Full text of Federal Reserve Bulletin : March 1990
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VOLUME 76 •
NUMBER 3 •
MARCH 1990
FEDERAL RESERVE
'V BULLETIN
E
I "
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood
• Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman
The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions
expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the
Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
107 MONETARY
CONGRESS
POLICY REPORT TO THE
Although growth was slower than in the
preceding two years, the U.S. economy
recorded its seventh consecutive year of
expansion in 1989, including the creation of
2Vi million jobs. Also, the trade and current
account deficits shrank further, and the rate
of inflation was lower than many analysts
had predicted.
120 STAFF STUDIES
In " N e w Data on the Performance of Nonbank Subsidiaries of Bank Holding Companies," the authors use 1986 and 1987 data
from a new reporting system to examine the
extent of the involvement of bank holding
companies in nonbank activities and the
profitability and riskiness of the nonbank
subsidiaries.
122 INDUSTRIAL
PRODUCTION
Industrial production rose 0.4 percent in
December after an increase of 0.3 percent
(revised) in November.
Joint Economic Committee of the Congress, January 30, 1990.
The following statements by four Federal
Reserve Bank Presidents support House
Joint Resolution 409, which directs the Federal Reserve to achieve price stability
within five years. These statements were
presented before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban
Affairs on February 6, 1990.
132 E. Gerald Corrigan, President, Federal Reserve Bank of New York, says that the U.S.
economy would perform better, U.S. citizens would be better off, and the international competitiveness of the United States
would improve in a setting in which the
goals of this resolution were achieved.
135 W. Lee Hoskins, President, Federal Reserve Bank of Cleveland, says that this
resolution wisely directs the Federal Reserve to place price stability above other
economic goals because price stability is
the most important contribution the Federal
Reserve can make to achieve full employment and maximum sustainable growth.
Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, analyzes the long-run implications of foreign
investment in the United States, before the
House Committee on Ways and Means,
January 25, 1990.
142 Robert P. Black, President, Federal Reserve Bank of Richmond, says that passage
of the resolution by the Congress would
significantly improve the overall framework
in which monetary policy is conducted and
increase the chances of achieving price stability and steady economic growth in the
years ahead.
128 Chairman Greenspan discusses the current
state of the economy and says that the
imbalances and dislocations that are evident probably do not suggest anything more
than a temporary hesitation in the continuing expansion of the economy, before the
146 Robert T. Parry, President, Federal Reserve Bank of San Francisco, says that
Federal Reserve officials have made it clear
that achieving price stability is the longterm goal of the System and that H.J. Res.
409 would assist the Federal Reserve in
124 STATEMENTS
TO CONGRESS
pursuing a credible and consistent anti-inflation policy by providing a statement from
the Congress that the Federal Reserve
should focus primarily on achieving that
one attainable goal within a specified period
of time.
151
AI FINANCIAL AND BUSINESS
STATISTICS
These tables reflect data available as of
January 29, 1990.
A3 Domestic Financial Statistics
A46 Domestic Nonfinancial Statistics
A55 International Statistics
ANNOUNCEMENTS
New members named to Consumer Advisory Council.
New members named to Thrift Institutions
Advisory Council.
Preliminary figures available on income and
expenses of the Federal Reserve Banks.
Revised list of OTC stocks subject to margin regulations now available.
Change in Board staff.
155 LEGAL
DEVELOPMENTS
Various bank holding company, bank service corporation, and bank merger orders;
and pending cases.
A71 GUIDE TO TABULAR
PRESENTATION,
STATISTICAL RELEASES, AND SPECIAL
TABLES
A90 BOARD OF GOVERNORS AND STAFF
A92 FEDERAL OPEN MARKET COMMITTEE
AND STAFF; ADVISORY COUNCILS
A94 FEDERAL RESERVE
PUBLICATIONS
BOARD
A96 INDEX TO STATISTICAL
TABLES
A98 FEDERAL RESERVE
BANKS,
BRANCHES, AND OFFICES
A99 MAP OF FEDERAL RESERVE
SYSTEM
Monetary Policy Report to the Congress
Report submitted to the Congress on February 20,
1990, pursuant to the Full Employment and Balanced
Growth Act of1978.1
MONETARY POUCY AND THE ECONOMIC
OUTLOOK FOR 1990
The U.S. economy recorded its seventh consecutive
year of expansion in 1989. Although growth was
slower than in the preceding two years, it was
sufficient to support the creation of 2xh million jobs
and to hold the unemployment rate steady at 5lA
percent, the lowest reading since the early 1970s.
On the external front, the trade and current account
deficits shrank further in 1989. And while inflation
remained undesirably high, the pace was lower than
many analysts—and, indeed, most members of the
Federal Open Market Committee (FOMC)—had
predicted, in part because of the continuing diminution in longer-range inflation expectations.
In 1989, monetary policy was tailored to the
changing contours of the economic expansion and to
the potential for inflation. Early in the year, as for
most of 1988, the Federal Reserve tightened money
market conditions to prevent pressures on wages and
prices from building. Market rates of interest rose
relative to those on deposit accounts, and unexpectedly large tax payments in April and May drained
liquid balances, restraining the growth of the
monetary aggregates in the first half of the year. By
May, M2 and M3 lay below the lower bounds of the
annual target ranges established by the FOMC.
Around midyear, risks of an acceleration in
inflation were perceived to have diminished as
pressures on industrial capacity had moderated,
commodity prices had leveled out, and the dollar
1. The charts for the report are available on request from
Publications Services, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551.
had strengthened on exchange markets, reinforcing
the signals conveyed bythe weakness in the monetary
aggregates. In June, the FOMC began a series of
steps, undertaken with care to avoid excessive
inflationary stimulus, that trimmed IVi percentage
points from short-term interest rates by year-end.
Longer-term interest rates moved down by a like
amount, influenced by both the System's easing and
a reduction in inflation expectations.
Growth of M2 rebounded to end the year at about
the midpoint of the 1989 target range. Growth of
M3, however, remained around the lower end of its
range, as a contraction of the thrift industry,
encouraged by the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA),
reduced needs to tap M3 sources of funds. The
primary effect of the shrinkage of the thrift industry's
assets was a rechanneling of funds in mortgage
markets, rather than a reduction in overall credit
availability; growth of the aggregate for nonfinancial
sector debt that is monitored by the FOMC was just
a bit slower in the second half than in the first, and
this measure ended the year only a little below the
midpoint of its range.
Thus far this year, the overnight rate on federal
funds has held at 8 lA percent, but other market rates
have risen. Increases of as much as Vi percentage
point have been recorded at the longer end of the
maturity spectrum. The bond markets responded to
indicators suggesting a somewhat greater-thananticipated buoyancy in economic activity—which
may have both raised expected real returns on
investment and renewed some apprehensions about
the outlook for inflation. The rise in yields occurred
in the context of a general runup in international
capital market yields, which appears to have been in
part a response to emerging opportunities associated
with the opening of Eastern Europe; this development had particularly notable effects on the exchange
value of the West German mark, which rose
considerably relative to the dollar, the yen, and other
non-European Monetary System currencies.
108
Federal Reserve Bulletin • March 1990
Monetary Policy for 1990
The Federal Open Market Committee is committed
to the achievement, over time, of price stability. The
importance of this objective derives from the fact
that the prospects for long-run growth in the economy are brightest when inflation need no longer be a
material consideration in the decisions of households
and firms. The members recognize that certain
short-term factors—notably a sharp increase in food
and energy prices—are likely to boost inflation early
this year, but they anticipate that these factors will
not persist. Under these circumstances, policy can
support further economic expansion without abandoning the goal of price stability.
To foster the achievement of those objectives, the
Committee has selected a target range of 3 to 7
percent for M2 growth in 1990. Growth in M2 may
be more rapid in 1990 than in recent years and yet be
consistent with some moderation in the rate of
increase in nominal income and restraint on prices;
in particular, M2 may grow more rapidly than
nominal GNP in the first part of this year in lagged
response to last year's interest rate movements.
Eventually, however, slower M2 growth will be
required to achieve and maintain price stability
(table 1).
The Committee reduced the M3 range to 2Vi to
6Vi percent to take account of the effects of the
restructuring of the thrift industry, which is expected
to continue in 1990. A smaller proportion of mortgages is likely to be held at depository institutions
and financed by elements in M3; thrift institution
assets should continue to decline, as some solvent
thrift institutions will be under pressure to meet
capital standards and insolvent thrift institutions will
continue to be shrunk and closed, with a portion of
their assets carried, temporarily, by the government.
While some of the assets shed by thrift institutions
are expected to be acquired by commercial banks,
overall growth in the asset portfolios of banks is
1.
Ranges of growth
for monetary and credit aggregates
Percent change, fourth quarter to fourth quarter
Aggregate
M2
M3
Debt
1988
1989
1990
4 to 8
4 to 8
7 to 11
3 to 7
3% to Vh
6Vi to 10%
3 to 7
2% to 6%
5 to 9
expected to be moderate, as these institutions
exercise caution in extending credit. An increase in
lender—and borrower—caution more generally
points to some slowing in the pace at which
nonfinancial sectors take on debt relative to their
income in 1990. In particular, recent developments
suggest that leveraged buyouts and other transactions that substitute debt for equity in corporate
capital structures will be noticeably less important in
1990 than in recent years. Moreover, a further
decline in the federal sector's deficit is expected to
reduce credit growth this year. In light of these
considerations, the Committee reduced the monitoring range for debt of the nonfinancial sectors to 5 to 9
percent.
The setting of targets for money growth in 1990 is
made more difficult by uncertainty about developments affecting thrift institutions. The behavior of
M3 and, to a more limited extent, M2 is likely to be
affected by such developments, but there is only
limited basis in experience to gauge the likely effect.
In addition, in interpreting the growth of nonfinancial debt, the Committee will have to take into
account the amount of Treasury borrowing (recorded as part of the debt aggregate) used to carry
the assets of failed thrift institutions, pending their
disposal. With these questions adding to the usual
uncertainties about the relationship among movements in the aggregates and output and prices, the
Committee agreed that, in implementing policy,
they would need to continue to consider, in addition
to the behavior of money, indicators of inflationary
pressures and economic growth as well as developments in financial and foreign exchange markets.
Economic Projections for
1990
The Committee members, and other Reserve Bank
presidents, expect that growth in the real economy
will be moderate during 1990. Most project real
GNP growth over the four quarters of the year to be
between 1% and 2 percent—essentially the same
increase as in 1989, excluding the bounceback in
farm output after the 1988 drought. It is expected
that this pace of expansion will be reflected in some
easing of pressures on domestic resources; the
central tendency of forecasts is for an unemployment rate of 5 Vi to 5 % percent in the fourth quarter
(table 2).
Monetary Policy Report to the Congress
2.
109
Economic projections for 1990
Item
FOMC members and
other FRB Presidents
1989 Actual
Range
Administration
Central tendency
Percent change,
fourth quarter to fourth quarter
Nominal GNP
Real GNP
Consumer price index
6.4
2.4
4.5
4 to 7
lto2U
3% to5
5Vito6'/*
134 to 2
4 to4'/2
7.0
2.6
4.1 1
Average level in the
fourth quarter, percent
Unemployment rate
5.3
5V4 to6'/j
5% to 5%
5.4 2
1. CPI for Urban Wage Earners and Clerical Workers. FOMC forecasts are
for CPI for All Urban Consumers.
2. Percent of total labor force, including armed forces residing in the United
States.
Certain factors have caused an uptick in inflation
early this year. Most notably, prices for food and
energy increased sharply as the year began, reflecting the effect of the unusually cold weather in
December. However, these run-ups should be
largely reversed in coming months, and inflation in
food and energy prices for the year as a whole may
not differ much from increases in other prices.
Given the importance of labor inputs in determining the trend of overall costs, a deceleration in the
cost of labor inputs is an integral part of any solid
progress toward price stability. Nominal wages and
total compensation have grown relatively rapidly
during the past two years, while increases in labor
productivity have diminished. With prices being
constrained by domestic and international competition, especially in goods markets, profit margins
have been squeezed to low levels. A restoration of
more normal margins ultimately will be necessary if
businesses are to have the wherewithal and the
incentive to maintain and improve the stock of plant
and equipment.
Unfortunately, the near-term prospects for a
moderation in labor cost pressures are not favorable.
Compensation growth is being boosted in the first
half of 1990 by an increase in social security taxes
and a hike in the minimum wage. The anticipated
easing of pressures in the labor market should help
produce some moderation in the pace of wage
increases in the second half of 1990, but the
Committee will continue to monitor closely the
growth of labor costs for signs of progress in this
area.
Finally, the recent depreciation of the dollar likely
will constitute another impetus to near-term price
increases, reversing the restraining influence exerted
by a strong dollar through most of last year. Prices of
imported goods, excluding oil, increased in the
fourth quarter after declining through the first three
quarters of 1989. The full effect of this upturn likely
will not be felt on the domestic price level until some
additional time has passed.
Despite these adverse elements in the near-term
picture, the Committee believes that progress toward
price stability can be achieved over time, given the
apparently moderate pace of activity. In terms of the
consumer price index, most members expect an
increase of between 4 and 4Vi percent, compared
with the 4.5 percent advance recorded in 1989.
Relative to the Committee, the Administration
currently is forecasting more rapid growth in real
and nominal GNP. At the same time, the Administration's projection for consumer price inflation is at the
low end of the Committee's central-tendency range.
In its Annual Report, the Council of Economic
Advisers argues that, if nominal GNP were to grow
at a 7 percent annual rate this year—as the Council is
projecting—then M2 could exceed its target range,
particularly if interest rates fall as projected in the
Administration forecast. As suggested above, monetary relationships cannot be predicted with absolute
precision, but the Council's assessment is reasonable. And, although most Committee members
believe that growth in nominal GNP more likely will
be between 5l/z and 6V2 percent, a more rapid
expansion in nominal income would be welcome if it
promised to be accompanied by a declining path for
inflation in 1990 and beyond.
THE PERFORMANCE OF THE ECONOMY IN 1989
Real GNP grew 2 V2 percent over the four quarters of
1989, 2 percent after adjustment for the recovery in
110
Federal Reserve Bulletin • March 1990
farm output from the drought losses of the prior
year. This rate of growth of GNP constituted a significant downshifting in the pace of expansion from
the unsustainably rapid rates of 1987 and 1988,
which had carried activity to the point that inflationary strains were beginning to become visible in the
economy. As the year progressed, clear signs
emerged that pressures on resource utilization were
easing, particularly in the industrial sector. Nonetheless, the overall unemployment rate remained at 5.3
percent, the lowest reading since 1973, and inflation
remained at 4l/z percent despite the restraining influence of a dollar that was strong for most of the
year.
The deceleration in business activity last year
reflected, to some degree, the monetary tightening
from early 1988 through early 1989 that was
undertaken with a view toward damping the inflation
forces. Partly as a consequence of that tightening,
the U.S. dollar appreciated in the foreign exchange
markets from early 1988 through mid-1989, contributing to a slackening of foreign demand for U.S.
products. At the same time, domestic demand also
slowed, more for goods than for services. Reflecting
these developments, the slowdown in activity was
concentrated in the manufacturing sector: Factory
employment, which increased a total of90,000 over
the first three months of 1989, declined 195,000
over the remainder of the year, and growth in
manufacturing production slowed from 5 Vi percent
in 1988 to only 1 % percent last year. Employment in
manufacturing fell further in January of this year,
but that decline was largely attributable to temporary
layoff's in the automobile industry, and most of the
affected workers have since been recalled.
As noted above, the rate of inflation was about the
same in 1989 as it had been in the preceding two
years. While the appreciation of the U.S. dollar
through the first half of the year helped to hold down
the prices of imported goods, the high level of
resource utilization continued to exert pressure on
wages and prices. In that regard, the moderation in
the expansion of real activity during 1989 was a
necessary development in establishing an economic
environment that is more conducive to progress over
time toward price stability.
vehicles and housing. Real consumer spending on
goods and services increased 2 lA percent over the
four quarters of 1989, IV2 percentage points less
than in 1988. Growth in real disposable income
slowed last year, but continued to outstrip growth in
spending, and, as a result, the personal saving rate
increased to 5% percent in the fourth quarter of
1989.
The slackening in consumer demand was concentrated in spending on goods. Real spending on
durable goods was about unchanged from the fourth
quarter of 1988 to the fourth quarter of 1989-after
jumping 8 percent in the prior year—chiefly reflecting a slump in purchases of motor vehicles. Spending
on nondurable goods also decelerated, increasing
only V2 percent in 1989 after an advance of 2 percent
in 1988. The principal support to consumer spending
came from continued large gains in outlays for
services. Spending on medical care moved up IV2
percent in real terms last year, and now constitutes
11 percent of total consumption expenditures—up
from 8 percent in 1970. Outlays for other services
rose 3 V percent, with sizable increases in a number
*
of categories.
Sales of cars and light trucks fell % million units
in 1989, to l4Vi million. Most of the decline
reflected reduced sales of cars produced by U.S.owned automakers; a decline in sales of imported
automobiles was about offset by an increase in sales
of foreign nameplates produced in U.S. plants. The
slowing in sales of motor vehicles was most
pronounced during the fourth quarter of 1989,
reflecting a "payback" for sales that had been
advanced into the third quarter and a relatively large
increase in sticker prices on 1990-model cars.
Although part of this increase reflected the inclusion
of additional equipment—notably the addition of
passive restraint systems to many models—consumers nevertheless reacted adversely to the overall
increase in prices. Beyond these influences, longerrun factors appear to have been damping demand for
autos and light trucks during 1989; in particular, the
robust pace of sales earlier in the expansion seems to
have satisfied demand pent up during the recessionary period of the early 1980s. The rebuilding of the
motor vehicle stock suggests that future sales are
likely to depend more heavily on replacement needs.
The Household
Residential investment fell in real terms through
the first three quarters of 1989, and with only a slight
upturn in the fourth quarter, expenditures decreased
6 percent on net over the year. Construction was
Sector
Household spending softened significantly in 1989,
with a marked weakening in the demand for motor
Monetary Policy Report to the Congress
weighed down throughout 1989 by the overbuilding
that occurred in some locales earlier in the decade.
Vacancy rates were especially high for multifamily
rental and condominium units. In the single-family
sector, affordability problems constrained demand,
dramatically so in those areas in which home prices
had soared relative to household income.
Mortgage interest rates declined more than a
percentage point, on net, between the spring of 1989
and the end of the year, helping to arrest the
contraction in housing activity; however, the response to the easing in rates appears to have been
muted somewhat by a reduction in the availability of
construction credit, likely reflecting, in part, the
tightening of regulatory standards in the thrift
industry and the closing of several insolvent institutions. Exceptionally cold weather also hampered
building late in the year, but a sharp December drop
in housing starts was followed by a record jump in
activity last month.
The Business
Sector
Business fixed investment, adjusted for inflation,
increased only 1 percent at an annual rate during the
second half of 1989 after surging 7% percent during
the first half. Although competitive pressures forced
many firms to continue seeking efficiency gains
through capital investment, the deceleration in
overall economic growth made the need for capacity
expansion less urgent, and shrinking profits reduced
the availability of internal finance.
Spending on equipment moved up briskly during
the first half of 1989, with particularly notable gains
in outlays for information-processing equipment—
computers, photocopiers, telecommunications devices, and the like. However, equipment outlays
were flat in the second half of the year; growth in the
information processing category slowed sharply,
and spending in most other categories was either flat
or down. Purchases of motor vehicles dropped
sharply in the fourth quarter from the elevated levels
of the second and third quarters. There were a few
exceptions to the general pattern of weakness during
the second half. Spending on aircraft was greater in
the second half of 1989 than in the first half, and
would have increased still more had it not been for
the strike at Boeing. Outlays for tractors and
agricultural machinery moved up smartly; spending
on farm equipment has been buoyed by the substantial improvements over the past several years in the
111
financial health of the agricultural sector. Over the
four quarters of 1989, total spending on equipment
increased 6 percent in real terms—about 1 percentage point below the robust pace of 1988.
Business spending for new construction edged
down xh percent in real terms during 1989—the
second consecutive yearly decline. Commercial
construction, which includes office buildings, was
especially weak; vacancy rates for office space
remain at high levels in many areas, lowering
prospective returns on new investment. Outlays for
drilling and mining, which had dropped 20 percent
over the four quarters of 1988, moved down further
in the first quarter of 1989; later in the year, drilling
activity revived as crude oil prices firmed. The
industrial sector was the most notable exception to
the overall pattern of weakness: Real outlays
increased 11 percent in 1989, largely because of
construction that had been planned in 1987 and 1988
when capacity in many basic industries tightened
substantially and profitability was improving sharply.
As noted above, the slowdown in investment
spending during the second half of last year likely
was exacerbated by the deterioration in corporate
cash flow. Before-tax operating profits of nonfinancial corporations dropped 12 percent from the fourth
quarter of 1988 to the third quarter of 1989 (latest
data available); after-tax profits were off in about the
same proportion. Reflecting the increased pressures
from labor and materials costs—and a highly
competitive domestic and international environment—before-tax domestic profits of nonfinancial
corporations as a share of gross domestic product
declined to an average level of 8 percent during the
first three quarters of 1989, the lowest reading since
1982. At the same time, taxes as a share of beforetax operating profits increased to an estimated 44
percent in the first three quarters of 1989; since
1985, this figure has retraced a bit more than half of
its decline from 54 percent in 1980.
Nonfarm business inventory investment averaged
$21 billion in 1989. Although the average pace of
accumulation last year was slower than in 1988, the
pattern across sectors was somewhat uneven. Some
of the buildup in stocks took place in industries—
such as aircraft—where orders and shipments have
been strong for some time now. But inventories in
some other sectors became uncomfortably heavy at
times and precipitated adjustments in orders and
production. The clearest area of inventory imbalance
at the end of the year was at auto dealers, where
112
Federal Reserve Bulletin • March 1990
stocks of domestically produced automobiles were
at 1.7 million units in December—almost three
months' supply at the sluggish fourth-quarter sales
pace. In response, the domestic automakers implemented a new round of sales incentives and cut
sharply the planned assembly rate for the first quarter
of 1990. Elsewhere in the retail sector, inventories
moved up substantially relative to sales at general
merchandise outlets. Overall, however, most sectors
of the economy have adjusted fairly promptly to the
deceleration in sales and appear to have succeeded in
preventing serious overhangs from developing.
The Government
Sector
Budgetary pressures continued to restrain the growth
of purchases at all levels of government. At the
federal level, purchases fell 3 percent in real terms
over the four quarters of 1989, with lower defense
purchases accounting for the bulk of the decline.
Nondefense purchases also declined in real terms
from the fourth quarter of 1988 to the fourth quarter
of 1989; increases in such areas as the space program
and drug interdiction were more than offset by
general budgetary restraint that imposed real reductions on most other discretionary programs.
In terms of the unified budget, the federal deficit in
fiscal year 1989 was $152 billion, slightly smaller
than in 1988. Growth in total federal outlays, which
include transfer payments and interest costs as well
as purchases of goods and services, picked up a bit in
fiscal year 1989. Outlays were boosted at the end of
the fiscal year by the initial $9 billion of spending by
the Resolution Trust Corporation. On the revenue
side of the ledger, growth in federal receipts also
increased in fiscal 1989. The acceleration occurred
in the individual income tax category, but strong
increases also were recorded in corporate and social
security tax payments.
Purchases of goods and services at the state and
local level increased 2xh percent in real terms over
the four quarters of 1989, down more than a
percentage point from the average pace of the
preceding five years. Nonetheless, there were some
areas of growth. Spending for educational buildings
increased, and employment in the state and local
sector rose 350,000 over the year, largely driven by
a pickup in hiring by schools. Despite the overall
slowdown in the growth of purchases, the budgetary
position of the state and local sector deteriorated
further over the year; the annualized deficit of
operating and capital accounts, which excludes
social insurance funds, increased $6 billion over the
first three quarters of 1989 and appears to have
worsened further in the fourth quarter.
The External
Sector
The U.S. external deficits improved somewhat in
1989, but not by as much as in 1988. On a balanceof-payments basis, the deficit on merchandise trade
fell from an annual rate of $128 billion in the fourth
quarter of 1988 (and $127 billion for the year as a
whole) to $114 billion in the first quarter of 1989.
Thereafter, there was no further net improvement.
The appreciation in the foreign exchange value of
the dollar between early 1988 and mid-1989 appears
to have played an important role in inhibiting ftirther
progress on the trade front. During the first three
quarters of 1989, the current account, excluding the
influence of capital gains and losses that are largely
caused by currency fluctuations, showed a deficit of
$106 billion at an annual rate—somewhat below the
deficit of $124 billion in the comparable period of
1988.
Measured in terms of the other Group of Ten
(G-10) currencies, the foreign exchange value of the
U.S. dollar in December 1989 was about 3 percent
above its level in December 1988, but the dollar has
moved lower thus far in 1990. In real terms, the net
appreciation of the dollar during 1989 in terms of the
other G-10 currencies was about 5 percent as
consumer prices rose somewhat faster here than
they did abroad, on average. Over the year, the
dollar moved lower on balance against the currencies of South Korea, Singapore, and especially
Taiwan. From a longer perspective, the modest
uptrend on balance in the dollar over the past two
years marked a sharp departure from the substantial
weakening seen during the 1985-87 period.
The behavior of the dollar differed greatly between
the two halves of 1989. In the first half, the dollar
appreciated 12 percent in terms of the other G-10
currencies, while depreciating against the currencies of South Korea and Taiwan. The dollar
fluctuated during the summer, and later in the year
unwound most of the prior appreciation, as U.S.
interest rates eased relative to rates abroad and in
Monetary Policy Report to the Congress
response to concerted intervention in exchange
markets in the weeks immediately after the September meeting of Group of Seven officials and to events
in Eastern Europe. In the second half of the year, the
dollar rose against the currencies of South Korea and
Taiwan while depreciating in terms of the Singapore
dollar. Over the course of 1989, the dollar appreciated nearly 16 percent against the Japanese yen and
14 percent against the British pound, but it depreciated slightly against the German mark, the Canadian
dollar, and most other major currencies.
On a GNP basis, merchandise exports increased
about 11 percent in real terms over the four quarters
of 1989—roughly 4 percentage points less than in
1988. This deceleration took place despite continued
strong growth in economic activity in most foreign
industrial countries (with the exception of Canada
and the United Kingdom), and appears to have
reflected, in large part, the effect on U.S. competitiveness of the dollar's appreciation and the more
rapid U.S. inflation over 1988 and much of 1989.
Exports were also depressed in the fourth quarter of
1989 by several special factors, including the Boeing
strike. The volume of agricultural exports increased
about 11 percent in 1989—a bit faster even than the
robust pace of 1988. The value of agricultural
exports rose much less, however, as agricultural
export prices reversed the drought-induced increases
of the previous year.
Merchandise imports excluding oil expanded
about 7 percent in real terms during 1989, with
much of the rise accounted for by imports of
computers. Imports of oil increased 6 percent from
the fourth quarter of 1988 to the fourth quarter of
1989, to a rate of 8.3 million barrels per day. At the
same time, the average price per barrel increased
almost 40 percent, and the nation's bill for foreign oil
jumped 45 percent.
The counterpart of the current account deficit of
$106 billion at an annual rate over the first three
quarters of 1989 was a recorded net capital inflow of
about $60 billion at an annual rate and an unusually
large statistical discrepancy, especially in the second
quarter. More than half of the recorded net inflow of
capital reflected transactions in securities, as foreign
private holdings of U.S. securities rose nearly $50
billion (half of the increase being in holdings of U.S.
Treasury securities), while U.S. holdings of foreign
securities increased a bit less than $20 billion. Net
direct investment accounted for another substantial
113
portion of the inflow; foreign direct investment
holdings in the United States rose more than $40
billion, and U.S. holdings abroad rose only half as
much. Over the first three quarters of 1989, foreign
official assets in the United States increased almost
$15 billion, but this increase was more than offset by
the increase in U.S. official holdings of assets
abroad, largely associated with U.S. intervention
operations to resist the dollar's strength.
Labor
Markets
Employment growth slowed in the second half of
1989; nonetheless, nonfarm payrolls increased
nearly 2VI million during the year. The bulk of this
expansion occurred in the service-producing sector.
By contrast, the manufacturing sector shed 100,000
jobs. These job losses were more than accounted for
by declines in the durable goods industries and
appeared to reflect the slump in auto sales, the
weakening in capital spending, and the effects of a
stronger dollar on exports and imports.
Despite the slowdown in new job creation, the
overall balance of supply and demand in the labor
market remained steady over the year. The civilian
unemployment rate, which had declined about V
2
percentage point over the twelve months of 1988,
finished 1989 at 5.3 percent—unchanged from
twelve months earlier. Moreover, there was no
increase in the number of "discouraged" workers —
those who say they would re-enter the labor force if
they thought they could find a job. Nor was there any
net increase in workers who accepted part-time
employment when they would have preferred fulltime. The proportion of the civilian population with
jobs reached a historic high.
Reflecting the tightness of labor markets and the
persistence of inflation expectations in the range of 4
to 5 percent, according to surveys, the employment
cost index for wages and salaries in nonfarm private
industry increased 4% percent over the twelve
months of 1989-about the same as in 1988. Benefit
costs continued to rise more rapidly than wages and
salaries last year, with health insurance costs
remaining a major factor; nonetheless, the rate of
growth in overall benefit costs slowed in 1989, in
part because of a smaller increase in social security
taxes than in 1988. Total compensation-including
both wages and salaries and benefits—rose 4%
114
Federal Reserve Bulletin • March 1990
percent during 1989. Compensation growth in the
service-producing sector—at 5 percent—continued
to outpace the gain in the goods-producing sector by
about % percentage point.
A slowdown in the growth of productivity often
accompanies a softening in the general economy,
and productivity gains were lackluster in 1989.
Output per hour in the private nonfarm business
sector increased only V percent over the four
2
quarters of the year — 1 percentage point below the
rate of increase in 1988. In the manufacturing
sector, productivity gains during the first half of
1989 kept pace with the 1988 average of 3 percent;
in the second half, however, productivity growth
slowed to an annual rate of 2 lA percent. Reflecting
both the persistent growth in hourly compensation
and the disappointing developments in productivity,
unit labor costs in private nonfarm industry rose 5
percent over the four quarters of 1989—the largest
increase since 1982.
Price
Developments
Inflation in consumer prices remained in the neighborhood of 4j/2 percent for the third year in a row, as
the level of economic activity was strong and
continued to exert pressures on available resources.
During the first half of the year, overall inflation was
boosted by a sharp run-up in energy prices and a
carry-over from 1988 of drought-related increases
in food prices. However, inflation in food prices
slowed during the second half, and energy prices
retraced about a third of the earlier run-up. Prices
for imported goods excluding oil were little changed
over 1989, on net, and acted as a moderating
influence on consumer price inflation.
Food prices increased 5Vi percent at the retail
level, slightly more than in 1988 when several crops
were severely damaged by drought. Continued
supply problems in some agricultural markets in
1989—notably a poor wheat crop and a shortfall in
dairy production—likely prevented a deceleration
from the drought-induced rate of increase in 1988.
At the same time, increases in demand, including
sharp increases in exports of some commodities,
also appear to have played a role. Still another
impetus to inflation in the food area last year
evidently came from the continuing rise in processing and marketing costs.
Consumer energy prices surged 17 percent at an
annual rate during the first six months of 1989,
before dropping back 6 percent in the second half.
During the first half of the year, retail energy prices
were driven up by increases in the cost of crude oil.
The increase in gasoline prices at midyear was
exaggerated by the introduction of tighter standards
governing the composition of gasoline during
summer months. Gasoline prices eased considerably
in the second half, reflecting a dip in crude oil prices
and the expiration of the summertime standards.
Taking the twelve months of 1989 as a whole, the
increase in retail energy prices came to a bit more
than 5 percent. Heating oil prices jumped sharply at
the turn of the year, reflecting a surge in demand
caused by December's unusually cold weather. The
spike in heating fuel prices largely reversed itself in
spot markets during January of this year, but crude
oil prices remained at high levels.
Consumer price increases for items other than
food and energy remained at about 4Vi percent in
1989. Developments in this category likely would
have been less favorable had the dollar not been
appreciating in foreign exchange markets through
the first half of 1989. The prices of consumer
commodities excluding food and energy decelerated
sharply, and this slowdown was particularly marked
for some categories in which import penetration is
high, including apparel and recreational equipment.
Given the dollar's more recent depreciation, however, the moderating effect of import prices on
overall inflation may be diminishing. Indeed, prices
for imported goods excluding oil turned up in the
fourth quarter of 1989, after declining earlier in the
year. In contrast to goods prices, the prices of
nonenergy services—which make up half of the
overall consumer price index—increased 5 lA percent
in 1989, lA percentage point more than in 1988. The
pickup in this category was led by rents, medical
services, and entertainment services.
At the producer level, prices of finished goods
increased IV2 percent at an annual rate during the
first half—almost twice the pace of 1988— before
slowing to an annual rate of increase of 2 x h percent
over the second half. In large part, developments in
this sector reflected the same sharp swings in energy
prices that affected consumer prices. At earlier
stages of processing, the index for intermediate
materials excluding food and energy decelerated
sharply during the first half of the year and then
Monetary Policy Report to the Congress
edged down in the second half. For the year as a
whole, this index registered a net increase of only 1
percent, compared with more than 7 percent in
1988. The sharp deceleration in this category
appears to have reflected a relaxation of earlier
pressures on capacity in the primary processing
industries, and the influence of the rising dollar
through the first half of last year. Also consistent
with the weakening in the manufacturing sector and
the strength of the dollar, the index for crude nonfood
materials excluding energy declined 3 3A percent
over the year, and spot prices for industrial metals
moved sharply lower during the year, in part because
of large declines for steel scrap, copper, and
aluminum.
MONETARY AND FINANCIAL DEVELOPMENTS
DURING 1989
In 1989, the Federal Reserve continued to pursue a
policy aimed at containing and ultimately eliminating inflation while providing support for continued
economic expansion. In implementing that policy,
the Federal Open Market Committee maintained a
flexible approach to monetary targeting, with policy
responding to emerging conditions in the economy
and financial markets as well as to the growth of the
monetary aggregates relative to their established
target ranges. This flexibility has been necessitated
by the substantial variability in the short-run
relationship between the monetary aggregates and
economic performance; however, when viewed over
a longer perspective, those aggregates are still useful
in conveying information about price developments.
As the year began, monetary policy was following
through on a set of measured steps begun a year
earlier to check inflationary pressures. By then,
however, evidence of a slackening in aggregate
demand, along with sluggish growth of the monetary
aggregates, suggested that the year-long rise in
short-term interest rates was noticeably restraining
the potential for more inflation. But, after an increase
of V percentage point in the discount rate at the end
2
of February, the Federal Reserve took no further
policy action until June. Over the balance of 1989,
the Federal Reserve moved toward an easing of
money market conditions, as indications mounted of
slack in demand and lessened inflation pressures.
The easing in reserve availability induced declines
115
in short-term interest rates of 1V2 percentage points;
money growth strengthened appreciably, and M2
was near the middle of its target range by the end of
1989. The level of M3, on the other hand, remained
around the lower bound of its range, with its
weakness mosdy reflecting the shifting pattern of
financial intermediation as the thrift industry retrenched. The growth of nonfinancial debt was
trimmed to 8 percent in 1989, about in line with the
slowing in the growth of nominal GNP, and ended
the year at the midpoint of its monitoring range.
Implementation
of Monetary
Policy
In the opening months of the year, the Federal Open
Market Committee, seeking to counter a disquieting
intensification of inflationary pressures, extended
the move toward restraint that had begun almost a
year earlier. Policy actions in January and February,
restraining reserve availability and raising the
discount rate, prompted a further increase of %
percentage point in short-term market interest rates.
Longer-term rates, however, moved up only moderately; the tightening apparently had been widely
anticipated and was viewed as helping to avoid an
escalation in underlying inflation. Real short-term
interest rates—nominal rates adjusted for expected
price inflation—likely moved higher, though remaining below peak levels earlier in the expansion; these
gains contributed to a strengthening of the foreign
exchange value of the dollar over this period, while
the growth of the monetary aggregates slowed as the
additional policy restraint reinforced the effects of
actions in 1988.
As evidence on prospective trends in inflation and
spending became more mixed in the second quarter,
the Committee refrained from further tightening and
in June began to ease pressures on reserve markets.
As the information on the real economy, along with
the continued rise in the dollar, suggested that the
outlook for inflation was improving, most long-term
nominal interest rates fell as much as a percentage
point from their March peaks; the yield on the
bellwether thirty-year Treasury bond moved down
to about 8 percent by the end of June. The decline in
interest rates outstripped the reduction in most
measures of investors' inflation expectations, so that
estimated real interest rates fell from their levels
earlier in the year. These declines in nominal and
116
Federal Reserve Bulletin • March 1990
real interest rates, however, were not accompanied
by declines in the foreign exchange value of the
dollar. Rather, because of better-than-expected trade
reports and political turmoil abroad, the dollar
strengthened further.
In July, when the FOMC met for its semiannual
review of the growth ranges for money and credit,
M2 and M3 lay at, or a bit below, the lower bounds
of their target cones. This weakness, reinforcing the
signals from prices and activity, contributed to the
Committee's decision to take additional easing action
in reserve markets. The Committee reaffirmed the
existing annual target ranges for the monetary and
debt aggregates and tentatively retained those ranges
for the next year, since they were likely to encompass
money growth that would foster further economic
expansion and moderation of price pressures in
1990.
Late in the summer, longer-term interest rates
turned higher, as several releases of economic data
suggested reinvigorated inflationary pressures. With
growth in the monetary aggregates rebounding, the
Committee kept reserve conditions about unchanged
until the direction of the economy and prices
clarified.
Beginning in October, amid indications of added
risks of a weakening in the economic expansion, the
FOMC reduced pressures on reserve markets in
three separate steps, which nudged the federal funds
rate down to around 8 lA percent by year-end, about
1 xh percentage points below its level when incremental tightening ceased in February. Over those ten
months, other short- and long-term nominal interest
rates fell about 1 to 1XA percentage points; and most
major stock price indexes reached record highs at
the turn of the year, more than recovering the losses
that occurred on October 13. Reflecting some
reduction in inflation anticipations over the same
period, estimated short- and long-term real interest
rates fell somewhat less than nominal rates, dropping
probably about xh to 3A percentage point. Still, most
measures of short- and long-term real interest rates
remained well above their trough levels of 1986 and
1987-levels that had preceded rapid growth in the
economy and a buildup of inflationary pressures.
Over the last three months of the year and into
January 1990, the foreign exchange value of the
dollar declined substantially from its high, which
was reached around midyear and largely sustained
through September. The dollar fell amid concerted
intervention undertaken by the G-7 countries in the
weeks immediately after a meeting of the finance
ministers and central bank governors of these
countries in September. The dollar continued to
decline in response to the easing of short-term
interest rates on dollar assets and increases in rates in
Japan and Germany. The German currency rate rose
particularly sharply as developments in Eastern
Europe were viewed as favorable for the West
German economy, attracting global capital flows.
Rising interest rates in Germany likely contributed
to an increase in bond yields in the United States
early in 1990, even as U.S. short-term rates
remained essentially unchanged. More important,
however, for the rise in nominal, and likely real,
long-term rates in the United States were incoming
data pointing away from recession in the economy
and from any abatement in price pressures, especially as oil prices moved sharply higher.
Behavior of Money and Credit
Growth in M2 was uneven over 1989, with marked
weakness in the first part of the year giving way to
robust growth thereafter. On balance over the year,
M2 expanded 4x/2 percent, down from 5 lA percent
growth in 1988, placing it about at the midpoint of its
1989 target range of 3 to 7 percent. The slower rate
of increase in M2 reflected some moderation in
nominal income growth as well as the pattern of
interest rates and associated opportunity costs of
holding money, with the effects of increases in 1988
and 1989 outweighing the later, smaller drop in rates
(table 3).
M2 has grown relatively slowly over the past
three years, as the Federal Reserve has sought to
ensure progress over time toward price stability.
There appears to be a fairly reliable long-term link
between M2 and future changes in inflation. One
method of specifying that link is to estimate the
equilibrium level of prices implied by the current
level of M2, assuming that real GNP is at its
potential and velocity is at its long-run average, and
compare that to actual prices. The historical record
suggests that inflation tends to rise when actual
prices are below the equilibrium level and to
moderate when equilibrium prices are below actual.
At the end of 1986, the equilibrium level of prices
was well above the actual level, reinforcing
Monetary Policy Report to the Congress
the view that the risks weighed on the side of an
increase in inflation; at the end of 1989, that
equilibrium price had moved into approximate
equality with the actual price level, indicating that
basic inflation pressures had steadied.
In 1989, compositional shifts within M2 reflected
the pattern of interest rates, the unexpected volume
of tax payments in the spring, and the flow of funds
out of thrift deposits and into other instruments.
Early in the year, rising market interest rates buoyed
the growth of small-denomination time deposits at
the expense of more liquid deposits, as rates on the
latter accounts adjusted only sluggishly to the
upward market movements. The unexpectedly large
tax payments in April and May contributed to the
weakness in liquid instruments as those balances
also were drawn down to meet tax obligations. As
market interest rates fell, the relative rate advantage
reversed in favor of liquid instruments and the
growth in liquid deposits rebounded, boosted as well
by the replenishment of accounts drained by tax
payments.
The M l component of M2 was especially affected
by the swings in interest rates and opportunity costs
last year, and in addition was buffeted by the effects
of outsized tax payments in April. After its rise of
4lA percent in 1988, M l grew only Vi percent in
1989, with much of the weakness in this transactions
aggregate occurring early in the year. By May, M l
had declined at an annual rate of about 2Vi percent
from its fourth-quarter 1988 level, reflecting a
lagged response to earlier increases in short-term
3.
117
interest rates and an extraordinary bulge in net
individual tax remittances to the Treasury. From
May to December, M l rebounded at a 4 percent rate
as the cumulating effects of falling interest rates and
post-tax-payment rebuilding boosted demands for
this aggregate. M l velocity continued the upward
trend that resumed in 1987, increasing in the first
three quarters before turning down in the fourth
quarter of 1989.
The shift of deposits from thrift institutions to
commercial banks and money fund shares owed, in
part, to regulatory pressures that brought down rates
paid by some excessively aggressive thrift institutions. Beginning in August, the newly created
Resolution Trust Corporation (RTC) targeted some
of its funds to pay down high-cost deposits at
intervened thrift institutions and began a program of
closing insolvent thrift institutions and selling their
deposits to other institutions—for the most part,
banks. On balance, the weak growth of retail deposits at thrift institutions appears to have been
about offset by the shift into commercial banks and
money market mutual funds, leaving M2 little
affected overall by the realignment of the thrift
industry.
M3 was largely driven, as usual, by the funding
needs of banks and thrift institutions; under the
special circumstances of the restructuring of the
thrift industry, it was a less reliable barometer of
monetary policy pressures than is normally the case.
After expanding 6 lA percent in 1988, M3 hugged the
lower bound of its 3 Vi to IVi percent target cone in
Growth of money and debt
Percent change
Period
Fourth quarter to fourth quarter
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
Quarterly growth rates (annual rates)
1989: 1
2
3
4
Ml
7.4
5.4 (2.5)'
8.8
10.4
5.4
12.0
15.5
6.3
4.3
.6
-.1
-4.4
1.8
5.1
1. Figure in parentheses is adjusted for shifts to NOW accounts in 1981.
M2
M3
Debt of domestic
nonfinancial sectors
8.9
9.3
9.1
12.2
7.9
8.9
9.3
4.3
5.2
4.6
9.5
12.3
9.9
9.8
10.6
7.8
9.1
5.8
6.3
3.3
9.5
10.2
9.1
11.1
14.2
13.1
13.2
9.9
9.2
8.1
2.3
1.6
6.9
7.1
3.9
3.3
3.9
2.0
8.4
7.9
7.2
8.0
118
Federal Reserve Bulletin • March 1990
1989, closing the year about 3% percent above its
fourth quarter of 1988 base. In 1989, bank credit
growth about matched the previous year's IV2
percent increase, but credit at thrift institutions is
estimated to have contracted a bit on balance over
the year, in contrast to its 6V4 percent growth in
1988. This weakness in thrift credit directly owed to
asset shrinkage at savings and loan institutions
insured by the Savings Association Insurance Fund;
credit unions and mutual savings banks expanded
their balance sheets in 1989. In addition, funds paid
out by the RTC to thrift institutions and to banks
acquiring thrift deposits directly substituted for other
sources of funds. As a result, thrift institutions
lessened their reliance on managed liabilities, as
evidenced by the decline of 14% percent over the
year in the sum of large time deposits and repurchase
agreements at thrift institutions. Institution-only
money market mutual funds were bolstered by a
relative yield advantage, as fund returns lagged
behind declining market interest rates in the second
half of the year; these funds provided the major
source of growth for the non-M2 component of M3.
On balance, the effects of the thrift restructuring
dominated the movements in M3, and the rebound in
M2 in the second half of the year did not show
through to this broader aggregate. As a consequence,
the velocity of M3 increased 3 percent in 1989, 1 lA
percentage points faster than the growth in M2
velocity, and its largest annual increase in twenty
years.
Many of the assets shed by thrift institutions were
mortgages and mortgage-backed securities, but this
appears to have had little sustained effect on home
mortgage cost and availability. The spread between
the rate on primary fixed-rate mortgages and the rate
on ten-year Treasury notes rose somewhat early in
the year, but thereafter remained relatively stable.
The share of mortgages held in securitized form
again climbed in 1989, facilitating the tapping of a
base of investors. Diversified lenders, acting in part
through other intermediaries, such as federally
sponsored agencies, mostly filled the gap left by the
thrift institutions. However, some shrinkage of
credit available for acquisition, development, and
construction appeared to follow from limits imposed
by the FIRREA on loans by thrift institutions to
single borrowers, though the reduction in funds
available for these purposes probably also reflected
problems in some residential real estate markets.
Aggregate debt of the domestic nonfinancial
sectors grew at a fairly steady pace over 1989,
averaging 8 percent, which placed it near the
midpoint of its monitoring range of 6V2 to IOV2
percent. Although the annual growth of debt slowed
in 1989, as it had during the preceding two years, it
still exceeded the 6V2 percent growth of nominal
GNR Federal sector debt grew 7 V2 percent, about V2
percentage point below the 1988 increase—and the
lowest rate of expansion in a decade—as the deficit
leveled off. Debt growth outside the federal sector
eased by more to average 814 percent, mostly
because of a decline in the growth of household debt.
Mortgage credit slowed in line with the reduced
pace of housing activity, and consumer credit
growth, though volatile from month to month,
trended down through much of the year. The growth
of nonfinancial business debt slipped further below
the extremely rapid rates of the mid-1980s. Corporate restructuring continued to be a major factor
buoying business borrowing, although such activity
showed distinct signs of slowing late in the year as
lenders became more cautious and the use of debt to
require equity ebbed.
The second half of 1989 was marked by the
troubling deterioration in indicators of financial
stress among certain classes of borrowers, with
implications for the profitability of lenders, including commercial banks. In the third quarter, several
measures of loan delinquency rates either rose
sharply or continued on an uptrend. Delinquency
rates on closed-end consumer loans at commercial
banks and auto loans at "captive" auto finance companies were close to historically high levels. At
commercial banks as a whole in 1989, both delinquency and charge-off rates for real estate loans
were little changed from the previous year. Still,
problem real estate loans continued to be a drag on
the profitability of banks in Texas, Oklahoma, and
Louisiana; in the second half, such loans emerged as
a serious problem for banks in New England. On the
other hand, smaller, agriculturally oriented banks
continued to recover from the distressed conditions
of the mid-1980s. Since 1987, agricultural banks
have charged off loans at well below the national
rate, and their nonperforming assets represented a
smaller portion of their loans than that for the
country as a whole.
The upswing in the profitability of insured
commercial banks that began in 1988 only extended
Monetary Policy Report to the Congress
through the first half of 1989. A slowing in the
buildup of loan loss provisions, along with improvements in interest rate margins, contributed to these
gains, with the money center banks showing the
sharpest turnaround. Information for the second half
of 1989, although still incomplete, clearly points to
an erosion of these profit gains, in part, because of
problems in the quality of loans. Several money
119
center banks sharply boosted their loss provisions on
loans to developing countries, while evidence of
rising delinquency rates on real estate and consumer
loans suggested more widespread weakening. Despite these developments, the spread of rates on
bank liabilities, certificates of deposit, and Eurodollar deposits, over comparable Treasury bill rates
narrowed early in 1990.
120
Staff Studies
The staff members 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.
From time to time the studies that are of general
interest are published in the Staff Studies series
and are summarized in the FEDERAL RESERVE
BULLETIN.
The analyses
STUDY
and conclusions set forth are
those of the authors and do not necessarily
indicate concurrence by the Board of Governors,
by the Federal Reserve Banks, or by members of
their staffs.
Single copies of the full text of each study are
available without charge. The titles available are
shown under "Staff Studies" in the list of Federal Reserve Board publications at the back of
each BULLETIN.
SUMMARY
NEW DATA ON THE PERFORMANCE OF NONBANK
COMPANIES
Nellie Liang and Donald
Savage—Staff,
Board of
SUBSIDIARIES OF BANK
HOLDING
Governors
Prepared as a staff study in the winter of 1989
The Federal Reserve Board is empowered to
permit bank holding companies to engage in
those nonbank activities that are closely related
to banking and that provide net public benefits.
There are few studies of the performance of
nonbank subsidiaries and those bank holding
companies that own them because, until 1986,
little financial information had been collected
from nonbank subsidiaries. Using 1986 and
1987 data from a new reporting system, this study
examines the extent of the involvement of bank
holding companies in nonbank activities and the
profitability and riskiness of the nonbank subsidiaries.
In 1987, net nonbank assets owned by the 298
firms reporting under the new system totaled
$146.8 billion, representing 6.3 percent of the
consolidated bank and nonbank assets of these
firms. The ownership of these nonbank assets is
highly concentrated. Among the reporting firms,
the top five in terms of net nonbank assets held
59.2 percent of the net nonbank assets, and the
top ten held 74.6 percent. The nation's largest
banking organizations are also among the largest
owners of nonbank assets. The fifty largest bank
holding companies (in terms of consolidated
bank and nonbank assets) held 90.6 percent of
total net nonbank assets; twelve of these organizations held more than 10 percent of their total
assets in nonbank subsidiaries.
For the most part, nonbank subsidiaries engage in the same lines of business as do banks.
About 50 percent of aggregate nonbank assets
are accounted for by the assets held in subsidiaries engaged principally in commercial finance,
mortgage banking, consumer finance, and leasing. Securities brokerage subsidiaries, which engage in discount brokerage and some government
securities underwriting, are also significant in
terms of assets.
In both 1986 and 1987, profit rates of the
nonbank subsidiaries were higher than the profit
rates of affiliated banks and the consolidated
bank holding companies. Across the different
121
types of nonbank activities, profit rates vary
widely. In general, subsidiaries engaged in insurance underwriting and the insurance agency business have relatively high returns on assets,
whereas subsidiaries engaged in leasing and
mortgage banking have relatively low returns.
Finally, nonbank subsidiaries are better capitalized than affiliated bank subsidiaries of bank
holding companies. Some other commonly used
risk measures suggest, however, that some of the
nonbank subsidiaries are riskier than affiliated
bank subsidiaries.
122
Industrial Production
Released for publication January 17
Industrial production rose 0.4 percent in December following an upward revised increase in
November of 0.3 percent and slightly smaller
declines in October and September than were
reported last month. The extremely cold weather
in December caused a sharp rise in utility output,
but also resulted in some disruptions in produc-
tion, particularly in petroleum refining and construction supplies. Aircraft production returned
to normal in December following the settlement
of a strike at a major producer in late November.
At 142.8 percent of the 1977 annual average, the
total index in December was 1.7 percent higher
than that of a year earlier; for the fourth quarter
on average, total industrial output was little
changed from the third quarter. Manufacturing
Ratio scale, 1977=100
140
Total Index
120
100
80
160
Manufacturing
Nondurable
140
Durable
120
100
Consumer Goods
Intermediate
Products
/
Business supplies.
-
*
_ **~
, »»"^•
Construction
supplies
Durable
J
I
Final Products
Motor Vehicles and Parts
Defense and space
Business
equipment ^ , -
Consumer goods
1984
1986
1988
All series are seasonally adjusted. Latest figures: December.
1990
1984
1986
1988
1990
123
1977 = 100
Percentage change from preceding month
1989
1989
Group
Nov.
Aug.
Dec.
Sept.
Oct.
Percentage
change,
Dec. 1988
Nov.
Dec.
1989
Major market groups
Total industrial production
142.3
142.8
.4
-.1
-.4
.3
.4
1.7
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment...
Defense and space
Intermediate products...
Construction supplies.
Materials
152.3
150.1
139.8
126.8
144.6
167.2
176.9
160.1
143.9
128.6
153.6
151.6
140.6
127.7
145.4
169.9
179.6
160.5
142.9
128.2
.5
.6
.4
1.1
.2
.8
.4
.0
-.5
.4
-.1
-.2
-.2
-.6
-.1
-.2
-.3
.2
-.4
-.2
-.6
-1.0
.6
-.2
.9
-2.6
-3.4
.6
1.1
.0
.6
.5
-.1
-.6
.1
1.2
.5
.8
1.0
.0
.8
1.0
.6
.7
.6
1.6
1.6
.3
-.7
-.3
2.8
2.6
1.8
-3.2
3.5
4.5
-.5
3.5
1.1
-.1
.4
.4
.3
.3
-.3
.2
.3
-.1
-1.2
6.3
1.7
.3
3.7
-1.7
6.3
Major industry groups
148.6
145.7
152.7
104.4
115.5
Manufacturing
Durable
Nondurable
Mining
Utilities
148.8
146.2
152.6
103.2
122.7
.5
.7
.2
.3
-.5
-.2
-.4
.0
1.1
1.0
-.5
-1.5
.7
.6
1.2
NOTE. Indexes are seasonally adjusted.
output rose 0.2 percent in December, and factory
utilization edged down to 83.1 percent. Detailed
data for capacity utilization are shown separately
in "Capacity Utilization," Federal Reserve
monthly statistical release G.3.
In market groups, production of consumer
goods rose 0.6 percent in December, mainly
reflecting a surge in electricity and gas output for
residential use and an increase in light truck
production. Auto assemblies, at an annual rate of
6.2 million units, were unchanged from November. Output of home goods, particularly appliances, remained weak. Production of business
equipment rose sharply last month as aircraft
Total industrial production—Revisions
Estimates as shown last month and current estimates
Index (1977=100)
Month
Percentage change
from previous
months
Previous
Sept
Oct
Nov
Dec
Current
Previous
Current
142.1
141.3
141.5
142.3
141.8
142.3
142.8
-.3
-.6
.1
-.1
-.4
.3
.4
output rebounded; production of manufacturing
equipment has changed little recently, but most
other major sectors have posted gains.
Output of construction supplies fell 0.7 percent
following sizable increases in the previous two
months; the December decline reflected, at least
in part, the effects of the severe weather. Materials production decreased 0.3 percent as output
of basic metals, coal mining, and parts for consumer durables, mainly motor vehicles, fell significantly. These losses more than offset the
weather-related jump in utility output.
In industry groups, excluding the comeback in
the aircraft industry, manufacturing production
would have been nearly unchanged in December.
Output of motor vehicles and parts remained
relatively weak in December; other related industries, such as steel, fabricated metal products, and textiles, also have declined, on balance, in recent months. The production of paper,
printing, and publishing, and nonelectrical machinery posted further gains in December. Outside of manufacturing, mining output fell because
coal production was curtailed by an unusually
long holiday shutdown; utility output rose
sharply because of the extremely cold weather.
124
Statements to Congress
Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve System,
before the Committee on Ways and Means, U.S.
House of Representatives, January 25, 1990.
I am pleased to appear before this committee
today to discuss foreign investment in the United
States. Over the past decade, foreign investment
in the United States has increased dramatically,
reflecting both the increased integration of world
financial markets and the financial flows that are
the necessary counterpart to large U.S. current
account deficits. In my testimony today, I would
like to put these developments in perspective and
analyze their longer-run implications.
Both direct and portfolio investment by foreigners in the United States have soared in the
past decade. Since 1980 the position of foreign
direct investors in the United States has increased 300 percent. Private foreign holdings of
U.S. Treasury securities have increased 500 percent, and holdings of equities have increased 200
percent. Holdings of corporate and U.S. government agency bonds also have grown rapidly, as
have liabilities of banks in the United States to
foreigners; growth of the latter was spurred by
regulatory changes in late 1981 that permitted the
creation of international banking facilities.
These statistics on foreign investments in the
United States tell only part of the story of
increased foreign participation in U.S. financial
markets. Foreign-based financial intermediaries
play an increasingly prominent role in U.S. banking and securities markets. The volume of transactions by foreigners in U.S. securities markets
has increased even more dramatically than foreign holdings. For example, foreign purchases
and sales of U.S. Treasury securities surpassed
$3 trillion on a gross basis in 1988, up from $100
billion to $200 billion earlier in the decade. Similarly, foreign purchases and sales of U.S. corporate stocks and bonds also have been running
dramatically above levels earlier in the decade,
although they are off from their peak levels of a
couple of years ago.
U.S. investment abroad also has grown in the
1980s, but not as rapidly as foreign investment in
the United States. Although the position of U.S.
direct investors abroad as measured by book
value increased about 50 percent between the
end of 1980 and the end of 1988, the book value
of foreign direct investment in the United States
rose from much lower levels to about the same
total—$325 billion as of the end of 1988. However, the market value of U.S. direct investments
abroad, which have accumulated over many
years, undoubtedly still exceeds the market
value of foreign direct investments in the United
States by a substantial margin. U.S. holdings of
foreign stocks and bonds also have grown in the
1980s, as have the activities abroad of U.S.
financial intermediaries.
This surge in cross-border financial transactions has paralleled a large advance in the magnitude of cross-border trade of goods and services. A key factor behind these trends in
international trade and securities transactions is
a process that I have described elsewhere as the
"downsizing of economic output." The creation
of economic value has shifted increasingly
toward conceptual values with decidedly less
reliance on physical volumes. Today, for example, major new insights have led to thin fiber
optics, replacing vast tonnages of copper in communications. Financial transactions historically
buttressed with reams of paper are being progressively reduced to electronic charges. Such advances not only reduce the amount of human
physical effort required in making and completing financial transactions across national borders
but facilitate more accuracy, speed, and ease in
execution.
Underlying this process have been quantum
advances in technology, spurred by economic
forces. In recent years, the explosive growth in
information-gathering and processing techniques
125
has greatly extended our analytic capabilities of
substituting ideas for physical volume. The purpose of production of economic value will not
change. It will continue to serve human needs
and values. But the form of output increasingly
will be less tangible and hence more easily traded
across international borders. It should not come
as a surprise therefore that in recent decades the
growth in world trade has far outstripped the
growth in domestic demand. As a necessary
consequence, imports as a share of output, on
average, have risen significantly. Since irreversible conceptual gains are propelling the downsizing process, these trends almost surely will continue into the twenty-first century and beyond.
New technology—especially computer and
telecommunications technology—is boosting
gross financial transactions across national borders at an even faster pace than the net transactions supporting the increase in trade in goods
and services. Rapidly expanding data processing
capabilities and virtually instantaneous information transmission are facilitating the development
of a broad spectrum of complex financial instruments that can be tailored to the hedging, funding, and investment needs of a growing array of
market participants. These types of instruments
were simply not feasible a decade or two ago.
Some of this activity has involved an unbundling
of financial risk to meet the increasingly specialized risk management requirements of market
participants. Exchange rate and interest rate
swaps, together with financial futures and options, have become important means by which
currency and interest rate risks are shifted to
those more willing to take them on. The proliferation of financial instruments, in turn, implies
an increasing number of arbitrage opportunities,
which tend to boost further the volume of gross
financial transactions in relation to output. Moreover, these technological advances and innovations have reduced the costs of managing operations around the globe, and have facilitated
direct, as well as portfolio, investment.
Portfolio considerations also are playing an
important role in the globalization of securities
markets. As the welfare of people in the United
States and abroad becomes increasingly dependent on the performance of foreign economies, it
is natural for both individual investors and insti-
tutions to raise the share of foreign securities in
investment portfolios. Such diversification provides investors a means of protecting against
both the depreciation of the local currency on
foreign exchange markets and the domestic economic disturbances affecting asset values on local markets. As international trade continues to
expand more rapidly than global output and
domestic economies become even more closely
linked to those abroad, the objective of diversifying portfolios of international securities will
become increasingly important. Moreover, since
the U.S. dollar is still the key international
currency, such diversification has been, and may
continue to be, disproportionately into assets
denominated in the dollar.
Another factor facilitating the globalization of
capital markets and the growth of foreign investments in the United States has been deregulation. Technological change and innovations that
have tied international economies more closely
together have increased opportunities for arbitrage around domestic regulations, controls, and
taxes, undermining the effectiveness of these
policies. Many governments have responded by
dismantling domestic regulations designed to allocate credit and by removing controls on international capital flows, relying more heavily instead on market forces to allocate capital. An
additional factor contributing to an increase in
Japanese gross investment abroad may have
been the rise in stock and land prices in Japan
that has been leveraged to finance these increased investments.
The 1980s were marked not just by the expansion of gross capital flows into and out of the
United States but also by very large net capital
inflows. As I noted earlier, foreign investment in
the United States has grown faster than U.S.
investment abroad. During the decade of the
1980s, the U.S. net international investment position, as published by the Department of Commerce, fell sharply from a positive $141 billion at
the end of 1981 to a negative $533 billion by the
end of 1988. However, these numbers should not
be viewed as precise measures of U.S. net international indebtedness. Because of valuation
problems in the U.S. international transactions
accounts, the measurement of U.S. indebtedness
could be overstated by several hundred billion
126
Federal Reserve Bulletin • March 1990
dollars. Much of this overstatement is the result
of the inclusion of direct investment assets in the
data at book rather than market value. Nonetheless, while the precise level of our net investment
position is uncertain, the direction and magnitude of recent changes are clear. They are the
consequence of our large current account deficits.
The growing U.S. net international indebtedness and our large current account deficits are
two sides of the same coin. Over the past decade
the United States bought more goods and services from the rest of the world than it sold, and
it has paid for the difference, in essence, by
borrowing from, and selling assets to, foreigners.
The U.S. current account moved from approximate balance in the early 1980s to a deficit of
more than $140 billion in 1987. More recently,
the deficit has declined, but it remains substantial.
The most important underlying cause of the
surge in our net borrowing from foreigners and
the deterioration in our external balance has been
the substantial decline in our national savings
rate against the background of a relatively stable
domestic investment rate. As you are well aware,
the decline in our savings rate reflected both the
expansion of the fiscal deficit and some downtrend in the U.S. private savings rate. The fundamental accounting identity between savings
and investment, of course, requires that any
shortfall of domestic savings below domestic
investment be made up in the form of a net inflow
of savings from abroad.
It is important to understand just how this link
between lower domestic savings and increased
inflows from abroad worked in practice. The
increased demand for funds to finance both the
gaping budget deficit and growing private investment in the face of a declining private savings
rate put substantial upward pressure on U.S.
interest rates. Higher interest rates made investment in the United States more attractive to
foreigners, increased demand for dollars to implement such investments, and, thereby, pushed
up the foreign exchange value of the dollar. The
higher dollar, in turn, reduced U.S. international
price competitiveness and contributed to the
widening of the external deficit. The fiscal stimulus and downtrend in private savings also led to
strong growth in U.S. domestic demand, which
raised demand for imports and contributed further to the external deficit.
The behavior of the U.S. national savings rate
during most of the 1980s contrasted with events
abroad. Over much of the past decade, other
major industrial countries generally were moving
fiscal policies toward restraint. In Germany and
Japan, especially, government deficits were being reduced, which contributed to their external
surpluses and to the outflow of financial resources from those countries.
The widening of the U.S. external deficit also
was facilitated by the enhanced mobility of capital; the tremendous growth in gross capital flows
undoubtedly permitted the emergence of very
large net flows. On balance, though, the global
integration of financial markets was probably
only a facilitating factor, not a motivating force,
behind the growth and persistence of U.S. net
capital inflows.
The progress that has been made in reducing
the budget deficit from its earlier peak levels,
along with declines in U.S. interest rates and the
dollar since the mid-1980s, can explain much of
the more recent improvement in the external
deficit. Nonetheless, we still have a long way to
go to establish equilibrium in our international
accounts.
The persistence of inadequate domestic savings, large current account deficits, and continued deterioration of the U.S. net international
investment position remain matters of serious
concern. Current U.S. savings levels are inadequate to finance the domestic investment necessary to provide rising living standards for future
generations on the scale enjoyed by previous
generations.
The most important contribution the Congress
can make to remedying this problem is to continue the progress made in recent years in reducing the federal budget deficit. As I have stated
here before, the ultimate target should be a
budget surplus.
Efforts to limit directly or to discourage the
inflow of capital from abroad would aggravate
the problem by raising real interest rates in the
United States and lowering domestic investment
toward levels consistent with already low domestic savings. Even limited measures affecting only
Statements
certain capital flows, such as direct investment,
would necessitate larger inflows through other
channels that could only be attracted at higher
rates of return or with a weaker dollar.
Measures to restrict or discourage foreign investment in the United States would be undesirable for other reasons as well. The United States
has benefited, and will continue to benefit, from
the inevitably closer integration of world markets
for goods, services, and capital. As unfolding
events in Eastern Europe indicate, countries that
attempt to isolate their economies from the rest
of the world and do not heed market signals in
allocating scarce resources pay a high price in
terms of low levels of economic welfare.
The globalization of capital markets offers
many benefits in terms of increased competition,
reduced costs of financial intermediation that
benefit both savers and borrowers, more efficient
allocation of capital, and the more rapid spread
of innovations. However, this internationalization does pose certain risks as well: The United
States has become more vulnerable to disturbances originating outside its borders. The Federal Reserve has been actively interested in efforts to limit risks in international payments and
settlement systems. In cooperation with authorities in other countries, the Federal Reserve has
pressed for improved capital adequacy for banks
and other financial intermediaries.
These measures to protect the soundness and
integrity of our financial system are necessary
regardless of whether the United States is a net
debtor or a creditor. It should be noted that in the
1970s, when the United States was still a substantial net creditor, unfavorable developments
led to repeated episodes of downward pressure
on the foreign exchange value of the dollar.
Given the vast array of financial products currently available, and the wealth of U.S. residents
themselves, the size of net holdings of U.S.
assets by foreigners bears little relationship to
the magnitude of pressures that can arise in
foreign exchange markets.
Concern about foreign investment in the
United States tends to focus on direct investment; highly visible purchases, such as Rockfeller Center, Columbia Pictures, and Bloomingdales, have given rise to fears about the selling
of America at bargain basement prices. How-
to Congress
127
ever, little attention is paid to the benefits of
direct investment. The operations of multinational companies play an important role in facilitating the growth of world trade in goods, services, and information. Trade and direct
investment are intimately related; transactions
between direct investment affiliates and their
U.S. or foreign parents accounted for 35 percent
of U.S. merchandise exports and 40 percent of
U.S. imports in 1987—the latest year for which
data are available. It is essentially impossible to
separate trade from investment and vice versa.
Foreign investment in the United States spurs
competition, provides infusions of new capital
and technology into industries like steel, and
speeds the spread of technological advances.
Concerns about direct investment in the
United States are understandable because these
investments sometimes disrupt established patterns of doing business. But, on the whole, such
concerns are overblown. It is ironic that if a
Japanese real estate company buys a building in
the United States, we record it as a direct investment and a possible source of concern. If, however, the real estate company dismantles the
building brick by brick and ships it to Japan, it is
recorded as a U.S. export, a positive event.
Acquisitions of U.S. companies by foreigners
present somewhat different issues. The analysis
of mergers and acquisitions in general is controversial, but one conclusion with which nearly all
investigators would concur is that the American
stockholders of takeover targets are big gainers.
The former owners of acquired U.S. companies
can reinvest these funds in other enterprises that
they judge to have the highest returns. As for
foreigners who outbid U.S. competitors for U.S.
companies, recent news indicates that overly
optimistic estimates of future earnings may have
been an important factor in several important
cases.
Although foreign direct investment in the
United States has grown very rapidly, it is still
relatively small. For manufacturing as a whole,
direct investment affiliates accounted for 13 percent of assets and 11 percent of sales in 1987, the
latest data available. Comparison of the role of
direct investment affiliates in U.S. sales, manufacturing employment, and assets with ratios for
other countries indicates that direct investment
128
Federal Reserve Bulletin • March 1990
plays a much smaller role in the U.S. economy
than in Canada, the United Kingdom, Germany,
or France.
Most direct investment in the United States
originates from the United Kingdom, Japan, Canada, the Netherlands, and Germany—countries
with which the United States has close economic
and political ties. Direct investment in the United
States gives these countries an even larger interest
in ensuring continued U.S. prosperity. Moreover,
the U.S. government has ample authority to block
direct investments that have a negative impact on
national security or that involve undesirable concentrations of market power.
Comparison of the operations of affiliates of
foreign companies with U.S. firms in the same
industry indicates that research and development
expenditures, wage rates, and value added do not
differ systematically. Only a tendency to import
more clearly distinguishes affiliates from U.S.owned companies; however, since some foreign
companies have built plants in the United States
to replace imports, the net effect of direct investment on the U.S. trade balance is probably small.
One area of foreign direct investment of particular interest to the Federal Reserve Board is
the banking industry. Foreign banks account for
about one-fifth of all banking assets in the United
States. However, in many cases foreign banks
conduct largely international transactions at their
U.S. offices. Foreign-chartered banks typically
have not been very successful at competing for
retail U.S. business, but they have been more
successful in the area of commercial and industrial lending to large companies. Foreign bank
participation in that market has increased competitive pressures to price loans off money market rates. U.S. consumers of banking services
have benefited from a more competitive banking
environment. Departure from a policy of national
treatment in the banking industry could produce
retaliation and could seriously complicate negotiations to ensure access of U.S. banks to markets abroad, particularly to Europe after 1992.
In conclusion, the globalization of markets for
goods, services, and finance benefits both the
United States and the rest of the world. Efforts to
insulate the United States from the inexorable
forces of increasing globalization could be very
costly to our standard of living. However, continued efforts should be made to limit risks in
international payments and securities settlement
systems and to protect investors by increasing
international cooperation and coordination of
supervision and regulation.
The United States could help to ensure the
orderly progress of global integration by reducing
its current account imbalance. The necessary
policies are not those that attack the symptoms—
large accumulations of foreign assets in the
United States—but rather policies that address
the underlying cause, which is our inadequate
national savings, particularly our large federal
budget deficit.
•
Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve System,
before the Joint Economic Committee,
U.S.
Congress, January 30, 1990.
Concerns that our long economic expansion
may be nearing an end may have been intensified
last week by the release of initial estimates
showing that real GNP rose only Vz percent at an
annual rate in the fourth quarter of 1989. To be
sure, activity in that period was affected by
several special transitory influences—the California earthquake, Hurricane Hugo, extraordinarily cold weather, and the long strike at Boeing. But even allowing for those factors, business
activity in recent months clearly has been less
vigorous than it was earlier.
The locus of the recent softness is in what we
can broadly characterize as "durable" goods.
Most notably, weakness has emerged in the auto
I am pleased, as always, to appear before this
distinguished committee. As you know, the Federal Reserve will be submitting its semiannual
Humphrey-Hawkins Report to the Congress in
just a few weeks. At that time, I will be in a
position to address more meaningfully the tactics
and strategy of monetary policy. Under the circumstances, I thought it might be most useful for
me to focus my initial remarks this morning on
the current state of the economy.
Statements
industry, and this has spread to related supplier
industries, including metals, textiles, and machine tools. In addition, several categories of
capital goods and consumer hard goods, as well
as construction of both residential and nonresidential buildings, have softened in recent
months.
In evaluating trends in such long-lived physical
assets, one must remember that household and
business users' ownership of them does not
appear anywhere in the gross national income
and product accounts; nevertheless, by providing flows of services, these balance sheet items
are an important determinant of the level of
production. A fundamental characteristic of such
durable items is that demand for them is shaped
in part by the size of outstanding stocks relative
to current household and producer needs.
Viewed in this light, the current economic slowdown represents, at least to an extent, a pause in
the accumulation of physical assets, a form of
"inventory correction," so that levels of ownership do not get too far ahead of the long-term
desired levels.
Because of their importance in understanding
the current economic situation, it is worth examining some of these stock adjustment relationships in detail. Let me start with motor vehicles,
for which manufacturers have made sizable production cutbacks recently. It appears that auto
assemblies in January may fall short of an annual
rate of 4Vi million units, well below the rate of 7
million units over 1989 as a whole. The proximate cause of the recent production cutback was
soft demand and rising dealer inventories last
fall. The soft demand reflects a payback from the
elevated sales pace of the third quarter during
which the use of price incentives was especially
heavy for the 1989 model-year cars. Moreover,
demand for 1990 model-year cars has been restrained by increases in sticker prices, which in
many cases exceeded 5 percent. However, with
the introduction of new incentive programs, sales
picked up in late December and early January.
This has reduced dealer inventories to more
acceptable levels, and automakers reportedly
plan to step up production somewhat in the
coming weeks.
Looking beneath these short-run variations in
sales, production, and dealer inventories, how-
to Congress
129
ever, current and prospective developments in
the auto market reflect in part longer-range demand factors. Among the underlying forces are
the existing number of motor vehicles owned per
household and the average age of the auto and
truck stocks. To see the role of these factors
more clearly, it is useful to go back to the
beginning of the last decade. Between 1979 and
1983, the number of vehicles per household—
which had been on a strong uptrend throughout
the postwar period—fell nearly 3 percent. A
decline of 3 percent may not sound very large
until you consider that it represented a shortfall
of about 10 million cars and trucks between the
actual stock of motor vehicles and the underlying
trend stock. This decline in the ownership per
household of motor vehicles was likely a result of
consumer reaction to the relative increase in
gasoline prices and the downturn in economic
activity that occurred during the period. Also,
during the late 1970s and early 1980s consumers
slowed the pace at which they scrapped their
existing cars and light trucks; the combination of
lower scrappage and the lower sales of new
vehicles pushed the average age of both the auto
and truck stocks up approximately one year to
more than seven years.
The combination of an enormous pent-up demand—reflecting the gap between actual and
presumptive desired levels of ownership—as
well as increased replacement needs associated
with an aging auto stock, provided the stimulus
for the extraordinarily strong pace of auto sales
posted from 1983 through much of the remainder
of the decade. The number of vehicles per household has risen substantially, rising well above the
earlier peak, and, as scrappage rates have returned to prior levels, the average ages of the
auto and truck stocks have leveled out. This
rebuilding of the motor vehicle stock and stabilization in its average age suggest that the number of autos sitting in America's driveways is
adequate to meet much of the desired demand for
transportation equipment, and lowered sales are
at this point likely to reflect primarily replacement needs and growth in the driving-age population.
In contrast to motor vehicles, the current
slowdown in construction of new homes and
commercial buildings seems to reflect a situation
130
Federal Reserve Bulletin • March 1990
in which earlier activity was so robust that the
actual stocks of residential and nonresidential
structures exceed desired levels—at least in
some locales. Moreover, in the housing market
longer-run demographic factors also are having
an effect on the underlying stock demand—especially the rate of household formation. This rate
has been slowing and will slow further as more
and more of the low birth cohort of the 1960s and
1970s matures into adulthood. What this means,
of course, is that we need to lower our sights
about what constitutes "normal" levels of homebuilding activity during the 1990s compared with
the 1980s.
How the broad decade averages of demand
get distributed from year to year depends in
large part on financial conditions. Interest rates
on home mortgages have been around 10 percent since mid-1989, and so, from the homebuyer's perspective, financial considerations have
not varied to a great extent. In recent months,
however, segments of the construction industry
have reported difficulty in obtaining credit in
the wake of newly imposed restrictions on
lending by thrift institutions. Some added caution in acquisition, development, and construction lending was called for, given the riskiness
of this activity, but the difficulties now being
experienced by builders should diminish considerably over time as these businesses secure
other financing sources for their creditworthy
projects.
Despite the reduced pace of housing construction, there continues to be an overhang of new
single-family homes and condominiums for sale
in a few regions of the country, and rental
vacancy rates in the multifamily market remain
high. But, it is important to note that much of the
market overhang is concentrated in the Northeast and shows few signs of leading to a national
real estate market contraction. The reason is that
the spread of local problems generally is limited
by the geographical segmentation of real estate
markets. Because neither residential property
nor occupants are perfectly mobile, the market
will not necessarily arbitrage away price differences observed in different local markets.
Hence, softness in housing prices in some areas
is unlikely to prove highly contagious in the short
run. Indeed, in most areas, and on average
nationally, real estate values have continued to
increase.
In the case of nonresidential structures, there
also is an indication of stock overhang, with
vacancy rates for office space in metropolitan
areas at near-record levels. Moreover, lending
institutions—stung by a long series of questionable investments—are scrutinizing loan applications more carefully than in the past so that
highly risky projects are not getting funded as
readily. Reflecting these developments, building permits have turned down and new construction spending has been stagnant over the
past year in all major sectors except industrial
building.
Business demands for new equipment also
reflect, to a large degree, stock-adjustment motives. Recently available data for the fourth
quarter show that a sizable deceleration in
business equipment spending is under way,
reflecting the general slowdown in economic
activity and expected sales. Real spending on
producers' durable equipment fell more than 4
percent at an annual rate in the fourth quarter.
Part of the decline resulted from the work
stoppage at Boeing; but even allowing for that
special factor, real equipment outlays still declined somewhat.
Looking forward, recent data are offering
mixed signals about future capital spending. For
example, orders for nondefense capital goods
received in November and December show a
bounceback from the decline that had occurred
in the third quarter. Other indicators of capital
spending, however, give the impression of softness ahead. For example, recent declines in real
cash flow of nonfinancial corporations do not
bode well for investment spending in the near
term. In the 1980s, growth in cash flow—measured as the sum of undistributed after-tax profits
and depreciation allowances—tended to move
with growth in real gross business fixed investment. Thus the recent cash-flow experience—
which has signaled a deterioration in the availability of internal funds—is one factor likely to be
a restraining influence on capital spending in
1990. Moreover, this signal is being reinforced by
surveys of plant and equipment expenditures
taken this past fall that indicate real capital
spending will grow less this year than last, the
Statements
deceleration being most noticeable among nondurable manufacturing and nonmanufacturing
firms.
Until now, I have been sketching the negative
side of the economic landscape. Let me now
suggest where we can look for more favorable
signs. First, demand for long-lived assets is still
growing in some areas, creating opportunities for
strong production growth. This is most clearly
evident in the case of civilian aircraft for which
the level of the orders backlog has doubled over
the past two years. Second, in contrast to some
past cycles, we have not seen the type of speculative buildups of materials and finished goods
by businesses that can exacerbate the effects of
any weakening in sales trends. I believe one
reason for this is that thus far we have avoided a
cyclical upswing in inflation, so that the buyin-advance motive has been less of an influence.
Third, foreign demand for many of our manufactured products is strong. Real export growth of
manufactured goods, although down somewhat
from the torrid pace of 1988, remains sizable.
Strength runs across a wide variety of consumer
and capital goods as well as industrial supplies.
Fourth, there is evidence from labor markets
that the spillover effects from durable manufacturing have been limited. Although manufacturing employment has fallen nearly 195,000 jobs
since last March, total private nonfarm payrolls
have continued to rise, with the increase totaling
about Wi million over that period. The contribution from the health services area to the overall
increase has been especially noteworthy. Employment in medical care, which made up about
7 percent of total payroll employment early last
year, has increased nearly 400,000 since then.
Other sizable employment contributions have
come from business services and state and local
governments.
Favorable signs about the economy's economic health are also revealed by comparing
recent movements in an index of leading eco-
to Congress
131
nomic indicators with its pattern of movements
just before and during previous recessions. Recently, statistical procedures have been developed that allow such a comparison to be translated into the likelihood of a recession. These
procedures have been applied by Board staff to
the Commerce Department's index of leading
economic indicators, which comprise several
real and financial market variables. The resulting
measure suggests that the probability of a recession developing in the next six months increased
last spring to almost 30 percent, but according to
the most recent estimates has declined to about
20 percent.
A second probability-of-recession measure is
based on a leading index recently compiled by
economists at the National Bureau of Economic
Research, which relies less heavily on data from
the manufacturing sector than does the Commerce Department index and does not include
stock prices. The probability of a recession in the
next six months based on the National Bureau of
Economic Research (NBER) index also has declined since last spring and according to the
December reading stands at about 10 percent.
Both probabilities are much smaller than those
occurring at the beginning of each of the four
recessions since the late 1960s. For example, the
probability exceeded 50 percent shortly before
each of the previous recessions using the NBER
index.
I wouldn't want to "bet the ranch" on such
statistical measures. I think we must continue to
monitor developments closely and stay alert to
the possibility that, perhaps reinforced by some
adverse shock not now visible, the weakness in
the several sectors I have discussed might cumulate and lead to a more widespread downturn in
activity. But such imbalances and dislocations as
we see in the economy today probably do not
suggest anything more than a temporary hesitation in the continuing expansion of the
economy.
•
132
Federal Reserve Bulletin • March 1990
Statement by E. Gerald Corrigan, President,
Federal Reserve Bank of New York, before the
Subcommittee on Domestic Monetary Policy of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives,
February 6, 1990.
I am pleased to appear before you this morning to
lend my support to House Joint Resolution 409,
which calls for Federal Reserve monetary policy
to be conducted with a view toward achieving
price stability in five years. I want to applaud
your efforts for taking the initiative on this important matter. There is no doubt in my mind that
our economy would perform better, our citizens
would be better off, and our international competitiveness would improve in a setting in which
the goals of this resolution were achieved. There
is also no doubt in my mind that the primary (but
not sole) mission of the central bank should be to
promote a noninflationary economic environment. Finally, I believe that monetary policy in
the United States is capable of achieving that
result, but how quickly it is achieved, at what
cost, and how sustainable that environment
proves to be will depend importantly on other
aspects of economic policy both here and, increasingly, in other countries as well.
In this context, it seems to me that the resolution raises two basic issues that warrant the
careful consideration of the subcommittee and
the Congress as a whole. The first relates to the
definition of price stability and the second relates
to the costs that may be incurred in moving
toward price stability and, more importantly,
what we, as a nation, can do to minimize such
costs.
Let me turn first to the definitional question.
The resolution incorporates a definition of price
stability that is couched in terms of a pattern of
behavior in which expectations of future price
changes play no role in decisionmaking on the
part of businesses, households, and governments. This definition is conceptually sound because inflation is at least as much a state of mind
as it is a statistic. To be a bit more concrete, I
would suggest that the spirit of the resolution
would be essentially attained if we were able to
return to the pattern of behavior that characterized the period from 1955 through 1965, when the
average annual change in the consumer price
index (CPI) was only 1.5 percent. Such an outcome would also closely approximate experience
over the past few years in Japan, Germany, and
the Netherlands, the industrial countries that
have been among the leaders with regard to
containing inflation over most of the 1980s. In
short, the goal of seeking to replicate a pattern of
price performance that approximates our own
national experience between 1955 and 1965 and
to realize that goal in the timeframe of the
mid-1990s strikes me as appropriate.
The second major issue relates to the costs
incurred in the transition to such an environment
and the sustainability of that environment once it
is achieved. There is absolutely no question that
bringing the underlying inflation rate down from
its current level of about 4.5 percent to about 1 or
1.5 percent will involve costs in terms of at least
some shortfall of actual output relative to potential output over the transition period. Moreover,
history here in the United States, as well as
experience in all other countries, suggests that
such costs could be large. Indeed, I am very
hard pressed to recall a single case in which a
significant reduction in inflation was accomplished in a major industrial country without
relatively large costs. And, in cases in which
the costs were more moderate and the success
more lasting, the adjustment process typically
has been assisted by complementary moves on
the part of fiscal or other elements of economic
policy. But, even under the best of circumstances, some costs will be incurred. For example, over the last decade, in both Germany and
the Netherlands—the European superstars on
the inflation front—the unemployment rate has
been quite high by historic and international
comparative standards.
Having said that there will be at least some
costs associated with the transition, let me hasten to add that it is not easy to judge just how
small or how great those costs might be. This is
true, in part, because these costs can vary significantly, depending on the broad economic and
expectational environment in which the transition is made. To illustrate some of the dimensions of this situation, I have attached to my
statement a table containing a cross section of
economic statistics covering the 1955-65 and the
Statements
1983-89 periods. Clearly a handful of statistics
cannot begin to capture all the elements and all
the dynamics of a multitrillion dollar economy,
but I believe they convey many useful insights.
The first cluster of those statistics provides a
quick comparison of five measures of overall
economic performance over the two periods.
These statistics suggest that the growth of real
GNP was not, on average, wildly different in the
two periods. In fact, the similarity in the average
growth rates of real GNP in the two periods is
very striking. However, the " c o r e " inflation rate
was much higher in the 1980s and unemployment
Selected macroeconomic statistics
Average
Economic indicators
1955-65
Economic performance
Percent change in nominal GNP
Percent change in real GNP
Percent change in CPI
Excluding food and energy
Average unemployment rate
Unemployment rate at end of period
Structural change in the economy
Percent of civilian population aged 16 or
more in labor force
Percent of total population aged 25-44 ..
Consumer spending on services
as percent of GNP
6.0
3.6
1.4
1.6 1
5.3
4.5
1983-89
7.5
3.9
3.6
4.3
6.9
5.3
59.2
26.2
65.2
31.3
25.4
34.3
4.3
2.6
4.4
1.8
5.4 3
1.6
2.6
4.3 3
6.5 5
2.4
7.4
6.0
3.7 7
2.4 1
5.3
4.0 7
2
Underlying inflation
Percent change in compensation per hour ..
Percent change in productivity
Percent change in unit labor cost
(all data for private nonfarm economy).
Financial performance
Percent change in M2 4
Inflation adjusted long-term bond yield 6 . . .
Inflation adjusted long-term bond yield
using CPI, excluding food and energy .
Underlying characteristics
of the U.S. economy2
Federal budget deficit as percent of GNP
Current account balance as percent of GNP
Net private savings as percent of GNP . . .
Excluding state and local
government balances8
Net private investment as percent of GNP
Net domestic savings gap
as percent of GNP
Net economic profits as percent of GNP .
Net foreign assets or liabilities ( - )
as percent of GNP at end of period ..
.1
1.03
4.1
.6
7.7
-2.6
7.8
6.9
5.2
4.8
6.5
-2.4
6.6
10.3
n.a.
9
-11.7
1. Based on 1958-65 average.
2. 1989 data are based on estimates.
3. Percent change, 1988:3 to 1989:3.
4. Annual data calculated on fourth-quarter-to-fourth-quarter basis.
5. 1955-59 data are based on estimates.
6. Ten-year bond yield less change in CPI.
7. 1989.
