has been slow ed substantially
in recent years as a consequence of reduced
needs for education personnel and fiscal re­
trenchment by many units.
The reduction of dem and for labor in educa­
tion reflects the shift in the age structure of the
population that has been affecting not only
school enrollm ents but also the size of the work
force. Growth of the teenage population (ages
16 to 19) in the late 1960s and early 1970s was
exceed in gly large, reflecting the attainment of
working age by the postwar baby boom cohort.
At the sam e tim e, labor force participation rates
for teens rose sharply. In the m id -1970s, growth
of the 16 to 19 age group slo w ed , and in 1978
the teenage population actually began to co n ­
tract. N oneth eless, with participation rates still
rising rapidly, the teenage labor force continued
to grow at a rapid pace (up 3 .2 percent in 1978
compared with 1.6 percent on average in the
preceding four years).
An even more significant factor in the expan­
sion of the work force has been the continued
rise in the participation rates of adult w om en.
The longer-run trend, w hich reflected low birth
rates as w ell as changing attitudes and social
trends, apparently was augmented in the 1970s
by a desire of fam ilies to maintain their material
living standards in the face of rapid inflation.
A s a result of these participation-rate patterns,
the total civilian labor force grew 3 percent
during 1978— about the sam e as in 1977, but

M onetary Policy R eport to Congress

up considerably from the 2 lA percent annual rate
during preceding years of the decade.
With the growth of employment outstripping
even the large increase in the size of the labor
force, the unemployment rate fell 1/2 percent­
age point over the course of 1978 to just under
6 percent. Labor market conditions improved
significantly for most groups of skilled and
experienced workers. For example, unemploy­
ment rates for workers 25 to 54 years old,
skilled blue collar workers, and workers seeking
full-time employment all were at or near the
levels reached in 1972 when labor and product
markets were beginning to tighten noticeably.
While there was as yet no general shortage of
skilled workers during 1978, many firms report­
edly were finding it increasingly difficult to fill
certain job vacancies at prevailing wage rates.
The improvement in employment conditions
during the current expansion has not been uni­
form. Despite the gains made by many groups,
unemployment rates for younger workers, mi­
norities, and the unskilled were still very high
at the end of 1978. For example, the unem­
ployment rate for teenagers at the end of 1978
was \ 6 lA percent, more than four times the rate
for workers 25 to 54 years old; for minority
youth the rate was over 35 percent. Younger
workers between 16 and 24 years of age ac­
counted for about half of all joblessness in the
fourth quarter of 1978.
The enlarged proportion of the labor force
accounted for by teenagers and women means
that the overall unemployment rate does not
imply the same degree of labor force pressure
that it would have in past years. These groups
tend to have relatively high rates of joblessness
for a number of reasons, including generally
more limited training and work experience. As
a rough adjustment for such structural influ­
ences, the average unemployment rate can be
recomputed using the age-sex composition of
the labor force in the mid-1950s. The result of
such a calculation is an unemployment rate
about one percentage point below its current
level, which vividly illustrates that the level of
labor utilization consistent with price stability
may change considerably over time. To enhance




189

the possibility of simultaneously achieving low
unemployment and price stability, it may be
necessary to augment monetary and fiscal poli­
cies with carefully focused programs to facilitate
job placement and to provide skill training.

P ro d u ctivity
The 3.5 million increase in payroll employment
during 1978 was much larger than would have
been expected on the basis of the historical
relationships between output changes and labor
demand. Although growth in real GNP decel­
erated from 5Vi percent in 1977 to 4% percent
in 1978, businesses added to their payrolls at
almost the same rate. Output per hour of work
rose only slightly over the four quarters of 1978.
Much of the slowdown in productivity growth
last year occurred outside the manufacturing
sector; output per hour in manufacturing in­
creased 3Vi percent during 1978. Normally,
productivity growth slows as labor markets
tighten and capacity constraints are approached,
but the falloff in productivity gains in the past
two years has been particularly sharp.
This poor performance of labor productivity
continues a trend toward slower growth evident
since the late 1960s. During the period from
1947 to 1967, productivity in the nonfarm busi­
ness sector rose on average by 2% percent per
year, and accounted for almost 70 percent of
the gain in output for this sector. Since 1967
the rise in output per hour has slowed, with
average annual gains of only 1.2 percent re­
corded since 1973. As a result, less than 50
percent of output growth over the last five years
can be attributed to gains in efficiency.
The deterioration of productivity performance
in recent years is a complex phenomenon that
is not completely understood. It appears, how ­
ever, that a crucial factor has been the failure
to maintain an adequate rate of capital forma­
tion. Indeed, the nation’s stock of capital has
shown little growth relative to the size of the
labor force over the past decade; in contrast,
the capital-labor ratio trended upward rapidly
in the preceding 20 years. Other factors that may
have contributed to reduced productivity growth

190

Federal Reserve Bulletin □ March 1979

in recent years are the influence of environ­
mental and safety regulations that divert re­
sources to uses not measured in the national
income and product accounts and the increase
in the proportion of young and inexperienced
workers in the labor force.

In vestm en t
Since the early 1960s there has been a marked
trend toward slower growth of the stock of
business capital in the United States. Although
real gross business fixed investment last year
surpassed the 1973 record, still stronger invest­
ment activity will be needed if there is to be
a sustained reversal of this trend. In part this
merely reflects the arithmetic truth that un­
changed absolute amounts of investment trans­
late into declining percentage increases in a
growing stock of plant and equipment. Also
important, however, is the fact that it is net
investment— that is, gross investment less the
depreciation of existing capital goods— that
adds to the capital stock, and real net investment
has yet to reach its previous peak level. Because
the fraction of the capital stock in the form of
relatively short-lived equipment has been in­
creasing in recent years, a higher level of gross
investm ent is now needed simply to maintain
the existing capital stock.
It also must be noted that even the figures
for net investment probably overstate the con­
tribution that capital outlays have been making
recently to the expansion of productive capacity.
A significant share of plant and equipment
spending has been undertaken to meet govern­
ment pollution, health, and safety regulations.
During the past several years roughly 5 percent
of total capital spending has been for the pur­
pose of pollution abatement, and some estimates
suggest that perhaps an additional 2 percent of
investment has been for improvements in health
and safety conditions. Although these outlays
may well yield important benefits to society,
they do not directly enhance productive capac­
ity.
When an economy is near full employment,
the commitment of additional resources to capi­
tal formation will require some near-term sacri­
fice of consumption by individuals or govern­



ment. However, there is ample evidence that
higher levels of investment effort can enhance
long-range economic growth and raise living
standards. The increase in U .S. capital spending
last year raised the ratio of real gross business
fixed investment to GNP to 10.2 percent— the
first time since 1974 that it reached the 10
percent level, but still somewhat below the
average of the late 1960s and early 1970s.
Although international comparisons must be
made with caution, owing to differences in
accounting and other technical problems, it is
clear that other major industrial nations have
allocated greater shares of GNP to investment
and, as a result, have enjoyed substantially
faster increases in productivity and output.
While this does not lead to the conclusion that
the United States should attempt to achieve the
same investment-GNP ratios as prevail else­
where, it tends to confirm the proposition that
this nation would benefit from higher propor­
tions of capital spending to GNP than have been
experienced in recent years.

In tern ation al T ra d e an d P aym en ts
From the mid-1960s through the early 1970s,
the U .S. merchandise trade balance moved
gradually from surplus to deficit. Then, during
the 1974-75 worldwide econom ic slowdown the
United States suffered a disproportionately sharp
contraction, so that— despite an enormous in­
crease in our outlays for imported oil— the U .S.
trade balance swung into surplus in 1975. The
surplus proved temporary, however; the subse­
quent economic recovery was stronger here than
abroad, and this played a major role in the steep
increase of our trade deficit from 1976 through
early 1978.
The trade deficit in 1978 was $34 billion,
slightly larger than in 1977. But the deficit
peaked at an annual rate of $45 billion in the
first quarter of 1978, and developments in both
exports and imports contributed to a narrowing
of the imbalance to a rate of about $30 billion
in each of the subsequent quarters.
The growth of exports accelerated in the
second quarter. The step-up was partly attrib­
utable to temporary causes— for example, de­
mand for U .S. agricultural commodities was

M onetary Policy R eport to Congress

stimulated by poor harvests in the Southern
Hemisphere. More important was a strengthen­
ing of econom ic activity abroad and the im­
proved competitiveness of U .S. goods resulting
from the substantial depreciation of the U .S.
dollar that had begun in the fall of 1977. The
real volume of nonagricultural exports increased
6 percent in 1978, and growth picked up
strongly in the second half of the year. Prices
of exports increased in line with the general pace
of domestic inflation, and the total value of
merchandise exports rose 17 percent from 1977.
The relatively moderate rise in the volume
of imports in 1978, following two years of very
large increases, resulted primarily from a slower
increase in nonoil imports, but it was reinforced
by some decline in petroleum imports. Although
total U .S. petroleum consumption is estimated
to have increased 3 percent, the higher demand
was more than met by the increased Alaskan
production and by a drawing down of invento­
ries from unusually high levels. The total value
of imports increased 16 percent in 1978 with
the gain spread over most major commodity
categories. Almost half of this increase was in
volume terms as imports responded to the con­
tinuing strength in U .S. economic activity.
Prices of nonoil imports were boosted by the
decline in the international value of the dollar.
The current-account deficit in 1978, estimated
at $17 billion, was slightly larger than in 1977.
As in other recent years, net receipts from
service transactions provided a substantial offset
to the merchandise trade deficit. Earnings, fees,
and royalties from foreign direct investments
have shown a strong uptrend during the 1970s.
In the period between the onset of generalized
floating of currencies in March 1973 and Sep­
tember 1977, the exchange value of the dollar
went through several phases of appreciation and
depreciation. The average value of the dollar
increased sharply (nearly 15 percent) from O c­
tober 1973 to January 1974, despite large sales
of dollars by foreign central banks. Continued
large sales of dollars by foreign central banks
in 1974, later reinforced by the easing of do­
mestic interest rates associated with the U .S.
recession, contributed to a decline in the dollar
that began in the first quarter of 1974 and did
not end until the spring of 1975. Thereafter,



191

the emergence of a large current-account surplus
and a relative firming of U .S. interest rates led
to a substantial appreciation of the dollar until
the spring of 1976. The dollar subsequently held
relatively steady until the fall of 1977.
The dollar began to depreciate markedly
against most major foreign currencies in late
September 1977 as forecasts for 1978 suggested
that the U .S. trade deficit would be no smaller
than in 1977. The decline continued through the
end of 1977, despite large intervention pur­
chases of dollars by foreign central banks. An
announcement in January 1978 that the U .S.
Treasury would join the Federal Reserve in
exchange-market intervention in German marks,
followed by an increase in the discount rate,
improved market sentiment only temporarily,
and by early April the dollar had declined about
10 percent on a weighted-average basis. Be­
tween early April and mid-May, a relative
firming of U .S. interest rates contributed to a
recovery, but the dollar declined fairly steadily
thereafter in response to continuing concerns
about the size of the U .S. trade deficit and
increasing fears that U .S. price performance
was deteriorating.
Although some depreciation of the dollar was
justified by the need to restore external balance
in the face of differential growth rates in the
United States and major foreign econom ies and
a relative worsening of U .S. inflation, by mid­
summer it was clear that the dollar’s decline
was becoming excessive in trading that was
increasingly disorderly. Consequently, in Au­
gust the Federal Reserve announced a 1/2 per­
centage point increase in the discount rate and
reduced to zero the reserve requirements on
borrowings by member banks in the Eurodollar
market. The Treasury later announced that it
would increase the size of its regular monthly
gold auctions. These measures produced a brief
rally and then a few weeks of stability for the
dollar. However, the dollar’s slide soon re­
sumed. After the President announced his
wage-price program on October 24, the decline
steepened alarmingly, threatening to undercut
the anti-inflation effort at home and to lead to
further erosion of confidence abroad. By late
October, the dollar had fallen 21 percent from
its September 1977 level.

192

Federal Reserve Bulletin □ March 1979

Under these circumstances, more forceful ac­
tion was required. On November 1, the Federal
Reserve increased the discount rate by 1 per­
centage point and imposed a supplementary
reserve requirement of 2 percentage points on
large time deposits. To increase the availability
of foreign currencies for exchange-market in­
tervention, enlarged swap lines were arranged
with the central banks of Germany, Japan, and
Switzerland. The U .S. Treasury simultaneously
announced its intention to draw on its reserve
position in the International Monetary Fund, to
sell special drawing rights, and to issue
foreign-currency-denominated securities. In ad­
dition, the Treasury announced a doubling in
its rate of gold sales.
The aim of these measures was to correct the
excessive depreciation of the dollar and thereby
to counter upward pressures on the domestic
price level. When viewed in its entirety, the
policy initiative of the administration and the
Federal Reserve System indicated that the
United States recognized the need for an inte­
grated approach in addressing domestic and
international econom ic concerns. The an­
nouncement of these measures on November 1
produced a dramatic jump in the dollar’s ex­
change value. On that day alone the dollar
advanced by 5 percent on a weighted-average
basis. Heavy cooperative central bank interven­
tion over the following few weeks provided
support for the dollar as market participants
tested the authorities’ resolve, but the need for
such intervention abated in January. As of midFebruary of this year, the dollar was more than
7 percent above its October low on a weightedaverage basis.

P rices
Inflation typically has accelerated over the
course of cyclical expansions in economic ac­
tivity, and this upswing has proven no excep­
tion. However, the marked increase in the pace
of price advance during the past year was in
large measure a consequence of forces not di­
rectly related to an intensification of general
demand pressures on available productive re­
sources. Government-mandated increases in
costs and special developments in the agricul­



tural and international sectors contributed sub­
stantially to the pickup in inflation during 1978.
Inflation moderated during the first stages of
the cyclical recovery in 1975 and 1976. The
earlier extraordinary pressures (associated with
the rise in oil prices, the sharp escalation in food
prices, a worldwide boom in other commodities,
and domestic price decontrol) subsided, and the
considerable slack in labor and product markets
restrained wages and prices. Inflation began to
speed up again in 1977, however, and prices
then surged in 1978. The consumer price index,
the producer price index, and the fixed-weight
price index for gross business product all regis­
tered increases of around 9 percent during 1978,
about 2 percentage points more than in the
preceding year.
The acceleration of inflation last year re­
flected importantly the pressure of rising labor
costs. Wage rates in the private nonfarm sector
increased 8!4 percent, compared with about IV 2
percent in each of the preceding two years. A
boost in the federal minimum wage contributed
appreciably to the accelerated rise of wages; the
impact was especially noticeable in the trade
sector, which has the largest concentration of
lower-wage workers and had average wage in­
creases of more than 9 percent last year.
Hourly compensation, which includes, in ad­
dition to wages, the costs to employers of social
insurance contributions and of privately nego­
tiated fringe benefits, rose 9 3A percent— about
2 percentage points faster than in 1977. About
one-quarter of the acceleration resulted from
increased social security taxes and unemploy­
ment insurance contributions. In addition, pri­
vate fringe benefits continued to rise faster than
wages.
Given the weak performance of labor pro­
ductivity, the larger compensation gains were
translated into rapid increases in unit labor
costs. Unit labor costs in the nonfarm business
sector rose 9 percent during 1978 versus 6 V3
percent in 1977. As 1979 began, labor costs
again were given an upward jolt by further
increases in the minimum wage and social se­
curity taxes.
Apart from the broad pressures exerted by
rising unit labor costs, the general level of prices
was affected considerably in 1978 by develop­

M onetary Policy R eport to Congress

ments in the farm and food sector. Retail food
prices rose 12 percent over the year— the largest
increase since 1974. The increases at the retail
level reflected a rise of almost 20 percent in
farm prices during 1978 following little change
in the preceding year. Meat price increases were
particularly rapid, as beef production continued
to decline.
The decline in the foreign exchange value of
the dollar also aggravated inflation. Aside from
the direct impact of higher prices for imported
merchandise, the price-restraining pressure of
foreign competition was weakened for many
domestic products. Large price increases for
domestically produced automobiles and other
durable goods reflected both of these effects.
The inflationary pressures associated with the
steep depreciation of the dollar that had begun
in September 1977 appear to have accounted
for about 1 percentage point of last year’s rise
in the consumer price index.
At the producer level, the inflation of prices
of capital equipment accelerated considerably
less than that for consumer finished goods. But
crude materials prices, for both food and non­
food items, increased sharply, and prices for
construction materials also rose rapidly. In the
first month of this year the continuing strength
of inflationary forces was demonstrated by a 1.3
percent jump in the producer price index; al­
though consumer foods posted an especially
large increase, all of the major groupings of
finished goods and materials showed accelerated
advances.

F inan cial M a rk ets
Interest Rates. Interest rates generally de­
clined during the early part of the current eco­
nomic expansion. This departure from usual
cyclical patterns probably was attributable in
part to a diminution of inflation expectations
associated with the observed slowing in the
advance of prices and to the limited credit needs
of businesses, which were pursuing cautious
capital spending policies. Interest rates began
to move upward in the spring of 1977, however,
as the Federal Reserve acted to restrain acceler­
ating growth in money and credit. Over the
course of 1977, yields on short-term market



193

instruments generally rose about 2 percentage
points, while corporate and Treasury bond
yields increased around 3/4 percentage point.
With inflation picking up, the margin of unu­
tilized resources narrowing, and the dollar under
downward pressure in foreign exchange mar­
kets, the Federal Reserve applied increasing
restraint to the expansion of money and credit
in 1978. This was reflected in further increases
of 3 to 4 percentage points in most short-term
rates over the course of the year. The combina­
tion of rising short-term rates and heightened
inflation expectations resulted in increases of
roughly 1 percentage point in bond yields. By
year-end, a number of interest rates were near
or above the peak levels of 1974.

Monetary Aggregates. The monetary aggre­
gates have exhibited some unusual patterns of
behavior during the past several years. This has
been especially true with respect to the narrow
money stock, M -l. During 1975 and 1976,
growth in M -l averaged just over 5 percent per
year. Given the concurrent decline in interest
rates, the sizable increases in M -l velocity—
that is, the ratio of GNP to M -l— were much
larger than would have been predicted on the
basis of previous historical relationships among
money, income, and interest rates.
The moderation of the public’s demand for
M -l may have reflected to a degree an unusually
strong cyclical swing in confidence and in­
creased willingness to spend out of existing cash
balances as the economy recovered from a se­
vere recession. However, there is also consid­
erable evidence that other factors played an
important role. The unprecedentedly high level
reached by interest rates in 1974 stimulated the
creation and adoption of new cash management
techniques that permitted individuals and busi­
nesses to econom ize on nonearning demand
deposits. This development apparently contin­
ued to exert a significant influence even after
interest rates turned downward, and it was rein­
forced by several important legislative and reg­
ulatory developments and innovations affecting
the payments system. These included the au­
thorization of negotiable order of withdrawal
(NOW) accounts in all of New England, of
savings accounts for businesses and govern­

194

Federal Reserve Bulletin □ March 1979

mental units, and of preauthorized third-party
and telephone transfer privileges for personal
savings accounts.
By the beginning of 1977, the level of M -l
was well below that predicted by most standard
econometric models of the demand for money.
This downward shift in money demand abated
in early 1977, however, and growth of M -l
generally conformed to historical patterns until
the final months of 1978. M -l expanded 8
percent during 1977 and at about the same pace
over the first three quarters of 1978; rising
interest rates and slowing economic expansion
worked to moderate M -l growth over this span,
but these influences were offset by the effect
of accelerating inflation on transactions require­
ments.
On a quarterly average basis, M -l growth in
the fourth quarter of 1978 was at a 4 .4 percent
annual rate, but the average level of the money
stock in January was slightly below that for
October. A portion of this weakness is the direct
consequence of the introduction of automatic
transfer services (ATS) last November 1; many
individuals have shifted their transactions bal­
ances from checking accounts to savings ac­
counts from which funds are automatically
transferred to cover checks. These shifts appear
to have reduced M -l growth rates by roughly
3 percentage points per month, on average.
Even after allowance for this, however, growth
in M -l has been weaker than might have been
expected in light of the recent expansion of
income and spending. It may be that, as in 1974,
interest rates have reached a high threshold level
at which households and businesses are induced
to seek out and adopt cash management tech­
niques that permit major economies in demand
deposit holdings. The advent of ATS— which
occasioned basic changes in the checking ac­
count pricing policies of many banks— un­
doubtedly has caused many individuals to assess
more carefully the opportunity costs of holding
non-interest-earning demand deposit balances as
compared not only with ATS accounts but also
with other highly liquid interest-earning assets.
The behavior of the interest-bearing com po­
nents of the broader monetary aggregates— M-2
and M-3— was generally in line with historical
patterns during the first three years of the eco­



nomic upswing, but there has been a marked
deviation since last June. Commercial banks and
thrift institutions experienced rapid growth of
savings and small-denomination time deposits
until the latter part of 1977. At that point a gap
began to develop between interest rates on shortand intermediate-term market securities and the
rates permitted on insured deposits by federal
regulations. As the gap grew, inflows to savings
and small time accounts gradually diminished
through the spring of 1978. Commercial banks
found it necessary to rely more heavily during
this period on large time deposits and other
managed liabilities to fund their lending activi­
ties, and savings and loan associations borrowed
heavily from Federal Home Loan Banks.
To prevent a repetition of past episodes when
markedly reduced deposit inflows led to an
abrupt curtailment of credit to homebuyers and
others reliant on the depositary institutions for
credit, the federal regulatory agencies author­
ized two new time deposit categories effective
June 1. One was an 8-year account paying up
to 1 3A percent at commercial banks and 8 per­
cent at thrift institutions. The other was a 6month “ money market certificate” (MMC)
whose maximum rate varies weekly with the
average yield on newly issued 6-month Treasury
bills. Given rate relationships, the 8-year certif­
icate has not added significantly to overall de­
posit flows, but quite the contrary is true of the
MMCs. During the first 5 months of 1978, time
and savings deposits subject to rate ceilings at
commercial banks, savings and loan associa­
tions, and mutual banks grew at a 7.9 percent
annual rate; since the beginning of June, these
deposits have grown at a 10.3 percent rate
despite substantial further increases in market
interest rates. MMC balances at the end of
January totaled about $105 billion and ac­
counted for 7 3A percent of savings and small
time deposits at banks and almost 13 percent
at thrift institutions.
The MMCs have greatly reduced the sensi­
tivity of time and savings deposit growth to
changes in market interest rates, but they have
not eliminated it. Indeed, inflows have mod­
erated during the past few months, at least partly
in response to the substantial further rise in
interest rates. Increased noncompetitive tenders

M onetary Policy R eport to Congress

in auctions of Treasury securities and record
growth of money market mutual funds are indi­
cations that recent interest rate levels have been
inducing some diversion of funds from savings
and small time accounts subject to fixed rate
ceilings.

Credit Flows. Although accelerating inflation
has tended to dampen the impact of rising nom­
inal interest rates on credit demands, there has
been a perceptible flattening of the overall pace
of borrowing in the economy over the past year.
Total funds raised in credit markets by the
private domestic nonfinancial sectors have ex ­
panded only moderately since the second half
of 1977 after having risen rapidly during the
earlier part of the economic expansion. A l­
though the liquidity of depositary institutions
has declined over the past two years, the intro­
duction of the MMC has prevented the disinter­
mediation that accompanied previous interest
rate cycles and has permitted banks and thrift
institutions to continue to account for a very
large share of the funds advanced to ultimate
borrowers.
Households, in particular, are heavily reliant
on depositary institutions for credit, and their
demands for funds have remained strong. Home
mortgage borrowing in 1978 was slightly larger
than in 1977, and consumer installment bor­
rowing rose to a new record as households
financed purchases of autos and other large
ticket items. The aggregate flow of credit to
households in 1978, at more than $160 billion,
was 15 percent greater than in 1977 and three
times the volume recorded in 1975.
The buildup of indebtedness by households
over the last three years has outstripped both
the growth of this sector’s financial asset hold­
ings and of disposable income. Repayment bur­
dens have reached record proportions. Although
loan delinquency data indicate that families have
not as yet encountered significant difficulty in
meeting their obligations for debt service, the
diminished liquidity of household financial po­
sitions suggests a greater fragility and vulnera­
bility to any deterioration of income flows.
The nonfinancial business sector also experi­
enced some decline in liquidity in the past year.
The gap between corporate capital spending and



195

internal cash flow widened, and firms met a
substantial portion of their external financing
needs through short-term borrowings— particu­
larly from commercial banks. While commer­
cial mortgage borrowing increased and private
bond placements remained large, many of the
big, highly rated industrial firms that have ready
access to the public bond markets evidently
preferred to defer long-term financings in the
expectation that long-term rates would eventu­
ally decline. As a consequence, the aggregate
ratio of liquid assets to short-term liabilities in
the nonfinancial corporate sector declined over
the course of 1978, to a level only slightly above
the 1974 low.
State and local borrowing was about the same
in 1978 as in 1977. Advance refundings again
accounted for a sizable share of tax-exempt
bond issuance, but such operations virtually
ceased after August owing to the combination
of restrictive Internal Revenue Service regula­
tions and rising interest rates. Despite some rise
in the past few months, the ratio of yields on
municipal bonds to those on taxable obligations
has remained relatively low by historical stand­
ards, reflecting in part the continued demand
for tax-exempt securities by casualty insur­
ance companies, by commercial banks, and by
individuals.
Borrowing by the U .S. Treasury has declined
over the past year, reflecting the diminution of
the federal budget deficit. Government borrow­
ing from the public totaled $59 billion in fiscal
year 1978, but is projected by the administration
at about $40 billion in the current fiscal year.
The preponderance of the increase in out­
standing Treasury debt during 1978 was ab­
sorbed by state and local governments, which
purchased a large volume of nonmarketable
Treasury securities with proceeds of advance
refundings, and by foreign official institutions,
which invested dollars obtained in exchangemarket intervention.
Commercial banks satisfied a substantial
proportion of the credit demands of households,
businesses, and state and local governments
during 1978. Total bank credit expanded 10.9
percent over the course of the year, with loan
portfolios increasing by 14.6 percent. To meet
loan demands many banks had to liquidate

196

Federal Reserve Bulletin □ March 1979

holdings of Treasury securities and to borrow
either from correspondents or in the open market
through the issuance of large CDs or nondeposit
liabilities such as federal funds and repurchase
agreements. Aggregate bank liquidity ratios de­
clined appreciably, especially among the
smaller and regional institutions that have expe­
rienced the strongest business loan growth dur­
ing this expansion.
Thrift institutions experienced considerable
cash-flow pressure during the first half of 1978,
but they have been able to rebuild their liquid
asset positions since the MMCs began to bolster
deposit growth. Thrift institution mortgage
lending declined moderately during 1978, al­
though there was some upturn in the final quarter
in lagged reaction to the midyear pickup in
deposit inflows. Outstanding loan commitments
also rose during the second half but in December
were slightly below the year-earlier level.
Life insurance companies and pension funds
have continued to experience large inflows of
investable funds. In 1978 as in previous years
of the economic expansion, these institutions
absorbed the bulk of the net issuance of cor­
porate bonds. The insurance companies also
have supplied a large share of commercial
mortgage credit.
O

b je c t iv e s

Federal R

and

Plans

of

the

eserve

The O bjective of
M o n eta ry Policy in 1979
The objective of the Federal Reserve is to foster
financial conditions conducive to a continued,
but more moderate, economic expansion during
1979 that should permit a gradual winding down
of inflation and the maintenance of the stronger
position of the dollar in international exchange
markets. Given the limited margin of unutilized
labor and industrial resources remaining in the
econom y, it is critically important to avoid
strong aggregate demand pressures that would
aggravate our already serious inflation problem.
At the same time, the current condition of
general balance in the economy suggests that
it should be possible to continue restraint to




relieve inflationary pressures without triggering
a recession.

G row th o f M o n e y an d C re d it in 1979
The Federal Open Market Committee (FOMC)
has selected growth ranges for the monetary
aggregates that it believes will bring to bear an
appropriate degree of restraint in light of the
current outlook for fiscal policy and the under­
lying strength of private demand in the econ­
omy. Over the year ending with the fourth
quarter of 1979, M -l is expected to grow be­
tween IV2 and 4!/2 percent; M -2, 5 to 8 percent;
and M -3, 6 to 9 percent. Commercial bank
credit has been projected to increase between
7 V2 and IOV2 percent during the year.
The growth range for M -l calls for a marked
deceleration from the pace of recent years. This
reflects in part an expectation that the shifting
of funds to savings accounts with automatic
transfer facilities and to the NOW accounts
Recently authorized in New York State will
continue to depress the growth of demand de­
posits throughout 1979. The board’s staff has
projected that such shifting will damp growth
in M -l this year by around 3 percentage points.
Because there has been only a brief period of
experience upon which to base an analysis of
the attractiveness of the ATS accounts, this
projection carries a broad range of uncertainty.
The unexplained flatness of M -l in recent
months introduced another uncertainty in the
FOMC’s deliberations regarding the monetary
growth ranges. At this stage it is impossible to
tell whether the weakness of M -l relative to
what would have been expected on the basis
of historical relationships among money, in­
com e, and interest rates is a transitory phenom­
enon or one that is likely to persist for some
time. The range for M -l assumes that the recent
weakness does in some degree reflect a change
in the public’s desired allocation of funds among
various financial assets that may persist for some
time ahead, though not so strongly as in recent
months.
The breadth of the specified growth range for
M -l recognizes the considerable uncertainties
that currently exist. As subsequent information

M onetary Policy R eport to Congress

begins to resolve those uncertainties, the range
may be adjusted. In the meantime, M -l may
continue to be a somewhat ambiguous indicator
of monetary policy, and it will be especially
important to monitor carefully the behavior of
other financial variables.
It may be noted that the Federal Reserve is
studying possible redefinitions of the monetary
aggregates. Among the proposals made in a staff
paper published for public comment in the Jan­
uary F e d e r a l R e s e r v e B u l l e t i n is that M -l
be redefined to encompass ATS, NOW , and
other similar transactions accounts.2 While such
a redefinition would not eliminate the need to
understand the behavior of the various financial
assets, it might produce an aggregate that is
more reflective of the public’s need for transac­
tions balances in light of ongoing institutional
changes.
The behavior of M -l was not the only puz­
zling development confronting the FOMC early
this month as it considered the appropriate
ranges for monetary growth during 1979. There
were questions as well regarding the movements
of the interest-bearing components of the
broader aggregates— especially the time and
savings deposits at commercial banks that,
along with M -l, constitute M-2. Bank savings
deposits have declined appreciably in the past
few months, despite the influx of funds to ATS
savings accounts. While savings deposit inflows
might be expected to exhibit weakness when
market interest rates are so far above regulatory
ceilings, a large gap had existed for a consid­
erable time and it might have been expected that
most of the interest-sensitive funds had already
moved into other instruments. It is possible,
however, that— as perhaps with demand depos­
its— the recent further sharp increase in interest
rates to historically high levels has prompted
many people to seek out alternative assets car­
rying market yields more aggressively. The M-2
range adopted by the FOMC reflects an expec­
tation that growth of the interest-bearing com ­
ponent will be somewhat stronger in the months

2.
“ A Proposal for R edefining the M onetary A g g re­
g a t e s ,” F e d e r a l R e se r v e B u l l e t i n , V o l. 65 (January
1 9 7 9 ), pp. 1 3 -4 2 .




197

ahead, buttressed by further sizable increases in
the large-denomination time deposits included
in the total and by abatement of the recent
unusually large withdrawals of funds from sav­
ings deposits.
The range for M-3 implies a continued sub­
stantial growth of deposits at nonbank thrift
institutions. The money market certificates have
proven a reliable source of funds. While some
institutions have reduced their promotion of
MMCs, the certificates have continued to be
widely offered at ceiling rates— although there
has been some erosion of earnings at thrift
institutions since m id-1978 as these relatively
high cost deposits have taken a growing share
of thrift institution liabilities.
The projected range for bank credit expansion
reflects an expectation that loan demands will
be less intense in 1979 than in 1978, in line
with the prospect of more moderate growth of
economic activity. Banks likely will have to
continue to rely heavily on large time deposits
and other money market liabilities to fund asset
growth, and this implies some further decline
in traditional measures of institutional liquidity.

The E con om ic O u tlook
Despite the surge in real GNP during the fourth
quarter, it appears that underlying economic and
financial conditions will lead to a moderation
of economic growth in the year ahead. The
absence of the sorts of distortions and imbal­
ances that have often precipitated economic
downturns in the past indicates that it should
be possible to slow the pace of expansion— and
thereby relieve inflationary pressures— without
prompting a recession. However, any further
acceleration of inflation or the occurrence of
severe shortages of critical com modities, such
as oil, would imperil this outcome.
The monetary restraint applied over the past
year by the Federal Reserve is expected in­
creasingly to affect the residential construction
sector. Higher costs of credit will cause land
developers and builders to put aside marginally
profitable projects, and the combination of
higher house prices and mortgage rates will lead
some families to defer home purchases. None­

198

Federal Reserve Bulletin □ March 1979

theless, owing to the MMCs and various insti­
tutional developments that have broadened the
sources of mortgage funds, as well as to the
strong underlying demand for shelter, the de­
cline in housing activity should be moderate by
comparison with past cycles.
Business fixed investment likely will continue
to grow during 1979, but at a slower rate than
in 1978. There has been some indication in the
past few months of a slowing in the steep
upward trend of contracts and orders for plant
and equipment, and this is generally consistent
with surveys of capital spending plans, which
point to smaller gains in outlays this year than
last. On the other hand, the climate for invest­
ment can be expected to improve as business
managers begin to perceive some progress in
retarding inflation and become more confident
about the sustainability of expansion.
Government spending probably will post only
a small increase in real terms this year. Indeed,
real federal purchases could decline during the
first half due partly to expected repayments of
Commodity Credit Corporation loans (which
are, in effect, sales of agricultural stocks). At
the state and local level, slower growth of
federal financial aid and the pressure for tax
relief will tend to hold spending increases to
small proportions.
Foreign demand for U .S. exports should tend
to strengthen during 1979. Economic expansion
abroad is generally expected to continue at its
recent more rapid pace, and the effects of the
substantial depreciation of the dollar on the U .S.
trade position should become more evident as
the year progresses.
On balance, the aforementioned sectors are
likely to provide a reduced impetus to income
growth during the year ahead. As a conse­
quence, consumer spending is likely to grow
less vigorously. Moreover, the substantial debt
repayment burdens faced by many households
and generally reduced liquidity of the household
sector could prompt households to increase their
recent relatively low saving rate. The demand
for imports also should moderate this year, not
only because of the slower expansion of do­
mestic income and production but also because
of the lagged effects of the 1977-78 decline in
the international exchange value of the dollar.




Inventory investment is likely to be relatively
flat in the projected economic environment.
With a slower growth of activity, pressures
on productive capacity should ease a bit. Indus­
trial capacity utilization rates, which in the
manufacturing sector are not now far below past
cyclical peaks, should decline slightly. In labor
markets, the growth of employment should
moderate from its recent rapid pace. Labor force
increases also are likely to diminish, as the
growth of the working age population slows
slightly and as labor force participation rates—
especially for youth— respond to the slackening
in econom ic expansion. Together, the prospec­
tive changes in employment and the labor force
point to a small increase in the overall unem­
ployment rate during 1979.
The moderation of demand pressures in labor
and product markets will tend to slow the ad­
vance of wages and prices and thus to reduce
the present, unacceptable rate of inflation.
However, uncertainties will remain as a result
of highly volatile and largely exogenous influ­
ences such as farm prices and oil prices. It now
appears that food prices will increase somewhat
less this year than last. Unfortunately, the price
of imported oil will be boosted substantially this
year as a result of the decisions taken by the
Organization of Petroleum Exporting Countries
in December, and the unsettled situation in Iran
raises the possibility of even larger price in­
creases.
Setting aside these special factors, a key
determinant of the rate of inflation this year will
be the performance of unit labor costs. Although
there may well be some improvement in pro­
ductivity in the next few years as the work force
tends to become, on average, somewhat older
and more experienced, there is little reason to
expect any marked acceleration of productivity
growth during 1979. Consequently, if there is
to be a noticeable slowing in the rise of unit
labor costs, compensation gains will have to
moderate significantly.
Toward this end, the administration’s wageprice program can play an important role. By
providing a standard for constructive behavior
on the part of both business and labor, the
program can be a vehicle for helping to brake
the wage-price spiral. Broad compliance with

M onetary Policy R eport to Congress

the adm inistration’s standards w ould make a
significant contribution to the slow in g of infla­
tion. Of course, the w age-price program can be
successful only if there is com plem entary re­
straint in monetary and fiscal p olicy— to contain
aggregate dem and pressures and to assure the
public of the governm ent’s com m itm ent to the
restoration of price stability.

The S h o rt-T erm G o a ls in the
E co n o m ic R e p o r t o f the P resid en t
A s specified by the Full Em ploym ent and B al­
anced Growth A ct, the President’s E conom ic
R e p o r t, transmitted to the C ongress last m onth,
lays out a detailed set of econom ic goals for
1979 and 1980. The d iscussion of the act’s
requirements points out that the adm inistration’s
“ short-term goals for [1979] and 1980 represent
a forecast of how the econom y w ill respond over
the next 2 years not only to the budgetary
policies proposed by the President for fiscal
1979 and 1980 but to the anti-inflation program
announced on October 2 4 .” 3
The adm inistration’s goals, along with the
com parable figures for 1978, are summ arized
in the follow in g table:
Item
1978 Q 4

Level
1979 Q4

1980 Q4

9 5 .6
5 .8

9 7 .5
6 .2

9 9 .5
6 .2

Em ploym ent (m illions) ........
U nem ploym ent rate (percent)

Percentage change, Q4 to Q4
Consumer prices .....................
Real G N P ...................................
Real disposable incom e ---Productivity ...............................

The R

8 .9
4 .3
3 .3
.2

e l a t io n s h ip

R

e s e r v e 's

Plans

A

d m i n i s t r a t i o n 's

7 .5
2 .2
2 .8
.4

of

the

to

the

G

oals

6 .4
3 .2
2 .3
1.1

Federal

The R ela tio n sh ip o f the F ed era l
R e s e r v e ’s M o n e ta ry G row th R a n g e s to
the S h o rt-T erm G o a ls in
The E co n o m ic R e p o r t
The Full Em ploym ent and Balanced Growth Act
directs the Federal R eserve to assess the rela­
tionship of its plans for monetary growth to the
3. E conom ic R eport of the P resident, p. 108.




199

short-term goals in the E conom ic R e p o r t . This
task is com plicated by the fact that goals are
specified for a variety of econom ic variables,
and monetary p olicy does not affect each of
them separately. Monetary p olicy has its m ost
direct short-term impact on aggregate nominal
G N P. W ithin the context of a particular nominal
G N P outcom e, the m ix of real output gains and
inflation, the growth of em ploym ent, and the
m ovem ents in other variables are influenced
importantly by conditions at the beginning of
the period, by other governm ental p o licies, by
the structural and behavioral relationships in the
econ om y, and by developm ents outside the d o ­
m estic econom y.
A s required by the Full Em ploym ent and
Balanced Growth A ct, the Federal R eserve at
this time has established ranges for m onetary
growth through the end of 1979. It w ill reassess
these and report preliminary ranges for 1980 in
July, unless d evelopm ents in the m onths ahead
necessitate earlier reconsideration. At this junc­
ture, the monetary growth ranges and the ad­
m inistration’s 1979 econom ic goals appear rea­
sonably consistent. The adm inistration’s fore­
cast im plies an expansion in nom inal G N P of
around 9 3A percent from the fourth quarter of
1978 to the fourth quarter of 1979. The m idpoint
of the F O M C ’s growth range for M -l is about
6 percent after adjustment for the expected im ­
pact of shifts of funds to ATS and N O W
accounts. This suggests an increase of M -l
velocity on the order of 3 xh percent, a figure
som ew hat above the longer-term trend, but rea­
sonable in light of the lagged effects of the
recent substantial increases in interest rates and
the downward shift in m oney dem and that has
been occurring. The upper and low er boundaries
of the M -l range, of course, allow for the
possibility of sm aller or faster increases in v e­
locity over the year.
The output-price m ix in the adm inistration’s
1979 forecast appears attainable if there is rea­
sonable com pliance with the w age-price stand­
ards and as long as there are no untoward shocks
such as an unanticipated surge in food or energy
prices. The em ploym ent and productivity fore­
casts appear consistent with the output goal, and
the unem ploym ent rate forecast seem s co n sist­
ent with reasonable assum ptions about labor

200

Federal Reserve Bulletin □ March 1979

force growth in the projected econom ic en v i­
ronment.
Considerably greater uncertainties naturally
are encountered with respect to the administra­
tion ’s goals for 1980, a period that is still rather
distant. N othing in the monetary or econom ic
projections for 1979 suggests to us that con d i­
tions prevailing at year-end w ill bar the
achievem ent of the adm inistration’s forecasted
9 xh percent growth in nominal G N P during
1980. At this tim e, how ever, the achievem ent
of the output-price m ix projected for 1980 ap­
pears to be more difficult.
The administration has forecast a marked
acceleration of growth in real G N P in 1980 and
a marked deceleration of inflation. Such an
outcom e is certainly attainable, but given the
projected levels of resource utilization— with
the unem ploym ent rate rem aining around 6 lA
percent— this result w ill require considerable
progress in the low ering of inflation exp ecta­
tions. There w ill have to be broad conform ance




to the adm inistration’s w age-price standards,
and the governm ent w ill have to give careful
attention to the potential cost-raising impacts of
its regulatory and legislative actions. Continued
budgetary restraint also w ill be necessary, both
to build confidence in the governm ent’s co m ­
mitment to avoid fiscal ex c esses and to m inim ize
pressures on the capital markets.
R ecognizin g the risks and uncertainties that
currently ex ist, the adm inistration’s 1980 fore­
cast can serve as an appropriate goal for the
C ongress as it considers its budgetary plan for
fiscal 1980. If inflationary pressures su bse­
quently should prove stronger than the adm inis­
tration has projected, then the prudent course
for governm ent p olicy would be to exercise a
substantial degree of restraint even if it risks
less real growth in 1980 than the 3 .2 percent
goal. Such a p olicy would lay the foundation
for balanced econom ic growth over the years
to com e and would help to maintain the integrity
of the dollar.
□

201

Treasury and Federal Reserve
Foreign Exchange Operations
This thirty-fourth joint interim report reflects the
Treasury-Federal Reserve policy of making
available from time to time additional informa­
tion on foreign exchange operations. The Fed­
eral Reserve Bank of New York acts as agent
for both the Treasury and the Federal Open
Market Committee of the Federal Reserve Sys­
tem in the conduct of foreign exchange opera­
tions.
This report was prepared by Alan R. Holmes ,
M anager , System Open Market Account, and
Executive Vice President in charge of the
Foreign Function of the Federal Reserve Bank
of New York , and by Scott E. Pardee , Deputy
Manager for Foreign Operations of the System
Open Market Account and a Vice President in
the Foreign Function of the Federal Reserve
Bank of New York. It covers the period August
1978 through January 1979. Previous reports
have been published in the B u l l e t i n for March
and September of each year beginning with
September 1962.
On N ovem ber 1, 1978, President Carter, the
U .S . Treasury, and the Federal Reserve an­
nounced a series of actions to correct what had
becom e an ex cessiv e decline of the U .S . dollar
in the exchange market. B etw een early August
and the end of October, the dollar had fallen
sharply against m ost major foreign currencies,
including net depreciations of 18 percent against
the German mark, 17 percent against the Sw iss
franc, and 7 percent against the Japanese yen.
A s was true of earlier periods of decline in 1977
and 1978, the renewed selling pressure on the
dollar had largely been in reaction to the per­
sistence of the large U .S . trade and current-ac­
count deficit, com pared with surpluses in several
other industrial countries, and to a quickening
of inflation in the United States, as against




steady or slow in g rates of inflation elsew here.
By late October the sellin g pressure had gath­
ered such force that m ovem ents in dollar e x ­
change rates had gone beyond what could be
justified by underlying econ om ic conditions and
were threatening to undermine U .S . efforts to
curb inflation.
In fact, the U .S . trade deficit had begun to
narrow, as manufacturing exports in particular
were expanding sharply, and this trend was
expected to continue. E conom ic growth in the
United States was expected to moderate in 1979,
w hile more rapid expansion was already under
way in several other major countries. The sharp
rise of U .S . interest rates over the course of
1978 w hile interest rates elsew h ere were steady
or rising more slo w ly had opened up substantial
interest differentials in favor of placem ents in
the United States. But the market atmosphere
had becom e so extrem ely bearish that few e x ­
pected the dollar’s slide to stop or to be reversed
on its ow n.
The N ovem ber 1 program, d eveloped in close
cooperation with the governm ents and central
banks of three major foreign countries, was
linked clo sely to the broader anti-inflation p o li­
cies of the U .S . governm ent. It featured a fur­
ther tightening of monetary p o licy , including an
increase of 1 percentage point in the Federal
R eserve discount rate to an historic high of 9 lh
percent. A lso , it provided for additional foreign
currency resources totaling up to $30 billion
equivalent to finance U .S . participation in coor­
dinated intervention in the exchange markets.
For the Federal R eserve, this involved a $ 7 .6
billion increase in the swap network through
increases in the swap arrangements with the
German Federal Bank, the Bank of Japan, and
the Sw iss National Bank to a total of $15 billion.
For its part, the Treasury announced that it

202

Federal Reserve Bulletin □ March 1979

would draw $3 billion in marks and yen from
the U .S. reserve position with the International
Monetary Fund (IMF) and sell $2 billion equiv­
alent of special drawing rights (SDRs) to mobi­
lize additional balances of German marks and
Japanese yen, as well as Swiss francs. The
Treasury also announced that it would issue
securities denominated in foreign securities up
to $10 billion equivalent. In addition, the
Treasury announced it would substantially in­
crease the amounts of gold to be offered at its
monthly auctions.
The U .S. authorities followed up the an­
nouncements by intervening massively in the
New York market in German marks, Swiss
francs, and Japanese yen, through the Foreign
Exchange Trading Desk of the Federal Reserve
Bank of New York. These operations were fully
coordinated with intervention by other central
banks in their own markets and in some cases
in New York. The dollar rebounded sharply,
and reactions were similarly favorable in U .S.
financial markets. Thereafter, the exchange
market gradually came into better balance with
good two-way trading at levels well above the
lows of late October, and the authorities were
able to scale back their intervention. By late
November and early December, the dollar had
advanced nearly 12 percent against the German
mark, 15 percent against the Swiss franc, and
13 percent against the Japanese yen.
Despite the improved outlook, however, the
dollar’s recovery rested on fragile footing for
the time being. Many market participants re­
mained pessimistic about the prospects for
bringing inflation under control in the United
States and continued to question whether the
authorities would succeed in their efforts to halt
the erosion of the dollar’s value in the exchange
markets. The dollar therefore remained vulner­
able to potentially adverse political and eco­
nomic shocks around the world. In early D e­
cember the political upheavals in Iran, coupled
with a stoppage of that country’s production and
export of oil, prompted a burst of dollar selling.
The mid-December announcement by the Orga­
nization of Petroleum Exporting Countries
(OPEC) of a greater-than-expected rise in oil
prices of some 14.5 percent over the course of
1979 triggered additional selling of dollars. The



U .S. authorities, along with the other central
banks, again intervened in substantial amounts
to blunt these selling pressures on the dollar
without holding rates at any particular level. But
bearish sentiment deepened, and dollar rates
slipped back some 2 to 5 xh percent from their
highs in early December.
From November 1 to the end of December,
the U .S. authorities had sold a total of $6,659.4
million of foreign currencies. Net of repay­
ments, Federal Reserve commitments under the
swap lines with the German Federal Bank, the
Swiss National Bank, and the Bank of Japan
rose to a peak of $5,456.9 million in early
January. U .S. Treasury drawings under its swap
arrangement with the Federal Bank stood at
$889.4 million equivalent, and the Treasury had
used $1,820.4 million of the $4.4 billion
equivalent of currencies obtained through IMF
and SDR transactions in November and through
the issuance of $1.6 billion equivalent of markdenominated securities in the German capital
market in December.
Though many market participants expected
further downward pressure on the dollar in Jan­
uary, renewed selling failed to materialize and
the dollar gradually regained resiliency in the
exchanges. In fact, the dollar had been heavily
oversold in late 1978. Moreover, on those oc­
casions when the dollar did come on offer, the
authorities quickly met the pressures, helping
to restore a greater sense of two-way risk in
the market.
As the market thus came into greater balance,
traders began to respond more positively to the
thrust of U.S. policy. The Carter administration
opened the new congressional session by calling
for austerity in fiscal policy to deal with infla­
tion and the dollar problem. Federal Reserve
spokesmen continued to emphasize the need for
monetary restraint. The Federal Reserve pro­
vided tangible evidence of this determination by
keeping domestic interest rates firm even as the
growth of monetary aggregates slowed. With
the dollar taking on a firmer tone in the ex ­
changes, the German Federal Bank was able to
begin to absorb some of the excess mark liquid­
ity created in 1978, and Switzerland and Japan
lifted temporary barriers to capital inflows.
In late January the demand for dollars picked

Foreign Exchange Operations

up further, as market participants began to view
the Iranian situation and possible oil shortages
as a potentially serious problem for Western
Europe and Japan, as well as for the United
States. The dollar’s surge caught some market
participants by surprise, prompting a sudden
scramble for dollars toward the month-end. The
central banks stepped in to avoid an outbreak
of disorderly conditions in the upward direction.
On such occasions, the U .S. authorities pur­
chased a total of $188.8 million equivalent of
German marks, Swiss francs, and Japanese yen.
At the end of January, dollar rates stood some
9 to 14 percent above lows at the end of October
1978.
As the dollar improved in early 1979, the
U.S. authorities were able to step up efforts to
clear away swap indebtedness, repaying a net
$1,118.3 million equivalent of commitments.
These repayments were effected by purchases
of currencies mainly from correspondents but
also in the market. By the end of January, the
Federal Reserve had reduced total swap draw­
ings outstanding to $4,615 million equivalent
and the U .S. Treasury had reduced its swap
drawings in German marks to $613.0 million
equivalent. A lso, in January, the Treasury is­
sued in the Swiss market $1,203 million equiva­
lent of medium-term notes denominated in
Swiss francs. Foreign currency securities issued
during the period were thereby increased to a
total of $2,7 9 8 .2 million valued on the dates
of issue. As of January 31, 1979, the value of
these liabilities amounted to $ 2 ,821.8 million.
In all, during the six-month period from Au­
gust 1978 through January 1979, the interven­
tion sales of foreign currencies by the U .S.
authorities totaled $9,359.1 million. In German
m arks, sa les over the six -m o n th period
amounted to $ 8 ,1 2 2 .9 million, of which $4,939.2 million was for the Federal Reserve and
$3,183.7 million for the Treasury. In Swiss
francs, the Federal Reserve sold a total of $1,029 million over the six-month period. Sales
of Japanese yen totaled $207.3 million, of
which $160.8 million was for the System and
$46.5 million for the Treasury.
In other operations, the Federal Reserve and
the U .S. Treasury continued to repay preAugust 1971 liabilities with the Swiss National



203

Bank denominated in Swiss francs. The Federal
Reserve bought sufficient francs directly from
the Swiss National Bank to liquidate $139.6
million equivalent of special swap debt with the
Swiss central bank. The Treasury used Swiss
francs purchased directly from the Swiss central
bank to repay $319.2 million equivalent of
franc-denominated securities. As of January 31,
$139.3 million equivalent of the Federal Re­
serve’s special swap debt and $531.2 million
equivalent of the Treasury’s obligations re­
mained outstanding.

Germ an M

ark

Since the m id-1970s, the German mark had
been caught up in recurrent heavy inflows of
speculative and investment funds, leading to a
sharp appreciation of the rate against the dollar
as well as against most other major currencies.
The underlying strength of the mark reflected
Germany’s large current-account surplus. Ger­
man industry had successfully weathered the
previous substantial appreciations of the mark
and had maintained, if not improved, its com ­
petitiveness in many markets. Moreover, the
German government, mindful of the broad pub­
lic concern over inflation, had been cautious
about providing stimulus to the econom y. As
growth in Germany lagged behind the expansion
under way elsewhere, particularly in the United
States, the current-account surplus mounted.
In fact, the mark’s appreciation had tempo­
rarily added to the size of the current-account
surplus even more, through terms-of-trade e f­
fects. It also allowed Germany to make further
progress in curbing inflation, to the extent that
prices rose by only 2Vi percent in 1978. Even
so, the cumulative rise in the mark exceeded
relative inflation differentials with many trading
partners, including the United States, and was
clearly having a depressing effect on the German
economy. By 1978 the German government
had moved gradually to provide more stimulus
to the domestic economy through fiscal meas­
ures, but the market remained doubtful that the
underlying differences in economic performance
were likely to change very quickly.
Under these circumstances, trading condi­
tions in the exchange market between the mark

204

Federal Reserve Bulletin □ March 1979

and the dollar had occasionally become ex­
tremely disorderly. In late 1977 and early 1978,
German and U.S. authorities had intervened
heavily in the exchanges to settle the market
and to reestablish a sense of two-way risk. For
the United States, the Federal Reserve and the
Treasury had both intervened, mainly using
marks drawn under swap arrangements with the
German Federal Bank. In March, the United
States had announced its preparedness to sell
SDRs to Germany and to draw marks from the
IMF, but such operations were not necessary
at the time. The dollar firmed over the next
months, and the U.S. authorities were able to
unwind a sizable part of the swap debt.
By the end of July, the Federal Reserve’s
swap debt to the German Federal Bank had been
reduced to $650.5 million equivalent and the
Treasury’s to $197.0 million equivalent. Mean­
while, in view of the recurrent strains in the
exchange markets, the governments of the Eu­
ropean countries decided to work toward linking
their currencies together under common inter­
vention arrangements. At a summit meeting in
Bremen in July, the European Community (EC)
governments made a formal commitment to
establish a European Monetary System (EMS)
along these lines with the specifics to be nego­
tiated by the year-end.
A sense of deep frustration nevertheless pre­
vailed in the exchange markets about the kind
of underlying adjustments that would be neces­
sary to establish stability in the dollar-mark
relationship for some time. At the Bremen and
Bonn summit meetings in July, the German
government had promised to take additional
stimulative measures, which were subsequently
implemented. But by early August, both the
Swiss franc and the Japanese yen had come into
strong demand, and the unsettled conditions in
those markets triggered renewed demand for
marks against dollars. The spot mark, which had
been trading at DM 2.0330 at the end of July,
was bid up to DM 1.9370 by August 15, a rise
of 5 percent. The German Federal Bank and
the Federal Reserve intervened to temper the
rise.
On August 16, President Carter expressed his
deep concern over the decline of the dollar,




asking Secretary of the Treasury Michael W.
Blumenthal and Federal Reserve Chairman G.
William Miller to seek ways to stem the decline.
Over subsequent weeks, the U.S. authorities
followed up with a series of measures. The
Federal Reserve tightened money market condi­
tions, hiked the discount rate 3/4 of a percentage
point in two stages to 8 percent by late Sep­
tember, and eliminated reserve requirements on
member bank Eurodollar borrowings. The
Treasury announced that it would triple the
amount of gold at its monthly auctions. More­
over, the administration pressed the Congress
to seek means of reducing the budget deficit
even further and to resolve the remaining issues
that held up passage of an energy bill. The
market responded favorably to these initiatives,
and the mark fell back to trade at about DM
1.9850 in early September.
The extreme pessimism in the market toward
the dollar did not lift completely, however, and
trading remained volatile. Consequently, the
German Federal Bank and the New York Fed­
eral Reserve Bank intervened on several occa­
sions in late August. For the month, the sales
of marks by the Trading Desk for the Federal
Reserve and the Treasury amounted to $285.1
million equivalent and $278.4 million equiva­
lent, respectively; these sales were financed
partly out of balances and partly by additional
drawings under the swap lines with the German
Federal Bank. At the same time, the Trading
Desk was able to acquire marks, largely through
nonmarket transactions with correspondents, to
repay swap drawings.
During September a number of potentially
favorable developments emerged for the dollar.
U.S. trade figures showed that, following the
bulge in the deficit earlier in the year, import
demand was beginning to slacken while exports
were expanding rapidly. With economic expan­
sion in Germany and other countries now more
solidly based, official projections pointed to a
further and substantial narrowing of the deficit
for 1979. The Senate passed the long-awaited
energy bill. And the Camp David accord gen­
erated hopes of an easing of tensions in the
Middle East. But these developments were
largely ignored by the exchange markets, where

Foreign Exchange Operations

traders were expressing concern over the resur­
gence of inflationary pressures in the United
States.
By that time, the negotiations over the EMS
were the subject of extensive press and market
commentary. Many market participants came to
expect that, before the new arrangements could
be introduced, which was scheduled for January
1, a generalized realignment would be necessary
to revalue the mark substantially relative to the
other currencies. As these expectations spread,
heavy demand for marks built up, particularly
before weekends. The German Federal Bank
and the other EC central banks had to intervene
with progressively larger amounts to maintain
the margin of 2 lA percent between participating
currencies. From the July Bremen summit to
mid-October, some $5 billion equivalent of
marks was pumped into the market by partici­
pating central banks. Then on October 15 the
mark was revalued by 2 percent against the
Netherlands guilder and the Belgian franc and
by 4 percent against the Norwegian krone and
the Danish krone. This stopped the immediate
speculative pressure on the snake but did not
generate significant reflows.
Instead the bidding for marks continued. With
the focus now shifting back to the dollar, a
massive amount of hot money flowed out of
dollars and into marks. Corporate treasurers,
investment managers, central banks, and other
dollar holders around the world sought to diver­
sify their portfolios by buying marks and other
currencies. The Federal Reserve’s decision on
October 13 to raise the discount rate another
1/2 of a percentage point to SV2 percent was
ignored, as were the generally favorable interest
rate differentials for the dollar.
As the selling pressure on the dollar moved
with the time zones around the clock, interven­
tion by the German and U.S. authorities in­
creased both in size and in scope. On the night
of October 24, when President Carter an­
nounced his new anti-inflation program calling
for voluntary price and wage guidelines, the
Federal Reserve, operating through U.S. banks
with branches in Hong Kong and Singapore,
intervened in marks in the Far Eastern market
to counter speculative pressure on the dollar.




205

The market was well aware of this very forceful
approach by the authorities, but demand for
marks continued to build, and on October 31
the rate was pushed to a record high of
DM 1.7050. At this level, the mark had risen
almost 20 percent since early August, 23 percent
since the beginning of the year, and 34 percent
since late July 1976.
In all, the Trading Desk sold $1,641.4 million
equivalent of German marks during September
and October, of which $976.7 million was in
the last four trading days in October. Of these
totals, $1,033.2 million equivalent was for the
Federal Reserve and $608.2 million equivalent
was for the Treasury. Net of further repayments
during those months, swap drawings on the
German Federal Bank had mounted to $1,256.1
million by the Federal Reserve and $650.4 mil­
lion by the Treasury. Meanwhile, net purchases
of dollars, together with the much larger inter­
vention in EC snake currencies, had swollen
Germany’s international reserves by $8 billion
from July to the end of October, when the total
outstanding was $49.5 billion.
On November 1, President Carter announced,
as a major step in the U.S. anti-inflation pro­
gram, that it was now necessary to correct the
excessive decline in the dollar. In this connec­
tion, the Federal Reserve’s swap line with the
German Federal Bank was raised to $6 billion,
along with increases in the system’s swap lines
with the Swiss National Bank and the Bank of
Japan. The Treasury announced it would draw
German marks on its reserve position in the
IMF, sell SDRs to Germany for marks, and
issue mark-denominated bonds in the German
capital market.
The Trading Desk followed up the an­
nouncements with highly visible and forceful
intervention in the New York market in German
marks, as well as in Swiss francs and Japanese
yen. These operations were fully coordinated
with those of other central banks in their own
markets. In response, many market profes­
sionals moved quickly to dump their long mark
positions. As the dollar rebounded, the spot
mark fell sharply to as low as DM 1.9030 on
November 6, down IOV2 percent from its record
high just four trading days earlier. But sporadic

206

Federal Reserve Bulletin □ March 1979

bidding for marks by the banks’ commercial
customers and by central banks shifting funds
out of dollars continued for some time. Conse­
quently, as the market sought to establish a new
trading range following the November 1 an­
nouncements, both the German and the U.S.
authorities continued intervening openly and
vigorously in their respective markets. These
operations gradually brought the market into
better balance, and by November 20 the mark
declined to as low as DM 1.94.
In all, the Trading Desk intervened on twelve
trading days during November, selling $2,920.8
million equivalent of marks in the market, of
which $1,976.1 million equivalent was done for
the system account and the remaining $944.7
million equivalent was on behalf of the Ex­
change Stabilization Fund (ESF). Meanwhile,
Germany’s foreign currency reserves increased
$500 million more, which, together with the
purchase of SDRs from the U.S. Treasury and
the increase in its reserve position with the IMF
resulting from the U.S. drawing, contributed to
the $3 billion increase in overall reserves for
the month.
During December, however, the dollar’s re­
covery lost momentum. With the latest statistics
showing the U.S. economy even more buoyant
than expected just a month before— with prices,
production, and employment all expanding rap­
idly— the market worried that the anticipated
slowing of inflation and narrowing of the U.S.
trade deficit was now delayed. Moreover, with
economic activity in Germany picking up, re­
ports circulated that the German Federal Bank
was increasingly concerned over the buildup
of mark liquidity in domestic money markets.
As a result, dealers watched closely the German
Federal Bank’s weekly reserve figures for any
indication that it had acted to offset earlier
intervention by selling dollars, and grew cau­
tious about the implications of its December 14
announcement of a reduction in commercial
bank rediscount quotas and a monetary growth
target of 6 to 9 percent for 1979. In addition,
with the approach of its starting date, the new
EMS was still a source of uncertainty, as traders
remained doubtful even that the new exchange
rate relationships would prevail in the proposed
new joint arrangement.



Against this background, the outbreak of a
political crisis in Iran and a larger-than-expected
increase in OPEC oil prices helped trigger an­
other burst of demand for the German mark
before mid-December. As the mark advanced,
many corporations joined in the bidding to cover
accounting as well as economic exposures be­
fore the rate rose too far. Moreover, the central
banks of some developing countries proceeded
further with their efforts to diversify portfolios
by buying marks. This demand for marks came
at a time when many of the dealing banks were
reluctant to undertake new transactions that
would significantly alter their accounts for the
year-end. Consequently, the market was even
less resilient than usual, and the heavy bidding
for marks propelled the rate up to as high as
DM 1.8070 on January 2, almost IV2 percent
above its November lows.
To moderate this advance, the U.S. and Ger­
man authorities again intervened forcefully
throughout December. Operating on 14 trading
days, the Trading Desk sold $2,796.5 million
equivalent of marks, including $1,575.8 million
equivalent for the system and $1,220.7 million
equivalent for the Treasury. These operations
brought total U.S. intervention sales over the
last two months of 1978 to $5,717.3 million
equivalent of marks. As a result, total drawings
outstanding on the swap line of the Federal
Reserve with the German Federal Bank stood
at $4,558.0 million by the year-end. The Treas­
ury’s outstanding drawings on its swap line with
the German central bank stood at $889.4 million
equivalent.
But the bulk of its intervention after No­
vember 1 had been financed out of ESF balances
obtained from the U.S. drawings on the IMF
and the proceeds of the Treasury’s first issue
of mark-denominated securities. This issue,
which was floated in the German capital market
on December 15, consisted of $931.1 million
equivalent of three-year securities at 5.95 per­
cent per annum and $664.1 million equivalent
of four-year notes at 6.2 percent. The $1,595.2
million of proceeds was warehoused by the
Treasury with the Federal Reserve.
Meanwhile, the surge in the mark ahead of
the year-end had led many market participants
to believe that it would advance much further

Foreign Exchange Operations

in early January. In fact, the commercial de­
mand for marks that had been expected for Jan­
uary had largely been met. The German Federal
Bank stepped in and intervened in volume as
soon as trading resumed in the new year. Also,
rumors circulated that new measures in defense
of the dollar would quickly be announced should
the mark rise strongly against the dollar. Traders
then found they had few outlets for the marks
they had accumulated or had just received from
the German central bank, and some moved to
cover their positions. The mark thus fell back
quickly, to around DM 1.85, an unexpected
turnaround that had a sobering impact on market
psychology. As a result, after some initial ner­
vousness, the market took in stride the January
18 decision of the German authorities to in­
crease minimum reserve requirements and to
raise the Lombard rate 1/2 of a percentage point
to 4 percent. Sentiment toward the dollar was
also helped by the stress on fiscal restraint in
the President’s budget and state of the union
message, and the adherence by the Federal
Reserve to a restrictive monetary policy. A
scramble for oil by many countries seeking to
prepare themselves for a protracted disruption
of production in Iran prompted additional de­
mand for dollars.
The mark thus came increasingly on offer
toward the month-end. It fell sharply on the final
day of the period under review, prompting the
Trading Desk to buy $70 million equivalent of
marks in the market to cover outstanding Fed­
eral Reserve and Treasury swap debt and to
maintain orderly trading conditions. The mark
thus ended the period at DM 1.8720, some 9
percent below its peak at the end of October
but still up SVi percent over the six-month
period under review.
Compared with the preceding two months,
central bank support for the dollar was modest
during January. The Federal Reserve Trading
Desk intervened to sell $68.9 million equivalent
of marks for the system and $132.3 million
equivalent for the Treasury over the course of
the month. Meanwhile, it took advantage of
opportunities to acquire marks, largely through
nonmarket transactions with correspondents,
which were used to repay swap debt.
Thus, by the end of January, the system’s



207

outstanding swap indebtedness to the German
Federal Bank was down $389.8 million net over
the month to stand at $4,168.2 million, and that
of the Treasury had been reduced by $276.4
million to $613.0 million. These operations,
repayments of swap debt by the German Federal
Bank’s partners in the EC snake, and that central
bank’s own operations in the market were re­
flected in the $1.9 billion net decrease in Ger­
many’s official reserves over the month to $52.1
billion by January 31, 1979. But for the sixmonth period as a whole, Germany’s reserves
rose a net $11 billion.
Ja p a n e s e

Yen

In late 1977 and early 1978, the Japanese
authorities faced three mutually reinforcing
problems: economic growth had fallen short of
the government's target, the current-account
surplus remained excessive at an annual rate of
nearly $16 billion, and the Japanese yen was
appreciating rapidly, rising 30 percent in two
years to ¥22 7 .0 0 . Since each of these problems
had significant international implications,
foreign authorities were pressing Japan to hasten
the adjustment process. In late 1977 the gov­
ernment had provided more fiscal stimulus to
promote domestic growth and boost imports. In
addition, Japan encouraged imports by relaxing
the remaining trade restrictions on certain kinds
of goods. But the impact of these measures was
blunted by the persistent rise in the Japanese
yen, which exerted a drag on the domestic
economy. Moreover, the current-account sur­
plus widened even farther as the yen appreci­
ated. This unexpected result reflected in good
measure the terms-of-trade effects of the yen’s
rise. It also reflected the fact that Japan’s exports
remained highly competitive.
With the yen’s appreciation serving as a fur­
ther brake on domestic inflation, Japanese firms
in several key industries were able to take ad­
vantage of declining costs of imported raw ma­
terials and products, such as oil. Moreover,
because of the more rapid inflation under way
in many foreign markets, Japanese exporters did
not have to absorb the full effect of the rise
in the yen on their prices. By mid-1978 the
underlying adjustment to the previous appreci­

208

Federal Reserve Bulletin □ March 1979

ation of the yen was finally beginning to show
through in the trade figures, as export volumes
started to decline and import volumes started
to rise. But, in view of the experience of the
previous two years, the market was still skepti­
cal about the chances of early success for
Japan’s efforts to reduce its current-action sur­
plus significantly— or the U.S. efforts to reduce
its current-account deficits.
Against this background the yen had come
into demand, buoyed by heavy inflows of funds
again in late July and early August. The yen
rate was bid up by 20 percent to ¥ 1 8 8 .6 at
the end of July and advanced a further 33A
percent to a peak of ¥ 1 8 1 .8 in mid-August.
By that time, selling pressure on the dollar again
spread to the markets for major European cur­
rencies. On August 16 President Carter ex­
pressed his deep concern over the dollar’s de­
cline, initiating a series of actions by the Federal
Reserve and the U.S. Treasury to deal with the
problem. These actions included intensive dis­
cussion between the U.S. and the Japanese
authorities on means of hastening the adjustment
process. In late August the Japanese government
introduced a supplementary budget that included
additional stimulus, mainly through public
works projects and credit availability for hous­
ing, which was expected to increase GNP by
some ¥ 2 .7 trillion. The Japanese authorities
also pressed ahead on a program of emergency
imports to reduce the immediate current-account
surplus. The market responded positively to
these various official actions, and the yen settled
back in late August to ¥ 1 8 8 , where it held
steady in balanced trading through mid-October.
By that time, Japan’s current-account surplus
was more clearly on a narrowing trend. But the
dollar had again come under heavy selling pres­
sure against Western European currencies and
that pressure again spilled over into the yen,
which rose to a new record high of ¥ 1 7 6 .4 5
by October 31. Under these circumstances, the
Japanese authorities became concerned that the
new appreciation of the yen might thwart even
the modest progress toward internal and external
balance that had just begun. The U.S. authori­
ties were also concerned that the decline of the
dollar was becoming excessive and threatening




to undermine the efforts to curb inflation in the
United States.
Consequently, in further discussions in late
October, U.S. and Japanese authorities agreed
that an important element of any broader pack­
age of initiatives to strengthen the U.S. dollar
would be a commitment by the United States
to intervene in Japanese yen, backed up by
substantial resources, along with intervention in
German marks and Swiss francs. For some time,
the Federal Reserve Bank of New York had
been intervening in the New York market for
the account of the Japanese authorities. It was
agreed that this would continue and that the
U.S. authorities would join in this intervention
using their own resources. As the $30 billion
of foreign currency resources was assembled,
therefore, the Federal Reserve swap arrange­
ment with the Bank of Japan was raised from
$2 billion to $5 billion, and the U.S. Treasury
agreed to draw $1 billion equivalent of yen from
the IMF and to sell $641.7 million equivalent
of SDRs to Japan.
The announcement on November 1 of these
measures had a profound effect on yen trading
in New York, and the yen rate fell back sharply
with only modest intervention on that day.
Heavy demand for yen developed the next day
in Tokyo. But the Bank of Japan countered
vigorously, and the Federal Reserve Bank of
New York maintained a forceful presence in the
New York market on that and subsequent days.
In response, the pressure quickly abated and
there was little need for further intervention. In
all, sales of yen by the Federal Reserve’s Trad­
ing Desk in early November amounted to
$196.7 million. Of the Federal Reserve sales,
$151.7 million equivalent of yen was financed
by drawings under the system’s swap arrange­
ment with the Bank of Japan and $2.8 million
equivalent of Japanese yen was drawn from
balances. U.S. Treasury sales of $42.3 million
of yen were financed entirely out of proceeds
of IMF and SDR drawings.
Once the sense of two-way risk was reestab­
lished, market sentiment began to shift against
the yen. Traders took account of the narrowing
of Japan’s current-account surplus. Moreover,
the wide interest differentials favoring the U.S.

Foreign Exchange Operations

dollar over the yen generated capital outflows
as foreign governments and international insti­
tutions stepped up new borrowings in the Tokyo
market and nonresidents liquidated earlier in­
vestments. Consequently, the yen rate dropped
back to as low as ¥ 2 0 2 .4 5 in early December,
some 13 percent below the peak in late October.
By that time the Federal Reserve had begun to
acquire modest amounts of yen to repay the
swap drawings of early November.
The yen then became caught up in the re­
newed upsurge of the European currencies
against the dollar in mid-December. But while
regaining 5 percent to a high of ¥ 1 9 2 .4 5 , the
yen lagged behind the rise of the other curren­
cies. Consequently, intervention to check the
rise was relatively modest, with the U.S. au­
thorities selling a total of $10.6 million equiva­
lent of yen. Of this amount the Federal Reserve
sold $6.4 million equivalent financed by a $4.8
million equivalent drawing on the swap line
with the Bank of Japan and other balances. The
remaining $4.2 million equivalent was sold by
the Treasury out of balances. By midmonth,
market sentiment turned hesitant toward the yen
once again, as major events of concern to the
market at the time— the political and economic
disturbances in Iran and the jump in OPEC oil
prices— were viewed as potentially serious to
Japan as well as to the United States. Conse­
quently, the yen rate began to ease through the
month, even as other currencies continued to
advance.
In January, the yen softened further as Japa­
nese trading companies bid strongly for dollars.
The Japanese authorities took the opportunity
to dismantle some of the barriers to capital
inflows, cutting in half the marginal reserve
requirement on free yen deposits and relaxing
the restrictions on purchases by nonresidents of
Japanese securities. On several days the yen
declined sharply enough on the New York mar­
ket that the Federal Reserve stepped in as a
buyer of yen to maintain orderly trading condi­
tions. On this basis it purchased $98.8 million
equivalent for the account of the U.S. authori­
ties over the course of the month. By the
month-end, the yen rate had fallen back to
¥ 2 0 1 .7 0 , for a net decline of 6 V2 percent for




209

the six-month period under review. By that
time, the Federal Reserve had acquired suffi­
cient amounts of yen from transactions with
correspondents and from the market to repay
in full the swap drawings on the Bank of Japan.
The ESF’s purchases of yen were added to
balances.

S w is s

F r a n c

By midsummer 1978, the Swiss franc was rising
sharply, reaching new highs against the dollar
and other major European currencies. Switzer­
land’s inflation rate was running at 1.4 percent
per year, the lowest of all industrial countries.
Switzerland’s current account for the year,
forecast to show a surplus of SF 9 billion, was
expected to be second only to Japan’s. Also,
many in the market had come to question
whether the authorities would continue to resist
upward pressure on the franc, since intervention
in the exchanges earlier in the year had already
contributed to an explosion in the monetary
aggregates well above the central bank’s target
of 5 percent.
Indeed, since midyear the Swiss National
Bank had been able to absorb some of the excess
liquidity through domestic monetary operations
and by selling dollars to nonresident borrowers
under the official capital export conversion re­
quirement. As a result, Switzerland’s reserves
had declined somewhat in July to $12.8 billion.
But in the exchange market the Swiss franc was
swept up in a burst of bidding to SF 1.7099
against the dollar and SF 0.8458 against the
German mark by August 2. At these levels, the
Swiss franc had gained 16 percent and 12 per­
cent, respectively, since the beginning of the
year.
In view of the franc’s rapid advance, the
central bank moved early in August to make
more liquidity available to the market by open
market operations, the placement of government
deposits with commercial banks, and one-year
swaps against dollars. These operations trig­
gered a sharp decline in domestic and EuroSwiss franc interest rates and succeeded for a
while in blunting the franc’s rise. But, in the
generally unsettled markets at the time, the franc

210

Federal Reserve Bulletin □ March 1979

once again began to rise against the dollar, along
with other major currencies. It rose as high as
SF 1.5451 by mid-August before falling back
by some SV2 percent in reaction to President
Carter’s expression of deep concern over the
dollar’s decline and the follow-up measures by
the Federal Reserve and the Treasury.
By September, however, the Swiss franc was
again on the rise. As before, the appreciation
was for the most part caused by commercial and
official shifts of funds out of the dollar. But
the franc was also buoyed by flows of funds
out of other European currencies, including the
mark, in response to market concern that an
expanded joint float arrangement to include all
EC countries would leave the franc isolated and
hence more vulnerable to even stronger upward
pressures.
In this environment, the rate was propelled
by late September to a new record high of
SF 1.4510 against the dollar and SF 0.7547
against the mark. To moderate this advance, the
Swiss National Bank had gradually increased its
dollar purchases in Zurich and New York, while
the Federal Reserve joined in these operations
on twelve trading days in August and Sep­
tember, selling $147.7 million equivalent of
francs. These sales were financed by drawings
under the swap arrangement with the Swiss
National Bank, which raised the total from
$22.9 million equivalent to $170.5 million.
Meanwhile, the franc’s unrelenting advance
in the exchanges raised the risk of severe reper­
cussions on the Swiss economy. Producers of
goods for both foreign and domestic markets
were concerned about a loss of competitiveness,
falling profit margins, and declining sales. But
the trade balance remained strong because of
the favorable price effects of the franc’s appre­
ciation on the terms of trade. Concerned that
an excessive appreciation of the franc might
drive the economy into recession, the Swiss
authorities took the initiative in the exchange
markets in late September and early October.
The Swiss National Bank intervened massively
to reverse the rise in the rate against both the
dollar and the German mark. Although the bulk
was done in Zurich, the Federal Reserve fol­
lowed up in New York, for the account of the
Swiss National Bank and for the Federal Re­



serve account. System sales of francs amounted
to $100 million equivalent.
Also, to signal a desire for the franc to decline
against the mark, the Swiss central bank bought
modest amounts of snake currencies other than
the mark to give the mark more room to appre­
ciate within the joint float. Finally, to increase
the depth of the Swiss franc market, the author­
ities raised the limit on nonresident participation
in Swiss franc bond issues by foreign borrowers
from 35 percent to 50 percent and allowed 50
percent of borrowings of francs by private
nonresidents to be converted in the market.
In response to these actions, the franc initially
fell back sharply, dropping to a low of SF 1.63
against the dollar and to SF 0.8350 against the
mark. Later on as trading conditions deterio­
rated and the dollar plummeted across the board,
the franc rose again, moving back to its record
high on October 31. But, in the wake of the
earlier intervention by the Swiss National Bank
and the highly publicized concern of the Swiss
authorities over the franc’s relationship to the
mark, the Swiss franc lagged behind the rise
in the mark. As a result, although the Federal
Reserve supplemented its intervention in marks
with sales of Swiss francs, in late October it
sold only a modest $46.5 million equivalent of
francs financed by drawings on the swap line
with the Swiss National Bank. Meanwhile, the
heavy intervention by the Swiss National Bank
earlier in October accounted largely for the $4.7
billion increase in Switzerland’s external re­
serves during the first three months of the period
under review.
The franc’s advance was abruptly reversed in
response to the November 1 announcement of
steps to correct the excessive decline of the
dollar. These included an increase in the Federal
Reserve’s swap line with the Swiss National
Bank from $1.4 billion to $4 billion, indications
by the Treasury that it would sell SDRs for
Swiss francs, and plans for the Treasury to place
franc-denominated securities in the Swiss capi­
tal market. On November 1 the franc fell
sharply, dropping off some 8 3A percent from
its highs of the previous day. Thereafter, the
franc, along with the mark and the yen, came
into heavy demand in a test of the U.S. resolve
to follow through on the November 1 program.

Foreign Exchange Operations

But the earlier forceful intervention by the Swiss
authorities had already made traders more cau­
tious, and the Swiss National Bank did not have
to intervene as heavily as before.
For its part the Federal Reserve sold $351.6
million equivalent of francs on six trading days
during November, financed entirely by new
drawings on the swap line with the Swiss central
bank. This intervention helped to settle the
market, and by November 20 the franc had
declined another 9 percent to SF 1.7640.
Thereafter, the rate fluctuated fairly narrowly
through early December, requiring only occa­
sional light support from the Swiss National
Bank and sales of just $29.0 million equivalent
of francs by the Federal Reserve on November
21 and 29, which were financed by further swap
drawings.
During December the franc came under re­
newed upward pressure amid uncertainties
ahead of the scheduled introduction of the EMS
at the month-end, growing political instability
in Iran, and the announcement by OPEC of a
larger-than-expected increase in oil prices. As
the franc rose, many multinational corporations
sought to cover both economic and accounting
exposures. For a while the franc outstripped the
mark in its advance against the dollar, rising
9 percent by the year-end. In response, the
Swiss National Bank intervened heavily and the
Federal Reserve sold $354.3 million equivalent
of francs through the month-end, of which
$33.8 million were for value in early January.
These operations contributed to a further rise
of $4.1 billion equivalent in Switzerland’s ex­
ternal reserves from October 31 to $21.6 billion
at the year-end.
This intense bidding tapered off quickly in
early January once it became clear that most
companies had satisfied their near-term need for
francs before the year-end. Also, timely and
forceful intervention by the Swiss National
Bank led the market to expect that the central
banks would step in quickly to counter a re­
newed rush into francs. Even so, the market
was aware that the heavy intervention by the
Swiss National Bank had generated an increase
of 16.2 percent in the Swiss money supply in
1978, a rate of increase that was far above the
target.



211

To ease concerns that it might suddenly
tighten liquidity, the Swiss National Bank an­
nounced that, since priority was still being given
to the stabilization of exchange rate relation­
ships, it would not set a money supply target
for 1979. Moreover, when the U.S. Treasury
announced plans to sell bonds denominated in
Swiss francs, the Swiss National Bank followed
up with an assurance that the authorities would
offset the liquidity drain caused by this issue.
At mid-January, the U.S. Treasury placed a
total of $1,203 million equivalent of franc-de­
nominated securites in the Swiss capital market.
Of this amount $744.5 million equivalent was
borrowed over 2 xh years at 2.35 percent per
year. The remaining $458.5 million equivalent
was a four-year placement at 2.65 percent. The
proceeds of these securities were then ware­
housed by the Treasury with the Federal Re­
serve.
In this better atmosphere for the dollar,
traders began to perceive a downside risk in the
Swiss franc. In view of the differential between
U.S. and Swiss interest rates, it became im­
mensely costly to remain short of dollars once
the franc began to ease. The franc thus fell back
sharply from its year-end highs, and this decline
accelerated following the announcement of the
new anti-inflation policies in the United States.
With the exchange market now in better bal­
ance, the Swiss government announced on Jan­
uary 23 the removal of the February 1978 ban
on purchases by nonresidents of foreign securi­
ties. Caught by surprise, the market’s initial
reaction was to bid heavily for francs. But the
Swiss National Bank reacted immediately with
forceful intervention, and this flurry of demand
quickly subsided. Thus, the franc continued to
ease, enabling the Swiss National Bank to sell
some of its earlier dollar purchases. The franc
closed at SF 1.700 on January 31, off 14 percent
from the peak in late October.
For its part, the Federal Reserve did not
intervene in the franc market during January.
In fact, at one point, when the franc was
easing at a particularly sharp rate, the system
was able to buy $20.0 million equivalent of
francs in the market. This purchase, together
with much larger amounts purchased directly
from the Swiss National Bank, enabled the

212

Federal Reserve Bulletin □ March 1979

system to repay $605.1 million of its current
swap debt, leaving $446.7 million equivalent
outstanding as of January 31. For the six-month
period as a whole, the franc was virtually un­
changed on balance, while Switzerland’s exter­
nal reserves rose a net of $8.9 billion to $21.7
billion.
During the period, the Federal Reserve and
the U.S. Treasury continued with the program
agreed to in October 1976 for an orderly repay­
ment of pre-August 1971 liabilities denominated
in francs. The Federal Reserve repaid $139.6
million equivalent of special swap indebtedness,
while the Treasury redeemed $319.2 million
equivalent of securities denominated in Swiss
francs by the end of January. Most of the francs
for these repayments were acquired directly
from the Swiss National Bank against dollars,
but the Federal Reserve also bought francs from
that bank against the sale of $118.2 million
equivalent of German marks, which, in turn,
were either covered in the market or drawn
from existing balances. By the end of January,
the Federal Reserve’s special swap debt to the
Swiss National Bank stood at $139.3 million
equivalent, while the Treasury’s obligations
denominated in Swiss francs had been reduced
to $531.2 million equivalent.
EC Snake

In the mid-1970s, divergencies in the perform­
ances of the major European economies had
forced a number of important currencies to drop
out of the EC snake, leaving the remaining
currencies highly exposed to the volatility of the
exchange markets. As a result, over the past
three years the currencies remaining inside the
joint float had advanced more rapidly against
the dollar than those that had left the band, even
though the differences in economic performance
among all EC countries had begun to narrow.
Against this background, the EC heads of state
and government reached agreement at Bremen
in July 1978 to create a zone of monetary
stability via a new joint floating to include all
EC members.
News of the agreement prompted some bid­
ding for the currencies outside the snake as the
market took the view that these currencies



would henceforth trade more in line with those
now in the EC band. But within that arrange­
ment enough divergence between price and
trade performances remained to raise expecta­
tions in the market that a realignment might take
place among those currencies before the intro­
duction of the EMS. Once the mark began
outpacing the advances of other major curren­
cies against the dollar in late July and early
August, participants doubted that other partici­
pating currencies could keep pace with the
mark. As a result, the Dutch guilder, Belgian
franc, Norwegian krone, and Danish krone all
fell to the bottom of the joint float.
Against this background, all four currencies
were subjected to outflows into the mark. In
some cases, the pressures were aggravated by
local considerations. The Norwegian krone was
beset by commercial and professional selling
pressure as the market reacted to Norway’s loss
of competitiveness vis-a-vis its major trading
partner, Sweden, whose currency had been
withdrawn from the EC band a year before.
Evidence of deterioration in Belgium’s trade
position during the summer generated continued
large sales of Belgian francs. A large-scale
buildup in commercial leads and lags also
weighed on the Netherlands guilder.
As the movement of funds into the mark
gathered momentum, the five EC central banks
stepped up their intervention to keep the joint
float within its 2 Va percent limits, buying large
amounts of guilders, Belgian francs, Danish
krone, and Norwegian krone against sales of
German marks provided by the German Federal
Bank. By mid-October the total amount of
marks created by the German Federal Bank to
meet these pressures had mounted up to $5.1
billion equivalent since the end of June and was
contributing to a strong expansion in Germany’s
monetary aggregates. By contrast, this inter­
vention drained large amounts of liquidity out
of the other four snake currencies. Interest rates
rose steeply in each of the money markets, while
the monetary authorities reinforced the squeezes
still further by raising official lending and pen­
alty rates at the various central banks.
Finally, in mid-October, the EC monetary
authorities agreed to a realignment that upvalued
the mark by 2 percent against the Dutch guilder

Foreign Exchange Operations

and Belgian franc and by 4 percent against the
Danish krone and the Norwegian krone. Fol­
lowing this announcement, the heavy selling
within the snake came to an end, and all the
joint-float currencies advanced on their own to
record highs against the dollar at the month-end.
But reversals of the commercial leads and lags
or speculative positions in favor of the mark
were modest. Consequently, part of the indebt­
edness built up while defending the snake was
settled at the month-end by transfers of dollar
assets to Germany.
The November 1 announcement of the new
U.S. measures to support the dollar triggered
a sharp fall in the mark, well in excess of the
declines in the other snake currencies. The mark
thus dropped to the bottom of the joint float,
and strains on the band eased generally. Under
these conditions, market participants began to
reverse the highly expensive long mark posi­
tions they had been maintaining against the
weaker snake currencies.
This unwinding proceeded slowly, however.
Many uncertainties remained over the outlook
for the snake in view of the scheduled introduc­
tion of the new EMS on January 2. Some
participants still wondered if another realign­
ment might not occur prior to the starting date
then only a few weeks away. Many traders thus
continued to roll over short positions against the
mark. To clear the air, the monetary authorities
of the EC snake countries let it be known that
the bilateral central rates then in force between
the snake currencies would be maintained in the
new system. This announcement contributed
further to a reduction of tensions within the
snake. But Norway decided it could not risk
having its currency pulled up further against the
Swedish krona. Therefore, following Sweden’s
decision not to enter the new system, Norway
announced on December 12 that it could not
join the arrangement and that the krone would
be withdrawn from the snake effective immedi­
ately.
The decision at year-end to delay the imple­
mentation of the new monetary arrangement had
no discernible impact on trading relationships
within the snake. Instead, as the mark eased
back against the dollar, the process of unwind­
ing positions taken up before the mid-October



213

realignment accelerated. Benefiting from high
domestic interest rates, the Dutch guilder and
the Danish krone were buoyed by these reflows
and traded firmly in the snake. The commercial
Belgian franc was also bolstered by reflows, but
amid concerns over the persistent sluggishness
of the Belgian economy and the size of the
government deficit, the return of funds took
place more slowly and the franc stayed near the
bottom of the joint float.
Fr e n c h Fr a n c

During the spring of 1978, the French govern­
ment had reaffirmed its commitment to give
priority to the fight against inflation and the
maintenance of a sound balance of payments,
while boosting employment largely through se­
lective measures. By midyear, the economy was
beginning to respond to the modest stimulus that
had been provided earlier, spurred by an upturn
in domestic consumption. Also, the current ac­
count had settled into strong surplus and the
French franc had strengthened in the exchanges.
It rose against the dollar to trade around FF 4.36
by early August. It also gained against the
German mark, and the Bank of France had taken
in reserves. Progress on the inflation front,
however, had not yet met expectations.
Looking ahead, the market was uncertain
about the prospect for an early further decline
in inflationary pressures. One of the reasons was
that, as part of its longer-term strategy to reduce
the growth of public financing needs and to
channel more personal savings into business
investment, the government had embarked on
a program to increase charges for public services
and gradually to relax longstanding controls on
industrial prices. Also, by midsummer, the
market had become sensitive to the implications
of any deterioration in economic performance
relative to Germany, in view of the possibility
that France might join in the expanded EC
currency arrangement that was scheduled for
implementation on January 1, 1979.
Against this background, news during August
of a quick upsurge in consumer prices, an ac­
celeration of wage increases, and a temporary
slippage in France’s trade account back into
deficit had a dampening effect on market psy­

214

Federal Reserve Bulletin □ March 1979

chology for the French franc. Market partici­
pants began to question whether the franc could
hold its own against the German mark, and
commercial leads and lags started to move
against the franc. Also, since short-term interest
rates had been gently declining as the franc had
strengthened during previous months, some in­
vestors took advantage of a narrowing of favor­
able interest differentials to shift funds into other
currencies. As a result, the franc lost some of
its earlier buoyancy. Although at times it was
bid up as the dollar came on offer in August
and September, it posted little advance on bal­
ance over the two months, trading around FF
4.37. Meanwhile it eased back about 4 percent
against the mark by the end of September.
Under these circumstances, the inflows to
France’s reserves tapered off and the Bank of
France provided some support for the rate
through sales mostly of German marks but also
of dollars.
In the increasingly unsettled markets that de­
veloped during October, the French franc joined
to a greater degree in the rise of foreign curren­
cies against the dollar. By this time, also, the
authorities had reinforced the relatively restric­
tive monetary stance by reducing to 11 percent
the target for monetary growth in 1979 and by
tightening somewhat the ceilings on bank credit
expansion. They also doubled the reserve re­
quirements against sight deposits to 4 percent
to absorb liquidity generated by the balance of
payments surplus and the financing of the gov­
ernment deficit. Thereafter, an abrupt tightening
in the Eurofranc market prompted importers
who previously had been borrowing to bid in­
stead for francs in the spot market in order to
meet their month-end payment needs. These
factors combined to push up the French franc,
which rose to a record high of FF 3.97 against
the dollar on October 31, some 9 3A percent
above levels in early August. But the franc
continued to lag behind the German mark; and
as a result, the Bank of France at times still
provided occasional support for the franc by
selling marks while otherwise taking in dollars
to limit the franc’s rise.
Following the announcement of the No­
vember 1 package in support of the dollar, the
French franc plummeted along with other cur­



rencies, dropping back below early-August
levels to FF 4.3490 by midmonth. Initially, it
fell back less rapidly than the mark, which had
been the center of speculation against the dollar.
But by late November, as the market focused
on the coming negotiation over the EMS at an
EC council meeting on December 5 and 6, the
franc became subject again to bouts of selling
pressure on expectations that it would decline
against the mark before entering the new joint
floating arrangement. As a result, the franc
eased back against the mark to a low on De­
cember 4, while moving back up to FF 4.45
against the dollar.
Before long, however, the earlier concerns
about the prospects for the French franc began
to lift. Doubts about France’s trade performance
faded inasmuch as a surplus of around FF 2.5
billion was emerging for 1978. The market’s
previous fears that price decontrol would trigger
an accelerated spiral of price increases no longer
seemed justified in view of the more moderate
rise in consumer prices reported for November.
The December announcement of an agreement
that all currencies coming into the EMS would
enter at prevailing cross rates dispelled some
of the uneasiness about implementation of the
new arrangement. Also, inclusion of the Italian
lira and the Irish pound in the new arrangement
alleviated concerns in the market that the franc
would be the only additional currency. Against
this background, funds began flowing from the
mark back into the franc and the previously
adverse commercial leads and lags started to be
reversed. Moreover, since the dollar had started
declining again, market participants scrambled
to cover exposures and year-end needs in francs
as well as in other currencies. The franc thus
recovered to as high as FF 4.1200 at the Paris
opening on January 2.
That day the decision not to proceed with the
EMS until EC members had concluded new
agricultural financing arrangements was an­
nounced. Also, forceful intervention in other
markets helped to blunt any further rise in
European currencies against the dollar. There­
after, the franc began to ease back, and this
tendency continued as the dollar strengthened
generally during the month. Thus, the franc,
closing at FF 4.2905 on January 31, was up

Foreign Exchange Operations

only 13A percent on balance for the six-month
period. Against the mark, however, the franc
remained relatively firm during January, with
the result that it recovered to just about the
levels of six months before. In view of the
franc’s buoyancy generally in December and
against the mark during January, the Bank of
France continued to buy both dollars and Ger­
man marks in the market. These operations
contributed to a further rise in France’s foreign
exchange reserves, which increased $1.6 billion
over the period to $8.7 billion on January 31.
I t a l i a n L ir a

Under Italy’s comprehensive stabilization pro­
gram, further progress was made during the first
half of 1978 in strengthening the balance of
payments and reining in the rate of domestic
inflation. By midyear, the inflation rate had been
brought down to 12 percent, and the current
account had registered a comfortable surplus of
$2.1 billion over the first six months. Early in
the summer, imports remained sluggish while
exports continued to be buoyed by the existence
of excess industrial capacity and by the com­
petitive effects of the lira’s decline of earlier
years. With the seasonal bulge in tourist receipts
adding strength to Italy’s current account, the
stage was set for a further widening of Italy’s
surplus position. Also, interest rates in Italy had
been kept high, easing back less than the slow­
down in the inflation rate might have suggested,
in order to facilitate the financing of the large
public sector deficit. Consequently, Italian resi­
dents continued to borrow abroad, and these
capital inflows, on top of Italy’s current-account
surplus, bolstered the lira in the exchanges. As
a result, the lira had come into heavy demand
for several months and the authorities were able
to buy substantial amounts of dollars to rebuild
Italy’s reserve position, while moderating the
rise in the spot rate. By the end of July the
lira, trading above LIT 841, was at its highest
level against the dollar since October 1976.
Moreover, Italy’s foreign exchange reserves had
increased to $9.3 billion, even after the au­
thorities had made sizable repayments of official
debt to the IMF, the EC, and the German
Federal Bank.




215

During August and much of September,
the lira continued to benefit from Italy’s
strong balance of payments position. The an­
nouncement on August 1 of a seven-month
extension in the ceiling on the growth of bank
lending reassured the market that current poli­
cies were to be maintained. Against this back­
ground and with the Bank of Italy continuing
to take large amounts of dollars into reserves,
the authorities took the opportunity to follow
through on initiatives earlier in the year to ease
exchange controls regarding commercial pay­
ment terms.
Meanwhile, the minority government an­
nounced its three-year economic stabilization
program, which, after extensive negotiation over
the summer months, had received the tacit ap­
proval of the Communist Party. This program,
which was to reduce significantly the proportion
of gross domestic product taken up by the public
sector deficit, included a shift of government
spending from current expenditures to the pro­
motion of investment, a freeze on real labor
costs together with a gradual phasing-out of
automatic wage rises under the scala-mobile
program, improved incentives for labor mobil­
ity, and a rebuilding of the financial condition
of Italian enterprises.
At the same time, the authorities acted to
absorb some of the liquidity being created by
Italy’s balance of payments surplus. This ob­
jective was accomplished in part by extending
the maturities of new government debt after the
Bank of Italy confirmed an easing of money
market rates by lowering its base rate for redis­
counting and advances by 1 percentage point
to IOV2 percent. In addition, the government
continued to use some of its additions to official
reserves to repay outstanding debt to the IMF
and the EC, both at and prior to maturity.
Moreover, to keep Italy’s inflation rate more in
line with those of its trading partners over the
long run, the Italian authorities indicated that
they might be receptive to some form of associ­
ation for the lira with the EMS, then under
consideration within the EC.
In October, however, the increasingly unset­
tled conditions in the exchange markets began
to affect the Italian lira as well. Although it,
too, was pulled up against the dollar by the rise

216

Federal Reserve Bulletin □ March 1979

of the strong continental currencies, the market
began to question whether the lira would not
be allowed to weaken vis-a-vis other EC cur­
rencies before being linked to the EMS. As a
result, commercial leads and lags shifted mod­
estly against the lira. In addition, Italian enter­
prises reacted to seemingly favorable exchange
rates and the increases in Eurodollar interest
rates by paying or prepaying their Eurocurrency
debts and switching back into lira financing.
Consequently, the lira lagged behind the mark
during October while the Bank of Italy sold
dollars to provide some support for the rate.
Even so, by October 31 the lira had advanced
7 percent above levels in early August to LIT
787 against the dollar.
Then, fo llow in g the Novem ber 1 an­
nouncement of U.S. measures to strengthen the
dollar, the lira declined, along with other Euro­
pean currencies, to trade around LIT 851.
Meanwhile, new figures showed that Italy’s
current account, remaining strong even after the
passing of favorable seasonal factors, was
amassing a surplus of some $6 billion for the
year. Also, the economy had begun to expand
more rapidly, and with financing needs growing
and interest rates still high, the inflows of capital
resumed.
The Italian government had negotiated flexi­
ble terms for entry into the EMS, whereby the
lira would be allowed to fluctuate as much as
6 percent around its central rate against each
of the other currencies. Moreover, the market
was reassured once prospects for a currency
realignment prior to the introduction of EMS
faded and numerous officials confirmed that the
exchange rate relationships of that arrangement
would be based on prevailing market rates.
Thus, the lira came into heavy demand as the
new year approached, and the news on January
2 of a delay in the implementation of EMS had
little apparent impact on the exchange rate.
By January, the continuing strength of Italy’s
external position was again showing through in
the exchange market. Although the lira tended
to decline as the dollar recovered across the
board, it eased back less rapidly than the Ger­
man mark and other strong European currencies.
In mid-January the authorities provided some
relief to small firms with limited access to the




Eurodollar market, by raising slightly the ceiling
on domestic credit expansion applicable through
March. Nevertheless, funds continued to flow
into the lira, thereby keeping the exchange rate
buoyant even in the face of increasingly vocal
opposition from the trade unions to the govern­
ment’s anti-inflation program and the with­
drawal of Communist Party support of the Andreotti government at month-end. In fact, the
lira closed the six-month period trading steadily
at LIT 843.50 to show little net change on
balance. Meanwhile, additional purchases of
dollars by the Bank of Italy during January
helped to provide a $2 billion increase in foreign
exchange reserves over the period to $11.3
billion by January 31.
S t e r l in g

In the United Kingdom, impressive progress had
been made in 1977 in bringing down domestic
inflation, swinging the balance of payments into
surplus, and bolstering the international reserve
position. Also, by late 1977 the British author­
ities had succeeded in gaining leeway, under
the agreements with the IMF, for providing
some modest stimulus to the economy. But by
late spring 1978 the markets were becoming
concerned that the sudden upsurge in demand
in the United Kingdom was beginning to gener­
ate additional inflationary pressures and would
weaken the payments position.
In June the authorities moved again to rein­
force their broad anti-inflation effort through
monetary restraints, including a hike in interest
rates, and through a selective tightening of fiscal
policy. Later, the government announced a 5
percent guideline for wage increases over the
coming year beginning in August, down from
the previous guideline of 10 percent. These
measures helped to reassure the market. Thus
the pound had advanced to $1.95 against the
dollar by early August and had firmed against
other currencies as well. On the trade-weighted
effective basis used by the U.K. authorities, the
pound had reached 63 percent of its 1971
Smithsonian parity.
By early August, however, the market was
again becoming concerned over the outlook for
inflation in the United Kingdom. The Trades

Foreign Exchange Operations

Union Congress voted to reject a continuation
of an incomes policy, and highly visible wage
negotiations kept the exchange market wary of
a possible confrontation between the govern­
ment and the unions over the 5 percent pay
policy. The pound fell back somewhat and
traded unevenly in the exchanges between early
August and mid-October. But each time selling
pressure mounted, the Bank of England re­
sponded quickly to show its resolve in defending
sterling, both through intervention in the ex­
change market and through maintaining a taut
money market.
In October, as market participants increas­
ingly turned their attention to the accelerating
slide of the dollar, sterling started to move up
on hot-money inflows. Spot sterling soon moved
above $2.00, and a burst of buying in late
October pushed the rate to as high as $2.1050
by the month-end. During this upswing the
Bank of England occasionally bought dollars to
keep the trade-weighted effective rate from ris­
ing much above 63 percent.
In the wake of the U.S. measures of No­
vember 1, sterling dropped back 6 percent to
fluctuate around $1.98 against the dollar, with­
out any appreciable change on an effective
basis. Meanwhile, union opposition to the con­
tinuance of an incomes policy was hardening.
Interest rates abroad were rising sharply, partic­
ularly in the United States. And as sterling came
on offer, in response to these uncertainties the
Bank of England again provided support in the
exchange market to steady the effective rate.
Short-term sterling interest rates were allowed
to rise, and on November 9, the authorities
hiked the minimum lending rate 2 l/z percentage
points to 121/2 percent, its highest level in two
years.
Thereafter, sterling was buoyed by inflows
of interest-sensitive funds. Also, with the spot
rate holding firm in December, many multina­
tional corporations bought pounds to cover ac­
counting and economic exposures and to satisfy
year-end payment needs. The political uncer­
tainties in Iran and the mid-December increase
in OPEC oil prices had little impact on sterling
since the United Kingdom, as an oil producer
itself, was seen as less vulnerable to a cutoff
of oil supplies from Iran and as perhaps even



217

benefiting from the larger-than-expected rise in
oil prices. As a result, when the dollar came
on renewed offer during December, sterling was
bid up to a high of $2.0480 by early January.
Meanwhile, the government had announced it
would not join the EMS but would undertake,
as it had in the past, to keep sterling relatively
stable vis-a-vis its principal trading partners.
In view of the United Kingdom’s comfortable
reserve position and the high level of interest
rates, sterling held firm in the exchanges in early
1979, despite a spate of highly disruptive
strikes. Sterling eased off against the dollar as
dollar rates generally improved, but it held
steady in effective terms. By the close of the
period the spot rate was at $1.9872, up 3 percent
on balance for the six months. Meanwhile,
although the authorities had intervened on both
sides of the market, these operations had largely
netted out. Consequently, official reserves,
which were $17.6 billion at the end of January,
were unchanged on balance over the six-month
period.
Ca n a d ia n D ollar

By late summer, the Canadian dollar had been
declining almost without interruption for nearly
two years. Even so, the current account re­
mained in substantial deficit and long-term
foreign borrowings by private interests and pro­
vincial authorities were not sufficient to close
the overall payments gap. Moreover, the rate
of domestic inflation remained high, aggravated
partly by the depreciating currency, and unem­
ployment continued at uncomfortably high
levels.
Earlier in 1978, the authorities had moved
cautiously to stimulate employment through se­
lective fiscal policy measures while maintaining
a firm monetary policy in light of concerns over
inflation and the exchange rate. The authorities
had also arranged for some $7.7 billion of
official long-term international borrowing, both
to close the payments gap and to bolster reserves
that had been depleted through intervention to
cushion the decline of the exchange rate. Nev­
ertheless, the deep-rooted pessimism toward the
Canadian dollar persisted in the exchange mar­
ket, as the prospect of a national election to

218

Federal Reserve Bulletin □ March 1979

be held sometime within the year left the market
uncertain about the outlook for the Canadian
economy. Amid these uncertainties, sudden
shifts of sentiment left the market subject to
increased volatility. In addition, selling pres­
sures were aggravated at times when the U.S.
dollar was declining, because market partici­
pants would sell Canadian dollars against U.S.
dollars either to finance acquisitions of curren­
cies rising in the exchanges or to offset for
internal accounting short-dollar positions
against these currencies.
In August and September, after trading
against the U.S. dollar at around Can.$1.14,
the Canadian dollar again came under heavy
selling pressure in the exchanges following
some disappointing trade and price figures.
Also, the further rise in interest rates in the
United States had prompted some outflows of
interest-sensitive funds from Canada. In re­
sponse, the Bank of Canada raised its discount
rate to 9 lA percent and announced a reduction
of its monetary growth targets for the coming
year. The authorities also arranged for a further
$750 million bond issue in the U.S. market.
The selling pressure continued, however, with
the Canadian dollar slipping a further 3 percent
against the U.S. dollar. Meanwhile, a sustained
intervention effort contributed to a decline in
Canada’s external reserves by a net $924 million
in August-September to $3.7 billion.
In early October the spot rate dipped to as
low as Can.$1.1958 before bottoming out. The
Canadian authorities hiked the discount rate
further to 10 lA percent and operated in the bond
market to lift long-term Canadian interest rates.
Interest-sensitive funds thus began to move back
into Canada. In addition, the trade figures for
September were back in significant surplus and
the rise in consumer prices slowed, giving a
boost to market sentiment toward the Canadian
dollar. Thus, the Canadian dollar moved back
up from its lows in early October against the
U.S. dollar, and the Bank of Canada intervened
to moderate the rise. These official dollar pur­
chases, combined with the receipt of proceeds
from the New York bond issue and the take­
down of additional credits on the facility with




the chartered banks, were reflected in a $1.4
billion rise in external reserves to $5.1 billion
at the month-end.
On November 1, when the United States
announced its major support package and the
U.S. dollar rose sharply against the currencies
of Western Europe and Japan, the Canadian
dollar eased only slightly vis-a-vis the U.S.
dollar. But then, as interest rates in the United
States rose by more than rates in Canada, inter­
est incentives favoring Canada were nearly
eliminated, even after the Bank of Canada raised
its discount rate to 10% percent on November
6. Moreover, the latest figures on Canada’s price
and trade performance released during the
month were less encouraging. Bearish sentiment
resurfaced for the Canadian dollar, and as sell­
ing pressure built up once again, the rate drifted
downward in November and December.
In early January, the Canadian authorities
announced plans for a new official borrowing
abroad, a $500 million equivalent issue denom­
inated in yen, and the Bank of Canada raised
its discount rate by 1/2 of a percentage point
to 1114 percent. These initiatives helped to
stabilize the exchange rate, but the latest round
of trade figures announced in late January
proved to be disappointing to the market. The
rate thus dipped to Can.$1.1989 at the monthend, down 5!/2 percent for the six-month period,
before firming somewhat in February. Mean­
while, Canada’s reserves declined by.$700 mil­
lion from levels at the end of October; the net
decline was $200 million over the six-month
period to $4.4 billion as of January 31.
P r o f its a n d L o sses

The stepped-up intervention by the U.S. au­
thorities beginning on November 1 involved a
variety of financing techniques. In addition to
use of the swap arrangements, the Treasury
drew marks and yen on its reserve position with
the IMF and sold SDRs to both Germany and
Japan against their respective currencies. Also,
the Treasury issued notes denominated in marks
and Swiss francs in the German and Swiss
capital markets, thereby raising foreign currency

Foreign Exchange Operations

assets against medium-term liabilities in those
currencies. The acquisitions or borrowings of
currencies and the sale and repayment of cur­
rencies took place at varying exchange rates.
Thus, the profit and loss implications became
much more complex.
At the same time, at the end of 1978 the
Federal Reserve, in presenting its annual state­
ment of condition, shifted to accounting prac­
tices under which all foreign currency assets and
liabilities are periodically revalued in dollars at
current spot market rates. The ESF had adopted
this accounting practice in 1977. For both insti­
tutions this meant that, in addition to profits and
losses actually realized on foreign exchange
transactions, unrealized profits and losses are
reported. New arrangements were also reached
with foreign central banks to revalue, beginning
in January, maturing swap drawings that were
being renewed at current market rates. This
practice generated realized profits or losses
depending on whether the dollar rose or fell over
the period of the swap drawing.
One of the tables presents the profit and loss
data for the Federal Reserve and the U.S.
Treasury, separating out the results between the
Treasury general account and the ESF.1 Losses
on pre-August 1971 Swiss franc debt, under­
taken to protect the U.S. gold stock, are pre­
sented separately.
In summary, Federal Reserve operations
mainly reflect current swap operations, while
ESF data also reflect foreign currency acquisi­
tions from IMF drawings and SDR sales. The
Treasury general account operations reflect the
issuance of securities denominated in foreign
currencies and sales of some of those proceeds
in the market. Foreign exchange operations are
closely coordinated between the Treasury and
the Federal Reserve. The incidence of realized
profit and loss, however, falls on the participants
in the operations depending on the nature of the
transaction and the exchange rate at the time.

1. The attachments to this report are available on
request from Publications Services, D ivision of Support
Services, Board of Governors of the Federal Reserve
System , W ashington, D .C . 20551.




219

The ESF, the Treasury general account, and the
Federal Reserve had both profits and losses on
individual transactions, but as the table indi­
cates, losses exceeded profits on balance in
1978.
Fe d e r a l R e se r v e - T r e a s u r y

‘ ‘W a r e h o u s i n g A

r r a n g e m e n t ’’

During the six-month period, the Federal Re­
serve “ warehoused” foreign currencies by tak­
ing foreign exchange acquired by the Treasury
that was not immediately needed to finance
foreign exchange intervention in return for dol­
lars that were needed by the Treasury in its own
domestic operations. In carrying out this ex­
change, the Federal Reserve operated as it did
in the past to buy the foreign currency in a spot
purchase from the Treasury and simultaneously
sell it back to the Treasury at the same exchange
rate for a future maturity date— three months
or even one year later. A key aspect of this
type of transaction is that, since the Federal
Reserve and the Treasury agree to pay and to
receive the same amount of foreign currency
because the same exchange rate is used, neither
party incurs any exchange rate risk from this
transaction.
Between the time of the initial transaction and
the maturity date, the Treasury has dollars that
are credited initially to its account at the Federal
Reserve Bank of New York, while the Federal
Reserve has foreign currency assets that it places
with its central bank correspondent abroad to
earn an investment return. As the dollars flow
into the U.S. banking system, either by transfer
to a Treasury tax and loan account at a com­
mercial bank or by financing of domestic ex­
penditures by the Treasury, member bank re­
serves increase. Under the operating procedures
the domestic Trading Desk uses to carry out
objectives set by the Federal Open Market
Committee, however, it would typically respond
by absorbing an equivalent amount of reserves
in its day-to-day open market operations to
neutralize any unwanted expansionary effect of
the use of the Treasury’s balance at the Federal
Reserve Bank of New York.

220

Federal Reserve Bulletin □ March 1979

A warehousing transaction is reversed when
the Federal Reserve repays the foreign currency
it has acquired from the Treasury and the
Treasury repays dollars. This could occur before
the original maturity date if the Treasury de­
cides that warehoused foreign exchange bal­
ances will be used to finance its intervention
(in which case the Treasury carries any ex­
change risk that may be involved) or upon
maturity. Whether the Treasury acquires dollars




to make the repayment to the Federal Reserve
by purchasing them in the foreign exchange
market, by borrowing in the domestic market,
or from receipts from other sources, member
bank reserves will decline. The domestic Trad­
ing Desk would offset any unwanted decline
through open market operations. Thus, in prac­
tice, member bank reserves show no net effect
from operations under the warehousing
arrangements.
□

221

Staff Studies
The staffs of the Board of Governors of the
Federal Reserve System and of the Federal
Reserve Banks undertake studies that cover a
wide range of economic and financial subjects ,
and other staff members prepare papers related
to such subjects. In some instances the Federal
Reserve System finances similar studies by
members of the academic profession.
From time to time the results of studies that
are of general interest to the professions and
to others are summarized— or they may be
printed in full— in this section of the F e d e r a l
R eserv e B u lle t in .

In all cases the analyses and conclusions set
forth are those of the authors and do not neces­
sarily indicate concurrence by the Board of
Governors , by the Federal Reserve Banks, or
by the members of their staffs.
Single copies of the full text of each of the
studies or papers summarized in the B u l l e t i n
are available in mimeographed form. The list
of Federal Reserve B oard publications at the
back of each B u l l e t i n includes a separate
section entitled “ Staff Studies 99 that lists the
studies for which copies are currently available
in mimeographed form.

Study S ummary

G e o g r a ph ic E x p a n sio n of B a n k s a n d C h a n g e s in B a n k in g S t r u c t u r e
S te p h e n A . R h o a d e s — S ta f f , B o a r d o f G o v e r n o r s
P r e p a r e d as a start p a p e r in e a r l y 1 9 7 9

Various forces have provided impetus to geo­
graphic expansion in commercial banking since
1960. Because expansion could affect banking
structure and competition, a study was made of
the changes in local market structure over the
period 1966-76 and in statewide structure for
1960-77.
To determine whether geographic expansion
of banking organizations has a systematic effect
on local market and statewide structure, an
index of geographic expansion was constructed
for local markets— 154 standard metropolitan
statistical areas (SMSAs) and 129 non-SMSA
counties— and for 48 states. The index is in­
cluded in this study in a multivariate regression
for testing purposes.




The data reveal that the great majority of local
banking markets decreased in concentration, but
test results provide no evidence that geographic
expansion affects local market concentration. At
the state level, the study shows that more than
half the states increased in concentration, and
statistical tests indicate that geographic expan­
sion tends to increase statewide concentration.
The data also reveal that overall the number of
banking organizations in the United States
has declined since 1970, a trend that has oc­
curred in about half of the states. Finally, there
has been a notable change in the size distribution
of banking organizations in individual states—
the proportion of organizations with $10 million
or less in assets has declined dramatically.

222

Industrial Production
Released for publication March 16

Industrial production rose by an estimated 0.3
percent in February; revised figures showed no
growth in the index for January. At 151.2 per­
cent of the 1967 level, the index for February
was 8.6 percent above that of a year earlier.
Increases in production in February were
widespread and generally moderate; the largest
gains were in equipment and nondurable goods
materials. But sharp declines were again re­
corded in automotive products and coal and, to
a lesser extent, in refined petroleum. Production
of some items was again affected by adverse
weather. The index now indicates a 0.6 percent
gain in total output in November and a 0.8
percent gain in December.
Output of consumer goods was unchanged in
February; there were moderate gains in home
goods and some nondurable consumer goods,
but further declines in auto and utility vehicle
assemblies and a drop in the production of
consumer fuel such as gasoline. Auto assem­
blies were at an 8.8-million-unit rate— almost
unchanged from the 8.9-million-unit rate in
January. Output of business equipment rose 0.5
percent further in February; the largest increases
were in equipment used in manufacturing, power
generation, and commercial enterprises. As in
January, the growth in output of construction
1967 = 100

Federal Reserve indexes, seasonally adjusted. Latest figures:
February. Auto sales and stocks include imports.

Perceniage change trom preceding month to—
1978

Jan.p

F e b .e

T o ta l .......................................

15 0 .8

1 5 1 .2

Products, t o t a l...........................
Final p rod u cts.......................
C onsumer g o o d s ..............
Durable .......................
Nondurable ..................
B usiness e q u ip m e n t___
Intermediate products
Construction su p p lies. . .
M aterials .....................................

149.1
145.6
150.5
160.7
146.3
168.9
162.6
161.9
153.4

1 49.6
14 6 .0
150.5
1 60.4
1 46.6
169.7
162.9
162.1
153.8




Seasonally adjusted, ratio scale, 1967-100

1979

Industrial production

pPreliminary.

supplies was small following the extremely sharp
increase in December.
Production of materials advanced 0.3 percent
in February, reflecting increases in the output
of equipment parts and chemical and paper
materials. Production of energy materials de­
clined for the second successive month due
mainly to reduced output of coal.

eEstimated.

Sept.

1979

Percentage
change
2 /78
to
2/79

Oct.

N ov.

D ec.

Jan.

Feb.

.5

.6

.6

.8

.0

.3

8.6

.2

.3
.3

.5
.3
.3

.8

.1
.1

.3
.3

.1
1.0
.8

_ 7

7 .2
7 .0
4 .7

.1

.0
- .2
.2

4.1

.5

10.1

.2
.1

7 .6
9.1

.3

11.0

.3
.4
-.7
.9

.1
.8
-.1

.2

.7

.4

.6

.6

.9

.7

1.1

.3

.2
.8
1.3
.9

.7
.7

1.4

1.6
.6

__i

!i

.2
.6
.2
-.1

N o t e . Indexes are seasonally adjusted.

6.1

223

Statements to Congress
Statement by Nancy H. Teeters, M em ber ,
Board of Governors of the Federal Reserve
System, before the Subcommittee on Consumer
Affairs and the Subcommittee on Financial In­
stitutions Supervision, Regulation and Insur­
ance of the House Committee on Banking, Fi­
nance and Urban Affairs, February 20, 1979.

It is a pleasure for me to appear before both
subcommittees. I have recently been designated
to chair the board committee that has respon­
sibility for consumer affairs, and I look forward
to working with you in the future.
Section 1 of H.R. 1903 would change the
effective date of the Electronic Fund Transfer
Act from May 10, 1980, to June 10, 1979. The
board recommends against adoption of this
amendment. While we recognize the need for
prompt implementation of the act, changing the
effective date to June 10 would not leave suffi­
cient time to accomplish this task. A June 1979
effective date would require the board to issue
regulations without the degree of public partici­
pation that is essential for orderly implementa­
tion of this important new law. In addition,
financial institutions would have fewer than four
months to comply with the act.
I can assure you that the board shares your
interest in quickly providing consumers who use
electronic transfer services with the important
protections offered by the act. We also wish to
publish final regulations as soon as possible. The
board’s commitment to prompt action is illus­
trated by the speed with which the board acted
in implementing sections 909 and 911 of the
act. Those regulations were published for com­
ment on December 26; the staff is analyzing
the comments and preparing recommendations
for the board. Final regulations are expected to
be issued in a few weeks.
The board’s schedule for implementing the
remainder of the act is as follows: by April 1



publish draft regulations for a 60-day comment
period, ending May 31; we have allowed 60
days for analyzing the comments and redrafting
the regulations, bringing us to July 31; the
revised regulations will be published for com­
ment for a second 60-day period, running from
August 1 to September 30; analysis of the
comments and redrafting will be completed by
November 30; the final regulations will be pub­
lished about December 1.
We believe this is a realistic schedule that
demonstrates the board’s commitment to speedy
and responsible implementation of the act.
Meeting it will require considerable effort by
the board and its staff. Our considerable experi­
ence in implementing consumer legislation sug­
gests that a shorter rulewriting timetable would
not be in the public interest.
One way in which the board’s schedule could
be shortened is by allowing 30 days instead of
60 days for public comment. We are concerned,
however, that a period as short as 30 days would
not be sufficient to allow all interested parties
to express their views adequately. Our recent
experience with the amendment to Regulation
Z modifying the rescission requirements with
respect to certain open-end credit plans is a good
example. When the proposal was first published
for comment, the comment period was 30 days.
Many interested parties have objected strongly
that this was not enough time, so the board
recently decided to publish the amendment
again. The board, in accordance with the spirit
of Executive Order 12044, recently adopted a
policy of allowing at least 60 days for public
comment on regulations that implement a new
law. We feel that adequate time for public
comment is especially important in the case of
a law, such as the Electronic Fund Transfer Act,
that is highly technical and that confers signifi­
cant consumer rights.
Our experience with implementation of other

224

Federal Reserve Bulletin □ March 1979

legislation indicates that 60 days is essential for
analysis of public comments, redrafting the
regulations, and bringing them back to the board
for comment. In 1976, when the amended Equal
Credit Opportunity regulations were issued, the
board received about 650 comments on the first
proposal and about 500 comments on the second
proposal. More recently, the board, along with
the other financial supervisory agencies, re­
ceived almost 1,000 comments on the Commu­
nity Reinvestment Act regulations. Since there
is great public interest in the Electronic Fund
Transfer Act, I think we can expect to receive
at least several hundred comments on proposed
Regulation E.
Finally, the board’s timetable calls for two
public comment periods. I wish I could say that
one comment period would suffice, but, again,
our experience indicates otherwise. When new
regulations are drafted, the first proposal may
overlook important issues and some of the pro­
visions may not be workable. Indeed, that is
the purpose of public comment— to expose reg­
ulations to the critical gaze of the financial
institutions and consumers who must live with
them. Having two comment periods allows the
public to comment on significant changes before
regulations go into effect and thereby reduces
the possibility that the regulations will have to
be amended later. If the act’s effective date were
changed to June 1979, the board’s regular pro­
cedures could not be followed. Even with only
one comment period, there is a real risk that
the law would take effect before implementing
regulations could be issued in final form.
It is worth noting that the Electronic Fund
Transfer Act creates two duties that the board
did not have under the Equal Credit Opportunity
Act or other prior legislation— namely, the re­
quirement to prepare an analysis of economic
impact and to issue model disclosure clauses.
I would also like to point out that the Elec­
tronic Fund Transfer Act imposes major new
responsibilities on financial institutions. They
will be required to prepare and print new dis­
closures, establish new error resolution and
stop-payment procedures, program their com­
puters to generate periodic statements, and, of
course, train their personnel. Our experience




with other laws, including the Equal Credit
Opportunity Act, suggests that the quality of
compliance is enhanced and the cost of compli­
ance reduced by providing a lead time of several
months between the issuance of regulations in
final form and the effective date of a statute.
Turning now to the second section of H.R.
1903, it would change both the timing of, and
the entity responsible for providing, the general
statement of customer rights required under
section 1104(d) of the Right to Financial Privacy
Act of 1978. Instead of requiring that the state­
ment be sent to all customers of all financial
institutions “ promptly” after March 10, 1979
(the effective date of the Right to Financial
Privacy Act), the bill would require that the
statement be provided to a customer when the
customer is notified by a federal agency of its
efforts to obtain the customer’s financial rec­
ords. In addition, the bill would shift the re­
sponsibility for providing the statement from the
financial institution having custody of the cus­
tomer’s records to the agency seeking the rec­
ords. The board would continue to be required
to prepare a model statement of customer rights
for use under section 1104(d). A draft statement
was issued for public comment by the board
on January 29.
We believe that the provisions of section
1104(d) as written into law last year should be
modified significantly. The informational benefit
to customers of financial institutions of receiving
a general statement of their privacy rights
promptly after the effective date of the act does
not justify an estimated expenditure on the order
of hundreds of millions of dollars to provide
that statement. Sending the statement on a one­
time basis after March 10 would not provide
customers with information about their rights
when that information was most needed— that
is, when access to their records was sought.
Furthermore, for every account that an individ­
ual has at a financial institution and for every
credit card held, the individual would receive
a separate statement. Therefore, a typical cus­
tomer would receive several and perhaps a
dozen or more virtually identical statements
within a relatively short time span.
For those reasons, the board, responding to

Statements to Congress

225

a resolution of our Consumer Advisory Council,
recommended that the act be amended to require
that the section 1104(d) statement be delivered
only when access to a customer’s records is
sought. In making that recommendation, both
the board and the council were influenced by
the belief that providing the statement when
access was sought would give customers rele­
vant information about their rights at the most
appropriate time for them to understand the
significance of, and to act upon, those rights.
Therefore, the proposed change in H.R. 1903
in the timing of the delivery of the customer
rights statement is, in our view, a significant
step in the right direction.
We should note, however, that the act already
requires the government to notify customers in
10 different instances about their rights under
the statute. In addition, the act specifies that
customers must be apprised of their financial
privacy rights prior to authorizing government
access to their records; and, having authorized
access, they generally must be informed, upon
request, of the identity of the federal agency
or agencies to whom their records have been
disclosed and the number of times access has
been granted. Although delivery of the required
notices may be delayed if the federal agency
involved obtains an appropriate court order,
even then the customer usually must be provided

with a statutory notice. Thus, we believe that
the general statement of customer rights man­
dated by section 1104(d) could be eliminated,
as provided by S. 37, which has passed the
Senate, without materially diminishing the cus­
tomer protections of the act.
While our original recommendation, based
upon the Consumer Advisory Council’s resolu­
tion, did not contemplate shifting responsibility
from financial institutions to the federal govern­
ment for providing the statement, we believe
that the proposal of H.R. 1903 to require the
federal agency involved to supply the statement
along with any other notice it must provide
under the statute is an appropriate alternative.
Although such a shift would increase somewhat
the government’s cost of complying with the
act, it should on balance decrease overall costs
by eliminating the need for a separate com­
munication from financial institutions. While the
approach taken by either our original recom­
mendation or H.R. 1903 is better than the cur­
rent requirement, we believe that deletion of the
requirement of a general statement as provided
by S. 37 also is an acceptable alternative for
the reasons previously mentioned.
I appreciate the opportunity to appear before
both subcommittees to present the views of the
board and its Consumer Advisory Council. I
would be pleased to answer any questions.