8. Includes state and local government surplus or deficit.
9. 5.7 percent at end of 1970.
n.a. Not available.
to Congress
133
materially lower in the earlier period even though
the unemployment rate at the end of the 1980s
had converged significantly toward its level in
1965.
To some extent, these differences in inflation
and unemployment may reflect changed structural features in the economy. To illustrate this,
the second set of statistics shows that over the
interval spanned by the two time periods, we
have experienced a significant increase in the
following: (1) labor force participation rates; (2)
the share of the population in the household
formation age bracket of 25 to 44 years of age;
and (3) the share of GNP that is accounted for by
consumer spending on services, in which inflation rates tend to be relatively high.
However, even after allowing for these
changed structural features of the economy, the
" c o r e " rate of inflation in the 1980s is both too
high and is materially higher than it was in the
1955-65 interval. To shed further light on this,
the third set of statistics presents data on compensation per hour, productivity, and unit labor
costs for the private nonfarm economy. At least
in a proximate sense, these data provide particularly good insights into the dynamics of the core
inflationary process. In looking at these data, it is
important to keep in mind that the aggregate
compensation bill represents a sizable fraction of
GNP. Therefore, as an approximation over time,
it follows that the only way in which the core
inflation rate can rise at a materially slower rate
than the rise in unit labor costs would be when
profitability is falling. That is particularly important in the current setting in which profits already
are squeezed and the share of "economic" profits in GNP is near to an all-time postwar low.
With those qualifications in mind, the most
striking feature of the third set of statistics is that
by far the largest factor contributing to the more
rapid rise in unit labor costs in the 1980s is not
the rate of increase in compensation but the
distinct slowing of productivity growth. The immediate situation is even worse than the average
for 1983-89 since over the past four quarters
productivity growth has slowed to only 1 percent
and unit labor costs are rising at 4.3 percent. I
might also add in this regard that recent patterns
of productivity increases in the United States not
only look poor relative to the 1955-65 period but
134
Federal Reserve Bulletin • March 1990
also look quite poor by international standards as
well. For example, overall productivity increases
not only in Japan and Germany, but also in
France and the United Kingdom, have outpaced
those in the United States during the 1980s.
While I will return to this point later, it is quite
clear to me that if we want to achieve and sustain
major improvements in inflation at modest costs,
we are going to have to do much better on the
productivity front than has been our recent history. The reason for this is quite straightforward:
Namely, the higher the rate of productivity
growth, the lower the rise in unit labor costs
associated with any given rate of compensation
increase and the smaller the amount of slack
needed in labor markets to achieve that lower
rise in unit labor costs.
The next set of data in the table provides some
insights on financial indicators during the two
periods under study. These, too, might be surprising to some, especially since the growth of
M2 over the two intervals was quite similar.
However, there is a striking difference between
the inflation-adjusted interest rates on long-term
bonds over the two periods—a difference that, at
first blush, seems difficult to explain. For the
1983-89 period as a whole, the very high, real
long-term interest rates are somewhat exaggerated by extraordinarily high rates earlier in the
period as the economy adjusted from the very
high inflation rates of the early 1980s. However,
even at the end of 1989 the inflation-adjusted
long-bond rate of about 4 percent was still about
1.5 percentage points above its average during
the 1955-65 period. The last set helps shed some
light on this difference and, in my judgment, gets
right to the heart of many of our current economic difficulties.
There are truly massive differences in the
behavior of the federal budget and current account relative to GNP in the two periods, as well
as associated sharp differences in the private
savings and investment rates relative to GNP
(bottom panel of the table). These differences can
have profound implications both for how the
economy works and for the costs associated with
the transition to price stability. For example,
with the investment rate as low as it is, should we
be all that surprised that productivity behavior
has been so poor? In fact, the investment situa-
tion may be even worse than indicated; some
analytical work by my colleagues at the Federal
Reserve Bank of New York suggests that the
stock of net capital per worker has been essentially flat over the past three years.
As another example that can be drawn from
the lower panel of the table, should we be
surprised that real interest rates are so high when
our domestic credit demands far exceed our
domestic savings and, as a result, we must finance much, and at times virtually all, of our
budget deficit by attracting savings flows from
the balance of the world in a setting in which our
net external liabilities are now so large. To be
sure, other factors such as volatility in economic
growth patterns and high and volatile inflation
rates also play a role in explaining the relatively
high level of U.S. real interest rates in recent
years. But, the persistent domestic savings gap
and the resulting need to attract so much savings
from abroad in recent years have to be recognized as significant factors in this regard.
As I mentioned earlier, I am under no illusion
that these few statistics can tell the whole story
about a large and complex economy such as that
of the United States. Despite these limitations, I
think the message from these statistics is clear:
We have some major imbalances in our economy, which, among other things, have a direct
bearing on the relative ease—or lack thereof—
with which the transition to price stability can be
managed. For example, to the extent that the
savings gap is eliminated by balancing the federal
budget, we would at least have much more room
to finance domestically a higher rate of private
investment, which, in turn, would assist productivity performance over time. Similarly, in those
same circumstances, the potential for some decline in real interest rates is clear, although we
must recognize that our status as a large net
debtor nation may limit the scope of these gains.
To put it differently, moving toward and sustaining a noninflationary environment will be
even easier if we have genuine success in implementing policies that will deal with the closely
interrelated problems of low savings, low investment, and low productivity growth. But, these
gains will only come slowly.
There is one other crucial variable that could
make an enormous difference with regard to
Statements
to Congress
135
containing the costs of the transition to price
stability, and that is the role of expectations.
Many models of the economy and most elements
of casual observation suggest that expectations
of future inflation are importantly, if not decisively, influenced by experience with inflation in
the recent-to-intermediate-term past. Econometric analysis also suggests that the deeper those
expectations are entrenched, the more difficult
and more costly will be the task of winding down
inflation. By the same token, the less entrenched,
and even more important, the more forward
looking such expectations are, the lower will be
the cost of moving toward and achieving price
stability.
For this reason, if the American public were
convinced that the national commitment to price
stability was real and lasting, the transition problem would be much easier and less costly. However, it is going to take much more than rhetoric
to produce that change in expectations. Even if
H.J. Res. 409 were to become law with broadbased bipartisan support, I am not at all sure that
the public would immediately and fully adjust
their expectations in a major way so long as
perceptions about our national economic imbalances in areas such as the budget deficit remain
unchanged. In other words, a change in expectations about future inflation would make a very
major contribution to our success in achieving a
noninflationary environment, but that change
will not come easily or automatically.
In closing, I think that it is essential that any
discussion of the costs of moving to price stability also includes a parallel discussion of the costs
of coexisting with something like the current rate
of inflation and the ever-present danger that the
inflation rate could move still higher. Virtually
every observable facet of economic and financial
history—here in the United States and around
the world—tells us that high or rising rates of
inflation are simply incompatible with sustained
economic prosperity. Inflation inevitably undermines economic and financial discipline; it can
arbitrarily redistribute income; it surely undercuts international competitiveness; and it can
induce wholly unnecessary and costly elements
of volatility in interest rates and exchange rates.
Moreover, so long as an inflationary environment
persists, these costs are ongoing and cumulative.
Looked at in this light, the costs of gradually
winding down inflation—especially if we are able
to maintain the discipline to keep the inflation
down—look far less foreboding. Nevertheless,
both minimizing the transition costs and maximizing the prospects of sustaining a noninflationary environment make it all the more clear to
me that those complementary efforts aimed at the
savings gap, the investment rate, and productivity growth are very important indeed.
•
Statement by W. Lee Hoskins, President, Federal Reserve Bank of Cleveland, before the Subcommittee on Domestic Monetary Policy of the
Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives,
February
6, 1990.
serve. Efficient utilization of our nation's resources requires a sound and predictable monetary polidy. H.J. Res. 409 wisely directs the
Federal Reserve to place price stability above
other economic goals because price stability is
the most important contribution the Federal Reserve can make to achieve full employment and
maximum sustainable growth.
I am pleased to appear before this subcommittee
to testify on House Joint Resolution 409. I
strongly support your resolution directing the
Federal Reserve System to make price stability
the main goal of monetary policy. Ultimately, the
price level is determined by monetary policy.
While economic growth and the level of employment depend on our resources and the efficiency
with which they are used, the aggregate price
level is determined uniquely by the Federal Re-
THE BENEFITS OF PRICE
Price Stability
Leads
STABILITY
to Economic
Stability
An important benefit of price stability is that it
would stabilize the economy. High and variable
inflation has always been one of the prime causes
136
Federal Reserve Bulletin • March 1990
of financial crises and economic recessions. Certainly U.S. experience since World War II reaffirms the notion that inflation is a leading cause of
recessions. Every recession in our recent history
has been preceded by an outburst of cost and
price pressures and the associated imbalances
and distortions. A monetary policy that strives
for price stability, or zero inflation, as mandated
by H.J. Res. 409, would help markets avoid
distortions and imbalances, stabilize the business
cycle, and promote the highest sustainable
growth in our economy.
Price Stability Maximizes
Efficiency and Output
Economic
A market economy achieves maximum production and growth by allowing market prices to
allocate resources. Money helps make markets
work more efficiently by reducing information
and transactions costs, thus allowing for better
decisions and improved productivity in resource
use. Stabilizing the price level would make the
monetary system operate more efficiently and
would result in a higher standard of living for all
Americans. Money is a standard of value. Much
of our wealth is held either in the form of money
or in claims denominated in and payable in
money. Money represents a claim on a share of
society's output. Stabilizing the price level protects the value of that claim while inflation reduces it.
When we borrow, we promise to pay back the
same amount with interest. When we allow unpredictable inflation, we arbitrarily take from the
lender and give to the borrower. When this
condition persists, we create an environment in
which interest rates rise once to accommodate
expected inflation and again to accommodate the
increased risk involved in dealing with an uncertain inflation. When inflation rises and becomes
uncertain, people are forced to develop elaborate, complicated, and expensive mechanisms to
protect their wealth and income, such as new
accounting systems, markets for trading financial
futures and options, and cash managers who
spend all their time trying to keep cash balances
at zero. It would be inefficient to allow the length
of a yardstick to vary over time, and it is ineffi-
cient to allow inflation to change the yardstick for
economic value.
While the evidence that price stability maximizes production and employment is not as
direct or as extensive as I would like, it is
persuasive to me. One source of evidence can
be found in the comparison of inflation and
real growth across countries. Several studies
find that higher inflation or higher uncertainty
about inflation is associated with lower real
growth.
Inflation adds risk to decisionmaking and retards long-term investments. Inflation causes
people to invest scarce resources in activities
that have the sole purpose of hedging against
inflation. Inflation interacts with the tax structure
to stifle incentives to invest.
More evidence comes from the extreme cases,
the cases of hyperinflation. There we see that
economic performance clearly deteriorates with
high inflation. Both specialization and trade decline as small firms go bankrupt and people
return to home production for a larger share of
goods and services.
Even a relatively predictable and moderate
rate of inflation can be quite harmful. During the
seven years of our economic expansion since
1982, inflation has averaged between 3 and 4
percent. While that is low by the standards of the
1970s, the purchasing power of the dollar has
been reduced about 25 percent. Interest rates
continue to include a premium for expected
inflation and a premium for uncertainty about
inflation.
Research at the Federal Reserve Bank of
Cleveland indicates that a fully anticipated inflation, with no uncertainty about future inflation,
would reduce the capital stock through taxes on
capital income. Using 1985 as a benchmark and
using conservative assumptions, we have estimated that the interaction of an expected 4
percent inflation rate with the tax on capital
income leads to a present value income loss in
the American economy of $600 billion or more.
This is an amount much greater than the output
loss typically associated with recessions. This
estimate is from a policy of a perfectly anticipated 4 percent inflation and includes only the
welfare loss associated with the failure to fully
index taxes on capital income. It ignores the
Statements
greater damage done to market efficiency by
making our monetary yardstick variable. 1
Even beyond these costs, I believe that inflation diminishes productivity growth. Because the
worldwide slowdown in productivity growth occurred simultaneously with the acceleration in
inflation and the oil price shocks, the evidence is
very difficult to sort out satisfactorily. But if I am
correct in believing that inflation inhibits productivity growth, the present value of lost output
from even a very small reduction in the trend of
productivity growth would far exceed the adjustment costs associated with the transition to price
stability.
THE LIMITATIONS
A Fallacious
Prosperity
OF MONETARY
Trade-Off:
Inflation
POLICY
for
Unfortunately, over the years we have come to
believe that we can prolong expansion, or avoid
recession, with more inflation. A look at recent
history reminds us that there is no trade-off
between inflation and recession. Although we do
not understand recessions completely, we have
seen that they can be caused by monetary policy
actions as well as by nonmonetary factors.
In the early 1980s we had recessions caused by
monetary policy mistakes. The policy mistake
was the excessive monetary growth of the 1970s,
which allowed accelerating inflation and rising
interest rates and ultimately led to the need for
disinflationary monetary policies. The disinflationary policies were necessary to get our economy back to an acceptable level of real activity.
Yet even today, we are apt to blame the recessions on policies that reduced inflation instead of
blaming the policies that created the inflation to
begin with. While recessions will occur even
under an ideal monetary policy, they will not be
as frequent or as severe. With price stability, we
would not have recessions induced by inflation
and the subsequent need to eliminate it.
1. David Altig and Charles T. Carlstrom, "Expected Inflation and the Welfare Losses from Taxes on Capital Income,"
Federal Reserve Bank of Cleveland, February 1990.
to Congress
137
Even if we thought that eliminating the business cycle was a desirable and healthy long-term
goal, I believe it is impossible to do so. There are
several reasons that prevent us from using monetary policy to offset nonmonetary surprises.
First, we cannot predict recessions. Second,
monetary policy does not work immediately or
predictably; it works with a lag, and the lag is
variable and poorly understood.
The Crystal
Ball
Syndrome
The limitations of economic forecasting are well
known. Analysis of forecast errors has shown
that we often do not know that a recession has
begun until it is well under way. At any point in
time, the range of uncertainty around economic
forecasts of business activity for one quarter in
the future is wide enough that both expansion
and recession are plausible outcomes.
The people who make forecasts and those
who use them often get a false sense of confidence because forecast errors are not distributed evenly over the business cycle. When the
economy is doing well, forecasts that prosperity
will continue are usually correct. And when the
economy is performing poorly, forecasts that
the slump will continue are also usually correct.
The problem lies in predicting the turning
points. However, the turning points are the
things we must forecast to prevent recessions.
Monetary
Policy's
Long and Variable
Lags
We do not know exactly how a particular policy
action will affect the economy. Macroeconomic
ideas about monetary policy and its effect on real
output have changed profoundly in the last decade, as we have recognized that the effect of
monetary policy depends importantly on how
economic agents form and alter expectations
about policy.
Even if we could predict recessions and
wanted to vary monetary policy to alleviate
them, we still face an almost insurmountable
problem—monetary policy operates with a lag.
Moreover, the length of the lag varies over
time, depending on conditions in the economy
and on public perception of the policy process.
The effect of today's monetary policy actions
138
Federal Reserve Bulletin • March 1990
will probably not be felt for at least six to nine
months, with the main influence perhaps two to
three years in the future. The act of trying to
prevent a recession may not only fail, but may
also create a future recession—via an inflation—where otherwise there would not have
been one.
Economic agents, businessmen, and consumers alike do not act in a vacuum. The political
forces operating on a central bank make inflation always a possibility. Uncertainty about
future inflation adds risk to future investments.
Uncertainty about future inflation will raise real
interest rates, drive investors away from longterm markets, and delay the very adjustments
needed to end the recession. The more certain
people are about the stability of future monetary policy, the more easily and quickly inflation can be reduced and the economy can
recover.
Lessons
We Should Have
Learned
If we have learned anything about economic
policymaking in the last twenty years, we ought
to have learned to think about policy as a dynamic process. To claim that "in order to reduce
inflation, we must have a recession," is a wrongheaded notion that completely ignores the ability
of humans to adapt their expectations as the
environment changes.
People do their best to forecast economic
policies when they make decisions. If the
central bank has a record of expanding the
money supply in attempts to prevent recessions, people will come to anticipate the policy,
setting off an acceleration of inflation and misallocation of resources that will lead to a recession.
An economy often goes into recession after
an unexpected burst of inflation because people
have made decisions that were based on an
incorrect view of the future course of asset
prices and economic activity. The central bank
can help prevent the need for such adjustments
by providing a stable price environment. Moreover, price stability will be the optimal setting
for adjustments in business inventories and bad
debts, should such adjustments be necessary.
THE IMPORTANCE OF ADOPTING
HOUSE JOINT RESOLUTION 409
Sound Policies
Minimize
Uncertainty
Economic policies must have clear objectives,
verifiable outcomes, and rules that are consistently adhered to in order to minimize uncertainty. Predictable, verifiable policies ensure that
long-term planning and resource allocation decisions will be efficient. Sound policy thus requires
a resolute focus on the long term and resistance
to policies that, while expedient in the short run,
introduce more uncertainty into an already unpredictable world. If enacted, H.J. Res. 409
would make a valuable contribution to this important objective.
In the long run, inflation is the one economic
variable for which monetary policy is unambiguously responsible. The zero inflation policy
called for in H.J. Res. 409 satisfies the key
requirements of sound policy: It is clear, it is
verifiable, and it has consistent rules. Unlike
other rates of inflation, zero inflation is a policy
goal that will be understood by everyone.
Responding
to Multiple
Goals
The Federal Reserve Reform Act of 1977
amended the Federal Reserve Act so that it now
requires the Federal Reserve " . . . to promote
effectively the goals of maximum employment,
stable prices, and moderate long-term interest
rates." However, it is the Federal Reserve's
responsibility to decide how best to pursue those
goals.
Because of the multiplicity of goals established
by the Congress for the Federal Reserve, the
Federal Reserve can choose which goal it emphasizes at any moment. Such discretion increases
the likelihood that political and special interest
groups could try to influence the Federal Reserve
to pursue the policy that is currently important to
that group.
In this respect, the Federal Reserve's situation
is different from that of West Germany's central
bank, which is also independent. More than one
goal is specified by law for that bank, but German
law states that the goal of price stability is to be
given highest priority whenever another goal
Statements
might conflict with maintaining price stability.
This stipulation is a major reason why West
Germany's price level only doubled between
1950 and 1988, while the U.S. price level quadrupled.
Since current law requires the Federal Reserve
to promote maximum employment, stable prices,
and moderate long-term interest rates, the Federal Reserve must choose a viable strategy to
accomplish this mission. Two approaches seem
plausible.
One approach would be for the central bank to
try to achieve a balance among its three congressionally mandated objectives. The Federal Reserve could use its own judgment about what
balance among the objectives to pursue, and
could change that balance from time to time,
depending on its view of how the economy works
and what course is broadly acceptable to the
public. In essence, this is the practice that the
Federal Reserve has followed. It has strived to
balance desirable economic conditions such as
full employment, economic growth, and low
long-term interest rates with low rates of inflation. But the major drawback to this approach is
its feasibility. To strike a balance among the
mandated goals requires that they be reliably
linked to one another. Furthermore, monetary
policy would need to be capable of influencing
simultaneously all these economic dimensions in
the desired directions and quantities.
While monetary policy is capable of influencing the economy in the short to intermediate
run, over long periods of time monetary policy
can only affect the rate of inflation. The rate of
inflation, in turn, affects all dimensions of economic performance, including output, employment, and interest rates. Maximum production
and employment and low interest rates can be
achieved only with price stability.
By its very nature, a balancing act among
complex economic goals causes substantial confusion about the Federal Reserve's intentions.
Such confusion could be avoided to a large
degree if the Congress or the Federal Reserve
assigned priorities to the goals.
A more promising approach is to select one
objective—the only one that the Federal Reserve
can influence directly. Under the provisions of
H.J. Res. 409, the Federal Reserve would seek to
to Congress
139
maintain a stable price level over time. Price
stability is defined as an inflation rate so small
that it does not systematically affect economic
decisions. The definition may appear less specific
than some would like, but I believe that the
decisions of economic agents will be very important in monitoring success in achieving price
stability. In practice, the size of the inflation
premium estimated to be found in long-term
interest rates, surveys of the public's inflation
expectations, and other market-generated measures of inflation expectations can be very useful.
If policy is credible, both the inflation component
and the inflation uncertainty risk premium would
be eliminated from interest rates. Temporary and
unforeseen factors will cause the price level to
deviate from the desired course. It would be a
mistake to try to keep some inflation index on
target each and every quarter, or even each and
every year.
Price stability can be achieved by holding the
money supply (as measured by M2) on or close to
a path that is consistent with price stability over
long periods. The relationship between money
and the price level over long periods of time is
stable and strong. However, the link between
money and the economy over periods perhaps as
short as a year is loose enough to afford the
Federal Reserve considerable leeway in responding to problems and crises—as long as economic
agents believe that the future value of money will
be stable. Clearly, this resolution would not
prevent the Federal Reserve from providing liquidity in times of financial crises, such as the
stock market crash in 1987.
Announcing a
Commitment
to Price
Stability
Announcement of a commitment to price stability, as embodied in H.J. Res. 409, would enhance
the ability of the Congress to hold the Federal
Reserve accountable for achieving the goal. Central bank accountability is appropriate in a democracy and, in fact, the Congress has the
ultimate authority to change the Federal Reserve's goal.
A legislative commitment to price stability
would also enhance the Federal Reserve's independence from political pressures as it pursued
140
Federal Reserve Bulletin • March 1990
that goal. A commitment by the Congress to
price stability would reduce the effectiveness of
political pressure to deviate from that goal. Thus,
a distinction can be made between a central bank
that is accountable for long-run performance and
a central bank that can be influenced to pursue
short-run goals that might be incompatible with
desirable long-term economic performance.
The commitment to price stability supported
by a legislative mandate would foster the credibility of the Federal Reserve. Improving the
Federal Reserve's credibility would strengthen
the expectation that prices will be stable and
would contribute to price and wage decisions
that would make price stability easier to achieve
and maintain.
ARGUMENTS AGAINST ADOPTING HOUSE
JOINT RESOLUTION 409 ARE WEAK
What About
the Transition
Costs?
A commitment by the Congress and the Federal
Reserve to achieve price stability would entail
adjustment costs. Adjustment costs would arise
from two sources: contractual obligations and
the credibility problem, or uncertainty about
whether price stability would be achieved and
maintained. The contractual costs can be alleviated with an appropriate adjustment period. H.J.
Res. 409 recognizes that abrupt policy changes
can be disruptive and provides a phase-in period
to help reduce adjustment costs.
Much of our day-to-day economic activity is
conducted under contracts and commitments
that extend over longer periods of time and that
embody the expectations of a continuing moderate inflation rate. Most of these contracts will
expire in the next few years. The disruption to
business and the arbitrary wealth redistribution
of an abrupt adjustment to price stability would
be greatly reduced by an appropriate phase-in
period. H.J. Res. 409 gives us five years to get to
price stability—a period long enough to reduce
substantially the transition costs.
The second set of adjustment costs emanates
from the expectations of economic agents. As the
Congressional Budget Office (CBO) points out in
its recent Economic and Budget Outlook, if ev-
eryone believed that inflation would be reduced
to zero, and planned accordingly, these costs
would be very low. The Federal Reserve has
stated that it intends to reduce inflation to zero or
to low levels, but it has not committed to a
specific timetable for eliminating inflation, or to a
plan for doing so. The result is that the public in
general and the markets in particular wonder just
how serious we are in those intentions, or
whether we will switch our priorities to some
other goal, as we have in the past.
Large-Scale
Econometric
of the Transition
Cost
Model
Estimates
Economists have not made much progress in
estimating the transition costs of eliminating inflation. Frequently, econometric models that embody a large number of complex relationships
and variables are used to estimate the adjustment
costs. For manageability, econometric models
are built with many simplifying assumptions, one
of which is the presumption that economic agents
are backward looking in the way they form and
change expectations. In these models, expectations, which in effect determine adjustment
costs, are formed from past experience, and are
changed only slowly as the future unfolds. The
presumption that expectations change only
slowly inevitably generates estimates of high
transition costs. The real question about a
change in policy as specified by H J . Res. 409 is
how forward-looking economic agents would behave under a fully credible and fully understood
policy change. Backward-looking models are relatively useless in answering this question.
In almost every case, such models are constructed to display the effects that are consistent
with the model builder's theories and biases.
Almost all of the large models are based on the
dual notion that the only way to eliminate inflation is to raise the unemployment rate. Naturally,
these models will find that eliminating inflation is
very costly. These exercises have been conducted many times in the past, and they have
consistently overestimated the costs of eliminating inflation and ignored the benefits of doing so.
I might also observe that those who really believe
the analytical structures contained in these models logically should advocate an acceleration of
Statements
inflation because the models would predict great
benefits from doing so.
One member of the Council of Economic
Advisors, an expert on such matters, has developed large econometric models with sluggish
resource adjustment induced by labor contracts. Even in these models, there is almost no
short-run cost to eliminating inflation with a
credible policy change. The reason is simply
that, in these models, people are assumed to
change their behavior in response to the policy
change.
As the CBO study states, "inflation could be
reduced relatively painlessly by lowering inflationary expectations." A commitment by the
Congress and the Federal Reserve would enhance credibility and convince economic agents
to begin to base decisions on gradual elimination of inflation over a five-year period. The
transitional costs presented elsewhere in the
CBO study then would be grossly overestimated.
A consistent commitment to a long-run policy
goal of price stability is important. One of the
worst things we could do is to eliminate inflation
for a while and then return to high inflation later.
H.J. Res. 409 would contribute to an important
change in the policy process, focusing it toward
consistent long-run goals and away from reactions to each new report of economic activity.
Each policy action would become part of a policy
process that is consistent with long-run price
stability.
Fiscal Policy Is No
to Price
Stability
Obstacle
Federal budget deficits should not compromise
either the Federal Reserve's goal of price stability or the adoption of a specific timetable to
achieve it. I do not mean to suggest or imply
that current fiscal policy is ideal, appropriate,
or the result of bad monetary policy. Savings
are too low, at least partly because of budget
deficits, and measures to address our savings
shortfall must include measures to reduce the
deficit. However, while we strive for better
fiscal policy, we should recognize that monetary policy cannot offset whatever harm may
to Congress
141
result from fiscal policy; indeed, it can only add
to those costs.
We are all familiar with the argument that
large federal budget deficits cause high interest
rates, forcing the Fed to ease monetary policy
to keep interest rates at levels consistent with
full employment. This argument ignores the fact
that both the federal budget deficit and, more
important, government spending, at least measured relative to the economy, have been falling
for the past several years and should continue
to do so.
There is, of course, legitimate concern that
the progress in deficit and expenditure reduction might cease or even be reversed, for any
number of reasons. How should such a reversal
influence monetary policy? Even if fiscal policy
choices were to put upward pressure on interest
rates, and there is little consensus among economists that this is the case, it is far from clear
that the Federal Reserve can do anything to
alleviate the economic consequences of that
problem. Ultimately, it is real interest rates that
affect the consumption and production decisions of individuals and businesses and the
allocation of resources over time. Real rates of
return are based on the productivity of labor,
capital, and other real assets in a society, and
have very little, if any, connection with monetary policy.
In an inflationary environment, nominal rates
of return include an inflation premium to compensate lenders for being repaid in money of
reduced purchasing power. The correlation between monetary policy and nominal interest rates
that dominates discussion in the financial press
tells us next to nothing about the relationship
between monetary policy and the real interest
rates that govern the allocation of resources over
time. Every movement in the federal funds rate
does not produce equivalent changes in real
interest rates, in the productivity of our capital
stock, or in any of the other important real
variables that affect economic activity. The fact
that monetary policy exerts relatively direct control over the federal funds rate does not imply
that real interest rates can, similarly, be controlled by monetary policy.
It is unnecessary and undesirable for sound
monetary policy choices to await sound fiscal
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Federal Reserve Bulletin • March 1990
policy choices. Sound fiscal policy decisions, like
sound private economic decisions, require the
stable inflation environment that H.J. Res. 409
would direct the Federal Reserve to provide. The
tax-related distortions and economic complexities associated even with stable, positive rates of
inflation argue strongly for price stability.
CONCLUSION
If H.J. Res. 409 is enacted and the Federal
Reserve commits to an explicit plan for price
stability, the transition period will soon be
over, and any costs that arise because of this
Statement by Robert P. Black, President, Federal Reserve Bank of Richmond, before the Subcommittee on Domestic Monetary Policy of the
Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives,
February 6, 1990.
I am delighted to be here today to testify in
favor of House Joint Resolution 409, which
would instruct the Federal Reserve to achieve
price stability within five years. I believe that
passage of the resolution by the Congress
would significantly improve the overall framework in which monetary policy is conducted
and increase our chances of achieving price
stability and steady economic growth in the
years ahead.
I have been associated with the Federal Reserve Bank of Richmond for more than thirty-five
years and have attended at least some of the
meetings of the Federal Open Market Committee
for about thirty of those years. For seventeen
years, I have been the Richmond Bank's official
representative at those meetings. My work with
the Committee has convinced me that price stability should be the primary long-run objective
for monetary policy and that the Federal Reserve
can make its greatest contribution to the economic health of our country through pursuit of
that objective.
policy change will be outweighed by the benefits. These benefits will be large and permanent,
and will far outweigh the costs of getting there.
H.J. Res. 409, if enacted, would be a milestone
in economic policy legislation because it would
shift the focus of monetary policy away from
short-term fine tuning to the long term, where it
belongs. It would enforce accountability for the
one vital objective that the Federal Reserve can
achieve. It would officially sanction those
sometimes unpopular short-run policy actions
that most certainly are in our nation's long-term
interest. It would make clear that the Federal
Reserve cannot achieve maximum output and
employment without achieving price stability. I
fully support House Joint Resolution 409.
•
THE CASE FOR MAKING PRICE STABILITY
THE OVERRIDING OBJECTIVE OF
MONETARY POLICY
The case for making price stability the primary
objective of monetary policy is a compelling one.
First, inflation imposes pervasive costs on our
society, especially if it is not anticipated. Inflation distorts the signals that prices send in our
market economy, which leads to serious inefficiencies in the allocation of resources. These
distortions and inefficiencies reduce the long-run
rate of growth of the economy below its full
potential. In a similar way, inflation disrupts the
functioning of our financial markets and on balance discourages saving and investment. Moreover, its volatility increases the risk associated
with particular business decisions. Finally, inflation redistributes income and wealth in arbitrary
ways, which creates dissatisfaction within the
social and economic groups whose incomes and
wealth are adversely affected.
Although many of these costs are hard to
measure, there is good reason to believe that
they are significant in the aggregate. First, there
is a negative correlation between inflation and
long-term economic growth across different
countries. Second, our citizens have repeatedly
made it clear that they strongly dislike inflation.
Finally, persistently high rates of inflation in
peacetime in the United States have frequently
Statements
been associated with relatively low rates of real
economic growth.
Inflation is still a major problem today, despite
the belief in some quarters that it has been
conquered. It disturbs me to hear people talk as
if inflation were dead when we have been experiencing an underlying inflation rate of about 4 to
4Vi percent. The current rate is clearly an improvement over the very high rates prevailing in
the late 1970s and early 1980s, but it is not a
particularly low rate when judged by longer-run
historical standards. As you may know, the
consumer price index rose at an average annual
rate of 1.5 percent between the end of the Korean
War and 1965. What is now considered by some
to be moderate inflation was regarded as an
intolerable condition only a few years ago. President Nixon imposed a comprehensive price and
wage control program on the economy in August
1971 when the rate of inflation was even lower
than the rates of recent years.
Moreover—and I believe that this is one of the
critical issues addressed by the resolution—inflation may well reaccelerate in the absence of a
clear signal to the public that the Congress fully
supports the Federal Reserve's commitment to
reduce it further. As we all know, the System is
under constant pressure to "do something" with
monetary policy in the short run to improve the
economy's performance or deal with some other
current problem. In the past such pressures
have, at times, led the System to take actions
that have eventually contributed to an acceleration of inflation. There is obviously a risk that
history will repeat itself unless an effort is made
to reduce these pressures.
I say this even though I believe that the present
members of the Federal Open Market Committee
as a group are especially strongly committed to
fighting inflation and that the public still has vivid
memories of the rampant inflation of the late
1970s and early 1980s. The composition of the
Federal Open Market Committee will change,
and the memories of double-digit inflation will
gradually fade, but the pressures on the Federal
Reserve to make its monetary policy decisions
on the basis of short-run considerations without
adequate regard for the long-run inflationary consequences of these decisions will surely persist in
the years ahead.
to Congress
143
One problem that the Federal Reserve faces
in conducting monetary policy currently, in my
view, is that our mandate is too broad. A clear
and attainable objective is a necessary condition for the success of any policy strategy.
Unfortunately, current law does not provide the
Federal Reserve with such an objective. Instead, our current mandate instructs us to consider a wide range of economic conditions in
carrying out monetary policy. Specifically, Section 2A of the Federal Reserve Act requires the
System to take account of " . . . past and prospective developments in employment, unemployment, production, investment, real income,
productivity, international trade and payments,
and prices. . . . " in setting its annual objectives for the growth of the monetary and credit
aggregates.
A mandate that instructs the Federal Reserve
to consider such a broad range of economic
conditions may not be the strongest foundation
for an effective strategy for monetary policy.
Faced with the requirement to take account of all
these conditions, policy choices necessarily are
made in a discretionary manner that gives substantial weight to current economic and financial
conditions and prospects for the near-term future. This approach to policy fosters the notion
that the Fed can fine-tune the economy even
though both actual experience and much of the
most important recent research in macroeconomics argue persuasively to the contrary. It also
encourages special interest groups to try to pressure the System to pursue the particular goals
they consider important. These circumstances
tend to impart an inflationary bias to monetary
policy.
The resolution would help us overcome these
problems by specifying clearly a single, feasible
objective for monetary policy and instructing the
Federal Reserve to achieve that objective. Price
stability is obviously an appropriate objective for
any central bank. Further, it is a feasible objective since there is no question that the System
can achieve price stability over the long run by
controlling the rate of growth of the monetary
aggregates.
Moreover, I believe price stability is really the
only feasible objective for monetary policy.
Some might argue that increasing long-run eco-
144
Federal Reserve Bulletin • March 1990
nomic growth or fine-tuning economic activity in
the short run are alternative objectives. Most
economists now agree, however, that the longrun rate of real economic growth is determined
by nonmonetary factors such as population
growth, increases in productivity, and the rate of
saving and investment. Accordingly, most conclude that expansionary monetary policies can
raise the growth rate only temporarily, if at all.
There is also a growing consensus that the System could make its greatest contribution to longrun economic growth by fostering price stability
so that economic decisions could be made on the
basis of reliable information on both current and
future prices.
There also is very little evidence that the
Federal Reserve can use monetary policy to finetune the economy in the short run. Monetary
policy affects the economy with both long and
variable lags. These lags, in conjunction with the
inability of economists to forecast future economic conditions with much confidence, make it
very difficult for the System to determine what
policy actions it should take today to produce a
particular result at some point in the near-term
future. Moreover, as I indicated earlier, focusing
too narrowly on relatively short-run economic
conditions tends to give monetary policy an
inflationary bias. This is not to say that the
Federal Reserve should ignore extraordinary
events such as the stock market crash in October
1987. But, as I believe we demonstrated in late
1987, the System can react to such shocks to the
economy without weakening its long-run commitment to price stability.
One might argue, of course, that price stability
has always been one of the System's primary
objectives and therefore that the resolution is not
needed since it simply instructs the Federal Reserve to seek an objective it is already pursuing.
I strongly disagree with this view. Despite our
best intentions, prices have not yet stabilized, as
evidenced by the fourfold increase in the price
level since 1964. Moreover, surveys of expected
inflation consistently indicate that the public
does not expect the Federal Reserve to make
much further progress in reducing inflation in the
future, let alone achieve price stability. Confidence in the System's commitment to price stability suffers because its policy decisions are
necessarily influenced by numerous other considerations. Passage of the resolution would send
an unambiguous signal to the public and the
financial markets that price stability is the overriding goal of the Federal Reserve. The credibility of the System's efforts to reduce inflation
would therefore rise. This increased credibility
would, in turn, lower the public's expectations of
future inflation because these expectations would
be less influenced by the relatively high inflation
rates in the recent past. Further, lower expected
inflation would tend to reduce the costs of
achieving price stability in terms of any temporary loss of output and employment. This reduction would occur, in part, because producers,
when faced with monetary restraint, would be
more inclined to reduce prices, or raise them at a
slower pace, and less likely to reduce output and
employment. Similarly, workers would be more
inclined to restrain their wage demands. It is
worth emphasizing that a truly clear and unambiguous congressional mandate to eliminate inflation would play a vital role in this process.
RESPONSES TO SOME LIKELY
AGAINST THE RESOLUTION
ARGUMENTS
The major arguments that will be made against
the resolution are fairly predictable, and I would
like to say a few words about them. One argument obviously concerns the potential transitional cost of implementing the resolution. Specifically, some will argue that trying to eliminate
inflation altogether would risk a recession. It is
impossible to predict the future, so we cannot
dismiss this argument out of hand. In evaluating
the argument, however, we should not simply
extrapolate from our experience in dealing with
past inflationary episodes such as the ones in
1973-74 and 1979-81. In those periods, the System acted forcefully in a crisis atmosphere to
reduce the rate of inflation over a short period of
time and economic activity contracted sharply.
In contrast, H.J. Res. 409 would require a gradual reduction in inflation over a relatively long
period of time following an extended period in
which substantial progress has already been
made. As I indicated earlier, there is good reason
to believe that passage of the resolution would
Statements
enable us to achieve such a reduction in inflation
with relatively small costs to the economy.
Moreover, it is very important to weigh any
short-run costs of achieving price stability as
provided by the resolution against the longer-run
costs of not achieving it. These latter costs could
be particularly great if, at some future time, the
Federal Reserve were forced to follow policies
resulting in a recession in order to rein in an
accelerating rate of inflation.
A second possible argument against H.J. Res.
409 is that it would prevent the Federal Reserve
from reacting appropriately to unanticipated
" s h o c k s " to the economy, such as the stock
market crash in October 1987. As I suggested a
moment ago, however, there is simply no reason
why shocks that may affect the System's actions
in the short run should prevent us from achieving
price stability over a period as long as five years.
This would be especially true if the policy had
credibility in the eyes of the general public and
financial market participants, as I believe it
would if the resolution were enacted. In evaluating this argument, it is also important to distinguish between temporary adjustments in our
policy instruments or intermediate targets and
changes in our ultimate policy objectives. Adjustments in our policy instruments or intermediate targets do not require us to alter our longrun objectives. Following the stock market crash
in 1987, for example, the System temporarily
supplied additional reserves to meet the greater
demand for liquidity induced by the crash, but
this action did not change our longer-run policy
goals.
IMPLEMENTATION
OF THE
RESOLUTION
A final question regarding H.J. Res. 409 concerns
how it would be implemented. I realize that the
resolution leaves this matter to the Federal Reserve. Nevertheless, in evaluating the resolution I
think it is important to appreciate that from a
technical standpoint the System is quite capable
of achieving price stability over a five-year period
and that pursuing this objective would require at
most minor changes in our current procedures.
Recent research both at the Board of Governors
and at the Federal Reserve Bank of Richmond has
to Congress
145
provided strong evidence that the public's total
demand for balances included in the monetary
aggregate, M2, has remained stable since the early
1950s, despite the substantial amount of financial
innovation in recent years. This innovation has
affected the behavior of the components of M2,
but it has had little effect on the behavior of total
M2. Consequently, the velocity of M2, which is
simply current-dollar GNP divided by M2, has not
exhibited any trend either upward or downward in
this period. This constancy in the velocity of M2
over time implies that the System could bring the
trend rate of inflation to zero within a five-year
period by gradually lowering the trend rate of
growth of M2 to the longer-run potential rate of
growth of real GNP.
It is worth noting that implementing the resolution would not require any major change in the
Federal Reserve's operating procedures, since
we already set annual targets for M2 and announce them to the Congress. Under the resolution we would simply have to reduce these
targets gradually and persistently until they declined to the trend rate of growth of real GNP,
which is probably somewhere in the neighborhood of 2Vi to 3 percent a year.
One fairly straightforward change in our procedures that I would favor would be to establish
multiyear targets for M2 rather than the one-year
targets we currently set. Under the current procedure, growth in M2 above or below the target
for a given year is effectively forgiven at the end
of the year. Thus, the base for the next year's
target is the actual level of M2 at the end of the
current year rather than the targeted level. As a
result of this "base drift" in M2, the price level
can drift up or down over time even though the
individual annual M2 targets may be consistent
with a zero rate of inflation. Consequently, I
believe that the likelihood of achieving true longrun price stability would be increased if we
eliminated base drift by setting a multiyear path
for M2.
This last point raises a corresponding point
regarding how, in practice, the System would
pursue the price stability objective mandated by
the resolution. One approach would be to seek to
hold the price level at a particular permanent
level on average over the long run. A second
approach would be to try to maintain the price
146
Federal Reserve Bulletin • March 1990
level at its current level at any point in time
irrespective of any past movements in the level.
Under the first approach, the System would act
to bring prices back to their permanent target
level if they moved away from that level in
response, for example, to an unanticipated
change in M2 velocity. Under the second approach, the System would not attempt to offset
the one-time effects of such shocks on the price
level, but would simply try to hold the price level
at its then current level. We prefer the first
approach, although we recognize that it might
take considerable time to reattain the permanent
objective in some instances in order to avoid
significant transitory disruptions to real economic activity. Under the second approach, the
price level would almost certainly change permanently from time to time, and it is not unreasonable to expect that political and other pressures
would tend to bias these movements upward.
Statement by Robert T. Parry, President, Federal Reserve Bank of San Francisco, before the
Subcommittee on Domestic Monetary Policy of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives,
February 6, 1990.
I am Robert Parry, President of the Federal
Reserve Bank of San Francisco, a position I have
held since early 1986. I am pleased to speak on
House Joint Resolution 409. Over all, I strongly
endorse the resolution—the Federal Reserve
should gear monetary policy toward gradually
eliminating inflation and maintaining price stability thereafter.
Since inflation is a monetary phenomenon, the
central bank is uniquely suited to control inflation in the long run. Monetary policy also can
have significant transitory effects on the production of goods and services. As a result, I believe
that there is a role for countercyclical monetary
policies, although the difficulty of forecasting
future economic developments limits the extent
to which the Federal Reserve can effectively
engage in such policies. More important, monetary policy cannot have any direct control over
real variables in the long run. Thus, although the
CONCLUSION
In conclusion, I strongly support H.J. Res. 409
and its objective of achieving price stability in
five years. The costs of the persistent inflation in
this country are substantial. Without a significant
change in the framework in which monetary
policy decisions are made, inflation is likely to
continue to be a serious problem in the years
ahead, and it is entirely possible that the rate of
inflation could reaccelerate. H.J. Res. 409 goes
to the heart of the policy problem, which stems
to a large extent from the Federal Reserve's
overly broad current mandate. Price stability
can, and should, be the overriding objective of
monetary policy. Achieving and maintaining
price stability is the best contribution monetary
policy can make to the successful performance of
the economy over the long run.
•
Federal Reserve must consider the transitory
effects of its actions on the business cycle, it
should orient its efforts mainly around the single
variable it can control in the long run—the rate of
inflation.
Federal Reserve officials have made it clear
that achieving price stability is the long-term
goal of the System. H.J. Res. 409 would assist
us in pursuing a credible and consistent antiinflation policy by providing a statement from
the legislature that we should focus primarily on
achieving that one attainable goal within a specified period of time. Without this support, there
is the danger that the pursuit of the long-term
inflation goal could be unduly delayed because
of pressure to respond to short-run, businesscycle considerations. 1
Eliminating inflation would help to promote
the highest possible standards of living for U.S.
residents and greater prosperity around the
world. The magnitude of the costs of inflation, in
terms of lost output and employment, are noto-
1. For a discussion of the role of a monetary policy rule in
combating inflation, see Robert J. Barro, "Recent Developments in the Theory of Rules Versus Discretion," Supplement to Economic Journal (1986), pp. 23-37.
Statements
riously difficult to estimate. 2 However, these
costs almost surely are large.
The most worrisome of these costs stem from
uncertainty about future prices, which undermines the ability of our market system to function efficiently. Price stability would reduce the
risk and uncertainty that have hampered longterm planning and contracting by business and
labor and that have reduced capital formation by
raising the risk premia in long-term interest rates.
Moreover, price stability would lead to the
avoidance of the many arbitrary transfers of
wealth and income that occur when the general
price level changes unexpectedly and thus would
reduce wasteful hedging activity designed to protect against these transfers. Eliminating inflation
also would avoid confusion between absolute
price changes and movements in relative prices,
which can lead to inefficient economic decisions
by businesses and households. 3
The foregoing comments make it clear that I
strongly support the message of H.J. Res. 409. I
also have the following comments on its more
specific features.
LENGTH OF THE TRANSITION
PERIOD
Few would disagree that the elimination of inflation is a desirable goal for the Federal Reserve.
The issues center on the costs of achieving the
goal and on how large these costs are relative to
the benefits. As I mentioned earlier, it is difficult
to produce reliable estimates of the gains in
output and employment that would accrue from
price stability, although my judgment is that they
2. For more formal discussions of the costs of inflation, see
Stanley Fischer, "Towards an Understanding of the Costs of
Inflation: II," in Karl Brunner and Allan H. Meltzer, eds.,
The Costs and Consequences of Inflation, Carnegie-Rochester Conference Series on Public Policy, vol. 15 (Amsterdam: North-Holland, 1981), pp. 5-41; and Michelle R.
Garfinkel, "What Is an 'Acceptable' Rate of Inflation?—A
Review of the Issues," Federal Reserve Bank of St. Louis,
Review, vol. 71 (July/August 1989), pp. 3-15.
3. For example, an individual firm may speed up its
production schedule because it finds that it can command a
higher price for its product, only to subsequently find out that
the prices of its materials and other inputs also have risen
(along with the aggregate price level). By mistaking inflation
for a rise in the demand for its product, the firm makes an
inefficient production decision.
to Congress
147
most likely would be large. Unfortunately, calculations of the costs of eliminating inflation also
are problematic.
An upper limit to these costs can be obtained
from the so-called Phillips curve, which relates
inflation to the actual unemployment rate, an
estimate of the unemployment rate consistent
with the economy operating at full capacity, and
an estimate of expected inflation. The latter
estimate generally is based on an assumption that
the public's expectations adjust gradually to past
observations of inflation.
The Phillips curve suggests that the short-run
costs of reducing inflation are relatively high,
largely because it assumes that inflation expectations are slow to adjust to the introduction of an
anti-inflation regime. For example, work at the
Federal Reserve Bank of San Francisco on this
relationship suggests that a recession is not necessary to reduce inflation from approximately 4l/z
percent now to zero percent in 1994. The unemployment rate would need to rise a maximum of
about l3/4 percentage points above an estimated 5
to 6 percent "full-employment" rate. 4 At the
same time, real GNP growth would need to slow
from 1 to 2 percent per year below what it would
otherwise have been during the five-year transition period.
Two points about these estimates are worth
emphasizing. First, the costs would be transitory
only. In the long run, there is no trade-off between inflation and unemployment. Thus, once
inflation were eliminated, real G N P could go
back to its long-run potential path, and the unemployment rate to its "full-employment" level.
The benefits of price stability, however, would
continue indefinitely. Second, the figures represent average historical relationships over the past
twenty-five years and should be taken only as
very rough guidelines for the costs of implementing the resolution //inflation expectations were to
adjust only gradually.
It seems highly likely, however, that the costs
would be smaller than this. Rather than adapting
4. For a discussion of how estimates of this type are made,
see Laurence H. Meyer and Robert H. Rasche, "On the
Costs and Benefits of Anti-Inflation Policies," Federal Reserve Bank of St. Louis, Review, vol. 62 (February 1980), pp.
3-14.
148
Federal Reserve Bulletin • March 1990
solely to declines in observed inflation, as assumed in the Phillips curve analysis, the public's
expectations of inflation probably would adjust
directly in response to the implementation of the
new anti-inflation regime itself. This direct response might become quite strong over perhaps
two to three years, as it became apparent that the
Federal Reserve, with legislative support, indeed
was acting to eliminate inflation.
Unfortunately, there appears to be little historical evidence available that would provide a
reliable estimate of how strong the direct response might be. There is evidence that sweeping
institutional changes put in place to limit hyperinflations have had dramatically beneficial effects, but the relevance of these experiences to
moderate inflation is remote. 5 In fact, there is
evidence that expectations did not respond directly to the October 1979 change in Federal
Reserve monetary policy procedures. 6 However,
I seriously doubt that this experience is particularly relevant to the question at hand. The announcement of a policy change by the central
bank itself will not carry as much credibility as
the same announcement initiated and supported
by a resolution of the legislative body. Moreover,
the Federal Reserve has much more credibility as
an inflation fighter today than it did in the period
of double-digit inflation at the beginning of this
decade. 7 Finally, as noted by others, I also
believe that the attainment of price stability
would be expedited if such a monetary policy
were supported by other policy actions, such as
a credible elimination of the federal deficit.
There is general agreement within the economics profession that the costs of reducing inflation
are closely tied to the degree to which the public
5. See Thomas J. Sargent, "The Ends of Four Big Inflations," in Robert E. Hall, ed., Inflation: Causes and Effects
(University of Chicago Press for the National Bureau of
Economic Research, 1982), pp. 41-97.
6. See Benjamin M. Friedman, "Lessons on Monetary
Policy from the 1980s," Journal of Economic Perspectives,
vol. 2 (Summer 1988), pp. 51-72.
7. In recent years, long-term interest rates have not risen
very much when tighter monetary policies have led to higher
short-term interest rates. This development suggests that
financial market participants believed that recent periods of
tighter monetary policy would be successful in controlling
inflation. See Frederick T. Furlong, "The Yield Curve and
Recessions," Federal Reserve Bank of San Francisco,
Weekly Letter, March 10, 1989.
believes the central bank's anti-inflation policy to
be credible. 8 I believe that the resolution as
proposed would help in this regard, but I also
recognize the possibility that achieving zero inflation in five years might involve high transitional costs. We will only know for sure as such
a policy is being carried out. However, I do not
favor lengthening the transition period because
the resolution's credibility, and thus its impact,
would be diluted if the time limit were too far in
the future.
PRICE STABILITY
OR INFLATION
STABILITY
There appears to be some ambiguity in the wording of the resolution concerning what the Federal
Reserve would be required to do once zero
inflation is achieved: Should it aim at a constant
price level over time (price level stability) or at
zero inflation over time (inflation stability)? This
distinction would become important after an unanticipated price level change. A stable price
level objective would require that a period of
deflation (inflation) follow a positive (negative)
price level shock. As a consequence, this approach might imply a high level of volatility in
short- to intermediate-run inflation.
Alternatively, a zero-inflation objective would
allow the price level to be permanently affected
by a price level shock, while monetary policy
would be geared toward permitting no further
change in prices: that is, zero future inflation.
This approach, by accommodating past price
level movements, would involve less short-term
volatility in inflation, but would permit more
long-run inflation or deflation if shocks or policy
errors tended to be one-sided.
I personally prefer a policy of price level stability. First, in my view, the costs of inflation that I
discussed earlier relate more closely to uncertainty about the long-run price level than to short-
8. For a discussion of the conceptual basis for this view,
see Keith Blackburn and Michael Christensen, "Monetary
Policy and Policy Credibility: Theories and Evidence," Journal of Economic Literature, vol. 27 (March 1989), pp. 1-45;
and Alex Cukierman, "Central Bank Behavior and Credibility: Some Recent Theoretical Developments," Federal Reserve Bank of St. Louis, Review, vol. 68 (May 1986), pp.
5-17.
Statements
run inflation volatility. 9 Moreover, the credibility
of a zero-inflation goal probably would be less
than that of a price-level goal. Permitting the price
level to drift (upward) under a zero-inflation goal
inevitably would raise questions in the minds of
the public as to whether the Federal Reserve was
serious about controlling inflation or instead was
losing control of long-run inflation through a series
of "one-time" price-level adjustments.
Finally, there is nothing to be gained, and a lot
to be lost, by permitting the price level to drift
over the long run. Permitting this drift in response to the influences of fiscal and monetary
policies obviously would defeat the purpose of
the resolution. In my view the appropriate response to a supply shock, such as the oil embargo of the mid-1970s, also is to maintain price
stability in the long run. Following such a shock,
real GNP inevitably must fall to reflect the decline in long-run potential output. This decline in
output will occur no matter where the price level
eventually ends up, and thus there is nothing to
gain by allowing prices to rise in the long run.
There are, however, short-run problems to consider. For example, a recession could result from
attempts by the Federal Reserve to hold the price
level constant immediately after a large oil price
shock. This example shows why it is important for
the Federal Reserve to have some flexibility in
implementing the requirements of the resolution.
"Draconian" effects on economic activity could
be avoided by permitting some inflation for a time
in the wake of the oil shock. The potential damage
done by price-level uncertainty simultaneously
could be avoided by monetary policies designed
to produce a subsequent period of gradual deflation until the price level returned to its original
level. Such an approach, once it became credible
with the public, would remove the long-run uncertainty about the price level that damages the
performance of the economy.
9. The one exception may be the problem of confusing
price level and relative price movements in making economic
decisions. This cost of inflation may be exacerbated more by
a price level target than by an inflation target because the
former would involve greater volatility in short-run inflation.
However, this cost of inflation may be among the least
onerous on my list, since information is readily available to
businesses and individuals on the general price level each
month.
DEFINITION OF PRICE
to Congress
149
STABILITY
For the reasons just given, there may be some
flexibility needed in the implementation of policies
designed to achieve price stability. Thus, I support the concept of a functional definition instead
of a specific numerical target. It might be argued
that a numerical target would enhance the credibility of the objective, since the public then could
measure Federal Reserve performance against a
published standard. However, it would be difficult
to define, in advance, a specific numerical target
that reasonably could be adhered to over a long
period of time into the future.
First, there would be a great deal of debate over
which particular price index to target, and all
indexes most likely will not exhibit zero rates of
change when "price stability" is achieved. Second, there may be upward biases in the price
indexes because they may not adequately adjust
for improvements in the quality of goods and
services. This difficult-to-estimate bias should be
reflected in a change in the price index that is
greater than zero, but it would be difficult to
estimate the appropriate size of the adjustment. 10
Third, a specific numerical target would reduce
Federal Reserve flexibility in responding to relative price shocks. I already have discussed how
an inflexible approach in such circumstances
could lead to undesirable effects on economic
activity.
Of course, relying on a functional definition of
price stability inevitably will lead to some debate
over how the Federal Reserve's performance
stacks up against its objective. This judgment
will depend on the evaluation of a large number
of different price indexes. Other considerations
also could play a role. Does a recent supply
shock justify the inflation observed in a given
year? Have there been significant biases in price
10. See Paul A. Armknecht, "Quality Adjustment in the
CPI and Methods to Improve It," in Proceedings of the
Business and Economic Statistics Section (American Statistical Association, August 13-16, 1984), pp. 57-63; Martin
Neil Baily and Robert J. Gordon, "The Productivity Slowdown, Measurement Issues, and the Explosion of Computer
Power/'Brookings Papers on Economic Activity, 1988:2, pp.
347-431; and Robert J. Gordon, The Measurement of Durable Goods Prices (University of Chicago Press for the National Bureau of Economic Research, forthcoming).
150
Federal Reserve Bulletin • March 1990
indexes because of mismeasurement of quality
change? These issues can be discussed and evaluated in the context of the Federal Reserve's
semiannual policy report to the Congress, as
specified in H.J. Res. 409.
Although this process may not alleviate everyone's concerns, I would like to point out that
specifying a numerical target that later had to be
modified in view of unforeseen events might
damage credibility more than acknowledging the
need to retain some flexibility and judgment.
Moreover, I am confident that credibility will
develop as the evidence emerges that Federal
Reserve policy actions actually are being guided
by the resolution, and as the economy moves
toward price stability.
CONCLUSION
To sum up, I enthusiastically support H.J. Res.
409. Eliminating inflation would be the most
significant contribution that the Federal Reserve
could make to the attainment of the highest
possible standards of living in the United States
and around the world. H.J. Res. 409 can assist
the Federal Reserve in attaining this goal by
stating that we should design policies to eliminate
inflation within a prescribed deadline. Once this
goal is achieved, I believe that monetary policy
should be geared toward maintaining a stable
price level, so that businesses and individuals do
not need to be concerned about long-run inflation
in making their economic decisions.
•
151
Announcements
NEW MEMBERS
NAMED
TO CONSUMER ADVISORY
COUNCIL
The Federal R e s e r v e Board named on January
25, 1990, eight new members to its Consumer
Advisory Council to replace those m e m b e r s
w h o s e terms have expired and designated a new
chairman and vice chairman of the council for
1990.
The C o n s u m e r Advisory Council was established by the Congress in 1976, at the suggestion
of the Board, to advise the Board on the exercise
of its duties u n d e r the Consumer Credit Protection Act and on other consumer-related matters.
The thirty-member council meets three times a
year.
William E . O d o m , Chairman of the Board of
the F o r d M o t o r Credit Company in Dearborn,
Michigan, was designated chairman of the council, and J a m e s W . H e a d , Executive Director of
the National E c o n o m i c Development and L a w
Center in Berkeley, California, was designated
vice chairman.
T h e eight n e w m e m b e r s , named f o r staggered,
three-year terms, are the following:
George C. Galster
Professor of Economics
The College of Wooster
Wooster, Ohio
Kathleen E. Keest
Staff Attorney
National Consumer Law Center, Inc.
Boston, Massachusetts
Colleen D. McCarthy
Executive Director
Kansas City Neighborhood Alliance
Kansas City, Missouri
Bernard F. Parker, Jr.
Executive Director
Community Resource Projects
Detroit, Michigan
Nancy Harvey Steorts
President
Nancy Harvey Steorts & Associates
Dallas, Texas
T h e other m e m b e r s of the Council are the following:
George H. Braasch
Corporate General Counsel
Spiegel, Inc.
Oakbrook, Illinois
Betty Tom Chu
Chairman
Trust Savings Bank
Arcadia, California
Cliff E. Cook
Vice President and Compliance Officer
Puget Sound National Bank
Tacoma, Washington
E. Thomas Garman
Professor of Consumer Studies
College of Human Resources
Virginia Polytechnic Institute
and State University
Blacksburg, Virginia
Jerry D. Craft
Senior Vice President
First National Bank of Atlanta
Atlanta, Georgia
Michael M. Greenfield
Professor of Law
Washington University
St. Louis, Missouri
Donald C. Day
President
New England Securities Corp.
Boston, Massachusetts
Deborah B. Goldberg
Reinvestment Specialist on the Neighborhood
Revitalization Project
Center for Community Change
Washington, D.C.
R.B. Dean, Jr.
Administrator of Community and Consumer
Affairs
South Carolina National Bank
Columbia, South Carolina
152
Federal Reserve Bulletin • March 1990
William C. Dunkelberg
Dean of the School of Business & Management
Temple University
Philadelphia, Pennsylvania
David B. Ward
Consultant
Beneficial Management Corp.
Chester, New Jersey
James Fletcher
President and Director
South Shore Bank of Chicago
Chicago, Illinois
Lawrence Winthrop
President
Consumer Credit Counseling Services
of Oregon, Inc.
Portland, Oregon
Robert A. Hess
President and General Manager
Wright Patman Congressional
Federal Credit Union
Washington, D.C.
Barbara Kaufman
Co-Director of KCBS Call for Action
San Francisco, California
A.J. King
Chairman and Vice President
Valley Bank of Kalispell
Kalispell, Montana
Michelle S. Meier
Counsel for Government Affairs
Consumers Union
Washington, D.C.
Linda K. Page
Director
Ohio Department of Commerce
Columbus, Ohio
Sandra Phillips
Executive Director
Pittsburgh Partnership for
Neighborhood Development
Pittsburgh, Pennsylvania
Vincent P. Quayle
Director
St. Ambrose Housing Aid Center
Baltimore, Maryland
NEW MEMBERS APPOINTED TO THRIFT
INSTITUTIONS ADVISORY
COUNCIL
The Federal Reserve Board announced on January 19, 1990, the names of the five new members
appointed to its Thrift Institutions Advisory
Council (TIAC) to replace those m e m b e r s whose
terms have expired and designated a new President and Vice President of the council for 1990.
The council is an advisory group made up of
twelve representatives f r o m thrift institutions.
The panel was established by the Board in 1980
and includes savings and loan, savings bank, and
credit union representatives. The council meets
at least four times each year with the Board of
Governors to discuss developments relating to
thrift institutions, the housing industry, mortgage
finance, and certain regulatory issues.
Donald B. Shackelford, Chairman of the Board
of State Savings Bank, Columbus, Ohio, will
serve as president of the council and Marion O.
Sandler, President/Chief Executive Officer of
World Savings and L o a n Association, Oakland,
California, will serve as vice president.
The five new m e m b e r s , named for two-year
terms that began January 1, are the following:
Clifford N. Rosenthal
Executive Director
National Federation of Community
Development Credit Unions
New York, New York
David L. Hatfield
President
Fidelity Federal Savings and Loan Association
Kalamazoo, Michigan
Alan M. Silberstein
Senior Vice President
Chemical Bank
New York, New York
Lynn W. Hodge
President and Chief Executive Officer
United Savings Bank Inc.
Greenwood, South Carolina
Ralph E. Spurgin
President and Chief Executive Officer
Limited Credit Services, Inc.
Columbus, Ohio
Elliott K. Knutson
Chairman and Chief Executive Officer
Washington Federal Savings and Loan Association
Seattle, Washington
Announcements
John Wm. Laisle
President
MidFirst Bank SSB
Oklahoma City, Oklahoma
John A. Pancetti
Chairman and Chief Executive Officer
The Manhattan Savings Bank
New York, New York
The other members of the Council are the
following:
Charlotte Chamberlain
Vice Chairman
New America Saving
Los Angeles, California
Adam A. Jahns
Chairman and President
Cragin Federal Bank for Savings
Chicago, Illinois
H.C. Klein
President and General Manager
Little Rock AFB Federal Credit Union
Jacksonville, Arkansas
Philip E. Lamb
Chairman and Chief Executive Officer
Springfield Institution for Savings
Springfield, Massachusetts
Charles B. Stuzin
Chairman, President, and
Chief Executive Officer
Citizens Federal Savings and Loan Association
Miami, Florida
INCOME AND EXPENSES
OF THE FEDERAL RESERVE
BANKS
Preliminary figures released on January 9, 1990,
indicate that operating income of the Federal
Reserve Banks amounted to $22,230 billion during 1989. Net income before dividends, additions
to surplus, and payments to the Treasury totaled
$21,888 billion. About $21.6 billion was paid to
the U.S. Treasury during 1989.
Federal Reserve System income is derived
primarily from interest earned on U.S. government securities that the Federal Reserve has
acquired through open market operations. Income from the provision of financial services
amounted to $702 million.
153
Operating expenses of the twelve Reserve
Banks and their Branches totaled $1,331 billion,
including $147 million for the earnings credits
granted to depository institutions under the Monetary Control Act of 1980. Assessments by the
Board of Governors for Board expenditures totaled $90 million, and the cost of currency
amounted to $175 million.
Net additions to income amounted to $1,296
billion, primarily resulting from gains on assets
denominated in foreign currencies. Statutory dividends to member banks were $130 million; and
payments to the Treasury amounted to $21,627
billion.
Under the policy established by the Board of
Governors at the end of 1964, all net income after
the statutory dividend to member banks and the
amount necessary to equate surplus to paid-in
capital is transferred to the U.S. Treasury as
interest on Federal Reserve notes.
REVISED LIST OF OTC STOCKS
SUBJECT TO MARGIN
REGULATIONS
NOW
AVAILABLE
The Federal Reserve Board published on January 26, 1990, a revised list of over-the-counter
(OTC) stocks that are subject to its margin regulations, effective February 12, 1990.
This revised List of Marginable OTC Stocks
supersedes the list that was effective on November 13, 1989. The changes that have been made to
the list, which now includes 2,859 OTC stocks,
are as follows:
• Seventy stocks have been included for the
first time, sixty-three under National Market
System (NMS) designation.
• Forty-six stocks previously on the list have
been removed for substantially failing to meet the
requirements for continued listing.
• Fifty-eight stocks have been removed for
reasons such as listing on a national securities
exchange or involvement in an acquisition.
This list is published by the Board for the
information of lenders and the general public. It
includes all OTC securities designated by the
Board pursuant to its established criteria as well
as all stocks designated as NMS securities for
which transaction reports are required to be
154
Federal Reserve Bulletin • March 1990
made pursuant to an effective transaction reporting plan. Additional OTC securities may be designated as NMS securities in the interim between
the Board's quarterly publications and will be
immediately marginable. The next publication of
the Board's list is scheduled for April 1990.
Besides NMS-designated securities, the Board
will continue to monitor the market activity of
other OTC stocks to determine which stocks
meet the requirements for inclusion and continued inclusion on the list.
CHANGE IN BOARD
STAFF
William C. Schneider, Jr., has been appointed
to the Office of Staff Director for Management
as Project Director of the National Information
Center (NIC), effective January 12, 1990.
Before this appointment, Mr. Schneider served
as Vice President at the Federal Reserve
Bank of Cleveland. He holds an M.B.A. in
Computer Science from George Mason University.
155
Legal Developments
FINAL RULE—AMENDMENT
G, T, U AND X
TO REGULATIONS
The Board of Governors is amending 12 C.F.R. Parts
207, 220, 221 and 224, its Securities Credit Transactions; List of Marginable OTC Stocks. The List of
Marginable OTC Stocks is comprised of stocks traded
over-the-counter (OTC) that have been determined by
the Board of Governors of the Federal Reserve System to be subject to the margin requirements under
certain Federal Reserve regulations. The List is published four times a year by the Board as a guide for
lenders subject to the regulations and the general
public. This document sets forth additions to or deletions from the previously published List which was
effective November 13, 1989, and will serve to give
notice to the public about the changed status of certain
stocks.
Effective February 12, 1990, accordingly, pursuant
to the authority of sections 7 and 23 of the Securities
Exchange Act of 1934, as amended (15 U.S.C. §§ 78g
and 78w), and in accordance with 12 C.F.R. 207.2(k)
and 207.6(c) (Regulation G), 12 C.F.R. 220.2(s) and
220.17(c) (Regulation T), and 12 C.F.R. 221.2(j) and
221.7(c) (Regulation U), there is set forth below a
listing of deletions from and additions to the Board's
List of Marginable OTC Stocks:
City Investing Company Liquidating Trust: Units of
beneficial interest
Columbia Pictures Entertainment, Inc.: Warrants
(expire 06-01-92)
Commercial Decal, Inc.: $.20 par common
Commodore Environmental Services, Inc.: $.10 par
common
Connaught Biosciences Inc.: No par common
Constar International, Inc.: Warrants (expire
11-13-89)
Entree Corporation: $.01 par common
First American Bank and Trust of Palm Beach
County: Class A, $1.00 par common
Flight International Group, Inc.: $.01 par common
Fonar Corporation: $.0001 par common
Frances Denney Companies, Inc.: $.01 par common
Frontier Savings Association: $.80 par capital
Harvard Knitwear, Inc.: $.001 par common
Hauserman, Inc.: $1.00 par common
High Plains Corporation: $.10 par common
Kimmons Environmental Service Corp.: 9% convertible subordinated debentures
Kurzweil Music Systems, Inc.: $.001 par common
Deletions From the List of Marginable OTC
Stocks
Lyphomed, Inc.: $.01 par common, 5-Vi% convertible
subordinated debentures
Stocks R e m o v e d For Failing Continued Listing
Requirements
Macrochem Corporation: $.005 par common
Management Assistance Inc. Liquidating Trust: Units
of beneficial interest
McM Corporation: $1.00 par common
Medical Sterilization, Inc.: $.01 par common
Monoclonal Antibodies, Inc.: N o par common
3CI Incorporated: $.01 par common
ABQ Corporation: $.01 par common
AFP Imaging Corporation: $.01 par common
American Savings & Loan Association of Florida: $.01
par preferred
Braniff, Inc.: $.01 par common
Brown, Robert C. & Co., Inc.: $.01 par common
Central Bancorporation: $1.67 par common
Chemex Pharmaceuticals, Inc.: $.01 par common,
1989-1 Warrants (expire 03-31-94)
Northern Trust Corporation: Series B, no par preferred stock
Pantera's Corporation: $.01 par common
Plains Resources Inc.: $1.00 par cumulative convertible preferred
Ports of Call, Inc.: $.20 par common
Priam Corporation: $.001 par common
Properties of America, Inc.: $.01 par common
156
Federal Reserve Bulletin • March 1990
Rentrak Corp.: $.001 par common
Rudy's Restaurant Group, Inc.: $.01 par common
International Genetic Engineering, Inc.: No par common
Scanforms, Inc.: $.01 par common
Silvar-Lisco: No par common
Skipper's Inc.: $.10 par common
Jefferson Smurfit Corporation: $1.00 par common
Unifast Industries, Inc.: $.01 par common
Management Science America, Inc.: $.0025 par common
Marine Transport Lines, Inc.: $.10 par common
Mayfair Super Markets, Inc.: Class A, $.01 par common
Microbilt Corporation: No par common
Midwest Financial Group, Inc.: $5.00 par common
Yorkridge-Calvert Savings and Loan Association
(Maryland): $1.00 par common
Stocks Removed for Listing on a National
Securities Exchange or Being Involved in an
Acquisition
Alco Health Services Corporation: $.01 par common
Alliance Financial Corporation: $10.00 par common
American Home Shield Corporation: $.04 par common
American Savings Financial Corporation (Washington): $1.00 par common
Associated Natural Gas Corp.: $.10 par common
Beaman Corporation: $1.00 par common
Clinical Sciences, Inc.: $.01 par common
CMS Enhancements, Inc.: $.01 par common
Coast Federal Savings and Loan Association
(Florida): $.01 par common
Convex Computer Corporation: $.01 par common
Crawford & Company: $1.00 par common
CVB Financial Corp.: No par common
CVN Companies, Inc.: No par common
Digilog, Inc.: $.01 par common
Dumagami Mines Limited: $1.00 par common
Dunkin' Donuts Inc.: $1.00 par common
Dyatron Corporation: $.66-% par common
E.I.L. Instruments, Inc.: $.10 par common
Elan Corporation PLC: American Depositary Receipts
Leo's Industries, Inc.: $.001 par common
Noxell Corporation: Class B, non-voting, $1.00 par
common
Numerex Corporation: $.01 par common
Pace Membership Warehouse, Inc.: $.01 par common
Pacific First Financial Corp.: $1.00 par common
Pacific Silver Corporation: $.25 par common
Peoples Savings Bank F.S.B.: $1.00 par common
Praxis Biologies, Inc.: $.01 par common
Precision Castparts Corp.: No par common
Ravenswood Financial Corp.: $1.00 par common
Reisterstown Federal Savings Bank (Maryland): $1.00
par common
Resurgens Communications Group, Inc.: $.01 par
common
Rhone-Poulenc S.A.: American Depositary Receipts
Richton International Corp.: $.10 par common
RSI Corporation: $.05 par common
Safecard Services, Inc.: $.01 par common
SAG Harbor Savings Bank (New York): $1.00 par
common
Security American Financial Enterprises, Inc.: $.10
par common
Starpointe Savings Bank: $2.00 par common
Stratus Computer, Inc.: $.01 par common
First Banc Securities, Inc.: $5.00 par common
First Ohio Bancshares, Inc.: $6.25 par common
Trustcorp, Inc.: $1.00 par common
Gen-Probe Incorporated: $.01 par common
Guber-Peters Entertainment Company, The: $.01 par
common
Weisfield's, Inc.: $2.00 par capital
Westmarc Communications, Inc.: Class A, $.01 par
common
H.M.S.S., Inc.: $.01 par common
HCC Industries Inc.: $.10 par common
Hibernia Corporation: Class A, no par common
Howard Bancorp: $5.00 par common
Additions to the List of Marginable OTC
Stocks
Inca Resources, Inc.: No par common
Allied Capital Corporation II: $1.00 par common
American Capital and Research Corporation: Class A,
$.01 par common
Legal
Developments
157
Amtech Corporation: $.01 par common
Aztar Corporation: $.01 par common
MAF Bancorp, Inc.: $1.00 par common
MIPS Computer Systems, Inc.: No par common
BKLA Bancorp: N o par common
Borland International, Inc.: $.01 par common
Boston Technology, Inc.: $.001 par common
BT Shipping Limited: American Depositary Receipts
New Horizons Savings & Loan Association: No par
common
Nucorp, Inc.: Class C, Warrants (expire 06-30-91)
Caere Corporation: $.001 par common
Candela Laser Corporation: $.01 par common
Cellular Information Systems, Inc.: Class A, $.01 par
common
Century South Banks, Inc.: No par common
Continental Gold Corporation: No par common
Cray Computer Corporation: $.01 par common
Cupertino National Bancorp: No par common
Cytogen Corporation: $.01 par convertible exchangeable preferred
Economy Savings Bank, PASA: $1.00 par common
Energy Ventures, Inc.: $1.00 par common
Exabyte Corporation: $.001 par common
Exide Electronics Group, Inc.: $.01 par common
Financial Center Bancorp: No par common
First American Financial Corporation, The: Class B,
$1.00 par common
First Bank of Philadelphia: $2.00 par common
First Federal Capital Corp.: $.01 par common
G-III Apparel Group, Ltd.: $.01 par common
Gehl Company: $.10 par common
Great Southern Bancorp, Inc.: $.01 par common
Harmonia Bancorp, Inc.: $.01 par common
Healthsource, Inc.: $.10 par common
Henley Group, Inc., The (Delaware): $.01 par common
Home Nutritional Services, Inc.: No par common
Hycor Biomedical Inc.: $.01 par common
Ilio, Inc.: $.01 par common, Warrants (expire
10-25-92)
Immunogen, Inc.: $.01 par common
Industrial Funding Corporation: Class A, no par
common
Keegan Management Company: $.001 par common
Knowledge ware, Inc.: N o par common
Landmark Bancorp: No par common
Laserscope: No par common
Lattice Semiconductor Corporation:
common
$.01
par
Pacific Bank, N.A., The: $5.00 par common
Pamrapo Bancorp, Inc.: $.01 par common
Parametric Technology Corporation: $.01 par common
People's Telephone Company, Inc.: $.01 par common
Pinnacle Financial Services, Inc.: $10.00 par common
Players International, Inc.: $.005 par common
Procyte Corporation: $.01 par common
Ramtron Australia Limited: American Depositary Receipts
Receptech Corporation: Paired common stock & a
Warrant
Ren Corporation - USA: N o par common
Robec, Inc.: $.01 par common
Sierra Tucson Companies, Inc.: $.01 par common
Smith International, Inc.: Class A, Warrants (expire
02-28-95)
Solectron Corporation: No par common
Summit Technology, Inc.: $.01 par common
Sun Sportswear, Inc.: No par common
T2 Medical, Inc.: $.01 par common
TW Holdings, Inc.: No par common
United Artists Entertainment Company: 12.875%, no
par cumulative convertible preferred
Urcarco, Inc.: $.01 par common
Ventura County National Bancorp: No par common
Village Financial Services, Inc.: $.01 par common
Westcott Communications, Inc.: $.01 par common
Workmen's Bancorp, Inc.: $1.00 par common
Yes Clothing Company: No par common
FINAL RULE—AMENDMENT
TO RULES
REGARDING FOREIGN GIFTS AND DECORATIONS
The Board of Governors is amending 12 C.F.R. Part
264b, its Rules Regarding Foreign Gifts and Decorations. Congress has permitted federal government
employees to accept gifts from foreign governments in
amounts up to a "minimal value" that is to be established by the Government Services Administration
("GSA") in consultation with the Secretary of State.
158
Federal Reserve Bulletin • March 1990
The GSA's regulations currently establish "minimal
value" to be $180, while the Board's Rules Regarding
Foreign Gifts and Regulations set "minimal value" at
$100. Accordingly, this amendment will change the
Board's definition of "minimal value" by increasing it
to $180 or such higher amount as might be established
by the GSA.
Effective January 29, 1990, and pursuant to the
Board's authority under section ll(i) of the Federal
Reserve Act (12 U.S.C. § 248(i)), 12 C.F.R. Part 264b
is amended as follows:
Part 264b—Rules Regarding Foreign Gifts and
Decorations
1. The authority citation for Part 264b continues to
read as follows:
Authority: 5 U.S.C. § 7342, as amended; and section
ll(i) of the Federal Reserve Act (12 U.S.C. § 248(i));
5 U.S.C. § 552.
2. In section 264b.3 paragraph (a) is revised to read as
follows:
Section 264b.3—Foreign gifts.
(a) Gifts of minimal value. If not otherwise prohibited
by Board regulations, Board members and employees
may accept and retain a tangible or intangible gift of
minimal value, intended as a souvenir or mark of
courtesy, from a foreign government. A gift of minimal
value is one having a retail value in the United States
at the time of acceptance not in excess of $180 (or such
higher amount established in 41 C.F.R. Part 101-49).
ORDERS ISSUED UNDER BANK HOLDING
COMPANY ACT
Orders Issued Under Section 4 of the
Bank Holding Company Act
Canadian Imperial Bank of Commerce
Toronto, Ontario, Canada
The Royal Bank of Canada
Montreal, Quebec, Canada
Barclays PLC
London, England
Barclays Bank PLC
London, England
Order Approving Applications to Engage, to a
Limited Extent, in Underwriting and Dealing in Debt
and Equity Securities
Canadian Imperial Bank of Commerce, Toronto, Ontario, Canada ("Canadian Imperial"), The Royal Bank
of Canada, Montreal, Quebec, Canada ("Royal
Bank"), and Barclays PLC and Barclays Bank PLC,
London, England ("Barclays") (together referred to
as "Applicants"), bank holding companies within the
meaning of the Bank Holding Company Act ("BHC
Act"), have each applied for the Board's approval
under section 4(c)(8) of the BHC Act, 12 U.S.C.
§ 1843(c)(8), and section 225.23(a)(3) of the Board's
Regulation Y, 12 C.F.R. 225.23(a)(3), for their indirect
subsidiaries, Wood Gundy Corp., RBC Dominion Securities Corporation, and Barclays de Zoete Wedd
Government Securities, Inc., respectively, each located in New York, New York ("Companies"), to
underwrite and deal in, on a limited basis, all types of
debt securities, including without limitation, sovereign
debt securities, corporate debt, debt securities convertible into equity securities, and securities issued by
a trust or other vehicle secured by or representing
interests in debt obligations.
In addition, Canadian Imperial and Royal Bank have
each applied for approval to underwrite and deal in
equity securities, including, without limitation, common stock, preferred stock, American Depositary
Receipts, and other direct and indirect equity ownership interests in corporations and other entities.1
Notice of the applications, affording interested persons an opportunity to submit comments on the proposals, has been duly published (54 Federal Register
25,173; 54 Federal Register 29,388; 54 Federal Register 26,252 (1989)). The Board received comments in
opposition to approval of all the applications from the
Securities Industry Association ("SIA"), a trade association of the investment banking industry, and in
opposition to approval of the application of Royal
Bank from the Investment Company Institute ("ICI"),
a trade association of the mutual fund industry. The
Board also received comments in support of the proposals from the Institute of International Bankers, the
Bankers' Association for Foreign Trade, and the Bank
Capital Markets Association.
1. Applicants have not proposed to underwrite or deal in securities
issued by open-end investment companies and, accordingly, may not
do so without further application under section 4(c)(8) of the BHC
Act. Canadian Imperial and Royal Bank have proposed to underwrite
and deal in securities issued by closed-end investment companies.
Legal Developments
Canadian Imperial has total consolidated assets
equivalent to approximately $82.6 billion.2 Canadian
Imperial owns bank subsidiaries in Los Angeles, California, and New York, New York, and operates
agencies in Atlanta, New York City, Los Angeles, and
San Francisco.
Royal Bank has total consolidated assets equivalent
to approximately $96.0 billion. Royal Bank owns bank
subsidiaries in New York, New York, and San Juan,
Puerto Rico, and operates branches in Portland, Oregon, New York City, and Puerto Rico and agencies in
Miami and San Francisco.
Barclays has total consolidated assets equivalent to
approximately $196.1 billion.3 Barclays owns bank
subsidiaries in New York City, Wilmington, Delaware, and Charlotte, North Carolina, and operates
branches in New York, Boston, Seattle, and Chicago
and agencies in San Francisco and Miami.
I. Glass-Steagall Act
Applicants have previously received Board approval
under section 4(c)(8) of the BHC Act for Companies to
underwrite and deal in securities that member banks
are authorized to underwrite and deal in under the
Glass-Steagall Act4 (hereinafter "eligible securities")
and to engage in various other activities permissible
for bank holding companies. In order to ensure that
Companies would not be engaged principally in underwriting or dealing in securities in violation of section
20 of the Glass-Steagall Act5 upon commencing the
proposed debt and equity securities activities, each
Company will limit the gross revenues derived from
these activities to no more than 10 percent of its total
gross revenues over any two-year period.6 The Board
has previously determined that a company would not
be in violation of section 20 of the Glass-Steagall Act
if the gross revenue the company derived from underwriting and dealing in ineligible securities does not
exceed between 5 and 10 percent of the company's
total gross revenues on average over any two-year
period. CiticorplJ.P. Morgan & Co. Incorporated1
Bankers Trust New York Corporation, 73 Federal
2. Unless otherwise noted, asset data are as of April 30, 1989.
3. Asset data are as of June 30, 1989.
4. Other types of securities, which member banks may not underwrite deal in under the Glass-Steagall Act, are referred to herein as
"ineligible securities".
5. 12 U.S.C. § 377. Section 20 provides that ". . . no member bank
shall be affiliated . . . with any . . . organization engaged principally in
the issue, flotation, underwriting, public sale, or distribution at
wholesale or retail or through syndication of stocks, bonds, debentures, notes, or other securities . . . ."
6. Compliance with the revenue limits shall be calculated in the
manner set forth in J. P. Morgan & Co. Incorporated,
et al., 75
Federal Reserve Bulletin 192, 196-197 (1989).
159
Reserve Bulletin 473, 485 (1987).7 Accordingly, the
Board concludes that Applicants' proposals would be
consistent with section 20 of the Glass-Steagall Act.
II. Bank Holding Company Act
In order to approve an application under section
4(c)(8) of the BHC Act, the Board must find that the
activities to be conducted are "so closely related to
banking . . . as to be a proper incident thereto."
12 U.S.C. § 1843(c)(8). In January 1989, the Board
determined that bank holding companies, through separately incorporated and capitalized subsidiaries
("section 20 subsidiaries" or "underwriting subsidiaries"), may underwrite and deal in ineligible debt and
equity securities, subject to the 5 to 10 percent revenue limit established under the Glass-Steagall Act.
J.P. Morgan & Co. Incorporated, et al., 75 Federal
Reserve Bulletin 192 (1989) (the "section 20 Order").
The Board concluded that these activities are closely
related to banking and a proper incident thereto,
provided that the activities are conducted within a
framework of prudential limitations that avoid the
potential for conflicts of interest, unsound banking
practices, unfair competition and other adverse
effects.8 In reaching this decision, the Board found
that the proposals could be expected to result in public
benefits such as increased competition, gains in efficiency, greater convenience to users of these services
and a strengthened and more competitive banking and
financial system.
Applicants have proposed for Companies to conduct
the new activities within the prudential framework of
limitations established by the Board in the section 20
Order. They have requested, however, certain modifications to that framework, which are discussed below, to account for the fact that each Applicant is a
foreign bank that operates predominately outside the
United States.
Applicants' requests for modification raise issues
under the BHC Act and the framework established in
the section 20 Order because, unlike U.S. bank holding companies, Applicants are both banks and bank
holding companies. The framework established in the
section 20 Order required a separation of federallyinsured bank or thrift institutions from an affiliated
7. That decision has been affirmed by the United States Court of
Appeals for the Second Circuit. Securities Industry Ass'n v. Board of
Governors, 839 F.2d 47, 67, cert, denied, 108 S.Ct. 2830 (1988). See
also Press Release, dated September 21, 1989, 75 Federal
Reserve
Bulletin 751 (1989), raising the revenue limitation for section 20
subsidiaries from 5 to 10 percent.
8. The Board hereby adopts and incorporates herein by reference
the reasoning and analysis from that Order for these findings, except
as that reasoning and analysis is specifically modified by this Order to
account for the particular circumstances of these cases.
160
Federal Reserve Bulletin • March 1990
section 20 subsidiary in order both to insulate U.S.insured institutions and the federal safety net from the
risk of the section 20 subsidiary's activities and for
reasons of competitive equity in the United States.
Although as banks, Applicants are not supported to
any significant extent by the U.S. federal safety net,
they have access to any benefits that are associated
with their respective home country safety nets, from
which they may derive some competitive advantage
over U.S. bank holding companies operating under the
section 20 framework or other U.S. securities firms.
Rigid application of the section 20 framework to Applicants as banks, however, would prevent them generally from being able to establish section 20 subsidiaries in the United States unless they adopted a
holding company structure.
The International Banking Act of 1978 ("IBA"),
12 U.S.C. §3101 et seq., established that foreign
banks were to operate in the United States under the
principle of national treatment. National treatment in
this context calls for parity of treatment between
domestic and foreign banking organizations to the
extent possible such that one group does not have
competitive advantages relative to the other in the
United States.
In order to assist in achieving this objective, the IBA
provided that any foreign bank that operates a bank,
branch or agency in the United States "shall be
subject to the provisions of the Bank Holding Company Act . . . in the same manner and to the same
extent that bank holding companies are subject thereto
. . ." 12 U.S.C. § 3106(a). The legislative history of
the IBA states that this was "to insure competitive
equality by allowing foreign financial institutions to
expand their U.S. banking-related activities in accordance with the same standards applicable to domestic
bank holding companies. . . . [T]he bill does not affect
the type or scope of a foreign bank's nondomestic
business." S. Rep. No. 1073, 95th Cong., 2d Sess. 15
(1978).
Applicants have asserted that some of the conditions established in the section 20 Order were imposed
on domestic bank holding companies for supervisory
reasons and that such conditions should not be applicable to the operations of Applicants. Consequently,
they have requested modification of certain conditions, principally those that apply to their non-U.S.
operations. Without appropriate modifications, Applicants assert, the conditions of the section 20 Order
would be an extraterritorial extension of U.S. regulation and supervision, which would be inconsistent
with U.S. policy and international agreements on bank
supervision.
The Board has carefully considered Applicants'
requests and has determined that, consistent with the
IBA and its policy of national treatment, foreign banks
must conduct the proposed activities in the United
States within the framework of prudential limitations
established in the section 20 Order. Giving due regard
to the principles of national treatment and the Board's
policy not to extend U.S. bank supervisory standards
extraterritorially, the Board has determined, as discussed further below, to adjust the funding and certain
operational requirements of the section 20 Order
where these adjustments would not change the balance
of public interest factors that the Board considered in
the section 20 Order or cause adverse effects to
outweigh public benefits. Consistent with the terms
and objectives of the BHC Act and the IBA, the
conditions to which the Board believes Applicants
should be subject are designed to ensure that the
prudential, competitive equity, safety net and prevention of moral hazard objectives of the conditions
continue to be met; that U.S. regulation does not
interfere with the operations of foreign banks outside
the United States; and that foreign bank applicants will
not have any significant competitive advantage in the
United States over section 20 subsidiaries and nonbank-owned securities firms.
To achieve these ends, the Board has determined
that:
(1) the prudential framework of the section 20 Order
will apply without modification to the U.S. bank and
thrift affiliates of Applicants' underwriting subsidiaries;
(2) the framework will also generally cover U.S.
branches and agencies of Applicants;
(3) the Applicants, insofar as their foreign offices
and operations are concerned, will be treated as
bank holding companies for purposes of the framework consistent with the IBA; and
(4) the responsibility for compliance with the framework will be placed on the section 20 subsidiaries in
order to avoid U.S. regulation having an extraterritorial impact.
The Board recognizes that this modified framework
raises certain issues of compatibility with that established for U.S.-owned section 20 subsidiaries, principally in the area of bank funding and investment. For
example, under the modified framework, a foreign
bank may establish and fund a section 20 subsidiary,
while a U.S. bank may not.
While there could be potential advantages accruing
to Applicants through this differing structure, the
Board believes that any advantage would not be
significant in light of the effect on them of the overall
section 20 framework and the circumstances of these
cases, and should not preclude foreign bank ownership
of section 20 subsidiaries. The Board notes that the
Legal Developments
absolute size of the ineligible securities activities of
section 20 companies owned by foreign banks will
generally be small, as they will necessarily be constrained by the 10 percent revenue limitation established by the Board. The base of eligible securities
activities against which to measure ineligible securities
activities is derived mainly from U.S. government
securities, which do not form as relatively large or as
natural an asset base for foreign banks as they do for
U.S. banking organizations. In addition, foreign banks
in their capacity as bank holding companies will be
subject to the provisions of the section 20 Order
requiring a bank holding company to deduct from its
capital investments in and unsecured lending to a
section 20 subsidiary. Finally, the U.S. operations of
the foreign bank will be subject to the provisions of the
section 20 Order to the same extent as U.S.-owned
and section 20 subsidiaries, and, significantly, a foreign-owned section 20 subsidiary may not utilize the
credit facilities of its foreign bank parent to gain an
advantage over U.S. firms in its securities underwriting and dealing activities. The Board notes that this
assessment could change with a significant change in
the factors considered by the Board, such as if the size
of section 20 companies becomes significant, due to an
increase in the revenue limitations, a change in the law
governing bank securities activities, or sizeable
growth in the base of eligible securities. In such
circumstances, the Board may reevaluate its position
on these matters from the standpoint of the principles
of national treatment.
The modifications adopted by the Board to the
section 20 framework as it applies to Applicant foreign
banks are discussed below.
Capital Adequacy
Considerations
In the section 20 Order, the Board stated that it would
not permit any impairment in an applicant's financial
strength as a result of the provision of capital or
liquidity support for the proposed activities. The
Board required that each bank holding company deduct from its consolidated primary capital any investments in, or unsecured extensions of credit to, the
section 20 subsidiary9 and exclude from its total consolidated assets the assets of the section 20 subsidiary.
This requirement was designed to ensure that the
holding company maintains a strong capital position to
support its subsidiary banks and that the resources
9. The applicants were required to deduct any loans extended
directly or indirectly to the section 20 subsidiary that were not fully
secured by U.S. government or other marketable securities in the
same manner and to the same extent as would be applicable in the case
of member bank loans or extensions of credit to an affiliate under
section 23A(c) of the Federal Reserve Act. 12 U.S.C. § 371c(c).
161
needed for that support would not be put at risk to
fund the expanded securities activities.10
Applicants have proposed that, in the case of a
foreign bank seeking to establish a section 20 company, the proper authority to assess capital adequacy
is the home country supervisor, using its own capital
guidelines consistent with the standards established by
the Basle Committee on Banking Regulations and
Supervisory Practices. The Board has adopted guidelines consistent with these standards and considers the
Basle Accord an important step toward a more consistent and equitable international standard for assessing capital adequacy.11
In 1979, the Board adopted a Policy Statement on
Foreign-Based Bank Holding Companies12 that states
a foreign bank with U.S. banking operations is expected to meet the same general standards of financial
strength as U.S. bank holding companies. The Board
recognized, however, that foreign banks operate outside the United States in accordance with different
banking practices and in different legal environments,
and that the Board's supervisory responsibilities extend only to the safety and soundness of U.S. banking
operations. The Board stated that, consistent with the
principles of the BHC Act and the IBA, its policy is
not to extend U.S. bank supervisory standards extraterritorially to foreign banks. Rather, the Board would
seek to assure itself of the foreign bank's ability to be
a source of strength to its U.S. operations.
In light of the Board's policy with respect to foreign
bank holding companies and the endorsement and
implementation of the Basle Accord by the Applicants' home country regulators, the Board has considered the following in assessing Applicants' capital
positions: both before and after deduction of investments in and unsecured loans to the section 20 subsidiary, each Applicant meets the risk-based capital standards established by its home country supervisor
under the Basle Accord; each is in good standing with
the home country supervisor; the U.S. offices, subsidiary banks, and any subsidiary U.S. holding company
of Applicants are in generally satisfactory condition;
and all other financial and managerial factors are
consistent with the capability of each Applicant to
remain a source of strength to its U.S. banking operations.
One of the conditions of the section 20 Order is that
the section 20 subsidiary maintain at all times capital
adequate to support its activity and cover reasonably
10. In accordance with the new Risk-Based Capital Guidelines, the
applicants were required to take 50 percent of the deductions from
Tier 1 capital and 50 percent from Tier 2 capital.
11. See 54 Federal Register 4186 (1989).
12. Federal Reserve Regulatory Service 1 4-835.
1
162
Federal Reserve Bulletin • March 1990
expected expenses and losses in accordance with
industry norms. The Board has reviewed the capitalization of each of the section 20 subsidiaries and
believes that each is adequate in light of its business
plan which, at the outside, projects a modest increase
in outstanding ineligible securities positions. Barclays
notes that additional capitalization of its section 20
subsidiary may be necessary, and has committed to
increase capital in the securities subsidiary in early
1991 if, at year end 1990, the subsidiary's assets have
grown to the size projected. The section 20 subsidiaries of Canadian Imperial and Royal Bank may also
have a need for increased capital if their businesses
grow beyond current projections. Accordingly, and
subject to any commitments related to capital, approval of these activities is limited to a level consistent
with the projections of position size and types of
securities contained in each of the applications unless
the section 20 subsidiaries receive an appropriate
infusion of additional capital.
The Board notes that Applicants have an ongoing
responsibility under the Board's regulations to continue to act as a source of financial strength to their
U.S. subsidiary banks. 12 C.F.R. 225.4(a). Under this
rule, Applicants are expected to manage their operations, including their section 20 subsidiaries, in such a
way as not to compromise or prejudice their ability to
continue to act as a source of strength to their U.S.
subsidiary banks and thrifts.
Funding of Section 20 Subsidiaries
In addition to these capital adequacy considerations,
the Board determined in the section 20 Order that the
broadening in the scope of permissible securities activities required a prohibition on lending by a bank or
thrift affiliate to the section 20 subsidiary, as well as a
prohibition on the purchase and sale of financial assets
between these institutions for their own account,
subject to limited exceptions for clearing U.S. government and agency securities and the purchase and sale
of U.S. Treasury securities. The purpose of the prohibitions is to limit the transfer of risk from the
securities activities to the federal safety net, both to
protect the resources of the federal safety net and to
prevent a securities company affiliated with a bank
from gaining an unfair competitive advantage over
securities companies that are not bank-affiliated. The
section 20 Order permitted a bank holding company to
provide secured and unsecured credit to an underwriting subsidiary.
In these cases, Applicants are not only bank holding
companies within the meaning of the BHC Act but are
also banks that have access to deposits in the United
States and abroad and have the benefits of the safe
guards that most countries afford to their banking
systems. Unlike the typical U.S. banking organization
structure, foreign banking institutions are not generally organized in a holding company structure. The
foreign bank itself is generally the parent
organization.13 Applicants argue that, in light of this
organizational structure, the foreign bank parent is the
only ultimate source of support for the operations of
the section 20 subsidiary. Accordingly, Applicants
contend, a determination by the Board that the foreign
bank parent could not fund its section 20 subsidiary
through loans or investments because it is a bank
would have the effect of preventing foreign banks from
establishing section 20 subsidiaries in the United
States unless they adopted the U.S. holding company
structure.
As previously noted, the Board has considered the
implications of modifying the section 20 conditions to
permit extensions of credit and other support by a
foreign bank to its section 20 subsidiary in light of the
purposes of the prohibition against such support by a
bank affiliate. Because funds of a foreign bank that are
generated from abroad are not federally insured, and
the foreign bank itself does not have access to the
discount window, the provision of support by a foreign
bank to its underwriting subsidiary from outside the
United States would not directly implicate the federal
safety net. In addition, for the reasons discussed
above, it does not appear that the ability to provide
such support would give securities companies owned
by foreign banks a significant competitive advantage
over domestically-owned companies.
Moreover, whether or not a funding advantage
exists by virtue of Applicants' status as banks, U.S.
securities companies, whether or not affiliated with a
U.S. bank, may borrow from foreign bank affiliates.
The Board notes that certain of the largest U.S.
investment banking companies are affiliated with foreign banks from which they may obtain credit. In the
case of a U.S. bank holding company that directly
owns a foreign bank, the section 20 conditions would
not prohibit loans by that foreign bank affiliate to an
underwriting subsidiary in the United States, subject
to the lending and capital deduction requirements
established in the section 20 Order, which are applicable also to the foreign bank Applicants.
Accordingly, in light of these considerations and
consistent with the IBA, the Board has determined
that Applicant foreign banks should be able to lend to
their section 20 subsidiaries in accordance with their
status as bank holding companies. The restrictions
13. In some cases, this organizational structure is required by the
home country's laws governing ownership of banks.
Legal Developments
against lending and purchasing or selling assets will
apply, however, to all of Applicants' U.S. banking
offices, including their U.S. bank and thrift subsidiaries, branches, and agencies.
Barclays has requested modification of the section
20 conditions in order to lend to its section 20 subsidiary through its U.S. branches. In support of the
request, Barclays notes that the deposits in its U.S.
branches are not insured by the Federal Deposit
Insurance Corporation and Barclays is expected by
the Federal Reserve to call on home country resources
before seeking credit at the discount window. Therefore, according to Barclays, the U.S. federal safety net
would not be exposed even if Barclays' U.S. branches
were to lend to its section 20 subsidiary.
The Board has considered this request and has
determined that an exception to the section 20 Order
to permit U.S. branches of foreign banks to lend to the
section 20 subsidiaries would not be appropriate.
Although their deposits are not FDIC-insured, these
offices are part of the U.S. financial structure and have
statutory access to the discount window and payments
system. Moreover, in the Board's view, lending to a
section 20 subsidiary from a U.S. branch is inconsistent with, and could potentially undermine, the framework that the Board has adopted for the operation of
the section 20 companies in the United States.
Compliance with Capital and Funding Conditions
In the section 20 Order, the Board required that any
funds supplied to a section 20 subsidiary by the
holding company or its nonbank subsidiaries, whether
in the form of capital, secured or unsecured loans or
transfer of assets, be subject to prior notice to and
approval by the Board. The Board imposed this requirement as a method to ensure compliance with the
condition that requires a bank holding company to
deduct from capital any investments in and unsecured
lending to its section 20 subsidiary. In this manner, the
Board could assure itself that any funds necessary to
support a bank holding company's bank or thrift
subsidiaries would not be diverted to fund the activities of the section 20 subsidiary. The Board stated that
it would consider requests for prior approval of specific quantitative levels of funding by a holding company for a section 20 subsidiary in accordance with the
particular holding company's capitalization and resources and the requirements outlined in the section 20
Order.
Applicants have requested modification to this condition to permit them to fund their section 20 subsidiaries without prior notice. Applicants argue that this
requirement was designed to protect the safety and
soundness of the U.S. banking system; accordingly, it
163
should not be necessary to extend its application to the
foreign offices and subsidiaries of Applicants, which
are supervised by home country authorities.
The Board has considered Applicants' arguments
and believes that, while the home country supervisors
have primary responsibility for the financial soundness
of Applicants, it is an appropriate concern of the
Board to ensure that Applicants' investments in and
liquidity support for section 20 companies do not
adversely affect their ability to support their U.S.
insured subsidiary banks and other U.S. banking operations in accordance with the Board's source of
strength policy. Accordingly and consistent with the
general approach to these applications outlined above,
the Board has determined not to grant Applicants an
exception from the requirement for prior approval for
additional investments in or loans or transfers of assets
to the section 20 subsidiary. This requirement is not
expected to impose a significant burden as each Applicant has requested approval for investments and
funding in amounts that should be adequate for its
section 20 company's operations for the next several
years.
The Board recognizes that the capital deduction for
unsecured lending and prior approval requirements for
bank holding companies raise a number of difficult and
complex issues for foreign bank applicants that, as
noted, need not be definitively or finally resolved by
the specific factual setting of the present applications.
The Board believes that these requirements are issues
of concern to both domestic and foreign applicants
that implicate significant banking structure policies. In
light of the concerns raised by this issue, the Board
intends to review this requirement generally to determine whether it need be retained for domestic and
foreign applicants.
Credit Enhancement and Loans to Customers
In the section 20 Order, the Board established several
limitations on extensions of credit by the applicants or
their subsidiaries to customers of the section 20 subsidiaries. The Board provided that bank holding companies and their subsidiaries may not extend credit or
issue or enter into any facility that might be viewed as
enhancing the creditworthiness or marketability of
ineligible securities underwritten or distributed by the
section 20 subsidiary, or make loans to issuers of
ineligible securities underwritten by the section 20
subsidiaries for the purpose of payment of principal,
interest, or dividends on such securities. Affiliates of
section 20 subsidiaries also could not knowingly extend credit to a customer secured by, or for the
purpose of purchasing, any ineligible security that the
section 20 subsidiary underwrites during the period of
164
Federal Reserve Bulletin • March 1990
the underwriting and for 30 days thereafter, or to
purchase from the section 20 subsidiary any ineligible
security in which the subsidiary makes a market.
These limitations were imposed in order to protect
the soundness of U.S. banking institutions by removing improper incentives from the credit granting process. In addition, the limitations protect the federal
safety net from the potential for abusive credit practices and prevent bank-affiliated securities companies
from obtaining an unfair advantage over companies
that are not affiliated with banks.
Applicants argue that because the limitations were
imposed primarily to protect the soundness of U.S.
banking institutions and the federal safety net, they
should not be applied to Applicants' non-U.S. operations in a manner that interferes with those operations
or requires them to create costly new compliance
systems. Applicants view such requirements not only
as entailing substantial costs, but also as amounting to
an unwarranted extraterritorial regulation of their nonU.S. operations. Applicants have suggested a number
of alternatives to ensure compliance by their non-U.S.
operations with the goals of the section 20 conditions.
Credit Enhancements
Although Applicants argue generally against the need
for limitations on credit enhancements, each has
agreed to comply fully with the conditions with respect
to their U.S. operations. Barclays also committed to
comply with the condition worldwide, while Canadian
Imperial and Royal Bank proposed to comply worldwide with the restrictions when the section 20 subsidiary is the sole underwriter or lead or co-lead manager
of an underwriting of ineligible securities. Canadian
Imperial and Royal Bank contend that a section 20
subsidiary should not be prohibited from handling a
small part of an underwriting that is managed by other
securities companies simply because a foreign affiliate
has provided credit enhancements for that issue.
The Board is of the view that it is appropriate to
adopt one general framework for foreign banks and
section 20 subsidiaries, rather than to rely on individual and differing commitments from each foreign bank
applicant. In considering the merits of Applicants'
various arguments, the Board has determined not to
grant an exception from the condition prohibiting an
affiliate from providing credit enhancements for ineligible securities underwritten by a section 20 subsidiary. The Board, however, recognizes that a compliance requirement imposed on the foreign operations of
Applicants could be viewed as having an inappropriate
extraterritorial effect on their non-U.S. business. Consequently, the Board has determined that the objectives of the credit enhancement condition may be
achieved by placing the restriction on the operations of
the section 20 subsidiary, rather than on its non-U.S.
affiliates. Accordingly, the section 20 company would
be prohibited from underwriting any ineligible securities where it became aware, in the ordinary course of
conducting a due diligence review, that an affiliate was
providing a credit enhancement. Because virtually
every credit facility that would enhance an issue of
securities would be listed in the required disclosure
documents for the issue, the section 20 subsidiary
would be in a position to know if an affiliate is
providing credit.
Credit to Customers and Issuers
Applicants offered various commitments with respect
to the conditions prohibiting credit to customers to
purchase ineligible securities underwritten or dealt in
by the section 20 subsidiary or to issuers of ineligible
securities underwritten by the section 20 subsidiary to
pay the principal, interest, or dividends on those
securities. Each Applicant committed to comply fully
with these conditions in the United States. Canadian
Imperial and Royal Bank committed to comply with
the conditions worldwide in any instance in which the
section 20 subsidiary is sole underwriter or lead or
co-lead manager of an underwriting syndicate in respect of ineligible securities. Canadian Imperial also
suggested that the prohibitions not apply to pre-existing or new lines of credit unless such lines were
purposely marketed to an issuer in connection with the
offering of services by the section 20 subsidiary.
As with the condition prohibiting credit enhancements, the Board believes it is important to maintain
these conditions relating to credit granted to customers
and issuers. As in the previous condition, the Board
also believes that it is appropriate to place the responsibility for compliance with these prohibitions on Applicants' section 20 subsidiaries rather than on their
non-U.S. affiliates. Therefore, the section 20 subsidiary
may not participate in any underwriting where it arranges for an affiliate to provide credit, or knowingly
participates in any arrangement whereby an affiliate
provides credit, to a customer or issuer for a prohibited
purpose. This modification would limit the extraterritorial impact of establishing compliance procedures in the
non-U. S. offices of the foreign banks, while also achieving the purposes of the conditions in the section 20
Order and preserving competitive equality.
Purchase by Affiliate of Securities Underwritten by
the Section 20 Subsidiary
The section 20 Order did not permit bank holding
companies or their subsidiaries to purchase, as princi-
Legal Developments
pal, ineligible securities underwritten by the section 20
subsidiaries during the period of the underwriting and
for 60 days thereafter. The Order also prohibited the
purchase from the section 20 subsidiary of any ineligible security in which it makes a market. The Board
imposed these prohibitions in order to prevent a bank
holding company from using its resources, to the
detriment of its banking subsidiaries, to support a
failing underwriting or ineligible securities in which the
section 20 subsidiary makes a market.
Royal Bank has proposed that this prohibition extend only to its U.S. subsidiaries, branches, and
agencies. Canadian Imperial has put forward a more
limited proposal, requesting only that Wood Gundy
Inc., the Canadian parent company of its section 20
subsidiary, be exempt from the prohibition in order to
permit the joint participation by Wood Gundy Inc. and
the section 20 subsidiary in cross-border transactions.
Barclays has requested that its foreign securities affiliates be permitted to purchase securities from the
section 20 subsidiary at any time.
The Board has considered these requests and has
determined that it is not appropriate to modify this
condition generally. The Board believes, however,
that this limitation should be modified for all section 20
companies, both domestic and foreign-owned, in one
limited respect. Canadian Imperial has argued that this
restriction would potentially interfere with the effective distribution of securities that are issued in a
simultaneous, cross-border offering. In such situations, where the securities are issued in two or more
markets at the same time, a syndicate in each market
commits to a portion of the issue. During the underwriting period, fluctuations in market conditions may
enhance demand for the issue in one market and
dampen demand in another. Intersyndicate agreements in such circumstances permit the sale of securities between syndicate members to ensure smooth
and broad distribution of the securities.
The Board believes that modifying this prohibition
to permit purchases and sales of ineligible securities
between affiliates that are participating in simultaneous underwritings in more than one market could
promote efficiency and better service to customers. If
the transactions are entered into to satisfy bona fide
customer demand, the risk of adverse effects appears
to be slight. Accordingly, in this limited circumstance,
the Board believes that the purposes of the condition
prohibiting purchases or sales during the underwriting
period and for 60 days thereafter would not be undermined where such purchases or sales result from bona
fide indications of interest from customers in the
various markets. This exception will extend to all
section 20 companies whether owned by U.S. bank
holding companies or foreign banks. The Board re-
165
quires all section 20 companies to establish appropriate documentation procedures to assure that such
purchases or sales are related to customer demand in
the market and are not entered into to evade the
requirements established in this Order or the section
20 Order.
Personnel Interlocks and Other Restrictions
The section 20 Order prohibited officer, director, or
employee interlocks between a section 20 subsidiary
and any affiliated bank or thrift institution. It also
prohibited an affiliated bank or thrift institution from
engaging in certain marketing activities on behalf of
the section 20 subsidiary. These limitations were
among the measures established to ensure that the
section 20 company was insulated, both structurally
and operationally, from the holding company's subsidiary banks and thrifts.
Canadian Imperial and Royal Bank have each committed to comply with these restrictions and to extend
them to their U.S. branches and agencies. Barclays
has agreed to the prohibition against personnel interlocks and marketing with respect to its U.S. bank and
thrift affiliates, but has requested that it be permitted
to have management interlocks and engage in joint
marketing between its U.S. branches and agencies and
the section 20 subsidiary. Barclays argues that these
prohibitions were adopted in order to assure the
protection of federally-insured depositors. This rationale would be inapplicable, however, to U.S. branches
and agencies of a foreign bank that are not insured by
the FDIC and, consequently, are not covered by the
federal safety net.
Barclays also states that qualified personnel available to foreign banks for employment in the United
States are scarce and that it would impose a particular
hardship on foreign banks to require them to build up
duplicate marketing staffs in New York for their
branches and their section 20 subsidiaries. Barclays
argues further that applying these prohibitions to its
New York branch would also place the section 20
subsidiary at a competitive disadvantage. Because
there are a number of officers and employees in the
New York office of Barclays whose responsibilities are
not specifically confined to the New York branch,
Barclays states that it would be administratively difficult to exclude those officers and employees from
involvement with any permitted transactions between
Barclays as a bank holding company and the section 20
subsidiary.
With respect to interlocks, the Board notes that
various proposals considered by the Congress to
amend the Glass-Steagall Act would not have required
a complete prohibition on interlocks between a section
166
Federal Reserve Bulletin • March 1990
20 subsidiary and an insured bank, and would have
authorized the Board to permit officer or director
interlocks, taking into consideration the size of the
organizations, safety and soundness considerations,
and other appropriate factors, including unfair competition in securities activities. In these applications, the
Board, as a regulator of foreign bank offices in the
United States, has an interest in assuring that these
foreign banks have in place a mechanism for proper
control of all of their U.S. operations. Accordingly,
while the Board has determined at this time to retain
the general prohibition against interlocks, the Board
believes that, giving due regard to all relevant factors,
it is appropriate to permit an interlock between a U.S.
branch and agency of a foreign bank and a section 20
subsidiary as a means of providing the foreign bank
with a mechanism to monitor effectively the operations of the underwriting subsidiary for supervisory
purposes. In these applications, such an interlock
would not appear to result in any adverse effects in
light of the general framework of conditions to which
Applicants' section 20 subsidiaries will be subject.
The Board has determined not to modify at this time
the condition relating to marketing activities as it
would apply to U.S. branches and agencies in light of
the general approach to these applications as outlined
above and considerations of competitive equity. However, with respect to this condition as well as the
general prohibition on interlocks between U.S. banks
or banking offices and a section 20 subsidiary, the
Board will consider, based on experience with the
operations of section 20 subsidiaries, whether modification of these general restrictions would be appropriate consistent with the purposes of the section 20
prudential framework.
In accordance with the policy of not extending U.S.
regulation extraterritorially, the Board has also modified the condition relating to purchases by an affiliate
of a section 20 company, acting in a trustee or other
fiduciary capacity, of ineligible securities from the
section 20 affiliate. This condition, which reflects
applicable U.S. fiduciary principles, was intended to
apply only to U.S. organizations or entities operating
in the United States. This condition would apply fully
to the U.S. affiliates, branches and agencies of Applicants, but would not apply to the non-U.S. operations
of Applicants, which are governed by their home
country law.
Supervision of Section 20 Subsidiaries and
Reservation of Authority to Modify Operating
Limitations
In the section 20 Order, the Board stated that, because
the proposals represented the first major entry of
banking organizations into debt and equity securities
underwriting and dealing activities, it was appropriate
to proceed cautiously and to establish an extensive
framework of prudential limitations to guard against
potential conflicts of interest, unsound banking practices, and other adverse effects.14 The Board continues
to be of this view. The Board also continues to believe
that careful supervisory review is needed to ensure
that the structural and operating conditions established in the section 20 Order are observed in order to
achieve the objectives of the conditions of minimizing
adverse effects and insulating affiliated banks and
thrifts and the federal safety net from the risks of the
new activity.15 Thus, the Board expects careful adherence by section 20 subsidiaries, including Companies,
and their affiliates to the conditions established in this
and the section 20 Order and directs the appropriate
Federal Reserve Banks to undertake at least annual
inspections for compliance. The Board will review the
results of these inspections annually.
In addition, the Board continues to believe that,
before the new activities may be commenced, the
appropriate Reserve Bank should determine by inspection that the section 20 subsidiaries and their
affiliates have put in place the operational and managerial infrastructure necessary to ensure compliance
with the conditions in this and the section 20 Order,
including computer, audit and accounting systems,
internal risk management controls and other policies
and procedures consistent with sound operating practices.
As indicated in the section 20 Order, the Board may
review the continued appropriateness of particular
operating limitations as section 20 subsidiaries establish a record of experience in the proposed activities.
The Board also reserves the right to establish, from
time to time, based upon the supervisory process and
experience with the activities, additional limitations on
the conduct of the proposed activities to ensure that
they are consistent with safety and soundness, and
conflict of interest and other considerations relevant
under the BHC Act.
Canadian Government Securities
Canadian Imperial and Royal Bank have proposed that
Canadian government securities be treated in the same
manner as U.S. government securities for purposes of
exemptions granted U.S. government securities from
two of the section 20 conditions. First, the prohibition
14. J.P. Morgan & Co. Incorporated,
15. Id. at 209.
at 210.
Legal Developments
against purchase and sale of financial assets between a
bank or thrift affiliate and a section 20 subsidiary
contains an exemption for U.S. Treasury securities.
Second, the section 20 prohibition against a bank or
thrift affiliate extending credit to a section 20 subsidiary contains an exemption for an extension of credit
that is incidental to the provision of clearing services
by the bank or thrift to the section 20 subsidiary with
respect to U.S. government securities if the extension
of credit is fully secured by such securities, is on
market terms, and is repaid on the same calendar day.
In light of the United States-Canada Free-Trade
Agreement, under which member banks were authorized to underwrite and deal in Canadian governmental
securities, and in light of the nature of the Canadian
government securities market, the Board has determined that a section 20 subsidiary may engage in
transactions involving Canadian government securities with a U.S. bank or thrift affiliate to the same
extent it is permitted to do so with respect to U.S. and
other government securities.16 This authority is extended to all section 20 subsidiaries, whether owned
by foreign or U.S. bank holding companies.
Immediate Authority to Underwrite and Deal in
Equity Securities
The section 20 Order imposed a one-year waiting
period on the applicants in those cases before they
were permitted to commence underwriting and dealing
in equity securities.17 The Board indicated that it
would review in one year whether the applicants had
established the managerial and operational infrastructure and other policies and procedures necessary to
comply with the requirements of the section 20 Order
and thus to be able to implement the equity securities
underwriting and dealing activities.
Canadian Imperial and Royal Bank have requested
immediate authority to commence underwriting and
dealing in equity securities. They assert that, unlike
U.S. bank holding companies, their section 20 subsidiaries were engaged in a full range of securities activities in the United States for over 70 years prior to
their acquisition by the Applicants. At that time, the
companies terminated their ineligible securities activities to conform to U.S. banking law. Applicants assert
that the companies already have the necessary managerial and operational infrastructure in place for underwriting equity securities. Applicants state that the
16. Where exceptions to the requirements apply only to U.S.
Treasury Securities, rather than the broader category of government
securities, the exception is extended only to direct obligations of the
Canadian federal government.
17. J.P. Morgan & Co. Incorporated, at 209.
167
purpose of their applications is merely to obtain approval for their section 20 subsidiaries to resume, on a
very limited basis, underwriting activities that had
been an essential part of their operations for many
years prior to their acquisition by the Canadian banks
in 1988.
In imposing the one-year waiting period in the
section 20 Order, the Board explained that it wanted to
allow the applicants time to establish the managerial
and operational infrastructure and other policies and
procedures necessary "to comply with the requirements of this Order." 75 Federal Reserve Bulletin 209.
Accordingly, in addition to being concerned with the
bank holding companies' lack of experience in underwriting equity securities, the Board recognized that
the applicants would require time to develop and put
into place the policies and procedures required by the
operating conditions of the section 20 Order, especially when applied in the context of underwriting
equity securities.
In light of these concerns and the principle established by the IBA of equality of treatment in the
United States, the Board does not believe it would be
appropriate to authorize Canadian Imperial and Royal
Bank to begin underwriting equity securities immediately. Although Applicants' section 20 subsidiaries
may have had substantial experience in underwriting
equity securities prior to their acquisition by Applicants, the subsidiaries and their U.S. bank affiliates
and the U.S. offices of their parent foreign banks have
never had to comply with the framework of conditions
established in the section 20 Order. Thus, the Board
finds no basis to differentiate between the Canadian
and U.S. applicants with respect to the need for an
infrastructure review.
In the alternative, Canadian Imperial and Royal
Bank have requested an exemption pursuant to section
4(c)(9) of the BHC Act (12 U.S.C. § 1843(c)(9)) to
underwrite and deal in the equity securities of Canadian issuers immediately. Section 4(c)(9) permits the
Board to grant an exemption from the BHC Act's
nonbanking activity prohibitions to a foreign bank if
the Board determines that the exemption would not be
substantially at variance with the purposes of the BHC
Act and would be in the public interest.
Applicants assert that granting the exemption would
not be substantially at variance with the purposes of
the BHC Act because the Board has determined that
underwriting and dealing in equity securities are
closely related to banking under the BHC Act. Moreover, Applicants argue, there is no basis for finding a
substantial competitive disadvantage to U.S. competitors because U.S. companies may commence the
activity as well as soon as they are found to have the
necessary procedures and expertise. Applicants fur-
168
Federal Reserve Bulletin • March 1990
ther contend that the proposed exemption would be in
the public interest in that it would provide the public
with additional sources of equity underwriting and
dealing services. Finally, Applicants contend that their
underwriting subsidiaries will suffer substantial competitive harm if they are not permitted to resume
underwriting and dealing in equity securities immediately in that they will lose valuable, experienced staff
to companies who are able to engage in such activities.
The Board believes, however, that granting Applicants' request for an exemption pursuant to section
4(c)(9) would give them a competitive advantage over
U.S. bank holding companies as well as other securities companies owned by foreign banks. By virtue of
the exemption, Applicants would be able to offer
equity underwriting services while their U.S. bankowned competitors could not without having been
examined with respect to their managerial and operational infrastructure and other policies and procedures. Moreover, it has long been the policy of the
Board not to grant exemptions under section 4(c)(9) to
foreign organizations if the exemption would give the
foreign organization a material competitive advantage
over U.S. bank holding companies.18 Accordingly, the
Board does not believe Applicants' request for an
exemption to be consistent with the policies governing
the implementation of section 4(c)(9) of the BHC Act
and the request is denied.
Public Benefits
Consummation of Applicants' proposals would provide increased convenience to the section 20 subsidiaries' customers and gains in efficiency. In addition,
the Board expects that the de novo entry of Applicants
into the market for these services would increase the
level of competition among providers of these services. Accordingly, for these reasons and the reasons
set forth in the section 20 Order, the Board finds that
the performance of the proposed activities by the
section 20 subsidiaries can reasonably be expected to
produce benefits to the public.
Contentions of SI A and ICI
The SIA and ICI, in their comments on these applications, incorporated by reference the arguments each
had made relating to the Board's January 1989 section
20 Order. The SIA contends that the proposed activities would result in a violation of section 20 of the
Glass-Steagall Act and that they do not meet the
18. See Midland
(1981).
Bank Limited,
67 Federal Reserve
Bulletin 729
"closely related" and "proper incident to banking"
standards of section 4(c)(8) of the BHC Act. The ICI
makes similar contentions to the extent that the application by Royal Bank requests authority to underwrite
and deal in investment company securities.19
With respect to the comments previously made by
the SIA and ICI in connection with the January 1989
Order regarding the Glass-Steagall Act and the BHC
Act, the Board has considered and rejected such
comments in that Order, the reasons for which have
been incorporated and made part of the Board's decision herein.20
The SIA also contends that consistent application of
the Board's statutory interpretation and related regulatory framework is appropriate, given that the applicable statutory language applies equally to all conduct
covered by it regardless of the status or locale of the
particular banking entity involved. The SIA argues
that such a consistent rationale counsels against granting additional authority to or reducing limitations
proposed by a given applicant, such as Canadian
19. The ICI also argues that, to the extent Royal Bank seeks
authority for the Section 20 subsidiary to engage in underwriting or
dealing in bank-ineligible affiliate securities, the application is contrary
to law and should be denied. By Order dated September 21, 1989,
however, the Board made a determination to permit a section 20
subsidiary to underwrite and deal in securities of affiliates, where the
securities are rated by an unaffiliated, nationally recognized rating
organization or are issued or guaranteed by the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association, or represent
interests in such obligations. 75 Federal Reserve Bulletin 751 (1989).
The Board hereby incorporates the reasoning of that decision.
20. The SIA has also indicated that a determination to increase from
5 to 10 percent the revenue limit on the amount of total revenues a
Section 20 subsidiary may derive from ineligible securities underwriting and dealing activities should be addressed in the context of a
response to the Board's general request for comments on that issue,
rather than in the context of this particular application. The Board
acted on this issue by Order dated September 21, 1989, determining
that it would be appropriate to raise the revenue limit from 5 to 10
percent.
The SIA also contends that Royal Bank and Barclays appear to be
requesting permission to engage in "riskless principal" transactions in
which their section 20 subsidiaries would act in effect as dealers for
securities underwritten or distributed by foreign affiliates. While it is
unclear which of the proposed activities the SIA is referring to as
"riskless principal" transactions, Royal Bank and Barclays have
committed that any of the activities of the section 20 subsidiaries that
constitute underwriting or dealing in securities within the meaning of
section 20 of the Glass-Steagall Act would be subject to the 10 percent
revenue limitation.
The Board also notes that Royal Bank and Barclays have not
applied to engage in riskless principal transactions as an eligible
securities activity in accordance with the conditions established by the
Board for the conduct of that activity. Bankers Trust New York
Corporation, 75 Federal Reserve Bulletin 829 (1989). One of the
conditions established in the Bankers Trust Order is that, for a riskless
principal transaction to be considered an eligible activity for a section
20 subsidiary, it may not be entered into on behalf of a foreign affiliate
that deals in securities abroad. The Board had previously stated that,
where a U.S. company acts as a riskless principal on behalf of foreign
securities affiliates, such activity could constitute dealing in securities.
Letter from William W. Wiles to Security Pacific Corporation
(April 18, 1988).
Legal Developments
Imperial, Royal Bank or Barclays, relative to those
previously enunciated by the Board.
The Board has considered the SIA's comments and
has found, for the reasons discussed in this Order, that
modifications to the conditions previously imposed by
the Board on the conduct of the proposed activities are
appropriate in these cases, particularly in light of the
policy of national treatment mandated by the IBA and
Applicants' status as bank holding companies. Moreover, the Board has not modified the commitments for
particular foreign bank applicants; rather, the Board
has adopted a general framework that adjusts certain
of the section 20 conditions to address the issues
raised by Applicants' foreign status without creating
the potential for adverse effects that outweigh expected public benefits.
Finally, SI A appears to contend that Applicants'
branches and agencies are subject to all the same laws
and regulations as national banks by virtue of
12 U.S.C. § 3106a, and therefore the Board may not
modify any conditions of the section 20 Order for
Applicants that are applicable to national banks. The
Board does not agree with this reading of the statute.
The provision in question provides that foreign banks
operating in the United States are subject to all the
same laws and regulations affecting U.S. banks that
relate to discrimination based on race, sex, creed or
national origin.
For these reasons, and subject to the framework and
conditions established in this Order, the Board believes that the proposals are not likely to result in
decreased or unfair competition, conflicts of interest,
unsound banking practices, concentration of resources, or other adverse effects that outweigh the
reasonably expected public benefits from the proposals.
Conclusion
Based on the foregoing and other facts of record, and
subject to the conditions set forth in this Order, the
Board concludes that Applicants' proposals are consistent with section 20 of the Glass-Steagall Act and
are so closely related to banking as to be a proper
incident thereto within the meaning of section 4(c)(8)
of the BHC Act. Accordingly, the applications are
hereby approved. The Board's approval of these proposals extends only to activities conducted within the
conditions of this Order and subject to the gross
revenue limitation discussed above. Underwriting and
dealing in the approved securities in any manner other
than as approved in this Order is not within the scope
of the Board's approval and is not authorized for the
section 20 subsidiaries. As more fully set forth in the
section 20 Order, as modified by this Order, the
169
Board's approval is subject to the following conditions:
A. Capital Adequacy Conditions
1. Applicant meets internationally-accepted risk-based
capital requirements before and after deduction from
Applicant's consolidated capital of:
(a) any investment it makes in the underwriting
subsidiary that is treated as capital in that subsidiary, and
(b) any credit Applicant or a subsidiary extends
directly or indirectly to the underwriting subsidiary
unless the extension of credit is fully secured by
U.S. Treasury securities, securities that are direct
obligations of the Canadian federal government, or
other marketable securities and is collateralized in
the same manner and to the same extent as would be
required under section 23A(c) of the Federal Reserve Act if the extension of credit were made by a
member bank.21
2. In calculating risk-based capital ratios, Applicant
should deduct 50 percent of the amount of any investment in, and 50 percent of any unsecured or not fully
secured or inadequately collateralized loans to, the
underwriting subsidiary from Tier 1 capital and 50
percent from Tier 2 capital. Applicant should also
exclude the underwriting subsidiary's assets from its
consolidated assets. Notwithstanding these adjustments, Applicant should continue to maintain adequate capital on a fully consolidated basis.
3. No Applicant nor any of its subsidiaries shall,
directly or indirectly, provide any funds to, or for the
benefit of, an underwriting subsidiary, whether in the
form of capital, secured or unsecured extensions of
credit, or transfer of assets, without prior notice to and
approval by the Board.
4. The underwriting subsidiary shall maintain at all
times capital adequate to support its activity and cover
reasonably expected expenses and losses in accordance with industry norms.
B. Credit Extensions to Customers of the
Underwriting Subsidiary 22
5(a) No U.S. affiliate or branch or agency of Applicant
shall directly or indirectly extend credit or issue or
enter into a stand-by letter of credit, asset purchase
21. An extension of credit means any loan, guarantee, or other form
of credit exposure, including those described in Condition 5.
22. Unless otherwise stated, these conditions shall apply to a
subsidiary of a bank or thrift institution to the same extent as they
apply to the bank or thrift institution.
170
Federal Reserve Bulletin • March 1990
agreement, indemnity, guarantee, insurance or
other facility that might be viewed as enhancing the
creditworthiness or marketability of an ineligible
securities issue underwritten or distributed by the
underwriting subsidiary.
(b) The underwriting subsidiary shall not underwrite or distribute ineligible securities if the underwriting subsidiary is aware in the ordinary course of
conducting a due diligence review that an affiliate is
extending credit or issuing or entering into a standby letter of credit, asset purchase agreement, indemnity, guarantee, insurance or other facility that
might be viewed as enhancing the creditworthiness
or marketability of such ineligible securities.
6(a) No U.S. affiliate or branch or agency of Applicant (other than the underwriting subsidiary) shall
knowingly extend credit to a customer directly or
indirectly secured by, or for the purpose of purchasing, any ineligible security that the underwriting subsidiary underwrites during the period of the
underwriting or for 30 days thereafter, or to purchase from the underwriting subsidiary any ineligible security in which the underwriting subsidiary
makes a market.
(b) The underwriting subsidiary shall not arrange for
an Applicant or any of its subsidiaries to extend, or
knowingly participate in any arrangement whereby
an Applicant or any of its subsidiaries extends,
credit to a customer directly or indirectly secured
by, or for the purpose of purchasing, any ineligible
security that the underwriting subsidiary underwrites during the period of the underwriting or for 30
days thereafter, or to purchase from the underwriting subsidiary any ineligible security in which the
underwriting subsidiary makes a market.
(c) These limitations extend to all customers of
Applicant and its subsidiaries, including brokerdealers and unaffiliated banks, but do not include
lending to a broker-dealer for the purchase of securities where an affiliated bank is the clearing bank for
such broker-dealer.
7(a) No U.S. affiliate or branch or agency of Applicant may, directly or indirectly, extend credit to
issuers of ineligible securities underwritten by the
underwriting subsidiary for the purpose of the
payment of principal, interest or dividends on such
securities.
(b) The underwriting subsidiary shall not arrange for
an Applicant or any of its subsidiaries to extend, or
knowingly participate in any arrangement whereby
an Applicant or any of its subsidiaries extends,
credit to an issuer of ineligible securities underwritten by the underwriting subsidiary for the purpose of
the payment of principal, interest, or dividends on
such securities and shall not underwrite any ineligi-
ble securities of an issuer if it becomes aware that an
affiliate is providing credit to an issuer for such
purposes.
(c) These limitations are inapplicable to any credit
lines extended to an issuer by any Applicant or any
subsidiary of an Applicant that provide for substantially different timing, terms, conditions and
maturities from the ineligible securities being underwritten. It would be clear, for example, that a
credit has substantially different terms and timing
if it is for a documented special purpose (other
than the payment of principal, interest or dividends) or there is substantial participation by other
lenders.
8. Each Applicant shall adopt appropriate procedures,
including maintenance of necessary documentary records, to assure that any extension of credit by any of
its U.S. affiliates, branches, or agencies to issuers of
ineligible securities underwritten or dealt in by an
underwriting subsidiary are on an arm's length basis
for purposes other than payment of principal, interest,
or dividends on the issuer's ineligible securities being
underwritten or dealt in by the underwriting subsidiary. An extension of credit is considered to be on an
arm's length basis if the terms and conditions are
substantially the same as those prevailing at the time
for comparable transactions with issuers whose securities are not underwritten or dealt in by the underwriting subsidiary.
9. In any transaction involving an underwriting subsidiary, Applicant's thrift subsidiaries shall observe
the limitations of sections 23A and 23B of the Federal
Reserve Act as if the thrifts were banks.23
10. The requirements relating to credit extensions to
issuers noted in paragraphs 5 - 9 above shall also apply
to extensions of credit to parties that are major users
of projects that are financed by industrial revenue
bonds.
11. Applicants shall cause their U.S. bank and thrift
subsidiaries, branches, and agencies to adopt policies and procedures, including appropriate limits on
exposure, to govern their participation in financing
transactions underwritten or arranged by an underwriting subsidiary as set forth in this Order. The
Reserve Banks shall ensure that these policies and
procedures are in place at Applicants' U.S. bank and
thrift subsidiaries, branches, and agencies and shall
assure that loan documentation is available for review by Reserve Banks to ensure that an independent and thorough credit evaluation has been under-
23. The Board notes that the Applicants in these cases do not
currently own thrift subsidiaries in the United States. The Board is
including this limitation as part of a general framework for foreign
banks operating in the United States.
Legal Developments
taken in connection with the participation by the
bank, thrift, branch, or agency in such financing
packages and that such lending complies with the
requirements of this Order and section 23B of the
Federal Reserve Act.
12. Applicants' U.S. bank and thrift subsidiaries and
branches and agencies should also establish appropriate policies, procedures, and limitations regarding
exposure of Applicants' U.S. subsidiaries and offices
on a consolidated basis to any single customer whose
securities are underwritten or dealt in by the underwriting subsidiary.
C. Limitations to Maintain Separateness of an
Underwriting Affiliate's Activity
13. There will be no officer, director, or employee
interlocks between an underwriting subsidiary and any
of Applicant's U.S. bank or thrift subsidiaries,
branches, or agencies, except that one officer of a
branch or agency may act as a director of the underwriting subsidiary. The underwriting subsidiary will
have separate offices from any bank or thrift subsidiary or branch or agency of Applicant.24
171
E. Marketing Activities on Behalf of an
Underwriting Subsidiary
15. No underwriting subsidiary nor any affiliated U.S.
bank or thrift institution, branch, or agency will engage in advertising or enter into an agreement stating
or suggesting that an affiliated U.S. bank, thrift,
branch, or agency is responsible in any way for the
underwriting subsidiary's obligations as required for
affiliates of member banks under section 23B of the
Federal Reserve Act.
16. No U.S. bank or thrift subsidiary or U.S. branch or
agency of Applicant will act as agent for, or engage in
marketing activities on behalf of, the underwriting
subsidiary.25 In this regard, prospectuses and sales
literature relating to securities being underwritten or
dealt in by an underwriting subsidiary may not be
distributed by a U.S. bank or thrift subsidiary or U.S.
branch or agency of Applicant; nor should any such
literature be made available to the public at any offices
of any such bank, thrift, branch, or agency, unless
specifically requested by a customer.
F. Investment Advice by Bank/Thrift Affiliates,
Branches, and Agencies
D. Disclosure by the Underwriting Subsidiary
14. An underwriting subsidiary will provide each of
its customers with a special disclosure statement
describing the difference between the underwriting
subsidiary and its bank and thrift affiliates and its
U.S. branches and agencies and pointing out that an
affiliated bank or thrift or U.S. branch or agency
could be a lender to an issuer and referring the
customer to the disclosure documents for details. In
addition, the statement shall state that securities
sold, offered, or recommended by the underwriting
subsidiary are not deposits, are not insured by the
Federal Deposit Insurance Corporation, are not
guaranteed by an affiliated bank or thrift or branch or
agency, and are not otherwise an obligation or responsibility of such a bank or thrift or branch or
agency (unless such is the case). The underwriting
subsidiary should also disclose any material lending
relationship between the issuer and a bank or lending
affiliate of the underwriting subsidiary as required
under the securities laws and in every case, to the
extent known, whether the proceeds of the issue will
be used to repay outstanding indebtedness to affiliates.
17. An affiliated U.S. bank or thrift institution or a
U.S. branch or agency may not express an opinion on
the value or the advisability of the purchase or the sale
of ineligible securities underwritten or dealt in by an
affiliated underwriting subsidiary unless the affiliated
institution, branch, or agency notifies the customer
that the underwriting subsidiary is underwriting, making a market, distributing or dealing in the security.
18. No U.S. bank, thrift, or trust or investment advisory subsidiaries, or U.S. branches or agencies, of an
Applicant shall purchase, as a trustee or in any other
fiduciary capacity, for accounts over which they have
investment discretion ineligible securities:
(a) underwritten by the underwriting subsidiary as
lead underwriter or syndicate member during the
period of any underwriting or selling syndicate, and
for a period of 60 days after the termination thereof,
and
(b) from the underwriting subsidiary if it makes a
market in that security, unless, in either case, such
purchase is specifically authorized under the instrument creating the fiduciary relationship, by court
order, or by the law of the jurisdiction under which
the trust is administered.
24. An underwriting subsidiary may have offices in the same
building as a bank or thrift subsidiary or branch or agency of Applicant
if the underwriting subsidiary's offices are clearly distinguished from
those of the bank, thrift, branch, or agency.
25. This condition does not prevent a bank, thrift, branch, or agency
from informing its customers of the available services of the underwriting subsidiary.
172
Federal Reserve Bulletin • March 1990
G. Extensions of Credit and Purchases and
Sales of Assets
19. An underwriting subsidiary may not sell to any
affiliate that is acting as principal in the transaction,
ineligible securities that are underwritten by the underwriting subsidiary during the period of the underwriting and for 60 days after the close of the underwriting period, or any ineligible security in which the
underwriting subsidiary makes a market, except that,
in the case of ineligible securities that are being issued
in a simultaneous cross-border underwriting in which
the underwriting subsidiary and a foreign affiliate or
affiliates are participating, such securities may be
purchased or sold pursuant to an intersyndicate agreement for the period of the underwriting where the
purchase or sale results from bona fide indications of
interest from customers. Such purchases or sales shall
not be made for purposes of providing liquidity or
capital support to the underwriting subsidiary or otherwise to evade the requirements of this Order. An
underwriting subsidiary shall maintain documentation
on such transactions.
20. An underwriting subsidiary may not underwrite or
deal in any ineligible securities issued by its affiliates
or representing interests in, or secured by, obligations
originated or sponsored by its affiliates (except for
grantor trusts or special purpose corporations created
to facilitate underwriting of securities backed by assets
originated by a non-affiliated lender) unless such securities are rated by an unaffiliated, nationally recognized rating organization or are issued or guaranteed
by the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or the
Government National Mortgage Association or represent interests in securities issued or guaranteed by
such agencies.
21(a) Applicants shall assure that no U.S. bank or
thrift subsidiary, branch, or agency shall, directly or
indirectly, extend credit in any manner to an affiliated underwriting subsidiary or a subsidiary
thereof; or issue a guarantee, acceptance, or letter
of credit, including an endorsement or standby letter
of credit, for the benefit of the underwriting subsidiary or a subsidiary thereof,
(b) This prohibition shall not apply to an extension
of credit by an affiliated bank or thrift subsidiary,
branch, or agency to an underwriting subsidiary that
is incidental to the provision of clearing services by
such affiliate, branch or agency to the underwriting
subsidiary with respect to securities of the United
States or Canada or their agencies, or securities on
which the principal and interest are fully guaranteed
by the United States or Canada or their agencies, if
the extension of credit is fully secured by such
securities, is on market terms, and is repaid on the
same calendar day. If the intra-day clearing of such
securities cannot be completed because of a bona
fide fail or operational problem incidental to the
clearing process that is beyond the control of the
affiliate, branch or agency and the underwriting
subsidiary, the affiliate, branch or agency may continue the intra-day extension of credit overnight
provided the extension of credit is fully secured as
to principal and interest as described above, is on
market terms, and is repaid as early as possible on
the next business day.
22. No U.S. bank or thrift subsidiary, branch, or
agency shall, directly or indirectly, for its own account, purchase financial assets of an affiliated underwriting subsidiary or a subsidiary thereof or sell such
assets to the underwriting subsidiary or subsidiary
thereof. This limitation shall not apply to the purchase
and sale of U.S. Treasury securities or direct obligations of the Canadian federal government that are not
subject to repurchase or reverse repurchase agreements between the underwriting subsidiary and its
affiliated bank or thrift subsidiary, branch, or agency.
H. Limitations on Transfers of Information
23. No U.S. bank, thrift, branch, or agency shall
disclose to an affiliated underwriting subsidiary, nor
shall an underwriting subsidiary disclose to an affiliated bank, thrift, branch, or agency, any nonpublic
customer information (including an evaluation of the
creditworthiness of an issuer or other customer of that
bank, thrift, branch, agency, or underwriting subsidiary) without the consent of that customer.
I. Reports
24. Applicants shall submit quarterly to the appropriate Federal Reserve Bank FOCUS reports filed with
the NASD or other self-regulatory organizations, and
detailed information breaking down the underwriting
subsidiaries' business with respect to eligible and
ineligible securities, in order to permit monitoring of
the underwriting subsidiaries' compliance with the
provisions of this Order.
J. Transfer of Activities and Formation of
Subsidiaries of an Underwriting Subsidiary to
Engage in Underwriting and Dealing
25. The Board's approval of the proposed underwriting and dealing activities extends only to the subsidiaries described above for which approval has been
sought in the instant applications. The activities in the
United States may not be conducted by Applicants in
Legal Developments
any other subsidiary without prior Board review.
Pursuant to Regulation Y, no corporate reorganization
of an underwriting subsidiary, such as the establishment of subsidiaries of the underwriting subsidiary to
conduct the activities, may be consummated without
prior Board approval.
K. Limitations on Reciprocal Arrangements
and Discriminatory Treatment
26. No Applicant nor any of its subsidiaries may,
directly or indirectly, enter into any reciprocal arrangement. A reciprocal arrangement means any
agreement, understanding, or other arrangement under which one bank holding company (or subsidiary
thereof) agrees to engage in a transaction with, or on
behalf of, another bank holding company (or subsidiary thereof), in exchange for the agreement of the
second bank holding company (or any subsidiary
thereof) to engage in a transaction with, or on behalf
of, the first bank holding company (or any subsidiary
thereof) for the purpose of evading any requirement of
this Order or any prohibition on transactions between,
or for the benefit of, affiliates of banks established
pursuant to federal banking law or regulation.
27. No U.S. bank or thrift subsidiary or branch or
agency of Applicant shall, directly or indirectly:
(a) acting alone or with others, extend or deny credit
or services (including clearing services), or vary the
terms or conditions thereof, if the effect of such
action would be to treat an unaffiliated securities
firm less favorably than its affiliated underwriting
subsidiary, unless the bank, thrift, branch, or
agency demonstrates that the extension or denial is
based on objective criteria and is consistent with
sound business practices; or
(b) extend or deny credit or services or vary the
terms or conditions thereof with the intent of creating a competitive advantage for an underwriting
subsidiary of an affiliated bank holding company.
173
that it has established the managerial and operational
infrastructure and other policies and procedures necessary to comply with the requirements of this Order.
The Board's approval determination is subject to the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent
evasion of, the provisions and purposes of the BHC
Act and the Board's regulations and orders issued
thereunder.
By order of the Board of Governors, effective
January 4, 1990.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, Kelley, and LaWare.
JENNIFER J. JOHNSON
Associate Secretary of the Board
Concurring Statement of Governor Seger
I concur in the decision of the Board to approve these
applications. I believe, however, that the Board
should reevaluate the need for continued imposition
on any section 20 company, whether U.S. or foreignowned, of any firewalls that are not related to safety
and soundness of affiliated banks.
In these cases, I would not require that Applicants
obtain the Board's prior approval for future investment and lending. Moreover, I do not see the need to
continue to require U.S.-owned section 20 companies
to obtain such approval. I would also permit Applicants to establish interlocks without restriction between the section 20 companies and their U.S.
branches and agencies, and would urge the Board to
reconsider the section 20 Order's total prohibition on
interlocks with bank and thrift affiliates.
January 4, 1990
L. Requirement for Supervisory Review Before
Commencement of Activities
Concurring Statement of Governor LaWare
28. An Applicant may not commence the proposed
debt or equity securities underwriting and dealing
activities until the Board has determined that the
Applicant has established policies and procedures to
ensure compliance with the requirements of this Order, including computer, audit and accounting systems, internal risk management controls and the necessary operational and managerial infrastructure. In
this regard, the Board will review whether an Applicant may commence underwriting and dealing in equity securities based on a determination by the Board
These applications present a number of complex issues that require difficult choices on the part of the
Board. The Board's decision to approve the applications within the framework of its previous section 20
Orders reflects a careful balancing of competing interests and, in my view, the decision strikes the appropriate balance under the circumstances.
As the Board's Order recognizes, there is a basic
incongruity presented by Applicants' status as both
banks and bank holding companies. In my view, the
Board correctly determined, consistent with the pro-
174
Federal Reserve Bulletin • March 1990
visions of the International Banking Act, that the
Applicant foreign banks should be treated as bank
holding companies and that the conditions or firewalls
should be appropriately adjusted to reflect that policy.
My disagreement with the Board lies in its decision to
leave open the possibility that other circumstances
could arise that would warrant a different treatment for
an applicant foreign bank than the one reached today.
I recognize that the Board is proceeding cautiously in
this difficult area and that it is not willing to establish a
general principle applicable to situations not before it.
Nevertheless, it is my opinion that the Board's basic
decision to treat the Applicant foreign banks as bank
holding companies is the correct principle to apply
generally under current law.
In applying the principles of national treatment and
competitive equity in the context of the International
Banking Act's instruction that Applicants be treated as
bank holding companies, the Board felt compelled not
to exempt Applicants from the requirement of the
section 20 Order that bank holding companies deduct
from their capital any investments in and unsecured
lending to the section 20 company, and seek prior
approval for such actions in the future. The Board
established the condition in its original decision in
order to ensure that the parent bank holding company
met its capital requirements after the applicable deductions and thus could continue to serve as a source of
strength to its subsidiary banks. While I recognize that
it is the Board's objective through the condition to
strengthen and preserve the capital position of domestic bank holding companies, I disagree with the need
for that requirement in the context of foreign banks
whose financial condition is subject to comparable
home country supervision. Any advantage that might
be conferred on Applicants by an exemption would
not, in my opinion, be so substantial as to warrant the
condition in order to maintain competitive equity. I
note, however, that the Board has stated it will review
the requirement for prior approval of bank holding
company funding of section 20 subsidiaries, whether
domestically or foreign owned, outside the context of
these applications. I welcome that review.
January 4, 1990
First Union Corporation
Charlotte, North Carolina
Order Approving Application to Act in the Private
Placement of All Types of Securities
First Union Corporation, Charlotte, North Carolina
("First Union"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), has applied for the Board's approval under
section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) for its subsidiary, First
Union Securities, Incorporated, Charlotte, North
Carolina ("Company"), to act as agent in the private
placement of all types of securities.
First Union, with approximately $19.9 billion in
deposits, is the third largest commercial banking organization in North Carolina.1 It operates five subsidiary
banks and engages directly and through subsidiaries in
a broad range of permissible nonbanking activities in
the United States, including engaging through Company to a limited extent in underwriting and dealing in
certain securities.2 Company is and will continue to be
a broker-dealer registered with the Securities and
Exchange Commission and subject to the recordkeeping, reporting, fiduciary standards, and other requirements of the Securities Exchange Act of 1934,
and the National Association of Securities Dealers.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (54 Federal Register 24,038
(1989)). The time for filing comments has expired, and
the Board has considered the application and all
comments received in light of the public interest
factors set forth in section 4(c)(8) of the BHC Act. The
Board received written comments opposing the application from the Investment Company Institute
("ICI"), a trade association of the mutual fund
industry.3
Because Company would be affiliated through common ownership with a member bank, Company may
not be "engaged principally" in underwriting or dealing in securities within the meaning of section 20 of the
Banking Act of 1933 (the "Glass-Steagall Act"). 4 In
earlier decisions, the Board has determined that Company is not "engaged principally" in section 20 activities if revenues from underwriting and dealing in
1. All data are as of June 30, 1989.
2. See First Union Corporation, 75 Federal Reserve Bulletin 645
(1989).
3. The comments of the ICI were received substantially after the
close of the comment period prescribed in the notice of this application. Under the Board's Rules of Procedure, the Board may, but is not
required to consider comments received after the close of the public
comment period. 12 C.F.R. 262.3. In any event, the ICI has objected
to First Union's proposal to the extent that it could be construed to
seek approval for Company to privately place securities of investment
companies that are sponsored or advised by Company or First Union.
This application does not involve a request by First Union to place
such securities.
4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) provides
that
". . . no member bank shall be affiliated . . . with any . . .
organization engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through
syndicate participation of stocks, bonds, debentures, notes, or
other securities. . . . "
Legal Developments
securities that banks are not authorized to underwrite
and deal in directly ("ineligible securities") do not
exceed 10 percent of Company's gross revenues.
In its recent Bankers Trust decision, the Board
determined that acting as agent in the private placement of securities does not constitute underwriting
and dealing in securities for purposes of section 20 of
the Glass-Steagall Act, and therefore revenue derived
from these activities is not subject to the 10 percent
revenue limitation on ineligible securities underwriting
and dealing.5 In addition, in its Bankers Trust and J.P.
Morgan decisions the Board found that, subject to a
number of prudential limitations that address the potential for conflicts of interests, unsound banking
practices or other adverse effects, private placement
was so closely related to banking as to be a proper
incident thereto within the meaning of section 4(c)(8)
of the BHC Act. First Union has committed that
Company will conduct its private placement activities
in a manner consistent with, and subject to, all of the
prudential limitations approved by the Board in J.P.
Morgan.6
First Union has proposed to have its affiliated banks
extend credit to an issuer whose debt securities have
been placed by the section 20 subsidiary where the
proceeds would be used to pay the principal amount of
the securities at maturity. Such transactions may be
appropriate if at the time the securities mature it were
more advantageous to the issuer to obtain financing
from the bank rather than to reissue the securities.
In situations where the decision to extend credit to
an issuer of securities placed by the section 20 subsidiary to repay the principal amount of the securities at
maturity is made at a different time than when the
securities are actually being placed, the likelihood that
the decision to extend credit would be influenced by
any promotional incentive associated with the placement activity would be minimized, especially in the
case of longer-term securities. Since the decision
whether to extend credit in this situation would not be
made while the securities are being marketed, the
likelihood that the bank would not exercise independent judgment in assessing the creditworthiness of the
issuer in light of all relevant circumstances at the time
would be lessened. The bank's credit decisions, moreover, can be closely scrutinized through the examination process. In addition, many of these credit transactions could be subject to the requirements of section
5. Bankers Trust New York Corporation,
75 Federal
Reserve
Bulletin 829 ("Bankers Trust"). See also J.P. Morgan & Company
Incorporated, 76 Federal Reserve Bulletin 26 {"J.P.
Morgan").
6. First Union has agreed to consult with Federal Reserve staff
before transferring its private placement activities from Company to
any other nonbank subsidiary of First Union to assure that none of the
provisions of the J.P. Morgan Order are evaded by the transfer.
175
23B of the Federal Reserve Act, which provides that
certain types of transactions between a bank and a
nonbank affiliate must be on an arm's length basis.7
While it is not entirely clear that section 23B will apply
to all of these credit transactions, the Board expects
that the standards set out in that section will nevertheless be complied with.
Accordingly, the Board believes that it is appropriate to allow banks affiliated with section 20 subsidiaries or other nonbank affiliates to extend credit to an
issuer to repay the principal amount of the securities,
provided there is some reasonable time difference
between the placement of the securities and the decision to extend credit,8 and provided the extensions of
credit meet prudent and objective standards. The
Board conditions its decision with regard to these
extensions of credit on the requirement that First
Union's subsidiary banks or other affiliates maintain
detailed and clearly identified credit and collateral
documentation so that examiners may determine that a
thorough, objective and independent analysis of the
credit has been undertaken. In addition, documentation must be maintained to show that the participation
by a bank or thrift affiliate in the transaction has been
undertaken under circumstances and on terms and
conditions (including pricing, minimum borrower cash
flow-to-debt service or collateral requirements, or
repayment terms) that are not preferential and that
fully reflect the risks associated with the loan, as
required under section 23 B of the Federal Reserve
Act. The Federal Reserve Bank of Richmond will
closely review loan documentation of bank affiliates to
ensure that an independent and thorough credit evaluation has been undertaken with respect to the participation of the bank in these credit extensions to issuers
of securities privately placed by an agent affiliated with
the bank.
With respect to the affiliate purchase restriction,
First Union also has proposed to have Company place
securities with its parent holding company or with a
nonbank subsidiary of the parent company consistent
with the Board's ruling in J.P. Morgan.9 The Board
notes that since purchases of securities will not be
made by an affiliated bank, the possibility that losses
as a result of these investments will adversely affect
the federal safety net protecting the bank is minimized.
7. 12 U.S.C. § 371c-l.
8. In the Board's view, this requirement will be satisfied if at the
time the extension of credit is made, a period of at least three years has
elapsed from the time of the placement of the securities.
9. Under current legal restrictions, member banks cannot generally
purchase securities privately placed by an affiliate. This is because
member banks are prohibited from acquiring any equity securities or
unmarketable debt securities, i.e., those that cannot be resold because
of SEC private placement restrictions. See 12 U.S.C. §§ 24 (Seventh)
and 335.
176
Federal Reserve Bulletin • March 1990
Accordingly, the Board believes that it is appropriate to allow Company to place securities with its
parent holding company or a nonbank affiliate. The
Board recognizes that the potential for certain conflicts of interest may be increased if affiliates were to
purchase the entire issue of securities placed by the
section 20 subsidiary or a substantial portion of such
an issue. The Board therefore believes that it is
appropriate to require that affiliates of the section 20
subsidiary limit their investment, both individually and
in the aggregate, in any particular issue of securities
that are placed by the section 20 subsidiary. The Board
expects that First Union will establish appropriate
internal policies, procedures, and limitations regarding
the amount of securities of any particular issue placed
by Company that may be purchased by First Union
and each of its nonbanking subsidiaries, individually
and in the aggregate.10 These policies and procedures,
as well as the purchases themselves, will be reviewed
by the Federal Reserve Bank of Richmond.
In sum, the record shows that under the framework
established in this and prior decisions, consummation
of this proposal is not likely to result in any significant
undue concentration of resources, decreased or unfair
competition, conflicts of interest, unsound banking
practices, or other adverse effects.
Consummation of this proposal would provide
greater efficiencies and added convenience to First
Union's customers by allowing consolidation of a
wider range of services in a single entity. Accordingly,
the Board has determined that the performance of the
proposed activities by First Union can reasonably be
expected to produce public benefits which would
outweigh adverse effects under the proper incident to
banking standard of section 4(c)(8) of the BHC Act.
Based on the above, the Board has determined to
approve First Union's application subject to all of the
terms and conditions set forth above. The Board's
determination is subject to all of the conditions set
forth in the Board's Regulation Y, including those in
sections 225.4(d) and 225.23(b), and to the Board's
authority to require modification or termination of the
activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to assure
compliance with, and to prevent evasion of, the pro-
10. The limit established shall not exceed 50 percent of the issue
being placed. Additionally, in the development of these policies and
procedures, First Union should incorporate, with respect to placements of securities, the limitations established by the Board in
condition 12 of its Order regarding aggregate exposure of the holding
company on a consolidated basis to any single customer whose
securities are underwritten or dealt in by Company. J.P. Morgan &
Co. Incorporated, The Chase Manhattan Corporation, Bankers Trust
New York Corporation, Citicorp and Security Pacific Corporation, 75
Federal Reserve Bulletin 192 (1989).
visions of the BHC Act and the Board's regulations
and Orders issued thereunder.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
Richmond, pursuant to delegated authority.
By order of the Board of Governors, effective
January 4, 1990.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, Kelley, and LaWare.
JENNIFER J. JOHNSON
Associate Secretary of the Board
Orders Issued Under Sections 3 and 4 of the
Bank Holding Company Act
CoreStates Financial Corp.
Philadelphia, Pennsylvania
Order Approving Merger of Bank Holding
Companies
CoreStates Financial Corp., Philadelphia, Pennsylvania ("CoreStates"), a bank holding company within
the meaning of the Bank Holding Company Act
("BHC Act"), has applied for the Board's approval
under section 3 of the BHC Act (12 U.S.C. § 1842) to
merge with First Pennsylvania Corp., Philadelphia,
Pennsylvania ("First Penn"), and thereby indirectly
acquire First Pennsylvania Bank, N.A., Philadelphia,
Pennsylvania, First Pennsylvania Bank (NJ), N.A.,
Evesham Twp., New Jersey, and First Pennsylvania
Bank (Del), Wilmington, Delaware. CoreStates also
has applied for the Board's approval under section
4(c)(8) of the BHC Act to acquire the nonbanking
subsidiaries of First Penn.1
Notice of the applications, affording interested persons an opportunity to submit comments, has been
published (54 Federal Register 51,235 (1989)). The
time for filing comments has expired, and the Board
has considered the applications and all comments
1. CoreStates proposes to acquire Centre Square Investment
Group, Inc., Philadelphia, Pennsylvania, and thereby engage in investment advisory services; Pennco Life Insurance Company, Phoenix, Arizona, and thereby engage in underwriting as a reinsurer of
credit life and accident and health insurance in connection with
extensions of credit by its subsidiary banks; and First Pennsylvania
Financial Services, Inc., Philadelphia, Pennsylvania, and thereby
engage in second-mortgage lending.
These activities are authorized for bank holding companies pursuant to the Board's Regulation Y, 12 C.F.R. 225.25(b)(4), (b)(8), and
(b)(1).
Legal Developments
received in light of the factors set forth in sections 3(c)
and 4 of the BHC Act.
Section 3(d) of the BHC Act, the Douglas Amendment, prohibits the Board from approving an application by a bank holding company to acquire control of
any bank located outside of the holding company's
home state,2 unless such acquisition is "specifically
authorized by the statute laws of the State in which
[the] bank is located, by language to that effect and not
merely by implication." 12 U.S.C. § 1842(d). The
Board has previously determined that the acquisition
of a Delaware bank by a Pennsylvania bank holding
company is specifically authorized by the statute laws
of Delaware, subject to CoreStates's obtaining the
approval required pursuant to Delaware law.3 The
Board has also previously determined that the acquisition of a New Jersey bank by a Pennsylvania bank
holding company is specifically authorized by the
statute laws of New Jersey.4 Based on the foregoing,
the Board has determined that the proposed merger is
specifically authorized by the statute laws of Delaware
and New Jersey, and that Board approval of the
proposal is not barred by the Douglas Amendment,
subject to CoreStates's obtaining the required approval of state banking authorities.
CoreStates controls commercial banking institutions
in Pennsylvania, New Jersey and Delaware. CoreStates is the fourth largest commercial banking organization in Pennsylvania, controlling deposits of
$11 billion, representing approximately 6.7 percent of
the total deposits in commercial banks in the state.5
First Penn operates commercial bank subsidiaries in
Pennsylvania, New Jersey and Delaware. First Penn is
the eighth largest commercial banking organization in
Pennsylvania, with total deposits of $4.8 billion, representing 3.3 percent of the total deposits in commercial banks in the state. Upon consummation of the
proposal, CoreStates would become the third largest
commercial banking organization in Pennsylvania,
controlling deposits of approximately $15.8 billion,
representing approximately 10 percent of the total
deposits in commercial banking organizations in Pennsylvania. Consummation of this proposal would not
have a significantly adverse effect upon the concentration of commercial banking resources in Pennsylvania.
177
banking market.6 In that market, CoreStates is the
third largest of 184 commercial banking and thrift
organizations, controlling $6.6 billion in deposits, representing approximately 10 percent of total deposits in
commercial banking organizations in the market
("market deposits").7 First Penn is the sixth largest
commercial banking organization in the Philadelphia/
Trenton market, controlling $3.6 billion in deposits,
representing approximately 5.4 percent of market deposits. Upon consummation of this proposal, CoreStates would become the second largest commercial
banking organization in the market, controlling
$10.2 billion in deposits, representing approximately
15.4 percent of market deposits.8 The Philadelphia/
Trenton market is considered unconcentrated, with a
Herfindahl-Hirschman Index ("HHI") of 660, which
would increase by 108 points to 768 upon consummation of the proposal.
Based on the facts of record in this case, the Board
has determined that consummation of the proposal
would not have a significantly adverse effect on existing competition in the Philadelphia/Trenton banking
market, or in any other relevant banking market. The
increase in concentration resulting from the proposal
is small, and a significant number of competitors
would remain after consummation. The Board also has
considered the effects of the proposal on probable
future competition in relevant markets. In light of the
market concentration and the number of probable
future entrants into those markets, the Board concludes that consummation of this proposal would not
have a significantly adverse effect on probable future
competition in any relevant market.
In evaluating these applications, the Board has
considered the financial and managerial resources of
CoreStates, First Penn and their bank subsidiaries,
and the effect of the proposed merger on the resources
and future prospects of these companies. The Board
has stated and continues to believe that capital adequacy is an important factor in the analysis of bank
holding company expansion proposals.9 In this regard,
the Board expects banking organizations contemplating expansion proposals to maintain strong capital
levels substantially above the minimum levels speci-
CoreStates and First Penn compete directly in the
Philadelphia, Pennsylvania/Trenton, New Jersey
2. A bank holding company's home state is that state in which the
operations of the bank holding company's banking subsidiaries were
principally conducted on July 1, 1966, or the date on which the
company became a bank holding company, whichever is later.
3. Meridian Bancorp, Inc., 74 Federal Reserve Bulletin 51 (1988).
4. CoreStates Financial Corporation, 72 Federal Reserve Bulletin
796 (1986).
5. Banking data are as of September 30, 1989.
6. The Philadelphia/Trenton banking market is comprised of Philadelphia, the counties of Bucks, Chester, Delaware and Montgomery in
Pennsylvania, and Trenton and the counties of Burlington, Camden,
Gloucester and Mercer in N e w Jersey.
7. Market data are as of June 30, 1988.
8. This includes 50 percent of thrift deposits.
9. The Bank of New York Company, Inc., 74 Federal
Reserve
Bulletin 257 (1988); Chemical New York Corporation,
73 Federal
Reserve Bulletin 378 (1987); Citicorp, 72 Federal Reserve Bulletin 497
(1986); National City Corporation, 70 Federal Reserve Bulletin 743
(1984).
178
Federal Reserve Bulletin • March 1990
fied in the Board's Capital Adequacy Guidelines10
without significant reliance on intangibles, in particular goodwill. The Board carefully analyzes the effect of
expansionary proposals on the preservation or
achievement of strong capital levels, and has adopted
a policy that there should be no significant diminution
of financial strength below these levels for the purpose
of effecting major expansion proposals.
CoreStates proposes to accomplish the merger
through an exchange of shares. CoreStates would
remain well capitalized following consummation of the
proposal, with capital ratios above the minimum levels
specified in the Board's Capital Adequacy Guidelines.
Based on these and all of the other facts of record, the
Board concludes that financial and managerial considerations are consistent with approval of this application.
In considering the convenience and needs of the
communities to be served, the Board has taken into
account the record of CoreStates's subsidiary banks
under the Community Reinvestment Act ("CRA").
The CRA requires the federal financial supervisory
agencies to encourage financial institutions to help
meet the credit needs of the local communities in
which they operate, consistent with the safe and sound
operation of such institutions. To accomplish this end,
the CRA requires the appropriate federal supervisory
authority to "assess an institution's record of meeting
the credit needs of its entire community, including
low- and moderate-income neighborhoods, consistent
with the safe and sound operation of the institution,"
and to "take this record into account in its evaluation
of bank holding company applications."11
In this regard, the Board has received comments
filed by the Black Clergy of Philadelphia and Vicinity
("Protestant") critical of the CRA performance of
CoreStates's subsidiary bank, Philadelphia National
Bank, Philadelphia, Pennsylvania ("PNB"). Protestant alleges that PNB has shown a lack of commitment
to low- and moderate-income minority neighborhoods
in the Philadelphia area. In particular, Protestant asserts that PNB engaged in a significantly smaller
percentage of its mortgage business in low- to moderate-income and minority areas than in other parts of
the Philadelphia area. CoreStates has submitted a
detailed response to the comments made by
Protestant.12
The Board also received letters from 12 community
organizations13 in support of this application. The
letters describe the initiatives these organizations have
undertaken in collaboration with PNB and the positive
relationship PNB has developed with their organizations, generally over a period of years.
The Board has carefully reviewed the CRA performance record of PNB, as well as Protestant's comments and CoreStates's response to those comments, in
light of the CRA, the Board's regulations, and the
jointly issued Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("CRA Policy Statement").14 The CRA Policy Statement provides guidance regarding the types of
policies and procedures that the supervisory agencies
believe financial institutions should have in place in
order to fulfill their responsibilities under the CRA on
an ongoing basis, and the procedures that the supervisory agencies will use during the application process to
review an institution's CRA compliance and performance.
Initially, the Board notes that PNB has received a
satisfactory rating from the Office of the Comptroller
of the Currency in a January 1990 examination of its
CRA performance. The record also shows that CoreStates's other subsidiary banks have each received
satisfactory ratings from their primary regulators in
the most recent examinations of their CRA performance. In addition, CoreStates has in place the types
of programs outlined in the CRA Policy Statement as
essential to any effective CRA program. Specifically,
PNB has a Public Responsibility Department that
reports to the Board of Directors of CoreStates and
concentrates on CRA matters, monitors the CRA
activities and initiatives taken by the bank, and maintains contacts within the community to develop and
monitor all of its CRA activities. CoreStates also has a
Compliance Committee to evaluate CRA activity in a
similar manner throughout the entire organization.
PNB routinely codes and analyzes the geographic
distribution of its loans in order to monitor the effectiveness of its lending and outreach programs and
advertises the availability of its products and services
in community newspapers, including foreign-language
newspapers, directed at low- and moderate-income
areas. PNB sponsors community informational events
to publicize products which could be of interest to
10. Capital Adequacy Guidelines, 50 Federal Register 16,057
(April 24, 1985).
11. 12 U.S.C. § 2903.
12. CoreStates has met with Protestant in an effort to clarify the
issues presented under the CRA, although the parties failed to resolve
all of their differences.
13. These are the Glenwood Development Corporation, Women's
Community Revitalization Project, Venture Theatre, the Resource
Center for Human Services, Indochinese-American Council, Hispanic
Association of Contractors and Enterprises, Inc., People's Emergency Center, Better Housing for Chester, Inc., Neighborhoods
Action Bureau, Inc., Community Ventures, Inc., Housing Consortium for Disabled Individuals, and Centra Pedro Claver.
14. 54 Federal Register 13,742 (1989).
Legal Developments
members of the community, including low- and moderate-income neighborhoods.
PNB has been extensively involved in the Philadelphia Mortgage Plan, which is a city-wide plan with
participation by local banks to grant mortgages in the
inner-city; the Philadelphia Rehabilitation Plan, which
makes inner-city rehabilitation loans; the Action Loan
Program, which consists of subsidized home improvement loans in low- to moderate-income neighborhoods;
and other loans to multi-family rental housing made in
cooperation with community groups. It has also participated in subsidized public mortgage lending programs,
as well as lending to local governments, underwriting
debt issues, investing in municipal bonds, lending to
small businesses, farms and nonprofit organizations,
and the creation of no-frills and basic checking accounts.
CoreStates engages in a variety of other CRA activities, including support for public debt issues for local
units of government; industrial development lending in
cooperation with local and regional development authorities; a wide range of credit and banking services
to health care facilities; and secured loans to individuals and businesses through consumer finance and
commercial finance subsidiaries as well as the banks.
The Board has carefully reviewed Protestant's allegation that 83 percent of mortgage dollars extended by
PNB went to census tracts with less than 10 percent
minority population, while only 5.3 percent of mortgage
dollars were extended in census tracts with minority
populations of 40 percent or more. An analysis of the
Home Mortgage Disclosure Act ("HMDA") data for
PNB in the Philadelphia Metropolitan Statistical Area
("PMSA") indicates, however, that there is no evidence of discriminatory or other illegal credit practices
by PNB. When compared with other HMDA-reporting
lenders in the PMSA, PNB devoted a much higher
percentage of its portfolio to those areas with a substantial minority population, and a lesser percentage of its
mortgage loan portfolio to mostly white neighborhoods
than aggregate lenders. In 1987 and 1988, PNB made 25
and 24 percent of the total number of mortgage loans in
census tracts with minority populations of greater than
40 percent. These census tracts constitute approximately 16 percent of the owner-occupied housing units
in the PMSA. In mostly white census tracts, which
constitute 68 percent of owner-occupied units, PNB
made 62 and 55 percent of its mortgage loans in 1987
and 1988.15 For home improvement lending, PNB's
15. Eighteen percent, or 217 out of 1,187, of the PMSA's census
tracts have a minority population of 40 percent or more. These 217
tracts account for only 16 percent of the owner-occupied housing units
in the PMSA. At the same time, 756, or 64 percent, of the tracts have
lower than 10 percent minority population, and account for 68 percent
of the owner-occupied units.
179
lending was roughly the same as the aggregate in those
neighborhoods during 1987 and 1988.
Protestant bases its comments on an analysis of the
level of loans by dollar amount, rather than on the
number of loans made as reported under HMD A.
Because differences in housing values will affect the
size of mortgage and home improvement loans, analysis of the number of loans made is a more reliable
indicator of lending practices than percentages based
on loan amounts.
For the foregoing reasons, and based upon the
overall CRA record of CoreStates and PNB, and other
facts of record, the Board concludes that convenience
and needs considerations, including the record of
performance under the CRA of CoreStates, PNB and
CoreStates's other subsidiaries, are consistent with
approval of this application.
CoreStates has also applied, pursuant to section
4(c)(8) of the BHC Act, to acquire certain nonbanking
subsidiaries of First Penn. CoreStates and First Penn
operate subsidiaries that engage in investment advisory activities, credit related health, accident and life
insurance, and mortgage lending. These activities are
permissible for bank holding companies under the
Board's Regulation Y. 16 The market share controlled
by each of these subsidiaries is small, and there are
numerous competitors for their services. Accordingly,
consummation of this proposal would have a de minimis effect on competition in each of these markets,
and the Board concludes that the proposal would not
have any significantly adverse effect on competition in
the provision of these services in any relevant market.
Furthermore, there is no evidence in the record to
indicate that approval of this proposal would result in
undue concentration of resources, decreased or unfair
competition, conflicts of interests, unsound banking
practices, or other adverse effects on the public interest. Accordingly, the Board has determined that the
balance of public interest factors it must consider
under section 4(c)(8) of the BHC Act is favorable and
consistent with approval of CoreStates's application to
acquire the nonbanking subsidiaries of First Penn.
Based on the foregoing and other facts of record, the
Board has determined that the consummation of the
transaction would be in the public interest, and that
the applications under sections 3 and 4 should be, and
hereby are, approved. The acquisition of First Penn
shall not be consummated before the thirtieth calendar
day following the effective day of this Order, or later
than three months following the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
16. 12 C.F.R. 225.25(b)(4), (b)(8) and (b)(1), respectively.
180
Federal Reserve Bulletin • March 1990
Philadelphia, acting pursuant to delegated authority.
The determinations as to Applicant's nonbanking activities are subject to all of the conditions contained in the
Board's Regulation Y, including sections 225.4(d) and
225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), and
to the Board's authority to require such modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with, or to prevent evasion of, the
provisions and purposes of the BHC Act and the
Board's regulations and orders issued thereunder.
By order of the Board of Governors, effective
January 29, 1990.
Voting for this action: Chairman Greenspan and Governors
Johnson, Seger, Angell, Kelley, and LaWare.
JENNIFER J. JOHNSON
Associate Secretary of the Board
ORDERS ISSUED UNDER BANK MERGER ACT
Manufacturers and Traders Trust Company
Buffalo, New York
Order Approving the Acquisition of Assets and
Assumption of Liabilities of a Savings Bank
Manufacturers and Traders Trust Company, Buffalo,
New York, has applied for the Board's approval under
the Bank Merger Act (12 U.S.C. § 1828(c)) to acquire
certain assets and assume certain liabilities of Monroe
Savings Bank, FSB, Rochester, New York, ("Bank"),
an FDIC-insured savings bank.
Public notice of the application before the Board is
not required by the Act, and, in view of the emergency
situation, the Board has not followed its normal practice of affording interested parties the opportunity to
submit comments and views. In view of the emergency
situation involving Bank, the Office of Thrift Supervision has recommended immediate action by the Board
to prevent the probable failure of Bank.
In connection with the application, the Secretary of
the Board has taken into consideration the competitive
effects of the proposed transaction, the financial and
managerial resources of the banks concerned, and the
convenience and needs of the communities to be
served. On the basis of the information before the
Board, the Secretary of the Board finds that an emergency situation exists so as to require that the Secretary
of the Board act immediately pursuant to the provisions
of section 18(c)(3) of the Federal Deposit Insurance Act
(12 U.S.C. § 1828 (c)(3)) in order to safeguard the
depositors of Bank. Having considered the record of
this application in light of the factors contained in the
Bank Merger Act, the Secretary of the Board has
determined that consummation of the transaction
would be in the public interest and that the application
should be approved on a basis that would not preclude
immediate consummation of the proposal. On the basis
of these considerations, the application is approved.
The transaction may be consummated immediately,
but in no event later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of New York, acting pursuant
to delegated authority.
By order of the Secretary of the Board acting
pursuant to delegated authority for the Board of Governors, effective January 26, 1990.
WILLIAM W . WILES
Secretary of the Board
APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon
request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
Section 3
Applicant(s)
First Commercial Corporation,
Little Rock, Arkansas
Bank(s)
ABT Bancshares Corporation,
Hot Springs, Arkansas
Effective
,
date
January 16, 1990
Legal Developments
181
Section 3—Continued
Appiicant(s)
First Security Corporation,
Salt Lake City, Utah
West One Bancorp,
Boise, Idaho
West One Bancorp, Washington
Bellevue, Washington
Bank(s)
^ate^
United Savings Bank,
Salem, Oregon
Bank of Tacoma,
Tacoma, Washington
January 31, 1990
January 29, 1990
Section 4
Applicant(s)
Mid-South Bancorp, Inc.,
Franklin, Kentucky
Effective
Bank(s)
date
General Trust Company,
Nashville, Tennessee
January 19, 1990
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon
request to the Reserve Banks.