Statement by G. William M iller, Chairman,
Board of Governors of the Federal Reserve
System, before the Committee on the Budget,
U.S. Senate, February 22, 1979.

ployment and price stability. While your task
is a difficult one, it provides a clear opportunity
for the Congress to help unwind years of corro­
sive and persistent inflation.
Economic activity over the past year was
highlighted by a sizable rise in real gross na­
tional product together with a marked acceler­
ation in the rate of price increase. By the end
of 1978, the current economic expansion was
close to its fourth anniversary and, when com­
pared with prior cyclical upswings of the post­
war period, it is notable both for its longevity
as well as its strength. As indicated in Chart
1 the 4 lA percent rise in real GNP over 1978
represented something of a deceleration from

Mr. Chairman, members of this committee, the
budget deliberation process plays a critical role
in the formulation of public policy, and I am
pleased to present the views of the Federal
Reserve as the committee develops the First
Concurrent Budget Resolution for fiscal year
1980. The direction that fiscal policy takes over
the next several years will be of strategic im­
portance in determining the nation’s ability to
meet its longer-run goals of growth, high em­




226

Federal Reserve Bulletin □ March 1979

the 5Vi percent pace of the first three years
of expansion.1 But with the economy’s move­
ment into a zone where resource pressures can
be intense, this slowing was desirable, espe­
cially given the recent signs of acceleration of
raw materials price increases. Over the year the
unemployment rate fell further by 1/2 a per­
centage point to 5.8 percent of the labor force,
and at year-end there was relatively little job
market slack in many of the higher-skilled
occupational groups. Similarly, capacity utili­
zation moved up to about 86 percent in manu­
facturing, and while the emergence of any pro­
duction bottlenecks generally has been avoided,
this sector of the economy is operating quite
close to its prerecession rate. Despite this di­
minished slack in the economy, last year’s in­
tensification of inflationary pressures can be
attributed largely to sources other than pressures
of resource constraints. However, further brisk
expansion of the economy at this time runs the
risk of adding yet another source to an already
intractable inflation.
The acceleration of price increases during
1978 was clearly the major disappointment in
the economy’s performance. Unlike earlier
years, when worsening inflation could be asso­
ciated with one or two unfavorable and isolated
developments, the acceleration last year was
broadly based and resulted from both endo­
genous as well as special occurrences. Food
prices skyrocketed early in the year as the severe
winter weather took its toll on the agricultural
sector. In addition, the cost of homeownership
rose sharply as home purchase prices and mort­
gage interest rates increased, and the weakening
exchange value of the dollar had adverse impli­
cations for prices of imports and for those do­
mestically produced goods that compete with
imports. However, even after allowing for these
somewhat “ special” considerations, there was
an acceleration of inflation in most other areas
as well. The deterioration of this underlying rate
of increase in prices can be most clearly asso­
ciated with last year’s pickup in unit labor costs.
In turn, the continued uptrend in costs can be
1. The attachments to this statement are available on
request from Publications Services, D ivision of Support
Services, Board of Governors of the Federal Reserve
System , W ashington, D .C . 20551.




attributed in large part to a most disappointing
productivity performance and to legislated in­
creases in the minimum wage and in payroll
taxes for social security and unemployment in­
surance.
Unfortunately, likely developments over the
course of this year do not suggest a significant
easing of inflationary pressures in the near term.
Another round of mandated increases in payroll
taxes went into effect the first of the year and
these costs tend to be passed through to prices
quite promptly. Also, given recent reports on
spot prices of crude foodstuffs, it is a virtual
certainty that retail food prices will increase
sharply in the first quarter. Furthermore, large
oil price hikes by the Organization of Petroleum
Exporting Countries have been scheduled for
this year, and the impact of the dollar’s depre­
ciation has yet to run its course. These factors,
combined with a heavy collective bargaining
calendar following the price runup of 1978,
makes it difficult to envision overall price in­
creases slowing markedly from last year’s 9
percent range.
Given this developing environment there was
a clear and urgent need for the stance of public
policy to shift toward the restraint of aggregate
demand and focus on actions designed to end
the self-fulfilling prophecies of inflationary ex­
pectations. The administration’s anti-inflation
proposals of late October were aimed at disen­
tangling the interplay of wages and prices
through the recommendation of wage-price
standards. In addition, the program underscored
the inflationary tendencies of government poli­
cies by stressing that fiscal restraint and regula­
tory reform were both necessary for an effective
assault on inflation. These proposals were rein­
forced by the joint actions of the Treasury and
the Federal Reserve on November 1 that helped
restore stability to the international value of the
dollar. Fiscal policy also moved toward restraint
last year. The $44 billion federal deficit for
calendar year 1978 was $7 billion less than in
the prior year and well below that implied by
the first and second concurrent budget resolu­
tions. Nonetheless, a continuing deficit of this
magnitude is far too large for a maturing ex­
pansion beset with inflationary difficulties.
Monetary policy also moved clearly in the

Statements to Congress

direction of restraint during 1978. Interest rates
for short-term market instruments rose about 3
to 4 percentage points over the course of the
year and yields at the longer end of the maturity
spectrum rose about 1 percentage point. These
appreciable advances in market rates reflect a
monetary policy that continues in its efforts to
foster financial conditions consistent with a
moderation in the pace of economic activity and
a slowing of inflation. Real interest rates— or
market rates adjusted for inflation— still appear
to remain low by historical standards and thus
continue to facilitate an expansion of overall
demands. Furthermore, due to the evolution of
the structure of financial markets in recent years,
there is growing evidence that the economy now
responds in a smoother fashion to adjustments
in monetary policy. A recent example of this
development has been the success that the new
6-month money market certificates have had in
boosting deposit flows at major mortgage lend­
ing institutions during a period when prevailing
market rates could have resulted in widespread
disintermediation. Thus, despite a tightening of
monetary policy, economic activity has not been
disrupted by the type of “ credit crunch” epi­
sodes that have severely affected financial mar­
kets in the past.
The economy’s ability to withstand tauter
financial markets does not blunt, however, the
critical role that monetary policy can play in
combating inflation. The upward movements in
interest rates have been accompanied by a re­
duction in the growth of the monetary aggre­
gates, even after allowance for the recent intro­
duction of automatic transfers from savings to
demand accounts. In turn, this moderation of
money growth has apparently discouraged some
borrowing activity recently, especially in the
commercial and industrial sector. Furthermore,
given the normal lags of policy impacts, the
expansion of total credit demands should be
further restrained in the months ahead.
While monetary policy has a key role to play
in achieving the nation’s economic goals, it
cannot wage the battle alone. The application
of prudent restraint through fiscal policy is just
as critical if we are to turn our full arsenal of
public policies against inflation. It is most im­
portant that fiscal and monetary authorities work



227

in tandem towards achievement of the nation’s
longer-term goals. In a report submitted to the
Congress on February 20, in compliance with
the Full Employment and Balanced Growth Act
of 1978, the Federal Reserve detailed its policy
aims for 1979 and concluded that those plans
are consistent with the present goals of fiscal
policy. (See pages 185-200.)
Specific fiscal policy recommendations for the
upcoming fiscal year depend critically on the
outlook for real GNP growth and inflation.
Despite much public opinion to the contrary,
there is little evidence, at present, that the
economy is threatened with an actual contrac­
tion of activity. While the surprisingly strong
surge of real GNP in the fourth quarter of last
year is not sustainable nor even desirable, it did
impart a good deal of momentum to activity that
is likely to carry over into the first half of the
year. In the business sector, orders backlogs and
construction contracts remain at high levels and
are likely to support a moderate expansion of
capital spending at least through the spring. In
addition, inventories remain quite lean relative
to sales and, given the surge in consumption
late last year, a rebuilding of stocks could be
required in some lines, which could further
boost production and income. Furthermore,
aside from last month’s drop in starts, which
appears to be mostly weather-related, housing
construction has been sustained at a relatively
brisk pace. As a result, we have avoided a sharp
downturn in one area of the economy most
prone to cyclical sensitivity.
Nonetheless, there are signs that some
weakness in demands could well develop over
the course of the year. Surveys of capital
spending intentions of business point to a slow­
ing of growth in the latter half of this year. Also,
it seems likely that housing activity could be
reduced somewhat by financial conditions in
mortgage markets. And finally, consumption,
whose consistent strength has provided a solid
foundation for most of this expansion, might
slow as income gains weaken and high debt
burdens impart a degree of caution to consumer
spending decisions.
Over all, while inflation remains a most
disruptive influence, there are no signs of the
type of imbalances that typically have signalled

228

Federal Reserve Bulletin □ March 1979

the onset of prior recessions. In this environ­
ment, macroeconomic stabilization policies
need to aim for a moderating course of activity
and the resulting relief of inflationary pressures
that would emanate from product, labor, and
financial markets. While the outcome of such
policies would presumably imply an upward
drift of unemployment, the alternative course—
that of further demand stimulus— would be
fraught with ever greater inflationary perils. The
social costs of unemployment can never be
ignored, but at this juncture a failure to ease
inflationary pressures would be far more costly
over the longer run than would be any temporary
dislocations in the labor market.
At present, fiscal policy recommendations
need to be governed by clear restraint. Contin­
ued reduction in the deficit in the near future
and movement toward a balanced budget over
the next several years is desirable; the adminis­
tration’s recent budget proposals represent a
positive move in this direction. Not only would
the trend toward balance avoid the excessive
demand stimulus that has fueled inflation during
recent years but elimination of large federal
deficits also would absorb less private savings
and thus provide more of an opportunity for
increased capital formation. Furthermore, the
deficits of the past several years have been
accompanied by Treasury borrowing on a scale
large enough to distort flows in private capital
markets. And the financing needs of off-budget
agencies have acted to exacerbate this problem.
As a result, a movement toward fiscal balance
would lessen the pressures on our money and
capital markets.
A second and related aim of fiscal policy
should be a reduction in the size of the govern­
ment sector in our economy. One of the more
undesirable features of economic change over
the last 20 years has been the gradual increase
in the share of federal outlays as a percentage
of GNP. In the latter half of the 1950s, the ratio
stood at 18.3 percent whereas by 1976 it had




risen to 22.5 percent. In the past two years the
ratio has edged back down, but it still remains
too high. The 21 percent share projected for
fiscal year 1980 is laudable, but the reduction
should not stop at this point. Achieving such
a reduction will require a rethinking of many
existing spending programs as well as limita­
tions on new spending initiatives.
At the same time the deficit and the output
share of the federal sector are being reduced,
fiscal policy should also be directed at promot­
ing an improved environment for capital spend­
ing. Over the past decade our investment share
of output has been generally inferior to that of
most major industrialized economies. Further­
more, in recent years there seems to have been
a reluctance to invest in the heavy machinery
that is so essential for the expansion of our
productive capacity. Whatever the cause— an
excessive regulatory burden, increased foreign
competition, or an outmoded technological
base— there is a real need for stepping up in­
centives such as accelerated depreciation and
investment tax credits. Not only would this
enhance the economy’s longer-run growth pros­
pects, it would also facilitate resumption of
more normal growth in productivity. The slow­
ing of productivity gains over the last five years
has been most disappointing, and this has con­
tributed directly to the growing inflationary bias
of the present expansion. Successful efforts to
reverse this trend would improve greatly the
economy’s potential for noninflationary expan­
sion.
In sum, fiscal policy needs to be directed in
a clear and forceful way toward the easing of
inflationary pressures. The implications of aus­
terity, sacrifice, and patience need not be mini­
mized but instead should be recognized as a
measure of our commitment in dealing with a
most difficult problem. The Federal Reserve for
its part will continue to aim monetary policy
toward a gradual unwinding of inflation and the
maintenance of moderate economic growth.

Statements to Congress

Statement by G. William Miller, Chairman,
Board of Governors of the Federal Reserve
System , before the Committee on Banking,
Housing and Urban Affairs , (7.5. Senate , Fefrruary 26, 1979.

The nation’s financial system has been under­
going rapid change in recent years, altering the
competitive environment in banking and other
financial markets and complicating the Federal
Reserve’s ability to implement monetary policy.
These developments are well known to the
committee. Nonmember depositary institutions
have been growing much more rapidly than
member banks. Transactions-type deposit ac­
counts have become more widespread at thrift
institutions. And, in general, competition
among depositary institutions and between those
institutions and the open market has become
much more intense.
Increased competition enhances the efficiency
of the financial system. But, as a result, banks
have been reassessing their costs, and many have
become less willing to bear the high cost of cash
reserve requirements associated with being a
member of the Federal Reserve System. Thus,
there has been a steady— and in recent years
accelerating— decline in the proportion of bank
deposits, especially transactions deposits, sub­
ject to federal reserve requirements. Moreover,
the continued development of new transac­
tions-type deposits at nonbank depositary insti­
tutions will worsen this situation.
D e v e l o p m e n t s

W e a k e n

M o n e t a r y

C o n t r o l

It is essential that the Federal Reserve maintain
adequate control over the monetary aggregates
if the nation is to succeed in its efforts to curb
inflation, sustain economic growth, and main­
tain the value of the dollar in international
exchange markets. The attrition in deposits
subject to reserve requirements set by the Fed­
eral Reserve weakens the linkage between
member bank reserves and the monetary aggre­
gates. As a larger and larger fraction of deposits
at banks becomes subject to the diverse reserve
requirements set by the 50 states rather than by
the Federal Reserve, and as more transactions



229

balances reside at thrift institutions, the rela­
tionship between the money supply and reserves
controlled by the Federal Reserve will become
less and less predictable, and the instruments
of monetary policy will become less precise in
their application.
Our staff has attempted to assess the extent
to which growth of deposits outside the Federal
Reserve System would weaken the relationship
between reserves and money. Their tentative
results are shown in chart 1, which depicts the
greater range of short-run variability in M -l and
M-2, with a given level of bank reserves, that
would develop as the percentage of deposits
held outside the Federal Reserve rises.1 As more
and more deposits are held outside the system,
this chart suggests that control of money through
the reserve base becomes increasingly uncer­
tain.
U se

o f

B e e n

R e s e r v e

R e q u ir e m e n t s

H a s

R e s t r ic t e d

With the proportion of banks subject to federal
reserve requirements declining, the ability of the
central bank to use changes in reserve require­
ments as a tool of monetary policy has been
increasingly undermined. Changes in reserve
ratios not only affect a smaller proportion of
deposits today than in the past, but the board
also must weigh the potential impact of its
actions on the membership problem— and hence
on its ability to maintain monetary control over
the longer run— each time it deliberates on the
uses of this tool. Such concerns inhibit the
board’s freedom of action to conduct monetary
policy. If reserve requirements were applied
universally, as is proposed in S. 85, adjustments
in reserve ratios to affect the availability of
credit throughout the country or to influence
banks’ efforts concerning particular types of
deposits may again become a more viable mon­
etary instrument. Moreover, while open market
operations in U.S. government securities cur­
rently provide the Federal Reserve with a pow­

1. The attachments to this statement are available on
request from Publications Services, D ivision of Support
Services, Board of Governors of the Federal Reserve
System , W ashington, D .C . 20551.

230

Federal Reserve Bulletin □ March 1979

erful policy instrument, it is possible that con­
ditions could develop in the future— such as a
less active market for U.S. government securi­
ties in a period of reduced federal budgetary
deficits— when more flexible adjustment of re­
serve requirements might become more neces­
sary to control the monetary aggregates.
A s

H a s

B e e n

t h e

D is c o u n t

W in d o w

The effectiveness of the Federal Reserve’s ad­
ministration of the discount window also has
been potentially compromised by recent devel­
opments. Membership attrition and the growth
of transactions balances at nonbank depositary
institutions have resulted in a shrinking propor­
tion of the financial system having immediate
access to the discount window on a day-to-day
basis.
The discount window, as the “ lender of last
resort,” provides the payments system with a
basic liquidity backup by assuring member
banks the funds to meet their obligations. But,
if the proportion of institutions having access
to this facility continues to decline, individual
institutions could be forced to make abrupt
adjustments in their lending or portfolio policies
because they could not turn to the window to
cushion temporarily the impacts of restrictive
monetary policies. Risks that liquidity squeezes
would result in bank failures could also in­
crease. Thus, the Federal Reserve may find that
its ability to limit growth in money and credit
in order to curb inflation was being unduly
impeded because the safety valve provided by
the discount window was gradually losing its
effective coverage.

A n d

t h e

P a y m e n t s

S y s t e m

F a c e s

D e t e r io r a t io n

The growth of transactions balances at institu­
tions that do not have access to Federal Reserve
clearing services also could lead to a deterio­
ration in the quality of the nation’s payments
system. Reserve balances held at Federal Re­
serve Banks are the foundation of the payments
mechanism because these balances are used for
making payments and settling accounts between



banks. Nonmember deposits at correspondent
banks can serve the same purpose, but as more
and more of the deposits used for settlement
purposes are held outside the Federal Reserve,
the banking system becomes more exposed to
the risk that such funds might be immobilized
if a large correspondent bank outside the Federal
Reserve experienced substantial operating diffi­
culties or liquidity problems. A liquidity crisis
affecting such a large clearing bank could have
widespread damaging effects on the banking
system as a whole because smaller banks might
become unable to use their clearing balances in
the ordinary course of business. The Federal
Reserve, of course, is not subject to liquidity
risk and therefore serves, as the Congress in­
tended, as a safe foundation for the payments
mechanism.
In sum, the major functions of the Federal
Reserve System— to conduct monetary policy in
the public interest, to provide backup liquidity
and flexibility to the financial system, and to
assure a safe and efficient payments mecha­
nism— all have been undermined by recent de­
velopments. These developments include, as
was noted earlier, attrition in Federal Reserve
membership and the spreading of third-party
payment powers to nonbank institutions.
D e c l in e

S y s t e m

i n

M e m b e r s h ip

For more than 25 years, there has been a contin­
ual decline in the proportion of commercial
banks belonging to the Federal Reserve. The
downward trend in the number of member banks
has been accompanied by a decline in the
proportion of bank deposits subject to federal
reserve requirements. As of mid-1978, member
banks held less than 72 percent of total com­
mercial bank deposits, down about 9 percentage
points since 1970. Thus, more than one-fourth
of commercial bank deposits— and over threefifths of all banks— are outside the Federal Re­
serve System.

D u e

t o

t h e

E x c e ssiv e

C o s t

o f

M e m b e r s h ip

The basic reason for the decline in membership
is the financial burden that membership entails.

Statements to Congress

Most nonmember banks and thrift institutions
may hold their required reserves in the form of
earning assets or in the form of deposits (such
as correspondent balances) that would be held
in the normal course of business. Member
banks, by contrast, must keep their required
reserves entirely in nonearning form.
The cost burden of Federal Reserve member­
ship thus consists of the earnings that member
banks forgo because of the extra amount of
nonearning assets that they are required to hold.
Of course, member banks are provided with
services by Reserve Banks, but the value of
those services is insufficient to close the earnings
gap between member and nonmember banks.
The board staff estimates that the aggregate
cost burden to member banks of Federal Reserve
membership exceeds $650 million annually,
based on data for 1977, or about 9 percent of
member bank profits before income tax. The
burden of membership is not distributed equally
across all sizes of member banks. According
to staff estimates, the relative burden is greatest
for small banks— exceeding 20 percent of prof­
its for banks with less than $10 million in
deposits. Further reductions of reserve require­
ments within existing statutory limits would do
little to eliminate the burden for most classes
of banks, especially for the smaller banks.

In e q u it y o f C o st B u r d e n B o r n e
b y M ember B a n k s

The current regulatory structure is arbitrary and
unfair because it forces member banks to bear
the full burden of reserve requirements. Only
member banks must maintain sterile reserve
balances, while nonmember banks, which com­
pete with members in the same markets for loans
and deposits, and thrift institutions, which in­
creasingly are competing in the same markets,
do not face similar requirements. Thus, mem­
bers are at a competitive disadvantage relative
to other depositary institutions. Among the
major countries in the free world, only in the
United States has this legislated inequity been
imposed on the commercial banking system. It
is no wonder that member banks continue to
withdraw from the Federal Reserve.




231

Spread of
T h i r d -P a r t y P a y m e n t P o w e r s

At the same time, the spread of third-party
powers to thrift institutions is further increasing
the proportion of transactions balances outside
the control of the Federal Reserve. Commercial
banks’ virtual monopoly on transactions ac­
counts, maintained in the past because of their
ability to offer demand deposits, is being
eroded. Moreover, recent financial innovations
have led to widespread use of interest-bearing
transactions accounts at both nonbank deposi­
tary institutions and commercial banks. These
developments have increased both the costs and
the competitive pressures on banks, no doubt
compelling members to reevaluate the costs and
benefits of membership and thus playing a sig­
nificant role in membership withdrawals.
The payments innovations since 1970 have
received widespread attention, and include lim­
ited preauthorized “ bill-payer” transfers as well
as telephone transfers from savings accounts at
banks and savings and loan associations, nego­
tiable order of withdrawal (NOW) accounts at
practically all depositary institutions in New
England, credit union share drafts, automatic
transfers from savings deposits, and the use of
electronic terminals to make immediate transfers
to and from savings accounts.
Growth of these transactions-related, inter­
est-bearing deposits has been most dramatic in
recent years. For example, NOW accounts in
New England have grown from practically zero
in 1974 to 8 percent of the region’s household
deposit balances in mid-1978, and one-third of
these NOW deposits are at thrift institutions.
The intense competition engendered by the in­
troduction of NOW accounts has been accom­
panied by an acceleration of member bank attri­
tion in New England to a rate well beyond that
of the nation. This increase in member bank
withdrawals is clearly not just coincidental.
There is no sign that the intense competition
will abate. Savings accounts authorized for au­
tomatic transfer have grown rapidly at commer­
cial banks across the country since their intro­
duction November 1; and in New York, NOW
accounts, which were authorized November 10
for all depositary institutions in the state, have

232

Federal Reserve Bulletin □ March 1979

been increasing vigorously. In addition, the
Federal Home Loan Bank Board has announced
its intention to authorize savings and loan asso­
ciations to offer payment order accounts, or
POAs, which are interest-bearing deposits that
can serve many of the same functions as NOWs.
These developments have caused the distinc­
tions among banks and thrift institutions with
respect to the “ moneyness” of their deposits
to become increasingly blurred and have
prompted the Federal Reserve to reevaluate its
existing measures of the monetary aggregates
and to propose redefinitions to reflect the
changing institutional environment. The most
basic measure of transactions balances, M -l,
clearly should include more than just currency
and commercial bank demand deposits. And the
broader aggregates should be redefined to em­
phasize distinctions by type or function of de­
posit rather than by the institution in which the
deposit is held. Changing the money measures
to reflect economic reality, including the wider
role played by depositary institutions other than
member banks in the monetary system, would
be complemented by legislation for universal
reserve requirements.
L e g isl a t iv e P r o p o sa l s P o in t in
th e R ig h t D ir e c t io n

The board appreciates the priority attention
given by the committee to the important issues
of improving monetary control and reducing the
inequities in markets in which depositary insti­
tutions are competing. The legislative proposals
set forth by Chairman Proxmire and Senator
Tower represent constructive approaches. As
was indicated in the last session of the Congress,
the board prefers the universal approach of S.
85.
This bill proposes universal federal reserve
requirements by establishing reserve ratios ap­
plicable to all deposits at commercial banks and
to transactions balances at thrift institutions. The
definition of transactions accounts includes not
only demand deposits but also the growing
number of new third-party payments accounts.
Such an approach puts all depositary institutions
of similar size on an equal competitive basis
in the market for transactions deposits. The
exemption from any reserve requirement of the



first $40 million of transactions balances at all
institutions and the first $40 million of other
deposits at commercial banks would eliminate
the competitive burden of reserve requirements
on small institutions while increasing slightly
from present levels the proportion of commer­
cial bank deposits subject to federal reserve
requirements. This approach helps to assure the
continuation of the reserve structure needed for
the efficient conduct of monetary policy.
Under this legislation thrift institutions with
reservable transactions accounts and all com­
mercial banks would have access to the Federal
Reserve discount window. The Federal Reserve
could then act as a “ lender of last resort” to
a broader class of depositary institutions and
thereby enhance the overall safety and
soundness of the depositary system, as well as
providing more flexibility to financial institu­
tions to respond to changing monetary policy.
The bill also gives all depositary institutions
access to other Federal Reserve services. With
the application of an appropriate price schedule
for such services, this action would improve the
efficiency of the payments mechanism, which
underlies all of the nation’s economic transac­
tions.
But it should be emphasized that open access
to system services, desirable as it may be, is
only practicable if the membership problem is
resolved, as S. 85 does in principle. Without
resolution of the membership problem, open
access for all institutions at explicit prices would
only exacerbate the problem and lead to even
greater reduction in the Federal Reserve’s de­
posit coverage, since services would be avail­
able to nonmembers that would not bear the
burden of sterile reserves. Thus, as Senator
Tower has recognized in his bill, a voluntary
approach to solving the membership problem
must make it clear that the Federal Reserve has
the authority to continue to restrict access to
system services.
B u t C e r t a in M o d if ic a tio n s of

S . 85 A r e D e s i r a b l e
The various features of S. 85 redress much of
the growing competitive inequity among finan­
cial institutions and provide a framework for
enhancing the implementation of monetary pol­

Statements to Congress

icy. However,, we believe that certain modifi­
cations are desirable in order to exploit more
fully the potential for improved monetary con­
trol offered by this approach and to strike a
better balance among the legitimate concerns
and interests of the various constituencies af­
fected by this legislative compromise.
First, while the $40 million exemptions in this
legislation would mean that the proportion of
deposits subject to direct Federal Reserve con­
trol would increase slightly from current levels,
we feel that there are important benefits for
monetary control in increasing that coverage
even further. The board has a proposal that will
provide additional coverage and hence further
enhance monetary control, while at the same
time preserving for all depositary institutions the
earnings protection contained in S. 85.

233

size of the earnings participation account would
be reduced correspondingly.
The return on this account would be equiva­
lent to the average return on the Federal Re­
serve’s portfolio, which includes both short- and
long-term securities. Some years this return
might be higher than banks would earn on other
assets— which are likely to be a combination
of loans and liquid instruments— and some years
less. On average, over time, there should be
little difference.
It should be noted that Senator Tower’s S.
353 does provide for establishment of an earn­
ings participation account. However, the esti­
mated cost to the Treasury of this bill is consid­
erably greater than other proposals being con­
sidered.
Y ie ld s E x p a n d e d C o v e r a g e , M o re

Pa r tic ipa tio n in
Fe d e r a l R e se r v e E a r n in g s for
E x e m p t e d D e po sits

The board’s proposed modification involves es­
tablishment of an “ earnings participation ac­
count,” which would result in more institutions
maintaining balances at the Federal Reserve;
however, their earnings capacity would be pro­
tected because the earnings participation ac­
count would accrue interest at the rate earned
by the Federal Reserve on its portfolio of se­
curities. To reduce the recordkeeping burden,
small institutions could be excluded from having
to hold this account. This exclusion could
amount to the first $10 million of transactions
deposits at each institution and $10 million of
other deposits at each commercial bank.
For banks, with respect to all deposits, and
for other depositary institutions, with respect to
transactions deposits, their earnings partici­
pation account would be held against deposits
above the $10 million exclusion and up to the
amount of the exemption level, which would
be $40 million in the case of S. 85. The size
of this earnings participation account for each
deposit category would equal the reserve ratio
applicable to deposits in this category times the
amount of deposit liabilities between $10 mil­
lion and the exemption level. To the extent that
an institution holds vault cash in excess of its
required reserves on nonexempt deposits, the



E a r n in g s Pr o te c tio n

In a comparison of the impacts of the board’s
proposal with S. 85 and with the current reserve
system, it can be seen that the board’s modifi­
cation has the advantage of increasing the
proportion of commercial bank transactions de­
posits covered by an account at the Federal
Reserve— from the present 73 percent, and
about 75 percent under S. 85, to 94 percent.
This would be accomplished even though the
$10 million exclusion would mean that 45 per­
cent of all commercial banks, as well as virtu­
ally all thrift institutions, would not be required
to hold any account at the Federal Reserve.
It is worth emphasizing that now is the ap­
propriate time to bring transactions-type depos­
its at thrift institutions under reserve require­
ments. It will be several years, at least, before
any significant number of thrift institutions
would actually have to hold nonearning reserves
at the Federal Reserve. Currently, less than a
dozen thrift institutions have deposits in excess
of the $40 million exemption of S. 85, and all
have vault cash much greater than the reserve
requirement that would apply to such deposits.

R eserve R e q u ir e m e n ts

While the board does not strongly object to the
particular reserve requirement ratios specified in
S. 85, it would, assuming the other elements

234

Federal Reserve Bulletin □ March 1979

of the proposal are adopted, prefer somewhat
lower ratios, on average. However, average re­
serve requirements on demand and time and
savings deposits at commercial banks would
provide for more equitable treatment, as thrift
institutions are not subject to any reserve re­
quirements on nontransactions deposits under
the proposed bill.
The exact set of reserve ratios that would
balance equity considerations against the loss
of Treasury revenue and the need for flexible
and effective instruments of monetary policy is,
of course, a matter of judgment. There is much
to be said for complete equality of treatment
between banks and thrift institutions with re­
spect to reserve requirements. This approach
would argue, on the one hand, for reducing
further the reserve requirements on all nontrans­
actions time and savings deposits at commer­
cial banks, even to zero. But such reductions
would be very costly to the Treasury and would
also eliminate reserve requirements on time de­
posits as a policy instrument; the flexibility to
vary those requirements has proven useful in
the past as a means of influencing banks’ liabil­
ity management and international flows of
funds.
Complete equality of treatment could also be
obtained, on the other hand, by imposing the
same reserve requirements on time and savings
deposits at thrift institutions as those borne by
banks. But this has the disadvantage of being
very costly to thrift institutions, which are, in
any event, coming under earnings pressure in
the current period of relatively high short-term
interest rates.
Thus, the board believes that the reserve
requirement structure suggested in the House
bill proposed by Representative Reuss (H.R. 7)
may be a reasonable compromise. The board
also would not oppose an increase in the ex­
emption level to the $50 million specified in
H.R. 7, as long as the modified bill included
the establishment of an earnings participation
account. With lower reserve requirements and
a higher exemption level, more commercial
banks would effectively be on the same footing
as the thrift institutions with which they com­
pete, in the sense that neither would be forced
to hold non-interest-earning reserves against
their deposits. The number of banks holding



sterile reserve balances at Federal Reserve
Banks would be sharply reduced from the cur­
rent level of 5,664 to an estimated 656 under
the board modification. This number is some­
what lower than the estimated 796 banks that
would be required to hold nonearning reserves
at Federal Reserve Banks under S. 85.
The reserve requirement structures of S. 85
and H.R. 7 are:
D eposit category

R eserve ranges (percent)
S. 85

Transactions
deposits ................
Short-term time
deposits ...............
Savings d e p o s its ___
Long-term time
deposits ................

H .R . 7

12 to 14
(13 initially)
4 to 8
(6 initially)
1 to 5
(3 initially)
1/2 to 2
(1 initially)

8 to 10
(9 .5 initially)
3 to 8
(8 initially)
1 to 3
(3 initially)
1 to 3

(1 initially)

The board believes that it is particularly impor­
tant to have a somewhat lower reserve require­
ment on transactions deposits than under S. 85
so as to minimize the incentive for institutions
to develop roundabout methods for avoiding the
requirement and thereby add to the complexity
of administering the reserve structure.
E f f e c t
B a n k

o n

D e p o s it

C o v e r a g e

a n d

E a r n in g s

The board’s modified version would provide a
greater earnings benefit to the banking system
than S. 85. A listing shows individual member
and nonmember commercial banks and mutual
savings banks that would be subject to federal
reserve requirements or would be required to
hold an earnings participation account under S.
85 as modified by our proposal. This listing is
similar to that part of the Committee print,
Summary of the Monetary Policy Improvement
A c t of 1979 , which shows the banks covered

under S. 85. Banks are added to the list under
the board’s proposal when they have deposits
above the excluded level but below the exemp­
tion level of S. 85. These added banks would
hold an earnings participation account at the
Federal Reserve and thus expand the Federal
Reserve’s coverage of deposits, but they would
not hold any nonearning required reserve bal­
ance at Reserve Banks because their deposits

Statements to Congress

are below the exempted level. The list shows
the amount of the earnings participation account
each institution would hold. If this amount is
zero, the bank at the end of 1977 had sufficient
vault cash in excess of its required reserves that
it would have had no earnings participation
account.
The additional institutions holding accounts
at the Federal Reserve would keep the earnings
benefit of the exemption level proposed by S.
85, since they would participate in the Federal
Reserve’s earnings on funds that they would be
required to maintain in the earnings participation
account. Moreover, the combination of the
higher exemptions and the different structure of
reserve ratios in the modified bill means that
any institution required to hold sterile reserves
would have its burden reduced relative to that
of S. 85. This structure enhances the earnings
capacity of all institutions and minimizes the
competitive burden on individual institutions.
In sum, the board proposal would have the
clear advantage of expanding significantly the
coverage subject to reserve requirements,
thereby enhancing the implementation of mone­
tary policy. At the same time, it would increase
the earnings benefit for depositary institutions
over those provided in S. 85 at a modest addi­
tional cost to the Treasury. Finally, exclusion
of the first $10 million of transactions-type de­
posits and $10 million of other deposits from
any reserve requirement would reduce the rec­
ordkeeping burden of the proposal with rela­
tively small policy impact.
Tr e a s u r y R e v e n u e s

Based on the 1977 level of deposits and assum­
ing all the provisions of the bill had been in
effect for some time, it is estimated that the
provisions of S. 85 would reduce Treasury rev­
enues by about $60 million. This estimate
allows for recapture by the Treasury through tax
payments by banks and stockholders of a portion
of the earnings benefits accruing to banks.
The board’s modification would have a
somewhat larger impact on Treasury revenues
than S. 85 but still keeps the cost within rea­
sonable bounds. It is estimated that the net cost
to the Treasury would be about $173 million.



235

It must be stressed, however, that in the
absence of legislation to stop membership attri­
tion, the Federal Reserve will lose increasing
amounts of revenue over time as member banks
leave the system. Thus, after making allowance
for the loss of Federal Reserve revenues from
continued attrition that would otherwise be oc­
curring, these proposals would result in little,
if any, net cost to the Treasury in the future.
Moreover, in the first three years after the pro­
gram is implemented, the Treasury will not
incur any loss in revenue because the Federal
Reserve intends to transfer a sufficient portion
of its earned surplus to maintain net Treasury
revenues during this period.
A series of amendments to S. 85 would
implement the various aspects of the board’s
proposed modification.
A d d it io n a l M o d if ic a tio n s

Another modification proposed by the board
concerns the pricing of Federal Reserve System
services. The system has already expended
considerable effort in formulating pricing prin­
ciples and in developing pricing alternatives for
the services we provide. A preliminary schedule
of prices for check and automated clearinghouse
services was announced last November. Price
schedules for other Federal Reserve services,
such as coin and currency services, wire
transfers, and the safekeeping of securities, are
under consideration. Although we intend to im­
plement service charges as rapidly as we can
after the membership problem is solved, we
believe that the July 1, 1980, implementation
date set in S. 85 may not afford sufficient
flexibility to develop a well-designed system.
An amendment would eliminate the fixed date
and thus provide the necessary flexibility. Ad­
ditional, more technical amendments pertaining
to reporting requirements, access to the discount
window, and the application of reserve require­
ments to foreign obligations of banks and con­
forming other provisions of the Federal Reserve
Act, also are attached for the committee’s con­
sideration.
Mr. Chairman, thank you for the opportunity
to present the Federal Reserve’s view on the
Monetary Policy Improvement Act of 1979.

236

Federal Reserve Bulletin □ March 1979

Statement by J. Charles Partee , M em ber , Board
of Governors of the Federal Reserve System ,
before the Committee on Banking , Housing and
Urban Affairs and the Committee on Govern­
mental Affairs , U.S. Senate , February 28,
1979.

I appreciate the opportunity to appear before the
committees today to present the views of the
Board of Governors of the Federal Reserve
System on S. 332. This bill would consolidate
the bank supervisory functions of the Comp­
troller of the Currency, the Federal Deposit
Insurance Corporation, and the bank and bank
holding company supervisory functions of the
Federal Reserve into a newly created Federal
Bank Commission.
In September 1977, I testified for the board
in opposition to a similar bill, S. 684, before
the Senate Banking Committee. The board op­
posed that bill because it saw no persuasive
reasons for consolidating the three regulatory
agencies. Moreover, the board believed that
consolidation would involve a number of dis­
tinct disadvantages that would outweigh any
likely benefits. Today we continue to oppose
agency consolidation, as proposed in S. 332,
for essentially the same reasons.
The p r i m a r y o b j e c t i v e of b a n k r e g u l a t i o n is
to maintain a safe and sound banking system.
Therefore, the best measure of the performance
of the present agency structure is the record of
banking stability in this nation over the years.
In my judgment, the record is very good. During
the last several decades there has been only one
brief period— during and immediately following
the deep recession of the mid-1970s— when the
banking system encountered any significant
problems. Even then, the efforts of the three
banking agencies helped to contain emerging
problems so that the economy was not signifi­
cantly affected. Since then, the condition of the
banking system has strengthened, and the prob­
lems of the mid-1970s are now largely behind
us.
This excellent record of banking stability is
certainly due in large part to good management
of American banks. But it also indicates that
the present agency structure has been effective.
Indeed, it is hard to argue that this nation could



have compiled this enviable record of banking
stability if the present agency structure had
serious flaws.
Proponents of agency consolidation have ar­
gued that the present statutory division of re­
sponsibilities among the three federal banking
agencies is complex and often overlapping.
There is, of course, some truth to this charge.
But the three agencies have worked out nu­
merous arrangements over the years that have
eliminated most of these potential overlaps. For
example, while all three agencies have the stat­
utory authority to examine national banks, only
the Comptroller of the Currency actually does
so.

Proponents of agency consolidation also have
criticized the three agencies for having incon­
sistent policies and procedures and have argued
that agency consolidation would end this prob­
lem. Historically, there have been differences
in agency practices. However, in the last several
years the agencies have made a concerted effort
to increase the consistency of agency policies
and procedures. This effort has been spear­
headed by the Interagency Coordinating Com­
mittee, which is composed of principals of the
agencies, and the Interagency Supervisory
Committee, which is made up of top supervisory
staff o f

th e

ag en cies.

Recent

ac tio n s of th ese

interagency groups have included the develop­
ment of a uniform system for rating banks, a
uniform approach for reviewing and comment­
ing on the country risk element in bank lending
abroad, a uniform set of regulations and exami­
nation procedures for ensuring compliance with
the Community Reinvestment Act, and an in­
teragency system for evaluating large shared
national credits.
In testimony beginning in the mid-1970s, the
board recommended that the Congress establish
a Bank Examination Council. This council
would formalize existing cooperative arrange­
ments among the federal banking agencies and
assure progress toward greater uniformity in
examination principles, procedures, and train­
ing. Last year the Congress accepted the board’s
recommendation and established the Federal Fi­
nancial Institutions Examination Council. The
council, which also includes representatives
from the Federal Home Loan Bank Board and

Statements to Congress

the National Credit Union Administration, will
come into existence this March 10. Council
members already are working on the group’s
initial organization and administrative proce­
dures, and the council will begin to tackle a
variety of substantive issues promptly after it
is established.
The board believes that the Congress was well
advised last year to create the council and to
avoid agency consolidation. Now that the coun­
cil is about to become operational, we urge that
the Congress give the council a chance to per­
form.
In the board’s judgment, creation of the Fed­
eral Bank Commission at the present time would
entail some particularly unfortunate conse­
quences. Within the last year or so, the Con­
gress has passed a massive amount of banking
legislation, including the Financial Institutions
Regulatory Act, the International Banking Act,
and the Community Reinvestment Act. In total,
the banking legislation enacted by the 95th
Congress represents the largest amount of such
legislation passed by any Congress since the
1930s. At present, both the banking community
and the banking agencies have the sizable task
of digesting and implementing all of this com­
plex legislation. The banking agencies, for ex­
ample, must write new regulations, design new
report forms and establish new enforcement
procedures. In this hectic environment, the
board believes that the creation of the Federal
Bank Commission— with all of the temporary
dislocations that this would inevitably in­
volve— would be extremely disruptive. Such a
reorganization could impair agency operations
and adversely affect the implementation and
enforcement of the new legislation.
In testimony during the last several years, the
board has cited other problems with agency
consolidation of the sort proposed in S. 332.
Probably the greatest problem is that these bills
would break the present link between bank
supervision and monetary policy by removing
the Federal Reserve from bank supervision. In
the board’s judgment, breaking this link could
at times impair the Federal Reserve’s ability to
carry out monetary policy effectively.
A primary objective of bank supervision is
to maintain a safe and sound banking system.



237

Supervisors normally seek to accomplish this
objective by restraining excessive risk taking by
banks. The primary objective of monetary pol­
icy is to foster financial conditions that promote
economic growth, full employment, and stable
prices. The Federal Reserve seeks to accomplish
this objective through measures that influence
the pace of expansion in money and credit and
impact on the cost and availability of funds.
While the objectives of supervisory policy and
monetary policy are different, they are clearly
interrelated. For example, supervisory actions
that require banks to augment their capital posi­
tions may impact monetary policy by slowing
the rate of growth of bank credit or reducing
the availability of bank funds to particular bor­
rowers. Moreover, decisions affecting the
structure of bank holding companies or interna­
tional banking organizations will impact on the
performance of credit markets and the interna­
tional flow of funds. These results, in turn, can
influence how financial markets and the balance
of payments respond to monetary policy actions.
While supervisory policy can affect monetary
policy, monetary policy can also have conse­
quences for supervisory policy by altering the
financial environment in which banks operate.
For example, a restrictive monetary policy tends
to raise interest rates, producing what may be
substantial declines in the market value of cer­
tain bank assets. Monetary policy, by restricting
the growth in money and credit, can also place
banks under liquidity pressure and adversely
affect the financial flexibility and prospects of
certain bank borrowers. Conversely, during pe­
riods of monetary ease, interest rates will tend
to decline— putting pressure on bank earn­
ings— while banking resources may grow so
rapidly that bank capital ratios deteriorate. The
conduct of monetary policy thus must always
be carried out with the implications for bank
performance clearly in mind.
On the basis of its experience, the board is
convinced that bank supervision and monetary
policy are closely and inevitably linked, and that
supervisory policy and monetary policy should
not be determined in isolation. One of the vir­
tues in the existing agency structure is that the
Federal Reserve is involved in bank supervision.
As a result, there is assurance that economic

238

Federal Reserve Bulletin □ March 1979

stabilization considerations enter into the for­
mulation of bank supervisory policy and that
bank soundness is taken into account in the
formulation of monetary policy.
The board is aware that S. 332 contains
certain provisions designed to bring about a
degree of coordination between supervisory
policy and monetary policy. This would be
accomplished by permitting the Chairman of the
Federal Reserve Board to initiate procedures for
rulemaking or the issuance of a policy statement
whenever he determines that an action or activ­
ity of the Federal Bank Commission may have
an impact on monetary policy. The proposed
statute would also allow the Chairman of the
Federal Reserve to participate in an interpreta­
tion or the commencement of an adjudication
by the commission. While these provisions in
S. 332 give recognition to the close link between
bank supervision and monetary policy, the
board seriously doubts that they would prove
to be effective.
First, S. 332 does not provide for any mech­
anism assuring that the Federal Reserve is ade­
quately and promptly informed of bank super­
visory policy actions about to be taken by the
Federal Bank Commission nor of the banking
practices— or changes in banking practices—
with which they are intended to deal. Without
such a mechanism, the Chairman of the Federal
Reserve may not become aware of the monetary
policy implications of certain commission ac­
tions.
Second, even if the Chairman of the Federal
Reserve were to call for a rulemaking or policy
statement proceeding, there is no assurance that
the commission would give sufficient weight to
monetary policy considerations. The commis­
sion would be responsible solely for maintaining
a sound banking system and would be prone
to overemphasize this public policy objective.
The tendency to downgrade monetary policy
considerations would be particularly likely if
there were no Federal Reserve Board repre­
sentation on the commission. Such repre­
sentation was provided for in the 1977 bill, but
not in S. 332. Once the link between bank
supervision and monetary policy is broken at
the policymaking level, we believe there will
be serious risk that monetary policy could be
impaired.



The major effect of S. 332, of course, is
intended to improve the overall character and
quality of bank supervision. But it is by no
means clear to the board that agency consoli­
dation, as proposed in S. 332, would be entirely
favorable. In fact, there are a number of reasons
for believing that consolidation could have per­
verse consequences.
First, a single agency would be more inclined
to abrupt shifts in supervisory policy— shifts
that could destabilize the banking system. This
is particularly true when, as in S. 332, the
chairman is given broad independent power over
the activities of the commission’s staff and, at
the same time, serves at the pleasure of the
President. One of the advantages of the present
tripartite system is that it contains certain checks
and balances that tend to guard against such
extreme shifts.
Second, there has been considerable concern
expressed by the Congress and others in recent
years about regulators becoming captives of the
industries that they regulate. While one should
not assume that a single bank regulatory agency
would necessarily be unduly influenced by the
banking industry, agency consolidation would
surely tend to increase that risk.
Third, agency consolidation could result in
suppressing innovation in the banking industry.
One of the prime concerns in many regulated
industries is that the sole regulator may, by its
behavior, serve to stultify progress in the in­
dustry. In contrast, one of the advantages of
the tripartite agency structure in banking is the
opportunity for experimentation. Under the
present system, one regulatory agency can allow
a certain degree of experimentation in the offer­
ing of new services. When and if it becomes
clear that such services are of real benefit to
the public and do not involve undue risks, the
new practices will inevitably spread throughout
the banking system.
Fourth, I believe that the removal of the
Federal Reserve from bank supervision, as pro­
posed in S. 332, would adversely affect the
quality of bank supervision. As the nation’s
central bank, the Federal Reserve brings to bank
supervision a broad perspective and an in-depth
knowledge of the workings of the economy that
should not be lost in the development and con­
duct of supervisory policy.

Statements to Congress

239

Proponents of the Federal Bank Commission
seem to imply that agency consolidation would
produce substantial operating efficiencies. The
board doubts that this would occur because
almost all current agency operations will still
have to be performed by the new commission
in order to maintain the present quality of bank
supervision. It should be noted that the Comp­
troller General, after reviewing the existing
structure of federal bank regulation, indicated
in his report to the Congress that a single agency
would not be likely to provide any substantial
cost savings.
As indicated earlier, the board believes the
banking agencies have made excellent progress
in coordinating their policies and procedures
over the last several years. But we also recog­
nize that there is still room for further improve­
ment in some areas, such as in the integration
of holding company and international examina­
tions. We are confident that this additional
coordination can be accomplished through the
new examination council and other existing or­
ganizational arrangements.
In conclusion, I would like to reiterate the

board’s view that passage of S. 332 would not
be in the public interest. First, the proposal
would replace the present agency structure that
has worked well for over four decades with a
single agency that would be an unknown. Sec­
ond, S. 332, by removing the Federal Reserve
from bank supervision, would break the link
between bank supervision and monetary pol­
icy— to the detriment of both. Third, the cre­
ation of the Federal Bank Commission at the
present time could seriously disrupt the imple­
mentation of the major banking legislation
passed by the previous Congress. And fourth,
though it might create the appearance of more
order on a table of organization, the proposed
Federal Banking Commission would not save
any substantial amount of expenditure, while it
would pose all of the risks that an industry-encompassing superagency entails. In sum, the
board believes that the better course is to retain
the present agency structure and to give the
newly created examination council a chance to
promote the greater uniformity in examination
procedures and supervisory policy that is the
principal aim of S. 332.
□

Statement by Nancy H. Teeters , M em ber,
Board of Governors of the Federal Reserve
System , before the Committee on Banking ,
Housing and Urban Affairs , U.S. Senate ,
March 2, 1979.

vide credit to groups that would otherwise en­
counter difficulties in obtaining accommodation
and/or to enable borrowers to obtain credit at
a lower cost than they would otherwise have
to pay. During periods of credit stringency, for
example, loan guarantees have been of major
help to families purchasing homes. The creditrelated activities of the government, moreover,
have fostered many worthwhile developments
in financial markets. The equal monthly install­
ment payments of a home mortgage, for ex­
ample, are a federal innovation— one so suc­
cessful that private lenders have fully adopted
it.
It should be recognized, however, that while
federal credit programs can help promote social
objectives that have wide public support, these
benefits are not obtained without cost. The lower
interest costs paid by groups receiving credit
can, in effect, be viewed as a form of subsidy
provided by the government. Moreover, since
the supply of credit is not unlimited, when

I am pleased to be here today to comment on
the administration’s proposals for improving
control over federal credit programs. I wish to
emphasize that my opinions and analyses are
my own. The Board of Governors of the Federal
Reserve System has not taken a position on this
issue. However, I have had a continuing interest
in this subject for several years. In fact, I
personally consider the lack of unified congres­
sional control over federal credit allocation ac­
tivities as a major loophole in the congressional
budget process.
The provision of credit assistance through
direct loans, guarantees, and other means is, of
course, a legitimate activity of the federal gov­
ernment. It has traditionally been used to pro­



240

Federal Reserve Bulletin □ March 1979

certain groups obtain credit with federal assist­
ance, other groups find it more difficult to do
so.
There is general agreement, I believe, that
procedures currently being followed to evaluate,
authorize, find, and account for the direct lend­
ing and credit assistance activities of the federal
government are seriously deficient. Because of
these deficiencies, the Congress in its deliber­
ations is able to make only an imperfect assess­
ment of the relative value of individual credit
programs and is unable to consider the impact
of all such programs on the economy’s alloca­
tion of resources. If “ off-budget” credit assist­
ance and preferential tax treatment were given
the same attention as direct federal expendi­
tures, for example, the extent of federal assist­
ance to particular sectors would look much
different than it does when direct loans are
considered alone. The amount of total assistance
to agriculture and housing is approximately
double the volume of direct loans made to these
sectors. Moreover, the citizens of our country
are not being properly informed as to the extent
of the government’s involvement in credit allo­
cation.
The magnitude of federal credit activities has
become quite large in recent years, and rapid
further growth is in prospect. Altogether, loans
by fully owned federal agencies and guaranteed
loans outstanding amounted to about $315 bil­
lion at the end of the last fiscal year; just 10
years ago the level was only $150 billion. In
addition, loans held by agencies operating under
federal sponsorship totaled $127 billion at the
close of last year, up $100 billion from the level
10 years earlier. These credit activities, more­
over, are expected to continue to grow rapidly,
with loans under all programs projected to in­
crease around $50 billion in fiscal years 1979
and 1980. Such activity is expected to account
for about one-sixth of the total net funds raised
in credit markets during these periods.
Only a small proportion of this credit activity
is recorded as outlays in the unified budget.
Loan guarantees, of course, do not involve an
expenditure of funds and are thus not reflected
in the unified budget, except in the cases where
appropriations are required to cover defaulted
loans. Credit extended by sponsored credit



agencies is also not recorded in the budget since
these agencies are privately owned. However,
the liabilities issued by these agencies to finance
their operations have an implicit (and in some
cases explicit) government guarantee. And al­
though the administration is proposing to in­
clude these activities only in a credit information
system and not in the credit control system, the
Congress should take cognizance of them in the
overall evaluation of federal credit assistance.
Finally, only a comparatively small proportion
of the direct lending by fully owned agencies
of the government is shown in the budget,
because many of their activities have been
placed “ off budget” by the Congress.
I am personally concerned that “ guaranteed
credit” has been extended into new areas that
are not necessarily appropriate. The original
uses of guaranteed credit were in the areas of
home and farm mortgages involving large num­
bers of relatively small loans secured by a
physical asset. We now have proposals or pro­
grams to fund a large number of unsecured small
loans— such as student loans— and other pro­
posals or programs to assist a small number of
very large loans— such as “ synfuel.” The na­
ture of guaranteed credit or proposals for such
credit has changed markedly.
Another element that clouds the picture of
federal credit activities is the operation of the
Federal Financing Bank (FFB). The FFB uses
funds borrowed directly from the Treasury to
support the lending activities of federal agencies
and to acquire certain types of guaranteed loans.
In carrying out this function, the FFB has suc­
cessfully performed the function it was estab­
lished to do, since it has eliminated the conges­
tion that often occurred when the agencies at­
tempted to finance their operations directly in
the credit markets. In the process, however, it
has reduced the accountability of federal credit
programs, because lending activities are attrib­
uted to the FFB rather than to the agency origi­
nating the transaction.
These problems of accountability are matched
by imperfections in the congressional review
process. All credit programs, of course, have
been authorized by law and are subject to over­
sight by the Congress. In the case of some loans
made by “ on-budget” agencies, this oversight

Statements to Congress

is conducted annually. But for most programs
there is no annual review, and authorizations
to engage in activities may be given for several
years. Also, limits that are set in most cases
are stated in terms of net credit extended (or
loans guaranteed) rather than in terms of the
gross volume of such lending activity.
The proposals developed by the administra­
tion to improve the way federal credit programs
are controlled in the budget process are gener­
ally sound in my view. In particular, I strongly
support the proposal for the establishment of a
federal-credit-control system that would include
all credit activities by agencies fully owned by
the federal government. This system would be
presented by the administration and considered
by the Congress in concurrence with the regular
budget process, and thus all programs would
be subject to annual review and control. I also
agree that this process should set an aggregate
ceiling on all credit programs and binding limi­
tations on each direct-loan and loan-guarantee
program. These deliberations should consider
how each program will affect the ceiling for all
credit programs and how it will integrate with
other credit and noncredit programs designed
to accomplish specific budget functions.
Moreover, the process of evaluation should
be made within the framework of the overall
demand for credit. Flow of funds statistics are
now available, and projections of “ flow of
funds” are legion— not as pervasive as projec­
tions of gross national product, but plentiful.
This will serve to emphasize that the nation’s
credit supply has limits and will indicate the
extent to which it is used by the government,
directly or indirectly.
I also agree that a program’s gross lending
(or extension of guarantees) should be a major
concern, as well as the net increase or decrease
in total commitment in each functional area.
And the proposal that sales of loans or certifi­
cates of beneficial ownership in pools of loans
should be recorded as a form of borrowing
rather than as a negative outlay is also well
advised.
I find myself in general agreement with most
of the administration’s other proposals. In par­
ticular, the administration has indicated that, as
part of its control system, it is considering a



241

requirement that would call for FFB outlays and
budget authority to be attributed to the agency
and function where loans are originated. This
seems a sensible approach to me.
I recognize that if such an approach were
adopted, agencies may be tempted to obtain
funds directly in the credit markets. If this were
to occur, the benefits being provided by the FFB
in reducing agency demands in credit markets
would be lost. Thus, it may be necessary to
develop guidelines to discourage agencies from
guaranteeing obligations to be sold directly to
the public, if these obligations are of the same
nature as those presently being acquired by the
FFB. The inclusion of all loan-guarantee pro­
grams in the credit-control system and the im­
position of limitations on these programs, of
course, will reduce incentives to channel loan
guarantees away from the FFB. Safeguards will
also have to be established to constrain agencies
from turning to other arrangements— such as
long-term leasing agreements and price-support
agreements— which can be used to achieve the
same purpose as loan guarantees. The budgetcontrol system being prepared by the adminis­
tration does not have provisions for the estab­
lishment of such constraints, and it will thus
be necessary to develop procedures to achieve
this objective.
One of the administration’s proposals in the
scorekeeping area should not be adopted in my
view. Rather than continuing to include direct
lending of federal agencies in the budget, I
believe it would be advisable instead to take
these loans out of the unified budget and to
record them only in the credit-control budget.
Direct loans are not the same as other govern­
ment outlays, since financial assets are acquired
in conjunction with the dispersal of funds. In
addition, direct loans appear to have essentially
the same implications for economic stabiliza­
tion, resource allocation, and income distri­
bution as do loan guarantees. In recommending
the removal of direct loans from the unified
budget, I am, of course, assuming that coinci­
dentally the federal credit budget will be put
into place, so that there would be no loss in
scrutiny and control over these various programs
by the Congress and the administration. Cer­
tainly, the direct lending programs should not

242

Federal Reserve Bulletin □ March 1979

be removed from the budget until these alterna­
tive budgetary arrangements are working.
While a broad range of questions pertaining
to the budgetary treatment of federal credit
activities are covered by the administration’s
proposals, I believe there remain important
issues that require further study. I wish to em­
phasize the great need to develop guidelines for
determining the trade-offs between accomplish­
ing social objectives through direct outlays, on
the one hand, and through federal credit pro­
grams on the other. Similar criteria need to be
developed to provide guidance for choosing
between giving credit assistance through direct
loans or through guarantees. Because guaran­
teed loans are specifically exempt from the bud­
get control act, there has been a proliferation
of questionable “ loan guarantee” proposals and
programs.
In addition to these broad issues, there is a
need to study the appropriate budget treatment
of nonrecourse loans, such as those made by
the Commodity Credit Corporation to farmers.
Since these loans need not be repaid and in
many cases are not repaid, there is the ongoing
question as to whether these transactions should
be treated as outlays or as loans at the time the
funds are dispersed. Similar questions as to
appropriate budgetary treatment can also be
raised in connection with other direct nonre­
course loan programs, especially foreign loans.
For example, it is far from clear how to account
for funds dispersed as loans under programs of
International Development Assistance and In­
ternational Security Assistance. The ultimate
collectibility of such loans depends on interna­
tional developments, which are, of course,
highly uncertain.
Given the importance of these unanswered
questions, I believe it would be advisable to
appoint a new budget commission to study these
questions and other related issues. Such a com­

mission study would not, in my view, create
any need to delay the implementation of the
administration’s proposals. Rather, it would be
advisable to push ahead and set up the new
control system, and then make amendments to
this system should the commission study indi­
cate that procedures need to be augmented or
changed.
It is to be hoped that establishment of an
effective framework for appraisal, control, and
scorekeeping of federal credit programs will
lead to proper evaluation of new programs and
activities to prevent such activities from falling
outside the annual budget process. Past experi­
ence, however, suggests that the mind of man
is highly inventive in this regard. Whatever
restrictions are put on fiscal activities, or credit
allocation, ways will be found to circumvent
them. Thus, I would further recommend that
the Congress fully consider the advisability of
establishing formal rules to require the recon­
vening, at regular intervals, of a budgetary
commission to review conceptual and measure­
ment problems that may have developed with
respect to the unified budget and the credit
budget.
Allocation of credit either directly through
government loans or indirectly by federal guar­
antees (regardless of whatever inventive name
is applied) falls between the traditional concepts
of “ fiscal” and “ monetary” policy. It is a gray
area between the two. The decision, I believe,
is basically a fiscal one, but if the amount of
priority credit assigned is too large a part of
the total available supply of funds, there inevi­
tably will be impacts on general interest rates
and the conduct of monetary policy. Clearly the
allocation of credit on better-than-market terms
is a federal activity that creates a preferred status
for certain groups in the credit market. Govern­
ment has a responsibility to make sure that this
activity is serving the public interest.
□

Statement by J. Charles Partee , M em ber , Board
of Governors of the Federal Reserve System ,
before the Subcommittee on Domestic Monetary
Policy of the Committee on Banking, Finance
and Urban Affairs , U.S. House of Repre­
sentatives , March 5, 1979.

I appreciate the opportunity to appear today to
comment for the Board of Governors of the
Federal Reserve System on the two bills the
subcommittee is considering that deal with the
authority of the U.S. Treasury to borrow di­
rectly from the Federal Reserve System. H.R.




Statements to Congress

2281 would extend the existing authority for
five years. H.R. 421 would substitute instead
a new authority that permits the Treasury to
meet its emergency cash needs by borrowing
securities from the Federal Reserve for resale
in the secondary market.
Last June I met with this committee to explain
why the board strongly supported a bill then
being considered, which was similar to H.R.
2281 in that it called for a simple extension of
the system ’s existing authority to purchase U .S.
government obligations directly from the Treas­
ury in amounts up to $5 billion. Because the
board’s view on this issue has not changed, I
would like to resubmit that earlier testimony for
the record.1 The major points offered then re­
main equally applicable today.
Since the Treasury now often relies on shortdated cash management bills to cover low points
in its cash balance prior to key income tax
payment dates, the direct-borrowing authority
of the Treasury has come to be used only
infrequently. In fact, since 1975, the authority
has been activated only once. The Treasury had
made more use of the facility in earlier years,
usually to offset cash drains just before funds
were available from quarterly income tax pay­
ments. But the direct-borrowing authority is still
important as a standby facility to be used in
emergency situations. Such an arrangement
provides assurance that the Treasury will be able
to honor its commitments without delay if un­
expected developments suddenly shrink its cash
holdings. The Treasury, at its own initiative,
can quickly arrange to borrow from the Federal
Reserve, even on the same day of the request.
It continues to be the judgment of the board
that this direct-borrowing authority has func­
tioned well whenever needed and that the facil­
ity contains prudent safeguards and limits. In
addition to the $5 billion limit on drawings
contained in the legislation, the Federal Open
Market Committee (FOMC) has imposed an
operating ceiling of $2 billion on purchases that
can be made by the manager of the System
Open Market Account without special authori­
zation from the FOMC.
H.R. 421 would substitute a more elaborate

1. Federal Reserve Bulletin, vol. 64 (July 1978), pp.
542-43.



243

technique for providing the Treasury with funds
in the event of an unexpected need. In such
instances, this alternative proposal would permit
the Treasury to borrow securities from the Fed­
eral Reserve for reselling into the open market.
The Treasury would be required to repay the
borrowed securities within six months. The bill,
as now written, does not limit the amount of
securities that could be borrowed, nor does it
specify whether the value of the securities bor­
rowed would represent an addition to the public
debt— two issues that require clarification. We
assume that it is not the intent of the bill to
give the Treasury a way of circumventing the
federal debt ceiling through large-scale borrow­
ing and resale of securities from the Federal
Reserve’s portfolio. And we are concerned
about the apparently open-ended grant of power
to the Secretary of the Treasury to borrow
securities from the Federal Reserve without
prior consultation or approval from the FOMC.
Even after these questions are resolved, how ­
ever, the proposed alternative to the direct bor­
rowing authority does not appear as desirable
as the present arrangement. Since Treasury
cash-management bills can be announced, of­
fered, and delivered within a few days under
present debt management procedures, what the
Treasury appears to us to need in addition is
a backstop facility that permits it to acquire a
sizable volume of funds immediately without
resort to the market.
If the Treasury were to meet such needs by
borrowing securities from the Federal Reserve
and then reselling them ill the market, it might
well be forced to pay a substantial premium over
its usual borrowing rate. The action would
probably take market participants by surprise
and might have to be accomplished fairly late
in the day. In highly unsettled market circum­
stances, moreover, the Treasury could find it
difficult or impossible to sell all of the securities
needed. We understand that the objective of the
bill is to insure that Treasury borrowing always
be subjected to the discipline of the market.
While the board endorses such a concept as a
general rule, in emergency cases of the sort
contemplated here, that test could well be abnor­
mally unfavorable and not in the public interest.
The existing direct-borrowing authority of the
Treasury was established in 1942 when wartime

244

Federal Reserve Bulletin □ March 1979

financing required that the federal government
raise enormous volumes of funds through se­
curities markets. The authority was needed to
provide assurance that the Treasury at all times
could meet its expanding obligations. Under any
future conditions of national emergency occa­
sioned by war or natural disaster, the Treasury
might again face unanticipated needs for imme­
diate funds at a time when securities markets
are in general disarray. While the Congress
probably would be in a position to reestablish
an emergency-borrowing authority quickly in
such circumstances, it seems far more efficient
to maintain the existing standby direct-borrow­




ing procedures in order to assure the Treasury
the capacity to finance— for at least a limited
period— without the necessity of such congres­
sional action.
In conclusion, the board sees no need to
introduce a new mechanism for the Treasury to
raise temporary funds since the present directborrowing authority has functioned effectively.
Instead, we believe that the Federal Reserve
System should be empowered to continue lend­
ing directly to the Treasury under the carefully
drafted constraints of the current authority. Fa­
vorable action on H.R. 2281 will achieve this
objective, and the board endorses the bill.

245

Announcements
R e g u l a t io n

O :

A m e n d m e n t

The Federal Reserve Board on March 6, 1979,
issued a final regulation implementing new sec­
tion 22(h) of the Federal Reserve Act, a part
of Title I of the Financial Institutions Regulatory
and Interest Rate Control Act of 1978 (FIRA).
Regulation O (Loans to Executive Officers of
Member Banks) applies to all member banks
of the Federal Reserve System, including all
national banks.
The board said that because the final regula­
tion differs in some important respects from the
proposed regulation issued for public comment
on December 28, 1978, an additional 60-day
comment period will be allowed.
Section 22(h) applies to loans by a member
bank to the executive officers, directors, and
principal shareholders of (1) the member bank,
(2) the member bank’s parent bank holding
company, and (3) any other subsidiaries of the
parent bank holding company. A “ principal
shareholder” of the bank is defined as any
individual or company that controls more than
10 percent of any class of voting shares of the
bank (18 percent in certain circumstances).
Section 22(h) also applies to related interests
of bank officials. Related interests are compa­
nies controlled by, and political or campaign
committees controlled by or benefiting, bank
officials.
Section 22(h) establishes the following four
requirements for loans by member banks to bank
officials or their related interests:
1. An aggregate lending limit of 10 percent
of the bank’s capital and surplus on loans (sub­
ject to certain exceptions) to any of its executive
officers or principal shareholders and their re­
lated interests.
2. Prohibition of payment by the bank of an
overdraft by an executive officer or director.
3. A requirement that every extension of
credit by the bank to a bank official or to a
related interest be made on substantially the



same terms as those prevailing at the time for
comparable transactions with other persons not
associated with the bank and not involve more
than the normal risk of repayment or present
other unfavorable features.
4. A requirement that every extension of
credit by the bank to a bank official or any
related interest that would exceed $25,000 in
the aggregate be approved in advance by a
majority of the bank’s entire board of directors,
with the interested party abstaining.
The board’s proposed regulation to imple­
ment section 22(h) was issued on December 28,
1978, and the comment period expired on Jan­
uary 29, 1979. More than 200 letters of com ­
ment were received.
Significant changes from the proposed regu­
lation are:
1. A rebuttal presumption of control is in­
cluded in addition to a definition of control.
2. A member bank’s loans to its parent bank
holding company or the nonbank subsidiaries
of the holding company are excluded from the
10 percent lending limit of section 22(h), since
such loans are currently subject to a 20 percent
limit under section 23A of the Federal Reserve
Act.
3. The requirement for prior approval by the
board of directors of lending to bank officials
may be satisfied when the extension of credit
is made under a line of credit previously ap­
proved by the board.
4. Capital and surplus of a member bank for
purposes of determining lending limits is de­
fined to include subordinated notes and deben­
tures.
5. Inadvertent overdrafts of a nominal
amount that are outstanding for a short period
of time have been excluded from the overdraft
prohibition.
6 . Term loans (including residential mort­
gage loans) made prior to March 10, 1979, have
been exempted from the deadlines for com pli­

246

Federal Reserve Bulletin □ March 1979

ance with the lending limit and may be repaid
in accordance with their original repayment
schedules.
In any enforcement action under section 22(h)
during the first 60 days of the statute’s effec­
tiveness, the agencies will consider the com ­
plexities of the statute and the brief period of
time between publication of the regulation and
March 10, 1979. The agencies have adopted this
policy in recognition of the fact that some may
inadvertently violate the regulation before they
have developed procedures for compliance with
the amended Regulation O.
R e g u la tio n

Y: A m e n d m e n t

The Federal Reserve Board on February 26,
1979, announced an amendment to its Regula­
tion Y (Bank Holding Companies) to permit
bank holding companies to sell money orders,
travelers checks, and U .S. savings bonds to the
public at their nonbank offices. The Board of
Governors fixed a maximum face value of
$1,000 on the money orders sold at offices of
bank holding companies and their subsidiaries.
At the same time, it declined to adopt an
amendment that was earlier proposed that would
have permitted bank holding companies to sell
variable-denominated instruments and financial
management courses. The board announced that
it would consider specific proposals by bank
holding companies to furnish consumer-oriented
financial management courses on a case-by-case
basis.
In a related action the board announced its
approval of an application by Citicorp, New
York, to sell money orders, travelers checks,
and U .S. savings bonds and to provide con­
sumer-oriented financial management courses at
eight offices in Utah of its subsidiary, Citicorp
Person-to-Person Financial Centers.
R e g u la tio n

V: R e v i s i o n

The Federal Reserve Board simplified its Regu­
lation V (Loan Guarantees for Defense Produc­
tion), consolidated related rules into the regula­
tion, and revised the interest rate and guarantee
fee structures applying to such defense produc­
tion loans, effective February 12, 1979.
The board had invited public comment,



through April 30, 1979, as to whether the Vloan program should be restructured or elim i­
nated. The current revision of Regulation V is
based on the existing regulation pending a deci­
sion about the V-loan program.
Regulation V grew out of a program begun
in World War II to facilitate production or other
operations for national defense. The Federal
Reserve acts as fiscal agent and also sets the
maximum rate of interest to be charged by a
financing institution and establishes the fees to
be charged by government agencies for making
guarantees.
Before issuing its revised regulation, the
board had requested and received comment from
the government agencies guaranteeing loans.
The revised regulation takes account of these
comments.
The revision of Regulation V is part of a
review of all Federal Reserve regulations to
determine whether a regulation, in whole or in
part, is required by law; to assess the costs and
benefits of each regulation; to ascertain if there
are more desirable nonregulatory alternatives;
to determine whether the board’s regulations
should be simplified; and to consider whether
to make recommendations to the Congress for
modernizing changes in the statutes underlying
Federal Reserve regulations.
The principal elements of the revision of
Regulation V are:
1. Simplification and streamlining of the lan­
guage.
2. Consolidation into the regulation of ad­
ministrative rules not previously available in
published form.
3. A change in the maximum rate of interest
that a financing institution may charge for a
V-loan, from a fixed maximum rate (IV2 per­
cent) to the rate the institution currently charges
its most creditworthy business customers for
loans of comparable maturity (unless the gov­
ernmental guarantor decides that a particular
loan bearing a higher rate of interest is necessary
for national defense purposes).
4. Modification of the scale used for calcu­
lating the fee that a guarantor may charge for
guaranteeing a loan. The guarantee fee runs
from 10 percent of the base interest rate (the
rate used for calculating guarantee fees) for the
guaranteed portion of a loan of which 70 percent

Announcements

or less is guaranteed, to 40 to 50 percent of
the base interest rate on a loan of which 95
percent or more is guaranteed. The base interest
rate is set by the guaranteeing agency and is
to be 6 percent or more; previously, it was a
flat 6 percent. The base rate may not be varied
from borrower to borrower. For exam ple, for
a V-loan that is 70 percent guaranteed and that
has a base interest rate of 10 percent, the
guarantor could charge a fee of 1 percent of
the interest on the guaranteed part of the loan.
The use of V-loans has declined from a peak
at the end of 1952 of $979 million outstanding
of loans, of which a portion was guaranteed,
to $1 million outstanding at the end of 1978;
current authorization is for $30 million. Only
six new V-loans have been made since 1971.
In the light of this record, the board said:

These facts suggest that the loan guarantee pro­
gram may have outlived its usefulness. Moreover,
there may be more efficient or economical means
of performing both guaranteeing and fiscal agency
functions. For these reasons, the Board might
consider recommending legislative or other
changes in the V-loan program.
The board noted also that the Defense Pro­
duction Act authorizing the program will expire
on September 30, 1979, unless extended by the
Congress.

C RA A n s w e r s
On January 8, 1979, the four federal finan­
cial institutions regulatory agencies responsible
for enforcing the Community Reinvestment Act
(CRA) issued a staff paper to answer frequently
received inquires about the act, the implement­
ing regulations, and the CRA examination pro­
cedures.1 They noted additional questions and
answers would be forthcoming, and on March
1, 1979, issued those questions and answers.
As stated in the January 8 paper, the answers
to these commonly asked questions “ should not
be regarded as official interpretations. Their
purpose is solely to be helpful to financial insti­
1
The governm ent agencies supervising federally insured
depositary institutions are as follow s: Federal H om e Loan Bank
Board (supervisor o f savings and loan associations and savings
and loan holding com panies); Federal D eposit Insurance Cor­
poration (supervisor o f state-chartered com m ercial and mutual
savings banks that are not m em bers o f the Federal R eserve
System ); Comptroller o f the Currency (supervisor o f national
banks); and Federal R eserve Board (supervisor o f state-char­
tered member banks and o f bank holding com panies).




247

tutions and the public by providing useful back­
ground information. . . . [FJinancial institutions
should focus on the spirit of the legislation and
try to avoid narrow, legalistic interpretations of
the legislation or the regulations.”
The first set of questions and answers pro­
vided staff guidance on the subjects of commu­
nity delineation, contents of CRA statements,
CRA public notices, and maintenance of files
of public comments and recent CRA statements.
The second set provides staff guidance on as­
sessment of institutions records of performance
under the CRA, agency encouragement of insti­
tutions under CRA, available sanctions under
CRA, and impact of CRA on holding companies
and their affiliates.
C h a n g e in

MMC R u le s

A change in the rules under which financial
institutions issue six-month money market cer­
tificates was announced on March 8, 1979, by
federal regulators.
The changes, which went into effect March
15, 1979, will:
1. Prohibit the use of compounding on
money market certificates (MMCs) issued on or
after March 15 by insured commercial banks,
savings banks, savings and loan associations,
and credit unions.
2. Eliminate the 1/4 point interest differential
on MMCs between thrift institutions and com ­
mercial banks when the ceiling rate is 9 percent
or more. The full differential will be in effect
when the ceiling rate is 8% percent or less.
When the six-month bill rate is between 8% and
9 percent, thrift institutions may pay a maxi­
mum 9 percent while commercial banks may
pay up to the actual discount rate for six-month
bills.
These actions were announced jointly by the
four regulatory agencies, with each taking appro­
priate regulatory action after consultation with
the interagency coordinating committee that in­
cludes representatives of each agency and the
U .S. Treasury Department. The agencies are ac­
tively reviewing the terms on other types of de­
posits with a view toward providing improved
savings opportunities for the small saver.
The action taken is in further support of
efforts to restrain inflation. The changes are

248

Federal Reserve Bulletin □ March 1979

designed to reduce somewhat the cost of money
market certificates and to moderate the flow of
funds into thrift institutions in the current infla­
tionary environment. While this action will af­
fect the savings flows of thrift institutions, it
will permit them to continue to remain compet­
itive in attracting funds for housing. It will help
reduce cost pressures on such institutions and
over the longer run assure continued availability
of mortgage credit.
MMCs were created last June 1 to help
maintain a flow of funds into the mortgage
market. At the end of January, $104.4 billion
in such certificates were outstanding. MMCs are
issued in minimum denominations of $10,000
with a 26-week maturity. The maximum rate
of interest that may be paid on MMCs is tied
to the discount rate (auction average) for sixmonth Treasury bills.
At present, the ceiling rate for banks on
MMCs is equal to the Treasury bill rate. The
ceiling for thrift institutions is 1/4 of a percent
higher.
As of the end of January, $55 billion in
MMCs were outstanding at savings and loan
associations (12.9 percent of total deposits);
$31.9 billion at commercial banks (7.9 percent
of small-denomination time and savings depos­
its); $17.5 billion at mutual savings banks (12.3
percent of deposits); and $0.6 billion at credit
unions (about 1 percent of deposits). Without
this action, further substantial increases in these
percentages could have been anticipated.
Under the change, institutions may advertise
an annual effective rate of interest for MMCs
based upon reinvestment after six months of
both principal and interest, if the ads comply
fully with guidelines that were previously is­
sued. Advertisements must also state that fed­
eral regulations prohibit compounding of inter­
est.

P r o p o s e d

A c t io n s

W it h d r a w a l

o f

a n d

P r o p o s a l

The Federal Reserve Board on February 14,
1979, proposed amendments to its regulations




governing corporations engaged in international
banking and financial operations, known as
Edge corporations. These amendments are de­
signed to implement section 3 of the Interna­
tional Banking Act of 1978.
The board also proposed a series of amend­
ments to its regulations governing the interna­
tional operations of U .S. banks. The proposals
would consolidate existing regulations in this
area and would formalize a number of board
policy positions that have previously been de­
veloped on a case-by-case basis. Comment will
be received until April 15, 1979.
The Federal Reserve Board and the Federal
Deposit Insurance Corporation published for
comment on March 8, 1979, proposed regula­
tions to implement the Financial Institutions
Regulatory and Interest Rate Control Act of
1978 (FIRA). Titles VIII and IX of the Federal
Reserve proposed regulation applies to all
member banks, including national banks. Com­
ments must be received by April 20, 1979.
The Federal Reserve Board withdrew on
March 8, 1979, a proposed Statement of Cus­
tomer Rights under the Right to Financial Pri­
vacy Act of 1978. The board acted after Con­
gress on March 7 repealed a section of the act
that would have required financial institutions
to notify their customers of privacy rights.

S y st e m

M e m b e r s h ip :

A d m is s io n

o f

S t a t e

B a n k s

The following banks were admitted to member­
ship in the Federal Reserve System during the
period February 16 through March 15, 1979:
Florida
Miami ....................Sunset Commercial Bank
Utah
Salt Lake C it y .............Western Home Bank
Virginia
Covington .................................. State Bank of
the Alleghenies
Forest ...............Community Bank of Forest
Washington
Seattle ......................Liberty Bank of Seattle

249

Law Department
S ta tu te s , re g u la tio n s , in te r p r e ta tio n s , a n d d e c is io n s

A

mendments

R

e g u l a tio n

d e n t s 13 ( o t h e r t h a n a s s e t s a c q u i r e d a n d n e t b a l ­

to

D

R

and

e g u l a tio n

ances due from

M

four-w eek
The

B oard

of

G o vernors

has

adopted

an

its d o m e s t i c o f f i c e s ) d u r i n g

com putation

p erio d

en d in g

th e

on

th e

W e d n e s d a y fifteen d a y s b e f o r e th e b e g i n n i n g o f

a m e n d m e n t w h ic h tran sfers p ro v isio n s re g a rd in g

the m a in te n a n c e p e rio d :

reserve

g r a p h d o e s n o t a p p l y t o c r e d i t e x t e n d e d ( 1 ) in t h e

req u irem en ts

m em ber

banks

A ctiv ities

of

for

from

fo reig n

branches

R e g u la tio n

N atio n al

Banks)

to

M

of

(F oreign

R e g u la tio n

D

(R eserves of M e m b e r B anks).
E ffective F e b ru a ry

aggregate

am ount

of

U n ited S tates resid e n t,

Provided ,
$ 1 0 0 ,0 0 0

T h a t this p a r a ­
or

less

(2) b y a f o r e i g n

to

any

branch

w h ic h at n o tim e d u r in g th e c o m p u t a t i o n p e r io d

14, 1 9 7 9 , S e c tio n 2 1 3 .7 of

h a d c re d it o u ts ta n d in g to U n ite d S ta te s re s id e n ts

R e g u l a t i o n M is d e l e t e d . S e c t i o n 2 0 4 . 5 o f R e g u ­

e x c e e d i n g $1 m i l l i o n , ( 3 ) t o e n a b l e t h e b o r r o w e r

lation

to c o m p l y w ith th e r e q u i r e m e n t s o f th e O ffice o f

D

is

am ended

by

adding

the

fo llo w in g

subsectio n s:

F o re ig n D irect In v e stm e n ts , D e p a rtm e n t of C o m ­

Section 204.5— Reserve Requirements.

m e r c e , 14 ( 4 ) u n d e r b i n d i n g c o m m i t m e n t s e n t e r e d
into b e f o re M a y 17, 1 9 7 3 , o r (5) to a n in stitu tio n
th a t w ill b e m a i n t a i n i n g r e s e r v e s o n s u c h c re d it

(d)

bank.

Foreign branch transactions with parent
D u r in g e a c h w e e k of th e f o u r - w e e k p e r io d

b eginning M a y 22,

1975, and durin g each w eek

of each

four-w eek

successive

( “ m ain te n a n c e ” )

p erio d , a m e m b e r b an k h a v in g o n e or m o re fo reig n
b r a n c h e s shall m a in ta in w ith th e R e s e r v e B a n k of
its d i s t r i c t , a s a r e s e r v e a g a i n s t its f o r e i g n b r a n c h
d e p o s i ts , a d a ily a v e r a g e b a la n c e e q u a l to z e r o p e r
c e n t o f th e d a ily a v e r a g e total o f —
( 1 ) n e t b a l a n c e s d u e f r o m its d o m e s t i c o f f i c e s
such b ra n c h e s , and
(2) a s s e ts

(in c lu d in g

p articip atio n s)

held

by

s u c h b r a n c h e s w h i c h w e r e a c q u i r e d f r o m its d o ­

u n d e r s u b s e c tio n (c) o f th is se c tio n o r § 2 1 1 . 3 ( g )
of R e g u la tio n K .
A

mendment

The

B oard

to

R

of

Y

e g u l a tio n

G o v ern o rs

a m e n d m e n t to R e g u la ti o n

has

Y to a d d

ado p ted

an

the sale of

m o n e y o rd e rs , trav elers c h e c k s , a n d U .S . sa v in g s
b o n d s to th e list o f t h o s e a c tiv itie s p e r m i s s i b l e fo r
b an k h o ld in g c o m p a n ie s.
E ffective A p ril,

2,

1979, section

2 2 5 .4 (a)

is

a m e n d e d by a d d in g the fo llo w in g n e w p a r a g r a p h
(13) im m ed iately fo llo w in g § 2 2 5 .4 (a )(1 2 ):

m e s tic offices ( o th e r th a n a s s e ts r e p r e s e n t i n g c re d it
e x t e n d e d to p e r s o n s n o t re s id e n ts o f th e

U n ited

S ta te s), d u r in g the f o u r - w e e k c o m p u t a t i o n p e r io d
e n d in g o n th e W e d n e s d a y fifteen d a y s b e f o re the

S e ctio n 2 2 5 .4 — N o n b a n k in g A c tiv itie s

(a)

A ctiv ities

c lo sely

related

to b a n k i n g

m a n a g in g or c o n tro llin g b a n k s.

b e g in n in g of the m a in te n a n c e p e rio d .
(e)
Foreign branch credit extended to United
States residents. D u r i n g e a c h w e e k o f t h e f o u r w e e k p erio d b eg in n in g M a y 2 2 , 1975, and d u rin g
each w eek of each successive fo u r-w eek m a in te ­
n an ce p e rio d , a m e m b e r b an k h a v in g o n e or m o re
fo re ig n b r a n c h e s sh all m a in ta in w ith th e R e s e r v e
B a n k o f its d i s t r i c t , a s a r e s e r v e a g a i n s t its f o r e i g n
b ran ch d e p o sits,

a daily av erag e b a la n c e , equal

to z e r o p e r c e n t o f th e d a ily a v e r a g e c r e d it o u t ­
sta n d in g f ro m su c h b r a n c h e s to U n ite d S ta te s r e s i­




13 (a) A ny individual residing (at the tim e the credit is
extended in any State of the United States or the District of
Colum bia; (b) any corporation, partnership, association or
other entity organized therein of any other entity wherever
organized. Credit extended to a foreign branch, office, subsidi­
ary, affiliate or other foreign establishm ent ( “ foreign affiliate” )
controlled by one or more such dom estic corporations w ill not
be deem ed to be credit extended to a United States resident
if the proceeds w ill be used in its foreign business or that
of other foreign affiliates of the controlling dom estic corporation(s).
14 The branch may in good faith rely on the borrower’s
certification that the funds w ill be so used.

or

250

Federal Reserve Bulletin □ March 1979

to p riv a te

(13) The sale at retail of money orders having
a face value of not more than $1,000 and
travelers checks and the sale of U .S. savings
bonds.
R

evisio n

of

R

e g u l a tio n

V

T h e B o a r d o f G o v e r n o r s h a s r e v i s e d its R e g u l a ­
tio n V ( L o a n G u a r a n t e e s fo r D e f e n s e P r o d u c tio n )
t o s i m p l i f y a n d c o n s o l i d a t e t h e b o a r d ’s r u l e s c o n ­
c e r n in g th e V - lo a n p r o g r a m

in a c c o r d a n c e w i t h

its R e g u l a t o r y I m p r o v e m e n t P r o j e c t .
1979, an d sh o u ld be sent

to th e S e c re ta ry o f th e B o a rd , B o a rd o f G o v e r n o r s
of the F ed eral R e s e r v e S y s te m , W a s h in g to n , D .C .
20551.

They

sh o u ld

include

the

institutions,

located

D ocket

No.

R -0201.

the

s e s s io n s , th at m a k e lo a n s fo r d e f e n s e p r o d u c tio n
that are g u a r a n te e d by the fe d e ra l d e p a r tm e n ts or
agencies desig n ed by

the A c t o r O rd e r*

(com ­

m o n l y r e f e r r e d t o a s “ V - l o a n s ” ).

Section 1505.2 —
Processing of Loan Guarantee Applications
( a ) S u b m i s s i o n o f a p p l i c a t i o n s . A n y p r i v a t e fi­
n a n cin g

in stitu tio n

m ay

su b m it

to

the

Federal

R e s e r v e B a n k o f its D i s t r i c t a n a p p l i c a t i o n f o r a
b e e l i g i b l e in a c c o r d a n c e w i t h t h e p r o v i s i o n s o f
p a r a g r a p h (b) o f th is se c tio n . T h e a p p lic a tio n f o rm
is a v a i l a b l e t h r o u g h t h e F e d e r a l R e s e r v e B a n k .
(b) D e te r m in a tio n o f e lig ib ility o f b o r r o w e r . T o
be elig ib le

for a

V -loan,

a borrow er

se e k in g fin an cin g for a c o n tra c t,

E ffective F e b ru a ry 2 0 ,

in

g u a r a n t e e o f a lo a n to a b o r r o w e r d e t e r m i n e d to

C o m m e n t s s h o u l d b e s u b m i t t e d in w r i t i n g t o b e
receiv ed by A pril 3 0 ,

financing

U n i t e d S t a t e s o r in a n y o f its T e r r i t o r i e s o r p o s ­

1979, R e g u la tio n

V is

r e v i s e d to r e a d a s f o l lo w s :

m ust

be

subcontract, or

o th e r o p e ra tio n d e e m e d b y the a p p ro p ria te g u ra n te e in g fe d e ra l d e p a r t m e n t o r a g e n c y to b e n e c e s ­
sa ry to e x p e d i t e p r o d u c t i o n a n d d e liv e r ie s o r s e r v ­

Part 1 5 0 5 Loan Guarantees for Defense Production

ices u n d e r a G o v e r n m e n t c o n tr a c t fo r th e p r o c u r e ­
m e n t of m a te ria ls o r the p e r fo r m a n c e of se rv ic e s
for th e n a tio n a l d e f e n s e . A d e te r m in a tio n th at th e

Sec.
1 5 0 5 .1

b o r r o w e r is e l i g i b l e s h a l l b e m a d e b y t h e g u a r a n ­

A u th o rity , p u rp o se , and sc o p e.

1 5 0 5 .2 P ro c e s s in g of lo an g u a r a n te e

ap p lica­

tions.
1 5 0 5 .3

F ed eral R e se rv e B an k fees an d ch arg es.

1 5 0 5 .4 M a x i m u m rate of in te re st, g u a r a n te e
fees, c o m m itm e n t fees, and p re p a y m e n t p e n ­
alties.

teein g d e p a r tm e n t or a g e n c y o n the b asis o f in fo r­
m a t i o n c o n t a i n e d in t h e l o a n g u a r a n t e e a p p l i c a t i o n
a n d a n y f u r t h e r i n f o r m a t i o n t h a t it n e e d s . N o l o a n
shall

be

guaran teed

until

that

d eterm ination

is

m ade.
(c) L e n d e r ' s r a t e s a n d f e e s . N o a p p lic a tio n fo r
a lo an g u a ra n te e shall be c o n s id e re d w h e re th e lo an
a g r e e m e n t is i n c o n s i s t e n t w i t h t h e r a t e o f i n t e r e s t ,

Section 1505.1 —
Authority , Purpose , and Scope

guarantee fees, c o m m itm e n t fees, and p rep ay m en t
p e n a l t i e s p r e s c r i b e d b y t h e B o a r d in s e c t i o n 1 5 0 5 . 4

(a) A u t h o r i t y . T h is P art c o m p r is e s the r e g u la ­
tio n s o f the B o a rd o f G o v e r n o r s o f th e F e d e ra l
R eserve S ystem

( r e f e r r e d t o in t h i s P a r t a s t h e

o f this P a rt (th e S u p p l e m e n t ) .
(d) C o n s i d e r a t i o n o f a p p l i c a t i o n s . E a c h a p p li­
ca tio n b y a fin a n c in g in stitu tio n shall b e su b je c t

“ B o a r d ” ) iss u e d p u r s u a n t to E x e c u t i v e O r d e r N o .

to a p p r o v a l

1 0 4 8 0 (3 C F R 1 9 4 9 - 5 3 C o m p . , p . 9 6 2 ; r e p r i n t e d

a g e n c y o r, to th e e x t e n t th a t th e d e p a r t m e n t o r

as

a g e n c y p re s c rib e s , by the F e d e ra l R e s e ve B a n k

am ended

fo llo w in g

50

App.

U .S .C .

2153

( 1 9 7 0 ) ) ( r e f e r r e d t o in t h i s P a r t a s t h e “ O r d e r ” ),
i m p l e m e n t i n g th e D e f e n s e P r o d u c t io n A c t o f 1 9 5 0
(50 A pp.

U .S .C . 2061

et seq.

(1 9 7 0 )) (referred

t o in t h i s P a r t a s t h e “ A c t ” ).

by

the

guaran teein g

departm ent or

t o w h i c h t h e a p p l i c a t i o n is s u b m i t t e d .
(1)

If a g u a r a n t e e i n g d e p a r t m e n t o r a g e n c y is

to d e c i d e

the

application,

the

Federal

R eserve

B a n k shall m a k e a r e c o m m e n d a tio n for actio n o n

(b) P u r p o s e a n d S c o p e . T h e p u r p o s e o f th e A c t,

th e a p p lic a tio n b e f o re th e d e p a r t m e n t o r a g e n c y

t h e O r d e r , a n d t h i s P a r t is t o f a c i l i t a t e t h e f i n a n c i n g

acts. T h e F e d e r a l R e s e r v e B a n k sh all tra n s m it th e

of co n tracts or o th er o p e ra tio n s d e e m e d n ecessa ry

*The names of the federal departments or agencies may be
obtained from any Federal R eserve Bank.

to n a tio n al d e f e n s e p r o d u c tio n . T h is P art a p p lie s




Law Department

application and its recommendation, together with
all necessary supporting information, through the
Board to that department or agency. If the depart­
ment or agency approves the application and
transmits its authorization through the Board on
the Board’s standard form, the Federal Reserve
Bank, acting as fiscal agent of the United States
on behalf of the department or agency, shall exe­
cute and deliver the guarantee (Board’s standard
“ V-Loan Guarantee Agreement” form) to the
applicant in accordance with the terms of the
authorization.
(2)
If a Federal Reserve Bank is to decide the
application, it shall do so without submitting the
application to the guaranteeing department or
agency for prior approval; but the application shall
be subject first to the department’s or agency’s
determination of the borrower’s eligibility. If the
Federal Reserve Bank approves the application,
it shall execute and deliver the guarantee (Board’s
standard “ V-Loan Guarantee Agreement” form)
to the applicant and promptly notify the depart­
ment or agency.
(e) Basis of Federal Reserve Bank decision. In
making a recommendation or deciding an applica­
tion as described in paragraph (d) of this section,
a Federal Reserve Bank shall consider whether the
financing arrangements allord the guaranteeing
department or agency the best available protection
against possible financial loss consistent with ob­
taining national defense production expeditiously.
(f) Federal Reserve Bank liability. In arranging
for or making any guarantee on behalf of any
guaranteeing department or agency, no Federal
Reserve Bank shall have any responsibility or
accountability except as fiscal agent.
(g) Other forms and procedures. From time to
time the Board, after consulting guaranteeing
departments or agencies, may prescribe other
forms and procedures related to the V-loan pro­
gram. These forms and procedural rules are to be
made available through the Federal Reserve
Banks.
Section 1505.3 —
Federal Reserve Bank Fees and Charges
Each Federal Reserve Bank shall be reimbursed
by each guaranteeing department or agency in the
usual manner for all expenses and losses incurred
by the Reserve Bank in acting as agent on behalf
of the department or agency. Regardless of any
other provision of law, such expenses shall include




251

attorneys’ fees and expenses of litigation. If a
Federal Reserve Bank advances its own funds to
purchase a guaranteed portion of a loan, when
authorized to do so as fiscal agent by the guaran­
teeing department or agency, it shall charge inter­
est on its advances at the current regular discount
rate.
Section 1505.4 —
Maximum Rate of Interest , Guarantee Fees ,
Commitment Fees, and Prepayment Penalties
The Board of Governors of the Federal Reserve
System prescribes the following charges for loans
guaranteed pursuant to the Defense Production Act
of 1950 (“ V-loans” ):
(a) Maximum rate of interest. The maximum
rate of interest that a financing institution may
charge a borrower for a V-loan is the rate that
institution currently charges its most creditworthy
business customers for loans of comparable ma­
turity, unless the guaranteeing department or
agency determines that the particular loan at a
higher rate of interest is necessary for the purposes
of the Defense Production Act of 1950.
(b) Guarantee fees. The schedule of fees for
guaranteeing V-loans is as follows:

Percentage
of Loan
Guaranteed

70 or less
75
80
85
90
95
Over 95

Guarantee Fee
(Percentage of
interest payable
by borrower
on guaranteed
portion of loan)

10
15

20
25
30
35
40-50

In any case in which the rate of interest on the
loan exceeds 6 per cent, the guarantee fee shall
be computed as though the interest rate were 6
per cent. However, at its discretion, a guaranteeing
department or agency may increase the 6 per cent
ceiling rate to a higher rate (not to exceed the
actual rate of interest charge); but if it does so,
the policy in this regard must be applied consist­
ently with respect to all applications received while
the policy is in effect.
(c)
Commitment fees. Any commitment fee
charged a borrower for a V-loan shall not exceed

252

Federal Reserve Bulletin □ March 1979

V2 of 1 per cent per annum, based on the average
daily unused balance of the maximum principal
amount of the loan. That fee may not begin to
accrue prior to the date on which the committed
funds are first available to the borrower according
to the terms of the loan agreement or other similar
financing arrangement. In any such case, the fi­
nancing institution shall pay to the guaranteeing
department or agency, a percentage of the com­
mitment fee (1) based on the guaranteed portion
of the loan, and (2) equal to the percentage of
the interest on the loan that is payable as a guar­
antee fee by the financing institution.
(d)
Prepayment penalties. (1) In the case of a
V-loan made primarily for working capital pur­
poses, a financing institution may not charge a
penalty for prepayment of the loan but may recover
out-of-pocket expenses.
(2)
In the case of a V-loan made for the purpose
of financing expansion, provision for a prepayment
penalty may be made in the loan agreement if all
of the following conditions are met:
(i) the loan has a maturity of 5 years or more;
(ii) the prepayment penalty shall not exceed the
rate of interest to be paid by the borrower accord­
ing to the terms of the loan;
(iii) provision is made for a graduated decrease
in the prepayment penalty as the loan approaches
maturity; and
(iv) the loan agreement explicitly provides that
the prepayment penalty shall not be applicable in
the event the loan is refinanced by or consolidated
with another loan that is made or guaranteed by
the federal government or any of its agencies.
A

mendments

P

u b lic

O

to

R

ules

bse rv a tio n

of

R

Section 2 6 l b . 4—
Meetings Open to Public Observation.
(a) Except as provided in section 261b.5 of this
Part, every portion of every meeting of the agency
shall be open to public observation.
(b) Copies of staff documents considered in
connection with agency discussion of agenda items
for a meeting that is open to public observation
shall be made available for distribution to members
of the public attending the meeting, in accordance
with the provisions of 12 C.F.R. Part 261.
(c) The agency will maintain a complete elec­
tronic recording adequate to record fully the pro­
ceedings of each meeting or portion of a meeting
open to public observation. Cassettes will be
available for listening in the Freedom of Informa­
tion Office, and copies may be ordered for $5 per
cassette by telephoning or by writing Freedom of
Information Office, Board of Governors of the
Federal Reserve System, Washington, D.C.
20551.
(d) The agency will maintain mailing lists of
names and addresses of all persons who wish to
receive copies of agency announcements of meet­
ings open to public observation. Requests for
a n n o u n ce m en ts m ay be m ad e by te le p h o n in g or

by writing Freedom of Information Office, Board
of Governors of the Federal Reserve System,
Washington, D.C. 20551.
*

*

*

*

*

e g a r d in g

M

e e t in g s

The Board of Governors of the Federal Reserve
System has amended its regulations relating to
public observation of meetings to reflect its current
policy of (1) making available copies of staff
documents underlying board discussion of agenda
items to persons attending open meetings; (2)
making available to the public electronic record­
ings of open board meetings; and (3) providing
a mailing list of persons who wish to be notified
personally and in advance about open Board
meetings. In addition, the amendments would
provide procedures for requests that the board
open to the public a previously announced closed
meeting.




Effective February 26, 1979, section 12 C.F.R.
261b.4 is amended and section 261b.8(f) is added
to read as follows:

Section 261b. 8— Meetings Closed to
Public Observation Under Regular Procedures.

*

*

%

*

*

(f)
Any person may request in writing to the
Secretary of the Board that an announced closed
meeting, or portion of the meeting, be held open
to public observation. The Secretary, or in his or
her absence, the Acting Secretary of the Board,
will transmit the request to the members of the
Board and upon the request of any member a
recorded vote will be taken whether to open such
meeting to public observation.
*

*

*

*

*

Law Department

Ban

H

k

and

B

Is s u e d

pany

in t h e m a r k e t . 3 A c c o r d i n g l y , c o m p e t i t i v e c o n s i d ­

erger

O rders

eratio n s are co n s iste n t w ith ap p ro v a l.

B

of

Com

o ld in g

M

ank
by

253

the

oard

G

T h e finan cial a n d m a n a g e r ia l r e s o u r c e s a n d f u ­

overnors

tu re p r o s p e c ts o f A p p lic a n t, w h ic h are d e p e n d e n t
O rders

U n d e r S e c tio n 3

upon

o f B a n k H o ld in g C o m p a n y A c t

th o se of

Bank,

appear

to b e

sa tisfacto ry .

W h i l e A p p l i c a n t w i l l i n c u r s o m e d e b t in c o n n e c ­
t i o n w i t h t h e p r o p o s e d t r a n s a c t i o n , it a p p e a r s t h a t

C o rn in g In v estm en t C o m p a n y , In c.,

A p p lic a n t h as sufficient fin an cial flex ib ility to m e e t

A tchison, K ansas

its a n n u a l d e b t - s e r v i c i n g r e q u i r e m e n t s w i t h o u t a d ­
v e rse ly affe ctin g B a n k . T h e financial a n d m a n a g e ­

O rd er A p p ro v in g

rial r e s o u r c e s o f e a c h o f th e o t h e r b a n k h o l d i n g

F o rm a tio n o f a B a n k H o ld in g C o m p a n y

c o m p a n ie s a n d their s u b s id ia ry b a n k s w ith w h ic h
C o rn in g In v estm en t C o m p a n y , In c., A tch iso n ,

A p p l i c a n t ’s p r i n c i p a l s
garded

approval

e r a tio n s r e la tin g to b a n k i n g f a c to rs

under

§ 3(a)(1)

of

the

Bank

H olding

as

a re affiliated

K a n s a s , ( “ A p p l i c a n t ” ) h a s a p p l i e d f o r t h e b o a r d ’s

sa tisfa c to ry .

T herefore,

are also
the

re­

co n sid ­

in r e g a r d t o

C o m p a n y A ct (12 U .S .C . § 184 2 (a)(1 )) of f o rm a ­

this p r o p o s a l are c o n s is te n t w ith a p p r o v a l o f the

tion of a b a n k h o ld in g c o m p a n y th r o u g h a c q u is i­

ap p licatio n .

tion of 8 0 p e rc e n t or m o re of the v o tin g sh a res

U p o n c o n s u m m a tio n of the p r o p o s a l, A p p lic a n t

of T h e F a rm e rs S tate B a n k of C o rn in g , C o rn in g ,

p r o p o s e s to c a u s e B a n k to p r o v i d e a n u m b e r o f

K a n s a s ( “ B a n k ” ).

n e w s e r v i c e s t o its c u s t o m e r s . I n p a r t i c u l a r , B a n k

N o tic e of the a p p lic a tio n , affo rd in g o p p o rtu n ity
for in te re ste d

persons

to s u b m it

co m m en ts

w ill

offer

passbook

sa v in g s

and

certificates

of

and

d e p o s i t w ith m a t u r it i e s l o n g e r th a n o n e y e a r . In

v i e w s , h a s b e e n g i v e n in a c c o r d a n c e w i t h s e c t i o n

a d d itio n , A p p lic a n t p r o p o s e s to offer in s ta llm e n t

3 ( b ) o f t h e A c t . T h e t i m e f o r f i li n g c o m m e n t s a n d

lo a n s a n d institute S m a ll B u s in e ss A d m in is tr a tio n

view s

and

has

expired

and

the

a p p licatio n

and

all

F arm ers

Hom e

A d m in istratio n

guaranteed

c o m m e n t s r e c e i v e d h a v e b e e n c o n s i d e r e d in l i g h t

lo a n s , as w e ll as in stall sa fe d e p o s it b o x e s . A p p l i ­

o f t h e f a c t o r s s e t f o r t h in s e c t i o n 3 ( c ) o f t h e A c t

c a n t w ill also initiate a n a d v e r tis in g p r o g r a m

(12 U .S .C . § 1 842(c)).

o r d e r t o i n f o r m its c o m m u n i t y a b o u t t h e s e r v i c e s

A p p lican t,

a

n onoperating

co rp o ra tio n ,

was

in

o ffe re d b y B a n k , a n d w ill s e e k to d e t e r m i n e th e

f o rm e d fo r the p u r p o s e of b e c o m i n g a b a n k h o l d ­

cre d it n e e d s of m e m b e r s o f th e c o m m u n i t y

ing c o m p a n y

p r e s e n t l y s e r v i c e d b y B a n k . F u r t h e r m o r e , B a n k ’s

th ro u g h

the

a c q u isitio n

of

Bank.

not

B a n k w i t h d e p o s i t s o f $ 1 . 7 m i l l i o n 1 is o n e o f t h e

r e c o r d o f p e r f o r m a n c e in s e r v i n g t h e c r e d i t n e e d s

sm a ller b a n k in g

and

o f its c o m m u n i t y h a s s i g n i f i c a n t l y i m p r o v e d s i n c e

h o l d s 0 . 0 1 5 p e r c e n t o f d e p o s i t s in c o m m e r c i a l
b a n k s in t h a t S t a t e . B a n k is t h e s m a l l e s t o f e i g h t

p rin cip als of A p p lic a n t h a v e b e e n a sso c ia te d w ith

b a n k s in t h e r e l e v a n t b a n k i n g

siderations

o rganizations

in t h e

sta te ,

m a r k e t 2 w ith 2 .6

p e r c e n t o f t h e m a r k e t ’s d e p o s i t s .

are

consistent

w ith

approval

of

th e

a p p l i c a t i o n . I n v i e w o f A p p l i c a n t ’s c o m m i t m e n t s

P rin c ip a ls o f A p p l i c a n t are affiliated w ith th re e
o th er K a n sa s b a n k

B ank. A cco rd in g ly , co n v en ien ce and needs c o n ­

h o ld in g c o m p a n i e s a n d their

to i m p r o v e

B a n k ’s p e r f o r m a n c e

in m e e t i n g

the

c r e d i t n e e d s o f its c o m m u n i t y , it h a s b e e n d e t e r -

s u b s id ia ry b a n k s . O n e of th e s e b a n k s , T h e First
N ational

Bank

of

G off,

G off,

K ansas

( “ G off

B a n k ” ), is l o c a t e d a p p r o x i m a t e l y f iv e m i l e s f r o m
B a n k in t h e r e l e v a n t b a n k i n g

m arket.

H ow ever,

th e c o m b i n e d d e p o s i ts o f G o f f B a n k a n d B a n k total
$ 4 .4

m illio n

and

represent 6 .7

percent of

total

m a r k e t d e p o s its . G i v e n th is sm a ll m a r k e t s h a re a n d
t h e n u m b e r o f b a n k i n g a l t e r n a t i v e s in t h e m a r k e t ,
it d o e s n o t a p p e a r t h a t a p p r o v a l o f t h e a p p l i c a t i o n
w o u ld h a v e a n y significant effect on c o m p e titio n
1 All banking data are as of D ecem ber 3 1 , 1977.
2 The banking market is approximated by N em aha County.




3 The president and vice president of A pplicant serve on
the board of Nemaha Investm ent C om pany, G olf, Kansas,
which ow ns 8 1 .8 percent of Goff Bank. Title II of the Financial
Institutions Regulatory and Interest Rate Control Act of 1978
( “ FIR A ” ) sets forth prohibitions against certain interlocks
betw een managem ent officials of depository institutions, in­
cluding com m ercial banks and “ depository holding com pa­
n ie s" , and further provides that these prohibitions w ill not
apply until 1988 to certain interlocks that existed on the date
of its enactment. Upon acquisition of Bank, an interlock w ould
exist betw een Applicant and Nem aha Investm ent Company
which would not qualify for the grandfather exem ption in
FIRA. The interlock relationship may prove to be inconsistent
with regulations implem enting Title II of FIRA. Applicant w ill
be expected to conform its m anagem ent structure to the re­
quirements of the regulations adopted by the board.

254

Federal Reserve Bulletin □ March 1979

m i n e d t h a t t h e p r o p o s e d t r a n s a c t i o n is i n t h e p u b l i c

FG

in terest

w ith in the sta tu to ry tim e lim it, the V irg in ia a n d

and

that the

a p p licatio n

sh o u ld

be

ap­

proved.

has protested

the

ap p licatio n .

F urtherm ore,

T e n n e s s e e C o m m i s s i o n e r s e a c h s u b m itte d to th e

O n the b a s is o f th e r e c o r d , th e a p p lic a tio n

is

B o a r d in w r i t in g s t a t e m e n t s e x p r e s s i n g d i s a p p r o v a l

a p p r o v e d for the r e a s o n s s u m m a r i z e d a b o v e . T h e

of th e a p p lic a tio n . In lig h t o f th e s u b m is s io n s o n

tr a n s a c tio n sha ll n o t b e c o n s u m m a te d (a) b e f o re

b eh alf of V irg in ia a n d

th e th irtie th d a y f o l lo w in g th e e ffe c tiv e d a te o f this

r e q u ire d b y s e c tio n 3 ( b ) o f th e A c t to s c h e d u l e

O rder

a h e a r in g o n th e a p p lic a tio n .

or

(b)

later

than

three

m onths

after

th e

T e n n e s s e e , the b o a r d

is

effe c tiv e d a te o f this O r d e r , u n le s s su c h p e rio d

B e fo re o rd e rin g a h e a r in g o n this a p p lic a tio n ,

is e x t e n d e d f o r g o o d c a u s e b y t h e B o a r d o f G o v ­

h o w e v e r , t h e b o a r d d e t e r m i n e d t h a t it w o u l d b e

ern o rs or b y the F e d e ra l R e s e r v e B a n k of K a n s a s

a p p r o p r ia te to c o n s i d e r w h e t h e r A p p l i c a n t s ’ a c ­

C ity , p u r s u a n t to d e l e g a t e d a u th o r ity .

q u isitio n of F G w o u ld v io late certain p ro v isio n s

B y o rd e r of the S e c re ta ry of th e B o a rd , u n d e r

of M ary lan d

law

r e la tin g to th e

ow nership and

c o n tr o l o f b a n k i n g in s t i t u t i o n s in th a t sta te o r th e

d e l e g a t e d a u t h o r i t y , e f f e c t i v e F e b r u a r y 1, 1 9 7 9 .

in ter-state b a n k in g p r o h ib itio n of se ctio n 3(d ) of
(S ig n e d ) G
[s e a l ]

r if f it h

L. G

arw ood

,

D e p u ty S e c r e ta r y o f the B o a r d .

th e A c t . 1 A b o a r d fin d in g th at th e p r o p o s e d a c q u i ­
sition c o n tr a v e n e d a n y of th ese p ro v is io n s w o u ld
p reclu d e ap p ro v al

of

the

ap p licatio n ,2 an d ,

ac­

cordingly, render a hearing unnecessary.
C red it and C o m m e rc e A m e ric a n H o ld in g s, N .V .,
N e th e rla n d s, A ntilles

T u r n i n g first t o a c o n s i d e r a t i o n o f M a r y l a n d l a w ,
A rticle

C redit and C o m m e rc e A m e ric a n In v e stm e n t,
B .V ., N etherlands

72

of

the

M ary lan d

Code

to h a v e a n “ a f f i l i a t e ” u n l e s s t h a t M a r y l a n d b a n k ­
ing in stitu tio n “ i n te n d s to h a v e a n a ffilia te .” T h e

B a n k H o ld in g C o m p a n y A p p lic a tio n

term
and

S ectio n

in stitu tio n o r g a n iz e d u n d e r th e la w s o f M a r y l a n d

O rd e r D ism issin g

C red it

11,

( “ s e c t i o n 7 2 ” ) m a k e s it u n l a w f u l f o r a n y b a n k i n g

C om m erce

A m erican

H oldings,

“ affiliate”

in clu d es

any

co rp o ra tio n

th at

co n tro ls o n e or m o re b a n k in g institutions by o w n ­

N .V ., N e th e rla n d s A n tilles, and C red it and C o m ­

ing o r c o n tr o llin g , d ire c tly o r in d ire c tly , a m a jo r ity

m erce A m erican In v estm en t, B .V ., N etherlands,

of

have

under

in stitu tio n s. U p o n c o n s u m m a tio n of the p r o p o s e d

§ 3 (a )(1 ) o f th e B a n k H o ld in g C o m p a n y A c t (12
U .S .C . § 1 842(a)(1)) for fo rm a tio n of b a n k h o ld ­

tran sactio n , A p p lic a n ts w o u ld e ach o w n or control
a m a j o r i t y o f t h e v o t i n g s h a r e s o f F G ’s M a r y l a n d

ing c o m p a n i e s

su b sid ia ry b a n k , F irst A m e r ic a n B a n k of M a r y ­

applied

for

by

the

b o a r d ’s

acq u irin g

up

approval

to

100 p e rc e n t

th e

vo tin g

shares

of

one

or

m ore

b anking

of the v o tin g sh a res of F in a n c ia l G e n e ra l B a n k ­

lan d , S ilver S p rin g . A p p lic a n ts w o u ld , th e re fo re ,

s h a re s , In c. ( “ F G ” ), W a s h i n g t o n , D . C . , a m u l t i ­

q u alify as “ affiliates” of F irst A m e r ic a n B a n k of

s t a t e b a n k h o l d i n g c o m p a n y c o n t r o l l i n g b a n k s in

M a ry la n d u n d e r M a ry la n d law .

th e D is tr ic t o f C o l u m b i a , a n d th e s ta te s o f M a r y ­
la n d , N e w Y o r k , T e n n e s s e e a n d V irg in ia .
O n D e c e m b e r 14, 1 9 7 8 , n o tic e of this a p p l i c a ­
tion w a s p u b lis h e d
F ed.

R eg.

58431).

On

January

26,

1979,

acting

pursuant

to

a

re q u e st fro m the M a r y la n d B a n k C o m m is s io n e r ,
th e A tto r n e y G e n e r a l fo r th e sta te o f M a r y l a n d

in t h e F e d e r a l R e g i s t e r ( 4 3

issu ed

A dditionally,

A tto rn ey G e n e ra l, after re v ie w in g briefs a n d a l­

in

accordance

an

o p in io n

in terp retin g

se ctio n

72.

The

w ith se ctio n 3(b) of the A c t (12 U .S .C . § 1 8 4 2 (b )),
n o tic e of r e c e ip t o f th is a p p lic a tio n w a s d u ly g iv e n
to t h e a p p r o p r i a t e s u p e r v i s o r y a u t h o r i t i e s , i n c l u d ­
ing th e C o m m i s s i o n e r o f F in a n c ia l In stitu tio n s of
th e c o m m o n w e a l t h o f V ir g in ia , th e C o m m i s s i o n e r
of B a n k in g of th e state of T e n n e s s e e , a n d th e B a n k
C o m m i s s i o n e r of th e state o f M a r y l a n d . T h e B a n k
C o m m i s s i o n e r o f th e sta te o f M a r y l a n d

notified

th e b o a r d th a t h e h a d re fe rr e d th is m a tte r to th e
M a ry la n d A tto rn ey G en e ra l for an o p in io n re g a rd ­
in g th e p e r m is s ib ility o f th e p ro p o s a l u n d e r M a r y ­
la n d b a n k in g la w , a n d th e c u r re n t m a n a g e m e n t of




1 Section 3(d) of the Act provides in relevant part that: “ no
application shall be a p p r o ve d [by the board] under this section
which will permit any bank holding com pany or any subsidiary
thereof to acquire, directly or indirectly, any voting shares of,
interest in, or all or substantially all of the assets of any
additional bank located outside of the state in which the
operations of such bank holding com pan y’s banking subsidi­
aries were principally conducted on July 1, 1966, or the date
on which such com pany becam e a bank holding com pany,
whichever is later. . . . ’’ (em phasis added).
2 Under Whitney N atio na l Bank in Jefferson Parish v. Bank
of N e w Orleans and Trust C o ., 379 U .S . 411 (1 9 6 5 ), the
board is prohibited from approving a proposal that would
violate state law.

Law Department

lo w in g o ral p r e s e n t a t i o n o n this issu e b y A p p l i ­
cants and
becom e

F G , co n clu d ed

“ affiliates”

that A p p lic a n ts w o u ld

of First A m e r ic a n

B a n k of

M a r y l a n d u p o n c o n s u m m a t i o n of th e p r o p o s a l a n d

255

c a tio n that w o u ld p e r m it a b a n k h o ld in g c o m p a n y
to a c q u i r e , d ir e c tly o r i n d i r e c t ly , a n y v o tin g s h a r e s
of,

or

interest

in,

any

additional

bank

lo cated

o u t s i d e o f t h e s t a t e in w h i c h t h e o p e r a t i o n s o f s u c h

that such a r e la tio n sh ip w o u ld be sta tu to rily p r o ­

b a n k h o l d i n g c o m p a n y ’s b a n k i n g s u b s i d i a r i e s w e r e

h ib ite d u n le s s th e M a r y l a n d b a n k “ in te n d s to h a v e

p r i n c i p a l l y c o n d u c t e d o n J u l y 1, 1 9 6 6 , o r t h e d a t e

an affiliate.” T h e M a ry la n d A tto rn e y G e n e ra l re a ­

on w h ich such c o m p a n y b e c a m e a b an k h o ld in g

so n e d th at, sin c e First A m e r ic a n B a n k of M a r y la n d

c o m p a n y , w h i c h e v e r is l a t e r .

h a d n o t i n d i c a t e d its i n t e n t t o h a v e a n a f f i l i a t e ( b u t
r a t h e r h a d o p p o s e d its p r o p o s e d a c q u i s i t i o n b y

is i n a p p l i c a b l e t o t h e p r o p o s e d t r a n s a c t i o n o n t w o

A p p lica n ts),3

g r o u n d s . T h e i r firs t a r g u m e n t is t h a t s e c t i o n 3 ( d )

the

proposed

a cq u isitio n

of

FG

w o u l d b e in v i o l a t i o n o f s e c t i o n 7 2 .

A p p l i c a n t s c l a i m t h a t s e c t i o n 3 ( d ) , b y its t e r m s ,

a p p l i e s o n ly to a n a c q u i s i ti o n m a d e b y a n e x i s ti n g

In in t e r p r e t i n g a p a r t i c u l a r sta te l a w , th e b o a r d

“ b an k h o lding c o m p a n y or a su b sid iary th e r e o f.”

c o n s id e rs th e sta tu te itself, an y ju d ic ia l in te r p re ta ­

S ince

t i o n s o f t h a t s t a t e l a w a n d , in t h e a b s e n c e o f s u c h

“ b an k h o lding c o m p a n y or a su b sid iary th e r e o f,”

a n i n t e r p r e t a t i o n , o p i n i o n s o f t h e s t a t e ’s A t t o r n e y

A pplicants contend

G e n e r a l or r e le v a n t sta te a d m i n i s t r a t i v e a g e n c y .

is n o t a p p l i c a b l e t o t h e p r o p o s e d t r a n s a c t i o n .

n either

of

the

A pplicants

is

c u rre n tly

a

th at se c tio n 3 (d ) of th e A c t

T h e M a ry la n d co u rts h a v e not issu ed a ju dicial

In o t h e r c o n t e x t s , t h e b o a r d h a s t a k e n t h e p o s i ­

in te rp re ta tio n of se c tio n 7 2 . H o w e v e r , th e M a r y ­

t i o n t h a t s e c t i o n 3 ( d ) is a p p l i c a b l e t o t h e f o r m a t i o n

lan d B a n k C o m m i s s i o n e r r e q u e s te d the A tto r n e y

of a m u lti-s ta te b a n k h o ld in g c o m p a n y as w e ll as

G e n e r a l to issu e a n o p in io n o n th e a p p lic a tio n of

to th e e x p a n s i o n o f a n e x i s ti n g m u l t i - s t a t e b a n k

th at s e c tio n to th e p r o p o s e d t r a n s a c tio n . T h e b o a r d

h o l d i n g c o m p a n y . A s a m a t t e r o f l o g i c , if s e c t i o n

has e x a m in e d

3(d)

th e

M ary lan d

A tto rn ey

G e n e r a l ’s

o p in io n r e g a rd in g se ctio n 7 2 , as w ell as s u b m i s ­

w ere

deem ed

in ap p licab le

to

a

proposed

h o ld in g c o m p a n y f o r m a t i o n , th e b o a r d w o u l d n o t

s io n s o n th is iss u e b y A p p l i c a n t s a n d F G , a n d h a s

b e p r e c l u d e d f r o m g r a n t i n g a p p r o v a l to a n a p p l i ­

f o u n d th a t o p i n i o n to b e w e ll r e a s o n e d , c o n s i s t e n t

c a tio n fo r th e f o r m a t i o n of a b a n k h o ld in g c o m ­

w ith th e sta tu to ry la n g u a g e of th at se c tio n , an d

p a n y th r o u g h th e s i m u l t a n e o u s a c q u is itio n o f c o n ­

n ot in c o n s is te n t w ith e ith e r th e a p p a r e n t in ten t of

trol

t h e s t a t u t e o r its l e g i s l a t i v e h i s t o r y . T h e r e f o r e , t h e

interp retatio n

w ould

b o a r d c o n c l u d e s t h a t b e c a u s e F G ’s M a r y l a n d b a n k

sional

to

s u b s i d i a r y h a s n o t i n d i c a t e d its i n t e n t t o h a v e a n

c o m p a n ie s , and p e rm it tra n sa c tio n s clearly in c o n ­

of

banks
intent

in

tw o

or

m ore

fru strate

lim it

sta te s.
a

clear

m u lti-state

Such

an

C ongres­

bank

ho ld in g

affiliate, th e in d ire c t a c q u is itio n o f F irst A m e r i c a n

siste n t w ith th e p u r p o s e o f s e c tio n

B a n k of M a ry la n d th ro u g h A p p li c a n ts ’ a c q u isitio n

b o a r d ’s v i e w , s e c t i o n 3 ( d ) w a s d e s i g n e d t o p r e ­

o f F G w o u l d b e in v i o l a t i o n o f s e c t i o n 7 2 . A c ­

c lu d e the b o a rd

c o r d i n g l y , t h e b o a r d f i n d s t h a t it is p r e c l u d e d b y
law f ro m a p p r o v in g this a p p l i c a t i o n .4

ad d itio n a l inter-state b a n k h o ld in g c o m p a n ie s
a b o v e a n d b e y o n d th o s e g r a n d f a th e r e d u n d e r th e

from

app ro v in g

3 (d).

In th e

th e c r e a tio n of

T u r n i n g n e x t to a c o n s i d e r a t i o n o f th e F e d e r a l

A c t . T h e r e f o r e , t h e b o a r d f i n d s A p p l i c a n t s ’ first

B a n k H o ld in g C o m p a n y A c t, se c tio n 3 (d ) of the

a r g u m e n t in c o n s is te n t w ith b o th th e in te n t o f th e

A ct p ro h ib its the b o a r d f ro m a p p r o v in g an a p p l i ­

A ct a n d prior b o ard p o sitio n s.
W ith r e s p e c t to A p p l i c a n t s ’ s e c o n d a r g u m e n t ,

3 This opposition was stated in the memorandum on the
Maryland state law issues filed with the Bank C om m issioner
of the state of Maryland on behalf of First Am erican Bank
of Maryland.
4 The board notes that the Maryland statute applies equally
to in-state and out-of-state “ affiliates” and the statute therefore
does not discriminate against acquisitions by non-M aryland
banking organizations. Furthermore, the board notes that C on­
gress has reserved to the states, in section 7 of the A ct, the
right to exercise their power and jurisdiction with respect to
banks and bank holding com panies. Where restrictions on the
acquisition of banks are placed by a state in a nondiscriminatory
manner, it does not appear that the state is interfering with
the freedom of trade betw een states guaranteed by the co m ­
merce clause of the Constitution. See B T Investment M a n a g ­
ers, Inc. and Bankers Trust N e w York Corpo ra tio n v. Lewis,
N o. TCA 73 -1 8 4 (N .D . Fla. D ecem ber 15, 1978).




A p p l i c a n t s u r g e th a t s e c t i o n 3 ( d ) a p p l i e s o n l y to
th e d ire c t or in d ire c t a c q u is itio n o f an a d d itio n a l
b a n k l o c a t e d in a s t a t e o t h e r t h a n t h a t in w h i c h
t h e b a n k h o l d i n g c o m p a n y h a s its p r i n c i p a l o p e r a ­
tio n s. S in c e th e p r o p o s e d a c q u is itio n w o u ld b e of
F G a s it e x i s t s a t t h e t i m e o f t h e p r o p o s e d t r a n s a c ­
tio n , the a c q u is itio n w o u ld n o t in v o lv e th e d ire c t
or indirect a cq u isitio n of an y “ a d d itio n a l” b a n k s
o th e r th an th o se p re se n tly c o n tro lle d by F G .
A p p lic a n ts ’ a r g u m e n t c o u ld be restated as fo l­
lo w s: A t the p r e s e n t tim e th e re are s e v e n m u l t i ­
sta te

bank

h o ld in g

co m p an ies,

in clu d in g

FG,

g r a n d fa th e re d u n d e r th e A c t as to th eir b a n k in g

256

Federal Reserve Bulletin □ March 1979

N o tic e of the a p p lic a tio n , a ffo rd in g o p p o rtu n ity

i n t e r e s t s . If t h e p r o p o s e d a c q u i s i t i o n w e r e p e r m i t ­
ted, there w o u ld

sti l l o n l y

be

for in terested

se v e n m ulti-state

persons

to s u b m it

co m m en ts

and

b an k h o ld in g c o m p a n ie s. T h e c o m p a n ie s ho ld in g

v i e w s , h a s b e e n g i v e n in a c c o r d a n c e w i t h s e c t i o n

th e F G s h a re s w o u l d o w n o r c o n tr o l o n ly th o se

3 ( b ) o f t h e A c t . T h e t i m e f o r f i li n g c o m m e n t s a n d

banks ow ned

e n a c tm e n t of se c tio n 3 (d ). A p p lic a n ts , w h ic h are

v ie w s has e x p ir e d , a n d the b o a rd has c o n s id e re d
t h e a p p l i c a t i o n a n d all c o m m e n t s r e c e i v e d in l i g h t

essentially

o f t h e f a c t o r s s e t f o r t h in s e c t i o n 3 ( c ) o f t h e A c t .

or c o n tro lle d

shell

by

co rp o ra tio n s,

FG

prior

w ould

to th e

m erely

be

n ew p aren t o rg a n iz a tio n s o v e r a p re -e x istin g b an k

S e c tio n 3 (c ) o f th e B a n k H o l d i n g C o m p a n y A c t

ho ld in g c o m p a n y , and no additional b an k w o u ld

p re c lu d e s the b o a rd fro m a p p r o v in g any a c q u is i­

b e a d d e d to an e x is tin g m u lti-s ta te b a n k h o ld in g

tio n by a b a n k h o ld in g c o m p a n y th a t (1) w o u l d

c o m p a n y stru c tu re . T h u s , the C o n g r e s s io n a l in ten t

r e s u l t in a m o n o p o l y o r b e in f u r t h e r a n c e o f a n y

of p r o h ib itin g th e f o rm a tio n a n d lim itin g th e e x ­

c o m b i n a t i o n to m o n o p o l i z e o r a tte m p t to m o n o p o ­

pansion

lize a b a n k i n g m a r k e t , or th a t (2) m a y su b s ta n tia lly

of

m ulti-state

bank

h o ld in g

co m p an ies

w o u l d b e p r e s e r v e d e v e n if t h i s a c q u i s i t i o n w e r e

le s se n c o m p e t i t i o n o r te n d to c re a te a m o n o p o l y

p e r m i t t e d b y t h e b o a r d . T h e b o a r d c o n c u r s in t h i s

o r b e in r e s t r a i n t o f t r a d e in a n y b a n k i n g m a r k e t

v iew a n d c o n c lu d e s , th e re fo re , that se ctio n 3(d)

(u n le ss the a n tic o m p e titiv e effe cts are c le a rly o u t ­

w o u l d n o t b e v i o l a t e d if t h e b o a r d w e r e t o a p p r o v e

w eighed

th e p r o p o s e d t r a n s a c t i o n . 5

com m unity).

by

th e

conven ien ce

and

needs

of

the

A p p l i c a n t is a n o n o p e r a t i n g c o r p o r a t i o n o r g a n ­

I n v i e w o f t h e b o a r d ’s f i n d i n g t h a t it m a y n o t
g r a n t a p p r o v a l to th e p r o p o s e d tr a n s a c tio n b e c a u s e

ized for th e

it w o u l d v i o l a t e M a r y l a n d l a w , t h e b o a r d h e r e w i t h

h o ld s d e p o sits of $ 1 0 .9 m illio n .1 U p o n acq u isitio n

d i s m i s s e s t h e a p p l i c a t i o n a s b e y o n d t h e b o a r d ’s

of

a u th o r ity to a p p r o v e , a n d s u c h a c t i o n r e p r e s e n t s

sm a ller

a f in a l d e t e r m i n a t i o n b y t h e b o a r d o n t h i s m a t t e r .

c a n t ’s p r i n c i p a l , w h o o w n s 8 0 p e r c e n t o f B a n k ’s

B y o rd e r of the B o a rd of G o v e r n o r s , e ffe ctiv e

o u tsta n d in g sh a res, also co n tro ls, th ro u g h a o n e

F ebruary

Bank,

purpose of

A pplicant

banking

b ank h o ld in g

16, 197 9 .

acq u irin g

w o u ld

control

o rganizations

com pany,

Bank,

F irst

in

one

of

Iow a.

N ational

w hich
th e

A p p li­

Bank

of

N e w H a m p t o n ( “ N e w H a m p t o n B a n k ” ), l o c a t e d
V o tin g fo r th is a c tio n : C h a ir m a n M ille r and G o v e r ­
n ors C o ld w e ll, P a r te e , and T e e te r s . A b s e n t and n ot
v o tin g : G o v e r n o r W a llic h .

12

m iles

C ounty.
( S ig n e d ) Jo h n M . W

[s e a l]

allace

,

A s s i s t a n t S e c r e t a r y o f the B o a r d .

north

H am p to n ,

of

Iow a,
Bank

is

in

county

also

the

tow n

of

N ew

seat of C h ic k a sa w

located

in

C h ick asaw

C o u n t y . In a d d itio n to h is s to c k o w n e r s h i p in te r ­
e s t s in t h e t w o b a n k s , A p p l i c a n t ’s p r i n c i p a l a l s o
se rv es as p re s id e n t

First S tate B a n c o rp o r a tio n ,

Bank

th e

and d irecto r

of B ank,

N ew

H a m p t o n B a n k a n d its p a r e n t b a n k h o l d i n g c o m ­

F redericksburg, Iow a

pany.

Order Denying
Formation of a Bank Holding Company

N e w H a m p t o n B a n k a r e l o c a t e d in s e p a r a t e b a n k ­

A p p lic a n t c o n te n d s a lte rn a tiv e ly , that B a n k a n d
ing m a r k e ts , o r that the re le v a n t b a n k in g m a r k e t

First

S tate

B an co rp o ratio n ,

F re dericksburg,

I o w a , h a s a p p l i e d f o r t h e b o a r d ’s a p p r o v a l u n d e r

consists of

all

of C h ic k a sa w

C o u n ty

and

large

p o r tio n s o f th re e a d j a c e n t c o u n tie s . In s u p p o r t of

se ctio n 3 (a)(1 ) of the B a n k H o ld in g C o m p a n y A ct

its c o n t e n t i o n s , A p p l i c a n t h a s s u b m i t t e d d a t a c o n ­

(12 U .S .C . § 1 8 4 2 (a)(1 )) of f o rm a tio n of a b a n k

c e r n in g th e r e s p e c tiv e s e rv ic e a re a s fo r lo a n s a n d

h o ld in g c o m p a n y by a cq u irin g 8 3 .7 3 p ercen t of

d e p o s its of th e b a n k s

th e

v o tin g

shares

of First

S tate

Bank,

i c k s b u r g , I o w a ( “ B a n k ” ).

5 In connection with its consideration of these matters, the
board has also had the opportunity to review Article 11, section
31A (b) of the Maryland C ode, which provides that an “ affi­
liated corporation,” defined generally as a corporation ow ning
a non-M aryland bank, may not becom e a bank holding co m ­
pany with respect to a Maryland bank. The provision is
som ewhat similar in effect to section 3(d) of the Federal Bank
H olding Com pany Act to the extent that it w ould appear to
preclude an out-of-state bank holding com pany from acquiring




in v o lv e d .2 A p p lic a n t also

F reder­
a Maryland bank. The Maryland Attorney General declined
to rule on the relevance of section 31A (b) to the subject
proposal, since his disposition of the other legal issue rendered
the transaction illegal. In the absence of any authoritative view
to the contrary, it w ould appear that the board’s discussion
with respect to section 3(d) of the Bank H olding Company
Act would be relevant to a determination of the effect of section
31A (b) of the Maryland Code on the subject transaction.
1 All banking data are as of D ecem ber 31 , 1977.
2 In particular, A pplicant cites the lack of substantial overlap
of the service areas of Bank and N ew Hampton Bank. H ow ­
ever, the board notes that in this case the lack of service area

Law Department

m a k e s a lleg atio n s c o n c e rn in g the ex te n t of c o m ­
m ercial

interactio n

w ithin

the

fo ur-county

area

g e n e ra lly . W h ile the r e sp e c tiv e se rv ic e areas of

257

g o v e r n m e n t a n d se rv ic e s . In a d d itio n , c e rta in sta te
and

federal

governm ent

offices

c o u n t y a r e l o c a t e d in N e w

for

th e

entire

H am p to n . M o reo v er,

is o n e

it a p p e a r s t h a t t h e r e is n o t a n y s i g n i f i c a n t a m o u n t

o f t h e f a c t o r s t h a t t h e b o a r d c o n s i d e r s in d e t e r ­

of c o m m u tin g b e tw e e n c o u n tie s by the re sid e n ts

m i n i n g th e r e l e v a n t b a n k i n g m a r k e t in w h i c h to

of C h ic k a s a w C o u n ty a n d the a d ja c e n t c o u n tie s .

b a n k s i n v o l v e d in a p r o p o s e d t r a n s a c t i o n

a n a ly z e the c o m p e titiv e effects of a p r o p o s a l, su c h

B a s e d o n t h e f o r e g o i n g , it a p p e a r s t h a t B a n k

se rv ice are a s are not d is p o s itiv e o f that d e te r m i­

a n d N e w H a m p t o n B a n k a r e l o c a t e d in t h e r e l e v a n t

n a tio n .3 B a se d o n facts of re c o rd d isc u sse d b e lo w ,

b a n k in g m a rk e t d e s c rib e d a b o v e . W ith in that m a r ­

it a p p e a r s

k e t , B a n k is t h e t h i r d l a r g e s t o f s e v e n c o m m e r c i a l

that

Bank

and

N ew

H am p to n

Bank

s h o u l d in f a c t b e r e g a r d e d a s r e a s o n a b l e a l t e r n a ­

b a n k s , a n d co n tro ls a p p r o x im a te ly 1 2 .4 p e rc e n t of

tiv e s to o n e a n o th e r .

t h e t o t a l c o m m e r c i a l b a n k d e p o s i t s in t h e m a r k e t .

W ith

regard

to

A p p l i c a n t ’s

alternative

four-

c o u n t y m a r k e t d e f i n i t i o n , t h e b o a r d f i n d s t h a t , in

N ew

H am pton B ank,

w ith $ 2 7 .8

m i l l i o n in d e ­

p o s i t s , is t h e l a r g e s t b a n k in t h e r e l e v a n t m a r k e t

this c a s e , a b a n k in g m a r k e t e n c o m p a s s i n g so larg e

a n d c o n tr o ls a p p r o x i m a t e l y 3 1 . 5 p e r c e n t o f total

a n a r e a is n o t s u p p o r t e d b y t h e f a c t s . I n a d d i t i o n

d e p o s i t s in t h e m a r k e t . T o g e t h e r B a n k a n d N e w

to

H a m p to n B a n k co n tro l 4 4 p e r c e n t of the d e p o s its

A p p l i c a n t ’s

su b m issio n s,

the

board

v i e w e d t h e r e s u l t s o f a fi e l d s u r v e y

has

re­

o f th e a re a

in t h e r e l e v a n t b a n k i n g m a r k e t .

th at in c lu d e d in te r v ie w s w ith lo cal b a n k e r s , n e w s ­

U p o n a p p lic a tio n of the c o m p e titiv e sta n d a rd s

p a p e r p u b l i s h e r s a n d b u s in e s s r e p r e s e n t a t i v e s , as

o f s e c tio n 3 (c ) o f th e A c t to th e fa c ts o f r e c o r d ,

w ell

as

co m m u tin g

data,

m u nications p atterns,

a d v ertisin g

and

com ­

a n d c o n s u m e r trade in fo r­

th e B o a r d h a s c o n c l u d e d th a t su b s ta n tia l e x is tin g
com petition

b etw een

Bank

and

N ew

H am p to n

m a t i o n . B a s e d o n its c a r e f u l r e v i e w o f t h e e n t i r e

B a n k w a s e l i m i n a t e d w h e n A p p l i c a n t ’s p r i n c i p a l ,

r e c o r d o f t h i s a p p l i c a t i o n , t h e b o a r d is o f t h e v i e w

who

th at th e re le v a n t b a n k in g m a r k e t fo r th e p u r p o s e s

1 9 6 9 , a c q u i r e d c o n t r o l o f B a n k in 1 9 7 2 . A c q u i s i ­

had

co n tro lle d

N ew

H am p to n

Bank

since

o f a n a ly z in g th e c o m p e titiv e effe c ts o f th e tr a n s ­

tio n o f c o n tr o l o f B a n k a n d N e w H a m p t o n B a n k

a c t i o n is a n a r e a c o m p o s e d p r i m a r i l y o f C h i c k a s a w

b y A p p l i c a n t ’s p r i n c i p a l r e s u l t e d in h i s c o n t r o l o f

C o u n t y . 4 T h e b o a r d b e lie v e s th a t th is a r e a c o n s t i ­

a p p r o x i m a t e l y 4 4 p e r c e n t o f d e p o s i t s in c o m m e r ­

tu te s a d is tin c t b a n k i n g m a r k e t b e c a u s e , f r o m th e

cial b a n k s

record,

su b s ta n tia lly le s s e n e d c o m p e titio n b e tw e e n the tw o

H am p to n

it

appears
is

th e

that

in

m any

co m m ercial

cen ter for C h ic k a sa w

C o u n ty ,

resp ec ts

New

in t h e

relev an t

b an k in g

m ark et,

has

gov ern m en tal

b a n k s , a n d w a s a n t i c o m p e t i t i v e in its i n c e p t i o n ,

in clu d in g F re d e r­

a facto r the b o a rd has re g a r d e d as significant a n d

and

i c k s b u r g . I n p a r t i c u l a r , N e w H a m p t o n is t h e l a r g ­

relevant

e s t c o m m u n i t y in C h i c k a s a w C o u n t y , a n d , a s t h e

a s p e c t s o f a n a c q u i s i t i o n . 5 I n t h e b o a r d ’s v i e w t h e

c o u n t y s e a t , c o n t a i n s all m a j o r o f f i c e s f o r c o u n t y

s u b je c t p r o p o s a l p r e s e n ts a c a s e w h e r e th e h o ld in g
c o m p a n y s t r u c t u r e is b e i n g u s e d t o m a i n t a i n c o n ­

overlap may m erely reflect the lack of com petition betw een
the tw o banks as a result of their com m on ow nership and
control by A pplicant’s principal since 1972.
3
The board notes that w hile the Supreme Court has indicated
that the com petitive effects of a proposed merger or
acquisition should be judged in a localized market, that Court
has stated that “ the proper question is not where the parties
to the merger do business or even where they com pete, but
where, within the area of com petitive overlap, the effect of
the merger on com petition will be direct and im m ed iate.’’
United States v. Philadelphia Na tio na l Bank, 374 U .S . 321
(1963). In determ ining what this area is, the Supreme Court
sought “ to delineate the area in which bank custom ers that
are neither very large or very small find it practical to do their
banking business, . . . ’’ United States v. Philadelphia National
Bank, supra. See also the board’s Order in Ellis Banking
Corpora tio n, (64 F e d e r a l R e s e r v e B u l l e t i n 884 (1 9 78)).
4 Specifically, the board b elieves that the relevant banking
market is approximated by three-fourths of Chickasaw County
east of the W apsipinicon River, the southeastern portion of
Howard C ounty, which includes the town of Elm a, and a small
northern portion of Bremer C ounty, which includes the town
of Frederika.

t r o l o f a b a n k t h a t is a d i r e c t c o m p e t i t o r o f a n o t h e r




to

a

co nsideration

of

th e

b a n k u n d e r th e c o n tro l o f th at s a m e

com petitive

individual.

In lig h t o f th e m a r k e t s h a r e s o f th e o r g a n i z a t i o n s
in v o lv ed ,

th e

board

is

of

the

o p inion

th at

the

a p p lic a tio n s h o u ld b e d e n i e d sin c e a p p r o v a l o f this
p r o p o s a l w o u ld s e rv e to p e r p e t u a t e a s u b s ta n tia lly
a d v e r s e c o m p e t i t i v e s i t u a t i o n in t h e r e l e v a n t b a n k ­
ing m a r k e t . 6
5 See the board’s Order of M ay 11, 1977, denying an
application by M ahaska Investm ent C om pany, O skaloosa,
Iowa (63 F e d e r a l R e s e r v e B u l l e t i n 579 (1 9 7 7 )), to form
a bank holding com pany because a prior purchase by A ppli­
cant’s principals had previously elim inated substantial com p e­
tition betw een two banks.
K In this regard, the board notes that in B o a r d of G ov erno rs
of the Federal R ese rv e System v. First Li ncoln w ood C orp .,
47 U .S .L .W . 4048 (D ecem ber 11, 1978) the Supreme Court
upheld the board’s authority to deny approval for formation
of a one bank holding com pany on the basis of pre-existing,

258

Federal Reserve Bulletin □ March 1979

T h e su b je ct p ro p o sa l p re se n ts a situ atio n w h e re
t h e h o l d i n g c o m p a n y f o r m is b e i n g u s e d t o f u r t h e r
an a n tic o m p e titiv e a rra n g e m e n t. W h ile d en ial of
this p r o p o s a l

m ay

not

im m ediately

result

in

V o tin g fo r th is a c tio n : G o v e r n o r s W a llic h , C o ld w e ll,
P a r te e , and T e e te r s . A b s e n t and n ot v o tin g : C h a ir m a n
M ille r .

(S ig n e d ) G r i f f i t h

a

c o m p le te te r m in a tio n o f the a n tic o m p e titiv e s itu a ­

L. G a r w o o d ,

D e p u t y S e c r e t a r y o f the B o a r d .

[se a l]

t i o n , it w o u l d p r e s e r v e t h e d i s t i n c t p o s s i b i l i t y t h a t
Bank

co u ld

co m p etin g

ag ain

becom e

o rganization

in

an

independent

th e

fu tu re.

and

A lterna­

G len -A n C o rp o ratio n ,

tiv e ly , a p p ro v a l w o u ld so lid ify a n d s tr e n g th e n the

K anaranzi, M in n eso ta

c o m m o n o w n e r s h ip o f th e tw o b a n k s a n d w o u ld
d im in ish

th e

p o ssib ility

of

disa ffiliatio n

in

the

future.
O n th e b asis of th e f o re g o in g a n d th e fa cts of

O rder A pproving
F o r m a t io n o f B a n k H o l d i n g C o m p a n y
G len -A n

C o rp o ratio n ,

K anaranzi,

M in n eso ta,

r e c o r d , th e b o a r d c o n c lu d e s th at a p p r o v a l of the

h a s a p p l i e d f o r t h e b o a r d ’s a p p r o v a l u n d e r s e c t i o n

ap p licatio n w o u ld h av e

3 (a)(1 ) of the

significant a d v e rse c o m ­

Bank

H o ld in g C o m p a n y

A ct (12

p e titiv e effe cts. A c c o r d in g ly , u n d e r th e s ta n d a rd s

U .S .C .

s e t f o r t h in t h e B a n k H o l d i n g C o m p a n y A c t , t h e

h o ld in g c o m p a n y th ro u g h acq u isitio n of 9 5 .6 p e r ­

§ 1842(a)(1))

of

form ation

of

a

bank

p r o p o s a l m a y not b e a p p r o v e d u n le s s the a d v e rs e

cen t of the v o tin g s h a re s o f F a r m e rs S tate B a n k

com petitive

o f K a n a r a n z i ( “ B a n k ” ), K a n a r a n z i , M i n n e s o t a .

factors

are

clearly

o u tw eig h ed

by

o t h e r p u b l i c i n t e r e s t c o n s i d e r a t i o n s r e f l e c t e d in t h e
r e c o r d . In th is c a s e , th e b o a r d finds th a t th e a d v e r s e
c o m p e titiv e a sp e c ts are c learly not o u tw e ig h e d .
T h e financial a n d m a n a g e r ia l r e s o u r c e s of A p ­
p lic a n t, w h ic h are en tire ly d e p e n d e n t u p o n those
of B a n k , are c o n s id e re d g e n e ra lly sa tis fa c to ry an d
their fu tu re p r o sp e c ts a p p e a r fa v o ra b le . T h e re f o r e ,
c o n s i d e r a t i o n s r e la tin g to b a n k i n g f a c to rs are c o n ­
sisten t w ith a p p r o v a l of the su b je c t a p p lic a tio n .
N o s i g n i f i c a n t c h a n g e s in t h e s e r v i c e s o t t e r e d b y
B a n k are e x p e c t e d to re su lt f r o m c o n s u m m a t i o n
o f th e p r o p o s e d a c q u is itio n . T h u s , c o n v e n i e n c e
and need s factors are c o n siste n t w ith , but lend no
w eig h t to w ard ,

a p p ro v al.

A cco rd in g ly ,

it is t h e

b o a r d ’s j u d g m e n t t h a t a p p r o v a l o f t h i s a p p l i c a t i o n
w o u l d n o t b e in t h e p u b l i c i n t e r e s t a n d t h a t t h e
ap p licatio n should be d en ied .
O n t h e b a s i s o f t h e f a c t s o f r e c o r d , a n d in l i g h t
it is t h e b o a r d ’s j u d g m e n t t h a t c o n s u m m a t i o n o f
proposal

to

form

a bank

h o ld in g

com pany

w o u l d n o t b e in t h e p u b l i c i n t e r e s t a n d t h a t t h e
a p p l i c a t i o n s h o u l d b e a n d is h e r e b y d e n i e d f o r t h e
reaso n s su m m a riz e d h erein.
B y o r d e r o f th e B o a rd o f G o v e r n o r s , e ffe c tiv e
February

persons

to s u b m i t

co m m en ts

and

v i e w s , h a s b e e n g i v e n in a c c o r d a n c e w i t h s e c t i o n
3 ( b ) o f t h e A c t . T h e t i m e f o r f i li n g c o m m e n t s a n d
v ie w s h as e x p ir e d , a n d th e b o a rd h as c o n s id e re d
t h e a p p l i c a t i o n a n d all c o m m e n t s r e c e i v e d in l i g h t
o f t h e f a c t o r s s e t f o r t h in s e c t i o n 3 ( c ) o f t h e A c t
(12 U .S .C . § 1 8 4 2 (c )).
A p p l i c a n t is a n o n o p e r a t i n g c o r p o r a t i o n w i t h n o
s u b s i d i a r i e s . It w a s o r g a n i z e d f o r t h e p u r p o s e o f
beco m in g

a bank

h o ld in g c o m p a n y

th r o u g h the

acq u istio n of B a n k , w h ic h h o ld s d ep o sits of $ 3 .7
m illio n .1 U p o n acq u isitio n of B a n k , A p p lic a n t
w o u l d c o n t r o l t h e 5 6 7 t h l a r g e s t b a n k in M i n n e s o t a ,
w i t h 0 . 0 2 p e r c e n t o f t o t a l d e p o s i t s in c o m m e r c i a l
b a n k s in t h e s t a t e .

Bank

is t h e s i x t h

largest of

e i g h t b a n k i n g o r g a n i z a t i o n s in t h e r e l e v a n t b a n k i n g

o f t h e f a c t o r s s e t f o r t h in s e c t i o n 3 ( c ) o f t h e A c t ,
the

N o tic e of th e a p p l i c a t i o n , a ffo r d in g o p p o r t u n it y
for in terested

16, 1 9 7 9 .

m a r k e t , 2 h o l d i n g 5 . 2 p e r c e n t o f t o t a l d e p o s i t s in
c o m m e r c i a l b a n k s in t h e m a r k e t .
posed

tran sactio n

S in c e th e p r o ­

re p re se n ts a re o rg a n iz a tio n

of

e x i s t i n g o w n e r s h i p i n t e r e s t s in B a n k , a n d A p p l i ­
cant has no o th er su b sid iarie s and

is n o t u n d e r

c o m m o n control w ith any o th er b a n k in g o rg a n i­
z a tio n , c o n s u m m a ti o n of th e p ro p o s a l w o u ld not
have
w ould

any

adverse

it i n c r e a s e

effect
the

upon

com petition

concentration

r e s o u r c e s in a n y r e l e v a n t a r e a .

of

nor

banking

T h u s , the b o a r d

c o n c l u d e s th at th e c o m p e t i t i v e e tle c ts of the p r o ­
unfavorable aspects even though the formation will neither
cause nor enhance the already existing adverse aspects. Thus,
the board may deny approval due to conditions that predate
the proposed holding com pany formation. Although the First
Lincolnwood case involved adverse financial factors, the ra­
tionale of the board’s authority to deny a bank holding com pany
formation is equally applicable to an anticom petitive arrange­
ment, especially in light of the A c t’s strong em phasis against
anticom petitive com binations.




p o sa l are c o n s is te n t w ith a p p r o v a l o f the a p p l i c a ­
tion.
1 D eposits are as of June 30, 1978. Other banking data are
as of September 30, 1977.
2 The relevant banking market is approximated by Rock
County and the southwestern corner of Pipestone County.

Law Department

T h e financial a n d m a n a g e r ia l r e s o u r c e s a n d f u ­
ture p ro sp e c ts of A p p lic a n t, w h ic h are d e p e n d e n t

259

shares) of C itizen s N atio n al B a n k of A u stin , A u s ­
t i n , T e x a s ( “ B a n k ” ).
N o tic e o f th e a p p lic a tio n , a ffo rd in g o p p o r tu n ity

u p o n t h o s e o f B a n k , a r e s a t i s f a c t o r y . B y its O r d e r
d a t e d A p r i l 1 5 , 1 9 7 7 , t h e b o a r d d e n i e d A p p l i c a n t ’s
p r e v i o u s a p p l i c a t i o n to b e c o m e a b a n k h o l d i n g

for in terested

c o m p a n y . 3 H o w e v e r , the o p e r a tio n s of B a n k h a v e

3 ( b ) o f th e A c t. T h e t im e f o r filing c o m m e n t s a n d

now

im p r o v e d u n d e r the m a n a g e m e n t o f A p p l i ­

c a n t ’s p r i n c i p a l s ,

it a p p e a r s

co m m en ts

and

v ie w s h as e x p ir e d , a n d the b o a r d h as c o n s id e re d
t h e a p p l i c a t i o n a n d all c o m m e n t s r e c e i v e d in l i g h t

w o u l d b e a b le to s e rv ic e th e d e b t to b e in c u r re d

o f t h e f a c t o r s s e t f o r t h in s e c t i o n 3 ( c ) o f t h e A c t

in c o n n e c t i o n w i t h

(12 U .S .C . § 1842(c)).

th is p r o p o s a l

that

to s u b m i t

A pplicant

verse effect o n

and

persons

v i e w s , h a s b e e n g i v e n in a c c o r d a n c e w i t h s e c t i o n

w ith o u t an a d ­

th e financial c o n d itio n o f B a n k .

A p p l i c a n t , t h e fifth l a r g e s t b a n k i n g o r g a n i z a t i o n

In lig h t o f th e f a c ts o f r e c o r d , th e b o a r d c o n c l u d e s

in T e x a s , c o n t r o l s e i g h t b a n k s w i t h t o t a l d e p o s i t s

th at c o n s i d e r a t i o n s r e la tin g to b a n k i n g f a c to rs are

of

c o n s is te n t w ith a p p r o v a l o f th e su b je c t a p p lic a tio n .

p ro x im a te ly 4.1

W hile

no m ajo r c h a n g e s are c o n te m p la te d

in

ap proxim ately

c o m m ercial

$ 2 .4

b illio n ,

representing

ap­

p e r c e n t o f th e total d e p o s its

banks

in

the

s ta te .1 A c q u is itio n

in
of

r e la tin g to c o n ­

B a n k (d ep o sits of a p p ro x im a te ly $ 3 3 .6 m illio n ),

v e n ie n c e a n d n e e d s o f the c o m m u n i t y to b e s e rv e d

the 2 4 1 st larg est c o m m e r c ia l b a n k in g o rg a n iz a tio n

a r e c o n s i s t e n t w i t h a p p r o v a l . A c c o r d i n g l y , it is t h e

in T e x a s ,

b o a r d ’s j u d g m e n t

c o m m e r c i a l b a n k d e p o s i t s in t h e s t a t e b y a p p r o x i ­

B a n k ’s s e r v i c e s ,

considerations

that

A p p l i c a n t ’s

proposal

to

w ould

in crease

A p p l i c a n t ’s s h a r e

of

f o r m a b a n k h o l d i n g c o m p a n y is c o n s i s t e n t w i t h

m ately 0 .0 6 p ercen t and w o u ld h av e no a p p re c ia ­

the p u b lic in tere st a n d that the a p p lic a tio n sh o u ld

ble effect u p o n the c o n c e n tr a tio n o f b a n k in g r e ­

be a p p ro v e d .

s o u r c e s in T e x a s .

O n the b asis o f the re c o r d , th e a p p lic a tio n

is

a p p r o v e d for the r e a s o n s s u m m a r i z e d a b o v e . T h e

Bank

is t h e

eig h th

largest

o f 21

co m m ercial

b a n k i n g o r g a n i z a t i o n s l o c a t e d in t h e A u s t i n b a n k ­

t ra n s a c tio n shall not be m a d e b e f o re the th irtieth

ing m a r k e t 2 a n d h o ld s a p p r o x im a te ly

c a l e n d a r d a y f o l lo w in g th e e f fe c tiv e d a te o f this

o f t o t a l c o m m e r c i a l b a n k d e p o s i t s in t h e m a r k e t .

O r d e r o r later th a n th ree m o n th s after th e e ffe ctiv e

A p p l i c a n t h a s o n e b a n k i n g s u b s i d i a r y in t h e r e l e ­

d a t e o f t h i s O r d e r , u n l e s s s u c h p e r i o d is e x t e n d e d

vant

for g o o d c a u s e b y the b o a r d , o r b y th e F e d e ra l

b anking organization

R eserve

ap proxim ately

B a n k of M i n n e a p o l is p u r s u a n t to d e l e ­

b an k in g

m arket

and

is

in t h e

12.7 p e rc e n t

th e

1.8 p e r c e n t

fourth

m arket,

largest

c o n tro llin g

of m arket

d ep o sits.

U p o n c o n s u m m a t i o n o f th e p r o p o s e d a c q u i s i ti o n ,

g ated au th o rity .
B y o r d e r o f th e B o a rd o f G o v e r n o r s , e ffe c tiv e

A p p l i c a n t ’s s h a r e o f c o m m e r c i a l b a n k d e p o s i t s in

February 2,

the m a r k e t w o u ld

1979.

Voting for this action: Chairman Miller and G over­
nors W allich, C oldw ell, Partee, and Teeters.

[s e a l ]

r if f it h

L. G

arw ood

,

D e p u ty S e c r e ta r y o f the B o a r d .

to

14.5 p e rc e n t

and

In asm u ch as A p p lica n t and B ank op erate in the
sam e

(S ig n ed ) G

increase

A p p l i c a n t ’s r a n k in t h e m a r k e t w o u l d n o t c h a n g e .
relevant

m arket,

th e

proposed

a cq u isitio n

w o u ld e lim in a te so m e e x istin g c o m p e titio n . H o w ­
e v e r , t h e b o a r d b e l i e v e s t h a t t h i s e f f e c t is m i t i g a t e d
by the u n u su a l c i r c u m s ta n c e s o f th e w e a k p e r f o r ­
m a n c e a n d d e c l i n i n g r o l e o f B a n k in t h e m a r k e t

M e rca n tile T e x a s C o rp o ra tio n ,
D allas, T ex as

in r e c e n t y e a r s . F u r t h e r , t h e b o a r d ’s v i e w o f t h e
c o m p e titiv e effe c ts w a s in flu e n ce d b y th e A u s tin
m a r k e t ’s b a n k i n g s t r u c t u r e , i n c l u d i n g t h e f a c t t h a t

O rd e r A p p r o v in g A cq u isitio n o f B ank

t h e f iv e l a r g e s t b a n k i n g o r g a n i z a t i o n s in T e x a s a r e
am ong

M e rc a n tile T e x a s C o rp o ra tio n , D allas, T e x a s,
a b an k h o ld in g c o m p a n y

m ark et.

the

larger

W h ile

b anking

o rganizations

co n su m m a tio n

of

the

in

the

proposal

w ith in the m e a n in g of

w o u ld r e d u c e th e n u m b e r o f in d e p e n d e n t b a n k in g

the B a n k H o ld in g C o m p a n y A c t, h as a p p lie d for

o r g a n i z a t i o n s l o c a t e d in t h e A u s t i n b a n k i n g m a r -

t h e B o a r d ’s a p p r o v a l u n d e r s e c t i o n 3 ( a ) ( 3 ) o f t h e
A c t ( 1 2 U . S . C . § 1 8 4 2 ( a ) ( 3 ) ) to a c q u i r e 100 p e r ­
ce n t of the v o tin g s h a re s (less d i r e c t o r s ’ q u a lify in g

3 42 Federal Register 20663 (April 21, 1977).




1 All banking data are as of D ecem ber 31, 1977, and reflect
bank holding com pany acquisitions and applications approved
by the board as of October 31, 1978.
2 The relevant banking market is approximated by the Austin
R M A.

260

Federal Reserve Bulletin □ March 1979

k e t, th e fa cts of re c o rd re v e a l th at th e re w ill r e m a in

3 (a )(3 ) o f the A c t (1 2

a n u m b e r of o th e r e n try v e h icles into the m a rk e t

a c q u i r e all o f

after c o n s u m m a tio n of the p r o p o s a l.

q u a lify in g sh a res) of R im r o c k B a n k of B illin g s,

th e a b o v e a n d

o th er facts

concludes

the

that

In lig h t o f

of record,

proposed

th e

a c q u isitio n

board
w o u ld

U .S .C .

th e v o tin g

§ 1 8 4 2 ( a ) ( 3 ) ) to

sh a re s (less d ir e c to r s ’

B i l l i n g s , M o n t a n a ( “ B a n k ” ).
N o tic e of the a p p lic a tio n , affo rd in g o p p o rtu n ity

h av e on ly slightly a d v e rse e tle c ts on c o m p e titio n ,

for interested

a n d in l i g h t o f t h e c o n s i d e r a t i o n s d i s c u s s e d b e l o w ,

v i e w s , h a s b e e n g i v e n in a c c o r d a n c e w i t h s e c t i o n

th e b o a r d d o e s n o t v ie w su c h e ffe c ts as b e in g so

3 ( b ) o f th e A c t. T h e t im e f o r filing c o m m e n t s a n d

persons

to s u b m i t

co m m en ts

and

v ie w s h as e x p ir e d , a n d the b o a rd has c o n s id e re d

s e r i o u s as to r e q u i r e d e n ia l o f th is p r o p o s a l .
T h e financial a n d m a n a g e r ia l r e s o u r c e s a n d f u ­

t h e a p p l i c a t i o n a n d a l l c o m m e n t s r e c e i v e d in l i g h t

t u r e p r o s p e c t s o f A p p l i c a n t , its s u b s i d i a r y b a n k s ,

o f t h e f a c t o r s s e t f o r t h in s e c t i o n 3 ( c ) o f t h e A c t

an d B a n k are re g a rd e d as sa tisfa c to ry a n d c o n s is t­

(12 U .S .C . § 1 8 4 2 (c)).

ent w ith ap p ro v al

of the a p p lic a tio n .

in te n d s to e x p a n d

B a n k ’s c o n s u m e r

and

b u sin e ss

fo u rth

largest b a n k in g

o rg an i­

se n tin g a p p r o x im a te ly 5 . 6 p e r c e n t o f total d e p o s its

Bank

w ith

p rovide

th e

w ith a g g re g a te d e p o s its of $ 1 9 7 .7 m illio n , r e p re ­

of

and

A pplicant,

z a t i o n in M o n t a n a , c o n t r o l s t h r e e b a n k s u b s i d i a r i e s

o ther

A ffiliation

len d in g

installm ent

s e r v i c e s n o t c u r r e n t l y a v a i l a b l e t o B a n k ’s c u s t o m ­
ers.

sm a ll

A p p lican t

A pplicant

sh o u ld

in c o m m e r c i a l

banks

m a k e B a n k a m o r e v i a b l e c o m p e t i t o r in t h e m a r ­

acq u isitio n

Bank

ket. T h u s , c o n s i d e r a t i o n s r e la tin g to th e c o n v e n ­

w o u l d i n c r e a s e A p p l i c a n t ’s s h a r e o f t o t a l d e p o s i t s

of

in

M o n t a n a . 1 A p p l i c a n t ’s

($ 4 .2

m illio n

in

d ep o sits)

ie n c e a n d n e e d s o f th e c o m m u n i t y to b e s e rv e d

by o n ly 0 .1

lend w eig h t

tow ard

s i g n i f i c a n t i n c r e a s e in t h e c o n c e n t r a t i o n o f b a n k i n g

and,

b o a r d ’s j u d g m e n t ,

in t h e

approval

of the
are

ap p licatio n
sufficient

to

o u tw e ig h any slightly a d v erse etle c ts on c o m p e ti­

percent and w o u ld

n o t r e s u lt in

a

r e s o u r c e s in t h e s t a t e o r c h a n g e A p p l i c a n t ’s r a n k
a m o n g o t h e r b a n k i n g o r g a n i z a t i o n s in M o n t a n a .

tio n th a t m ig h t re su lt f r o m c o n s u m m a t i o n o f the

B a n k is t h e s m a l l e s t o f 10 b a n k s o p e r a t i n g in

p r o p o s a l . It is t h e b o a r d ’s j u d g m e n t t h a t a p p r o v a l

the Y e llo w s to n e C o u n t y , M o n t a n a , b a n k in g m a r ­

o f t h e a p p l i c a t i o n w o u l d b e in t h e p u b l i c i n t e r e s t

k et (the r e le v a n t m a r k e t) , a n d c o n tro ls 0 .8 p e r c e n t

a n d that the a p p lic a tio n s h o u ld b e a p p r o v e d .

o f t h e m a r k e t ’s t o t a l c o m m e r c i a l b a n k d e p o s i t s .

O n th e b a s is o f th e r e c o r d , th e a p p lic a tio n

is

a p p r o v e d fo r the r e a s o n s s u m m a r i z e d a b o v e . T h e

One

of

Bank,

A p p l i c a n t ’s
N .A .,

su b sid iary

B illin g s,

banks,

M o n tan a

S ecurity

( “ S ecurity

tra n s a c tio n shall no t be m a d e b e f o re the th irtieth

B a n k ” ) , is a l s o l o c a t e d

c a le n d a r d a y fo llo w in g th e e ffe c tiv e d a te o f this
O r d e r , or later th a n th re e m o n th s a fte r th e effe c tiv e

S ecurity B a n k

d a t e o f t h i s O r d e r u n l e s s s u c h p e r i o d is e x t e n d e d

d ep o sits rep re se n tin g 3 0 .2 p e rc e n t of m a rk e t d e ­

for g o o d c a u s e by the b o a r d , o r b y th e F e d e ra l

posits.

R eserve

Bank

of

D allas

pursuant

to

delegated

au th o rity .

b an k in g

organization

T he board

in

F eb ru ary 5, 1979.

m ark et,

and

hold s

as an

a d v e rse facto r

in

actin g u p o n an a p p lic a tio n for ap p ro v a l of a p r o ­
p o se d acq u isitio n .

Voting for this action: Chairman Miller and Gover­
nors W allich, C oldw ell, Partee, and Teeters.

th e

n o r m a lly c o n s id e rs th e e lim in a tio n

of ex istin g c o m p e titio n

B y o rd e r of th e B o a rd o f G o v e r n o r s , e ffe c tiv e

in t h e r e l e v a n t m a r k e t .

is t h e s e c o n d l a r g e s t c o m m e r c i a l

H o w e v e r , in its c o n s i d e r a t i o n

of th is p ro p o s a l th e b o a r d n o te s th at B a n k , w h ic h
o p e n e d f o r b u s i n e s s in F e b r u a r y 1 9 7 7 , w a s o r g a n ­
ized d e n o v o by p rin cip als of A p p lic a n t w h o hold

(S ig n e d ) Jo h n M . W
[s e a l ]

allace,

A s s is ta n t S e c r e ta r y o f the B o a r d .

a p p r o x i m a t e l y 7 0 p e r c e n t o f B a n k ’s o u t s t a n d i n g
v o tin g sh a res. F u rth e rm o r e , the p re sid e n t of B a n k
is a d i r e c t o r o f A p p l i c a n t a n d e a c h o f its s u b s i d i a r y
b a n k s . T h u s , this p ro p o s a l e s s e n tia lly r e p re s e n ts

S ecurity B a n csh ares of M o n ta n a , In c .,

a r e o r g a n i z a t i o n o f B a n k ’s c u r r e n t o w n e r s h i p i n ­

B illin g s, M o n ta n a

terests. B e c a u s e o f this c o m m o n c o n tro l a n d m a n ­
a g e m e n t a n d th e s tru c tu re o f th e r e le v a n t m a r k e t,

O rd e r A p p ro v in g A cq u isitio n o f B an k

the b o a r d h as d e t e r m i n e d th at th e e lim in a tio n of
S ecu rity B a n c S h a re s of M o n ta n a , In c ., B illin g s,
M o n tan a,

a

bank

h o ld in g

com pany

w ithin

the

m e a n i n g o f th e B a n k H o l d i n g C o m p a n y A c t, h a s
applied

for

the




b o a r d ’s a p p r o v a l

under

section

1 All banking data are as of March 31, 1978, and reflect
bank holding company formations and acquisitions approved
as of December 31, 1978.

Law Department

e x is tin g c o m p e titio n b e tw e e n the tw o b a n k s d o e s

O

n o t w a r ra n t d e n ia l o f this a p p lic a tio n .

4 of B a n k H o l d in g C o m p a n y A ct

A lth o u g h

rders

U

261

S ec t io n

nder

a p p r o v a l o f this a p p lic a tio n m a y le s se n the p o s s i ­
b ility

that

the

tw o

banks

w o u ld

becom e

inde­

p e n d e n t o f e a c h o t h e r in t h e f u t u r e , t h e r e is n o
e v i d e n c e in th e r e c o r d to i n d ic a te th a t d e n i a l o f
the ap p lic a tio n

w o u ld in c re a se the lik e lih o o d of

s u c h a p o s s i b i l i t y in t h e f o r e s e e a b l e f u t u r e .

B a n k A m erica C orporation,
S an F ra n c isc o , C a lifo rn ia
O r d e r D e n y in g P etitio n
fo r R e v ie w an d A m e n d in g D en ia l O rd e r

A p p l i c a n t ’s o t h e r t w o M o n t a n a b a n k s , S e c u r i t y

B a n k A m erica C o rp o ratio n , San F ran cisco , C a l­

B a n k of C o ls trip , C o ls trip , a n d B ig H o rn B a n k ,

ifo rn ia ( “ B a n k A m e r i c a ” ), h a s r e q u e s te d re v ie w

H a r d i n , a r e l o c a t e d in s e p a r a t e b a n k i n g m a r k e t s ,

by th e b o a r d o f a c tio n at d e le g a te d lev el d e n y in g

125 m ile s a n d 4 6 m ile s , r e s p e c tiv e ly , f ro m B a n k .

re q u e st for

P rin c ip a ls

B oard of G o v ern o rs, dated

of

A pplicant

are

also

p rin cip als

of

reconsideration of

th e

O rder of

D ecem ber 26,

the
1978

B .O .C . C o rp o ratio n , S heridan, W y o m in g , a h o ld ­

(“ D ecem ber

i n g c o m p a n y t h a t c o n t r o l s t w o b a n k s in W y o m i n g ,

O rd e r the b o a rd d e n ie d

n e i t h e r o f w h i c h o p e r a t e s in t h e r e l e v a n t m a r k e t .

t i o n f i le d p u r s u a n t t o s e c t i o n 4 ( c ) ( 8 ) o f t h e B a n k

26

O r d e r ” ) . 1 In

its

D ecem ber

26

B a n k A m e r i c a ’s a p p l i c a ­

O n t h e b a s i s o f all t h e f a c t s o f r e c o r d , t h e b o a r d

H o ld in g C o m p a n y A ct (12 U .S .C . § 1 8 43(c)(8))

c o n c lu d e s th at th e p r o p o s e d a c q u is itio n of B a n k

a n d s e c t i o n 2 2 5 . 4 ( b ) o f t h e b o a r d ’s R e g u l a t i o n Y

by A p p lic a n t w o u ld not h av e significantly ad v erse

(1 2 C .F .R .

effects o n c o m p e titio n .

c o n t i n u e t o e n g a g e in c o m m e r c i a l f i n a n c e a c t i v i t i e s

T h e financial a n d m a n a g e ria l re s o u rc e s of A p ­

th ro u g h

§ 2 2 5 .4 (b ))

for

F in an ceA m erica

board

approval

C o m m ercial

to

C orpora­

p l i c a n t , its s u b s i d i a r i e s a n d B a n k a r e r e g a r d e d a s

tion,

sa tis fa c to ry a n d the fu tu re p ro s p e c ts for e a c h a p ­

d irect su b sid iary of F in a n c e A m e ric a C o rp o ra tio n ,

p e a r fa v o ra b le . T h u s , b a n k in g facto rs are c o n s is t­

A llen to w n ,

ent

B ankA m erica.

w ith

approval.

A ffiliation

w ith

A pplicant

A llen to w n ,

P e n n sy lv a n ia

P e n n sy lv a n ia ,

( “ F A C C ” ),

a

a d irect su b sid iary of

w o u l d e n a b l e B a n k t o e x p a n d its b a n k i n g f a c i l i t i e s

B a n k A m e r i c a ’s p e t i t i o n f o r r e v i e w is e q u i v a l e n t

a n d o f f e r a w i d e r r a n g e o f b a n k i n g s e r v i c e s in t h e

to a r e q u e s t f o r r e c o n s i d e r a t i o n b y th e b o a r d o f

f u tu re . T h e s e c o n s id e r a tio n s re la tin g to c o n v e n ­

its D e c e m b e r 2 6 O r d e r . U n d e r t h e b o a r d ’s R u l e s

ience an d n e e d s m a y not be su b sta n tia l, but they

of P ro ced u re

d o le n d s o m e w e ig h t to w a r d a p p r o v a l o f th e a p ­

w ill n o t g ra n t a n y re q u e s t fo r r e c o n s id e r a tio n of

(12 C .F .R .

§ 2 6 2 . 3 ( i)), th e b o a r d

p l i c a t i o n a n d , in t h e b o a r d ’s v i e w , o u t w e i g h a n y

its a c t i o n s o n a b a n k h o l d i n g c o m p a n y a p p l i c a t i o n

slightly a d v e rse effects o n c o m p e titio n that m ig h t

u n le s s th e r e q u e st p r e s e n ts re le v a n t fa c ts th a t, fo r

result

p ro p o sal.

go o d cause sh o w n , w ere not p reviously p resented

T h e r e f o r e , it is t h e b o a r d ’s j u d g m e n t t h a t t h e
p r o p o s e d a c q u i s i t i o n o f B a n k w o u l d b e in t h e
p u b lic in terest a n d th at the a p p lic a tio n sh o u ld be

from

c o n su m m a tio n

of

this

t o t h e b o a r d , o r u n l e s s it o t h e r w i s e a p p e a r s t o t h e
b o a r d that r e c o n s id e r a tio n w o u ld b e a p p r o p ria te .
T h e b o a r d h a s c o n s i d e r e d B a n k A m e r i c a ’s p e t i t i o n

approved.

for

O n th e b a s is o f th e r e c o r d , th e a p p lic a tio n

is

rev iew

and

request

for

reconsideration

and

finds th a t th e y d o n o t p r e s e n t a n y r e l e v a n t f a c ts

a p p r o v e d for the re a s o n s s u m m a r iz e d a b o v e . T h e

that, for g o o d c a u se s h o w n , w ere not p rev io u sly

t r a n s a c tio n shall n o t b e m a d e b e f o re th e th irtieth

p r e s e n t e d to th e b o a r d o r th a t r e c o n s i d e r a t i o n of

c a l e n d a r d a y f o l lo w in g th e e f fe c tiv e d a te o f this

the

O r d e r o r later th a n th re e m o n th s after the effe c tiv e

H o w e v e r , b a s e d u p o n a r e v i e w o f a ll t h e m a t e r i a l

d a t e o f t h i s O r d e r , u n l e s s s u c h p e r i o d is e x t e n d e d

o f r e c o r d , it a p p e a r s t h a t t h e l a s t t w o s e n t e n c e s

for g o o d c a u s e b y th e b o a r d , o r b y th e F e d e ra l

in t h e s i x t h p a r a g r a p h o f t h e D e c e m b e r 2 6 O r d e r

Reserve

26

O rder

w ould

be

appropriate.

B a n k o f M i n n e a p o l is p u r s u a n t to d e l e ­

g ated au th o rity .
B y o r d e r o f th e B o a rd o f G o v e r n o r s , e ffe c tiv e
F ebruary 21,

1979.

Voting for this action: Chairman Miller and Gover­
nors C oldw ell, Partee, and Teeters. Absent and not
voting: Governor W allich.
(S ig n e d ) J o h n M . W a l l a c e ,
[sealJ

D ecem ber

A s s i s t a n t S e c r e ta r y o f th e B o a r d .




1 Under section 2 6 2 .3(i) of the board’s Rules of Procedure
(12 C .F .R . § 2 6 2 .3 (i)), parties to an application may request
that the board reconsider its action on an application by filing
a request with the Secretary of the board within fifteen days
of the board’s action. Pursuant to the board’s delegation rules
(12 C .F .R . § 2 6 5 .2 (b )(7 )) the board’s General Counsel is
authorized to determine whether or not the request for recon­
sideration should be granted. The determination was made that
the request should not be granted and BankAm erica is peti­
tioning the board to review that action pursuant to section 2 6 5 .3
of the board’s delegation rules (12 C .F .R . § 2 6 5 .3 ).

262

Federal Reserve Bulletin □ March 1979

c o u l d i n c o r re c tly b e i n te r p re te d to reflect o n th e

secured b y p led g es of acco u n ts receivable of such

in teg rity o f the m a n a g e m e n t of B a n k A m e r ic a . T h e

co m p an ies,

board

p ersonal p ro p erty , an d

does

not

v iew

such

sentences

as

bein g

m ak in g

lo an s

secured

by

real

p u r c h a s in g retail

and

in stall­

m a t e r i a l t o i ts d i s p o s i t i o n o f t h e a p p l i c a t i o n a n d ,

m e n t sales co n tra c ts. F A C C also p ro p o se s to e n ­

t h e r e f o r e , t h e D e c e m b e r 2 6 O r d e r is a m e n d e d b y

g a g e in a d d itio n a l ac tiv itie s o f se rv ic in g e x te n s io n s

d e l e t i n g th e la s t t w o s e n t e n c e s in th e s ix th p a r a ­

o f c r e d it fo r itself a n d o th e r s , le a s in g rea l

g r a p h o f t h a t O r d e r . A c o p y o f t h e b o a r d ’s O r d e r

p e rs o n a l p r o p e rty , a n d o ffe rin g c re d it-re la te d life,

and

a c c i d e n t a n d d i s a b ility , a n d p r o p e r t y i n s u r a n c e in

a s a m e n d e d b y t h i s d e l e t i o n is a t t a c h e d .
A c c o r d i n g l y , in lig h t o f th e a b o v e c o n s i d e r a ­

c o n n e c tio n w ith e x te n sio n s of cred it m a d e or a c ­

t i o n s , B a n k A m e r i c a ’s p e t i t i o n f o r r e v i e w o f t h e

q u ire d b y F A C C . S u c h activ ities h a v e b e e n d e te r ­

denial

m in e d b y th e b o a rd to b e c lo s e ly related to b a n k in g

of

i ts r e q u e s t

b o a r d ’s D e c e m b e r

for re c o n sid e ra tio n

26

O rder

should

of

be,

and

th e
is

(1 2 C . F . R . §§ 2 2 5 .4 ( a ) ( 1 ) , (3 ), ( 6 ), a n d ( 9 ) ) .
N o tic e o f the a p p lic a tio n , affo rd in g o p p o r tu n ity

h e re b y , d en ied .
B y o rd e r of th e B o a rd o f G o v e r n o r s , e ffe ctiv e

persons

to s u b m it

co m m en ts

and

v ie w s o n the p u b lic in terest fa c to rs , has b e e n d u ly

F ebruary 9, 1979.

Voting for this action: Chairman M iller and Gover­
nors W allich, Partee, and Teeters. Absent and not
voting: Governor C oldw ell.
(S ig n e d ) G r i f f i t h L . G a r w o o d ,
[S e al]

for in terested

D e p u t y S e c r e ta r y o f the B o a r d .

published

(43

F ederal

R eg iste r

24912

(1978)).

T h e t im e f o r filing c o m m e n t s a n d v i e w s h a s e x ­
p ire d a n d th e b o a r d h a s c o n s id e r e d the a p p lic a tio n
a n d a l l c o m m e n t s r e c e i v e d in t h e l i g h t o f t h e p u b l i c
interest facto rs set fo rth

in § 4 ( c ) ( 8 ) o f th e A c t

(12 U .S .C . § 1 8 4 3 (c)(8 )).
A p p l i c a n t is t h e l a r g e s t b a n k i n g o r g a n i z a t i o n in

B a n k A m erica C orporation,

th e U n ite d S ta te s a n d c o n tr o ls B a n k o f A m e r i c a ,

S an F ra n c isc o , C a lifo rn ia

N . T . & S. A ., S an F ra n c isc o , C a lifo rn ia , w h ich

O rd e r D en yin g

ho ld s d ep o sits of a p p ro x im a te ly $ 6 6 .6 6 b illio n .2

nance

C o n tin u a tio n

A ctivities

and

o f C o m m e r c ia l F i­

C om m encem ent

of

Loan

S e rvic in g , L e a sin g , a n d C red it-rela ted Insuran ce

In

a d d itio n ,

A p p lican t

d irectly

F A C C (to ta l a s s e ts o f $ 2 3

A g e n c y A ctivities

co n tro ls

tw elv e

n o n b a n k in g su b sid iarie s.
m illio n as o f D e ­

c e m b e r 3 1 , 1977) has for fo u r y e a rs, w ith o u t p rior
B a n k A m e ric a C o rp o ratio n , S an F ran cisco , C a l­

b o a r d a p p r o v a l , e n g a g e d in a r a n g e o f c o m m e r c i a l

ifo rn ia, a b a n k h o ld in g c o m p a n y w ith in th e m e a n ­

len d in g activ ities. T h e s e activities h a v e b e e n c o n ­

ing o f the B a n k H o ld in g C o m p a n y A c t, h as a p ­

d u c t e d f r o m a n office in A l l e n t o w n , P e n n s y l v a n i a ,

p l i e d f o r t h e b o a r d ’s a p p r o v a l , u n d e r § 4 ( c ) ( 8 ) o f

a n d w e r e c o m m e n c e d i n v i o l a t i o n o f t h e b o a r d ’s

th e A c t (1 2 U .S . C . § 1 8 4 3 (c)(8 ) a n d § 2 2 5 .4 ( b )( 1 )

R e g u la tio n

of

tatio n o f n e w b u s in e s s d u r in g th e p e n d e n c y o f th e

th e

b o a r d ’s

R e g u la tio n

Y

(12

C .F .R .

Y.

FACC

h a s te rm in a te d the so lic i­

§ 2 2 5 . 4 ( b ) ( 1 ) ) , to c o n t i n u e 1 to e n g a g e in c o m ­

in sta n t a p p lic a tio n . U p o n a p p r o v a l o f th e a p p l i c a ­

m e rc ia l finance activities th ro u g h F in a n c e A m e r ic a

tio n , A p p lic a n t p r o p o s e s to h a v e F A C C

C o m m e r c ia l C o rp o ra tio n ( “ F A C C ” ), A lle n to w n ,

m e n c e t h e a c t i v i t i e s t e r m i n a t e d a n d t o e x p a n d its

P e n n sy lv a n ia ,

ac tiv itie s to in c lu d e se rv ic in g e x te n s io n s o f c re d it

a

d irect

subsidiary

A m erica C o rp o ratio n , A llen to w n ,

of

F in an ce­

P e n n sy lv a n ia ,

w h i c h is a d i r e c t s u b s i d i a r y o f A p p l i c a n t .

Such

fo r itself a n d

others,

leasin g

real

and

recom ­

personal

p r o p e rty , a n d o ffe rin g c re d it-re la te d life, a c c id e n t

activ ities in c lu d e in v e n to ry a n d a c c o u n ts re c e iv ­

a n d d i s a b i l i t y , a n d p r o p e r t y i n s u r a n c e in c o n n e c ­

able fin an cin g , lease fin an cin g , e q u ip m e n t fin an c­

tion w ith e x te n s io n s o f cre d it m a d e or a c q u ire d

in g , in su ra n c e p r e m iu m fin an cin g , m a k in g lo an s

by F A C C .

to n on-affiliated

finance

and

leasin g

com panies

C o n s u m m a t i o n o f this p r o p o s a l w o u ld n o t e l i m ­
in a te e x is tin g o r p o te n tia l c o m p e titio n . T h e m a r ­

1
On January 1, 1974, Applicant acquired shares of Fi­
nanceAmerica Corporation, formerly GAC Finance, Inc., with
the prior approval of the board. At all times relevant hereto
prior to September 3, 1974, FACC was an inactive corporation.
On that date, Applicant and FinanceAmerica caused FACC
to commence general commercial finance activities in violation
of the Act and Regulation Y. During the pendency of this
application, FACC has terminated the active solicitation of
business.




kets

for the

appear

h ig h ly

se rv ices

offered

co n cen trated .

by

FACC

FACC

s o lic it b u s i n e s s in 3 6 s ta te s a n d th e

do

proposes

not
to

D istrict of

C o l u m b i a a n d e x p e c ts to c o m p e t e p r in c ip a lly w ith
larg e c o m m e rc ia l

b a n k s a n d finance c o m p a n ie s .

2 All banking data are as of March 31, 1978.

Law Department

O n the

b asis of

the facts

of

record,

the

board

263

to d iv e s t itself o f th e a s se ts o f F A C C th at w e re

c o n c lu d e s that c o n s u m m a tio n of the su b je c t p r o ­

a c q u i r e d in v i o l a t i o n o f t h e b o a r d ’s R e g u l a t i o n Y

p o sa l w o u ld not h a v e a n y significant a d v e rs e c o m ­

n o later th a n n in e ty d a y s f ro m the e ffe ctiv e d ate

petitiv e effects.

o f th is O r d e r.

A s in d ic a te d a b o v e , th e a p p lic a tio n p r e s e n ts an
a f t e r - t h e - f a c t r e q u e s t f o r t h e b o a r d ’s a p p r o v a l t o
c o n d u c t o p e r a t i o n s c o m m e n c e d in v i o l a t i o n o f t h e
b o a r d ’s R e g u l a t i o n Y . L a s t y e a r t h e b o a r d c o n ­
sid ered an d a p p ro v e d a so m e w h a t sim ilar d o m e stic

B y o rd e r of the B o a rd of G o v e r n o r s , e ffe ctiv e
D ece m b e r 26, 1978.

Voting for this action: Governors W allich, Partee,
and Teeters. Present and not voting: Governor Coldw ell. Absent and not voting: Chairman Miller.

c a s e in w h i c h A p p l i c a n t h a d e n g a g e d in n o n b a n k
a c t i v i t i e s in

vio latio n

of R e g u la tio n

Y . 3 In

the

in te rn a tio n a l a r e a , th e b o a r d h a s c o n s id e r e d se v e ra l
a p p lic a tio n s by A p p lic a n t that h a v e in v o lv e d v io ­
l a t i o n s o f t h e b o a r d ’s r e g u l a t i o n s . D u e in p a r t t o
th e

b o a r d ’s

concern

about

such

(S ig n e d ) T
[s e a l ]

v iolations,
O rd e r A p p ro v in g
A c q u is itio n o f V e r ific a tio n s , Inc.

co n fo rm ity

w ith

the

su b stan tiv e

and

p r o c e d u r a l r e q u i r e m e n t s o f l a w a n d t h e B o a r d ’s

B arnett B a n k s

re g u la tio n s. A fte r e v a lu a tin g the m e rits of e a c h

F lo rid a,

a

o f th e c a s e s w h e r e a v io la tio n h a d o c c u r r e d , the

m eaning

of

board conclu d ed

that ap p ro v a l w as

,

B arnett B a n k s of F lo rid a, In c .,

g r a m t o e n s u r e t h a t a ll o f its a c t i v i t i e s w e r e c o n ­
in

l l is o n

Ja c k so n v ille , F lorida

A p p lic a n t in stituted an e x te n s iv e c o m p lia n c e p r o ­
ducted

E. A

heodore

S e c r e t a r y o f th e B o a r d .

ap p ro p riate.

( “ A c t ” ),

bank
the

has

of F lorida,
h o ld in g
Bank

ap p lied

In c.,

H o ld in g
for

Ja ck so n v ille,

com pany
th e

w ithin

C om pany

b o a r d ’s

the
A ct

approval

W ith r e s p e c t to th e su b je c t p r o p o s a l , h o w e v e r , th e

p u r s u a n t to se c tio n 4 ( c )( 8 ) o f th e A c t (1 2 U . S . C .

b o a r d d o e s n o t b e l i e v e t h a t a p p r o v a l o f A p p l i c a n t ’s

§ 1 843(c)(8))

c o n d u ct, w h ich

b o a r d ’s R e g u l a t i o n Y ( 1 2 C . F . R . § 2 2 5 . 4 ( b ) ( 2 ) ) ,

w a s in v i o l a t i o n o f t h e B o a r d ’s

and

sectio n

2 2 5 .4 (b )(2 )

of

the

to e n g a g e d e n o v o , th r o u g h a n e w n o n b a n k s u b ­

R e g u la tio n Y , w o u ld be ap p ro p riate.
W h ile the su b je c t p r o p o s a l d o e s no t re p re s e n t

sid ia ry , V e rifica tio n s, I n c ., J a c k s o n v ille , F lo rid a

a sig n ifica n t a c tiv ity to a n o r g a n iz a tio n o f th e size

( “ V e r i f i c a t i o n s ” ) , in t h e a c t i v i t y o f c h e c k v e r i f i ­

a n d c o m p l e x i t y o f A p p lic a n t, th e b o a r d d o e s no t

ca tio n , i.e ., for a fee au th o rizin g a c c e p ta n c e by

reg ard su c h facto rs as reliev in g an o rg a n iz a tio n

su b scrib in g m e rc h a n ts of certain p erso n al ch e c k s

f r o m l e g a l d u t i e s a n d o b l i g a t i o n s t o w h i c h it a n d

t e n d e r e d b y t h e m e r c h a n t ’s c u s t o m e r s in p a y m e n t

c o m p e tin g o r g a n iz a tio n s of lesser size a n d c o m ­

o f g o o d s a n d se rv ic e s . In a d d itio n , V e rific a tio n s

p lex ity are su b je ct. T h e effe c tiv e n e ss of an o r g a ­

w ill p u r c h a s e a v a lid ly a u th o r iz e d c h e c k f ro m th e

n i z a t i o n ’s

com pliance

m e r c h a n t in t h e e v e n t it is s u b s e q u e n t l y d i s h o n ­

w ith th e le g a l d u tie s to w h i c h

it is s u b j e c t a r e

m atters

to

o re d . T h is activ ity h as n o t b e e n sp e cified b y the
b o a r d in s e c t i o n 2 2 5 . 4 ( a ) o f R e g u l a t i o n Y a s

of

m anagem ent
param ount

in

ensu rin g

concern

th e

board

in

a c t i n g o n a p p l i c a t i o n s . It is t h e b o a r d ’s j u d g m e n t ,

p erm issib le for b an k h o ld in g c o m p a n ie s .

b a s e d u p o n all t h e f a c t s o f r e c o r d in t h i s m a t t e r ,

N o tic e of the a p p lic a tio n , as w e ll as p r o p o s e d

that a p p r o v a l o f the a p p lic a tio n w o u ld b e in a p p r o ­

r u l e m a k i n g t o a m e n d t h e b o a r d ’s R e g u l a t i o n Y t o

p r i a t e , a n d in o r d e r t o e n s u r e t h a t A p p l i c a n t d o e s

a d d the ac tiv ity o f c h e c k

not b enefit f ro m a c tio n s th at w e re c o m m e n c e d as

of activities p e rm iss ib le for b a n k h o ld in g c o m p a ­

a result of a v io latio n , A p p lic a n t sh o u ld
qu ired

to d iv e s t

itself p r o m p tl y

o f th e

be re­

n ie s p u r s u a n t to s e c tio n 4 ( c ) ( 8 ) o f th e A c t , 1 h a s

illegally

b e e n g i v e n ( 4 3 F e d . R e g . 3 1 9 3 6 ) in o r d e r t o a f f o r d

a cq u ired assets of F A C C .
A ccordingly,

based

upon

o th e r c o n s id e r a tio n s reflecte d

the

fo regoing

in t h e

record,

and
the

b o a r d h as d e t e r m i n e d th at th e su b je c t a p p lic a tio n
s h o u l d b e d e n i e d . 4 A p p l i c a n t is h e r e b y d i r e c t e d
3 B a n k A m e r ic a C o r p o r a tio n ( D a ta p r o c e s s in g activ ities of
F i n a n c e A m e r i c a ) 63 F e d e r a l R e s e r v e B u l l e t i n 687 (1 9 77).

4 In acting on this application the board has considered
com m ents from an individual from Providence, Rhode Island,
in opposition to approval of A pplicant’s proposal, questioning




v e r i f i c a t i o n t o t h e l is t

an o p p o rtu n ity

for interested

co m m en ts

v iew s

and

on

p e r s o n s to

w h eth er

subm it

the p r o p o s e d

whether A pplicant’s sale of property insurance w ould serve
the interests of the people of that state. The board has exam ined
the protest, and, in light of the protestant’s failure to cite a n y f
supporting facts, concludes that there exists no basis in fact
for the individual’s concern.
1 The board has determined not to amend Regulation Y at
this time by adding the proposed new activity to the list of
those that are generally perm issible for bank holding com pa­
nies; how ever, the board has proceeded to consider the appli­
cation on its merits.

264

Federal Reserve Bulletin □ March 1979

a c t i v i t y is s o c l o s e l y r e l a t e d t o b a n k i n g o r m a n a g ­

se rv ices are o p e ra tio n a lly a n d fu n ctio n ally related

in g or c o n tr o llin g b a n k s as to b e a p r o p e r in c id e n t

to a c tiv itie s e n g a g e d in b y b a n k s , th e b o a r d h a s

th ereto

and

d e te r m in e d that p ro v id in g c h e c k verification s e rv ­

resp ect

to

co m m en ts

on

the

th e

pu b lic

ap p licatio n .

has ex p ired .

interest
The

W h ile

no

facto rs

tim e

for

w ith,
f i li n g

req u est for a

i c e s a s p r o p o s e d b y A p p l i c a n t is c l o s e l y r e l a t e d
to b a n k i n g .

h e a r in g o n th is a p p lic a tio n h a s b e e n r e c e i v e d , the

In o r d e r to a p p r o v e th e s u b j e c t a p p l i c a t i o n , th e

B oard has receiv ed a n u m b e r of c o m m e n ts, and

b o a r d m u s t a ls o find th a t th e p e r f o r m a n c e o f th e

has c o n s id e re d the a p p lic a tio n a n d th o se c o m m e n ts

a c tiv ity b y a n o n b a n k affiliate o f A p p l i c a n t “ c a n

in l i g h t o f t h e c o n s i d e r a t i o n s s p e c i f i e d in s e c t i o n

r e a s o n a b ly b e e x p e c t e d to p r o d u c e b en e fits to th e

4 ( c )(8 ) of the A c t (1 2 U . S . C . § 184 3 ).

p ublic

such

as

g reater

convenience,

in creased

largest b a n k in g o rg a n i­

c o m p e t i t i o n , o r g a i n s in e f f i c i e n c y , t h a t o u t w e i g h

z a t i o n in F l o r i d a , c o n t r o l s 3 5 b a n k s h o l d i n g c o m ­

p o ss ib le a d v e rse effe cts, su c h as u n d u e c o n c e n tr a ­

A p p lic a n t, th e s e c o n d

m ercial b an k d e p o sits a g g re g a tin g $ 2 .4

b illio n .2

tio n o f r e s o u r c e s , d e c r e a s e d o r u n fa ir c o m p e titio n ,

A p p l i c a n t e n g a g e s in a v a r i e t y o f p e r m i s s i b l e n o n ­

conflicts

b a n k activities th ro u g h eig h t n o n b a n k su b sid iarie s.

tic e s.”

A p p l i c a n t ’s n o n b a n k a c t i v i t i e s i n c l u d e t r u s t f u n c ­

of

interest,

or

unsound

b anking

prac­

A p p l i c a n t ’s p r o p o s e d c h e c k v e r i f i c a t i o n s e r v i c e

insurance

w o u ld benefit m e r c h a n ts b y p r o v id in g a c o n v e n ie n t

a g e n c y activ ities d ire c tly re la te d to e x te n s io n s of

m e a n s for d e c re a s in g b a d -c h e c k losses. S im ila rly ,

credit

m ail o rd e r sales o p e r a tio n s w o u ld h a v e a c o n v e n ­

tio n s,

consum er
m ade

by

and

sales

fin an cin g ,

A p p l i c a n t ’s

su b sid ia rie s,

and

ien t m e a n s to v e rify o u t- o f- s ta te c h e c k s . T h e c o n ­

m o rtg a g e b a n k in g activities.
In o r d e r to a u t h o r i z e a b a n k h o l d i n g c o m p a n y
to e n g a g e

in a

n o n b a n k in g activity p u rsu a n t

se c tio n 4 (c )(8 ) o f th e A c t,

to

t h e b o a r d m u s t first

v e n ie n c e of indiv id u al c o n s u m e rs w o u ld be e n ­
h a n c e d b y th e p r o p o s e d a c tiv ity sin c e th e ir p e r ­
sonal c h e c k s w o u ld b e m o re read ily a c c e p te d for

d e t e r m i n e w h e t h e r t h e a c t i v i t y is c l o s e l y r e l a t e d

th e p u r c h a s e

to

c h a n t s . U s e o f a n a t i o n a l d a t a file a s p r o p o s e d b y

banking

or

m an ag in g

or

co n tro llin g

b a n k s.3

of goods
m ake

the

services
sy stem

from

m er­

F r o m t h e r e c o r d it a p p e a r s t h a t t h e p r o p o s e d a c ­

A p p lican t

t i v i t y is s i m i l a r t o a c t i v i t i e s c u r r e n t l y e n g a g e d in

c o n v e n ie n t to o u t- o f- s ta te to u ris ts, m ilita ry

by n atio n al b a n k s u n d e r a re c e n t in te rp re tiv e letter

so n n e l, and n ew resid en ts of F lorida. T h e entry

from

of A p p lic a n t in to c o m p e t i t i o n b e tw e e n c h e c k a u ­

th e O ffice o f th e C o m p t r o l l e r o f th e C u r ­

w ould

and

p articu larly
per­

r e n c y . 4 F u r th e r m o r e , v a rio u s a s p e c ts o f th e p r o ­

t h o r iz a t io n s y s t e m s a l r e a d y in o p e r a t i o n w o u l d b e

p o s e d a c tiv ity are sim ila r to n o r m a l b a n k f u n c tio n s
a n d s e r v i c e s c u r r e n t l y e n g a g e d in o r p r o v i d e d b y

in c re a s e d b y th e a d d itio n o f a n e w c o m p e tito r.
A c c o r d in g ly , the b o a r d h as c o n c lu d e d th at the

b a n k s , s u c h a s c h e c k p r o c e s s i n g , c r e d i t d a t a file

p e r fo r m a n c e of the p ro p o s e d a ctiv ity by A p p lic a n t

m a in te n a n c e , data p ro c e ssin g , and o v erd ra ft p ro ­

is l i k e l y
p u b lic.

t e c t i o n . A l s o , it h a s b e e n p o i n t e d o u t t h a t m a n y

to

produce

significant

benefits

to

the

b a n k s h a v e h isto rically p ro v id e d c h e c k verification

W ith re sp e c t to p o s s ib le a d v e r s e e ffe c ts, n o th in g

s e rv ice for their c u s to m e rs a n d m e r c h a n ts o n a

in t h e r e c o r d i n d i c a t e s t h a t A p p l i c a n t ’s p r o p o s a l

r e q u e s t b a s is . In lig h t o f th e fa c t th a t b a n k s g e n e r ­

w ould

ally p r o v id e

proposed

s o u r c e s . T h e b o a r d r e c o g n i z e s t h a t t h e r e is s o m e

2 All banking data are as of D ecem ber 3 1 , 1977.
3 The courts have set forth the fo llo w in g general guidelines

conflicts of in terest w ith re s p e c t to the v erificatio n

sim ilar se rv ic e s,

a n d the

r e s u l t in a n y

undue concentration of

re­

p o t e n t i a l in t h e p r o p o s a l f o r u n f a i r c o m p e t i t i o n o r

for determining whether an activity may be found to be closely
related to banking: ( 1) banks generally have in fact provided
the proposed services; ( 2 ) banks generally provide services that
are operationally or functionally so similar to the proposed
services as to equip them particularly w ell to provide the
proposed service; or (3) banks generally provide services that
are so integrally related to the proposed services as to require
their provision in a specialized form. Na tio na l C ou rier A s s o ­
ciation v. B oard of Gov er no rs of the Federal R ese rv e System,
51 6 F.2d 1229 (D .C . C ir., 1975).
4 See C C H Fed Banking L a w R eports H 8 5 ,0 0 1 , letter of
the C hief C ounsel, Office of the Comptroller of the Currency,
August 2 , 1977. 12 C .F .R . § 7 .7 0 1 5 . In this connection the
board notes that Applicant is currently performing the proposed
services through one of its subsidiary lead banks.




of c h eck s not d ra w n on su b sid iary b an k s of A p ­
p l i c a n t . H o w e v e r , t h e b o a r d r e l i e s o n A p p l i c a n t ’s
c o m m i t m e n t th at V e rific a tio n s w ill v e rify c h e c k s
d r a w n o n all b a n k s .

F u rth e r,

A p p l i c a n t is f u l l y

a w a re of se ctio n 106 o f the B a n k H o ld in g C o m ­
p a n y A c t A m e n d m e n t s o f 1 9 7 0 a n d t h e b o a r d ’s
R e g u la tio n Y , se ctio n 2 2 5 .4 ( c ), w h ic h p ro h ib it a
b a n k h o l d i n g c o m p a n y a n d its s u b s i d i a r i e s f r o m
e n g a g i n g in i m p e r m i s s i b l e t i e - i n a r r a n g e m e n t s in
c o n n e c tio n w ith e x te n s io n s of c red it or sales of
p r o p e rty o r th e fu rn is h in g o f se rv ic e s .
B a s e d u p o n th e f o re g o in g a n d u p o n o th e r c o n ­

Law Department

s i d e r a t i o n s r e f l e c t e d in t h e r e c o r d , t h e b o a r d h a s

265

w a s g i v e n in a c c o r d a n c e w i t h s e c t i o n 4 o f th e A c t

d e te r m in e d that the b a la n c e of the p u b lic interest

( 4 3 F e d . R e g . 7 4 4 0 ( 1 9 7 8 ) ) , a n d t h e t i m e f o r f i li n g

f a c to rs th at se c tio n 4 ( c )( 8 ) of th e A c t r e q u ire s the

v iew s an d c o m m e n ts has ex p ired . T h e b o ard has

b o a r d t o c o n s i d e r is f a v o r a b l e , a n d t h a t t h e a p p l i ­

c o n s i d e r e d th e a p p l i c a t i o n a n d all c o m m e n t s r e ­

c a tio n sh o u ld be a p p r o v e d . A c c o r d in g ly , the a p ­

c e i v e d i n l i g h t o f t h e c o n s i d e r a t i o n s s p e c i f i e d in

p l i c a t i o n is h e r e b y a p p r o v e d . A p p l i c a n t s h a l l c a u s e

se c tio n 4 ( c )( 8 ) o f th e A c t.

V e rific a tio n s to c o m m e n c e th e p r o p o s e d ac tiv ity

C i t i c o r p , w ith tw o s u b s id ia r y b a n k s h a v i n g total

no t later th a n th re e m o n th s after th e e ffe c tiv e d a te

d o m e s t i c d e p o s i t s o f $ 5 5 . 7 b i l l i o n , is t h e s e c o n d
l a r g e s t b a n k i n g o r g a n i z a t i o n in t h e U n i t e d S t a t e s

o f t h i s O r d e r , u n l e s s s u c h p e r i o d is e x t e n d e d f o r
g o o d c a u s e b y the F e d e ra l R e s e r v e B a n k o f A tla n ta

a n d t h e l a r g e s t in N e w Y o r k . 1 It c o n t r o l s t w o b a n k s

pursuant

a nd a n u m b e r of d o m e stic n o n b a n k

to

delegated

au th o rity .

T h is

determ i­

su b sid iarie s

n a t i o n is s u b j e c t t o t h e c o n s i d e r a t i o n s s e t f o r t h in

e n g a g e d in s u c h a c t i v i t i e s a s c o n s u m e r , s a l e s , a n d

s e c t i o n 2 2 5 . 4 ( c ) o f t h e b o a r d ’s R e g u l a t i o n Y a n d

c o m m e rc ia l finance, fa c to rin g , m o rtg a g e b a n k in g ,

t o t h e b o a r d ’s a u t h o r i t y t o r e q u i r e s u c h m o d i f i ­

sale a n d u n d e rw ritin g o f c r e d it-re la te d in s u r a n c e ,

c a tio n o r te r m in a tio n of th e a c tiv itie s o f a h o ld in g

a n d l e a s i n g . Its s u b s i d i a r y , N a t i o n w i d e F i n a n c i a l

c o m p a n y o r a n y o f its s u b s i d i a r i e s a s t h e b o a r d

S erv ices

finds n e c e s s a r y to a s s u r e c o m p l i a n c e w i t h , o r to

parent of

C o rp o ratio n ,

S t.

th e c o m p a n y
be

provides

th e

the
new

p re v e n t e v a s io n o f, the p ro v is io n s a n d p u rp o s e s

services
loans,

th e r e u n d e r by the b o a rd .

n a n c in g , a n d o th er sa les-finance p ro d u c ts th ro u g h

credit-related

o ffered,

M isso u ri,
w hich

of the A c t a n d the r e g u la tio n s a n d O rd e rs issued
B y o rd e r of the B o a rd of G o v e r n o rs , effe ctiv e

w ould

L o u is,

th ro u g h

insurance,

consum er

m o b ile-h o m e

fi­

o f f i c e s in 2 7 s t a t e s .
In o r d e r to a u th o r iz e a b a n k h o ld i n g c o m p a n y

F eb ru ary 2, 1979.

to e n g a g e in a n o n b a n k a c tiv ity p u r s u a n t to s e c t i o n

Voting for this action: Chairman Miller and G over­
nors W allich, C oldw ell, Partee, and Teeters.

4 ( c ) ( 8 ) o f t h e A c t , t h e b o a r d m u s t firs t d e t e r m i n e
w h e t h e r t h e a c t i v i t y is c l o s e l y r e l a t e d t o b a n k i n g

(S ig n e d ) Jo h n M . W
[s e a l ]

allace,

A s s i s t a n t S e c r e ta r y o f th e B o a r d .

or m a n a g in g or c o n tro llin g b a n k s.

N o n e o f the

p u b l i c c o m m e n t s r e c e i v e d in t h i s m a t t e r h a s m a d e
a s u b s ta n tiv e a r g u m e n t that a n y of the p r o p o s e d

C iticorp,

a c t i v i t i e s is n o t c l o s e l y r e l a t e d t o b a n k i n g , a n d

N ew Y ork, N ew Y ork

f r o m t h e r e c o r d it a p p e a r s t h a t b a n k s h a v e g e n e r ­

O r d e r A p p r o v i n g the S a le o f M o n e y O r d e r s ,

ally so ld

T ra v e le rs C h e c k s , a n d U .S . S a v in g s B o n d s ,

p a y m e n t i n s tr u m e n ts th a t are th e s u b je c t o f th is

U .S .

sa v in g s

bonds

a n d the

ty p es

of

a n d th e P r o v is io n o f F in a n c ia l M a n a g e m e n t

a p p l i c a t i o n . In th e c a s e o f fin a n c ia l m a n a g e m e n t

C ourses

courses and

co u n selin g ,

the

record

reflec ts

that

f u rn is h in g m o n e y m a n a g e m e n t a n d finan cial a d ­
C itico rp , N e w Y o rk , N e w Y o rk , a b an k h o lding

vice h as b e e n an im p o rta n t f u n c tio n of b a n k s , an d

c o m p a n y , h as a p p lie d p u r s u a n t to se c tio n 4 (c )(8 )

they h av e g en erally p ro v id e d su b stan tially sim ilar

o f th e B a n k H o ld in g C o m p a n y

s e rv ic e s u n d e r a v a rie ty o f c i r c u m s t a n c e s . In a d d i ­

A ct (12

U .S .C .
the

t i o n , it a p p e a r s t h a t c o n s u m e r f i n a n c i a l e d u c a t i o n

b o a r d ’s R e g u l a t i o n Y ( 1 2 C . F . R . § 2 2 5 . 4 ( b ) ( 2 ) ) ,

c a lls u p o n the n e c e s s a r y sk ills a n d r e s o u r c e s p o s ­

§ 1843(c)(8))

and

se ctio n

2 2 5 .4 (b )(2 )

of

fo r p e r m i s s io n to sell at retail at e ig h t lo c a tio n s

se ssed by b a n k h o ld in g c o m p a n ie s , a n d th ey are

in U t a h o f its s u b s i d i a r y , C i t i c o r p P e r s o n - t o - P e r -

p a r t i c u l a r l y s u i t e d t o p r o v i d e s u c h s e r v i c e s in t h e

son

F in an cial

C e n te rs,

m oney

orders,

travelers

form

proposed.

On

the b a s is

o f the re c o r d

the

c h e c k s , a n d U . S . s a v in g s b o n d s , a n d to p r o v id e

b o a r d h a s d e te r m in e d th at th e p r o p o s e d activ itie s

at

are c lo s e ly re la te d to b a n k i n g . 2

those

lo catio n s

c o n su m e r-o rie n te d

financial

m a n a g e m e n t c o u rse s , c o u n s e lin g , an d related in ­

T o a p p r o v e this a p p lic a tio n th e b o a r d m u s t also

stru ctio n al m aterial. T h e b o ard has not p re v io u sly

find th a t th e p e r f o r m a n c e

d e t e r m i n e d th e s e a c tiv itie s to b e p e r m i s s ib l e fo r

C i t i c o r p ’s s u b s i d i a r y c a n r e a s o n a b l y b e e x p e c t e d

of these activities

by

b an k h o ld in g c o m p a n ie s.
N o tice of

receipt

of

th is

application,

and

of

C i t i c o r p ’s a s s o c i a t e d r e q u e s t t h a t t h e b o a r d a m e n d
its R e g u l a t i o n . Y t o a d d t h e a c t i v i t i e s t o t h e list
o f th o se p e r m is s ib le for b a n k h o ld in g c o m p a n ie s ,




1 Banking data are as of D ecem ber 31 , 1977.
2 In a separate action, the board has amended its R egula­
tion Y to add the retail sale of m oney orders, travelers checks,
and U .S . savings bonds to the list of activities in which bank
holding com panies may engage.

266

Federal Reserve Bulletin □ March 1979

to p r o d u c e b e n e f its to th e p u b l i c s u c h a s g r e a t e r

b a n k h o l d i n g c o m p a n i e s . 3 S u b j e c t to t h a t l i m i t a ­

c o n v e n i e n c e , i n c r e a s e d c o m p e t i t i o n , o r g a i n s in

t i o n , th e b o a r d f in d s t h a t th e b a l a n c e o f p u b l i c

e f f i c i e n c y , th a t o u t w e i g h p o s s i b l e a d v e r s e e f f e c t s ,

in te re s t

su ch

4 ( c ) ( 8 ) o f t h e A c t is f a v o r a b l e a n d t h a t t h is p a r t

as

undue

c o n c e n tra tio n

of

reso u rc e s,

de­

c r e a s e d o r u n f a i r c o m p e t i t i o n , c o n f l i c ts o f i n t e r e s t ,
o r u n s o u n d b a n k in g p ra c tic e s .
in v o lv in g

re la tiv e ly

it

m u st

c o n s id e r

under

s e c tio n

o f th e a p p l i c a t i o n s h o u l d b e a p p r o v e d .
B a n k h o ld in g c o m p a n ie s a lre a d y p r o v id e fin a n ­

A t th e o u t s e t t h e b o a r d n o t e s t h a t t h i s p r o p o s a l
is o n e

fa c to rs

m in o r

s e rv ic e s

th a t

c ia l m a n a g e m e n t a d v i c e , c o u n s e l i n g , a n d v a r i o u s
e d u c a tio n a l m a te ria ls o f a s im ila r n a tu re as n e c e s ­

w o u l d n o t e n t a i l a n y d e t r i m e n ta l d i v e r s i o n o f C i t i ­

s a r y in c o n n e c t i o n w i th

c o r p ’s f in a n c ia l o r m a n a g e r i a l r e s o u r c e s .

f in a n c ia l a c t i v i t i e s . T h e a p p r o v a l o f t h a t p a r t o f

It a p p e a r s t h a t t h e p a r t i c i p a t i o n o f a b a n k h o l d ­

C i t i c o r p ’s a p p l i c a t i o n

th e i r o t h e r b a n k i n g

r e la tin g

to

f in a n c ia l

and
m an­

in g c o m p a n y a f f ilia te in th e s a le o f U . S . s a v in g s

a g e m e n t c o u rs e s w o u ld e s s e n tia lly p e rm it C itic o rp

b o n d s is l i k e l y

in

to f o r m a l i z e t h o s e a d v i s o r y s e r v i c e s a n d to c h a r g e

c o n v e n i e n c e to th e p u b l i c , a n d t h e r e a r e n o i d e n t i ­

a f e e f o r t h e m . E n tr y b y C i t i c o r p in to t h is a r e a

to r e s u l t in a s l i g h t

in c re a se

f ia b le a d v e r s e e f f e c t s a s s o c i a t e d w i th t h a t p a r t i c i ­

is e x p e c t e d to p r o m o te c o m p e t i t i o n a n d i n n o v a t i o n

p a t i o n . C i t i c o r p ’s r e t a i l s a le o f t r a v e l e r s c h e c k s

a n d m a y r a is e th e q u a l i t y a n d c o n v e n i e n t a v a i l ­

a n d m o n e y o r d e r s f r o m l o c a t i o n s o f its s u b s i d i a r y

a b i l i t y o f c o n s u m e r f in a n c ia l e d u c a t i o n . T h e b o a r d

is l i k e w i s e e x p e c t e d to r e s u l t in s o m e i n c r e a s e d

b e l i e v e s t h a t th e p u b l i c in t e r e s t f a v o r s m e a s u r e s

c o n v e n i e n c e to t h e p u b l i c a n d m a y s t i m u l a t e c o m ­

th a t w ill te n d to i m p r o v e e c o n o m i c d e c i s i o n m a k ­

p e t i t i o n a n d u l t i m a t e l y r e s u l t a s w e ll in a r e d u c t i o n

in g b y i n d i v i d u a l s a n d to f a c i l i t a t e a w i d e r a v a i l ­

o f s e r v i c e c h a r g e s in c o n n e c t i o n w i th th e s a l e o f

a b i l i t y o f r e l i a b l e c o n s u m e r f i n a n c ia l i n f o r m a t i o n

t h o s e i n s t r u m e n t s . B e c a u s e o f th e e a s e o f e n tr y

a n d t h a t , s u b j e c t to C i t i c o r p ’s r e p r e s e n t a t i o n s a n d

i n to th i s b u s i n e s s a n d its c h a r a c t e r a s a r e l a t i v e l y

u n d e r t a k i n g s , t h i s p r o p o s a l is c o n s i s t e n t w i t h t h a t

m in o r s e rv ic e a n c illa ry

fu n c tio n s

p u b l i c in t e r e s t . In a d d i t i o n , th e s u b s t i t u t io n o f a

o f C i t i c o r p ’s o f f ic e s , b a n k h o l d i n g c o m p a n y p a r ­

fe e fo r s e rv ic e s fo r w h ic h th e c o s t h a s b e e n tr a d i­

to th e p r i m a r y

t i c i p a t i o n c a n n o t b e e x p e c t e d to r e s u l t in u n f a i r

ti o n a l l y

o r d e c re a s e d c o m p e titio n o r an u n d u e c o n c e n tra ­

p e a r s to b e a u s e f u l s te p t o w a r d a m o r e e q u i t a b l e

in c lu d e d

in g e n e r a l s e r v i c e c h a r g e s a p ­

t io n o f r e s o u r c e s .

p r i c i n g s y s t e m f o r b a n k i n g a n d f in a n c ia l s e r v i c e s .

A l t h o u g h C i t i c o r p h a s s t i p u l a t e d th a t its s u b s i d ­

T h e r e a r e , h o w e v e r , s o m e id e n t i f i a b le c o n c e r n s

ia rie s w o u ld n o t b e p r e c lu d e d fro m o ffe r in g o th e r

a s s o c i a t e d w i th b a n k h o l d i n g c o m p a n y e n t r y in to

i n s t r u m e n t s o n s a l e , th e b o a r d r e c o g n i z e s th a t
C i t i c o r p ’s o f fic e s a r e l ik e ly to s e ll i n s t r u m e n t s

f o r m a l c o n s u m e r f in a n c ia l e d u c a t i o n t h a t m a y b e
c h a r a c te r iz e d b ro a d ly a s q u e s tio n s o f b u s in e s s

iss u e d

e t h i c s . T h e firs t o f t h e s e is t h a t a b a n k

by

th e

C itic o rp

o rg a n iz a tio n

ra th e r

th a n

h o ld in g

th a t p o t e n t i a l

c o m p a n y a f filia te o f f e r i n g s u c h c o u r s e s c o u l d a t ­

a s a c o n f li c t o f i n t e r e s t .

H o w e v e r , b e c a u s e o f th e la r g e n u m b e r o f r e t a il

t e m p t to in f lu e n c e t h e c u s t o m e r to u s e f in a n c ia l
s e r v i c e s o f a f f ilia te s a n d th e b o a r d h a s r e s e r v a t i o n s

o u t l e t s f o r m o n e y o r d e r s a n d t r a v e l e r s c h e c k s , th e

a b o u t th e p r o p r i e t y o f th is w h e r e , b e c a u s e o f th e

th o s e

is s u e d

by

c o m p e tito rs ,

m ig h t b e c h a r a c te r iz e d

and

b o a r d c o n s i d e r s t h a t t h i s l i k e l i h o o d is a t m o s t a n

n a tu r e o f th e s e r v i c e , th e c u s t o m e r m a y h a v e t h e

a d v e r s e e f f e c t th a t is n o t s i g n if ic a n t w h e n b a l a n c e d

r e a s o n a b l e e x p e c t a t i o n t h a t h e is r e c e i v i n g d i s i n ­

a g a i n s t th e e n h a n c e d c o n v e n i e n c e a n d c o m p e t i t i o n

t e r e s t e d a d v i c e a b o u t t h e o r d e r i n g o f h is f i n a n c ia l

th a t th e p r o p o s a l e n t a i l s . In a d d i t i o n , t h e p r o p o s a l

a f f a ir s . T h e s e c o n d c o n c e r n i n v o lv e s th e p o s s i b l e

w o u ld

and

m i s u s e o f c o n f id e n t ia l c u s t o m e r i n f o r m a t i o n o b ­

t r a v e l e r s c h e c k s o f s u p e r v i s e d i s s u e r s a n d to s o m e

t a in e d d u r i n g t h e c o u r s e o f th e e d u c a t i o n a l r e l a ­

e x te n t re d u c e

u s in g

tio n s h ip . B e c a u s e th e s e c o n s id e ra tio n s c o u ld e n ta il

T h e r e is n o i n d i c a t i o n in t h e r e c o r d t h a t a p p r o v a l

o n th is a c t i v i t y h a v e n o t t h o r o u g h l y e x p l o r e d a p ­

o f t h i s p r o p o s a l w o u ld r e s u l t in u n s o u n d b a n k i n g

p r o p r i a t e i n d u s t r y - w i d e li m i ts o n e d u c a t i o n a l a c ­

fa c ilita te

th e

risk s

s a le
of

of

m oney

lo s s to

th e

o rd e rs
p u b lic

m o n e y o rd e rs a n d tra v e le rs c h e c k s .

s i g n if i c a n t a d v e r s e e f f e c t s , a n d b e c a u s e c o m m e n t s

p r a c t i c e s . T h e r e t a il s a l e o f m o n e y o r d e r s b y b a n k

t i v i t i e s , th e b o a r d h a s in a s e p a r a te a c t i o n d e c l i n e d

h o ld in g

to a d d th e a c t i v i t y o f f u r n i s h i n g c o n s u m e r - o r i e n t e d

c o m p a n ie s

is

p ro p o sed

as

a

consum er

s e r v i c e , a n d to i n s u r e th a t it r e t a i n s th a t c h a r a c t e r ,

f in a n c ia l m a n a g e m e n t c o u r s e s to R e g u l a t i o n

Y ’s

th e b o a r d b y r e g u l a t i o n h a s i m p o s e d o n t h e i r s a le
th e s a m e li m i t o f $ 1 , 0 0 0 m a x i m u m f a c e v a l u e th a t
it h a s p r e v i o u s l y




im p o s e d o n

th e ir is s u a n c e

by

3 R epu blic of Texas C orporation and C itic o rp , 63 F e d e r a l
R e se rv e B u l l e t i n 414, 416 (1977).

267

L aw D epartm ent

lis t o f a c tiv itie s

g e n e ra lly

p e rm is s ib le

fo r b a n k

I n d e t e r m i n i n g t h a t th e b a l a n c e o f p u b l i c i n t e r e s t

h o l d i n g c o m p a n i e s . T h e b o a r d w il l i n s t e a d c o n ­

f a c to rs

s i d e r s p e c if ic p r o p o s a l s b y b a n k h o l d i n g c o m p a n i e s

b o a r d h a s c o n s i d e r e d th e c o m m e n t s r e c e i v e d t h a t

to f u r n i s h s u c h c o u r s e s o n a c a s e - b y - c a s e b a s i s .
C i t i c o r p ’s s p e c if ic

a p p lic a tio n , h o w e v e r,

ade­

q u a t e l y a d d r e s s e s th e b o a r d ’s c o n c e r n s , a n d th e
b o a rd

is

in te re s t

p ersu ad e d
fa c to rs

it

th a t
m u st

th e

b a la n c e

c o n s id e r

of

under

d id

fa v o rs

not

z a tio n s ,

fav o r

a p p r o v a l o f th is
a p p ro v a l.

S e c u r i t ie s

a p p lic a tio n ,

I n i ti a l l y

In d u s try

th re e

A s s o c ia tio n ,

th e

o rg a n i­
In d e­

p e n d e n t B a n k e rs A s s o c ia tio n o f A m e ric a , a n d N a ­

p u b lic

t io n a l A s s o c i a t i o n o f M u t u a l S a v i n g s B a n k s , r e ­

s e c tio n

q u e s te d th a t th e b o a rd h o ld fo rm a l h e a rin g s o n a

4 ( c ) ( 8 ) o f t h e A c t is f a v o r a b le a n d t h a t th i s p a r t

v a rie ty o f q u e s tio n s c o n c e rn in g th is a p p lic a tio n .

o f th e a p p lic a tio n

O n N o v e m b e r 1 3, 1 9 7 8 , r e p re s e n ta tiv e s o f th o se

sh o u ld b e a p p ro v e d . C itic o rp

d o e s n o t p r o p o s e i t s e l f to p r e p a r e t h e c o u r s e s it

o rg a n iz a tio n s a n d C itic o rp

w ill

b o a r d ’s s ta ff m e t a n d

o ffe r,

but

w i ll

act

as

s a le s

agent

fo r

an

a n d m e m b e r s o f th e

ag reed

t h a t th e i s s u e s o f

i n d e p e n d e n t s u p p l i e r o f f in a n c ia l c o u r s e s , a n d w ill

c o n c e rn a n d o n w h ic h th e p r o te s tin g o rg a n iz a tio n s

s p e c i f i c a l l y a d v i s e e v e r y c u s t o m e r t h a t h e is n o t

b e lie v e d h e a rin g s w o u ld b e u s e fu l w o u ld b e n a r ­

re q u ire d

r o w e d to t h r e e : th e s a le o f v a r i a b l e d e n o m i n a t e d

to p u r c h a s e

a f f ilia te s .

In

any

a d d itio n ,

s e rv ic e

a

re v ie w

fro m
of

C itic o rp

th e

s a m p le

i n s t r u m e n t s o t h e r th a n m o n e y o r d e r s , th e p r o v i s i o n

c o u r s e m a t e r i a l s s u b m i t t e d b y C i t i c o r p d i s c lo s e s

o f f i n a n c ia l m a n a g e m e n t c o u r s e s f o r s m a ll b u s i ­

t h a t t h e m a t e r i a l s d o n o t in f a c t p r o m o t e C i t i c o r p

n e s s e s , a n d th e lo s s o f d e p o s it in s u r a n c e fo r tr a v ­

f i n a n c ia l

e le rs c h e c k s . O n N o v e m b e r 2 7 ,

s e rv ic e s

b u t,

on

th e

c o n tra ry

and

as

1 9 7 8 , C itic o rp

a p p r o p r i a t e f o r b a s i c c o n s u m e r f in a n c i a l e d u c a t i o n ,

a m e n d e d its a p p l i c a t i o n to d e l e t e its r e q u e s t f o r

th e y s tre s s th a t th e re a re m a n y a lte r n a tiv e s o u rc e s

a u t h o r i t y to s e ll v a r i a b l e d e n o m i n a t e d i n s t r u m e n t s

f o r a g i v e n f in a n c ia l s e r v i c e a n d t h a t c o n s u m e r s

a n d to p r o v i d e f i n a n c i a l m a n a g e m e n t c o u r s e s f o r

s h o u l d s h o p f o r f in a n c i a l s e r v i c e s , c o m p a r i n g p r i c e

s m a ll b u s i n e s s e s , a n d it is a c c o r d i n g l y u n n e c e s s a r y

a n d o t h e r a d v a n t a g e s o f n u m e r o u s s u p p l i e r s , in

to c o n s i d e r th e q ia e s tio n s r a i s e d b y th e p r o t e s t i n g

m uch

o rg a n iz a tio n s c o n c e rn in g th o se p ro p o s a ls .

th e

sam e m an n er

a s th e y

g o o d s a n d s e rv ic e s . T h e b o a rd

s h o p fo r o th e r
u n d e r s t a n d s th a t

T h e b o a r d d o e s n o t c o n s i d e r th e th i r d q u e s t i o n

c o u r s e m a t e r i a l w ill n e c e s s a r i l y c h a n g e o v e r t i m e ,

to b e r e l e v a n t to th i s a p p l i c a t i o n . I n its l e t t e r o f

b u t th e s a m p l e s i n c l u d e d b y C i t i c o r p in its a p p l i ­

A p ril

c a tio n h a v e b e e n s u b m itte d as r e p re s e n ta tiv e , a n d

B a n k e r s A s s o c i a t i o n o f A m e r i c a o b s e r v e d th a t:

13,

1978,

to

th e

b o ard ,

th e

In d e p e n d e n t

C i t i c o r p h a s a g r e e d to m a i n t a i n a s t r ic t s e p a r a ti o n
b e t w e e n e d u c a t i o n a l a n d p r o m o ti o n a l a c t i v i t i e s i n ,
a n d to i n s u r e th e o b j e c t i v i t y o f , th e m a t e r i a l s it
w ill u s e .

M o re o v e r, C itic o rp

has

u n d e rta k e n

to

i n s u r e t h a t a n y c o n f id e n t ia l i n f o r m a t i o n o b t a i n e d
b y it o r a n y o f its s u b s i d i a r i e s in c o n n e c t i o n w i th
its c o u r s e s w ill b e o b t a i n e d o n l y
t o m e r ’s c o n s e n t a n d

w i th

th e c u s ­

w ill n o t b e m a d e a v a i l a b l e

to a n y o t h e r C i t i c o r p

a f filia te o r a n y t h i r d p a r t y

fo r a n y p u rp o se w h a ts o e v e r.

T radition ally, bank m on ey orders and bank trav­
elers ch eck s w ere insured d ep o sits under the
Federal D ep o sit Insurance A ct. In issuing these
instruments through the h old in g co m p a n y , the
bank can avoid m eetin g the reserve requirem ents
for that category o f d ep o sits.
*
*
*
T he public is clearly en titled to a hearing to w eig h
the p otential adverse effects o f the lo ss o f d ep osit
insurance. [E m phasis ad d ed .]

H a v i n g o n c e r e v i e w e d C i t i c o r p ’s p r o p o s a l , th e
c o n d i t i o n s u n d e r w h i c h it w o u l d b e p r o v i d e d , a n d

It h a s b e e n th e b o a r d ’s v ie w t h a t t h e q u e s t i o n s

its s a m p le m a t e r i a l s a n d d e t e r m i n e d t h a t t h e p u b l i c

o f b o th d e p o s it in s u r a n c e a n d r e s e r v e r e q u ire m e n ts

in te re s t

fav o r

a p p l i c a b l e to m o n e y o r d e r s a n d t r a v e l e r s c h e c k s

d e te r­

a r e g e r m a n e to a n a p p l i c a t i o n f o r t h e i s s u a n c e o f

c o n s id e ra tio n s

of

a p p ro v a l o f th a t p r o p o s a l,

s e c tio n

4 (c )(8 )

th e b o a r d

has

m i n e d t h a t f u r t h e r a p p l i c a t i o n s b y C i t i c o r p to e x ­

th o se in s tru m e n ts b y b a n k h o ld in g c o m p a n ie s , a n d

t e n d th e s a m e c o n s u m e r - o r i e n t e d

t h e b o a r d h a s c o n s i d e r e d t h o s e q u e s t i o n s c a r e f u l ly

f i n a n c ia l m a n ­

a g e m e n t e d u c a t i o n a l a c t i v i t i e s to a d d i t i o n a l o f fic e s

w h e n in t h e p a s t it h a s h a d b e f o r e it a p p l i c a t i o n s

o f its s u b s i d i a r i e s m a y b e p r o c e s s e d in th e s a m e

b y b a n k h o l d i n g c o m p a n i e s to i s s u e p a y m e n t i n ­

m a n n e r a s o t h e r d e n o v o a p p l i c a t i o n s u n d e r th e

s tr u m e n ts . T h is a p p lic a tio n d o e s n o t in v o lv e th e

p r o v i s i o n s o f s e c t i o n 2 2 5 . 4 ( b ) ( 1 ) o f R e g u la ti o n Y

is s u a n c e o f a n y in s tr u m e n t, b u t r a th e r th e re ta il

( 1 2 C . F . R . § 2 2 5 . 4 ( b ) ( 1 ) ) , a n d a u t h o r i t y is h e r e b y

s a le o f i n s t r u m e n t s t h a t h a v e b e e n a u t h o r i z e d t o

d e le g a te d

b e m a d e a v a ila b le to th e p u b lic u n d e r th e c o n d i­

to th e F e d e r a l R e s e r v e

Y o r k to a c c e p t a n d

ta k e a c tio n o n su c h

p r o p e r l y file d a s t h e r e p r e s c r i b e d .




B ank of N ew
n o tic e s

tio n s o f a p p lic a b le la w . A p p ro v a l o f th e p ro p o s a l
w o u ld n o t e x p a n d th e ra n g e o r c h a r a c te r is tic s o f

268

Federal Reserve Bulletin □ March 1979

a n y p a y m e n t in s tr u m e n t n o w a v a ila b le to th e p u b ­

o r te r m in a tio n o f th e a c tiv itie s o f a b a n k h o ld in g

l i c , a n d c o n s e q u e n t l y it w o u l d n o t r e s u l t in t h e

c o m p a n y o r a n y o f its s u b s i d i a r i e s a s th e b o a r d

lo ss o f d e p o s it in s u ra n c e fo r a n y in s tru m e n t.

fin d s

T h e b o a r d h a s a c c o r d i n g l y d e n i e d th e r e q u e s t s

n e c e ssa ry

to

assu re

c o m p lia n c e

f o r h e a r i n g s t h a t w e r e f ile d in c o n n e c t i o n w i t h t h is

O rd e rs a n d re g u la tio n s is s u e d

a p p lic a tio n .

p re v e n t e v a s io n th e re o f.
w h ic h

h e a rin g s

w e r e r e q u e s t e d , th e S e c u r i t i e s I n d u s t r y

A p a rt fro m

th o se

m a tte rs

on

A s s o c ia ­

t i o n a n d th e N a t i o n a l A s s o c i a t i o n o f M u t u a l S a v ­
i n g s B a n k s h a v e u r g e d t h a t th e b o a r d n o t a d o p t

w it h

th e

p r o v i s i o n s a n d p u r p o s e s o f th e A c t a n d th e b o a r d ’s
th e r e u n d e r ,

o r to

B y o r d e r o f th e B o a r d o f G o v e r n o r s , e f f e c t iv e
F e b ru a ry 2 6 , 1979.
V otin g for this action: Chairm an M iller and G o v er­
nors W a llich , C o ld w e ll, P artee, and T eeters.

th e p r o p o s e d a m e n d m e n t to R e g u l a t i o n Y r e g a r d ­
(S ig n e d ) T h e o d o r e E . A l l i s o n ,

i n g f in a n c i a l m a n a g e m e n t c o u r s e s b e c a u s e o f th e
b ro a d a n d u n p re d ic ta b le ra n g e o f a c tiv itie s th a t

[s e a l]

S e c r e t a r y o f th e B o a r d .

m i g h t b e ju s t i f ie d u n d e r i t , b u t r a t h e r to e v a l u a t e
c o n c re te p r o p o s a ls o n a c a s e -b y -c a s e b a s is , a n d

C o lo n ia l A m e ric a n B a n k s h a re s C o rp o ra tio n ,

f o r th e

R o a n o k e , V irg in ia

re a so n s

set

fo rth

above

th e

b o a rd

has

a d o p te d th a t su g g e s tio n .

O r d e r A p p r o v in g R e te n tio n o f

A m o n g th e o th e r a d v e rs e c o m m e n ts

re c e iv e d

t h a t d i d n o t , a f te r t h e m e e t i n g o f N o v e m b e r 1 3 ,

th e L y n c h b u r g , V ir g in ia O ffic e o f
C o lo n ia l A m e r ic a n M o r tg a g e C o r p o r a tio n

1 9 7 8 , e n t a i l a h e a r i n g r e q u e s t , w e r e th e s u g g e s ­
t i o n s t h a t b o a r d a p p r o v a l o f t h e s a le o f p a y m e n t
in s tru m e n ts m ig h t p e rm it b a n k h o ld in g c o m p a n ie s
to

c irc u m v e n t

s ta te

l i c e n s in g

re q u ire m e n ts

fo r

v e n d o rs o f th o s e in s tr u m e n ts a n d th a t th e p e r f o r ­
m a n c e o f th e a c t i v i t y

m ig h t c o n s titu te u n la w fu l

i n t e r s t a t e b r a n c h b a n k i n g . W i th r e s p e c t to th e firs t
s u g g e s t i o n , th e b o a r d b e l i e v e s it is i m p o r t a n t to
s tre s s th a t a u th o r iz a tio n o f a n y a c tiv ity u n d e r s e c ­
t i o n 4 ( c ) ( 8 ) in n o

w a y e x e m p ts a b a n k h o ld in g

c o m p a n y f r o m c o m p l y i n g w i th a ll s ta te a n d f e d e r a l
l a w s g o v e r n i n g th e p e r f o r m a n c e o f t h a t a c t i v i t y .
W i t h r e s p e c t to t h e s e c o n d s u g g e s t i o n , s i n c e n o n e
o f th e p r o p o s e d s e rv ic e s in v o lv e s a c o lle c tio n o f
d e p o s its , le n d in g o f m o n e y , o r p a y in g o f c h e c k s
such

as

m ig h t

ra is e

a

q u e s t io n

under

fe d e ra l

b r a n c h b a n k i n g r e s t r i c t i o n s , o r th e a c c e p t a n c e o f
d e p o s its w ith d r a w a b le o n d e m a n d a n d th e m a k in g
o f c o m m e r c i a l l o a n s s u c h a s m i g h t r a i s e a q u e s t io n
u n d e r se c tio n

3 (d )

of

th e A c t ,

th e

b o ard

m u st

c o n c l u d e th a t it is n o t th i s n a r r o w a p p l i c a t i o n th a t
has

p r o m p te d

th e s e

c o m m e n ts ,

but

ra th e r

th e

p r o s p e c t th a t b a n k h o l d i n g c o m p a n i e s m a y in th e
f u tu re a p p ly fo r o th e r a n d b r o a d e r p o w e r s . T h e
o b je c tio n d o e s n o t b e a r o n th e a c tiv itie s s o u g h t
to b e a u t h o r i z e d a t th is t im e .
B a s e d o n th e r e c o r d a n d f o r th e r e a s o n s s u m ­
m a r i z e d a b o v e th e a p p l i c a t i o n is h e r e b y a p p r o v e d .
T h e d e t e r m i n a t i o n a s to C i t i c o r p ’s n o n b a n k a c t i v i ­
tie s is s u b j e c t to th e c o n d i t i o n s s e t f o r t h

in th is

O r d e r a n d in s e c t i o n 2 2 5 . 4 ( c ) o f R e g u l a t i o n

Y,

a n d t h e b o a r d ’s a u t h o r i ty to r e q u i r e r e p o r t s b y a n d
m a k e e x a m in a tio n s o f b a n k h o ld in g c o m p a n ie s a n d
th e i r s u b s i d i a r i e s , a n d to r e q u i r e s u c h m o d i f i c a ti o n




C o lo n ia l
R oanoke,

A m e ric a n
V ir g in ia ,

B an k sh ares
a

bank

C o r p o ra tio n ,

h o ld in g

com pany

w i t h i n th e m e a n i n g o f th e B a n k H o l d i n g C o m p a n y
A ct

( “ A c t” ),

has

p ro v a l, u n d e r

a p p lie d

§ 4 (c )(8 )

§ 1 8 4 3 (c )(8 ))

and

fo r

th e

o f th e

b o a r d ’s

ap­

A c t (1 2

U .S .C .

o f th e

b o a r d ’s

§ 2 2 5 .4 ( b )( 2 )

R e g u l a t i o n Y ( 1 2 C . F . R . § 2 2 5 . 4 ( b ) ( 2 ) ) , to r e t a i n
th e

L y n c h b u rg ,

ow ned

V ir g in ia ,

o f fic e

of

its

s u b s id ia ry , C o lo n ia l A m e ric a n

w h o lly

M o rtg a g e

C o r p o r a tio n , R o a n o k e , V ir g in ia , a c o m p a n y th a t
e n g a g e s in th e a c t i v i t i e s o f m a k i n g , a c q u i r i n g a n d
s e r v i n g lo a n s s e c u r e d p r i m a r i l y b y s e c o n d m o r t ­
g a g e s o n r e a l p r o p e r t y a n d a c t i n g a s a g e n t in th e
s a le o f c r e d i t lif e a n d c r e d i t a c c i d e n t a n d h e a l t h
i n s u r a n c e in c o n n e c t i o n w i t h th o s e l o a n s . T h e s e
a c tiv itie s h a v e b e e n d e te rm in e d
be

c lo s e ly

re la te d

to

b y th e b o a r d

b a n k in g

(1 2

to

C .F .R .

§§ 2 2 5 .4 ( a )( 1 ) , (3 ), a n d (9 )(ii)).
N o t i c e o f t h e a p p l i c a t i o n , a f f o r d i n g o p p o r t u n it y
fo r in te re s te d

p e rso n s

to s u b m i t c o m m e n t s

and

v ie w s o n th e p u b l i c i n t e r e s t f a c t o r s , h a s b e e n d u l y
p u b l i s h e d ( 4 3 F e d e r a l R e g is t e r 4 7 0 1 2 ) . T h e t im e
f o r f ilin g c o m m e n t s a n d v i e w s h a s e x p i r e d , a n d
th e b o a r d h a s c o n s i d e r e d th e a p p l i c a t i o n a n d a ll
c o m m e n t s r e c e i v e d in th e l i g h t o f th e p u b l i c i n t e r ­
e s t fa c to rs se t fo rth

in § 4 ( c ) ( 8 ) o f t h e A c t ( 1 2

U .S .C . § 1 8 4 3 (c )(8 )).
A p p l i c a n t , a o n e b a n k h o l d i n g c o m p a n y , is th e
t h i r t e e n th l a r g e s t b a n k i n g o r g a n i z a t i o n in V i r g i n i a
w ith

$ 1 9 6 .5

m illio n

in

to t a l

c o m m e rc ia l

bank

d e p o s i t s , r e p r e s e n t i n g 1 .1 p e r c e n t o f th e d e p o s i t s
in

c o m m e rc ia l

banks

in

th e

s t a t e . 1 A p p l i c a n t ’s

1 All financial data are as of June 30 , 1978.

269

Law D epartm ent

b a n k i n g o f fic e s a r e l o c a t e d in R o a n o k e , V i r g i n ia .
A p p l i c a n t ’s w h o l l y o w n e d s u b s i d i a r y , C o l o n i a l

R e g u l a t i o n Y b y f ilin g th i s a p p l i c a t i o n , a n d A p p l i ­
c a n t ’s m a n a g e m e n t

h a d a d o p te d

c le a rly

d e f in e d

A m e ric a n M o rtg a g e C o m p a n y ( “ M o rtg a g e C o m ­

p r o c e d u r e s to p r e v e n t v i o l a t i o n s f r o m o c c u r r i n g in

p a n y ” ) ($ 3 .7

th e f u t u r e . C o n s i d e r i n g t h e s e s t e p s b y A p p l i c a n t

m i l l io n

in

a s s e ts ),

m akes

second

m o r t g a g e l o a n s a n d a c t s a s a g e n t f o r th e s a le o f

a n d o t h e r e v i d e n c e in th e r e c o r d e v i d e n c i n g A p ­

c r e d i t r e l a t e d l i f e , a c c i d e n t , a n d h e a l t h in s u r a n c e

p l i c a n t ’s i n t e n t i o n to c o m p l y w i th t h e r e q u i r e m e n t s

in c o n n e c t i o n w i t h t h o s e l o a n s .

M o rtg a g e C o m ­

o f th e A c t a n d th e b o a r d ’s R e g u la t i o n Y , t h e b o a r d

p a n y o p e r a t e d e x c l u s i v e l y in R o a n o k e , V i r g i n i a ,

h a s d e t e r m i n e d t h a t t h e c i r c u m s t a n c e s o f th e a b o v e

u n til O c t o b e r 3 ,

v i o l a t i o n d o n o t w a r r a n t d e n i a l o f th e a p p l i c a t i o n .

b a s is ,

L y n c h b u rg ,

B a s e d u p o n th e f o r e g o i n g a n d o t h e r c o n s i d e r a ­

V i r g i n i a , w i t h o u t th e p r i o r a p p r o v a l o f th e b o a r d .

ti o n s r e f l e c te d in th e r e c o r d , t h e b o a r d h a s d e t e r ­

novo

an

1 9 7 7 , w h e n it o p e n e d , o n a d e
a d d itio n a l

o f fic e

in

B y t h is a p p l i c a t i o n , A p p l i c a n t s e e k s to b r i n g th e

m i n e d t h a t th e b a l a n c e o f t h e p u b l i c i n t e r e s t f a c t o r s

o p e r a t i o n o f t h a t o f fic e in to c o n f o r m a n c e w it h th e

th e

r e q u ir e m e n ts o f la w .

§ 4 ( c ) ( 8 ) is f a v o r a b l e . A c c o r d i n g l y , t h e a p p l i c a ­

In a c t i n g o n a n a p p l i c a t i o n p u r s u a n t to § 4 ( c ) ( 8 )

b o a rd

tio n

is

is h e r e b y

re q u ire d
a p p ro v ed .

to

c o n s id e r

T h is

under

d e te rm in a tio n

is

o f th e A c t to r e t a i n o f fic e s e n g a g e d in a c t i v i t i e s

s u b j e c t to th e c o n d i t i o n s s e t f o r t h in § 2 2 5 . 4 ( c )

th a t a r e p e r m i s s i b l e f o r b a n k h o l d i n g c o m p a n i e s ,

o f R e g u la ti o n Y a n d to th e b o a r d ’s a u t h o r i t y to

in s i t u a t i o n s w h e r e th e n e c e s s a r y p r i o r b o a r d a p ­

re q u ire

p r o v a l w a s n o t o b t a i n e d f o r th o s e o f fic e s o r a c t i v i ­

a c tiv itie s

t i e s , th e b o a r d a p p l i e s th e s a m e s t a n d a r d s th a t it

s u b s i d i a r i e s a s t h e b o a r d fin d s n e c e s s a r y to a s s u r e

a p p l i e s in a c t i n g u p o n a n a p p l i c a t i o n to e s t a b l i s h

c o m p l i a n c e w it h th e p r o v i s i o n s a n d p u r p o s e s o f

s u c h o f fic e s a n d c o m m e n c e s u c h a c t i v i t i e s in i t i a l l y .

th e A c t a n d

In a d d i t i o n , th e b o a r d

i s s u e d t h e r e u n d e r , o r to p r e v e n t e v a s i o n t h e r e o f .

a n a ly z e s

th e c o m p e t i t i v e

e t l e c t s o f s u c h p r o p o s a l s a s o f th e ti m e th a t th e
o f fic e s

w ere

e s ta b lis h e d

or

th e

a c tiv ity

com ­

su ch
of

o f M o rtg a g e C o m p a n y h a s h a d a m in im a l im p a c t

R ic h m o n d .

m a rk e t.