Section 3
Applicant
Bradford Bankshares, Inc.,
Starke, Florida
Brotherhood Bancshares, Inc.,
Kansas City, Kansas
Chrisman-Sawyer Bancshares,
Inc.,
Independence, Missouri
The Citizens and Southern
Corporation,
Atlanta, Georgia
The Citizens and Southern
Florida Corporation,
Fort Lauderdale, Florida
Durand Bancorp, Inc.,
Durand, Illinois
Financial Bancshares, Inc.,
St. Louis, Missouri
First Banks, Inc.,
St. Louis, Missouri
Bank(s)
Reserve
Bank
Effective
date
Atlanta
December 22, 1989
Kansas City
January 12, 1990
Kansas City
January 19, 1990
M.B. Group, Inc.,
Marathon, Florida
Atlanta
January 4, 1990
Durand State Bank,
Durand, Illinois
First Bank of East Prairie,
East Prairie, Missouri
West Frankfort Community
Bancshares, Inc.,
West Frankfort, Illinois
Chicago
January 8, 1990
St. Louis
December 29, 1989
St. Louis
January 9, 1990
First National Bank of Bradford
County,
Starke, Florida
The Brotherhood Bank and
Trust Company,
Kansas City, Kansas
First City Bank,
Independence, Missouri
182
Federal Reserve Bulletin • March 1990
Section 3—Continued
Applicant
First City, Inc.,
Memphis, Tennessee
First Eldorado Bancshares, Inc.,
Eldorado, Illinois
First Maiden Bancshares, Inc.,
Maiden, Missouri
First Mid-America Bancorp, Inc.,
Davenport, Iowa
First Mutual Bancorp of Illinois,
Inc.,
Chicago, Illinois
First Patriot Bankshares
Corporation,
Fairfax, Virginia
First State Bancorp of
Monticello, Inc.,
Monticello, Illinois
First State Bancorp of Princeton,
Illinois, Inc.,
Princeton, Illinois
FMS Bancorp, Inc.,
Poplar Bluff, Missouri
Goodenow Bancorporation,
Spirit Lake, Iowa
Gore-Bronson Bancorp, Inc.,
Prospect Heights, Illinois
International Brotherhood of
Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers
and Helpers,
Kansas City, Kansas
Las Cruces B.R.G., Inc.,
Las Cruces, New Mexico
Lincoln Financial Corporation,
Fort Wayne, Indiana
Mercantile Bankshares
Corporation,
Baltimore, Maryland
Merchant Bankshares Group,
Inc.,
Fort Myers, Florida
National Penn Bancshares, Inc.,
Boyertown, Pennsylvania
Overton Bank Shares, Inc.,
Mondamin, Iowa
The Owego National Financial
Corporation,
Owego, New York
Bank(s)
Reserve
Bank
Effective
date
First City, A Federal Savings
Bank,
Memphis, Tennessee
First State Bank of Eldorado,
Eldorado, Illinois
First National Bank of Maiden,
Maiden, Missouri
The State Bank of Annawan,
Annawan, Illinois
First State Bancorp of Harvey,
Harvey, Illinois
St. Louis
December 29, 1989
St. Louis
December 27, 1989
St. Louis
December 19, 1989
Chicago
January 10, 1990
Chicago
January 11, 1990
Patriot National Bank of Reston,
Reston, Virginia
Richmond
December 27, 1989
Busey Bank of McLean County,
Heyworth, Illinois
Chicago
January 3, 1990
First Bank and Trust Co. of
Gridley,
Gridley, llinois
First Missouri State Bank,
Poplar Bluff, Missouri
First Trust & Savings Bank,
Armstrong, Iowa
IRVING BANCORP, INC.,
Chicago, Illinois
Brotherhood Bancshares, Inc.,
Kansas City, Kansas
Chicago
January 5, 1990
St. Louis
December 19, 1989
Chicago
January 10, 1990
Chicago
December 22, 1989
Kansas City
January 12, 1990
Rio Grande, N.A.,
Las Cruces, New Mexico
PTC Financial Corporation,
Peru, Indiana
Baltimore Trust Company,
Selbyville, Delaware
Dallas
January 12, 1990
Chicago
December 29, 1989
Richmond
December 28, 1989
Merchant National Bank,
Fort Myers, Florida
Atlanta
December 22, 1989
Valley Community Bank,
Kingston, Pennsylvania
Mondamin Savings Bank,
Mondamin, Iowa
The Owego National Bank,
Owego, New York
Philadelphia
January 10, 1990
Chicago
December 27, 1989
New York
December 29, 1989
Legal Developments
183
Section 3—Continued
Applicant
Bank(s)
Piedmont Bancshares
Corporation,
Winston-Salem, North Carolina
Royal Bancshares, Inc.,
Elroy, Wisconsin
Security Chicago, Corp.,
Chicago, Illinois
Enterprise National Bank of the
Piedmont,
Winston-Salem, North Carolina
Bank of Elroy,
Elroy, Wisconsin
First Bank and Trust Company
of Gridley,
Gridley, Illinois
Fir-Ban Inc.,
Verona, Kentucky
Texas Security Bancshares, Inc.,
Fort Worth, Texas
Central Bank and Trust,
Fort Worth, Texas
North Fort Worth Bank,
Fort Worth, Texas
First Financial Services, Inc.,
Brownsville, Tennessee
Security Bancshares, Inc.,
Paris, Tennessee
Peoples State Bank,
Three Lakes, Wisconsin
First National Bank of Chippewa
Falls,
Chippewa Falls, Wisconsin
The Nehawka Bank,
Nehawka, Nebraska
Star Banc Corporation,
Cincinnati, Ohio
Thompson Financial, Ltd.,
Fort Worth, Texas
Union Planters Corporation,
Memphis, Tennessee
Union Planters Corporation,
Memphis, Tennessee
Valley Bancorporation,
Appleton, Wisconsin
Valley Bancorporation,
Appleton, Wisconsin
WallCo, Inc.,
Nehawka, Nebraska
Reserve
Bank
Effective
date
Richmond
January 3, 1990
Chicago
January 8, 1990
Chicago
January 5, 1990
Cleveland
January 5, 1990
Dallas
January 10, 1990
St. Louis
January 4, 1990
St. Louis
January 4, 1990
Chicago
December 21, 1989
Chicago
December 21, 1989
Kansas City
December 21, 1989
Section 4
Applicant
Compagnie Financiere de Suez,
Paris, France
Banque Indosuez,
Paris, France
Dunlap Iowa Holding Co.,
Dunlap, Iowa
Northern Missouri Bancshares,
Inc.,
Unionville, Missouri
Norwest Corporation,
Minneapolis, Minnesota
Union Planters Corporation,
Memphis, Tennessee
Nonbanking
Activity/Company
brokerage of foreign currency
options and in the provision of
incidental investment advice
with respect to such options
to increase the dollar volume of
its lending authority
Harrison County Bancshares,
Inc.,
Bethany, Missouri
First Interstate Corporation of
Wisconsin,
Kohler, Wisconsin
Union Planters Investment
Bankers Corporation,
Memphis, Tennessee
Reserve
Bank
Effective
date
New York
December 22, 1989
Chicago
December 27, 1989
Kansas City
January 18, 1990
Minneapolis
December 29, 1989
St. Louis
December 28, 1989
184
Federal Reserve Bulletin • March 1990
Section 4—Continued
Applicant
The Yasuda Trust & Banking
Co., Ltd.,
Tokyo,Japan
Nonbanking
Activity/Company
MASI, Ltd.,
Deerfield, Illinois
Reserve
Bank
New York
Effective
date
January 22, 1990
APPLICATIONS APPROVED UNDER BANK MERGER ACT
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon
request to the Reserve Banks.
Applicant
Central State Bank,
Elkader, Iowa
First Illini Bank,
Galesburg, Illinois
Ohio Citizens Bank,
Toledo, Ohio
First State Savings Bank,
McGregor, Iowa
Abingdon Bank and Trust
Company,
Abingdon, Illinois
Community Bank & Trust
Company,
Canton, Illinois
Madison Park Bank,
Peoria, Illinois
Fremont Office of Diamond
Savings and Loan Company,
Findlay, Ohio
PENDING CASES INVOLVING THE BOARD OF
GOVERNORS
This list of pending cases does not include suits
against the Federal Reserve Banks in which the Board
of Governors is not named a party.
Woodward v. Board of Governors, No. 90-3031 (11th
Cir., filed January 16, 1990); Kaimowitz v. Board of
Governors, undocketed (11th Cir., filed January 23,
1990). Petitions for review of Board order dated
December 22, 1989, approving application by First
Union Corporation to acquire Florida National
Banks. Petitioners object to approval on Community Reinvestment Act grounds, and have moved for
a stay of the Board's order.
Securities Industry Association v. Board of Governors, No. 89-1730 (D.C. Cir., filed November 29,
Reserve
Bank
Bank(s)
Effective
date
Chicago
December 21, 1989
Chicago
January 12, 1990
Cleveland
January 19, 1990
1989). Petition for review of Board order approving
application under section 4(c)(8) to engage in private
placement and riskless principal activities. The case
has been held in abeyance pending the outcome of
Securities Industry Association v. Board of Governors, No. 89-1127 (D.C. Circuit).
Babcock and Brown Holdings, Inc., et al. v. Board of
Governors, No. 89-70518 (9th Cir., filed November
22, 1989). Petition for review of Board determination that a company would control a proposed
insured bank for purposes of the Bank Holding
Company Act.
Consumers Union of U.S., Inc. v. Board of Governors, No. 89-3008 (D.D.C., filed November 1,
1989). Challenge to various aspects of amendments
to Regulation Z implementing the Home Equity
Loan Consumer Protection Act.
Synovus Financial Corp. v. Board of Governors, No.
89-1394 (D.C. Cir., filed June 21, 1989). Petition for
Legal Developments
review of Board order permitting relocation of a
bank holding company's national bank subsidiary
from Alabama to Georgia.
MCorp v. Board of Governors, No. 89-2816 (5th Cir.,
filed May 2, 1989). Appeal of preliminary injunction
against the Board enjoining pending and future
enforcement actions against bank holding company
now in bankruptcy. Awaiting decision.
Independent Insurance Agents of America v. Board of
Governors, No. 89-4030 (2d Cir., filed March 9,
1989). Petition for review of Board order ruling that
the non-banking restrictions of section 4 of the Bank
Holding Company Act apply only to non-bank subsidiaries of bank holding companies. Board's order
upheld on November 29, 1989. Petition for rehearing
denied; petitioners have moved for a stay pending
Supreme Court review.
Securities Industry Association v. Board of Governors, No. 89-1127 (D.C. Cir., filed February 16,
1989). Petition for review of Board order permitting
five bank holding companies to engage to a limited
extent in additional securities underwriting and dealing activities.
American Land Title Assoc. v. Board of Governors,
No. 88-1872 (D.C. Cir., filed December 16, 1988).
Petition for review of Board order ruling that exemption G from the section 4(c)(8) prohibition on
insurance activities, which grandfathers insurance
agency activities by bank holding companies that
conducted insurance agency activities before January 1, 1971, does not limit those grandfathered
activities to the specific ones undertaken at that
time. Board's order upheld on December 29, 1989.
MCorp v. Board of Governors, No. CA3-88-2693
(N.D. Tex., filed October 10, 1988). Application for
injunction to set aside temporary cease and desist
orders. Stayed pending outcome of MCorp v. Board
of Governors in Fifth Circuit.
White v. Board of Governors, No. CU-S-88-623-RDF
(D. Nev., filed July 29, 1988). Age discrimination
complaint.
Cohen v. Board of Governors, No. 88-1061 (D.N.J.,
filed March 7, 1988). Action seeking disclosure of
documents under the Freedom of Information Act.
Chase Manhattan Corp. v. Board of Governors, No.
87-1333 (D.C. Cir., filed July 20, 1987). Petition to
review order conditionally approving application for
bank holding company to underwrite and deal in
mortgage-related securities to a limited extent. Dismissed by stipulation on December 28, 1989.
Lewis v. Board of Governors, Nos. 87-3455, 87-3545
(11th Cir., filed June 25, August 3, 1987). Petition for
review of Board orders approving applications of
non-Florida bank holding companies to expand activities of Florida trust company subsidiaries. Mat
185
ter stayed pending Supreme Court review of Continental Illinois Corp. v. Lewis, 827 F.2d 1517 (11th
Cir. 1987).
FINAL ENFORCEMENT ORDERS ISSUED BY THE
BOARD OF GOVERNORS
Bruce F. Dailey
Director of First Security Bank of Missoula
Missoula, Montana
The Federal Reserve Board announced on October 31,
1989, the issuance, on October 30, 1989, of an Order of
Prohibition against Bruce F. Dailey, the former chairman of the board of directors of the First Security
Bank of Missoula, Missoula, Montana, in settlement
of an enforcement action instituted against him.
In an enforcement proceeding, the Board contended
that Mr. Dailey misappropriated at least $100,000 from
the bank, while he was the chairman of its board,
through the use of false loan documents. Without
admitting any allegations made by the Board, Mr.
Dailey consented to the issuance of the Order of
Prohibition. Mr. Dailey is henceforth prohibited from
participating, including serving as an officer, director,
or employee, in any manner in the conduct of the
affairs of any financial institution supervised by a
federal financial institutions supervisory agency without the approval of the appropriate federal banking
agencies.
EVCO, Inc.
Evanston, Wyoming
Stockgrowers State Bank Company, Inc.
Worland, Wyoming
The Federal Reserve Board announced on January 30,
1990, the issuance of a Final Decision and Final Order
assessing civil money penalties in an aggregate amount
of $3,015,000 against seven former officials of EVCO,
Inc., Evanston, Wyoming, and Stockgrowers State
Bank Company, Inc., Worland, Wyoming.
They are Daniel M. Burke, John P. Burke, M.
Joseph Burke, John A. Edmiston, Don C. Davis, Lyle
R. Lake, and James R. Sperry. The Board also issued
Orders of Prohibition against four of those officials,
Daniel M. Burke, M. Joseph Burke, Edmiston, and
Davis.
186
Federal Reserve Bulletin • March 1990
National Bank of Greece
Athens, Greece
The Federal Reserve Board announced on
September 25, 1989, the issuance of a Consent Cease
and Desist Order and Consent Assessment of Civil
Money Penalty as to the National Bank of Greece and
the National Mortgage Bank of Greece.
The Consent Order is in settlement of enforcement
proceedings instituted by the Board because of alleged
unsafe and unsound practices and alleged violations of
law and regulation that generally arose out of the
receipt of deposits by representative offices of the
National Mortgage Bank in New York and in three
other states.
The National Mortgage Bank of Greece, without
admitting any of the allegations in the proceeding,
agreed to pay a fine of $2,000,000. The National Bank
of Greece, without admitting any of the allegations in
the proceeding, agreed to pay a fine of $125,000.
A1
Financial and Business Statistics
N O T E . The following tables may have
discontinuities in historical data for some
beginning with the December 1989 issue:
1.33, 1.44, 1.52, 1.57-1.60, 2.10, 2.12, 2.13,
some
series
1.12,
3.10,
COMMERCIAL BANKING
CONTENTS
Domestic
3.11, 3.15-3.20, 3.22-3.25, 3.27, 3.28, and 4.30.
For a more detailed explanation of the changes,
see the announcement on page 16 of the January
1990 Bulletin.
Financial
Statistics
INSTITUTIONS
A17 Major nondeposit funds
A18 Assets and liabilities, last-Wednesday-of-month
series
MONEY STOCK AND BANK CREDIT
A3 Reserves, money stock, liquid assets, and debt
measures
A4 Reserves of depository institutions, Reserve
Bank credit
A5 Reserves and borrowings—Depository
institutions
WEEKLY REPORTING COMMERCIAL
A19
A20
A21
A22
A6 Selected borrowings in immediately available
funds—Large member banks
Assets and liabilities
All reporting banks
Banks in New York City
Branches and agencies of foreign banks
Gross demand deposits—individuals,
partnerships, and corporations
FINANCIAL
POLICY
INSTRUMENTS
A7 Federal Reserve Bank interest rates
A8 Reserve requirements of depository institutions
A9 Federal Reserve open market transactions
FEDERAL RESERVE
BANKS
A10 Condition and Federal Reserve note statements
A l l Maturity distribution of loan and security
holdings
MONETARY AND CREDIT AGGREGATES
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks
BANKS
MARKETS
A23 Commercial paper and bankers dollar
acceptances outstanding
A23 Prime rate charged by banks on short-term
business loans
A24 Interest rates—money and capital markets
A25 Stock market—Selected statistics
A26 Selected financial institutions—Selected assets
and liabilities
FEDERAL
A28
A29
A30
A30
FINANCE
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types
and ownership
A31 U.S. government securities
dealers—Transactions
A32 U.S. government securities dealers—Positions
and financing
A3 3 Federal and federally sponsored credit
agencies—Debt outstanding
2
Federal Reserve Bulletin • March 1990
SECURITIES MARKETS AND
CORPORATE FINANCE
A34 New security issues—State and local
governments and corporations
A35 Open-end investment companies—Net sales
and asset position
A35 Corporate profits and their distribution
A35 Total nonfarm business expenditures on new
plant and equipment
A36 Domestic finance companies—Assets and
liabilities and business credit
REAL
ESTATE
A37 Mortgage markets
A3 8 Mortgage debt outstanding
CONSUMER INSTALLMENT
A56 U.S. reserve assets
A56 Foreign official assets held at Federal Reserve
Banks
A57 Foreign branches of U.S. banks—Balance
sheet data
A59 Selected U.S. liabilities to foreign official
institutions
REPORTED BY BANKS IN THE UNITED
STATES
A59
A60
A62
A63
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A63 Banks' own claims on unaffiliated foreigners
A64 Claims on foreign countries—Combined
domestic offices and foreign branches
CREDIT
A39 Total outstanding and net change
A40 Terms
REPORTED BY NONBANKING
BUSINESS
ENTERPRISES IN THE UNITED STATES
FLOW OF FUNDS
A65 Liabilities to unaffiliated foreigners
A66 Claims on unaffiliated foreigners
A41 Funds raised in U.S. credit markets
A43 Direct and indirect sources of funds to credit
markets
A44 Summary of credit market debt outstanding
A45 Summary of credit market claims, by holder
Domestic
Nonfinancial
SECURITIES HOLDINGS AND
A67 Foreign transactions in securities
A68 Marketable U.S. Treasury bonds and
notes—Foreign transactions
Statistics
INTEREST AND EXCHANGE
SELECTED
MEASURES
A46 Nonfinancial business activity—Selected
measures
A47 Labor force, employment, and unemployment
A48 Output, capacity, and capacity utilization
A49 Industrial production—Indexes and gross value
A51 Housing and construction
A52 Consumer and producer prices
A53 Gross national product and income
A54 Personal income and saving
International
SUMMARY
Statistics
STATISTICS
A55 U.S. international transactions—Summary
A56 U.S. foreign trade
TRANSACTIONS
RATES
A69 Discount rates of foreign central banks
A69 Foreign short-term interest rates
A70 Foreign exchange rates
A71 Guide to Tabular
Presentation,
Statistical Releases, and Special
Tables
SPECIAL
TABLES
A73 Terms of lending at commercial banks, May
1989 and November 1989
A84 Assets and liabilities of U. S. branches and
agencies of foreign banks, September 30, 1989
A88 Pro forma balance sheet and income statement
for priced service operations, September 30,
1989
Money Stock and Bank Credit
A3
1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Annual rates of change, seasonally adjusted in percent 1
1989
1989
Monetary and credit aggregates
Ql
1
2
3
4
Reserves of depository institutions2
Total
Required
Nonborrowed
Monetary base3
5
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
Nontrgnsaction components
10 In M25
11 In M3 only6
Time and savings deposits
Commercial banks
Savings
Small-denomination time
Large-denomination time •
Thrift institutions
15 Savings
16 Small-denomination time
17 Large-denomination time
12
13
14
Debt components4
18 Federal
19 Nonfederal
Q2
Q3
-4.2
-4.4
.0
4.6
-8.7
-7.6
-10.2
1.5
.3
.1
8.3
2.9
5.7
5.5
7.8
4.1
Aug.
Sept.
Oct.'
Nov.'
1.1
2.8
1.5
1.2
9.6
8.6
9.3
7.5
8.1
6.5
11.0
2.8
-1.1
.4
3.1
1.3
8.5
9.1
10.3
9.4
Dec.
-.4
1.9
3.7
5.0
8.4
-5.6
1.2
2.5'
4.7
7.9
1.5
7.1'
4.0'
4.4r
7.2
6.7
7.7
2.8
n.a.
7.5
.3
7.3
1.9
3.9'
8.1
5.8
6.8'
.4'
1.6'
7.1
10.1
7.6
2.9
3.1
7.8
2.8
8.6
5.0
3.1
8.2
12.2
7.8
3.7
n.a.
n.a.
2.6
10.5'
3.6'
i.y
9.0r
-7.or
8.0
-15.0
9.6'
-17.5'
7.2'
-22.8'
6.8
-14.8
10.4
-8.4
6.4
-12.3
-3.7
22.5
18.1
-14.2
29.0
17.7
-.2
10.3r
2.r
8.9
8.3
1.5
7.3
7.5
-2.<r
7.9
3.9
-3.3'
5.9
13.0
5.0
13.6
6.0
6.6
11.4
8.3
-5.9
-7.7
4.3
1.2
-19.0
14.0
5.9
-6.7
9.9'
-9.6
4.1
-4.5
-28.4
-1.7'
5.3'
-22.6'
4.2'
-2.9
-29.2'
3.6
-10.0
-34.3
7.7
-4.0
-27.1
3.7
-2.0
-23.3
7.7
8.6
6.9
8.2
11.0
5.9
9.8
7.2
11.1
7.4
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. The monetary base not adjusted for discontinuities consists of total
reserves plus required clearing balances and adjustments to compensate for float
at Federal Reserve Banks plus the currency component of the money stock less
the amount of vault cash holdings of thrift institutions that is included in the
currency component of the money stock plus, for institutions not having required
reserve balances, the excess of current vault cash over the amount applied to
satisfy current reserve requirements. After the introduction of contemporaneous
reserve requirements (CRR), currency and vault cash figures are measured over
the weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock plus the remaining items seasonally
adjusted as a whole.
4. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of depository institutions; (2) travelers checks of nonbank issuers; (3) demand
deposits at all commercial banks other than those due to depository institutions,
the U.S. government, and foreign banks and official institutions less cash items in
the process of collection and Federal Reserve float; and (4) other checkable
deposits (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union
share draft accounts, and demand deposits at thrift institutions.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts
(MMDAs), savings and small-denomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and
tax-exempt general purpose and broker-dealer money market mutual funds.
Excludes individual retirement accounts (IRA) and Keogh balances at depository
Q4
4.6
8.0
9.6
6.9
8.8
8.0
n.a.
n.a.
institutions and money market funds. Also excludes all balances held by U.S.
commercial banks, money market funds (general purpose and broker-dealer),
foreign governments and commercial banks, and the U.S. government.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted
is the estimated amount of overnight RPs and Eurodollars held by institution-only
money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt
data are based on monthly averages. Growth rates for debt reflect adjustments for
discontinuities over time in the levels of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker-dealer), MMDAs, and savings and small time
deposits less the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposit liabilities.
6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents,
money market fund balances (institution-only), less a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by
institution-only money market mutual funds.
7. Excludes MMDAs.
8. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All IRA and Keogh accounts at commercial
banks and thrifts are subtracted from small time deposits.
9. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
10. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
official institutions.
A4
1.11
DomesticNonfinancialStatistics • March 1990
RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT
Millions of dollars
Monthly averages of
daily figures
Weekly averages of daily figures for week ending
1989
1989
Factors
Oct.
Nov.
Dec.
Nov. 15
Nov. 22
Nov. 29
Dec. 6
Dec. 13
Dec. 20
Dec. 27
260,634
265,521
269,244
261,218
261,012
264,506
266,554
267,710
267,551
270,879
215,920
215,920
0
6,546
6,546
0
0
608
734
36,825
11,064
8,518
19,462
217,455
216,475
980
6,602
6,525
77
0
346
1,024
37,093
11,062
8,518
19,529
224,142
223,031
1,111
6,683
6,525
158
0
289
1,128
37,003
11,059
8,518
19,585
214,890
214,890
0
6,525
6,525
0
0
341
1,197
38,265
11,062
8,518
19,522
217,268
216,872
396
6,536
6,525
11
0
202
858
36,148
11,061
8,518
19,536
220,059
216,254
3,805
6,845
6,525
320
0
680
981
35,941
11,060
8,518
19,550
223,003
223,003
0
6,525
6,525
0
0
171
672
36,184
11,060
8,518
19,564
223,498
223,040
458
6,549
6,525
24
0
132
832
36,699
11,059
8,518
19,578
222,841
222,609
232
6,544
6,525
19
0
189
1,314
36,665
11,059
8,518
19,592
224,613
221,943
2,670
6,786
6,525
261
0
513
1,692
37,275
11,059
8,518
19,606
249,190
439
251,807
448
256,870
448
251,338
449
252,158
451
253,641
448
253,842
445
255,349
448
256,683
447
259,112
447
6,111
245
5,008
234
4,787
286
4,757
213
4,449
239
5,093
253
5,162
327
4,475
223
4,402
252
4,571
215
1,866
327
1,944
333
1,817
397
1,880
248
1,984
293
1,966
457
1,904
283
2,165
231
1,881
337
1,822
337
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit
2
U.S. government securities1
3
Bought outright
4
Held under repurchase agreements
5 Federal agency obligations
Bought outright
6
7
Held under repurchase agreements
8 Acceptances
9 Loans
10 Float
11 Other Federal Reserve assets
12 Gold stock2
13 Special drawing rights certificate account...
14 Treasury currency outstanding
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17 Treasury
18 Foreign
19 Service-related balances and
adjustments
20 Other
21 Other Federal Reserve liabilities and
capital
22 Reserve balances with Federal
Reserve Banks
8,091
7,862
8,242
7,716
7,651
7,912
8,464
8,458
7,839
8,140
33,410
33,993
35,559
33,717
32,903
33,866
35,268
35,515
34,878
35,417
Dec. 20
Dec. 27
End-of-month figures
Wednesday figures
1989
1989
Oct.
Nov.
Dec.
23 Reserve Bank credit
264,717
267,060
24 U.S. government securities'
25
Bought outright
26
Held under repurchase agreements
27 Federal agency obligations
Bought outright
28
29
Held under repurchase agreements
30 Acceptances
31
Loans
32 Float
33 Other Federal Reserve assets
34 Gold stock2
35 Special drawing rights certificate account...
36 Treasury currency outstanding
218,176
218,176
0
6,525
6,525
0
0
270
1,471
38,275
11,062
8,518
19,494
223,142
223,142
0
6,525
6,525
0
0
181
668
36,544
11,060
8,518
19,564
249,025
444
Nov. 15
Nov. 22
276,622
261,062
263,150
275,731
266,028
272,155
270,208
283,575
228,367
226,775
1,592
7,050
6,525
525
0
481
1,093
39,631
11,059
8,518
19,615
216,088
216,088
0
6,525
6,525
0
0
1,329
563
36,556
11,062
8,518
19,522
219,406
216,633
2,773
6,599
6,525
74
0
170
890
36,086
11,061
8,518
19,536
228,898
216,672
12,226
7,689
6,525
1,164
0
1,225
1,022
36,898
11,060
8,518
19,550
221,821
221,821
0
6,525
6,525
0
0
136
1,003
36,543
11,059
8,518
19,564
226,601
223,395
3,206
6.691
6,525
166
0
147
1,649
37,068
11,059
8,518
19,578
224,245
222,623
1,622
6,655
6,525
130
0
182
2,100
37,028
11,059
8,518
19,592
233,951
222,195
11,756
8,026
6,525
1,501
0
2,159
1,514
37,926
11,059
8,518
19,606
253,960
445
260,443
455
251,555
452
253,389
447
253,928
448
254,561
448
256,013
447
257,700
447
260,291
447
13,124
252
5,500
307
6,217
589
6,637
277
4,504
244
6,470
185
4,020
241
5.692
206
5,356
228
5,029
269
1,623
292
1,638
311
1,618
1,298
1,636
301
1,639
232
1,639
949
1,638
230
1,636
217
1,637
228
1,626
523
8,303
8,402
8,486
7,405
7,572
7,855
8,292
7,878
7,641
8,062
30,728
35,639
36,709
31,901
34,238
43,385
35,739
39,221
36,141
46,511
Nov. 29
Dec. 6
Dec. 13
SUPPLYING RESERVE FUNDS
ABSORBING RESERVE FUNDS
37 Currency in circulation
38 Treasury cash holdings2
Deposits, other than reserve balances, with
Federal Reserve Banks
39 Treasury
40 Foreign
41
Service-related balances and
adjustments
42 Other
43 Other Federal Reserve liabilities and
capital
44 Reserve balances with Federal
Reserve Banks
1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes any securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Revised for periods between October 1986 and April 1987. At times during
this interval, outstanding gold certificates were inadvertently in excess of the gold
stock. Revised data not included in this table are available from the Division of
Monetary Affairs, Banking Section.
3. Excludes required clearing balances and adjustments to compensate for
float.
NOTE. For amounts of currency and coin held as reserves, see table 1.12.
Components may not add to totals because of rounding.
Money Stock and Bank Credit
1.12 RESERVES AND BORROWINGS
A5
Depository Institutions1
Millions of dollars
Monthly averages9
Reserve classification
Reserve balances with Reserve Banks2
Total vault cash
Vault4
Surplus
Total reserves6
Required reserves
Excess reserve balances at Reserve Banks
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks
1988
1989
Dec.
1
2
3
4
5
6
7
8
9
10
1987
Dec.
Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
37,673
26,185
24,449
1,736
62,123
61,094
1,029
777
93
483
37,830
27,197
25,909
1,288
63,739
62,699
1,040
1,716
130
1,244
35,437
28,782
27,374
1,409
62,810
61,887
923
265
84
20
33,852
27,151
25,735
1,416
59,587
58,681
905
1,490
431
917
33,902
27,851
26,351
1,500
60,254
59,288
966
694
497
106
32,823
28,358
26,735
1,622
59,559
58,674
885
675
490
41
33,556
28,085
26,570
1,515
60,126
59,188
938
693
452
22
33,123
28,900
27,275
1,625
60,397
59,378
1,020
555
330
21
33,94 V
28,519
27,048
1,471
60,989
60,044
945
349
134
21
35,437
28,782
27,374
1,409
62,810
61,887
923
265
84
20
1989
Biweekly averages of daily figures for weeks ending
1989
1990
Sept. 6
11
12
13
14
15
16
17
18
19
20
Reserve balances with Reserve Banks2
Total vault cash1
Vault 4 ..5
Surplus
Total reserves6
Required reserves
Excess reserve balances at Reserve Banks7
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks
Sept. 20
Oct. 4
Oct. 18
Nov. 1
Nov. 15
Nov. 29
Dec. 13r
Dec. 27r
Jan. 10
33,053
27,710
26,153
1,557
59,206
58,247
959
538
485
22
34,424
28,095
26,660
1,436
61,083
60,195
888
614
438
21
32,643
28,298
26,695
1,603
59,338
58,343
995
898
453
25
33,581
29,096
27,531
1,565
61,112
60,186
926
653
342
19
32,778
28,875
27,177
1,698
59,955
58,827
1,128
345
280
23
34,468
27,907
26,552
1,355
61,020
60,139
881
272
147
20
33,394
29,156
27,574
1,582
60,968
59,958
1,009
441
115
23
35,399
27,821
26,509
1,312
61,908
61,149
759
151
87
22
35,131
29,415
27,903
1,513
63,033
62,015
1,018
351
89
19
36,630
29,695
28,334
1,361
64,963
63,841
1,122
339
58
19
1. These data also appear in the Board's H.3 (502) release. For address, see inside front cover.
2. Excludes required clearing balances and adjustments to compensate for
float.
3. Dates refer to the maintenance periods in which the vault cash can be used
to satisfy reserve requirements. Under contemporaneous reserve requirements,
maintenance periods end 30 days after the lagged computation periods in which
the balances are held.
4. Equal to all vault cash held during the lagged computation period by
institutions having required reserve balances at Federal Reserve Banks plus the
amount of vault cash equal to required reserves during the maintenance period at
institutions having no required reserve balances.
5. Total vault cash at institutions having no required reserve balances less the
amount of vault cash equal to their required reserves during the maintenance
period.
6. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
7. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy
reserve requirements less required reserves.
8. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
9. Data are prorated monthly averages of biweekly averages.
A6
DomesticNonfinancialStatistics • March 1990
1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS
Large Member Banks1
Averages of daily figures, in millions of dollars
1988 and 1989 week ending Monday
Maturity and source
Dec. 5
Dec. 12
Dec. 19
Dec. 26
Jan. 2
Jan. 9
Jan. 16
Jan. 23
Jan. 30
Federal funds purchased, repurchase agreements, and
other selected borrowing in immediately available
funds
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and
foreign official institutions, and U.S. government
agencies
For one day or under continuing contract
For all other maturities
74,471
9,940
70,886
9,829
69,448
10,114
70,964
9,810
67,427
9,356
75,520
9,753
70,344
10,870
69,604
10,424
66,372
9,947
28,709
6,545
30,368
7,418
26,454
7,778
24,933
8,730
22,855
7,709
28,713
6,801
26,331
7,431
24,937
6,694
27,974
6,345
Repurchase agreements on U.S. government and federal
agency securities in immediately available funds
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities
14,929
10,352
15,392
10,890
14,634
10,659
13,043
11,003
12,610
8,252
15,134
9,458
14,513
11,235
15,955
11,280
16,041
12,425
30,312
9,790
30,307
9,651
29,321
9,790
27,986
10,860
27,418
9,248
28,613
9,154
29,334
9,547
28,826
9,389
28,775
9,750
MEMO: Federal funds loans and resale agreements in
immediately available funds in maturities of one day
or under continuing contract
9 To commercial banks in the United States
10 To all other specified customers2
39,202
13,277
35,912
13,936
39,237
14,108
40,080
14,987
38,015
12,747
42,159
15,135
40,105
14,111
40,596
14,784
40,075
13,584
1
2
3
4
5
6
7
8
1. Banks with assets of $1 billion or more as of Dec. 31, 1977.
These data also appear in the Board's H.5 (507) release. For address, see inside
front cover.
2. Brokers and nonbank dealers in securities; other depository institutions;
foreign banks and official institutions; and United States government agencies,
Policy Instruments
1.14
A7
FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Extended credit2
Adjustment credit
and
Seasonal credit1
Federal Reserve
Bank
After 30 days of borrowing3
First 30 days of borrowing
On
1/29/90
Effective
date
Previous
rate
On
1/29/90
Effective
date
Previous
rate
On
1/29/90
EfFective
date
Previous
rate
7
2/24/89
2/24/89
2/24/89
2/24/89
2/24/89
2/24/89
6V5
7
2/24/89
2/24/89
2/24/89
2/24/89
2/24/89
2/24/89
6Vl
8.70
1/25/90
1/25/90
1/25/90
1/25/90
1/25/90
1/25/90
8.75
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco . . .
7
2/24/89
2/24/89
2/24/89
2/24/89
2/27/89
2/24/89
6Vi
2/24/89
2/24/89
2/24/89
2/24/89
2/27/89
2/24/89
7
6V5
8.70
Range of rates for adjustment credit in recent years
Effective date
In effect Dec. 31, 1977.
1978—Jan. 9
20
May 11
12
July
3
10
Aug. 21
Sept. 22
Oct. 16
20
Nov.
1
3
1979—July 20
Aug. 17
20
Sept. 19
21
Oct.
8
10
1980—Feb. 15
19
May 29
30
June 13
16
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
6
6
6 Vi
6V5
7
7
71/4
7V4
7%
8
8V5
6-6V1
6'/5
6V5-7
7
7-7V4
71/4
7V4
8
8-8i/>
8'/>
S'A-9>A
9Vi
10
10-10'/!
10V5
10!/5-l 1
11
11-12
12
12-13
13
12-13
12
11-12
11
8V2
m
9 Yi
1
0
1 '>
0/
10W
11
11
12
12
13
13
13
12
11
11
Effective date
F.R.
Bank
of
N.Y.
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
1/11/90
8.75
4
Effectiv
Range (or
level)—
All F.R.
Banks
1980-—July 28
—July
29
Sept. 26
Nov. 17
Dec. 5
10-11
10
11
12
12-13
10
10
11
12
13
1984—Apr.
9
13
Nov. 71
76
Dec. 74
81/5-9
9
8V5-9
8 Vl
8
9
9
m
8'A
8
1981-—May
—May
13-14
14
13-14
13
12
14
14
13
13
12
1985—May 70
74
7V5-8
71/5
71/5
71/5
1986—Mar.
7
10
Apr. 71
July 11
Aug. 71
77
7-7!A
7
61/5-7
6
51/5-6
5V
5
7
7
6 Vi
6
51/5
5V5
1987—Sept. 4
11
5V5-6
6
6
6
9
11
6-61/5
6"/5
6V5
6'/5
1989—Feb. 74
77
6V5-7
7
7
7
In effect Jan . 29
7
7
Nov.
Dec.
5
8
2
6
4
1982--July 20
-July
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
1. Adjustment credit is available on a short-term basis to help depository
institutions meet temporary needs for funds that cannot be met through reasonable alternative sources. After May 19, 1986, the highest rate established for loans
to depository institutions may be charged on adjustment credit loans of unusual
size that result from a major operating problem at the borrower's facility.
Seasonal credit is available to help smaller depository institutions meet regular,
seasonal needs for funds that cannot be met through special industry lenders and
that arise from a combination of expected patterns of movement in their deposits
and loans. A temporary simplified seasonal program was established on Mar. 8,
1985, and the interest rate was a fixed rate '/> percent above the rate on adjustment
credit. The program was reestablished for 1986 and 1987 but was not renewed for
1988.
2. Extended credit is available to depository institutions, when similar assistance is not reasonably available from other sources, when exceptional circumstances or practices involve only a particular institution or when an institution is
experiencing difficulties adjusting to changing market conditions over a longer
period of time.
3. For extended-credit loans outstanding more than 30 days, a flexible rate
somewhat above rates on market sources of funds ordinarily will be charged, but
Range (or
level)—
All F.R.
Banks
1/25/90
1/25/90
1/25/90
1/25/90
1/25/90
1/25/90
Effective date
11V5-12
111/5
11-111/!
11
10 Vl
10-10V5
10
91-5-10
9 Vl
9-9V2
9
8W-9
8V5-9
8V5
UVi
ll>/5
11
11
10V5
10
10
9 Vi
91Vi
9
9
9
m
8 Vi
1988—Aug.
in no case will the rate charged be less than the basic discount rate plus 50 basis
points. The flexible rate is reestablished on the first business day of each
two-week reserve maintenance period. At the discretion of the Federal Reserve
Bank, the time period for which the basic discount rate is applied may be
shortened.
4. For earlier data, see the following publications of the Board of Governors:
Banking and Monetary Statistics, 1914-1941, and 1941-1970; Annual Statistical
Digest, 1970-1979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than four weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7,
1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was
adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and
to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective
Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the
formula for applying the surcharge was changed from a calendar quarter to a
moving 13-week period. The surcharge was eliminated on Nov. 17, 1981.
A8
DomesticNonfinancialStatistics • March 1990
1.15
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1
Percent of deposits
Type of deposit, and
deposit interval
Depository institution requirements
after implementation of the
Monetary Control Act
Effective date
Net transaction accounts3'4
$0 million-$40.4 million....
More than $40.4 million . . .
12/19/89
12/19/89
5
Nonpersonal time deposits
By original maturity
Less than 1 Vi years
1 l/i years or more
10/6/83
10/6/83
Eurocurrency liabilities
All types
1. Reserve requirements in effect on Dec. 31, 1989. Required reserves must be
held in the form of deposits with Federal Reserve Banks or vault cash. Nonmember institutions may maintain reserve balances with a Federal Reserve Bank
indirectly on a pass-through basis with certain approved institutions. For previous
reserve requirements, see earlier editions of the Annual Report or the Federal
Reserve Bulletin. Under provisions of the Monetary Control Act, depository
institutions include commercial banks, mutual savings banks, savings and loan
associations, credit unions, agencies and branches of foreign banks, and Edge
corporations.
2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law
97-320) requires that $2 million of reservable liabilities (transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities) of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabilities subject to this zero percent reserve requirement each year for the succeeding calendar year by 80 percent of the percentage
increase in the total reservable liabilities of all depository institutions, measured
on an annual basis as of June 30. No corresponding adjustment is to be made in
the event of a decrease. On Dec. 20, 1988, the exemption was raised from $3.2
million to $3.4 million. In determining the reserve requirements of depository
institutions, the exemption shall apply in the following order: (1) net NOW
accounts (NOW accounts less allowable deductions); (2) net other transaction
accounts; and (3) nonpersonal time deposits or Eurocurrency liabilities starting
with those with the highest reserve ratio. With respect to NOW accounts and
other transaction accounts, the exemption applies only to such accounts that
would be subject to a 3 percent reserve requirement.
3. Transaction accounts include all deposits on which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers in excess of
three per month for the purpose of making payments to third persons or others.
However, MMDAs and similar accounts subject to the rules that permit no more
than six preauthorized, automatic, or other transfers per month, of which no more
than three can be checks, are not transaction accounts (such accounts are savings
deposits subject to time deposit reserve requirements).
4. The Monetary Control Act of 1980 requires that the amount of transaction
accounts against which the 3 percent reserve requirement applies be modified
annually by 80 percent of the percentage change in transaction accounts held by
all depository institutions, determined as of June 30 each year. Effective Dec. 19,
1989 for institutions reporting quarterly and Dec. 26, 1989 for institutions
reporting weekly, the amount was decreased from $41.5 million to $40.4 million.
5. In general, nonpersonal time deposits are time deposits, including savings
deposits, that are not transaction accounts and in which a beneficial interest is
held by a depositor that is not a natural person. Also included are certain
transferable time deposits held by natural persons and certain obligations issued
to depository institution offices located outside the United States. For details, see
section 204.2 of Regulation D.
Policy Instruments
1.17
A9
FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1
Millions of dollars
1989
Type of transaction
1986
1987
1988
May
July
June
Aug.
Sept.
Nov.
Oct.
U . S . TREASURY SECURITIES
Outright transactions (excluding matched
transactions)
1
2
3
4
Treasury bills
Gross purchases
Gross sales
Exchange
Redemptions
5
6
7
8
9
22,604
2,502
0
1,000
18,983
6,051
0
9,029
8,223
587
0
2,200
311
321
0
1,200
0
571
0
1,200
0
5,517
0
2,400
0
934
0
800
0
0
0
0
219
1,633
0
1,400
8,794
0
0
3,530
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
190
0
18,674
-20,180
0
3,659
300
21,504
-20,388
70
2,176
0
23,854
-24,588
0
0
0
2,863
-3,628
0
0
0
1,828
-1,434
0
0
0
1,749
-1,073
0
0
0
4,200
-4,025
0
0
0
1,832
0
0
0
0
852
-2,678
500
155
0
3,915
-5,502
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
893
0
-17,058
16,985
10,231
452
-17,975
18,938
5,485
800
-17,720
22,515
0
75
-2,036
3,328
0
0
-1,828
1,434
0
13
-1,584
787
0
150
-3,321
3,425
0
0
-1,832
0
0
24
-758
2,552
0
0
-2,869
4,902
14
15
16
17
5 to 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
236
0
-1,620
2,050
2,441
0
-3,529
950
1,579
175
-5,946
1,797
0
0
258
200
0
0
0
0
0
9
-165
286
0
0
-879
400
0
0
0
0
0
0
-95
126
0
0
-1,046
400
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
158
0
0
1,150
1,858
0
0
500
1,398
0
-188
275
0
0
-1,086
100
0
0
0
0
0
0
0
0
0
0
0
200
0
0
0
0
0
0
0
0
0
0
0
200
24,081
2,502
1,000
37,170
6,803
9,099
18,863
1,562
2,200
311
396
1,200
0
571
1,200
0
5,539
2,400
0
1,084
800
0
0
0
219
1,657
1,900
8,949
0
3,530
Matched transactions
25 Gross sales
26 Gross purchases
927,999
927,247
950,923
950,935
1,168,484
1,168,142
123,029
113,041
128,139
138,141
123,373
118,221
146,611
147,228
116,502
120,144
111,430
111,893
105,696
105,243
Repurchase agreements2
27 Gross purchases
28 Gross sales
170,431
160,268
314,621
324,666
152,613
151,497
31,419
41,117
6,203
6,203
4,961
4,961
0
0
9,396
9,396
0
0
15,350
15,350
29,988
11,234
15,872
-20,971
8,232
-13,091
-1,267
3,642
-2,875
4,966
0
0
398
0
0
276
0
0
587
0
0
0
0
0
0
0
0
45
0
0
0
0
0
54
0
0
30
0
0
0
31,142
30,521
80,353
81,350
57,259
56,471
12,732
16,573
1,666
1,666
1,137
1,137
0
0
4,011
4,011
0
0
1,247
1,247
35 Net change in federal agency obligations
222
-1,274
198
-3,841
0
-45
0
-54
-30
0
36 Total net change in System Open Market
Account
30,212
9,961
16,070
-24,812
8,232
-13,136
-1,267
3,588
-2,905
4,966
All maturities
22 Gross purchases
23 Gross sales
24 Redemptions
29 Net change in U.S. government securities
FEDERAL AGENCY OBLIGATIONS
Outright transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase agreements2
33 Gross purchases
34 Gross sales
1. Sales, redemptions, and negative figures reduce holdings of the System Open
Market Account; all other figures increase such holdings. Details may not add to
totals because of rounding.
2. In July 1984 the Open Market Trading Desk discontinued accepting bankers
acceptances in repurchase agreements,
A10
1.18
DomesticNonfinancialStatistics • March 1990
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements 1
Millions of dollars
Wednesday
1989
Account
Nov. 29
Dec. 6
End of month
1989
Dec. 13
Dec. 20
Oct.
Dec. 27
Nov.
Dec.
Consolidated condition statement
ASSETS
15 Total loans and securities
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies
19 All other4
20 Total assets
11,060
8,518
473
11,059
8,518
477
11,059
8,518
495
11,059
8,518
489
11,059
8,518
467
11,062
8,518
492
11,060
8,518
465
11,059
8,518
456
1,225
0
0
136
0
0
146
0
0
182
0
0
2,159
0
0
270
0
0
182
0
0
481
0
0
6,525
1,164
6,525
0
6,525
166
6,525
130
6,525
1,501
6,525
0
6,525
0
6,525
525
94,477
91,381
30,814
216,672
12,226
228,897
99,626
91,381
30,814
221,821
0
221,821
101,201
91,381
30,814
223,395
3,206
226,602
100,428
91,381
30,814
222,623
1,622
224,245
100,000
91,381
30,814
222,195
11,756
233,951
96,136
91,426
30,614
218,176
0
218,176
100,947
91,381
30,814
223,142
0
223,142
104,581
91,381
30,814
226,775
1,592
228,367
237,812
228,482
233,439
231,081
244,136
224,971
229,848
235,898
6,275
776
7,547
787
7,594
789
8,516
790
8,150
789
10,120
775
6,103
776
8,903
790
29,075
7,047
29,593
6,163
29,679
6,600
29,722
6,516
29,784
7,353
28,953
8,548
29,593
6,175
31,333
7,465
301,036
1 Gold certificate account
2 Special drawing rights certificate account
3
Loans
4 To depository institutions
5 Other
6 Acceptances held under repurchase agreements
Federal agency obligations
7 Bought outright
8 Held under repurchase agreements
U.S. Treasury securities
Bought outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright2
13 Held under repurchase agreements
14 Total U.S. Treasury securities
292,626
298,173
296,691
310,256
293,439
292,539
304,424
LIABILITIES
235,299
235,923
237,377
239,045
241,599
230,467
235,306
241,739
22
23
24
25
45,024
6,470
185
949
37,377
4,020
241
230
40,858
5,692
206
217
37,777
5,356
228
228
48,136
5,029
269
523
32,351
13,124
252
292
37,277
5,500
307
311
38,327
6,217
590
1,298
26 Total deposits
52,628
41,868
46,973
43,589
53,958
46,018
43,395
46,430
5,253
3,041
6,543
2,952
5,945
3,003
6,417
2,808
6,637
3,198
8,649
2,819
5,436
3,081
7,773
3,994
296,221
287,286
293,299
291,858
305,392
287,954
287,217
299,935
2,230
2,112
472
2,229
2,112
999
2,232
2,112
530
2,244
2,112
477
2,247
2,112
505
2,223
2,112
1,150
2,229
2,112
980
2,243
2,243
0
33 Total liabilities and capital accounts
301,036
292,626
298,173
296,691
310,256
293,439
292,539
304,423
34 MEMO: Marketable U.S. Treasury securities held in
custody for foreign and international accounts
233,024
235,957
233,712
232,269
230,616
235,318
235,096
233,048
21 Federal Reserve notes
Deposits
To depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
Federal Reserve note statement
35 Federal Reserve notes outstanding issued to bank
36
LESS: Held by bank
37
Federal Reserve notes, net
Collateral held against notes net:
38 Gold certificate account
39 Special drawing rights certificate account
40 Other eligible assets
41
U.S. Treasury and agency securities
279,559
44,260
235,299
280,873
44,950
235,923
281,361
43,984
237,377
280,943
41,899
239,045
280,128
38,529
241,599
278,866
48,398
230,467
279,629
44,321
235,306
279,665
37,926
241,739
11,060
8,518
0
215,721
11,059
8,518
0
216,345
11,059
8,518
0
217,800
11,059
8,518
0
219,468
11,059
8,518
0
222,022
11,062
8,518
0
210,887
11,060
8,518
0
215,728
11,059
8,518
0
222,162
42 Total collateral
235,299
235,923
237,377
239,045
241,599
230,467
235,306
241,739
1. Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover. Components may not add to totals because of
rounding.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities
pledged with Federal Reserve Banks—and excludes securities sold and scheduled
to be bought back under matched sale-purchase transactions.
3. Valued monthly at market exchange rates.
4. Includes special investment account at the Federal Reserve Bank of Chicago
in Treasury bills maturing within 90 days.
5. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
Federal Reserve Banks
1.19 FEDERAL RESERVE BANKS
Maturity Distribution of Loan and Security Holdings 1
Millions of dollars
Wednesday
1989
Type and maturity groupings
End of month
1989
Nov. 29
Dec. 6
Dec. 13
Dec. 20
Dec. 27
Oct. 31
Nov. 30
1,225
1,214
136
72
64
146
89
57
182
2,159
2,157
0
0
0
0
0
2
0
0
0
0
0
270
193
77
182
11
9 U.S. Treasury securities—Total ..
10 Within 15 days2
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
228,897
19,836
48,452
68,641
52,732
12,529
26,706
221,821
9,418
48,932
70,726
53,509
12,529
26,706
226,602
12,291
50,825
70,741
53,509
12,529
26,706
224,245
11,241
52,183
68,076
53,509
12,529
26,706
233,951
18,134
52,297
70,776
53,509
12,529
26,706
218,176
8,144
48,677
70,197
51,476
13,175
26,506
223,142
4,468
51,283
74,646
53,509
12,529
26,706
16 Federal agency obligations—Total
17 Within 15 days2
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
7,689
1,480
418
1,395
3,159
1,048
189
6,525
70
673
1,386
3,166
1,041
189
6,691
203
636
1,386
3,206
1,071
189
6,655
307
496
1,386
3,206
1,071
188
8,026
1,654
568
1,346
3,198
1,071
188
6,525
89
672
1,357
3,180
1,038
189
6,525
316
418
1,395
3,159
1,048
189
1 Loans—Total
2 Within 15 days
3
16 days to 90 days
4 91 days to 1 year
5 Acceptances—Total
6 Within 15 days
16 days to 90 days
7
8 91 days to 1 year
0
0
0
0
0
0
0
0
0
0
1. Holdings under repurchase agreements are classified as maturing within 15
days in accordance with maximum maturity of the agreements.
0
0
0
0
0
177
5
0
0
0
0
0
134
48
0
0
0
0
0
NOTE: Components may not add to totals due to rounding,
All
A12
1.20
DomesticNonfinancialStatistics • March 1990
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE 1
Billions of dollars, averages of daily figures
1989
Item
1986
Dec.
1987
Dec.
1988
Dec.
1989
Dec.
May
2
3
4
5
Nonborrowed reserves
Nonborrowed reserves plus extended credit
Required reserves
Monetary base
July
Aug.
Sept.
Oct.
Nov.
Dec.
58.75
59.22
59.62
59.57
59.99
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS2
1 Total reserves3
June
58.14
57.31
57.62
56.77
241.45
60.71
58.69
57.92
58.40
57.66
257.99
58.99
60.23
59.67
275.50
59.99
59.73
59.75
59.07
285.22
58.74
57.02
58.22
57.71
278.43
58.35
56.86
57.78
57.44
279.06
58.70
58.00
58.11
57.73
280.01
58.08
58.12
57.87
280.29
58.53
58.55
58.29
282.04
59.07 59.22
59.73
59.75
59.09 59.24
58.62
59.07
58.60
282.70 283. O(Y 285.22
Not seasonally adjusted
6 Total reserves3
7
8
9
10
Nonborrowed reserves
Nonborrowed reserves plus extended credit4
Required reserves
Monetary base
59.46
60.06
62.21
61.50
57.72
58.41
58.95
58.30
58.91
58.64
58.94
58.09
245.25
59.28
59.76
59.03
262.08
60.50
61.74
61.17
279.71
61.24
61.26
60.58
289.44
56.00
57.20
56.69
277.59
56.92
57.84
57.51
280.19
58.26
58.37
57.99
282.10
57.62
57.66
57.41
281.09
58.21
58.24
57.97
280.70
59.56
62.12
63.74
62.81
58.91
59.59
60.25
59.56
60.13
58.73
59.04
58.19
247.71
61.35
61.83
61.09
266.16
62.02
63.27
62.70
283.18
62.54
62.56
61.89
292.71
57.19
58.39
57.88
280.64
58.10
59.01
58.68
283.28
59.56
59.67
59.29
285.39
58.88
58.93
58.67
284.23
59.43
59.46
59.19
283.78
59.14
59.72
61.50
58.58 59.37
61.24
58.61 59.39
61.26
58.12 58.77' 60.58
281.37 284.13 289.44
NOT ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS
11 Total reserves3
12
13
14
15
Nonborrowed reserves
Nonborrowed reserves plus extended credit4
Required reserves
Monetary base
1. Latest monthly and biweeklyfiguresare available from the Board's H.3(502)
statistical release. Historical data and estimates of the impact on required reserves
of changes in reserve requirements are available from the Monetary and Reserves
Projections Section. Division of Monetary Affairs. Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
4. Extended credit consists of borrowing at the discount window under
60.40
60.99
62.81
59.84 60.64
59.86 60.66
59.38 60.04
284.49 287.35
62.54
62.56
61.89
292.71
the terms and conditions established for the extended credit program to helpdepository institutions deal with sustained liquidity pressures. Because there isnot
the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
5. The monetary base not adjusted for discontinuities consists of total reserves
plus required clearing balances and adjustments to compensate forfloatat Federal
Reserve Banks and the currency component of the money stock plus, for institutions not having required reserve balances, the excess of current vault cash over
the amount applied to satisfy current reserve requirements. Currency and vault
cash figures are measured over the weekly computation period ending Monday.
The seasonally adjusted monetary base consists of seasonally adjusted total
reserves, which include excess reserves on a not seasonally adjusted basis, plus
the seasonally adjusted currency component of the money stock and the remaining items seasonally adjusted as a whole.
6. Reflects actuail reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated with
implementation of the Monetary Control Act or other regulatory changes to
reserve requirements.
Monetary and Credit Aggregates
1.21
A13
MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES 1
Billions of dollars, averages of daily figures
2
1986
Dec.
1987
Dec.
1988
Dec.
1989
1989
Dec.
Sept.
Oct.
Nov.'
Dec.
781.1
3,153.5'
4,001.0'
4,813.9'
9,615.3
787.7
3,173.6'
4,010.6'
4,826.2'
9,677.9'
789.6
3,196.2
4,027.3
4,838.7
9,744.2
797.6
3,217.0
4,039.6
n.a.
n.a.
219.3
7.2
277.3
277.3
219.7
7.3
280.4
280.3
220.2
7.5
278.9
283.0
222.1
7.5
281.2
286.8
2,372.4'
847.4'
2,385.9'
837.0'
2,406.6
831.1
2,419.4
822.6
Seasonally adjusted
1
2
3
4
3
Ml
M2
M3
L
Debt
6
7
8
9
Ml components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6
10
11
Nontransactions components
In M27
In M3 only8
12
13
Savings deposits9
Commercial Banks
Thrift institutions
14
15
725.9
2,811.2
3,494.9
4,135.1
7,597.0
752.3
2,909.9
3,677.8'
4,336.8''
8,316.1
790.3
3,069.6
3,915.6'
4,672.3'
9,082.2
196.4
7.1
288.3
260.4
211.8
7.6
288.6
282.3
2,157.6
767.9''
2,279.3
846.0'
155.8
215.2
178.5
237.8
192.5
238.8
189.0
222.8
184.2
220.0
185.1
220.7
187.2
222.1
189.0
222.8
Small-denomination time deposits10
Commercial Banks
Thrift institutions
364.6
489.3
385.3
528.8
443.1
582.2
521.4
614.3
509.7'
622.5
515.2'
617.3'
517.8
615.3
521.4
614.3
16
17
Money market mutual funds
General purpose and broker-dealer
Institution-only
208.0
84.4
221.1
89.6
239.4
87.6
309.1
102.8
292.4'
99.1
298.4'
98.7
306.5
102.0
309.1
102.8
18
19
Large-denomination time deposits"
Commercial Banks
Thrift institutions
288.8
150.1
325.4
162.0
364.9
172.9
397.8
156.4
395.9'
167.9
397.6'
163.1
399.8
159.5
397.8
156.4
20
21
Debt components
Federal debt
Nonfederal debt
1,805.8
5,791.2
1,957.4
6,358.6
2,113.5
6,968.7
2,238.3
7,439.5'
2,259.0
7,485.2
n.a.
n.a.
778.5
3,146.9'
3,999.0'
4,808.6'
9,577.0
784.4
3,169.5'
4,008.0'
4,821.5'
9,643.7'
791.1
3,194.2
4,032.6
4,847.4
9,711.1
811.5
3,223.6
4,048.2
n.a.
n.a.
218.7
7.7
275.9
276.2
219.0
7.3
280.3
277.8
221.1
7.0
281.1
281.8
225.3
6.9
291.2
288.1
2,368.5'
852.1'
2,385.1'
838.5'
2,403.1
838.3
2,412.1
824.6
180.5
6.5
303.2
235.8
2,085.3
683.7
797.6
3,217.0
4,039.6
n.a.
n.a.
222.1
7.5
281.2
286.8
2,419.4
822.6
n.a.
n.a.
2,220.1
7,395.2
Not seasonally adjusted
740.4
2,821.1
3,507.4
4,150.1
7,580.7
22
23
24
25
26
27
28
29
30
31
32
33
34
214.9
6.9
298.8
283.7
225.3
6.9
291.2
288.1
2,152.3
770.1'
2,272.9
848.1'
2,412.1
824.6
358.8
167.5
352.5
150.3
354.4
132.0
338.9
130.2
342.0
131.0
349.7
132.0
354.4
132.0
154.2
212.7
Money market deposit accounts
Commercial Banks
Thrift institutions
199.3
6.5
298.6
262.0
379.6
192.9
Nontransactions components
M2
M3 only8
804.4
3,077.3r
3,925.4
4,685.8'
9,067.5
2,080.7
686.3
Ml components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6
766.4
2,918.7r
3,688.7
4,351.r
8,297.6
183.0
6.0
314.0
2i7.4
Ml
M2
M3
L
Debt
176.6
234.8
190.3
235.6
186.8
219.7
184.0'
220.9'
185.5
221.9
186.7
221.2
186.8
219.7
811.5
3,223.6
4,048.2
n.a.
n.a.
9
Savings deposits
Commercial Banks
Thrift institutions
35
36
10
37
38
Small-denomination time deposits
Commercial Banks
Thrift institutions
365.3
489.8
386.1
529.1
444.1
582.4
522.8
614.4
510.1'
619.7
515.6
617.8'
519.5
615.8
522.8
614.4
39
40
Money market mutual funds
General purpose and broker-dealer
Institution-only
208.0
84.4
221.1
89.6
239.4
87.6
309.1
102.8
292.4'
99.1
298.4'
98.7
306.5
102.0
309.1
102.8
41
42
Large-denomination time deposits"
Commercial Banks
Thrift institutions
289.1
150.7
325.8
163.0
365.6
174.1
398.8
157.5
398.1'
168.3
399.3'
164.9
401.2
161.2
398.8
157.5
43
44
Debt components
Federal debt
Nonfederal debt
1,803.9
5,776.8
1,955.6
6,342.0
2,111.8
6,955.7
2,222.6
7,421.1'
2,250.8
7,460.2
For notes see following page.
n.a.
n.a.
2,200.9
7,376.1
n.a.
n.a.
A14
DomesticNonfinancialStatistics • March 1990
NOTES TO TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508)
release. Historical data are available from the Monetary and Reserves Projection
section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
2. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of depository institutions; (2) travelers checks of nonbank issuers; (3) demand
deposits at all commercial banks other than those due to depository institutions,
the U.S. government, and foreign banks and official institutions less cash items in
the process of collection and Federal Reserve float; and (4) other checkable
deposits (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union
share draft accounts, and demand deposits at thrift institutions.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, MMDAs, savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of
less than $100,000), and balances in both taxable and tax-exempt general purpose
and broker-dealer money market mutual funds. Excludes individual retirement
accounts (IRA) and Keogh balances at depository institutions and money market
funds. Also excludes all balances held by U.S. commercial banks, money market
funds (general purpose and broker-dealer), foreign governments and commercial
banks, and the U.S. government.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted
is the estimated amount of overnight RPs and Eurodollars held by institution-only
money market mutual funds.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt
data are based on monthly averages.
3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of
depository institutions.
4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in
demand deposits.
5. Demand deposits at commercial banks and foreign-related institutions other
than those due to depository institutions, the U.S. government, and foreign banks
and official institutions less cash items in the process of collection and Federal
Reserve float.
6. Consists of NOW and ATS balances at all depository institutions, credit
union share draft balances, and demand deposits at thrift institutions.
7. Sum of overnight RPs and overnight Eurodollars, money market fund
balances (general purpose and broker-dealer), MMDAs, and savings and small
time deposits.
8. Sum of large time deposits, term RPs, and term Eurodollars of U.S.
residents, money market fund balances (institution-only), less the estimated
amount of overnight RPs and Eurodollars held by institution-only money market
funds.
9. Savings deposits exclude MMDAs.
10. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All individual retirement accounts (IRA) and
Keogh accounts at commercial banks and thrifts are subtracted from small time
deposits.
11. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
12. Large-denomination time deposits at commercial banks less those held by
money market mutual funds, depository institutions, and foreign banks and
officii institutions.
Monetary and Credit Aggregates
1.22
A15
BANK DEBITS A N D DEPOSIT TURNOVER 1
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
1989
Bank group, or type of customer
1986
1987
1988
May
July
June
Aug.
Sept.
Oct.
Seasonally adjusted
DEBITS TO
3
Demand deposits
1 All insured banks
2 Major New York City banks
3 Other banks
4 ATS-NOW accounts4
5 Savings deposits
188,346.0
91,397.3
96,948.8
2,182.5
403.5
217,116.2
104,496.3
112,619.8
2,402.7
526.5
226,888.4
107,547.3
119,341.2
2,757.7
583.0
266,468.1
120,984.1
145,483.9
3,406.5
647.2
284,129.2
129,166.6
154,962.7
3,696.5
640.0
276,453.7
114,991.8
161,461.9
3,596.3
580.4
292,446.5
121,378.1
171,068.3
3,943.1
650.0
281,432.2
125,206.9
156,225.3
3,601.9
672.3
293,424.9
136,039.0
155,385.9
3,911.9
665.4
556.5
2,498.2
321.2
15.6
3.0
612.1
2,670.6
357.0
13.8
3.1
641.2
2,903.5
376.8
14.7
3.1
767.1
3,342.1
467.5
18.2
3.6
824.0
3,588.5
501.8
19.8
3.6
788.4
3,222.3
512.6
19.1
3.2
841.8
3,402.4
548.8
20.6
3.6
802.2
3,482.2
496.2
18.8
3.7
826.4
3,486.5
492.5
20.1
3.6
DEPOSIT TURNOVER
6
7
8
9
10
Demand deposits3
All insured banks
Major New York City banks
Other banks
.
ATS-NOW accounts4
Savings deposits
Not seasonally adjusted
Demand deposits
11 All insured banks
12 Major New York City banks
13 Other banks
14 ATS-NOW accounts4
15 MMDA
16 Savings deposits
188,506.7
91,500.1
97,006.7
2,184.6
1,609.4
404.1
217,125.1
104,518.8
112,606.2
2,404.8
1,954.2
526.8
227,010.7
107,565.0
119,445.7
2,754.7
2,430.1
578.0
274,861.8
121,507.2
153,354.6
3,325.2
2,910.5
637.9
295,522.8
134,020.7
161,502.1
3,770.8
3,136.0
641.4
268,243.0
117,276.1
150,966.9
3,549.0
2,686.7
610.4
304,407.5
132,158.8
172,248.7
3,762.6
3,068.7
656.7
266,882.2
115,187.4
151,694.7
3,702.7
2,554.3
665.2
292,750.0
138,964.6
153,785.5
3,891.4
2,651.5
690.4
556.7
2,499.1
321.2
15.6
4.5
3.0
612.3
2,674.9
356.9
13.8
5.3
3.1
641.7
2,901.4
377.1
14.7
6.9
3.1
805.9
3,482.5
500.9
18.0
9.0
3.5
855.6
3,795.0
520.9
20.3
9.7
3.6
761.3
3,247.5
477.4
18.9
8.2
3.4
891.5
3,911.6
559.9
20.0
9.2
3.6
763.1
3,279.7
482.2
19.5
7.6
3.7
829.6
3,594.8
489.4
20.3
7.8
3.8
DEPOSIT TURNOVER
17
18
19
20
21
22
Demand deposits3
All insured banks
Major New York City banks
Other banks
ATS-NOW accounts4
MMDA
Savings deposits
1. Historical tables containing revised data for earlier periods may be obtained
from the Monetary and Reserves Projections Section, Division of Monetary
Affairs, Board of Governors of the Federal Reserve System, Washington, D.C.
20551.
These data also appear on the Board's G.6 (406) release. For address, see inside
front cover.
2. Annual averages of monthly figures.
3. Represents accounts of individuals, partnerships, and corporations and
of states and political subdivisions.
4. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). ATS data are
available beginning December 1978.
5. Excludes ATS and NOW accounts, MMDA and special club accounts, such
as Christmas and vacation clubs.
6. Money market deposit accounts.
A16
1.23
DomesticNonfinancialStatistics • March 1990
LOANS AND SECURITIES
All Commercial Banks 1
Billions of dollars; averages of Wednesday figures
1989
Category
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Seasonally adjusted
2
1 Total loans and securities
2 U.S. government securities
i Other securities
4 Total loans and leases2
S Commercial and industrial . . . . .
6
Bankers acceptances held . . .
/
Other commercial and
industrial
8
U.S. addressees4
9
Non-U.S. addressees4
10 Real estate
11 Individual
12 Security
13 Nonbank financial
institutions
14 Agricultural
15 State and political
subdivisions
16 Foreign banks
17 Foreign official institutions
18 Lease financing receivables . . . .
19 All other loans
2,422.8
2,451.9
2,464.9
2,470.9
2,486.3
2,496.8
2,518.1
2,534.4
2,544.1
2,575.5
2,583.9
2,577.4
360.4
189.6
1,872.9
606.6
4.4
361.8
190.4
1,899.7
619.0
4.2
368.8
189.7
1,906.5
617.8
4.0
370.7
187.2
1,913.1
620.6
4.1
373.5
186.4
1,926.5
626.3
4.2
373.8
185.7
1,937.3
624.9
4.2
374.4
184.6
1,959.1
632.1
4.1
376.6
182.8
1,974.9
637.3
4.5
378.8
182.9
1,982.4
636.9
4.8
391.7
182.7
2,001.1
641.1
5.4
397.5
180.3
2,006.1
641.5'
4.9
396.9
181.3
1,999.2
634.2
4.3
602.2
596.6
5.7
678.9
357.9
37.6
614.8
609.9
4.9
685.6
358.9
44.7
613.7
608.3
5.4
691.8
360.6
43.5
616.6
611.7
4.9
699.5
362.9
39.9
622.1
616.6
5.4
705.5
365.4
38.0
620.7
615.2
5.5
712.0
366.0
41.2
628.1
622.2
5.9
719.9
367.0
40.0'
632.8
627.1
5.7
729.0
369.3
39.3'
632.1
626.6
5.5
734.4
372.1
39.9'
635.7
629.3'
6.3'
741.1
374.4
41.4'
636.7
631.2'
5.5'
747.7
376.9
40.6'
629.9
624.6
5.2
754.8
378.1
37.8
30.1
30.7
30.5
30.7
29.6
30.7
29.1
30.4
28.6
30.3
30.2
30.3
31.2'
30.4
31.lr
30.3
31.3'
30.2
32.4'
30.1
33.1
30.3'
32.2
30.5
44.2
7.8
4.8
29.4
44.8
44.3
8.5
4.8
29.6
43.1
44.3
8.2
4.8
29.6
45.6
44.4
8.4
4.9
29.8
43.2
44.4
9.4
4.9
30.0
43.7
44.2
9.3
4.7
29.9
44.5
43.9
8.9
4.5
30.3
50.8'
43.6
9.3
4.3
30.3
51. V
43.5
8.5
4.3
31.0 r
42.9r
9.7
4.0
31.6
52.3'
42.3
9.0'
3.8
31.6
49.2'
41.0
9.1
3.8
31.1
46.5
50.2
Not seasonally adjusted
2
20 Total loans and securities
2,430.7
2,453.6
2,462.8
2,473.9
2,487.4
2,500.9
2,511.8
2,526.9
2,541.2
2,565.6
2,582.6'
2,591.7
21 U.S. government securities
22 Other securities
23 Total loans and leases2
24 Commercial and industrial . . . . .
25
Bankers acceptances held . . .
26
Other commercial and
industrial
U.S. addressees
27
28
Non-U.S. addressees
29 Real estate
30 Individual
31 Security
32 Nonbank financial
institutions
33 Agricultural
34 State and political
subdivisions
35 Foreign banks
36 Foreign official institutions
SI Lease financing receivables
38 All other loans
362.2
191.7
1,876.9
605.8
4.1
366.3
190.1
1,897.2
618.3
4.1
370.2
188.9
1,903.7
621.1
4.0
370.9
187.2
1,915.9
625.2
4.0
372.6
186.8
1,928.0
630.0
4.3
372.6
186.0
1,942.3
629.0
4.4
373.1
184.1
1,954.6
631.0
4.2
376.8
183.1
1,966.9
632.7
4.6
378.5
182.8
1,980.0
632.2
4.9
388.3
181.6
1,995.6
636.0
5.5
396.1
180.5
2,006.1
638.7
4.8
397.2
181.2
2,013.3
637.9
4.3
601.7
596.4
5.3
678.9
360.7
38.1
614.2
608.9
5.3
683.6
358.2
43.7
617.1
611.8
5.3
689.2
357.7
44.1
621.3
616.0
5.3
697.4
360.3
42.0
625.8
620.2
5.5
704.1
363.2
38.9
624.6
619.0
5.6
712.1
364.5
42.8'
626.8
621.1
5.6
720.6
365.9r
39.7
628.0
622.6
5.5
730.4
369.3
as.tr
627.3
621.7''
5.5
736.5
374.0r
38.4
630.5
624.9'
5.6'
741.9
375.6
39.7'
634.0
628.5'
5.4
749.8
378.1
633.6
628.3
5.3
756.4
382.4
38.2
30.6
30.1
29.9
29.7
29.0
29.6
28.9
29.5
28.8
30.1
30.3'
30.6
31.2'"
31.1
sur
31.2
31.2r
31.1
32.1'
31.0
33.3
30.5'
33.4
30.3
45.6
8.1
4.8
29.7
44.4
45.3
8.5
4.8
29.7
45.4
44.9
8.0
4.8
29.7
45.8
44.6
8.1
4.9
29.8
45.0
44.3
9.0
4.9
30.0
44.8
43.9
9.1
4.7
30.0
45.2
43.4
9.0
4.5
30.2r
48. l
43.2
9.1
4.3
30.2
47.6'
42.9
8.7
4.3
30.9
49.8'
42.5
9.8
4.0
31.4
51.7'
41.8
9.1'
3.8
31.5
49.6'
40.9
9.5
3.8
31.4
49.3
1. Data have been revised because of benchmarking beginning January 1984 .
These data also appear in the Board's G.7 (407) release. For address, see inside
front cover.
39.9"
2. Excludes loans to commercial banks in the United States.
3. Includes nonfinancial commercial paper held,
4. United States includes the 50 states and the District of Columbia.
Commercial Banking Institutions
1.24
A17
MAJOR NONDEPOSIT F U N D S OF COMMERCIAL BANKS 1
Monthly averages, billions of dollars
Source
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
205.9
3.0
209.9
226.9
7.7
228.3
229.8r
9.3'
238.C
9.7r
248.4'
lO.O'
251.9
-.1
245.2
3.0
203.9
165.8
38.1
203.0'
164.2
38.8r
210.0
169.2
40.8r
219.3'
179.1
40.1
217.2
175.4
41.8
220.5
178.2
42.3
228.3
184.9
43.4
238.4
192.0
46.4
243.1
194.4
48.7
242.2
194.9
47.3
217.7
7.2
-19.5
26.7
208.6
217.6'
2.5
-21.9
24.4
230. l r
7.9
-18.3
26.2
224.0
228.6'
-16.4
24.5
8.9'
-15.5
24.4'
234.0'
10.7'
-14.2
241.5'
9.7'
-14.8
24.5'
247.6
9.8
-15.2
25.0
238.2
5.5
-19.0
24.6
222.2
168.1
215.0
173.8
180.5
215.9
173.5
219.7
177.7
223.3
180.7
231.8
187.2
237.8
192.7
232.7
187.8
167.5
3.5
39.6
163.8
4.3
39.6
170.1
3.7
41.2
177.0
3.4
41.7
170.8
2.7
42.4
175.1
178.1
2.6
42.6
184.8
2.4
44.7
190.7
2.6
42.0
45.0
185.3
2.5
44.9
440.3
440.2
446.7
448.2
452.7
450.6
456.8
455.5
458.8
457.3
461.6
458.8
460.4
461.2
458.0
460.1
459.4'
461.1'
461.4
462.9
460.1
461.1
20.3
25.9
20.3
20.9
27.1
34.3
27.4
26.2
22.7
23.0
22.9
15.8
19.9
20.4
14.7
21.3
19.6
Jan.
Seasonally adjusted
—
1 Total nondeposit funds
2 Net balances due to related foreign offices —
3 Borrowings from other than commercial banks
in United States
4
Domestically chartered banks
5 Foreign-related banks
Not seasonally adjusted
6 Total nondeposit funds
7 Net balances due to related foreign offices —
8 Domestically chartered banks
9 Foreign-related banks
10 Borrowings from other than commercial banks
in United States4
11 Domestically chartered banks
12
Federal funds and security RP
borrowings
13
Other6
14 Foreign-related banks6
Feb.
208.2
8.2
211.3
10.7
212.1
200.0
163.0
37.0
200.6
161.3
39.3
207.4
7.9
-20.2
28.1
216.1
10.5
-17.6
28.1
199.5
161.3
205.7
165.1
210.6
207.7
170.9
157.9
3.4
38.1
161.9
3.2
40.6
434.9
434.5
20.3
25.0
8.2
.9
-22.8
23.7
11.1
8.1
24^
2.0
MEMO
Gross large time deposits
Seasonally adjusted
Not seasonally adjusted
U.S. Treasury demand balances at commercial
banks8
17 Seasonally adjusted
18 Not seasonally adjusted
15
16
18.1
1. Commercial banks are those in the 50 states and the District of Columbia
with national or state charters plus agencies and branches of foreign banks, New
York investment companies majority owned by foreign banks, and Edge Act
corporations owned by domestically chartered and foreign banks.
Tliese data also appear in the Board's G.10 (411) release. For address, see
inside front cover.
2. Includes federal funds, RPs, and other borrowing from nonbanks and net
balances due to related foreign offices.
3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and
U.S. branches and agencies of foreign banks with related foreign offices plus net
positions with own IBFs.
20.2
23.8
24.8'
20.6
4. Other borrowings are borrowings through any instrument, such as a promissory note or due bill, given for the purpose of borrowing money for the banking
business. This includes borrowings from Federal Reserve Banks and from foreign
banks, term federal funds, loan RPs, and sales of participations in pooled loans.
5. Based on daily average data reported weekly by approximately 120 large
banks and quarterly or annual data reported by other banks.
6. Figures are partly daily averages and partly averages of Wednesday data.
7. Time deposits in denominations of $100,000 or more. Estimated averages of
daily data.
8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at commercial banks. Averages of daily data.
A18
1.25
DomesticNonfinancialStatistics • March 1990
ASSETS A N D LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS
Billions of dollars
Last-Wednesday-of-Month Series 1
1989
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
2,624.0
535.8
351.3
184.5
20.1
2,068.0
173.2
1,894.9
617.6
684.1
358.3
234.8
2,627.1
539.1
355.5
183.6
21.8
2,066.2
154.9
1,911.3
622.9
692.6
358.1
237.7
2,623.0
538.3
356.6
181.7
17.8
2,066.8
150.7
1,916.2
627.3
699.4
361.8
227.7
2,659.8
541.1
359.1
182.0
19.2
2,099.5
160.5
1,939.0
631.1
706.7
363.8
237.4
2,660.7
541.6
362.2
179.4
18.2
2,100.9
155.0
1,945.9
628.3
715.1
366.0
236.6
2,677.1
538.3
360.3
178.1
19.8
2,119.0
162.4
1,956.6
635.3
722.8
366.2
232.3
2,692.5
542.8
365.3
177.5
18.7
2,131.0
162.9
1,968.1
631.9
733.9
371.4
231.0
2,695.7
542.4
366.4
176.1
18.3
2,135.0
158.0
1,977.1
630.3
737.5
375.5
233.7
2,728.1
545.4
370.8
174.6
26.6
2,156.1
164.2
1,992.0
634.9
743.2
376.1
237.8
2,764.7
549.5
375.8
173.7
27.6
2,187.6
179.9
2,007.8
638.7
752.0
378.8
238.2
2,771.0
550.4
375.7
174.7
23.4
2,197.2
181.9
2,015.3
639.4
757.7
384.5
233.8
227.4
27.7
26.6
89.1
211.5
30.9
26.8
75.9
215.8
33.4
26.9
78.8
248.3
27.8
27.9
107.6
214.2
27.9
27.6
78.7
211.7
30.6
27.4
75.2
212.0
28.7
28.5
77.4
219.6
31.7
28.0
82.6
213.0
28.0
27.9
77.5
234.8
38.7
30.7
84.1
259.3
42.8
31.6
98.8
33.3
50.7
28.8
49.0
28.5
48.3
34.9
50.2
29.6
50.5
28.8
49.7
29.7
47.7
29.0
48.3
28.8
50.7
28.9
52.3
32.5
53.7
ALL COMMERCIAL BANKING
INSTITUTIONS2
1 Loans and securities
2 Investment securities
3
U.S. government securities
4
Other
5
Trading account assets
6 Total loans
7
Interbank loans
8
Loans excluding interbank
9
Commercial and industrial
10
Real estate
11
Individual
12
All other
13 Total cash assets
14 Reserves with Federal Reserve Banks.
15 Cash in vault
16 Cash items in process of collection . . .
17 Demand balances at U.S. depository
institutions
18 Other cash assets
19 Other assets
191.4
194.1
200.7
206.8
198.7
201.1
199.6
203.9
203.8
201.9
208.2
20 Total assets/total liabilities and capital....
3,042.8
3,032.7
3,039.5
3,114.9
3,073.6
3,090.0
3,104.0
3,119.3
3,144.9
3,201.3
3,238.6
21 Deposits
22 Transaction deposits
23 Savings deposits
24 Time deposits
25 Borrowings
26 Other liabilities
21Residual (assets less liabilities)
2,125.2
602.6
527.3
995.3
502.9
216.5
198.2
2,123.7
583.2
523.2
1,017.3
483.6
223.9
201.4
2,134.2
594.5
512.0
1,027.6
486.7
217.4
201.2
2,182.6
628.5
509.7
1,044.3
510.6
218.6
203.2
2,138.2
580.5
507.4
1,050.2
512.7
218.4
204.4
2,152.0
579.4
514.0
1,058.6
510.2
223.1
204.7
2,166.6
583.4
518.9
1,064.4
504.6
226.3
206.5
2,175.3
588.5
520.7
1,066.1
516.5
221.4
206.1
2,194.2
588.0
527.6
1,078.6
526.5
222.4
201.9
2,221.1
602.5
537.6
1,081.0
542.2
235.2
202.9
2,265.1
643.3
540.3
1,081.5
530.6
239.1
203.8
366.2
372.1
369.5
372.3
374.4
373.5
377.5
378.5
390.4
396.2
392.2
189.7
188.8
186.6
188.0
185.4
184.6
184.0
182.3
181.6
180.9
181.6
2,405.9
509.0
338.1
171.0
20.1
1,876.8
138.9
1,737.8
503.4
661.7
358.0
214.7
2,407.8
513.1
342.7
170.4
21.8
1,872.8
122.3
1,750.5
506.1
669.8
357.7
216.9
2,407.8
513.8
344.1
169.7
17.8
1,876.2
120.2
1,756.0
511.3
676.0
361.4
207.3
2,446.0
516.1
345.9
170.2
19.2
1,910.6
131.5
1,779.2
515.5
683.2
363.5
217.0
2,439.9
517.3
349.5
167.8
18.2
1,904.5
119.3
1,785.1
511.6
691.6
365.6
216.3
2,452.1
514.2
347.8
166.5
19.8
1,918.1
126.4
1,791.7
515.6
698.2
365.8
212.0
2,467.6
519.4
353.5
165.9
18.7
1,929.4
127.0
1,802.5
512.8
708.7
371.1
209.9
2,473.6
519.0
354.5
164.5
18.3
1,936.3
125.1
1,811.2
510.4
712.2
375.2
213.5
2,506.5
521.6
358.7
162.9
26.6
1,958.3
134.9
1,823.5
514.2
717.1
375.8
216.4
2,526.4
523.0
362.1
160.9
27.6
1,975.8
142.1
1,833.7
515.3
724.4
378.5
215.5
2,535.9
524.3
363.3
161.0
23.4
1,988.3
145.8
1,842.5
515.9
729.7
384.2
212.7
206.4
26.6
26.6
88.1
191.4
29.5
26.8
75.1
195.3
30.7
26.8
77.9
227.0
26.7
27.9
106.6
192.3
26.6
27.6
77.7
190.1
29.6
27.4
74.4
191.7
27.0
28.5
76.5
197.6
29.5
28.0
81.3
191.5
26.3
27.9
76.3
209.5
37.9
30.7
82.2
235.0
41.7
31.5
97.4
31.2
33.9
26.6
33.4
26.8
33.1
32.9
33.0
27.5
32.9
27.0
31.7
28.0
31.7
27.3
31.6
26.9
34.2
27.0
31.7
30.7
33.6
MEMO
28 U.S. government securities (including
trading account)
29 Other securities (including trading
account)
DOMESTICALLY CHARTERED
COMMERCIAL BANKS3
30 Loans and securities
31 Investment securities
32
U.S. government securities
33
Other
34 Trading account assets
35 Total loans
36
Interbank loans
3/
Loans excluding interbank
38
Commercial and industrial
39
Real estate
40
Individual
41
All other
42 Total cash assets
43 Reserves with Federal Reserve Banks.
44 Cash in vault
45 Cash items in process of collection . . .
46 Demand balances at U.S. depository
institutions
47 Other cash assets
48 Other assets
129.6
130.6
134.6
133.6
131.6
128.4
127.5
131.5
126.3
132.2
136.0
49 Total assets/liabilities and capital
2,741.8
2,729.9
2,737.7
2,806.6
2,763.9
2,770.6
2,786.7
2,802.8
2,824.3
2,868.2
2,906.9
50
51
52
53
54
55
56
2,052.7
593.5
524.8
934.4
378.7
115.8
194.6
2,047.4
574.1
520.7
952.6
362.8
121.7
197.9
2,056.2
584.8
509.4
961.9
368.2
115.6
197.7
2,103.0
618.7
507.1
977.2
383.0
120.9
199.7
2,058.8
571.2
504.8
982.9
387.3
116.9
200.8
2,071.3
570.2
511.3
989.9
380.2
117.8
201.2
2,086.9
574.7
516.2
995.9
375.5
121.3
203.0
2,094.5
578.8
517.9
997.7
390.8
114.9
202.6
2,112.4
578.4
525.0
1,009.0
393.2
120.4
198.4
2,139.2
592.7
534.8
1,011.6
404.4
125.2
199.4
2,182.3
633.2
537.5
1,011.7
398.3
125.9
200.3
41.7
620.0
42.5
627.3
43.4
632.6
44.3
638.9
45.3
646.2
45.7
652.5
46.4
662.3
47.1
665.0
47.9
669.2
48.5
676.0
49.1
680.6
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
MEMO
57 Real estate loans, revolving
58 Real estate loans, other
1. Back data are available from the Banking and Monetary Statistics section,
Board of Governors of the Federal Reserve System, Washington, D.C., 20551.
These data also appear in the Board's weekly H.8 (510) release.
Figures are partly estimated. They include all bank-premises subsidiaries and
other significant majority-owned domestic subsidiaries. Loan and securities data
for domestically chartered commercial banks are estimates for the last Wednesday of the month based on a sample of weekly reporting banks and quarter-end
condition report data. Data for other banking institutions are estimates made for
the last Wednesday of the month based on a weekly reporting sample of
foreign-related institutions and quarter-end condition reports.
2. Commercial banking institutions include insured domestically chartered
commercial banks, branches and agencies of foreign banks, Edge Act and
Agreement corporations, and New York State foreign investment corporations.
3. Insured domestically chartered commercial banks include all member banks
and insured nonmember banks.
Weekly Reporting Commercial Banks
1.26
A19
ASSETS A N D LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS 1
Millions of dollars, Wednesday figures
1989
Account
Nov. V
1 Cash and balances due from depository institutions
2 Total loans, leases, and securities, net
3 U.S. Treasury and government agency
4
Trading account
Investment account
5
Mortgage-backed securities
6
R
Nov. 8
R
Nov. 15
130,647
109,220
117,955
1,274,536
1,245,950
1,265,997
Nov. 22
111,966'
Nov. 29
Dec. 13
Dec. 20
Dec. 27
113,198
115,176
123,602
139,112
1,250,240
1,257,325
1,258,300
1,258,888
1,251,465
R
1,250,175
120,195'
Dec. 6
159,975
21,235
138,740
69,066
160,544
21,716
138,828
69,219
163,222
23,416
139,806
70,775
162,577
22,109
140,468'
71,209'
161,329'
20,406
140,923'
71,483'
164,458
22,782
141,677
71,836
164,785
22,685
142,101
72,131
160,736
19,700
141,036
72,163
156,540
16,554
139,986
71,822
7
One year or less
8
Over one through five years
9
Over five years
10 Other securities
11
Trading account
Investment account
12
13
States and political subdivisions, by maturity
14
One year or less
Over one year
15
16
Other bonds, corporate stocks, and securities
17 Other trading account assets
19,880
35,237
14,556
67,141
913
66,229
39,125
4,850
34,275
27,104
6,148
19,744
35,431
14,433
66,817
900
65,918
38,800
4,943
33,857
27,118
6,118
19,342
35,401
14,288
66,971
1,064
65,907
38,628
4,932
33,696
27,278
6,066
19,307
35,649'
14,303'
66,658'
1,032
65,626'
38,525
4,947
33,578
27,101'
6,046
19,189
35,644'
14,606'
66,556'
1,182
65,374'
38,395
4,948
33,447
26,979'
5,982
19,929
34,763
15,148
66,693
1,087
65,605
38,036
5,017
33,018
27,570
6,265
20,406
34,526
15,038
66,737
1,078
65,658
37,790
4,963
32,827
27,868
6,001
19,949
34,238
14,686
66,591
1,253
65,338
37,406
4,919
32,487
27,932
5,866
19,846
33,868
14,450
66,646
1,276
65,370
37,332
4,876
32,456
28,038
5,570
18 Federal funds sold4
19
To commercial banks
20
To nonbank brokers and dealers in securities
21
To others
22 Other loans and leases, gross
23
Other loans, gross
24
Commercial and industrial
25
Bankers acceptances and commercial paper
26
All other
27
U.S. addressees
28
Non-U.S. addressees
88,666
62,061
16,978
9,628
995,523
969,371
320,642
1,816
318,827
317,000
1,827
70,289
46,908
16,444
6,937
985,228
959,125
318,275
1,798
316,477
314,720
1,757
81,758
57,063
16,603
8,092
991,078
964,936
320,301
1,721
318,579
316,681
1,898
66,208
43,944'
15,875'
6,389
991,82c
965,614'
320,156'
1,721
318,435'
316,685'
1,750'
67,784
46,306'
15,090'
6,389'
991,549
965,323
319,046'
1,520
317,526'
315,771'
1,754'
71,574
48,399
15,341
7,834
991,529
965,642
317,973
1,495
316,477
314,724
1,753
70,838
49,069
14,731
7,037
993,296
967,382
318,337
1,410
316,926
315,152
1,774
72,093
51,964
13,552
6,576
996,866
970,873
320,047
1,404
318,643
316,916
1,727
69,681
50,681
13,577
5,422
995,794
969,625
318,783
1,404
317,379
315,573
1,806
Real estate loans
347,332
Revolving, home equity
26,491
All other
320,841
174,030
To individuals for personal expenditures
51,068
To depository and financial institutions
Commercial banks in the United States
23,049
Banks in foreign countries
5,168
Nonbank depository and otherfinancialinstitutions ..