G iv e n

a p p l i c a n t ’s r a n k i n g

am ong

its

o rd e rs

n o t l a te r

th a n

u n l e s s s u c h p e r i o d is e x t e n d e d f o r g o o d c a u s e b y
b o ard

or by

th e

F ed e ral

R e serv e

B ank

of

B y o r d e r o f t h e B o a r d o f G o v e r n o r s , e f f e c t iv e
F e b ru a ry 2 , 1979.

tio n in o p e n i n g a d e n o v o o ffic e in a m a r k e t lo c a t e d

V otin g for this action: Chairm an M iller and G o v er­
nors W a llich , C o ld w e ll, Partee, and T eeters.
(S ig n e d ) G r i f f i t h

5 3 m ile s fro m R o a n o k e h a d n o a d v e r s e e ffe c ts o n
c o m p e t i t i o n . I n d e e d , th e c o n t i n u e d o p e r a t i o n o f
th e L y n c h b u r g o f fic e s h o u l d r e s u l t in i n c r e a s e d
SM SA

be m ade

of

com ­

m e r c i a l b a n k i n g o r g a n i z a t i o n s in V i r g i n ia , its a c ­

c o m p e t i t i o n in th e L y n c h b u r g

s h a ll

o f th e

or any

th e b o a r d ’s r e g u l a t i o n s a n d

T h e tra n s a c tio n

th e

L y n c h b u r g S M S A , th e r e l e v a n t m o r t g a g e b a n k i n g

o r t e r m in a ti o n

com pany

th r e e m o n t h s a f t e r th e e f f e c t iv e d a t e o f t h i s O r d e r ,

m enced.
T h e o p e r a t i o n , t h u s f a r , o f th e L y n c h b u r g o ffic e
o n th e m a r k e t f o r s e c o n d m o r t g a g e lo a n s in th e

m o d i f i c a ti o n
a h o ld in g

[s e a lJ

L. G a rw o o d ,

D e p u t y S e c r e t a r y o f th e B o a r d .

a n d r e s u lt

in g r e a t e r c o n v e n i e n c e to th e p u b l i c b y p r o v i d i n g
an a d d itio n a l s o u rc e o f s e c o n d

m o r tg a g e l o a n s .

F u r t h e r , in c o n n e c t i o n w it h th is p r o p o s a l , A p p l i ­
cant

has

in je c te d

a d d itio n a l

e q u ity

c a p ita l

in to

F ir s t H a w a i i a n , I n c . ,
H o n o lu lu , H a w a ii
O r d e r A p p r o v in g C o n tin u a tio n o f

M o r t g a g e C o m p a n y . T h e r e is n o e v i d e n c e o f r e c ­

C re d it-R e la te d In su ra n ce A c tiv itie s

o r d to i n d i c a t e t h a t A p p l i c a n t ’s s e c o n d m o r tg a g e

T h r o u g h H a w a ii T h r ift & L o a n , I n c o r p o r a te d

o r i n s u r a n c e a c t i v i t i e s w ill r e s u l t in u n d u e c o n c e n ­
tr a t io n o f r e s o u r c e s , d e c r e a s e d o r u n f a i r c o m p e t i ­
tio n ,

c o n flic ts

of

in te re s t,

or

u n sound

b a n k in g

m e a n in g

p ra c tic e s .
U p o n e x a m i n a t i o n o f a ll th e f a c ts a n d c i r c u m ­
s ta n c e s

F irs t H a w a iia n , I n c ., H o n o lu lu , H a w a ii ( “ A p ­
p lic a n t” ),

su rro u n d in g

th e

e s ta b lis h m e n t

of

th e

a bank
of

th e

h o ld in g
B ank

( “ A c t” ), h a s a p p lie d
under

se c tio n

L y n c h b u r g o f fic e w i t h o u t p r i o r b o a r d a p p r o v a l it

§ 1 8 4 3 (c )(8 ))

4 (c )(8 )
and

com pany

H o ld in g

w ith in

C om pany

th e
A ct

f o r th e b o a r d ’s a p p r o v a l ,
of

th e

A ct

§ 2 2 5 .4 ( b )( 2 )

of

(1 2

U .S .C .

th e

b o a r d ’s

a p p e a r s th a t th e v i o l a t i o n d o e s n o t w a r r a n t d e n ia l

R e g u l a t i o n Y ( 1 2 C . F . R . § 2 2 5 . 4 ( b ) ( 2 ) ) , to c o n ­

o f t h is a p p l i c a t i o n . T h e A p p l i c a n t h a s ta k e n s te p s

ti n u e to e n g a g e in th e s a l e o f c r e d i t - r e l a t e d l i f e ,

to c o n f o r m its o p e r a t i o n s to th e A c t a n d th e b o a r d ’s

a c c i d e n t a n d h e a l t h i n s u r a n c e in c o n n e c t i o n w i th




270

Federal Reserve Bulletin □ March 1979

e x te n s io n s o f c re d it m a d e b y

its w h o l l y o w n e d

s u b s id ia ry , H a w a ii T h rift & L o a n , In c o rp o ra te d ,
H o n o lu lu ,

H a w a ii

( “ H T L ” ).

Such

a c tiv ity

in th e a c t i v i t y a n d a t th e tim e o f th e a p p l i c a t i o n
to c o n t i n u e to e n g a g e in t h e a c t i v i t y .

has

A t th e t im e t h a t it a p p r o v e d A p p l i c a n t ’s a p p l i ­

b e e n d e t e r m i n e d b y th e b o a r d to b e c l o s e l y r e l a t e d

c a tio n

to b a n k i n g ( 1 2 C . F . R . § 2 2 5 .4 ( a ) ( 9 ) ( i i ) ) .

b e c a u s e o f H T L ’s f in a n c ia l s i t u a t i o n , H T L w a s n o

N o t i c e o f th e a p p l i c a t i o n , a f f o r d i n g o p p o r t u n i t y
fo r in te re s te d

p erso n s

to s u b m i t c o m m e n t s

to

a c q u ire

HTL,

th e

b o ard

fo u n d

th a t,

lo n g e r a n e f f e c t iv e c o m p e t i t o r a n d c o n s u m m a t i o n

and

o f th e p r o p o s e d a c q u i s i t i o n w o u l d n o t h a v e a n y

v i e w s o n th e p u b l i c i n t e r e s t f a c t o r s , h a s b e e n d u ly

a d v e r s e e f f e c ts o n p o t e n t i a l o r e x i s t i n g c o m p e t i t i o n

p u b l i s h e d (4 3 F e d e r a l R e g i s t e r 5 6 9 4 0 ) . T h e tim e

a t th a t t i m e .

f o r filin g c o m m e n t s a n d v ie w s h a s e x p i r e d , a n d

l im i te d to a c t i n g a s th e a g e n t in th e s a le o f c r e d i t

As

H T L ’s i n s u r a n c e a c t i v i t i e s

are

th e b o a r d h a s c o n s i d e r e d th e a p p l i c a t i o n a n d a ll

i n s u r a n c e r e l a t e d to lo a n s it o r i g i n a t e s , A p p l i c a n t ’s

c o m m e n t s r e c e i v e d in th e li g h t o f th e p u b l i c i n t e r ­

a c q u i s i t i o n o f H T L ’s i n s u r a n c e a g e n c y a c t i v i t i e s ,

e s t f a c t o r s s e t f o r th in s e c t i o n 4 ( c ) ( 8 ) o f th e A c t

s im ila rly ,

(1 2 U .S .C . § 1 8 4 2 (c )(8 )).

p o t e n t i a l o r e x i s ti n g c o m p e t i t i o n . F u r t h e r , it d o e s

A p p l i c a n t , w i th to ta l a s s e t s o f $ 1 . 4 b i l l i o n , 1 is
th e

second

la r g e s t

b a n k in g

o rg a n iz a tio n

in

th e

d id

not have

any

ad v erse

e ffe c ts

on

n o t a p p e a r th a t A p p l i c a n t ’s c o n t i n u a t i o n o f i n s u r ­

s ta te o f H a w a i i a n d c o n t r o l s o n e b a n k , F ir s t H a ­

a n c e a g e n c y a c t i v i t i e s t h r o u g h H T L w o u ld h a v e
a n y s ig n if ic a n t a d v e r s e e f f e c t o n c o m p e t i t i o n . In

w a iia n

B ank,

H o n o lu lu ,

H a w a ii.

a d d i t i o n , it w o u ld p r o v i d e b e n e f its to th e p u b l i c

w h o lly

ow ned

su b s id ia ry ,

HTL,

in d u s tria l lo a n a c tiv itie s .
p o s i t s in th e f o r m

A p p l i c a n t ’s

is e n g a g e d

in

H T L a c c e p t s t h r if t d e ­

o f i n v e s t m e n t c e r t if i c a t e s a n d

b y o ffe rin g a c o n tin u e d a n d a d d itio n a l c o n v e n ie n t
so u rce

of

c re d it-re la te d

M o reo v er,

th e r e

is

no

in s u r a n c e
e v id e n c e

in
in

a re a .
reco rd

d e b e n t u r e s a n d w it h th e p r o c e e d s o f s u c h d e p o s i ts

i n d i c a t i n g th a t c o n t i n u a t i o n

m akes

c o m m e rc ia l

u n d u e c o n c e n tr a tio n o f r e s o u r c e s , u n fa ir c o m p e ti­

l o a n s . H T L h a s its m a i n o ffic e in H o n o l u l u a n d

t i o n , c o n f lic ts o f i n t e r e s t , u n s o u n d b a n k i n g p r a c ­

m a in ta in s e le v e n

t ic e s o r o t h e r a d v e r s e e f f e c t s o n th e p u b l i c i n t e r e s t .

real

e s ta te ,

c o n su m e r,

and

o t h e r o f fic e s o n

th e

is l a n d s o f

O a h u , K a u a i, M a u i a n d H a w a ii.
B y O rd e r d a te d J u n e
p ro v ed

a s s e t s a n d to a s s u m e c e r t a i n

to

r e s u l t in a n y

A s i n d ic a te d a b o v e , th e s u b j e c t a p p l i c a t i o n is

1 8 , 1 9 7 5 , th e b o a r d a p ­

A p p l i c a n t ’s p r o p o s a l

w o u ld

th e
th e

a c q u ire

c e rta in

l i a b i l i t ie s o f H T L .

an

a fte r-th e -fa c t

req u est

fo r

b o a rd

a p p ro v al

to

e n g a g e in a c t i v i t i e s th a t w e r e c o m m e n c e d in v i o ­
l a tio n o f th e A c t a n d th e b o a r d ’s R e g u la ti o n

Y.

T h is O r d e r w a s l i m i te d to a p p r o v a l f o r A p p l i c a n t

U p o n e x a m in a tio n

to e n g a g e t h r o u g h H T L in i n d u s t r i a l lo a n a c t i v i ­
t i e s . In a d d i t i o n to in d u s t r i a l lo a n a c t i v i t i e s , H T L

s t a n c e s o f th e s u b j e c t a p p l i c a t i o n , it is th e b o a r d ’s
v ie w th a t th e v i o l a t i o n w a s i n a d v e r t e n t . In a c t i n g

a ls o e n g a g e d

o n th is a p p l i c a t i o n th e b o a r d h a s ta k e n in to c o n ­

in c r e d i t l i f e , a c c i d e n t a n d

h e a lth

o f a ll

th e

fa c ts a n d

c irc u m ­

i n s u r a n c e a g e n c y a c t i v i t i e s th a t w e r e n o t in c l u d e d

s i d e r a t i o n th e f a c t th a t A p p l i c a n t , u p o n b e c o m i n g

in A p p l i c a n t ’s p r o p o s a l to a c q u i r e H T L a n d th a t

a w a r e o f th e e x i s t e n c e o f th e v i o l a t i o n , t o o k s te p s

h a v e n o t b e e n a p p r o v e d b y th e b o a r d . 2 T h e i n s ta n t

to c o n f o r m

a p p lic a tio n re q u e s ts b o a rd a p p ro v a l fo r c o n tin u ­

s u b j e c t a p p l i c a t i o n . In a d d i t i o n , A p p l i c a n t 's m a n ­

a t i o n o f A p p l i c a n t ’s in s u r a n c e a g e n c y

a c tiv itie s

th ro u g h H T L .

its o p e r a t i o n s to th e A c t b y f ilin g th e

a g e m e n t h a s ta k e n s te p s to p r e v e n t v i o l a t i o n s f r o m
o c c u r r i n g in th e f u t u r e , in c l u d i n g th e in i t i a t i o n o f

In a c t i n g o n a n a p p l i c a t i o n p u r s u a n t to s e c t io n
4 ( c ) ( 8 ) o f th e A c t a n d R e g u l a ti o n

a c o m p lia n c e p ro g ra m

u n d e r th e d i r e c t i o n o f o n e

Y to c o n t i n u e

o f its o f fic e r s to e n s u r e th a t th e m a n a g e m e n t o f

to e n g a g e in a c t i v i t i e s th a t a r e p e r m i s s i b l e f o r b a n k

A p p l i c a n t a n d H T L is a w a r e o f its r e s p o n s i b i l i t i e s

h o l d i n g c o m p a n i e s , in s i t u a t i o n s w h e r e th e n e c e s ­

u n d e r th e A c t. T h e b o a r d e x p e c t s th a t th e s e a c t i o n s

sa ry p rio r b o a rd a p p ro v a l w a s n o t o b ta in e d

fo r

w ill a s s i s t A p p l i c a n t in a v o i d i n g a r e c u r r e n c e o f

s u c h a c t i v i t i e s , th e b o a r d a p p l i e s th e s a m e s t a n d ­

s im il a r v i o l a t i o n s . In lig h t o f th e a b o v e a n d o t h e r

a r d s th a t it a p p l i e s to a n a p p l i c a t i o n to c o m m e n c e

i n f o r m a t i o n in th e r e c o r d e v i d e n c i n g A p p l i c a n t ’s

su ch

in te n t to c o m p l y w it h th e r e q u i r e m e n t s o f th e B a n k

a c tiv itie s

in itia lly . T h e b o a rd

a n a l y z e s th e

c o m p e t i t i v e e f f e c t s o f s u c h p r o p o s a l s b o th a t th e

H o ld in g C o m p a n y A c t , th e b o a r d h a s d e t e r m i n e d

t i m e o f th e a c q u i s i t i o n o f th e c o m p a n y e n g a g e d

t h a t th e c i r c u m s t a n c e s o f th e a b o v e v i o l a t i o n d o
n o t w a r r a n t d e n i a l o f th e a p p l i c a t i o n .

1 All financial data are as of June 30, 1978.
2 Section 4 of the Act and section 225.4 of Regulation Y
prohibit a bank holding company from engaging in any non­
banking activity without the board’s prior approval.




B ased
e ra tio n s

upon

th e

r e f le c te d

fo re g o in g
in

th e

and

rec o rd ,

o th e r
th e

c o n s id ­

b o a rd

has

d e t e r m i n e d th a t th e b a l a n c e o f th e p u b l i c i n t e r e s t

271

Law D epartm ent

f a c t o r s th e

b o ard

is r e q u i r e d

to c o n s i d e r

under

M a r y l a n d , is a o n e - b a n k

h o ld in g c o m p a n y

w ith

s e c t i o n 4 ( c ) ( 8 ) is f a v o r a b le . A c c o r d i n g l y , th e a p ­
p l i c a t i o n is h e r e b y a p p r o v e d . T h i s d e t e r m i n a t i o n

d e p o s i ts o f a p p r o x i m a t e l y $ 2 b i l l i o n , r e p r e s e n t i n g

is s u b j e c t to th e c o n d i t i o n s s e t f o r t h

in M a r y l a n d ( a s o f M a r c h 3 1 , 1 9 7 8 ) . T h r o u g h its

2 2 5 .4 ( c ) o f R e g u la tio n

in s e c ti o n

Y a n d to th e b o a r d ’s a u ­

1 8 .9 p e r c e n t o f to t a l d e p o s i ts in c o m m e r c i a l b a n k s
p rin c ip a l n o n b a n k

s u b s i d i a r i e s , A p p l i c a n t is e n ­

t h o r it y to r e q u i r e s u c h m o d i f i c a ti o n o r te r m in a ti o n

gaged

o f th e a c t i v i t i e s o f a h o l d i n g c o m p a n y o r a n y o f

l e n d i n g , c o n s u m e r l e n d i n g , c o m m e r c i a l f in a n c i n g

its s u b s i d i a r i e s

a n d le a s in g .

as

th e

a ssu re c o m p lia n c e

b o ard

w i th

f in d s

n e c e ssa ry

to

th e p r o v i s i o n s a n d p u r ­

p o s e s o f th e A c t a n d th e b o a r d ’s r e g u l a t i o n s a n d
o rd e rs

is s u e d

th e re u n d e r

or

to

p re v e n t

e v a s io n

th e re o f.

in

m o r tg a g e

A p p l i c a n t ’s

le a s in g

B y o r d e r o f th e B o a r d o f G o v e r n o r s , e f f e c t iv e

30,

( S ig n e d ) G r i f f i t h
[s e a l]

L. G a rw o o d ,

D e p u t y S e c r e t a r y o f th e B o a r d .

s u b s id ia ry ,

1 9 7 8 ) w as o rg a n iz e d

m o r tg a g e

NM LC

( w it h

de

in l e a s i n g

in

novo

1974

tra n s a c tio n s

and

v a lu e d

b e tw e e n $ 2 5 0 ,0 0 0 a n d $ 1 0 m illio n , “ m id d le m a r ­
k e t”

V o tin g for this action: G overnors W a llich , C o ld w ell,
Partee, and T eeters. A bsent and not voting: Chairm an
M iller.

seco n d

a s s e ts o f a p p r o x im a te ly $ 3 2 .4 m illio n a s o f J u n e
e n g a g e s p rim a rily

F e b ru a ry 9 , 1979.

b a n k in g ,

le a s in g .

M i d d l e m a r k e t t r a n s a c t i o n s r e f le c t

th e u n d e r l y i n g ta x c o n s i d e r a t i o n s w h e r e b y th e l e s ­
s o r p u r c h a s e s th e l e a s e p r o p e r t y a n d s h a r e s th e
a d v a n t a g e s o f a n i n v e s tm e n t ta x c r e d i t w i th th e
l e s s e e b y l e a s i n g th e p r o p e r t y a t a c o s t l o w e r th a n
th e n e t p u r c h a s e c o s t if th e ta x c r e d i t a d v a n t a g e
o f o w n e r s h i p w e r e n o t a v a i l a b l e . I n li g h t o f A p ­
p l i c a n t ’s in c o m e , M N L C h a s r e c e n t l y b e e n u n a b l e
to e x p a n d its m i d d l e m a r k e t le a s e t r a n s a c t i o n s b y

M a ry la n d N a tio n a l C o rp o ra tio n ,

m a k in g

B a ltim o r e , M a ry la n d

b e g a n to b r o k e r its le a s e o r i g i n a t i o n s a n d

u se

b ro k e re d

O r d e r D e n y in g F o r m a tio n o f

o f f u r t h e r ta x

tra n s a c tio n s

now

c re d it;

th u s,

d o m in a te

its

M NLC
th e s e

le a s in g

a c tiv itie s .

G E C C a n d M N L e a s in g C o r p o r a tio n

G E C C is a w h o l l y o w n e d s u b s i d i a r y o f G e n e r a l
B a ltim o r e ,

E le c t r i c

w i th in

th e

c o r p o r a t i o n s in th e U n i te d S t a t e s w it h c o n s o l i d a t e d

m e a n i n g o f th e B a n k H o l d i n g C o m p a n y A c t , h a s

t o ta l a s s e t s , n o t i n c l u d i n g G E C C , o f $ 1 3 . 7 b i l l i o n

a p p l i e d f o r th e b o a r d ’s a p p r o v a l , u n d e r § 4 ( c ) ( 8 )

a n d n e t in c o m e o f $ 1 .1 b i l l i o n ( f o r th e y e a r e n d i n g

M a ry la n d

N a tio n a l

M a ry la n d , a b a n k

of

th e

A ct

C .F .R .

h o ld in g

(1 2

§ 2 2 5 .4 ( b )( 2 )

of

C o rp o ra tio n ,
com pany

U .S .C .

th e

§ 1 8 4 3 (c )(8 ))

b o a r d ’s R e g u l a t i o n

Y

C om pany,

one

of

th e

m a jo r

in d u s tr ia l

and

D e c e m b e r 3 1 , 1 9 7 7 ) . G E C C , c u r r e n t l y th e f o u r t h

(1 2

l a r g e s t d o m e s t i c n o n - c a p t i v e f in a n c e c o m p a n y w i th

§ 2 2 5 . 4 ( b ) ( 2 ) ) , f o r its s u b s i d i a r y , M a r y ­

a s s e ts o f a p p r o x i m a t e l y $ 6 .1

b illio n (a s o f J u n e

l a n d N a t i o n a l L e a s i n g C o r p o r a t i o n ( “ M N L C ” ) , to

3 0 , 1 9 7 8 ) , w a s o r g a n i z e d in 1 9 3 2 a s a c o n s u m e r

f o r m a j o i n t v e n t u r e w it h G e n e r a l E le c t r i c C r e d i t

s a le s f in a n c e c o m p a n y , a n d h a s s i n c e e v o l v e d i n to

C o rp o ra tio n
sh a re s

( “ G E C C ” ),

in G E C C

and

and

MN

to

a c q u ire

L e a s in g

v o ti n g

a m a j o r g e n e r a l f in a n c e c o m p a n y e n g a g e d in c o m ­

C o rp o ra tio n

m e r c i a l a n d i n d u s t r i a l f i n a n c i n g , c o n s u m e r f in a n c ­

( “ C o m p a n y ” ), S ta m fo rd , C o n n e c tic u t, a d e n o v o

in g a n d i n s u r a n c e o p e r a t i o n s . G E C C ’s c o m m e r c i a l

c o r p o r a t i o n th a t w o u l d e n g a g e in th e a c t i v i t i e s o f

a n d i n d u s tr i a l f in a n c i n g a c t i v i t i e s i n c l u d e m i d d l e

le a s in g p e r s o n a l a n d re a l p r o p e rty . S u c h a c tiv itie s

m a rk e t le a s in g , w h ic h re p re s e n ts a p p ro x im a te ly 6

h a v e b e e n d e t e r m i n e d b y th e b o a r d to b e c l o s e l y

p e r c e n t o f G E C C ’s le a s e r e c e i v a b l e s .

r e l a t e d to b a n k i n g ( 1 2 C . F . R . § 2 2 5 . 4 ( a ) ( 6 ) ) .

A p p l i c a n t h a s p r o p o s e d th a t M N L C w o u ld a c ­

N o t i c e o f th e a p p l i c a t i o n , a f f o r d i n g o p p o r t u n i t y
fo r in te r e s te d

and

t h e r e m a i n i n g 8 0 p e r c e n t to b e o w n e d b y G E C C .

v i e w s o n th e p u b l i c i n te r e s t f a c t o r s , h a s b e e n d u ly

C o m p a n y w o u l d e n g a g e g e n e r a l l y in s t r u c t u r i n g ,

p u b lis h e d

(4 3

p erso n s
F ed.

to s u b m i t c o m m e n t s

q u i r e 2 0 p e r c e n t o f th e e q u i t y in C o m p a n y w ith

R eg.

4 7 0 1 3 ).

T h e tim e

fo r

o r i g i n a t i n g , b u y i n g , s e l l i n g a n d s e r v i c i n g c h a t te l

f ilin g c o m m e n t s a n d v i e w s h a s e x p i r e d , a n d th e

m o r tg a g e s , c o n d i t i o n a l s a l e s c o n t r a c t s , a n d le a s e s

b o a r d h a s c o n s i d e r e d th e a p p l i c a t i o n a n d a ll c o m ­

o f p e r s o n a l a n d r e a l p r o p e r t y . A p p l i c a n t ’s p r i m a r y

m e n t s r e c e i v e d in th e lig h t o f th e p u b l i c in t e r e s t

p u r p o s e in p a r t i c i p a t i n g in th i s j o i n t v e n t u r e w ith

f a c t o r s s e t f o r t h in § 4 ( c ) ( 8 ) o f th e A c t ( 1 2 U . S . C .

GECC

§ 1 8 4 3 (c )(8 )).

m uch

A p p l i c a n t , th e l a r g e s t b a n k i n g o r g a n i z a t i o n in




w o u ld
g re a te r

b e to t a k e a d v a n t a g e
ta x

base

and

th e re b y

o r i g i n a ti o n o f t a x m o t i v a t e d l e a s e s .

o f G E C C ’s
expand

its

272

Federal Reserve Bulletin □ March 1979

B o th G E C C a n d M N L C a r e c u r r e n tl y e n g a g e d

B a s e d u p o n th e f o r e g o i n g

a n d th e o t h e r f a c t s

in th e s a m e ty p e o f l e a s i n g a c t i v i t i e s t h a t w o u l d

o f r e c o r d , it is th e b o a r d ’s j u d g m e n t th a t a p p r o v a l

b e c o n d u c t e d b y th e jo i n t v e n t u r e . T h e a g r e e m e n t

o f th e

b e t w e e n M N L C a n d G E C C s t i p u l a t e s th a t t h e j o i n t

i n t e r e s t a n d t h a t th e a p p l i c a t i o n

v e n t u r e s h a ll in n o w a y li m i t o r r e s t r i c t th e a b il it y

h e r e b y is , d e n i e d .

o f M N L C o r G E C C to c o n t i n u e to c o n d u c t s u c h
b u s i n e s s in t h e i r o w n

n a m e s a n d f o r th e i r o w n

a c c o u n ts . N e v e rth e le s s ,

a p p lic a tio n

le a s i n g a n d t h e r e a r e n o a p p a r e n t l i m i t a t io n s to

in

th e

p u b lic

s h o u ld b e , a n d

B y o r d e r o f th e B o a r d o f G o v e r n o r s , e f f e c t iv e
F e b ru a ry 2 3 , 1 979.
V oting for this action: Chairm an M iller and G o v er­
nors W allich , C o ld w e ll, P artee, and T eeters.
(S ig n e d ) T h e o d o r e E . A l l i s o n ,

its e x p a n d i n g its a c t i v i t y in th is m a r k e t a b s e n t th e
j o i n t v e n t u r e , th e b o a r d

fin d s t h a t th e p r o p o s e d

tra n s a c tio n

a d e tr im e n ta l

have

not be

in l i g h t o f th e f a c t th a t

G E C C is a l r e a d y e n g a g e d in s o m e m i d d l e m a r k e t

w o u ld

w o u ld

[s e a l]

S e c r e t a r y o f th e B o a r d .

e ffe c t o n

p ro b a b le fu tu re c o m p e titio n .
T h e b o a r d h a s e x a m i n e d c a r e f u l l y A p p l i c a n t ’s
p ro p o sal

and

g a in e d b y
a c h ie v e d

c o n c lu d e s

th e

p ro p o se d

w ith o u t

th e

T h e r e is n o e v i d e n c e
w h ic h

a lre a d y

th a t

th e

jo in t

b e n e f its

v e n tu re

fo rm a tio n

of

to

be

c o u ld

be

C om pany.

in t h e r e c o r d th a t G E C C ,

engages

in

so m e

m id d le

N a tio n a l D e tro it C o r p o r a tio n ,
D e t r o i t , M i c h ig a n
O r d e r A p p r o v in g A c q u is itio n o f
C e r ta in A s s e ts o f J a m e s T a lc o tt, In c.

m ark et
N a tio n a l D e tro it C o r p o r a tio n , D e tro it,

l e a s i n g , is n o t f u l ly c a p a b l e o f d e v e l o p i n g b y its e lf
th e c a p a b i l i t i e s th a t w o u ld

b e m a d e p o s s ib le b y

th e f o r m a t i o n o f a j o i n t v e n t u r e . T h e r e c o r d i n d i ­
c a t e s th a t G E C C h a s s u b s t a n t i a l f in a n c ia l r e s o u r c e s
th a t w o u l d e n a b l e G E C C to d e v e l o p i n d e p e n d e n t l y
th e p e r s o n n e l to b e p r o v i d e d b y M N L C t h r o u g h
th e j o i n t v e n t u r e . M o r e o v e r , th e r e c o r d in d i c a t e s
th a t G E C C

has

s u b s ta n tia l

e x p e rtis e

in

m id d le

M ic h i­

g a n , a b a n k h o l d i n g c o m p a n y w i t h i n th e m e a n i n g
o f th e B a n k H o l d i n g C o m p a n y A c t , h a s a p p l i e d
f o r th e b o a r d ’s a p p r o v a l ,

u n d e r § 4 ( c ) ( 8 ) o f th e

A c t (1 2 U .S .C . § 1 8 4 3 (c )(8 )) a n d

§ 2 2 5 .4 ( b )( 2 )

of

(1 2

th e

B o a r d ’s

R e g u la tio n

Y

C .F .R .

§ 2 2 5 . 4 ( b ) ( 2 ) ) , to a c q u i r e , th r o u g h its s u b s i d i a r y ,
In s ta lo a n F in a n c ia l S e rv ic e s , In c . ( “ I n s ta lo a n ” ),

m a r k e t l e a s i n g t h r o u g h its p a r t i c i p a t i o n o f l e a s e s

c e r t a i n a s s e ts o f J a m e s T a l c o t t , I n c . , N e w Y o r k ,

to s m a ll a n d m e d i u m s iz e b a n k s , a n d t h a t G E C C

N e w Y o r k ( “ T a l c o t t ” ) , a n d to e n g a g e in its c o m ­

is e x p a n d i n g its a c t i v i t y in th is a r e a w i t h o u t th e
a s s is ta n c e o f an e x is tin g c o m p e tito r.
A c c o r d i n g l y , th e b o a r d d o e s n o t fin d a n y t a n g i ­
b le p u b l i c b e n e f its a s s o c i a t e d
tra n s a c tio n .

W h i le

A p p lic a n t

w i th th e p r o p o s e d
in d ic a te s

th a t

th e

c o m b in e d r e s o u r c e s o f G E C C a n d M N L C w o u ld
p ro d u ce

“ a d m in is tra tiv e

s a v in g s ”

w h ic h

w o u ld

p r o v i d e c u s t o m e r s w i th a “ p r e f e r e n t i a l r a t e , ” th e
r e c o r d d o e s n o t i n d i c a t e th a t s u c h s a v i n g s o r r a te
r e d u c t i o n s w o u ld b e s u f f ic ie n t to p r o d u c e p u b l i c
b e n e f its w a r r a n t i n g

a p p ro v a l o f th is a p p lic a tio n .

F u r t h e r m o r e , A p p l i c a n t ’s c l a i m

th a t c o n s u m m a ­

tio n o f th e p r o p o s a l w o u l d i n c r e a s e c o m p e t i t i o n
b y p l a c i n g a n a d d i t i o n a l c o m p e t i t o r in th e l e a s i n g
m a r k e t c a n n o t b e g r a n t e d g r e a t w e i g h t b y th e b o a r d
sin c e b o th

p a rtic ip a n ts

in

th e

jo in t

v e n tu re

are

p r e s e n t in th e m a r k e t . S i n c e th e b o a r d f in d s th a t
th e s a m e r e s u l t c a n b e a c h i e v e d a b s e n t th e f o r m a ­
t i o n o f a j o i n t v e n t u r e , w i th its p o t e n t i a l f o r c o n ­

m e rc ia l

f in a n c e

a c tiv itie s .1 S u c h

a c tiv itie s

have

b e e n d e t e r m i n e d b y th e b o a r d to b e c l o s e l y r e l a t e d
to b a n k i n g ( 1 2 C . F . R . § 2 2 5 . 4 ( a ) ( 1 ) ) .
N o t i c e o f th e a p p l i c a t i o n , a f f o r d i n g o p p o r t u n i t y
fo r in te re ste d

p erso n s

to s u b m i t c o m m e n t s

and

v ie w s o n th e p u b l i c i n t e r e s t f a c t o r s , h a s b e e n d u l y
p u b l i s h e d (4 3 F e d e r a l R e g i s t e r 5 9 4 3 5 ) . T h e t im e
f o r f ilin g c o m m e n t s a n d v i e w s h a s e x p i r e d , a n d
th e b o a r d h a s c o n s i d e r e d th e a p p l i c a t i o n a n d a ll
c o m m e n t s r e c e i v e d in th e l ig h t o f th e p u b l i c i n t e r ­
e s t f a c t o r s s e t f o r th

in § 4 ( c ) ( 8 ) o f th e A c t ( 1 2

U .S .C . § 1 8 4 3 (c )(8 )).
A p p l i c a n t , th e l a r g e s t b a n k i n g o r g a n i z a t i o n in
M i c h i g a n , c o n t r o l s s e v e n c o m m e r c i a l b a n k s in t h a t
s t a te w ith a g g r e g a t e d e p o s i ts o f $ 5 . 6 b i l l i o n , r e p ­
re s e n tin g

1 5 .7 p e r c e n t o f to ta l d e p o s i t s in c o m ­

m e r c ia l b a n k s in M i c h i g a n . 2 A p p l i c a n t c u r r e n tl y
e n g a g e s th r o u g h s u b s i d i a r i e s in i n s u r a n c e , m o r t ­
g a g e b a n k i n g , a n d c o n s u m e r f in a n c e a c t i v i t i e s .

c e n tr a tio n o f r e s o u r c e s a n d le s s e n in g o f c o m p e ti­
tio n in th e p r o d u c t m a r k e t in w h i c h th e tw o p a r t i e s
to th e

jo in t

v e n tu re c o m p e te ,

th e

f o r m a t i o n s h o u ld n o t b e a p p r o v e d .




jo in t

v e n tu r e

1 In particular, Applicant proposes to acquire certain loans
receivable, and the furniture, furnishings, and equipment of
the Detroit office of T alcott’s Business Finance Division.
2 Banking data as of December 31, 1977.

273

Law D epartm ent

T a l c o t t ’s D e t r o i t o f fic e ( “ T a l c o t t - D e t r o i t ” ) e n ­

a s p a r t i c u l a r l y s i g n if i c a n t in lig h t o f T a l c o t t ’s r e ­

g a g e s in c o m m e r c i a l f in a n c e a c t i v i t i e s i n c l u d i n g

d u c t i o n o f its o v e r a l l o p e r a t i o n s in r e c e n t y e a r s

th e m a k i n g o f b u s i n e s s l o a n s s e c u r e d b y a c c o u n t s

a n d t h e d if f ic u lty T a l c o t t - D e t r o i t h a s e x p e r i e n c e d

re c e iv a b le , in v e n to ry , m a c h in e ry a n d e q u ip m e n t,

in o b t a i n i n g a c c e s s to b o r r o w e d f u n d s a t c o m p e t i ­

a n d re a l e s ta te . O n J u ly 3 1 , 1 9 7 8 , T a lc o tt- D e tr o it

t iv e r a t e s . F u r t h e r m o r e , a f f ilia tio n w i th A p p l i c a n t

h a d l o a n s o u t s t a n d i n g o f $ 1 9 .1 m i l l i o n , a n d g r o s s

s h o u ld e n a b l e T a l c o t t - D e t r o i t to b e c o m e a m o r e

r e v e n u e s o f $ 2 .4 m illio n . T a lc o tt- D e tr o it, w h ic h

e f f e c t iv e c o m p e t i t o r in th e a r e a s w h e r e it o p e r a t e s .

of

O n th e b a s is o f t h e s e a n d o t h e r f a c t s o f r e c o r d ,

M i c h i g a n a n d th e s t a te o f O h i o , d e r i v e s m o s t o f

th e b o a r d c o n c l u d e s t h a t th e b e n e f its to th e p u b l i c

its

th a t c a n

o b ta in s

b u s in e s s

b u s in e s s

fro m

fro m

th e

th e

lo w e r

D e tro it,

p e n in s u la

C le v e la n d ,

and

G r a n d R a p i d s S M S A s . A p p l i c a n t ’s b a n k i n g s u b ­

re a s o n a b ly

b e e x p e c te d

A p p l i c a n t ’s a c q u i s i t i o n

to r e s u l t f r o m

o f th e a s s e t s o f T a l c o t t-

s i d i a r i e s a l s o o r i g in a t e b u s i n e s s l o a n s in th e l o w e r

D e t r o i t a r e s u f f ic ie n t to o u t w e i g h th e s l i g h t a d v e r s e

p e n i n s u l a o f M i c h ig a n a n d th e s ta te o f O h i o , a n d

e f f e c ts o n c o m p e t i t i o n th a t w o u l d r e s u l t f r o m th e

o n J u n e 3 0 , 1 9 7 8 , A p p l i c a n t h a d a to ta l o f $ 5 0 4 .8

p r o p o s a l . F u r t h e r m o r e , t h e r e is n o e v i d e n c e in th e

m i l l i o n in b u s i n e s s lo a n s o u t s t a n d i n g in th e D e t r o i t

r e c o r d to i n d i c a t e t h a t c o n s u m m a t i o n o f th e p r o ­

S M S A . 3 H o w e v e r , it a p p e a r s t h a t n e i t h e r A p p l i ­

p o s e d t r a n s a c t i o n w o u ld r e s u l t in u n f a i r c o m p e t i ­

c a n t n o r T a l c o t t - D e t r o i t c o n t r o l s a s i g n if i c a n t p o r ­

t i o n , c o n f li c ts o f i n t e r e s t , u n s o u n d b a n k i n g p r a c ­

tio n o f th e c o m m e r c i a l lo a n m a r k e t in t h is a r e a ,

t i c e , o r a n y o t h e r e f f e c ts th a t w o u l d b e a d v e r s e

i n a s m u c h a s th e D e t r o i t a r e a is s e r v e d

to th e p u b l i c i n t e r e s t .

by over

B ased

7 0 c o m m e r c i a l f in a n c e c o m p a n i e s o p e r a t i n g a to ta l
of

1 5 7 o f f ic e s ,

i n c l u d i n g o f fic e s o f m a n y o f th e

n a t i o n ’s l a r g e s t

c o m m e rc ia l

f in a n c e

c o m p a n ie s .

upon

e ra tio n s

th e

fo re g o in g

r e f le c te d

in

th e

and

re c o rd ,

o th e r
th e

c o n s id ­

b o a rd

has

d e t e r m i n e d th a t th e b a l a n c e o f th e p u b l i c in t e r e s t

T h u s , w h i l e c o n s u m m a t i o n o f th e p r o p o s a l w o u ld

f a c t o r s th e

e l i m i n a t e s o m e c o m p e t i t i o n e x i s ti n g b e t w e e n A p ­

§ 4 ( c ) ( 8 ) is f a v o r a b l e . A c c o r d i n g l y , th e a p p l i c a ­

b o a rd

t io n

s u b j e c t to th e c o n d i t i o n s s e t f o r t h in § 2 2 5 . 4 ( c )
o f R e g u la ti o n

In th i s c o n n e c t i o n , th e b o a r d n o t e s t h a t T a l c o t t

re q u ire

su ch

d e te rm in a tio n

is

Y a n d to th e b o a r d ’s a u t h o r i t y to
m o d i f i c a ti o n
a h o ld in g

o r t e r m in a ti o n

com pany

of

or any

th e

h a s e x p e r i e n c e d f i n a n c ia l d i f f ic u l ti e s , w h ic h h a v e

a c tiv itie s

c a u s e d it to c o n t r a c t its o v e r a l l o p e r a t i o n s . T h is

s u b s i d i a r i e s a s th e b o a r d fin d s n e c e s s a r y to a s s u r e

d e v e l o p m e n t is r e f le c te d in a d e c l i n e s i n c e

c o m p l i a n c e w ith th e p r o v i s i o n s a n d p u r p o s e s o f

1973

of

T h is

under

th e a m o u n t o f c o m p e t i t i o n
n a t e d is s l i g h t .

a p p ro v ed .

to c o n s i d e r

p l i c a n t a n d T a l c o t t - D e t r o i t o f f ic e , it a p p e a r s th a t
th a t w o u ld b e e l i m i ­

is h e r e b y

is r e q u i r e d

its

o f T a l c o t t - D e t r o i t ’s g r o s s r e v e n u e s a n d lo a n s o u t ­

th e A c t a n d

s t a n d i n g . In v ie w o f th e d if f i c u lt ie s f a c e d b y T a l ­

i s s u e d t h e r e u n d e r , o r to p r e v e n t e v a s i o n t h e r e o f .

c o t t a n d its f u t u r e p r o s p e c t s , it d o e s n o t a p p e a r

th e b o a r d ’s r e g u l a t i o n s a n d

of

T h e tr a n s a c tio n

s h a ll

be m ade

o rd e rs

n o t la t e r

th a n

l i k e l y t h a t T a l c o t t - D e t r o i t w ill r e m a i n a v i a b l e
i n d e p e n d e n t c o m p e t i t o r in th e D e t r o i t a r e a . 4 In

th r e e m o n t h s a f t e r th e e f f e c t iv e d a t e o f th is O r d e r ,
u n l e s s s u c h p e r i o d is e x t e n d e d f o r g o o d c a u s e b y

v ie w o f th e s e f a c t s , th e b o a r d c o n c l u d e s th a t
c o n s u m m a t i o n o f th e p r o p o s a l w o u l d h a v e o n l y

C h i c a g o , p u r s u a n t to d e l e g a t e d a u t h o r i ty .

s lig h tly a d v e rs e e ffe c ts o n c o m p e titio n . W h e n b a l­
a n c e d a g a i n s t th e p u b l i c b e n e f its e x p e c t e d to r e s u l t

th e

b o ard

or

by

th e

F ed eral

R e se rv e

B ank

of

B y o r d e r o f th e B o a r d o f G o v e r n o r s , e f f e c t iv e
F e b ru a ry 2 6 , 1 9 79.

f r o m th i s t r a n s a c t i o n , t h e s e a d v e r s e e f f e c t s a r e n o t
s o s e r i o u s a s to w a r r a n t d e n i a l o f th e p r o p o s a l .
B y a c q u i r i n g th e a s s e t s o f T a l c o t t - D e t r o i t , A p ­
p l i c a n t w ill e n s u r e th e c o n t i n u e d

a v a ila b ility

of

c o m m e r c i a l l o a n s to T a l c o t t - D e t r o i t ’s c u s t o m e r s a t
its p r e s e n t l o c a t i o n . T h e b o a r d v ie w s th is f a c t o r

3 The Detroit SMSA is approxim ated by M acom b, Oakland,
and Wayne Counties and portions of St. Clair, Lapeer, Liv­
ingston, W ashtenaw, and Monroe counties, all in the State
of Michigan.
4 The board also notes that Talcott has announced its inten­
tion to sell the assets of its Business Finance Division, includ­
ing Talcott-Detroit, in order to obtain additional revenues.




V oting for this action: Chairm an M iller and G o v er­
nors W allich , C o ld w e ll, P artee, and T eeters.
(S ig n e d ) J o h n
[s e a l]

M . W a lla c e ,

A s s i s t a n t S e c r e t a r y o f th e B o a r d .

P r i o r a n d F in a l C e r tif ic a ti o n s P u r s u a n t to
th e B a n k H o l d i n g C o m p a n y T a x A c t o f 1 9 7 6

P r i o r a n d fin a l c e r t i f i c a t i o n s a r e c o n t i n u e d
th e f o l lo w in g p a g e .

on

274

Federal Reserve Bulletin □ March 1979

S h e lte r R e s o u rc e s , In c .

E l e c t r o n i c s C a p it a l C o r p o r a t i o n . B a n c o r p o r a t i o n is

C le v e la n d , O h io

a c o r p o r a t i o n o r g a n i z e d u n d e r th e la w s o f th e s t a te
o f O h io o n O c to b e r 1 8 ,

P r i o r C e r t i f i c a t i o n P u r s u a n t t o th e
B a n k H o ld in g C o m p a n y T a x A c t o f 1 9 7 6
[D o c k e t N o .

S h e lte r

2 . O n J a n u a ry 2 8 , 1 9 6 9 , S h e lte r a c q u ire d in d i­

R e so u rces,
has

S h e lte r a c q u ire d

B a n c o rp o ra tio n o n J a n u a ry 2 8 , 1 9 6 9 .

7 6 -1 2 5 J

( “ S h e lte r ” ),

1961.

9 8 . 4 2 p e r c e n t o f th e o u t s t a n d i n g v o t in g s h a r e s o f

I n c .,

re q u e s te d

O h io

r e c t o w n e r s h i p a n d c o n t r o l , th r o u g h B a n c o r p o r a ­

c e r t i f ic a t io n

tio n , o f 4 3 ,3 0 5 sh a re s o f B a n k , re p re s e n tin g 9 8 .4 2
p e r c e n t o f th e th e n t o ta l o u t s t a n d i n g v o t in g s h a r e s

C le v e la n d ,
a

p rio r

p u r s u a n t to s e c t i o n 6 1 5 8 ( a ) o f th e I n t e r n a l R e v e n u e
C o d e ( th e “ C o d e ” ), a s a m e n d e d b y s e c t i o n 3 ( a )

o f B a n k (a s p li t o f B a n k ’s s h a r e s in 1 9 7 1 i n c r e a s e d

o f th e B a n k H o l d i n g C o m p a n y T a x A c t o f 1 9 7 6

th e n u m b e r o f B a n k ’s o u t s t a n d i n g s h a r e s to 6 1 , 6 0 0

( th e “ T a x A c t ” ) , th a t its s a le o n A p r i l 2 3 , 1 9 7 3 ,

s h a re s , o f w h ic h S h e lte r in d ire c tly o w n e d o r c o n ­

o f 6 1 , 5 7 9 o u t s t a n d i n g s h a r e s o f C a p i t a l N a ti o n a l

t r o ll e d 6 1 , 5 7 9 ) .

B ank,

C le v e la n d ,

ow ned

and

O h io

c o n t r o l le d

by

( “ B a n k ” ),
it t h r o u g h

i n d i r e c t ly
its

w h o l ly

3.

S h e lte r b e c a m e a b a n k h o ld in g c o m p a n y o n

D ecem ber

31,

1970,

as

a

of

th e

1970

o w n e d s u b s i d i a r y , C a p it a l B a n c o r p o r a t i o n , C l e v e ­
la n d ,

B a n c O h io

d i r e c t o w n e r s h i p a n d c o n t r o l a t t h a t ti m e o f m o r e

C o rp o ra tio n , C le v e la n d , O h io ( “ B a n c O h io ” ), w a s

th a n 2 5 p e r c e n t o f t h e o u t s t a n d i n g v o t in g s h a r e s

n e c e s s a r y o r a p p r o p r i a t e to e f f e c t u a t e th e p o l i c i e s

o f B a n c o rp o ra tio n , a n d

o f th e B a n k H o l d i n g

U .S .C .

o w n e r s h ip a n d c o n tro l at th a t tim e , th r o u g h B a n ­

A c t ” ) ). S h e l t e r h a s a ls o

c o r p o r a t i o n , o f m o r e th a n 2 5 p e r c e n t o f th e o u t ­

O h io

( “ B a n c o rp o r a tio n ” ),

C om pany

§ 1841 e t s e q . ( “ B H C

to

A c t (1 2

BHC

re s u lt

A m e n d m e n t s to th e

A c t , b y v i r tu e o f

its

b y v ir tu e o f its i n d i r e c t

r e q u e s t e d a fin a l c e r t i f i c a t i o n p u r s u a n t to s e c t io n

s t a n d in g v o t in g s h a r e s o f B a n k , a n d it r e g i s t e r e d

6 1 5 8 (c )(2 )

a s s u c h w it h th e b o a r d o n F e b r u a r y

e x p ira tio n

of
of

th e
th e

C ode

th a t

p e rio d

it h a s

p r o h i b it e d

(b e fo re

th e

p ro p e rty

is

17,

1 9 7 2 .3

S h e lte r w o u ld h a v e b e e n a b a n k h o ld in g c o m p a n y

p e r m i t t e d u n d e r th e B H C A c t to b e h e l d b y a b a n k

o n J u ly

h o ld in g c o m p a n y ) c e a s e d

o f 1 9 7 0 h a d b e e n in e f f e c t o n s u c h d a te b y v ir tu e

to b e a b a n k

h o l d in g

1 9 7 0 , if th e

BHC

A c t A m e n d m e n ts

o f its d i r e c t a n d i n d i r e c t o w n e r s h i p

c o m p a n y .1
In c o n n e c t i o n w i t h t h e s e r e q u e s t s , th e f o l lo w in g
in fo rm a tio n

7,

is d e e m e d

re le v a n t fo r p u rp o s e s

of

a n d c o n tro l

o n th a t d a t e o f m o r e t h a n 2 5 p e r c e n t o f th e o u t ­
s t a n d in g

v o ti n g

sh a re s

of

B a n c o rp o ra tio n

and

is s u i n g th e r e q u e s t e d c e r t i f i c a t i o n s : 2

B a n k , re s p e c tiv e ly .

1.
S h e l t e r is a c o r p o r a ti o n o r g a n i z e d u n d e r th e
la w s o f th e s ta te o f D e l a w a r e o n F e b r u a r y 1 1 ,

4 . O n J u l y 2 , 1 9 7 1 , S h e l t e r file d a n i r r e v o c a b le
d e c l a r a t i o n w ith th e b o a r d , th a t it w o u l d c e a s e to

1 9 7 0 , a s th e s u c c e s s o r b y m e r g e r to E l e c t r o n i c s

be a b ank

C a p it a l C o r p o r a t i o n , a c o r p o r a ti o n

i n t e r e s t in B a n k b y J a n u a r y

o rg a n iz e d

in

1 9 5 9 u n d e r th e l a w s o f th e s t a te o f M a s s a c h u s e t t s .
S in c e

S h e lte r

r e o rg a n iz a tio n

w as
p la n

o rg a n iz e d
of

under

E le c tro n ic s

an

in te r n a l

C a p ita l

C o r­

h o ld in g

5 . O n Ja n u a ry

c o m p a n y b y d iv e s tin g
2,

1973,

o f its

1, 1 9 8 1 .
th e b o a r d

is s u e d

an

O r d e r p u r s u a n t to s e c t i o n 3 ( a ) ( 3 ) o f th e B H C A c t
a p p r o v i n g th e a p p l i c a t i o n o f B a n c O h i o to a c q u i r e

p o r a t i o n , f o r p u r p o s e s o f th is a p p l i c a t i o n c o r p o r a t e

1 0 0 p e rc e n t (le s s d ir e c to r s ’ q u a lif y in g s h a re s ) o f

a c t i o n s d e s c r i b e d a s ta k e n b y S h e l t e r p r i o r to its

th e v o t in g s h a r e s o f B a n k , a n d o n A p r il 2 3 , 1 9 7 3 ,

o r g a n i z a t i o n a r e u n d e r s t o o d to b e a c t i o n s t a k e n b y

S h e lte r

s o ld

a ll o f

th e

o w n e d o r c o n tr o lle d b y
1 Pursuant to sections 2(d)(2) and 3(e)(2) of the Tax Act,
in the case of any sale that takes place on or before December
31, 1976 (the 90th day after the date of the enactm ent of the
Tax Act), the certification described in section 6158(a) shall
be treated as made before the close of the calendar year
following the calendar year in which the last sale occurred,
if application for such certification was made before the close
of December 31, 1976. Shelter’s application for such certifi­
cation was received by the board in January, 1977, but post­
marked December 31, 1976, thereby com plying with the stat­
utory time limit on filing of applications.
2 This information derives from Shelter’s correspondence
with the board concerning its request for certification, and
Registration Statements Hied with the board by Shelter and
Bancorporation pursuant to the BHC Act, and other records
of the board.




6 1 ,5 7 9

sh a re s

it, t h r o u g h

of

B ank

B a n c o rp o ra ­

t i o n , to B a n c O h i o f o r c a s h .
6 . O n A p r il 2 3 ,
a c q u ire d

by

it o n

1 9 7 3 , S h e l t e r h e ld
or

b e fo re

J u ly

7,

p ro p e rty
1970,

th e

d i s p o s i t i o n o f w h i c h w o u l d , b u t f o r S h e l t e r ’s, d e ­
c l a r a t i o n u n d e r s e c t i o n 4 ( c ) ( 1 2 ) o f th e B H C Act*,
h a v e b e e n n e c e s s a r y o r a p p r o p r i a t e to e f f e c t u a t e

3
Bancorporation similarly became a bank holding company
on December 31, 1970, as a result of the 1970 Amendments
to the BHC Act, by virtue of its direct ownership and control
of more than 25 percent of the outstanding voting shares of
Bank, and it registered as such with the board on February
2, 1972.

275

Law D epartm ent

B y o rd e r

s e c t i o n 4 o f th e B H C A c t if S h e l t e r w e r e to r e m a i n
a bank

h o ld in g c o m p a n y b e y o n d

1980, and
e rty ”

w h ic h p ro p e rty

D ecem ber 31,

is “ p r o h i b i t e d

p ro p ­

w ith in th e m e a n in g o f s e c tio n s 6 1 5 8 ( f) (2 )

of

th e B o a rd

a u th o rity

(1 2

C .F .R .

any

in te re s t

in

B ank,

B a n c O h io ,

or any

§ 2 6 5 .2 ( b )( 3 )) ,

e f f e c t iv e

(S ig n e d ) T h e o d o r e E . A l l i s o n ,

N e ith e r S h e lte r n o r a n y s u b s id ia ry o f S h e lte r

h o ld s

a c tin g

F e b ru a ry 2 7 , 1979.

a n d 1 1 0 3 (c ) o f th e C o d e .
7.

of G o v e rn o rs,

t h r o u g h its G e n e r a l C o u n s e l , p u r s u a n t to d e l e g a t e d

[s e a l]

S e c r e t a r y o f th e B o a r d .

c o m p a n y th a t c o n tro ls a b a n k .
8.

N e ith e r

B a n c O h io

nor

any

s u b s id ia ry

of

B a n c O h i o , i n c l u d i n g B a n k , h o ld s a n y i n t e r e s t in

R e p u b lic o f T e x a s C o r p o r a tio n ,
D a lla s , T e x a s

S h e lte r o r a n y s u b s id ia ry o f S h e lte r.
9.

N o o f f ic e r , d i r e c t o r ( i n c l u d i n g h o n o r a r y

or

a d v i s o r y d i r e c t o r ) o r e m p l o y e e w it h p o l i c y - m a k i n g
fu n c tio n s o f S h e lte r o r a n y su b s id ia ry o f S h e lte r

P r i o r C e r t i f i c a t i o n P u r s u a n t t o th e
B a n k H o ld in g C o m p a n y T a x A c t o f 1 9 7 6
[D o c k e t N o .

a l s o h o l d s a n y s u c h p o s i t i o n w it h B a n c O h i o , o r

TCR

7 6 -1 0 7 ]

R e p u b li c o f T e x a s C o r p o r a t i o n , D a l l a s , T e x a s

a n y s u b s i d i a r y o f B a n c O h i o , in c l u d i n g B a n k , o r

( “ R e p u b lic ” ) h a s re q u e s te d

w ith a n y o t h e r b a n k o r c o m p a n y t h a t c o n t r o l s a

p u rsu an t

bank.

C o d e ( th e “ C o d e ” ) , a s a m e n d e d b y § 3 ( a ) o f th e

10.

S h e l t e r d o e s n o t c o n t r o l in a n y m a n n e r th e

B ank

to

§ 6 1 5 8 (a)

H o ld in g

a p rio r c e rtific a tio n

o f th e

C om pany

T ax

In te rn a l
A ct of

R evenue
1976

( th e

e l e c t i o n o f a m a j o r it y o f d i r e c t o r s , o r e x e r c i s e a

“ T a x A c t ” ) , th a t th e p r o p o s e d s a le b y W e s t g a t e

c o n t r o l l i n g i n f lu e n c e o v e r th e m a n a g e m e n t o r p o l ­

C o m p a n y , a s u b s id ia ry o f R e p u b lic , o f 4 .4 7 4 a c re s

ic i e s , o f B a n c O h i o o r a n y s u b s i d i a r y o f B a n c O h i o ,

o f c e r t a i n r e a l p r o p e r t y l o c a t e d in I r v i n g , T e x a s

in c l u d i n g B a n k , o r o f a n y o t h e r b a n k o r c o m p a n y

( “ W e s tg a te

th a t c o n t r o l s a b a n k .

p r i a t e to e f f e c t u a t e § 4 o f th e B a n k H o l d i n g C o m ­

O n th e b a s i s o f th e f o r e g o i n g

i n f o r m a t i o n , it

is h e r e b y c e r t i f i e d th a t:

pany

A ct

A c t ” ).

( A ) a t th e t i m e o f its s a l e , t h r o u g h B a n c o r p o ­

P ro p e rty ” ),
(1 2

U .S .C .

W e s tg a te

is

n e c e ssa ry

§ 1843

p ro p o ses

et

th e

w i t h i n th e m e a n i n g o f s e c t i o n 6 1 5 8 ( f ) ( 1 ) a n d s u b ­
s e c t i o n ( b ) o f s e c t i o n 1 1 0 3 o f th e C o d e , a n d

i s s u i n g th e r e q u e s t e d c e r t i f i c a t i o n : 1

s a tis f ie d th e r e q u i r e m e n t s o f th a t s u b s e c t i o n ;

of

B ank

th a t

S h e lte r

s o ld

to

W e s tg a te

I n c o n n e c t i o n w i th th is r e q u e s t , th e f o l lo w in g
in fo rm a tio n

of

(“ BHC

s e q .)

to s e ll

S h e l t e r w a s a q u a l if ie d b a n k h o l d i n g c o r p o r a t i o n ,

sh a re s

ap p ro ­

P r o p e r t y to tw o i n d i v i d u a l p u r c h a s e r s f o r c a s h .

r a t i o n , o f t h e 6 1 , 5 7 9 s h a r e s o f B a n k to B a n c O h i o ,

( B ) th e

or

is d e e m e d

1. O n J u ly 7 ,
D a lla s

b a n k in g

re le v a n t fo r p u rp o s e s

1 9 7 0 , R e p u b lic N a tio n a l

( “ O ld

R e p u b lic

a s s o c ia tio n ,

B a n k ” ),

i n d i r e c t ly

a

of

B ank

n a tio n a l

c o n tr o lle d

2 9 .9

B a n c O h i o t h r o u g h B a n c o r p o r a t i o n w e r e a ll o r p a r t

p e r c e n t o f th e o u t s t a n d i n g v o t i n g s h a r e s o f O a k

o f th e p r o p e r t y b y r e a s o n o f w h i c h S h e l t e r c o n ­

C lif f

t r o ll e d ( w i t h i n th e m e a n i n g o f s e c t i o n 2 ( a ) o f th e

( “ O a k C liff B a n k ” ).

B H C A c t) a b a n k o r b a n k h o ld in g c o m p a n y ;

2.

B ank

and

T ru st C o m p a n y ,

O n J u ly 7 ,

D a lla s ,

T exas

1 9 7 0 , O ld R e p u b l i c B a n k i n d i ­

( C ) th e s a le o f th e s h a r e s o f B a n k w a s n e c e s s a r y
o r a p p r o p r i a t e to e f f e c t u a t e th e p o l i c i e s o f th e B H C

r e c t ly c o n t r o l l e d , t h r o u g h th e H o w a r d C o r p o r a t i o n

A c t;

d is p o s itio n o f w h ic h w o u ld b e n e c e s s a ry o r a p p r o ­

(D ) S h e lte r h a s (b e fo re

th e e x p i r a t i o n

of

th e

( “ H o w a r d ” ),

R e p u b li c

B H C A c t to b e h e l d b y a b a n k h o l d i n g c o m p a n y )

h o ld in g

c e a s e d to b e a b a n k h o l d i n g c o m p a n y ; a n d

w h ic h

( E ) S h e l t e r h a s d i s p o s e d o f a ll b a n k i n g p r o p ­
T h is

is

based

upon

th e

re p re ­

B ank

p ro p e rty

§ 4 o f th e

w e re

com pany

a f f il ia t e ,

to

BHC

c o n tin u e

beyond

p ro p e rty

to

th e

A c t if O l d
be

D ecem ber

31,

is “ p r o h i b i t e d p r o p e r t y ”

a bank
1980,
w it h i n

th e m e a n i n g o f § 1 1 0 3 ( c ) o f t h e C o d e .
3.

c e rtific a tio n

tru s te e d

p r i a t e to e f f e c t u a t e

p e r i o d p r o h i b i t e d p r o p e r t y is p e r m i tt e d u n d e r th e

e rty .

a

O ld R e p u b li c B a n k b e c a m e a b a n k h o l d i n g

co m p an y on D ecem b er 3 1 ,

1 9 7 0 , as a re s u lt o f

s e n t a t i o n s m a d e to th e b o a r d b y S h e l t e r a n d u p o n

th e 1 9 7 0 A m e n d m e n t s to th e B H C A c t , b y v ir tu e

th e f a c t s s e t f o r t h a b o v e . In th e e v e n t th e b o a r d

o f its i n d i r e c t c o n t r o l a t th a t t im e o f m o r e t h a n

s h o u l d h e r e a f t e r d e t e r m i n e th a t f a c ts m a t e r i a l to
th is c e r t i f i c a t i o n a r e o t h e r w i s e t h a n a s r e p r e s e n t e d
b y S h e l t e r , o r th a t S h e l t e r h a s f a il e d to d i s c lo s e
to th e b o a r d o t h e r m a t e r i a l f a c t s , it m a y r e v o k e
t h is c e r t i f i c a t i o n .




1 This information derives from R epublic’s correspondence
with the board concerning its request for this certification,
Republic’s Registration Statement filed with the board pursuant
to the BHC Act as well as the Registration Statement of
Republic National Bank and other records of the board.

276

Federal Reserve Bulletin □ March 1979

2 5 p e r c e n t o f th e o u t s t a n d i n g v o t i n g s h a r e s o f O a k

R e p u b li c a c q u i r e d b e n e f i c ia l i n t e r e s t s in t h e s h a r e s

C lif f B a n k , a n d it r e g i s t e r e d a s s u c h w it h th e b o a r d

of H o w ard

o n S e p te m b e r 2 4 , 1 9 7 1 .

s h a r e h o l d e r s o f N e w R e p u b li c B a n k , w h ic h s h a r e s

4 . R e p u b l i c is a c o r p o r a t i o n t h a t w a s o r g a n i z e d
u n d e r th e l a w s o f th e s t a te o f D e l a w a r e o n J u ly

h e ld

by

tru s te e s

fo r

th e

b e n e f it

of

a r e s h a r e s d e s c r i b e d in § 2 ( g ) ( 2 ) o f th e B H C A c t .
9.

The

W e s tg a te

P ro p e rty

w as

a c q u ire d

by

1 2 , 1 9 7 2 , f o r t h e p u r p o s e o f e f f e c t in g th e r e o r g a n ­

H o w a r d o n N o v e m b e r 1 3 , 1 9 6 9 , a n d is a p a r t o f

iz a t i o n o f O l d R e p u b l i c B a n k in to a s u b s i d i a r y o f

th e p r o p e r t y o f

R e p u b lic .

q u i r e d a b e n e f i c ia l i n t e r e s t p u r s u a n t to § 2 ( g ) ( 2 )

5 . O n S e p t e m b e r 1 0 , 1 9 7 3 , th e b o a r d r u l e d th a t
in t h e e v e n t R e p u b l i c
h o ld in g c o m p a n y
su ccesso r

by

w ere

th ro u g h

m erg er

to

to

becom e

a bank

th e a c q u i s i t i o n o f th e
O ld

R e p u b lic

B ank,

H o w ard

in

w h ic h

R e p u b li c

ac­

o f th e B H C A c t.
O n th e b a s i s o f th e f o r e g o i n g

i n f o r m a t i o n , it

is h e r e b y c e r t if i e d th a t:
( A ) P r io r to M a y 9 , 1 9 7 4 , O ld R e p u b l i c B a n k

R e p u b lic w o u ld n o t b e r e g a r d e d as a “ s u c c e s s o r ”

w as

h o ld in g

c o r p o r a tio n ,”

to O l d R e p u b l i c a s d e f in e d in § 2 ( e ) o f th e B H C

w i t h i n th e m e a n i n g o f s u b s e c t i o n

(b ) o f § 11 0 3

A c t f o r th e p u r p o s e s o f § 2 ( a ) ( 6 ) o f t h e B H C A c t ,

o f th e C o d e , a n d s a tis f ie d th e r e q u i r e m e n t s o f th a t

o r a s a “ c o m p a n y c o v e r e d in 1 9 7 0 , ” a s th a t t e r m

s u b s e c tio n .

is d e f in e d in th e B H C A c t , a n d t h a t R e p u b li c w a s

a

“ q u a lif ie d

(B ) N e w

bank

R e p u b l i c B a n k is a c o r p o r a ti o n t h a t

n o t e n t i t l e d to th e b e n e f it o f a n y g r a n d f a t h e r p r i v i ­

a c q u ire d

s u b s ta n tia lly

l e g e s th a t O l d R e p u b li c B a n k m a y h a v e p o s s e s s e d

q u a l if ie d b a n k

h o ld in g

a ll o f th e p r o p e r t i e s

of a

c o r p o ra tio n , a n d as su c h

p u r s u a n t to th e p r o v i s o in § 4 ( a ) ( 2 ) o f th e B H C

is t r e a t e d a s a q u a li f ie d b a n k h o l d i n g c o r p o r a t i o n

A c t.

f o r th e p u r p o s e s o f § 6 1 5 8 o f th e C o d e , p u r s u a n t

6.

B y O r d e r d a t e d O c t o b e r 2 5 , 1 9 7 3 , th e b o a r d

to § 3 ( d ) o f th e T a x A c t .

a p p r o v e d R e p u b l i c ’s a p p l i c a t i o n u n d e r § 3 ( a ) ( 1 ) o f

(C ) R e p u b l i c is a c o r p o r a t i o n in c o n t r o l ( w i t h in

th e B H C A c t to b e c o m e a b a n k h o l d i n g c o m p a n y

th e m e a n i n g o f § 2 ( a ) ( 2 ) o f th e B H C A c t) o f N e w

t h r o u g h th e a c q u i s i ti o n o f 1 0 0 p e r c e n t o f th e v o ti n g

R e p u b l i c B a n k , a n d a s s u c h is t r e a t e d a s a q u a l if ie d

sh a re s (le s s

bank

d ir e c to r s ’ q u a lif y in g

s u c c e s s o r b y m e r g e r to O l d

sh a re s )

o f th e

R e p u b li c B a n k a n d

th e i n d i r e c t a c q u i s i ti o n o f c o n t r o l o f 2 9 . 9 p e r c e n t
o f t h e v o t i n g s h a r e s o f O a k C lif f B a n k . P u r s u a n t
to t h e p r o v i s i o n s o f § 4 ( a ) ( 2 ) o f th e

BHC

A c t,

h o ld in g

c o rp o ra tio n

fo r

th e

p u rp o ses

of

§ 6 1 5 8 o f th e C o d e , p u r s u a n t to § 3 ( d ) o f th e T a x
A c t.
( D ) H o w a r d is a s u b s i d i a r y ( w i t h in th e m e a n i n g
o f § 2 (d ) o f th e B H C

A c t) o f R e p u b lic , a n d as

R e p u b l i c w a s r e q u i r e d b y th a t o r d e r to d i v e s t i t s e lf ,
w i t h i n tw o y e a r s f r o m th e d a t e a s o f w h i c h it w o u l d

s u c h is t r e a t e d a s a q u a li f ie d b a n k h o l d i n g c o r ­
p o r a t i o n f o r th e p u r p o s e s o f § 6 1 5 8 o f th e C o d e ,

b e c o m e a b a n k h o l d i n g c o m p a n y , o f th e i m p e r ­

p u r s u a n t to § 3 ( d ) o f th e T a x A c t.

m is s ib le n o n b a n k in g

in te re s ts th a t w o u ld b e d i ­

(E ) T h e

W e s tg a te

P ro p e rty

is

“ p r o h ib ite d

su ch

p r o p e r t y ” f o r th e p u r p o s e s o f § 6 1 5 8 o f th e C o d e ;
and

7 . O n M a y 9 , 1 9 7 4 , in a t r a n s a c t i o n d e s c r i b e d

s a r y o r a p p r o p r i a t e to e f f e c t u a t e § 4 o f th e B H C

r e c t l y o r i n d i r e c t ly c o n t r o l l e d b y th e s u c c e s s o r b y
m erg er

to

O ld

R e p u b lic

B ank,

in c lu d in g

( F ) th e s a le o f th e W e s t g a t e P r o p e r t y is n e c e s ­

im p e rm is s ib le in te re s ts h e ld b y H o w a rd .
in § 3 6 8 ( a ) ( 1 ) ( A ) a n d § 3 6 8 ( a ) ( 2 ) ( D ) o f th e C o d e ,
O l d R e p u b li c B a n k w a s m e r g e d in to th e p r e s e n t

A c t.
T h is c e r t i f i c a t i o n is b a s e d u p o n th e r e p r e s e n t a ­

R e p u b l i c N a t i o n a l B a n k o f D a l l a s ( “ N e w R e p u b li c

t io n s m a d e to th e b o a r d

B a n k ” ), a n a tio n a l b a n k in g a s s o c ia tio n w h ic h w a s

th e f a c ts s e t f o r th a b o v e . In th e e v e n t th e b o a r d

b y R e p u b lic

and

upon

a w h o lly o w n e d s u b s id ia r y ( e x c e p t fo r d ir e c to r s ’

s h o u l d h e r e a f t e r d e t e r m i n e th a t f a c ts m a t e r i a l to

q u a lif y in g

th is c e r t if i c a t io n a r e o t h e r w i s e th a n a s r e p r e s e n t e d

B ank

sh a re s)

th e re b y

of

a c q u ire d

p r o p e r t i e s o f O ld

R e p u b lic .

N ew

s u b s ta n tia lly

R e p u b li c

B ank

th e r e u p o n b e c a m e a b a n k h o l d i n g

and

R e p u b lic
th e

b y R e p u b l i c , o r th a t R e p u b l i c h a s f a i l e d to d i s c l o s e

R e p u b li c

to th e b o a r d o t h e r m a t e r i a l f a c t s , it m a y r e v o k e

a ll

of

com pany. By

v i r tu e o f th r e e o n e - y e a r e x t e n s i o n s g r a n t e d b y th e

th is c e r ti f ic a ti o n .
By

o rd e r

of

th e

B o a rd

of G o v e rn o rs

a c tin g

b o a r d , R e p u b l i c p r e s e n t l y h a s u n til M a y 9 , 1 9 7 9 ,

t h r o u g h its G e n e r a l C o u n s e l , p u r s u a n t to d e l e g a t e d

to c o m p l e t e th e d i v e s ti t u r e s r e q u i r e d b y th e b o a r d ’s

a u th o r ity

(1 2

O rd e r o f O c to b e r 2 5 , 1 9 7 3 .

F e b ru a ry

14, 1979.

8 . A s p a r t o f th e s a m e t r a n s a c t i o n b y w h i c h
R e p u b li c b e c a m e a b a n k h o l d i n g c o m p a n y , in a
t r a n s a c t i o n to w h i c h § 3 5 1 o f th e C o d e a p p l i e d ,




C .F .R .

§ 2 6 5 .2 ( B ) (3 ) ),

(S ig n e d ) G r i f f i t h
[s e a l]

e f f e c t iv e

L. G a rw o o d ,

D e p u t y S e c r e t a r y o f th e B o a r d .

277

Law D epartm ent

T h e S p e rry a n d H u tc h in s o n C o m p a n y ,

la w s o f N e w J e rs e y o n O c to b e r 1 9 , 1 9 0 0 .

N ew Y o rk , N e w Y o rk

2.

P r i o r C e r t i f i c a t i o n P u r s u a n t t o th e

5 5 1 ,1 0 0

B a n k H o ld in g C o m p a n y T a x A c t o f 1 9 7 6
[D o c k e t N o .

T he

S p e rry

TCR

3.

H u tc h in s o n

a c q u ire d

sh a re s,

o w n e rs h ip

r e p re s e n tin g

and

c o n tro l o f

a p p ro x im a te ly

99

p e r c e n t o f th e o u t s t a n d i n g v o t i n g s h a r e s , o f B a n k .

76— 171]

and

B e tw e e n S e p t e m b e r 3 0 , 1 9 6 8 , a n d A p r i l 2 7 ,

1970, S& H

C om pany,

N ew

S& H

becam e a bank

D ecem ber

31,

1970,

as

h o ld in g c o m p a n y o n
a

re s u lt

of

1970

Y o rk , N e w Y o rk ( “ S & H ” ) h a s re q u e s te d a p rio r
c e r t i f i c a t i o n p u r s u a n t to s e c t i o n 1 1 0 1 ( c ) ( 3 ) o f th e

o w n e rs h ip a n d c o n tro l at th a t tim e o f m o re th a n

In te rn a l R e v e n u e C o d e ( “ C o d e ” ), a s a m e n d e d b y

25 p e rc e n t o f th e

se c tio n 2 (a ) o f th e B a n k H o ld in g C o m p a n y T a x

B a n k , a n d r e g i s t e r e d a s s u c h w i th t h e b o a r d o n

A c t o f 1 9 7 6 , t h a t its p r o p o s e d d i v e s t i t u r e o f a ll

J u ly

o f th e

h o l d i n g c o m p a n y o n J u l y 7 , 1 9 7 0 , if t h e B H C
A c t A m e n d m e n t s o f 1 9 7 0 h a d b e e n in e f f e c t o n

of

1 ,3 8 2 ,8 1 5

s h a re s o f S ta te N a tio n a l B a n k

C o n n e c tic u t,

B rid g e p o rt,

( “ B a n k ” ), p re s e n tly
pro

r a ta

h e ld b y

d is trib u tio n

C o n n e c tic u t

S & H , th ro u g h

to S & H ’s c o m m o n

th e

s to c k ­

h o l d e r s o f t h e s t o c k o f s t a te N a t i o n a l B a n c o r p ,
In c . ( “ B a n c o rp ” ), a c o rp o ra tio n
a v a i l e d o f s o l e ly f o r th e p u r p o s e

c re a te d a n d
o f re c e iv in g

S & H ’s B a n k s h a r e s , is n e c e s s a r y o r a p p r o p r i a t e
to e f f e c t u a t e

th e

p o lic ie s

o f th e

B ank

H o ld in g

C o m p a n y A c t (1 2 U .S .C . § 1841 e t s e q ) ( “ B H C

1,

1971.

A c t, b y

th e

A m e n d m e n ts to th e B H C

o u ts ta n d in g

S& H

w o u ld

v i r tu e o f

v o tin g

have

sh a re s

been

a

its
of

bank

th a t d a t e b y v i r t u e o f its o w n e r s h i p a n d c o n t r o l
o n th a t d a te o f m o re th a n 2 5 p e rc e n t o f th e o u t­
s t a n d in g v o t i n g

sh a re s o f B a n k .

S& H

p re s e n tly

o w n s a n d c o n tro ls 1 ,3 8 2 ,8 1 5 s h a re s , r e p re s e n tin g
9 9 .3 p e r c e n t o f t h e o u t s t a n d i n g v o t i n g s h a r e s , o f
B a n k .3
4.

S& H

b e fo re

h o ld s p ro p e rty

J u ly

7,

1970,

th e

a c q u ire d

by

d is p o s itio n

it o n
of

or

w h ic h

A c t ” ) . S & H p r o p o s e s to e x c h a n g e t h e 1 , 3 8 2 , 8 1 5

w o u l d b e r e q u i r e d b y s e c t i o n 4 o f th e B H C A c t ,

s h a r e s o f B a n k t h a t it p r e s e n t l y o w n s f o r a ll o f

if S & H

t h e s h a r e s o f B a n c o r p , a n d i m m e d i a t e l y t h e r e a f te r

c o m p a n y b e y o n d D e c e m b e r 3 1 , 1 9 8 0 , a n d w h ic h

to d i s t r i b u t e a ll o f B a n c o r p ’s s h a r e s p r o r a t a to

p ro p e rty

t h e h o l d e r s o f c o m m o n s to c k o f S & H . 1

m e a n in g o f s e c tio n

In c o n n e c t i o n w it h th i s r e q u e s t , th e f o l lo w in g
i n f o r m a t i o n is d e e m e d

re le v a n t, fo r p u rp o s e s o f

is s u i n g t h e r e q u e s t e d c e r t i f i c a t i o n : 2
1. S & H

is a c o r p o r a t i o n o r g a n i z e d u n d e r th e

5.

w e r e to c o n t i n u e to b e a b a n k h o l d i n g
is

“ p ro h ib ite d

p ro p e rty ”

w ith in

th e

1 1 0 3 (c ) o f th e C o d e .

S & H h a s c o m m i t t e d to th e b o a r d t h a t it w ill

te r m in a te

a ll

in te r lo c k in g

re la tio n s h ip s

b e tw e e n

S & H a n d B a n k b y A p ril 3 0 , 1 9 7 9 .4
O n th e b a s i s o f th e f o r e g o i n g

i n f o r m a t i o n , it

is h e r e b y c e r t if i e d t h a t:
1 The board has received a protest to this proposal from
a group of individuals owning approxim ately five percent of
S& H ’s preferred shares (“ Protestants” ). Protestants claim that
the proposed divestiture is not in the best interests of S& H ’s
minority shareholders because it will reduce S& H ’s net assets
by approxim ately 20 percent with no corresponding benefit
to S&H. M oreover, they say, the proposal will not result in
a true divestiture because the same stockholders that currently
control S&H will control Bancorp and Bank after the spinoff.
Finally, Protestants assert that S&H has made no serious effort
to sell Bank even though it was approached on several occa­
sions by potential purchasers of Bank.
The facts that a preferred shareholder may not receive any
direct benefits from a spinoff and that, after a spinoff, share­
holders of a bank holding company and a divested company
are identical, are both results of a divestiture method clearly
sanctioned by Congress. Section 1101(b)(2) of the Code au­
thorizes spinoffs to holders of a bank holding com pany’s
common shares without any participation in the transaction by
the holders of the com pany’s preferred shares. Under section
1101(a)(3), such spinoffs must be made on a pro rata basis
unless the com pany has 10 or fewer shareholders. Since a
spinoff is clearly a permissible divestiture m ethod, the exist­
ence of potential purchasers for Bank would not be determ i­
native for purposes of assessing the adequacy of the proposed
divestiture. (See note 4 below for further discussion of the
adequacy of the proposed divestiture.)
2 This inform ation derives from S& H ’s correspondence with
the board concerning its request for this certification, S& H ’s




Registration Statement filed with the board pursuant to the BHC
Act, and other records of the board.
3 Bank declared a 150 percent stock dividend in 1974 and
S&H consequently received an additional 826,650 shares of
frank on the basis of the 551,100 shares acquired prior to July
7, 1970. Under section 1101(c)(1) of the Code, property
acquired after July 7, 1970, generally does not qualify for the
tax benefits of section 1101(b) when distributed by an otherwise
qualified bank holding com pany. However, where such prop­
erty is acquired by a qualified bank holding company in a
transaction in which gain is not recognized under section 305(a)
of the Code then section 1101(b) is applicable. S&H has
indicated that these shares of Bank were acquired in a transac­
tion in which gain was not recognized under section 305(a)
of the Code. Accordingly, even though such shares were
acquired after July 7, 1970, those shares would nevertheless
qualify as property eligible for the tax benefits provided in
section 1101(b) of the Act, by virtue of section 1101(c), if
they were in fact received in a transaction in which gain was
not recognized under section 305(a) of the Act.
The remaining 5,065 shares of Bank now held by S&H were
acquired through cash purchase after July 7, 1970, or through
stock dividends with respect to such shares. These shares are
not eligible for the tax benefits of section 1101(b) since none
of the exceptions to section 1101(c) is applicable to them.
4 It is noted that S&H has controlled Bank for approximately
10 years and owns 99 percent of B ank’s shares. During that
time, Bank selected most of its officer/directors, but obtained

278

Federal Reserve Bulletin □ March 1979

( A ) S & H is a q u a li f ie d b a n k h o l d i n g c o r p o r a ­
tio n w i t h i n th e m e a n i n g o f s e c t i o n 1 1 0 3 ( b ) o f th e

S l o a n S ta te C o r p o r a t i o n ,
S lo a n , Io w a

C o d e , a n d s a tis f ie s th e r e q u i r e m e n t s o f t h a t s e c ­
tio n ;

P r i o r C e r t i f i c a t i o n P u r s u a n t t o th e

( B ) th e s h a r e s o f B a n k th a t S & H p r o p o s e s to
e x c h a n g e f o r s h a r e s o f B a n c o r p a r e a ll o r p a r t o f
th e p r o p e rty

by reaso n

o f w h ic h S & H

B a n k H o ld in g C o m p a n y T a x A c t o f 1 9 7 6
[D o c k e t N o .

TCR

7 6 -1 6 8 J

c o n tro ls
S lo a n

( w i t h in th e m e a n i n g o f s e c t i o n 2 ( a ) o f th e B H C

S ta te

C o rp o ra tio n ,

S lo a n ,

Io w a

( “ S lo a n ” ), h a s re q u e s te d a p rio r c e rtific a tio n p u r ­

A c t) a b a n k o r b a n k h o ld in g c o m p a n y ; a n d
th e

s u a n t to s e c t i o n 1 1 0 1 ( a ) ( 1 ) o f t h e I n t e r n a l R e v e n u e

s h a r e s o f B a n c o r p a n d th e d i s t r i b u t i o n to th e c o m ­

C o d e ( “ C o d e ” ), as a m e n d e d b y s e c tio n 2 (a ) o f

m o n s h a r e h o l d e r s o f S & H o f th e s h a r e s o f B a n c o r p

th e B a n k H o l d i n g C o m p a n y T a x A c t o f 1 9 7 6 , th a t

(C ) e x c h a n g e

of

th e

sh a re s

of

B ank

fo r

a r e n e c e s s a r y o r a p p r o p r i a t e to e f f e c t u a t e th e p o l i ­

its p r o p o s e d d i v e s ti t u r e o f a p p r o x i m a t e l y 7 5 a c r e s

c i e s o f th e B H C A c t .

o f r e a l p r o p e r t y ( “ S e v e n t y - f i v e A c r e s ” ) 1 th r o u g h

T h is

c e r t i f i c a ti o n

is

based

upon

th e

s e n t a t i o n s m a d e to th e b o a r d b y S & H

re p re ­

and upon

th e d i s t r i b u t i o n o f s u c h p r o p e r t y to s h a r e h o l d e r s
o f S lo a n

a s t e n a n t s in c o m m o n

is n e c e s s a r y o r

t h e f a c t s s e t f o r t h a b o v e . I n th e e v e n t th e b o a r d

a p p r o p r i a t e to e f f e c t u a t e t h e p o l i c i e s o f th e B a n k

s h o u l d h e r e a f t e r d e t e r m i n e t h a t f a c t s m a t e r i a l to

H o ld in g C o m p a n y A c t (1 2 U .S .C . § 1841 e t s e q .)

t h is c e r t i f i c a t i o n a r e o t h e r w i s e th a n a s r e p r e s e n t e d

( “ B H C A c t ” ).
I n c o n n e c t i o n w i th t h is r e q u e s t , th e f o l lo w in g

b y S & H o r t h a t S & H h a s f a i l e d to d i s c lo s e to th e
b o a rd

o th e r

m a te ria l

fa c ts ,

it

m ay

re v o k e

th is

i n f o r m a t i o n is d e e m e d r e l e v a n t : 2

c e r t i f i c a t i o n . T h i s c e r t i f i c a t i o n is a ls o g r a n t e d o n

1. S l o a n is a c o r p o r a t i o n o r g a n i z e d u n d e r th e

t h e c o n d i t i o n th a t a f t e r A p r il 3 0 , 1 9 7 9 , n o p e r s o n

la w s o f th e s ta te o f I o w a o n S e p t e m b e r 1 2 , 1 9 6 8 .
2 . In S e p te m b e r , 1 9 6 8 , S lo a n a c q u ire d o w n e r ­

h o l d i n g a n o f fic e o r p o s i t i o n ( i n c l u d in g a n a d v i s o r y
or

h o n o ra ry

p o sitio n )

w it h

S& H

or

any

of

its

s h ip a n d c o n t r o l o f 9 1 0 c o m m o n

s u b s id ia r ie s a s a n o ffic e r, d ir e c to r , p o lic y - m a k in g

s e n t in g

e m p lo y e e o r m a n a g e m e n t c o n s u lta n t, o r w h o p e r ­

sh a re s,
of
( “ B a n k ” ).

fo rm s ( d ire c tly , o r th ro u g h a n a g e n t, r e p re s e n ta tiv e
o r n o m in e e ) fu n c tio n s c o m p a ra b le

to t h o s e

3.

n o r­

91

p ercen t
S lo a n

of

th e

S t a te

sh a re s, re p re ­

o u ts ta n d in g

B ank,

S lo a n ,

v o ti n g
Io w a

S lo a n b e c a m e a b a n k h o ld in g c o m p a n y o n

m a l l y a s s o c i a t e d w it h s u c h o f fic e o r p o s i t i o n , w ill

D e c e m b e r 3 1 , 1 9 7 0 , a s a r e s u l t o f th e e n a c t m e n t

h o l d a n y s u c h o f fic e o r p o s i t i o n o r p e r f o r m

s u c h f u n c t i o n w ith B a n c o r p , B a n k , o r a n y o f th e i r

o f th e 1 9 7 0 A m e n d m e n t s to t h e B H C A c t , b y
v ir tu e o f its o w n e r s h i p a n d c o n t r o l a t th a t ti m e

s u b s i d i a r i e s o r a f f ilia te s .

o f m o r e t h a n 2 5 p e r c e n t o f th e o u t s t a n d i n g c o m ­

any

a c tin g

m o n s h a r e s o f B a n k , a n d it r e g i s t e r e d a s s u c h w ith

th r o u g h its G e n e r a l C o u n s e l , u n d e r d e l e g a t e d a u ­

th e b o a r d o n O c t o b e r 1 2 , 1 9 7 1 . S lo a n w o u ld h a v e

t h o r it y ( 1 2 C . F . R .

b e e n a b a n k h o ld in g c o m p a n y o n J u ly 7 ,

B y o rd er of

ru a ry

th e

B o a rd

o f G o v e rn o rs,

§ 2 6 5 . 2 ( b ) ( 3 ) ) , e f f e c t iv e F e b ­

in
(S ig n e d ) G r i f f i t h
[s e a l]

e ffe c t

on

su ch

d a te

by

v i r tu e

of

its

d ire c t

L. G a rw o o d ,

D e p u t y S e c r e t a r y o f th e B o a r d .

prior approval of such decisions from S&H. Four of B ank’s
officer/directors are also officer/directors of S&H, and were
selected by S&H to become members of Bank’s management.
S&H is a publicly held corporation. 58 percent of its voting
shares are owned by members of the Beinecke family. This
stock ownership is dispersed am ong 70 holders, however. The
largest number of shares that could be attributed to one person
on the basis of the “ immediate fam ily” rule of Regulation
Y (section 225.2(b)(2)) is the approxim ately 28 percent of
S& H ’s shares owned by W illiam Beinecke and m embers of
his immediate family. Of seven Beinecke family members that
sit on S & H ’s 21-member board of directors, 5 are not members
of W illiam Beinecke’s immediate family. Thus, it does not
appear that S&H is subject to the control of any one individual,
and termination of the interlocking relationships appears nec­
essary to further a com plete divestiture of S& H ’s control over
Bank since these corporate interlocks are among the principal
means by which S&H might maintain control over bank.




1970,

if th e 1 9 7 0 A m e n d m e n t s to th e B H C A c t h a d b e e n

16, 1979.

1 The legal description of Seventy-five Acres is as follows:
All that part of the Southeast Quarter of Section 32
lying East of the Right-of-way of the Chicago &
Northwestern Railway Com pany, in Township 86
North, Range 46, West of the 5th P .M ., except a tract
of land described as follows: Comm encing at the
Northeast Corner of the Southeast quarter of Section
32, Township 86, Range 46, thence running South
along the half section line a distance of 1326 feet to
the point of beginning; thence West and parallel with
the half section line a distance of 410 feet; thence South
parallel with the east section line a distance of 610 feet;
thence East and parallel with the South section line a
distance of 410 feet; thence North along the East section
line a distance of 610 feet to the place of beginning,
containing 75 acres more or less, in W oodbury County,
Iowa.
2 This information derives from S loan’s com munications
with the board concerning its request for this certification and
Sloan’s registration statement filed with the board pursuant to
the BHC Act.

279

Law D epartm ent

o w n e r s h ip a n d c o n tro l o n th a t d a te o f m o re th a n

A.

S l o a n is a q u a l if ie d b a n k h o l d i n g c o r p o r a t i o n

2 5 p e r c e n t o f th e o u ts ta n d in g c o m m o n s h a re s o f

w i t h i n th e m e a n i n g o f s e c t i o n 1 1 0 3 ( b ) o f th e C o d e ,

B a n k . S lo a n p re s e n tly o w n s a n d c o n tro ls 91 p e r ­

a n d s a tis f ie s t h e r e q u i r e m e n t s o f t h a t s e c t i o n ;

c e n t o f th e o u t s t a n d i n g c o m m o n s h a r e s o f b a n k .
4 . S l o a n p u r c h a s e d S e v e n ty - f i v e A c r e s o n S e p ­

n e c e s s a r y o r a p p r o p r i a t e to e f f e c t u a t e th e p o l i c i e s

te m b e r 12,

o f t h e B H C A c t.

1 9 6 9 , a n d h as o w n e d su c h p ro p e rty

T h is

c o n tin u o u s ly s in c e th a t d a te .
5 . S l o a n d o e s n o t e n g a g e in a n y
a c tiv itie s o th e r th a n

B. The

th e h o l d i n g

n o n b a n k in g

o f c e rta in

real

d is trib u tio n

c e rtific a tio n

is

of

S e v e n ty -fiv e

based

upon

acre s

th e

is

re p re ­

s e n t a t i o n s m a d e to t h e b o a r d b y S l o a n a n d u p o n
th e f a c t s s e t f o r t h a b o v e . I n t h e e v e n t th e b o a r d

p r o p e r t y . S l o a n h a s p r o p o s e d to d i v e s t a ll o f its

s h o u ld h e r e a f t e r d e t e r m i n e t h a t th e f a c t s m a t e r i a l

real p ro p e rty .

to th i s c e r t i f i c a t i o n a r e o t h e r w i s e

6.
J u ly

S lo a n
7,

a c q u ire d

1970.

The

S e v e n ty -fiv e
d is p o s itio n

A c re s

of

b e fo re

S e v e n t y - f iv e

A c r e s w o u l d b e n e c e s s a r y o r a p p r o p r i a t e to e f f e c ­
t u a t e s e c t i o n 4 o f th e B H C A c t if S l o a n w e r e to

th a n

as re p re ­

s e n te d b y S l o a n o r t h a t S l o a n h a s f a i l e d to d i s c l o s e
to th e b o a r d o t h e r m a t e r i a l f a c t s , th e b o a r d m a y
re v o k e th is c e rtific a tio n .
B y o rd e r o f th e B o a rd

of G o v e rn o rs,

a c tin g

c o n t i n u e to b e a b a n k h o l d i n g c o m p a n y b e y o n d

t h r o u g h its G e n e r a l C o u n s e l p u r s u a n t to d e l e g a t e d

D ecem ber 31,

a u t h o r i ty

1 9 8 0 , a n d s u c h p r o p e r t y is “ p r o ­

h ib ite d p r o p e r ty ”

w ith in th e m e a n in g o f s e c tio n

(1 2

1 1 0 3 (c ) o f th e C o d e .
O n th e b a s i s o f th e f o r e g o i n g

in fo rm a tio n ,

it

is h e r e b y c e r t i f i e d th a t:

C .F .R .

§ 2 6 5 .2 ( b )( 3 )) ,

e ffe c tiv e

F e b ru a ry 2 7 , 1 9 7 9 .
(S ig n e d ) T h e o d o r e E . A l l i s o n ,
[s e a l]

S e c r e t a r y o f th e B o a r d .

O rders A pproved U nder B a n k H olding C o m p a n y A ct
By the Board of Governors
D u r i n g F e b r u a r y 1 9 7 9 , th e B o a r d o f G o v e r n o r s a p p r o v e d th e a p p l i c a t i o n s l is t e d b e l o w . C o p i e s a r e a v a ila b le
u p o n r e q u e s t to P u b l i c a t i o n s S e r v i c e s , D i v i s i o n o f A d m i n i s t r a t i v e S e r v i c e s , B o a r d o f G o v e r n o r s o f th<
F e d e ra l R e s e rv e S y s te m , W a s h in g to n , D .C . 2 0 5 5 1 .
S e c tio n 3
B o a r d a c tio n
(e ffe c tiv e
A p p lic a n t

B o w m a n C a p ita l C o .,
O m a h a , N eb rask a
F irs t N a tio n a l C o r p o r a tio n ,
A p p le to n , W is c o n s in
M a rs h I n v e s tm e n ts , N .V .
C u r a c a o , N e th e rla n d s A n tille s

B a n k (s)

F irs t N a tio n a l B a n k o f B o w m a n ,

d a te )

F e b ru a ry 2 3 , 1979

B o w m a n , N o r th D a k o t a
T h e O s h k o s h N a ti o n a l B a n k ,

F e b ru a ry

12, 1979

F e b ru a ry

12, 1979

O s h k o s h , W is c o n s in
F irs t N a tio n a l B a n k o f G r e a te r
M ia m i, H ia le a h , F lo rid a

M a r s h I n v e s t m e n t s , B .V .
R o tte r d a m , th e N e th e r la n d s
M .F .G . In v e s tm e n ts , In c.
H ia le a h , F lo rid a
M e tro p o lita n B a n c o rp o ra tio n ,
T a m p a , F lo rid a

M e tro p o lita n B a n k a n d T ru s t

F e b ru a ry 2 2 , 1979

C o m p a n y , T a m p a , F lo rid a
H o lid a y B a n k , H o lid a y , F lo rid a

T e x a s A m e ric a n B a n c s h a re s , In c .
F o rt W o rth , T e x a s




T h e C itiz e n s N a tio n a l B a n k o f
D e n is o n , D e n is o n , T e x a s

February 12, 1979

280

Federal Reserve Bulletin □ March 1979

B y Federal R eserve B a n k s
R e c e n t a p p lic a tio n s h a v e b e e n

ap p ro v ed

b y th e F e d e r a l R e s e r v e

B a n k s a s lis te d b e lo w . C o p ie s

o f th e o r d e r s a r e a v a i l a b l e u p o n r e q u e s t to t h e R e s e r v e B a n k s .
S e c tio n 3

Applicant

Reserve
Bank

Bank(s)

S o c ie ty C o r p o r a tio n ,

F irs t N a tio n a l B a n k o f

C le v e la n d , O h io

C le rm o n t C o u n ty ,

C le v e la n d

Effective
date
F e b ru a ry 7 , 1979

B e th a l, O h io

O rders A pproved Under B a n k M erger A ct

Applicant
T h e C e n tr a l T r u s t
C o m p a n y , R e y n o ld s ­
b u rg , O h io

Reserve
Bank

B a n k (s)
T h e C e n tr a l T r u s t C o m p a n y

C l e v e la n d

Effective
date
F e b ru a ry

14, 1979

o f Z a n e s v ille ,
Z a n e s v ille , O h io

P endin g C ases I n v o l v in g the B oard of G overnors
D oes not include suits against the Federal R eserve Banks in which the B oard of G overnors is not nam ed a p arty.

California Life Corporation v. Board of
Governors, filed January 1979, U.S.C.A. for

Beckley v. Board of Governors, filed July 1978,

the District of Columbia.
Hunter Holding Company v. Board of Gover­
nors, filed December 1978, U.S.C.A. for the
Eighth Circuit.
Consumers Union of the United States v. G.
William Miller, et al., filed December 1978,
U.S.D.C. for the District of Columbia.
Commercial National Bank, et al., v. Board
o f G o v e r n o r s , filed Decem ber 1978,
U.S.C.A. for the District of Columbia.
Ella Jackson et al., v. Board of Governors, filed
November 1978, U.S.C.A. for the Fifth Cir­
cuit.
Metro-North State Bank, Kansas City v. Board
of Governors, filed October 1978, U.S.C.A.
for the Eighth Circuit.

Independent Bankers Association of Texas v.
First National Bank in Dallas, et al., filed

U.S.D.C. for the Northern District of Illinois.

July 1978, U.S.C .A . for the Northern District
of Texas.
Mid-Nebraska Bancshares , Inc. v. B oard of
Governors, filed July 1978, U.S.C.A. for the
District of Columbia.
N C N B Corporation v. Board of Governors,
filed June 1978, U.S.C.A. for the Fourth
Circuit.
United States League of Savings Associations
v. Board of Governors, filed May 1978,

U.S.D.C. for the District of Columbia.
Security Bancorp and Security National Bank
v. Board of Governors, filed March 1978,

U.S.C.A. for the Ninth Circuit.

Manchester-Tower Grove Community Organi­
zation/A C O R N v . Board of Governors, filed

Michigan National Corporation v. Board of
Governors, filed January 1978, U.S.C.A. for

September 1978, U.S.C .A . for the District
of Columbia.

Wisconsin Bankers Association v. Board of




the Sixth Circuit.

Law D epartm ent

Governors , filed January 1978, U.S.C.A. for
the District of Columbia.
Vickars-Henry Corp. v. Board of Governors,
filed December 1977, U.S.C.A. for the Ninth
Circuit.
Emcin v. The United States of America, et al.,
filed November 1977 for the Eastern District
of Wisconsin.
Central Bank v. Board of Governors , filed
October 1977, U.S.C.A. for the District of
Columbia.
Investment Company Institute v. Board of G ov­
ernors, filed September 1977, U.S.D.C. for
the District of Columbia.
BankAmerica Corporation v. Board of G over­
nors, filed May 1977, U.S.D.C. for the
Northern District of California.
BankAmerica Corporation v. Board of Gover­




281

nors, filed May 1977, U .S.C .A . for the Ninth
Circuit.
Roberts Farms, Inc. v. Comptroller of the Cur­
rency, e ta l., filed November 1975, U.S.D.C.
for the Southern District of California.
Florida Association of Insurance Agents, Inc.
v. B oard of Governors, and National A s s o ­
ciation of Insurance Agents, Inc. v. Board
of Governors, filed August 1975, actions

consolidated in U.S.C.A. for the Fifth Cir­
cuit.
David R. Merrill, et al., v. Federal Open M a r­
ket Committee of the Federal Reserve System,

filed May 1975, U.S.D.C. for the District of
Columbia.
Bankers Trust New York Corporation v. Board
of Governors, filed May 1973, U.S.C. A. for
the Second Circuit.

282

Directors of
Federal Reserve Banks and Branches
F o l l o w i n g is a li s t o f t h e d i r e c t o r a t e s o f th e F e d e r a l

s im ila r c a p ita liz a tio n , a n d e a c h g ro u p e le c ts o n e

R e se rv e B a n k s a n d B ra n c h e s as at p re se n t c o n s ti­

C la s s A a n d o n e C la s s B d ir e c to r. C la s s C d ire c to rs

t u t e d . T h e l i s t s h o w s , in a d d i t i o n to t h e n a m e o f

a r e s e l e c t e d to r e p r e s e n t t h e p u b l i c w it h d u e b u t

e a c h d i r e c t o r , h i s p r i n c i p a l b u s i n e s s a f f il ia t i o n , th e

n o t e x c l u s i v e c o n s i d e r a t i o n to t h e i n t e r e s t s o f a g ­

c l a s s o f d i r e c t o r s h i p , a n d t h e d a t e w h e n h is t e r m

ric u ltu re , c o m m e r c e , in d u s try , s e rv ic e s , la b o r, a n d

e x p ire s .

n in e

c o n su m e rs,

and

d ir e c to rs ; th re e C la s s A a n d th re e C la s s B d ir e c ­

e m p lo y e e s ,

or

to r s , w h o a re e le c te d b y th e s to c k h o ld in g m e m b e r

C l a s s C d i r e c t o r is d e s i g n a t e d b y t h e B o a r d o f

b a n k s , a n d th re e C la s s C d ir e c to rs , w h o a re a p ­

G o v e r n o r s a s C h a ir m a n o f th e B o a r d o f D i r e c t o r s

E ach

F ed eral

R e serv e

B ank

has

m ay

not be

s to c k h o ld e r s

o ffic e rs , d ir e c to rs ,
of

any

bank.

O ne

p o i n t e d b y t h e B o a r d o f G o v e r n o r s o f th e F e d e r a l

and

R e s e r v e S y s t e m . A ll F e d e r a l R e s e r v e B a n k d i r e c ­

p o in te d

t o r s a r e c h o s e n w i t h o u t d i s c r i m i n a t i o n o n th e b a s i s

B r a n c h e s h a v e e i t h e r fiv e o r s e v e n d i r e c t o r s , o f

o f r a c e , c r e e d , c o lo r , s e x , o r n a tio n a l o r ig in . C la s s

w h o m a m a j o r it y a r e a p p o i n t e d b y t h e B o a r d o f

F e d eral

R e serv e

D e p u ty

A gent and

C h a irm a n .

a n o th e r

F ed eral

is a p ­

R e se rv e

A d ir e c to rs a re re p re s e n ta tiv e o f th e s to c k h o ld in g

D i r e c t o r s o f th e p a r e n t F e d e r a l R e s e r v e B a n k ; th e

m em ber banks.

r e p r e s e n t th e

o th e rs a re a p p o in te d b y th e B o a rd o f G o v e rn o rs

p u b l i c a n d a r e e l e c t e d w i th d u e b u t n o t e x c l u s i v e

o f th e F e d e r a l R e s e r v e S y s t e m . O n e o f t h e d i r e c ­

c o n s i d e r a t i o n to th e in t e r e s t s o f a g r i c u l t u r e , c o m ­

to rs a p p o in te d b y th e B o a rd o f G o v e rn o rs at e a c h

m e rc e , in d u s try , s e rv ic e s , la b o r, a n d c o n s u m e rs ,

B r a n c h is d e s i g n a t e d a n n u a l l y a s C h a ir m a n o f th e

C la s s

B d ire c to rs

a n d m a y n o t b e o f f ic e r s , d i r e c t o r s , o r e m p l o y e e s

B o a r d in s u c h a m a n n e r a s th e F e d e r a l R e s e r v e

of any bank.
F o r th e p u rp o s e o f e le c tin g C la s s A a n d C la s s

B a n k m a y p re s c rib e .

B d i r e c t o r s , th e m e m b e r b a n k s o f e a c h F e d e r a l

b y f o o t n o te 1 (* ) a r e C h a i r m e n , t h o s e b y f o o t n o te

R e serv e

2 (2) a r e D e p u t y C h a i r m e n , a n d t h o s e b y f o o t n o t e

d is tric t a re

G o v e rn o rs

o f th e

c l a s s i f ie d

by

th e

F e d eral R e serv e

B o a rd

S y s te m

of
in to

I n th i s l is t o f th e d i r e c t o r a t e s , n a m e s f o l lo w e d

3 ( 3) i n d i c a t e n e w a p p o i n t m e n t s .

th re e g r o u p s , e a c h o f w h ic h c o n s is ts o f b a n k s o f

D is t r ic t

1— B o s t o n

T e rm
e x p ire s
D e c . 31

Class A
J o h n H u n te r, Jr.

P r e s i d e n t , V e r m o n t N a t i o n a l B a n k , B r a t t l e b o r o , V t.

R i c h a r d D . H ill

C h a i r m a n o f th e B o a r d , F i r s t N a t i o n a l B o s t o n C o r p o r a ­

F re d A . W h ite 3

P re s id e n t, D a rtm o u th N a tio n a l B a n k o f H a n o v e r, H a n ­

tio n , B o s to n , M a ss .
o v e r, N .H .

1979
1980
1981

Class B
C a ro l R . G o ld b e rg

P r e s i d e n t , S to p & S h o p M a n u f a c t u r i n g C o m p a n y , B o s t o n ,

W e s to n P . F ig g in s

C h a i r m a n o f th e B o a r d , W m . F i l e n e ’s S o n s C o m p a n y ,

R o b e rt D . K ilp a tr ic k 3

P r e s i d e n t & C h i e f E x e c u t i v e O f f ic e r , C o n n e c t i c u t G e n e r a l

M ass.
B o s to n , M a ss .




L if e I n s u r a n c e C o . , H a r t f o r d , C o n n .

1979
1980
1981

D irectors of Federal R eserve Banks and Branches

D i s t r i c t 1— B o s t o n — Continued

283

T e rm
e x p ire s

Class C

D e c . 31

K e n n e th I. G u s c o tt

P re s id e n t, K e n G u s c o tt A s s o c ia te s , B o s to n M a s s .

R o b e rt M . S o lo w 1

In s titu te P ro fe s s o r, M a s s a c h u s e tts In s titu te o f T e c h n o lo g y

R o b e r t P . H e n d e r s o n 2,3

P r e s i d e n t & C h i e f E x e c u t i v e O f f ic e r , I t e k C o r p . , L e x i n g ­

1979

C a m b rid g e , M a ss .

1980

to n , M a ss .

1981

D istr ic t 2 — N e w Y o r k

Class A
E llm o r e C . P a tte r s o n

C h a ir m a n o f th e E x e c u tiv e C o m m itte e , M o r g a n G u a r a n ty

R aym ond W . B auer

C h a ir m a n a n d P re s id e n t, U n ite d C o u n tie s T ru s t C o m p a n y ,

J a m e s W h e ld e n

P re s id e n t,

1979

T ru s t C o m p a n y o f N e w Y o rk , N e w Y o rk , N .Y .

1980

E liz a b e th , N .J .
B a lls to n

Spa

N a tio n a l

B ank,

B a lls to n

Spa,
1981

N .Y .

Class B
M a u ric e F . G ra n v ille

C h a ir m a n o f th e B o a r d , T e x a c o , I n c ., W h ite P la in s , N .Y .

W illia m S . S n e a th

C h a i r m a n o f th e B o a r d , U n i o n C a r b i d e C o r p o r a t i o n , N e w

Jo h n R . M u lh e a rn

P re s id e n t, N e w

1979
1980

Y o rk , N .Y .
Y o rk T e le p h o n e C o m p a n y , N e w

Y o rk ,
1981

N .Y .

Class C
B o ris Y a v itz 2

D e a n , G ra d u a te S c h o o l o f B u s in e s s , C o lu m b ia U n iv e r­

R o b e rt H . K n ig h t1

P a r t n e r , S h e a r m a n a n d S t e r li n g , A t t o r n e y s , N e w

G e rtru d e M ic h e ls o n

S e n i o r V i c e P r e s i d e n t , M a c y ’s N e w

1979

s ity , N e w Y o rk , N .Y .
Y o rk ,

1980

N .Y .
Y o rk , N ew

Y o rk ,
1981

N .Y .

— B u ffalo B r a n c h
A p p o in te d by Federal R eserve Bank
M . Ja n e D ic k m a n

P a rtn e r, T o u c h e R o s s & C o ., B u ffa lo , N .Y .

W illia m B . W e b b e r

V ic e C h a i r m a n o f th e B o a r d , L i n c o l n F i r s t B a n k , N . A . ,

W illia m S . G a v itt

P re s id e n t, T h e L y o n s N a tio n a l B a n k , L y o n s , N .Y .

R o b e rt J. D o n o u g h

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r , L ib e r t y N a t i o n a l

1979

R o c h e s te r, N .Y .

1979

B a n k a n d T ru s t C o ., B u ffa lo , N .Y .

1980
1981

A p p o in ted by B o a r d o f G overnors
F re d e ric k D . B e r k e le y 1

C h a irm a n o f th e B o a rd a n d P re s id e n t, G r a h a m M a n u f a c ­

Jo h n R . B u rw e ll3

P re s id e n t,

G e o rg e L . W e s s e l3

P re s id e n t, B u ffa lo A F L - C I O C o u n c il, B u ffa lo , N .Y .

t u r in g C o m p a n y , I n c . , B a t a v i a , N . Y .
R o llin s

C o n ta in e r

C o rp o ra tio n ,

1979
R o c h e s te r,

N .Y .




1980
1981

284

Federal Reserve Bulletin □ March 1979

D is t r ic t 3 — P h il a d e l p h ia

T e rm
e x p ire s

Class A

D e c . 31

D o n a ld J. S e e b o ld

P re s id e n t, T h e F irs t N a tio n a l B a n k o f D a n v ille , D a n v ille ,

J o h n R . B ie c h le r 3

P re s id e n t a n d

R o b e rt H . D e a c o n 3

P re s id e n t, T h e B a n k o f M id -J e rs e y , B o rd e n to w n , N .J .

P a.

1979
C h ie f E x e c u tiv e

O ffic e r, T h e

C om m on­

w e a lth N a tio n a l B a n k , H a r ris b u rg , P a .

1980
1981

Class B
W illia m S . M a s la n d

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , C . H . M a s l a n d &

Jack K . B usby

C h a ir m a n

R ic h a rd P . H a u s e r 3

C h a i r m a n a n d C h i e f E x e c u t i v e O f f ic e r , J o h n W a n a m a k e r ,

S o n s , C a rlis le , P a .
and

C h ie f

1979
E x e c u tiv e

O f f ic e r ,

P e n n s y lv a n ia

P o w e r & L ig h t C o . , A l l e n t o w n , P a .

1980
1981

P h ila d e lp h ia , P a.

Class C
Je a n C ro c k e tt

C h a ir m a n , D e p t, o f F in a n c e , W h a rto n S c h o o l, U n iv e rs ity

W e rn er C . B ro w n 2

C h a ir m a n , H e rc u le s I n c o rp o r a te d , W ilm in g to n , D e l.

John W . E c k m a n 1

C h a ir m a n a n d P re s id e n t, R o re r G r o u p , I n c ., F o rt W a s h ­

o f P e n n s y lv a n ia , P h ila d e lp h ia , P a .

1979

in g to n , P a .

1980
1981

D istrict 4 — C l e v e l a n d

Class A
P re s id e n t, T h e P a rk N a tio n a l B a n k , N e w a r k , O h io

J o h n W . A lfo rd
J o h n A . G e lb a c h

C h a ir m a n o f th e B o a r d , C e n tr a l N a t i o n a l B a n k o f C l e v e ­

E v e re tt L . M a ff e tt3

P re s id e n t a n d C h ie f

la n d , C le v e la n d , O h io

1979
1980

E x e c u t i v e O f f ic e r ,

E a to n

N a tio n a l

B a n k a n d T ru s t C o ., E a to n , O h io

1981

Class B
C h a rle s Y . L a z a ru s

C h a irm a n , T h e F . & R . L a z a ru s C o ., C o lu m b u s , O h io

H a y s T . W a tk in s

C h a ir m a n

W a lte r J. R o b b , S r . s

C h a ir m a n a n d S e n io r P a r tn e r, P r o c to r, R o b b & C o m p a n y ,

and

P re s id e n t,

C h e s s ie

S y s te m ,

1979

C le v e la n d ,

O h io

1980

G r a n v ille , O h io

1981

Class C
R o b e rt E . K ir b y 1

C h a ir m a n

and

C h ie f

E x e c u tiv e

O f f ic e r ,

W e s tin g h o u s e

E le c tric C o r p ., P itts b u r g h , P a .

1979

A rn o ld R . W e b e r 2

P ro v o s t, C a rn e g ie -M e llo n U n iv e r s ity , P itts b u r g h , P a .

1980

J. L . Ja c k so n 3

P re s id e n t, F a lc o n C o a l C o m p a n y I n c ., L e x in g to n , K y .

1981

— Cin c in n a t i Bran ch
A pp oin ted by Federal R eserve Bank
W illia m N . L ig g e tt




C h a ir m a n o f t h e B o a r d a n d C h i e f E x e c u t i v e O f f i c e r , T h e
F irs t N a tio n a l B a n k o f C in c in n a ti, C in c in n a ti, O h io

1979

D irectors of Federal R eserve Banks and Branches

D is tr ic t 4 — C le v e la n d —

Continued

285

T e rm
e x p ire s
D e c . 31

-C in cin atti B r a n c h — C ontinued
A p p o in te d b y F e d e ra l R e s e r v e B a n k

W a lte r W . H ille n m e y e r ,

C h a ir m a n

and

C h ie f E x e c u tiv e

O f f ic e r ,

F irs t S e c u rity
1980

N a tio n a l B a n k & T ru s t C o ., L e x in g to n , K y .

Jr.
L a w re n c e C . H a w k in s

S e n io r V ic e P r e s id e n t, U n iv e rs ity o f C in c in n a ti, C in c in ­

E ld e n H o u t s 3

n a t i , O h io
P re s id e n t, T h e

1981
C itiz e n s

C o m m e rc ia l

B ank

and

T ru st
1981

C o m p a n y , C e lin a , O h io

A p p o in te d by B o a rd of G overnors
S is te r M ic h a e l L e o
M u lla n e y 3

1979

P r e s i d e n t , S t. J o s e p h H o s p it a l, L e x i n g t o n , K y .

L a w re n c e H . R o g e rs I I 1

P re s id e n t

and

C h ie f

E x e c u tiv e

O f f ic e r ,

O m ega

M a rtin B . F rie d m a n

P re s id e n t, F o rm ic a C o rp o ra tio n , C in c in n a ti, O h io

C om ­
1980

m u n ic a tio n s , I n c ., C in c in n a ti, O h io

1981

-P i t t s b u r g h B r a n c h
A p p o in ted by Federal R eserve Bank
P e te r M o rte n s e n

P re s id e n t, F .N .B . C o rp o ra tio n , S h a ro n , P a .

1979

W illia m E . B ie re r

P re s id e n t, E q u ib a n k N .A ., P itts b u r g h , P a .

1980

R o b e rt W . F is c u s 3

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , T h e S a v i n g s &

R . B u rt G o o k in

V ic e C h a i r m a n a n d C h i e f E x e c u t i v e O f f ic e r , H . J . H e i n z

T ru s t C o m p a n y o f P e n n s y lv a n ia , In d ia n a , P a .

1981

C o ., P itts b u rg h , P a.

1981

A p p o in te d by B o a rd of G overnors
G . Ja c k so n T a n k e rs le y 1

P re s id e n t,

C o n s o lid a te d

N a tu ra l

G as

C om pany,

P itts ­

b u rg h , P a.
L lo y d M . M c B r id e

P re s id e n t, U n ite d S te e lw o rk e rs o f A m e r ic a , P itts b u rg h ,

W illia m H . K n o e ll

P re s id e n t, C y c lo p s C o r p o r a tio n , P itts b u r g h , P a .

P a.

D is t r ic t

1979
1980
1981

5 — R ic h m o n d

Class A
F ra n k B . R o b a rd s , Jr.

P r e s i d e n t , R o c k H ill N a t i o n a l B a n k , R o c k H i l l , S . C .

1979

F re d e ric H . P h illip s

P re s id e n t, N e w B a n k o f R o a n o k e , R o a n o k e , V a .

1980

V in c e n t C . B u rk e , J r . 3

C h a i r m a n a n d C h i e f E x e c u t i v e O f f ic e r , T h e R i g g s N a ­
t io n a l B a n k o f W a s h i n g t o n , D . C . , W a s h i n g t o n , D . C .

1981

P re s id e n t, A n d y C la rk F o rd , I n c ., P rin c e to n , W .V a .
S e c r e ta r y -T r e a s u r e r, S tu a rt F u rn itu r e I n d u s tr ie s , I n c .,

1979

T h o m a s A . Jo rd an

Paul G. Miller3

C h a i r m a n , P r e s i d e n t , a n d C h i e f E x e c u t i v e O f f ic e r , C o m ­

Class B
A n d re w L . C la rk

A s h e b o ro , N .C .




m e rc ia l C re d it C o m p a n y , B a ltim o re , M d .

1980
1981

286

Federal Reserve Bulletin □ March 1979

D i s t r i c t 5 — R i c h m o n d — Continued

T e rm
e x p ire s

Class C

D e c . 31

E . A n g u s P o w e ll1

P a rtn e r, M id lo th ia n C o m p a n y , M id lo th ia n , V a .

1979

S te v e n M u lle r

P re s id e n t, T h e J o h n s H o p k in s U n iv e rs ity , B a ltim o r e , M d .

1980

M a ceo A . S lo a n 2

E x e c u tiv e V ic e

P re s id e n t, N o rth

C a r o l i n a M u t u a l L if e
1981

In s u ra n c e C o ., D u rh a m , N .C .

— B a l t im o r e B r a n c h
A p p o in ted by Federal R eserve Bank
L a c y I. R ic e , J r.

P r e s i d e n t , T h e O ld N a t i o n a l B a n k o f M a r t i n s b u r g , M a r -

A . R . R e p p e rt

P re s id e n t,

Jo se p h M . G o u g h , Jr.

P r e s i d e n t , T h e F i r s t N a t i o n a l B a n k o f S t. M a r y ’s , L e o -

P e a rl C . B ra c k e tt

A s s i s t a n t / D e p u t y M a n a g e r , B a l t i m o r e R e g io n a l C h a p te r

tin s b u rg , W . V a .
The

U n io n

1979
N a tio n a l

B ank

of

C la rk s b u rg ,

C la rk s b u rg , W . V a.
n a rd to w n , M d .
o f A m e ric a n R e d C ro s s , B a ltim o r e , M d .

1979
1980
1981

A p p o in te d by B o a r d o f Governors
I. E . K i l l i a n 1
C a th e rin e B y r n e

P re s id e n t, K illia n E n te rp r is e s , I n c ., G ib s o n I s la n d , M d .

1979

B a ltim o r e , M d .

1980

P re s id e n t, W a s h in g to n C o lle g e , C h e s te rto w n , M d .

1981

D o e h le r
J o s e p h H . M c L a in

— C harlotte Branch
A p p o in te d by Federal R eserve Bank
T h o m as L . B en so n

P re s id e n t, T h e C o n w a y N a tio n a l B a n k , C o n w a y , S .C .

1979

W . B . A p p le , Jr.

P re s id e n t, F irs t N a tio n a l B a n k o f R e id s v ille , R e id s v ille ,
N .C .

1979

J o h n T . F ie ld e r

P re s id e n t, J . B . Iv e y a n d C o m p a n y , C h a rlo tte , N .C .

1980

H ugh M . C hapm an3

C h a i r m a n o f th e B o a r d , T h e C i t i z e n s & S o u t h e r n N a t i o n a l
B a n k o f S o u th C a ro lin a , C o lu m b ia , S .C .

1981

A p p o in te d by B o a r d of G overnors
N a o m i G . A lb a n e s e

D e a n , S c h o o l o f H o m e E c o n o m ic s , U n iv e r s ity o f N o rth

R o b e rt E . E lb e rs o n 1

P r e s i d e n t , C h i e f E x e c u t i v e O f fic e r a n d D i r e c t o r , H a n e s

H en ry P o n d e r3

P re s id e n t, B e n e d ic t C o lle g e , C o lu m b ia , S .C .

1981

Jo h n T . O liv e r, Jr.

P r e s id e n t, F irs t N a tio n a l B a n k o f J a s p e r , J a s p e r , A la .

1979

H u g h M . W ills o n

P re s id e n t, C itiz e n s N a tio n a l B a n k , A th e n s , T e n n .

1980

G u y W . B o tts 3

C h a ir m a n o f th e B o a r d , B a r n e t t B a n k s o f F l o r i d a , I n c .

C a ro lin a at G re e n s b o ro , G re e n s b o ro , N .C .
C o r p o r a tio n , W in s to n - S a le m , N .C .

1979
1980

D istric t 6—A tla n ta

Class A




J a c k s o n v ille , F la .

1981

D irectors of Federal R eserve Banks and Branches

D is tr ic t

6—

A tla n ta

—

Continued

287

T e rm
e x p ire s

Class B

D e c . 31

J e a n M c A rth u r D a v is

P re s id e n t, M c A rth u r D a iry , I n c ., M ia m i, F la .

U ly ss e s V . G o o d w y n

E x e c u tiv e

F lo y d W . L e w is 3

P re s id e n t, M id d le S o u th U tilitie s , I n c ., N e w O r le a n s , L a .

1981

P re s id e n t, C o x B ro a d c a s tin g C o rp o ra tio n , A tla n ta , G a .

1979

V ic e

P re s id e n t,

S o u th e rn N a tu ra l

1979
R e so u rces

I n c ., B ir m in g h a m , A la .

1980

Class C
C liffo rd M . K irtla n d ,
J r .1
W illia m A . F ic k lin g , J r .2

P re s id e n t a n d C h a ir m a n , C h a rte r M e d ic a l C o r p o r a tio n ,

F re d A d a m s , Jr.

P r e s i d e n t , C a l- M a i n e F o o d s , I n c . , J a c k s o n , M i s s .

M acon, G a.

1980
1981

— B irm ingham B r a n c h
A p p o in ted by Federal R e se rv e Bank
D ru ry F lo w e rs

C h a ir m a n , F irs t A la b a m a B a n k o f D o th a n , D o th a n , A la .

1979

M a rth a H . S im m s

H u n ts v ille , A la .

1979

G e o rg e S . S h irle y

P re s id e n t, T h e F irs t N a tio n a l B a n k o f T u s c a lo o s a , T u s c a ­

G u y H . C a ffe y , J r .3

C h a i r m a n a n d C h i e f E x e c u t i v e O f f ic e r , S o u t h e r n B a n c o r ­

lo o s a , A la .

1980

p o ra tio n o f A la b a m a , B irm in g h a m , A la .

1981

A p p o in ted by B o a rd of G overnors
W illia m H . M a rtin , I I I 1

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , M a r t i n I n d u s t r i e s ,

H a ro ld B . B la c h , Jr.

P r e s i d e n t , B l a c h ’s , I n c . , B i r m i n g h a m , A l a .

L o u is J . W i l l i e 3

E x e c u t i v e V ic e P r e s i d e n t , B o o k e r T . W a s h i n g t o n I n s u r ­

I n c ., F lo re n c e , A la .

1979
1980

a n c e C o . , B i r m i n g h a m , A la .

1981

— Ja c k s o n v i l l e B r a n c h
A p p o in te d by Federal R eserve Bank
R i c h a r d E . E h li s

P re s id e n t, F lo rid a N a tio n a l B a n k at L a k e la n d , L a k e la n d ,

W illia m E . A rn o ld , Jr.

P re s id e n t,

D u B o s e A u s le y

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , C a p i t a l C i t y F i r s t

R o b e r t E . W a r f ie ld , J r . 3

C h a ir m a n

F la .

1979
W illia m

E.

A rn o ld

C om pany,

Ja c k s o n v ille ,

F la .

1979

N a t i o n a l B a n k , T a l l a h a s s e e , F la .
a n d P re s id e n t,

1980

T h e F irs t N a tio n a l B a n k a n d

T r u s t C o . , E u s t i s , F la .

1981

A p p o in te d by B o a r d of G overnors
C o p e la n d D . N e w b e r n 1

C h a ir m a n o f th e B o a rd , N e w b e r n G r o v e s , I n c ., T a m p a ,

Jo a n W . S te in

P a rtn e r, R e g e n c y S q u a re S h o p p in g C e n te r, J a c k s o n v ille ,

Je ro m e P . K e u p e r3

P re s id e n t, F lo rid a In s titu te o f T e c h n o lo g y , M e lb o u rn e ,

F la .
F la .




F la .