22,851
17,319
For purchasing and carrying securities
5,559
To finance agricultural production
25,935
To states and political subdivisions
1,459
To foreign governments and official institutions
26,026
All other
Lease financing receivables
26,152
4,863
LESS: Unearned income
38,054
Loan and lease reserve
952,606
Other loans and leases, net
134,716
All other assets
1,539,899
Total assets
247,426
Demand deposits
193,984
Individuals, partnerships, and corporations
7,122
States and political subdivisions
1,582
U.S. government
Depository institutions in the United States
26,572
Banks in foreign countries
7,138
738
Foreign governments and official institutions
Certified and officers' checks
10,290
77,424
Transaction balances other than demand deposits
702,216
Nontransaction balances
664,376
Individuals, partnerships, and corporations
29,252
States and political subdivisions
945
U.S. government
7,039
Depository institutions in the United States
604
Foreign governments, official institutions, and banks ..
323,954
Liabilities for borrowed money
0
Borrowings from Federal Reserve Banks
24,403
Treasury tax-and-loan notes
299,552
All other liabilities for borrowed money
90,466
Other liabilities and subordinated notes and debentures ..
1,441,486
Total liabilities
98,413
Residual (total assets minus total liabilities)7
348,200
26,542
321,658
174,049
48,618
21,194
4,660
22,764
15,137
5,511
25,836
1,481
22,017
26,103
4,886
38,161
942,181
135,227
348,900
26,653
322,247
174,713
49,315
22,137
4,691
22,487
16,006
5,521
25,548
1,483
23,148
26,142
4,890
38,208
947,980
138,016
349,330'
26,734
322,596'
174,802
49,542'
22,798
4,549'
22,195
16,356
5,449
25,429
1,388
23,163'
26,206
4,941
38,194
948,685'
132,920'
350,282
26,816
323,466
175,401
48,921'
21,591'
4,458'
22,872
15,760
5,402
25,389
1,414
23,708'
26,226
4,912
38,050
948,588
133,365'
352,077
26,908
325,169
175,594
49,119
21,490
4,615
23,014
15,286
5,355
25,210
1,340
23,688
25,887
4,813
38,381
948,336
135,449
353,080
27,035
326,046
176,721
48,480
21,140
4,368
22,972
16,852
5,398
24,996
1,364
22,153
25,913
4,817
38,539
949,940
136,581
353,327
27,222
326,105
177,262
47,948
20,633
4,876
22,439
17,110
5,379
24,919
1,452
23,428
25,993
4,784
38,480
953,602
136,322
352,524
27,271
325,253
177,825
47,572
20,813
4,430
22,329
16,261
5,452
24,856
1,415
24,936
26,169
4,762
38,004
953,027
135,528
1,505,973
1,510,058
1,518,812
1,526,105
227,177
182,551
5,998
2,675
20,475
6,304
606
8,567
79,918
706,637
668,841
29,273
898
7,061
563
306,167
0
7,786
298,381
87,003
228,103
185,306
5,944
1,446
20,199
5,982
878
8,349
78,322
706,401
668,522
29,298
900
7,128
554
306,043
25
7,360
298,658
92,012
247,131
191,286
7,450
5,099
22,542
8,196
11,929
79,232
702,865
665,733
28,424
886
7,289
533
299,242
0
17,626
281,616
91,000
247,985
197,147
7,245
1,853
23,729
6,844
681
10,485
79,264
704,033
666,359
28,968
886
7,241
579
302,906
1,943
15,064
285,899
92,732
1,404,928
1,406,901
1,410,881
1,419,470
1,426,920
98,871
99,072
99,176
99,342
99,185
1,230,630
993,214
217,753
18,496
536
233
304
268,157
1,231,448
993,925
217,113
19,039
536
232
304
268,617
1,229,554
996,361
215,307
17,882
524
229
295
266,828
1,222,737
993,980
214,664
17,257
532
235
297
268,435
All other maturing in
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
1,490,398
222,095
177,368
5,244
3,227
20,374
6,068
621
9,192
77,648
702,174
664,443
29,202
948
6,963
617
302,262
0
2,520
299,742
87,779
1,391,958
1,521,968 1,495,062' 1,503,799
243,064
193,079
6,632
4,266
23,788
6,050
592
8,655
77,533
705,266
667,394
29,462
945
6,886
579
309,420
1,150
3,244
305,026
88,427
227,363
181,649
6,925
3,212
20,081
6,583
781
8,131
76,872
703,451
665,702
29,332'
952'
6,890
574
298,644'
0
7,613
291,030'
89,939'
1,423,710 1,396,268
98,439
98,258
98,794'
1,220,896
987,416
218,747
18,288
1,523
1,221
302
264,325
1,229,895
993,636
218,339
17,957
1,126
825
301
266,525
1,226,568'
991,286'
218,219
17,594
829
525
304
265,355
223,373
178,974
5,623
1,793
21,049
6,250
618
9,066
76,012
703,876
665,914'
29,409'
948'
7,037
569
310,423'
899
9,610'
299,914'
91,243'
628
MEMO
70
71
72
73
74
75
76
77
Total loans and leases (gross) and investments adjusted . 1,232,344
999,080
Total loans and leases (gross) adjusted
218,072
Time deposits in amounts of $100,000 or more
18,413
U.S. Treasury securities maturing in one year or less
1,526
Loans sold outright to affiliates—total
1,226
Commercial and industrial
300
Other
264,644
Nontransaction savings deposits (including MMDAs)
1. Beginning Jan. 6, 1988, the "Large bank" reporting group was revised
somewhat, eliminating some former reporters with less than $2 billion of assets
and adding some new reporters with assets greater than $3 billion.
2. For adjustment bank data see this table in the March 1989 Bulletin. The
adjustment data for 1988 should be added to the reported data for 1988 to establish
comparability with data reported for 1989.
3. Includes U.S. government-issued or guaranteed certificates of participation
in pools of residential mortgages.
4. Includes securities purchased under agreements to resell.
5. Includes allocated transfer risk reserve.
1,225,304'
991,437'
217,748
17,100
536
231
305
265,832
6. Includes federal funds purchased and securities sold under agreements to
repurchase; for information on these liabilities at banks with assets of $1 billion or
more on Dec. 31, 1977, see table 1.13.
7. This is not a measure of equity capital for use in capital-adequacy analysis or
for other analytic uses.
8. Exclusive of loans and federal funds transactions with domestic commercial
banks.
9. Loans sold are those sold outright to a bank's own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank's holding company (if
not a bank), and nonconsolidated nonbank subsidiaries of the holding company.
A20
1.28
DomesticNonfinancialStatistics • March 1990
ASSETS A N D LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL B A N K S
IN NEW YORK CITY 1
Millions of dollars, Wednesday figures
1989
Account
Nov. 1
1 Cash balances due from depository institutions
2 Total loans, leases, and securities, net2
Securities
3 U.S. Treasury and government agency
4 Trading account3
5 Investment account
6 Mortgage-backed securities
All other maturing in
7
One year or less
8
Over one through five years
9
Over five years
10 Other securities
11 Trading account3
12 Investment account
13
States and political subdivisions, by maturity
14
One year or less
15
Over one year
16
Other bonds, corporate stocks, and securities
17 Other trading account assets
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Loans and leases
Federal funds sold5
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
Revolving, home equity
All other
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans ancLleases, net
All other assets
47 Total assets
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
(ATS, NOW, Super NOW, telephone transfers)
Nontransaction balances
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions, and banks
Liabilities for borrowed money
Borrowings from Federal Reserve Banks
Treasury tax-and-loan notes
All other liabilities for borrowed money8
Other liabilities and subordinated notes and debentures
68 Total liabilities
69 Residual (total assets minus total liabilities)9
Nov. 8
Nov. 15
Nov. 22
Nov. 29
Dec. 6
Dec. 13
Dec. 20
Dec. 27
34,938
25,318
24,768
21,833
28,750
22,921
21,572
28,238
36,663
222,339
207,756
220,795
209,742
212,537
209,462
214,997
210,684
207,786
0
0
15,927
8,442
0
0
15,890
8,447
0
0
15,718
8,376
0
0
16,173
8,627
0
0
16,100
8,534
0
0
16,141
8,588
0
0
16,043
8,464
0
0
15,969
8,402
0
0
15,848
8,242
2,836
3,180r
l ^
0
0
15,312
8,403
1,061
7,343
6,908
0
2,844
3,209'
1,389'
0
0
15,032
8,120
1,046
7,074
6,912
0
2,849
3,111'
1,381'
0
0
15,092
8,057
1,051
7,006
7,035
0
2,858
3,342'
1,346'
0
0
15,056
8,020
1,052
6,969
7,036
0
2,831
3,242'
1,494'
0
0
14,846
7,988
1,049
6,940
6,858
0
2,792
3,236
1,525
0
0
14,873
7,893
1,052
6,841
6,980
0
2,813
3,240
1,525
0
0
14,900
7,867
1,055
6,812
7,033
0
2,816
3,289
1,462
0
0
14,805
7,837
1,053
6,783
6,968
0
2,774
3,330
1,500
0
0
14,830
7,833
1,047
6,786
6,997
0
25,543
13,429
6,296
5,818
185,571
179,860
61,631
165
61,466
60,764
702
59,768
3,798
55,970
20,055
19,624
8,082
3,777
7,765
7,069
122
5,969
384
5,238
5,711
1,738
18,275
165,558
60,546
17,730
9,001
4,919
3,811
179,133
173,458
60,418
160
60,259
59,620
639
59,939
3,809
56,130
20,139
16,926
5,901
3,357
7,668
5,516
114
5,961
412
4,032
5,676
1,759
18,271
159,103
61,507
27,450
16,294
6,104
5,052
182,583
176,911
61,406
151
61,255
60,473
782
59,925
3,810
56,115
20,150
18,481
7,380
3,382
7,720
6,366
113
5,695
425
4,350
5,672
1,757
18,290
162,536
62,540
16,640
8,473
5,077
3,089
181,982
176,269
60,506
136
60,371
59,795
576
60,099
3,828
56,270
20,168
18,256
7,391
3,239
7,626
6,857
102
5,565
339
4,377
5,714
1,820
18,290
161,873
59,368
19,788
12,046
4,600
3,143
181,873
176,168
60,040
131
59,909
59,332
578
60,309
3,835
56,474
20,148
18,188
6,954
3,127
8,108
6,404
103
5,555
382
5,037
5,705
1,791
18,280
161,802
59,680
17,344
8,310
4,922
4,113
181,205
175,510
59,781
122
59,659
59,056
603
61,332
3,840
57,492
19,975
18,596
7,166
3,200
8,230
5,425
103
5,515
316
4,465
5,695
1,801
18,301
161,103
61,547
20,548
12,041
5,098
3,409
183,655
177,917
60,455
116
60,339
59,724
616
61,563
3,852
57,711
19,969
18,479
7,259
3,006
8,214
6,841
111
5,350
346
4,803
5,739
1,807
18,343
163,506
61,204
17,304
10,169
4,154
2,981
182,749
177,023
60,379
134
60,245
59,635
609
61,303
3,864
57,439
19,967
18,066
6,797
3,536
7,733
6,298
113
5,340
405
5,154
5,726
1,808
18,336
162,606
59,750
16,289
10,381
3,339
2,569
180,812
175,068
58,571
125
58,445
57,838
607
60,850
3,841
57,009
20,046
18,098
7,446
3,026
7,625
6,150
113
5,349
384
5,509
5,744
1,801
18,192
160,819
61,849
317,824
294,581
308,103
290,943
300,966
293,930
297,773
298,672
306,298
61,956
41,668
956
170
8,798
5,849
554
3,962
51,659
35,810
582
626
5,028
4,941
458
4,213
56,515
40,130
965
715
6,800
4,675
453
2,777
50,289
35,858
635
604
4,114
5,413
646
3,018
50,743
34,999
493
326
5,920
4,944
468
3,593
48,644
34,518
584
448
4,451
5,037
479
3,127
50,476
36,648
547
168
4,458
4,799
740
3,114
59,194
39,192
953
1,004
5,424
6,708
392
5,521
55,232
38,291
810
270
5,432
5,547
541
4,340
8,255
115,441
105,718
7,388
29
2,034
271
75,784
0
5,684
70,100
32,327
8,305
113,697
104,048
7,274
29
2,074
273
67,473
0
422
67,050
29,333
8,361
116,677
106,976
7,353
30
2,062
256
72,910
1,150
604
71,157
29,622
8,252
115,318
105,704
7,281
29
2,051
252
62,029
0
1,465
60,564
30,619
8,205
115,313
105,701
7,292
29
2,041
249
69,940
883
1,878
67,179
32,460
8,560
116,075
106,650
7,117
30
2,041
238
68,108
0
1,594
66,515
28,037
8,505
115,658
106,374
7,040
29
1,980
234
67,054
0
1,541
65,514
31,589
8,675
116,117
107,067
6,819
27
1,976
228
61,462
0
4,664
56,798
28,929
8,701
115,660
106,870
6,691
26
1,833
240
71,691
1,680
3,831
66,180
30,930
293,763
270,467
284,085
266,507
276,662
269,425
273,282
274,377
282,214
24,060
24,114
24,018
24,436
24,305
24,505
24,491
24,295
24,084
220,842
189,604
42,444
3,353
212,884
181,962
41,933
3,005
217,169
186,359
42,576
2,904
213,987
182,758
41,804
2,990
213,608
182,662
41,576
2,970
214,087
183,073
41,740
3,066
215,846
184,904
41,535
3,084
213,862
183,087
41,798
3,118
209,952
179,274
41,103
3,240
MEMO
70
71
72
73
Total loans and leases (gross) and investments adjusted2'10
Total loans and leases (gross) adjusted
Time deposits in amounts of $100,000 or more
U.S. Treasury securities maturing in one year or less
1. These data also appear in the Board's H.4.2 (504) release. For address, see
inside front cover.
2. Excludes trading account securities.
3. Not available due to confidentiality.
4. Includes U.S. government-issued or guaranteed certificates of participation
in pools of residential mortgages.
5. Includes securities purchased under agreements to resell.
FRASER allocated transfer risk reserve.
6. Includes
Digitized for
7. Includes trading account securities.
8. Includes federal funds purchased and securities sold under agreements to
repurchase.
9. Not a measure of equity capital for use in capital adequacy analysis or for
other analytic uses.
10 Exclusive of loans and federal funds transactions with domestic commercial banks.
Weekly Reporting Commercial Banks
1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS 1
Liabilities
Millions of dollars, Wednesday figures
A21
Assets and
1989
Account
Nov. 1
38
39
40
41
Cash and due from depository institutions . . .
Total loans and securities
U.S. Treasury and government agency
securities
Other securities
Federal funds sold
To commercial banks in the United States .
To others
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial
paper
All other
U.S. addressees
Non-U.S. addressees
Loans secured by real estate
Tofinancialinstitutions
Commercial banks in the United States..
Banks in foreign countries
Nonbank financial institutions
To foreign governments and official
institutions
For purchasing and carrying securities
All other3
Other assets (claims on nonrelated parties) ..
Net due from related institutions
Total assets
Deposits or credit balances due to other
than directly related institutions
Transaction accounts and credit balances .
Individuals, partnerships, and
corporations
Other
Nontransaction accounts
Individuals, partnerships, and
corporations
Other
Borrowings from other than directly
related institutions
Federal funds purchased6
From commercial banks in the
United States
From others
Other liabilities for borrowed money
To commercial banks in the
United States
To others
Other liabilities to nonrelated parties
Net due to related institutions
Total liabilities
42
43
Total loans (gross) and securities adjusted ..
Total loans (gross) adjusted
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Nov. 8
Nov. 15
Nov. 22
Nov. 29'
Dec. 6
Dec. 13
Dec. 20
Dec. 27
12,734
137,835'
12,083'
139,655
12,983
140,684
12,064
141,024
13,482
146,884
12,161
142,824
12,958
143,456
13,008
143,263
13,410
144,880
8,167
6,159
4,441
3,049
1,392
119,068''
74,366
8,237
6,204
5,321
3,985
1,336
119,893
75,074
8,268
6,347
4,996
3,338
1,658
121,073
74,987
8,367
6,423
4,865
3,349
1,516
121,369
75,917
8,997
6,577
8,219
6,567
1,652
123,091
75,345
8,922
6,637
4,984
3,233
1,751
122,281
74,487
9,054
6,672
6,182
4,293
1,889
121,548
73,952
8,380
6,810
4,857
3,532
1,325
123,216
75,238
8,266
6,925
6,956
5,745
1,211
122,733
75,075
2,328
73,589
71,838
1,751
17,643
23,366
17,507'
1,330'
4,529
2,399
72,946
71,263
1,683
18,077
24,399
18,262
1,552
4,585
2,050
72,437
70,762
1,675
18,226
24,869
18,487
1,803
4,579
2,062
71,890
70,244
1,646
18,206
24,441
18,082
1,779
4,580
2,065
73,173
71,492
1,681
18,244
24,826
18,348
1,636
4,842
2,054
73,021
71,318
1,703
18,553
24,542
18,388
1,415
4,739
2,329
72,037
70,117
1,920
17,426
22,63 l r
16,981'
1,398'
4,252
2,129
72,945
71,196
1,749
17,379
23,280
16,881'
1,508'
4,891
2,032
72,955
71,224
1,731
17,753
23,168
17,326'
1,311'
4,531
489
1,627
2,529
36,183
20,307
207,059
374
1,472
2,314
36,499'
15,348
203,584
373
2,306
2,486
36,571
16,029
206,268
384
1,722
2,337
36,570'
16,429^
206,087'
382
2,317
2,571
36,761
11,454
208,580
431
2,026
2,242
37,903
13,961
206,852
434
2,206
2,309
38,117
12,517
207,047
402
2,141
2,365
38,122
13,350
207,742
388
1,956
2,219
37,250
12,124
207,665
51,313
4,483
50,944
3,772
52,887
4,918
50,359
3,757
49,927
4,204
49,684
3,735
50,906
4,292
50,992
4,241
50,180
4,047
2,531
1,952
46,830
2,250
1,522
47,172
2,635
2,283
47,969
2,661
1,096
46,602
2,439
1,765
45,723
2,509
1,226
45,949
2,514
1,778
46,614
2,612
1,629
46,751
2,632
1,415
46,133
38,998'
7,832'
39,006'
8,166'
39,184
8,785
38,828
7,774
38,584
7,139
38,311
7,638
38,334
8,280
38,961
7,790
38,816
7,317
96,525
46,988
90,730
40,454
92,556
42,500
92,251
37,192
90,291
38,907
92,244
39,896
88,366
35,839
92,845
41,464
86,771
34,624
25,390
21,598
49,537
21,168
19,286
50,276
25,151
17,349
50,056
18,392
18,800
55,059
19,041
19,866
51,384
21,010
18,886
52,348
18,551
17,288
52,527
23,606
17,858
51,381
16,521
18,103
52,147
32,411
17,126
36,260
22,962
207,059
32,698
17,578
36,141
25,769
203,584
32,588
17,468
37,070
23,754
206,268
35,040
20,019
37,114
26,361'
206,087'
33,158
18,226
36,552
31,808
208,580
33,718
18,630
37,386
27,537
206,852
33,508
19,019
38,052
29,722
207,047
32,250
19,131
37,582
26,323
207,742
33,674
18,473
37,169
33,545
207,665
117,805'
103,479'
118,789'
104,348'
120,020'
105,405'
120,168'
105,378'
122,055
106,481
121,104
105,545
121,081
105,355
121,383
106,193
120,747
105,556
MEMO
1. Effective Jan. 4, 1989, the reporting pane) includes a new group of large U.S.
branches and agencies of foreign banks. Earlier data included 65 U.S. branches
and agencies of foreign banks that included those branches and agencies with
assets of $750 million or more on June 30, 1980, plus those branches and agencies
that had reached the $750 million asset level on Dec. 31, 1984. These data also
appear in the Board's H.4.2 (504) release. For address, see inside front cover.
2. Includes securities purchased under agreements to resell.
3. Effective Jan. 4, 1989, loans secured by real estate are being reported as a
separate component of Other loans, gross. Formerly, these loans were included in
"All other", line 21.
4. Includes credit balances, demand deposits, and other checkable deposits.
5. Includes savings deposits, money market deposit accounts, and time
deposits.
6. Includes securities sold under agreements to repurchase.
7. Exclusive of loans to and federal funds sold to commercial banks in the
United States.
A22
1.31
DomesticNonfinancialStatistics • March 1990
GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1
Billions of dollars, estimated daily-average balances, not seasonally adjusted
Commercial banks
Type of holder
1988
1985
Dec.
1986
Dec.
1987
Dec.
1989
1988
Dec.
Sept.
Dec.
Mar.
June
Sept.
Dec.
1 All holders—Individuals, partnerships, and
corporations
321.0
363.6
343.5
354.7
337.8
354.7
330.4
329.3
337.3
n.a.
2
3
4
5
6
32.3
178.5
85.5
3.5
21.2
41.4
202.0
91.1
3.3
25.8
36.3
191.9
90.0
3.4
21.9
38.6
201.2
88.3
3.7
22.8
34.8
190.3
87.8
3.2
21.7
38.6
201.2
88.3
3.7
22.8
36.3
182.2
87.4
3.7
20.7
33.0
185.9
86.6
2.9
21.0
33.7
190.4
87.9
2.9
22.4
n.a.
n.a.
n.a.
n.a.
n.a.
Financial business
Nonfinancial business
Consumer
Foreign
Other
Weekly reporting banks
1988
1985
Dec.
1986
Dec.
1987
Dec.
1989
1988
Dec.
Sept.
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial business
Nonfinancial business
Consumer
Foreign
Other
Mar.
June
Sept.
Dec.
168.6
195.1
183.8
198.3
185.3
198.3
181.9
182.2
186.6
196.7
25.9
94.5
33.2
3.1
12.0
32.5
106.4
37.5
3.3
15.4
28.6
100.0
39.1
3.3
12.7
30.5
108.7
42.6
3.6
12.9
27.2
101.5
41.8
3.1
11.7
30.5
108.7
42.6
3.6
12.9
27.2
98.6
41.1
3.3
11.7
25.4
99.8
42.4
2.9
11.7
26.3
101.6
43.0
2.8
12.9
27.6
108.8
44.1
3.0
13.2
1. Figures include cash items in process of collection. Estimates of gross
deposits are based on reports supplied by a sample of commercial banks. Types
of depositors in each category are described in the June 1971 Bulletin, p. 466.
Figures may not add to totals because of rounding.
2. Beginning in March 1984, these data reflect a change in the panel of weekly
reporting banks, and are not comparable to earlier data. Estimates in billions of
dollars for December 1983 based on the new weekly reporting panel are: financial
business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other
9.5.
3. Beginning March 1985, financial business deposits and, by implication, total
gross demand deposits have been redefined to exclude demand deposits due to
thrift institutions. Historical data have not been revised. The estimated volume of
such deposits for December 1984 is $5.0 billion at all insured commercial banks
and $3.0 billion at weekly reporting banks.
Dec.
4. Historical data back to March 1985 have been revised to account for
corrections of bank reporting errors. Historical data before March 1985 have not
been revised, and may contain reporting errors. Data for all commercial banks for
March 1985 were revised as follows (in billions of dollars): all holders, - . 3 ;
financial business, - . 8 ; nonfinancial business, - . 4 ; consumer, .9; foreign, .1;
other, - . 1 . Data for weekly reporting banks for March 1985 were revised as
follows (in billions of dollars): all holders, - . 1 ; financial business, - . 7 ; nonfinancial business, - . 5 ; consumer, 1.1; foreign, .1; other, - . 2 .
5. Beginning March 1988, these data reflect a change in the panel of weekly
reporting banks, and are not comparable to earlier data. Estimates in billions of
dollars for December 1987 based on the new weekly reporting panel are: financial
business, 29.4; nonfinancial business, 105.1; consumer, 41.1; foreign, 3.4; other,
13.1.
Financial Markets
A23
1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
1989
1985
Dec.
1984
Dec.
Instrument
1987
Dec.
1986
Dec.
1988
Dec.
June
July
Aug.
Sept.
Oct.'
Nov.
Commercial paper (seasonally adjusted unless noted otherwise)
237,586
2
3
4
5
6
329,991
357,129
455,017
503,445
506,095
516,476
507,090
507,902
n.a.
78,443
101,072
101,958
159,947
167,681
179,354
183,992
179,050
177,713
n.a.
2,035
1,602
2,265
1,428
1,248
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
110,543
135,320
151,820
173,939
192,442
211,020
205,847
208,915
206,521
210,855
n.a.
42,105
70,558
Financial companies'
Dealer-placed paper
Total
Bank-related (not seasonally
adjusted)
Directly placed paper
Total
Bank-related (not seasonally
adjusted)
^
Nonfinancial companies
298,779
56,485
1 All issuers
44,778
85,016
40,860
77,099
43,173
81,232
43,155
102,628
n.a.
124,744
n.a.
121,217
n.a.
125,478
n.a.
123,489
n.a.
121,466
n.a.
n.a.
63,814'"
63,660
63,704
9,526'
8,779'
747'
10,811
9,108
1,703
10,025
8,518
1,507
Bankers dollar acceptances (not seasonally adjusted)6
78,364
11
12
13
70,565
66,631
64,141'
11,197
9,471
1,726
13,423
11,707
1,716
10,943
9,464
1,479
9,086
8,022
1,064
9,442'
8,397'
1,046
9,410'
8,334'
1,076
9,935'
8,874'
1,061
0
937
56,279
0
1,317
50,234
0
965
58,658
0
1,493
56,052
0
1,177
53,521
0
1,026
55,152'
0
1,014
54,615'
0
1,016
53,370
0
1,016
51,833
0
1,034
52,645
17,845
16,305
44,214
Basis
14 Imports into United States
15 Exports from United States
16 All other
8
9
10
64,974
0
671
67,881
Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others
68,413
9,811
8,621
1,191
7 Total
15,147
13,204
40,062
14,670
12,960
37,344
16,483
15,227
38,855
14,984
14,410
37,237
15,093
15,063
33,985r
15,338
15,270
34,980
16,140
14,895
34,729
16,101'
14,304'
33,409'
16,157
14,275
33,228
15,664
14,397
33,643
1. Institutions engaged primarily in activities such as, but not limited to,
commercial savings, and mortgage banking; sales, personal, and mortgage financing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities.
2. Includes all financial company paper sold by dealers in the open market.
3. Beginning January 1989, bank-related series have been discontinued.
4. As reported by financial companies that place their paper directly with
investors.
65,588
65,764
5. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
6. Beginning January 1988, the number of respondents in the bankers acceptance survey were reduced from 155 to 111 institutions—those with $100 million
or more in total acceptances. The new reporting group accounts for over 90
percent of total acceptances activity.
1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per year
Period
Rate
7.75
8.00
8.25
8.75
9.25
9.00
8.75
8.50
9.00
9.50
10.00
10.50
11.00
11.50
11.00
10.50
1987
1988
1989
Average
rate
8.21
9.32
10.87
1987Feb.
Mar.
Apr.
May .
June
July .
Aug.
Sept.
Oct. .
Nov.
Dec.
7.50
7.50
7.50
7.75
8.14
8.25
8.25
8.25
8.70
9.07
8.78
8.75
10.00
NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases.
For address, see inside front cover.
Period
1988—Jan. ...
Feb. ..
Mar. ..
Apr. ..
May ...
June ..
July ..
Aug. ..
Sept. ..
Oct. ...
Nov. ..
Dec. ..
Average
rate
8.75
8.51
8.50
8.50
8.84
9.00
9.29
9.84
10.00
10.00
10.05
10.50
1989—Jan. .
Feb.
Mar.
Apr.
May .
June
July .
Aug.
Sept.
Oct. .
Nov.
Dec.
1990—Jan. .
A24
1.35
DomesticNonfinancialStatistics • March 1990
INTEREST RATES Money and Capital Markets
Averages, percent per year; weekly, monthly and annual figures are averages of business day data unless otherwise noted.
1989
Instrument
1987
1988
1989, week ending
1989
Sept.
Oct.
Nov.
Dec.
Dec. 1
Dec. 8
Dec. 15
Dec. 22
Dec. 29
MONEY MARKET RATES
1 Federal funds1,2
2 Discount window borrowing1,
Commercial paper •
3
1-month
3-month
4
5 6-month
,
Finance paper, directly placed4,
6
1-month
7 3-month
8 6-month
.
Bankers acceptances ,6
9 3-month
10 6-month
Certificates of deposit, secondary market
11
1-month
12 3-month
13 6-month
14 Eurodollar deposits^ 3-month8
U.S. Treasury bills5
Secondary market9
15 3-month
16 6-month
17
1-year
Auction average
18 3-month
19 6-month
20
1-year
6.66
5.66
7.57
6.20
9.21
6.93
9.02
7.00
8.84
7.00
8.55
7.00
8.45
7.00
8.51
7.00
8.52
7.00
8.47
7.00
8.52
7.00
8.38
7.00
6.74
6.82
6.85
7.58
7.66
7.68
9.11
8.99
8.80
8.87
8.70
8.50
8.66
8.53
8.24
8.47
8.35
8.00
8.61
8.29
7.93
8.42
8.25
7.90
8.53
8.24
7.86
8.61
8.31
7.94
8.67
8.33
7.94
8.66
8.31
7.99
6.61
6.54
6.37
7.44
7.38
7.14
8.99
8.72
8.16
8.76
8.35
7.56
8.54
8.29
7.50
8.33
8.07
7.45
8.40
8.01
7.33
8.21
7.97
7.34
8.40
8.00
7.33
8.45
8.01
7.31
8.43
8.01
7.34
8.28
8.00
7.36
6.75
6.78
7.56
7.60
8.87
8.67
8.59
8.37
8.42
8.08
8.21
7.86
8.15
7.78
8.12
7.77
8.10
7.73
8.19
7.81
8.15
7.77
8.16
7.84
6.75
6.87
7.01
7.07
7.59
7.73
7.91
7.85
9.11
9.09
9.08
9.16
8.83
8.78
8.75
8.85
8.62
8.60
8.45
8.67
8.44
8.39
8.21
8.42
8.65
8.32
8.12
8.39
8.43
8.27
8.09
8.25
8.55
8.26
8.04
8.34
8.67
8.35
8.16
8.40
8.72
8.37
8.15
8.48
8.72
8.33
8.16
8.39
5.78
6.03
6.33
6.67
6.91
7.13
8.11
8.03
7.92
7.75
7.74
7.65
7.64
7.62
7.45
7.69
7.49
7.25
7.63
7.42
7.21
7.63
7.43
7.21
7.61
7.35
7.22
7.65
7.40
7.22
7.60
7.42
7.15
7.68
7.56
7.27
5.82
6.05
6.33
6.68
6.92
7.17
8.12
8.04
7.91
7.72
7.74
7.61
7.63
7.61
7.35
7.65
7.46
7.17
7.64
7.45
7.14
7.63
7.45
n.a.
7.55
7.30
n.a.
7.60
7.41
n.a.
7.62
7.43
7.14
7.77
7.64
n.a.
6.77
7.42
7.68
7.94
8.23
8.39
n.a.
8.59
7.65
8.10
8.26
8.47
8.71
8.85
n.a.
8.96
8.53
8.57
8.55
8.50
8.52
8.49
n.a.
8.45
8.22
8.28
8.26
8.17
8.23
8.19
n.a.
8.15
7.99
7.98
8.02
7.97
8.03
8.01
n.a.
8.00
7.77
7.80
7.80
7.81
7.86
7.87
n.a.
7.90
7.72
7.78
7.77
7.75
7.85
7.84
n.a.
7.90
7.73
7.76
7.76
7.77
7.83
7.85
n.a.
7.91
7.73
7.77
7.77
7.74
7.83
7.84
n.a.
7.90
7.73
7.78
7.74
7.72
7.83
7.82
n.a.
7.88
7.66
7.71
7.72
7.69
7.81
7.78
n.a.
7.85
7.80
7.89
7.90
7.88
7.99
7.93
n.a.
7.98
8.64
8.98
8.58
8.31
8.15
8.03
8.02
8.03
8.02
8.00
7.97
8.12
7.14
8.17
7.63
7.36
7.83
7.68
7.00
7.40
7.23
6.97
7.26
7.26
6.93
7.33
7.22
6.77
7.16
7.14
6.72
7.03
6.98
6.67
7.00
7.04
6.61
6.83
7.00
6.73
7.10
6.99
6.76
7.10
6.96
6.76
7.10
6.97
9.91
9.38
9.68
9.99
10.58
10.18
9.71
9.94
10.24
10.83
9.66
9.26
9.46
9.74
10.18
9.41
9.01
9.23
9.51
9.91
9.34
8.92
9.19
9.44
9.81
9.32
8.89
9.14
9.42
9.81
9.30
8.86
9.11
9.39
9.82
9.31
8.88
9.14
9.40
9.83
9.30
8.86
9.11
9.40
9.81
9.29
8.85
9.12
9.38
9.81
9.28
8.85
9.08
9.36
9.82
9.32
8.88
9.14
9.41
9.85
9.96
10.20
9.79
9.55
9.39
9.28
9.36
9.26
9.29
9.33
9.40
9.54
8.37
3.08
9.23
3.64
n.a.
n.a.
8.82
3.29
8.85
3.29
8.73
3.39
8.75
3.33
8.67
3.37
8.69
3.33
8.68
3.29
8.75
3.39
8.75
3.31
CAPITAL MARKET RATES
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
U.S. Treasury notes and bonds11
Constant maturities
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
Composite
Over 10 years (long-term)
State and local notes and bonds
Moody's series
Aaa
Baa
Bond Buyer series15
Corporate bonds
Seasoned issues
All industries
Aaa
Aa
A
Baa
A-rated, recently offered utility
bonds17
MEMO: Dividend/price ratio18
39 Preferred stocks
40 Common stocks
1. Weekly, monthly and annual figures are averages of all calendar days,
where the rate for a weekend or holiday is taken to be the rate prevailing on the
preceding business day. The daily rate is the average of the rates on a given day
weighted by the volume of transactions at these rates.
2. Weekly figures are averages for statement week ending Wednesday.
3. Rate for the Federal Reserve Bank of New York.
4. Unweighted average of offering rates quoted by at least five dealers (in the
case of commercial paper), or finance companies (in the case of finance paper).
Before November 1979, maturities for data shown are 30-59 days, 90-119 days,
and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and
150-179 days for finance paper.
5. Yields are quoted on a bank-discount basis, rather than in an investment
yield basis (which would give a higher figure).
6. Dealer closing offered rates for top-rated banks. Most representative rate
(which may be, but need not be, the average of the rates quoted by the dealers).
7. Unweighted average of offered rates quoted by at least five dealers early in
the day.
8. Calendar week average. For indication purposes only.
9. Unweighted average of closing bid rates quoted by at least five dealers.
10. Rates are recorded in the week in which bills are issued. Beginning with the
Treasury bill auction held on Apr. 18, 1983, bidders were required to state the
percentage yield (on a bank discount basis) that they would accept to two decimal
places. Thus, average issuing rates in bill auctions will be reported using two
rather than three decimal places.
11. Yields are based on closing bid prices quoted by at least five dealers.
12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields
are read from a yield curve at fixed maturities. Based on only recently issued,
actively traded securities.
13. Averages (to maturity or call) for all outstanding bonds neither due nor
callable in less than 10 years, including one very low yielding "flower" bond.
14. General obligations based on Thursday figures; Moody's Investors Service.
15. General obligations only, with 20 years to maturity, issued by 20 state and
local governmental units of mixed quality. Based on figures for Thursday.
16. Daily figures from Moody's Investors Service. Based on yields to maturity
on selected long-term bonds.
17. Compilation of the Federal Reserve. This series is an estimate of the yield
on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of
call protection. Weekly data are based on Friday quotations.
18. Standard and Poor's corporate series. Preferred stock ratio based on a
sample often issues: four public utilities, four industrials, one financial, and one
transportation. Common stock ratios on the 500 stocks in the price index.
NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases.
For address, see inside front cover.
Financial Markets
1.36 STOCK MARKET
A25
Selected Statistics
1989
Indicator
1987
1988
1989
Apr.
June
May
July
Sept.
Aug.
Oct.
Nov.
Dec.
Prices and trading (averages of daily figures)
Common stock prices
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2 Industrial
3 Transportation
4 Utility
5 Finance
6 Standard & Poor's Corporation
(1941-43 = 10)1
161.78
195.31
140.52
74.29
146.48
149.97
180.83
134.09
72.22
127.41
180.13
228.04
174.90
94.33
162.01
169.38
204.81
164.32
79.69
143.26
175.30
211.81
169.05
84.21
146.82
180.76
216.75
173.47
87.95
154.08
185.15
221.74
179.32
90.40
157.78
192.93
231.32
197.53
92.90
164.86
193.02
230.86
202.02
93.44
165.51
192.49
229.40
190.36
94.67
166.55
188.50
224.38
174.26
94.95
160.89
192.67
230.12
177.25
99.73
155.63
287.00
265.88
323.05
302.25
313.93
323.73
331.92
346.61
347.33
347.40
340.22
348.57
7 American Stock Exchange
(Aug. 31, 1973 = 50p
316.78
295.08
356.67
336.82
349.50
362.73
368.52
379.28
382.75
383.63
371.92
373.87
188,922
13,832
161,386
9,955
165,568
13,124
161,863
11,529
171,495
11,699
180,680
13,519
162,501
11,702
171,683
14,538
151,752
12,631
182,394
13,853
144,389
12,001
160,671
13,298
Volume of trading (thousands of shares)
8 New York Stock Exchange
9 American Stock Exchange
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers3
31,990
32,740
34,320
32,610
33,140
34,730
34,360
33,940
35,020
35,110
34,630
34,320
Free credit balances at brokers4
11 Margin-account
12 Cash-account
4,750
15,640
5,660
16,595
7,040
18,505
5,450
16,125
5,250
15,965
6,900
19,080
5,420
16,345
5,580
16,015
5,680
15,310
6,000
16,340
5,815
16,345
7,040
18,505
Margin requirements (percent of market value and effective date)6
Mar. 11, 1968
13 Margin stocks
14 Convertible bonds
15 Short sales
June 8 , 1968
May 6, 1970
Dec. 6, 1971
Nov. 24, 1972
Jan. 3, 1974
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
50
50
50
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Beginning July 1983, under the revised Regulation T, margin credit at
broker-dealers includes credit extended against stocks, convertible bonds, stocks
acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues was discontinued in April 1984.
4. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on demand.
5. New series beginning June 1984.
6. These regulations, adopted by the Board of Governors pursuant to the
Securities Exchange Act of 1934, limit the amount of credit to purchase and
carry "margin securities" (as defined in the regulations) when such credit is
collateralized by securities. Margin requirements on securities other than options
are the difference between the market value (100 percent) and the maximum loan
value of collateral as prescribed by the Board. Regulation T was adopted effective
Oct. 15, 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar.
11, 1968; and Regulation X, effective Nov. 1, 1971.
On Jasv. 1, 1977, the Board of Governors for the first time established in
Regulation T the initial margin required for writing options on securities, setting
it at 30 percent of the current market-value of the stock underlying the option. On
Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the
same as the option maintenance margin required by the appropriate exchange or
self-regulatory organization; such maintenance margin rules must be approved by
the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC
approved new maintenance margin rules, permitting margins to be the price of the
option plus 15 percent of the market value of the stock underlying the option.
A26
1.37
DomesticNonfinancialStatistics • March 1990
SELECTED FINANCIAL INSTITUTIONS
Selected Assets and Liabilities
Millions of dollars, end of period
1989
Account
1987
1988
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
SAlF-insured institutions
1 Assets
2 Mortgages
3 Mortgage-backed
securities
4 Contra-assets to
mortgage assets' .
5 Commercial loans
6 Consumer loans
7 Contra-assets to nonmortgage loans2 .
8 Cash and investment
securities
9 Other3
1,250,855
Savings capital
Borrowed money
FHLBB
Other
Other
Net worth
1,340,502 1,345,347' 1,346,564' 1,338,576' 1,331,965' 1,318,148' 1,301,825' 1,289,468
764,513
767,260
767,603
769,398
773,386'
774,358'
772,720'
771,654'
770,072'
764,703'
757,730
201,828
214,587
211,308
213,090
215,203
216,129'"
216,256'
211,325'
204,321'
195,262'
188,397'
181,589
42,344
23,163
57,902
37,950
33,889
61,922
37,157
32,974
61,998
37,013
32,955
61,981
37,842
32,866
61,402
37,791'
32,812'
61,71c
37,504'
33,009'
61,869'
37,540'
33,073'
60,769'
37,204'
33,213
61,100'
36,781'
32,004'
60,981'
36,235'
32,939'
60,425'
34,835
32,579
59,795
3,467
3,056
2,840
2,923
3,074
2,899'
2,918'
3,192'
3,192'
3,157'
3,001'
3,111
169,717
122,462
186,986
129,610
178,813
125,026
177,178
126,243
177,094
125,455
175,841'
126,065'
174,333'
127,161'
175,222'
126,200'
175,244'
126,829'
171,674'
127,092'
169,643'
125,054'
172,721
123,000
10 Liabilities and net worth . 1,250,855
11
12
13
14
15
16
1,350,500 1,337,382 1,339,115
721,593
932,616
249,917
116,363
133,554
21,941
46,382
1,350,500 1,337,382 1,339,115
971,700
299,400
134,168
165,232
24,216
55,185
963,820
299,415
135,712
163,703
29,751
58,882
957,358
305,675
140,089
165,586
31,749
58,962
1,340,502 1,345,347' 1,346,564' 1,338,576' 1,331,965' 1,318,148' 1,301,825' 1,289,468
956,663
312,988
146,007
166,981
29,593
57,113
954,495
318,671'
148,000
170,671'
31,629'
56,068'
955,566
318,367'
146,520
171,847'
33,585'
54,596'
960,073'
312,093'
144,217
167,876'
29,892'
52,741'
963,158
301,581
141,875
159,706
31,884'
50,916'
960,344'
289,631
138,331
151,300
33,807'
49,959'
958,949'
281,474
133,633
147,841
29,831'
47,802'
948,531
275,979
130,514
145,465
30,875
49,157
SAIF-insured federal savings banks
17 Assets
284,270
425,983
423,846
432,675
443,167
455,143
469,939
495,739
507,020'
504,187'
501,128'
502,589
18 Mortgages
19 Mortgage-backed
securities
20 Contra-assets to
mortgage assets' .
21 Commercial loans
Consumer loans
22
23 Contra-assets to nonmortgage loans .
24 Finance leases plus
interest
25 Cash and investment . . .
26 Other
161,926
227,869
234,591
238,415
241,076
249,940'
257,187'
276,613'
285,072'
285,503'
283,188'
283,674
45,826
64,957
62,773
65,896
68,086
69,964
73,963
73,943
74,341
72,082
72,438'
72,318
9,100
6,504
17,696
13,140
16,731
24,222
12,258
16,172
25,033
12,685
16,320
25,977
12,896
16,313
26,096
13,049
16,497'
26,768'
13,227
16,934'
27,957'
13,662
18,014
28,157
13,972
18,279'
28,996'
13,859
18,169
28,985
13,821'
18,195
28,766
13,492
18,301
28,326
678
889
814
857
977
863
888
976
1,029
1,051
591
35,347
24,069
880
61,029
35,428
907
57,434
33,954
946
57,986
34,664
1,011
60,272
34,964
1,047
61,278
37,333
1,072
62,002
38,021
1,083
65,778
39,644
1,088
66,068
40,340'
1,075
65,109
40,534'
1,092
64,232
40,680
1,087
65,277
40,756
27 Liabilities and net worth .
284,270
425,983
423,846
432,675
443,167
455,143
469,939
495,739
507,020'
504,187'
501,128'
502,589
28
29
30
31
32
33
203,196
60,716
29,617
31,099
5,324
15,034
298,197
99,286
46,265
53,021
8,075
20,235
298,515
98,304
46,470
51,834
8,270
21,625
301,770
102,902
48,951
53,951
8,884
22,700
307,580
107,179
51,532
55,647
8,649
23,090
315,725
110,004
53,519
56,485
9,306
23,404
324,369
114,854
55,463
59,391
10,174
23,926
342,145
121,895
58,505
63,390
9,825
25,677
352,547
121,195
59,781
61,414
10,697
26,266'
352,099
117,970
59,189
58,781
11,443
26,369'
353,461'
115,628
57,941
57,687
9,904'
26,134'
355,903
114,232
57,793
56,439
10,298
26,126
Savings capital
Borrowed money
FHLBB
Other
Other
Net worth
980
987
Financial Markets
A25
1.37—Continued
1989
Account
1987
1988
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Credit unions5
34 Total assets/liabilities
and capital
174,593
175,027
176,270
178,175
177,417
178,812
180,664
179,029
180,035
181,812
181,527
35
36
114,566
60,027
114,909
60,118
115,543
60,727
117,555
60,620
115,416
62,001
116,705
62,107
117,632
63,032
117,475
61,554
117,463
62,572
118,746
63,066
118,887
62,640
113,191
73,766
39,425
159,010
104,431
54,579
114,012
74,083
39,927
159,106
104,629
54,477
113,880
73,917
39,963
161,073
105,262
55,811
114,572
74,395
40,177
164,322
107,368
56,954
115,249
75,003
40,246
161,388
105,208
56,180
116,947
76,052
40,895
162,134
105,787
56,347
119,101
77,729
41,372
164,415
106,984
57,431
119,720
78,472
41,248
162,405
106,266
56,139
120,577
78,946
41,631
162,754
106,038
56,716
122,522
80,548
41,874
164,050
106,633
57,417
122,997
80,570
42,427
164,695
107,588
57,107
Federal
State
37 Loans outstanding
38 Federal
39 State
40 Savings
41 Federal
42 State
n.a.
Life insurance companies
43 Assets
44
45
46
47
48
49
50
51
52
53
54
1,044,459
1,157,140
1,176,042
1,186,208
1,199,125
1,209,242
1,221,332
1,232,195
1,247,341
1,257,045
1,266,773
84,426
57,078
10,681
16,667
n.a.
472,684
n.a.
203,545
34,172
53,626
89,586
84,051
58,564
9,136
16,351
660,416
556,043
104,373
232,863
37,371
54,236
93,358
84,042
58,473
8,918
16,651
667,026
560,385
106,641
232,941
37,453
54,517
98,063
84,190
58,509
8,817
16,864
678,541
571,365
107,176
233,556
37,603
54,738
97,580
84,485
58,417
8,860
17,208
687,777
579,232
108,545
234,632
37,842
54,921
99,468
82,873
57,127
8,911
16,835
697,703
587,889
109,814
235,312
37,976
55,201
100,173
83,847
57,790
8,953
17,104
706,960
595,500
111,460
236,651
38,598
55,525
99,751
84,564
57,817
9,036
17,711
714,398
601,786
112,612
237,444
38,190
55,746
101,853
84,438
57,698
9,061
17,679
726,599
606,686
119,913
237,865
38,622
55,812
104,005
83,225
56,978
9,002
17,245
735,441
614,585
120,856
238,944
38,822
56,077
104,536
82,867
56,684
9,037
17,146
742,537
621,856
120,681
240,189
38,942
56,403
105,835
Securities
Government
United States6
State and local
Foreign
Business
Bonds
Stocks
Mortgages
Real estate
Policy loans
Other assets
1. Contra-assets are credit-balance accounts that must be subtracted from the
corresponding gross asset categories to yield net asset levels. Contra-assets to
mortgage loans, contracts, and pass-through securities include loans in process,
unearned discounts and deferred loan fees, valuation allowances for mortgages
"held for sale," and specific reserves and other valuation allowances.
2. Contra-assets are credit-balance accounts that must be subtracted from the
corresponding gross asset categories to yield net asset levels. Contra-assets to
nonmortgage loans include loans in process, unearned discounts and deferred loan
fees, and specific reserves and valuation allowances.
3. Holding of stock in Federal Home Loan Bank and Finance leases plus
interest are included in "Other" (line 9).
4. Excludes checking, club, and school accounts.
5. Data include all federally insured credit unions, both federal and state
chartered, serving natural persons.
6. Direct and guaranteed obligations. Excludes federal agency issues not
guaranteed, which are shown in the table under "Business" securities.
7. Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
n. a.
NOTE. FSLIC-insured institutions: Estimates by the FHLBB for all institutions
insured by the FSLIC and based on the FHLBB thrift Financial Report.
FSLIC-insured federal savings banks: Estimates by the FHLBB for federal
savings banks insured by the FSLIC and based on the FHLBB thrift Financial
Report.
Savings banks: Estimates by the National Council of Savings Institutions for all
savings banks in the United States and for FDIC-insured savings banks that have
converted to federal savings banks.
Credit unions: Estimates by the National Credit Union Administration for
federally chartered and federally insured state-chartered credit unions serving
natural persons.
Life insurance companies: Estimates of the American Council of Life Insurance
for all life insurance companies in the United States. Annual figures are annualstatement asset values, with bonds carried on an amortized basis and stocks at
year-end market value. Adjustments for interest due and accrued and for
differences between market and book values are not made on each item separately
but are included, in total, in "other assets."
As of June 1989 Savings bank data are no longer available.
A28
1.38
DomesticNonfinancialStatistics • March 1990
FEDERAL FISCAL A N D FINANCING OPERATIONS
Millions of dollars
Calendar year
Type of account or operation
Fiscal
year
1987
Fiscal
year
1988'
Fiscal
year
1989
1989
July
U.S. budget1
1 Receipts, total
2 On-budget
3 Off-budget
4 Outlays, total
5 On-budget
6 Off-budget
7 Surplus, or deficit ( - ) , total
8 On-budget
9 Off-budget
10
11
12
Source of financing (total)
Borrowing from the public
Operating cash (decrease, or increase
<")),
Other
2
Aug.
Sept.
66,191
45,673
20,518
84,430
66,624
17,806
-18,239
-20,951
2,712
76,161
57,156
19,004
98,310
79,218
19,092
-22,150
-22,062
99,233
75,711
23,522
105,299
86,548
18,750
-6,066
-10,837
4,771
68,426
50,122
18,304
94,515
75,096
19,419
-26,089
-24,974
-1,115
Nov.
Dec.
71,213
51,989
19,223
100,172
80,794
19,378
-28,959
-28,804
-155
89,130
69,052
20,077
103,770
91,249
12,522
-14,641
-22,1%
7,556
854,143
640,741
213,402
1,003,804
809,972
193,832
-149,661
-169,231
19,570
908,166
666,675
241,491
,063,318
860,626
202,691
-155,151
-193,951
38,800
-151,988
-204,433
52,445
151,717
166,139
140,156
36,690
19,790
-5,052
2,996
-7,963
-3,025
3,425
8,407
21,564
636
-3,235
-10,469
-15,589
14,977
-2,513
21,772
-12,603
-5,221
13,040
36,436
9,120
27,316
44,398
13,024
31,375
40,973
13,452
27,521
22,149
5,312
16,837
25,384
6,652
18,732
40,973
13,452
27,521
43,486
13,124
30,362
21,715
5,501
16,214
26,935
6,217
20,718
990,789
727,123
263,666
1,142,777
931,556
211,221
35,854
MEMO
13 Treasury operating balance (level, end of
period)
14 Federal Reserve Banks
15 Tax and loan accounts
1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. The Federal
Financing Bank (FFB) activities are now shown as separate accounts under the
agencies that use the FFB to finance their programs. The act has also moved two
social security trust funds (Federal old-age survivors insurance and Federal
disability insurance trust funds) off-budget.
2. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to
international monetary fund; other cash and monetary assets; accrued interest
payable to the public; allocations of special drawing rights; deposit funds;
miscellaneous liability (including checks outstanding) and asset accounts;
seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjustment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold.
SOURCE. Monthly Treasury Statement of Receipts and Outlays of the U.S.
Government and the Budget of the U.S. Government.
Federal Finance A3 3
1.39
U.S. BUDGET RECEIPTS AND OUTLAYS 1
Millions of dollars
Calendar year
Source or type
Fiscal
year
1988
Fiscal
year
1989
1989
1988
1989
HI
H2
HI
H2
Oct.
Nov.
Dec.
475,724
449,394
527,574
470,354
68,426
71,213
89,130
37,385
35,443
0
2,717
775
19,731
853
RECEIPTS
908,166
1 All sources
2 Individual income taxes, net
3 Withheld
Presidential Election Campaign Fund . . . .
4
5
Nonwithheld
6 Refunds
Corporation income taxes
7 Gross receipts
8 Refunds
9 Social insurance taxes and contributions,
net
10 Employment taxes and
contributions
11
Self-employment taxes and
contributions
12 Unemployment insurance
13 Other net receipts4
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts
990,789
401,181
341,435
33
132,199
72,487
445,690
361,386
32
154,839
70,567
207,659
169,300
28
101,614
63,283
200,300
179,600
4
29,880
9,186
233,572
174,230
28
121,563
62,251
218,661
193,296
3
33,303
7,943
35,493
32,751
0
3,684
943
34,448
34,439
0
1,459
1,450
109,683
15,487
117,015
13,723
58,002
8,706
56,409
7,250
61,585
7,259
52,269
6,842
3,279
2,549
3,381
996
334,335
359,416
181,058
157,603
200,127
162,574
24,308
26,791
25,805
305,093
332,859
164,412
144,983
184,569
152,407
23,100
24,303
25,266
17,691
24,584
4,659
18,405
22,011
4,547
14,839
14,363
2,284
3,032
10,359
2,262
16,371
13,279
2,277
1,947
7,909
2,260
0
859
350
140
2,088
401
0
161
377
35,540
15,411
7,594
19,909
34,386
16,334
8,745
22,927
16,440
7,522
3,863
9,950
19,299
8,107
4,054
10,873
16,814
7,918
4,583
10,235
16,844
8,667
4,451
13,728
2,970
1,493
835
2,598
2,939
1,421
693
2,535
2,763
1,293
850
2,156
1,063,318
1,142,777
512,856
552,801
565,524
586,496
94,515
100,172
103,770
28,570
1,306
1,202
160
1,319
1,097
1,107
2,515
841
OUTLAYS
18 All types
19
20
21
22
23
24
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
25
26
27
28
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
290,361
10,471
10,841
2,297
14,625
17,210
303,551
9,596
12,891
3,745
16,084
16,948
143,080
7,150
5,361
555
6,776
7,872
150,496
2,636
5,852
1,966
9,144
6,911
148,098
6,605
6,238
2,221
7,022
9,619
149,613
5,981
7,091
564
9,209
4,132
19,930
2,117
1,342
363
1,975
904
25,234
495
1,155
-170
2,064
1,967
18,828
27,272
5,294
27,716
27,623
5,755
5,951
12,700
2,765
19,836
14,922
2,690
4,129
13,035
1,833
22,200
14,982
4,879
5,4%
2,618
790
2,030
2,584
1,100
31,938
35,697
15,451
16,152
18,083
18,663
3,251
3,194
3,151
29 Health
30 Social security and medicare
31 Income security
44,490
297,828
129,332
48,391
317,506
136,765
22,643
135,322
65,555
23,360
149,017
64,978
24,078
162,195
70,937
25,339
162,322
67,950
4,511
27,143
9,711
4,136
27,337
11,456
4,435
27,166
13,217
32
33
34
35
36
37
29,406
8,436
9,518
1,816
151,748
-36,967
30,066
9,396
8,940
n.a.
169,314
-37,212
13,241
4,379
4,337
448
76,098
-17,766
15,797
4,351
5,137
0
78,317
-18,771
14,891
4,801
3,858
0
86,009
-18,131
14,864
4,963
4,753
n.a.
87,927
-18,935
1,503
842
842
n.a.
14,124
-2,945
2,627
771
1,437
n.a.
15,526
-2,771
3,664
968
745
n.a.
14,579
-2,271
Veterans benefits and services
Administration of justice
General government
General-purpose fiscal assistance
Net interest6
*
Undistributed offsetting receipts
1. Functional details do not add to total outlays for calendar year data because
revisions to monthly totals have not been distributed among functions. Fiscal year
total for outlays does not correspond to calendar year data because revisions from
the Budget have not been fully distributed across months.
2. Old-age, disability, and hospital insurance, and railroad retirement accounts.
3. Old-age, disability, and hospital insurance.
4. Federal employee retirement contributions and civil service retirement and
disability fund.
5. Deposits of earnings by Federal Reserve Banks and other miscellaneous
receipts.
6. Net interest function includes interest received by trust funds.
7. Consists of rents and royalties on the outer continental shelf and U.S.
government contributions for employee retirement.
SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of
Receipts and Outlays of the U.S. Government, and the U.S. Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 1990.
A30
DomesticNonfinancialStatistics • March 1990
1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1988
1987
1989
Item
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
1 Federal debt outstanding
2,354.3
2,435.2
2,493.2
2,555.1
2,614.6
2,707.3
2,763.6
2,824.0
2,881.1
2 Public debt securities
3 Held by public
4 Held by agencies
2,350.3
1,893.1
457.2
2,431.7
1,954.1
477.6
2,487.6
1,996.7
490.8
2,547.7
2,013.4
534.2
2,602.2
2,051.7
550.4
2,684.4
2,095.2
589.2
2,740.9
2,133.4
607.5
2,799.9
2,142.1
657.8
2,857.4
2,180.7
676.7
4.0
3.0
1.0
3.5
2.7
.8
5.6
5.1
.6
7.4
7.0
.5
12.4
12.2
.2
22.9
22.6
.3
22.7
22.3
.4
24.0
23.6
.5
23.7
23.5
.1
2,336.0
2,417.4
2,472.6
2,532.2
2,586.9
2,669.1
2,725.6
2,784.6
2,829.8
9 Public debt securities
10 Other debt1
2,334.7
1.3
2,416.3
1.1
2,472.1
.5
2,532.1
.1
2,586.7
.1
2,668.9
.2
2,725.5
.2
2,784.3
.2
2,829.5
.3
11 MEMO: Statutory debt limit
2,800.0
2,800.0
2,800.0
2,800.0
2,800.0
2,800.0
2,800.0
2,800.0
2,870.0
5 Agency securities
6 Held by public
7 Held by agencies
8 Debt subject to statutory limit
SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the
United States.
1. Includes guaranteed debt of Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District
of Columbia stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
Sept. 30
Types and Ownership
Billions of dollars, end of period
1988
Type and holder
1987
1985
1989
1988
Q4
1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
By type
Interest-bearing debt
Marketable
Bills
Notes
Bonds
Nonmarketable
State and local government series
Foreign issues
Government
Public
Savings bonds and notes.
Government account series
14 Non-interest-bearing debt
15
16
17
18
19
20
21
22
23
24
25
26
By holder4
U.S. government agencies and trust funds
Federal Reserve Banks
Private investors
Commercial banks
Money market funds
Insurance companies
Other companies
State and local Treasurys
Individuals
Savings bonds
Other securities
Foreign and international
Other miscellaneous investors6
Q2
Q3
1,945.9
2,214.8
2,431.7
2,684.4
2,684.4
2,740.9
2,799.9
2,857.4
,943.4
,437.7
399.9
812.5
2,212.0
2,428.9
1,724.7
389.5
1,037.9
282.5
704.2
139.3
4.0
4.0
2,663.1
1,821.3
414.0
1,083.6
308.9
841.8
151.5
6.6
2.738.3
1,871.7
417.0
1.121.4
318.4
2,797.4
1,877.3
397.1
1,137.2
328.0
920.1
156.0
2,836.3
1,892.8
406.6
1,133.2
338.0
943.5
158.6
99.2
461.3
.0
107.6
575.6
2,663.1
1,821.3
414.0
1,083.6
308.9
841.8
151.5
6.6
6.6
.0
107.6
575.6
110.4
594.7
112.3
645.2
.0
114.0
663.7
2.8
21.3
21.3
2.6
2.5
21.1
477.6
589.2
238.4
1,852.8
193.8
589.2
238.4
1,852.8
193.8
607.5
111.2
111.2
86.5
313.6
86.5
313.6
657.8
231.8
1,905.4
206.7
11.6
n.a.
90.7
322.1
1,954.6
n.a.
12.4
n.a.
n.a.
n.a.
109.6
77.0
362.1
587.2
109.6
77.0
362.1
587.2
114.0
89.1
367.9
n.a.
115.7
n.a.
393.5
n.a.
78.1
332.2
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
2.5
2.8
211.1
505.7
87.5
7.5
7.5
.0
348.9
181.3
1,417.2
198.2
25.1
78.5
59.0
226.7
79.8
75.0
224.8
450.1
1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual
retirement bonds.
2. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners.
3. Held almost entirely by U.S. Treasury agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. Treasury agencies and trust funds
are actual holdings; data for other groups are Treasury estimates.
Q1
403.1
211.3
1,602.0
203.5
28.0
105.6
68.8
262.8
92.3
70.4
263.4
506.6
.0
222.6
1,745.2
201.5
14.6
104.9
84.6
284.6
101.1
70.2
299.7
584.0
6.6
18.8
18.8
866.6
154.4
6.7
6.7
.0
228.6
1,900.2
200.9
13.0
112.5
89.2
320.4
112.2
82.9
375.6
593.5
6.2
6.2
.0
6.8
6.8
676.7
220.6
5. Consists of investments of foreign and international accounts. Excludes
non-interest-bearing notes issued to the International Monetary Fund.
6. Includes savings and loan associations, nonprofit institutions, credit unions,
mutual savings banks, corporate pension trust funds, dealers and brokers, certain
U.S. Treasury deposit accounts, and federally-sponsored agencies.
SOURCES. Data by type of security, U.S. Treasury Department, Monthly
Statement of the Public Debt of the United States; data by holder. Treasury
Bulletin.
Federal Finance
1.42
A3 3
Transactions 1
U.S. GOVERNMENT SECURITIES DEALERS
Par value; averages of daily figures, in millions of dollars
1989
1989
Item
1987
1988
1989
Oct/
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Immediate delivery2
U.S. Treasury securities
By maturity
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
By type of customer
U.S. government securities
dealers
U.S. government securities
brokers
All others
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures contracts
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions
U.S. Treasury securities
Federal agency securities
Nov/
Dec.
Nov. 22' Nov. 29
Dec. 6
Dec. 13
Dec. 20
Dec. 27
110,050
101,623
112,730
130,820
115,717
84,256
102,465
103,002
84,048
86,756
105,779
72,754
37,924
3,271
27,918
24,014
16,923
29,387
3,426
27,777
24,939
16,093
30,741
3,182
33,665
28,682
16,460
35,905
3,312
39,950
34,368
17,285
32,619
2,809
38,445
26,207
15,638
26,846
2,559
25,879
18,250
10,723
30,234
2,892
38,594
17,045
13,701
31,041
2,660
38,543
20,540
10,219
24,334
2,593
24,995
22,193
9,933
26,890
2,393
25,871
20,356
11,247
34,298
2,745
34,564
20,487
13,685
24,327
2,193
22,201
14,356
9,677
2,936
2,761
3,287
4,298
3,496
2,552
2,753
2,582
2,081
2,410
3,364
2,920
61,539
45,575
18,084
4,112
2,965
17,135
59,844
39,019
15,903
3,369
2,316
22,927
66,419
43,024
18,622
2,798
2,222
31,807
77,566
48,956
20,989
2,422
2,169
34,167
66,555
45,666
20,026
2,184
1,995
31,188
45,734
35,970
17,908
1,596
1,635
32,291
59,514
40,198
19,816
2,281
1,903
32,277
59,607
40,813
15,963
2,150
2,110
27,286
46,781
35,186
19,857
1,783
1,828
32,864
48,224
36,123
23,434
2,016
1,878
31,288
57,553
44,862
17,557
1,807
1,567
33,421
38,286
31,549
13,325
1,046
1,226
31,857
3,233
8,963
5
2,627
9,695
1
2,525
9,603
8
2,797
10,334
20
1,900
9,308
7
2,523
5,838
3
1,606
10,303
10
2,254
6,532
0
2,578
5,334
0
2,713
5,769
6
3,567
6,733
5
1,788
6,773
2
2,029
9,290
2,095
8,008
2,130
9,486
2,163
10,561
2,009
10,894
1,859
9,536
1,440
10,750
2,373
6,150
1,305
9,884
1,221
13,212
3,372
10,135
1,789
5,709
1. Transactions are market purchases and sales of securities as reported to the
Federal Reserve Bank of New York by the U.S. government securities dealers on
its published list of primary dealers.
Averages for transactions are based on the number of trading days in the period.
The figures exclude allotments of, and exchanges for, new U.S. Treasury
securities, redemptions of called or matured securities, purchases or sales of
securities under repurchase agreement, reverse repurchase (resale), or similar
contracts.
2. Data for immediate transactions do not include forward transactions.
3. Includes, among others, all other dealers and brokers in commodities and
r
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal Reserve System.
4. Futures contracts are standardized agreements arranged on an organized
exchange in which parties commit to purchase or sell securities for delivery at a
future date.
5. Forward transactions are agreements arranged in the over-the-counter
market in which securities are purchased (sold) for delivery after 5 business days
from the date of the transaction for Treasury securities (Treasury bills, notes, and
bonds) or after 30 days for mortgage-backed agency issues.
A32
1.43
DomesticNonfinancialStatistics • March 1990
U.S. GOVERNMENT SECURITIES DEALERS
Positions and Financing1
Averages of daily figures, in millions of dollars
1989
Item
1987
1988
1989
1989
Oct.
Nov/
Dec.
Nov. 29r
Dec. 6
Dec. 13
Dec. 20
Dec. 27
Positions
Net immediate2
U.S. Treasury securities
-6,216
-22,765
-5,938
10,654r
17,160
25,256
16,790
23,866
23,329
27,240
26,448
2
3
4
5
6
Bills
Other within 1 year
1-5 years
5-10 years
Over 10 years
4,317
1,557
649
-6,564
-6,174
2,238
-2,236
-3,020
-9,663
-10,084
7,835
-1,528
2,340
-8,133
-6,452
19,152'
-1,646r
9,664
-10,499
-6,017'
22,529
-1,276
10,545
-8,995
-5,642
26,829
-1,171
12,424
-7,230
-5,595
24,419
-1,091
8,656
-9,351
-5,843
26,211
-887
11,050
-6,640
-5,868
26,749
-852
9,942
-7,155
-5,355
29,911
-1,106
10,561
-6,623
-5,504
24,106
-1,702
17,619
-7,877
-5,698
7
8
9
10
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
Treasury bills
Treasury coupons
Federal agency securities
Forward positions
U.S. Treasury securities
Federal agency securities
31,911
8,188
3,660
7,4%
28,230
7,300
2,486
6,152
31,912
6,674
2,089
8,242
36,265r
7,123'
2,105
9,055
35,449
7,003
1,925
7,650
35,922
6,884
1,728
8,151
31,403
6,580
1,830
7,583
32,700
7,121
2,259
8,875
37,615
7,197
2,109
8,069
37,788
6,848
1,258
8,114
35,231
6,849
1,364
8,191
-3,373
5,988
-95
-2,210
6,224
0
-4,599
-2,919
14
-7,459
-9,302
68
-9,455
-11,364
25
-10,140
-11,022
30
-10,425
-10,772
1
-11,781
-10,264
1
-11,624
-10,907
31
-9,907
-13,006
36
-8,278
-10,748
43
-1,211
-18,817
346
-16,348
-545
-16,878
1,380
-15,367
-109
-17,372
-144
-16,523
1,310
-14,703
649
-15,993
114
-19,513
-22
-16,799
52
-14,438
1
11
12
13
14
15
Financing3
Reverse repurchase agreements4
Overnight and continuing
Term
Repurchase agreements
18 Overnight and continuing
19 Term
16
17
126,709
148,288
136,327
177,477
156,848
223,566
164,478
233,888
153,281
242,133
129,595
200,542
160,730
231,768
149,612
212,603
150,482
221,256
142,593
220,594
131,535
230,344
170,763
121,270
172,695
137,056
217,235
178,362
242,486
193,445
227,507
218,527
211,236
165,061
245,546
201,010
229,821
180,957
241,158
184,035
240,487
181,824
221,690
182,633
1. Data for dealer positions and sources offinancingare obtained from reports
submitted to the Federal Reserve Bank of New York by the U.S. Treasury
securities dealers on its published list of primary dealers.
Data for positions are averages of daily figures, in terms of par value, based on
the number of trading days in the period. Positions are net amounts and are shown
on a commitment basis. Data for financing are in terms of actual amounts
borrowed or lent and are based on Wednesday figures.
2. Immediate positions are net amounts (in terms of par values) of securities
owned by nonbank dealer firms and dealer departments of commercial banks on
a commitment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase (RPs). The maturities of some
repurchase agreements are sufficiently long, however, to suggest that the securities involved are not available for trading purposes. Immediate positions include
reverses to maturity, which are securities that were sold after having been
obtained under reverse repurchase agreements that mature on the same day as the
securities. Data for immediate positions do not include forward positions.
3. Figures coverfinancinginvolving U.S. Treasury and federal agency securities, negotiable CDs, bankers acceptances, and commercial paper.
4. Includes all reverse repurchase agreements, including those that have been
arranged to make delivery on short sales and those for which the securities
obtained have been used as collateral on borrowings, that is, matched agreements.
5. Includes both repurchase agreements undertaken to finance positions and
"matched book" repurchase agreements.
NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially
estimated.
Federal Finance
1.44 FEDERAL A N D FEDERALLY SPONSORED CREDIT AGENCIES
A3 3
Debt Outstanding
Millions of dollars, end of period
1989
Agency
1985
1986
1987
1988
July
1 Federal and federally sponsored agencies
2 Federal agencies
3 Defense Department
4
Export-Import Bank2,3
5 Federal Housing Administration
6 Government National Mortgage Association participation
certificates5
7 Postal Service 6 ...
8 Tennessee Valley Authority
9
United States Railway Association
10 Federally sponsored agencies7
11 Federal Home Loan Banks
12 Federal Home Loan Mortgage Corporation
13 Federal National Mortgage Association
14 Farm Credit Banks8
15 Student Loan Marketing Association
16 Financing Corporation
17 Farm Credit Financial Assistance Corporation
18 Resolution Funding Corporation
Aug.
Sept.
Oct.
Nov.
293,905
307,361
341,386
381,498
411,874
411,979
408,591
409,113
412,234
36,390
71
15,678
115
36,958
33
14,211
138
37,981
13
11,978
183
35,668
8
11,033
150
36,453
7
11,014
245
36,453
7
11,014
255
36,584
7
10,990
295
36,378
7
10,990
301
35,855
7
10,990
308
2,165
1,940
16,347
74
2,165
3,104
17,222
85
1,615
6,103
18,089
0
0
6,142
18,335
0
0
6,445
18,742
0
0
6,445
18,732
0
0
6,445
18,847
0
0
6,445
18,635
0
0
6,445
18,105
0
257,515
74,447
11,926
93,896
68,851
8,395
0
0
0
270,553
88,752
13,589
93,563
62,478
12,171
0
0
0
303,405
115,725
17,645
97,057
55,275
16,503
1,200
0
0
345,830
135,834
22,797
105,459
53,127
22,073
5,850
690
0
375,421
151,487
25,690
109,926
53,158
26,813
7,500
847
0
375,526
149,269
27,165
110,155
53,511
27,079
7,500
847
0
372,007
143,578
26,738
111,507
54,015
27,126
8,170
847
0
372,735
140,854
25,097
111,776
54,029
27,440
8,170
847
4,522
376,379
138,229
27,018
115,774
54,131
27,688
8,170
847
4,522
153,373
157,510
152,417
142,850
138,814
137,690
136,092
135,841
135,213
15,670
1,690
5,000
14,622
74
14,205
2,854
4,970
15,797
85
11,972
5,853
4,940
16,709
0
11,027
5,892
4,910
16,955
0
11,008
6,195
4,910
17,362
0
11,008
6,195
4,910
17,352
0
10,984
6,195
4,910
17,467
0
10,984
6,195
4,880
17,255
0
10,984
6,195
4,880
16,725
0
64,234
20,654
31,429
65,374
21,680
32,545
59,674
21,191
32,078
58,496
19,246
26,324
54,911
19,257
25,171
54,611
19,270
24,344
53,311
19,275
23,950
53,311
19,233
23,983
53,311
19,249
23,869
MEMO
19 Federal Financing Bank debt13
20
21
22
23
24
Lending to federal and federally sponsored agencies
Export-Import Bank
Postal Service6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association
Other Lending14
25 Farmers Home Administration
26 Rural Electrification Administration
27 Other
1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1,1976.
3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. Once issued, these securities may be sold privately on the
securities market.
5. Certificates of participation issued before fiscal 1969 by the Government
National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Some data are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation,
shown in line 17.
9. Before late 1981, the Association obtained financing through the Federal
Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is
shown on line 21.
10. The Financing Corporation, established in August 1987 to recapitalize the
Federal Savings and Loan Insurance Corporation, undertook its first borrowing in
October 1987.
11. The Farm Credit Financial Assistance Corporation (established in January
1988 to provide assistance to the Farm Credit System) undertook its first
borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, undertook its first
borrowing in October 1989.
13. Includes FFB purchases of agency assets and guaranteed loans; the latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular agency being generally small. The Farmers Home Administration item
consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans.
14. The FFB, which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since FFB
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
A34
1.45
DomesticNonfinancialStatistics • March 1990
NEW SECURITY ISSUES
Millions of dollars
Tax-Exempt State and Local Governments
1989
Type of issue or issuer,
or use
1986
1987
1988
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
1 All issues, new and refunding1
147,011
102,407
114,522
7,435
13,775
8,735
9,824
10,818
9,075
9,564
12,456
Type of issue
2 General obligation
3 Revenue
46,346
100,664
30,589
71,818
30,312
84,210
2,342
5,093
4,960
8,815
3,789
4,946
2,199
7,625
3,500
7,318
3,273
5,802
3,328
6,237
1,930
10,526
Type of issuer
4 State
5 Special district and statutory authority
6 Municipalities, counties, and townships
14,474
89,997
42,541
10,102
65,460
26,845
8,830
74,409
31,193
392
4,979
2,064
1,989
8,033
3,753
970
4,868
2,897
694
7,027
2,103
764
7,567
2,487
1,330
4,770
2,975
930
5,473
3,161
885
8,657
2,914
7 Issues for new capital, total
83,492
56,789
79,665
5,938
10,078
6,816
6,612
7,470
7,266
7,777
9,412
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
12,307
7,246
14,594
11,353
6,190
31,802
9,524
3,677
7,912
11,106
7,474
18,020
15,021
6,825
8,4%
19,027
5,624
24,672
1,024
748
467
1,376
361
1,962
2,678
576
1,058
1,509
329
3,928
998
500
551
1,632
440
2,695
1,302
556
813
1,553
447
1,941
1,639
976
622
1,242
381
2,610
1,006
280
718
1,803
345
3,114
1,058
675
1,137
1,441
444
3,022
1,292
622
2,173
2,292
966
2,067
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning 1986.
1.46
NEW SECURITY ISSUES
SOURCES. Securities Data/Bond Buyer Municipal Data Base beginning 1986.
Public Securities Association for earlier data.
U.S. Corporations
Millions of dollars
Type of issue or issuer,
or use
1989
1986
1987
1988
Apr.
May
June
July
Aug.
Sept.
Oct.'
Nov.
1 All issues1
424,737
392,171'
408,803'
14,405
21,471
24,450
17,734'
14,895'
14,409'
24,267'
20,240
2 Bonds2
356,304
325,663'
351,002'
13,396
19,662
21,622
12,680'
12,860'
12,136'
20,587'
16,000
Type of offering
3 Public, domestic
4 Private placement, domestic3
5. Sold abroad
232,742
80,760
42,801
209,279
92,070
24,308
200,124'
127,700
23,178
11,471
n.a.
1,925
17,756
n.a.
1,906
18,714
n.a.
2,908
11,26C
n.a.
1,420
12,044'
n.a.
816
10,936'
n.a.
1,200
19,479'
n.a.
1,108'
14,000
n.a.
2,000
90,788
41,909
10,322'
31,074r
16,441
165,770
61,666
49,327
11,974
23,004
7,340
172,351
70,348'
61,620'
9,976
19,318
5,951'
183,787'
1,457
843
100
1,695
453
8,848
7,715
2,162
150
385
122
9,128
3,252'
1,649'
480
2,936
4
13,302
2,776'
1,331
0
1,173
300
7,099
2,665'
1,090
423
705'
358
7,619
2,177'
1,393
0
1,058'
308
7,201'
3,438'
1,830'
831
1,738'
632
12,118'
3,214
1,112
272
927
812
9,663
12 Stocks2
68,433
66,508
57,802
1,009
1,809
2,828
5,054
2,035
2,273
3,680
4,240
Type
13 Preferred
14 Common
15 Private placement3
11,514
50,316
6,603
10,123
43,225
13,157
6,544
35,911
15,346
495
514
n.a.
306
1,503
n.a.
335
2,493
n.a.
920
4,134
n.a.
1,013
1,023
n.a.
519
1,754
n.a.
570
3,110
n.a.
160
4,080
n.a.
15,027
10,617
2,427
4,020
1,825
34,517
13,880
12,888
2,439
4,322
1,458
31,521
7,608
8,449
1,535
1,898
515
37,798
155
282
169
0
93
310
299
115
39
192
280
884
630
512
0
125
25
1,536
593
438
0
25
29
3,969
393
343
0
137
20
1,020
193
155
0
709
0
1,195
190
728
50
465
0
2,214
378
498
0
211
0
3,153
6
7
8
9
10
11
16
17
18
19
20
21
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Reed estate and financial
Industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1. Figures which represent gross proceeds of issues maturing in more than one
year, are principal amount or number of units multiplied by offering price.
Excludes secondary offerings, employee stock plans, investment companies other
than closed-end, intracorporate transactions, equities sold abroad, and Yankee
bonds. Stock data include ownership securities issued by limited partnerships.
2. Monthly data include only public offerings.
3. Data are not available on a monthly basis. Before 1987, annual totals include
underwritten issues only.
SOURCES. IDD Information Services, Inc., the Board of Governors of the
Federal Reserve System, and before 1989, the U.S. Securities and Exchange
Commission.
Securities Market and Corporate Finance
1.47 OPEN-END INVESTMENT COMPANIES
A35
Net Sales and Asset Position
Millions of dollars
1989
Item
1987
1988
Apr.
May
June
July
Aug.
Sept.
Oct/
Nov.
INVESTMENT COMPANIES1
1 Sales of own shares2
381,260
271,237
25,496
24,661
25,817
25,330
26,800
23,911
23,872
23,618
2 Redemptions of own shares3
3 Net sales
314,252
67,008
267,451
3,786
26,183
-687
22,483
2,178
22,562
3,255
20,053
5,277
22,262
4,538
21,499
2,412
21,702
2,170
19,719
3,899
4 Assets4
453,842
472,297
497,329
509,781
515,814
535,910
539,553
539,814
534,922
550,130
5 Cash position5
6 Other
38,006
415,836
45,090
427,207
48,788
448,541
49,177
460,604
48,428
467,386
47,888
488,022
47,209
492,344
47,163
492,651
46,146
488,776
48,428
501,702
1. Data on sales and redemptions exclude money market mutual funds but
include limited maturity municipal bond funds. Data on asset positions exclude
both money market mutual funds and limited maturity municipal bond funds.
2. Includes reinvestment of investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund
to another in the same group.
3. Excludes share redemption resulting from conversions from one fund to
another in the same group.
4. Market value at end of period, less current liabilities.
5. Also includes all U.S. government securities and other short-term debt
securities.
NOTE. Investment Company Institute data based on reports of members, which
comprise substantially all open-end investment companies registered with the
Securities and Exchange Commission. Data reflect newly formed companies after
their initial offering of securities.
SOURCE. Survey of Current Business (Department of Commerce).
1.48 CORPORATE PROFITS A N D THEIR DISTRIBUTION •
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1987
Account
1986
1987
1988
1989
1988
Q4
1 Corporate profits with inventory valuation and
capital consumption adjustment
Profits before tax
Profits tax liability
Profits after tax
Dividends
Undistributed profits
Q1
Q2
Q3
Q4
QI
Q2
Q3
282.1
221.6
106.3
115.3
91.3
24.0
7 Inventory valuation
8 Capital consumption adjustment
298.7
266.7
124.7
142.0
98.7
43.3
328.6
306.8
137.9
168.9
110.4
58.5
308.2
276.2
127.3
148.9
102.8
46.1
318.1
288.8
129.0
159.9
105.7
54.2
325.3
305.3
138.4
166.9
108.6
58.3
330.9
314.4
141.2
173.2
112.2
61.1
340.2
318.8
143.2
175.6
115.2
60.4
316.3
318.0
144.4
173.6
118.5
55.1
307.8
296.0
134.9
161.1
120.9
40.2
295.2
275.0
122.6
152.4
123.3
29.1
6.7
53.8
2
3
4
5
6
-18.9
50.9
-25.0
46.8
-20.4
52.4
-20.7
49.9
-28.8
48.9
-30.4
46.9
-20.1
41.5
-38.3
36.6
-21.0 r
32.3
n.a/
26.5
•Trade and services are no longer being reported separately. They are included in Commercial and other, line 10.
1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1988
Industry
1988'
1989
1989
1990
19901
Q2
1 Total nonfarm business
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
Nonmanufacturing
4 Mining
Transportation
5 Railroad
6 Air
7 Other
Public utilities
8 Electric
9 Gas and other
.
10 Commercial and other
Q4
Ql
Q2
Q3
Q41
Ql 1
430.17
475.18
505.49r
427.54
435.61
442.11
459.47
470.86
484.93
485.45
503.46
77.75
86.79
83.05
100.11
83.22'
106.94'
77.38
85.24
79.15
89.62
80.56
92.76
81.26
93.96
82.97
98.57
85.66
102.00
82.30
105.90
86.84
106.92
12.57
12.50
12.01r
13.15
12.53
12.38
12.15
12.70
12.59
12.58
12.23
7.21
7.00
7.15
8.12
9.50
7.62
1.1%'
lO^
8.03'
6.99
6.91
7.05
6.84
8.09
7.08
7.45
7.69
6.89
8.02
7.04
8.07
7.37
9.49
7.40
8.16
12.48
7.89
8.93
8.99
7.13
7.91
10.12
8.58
31.75
14.63
185.32
33.96
16.10
204.22
34.32'
15.82''
226.78r
31.31
14.49
185.21
32.07
14.61
185.61
33.69
15.04
185.65
33.69
17.12
198.15
35.34
16.67
200.36
33.73
15.84
206.59
33.07
14.79
211.76
35.47
16.42
218.97
1. Anticipated by business.
2. "Other" consists of construction; wholesale and retail trade; finance and
Q3
insurance; personal and business services; and communication.
SOURCE. Survey of Current Business (Department of Commerce).
A36
1.51
D o m e s t i c Financial Statistics •
M a r c h 1990
Assets and Liabilities1
DOMESTIC FINANCE COMPANIES
Billions of dollars, end of period
1988
Account
1985
1989
1987
1986
Ql
Q2
Q3
Q4
Ql
Q2
Q3
ASSETS
1
2
Accounts receivable, gross2
Consumer
Business
Real estate
Total
111.9
157.5
28.0
297.4
134.7
173.4
32.6
340.6
141.1
207.4
39.5
388.1
141.5
219.7
41.4
402.6
144.4
224.0
42.5
410.9
146.3
223.3
43.1
412.7
146.2
236.5
43.5
426.2
140.2
243.1
45.4
428.7
144.9
250.5
47.4
442.8
147.2
248.8
48.9
444.9
39.2
4.9
41.5
5.8
45.3
6.8
46.8
6.8
46.3
6.8
48.4
7.1
50.0
7.3
50.9
7.4
52.1
7.5
53.7
7.8
7 Accounts receivable, net
8 Al) other
253.3
45.3
293.3
58.6
336.0
58.3
348.9
60.1
357.8
70.5
357.3
68.7
368.9
72.4
370.4
75.1
383.2
81.5
383.5
83.1
9 Total assets
298.6
351.9
394.2
409.1
428.3
426.0
441.3
445.5
464.6
466.6
18.0
99.2
18.6
117.8
16.4
128.4
14.9
125.2
13.3
131.6
11.9
129.4
15.4
142.0
11.6
147.9
12.2
149.2
12.3
147.4
12.7
94.4
n.a.
n.a.
41.5
32.8
17.5
117.5
n.a.
n.a.
44.1
36.4
28.0
137.1
n.a.
n.a.
52.8
31.5
n.a.
n.a.
49.0
132.4
56.1
31.5
n.a.
n.a.
51.4
139.8
58.7
33.5
n.a.
n.a.
51.5
139.3
58.9
34.9
n.a.
n.a.
50.6
137.9
59.8
35.6
n.a.
n.a.
56.8
134.5
58.1
36.6
n.a.
n.a.
59.7
141.3
63.5
38.7
n.a.
60.4
146.1
60.4
40.0
298.6
351.9
394.2
409.1
428.3
426.0
441.3
445.5
464.6
466.6
i
4
Less:
5 Reserves for unearned income
6 Reserves for losses
LIABILITIES
10 Bank loans
11 Commercial paper
Debt
12 Other short-term
13 Long-term
14 Due to parent
15 Not elsewhere classified
16 All other liabilities
17 Capital, surplus, and undivided profits
18 Total liabilities and capital
1. Components may not add to totals because of rounding.
1.52 DOMESTIC FINANCE COMPANIES
2. Excludes pools of securitized assets.
Business Credit Outstanding and Net Change1
Millions of dollars, seasonally adjusted
1989
Type
1986
1987
1988
June
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
Retailfinancingof installment sales
Automotive
Equipment
Pools of securitized assets2
Wholesale
Automotive
Equipment
All other
Pools of securitized assets2
Leasing
Automotive
Equipment
Pools of securitized assets2
Loans on commercial accounts receivable and factored
commercial accounts receivable
All other business credit
July
Aug.
Sept.
Oct.
Nov.
172,060
205,810
234,529
249,322
251,126
253,822
258,851
259,083
257,930
26,015
23,112
n.a.
35,782
25,170
n.a.
36,548
28,298
n.a.
39,042
27,773
807
39,183
28,128
769
39,355
29,039
793
39,258
29,639
755
38,952
29,594
715
38,187
29,568
739
23,010
5,348
7,033
n.a.
30,507
5,600
8,342
n.a.
33,300
5,983
9,341
n.a.
34,021
6,165
9,862
0
33,233
6,244
10,001
0
33,566
6,497
9,990
0
37,243
6,602
9,957
0
35,210
6,843
9,927
0
33,537
6,933
9,895
0
19,827
38,179
n.a.
21,952
43,335
n.a.
24,673
57,455
n.a.
26,515
63,370
796
26,701
64,086
887
26,739
64,186
990
26,865
65,170
948
27,442
66,787
1,199
27,547
67,677
1,093
15,978
13,557
18,078
17,043
17,796
21,134
19,302
21,669
19,989
21,904
20,098
22,571
19,611
22,804
19,487
22,926
18,892
23,861
Net change (during period)
14 Total
15
16
17
18
19
20
21
22
23
24
25
26
Retail financing of installment sales
Automotive
Equipment
Pools of securitized assets
Wholesale
Automotive
Equipment
All other
Pools of securitized assets2
Leasing
Automotive
Equipment
Pools of securitized assets2
Loans on commercial accounts receivable and factored
commercial accounts receivable
All other business credit
15,763
33,750
22,662
3,462
1,803
2,697
5,029
232
-1,153
5,355
629
n.a.
9,767
2,058
n.a.
766
1,384
n.a.
226
135
-39
141
354
-38
172
911
24
-97
600
-38
-305
-45
-40
-765
-25
24
-978
780
224
n.a.
7,497
252
1,309
n.a.
2,793
226
999
n.a.
-513
69
-68
0
-788
79
139
0
332
253
-11
0
3,677
104
-32
0
-2,033
242
-30
0
-1,673
90
-32
0
3,552
3,411
n.a.
2,125
5,156
n.a.
2,721
9,962
n.a.
504
2,348
-28
187
716
91
38
99
103
126
984
-42
577
1,618
251
105
890
-106
213
2,576
2,100
3,486
-282
4,091
530
298
687
235
109
667
-487
234
-124
122
-595
934
1. These data also appear in the Board's G.20 (422) release. For address, see
inside front cover.
2. Data on pools of securitized assets are not seasonally adjusted.
Real Estate
1.53
A37
MORTGAGE MARKETS
Millions of dollars; exceptions noted.
1989
Item
1987
1988
1989
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
6
Conventional mortgages on new homes
Terms
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan/price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)
Contract rate (percent per year)
Yield (percent per year)
/ OTS series
8 HUD series4
137.0
100.5
75.2
27.8
2.26
8.94
150.0
110.5
75.5
28.0
2.19
8.81
159.6
117.0
74.5
28.1
2.06
9.76
150.5
111.0
75.2
27.8
1.91
10.09
174.5
125.3
73.8
28.6
2.42
10.06
160.8
119.4
75.6
28.3
2.31
9.83
160.6
118.6
75.3
28.4
2.14
9.87
153.1
111.3
73.2
27.3
1.95
9.77
152.8
110.4
73.0
27.1
1.81
9.78
162.7
119.9
74.4
27.9
2.18
9.70
9.31
10.17
9.18
10.30
10.11
10.22
10.42
10.04
10.48
9.70
10.22
10.05
10.24
10.04
10.11
9.79
10.09
9.72
10.07
9.75
10.16
9.43
10.49
9.83
n.a.
n.a.
10.08
9.75
9.61
9.55
9.95
9.48
9.94
9.47
9.73
9.21
9.69
9.07
9.71
n.a.
SECONDARY MARKETS
Yield (percent per year)
9 FHA mortgages (HUD series)
10 GNMA securities6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
12 FHA/VA-insured
13 Conventional
95,030
21,660
73,370
101,329
19,762
81,567
104,974
19,640
85,335
103,309
19,586
83,723
104,421
19,630
84,791
105,8%
19,589
86,307
107,052
19,608
87,444
108,180
19,843
88,337
109,076
19,953
89,123
110,721
20,283
90,438
Mortgage transactions (during period)
14 Purchases
20,531
23,110
22,518
1,862
2,091
2,724
2,223
2,267
2,376
2,982
Mortgage commitments7
15 Contracted (during period)
16 Outstanding (end of period)
25,415
4,886
23,435
2,148
27,409
n.a.
2,573
5,236
2,513
5,648
2,842
5,755
2,328
5,865
2,963
6,548
2,536
6,645
2,495
n.a.
Mortgage holdings (end of periodf
17 Total
18 FHA/VA
19 Conventional
12,802
686
12,116
15,105
620
14,485
n.a.
n.a.
n.a.
20,121
585
19,535
20,533
585
19,948
21,024
589
20,435
20,650
540
20,110
21,342
588
20,755
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Mortgage transactions (during period)
20 Purchases
21 Sales
76,845
75,082
44,077
39,780
n.a.
72,932
7,392
6,551
5,720
5,180
7,283
6,650
7,889
8,050
7,884
7,058
n.a.
7,059
n.a.
8,526
Mortgage commitments9
22 Contracted (during period)
71,467
66,026
n.a.
7,948
6,608
5,705
7,708
7,555
n.a.
n.a.
FEDERAL HOME LOAN MORTGAGE CORPORATION
1. Weighted averages based on sample surveys of mortgages originated by
major institutional lender groups; compiled by the Federal Home Loan Bank
Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and "points" paid (by the
borrower or the seller) to obtain a loan.
3. Average effective interest rates on loans closed, assuming prepayment at the
end of 10 years.
4. Average contract rates on new commitments for conventional first mortgages; from Department of Housing and Urban Development.
5. Average gross yields on 30-year, minimum-downpayment, Federal Housing
Administration-insured first mortgages for immediate delivery in the private
secondary market. Based on transactions on first day of subsequent month. Large
monthly movements in average yields may reflect market adjustments to changes
in maximum permissable contract rates.
6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities, assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying
the prevailing ceiling rate. Monthly figures are averages of Friday figures from the
Wall Street Journal.
7. Includes some multifamily and nonprofit hospital loan commitments in
addition to 1- to 4-family loan commitments accepted in FNMA's free market
auction system, and through the FNMA-GNMA tandem plans.
8. Includes participation as well as whole loans.
9. Includes conventional and government-underwritten loans. FHLMC's mortgage commitments and mortgage transactions include activity under mortgage/
securities swap programs, while the corresponding data for FNMA exclude swap
activity.
A38
1.54
DomesticNonfinancialStatistics • March 1990
MORTGAGE DEBT OUTSTANDING 1
Millions of dollars, end of period
1988
Type of holder, and type of property
1986
1987
1989
1988
Q3
Q4
Q1
Q2
Q3P
1 All holders
2,618,324
2,977,293
3,268,285
3,189,132
3,268,285
3,328,824
3,391,259
3,453,883
2
3
4
5
1,719,673
247,831
555,039
95,781
1,959,607
273,954
654,863
88,869
2,189,475
290,355
701,652
86,803
2,134,225
284,675
683,207
87,025
2,189,475
290,355
701,652
86,803
2,230,006
296,139
716,695
85,984
2,281,317
297,860
725,341
86,741
2,331,196
302,121
733,988
86,578
1,507,944
502,534
235,814
31,173
222,799
12,748
1,704,560
591,369
276,270
33,330
267,340
14,429
1,874,967
669,160
314,283
34,131
305,242
15,504
1,833,800
650,799
307,041
33,960
294,398
15,400
1,874,967
669,160
314,283
34,131
305,242
15,504
1,905,052
688,662
324,681
34,172
313,941
15,868
1,932,154
715,049
338,872
34,954
324,878
16,345
1,950,634
737,979
349,739
36,075
335,2%
16,869
777,967
559,067
97,059
121,236
605
193,842
12,827
20,952
149,111
10,952
33,601
860,467
602,408
106,359
150,943
757
212,375
13,226
22,524
166,722
9,903
40,349
929,647
678,263
111,302
139,416
666
232,639
15,284
23,562
184,124
9,669
43,521
914,280
665,294
109,287
139,029
670
225,627
14,917
23,139
178,166
9,405
43,094
929,647
678,263
111,302
139,416
666
232,639
15,284
23,562
184,124
9,669
43,521
936,091
682,658
112,507
140,255
671
234,910
12,690
24,636
188,073
9,511
45,389
933,694
684,828
110,009
138,201
656
236,160
12,745
25,103
188,756
9,556
47,251
927,982
680,572
109,353
137,406
651
235,767
13,045
25,913
187,208
9,601
48,906
203,800
889
47
842
48,421
21,625
7,608
8,446
10,742
192,721
444
25
419
43,051
18,169
8,044
6,603
10,235
200,570
26
26
0
42,018
18,347
8,513
5,343
9,815
198,027
64
51
13
41,836
18,268
8,349
5,300
9,919
200,570
26
26
0
42,018
18,347
8,513
5,343
9,815
199,847
26
26
0
41,780
18,347
8,615
5,101
9,717
201,909
24
24
0
40,711
18,391
8,778
3,885
9,657
206,503
23
23
0
41,117
18,405
8,916
4,366
9,430
Federal Housing and Veterans Administration
1- to 4-family
Multifamily
Federal National Mortgage Association
1- to 4-family
Multifamily
Federal Land Banks
1- to 4-family
Farm
Federal Home Loan Mortgage Corporation ..
1- to 4-family
Multifamily
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11,564
10,010
1,554
5,574
2,557
3,017
96,649
89,666
6,983
34,131
2,008
32,123
12,872
11,430
1,442
5,973
2,672
3,301
103,013
95,833
7,180
32,115
1,890
30,225
17,425
15,077
2,348
5,666
2,432
3,234
102,453
95,417
7,036
32,566
1,917
30,649
15,442
13,322
2,120
5,973
2,672
3,301
103,013
95,833
7,180
32,115
1,890
30,225
17,425
15,077
2,348
6,075
2,550
3,525
101,991
94,727
7,264
31,261
1,839
29,422
18,714
16,192
2,522
6,424
2,827
3,597
103,309
95,714
7,595
31,467
1,851
29,616
19,974
17,305
2,669
5,853
2,730
3,123
107,052
99,168
7,884
30,943
1,821
29,122
21,515
18,493
3,022
44 Mortgage pools or trusts6
45 Government National Mortgage Association..
46
1- to 4-family
47
Multifamily
48 Federal Home Loan Mortgage Corporation ..
49
1- to 4-family
50
Multifamily
51 Federal National Mortgage Association
52
1- to 4-family
53
Multifamily
54 Farmers Home Administration
55
1- to 4-family
56
Multifamily
57
Commercial
58
Farm
565,428
262,697
256,920
5,777
171,372
166,667
4,705
97,174
95,791
1,383
348
142
0
132
74
718,297
317,555
309,806
7,749
212,634
205,977
6,657
139,960
137,988
1,972
245
121
0
63
61
810,887
340,527
331,257
9,270
226,406
219,988
6,418
178,250
172,331
5,919
104
26
0
38
40
782,802
333,177
324,573
8,604
220,684
214,195
6,489
167,170
162,228
4,942
106
27
0
38
41
810,887
340,527
331,257
9,270
226,406
219,988
6,418
178,250
172,331
5,919
104
26
0
38
40
839,684
348,622
337,563
11,059
234,695
228,389
6,306
188,071
181,352
6,719
96
24
0
34
38
861,827
353,154
341,951
11,203
242,789
236,404
6,385
196,501
188,774
7,727
85
23
0
26
36
898,388
361,291
349,830
11,461
256,8%
250,123
6,773
208,894
200,302
8,592
78
22
0
22
34
59 Individuals and others7
60 1- to 4-family
61 Multifamily
62 Commercial
63 Farm
341,152
197,868
66,940
53,315
23,029
361,715
201,704
75,458
63,192
21,361
381,861
215,077
78,411
67,489
20,884
374,503
209,784
77,502
66,276
20,941
381,861
215,077
78,411
67,489
20,884
384,241
215,379
78,814
69,291
20,757
395,369
225,059
79,840
69,595
20,875
398,358
226,788
81,009
69,690
20,871
1- to 4-family
Multifamily
Commercial
Farm
6 Selected financial institutions
7 Commercial banks
8
1- to 4-family
9
Multifamily
10
Commercial
11
Farm
12
13
14
15
16
17
18
19
20
21
22
Savings institutions3
1- to 4-family
Multifamily
Commercial
Farm
Life insurance companies
1- to 4-family
Multifamily
Commercial
Farm
Finance companies
23 Federal and related agencies
24 Government National Mortgage Association..
25
1- to 4-family
26
Multifamily
27 Farmers Home Administration
28
1- to 4-family
29
Multifamily
30
Commercial
31
Farm
32
33
34
35
36
37
38
39
40
41
42
43
1. Based on data from various institutional and governmental sources, with
some quarters estimated in part by the Federal Reserve. Multifamily debt refers
to loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not bank trust
departments.
3. Includes savings banks and savings and loan associations. Beginning 1987:1,
data reported by FSLIC-insured institutions include loans in process and other
contra assets (credit balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels).
4. Assumed to be entirely 1- to 4-family loans.
5. FmHA-guaranteed securities sold to the Federal Financing Bank were
reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:4,
because of accounting changes by the Farmers Home Administration.
6. Outstanding principal balances of mortgage pools backing securities insured
or guaranteed by the agency indicated. Includes private pools which are not
shown as a separate line item.
7. Other holders include mortgage companies, real estate investment trusts,
state and local credit agencies, state and local retirement funds, noninsured
pension funds, credit unions, and other U.S. agencies.
Consumer Installment
1.55
Credit
A39
CONSUMER INSTALLMENT CREDIT 1 Total Outstanding, and Net Change, seasonally adjusted
Millions of dollars
1989
Holder, and type of credit
1987
Mar.
May
Apr.
June
July
Aug.
Sept.
Oct/
Nov.
Amounts outstanding (end of period)
607,721
659,507
691,162
693,911
698,132
700,849
700,344
703,001
704,371
707,562
711,799
282,910
140,281
80,087
40,975
59,851
3,618
n.a.
318,925
145,180
86,118
43,498
62,099
3,687
n.a.
318,242
143,070
88,514
41,300
62,735
3,682
33,619
320,458
144,378
89,330
41,301
61,919
3,787
32,737
323,363
145,523
89,890
41,323
61,311
3,897
32,826
324,438
146,055
90,073
41,649
59,920
4,017
34,696
323,621
145,488
89,852
41,798
60,092
3,936
35,557
326,135
144,386
90,016
41,989
59,229
3,976
37,270
327,327
144,188
89,892
42,221
59,883
3,886
36,974
330,746
141,273
89,856
42,319
58,890
3,804
40,675
332,300
141,440
90,035
42,554
57,967
3,772
43,731
By major type of credit
9 Automobile
10 Commercial banks
11 Credit unions
12 Finance companies
13 Savings institutions
14 Pools of securitized assets
265,976
109,201
40,351
98,195
18,228
n.a.
281,174
123,259
41,326
97,204
19,385
n.a.
288,850
123,062
42,211
89,567
19,231
14,779
289,654
123,878
42,510
90,268
18,866
14,132
290,741
125,118
42,687
90,976
18,566
13,395
290,192
125,592
42,684
91,184
18,032
12,700
288,526
124,881
42,624
90,213
17,972
12,835
288,533
126,597
42,747
89,439
17,603
12,147
287,754
126,759
42,733
88,317
17,990
11,955
288,747
128,238
42,761
84,814
17,692
15,243
289,266
128,635
42,891
84,707
17,415
15,619
Revolving
Commercial banks
Retailers
Gasoline companies
Savings institutions
Credit unions
Pools of securitized assets
153,884
99,119
36,389
3,618
10,367
4,391
n.a.
174,792
117,572
38,692
3,687
10,151
4,691
n.a.
182,831
112,553
36,489
3,682
10,860
4,947
14,299
184,500
114,130
36,497
3,787
10,918
5,035
14,134
186,502
115,407
36,504
3,897
11,008
5,109
14,578
189,622
115,561
36,814
4,017
10,951
5,162r
17,117
191,028
115,967
36,963
3,936
11,176
5,192
17,795
194,398
117,012
37,134
3,976
11,206
5,244
19,827
195,302
117,868
37,355
3,886
11,183
5,279
19,731
196,379
118,801
37,435
3,804
10,998
5,319
20,021
199,191
119,335
37,639
3,772
10,826
5,372
22,247
26,387
9,220
7,762
9,406
25,744
8,974
7,186
9,583
24,168
8,844
5,687
9,637
23,993
8,836
5,659
9,498
23,952
8,878
5,684
9,390
23,685
8,847
5,674
9,163
23,630
8,830
5,624
9,176
22,938
8,808
5,100
9,030
22,991
8,788
5,087
9,116
22,947
8,724
5,272
8,951
22,523
8,942
4,783
8,797
161,475
65,370
34,324
35,344
4,586
21,850
n.a.
177,798
69,120
40,790
40,102
4,807
22,981
n.a.
195,314
73,783
47,816
41,357
4,811
23,006
4,541
195,763
73,614
48,451
41,785
4,804
22,638
4,471
196,936
73,960
48,863
42,094
4,819
22,347
4,853
197,349
74,438
49,197
42,228
4,834
21,773
4,879
197,161
73,944
49,650
42,036
4,835
21,769
4,927
197,132
73,718
49,847
42,025
4,855
21,390
5,296
198,324
73,912
50,784
41,880
4,866
21,593
5,288
199,490
74,983
51,187
41,776
4,884
21,249
5,411
200,818
75,389
51,950
41,772
4,914
20,929
5,865
1 Total
2
3
4
5
6
7
8
16
17
18
19
20
21
By major holder
Commercial banks
Finance companies
Credit unions
Retailers
Savings institutions
Gasoline companies
Pools of securitized assets4
27 Mobile home
23 Commercial banks
24 Finance companies
25 Savings institutions
26 Other
77 Commercial banks
28 Finance companies
29 Credit unions
30 Retailers
Savings institutions
31
32 Pools of securitized assets4
Net change (during period)
35,674
51,786
3,765
2,749
4,221
2,717
-505
2,657
1,371
3,191
4,236
19,884
6,349
3,853
1,568
3,689
332
n.a.
36,015
4,899
6,031
2,523
2,248
69
n.a.
-181
-349
701
247
-375
6
3,716
2,216
1,309
815
2
-815
104
-882
2,904
1,145
560
21
-609
110
89
1,076
532
184
326
-1,390
120
1,870
-817
-567
-222
149
172
-81
861
2,514
-1,102
164
192
-863
39
1,713
1,192
-198
-124
231
654
-89
-296
3,418
-2,915
-36
98
-993
-82
3,701
1,555
167
179
235
-923
-33
3,056
By major type of credit
41 Automobile
42 Commercial banks
43 Credit unions
44 Finance companies
Savings institutions
45
46 Pools of securitized assets
18,663
7,919
1,916
5,639
3,188
n.a.
15,198
14,058
975
-991
1,157
n.a.
82
79
247
778
-233
-789
804
816
300
701
-366
-647
1,087
1,239
177
708
-300
-737
-549
474
-3
208
-533
-695
-1,667
-711
-60
-970
-61
135
7
1,716
123
-775
-369
-688
-779
162
-14
-1,122
387
-192
993
1,479
28
-3,503
-298
3,288
519
397
130
-107
-277
376
47 Revolving
48 Commercial banks
49 Retailers
50 Gasoline companies
Savings institutions
51
52 Credit unions
53 Pools of securitized assets
16,871
12,188
1,866
332
1,771
715
n.a.
20,908
18,453
2,303
69
-216
300
n.a.
4,261
848
232
6
138
81
2,957
1,670
1,576
8
104
58
88
-165
2,002
1,277
7
110
90
74
444
3,120
154
310
120
-57
53r
2,539
1,406
405
149
-81
225
30
678
3,370
1,045
171
39
30
52
2,032
904
856
221
-89
-22
35
-96
1,076
933
80
-82
-185
40
290
2,813
534
205
-33
-172
53
2,226
54 Mobile home
55 Commercial banks
56 Finance companies
57 Savings institutions
-968
192
-1,052
-107
-643
-246
-576
177
-1,824
-131
-1,621
-72
-174
-7
-28
-140
-41
42
25
-108
-267
-31
-10
-227
-56
-18
-50
12
-692
-22
-524
-146
53
-20
-13
86
-44
-64
185
-165
-424
219
-489
-154
58 Other
59 Commercial banks
60 Finance companies
61 Credit unions
62 Retailers
63 Savings institutions
64 Pools of securitized assets4
1,108
-415
1,761
1,221
-297
-1,162
n.a.
16,323
3,750
6,466
4,758
221
1,131
n.a.
1,246
-977
494
374
16
-208
1,548
449
-169
635
428
-7
-368
-70
1,173
346
412
309
15
-291
382
413
478
334
133
16
-574
26
-189
-494
453
-191
0
-5
48
-29
-226
197
-11
21
-379
369
1,192
194
937
-145
11
203
-8
1,166
1,071
403
-104
18
-344
123
1,329
405
763
-4
30
-320
454
33 Total
34
35
36
37
38
39
40
By major holder
Commercial banks
Finance companies
Credit unions
Retailers
Savings institutions
Gasoline companies
Pools of securitized assets4
1. The Board's series cover most short- and intermediate-term credit extended
to individuals that is scheduled to be repaid (or has the option of repayment) in
two or more installments.
These data also appear in the Board's G.19 (421) release. For address, see
inside front cover.
2. More detail for finance companies is available in the G. 20 statistical release.
3. Excludes 30—day charge credit held by travel and entertainment companies.
4. Outstanding balances of pools upon which securities have been issued; these
balances are no longer carried on the balance sheets of the loan originator.
A40
DomesticNonfinancialStatistics • March 1990
1.56 TERMS OF CONSUMER INSTALLMENT CREDIT 1
Percent unless noted otherwise
1989
Item
1986
1987
1988
May
June
July
Aug.
Sept.
Oct.
Nov.
INTEREST RATES
1
2
3
4
5
6
Commercial banks2
48-month new car
24-month personal
120-month mobile home
Credit card
Auto finance companies
New car
Used car
11.33
14.82
13.99
18.26
10.45
14.22
13.38
17.92
10.85
14.68
13.54
17.78
12.44
15.65
14.35
18.11
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
12.13
15.45
14.13
18.07
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
11.94
15.42
13.97
18.07
9.44
15.95
10.73
14.60
12.60
15.11
11.80
16.45
11.96
16.45
11.94
16.37
12.22
16.31
12.42
16.22
13.04
16.17
13.27
16.09
50.0
42.6
53.5
45.2
56.2
46.7
52.7
46.6
53.0
46.5
52.9
46.4
52.9
46.2
53.1
46.2
54.4
45.8
55.1
45.6
91
97
93
98
94
98
91
97
91
97
91
97
90
96
88
96
88
96
89
96
10,665
6,555
11,203
7,420
11,663
7,824
11,973
7,908
12,065
7,921
12,108
7,988
11,949
7,874
11,841
7,856
11,965
7,904
12,279
8,063
OTHER TERMS4
7
8
9
10
11
12
Maturity (months)
New car
Used car
Loan-to-value ratio
New car
Used car
Amount financed (dollars)
New car
Used car
1. These data also appear in the Board's G.19 (421) release. For address, see
inside front cover.
2. Data for midmonth of quarter only.
3. Before 1983 the maturity for new car loans was 36 months, and for mobile
home loans was 84 months.
4. At auto finance companies.
Flow of Funds
1.57
A41
FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1988
Ql
Q2
1989
Q3
Q4
Ql
Q2
Q3
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors
750.7
846.3
831.1
693.2
767.0
728.2
827.2
754.4
758.3
792.2
658.9
688.1
By sector and instrument
2 U.S. government
3 Treasury securities
4 Agency issues and mortgages
198.8
199.0
-.2
223.6
223.7
-.1
215.0
214.7
.4
144.9
143.4
1.5
157.5
140.0
17.4
211.6
212.0
-.5
113.7
106.0
7.7
162.5
141.6
20.9
142.1
100.5
41.6
199.9
201.1
-1.2
70.9
65.8
5.1
149.0
149.1
-.2
5 Private domestic nonfinancial sectors
6 Debt capital instruments
Tax-exempt obligations
7
8
Corporate bonds
9
Mortgages
Home mortgages
10
Multifamily residential
11
12
Commercial
13
Farm
551.9
320.0
51.0
46.1
222.8
136.7
25.2
62.2
-1.2
622.7
451.4
135.4
73.8
242.2
156.8
29.8
62.2
-6.6
616.1
460.3
22.7
121.3
316.3
218.7
33.5
73.6
-9.5
548.3
458.5
34.1
99.9
324.5
234.9
24.4
71.6
-6.4
609.6
462.6
34.0
120.9
307.7
229.1
18.9
61.7
-2.1
516.6
386.5
29.1
118.8
238.7
170.7
24.2
48.5
-4.7
713.4
561.0
37.9
143.9
379.2
300.7
14.7
65.4
-1.6
592.0
463.9
34.8
115.9
313.2
231.0
19.5
65.4
-2.6
616.3
438.9
34.3
104.9
299.7
214.0
17.3
67.7
.7
592.3
427.8
29.3
111.6
286.9
205.2
27.2
58.8
-4.4
588.0
394.1
20.6
138.5
234.9
186.1
8.1
38.7
2.1
539.1
412.6
32.6
113.6
266.4
191.9
21.3
53.2
.0
14
15
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
231.9
81.6
66.3
21.7
62.2
171.3
82.5
38.6
14.6
35.6
155.8
58.0
66.7
-9.3
40.5
89.7
32.9
10.8
2.3
43.8
147.0
51.1
38.4
11.6
45.9
130.1
43.7
20.8
2.4
63.2
152.4
51.9
58.8
6.8
34.8
128.1
35.5
7.3
17.1
68.1
177.3
73.1
66.6
20.0
17.6
164.5
34.8
23.1
44.1
62.5
193.9
46.0
29.9
44.9
73.1
126.5
30.9
21.6
20.4
53.6
19
20
21
22
23
24
25
By borrowing sector
State and local governments
Households
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
551.9
28.1
231.5
292.3
-.4
123.2
169.6
622.7
90.9
284.6
247.2
-14.5
129.3
132.4
616.1
36.2
289.2
290.7
-16.3
103.2
203.7
548.3
33.6
271.9
242.8
-10.6
107.9
145.5
609.6
29.8
287.9
291.8
-7.5
91.9
207.5
516.6
23.4
230.2
263.0
-12.7
85.2
190.5
713.4
37.0
346.7
329.7
-3.3
83.6
249.4
592.0
28.1
291.6
272.3
-2.2
100.5
174.0
616.3
30.6
283.3
302.4
-11.8
98.2
216.0
592.3
29.7
263.1
299.4
-2.2
91.1
210.6
588.0
27.7
227.1
333.3
.3
70.0
263.0
539.1
29.5
254.8
254.9
2.8
81.7
170.4
26 Foreign net borrowing in United States
27 Bonds
28 Bank loans n.e.c
29 Open market paper
30 U.S. government loans
8.4
3.8
-6.6
6.2
5.0
1.2
3.8
-2.8
6.2
-6.0
9.7
3.1
-1.0
11.5
-3.9
4.9
7.4
-3.6
2.1
-1.0
6.9
6.9
-1.8
9.6
-7.8
4.8
14.2
1.7
.7
-11.8
5.4
2.6
-3.3
6.5
-.4
4.1
5.9
.0
10.3
-12.1
13.3
5.1
-5.7
21.0
-7.1
-1.1
3.2
4.9
12.1
-21.4
-3.9
11.1
1.7
-8.1
-8.6
28.7
9.1
.0
20.4
-.9
31 Total domestic plus foreign
759.1
847.5
840.9
698.1
773.9
733.0
832.6
758.5
771.7
791.1
655.0
716.8
Financial sectors
32 Total net borrowing by financial sectors
150.7
201.3
318.9
315.0
264.2
242.5
263.9
232.1
318.3
394.4
123.4
152.5
By instrument
U.S. government related
Sponsored credit agency securities
Mortgage pool securities
Loans from U.S. government
74.9
30.4
44.4
.0
101.5
20.6
79.9
1.1
187.9
15.2
173.1
-.4
185.8
30.2
156.4
-.8
137.5
44.9
92.6
.0
128.8
59.5
69.3
.0
104.3
11.1
93.1
.0
144.4
46.5
97.8
.0
172.5
62.3
110.1
.0
216.1
84.9
131.2
.0
105.8
12.5
93.3
.0
137.4
10.0
127.4
.0
75.9
34.3
.4
1.4
24.0
15.7
99.7
50.9
.1
2.6
32.0
14.2
131.0
82.9
.1
4.0
24.2
19.8
129.2
78.9
.4
-3.3
28.8
24.4
126.7
51.7
.3
1.4
53.6
19.7
113.7
60.0
-.1
5.9
38.5
9.4
159.6
71.1
.1
5.7
70.5
12.3
87.7
32.5
-.1
-5.6
35.1
25.8
145.8
43.0
1.2
-.3
70.4
31.4
178.3
52.7
.3
3.0
53.2
69.1
17.6
31.4
.0
.3
2.8
-16.9
15.1
26.4
.0
4.1
28.2
-43.7
150.7
201.3
318.9
315.0
264.2
242.5
263.9
232.1
318.3
394.4
123.4
152.5
30.4
44.4
75.9
7.3
16.1
17.2
1.2
24.0
.8
9.3
21.7
79.9
99.7
-4.9
16.6
17.3
1.5
57.2
.5
11.5
14.9
173.1
131.0
-3.6
15.2
20.9
4.2
54.5
1.0
39.0
29.5
156.4
129.2
7.1
14.3
19.6
8.1
40.3
.8
39.1
44.9
92.6
126.7
-3.9
5.2
19.9
1.9
67.0
4.1
32.5
59.5
69.3
113.7
-16.7
-8.8
10.0
2.3
78.4
5.4
43.0
11.1
93.1
159.6
-1.6
22.4
19.1
1.1
85.4
1.7
31.5
46.5
97.8
87.7
-.9
6.1
24.1
.5
40.7
-5.9
23.1
62.3
110.1
145.8
3.7
.8
26.3
3.8
63.6
15.0
32.5
84.9
131.2
178.3
-13.4
6.4
71.3
-2.8
78.4
-.9
39.3
12.5
93.3
17.6
-.9
6.5
-16.2
-1.1
32.8
-2.2
-1.4
10.0
127.4
15.1
7.5
6.7
-43.9
-2.9
43.2
-1.4
5.9
33
34
35
36
37 Private financial sectors
38 Corporate bonds
39 Mortgages
40 Bank loans n.e.c
41
Open market paper
42 Loans from Federal Home Loan Banks
By sector
43
44
45
46
47
48
49
50
51
52
53
Sponsored credit agencies
Mortgage pools
Private financial sectors
Commercial banks
Bank affiliates
Savings and loan associations
Mutual savings banks
Finance companies
REITs
SCO Issuers
A42
DomesticNonfinancialStatistics • March 1990
1.57—Continued
1989
1988
Transaction category, sector
1984
1985
1986
1987
1988
Q1
Q2
Q3
Q4
Q1
Q2
Q3
All sectors
54 Total net borrowing
909.8
975.5
1,096.5
990.6
778.4
869.3
55
56
57
58
59
60
61
62
273.8
51.0
84.3
223.1
81.6
61.1
51.9
82.9
324.2
135.4
128.4
242.2
82.5
38.3
52.8
45.0
403.4
22.7
207.3
316.4
58.0
69.7
26.4
56.1
331.5
34.1
186.3
324.9
32.9
3.8
33.2
66.5
294.9
34.0
179.5
308.0
51.1
38.0
74.9
57.8
340.4
29.1
193.0
238.6
43.7
28.3
41.6
60.8
218.0
37.9
217.6
379.3
51.9
61.2
83.9
46.8
306.8
34.8
154.3
313.1
35.5
1.7
62.5
81.8
314.6
34.3
153.0
300.8
73.1
60.7
111.5
42.0
416.0
29.3
167.5
287.2
34.8
31.1
109.4
110.2
176.7
20.6
181.1
234.9
46.0
31.9
39.6
47.5
286.4
32.6
149.2
266.4
30.9
25.8
69.0
9.1
6.3
14.4
.0
-7.9
10.4
47.6
1.2
10.6
-17.9
-22.5
43.7
-7.5
744.4
192.5
831.9
209.3
831.2
215.0
701.1
152.8
756.6
147.1
680.6
164.0
825.9
112.5
743.8
151.8
776.3
160.0
814.7
222.4
615.2
27.2
695.6
156.4
-163.5 -163.5
-48.7
-64.7
U.S. government securities
State and local obligations
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans
63 MEMO: U.S. government, cash balance
64
65
Totals net of changes in U.S. government cash balances
Net borrowing by domestic nonfinancial
Net borrowing by U.S. government
1,048.8 1,159.8 1,013.2 1,038.1
1,089.9 1,185.4
External corporate equity funds raised in United States
66 Total net share issues
67
68
69
70
71
Mutual funds
All other
Nonfinancial corporations
Financial corporations
Foreign shares purchased in United States
-36.0
20.1
90.5
29.3
-65.3
-74.5
8.2
.9
84.4
-64.3
-81.5
13.5
3.7
159.0
-68.5
-80.8
11.1
1.2
14.3 -117.9 -101.0 -133.7
71.6
-.7
-57.3 -117.2
-76.5 -130.5
21.4
12.4
-2.1
.9
-9.5
-6.6
-91.5 -127.0
-95.0 -140.0
19.0
2.4
1.1
-6.0
-73.5
24.0
50.0
1.5
11.9
3.6
-75.0 -175.4 -167.1 -72.7 -114.6
-92.0 -195.0 -180.0 -105.0 -145.0
17.1
17.1
14.6
13.5
9.4
2.4
15.2
13.3
6.1
3.6
Flow of Funds
1.58
A43
DIRECT A N D INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
Billions of dollars, except as noted; quarterly data are at seasonally adjusted annual rates.
1989
1988
Transaction category, or sector
1984
1985
1987
1986
1988
Q1
1 Total funds advanced in credit markets to domestic
nonfinancial sectors
Q2
Q3
Q4
Q1
Q2
Q3
750.7
846.3
831.1
693.2
767.0
728.2
827.2
754.4
758.3
792.2
658.9
688.1
157.6
38.9
56.5
15.7
46.6
202.0
45.9
94.6
14.2
47.3
314.0
69.4
170.1
19.8
54.7
262.8
70.1
153.2
24.4
15.1
237.6
85.0
104.0
19.7
28.8
278.6
153.2
88.9
9.4
27.1
185.5
43.3
107.9
12.3
22.1
196.9
24.1
98.1
25.8
49.0
289.3
119.6
121.2
31.4
17.1
348.7
26.7
97.6 -102.4
133.3
106.6
69.1 -16.9
48.7
39.4
267.4
117.1
149.0
-43.7
45.0
17.1
74.3
8.4
57.9
17.8
103.5
18.4
62.3
9.7
187.2
19.4
97.8
-7.9
183.4
24.7
62.7
-4.9
129.6
10.5
102.3
-7.0
114.3
2.7
168.6
-7.6
105.7
5.0
82.5
4.3
130.1
15.5
47.0
-9.3
168.5
18.9
111.2
2.8
221.4
5.2
119.3
3.1
15.6
-3.9
11.9
5.2
165.6
-30.7
127.2
74.9
8.4
101.5
1.2
187.9
9.7
185.8
4.9
137.5
6.9
128.8
4.8
104.3
5.4
144.4
4.1
172.5
13.3
216.1
-1.1
105.8
-3.9
137.4
28.7
Private domestic funds advanced
13 Total net advances
14 U.S. government securities
15 State and local obligations
16 Corporate and foreign bonds
17 Residential mortgages
18 Other mortgages and loans
19 LESS: Federal Home Loan Bank advances
676.3
234.9
51.0
35.1
105.3
265.6
15.7
747.0
278.2
135.4
40.8
91.8
214.8
14.2
714.8
333.9
22.7
84.2
82.0
211.8
19.8
621.1
261.4
34.1
87.5
106.1
156.5
24.4
673.8
209.9
34.0
104.4
144.0
201.2
19.7
583.2
187.2
29.1
126.5
106.0
143.8
9.4
751.3
174.7
37.9
126.2
207.5
217.2
12.3
705.9
282.8
34.8
91.7
152.3
170.1
25.8
654.8
195.0
34.3
73.0
110.1
273.7
31.4
658.4
318.4
29.3
89.4
99.2
191.3
69.1
734.1
279.1
20.6
132.3
87.5
197.7
-16.9
586.8
169.3
32.6
103.4
64.2
173.6
-43.7
Private financial intermediation
20 Credit market funds advanced by private financial
institutions
Commercial banking
21
22 Savings institutions
23 Insurance and pension funds
24 Other finance
585.8
169.2
154.7
121.8
140.1
579.9
186.0
87.9
154.4
151.6
744.0
197.5
107.6
174.6
264.2
560.8
136.8
136.8
210.9
76.3
558.2
155.3
120.5
194.9
87.4
617.4
87.9
96.0
257.4
176.1
553.7
194.5
134.9
182.7
41.6
427.5
118.4
157.0
150.5
1.7
634.1
220.5
94.2
189.1
130.3
568.6
120.6
62.2
228.3
157.6
342.2
544.3
158.6
132.9
-73.1 -154.2
182.5
156.0
276.2
207.4
25 Sources of funds
26 Private domestic deposits and RPs
27 Credit market borrowing
28 Other sources
29
Foreign funds
Treasury balances
30
31
Insurance and pension reserves
Other, net
32
585.8
322.6
75.9
187.3
8.8
4.0
124.0
50.5
579.9
214.3
99.7
265.9
19.7
10.3
131.9
104.1
744.0
262.6
131.0
350.4
12.9
1.7
149.3
186.5
560.8
144.1
129.2
287.5
43.7
-5.8
176.1
73.6
558.2
219.2
126.7
212.3
9.3
7.3
186.8
8.8
617.4
305.5
113.7
198.2
-60.6
44.2
190.1
24.4
553.7
102.0
159.6
292.1
94.5
-16.3
184.0
29.9
427.5
191.9
87.7
147.9
-42.1
5.6
109.8
74.5
634.1
277.4
145.8
210.9
45.5
-4.1
263.3
-93.8
568.6
166.5
178.3
223.8
-28.4
-21.6
133.0
140.8
544.3
213.4
17.6
313.3
-16.0
26.6
151.5
151.2
342.2
282.7
15.1
44.3
10.6
-6.4
88.7
-48.6
Private domestic nonfinancial investors
33 Direct lending in credit markets
34 U.S. government securities
35 State and local obligations
36 Corporate and foreign bonds
37 Open market paper
38 Other
166.4
111.4
27.1
-4.1
7.8
24.2
266.8
157.8
37.7
4.2
47.5
19.6
101.8
60.9
-21.7
39.3
5.4
17.9
189.6
100.0
45.6
24.1
6.6
13.3
242.3
149.3
33.9
2.6
37.2
19.3
79.5
119.6
19.7
-39.6
-14.5
-5.8
357.2
103.2
37.2
61.4
98.6
56.8
366.2
225.7
56.4
-5.8
77.4
12.5
166.5
148.7
22.3
-5.7
-12.6
13.9
268.1
211.1
35.7
-15.4
67.1
-30.3
207.5
123.2
-11.4
32.8
19.5
43.4
259.7
137.4
22.6
21.2
43.4
35.1
39 Deposits and currency
40 Currency
41
Checkable deposits
42 Small time and savings accounts
43 Money market fund shares
44 Large time deposits
45
Security RPs
46 Deposits in foreign countries
326.1
8.6
30.2
150.7
49.0
82.9
9.8
-5.1
224.6
12.4
41.9
138.5
8.9
7.4
17.7
-2.1
283.0
14.4
95.0
120.6
38.3
-11.4
20.2
5.9
160.2
19.0
-3.0
76.0
27.2
26.7
17.2
-2.8
221.8
14.7
12.3
122.2
22.8
40.8
21.2
-12.1
313.5
10.7
3.6
199.5
57.6
16.9
27.9
-2.7
110.0
13.8
-30.5
130.5
-21.0
-3.5
26.5
-5.9
215.7
29.3
-21.4
72.7
-3.5
137.0
7.0
-5.5
248.2
5.1
97.3
86.0
58.1
12.7
23.3
-34.4
211.2
19.3
-54.5
26.4
51.1
111.9
31.6
25.5
231.1
12.6
-83.0
117.4
111.8
39.8
27.5
5.1
273.2
11.4
35.4
119.1
124.3
-15.4
19.4
-20.9
47 Total of credit market instruments, deposits, and
currency
2
3
4
5
6
By public agencies and foreign
Total net advances
U.S. government securities
Residential mortgages
FHLB advances to thrifts
Other loans and securities
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
Agency and foreign borrowing not in line 1
11 Sponsored credit agencies and mortgage pools
12 Foreign
7
8
9
10
492.5
491.4
384.8
349.8
464.2
393.0
467.2
581.9
414.7
479.4
438.6
532.9
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
20.8
86.6
66.7
23.8
77.6
82.0
37.3
104.1
110.7
37.6
90.3
106.4
30.7
82.8
111.7
38.0
105.9
108.1
22.3
73.7
177.0
26.0
60.6
4.9
37.5
96.8
156.7
44.1
86.4
90.9
4.1
74.1
-4.1
37.3
58.3
137.8
MEMO: Corporate equities not included above
51 Total net issues
-36.0
20.1
90.5
14.3
-117.9 -101.0 -133.7
-73.5
-163.5 -163.5
-48.7
-64.7
52 Mutual fund shares
53 Other equities
54 Acquisitions by financial institutions
55 Other net purchases
29.3
-65.3
15.8
-51.8
84.4
-64.3
45.6
-25.5
159.0
-68.5
53.7
36.8
71.6
-57.3
21.4
-7.1
-.7
-117.2
5.4
-123.3
1.5
-75.0
25.5
-99.1
11.9
3.6
-175.4 -167.1
-6.5
30.1
-193.6 -157.0
50.0
24.0
-72.7 -114.6
-6.5
3.8
-42.2 -68.4
48
49
50
NOTES BY LINE NUMBER.
1. Line 1 of table 1.57.
2. Sum of lines 3-6 or 7-10.
6. Includes farm and commercial mortgages.
11. Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33.
Also sum of lines 28 and 47 less lines 40 and 46.
18. Includes farm and commercial mortgages.
26. Line 39 less lines 40 and 46.
27. Excludes equity issues and investment company shares. Includes line 19.
29. Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates, less
claims on foreign affiliates and deposits by banking in foreign banks.
30. Demand deposits and note balances at commercial banks.
-9.5
-6.6
-91.5 -127.0
-34.4
.2
-66.5 -133.9
31. Excludes net investment of these reserves in corporate equities.
32. Mainly retained earnings and net miscellaneous liabilities.
33. Line 13 less line 20 plus line 27.
34-38. Lines 14-18 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 38 includes mortgages.
40. Mainly an offset to line 9.
47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46.
48. Line 2/line 1.
49. Line 20/line 13.
50. Sum of lines 10 and 29.
51. 53. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types in flows and in amounts
outstanding may be obtained from Flow of Funds Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.
A44
1.59
DomesticNonfinancialStatistics • March 1990
SUMMARY OF CREDIT MARKET DEBT OUTSTANDING
Billions of dollars; period-end levels.
1988
Transaction category, sector
iy<s4
lyoj
I70O
1989
198/
Q2
Ql
Q3
Q4
Ql
Q2
Q3
Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors
5,951.8
6,795.1
7,631.2
8,335.0
8,477.0
8,686.9
8,875.4
9,105.6
9,258.7
9,428.4
9,604.5
By sector and instrument
2 U.S. government
3 Treasury securities
4 Agency issues and mortgages
1,376.8
1,373.4
3.4
1,600.4
1,597.1
3.3
1,815.4
1,811.7
3.6
1,960.3
1,955.2
5.2
2,003.2
1,998.1
5.0
2,022.3
2,015.3
7.0
2,063.9
2,051.7
12.2
2,117.8
2,095.2
22.6
2,155.7
2,133.4
22.3
2,165.7
2,142.1
23.6
2,204.3
2,180.7
23.5
5 Private domestic nonfinancial sectors
6 Debt capital instruments
7
Tax-exempt obligations
8
Corporate bonds
Mortgages
9
10
Home mortgages
11
Multifamily residential
12
Commercial
13
Farm
4,575.1
3,038.0
520.0
469.2
2,048.8
1,336.2
183.6
416.5
112.4
5,194.7
3,485.5
655.5
542.9
2,287.1
1,490.2
213.0
478.1
105.9
5,815.8
3,957.5
679.1
664.2
2,614.2
1,720.8
246.2
551.4
95.8
6,374.7
4,428.0
713.2
764.1
2,950.7
1,943.1
270.0
648.7
88.9
6,473.8
4,511.0
718.1
793.8
2,999.1
1,978.0
273.0
660.2
88.0
6,664.7
4,652.6
727.2
829.8
3,095.7
2,055.3
276.6
676.0
87.8
6,811.5
4,782.0
746.1
858.8
3,177.2
2,118.0
281.0
691.1
87.0
6,987.8
4,902.1
759.8
885.0
3,257.3
2,174.2
286.8
709.6
86.8
7,103.0
4,979.2
764.7
912.9
3,301.6
2,214.8
292.6
708.2
86.0
7,262.7
5,078.3
769.3
947.5
3,361.6
2,263.4
294.4
717.0
86.7
7,400.2
5,187.8
780.3
975.9
3,431.6
2,316.7
299.3
728.9
86.6
14
15
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
1,537.1
519.3
553.1
58.5
406.2
1,709.3
601.8
592.7
72.2
442.6
1,858.4
659.8
656.1
62.9
479.6
1,946.7
692.7
664.3
73.8
516.0
1,962.8
688.9
668.3
73.5
532.1
2,012.0
705.8
687.2
77.8
541.2
2,029.4
721.2
687.7
80.3
540.2
2,085.7
743.7
702.6
85.4
554.0
2,123.8
745.0
717.6
96.1
565.1
2,184.3
761.0
729.8
110.1
583.5
2,212.4
775.3
734.5
113.1
589.5
19
20
21
22
23
24
25
By borrowing sector
State and local governments
Households
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
4,575.1
383.0
2,018.2
2,173.9
187.9
769.0
1,216.9
5,194.7
473.9
2,295.5
2,425.4
173.4
898.3
1,353.6
5,815.8
510.1
2,591.8
2,714.0
156.6
1,001.6
1,555.8
6,374.7
543.7
2,864.5
2,966.5
145.5
1,109.4
1,711.6
6,473.8
547.1
2,900.7
3,026.0
141.3
1,131.7
1,753.0
6,664.7
556.0
2,990.2
3,118.5
143.9
1,151.9
1,822.7
6,811.5
565.7
3,068.3
3,177.5
143.6
1,172.6
1,861.3
6,987.8
573.5
3,152.0
3,262.4
137.6
1,205.3
1,919.5
7,103.0
578.5
3,205.6
3,319.0
135.9
1,229.1
1,954.0
7,262.7
584.8
3,265.5
3,412.3
139.5
1,245.9
2,027.0
7,400.2
595.1
3,336.1
3,469.0
140.7
1,261.6
2,066.6
233.6
68.0
30.8
27.7
107.1
234.7
71.8
27.9
33.9
101.1
236.4
74.9
26.9
37.4
97.1
242.9
82.3
23.3
41.2
96.1
244.6
86.1
22.8
42.5
93.1
245.9
86.0
22.4
44.0
93.5
246.1
87.4
22.7
46.3
89.8
249.6
89.2
21.5
50.9
88.1
249.9
90.5
21.6
54.9
83.0
249.0
92.2
22.7
52.7
81.4
255.3
94.5
22.9
57.5
80.4
6,185.4
7,029.9
7,867.6
8,578.0
8,721.6
8,932.8
9,121.5
9,355.3
9,508.7
9,677.4
9,859.7
26 Foreign credit market debt held in
United States
27 Bonds
28 Bank loans n.e.c
29 Open market paper
30 U.S. government loans
31 Total domestic plus foreign
Financial sectors
32 Total credit market debt owed by
financial sectors
33
34
35
36
37
38
39
40
41
42
By instrument
U.S. government related
Sponsored credit agency securities
Mortgage pool securities
Loans from U.S. government
Private financial sectors
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Loans from Federal Home Loan Banks.
43 Total, by sector
44
45
46
47
48
49
50
51
52
53
Sponsored credit agencies
Mortgage pools
Private financial sectors
Commercial banks
Bank affiliates
Savings and loan associations
Mutual savings banks
Finance companies
REITs
SCO issuers
1,010.2
1,213.2
1,563.6
1,885.5
1,926.0
2,000.5
2,058.2
2,149.7
2,258.7
2,298.9
2,336.7
531.2
237.2
289.0
5.0
479.0
153.0
2.5
29.5
219.5
74.6
632.7
257.8
368.9
6.1
580.5
204.5
2.7
32.1
252.4
88.8
844.2
273.0
565.4
5.7
719.5
287.4
2.7
36.1
284.6
108.6
1,026.5
303.2
718.3
5.0
859.0
366.3
3.1
32.8
323.8
133.1
1,050.6
313.5
732.1
5.0
875.4
380.5
3.1
31.7
330.6
129.5
1,076.9
317.9
754.0
5.0
923.6
397.9
3.1
34.3
353.4
134.8
1,116.3
328.5
782.8
5.0
941.9
406.4
3.1
32.9
358.0
141.6
1,164.0
348.1
810.9
5.0
985.7
418.0
3.4
34.2
377.4
152.8
1,209.0
364.3
839.7
5.0
1,049.7
458.2
3.5
32.2
392.0
163.8
1,235.8
369.0
861.8
5.0
1,063.1
465.8
3.5
33.8
398.3
161.9
1,273.8
370.4
898.4
5.0
1,062.9
472.8
3.5
34.7
400.9
151.1
1,010.2
1,213.2
1,563.6
1,885.5
1,926.0
2,000.5
2,058.2
2,149.7
2,258.7
2,298.9
2,336.7
242.2
289.0
479.0
84.1
89.5
81.6
2.9
203.0
4.3
13.5
263.9
368.9
580.5
79.2
106.2
98.9
4.4
261.2
5.6
25.0
278.7
565.4
719.5
75.6
116.8
119.8
8.6
328.1
6.5
64.0
308.2
718.3
859.0
82.7
131.1
139.4
16.7
378.8
7.3
103.1
318.5
732.1
875.4
76.4
131.0
135.3
17.1
393.0
8.7
113.9
322.9
754.0
923.6
77.2
136.3
141.9
17.6
419.8
9.1
121.8
333.5
782.8
941.9
76.6
136.3
148.1
18.1
427.7
7.6
127.5
353.1
810.9
985.7
78.8
136.2
159.3
18.6
445.8
11.4
135.7
369.3
839.7
1,049.7
73.3
140.0
170.1
17.8
463.8
11.1
173.5
374.0
861.8
1,063.1
74.5
141.2
167.9
17.7
478.0
10.6
173.1
375.4
898.4
1,062.9
75.8
141.5
156.8
17.6
486.3
10.3
174.6
All sectors
54 Total credit market debt
7,195.7
8,243.1
9,431.2
10,463.4
10,647.5
10,933.4
11,179.7
11,504.9
11,767.4
11,976.3
12,196.4
55
56
57
58
59
60
61
62
1,902.8
520.0
690.1
2,051.4
519.3
613.4
305.7
592.9
2,227.0
655.5
819.2
2,289.8
601.8
652.7
358.5
638.6
2,653.8
679.1
1,026.4
2,617.0
659.8
719.1
384.9
691.1
2,981.8
713.2
1,212.7
2,953.8
692.7
720.3
438.8
750.2
3,048.8
718.1
1,260.4
3,002.2
688.9
722.7
446.7
759.7
3,094.2
727.2
1,313.7
3,098.8
705.8
744.0
475.3
774.5
3,175.2
746.1
1,352.5
3,180.3
721.2
743.3
484.6
776.6
3,276.7
759.8
1,392.2
3,260.7
743.7
758.3
513.6
799.8
3,359.7
764.7
1,461.6
3,305.1
745.0
771.4
543.1
816.8
3,396.5
769.3
1,505.5
3,365.0
761.0
786.2
561.1
831.7
3,473.1
780.3
1,543.2
3,435.1
775.3
792.0
571.4
826.0
U.S. government securities..
State and local obligations...
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans
Flow of Funds
1.60
A45
SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER
Billions of dollars, except as noted; period-end levels.
1988
Transaction category, or sector
1984
1985
1986
1989
1987
Ql
1 Total funds advanced in credit markets to domestic
nonfinancial sectors
Q2
Q3
Q4
Ql
Q2
Q3
5,951.8
6,795.1
7,631.2
8,335.0
8,477.0
8,686.9
8,875.4
9,105.6
9,258.7
9,428.4
9,604.5
1,257.7
377.9
423.5
74.6
381.6
1,460.5
423.8
518.2
88.8
429.7
1,794.7
493.2
712.3
108.6
480.5
2,044.9
563.3
862.0
133.1
486.6
2,099.4
595.7
880.6
129.5
493.6
2,151.3
610.1
906.1
134.8
500.3
2,191.8
613.3
934.9
141.6
502.1
2,266.4
648.3
966.0
152.8
499.3
2,332.1
666.2
995.3
163.8
506.9
2,345.1
644.6
1,020.5
161.9
518.1
2,414.3
670.7
1,062.6
151.1
529.8
7 Total held, by type of lender
8 U.S. government
9 Sponsored credit agencies and mortgage pools . . .
10 Monetary authority
11 Foreign
1,257.7
228.2
556.3
167.6
305.6
1,460.5
246.7
659.8
186.0
367.9
1,794.7
253.3
869.8
205.5
466.1
2,044.9
238.0
1,048.9
230.1
527.9
2,099.4
237.1
1,068.0
224.9
569.5
2,151.3
235.8
1,095.6
229.7
590.2
2,191.8
226.3
1,132.9
230.8
601.9
2,266.4
216.9
1,178.6
240.6
630.3
2,332.1
213.9
1,223.5
235.4
659.3
2,345.1
215.2
1,228.9
238.4
662.6
2,414.3
216.9
1,275.3
227.6
694.5
Agency and foreign debt not in line 1
Sponsored credit agencies and mortgage pools . . .
Foreign
531.2
233.6
632.7
234.7
844.2
236.4
1,026.5
242.9
1,050.6
244.6
1,076.9
245.9
1,116.3
246.1
1,164.0
249.6
1,209.0
249.9
1,235.8
249.0
1,273.8
255.3
Private domestic holdings
14 Total private holdings
15 U.S. government securities
16 State and local obligations
17 Corporate and foreign bonds
18 Residential mortgages
19 Other mortgages and loans
20 LESS: Federal Home Loan Bank advances
5,458.9
1,524.9
520.0
476.8
1,096.5
1,915.3
74.6
6,202.1
1,803.2
655.5
517.6
1,185.1
2,129.7
88.8
6,917.1
2,160.6
679.1
601.3
1,254.7
2,330.0
108.6
7,559.5
2,418.5
713.2
689.6
1,351.1
2,520.1
133.1
7,672.7
2,453.1
718.1
722.2
1,370.4
2,538.5
129.5
7,858.4
2,484.1
727.2
752.9
1,425.9
2,603.3
134.8
8,045.9
2,561.9
746.1
775.7
1,464.1
2,639.6
141.6
8,252.8
2,628.4
759.8
794.0
1,494.9
2,728.4
152.8
8,385.5
2,693.5
764.7
817.6
1,512.2
2,761.3
163.8
8,568.1
2,751.9
769.3
849.3
1,537.3
2,822.2
161.9
8,719.2
2,802.3
780.3
875.1
1,553.5
2,859.1
151.1
Private financial intermediation
21 Credit market claims held by private financial
institutions
22 Commercial banking
23
Savings institutions
24 Insurance and pension funds
25 Other finance
4,699.6
1,791.9
1,100.7
1,215.3
591.7
5,283.1
1,978.9
1,191.2
1,369.7
743.4
6,025.7
2,176.3
1,297.9
1,544.3
1,007.1
6,604.6
2,313.1
1,445.5
1,755.2
1,090.7
6,732.0
2,327.1
1,453.6
1,810.6
1,140.7
6,891.0
2,382.6
1,495.9
1,859.0
1,153.5
7,003.5
2,421.6
1,538.8
1,899.1
1,144.0
7,168.1
2,468.4
1,571.3
1,950.2
1,178.1
7,298.7
2,490.9
1,566.7
1,996.7
1,244.4
7,458.7
2,538.2
1,557.3
2,046.5
1,316.7
7,543.1
2,580.2
1,522.8
2,083.7
1,356.5
26 Sources of funds
27 Private domestic deposits and RPs
28 Credit market debt
4,699.6
2,715.6
479.0
5,283.1
2,930.0
580.5
6,025.7
3,188.4
719.5
6,604.6
3,324.8
859.0
6,732.0
3,404.2
875.4
6,891.0
3,432.6
923.6
7,003.5
3,474.2
941.9
7,168.1
3,554.2
985.7
7,298.7
3,587.8
1,049.7
7,458.7
3,644.5
1,063.1
7,543.1
3,710.6
1,062.9
29
30
31
32
33
1,504.9
-14.1
15.5
1,160.8
342.6
1,772.7
5.6
25.8
1,289.4
451.8
2,117.9
18.6
27.5
1,427.9
643.9
2,420.8
62.2
21.6
1,597.2
739.6
2,452.4
45.9
23.5
1,647.9
735.2
2,534.8
62.3
32.6
1,693.8
746.1
2,587.4
51.9
34.2
1,729.2
772.1
2,628.1
71.6
29.0
1,771.2
756.4
2,661.1
61.9
13.5
1,802.6
783.0
2,751.0
51.0
34.4
1,833.7
831.9
2,769.6
53.7
32.4
1,853.9
829.6
Private domestic nonfinancial investors
34 Credit market claims
35 U.S. government securities
36 Tax-exempt obligations
37 Corporate and foreign bonds
38 Open market paper
39 Other
1,238.4
659.5
194.2
33.1
83.5
268.0
1,499.5
814.7
231.9
38.0
131.0
283.8
1,610.8
899.1
211.2
77.8
136.4
286.2
1,813.9
992.0
256.8
102.2
160.7
302.3
1,816.1
1,005.2
257.6
97.7
151.9
303.7
1,891.0
1,022.1
270.1
105.7
179.9
313.3
1,984.4
1,086.1
289.0
107.1
188.7
313.6
2,070.5
1,143.5
303.7
100.8
201.0
321.5
2,136.6
1,175.0
307.2
137.0
213.0
304.3
2,172.6
1,196.3
308.2
136.4
221.7
309.9
2,239.0
1,239.6
312.4
150.0
221.4
315.5
40 Deposits and currency
41
Currency
42 Checkable deposits
43 Small time and savings accounts
44 Money market fund shares
45 Large time deposits
46 Security RPs
47 Deposits in foreign countries
2,895.8
159.6
380.6
1,693.4
218.5
332.5
90.6
20.6
3,120.4
171.9
422.5
1,831.9
227.3
339.9
108.3
18.5
3,399.2
186.3
517.4
1,948.3
265.6
328.5
128.5
24.5
3,553.9
205.4
514.0
2,017.1
292.8
355.2
145.7
23.7
3,628.0
204.0
495.4
2,084.9
318.4
353.7
151.9
19.9
3,662.4
209.9
510.3
2,110.9
306.1
349.1
156.2
19.9
3,704.4
213.4
496.1
2,131.1
303.6
384.7
158.6
16.8
3,785.9
220.1
525.4
2,150.4
315.6
396.0
166.9
11.6
3,822.8
220.7
492.8
2,164.7
340.3
415.9
174.1
14.3
3,887.9
226.4
496.4
2,186.7
359.9
423.1
178.4
17.0
3,945.9
225.0
497.3
2,219.0
389.2
421.2
183.9
10.3
48 Total of credit market instruments, deposits, and
currency
4,134.2
4,619.9
5,010.0
5,367.8
5,444.2
5,553.5
5,688.8
5,856.4
5,959.4
6,060.4
6,184.9
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
20.3
86.1
291.5
20.8
85.2
373.5
22.8
87.1
484.7
23.8
87.4
590.2
24.1
87.7
615.3
24.1
87.7
652.5
24.0
87.0
653.8
24.2
86.9
701.9
24.5
87.0
721.2
24.2
87.1
713.6
24.5
86.5
748.1
MEMO: Corporate equities not included above
52 Total market value
2,157.9
2,823.9
3,360.6
3,325.0
3,504.0
3,622.7
3,577.6
3,620.3
3,731.6
4,072.3
4,296.0
53
54
Mutual fund shares
Other equities
136.7
2,021.2
240.2
2,583.7
413.5
2,947.1
460.1
2,864.9
479.2
3,024.8
486.8
3,136.0
478.1
3,099.5
478.3
3,142.0
486.3
3,245.3
514.8
3,557.5
538.5
3,757.5
55
56
Holdings by financial institutions
Other holdings
615.6
1,542.3
800.0
2,023.9
972.1
2,388.4
1,013.8
2,311.2
1,112.6
2,391.3
1,170.0
2,452.8
1,167.1
2,410.5
1,200.4
2,419.9
1,277.7
2,453.9
1,395.7
2,676.6
1,523.6
2,772.4
2
3
4
5
6
12
13
49
50
51
By public agencies and foreign
Total held
U.S. government securities
Residential mortgages
FHLB advances to thrifts
Other loans and securities
Other sources
Foreign funds
Treasury balances
Insurance and pension reserves
Other, net
NOTES BY LINE NUMBER.
1. Line 1 of table 1.59.
2. Sum of lines 3-6 or 7-10.
6. Includes farm and commercial mortgages.
12. Credit market debt of federally sponsored agencies, and net issues of
federally related mortgage pool securities.
14. Line 1 less line 2 plus line 12 and 13. Also line 21 less line 28 plus line 34.
Also sum of lines 29 and 48 less lines 41 and 47.
19. Includes farm and commercial mortgages.
27. Line 40 less lines 41 and 47.
28. Excludes equity issues and investment company shares. Includes line 20.
30. Foreign deposits at commercial banks plus bank borrowings from foreign
affiliates, less claims on foreign affiliates and deposits by banking in foreign banks.
31. Demand deposits and note balances at commercial banks.
32. Excludes net investment of these reserves in corporate equities.
33. Mainly retained earnings and net miscellaneous liabilities.
34. Line 14 less line 21 plus line 28.
35-39. Lines 15-19 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 39 includes mortgages.
41. Mainly an offset to line 10.
48. Lines 34 plus 40, or line 14 less line 29 plus 41 and 47.
49. Line 2Aine 1 and 13.
50. Line 21/line 14.
51. Sum of lines 11 and 30.
52-54. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types in flows and in amounts
outstanding may be obtained from Flow of Funds Section, Stop 95, Division of
Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
A46
2.10
Domestic Nonfinancial Statistics • March 1990
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures 1
1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1989
Measure
1987
1988
1989
Apr.
May
June
July
Aug.
Sept.
Oct.'
Nov.'
Dec.
1 Industrial production
129.8
137.2
n.a.
141.7
141.6
142.0
141.9
142.5
142.3'
141.8
142.3
142.8
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
138.3
136.8
127.7
148.8
143.3
118.3
145.9
144.3
133.9
158.2
151.5
125.3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
151.6
150.2
139.5
164.3
156.5
128.2
151.7
150.4
139.2
165.4
156.3
127.9
152.5
151.2
139.9
166.1
157.0
127.7
151.8
150.2
138.7
165.5
157.5
128.3
152.5
151.1
139.3
166.8
157.5
128.8
152.4'
150.8'
139.0'
166.5'
157.8'
128.6'
151.5
149.4
139.9
162.0
158.9
128.6
152.3
150.1
139.8
163.7
160.1
128.6
153.6
151.6
140.6
166.1
160.5
128.2
134.6
142.8
n.a.
148.0
148.1
148.7
148.5
149.2
148.8'
148.0
148.6
148.8
81.1
80.5
83.5
83.7
84.0
83.7
84.5
84.2
84.3
83.8
84.4
83.6
84.0
83.7
84.2
83.9
83.7
83.6'
83.1
83.5
83.2
83.3
83.1
82.8
2
3
4
5
6
7
Industry groupings
8 Manufacturing
Capacity utilization (percent)2
9 Manufacturing
10 Industrial materials industries
11 Construction contracts (1982 = 100)3
163.8
160.8
159.4
163.0
159.0
157.0
163.0
160.0
175.0
165.0
158.0
160.0
12
13
14
15
16
17
18
19
20
21
Nonagricultural employment, total4
Goods-producing, total
Manufacturing, total
Manufacturing, production- worker . . .
Service-producing
Personal income, total
Wages and salary disbursements
Manufacturing
Disposable personal income
Retail sales®
123.9
101.5
96.7
91.9
133.3
235.0
226.3
183.8
232.4
210.8
128.0
103.7
98.6
93.9
138.2
252.8
244.4
196.5
252.1
225.1
131.6
105.3
99.6
94.8
142.7
275.5
264.8
207.3
274.0
237.5
131.1
105.5
99.9
95.0
141.8
272.9
261.7
205.7
269.6
235.5
131.3
105.5
99.9
95.0
142.2
273.5
262.0
205.8
271.7
237.4
131.7
105.4
99.8
94.8
142.7
274.8
263.8
207.0
273.8
237.3
131.9
105.4
99.8
94.8
143.0
276.4
266.1
207.5
275.4
239.1
132.0
105.5
99.8
94.8
143.1
277.3
266.7
208.8
276.1
241.3
132.3
105.2
99.4
94.2
143.6
277.9
268.5
208.8
276.5
242.0
132.4
105.2
99.2
94.1
143.8
280.3
271.4
211.1
278.7
238.9
132.6
105.2
99.1
93.9
144.1
282.9
271.6
208.9
281.6
240.1
132.8
104.9
99.0
93.9
144.5
284.2
273.3
209.8
282.7
240.6
22
23
Prices7
Consumer (1982-84 = 100)
Producer finished goods (1982 = 100) . . .
113.6
105.4
118.3
108.0
124.0
113.5
123.1
113.0
123.8
114.2
124.1
114.3
124.4 '
114.1
124.6
113.4'
125.0
113.5
125.6
114.8
125.9
114.8
126.1
115.3
1. A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See "A Revision of the Index of
Industrial Production" and accompanying tables that contain revised indexes
(1977= 100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July
1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September Bulletin.
2. Ratios of indexes of production to indexes of capacity. Based on data from
Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential,
nonresidential and heavy engineering, from McGraw-Hill Information Systems
Company, F. W. Dodge Division.
4. Based on data in Employment and Earnings (U.S. Department of Labor).
Series covers employees only, excluding personnel in the Armed Forces.
5. Based on data in Survey of Current Business (U.S. Department of Commerce).
6. Based on Bureau of Census data published in Survey of Current Business.
7. Data without seasonal adjustment, as published in Monthly Labor Review.
Seasonally adjusted data for changes in the price indexes may be obtained from
the Bureau of Labor Statistics, U.S. Department of Labor.
NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6,
and indexes for series mentioned in notes 3 and 7 may also be found in the Survey
of Current Business.
Figures for industrial production for the last two months are preliminary and
estimated, respectively.
Selected Measures
2.11
A47
LABOR FORCE, EMPLOYMENT, A N D UNEMPLOYMENT
Thousands of persons; monthly data are seasonally adjusted. Exceptions noted.
1989
Category
1987'
1988'
1989
May
June
July
Aug.
Sept.
Oct.'
Nov.'
Dec.
HOUSEHOLD SURVEY DATA
1
185,010
186,837
188,601
188,377
188,518
188,672
188,808
188,948
189,096
189,238
189,381
122,122
119,865
123,893
121,669
126,077
123,869
125,747'
123,551'
126,30c
124,111'
126,202'
124,013'
126,28C
124,070'
126,245'
124,023'
126,373
124,148
126,709
124,488
126,762
124,546
109,232
3,208
111,800
3,169
114,142
3,199
113,995''
3,137'
114,404'
3,138'
114,2W
3,217'
114,275'
3,275'
114,20c
3,2W
114,388
3,197
114,676
3,160
114,691
3,197
7,425
6.2
62,888
6,701
5.5
62,944
6,528
5.3
62,524
6,419'
5.2
62,630'
6,569'
5.3
62,218'
6,577'
5.3'
62,470'
6,52C
5.3'
62,528'
6,604'
5.3
62,703'
6,563
5.3
62,723
6,652
5.3
62,529
6,658
5.3
62,619
9 Nonagricultural payroll employment
102,200
105,584
108,573
108,310
108,607
108,767
108,887
109,096
109,171
109,393
109,535
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
19,024
717
4,967
5,372
24,327
6,547
24,236
17,010
19,403
721
5,125
5,548
25,139
6,676
25,600
17,372
19,611
722
5,302
5,703
25,807
6,814
26,889
17,726
19,667
722
5,283
5,700
25,750
6,790
26,711
17,687
19,650
715
5,283
5,716
25,781
6,808
26,931
17,723
19,649
706
5,314
5,736
25,823
6,815
26,973
17,751
19,644
729
5,321
5,618
25,877
6,836
27,058
17,804
19,559
730
5,325
5,709
25,896
6,852
27,159
17,866
19,537
731
5,335
5,729
25,957
6,851
27,188
17,843
19,510
737
5,360
5,745
26,022
6,872
27,321
17,826
19,485
736
5,322
5,818
26,024
6,885
27,405
17,860
1 Noninstitutional population
2 Labor force (including Armed Forces)
3
4
5
6
7
8
1
Civilian labor force
Employment
Nonagncultural industries
Agriculture
Unemployment
Number
Rate (percent of civilian labor force)
Not in labor force
ESTABLISHMENT SURVEY DATA
3
10
11
12
13
14
15
16
17
1. Persons 16 years of age and over. Monthly figures, which are based on
sample data, relate to the calendar week that contains the 12th day; annual data
are averages of monthly figures. By definition, seasonality does not exist in
population figures. Based on data from Employment and Earnings (U.S. Department of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.
3. Data include all full- and part-time employees who worked during, or
received pay for, the pay period that includes the 12th day of the month, and
exclude proprietors, self-employed persons, domestic servants, unpaid family
workers, and members of the Armed Forces. Data are adjusted to the March 1984
benchmark and only seasonally adjusted data are available at this time. Based on
data from Employment and Earnings (U.S. Department of Labor).
A48
2.12
Domestic Nonfinancial Statistics • March 1990
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION 1
Seasonally adjusted
1989
1989
Series
Ql r
Q2'
Q3'
Q4
Output (1977 = 100)
1 Total industry
Ql r
Q2'
Q3r
Q4
Ql r
Capacity (percent of 1977 output)
Q2r
Q3r
Q4
Utilization rate (percent)
140.7
141.8
142.2
142.3
167.5
168.7
169.9
84.0
84.1
83.7
83.2
101.8
116.0
102.0
115.7
102.7
113.9
103.9
118.0
125.1
141.0
124.7
141.4
124.3
141.7
123.8
142.0
81.3
82.3
81.8
81.8
82.6
80.4
83.9
83.1
147.0
148.3
148.8
148.S
174.3
175.7
177.2
178.7
84.4
84.4
84.0
83.1
5 Primary processing
127.8
158.6
127.6
160.8
128.8
160.9
128.5
160.4
146.5
191.0
147.8
192.6
149.1
194.2
150.4
195.8
87.3
83.0
86.4
83.5
86.4
82.9
85.5
81.9
6 Advanced processing
127.6
127.9
128.6
128.5
151.7
152.6
153.5
154.4
84.1
83.9
83.8
83.2
7 Materials
8 Durable goods
11 Textile, paper, and chemical
9 Metal materials
12
10 Nondurable goods
Paper
13
Chemical
138.6
98.4
136.3
139.2
148.4
145.4
139.0
96.0
137.1
139.8
146.1
145.7
140.4
97.8
137.9
141.1
149.8
146.5
138.6
92.9
138.6
141.5
170.1
110.2
152.7
153.5
154.0
161.4
171.3
110.6
154.2
155.3
155.8
163.7
172.5
111.0
155.8
157.0
157.6
165.9
173.7
111.4
157.4
158.8
81.5
83.8
89.3
90.7
96.4
90.1
81.1
81.4
88.9
90.0
93.8
89.0
81.4
82.3
88.5
89.8
95.1
88.3
79.8
78.0
88.1
89.1
14 Energy materials
100.7
100.7
99.8
101.8
118.4
118.3
118.1
118.0
85.0
85.1
84.5
86.3
Aug/
Sept/
Oct/
Nov/
Dec.
2 Mining
3 Utilities
4 Manufacturing
Previous cycle
High
Low
Latest cycle
High
Low
1988
Dec.
1989
Apr/
May'
June'
July'
Capacity utilization rate (percent)
15 Total industry
88.6
72.1
86.9
69.5
84.3
84.2
84.0
84.0
83.7
83.9
83.6
83.1
83.1
83.3
16 Mining..
17 Utilities.
92.8
95.6
87.8
82.9
95.2
88.5
76.9
78.0
83.6
82.0
82.0
82.9
81.8
81.8
81.5
80.8
82.1
80.5
82.4
80.0
83.4
80.8
84.0
81.7
84.3
81.3
83.4
86.3
18 Manufacturing
87.7
69.9
86.5
68.0
84.4
84.5
84.3
84.4
84.0
84.2
83.7
83.1
83.2
19 Primary processing...
20 Advanced processing.
91.9
86.0
68.3
71.1
89.1
85.1
65.0
69.5
87.9
82.8
86.8
83.5
86.2
83.4
86.2
83.5
86.7
82.9
86.6
83.2
85.8
82.6
86.2
81.7
85.7
81.9
21 Materials
92.0
70.5
89.1
68.5
84.9
84.2
83.8
83.6
83.7
83.9
83.6
83.5
83.3
22 Durable goods
23 Metal materials
24 Nondurable goods . . .
25 Textile, paper, and
chemical
26
Paper
27
Chemical
91.8
99.2
91.1
64.4
67.1
66.7
89.8
93.6
88.1
60.9
45.7
70.7
82.1
84.6
89.8
81.3
83.6
89.2
81.0
79.8
88.7
81.1
80.6
88.7
81.3
82.3
89.2
81.7
82.7
88.8
81.2
81.9
87.5
80.3
81.7
88.3
80.0
77.2
88.1
92.8
98.4
92.5
64.8
70.6
64.4
89.4
97.3
87.9
68.8
79.9
63.5
91.3
98.4
90.7
90.7
94.5
90.1
89.6
93.2
88.4
89.8
93.7
88.5
90.6
95.0
89.5
90.1
95.1
88.6
88.8
95.1
86.7
89.4
96.3
87.4
89.1
95.8
87.2
28 Energy materials.
94.6
86.9
94.0
82.3
86.5
86.0
85.5
83.8
83.9
84.3
85.4
86.1
86.1
1. These data also appear in the Board's G.3 (402) release. For address, see
inside front cover.
2. Monthly high 1973; monthly low 1975.
3. Monthly highs 1978 through 1980; monthly lows 1982.
84.5
82.2
79.1
75.0
87.8
86.6
Selected Measures
2.13
A49
INDUSTRIAL PRODUCTION Indexes and Gross Value 1
Monthly data are seasonally adjusted
„
1977
proportion
1988
1989
1989
avg.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept/
Oct/
Nov.'' D e c /
Index (1977 = 100)
MAJOR MARKET
1 Total index
100.00
140.4
140.8
140.5
140.7
141.7
141.6
142.0
141.9
142.5
142.3
141.8
142.3
142.8
57.72
44.77
25.52
19.25
12.94
42.28
149.4
147.7
138.2
160.4
155.0
128.3
150.1
148.2
138.5
161.1
156.6
128.1
150.0
148.6
138.7
161.6
155.1
127.4
150.5
148.9
138.4
162.8
156.1
127.3
151.6
150.2
139.5
164.3
156.5
128.2
151.7
150.4
139.2
165.4
156.3
127.9
152.5
151.2
139.9
166.1
157.0
127.7
151.8
150.2
138.7
165.5
157.5
128.3
152.5
151.1
139.3
166.8
157.5
128.8
152.4
150.8
139.0
166.5
157.8
128.6
151.5
149.4
139.9
162.0
158.9
128.6
152.3
150.1
139.8
163.7
160.1
128.6
153.6
151.6
140.6
166.1
160.5
128.2
6.89
2.98
1.79
1.16
.63
1.19
3.91
1.24
1.19
.96
1.71
131.9
134.5
138.0
105.1
199.1
129.3
130.0
151.0
150.0
140.5
108.9
131.5
132.5
135.6
99.6
202.3
127.9
130.7
151.0
149.5
141.1
110.1
131.6
131.6
133.1
96.0
201.9
129.4
131.6
153.9
153.0
141.3
110.1
130.1
128.9
128.3
95.0
190.0
129.8
131.1
151.6
152.3
140.7
110.9
132.2
131.7
131.7
98.8
192.8
131.7
132.6
151.7
152.5
142.8
113.0
131.2
128.6
127.4
96.0
185.5
130.4
133.3
151.3
151.4
144.3
114.1
130.8
125.6
123.3
91.4
182.5
129.1
134.8
155.6
155.0
143.1
115.0
127.3
120.2
114.6
81.2
176.7
128.7
132.7
148.1
147.0
141.3
116.8
128.7
122.3
119.3
86.4
180.5
126.7
133.5
152.1
149.4
139.8
116.6
127.9
120.6
117.1
92.7
162.4
125.9
133.4
151.9
148.3
139.9
116.5
127.6
118.9
113.1
91.5
153.3
127.6
134.2
151.7
147.3
142.0
117.2
126.8
119.3
114.8
84.3
171.2
126.2
132.5
145.0
142.3
142.7
117.8
127.7
121.9
118.3
84.2
181.7
127.4
132.1
142.5
19 Nondurable consumer goods
20 Consumer staples
Consumer foods and tobacco
21
22
Nonfood staples
Consumer chemical products
23
24
Consumer paper products
25
Consumer energy
26
Consumer fuel
27
Residential utilities
18.63
15.29
7.80
7.49
2.75
1.88
2.86
1.44
1.42
140.5
148.9
144.5
153.6
186.8
169.0
111.6
96.3
127.1
141.1
149.4
144.8
154.2
187.6
174.2
109.1
96.7
121.7
141.4
149.7
144.3
155.4
187.8
177.0
110.1
95.0
125.4
141.4
149.9
143.3
156.9
188.9
180.4
110.7
95.6
126.1
142.2
150.7
144.7
156.9
187.3
180.9
112.0
97.3
127.0
142.1
150.7
144.7
156.9
189.1
180.9
110.1
93.6
127.0
143.3
151.9
145.7
158.4
191.0
183.6
110.7
95.6
126.1
142.8
151.4
144.2
158.9
193.1
183.0
110.4
97.0
124.0
143.2
152.0
145.6
158.7
192.5
184.7
109.2
96.0
122.7
143.1
151.8
145.9
157.9
187.9
186.6
110.3
95.7
125.1
144.4
153.4
147.2
160.0
192.6
187.1
110.8
96.1
125.8
144.6
153.8
148.1
159.7
191.5
189.0
110.1
94.9
145.4
155.0
162.8
Equipment
28 Business and defense equipment
29 Business equipment
30
Construction, mining, and farm
Manufacturing
31
32
Power
Commercial
33
34
Transit
35 Defense and space equipment
18.01
14.34
2.08
3.27
1.27
5.22
2.49
3.67
166.2
162.6
74.6
137.0
91.8
248.9
124.9
180.5
167.1
163.8
74.3
136.3
92.8
252.4
125.7
180.0
167.9
165.0
75.6
137.8
92.7
254.3
125.2
179.3
168.9
166.3
76.9
138.6
93.0
257.6
123.9
178.7
170.3
167.8
77.6
139.7
93.6
260.1
124.8
179.9
171.5
169.1
76.3
140.9
93.3
263.2
125.3
180.7
172.0
169.6
74.8
142.8
92.5
264.5
124.8
181.1
171.3
168.5
73.0
143.8
92.8
263.8
120.1
182.0
172.5
169.9
72.1
143.5
94.2
265.6
124.4
182.7
172.1
169.6
74.7
143.1
93.8
265.1
122.2
182.1
167.4
165.2
75.2
142.9
95.0
259.6
107.7
176.0
169.2
167.2
75.8
142.7
94.7
264.0
110.2
176.9
171.9
169.9
76.9
142.9
95.3
264.8
122.6
179.6
5.95
6.99
5.67
1.31
141.4
166.7
173.8
135.8
142.3
168.8
175.9
138.2
139.5
168.4
175.4
138.3
139.3
170.4
177.4
140.3
140.2
170.4
177.9
138.0
140.2
170.0
177.3
138.2
141.2
170.4
177.9
138.4
142.2
170.6
177.8
139.6
141.5
171.2
178.8
138.1
140.9
172.3
180.1
138.5
142.5
172.8
180.4
140.0
143.9
173.9
181.7
140.3
142.9
20.50
4.92
5.94
9.64
4.64
139.0
112.5
174.1
130.9
99.8
139.4
111.7
175.2
131.5
100.8
138.6
112.1
175.2
129.7
98.4
137.9
110.7
175.3
128.8
95.9
139.0
110.8
176.9
130.0
98.0
138.7
111.8
177.1
128.9
94.4
139.4
111.6
177.5
130.0
95.5
139.9
109.9
179.1
131.0
97.7
140.9
111.9
180.0
131.6
98.4
140.4
110.7
179.6
131.4
97.4
139.2
108.3
177.7
131.2
96.7
139.0
108.0
179.4
129.9
92.0
137.7
105.0
179.7
128.6
90.0
2 Products
3 Final products
4
Consumer goods
5
Equipment
6 Intermediate products
7 Materials
Consumer goods
8 Durable consumer goods
9 Automotive products
10
Autos and trucks
11
Autos, consumer
12
Trucks, consumer
13
Auto parts and allied goods
14 Home goods
15
Appliances, A/C and TV
Appliances and TV
16
17
Carpeting and furniture
Miscellaneous home goods
18
Intermediate products
36 Construction supplies
37 Business supplies
38 General business supplies
39 Commercial energy products
Materials
40 Durable goods materials
41
Durable consumer parts
42 Equipment parts
43 Durable materials n.e.c
44
Basic metal materials
115.2
45 Nondurable goods materials
46 Textile, paper, and chemical
materials
47
Textile materials
48
Pulp and paper materials
49
Chemical materials
50 Miscellaneous nondurable materials . . .
10.09
136.3
137.1
135.9
136.0
137.1
136.8
137.3
138.5
138.3
136.7
138.5
138.6
138.7
7.53
1.52
1.55
4.46
2.57
139.1
110.0
150.3
145.1
128.0
139.9
112.1
150.4
145.7
129.1
138.6
110.7
147.5
145.0
128.0
139.0
111.8
147.3
145.4
127.2
140.3
114.6
146.7
146.8
127.8
139.1
116.4
145.2
144.7
129.9
140.0
117.2
146.5
145.5
129.4
141.8
116.4
149.1
147.9
129.0
141.5
117.0
149.9
147.0
128.9
140.0
115.6
150.5
144.6
127.3
141.5
115.7
153.0
146.3
129.8
141.5
115.0
152.7
146.6
141.5
51 Energy materials
52 Primary energy
53 Converted fuel materials
11.69
7.57
4.12
102.6
107.6
93.3
100.5
105.2
92.0
100.5
104.4
93.3
101.0
103.7
96.1
101.7
104.1
97.4
101.1
104.6
94.7
99.1
103.0
92.0
99.1
103.2
91.6
99.5
104.2
91.0
100.9
105.6
92.2
101.6
106.7
92.2
101.7
106.6
92.6
102.2
A50
2.13
Domestic Nonfinancial Statistics • March 1990
I N D U S T R I A L PRODUCTION Indexes and Gross Value 1 —Continued
Groups
SIC
code
1977
proportion
1989
1989
avg.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept/
Oct/
Nov. p
Dec
Index (1977 = 100)
MAJOR INDUSTRY
15.79
9.83
5.96
84.21
35.11
49.10
7
8
9
10
Mining
Metal
Coal
Oil and gas extraction
Stone and earth minerals .
11
12
13
14
15
16
17
18
19
20
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastic products .
Leather and products
13
14
107.2
103.0
114.0
147.2
148.5
146.2
106.8
107.5
101.5
117.5
147.0
148.6
145.8
107.9
102.4
117.1
148.0
149.6
146.9
107.2
102.0
115.6
148.1
149.5
147.1
106.3
101.5
114.3
148.7
150.5
147.4
106.6
100.9
116.5
146.8
148.1
145.9
.50
1.60
7.07
111.9
155.1
88.9
149.4
106.9
144.7
88.9
150.8
98.6
134.7
89.5
142.5
98.1
137.7
89.6
143.5
96.8
145.5
89.1
144.5
94.0
137.1
90.5
146.6
101.2
106.2
129.2
90.6
150.2
145.8
107.0
117.9
146.6
105.0
145.4
101.5
119.7
109.9
151.7
146.6
109.2
122.5
111.3
150.7
147.2
105.9
123.6
111.5
150.1
4.54
8.05
2.40
Nondurable manufactures
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
10
11.12
108.9
104.9
115.4
146.3
147.1
145.7
7.96
.62
2.29
2.79
3.15
1 Mining and utilities .
2 Mining
3 Utilities
4 Manufacturing
5 Nondurable
6
Durable
.66
104.3
144.2
90.0
148.8
104.6
144.4
90.6
151.3
147.9
104.2
123.8
111.9
150.2
147.3
97.1
123.5
111.4
152.4
148.3
99.9
123.2
111.1
152.8
148.8
97.3
123.2
150.1
96.6
123.0
110.8
155.2
200.6
161.5
97.7
183.6
203.1
159.3
98.4
184.2
60.4
203.8
161.5
98.1
185.8
135.7
167.6
123.4
137.6
167.9
123.7
88.9
76.4
124.2
184.9
110.2
188.0
193.0
159.0
98.0
175.9
62.9
194.6
158.5
96.3
175.0
62.9
198.5
159.2
97.0
176.4
61.2
200.1
159.3
97.3
178.0
61.4
199.0
158.2
96.9
180.5
60.3
200.5
159.9
97.9
182.3
60.5
199.9
139.9
166.3
132.8
164.8
125.4
133.4
165.8
125.5
135.1
135.5
170.2
123.9
137.2
170.8
123.9
136.9
169.0
122.9
136.5
124.7
91.1
79.1
124.5
88.4
75.9
123.8
183.0
90.1
77.0
123.1
184.7
87.2
73.2
124.8
186.5
89.2
75.4
125.4
186.7
181.4
90.3
75.9
125.5
187.8
183.7
89.2
75.4
124.4
181.6
87.3
72.9
125.2
187.5
181.9
182.7
181.8
134.2
116.4
131.3
110.4
133.2
114.2
131.9
112.7
123.8
110.1
158.4
165.7
117.1
159.6
166.0
119.6
159.0
164.1
118.5
157.9
163.1
119.2
142.4
163.4
121.7
24
25
32
2.30
1.27
2.72
143.0
165.4
125.1
33
331.2
34
35
36
5.33
3.49
6.46
9.54
7.15
90.0
77.6
125.1
177.8
180.9
124.5
178.7
180.9
29 Transportation equipment
37
30 Motor vehicles and parts
371
31 Aerospace and miscellaneous
transportation equipment.. 372 - 6 . 9
32 Instruments
38
33 Miscellaneous manufactures
39
9.13
5.25
136.8
125.5
3.87
152.2
159.1
111.0
161.0
1.46
103.7
135.4
90.3
151.5
153.8
60.2
2.66
130.2
90.8
152.1
151.7
.53
Primary metals
Iron and steel
Fabricated metal products.