1979
1980
1981

288

D

Federal Reserve Bulletin □ March 1979

is tr ic t

6—

A

t l a n t a —

C o n tin u e d
T e rm

— M ia m i B r a n c h

e x p ire s
D e c . 31

A p p o in te d by Federal R eserve Bank
A r i s t i d e s R . S a s tr e

P re s id e n t, R e p u b lic N a tio n a l B a n k , M ia m i, F la .

T u lly F . D u n la p 3

C h a ir m a n , F lo rid a N a tio n a l B a n k , M ia m i, F la .

1979
1980

J a n e C . C o u s in s

P re s id e n t, C o u s in s A s s o c ia te s , I n c ., M ia m i, F la .

1981

A lfre d W . R o e p s to r ff 3

P re s id e n t, N a tio n a l B a n k o f C o llie r C o u n ty , M a rc o I s ­
1981

la n d , F la .

A p p o in te d by B o a rd of Governors
C a stle W . J o r d a n 1

P re s id e n t, A e g is C o r p o r a tio n , C o ra l G a b le s , F la .

1979

D a v id G . R o b in s o n

P r e s id e n t, E d is o n C o m m u n ity C o lle g e , F o rt M y e rs , F la .

1980

R o y W . V a n d e rg rift3

P re s id e n t,V a n d e r g r ift- W illia m s F a r m s ,I n c .,P a h o k e e ,F la .

1981

— N ashville B ra n c h
A p p o in ted by Federal R ese rv e Bank
V irg il H . M o o r e , J r .

P r e s i d e n t , F i r s t F a r m e r s a n d M e r c h a n ts N a t i o n a l B a n k ,

F ra n k C . T h o m a s

P re s id e n t, S te a rn s C o a l a n d L u m b e r C o m p a n y , K n o x v ille ,

J a m e s R . A u s tin

C h a ir m a n a n d C h ie f E x e c u tiv e O ffic e r, P e o p le s N a tio n a l

R u th W . E ll i s 3

P r e s i d e n t , M o u n t a in E m p i r e B a n k , J o h n s o n C i t y , T e n n .

C o lu m b ia , T e n n .

1979

T enn.

1979

B a n k , S h e lb y v ille , T e n n .

1980
1981

A p p o in te d by B o a r d of Governors
C e c e lia A d k in s

E x e c u tiv e

D ire c to r,

S unday

S chool

P u b lis h in g

B o a rd ,

N a s h v ille , T e n n .
R o b e rt C . H . M a th e w s , Jr.

P re s id e n t, R . C . M a th e w s , C o n tra c to r, I n c ., N a s h v ille ,

Jo h n C . B o lin g e r1

M a n a g e m e n t C o n s u lta n t, K n o x v ille , T e n n .

T enn.

1979
1980
1981

— N e w Orleans B ranch
A p po in te d by Federal R eserve Bank
M a rtin C . M ile r

C h a ir m a n o f th e B o a r d a n d P r e s i d e n t , T h e H i b e r n i a N a ­

G e o rg e P . H o p k in s , Jr.

P re s id e n t, G e o rg e P . H o p k in s , I n c ., G u lf p o rt, M is s .

W illia m E . H o w a r d , J r.

C h a i r m a n o f th e B o a r d , C o m m e r c i a l N a t i o n a l B a n k a n d

R o b e rt H . B o lto n 3

P r e s i d e n t , R a p i d e s B a n k a n d T r u s t C o m p a n y in A l e x a n ­

t io n a l B a n k , N e w O r l e a n s , L a .

T ru s t C o m p a n y o f L a u re l, L a u re l, M is s .
d ria , A le x a n d ria , L a .

1979
1979
1980
1981

A p p o in te d by B o a rd of Governors
L e v e re C . M o n tg o m e ry 1

P r e s i d e n t , T im e S a v e r S t o r e s , I n c . , N e w O r l e a n s , L a .

G e o rg e C . C o r tr ig h t, J r.

P a rtn e r, G e o rg e




M is s.

1979

C . C o r tr ig h t C o m p a n y , R o llin g F o r k ,
1980

D irectors of Federal R eserve Banks and Branches

D is tr ic t

6—

A tla n ta —

Continued

289

T e rm
e x p ire s

— N e w O rleans B r a n c h — Continued

D e c . 31

Appointed by Board of Governors
H o ra tio C . T h o m p s o n 3

P re s id e n t,

H o ra tio

T hom pson

In v e s tm e n t

C om pany,
1981

B a to n R o u g e , L a .

D is t r ic t

7 — C h ic a g o

Class A
Jay J. D eL ay

P re s id e n t,

H u ro n

V a lle y

N a tio n a l

B ank,

A nn

A rb o r,

M ic h .

1979

J o h n F . S p ie s

P re s id e n t, Io w a T ru s t a n d S a v in g s B a n k , E m m e ts b u rg ,

A . R o b e rt A b b o u d

C h a ir m a n

1980

Io w a
of

th e

B o a rd ,

The

F irs t

N a tio n a l

B ank

of
1981

C h i c a g o , C h i c a g o , 111.

Class B
M a ry G a r s t3

M anager

of

C a tt l e

D iv is io n ,

G a r s t. C o m p a n y ,

C oon
1979

R a p id s , Io w a
A rth u r J. D e c io

C h a ir m a n

of

th e

B o a rd

and

C h ie f

E x e c u tiv e

O f f ic e r ,

D e n n is W . H u n t3

P re s id e n t, H u n t T ru c k L in e s , I n c ., R o c k w e ll C ity , I o w a

1981

1979

S k y l i n e C o r p o r a t i o n , E lk h a r t , I n d .

1980

Class C
R o b e rt H . S tr o tz 1

P r e s i d e n t , N o r t h w e s t e r n U n i v e r s i t y , E v a n s t o n , 111.

Jo h n S a g a n 2

V ic e P re s id e n t— T re a s u r e r , F o rd M o to r C o m p a n y , D e a r ­

E d w a rd F . B ra b e c

B u s in e s s M a n a g e r , C h ic a g o J o u rn e y m e n P lu m b e rs , L o c a l

b o rn , M ic h .

1980
1981

1 3 0 , C h i c a g o , 111.

— D e t r o it B r a n c h
A p p o in te d by Federal R eserve Bank
R o d k e y C ra ig h e a d

C h a i r m a n a n d C h i e f E x e c u t i v e O f f ic e r , D e t r o i t b a n k C o r ­

L a w re n c e A . Jo h n s

P re s id e n t,

C h a rle s R . M o n tg o m e ry

P r e s i d e n t , M i c h ig a n C o n s o l i d a t e d G a s C o m p a n y , D e t r o i t ,

Jam es H . D u n c a n 3

C h a irm a n , F irs t N a tio n a l B a n k a n d T ru s t C o m p a n y o f

1979

p o r a tio n , D e tr o it, M ic h .
Isa b e lla

B ank

and

T ru s t,

M ount

P le a s a n t,

M ic h .
M ic h .
M ic h ig a n , K a la m a z o o , M ic h .

1980
1981
1981

A p p o in te d by B o a r d of G overnors
Jo rd an B . T a tte r 1

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , S o u t h e r n M i c h i g a n

H o w a r d F . S im s

P re s id e n t, S im s -V a rn e r A s s o c ia te s , I n c ., D e tr o it, M ic h .

C o ld S t o r a g e C o . , B e n to n H a r b o r , M i c h .




1979
1980

290

Federal Reserve Bulletin □ March 1979

D i s t r i c t 7 — C h i c a g o — Continued

T e rm
e x p ire s
D e c . 31

— D etroit B r a n c h — Continued
Appointed by Board of Governors
H e rb ert H . D o w

D ire c to r a n d

S e c re ta ry , T h e D o w

C h e m ic a l C o m p a n y ,

M id la n d , M ic h .

1981

D istr ic t 8 — S t . L o u is

Class A
R a y m o n d C . B u rro u g h s

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , T h e C i t y N a t i o n a l

D o n a ld N . B ra n d in

C h a ir m a n

G eo rg e M . R y rie 3

P re s id e n t a n d C h ie f E x e c u tiv e O ffic e r, F irs t N a tio n a l B a n k

B a n k o f M u r p h y s b o r o , M u r p h y s b o r o , 111.
a n d C h ie f

E x e c u tiv e O ffic e r,

1979

t h e B o a t m e n ’s

N a t i o n a l B a n k o f S t. L o u i s , S t. L o u i s , M o .

1980

& T r u s t C o m p a n y , A l t o n , 111.

1981

Class B
V i r g i n i a M . B a il e y

O w n e r , E ld o P r o p e r t i e s , L i t t l e R o c k , A r k .

1979

R a l p h C . B a in

V ic e P re s id e n t, W a b a s h P la s tic s , I n c ., E v a n s v ille , In d .

1980

T o m K . S m ith , Jr.

S e n i o r V i c e P r e s i d e n t , M o n s a n t o C o m p a n y , S t. L o u i s , M o .

1981

Class C
A rm a n d C . S ta ln a k e r1

C h a i r m a n o f th e B o a r d , G e n e r a l A m e r i c a n L if e I n s u r a n c e

W illia m H . S tro u b e

A s s o c ia te D e a n o f F a c u lty P ro g r a m s , W e s te rn K e n tu c k y

W illia m B . W a lto n 2

V i c e C h a i r m a n o f th e B o a r d , H o l i d a y I n n s , I n c . , M e m ­

C o . , S t. L o u i s , M o .

1979

U n iv e rs ity , B o w lin g G r e e n , K y .

1980

p h is , T e n n .

1981

— L ittle R ock B ran ch
A p p o in te d by Federal R eserve Bank
B . F in le y V in s o n

V ic e C h a i r m a n

o f th e B o a r d , T h e F i r s t N a t i o n a l B a n k

in L itt l e R o c k , L itt l e R o c k , A r k .

1979

T h o m a s E . H ay s, Jr.

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , T h e F i r s t N a t i o n a l

G o rd o n E . P a rk e r3

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , T h e F i r s t N a t i o n a l

S h irle y J . P in e 3

P ro fe sso r,

B an k of H o p e , H o p e, A rk .

1980

B a n k o f E l D o ra d o , E l D o ra d o , A rk .
S peech

C o m m u n ic a tio n ,

U n iv e rs ity

1981
of

A r­

k a n s a s a t L itt le R o c k , L it tl e R o c k , A r k .

1981

A p p o in te d by B o a rd of Governors
E . R ay K e m p , Jr.




V ic e C h a ir m a n o f th e B o a r d a n d C h i e f A d m i n i s t r a t i v e
O f f ic e r , D i l l a r d D e p a r t m e n t S t o r e s , I n c . , L it t l e R o c k ,
A rk .

1979

D irectors of Federal R eserve Banks and Branches

D is tr ic t

8—

S t.

L o u is —

Continued

291

T e rm
e x p ire s
D e c . 31

— L i t t l e R o c k B r a n c h — Continued

Appointed by B oard of Governors
R o n a l d W . B a il e y

E x e c u tiv e V ic e P re s id e n t a n d G e n e r a l M a n a g e r , P r o d u c ­

G . L a rry K e lle y 1

P r e s i d e n t , P i c k e n s - B o n d C o n s t r u c t i o n C o . , L it t l e R o c k ,

1980

e rs R ic e M ill, In c . S tu ttg a rt, A rk .
A rk .

1981

— L o u is v il l e B r a n c h
A p p o in te d by Federal R eserve Bank
H o w ard B ren n er

V i c e C h a i r m a n o f th e B o a r d , T e l l C i t y N a t i o n a l B a n k ,

J. D a v id G ris s o m

C h a ir m a n a n d C h i e f E x e c u t i v e O f f ic e r , C i t i z e n s F i d e l i t y

F re d B . O n e y

P re s id e n t, T h e F irs t N a tio n a l B a n k o f C a rr o llto n , C a rr o ll­

S is te r E ile e n M . E g a n 3

P re s id e n t, S p a ld in g C o lle g e , L o u is v ille , K y .

T e ll C ity , In d .

1979

B a n k a n d T ru s t C o ., L o u is v ille , K y .

1980

to n , K y .

1981
1981

A p p o in ted by B o a r d o f G overnors
Jam es F. T h o m p so n 1

P r o f e s s o r o f E c o n o m i c s , M u r r a y S t a te U n i v e r s i t y , M u r ­

R ic h a rd O . D o n e g a n

V ic e P re s id e n t a n d G r o u p E x e c u tiv e , M a jo r A p p lia n c e

ra y , K y .

1979

B u s in e s s

G ro u p ,

G en era l

E le c tric

C om pany,

L o u is ­

v ille , K y .
W e n d e ll G . R a y b u r n 3

D ean

of

U n iv e rs ity

1980
C o lle g e ,

U n iv e rs ity

o f L o u is v ille ,

L o u is v ille , K y .

1981

— M emphis B r a n c h
A p p o in te d by Federal R eserve Bank
E a rl L . M c C a rro ll

P re s id e n t, T h e F a rm e rs B a n k & T ru s t C o ., B ly th e v ille ,

C h a rle s S . Y o u n g b lo o d

P re s id e n t a n d C h ie f E x e c u tiv e O ffic e r, F irs t C o lu m b u s

S ta llin g s L ip f o r d

P re s id e n t,

B ru c e E . C a m p b e ll, J r . 3

C h a ir m a n

A rk .

1979

N a tio n a l B a n k , C o lu m b u s , M is s .
F irs t- C itiz e n s

N a tio n a l

1980
B ank

of D y ersb u rg ,

D y ersb u rg , T en n .

1981

a n d P re s id e n t, N a tio n a l B a n k o f C o m m e r c e ,

M e m p h is , T e n n .

1981

A p p o in ted by B o a r d of G overnors
W a lte r L . W a lk e r 3

P re s id e n t, L e M o y n e -O w e n C o lle g e , M e m p h is , T e n n .

1979

F ra n k A . J o n e s , J r . 1

P re s id e n t, C o o k In d u s trie s , I n c ., M e m p h is , T e n n .

1980

B e n ja m in P . P i e r c e 3

P re s id e n t, T y ro n e H y d ra u lic s , I n c ., C o r in th , M is s .

1981




292

Federal Reserve Bulletin □ March 1979

D is t r ic t

T e rm

9 — M in n e a p o l is

e x p ire s
D e c . 31

Class A
N e ls E . T u rn q u is t

P re s id e n t, N a tio n a l B a n k o f S o u th D a k o ta , S io u x F a lls ,

Jam es H . S m aby

P re s id e n t, C o m m e rc ia l N a tio n a l B a n k & T ru s t C o ., Iro n

D o n a ld L . S c o th o r n 3

P r e s i d e n t , F i r s t S t a te B a n k , S t e v e n s v i l l e , M o n t .

S. D ak.

1979
1980

M o u n ta in , M ic h .

1981

Class B
W a rre n B . Jo n e s

S e c re ta ry -T re a s u re r,

Two

D ot L and &

L iv e s to c k C o .,

H a r l o w t o n , M o n t.

1979

D o n a ld P . H e lg e s o n

S e c r e t a r y a n d V i c e P r e s i d e n t , J a c k F r o s t , I n c . , S t. C l o u d ,

R u s s e ll G . C le a ry

C h a ir m a n a n d P re s id e n t, G . H e ile m a n B r e w in g C o m p a n y ,

M in n .

1980

L a C r o s s e , W is .

1981

Class C
S is te r G e n e ro s e G e rv a is

A d m i n i s t r a t o r , S t. M a r y ’s H o s p i t a l , R o c h e s t e r , M i n n .

S te p h e n F . K e a tin g 1

V ic e

W i l l i a m G . P h i l l i p s 2’3

C h a ir m a n

C h a ir m a n

o f th e

B o a rd ,

H o n e y w e ll,

I n c .,

n e a p o lis , M in n .
and

C h ie f

1979

M in ­
1980

E x e c u tiv e

O f f ic e r ,

In te rn a tio n a l

M u ltif o o d s , M in n e a p o lis , M in n .

1981

— H elena B r a n c h
A p p o in te d by Federal R eserve Bank
L y n n D . G ro b el

P re s id e n t,

F irs t N a tio n a l

B ank

o f G la s g o w ,

G la s g o w ,

M o n t.

1979

W illia m B . A n d re w s

P re s id e n t, N o rth w e s te rn B a n k o f H e le n a , H e le n a , M o n t.

1980

Ja se O . N o rsw o rth y 3

P re s id e n t, T h e N .R .G . C o m p a n y , B illin g s , M o n t.

1980

A p p o in te d by B o a rd of G overnors
N o rris E . H a n fo rd

W h e a t & B a rle y O p e ra to r, F o rt B e n to n , M o n t.

P a tr ic ia P . D o u g l a s 1

V ic e

P r e s i d e n t - F is c a l

A ffa irs ,

U n iv e rs ity

of

1979
M o n ta n a ,

M is s o u la , M o n t.

D is tr ic t

10— K a n sa s

1980

C ity

Class A
P h ilip H a m m

P r e s i d e n t , F i r s t N a t io n a l B a n k &

T r u s t C o . , E ld o r a d o ,

K ans.

1979

C ra ig B a c h m a n

P re s id e n t, F irs t N a tio n a l

Jo h n D . W o o d s3

C h a ir m a n

B a n k o f C e n tr a lia ,

C e n tra lia ,

K ans.




&

C h i e f E x e c u t i v e O f f ic e r , T h e O m a h a N a ­

t io n a l B a n k , O m a h a , N e b .

1981

D irectors of Federal R eserve Banks and Branches

D is tr ic t

10 —

K a n sa s

C ity

— Continued

293

T e rm
e x p ire s
D e c . 31

Class B
J o h n A . M c K in n e y

P re s id e n t a n d

C h ie f E x e c u tiv e O ffic e r, J o h n s - M a n v ille
1979

C o r p o r a tio n , D e n v e r, C o lo .
J a m e s G . H a rlo w , Jr.

P re s id e n t, O k la h o m a

G a s a n d E le c tric C o ., O k la h o m a

A la n R . S le e p e r

R a n c h e r, A ld e n , K a n s .

1980

C ity , O k la .

1981

Class C
P aul H . H enson

C h a ir m a n , U n ite d T e le c o m m u n ic a tio n s , I n c ., W e s tw o o d ,

Jo se p h H . W illia m s 2

C h a ir m a n

H a ro ld W . A n d e r s e n 1

P re s id e n t,

1979

K ans.
and

C h ie f

E x e c u tiv e

O ffic e r,

The

W illia m s

C om pany,

O m aha,

1980

C o m p a n ie s , T u ls a , O k la .
O m aha

W o rld -H e ra ld

N eb r.

1981

— D enver B ra n c h
A p p o in te d by Federal R eserve Bank
F e lix B u c h e n ro th , J r.

P r e s i d e n t , T h e J a c k s o n S t a te B a n k , J a c k s o n , W y o .

W illia m H . V e rn o n

D ire c to r,

D e la n o E . S c o tt

P re s id e n t a n d C h a ir m a n , T h e R o u tt C o u n ty N a tio n a l B a n k

and

F o rm e r

C h a ir m a n

and

C h ie f

1979

E x e c u tiv e

O f f ic e r , S a n t a F e N a t i o n a l B a n k , S a n t a F e , N . M .
o f S te a m b o a t S p rin g s , S te a m b o a t S p rin g s , C o lo .

1980
1980

A p p o in ted by B o a rd of G overnors
A . L . F e ld m a n 1

P re s id e n t a n d C h ie f E x e c u tiv e O ffic e r, F ro n tie r A ir lin e s ,

D o ris M . D r u r y 3

P ro fe s s o r a n d C h a ir m a n , D e p a rtm e n t o f E c o n o m ic s , U n i­

1979

D e n v e r, C o lo .

1980

v e rs ity o f D e n v e r , D e n v e r, C o lo .

— Oklahoma City Branch
A p p o in ted by Federal R ese rv e Bank
J. A . M a u re r

C h a ir m a n , S e c u rity N a tio n a l B a n k & T ru s t C o ., D u n c a n ,

W . L . S te p h e n s o n , J r.

C h a ir m a n

1979

O k la .
of

th e

B o a rd

C e n tr a l N a t i o n a l B a n k

and
&

C h ie f

E x e c u tiv e

T ru st C o .

O f f ic e r ,

o f E n id , E n id ,
1980

O k la .
V . M . T h o m p so n , Jr.

C h a ir m a n a n d

C h ie f E x e c u tiv e

O f f ic e r , U t i c a N a t i o n a l

B a n k a n d T ru s t C o ., T u ls a , O k la .

1980

A p p o in te d by B o a r d of Governors
C h ris tin e H . A n th o n y 1

O k la h o m a C ity , O k la .

S am u el R . N o b le 3

C h a ir m a n o f t h e B o a r d , N o b l e A f f il ia te s , I n c . , A r d m o r e ,




O k la .

1979
1980

294

Federal Reserve Bulletin □ March 1979

D i s t r i c t 10 — K a n s a s C i t y — Continued

T e rm
e x p ire s
D e c . 31

— Omaha Branch
A p p o in te d by Federal R eserve Bank
R o y G . D in sd a le

C h a ir m a n o f th e B o a rd , F a r m e rs N a tio n a l B a n k o f C e n tra l

J o e J. H u c k fe ld t

P re s id e n t, G e rin g N a tio n a l B a n k & T ru s t C o ., G e r in g ,

F . P h illip s G iltn e r

P re s id e n t, F irs t N a tio n a l B a n k o f O m a h a , O m a h a , N e b r.

C ity , C e n tr a l C ity , N e b r .

1979

N eb r.

1979
1980

A p p o in te d by B o a rd of Governors
D u rw ard B . V a rn e r1

C h a ir m a n

and

C h ie f

E x e c u tiv e

O f f ic e r ,

U n iv e rs ity

of

N e b ra s k a F o u n d a tio n , L in c o ln , N e b r.
R o b e rt G . L u e d e r3

1979

P re s id e n t, L u e d e r C o n s tru c tio n C o m p a n y , O m a h a , N e b r.

1980

D istr ic t 11— D a l l a s

Class A
G ene D . A dam s

P re s id e n t, T h e F irs t N a tio n a l B a n k o f S e y m o u r , S e y m o u r,

F ra n k J u n e ll

C h a ir m a n o f th e B o a r d , T h e C e n tr a l N a t i o n a l B a n k o f

L e w is H . B o n d 3

C h a i r m a n a n d C h i e f E x e c u t i v e O f f ic e r , T e x a s A m e r i c a n

1979

T ex.
S a n A n g e lo , S an A n g e lo , T e x .

1980

B a n c s h a r e s , I n c . , F t. W o r t h , T e x .

1981

Class B
C h a ir m a n

S te w a rt O rto n

F o l e y ’s ,

of

th e

B o a rd

D iv is io n

of

and

C h ie f

F e d e ra te d

E x e c u tiv e
D e p t.

O f f ic e r ,

S to re s ,

I n c .,
1979

H o u s to n , T e x .

1980

V acancy
J. W a y la n d B e n n e tt3

A s s o c i a t e D e a n f o r I n d u s t r y R e la t i o n s a n d P r o f e s s o r o f
A g ric u ltu ra l

E c o n o m ic s ,

C o lle g e

of

A g ric u ltu ra l

S c ie n c e s , T e x a s T e c h U n iv e rs ity , L u b b o c k , T e x .

1981

Class C
M a rg a re t S . W ils o n

C h a ir m a n

of

th e

B o a rd

and

C h ie f

E x e c u tiv e

O f f ic e r ,

S c a rb ro u g h s S to re s , A u s tin , T e x .
Irv in g A . M a th e w s 1

C h a i r m a n o f th e B o a r d a n d C h i e f E x e c u t i v e O f f ic e r , F r o s t

G e ra ld D . H in e s 2

O w n e r, G e ra ld D . H in e s I n te re s ts , H o u s to n , T e x .

B r o s ., I n c ., S an A n to n io , T e x .

1979
1980
1981

-E l P a so B r a n c h
A p p o in te d by Federal R eserve Bank
A rth u r L . G o n z a le s

P r e s i d e n t , F i r s t C it y N a t i o n a l B a n k o f E l P a s o , E l P a s o ,

C la u d e E . L e y e n d e c k e r

P r e s i d e n t , M i m b r e s V a l le y B a n k , D e m i n g , N . M e x .

T ex.




1979
1980

D irectors of Federal R eserve Banks and Branches

D is tr ic t

11 —

D a lla s —

Continued

— E l P a so B r a n c h —

295

T e rm
e x p ire s
D e c . 31

C o n tin u e d

A p p o in te d b y F e d e r a l R e s e r v e B a n k

A rn o ld B . P e in a d o , J r.

P a rtn e r, A V C D e v e lo p m e n t, E l P a s o , T e x .

C h a rle s A . J o p lin 3

P re s id e n t, S e c u rity N a tio n a l B a n k o f R o s w e ll, R o s w e ll,

1981

N . M ex.
A p p o in te d

by B o a rd

1981

of G overn ors

A . J. L o s e e 1

S h a re h o ld e r, L o s e e , C a rs o n , & D ic k e rs o n , P .A ., A rte s ia ,

C h e s te r J. K e s e y

C . J . K e s e y E n te rp r is e s , P e c o s , T e x .

1980

J o s e fin a A . S a la s - P o r ra s

E x e c u tiv e D ir e c to r, B I L a n g u a g e S e r v ic e s , E l P a s o , T e x .

1981

N . M ex.

1979

— H ouston B ranch
A p p o in te d

by F ederal R eserve B an k

P a g e K . S tu b b le fie ld

C h a ir m a n o f th e B o a r d , V i c t o r i a B a n k & T r u s t C o m p a n y ,

R a y m o n d L . B ritto n 3

L a b o r A r i b i tr a t o r a n d

V ic to ria , T e x .

1979
P ro fesso r o f L a w ,

U n iv e rs ity

of

1980

H o u s to n , H o u s t o n , T e x .
Jo h n T . C a te r 3

P r e s i d e n t , B a n k o f th e S o u t h w e s t N a t i o n a l A s s o c i a t i o n ,

R a lp h E . D a v i d 3

P re s id e n t, F irs t F re e p o rt N a tio n a l B a n k , F re e p o rt, T e x .

H o u s to n , T e x .

A p p o in te d

by B o a rd

1981
1981

of G overn ors

Je ro m e L . H o w a rd

C h a ir m a n

of

th e

B o a rd

and

C h ie f E x e c u tiv e

O f f ic e r ,

M o rtg a g e & T ru s t, I n c ., H o u s to n , T e x .
of

th e

B o a rd

and

1979

G e n e M . W o o d fin 1

C h a ir m a n

C h ie f E x e c u tiv e

O f f ic e r ,

M a ra th o n M a n u fa c tu r in g C o m p a n y , H o u s to n , T e x .

1980

G ra n v ille M . S a w y e r 3

P re s id e n t, T e x a s S o u th e rn U n iv e rs ity , H o u s to n , T e x .

1981

— Sa n A ntonio B ranch
A p p o in te d

by F ederal R eserve

B en R . L ow

Bank

P re s id e n t, N a tio n a l

B ank of C o m m erce,

S a n A n to n io ,

T ex.

1979

Jo h n H . G arn er

P re s id e n t a n d

C h ie f E x e c u tiv e

O f f ic e r ,

C o rp u s

C h ris ti

Jo h n H . H o lc o m b

O w n er-M an ag er,

C h a rle s E . C h e e v e r, J r .3

P re s id e n t, B ro a d w a y N a tio n a l B a n k , S a n A n to n io , T e x .

N a tio n a l B a n k , C o rp u s C h ris ti, T e x .
P ro g re so

H a c ie n d a s

1980
C om pany,

P ro ­

g reso , T ex .

A p p o in te d

by B o a rd

1981

o f G overn ors

P at L eg an 1

O w n e r, L e g a n P ro p e rtie s , S a n A n to n io , T e x .

Jo h n J. M c K e tta

E .P . S c h o c h P ro fe s s o r o f C h e m ic a l E n g in e e rin g , U n iv e r ­

C a rlo s A . Z u n ig a

P a rtn e r,

1979

s ity o f T e x a s , A u s ti n , T e x .




1981

Z u n ig a

L a re d o , T ex .

S to ra g e

and

1980
F o rw a rd in g

C om pany,
1981

296

Federal Reserve Bulletin □ March 1979

D i s t r i c t 12 — S a n F r a n c i s c o

T e rm
e x p ire s
D e c . 31

Class A
F re d e ric k G . L a rk in , Jr.

C h a ir m a n o f th e E x e c u t i v e C o m m i t t e e , S e c u r i t y P a c if ic

O l e R . M e t tl e r

P r e s i d e n t a n d C h a ir m a n o f t h e B o a r d , F a r m e r s & M e r ­

R o b e rt A . Y o u n g 3

C h a ir m a n a n d P r e s i d e n t , N o r t h w e s t N a t i o n a l B a n k , V a n ­

N a t i o n a l B a n k , L o s A n g e l e s , C a li f .

1979

c h a n t s B a n k o f C e n t r a l C a l i f o r n i a , L o d i , C a li f .

1980

c o u v er, W ash .

1981

Class B
C la ir L . P e c k , Jr.

C h a ir m a n o f th e B o a rd , C .L . P e c k C o n tr a c to r , L o s A n ­

J .R . V a u g h a n

C h a ir m a n

M a lc o lm T . S ta m p e r

P re s id e n t, T h e B o e in g C o m p a n y , S e a ttle , W a s h .

g e l e s , C a li f .
and

1979
C h ie f

E x e c u tiv e

O f f ic e r ,

K nudsen

C o r­

p o r a t i o n , L o s A n g e l e s , C a li f .

1980
1981

Class C
D o ro th y W rig h t N e ls o n

D e a n a n d P ro fe s s o r o f L a w , U n iv e rs ity o f S o u th e rn C a li­

C o rn e ll C . M a i e r 2

C h a i r m a n , P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , K a i s e r

Jo sep h F . A lib ra n d i1

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , W h i t t a k e r C o r p . ,

f o r n i a L a w C e n t e r , L o s A n g e l e s , C a li f .

1979

A l u m i n u m & C h e m i c a l C o r p . , O a k l a n d , C a li f .

1980

L o s A n g e l e s , C a li f .

1981

— Los A n g e l e s B r a n c h
A p p o in te d by Federal R eserve Bank
J o s e p h J . P in o la

C h a ir m a n a n d C h ie f E x e c u tiv e O ffic e r, W e s te rn B a n c o r ­

F e rn J e llis o n

G e n e r a l M a n a g e r , S o c ia l S e rv ic e D e p a r tm e n t, C ity o f L o s

Jam es D . M cM ahon

P r e s i d e n t , S a n t a C l a r i t a N a t i o n a l B a n k , N e w h a l l , C a li f .

H a r v e y J . M itc h e ll

P re s id e n t,

p o r a t i o n , L o s A n g e l e s , C a li f .

1979

A n g e l e s , L o s A n g e l e s , C a li f .
F irs t N a tio n a l

B ank

1979
of

San

D ie g o

1980

C o u n ty ,

E s c o n d i d o , C a li f .

1981

A p p o in te d by B o a r d o f G overnors
Togo W . T anaka3

P r e s i d e n t , G r a m e r c y E n t e r p r i s e s , L o s A n g e l e s , C a li f .

C a ro lin e A h m a n s o n 1

C h a i r m a n o f th e B o a r d , C a r o l i n e L e o n e t t i , L t d . , B e v e r ly

H a rv e y A . P ro c to r

C h a i r m a n o f th e B o a r d , S o u t h e r n C a l i f o r n i a G a s C o m ­

H ills , C a lif .

1979
1980

p a n y , L o s A n g e le s , C a lif.

1981

— Po rtlan d Branch
A p p o in ted by Federal R eserve Bank
M e rle G . B ry a n

P re s id e n t, F o re s t G ro v e N a tio n a l

B a n k , F o re st G ro v e ,

O re g .
K e n n e t h S m i th




G en eral

1979
M a n a g e r,

The

C o n fe d e ra te d

S p rin g s , W a rm S p rin g s , O re g .

T rib e s

of

W a rm
1980

D irectors of Federal Reserve Banks and Branches

D is tr ic t

12 —

S a n

F r a n c is c o —

Continued

291

T e rm
e x p ire s

—P o r tla n d B ranch—

D e c . 31

C o n tin u e d

A p p o in te d b y F e d e r a l R e s e r v e B a n k

Ja c k W . G u s ta v e l3

P r e s i d e n t a n d C h i e f E x e c u t i v e O f f ic e r , F i r s t N a t i o n a l B a n k

R o b e rt F . W a lla c e

C h a ir m a n o f th e B o a r d , F i r s t N a t i o n a l B a n k o f O r e g o n ,

o f N o rth Id a h o , C o e u r d ’ A le n e , Id a h o

1981

P o rtla n d , O re g .

1981

A p p o in ted by B o a rd of Governors
P h illip W . S c h n e id e r

N o r th w e s t R e g io n a l E x e c u tiv e , N a tio n a l W ild life F e d e r a ­

L o ra n L . S te w a r t1

D ire c to r, B o h e m ia I n c ., E u g e n e , O re g .

1980

J e a n M a te r

P a rtn e r a n d G e n e ra l M a n a g e r, M a te r E n g in e e rin g , C o r ­

1981

tio n , P o rtla n d , O re g .

1979

v a llis , O re g .

— Sa l t L ake Cit y B ra n c h
A p p o in te d by Federal R eserve Bank
F re d H . S trin g h a m

P re s id e n t, V a lle y B a n k a n d T ru s t C o m p a n y , S o u th S a lt

M a ry S . K n o x

C h a i r m a n , I d a h o S ta t e B a n k , G l e n n s F e r r y , I d a h o

R o b e rt E . B ry a n s

C h a ir m a n

D a v id P . G a rd n e r

P r e s i d e n t , U n i v e r s i t y o f U t a h , S a lt L a k e C i t y , U t a h

1979

L a k e , U ta h
of

th e

B o a rd

and

C h ie f

E x e c u tiv e

1980

O ffic e r,

W a l k e r B a n k & T r u s t C o m p a n y , S a lt L a k e C i t y , U ta h

1981
1981

A p p o in ted by B o a r d of Governors
R o b e rt A . E rk in s

W h it e A r r o w R a n c h , B l i s s , I d a h o

1979

J. L . T e rte lin g

T e rte lin g C o m p a n y , I n c ., B o is e , Id a h o

1980

W e n d e l l J . A s h t o n 1,3

P u b lis h e r , D e s e re t N e w s P u b lis h in g C o m p a n y , S a lt L a k e
C i t y , U ta h

1981

— Seattle B ranch
A p p o in te d by Federal R ese rv e Bank
D o n a ld L . M e llis h

C h a ir m a n o f t h e B o a r d , N a t i o n a l B a n k o f A l a s k a , A n ­

R u fu s C . S m ith

C h a ir m a n , T h e F irs t N a tio n a l B a n k o f E n u m c la w , E n u m -

D o u g la s S . G a m b le

P re s id e n t a n d

C . M . B e rry 3

P re s id e n t, S e a ttle F irs t N a tio n a l B a n k , S e a ttle , W a s h .

c h o r a g e , A la s k a

1979

c la w , W a s h .

1980
C h ie f E x e c u tiv e

O f f ic e r , P a c if ic G a m b l e

R o b in s o n C o ., S e a ttle , W a s h .

1981
1981

A p p o in ted by B o a rd of Governors
M e rle D . A d lu m

V i c e P r e s i d e n t , S e a f a r e r ’s I n t e r n a t i o n a l U n i o n o f N o r t h

V ir g in ia L . P a r k s

V ic e P re s id e n t— B u s in e s s a n d F in a n c e , S e a ttle U n iv e r ­

L lo y d E . C o o n e y 1

P re s id e n t a n d G e n e ra l M a n a g e r, K IR O — R a d io & T e le v i­

A m e ric a , A F L -C IO , S e a ttle , W a s h .
sity , S e a ttle , W a s h .




s io n , S e a ttle , W a s h .

1979
1980
1981

Al

Financial and Business Statistics
C ontents

D om estic Financial S tatistics

W e e k l y R eporting C ommercial B a n k s

A 3 M o n e t a r y a g g r e g a t e s a n d i n t e r e s t r a te s

A s s e ts a n d L ia b ilitie s o f—

A 4 F a c t o r s a f f e c t in g m e m b e r b a n k r e s e r v e s

A 20

A ll r e p o r t i n g b a n k s

A 5 R e se rv e s a n d b o rro w in g s o f m e m b e r

A 21

B a n k s in N e w Y o r k C i ty

A 22

B a n k s o u ts id e N e w Y o rk C ity

banks
A 6 F e d e ra l fu n d s tra n s a c tio n s o f m o n e y
m ark e t b an k s

A 2 3 B a la n c e s h e e t m e m o r a n d a
A 2 4 C o m m e r c ia l a n d in d u s tria l lo a n s
A 2 5 G r o s s d e m a n d d e p o s i ts o f i n d i v i d u a l s ,
p a r t n e r s h i p s , a n d c o r p o r a ti o n s

P o lic y In struments
A 8 F e d e ra l R e s e r v e B a n k in te re s t ra te s
A 9 M e m b e r b a n k re se rv e re q u ire m e n ts
A 10 M a x i m u m

in te r e s t ra te s p a y a b le o n

Fin ancia l M ar kets
A 2 5 C o m m e rc ia l p a p e r a n d b a n k e rs

t i m e a n d s a v i n g s d e p o s i ts a t f e d e r a l ly
A ll

a c c e p ta n c e s o u ts ta n d in g

in su re d in s titu tio n s
F ed era l R e serv e o p en m a rk e t

A 2 6 P r im e r a te c h a r g e d b y b a n k s o n

tra n s a c tio n s

A 2 6 T e rm s o f le n d in g a t c o m m e rc ia l b a n k s

s h o r t - t e r m b u s i n e s s lo a n s
A 2 7 I n t e r e s t r a t e s in m o n e y a n d c a p i t a l
m a rk e ts

Federal R eserve B a n k s

A 2 8 S to c k m a rk e t— S e le c te d s ta tis tic s
A 12 C o n d i t i o n a n d F . R . n o t e s t a te m e n t s
A 13 M a t u r i t y d i s t r i b u t i o n o f l o a n a n d

A 2 9 S a v in g s in s titu tio n s — S e le c te d a s s e ts

s e c u rity h o ld in g s

M o n e t a r y a n d C redit A ggregates

a n d l ia b i l i t i e s

Federal Finance

A 13 B a n k d e b i t s a n d d e p o s i t t u r n o v e r

A 3 0 F e d e r a l f is c a l a n d f in a n c in g o p e r a t i o n s

A 14 M o n e y s t o c k m e a s u r e s a n d c o m p o n e n t s

A 31

A 15 A g g r e g a t e r e s e r v e s a n d d e p o s i ts o f

A 3 2 F e d e r a l d e b t s u b j e c t to s t a t u t o r y

m em ber banks
A 15 L o a n s a n d i n v e s t m e n t s o f a ll

l i m i ta t i o n
A 3 2 G ro s s p u b lic d e b t o f U .S . T re a s u ry —

c o m m e rc ia l b a n k s

T y p e s a n d o w n e rs h ip
A 33
A 34

A 16 L a s t - W e d n e s d a y - o f - m o n t h s e r i e s
A 1 8 D e ta ile d b a la n c e s h e e t, S e p te m b e r 3 0 , 1978




U .S . g o v e r n m e n t m a r k e t a b l e
s e c u r i t i e s — O w n e r s h i p , b y m a t u r it y

C ommercial B a n k A ssets a n d L iabilities

A 17 C a l l - d a t e s e r i e s

U .S . b u d g e t r e c e i p t s a n d o u t l a y s

U .S . g o v e r n m e n t s e c u r i t i e s d e a l e r s T r a n s a c t i o n s , p o s i t i o n s , a n d f i n a n c in g

A 35

F e d e ra l a n d fe d e r a lly s p o n s o r e d c r e d it
a g e n c ie s — D e b t o u ts ta n d in g

A2

Federal Reserve Bulletin □ March 1979

S ecurities M ar kets a n d
C orporate Fin ance

International Statistics
A 5 4 U .S . in te r n a tio n a l tr a n s a c tio n s —
S u m m a ry

A 3 6 N e w s e c u r i t y i s s u e s — S t a te a n d l o c a l
g o v e r n m e n ts a n d c o r p o ra tio n s
A 3 7 O p e n - e n d in v e s tm e n t c o m p a n ie s — N e t
s a le s a n d a s s e t p o s i t i o n

A 5 5 U .S . f o r e i g n tr a d e
A 5 5 U .S . re s e rv e a s s e ts
A 5 6 F o re ig n b ra n c h e s o f U .S . b a n k s —
B a la n c e s h e e t d a ta

A 3 7 C o r p o r a t e p r o f its a n d th e i r d i s t r i b u t i o n
A 3 8 N o n fin a n c ia l c o r p o ra tio n s — A s s e ts a n d

A 5 8 S e l e c t e d U . S . l i a b i l i t i e s to f o r e i g n
o f fic ia l i n s t i t u t i o n s

lia b ilitie s
A 3 8 B u s in e s s e x p e n d itu re s o n n e w p la n t
an d e q u ip m e n t

R eported b y B a n k s in the United S tates

A 3 9 D o m e s t i c f in a n c e c o m p a n i e s — A s s e t s
a n d lia b ilitie s ; b u s in e s s c r e d it

A 5 9 L i a b il i t i e s to f o r e i g n e r s
A 61

R eal E state
A 4 0 M o rtg a g e m a rk e ts

B a n k s ’ o w n c la im s o n fo re ig n e rs

A 6 2 B a n k s ’ o w n a n d d o m e s tic c u s to m e r s ’
c la im s o n fo re ig n e rs
A 6 3 B a n k s ’ o w n c l a i m s o n u n a f f ilia te d
fo re ig n e rs

A 4 1 M o rtg a g e d e b t o u ts ta n d in g

A 6 3 L i a b i l i t i e s to a n d c l a i m s o n f o r e i g n e r s
C o n s u m e r I n s t a l l m e n t C r e d it

S ecurities H oldings a n d Tra nsa ctions
A 4 2 T o ta l o u t s t a n d i n g a n d n e t c h a n g e
A 4 3 E x te n s io n s a n d liq u id a tio n s

A 6 4 M a rk e ta b le U .S . T re a s u ry b o n d s a n d
n o te s — F o re ig n h o ld in g s a n d

Fl o w of F unds

tra n s a c tio n s
A 6 4 F o r e i g n o f fic ia l a s s e t s h e l d a t F . R .
B anks

A 4 4 F u n d s r a i s e d in U . S . c r e d i t m a r k e ts
A 4 5 D i r e c t a n d i n d i r e c t s o u r c e s o f f u n d s to

A 6 5 F o r e i g n t r a n s a c t i o n s in s e c u r i t i e s

c re d it m a rk e ts

D om estic Nonfinancial Statistics
A 4 6 N o n f i n a n c ia l b u s i n e s s a c t i v i t y —

R eported b y N o n b a n k in g C oncerns in
the U nited S tates
A 6 6 S h o r t - t e r m l i a b i l i t i e s to a n d c l a i m s o n
fo re ig n e rs

S e le c te d m e a s u re s
A 4 6 O u tp u t, c a p a c ity , a n d c a p a c ity

A 6 7 L o n g - t e r m l i a b i l i t ie s to a n d c l a i m s o n
fo re ig n e rs

u tiliz a tio n
A 4 7 L a b o r fo rc e , e m p lo y m e n t, an d
u n e m p lo y m e n t

I nterest a n d E xc h a n g e R ates

A 4 8 In d u s tria l p ro d u c tio n — In d e x e s a n d
g r o s s v a lu e
A 5 0 H o u s in g a n d c o n s t r u c t i o n

A 6 8 D i s c o u n t r a te s o f f o r e i g n c e n t r a l b a n k s
A 6 8 F o re ig n s h o rt-te rm

i n t e r e s t r a te s

A 5 1 C o n s u m e r a n d w h o l e s a l e p r ic e s
A 5 2 G ro ss n a tio n a l p r o d u c t a n d in c o m e
A 5 3 P e r s o n a l i n c o m e a n d s a v in g




Special Table
A 69

S a le s , r e v e n u e , p r o fits , a n d d iv id e n d s o f
la r g e m a n u f a c tu r in g c o r p o r a tio n s

Inside B ack C over
G u id e to T a b u la r P r e s e n ta tio n a n d
S ta tis tic a l R e le a s e s

Domestic Financial Statistics

A3

1.10 MONETARY AGGREGATES AND INTEREST RATES
1978

Item
Ql

Q2

1978
Q3

Q4

Sept.

Oct.

J

1979
Nov.

Dec.

Jan.

Monetary and credit aggregates
(annual rates of change, seasonally adjusted in per cent)13

1
2
3
4

Member bank reserves
Total......................................................................
Required..............................................................
Nonborrowed............... ........................................
Monetary base1....................................................

8.9
8.8
14.5
9.9

6.2
6.7
0.6
7.6

8.6
8.6
6.6
9.3

*■2.3
r2 . 1
r4.6
8.4

8.6
8.0
11.3
13.4

'5.1
r6.0
- 1 .2
8.0

- 3 .6
- 5 .4
13.4
5.7

'- 0 . 1
' —0.4
'- 4 . 9
7.9

6.0
6.6
2.2
8.6

5
6
7
8

Concepts of money2
M -l........................................................................
M-l + .....................................................................
M-2........................................................................
M-3........................................................................

6.6
5.0
7.0
8.1

9.2
7.2
8.4
8.4

8.1
6.0
9.9
10.4

4.4
2.5
7.7
'9.3

13.8
12.1
13.0
13.4

1.7
0.8
6.5
'8 .8

-2 .0
-4 .9
4.7
6.7

1.7
-1 .4
2.7
'5.5

- 5 .3
- 8 .0
- 1 .2
3.3

9
10
11

Time and savings deposits
Commercial banks:
Total...................................................................
Savings...............................................................
Other time.........................................................

12.5
2.0
11.7
9.7

11.5
3.8
11.4
8.5

11.3
2.3
18.5
11.1

12.4
- 0 .9
19.2
'11.6

12.7
9.7
14.8
14.0

8.5
- 1 .6
19.3
12.0

21.9
- 9 .6
24.5
'9 .6

5.1
- 7 .5
12.0
'9 .3

9.0
-13.0
12.7
9.6

10.1

14.9

10.8

7.7

9.7

9.8

6.7

1.1

13.3

12

Thrift institutions 3................................................

13 Total loans and investments at commercial banks4

Interest rates (levels, per cent per annum)
14
15
16
17

Short-term rates
Federal funds 5.....................................
Federal Reserve discount6 ..................
Treasury bills (3-month market yield) ">
Commercial paper (90- to 119-day)7.8

6.76
6.46
6.39
6.76

7.28
6.78
6.48
7.16

8.09
7.50
7.31
8.03

9.58
9.09
8.57
9.83

8.96
8.26
7.99
8.98

9.76
9.50
8.64
10.14

10.03
9.50
9.08
10.37

10.07
9.50
9.35
10.25

10.06
9.50
9.32
9.95

18
19
20

Long-term rates
Bonds:
U.S. Government9...........................
State and local government10........
Aaa utility (new issue)11.................

8.19
5.65
8.70

8.43
6.02
8.98

8.53
6.16
8.94

8.78
6.28
9.23

8.69
6.13
9.17

8.75
6.19
9.27

8.90
6.51
9.28

8.98
6.47
9.54

9.03
6.31
9.53

21

Conventional mortgages12.................

10.10

10.30

10.30

10.35

1 Includes total reserves (member bank reserve balances in the current
week plus vault cash held two weeks earlier), currency in circulation
(currency outside the U.S. Treasury, Federal Reserve Banks and the vaults
of commercial banks), and vault cash of nonmember banks.
2 M-l equals currency plus private demand deposits adjusted.
M-l + equals M-l plus savings deposits at commercial banks, NOW
accounts at banks and thrift institutions, credit union share draft ac­
counts, and demand deposits at mutual savings banks.
M-2 equals M-l plus bank time and savings deposits other than large
negotiable certificates of deposit (CDs).
M-3 equals M-2 plus deposits at mutual savings banks, savings and
loan associations, and credit union shares.
3 Savings and loan associations, mutual savings banks, and credit
unions.
4 Quarterly changes calculated from figures shown in table 1.23.
5 Seven-day averages of daily effective rates (average of the rates on
a given date weighted by the volume of transactions at those rates).




9.58

10.12

6 Rate for the Federal Reserve Bank of New York.
7 Quoted on a bank-discount basis.
8 Beginning Nov. 1977, unweighted average of offering rates quoted by
five dealers. Previously, most representative rate quoted by these dealers.
9 Market yields adjusted to a 20-year maturity by the U.S. Treasury.
10 Bond Buyer series for 20 issues of mixed quality.
11 Weighted averages of new publicly offered bonds rated Aaa, Aa,
and A by Moody’s Investors Service and adjusted to an Aaa basis.
Federal Reserve compilations.
12 Average rates on new commitments for conventional first mortgages
on new homes in primary markets, unweighted and rounded to nearest
5 basis points, from Dept, of Housing and Urban Development.
13 Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.

A4

Domestic Financial Statistics □ March 1979

1.11 FACTORS AFFECTING MEMBER BANK RESERVES
Millions o f dollars

Monthly averages of daily
figures
Factors

Weekly averages of daily figures for weeks ending—

1979

1978
Dec.

Jan.

1 Reserve Bank credit outstanding. . . .

129,330

2

109,255

1979
Feb.*1

Jan. 17

Jan. 24

Jan. 31

128,749

126,074

105,287

103,335

Feb. 7

Feb. 14

129,659

127,716

126,666

125,668

125,041

127,262

125,978

107.131

104.725

102.629

105,548

104,308

102.384

101.098

Feb. 21 p Feb. 28/J

SUPPLYING RESERVE FUNDS

U.S. government securities 1 ............

3

4

Bought outright.........................
Held under repurchase agree­
ments ..................................

105,151

103,087

475

136

248

108,780
8,089

7,528

7,905

5

Federal agency securities.................

Bought outright.........................
Held under repurchase agree­
ments .................................

7,897

7,878

7,487

192

27

8
9
10
11

Acceptances...................................
Loans.............................................
Float..............................................
Other Federal Reserve assets. . . .

167
874
7,423
3,522

56
994
9,882
4,625

12 Gold stock........................................
13 Special Drawing Rights certificate
account.......................................
14 Treasury currency outstanding........

11,635
1,300
11,826

6
7

107.131

7.892

104.725
7.889

102.629
7.832

104,877

103,989

671
7,578

7,560

7,487

41

91

73

88
973
9,076
5,074

896
9,354
4,386

923
9,830
4,349

1,428
9,479
5,299

170
817
5,975
5,579

11,625

11,553

11,609

11,608

11,603

1,300
11,867

1,300
11,948

1,300
11,864

1,300
11,875

1,300
11,888

113,395
260

112.340
251

110,950
303

112,599
247

111,437
249

3,931
301
724

3,379
288
826

3,502
276
867

3,302
277
786

3,420
269
858

7.889

101.098

319

7.832

7.892

102.384

7,487

7.487

7.487

7.487

7.487

181
1,054
6,433
5,505

937
12,093
4,360

1,084
11,646
4,663

11,578

11,544

11,544

11,544

1,300
11,911

1,300
11,931

1,300
11,969

1,300
11,983

110,549
264

110,564
289

111,019
296

111,153
312

111,054
326

3,477
256
789

3.667
287
811

3,145
261
938

3,534
286
879

3,660
269
840

ABSORBING RESERVE FUNDS
15 Currency in circulation....................
16 Treasury cash holdings....................
Deposits, other than member bank
reserves, with F.R. Banks:
17 Treasury........................................
18 Foreign..........................................
19 Other2............................................
20 Other F.R. liabilities and capital. ..
21 Member bank reserves with F.R.
Banks.........................................

4,322

4,522

4,371

4,490

4,593

4,658

4,153

4,164

4,447

4,721

31,158

31,935

30,606

32,731

31,673

31,465

30,688

29,993

31,463

29,935

End-of-month figures
1979

1978
SUPPLYING RESERVE FUNDS

Dec.

Wednesday figures

Jan.

1979
Feb.p

Jan. 17

Jan. 24

Jan. 31

Feb. 7

Feb. 14

Feb. 21 p

Feb. 2%p

22 Reserve bank credit outstanding. . . .

131,327

125,406

125,335

132,291

129,681

125,406

128,236

133,633

121,581

125,335

23
24
25

U.S. government securities 1...........

110,562

101.279

103.486

102.373

105.724

101.279

105,023

106,784

95.833

103.486

701

1,244

26
27
28

Federal agency secu rities.................

8,029

29
30
31
32

Acceptances...................................
Loans.............................................
Float..............................................
Other Federal Reserve assets . . . .

4,366
6,578
5,676

1,604
8,187
4,571

2,043
15,305
4,678

33 Gold stock........................................
34 Special Drawing Rights certificate
account......................................
35 Treasury currency outstanding........

11,671

11,592

11,544

1,300
11,831

1,300
11,912

1,300
11,992

114,645
240

110,662
289

4,196
368
1,256

3,522
339
874

Bought outright.........................
Held under repurchase agree­
ments ..................................

Bought outright.........................
Held under repurchase agree­
ments ..................................

109,478

101.279

103.486

102.373

105.724

101.279

1,084
7.507

7.487

7.892

7.886

7.507

104,322
7,633

105,540
7,851

7.507

7,487

133

146

364

587
1,174
6,432
4,543

1,082
10,595
4,394

4,366
6,578
5,676

434
512
8,895
5,739

11,608

11,608

11,592

1,300
11,870

1,300
11,882

1,300
11,912

111,316
331

112,294
244

111,158
249

3,443
343
779

3,061
316
712

3,432
291
853

7,896

7.507

7.487

7.892

7.886

7,487

95.833

7.487

103.486
7.487

7.487

7.487

708
1,129
11,773
5,388

1,018
12,733
4,510

1,604
8,187
4,571

11,550

11,544

11,544

11,544

1,300
11,922

1,300
11,969

1,300
11,969

1,300
11,992

110,662
289

111,076
286

111,396
308

111,437
325

111,316
331

3,522
339
874

2,219
233
687

3,276
312
902

3,185
315
752

3,443
343
779

ABSORBING RESERVE FUNDS
36 Currency in circulation....................
37 Treasury cash holdings....................
Deposits, other than member bank
reserves, with F.R. Banks:
38 Treasury........................................
39 Foreign..........................................
40 Other 2............................................
41 Other F.R. liabilities and capital. ..
42 Member bank reserves with F.R.
Banks.........................................

4,275

4,594

4,679

4,542

4,596

4,594

4,093

4,084

4,756

4,679

31,152

29,931

29,280

35,900

33,892

29,931

34,413

38,168

25,624

29,280

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 salepurchase transactions.
2 Includes certain deposits of foreign-owned banking institutions




voluntarily held with member banks and redeposited in full with Federal
Reserve Banks.
N ote. For amounts of currency and coin held as reserves, see table
1.12.

A5

Member Banks
1.12 RESERVES AND BORROWINGS Member Banks
Millions o f dollars

Monthly averages of daily figures
Reserve classification

All member banks
Reserves:
At Federal Reserve Banks.........
Currency and coin......................
Total held 1...................................
Required..................................
Excess1.....................................
Borrowings at Federal Reserve
Banks:2
6
Total............................................
7
Seasonal.......................................

1
2
3
4
5

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Large banks in New York City

Large banks in Chicago
Reserves held ...................................
Required......................................
Borrowings2....................................
Other large banks
Reserves held ...................................
Required......................................
Excess...........................................
Borrowings2....................................
All other banks

Reserves held ...................................

Required......................................
Excess..........................................

1978

1977
Dec.

June

27,057
9,351

27,840
9,345

July

Aug.

28,570
9,542

28,079
9,512

38,189

37,666

36,471

37,262

36,297
174

37,125
137

38,049
140

558
54

1,111
120

1,286
143

37,404
262
1,147
188

Nov.

Sept.

Oct.

28,010
9,605

28,701
9,654

29,853
9,794

31,158
10,330

31,935
11,093
43,167

40,828

37,614
75

38,222
212

39,728

41,572

30,606
10.082

38,434

1,068
191
6,182

37,689

Dec.

39,423
305

41,447
125

1,261
221

722
185

874
134

6,428

6,682

Jan.

Feb.?

42,865
302

40,500
328

994
112

973
114

6,244

6,341

6,376
-3 5
54

6,606

6,279
-3 5
48

6,581
25
129

6,290
44
58

6,251
-6 9
78

6,349
79
157

6,658
24
48

7,243
-123
99

7,690
118
117

6,976
-136

1,593

1,668

1,708

1,648

1,655

1,672

1,649
23
14

1,791

1,650
5
35

1,907

2,011

1,812

13,993

14,250

14,564

14,862

16,446

16,942

15,925

16,099

16,406

15.660

1,613
-2 0
26

13,931
62
243

14,641

14,474
167
241

1,670
-2
20

1,707
1
20

6,334

1979

1,646
2
3

14,553

14,502

14,225
25
536

14,569
-1 6
499

14,423
79
417

14,541
23
363

14,867
-5
408

15,003

15,322

15,182

15,288

15,472

14,854
149
501

15,192
130
638

15,045
137
669

15,172
116
592

15,357
115
682

1,765
26
4
15,547

15,447
100
194

15,708

15,553
155
476

7,120

1,900
7
10

16,342
104
276

15,962
137
489

7.808

2,010
1
23

16,923
19
269

16,242
164
585

6,840

1,823
-11
10

16,019
-9 4
273

15.682
-2 2
690

Weekly averages of daily figures for weeks ending—
1979

1978
Dec. 27

24
25
26
27

All member banks
Reserves:
At Federal Reserve Banks........
Currency and coin.....................
Total held 1.................................
Required................................

29
30

Borrowings at Federal Reserve
Banks:2
Total..........................................
Seasonal.....................................

28

E xcess 1.................. ......................

32
33
34

Large banks in New York City
Reserves held .................................
Required....................................
Excess.........................................
Borrowings2..................................

35
36
37
38

Large banks in Chicago
Reserves held .................................
Required....................................
Excess.........................................
Borrowings2..................................

31

39
40
41 .
42

Other large banks
Reserves held .................................
Required....................................
Excess........................................
Borrowings2..................................
All other banks

43
44
45
46

Reserves held .................................

Required....................................
Excess........................................
Borrowings2..................................

31,018
10,258

41,357

Jan. 3

32,765
10,538

43,420

41,412
-5 5

42,694
726

1,413
131

,183
119

6,871

7,933

Jan. 10

31,133
10,450
41,722

41,844
-1 2 2

7,204

8,472

7,360
-156

1,883

1,964

1,959

16,391

16,439
-4 8
488

16,212

16,099
113
566

17,120

16,846
274
470

16,403

16,170
233
561

44,456
404
896
98

7,734
199
143

1,944
20
9

32,731
11,991

44,860

686
93

7,025
-1 5 4
330
1,849
34
29

Jan. 17

1,955
4
3

16,459

16,519
-6 0
241

16,100

16,010
90
442

Jan. 24

31,673
11,168
42,983

Jan. 31

Feb. 7

Feb. 14

31,465

30,688
10.684

29,993
10,554

42,607

41,517

40,691

11,001

39,812

41,238
279

40,580
111

40.536
408

39,647
165

923
105

1.428
112

817
102

1,054
110

937
121

1,084
123

7,327

7,435
1,294

6,977

7,605

7,345
-1 8
299

2,261

1,942

1,959

2,224
37

1,941
1
3

17,545

16,951

17,488
57
234

16^974
-2 3
198

16,582

16,485

493

29,935
9.743

40,944

42.267
340

7,658
-5 3
14

111

31.463
9.345

Feb. 28p

42,967
16

8,379
93
169

16,365

Feb. 21 p

16,394
91
708

1,950
9
90

16,886

16,745
141
340
16,435

16,227
208
699

7,064
-8 7

7,233

7.050
183

6,322

141

1.873

1,850

1,804

1,613

1.873
19

1,857
-7
13

16,230

16,149

16.218
12
178

15,979

15.853
126
620

16,113
36
415

15,715

15,546
169
626

1.827
-2 3
3

16,060

16,010
50
199
15,686

15,649
37
735

6,497
-175

1,735
-1 2 2
4

15,639

15,736
-9 7
310

15,595

15,679
-8 4
770

1 Adjusted to include waivers of penalties for reserve deficiencies in nonmember bank joins the Federal Reserve System. For weeks for which
accordance with board policy, effective Nov. 19, 1975, of permitting
figures are preliminary, figures by class of bank do not add to total
transitional relief on a graduated basis over a 24-month period when a
because adjusted data by class are not available.
2 Based on closing figures.
nonmember bank merges into an existing member bank, or when a




A6
1.13

Domestic Financial Statistics □ March 1979
F E D E R A L F U N D S T R A N S A C T I O N S M o n e y M a rk e t B a n k s
Millions of dollars, except as noted
1979, end of week

Type
Jan. 3

Jan. 17

Jan. 10

Jan. 24

Jan. 31

Feb. 7

Feb. 14

Feb. 21

Feb. 28

Total, 46 banks
Basic reserve position
1 Excess reserves1...................................
L ess:
2 Borrowings at Federal Reserve
Banks........................................
3 Net interbank federal funds
transactions...............................
Equals: Net surplus, or deficit ( —)
4 Amount. ...........................................
5 Percent o f average required reserves.

6
7
8
9
10

Interbank federal funds transactions
Gross transactions:
Purchases..........................................
Sales..................................................
Two-way transactions2.......................
Net transactions:
Purchases of net buying banks.......
Sales of net selling banks...............
Related transactions with U.S.
government securities dealers

12 Borrowing from dealers4 ....................

331

-3 6

65

-11

150

46

4

104

1

226

79

211

42

439

36

116

33

75

14,813

17,623

17,052

15,248

12,928

14,316

16,084

16,222

15,586

-14,708

-17,737

-17,199

-15,301

-13,321

-14,202

-16,197

-16,151

-15,660

7 7 .8

9 6 .7

8 5 .2

8 1 .4

7 2 .6

7 9 .4

9 1 .7

9 2 .3

9 3 .8

23,480
8,667
6,329

24,357
6,734
5,421

23,953
6,901
5,471

22,400
7,152
5,315

20,855
7,927
6,370

22,071
7,755
5,671

23,568
7,483
5,908

23,903
7,681
6,202

22,337
6,751
5,799

17,151
2,339

18,936
1,313

18,482
1,429

17,085
1,836

14,485
1,558

16,400
2,084

17,660
1,575

17,701
1,480

16,538
952

3,062
1,679
1,382

5,101
1,232
3,869

3,114
1,146
1,968

3,988
1,414
2,573

4,697
1,336
3,361

3,249
1,277
1,971

3,074
1,372
1,702

4,491
1,117
3,374

4,654
1,516
3,138

-1 5

52

-5

8 banks in New York City
Basic reserve position
L ess:
Borrowings at Federal Reserve
Banks.........................................
16 Net interbank federal funds
transactions...............................
Equals: Net surplus, or deficit ( —)
17 Amount............................................
18 Percent o f average required reserves.
15

19
20
21
22
23

Interbank federal funds transactions
Gross transactions:
Purchases..........................................
Sales..................................................
Two-way transactions2............. .........
Net transactions:
Purchases of net buying banks.......
Sales of net selling banks................

Related transactions with U.S.
government securities dealers
24 Loans to dealers3.................................
25 Borrowing from dealers4 ....................
26 Net loans..............................................

-3 7

47
162

14

272

4,214

4,145

4,226

2,480

2,050

2,67 4

3,093

2654

2,227

-4 ,1 8 8

-4 ,1 8 2

-4,341

-2,503

-2 ,3 4 4

-2 ,5 8 2

-3 ,1 0 8

-2 ,2 3 2

5 9 .5

6 2 .6

5 7 .0

3 6 .2

3 5 .4

3 9 .2

-2 ,6 0 2

4 8 .5

4 0 .8

3 7 .9

5,299
1,085
1,085

5,078
933
933

5,227
1,001
1,001

4,142
1,663
1,224

3,674
1,623
1,449

4,305
1,631
1,141

4,433
1,340
1,340

4.397
1:,744
1260

3,616
1,389
1,262

4,214

4,145

4,226

2,919
439

2,225
175

3,164
490

3,093

3,138
485

2,354
128

1,896
382
1,514

3,206
399
2,807

1,790
394
1,396

2,366
426
1,940

2,987
377
2,610

1,843
425
1,419

1,616
525
1,091

2,638
400
2.,238

2,855
444
2,411

19

52

6

169
143

-9

-2 1

92

38 banks outside New York City
Basic reserve position
27 Excess reserves1...................................
L ess:
28 Borrowings at Federal Reserve
Banks.........................................
29 Net interbank federal funds
30
31

32
33
34
35
36

Equals: Net surplus, or deficit ( —)
Amount............................................
Percent o f average required reserves.

Interbank federal funds transactions
Gross transactions:
Purchases..........................................
Sales..................................................
Two-way transactions2.......................
Net transactions:
Purchases of net buying banks.......
Sales of net selling banks................

Related transactions with U.S.
government securities dealers
37 Loans to dealers3.................................
39 Net loans..............................................
For notes see end o f table.




18

-2

67

58

163

1

83

79

50

27

166

36

116

33

75

10,600

13,478

12,826

12,769

10,878

11,642

12,991

13,568

13,359

-10,520

-13,555

-12,858

-12,798

-10,977

-11,620

-13,088

-13,549

-13,427

8 8 .7

11 6 .2

1 0 2.3

1 0 7 .7

9 3 .6

1 0 3 .0

1 1 6 .2

1 2 1 .7

1 2 4 .2

18,182
7,582
5,245

19,279
5,801
4,488

18,726
5,900
4,470

18,258
5,489
4,092

17,182
6,304
4,921

17,766
6,124
4,529

19,135
6,143
4,568

19,505
5,937
4,942

18,721
5,362
4,537

12,937
2,339

14,791
1,313

14,256
1,429

14,166
1,397

12,260
1,383

13,236
1,594

14,567
1,575

14,563
996

14,184
825

1,166
1,297
-131

1,895
833
1,062

1,324
752
572

1,622
989
633

1,710
959
751

1,406
853
553

1,458
847
611

1,853
716
1,137

1,799
1,072
727

Federal Funds

A7

1.13 Continued
1979, end o f week

Type

Jan. 3

Jan. 10

Jan. 17

Jan. 24

Jan. 31

Feb. 7

Feb. 14

Feb. 21

Feb. 28

5 banks in City of Chicago
Basic reserve position *
40 Excess reserves1...................................
L ess:
41
Borrowings at Federal Reserve
Banks........................................
42 Net interbank federal funds
transactions...............................
Equals: Net surplus, or deficit ( — .
43 Amount............................................
44 Percent o f average required reserves.

45
46
47
48
49

Interbank federal funds transactions
Gross transactions:
Purchases..........................................
Sales..................................................
Two-way transactions2.......................
Net transactions:
Purchases of net buying banks.......
Sales of net selling banks...............

Related transactions with U.S.
government securities dealers
50 Loans to dealers3...........................
51 Borrowing from dealers4..............
52 Net loans........................................

37

17

45

22

5,379

6,131

5,880

5,207

4,597

5,079

6,003

5,995

-5,341

-6,114

-5,835

80

-5,184

-4,661

-5,074

-6,004

-5,990

-5,251

278.1

284.9

255.1

289.5

345 A

350.3

324.6

7,309
1,179
1,136

7,168
1,288
1,218

6,708
1,501
1,428

6,123
1,525
1,505

6,626
1,548
1,498

7,437
1,435
1,378

7,370
1,375
1,325

6,756
1,498
1,470

5,456
77

6,173
42

5,950
69

5,280
73

4,618
20

5,128
49

6,060
57

6,044
50

5,286
28

179
298
-119

266
4
262

213
58
155

179
9
171

209
125
84

272
160
112

147
64
83

452
7
445

364
81
283

53

20

48

-1

293.3

333.9

6,746
1,368
1,290

33 other banks
Basic reserve position
53 Excess reserves1...................................
L ess:
54 Borrowings at Federal Reserve
Banks.........................................
55 Net interbank federal funds
transactions...............................
Equals: Net surplus, or deficit ( —)
Amount............................................

-2 7

-2 5

79

50

27

86

36

116

33

75

5,221

7,347

6,946

7,562

6,280

6,563

6,989

7,573

8,101

-5 ,1 7 8

-7,441

-7,0 2 3

-6 ,3 1 6

-6 ,5 4 6

-7,0 8 5

75.7

67.0

-7 ,6 1 4

51.6

11,436
6,215
3,954

11,970
4,623
3,352

Net transactions:
Purchases of net buying banks.......
Sales of net selling banks................

7,482
2,262

Related transactions with U.S.
government securities dealers
63 Loans to dealers3................................
64 Borrowing from dealers4 ....................
65 Net loans..............................................

987
999
-1 2

56
57

Percent o f average required reserves.

Interbank federal funds transactions
Gross transactions:
58 Purchases..........................................
59 Sales..................................................
61
62

126

-1 6

83

-7 ,5 5 9

-8,1 7 7

74.4

80.2

88.9

4,516

3,031

11,697
4,709
3,191

12,136
4,563
3,617

11,965
3,864
3,067

1,642

1,362

8,108
1,545

8,507
1,518

8,519
946

8,898
797

1,501
834
667

1,133
692
441

1,311
783
528

1,401
710
691

1,435
992
444

75.7

63.8

11,558
4,612
3,252

11,550
3,987
2,663

11,059

8,618
1,271

8,306
1,360

8,886
1,324

1,629
829
800

1,110
694
417

1,442
980
462

1 Based on reserve balances, including adjustments to include waivers
of penalities for reserve deficiencies in accordance with changes in policy
of the Board of Governors effective Nov. 19, 1975.
2 Derived from averages for individual banks for entire week. Figure
for each bank indicates extent to which the bank’s average purchases
and sales are offsetting.
3 Federal funds loaned, net funds supplied to each dealer by clearing
banks, repurchase agreements (purchases from dealers subject to resale),
or other lending arrangements.




51

A,119

3,417

68.7

11,139

4 Federal funds borrowed, net funds acquired from each dealer by
clearing banks, reverse repurchase agreements (sales of securities to
dealers subject to repurchase), resale agreements, and borrowings secured
by U.S. government or other securities.
Note. Weekly averages of daily figures. For description of series, see
August 1964 B ulletin, pp. 944-53. Back data for 46 banks appear in
the board’s Annual Statistical Digest, 1971-1975, table 3.

A8

Domestic Financial Statistics □ March 1979

1.14 FEDERAL RESERVE BANK INTEREST RATES
Per cent per annum

Current and previous levels
Loans to member banks

Federal Reserve
Bank

Boston..................
New Y ork............
Philadelphia.........
Cleveland.............
Richmond............
Atlanta.................
Chicago................
St. Louis...............
Minneapolis.........
Kansas City..........
Dallas...................
San Francisco. . . .

Special rate3

Regular rate
Rate on Effective
2/28/79 i date
9 Vi
9Vi
9Vi
91/2

9 Vi
9Vi
9Vi
91/2
91/2
91/2
91/2
91/2

11/2/78
11/1/78
11/2/78
11/2/78
11/2/78
11/3/78
11/2/78
11/2/78
11/1/78
11/2/78
11/2/78
11/2/78

Previous
rate
81/i
81/2
81/2
81/2
81/2
81/2
81/2
81/2
81/2

8Vi
81/2

81/2

Loans to all others
under sec. 13, last par.4

Under sesc. 10(b)2

Under secs. 13 and 13a1

Rate on
2/28/79
10
10
10
10
10
10
10
10
10
10
10
10

Effective
date

Previous
rate

11/2/78
11/1/78
11/2/78
11/2/78
11/2/78
11/3/78
11/2/78
11/2/78
11/1/78
11/2/78
11/2/78*
11/2/78

9
9
9
9
9
9
9
9
9
9
9
9

Rate on
2/28/79

Effective Previous
date
rate

Effective
date

Previous
rate

11/2/78
11/1/78
11/2/78
11/2/78
11/2/78
11/3/78
11/2/78
11/2/78
11/1/78
11/2/78
11/2/78
11/2/78

11 Vi
11 Vi
11%
HVi
11%
11%
11%
11%
11%
11%
11%
11%

Range
(or level)—
All F.R.
Banks

F.R.
Bank
of
N.Y.

1976—Jan.

19..................
23..................
Nov. 22..................
26..................

5%-6
5%
514-5%
51/4

5%
5%
5V4
51/4

1977—Aug. 30..................
31..................
Sept. 2.................
Oct. 26.................

514-534
51/4-534
534
6

51/4
534
534
6

1978—Jan.

6-6%
6%
6%-7
7
7-7V4
7V4
734
8
8-8%
8%
8 Vi-9%
9%

6%
6%
7
7
714
714
734
8
8%
8%
9%
9%

9%

9%

11/2/78
11/1/78
11/2/78
11/2/78
11/2/78
11/3/78
11/2/78
11/2/78
11/1/78
11/2/78
11/2/78
11/2/78

IOI/2
IOI/2
101/2
10Vi
IOI/2
Id /2
lOVi
10Vi
101/2
101/2

lOVi
101,4

Rate on
2/28/79

9Vi
9Vi
9 Vi
91/2

9Vi
91/2

9Vi
9Vi
91/2
91/2

91/2
91/2

12Vi
12Vi
12Vi
12Vi
12Vi
121/2
12Vi
12%
12Vi
12Vi
12Vi
12Vi

Range of rates in recent years5

Effective date

In effect Dec. 31, 1970.......
1971—Jan.

Feb.
July
Nov.
Dec.

8...................
15...................
19...................
22...................
29...................
13...................
19...................
16..................
23...................
11...................
1 9 .................
1 3 .................
17....................
2 4 ..................

1973—Jan. 15..................
Feb. 26..................
Mar. 2..................
Apr. 23..................

Range
(or level)—
All F.R.
Banks

F.R.
Bank:
of
N.Y.

5%

5%

514-5%
514
5-514
5-514
5
434-5
434
434-5
5
434-5
434
4%-434
4%-434
4%

5V4
514
514
5
5
434
5
5
5
434
434
4%
4%

5
5-5%
5%
5%-534

5
5%
5%
5%

5

Range
(or level)—
All F.R.
Banks

F.R.
Bank
of
N.Y.

4..................
11..................
18..................
June 1 1 . . . . . ........
15..................
July 2.................
Aug. 14.................
23.................

534
5*4-6

534
6
6
6%

1974—Apr. 25.................
30.................
Dec. 9.................
16.................

7 Vi-8
8
7*4-8

1975—Jan.

1 'A -m

Effective date

1973—May




6%
7
7-7 Vi
7 Vi

IVa

6.................
10.................
24.................
Feb. 5.................
7.................
Mar. 10.................
14.................
May 16.................
23..................

1 Discounts of eligible paper and advances secured by such paper or by
U.S. government obligations or any other obligations eligible for Federal
Reserve Bank purchase.
2 Advances secured to the satisfaction of the Federal Reserve Bank.
Advances secured by mortgages on 1- to 4-family residential property
are made at the section 13 rate.
3 Applicable to special advances described in section 201.2(e)(2) of
Regulation A.

6-6%

714-734

7V4
534 - 71/4
634
614-634
614
6 - 614

6

61A
oyz
1

7%
7%
O
O
8
734
734
734
714
714
634
634
6V4
614
6
6

Effective date

9 .................
20.................
May 11.................
12.................
July 3.................
10.................
Aug. 21.................
Sept. 22.................
Oct. 16.................
20.................
Nov. 1.................
3.................

In effect Feb. 28, 1979.. .

4 Advances to individuals, partnerships, or corporations other than
member banks secured by direct obligations of, or obligations fully
guaranteed as to principal and interest by, the U.S. government or any
agency thereof.
5 Rates under secs. 13 and 13a (as described above). For description
and earlier data, see the following publications of the Board of Governors:
Banking and Monetary Statistics, 1914-1941, Banking and Monetary
Statistics, 1941-1970, Annual Statistical Digest, 1971-75, 1972-76, and
1973-77.

Policy Instruments

A9

1.15 MEMBER BANK RESERVE REQUIREMENTS1
Percent o f deposits

Requirements in effect
February 28, 1979
Type of deposit, and deposit interval
in millions of dollars

Net demand2
0 -2 .................................
2-10...............................
10-100...........................
100-400.........................
Over 400........................

Previous requirements

Effective date

7
9i/£
im
12X

161/4

Effective date

12/30/76
12/30/76
12/30/76
12/30/76
12/30/76

10
12
13
16^

2/13/75
2/13/75
2/13/75
2/13/75
2/13/75

3/16/67

3*4

3/2/67

m

T im e an d savings 2, 3,4

Savings...........................

T im e 5.................................

0-5 by maturity
30-179 days...........
180 days to 4 years
4 years or m ore. . .
Over 5, by maturity
30-179 days...........
180 days to 4 years
4 years or m ore. . .

3
2%
1

3/16/67
1/8/76
10/30/75

m

3
3

3/2/67
3/16/67
3/16/67

6
2%
1

12/12/74
1/8/76
10/30/75

5
3
3

10/1/70
12/12/74
12/12/74

Legal limits

Net demand
Reserve city banks.................
Other banks...........................
Time............................................
Borrowings from foreign banks
1 For changes in reserve requirements beginning 1963, see board’s

Annual Statistical Digest, 1971-1975 and for prior changes, see board’s
Annual Report for 1976, table 13.

2 (a) Requirement schedules are graduated, and each deposit interval
applies to that part of the deposits of each bank. Demand deposits
subject to reserve requirements are gross demand deposits minus cash
items in process of collection and demand balances due from domestic
banks.
(b) The Federal Reserve Act specifies different ranges of requirements
for reserve city banks and for other banks. Reserve cities are designated
under a criterion adopted effective Nov. 9, 1972, by which a bank having
net demand deposits of more than $400 million is considered to have the
character of business of a reserve city bank. The presence of the head
office of such a bank constitutes designation of that place as a reserve
city. Cities in which there are Federal Reserve Banks or branches are also
reserve cities. Any banks having net demand deposits of $400 million or
less are considered to have the character of business of banks outside of
reserve cities and are permitted to maintain reserves at ratios set for banks
not in reserve cities. For details, see the board’s Regulation D.
(c) Effective August 24, 1978, the Regulation M reserve requirements




on net balances due from domestic banks to their foreign branches and
on deposits that foreign branches lend to U.S. residents were reduced to
zero from 4 percent and 1 percent, respectively. The Regulation D reserve
requirement on borrowings from unrelated banks abroad was also reduced
to zero from 4 percent.
(d) Effective with the reserve computation period beginning Nov. 16,
1978, domestic deposits of Edge Corporations are subject to the same
reserve requirements as deposits of member banks.
3 Negotiable order of withdrawal (NOW) accounts and time deposits
such as Christmas and vacation club accounts are subject to the same
requirements as savings deposits.
4 The average reserve requirement on savings and other time deposits
must be at least 3 percent, the minimum specified by law.
5 Effective November 2, 1978, a supplementary reserve requirement of
2 percent was imposed on time deposits of $100,000 or more, obligations
of affiliates, and ineligible acceptances.
N ote. Required reserves must be held in the form of deposits with
Federal Reserve Banks or vault cash.

A 10
1.16

Domestic Financial Statistics □ March 1979
M A X IM U M IN T E R E S T R A T E S P A Y A B L E o n T im e a n d S avings D e p o s its a t F e d e ra lly In s u re d In s titu tio n s
Percent per annum
Commercial banks

Type and maturity of deposit

In effect Feb. 28, 1979
Percent

1 Savings............................. .......................
2 Negotiable order of withdrawal
accounts1..................................... .
3 Money market time deposits of less
than $100,0002...............................
Time (multiple- and single-maturity
unless otherwise indicated) 3
30-89 days:
4
Multiple-maturity.............................
5
Single-maturity................................. I}

Effective
date

Savings and loan associations and
mutual savings banks

Previous maximum
Percent

In effect Feb. 28, 1979

Effective
date

5

7/1/73
1/1/74

4Vi
(10)

1/21/70

5
(9)

(9)

(9)

(9)

5

7/1/73 {
I

VA
5

Percent

Effective
date

Previous maximum
Percent

5Va

(7)

5

5

1/1/74

(10)

(9)

( 9)

(9)

1/21/70
9/26/66 }

( io)

7/20/66
9/26/66 }

45%

(7)

5 Vi
5 Va
53/4

1/21/70
1/21/70 }
1/21/70

6H
6%

(7)
(7)

(n )
m
(10)

11/1/73

(8)

90 days to 1 year:
Multiple-maturity.......... ................. .
Single-maturity................................ . j

5V4

7/1/73

8
9
10

1 to 2 years4........................................
2 to 2Vi years4................. .................... }
2Vi to 4 years4....................................

6
6%

7/1/73 /
\
7/1/73

11
12
13

4 to 6 years5........................................
6 to 8 years5........................................
8 years or more5............. ...................

7%
7 Vi

14

Issued to governmental units (all
maturities).............. .....................
Individual retirement accounts and
Keogh (H.R. 10) plans 6..............

8

6/1/78

7%

12/23/74

8

6/1/78

m

8

6/1/78

7%

7/6/77

8

6/1/78

IVa

15

m

11/1/73
12/23/74
6/1/78

1 For authorized states only. Federally insured commercial banks,
savings and loan associations, cooperative banks, and mutual savings
banks in Massachusetts and New Hampshire were first permitted to offer
negotiable order of withdrawal (NOW) accounts on Jan. 1, 1974.
Authorization to issue NOW accounts was extended to similar institutions
throughout New England on Feb. 27, 1976, and in New York State on
Nov. 10, 1978.
2 Must have a maturity of exactly 26 weeks and a minimum denomina­
tion of $10,000, and must be nonnegotiable.
3 For exceptions with respect to certain foreign time deposits see the
F ederal R eserve Bulletin for October 1962 (p. 1279), August 1965 (p.
1094), and February 1968 (p. 167).
4 A minimum of $1,000 is required for savings and loan associations,
except in areas where mutual savings banks permit lower minimum de­
nominations. This restriction was removed for deposits maturing in less
than 1 year, effective Nov. 1, 1973.
5 $1,000 minimum except for deposits representing funds contributed
to an Individual Retirement Account (IRA) or a Keogh (H.R. 10) Plan es­
tablished pursuant to the Internal Revenue Code. The $1,000 minimum
requirement was removed for such accounts in December 1975 and No­
vember 1976, respectively.
6 3-year minimum maturity.
7 July 1, 1973, for mutual savings banks; July 6, 1973, for savings and
loan associations.
8 Oct. 1, 1966, for mutual savings banks; Jan. 21, 1970, for savings and
loan associations.
9 Commercial banks, savings and loan associations, and mutual savings
banks were authorized to offer money market time deposits effective
June 1, 1978. The ceiling rate for commercial banks is the discount rate
on most recently issued 6-month U.S. Treasury bills. The ceiling rate for
savings and loan associations and mutual savings banks is % percent




{

(9)

(10)

6
7

5

Effective
date

5*4

1/21/70

J

5Va

[

%

1/21/70
1/21/70
1/21/70

11/1/73
12/23/74
6/1/78

m

7%
8

71/2
(10)

11/1/73
12/23/74
7/6/77

higher than the rate for commercial banks. The most recent rates and
effective dates are as follows:
Jan. 25
9.475
9.725

Feb. 1
9.376
9.626

Feb. 8
9.307
9.557

Feb. 15

Feb. 22

9.342
9.592

9.370
9.620

10 No separate account category.
11 Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for
certificates maturing in 4 years or more with minimum denominations
of $1,000; however, the amount of such certificates that an institution
could issue was limited to 5 percent of its total time and savings deposits.
Sales in excess of that amount, as well as certificates of less than $1,000,
were limited to the 6Vi percent ceiling on time deposits maturing in 2Vi
years or more.
Effective Nov. 1, 1973, ceilings were reimposed on certificates maturing
in 4 years or more with minimum denominations of $1,000. There is no
limitation on the amount of these certificates that banks can issue.
Note. Maximum rates that can be paid by federally insured commer­
cial banks, mutual savings banks, and savings and loan associations are
established by the Board of Governors of the Federal Reserve System,
the Board of Directors of the Federal Deposit Insurance Corporation,
and the Federal Home Loan Bank Board under the provisions of 12
CFR 217, 329, and 526, respectively. The maximum rates on time de­
posits in denominations of $100,000 or more were suspended in mid1973. For information regarding previous interest rate ceilings on all
types of accounts, see earlier issues of the F ederal Reserve B ulletin,
the Federal Home Loan Bank Board Journal, and the Annual Report
of the Federal Deposit Insurance Corporation.

A ll

Policy Instruments
1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS
Millions o f dollars

Type of transaction

1976

1977

1978

1978
Aug.

1979

Sept.

Oct.

Nov.

Dec.

972
689
0

2,635
0
0

1,978
2,148
0

2,039
3,587
603

0
2,751
0

0
3,758
500

171
0
0
0
-241 -1 ,5 4 4
0
0

168
0
563
0

73
0
-385
0

139
0
-7 7 8
0

0
0
705
0

0
0
-673
0

July

Jan.

U.S. GOVERNMENT SECURITIES
Outright transactions (excluding matched salepurchase transactions)
1
2
3
4
5
6
7

Treasury bills:
Gross purchases...........................................
Gross sales....................................................
Redemptions.................................................
Others within 1 year:1
Gross purchases...........................................
Exchange, or maturity shift.........................
Redemptions................................................

14,343
8,462
2 5,017
472
0
792
0

8
9
10

1 to 5 years:
Gross purchases...........................................
Gross sales....................................................
Exchange, or maturity shift.........................

11
12
13

5 to 10 years:
Gross purchases...........................................
Gross sales....................................................
Exchange, or maturity shift.........................

1,048
0
1,572

14
15
16

Over 10 years:
Gross purchases...........................................
Gross sales....................................................
Exchange, or maturity shift.........................

17
18
19

13,738
7,241
2,136

16,628
13,725
2,033

1,184
3,017
0
0
4,499 -5 ,1 7 0
0
2,500

701
466
0

4,188
0
-178

0
0
241

424
0
-4 9 0

350
0
-563

507
0
385

628
0
-6 5 7

0
0
-705

0
0
673

758
0
584

1,526
0
2,803

0
0
0

238
0
1,434

110
0
0

87
0
0

163
0
835

0
0
0

0
0
0

642
0
225

553
0
1,565

1,063
0
2,545

0
0
0

113
0
600

122
0
0

139
0
0

108
0
600

0
0
0

0
0
0

All maturities: 1
Gross purchases........................................... 2 19,707
Gross sales....................................................
8,639
2 5,017

20,898
7,241
4,636

24.591
13,725
2,033

701
466
0

1,919
689
0

3,386
0
0

2,785
2,148
0

3,075
3,587
603

0
2,751
0

0
3,758
500

2 3,202
2,833
0
177
-2 ,5 8 8 -6 ,6 4 9

20
21

Matched sale-purchase transactions
Gross sales........................................................
Gross purchases...............................................

196,078 425,214 511,126
196,579 423,841 510,854

44,657
44,712

29,162
29,641

33,346
33,130

35,112
36,106

40,785
40,546

52,661
51,586

64,691
60,750

22
23

Repurchase agreements
Gross purchases...............................................
Gross sales........................................................

232,891 178,683 151,618
230,355 180,535 152,436

15,822
17,374

16,286
15,140

10,724
10,353

18,976
20,565

7,719
8,383

8,133
7,049

3.117
4,201

43 -2 ,0 1 7

-2 ,7 4 3

-9 ,2 8 3

24 Net change in U.S. government securities........

9,087

5,798

7,743

-1,261

2,854

3.540

FEDERAL AGENCY OBLIGATIONS
Outright transactions:
Gross purchases...............................................
Gross sales........................................................
Redemptions....................................................
Repurchase agreements:
28 Gross purchases...............................................
29 Gross sales........................................................

891
0
169

1,433
0
223

301
173
235

0
0
4

0
173
13

0
0
28

0
0
12

0
0
39

0
0
3

0
379
10

10,520
10,360

13,811
13,638

40,567
40,885

5,170
5,457

3,080
3,032

3,877
3,348

6,675
7,196

2,544
2,670

4,307
4,174

713
846

30 Net change in federal agency obligations.........

882

1,383

-426

-291

-138

501

-533

-165

130

-522

31 Outrighttransactions.net...................................
32 Repurchase agreements, net...............................

-545
410

-1 9 6
159

0
-3 6 6

0
-753

0
28

0
419

0
-479

0
-2 3 6

0
587

0
-587

33 Net change in bankers acceptances....................

-135

-3 7

-3 6 6

-753

28

419

-479

-2 3 6

587

-587

34 Total net change in System Open Market
Account.........................................................

9,833

7,143

6,951

-2 ,3 0 5

2,744

4,460

-969

-2 ,4 1 9

-2 ,0 2 6

-10,392

25
26
27

BANKERS ACCEPTANCES

1 Both gross purchases and redemptions include special certificates
created when the Treasury borrows directly from the Federal Reserve,
as follows (millions of dollars): 1975, 3,549: 1976, none; Sept. 1977,
2,500.
2 In 1975, the system obtained $421 million of 2-year Treasury notes
in exchange for maturing bills. In 1976 there was a similar transaction




amounting to $189 million. Acquisition of these notes is treated as a
purchase; the run-off of bills, as a redemption.
N ote. 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.

A 12

Domestic Financial Statistics □ March 1979

1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements
Millions o f dollars

Wednesday

End of month

1979

Account
Jan. 31

Feb. 7

1978

Feb. 14

Feb. 21 p

Feb. 28

1979

Dec.

Feb.p

Consolidated condition statement
ASSETS
1 Gold certificate account.........................................
2 Special Drawing Rights certificate account.........

11.592
1.300

11.550
1.300

11,544
1,300

11,544
1.300

11.544
1.300

3 Coin.........................................................................

316

324

336

340

344

4,366

512

1,129

1.018

1.604

434

708

7.507

7,487
146

7.487
364

7.487

33,959

37,002

37.623

27.814

54,855
12,465
101.279

54,855
12,465
104.322
701

55,392
12,525
105,540
1,244

17 Total U.S. government securities.......................

101,279

105,023

18 Total loans and securities.....................................

113,152

113,602

12,803
395

4
5
6
7
8
9

10
11
12
13
14
15
16

Loans:
Member bank borrowings.................
Other....................................................
Acceptances:
Bought outright...................................
Held under repurchase agreements...
Federal agency obligations:
Bought outright...................................
Held under repurchase agreements...
U.S. government securities
Bought outright:
Bills................................................................
Certificates—Special.....................................
O ther.......................................
Notes..............................................................
Bonds.............................................................
Total i .............................................................
Held under repurchase agreements.................

19 Cash items in process of collection.......
20 Bank premises........................................
Other assets:
21
Denominated in foreign currencies2.
22
All o th er.............................................
23 Total assets.

11,671
1 ,300

11,592
1 ,300

11,544
1,300

316

344

1.174

1.604

587
7.896
133

507

7,487

35,467

42,158

33,959

35,467

54,662
13.357
95,833

54,662
13,357
103,486

54.855
12,465
109,478
1.084

54,855
12,465
101,279

54,662
13,357
103,486

106,784

95,833

103,486

110,562

101,279

103,486

116,472

104,338

112,577

120,352

113,152

112,577

15.048
394

18.707
395

21.349
394

14.785
395

12.926
394

12,803
395

14.785
395

2,528
2,753

2.427
2,918

2,211
2,782

2,219
1,897

2.266
1,910

1.606
2,543

2,528
2,753

2.266
1,910

144,839

147,563

153,747

143,381

145,121

151,066

144,839

145,121

LIABILITIES
24 Federal Reserve notes.........................
Deposits:
Member bank reserves..................
U.S. Treasury—General account.
Foreign...........................................
Other..............................................

99,354

99,765

100,071

100,133

99,999

103,325

99,354

99,999

25
26
27
28

29.931
3,522
339
874

34,413
2,219
233
687

38,168
3,276
312
902

25,624
3.185
315
752

29,280
3,443
343
779

31,152
4,196
368
1,256

29,931
3,522
339
874

29,280
3,443
343
779

29 Total deposits.

34,666

37,552

42,658

29,876

33,845

36,972

34,666

33,845

6,225
1,685

6,153
1,730

6,934
1,559

8,616
2,086

6,598
1,859

6,494
2,119

6.225
1,685

6,598
1,859

141,930

145,200

151,222

140,711

142,301

148,910

141,930

142,301

33 Capital paid in......................................................
34 Surplus.......... .......................................................
35 Other capital accounts.........................................

1,085
1,078
746

1,085
1,078
200

1.087
1.078
360

1.088
1.078
504

1,088
1,078
654

1.078
1.078

1,085
1,078
746

1,088
1,078
654

36 Total liabilities and capital accounts...................

144,839

147,563

153,747

1^3,381

145,121

151,066

144,839

145,121

37 M emo: Marketable U.S. govt, securities held in
custody for foreign and inti, account........

95,762

95,165

94,888

94,339

94,611

95,307

95,762

94,611

30 Deferred availability cash items.............
31 Other liabilities and accrued dividends3.
32 Total liabilities...................................
CAPITAL ACCOUNTS

Federal Reserve note statement
38 F.R. notes outstanding (issued to Bank).............
Collateral held against notes outstanding:
Gold certificate account......................... ...........
39
Special Drawing Rights certificate account... .
40
41
42
U.S. government securities................... ...........

133,618

113,384

113,239

106,833

113,160

112,836

113,618

113,160

11,592
1,300
2,726
98,000

11,550
1,300
465
100,069

11,544
1,300
1,050
99,345

11,544
1,300
872
93,167

11,544
1,300
1,424
98,892

11,671
1,300
907
98,958

11,592
1.300
2,726
98,000

11,544
1,300
1,424
98,892

43 Total collateral.............................................. .........

133,618

113,384

113,239

106,883

113,160

112,836

113,618

113,160

1 Includes securities loaned—fully guaranteed by U.S. govt, securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold
and scheduled to be bought back under matched sale-purchase trans­
actions.




2 Beginning December 29, 1978, such assets are revalued monthly
at market exchange rates.
3 Includes exchange-translation account reflecting, beginning December
29, 1978, the monthly revaluation at market exchange rates of foreignexchange commitments.

A 13

Reserve Banks
1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings
Millions o f dollars

Wednesday

End of month

1979

Type and maturity
Jan. 31

Feb. 7

4,364
4.334
30

1 Loans...........................
2 Within 15 d a y s .. . .
3 16 days to 90 days.
4 91 days to 1 year...
5 Acceptances................
6 Within 15 days. . . .
7 16 days to 90 days.
8 91 days to 1 year...

Feb. 14

512
477
35

1,129
1,080
49

434
434

708
708

1978
Feb. 21

Feb. 28

Dec. 31

1,604
1.577
27

1,018
981
37

1,172
1,142
30

1979
Jan. 31

Feb. 28

4,364
4.334
30

1,604
1,577
27

587
587

9 U.S. government securities.
10 Within 15 days1..............
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...................

101,279
3,961
14,369
25,980
31,577
14,717
10,675

105,023
4,146
17,799
26,109
31,577
14,717
10.675

106,784
5,735
18,124
25,405
32.003
14,781
10,736

95,833
1,957
9.474
26,778
34,181
11.875
11;568

103,486
3,084
16,546
25,864
34,549
11,875
11,568

110,562
4.297
19,800
29,465
31,608
14,717
10,675

101,279
3,961
14,369
25,980
31,577
14,717
10,675

103,486
3,084
16,546
25,864
34,549
11,875
11,568

16 Federal agency obligations..
17 Within 15 days i ..............
18 16 days to 90 days..........
19 91 days to 1 year.............
20 Over 1 year to 5 years. . .
21 Over 5 years to 10 years.
22 Over 10 years..................

7,507
16
507
1,188
3,475
1.511
810

7,633
146
537
1,154
3,475
1,511
810

7,851
696
205
1,154
3.475
1,511
810

7,487
355
182
1,154
3.475
1,511
810

7,487
114
344
1,098
3,553
1,568
810

8,029
217
482
1.286
3; 723
1.511
810

7,507
16
507
1,188
3,475
1,511
810

7,487
114
344
1,098
3,553
1.568
810

1 Holdings under repurchase agreements are classified as maturing
within 15 days in accordance with maximum maturity of the agreements.
1.20

B A N K D E B IT S A N D D E P O S I T T U R N O V E R
Debits are shown in billions of dollars, turnover as ratio of debits to deposit. Monthly data are at annual rates.

Bank group, or type
of customer

1975

1976

1978

1977
Aug.r

Sept.r

Oct.r

N ov.r

Dec.

Debits to demand deposits 2 (seasonally adjusted)
1 All commercial banks...............
2 Major New York City banks..
3 Other banks...............................

25,028.5
9,670.7
15,357.8

29,180.4
11.467.2
17.713.2

34,322.8
13,860.6
20,462.2

42,819.1
16.435.0
26.384.1

41.896.6
15,500.0
26.396.6

42,942.5
15,437.8
27,504.7

42.941.5
15.673.6
27,267.9

42,307.5
15.100.2
27.207.3

446.0
66.8
379.1

438.0
61.4
376.6

145.1
559.8
101.8

141.6
535.9
100.5

2.0
5.8
1.8

2.0
5.4
1.8

Debits to savings deposits 3 (not seasonally adjusted)
4 All customers.............................
5 Business 1...................................
6 Others.........................................

174.0
21.7
152.3

434.6
58.5
376.1

424.4
62.0
362.4

467.6
67.2
400.4

Demand deposit turnover 2 (seasonally adjusted)
7 All commercial banks...............
8 Major New York City banks..
9 Other banks...............................

105.3
356.9
72.9

116.8
411.6
79.8

129.2
503.0
85.9

146.5
577.6
100.0

141.9
549.6
98.8

144.1
530.1
102.3

Savings deposit turnover 3 (not seasonally adjusted)
10 All customers.............................
11 Business 1...................................
12 Others.........................................
1 Represents corporations and other profit-seeking organizations (ex­
cluding commercial banks but including savings and loan associations,
mutual savings banks, credit unions, the Export-Import Bank, and
federally sponsored lending agencies).
2 Represents accounts of individuals, partnerships, and corporations,
and of states and political subdivisions.
3 Excludes negotiable order of withdrawal (NOW) accounts and
special club accounts, such as Christmas and vacation clubs.




1.6
4.1
1.5

' 2.0
5.2
1.8

1.9
5.4
1.7

2.1
5.8
1.9

N ote. Historical data—estimated for the period 1970 through June
1977, partly on the basis of the debits series for 233 SMS As, which were
available through June 1977—are available from Publications Services,
Division of Administrative Services, Board of Governors of the Federal
Reserve System, Washington, D.D. 20551. Debits and turnover data
for savings deposits are not available prior to July 1977.

A14
1.21

Domestic Financial Statistics □ March 1979
M O N EY STOCK M EASURES A N D CO M PO N EN TS
Billions of dollars, averages of daily figures

Item

1975
Dec.

1976
Dec.

1977
Dec.

1978
Dec.

1978
Aug.

Sept.

Oct.

1979
Nov.

Dec.

Jan.

Seasonally adjusted
MEASURES i
1
2
3
4
5
6

M -l......................................................
M-1 + ..................................................
M-2......................................................
M-3......................................................
M-4......................................................
M-5......................................................

295.4
456.8
664.8
1,092.4
745.8
1,173.5

313.8
517.2
740.6
1,235.6
803.0
1,298.0

338.7
361.5
586.7
560.6
809.4
876.3
1,374.3 rl ,500.6
883.1
r972.9
1,448.0 rl ,597.3

357.0
583.5
856.9
1,458.4
944.5
1,546.0

361 .1
361.6
589.4
589.8
866.2
870.9
1,474.7 r l ,485.5
954.8
959.6
1,563.2 rl , 574.1

361.0
361.5
587.4
586.7
874.3
876.3
rl ,493.8 rl ,500.6
969.7
r972.9
rl ,589.2 rl ,597.3

359.9
582.8
875.4
1,504.7
975.9
1,605.2

COMPONENTS
7 Currency..............................................
Commercial bank deposits:
8 Demand..............................................
9
Time and savings.............................
10
Savings.........................................
11
Negotiable CDs2.........................
12
Other tim e...................................

73.8

80.8

88.6

97.5

93.9

95.2

95.8

96.6

97.5

98.2

221.7

233.0

250.1

264.1

263.0

265.9

450.3

489.2

544.4

611.4
r222.0

587.5

593.7

265.8

264.4

264.1

261.7

13 Nonbank thrift institutions3.............

427.7

160.7
81.0
208.6

202.1
62.4
224.7

219.7
73.7
251.0

495.0

c564.9

96.6
292.8

223.7
87.6
276.2

c624.3

c601.5

225.5
88.5
279.6
c608.5

597.9
225.2

r608.8

88.6
284.1

223.4
95.4
289.9

'•222.0
96.6
292.8

219.6
100.5
295.9

c614.6

c619.5

c624.3

629.3

361.4
363.0
371.6
587.9
587.6
594.7
868.2
871.6
882.0
1,481.6 rl ,487.8 rl ,503.3
959.0
968.0
981.6
rl ,572.4 rl ,584.2 rl ,602.9

365.7
587.7
880.1
1,507.8
981.2
1,608.9

611.4

616.0

Not seasonally adjusted
MEASURES!
14
15
16
17
18
19

M -l......................................................
M-l - f ..................................................
M-2......................................................
M-3......................................................
M-4......................................................
M-5......................................................

303.9
463.6
670.0
1,095.0
753.5
1,178.4

322.6
524.2
745.8
1,238.3
810.0
1,302.6

348.2
371.6
568.0
594.7
882.0
814.9
1,377.2 ''1,503.3
890.8
981.6
1,453.2 rl ,602.9

354.4
580.9
853.8
1,455.5
941.8
1,543.5

359.0
585.4
861.7
1,469.2
952.0
1,559.5

COMPONENTS
20 Currency..............................................
Commercial bank deposits:
21
Demand. ...........................................
22
Member.......................................
23
Domestic nonmember................
24
Time and savings.............................
25
Savings........................................
26
Negotiable CDs2.........................
27
Other tim e...................................
28 Other checkable deposits4.................
29 Nonbank thrift institutions3.............
30 U.S. government deposits (all commerical banks).............................

*75.1

r82.1

c9 0 .1

c9 9 .1

94.2

94.9

95.6

97.2

99.1

97.4

c228.8

c240 .5

c258.1
m i.5
c16.2
c542.6

c272.5

260.2

264.1

265.8

265.7

272.5

268.3

c609.9

587.5

593.1

597.6

605.0

609.9

615.5

c162.8
c62.6
c449.6

c159.1
c83.5
c207.1

c169.4
c67.5

c487.4

c200.2
c64.3
c222.9

c182.9
c85.6

c217.7
c75.9
c249.0

c219.9
c99.5
c290.5

176.2
80.1

223.7
88.0
275.7

178.3
81.9

223.6
90.3
279.2

179.3
82.7

223.5
90.8
283.3

178.3
83.7

221.5
96.4
287.1

182.9
85.6

219.9
99.5
290.5

179.2
84.9

218.8
101.1
295.6

c0.7
c424.9

C1.4
c492.5

c2 . 1
c562.3

c3.2
c621.3

2.8
601.7

2.8
607.5

2.9
613.4

3.1
'616.2

3.2
r621.3

3.3
627.7

c4 . 1

c4.4

c5 .1

c10.2

3.6

6.2

4.3

8.0

10.2

12.0

1 Composition of the money stock measures is as follows:
M -l: Averages of daily figures for (1) demand deposits at commercial
banks other than domestic interbank and U.S. government, less cash items
in process of collection and Federal Reserve float; (2) foreign demand
balances at Federal Reserve Banks; and (3) currency outside the Treasury,
Federal Reserve Banks, and vaults of commercial banks.
M-l + : M-l plus savings deposits at commercial banks, NOW accounts
at banks and thrift institutions, credit union share draft accounts, and
demand deposits at mutual savings banks.
M2-: M-l plus savings deposits, time deposits open account, and time
certificates of deposit (CDs) other than negotiable CDs of $100,000 or
more at large weekly reporting banks.
M-3: M-2 plus the average of the beginning- and end-of-month deposits

of mutual savings banks, savings and loan shares, and credit union shares
(nonbank thrift).
M-4: M-2 plus large negotiable CDs.
M-5: M-3 plus large negotiable CDs.
2 Negotiable time CDs issued in denominations of $100,000 or more
by large weekly reporting commercial banks.
3 Average of the beginning- and end-of-month figures for deposits of
mutual savings banks, for savings capital at savings and loan associations,
and for credit union shares.
4 Includes NOW accounts at thrift institutions, credit union share
draft accounts, and demand deposits at mutual savings banks.
N ote. Latest monthly and weekly figures are available from the board’s
508 (H.6) release. Back data are available from the Banking Section,
Division of Research and Statistics.

NOTES TO TABLE 1.23:
1 Adjusted to exclude domestic commercial interbank loans.
2 Loans sold are those sold outright to a bank’s own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank’s holding
company (if not a bank), and nonconsolidated nonbank subsidiaries of
the holding company. Prior to Aug. 28, 1974, the institutions included
had been defined somewhat differently, and the reporting panel of banks
was also different. On the new basis, both “Total loans” and “Commerical and industrial loans” were reduced by about $100 million.
3 Data beginning Ju n e .30, 1974, include one large mutual savings
bank that merged with a nonmember commercial bank. As of that date
there were increases of about $500 million in loans, $100 million in
“Other” securities and $600 million in “Total loans and investments.”
As of Oct. 31, 1974, “Total loans and investments” of all commercial
banks were reduced by $1.5 billion in connection with the liquidation




of one large bank. Reductions in other items were: “Total loans,” $1.0
billion (of which $0.6 billion was in “Commercial and industrial loans”),
and “Other securities,” $0.5 billion. In late November “Commercial and
industrial loans” were increased by $0.1 billion as a result of loan re­
classifications at another large bank.
4 Reclassification of loans reduced these loans by about $1.2 billion
as of Mar. 31,'1976.
5 Reclassification of loans at one large bank reduced these loans by
about $200 million as of Dec. 31, 1977.
N ote. Data are for last Wednesday of month except for June 30 and
Dec. 31; data are partly or wholly estimated except when June 30 and
Dec. 31 are call dates.

M onetary Aggregates

A15

1.22 AGGREGATE RESERVES AND DEPOSITS Member Banks
Billions of dollars, averages o f daily figures

1975
Dec.

1976
Dec.

1978

1977
Dec.

June

July

Aug.

Sept.

1979
Oct.

Nov.

Dec.

Jan.

Seasonally adjusted
1 Reserves1....................................................................
2 Nonborrowed.........................................................
3 Required.................................................................
4 Monetary base........................................................
5 Deposits subject to reserve requirements2.................
6 Time and savings....................................................
Demand
7 Private.....................................................................
8 U.S. government....................................................

34.67
34.54
34.40
106.7
504.2
336.8

34.89
34.84
34.61
118.4
528.6
354. 1

36.10
35.53
35.91
127.8
568.6
386.7

37.63
36.53
37.45
133.5
595.8
407.4

38.11
36.80
37.92
134.7
600.5
410.8

37.93
36.79
37.77
135.3
602.7
413.0

38.21
37. 15
38.02
136.8
607.0
416.8

38.38
37.10
38.22
137.8
608.9
418.3

39.75
39.05
39.53
139.9
616.9
427.5

41.27
40.40
41.04
142.4
616.7
429.4

41.48
40.48
41.28
143.4
621.1
433.5

164.5
2.9

171.5
3.0

178.5
3.5

184.6
3.8

186.1
3.6

186.5
3.3

186.2
4.0

187.2
3.5

187.0
2.3

185.1
2.3

185.6
1.9

Not seasonally adjusted
9 Monetary base........................................................
10 Deposits subject to reserve requirements2.................
11 Time and savings....................................................
Demand
12 Private.....................................................................
13 U.S. government....................................................

108.3
510.9
337.2

120.3
534.8
353.6

129.8
575.3
386.4

133.5
596.8
408.6

135.7
600.6
411.1

135.2
599.2
412.8

136.2
605.9
416.6

137.5
608.4
418.5

140.5
615.1
425.2

144.6
624.0
429.6

144.4
627.1
433.8

170.7
3.1

177.9
3.3

185.1
3.8

183.7
4.5

186.4
3.2

183.9
2.5

184.7
4.6

186.9
3.0

188.0
2.0

191.9
2.5

191.5
1.9

1 Series reflects actual reserve requirement percentages with no adjust­
ment to eliminate the effect of changes in Regulations D and M. There
are breaks in series because of changes in reserve requirements effective
Dec. 12, 1974; Feb. 13, May 22, and Oct. 30, 1975; Jan. 8 and Dec. 30,
1976. In addition, effective Jan. 1, 1976, statewide branching in New York
was instituted. The subsequent merger of a number of banks raised
required reserves because of higher reserve requirements on aggregate
deposits at these banks.

1.23

2 Includes total time and savings deposits and net demand deposits as
defined by Regulation D. Private demand deposits include all demand
deposits except those due to the U.S. govt., less cash items in process of
collection and demand balances due from domestic commercial banks.

Note. Back data and estimates of the impact on required reserves
and changes in reserve requirements are shown in Table 14 of the Board’s
Annual Statistical Digest, 1971-1975.

L O A N S A N D I N V E S T M E N T S A ll C o m m e rc ia l B a n k s
Billions of dollars; last Wednesday of month except for June 30 and Dec. 31

Category

1974
Dec. 313

1975
Dec. 31

1976
Dec. 31

1977
Dec. 31

1978
July 26p Aug. 30p Sept. 21p Oct. 25p Nov. 29 p | Dec. 31*>
Seasonally adjusted

1 Loans and investments1......................
2 Including loans sold outright2. . . .

691.1
695.9

721.8
726.2

785.1
788.9

870.6
875.5

940.7
945.3

944.6
949.3

952.4
957.0

960.9
964.8

966.5
970.2

967.3
971.1

Commercial and industrial............
Including loans sold outright2. ..

500.2
505.0
183.5
186.2

496.9
501.3
176.2
178.7

538.9
542.7
4179.7
4182.1

617.0
621.9
5201.4
5204.2

675.1
679.7
220.8
223.1

680.2
684.9
222.8
225.2

687.3
691.9
224.6
226.9

696.8
700.7
227.0
228.9

706.8
710.5
228.9
230.8

709.0
712.8
228.9
230.7

Investments:
U.S. Treasury.................................
Other................................................

51.1
139.8

80.1
144.8

98.0
148.2

95.6
158.0

100.6
165.0

97.9
166.5

97.2
167.9

95.2
168.9

90. 3
169.4

88.4
169.9

Loans:
Total................................................

3
4
5
6

In cluding loans sold o u trig h t2__

7
8

Not seasonally adjusted
9 Loans and investments1......................
10 Including loans sold outright2.......

705.6
710.4

737.0
741.4

801.6
805.4

888.9
893.8

936.6
941.2

942.0
946.7

951.4
956.1

958.4
962.3

969.3
973.0

987.6
991.4

11
12
13
14

Loans:
Total1..............................................
Including loans sold outright2. . .
Commercial and industrial............
Including loans sold outright2. ..

510.7
515.5
186.8
189.5

507.4
511.8
179.3
181.8

550.2
554.0
4182.9
4185.3

629.9
634.8
5205.0
5207.8

675.6
680.2
220.9
232.2

681.0
685.7
221.7
224.1

688.6
693.3
223.9
226.2

696.6
700.5
226.5
228.4

707.2
710.9
228.9
230.8

723.9
727.7
233.0
234.8

15
16

Investments:
U.S. Treasury.................................
Other................................................

54.5
140.5

84.1
145.5

102.5
148.9

100.2
158.8

96.1
164.9

94.8
166.2

95.0
167.7

93.5
168.3

92.6
169.5

93.0
170.7

For notes see bottom o f opposite page.




Domestic Financial Statistics o March 1979

A16
1.24

C O M M E R C IA L B A N K A S S E T S A N D L IA B IL IT IE S
Billions of dollars except for number of banks

L a st-W e d n e s d a y -o f-M o n th S eries

19783

1977
Account

Dec.

Mar.

Apr.

May

June

July?

Aug.?

Sept.**

Oct.»

N ov.p

Dec.p

All commercial
1 Loans and investments.........................
2
Loans, gross.....................................
Investments:
U.S. Treasury securities..............
3
4
Other............................................

939.1
680.1

939.7
680.4

953.0
688.7

974.4
712.4

985.0
722.1

980.6
719.6

985.5
724.5

996.4 1,003.0 1,016.2 1,034.7
741.2
754.1
733.6
770.9

100.2
158.8

99.0
160.3

100.2
164.1

97.3
164.6

97.9
165.1

96.1
164.9

94.8
166.2

95.0
167.7

93.5
168.3

92.6
169.5

92.6
171.2

5 Cash assets...........................................
6
Currency and coin...........................
7
Reserves with Federal Reserve

168.7
13.9

130.5
14.4

133.1
14.3

161.0
14.5

166.8
12.0

130.2
14.8

137.4
15.2

141.8
15.2

146.5
15.1

149.2
16.7

170.1
17.2

29.3
59.0
66.4

30.2
42.6
43.3

27.6
43.6
47.6

30.3
51.9
64.3

29.6
56.0
69.3

23.6
44.4
47.3

29.7
43.0
49.5

32.6
44.4
49.6

34.6
45.0
51.7

32.6
46.5
53.5

37.7
51.6
63.6

8
9

Cash items in process of collection..

10 Total

assets/total

liabilities

and

1,166.0 1,140.5 1,156.9 1,206.5 1,215.0 1,179.2 1,192.9 1,209.5 1,220.4 1,240.8 1,284.0
939.4

899.8

915.5

952.9

965.7

932.3

937.7

949.9

952.3

959.0

993.1

51.7
7.3
323.9

37.6
4.9
281.2

39.0
6.2
293.8

51.2
3.3
312.9

49.3
8.0
317.5

40.5
4.3
296.3

40.4
2.8
298.6

41.9
11.0
297.1

43.3
7.6
299.2

42.9
2.1
304.7

51.1
2.3
327.1

9.8
546.6

9.0
567.1

9.0
567.5

9.4
576.1

10.2
580.8

10.3
580.9

10.7
585.2

11.6
588.3

11.1
591.2

11.8
597.6

12.4
600.3

17
18

96.2
85.8

105.6
83.4

104.9
83.7

112.2
84.6

106.8
89.9

103.2
85.8

109.1
86.2

112.8
87.1

118.3
87.1

125.6
87.8

133.0
87.3

19

14,707

14,689

14,697

14,702

14,698

14,713

14,721

14,715

14,713

14,719

14,712

11
12
13
14
15
16

Demand:

Time:
O ther............................................

Member
20 Loans and investments........................
21
Loans, gross.....................................
Investments:
22
U.S. Treasury securities..............
23

675.5
494.9

668.6
490.5

676.8
495.3

693.8
514.3

699.7
519.6

695.8
517.6

698.9
520.3

706.9
527.0

713.4
533.9

724.3
544.6

739.5
558.3

70.4
110.1

68.2
109.9

68.8
112.7

66.9
112.7

67.4
112.7

65.7
112.5

65.3
113.3

65.4
114.5

64.1
115.3

63.5
116.2

63.6
117.6

24 Cash assets, total.................................
25
Currency and coin...........................
26
Reserves with Federal Reserve
Banks........................................
27
Balances with banks ........................
28
Cash items in process of collection..

134.4
10.4

104.8
10.6

106.5
10.5

130.7
10.6

133.8
8.7

104.2
10.8

111.2
11.1

115.4
11.1

118.6
11.1

121.3
12.3

140.2
12.7

29.3
30.8
63.9

30.2
22.9
41.2

27.6
22.7
45.7

30.3
28.1
61.7

29.6
29.1
66.5

23.6
24.3
45.4

29.7
22.9
47.6

32.6
24.0
47.7

34.6
23.2
49.7

32.6
25.1
51.4

37.7
28.6
61.2

29 Total assets/total liabilities and
capital i .............................................

861.8

833.2

843.3

884.7

888.7

857.3

868.5

882.2

891.2

908.5

945.2

30

683.5

645.1

655.1

686.7

694.3

666.1

670.6

679.6

682.5

688.6

716.3

48.0
5.4
239.4

34.7
3.7
205.1

36.0
4.5
213.4

47.5
2.2
229.1

45.5
5.6
231.6

37.3
3.1
214.6

37.2
1.9
217.0

38.6
8.1
215.6

39.9
5.7
217.0

39.5
1.5
221.3

47.3
1.6
237.9

7.8
382.9

7.0
394.7

6.9
394.3

7.3
400.5

8.1
403.4

8.2
402.9

8.6
405.9

9.4
407.8

9.0
411.0

9.7
416.7

10.2
419.3

36 Borrowings..........................................
37 Total capital accounts2 .......................

84.9
63.7

91.8
62.4

91.1
62.7

96.9
63.3

92.1
66.1

88.0
64.2

93.9
64.5

97.2
65.1

101.4
65.2

108.1
65.7

115.9
65.5

38 M emo: Number of banks.................

5,669

5,654

5,645

5,638

5,622

5,613

5,610

5,593

5,585

5,586

5,565

31
32
33
34
35

Demand:
Other............................................
Time:
Interbank......................................
Other............................................

1 Includes items not shown separately.
Effective Mar. 31, 1976, some of the item “ reserve for loan losses”
and all of the item “ unearned income on loans” are no longer reported
as liabilities. As of that date the “valuation” portion of “reserve for
loan losses” and the “ unearned income on loans” have been netted
against “other assets,” and against “total assets” as well.
Total liabilities continue to include the deferred income tax portion of
“reserve for loan losses.”
2 Effective Mar. 31, 1976, includes “reserves for securities” and the
contingency portion (which is small) of “reserve for loan losses.”
3 Figures partly estimated except on call dates.




N ote. Figures include all bank-premises subsidiaries and other sig­
nificant rriajority-owned domestic subsidiaries.
Commercial banks: All such banks in the United States, including
member and nonmember banks, stock savings banks, nondeposit trust
companies, and U.S. branches of foreign banks.
Member banks: The following numbers of noninsured trust companies
that are members of the Federal Reserve System are excluded from mem­
ber banks in tables 1.24 and 1.25 and are included with noninsured banks
in table 1.25: 1976—December, 11; 1978—January, 12.

Commercial Banks

A17

1.25 COMMERCIAL BANK ASSETS AND LIABILITIES Call-Date Series
Millions of dollars, except for number of banks
Account

1976

1977

Dec. 31

June 30

Dec. 31

1978

1976

June 30

Dec. 31

1 Loans and investments, gross.................................
Loans
Gross................................................................
Net...................................................................
Investments
4
U.S. Treasury securities.................................
5
Other................................................................
6 Cash assets..............................................................
7 Total assets/total liabilities1...................................
8

June 30

1978

Dec. 31

June 30

National (all insured)

Total insured

2
3

1977

956,431

827,696

854,733

578,734
560,077

601,122
581,143

657,509
636,318

695,443
672,207

101,461
147,500
129,562

100,568
153,042
130,726

99,333
157,936
159,264

97,001
163,986
157,393

914,779

488,240

523,000

542,218

340,691
329,971

351,311
339,955

384,722
372,702

403,812
390,630

55,727
80,191
76,072

53,345
83,583
74,641

52,244
86,033
92,050

50,519
87,886
90,728

476,610

583,304

599,743

651,360

671,166

825,003

847,372

922,657

945,874

469,377

476,381

520,167

526,932

1,003,970 1,040,945 1,129,712 1,172,772

Demand
U.S. government............................................
Interbank........................................................
Other................................................................
Time
Interbank........................................................
Other................................................................

3,022
44,064
285,200

2,817
44,965
284,544

7,310
49,843
319,873

7,956
47,203
312,707

1,676
23,149
163,346

1,632
22,876
161,358

4,172
25,646
181,821

4,483
22,416
176,025

8,248
484,467

7,721
507,324

8,731
536,899

8,987
569,020

4,907
276,296

4,599
285,915

5,730
302,795

5,791
318,215

14 Borrowings..............................................................
15

75,291
72,061

81,137
75,502

89,339
79,082

98,351
83,074

54,421
41,319

57,283
43,142

63,218
44,994

68,948
47,019

16 M emo : Number of banks.....................................

14,397

14,425

14,397

14,381

4,735

4,701

4,654

4,616

9
10
11
12
13

State member (all insured)

Insured nonmember

144,000

144,597

152,514

157,464

207,085

221,896

239,265

256,749

102,277
99,474

102,117
99,173

110,243
107,205

115,736
112,470

135,766
130,630

147,694
142,015

162,543
156,411

175,894
169,106

18,849
22,874
32,859

19,296
23,183
35,918

18,179
24,091
42,305

16,886
24,841
43,057

26,884
44,434
20,631

27,926
46,275
20,166

28,909
47,812
24,908

29,595
51,259
23,606

23

189,579

195,452

210,442

217,384

231,086

245,748

267,910

284,221

24 Deposits...................................................................
Demand
25
U.S. government............................................
26
Interbank.........................................................
27
Time
28
Interbank........................................................
29

149,491

152,472

163,436

167,403

206,134

218,519

239,053

251,539

429
19,295
52,204

371
20,568
52,570

1,241
22,346
57,605

1,158
23,117
55,550

917
1,619
69,648

813
1,520
70,615

1,896
1,849
80,445

2,315
1,669
81,131

2,384
75,178

2,134
76,827

2,026
80,216

2,275
85,301

956
132,993

988
144,581

973
153,887

920
165,502

17,310
13,199

19,697
13,441

21,736
14,182

23,167
14,670

3,559
17,542

4,155
18,919

4,384
19,905

6,235
21,384

1,023

1,019

1,014

1,005

8,639

8,705

8,729

8,760

17
18
19

Loans
Gross................................................................
Net...................................................................
Investments
U.S. Treasury securities.................................

20
21
22 Cash assets..............................................................

30
31
32 M emo: Number of banks.....................................