Nonelectrical machinery ..
Electrical machinery
104.2
115.9
148.0
152.2
145.0
108.8
2.80
24
25
26
27
28
107.7
103.5
114.5
148.8
151.1
147.2
114.0
148.5
150.8
146.8
146.3
104.7
119.4
110.2
151.7
120.2
158.1
98.0
177.5
Durable manufactures
21 Lumber and products
22 Furniture and fixtures
23 Clay, glass, and stone products ..
108.6
106.5
102.4
113.3
149.2
151.1
147.8
102.1
126.6
93.2
82.2
180.8
168.0
181.7
181.6
136.7
124.9
136.4
123.4
134.8
120.4
136.4
122.0
135.5
119.7
152.7
154.0
161.3
107.6
154.4
155.9
163.0
114.5
157.1
164.3
114.7
111.8
161.8
110.0
182.2
162.2
98.3
182.3
60.8
60.2
168.0
123.9
111.2
153.4
188.2
60.1
Utilities
34 Electric .
Gross value (billions of 1982 dollars, annual rates)
MAJOR MARKET
35 Products, total
517.5
1,855.5 1,875.3 1,885.1 1,879.2 1,878.0 1,893.9 1.885.5 1,868.0 1,875.4 1,874.8 1,874.3
36 Final
37 Consumer goods
38 Equipment
39 Intermediate
405.7
272.7
133.0
111.9
1,426.3 1,442.1 1,447.5 1,449.6 1,442.8 1,460.4 1.449.6 1,430.0 1,438.1 1,436.5 1,431.3
918.4 934.4 935.6 934.3 928.0 939.4 928.5 915.5 919.9 917.7 924.0
507.9 507.7 511.9 515.2 514.8 521.1 521.1 514.5 518.2 518.8 507.3
429.3 433.2 437.7 429.6 435.3 433.5 435.9 438.0 437.3 438.3 443.0
1. These data also appear in the Board's G.12.3 (414) release. For address, see
inside front cover.
A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See "A Revision of the Index of
Industrial Production" and accompanying tables that contain revised indexes
(1977=100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July
1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September Bulletin.
Selected Measures
2.14
A51
HOUSING A N D CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1989
Item
1986
1987
1988
Feb.
Mar.
Apr.
May
June
July
Aug.'
Sept/
Oct/
Nov.
Private residential real estate activity (thousands of units)
NEW UNITS
1 Permits authorized
2
1-family
3 2-or-more-family
1,750
1,071
679
1,535
1,024
511
1,456
994
462
1,403
989
414
1,230
870
360
1,334
954
380
1,347
905
442
1,308
874
434
1,281
906
375
1,328
927
401
1,319
946
373
1,356
961
395
1,342
979
363
4 Started
5
1-family
6 2-or-more-family
1,805
1,180
626
1,621
1,146
474
1,488
1,081
407
1,465
1,029
436
1,409
981
428
1,343
1,029
314
1,308
977
331
1,406
972
434
1,420
1,026
394
1,329
990
339
1,264
971
293
1,423
1,023
400
1,342
1,003
339
7 Under construction, end of period1 .
8
1-family
9 2-or-more-family
1,074
583
490
987
591
397
919
570
350
951
594
357
942
586
356
924
579
345
911
572
339
914
572
342
918
576
342
902
565
337
893
566
327
897
566
331
888
563
325
1,756
1,120
636
1,669
1,123
546
1,530
1,085
445
1,610
1,189
421
1,459
1,050
409
1,552
1,115
437
1,442
1,041
401
1,355
964
391
1,372
965
407
1,439
1,040
399
1,368
960
408
1,318
990
328
1,451
1,045
406
13 Mobile homes shipped
244
233
218
212
207
198
205
202
178
194
185
191
191
Merchant builder activity in
1-family units
14 Number sold
15 Number for sale, end of period
748
357
672
365
675
366
621
375
555
377
607
377
653
380
647
377
738
369
723
364
642
366
648
366
710
365
10 Completed
11
1-family
12 2-or-more-family
Price (thousands of dollars)2
Median
16 Units sold
17
Units sold
92.2
104.7
113.3
118.0
123.0
116.7
119.0
122.8
116.0
122.9
119.0
123.0
127.0
112.2
127.9
139.0
145.3
149.0
144.7
145.1
153.6
140.3
158.6
149.7
147.6
155.9
3,566
3,530
3,594
3,480
3,400
3,400
3,210
3,360
3,330
3,480
3,520
3,480
3,590
80.3
98.3
85.6
106.2
89.2
112.5
91.9
117.8
92.0
116.1
92.9
118.0
92.6
118.0
93.4
118.8
96.7
122.1
94.8
120.8
94.3
118.4
92.6
117.2
93.2
118.3
EXISTING UNITS (1-family)
18 Number sold
Price of units sold
(thousands of dollars)
19 Median
20 Average
Value of new construction3 (millions of dollars)
CONSTRUCTION
21 Total put in place
387,043 397,721
409,663
416,597
416,779
411,891
416,540
412,523 410,269r
416,279
416,176
415,631
421,692
22 Private
23 Residential
24 Nonresidential, total
Buildings
25
Industrial
26
Commercial
27
Other
28
Public utilities and other
315,313 320,108
187,147 194,656
128,166 125,452
328,738
198,101
130,637
333,169
200,454
132,715
338,065
202,083
135,982
332,537
200,735
131,802
330,591
196,984
133,607
329,035 328,785' 331,884
194,229 195,165' 194,393
134,806 133,620' 137,491
329,564
192,765
136,799
330,183
193,158
137,025
330,281
194,381
135,900
29 Public
30 Military
31
Highway
32 Conservation'and development...
33 Other
13,747
56,762
13,216
44,441
13,707
55,448
15,464
40,833
14,931
58,104
17,278
40,324
15,098
58,749
17,484
41,384
15,698
60.653
17,634
41,997
16,245
55,581
16,645
43,331
15,945
56,796
17,343
43,523
16,302
57,434
17,179
43,891
16,424'
56,640'
16,768'
43,788'
17,526
57,680
18,455
43,830
17,927
57,132
17,962
43,778
17,825
58,154
17,392
43,654
18,063
56,741
17,972
43,124
71,727
3,868
22,971
4,646
40,242
77,612
4,327
25,343
5,162
42,780
80,922
3,579
28,524
4,474
44,345
83,428
3,433
27,936
4,742
47,317
78,714
3,740
26,091
4,210
44,673
80,420
2,054
27,772
3,068
47,526
85,130
3,870
27,432
6,053
47,775
81,914
4,324
27,321
4,699
45,570
81,484'
3,194'
26,128
4,567'
47,595'
84,395
3,779
27,367
4,708
48,541
86,612
4,916
27,581
4,906
49,209
85,448
3,342
26,406
5,343
50,357
91,411
3,988
29,288
4,878
53,257
1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in previous periods because of changes by the Bureau of the
Census in its estimating techniques. For a description of these changes see
Construction Reports (C-30-76-5), issued by the Bureau in July 1976.
NOTE. Census Bureau estimates for all series except (1) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices
of existing units, which are published by the National Association of Realtors. All
back and current figures are available from the originating agency. Permit
authorizations are those reported to the Census Bureau from 16,000 jurisdictions
beginning with 1978.
A52
2.15
Domestic Nonfinancial Statistics • March 1990
CONSUMER A N D PRODUCER PRICES
Percentage changes based on seasonally adjusted data, except as noted
Change from 12
months earlier
Change from 3 months earlier
(at annual rate)
Change from 1 month earlier
1989
1989
Item
1988
Dec.
Index
level
Dec.
1989
1989
Dec.
Mar.
June
Sept.
Dec.
Aug.
Sept.
Oct.
Nov.
Dec.
CONSUMER PRICES2
(1982-84=100)
1
AU items
4.4
4.6
6.1
5.7
1.6
5.2
.0
.2
.5
.4
.4
126.1
2
J
4
5
6
Food
Energy items
All items less food and energy
Commodities
Services
5.2
.5
4.7
4.0
5.0
5.6
5.1
4.4
2.7
5.3
8.2
10.2
5.2
4.1
5.9
5.6
24.8
3.8
2.0
4.3
2.9
-13.4
3.1
.7
4.5
5.8
2.2
5.3
4.1
6.0
.2
-2.0
.2
-.3
.3
.2
-.9
.2
.4
.2
.4
.6
.5
.6
.4
.6
-.1
.4
.2
.5
.5
.0
.4
.2
.5
127.4
93.2
131.5
121.2
137.5
4.0
5.7
-3.6
4.8
3.6
4.8
5.0
9.6
4.5
3.7
10.2
13.1
41.0
5.4
4.6
5.8
-1.3
31.8
5.7
4.5
-.3
-1.3
-16.8
2.6
4.8
4.3
10.9
-7.1
4.5
1.0
-.4
.3
-7.3
.6'
.y
.8'
-,5R
6.5
.4'
,8R
.4
1.4
.2
.2
-.3
-.1
.8
-3.3
.0
.3
.7
.5
1.4
.9
.2
115.3
120.9
64.9
126.6
120.7
5.3
7.2
2.6
.9
8.7
5.5
2.9
.3
-1.1
-.7
-.4
-1.3
-.4'
-.R
.4
.2'
.1
.1
-.1
.0
-.1
-.4
112.0
119.7
14.2
-9.5
7.5
2.6
17.9
-3.8
16.9
48.3
10.3
-17.8
23.6
-9.3
-2.2
-6.5
-.6
17.1
12.6
-14.3
-6.8'
.8
-1.3'
3.7'
.3
-.6
.5
.3
1.7
.3
-2.3
3.0
2.2
-1.8
112.3
78.5
131.7
PRODUCER PRICES
(1982=100)
7
8
9
10
11
Finished goods
Consumer foods
Consumer energy
Other consumer goods
Capital equipment
12
13
Intermediate materials3
Excluding energy
14
15
16
Crude materials
Foods
Energy
Other
1. Not seasonally adjusted.
2. Figures for consumer prices are those for all urban consumers and reflect a
rental equivalence measure of homeownership after 1982.
\.r
3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds.
SOURCE. Bureau of Labor Statistics.
Selected Measures
2.16
A53
GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.
1988
Account
1987
1988
1989
1989
Q4
Ql
Q2
Q3
Q4
GROSS NATIONAL PRODUCT
1 Total
2
3
4
5
4,524.3
6 Gross private domestic investment
8
9
10
11
Fixed investment
Nonresidential
Structures
Producers' durable equipment
Residential structures
12
13
Change in business inventories
Nonfarm
'/
14 Net exports of goods and services
15
Exports
16
Imports
17 Government purchases of goods and services
18
Federal
19
State and local
4,880.6
5,233.2
5,017.3
5,113.1
5,201.7
5,281.0
5,337.0
3,010.8
421.0
998.1
1,591.7
3,235.1
455.2
1,052.3
1,727.6
3,470.3
473.6
1,122.6
1,874.1
3,324.0
467.4
1,078.4
1,778.2
3,381.4
466.4
1,098.3
1,816.7
3,444.1
471.0
1,121.5
1,851.7
3,508.1
486.1
1,131.4
1,890.6
3,547.5
471.0
1,139.1
1,937.5
699.9
670.6
444.3
133.8
310.5
226.4
750.3
719.6
487.2
140.3
346.8
232.4
777.1
747.7
512.5
145.1
367.4
235.2
752.8
734.1
495.8
142.5
353.3
238.4
769.6
742.0
503.1
144.7
358.5
238.8
775.0
747.6
512.5
142.4
370.1
235.1
779.1
751.7
519.6
146.2
373.4
232.1
784.8
749.6
514.8
147.1
367.7
234.8
29.3
30.5
30.6
34.2
29.4
25.2
18.7
40.8
27.7
19.1
27.4
23.6
27.4
19.8
35.2
38.3
-112.6
448.6
561.2
-73.7
547.7
621.3
-50.9
624.4
675.2
-70.8
579.7
650.5
-54.0
605.6
659.6
-50.6
626.1
676.6
-45.1
628.5
673.6
-53.8
637.3
691.1
926.1
381.6
544.5
968.9
381.3
587.6
1,036.7
404.1
632.5
1,011.4
406.4
604.9
1,016.0
399.0
617.0
1,033.2
406.0
627.2
1,038.9
402.7
636.2
1,058.6
408.8
649.8
4,495.0
1,785.2
777.6
1,007.6
2,304.5
434.6
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
4,850.0
1,931.9
863.6
1,068.3
2,499.2
449.5
5,203.8
2,073.6
911.6
1,161.9
2,700.7
459.0
4,998.7
1,987.4
888.5
1,098.9
2,570.0
459.9
5,085.4
2,030.9
894.7
1,136.2
2,620.8
461.3
5,174.3
2,079.1
905.2
1,173.9
2,667.5
455.1
5,253.6
2,096.3
930.1
1,166.2
2,728.1
456.6
5,301.8
2,087.9
916.5
1,171.3
2,786.2
462.9
29.3
22.0
7.2
30.6
25.0
5.6
29.4
14.6
14.9
18.7
32.0
-13.3
27.7
22.0
5.7
27.4
6.0
21.4
27.4
5.2
22.2
35.2
25.0
10.2
3,853.7
4,024.4
4,142.6
4,069.4
4,106.8
4,132.5
4,162.9
4,168.1
By major type of product
20 Final sales, total
21
Goods
22
Durable
Nondurable
23
24
Services
25
Structures
26 Change in business inventories
27
Durable goods
28
Nondurable goods
MEMO
29 Total GNP in 1982 dollars
NATIONAL INCOME
30 Total
3,665.4
3,972.6
4,265.0
4,097.4
4,185.2
4,249.6
4,287.3
n.a.
31 Compensation of employees
32
Wages and salaries
33
Government and government enterprises
34
Other
35
Supplement to wages and salaries
Employer contributions for social insurance
36
37
Other labor income
2,690.0
2,249.4
419.2
1,830.1
440.7
227.8
212.8
2,907.6
2,429.0
446.5
1,982.5
478.6
249.7
228.9
3,145.4
2,632.0
476.9
2,155.1
513.4
265.1
248.3
2,997.2
2,505.1
456.3
2,048.9
492.0
255.6
236.5
3,061.7
2,560.7
466.9
2,093.8
501.0
259.7
241.3
3,118.2
2,608.8
473.5
2,135.3
509.4
263.4
246.0
3,171.9
2,654.7
480.2
2,174.5
517.2
266.6
250.7
3,230.1
2,704.0
487.1
2,216.9
526.1
270.7
255.3
311.6
270.0
41.6
327.8
288.0
39.8
352.2
305.9
46.3
328.3
296.3
32.0
359.3
300.3
59.0
355.5
304.2
51.3
343.3
307.2
36.1
350.9
312.0
38.8
38 Proprietors' income1
39
Business and professional1
40
Farm1
41 Rental income of persons
2
13.4
15.7
8.0
16.1
11.8
9.8
5.4
42 Corporate profits1
43
Profits before tax3
44
Inventory valuation adjustment
45
Capital consumption adjustment
298.7
266.7
-18.9
50.9
328.6
306.8
-25.0
46.8
298.2
287.3
-18.5
29.4
340.2
318.8
-20.1
41.5
316.3
318.0
-38.3
36.6
307.8
296.0
-20.7
32.3
295.2
275.0
-6.3
26.5
n.a.
n.a.
46 Net interest
351.7
392.9
461.1
415.7
436.1
458.4
471.5
478.4
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. Survey of Current Business (Department of Commerce).
5.1
-8.9
22.4
A54
Domestic Nonfinancial Statistics • March 1990
2.17
PERSONAL INCOME A N D SAVING
Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1989
1988
Account
1987
1988
1989
Q4
Q1
Q2
Q3
Q4
PERSONAL INCOME AND SAVING
1 Total personal income
3,777.6
4,064.5
4,428.7
4,185.2
4,317.8
4,400.3
4,455.9
4,540.9
2 Wage and salary disbursements
3 Commodity-producing industries
4
Manufacturing
5 Distributive industries
Service industries
6
7 Government and government enterprises
2,249.4
649.9
490.3
531.9
648.3
419.2
2,429.0
696.3
524.0
571.9
714.4
446.5
2,632.0
738.3
553.0
615.1
801.7
476.9
2,505.1
714.7
538.1
587.5
746.7
456.3
2,560.7
726.6
546.3
598.8
768.4
466.9
2,608.8
733.7
549.9
610.8
790.8
473.5
2,654.7
742.6
555.7
619.4
812.4
480.2
2,704.0
750.4
559.9
631.2
835.3
487.1
212.8
311.6
270.0
41.6
13.4
92.0
523.2
548.2
282.9
228.9
327.8
288.0
39.8
15.7
102.2
571.1
584.7
300.5
248.3
352.2
305.9
46.3
8.0
112.4
657.8
632.1
325.2
236.5
328.3
296.3
32.0
16.1
106.4
598.6
593.8
304.0
241.3
359.3
300.3
59.0
11.8
109.4
629.0
616.4
316.9
246.0
355.5
304.2
51.3
9.8
111.4
655.1
626.8
322.9
250.7
343.3
307.2
36.1
5.4
113.2
667.8
636.4
327.9
255.3
350.9
312.0
38.8
5.1
115.7
679.5
649.0
333.0
8 Other labor income
9 Proprietors' income
10 Business and professional
11 Farm1
12 Rental income of persons
14 Personal interest income
15 Transfer payments
16 Old-age survivors, disability, and health insurance benefits . . .
17
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
172.9
194.9
214.2
199.6
210.0
213.0
215.4
218.5
3,777.6
4,064.5
4,428.7
4,185.2
4,317.8
4,400.3
4,455.9
4,540.9
571.7
586.6
648.7
597.8
628.3
652.6
649.1
665.0
20 EQUALS: Disposable personal income
3,205.9
3,477.8
3,780.0
3,587.4
3,689.5
3,747.7
3,806.8
3,875.9
21
LESS: Personal outlays
3,104.1
3,333.1
3,573.7
3,424.0
3,483.8
3,547.0
3,611.7
3,652.2
22 EQUALS: Personal saving
101.8
144.7
206.3
163.4
205.7
200.7
195.1
223.7
15,793.9
10,302.0
10,970.0
3.2
16,332.8
10,545.5
11,337.0
4.2
16,650.3
10,725.5
11,681.0
5.5
16,455.3
10,625.6
11,466.0
4.6
16,566.4
10,653.5
11,625.0
5.6
16,629.8
10,678.9
11,622.0
5.4
16,711.8
10,799.3
11,717.0
5.1
16,685.7
10,765.8
11,761.0
5.8
27 Gross saving
553.8
642.4
700.7
647.4
693.5
695.8
709.9
n.a.
28
29
30
31
663.8
101.8
75.3
-18.9
738.6
144.7
80.3
-25.0
805.6
206.3
47.1
-18.5
769.3
163.4
81.7
-20.1
792.1
205.7
53.4
-38.3
793.7
200.7
52.0
-20.7
809.7
195.1
49.3
-6.3
n.a.
223.7
n.a.
-8.9
303.1
183.6
321.7
191.9
-344.8
-207.4
329.7
194.4
335.2
197.8
339.7
201.3
-349.9
-215.3
-354.5
-215.1
n.a.
n.a.
n.a.
19
LESS: Personal tax and nontax payments
MEMO
Per capita (1982 dollars)
23 Gross national product
24 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING
Gross private saving
Personal saving
Undistributed corporate profits
Corporate inventory valuation adjustment
Capital consumption allowances
33 Noncorporate
34
Government surplus, or deficit ( - ) , national income and
product accounts
36
State and local
-110.1
-161.4
51.3
-96.1
-145.8
49.7
-104.9
-149.9
45.0
-121.9
-167.6
45.7
-98.7
-147.5
48.8
-97.9
-145.4
47.5
-99.8
-144.7
44.9
37 Gross investment
549.0
632.8
677.4
630.8
669.3
677.5
684.3
678.3
699.9
-150.9
750.3
-117.5
777.1
-99.8
752.8
-122.0
769.6
-100.3
775.0
-97.5
779.1
-94.8
784.8
-106.5
-4.7
-9.6
-23.4
-16.6
-24.1
-18.3
-25.5
-25.5
38 Gross private domestic
39 Net foreign
40 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
SOURCE. Survey of Current Business (Department of Commerce).
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A55
Summary
Millions of dollars; quarterly data are seasonally adjusted except as noted. 1
1989
1988
Item credits or debits
1986
1987
1988
Q3
Balance on current account
Not seasonally adjusted
Merchandise trade balance
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net
Other service transactions, net
Remittances, pensions, and other transfers ..
U.S. government grants (excluding military) .
11 Change in U.S. government assets, other than official
reserve assets, net (increase, - )
-133,249
-143,700
-126,548
-145,058
223,367
-368,425
-4,577
60,629
10,517
-4,049
-11,730
-159,500
250,266
-409,766
-2,856
71,151
10,585
-4,063
-10,149
-127,215
319,251
-446,466
-4,606
61,974
17,702
-4,279
-10,377
Q4
Ql
Q2
Qy
-32,340
-36,926
-30,339
80,604
-110,943
-1,006
12,806
4,971
-1,088
-2,288
-28,677
-28,191
-32,019
83,729
-115,748
-1,604
21,329
5,475
-1,090
-3,928
-30,390
-25,994
-28,378
87,919
-116,297
-1,498
15,527
5,428
-1,186
-2,340
-32,084
-31,888
-27,554
91,423
-118,977
-1,518
13,400
5,977
-1,011
-1,857
-22,687
-27,718
-27,751
91,569
-119,320
-968
21,096
7,077
-1,099
-2,557
-2,024
997
2,999
1,961
3,413
1,049
-309
644
12 Change in U.S. official reserve assets (increase, - ) .
13 Gold
14 Special drawing rights (SDRs)
15 Reserve position in International Monetary Fund.
16 Foreign currencies
312
0
-246
1,501
-942
9,149
0
-509
2,070
7,588
-3,566
0
474
1,025
-5,064
-7,380
0
-35
202
-7,547
2,271
0
173
307
1,791
-4,000
0
-188
316
-4,128
-12,095
0
68
-159
-12,004
-5,996
0
-211
337
-6,122
17 Change in U.S. private assets abroad (increase, - ) .
18 Bank-reported claims
19 Nonbank-reported claims
20 U.S. purchase of foreign securities, net
21
U.S. direct investments abroad, net
-97,953
-59,975
-7,396
-4,271
-26,311
-86,363
-42,119
5,201
-5,251
-44,194
-81,544
-54,481
-1,684
-7,846
-17,533
-32,467
-26,229
255
-1,592
-4,901
-38,332
-30,916
4,569
-3,047
-8,938
-28,367
-22,132
1,835
-2,568
-5,502
12,781
27,238
-2,954
-5,737
-5,766
-41,804
-20,702
23
24
25
26
27
22 Change in foreign official assets in United States (increase,
+)
U.S. Treasury securities
Other U.S. government obligations
Other U.S. government liabilities
Other U.S. liabilities reported by U.S. banks3
Other foreign official assets
35,594
34,364
-1,214
2,141
1,187
-884
45,193
43,238
1,564
-2,520
3,918
-1,007
38,882
41,683
1,309
-1,284
-331
-2,495
-2,234
-3,769
572
-232
1,703
-508
10,589
11,897
697
-232
-1,036
-737
7,477
4,634
721
-304
1,974
452
-5,201
-9,738
-97
417
3,620
597
11,246
12,068
190
-547
-1,117
652
28 Change in foreign private assets in United States (increase,
+)
,
29 U.S. bank-reported liabilities^
30 U.S. nonbank-reported liabilities
31
Foreign private purchases of U.S. Treasury securities, net
32 Foreign purchases of other U.S. securities, net
33
Foreign direct investments in United States, net
186,011
79,783
-2,641
3,809
70,969
34,091
172,847
89,026
2,450
-7,643
42,120
46,894
180,417
68,832
6,558
20,144
26,448
58,435
48,413
23,291
2,350
3,422
7,454
11,896
70,170
32,223
2,702
5,336
6,871
23,038
52,529
13,261
2,852
8,590
8,665
19,161
3,412
-21,422
-361
2,252
9,676
13,267
61,236
25,688
0
11,308
0
1,878
0
-10,641
0
24,047
-4,556
0
-19,434
4,431
0
1,702
4,127
0
33,496
-2,311
0
-2,639
-5,115
11,308
1,878
-10,641
28,603
-23,865
-2,425
35,807
2,476
34 Allocation of SDRs
35 Discrepancy
36 Owing to seasonal adjustments
37
Statistical discrepancy in recorded data before seasonal
adjustment
-10,138
-10,964
13,034
11,082
11,432
MEMO
Changes in official assets
U.S. official reserve assets (increase, —)
Foreign official assets in United States (increase, +)
excluding line 25
40 Change in Organization of Petroleum Exporting Countries
official assets in United States (part of line 22
above)
41 Transfers under military grant programs (excluded from
lines 4, 6, and 10 above)
38
39
312
9,149
-3,566
-7,380
2,271
-4,000
-12,095
-5,996
33,453
47,713
40,166
-2,002
10,821
7,781
-5,618
11,793
-9,327
-9,956'
-3,109
-459
672
7,143
433
3,776
96
53
92
7
40
12
13
15
1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and
38-41.
2. Data are on an international accounts (IA) basis. Differs from the Census
basis data, shown in table 3.11, for reasons of coverage and timing. Military
exports are excluded from merchandise data and are included in line 6.
3. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
4. Primarily associated with military sales contracts and other transactions
arranged with or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of
private corporations and state and local governments.
NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business
(Department of Commerce).
A56
3.11
International Statistics • March 1990
U.S. FOREIGN TRADE 1
Millions of dollars; monthly data are seasonally adjusted.
1989
Item
1986
1987
1988
May
June
July
Aug.
Sept/
Oct/
Nov."
1 EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments, f.a.s. value
227,158
254,073
322,426
30,455
31,286
30,468
30,562
30,680
31,034
30,192
GENERAL IMPORTS including
merchandise for immediate
consumption plus entries into
bonded warehouses
2
Customs value
365,438
406,241
440,952
40,534
39,293
38,709
40,662
39,194
41,283
40,689
-138,279
-152,169
-118,526
-10,079
-8,007
-8,241
-10,101
-8,513
-10,249
-10,498
Trade balance
3
Customs value
1. The Census basis data differ from merchandise trade data shown in table
3.10, U.S. International Transactions Summary, for reasons of coverage and
timing. On the export side, the largest adjustment is the exclusion of military sales
(which are combined with other military transactions and reported separately in
the "service account" in table 3.10, line 6). On the import side, additions are made
for gold, ship purchases, imports of electricity from Canada, and other transac-
3.12
tions; military payments are excluded and shown separately as indicated above.
As of Jan. 1, 1987 census data are released 45 days after the end of the month; the
previous month is revised to reflect late documents. Total exports and the trade
balance reflect adjustments for undocumented exports to Canada.
SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade"
(Department of Commerce, Bureau of the Census).
U.S. RESERVE ASSETS
Millions of dollars, end of period
1989
Type
1986
1987
1988
June
July
Aug.
Sept.
Oct.
Nov/
Dec/
1 Total
43,186
48,511
45,798
60,502
63,462
62,364
68,418
70,560
70,560
74,609
2 Gold stock, including Exchange
Stabilization Fund
11,090
11,064
11,078
11,063
11,066
11,066
11,065
11,062
11,060
11,059
7,293
8,395
10,283
9,034
9,340
9,240
9,487
9,473
9,751
9,951
3 Special drawing rights2,3
4 Reserve position in International
Monetary Fund
11,947
11,730
11,349
8,888
9,055
8,644
8,786
8,722
9,047
9,048
5 Foreign currencies4
12,856
17,322
13,088
31,517
34,001
33,413
39,080
41,552
42,702
44,551
1. Gold held under earmark at Federal Reserve Banks for foreign and international accounts is not included in the gold stock of the United States; see table
3.13. Gold stock is valued at $42.22 per fine troy ounce.
2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based
on a weighted average of exchange rates for the currencies of member countries.
From July 1974 through December 1980, 16 currencies were used; from January
1981, 5 currencies have been used. The U.S. SDR holdings and reserve position
in the IMF also are valued on this basis beginning July 1974.
3.13
3. Includes allocations by the International Monetary Fund of SDRs as follows:
$867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1,
1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093
million on Jan. 1, 1981; plus transactions in SDRs.
4. Valued at current market exchange rates.
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS'
Millions of dollars, end of period
1989
Assets
1986
1987
1988
June
1 Deposits
Assets held in custody i
2 U.S. Treasury securities
3 Earmarked gold3
Aug.
Sept.
Oct.
Nov.
Dec.
287
244
347
275
371
265
325
252
307
589
155,835
14,048
195,126
13,919
232,547
13,636
229,914
13,545
233,170
13,530
238,007
13,516
235,597
13,506
230,804
13,460
231,059
13,458
224,911
13,456
1. Excludes deposits and U.S. Treasury securities held for international and
regional organizations.
2. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S.
Treasury securities payable in dollars and in foreign currencies.
July
3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce,
Earmarked gold is gold held for foreign and international accounts and is not
included in the gold stock of the United States.
Summary Statistics
3.14
FOREIGN BRANCHES OF U.S. BANKS
A57
Balance Sheet Data1
Millions of dollars, end of period
1989
Asset account
1986
1987
1988
May
June
July
Aug.
Sept.
Oct.
Nov.
All foreign countries
1 Total, all currencies
2 Claims on United States
3 Parent bank
4 Other banks in United States
5 Nonbanks
6 Claims on foreigners
7 Other branches of parent bank
8 Banks
9 Public borrowers
10 Nonbank foreigners
456,628
518,618
505,595r
521,436
523,674
534,200
522,489
520,845
533,641
549,126
114,563
83,492
13,685
17,386
312,955
96,281
105,237
23,706
87,731
138,034
105,845
16,416
15,773
342,520
122,155
108,859
21,832
89,674
169,111
129,856
14,918
24,337
299,728
107,179
96,932
17,163
78,454
177,987
134,026
13,040
30,921
302,808
116,506
94,042
16,095
76,165
177,445
132,380
14,218
30,847
303,720
115,913
94,902
16,709
76,196
179,615
133,135
15,744
30,736
310,426
117,438
95,621
16,948
80,419
177,299
134,479
15,225
27,595
299,265
108,893
92,465
16,656
81,251
182,440
142,339
14,164
25,937
289,996
104,683
90,510
16,215
78,588
184,505'
145,034'
14,248'
25,223'
300,814'
110,684'
93,357
16,721
80,052
193,215
152,021
15,405
25,789
306,291
113,732
95,249
16,139
81,171
29,110
38,064
36,756'
40,641
42,509
44,159
45,925
48,409
48,322'
49,620
12 Total payable in U.S. dollars
317,487
350,107
357,573'
366,315
367,562
371,851
369,287
359,924
369,898'
380,948
13 Claims on United States
14 Parent bank
15 Other banks in United States
16 Nonbanks
17 Claims on foreigners
18 Other branches of parent bank
19 Banks
20 Public borrowers
21 Nonbank foreigners
110,620
82,082
12,830
15,708
195,063
72,197
66,421
16,708
39,737
132,023
103,251
14,657
14,115
202,428
88,284
63,707
14,730
35,707
163,456
126,929
14,167
22,360
177,685
80,736
54,884
12,131
29,934
169,796
128,771
11,909
29,116
177,308
86,625
49,793
11,282
29,608
169,520
127,352
13,207
28,961
180,013
88,874
50,627
11,815
28,697
171,041
128,063
14,734
28,244
181,441
90,077
49,913
11,616
29,835
170,497
130,168
14,688
25,641
177,911
83,036
50,885
11,774
32,216
174,628
137,481
13,217
23,930
164,461
77,858
46,786
11,646
28,171
176,228'
139,224'
13,597
23,407'
171,691'
83,945'
47,349
11,579
28,818
185,408
147,104
14,648
23,656
171,506
82,265
49,045
11,446
28,750
11,804
15,656
16,432'
19,211
18,029
19,369
20,879
20,835
21,979'
24,034
11 Other assets
22 Other assets
United Kingdom
23 Total, all currencies
140,917
158,695
156,835
155,532
153,968
161,882
158,860
157,673
164,155
166,003
24 Claims on United States
25 Parent bank
26 Other banks in United States
27 Nonbanks
28 Claims on foreigners
29 Other branches of parent bank
30 Banks
31 Public borrowers
32 Nonbank foreigners
24,599
19,085
1,612
3,902
109,508
33,422
39,468
4,990
31,628
32,518
27,350
1,259
3,909
115,700
39,903
36,735
4,752
34,310
40,089
34,243
1,123
4,723
106,388
35,625
36,765
4,019
29,979
39,599
35,642
1,243
2,714
104,504
35,537
37,412
3,627
27,928
38,014
33,763
1,125
3,126
103,773
34,948
37,357
3,599
27,869
42,147
37,713
1,121
3,313
106,586
35,440
36,519
3,788
30,839
41,914
38,031
1,112
2,771
102,231
32,392
36,073
3,586
30,180
40,085
36,046
1,265
2,774
102,097
32,611
37,146
3,265
29,075
42,424'
38,938
1,200
2,286'
106,430
35,252
38,048
3,346
29,784
44,662
40,743
1,303
2,616
105,612
35,071
36,468
3,172
30,901
6,810
10,477
10,358
11,429
12,181
13,149
14,715
15,491
34 Total payable in U.S. dollars
95,028
100,574
103,503
101,612
99,028
103,512
104,036
99,238
35 Claims on United States
36 Parent bank
37 Other banks in United States
38 Nonbanks
39 Claims on foreigners
40 Other branches of parent bank
41 Banks
42 Public borrowers
43 Nonbank foreigners
23,193
18,526
1,475
3,192
68,138
26,361
23,251
3,677
14,849
30,439
26,304
1,044
3,091
64,560
28,635
19,188
3,313
13,424
38,012
33,252
964
3,796
60,472
28,474
18,494
2,840
10,664
36,675
34,119
862
1,694
58,395
26,036
18,458
2,737
11,164
34,990
32,059
844
2,087
58,746
26,541
18,745
2,606
10,854
38,506
36,041
821
1,644
59,137
27,955
17,080
2,702
11,400
39,135
36,375
1,007
1,753
57,706
25,368
18,298
2,679
11,361
37,108
34,537
1,017
1,554
55,340
25,542
17,612
2,521
9,665
39,715'
37,404
951
1,360'
59,389
28,084
18,275
2,553
10,477
41,506
39,199
966
1,341
57,029
26,969
16,963
2,404
10,693
3,697
5,575
5,019
6,542
5,292
5,869
7,195
6,790
7,765'
8,192
33 Other assets
44 Other assets
15,301'
106,869
15,729
106,727
Bahamas and Caymans
45 Total, all currencies
46 Claims on United States
47 Parent bank
48 Other banks in United States
49 Nonbanks
50 Claims on foreigners
51 Other branches of parent bank
52 Banks
53 Public borrowers
54 Nonbank foreigners
55 Other assets
56 Total payable in U.S. dollars
142,592
160,321
170,639
173,137
171,780
172,789
165,401
164,684
164,836
172,762
78,048
54,575
11,156
12,317
60,005
17,296
27,476
7,051
8,182
85,318
60,048
14,277
10,993
70,162
21,277
33,751
7,428
7,706
105,320
73,409
13,145
18,766
58,393
17,954
28,268
5,830
6,341
111,823
73,627
10,807
27,389
53,984
21,962
21,184
5,280
5,558
109,800
70,735
12,116
26,949
54,537
22,324
21,202
5,540
5,471
107,831
67,417
13,712
26,702
57,135
24,462
21,591
5,405
5,677
106,693
69,404
13,294
23,995
50,808
16,802
20,688
5,407
7,911
111,043
76,426
12,141
22,476
45,962
14,688
20,162
5,435
5,677
109,910
75,900
12,059'
21,951'
47,214
16,961
19,579
5,289
5,385
115,373
79,941
13,185
22,247
49,063
17,086
21,641
5,340
4,9%
4,539
4,841
6,926
7,330
7,443
7,823
7,900
7,679
7,712
8,326
136,813
151,434
163,518
166,869
165,676
167,259
160,821
160,274
159,643
167,182
1. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
A58
International Statistics • March 1990
3.14—Continued
Liability account
1986
1987
May
July
Aug.
Sept.
Oct.
All foreign countries
57 Total, all currencies
456,628
518,618
505,595'
521,436
523,674
534,200
522,489
520,845
533,641
549,126
58 Negotiable CDs
59 To United States
60 Parent bank
61 Other banks in United States
62 Nonbanks
31,629
152,465
83,394
15,646
53,425
30,929
161,390
87,606
20,355
53,429
28,511
185,577
114,720
14,737
56,120
29,425
178,852'
110,579
13,564
54,709'
28,116
179,902'
113,395
12,951
53,556'
28,882
177,739'
110,326
13,323
54,090'
29,524
177,542'
110,917
13,269
53,356'
26,679
183,203'
121,003
13,015
49,185'
26,776
183,576'
123,229'
11,476
48,871'
26,555
190,472
128,739
11,179
50,554
63 To foreigners
64 Other branches of parent bank
65 Banks
66 Official institutions
67 Nonbank foreigners
68 Other liabilities
253,775
95,146
77,809
17,835
62,985
18,759
304,803
124,601
87,274
19,564
73,364
21,496
270,923
111,267
72,842
15,183
71,631
20,584'
288,260'
121,135
72,897'
17,795
76,433'
24,899
289,559'
118,950
74,209'
17,559
78,841'
26,097
301,389'
119,571
80,069'
18,846
82,903'
26,190
288,566'
113,752'
75,589'
17,591
81,634'
26,857
283,435'
104,853'
77,618'
17,349
83,615'
27,528
294,486'
114,180'
75,758'
19,361
85,187'
28,803
302,316
116,016
80,668
18,937
86,695
29,783
69 Total payable in U.S. dollars
336,406
361,438
367,483
376,474
378,331
381,879
379,771
371,301
384,495'
393,001
70 Negotiable CDs
71 To United States
72 Parent bank
73 Other banks in United States .
74 Nonbanks
28,466
144,483
79,305
14,609
50,569
26,768
148,442
81,783
18,951
47,708
24,045
173,190
107,150
13,468
52,572
25,411
166,165'
102,643
11,944
51,578'
24,129
167,261'
105,074
11,537
50,65c
24,914
163,804'
100,726
11,845
51,233'
25,483
166,041'
103,3%
11,964
50,681'
22,927
170,512'
112,255
11,837
46,42C
22,260
171,458'
115,314'
10,273
45,871'
22,539
179,313
121,914
9,881
47,518
75 To foreigners
76 Other branches of parent bank
77 Banks
78 Official institutions
79 Nonbank foreigners
80 Other liabilities
156,806
71,181
33,850
12,371
39,404
6,651
177,711
90,469
35,065
12,409
39,768
8,517
160,766
84,021
28,493
8,224
40,028
9,482
173,197'
90,123
29,561'
9,255
44,258'
11,701
175,349'
90,850
29,682'
9,852
44,965'
11,592
180,972'
91,713
31,215'
11,176
46,868'
12,189
175,27C
87,123'
31,939'
10,680
45,528'
12,977
165,321'
77,987'
30,232'
10,195
46,907'
12,541
177,703'
85,781'
31,986'
11,445
48,491'
13,074
177,413
83,520
32,775
11,712
49,406
13,736
United Kingdom
81 Total, all currencies
140,917
158,695
156,835
155,532
153,968
161,882
158,860
157,673
164,155
166,003
82 Negotiable CDs
83 To United States
84 Parent bank
85 Other banks in United States
86 Nonbanks
27,781
24,657
14,469
2,649
7,539
26,988
23,470
13,223
1,536
8,711
24,528
36,784
27,849
2,037
6,898
25,539
30,867
20,329
1,720
8,818
24,396
30,013
22,037
1,648
6,328
25,342
29,954
19,885
1,852
8,217
25,905
31,551
21,841
1,767
7,943
23,122
31,076
24,013
1,687
5,376
23,152
34,181
25,061
2,002
7,118
22,837
33,192
25,138
1,464
6,590
87 To foreigners
88 Other branches of parent bank
89 Banks
90 Official institutions
91 Nonbank foreigners
92 Other liabilities
79,498
25,036
30,877
6,836
16,749
8,981
98,689
33,078
34,290
11,015
20,306
9,548
86,026
26,812
30,609
7,873
20,732
9,497
88,985
26,867
30,925
8,946
22,247
10,141
88,381
24,974
31,066
8,650
23,691
11,178
94,335
26,556
33,047
9,586
25,146
12,251
88,661
24,326
30,790
8,868
24,677
12,743
91,101
24,769
31,330
8,878
26,124
12,374
93,700
26,936
30,688
10,132
25,944
13,122
96,711
26,660
33,179
9,723
27,149
13,263
93 Total payable in U.S. dollars
99,707
102,550
105,907
104,356
101,742
105,700
106,915
102,361
110,358
109,169
94 Negotiable CDs
95 To United States
96 Parent bank
97 Other banks in United States .
98 Nonbanks
26,169
22,075
14,021
2,325
5,729
24,926
17,752
12,026
1,308
4,418
22,063
32,588
26,404
1,752
4,432
23,568
26,554
18,545
1,368
6,641
22,324
25,401
19,556
1,393
4,452
23,132
24,618
16,909
1,477
6,232
23,679
27,232
19,580
1,502
6,150
21,156
26,592
21,588
1,511
3,493
20,433
30,433
23,247
1,835
5,351
20,715
29,284
23,350
1,232
4,702
99 To foreigners
100 Other branches of parent bank
101 Banks
102 Official institutions
103 Nonbank foreigners
104 Other liabilities
48,138
17,951
15,203
4,934
10,050
3,325
55,919
22,334
15,580
7,530
10,475
3,953
47,083
18,561
13,407
4,348
10,767
4,173
49,006
18,030
13,930
4,796
12,250
5,228
48,491
16,467
13,545
5,579
12,900
5,526
52,179
18,388
14,173
6,131
13,487
5,771
49,913
17,060
13,578
5,825
13,450
6,091
48,557
16,673
12,331
5,532
14,021
6,056
52,902
18,926
13,177
6,605
14,194
6,590
52,321
16,925
13,687
6,754
14,955
6,849
Bahamas and Caymans
105 Total, all currencies
142,592
160,321
170,639
173,137
171,780
172,789
165,401
164,684
164,836
172,762
106 Negotiable CDs
107 To United States
108 Parent bank
109 Other banks in United States
110 Nonbanks
847
106,081
49,481
11,715
44,885
885
113,950
53,239
17,224
43,487
953
122,332
62,894
11,494
47,944
872
120,206'
64,908
10,398
44,900'
696
117,781'
61,642
10,034
46,105'
717
116,294'
61,263
10,197
44,834'
691
113,179'
58,765
10,076
44,338'
669
117,611'
64,859
10,026
42,726'
669
114,701'
66,292
8,088
40,321'
671
121,253
70,339
8,438
42,476
111 To foreigners
112 Other branches of parent ban
113 Banks
114 Official institutions
115 Nonbank foreigners
116 Other liabilities
34,400
12,631
8,617
2,719
10,433
1,264
43,815
19,185
10,769
1,504
12,357
1,671
45,161
23,686
8,336
1,074
12,065
2,193
48,958'
26,478
8,227'
1,164
13,089'
3,101
50,433'
27,763
8,318'
1,102
13,25(y
2,870
52,848'
29,085
8,308'
1,223
14,232'
2,930
48,712'
25,770'
8,613'
1,081
13,248'
2,819
43,818'
20,678'
8,802'
928
13,410'
2,586
46,906'
23,086'
8,985'
1,003
13,832'
2,560
47,289
23,880
8,442
1,131
13,836
3,549
117 Total payable in U.S. dollars ..
138,774
152,927
162,950
160,800
160,133
166,954
165,593
166,988
160,028
167,835
Summary Statistics
3.15
A59
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1989
Item
1987
1988
May
1 Total1
2
3
4
5
6
7
8
9
10
11
12
July
Aug.
Sept.
Oct.
Nov."
259,556
By area
Western Europe
Canada
Latin America and Caribbean
Asia
Africa
Other countries
299,782r
306,569'
302,299'
307,516'
317,591'
314,782'
315,118'
315,085
31,838
88,829
31,5^
103,722
38,185'
91,798
37,490'
87,190
39,216'
87,734
38,171'
88,325
36,393'
86,350
42,148'
81,465
39,203
82,474
122,432
300
16,157
149,056
523
14,962
160,013
542
16,031
160,462
545
16,612'
163,281
549
16,736'
173,238
553
17,304'
174,037
557
17,445'
173,047
561
17,897'
174,733
564
18,111
124,620
4,961
8,328
116,098
1,402
4,147
By type
Liabilities reported by banks in the United States
U.S. Treasury bills and certificates3
U.S. Treasury bonds and notes
Marketable
Nonmarketable4
U.S. securities other than U.S. Treasury securities
125,097
9,584
10,099
145,608r
1,369
7,501
126,264'
9,938
6,091
156,180'
1,182
6,371
122,670'
9,604
5,925
155,454'
1,271
6,830
126,533'
9,424
7,166
155,786'
949
7,113
134,232
9,560
7,986
157,197'
810
7,257
133,694'
8,989
9,511
154,315'
867
6,849
133,922'
8,609
10,074
154,084'
910
6,959
137,382
9,066
10,221
149,503
1,019
7,329
1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness (including those payable
in foreign currencies through 1974) and Treasury bills issued to official institutions
of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes
3.16
June
bonds and notes payable in foreign currencies.
5. Debt securities of U.S. government corporations and federally sponsored
agencies, and U.S. corporate stocks and bonds.
6. Includes countries in Oceania and Eastern Europe.
NOTE. Based on Treasury Department data and on data reported to the
Treasury Department by banks (including Federal Reserve Banks) and securities
dealers in the United States.
LIABILITIES TO A N D CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies1
Millions of dollars, end of period
1988
Item
1985
1986
1989
1987
Dec.
1 Banks' own liabilities
2 Banks' own claims
3 Deposits
4
Other claims
5 Claims of banks' domestic customers
15,368
16,294
8,437
7,857
580
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.
29,702
26,180
14,129
12,052
2,507
55,438
51,271
18,861
32,410
551
Mar.'
June'
Sept.
74,980'
68,983
25,100
43,884
364
76,545
72,904
25,938
46,966
376
69,067
62,758
23,845
38,913
723
72,560
70,715'
23,983
46,731'
2,558
2. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the accounts
of the domestic customers.
A60
3.17
International Statistics • March 1990
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States 1
Millions of dollars, end of period
1989
Holder and type of liability
1986
1987
1988
May
June'
July
Aug.
Sept.'
Oct.'
Nov."
1 All foreigners
540,996
618,874
685,339'
678,480'
673,402
665,330'
679,994'
694,304
701,035
723,141
2 Banks' own liabilities
3 Demand deposits
4 Time deposits
5 Other.
6 Own foreign offices
406,485
23,789
130,891
42,705
209,100
470,070
22,383
148,374
51,677
247,635
514,532'
21,863
152,164'
51,366'
289,138'
512,755'
21,930'
154,169'
59,073'
277,583'
511,877
21,223
153,783
60,916
275,955
503,147'
21,363'
149,753'
64,303'
267,728'
516,883'
19,718
155,494'
63,732'
277,939'
530,517
21,550
157,273
56,157
295,536
540,383
21,089
162,100
65,437
291,757
560,752
21,657
165,184
65,914
307,997
134,511
90,398
148,804
101,743
170,807'
115,056
165,725
102,734
161,524
98,893
162,184
99,365
163,111
99,683
163,787
99,209
160,652
95,278
162,389
96,355
15,417
28,696
16,776
30,285
16,426
39,325'
18,541
44,451
17,077
45,555
16,893
45,925
17,260
46,168
17,091
47,487
16,741
48,633
16,116
49,918
11 Nonmonetary international and regional
organizations8
5,807
4,464
3,224
3,415
3,817
4,240
4,418
4,945
6,316
6,337
12 Banks' own liabilities
13 Demand deposits
14 Time deposits
15 Other
3,958
199
2,065
1,693
2,702
124
1,538
1,040
2,527
71
1,183
1,272
2,980
76
1,202
1,702
2,895
32
1,454
1,409
2,716
41
918
1,756
3,402
66
1,079
2,257
3,347
89
1,702
1,555
4,280
53
1,615
2,613
5,019
62
1,446
3,512
16 Banks' custody liabilities5
17 U.S. Treasury bills and certificates6
18 Other negotiable and readily transferable
instruments
19 Other
1,849
259
1,761
265
698
57
435
95
922
181
1,524
345
1,016
107
1,598
84
2,036
568
1,318
321
1,590
0
1,497
0
641
0
305
35
731
10
1,179
0
909
1
1,479
35
1,454
14
996
0
7 Banks' custody liabilities5
8 U.S. Treasury bills and certificates6
9 Other negotiable and readily transferable
instruments
10 Other
20 Official institutions9
103,569
120,667
135,241'
129,983'
124,680
126,951'
126,496'
122,743
123,613
121,676
21 Banks' own liabilities
22 Demand deposits
23 Time deposits
24 Other
25,427
2,267
10,497
12,663
28,703
1,757
12,843
14,103
27,109'
1,917'
9,767'
15,425'
31,886'
1,761
11,180'
18,945'
32,167
1,801
10,033
20,332
34,132'
1,959'
10,072'
22,101'
33,238'
1,625
8,837
22,776'
31,615
2,026
8,994
20,595
37,111
2,057
11,877
23,177
34,272
2,118
11,200
20,954
25 Banks' custody liabilities5
26 U.S. Treasury bills and certificates6
27 Other negotiable and readily transferable
instruments
28 Other
78,142
75,650
91,965
88,829
108,132
103,722
98,097
91,798
92,513
87,190
92,818
87,734
93,258
88,325
91,127
86,350
86,502
81,465
87,404
82,474
2,347
145
2,990
146
4,130
280
6,114
185
5,080
244
4,821
263
4,735
198
4,588
189
4,734
303
4,805
125
29 Banks
351,745
414,280
459,523'
455,183'
452,396
443,172'
457,463'
476,027
477,952
501,912
30 Banks' own liabilities
31 Unaffiliated foreign banks
32
Demand deposits
33
Time deposits
34
Other .
35 Own foreign offices
310,166
101,066
10,303
64,232
26,531
209,100
371,665
124,030
10,898
79,717
33,415
247,635
409,501'
120,362'
9,948'
80,189'
30,226'
289,138'
400,564'
122,981'
11,172'
78,517'
33,293'
277,583'
3%,662
120,707
9,677
77,874
33,156
275,955
387,306'
119,578'
10,145
75,166'
34,267'
267,728'
400,975'
123,036'
9,101
80,603'
33,333'
277,939'
415,761
120,225
10,695
80,789
28,741
295,536
416,766
125,009
9,884
83,327
31,798
291,757
439,580
131,582
10,756
86,690
34,136
307,997
41,579
9,984
42,615
9,134
50,022'
7,602
54,619
7,114
55,734
7,759
55,865
7,674
56,488
7,838
60,265
9,032
61,186
9,251
62,332
9,499
5,165
26,431
5,392
28,089
5,725
36,694'
5,686
41,819
5,314
42,662
5,326
42,866
5,284
43,365
5,095
46,138
4,770
47,165
4,446
48,388
10
36 Banks' custody liabilities5
37 U.S. Treasury bills and certificates6
38 Other negotiable7 and readily transferable
instruments
39 Other
40 Other foreigners
79,875
79,463
87,351'
89,898'
92,509
90,968'
91,617'
90,590
93,154
93,215
41 Banks' own liabilities
42 Demand deposits
43 Time deposits
44 Other
66,934
11,019
54,097
1,818
67,000
9,604
54,277
3,119
75,396'
9,928
61,025
4,443'
77,324'
8,921
63,270'
5,133'
80,153
9,714
64,422
6,018
78,992'
9,218
63,596'
6,179'
79,268'
8,926
64,975'
5,367'
79,793
8,739
65,787
5,267
82,226
9,095
65,281
7,849
81,881
8,721
65,848
7,312
45 Banks' custody liabilities5
46 U.S. Treasury bills and certificates6
47 Other negotiable and readily transferable
instruments
48 Other
12,941
4,506
12,463
3,515
11,956
3,675
12,574
3,725
12,355
3,763
11,976
3,612
12,349
3,413
10,796
3,743
10,928
3,993
11,334
4,061
6,315
2,120
6,898
2,050
5,929
2,351
6,436
2,412
5,952
2,639
5,566
2,797
6,332
2,604
5,929
1,125
5,783
1,152
5,869
1,405
7,496
7,314
6,425
5,625
5,337
5,261
5,199
5,237
5,160
4,799
49 MEMO: Negotiable time certificates of deposit in
custody for foreigners
1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
2. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. U.S. banks: includes amounts due to own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due to head office or parent foreign bank, and
foreign branches, agencies, or wholly owned subsidiaries of head office or parent
foreign bank.
5. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
6. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
8. Principally the International Bank for Reconstruction and Development, and
the Inter-American and Asian Development Banks. Data exclude "holdings of
dollars" of the International Monetary Fund.
9. Foreign central banks, foreign central governments, and the Bank for
International Settlements.
10. Excludes central banks, which are included in "Official institutions."
Nonbank-Reported
Data
3.17—Continued
1989
Area and country
1986
1987
1988
May
r
June
July
Aug.
Sept.
Oct.'
Nov."
1 Total
540,996
618,874
685,339
678,480'
673,402'
665,33C
679,994'
694,304'
701,035
723,141
2 Foreign countries
535,189
614,411
682,115''
675,064'
669,585'
661,091'
675,576'
689,359'
694,719
716,804
180,556
1,181
6,729
482
580
22,862
5,762
700
10,875
5,600
735
699
2,407
884
30,534
454
85,334
630
3,326
80
702
234,641
920
9,347
760
377
29,835
7,022
689
12,073
5,014
1,362
801
2,621
1,379
33,766
703
116,852
710
9,798
32
582
231,912''
1,155
10,022r
2,200
285'
24,777'
6,772
672
14,599
5,316
1,559
903
5,494
1,284'
34,199'
1,012
111,811'
529
8,598
138
591
223,353'
1,405
8,826'
1,642
433'
24,203'
7,801'
1,172
12,532'
5,870
1,479
996'
5,424'
1,552
28,453'
785
107,742'
520'
11,889'
193
435
222,164'
1,508'
8,631'
1,179
451'
23,868'
9,363'
889
13,965'
4,875
1,485
1,100'
5,09C
1,478
28,811'
737
103,173'
558
14,342'
164
499
222,146'
1,417
8,949
1,348
436'
22,290
8,875'
862
12,892
5,029
1,522
1,419
5,910
1,248
28,581
1,053
105,310'
604
13,667'
175
559
226,366'
1,404
9,286
1,956
460
24,864
7,651
828
14,597
5,106
1,453
1,945
5,390
2,002
28,931
1,022
104,055'
691
13,824
201
699
222,040'
1,345
10,158'
1,265
519'
23,031'
8,345
797
14,542'
4,989'
1,698
2,206
5,277
1,680'
29,001'
1,085'
102,210'
774
12,312'
244
562
232,219
1,193
10,841
1,280
464
23,868
8,700
847
14,220
5,415
1,342
2,291
4,986
1,663
29,552
1,199
106,749
858
15,820
338
593
240,938
1,489
10,306
1,794
577
25,920
9,017
1,024
14,643
7,039
1,952
2,248
4,888
1,920
31,492
1,397
108,432
1,016
14,733
286
764
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 Europe1
22 U.S.S.R
23 Other Eastern Europe
26,345
30,095
21,062'
18,353
17,514
17,472
16,958
17,960
16,670
18,161
25 Latin America and Caribbean
26 Argentina
27 Bahamas
28 Bermuda
29 Brazil
30 British West Indies
31 Chile
32 Colombia
33 Cuba
34 Ecuador
35 Guatemala
36 Jamaica
37 Mexico
38 Netherlands Antilles
39 Panama
40 Peru
41 Uruguay
42 Venezuela
43 Other
210,318
4,757
73,619
2,922
4,325
72,263
2,054
4,285
7
1,236
1,123
136
13,745
4,970
6,886
1,163
1,537
10,171
5,119
220,372
5,006
74,767
2,344
4,005
81,494
2,210
4,204
12
1,082
1,082
160
14,480
4,975
7,414
1,275
1,582
9,048
5,234
271,146'
7,804
86,863
2,621
5,314'
113,840'
2,936
4,374
10
1,379
1,195
269
15,185
6,420
4,353
1,671
1,898
9,147
5,868
275,60c
6,459
90,95c
2,451
5,307'
116,491'
2,988
4,033
15
1,285
1,232
188
14,060
6,072
4,453'
1,724
2,344
9,417'
6,130'
271,445'
6,320
82,312'
2,321'
5,004'
121,385'
2,690'
4,127
10
1,351
1,251
294
14,27C
6,316
4,278
1,761
2,429
9,423'
5,903
266,403'
7,397
84,526
2,269
5,396
113,243'
2,683
4,235
9
1,411
1,297
227
13,705'
6,434
4,357
1,770
2,152
9,500
5,790
275,557'
8,047
90,317
2,209
5,539
115,87C
2,739
4,365
10
1,376
1,279
231
13,769
6,071
4,400
1,778
2,121
9,398
6,039
284,9%'
8,446
90,622
2,124
5,892
122,677'
2,765
4,199
14
1,363
1,293
233
14,981
6,062'
4,424
1,828
2,340
9,520
6,213
282,999
8,068
93,119
2,458
6,079
117,395
3,013
4,887
10
1,342
1,276
206
14,641
5,950
4,393
1,901
2,214
9,550
6,495
293,407
7,693
96,273
2,549
6,433
124,799
3,116
4,680
15
1,324
1,289
189
13,851
6,243
4,355
1,922
2,314
9,799
6,563
44
108,831
121,288
147,838'
147,393'
148,449'
144,106'
145,917'
153,564'
150,748
150,425
1,476
18,902
9,393
674
1,547
1,892
47,410
1,141
1,866
1,119
12,352
11,058
1,162
21,503
10,180
582
1,404
1,292
54,322
1,637
1,085
1,345
13,988
12,788
1,895'
26,058
12,248'
699
1,180
1,461
74,015'
2,541
1,163
1,236
12,083
13,260'
1,652
26,931'
12,215
1,009
1,306
1,103
70,505'
3,166
991
1,162
13,505
13,851
1,432
27,025
12,134'
812
1,232
1,088
71,198'
3,047
984
1,274
13,612
14,612'
1,522
27,128'
11,346
871
1,0%
1,058
68.70C
3,556
936
1,254
12,368
14,271
1,700
25,427
12,268
940
1,042
953
71,028'
2,907
1,083
1,776
12,524
14,270
1,804
24,119
12,292
875
1,042
1,041
78,824
3,037
1,055
1,430
13,021'
15,024'
1,985
22,402
12,124
836
1,144
2,221
73,361
3,099
1,148
1,686
13,450
17,293
1,635
21,359
11,895
989
1,300
1,081
74,657
3,359
1,242
1,887
13,574
17,448
57 Africa
58 Egypt
59 Morocco
60 South Africa
61 Zaire
62 Oil-exporting countries
63 Other
4,021
706
92
270
74
1,519
1,360
3,945
1,151
194
202
67
1,014
1,316
3,991
911
68
437
85
1,017
1,474
3,802
702
68
324
92
879
1,737
3,904
748
67
188
98
1,100
1,702
3,618
738
66
231
92
942
1,548
3,265
549
72
201
87
897
1,459
3,536
574
%
246
81
1,036
1,502
3,486
577
71
220
71
1,046
1,501
3,747
633
75
291
60
1,143
1,546
64 Other countries
65 Australia
66 All other
5,118
4,196
922
4,070
3,327
744
6,165
5,293
872
6,563
5,700
863
6,108
5,192
916
7,346
6,620
726
7,513
6,721
792
7,262'
6,518'
744
8,597
8,046
551
10,126
9,433
692
67 Nonmonetary international and regional
organizations
International
Latin American regional
Other regional6
5,807
4,620
1,033
154
4,464
2,830
1,272
362
3,224
2,503
589
133
3,415
2,456
564
395
3,817'
3,030'
613
175
4,240
2,881
%1
397
4,418
3,084
690
644
4,945
3,390
1,201
353
6,316
4,998
919
400
6,337
5,201
586
551
24 Canada
45
46
47
48
49
50
51
52
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle-East oil-exporting countries
Other
68
69
70
1. Includes the Bank for International Settlements and Eastern European
countries that are not listed in line 23.
2. Comprises Bulgaria, Czechoslovakia, the German Democratic Republic,
Hungary, Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Excludes "holdings of dollars" of the International Monetary Fund.
6. Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in "Other
Western Europe."
A61
A62
3.18
International Statistics • March 1990
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1989
Area and country
1986
1987
1988
May
June'
July'
Aug.'
Sept.'
Oct.'
Nov."
1 Total
444,745
459,877
491,165'
491,219'
491,103
481,051
488,861
499,388
514,552
534,211
2 Foreign countries
441,724
456,472
489,094r
487,437'
487,626
477,264
485,737
4%,466
511,850
531,537
107,823
728
7,498
688
987
11,356
1,816
648
9,043
3,296
672
739
1,492
1,964
3,352
, 1,543
58,335
1,835
102,348
793
9,397
717
1,010
13,548
2,039
462
7,460
2,619
934
477
1,853
2,254
2,718
1,680
50,823
1,700
619
389
852
116,928'
483'
8,515r
483'
1,065
13,243
2,329'
433
7,936
2,541'
455
261'
1,823
1,977
3,895
1,233
65,706'
1,390
1,152
1,255
754
112,957'
764
8,441'
476'
1,280
16,108'
3,965'
595
5,639'
3,197'
567
291'
2,209
2,158
3,975
910
58,077'
1,366
966
1,155
8^
112,201
809
7,781
774
1,175
15,575
3,695
632
6,813
2,032
667
328
2,190
1,946
5,485
886
56,844
1,359
1 161
1,212
838
106,459
854
7,558
562
1,395
16,008
3,461
602
5,994
1,957
796
283
2,092
2,003
4,123
891
53,464
1,406
974
1,227
810
107,359
549
7,510
768
1,401
16,415
3,316
624
5,494
1,454
665
264
1,738
2,046
4,479
960
54,809
1,346
1 247
U456
819
111,180
480
7,404
557
1,233
16,249
3,463
634
6,043
1,994
644
252
1,684
2,286
5,018
1,028
57,187
1,338
113,432
580
7,510
513
1,707
16,391
3,371
650
5,577
1,899
647
258
1,733
2,087
4,522
1,021
59,840
1,373
1 504
1,453
794
111,948
569
6,605
609
1,179
15,972
2,657
700
5,717
2,259
635
275
1,836
2,555
4,940
1,044
59,906
1,281
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
71
22 U.S.S.R
23 Other Eastern Europe
24 Canada
345
948
1,574
799
1,080
884
21,006
25,368
18,889
16,075'
16,236
14,493
15,073
14,763
13,800
16,176
208,825
12,091
59,342
418
25,716
46,284
6,558
2,821
0
2,439
140
198
30,698
1,041
5,436
1,661
940
11,108
1,936
214,789
11,996
64,587
471
25,897
50,042
6,308
2,740
1
2,286
144
188
29,532
980
4,744
1,329
963
10,843
1,738
214,264'
11,826
66,954'
483
25,735
55,888'
5,217
2,944
1
2,075
198
212
24,637
1,306'
2,521'
1,013
910
10,733
1,612'
218,320'
11,381
70,552
449
25,785
58,326'
5,266
2,600
1
1,944
207
265
24,052'
978'
2,453'
938
832
10,600
1,691'
219,855
10,840
66,611
391
25,675
65,359
4,863
2,583
1
1,895
201
286
23,703
1,179
2,423
874
896
10,569
1,503
217,371
10,705
70,488
463
25,824
59,670
4,793
2,525
9
1,933
189
270
23,369
1,159
2,320
867
854
10,269
1,665
216,073
10,730
68,113
522
25,597
61,493
4,803
2,504
1
1,918
203
272
23,169
1,022
2,030
870
866
10,024
1,936
219,948
10,460
70,906
1,104
24,999
63,543
4,707
2,477
1
1,905
196
282
22,813
1,103
1,834
823
899
10,064
1,833
219,974
10,442
71,422
804
25,075
62,802
4,601
2,800
1
1,864
270
22,751
1,133
1,837
851
903
10,269
1,960
231,742
10,273
78,609
847
24,432
68,239
4,496
2,784
1
1,858
190
260
23,281
1,022
1,792
849
902
10,119
1,787
96,126
106,096
130,881'
131,634'
130,590
130,369
137,687
140,704
153,753
158,912
787
2,681
8,307
321
723
1,634
59,674
7,182
2,217
578
4,122
7,901
968
4,592
8,218
510
580
1,363
68,658
5,148
2,071
496
4,858
8,635
762
4,184
10,143'
560
674
1,136
90,149'
5,213'
1,876
848'
6,213
9,122
952
3,718'
8,855
411
690
1,047'
93,504'
5,332'
1,810
974'
5,522
8,818
920
4,058
8,557
537
671
1,021
91,103
5,608
1,763
1,056
6,550
8,745
644
3,949
8,153
477
645
964
91,806
5,774
1,607
1,060
5,550
9,741
575
3,356
8,800
547
614
911
96,118
6,007
1,543
1,117
8,879
9,221
615
3,331
10,358
638
615
859
97,699
5,686
1,617
1,203
8,581
9,502
594
2,831
10,052
617
685
1,185
110,444
5,713
1,549
1,058
8,357
10,669
610
2,677
10,441
637
655
758
114,658
5,846
1,478
1,076
8,750
11,324
57 Africa
58 Egypt
59 Morocco
60 South Africa
61 Zaire
62 Oil-exporting countries
63 Other
4,650
567
598
1,550
28
694
1,213
4,742
521
542
1,507
15
1,003
1,153
5,718
507
511
1,681
17
1,523
1,479
6,083'
541
538
1,753
19
1,504
1,728'
6,075
534
531
1,746
17
1,503
1,744
6,066
577
518
1,702
17
1,587
1,664
6,032
494
535
1,713
16
1,608
1,666
6,028
501
524
1,709
20
1,629
1,645
5,763
475
538
1,679
15
1,546
1,510
6,009
471
547
1,686
16
1,641
1,648
64 Other countries
65 Australia
66 All other
3,294
1,949
1,345
3,129
2,100
1,029
2,413'
1,520'
894
2,368'
1,170'
1,198'
2,670
1,307
1,363
2,505
1,518
987
3,512
2,499
1,013
3,843
3,078
765
5,129
4,301
828
6,750
6,174
576
67 Nonmonetary international and regional
organizations
3,021
3,404
2,071
3,782
3,477
3,787
3,124
2,922
2,701
2,675
25 Latin America and Caribbean
26 Argentina
27 Bahamas
28 Bermuda
29 Brazil
30 British West Indies
31 Chile
32 Colombia
33 Cuba
34 Ecuador 4
35 Guatemala
36 Jamaica4
37 Mexico
38 Netherlands Antilles
39 Panama
40 Peru
41 Uruguay
42 Venezuela
43 Other Latin America and Caribbean
44
46
47
48
49
50
51
52
53
54
55
56
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle East oil-exporting countries
Other Asia
1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
2. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
3. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
188
4. Included in "Other Latin America and Caribbean" through March 1978.
5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
6. Comprises Algeria, Gabon, Libya, and Nigeria.
7. Excludes the Bank for International Settlements, which is included in
"Other Western Europe."
Nonbank-Reported
Data
3.19 BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1989
Type of claim
1986
1987
1988'
Mayr
June'
491,219
64,276
257,514
130,269
67,331
62,937
39,160
491,103
63,164
258,548
128,295
68,177
60,119
41,095
Julyr
Aug/
Sept/
481,051
62,832
248,987
128,919
68,888
60,031
40,313
488,861
62,765
252,281
132,478
72,576
59,903
41,336
499,388
62,051
265,786
131,124
72,654
58,470
40,428
1 Total
478,650
497,635
538,689
2 Banks' own claims on foreigners
3 Foreign public borrowers
4 Own foreign offices
5 Unaffiliated foreign banks
Deposits
6
7
Other
8 All other foreigners
444,745
64,095
211,533
122,946
57,484
65,462
46,171
459,877
64,605
224,727
127,609
60,687
66,922
42,936
491,165
62,658
257,436
129,425
65,898
63,527
41,646
33,905
4,413
37,758
3,692
47,524
8,289
49,531
11,153
26,696
25,700
22,017
7,370
13,535
16,362
23,107
19,596
16,810
40,909'
45,568
43,619
n.a.
12,828
43,984
534,211
61,742
296,552
133,827
75,599
58,228
42,090
16,609
25,706
514,552
63,384
276,422
131,228
72,229
59,000
43,517
24,286
5,448
Nov. p
52,154
11,259
24,044
Oct/
9 Claims of banks' domestic customers 3 ...
11
540,634
551,543
Negotiable and readily transferable
12 Outstanding collections and other
13 MEMO: Customer liability on
Dollar deposits in banks abroad,
reported by nonbanking business
enterprises in the United States . . . .
49,639
48,485
49,575
46,671
parent foreign bank.
3. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the account
of their domestic customers.
4. Principally negotiable time certificates of deposit and bankers acceptances.
5. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad. For
description of changes in data reported by nonbanks, see July 1979 Bulletin,
p. 550.
1. Data for banks' own claims are given on a monthly basis, but the data for
claims of banks' own domestic customers are available on a quarterly basis only.
Reporting banks include all kinds of depository institutions besides commercial
banks, as well as some brokers and dealers.
2. U.S. banks: includes amounts due from own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due from head office or parent foreign bank,
and foreign branches, agencies, or wholly owned subsidiaries of head office or
3.20
46,740
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1988
Maturity; by borrower and area
1985
1986
1989
1987
Dec/
8
9
10
11
1?
n
14
15
16
17
18
19
June'
Sept.
227,903
1
2
3
4
5
6
7
Mar/
By borrower
Maturity of 1 year or less 2
Foreign public borrowers
All other foreigners
Maturity over 1 year
Foreign public borrowers
All other foreigners
By area
Maturity of 1 year or less
Europe
Canada
Latin America and Caribbean
Asia
;
Africa
All other3
Maturity of over 1 year
Europe
Canada
Latin America and Caribbean
Asia
Africa
Mother 3
232,295
235,130
233,184
231,686
231,374
236,519
160,824
26,302
134,522
67,078
34,512
32,567
160,555
24,842
135,714
71,740
39,103
32,637
163,997
25,889
138,108
71,133
38,625
32,507
172,634
26,562
146,071
60,550
35,291
25,259
168,608
24,479
144,129
63,078
37,935
25,142
167,307
23,759
143,548
64,067
38,108
25,959
169,300
24,223
145,078
67,219
41,852
25,367
56,585
6,401
63,328
27,966
3,753
2,791
61,784
5,895
56,271
29,457
2,882
4,267
59,027
5,680
56,535
35,919
2,833
4,003
55,909
6,282
57,991
46,224
3,337
2,891
57,741
5,119
53,268
45,727
3,610
3,143
58,340
5,693
50,605
45,303
3,601
3,765
52,421
6,206
52,219
51,187
3,510
3,757
7,634
1,805
50,674
4,502
1,538
926
6,737
1,925
56,719
4,043
1,539
777
6,6%
2,661
53,817
3,830
1,747
2,381
4,666
1,922
47,547
3,613
2,301
501
4,508
2,309
49,790
3,699
2,292
480
4,664
2,592
50,107
3,823
2,408
472
8,862
2,459
48,628
4,214
2,472
584
1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
2. Remaining time to maturity,
3. Includes nonmonetary international and regional organizations.
A63
A64
3.21
International Statistics • March 1990
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2
Billions of dollars, end of period
1987
Area or country
1985
1988
1989
1986
Sept.
1 Total
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
389.1
386.5
387.9
382.4
371.4
352.2
354.3
346.8
345.9r
339.2r
344.6r
147.0
9.4
12.3
10.5
9.7
3.8
2.8
4.4
63.3
6.8
24.1
156.6
8.4
13.6
11.6
9.0
4.6
2.4
5.8
70.9
5.2
25.1
154.8
8.1
13.6
10.5
6.8
4.8
2.6
5.4
72.0
4.6
26.4
159.7
10.0
13.7
12.6
7.5
4.1
2.1
5.6
68.8
5.5
29.8
156.8
9.1
11.8
11.8
7.4
3.3
2.1
5.1
71.7
4.7
29.7
151.0
9.2
10.9
10.6
6.3
3.2
1.9
5.6
70.4
5.3
27.6
148.9
9.5
10.3
9.2
5.6
2.9
1.9
5.2
67.6
4.9
31.8
153.1
9.0
10.5
10.3
6.8
2.7
1.8
5.4
66.2
5.0
35.3
145.7
8.6
11.2
10.2
5.2
2.8
2.3
5.1
65.3r
4.0
30.9
144.7
7.8
10.8
10.6
6.1
2.8
1.8
5.4r
64.2'
5.1
30.1
145.7r
6.9
11.1
10.4
6.8
2.4
2.0
6.1
63.3r
5.9
30.8
13 Other developed countries
14 Austria
15 Denmark
16 Finland
17 Greece
18 Norway
19 Portugal
20 Spain
21 Turkey
22 Other Western Europe
23 South Africa
24 Australia
30.3
1.6
2.4
1.6
2.6
2.9
1.3
5.8
2.0
2.0
3.2
5.0
26.1
1.7
1.7
1.4
2.3
2.4
.9
5.8
2.0
1.5
3.0
3.4
26.3
1.8
1.6
1.4
1.9
2.0
.9
7.4
1.9
1.6
2.9
2.9
26.4
1.9
1.7
1.2
2.0
2.2
.6
8.0
2.0
1.6
2.9
2.4
26.4
1.6
1.4
1.0
2.3
1.9
.5
8.9
2.0
1.9
2.8
2.0
24.0
1.6
1.1
1.2
2.1
1.9
.4
7.2
1.8
1.7
2.8
2.2
23.0
1.6
1.2
1.3
2.1
2.0
.4
6.3
1.6
1.9
2.7
1.8
21.0
1.5
1.1
1.1
1.8
1.8
.4
6.2
1.5
1.3
2.4
1.8
21.0
1.4
1.1
1.0
2.1
1.6
.4
6.6
1.3
1.1
2.2
2.4
21. Y
1.7
1.4
1.0
2.3
1.8
.6
6.2
l.l r
1.1
2.1
1.9
20.9r
1.5'
1.1
1.1
2.3
1.4
.4
6.9
1.1
1.0
2.1
2.r
25 OPEC countries3
26 Ecuador
27 Venezuela
28 Indonesia
29 Middle East countries
30 African countries
21.5
2.1
9.0
3.0
5.4
2.0
19.4
2.2
8.7
2.5
4.3
1.8
19.2
2.1
8.3
2.0
5.0
1.8
17.4
1.9
8.1
1.9
3.6
1.9
17.6
1.9
8.1
1.8
3.9
1.9
17.0
1.8
8.0
1.8
3.5
1.9
17.9
1.8
7.9
1.8
4.6
1.9
16.6
1.7
7.9
1.7
3.4
1.9
16.2
1.6
7.9
1.7
3.3
1.7
16.0
1.5
7.5
1.9
3.4
1.6
16.2
1.5
7.3
2.0
3.5
1.9
105.0
99.6
98.0
97.8
94.4
91.8
87.2
85.3
85.4
83.1
80.8
8.9
25.5
7.0
2.6
24.3
1.8
3.5
9.5
25.3
7.1
2.1
24.0
1.4
3.1
9.4
25.1
7.1
2.0
24.7
1.2
2.8
9.5
24.7
6.9
2.0
23.5
1.1
2.8
9.6
23.8
6.6
2.0
22.4
1.1
2.8
9.5
23.7
6.4
2.2
21.1
.9
2.6
9.3
22.4
6.3
2.1
20.4
.8
2.5
9.0
22.4
5.6
2.1
18.8
.8
2.6
8.4
22.7
5.7
1.9
18.0
.7
2.7
7.9
22.0
5.1
1.7
17.5
.6
2.6r
7.6
20.8
4.9
1.6
17.0
.6
2.9
39
40
41
42
43
44
45
46
47
Asia
China
Mainland
Taiwan
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
.5
4.5
1.2
1.6
9.3
2.4
5.7
1.4
1.0
.4
4.9
1.2
1.5
6.7
2.1
5.4
.9
.7
.3
6.0
1.9
1.3
5.0
1.6
5.4
.7
.7
.3
8.2
1.9
1.0
5.0
1.5
5.2
.7
.7
.4
6.1
2.1
1.0
5.7
1.5
5.1
1.0
.7
.4
4.9
2.3
1.0
5.9
1.5
4.9
1.1
.8
.2
3.2
2.0
1.0
6.0
1.7
4.7
1.2
.8
.3
3.7
2.1
1.2
6.1
1.6
4.5
1.1
.9
.5
4.9
2.6
.9
6.1
1.7
4.4
1.0
.8
.3
5.2
2.4
.8
6.6
1.6
4.4
1.0
.8
.3
5.0
2.7
.7
6.5
1.7
4.0
1.3
1.0
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa4
1.0
.9
.1
1.9
.7
.9
.1
1.6
.6
.9
.1
1.3
.6
.9
.0
1.3
.5
.9
.1
1.2
.6
.9
.1
1.2
.5
.8
.0
1.2
.4
.9
.0
1.1
.5
.9
.0
1.1
.6
.9
.0
1.1
.5
.8
.0
1.0
52 Eastern Europe
53 U.S.S.R
54 Yugoslavia
55 Other
4.4
.1
2.4
1.9
3.5
.1
2.0
1.4
3.6
.4
1.9
1.2
3.2
.3
1.8
1.1
3.1
.3
1.9
1.0
3.3
.4
1.9
1.0
3.1
.4
1.8
1.0
3.6
.7
1.8
1.1
3.5
.7
1.7
1.1
3.4
.6
1.7
1.1
3.5r
.8
1.7
i.r
56 Offshore banking centers
51 Bahamas
58 Bermuda
59 Cayman Islands and other British West Indies
60 Netherlands Antilles
bl
Panama
62 Lebanon
63 Hong Kong
64 Singapore
65
Others6
64.0
21.5
.7
12.2
2.2
6.0
.1
11.5
9.8
.0
61.5
22.4
.6
12.3
1.8
4.0
.1
11.1
9.2
.0
63.7
25.7
.6
11.9
1.2
3.7
.1
12.3
8.1
.0
54.5
17.3
.6
13.5
1.2
3.7
.1
11.2
7.0
.0
51.5
15.9
.8
11.6
1.3
3.2
.1
11.3
7.4
.0
43.0
8.9
1.0
10.3
1.2
3.0
.1
11.6
6.9
.0
47.3
12.9
.9
11.9
1.2
2.6r
.1
10.5
7.0
.0
44.2r
11.0r
.9
12.9
1.0
2.5r
.1
9.6
6.1
.0
48.5r
15.8
1.1
12.0r
.9
2.2'
.1
9.6
6.8
.0
43.1
11.0
.7
10.8
.9
1.9
.1
10.4
7.3
.0
48.7r
11.2'
1.3
15.r
1.0
1.5
.1
10.7
7.8
.0
66 Miscellaneous and unallocated7
16.9
19.8
22.3
23.2
21.5
22.2
26.7
22.6
25.1
27.4
28.4'
2 G-10 countries and Switzerland
3 Belgium-Luxembourg
4 France
5 Germany
6 Italy
7 Netherlands
8 Sweden
9 Switzerland
10 United Kingdom
11 Canada
12 Japan
31 Non-OPEC developing countries
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Other Latin America
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
3. This group comprises the Organization of Petroleum Exporting Countries
shown individually, other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and Bahrain and
Oman (not formally members of OPEC).
4. Excludes Liberia.
5. Includes Canal Zone beginning December 1979.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.
Nonbank-Reported
3.22
Data
A65
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States 1
Millions of dollars, end of period
1989
1988
Type, and area or country
1985
1986
1987'
Sept.
Dec.
Mar.
June'
Sept."
r
June
1 Total
27,825
25,587
28,302
30,154
32,405'
33,624'
37,440'
36,967
34,711
2 Payable in dollars
3 Payable in foreign currencies .
24,296
3,529
21,749
3,838
22,785
5,517
24,852'
5,302
27,176'
5,229
28,037'
5,586
31,649'
5,790
31,894
5,073
29,850
4,861
By type
4 Financial liabilities
5 Payable in dollars
6 Payable in foreign currencies
13,600
11,257
2,343
12,133
9,609
2,524
12,424
8,643
3,781
13,934r
10,274r
3,660
15,079'
11,485'
3,594
15,118'
11,250'
3,868
17,532'
13,452'
4,080
16,920
13,060
3,860
15,857
11,998
3,859
7 Commercial liabilities
8 Trade payables
Advance receipts and other lial
9
10 Payable in dollars
11 Payable in foreign currencies
14,225
6,685
7,540
13,039
1,186
13,454
6,450
7,004
12,140
1,314
15,878
7,305
8,573
14,142
1,737
16,220'
6,768
9,452'
14,578r
1,642
17,325'
6,480
10,845'
15,691'
1,635
18,506'
6,454
12,052'
16,788'
1,718
19,908'
7,009'
12,899'
18,197'
1,711
20,047
6,339
13,708
18,834
1,213
18,854
6,436
12,418
17,852
1,002
7,700
349
857
376
861
610
4,305
7,917
270
661
368
542
646
5,140
8,320
213
382
551
866
558
5,557
9,071'
282
371
544'
862
638
6,201
10,497'
339
372
690'
996
687
7,243
9,912'
289
267
749'
879
1,163
6,418
12,511'
320
249
741'
933
954
9,121
11,217
357
274
838
834
936
7,799
10,188
308
258
807
853
839
6,928
12
13
14
15
16
17
18
19
By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
839
399
360
412
431
650
616
544
599
1,944
614
4
32
1,146
22
0
1,189
318
0
25
778
13
0
1,448
250
0
0
1,154
26
0
1,057
238
0
0
812
2
0
1,239
184
0
0
645
1
0
677
189
0
0
471
15
0
1,216
165
0
0
621
17
0
1,334
204
0
0
698
4
0
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
3,184
1,123
4
29
1,843
15
3
27
28
29
Asia
Japan
Middle East oil-exporting countries .
1,815
1,198
82
1,805
1,398
8
2,451
2,042
8
2,928
2,331
11
3,088
2,435
4
3,313'
2,563
3
3,722
2,950
1
3,842
3,082
12
3,635
2,887
2
30
Africa
12
0
1
1
4
1
2
1
3
1
1
0
5
3
3
2
4
2
50
67
100
74
3
2
2
97
97
4,074
62
453
607
364
379
976
4,446
101
352
715
424
385
1,341
5,516
132
426
909
423
559
1,599
5,755'
147
408
791
508
482
1,804'
6,688
206
438
1,185
647
486
2,110
7,348'
170
459
1,699
591
417
2,063
7,944'
134
579'
1,372'
670'
458'
2,585'
7,865
117
549
1,190
689
458
2,709
7,989
138
773
1,195
549
415
2,728
31
32
33
34
35
36
37
38
39
40
Oil-exporting countries
All other4
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
1,449
1,405
1,301
1,167
1,109
1,218
1,163'
1,132
1,195
924
32
156
61
49
217
216
864
18
168
46
19
189
162
1,035
61
272
54
28
233
140
997
19
222
58
30
177
204
1,118
49
286
95
34
179
177
1,267'
35
426
103'
31
198'
179
1,669
34
388
541
42
182
185
1,091
27
305
113
30
191
140
6,970
2,712
1,431
6,859
2,639
1,426
768
253
650
246
1,643
1,071
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,088
12
77
58
44
430
212
48
49
50
Asia
Japan
-j
Middle East oil-exporting countries 1
6,046
1,799
2,829
5,080
2,042
1,679
6,565
2,578
1,964
6,286'
2,659
1,320
6,638'
2,763
1,298
6,916'
3,091
1,386
7,329'
3,059'
1,526
51
52
Africa
Oil-exporting countries
587
238
619
197
574
135
626
115
477
106
578
202
706
272
53
All other4
982
980
1,057
1,351'
1,415
1,328
1. For a description of the changes in the International Statistics tables, see
July 1979 Bulletin, p. 550.
2. Comprises Baihrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
1,499'
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
A66
3.23
International Statistics • March 1990
CLAIMS ON UNAFFILIATED FOREIGNERS
United States 1
Reported by Nonbanking Business Enterprises in the
Millions of dollars, end of period
1988
Type, and area or country
1985
1986
1989
1987
June
Sept.'
Dec.'
Mar.'
June'
Sept."