Total nonmember

Noninsured nonmember
18,819

22,940

24,415

28,699

225,904

244,837

263,681

285,448

16,336
16,209

20,865
20,679

22,686
22,484

26,747
26,548

152,103
146,840

168,559
162,694

185,230
178,896

202,641
195,655

1,054
1,428
6,496

993
1,081
8,330

879
849
9,458

869
1,082
9,360

27,938
45,863
27,127

28,919
47,357
28,497

29,788
48,662
34,367

30,465
52,341
32,967

39

26,790

33,390

36,433

42,279

257,877

279,139

304,343

326,501

40

13,325

14,658

16,844

19,924

219,460

233,177

255,898

271,463

4
1,277
3,236

8
1,504
3,588

10
1,868
4,073

8
2,067
4,814

921
2,896
72,884

822
3,025
74,203

1,907
3,718
84,518

2,323
3,736
85,946

1,041
7,766

1,164
8,392

1,089
9,802

1,203
11,831

1,997
140,760

2,152
152,974

2,063
163,690

2,123
177,334

46 Borrowings..............................................................
47 Total capital accounts.............................................

4,842
818

7,056
893

6,908
917

8,413
962

8,401
18,360

11,212
19,812

11,293
20,823

14,649
22,346

48 M emo: Number of banks.....................................

275

293

310

317

8,914

8,998

9,039

9,077

33
34
35
36
37
38

41
42
43
44
45

Loans
Gross................................................................
Net...................................................................
Investments
U.S. Treasury securities.................................

Demand
U.S. government............................................
Time
Interbank........................................................

i Includes items not shown separately.




For Note see table 1.24.

A18
1.26

Domestic Financial Statistics □ March 1979
C O M M E R C IA L B A N K A S S E T S A N D L IA B IL IT IE S
Millions of dollars, except for number of banks.

D eta iled B alance Sh eet, S eptem ber 30, 1978

Member banks1
Asset account

Insured
commercial
banks

Large banks
Total

New York
City

City of
Chicago

Other
large

All other

Nonmember
banks1

1 Cash bank balances, items iin process..........................................
2 Currency and coin....................................................................
3 Reserves with Federal Reserve Banks....................................
4 Demand balances with banks in United States.....................
5 Other balances with banks in United States..........................
6 Balances with banks in foreign countries...............................
7 Cash items in process of collection........................................

158,380
12,135
28,043
41,104
4,648
3,295
69,156

134,955
8,866
28,041
25,982
2,582
2,832
66,652

43,758
867
3,621
12,821
601
331
25,516

5,298
180
1,152
543
15
288
3,119

47,914
2,918
12,200
3,672
648
1,507
26,969

37,986
4,901
11,067
8,945
1,319
705
11,049

23,482
3,268
3
15,177
2,066
463
2,504

8 Total securities held—Book value................................................
9 U.S. Treasury...........................................................................
10 Other U.S. Government agencies............................................
11 States and political subdivisions.............................................
12 All other securities...................................................................
13

262,199
95,068
40,078
121,260
5,698
94

179,877
65,764
25,457
85,125
3,465
66

20,808
9,524
1,828
9,166
291

7,918
2,690
1,284
3,705
240

58,271
22,051
7,730
27,423
1,048
19

92,881
31,499
14,616
44,831
1,887
47

82,336
29,315
14,622
36,136
2,234
28

6,681

3,238

708

2,446

290

151

14
15
16
17
18
19

Trading-account securities ........................................................

6,833

U.S. Treasury.......................................................................
Other U.S. Government agencies.......................................
States and political subdivisions..........................................
All other trading account securities....................................

4.125
825
1,395
394
94

20
21
22
23
24

Bank investment portfolios .......................................................

255,366

U.S. Treasury.......................................................................
Other U.S. Government agencies......... ..............................
States and political subdivisions..........................................
All other portfolio securities................................................

90,943
39,253
119,865
5,305

4,103
816
1,381
316
66

173,196

61,661
24,641
83,745
3,149

2,407
401
363
67

408
82
117
101

17,570

7,210

7,117
1,426
8,803
224

2,282
1,201
3,588
138

1,210
278
794
145
19

55,825

20,840
7,452
26,629
903

78
55
107
3
Al

23
9
14
78
28

92,591

82,185

31,422
14,561
44,724
1,884

29,293
14,613
36,123
2,156

25 Federal Reserve stock and corporate stock...............................

1,656

1,403

311

111

507

475

253

26 Federal funds sold and securities resale agreement.....................
27 Commercial banks...................................................................
28
Brokers and dealers.................................................................
29 Others......................................................... ..............................

41,258
34,256
4,259
2,743

31,999
25,272
4,119
2,608

3,290
1,987
821
482

1,784
1,294
396
94

16,498
12,274
2,361
1,863

10,427
9,717
541
169

9,365
9,090
140
135

30 Other loans, gross.......................................... ..............................
31 L ess : Unearned income on loans............. ..............................
32
Reserves for loan loss..................... ..............................
33 Other loans, n et......................................... ..............................

675,915
17,019
7,431
651,465

500,802
11,355
5,894
483,553

79,996
675
1,347
77,974

26,172
107
341
25,724

190,565
3,765
2,256
184,544

204,069
6,809
1,949
195,311

175,113
5,664
1,537
167,912

203,386

138,730

10,241

2,938

52,687

72,863

64,656

34
35
36
37
38
39
40
41
42
43
44

Other loans, gross, by category
Real estate loans ........................................ ..............................
Construction and land development...................................
Secured by farmland............................. ..............................
Secured by residential properties........................................

25,621
8,418
117,176

19,100
3,655
81,370

FHA-insured or VA-guaranteed.................................
Conventional.................................................................
Multifamily residences......................................................
FHA-insured.................................................................
Conventional.................................................................
Secured by other properties.................................................

7,503
104,171

6,500
70,922

399
5,103
52,171

340
3,609
34,605

132
613
2,258

45
46
47
48
49
50
51
52
53
54

Loans to financial institutions ..................................................

37,072

34,843

12,434

55
56
57
58
59
60
61
62
63
64
65
66
67

Loans to individuals.................................................................
Instalment loans.....................................................................
Passenger automobiles......................................................
Residential repair and modernization.............................
Credit cards and related plans........................................
Charge-account credit cards........................................
Check and revolving credit plans................................
Other retail consumer goods............................................
Mobile homes...............................................................
Other..............................................................................
Other instalment loans.....................................................
Single-payment loans to individuals...................................
All other loans.........................................................................

1- to 4-fam ily residences........................ ...................................

REIT’s and mortgage companies........................................
Domestic commercial banks................................................
Banks in foreign countries...................................................
Other depositary institutions...............................................
Other financial institutions..................................................
Loans to security brokers and dealers....................................
Other loans to purchase or carry securities...........................
Loans to farmers—except real estate....................................
Commercial and industrial loans............................................

111,674

5,502

77,422
3,948

8,574
3,362
7,359
1,579
16,198
11,042
4,280
28,054
213,123

8,162
2,618
7,187
1,411
15,465
10,834
3,532
15,296
171,815

161,599
131,571

2,598
23
5,362
4,617

508
4,109

746

685
34
1,559

1,460

44
1,417
99
21
11

1,665

1,554

1,003
33,249

4,342

15,137

2,930

2,228

7,100

2,562

5,405

1,711

6,1X1

34,252

2,502
39,068

59
1,495
17,566

90,568

956,579

1,438

41,570

660

110,974

1,077
331
2,268
1,573
695

3,446
26,328

6,521
4,763
35,806

92
1,573
19,901

801
165
268
76
3,033
1,324
276
150
13,290

37,494
5,543
19,333
16,037
3,296
13,296
6,667
6,629
14,902
20,406
14,778

29,774

6,581
3,146
43,236

88
1,350
11,786

2,066
966
3,464
290
5,649
6,465
410
168
39,633

58,908
8,526
21,938
17,900
4,038
19,689
9,642
10,047
22,510
30,027
17,360

9,236
453
31,212

209
60
1,267
1,219

4,616
1,206
2,820
785
5,710
2,846
1,860
3,781
67,833

40,320
33,640

680
281
635
261
1,073
199
985
11,196
51,059

412
744
171
167
733
207
747
12,758
41,309

60,993

50,624

49,811

41,003

A ll

179
249
1,302
1 ,694
3,545

57
19
38
119
851
1,290

11,626
2,088
9,736
8,192
1,545
5,242
2,563
2,678
4,948
6,680
6,100

696,833

102,383

35,536

259,820

299,094

259,867

22,448
3,255
16,557
34,559

6,212
16,529
3,209
16,036
30,408

1,145
2,332
1,642
8,315
11,323

96
795
188
1,258
1,000

3,931
6,268
1,282
6,054
12,810

1,041
7,133
96
409
5,275

505
5,926
46
521
4,249

74 Total assets...... ............................................................................ 1,198,495

904,182

170,899

44,170

338,079

351,034

294,595

68 Total loans and securities, net......................................................
69
70
71
72
73

Direct lease financing...................................................................
Fixed assets—Buildings, furniture, real estate...........................
Investment in unconsolidated subsidiaries.................................
Customer acceptances outstanding.............................................
Other assets.................................................................................

For notes see opposite page.




Al

24,582
3,064
6,062
5,053
1,009
7,570
3,905
3,664
8,533
11,182
3,844

21,414
2,983
2,605
1,863
742
6,393
2,976
3,417
7,608
9,621
2,582

Commercial Banks

A19

1.26 Continued
Member banks1
Liability or capital account

Insured
commercial
banks

Large banks
Total

New York
City

Other
large

City of
Chicago

All other

Non­
member
banks1

75 Demand deposits...........................................................
76 Mutual savings banks...............................................
77 Other individuals, partnerships, and corporations.
78 U.S. Government......................................................
79 States and political subdivisions..............................
80 Foreign governments, central banks, etc.................
81 Commercial banks in United States.......................
82 Banks in foreign countries.......................................
83 Certified and officers’ checks, etc.............................

369,030
1,282
279,651
7,942
17,122
1,805
39,596
7,379
14,253

282,450
1,089
205.591
5.720
11.577
1.728
38.213
7,217
11,315

66,035
527
31.422
569
764
1,436
21,414
5,461
4,443

10,690
1
7.864
188
252
19
1,807
207
352

100,737
256
79,429
1,987
3.446
211
10,803
1,251
3,354

104,988
305
86,876
2,977
7.116
62
4,189
298
3,166

86,591
194
74,061
2,222
5,545
77
1,393
162
2,937

84 Time deposits.................................................................
85 Accumulated for personal loan payments..............
86 Mutual savings banks...............................................
87 Other individuals, partnerships, and corporations.
88 U.S. Government......................................................
89 States and political subdivisions..............................
90 Foreign governments, central banks, etc.................
91
Commercial banks in United States........................
92 Banks in foreign countries.......................................

368,562
79
399
292,120
864
59,087
6.672
7.961
1.381

266,496
66
392
210.439
689
40.010
6.450
7.289
1.161

38,086

15,954

177
29.209
61
1,952
3,780
2,077
829

40
12,074
40
1,554
1,145
999
103

98,525
1
148
76.333
356
16,483
1,401
3,585
219

113,931
65
27
92,824
232
20,020
124
629
9

102,066
13
7
81,680
175
19,077
222
672
220

93 Savings deposits.....................................................
94 Individuals and nonprofit organizations..........
95 Corporations and other profit organizations..
96 U.S. Government..............................................
97 States and political subdivisions.......................
98 All other.............................................................

223,326
207,701
11,216
82
4,298
30

152,249
141,803
7,672
65
2,682
27

10,632
9.878
519
2
215
18

2,604
2,448
148
3
4
*

54,825
51.161
3,195
24
437
8

84,188
78,316
3,809
35
2,025
2

71,077
65,897
3,544
17
1.616
3

99 Total deposits.............................................................................

960,918

701,195

114,753

29,248

254,087

303,107

259,733

100 Federal funds purchased and securities sold under agreements
to repurchase.......................................................................
101 Commercial banks.................................................................
102 Brokers and dealers...............................................................
103 Others....................................................................................
104 Other liabilities for borrowed money.....................................
105 Mortgage indebtedness............................................................
106 Bank acceptances outstanding................................................
107 Other liabilities.........................................................................

91,981
42,174
12,787
37,020
8,738
1.767
16,661
27,124

85,582
39.607
11,849
34.126
8,352
1,455
16,140
23,883

21,149
6,991
2,130
12,028
3,631
234
8,398
8,860

8,777
5,235
1,616
1,926
306
27
1,260
1,525

41,799
21,609
6,381
13,809
3,191
701
6,070
9,020

13,857
5,773
1,722
6,362
1,225
491
412
4,477

6,398
2,566
939
2,894
386
316
521
3,494

1,107,188

836,607

157,026

41,144

314,868

323,569

270,849

5.767

4,401

1,001

79

2,033

1,287

1,366

85,540
88
17,875
32,341
33,517
1,719

63,174
36
12,816
23,127
26,013
1,182

12,871

2,947

2.645
4;541
5,554
132

570
1,404
921
52

21,177
5
4,007
8,148
8,680
337

26,178
31
5,594
9,034
10,858
661

22,380
52
5,064
9,217
7.509
538

1,198,495

904,182

170,899

44,170

338,079

351,034

294,595

108 Total liabilities.
109 Subordinated notes and debentures.
110 Equity capital.................
111 Preferred stock............
112 Common stock..........
113 Surplus.......................
114 Undivided profits
115 Other capital reserves.
116 Total liabilities and equity capital...........................................
M e m o it e m s :

117 Demand deposits adjusted2.....................................................
Average for last 15 or 30 days:
118 Cash and due from bank.....................................................
119 Federal funds sold and securities purchased under agree­
ments to resell...............................................................
120 Total loans............................................................................
121 Time deposits of $100,000 or more.....................................
122 Total deposits.......................................................................
123 Federal funds purchased and securities sold under agree­
ments to repurchase......................................................
124 Other liabilities for borrowed money.................................
125 Standby letters of credit outstanding.
126 Time deposits of $100,000 or more. .
127 Certificates of deposit....................
128 Other time deposits.......................
129 Number of banks.

252,337

171.864

18,537

5,576

60,978

86,774

80.472

146,283

124.916

36,862

6,030

45,731

36.293

21,379

43,873
651,874
183,614
944,593

33,682
483,316
150,160
687,543

4,272
76,750
32,196
107,028

1,887
25,722
13,216
28,922

16,007
184,790
65,776
250,804

11,517
196,054
38,972
300,789

10,307
168,558
33,454
257,062

92,685
8,716

86.635
8.326

22.896
3,679

9.473
370

40,541
3,211

13,725
1,067

6,053
390

18,820
186,837
160,227
26,610

17,658
152,553
129,667
22.886

10,063
32,654
27,950
4,704

1,477
13,486
11,590
1,896

4,820
66,684
56,383
10,301

1,297
39,728
33,743
5.985

1,162
34,284
30,560
3,724

14,390

5.593

12

9

153

5,419

8,810

1 Member banks exclude and nonmember banks include 13 noninsured
trust companies that are members of the Federal Reserve System.
2 Demand deposits adjusted are demand deposits other than domestic
commercial interbank and U.S. government, less cash items reported
as in process of collection.




N ote. Data include consolidated reports, including figures for all
bank-premises subsidiaries and other significant majority-owned do­
mestic subsidiaries. Securities are reported on a gross basis before deduc­
tions of valuation reserves. Back data in lesser detail were shown in
previous Bulletins.

Domestic Financial Statistics □ March 1979

A20

1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of #750 Million or More on
December 31, 1977, Assets and Liabilities
Millions of dollars, Wednesday figures
1979

Account

1 Cash items in process of collection.....................
2 Demand deposits due from banks in the United
States...................................................... .......
3 All other cash and due from depositary
institutions.....................................................
4 Total loans and securities.............................. . . .
Securities
5 U.S. Treasury securities................................ .......
6 Trading account..........................................
7 Investment account, by maturity............. .
One year or less........................................
8
Over one through five years................... .
9
Over five years........................................
10
11
12 Trading account................................................
13 Investment account...........................................
14
U.S. government agencies............................
States and political subdivision, by maturity.
15
One year or less....................................
16
Over one year......................................
17
Other bonds, corporate stocks and
18
securities......................................... .......

Jan. 3

Jan. 10

Jan. 17

Jan. 24

Jan. 31p

Feb. I p

54,830

44,286

46,243

39,754

44,193

42,201

44,504

49,468

15,112

14,429

14,134

13,063

14,321

13,331

12,571

13,804

15,576

33,854
457,940

30,343
453,046

36,300
450,818

33,421
447,824

29,878
451,140

33,161
450,574

36,096
451,292

26,730
459,394

28,968
455,140

35,533

35,102

35,778

35,711

34,990

35,235

34,938

36,186

36,139

3,112
32,421
8,820
19,488
4,114

63,937

2,436
61,501
12,075
46,412
7,810
38,602

3,272
31,830
8,361
19,370
4,099

3,989
31,789
8,283
19,304
4,203

4,209
31,502
8,173
19,160
4,169

64,302

64,047

64,086

2,673
61,630
12,059
46,634
7,874
38,760

2,578
61,469
11,819
46,776
7,798
38,978

2,298
61,787
12,091
46,875
7,746
39,128

3,934
31,056
7,935
18,944
4,176

64,238

2,485
61,754
12,094
46,838
7,620
39,217

3,892
31,343
8,295
18,705
4,343

64,800

2,947
61,853
12,137
46,890
7,513
39,377

Feb. 14p Feb. 21 p

3,472
31,466
8,373
18,789
4,304

64,381
2,646

4,418
31,768
8,434
18,807
4,528

64,616

61,735
12,109
46,809
7,383
39,426

2,625
61,992
12,199
46,976
7,387
39,588

Feb. 2Sp
49,091

4,408
31,731
8,595
18,684
4,452

64,441

2,595
61,846
12,287
46,807
7,178
39,629

3,014

2,936

2,874

2,821

2,822

2,826

2,816

2,817

2,752

27,380
19 Federal funds sold 1....................................... .......
19,454
20 To commercial banks............................... .......
To nonbank brokers and dealers in securities.
5,510
21
2,416
22 To others...........................................................
23 Other loans, gross......................................... ....... 341,036
133,642
24 Commercial and industrial....................... .
Bankers’ acceptances and commercial
25
4,347
paper......................................................
All other........................................................ 129,295
26
U.S. addresses............................................ 122,888
27
Non-U.S. addressees..................................
6,406
28
80,650
29 Real estate.........................................................
30 To individuals for personal expenditures........ 60,178
To financial institutions
3,603
Commercial banks in the U.S......................
31
9,646
Banks in foreign countries...........................
32
Sales finance, personal finance companies,
33
8,167
etc.................................................... .......
15,857
Other financial institutions...........................
34
8,430
35 To nonbank brokers and dealers in securities.
36 To others for purchasing and carrying
2,205
4,590
37 To finance agricultural production.................
14,067
38 All other............................................................
5,602
39 Less: Unearned income................................ .......
4,345
40
41 Other loans, net.................................................... 331,090
5,079
42 Lease financing receivables..................................
66,044
43 All other assets.............................................. .......
632,859

25,803

24,099

22,621

25,483

24,774

24,456

29,694

25,786

Loans

Deposits
45 Demand deposits ............................................ .......
Mutual savings banks......................................
46
47 Individuals, partnerships, and corporations..
48 States and political subdivisions............. .......
49
U.S. government....................................... .
50 Commercial banks in United States...............
Banks in foreign countries....................... .
51
52 Foreign governments and official institutions.
53 Certified and officers’ checks................... ..
54 Time and savings deposits .....................................
55 Savings........................................................
Individuals and nonprofit organizations---56
Partnerships and corporations operated for
57
profit.......................................................
Domestic
governmental units.......................
58
All other........................................................
59
60 Time............. .....................................................
Individuals, partnerships, and corporations..
61
62 States and political subdivisions.....................
63
U.S. government...............................................
64 Commercial banks in United States...............
Foreign governments, official institutions,
65
and banks.................................................
66 Federal funds purchased3.....................................
Other liabilities for borrowed money
67
Borrowings from Federal Reserve Banks..
Treasury tax-and-loan notes.........................
68
69
All other liabilities for borrowed money. ..
70 Other liabilities and subordinated note and
debentures..................................................
71 Total liabilities..................................................
72

Residual (total assets minus total liabilities)4.

203,164

1,004
144,472
5,291
978
34,131
7,702
1,646
7,941

258,251

77,469
71,994

15,837
6,025
2,237
336,905
131,886

16,637
4,271
1,713
335,455
131,722

17,732
5,628
2,124
336,481
131,552

17,203
5,600
1,970
335,916
132,098

17,765
4,935
1,756
337,734
132,865

18,364
8,008
3,322
339,121
133,575

17,914
5,228
2,644
338,976
133,952

3,663
128,254
121,972
6,283
81,046
59,908

3,773
128,113
121,800
6,313
81,236
59,970

3,589
128,132
121,769
6,363
81,474
60,411

3,481
128,072
121,722
6,349
81,841
60,617

3,469
128,628
122,332
6,297
81,811
60,593

3,745
129,120
122,865
6,254
82,052
60,589

3,827
129,748
123,467
6,281
82,304
60,695

3,755
130,196
123,958
6,238
82,380
60,832

3,166
9,052

3,364
8,969

3,165
8,518

2,915
8,380

2,809
7,871

3,094
8,430

3,287
8,475

2,853
8,085

8,291
15,813
8,516

7,968
15,710
7,714

7,946
15,299
7,658

7,985
15,226
8,671

8,150
15,122
8,264

8,150
15,280
7,601

7,824
15,089
8,241

7,926
15,082
7,933

2,232
4,574
13,308
5,628
4,355
327,840
5,150
66,936
614,191

2,278
4,529
13,280
5,663
4,348
326,894
5,382
65,435
618,311

2,302
4,467
12,492
5,692
4,357
325,406
5,402
63,701
603,165

2,309
4,472
12,512
5,626
4,427
326,428
5,513
64,555
609,600

2,327
4,425
12,446
5,662
4,487
325,766
5,457
63,540
608,265

2,332
4,439
12,902
5,722
4,495
327,517
5,462
63,381
613,306

2,333
4,444
12,852
5,724
4,499
328,898
5,516
62,648
617,560

2,360
4,440
13,133
5,655
4,548
328,773
5,543
63,581
617,898

182,349

184,544

169,030

176,174

170,197

174,570

183,246

180,392

257,627

257,733

860
128,856
4,737
1,630
31,066
6,773
1,035
7,391

259,464

77,473
71,917

754
133,133
5,025
1,052
28,816
6,642
1,234
7,887

259,210

77,054
71,669

671
122,107
4,997
1,105
25,300
6,728
1,481
6,642

260,067

76,570
71,158

747
124,395
5,274
1,406
29,035
6,667
1,165
7,485

258,305

76,054
70,939

707
119,973
4,726
749
27,445
6,471
1,450
8,676

257,732

731
125,565
4,767
888
27,280
6,900
1,250
7,189

257,661

76,227
71,085

76,084
70,963

728
129,085
4,756
2,374
30,358
7,724
1,115
7,105
76,160
71,061

698
126,001
5,200
863
31,712
6,563
1,515
7,839
76,028
70,990

4,551
903
20
180,782
142,367
23,131
484
7,542

4,557
973
27
181,991
142,859
23,401
488
7,769

4,449
914
22
182,156
142,912
23,604
495
7,781

4,472
919
21
183,496
143,926
23,895
485
7,772

4,236
858
21
182,251
142,957
23,866
483
7,632

4,223
896
23
181,504
142,578
23,880
497
7,419

4,214
883
24
181,577
142,621
24,024
499
7,399

4,199
874
26
181,467
142,412
24,132
502
7,383

4,169
846
23
181,705
142,718
24,306
487
7,405

7,259
73,390

7,473
75,271

7,363
76,784

7,418
76,542

7,313
70,698

7,131
80,302

7,034
82,660

7,037
77,641

6,789
77,018

142
6,507
8,365

316
3,000
8,919

1,532
3,923
7,305

432
6,033
8,322

3,602
7,097
7,617

64
4,290
10,031

498
2,531
8,988

356
2,811
8,674

816
1,930
11,584

41,144
590,965

42,893
572,211

43,636
576,935

43,434
561,860

44,252
567,746

43,743
566,359

44,633
571,540

45,379
575,734

46,464
575,937

41,894

41,980

41,376

41,305

41,854

41,906

41,765

41,826

41,961

1 Includes securities purchased under agreements to resell.
2 Other than financial institutions and brokers and dealers.
3 Includes securities sold under agreements to repurchase.




16,817
5,979
3,006
337,823
131,918

4 This is not a measure of equity capital for use in capital adequacy
analysis or for other analytic uses.

A21

Weekly Reporting Banks
1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1 Billion or More on
December 31, 1977 Assets and Liabilities
Millions o f dollars, Wednesday figures

1979

Account

Feb. 14* Feb. 21 p Feb. 28*

Jan. 3

Jan. 10

Jan. 17

Jan. 24

Jan. 31*

Feb. l p

51,843
1 Cash items in process of collection.....................
2 Demand deposits due from banks in the United
States..............................................................
14,081
3 All other cash and due from depositary
31,822
institutions.....................................................
4 Total loans and securities..................................... 428,252

42,045

43,911

37,621

41,972

40,276

42,396

46,765

13,690

13,341

12,465

13,644

12,660

11,851

12,998

14,811

28,635
422,661

34,614
420,915

31,481
418,442

28,143
421,565

31,252
421,214

34,422
421,750

25,264
429,664

27,071
425,884

32,593

32,836

32,532

33,803
A, 379

33,732

59,516

Securities
5 U.S. Treasury securities .......................................
6 Trading account................................................
7 Investment account, by m aturity.....................
One year or less............................................
8
Over one through five years.........................
9
10
Over five years..............................................
11
12 Trading account................................................
13 Investment account...........................................
U.S. government agencies.............................
14
States and political subdivision, by maturity.
15
One year or less........................................
16
Over one year............................................
17
Other bonds, corporate stocks and
18
securities.................................................

33,162

32,701

3,073
30,089
8,172
18,157
3,761

3,244
29,456
7,703
18,017
3,737

59,024

33,411

3,964
29,446
7,648
17,960
3,839

33,337

4,179
29,158
7,536
17,822
3,800

59,211

59,266

59,152

2,375
56,649
11,234
42,641
7,128
35,513

2,618
56,648
11,158
42,821
7,179
35,642

2,518
56,634
10,994
43,002
7,222
35,779

2,246
56,965
11,281
43,099
7,172
35,927

2,11 A

2,669

2,638

25,130
19 Federal funds sold1 ...............................................
17,535
20 To commercial banks.......................................
To nonbank brokers and dealers in securities.
5,242
21
2,353
22 To others............................................................
23 Other loans, gross................................................. 320,150
24 Commercial and industrial............................... 126,796
Bankers’ acceptances and commercial
25
paper......................................................
A,211
All other........................................................ 122,519
26
U.S. addresses............................................ 116,165
27
Non-U.S. addressees..................................
6,354
28
29 Real estate.......................................................... 75,576
30 To individuals for personal expenditures........ 53,589
To financial institutions
Commercial banks in the U.S......................
31
3,518
Banks in foreign countries...........................
9,567
32
Sales finance, personal finance companies,
33
etc............................................................
7,946
Other financial institutions...........................
15,308
34
8,305
35 To nonbank brokers and dealers in securities.
36 To others for purchasing and carrying
securities2 ...................................................
1,901
4,427
37 To finance agricultural production.................
13,216
38 All other............................................................
5,120
39 Less: Unearned income.......................................
4,094
40
Loan loss reserve........................................
41 Other loans, net..................................................... 310,936
42 Lease financing receivables...................................
4,921
43 All other assets......................................................
64,556
44 Total assets............................................................ 595,476

23,338

21,555

Loans

Deposits
45 Demand deposits ....................................................
Mutual savings banks.......................................
46
47
Individuals, partnerships, and corporations..
48 States and political subdivisions.....................
U.S. government...............................................
49
50 Commercial banks in United States...............
Banks in foreign countries...............................
51
Foreign governments and official institutions.
52
53 Certified and officers’ checks...........................
54 Time and savings deposits .....................................
55 Savings...............................................................
Individuals and nonprofit organizations__
56
57
Partnerships and corporations operated for
profit.......................................................
Domestic governmental units.......................
58
All other........................................................
59
60 Time...................................................................
Individuals, partnerships, and corporations..
61
62 States and political subdivisions.....................
63
U.S. government...............................................
64 Commercial banks in United States...............
Foreign governments, official institutions,
65
and banks..................................................
66 Federal funds purchased3....................................
Other liabilities for borrowed money
67
Borrowings from Federal Reserve Banks..
68
Treasury tax-and-loan notes.........................
69
All other liabilities for borrowed money. ..
70 Other liabilities and subordinated note and
debentures..................................................
71 Total liabilities..................................................
72

Residual (total assets minus total liabilities)4.

190,575

964
134,769
4,639
870
32,429
7,641
1,644
7,618

241,618

71,790
66,707




3,859
28,977
7,655
17,365
3,957

3,429
29,102
7,732
17,453
3,918

29,424
7,824
17,453
4,147

4,353
29,379
7,982
17,276
4,120

2,873
57,012
11,295
43,117
6,946
36,171

59,884

59,472

59,737

2,406
56,918
11,270
43,061
7,040
36,021

2,575
56,897
11,282
43,027
6,811
36,216

2,582
57,156
11,382
43,180
6,808
36,372

2,585

2,586

2,599

2,587

2,593

2,523

20,593

23,342

22,821

22,309

27,390

24,023

59,324

2,546
56,971
11,434
43,013
6,592
36,421

14,656
5,708
2,974
316,580
124,862

13,695
5,674
2,185
316,076
125,087

14,928
3,974
1,690
314,612
124,940

15,970
5,258
2,115
315,620
124,782

15,600
5,264
1,957
315,080
125,301

15,965
4,618
1,726
316,909
126,078

16,458
7,678
3,254
318,206
126,708

16,390
5,020
2,612
318,060
127,057

3,592
121,270
115,043
6,227
75,828
53,307

3,705
121,381
115,117
6,264
76,104
53,391

3,532
121,408
115,094
6,314
76,319
53,784

3,424
121,358
115,057
6,301
76,670
53,956

3,408
121,893
115,644
6,249
76,642
53,933

3,690
122,387
116,182
6,205
76,864
53,914

3,774
122,934
116,702
6,232
77,111
54,028

3,701
123,356
117,167
6,189
77,183
54,155

3,074
8,960

3,279
8,878

3,083
8,425

2,819
8,290

2,719
7,790

2,992
8,342

3,181
8,376

2,751
7,986

8,060
15,268
8,405

7,750
15,170
7,607

7,742
14,768
7,554

7,793
14,697
8,564

7,969
14,592
8,161

7,986
14,757
7,512

7,661
14,582
8,149

14,575
7,846

1,927
4,409
12,479
5,130
4,095
307,356
4,998
65,276
577,304

1,974
4,366
12,471
5,176
4,102
306,798
5,227
63,799
581,808

1,997
4,305
11,695
5,202
4,110
305,300
5,245
62,170
567,424

2,001
4,317
11,729
5,141
4,172
306,306
5,355
62,933
573,613

2,023
4,276
11,673
5,176
4,231
305,672
5,299
61,946
572,645

2,034
4,290
12,140
5,234
4,238
307,437
5,303
61,816
577,538

2,037
4,296
12,076
5,233
4,240
308,734
5,356
61,219
581,267

2,065
4,296
12,371
5,170
4,278
308,612
5,384
62,046
581,952

170,816

173,073

158,562

165,426
111

159,952

163,833

172,031

169,712
665

822
119,835
4,121
1,484
29,760
6,650
1,029
7,114

242,538

728
124,232
4,346
899
27,450
6,573
1,226
7,618

242,415

647
114,005
4,289
937
24,143
6,661
1,471
6,410

243,249

71,675
66,548

71,409
66,420

4,215
847
20
169,828
133,748
21,084
479
7,272

4,198
902
26
170,863
134,197
21,245
484
7,479

4,118
848
22
171,007
134,200
21,486
490
7,482

7,246
69,750

7,458
71,263

7,348
72,839

7,403
70,782

128
5,975
8,077

301
2,836
8,471

1,517
3,646
6,976

40,049
556,173

41,755
537,979

39,304

39,325

1 Includes securities purchased under agreements to resell.
2 Other than financial institutions and brokers and dealers.
3 Includes securities sold under agreements to repurchase.

3,896
28,697
7,298
17,612
3,787

46,756

70,968
65,950

116,158
4,576
1,295
27,716
6,591
1,162
7,209

677
112,004
4,128
659
26,184
6,409
1,446
8,445

241,483

240,789

70,496
65,755

4,144
3,921
853
798
21
21
172,281 170,987
135,169 134,167
21,751
21,711
481 .
479
7,477
7,333

70,651
65,899

702
117,167
4,130
804
26,043
6,837
1,247
6,903

240,622

70,533
65,811

702
120,428
4,157
2,199
28,937
7,662
1,109
6,835

1,11 A

117,807
4,586
753
30,334
6,487
1,493
7,586

240,618

240,762

70,605
65,893

70,475
65,823

3,906
823
23
170,138
133,720
21,698
492
7,113

3,895
803
23
170,090
133,644
21,838
494
7,096

3,880
807
26
170,013
133,463
21,945
498
7,086

3,858
772
22
170,287
133,781
22,138
482
7,113

7,298
66,997

7,115
76,266

7,017
78,922

7,021
73,777

6,772
73,004

326
5,600
7,903

3,490
6,583
7,260

44
4,010
9,669

457
2,397
8,633

324
2,604
8,383

703
1,782
11,299

42,563
543,030

42,288
528,711

43,125
534,365

42,609
533,341

43,505
538,370

44,309
542,046

45,308
542,570

38,777

38,713

39,248

39,305

39,168

39,221

39,382

4 This is not a measure of equity capital for use in capital adequacy
analysis or for other analytic uses.

A22
1.29

Domestic Financial Statistics □ March 1979
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 IA L B A N K S I N N E W Y O R K C I T Y
Millions of dollars, Wednesday figures

A ssets a n d L ia b ilities

1979

Account
Jan. 3

Jan. 10

Jan. 17

Jan. 24

Jan. 31?

Feb. lv

17,369

Feb. IAp Feb. 21 p

Feb. 28*

1 Cash items in process of collection.....................
2 Demand deposits due from banks in the United
States..............................................................
3 All other cash and due from depositary
institutions.....................................................
4 Total loans and securities1...................................

16,675

15,990

13,594

15,975

16,810

16,544

14,792

18,084

7,679

8,515

8,040

7,894

8,627

8,381

7,315

7,618

9,662

9,222
98,468

6,883
95,885

10,048
95,087

8,558
94,899

7,620
96,429

8,963
96,663

9,655
96,908

5,562
100,654

5,999
97,452

Securities
5 U.S. Treasury securities2......................................
6 Trading account2..............................................
7 Investment account, by maturity.....................
8
One year or less............................................
9
Over one through five years.........................
10
Over five years..............................................
11 Other securities2 ....................................................
12 Trading account2..............................................
13 Investment account..........................................
14
U.S. government agencies.............................
15
States and political subdivision, by maturity.
16
One year or less.........................................
17
Over one year............................................
18
Other bonds, corporate stocks and securities

n.a.
n.a.
6,485
1,119
4,653
712
n.a.
n.a.
11,267
1,376
9,220
1,832
7,388
671

n.a.
n.a.
6,306
958
4,653
696
n.a.
n.a.
11,196
1,376
9,180
1,783
7,397
641

n.a.
n.a.
6,183
837
4,606
739
n.a.
n.a.
11,243
1,375
9,215
1,817
7,398
652

n.a.
n.a.
5,892
750
4,419
723
n.a.
n.a.
11,290
1,426
9,215
1,750
7,465
648

n.a.
n.a.
5,844
650
4,447
748
n.a.
n.a.
11,258
1,405
9,205
1,732
7,473
648

n.a.
n.a.
6,244
767
4,626
850
n.a.
n.a.
11,355
1,505
9,208
1,645
7,564
641

n.a.
n.a.
6,336
748
4,749
839
n.a.
n.a.
11,250
1,440
9,165
1,666
7,499
645

n.a.
n.a.
6,698
888
4,766
1,044
n.a.
n.a.
11,266
1,447
9,173
1,617
7,556
646

n.a.
n.a.
6,604
932
4,659
1,013
n.a.
n.a.
11,012
1,413
9,037
1,464
7,573
561

4,643
2,962

4,288

5,105

6,419
A,119

6,362

5,567

8,699

6,483

Loans
4,886
19 Federal funds sold 3................................................
20 To commercial banks.......................................
3,444
21 To nonbank brokers and dealers in securities.
1,035
22 To others............................................................
406
23 Other loans, gross................................................. 77,828
24 Commercial and industrial...............................
39,336
25
Bankers’ acceptances and commercial
1,980
paper......................................................
26
All other........................................................
37,356
27
U.S. addressees..........................................
34,952
28
Non-U.S. addressees.................................
2,404
29 Real estate.........................................................
10,178
30 To individuals for personal expenditures___
7,294
To financial institutions
31
Commercial banks in the U.S......................
1,295
32
Banks in foreign countries...........................
4,327
33
Sales finance, personal finance companies,
etc............................................................
3,127
34
Other financial institutions...........................
4,427
35 To nonbank: brokers and dealers in securities.
4,635
36 To others for purchasing and carrying
securities4 ...................................................
366
192
37 To finance agricultural production.................
38 All other............................................................
2,650
39 Less: Unearned income..,....................................
662
40
Loan loss reserve........................................
1,336
75,830
41 Other loans, n e t....................................................
490
42 Lease financing receivables...................................
43 All other assets5....................................................
32,141
44 Total assets............................................................ 165,370
Deposits
45 Demand deposits....................................................
46 Mutual savings banks.......................................
47 Individuals, partnerships, and corporations...
48 States and political subdivisions......................
49
U.S. government...............................................
50 Commercial banks in United States...............
51
Banks in foreign countries...............................
52 Foreign governments and official institutions.
53 Certified and officers’ checks...........................
54 Time and savings deposits .....................................
55 Savings...............................................................
56
Individuals and nonprofit organizations....
57
Partnerships and corporations operated for
profit.......................................................
58
Domestic governmental units.......................
59
All other........................................................
61
62
63
64
65
66
67
68
69
70
71

60,277

584
33,192
430
139
15,838
5,490
1,366
3,238

50,808

9,414
8,761

461
182
11
41,394
31,915
1,862
48
3,139

Individuals, partnerships, and corporations.
States and political subdivisions..................
U.S. government...........................................
Commercial banks in U.S.............................
Foreign governments, official institutions,
4,430
and banks..............................................
Federal funds purchased6....................................
19,805
Other liabilities for borrowed money
0
Borrowings from Federal Reserve Banks.......
Treasury tax-and-loan notes...........................
1,065
All other liabilities for borrowed money........
4,396
Other liabilities and subordinated note and
debentures......................................................
16,394
Total liabilities...................................................... 152,746

72 Residual (total assets minus total liabilities)7..

12,623

1 Excludes trading account securities.
2 Not available due to confidentiality.
3 Includes securities purchased under agreements to resell.
4 Other than financial institutions and brokers and dealers.




1,041
640
75,719
38,000

2,782
981
525
75,363
37,876

3,912
988
204
74,605
37,643

1,281
358
74,912
37,404

4,146
1,966
250
74,736
37,599

3,558
1,759
250
75,820
38,084

5,023
2,774
902
76,061
38,256

3,922
1,689
872
75,423
38,287

1,295
36,705
34,308
2,397
10,210
7,294

1,380
36,496
34,176
2,320
10,217
7,265

1,199
36,444
34,148
2,297
10,245
7,262

964
36,440
34,091
2,349
10,293
7,27 4

921
36,678
34,393
2,286
10,285
7,255

1,121
36,964
34,683
2,280
10,323
7,255

1,094
37,162
34,876
2,286
10,391
7,258

950
37,337
35,076
2,261
10,377
7,264

1,094
4,008

1,224
3,903

1,158
3,546

1,010
3,497

884
3,331

1,191
3,916

1,266
3,930

953
3,548

3,174
4,455
4,529

3,034
4,452
4,055

2,938
4,407
4,281

3,017
4,404
4,823

3,152
4,364
4,560

3,236
4,405
4,042

2,950
4,340
4,439

3,064
4,373
4,221

364
193
2,399
649
1,331
73,739
489
32,941
161,388

401
194
2,739
657
1,333
73,373
497
32,103
161,764

403
190
2,532
660
1,333
72,612
489
32,427
157,861

411
200
2,579
639
1,364
72,908
492
32,026
161,169

412
201
2,693
648
1,386
72,702
493
31,084
162,394

421
209
2,736
669
1,396
73,754
498
30,567
161,486

418
216
2,596
669
1,401
73,990
498
31,230
160,354

432
206
2,695
660
1,410
73,354
499
32,157
163,854

56,648

55,770

52,242

56,103
A ll

516
28,753
403
305
18,244
4,705
786
2,936

418
30,029
464
194
15,380
4,712
962
3,611

51,224

51,349

9,556
8,890

9,537
8,890

373
28,512
426
279
13,712
4,767
1,181
2,992
51,913

9,516
8,846

405
27,691
462
77
14,965
4,848
974
4,886

53,978
A ll

56,149

28,837
547
101
14,856
5,189
982
3,049

395
29,060
476
571
15,838
5,798
867
3,144

58,556

29.397
518
224
16,645
4,924
770
3,197

54,308

50,996

50,823

50,265

50,397

9,486
8,842

9,535
8,890

9,538
8,896

49,881

9,551
8,892

441
191
13

440
184
12
40,333
31,071
1,877
23
3,274

381
29,600
412
102
18,552
4,662
1,255
3,593
9,548
8,913

460
189
16
41,668
31,860
1,908
42
3,287

449
185
12
41,812
32,041
1,890
40
3,329

450
209
11
42,397
32,432
1,899
40
3,402

438
196
9
41,510
31,741
1,817
35
3,375

438
210
12
41,272
31,660
1,839
36
3,328

A0,129

31,206
1,868
30
3,275

441
187
14
40,858
31,265
1,906
29
3,296

4,570
19,344

4,514
19,376

4,624
18,269

4,541
17,168

4,409
22,205

4,350
22,353

4,362
18,931

4,087
19,291

0
390
3,935

975
556
3,792

100
1,124
4,104

2,021
1,255
3,770

0
784
4,047

0
482
4,037

0
324
3,930

0
411
4,049

17,281
148,821

17,403
149,221

17,540
145,293

17,150
148,462

17,438
149,605

17,623
148,739

17,776
147,506

18,777
150,966

12,567

12,543

12,568

12,707

12,789

12,748

12,848

12,889

5 Includes trading account securities.
6 Includes securities sold under agreements to repurchase.
7 This is not a measure of equity capital for use in capital adequacy
analysis or for other analytic uses.

W eekly Reporting Banks

A23

1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda
Millions o f dollars, Wednesday figures

1979
Account
Jan. 3

Jan. 10

Jan. 17

Jan. 24

Jan. 31*

Feb. I p

Feb. 14* Feb. 21 p Feb. 28**

Large weekly reporting banks with assets of $750 million or more
1 Total loans (gross) and investments adjusted1. . . 444,829
2 Total loans (gross) adjusted1............................... 345,358
3 Demand deposits adjusted2................................. 113,225

443,047
343,643
105,366

441,628
341,803
108,432

438,070
338,273
102,872

440,546
341,318
101,540

440,711
340,677
99,802

440,650
341,331
101,899

447,966
347,163
101,046

444,575
343,995
98,725

4 Time deposits in accounts o f $100,000 or more..
5
Negotiable C D s................................................

131,239

131,676

131,756

133,507

131,950

131,070

131,029

130,781

130,852

7 Loans sold outright to affiliates*...........................
8 Commercial and industrial...............................
9 Other..................................................................

3,745

3,650

3,554

3,602

3,570

3,578

3,615

3,618

3,540

6

Other time deposits..........................................

96,584
34,655
2,606
1,139

96,857
34,818

2,548
1,103

96,473
35,282
2,452
1,102

97,737
35,771

2,494
1,108

96,243
35,707

2,501
1,069

95,486
35,584
2,481
1,097

95,240
35,789
2,554
1,061

95,124
35,657
2,562
1,056

94,719
36,133
2,489
1,050

Large weekly reporting banks with assets of $ 1 billion or more
10 Total loans (gross) and investments adjusted1... 416,412
11 Total loans (gross) adjusted1............................... 324,226
12 Demand deposits adjusted2................................. 105,432

414,155
322,188
97,527

413,220
320,657
100,812

409,743
317,194
95,862

412,090
320,173
94,442

412,302
319,581
92,834

412,265
320,261
94,590

419,497
325,956
94,130

416,190
322,941
91,868

13 Time deposits in accounts o f $100,000 or more. ..
14 Negotiable C D s................................................
15 Other time deposits..........................................

123,865

124,296

124,273

125,963

124,399

123,415

123,269

16 Loans sold outright to affiliates 3...........................
17 Commercial and industrial...............................
18 Other..................................................................

3,703

92,271
31,593
2,588
1,115

92,280
32,017
3,608

2,528
1,080

91,956
32,317
3,512

2,433
1,078

93,146
32,817
3,560

2,476
1,084

91,608
32,791
3,528

2,484
1,044

90,766
32,648
3,537

2,464
1,073

123,046

90,370
32,676

123,131

90,535
32,734
3,573

3,575

3,498

94,646
77,030
21,817

2,535
1,038

2,543
1,033

89,988
33,143
2,471
1,027

Large weekly reporting banks in New York City
19 Total loans (gross) and investments adjusted1-4.
20 Total loans (gross) adjusted1...............................
21 Demand deposits adjusted2.................................
22 Time deposits in accounts o f $100,000 or more. . .
23 Negotiable C D s................................................
24 Other time deposits..........................................

11,91A

26,931

93,809
76,306
21,424

93,070
75,644
24,207

91,822
74,641
24,657

92,644
75,542
23,259

93,666
76,068
22,456

94,224
76,637
22,478

96,435
78,471
24,949

36,237

36,645

36,815

37,314

36,422

36,192

35,638

35,698

95,726

29,137
7,100

29,489
7,156

1 Exclusive of loans and federal funds transactions with domestic com­
mercial banks.
2 All demand deposits except U.S. government and domestic banks
less cash items in process of collection.




29,596
7,220

30,113
7,201

29,139
7,282

28,844
7,348

28,309
7,329

28,321
7,377

35,191

27,683
7,508

3 Loans sold are those sold outright to a bank’s own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank’s holding com­
pany (if not a bank) and nonconsolidated nonbank subsidiaries of the
holding company.
4 Excludes trading account securities.

A24

1.31

Domestic Financial Statistics □ March 1979

L A R G E W E E K L Y R E P O R T IN G C O M M E R C IA L B A N K S
L oan s
Millions of dollars

D o m e stic C lassified C om m ercial and Industrial

Outstanding
Industry classification

Net change during—
1979

1978
Oct. 25

Nov. 29

1 Durable goods manufacturing..........

17,290

2 Nondurable goods manufacturing.. .
3 Food, liquor, and tobacco.............
4 Textiles, apparel, and leather........
5 Petroleum refining..........................
6 Chemicals and rubber....................
7 Other nondurable goods................

16,805
4,431
4,241
2,445
3,274
2,414

1978

Feb. 28

1979

Dec. 27

Jan. 31

17,325

18,004

17,728

18,690

64

365

679

-276

962

16,775
4,654
3,964
2,522
3,210
2,425

17,216
4,936
3,726
2,643
3,540
2,371

16,468
4,620
3,788
2,370
3,285
2,404

16,771
4,704
3,931
2,336
3,371
2,430

166
-7 7
243
-116
-9 9
214

213
686
-624
153
88
-8 9

441
282
-238
121
330
-5 4

-748
-316
62
-273
-255
33

303
84
143
-3 4
86
26

Q3

Q4

Dec.

Jan.

Feb.

8 Mining (including crude petroleum
and natural gas)..........................

10,469

10,495

10,652

10,038

10,000

167

200

157

-614

-3 8

9 Trade...................................................
10 Commodity dealers.........................
11 Other wholesale...............................
12 Retail...............................................

20,113
1,797
9,419
8,897

20,364
1,787
9,520
9,057

19,964
1,963
9,436
8,565

21,128
1,980
10,157
8,990

21,354
1,940
10,276
9,137

-182
-316
251
-114

817
227
277
312

-400
176
-8 4
-492

1,164
17
721
425

226
-4 0
119
147

13 Transportaion, communication, and
other public utilities...................
14 Transportation................................
15 Communication..............................
16 Other public utilities.......................

12,636
5,655
1,695
5,287

12,892
5,649
1,756
5,487

13,411
5,641
1,797
5,973

13,528
5,784
1,753
5,991

13,738
5,962
1,825
5,952

184
28
67
88

1,086
74
83
930

519
-8
41
486

117
143
-4 4
18

210
178
72
-3 9

17 Construction.......................................
18 Services................................................
19 All other1............................................

5,212
14,186
17,597

5,156
14,432
17,995

5,207
14,957
16,908

5,112
15,465
15,582

5,056
15,610
15,946

115
509
205

-2 5
982
-409

51
525
-1,087

-9 5
508
-1 ,3 2 6

-5 6
145
364

20 Total domestic loans..........................

114,308

115,434

116,319

115,047

117,167

1,228

3,229

885

-1 ,2 7 2

2,120

21 M emo: Term loans (original maturity
more than 1 year) included in
domestic loans.............................

n.a.

n.a.

n.a.

57,676

58,270

n.a.

n.a.

n.a.

n.a.

594

1 Includes commercial and industrial loans at a few banks with assets
with domestic assets of $1 billion or more as of December 31, 1977 are
of $1 billion or more that do not classify their loans.
included in this series. The revised series is on a last-Wednesday-of-themonth basis.
N ote. New series. The 134 large weekly reporting commercial banks




Deposits and Commercial Paper
1.32

A25

G R O S S D E M A N D D E P O S IT S o f In d iv id u a ls , P a rtn e rs h ip s , a n d C o r p o r a tio n s
Billions of dollars, estimated daily-average balances
At commercial banks
Type of holder

1 All holders,

individuals,

partnerships,

and

2 Financial business..................................................
3 Nonfinancial business............................................

1974
Dec.

1975
Dec.

1976
Dec.

225.0

236.9

19.0
118.8
73.3
2.3
11.7

20.1
125.1
78.0
2.4
11.3

1977

1978

June

Sept.

Dec.

Mar.

June

Sept.

Dec.

250.1

253.8

252.7

274.4

262.5

271.2

278.8

294.6

22.3
130.2
82.6
2.7
12.4

25.9
129.2
84.1
2.5
12.2

23.7
128.5
86.2
2.5
11.8

25.0
142.9
91.0
2.5
12.9

24.5
131.5
91.8
2.4
12.3

25.7
137.7
92.9
2.4
12.4

25.9
142.5
95.0
2.5
13.1

27.8
152.7
97.4
2.7
14.1

At weekly reporting banks

7 All

holders,

individuals,

partnerships,

and

8 Financial business..................................................
9 Nonfinancial business............................................
10 Consumer................................................................
12 Other.......................................................................

1975
Dec.

1976
Dec.

1977
Dec.

124.4

128.5

15.6
69.9
29.9
2.3
6.6

17.5
69.7
31.7
2.6
7.1

N ote. Figures include cash items in process of collection. Estimates of
gross deposits are based on reports supplied by a sample of commercial

1.33

1978
June

July

Aug.

Sept.

Oct.

Nov.

Dec.

139.1

136.9

139.9

137.7

139.7

141.3

142.7

147.0

18.5
76.3
34.6
2.4
7.4

19.0
71.9
36.6
2.3
7.1

19.4
73.7
37.1
2.3
7.3

19.4
72.0
36.8
2.4
7.1

18.9
74.1
37.1
2.4
7.3

19.1
75.0
37.5
2.5
7.2

19.3
75.7
37.7
2.5
7.5

19.8
79.0
38.2
2.5
7.5

banks. Types of depositors in each category are described in the June 1971
Bulletin, p. 466.

C O M M E R C IA L P A P E R A N D B A N K E R S A C C E P T A N C E S O U T S T A N D I N G
Millions of dollars, end of period

Instrument

1975
Dec.

1976
Dec.

1978

1977
Dec.

July

Aug.

Sept.

1979
Oct.

Nov.

Dec.

Jan.

Commercial paper (seasonally adjusted)
1 All issuers................................................................ r48,471

'52,971

'65,101

'74,421

'74,135

'77,021

'77,734 '80,679

'83,665

85,226

Financial companies: 1
Dealer-placed paper:2
'8,884 '10,590 '10,864
2
Total................................................................ r6 ,212 ''7,261
1,762
1,900
2,132
2,633
2,935
3
Directly-placed paper:3
r31,404 *•32,511 '40,484 '46,410 '45.828
4
6,892
5,959
7,102 10,030
9,634
5
Bank-related....................................................

'11,429
2,622

'10,949
2,868

'12,296
3,521

12,915
4,413

'47,760 '48,460 '50,093 '51,630
10,383 10,925 11,478 12,314

52,880
12,191

'17,832

'19,739

19,431

33,749

r 10,855 '13,199

'15,733

'17,421

'17,443

'18,325

'11,487
3,231

'19,099

Dollar acceptances (not seasonally adjusted)
7 Total........................................................................
8
9
10
11
12

18,727

22,523

25,450

7,333

10,442

10,434

8,769
1,673

8,915
1,519

6,345
899

1,126
293

991
375

954
362

568

633

19,766
7,415
6,565
13,599

Held by:

Accepting banks ..................................................

Own bills.........................................................
Bills bought....................................................
Federal Reserve Banks:
Own account...................................................
Foreign correspondents.................................

5,899
1,435

Others..................................................................

9,975

10,715

13,904

Based on:
14 Imports into United States...............................
15 Exports from United States..............................
16 All other..............................................................

3,726
4,001
11,000

4,992
4,818
12,713

6,378
5,863
13,209

13

1 Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
2 Includes all financial company paper sold by dealers in the open
market.




27,579
7,244

27,952

30,579

32,145

33,700

7,048

7.647

8,379

8,579

6^61
1,186

7,012
1,366

8,082

6,131
917

6,840
1,243

7,653
927

1
556

557

585

1
664

765

20,638

19,748

21,644

23,478

24,456

25,646

7,885
6,558
13,876

7,957
6,350
13,644

8,575
6,665
15,339

8,675
7,224
16,245

8,574
7,586
17,540

8,869
7,762
17.118

28,319

7,339

6.214
1,125

3 As reported by financial companies that place their paper directly
with investors.
4 Includes public utilities and firms engaged primarily in activities such
as communications, construction, manufacturing, mining, wholesale and
retail trade, transportation, and services.

A26
1.34

Domestic Financial Statistics □ March 1979
P R I M E R A T E C H A R G E D B Y B A N K S o n S h o rt-te rm B usiness L o a n s
Percent per annum
Rate

Effective date

Rate

1978—Jan. 10............

8

1978—Sept. 15...........
28...........

9%
93/4

5...........
26...........

00 00

Effective date

June 16...........
30...........

9

Aug. 31............

91/4

May

1.35

Month

Average
rate

Month

Average
rate

6.75
6.75
6.83
7.13
7.52
7.75
7.75

1978—M ay.....................

7.93
8.00
8.00
8.00

Nov......................
Dec.......................

8.27
8.63
9.00
9.01
9.41
9.94
10.94
11.55

I979 —j an........................
Feb.......................

11.75
11.75

1...........
6...........
17...........
24...........

10 %

103/4
11
111/2

1977—June.....................
July......................
Aug......................
Sept......................
Oct.......................
Nov......................
Dec.......................

Dec. 26...........

113/4

1978—Jan.......................
Feb.......................
Mar......................
A pr......................

Oct. 13...........
27...........

10

Nov.

10 %

T E R M S O F L E N D I N G A T C O M M E R C IA L B A N K S

Item

July......................
Aug......................
Sept......................

S u rv ey o f L o a n s M a d e , N o v e m b e r 6 -1 1 , 1978
Size of loan (in thousands of dollars)

All
sizes
1-24

25-49

50-99

100-499

1,000
and over

500-999

Short-term commercial and industrial loans
1
2
3
4

Amount of loans (thousands of dollars).........
Number of loans................................................
Weighted-average maturity (months)..............
Weighted-average interest rate (percent per
annum)........................................................
5 Interquartile range1......................................
Percent of amount of loans:
6 With floating rate..........................................
7 Made under commitment.............................

8
9
10
11

Amount of loans (thousands of dollars).........
Number of loans................................................
Weighted-average maturity (months)..............
Weighted-average interest rate (percent per
annum)........................................................
12 Interquartile range1.......................................
Percentage of amount of loans:
13 With floating rate..........................................
14 Made under commitment.............................

9.533,752
143,729
3.0

735,419
105,705
2.9

493,312
15.165
2.7

595.003
9,331
2.7

1.867,088
11,360
3.1

680.499
1.105
3.4

5,162,431
1.063
3.1

11.44
11.73
11.73
11.43
11.53
11.19
11.37
10.92-12.10 10.38-13.29 10.50-12.75 10.37-12.62 10.78-12.25 10.25-11.73 11.00-11.85
64.4
36.2

27.1
17.3

26.4
20.7

35.0
31.8

50.1
42.8

Long-term commercial and industrial loans
----------------'
288,653
222,967
17.174
1,403
30.6
44.4

1,177,815
18.903
43.2
11.38
10.47-12.50

11.41
10.47-12.40

61.2
60.8

40. 1
42.3

69.3
70.0

81.2
34.1

121.987
172
42.1

544.208
155
49.6

11.09
11.93
11.58
11.00-12.88 10.75-12.68 10.00-12.13
68.4
40.3

62.8
69.1

69.0
77.1

Construction and land development loans
15
16
17
18
19
20
21
22
23
24
25

Amount of loans (thousands of dollars).........
Number of loans...............................................
Weighted-average maturity (months)...............
Weighted-average interest rate (percent per
annum).......................................................
Interquartile range1......................................
Percentage of amount of loans:
With floating rate..........................................
Secured by real estate....................................
Made under commitment.............................
Type of construction : 1- to 4-family...........
Multifamily...............
Nonresidential..........

1,012,101
25,510
7.7
11.55
10.50-12.50

167,317
18.633
4.2

116,176
1,766
5.5

403,138
1,800
8.7

214,383
157
11.8

10.82
11.46
11.65
11.90
9.92-12.13 10.29-12.68 10.56-12.62 11.75-12.36

11.46
10.50-12.75

42.7
94.2
60.4
38.2
15.4
46.3
All
sizes

111,087
3,155
4.0

19.8
89.1
66.3
86.9
1.0
12.1

1-9

18.9
95.8
88.7
85.5
1.5
13.0

10-24

23.9
95.2
31.7
32.5
3.3
64.2

25-49

59.6
95.4
52.8
14.0
27.6
58.4

50-99

51.4
94.7
70.9
24.5
17.5
57.9

100-249

250
and over

Loans to farmers
26
27
28
29
30
31
32
33
34
35

Amount of loans (thousands of dollars).........
Number of loans...............................................
Weighted-average maturity (months)...............
Weighted-average interest rate (percent per
annum).......................................................
Interquartile range1.. ...................................
By purpose of loan:
Feeder livestock.........................................
Other livestock..........................................
Other current operating expenses.............
Farm machinery and equipment..............
Other...........................................................

134,907
36,846
7.5

186,760
12.625
8.9

169,744
5,009
8.0

156,770
2,386
6.4

9.94
10.36
9.50-10.80 1 9.20-10.47

9.98
9.20-10.50

9.91
9.24-10.38

10.25
9.73-10.50

9.74
9.81
9.87
10.12
10.34

9.82
10.03
9.83
10.51
10.46

9.64
10.81
10.02
9.80
10.18

10.20
10.37
10.33
9.70
10.20

949,031
58,275
7.4

10.23
10.801
10.27
10.29
10.72

1 Interest rate range that covers the middle 50 percent of the total
dollar amount of loans made.
2 Fewer than three sample loans.




171.536
1,198
8.0

129.314
211
4.7

10.66
11.69
9.99-11.57 10.47-12.69
10.15
11.40
11.03
10.76
10.96

11.74
12.33
11.42
(2)
11.78

Note. For more detail, see the board’s 416 (G. 14) statistical release,
The past data have been revised and are available from Publications
Services, Division of Support Services, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551.

Securities M arkets

A ll

.36 INTEREST RATES Money and Capital Markets
Averages, per cent per annum

1976

1977

1978

1978
Nov.

1979

Dec.

Jan.

1979, week ending—

Feb.

Feb. 3 Feb. 10 Feb. 17 Feb. 24 Mar. 3

Money market rates
1 Federal funds'................................................

Prime commercial paper2 3
2
3

90- to 119-day............................................
4- to 6-m onth.............................................

4 Finance company paper, directly placed,
3- to 6-month3>4....................................
5 Prime bankers acceptances, 90-day3-5. . . .

Large negotiable certificates of deposit

5.05

5.54

7.94

9.76

10.03

10.07

10.06

10.12

10.06

10.15

9.97

10.06

5.24
5.35

5.54
5.60

7.94
7.99

10. 14
10.23

10.37
10.43

10.25
10.32

9.95
10.01

9.99
10.07

9.94
9.99

9.96
10.02

9.97
10.03

9.96
10.03

5.22

5.49

7.78

9.82

10.06

10.10

9.85

9.86

9.83

9.86

9.85

9.84

5. 19

5.59

10.01

9.92

10.03

9.96

10.06

10.03

8. 11

10.53

10.55

10.29

3-month, secondary market6..................

5.26

5.58

8.20

10.72

10.72

10.51

10.18

r10.13

10.17

10.16

10.26

10.14

7 Eurodollar deposits, 3-month7 .................

5.57

6.05

8.74

11.51

11.62

11.16

10.79

'10.63

10.90

10.80

10.84

10.61

4.98
5.26
5.52

5.27
5.53
5.71

7.19
7.58
7.74

8.64
9.24
9.20

9.08
9.36
9.44

9.35
9.47
9.54

9.32
9.41
9.39

9.28
9.34
9.31

9.24
9.37
9.34

9.28
9.36
9.35

9.41
9.50
9.49

9.44
9.50
9.50

4.989
5.266

5.265
5.510

7.221
7.572

8.787
9.204

9.122
9.397

9.351
9.501

9.265
9.349

9.324
9.376

9.186
9.307

9.257
9.342

9.293
9.370

9.451
9.498

6

U.S. government securities
8
9
10
11
12

Bills:3-8
Market yields:
3-month...............................................
6-m onth...............................................
1-year...................................................
Rates on new issue:9
3-month...............................................
6-m onth...............................................

Capital market rates

13
14
15
16
17
18
19
20
21
22

23
24
25
26
27
28
29
30
31
32
33
34

Government notes and bonds
U.S. Treasury
Constant maturities:10
1-year.........................
2-year.........................
3-year.........................
5-year.........................
7-year.........................
10-year.......................
20-year.......................
30-year.......................
Notes and bonds maturing in— 11
3 to 5 years............................... .
Over 10 years (long-term)..........
State and local:
Moody’s series12
A aa.......................
B aa.......................
Bond Buyer series13.
Corporate bonds
Seasoned issues14
All industries...........
By rating groups:
A a ..
A. . .
Baa.
laa utility bonds:15
New issue.....................
Recently offered issues.
Dividend/price ratio
Preferred stocks..
Common stocks.

6.77
7. 18
7.42
7.61
7.86

6.09
6.45
6.69
6.99
7.23
7.42
7.67

8.34
8.34
8.29
8.32
8.36
8.41
8.48
8.49

10.01
9.42
9.04
8.84
8.80
8.81
8.75
8.75

10.30
9.72
9.33
9.08
9.03
9.01
8.90

10.41
9.86
9.50
9.20
9.14
9. 10
8.98
8.94

10.24
9.72
9.29
9.13
9.11
9.10
9.03
9.00

10. 13
9.62
9. 15
8.94
8.93
8.94
8.89
8.85

10.19
9.64
9.20
9.05
9.05
9.05
9.00
8.96

10.19
9.68
9.28
9.13
9.12
9.12
9.04
9.01

10.33
9.81
9.39
9.24
9.21
9.17
9.09
9.06

10.36
9.89
9.45
9.28
9.22
9.18
9.12
9.08

6.94
6.78

6.85
7.06

8.30
7.89

8.97
8.16

9.23
8.36

9.36
8.43

9.16
8.43

9.02
8.32

9.07
8.39

9.16
8.44

9.25
8.47

9.32
8.49

5.66
7.49
6.64

5.20
6.12
5.68

5.52
6.27
6.03

5.59
6.65
6.19

5.91
6.76
6.51

5.95
7.14
6.47

5.66
6.75
6.31

5.70
7.00
6.22

5.60
6.75
6.31

5.60
6.75
6.33

5.75
6.50
6.38

5.80
6.40
6.42

9.01

8.43

9.07

9.40

9.49

9.65

9.63

9.60

9.60

9.61

9.65

9.73

8.43
8.75
9.09
9.75

8.02
8.24
8.49
8.97

8.73
8.92
9.12
9.45

9.03
9.24
9.48
9.83

9.16
9.33
9.53
9.94

9.25
9.48
9.72
10.13

9.26
9.50
9.68
10.08

9.19
9.43
9.72
10.07

9.23
9.46
9.66
10.04

9.25
9.49
9.66
10.04

9.28
9.52
9.68
10.10

9.36
9.59
9.74
10.21

8.48
8.49

8. 19
8.19

8.96
8.97

9.27
9.27

9.28
9.41

9.54
9.51

9.53
9.56

r9.40

9.42
9.51

9.55

9.59
9.63

9.64
9.67

7.97
3.77

7.60
4.56

8.25
5.28

8.43
5.45

8.84
5.39

8.79
5.29

8.77
5.43

8.65
r5 .28

8.71
5.45

8.84
5.36

8.73
5.35

8.78
5.55

1 Weekly figures are 7-day averages of daily effective rates for the week
ending Wednesday; the daily effective rate is an average of the rates on
a given day weighted by the volume of transactions at these rates.
2 Beginning Nov. 1977, unweighted average of offering rates quoted
by five dealers. Previously, most representative rate quoted by those
dealers.
3 Yields are quoted on a bank-discount basis.
4 Averages of the most representative daily offering rates published by
finance companies for varying maturities in this range.
5 Average of the midpoint of the range of daily dealer closing rates
offered for domestic issues.
6 Weekly figures (week ending Wednesday) are 7-day averages of the
daily midpoints as determined from the range of offering rates; monthly
figures are averages of total days in the month. Beginning Apr. 5, 1978,
weekly figures are simple averages of offering rates.
7 Averages of daily quotations for the week ending Wednesday.
8 Except for new bill issues, yields are computed from daily closing
bid prices.




9 Rates are recorded in the week in which bills are issued.
10 Yields on the more actively traded issues adjusted to constant
maturities by the U.S. Treasury, based on daily closing bid prices.
11 Unweighted averages for all outstanding notes and bonds in maturity
ranges shown, based on daily closing bid prices. “Long-term” includes
all bonds neither due nor callable in less than 10 years, including a num­
ber of very low yielding “flower” bonds.
12 General obligations only, based on figures for Thursday, from
Moody’s Investors Service.
13 Twenty issues of mixed quality.
14 Averages of daily figures from Moody’s Investors Service.
15 Compilation of the Board of Governors of the Federal Reserve
System.
Issues included are long-term (20 years or more). New-issue yields
are based on quotations on date of offering; those on recently offered
issues (included only for first 4 weeks after termination of underwriter
price restrictions), on Friday close-of-business quotations.

A28

Domestic Financial Statistics □ March 1979

1.37 STOCK MARKET Selected Statistics
1978
Indicator

1976

1979

1978

1977

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

55.76
61.31
43.69
38.79
57.59

55.06
60.42
42.27
39.22
56.09

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...............................................................

54.45
60.44
39.57
36.97
52.94

6 Standard & Poor’s Corporation (1941-43 = 10)1..

53.67
57.84
41.07
40.91
55.23

53.76
58.30
43.25
39.23
56.74

58.53
64.07
49.45
40.20
63.28

58.58
64.23
50.19
39.82
63.22

56.40
61.60
46.70
39.44
60.42

52.74
57.50
41.80
37.88
54.95

53.69
58.72
42.49
38.09
55.73

102.01

98.18

96.11

103.92

103.86

100.58

94.71

96.10

99.70

98.23

7 American Stock Exchange (Aug. 31,1973 = 100). 101.63

116.18

144.56

162.52

170.95

160.14

144.17

149.94

159.26

160.92

Volume of trading (thousands of shares)2
New York Stock Exchange............................... 21,189
American Stock Exchange................................ 2,565

20,936
2,514

28,591
3,922

37,603
5,526

33,612
5,740

31,020
4,544

24,505
3,304

24,622
3,430

27,988
3.150

25,037
2,944

8
9

Customer financing (end-of-period balances, in millions of dollars)
10 Regulated margin credit at brokers/dealers
11 Margin stock4.........................................
12 Convertible bonds..................................
13 Subscription issues.................................

8,166
7,960
204
2

9,993
9,740
250
3

11,035
10,830
205
1

11,984
11,740
243
1

12,626
12,400
225
1

12,307
12,090
216
1

11,209
11,000
209

11,035
10,830
205
1

10,955
10,750
204
1

M emo: Free credit balances at brokers6
14 Margin-account......................................
15 Cash-account..........................................

585
1,855

640
2,060

835
2,510

795
2,555

825
2,655

885
2,465

790
2,305

835
2,510

810
2,565

T
n.a.

Margin-account debt at brokers (percentage distribution, end of period)
16 Total.......................................................................

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

By equity class (in percent):7
Under 40.............................................................
40-49...................................................................
50-59...................................................................
60-69...................................................................
70-79...................................................................
80 or more..........................................................

12.0
23.0
35.0
15.0
8.7
6.0

18.0
36.0
23.0
11.0
6.0
5.0

33.0
28.0
18.0
10.0
6.0
5.0

12.0
34.0
23.0
16.0
9.0
6.0

15.0
36.0
23.0
13.0
7.0
6.0

47.0
20.0
15.0
8.0
5.0
5.0

32.0
27.0
20.0
10.0
6.0
5.0

33.0
28.0
18.0
10.0
6.0
5.0

17
18
19
20
21
22

100.0
21.0
32.0
22.0
12.0
7.0
6.0 .

n.a.

Special miscellaneous-account balances at brokers (end of period)
23 Total balances (millions of dollars) 8...................
Distribution by equity status (percent)
Net credit status................................................
Debit status, equity of—
25
60 percent or m ore.......................................
26
Less than 60 percent.....................................

24

8,776

9,910

41.3

43.4

47.8
10.9

44.9
11.7
Margin requirements (percent of market value)9
Effective date

27 Margin stocks........................................................
28 Convertible bonds..................................................
29 Short sales..............................................................

Mar. 11, 1968

June 8, 1968

May 6, 1970

Dec. 6, 1971

Nov. 24, 1972

Jan. 3, 1974

70
50
70

80
60
80

65
50
65

55
50
55

65
50
65

50
50
50

1 Effective July 1976, includes a new financial group, banks and in­
surance 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 Based on trading for a 6-hour day.
3 Margin credit includes all credit extended to purchase or carry
stocks or related equity instruments and secured at least in part by stock.
Credit extended is end-of-month data for member firms of the New York
Stock Exchange.
In addition to assigning a current loan value to margin stock generally,
Regulations T and U permit special loan values for convertible bonds
and stock acquired through exercise of subscription rights.
4 A distribution of this total by equity class is shown on lines 23-28.
5 Nonjnargin stocks are those not listed on a national securities ex­
change arid not included on the Federal Reserve System’s list of over-thecounter margin stocks. At brokers, such stocks have no loan value.
6 Free credit balances are in accounts with no unfulfilled commitments
to the brokers and are subject to withdrawal by customers on demand.




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 re­
quired 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 or 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.
Regulation G and special margin requirements for bonds convertible
into stocks were adopted by the Board of Governors effective Mar. 11,
1968.

Thrift Institutions

A29

1.38 SAVINGS INSTITUTIONS Selected Assets and Liabilities
Millions o f dollars, end o f period

1975

1976

1978

1977
May

Account

June

July

Aug.

1979
Sept.

Oct.

| Nov.

Dec.

Jan.*

Savings and loan associations9
1 Assets..................................... 338,233 391,907 459,241 487,052 491,576 498,301 504,298 508,977 515,352

520,677 523,649 529,926

2 Mortgages............................. 278,590 323,005 381,163 402,305 407,965 411,956 416,677 420,971 425,236
3 Cash and investment
securities1........................... 30,853 35,724 39,150 42,444 41,505 43,627 44,188 43,987 45,577
4 Other...................................... 28,790 33,178 38,928 42,303 42,106 42,718 43,433 44,019 44,539

429,420 432,858 435,453
45,869 44,855
45,388 45,936

47,770
46,703

5 Liabilities and net worth........ 338,233 391,907 459,241 487,052 491,576 498,301 504,298 508,977 515,352

520,677 523,649 529,926

Savings capital....................... 285,743 335,912 386,800 401,930 408,586 411,660 413,972 420,405 423,050
Borrowed money .................... 20,634 19,083 27,840 32,759 34,270 35,730 37,219 38,595 39,873
FHLBB.............................. 17,524 15,708 19,945 23,323 24,875 26,151 27,363 28,632 29,456
9,395
9,579
9,856
9,963 10,417
9,436
3,375
7,895
Other................................ . 3,110
5,128
6,840
9,911 11,386 11,632 11,540 11,422 11,222 11,165
Loans in process...................
9,506 14,239 10,046 11,972 13,906 10,676 12,832
6,949
Other......................................
8,074

425,207 431,009 435,771

6
7
8
9
10
11

40,711 42,960

30,052 31,990
10,659 10,970
11,315 10,737
14,666 9,918

42,423

31,776
10,647
10,458
11,990

12 Net worth2.............................

19,779

21,998

25,184

26,738

27,042

27,399

27,779

28,079

28,432

28,808 29,025

29,284

13 M emo : Mortgage loan commitments outstanding3..

10,673

14,826

19,875

23,939

22,927

22,393

22,047

21,648

21,503

20,738 18,734

18,174

14 Assets..................................... 121,056 134,812 147,287 152,202 153,175 154,315 155,210 156,110 156,843

157,436 158,185

Mutual savings banks10

Loans:
15 Mortgage........................... 77,221
4,023
16
Securities:
17 U.S. government.............. 4,740
18 State and local government. 1,545
19 Corporate and other4....... 27,992
2,330
20 Cash.......................................
21 Other assets...........................
3,205

23
24
25
26
27
28
29
30

81,630
5,183

88,195
6,210

90,915
7,907

91,555
7,771

92,230
8,207

92,866
8,379

93,403
8,418

93,903
8,272

94,497 95,205
7,921 7,176

5,840
2,417
33,793
2,355
3,593

5,895
2,828
37,918
2,401
3,839

5,491
2,994
39,225
1,798
3,873

5,304
3,008
39,427
2,163
3,946

5,269
3,025
39,639
2,029
3,915

5,210
3,098
39,592
2,080
3,985

5,172
3,180
39,639
2,293
4,006

5,105
3,190
39,651
2,735
3,988

5,035 4,950
3,307 3,335
39,679 39,759
3,033 3,730
3,962 4,031

121,056 134,812 147,287 152,202 153,175 154,315 155,210 156,110 156,843

157,436 158,185

Deposits ................................. 109,873 122,877 134,017 137,307 138,709 139,128 139,308 140,816 141,026

141,155 142,629

n.a.

Regular:5........................... 109,291 121,961 132,744 135,785 137,089 137,430 137,690 139,068 139,422 r 139,853 141,089
69,653 74,535 78,005 78,273 77,321 76,116 75,578 75,423 74,124
72,398 71,702
Time and other.............. 39,639 47,426 54,739 57,512 59,768 61,313 62,112 63,645 65,298
67,299 69,387
582
916
1,272
1,521
1,604
1,620
1,698
1,619
1,747
1,458 1,540
Other..................................
2,884
3,292
4,481
3,969
5,040
Other liabilities.............
2,755
4,636
5,246
4,570
5,411 4,666
9,052
General reserve accounts.. . .
8,428
9,978 10,414 10,497 10,551 10,654 10,725 10,777
10,870 10,891
M emo : Mortgage loan commitments outstanding®.. 1,803
2,439
4,066
4,606
4,843
4,958
4,872
4,789
4,561
4,823 4,400
Life insurance companies11

31 Assets..................................... 289,304 321,552 351,722 366,938 369,879 374,415 378,124 381,050 382,446
32
33
34
35
36
37
38
39
40
41
42

Securities:

13,758

4,736
4,508
4,514

17,942

5,368
5,594
6,980

19,553

5,315
6,051
8,187

19,489

5,206
5,915
8,368

19,401

4,984
5,943
8,474

19,447

5,006
5,925
8,516

19,563

5,155
5,884
8,524

19,638

5,156
6,001
8,481

19,757

5,183
6,035
8,539

135,317 157,246 175,654 187,126 188,500 192,112 194,620 196,152 195,883

Stocks.............................
Mortgages.............................
Real estate.............................
Policy loans...........................
Other assets...........................

107,256 122,984 141,891 152,267 153,812 156,207 157,888 159,972 161,347
28,061 34,262 33,763 34,859 34,688 35,905 36,732 36,180 34,536
89,167
9,621
24,467
16,971

91,552
10,476
25,834
18,502

96,848
11,060
27,556
21,051

99,190 100,040 100,596 101,602 102,365 103,161
11,537 11,540 11,562 11,538 11,583 11,693
28,431 28,649 28,843 29,067 29,290 29,521
21,165 21,749 21,855 21,734 22,022 22,431

385,562 389,021
19,711

4,934
6,235
8,542

19,579

4,795
6,250
8,534

197,615 197,342

162,835 161,923
34,780 35,419

104,106
11,707
29,818
22,605

105,932
11,776
30,202
24,190

Credit unions
43 Total assets/liabilities and
capital...........................
Federal.............................
State.................................

54,084
29,574
24,510

38,037
20,209
17,828

45,225
24,396
20,829

28,169

34,384

14,869
13,300

18,311
16,073

22,717
19,338

49 Savings ................................. 33,013
50 Federal (shares)...............
17,530
51 State (shares and deposits), 15,483

39,173
21,130
18,043

46,832

44
45

46 Loans outstanding ................
47 Federal.............................
48 State..................................

For notes see bottom o f page A30.




42,055

25,849
20,983

58,018
31,925
26,093
45,506

59,381
32,793
26,588

60,141
33,315
26,826

61,277
34,058
27,219

60,909
33,718
27,191

61,465 62,595
34,093 34,681
27,372 27,914
51,264 51,807

25,762
21,356

47,620

49,103

50,121

25,970
21,650

26,840
22,263

50,549

20,11A

27,510
22,611

27,697
22,852

50,789

52,076

51,551

52,867

52,468

52,600 53,048

29,086
23,382

29,163 29,326
23,437 23,722

24,732

28,128
22,661

47,118

59,152
32,679
26,473

28,903
23,173

28,627
22,924

51,772

28,779
22,993

29,429
23,438

28,176 28,583
23,088 23,224

n.a.

A30

Domestic Financial Statistics □ March 1979

1.39 FEDERAL FISCAL AND FINANCING OPERATIONS
Millions o f dollars

Type of account or operation

Transition
quarter
(JulySept.
1976)

Calendar year
Fiscal
year
1977

Fiscal
year
1978

1978

1978

1979

H2

U.S. budget
Receipts1..........................................
Outlays1. . . . ...................................
3 Surplus, or deficit ( —) ..................
4
Trust funds...................................
5
Federal funds 2.............................

-1 ,9 5 2
-11,018

7,833
-52,874

12,693
-61,454

4,293
-45.254

4,334
-16,204

11.755
-43.630

1,293
-7 ,2 0 0

Off-budget entities surplus, or
deficit ( —)
Federal Financing Bank outlays. . .
Other 3...............................................

-2,575
793

-8,415
-269

-10.660
354

-6.663
428

-5,1 0 5
-7 9 0

-5 ,0 8 2
1,841

-296
1,700

-1 ,1 7 8
453

-693
-272

-14,752

-53,725

-59,067

-47,196

-1 7 ,7 6 5

-35,117

-4,503

- 4 ,6 4 0

-3 ,6 9 6

18,027

53,516

59,106

40.284

23,374

30,308

5,236

3,533

3,312

-2 ,8 9 9
-373

-2 ,2 3 8
2,440

-3 ,0 2 3
2,984

4.317
2.597

-5 ,0 9 8
-511

3.381
1.428

3,485
-4,218

-2 .3 2 3
3.430

-227
611

17,418

19,104

22,444

12,274

17,526

16,291

12,854

16,291

15,146

1

2

6
7

U.S. budget plus off-budget, in­
cluding Federal Financing Bank
Surplus, or deficit ( —) .....................
Financed by:
9
Borrowing from the public..........
10
Cash and monetary assets (de­
crease, or increase ( —))........
11
Other 4..........................................
8

81,772
94,742
-1 2 ,9 7 0

357,762
402,803

-4 5 ,0 4 1

401,997
450.758

-4 8 ,7 6 1

175,820
216,781

-4 0 ,9 6 1

210,650
222,518
-1 1 ,8 7 0

206.275
238,150
-3 1 .8 7 5

33,227
39,134
-5 ,9 0 7

37.477
41.392
- 3 .9 1 5

K833
-5 .7 4 8

38,364
41,095

-2 ,7 3 1

-3,971
1,240

M emo items :

12 Treasury operating balance (level, end
of period)..........................................

13
14

Federal Reserve Banks...................
Tax and loan accounts....................

13,299
4,119

15,740
3,364

16,647
5,797

1 Effective June 1978, earned income credit payments in excess of
an individual’s tax liability, formerly treated as income tax refunds, are
classified as outlays retroactive to January 1976.
2 Half years calculated as a residual of total surplus/deficit and trust
fund surplus/deficit.
3 Includes Pension Benefit Guaranty Corp.; Postal Service Fund; Rural
Electrification and Telephone Revolving Fund, Rural Telephone Bank;
and Housing for the Elderly or Handicapped Fund until October 1977.

7.114
5.160

11,614
5,912

4.196
12^095

6,587
6,267

4.196
12,095

3,522
11,624

4 Includes public debt accrued interest payable to the public; deposit
funds; miscellaneous liability (including checks outstanding) and asset
accounts; seignorage; increment on gold; net gain/loss for U.S. currency
valuation adjustment; net gain/loss for IMF valuation adjustment.
Source. “ Monthly Treasury Statement of Receipts and Outlays of
the U.S. Government,” Treasury Bulletin, and U.S. Budget, Fiscal Year
1978.

NOTES TO TABLE 1.38
1 Holdings of stock of the Federal Home Loan Banks are included in
“other assets.”
2 Includes net undistributed income, which is accrued by most, but not
all, associations.
3 Excludes figures for loans in process, which are shown as a liability.
4 Includes securities of foreign governments and international organiza­
tions and nonguaranteed issues of U.S. government agencies.
5 Excludes checking, club, and school accounts.
6 Commitments outstanding (including loans in process) of banks in
New York State as reported to the Savings Banks Association of the
State of New York.
7 Direct and guaranteed obligations. Excludes federal agency issues
not guaranteed, which are shown in this table under “business” securities.
8 Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
9 Data reflect benchmark revisions back to 1977.
]0 Data for June, July, and August 1978 have been revised.
11 Data for 1977 and the first 6 months of 1978 have been revised by
the American Council of Life Insurance.




Note. Savings and loan associations: Estimates by the FHLBB for
all associations in the United States. Data are based on monthly reports
of federally insured associations and annual reports of other associations.
Even when revised, data for current and preceding year are subject to
further revision.
Mutual savings banks: Estimates of National Association of Mutual
Savings Banks for all savings banks in the United States. Data are re­
ported on a gross-of-valuation-reserves basis.
Life insurance companies: Estimates of the American Council of Life
Insurance for all life insurance companies in the United States. Annual
figures are annual-statement 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.”
Credit unions: Estimates by the National Credit Union Administration
for a group of federal and state-chartered credit unions that account for
about 30 percent of credit union assets. Figures are preliminary and
revised annually to incorporate recent benchmark data.

Federal Finance

A31

1.40 U.S. BUDGET RECEIPTS AND OUTLAYS
Millions o f dollars
Calend ar year
Source or type

Transition
quarter
(JulySept.
1976)

Fiscal
year
1977

Fiscal
year
1978

1977
H2

1978

1978
HI

H2

1979

Nov.

Dec.

Jan.

Receipts
1 AH sources1..............................................
3
4

Withheld.............................................
Presidential Election Campaign

5
6
7
8
9
10

Refunds1............................................
Corporation income taxes
Gross receipts....................................

11
12
13
14
15
16
17
18

81,772

357,762

401,997

175,820

210,650

206,275

33,227

37,477

38,364

38,800
32,949

157,626
144,820

180,988
165,215

82,911
75,480

90,336
82,784

98,854
90,148

16,609
16,268

16,066
15,454

23,667
15,843

1
6,809
958

37
42,062
29,293

39
47,804
32,070

1
9,397
1,967

36
37,584
30,068

3
10,777
2,075

533
192

830
219

7,866
42

9,808
1,348

60,057
5,164

65,380
5,428

25.121
2.819

38,496
2,782

28,536
2,757

1,541
493

10,769
382

2,539
392

25,760

108,683

123,410

52,347

66,191

61,064

11,923

7,716

9,429

21,534

88,196

99,626

44.384

51,668

51,052

9,762

7,059

8.098

269
2,698
1,259

4,014
11,312
5,162

A,261
13,850
5,668

316
4,936
2.711

3,892
7,800
2,831

369
6.727
2,917

1,662
499

174
483

341
478
512

4,473
1,212
1,455
1,612

17,548
5,150
7,327
6,536

18,376
6,573
5,285
7,413

9.284
2,848
2.837
3,292

8,835
3,320
2,587
3,667

9,879
3.748
2,691
4,260

1,712
646
460
829

1.597
594
386
732

1 ,520
630
485
486

Social insurance taxes and contribuPayroll employment taxes and
contributions 2 ..........................
Self-employment taxes and
contributions 3..........................
Unemployment insurance...............

Estate and gift taxes...........................
Miscellaneous receipts 5.....................

Outlays 8
19 All types1 .................................................

94,742

402,803

450,758

216,781

222,518

238,150

39,134

41,392

41,095

National defense...................................
International affairs.............................
General science, space, and
technology......................................
Energy.....................................................
Natural resources and environment.

22,307
2,180

97,501
4,831

105,192
6,083

50,873
2,896

52,979
2,904

55,129
2,221

9,239
-A l

9.450.
339

9,304
550

1,161
794
2,532
584

A ,611
4,172
10,000
5,526

4,721
6,045
11,022
7,618

2,318

2,395
2,487
4,959
2,353

2,362
4.461
6,119
4,854

412
792
889
1,372

407
747
1.125
1,681

421
622
953
1,755

26 Commerce and housing credit...........
27 Transportation......................................
28 Community and regional
development..................................
29 Education, training, employment,

1 391
3,306

—31
14,636

3,340
15,461

—946
7,723

3 291
8^758

41
1,414

309
1,374

109
1 ,419

20
21
22
23
24
25

30
31

H ealth.....................................................
Income security1...................................

32
33
34
35
36
37

Veterans benefits and services...........
Administration o f justice....................
General-purpose fiscal assistance.. . .
Interest 6 ................................................
Undistributed offsetting receipts 6-7.

1,340

6,283

11,255

4,924

5,928

6,108

910

753

800

5,162
8,720
32,795

20,985
38,785
137,905

25,889
44,529
145,640

10,800
19,422
71,081

12,792
21,391
75,201

13,676
23,942
73,305

2,244
3,957
12,358

2.210
4,717
12.469

2,467
4,149
12,959

3,962
859
878
2,092
7,246
- 2 ,5 6 7

18,038
3,600
3,357
9,499
38,092
-1 5 ,0 5 3

18,987
3,786
3,544
9,377
44,040
-1 5 ,7 7 2

9,864
1,723
1,749
4,926
19,962
-8 ,5 0 6

9,603
1,946
1,803
4,665
22,280
-7 ,9 4 5

9,545
1,973
2.111
4,385
24,110
-8 ,2 0 0

1,667
392
196
160
3,850
-7 1 3

2.650
309
269
79
7,372
- 4 ,8 7 0

757
341
392
1,754
2,860
-5 1 6

..

1 Effective June 1978, earned income credit payments in excess o f an
individual’s tax liability, formerly treated as income tax refunds, are
classified as outlays retroactive to January 1976.
2 Old-age, disability and hospital insurance, and railroad retirement
accounts.
3 Old-age, disability, and hospital insurance.
4 Supplementary medical insurance premiums, federal employee re­
tirement contributions, and Civil Service retirement and disability fund.
5 Deposits of earnings by Federal Reserve Banks and other miscel­
laneous receipts.
6 Effective September 1976, “ Interest” and “ Undistributed Offsetting
Receipts” reflect the accounting conversion for the interest on special
issues for U.S. government accounts from an accrual basis to a cash basis.




5, A ll

7 Consists of interest received by trust funds, rents and royalties on
the Outer Continental Shelf, and U.S. government contributions for
employee retirement.
8 For some types of outlays the categories are new or represent re­
groupings; data for these categories are from the Budget o f the United
States Government, Fiscal Year 1979; data are not available for half-years
or for months prior to February 1978.
Two categories have been renamed: “ Law enforcement and justice”
has become “ Administration of justice” and “ Revenue sharing and
general purpose fiscal assistance” has become “ General purpose fiscal
assistance.”
In addition, for some categories the table includes revisions in figures
published earlier.

A32
1.41

Domestic Financial Statistics □ March 1979
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions o f dollars
1976

1977

1978

Item
Sept. 30

Dec. 31

June 30

Sept. 30

Dec. 31

Mar. 31

June 30

Sept. 30

Dec. 31

1 Federal debt outstanding.. ...................

2 646.4

665.5

685.2

709.1

729.2

747.8

758.8

780.4

797.7

2 Public debt securities ........ ...................
3
Held by public............... .....................
4
Held by agencies........... .....................

634.7
488.6
146.1

653.5
506.4
147.1

674.4
523.2
151.2

698.8
543.4
155.5

718.9
564.1
154.8

738.0
585.2
152.7

749.0
587.9
161.1

771.5
603.6
168.0

789.2
619.2
170.0

5 Agency securities..................................
6
Held by public............... .....................
7
Held by agencies................................

11.6
2 9 .7
1.9

12.0
10.0
1.9

10.8
9 .0
1.8

10.3
8.5
1.8

10.2
8.4
1.8

9 .9
8.1
1.8

9 .8
8.0
1.8

8 .9
7.4
1.5

8 .5
7 .0
1.5

8 Debt subject to statutory lim it..............

635.8

654.7

675.6

700.0

720.1

739.1

750.2

772.7

790.3

9 Public debt securities........ ....................
10 Other debt1......................... ....................

634.1
1.7

652.9
1.7

673.8
1.7

698.2
1.7

718.3
1.7

737.3
1.8

748.4
1.8

770.9
1.8

788.6
1.7

11 Memo: Statutory debt lim it.................

636.0

682.0

700.0

700.0

752.0

752.0

752.0

798.0

798.0

1 Includes guaranteed debt o f government agencies, specified participa­
tion certificates, notes to international lending organizations, and District
o f Columbia stadium bonds.
2 Gross federal debt and agency debt held by the public increased

$0.5 billion due to a retroactive reclassification of the Export-Import Bank
certificates of beneficial interest from loan asset sales to debt, effective
July 1, 1975.
Note. Data from Treasury Bulletin (U.S. Treasury Department).

1.42 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership
Billions o f dollars, end o f period
1978
Type and holder

1974

1975

1976

Oct.
1 Total gross public debt. ...........................................
2
3
4
5
6
7
8
9
10
11
12

By type:
Interest-bearing debt..................................................
M arketable ........................................................
Bills......................................................................
N otes............................................................. ..
Bonds............................................................. ..
Nonmarketable 1.......................................... ..
Convertible bonds2 . ........................................
State and local government series.............
Savings bonds and notes.................................
Government account series4 ..........................

13 Non-interest-bearing debt.................................
By holder:5
14
U.S. government agencies and trust funds. ..
Federal Reserve Banks........................................
15

1979

1977
Nov.

Dec.

Jan.

Feb.

492.7

576.6

653.5

718.9

776.4

783.0

789.2

790.5

792.2

491.6
282.9
119.7
129.8
33.4
208.7
2 .3
.6
22.8
63.8
119.1

575.7
363.2
157.5
167.1
38.6
212.5
2.3
1.2
21.6
67.9
119.4

652.5
421.3
164.0
216.7
40.6
231.2
2.3
4.5
22.3
72.3
129.7

715.2
459.9
161.1
251.8
47.0
255.3
2 .2
13.9
22.2
77.0
139.8

775.5
491.7
161.2
272.6
57.8
283.8
2 .2
24.1
24.0
80.5
152.7

782.0
493.3
161.5
271.7
60.1
288.7
2.2
24.1
26.6
80.7
154.8

782.4
487.5
161.7
265.8
60.0
294.8
2.2
24.3
28.0
80.9
157.5

789.5
496.5
162.3
272.8
61.4
293.0
2 .2
24.2
27.5
80.8
155.2

791.2
498.0
162.4
271.4
64.2
293.3
2 .2
24.2
25.3
80.8
157.6

1.1

1.0

1.1

3.7

.9

1.0

6.8

1.0

1.0

138.2
80.5

139.1
89.8

147.1
97.0

154.8
102.5

166.3
115.3

167.4
113.3

170.0
109.6

271.0
55.6
2 .5
6.2
29.2

349.4
85.1
4.5
9.5
20.2
34.2

409.5
103.8
5.9
12.7
27.7
41.6

461.3
101.4
5.9
15.1
22.7
55.2

494.7
94.3
5.4
15.3
21.0
67.1

502.3
93.5
5.3
15.1
20.9
69.1

509.6
93.4
5.2
15.0
20.6
68.6

16
17
18
19
20
21

Insurance companies........................................
Other corporations...........................................
State and local governments..........................

22
23

Individuals:
Savings bonds................................................
Other securities..............................................

63.4
21.5

67.3
24.0

72.0
28.8

76.7
28.6

80.2
29.6

80.5
29.8

80.7
30.0

24
25

Foreign and international6.............................
Other miscellaneous investors7 ............... ......

58.8
22.8

66.5
38.0

78.1
38.9

109.6
46.1

122.5
54.3

132.4
55.8

137.8
58.3

11.0

1 Includes (not shown separately): Securities issued to the Rural
Electrification Administration and to state and local governments, de­
positary bonds, retirement plan bonds, and individual retirement bonds.
2 These nonmarketable bonds, also known as Investment Series B
Bonds, may be exchanged (or converted) at the owner’s option for 1%
percent, 5-year marketable Treasury notes. Convertible bonds that have
been so exchanged are removed from this category and recorded in the
notes category above.
3 Nonmarketable dollar-denominated and foreign currency denomin­
ated series held by foreigners.
4 Held almost entirely by U.S. government agencies and trust funds.
5 Data for Federal Reserve Banks and U.S. government agencies and
trust funds are actual holdings; data for other groups are Treasury
estimates.




n.a.

n.a.

6 Consists o f the investments of foreign balances and international
accounts in the United States. Beginning with July 1974, the figures exclude
non-interest-bearing notes issued to the International Monetary Fund.
7 Includes savings and loan associations, nonprofit institutions, cor­
porate pension trust funds, dealers and brokers, certain government
deposit accounts, and government sponsored agencies.

Note. Gross public debt excludes guaranteed agency securities and,
beginning in July 1974, includes Federal Financing Bank security issues.
Data by type of security from Monthly Statement o f the Public Debt o f
the United States (U.S. Treasury Department); data by holder from
Treasury Bulletin.

Federal Finance

A33

1.43 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity
Par value; millions o f dollars, end o f period

Type o f holder

1976

1978

1977

1976
Nov.

Dec.

Nov.

All maturities
1

1978

1977

Dec.

1 to 5 years

421,276

459,927

493,337

487,546

141,132

151,264

168,795

162,886

2 U.S. government agencies and trust funds.............................
3 Federal Reserve Banks.................................................................

16,485
96,971

14,420
101,191

12.776
113.305

12.695
109.616

6,141
31,249

4,788
27,012

3,310
31,608

3,310
31,283

4 Private investors..............................................................................
5
Commercial banks....................................................................
6
Mutual savings banks...............................................................
7
Insurance companies................................................................
8
Nonfinancial corporations......................................................
9
Savings and loan associations.................................................
10
11
All others....................................................................................

307,820
78,262
4,072
10,284
14,193
4,576
12,252
184,182

344,315
75,363
4,379
12,378
9,474
4,817
15,495
222,409

367,256
69,332
3,642
11.732
8.731
4,173
19.146
250,500

365,235
68,890
3,499
11.635
8,272
3,835
18.815
250.288

103,742
40,005
2,010
3,885
2,618
2,360
2,543
50,321

119,464
38,691
2,112
A,129
3,183
2,368
3,875
64,505

133,876
40,042
1,997
4,806
3,523
2,464
4,281
76,763

128,293
38,390
1,918
4,664
3,635
2,255
3,997
73,433

Total, within 1 year

5 to 10 years

12 All holders.......................................................................................

211,035

230,691

228,284

228,516

43,045

45,328

50,402

50,400

13 U.S. government agencies and trust funds.............................
14 Federal Reserve Banks............................. ...................................

2,012
51,569

1,906
56,702

1.488
56,304

1.488
52,801

2,879
9,148

2,129
10,404

1,989
14,717

1,989
14,809

15 Private investors.............................................................................
16
Commercial banks....................................................................
17
Mutual savings banks...............................................................
18
Insurance companies................................................................
19
Nonfinancial corporations.......................................................
20
Savings and loan associations.................................................
21
22
All others....................................................................................

157,454
31,213
1,214
2,191
11,009
1,984
6,622
103,220

172,084
2 9 ,A ll
1,400
2,398
5,770
2,236
7,917
122,885

170,492
19.342
863
1,799
4,686
1,540
8,366
133,895

174,227
20.608
817
1,838
4.048
1,414
8,194
137.309

31,018
6,278
567
2,546
370
155
1,465
19,637

32,795
6,162
584
3,204
307
143
1,283
21,112

33,695
7,408
507
2,894
292
90
1,557
20,946

33,601
7,490
496
2,899
369
89
1.588
20,671

Bills, within 1 year

10 to 20 years

23 All holders.......................................................................................

163,992

161,081

161,548

161,747

11,865

12,906

19,912

19,800

24 U.S. government agencies and trust funds.............................
25 Federal Reserve Banks.................................................................

449
41,279

32
42,004

2
45,985

2
42.397

3,102
1,363

3,102
1,510

3,957
2,077

3,876
2,088

26 Private investors.............................................................................
27
Commercial banks....................................................................
28
Mutual savings banks...............................................................
29
Insurance companies.................................................................
30
Nonfinancial corporations.......................................................
31
Savings and loan associations.................................................
32
State and local governments...................................................
33
All others....................................................................................

122,264
17,303
454
1,463
9,939
1,266
5,556
86,282

119,035
11,996
484
1,187
4,329
806
6,092
94,152

115,561
4.431
161
766
2,083
278
5,876
101,966

119,348
5,707
150
753
1.792
262
5,524
105,161

7,400
339
139
1,114
142
64
718
4,884

8,295
456
137
1,245
133
54
890
5,380

13,879
1,067
143
1,463
70
60
1,365
9,710

13,836
956
143
1,460
86
60
1,420
9,711

Other, within 1 year

Over 20 years

34 All holders.......................................................................................

47,043

69,610

66,736

66,769

14,200

19,738

25,944

25,944

35 U.S. government agencies and trust funds.............................
36 Federal Reserve Banks.................................................................

1,563
10,290

1,874
14,698

1,487
10,319

1,487
10,404

2,350
3,642

2,495
5,564

2,032
8,599

2,031
8,635

37 Private investors..............................................................................
38
Commercial banks....................................................................
39
Mutual savings banks...............................................................
40
Insurance companies.................................................................
41
Nonfinancial corporations.......................................................
42
Savings and loan associations................................................
43
State and local governments...................................................
44
All others....................................................................................

35,190
13,910
760
728
1,070
718
1,066
16,938

53,039
15,482
916
1,211
1,441
1,430
rl ,825
28,733

54,931
14,911
702
1,033
2,603
1,262
2.490
31,929

54,879
14.901
666
1,084
2.256
1,152
2,670
32,149

8,208
427
143
548
55
13
904
6,120

11,679
578
146
802
81
16
1,530
8,526

15,314
1,473
131
770
159
17
3,577
9,186

15,278
1.446
126
774
135
17
3,616
9,164

Note. Direct public issues only. Based on Treasury Survey o f Owner­
ship from Treasury Bulletin (U.S. Treasury Department).
Data complete for U.S. government agencies and trust funds and
Federal Reserve Banks, but data for other groups include only holdings
of those institutions that report. The following figures show, for each
category, the number and proportion reporting as o f Dec. 31, 1978:




(1) 5,463 commercial banks 464 mutual savings banks, and 726 insurance
companies, each about 80 percent; (2) 435 nonfinancial corporations and
485 savings and loan associations, each about 50 percent; and (3) 492
state and local governments, about 40 percent.
“All others,” a residual, includes holdings of all those not reporting
in the Treasury Survey, including investor groups not listed separately.

A34

Domestic Financial Statistics □ March 1979

1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions
Par value; averages o f daily figures, in millions o f dollars
Week ending Wednesday
1979

1978
Item

1975

1976

1977

1978
Nov.

Dec.

Jan.

Dec. 6

1979

Dec. 13 Dec. 20

Dec. 27

Jan. 3

Jan. 10

1 U.S. government securities.. .

6,027

10,449

10,838

11,844

8,837

10,778

8,079

9,083

9,227

8,954

9,824

10,139

By maturity:
Bills........................................
Other within 1 year...........
1-5 years..............................
5-10 years............................
Over 10 years.......................

3,889
223
1,414
363
138

6,676
210
2,317
1,019
229

6,746
237
2,320
1,148
388

6,573
449
2,301
1,207
1,314

5,336
400
1,676
738
687

6,016
464
2,344
813
1,141

4,977
285
1,347
705
766

5,723
459
1,157
888
856

5,214
371
2,075
854
711

5,239
488
2,296
485
447

6,502
622
1,569
542
589

6,008
355
1,714
772
1,289

885

1,360

1,267

908

954

1,038

666

923

972

1,270

915

1,033

5,321
1,834
3,780

3,303
1,514
3,066

4,525
1,599
3,616

3,547
1,255
2,612

3,648
1,437
3,075

3,586
1,613
3,056

2,754
1,631
3,300

3,307
1,745
3,858

4,094
1,599
3,413

2,208

2,325

2,479

2,300

2,313

2,541

2,136

2,005

2,239

2
3
4
5
6

By type o f customer
U.S. government securities
dealers...........................
8
U.S. government securities
brokers.........................
9
Commercial banks.............
10
All others1...........................

1,750
1,451
1,941

3,407
2,426
3,257

3,709
2,295
3,568

11 Federal agency securities. . . .

1,043

1,548

1,729

7

1 Includes, among others, all other dealers and brokers in commodities
and securities, foreign banking agencies, and the Federal Reserve System.

N ote. Averages for transactions are based on number of trading days
in the period.

Transactions are market purchases and sales of U.S. government
securities dealers reporting to the Federal Reserve Bank o f New York.
The figures exclude allotments of, and exchanges for, new U.S. government
securities, redemptions of called or matured securities, or purchases or
sales of securities under repurchase, reverse repurchase (resale), or similar
contracts.

1.45 U.S. GOVERNMENT SECURITIES DEALERS Positions and Sources of Financing
Par value; averages o f daily figures, in millions o f dollars
1978
Item

1975

1976

1979

1978, week ending Wednesday—

1977
Nov.

Dec.

Jan.

Nov 15

Nov. 22 Nov. 29

Dec. 6

Dec. 13

Dec. 20

Positions2
1 U.S. government securities.. .

5,884

7,592

5,172

2,417

2,134

3,549

2,548

1,894

2,364

1,853

2,620

2,495

2
3
4
5
6

Bills........................................
Other within 1 year...........
1-5 years..............................
5-10 years............................
Over 10 years.......................

4.297
265
886
300
136

6,290
188
515
402
198

4,772
99
60
92
149

1,958
60
-2 2 8
413
213

1,922
97
-7 3
211
-2 4

3,045
239
115
15
134

1,880
181
-4 9 1
673
305

1,690
-1 1 0
-3 2 6
393
247

2,229
-1 8 3
-1 1 7
217
218

2,133
-3 0 1
-2 7 4
195
99

2,704
-5 4
-3 4 7
241
76

2,458
215
-3 6 7
236
-4 8

7 Federal agency securities. . . .

939

729

693

217

370

609

139

325

271

354

296

289

Sources o f financing 3
8 All sources................................

6,666

8,715

9,877

11,396

11,918

13,157

10,881

11,355

11,427

11,590

12,465

12,878

Commercial banks:
New York City...................
Outside New York C ity...
Corporations1.........................
All others..................................

1,621
1,466
842
2,738

1,896
1,660
1,479
3.681

1,313
1,987
2,423
4,155

347
2,032
3,007
6,010

638
2,210
2,890
6,179

2,136
2,367
2,756
5,898

348
1,930
3,051
5,553

304
2,134
3,000
5,916

39
2,195
3,144
6,049

1
2,067
2,897
6,625

802
2,430
2,852
6,382

1,256
2,338
3,065
6,220

9
10
11
12

1 All business corporations except commercial banks and insurance
companies.
2 New amounts (in terms o f par values) o f securities owned by nonbank
dealer firms and dealer departments o f commercial banks on a commit­
ment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase. The maturities o f some re­
purchase agreements are sufficiently long, however, to suggest that the
securities involved are not available for trading purposes. Securities
owned, and hence dealer positions, do not include securities purchased
under agreements to resell.
3 Total amounts outstanding o f funds borrowed by nonbank dealer




firms and dealer departments of commercial banks against U.S. govern­
ment and federal agency securities (through both collateral loans and sales
under agreements to repurchase), plus internal funds used by bank dealer
departments to finance positions in such securities. Borrowings against
securities held under agreement to resell are excluded where the borrowing
contract and the agreement to resell are equal in amount and maturity,
that is, a matched agreement.

Note. Averages for positions are based on number of trading days
in the period; those for financing, on the number of calendar days in the
period.

Federal Finance

A35

1.46 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding
Millions o f dollars, end o f period

Agency

1 Federal and federally sponsored agencies............
3
4
5
6
7
8
9

Defense Department1..........................................
Export-Import Bank 2•3........................................
Federal Housing Administration4.....................
Government National Mortgage Association
participation certificates5............................
Postal Service 6 .......................................................
Tennessee Valley Authority................................
United States Railway Association6.................

10 Federally sponsored agencies.................................
11
Federal Home Loan Banks................................
12
Federal Home Loan Mortgage Corporation..
13
Federal National Mortgage A ssociation........
14
Federal Land Banks.............................................
15
Federal Intermediate Credit Banks...................
16 Banks for Cooperatives.......................................
17
Student Loan Marketing Association7.............
18
Other........................................................................

M emo items :

20
21
22
23
24

Lending to federal and federally sponsored
agencies:
Export-Import Bank3 ..........................................
Postal Service6 .......................................................
Student Loan Marketing Association7.............
Tennessee Valley Authority................................
United States Railway Association6 .................

25

Other lending:9
Farmers Home Administration.........................

27

Other........................................................................

1975

1976

July

Aug.

Sept.

Oct.

Nov.

Dec.

97,680

103,325

109,924

122,638

123,297

125,397

127,468

129,139

131,982

19,046
1,220
7,188
564

21,896
1,113
7,801
575

22,760
983
8,671
581

23,286
916
8,596
603

22,505
906
8,274
603

23,139
897
8,709
601

23,279
897
8,704
598

23,073
876
8,392
594

23,488
868
8,711
588

4,200
1,750
3,915
209

4,120
2,998
5,185
104

3,743
2,431
6,015
336

3,666
2,364
6,785
356

3,166
2,364
6,835
357

3,166
2,364
7,045
357

3,166
2,364
7,195
355

3,166
2,364
7,325
356

3,141
2,364
7,460
356

78,634
18,900
1,550
29,963
15,000
9,254
3,655
310
2

81,429
16,811
1,690
30,565
17,127
10,494
4,330
410
2

87,164
18,345
1,686
31,890
19,118
11,174
4,434
515
2

99,352
23,430
1,937
36,900
20,198
11,392
4,788
705
2

100,792
24,360
1,937
37,518
20,198
11,482
4,570
725
2

102,258
25,025
2,063
38,353
20,198
11,555
4,317
745
2

104,189
25,395
2,063
39,776
20,360
11,554
4,264
775
2

106,066
26,777
2,062
39,814
20,360
11,548
4,668
835
2

108,494
27,563
2,262
41,080
20,360
11,469
4,843
915
2

17,154

28,711

38,580

45,550

46,668

48,078

49,212

49,645

51,298

4,595
1,500
310
1,840
209

5,208
2,748
410
3,110
104

5,834
2,181
515
4,190
336

6,132
2,114
705
4,960
356

6,132
2,114
725
5,010
357

6,568
2,114
745
5,220
357

6,568
2,114
775
5,370
355

6,568
2,114
835
5,500
356

6,898
2,114
915
5,635
356

7,000
566
1,134

10,750
1,415
4,966

16,095
2,647
6,782

21,580
3,684
6,019

22,275
3,919
6,136

22,275
4,192
6,607

23,050
4,407
6.573

23,050
4,489
6,733

23,825
4,604
6,951

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 o f debentures issued in payment o f Federal Housing Ad­
ministration insurance claims. Once issued, these securities may be sold
privately on the securities market.
5 Certificates of participation issued prior to fiscal 1969 by the Govern­
ment National Mortgage Association acting as trustee for the Farmers
Home Administration; Department o f Health, Education, and Welfare;
Department o f Housing and Urban Development; Small Business Ad­
ministration ; and the Veterans Administration.
6 Off-budget.




1978

1977

7 Unlike other federally sponsored agencies, the Student Loan
Marketing Association may borrow from the Federal Financing Bank
(FFB) since its obligations are guaranteed by the Department of Health,
Education, and Welfare.
8 The FFB, which began operations in 1974, is authorized to purchase
or sell obligations issued, sold, or guaranteed by other federal agencies.
Since FFB incurs debt solely for the purpose of lending to other agencies,
its debt is not included in the main portion of the table in order to avoid
double counting.
9 Includes FFB purchases o f agency assets and guaranteed loans;
the latter contain loans guaranteed by numerous agencies with the
guarantees of any particular agency being generally small. The Farmers
Home Administration item consists exclusively o f agency assets, while the
Rural Electrification Administration entry contains both agency assets
and guaranteed loans.

A36

Domestic Financial Statistics □ March 1979

1.47 NEW SECURITY ISSUES of State and Local Governments
Millions o f dollars

Type o f issue or issuer,
or use

1976

1978

1977
July

Aug.

Sept.

Oct.

Nov.

Dec.

1 AH issues, new and refunding 1.................

35,313

46,769

48,607

3,923

6,416

2,330

3,244

4,328

3,694

By type o f issue
General obligation..................................
Revenue....................................................
Housing Assistance Administration 2.
U.S. government loans........................

18,040
17,140

18,042
28,655

17,854
30,658

1,065
2,855

2.161
4,246

703
1,620

1,148
2,083

1,168
3,152

1,698
1,992

3

9

7

13

8

4

2
3
4
5

133

72

By type o f issuer
6
State............................................................................................
7
Special district and statutory authority..............................
8
Municipalities, counties., townships, school districts. . . .

7,054
15,304
12,845

6,354
21,717
18,623

6,632
24,156
17,718

650
2,171
1,098

919
3,120
2,369

85
1,599
639

552
1,616
1,061

343
2,848
1,129

497
2,148
1,043

9 Issues for new capital, to ta l........................................................

32,108

36,189

37,629

3,497

3,365

2,266

3,160

4,216

3,379

By use o f proceeds
Education..................................................................................
Transportation..........................................................................
Utilities and conservation......................................................
Social welfare............................................................................
Industrial a id ............................................................................
Other purposes.........................................................................

4,900
2,586
9,594
6,566
483
7,979

5,076
2,951
8,119
8,274
4,676
7,093

5,003
3,460
9,026
10.494
3,526

499
292
941
1,241
244
280

277
632
689
967
344
456

397
302
695
526
105
241

314
422
831
1,169
249
175

463
259
1,241
817
323
1,113

319
337
705
1,126
276
616

10
11
12
13

14
15

Source. Public Securities Association.

1 Par amounts of long-term issues based on date of sale.
2 Only bonds sold pursuant to the 1949 Housing Act, which are secured
by contract requiring the Housing Assistance Administration to make
annual contributions to the local authority.

1.48

6.120

NEW SECURITY ISSUES of Corporations
Millions o f dollars

Type of issue or issuer,
or use

1975

1976

1978

1977
June

July

Aug.

Sept.

Oct.

Nov.

53,619

53,488

54,205

5,215

4,226

3,311

3,832

3,654

3,207

2 Bonds...............................................................................................

42,756

42,380

42,193

3,810

3,718

2,529

2,905

2,496

2,481

By type o f offering:
3
Public..........................................................................................
4
Private placement.....................................................................

32,583
10,172

26,453
15,927

24,186
18,007

1,744
2,066

2,177
1,541

1,497
1,032

1,610
1,295

1,631
865

1,608
873

Commercial and miscellaneous............................................
Transportation.........................................................................
Public utility..............................................................................
Communication........................................................................
Real estate and financial.........................................................

16,980
2,750
3,439
9,658
3,464
6,469

13,264
4,372
4,387
8,297
2,787
9,274

12,510
5,887
2,033
8,261
3,059
10,438

1,105
562
225
815
344
761

675
417
235
768
326
1,296

485
414
115
521
546
448

823
454
135
912
205
375

385
487
67
819
290
446

805
112
96
384
456
627

11 Stocks.............................................................................................

10,863

11,108

12,013

1,405

508

782

927

1,158

726

By type:
12
Preferred....................................................................................
13
Common....................................................................................

3,458
7,405

2,803
8,305

3,878
8,135

586
819

57
451

157
625

127
800

47
1,111

149
577

1,670
1,470
1
6,235
1,002
488

2,237
1,183
24
6,121
776
771

1,265
1,838
418
6,058
1,379
1,054

366
245
38
429
5
320

167
167
40
31
27
76

236
110
0
354
6
75

148
168
12
426
10
164

90
111
0
800
0
156

35
111
12
377
1
190

By industry group:
6
7
8
9
10

14
15
16
17

By industry group:
Manufacturing..........................................................................
Commercial and miscellaneous............................................
T ransportation..........................................................................
Public utility..............................................................................

19

Real estate and financial.........................................................

1 Figures, which represent gross proceeds of issues maturing in more companies other than closed-end, intracorporate transactions, and sales to
than one year, sold for cash in the United States, are principal amount or
foreigners.
number of units multiplied by offering price. Excludes offerings of less
than $100,000, secondary offerings, undefined or exempted issues as
Source. Securities and Exchange Commission.
defined in the Securities Act of 1933, employee stock plans, investment




Corporate Finance

A37

1.49 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position
Millions o f dollars
1978
Item

1977

1978

Aug.

July

1979

Sept.

Oct.

Nov.

Dec.

Jan.

INVESTMENT COMPANIES
excluding money market funds
1
2
3

Sales o f own shares1............................................
Redemptions o f own shares2 ............................
Net sales.................................................................

6,401
6,027
357

6,645
7,231
-5 8 6

474
645
-1 8 1

638
882
-2 4 4

519
673
-1 5 4

463
607
-1 4 4

587
439
148

602
545
57

647
607
40

4
5
6

Assets3 ....................................................................
Cash position4..................................................

45,049
3,274
41,775

'44,980
'4,507
'40,473

47,975
4,285
43,690

49,299
3,948
45,351

48,151
3,703
44,448

43,462
3,793
39,669

44,242
4,299
39,943

'44,980
'4,507
'40,473

46,587
4,618
41,969

1 Includes reinvestment o f investment income dividends. Excludes
reinvestment o f capital gains distributions and share issue o f conversions
from one fund to another in the same group.
2 Excludes share redemption resulting from conversions from one fund
to another in the same group.
3 Market value at end o f period, less current liabilities.

4 Also includes all U.S. government securities and other short-term
debt securities.

Note. Investment Company Institute data based on reports o f mem­
bers, which comprise substantially all open-end investment companies
registered with the Securities and Exchange Commission. Data reflect
newly formed companies after their initial offering o f securities.

1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions o f dollars; quarterly data are at seasonally adjusted annual rates.
1977
Account

1975

1976

1978

1977
Ql

Q2

Q3

Q4

Ql

Q2

Q3

1 Profits before ta x ..........................................................

120.4

155.9

173.9

164.8

175.1

177.5

178.3

172.1

205.5

205.4

2 Profits tax liability........................................................
3 Profits after tax.............................................................

49.8
70.6

64.3
91.6

71.8
102.1

68.3
96.5

72.3
102.8

72.8
104.7

73.9
104.4

70.0
102.1

85.0
120.5

86.2
119.2

4 Dividends........................................................................
5 Undistributed profits...................................................

31.9
38.7

37.9
53.7

43.7
58.4

41.5
55.0

42.7
60.1

44.1
60.6

46.3
58.1

4 7.0
55.1

48.1
72.4

50.1
69.1

6 Capital consumption allowances...............................
7 Net cash flow.................................................................

89.2
127.9

97.1
150.8

106.0
164.4

102.0
157.0

105.0
165.1

107.6
168.2

109.3
167.4

111.3
166.4

113.3
185.7

115.4
184.5

Source. Survey o f Current Business (U.S. Department o f Commerce.)




A38

Domestic Financial Statistics □ March 1979

1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities
Billions o f dollars, except for ratio
1976
Account

1
2
3
4
5
6

8
9

Cash..........................................................................
U.S. government securities.................................
Notes and accounts receivable............................
Inventories...............................................................
Other.........................................................................

Notes and accounts payable................................
Other.........................................................................

11 Memo: Current ratio1...............................................

1974

1977

1978

1975
Q4

Ql

Q2

Q3

Q4

Ql

Q2

Q3

734.6

756.3

823.1

842.0

856.4

880.3

900.1

924.2

953.5

992.4

73.0
11.3
265.5
318.9
65.9

80.0
19.6
272.1
314.7
69.9

86.8
26.0
292.4
341.4
76.4

80.8
26.8
304.1
352.1
78.3

83.1
22.1
312.8
358.8
79.6

83.4
21.5
326.9
367.5
81.0

94.2
20.9
325.7
375.0
84.3

88.5
20.9
338.3
389.7
86.8

90.9
19.7
356.8
399.1
87.0

91.4
18.6
377.8
415.5
89.0

451.8

446.9

487.5

502.6

509.5

528.9

543.2

570.4

590.8

624.5

272.3
179.5

261.2
185.7

273.2
214.2

280.2
222.4

286.8
222.7

297.8
231.1

306.8
236.3

317.2
253.2

331.3
259.4

349.9
274.6

282.8

309.5

335.6

339.5

346.9

351.4

357.0

353.8

362.7

367.9

1.626

1.693

1.688

1.675

1.681

1.664

1.657

1.620

1.614

1.589

i Ratio o f total current assets to total current liabilities.

Source. Federal Trade Commission.

Note. For a description o f this series see “ W orking Capital of N on­
financial C orporations” in the July 1978 B ulletin, pp. 533-37.

1.52 BUSINESS EXPENDITURES on New Plant and Equipment
Billions o f dollars; quarterly data are at seasonally adjusted annual rates.
1977
Industry

1978

19782

1977

Ql

Q2

Q3

Q4

Ql

Q2

Q3

Q4

1 All industries................................................................

135.72

152.28

130.16

134.24

140.38

138.11

144.25

150.76

155.13

158.98

Manufacturing
2
Durable goods industries......................................
3
Nondurable goods industries..............................

27.75
32.33

31.53
36.23

26.30
30.13

27.26
32.19

29.23
33.79

28.19
33.22

28.72
32.86

31.40
35.80

32.11
36.54

33.89
39.72

4.49

4.78

4.24

4.49

4.74

4.50

4.45

4.81

4.80

5.07

2.82
1.63
2.55

3.28
2.45
2.27

2.71
1.62
2.96

2.57
1.43
2.96

3.20
1.69
1.96

2.80
1.76
2.32

3.35
2.67
2.44

3.09
2.08
2.23

3.64
2.97
2.37

3.05
2.08
2.05

21.57
4.21
15.43
22.95

24.49
4.48

21.19
4.16
14.19
22.67

21.14
4.16
15. 32
22.73

21.90
4.32
16.40
23.14

22.05
4.18
15.82
23.27

23.15
4.78
17.07
24.76

23.83
4.62
18.18
24.71

25.04
4 .22

J 43.44

25.94
4.28
42.90

4
5
6
7
8
9
10
11

Nonmanufacturing
M ining......................................................................
Transportation:
Railroad...............................................................
Air.........................................................................
Other.....................................................................
Public utilities:
Electric.................................................................
Gas and other.....................................................
Communication......................................................
Commercial and other1........................................

1 Includes trade, service, construction, finance, and insurance.
2 Anticipated by business.

Note. Estimates for corporate and noncorporate business, excluding




agriculture; real estate operators; medical, legal, educational, and cultural
service; and nonprofit organizations.
Source. Survey o f Current Business (U.S. Dept, of Commerce).

Corporate Finance
1.521 DOMESTIC FINANCE COMPANIES

A39

Assets and Liabilities

Billions o f dollars, end o f period

1973

Account

1974

1977
1975

1978

1976
Q3

Q4

Ql

Q2

Q3

Q4

42.3
50.6
92.9
11.7
81.2
2.5

44.0
55.2
99.2
12.7
86.5

44.5
57.6
102.1

49.7
58.3
108.0
14.3
93.7
2 .7

14.2

.9
14.3

15.0

47.1
59.5
106.6
14.1
92.6
2.9
1.3
16.2

17.1

52.6
63.3
116.0
15.6
100.4
3.5
1.3
17.3

ASSETS
1

2
3
4
5

Accounts receivable, gross
Consumer.................................................................
Business....................................................................
T o ta l ......................................................................
L ess : Reserves for unearned income and losses
Accounts receivable, n et...........................................
Cash and bank deposits............................................
Securities.......................................................................
All other........................................................................

35.4
32.3
6 7 .7
8.4
59.3

36.1
37.2
73.3
9 .0
64.2
3 .0
.4

36.0
39.3
75.3
9 .4
65.9
2.9

38.6
44.7
83.4
10.5
72.9

12.8
89.3

12.0

1.0
11.8

2.6
1.1
12.6

73.2

79.6

81.6

89.2

99.6

104.3

107.7

112.9

115.3

122.4

10 Bank loans....................................................................
11 Commercial paper......................................................

7.2
19.7

9 .7
20.7

8.0
22.2

6.3
23.7

5 .4
25.7

5.9
2 9.6

5.8
29.9

5.4
31.3

5.4
29.3

Debt:
12 Short-term, n.e.c.....................................................
13 Long-term, n.e.c......................................................
14 Other..........................................................................

6.5
34.5

4 .6
24.6
5 .6

4 .9
26.5
5.5

4.5
27.6

5 .4
32.3

5.4
34.8
13.7

6.2
36.0
11.5

5.3
38.0
12.9

6.6

6.8

40.1
13.6

41.3
15.2

6
7
8

9 Total assets.............................................................

2.6
.8
10.6

1.8

2.6

2.2
1.2

1.8

LIABILITIES

6.8

8.1

8.1
43.6

12.6

15 Capital, surplus, and undivided profits.................

11.5

12.4

12.5

13.4

14.6

15.1

15.7

16.0

17.3

17.2

16 Total liabilities and capital....................................

73.2

79.6

81.6

89.2

99.6

104.3

107.7

112.9

115.3

122.4

Note. Components may not add to totals due to rounding.

1.522 DOMESTIC FINANCE COMPANIES

Business Credit

Millions o f dollars, seasonally adjusted except as noted

Type

Accounts
receivable
outstand­
ing Dec. 31,
19781

Changes in accounts
receivable
1978 *
Oct.

Extensions

Repayments

1978

1978

Nov.

Dec.

Oct.

Nov.

Dec.

Oct.

Nov.

Dec.

1 Total........................................................................

63,348

704

1,210

1,271

15,078

16,293

17,680

14,374

15,083

16,409

2 Retail automotive (commercial vehicles)........
3 Wholesale automotive........................................
4 Retail paper on business, industrial, and
farm equipment............................................
5 Loans on commercial accounts receivable__
6 Factored commercial accounts receivable.. . .
7 All other business credit....................................

14,562
12,744

214
103

229
591

245
551

1,237
6,171

1,260
6,946

1,308
6,967

1.023
6; 068

1,031
6,355

1,063
6,416

16,759
4,294
2,536
12,453

160
-2 0 2
291
138

226
-4 9
209
4

20
262
32
161

1,041
3,233
1,543
1,853

1,159
3,310
1,776
1,842

1,790
4,110
1,550
1,955

881
3,435
1,252
1,715

933
3,359
1,567
1,838

1,770
3,848
1,518
1,794

1 Not seasonally adjusted.




A40
1.53

Domestic Financial Statistics □ March 1979
MORTGAGE MARKETS
Millions o f dollars; exceptions noted.
1978
Item

1976

1977

1978

Aug.

Sept.

Oct.

1979
Nov.

Dec.

Jan.

Terms and yields in primary and secondary markets
PRIMARY MARKETS

1
2
3
4
5
6

Conventional mortgages on new homes
Terms:1
Purchase price (thous. dollars).......................
Amount o f loan (thous. dollars)...................
Loan/price ratio (percent)..............................
Maturity (years).................................................
Fees and charges (percent o f loan amount)2.
Contract rate (percent per annum).............

48.4
35.9
74.2
27.2
1.44
8.76

54.3
40.5
76.3
27.9
1.33
8.80

62.6
45.9
75.3
28.0
1.39
9.30

63.6
46.4
75.3
28.0
1.43
9.45

64.6
46.7
74.1
27.8
1.36
9 .50

48.6
74.4
28.0
1.37
9.60

65.1
47.5
74.4
27.9
1.40
9.63

49.6
75.1
28.1
1.49
9.76

7
8

Yield (percent per annum):
FHLBB series 3...................................................
H U D series4.......................................................

8.99
8.99

9.01
8.95

9.54
9.68

9.70
9.80

9.73
9 .80

9.83
9.95

9.87

10.02

10.10

10.30

10.18
10.30

8.82
8.17

7.96
8.04

8.08
8.98

9.78
8.95

9.78
9.04

9.93
9.25

9.99
9.39

10.16
9.54

10.17
9.97

8.99
9.11

8.73
8.98

10.01

9.78

10.03
10.19

10.30
10.56

10.50
10.85

10.70
11.07

66.8

68.1

71.9
52.0
74.7
28.6
1.56
9.92

SECONDARY MARKETS
9
10
11
12

Yields (percent per annum):
FHA mortgages (H U D series)5.....................
GNM A securities6............................................
FNM A auctions:7
Government-underwritten loans...............
Conventional loans......................... ............

9.77

9.81

10.11

10.02

Activity in secondary markets
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
13

Mortgage holdings (end o f period)
Total.........................................................................

15

VA-guaranteed...................................................

32,904
18,916
9,212
4,776

34,370
18,457
9,315
6,597

43,311
21,243
10,544
11,524

40,325
20,034
10,535
9,752

41,189
20,325
10,575
10,289

41,957
20,625
10,565
10,767

42,590
20,929
10,535
11,126

43,311
21,243
10,544
11,524

44,329
21,967
10,606
12,046

3,606
86

4,780
67

12,303
5

1,230
0

1,132
0

1,053
0

920
0

974
0

1,280
0

6,247
3,398

9,729
4,698

18,960
9,201

527
9,419

882
9,068

1,900
9,547

1,275
9,525

1,051
9,201

n.a.
n.a.

4,929.8
2,787.2

7,974.1
4 ,846.2

12,978
6,747.2

499.1
277.2

717.9
335.9

1,964.8
832.4

788.0
321.8

627.0
319.6

304.9
155.4

2,595.7
1,879.2

5,675.2
3,917.8

9 ,933.0
5,110.9

224.7
128.5

484.7
283.7

1,156.8
495.6

861.4
386.8

417.4
220.9

113.5
58.1

4,269
1,618
2,651

3,276
1,395
1,881

3,064
1,243
1.822

2,448
1,304
1,144

2,486
1,287
1,199

2,867
1,594
1,273

3,022
1,257
1,766

3,064
1,243
1,822

n.a.
n.a.
n.a.

Mortgage transactions (during period)

Mortgage commitments:8
20

Outstanding (end o f period)................................

Auction o f 4-month commitments to buy—
Government-underwritten loans:
Offered9. . ...........................................................
Accepted.............................................................
Conventional loans:
23
Offered9. . ...........................................................
24
Accepted.............................................................

21
22

FEDERAL HOME LOAN
MORTGAGE CORPORATION
25
26

Mortgage holdings (end o f period)10
Total.........................................................................
FH A/VA .............................................................
Mortgage transactions (during period)

29

Sales..........................................................................

1,175
1,396

3,900
4,131

6,524
6,211

742
299

670
594

791
369

763
581

596
540

n.a.
n.a.

30
31

Mortgage commitments:11
Contracted (during period)................................
Outstanding (end of period)................................

1,477
333

5,546
1,063

7,451
1,410

838
2,142

760
2,130

547
1,716

706
1,617

455
1,410

n.a.
n.a.

1 Weighted averages based on sample surveys o f mortgages originated
by major institutional lender groups. Compiled by the Federal Home
Loan Bank Board in cooperation with the Federal Deposit Insurance
Corporation.
2 Includes all fees, commissions, discounts, and “points” paid (by the
borrower or the seller) in order to obtain a loan.
3 Average effective interest rates on loans closed, assuming prepay­
ment at the end of 10 years.
4 Average contract rates on new commitments for conventional first
mortgages, rounded to the nearest 5 basis points; from Dept, o f 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. Any gaps in data are due to periods of
adjustment to changes in maximum permissible 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
unweighted averages of Monday quotations for the month.
7 Average gross yields (before deduction o f 38 basis points for mortgage
servicing) on accepted bids in Federal National Mortgage Association’s
auctions of 4-month commitments to purchase home mortgages, assuming
prepayment in 12 years for 30-year mortgages. N o adjustments are made
for FNMA commitment fees or stock related requirements. Monthly
figures are unweighted averages for auctions conducted within the month.
8 Includes some multifamily and nonprofit hospital loan commitments
in addition to 1- to 4-family loan commitments accepted in FNM A’s
free market auction system, and through the FNM A-GNMA tandem
plans.
9 Mortgage amounts offered by bidders are total bids received.
10 Includes participations as well as whole loans.
11 Includes conventional and government-underwritten loans.

Real Estate Debt

A41

1.54 MORTGAGE DEBT OUTSTANDING
Millions o f dollars, end o f period
1978
Type o f holder, and type o f property

1 All holders.......................................................
2
1- to 4-family............................................
Multifamily................................................
3
4
Commercial...............................................
5
Farm ...........................................................

1974

1975

1976

1977
Ql

Q2

Q3

Q4*>

742,512
449,371
99,976
146,877
46,288

801,537
490,761
100,601
159,298
50,877

889,327
556,557
104,516
171,223
57,031

1,023,505
656,566
111,841
189,274
65,824

'1,051,908
'676,573
'113,915
'193,355
'68,065

'1,092,451
'706,230
'116,419
'198,926
'70,876

1,133,122
734,097
119,207
206,045
73,773

1,169,522
759,617
121,928
211,810
76,167

7
8
9
10
11

Commercial banks1..................................
1- to 4-family........................................
Multifamily............................................
Commercial...........................................
Farm.......................................................

542,560
132,105
74,758
7,619
43,679
6,049

581,193
136,186
77,018
5,915
46,882
6,371

647,650
151,326
86,234
8,082
50,289
6,721

745,011
178,979
105,115
9,215
56,898
7,751

764,614
184,423
108,699
9,387
58,407
7,930

'794,009
'194,469
'115,389
'9,925
'60,950
'8,205

822,184
205,445
121,911
10,478
64,386
8,670

846,788
213,845
126,896
10,906
67,019
9,024

12
13
14
15
16

Mutual savings banks..............................
1- to 4-family........................................
Multifamily............................................
Commercial...........................................
Farm.......................................................

74,920
49,213
12,923
12,722
62

77,249
50,025
13,792
13,373
59

81,639
53,089
14,177
14,313
60

88,104
57,637
15,304
15,110
53

89,800
58,747
'15,598
15,401
54

91,535
59,882
15,900
15,698
55

93,403
61,104
16,224
16,019
56

95,044
62,178
16,509
16,300
57

17
18
19
20

Savings and loan associations.................
1- to 4-family........................................
Multifamily............................................
Commercial...........................................

249,301
200,987
23,808
24,506

278,590
223,903
25,547
29,140

323,130
260,895
28,436
33,799

381,163
310,686
32,513
37,964

'.392,428
'320,064
'33,592
'38,772

'407,965
'334,164
'34,351
'39,450

420,971
345,232
35,446
40,293

432,922
355,291
36,452
41,179

21
22
23
24
25

1- to 4-family........................................
Multifamily...........................................
Commercial...........................................
Farm.......................................................

86,234
19,026
19,625
41 ,256
6,327

89,168
17,590
19,629
45,196
6,753

91,555
16,088
19,178
48,864
7,425

96, 765
14,727
18,807
54,388
8,843

97,963
14,476
18,851
55,426
9,210

100,040
14,129
18,745
57,463
9,703

102,365
14,189
18,803
59,268
10,105

104,971
14,550
19,284
60,782
10,361

26 Federal and related agencies......................
27
Government National Mortgage Assn...
28
1- to 4-family........................................
29
Multifamily............................................

58,320
4,846
2,248
2,598

66,891
7,438
4,728
2,710

66,753
4,241
1,970
2,271

70,006
3,660
1,548
2,112

72,014
3,291
948
2,343

73,991
3,283
922
2,361

I S ,612
3,560
897
2,663

82,086
3,610
910
2,700

30
31
32
33
34

Farmers Home Admin..............................
1- to 4-family........................................
Multifamily............................................
Commercial...........................................
Farm.......................................................

1,432
759
167
156
350

1,109
208
215
190
496

1,064
454
218
72
320

1,353
626
275
149
303

1,179
202
408
218
351

618
124
102
104
288

1,384
460
240
251
433

1,084
360
188
197
339

35
36
37

Federal Housing and Veterans Admin...
1- to 4-family........................................
Multifamily............................................

4,015
2,009
2,006

4,970
1 ,990
2,980

5,150
1,676
3,474

5,212
1,627
3,585

5,219
1,585
3,634

5,225
1,543
3,682

5,295
1,565
3,730

5,365
1,587
3,778

38
39
40

Federal National Mortgage Assn...........
1- to 4-family........................................
Multifamily............................................

29,578
23,778
5,800

31,824
25,813
6,011

32,904
26,934
5,970

34,369
28,504
5,865

36,029
30,208
5,821

38,753
32,974
5,779

41,189
35,437
5,752

43,311
37,579
5,732

41
42
43

Federal Land Banks.................................
1- to 4-family........................................
Farm.......................................................

13,863
406
13,457

16,563
549
16,014

19,125
601
18,524

22,136
670
21,466

22,925
691
22,234

23,857
727
23,130

24,758
819
23,939

25,658
849
24,809

44
45
46

Federal Home Loan Mortgage Corp. . . .
1- to 4-family........................................
Multifamily............................................

4,586
4,217
369

4,987
4,588
399

4,269
3,889
380

3,276
2,738
538

3,371
2,785
586

2,255
1,856
399

2,486
1,994
492

3,058
2,453
605

47 Mortgage pools or trusts2...........................
48
Government National Mortgage Assn. ..
49
1- to 4-family........................................
50
Multifamily............................................

23,799
11,769
11,249
520

34,138
18,257
17,538
719

49,801
30,572
29,583
989

70,289
44,896
43,555
1,341

74,080
46,357
44,906
1,451

78,602
48,032
46,515
1,517

82,153
50,844
49,276
1,568

86,747
54,347
52,732
1,615

9,934
8,358
1,576

10,125
8,519
1,606

51
52
53

Federal Home Loan Mortgage Corp...
1- to 4-family........................................
Multifamily............................................

757
608
149

1,598
1,349
249

2,671
2,282
389

6,610
5,621
989

7,471
6,286
1,185

9,423
7,797
1,626

54
55
56
57
58

Farmers Home Admin..............................
1- to 4-family........................................
Multifamily............................................
Commercial...........................................
Farm.......................................................

11,273
6,782
116
1,473
2,902

14,283
9,194
295
1,948
2,846

16,558
10,219
532
2,440
3,367

18,783
11,379
759
2,945
3,682

20,252
12,235
732
3,528
3,757

21,147
12,742
1,128
3,301
3,976

59 Individuals and others3................................
60
1- to 4-family........................................
61
Multifamily............................................
62
Commercial...........................................
63
Farm.......................................................

117,833
53,331
24,276
23,085
17,141

119,315
56,268
22,140
22,569
18,338

125,123
62,643
20,420
21,446
20,614

138,199
72,115
20,538
21,820
23,726

141,200
74,741
20,327
21,603
24,529

145,849
77,466
20,904
21,960
25,519

1 Includes loans held by nondeposit trust companies but not bank trust
departments.
2 Outstanding principal balances o f mortgages backing securities in­
sured or guaranteed by the agency indicated.
3 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 U.S. agencies for which
amounts are small or separate data are not readily available.




22,275
13,392
1,163
3,510
4,210
150,113
80,004
21,119
22,459
26,531

153,901
82,321
21,390
22,823
27,367

Note. Based on data from various institutional and government
sources, with some quarters estimated in part by Federal Reserve in
conjunction with the Federal Home Loan Bank Board and the Depart­
ment o f Commerce. Separation o f nonfarm mortgage debt by type of
property, if not reported directly, and interpolations and extrapolations
where required, are estimated mainly by Federal Reserve. Multifamily
debt refers to loans on structures of five or more units.

A42

Domestic Financial Statistics □ March 1979

1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change A
Millions o f dollars

Holder, and type o f credit

1976

1977

1978

1979

1978
July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Amounts outstanding (end of period)
193,977

230,829

275,640

253,897

259,614

263,387

265,821

269,445

275,640

275,346

93,728
38,919
31,169
19,260
6,246
2,830
1,825

112,373
44,868
37,605
23,490
7,354
2,963
2,176

136,189
54,309
45,939
24,876
8,394
3,240
2,693

126,619
49,502
42,355
21,828
7,793
3,309
2,491

129,622
50,558
43,499
22,093
7,947
3,354
2,541

131,403
51,280
44,325
22,302
8,055
3,416
2,606

132,702
51,984
44,635
22,464
8,177
3,276
2,583

133,908
53,099
45,305
23,006
8,291
3,173
2,663

136,189
54,309
45,939
24,876
8,394
3,240
2,693

136,452
55,004
45,526
23,962
8,427
3,338
2,637

6 7 ,7 0 7

82,911

102,468

9 7 ,6 8 7

9 9 ,0 6 2

1 0 0 ,1 5 9

1 01 ,5 6 5

102,468

49,577
27,379
22,198
18,099
15,235

58,453
32,667
25,786
20,801
18,433

59,085
33,067
26,018
21,196
18,781

59,778
33,415
26,363
21,344
19,037

60,347
33,709
26,638
21,664
19,554

60,564
33,850
26,714
21,967
19,937

1 02,890

39,621
22,072
17,549
15,238
12,848

60,564
33,850
26,714
21,976
19,937

9 5 ,2 8 9

14

A utom obile...................
Commercial banks. .
Indirect paper
Direct loans..........
Credit unions............
Finance companies.,

15
16
17
18

Revolving.......................
Commercial banks. .
Retailers.....................
Gasoline companies .

17,189

3 9 ,2 7 4

47,051

41 ,6 2 9

4 2 ,4 2 0

4 2 ,5 7 9

4 3 ,5 2 3

47,051

2,830

18,374
17,937
2,963

24,434
19,377
3,240

4 0 ,5 5 3

14,359

20,566
16,678
3,309

21,314
16,961
3,354

21,935
17,069
3,416

22,165
17,138
3,276

22,724
17,626
3,173

24,434
19,377
3,240

19

14,573

15,141

15,799

1 5,9 1 0

1 5 ,9 2 5

1 6 ,0 1 7

1 6 ,0 4 2

8,737
3,263
2,241
332

9,124
3,077
2,538
402

16,042
9,553
3,152
2,848
489

1 5 ,6 6 3

23

Mobile hom e...............
Commercial banks.
Finance companies.
Savings and loans..
Credit unions...........

9,483
3,085
2,644
451

9,539
3,101
2,696
463

9,591
3,114
2,733
472

9,548
3,127
2,775
475

9,572
3,150
2,813
482

9,553
3,152
2,848
489

24
25
26
27
28
29
30

Other...................................
Commercial banks
Finance companies
Credit unions.................
Retailers.........................
Savings and loans........
Mutual savings banks.

9 4 ,5 0 8

9 3 ,503

1 10,079

1 02,392

104,499

1 05,995

107 ,1 5 8

108 ,3 4 0

1 10,079

109 ,9 3 6

31,011
22,808
15,599
19,260
4,005
1,825

35,298
26,556
19,104
5,553
4,816
2,176

41,638
31,220
23,483
5,499
5,546
2,693

39,499
28,453
21,650
5,150
5,149
2,491

40,316
29,024
22,235
5,132
5,251
2,541

40,792
29,385
22,657
5,233
5,322
2,606

41,211
29,820
22,816
5,326
5,402
2,583

41,265
30,395
23,159
5,380
5,478
2,663

41,638
31,220
23,483
5,499
5,546
2,693

41,582
31,416
23,272
5,461
5,568
2,637

1 Total.

2
3

4

5
6
7
8

By major holder

Commercial banks
Finance companies
Credit unions.................
Retailers2.......................
Savings and loans........
Gasoline companies. .,
Mutual savings banks.
By m ajor type o f credit

9

10
11

12
13

20
21
22

57,071
31,907
25,164
20,254
17,964

60,682
33,928
26,754
21,769
20,439
4 6 ,5 1 6

24,677
18,501
3,338
1 6 ,0 0 4

9,511
3,149
2,859
485

Net change (during period) 3
31

21,647

35,278

45,066

3,466

3,632

3,680

3,374

4,099

4,400

3,061

10,792
2,946
5,503
1,059
1,085
124
138

18,645
5,948
6,436
2,654
1,111
132
352

24,058
9,441
8,334
1,386
1,041
276
530

2,100
671
513
144
10
-1 9
47

1,785
736
613
342
107
-1
50

1,714
847
639
328
94
9
49

1,617
863
644
115
127
16
-8

1,925
1,018
779
186
88
-1
104

2,080
1,098
773
196
115
96
42

1,330
1,341
360
-9 0
67
100
-4 7

19 ,557

1,711

1 ,6 0 4

1 ,5 3 2

1 ,3 7 5

1 ,7 5 5

1 ,7 8 0

1 ,6 8 0

1,041
626
415
275
395

957
515
442
287
360

848
517
331
313
371

759
354
405
301
315

839
440
399
364
552

845
530
315
391
544

633
387
246
187
860

600

737

622

346

665

869

433

498
121
-1 9

358
380
-1

380
233
9

337
-7
16

556
110
-1

610
163
96

375
-4 2
100

B y major holder

32
33
34
35
36
37
38

Commercial banks............................
Finance companies........ ...................
Credit unions......................................
Retailers1............................................
Savings and loans..............................
Gasoline companies..........................
Mutual savings banks......................
B y major type o f credit

39
40
41
42
43
44

A utom obile........................................
Commercial banks........................
Indirect paper............................
Direct loans................................
Credit unions..................................
Finance companies.......................

10,465

15,204

6,334
2,742
3,592
2,497
1,634

9,956
5,307
4,649
2,861
2,387

45
46
47
48

Revolving......................... ...................
Commercial banks........................
Retailers..........................................
Gasoline companies.....................

2 ,1 7 0

6 ,2 4 8

2,046

4,015
2,101
132

49
50
51
52
53

Mobile hom e................... ...................
Commercial banks. . ...................
Finance companies........................
Savings and loans.........................
Credit unions.............. ...................

140

565

79

72

25

75

71

40

387
-1 8 9
297
70

426
74
310
87

83

70
-1 8 2
192
60

65
11
2
5

20
7
46
6

31
6
27
8

-2 5
-2
46
6

19
15
34
7

21
11
30
9

12
7
19
2

54
55
56
57
58
59
60

Other....................................................
Commercial banks........................
Finance companies........................
Credit unions.............. ...................
Retailers....................... ...................
Savings and loans...... ..................
Mutual savings banks..................

8 ,8 7 2

13,261

16,836

1,2 1 2

1 ,4 5 4

1 ,6 2 8

1 ,6 0 4

1 ,6 8 0

908

4,287
3,750
3,505
553
814
352

6,585
4,665
4,379
-5 4
731
530

1,072

2,342
1,494
2,946
1,059
893
138

496
265
233
23
8
47

450
369
320
-3 8
61
50

455
470
318
95
67
49

546
550
337
122
81
-8

511
451
408
76
54
104

604
543
373
33
85
42

310
474
171
-4 8
48
-4 7

124

10,987
6,471
4,516
3,868
4,702
7,776

6,060
1,440
276
897

1 The board’s series cover most short- and intermediate-term credit
extended to individuals through regular business channels, usually to
finance the purchase o f consumer goods and services or to refinance
debts incurred for such purposes, and scheduled to be repaid (or with
the option o f repaying in two or more installments).
2 Includes auto dealers and excludes 30-day charge credit held by
travel and entertainment companies.
3 Net change equals extensions minus liquidations (repayments, chargeoffs, and other credits); figures for all months are seasonally adjusted.




Note. Total consumer noninstallment credit outstanding—credit
scheduled to be repaid in a lump sum, including single-payment loans,
charge accounts, and service credit—amounted to $64.3 billion at the end
of 1978, $58.6 billion at the end of 1977, $54.8 billion at the end of 1976,
and $50.9 billion at the end of 1975. Comparable data for Dec. 31, 1979
will be published in the February 1980 B ulletin.
A Consumer installment credit series have been revised from 1943.
effective Dec. 7, 1978. Information is available from Mortgage and
Consumer Finance Section, Division of Research and Statistics.

Consumer Debt

A43

1.56 CONSUMER INSTALLMENT CREDIT Extensions and Liquidations A
Millions o f dollars
1979

1978
Holder, and type o f credit

1976

1977

1978
July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Extensions2
1 T otal.........................................................

211,028

254,071

298,574

25,022

25,669

25,536

25,785

26,214

26,500

25,544

2
3
4
5
6
7
8

By major holder:
Commercial banks............................
Finance companies...........................
Credit unions......................................
Retailers1............................................
Savings and loans..............................
Gasoline companies..........................
Mutual savings banks.......................

97,397
36,129
29,259
29,447
3,898
13,387
1,511

117,896
41,989
34,028
39,133
4,485
14,617
1,923

142,965
50,483
40,023
41,619
5,050
16,125
2,309

12,187
4,261
3,271
3,477
327
1,299
200

12,255
4,348
3,379
3,725
435
1,317
210

12,123
4,372
3,360
3,718
403
1,346
215

12,182
4,605
3,401
3,518
566
1,335
151

12,476
4,512
3,530
3,571
489
1,376
260

12,521
4,679
3,526
3,612
516
1,451
195

12,153
4,547
3,241
3,565
481
1,440
117

9
10
11
12
13
14

By major type o f credit:
Automobile..........................................
Commercial banks........................
Indirect paper............................
Direct loans................................
Credit unions..................................
Finance companies.......................

63,743
37,886
20,576
17,310
14,688
11,169

75,641
46,363
25,149
21,214
16,616
12,662

88,986
53,028
29,336
23,692
19,486
16,472

7,652
4,639
2,554
2,085
1,629
1,384

7,744
4,660
2,562
2,098
1,632
1,452

7,542
4,479
2,519
1,960
1,641
1,422

7,501
4,345
2,384
1,961
1,643
1,513

7,787
4,503
2,422
2,081
1,718
1,566

7,833
4,443
2,451
1,992
1,738
1,652

7,545
4,286
2,318
1,968
1,635
1,624

15
16
17
18

Revolving.............................................
Commercial banks........................
Retailers..........................................
Gasoline companies.....................

43,934
30,547
13,387

86,756
38,256
33,883
14,617

104,587
51,531
36,931
16,125

8,700
4,320
3,081
1,299

9,028
4,346
3,365
1,317

9,006
4,457
3,203
1,346

8,846
4,475
3,036
1,335

9,176
4 , 702
3,098
1,376

9,424
4,814
3,159
1,451

9,417
4,799
3,178
1,440

19
20
21
22
23

Mobile home.......................................
Commercial banks........................
Finance companies.......................
Savings and loans.........................
Credit unions..................................

4,859
3,064
702
929
164

5,425
3,466
643
1,120
196

6,067
3,704
886
1,239
238

509
335
78
78
18

531
310
75
127
19

494
297
77
100
20

604
352
73
154
25

486
280
77
108
21

502
295
74
111
22

369
235
33
88
13

24
25
26
27
28
29
30

Other.....................................................
Commercial banks........................
Finance companies.......................
Credit unions..................................
Retailers..........................................
Savings and loans.........................
Mutual savings banks..................

98,492
25,900
24,258
14,407
29,447
2,969
1,511

86,249
29,811
28,684
17,216
5,250
3,365
1,923

98,934
34,702
33,125
20,299
4,688
3,811
2,309

8,161
2,893
2,799
1,624
396
249
200

8,366
2,939
2,821
1,728
360
308
210

8,495
2,890
2,873
1,699
515
303
215

8,807
3,010
3,019
1,733
482
412
151

8,765
2,991
2,869
1,791
473
381
260

8,741
2,969
2,953
1,766
453
405
195

8,213
2,833
2,890
1,593
387
393
117

Liquidations2
31 T otal.........................................................

189,381

218,793

253,508

21,556

22,037

21,857

22,384

22,115

22,100

22,483

32
33
34
35
36
37
38

By major holder
Commercial banks............................
Finance companies...........................
Credit unions......................................
Retailers1............................................
Savings and loans..............................
Gasoline companies..........................
Mutual savings banks.......................

86,605
33,183
23,756
28,388
2,813
13,263
1,373

99,251
36,041
27,592
36,479
3,374
14,485
1,571

118,907
41,042
31,689
40,233
4,009
15,849
1,779

10,087
3,590
2,758
3,333
317
1,318
153

10,470
3,612
2,766
3,383
328
1,318
160

10,409
3,525
2,721
3,390
309
1,337
166

10,565
3,742
2,757
3,403
439
1,319
159

10,551
3,494
2,751
3,385
401
1,377
156

10,441
3,581
2,753
3,416
401
1,355
153

10,823
3,206
2,881
3,655
414
1,340
164

39
40
41
42
43
44

By major type o f credit
Autom obile........................................
Commercial banks........................
Indirect paper............................
Direct loans................................
Credit unions..................................
Finance companies.......................

53,278
31,552
17,834
13,718
12,191
9,535

60,437
36,407
19,842
16,565
13,755
10,275

69,429
42,041
22,865
19,176
15,618
11,770

5,941
3,598
1,928
1,670
1,354
989

6,140
3,703
2,047
1,656
1,345
1,092

6,010
3,631
2,002
1,629
1,328
1,051

6,126
3,586
2,030
1,556
1,342
1,198

6,032
3,664
1,982
1,682
1,354
1,014

6,053
3,598
1,921
1,677
1,347
1,108

5,865
3,653
1,931
1,722
1,448
764

45
46
47
48

Revolving............................................
Commercial banks........................
Retailers..........................................
Gasoline companies.....................

41,764
28,501
13,263

80,508
34,241
31,782
14,485

96,811
45,471
35,491
15,849

8,100
3,822
2,960
1,318

8,291
3,988
2,985
1,318

8,384
4,077
2,970
1,337

8,500
4,138
3,043
1,319

8,511
4,146
2,988
1,377

8,555
4,204
2,996
1,355

8,984
4,424
3,220
1,340

49
50
51
52
53

Mobile hom e......................................
Commercial banks........................
Finance companies.......................
Savings and loans.........................
Credit unions..................................

4,719
2,994
884
737
104

4,860
3,079
832
823
126

5,170
3,278
812
929
151

426
270
67
76
13

452
290
68
81
13

422
266
71
73
12

579
377
75
108
19

411
261
62
74
14

431
274
63
81
13

329
223
26
69
11

54
55
56
57
58
59
60

Other....................................................
Commercial banks........................
Finance companies.......................
Credit unions..................................
Retailers..........................................
Savings and loans.........................
Mutual savings banks..................

89,620
23,558
22,764
11,461
28,388
2,076
1,373

72,988
25,524
24,934
13,711
4,697
2,551
1,571

82,098
28,117
28,460
15,920
4,742
3,080
1,779

7,089
2,397
2,534
1,391
373
241
153

7,154
2,489
2,452
1,408
398
247
160

7,041
2,435
2,403
1,381
420
236
166

7,179
2,464
2,469
1,396
360
331
159

7,161
2,480
2,418
1,383
397
327
156

7,061
2,365
2,410
1,393
420
320
153

7,305
2,523
2,416
1,422
435
345
164

1 Includes auto dealers and excludes 30-day charge credit held by
travel and entertainment companies.
2 Monthly figures are seasonally adjusted.




A Consumer installment credit series have been revised from 1943,
effective Dec. 7, 1978. Information is available from Mortgage and Consumer Finance Section, Division of Research and Statistics.

A44

Domestic Financial Statistics □ March 1979

1.57 FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; quarterly data are at seasonally adjusted annual rates.

Transaction category, or sector

1973

1974

1975

1976

1976

1978

1977

HI

1977

1978

H2

HI

H2

H I'

H2

285.6

302.2

378.9
373.8

378.2

400.7

11.0

58.7
59.7
- .9
319.4
1.4
318.0
302.2
2.2

48.6
50.5
- 1 .9
352.1
2.7
349.3
318.0
3.0

300.0
185.6

314.9
204.0

Nonfinancial sectors
1 Total funds raised........................................
2 Excluding equities........................................
By sector and instrument:
3 U.S. government.......................................
4
Public debt securities...........................
5
Agency issues and mortgages..............
6 All other nonfinancial sectors...................
7
Corporate equities................................
8
Debt instruments.................................
9
Private domestic nonfinancial sectors. .
10
Corporate equities............................
11
Debt instruments..................................
12
Debt capital instruments.................
13
State and local obligations. . . .
14
Corporate bonds.......................
Mortgages:
15
Hom e.....................................
16
Multifamily residential.........
17
Commercial...........................
18
Farm......................................
19
Other debt instruments...................
20
Consumer credit.......................
21
Bank loans n.e.c............ ...........
22
Open market paper...................
23
Other..........................................

203.8

23.8
39.8
2.5
10.3

10.2
29.0
6.6
13.7

9.4
-1 4 .0
- 2 .6
9.0

23.6
3.5
4.0
14.4

24
25
26
27
28
29

By borrowing sector............................

189.3

State and local governments........
Households...................................
Farm..............................................
Nonfarm noncorporate................
Corporate......................................

13.2
80.9
9.7
12.8
72.7

161.6

109.5

182.8

30
31
32
33
34
35
36

Foreign..................................................
Corporate equities............................

6.2
- .2

15.3
- .2

13.2
.2

20.7
.3

12.3
.4

17.5
.3

23.8
.3

6 .4

15.6

25.7
- .5

7.5
.6

17.2
.2

Debt instruments..................................

13.0

20.4

11.9

26.2

8.5
6.6
1.9
3.3

5.0
1.6
2.4
3.0

17.2
1 .4

23.5

6 .9
4 .4

17.0

Bonds............................................
Bank loans n.e.c............................
Open market paper.......................
U.S. government loans................

188.8

208.1

272.5

184.9

198.0

261.7

8.3
7.9
.4
195.5
7.7
187.9
189.3
7.9

11.8
12.0
- .2
177.0
3.8
173.1
161.6
4.1

85.4
85.8
- .4
122.7
10.1
112.6
109.5
9.9

69.0
69.1
- .1
203.5
10.8
192.6
182.8
10.5

181.4
105.0

157.5
98.0

99.6
97.8

172.3
126.8

196.1

14.7
9.2

46.4
10.4
18.9
5.5
76.4

1.0
2.8
.9
1.7

16.5
19.7

15.6
27.2

34.8
6.9
15.1
5.0

39.5
*
11.0
4.6

59.6

15.5
49.2
7.9
7.4
81.8

2.1
4.7
7.3
1.5

1.8

13.2
48.6
8.7
2.0
37.0

6.2
3.7
.3
2.8

19.0
22.8

340.5

389.4
387.4

245.9

56.8
57.6
- .9
283.8
3.1
280.6
271.4
2.7

53.7
55.1
- 1 .4
335.8
2.1
333.7
310.1
2.6

268.7
181.1
29.2

307.5
194.8

21 .0

29.6
20.1

63.7
1.8
13.4
6.1

96.4
7.4
18.4
8.8

101.4
10.1
23.1
10.3

45.5

87.6

112.7

18.5
89.9
11.0
5.2
58.2

259.6

337.4

35.0
30.6
2.9
19.0

271.4

25.9
139.6
14.7
12.6
78.7

277.5

301.0

73.5
73.4
.1
186.0
13.6
172.4
168.5
13.3

64.5
64.9
- .3
221.0
8.1
213.0
197.2
7.7

155.2
117.8

189.5
135.9

42.6
43.1
- .6
259.6
1.2
258.5
252.1
.5

- 1 .2
307.9
5.1
302.8
290.7
4.9

29.3
16.0

29.0
26.0

19.3
22.2

18.7
23.5

56.9
.6
13.8
4.9

70.5
3.1
12.9
7.3

88.5
6.4
14.2
8.9
88.2

37.4
22.9

53.6

50.5
37.1
4.9
20.2

- 2 .7
5.6
11.6

24.3
9.6
2.4
17.3

310.1

168. 5

197.2

24.9
161 .3
17.2
17.2
89.5

4.3
12.0
6.6
3.3

251.6
163.4

17.6
19.5
82.7 | 97.1
9.9
12.1
4.0
6.4
54.3
62.2

5.4
1.5
2.9

9.7
7.9
2.4
3.6

12.2

285.8
198.9

28.5
19.0

398.0

30.8
21.2

104.2
8.4
22.6
8.7

99.3
9.2
20.3
9.3

103.6
11.1
26.0
11.4

86.9

114.5

110.9

35.7
34.0
3.5
15.0

34.4
27.2
2.4
23.0

252.1

290.7
29.0

22.7
131.2
15.5
12.8
69.8

376.8

148.0
13.8
12.3
87.6

- 3 .2
2.7
3.1

5.6
6.4
2.2
2.9

49.8
41 .4
5.2
18.0
302.2

21.7
155.0
14.6
20.3
90.6
17.2
- .8

51.3
32.7
4.5
22.4

318.0

28.1
167.5
19.9
14.2
88.2
34.1
- .3

18.0
4.9

34.4

6.2
3.6
3.3

3.7
17.7
9.6
3.4

Financial sectors
37 Total funds raised........................................
By instrument:

38
39
40
41
42
43
44
45
46
47
48
49

50
51
52
53
54
55
56
57
58
59
60

U.S. government related.............................

Sponsored credit agency securities.. . .
Mortgage pool securities.....................
Loans from U.S. government............

57.6

36.4

11.7

29.2

58.8

93.8

27.9

30.5

61.5

56.2

102.9

84.6

19.9

23.1

13.5

18.6

26.3

39.0

18.2

19.0

25.0

27.5

41.5
24.9

36.5

16.3
3.6

Private financial sectors..............................

37.7

Debt instruments......................................

36.2

Corporate equities...............................

1.5

16.6
5.8
.7

7.0
20.5
- 1 .2

22.6
16.5

-1 .9

10.6

32.6

54.7

13.0

-2 .5
2.9

9 .6

32.0

53.7

.3

3.5
- 1 .2
8.9
17.8
7.2

2.1
- 1 .3
4.6
.9
6.7

By sector:
Sponsored credit agencies.......................
Mortgage pools........... ............................

57.6
16.3
3.6

Private financial sectors...............................

3 7 .7

36.4
17.3
5.8

14.1
2.2
6.0
.5
9.4
6.5
- 1 .2

3.3
15.7
- .4

13.3

Corporate bonds...............................
Mortgages.........................................
Bank loans n.e.c................................
Open market paper and RPs..........
Loans from FHLBs.........................

Commercial banks. .............................
Bank affiliates......................................
Savings and loan associations.............
Other insurance companies.................
Finance companies..............................
REITs....................................................
Open-end investment companies........
Money market funds............................

2.3
10.3
.9

13.3

- 5 .6
3.5
6.3
.9
6.0
.6
- .7
2.4

.6

1.0

.6

2.3
- 3 .6
- .1
- 4 .0

5.8
2.1
- 3 .7
7.3
- 2 .0

10.1
3.1
*
14.4
4.3

11.7
3.2
10.3

29.2
2.9
15.7

-1 .9

- 1 .4
.3
- 2 .2
1.0
.6
- 1 .4
- .1
1.3

1.1

4.1
14.2

*
9 .7
-.2
10.0

2.6
17.2
- .7

9.5
17.9
- 2 .3

4.4
23.1
0

36.5

48.0

36.0

28.7
.1
28.0

61.4

9 .2

60.3

47.0

102.9
24.9
16.6

84.6
20.2
16.3

61.4

48.0
4.2

2.3

.5

6.4
1.5
- 2 .6
6.2
- 1 .5

5.2
2.7
- 4 .8
8.5
- 2 .5

10.1
3.3
- 2 .3
21.4
3.4

58.8
5.8
20.5

93.8
22.6
16.5

27.9
4.0
14.2

30.5
1.8
17.2

10.6

32.6

54.7

56.2
4.4
23.1

7.5
- .8
*
.9
6.4
- 2 .4
- 1 .0
*

4.8
1.3
11.9
.9
16.9
- 2 .4
- 1 .0
.2

9 .7

61.5
7.1
17.9

11.5

36.5

28.7

9.0
- 1 .3
.1
.9
6.0
- 2 .1
- 2 .4
- .5

20.2
16.3
0

11.5

7.7
.9
1 .2
31.3
12.5

8.2
4.3
16.4
1.1
19.7
- 1 .3
- .5
6.9

16.6
0

10.1
2.9
2.3
7.4
5.2

1.1

8.4
2.4
.5
34.9
14.1

1 .0

6.9
- .5
1 .9
27.8
10.9

6.0
- .3
- .1
.9
6.9
- 2 .7
.4
.5

10.0
1.3
10.6
.9
17.4
- 2 .5
- .8
- .5

- .4
1.2
13.1
1.0
16.4
- 2 .2
- 1 .2
.9

12.2
5.8
19.7
1.0
18.7
- 1 .3
- .6
5.9

2.8
13.1
1.1
20.6
- 1 .3
- .4
8.0

316.0
.4
9.9

363.7
- .8
2.5

435.0
- 1 .2
7.0

481.1
- .6
3.1

305.7

362.0

429.2

478.6

485.3
- .4
4.2

All sectors
61 Total funds raised, by instrument............... 261.4
62 Investment company shares.................... - 1 .2
63 Other corporate equities..........................
10.4
64 Debt instruments.......................................... 252.3
65
U.S. government securities..................
28.3
66
State and local obligations..................
14.7
67
Corporate and foreign bonds..............
13.6
Mortgages............................................. 79.9
68
69
Consumer credit................................... 23.8
70
Bank loans n.e.c........ ...........................
51.6
71
Open market paper and RPs.............. 21.2
72
Other loans................ ..........................
19.1




225.1
- .7
4.8

219.8
- .1
10.8

301.7
- 1 .0
12.9

399.4
- 1 .0
4.8

483.2
- .5
3.6

221.0

209.1

289.8

395.6

480.1

34.3
16.5
23.9
60.5
10.2
38.3
14.8
22.6

98.2
15.6
36.4
57.2
9.4
-1 3 .9
- 2 .4
8.7

88.1
19.0
37.2
87.1
23.6
6.4
13.3
15.3

84.3
29.2
36.1
134.0
35.0
32.2
19.8
25.1

92.8
29.8
32.1
145.9
50.5
50.2
42.8
36.1

287.5
- 2 .4
15.8
274.1

91.9
19.3
36.1
77.7
22.9
.1
13.3
12.9

84.3
18.7
38.4
96.4
24.3
12.6
13.3
17.7

10.0
29.3
30.5
121.2
35.7
28.4
27.6
19.2

98.6
29.0
41.7
146.7
34.4
35.9
11.9
31.0

100.4
28.5
32.3
140.3
49.8
48.2
43.7
35.4

481.5

85.2
30.8
31.8
151.5
51.3
52.2
41.9
36.8

Flow o f Funds

A45

1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
Billions o f dollars, except as noted; quarterly data are at seasonally adjusted annual rates.

Transaction category, or sector

1973

1 Total funds advanced in credit markets to

1974

1975

1976

1977

1976

1978

1977

1978

HI

H2

HI

H2

H 1r

H2

196.1

184.9

198.0

261.7

337.4

387.4

245.9

277.5

301.0

373.8

376.8

398.0

34.1
9.5
8.2
7 .2
9 .2

52.6
11.9
14.7
6.7
19.4

44.3
77.5
16.2
-4 .0
9.5

54.5
26.8
12.8
-2 .0
16.9

85.4
40.2
20.4
4.3
20.5

102.8
43.1
24.6
12.5
22.6

49.7
24.4
11.8
-1 .5
15.0

59.3
29.3
13.7
-2 .5
18.8

69.3
27.2
20.0
3.4
18.6

101.6
53.2
20.9
5 .2
22.4

103.5
42.7
23.5
14.1
23.3

102.0
43.6
25.7
10.9
21 .8

2 .8
21.4
9 .2
.6
19.9

9.7
25.6
6 .2
11.2
23.1

15.1
14.5
8.5
6.1
13.5

8.9
20.6
9.8
15.2
18.6

11.8
26.9
7.1
39.5
26.3

18.3
44.0
7 .0
33.5
39.0

6.3
20.0
13.7
9.7
18.2

11.5
21.2
6 .0
20.6
19.0

6.1
26.7
10.2
26.4
25.0

17.6
27.2
4.1
52.7
27.5

19.2
44.9
12.9
26.4
41 .5

17.4
43.2
1.0
40.5
36.5

182.0
18.8
14.7
10.0
48.4
97.2
7 .2

155.3
22.4
16.5
20.9
26.9
75.4
6.7

167.3
15.1
15.6
37.8
? 3 .2
16.1
-4 .0

225.7
61.3
19.0
30.5
52.7
60.4
-2 .0

278.2
44.1
29.2
22.3
83.2
103.7
4.3

323.6
49.7
29.6
23.4
86.9
146.6
12.5

214.4
67.5
19.3
28.6
45.6
51.9
- 1 .5

237.1
55.1
18.7
32.3
59.7
68.9
-2 .5

256.8
42.8
29.3
17.2
74.9
96.0
3.4

299.7
45.4
29.0
27.3
91.6
111.5
5.2

314.8
51.1
28.5
22.4
84.9
135.4
14.1

332.5
41.6
30.8
24.3
88.9
157.8
10.9

Commercial banking..................................
Savings institutions......................................
Insurance and pension funds....................
Other finance.................................................

165.4
86.5
36.9
23.9
18.0

126.2
64.5
26.9
30.0
4.7

119.9
27.6
52.0
41.5
- 1 .1

191.2
58.0
71.4
51.7
10.1

249.6
85.8
84.8
62.0
16.9

289.6
119.2
79.1
71 .4
19.9

174.4
46.6
70.5
53.2
4.2

207.9
69.4
72.4
50.2
15.9

241.1
81.1
85.3
60.3
14.5

258.0
90.5
84.3
63.7
19.4

283.7
120.4
77.2
69.4
16.6

295.5
117.9
81.0
73.4
23.2

24 Sources o f funds................................................
25
Private domestic deposits..........................
26
Credit market borrowing...........................

165.4
86.6
36.2

126.2
69.4
13.0

119.9
90.6
-2 .5

191.2
121.5
9.6

249.6
136.0
32.0

289.6
124.5
53.7

174.4
108.3
10.0

207.9
134.6
9.2

241.1
127.0
36.0

258.0
145.0
28.0

283.7
119.4
60.3

295.5
129.6
47.0

27
28
29
30
31

Other sources.................................................
Foreign funds...........................................
Treasury balances....................................
Insurance and pension reserves...........
Other, net..................................................

42.5
5 .8
- 1 .0
18.4
19.4

43.8
16.8
-5 .1
26.0
6 .0

31.9
.9
- 1 .7
29.6
3.1

60.1
5.1
-.1
34.8
20.3

81.6
11.6
4.3
48.0
17.8

111 .4
15.7
9.7
57.0
29.0

56.1
.1
2.3
35.8
17.2

64.1
9.5
-2 .5
33.8
23.4

78.2
.7
-1 .8
45.5
33.7

85.1
22.4
10.4
50.4
1.9

104.0
4.0
-.7
55.9
44.9

118.9
21.5
20.1
58.2
13.1

Private domestic nonfinancial investors
32 Direct lending in credit m arkets....................
33
U.S. government securities......................
34
State and local obligations........................
35
Corporate and foreign bonds...................
36
Commercial paper.......................................
37
Other...............................................................

52.8
19.2
5 .4
1.3
18.3
8.6

42.2
17.5
9.3
4.7
2 .4
8.2

44.9
23.0
8.3
8.0
-.8
6 .4

44.1
19.6
6.8
2.1
4.1
11.5

60.6
24.6
9.1
1.1
9.5
16.2

87.7
33.1
8.8
-.9
27.8
18.8

50.0
25.0
7.6
2.9
4.8
9.7

38.4
14.1
6 .0
1.3
3.4
13.5

51.6
14.1
8.2
.4
13.0
15.9

69.6
35.2
10.1
1.8
6 .0
16.5

91.4
36.3
10.8
- 2 .6
28.8
18.2

84.0
30.0
6.8
.8
26.9
19.5

38 Deposits and currency......................................
39
Time and savings accounts.........................
40
Large negotiable C D s............................
41
Other at commercial banks...................
42
At savings institutions............................

9 0.6
76.1
18.1
29.6
28.5

75.7
6 6 .7
18.8
26.1
21.8

96.8
84.8
- 1 4 .1
39.4
59.4

128.8
112.2
-1 4 .4
58.1
68.5

144.3
120.1
9.3
41.7
69.1

133.8
117.8
13.8
42.8
61.3

114.3
99.5
- 1 9 .8
52.0
67.3

143.3
125.0
-9 .1
64.3
69.8

132.6
110.5
-4 .4
45.3
69.6

156.0
129.7
22.9
38.2
68.7

129.5
110.2
10.3
45.0
54.9

138.0
125.5
17.3
40.5
67.7

43
44
45

M oney.............................................................
Demand deposits.....................................
Currency....................................................

14.4
10.5
3.9

8 .9
2 .6
6.3

12.0
5.8
6 .2

16.6
9.3
7.3

24.2
15.9
8.3

15.9
6.6
9.3

14.8
8.9
6 .0

18.3
9.6
8.6

22.1
16.5
5.6

26.3
15.3
11.0

19.3
9 .2
10.1

12.5
4.1
8.5

46 Total of credit market instruments, de­
posits and currency..................................

143.4

117.8

141.6

172.9

204.9

221.5

164.3

181.6

184.2

225.6

220.9

222.0

17.4

28.5

22.4

20.8

25.3

26.5

20.2

21.4

23.0

27.2

27.5

25.6

90.9
6 .4

81.3
28.0

71.7
7.1

84.7
20.3

89.7
51.1

89.5
49.2

81.3
10.4

87.7
30.1

93.9
27.1

86.1
75.1

90.1
30.4

88.9
68.0

9.2
-1 .2
10.4
13.3
-4 .1

4.1
-.7
4.8
5 .8
-1 .6

10.7
-.1
10.8
9.7
1.0

11.9
-1 .0
12.9
12.5
-.7

3.8
- 1 .0
4.8
6.2
-2 .4

3.1
-.5
3.6
4.9
-1 .7

13.4
-2 .4
15.8
13.1
.3

10.4
.4
9.9
12.0
-1 .6

1.7
- .8
2.5
6.1
-4 .4

5.8
-1 .2
7 .0
6.3
-.5

2.5
- .6
3.1
1 .7
.8

3.8
- .4
4.2
8.0
-4 .2

By public agencies and foreign:

Totals advanced, by sector

11 Agency borrowing not included in line 1 ..
Private domestic funds advanced

Private financial intermediation
19 Credit market funds advanced by private
20
21
22
23

47
48
49

Public support rate (in per cent).............
Private financial intermediation (in per
cen t)........................................................
Total foreign funds......................................

Memo: Corporate equities not included
above
50 Total net issues.................................................
51
Mutual fund shares.....................................
52
Other equities...............................................
53 Acquisitions by financial institutions..........
54 Other net purchases........................................

N otes
1.
2.
6.
11.
12.
17.
25.
26.
28.

by line number.

Line 2 o f p. A-44.
Sum o f lines 3-6 or 7-10.
Includes farm and commercial mortgages.
Credit market funds raised by federally sponsored credit agencies,
and net issues o f federally related mortgage pool securities. Included
below in lines 3, 13, and 33.
Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32.
Also sum o f lines 27, 32, 39, and 44.
Includes farm and commercial mortgages.
Sum of lines 39 and 44.
Excludes equity issues and investment company shares. Includes
line 18.
Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities o f foreign banking agencies to foreign af­
filiates.




29. Demand deposits at commercial banks.
30. Excludes net investment of these reserves in corporate equities.
31. Mainly retained earnings and net miscellaneous liabilities.
32. Line 12 less line 19 plus line 26.
33-37. Lines 13-17 less amounts acquired by private finance. Line 37
includes mortgages.
45. Mainly an offset to line 9.
46. Lines 32 plus 38, or line 12 less line 27 plus line 45.
47. Line 2/line 1.
48. Line 19/line 12.
49. Sum of lines 10 and 28.
50. 52. Includes issues by financial institutions.
Note. Full statements for sectors and transaction types quarterly,
and annually for flows and for amounts outstanding, may be obtained
from Flow of Funds Section, Division o f Research and Statistics, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551.

A46

Domestic N onfinancial Statistics □ March 1979

2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures
1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1978
1976

Measure

1977

1979

1978*
July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

1 Industrial production.......................................................

129.8

137.1

145.2

146.1

147.1

147.8

148.7

149.6

150.8

150.8

151.2

2
3
4
5
6
7

Market groupings:
Products, to ta l.........................................................
Final, to ta l...........................................................
Consumer goods.............................................
Equipment.......................................................
Intermediate.........................................................
Materials...................................................................

129.3
127.2
136.2
114.6
137.2
130.6

137.1
134.9
143.4
123.2
145.1
136.9

144.3
141.4
147.4
133.1
155.3
146.5

145.0
142.2
147.7
134.7
155.6
147.9

146.2
143.3
148.4
136.3
156.4
148.6

146.5
143.7
149.0
136.4
157.0
149.7

147.0
144.1
149.2
137.0
158.0
151.4

147.7
144.5
149.7
137.3
159.3
152.7

148.9
145.5
150.7
138.5
161.6
153.6

149.1
145.6
150.5
138.9
162.6
153.4

149.6
146.0
150.5
139.8
162.9
153.8

8

Industry groupings:
Manufacturing.........................................................

129.5

137.1

145.6

146.7

147.6

148.7

149.5

150.4

151.8

151.9

152.4

Capacity utilization (percent)1
9
Manufacturing.............................................................
10
Industrial materials industries..................................

80.2
80.4

82.4
81.9

84.2
84.9

84.7
85.7

85.0
85.9

85.3
86.3

85.5
87.1

85.8
87.6

86.3
88.0

86.0
87.5

86.0
87.6

11 Construction contracts2 ................................................

190.2

'160.5

174.3

r173.0

M77.0

r182.0

r193.0

173.0

184.0

181.0

n.a.

12 Nonagricultural employment, total3.............................
13
Goods-producing, total..............................................
14
Manufacturing, total..............................................
15
Manufacturing, production-worker....................
16
Service-producing.......................................................

120.7
100.2
97.7
95.3
131.9

125.0
104.2
101.0
98.6
136.4

130.3
108.9
104.5
102.1
142.1

130.8
109.4
104.4
101.8
142.5

130.9
109.2
104.3
101.6
142.8

131.0
109.3
104.3
101.6
142.9

131.6
110.1
105.1
102.4
143.4

132.3
111.0
105.9
103.5
144.0

133.5
111.7
106.6
104.3
144.2

132.9
112.0
107.0
104.8
144.4

133.4
112.2
107.4
105.3
145.0

17 Personal income, total4...................................................
18
Wages and salary disbursements.............................
19
Manufacturing.............................................................

220.4
189.3
177.1

244.0
230.1
198.6

272.5
257.5
223.6

274.4
259.2
224.9

276.3
260.0
224.5

278.4
262.0
226.4

282.2
266.1
230.3

285.0
268.8
234.8

288.5
271.5
238.0

289.7
274.3
239.7

n.a.
n.a.
n.a.

20 D isn o sah le nersnnal in c o m e ............................................

217.5

239.3

266.5

21 Retail sales5......................................................................

203.5

224.4

248.0

244.9

251.7

253.5

257.5

262.0

265.3

266.3

n.a.

Prices:6
Consumer7....................................................................
22
23
Producer finished goods8..........................................

170.5
170.3

181.5
180.6

195.4
194.6

196.7
196.0

197.8
195.3

199.3
196.9

200.9
199.7

202.0
200.6

202.9
202.4

204.7
205.3

n.a.
207.4

1 Ratios of indexes o f production to indexes o f capacity. Based on data
from Federal Reserve, McGraw-Hill Economics Department, and D e­
partment of Commerce.
2 Index of dollar value o f total construction contracts, including
residential, nonresidential, and heavy engineering, from McGraw-Hill
Informations Systems Company, F. W. Dodge Division.
3 Based on data in Employment and Earnings (U.S. Department of
Labor). Series covers employees only, excluding personnel in the Armed
Forces.
4 Based on data in Survey o f Current Business U.S. Department of Com­
merce). Series for disposable income is quarterly.
5 Based on Bureau o f Census data published in Survey o f Current
Business (U.S. Department of Commerce).
6 Data without seasonal adjustment, as published in Monthly Labor

2.11

277.7

269.7

n.a.

Review (U.S. Department of Labor). Seasonally adjusted data for changes
in the price indexes may be obtained from the Bureau of Labor Statistics,
U.S. Department o f Labor.
7 Beginning Jan. 1978, based on new index for all urban consumers.
8 Beginning with the November 1978 B u l l e t i n , producer price data
in this table have been changed to the BLS series for producer finished
goods. The previous data were producer prices for all commodities.
N o t e . Basic data (not index numbers) for series mentioned in notes
3, 4, and 5, and indexes for series mentioned in notes 2 and 6 may also be
found in the Survey o f Current Business (U.S. Department of Commerce).

Figures for industrial production for the last two months are preliminary
and estimated, respectively.

OUTPUT, CAPACITY, AND CAPACITY UTILIZATION
Seasonally adjusted
1978

1978

1978

Series
Q2

Ql

Q 4r

Q3

Output (1967 = 100)

Ql

Q2

Q3

Q4

Capacity (percent o f 1967 output)

Ql

Q2

Q3

Q 4r

Utilization rate (percent)

1 Manufacturing...................................................

139.8

144.4

147.7

150.6

170.3

172.0

173.7

175.4

82.1

84.0

85.0

89.5

2
3

Primary processing......................................
Advanced processing..................................

148.2
135.4

154.1
139.3

158.2
142.1

162.0
144.5

176.8
166.9

178.5
168.5

180.2
170.2

181.9
171.8

83.8
81.1

86.3
82.7

87.8
83.5

89.0
84.1

139.2

145.1

148.7

152.6

170.4

171.7

173.0

174.2

81.7

84.5

86.0

87.6

5
6
7
8
9
10
11
12

Durable goods..............................................
Basic metal...............................................
Nondurable goods......................................
Textile, paper, and chemical................
Textile....................................................
Paper.....................................................
Chemical...............................................
Energy...........................................................

137.9
110.5
158.0
163.1
115.3
136.5
194.9
119.1

144.0
117.5
163.2
167.7
117.1
139.7
201.4
125.5

150.4
124.6
163.2
168.4
117.3
134.8
204.4
127.0

155.3
129.5
166.8
172.1
119.4
136.9
209.5
128.5

174.0
145.8
182.3
190.8
143.5
153.6
226.6
147.2

175.2
146.1
184.4
193.1
144.1
154.8
230.1
147.8

176.3
146.5
186.5
195.4
144.7
155.8
233.5
148.4

177.4
146.8
188.5
197.5
145.2
156.9
236.8
148.9

79.3
75.8
86.7
85.5
80.3
88.9
86.0
80.9

82.2
80.4
88.5
86.8
81.2
90.3
87.5
84.9

85.3
85.1
87.5
86.2
81.0
86.5
87.5
85.6

87.5
88.2
88.5
87.2
82.2
87.2
88.5
86.3




Labor Market

A47

2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands o f persons; monthly data are seasonally adjusted. Exceptions noted.
1978
Category

1976

1977

1979

1978
Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Household survey data
1 Noninstitutional population1................
2 Labor force (including Armed
Forces)1...........................................
3 Civilian labor force...............................
Employment:
4
Nonagricultural industries2........
Agriculture......................................
5
Unemployment:
6
Number...........................................
7
Rate (percent o f civilian labor
force)........................................
8 Not in labor force..................................

156,048

158,559

161,058

161,348

161,570

161,829

162,033

162,250

162,448

162,633

96,917
94,773

99,534
97,401

102,537
100.420

102,785
100,663

103,097
100,974

103,199
101,077

103,745
101,628

103,975
101,867

104,277
102,183

104,621
102,527

84,188
3,297

87,302
3,244

91,031
3,342

91.372
3,351

91,604
3,406

91,867
3,374

92,476
3,275

92.468
3,387

93,068
3,232

93,335
3,311

7,288

6,855

6,047

5,940

5.964

5,836

5,877

6,012

5,883

5,881

7 .7

7.0

6 .0

5 .9

5 .9

5 .8

5 .8

5 .9

5.8

5 .7

59,130

59,025

58,521

58,563

58,473

58,630

58,288

58,275

58,170

58,012

87,036
20,601
903
4,368
4,947
19,701
4,774
16,270
15,472

'87,281
'20,729
'904
'4,397
'4,967
'19,697
'4,789
'16,327
'15,471

*87,465
*20,812
*908
*4,379
*4,962
*19,797
*4,811
*16,315
*15,481

*87,766
*20,885
*916
*4,348
*4,998
*19,927
*4,820
*16,378
p15,486

Establishment survey data4
9 Nonagricultural payroll employment3
10
Manufacturing....................................
M ining.................................................
11
12
Contract construction.......................
13
Transportation and public utilities.
14 Trade....................................................
15
Finance................................................
Service..................................................
16
17
Government........................................

79,382
18,997
779
3,576
4,582
17,755
4,271
14,551
14,871

82,256
19,647
809
3,833
4,696
18,492
4,452
15,249
15,079

*85,763
*20,332
*837
*4,212
*4,859
p19,394
*4,676
*15,979
*15.476

1 Persons 16 years o f 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 o f monthly figures. By definition, seasonality
does not exist in population figures. Based on data from Employment
and Earnings (U.S. Dept, o f 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,




86,149
20,278
887
4,298
4,846
19,523
4,707
16,074
15,536

86,163
20,286
887
4,298
4,855
19,546
4,719
16,127
15,445

86,573
20,436
893
4,341
4,922
19,632
4 ,m i
16,169
15,443

unpaid family workers, and members of the Armed Forces. Data are
adjusted to the February 1977 benchmark. Based on data from Employ­
ment and Earnings (U.S. Dept, o f Labor).
4 The establishment survey data in this table have been revised to
conform to the industry definitions o f the 1972 Standard Industrial
Classification (SIC) Manual and to reflect employment benchmark
levels for March 1977. In addition, seasonal factors for these data have
been revised, based on experience through May 1978.

A48

Domestic Nonfinancial Statistics □ March 1979

2.13 INDUSTRIAL PRODUCTION

Indexes and Gross Value

Monthly data are seasonally adjusted.

Grouping

1967
pro­
por­
tion

1977
1978
aver­
age*

Dec.

1978
Jan.

Feb.

July

Aug.

1979

Sept.

Oct.

N ov.r Dec.

Jan.*

F eb.e

150.8

151.2

Index(1967 == 100)
MAJOR MARKET
1 Total index................................................................... 100.00 145.2 139.7
2 Products.......................................................................
3
Final products..........................................................
4
Consumer goods.................................................
5
Equipment...........................................................
Intermediate products............................................
6
7 Materials.......................................................................
8
9
10
11
12

Consumer goods
Durable consumer goods........................................
Automotive products........................................
Autos and utility vehicles.............................
Autos............................................................
Auto parts and allied goods........................

13
14
15
16
17

Home goods........................................................
Appliances, A/C, and TV.............................

18
19
20
91

Nondurable consumer goods..................................

22
23
24
25
26
27
28
29
30
31

Miscellaneous home goods..........................

Consumer staples................................................

Consumer chemical products..................
Consumer paper products.......................
Consumer energy products.....................
Residential utilities................................
Equipment
Industrial..............................................................
Building and mining......................................
Manufacturing................................................
Power................................................................

5.06
1.40
1.33
1.07
2.59

7.17
2.63
1.92
2.62
1.45

Defense and space...................................................

7.51
6.42
6.47
1.14

50
51
52
53
54

Containers, nondurable....................................
Nondurable materials n.e.c.................... ..........
Energy materials.......................................... ..........
Primary energy....................................................
Converted fuel materials..................................

55
56
57
58

Supplementary groups
Home goods and clothing....................................
Products...............................................................
Materials..............................................................
For N ote see opposite page.




147.8
132.5
H 4.5
164.3
149.3

146.6
132.8
134.6
161.5
147.7

156.2
187.1
118.1
153.2

155.2
186.5
119.8
149.7
158.5

5.86 175.9 166.9
3.26 208.5 198.8
1.93 133.6 121.1
.67 138.9 144.5

Intermediate products
Construction supplies............................................
37
38
Business supplies....................................................
39
Commercial energy products...........................

Nondurable goods materials............................
Textile, paper, and chemical materials-----Textile materials.................................... ..
Paper materials...................................... ..
Chemical materials...............................

148.7 149.6 150.8

140.3 144.6
116.1 133.3
117.4 135.7
159.1 160.2
145.9 144.3

148.9 150.0
133.7 133.9
136.8 135.6
168.5 167.9
149.1 151.3

150.2
134.4
136.9
169.0
150.8

161.6 161.8 161.9 160.7 160.4
185.6 189.0 185.1 181.2 179.4
180.5 185.0 179.3 173.8 171.0
154.2 159.7 151.8 145.9 144.5
199.1 199.0 200.1 200.0 200.6
148.2
128.7
129.9
168.0
150.6

146.5
123.4
124.4
164.9
151.3

148.9
129.1
129.8
166.8
152.0

156.6 155.8
187.4 184.3
121.4 118.8
151.5 154.5
161.7 167.6

155.5
186.7
117.5
151.9
159.9

155.9
188.0
117.3
152.0
160.1

157.4
190.1
118.2
153.3
160.9

158.5
191.9
116.7
155.4
162! 8

158.8
190.7
117.6
156.7
162.1

159.9
193.2
117.2
157.6

149.0 149.8
126.4 128.0
127.3
168 1
153.6 153.9
146.3

146.6

150.9
142.3

151.4

160.7 161.3
195.1
119*6
156.3

12.63 162.0 154.0 152.6 154.2 163.8 165.4 165.8 166.9 167.2 168.6 168.9 169.7
6.77 149.9 143.0 144.3 144.6 151.9 152.8 152.7 152.9 151.8 152.2 153.3 154.5
1.44 223.4 208.3 211.1 214.9 228.9 228.1 226.3 226.5 223.8 222.3 221.3 220.5
3.85 121.9 118.2 118.8 117.7 122.6 123.9 124.4 125.0 124.2 124.7 126.1 127.5
1.47 151.0 143.7 146.1 145.8 152.8 154.6 154.8 154.0 153.4 155.6 157.9 160.0

36

45
46
47
48
49

147.8

19.79 142.8 141.8 139.9 140.8 142.4 143.1 144.4 144.3 144.8 146.2
126.9 118.3 121.1 125.1 126.6 128.9 128.3
4.29
15.50 147.6 145.9 145.9 146.3 147.3 147.8 148.8 148.8 149.2 150.8
8.33 140.1 137.9 136.5 138.3 140.2 140.8 141.2 140.4 141.0 143.1

Commercial transit, farm.................................
Commercial.....................................................
Transit..............................................................
Farm.................................................................

Materials
Durable goods materials..................................
Durable consumer parts...................................
Equipment parts.................................................
Durable materials n.e.c.....................................
Basic metal materials....................................

147.1

7.89 158.9 155.8 146.5 151.2 160.9 161.5 160.3
2.83 178.6 172.4 157.5 162.8 182.2 182.1 178.3
2.03 172.5 165.5 145.5 153.9 176.7 175.6 170.0
1.90 148.5 143.6 127.4 131.5 152.7 151.1 144.4
.80 194.0 190.4 187.8 185.3 196.1 198.0 199.8

32
33
34
35

40
41
42
43
44

138.8 139.2 146.1

60.71 144.3 140.3 138.5 139.6 145.0 146.2 146.5 147.0 147.7 148.9 149.1 149.6
47.82 141.4 137.6 134.9 136.4 142.2 143.3 143.7 144.1 144.5 145.5 145.6 146.0
27.68 147.4 145.8 141.8 143.8 147.7 148.4 149.0 149.2 149.7 150.7 150.5 150.5
20.14 133.1 126.2 125.4 126.2 134.7 136.3 136.4 137.0 137.3 138.5 138.9 139.8
12.89 155.3 150.4 151.6 151.4 155.6 156.4 157.0 158.0 159.3 161.6 162.6 162.9
39.29 146.5 138.8 139.2 138.6 147.9 148.6 149.7 151.4 152.7 153.6 153.4 153.8

84.5

162.2 165.5 177.5 179.9 180.8 182.9 184.9 187.6 186.7 187.2
198.5 200.9 210.6 212.2 214.1 215.1 214.9 216.6 217.1 218.8
111.1 115.9 134.9 138.5 138.6 142.6 147.5 151.2 148.4 146.9
131.4 134.8 138.5 141.3 142.0 143.2 145.8 151.0 148.7

79.5

79.7

79.2

85.9

87.1

87.1

153.3 148.3
157.2 152.6
166.3 165.6

149.2
153.8
165.5

148.6
154.2
165.6

153.5
157.6
164.1

154.7
158.2
167 A

155.6
158.4
169!9

20.35 146.9 138.7 138.2 137.0 148.7
4.58 140.3 135.7 133.0 131.1 142.0
5.44 159.1 149.2 148.7 146.6 161.7
10.34 143.4 134.3 134.9 134.6 144.7
5.57 120.4 110.3 110.2 111 .0 121.7

87.2

87.9

157.0 159.0
159 2 159.9
168i8 168.8

161.6
161.8
168.0

86.7

88.6

89.5

161.9 162.1
163.2
169! 1

150.4 152.1 154.0 154.9 157.0 156.2 156.8
142.2 144.8 147.3 147.4 148.4 147.2 146.9
162.9 164.6 166.0 167.6 170.5 170.8 172.0
147.6 148.7 150.5 151 .6 153.7 152.8 153.2
125.4 126.7 128.2 129.1 131.2 127.1

10.47 162.9 155.3 155.0 158.5 162.5 162.7 164.4 165.7 167.8 167.0 167.9 169.0
7.62 167.9 159.3 160.7 162.8 168.3 167.0 170.0 171.0 173.3 172.1 173.4 174.3
1.85 117.2 117.3 114.9 115.8 117.1 116.0 118.7 118.7 120.4 119.0 118.9
1.62 136.9 130.2 135.0 136.8 135.1 131.5 137.7 137.3 137.6 135.7 133.7
4.15 202.6 189.5 191.4 194.2 204.0 203.7 205.5 207.6 210.7 210.3 213.2
1.70
1.14
8.48
4.65
3.82
9.35
12.23
3.76
8.48

160.5
133.1
125.2
112.7
140.4

154.4
129.9
118.7
103.0
137.7

137.6 137.5
135.0 129.7
157.2 154.5
125.2 118.7

150.4
123.6
122.2
105.2
142.8

158.7 155.4
128.9 135.7
117.7 127.9
101.0 116.7
138.0 141.6

130.2 133.8
132.5 130.0
155.8 157.9
122.2 117.7

138.0
136.4
155.6
127.9

161.8 161.1
134.8 131.8
127.0 126.0
115.4 111 8
141.3 143.4

163.4
134.5
128.0
115 9
142.7

165.6
135.5
128.4
117.4
141.8

165.5
135.3
129.0
117.0
143.6

166.0
134 6
128.3 127.8
114.6
144.9

139.2
136.1
156.7
127.0

139.1
137.6
159.3
128.0

138.5
138.2
160.4
128.4

140.3
138.7
160.7
129.0

140.3
138.1
160.1
128.3

140.3
135.9
158.3
126.0

140.4
137.5
i 27! 8

Output

A49

2.13 Continued

Grouping

1967
pro­
por­
tion

SIC
code

1977
1978
aver­
age*

Dec.

1978
Jan.

Feb.

July

Aug.

Sept.

1979
Oct.

N o v .r Dec.

Jan.*

Feb. e

Index (1967 = 100)
MAJOR INDUSTRY
1 Mining and utilities.
2
Mining...................
3
Utilities.................
4
Electric..............

12.05 141.5 133.9 137.4
6 . 3 6 124.2 113.4 115.0
5 . 6 9 160.9 156.7 162.3
3.
175.9 183.6

5 Manufacturing. ,
6
Nondurable..
7
Durable........

87.95 145.6 140.5 138.7 139.4 146.7 147.6 148.7 149.5 150.4 151.8 151.9 152.4
35.97 154.8 150.9 149.8 150.6 155.0 155.6 157.1 157.4 158.5 159.4 160.3 160.8
51.98 139.3 133.4 131.1 131.5 141.1 142.2 142.8 144.0 144.8 146.5 146.0 146.7

8
9
10
11

12
13
14
15
16
17
18
19

20
21
22
23
24
25

Mining
M etal....................................
C oal......................................
Oil and gas extraction.. . .
Stone and earth minerals.

13
14

Nondurable manufactures
Foods................................
Tobacco products..........
Textile mill products. . .
Apparel products...........
Paper and products___

Durable manufactures
Ordnance, private and government...
Lumber and products............... . ..........
Furniture and fixtures...........................
Clay, glass, stone products...................
Primary metals.....................
Iron and steel...................
Fabricated metal products.
Nonelectrical machinery...
Electrical machinery...........

31
32
33

Transportation equipment...................
Motor vehicles and parts.................
Aerospace and miscellaneous trans­
portation equipment.................
Instruments..............................................
Miscellaneous manufactures................

142.6
127.1
159.9
182.1

.51 121.0 104.3 121.4 119.9 117.0
.69 115.8 74.6
54.8 56.5 131.7
4.40 124.7 118.4 121.1 120.4 126.8
.75 131.1 126.5 130.0 129.1 131.3

142.5 142.1 144.1 144.5
126.0 124.1 127.6 128.1
160.8 162.3 162.4 162.9
183.2 184.4 184.1 185.0

122.1

144.7 143.4 143.1
127.5
122.1
163.9 "\65.2 166.4

117.9
124.9
126.2
131.6

115.6
114.7
124.9
133.8

144.0
124.5
134.0

125.3
145.1
124.9
132.9

123.9
146.8
123.7
134.2

123.9
117.6
123.0
136.7

8.75

142.9

140.4 139.3

140.8

142.9

144.0

144.4

143.2

144.2

145.5

145.9

3.31
3.21

144.4

125.8
138.6

121.1
143.9

124.5
140.5

127.2
141.9

130.9
142.3

130.6
145.8

145.3

147.1

103.0
122.2

.67 119.1 120.6 113.4 117.7 120.8 118.6 120.6 119.0 121.5 121.7
2.68 140.0 143.7 137.1 136.4 141.0 139.5 142.2 142.1 143.9 144.9 144.4

4.72 129.9 127.5
7.74 190.7 183.0
1.79 144.2 139.3
2.24 254.7 240.1
.86 74.1 77.3

Printing and publishing..........
Chemicals and products.........
Petroleum products.................
Rubber and plastic products.
Leather and products.............

26
27
28
29
30

34
35

10
11, 12

137.7
114.4
163.5
184.3

118.6
139.9

144.9

146.0

129.9 128.3 130.3 129.5 131.0 130.5 132.1 133.0 134.9
184.4 183.7 192.3 192.2 194.2 195.9 197.6 197.9 201.1
139.7 139.0 144.3 144.1 147.1 147.9 148.9 149.9 148.6
238.7 240.0 259.1 261.1 263.1 264.1 264.2 265.6 266.5
74.1
74.0
74.3
74.5 73.0 74.5 74.0 74.1
73.8

136.0
147.3

19, 91
24
25
32

3.64
1.64
1.37
2.74

73.7
138.9
154.7
159.2

73.8
138.1
146.6
152.1

71.2
135.5
150.1
152.6

75.2
138.1
158.1
158.8

75.2
136.9
159.0
159.5

74.3
139.2
160.7
160.9

73.9
141.2
160.9
162.1

73.6
142.5
157.6
166.3

74.0
146.3
156.7
167.7

73.6
146.5
157.8
168.3

73.5

33
331, 2
34
35
36

6.57
4.21
5.93
9.15
8.05

119.1
113.2
142.6
155.6
154.3

111.0 107.4 106.2
103.8 99.5
96.3
136.4 136.9 136.9
151.7 150.1 150.1
147.3 144.0 146.4

123.0
119.0
144.0
156.1
157.9

126.0 127.9
120.9 123.2
145.8 146.3
157.3 158.7
156.9 158.3

128.6
123.8
146.0
160.3
157.9

129.0
124.1
146.9
160.3
159.0

131.0
125.9
149.0
161.8
161.9

124.0
115.2
150.8
162.5
163.7

124.3

37
371

9.27
4.50

130.5
168.3

122.2 116.2 118.4 132.1
161.8

146.6

133.4
171.0

132.8
168.9

137.0
176.8

139.3
180.8

139.4
179.5

138.0
174.4

137.9
172.2

372-9
38
39

4.77

94.9
171.6
153.3

84.9
164.7
152.5

85.8
87.6
163.4 163.5
153.0 151.8

96.5 98.3
172.2 175.4
153.2 153.8

98.9
174.6
154.1

99.6
175.3
153.9

100.2
172.2
152.1

101.7
179.5
153.8

103.7
180.8
153.9

105.4
182.5
153.3

2.11

1.51

72.3
138.5
146.4
152.2

153.1

169.7

151.5
163.8
165.2

Gross value (billions of 1972 dollars, annual rates)
MAJOR MARKET
36 Products, total.............
37
Final...........................
38
Consumer goods.
39
Equipment............
40

Intermediate.

. 1507.4 609.4 594.7 582.0 591.2 610.3 613.3 613.6 621.3 625.3 630.7 629.9 630.3
. 1390.9 469.1 458.7 445.1 454.4 469.6 472.2 471.8 478.8 481.6 484.8 483.0 483.9
, 1277.5 324.1 320.4 311.2 318.6 323.4 324.7 324.4 328.1 330.8 332.4 330.7 330.3
U 13.4 145.2 138.2 133.9 135.8 146.4 147.5 147.7 150.6 150.9 152.3 152.1 153.3
U 16.6

140.4

135.9

i 1972 dollars.

Note. Published groupings include some series and subtotals not




136.7

137.0 140.7

141.4

141.9

142.6

144.0

146.0

146.9

146.7

shown separately. For description and historical data, see Industrial
Production—1976 Revision (Board o f Governors o f the Federal Reserve
System: Washington, D.C.), December 1977.

A50

Domestic Nonfinancial Statistics □ March 1979

2.14 HOUSING AND CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.

1976

1977

1978

1979

1978

Item

July

Aug.

Sept.

Oct.

Nov,

D ec.'

Jan.

Private residential real estate activity
(thousands o f units)
NEW UNITS
2
3

1-family................................................
2-or-more-family................................

1,296
894
402

'1,677
'1,126
'551

1,658
1,078
581

1,632
1,035
597

1,563
1,020
543

1,731
1,092
639

' / , 729
'1,135
592

1,724
1,114
610

1,664
1,149
515

1,363
864
499

6

2-or-more-family................................

1,538
1,163
377

1,986
1,451
535

2,019
1,433
586

r2 ,104
'1,455
666

'2 ,004
'1,431
585

r2 ,024
'1,432
612

'2 ,054
'1,436
636

T2 ,107
'1,502
597

2,062
1,529
533

1,656
1,136
520

7 Under construction, end o f period 1
8
1-family...............................................
9
2-or-more-family................................

1,147
655
492

1,442
829
613

1,355
1,378
553

' 1,301
'781
'520

'1,303
'786
'517

rl,311
'784
'526

1,320
'781
'539

' 1,337
'791
'545

1,355
802
553

1,378
821
556

2-or-more-family...............................

1,362
1,026
336

1,652
1,254
398

1,866
1,368
498

' 1,928
'1,320
'608

' 1,948
'1,363
'584

' 1,900
'1,370
'530

' 1,883
'1,414
'468

' 1,885
'1,375
'510

1,872
1,405
467

1,814
1,314
500

13 Mobile homes shipped........................

246

277

276

232

283

272

'286

'280

303

303

639
433

819
407

817
423

'829
'417

'778
'418

'796
'417

'900
'407

'811
'412

814
415

776
414

44.2
41.6

48.9
48.2

55.9
n.a.

54.8
n.a.

56.1
n.a.

57.3
n.a.

58.3
n.a.

58.8
n.a.

59.9
n.a.

60.3
n.a.

48.1

54.4

62.7

62.9

63.0

64.4

'66.2

67.2

68.0

3,002

3,572

3,905

3,890

4,080

3,950

4,290

4,350

4,160

3,710

38.1
42.2

42.9
47.9

48.7
55.1

49.4
56.5

50.3
57.5

50.2
57.7

50.1
57.3

50.7
57.4

50.9
58.1

52 0
59.8

12

14
15
16
17
18

Merchant builder activity in
1-family units:
Number sold..................... .....................
Number for sale, end o f period1.........
Price (thous. of dollars)2
Median:
Units sold........................................
Units for sale..................................
Average:
Units sold........................................
EXISTING UNITS (1-family)

19 Number sold ................... .......................
Price o f units sold (thous. o f
dollars):2
20
Median........................... ....................
21
Average.......................... ....................

Value o f new constructio n 4
(millions iof dollars)

CONSTRUCTION
22 Total put in place............. ...............

148,778

172,552

201,538

210,192

208,724

209,227

r209,815

'212,764

r215,741

208,110

23 Private ...........................................
24 Residential................... .............
25 Nonresidential, total.................
Buildings:
26
Industrial...........................
27
Commercial.......................
28
Other..................................
29
Public utilities and other. . . .

110,416
60,519
49,897

134,723
80,957
53,766

156,801
92,658
64,143

161,804
95,888
65,916

160,562
95,011
65,551

161,258
94,249
67,009

r161,909
*•93,568
68,341

'164,851
'95,377
69,474

r168,162
'96,945
'71,217

162,239
92,582
69,657

7,182
12,757
6,155
23,803

7,713
14,789

11,170
19,463
7,036
28,247

12,043
18,835
6,721
27,952

12,634
18,926

25,064

10,763
18,308
6,661
28,411

6,686

28,763

12,627
19,410
6,667
29,637

12,529
20,294
6,877
29,774

'13,273
'20,049
'6,922
'30,973

12,719
19,893
6,675
30,370

38,312
1,521
9,439
3,751
23,601

37,828
1,517
9,280
3,882
23,149

44,737
2,181
8,627
3,697
23,503

48,388
1,493
9,833
4,989
32,073

43,162
1,520
11,427
5,231
29,984

47,970
1,615
10,862
5,660
29,833

r47,970
'1,426
11,428
3,851
31,211

47,913
1,431
n.a.
n.a.
n.a.

'47,579
'1,458
n.a.
n.a.
n.a.

45,871
1,572
n.a.
n.a.
n.a.

30 Public ............................... .............
31
Military........................ .............
32 Highway....................... .............
33 Conservation and development.. .
34 Other 3........................................

6,200

1 Not at annual rates.
2 Not seasonally adjusted.
3 Beginning Jan. 1977 Highway imputations are included in Other.
4 Value of new construction data in recent periods may not be strictly
comparable with data in prior periods due to changes by the Bureau of
the Census in its estimating techniques. For a description o f 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 Na­
tional Association o f Realtors. All back and current figures are avail­
able from originating agency. Permit authorizations are for 14,000
jurisdictions reporting to the Census Bureau.

Prices

A51

2.15 CONSUMER AND PRODUCER PRICES
Percentage changes based on seasonally adjusted data, except as noted.
12 months to—

3 months (at annual rate) to—

1 month to—

1978
1978
Jan.

1978

1979
Jan.
Mar.

June

Sept.

Dec.

Sept.

Oct.

1979

Nov.

Dec.

Jan.

Index
level
Jan.
1979
(1967
= 100)2

Consumer prices3
1 All items.............................................................

6.8

9.3

8.9

10.7

8.5

8.5

.9

.8

.6

.6

.9

204.7

2 Commodities......................................................
3
Food...............................................................
4
Durable.....................................................
5
Nondurable..............................................
6

6 .2
8.6
5 .0
4.8
4.8

9.3
12.4
7.9
9.2
6.2

8.5
14.9
5.8
7.9
3.8

10.5
18.3
7.2
9.0
5.5

7.3
4.8
8.3
9.1
6.9

9.6
10.2
9.6
11.3
6.7

.8
.1
.9
.9
.6

.8
.9
.7
.8
.5

.7
.6
.7
1 .0
.5

.8
1 .0
.8
.8
.6

1.1
1 .4
.9
.9
1 .1

195.8
223.9
181.9
182.0
180.3

7 Services...............................................................
8
9

7.8
6.2
8.0

9.5
7.2
9.8

9.1
6.5
9.5

11.0
8.2
11.3

10.3
7.3
10.8

7.2
7.7
7.1

.9
.7
.9

.9
.6
.9

.5
.1
.4

.4
.6
.4

.5
.3
.6

221.1
170.3
230.4

Other groupings:
All items less fo o d ......................................
All items less food and energy.................
Homeownership..........................................

6.3
6.4
9.3

8.7
8.6
12.4

7.6
6.3
11 .4

8.9
10.4
13.2

9.3
9.7
14.6

8.5
7.7
10.9

.8
1.0
1.3

.8
.8
1 .4

.6
.7
.8

.6
.4
.4

.8
.5
.8

199.8
197.0
241.6

10
11
12

Producer prices, formerly Wholesale prices
6.8

9 .8

8.7

10.3

7.4

10.1

.8

r.8

r .9

.8

1.3

205.3

Consumer......................................................
F ood s.........................................................
Excluding food s.......................................
Capital equipment.......................................

6.5
7 .4
6.0
7.5

10.4
12.9
9 .0
8.4

9.5
16.8
5.3
7.1

10.6
11.4
10.5
9.1

7.5
4.9
8.8
7 .0

10.8
15.3
8.4
8.8

.9
1 .5
.5
.5

r.8
rl .6
r.4
r .6

r .9
r .9
r .9
r .1

r .9
1 .0
.8
.7

1.4
1.8
1.2
1.0

203.6
220.1
193.3
209.2

18 Materials...........................................................
19
Intermediate1................................................
Crude:
20
Nonfood....................................................
21
Food...........................................................

r6 . 1
6.6

10.9
8.7

rl \ .0
8.1

r9.9
7.2

n .5
6.9

r13.0
10.8

.9
.6

rl.5
M .l

r .9
r.8

r.l
.1

1.4
1.2

232.5
226.4

10.3
2.3

16.4
20.1

10.7
25.1

14.9
26.6

16.9
2.8

19.6
21.0

1 .6
1 .8

rl .7
r3 .7

>1 .6
rl . 1

1 .2
.1

1.7
2.8

311.6
232.9

14
15
16
17

1 Excludes intermediate materials for food manufacturing and manufactured animal feeds.
2 Not seasonally adjusted.




3 Beginning Jan. 1978 figures for consumer prices are those for all urban
consumers.
The Consumer Price Index has been revised back to 1974.

Source. Bureau of Labor Statistics.

A52

Domestic Nonfinancial Statistics □ March 1979

2.16 GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.

1976

1977

1977

1978

Account

Q3

1978
Q4

Ql

Q2

Q3

Q4

Gross national product
1
2
3
4
5

By source:
Personal consumption expenditures.....................

1,700.1

1,887.2

2,106.9

1,916.8

1,958.1

1,992.0

2,087.5

2,136.1

2,212.1

1,0 9 0 .2

1,206.5

1,340.4

1,214.5

1,255.2

1 ,276.7

1,322.9

1,356.9

1,405.1

199.5
531.7
625.8

209.2
553.5
642.5
360.1

Durable goods..............................................
Nondurable goods........................................
Services..........................................................

156.6
442.6
491.0

6
7
8
9
10
11
12

Gross private domestic investment......................

243.0

Nonresidential...... .........................................

164.6

Structures...............................................
Producers’ durable equipment..............
Residential structures...............................
Nonfarm................................................

57.3
107.3
68.2
65.8

13
14

Change in business inventories....................
Nonfarm....................................................

10.2
12.2

15
16
17

Net exports o f goods and services.......................

7.4

Exports..........................................................
Imports..........................................................

163.2
155.7

18
19
20

Government purchases o f goods and services. .

359.5

21
22
23
24
25
26
21'

28
29

Fixed investment...........................................

Federal...........................................................
State and local..............................................

By major type of product:
Final sales, total................................................
Goods...................................................................

232.8

129.9
229.6

178.4
479.0
549.2

197.5
526.5
616.4

177.4
479.7
557.5

297.8

344.6

309.7

190.4

329.1

287.8

222.1

193.5

282.3
63.9
126.5
91.9
88.9

183.5
501.4
591.8

313.5

300.5

345.4

350.1

205.6

220.1

227.5

235.2

80.9
146.6
109.0
105.7

84.6
150.7
113.3
110.0

20.1
22.1

13.6
14.6

11.6
12.2

-5 .5

-1 0 .7

65.4
128.1
94.3
91.2

15.6
15.0

15.5
16.4

21.9
22.0

13.1
10.4

16.7
16.9

- 1 1 .1

- 1 2 .0

-7 .0

-2 3 .2

- 2 4 .1

204.8
216.8

180.8
187.8

434.0

399.5

175.5
186.6

394.0

145.1
248.9

153.7
280.2

1,689.9

1,871.6

760.3

832.6

304.6
455.7
778.0
161.9

341.3
491.3
862.8
191.8

Change in business inventories.................
Durable goods..............................................
Nondurable goods..................................

10.2
5.3
4.9

15.6
8.4
7.2

1,271.0

1,332.7

67.4
132.8
100.2
97.5

68.5
137.1
100.3
97.3

172.1
195.2

412.5

197.8
519.3
605.8

322.7

306.0

200.3

77.6
144.5
107.0
103.8

Durable......................................................
Nondurable................................................
Services..........................................................
Structures......................................................

30 M emo: Total GNP in 1972 dollars.............

187.2
496.9
571.1

325.3
76.6
143.5
105.3
102.1

181.7
205.8

205.4
210.9

416.7

424.7

146.8
252.7

152.2
260.3

151.5
265.2

147.2
277.6

2,091.4

1,894.9

1,945.0

1,975.3

917.6

844.7

859.6

861.8

376.3
541.3
962.7
226.6

336.5

348.5

-7 .8

210.1
220.8

222.0
229.7

439.8

454.6

154.0
285.8

162.3
292.3

2,067.4

2,122.5

351.2
510.6
926.4
203.8

375.8
536.4
952.0
223.4

380.1
547.2
973.7
235.0

13.1
6.3
6.8

16.7
14.8
1.9

20.1
10.8
9.3

13.6
10.2
3.4

11 .6
10.3
1.3

1,354.5

1,354.2

1,382.6

1,391.4

1,413.0

346.5
498.2
875.3
196.8

347.4
512.2
893.6
204.9

15.5
11.6
4.0

21.9
11.9
10.0

1,385.3

1,343.9

912.2

927.3

2,200.5

969.3

398.3
571.0
998.8
244.0

National income
31 T otal.........................................................................

1,359,2

1.515.3

1,704.1

1,537.6

1,576.9

1,603.1

1,688.1

1.728.4

32 Compensation of employees............................

1,036.8
890.1
187.6
702.5
146.7

1.153.4
983.6

200.8

1,301.4
1,100.9
216.1
884.8
200.5

1,165.8
993.6
201.7
791.9
172.2

1,199.7
1,021.2
208.1
813.1
178.4

1,241.0
1,050.8
211.4
839.3
190.2

1,287.8
1,090.2
213.9
876.3
197.6

1,317.1
1.113.4
216.8
896.6
203.6

69.7
77.0

19 A

94.5
105.9

79.9
92.2

82.4
96.1

90.2

90.4

100.0

93.6
104.0

107.9

111.8

88.6
70.2
18.4

99.8
79.5
20.3

112.9
87.8
25.1

97.2
80.8
16.5

107.3
82.3
25.1

105.0
83.1
21.9

114.5
89.6
25.0

122.1
92.6
29.5

33

34
35
36
37
38

Wages and salaries........................................

Government and government enterprises
Other......................................................

Supplement to wages and salaries..............

Employer contributions for social
insurance........................................
Other labor income...............................

39 Proprietors’ income1.........................................
40 Business and professional1.......................
41
Farm 1........................................................ .
42 Rental income of persons2...............................
43 Corporate profits1........................................
44 Profits before tax3....................................
45 Inventory valuation adjustment.............
46 Capital consumption adjustment........... .
47 Net interest..................................................

782.9
169.8

86.1

24.0

9 5 .1

98.6

22.5

22.5

23.4

22.4

22.7

22.8

22.2

24.3

24.4

127.0
155.9
- 1 4 .5
- 1 4 .4

144.2
173.9
- 1 4 .8
- 1 4 .9

160.2
- 2 4 .3
- 1 8 .1

154.8
177.5
-7 .7
-1 5 .0

148.2
178.3
- 1 4 .8
- 1 5 .3

132.6
172.1
- 2 3 .5
- 1 6 .1

163.4
205.5
-2 4 .9
-1 7 .2

165.2
205.4
- 2 0 .9
- 1 9 .3

n.a.
- 2 7 .9
- 1 9 .9

84.3

95.4

106.2

97.3

99.0

101.7

104.6

107.4

111.1

1 W ith inventory valuation and capital consumption adjustments.
2 With capital consumption adjustments.




110.1

1,359.6
1,149.2
222.3
926.9
210.4

202.6

3 For after-tax profits, dividends, and the like, see table 1.50.
S ource. Survey o f Current Business (U.S. Dept, of Commerce).

National Income Accounts

A53

2.17 PERSONAL INCOME AND SAVING
Billions o f current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.

Account

1976

1977

1977

1978
Q3

1978
Q4

Ql

Q2

Q3

Q4

Personal income and saving
1 Total personal income...........................................

1,380.9

1,529.0

1,707.6

1,543.7

1,593.0

1,628.9

1,682.4

1,731.7

1,787.3

2 Wage and salary disbursements...............................
3 Commodity-producing industries....................
4
Manufacturing..............................................
5 Distributive industries......................................
6 Service industries..............................................
7 Government and government enterprises.......

890.1

983.6

993.6

1,021.2

1,050.8

307.5
237.5
216.4
178.6
187.6

343.7
266.3
239.1
200.1
200.8

1,100.9

1,090.2

1,113.2

1,149.2

396.4
302.0
271.6
228.5
216.7

411.3
314.3
280.3
235.3
222.3

390.2
299.8
268.8
225.8
216.1

348.3
269.3
241.2
202.3
201.7

357.1
277.3
247.5
208.5
208.1

365.9
286.9
257.0
216.5
211.4

387.0
296.1
266.4
222.8
213.9

8 Other labor income..............................................

77.0

90.4

105.9

92.2

96.1

100.0

104.0

107.9

111.8

9 Proprietors' income1..................................................
10 Business and professional1...............................
11
Farm 1................................................................

88.6

70.2
18.4

99.8

112.9

107.3

105.0

110.1

114.5

79.5
20.3

87.8
25.1

97.2

122.1

12 Rental income of persons2...................................

22.5

22.5

23.4

22.4

22.7

13 Dividends..............................................................

37.9

43.7

49.3

44.1

46.3

14 Personal interest income......................................

126.3

141.2

158.9

143.6

15 Transfer payments................................................
16 Old-age survivors, disability, and health
insurance benefits......................................

193.9

208.8

226.0

92.9

105.0

117.4

Less: Personal contributions for social
insurance....................................................

55.5

61.0

69.7

61.4

62.6

67.2

69.2

70.5

72.0

18 Equals : Personal income...................................

1,380.9

1,529.0

1,707.6

1,543.7

1,593.0

1,628.9

1,682.4

1,731.7

1,787.3

17

86.1
24.0

89.6
25.0

22.8

22.2

24.3

47.0

48.1

50.1

51.9

146.0

151.4

156.3

161.7

166.2

211.9

215.9

219.2

220.6

230.4

235.8

108.5

110.1

112.1

113.7

121.1

122.7

80.8
16.5

82.3
25.1

83.1
21.9

92.6
29.5
24.4

Less: Personal tax and nontax paym ents.. . .

196.5

226.0

256.2

224.6

233.3

237.3

249.1

263.2

275.0

20 E quals: Disposable personal income................

1,184.4

1,303.0

1,451.4

1,319.1

1,359.6

1,391.6

1,433.3

1,468.4

1,512.3

21

19

L ess: Personal outlays.....................................

1,116.3

1,236.1

1,375.2

1,244.8

1,285.9

1,309.2

1,357.0

1,392.5

1,442.1

22 Equals: Personal saving.....................................

68.0

66.9

76.2

74.3

73.7

82.4

76.3

76.0

70.2

M emo items :
Per capita (1972 dollars):
Gross national product.....................................
Personal consumption expenditures................
Disposable personal income.............................
Saving rate (per cent)...........................................

5,906
3,808
4,136
5.7

6,144
3,954
4,271
5.1

6,340
4,082
4,419
5.3

6,191
3,953
4,293
5.6

6,226
4,030
4,365
5.4

6,215
4,009
4,370
5.9

6,334
4,060
4,399
5.3

6,359
4,091
4,428
5.2

6,446
4,163
4,480
4.6

n.a.

23
24
25
26

Gross saving
27 Gross private saving..............................................

270.7

290.8

318.5

310.7

304.3

305.4

319.9

325.7

28
29
30

Personal saving..................................................
Undistributed corporate profits1.....................
Corporate inventory valuation adjustment....

68.0
24.8
-1 4 .5

66.9
28.7
-1 4 .8

76.2
26.8
-2 4 .3

74.3
38.0
- 7 .7

73.7
28.0
-1 4 .8

82.4
15.6
-2 3 .5

76.3
30.3
-2 4 .9

76.0
29.0
-2 0 .9

70.2
n.a.
-2 7 .9

31
32
33

Capital consumption allowances:
Corporate......................................................
Noncorporate................................................
Wage accruals less disbursements...................

111.5
66.3

120.9
74.3

132.5
84.4

122.6
75.9

124.6
77.9

127.4
79.9

130.5
82.8

134.7
86.1

137.4
89.0

- 1 .4

- 2 5 .2

-2 9 .6

34 Government surplus, or deficit ( —), national
35
36

Federal..............................................................
State and local..................................................

-3 3 .2

-5 3 .8
20.7

-1 8 .6

-4 8 .1
29.6

-2 9 .7
28.3

-5 6 .4
31.2

-5 8 .6
29.0

- 2 1 .1

-5 2 .6
31.5

6 .2

- 2 3 .6
29.8

.6

-2 2 .8
23.4

n.a.
n.a.
n.a.

37 Capital grants received by the United States,
net..................................................................
38 Investment...................................................................
39 Gross private domestic....................................
40 Net foreign........................................................

279.5

286.4

326.6

326.6

297.8
-2 0 .9

344.6
-2 5 .2

292.6

243.0
- 1 .2

309.7
-1 7 .1

313.5
-3 4 .1

322.7
-3 6 .3

345.4
- 1 8 .9

350.1
-2 3 .5

41 Statistical discrepancy..........................................

4.2

4.7

.9

7.1

4.8

2.2

.5

.4

241.7

276.9

1 With inventory valuation and capital consumption adjustments.
2 With capital consumption adjustment.




319.4

Source. Survey o f Current Business (U.S. Dept, of Commerce).

337.9

360.1
-2 2 .2
n.a.

A54

International Statistics □ March 1979

3.10 U.S. INTERNATIONAL TRANSACTIONS Summary
Millions o f dollars; quarterly data are seasonally adjusted except as noted.1

Item credits or debits

1975

1976

1977

1977
Q3

1 Merchandise exports...................
2 Merchandise imports..................
3
Merchandise trade balance2 .
4 Military transactions, net............
5 Investment income, net3..............
6 Other service transactions, n e t. .

1978

Ql

Q4

107,088
98,041
9,047

114,694
124,047
-9 ,3 5 3

120,576
151,706
-3 1 ,1 3 0

31,009
38,277
-7 ,2 6 8

29,461
39,664
-10,203

-8 7 6
12,795
2,095

312
15,933
2,469

1,334
17,507
1,705

467
4,609
583

3,813
482

5

Q2

Q3

30,664
41,865

35,067
42,869
-7 ,8 0 2

36,930
44,975
- 8 ,0 4 5

210
4,877
538

592
4,583
842

111
4,550
761

-11,201

23,060

9,361

-1 0 ,5 8 5

-1 ,6 0 9

- 5 ,9 0 3

- 5 ,5 7 6

-1 ,7 8 5

- 2 ,5 5 7

-1 ,7 2 1
- 2 ,8 9 4

-1 ,8 7 8
-3 ,1 4 5

-1 ,9 3 2
-2 ,7 7 6

-4 9 0
-7 8 7

-4 7 3
-5 9 1

-5 0 4
-7 7 8

-5 3 6
-7 8 1

-4 9 3
-7 7 4

10 Balance on current account3.
11
Not seasonally adjusted3. .

18,445

4,339

-1 5 ,2 9 2

-2 ,8 8 6
-5 ,1 9 6

-6 ,9 6 7
- 5 ,2 4 5

-6 ,8 5 8
-6 ,3 8 2

-3 ,1 0 2
-2 ,6 5 6

- 3 ,8 2 4
- 6 ,3 4 1

12 Change in U.S. government assets, other than official
reserve assets, net (increase, —) ........................................

-3,470

-4,213

-3 ,6 7 9

- 1 ,0 9 8

-838

-8 9 6

-1,176

-1 ,4 9 4

—607

-2 ,5 3 0

151

329

180

-7 8

-121

-6 0
-2 9
42
47

246

-6 6

-2 3 1
-1 1 8

-1 6
324
-6 2

-104
437

-4 3
165
58

7 Balance on goods and services3,4
8 Remittances, pensions, and other transfers...
9 U.S. government grants (excluding military).

13 Change in U.S. official reserve assets (increase, —) .............
14
G o ld ....................................................... ...................................
15
Special Drawing Rights (SDRs).........................................
16
Reserve position in International Monetary Fund (IMF).
17
Foreign currencies...................................................................

-4 6 6
-7 5

-2,2 1 2
-2 4 0

-2 9 4
302

-9
133
27

18 Change in U.S. private assets abroad (increase, —) 3-

-3 5 ,3 6 8

-4 3 ,8 6 5

-3 0 ,7 4 0

-5,668

-13,862

-1 4 ,3 8 6

-5,287

- 9 ,6 9 2

19

Bank-reported claims...................................................

-1 3 ,5 3 2

-2 1 ,3 6 8

-1 1 ,4 2 7

-1,7 7 9

-8 ,7 5 0

-6 ,2 7 0

-5 0 3

- 7 ,1 3 7

20
21
22
23
24

Nonbank-reported claims....................................................
Long-term.........................................................................
Short-term........................................................................
U.S. purchase of foreign securities, net.........................
U.S. direct investments abroad, net3.............................

-1 ,3 5 7
-3 6 6
-9 9 1
- 6 ,2 3 5
-1 4 ,2 4 4

- 2 ,0 3 0
5
-2 ,0 3 5
- 8 ,8 5 2
-1 1 ,6 1 4

-1 ,7 0 0
25
-1 ,7 2 5
- 5 ,3 9 8
-1 2 ,2 1 5

1,389
205
1,184
-2,1 6 5
-3 ,1 1 3

-1 ,1 8 4
-2 7 9
-9 0 5
-7 3 1
- 3 ,1 9 7

—2,222
-5 7
-2 ,1 6 5
-9 4 9
-4 ,9 4 5

267
80
187
-1,1 0 3
-3 ,9 4 8

25 Change in foreign official assets in the United States
{increase, + ) ....................................................................
26
U.S. Treasury securities....................................................
27
Other U.S. government obligations...............................
28
Other U.S. government liabilities5 ................................
29
Other U.S. liabilities reported by U.S. banks...............
30
Other foreign official assets6 ............................................

6,907
4,408
905
1,647
-2,1 5 8
2,104

18,073
9,333
573
4,993
969
2,205

37,124
30,294
2,308
1,644
773
2,105

8,246
6,948
627
332
-1 6 3
502

15,543
12,900
973
390
909
371

15,760
12,965
117
804
1,456
418

-5,685
-5,728

211

-3 1 2
-4 9 3
637

4,904
3,146
443
350
881
84

8,643

18,897

13,746

6,005

4,522

2,336

6,090

9,708

628

10,990

6,719

2,640

3,143

-3 1 4

1,836

8,044

319
406
-8 7

-5 0 7
-9 5 8
451

257
-6 2 0
877

590
18
572

425
-2 4 2
667

495
38
457

248

-6 8

316

482
91
391

2,590
2,503
2,603

2,783
1,284
4,347

563
2,869
3,338

1,251
513

1,012

-2 9 9
803
450

881
462
812

847
1,308
1,852

- 1 ,0 5 3
442
1,793

5,449

9,300

-927

-4,751
-2 ,2 2 9

1,602
2,276

3,798
160

,830

-1

218
-2,411

5,449

9,300

-927

-2 ,5 2 2

3,638

,831

2,629

-6 0 7
5,259

-2 ,5 3 0
13,080

-2 3 1
35,480

151
7,914

15,153

246
14,956

329
-5,373

180
4,554

7,092

9,581

6,733

1,438

1,024

1,963

-2,838

-1,593

2,207

373

194

31

71

75

57

69

31 Change in foreign private assets in the United States
(increase, + ) 3 ......................................................................
32

U.S. bank-reported liabilities.

33
34
35
36

U.S. nonbank-reported liabilities..........................................

37
38

Long-term............................................. .........................

Short-term............................................................................
Foreign private purchases o f U.S. Treasury securities,
n et......................................................................................
Foreign purchases o f other U.S. securities, n e t...............
Foreign direct investments in the United States, net3. . ..

39 Allocation of SD R s..............................................................
40 Discrepancy..................................................... .........................
41
Owing to seasonal adjustments.......................................
42
Statistical discrepancy in recorded data before seasonal
adjustment...................................................................

275

-1 1

286
-4 6 7
- 2 ,3 6 3

M emo items:

Changes in official assets:
43
U.S. official reserve assets (increase, —) ...................
44
Foreign official assets in the United States (increase, + ) .
45 Changes in Organization o f Petroleum Exporting Coun­
tries (OPEC) official assets in the Unites States (part
o f line 25 above)...........................................................
46 Transfers under military grant programs (excluded from
lines 1, 4, and 9 above)................................................

1 Seasonal factors are no longer calculated for lines 13 through 46.
2 Data are on an international accounts (IA) basis. Differs from the
census basis primarily because the IA basis includes imports into the
U.S. Virgin Islands, and it excludes military exports, which are part of
line 4.
3 Includes reinvested earnings o f incorporated affiliates.
4 Differs from the definition o f “net exports o f goods and services” in
the national income and product (GNP) account. The GNP definition




excludes certain military sales to Israel from exports and excludes U.S.
government interest payments from imports.
5 Primarily associated with military sales contracts and other transac­
tions arranged with or through foreign official agencies.
6 Consists of investments in U.S. corporate stocks and in debt securi­
ties of private corporations and state and local governments.
N ote. Data are from Bureau of Economic Analysis, Survey o f Current
Business (U.S. Department of Commerce).

Trade and Reserve Assets

A55

3.11 U.S. FOREIGN TRADE
Millions o f dollars; monthly data are seasonally adjusted.

Item

1976

1977

1978 -

1978

1979

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

11,661

12,294

13,274

12,901

13,451

13,282

13,133

1 EXPORTS o f domestic and foreign
merchandise excluding grant-aid
shipments............................................

115,156

2 GENERAL IMPORTS including
merchandise for immediate con­
sumption plus entries into bonded
warehouses..........................................

121,009

147,685

172,026

14,545

14,133

14,820

14,852

14,825

15,032

16,231

3 Trade balance.........................................

-5 ,8 5 3

-2 6 ,5 3 5

-2 8 ,4 5 1

- 2 ,8 8 3

-1 ,8 3 9

-1 ,5 4 5

-1 ,9 5 0

- 1 ,3 7 4

- 1 ,7 4 9

-3 ,0 9 8

121,150

143,575

Note. Bureau o f Census data reported on a free-alongside-ship
(f.a.s.) value basis. Effective January 1978, major changes were made in
coverage, reporting, and compiling procedures. The internationalaccounts-basis data adjust the Census basis data for reasons o f coverage
and timing. On the export side, the largest adjustments are: (a) the addition
of exports to Canada not covered in Census statistics, and (b) the exclusion
o f military exports (which are combined with other military transactions

and are reported separately in the “service account”). On the import
side, the largest single adjustment is the addition o f imports into the
Virgin Islands (largely oil for a refinery on St. Croix), which are not
included in Census statistics.

Source. FT 900 “Summary of U.S. Export and Import Merchandise
Trade” (U.S. Department of Commerce, Bureau o f the Census).

3.12 U.S. RESERVE ASSETS
Millions o f dollars, end o f period
1978
Type

1975

1976

1977

1979

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.*
3 21,641

1 Total.........................................................

16,226

18,747

19,312

18,783

18,850

18,935

17,967

18,650

20,468

2 Gold stock, including Exchange
Stabilization Fund1..........................

11,599

11,598

11,719

11,679

11,668

11,655

11,642

11,671

11,592

11,544

3 Special Drawing Rights2.....................

2,335

2,395

2,629

2,885

2,942

3,097

1,522

1,558

2,661

3 2,672

4 Reserve position in International
Monetary Fund..................................

2,212

4,434

4,946

4,196

4,214

4,147

1,099

1,047

1,017

3 1,120

5 Convertible foreign currencies4..........

80

320

18

23

26

36

3,704

4,374

5,198

6,305

1 Gold held under earmark at Federal Reserve Banks for foreign and
international accounts is not included in the gold stock o f the United
States; see table 3.24.
2 Includes allocations by the International Monetary Fund o f SDRs as
follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710
million on Jan. 1, 1972; and $1,103 million on Jan. 1, 1979; plus net
transactions in SDRs.




3 Beginning July 1974, the IMF adopted a technique for valuing the
SDR based on a weighted average of exchange rates for the currencies
of 16 member countries. The U.S. SDR holdings and reserve position in
the IMF also are valued on this basis beginning July 1974.
4 Beginning November 1978, valued at current market exchange rates.

A56
3.13

International Statistics □ March 1979
FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data
Millions of dollars, end of period

Asset account

1975

1976

19782
1977
June

July

Aug.

Sept.

Oct.

Nov.

Dec.''

All foreign countries

2
3
4

Claims on United S ta te s . ...............

Parent bank.................................
Other............................................

176,493

219,420

258,897

271,696

269,542

'274,929

287,369

'292,305

295,984

305,590

6,743

7,889

11,623

10,891

9,254

14,976

6,750
4,141

' 12,169
7,879
'4,290

13,375

7,806
3,817

5,096
4,158

r10,024

16,660

238,848

251,783

250,700

3,665
3,078

4,323
3,566

163,391

204,486

'5,818
4,206

r254,782

10,693
4,283

' 269,121
'67,654
'98,198
'23,936
'79,333

9,017
4,358

12,153
4,507

5
6
7
8
9

Other branches of parent bank..
Banks...........................................
Public borrowers1......................
Nonbank foreigners....................

10

Other assets................. ...................

6,359

7,045

8,425

9,022

9,588

'10,123

10,330

'11,015

11,163

11,318

11 Total payable in U.S. dollars.............

132,901

167,695

193,764

202,792

198,205

r200,779

212,063

'210,939

218,266

224,109

8,473

r9 ,219

14,168

' / 1,328
7,688
'3,640

12,471

15,702

50,880
71,892
20,505
50,180

' 194,882
52,887
'72,644
'20,301
'49,050

200,788

203,347

4,438

'4,729

5,007

5,060

12
13
14

34,508
69,206
5,792
53,886

45,955
83,765
10,613
64,153

55,772
91,883
14,634
76,560

55,357
96,638
22,654
77,134

55,236
94,659
23,288
77,517

3,628
2,780

4,264
3,332

7,595

11,049

10,107

Parent bank.................................
Other............................................

6,580
3,527

4,906
3,567

15
16
17
18
19

Claims on foreigners . . ....................

123,496

156,896

178,896

44,256
70,786
12,632
51,222

188,590

185,425

37,909
66,331
9,022
43,634

20

Other assets.....................................

2,997

3,204

3,820

4,095

4,307

6,408

Other branches of parent bank..
Banks...........................................
Public borrowers1.......................
Nonbank foreigners....................

28,478
55,319
4,864
34,835

7,692
3,357

43,544
74,842
19,674
50,530

43,447
71,592
20,291
50,095

58,746
*■92,811
r23,354
r79,871

'5,628
3,591

r187,041

46,326
r69,560
r20,255
r50,900
'4,519

262,063

63,493
95,222
23,896
79,452

10,535
3,633
193,457

271,446

'68,016
'100,987
22,696
78,847

8,840
3,631

'55,080
'76,335
19,367
50,006

277,612

70,216
102,797
23,664
80,935

11,967
3,735

55,288
78,381
19,853
49,825

United Kingdom
21 Total, all currencies............................
22
23
24

Parent bank.................................
Other............................................

25
26
27
28
29

Claims on foreigners ......................

30

Other assets.....................................

Other branches of parent bank..
Nonbank foreigners...................

31
32
33
34

Parent bank.................................
Other............................................

35
36
37
38
39

Claims on foreigners .......................

40

74,883

81,466

90,933

93,538

92,989

'93,333

99,084

101,887

102,032

106,605

2,392

3,354

4,341

3,142

2,615

r2,624

2,940

3,119

3,706

5,370

95,220

98,149

1,449
943

70,331

17,557
35,904
881
15,990

2,376
978
75,859

19,753
38,089
1,274
16,743

3,518
823

84,016

22,017
39,899
2,206
19,895

87,808

19,944
43,044
4,559
20,261

1,515
1,100

'1,595
1,029

87,479

*87,772

20,438
42,462
4,637
19,942

21,661
40,350
4,583
'21,178

2,014
926

93,364

24,691
42,677
4,549
21,447

2,230
889
95,774

26,422
44,020
'4,692
'20,640

2,779
927

26,190
44,174
4,237
20,619

4,448
922

27,830
45,013
4,522
20,784

2,159

2,253

2,576

2,588

2,895

'2,937

2,780

2,994

3,106

3,086

57*361

61,587

66,635

67,016

65,452

'64,449

70,008

70,209

71,761

75,860

2,273

3,275

4,100

2,870

2,321

1,386
935

r2 ,335

'1,481
854

2,598

2,877

3,475

5,113

2,178
692

54,121

57,488

61,408

63,043

61,938

66,242

66,132

17,438
29,455
3,660
11,385

20,934
29,859
3,471
11,978

21,377
29,680
'3,595
'11,480

67,031

69,416

17,025
30,686
3,525
11,807

' 60,910
18,305
27,268
3,544
'11,793

21,585
30,386
3,227
11,833

22,838
31,482
3,317
11,779

1,103

1,193

'1,204

1,168

1,200

1,255

1,331

1,445
828

2,374
902

3,431
669

Nonbank foreigners....................

15,645
28,224
648
9,604

17,249
28,983
846
10,410

18,947
28,530
1,669
12,263

Other assets....................................

967

824

1,126

Other branches of parent bank..
Banks...........................................

2,279
863

1,895
703

2,187
690

2,727
748

4,386
111

Bahamas and Caymans
41 Total, all currencies............................

45,203

66,774

79,052

84,692

82,145

85,654

88,755

'86,291

89,560

90,885

42
43
44

Claims on United States .................

3,229

3,508

5,782

6,441

5,132

5,620

10,053

r7,247

7,461

8,982

3,051
2,731

3,449
2,992

2,381
2,751

2,751
2,869

45
46
47
48
49

Claims on foreigners ........................

41,040

62,048

71,671

74,988

8,144
25,354
7,105
21,445

11,120
27,939
9,109
23,503

76,282

5,411
16,298
3,576
15,756

10,803
30,307
12,394
22,778

10,292
29,302
12,599
22,795

12,134
29,749
12,461
23,605

50

Other assets....................................

933

1,217

1,599

1,969

2,025

2,085

2,051

'2,176

2,209

2,324

51 Total payable in U.S. dollars.............

41,887

62,705

73,987

79,277

76,494

79,701

83,007

'80,223

83,568

84,586

Parent bank............. ...................
Other............................................
Other branches of parent bank..
Banks..................... .....................
Public borrowers1.......................
Nonbank foreigners....................

For notes see opposite page.




1,477
1,752

1,141
2,367

77,949

7,090
2,963

76,651

12,348
2 9 ,A ll

12,362
22,469

4,255
'2,992

4,399
3,062

' 76,868
12,618
'30,317
'12,094
21,839

13,433
33,025
11,534
21,898

79,890

5,771
3,211

79,579

12,776
33,646
11,505
21,652

Overseas Branches

A57

3.13 Continued

Liability account

1975

1976

19782

1977
June

July

Aug.

Sept.

Oct.

Nov.

Dec.*

All foreign countries
176,493

219,420

258,897

271,696

269,542

'274 ;929

287,369

'292,305

295,984

305,590

53
54
55
56

To United S tates................................
Parent bank....................................
Other banks in United States. . .
Nonbanks........................................

20,221
12,165

32,719
19,773

44,154
24,542

50,534
25,199
( 10,371
i 14,964

51,583
27,722
8,608
15,253

'52,441
28,923
7,659
'15,859

49,325
24,590
10,064
14,671

' 51,506
27,619
'8,362
15,525

57,030
31,788
9,089
16,153

58,478
29,841
12,670
15,967

57
58
59
60
61

To foreigners......................................
Other branches o f parent bank..
Banks...............................................
Official institutions.......................
Nonbank foreigners.....................

149,815
34,111
72,259
22,773
20,672

179,954
44,370
83,880
25,829
25,877

206,579
53,244
94,140
28,110
31,085

213,670
53,547
93,413
'31,420
r35,290

209,810
53,788
'88,561
'31,640
'35,821

'213,974
56,955
89,234
'31,461
'36,324

228,733
61,599
97,629
'33,086
'36,419

' 231,152
65,104
'95,956
'32,246
'37,846

229,230
65,762
94,098
31,222
38,148

236,959
68,064
97,787
30,581
40,527

62

Other liabilities..................................

6,456

6,747

8,163

7,492

8,149

'8,514

9,311

'9,647

9,724

10,153

63 Total payable in U.S. dollars..............

135,907

173,071

198,572

207,117

202,407

'204,938

215,496

'215,518

222,887

229,978

52 Total, all currencies..............................

64
65
66
67

To United States................................
Parent bank....................................
Other banks in United States. . .
Nonbanks.......................................

19,503
11,939

31,932
19,559

42,881
24,213

48,820
24,417
( 10,078
i 14,265

49,668
26,951
8,286
14,431

'50,325
28,031
7,286
'15,008

47,171
23,640
9,724
13,807

'49,273
'26,684
'8,008
14,581

55,079
30,959
8,818
15,302

56,344
28,815
12,416
15,113

68
69
70
71
72

To foreigners......................................
Other branches o f parent bank..
Banks...............................................
Official institutions.......................
Nonbank foreigners.....................

112,879
28,217
51,583
19,982
13,097

137,612
37,098
60,619
22,878
17,017

151,363
43,268
64,872
23,972
19,251

154,513
42,682
62,434
r26,593
r22,804

148,630
42,852
'56,405
'26,717
'22,656

'150,478
45,620
55,285
'26,184
'23,389

163,626
49,978
63,271
'27,367
'23,010

'161,542
52,052
'58,912
'26,341
'24,237

162,832
53,370
58,835
25,451
25,176

168,406
53,950
63,072
25,049
26,335

73

Other liabilities..................................

3,526

3,527

4,328

3,784

4,109

'4,135

4,699

'4,703

4,976

5,228

United Kingdom
90,933

93,538

92,989

'93,333

99,084

101,887

102,032

106,605

8,174
1,822
3,273
3,079

8,011
1,959
2,987
3,065

6,978
1,905
2,290
2,783

8,033
1,872
3,150
3,011

8,347
2,176
2,949
3,222

9,053
2,367
3,234
3,452

10,235
2,669
4,395
3,171

82,703
9,700
36,856
20,074
16,073

81,847
10,098
34,859
20,666
16,224

82,991
11,708
35,293
19,863
16,127

87,678
12,006
37,677
21,493
16,502

'89,979
12,269
'39,277
21,193
'17,240

89,347
13,153
38,167
20,182
17,845

92,709
12,928
40,704
20,181
18,896

74,883

81,466

75
76
77
78

5,646
To United States..............................
2,122
Parent bank..................................
Other banks in United States.. )J 1
1
Nonbanks.....................................

5,997
1,198
A
Q
4, 7Q
iyo

79
80
81
82
83

To foreigners....................................
Other branches o f parent bank.
Banks.............................................
Official institutions.....................
Nonbank foreigners...................

67,240
6,494
32,964
16,553
11,229

73,228
7,092
36,259
17,273
12,605

84

Other liabilities................................

1,997

2,241

2,445

2,661

3,131

'3,364

3,373

3,561

3,632

3,661

85 Total payable in U.S. dollars............

57,820

63,174

67,573

67,936

65,671

'64,918

70,227

71,158

72,812

77,030

86
87
88
89

5,415
To United S ta tes..............................
Parent bank..................................
2,083
Other banks in United States .. 1 'X 111
Nonbanks......................................

5,849
1,182
A
4,00
/

7,852
1,794
3,176
2,882

7,652
1,926
2,904
2,822

6,606
1,852
2,209
2,545

7,650
1,805
3,092
2,753

7,985
2,116
2,902
2,967

8,666
2,321
3,178
3,167

9,833
2,618
4,307
2,908

90
91
92
93
94

To foreigners....................................
Other branches o f parent bank.
Banks.............................................
Official institutions.....................
Nonbank foreigners...................

51,447
5,442
23,330
14,498
8,176

56,372
5,874
25,527
15,423
9,547

58,977
7,505
25,608
15,482
10,382

58,856
7,259
23,472
16,866
11,259

56,636
7,696
'20,659
'17,265
11,016

57,015
9,163
20,601
16,113
11,138

61,231
9,317
22,936
17,659
11,319

r61,802
9,301
'23,260
17,106
'12,135

62,631
10,302
23,044
16,317
12,968

65,711
9,764
26,062
16,309
13,576

95

Other liabilities................................

959

953

1,116

1,228

1,383

'1,297

1,346

'1,371

1,515

1,486

7,753
1,451
0, JUZ [(
80,736
9,376
37,893
18,318
15,149

7,480
1,416
6 064 \t

Bahamas and Caymans
45,203

66,774

79,052

84,692

82,145

85,654

88,755

'86,291

89,560

90,885

97
98
99
100

To United States..............................
11,147
Parent bank..................................
7,628
_*A
Other banks in United States.. )| 3-5, 520
Nonbanks......................................

22,721
16,161
6,560

35,185
32,176
20,956
19,078
t
5,514
11 oon
11,
ZZ\J ( 10,593

37,041
21,755
4,587
10,699

39,532
23,187
4,509
11,836

34,378
18,410
5,511
10,457

'35,676
20,179
'4,415
11,082

40,557
24,008
4,857
11,692

39,048
20,804
6,401
11,843

101
102
103
104
105

To foreigners .......................................
Other branches o f parent bank. ..
Banks.............................................
Official institutions.....................
Nonbank foreigners...................

42,899
13,801
21,760
3,573
3,765

45,292
12,816
24,717
3,000
4,759

48,088
11,657
25,752
'4,589
'6,090

43,649
11,165
21,951
'4,227
'6,306

44,597
11,436
21,884
'4,604
'6,673

52,574
14,762
27,372
'4,477
'5,963

48,955
15,635
22,471
'4,449
'6,400

47,321
14,715
22,002
4,349
6,255

50,017
16,115
22.861
4;i39
6,902

106

Other liabilities................................

1,106

1,154

1,584

1,419

1,455

1,525

1,803

'1,660

1,682

1,820

107 Total payable in U.S. dollars............

42,197

63,417

74,463

80,650

78,131

81,314

84,317

'81,324

84,878

86,182

96 Total, all currencies.............................

32,949
10,569
16,825
3,308
2,248

1 In May 1978 a broader category of claims on foreign public borrowers,
2 In May 1978 the exemption level for branches required to report
including corporations that are majority owned by foreign governments,
was increased, which reduced the number of reporting branches,
replaced the previous, more narrowly defined claims on foreign official
institutions.




A58

International Statistics □ March 1979

3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions o f dollars, end o f period
1979

1978
Item

1975

1976

1977
July r

Aug.r
A.

1 Total1............................................................................
2 Liabilities reported by banks in the United
States2 ..................................................................
3 U.S. Treasury bills and certificates3.......................
U.S. Treasury bonds and notes:
4
Marketable...............................................................
5
Nonmarketable4 .....................................................
6 U.S. securities other than U.S. Treasury
securities5.............................................................

8
9
10
11
12
13

Western Europe1.......................
Canada........................................
Latin America and Caribbean
Asia..............................................
Africa..........................................
Other countries6 .......................

Nov.

Dec.?3

Jan.p

By type

95,634 131,097 144,222 146,168 145,293 152,463 156,261 162,174 162,536

16,262
34,199

17,231
37,725

18,003
47,820

19,516
56,842

20,120
56,299

19,822
55,014

22,300
57,967

21,695
62,635

22,957
67,650

22,513
68,421

6,671
19,976

11,788
20,648

32,164
20,443

34,162
19.214

34.873
20,375

35,577
20,304

36,153
21,426

36,222
20,993

35,877
20,970

35.987
20,952

5,464

8,242

12,667

14,488

14,501

14.576

14,617

14,716

14,720

14,663

By area

82,572

95,634 131,097 144,222 146,168 145,293 152,463 156,261

45,701
3,132
4,461
24,411
2,983
1,884

45,882
3,406
4,926
37,767
1,893
1,760

1 Includes the Bank for International Settlements.
2 Principally demand deposits, time deposits, bankers acceptances,
commercial paper, negotiable time certificates o f deposit, and borrowings
under repurchase agreements.
3 Includes nonmarketable certificates o f indebtedness (including those
payable in foreign currencies through 1974) and Treasury bills issued to
official institutions o f foreign countries.
4 Excludes notes issued to foreign official nonreserve agencies. Includes
bonds and notes payable in foreign currencies.




Oct. r

82,572

B.
7 Total............................................

Sept.r

70,748
2,334
4,649
50,693
1,742
931

75,740
2,490
4,631
58,156

2,220
985

79,724
2,071
4,621
56,923
2,036
793

80,268
1,497
3,899
56,883
2,006
740

85,294
2,619
4,611
57,016
2,184
739

88,389
2,446
4,495
57,835
2,301
795

162,174 162,536
92,891
2,486
4,990
58,618
2,443
746

94,311
2,150
4,285
58,966
2,299
525

5 Debt securities of U.S. government corporations and federally
sponsored agencies, and U.S. corporate stocks and bonds.
6 Includes countries in Oceania and Eastern Europe.

Note. Based on Treasury Department data and on data reported to
the Treasury Department by banks (including Federal Reserve Banks)
and securities dealers in the United States.
For a description of the changes in the International Statistics tables,
see July 1978 B ulletin, p. 612.

Bank-reported Data

A59

3.15 LIABILITIES TO FOREIGNERS Reported by Banks in the United States
Payable in U.S. dollars
Millions o f dollars, end o f period
1978
Item

1975

1976

1979

1977

Julyr
A.

Aug.r

Sept.r

Oct.

Nov.

Dec.?

Jan.p

By holder and type of liability

1 All foreigners................

95,590 110,657 126,168 137,291 140,535 144,116 150,584 158,421 166,318 163,808

2 Banks’ own liabilities..
3 Demand deposits.. . .
4 Time deposits1.........
5 Other2.......................
6 Own foreign offices3.

13,564
10,267

16,803
11,347

18,996
11,521

61,424
17,953
11,921
6,872
24,679

63,931
16,104
12,634
7,234
27,960

68,593
17,204
12,154
6,697
32,538

71,102
17,557
12,279
9,756
31,511

75,166
18,264
12,514
8,645
35,744

77,849
19,203
12,295
9,766
36,585

74,104
17,780
12.165
8,994
35.165

37,414

40,744

48,906

75,867
57,629

76,604
57,264

75,523
56,665

79,482
59,077

83,255
63,434

88,469
68,434

89,704
69,192

15,964
2,274

17,198
2,142

16,492
2,366

17,619
2,786

17,424
2,397

17,501
2,535

18,105
2,407

3,274

2,678

2,823

3,406

2,929

2,225

2,617

2,292

808
142
97
569

767
144
99
523

336
133
116
87

417
153
102
161

916
330
94
492

762
333
88
340

7 Banks’ custody liabilities4.....................................
8 U.S. Treasury bills and certificates 5.................
9 Other negotiable and readily transferable
instruments6................................................
10 Other...................................................................
11 Nonmonetary international and
organizations7................. .

regional

12 Banks’ own liabilities.
13 Demand deposits...
14 Time deposits1.......
15 Other2.....................
16 Banks’ custody liabilities4................................... .
17 U.S. Treasury bills and certificates.................
18 Other negotiable and readily transferable
instruments6..............................................
19 Other...................................................................
20 Official institutions8. . . .
21
22
23
24

Banks’ own liabilities.
Demand deposits...
Time deposits I .......
Other2.....................

25
26
27

Banks’ custody liabilities4.................................
U.S. Treasury bills and certificates5.............
Other negotiable and readily transferable
instruments6............................................
Other...............................................................

28

29 Banks9.
30
31
32
33
34
35
36
37
38
39

Banks’ own liabilities............
Unaffiliated foreign banks.
Demand deposits.............
Time deposits1.................
Other2...............................

5,714

139
148

290
205

231
139

1,017
257
116
644

2,554

2,701

706

1,662
228

2,014
368

2,639
1,036

2,593
403

1,809
183

1,701
201

1,530
183

1,432
1

1,645
1

1,603
1

2,189
1

1,625
1

1,499
1

1,342
5

65,822

76,357

76,419

74,836

80,267

84,329

90,606

90,935

9,085
2,643
2,595
3,848

9,455
3,307
2,563
3,585

11,474
3,046
2,399
6,030

10,820
3,414
2,345
5,060

11,681
3,388
2,329
5,963

10,487
2,701
2,289
5,498

50,461

54,956

2,644
3,423

3,394
2,321

3,528
1,797

9,422
3,473
2,277
3,673

34,199

37,725

47,820

66,935
56,842

67,334
56,299

65,381
55,014

68,793
57,967

73,510
62,635

78,925
67,650

80,448
68,421

9,962
132

10,831
205

10,122
245

10,616
210

10,768
107

11,105
170

11,838
189

29,330

7,534
1,873

37,174

9,104
2,297

42,335

42,916

45,532

50,515

51,379

55,273

57,039

54,514

10,933
2,040

38,354
13,675
10,240
1,321
2,114

41,028
13,068
9,229
1,390
2,449

45,744
13,206
9,713
1,269
2,223

46,425
14,914
10,156
1,552
3,206

50,440
14,696
10,068
1,735
2,893

52,219
15,634
11,239
1,491
2,904

49,771
14,606
10,382
1,493
2,731

24,679

27,960

32,538

31,511

35,744

36,585

35,165

4,562
269

4,504
296

4,771
307

4,955
381

4,834
371

4,819
300

4,743
302

2,418
1,875

2,382
1,827

2,536
1,928

2,447
2,126

2,561
1,902

2,417
2,103

2,422
2,019

14,736

15,340

15,761

15,359

16,008

16,593

16,056

16,067

13,009
4,090
8,552
368

12,627
4,039
8,222
365

12,867
4,222
8,213
432

13,490
4,628
8,331
531

13,032
4,246
8,380
406

13,084
4,364
8,295
425

Own foreign offices3.
Banks’ custody liabilities4.................................
U.S. Treasury bills and certificates..............
Other negotiable and readily transferable
instruments6............................................
Other...............................................................

40 Other foreigners.
41
42
43
44

Banks’ own liabilities.
Demand deposits...
Time deposits1.......
Other2.....................

45
46
47

Banks’ custody liabilities4.................................
U.S. Treasury bills and certificates...............
Other negotiable and readily transferable
instruments6............................................
Other...............................................................

48

5,699

141

10,100

12,814

3,248
4,823

4,015
6,524

4,304
7,546

12,631
3,983
8,208
441

325

198

240

2,708
290

2,752
301

2,732
308

3,141
326

3,103
245

3,024
282

2,983
285

2,153
265

2,341
110

2,231
193

2,367
448

2,471
387

2,480
262

2,503
195

9,592

10,181

10,043

10,977

10,803

10,895

11,017

49 M emo: Negotiable time certificates of deposit
held in custody for foreigners..................... .
1 Excludes negotiable time certificates of deposit, which are included
in “Other negotiable and readily transferable instruments.”
2 Includes borrowings under repurchase agreements.
3 U.S. banks: includes amounts due to own foreign branches and
foreign subsidiaries consolidated in “Consolidated Report of Condition”
filed with bank regulatory agencies. Agencies, branches, and majorityowned subsidiaries of foreign banks: principally amounts due to head
office or parent foreign bank, and foreign branches, agencies or whollyowned subsidiaries of head office or parent foreign bank.
4 Financial claims on residents of the United States, other than long­
term securities, held by or through reporting banks.
5 Includes nonmarketable certificates of indebtedness (including those
payable in foreign currencies through 1974) and Treasury bills issued to
official institutions of foreign countries.




6 Principally bankers acceptances, commercial paper, and negotiable
time certificates of deposit.
7 Principally the International Bank for Reconstruction and Develop­
ment, and the Inter-American and Asian Development Banks.
8 Foreign central banks and foreign central governments and the
Bank for International Settlements.
9 Excludes central banks, which are included in “Official institutions.”
N ote. Data for time deposits prior to April 1978 represent short-term
only.
For a description of the changes in the International Statistics tables,
see July 1978 Bulletin, p. 612.

A60

International Statistics □ March 1979

3.15 Continued
Item

1975

1976

1978

1977
Aug.

July

Sept.

1979
Oct.

Nov.

Dec.p

Jan.p

B. By area and country
1

95,590 110,657 126,168 '137,291 '140,535 '144,116 150,584 158,421 166,318 163,808

2 Foreign countries....................................................
3 Europe.....................................................................
4 Austria................................................................
5 Belgium-Luxembourg........................................
6 Denmark............................................................
7 Finland...............................................................
8 France.................................................................
9 Germany.............................................................
10 Greece.................................................................
11 Italy.....................................................................
12 Netherlands........................................................
13 Norway...............................................................
14 Portugal..............................................................
15 Spain...................................................................
16 Sweden................... ............................................
17 Switzerland.........................................................
18 Turkey................................................................
19 United Kingdom................................................
20 Yugoslavia..........................................................
21
Other Western Europe *.....................................
22
U.S.S.R...............................................................
23 Other Eastern Europe*.....................................
24 Canada ...................................................................
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43

Argentina............................................................
Bahamas.............................................................
Bermuda.............................................................
Brazil...................................................................
British West Indies............................................
Chile...................................................................
Colombia...........................................................
Cuba...................................................................
Ecuador..............................................................
Guatemala 3........................................................
Jamaica3.............................................................
Mexico................................................................
Netherlands Antilles4........................................
Panama...............................................................
Peru.....................................................................
Uruguav.............................................................
Venezuela............................................................
Other Latin America and Caribbean...............

44
45
46
47
48
49
50
51
52
53
54
55
56

China (Mainland)..............................................
China (Taiwan)..................................................
Hong Kong........................................................
India...................................................................
Indonesia............................................................
Israel...................................................................
Japan...................................................................
K orea..................................................................
Philippines..........................................................
Thailand..............................................................
Middle East oil-exporting countries5...............
Other Asia..........................................................

89,891 104,943 122,893 '134,613 '137,712 '140,710 147,655 156,196 163,701 161,516
44,072

759
2,893
329
391
7,726
4,543
284
1,059
3,407
994
193
423
2,277
8,476
118
6,867
126
2,970
40
197

47,076

346
2,187
356
416
4,876
6,241
403
3,182
3,003
782
239
559
1,692
9,460
166
10,018
189
2,673
51
236

' 64,658 ' 67,340 '■69,157
372
424
431
318
2,531
2,277
2,174
2,368
770
1,542
1,593
1,673
407
323
416
415
7,353
7,989
8,060
5,269
9,727 10,766 11,206
7,239
603
646
826
865
6,857
7,036
7,394
8,055
2,869
3,078
3,240
2,756
1,737
944
1,516
1,208
227
273
324
521
619
709
752
765
2,712
3,340
3,341
3,355
12,343 '11,883 '11,987 12,997
130
147
137
226
14,125 11,770 10,956 '11,807
232
192
149
167
'2,427
1,804 '1,941
'2,631
'50
98
46
65
210
236
222
262

60,295

2,919

4,659

4,607

15,028

19,132

23,670

1,146
1,874
184
1,219
1,311
319
417
6
120

1,534
2,770
218
1,438
1,877
337
1,021
6
320

1,416
3,596
321
1,396
3,998
360
1,221
6
330

2,070
129
1,115
243
172
3,309
1,393

2,870
158
1,167
257
245
3,118
1,797

2,876
196
2,331
287
243
2,929
2,167

22,384

29,766

30,488

123
1,025
605
115
369
387
10,207
390
700
252
7,355
856

57 Africa ......................................................................
58 Egypt...................................................................
59 Morocco.............................................................
60 South Africa......................................................
61
Zaire...................................................................
62 Oil-exporting countries6....................................
63 Other Africa.......................................................

3,369

64 Other countries.......................................................
65 Australia.............................................................
66 All other.............................................................

2,119

342
68
166
62
2,240
491

2,006
113

48
990
894
638
340
392
14,363
438
628
277
9,360
1,398
2,298

333
87
141
36
1,116
585

53
1,013
1,094
961
410
559
14,616
602
687
264
8,979
1,250
2,535

73,408

473
2,464
1,734
424
8,421
13,345
887
7,346
2,523
1,210
386
702
3,187
14,314
164
12,438
158
2,887
82
262

78,418

514
2,471
1,827
388
8,817
15,652
907
7,761
2,518
1,102
379
885
3,216
15,810
163
12,826
190
2,719
73
198

85,005

506
2,557
1,946
346
8,631
17,448
826
7,674
2,402
1,271
330
778
3,131
18,974
156
14,211
254
3,156
82
325

83,960

555
2,465
2,036
381
8,386
15,800
653
8,724
2,536
1,411
255
759
2,955
20,189
141
13,120
174
3,119
150
152

'5,70/

7,418

8,001

6,911

6,522

' 24,833 ' 27,261 ' 29,216
1,550
1,453
1,393
3,629
4,601
'7,251
383
372
409
1,295
1.382 '1,275
4,009
5,380
5,474
380
346
351
1,429
1,486
1 ,431
9
10
7
378
347
405
419
347
415
59
75
78
2,921
3,171
3,112
317
435
288
2,639
2,628
2,741
309
311
321
197
218
185
'3,231
'3,210
'2,562
1,530
1,517 '1,639

28,470

31,111

31,432

30,856

' 33,501
44
46
1,262
1,280
1,211
'1,250
762
833
309
348
440
432
19,755 r19,933
736
lie
566
623
290
296
6,719
6,350
1,364
1,341

34,630

34,843

36,390

5,623

35,171

47
1,195
1,191
798
597
519
20,374
714
640
320
7,267
1,510
3,013

5,890

33,463

2,578

463
67
160
52
1,198
638

2,645

404
66
174
39
1,155
698

594
28
175
73
1,365
778

417
74
238
45
1,270
601

2,012

1,297

1,315

1,180

1,905
107

1,140
158

1,158
157

1,051
130

899
191

1,090

1,650
4,880
387
1,441
5,919
333
1,483
7
369
368
57
3,101
352
2,396
323
210
3,696
1,496

49
1,319
1,368
899
575
453
19,937
790
594
352
6,911
1,384

1,504
6,309
425
1,234
6,692
341
1,612
7
348
357
43
3,413
368
2,808
337
211
3,550
1,553

57
1,247
1,189
843
439
469
21,355
750
578
279
6,381
1,256

1,498
6,615
428
1,130
5,974
399
1,756
13
322
416
52
3,359
308
2,992
363
233
3,809
1,763

67
498
1,256
790
447
674
21,956
795
639
427
7,416
1,426

36,624

65
545
1,398
803
575
668
21,407
772
612
379
8,121
1,279

2,540

2,636

322
84
266
39
1,230
600

312
30
294
43
1,335
622

403
32
168
43
1,525
715

1,189

1,187

1,077

859

838
239

655
204

975
213

950
236

2,886

1,696
7,308
386
1,102
5,670
376
1,765
7
321
352
72
3,167
377
2,826
321
223
3,337
1,551

2,695

337
29
180
48
1,379
721

67 Nonmonetary international and regional
organizations...................................................

5,699

5,714

3,274

2,678

2,823

3,406

2,929

2,225

2,617

2,292

International......................................................
Latin American regional...................................
Other regional 7..................................................

5,415
188
96

5,157
267
290

2,752
278
245

2,027
411
241

2,157
437
228

2,339
799
269

1,789
856
284

1,033
870
323

1,485
808
324 i

1,210
804
279

68
69
70

1 Includes the Bank for International Settlements. Beginning April
1978, also includes Eastern European countries not listed in line 23.
2 Beginning April 1978 comprises Bulgaria, Czechoslovakia, German
Democratic Republic, Hungary, Poland, and Romania.
3 Included in “Other Latin America and Caribbean” through March
1978.
4 Includes Surinam through December 1975.
5 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).




6 Comprises Algeria, Gabon, Libya, and Nigeria.
7 Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in
“Other Western Europe.”
N ote. For a description of the changes in the International Statistics
tables, see July 1978 Bulletin, p. 612.

Bank-reported Data

A61

3.16 BANKS’ OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions o f dollars, end o f period
1978
Area and country

1975

1976

1979

1977
July'

A ug.r

Sept.

Oct.

Nov.

Dec.?

Jan.p

1

§8,308

79,301

90,206

88,388

92,269

'94,620

96,820 105,337 114,216 105,791

2 Foreign countries.........................................................

58,275

79,261

90,163

88,353

92,231

'94,581

96,779 105,291

3 Europe.....................................................................
4
Austria......................................................................
Belgium-Luxembourg............................................
5
Denmark...................................................................
6
Finland......................................................................
7
France........................................................................
8
9
Germany...................................................................
10
Greece........................................................................
11
Italy............................................................................
12
Netherlands..............................................................
13
Norway.....................................................................
14
Portugal....................................................................
Spain..........................................................................
15
Sweden......................................................................
16
17
Switzerland...............................................................
Turkey.......................................................................
18
United Kingdom.....................................................
19
20
Yugoslavia................................................................
Other Western Europe1........................................
21
22
U.S.S.R.....................................................................
Other Eastern Europe2 .........................................
23

11,109
35
286
104
180
1,565
380
290
443
305
131
30
424
198
199
164
5,170
210
76
406
513

14,776
63
482
133
199
1,549
509
279
993
315
136
88
745
206
379
249
7,033
234
85
485
613

18,114
65
561
173
111
2,082
644
206
1,334
338
162
175
111
218
564
360
8,964
311
86
413
566

16,567
110
780
129
187
2,226
706
190
1,093
436
208
132
684
244
111
313
7,015
301
165
313
566

17,172
107
847
146
216
2,573
645
125
1,037
403
163
105
676
290
1,013
305
7,206
281
125
343
564

' 18,390

19,327
111
1,052
160
232
2,752
808
161
1,355
494
238
106
929
348
781
293
8,065
293
147
387
617

3,349

95
'964
147
111
'2,831
742
126
1,016
379
263
99
'735
325
871
305
'7,890
'307
128
370
575

20,504
142
1,232
193
260
2,716
838
134
1,453
602
282
180
980
465
1,045
283
8,356
302
107
321
612

114,160 105,751
24,128
147
1,192
244
305
3,737
898
164
1,504
680
299
171
1,099
537
1,282
273
10,118
363
122
364
629

20,727
147
1,504
172
281
2,627
840
162
1,411
683
251
169
905
445
1,050
181
8,426
393
135
327
620

24 Canada ....................................................................

2,834

3,319

3,355

3,136

r3 ,451

3,586

4,552

5,141

4,956

25 Latin America and Caribbean ................................
26
Argentina..................................................................
27
Bahamas....................................................................
Bermuda....................................................................
28
29
Brazil.........................................................................
30
British West Indies.................................................
31
Chile..........................................................................
32
Colombia..................................................................
33
Cuba..........................................................................
Ecuador....................................................................
34
Guatemala 3 .............................................................
35
Jamaica3...................................................................
36
M exico......................................................................
37
Netherlands Antilles4............................................
38
39
Panama.....................................................................
40
Peru............................................................................
Uruguay................... ................................................
41
42
Venezuela..................................................................
Other Latin America and Caribbean.................
43

23,863
1,377
7,583
104
3,385
1,464
494
751
14
252

38,879
1,192
15,464
150
4,901
5,082
597
675
13
375

45,850
1,478
19,858
232
4,629
6,481
675
671
10
517

3,745
72
1,138
805
57
1,319
1,302

4,822
140
1,372
933
42
1,828
1,293

4,909
224
1,410
962
80
2,318
1,394

47,047
1,572
19,541
145
4,612
6,994
745
649
1
546
83
49
5,099
206
2,281
919
52
2,338
1,214

49,216 ' 49,482
1,690
1,566
21,825 '19,110
194
141
4,838
5,252
7,019
8,397
809
742
687
111
1
1
560
646
86
79
44
46
5,016
'5,010
198
230
1,631
2,280
930
'967
56
51
2,513
'2,746
1,367
1,245

49,267
1,447
19,208
352
5,596
7,170
832
793
*
621
85
45
4,927
212
2,480
945
63
3,105
1,386

54,341
1,698
23,541
141
6,137
6,432
862
936
4
680
89
49
5,255
242
2,531
931
58
3,367
1,388

56,286
2,258
21,115
189
6,148
9,215
962
990
*
697
94
40
5,357
269
3,061
887
47
3,468
1,487

52,784
2,134
20,890
185
6,249
5,285
1,012
1,051
3
675
87
37
5,453
259
3,655
873
50
3,323
1,564

44 Asia ..........................................................................
China (Mainland)...................................................
45
China (Taiwan).......................................................
46
Hong
K ong..............................................................
47
India..........................................................................
48
Indonesia..................................................................
49
50
Israel..........................................................................
Japan.........................................................................
51
52
Korea........................................................................
Philippines...............................................................
53
54
Thailand....................................................................
Middle East oil-exporting countries5.................
55
Other A sia................................................................
56

17,706
22
1,053
289
57
246
111
10,944
1,791
534
520
744
785

19,204
3
1,344
316
69
218
755
11,040
1,978
719
442
1,459
863

19,236
10
1,719
543
53
232
584
9,839
2,336
594
633
1,746
947

18,468
5
1,183
698
46
139
445
9,790
1,936
638
723
1,650
1,216

19,256
31
1,177
790
73
125
504
9,853
1,925
728
685
2,099
1,265

' 20,037
8
1,241
'903
76
152
544
'10,260
'1,933
730
633
'2,200
'1,357

21,358
10
1,285
1,368
66
144
555
10,568
1,788
732
734
2,097
2,012

22,691
6
1,356
1,385
46
188
719
11,997
1,741
111
758
2,188
1,592

25,417
35
1,421
1,572
54
143
871
12,699
2,238
678
753
3,119
1,833

24,223
21
1,405
1,620
61
138
996
12,563
2,236
605
751
2,332
1,497

57 Africa ......................................................................
Egypt.........................................................................
58
Morocco....................................................................
59
South Africa............................................................
60
Zaire..........................................................................
61
Oil-exporting countries6........................................
62
Other..........................................................................
63

1,933
123
8
657
181
382
581

2,311
126
27
957
112
524
565

2,518
119
43
1,066
98
510
682

2,136
79
38
1,036
79
341
563

2,264
62
42
1,058
79
458
565

2,158
67
38
1,022
82
406
544

2,219
56
40
990
161
438
534

2,163
68
36
906
162
439
551

2,216
107
82
860
162
449
556

2,145
82
97
838
156
444
527

64 Other countries ........................................................
Australia...................................................................
65
All other....................................................................
66

830
700
130

772
597
175

1,090
905
186

999
833
167

974
829
145

1,063
894
168

1,023
879
145

1,041
894
147

972
870
102

914
799
115

67 Nonmonetary international and regional
organizations7 .....................................................

33

40

43

36

38

39

41

45

56

40

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, German
Democratic Republic, Hungary, Poland, and Romania.
3 Included in “Other Latin America and Caribbean” through March
1978.
4 Includes Surinam through December 1975.
5 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).




6 Comprises Algeria, Gabon, Libya, and Nigeria.
7 Excludes the Bank for International Settlements, which is included
in “Other Western Europe.”

Note. Data for period prior to April 1978 include claims o f banks’
domestic customers on foreigners. For a description o f the changes in
the International Statistics tables, see July 1978 B ulletin, p. 612.

A 62

International Statistics □ March 1979

3.17 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

Type of claim

1979
1975

1976

1977
Julyr

1 Total..............................................

58,308

79,301

A ug.r

90,206

Sept. r

Oct.

Nov.

103,736

Dec.*7

Jan.*

125,226

2 Banks’ own claims on foreigners.

88.388

92,269

94.620

96,820

105.337

114.216

105,791

Foreign public borrowers.
Own foreign offices1.........
Unaffiliated foreign banks.
Deposits.........................
Other...............................
All other foreigners...........

7,157
34,682
27,506
4,660
22,846
19.045

7,591
37,537
27,500
4.595
22.905
19.641

8.006
35,001
31.448
4.688
26,760
20,165

8,051
36,357
31,080
3,965
27,115
21,332

9,197
40.412
33,461
4,370
29,090
22,267

10,048
40.892
40.009
5,714
34,295
23,267

10.234
38,335
34,530
4,695
29,835
22.692

9 Claims of banks’ domestic customers2.
10
11
12

Deposits..............................................................
Negotiable and readily transferable in­
struments3 ...................................................
Outstanding collections and other claims4. .. .

9,116

5,467

5,756

13 M emo: Customer liability on acceptances...
1 U.S. banks: includes amounts due from own foreign branches and
foreign subsidiaries consolidated in “Consolidated Report o f Condition”
filed with bank regulatory agencies. Agencies, branches., and majorityowned subsidiaries of foreign banks: principally amounts due from head
office or parent foreign bank, and foreign branches, agencies, or whollyowned subsidiaries of head office or parent foreign bank.
2 Assets owned by customers o f the reporting bank located in the
United States that represent claims on foreigners held by reporting banks
for the account of their domestic customers.




6,176

11.009

500

972

3,724
4.892

4,762
5,275

12.747

14.837

3 Principally negotiable time certificates of deposit and bankers ac­
ceptances.
4 Data for March 1978 and for period prior to that are outstanding
collections only.

Note. Beginning April 1978, data for banks’ own claims are given
on a monthly basis, but the data for claims of banks’ domestic customers
are available on a quarterly basis only.
For a description o f the changes in the International Statistics tables,
see July 1978 B ulletin, p. 612.

Bank-reported Data

A63

3.18 BANKS’ OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions o f dollars, end o f period
1978
Maturity; by borrower and area

1978

1979

1979
June

Sept.?

Dec . p

1 T otal................................................................................

55,128

59,516

73,250

By borrower:
2
Maturity o f 1 year or less1.....................................
3
Foreign public borrowers...................................
4
All other foreigners..............................................

43,682
2,919
40,763

46,684
3,640
43,044

57,982
4,497
53,486

5
6
7

Maturity o f over 1 year1........................................
Foreign public borrowers...................................
All other foreigners..............................................

11,445
3,162
8,283

12,832
3,928
8,904

15,268
5,315
9,952

8
9
10
11
12
13

By area:
Maturity of 1 year or less1
Europe.....................................................................
Canada....................................................................
Latin America and Caribbean...........................
Asia..........................................................................
Africa......................................................................
All other2...............................................................

9,532
1,615
17,036
13,515
1,461
523

10,386
1,943
18,518
13,712
1,535
591

14,934
2,662
20,813
17,500
1,512
562

14
15
16
17
18
19

Maturity of over 1 year1
Europe.....................................................................
Canada....................................................................
Latin America and Caribbean...........................
A sia..........................................................................
Africa......................................................................
All other2...............................................................

2.979
330
5.979
1. 2S2
629
247

3,104
793
6,843
1,305
577
211

3,163
1,426
8,444
1,393
629
214

Mar.

June

Sept.

Note. The first available data are for June 1978. For a description of
the changes in the International Statistics tables, see July 1978 B ulletin,
p. 612.

1 Remaining time to maturity.
2 Includes nonmonetary international and regional organizations.

3.19 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions o f dollars, end o f period
1i
Item

1975

1976

19 78
1977
Mar.

1 Banks’ own liabilities...........................................................................
2 Banks’ own claims1..............................................................................
3
Deposits...............................................................................................
4
Other claims.......................................................................................
5 Claims o f banks’ domestic customers2............................................

560
1,459
656
802

1 Includes claims o f banks’ domestic customers through March 1978.
2 Assets owned by customers o f the reporting bank located in the
United States that represent claims on foreigners held by reporting banks
for the accounts of their domestic customers.




781
1,834
1,103
731

925
2,356
941
1,415

986
2,383
948
1,435

June
1,704
3,153
1,290
1,863
809

Sept.*
1,981
3,530
1,386
2,144
446

Dec.*
2,055
3,612
1,797
1,815
400

Note. Data on claims exclude foreign currencies held by U.S. mone-

tary authorities.
For a description o f the changes in the International Statistics tables,
see July 1978 B ulletin, p. 612.

A64

International Statistics □ March 1979

3.20 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions
Millions o f dollars
1979
Country or area

1977

1978

1979

1978
Jan.-

July

Aug.

Sept.

Oct.

Nov.

Dec.*

Jan p

Holdings (end o f period) 4
1 Estimated total1. . .

38,640

44,933

41,153

41,578

'42,217

'43,627

43,852

44,933

46,166

2 Foreign countries1.

33,894

39,812

36,311

37,124

'37,830

'38,476

38,474

39,812

41,297

13,936
19
3,168
911
100
497
8,888
349
4

17,072
19
8,705
1,358
285
977
5,373
354

14,226
19
5,531
1,113

14,154
19
5,761
1,278

14,689
19
6,157
1,306

590
6,403
370

636
5,862
387

694
5,909
393

15,260
19
6,645
1,356
231
731
5,915
365

15,654
19
7,102
1,351
266
915
5,674
327

17,072
19
8,705
1,358
285
977
5,373
354

18,360
19
8,864
1,433
320
1,818
5,489
417

10
11

Europe1...............................
Belgium-Luxembourg..
Germany1.......................
Netherlands...................
Sweden...........................
Switzerland.....................
United Kingdom..........
Other Western Europe.
Eastern Europe.............

12

Canada.

288

152

275

276

276

151

151

152

150

13
14
15
16

Latin America and Caribbean..................
Venezuela..................................................
Other Latin American and Caribbean.
Netherlands Antilles..............................

551
199
183
170

416
144
110
162

485
174
149
162

545
244
139
162

445
144
139
162

426
144
119
162

416
144
109
162

416
144

395
144

162

162

17
18

Asia............
Japan.

18,745
6,860

21,483
11,528

r20,836
9,927

'21,652
10,791

'21,924
11,096

r2 1,942
11,560

21,565
11,483

21,483
11,528

21,704
12,226

19

Africa.........

362

691

491

491

491

691

691

691

691

20

All other.

11

-3

-3

7

5

6

-3

-3

-3

21 Nonmonetary international! and regional
organizations.........................................

4,746

5,121

4,842

4,454

'4,387

'5,151

5,378

5,121

4,869

22

4,646
100

5,089
33

4,809
33

4,421
33

4,354
33

5,118
33

5,345
33

5,089
33

4,837
33

3
4
5

6
7

8
9

International......................
Latin American regional.

23

200

210

211

110

88

Transactions (net purchases, or sales ( —), during period)
24 Total 1............................................................................

28 Nonmonetary international and regional

Memo: Oil-exporting countries
29
30

Middle East 2 .........................................................
Africa 3.....................................................................

22,843

6,292

1,233

490

425

639

1,410

225

1,081

1,233

21,130

5,916

1,485

1,342

813

706

646

-3

1,338

1,485

'20,377
'753

3,712
2,205

111
1,374

1,313
29

710
103

704
3

577
69

69
-7 2

-3 4 6
1,683

111
1,374

1,713

375

-2 5 2

-8 5 2

-3 8 7

-6 7

764

227

-2 5 6

-2 5 2

4,451
-1 8 1

-1 ,7 8 5
329

-4 6 1

-8 5

-3 1

-3 1

-4 0 1
200

-2 4 1
-1

-1 2 7

-4 6 1

1 Includes U.S. Treasury notes publicly issued to private foreign
residents.
2 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).
3 Comprises Algeria, Gabon, Libya, and Nigeria.

3.21

4 Estimated official and private holdings of marketable U.S. Treasury
securities with an original maturity o f more than 1 year. Data are based
on a benchmark survey o f holdings as o f Jan. 31, 1971, and monthly
transactions reports. Excludes nonmarketable U.S. Treasury bonds and
notes held by official institutions o f foreign countries.

FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS
Millions o f dollars, end o f period

Assets

1975

1976

1978

1977
Aug.

1 D eposits.......................................................................
Assets held in custody:
2
U.S. Treasury securities1......................................

353

352

424

60,019
16,745

66,532
16,414

91,962
15,988

1 Marketable U.S. Treasury bills, certificates o f indebtedness, notes,
and bonds; and nonmarketable U.S. Treasury securities payable in dollars
and inforeign currencies.
2 The value of earmarked gold increased because of the changes in
par value of the U.S. dollar in May 1972 and in October 1973.




309

Sept.
325

102,902 102,699
15,572
15,553

Oct.
305

1979
Nov.
379

Dec.
367

Jan.

Feb.?

338

343

107,934 112,434 117,126 116,961
15,463
15,548
15,525
15,448

114,005
15,432

Note. Excludes deposits and U.S. Treasury securities held for inter­
national 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.

Investment transactions

A65

3.22 FOREIGN TRANSACTIONS IN SECURITIES
Millions o f dollars
1979

1978

1978

Transactions, and area or country

Jan."

July

Aug.

Sept.

1979
Nov.

Oct.

Dec.'J

Jan."

U.S. corporate securities

1
2

Stocks
Foreign purchases..................................................
Foreign sales...........................................................

14.155
11.479

20.130
17.723

1.361
1 .301

'1.306
'1.297

'2.446
'2.680

2.357
2.115

1.509
1.523

1.461
1.359

1 .438
1 .102

1.361
1.301

3

Net purchases, or sales ( —) ..................................

2,676

2,408

60

9

-2 3 5

241

-1 4

103

336

60

4

Foreign countries.....................................................

2,661

2,454

61

9

-2 3 5

244

-1 5

102

336

61

5
6
7
8
9
10

Europe..................................................................
France...............................................................
Germany..........................................................
Netherlands.....................................................
Switzerland......................................................
United Kingdom............................................

1 .006
40
291
22
152
613

1.271
47
620
-2 2
-5 8 5
1.218

-7
-5
-1 8
-3 5
-3 0
85

-6
-1 5
17
9
-5 2
50

-1 5 2
9
-5 4
-2 2
-1 8 4
110

-3 3
2
24
7
-1 1 5
54

-9 1
-4
-3 0
7
-1 1 8
58

- 10
1
8
6
-8 8
67

264
-3 8
264
-9
-2 3
74

-7
-5
- 18
-3 5
-3 0
85

11
12
13
14
15
16

Canada.................................................................
Latin America and Caribbean........................
Middle East1.......................................................
Other A sia...........................................................
Africa....................................................................
Other countries...................................................

65
127
1 .390
59
5
8

74
151
781
187
-1 3
3

7
34
-1 6
49
-2
-4

-1 6
-3 5
69
-5
1
*

-1 8
48
-1 3 4
34
-1 2
- 1

117
1
120
35
5
- 1

22
13
42
-4
2
2

6
-2
109
1
-2
1

38
16
4
15
-1
1

7
34
-1 6
49
-2
-4

17

Nonmonetary international and regional
organizations...................................................

15

-4 6

-1

*

*

-3

1

1

Bonds2
18
Foreign purchases..................................................
19
Foreign sales............................................................

7.739
3.546

7.955
5.453

641
704

1.029
596

'868
490

'610
550

727
530

437
388

884
558

641
704

*

-1

20

Net purchases, or sales ( —) .................................

4,192

2,502

-6 3

433

'379

'60

197

49

326

-6 3

21

Foreign countries.....................................................

4,096

2,093

54

411

'326

'62

137

39

134

54

22
23
24
25
26
27

Europe..................................................................
France...............................................................
Germany..........................................................
Netherlands.....................................................
Switzerland......................................................
United Kingdom............................................

1.863
-3 4
-2 0
72
94
1.703

972
30
119
19
-1 0 0
936

39
18
42
-4
8
-5 4

387
13
18
11
-7 4
416

137
6
38
18
-2 0
89

80
-2
-5
19
43

89
-1 0
-1 2
-4
9
110

25
3
6
-1
9
9

152
17
10
-6
39
115

39
18
42
-4
8
-5 4

28
29
30
31
32
33

Canada.................................................................
Latin America and Caribbean........................
Middle East1.......................................................
Other Asia...........................................................
Africa....................................................................
Other countries...................................................

141
64
1.695
338
-6
*

102
78
810
131
-1
1

11
23
-3 4
16
*
*

14
-8
135
-1 1 6
*
*

24
17
99
'48

16
11
-7 3
'28
*
*

-5
13
-1 9
60
*
*

-1
-8
23

6
5
-2 1
-5
*
-3

11
23
-3 4
16
*
*

34

Nonmonetary international and regional
organizations...................................................

96

409

-1 1 8

22

60

10

192

-1 1 8

*

1

*

53

-3

*

*
*

Foreign securities
-4 1 0
2,255
2,665

527
3,666
3,139

11
265
254

10
333
323

'52
'383
331

-6 9
261
330

-1 9
299
318

163
360
197

-1 2
232
244

11
265
254

38 Bonds, net purchases, or sales ( —) ......................... '- 5 ,0 9 6
39
Foreign purchases..................................................
8.040
40
Foreign sales........................................................... '13,136

-3 ,9 7 0
11,044
15,013

-5 5 5
783
1.337

' —300
'926
'1,225

' —205
'990
'1,195

'36
'762
726

-6 7 7
941
1,618

-4 4 6
856
1,302

121
1,020
900

-5 5 5
783
1,337

41 Net purchases, or sales ( —) of stocks and bonds.. '- 5 ,5 0 6

-3 ,4 4 3

-5 4 4

' —290

' —153

'-3 3

-6 9 6

-2 8 3

109

-5 4 4

42 Foreign countries......................................................... '- 3 ,9 4 9 -3 ,2 6 5
43
Europe...................................................................... -1 ,1 0 0
-4 0
44
Canada..................................................................... -2 ,4 0 4 -3 ,2 3 7
45
Latin America and Caribbean............................
'-8 2
201
46
Asia...........................................................................
-9 7
397
47
Africa........................................................................
2
-4 4 1
48
Other countries.......................................................
-2 6 7
-1 4 6

-5 1 7
-1 2 4
-3 0 5
55
-141
-3
1

'-2 9 2
-1 7 1
-1 4 6
'7
'37
-2 5
7

' —157
94
-1 6 1
-1 7
'46
-1 2 3
3

'-6 7
-8 6
-4 1
-1 2
'72

-5 0 7
13
-7 4 7
-1 7
236
1
6

-3 0 3
-1 0 2
-2 4 6
18
21
1
4

67
53
-2 4
*
32
*
5

-5 1 7
-1 2 4
-3 0 5
55
-1 4 1
-3

2

5

34

20

41

-2 7

35 Stocks, net purchases, or sales ( —) ........................
36
Foreign purchases..................................................
37
Foreign sales...........................................................

49 Nonmonetary international and regional
organizations.......................................................

-1 ,5 5 7

-1 7 7

-2 7

-1

1

-1 8 9

1

2 Includes state and local government securities, and securities of U.S.
1 Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq,
Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial
government agencies and corporations. Also includes issues o f new debt
States).
securities sold abroad by U.S. corporations organized to finance direct
investments abroad.




A66

International Statistics □ March 1979

3.23 SHORT-TERM LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Nonbanking Concerns
in the United States
Millions of dollars, end of period
1977

Type, and area or country
Sept.

1978
Mar.

Dec.

1977

June

Sept.

Sept.

Dec.

Liabilities to foreigners
1
2
3
4

1978
Mar.

June

Sept.

Claims on foreigners

7,243

7,910

8,361

8,792

9,645

15,223

16,221

18,399

18,162

18,260

Payable in dollars...................................................

6,386

7,109

7,477

7,967

8,794

14,120

14,803

16,636

16,598

16,291

Payable in foreign currencies................................

857

801

884

825

851

1,104

1,418

1,763

1,564

1,969

414
690

613
805

783
980

673
890

804
1,165

9,521

15,222

3,159

5,062
24
226
44

16,220

18,397

18,160

5,764
24

5,508

5,273

18,258

By type:

Deposits with banks abroad in reporter’s

By area or country:
6 Foreign countries....................................................
7 Europe.......................................................................
Austria............................................................
8
Belgium-Luxembourg....................................
9
Denm
ark........................................................
10
11
France.............................................................
12
Germany.........................................................
13
14
Italy.................................................................
15
16
Netherlands....................................................
Norway...........................................................
17
Portugal..........................................................
18
19
Spain...............................................................
Sweden............................................................
20
21
Switzerland.....................................................
Turkey............................................................
22
23
United Kingdom...........................................
24
Yugoslavia......................................................
Other Western Europe...................................
25
26
U.S.S.R...........................................................
27

7,089

2,317

19
126
16
11
170
226
78
107
180
12
12
74
41
257
97
765
92
9
11
14

7,695

8,214

2,491

2,820

21
116
14
9
2.38
284
85
128
232
7
11
77
28
263
108
735
90
10
24
12

26
171
23
12
273
335
108
104
253
9
7
94
37
211
93
937
82
8
15
23

8,661

2,993
26

167
22
3
302
356
82
156
220
18
25
105
38
282
92
962
84
18
19
17

33
165
17
4
260
391
71
188
222
23
11
110
51
308
102
1,058
76
17
27
25

59
430
395
52
351
161
38
34
307
91
146
32
2,479
20
15
62
96

211
56
13
513
450
41
387
166
40
69
387
117
220
39
2,795
20
25
55
135

21
187
47
13
545
420
42
381
184
40
27
408
117
202
35
2,619
24
33
44
121

28
155
40
53
533
436
40
451
192
45
54
376
78
285
29
2,338
27
24
37
51

5,887
25

172
34
50
622
534
44
400
175
42
34
351
80
346
31
2,818
23
28
33
45

28

Canada......................................................................

451

504

530

524

566

2,649

2,681

3,428

3,502

3,724

29
30
31
32
33
34
35
36
37
38
39
40
41
42
43

Latin America........... ..............................................

1,038

1,201

1,353

1,421

1,532
131

4,619
53

4,467
53

5,943
53

6,001

5,142
65

44
45
46
47
48
49
50
51
52
53
54
55

Argentina........................................................
Bahamas.........................................................
Brazil.................... ..........................................
Chile................................................................

Cuba................................................................
Panama...........................................................
Peru.................................................................
Uruguay..........................................................
Other Latin American republics....... ...........
Other Latin America.....................................

*

50
248
76
13
24

185
71
17
9
185
101
30
299

235
59
19
7
232
121
19
213

2,583

2,835

2,814

3,008

3,517
4
176
61
23
49

Other A sia........................................ .............

588

FevDt ............................................... .............
Morocco............................................ .............
South Africa..................................... .............
Zaire.................................................. .............
Other Africa...................................................

45
105
29
48
361

62
63
64

Other countries........................................................

111

65 Nonmonetary international and regional

8
156
40
37
56
63
695
103
74
17
1,588
571

13
112
20
46
380
93

1
167
32
26
57
68
761
99
95
11
1,498

1
170
30
10
59
59
807
107
107
27
1,631

1,963
414
40
85
*
302
222
30
5
251
257
8
989

2,019
493
45
84
*
314
91
32
5
269
281
12
768

2,398
12
139
73
42

2,777
9

68
865
103
157
43
1,968

184
46
1,026
153
111
24
587
340

19
130
30
55
360

603
25
148
36
57
338

661
34

104

111

97
14

85
72
14

153

132

125

1

594

93
18

75
18

89
14

154

215

147

Note. Reported by exporters, importers, and industrial and commercial concerns and other nonbanking institutions in the United States.




*

353
87
14
42

169
12
22
5
264
107
41
250

Africa........................................................................

Australia.........................................................

*

74
321
63
23
42

114
22
15
3
216
118
25
209

56
57
58
59
60
61

Israel.................................................... ...........
Japan..............................................................
K orea..............................................................
Philippines......................................................

*

53
327
62
14
26

103
12
13
4
210
122
9
154
1
152
25
44
60
58
604
75
78
17
1,469

China, (Mainland).........................................
China, (Taiwan).............................................
Hong K ong........................................ ...........
India...............................................................

*

40
329
49
17
42

145
34
56
391

18
10
75
19
218
113
41

157
98
38
375
38
1,068
171
99
23
702

3,122
482
40
80
*
312
175
30
6
306
268
24
1,045
2,970
22
144

85
85
185
47
1,379
133
94
32
764

386
34
21
75

402

15
241

31
22
71
11
268

146

145

111
35
1

111
34
1

61
3,081
479
37
79
*
331
97
30
4
309
229
19
1,245
2,810
21
173
92
93
152
43

1,142
168
96
30
800
430
36
16

2,350
418
40
69
1
382
76
25
5
284
223
21
1,183
2,905
23
157

127
85
167
86
1,157
161
107
29
804
441
29

88
16
274

16
74
12
311

143

158

109
34
2

118
40
2

Data exclude claims held through U.S. banks and intercompany accounts
between U.S. companies and their affiliates.

Nonbank-reported Data
3.24 SHORT-TERM CLAIMS ON FOREIGNERS

A67

Reported by Large Nonbanking Concerns in the United States

Millions o f dollars, end o f period
1978
Type and country

1974

1975

1976

1977 r

July

Aug.

Sept.

Oct.

Nov.

Dec."

1 T otal..............................................................................

3,357

3,799

5,720

7,136

8,949

10,098

8,635

10,503

11,223

9,515

By type:
2
Payable in dollars...................................................
3
Deposits...............................................................
4
Short-term investments 1..................................

2,660
2,591
69

3,042
2,710
332

4,984
4,505
479

6,121
5,703
418

7M 3
7,172
471

8 .8 /8
8.282
536

7,409
6,985
424

9,240
8.688
552

9.981
9,362
619

8.264
1.144
520

5
6
7

Payable in foreign currencies................................
D eposits...............................................................
Short-term investments 1..................................

697
429
268

757
511
246

735
404
331

1,015
547
468

1.305
689
616

1,280
660
620

1,225
730
495

1.263
789
474

1,241
771
470

1.252
873
379

8
9
10
11
12

By country:
United Kingdom....................................................
Canada.....................................................................
Bahamas...................................................................
Japan.........................................................................
All other...................................................................

1,350
967
391
398
252

1,306
1,156
546
343
446

1,838
1,698
1,355
133
716

2,120
1,777
1,896
153
1,190

1,878
2,537
3,217
279
1 ,038

1,869
3,013
3,543
276
1,397

2,246
2,452
2,247
250
1,440

2.949
2,858
2.819
234
1 ,643

3.137
2,833
3,033
249
1,971

2,728
2,144
2,519
203
1,921

1 N e g o tia b le a n d o t h e r re a d ily t ra n s fe ra b le fo re ig n o b lig a tio n s p a y a b le
o n d e m a n d o r h a v in g a c o n tr a c tu r a l m a tu r ity o f n o t m o re t h a n 1 y e a r
fro m th e d a te o n w h ic h th e o b lig a tio n w as in c u rre d by th e fo re ig n e r.

Note. D a ta re p re s e n t th e a sse ts a b ro a d o f larg e n o n b a n k in g c o n c e rn s in th e U n ite d S ta te s. T h e y a re a p o r tio n o f th e to ta l c la im s on
fo re ig n ers r e p o r te d by n o n b a n k in g c o n c e rn s in th e U n ite d S ta te s a n d
a re in c lu d e d in th e fig u res s h o w n in ta b le 3.26.

3.25 LONG-TERM LIABILITIES TO AND CLAIMS ON FOREIGNERS
in the United States

Reported by Nonbanking Concerns

Millions o f dollars, end o f period
1977

1978

1977

Area and country
Sept.

Dec.

Mar.

June

Sept.

Sept.

Liabilities to foreigners

1978
Dec.

Mar.

June

Sept.

Claims on foreigners

1 Total.............................................................................

3,331

3,175

3,149

3,077

3,122

4,719

5,077

5,143

5,067

5,007

2 Europe..........................................................................
3
Germany..................................................................
4
Netherlands.............................................................
5
Switzerland..............................................................
6
United Kingdom....................................................

2.555
407
272
224
1.237

2.425
255
287
241
1.222

2.498
295
292
241
1.228

2.422
282
266
236
1.214

2.471
290
275
246
1 .253

833
79
81
42
282

864
74
82
49
310

937
75
81
48
332

943
71
76
55
363

927
76
74
58
341

7 Canada.........................................................................

67

62

58

56

65

1.462

1.776

1.792

1.811

1.779

8 Latin America.............................................................
9
Bahamas...................................................................
10
Brazil........................................................................
11
Chile.........................................................................
12
M exico.....................................................................

289
151
7
1
30

284
148
7
1
30

248
142
6
1
27

248
141
7
1
26

234
138
7
1
29

1 .367
36
134
201
187

1 .402
40
144
203
177

1 .387
42
154
194
183

1.298
2
143
190
188

1.283
2
144
176
217

13 Asia...............................................................................
14
Japan........................................................................

358
319

342
305

284
250

290
255

289
254

829
94

817
66

810
83

803
78

812
70
149

15 Africa...........................................................................

3

2

2

2

3

165

161

156

154

16 All other i .....................................................................

59

60

60

60

61

63

59

60

59

56
1

1 Includes nonmonetary international and regional organizations.




A68

International Statistics □ March 1979

3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Rate on Feb. 28, 1979

Rate on Feb. 28, 1979
Country

Country

Per­
cent

Argentina...........................
Austria................................
Belgium..............................
Brazil..................................
Canada...............................
Denmark............................

Per­
cent

Month
effective

18.0
3,75
6 .0
33.0
11.25
8.0

Feb.
Jan.
July
Nov.
Jan.
July

1972
1979
1978
1978
1979
1977

Germany, Fed. Rep. of.

Netherlands....................

Note. Rates shown are mainly those at which the central bank either
discounts or makes advances against eligible commercial paper and/or
government securities for commercial banks or brokers. For countries with

9.5
3.0
10.5
3.5
4 .5
6.5

Rate on Feb. 28, 1979
Country

Month
effective
Aug.
Dec.
Sept.
Mar.
June
Oct.

Per­
cent

1977
1977
1978
1978
1942
1978

Month
effective

7.0
6.5
1.0
14.0
5 .0

United Kingdom ...........

Feb.
July
Feb.
Feb.
Oct.

1978
1978
1978
1979
1970

more than one rate applicable to such discounts or advances, the rate
shown is the one at which it is understood the central bank transacts the
largest proportion of its credit operations.

3.27 FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1978
Country, or type

1977

1976

1979

1978
Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

1 Eurodollars................................................................
2 United Kingdom............................................ ..........
3 Canada........................................................................

5.58
11.35
9.39

6.03
8.07
7.47

8.74
9.18
8.52

9.12
9.29
9.08

10.12
10.44
9.68

11.51
12.00
10.37

11.62
12.28
10.44

11.16
12.61
10.87

10.79
13.28
10.94

Germany...... .............................................................
Switzerland.................................................................
Netherlands................................................................
France............................................................... ..........

4.19
1.45
7.02
8.65

4.30
2.56
4.73
9.20

3.67
0.74
6.53
8.10

3.67
0.58
6.91
7.40

3.90
0.24
11.23
7.37

3.81
0.20
8.86
7.06

4.09
0.22
10.25
6.59

3.85
0.05
8.69
6.55

4.13
0. 13
7.42
6.83

8 Italy..............................................................................
9 Belgium.......................................................................
10 Japan................................................................. ..........

16.32
10.25
7.70

14.26
6.95
6.22

11.40
7.14
4.75

10.94
7.24
4.51

10.99
8.55
4.44

11.17
9.19
4.78

11.24
9.28
4.76

11.12
8.93
4.52

11.38
8.23
4.50

4
5
6
7

Note. Rates are for 3-month interbank loans except for—Canada,
finance company paper; Belgium, time deposits of 20 million francs and

over; and Japan, loans and discounts that can be called after being held
over a minimum of two month-ends.

3.28 FOREIGN EXCHANGE RATES
Cents per unit o f foreign currency

Country/currency

1976

1977

1978

1979

1978
Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

1
2
3
4

Australia/dollar...................
Austria/schilling...................
Belgium/franc.......................
Canada/dollar.......................

122.15
5.5744
2.5921
101.41
16.546

110.82
6.0494
2.7911
94.112
16.658

114.41
6.8958
3.1809
87.729
18.156

115.29
7.0102
3.2207
85.739
18.411

116.87
7.4526
3.4503
84.546
19.584

114.53
7.1808
3.3389
85.244
19.025

114.15
7.2621
3.3637
84.763
19.063

114.04
7.3821
3.4276
84.041
19.487

113.12
7.3510
3.4153
83.638
19.423

6
7
8
9
10

Finland/markka...................
France/franc.........................
Germany/deutsche m ark...
India/rupee...........................
Ireland/pound.......................

25.938
20.942
39.737
11.148
180.48

24.913
20.344
43.079
11.406
174.49

24.337
22.218
49.867
12.207
191.84

24.586
22.909
50.778
12.445
195.95

25.454
23.767
54.430
12.643
200.75

24.932
22.958
52.508
12.458
196.08

24.957
23.178
53.217
12.174
198.61

25.252
23.570
54.056
12.185
200.53

25.186
23.395
53.862
12.124
200.42

11
12
13
14
15

Italy/lira...... ...........................
Japan/yen..............................
Malaysia/ringgit...................
M exico/peso.........................
Netherlands/guilder............

.12044
.33741
39.340
6.9161
37.846

.11328
.37342
40.620
4.4239
40.752

.11782
.47981
43.210
4.3896
46.284

.12050
.52656
43.603
4.3907
46.733

.12317
.54478
45.627
4.3904
50.017

.11857
.52066
45.415
4.3881
48.512

.11863
.51038
45.524
4.3950
49.120

.11955
.50571
45.487
4.4038
50.082

.11899
.49877
45.488
4.3952
49.856

18 Portugal/escudo...................
19 South Africa/rand...............
20 Spain/peseta.........................

99.115
18.327
3.3159
114.85
1.4958

96.893
18.789
2.6234
114.99
1.3287

103.64
19.079
2.2782
115.01
1.3073

105.58
19.189
2.1948
115.00
1.3605

107.37
20.325
2.2342
115.00
1.4317

105.41
19.736
2.1510
115.04
1.4051

105.45
19.574
2.1472
115.01
1.4085

105.64
19.730
2.1358
114.96
1.4293

105.32
19.610
2.1065
116.76
1.4427

21
22
23
24

11.908
22.957
40.013
180.48

11.964
22.383
41.714
174.49

6.3834
22.139
56.283
191.84

6.3855
22.592
63.765
195.95

6.3757
23.349
65.117
200.75

6.4695
22.856
59.766
196.08

6.4700
22.808
59.703
198.61

6.4491
22.987
59.840
200.53

6.4439
22.898
59.699
200.42

105.57

103.31

88.86

88.52

87.77

88.25

16 New Zealand/dollar............

Sri Lanka/rupee...................
Sweden/krona.......................
Switzerland/franc.................
United Kingdom/pound. . .

Memo:
25 United States/dollar1..........

89.51

86.04

1 Index o f weighted average exchange value o f U.S. dollar against curthe Weighted-Average Exchange Value of the U.S. Dollar: Revision” on
rencies o f other G-10 countries plus Switzerland. March 1973 = 100.
page 700 of the August 1978 B ulletin.
Weights are 1972-76 global trade o f each o f the 10 countries. Series
revised as o f August 1978. For description and back data, see “Index of
Note. Averages o f certified noon buying rates in New York for cable
transfers.




Business Finance

A69

4.10 SALES, REVENUE, PROFITS, AND DIVIDEND S— Large Manufacturing Corporations
Millions of dollars

Industry

1976

1977

Q4

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

19
20
21
22
23
24
25
26
27
28
29
30

1977

1976
Ql

Q2

1978
Q3

Q4

Ql

Q2

Q3

Total (170 corps.)
Sales................................................................ 667,821 748,757 180,462 177,430 190,302 180,384 200,641 '194,193 '210,546 207,767
Total revenue.................................................. 676,596 758,013 181,546 179,496 192,996 182,488 203,033 '196,611 '212,932 210,962
71,885 78,909 18,587 18,874 21,468 18,146 20,421 >-19,707 '22,684 20,817
Profits before taxes........................................
9,693 11,599 10,422
8,113
9,056 10,472
9,337
8,989
34,707 37,854
Profits after taxes...........................................
9,340
9,107 10,553
9,684 11,585 10,521
8,656 10,075
36,016 38,391
Memo: PAT unadjusted1.........................
4,269
4,371
3,840
4,306
14,491
3,985
5,438
4,556
4,471
Dividends........................................................
17,532
Nondurable goods industries (86 corps.):2
Sales................................................................
Total revenue.................................................
Profits after taxes..........................................
Dividends........................................................
Durable goods industries (84 corps.):3
Sales...............................................................
Total revenue.................................................
Profits before taxes........................................
Profits after taxes..........................................
M emo: PAT unadjusted1.........................
Dividends........................................................
Selected industries:
Food and kindred products (28 corps.):
Sales................................................................
Total revenue.................................................
Profits before taxes........................................
Profits after taxes..........................................
M emo: PAT unadjusted1.........................
Chemical and allied products (22 corps.):
Sales................................................................
Total revenue.................................................
Profits after taxes..........................................
M emo: PAT unadjusted1.........................

362,935 404,141 99,926
368,184 409,601 100,174
42,694 45,906 10,793
18,571 22,284
4,058
4,868
19,468 19,768
8,944
2,094
7,910

95,836 101,035
96,948 102,807
11,074 12,064
4,837
5,160
4,880
5,224
2,185
2,227

97,144 110,126 104,522 109,310 111,760
98,232 111,614 105,877 110,824 113.607
11,195 11,573 11,347 12,178 12,146
5,137
5,144
5,729
4,430
5,517
5,136
5,234
5,249
5,741
5,536
2,402
2,264
2,419
2,268
2,481

304,886 344,616
308,412 348,412
29,191 33,003
16,136 18,283
16,548 17,804
8,588
6,577

80,536
81,372
7,794
4,055
4,472
2,277

81,594
82,548
7,800
4,219
4,227
1,655

89,267
90,189
9,404
5,312
5,329
2,042

83,240
84,256
6,951
4,193
3,422
1,717

90,515
91,419
8,848
4,559
4,826
3,174

62,568
63,142
5,750
2,890
3,013
1,259

68,422
69,168
6,040
3,172
3,309
1,433

16,701
16,533
1,310
630
734
318

15,903
16,155
1,448
739
746
342

16,776
17,136
1,560
825
835
352

16,947
17,239
1,526
826
836
364

18,796
18,638
1,506
782
892
375

17,470
17,860
1,535
839
840
397

18.763
19,180
1,767
967
975
400

19,361
19,490
1,802
982
983
409

64,125
64,837
8,197
4,511
4,622
1,918

70,251
70,906
8,530
4,604
4,831
2,186

16,410
16,612
1,893
929
1,081
548

17,103
17,271
2,112
1,192
1,181
514

17,347
17,526
2,290
1,288
1,289
539

17,586
17,743
2,062
1,184
1,178
553

18,215
18,366
2,066
940
1,183
580

18,930
19,117
2,353
1,334
1,317
567

19,981
20,143
2,459
1,403
1,382
587

19,880
20,086
2,478
1,406
1,389
592

196,154 221,694
199,688 225,338
25,857 28,144
9,555 10,072
10,168 10,684
4,615
4,089

56,510
56,649
6,834
2,085
2,617
1,065

52,344
52,891
6,746
2,498
2,546
1,163

55,903
57,096
7,396
2,655
2,708
1,160

51,593
52,130
6,818
2,694
2,756
1,166

61,854
63,221
7,184
2,225
2,674
1,126

56,996
57,695
6,832
6,615
2,627
1,247

58,419
59,195
7,020
2,828
2,847
1,239

60,130
61,418
7,248
2,846
2,861
1,282

r89,671 '101,236
'90,734 '102,108
'8,360 '10,506
4,556
5,870
4,548
5,844
1,904
2,137

96,007
97,355
8,671
4,905
4,985
1,990

31
32
33
34
35
36

Petroleum refining (15 corps.):
Sales................................................................
Total revenue.................................................
Profits before taxes........................................
Profits after taxes...........................................
M emo : PAT unadjusted1.........................
Dividends........................................................

37
38
39
40
41
42

Primary metals and products (23 corps.):
Sales................................................................
Total revenue..................................................
Profits before taxes........................................
Profits after taxes...........................................
M emo: PAT unadjusted1.........................
Dividends........................................................

54,044
54,825
2,834
1,652
1,947
926

58,713
59,488
1,476
1,579
1,474
1,088

13,119
13,313
576
127
400
251

13,773
13,963
460
260
274
234

15,573
15,769
100
536
553
246

14,454
14,636
239
493
287
266

14,913
15,120
677
290
360
342

15,459
15,681
'372
173
183
226

17,560
17,822
'1,275
794
810
239

17,348
17,693
1,128
661
711
242

43
44
45
46
47
48

Machinery (27 corps.):
Sales................................................................
Total revenue.................................................
Profits before taxes........................................
Profits after taxes...........................................
M emo: PAT unadjusted1.........................
Dividends........................................................

87,274
88,519
11,320
6,181
6,202
2,383

96,820
98,380
13,158
7,158
7,204
3,495

24,059
24,460
3,370
1,837
1,864
663

22,727
23,051
2,900
1,573
1,571
712

24,380
24,702
3,318
1,805
1,804
767

24,317
24,767
3,264
1,771
1,782
702

25,396
25,860
3,676
2,009
2,047
1,314

25,472
25,831
3,209
1,749
1,745
823

27,857
27,977
3,996
2,270
2,254
892

27,848
28,374
3,458
1,974
2,015
821

49
50
51
52
53
54

Motor vehicles and equipment (9 corps.):
Sales................................................................
Total revenue.................................................
Profits before taxes........................................
Profits after taxes............................... ..........
M emo: PAT unadjusted1.........................
Dividends........................................................

107,563 127,049
108,394 127,816
8,909 10,738
4,870
5,747
4,918
5,861
2,062
2,607

28,208
28,250
2,087
1,166
1,219
983

31,069
31,350
2,988
1,599
1,603
392

33,502
33,716
3,489
1,914
1,926
698

28,835
29,104
1,575
892
898
413

33,643
33,646
2,686
1,342
1,434
1,104

'32,834
'33,127
2,986
1,654
1,648
473

'38,055
'38,301
3,178
1,640
1,637
620

31,982
32,298
1,665
901
903
477

1 Profits after taxes unadjusted are as reported by the individual com­
panies. These data are not adjusted to eliminate differences in accounting
treatments of special charges, credits, and other nonoperating items.
2 Includes 21 corporations in groups not shown separately.
3 Includes 25 corporations in groups not shown separately.
N ote. Data are obtained from published reports of companies and
reports made to the Securities and Exchange Commission. Sales are net




of returns, allowances, and discounts, and exclude excise taxes paid di­
rectly by the company. Total revenue data include, in addition to sales,
income from nonmanufacturing operations and nonoperating income.
Profits are before dividend payments and have been adjusted to exclude
special charges and credits to surplus reserves and extraordinary items not
related primarily to the current reporting period. Income taxes (not
shown) include federal, state and local government, and foreign.
Previous series last published in June 1972 Bulletin, p. A-50.

A 70

Federal Reserve Board of Governors
G.

W illia m

H en ry

M ille r,

Chairman

C. W a llic h

O f f ic e o f B o a r d M e m b e r s

P h ilip

J.

E.

C o ld w e ll

C h a rle s P a rte e

O f f ic e o f S t a f f D i r e c t o r f o r
M o n e t a r y a n d Fin a n c ia l

J o s e p h R . C o y n e , A s s i s t a n t to th e B o a r d
K e n n e t h A . G u e n t h e r , A s s i s t a n t to th e B o a r d
J a y P a u l B r e n n e m a n , S p e c ia l A s s i s t a n t to th e
B o a rd

F r a n k O ’B r i e n , J r . , S p e c ia l A s s i s t a n t to th e
B o a rd

J o s e p h S. S im s, S p e c ia l A s s i s t a n t to th e B o a r d
D o n a l d J. W i n n , S p e c ia l A s s i s t a n t to th e B o a r d

P o l ic y

S t e p h e n H . A x i l r o d , S ta f f D i r e c t o r
E d w a r d C . E t t i n , D e p u ty S ta f f D i r e c t o r
M u r r a y A l t m a n n , A s s i s t a n t to th e B o a r d
P e t e r M . K e i r , A s s i s t a n t to th e B o a r d
S t a n l e y J. S i g e l , A s s i s t a n t to th e B o a r d
N o r m a n d R . V . B e r n a r d , S p e c ia l A s s i s t a n t to
th e B o a r d
D iv is io n o f R e s e a r c h a n d S t a t is t ic s

L e g a l D iv is io n

N e a l L. P e te r s e n , G en eral C ou n sel
R o b e r t E. M a n n io n , A s s o c ia te G e n e ra l
C ou n sel

A l l e n L . R a ik e n , A s s o c ia te G e n e ra l C o u n sel
C h a r l e s R . M c N e i l l , A s s i s t a n t to th e G e n e r a l
C ou n sel

Ja m e s L . K i c h l i n e , D i r e c t o r
J o s e p h S. Z e i s e l , D e p u ty D i r e c t o r
J o h n H . K a l c h b r e n n e r , A s s o c ia te D ir e c to r
J o h n J. M in g o , S e n io r R e s e a r c h D iv is i o n
O ffic e r

E l e a n o r J. S t o c k w e l l , S e n io r R e s e a r c h
D iv is io n O ffic e r

J a m e s M . B r u n d y , A s s o c i a t e R e s e a r c h D iv is i o n
O ffic e r
O f f ic e o f t h e S e c r e t a r y

T h e o d o r e E . A l l i s o n , S e c r e ta r y
G r i f f i t h L . G a r w o o d , D e p u ty S e c r e ta r y
* E d w a r d T . M u l r e n i n , A s s i s t a n t S e c r e ta r y
R i c h a r d H . P u c k e t t , M a n a g e r , R e g u la to r y
I m p r o v e m e n t P r o je c t

R o b e r t A . E is e n b e is , A s s o c i a t e R e s e a r c h
D iv is i o n O ffic e r

J a r e d J. E n z l e r , A s s o c i a t e R e s e a r c h D iv is io n
O ffic e r

J. C o r t l a n d G . P e r e t , A s s o c i a t e R e s e a r c h
D iv is io n O ffic e r

M i c h a e l J. P r e l l , A s s o c i a t e R e s e a r c h D iv is io n
O ffic e r

H e l m u t F. W e n d e l , A s s o c ia te R e se a rc h
D iv is io n O ffic e r
D iv is io n o f C o n s u m e r A f f a ir s

R o b e r t M . F i s h e r , A s s i s t a n t R e s e a r c h D iv is io n

J a n e t O . H a r t , D ir e c to r
N a t h a n i e l E. B u t l e r , A s s o c ia te D ir e c to r
J e r a u l d C . K lu c k m a n , A s s o c ia te D ir e c to r
A n n e G e a r y , A s s is ta n t D ir e c to r

F r e d e r ic k M . S t r u b l e , A s s is ta n t R e se a rc h

O ffic e r
D iv is io n O ffic e r

S te p h e n P. T a y l o r , A s s is ta n t R e se a rc h
D iv is io n O ffic e r

L e v o n H . G a r a b e d ia n , A s s is ta n t D ir e c to r
D iv is io n o f B a n k in g
S u p e r v is io n a n d R e g u l a t io n

J o h n E. R y a n , D ir e c to r
f F r e d e r i c k C . S c h a d r a c k , D e p u ty D i r e c t o r
F r e d e r i c k R . D a h l , A s s o c ia te D ir e c to r
W illia m W . W ile s , A s s o c ia te D ir e c to r
J a c k M . E g e r t s o n , A s s is ta n t D ir e c to r
D o n E. K l i n e , A s s is ta n t D ir e c to r
R o b e r t S. P l o t k i n , A s s i s t a n t D i r e c t o r
T h o m a s A . S id m a n , A s s i s t a n t D i r e c t o r
S a m u e l H . T a l l e y , A s s is ta n t D ir e c to r
W illia m T a y l o r , A s s is ta n t D ir e c to r

D iv is io n o f In t e r n a t io n a l F in a n c e

E d w in M . T r u m a n , D i r e c t o r
R o b e r t F. G e m m i ll , A s s o c i a t e D i r e c t o r
G e o r g e B. H e n r y , A s s o c ia te D ir e c to r
C h a r l e s J. S ie g m a n , A s s o c i a t e D ir e c to r
S a m u e l P i z e r , S e n io r I n te r n a tio n a l D iv is io n
O ffic e r

J e f f r e y R . S h a f e r , A s s o c i a t e I n te r n a tio n a l
D iv is io n O ffic e r

D a l e W . H e n d e r s o n , A s s i s t a n t I n te r n a tio n a l
D iv is io n O ffic e r

L a r r y J. P r o m i s e l , A s s i s t a n t I n te r n a tio n a l
D iv is io n O ffic e r

R a l p h W . S m i th , J r . , A s s i s t a n t I n te r n a tio n a l
tO n loan from the Federal R eserve Bank of N ew York.




D iv is io n O ffic e r

A 71

and Official Staff
N ancy

H.

T e e te rs

O f f ic e o f

O f f ic e o f S t a f f D i r e c t o r f o r

S t a f f D ir e c t o r f o r M a n a g e m e n t

F e d e r a l R e s e r v e B a n k A c t iv it ie s

J o h n M . D e n k l e r , S ta f f D i r e c t o r
R o b e r t J. L a w r e n c e , D e p u ty S ta f f D i r e c t o r
Jo s e p h W . D a n i e l s , S r ., D ir e c to r o f E q u a l

W i l l i a m H . W a l l a c e , S ta f f D i r e c t o r

E m p lo y m e n t O p p o r tu n ity

H a r r y A . G u i n t e r , P ro g ra m D ir e c to r fo r

D iv is io n o f F e d e r a l R e s e r v e
B a n k E x a m in a t io n s a n d B u d g e t s

C o n tin g e n c y P la n n in g

A l b e r t R . H a m i l t o n , D ir e c to r
C ly d e H . F a r n s w o r t h , J r . , A s s o c ia te
D iv is io n o f D a t a

P r o c e s s in g

C h a r l e s L. H a m p to n , D ir e c to r
B r u c e M . B e a r d s l e y , A s s o c ia te D ir e c to r
U y le s s D . B l a c k , A s s is ta n t D ir e c to r
G l e n n L . C u m m in s , A s s i s t a n t D i r e c t o r
R o b e r t J. Z e m e l , A s s i s t a n t D i r e c t o r

D ir e c to r

C h a r l e s W . B e n n e t t , A s s is ta n t D ir e c to r
P . D . R in g , A s s i s t a n t D i r e c t o r
R a y m o n d L . T e e d , A s s is ta n t D ir e c to r

D iv is io n o f F e d e r a l R e s e r v e
B an k

D iv is io n o f P e r s o n n e l

D a v id L. S h a n n o n , D ir e c to r
J o h n R . W e is , A s s i s t a n t D i r e c t o r
C h a r l e s W . W o o d , A s s is ta n t D ir e c to r
O f f ic e o f t h e C o n t r o l l e r

J o h n K a k a l e c , C o n tr o lle r

D iv is io n o f S u p p o r t S e r v ic e s

D o n a ld
J o h n L.
W a lte r
Jo h n D.

E . A n d e r s o n ,D ir e c to r
G r i z z a r d , A s s o c ia te D ir e c to r
W . K r e im a n n , A s s o c ia te D ir e c to r
S m ith , A s s is ta n t D ir e c to r




O p e r a t io n s

Ja m es R . K u d lin s k i, D ir e c to r
W a l t e r A l t h a u s e n , A s s is ta n t D ir e c to r
B r i a n M . C a r e y , A s s is ta n t D ir e c to r
H a r r y A . G u i n t e r , A s s is ta n t D ir e c to r
L o r i n S. M e e d e r , A s s i s t a n t D i r e c t o r

A72

Federal Reserve Bulletin □ March 1979

FOMC and Advisory Councils
Fed eral

O p e n M a r k e t C o m m it t e e

G. W illia m M i lle r , Chairman
P a u l A. V o lc k e r ,
John B alles
M onroe K imbrel
R obert B lack
R obert M ayo
P hilip E. C oldwell

Vice Chairman
J. C harles P artee
N ancy H. T eeters
H enry C. W allich

G e o rg e B. H e n r y , A ssociate Econom ist
M u rra y A ltm a n n , Secretary
P e te r M. K eir, A ssociate Economist
N orm and R. V. B e r n a r d , A ssistan t Secretary
M ic h a e l K e ra n , A ssociate Econom ist
N e a l L. P e te r s e n , General Counsel
James L. K ic h lin e , A ssociate Econom ist
James H. O ltm a n , D eputy General Counsel
James P a rth e m u s, A ssociate Econom ist
R o b e rt E. M a n n io n , A ssistan t General Counsel
K a r l S c h e ld , A ssociate Econom ist
S tep h en H. A x ilr o d , Econom ist
Edw in M. T rum an , A ssociate Econom ist
H arry B r a n d t, A ssociate Econom ist
R ich ard G. D a v is, A ssociate Econom ist
Joseph S. Z e is e l, A ssociate Econom ist
E d w ard C. E t t in , A ssociate Econom ist
A la n R. H olm es, M anager, System Open M arket A ccount
P e t e r D. S t e r n l i g h t , D eputy M anager for D om estic O perations
S c o t t E. P a rd ee , D eputy M anager for Foreign O perations

F e d e r a l A d v is o r y C o u n c il

R ich ard H. V a u g h a n , n in th d is t r ic t , Vice President
J. W. M cL ean , t e n t h d is t r ic t, President
H en ry S. W o o d b rid g e, f ir s t d is t r ic t
F ran k A. P lum m er, s ix th d is t r ic t
W alter B. W riston , second district
Roger E. A nderso n , seventh district
W illiam B. E ag leson , Jr ., third district
C larence C. B arksdale , eighth district
M erle E. G illia n d , fourth district
James D. B erry , eleventh district
J. O wen C o le , fifth district
C hauncey E. S chm idt , twelfth district
H e r b e r t V. P r o c h n o w , Secretary
W illia m J. K o rsv ik , A ssociate Secretary

C o n s u m e r A d v is o r y C o u n c il

W illia m D. W a rr en , Los A ngeles, California, Chairman
M arcia A. H ak ala., Omaha, Nebraska, Vice Chairman
R oland E. B ran del , San Francisco, California
Percy W. Lo y , Portland, Oregon
James L. B ro w n , Milwaukee, Wisconsin
R. C. M o rgan , El Paso, Texas
M ark E. B u d n it z , Boston, Massachusetts
F lorence M. R ice , New York, New York
John G. B u l l , Fort Lauderdale, Florida
R alph J. R o h n er , Washington, D. C.
R aymond J. S a u ln ier , New York, New York
R obert V. B ullock , Frankfort, Kentucky
C arl F elsenfeld , New York, New York
H enry S. S chechter , Washington, D. C.
Jean A. F ox, Pittsburgh, Pennsylvania
E. G. S chuhari II, Amarillo, Texas
R ichard H. Ho lto n , Berkeley, California
B lair C. S hick , Cambridge, Massachusetts
E dna D e C oursey Jo h n so n , Baltimore, Mary­
T homas R. S w a n , Portland, Maine
land
A nne G ary T aylor , Alexandria, Virginia
R ichard F. K err , Cincinnati, Ohio
R ichard A. V an W in k le , Salt Lake City, Utah
Robert J. K l e in , New York, New York
R ichard D. W agner , Simsbury, Connecticut
H arvey M. K u h n l e y , M inneapolis, Minnesota
M ary W. W alker , Monroe, Georgia



A 73

Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK,
branch, o r fa c ility
Zip

Chairman
Deputy Chairman

President
First Vice President

B O S T O N * ....................... 02106

Robert M . Solow
Robert P. Henderson

Frank E. Morris
James A. M cIntosh

NEW Y O R K * ................ 10045

Robert H. Knight
Boris Yavitz
Frederick D. Berkeley

Paul A. Volcker
Thomas M . Tim len

P H ILA D E LPH IA ...........19105

John W . Eckm an
W erner C. Brown

David P. Eastburn
Richard L. Smoot

C LEV ELA N D *.............. 44101

Robert E. Kirby
Arnold R. W eber
Lawrence H. Rogers, II
G. Jackson Tankersley

W illis J. W inn
W alter H. M acDonald

E. Angus Powell
M aceo A. Sloan
I. E. Killian
Robert E. Elberson

Robert P. Black
George C. Rankin

B u ffalo ......................... 14240

C in c in n a ti....................45201
P ittsb u rg h .................... 15230
R IC H M O N D * ................23261
B altim ore..................... 21203
C h a rlo tte ..................... 28230

John T. Keane

Robert E. Showalter
Robert D. Duggan

Jim mie R. M onhollon
Stuart P. Fishburne

C u lp ep er C om m unications
and R ec o rd s C en ter . 22701

A T L A N T A ..................... 30303
B irm ingham ................ 35202
Jack so n v ille................ 32203
M ia m i...........................33152
N a s h v ille ....................37203
New O rle a n s.............. 70161
CHICAGO* ....................60690
D etroit...........................48231
ST. L O U IS ..................... 63166
Little R o c k ..................72203
Louisville ................... 40201
M e m p h is..................... 38101
M IN N E A P O L IS ............ 55480
H elena...........................59601
KANSAS C I T Y ............ 64198
D e n v e r .........................80217
Oklahoma C ity ...........73125
Omaha .........................68102
D A L L A S .........................75222
El P a so .........................79999
H o u sto n ....................... 77001
San A ntonio................78295
SAN F R A N C IS C O ....... 94120
Los A ngeles................ 90051
P o rtla n d ....................... 97208
Salt Lake City .........84125
Seattle .........................98124

Vice President
in charge of branch

Albert D. Tinkelenberg
Clifford M. Kirtland, Jr.
W illiam A. Fickling, Jr.
W illiam H. M artin, Jr.
Copeland D. Newbern
Castle W. Jordan
Cecelia Adkins
Levere C. M ontgomery

Monroe Kimbrel
Kyle K. Fossum

Robert H. Strotz
John Sagan
Jordan B. Tatter

Robert P. Mayo
Daniel M. Doyle

Armand C. Stalnaker
W illiam B. W alton
G. Larry Kelley
James F. Thompson
Frank A. Jones, Jr.

Lawrence K. Roos
Donald W. Moriarty

Stephen F. Keating
W illiam G. Phillips
Patricia P. Douglas

Mark H. Willes
Thomas E. Gainor

Harold W. Andersen
Joseph H. W illiams
A. L. Feldman
Christine H. Anthony
Durward B. Varner

Roger Guffey
Henry R. Czerwinski

Irving A. M athews
Gerald D. Hines
A. J. Losee
Gene M. Woodfin
Pat Legan

Ernest T. Baughman
Robert H. Boykin

Joseph F. Alibrandi
Cornell C. Maier
Caroline L. Ahmanson
Loran L. Stewart
W endell J. Ashton
Lloyd E. Cooney

John J. Balles
John B. Williams

Hiram J. Honea
Charles B. East
F. J. C raven, Jr.
Jeffrey J. W ells
George C. Guynn

William C. Conrad

John F. Breen
Donald L. Henry
L. Terry Britt

John D. Johnson

W ayne W . Martin
W illiam G. Evans
Robert D. Ham ilton

Fredric W . Reed
J. Z. Rowe
Carl H. M oore

Richard C. Dunn
Angelo S. Carella
A. Grant Holman
Gerald R. Kelly

* Additional offices of these Banks are located at Lewiston, Maine 04240; W indsor Locks, Connecticut 06096; Cranford,
New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Colum bia, South
Carolina 29210; Charleston, West Virginia 25311; Des M oines, Iowa 50306; Indianapolis, Indiana 46204; and M ilwaukee,
Wisconsin 53202.




A 74

Federal Reserve Board Publications
A v a i l a b l e f r o m P u b lic a tio n s S e r v i c e s , D iv is i o n o f A d ­

r e q u e s t a n d b e m a d e p a y a b l e to th e o r d e r o f th e B o a r d

m in is tr a tiv e S e r v i c e s , B o a r d o f G o v e r n o r s o f th e F e d ­

o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y s te m . R e m i t ­

e r a l R e s e r v e S y s t e m , W a s h in g to n , D .C . 2 0 5 5 1 . W h e r e
a ch arge

T he

is in d i c a te d , r e m itta n c e s h o u ld a c c o m p a n y

F ed e r a l R eser v e S ystem — P u r po ses
F u n c t i o n s . 1 974. 125 p p .

and

A nnual R eport.
F e d e r a l R e s e r v e B u l l e t i n . M o n th ly . $ 2 0 .0 0 p er
y e a r o r $ 2 .0 0 e a c h in th e U n ite d S ta te s , its p o s s e s ­
sio n s , C a n a d a , an d M e x ic o ; 10 o r m o re o f sam e
issu e to o n e a d d re s s , $ 1 8 .0 0 p e r y e a r or $ 1 .7 5
e a c h . E ls e w h e re , $ 2 4 .0 0 p e r y e a r o r $ 2 .5 0 e a c h .
B a n k in g a n d M o n e t a r y S t a t is t ic s , 1 9 1 4 -1 9 4 1 .
(R e p rin t o f P a rt 1 o n ly ) 1 976. 6 8 2 p p . $ 5 .0 0 .
B a n k in g a n d M o n e t a r y S t a t is t ic s , 1 9 4 1 -1 9 7 0 .
1 9 7 6 . 1 ,1 6 8 p p . $ 1 5 .0 0 .
A n n u a l S t a t i s t i c a l D i g e s t , 1 9 7 1 - 7 5 . 1 976. 3 3 9 p p .
$ 4 .0 0 p e r c o p y fo r e a c h p a id su b s c rip tio n to F e d ­
eral R e se rv e B u lle tin . A ll o th e rs , $ 5 .0 0 e a c h .
A n n u a l S t a t i s t i c a l D i g e s t , 1 9 7 2 -7 6 . 1 977. 388 p p .
$ 1 0 .0 0 p e r c o p y .
A n n u a l S t a t is t ic a l D ig e s t , 1 9 7 3 -7 7 . 1978. 361 p p .
$ 1 2 .0 0 p e r c o p y .
F e d e r a l R e s e r v e C h a r t B o o k . Iss u e d fo u r tim e s a
y e a r in F e b r u a ry , M a y , A u g u s t, an d N o v e m b e r
S u b sc rip tio n in c lu d e s o n e issu e of H isto ric a l C h a rt
B o o k . $ 7 .0 0 p e r y e a r-o r $ 2 .0 0 e a c h in the U n ited
S ta te s, its p o s s e s s io n s , C a n a d a , a n d M e x ic o . E ls e ­
w h e re , $ 1 0 .0 0 p e r y e a r o r $ 3 .0 0 e a c h .
H is t o r ic a l C h a r t B o o k . Iss u e d a n n u a lly in S ep t.
S u b sc rip tio n to C h a rt B o o k in c lu d e s o n e issu e .
$ 1 .2 5 ea c h in th e U n ite d S ta te s, its p o s s e s s io n s ,
C a n a d a , an d M e x ic o ; 10 or m o re to o n e a d d re ss ,
$ 1 .0 0 e a c h . E ls e w h e re , $ 1 .5 0 e a c h .
C a p it a l M a r k e t D e v e l o p m e n t s . W e e k ly . $ 1 5 .0 0 p e r
y e a r o r $ .4 0 e a c h in th e U n ite d S ta te s , its p o s s e s ­
sio n s , C a n a d a , an d M e x ic o ; 10 or m o re o f sa m e
issu e to o n e a d d re s s , $ 1 3 .5 0 p e r y e a r o r $ .3 5 e a c h .
E ls e w h e re , $ 2 0 .0 0 p e r y e a r o r $ .5 0 e a c h .
S el e c t e d In te r e st a n d E x c h a n g e R ates— W eek ly
S e r ie s o f C h a r t s . W e e k ly . $ 1 5 .0 0 p e r y e a r or
$ .4 0 e a c h in th e U n ite d S ta te s , its p o s s e s s io n s ,
C a n a d a , an d M e x ic o ; 10 o r m o re of sa m e issu e
to o n e a d d re ss , $ 1 3 .5 0 p e r y e a r or $ .3 5 e a c h .
E ls e w h e re , $ 2 0 .0 0 p e r y e a r or $ .5 0 e a c h .
T h e F e d e r a l R e s e r v e A c t , as a m e n d e d th ro u g h D e ­
c e m b e r 1 9 7 6 , w ith an a p p e n d ix c o n ta in in g p ro v i­
sio n s o f c e rta in o th e r sta tu te s a ffe c tin g th e F e d eral
R e se rv e S y ste m . 3 0 7 p p . $ 2 .5 0 .
R e g u l a t io n s o f t h e B o a r d o f G o v e r n o r s o f t h e
F ed e r a l R eser v e S ystem
P u b l is h e d I n t e r p r e t a t io n s o f t h e B o a r d o f G o v ­
e r n o r s , as o f Ju n e 3 0 , 1978. $ 7 .5 0 .
I n d u s t r ia l P r o d u c t io n — 1976 E d i t i o n . 1 977. 30 4
p p . $ 4 .5 0 e a c h ; 10 o r m o re to o n e a d d re s s , $ 4 .0 0
ea c h .




ta n c e fr o m f o r e ig n r e s id e n ts s h o u ld b e d r a w n o n a U .S .
b a n k . ( S ta m p s a n d c o u p o n s a r e n o t a c c e p t e d .)

B a n k C r e d it -C a r d a n d C h e c k -C r e d it P l a n s . 1 968.
102 p p . $ 1 .0 0 e a c h ; 10 o r m o re to o n e a d d re s s ,
$ .8 5 e a c h .
S u r v e y o f C h a n g e s in F a m il y F in a n c e s . 1 968. 321
p p . $ 1 .0 0 e a c h ; 10 o r m o re to o n e a d d re s s , $ .8 5
ea c h .
R e p o r t o f t h e J o in t T r e a s u r y -F e d e r a l R e s e r v e
S t u d y o f t h e U .S . G o v e r n m e n t S e c u r it ie s
M a r k e t . 1 969. 4 8 p p . $ .2 5 e a c h ; 10 o r m o re to
o n e a d d re ss , $ .2 0 e a c h .
J o in t T r e a s u r y -F e d e r a l R e s e r v e S t u d y o f t h e
G o v e r n m e n t S e c u r it ie s M a r k e t : S t a f f S t u d ­
ie s — P a r t 1. 1 970. 8 6 p p . $ .5 0 e a c h ; 10 o r m o re
to o n e a d d re s s , $ .4 0 e a c h . P a r t 2 . 1 971. 153 p p .
an d P a r t 3 . 1 973. 131 p p . E a c h v o lu m e $ 1 .0 0 ;
10 o r m o re to o n e a d d re s s , $ .8 5 e a c h .
O p e n M a r k e t P o l ic ie s a n d O p e r a t in g P r o c e ­
d u r e s — S t a f f S t u d i e s . 1 971. 2 1 8 p p . $ 2 .0 0
e a c h ; 10 o r m o re to o n e a d d re s s , $ 1 .7 5 e a c h .
R e a p p ra is a l o f t h e F e d e r a l R e se rv e D is c o u n t
M e c h a n i s m . V o l. 1. 19 7 1 . 2 7 6 p p . V o l. 2 . 1971.
173 p p . V o l. 3 . 1 9 7 2 . 2 2 0 p p . E a c h v o lu m e $ 3 .0 0 ;
10 or m o re to o n e a d d re s s , $ 2 .5 0 e a c h .
T h e E c o n o m e t r ic s o f P r ic e D e t e r m in a t io n C o n ­
f e r e n c e , O c to b e r 3 0 -3 1 , 1 9 7 0 , W a s h in g to n , D .C .
1 972. 397 p p . C lo th e d . $ 5 .0 0 e a c h ; 10 or m o re
to o n e a d d re ss , $ 4 .5 0 e a c h . P a p e r e d . $ 4 .0 0 e a c h ;
10 o r m o re to o n e a d d re s s , $ 3 .6 0 e a c h .
F ed era l R eserv e S ta ff S t u d y : W ays to M o d er a te
F l u c t u a t io n s in
H o u s in g
C o n s t r u c t io n .
1972. 4 8 7 p p . $ 4 .0 0 e a c h ; 10 o r m o re to o n e
a d d re ss , $ 3 .6 0 e a c h .
L e n d in g F u n c t io n s o f t h e F e d e r a l R e s e r v e
B a n k s . 1973. 271 p p . $ 3 .5 0 e a c h ; 10 o r m o re
to o n e a d d re ss , $ 3 .0 0 e a c h .
I m p r o v in g t h e M o n e t a r y A g g r e g a t e s (R e p o rt of the
A d v iso ry C o m m itte e o n M o n e ta ry S ta tistic s ).
1976. 43 p p . $ 1 .0 0 e a c h ; 10 o r m o re to o n e
a d d re ss , $ .8 5 e a c h .
A n n u a l P e r c e n t a g e R a t e T a b l e s (T ru th in L e n d ­
ing— R e g u la tio n Z ) V o l. I (R e g u la r T ra n s a c tio n s).
1969. 100 p p . V o l. I I (Irre g u la r T ra n s a c tio n s).
1969. 116 p p . E a c h v o lu m e $ 1 .0 0 , 10 or m o re
of sa m e v o lu m e to o n e a d d re s s , $ .8 5 e a c h .
F e d e r a l R e s e r v e M e a s u r e s o f C a p a c it y a n d C a ­
p a c it y U t i l i z a t i o n . 1978. 4 0 p p . $ 1 .7 5 e a c h ,
10 or m o re to o n e a d d re s s , $ 1 .5 0 . e a c h .
T h e B a n k H o l d in g C o m p a n y M o v e m e n t t o 1978:
A C o m p e n d iu m . 1978. 2 8 9 p p . $ 2 .5 0 e a c h , 10
or m o re to o n e a d d re s s , $ 2 .2 5 e a c h .
I m p r o v in g t h e M o n e t a r y A g g r e g a t e s :
Staff
P a p e r s . 1978. 170 p p . $ 4 .0 0 e a c h , 10 or m o re
to o n e a d d re ss , $ 3 .7 5 e a c h .
1977 C o n s u m e r C r e d it S u r v e y . 1978. 119 p p . $ 2 .0 0
ea c h .

Federal Reserve Board Publications

A 75

C o n su m e r E d u c a t io n P a m ph l e t s

R e p r in t s

( S h o r t p a m p h l e ts s u ita b le f o r c la s s r o o m u s e . M u ltip le
c o p ie s a v a ila b le w ith o u t c h a r g e .)

(E x c e p t f o r S ta f f P a p e r s , S ta f f S tu d ie s , a n d s o m e
l e a d in g a r tic le s , m o s t o f th e a r tic le s r e p r in te d d o n o t
e x ce e d 12 p a g e s .)

C o n s u m e r H a n d b o o k T o C r e d it P r o t e c t io n L a w s
T h e E q u a l C r e d it O p p o r t u n it y A c t a n d . . . A g e
T h e E q u a l C r e d it O p p o r t u n it y A c t a n d . . .
C r e d it R ig h t s in H o u s in g
T h e E q u a l C r e d it O p p o r t u n it y A c t a n d . . .
D o c t o r s , L a w y e r s , S m a l l R e t a il e r s , a n d
O t h e r s W h o M a y P r o v id e I n c id e n t a l C r e d it
T h e E q u a l C r e d it O p p o r t u n it y A c t a n d . . .
W om en
F a ir C r e d it B il l in g
A G u id e t o F e d e r a l R e s e r v e R e g u l a t io n s
How t o F i l e A C o n s u m e r C r e d i t C o m p l a i n t
If You Borrow To B uy Stock
If You Use A Credit Card
T r u t h in L e a s in g
U .S . C u r r e n c y
W h a t T r u t h in L e n d in g M e a n s t o Y o u
S t a f f S t u d ie s
S tu d ie s a n d p a p e r s o n e c o n o m ic a n d f in a n c ia l s u b je c ts
th a t a r e o f g e n e r a l in te r e s t.

Summaries Only Printed in the Bulletin
( L im ite d s u p p ly o f m im e o g r a p h e d c o p ie s o f f u ll te x t
a v a ila b le u p o n r e q u e s t f o r s in g le c o p i e s . )

S t r u c t u r e a n d P e r f o r m a n c e S t u d ie s in B a n k in g :
A S u m m a r y a n d E v a l u a t i o n , b y S te p h e n A .
R h o a d e s. D e c . 1 9 77. 4 5 p p .
A n A n a l y s is o f F e d e r a l R e s e r v e A t t r it io n S in c e
1 9 6 0 , b y J o h n T . R o s e . Ja n . 1 978. 4 4 p p .
P r o b l e m s in A p p l y in g D is c r im in a n t A n a l y s is in
C r e d it S c o r in g M o d e l s , b y R o b e rt A . E is e n b e is .
Jan. 1978. 28 pp.
E x t e r n a l C a p it a l F i n a n c in g R e q u ir e m e n t s o f
C o m m e r c ia l B a n k s : 1 9 7 7 -8 1 , b y G e ra ld A . H an w e c k an d J o h n J . M in g o . F e b . 19 7 8 . 3 4 p p .
M o r t g a g e B o r r o w in g A g a in s t E q u it y in E x is t in g
H o m e s : M e a s u r e m e n t , G e n e r a t io n , a n d I m ­
p l ic a t io n s f o r E c o n o m ic A c t iv i t y , b y D a v id F .
S e id e rs. M a y 1 9 7 8 . 4 2 p p .
T h e B e h a v io r o f M e m b e r B a n k R e q u ir e d R e s e r v e
R a t io s a n d t h e E f f e c t s o f B o a r d A c t i o n ,
1 9 6 8 - 7 7 , b y T h o m a s D . S im p so n . Ju ly 1 978. 39
pp.
F o o t h o l d A c q u is it io n s a n d B a n k M a r k e t S t r u c ­
t u r e , b y S te p h e n A . R h o a d e s a n d P a u l S c h w e it­
z e r, Ju ly 1 9 7 8 . 8 p p .
I n t e r e s t R a t e C e il in g s a n d D i s in t e r m e d ia t io n , by
E d w a rd F . M c K e lv e y . S e p t. 1 9 78. 105 p p .
T h e R e l a t io n s h ip B e t w e e n R e s e r v e R a t io s a n d
t h e M o n e t a r y A g g re g a tes U n d er R eserves
a n d F e d e r a l F u n d s R a t e O p e r a t in g T a r g e t s ,
b y K e n n e th J . K o p e c k y . D e c . 1 978. 58 p p .
T i e - in s B e t w e e n t h e G r a n t in g o f C r e d it a n d
S a l e s o f I n s u r a n c e by B a n k H o l d in g C o m p a ­
n ie s a n d O t h e r L e n d e r s , b y R o b e rt A . E is e n b e is
an d P au l R . S c h w e itz e r. F e b . 1978. 75 p p .

Printed in Full in the Bulletin
S ta f f S tu d ie s s h o w n u n d e r “ R e p r i n t s . ”




M e a s u r e s o f S e c u r it y C r e d i t . 1 2 /7 0 .
R e v is io n o f B a n k C r e d it S e r i e s . 1 2 /7 1 .
A s s e t s a n d L ia b il it ie s o f F o r e ig n B r a n c h e s o f
U .S . B a n k s . 2 /7 2 .
B a n k D e b it s , D e p o s it s , a n d D e p o s it T u r n o v e r —
R e v is e d S e r i e s . 7 /7 2 .
Y ie l d s o n N e w l y I s s u e d C o r p o r a t e B o n d s . 9 /7 2 .
R e c e n t A c t iv it ie s o f F o r e ig n B r a n c h e s o f U .S .
B a n k s . 1 0 /7 2 .
R e v is io n o f C o n s u m e r C r e d it S t a t is t ic s . 1 0 /7 2 .
O n e -B a n k H o l d in g C o m p a n ie s B e f o r e t h e 197 0
A m e n d m e n t s . 1 2 /7 2 .
Y ie l d s o n R e c e n t l y O f f e r e d C o r p o r a t e B o n d s .
5 /7 3 .
R a t e s o n C o n s u m e r I n s t a l m e n t L o a n s . 9 /7 3 .
N e w S e r ie s f o r L a r g e M a n u f a c t u r in g C o r p o r a ­
t i o n s . 1 0 /7 3 .
U .S . E n e r g y S u p p li e s a n d U s e s , S ta f f E c o n o m ic
S tu d y b y C la y to n G e h m a n . 1 2 /7 3 .
T h e S t r u c t u r e o f M a r g in C r e d i t . 4 /7 5 .
N e w S t a t is t ic a l S e r ie s o n L o a n C o m m it m e n t s a t
S e l e c t e d L a r g e C o m m e r c ia l B a n k s . 4 /7 5 .
R e c e n t T r e n d s in F e d e r a l B u d g e t P o l i c y . 7 /7 5 .
R e c e n t D e v e l o p m e n t s in I n t e r n a t io n a l F in a n c ia l
M a r k e t s . 1 0 /7 5 .
M IN N IE : A S m a l l V e r s i o n o f t h e M IT -P E N N -S S R C
E c o n o m e t r i c M o d e l , S ta f f E c o n o m ic S tu d y b y
D o u g la s B a tte n b e rg , J a re d J . E n z le r, a n d A rth u r
M . H a v e n n e r. 1 1 /7 5 .
A n A s s e s s m e n t o f B a n k H o l d i n g C o m p a n ie s , S ta f f
E c o n o m ic S tu d y b y R o b e rt J . L a w re n c e a n d S a m ­
u el H . T a lle y . 1 /7 6 .
I n d u s t r ia l E l e c t r ic P o w e r U s e . ' 1 /7 6 .
R e v is io n o f M o n e y S t o c k M e a s u r e s . 2 /7 6 .
S u r v e y o f F in a n c e C o m p a n ie s , 1 9 7 5 . 3 /7 6 .
R e v is e d S e r ie s f o r M e m b e r B a n k D e p o s it s a n d
A g g r e g a t e R e s e r v e s . 4 /7 6 .
I n d u s t r ia l P r o d u c t io n — 1976 R e v is io n . 6 /7 6 .
F e d e r a l R e s e r v e O p e r a t io n s in P a y m e n t M e c h a ­
n is m s : A S u m m a r y . 6 /7 6 .
R e c e n t G r o w t h in A c t iv it ie s o f U .S . O f f ic e s o f
B a n k s . 1 0 /7 6 .
N e w E s t im a t e s o f C a p a c it y U t i l i z a t i o n : M a n u ­
f a c t u r in g a n d M a t e r i a l s . 1 1 /7 6 .
B a n k H o l d in g C o m p a n y F i n a n c ia l D e v e l o p m e n t s
in 1976. 4 /7 7 .
S u r v e y o f T e r m s o f B a n k L e n d in g — N e w S e r i e s .
5 /7 7 .
T h e C o m m e r c ia l P a p e r M a r k e t . 6 /7 7 .
C o n s u m p t io n a n d F ix e d I n v e s t m e n t i n t h e E c o ­
n o m ic R e c o v e r y A b r o a d . 1 0 /7 7 .
R e c e n t D e v e l o p m e n t s in U .S . I n t e r n a t io n a l
T r a n s a c t io n s . 4 /7 8 .
T h e F e d e r a l B u d g e t in t h e 1 9 7 0 ’s. 9 /7 8 .
S u m m a r y M e a s u r e s o f t h e D o l l a r ’s F o r e ig n E x ­
c h a n g e V a l u e . 1 0 /7 8 .
S u r v e y o f T im e a n d S a v in g s D e p o s it s a t A l l C o m ­
m e r c ia l B a n k s , J u l y 19 7 8 . 1 1 /7 8 .
R e d e f in in g t h e M o n e t a r y A g g r e g a t e s . 1 /7 9 .
T h e E c o n o m y in 1978. 1/7 9 .
C h e c k P r o c e s s in g a t F e d e r a l R e s e r v e O f f ic e s . 2 /7 9 .

A76

Index to Statistical Tables
References are to pages A -3 through A -6 9 although the prefix “A ” is om itted in this index
A C C E P T A N C E S , b a n k e rs , 11, 2 5 , 27
A g ric u ltu ra l lo a n s , c o m m e rc ia l b a n k s , 18, 2 0 - 2 2 , 2 6
A sse ts an d lia b ilitie s ( S e e a ls o F o re ig n e rs ):
B a n k s , b y c la s s e s , 16, 17, 18, 2 0 - 2 3 , 29
D o m e s tic fin an ce c o m p a n ie s , 39
F e d e ra l R e s e rv e B a n k s , 12
N o n fin a n c ia l c o rp o ra tio n s , c u rre n t, 38
A u to m o b ile s:
C o n s u m e r in sta lm e n t c re d it, 4 2 , 43
P ro d u c tio n , 4 8 , 4 9
B A N K E R S b a la n c e s , 16, 18, 2 0 , 2 1 , 22
( S e e a ls o F o re ig n e rs )
B a n k s fo r c o o p e ra tiv e s , 35
B o n d s ( S e e a ls o U .S . G o v e rn m e n t se c u ritie s ):
N ew is s u e s , 36
Y ie ld s , 3
B ran ch b a n k s :
A sse ts an d lia b ilitie s o f fo re ig n b ra n c h e s o f U .S .
b an k s, 56
L ia b ilitie s o f U .S . b a n k s to th e ir fo re ig n
b r a n c h e s , 23
B u s in e ss a c tiv ity , 4 6
B u s in e ss e x p e n d itu re s o n n ew p la n t an d
e q u ip m e n t, 38
B u s in e ss lo a n s ( S e e C o m m e rc ia l a n d in d u stria l
lo an s)
C A P A C IT Y u tiliz a tio n , 4 6
C a p ita l a c c o u n ts :
B a n k s , b y c la s s e s , 16, 17, 19, 2 0
F e d e ra l R e se rv e B a n k s , 12
C e n tra l b a n k s , 68
C e rtific ates o f d e p o s it, 2 3 , 27
C o m m e rc ia l a n d in d u stria l lo an s:
C o m m e rc ia l b a n k s , 15, 18, 2 3 , 2 6
W e e k ly re p o rtin g b a n k s , 2 0 , 2 1 , 2 2 , 2 3 , 24
C o m m e rc ia l b a n k s :
A s se ts a n d lia b ilitie s , 3 , 1 5 - 1 9 , 2 0 - 2 3
B u s in e ss lo a n s , 2 6
C o m m e rc ia l a n d in d u stria l lo a n s , 2 4 , 2 6
C o n s u m e r lo a n s h e ld , b y ty p e , 4 2 , 43
L o a n s so ld o u trig h t, 23
N u m b e r, b y c la s s e s , 16, 17, 19
R e a l e s ta te m o rtg a g e s h e ld , b y ty p e of h o ld e r an d
p ro p e rty , 41
C o m m e rc ia l p a p e r, 3 , 2 4 , 2 5 , 2 7 , 39
C o n d itio n sta te m e n ts ( S e e A s se ts an d lia b ilitie s)
C o n s tru c tio n , 4 6 , 50
C o n s u m e r in sta lm e n t c r e d it, 4 2 , 43
C o n s u m e r p ric e s , 4 6 , 51
C o n s u m p tio n e x p e n d itu re s , 5 2 , 53
C o rp o ra tio n s:
P ro fits, ta x e s , an d d iv id e n d s , 37
S a le s , re v e n u e , p ro fits, a n d d iv id e n d s o f larg e
m a n u fa c tu rin g c o rp o ra tio n s , 69
S e c u rity is s u e s, 3 6 , 65
C o s t o f liv in g ( S e e C o n s u m e r p ric e s)
C re d it u n io n s , 2 9 , 4 2 , 43
C u rre n c y an d c o in , 5 , 16, 18
C u rre n c y in c irc u la tio n , 4 , 14
C u s to m e r c re d it, sto c k m a rk e t, 28
D E B IT S to d e p o s it a c c o u n ts , 13
D e b t ( S e e s p e c if i c ty p e s o f d e b t o r s e c u r itie s )




D e m a n d d e p o s its :
A d ju s te d , c o m m e rc ia l b a n k s , 13, 15, 19
B a n k s , b y c la s s e s , 16, 17, 19, 2 0 - 2 3
O w n e rs h ip b y in d iv id u a ls , p a rtn e rs h ip s , an d
c o rp o ra tio n s , 25
S u b je c t to re se rv e re q u ire m e n ts , 15
T u rn o v e r, 13
D e p o s its ( S e e a ls o s p e c if i c ty p e s o f d e p o s it s ):
B a n k s , b y c la s s e s , 3 , 16, 17, 19, 2 0 - 2 3 , 29
F e d e ra l R e se rv e B a n k s , 4 , 12
S u b je c t to re se rv e re q u ire m e n ts , 15
T u rn o v e r, 13
D isc o u n t rates at R e se rv e B a n k s ( S e e In te re s t ra te s)
D isc o u n ts an d a d v a n c e s b y R e s e rv e B a n k s ( S e e L o a n s)
D iv id e n d s , c o rp o ra te , 3 7 , 69
E M P L O Y M E N T , 4 6 , 47
E u ro -d o lla rs , 27
F A R M m o rtg a g e lo a n s , 41
F a rm e rs H o m e A d m in is tra tio n , 41
F e d e ra l a g e n c y o b lig a tio n s , 4 , 11, 12, 13, 34
F e d e ra l an d F e d e ra lly s p o n s o re d c re d it a g e n c ie s , 35
F e d e ra l finance:
D e b t su b je c t to s ta tu to ry lim ita tio n an d
ty p e s an d o w n e rsh ip o f g ro ss d e b t, 32
R e c e ip ts an d o u tla y s , 3 0 , 31
T re a s u ry o p e ra tin g b a la n c e , 3 0
F e d e ra l F in a n c in g B a n k , 3 0 , 35
F e d e ra l f u n d s , 3 , 6 , 18, 2 0 , 2 1 , 2 2 , 2 7 , 30
F e d e ra l h o m e lo a n b a n k s , 35
F e d e ra l H o m e L o a n M o rtg a g e C o r p ., 3 5 , 4 0 , 41
F e d e ra l H o u s in g A d m in is tra tio n , 3 5 , 4 0 , 41
F e d e ra l in te rm e d ia te c re d it b a n k s , 35
F e d e ra l la n d b a n k s , 3 5 , 41
F e d e ra l N a tio n a l M o rtg a g e A s s n ., 3 5 , 4 0 , 41
F e d e ra l R e se rv e B a n k s:
C o n d itio n s ta te m e n t, 12
D isc o u n t rates ( S e e In te re s t ra te s)
U .S . G o v e rn m e n t s e c u ritie s h e ld , 4 , 12, 13, 3 2 , 33
F e d e ra l R e se rv e c re d it, 4 , 5 , 12, 13
F e d e ra l R e se rv e n o te s , 12
F e d e ra lly sp o n s o re d c re d it a g e n c ie s , 35
F in a n c e c o m p a n ie s :
A s se ts a n d lia b ilitie s , 39
B u s in e ss c re d it, 39
L o a n s , 2 0 , 2 1 , 2 2 , 4 2 , 43
P a p e r, 2 5 , 27
F in a n c ia l in s titu tio n s, lo a n s to , 18, 2 0 - 2 2
F lo a t, 4
F lo w o f fu n d s, 4 4 , 45
F o re ig n :
C u rre n c y o p e ra tio n s , 12
D e p o s its in U .S . b a n k s , 4 , 12, 19, 2 0 , 2 1 , 22
E x c h a n g e ra te s , 68
T ra d e , 55
F o re ig n e rs :
C la im s o n , 6 0 , 6 1 , 6 6 , 67
L ia b ilitie s to , 2 3 , 5 6 - 5 9 , 6 4 - 6 7
GOLD:
C e rtific a te s, 12
S to c k , 4 , 55
G o v e rn m e n t N a tio n a l M o rtg a g e A s s n ., 3 5 , 4 0 , 41
G ro ss n a tio n a l p ro d u c t, 5 2 , 53

Federal Reserve Bulletin □ March 1979

H O U S IN G , n ew an d e x is tin g u n its , 50
IN C O M E , p e rso n a l an d n a tio n a l, 4 6 , 5 2 , 53
In d u stria l p ro d u c tio n , 4 6 , 48
In sta lm e n t lo a n s , 4 2 , 43
In su ra n c e c o m p a n ie s , 2 9 , 3 2 , 3 3 , 41
In su re d c o m m e rc ia l b a n k s , 17, 18, 19
In te rb a n k d e p o s its , 16, 17, 2 0 , 2 1 , 22
In te re s t rates:
B onds, 3
B u s in e ss lo a n s o f b a n k s , 26
F e d e ra l R e se rv e B a n k s , 3 , 8
F o re ig n c o u n trie s , 68
M o n e y an d c a p ita l m a rk e ts , 3 , 27
M o rtg a g e s , 3 , 4 0
P rim e ra te , c o m m e rc ia l b a n k s , 26
T im e an d sa v in g s d e p o s its , m a x im u m ra te s , 10
In te rn a tio n a l c a p ita l tra n sa c tio n s o f th e U n ite d
S ta te s, 5 6 - 6 7
In te rn a tio n a l o rg a n iz a tio n s , 5 6 - 6 1 , 6 4 - 6 7
In v e n to rie s , 5 2
In v e stm e n t c o m p a n ie s , issu e s a n d a s s e ts , 37
I n v e stm e n ts ( S e e a ls o s p e c if i c ty p e s o f in v e s tm e n ts ):
B a n k s, b y c la s s e s , 16, 17, 18, 2 0 , 2 1 , 2 2 , 29
C o m m e rc ia l b a n k s , 3 , 15, 16, 17, 18
F e d e ra l R e se rv e B a n k s , 12, 13
L ife in s u ra n c e c o m p a n ie s , 29
S a v in g s an d lo a n a s s n s ., 29
L A B O R fo rc e , 4 7
L ife in su ra n c e c o m p a n ie s ( S e e In su ra n c e
c o m p a n ie s )
L o a n s ( S e e a ls o s p e c if i c ty p e s o f lo a n s ):
B a n k s , b y c la s s e s , 16, 17, 18, 2 0 - 2 3 , 29
C o m m e rc ia l b a n k s , 3 , 1 5 - 1 8 , 2 0 - 2 3 , 2 4 , 2 6
F e d e ra l R e se rv e B a n k s , 3 , 4 , 5 , 8 , 12, 13
I n s u ra n c e c o m p a n ie s , 2 9 , 41
In su re d o r g u a ra n te e d b y U n ite d S ta te s , 4 0 , 41
S a v in g s a n d lo a n a s s o c ia tio n s , 29
M A N U F A C T U R IN G :
C a p a c ity u tiliz a tio n , 4 6
P ro d u c tio n , 4 6 , 4 9
M a rg in r e q u ire m e n ts , 28
M em ber banks:
A s se ts an d lia b ilitie s , b y c la s s e s , 16, 17, 18
B o rro w in g s at F e d e ra l R e se rv e B a n k s , 5 , 12
N u m b e r, b y c la s s e s , 16, 17, 19
R e se rv e p o s itio n , b a s ic , 6
R e se rv e re q u ire m e n ts , 9
R e se rv e s an d re la te d ite m s, 3 , 4 , 5 , 15
M in in g p ro d u c tio n , 4 9
M o b ile h o m e sh ip m e n ts , 50
M o n e ta ry a g g re g a te s , 3 , 15
M o n e y an d c a p ita l m a rk e t ra te s ( S e e In te re s t
ra te s)
M o n e y sto c k m e a s u re s an d c o m p o n e n ts , 3 , 14
M o rtg a g e s ( S e e R e al e s ta te lo a n s)
M u tu a l fu n d s ( S e e In v e stm e n t c o m p a n ie s )
M u tu a l sa v in g s b a n k s , 3 , 10, 20—2 2 , 2 9 , 3 2 , 3 3 , 41
N A T IO N A L b a n k s , 17, 19
N a tio n a l d e fe n se o u tla y s , 31
N a tio n a l in c o m e , 52
N o n m e m b e r b a n k s , 17, 18, 19
O P E N m a rk e t tr a n s a c tio n s , 11
P E R S O N A L in c o m e , 53
P ric es:
C o n s u m e r an d w h o le s a le , 4 6 , 51
S to c k m a rk e t, 28
P rim e ra te , c o m m e rc ia l b a n k s , 26
P ro d u c tio n , 4 6 , 4 8
P ro fits, c o rp o ra te , 3 7 , 69




A ll

R E A L e sta te lo an s:
B a n k s , b y c la s s e s , 18, 2 0 - 2 3 , 2 9 , 41
L ife in su ra n c e c o m p a n ie s , 29
M o rtg a g e te rm s , y ie ld s , a n d a c tiv ity , 3 , 4 0
T y p e of h o ld e r an d p ro p e rty m o rtg a g e d , 41
R e se rv e p o s itio n , b a s ic , m e m b e r b a n k s , 6
R e se rv e re q u ire m e n ts , m e m b e r b a n k s , 9
R e se rv e s:
C o m m e rc ia l b a n k s , 16, 18, 2 0 , 2 1 , 22
F e d e ra l R e se rv e B a n k s , 12
M e m b e r b a n k s , 3 , 4 , 5 , 15, 16, 18
U .S . re se rv e a s s e ts , 55
R e sid e n tia l m o rtg a g e lo a n s , 4 0
R e ta il c re d it an d re ta il sa le s , 4 2 , 4 3 , 4 6
S A L E S , re v e n u e , p ro fits, a n d d iv id e n d s
o f la rg e m a n u fa c tu rin g c o rp o ra tio n s , 69
S a v in g :
F lo w o f f u n d s , 4 4 , 45
N a tio n a l in c o m e a c c o u n ts , 53
S a v in g s an d lo a n a s s n s ., 3 , 10, 2 9 , 3 3 , 4 1 , 4 4
S a v in g s d e p o s its (S e e T im e d e p o s its )
S a v in g s in s titu tio n s, se le c te d a s s e ts , 29
S e c u ritie s ( S e e a ls o U .S . G o v e rn m e n t se c u ritie s ):
F e d e ra l an d F e d e ra lly s p o n s o re d a g e n c ie s , 35
F o re ig n tra n s a c tio n s , 65
N e w is s u e s, 36
P ric e s , 28
S p e c ia l D ra w in g R ig h ts , 4 , 12, 5 4 , 55
S ta te a n d lo cal g o v ts .:
D e p o s its , 19, 2 0 , 2 1 , 22
H o ld in g s o f U .S . G o v e rn m e n t se c u ritie s , 3 2 , 33
N e w se c u rity iss u e s, 36
O w n e rsh ip of s e c u ritie s o f, 18, 2 0 , 2 1 , 2 2 , 29
Y ie ld s o f s e c u ritie s , 3
S ta te m e m b e r b a n k s , 17
S to c k m a rk e t, 28
S to c k s ( S e e a ls o S e c u ritie s):
N e w iss u e s, 36
P ric e s , 28
T A X re c e ip ts , F e d e ra l, 31
T im e d e p o s its , 3 , 10, 13, 15, 16, 17, 19, 2 0 , 2 1 ,
2 2 , 23
T ra d e , fo re ig n , 55
T re a s u ry c u rre n c y , T re a s u ry c a s h , 4
T re a s u ry d e p o s its , 4 , 12, 30
T re a s u ry o p e ra tin g b a la n c e , 30
U N E M P L O Y M E N T , 47
U .S . b a la n c e of p a y m e n ts , 54
U .S . G o v e rn m e n t b a la n c e s :
C o m m e rc ia l b a n k h o ld in g s , 19, 2 0 , 2 1 , 22
M e m b e r b a n k h o ld in g s , 15
T re a s u ry d e p o s its at R e se rv e B a n k s , 4 , 12, 30
U .S . G o v e rn m e n t se c u ritie s :
B a n k h o ld in g s , 16, 17, 18, 2 0 , 2 1 , 2 2 , 2 9 ,
3 2 , 33
D e a le r tra n s a c tio n s , p o s itio n s , an d fin a n c in g , 34
F e d e ra l R e se rv e B a n k h o ld in g s , 4 , 12, 13, 3 2 , 33
F o re ig n an d in te rn a tio n a l h o ld in g s an d
tra n s a c tio n s , 12, 3 2 , 6 4
O p e n m a rk e t tr a n s a c tio n s , 11
O u ts ta n d in g , b y ty p e o f se c u rity , 3 2 , 33
O w n e rs h ip , 3 2 , 33
R a te s in m o n e y a n d c a p ita l m a rk e ts , 3 , 27
Y ie ld s , 3
U tilitie s , p ro d u c tio n , 4 9
V E T E R A N S A d m in is tra tio n , 4 0 , 41
W E E K L Y re p o rtin g b a n k s , 2 0 - 2 4
W h o le s a le p ric e s, 4 6
Y IE L D S ( S e e In te re s t ra te s)

A 78

The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories

Minneapolis
Detroit
C h ica g i
Omaha*

\ s altLake City

'“h Fra,

Denver

\i) . Louisville

Kansas City

't. Louts

UfculpePZ

jfj chjn?i
'karlotte.

IOklahoma C/fj
' n8eles

\San Antonio

A LASKA

LEGEND
—

Boundaries of Federal Reserve Districts

------ Boundaries of Federal Reserve Branch
Territories
©

Board of Governors of the Federal
Reserve System




®

Federal Reserve Bank Cities

•

Federal Reserve Branch Cities
Federal Reserve Bank Facility

Guide to
Tabular Presentation and Statistical Releases
G

u id e

to

Tabu

lar

P r e s e n t a t io n

Sym b o ls a n d A b b revia tio n s
c
e
p
r

*

C o rre c te d
E stim a te d
P re lim in a ry
R e v is e d (N o ta tio n a p p e a rs o n c o lu m n h e a d ­
in g w h e n m o re th an h a lf o f fig u res in th at
c o lu m n are c h a n g e d .)
A m o u n ts in sig n ific a n t in te rm s o f th e last
d e c im a l p la c e sh o w n in the ta b le (fo r
e x a m p le , less th a n 5 0 0 ,0 0 0 w h e n the
s m a lle s t u n it g iv e n is m illio n s )

0
n .a .
n .e .c .
IP C s
R E IT s
RPs
SM SAs

C a lc u la te d to b e ze ro
N o t a v a ila b le
N o t e ls e w h e re classified
In d iv id u a ls , p a r tn e rs h ip s , an d c o rp o ra tio n s
R e al e s ta te in v e s tm e n t tru sts
R e p u rc h a s e a g re e m e n ts
S ta n d a rd m e tro p o lita n sta tis tic a l a re a s
C e ll n o t a p p lic a b le

G en eral Inform ation
M in u s sig n s are u sed to in d ic a te (1) a d e c re a s e , (2)
a n e g a tiv e fig u re, o r (3) an o u tflo w .
“ U .S . g o v e rn m e n t s e c u ritie s ” m ay in c lu d e g u a r a n ­
teed issu e s o f U .S . g o v e rn m e n t a g e n c ie s (th e flow of
fu n d s fig u res a lso in c lu d e n o t fu lly g u a ra n te e d issu e s)

S

t a t is t ic a l

R

as w ell as d ire c t o b lig a tio n s o f th e T re a s u ry . “ S tate
an d lo cal g o v e r n m e n t” a lso in c lu d e s m u n ic ip a litie s ,
sp e c ia l d is tric ts , an d o th e r p o litic a l su b d iv is io n s.
In so m e o f th e ta b le s d e ta ils d o n o t a d d to to tals
b e c a u s e o f ro u n d in g .

eleases

L ist P ublish ed S em ian n ually, with L a te st B u lletin R eferen ce
Issue

A n tic ip a te d sc h e d u le o f re le a se d a te s fo r in d iv id u a l r e l e a s e s ....................




D e c e m b e r 1978

P age

A -76