1 Total
28,876
36,265
30,964
37,924r
38,465
33,574
31,667
33,833
32,272
2 Payable in dollars
3 Payable in foreign currencies
26,574
2,302
33,867
2,399
28,502
2,462
35,828'
2,097'
35,967
2,498
31,252
2,323
29,371
2,296
31,727
2,106
30,027
2,245
18,891
15,526
14,911
615
3,364
2,330
1,035
26,273
19,916
19,331
585
6,357
5,005
1,352
20,363
14,903
13,775
1,128
5,460
4,646
814
26,537''
19,75C
18,964'
786r
6,787'
5,892'
895
27,341
19,383
18,370
1,013
7,958
7,016
942
21,638
15,906
14,820
1,086
5,732
5,001
731
19,743
14,838
13,942
896
4,905
4,012
893
21,774
17,043
16,131
911
4,731
4,016
716
19,550
13,191
12,277
914
6,359
5,520
840
11 Commercial claims
12 Trade receivables
13 Advance payments and other claims
9,986
8,696
1,290
9,992
8,783
1,209
10,600
9,535
1,065
11,387'
10,347'
1,040''
11,123
10,124
1,000
11,937
10,858
1,079
11,924
10,660
1,265
12,059
10,857
1,202
12,722
11,348
1,375
14
13
9,333
652
9,530
462
10,081
519
10,971'
415
10,581
543
11,432
505
11,417
507
11,581
479
12,231
491
6,929
10
184
223
161
74
6,007
10,744
41
138
116
151
185
9,855
9,531
7
332
102
350
65
8,467
11,580''
16
181
168
335
105
10,498'
10,719
49
278
123
356
84
9,503
10,051
10
224
138
344
215
8,768
9,208
11
230
180
383
203
7,890
8,629
155
191
218
290
70
7,390
7,947
166
209
147
292
123
6,750
By type
4 Financial claims
3 Deposits
6
Payable in dollars
7
Payable in foreign currencies
8 Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
16
17
18
19
20
21
22
Payable in dollars
Payable in foreign currencies
By area or country
Financial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
3,260
4,808
2,844
2,917'
3,612
2,339
2,210
2,606
2,414
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
7,846
2,698
6
78
4,571
180
48
9,291
2,628
6
86
6,078
174
21
7,012
1,994
7
63
4,433
172
19
10,952'
4,176
87
46
6,142'
146
27
11,862
4,069
188
44
7,098
133
27
8,142
1,857
19
47
5,733
151
21
7,233
2,172
25
49
4,566
117
25
9,340
1,880
125
78
6,848
114
31
8,309
1,684
56
70
6,111
105
36
31
32
33
Asia
Japan
Middle East oil-exporting countries2
731
475
4
1,317
999
7
879
605
8
971'
647'
5
1,027
737
5
830
561
5
951
627
8
1,082
630
8
779
440
7
34
33
Africa
Oil-exporting countries3
103
29
85
28
65
7
60
9
95
9
106
10
89
8
80
8
75
8
21
28
33
58
26
170
52
37
27
4,313
172
544
615
146
183
1,191
5,016
177
673
612
208
322
1,306
4,930
201
760
646
158
249
1,283
4,934
201
775
642
194
220
1,355
5,196
208
848
666
179
217
1,463
36
37
38
39
40
41
42
43
All other4
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
3,533
175
426
346
284
284
898
3,725
133
431
444
164
217
999
4,180
178
650
562
133
185
1,073
r
4,713
158
687r
774r
172
262
1,107r
44
Canada
1,023
934
936
939'
979
975
1,114
1,181
1,228
45
46
47
48
49
30
31
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,753
13
93
206
6
510
157
1,857
28
193
234
39
412
237
1,930
19
170
226
26
368
283
2,067
13
174
232
25
411
304
2,104
12
161
234
22
463
266
2,229
36
229
298
21
457
226
2,103
34
234
277
23
477
211
2,083
14
236
313
29
428
228
2,110
10
270
223
32
497
187
52
33
34
Asia
Japan
Middle East oil-exporting countries2
2,982
1,016
638
2,755
881
563
2,915
1,158
450
2,992r
l,169r
446
3,028
967
437
2,954
934
441
3,097
1,038
421
3,115
990
423
3,424
1,173
397
55
36
Africa
Oil-exporting countries3
437
130
500
139
401
144
425
136
425
137
435
122
386
95
401
111
388
79
57
All other4
257
222
238
251'
274
328
294
345
377
1. For a description of the changes in the International Statistics tables, see
July 1979 Bulletin, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
Securities Holdings and Transactions
3.24
A67
FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1989
Transactions, and area or country
1987
1989
1988
Jan.Nov.
May
June'
July'
Aug.'
Sept.'
Oct.'
Nov. p
U.S. corporate securities
STOCKS
249,122
232,849
181,185
183,185
197,556
186,609
17,913'
16,849'
24,316
20,646
17,122
15,087
22,112
20,942
19,595
17,047
22,350
20,988
13,819
15,037
3 Net purchases, or sales ( - )
16,272
-2,000
10,948
l,064r
3,670
2,035
1,171
2,548
1,363
-1,218
4 Foreign countries
16,321
-1,825
11,145
1,066'
3,688
2,052
1,154
2,599
1,340
-1,217
1,932
905
-70
892
-1,123
631
1,048
1,318
-1,360
12,896
11,365
123
365
-3,350
-281
218
-535
-2,243
-954
1,087
1,238
-2,474
1,365
1,922
188
121
486
-445
-824
158
-3,028
3,315
-401
3,519
3,461
3,537
3,400
122
421
-293
-123
-215
-75'
-293
495'
-75
391
206
784
763
-1
55'
418
-15
-155
131
-114
329
168
166
1,679
1,201
1,215
16
40
779
75
-79
12
-23
546
8
109
456
729
626
2
-30
-98
-251
-238
-63
-333
773
14
250
554
423
424
22
-11
1,461
-5
-65
37
64
894
-265
602
110
631
611
24
38
-107
-265
-117
226
-244
-34
-140
149
112
1,138
975
-6
193
-1,698
-2%
-119
-54
-510
-739
-134
-85
303
342
309
19
37
-48
-176
-197
-2
-18
-17
17
-52
23
-1
11,100
1 Foreign purchases
2 Foreign sales
5 Europe
6 France
7 Germany
8 Netherlands
9 Switzerland
10 United Kingdom
11 Canada
12 Latin America and Caribbean
13 Middle East'
14 Other Asia
15 Japan
16 Africa
17 Other countries
18 Nonmonetary international and
regional organizations
BONDS 2
105,856
86,381'
106,726
8,343'
10,855
10,045
10,944
8,603
10,930
20 Foreign sales
78,312
58,417'
76,%5
8,783'
9,185
7,552
9,361
6,857
6,772
6,667
21 Net purchases, or sales (—)
27,544
27,964r
29,762
-440'
1,670
2,494
1,583
1,746
4,158
4,433
22 Foreign countries
26,804
28,506'
29,469
-563'
1,542
2,516
1,607
1,740
4,106
4,421
23
24
25
26
27
28
29
30
31
32
33
34
35
21,989
194
33
269
1,587
19,770
1,2%
2,857
-1,314
2,021
1,622
16
-61
17,239'
143
1,344
1,514
505
13,084'
711
1,931
-178
8,900
7,686
-8
-89
18,463
366
-206
809
112
16,153
908
3,180
-437
7,107
4,603
29
219
-55
93
-170
9
-114
665
59
136
-93'
-615
-722
0
5
2,132
6
-162
395
-110
1,881
-188
271
-619
-59
-209
1
4
1,976
121
-53
-22
81
1,937
79
300
19
35
-44
3
103
-138
-35
-121
%
-201
-9
76
63
44
1,574
1,167
5
-17
1,400
78
-33
28
-27
1,311
155
233
20
-108
-179
-3
42
1,986
-41
113
30
74
1,711
175
247
140
1,553
1,263
0
4
2,713
-14
-117
143
54
1,928
-86
529
-80
1,343
1,045
8
-7
292
122
128
-22
-24
6
53
12
19 Foreign purchases
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East'
Other Asia
Japan
Africa
Other countries
36 Nonmonetary international and
regional organizations
740
-542
Foreign securities
37 Stocks, net purchases, or sales ( - ) 3
-11,679
-1,306'
-2,100
-808
-1,706
-648
-1,345
-921
95,458
94,377
75,356'
77,315'
93,406
105,085
7,792'
9,098'
9,124
11,225
7,640
8,448
9,489
11,195
8,473
9,121
10,309
11,654
9,406
10,327
40 Bonds, net purchases, or sales ( - )
41 Foreign purchases
42 Foreign sales
-7,946
199,089
207,035
-7,434'
218,521'
225,955'
-5,438
215,509
220,948
-110'
17,293'
17,403'
-1,506
21,061
22,567
-1,406
20,222
21,628
1,005
24,106
23,101
-1.845
18,325
20,170
-615
21,266
21,881
520
20,487
19,966
43 Net purchases, or sales (—), of stocks and bonds . . . .
-6,865
—9,393r
-17,117
-1,416'
-3,607
-2,214
-701
-2,493
-1,960
-401
44 Foreign countries
-6,757
-9,873'
-17,084
-1,620'
-3,407
-2,366
-887
-1,926
-1,622
-478
-12,101
-4,072
828
9,299
89
-800
-7,864'
-3,747'
1,384
979'
-54
-571'
-17,852
-3,098
700
3,472
38
-344
-1,537'
-555
-90
722'
13
-173'
-3,945
-705
27
1,262
3
-49
-2,534
-697
-75
921
12
8
-860
-250
314
327
-4
-414
-2,099
-201
-61
412
-3
26
-2,487
924
183
-232
12
-21
-186
-325
-102
3
13
119
-108
480
-33
203
-200
152
186
-568
-338
77
38
39
45
46
47
48
49
50
Foreign purchases
Foreign sales
Europe
Canada
Latin America and Caribbean
Africa
Other countries
51 Nonmonetary international and
regional organizations
1,081
- l ^
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
2. Includes state and local government securities, and securities of U.S.
government agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments
abroad.
3. As a result of the merger of a U.S. and U.K. company in July 1989, the
former stockholders of the U.S. company received $5,453 million in shares of the
new combined U.K. company. This transaction is not reflected in the data above.
A68
3.25
International Statistics • March 1990
MARKETABLE U.S. TREASURY BONDS A N D NOTES
Millions of dollars
Foreign Transactions
1989
Country or area
1987
1989
1988
Jan.Nov.
May
June
July'
Aug.'
Sept.'
Oct.'
Nov/
Transactions, net purchases or sales (—) during period1
1 Estimated total2
25,587
48,832r
53,443
7,043
-5,202
-1,317
21,979
4,616
-2,150
8,196
30,889
48,170'
52,976
5,518'
-5,322'
-761
22,409
5,698
-3,404
8,312
3 Europe2
4 Belgium-Luxembourg
5 Germany2
6 Netherlands
7
Sweden
8 Switzerland2
9
United Kingdom
10 Other Western Europe
11 Eastern Europe
12 Canada
23,716
653
13,330
-913
14,3^
923
-5,268
-356
-323
-1,074
9,64C
10,786
-10
3,761
33,471
1,138
6,187
-750
859
1,452
4,498
88
-179
-638
-69
-83
3,873
1,511
-5
157
-1,305
13
-1,106
-674
647
378
-133
-423
4,357
15,191
413
2,503
1,304
241
-748
9,863
1,614
0
2,494
-2,268
90
137
-1,200
140
-187
-1,049
-199
0
150
4,260
210
1,666
54
-232
-780
3,799
-481
26
375
13
14
15
16
17
18
19
20
-2,192
150
-1,142
-1,200
4,488
713
-109
1,130
-308
27,603'
21,750'
-13
1,786
1,380
347
318
716
16,707
3,429
76
-179
0
-78
643
1
-14
656
-5,581'
-7,780
23
29
-506
500
2,857
2,402
0
697
-1,439
72
34
-1,545
1,372
163
576
634
1,646
1,085
9
650
661
467
137
231
1,525'
1,340
70
5,518'
2 Foreign countries
2
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
All other
210
1,917
3,975
4,563
-19
4,526
868
-56
407
18,810
5,773
4
457
-101
1,732'
1,646
-3
-687
- 6
-478
82
2,622
100
110
-361
1,024
786
-5
-533
1,028
216
510
302
-50
374
339
802
0
-373
839
71
104
665
-4,941
-5,360
-5
-478
120
217
-617
7,121
3,009
-48
12C
-253
191
-557
-546
3
-431
-576
75
-1,082
-719
-228
1,254
1,158
160
66
1,332
-280
-602
-101
1,330
13
240
21 Nonmonetary international and regional organizations
22 International
23 Latin America regional
-5,302
-4,387
3
1,106
Memo
24 Foreign countries2
25 Official institutions
26 Other foreign
30,889
31,064
-176
48,170'
26,624
21,546'
52,976
25,677
27,299
-1,068
6,586'
-5,322'
449
-5,772'
-761
2,819
-3,580
22,409
9,957
12,452
5,698
799
4,900
-3,404
-990
-2,414
-3,142
16
1,963
1
8,786
-1
-300'
0
667'
0
435
0
3,681
0
695
0
-2,183
0
27
28
Oil-exporting countries
Middle East'
Africa4
-31
1. Estimated official and private transactions in marketable U.S. Treasury
securities with an original maturity of more than 1 year. Data are based on
monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and
notes held by official institutions of foreign countries.
2. Includes U.S. Treasury notes publicly issued to private foreign residents
denominated in foreign currencies.
-116
-143
0
8,312
1,686
6,627
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
Interest and Exchange Rates
3.26
A69
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per year
Rate on Jan. 31, 1990
Rate on Jan. 31, 1990
Country
Percent
Austria..
Belgium .
Brazil . . .
Canada..
Denmark
6.0
10.25
49.0
12.29
10.5
Country
Month
effective
June 1989
Oct. 1989
Mar. 1981
Jan. 1990
Oct. 1989
Percent
France
Germany, Fed. Rep. of.
Italy
Japan
Netherlands
1. As of the end of February 1981, the rate is that at which the Bank of France
discounts Treasury bills for 7 to 10 days.
2. Minimum lending rate suspended as of Aug. 20, 1981.
NOTE. Rates shown are mainly those at which the central bank either discounts
3.27
Rate on Jan. 31, 1990
Country
10.0
6.0
13.5
4.25
7.0
Month
effective
Month
effective
Dec. 1989
Oct. 1989
Mar. 1989
Dec. 1989
Oct. 1989
8.0
6.0
Norway
Switzerland . . . .2
United Kingdom
Venezuela
June 1983
Oct. 1989
or makes advances against eligible commercial paper and/or government commercial banks or brokers. For countries with more than one rate applicable to
such discounts or advances, the rate shown is the one at which it is understood the
central bank transacts the largest proportion of its credit operations.
FOREIGN SHORT-TERM INTEREST RATES
Percent per year, averages of daily figures
1989
Country, or type
1987
1988
1989
July
1
2
3
4
5
6
7
8
9
10
Eurodollars
United Kingdom
Canada
Germany
Switzerland
Netherlands
France
Italy
Belgium
Japan
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
7.07
9.65
8.38
3.97
3.67
7.85
10.28
9.63
4.28
2.94
9.16
13.87
12.20
7.04
6.83
8.85
13.91
12.24
7.00
6.92
8.71
13.86
12.30
6.99
7.01
8.85
13.99
12.32
7.37
7.42
8.67
15.03
12.29
8.08
7.63
8.42
15.07
12.35
8.22
7.68
8.39
15.07
12.34
8.06
8.14
8.22
15.13
12.24
8.22
9.35
5.24
8.14
11.15
7.01
3.87
4.72
7.80
11.04
6.69
3.96
7.28
9.27
12.44
8.65
4.73
7.07
9.05
12.46
8.46
4.71
7.15
8.95
12.52
8.44
4.80
7.53
9.20
12.40
8.66
4.88
8.08
9.89
12.63
9.51
5.25
8.40
10.41
12.67
9.81
5.71
8.47
10.71
12.83
10.03
5.80
8.82
11.19
12.88
10.48
6.02
NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate.
A70
3.28
International Statistics • March 1990
FOREIGN EXCHANGE RATES 1
Currency units per dollar
1989
Country/currency
1987
1988
1990
1989
Aug.
1
2
3
4
5
6
2
Australia/dollar
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone
7
8
9
10
11
12
13
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/punt2
14
15
16
17
18
19
20
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar2
Norway/krone
Portugal/escudo
21
22
23
24
25
26
27
28
29
30
Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound
Sept.
Oct.
Nov.
Dec.
Jan.
70.137
12.649
37.358
1.3259
3.7314
6.8478
78.409
12.357
36.785
1.2306
3.7314
6.7412
79.186
13.236
39.409
1.1842
3.7673
7.3210
76.345
13.570
40.310
1.1758
3.7314
7.4938
77.271
13.733
40.841
1.1828
3.7314
7.5872
77.421
13.140
39.197
1.1749
3.7314
7.2781
78.295
12.860
38.403
1.1697
3.7314
7.1138
78.586
12.241
36.544
1.1613
4.1825
6.7610
78.111
11.904
35.451
1.1720
4.7339
6.5620
4.4037
6.0122
1.7981
135.47
7.7986
12.943
148.79
4.1933
5.9595
1.7570
142.00
7.8072
13.900
152.49
4.2963
6.3802
1.8808
162.60
7.8008
16.213
141.80
4.3504
6.5085
1.9268
166.26
7.8078
16.609
138.43
4.4219
6.5855
1.9502
169.03
7.8078
16.745
136.71
4.2817
6.3339
1.8662
165.88
7.8081
16.819
142.50
4.2619
6.2225
1.8300
164.97
7.8140
16.925
144.73
4.1231
5.9391
1.7378
160.32
7.8102
16.932
151.65
4.0080
5.7568
1.6914
157.68
7.8116
16.963
156.31
1,297.03
144.60
2.5186
2.0264
59.328
6.7409
141.20
1,302.39
128.17
2.6190
1.9778
65.560
6.5243
144.27
1,372.28
138.07
2.7079
2.1219
59.354
6.9131
157.53
1,384.24
141.49
2.6825
2.1726
59.217
7.0480
161.15
1,404.18
145.07
2.6980
2.1992
59.144
7.1264
163.36
1,369.24
142.21
2.6945
2.1072
55.937
6.9502
159.08
1,343.83
143.53
2.7028
2.0652
56.301
6.9010
157.65
1,291.93
143.69
2.7032
1.9619
59.458
6.7021
152.34
1,261.87
144.98
2.7041
1.9073
60.220
6.5462
149.17
2.1059
2.0385
825.94
123.54
29.472
6.3469
1.4918
31.753
25.775
163.98
2.0133
2.2773
734.52
116.53
31.820
6.1370
1.4643
28.636
25.312
178.13
1.9511
2.6215
674.29
118.44
35.947
6.4559
1.6369
26.407
25.725
163.82
1.9604
2.7247
671.13
120.64
36.276
6.5481
1.6605
25.685
25.912
159.47
1.9769
2.7882
672.73
122.14
39.572
6.6103
1.6865
25.737
26.012
157.15
1.9622
2.6403
673.86
118.77
40.018
6.4580
1.6302
25.739
25.868
158.74
1.9588
2.6295
674.94
116.58
40.017
6.4306
1.6189
26.029
25.877
157.26
1.9183
2.5679
677.66
112.24
40.018
6.2920
1.5686
26.139
25.778
159.65
1.8873
2.5532
686.18
109.71
40.018
6.1776
1.5175
26.081
25.745
165.12
96.94
92.72
98.60
100.44
101.87
98.92
97.99
94.88
93.00
MEMO
31 United States/dollar3
1. Averages of certified noon buying rates in New York for cable transfers.
Data in this table also appear in the Board's G.5 (405) release. For address, see
inside front cover.
2. Value in U.S. cents.
3. Index of weighted-average exchange value of U.S. dollar against the
currencies of 10 industrial countries. The weight for each of the 10 countries is the
1972-76 average world trade of that country divided by the average world trade of
all 10 countries combined. Series revised as of August 1978 (see Federal Reserve
Bulletin, vol. 64, August 1978, p. 700).
A71
Guide to Tabular Presentation, Statistical
Releases, and Special Tables
GUIDE
TO TABULAR
PRESENTATION
Symbols and Abbreviations
c
e
p
r
*
Corrected
Estimated
Preliminary
Revised (Notation appears on column heading when
about half of the figures in that column are changed.)
Amounts insignificant in terms of the last decimal place
shown in the table (for example, less than 500,000
when the smallest unit given is millions)
0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs
. . .
Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable
General Information
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed
issues of U.S. government agencies (the flow of funds figures
also include not fully guaranteed issues) as well as direct
obligations of the Treasury. "State and local government"
also includes municipalities, special districts, and other political subdivisions.
In some of the tables, details do not add to totals because
of rounding.
STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference
Issue
December 1989
Anticipated schedule of release dates for periodic releases
Page
A84
SPECIAL TABLES—Published Irregularly, with Latest Bulletin Reference
Title and Date
Issue
Assets and liabilities of commercial
December 31, 1988
March 31, 1989
June 30, 1989
September 30, 1989
Terms of lending at commercial
February 1989
May 1989
August 1989
November 1989
banks
August
December
January
February
1989
1989
1990
1990
A78
A72
A72
ALL
June
March
November
March
1989
1990
1989
1990
A84
A73
A73
A79
June
August
November
March
1989
1989
1989
1990
A90
A84
A78
A84
August
September
February
March
1988
1989
1990
1990
A70
A72
A78
A88
banks
Assets and liabilities of U.S. branches and agencies of foreign
December 31, 1988
March 31, 1989
June 30, 1989
September 30, 1989
banks
Pro forma balance sheet and income statements for priced service
March 31, 1988
March 31, 1989
June 30, 1989
September 30, 1989
http://fraser.stlouisfed.org/ begin
Special tables
Federal Reserve Bank of St. Louis
Page
on page A73.
operations
Financial Markets
A73
4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 1989'A
A. Commercial and Industrial Loans
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
maturity2
Days
Interquartile
range5
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
Loan rate (percent)
Weighted
Weighted
average
effective3
Standard
error4
Most
common
pricing
rate6
ALL BANKS
1 Overnight7
9,048,047
4,504
*
10.98
.08
10.65-11.14
65.8
16.6
Fed funds
2 One month and under
3 Fixed rate
4 Floating rate
6,517,757
4,632,654
1,885,103
579
742
375
17
17
18
11.37
11.19
11.80
.14
.10
.24
10.68-11.66
10.68-11.46
10.71-13.24
77.4
72.7
89.2
10.6
9.3
13.7
Domestic
Domestic
Prime
5 Over one month and under a year .
6 Fixed rate
7 Floating rate
9,429,494
4,583,393
4,846,101
112
115
110
137
107
166
12.24
11.75
12.70
.16
.21
.12
11.17-13.24
10.74-12.62
12.02-13.42
75.9
72.4
79.3
15.0
16.5
13.6
Prime
Other
Prime
8 Demand8
9 Fixed rate
10 Floating rate
19,009,291
1,961,921
17,047,370
279
574
264
*
*
*
12.34
11.14
12.47
.12
.14
.13
11.40-13.24
10.58-11.49
12.01-13.24
81.5
88.6
80.7
7.2
13.3
6.4
Prime
Domestic
Prime
11 Total short term
44,004,589
266
57
11.89
.14
10.84-12.75
76.5
11.3
Prime
12 Fixed rate (thousands of dollars) ..
13
1-24
14 25-49
15 50-99
16
100-499
17 500-999
18
1000 and over
20,140,462
254,916
136,808
209,946
473,757
397,907
18,667,128
390
7
32
66
218
637
6,518
32
97
116
138
129
102
25
11.22
13.53
13.47
13.12
12.62
11.90
11.10
.10
.16
.22
.19
.12
.15
.06
10.65-11.52
12.64-14.63
12.96—13.97
12.36-14.20
12.00-13.39
11.07-12.19
10.65-11.38
71.0
20.8
25.4
44.0
46.2
80.0
72.8
14.7
.3
.0
.0
1.9
7.5
15.6
Fed funds
Other
Other
Prime
Prime
Prime
Fed funds
19 Floating rate (thousands of dollars)
20
1-24
21 25-49
22 50-99
23
100-499
24 500-999
25
1000 and over
23,864,126
535,104
588,253
1,004,307
3,911,973
1,960,014
15,864,476
210
10
34
67
199
669
4,624
123
169
165
159
154
173
101
12.46
13.67
13.47
13.24
13.01
12.76
12.16
.13
.11
.09
.07
.05
.08
.14
11.83-13.24
12.96—14.37
12.75-14.17
12.68-13.80
12.19-13.52
12.13-13.24
11.09-13.24
81.1
75.3
79.1
82.5
84.2
87.7
79.7
8.5
1.4
4.1
2.7
6.0
7.9
9.9
Prime
Prime
Prime
Prime
Prime
Prime
Prime
Months
8.0
Prime
19.6
.2
1.6
9.3
26.9
None
Other
Other
None
Foreign
66.0
27.4
48.4
69.7
71.4
4.8
1.2
17.4
9.2
2.6
Prime
Prime
Prime
Prime
Prime
4,188,833
228
46
12.76
.10
12.11-13.65
65.2
27 Fixed rate (thousands of dollars) ..
28
1-99
29
100-499
30 500-999
31
1000 and over
907,193
143,759
66,851
61,846
634,737
106
18
221
705
3,863
45
36
61
43
46
12.13
13.16
13.00
11.45
11.88
.30
.20
.27
.61
.54
10.86-13.30
12.68-14.17
11.79-13.80
10.25-13.65
10.81-12.68
62.1
12.1
44.5
55.8
76.0
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
3,281,640
171,887
426,840
176,796
2,506,117
336
25
218
674
4,548
46
49
48
48
46
12.94
13.74
13.23
12.71
12.85
.11
.12
.13
.21
.16
12.13-13.65
13.10-14.37
12.68-13.80
12.13-13.31
12.13-13.65
26 Total long term
•
Loan rate (percent)
rnme rate
Days
Effective3
Nominal9
LOANS MADE BELOW PRIME"
Overnight7
One month and under
Over one month and under a year
Demand8
8,510,957
5,347,703
3,996,237
5,658,433
6,992
2,429
344
2,064
16
97
10.89
10.%
11.00
10.90
10.34
10.42
10.50
10.42
11.50
11.51
11.57
11.52
64.2
77.6
83.8
64.9
16.6
9.8
18.1
6.3
41 Total short term
23,513,329
1,323
27
10.93
10.40
11.52
70.7
12.8
42 Fixed rate
43 Floating rate
17,225,971
6,287,358
1,446
1,071
23
54
10.91
10.%
10.39
10.44
11.51
11.55
71.2
69.5
16.1
3.6
37
38
39
40
*
Months
44 Total long term
972,541
391
42
11.18
10.78
11.67
82.8
16.2
45 Fixed rate
46 Floating rate ..
459,540
513,002
291
565
46
39
10.%
11.37
10.60
10.94
11.59
11.74
75.4
89.5
17.3
15.3
For notes see end of table.
A74
4.23
Special Tables • March 1990
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 19891—Continued
A. Commercial and Industrial Loans—Continued
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Loan rate (percent)
Days
Interquartile
range5
Loans
made
under
commitment
(percent)
10.99
Weighted
average
maturity2
10.59-11.18
63.1
10.68-11.54
10.68-11.44
10.46-12.19
78.3
72.8
94.4
12.8
10.79-13.03
Weighted
average
effective3
Standard
Participation
loans
(percent)
LARGE BANKS
1 Overnight7
7,378,179
6,680
2 One month and under
3 Fixed rate
4
Floating rate
5,118,295
3,798,187
1,320,108
3,067
4,085
1,786
17
18
16
11.26
11.17
11.51
5 Over one month and under a year .
6 Fixed rate
7 Floating rate
5,448,135
3,157,624
2,290,511
818
1,448
512
112
11.81
92
139
10.61-12.08
82.0
20.2
11.43
12.33
11.47-13.25
80.4
84.3
23.3
16.0
8 Demand8
9 Fixed rate
10 Floating rate
11,829,673
1,220,780
10,608,893
603
2,130
557
12.11
10.95-13.10
10.68-11.51
11.09-13.24
75.5
86.9
74.2
6.5
7.2
6.5
11 Total short term
29,774,281
1,025
39
11.63
10.75-12.19
74.1
13.4
12 Fixed rate (thousands of dollars) ..
13 1-24
14 25-49
15 50-99
16 100-499
17 500-999
18 1000 and over
15,554,686
10,587
11,775
21,443
143,711
189,945
15,177,225
3,252
10
33
67
223
656
7,222
25
94
82
67
55
45
25
11.14
13.13
13.07
12.98
12.53
11.91
10.65-11.42
12.57-14.20
12.55-13.73
12.47-13.65
11.74-13.31
11.21-12.47
10.65-11.39
70.8
26.5
23.0
47.7
69.8
82.7
70.8
17.3
19 Floating rate (thousands of dollars)
20
1-24
21 25-49
22 50-99
23
100-499
24 500-999
25
1000 and over
14,219,5%
86,602
124,038
251,191
1,311,132
840,066
11,606,566
586
11
34
67
210
669
6,360
94
156
161
151
142
147
85
12.17
13.49
13.34
13.23
11.09-13.24
12.68-14.37
12.68-13.88
12.55-13.80
12.13-13.31
12.13-13.24
10.88-13.10
77.7
79.1
79.8
9.1
.4
85.8
90.1
75.8
3.9
9.1
11.19
12.22
11.11
12.88
12.70
12.00
82.1
10.8
18.5
.1
.0
.3
3.7
5.3
17.7
.8
1.0
10.0
Months
26 Total long term
2,358,090
1,153
12.69
.18
11.87-13.65
84.8
4.7
27 Fixed rate (thousands of dollars) ..
28
1-99
29
100-499
30 500-999
31
1000 and over
443,239
4,949
14,705
15,900
407,684
1,177
23
11.81
10.62-12.17
12.50-14.94
11.79-13.95
11.46-13.66
10.44-12.03
85.8
30.3
24.4
73.4
89.2
13.9
782
5,409
13.70
12.97
12.31
11.73
.58
.24
.15
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
1,914,851
28,490
107,171
79,081
1,700,110
1,147
32
223
697
8,663
12.89
13.79
12.89
12.67
12.89
12.13-13.65
12.68-14.37
12.13-13.52
12.01-13.51
12.13-13.65
84.6
70.8
77.5
83.2
85.3
2.6
1.4
8.4
7.7
2.0
228
1.12
1.08
.20
.21
.16
.44
.25
.0
.0
16.0
14.5
Loan rate (percent)
Days
Effective3
Nominal9
LOANS MADE BELOW PRIME"
37
38
39
40
Overnight7
One month and under
Over one month and under a year
Demand8
6,860,977
4,464,955
3,240,337
4,585,870
8,039
6,140
4,263
4,950
10.89
10.97
10.92
10.88
10.34
10.43
10.42
10.42
11.50
11.50
11.50
11.50
60.9
76.5
85.5
58.0
20.0
41 Total short term
19,152,139
5,862
10.91
10.39
11.50
68.0
13.9
42 Fixed rate
43 Floating rate
13,739,303
5,412,836
5,947
5,655
10.92
10.90
10.40
10.38
11.50
11.50
68.9
65.8
18.1
3.1
10.5
20.4
3.2
Months
44 Total long term
663,859
3,156
11.03
45 Fixed rate
46 Floating rate
294,376
369,482
3,184
3,134
11.03
11.03
For notes see end of table.
90.9
10.72
10.68
11.50
11.50
86.2
94.7
19.1
6.5
Financial Markets
A73
4.23—Continued
A. Commercial and Industrial Loans—Continued
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity2
Days
Loan rate (percent)
Weighted
average
effective3
Standard
Interquartile
range5
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
10.65-11.00
77.7
2.2
Fed funds
Prime
None
Prime
Most
common
pricing
rate6
OTHER BANKS
1 Overnight7
1,669,868
1,847
*
10.92
.12
2 One month and under
3 Fixed rate
4
Floating rate
1,399,462
834,467
564,995
146
157
132
18
16
22
11.74
11.26
12.46
.13
.16
.24
10.86-12.69
10.72-11.61
11.62-13.25
74.0
72.1
76.9
2.6
2.6
2.5
5 Over one month and under a year . . . .
6
Fixed rate
Floating rate
7
3,981,359
1,425,769
2,555,590
52
38
65
172
140
191
12.83
12.46
13.04
.07
.14
.05
12.13-13.47
11.23-13.31
12.19-13.60
67.6
54.8
74.7
8.0
1.6
11.6
Prime
Prime
Prime
8 Demand8
9 Fixed rate
10 Floating rate
7,179,618
741,141
6,438,478
148
261
141
*
*
12.71
11.05
12.90
.10
.20
.09
12.13-13.24
10.58-11.33
12.13-13.31
91.5
91.2
91.5
8.2
23.4
6.4
Prime
Domestic
Prime
11 Total short term
*
14,230,307
104
101
12.44
.13
11.43-13.24
81.5
6.9
Prime
12 Fixed rate (thousands of dollars)
13
1-24
14 25-49
15 50-99
16
100-499
17 500-999
18
1000 and over
4,585,777
244,330
125,033
188,503
330,046
207,962
3,489,903
98
7
32
66
215
620
4,578
56
97
119
146
160
152
27
11.48
13.55
13.51
13.13
12.66
11.90
11.03
.12
.19
.31
.18
.13
.15
.06
10.65-11.92
12.64-14.65
12.96-14.00
12.36-14.20
12.01-13.65
11.06-12.12
10.65-11.21
71.5
20.6
25.7
43.6
35.9
77.5
81.2
5.6
.3
.0
.0
1.1
9.5
6.6
Fed funds
Other
Other
Prime
Prime
Prime
Fed funds
19 Floating rate (thousands of dollars)...
20
1-24
21 25-49
22 50-99
23
100-499
24 500-999
25
1000 and over
9,644,531
448,502
464,214
753,116
2,600,841
1,119,948
4,257,909
108
9
34
66
194
669
2,651
156
170
165
160
158
185
140
12.90
13.70
13.51
13.25
13.08
12.81
12.59
.07
.09
.07
.04
.03
.13
.20
12.13-13.37
12.96-14.37
12.96-14.20
12.68-13.80
12.26-13.65
12.13-13.24
12.13-13.24
86.2
74.5
78.9
82.6
83.4
86.0
90.6
7.5
1.6
4.9
3.2
7.1
7.1
9.5
Prime
Prime
Prime
Prime
Prime
Prime
Prime
Months
1,830,743
112
44
12.86
.11
12.13-13.52
39.9
12.3
Prime
27 Fixed rate (thousands of dollars) ..
28
1-99
29
100-499
30 500-999
31
1000 and over
463,954
138,809
52,146
45,947
227,052
56
18
219
681
2,553
37
35
62
38
31
12.44
13.14
13.01
11.16
12.14
.20
.34
.54
.70
.32
11.13-13.59
12.68-14.09
11.71-13.80
10.25-13.65
10.86-13.59
39.5
11.4
50.1
49.7
52.2
25.0
.2
2.0
7.0
49.1
None
Other
Other
None
None
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
1,366,789
' 143,397
319,669
97,715
806,007
169
23
216
657
2,271
46
51
48
46
45
13.00
13.73
13.34
12.75
12.76
.11
.09
.16
.22
.17
12.13-13.52
13.10-14.37
12.68-13.92
12.13-13.24
12.13-13.37
40.0
18.7
38.6
58.7
42.1
8.0
1.2
20.4
10.4
3.9
Prime
Prime
Prime
Prime
Prime
78.0
83.3
76.6
94.4
2.3
6.0
7.8
19.3
26 Total long term
Loan rate (percent)
Days
rnme rate
Effective3
Nominal9
10.33
10.38
10.81
10.45
11.50
11.57
11.88
11.59
LOANS MADE BELOW PRIME
Overnight7
One month and under
Over one month and under a year
Demand8
*
1,649,980
882,748
755,900
1,072,562
4,534
599
70
591
15
99
*
10.88
10.92
11.35
10.96
41 Total short term
4,361,190
301
27
10.99
10.45
11.60
82.9
8.2
42 Fixed rate
43 Floating rate
3,486,668
874,522
363
178
18
83
10.90
11.36
10.36
10.80
11.55
11.82
80.4
92.8
8.4
7.2
37
38
39
40
Months
44 Total long term
308,683
135
33
11.51
10.94
12.02
65.4
25.1
45 Fixed rate
46 Floating rate ..
165,164
143,519
111
182
37
28
10.84
12.27
10.37
11.61
11.74
12.35
56.1
76.1
14.0
37.8
For notes see end of table.
A76
4.23
Special Tables • March 1990
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 19891—Continued
B. Construction and Land Development Loans1
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Loan rate (percent)
Weighted
average
maturity
(months)3
Weighted
average
effective4
Standard
error5
Interquartile
range6
Loans made
under
commitment
(percent)
Participation
loans
(percent)
ALL BANKS
1 Total
2,741,952
163
7
12.60
.11
12.06-13.24
93.2
32.2
978,562
15,089
17,117
22,590
67,082
856,685
270
7
34
72
168
8,658
3
18
19
19
27
1
11.89
13.58
14.22
12.70
12.94
11.71
.25
.34
.41
.28
.43
.28
11.51-12.13
12.47-14.37
12.68-14.93
12.13-13.52
12.13-14.93
11.46-12.06
93.4
51.8
94.4
55.7
85.4
95.7
37.3
.1
.0
1.7
2.3
42.3
10
li
12
li
1,763,389
77,455
64,934
75,801
285,173
1,260,027
134
9
34
68
217
3,000
9
10
12
15
16
8
12.99
13.65
13.21
13.42
13.24
12.85
.09
.09
.07
.10
.05
.09
12.68-13.24
13.03-14.17
12.68-13.65
12.96-13.88
12.96—13.52
12.55-13.19
93.1
88.0
90.7
81.8
82.9
96.5
29.4
1.4
1.7
13.4
9.5
37.9
By type of construction
14 Single family
15 Multifamily
16 Nonresidential
408,552
113,521
2,219,879
41
116
375
12
8
6
13.38
13.43
12.41
.11
.16
.13
12.96-13.80
12.96-13.77
11.51-12.82
84.1
93.8
94.8
4.4
3.3
38.8
2,035,329
1,019
5
12.35
.10
11.51-12.68
96.6
41.5
858,141
643
832
4,036
11
34
2
20
12
11.70
12.29
11.98
.26
.35
.46
11.46-12.06
11.85-12.91
11.71-12.68
95.3
64.1
66.5
42.4
.0
.0
5,884
849,880
226
9,591
15
1
11.93
11.70
.46
.32
11.41-12.46
11.46-12.06
58.7
95.7
26.6
42.7
1,177,188
5,581
10,947
17,660
109,892
1,033,107
660
11
35
71
233
4,209
8
11
16
14
17
8
12.81
13.37
13.33
13.23
13.13
12.77
.13
.11
.09
.14
.08
.15
12.55-12.96
12.96-13.80
12.96-13.80
12.68-13.63
12.68-13.52
12.55-12.96
97.6
89.1
89.6
96.1
96.4
97.9
40.9
3.3
3.9
6.7
11.9
45.1
103,199
27,288
1,904,902
184
144
1,528
11
8
5
13.13
13.59
12.28
.09
.23
.08
12.96-13.24
13.24-13.80
11.51-12.68
80.4
84.5
97.7
5.7
2.9
44.0
1 Total
706,623
48
14
13.32
.06
12.96-13.80
83.3
5.2
2 Fixed rate (thousands of dollars)
1-24
3
4 25-49
5 50-99
6
100-499
7 500 and over
120,422
14,466
16,285
21,688
61,198
35
6
34
72
164
23
18
20
19
32
.33
.48
.63
.41
.77
12.13-14.93
12.51-14.37
13.24-14.93
12.13-14.17
12.13-14.93
79.6
51.2
95.8
56.4
88.0
.3
.1
.0
1.8
.0
*
*
13.20
13.64
14.33
12.74
13.04
2 Fixed rate (thousands of dollars)
3
1-24
4 25-49
5 50-99
6
100-499
7 500 and over
8 Floating rate (thousands of dollars) . . .
Y
1-24
25-49
50-99
100-499
500 and over
LARGE BANKS 13
1 Total
2 Fixed rate (thousands of dollars)
i
1-24
4 25-49
5 50-99
6
100-499
7 500 and over
8 Floating rate (thousands of dollars) . . .
9
1-24
10 25-49
11 50-99
12
100-499
13 500 and over
By type of construction
14 Single family
15 Multifamily
16 Nonresidential
*
*
*
*
*
*
*
OTHER BANKS
*
*
8 Floating rate (thousands of dollars) . . .
1-24
9
10 25-49
11 50-99
12
100-499
13 500 and over
586,201
71,873
53,987
58,141
175,281
226,919
52
9
34
68
208
1,300
12
10
11
15
15
11
13.34
13.68
13.19
13.48
13.30
13.26
.03
.14
.11
.14
.07
.07
12.96—13.80
13.03-14.20
12.26-13.65
12.96-13.88
12.96-13.80
12.96-13.77
84.0
88.0
90.9
77.4
74.5
90.3
6.2
1.3
1.2
15.4
8.0
5.2
By type of construction
14 Single family
15 Multifamily
16 Nonresidential
305,353
86,293
314,977
33
109
67
12
8
18
13.47
13.38
13.15
.21
.23
.12
12.96-13.88
12.96-13.77
12.68-13.80
85.3
96.7
77.7
4.0
3.4
6.9
For notes see end of table.
*
*
Financial Markets A73
4.23—Continued
C. Loans to Farmers12
Size class of loans (thousands)
Characteristic
All sizes
$10-24
$1-9
$50-99
$25-49
$100-249
ALL BANKS
1 Amount of loans (thousands of dollars).
2 Number of loans
3 Weighted average maturity (months) ..
$
4 Weighted average interest rate (percent)3
5 Standard error
6
Interquartile range
146,990
40,498
8.0
$
184,720
12,617
9.4
$
130,554
3,838
9.1
$
208,631
3,059
12.7
12.85
.33
12.27-13.56
12.99
.28
12.19-13.52
13.74
13.30
12.87
13.41
13.56
13.65
12.81
13.38
12.73
13.07
13.03
13.11
12.68
12.97
13.07
17.4
9.2
55.9
2.8
4.6
10.1
6.9
6.4
71.8
6.9
1.7
6.2
13.33
.41
12.60-13.53
13.37
12.98
13.38
57.1
53.3
252,758
1,713
8.1
$
13.18
.48
12.47-14.09
51.8
54.0
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
13.05
.35
12.59-13.80
12.92
12.79
12.89
13.18
12.06
12.89
Percentage of amount of loans
13 With floating rates
14 Made under commitment
15
16
17
18
19
20
$
12.86
.56
12.21-13.52
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
I
8
9
10
II
12
1,294,324
62,312
8.9
*
13.15
*
13.77
*
*
*
*
*
13.73
13.22
13.18
46.9
45.9
53.4
45.9
46.3
46.1
49.5
48.6
9.4
9.1
67.0
5.4
3.5
5.5
14.9
16.6
56.1
16.3
6.4
52.0
*
*
22.4
*
45.4
*
*
*
*
12.9
14.7
8.0
LARGE BANKS 12
1 Amount of loans (thousands of dollars).
2 Number of loans
3 Weighted average maturity (months) ..
$
13,317
3,235
7.6
$
21,522
1,460
9.5
$
22,474
657
10.5
13.13
14.12
13.98
13.65
14.70
13.86
13.29
13.51
13.68
13.72
13.60
13.79
12.83
14.02
13.59
89.4
84.2
5.7
4.0
71.3
3.6
1.4
14.0
$
13.52
.17
13.03-14.17
28.8
7.9
37.5
1.7
5.3
18.9
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
13.68
.28
13.03-14.37
81.1
84.0
Percentage of amount of loans
13 With floating rates
14 Made under commitment
13.92
.30
13.24-14.45
12.65
12.68
13.18
13.61
11.29
12.60
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
15
16
17
18
19
20
$
12.78
.53
12.13-13.52
4 Weighted average interest rate (percent)'
Standard error
5
6
Interquartile range
7
8
9
10
11
12
381,270
6,482
9.3
*
30,525
465
8.7
$
58,342
386
12.6
13.22
.26
12.75-13.65
13.23
.41
12.75-13.80
13.06
13.07
*
*
*
13.35
13.35
*
*
*
*
13.49
13.08
13.31
91.4
84.6
92.7
86.7
90.4
82.7
90.1
90.5
5.2
2.3
66.8
4.6
2.9
18.4
11.1
6.8
54.4
*
27.3
18.5
*
32.1
44.0
*
*
*
*
24.4
*
*
30.1
30.1
OTHER BANKS 12
1 Amount of loans (thousands of dollars).
2 Number of loahs
3 Weighted average maturity (months) • •
$
913,054
55,830
8.8
$
133,673
37,263
8.0
$
163,198
11,157
9.4
$
108,080
3,181
8.9
4 Weighted average interest rate (percent)
5 Standard error
6 Interquartile range5
12.89
.15
12.24-13.50
12.97
.17
12.55-13.80
12.74
.16
12.26-13.45
12.88
.22
12.11-13.31
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses —
Farm machinery and equipment
Farm real estate
Other
13.19
12.83
12.82
13.08
12.44
13.25
13.79
13.25
12.76
13.40
12.78
13.38
12.60
13.00
12.65
12.89
12.%
7
8
9
10
11
12
For notes see end of table.
*
*
13.59
12.68
$
178,107
2,595
13.2
13.18
.24
12.47-14.45
*
*
*
*
*
*
*
13.43
$
194,415
1,326
7.4
13.37
.31
12.60-13.53
*
*
13.37
*
*
13.85
A78
4.23
Special Tables • March 1990
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 19891—Continued
C. Loans to Farmers12—Continued
Size class of loans (thousands)
Characteristic
$250
and over
All sizes
Percentage of amount of loans
13 With floating rates
14 Made under commitment
15
16
17
18
19
20
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
$1-9
$10-24
$25-49
$50-99
$100-249
39.6
41.4
53.9
50.2
41.1
40.8
45.2
37.4
38.7
39.9
37.3
36.0
12.7
9.7
63.5
3.2
4.4
6.5
7.1
6.6
71.9
7.2
10.0
10.0
67.1
5.5
15.7
18.6
56.4
*
*
*
*
*
53.4
49.4
*
*
*
5.5
3.8
•Note. These data should have appeared in the November 1989 issue but were
inadvertently replaced with August 7-11, 1989 data.
*Fewer than 10 sample loans.
1. The survey of terms of bank lending to business collects data on gross loan
extensions made during the first full business week in the mid-month of each
quarter by a sample of 340 commercial banks of all sizes. A subsample of 250
banks also report loans to farmers. The sample data are blown up to estimate the
lending terms at all insured commercial banks during that week. The estimated
terms of bank lending are not intended for use in collecting the terms of loans
extended over the entire quarter or residing in the portfolios of those banks.
Mortgage loans, purchased loans, foreign loans, and loans of less than $1,000 are
excluded from the survey.
As of Dec. 31, 1988, assets of most of the large banks were at least $6.0 billion.
For all insured banks total assets averaged $220 million.
2. Average maturities are weighted by loan size and exclude demand loans.
3. Effective (compounded) annual interest rates are calculated from the stated
rate and other terms of the loan and weighted by loan size.
4. The chances are about two out of three that the average rate shown would
differ by less than this amount from the average rate that would be found by a
complete survey of lending at all banks.
*
•
15.9
*
*
5. The interquartile range shows the interest rate range that encompasses the
middle 50 percent of the total dollar amount of loans made.
6. The most common base rate is that rate used to price the largest dollar
volume of loans. Base pricing rates include the prime rate (sometimes referred to
as a bank's "basic" or "reference" rate); the federal funds rate; domestic money
market rates other than the federal funds rate; foreign money market rates; and
other base rates not included in the foregoing classifications.
7. Overnight loans are loans that mature on the following business day.
8. Demand loans have no stated date of maturity.
9. Nominal (not compounded) annual interest rates are calculated from survey
data on the stated rate and other terms of the loan and weighted by loan size.
10. The prime rate reported by each bank is weighted by the volume of loans
extended and then averaged.
11. The proportion of loans made at rates below prime may vary substantially
from the proportion of such loans outstanding in banks' portfolios.
12. Among banks reporting loans to farmers (Table B), most "large banks"
(survey strata 1 to 2) had over $20 million in farm loans, and most "other banks"
(survey strata 3 to 5) had farm loans below $20 million.
The survey of terms of bank lending to farmers now includes loans secured by
farm real estate. In addition, the categories describing the purpose of farm loans
have now been expanded to include "purchase or improve farm real estate." In
previous surveys, the purpose of such loans was reported as "other."
Financial Markets
4.23
A73
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 19891
A. Commercial and Industrial Loans
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity2
Days
Loan rate (percent)
Weighted
average
effective3
Standard
error4
Interquartile
range5
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
Most
common
pricing
ALL BANKS
1 Overnight7
*
13,762,089
5,861
9.56
.41
9.21-9.73
54.7
8.7
Other
2 One month and under
3 Fixed rate
4
Floating rate
7,774,661
4,832,909
2,941,751
806
983
623
19
21
16
10.17
10.18
10.15
.10
.08
.20
9.52-10.56
9.61-10.34
9.33-11.02
84.2
79.6
91.8
8.8
11.8
4.0
Domestic
Domestic
Domestic
5 Over one month and under a year .
Fixed rate
6
7
Floating rate
9,856,562
4,307,635
5,548,927
138
130
145
153
131
170
11.11
10.72
11.42
.17
.18
.16
10.03-12.13
9.86-11.66
10.38-12.19
80.8
75.9
84.6
14.0
13.0
14.7
Prime
Other
Prime
8 Demand8
9
Fixed rate
10 Floating rate
12,651,826
1,869,578
10,782,248
217
419
200
*
*
*
11.24
10.09
11.44
.14
.27
.15
10.47-12.19
9.25-10.52
11.02-12.40
86.8
78.0
88.4
6.4
11.7
5.4
Prime
Domestic
Prime
11 Total short term
44,045,138
311
53
10.50
.16
9.46-11.30
75.0
9.2
Prime
12 Fixed rate (thousands of dollars) ..
13 1-24
14 25-49
15 50-99
16
100-499
17 500-999
18
1000 and over
24,769.253
221,280
125,337
209,130
527,537
437,327
23,248,642
554
7
33
66
207
697
7,752
30
111
120
146
76
79
26
9.92
12.67
12.46
12.01
11.56
10.60
9.81
.14
.15
.18
.24
.18
.14
.13
9.31-10.23
11.84-13.44
12.00-12.89
11.50-13.12
10.73-12.68
9.96-11.07
9.28-10.07
65.0
24.0
28.0
18.2
44.2
55.6
66.7
10.3
1.6
.1
6.6
3.3
5.7
10.7
Other
Other
Prime
Prime
Prime
Other
Other
19 Floating rate (thousands of dollars)
20
1-24
21
25-49
22 50-99
23
100-499
24 500-999
25
1000 and over
19,275,885
469,932
501,634
921,658
3,432,317
1,577,865
12,372,478
199
10
34
66
203
673
4,727
117
153
146
160
153
156
100
11.24
12.64
12.45
12.26
11.95
11.58
10.82
.15
.09
.05
.05
.06
.06
.15
10.26-12.19
12.01-13.24
11.85-13.24
11.57-12.75
11.07-12.64
11.02-12.15
9.73-11.67
87.8
73.8
79.5
82.2
85.3
90.7
89.4
7.9
.6
1.6
3.6
6.2
9.4
9.0
Prime
Prime
Prime
Prime
Prime
Prime
Prime
Months
5,180,184
260
43
11.36
.15
10.92-12.19
74.2
12.2
Prime
27 Fixed rate (thousands of dollars) ..
28
1-99
29
100-499
30 500-999
31
1000 and over
910,099
153,314
126,685
38,287
591,813
114
22
181
670
4,339
49
41
46
76
50
10.68
12.28
12.08
11.32
9.93
.29
.23
.18
.19
.24
9.37-11.63
11.57-13.23
11.30-12.75
10.97-12.13
9.33-10.98
54.1
15.8
23.9
39.1
71.4
.9
.3
3.2
.0
.7
Other
Other
Prime
Other
Other
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
4,270,086
207,194
520,021
376,052
3,166,819
359
25
206
628
4,987
41
52
38
41
41
11.51
12.48
12.23
11.89
11.28
.15
.12
.16
.13
.12
11.02-12.19
11.85-13.24
11.30-12.68
11.07-12.75
10.92-12.13
78.5
52.2
65.2
66.8
83.8
14.6
2.4
11.2
12.9
16.1
Prime
Prime
Prime
Prime
Prime
8.9
7.6
16.1
10.2
26 Total long term
Loan rate (percent)
Prime rate
Days
Effective3
Nominal9
9.06
9.34
9.47
9.29
10.50
10.51
10.57
10.54
53.8
86.7
91.0
79.0
LOANS MADE BELOW PRIME11
Overnight7
••'.
One month and under
Over one month and under a year
8
Demand
*
13,280,063
6,097,250
4,347,067
3,726,833
7,900
2,836
548
1,264
17
134
*
9.48
9.77
9.87
9.68
41 Total short term
27,451,213
1,865
30
9.64
9.22
10.52
70.4
9.9
42 Fixed rate
43 Floating rate
21,452,877
5,998,335
2,339
1,081
22
70
9.61
9.73
9.19
9.32
10.51
10.55
64.7
90.8
10.7
7.1
37
38
39
40
Months
44 Total long term
1,402,820
541
45
9.79
9.40
10.63
82.8
12.0
45 Fixed rate
46 Floating rate ..
528,022
874,798
282
1,210
44
46
9.57
9.92
9.23
9.51
10.62
10.63
73.0
88.7
14.3
10.6
For notes see end of table.
A80
4.23
Special Tables • March 1990
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 1989'—Continued
A. Commercial and Industrial Loans—Continued
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
average
maturity2
Days
Loan rate (percent)
Weighted
average
effective3
Standard
Interquartile
range5
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
LARGE BANKS
1 Overnight7
11,804,163
8,363
2 One month and under
3 Fixed rate
4 Floating rate
6,223,515
3,992,273
2,231,241
4,567
5,795
3,311
22
5 Over one month and under a year .
6
Fixed rate
7 Floating rate
5,911,897
2,899,355
3,012,542
1,053
3,685
624
8 Demand8
9 Fixed rate
10 Floating rate
7,851,684
1,235,547
6,616,137
438
685
411
11 Total short term
31,791,258
1,209
12 Fixed rate (thousands of dollars) ..
13
1-24
14 25-49
15 50-99
16 100-499
17 500-999
18 1000 and over
19,928,382
8,623
10,820
20,247
141,106
187,140
19,560,445
4,254
10
32
66
227
678
8,455
26
100
76
19 Floating rate (thousands of dollars)
20
1-24
21 25-49
22 50-99
23
100-499
24 500-999
25
1000 and over
11,862,876
82,720
103,240
222,580
1,092,501
631,503
9,730,332
549
11
34
66
208
671
5,800
102
9.56
9.21-9.74
47.6
10.1
13
10.07
10.13
9.95
9.49-10.24
9.54-10.31
9.01-10.22
85.3
80.5
93.8
7.1
9.2
3.4
150
132
167
10.72
10.35
11.08
9.92-11.66
9.86-10.89
10.12-12.13
90.5
88.7
92.3
18.6
11.01
9.97
82.8
7.5
11.20
9.96-12.13
9.12-10.50
10.54-12.19
69.8
85.3
16.0
10.23
9.38-11.02
71.7
10.5
9.82
12.02
11.70
11.59
10.93
10.59
9.80
9.28-10.10
11.50-12.50
11.50-12.13
11.02-12.50
10.33-11.50
9.73-11.25
9.28-10.06
61.5
26.7
34.5
38.2
66.6
70.1
61.5
11.5
10.94
12.33
12.31
11.75
11.57
10.75
9.83-12.01
11.57-13.24
11.57-12.96
11.35-12.68
11.02-12.19
11.02-12.19
9.68-11.63
88.7
76.7
84.8
87.4
89.6
91.2
19
126
57
30
26
148
152
146
164
153
%
12.10
88.6
18.5
18.8
5.9
.0
.0
.0
7.3
6.1
11.6
8.7
.5
1.0
2.0
4.2
7.1
9.6
Months
26 Total long term
3,397,972
1,116
11.04
10.12-12.01
27 Fixed rate (thousands of dollars) ..
28
1-99
29
100-499
30 500-999
31
1000 and over
513,629
5,231
12,841
10,995
484,561
1,346
25
217
599
5,113
9.89
11.66
11.39
9.79
9.20-10.22
11.57-13.31
10.75-12.68
10.73-12.13
9.20-10.22
25.6
45.3
52.0
70.3
2.7
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
2,884,343
38,540
208,403
168,373
2,469,027
1,083
37
230
668
5,486
11.25
12.44
11.90
11.73
11.14
10.68-12.13
11.57-12.96
11.02-12.55
11.02-12.19
10.41-12.13
89.4
79.9
85.7
84.4
90.2
15.8
4.4
11.5
15.8
16.3
12.28
.0
.0
Loan rate (percent)
Days
Prime rate"
Effective3
Nominal9
LOANS MADE BELOW PRIME 1
37
38
39
40
Overnight7
One month and under
Over one month and under a year .
Demand8
11,325,433
5,185,025
3,350,076
2,918,581
9,380
7,563
5,168
3,163
17
131
9.47
9.76
9.84
9.68
9.05
9.33
9.45
9.29
10.50
10.50
10.50
10.50
46.2
86.7
92.3
74.2
10.5
5.3
19.2
11.7
41 Total short term
22,779,114
6,576
27
9.62
9.20
10.50
65.8
10.7
42 Fixed rate
43 Floating rate
17,847,501
4,931,613
7,285
4,863
9.60
9.68
9.19
9.27
10.50
10.50
59.2
89.6
11.8
79.2
92.3
17.6
4.4
6.7
Months
44 Total long term
45 Fixed rate
46 Floating rate
For notes see end of table.
1,147,113
4,041
9.65
9.29
10.50
403,745
743,369
3,362
4,540
9.41
9.79
9.11
9.39
10.50
10.50
Financial Markets A73
4.23—Continued
A. Commercial and Industrial Loans—Continued
Characteristic
Amount of
loans
(thousands
of dollars)
Average
size
(thousands
of dollars)
Weighted
EVCfEJC
maturity2
Days
Loan rate (percent)
Weighted
average
effective3
Standard
error4
Interquartile
range5
Loans
made
under
commitment
(percent)
Participation
loans
(percent)
OTHER BANKS
*
1 Overnight7
1,957,926
2,090
9.55
.83
9.33-9.69
97.8
.0
2 One month and under
3 Fixed rate
4
Floating rate
1,551,146
840,636
710,510
187
199
175
20
17
22
10.59
10.42
10.79
.05
.08
.19
9.76-11.07
9.81-10.71
9.48-11.07
80.0
75.4
85.4
15.5
23.8
5.6
5 Over one month and under a year .
6
Fixed rate
7 Floating rate
3,944,665
1,408,280
2,536,386
60
44
76
158
129
174
11.69
11.47
11.82
.14
.16
.14
11.02-12.68
9.85-12.67
11.02-12.68
66.1
49.5
75.3
7.0
1.7
9.9
8 Demand8
9 Fixed rate
10 Floating rate
4,800,143
634,032
4,166,111
119
239
no
*
*
*
11.62
10.30
11.83
.06
.51
.06
11.02-12.55
9.33-10.88
11.07-12.55
93.4
94.1
93.3
4.6
3.3
4.8
11 Total short term
12,253,880
106
88
11.18
.11
9.81-12.19
83.6
6.0
12 Fixed rate (thousands of dollars) ..
13
1-24
14 25-49
15 50-99
16 100-499
17 500-999
18 1000 and over
4,840,871
212,657
114,516
188,883
386,431
250,186
3,688,197
121
7
33
66
201
711
5,380
47
111
120
146
80
108
27
10.36
12.70
12.53
12.06
11.79
10.61
9.90
.20
.10
.15
.45
.16
.21
.26
9.42-11.07
11.90-13.47
12.06-13.03
11.57-13.24
10.73-12.75
9.97-11.07
9.35-10.07
79.4
23.9
27.4
16.1
36.1
44.8
94.3
5.0
1.6
.1
7.3
1.8
5.3
5.6
19 Floating rate (thousands of dollars)
20
1-24
21 25-49
22 50-99
23
100-499
24 500-999
25
1000 and over
7,413,009
387,212
398,394
699,078
2,339,816
946,362
2,642,146
98
10
34
66
200
675
2,811
141
153
145
162
150
158
120
11.72
12.71
12.49
12.31
12.04
11.59
11.08
.10
.06
.06
.05
.07
.11
.20
11.02-12.55
12.13-13.31
11.85-13.24
11.63-12.75
11.30-12.68
11.05-12.15
10.44-11.85
86.4
73.1
78.2
80.5
83.3
90.3
92.4
6.6
0.7
1.7
4.0
7.1
11.0
6.8
Months
1,782,213
106
44
11.96
.10
11.20-12.68
51.2
9.6
27 Fixed rate (thousands of dollars) ..
28
1-99
29
100-499
30 500-999
31
1000 and over
3%,470
148,082
113,844
27,292
107,251
52
21
178
704
2,578
52
41
46
89
65
11.70
12.28
12.12
11.29
10.54
.26
.40
.23
.24
.30
11.02-12.75
11.57-13.23
11.35-12.96
10.97-11.99
9.80-11.35
34.9
15.4
21.5
33.9
76.2
1.1
.2
3.6
.0
.0
32 Floating rate (thousands of dollars)
33
1-99
34
100-499
35 500-999
36
1000 and over
1,385,743
168,654
311,618
207,678
697,792
150
24
192
600
3,773
42
56
38
42
40
12.04
12.49
12.46
12.01
11.76
.18
.12
.28
.24
.11
11.25-12.68
11.91-13.24
11.57-12.%
11.25-12.75
11.07-12.19
55.9
45.9
51.5
52.6
61.3
12.1
1.9
11.0
10.5
15.4
97.8
86.3
86.5
%.l
.0
20.5
5.6
4.7
26 Total long term
Loan rate (percent)
Prime rate
Days
Effective3
Nominal9
9.12
9.40
9.56
9.27
10.50
10.55
10.78
10.70
LOANS MADE BELOW PRIME11
Overnight7
'.
One month and under
Over one month and under a year
Demand8
*
1,954,630
912,225
9%,991
808,252
4,127
623
137
399
15
146
9.54
9.85
9.98
9.70
41 Total short term
4,672,098
415
42
9.72
9.29
10.61
92.8
6.0
42 Fixed rate
43 Floating rate
3,605,376
1,066,722
536
235
23
123
9.65
9.98
9.22
9.55
10.55
10.79
91.8
%.2
5.3
8.6
37
38
39
40
*
Months
44 Total long term
255,707
111
45
10.39
9.9!
11.20
60.9
25.1
45 Fixed rate
46 Floating rate ..
124,278
131,430
71
235
55
36
10.09
10.67
9.63
10.16
11.00
11.39
52.7
68.6
3.5
45.4
For notes see end of table.
A82
4.23
Special Tables • March 1990
TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 19891—Continued
B. Loans to Farmers12
Size class of loans (thousands)
Characteristic
All sizes
$1-9
$10-24
$25-49
$50-99
$250
$100-249
and over
ALL BANKS
1 Amount of loans (thousands of dollars)
2 Number of loans
$
i Weighted average maturity (months)2
4 Weighted average interest rate (percent)3
5
Standard error
6
Interquartile range5
7
8
9
10
11
12
lb
17
18
19
20
$
110,182
28,997
6.9
$
154,326
10,446
6.9
$
197,356
5,685
8.8
$
158,728
2,316
9.0
$
205,328
1,357
8.1
$
306,586
590
8.0
12.16
.50
11.50-12.75
12.53
.20
12.01-13.05
12.51
.23
11.96-13.03
12.04
.23
11.56-12.69
12.25
.28
11.67-12.84
11.95
.58
11.02-12.08
12.69
13.03
12.63
12.94
12.23
12.81
12.65
12.80
12.45
12.16
12.61
12.34
12.60
12.65
12.45
12.28
12.22
12.20
12.26
12.63
11.53
12.28
12.53
12.18
11.48
11.55
11.39
62.5
55.9
45.1
42.0
44.0
40.4
54.6
51.1
29.1
17.2
37.1
2.9
5.1
8.6
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
12.70
.44
12.19-13.21
12.20
12.19
12.08
12.37
12.26
12.16
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
Percentage of amount of loans
13 With floating rates
14 Made under commitment
15
1,132,505
49,391
8.0
13.1
10.1
61.8
7.8
2.1
5.1
23.4
13.8
50.8
4.6
2.1
5.3
35.9
19.4
29.3
5.1
7.6
2.7
*
*
11.17
12.50
*
12.01
11.97
57.5
41.8
73.4
62.7
78.6
74.5
38.5
13.2
33.2
31.0
8.2
33.9
27.1
28.3
30.7
*
3.6
9.7
*
18.3
8.3
LARGE BANKS12
1 Amount of loans (thousands of dollars)
2 Number of loans
3 Weighted average maturity (months)2
$
4 Weighted average interest rate (percent)3
5
Standard error
6
Interquartile range
7
8
9
10
11
12
$
15,226
3,920
6.9
29,809
1,989
7.6
$
$
44,387
1,251
9.0
48,331
711
7.2
$
$
107,771
708
7.5
$
254,674
440
7.4
11.77
.48
11.07-12.47
12.49
.16
12.01-12.96
12.31
.21
11.91-12.75
12.18
.14
11.63-12.70
11.97
.16
11.42-12.47
11.38
.53
11.02-12.01
12.58
12.87
12.70
13.30
12.23
12.88
12.54
12.64
12.47
12.13
12.33
12.51
12.43
12.78
12.25
12.06
12.30
12.23
11.90
11.33
11.14
11.39
11.99
11.97
11.48
12.40
85.7
80.7
85.5
79.4
86.2
75.3
88.7
73.5
27.7
14.9
38.7
1.4
4.1
13.1
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
12.74
.43
12.19-13.31
11.76
11.33
11.82
12.32
11.79
12.09
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
Percentage of amount of loans
13 With floating rates
14 Made under commitment
15
16
17
18
19
20
500,097
9,018
7.5
13.0
5.0
60.9
5.0
2.1
14.1
25.1
6.9
47.0
3.0
3.7
14.3
37.2
5.3
42.5
*
*
12.01
*
*
*
*
12.03
87.4
77.4
3.0
9.9
11.92
92.1
89.4
82.1
79.6
28.2
3.4
40.7
31.9
35.2
25.4
25.4
36.9
*
6.6
19.2
*
24.5
7.5
OTHER BANKS12
1 Amount of loans (thousands of dollars)
2 Number of loans
i Weighted average maturity (months)2
4 Weighted average interest rate (percent)3
5
Standard error4
6
Interquartile range
/
8
9
10
11
12
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
For notes see end of table.
$
632,408
40,374
8.3
$
94,956
25,078
6.9
$
124,516
8,457
6.8
$
152,969
4,434
8.8
12.46
.12
11.97-13.03
12.70
.07
12.19-13.16
12.54
.10
12.01-13.10
12.57
.09
12.00-13.10
12.53
12.72
12.30
12.39
12.52
12.29
12.71
13.04
12.62
12.90
12.22
12.76
12.68
12.82
12.44
12.17
12.66
12.64
12.55
*
*
*
12.24
$
110,397
1,605
9.6
11.99
.17
10.88-12.68
*
$
97,557
650
8.6
12.55
.23
11.91-12.89
12.31
*
11.11
*
*
»
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Financial Markets A25
4.23—Continued
B. Loans to Farmers12—Continued
Size class of loans (thousands)
Characteristic
All sizes
Percentage of amount of loans
13 With floating rates
14 Made under commitment
15
16
17
18
19
20
By purpose of loan
Feeder livestock
Other livestock
Other current operating expenses
Farm machinery and equipment
Farm real estate
Other
$1-9
$10-24
$25-49
$50-99
$100-249
$250
and over
44.2
36.3
38.6
36.0
33.9
32.0
44.7
44.6
44.5
26.3
52.7
33.3
*
30.1
19.1
35.9
4.0
5.9
5.0
13.1
10.9
62.0
8.3
2.1
3.6
23.0
15.5
51.7
5.0
35.5
23.5
25.5
43.0
*Fewer than 10 sample loans.
1. The survey of terms of bank lending to business collects data on gross loan
extensions made during the first full business week in the mid-month of each
quarter by a sample of 340 commercial banks of all sizes. A subsample of 250
banks also report loans to farmers. The sample data are blown up to estimate the
lending terms at all insured commercial banks during that week. The estimated
terms of bank lending are not intended for use in collecting the terms of loans
extended over the entire quarter or residing in the portfolios of those banks.
Mortgage loans, purchased loans, foreign loans, and loans of less than $1,000 are
excluded from the survey.
As of Dec. 31, 1988, assets of most of the large banks were at least $6.0 billion.
For all insured banks total assets averaged $220 million.
2. Average maturities are weighted by loan size and exclude demand loans.
3. Effective (compounded) annual interest rates are calculated from the stated
rate and other terms of the loan and weighted by loan size.
4. The chances are about two out of three that the average rate shown would
differ by less than this amount from the average rate that would be found by a
complete survey of lending at all banks.
5. The interquartile range shows the interest rate range that encompasses the
middle 50 percent of the total dollar amount of loans made.
*
9.0
*
*
*
*
*
*
*
*
*
*
*
30.0
*
*
*
6. The most common base rate is that rate used to price the largest dollar
volume of loans. Base pricing rates include the prime rate (sometimes referred to
as a bank's "basic" or "reference" rate); the federal funds rate; domestic money
market rates other than the federal funds rate; foreign money market rates; and
other base rates not included in the foregoing classifications.
7. Overnight loans are loans that mature on the following business day.
8. Demand loans have no stated date of maturity.
9. Nominal (not compounded) annual interest rates are calculated from survey
data on the stated rate and other terms of the loan and weighted by loan size.
10. The prime rate reported by each bank is weighted by the volume of loans
extended and then averaged.
11. The proportion of loans made at rates below prime may vary substantially
from the proportion of such loans outstanding in banks' portfolios.
12. Among banks reporting loans to farmers (Table B), most "large banks"
(survey strata 1 to 2) had over $20 million in farm loans, and most "other banks"
(survey strata 3 to 5) had farm loans below $20 million.
The survey of terms of bank lending to farmers now includes loans secured by
farm real estate. In addition, the categories describing the purpose of farm loans
have now been expanded to include "purchase or improve farm real estate." In
previous surveys, the purpose of such loans was reported as "other."
A84
4.30
Special Tables • March 1990
ASSETS A N D LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19891
Millions of dollars
All states2
Item
New York
California
Illinois
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
561,461
264,602
414,924
210,081
78,029
28,788
41,394
16,091
2 Claims on nonrelated parties
3 Cash and balances due from depository institutions
4 Cash items in process of collection and unposted
debits
5 Currency and coin (U.S. and foreign)
6 Balances with depository institutions in United States ..
7
U.S. branches and agencies of other foreign banks
(including their IBFs)
8
Other depository institutions in United States
(including their IBFs)
9 Balances with banks in foreign countries and with
foreign central banks
10
Foreign branches of U.S. banks
Other banks in foreign countries and foreign central
11
banks
12 Balances with Federal Reserve Banks
504,359
144,548
214,215
123,285
372,026
120,685
170,991
102,570
70,893
9,858
22,972
8,939
40,955
12,168
14,812
10,651
836
23
80,380
0
n.a.
61,522
783
17
67,035
0
n.a.
50,963
31
2
5,419
0
n.a.
4,686
5
1
7,114
0
n.a.
5,638
70,469
58,428
59,005
48,274
4,840
4,544
6,171
5,431
9,911
3,095
8,030
2,689
579
142
943
206
62,579
1,741
61,763
1,700
52,244
1,091
51,608
1,050
4,371
593
4,253
593
5,014
50
5,013
50
60,838
730
60,062
n.a.
51,153
607
50,558
n.a.
3,778
35
3,660
n.a.
4,964
34
4,963
n.a.
13 Total securities and loans
283,392
78,364
188,429
58,131
50,962
12,477
26,470
3,590
35,113
5,559
11,338
n.a.
29,194
5,122
9,193
n.a.
3,901
188
1,511
n.a.
1,258
188
544
n.a.
1 Total assets4
14 Total securities, book value
15 U.S. Treasury
16 Obligations of U.S. government agencies and
corporations
17 Other bonds, notes, debentures and corporate stock
(including state and local securities)
4,909
n.a.
4,758
n.a.
101
n.a.
10
n.a.
24,645
11,338
19,314
9,193
3,612
1,511
1,060
544
20,139
11,038
5,160
3,941
3,760
2,240
12
1,508
18,779
10,075
4,951
3,752
3,310
1,789
12
1,508
642
565
68
9
305
305
0
0
349
283
24
42
114
114
0
0
248,491
213
248,278
67,067
41
67,026
159,368
133
159,236
48,975
37
48,938
47,115
55
47,061
10,969
2
10,967
25,228
16
25,212
3,048
2
3,046
28,033
57,553
33,464
29,348
4,116
347
33,208
11,528
10,984
544
15,333
40,301
23,578
20,279
3,299
213
20,574
5,992
5,681
310
7,238
10,693
6,598
6,253
345
128
8,004
4,002
3,778
224
3,128
4,161
3,019
2,555
464
0
2,603
1,474
1,464
10
111
23,979
499
23,480
7,480
3
21,677
367
21,310
857
55
16,669
430
16,239
5,403
3
14,579
299
14,281
658
50
4,045
42
4,003
981
0
4,002
42
3,960
157
5
1,137
25
1,111
541
0
1,129
25
1,104
28
130,972
109,947
21,026
1,346
283
1,063
15,780
193
15,586
15
4
11
78,675
62,169
16,506
833
229
603
13,409
90
13,319
15
4
11
25,878
23,111
2,767
432
40
392
1,708
94
1,614
0
0
0
16,998
16,537
460
10
0
10
330
9
320
0
0
0
18,023
16,629
15,037
13,881
1,023
972
132
88
2,745
2,339
79
152
1,944
1,843
79
145
800
70
0
0
0
259
0
0
56,281
31,092
21,633
9,459
8,805
n.a.
n.a.
n.a.
44,133
23,324
14,587
8,737
6,981
n.a.
n.a.
n.a.
9,431
6,805
6,265
539
1,250
n.a.
n.a.
n.a.
1,968
718
711
8
458
n.a.
n.a.
n.a.
25,189
57,103
8,805
50,388
20,809
42,898
6,981
39,089
2,626
7,136
1,250
5,816
1,249
439
458
1,279
57,103
n.a.
42,898
n.a.
7,136
n.a.
n.a.
50,388
n.a.
39,089
n.a.
5,816
n.a.
1,279
52 Total liabilities
561,461
264,602
414,924
210,081
78,029
28,788
41,394
16,091
53 Liabilities to nonrelated parties
484,914
232,388
370,349
186,115
70,822
26,744
26,715
11,245
18 Federal funds sold and securities purchased under
agreements to resell
19 U.S. branches and agencies of other foreign banks
20 Commercial banks in United States
21 Other
22 Total loans, gross
73 Less: Unearned income on loans
24 Equals: Loans, net
Total loans, gross, by category
75 Real estate loans
26 Loans to depository institutions
27 Commercial banks in United States (including IBFs)
28
U.S. branches and agencies of other foreign banks . . .
29
Other commercial banks in United States
30 Other depository institutions in United States (including
IBFs)
31 Banks in foreign countries
Foreign branches of U.S. banks
37.
33
Other banks in foreign countries
34 Other financial institutions
35 Commercial and industrial loans
36 U.S. addressees (domicile)
37 Non-U.S. addressees (domicile)
38 Acceptances of other banks
39 U.S. banks
40 Foreign banks
41 Loans to foreign governments and official institutions
(including foreign central banks)
42 Loans for purchasing or carrying securities (secured and
unsecured)
43 All other loans
44 All other assets
45 Customers' liability on acceptances outstanding
46
U.S. addressees (domicile)
Non-U.S. addressees (domicile)
47
48 Other assets including other claims on nonrelated
parties
49 Net due from related depository institutions
50 Net due from head office and other related depository
institutions
51
Net due from establishing entity, head offices, and other
related depository institutions
4
439
n.a.
U.S. Branches and Agencies
A85
4.30—Continued
Millions of dollars
All states2
Item
54 Total deposits and credit balances
55 Individuals, partnerships, and corporations
56
U.S. addressees (domicile)
57
Non-U.S. addressees (domicile)
58 Commercial banks in United States (including IBFs)...
59
U.S. branches and agencies of other foreign banks ..
60
Other commercial banks in United States
61
Banks in foreign countries
62
Foreign branches of U.S. banks
63
Other banks in foreign countries
64 Foreign governments and official institutions
(including foreign central banks)
65 All other deposits and credit balances
66 Certified and official checks
67 Transaction accounts and credit balances
(excluding IBFs)
68 Individuals, partnerships, and corporations
69
U.S. addressees (domicile)
70
Non-U.S. addressees (domicile)
71 . Commercial banks in United States (including IBFs)...
U.S. branches and agencies of other foreign banks ..
72
Other commercial banks in United States
73
74 Banks in foreign countries
75
Foreign branches of U.S. banks
Other banks in foreign countries
76
77 Foreign governments and official institutions
(including foreign central banks)
78 All other deposits and credit balances
79 Certified and official checks
80 Demand deposits (included in transaction accounts
and credit balances)
81 Individuals, partnerships, and corporations
U.S. addressees (domicile)
82
Non-U.S. addressees (domicile)
83
84 Commercial banks in United States (including IBF)s...
85
U.S. branches and agencies of other foreign banks ..
86
Other commercial banks in United States
87 Banks in foreign countries
Foreign branches of U.S. banks
88
89
Other banks in foreign countries
90 Foreign governments and official institutions
(including foreign central banks)
91
All other deposits and credit balances
92 Certified and official checks
93 Non-transaction accounts (including MMDAs,
excluding IBFs)
94 Individuals, partnerships, and corporations
95
U.S. addressees (domicile)
Non-U.S. addressees (domicile)
96
97 Commercial banks in United States (including IBFs)...
98
U.S. branches and agencies of other foreign banks ..
99
Other commercial banks in United States
100 Banks in foreign countries
Foreign branches of U.S. banks
101
102
Other banks in foreign countries
103 Foreign governments and official institutions
(including foreign central banks)
104 All other deposits and credit balances
105 IBF deposit liabilities
106 Individuals, partnerships, and corporations
107
U.S. addressees (domicile)
108
Non-U.S. addressees (domicile)
109 Commercial banks in United States (including IBFs)...
110
U.S. branches and agencies of other foreign banks ..
Other commercial banks in United States
111
112 Banks in foreign countries
Foreign branches of U.S. banks
113
Other banks in foreign countries
114
115 Foreign governments and official institutions
(including foreign central banks)
116 All other deposits and credit balances
For notes see end of table.
New York
California
Illinois
Total
excluding
IBFs
IBFs
only
Total
excluding
IBFs
IBFs
only
Total
excluding
IBFs
IBFs
only
Total
excluding
IBFs
IBFs
only
76,085
60,514
46, J98
13,616
10,859
4,617
6,242
1,534
175
1,360
183,336
15,577
312
15,265
64,142
56,257
7,885
94,775
6,903
87,872
63,033
49,204
40,730
8,474
9,551
4,024
5,528
1,392
155
1,237
160,512
10,107
288
9,820
55,417
48,300
7,117
86,476
5,859
80,617
3,382
2,640
962
1,678
619
6
613
42
20
22
9,746
335
0
335
4,856
4,326
530
4,489
482
4,007
3,460
2,791
1,916
875
652
561
91
1
0
1
7,014
69
24
45
3,535
3,332
203
3,391
557
2,834
1,065
1,328
785
8,072
7/0
n. a.
938
1,233
714
7,746
767
n a.
24
31
26
67
0
n.a.
2
2
12
20
0
n a.
7,561
4,874
3,578
1,296
254
59
195
871
14
856
n.a.
6,477
3,978
3,044
935
245
58
187
804
14
789
n a.
266
223
179
44
2
0
2
10
0
10
n.a.
247
231
225
6
0
0
0
1
0
1
507
271
785
475
261
714
2
3
26
1
1
12
6,570
4,267
3,168
1,099
131
17
113
748
14
733
5,712
3,587
2,741
846
126
16
110
686
14
671
197
156
133
24
1
0
1
10
0
10
237
222
216
5
0
0
0
1
0
1
n.a.
n.a.
n.a.
n.a.
463
177
785
431
168
714
2
2
26
1
1
12
68,523
55,640
43,320
12,320
10,605
4,558
6,048
664
161
503
56,556
45,226
37,686
7,539
9,306
3,966
5,340
588
>41
448
3,116
2,417
784
1,634
617
6
611
32
20
12
3,213
2,560
1,690
869
652
561
91
0
0
0
n.a.
n.a.
559
1,056
n.a.
n.a.
463
972
183,336
15,577
312
15,265
64,142
56,257
7,885
94,775
6,903
87,872
8,072
no
n.a.
n.a.
22
28
160,512
10,107
288
9,820
55,417
48,300
7,117
86,476
5,859
80,617
7,746
767
n.a.
n.a.
1
1
9,746
335
0
335
4,856
4,326
530
4,489
482
4,007
67
0
n.a.
7,014
69
24
45
3,535
3,332
203
3,391
557
2,834
20
0
A86
4.30
Special Tables • March 1990
ASSETS A N D LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1989 1 —Continued
Millions of dollars
All states2
Item
New York
California
Illinois
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
51,026
13,707
18,487
18,832
118,785
4,680
2,100
748
1,832
36,493
36,880
8,811
11,420
16,650
67,775
2,568
868
285
1,414
16,721
10,503
4,169
5,078
1,256
36,714
1,725
1,055
453
217
14,208
3,105
602
1,712
792
10,918
327
168
10
148
3,545
72,225
30,901
14,795
1,910
37,000
18,337
4,111
835
26,447
8,264
8,443
792
6,709
3,756
1,291
115
41,324
20,219
2,543
17,676
26,341
12,884
19,369
2,459
16,910
2,329
18,663
11,088
1,172
9,916
19,687
3,275
10,307
1,089
9,218
2,304
18,183
5,783
947
4,836
4,484
7,651
5,740
946
4,794
25
2,953
2,270
302
1,968
1,938
1,176
2,254
302
1,952
0
All other liabilites
Branch or agency liability on acceptances executed
and outstanding
Other liabilities to nonrelated parties
131
55,682
7,879
42,148
6,314
10,477
1,065
2,218
33,490
22,193
n.a.
n. a.
1,065
1,218
1,001
n.a.
6,314
8,185
2,292
n. a.
7,879
23,581
18,567
Net due to related depository institutions5
Net due to head office and other related depository
institutions
Net due to establishing entity, head office, and other
134
related depository institutions
76,547
32,215
44,575
23,965
7,207
2,044
14,679
4,846
76,547
n.a.
44,575
n.a.
7,207
n. a.
14,679
n.a.
n.a.
32,215
n.a.
23,965
n.a.
2,044
n.a.
4,846
117
118
119
170
121
12.2
m
124
125
126
127
128
Federal funds purchased and securities sold under
agreements to repurchase
U.S. branches and agencies of other foreign banks
Other commercial banks in United States
Other
Other borrowed money
Owed to nonrelated commercial banks in United States
(including IBFs)
Owed to U.S. offices of nonrelated U.S. banks
Owed to U.S. branches and agencies of
nonrelated foreign banks
Owed to nonrelated banks in foreign countries
Owed to foreign branches of nonrelated U.S. banks . . .
Owed to foreign offices of nonrelated foreign banks....
Owed to others
129
130
132
133
360
360
MEMO
135
136
137
138
139
140
141
142
143
Non-interest bearing balances with commercial banks
in United States
Holding of commercial paper included in total loans
Holding of own acceptances included in commercial
and industrial loans
Commercial and industrial loans with remaining maturity
of one year or less
Predetermined interest rates
Floating interest rates
Commercial and industrial loans with remaining maturity
of more than one year
Predetermined interest rates
Floating interest rates
2,178
998
5
1,948
733
5
96
219
0
71
45
3,378
1,913
1,190
134
68,788
39,366
29,422
38,913
20,541
18,372
14,325
10,291
4,034
9,413
5,135
4,278
0
62,185
20,468
41,717
n.a.
39,762
13,826
25,937
n.a.
11,553
3,667
7,886
n. a.
7,585
2,309
5,276
n.a.
U.S. Branches and Agencies
A87
4.30—Continued
Millions of dollars
All states2
Item
144 Components of total nontransaction accounts,
included in total deposits and credit balances of
nontransactional accounts, including IBFs
145 Time CDs in denominations of $100,000 or more
146 Other time deposits in denominations of $100,000
or more
147 Time CDs in denominations of $100,000 or more
with remaining maturity of more than 12 months ..
Total
excluding
IBFs
New York
Total
excluding
IBFs
IBFs
only
1
1
89,969
50,385
n.a.
12,906
26,679
All states2
California
IBFs
only
77,373
42,436
t
1
10,628
Total
excluding
IBFs
IBFs
only
t
1
3,551
2,165
677
n.a.
n.a.
24,309
New York
Illinois
710
Total
excluding
IBFs
IBFs
only
1
1
3,577
1,618
1,430
n.a.
530
Illinois
California
Total
including
IBFs
148 Market value of securities held
149 Immediately available funds with a maturity greater than
one day included in other borrowed money
150 Number of reports filed6
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
Total
including
IBFs
IBFs
only
34,269
66,939
531
10,898
n.a.
0
28,708
37,549
253
8,865
n.a.
0
3,549
24,129
127
1,399
n.a.
0
1,254
3,973
53
544
n.a.
0
1. Data are aggregates of categories reported on the quarterly form FFIEC 002,
"Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign
Banks." Details may not add to totals because of rounding. This form was first
used for reporting data as of June 30, 1980, and was revised as of December 31,
1985. From November 1972 through May 1980, U.S. branches and agencies of
foreign banks had filed a monthly FR 886a report. Aggregate data from that report
were available through the Federal Reserve statistical release G. 11, last issued on
July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable
because of differences in reporting panels and in definitions of balance sheet
items.
2. Includes the District of Columbia.
3. Effective December 1981, the Federal Reserve Board amended Regulations
D and Q to permit banking offices located in the United States to operate
International Banking Facilities (IBFs). As of December 31, 1985 data for IBFs
are reported in a separate column. These data are either included in or excluded
from the total columns as indicated in the headings. The notation "n.a." indicates
that no IBF data re reported for that item, either because the item is not an eligible
IBF asset or liability or because that level of detail is not reported for IBFs. From
December 1981 through September 1985, IBF data were included in all applicable
items reported.
4. Total assets and total liabilities include net balances, if any, due from or due
to related banking institutions in the United States and in foreign countries (see
footnote 5). On the former monthly branch and agencyu report, available through
the G.ll statistical release, gross balances were included in total assets and total
liabilities. Therefopre, total asset and total liability figures in this table are not
comparable to those in the G.ll tables.
5. "Related banking institutions" includes the foreign head office and other
U.S. and foreign branches and agencies of the bank, the bank's parent holding
company, and majority-owned banking subsidiaries of the bank and of its parent
holding company (including subsidiaries owned both directly and indirectly).
6. In some cases two or more offices of a foreign bank within the same
metropolitan area file a consolidated report.
A88
4.31
Special Tables • March 1990
Pro forma balance sheet for priced services of the Federal Reserve System 1
Millions of dollars
Item
Short-term assets2
Imputed reserve requirement on clearing balances
Investment in marketable securities
Receivables
Materials and supplies
Prepaid expenses
Items in process of collection
5,140.0
285.1
122.0
6.1
48.4
418.0
6,283.7
2,199.9
2,859.7
80.3
2,748.5
3,037.1
80.2
5,140.0
1.2
131.0
Total long-term liabilities
Total liabilities
Equity
Total liabilities and equity4
1. Details may not sum to totals because of rounding.
2. The imputed reserve requirement on clearing balances and investment in
marketable securities reflect the Federal Reserve's treatment of clearing balances
maintained on deposit with Reserve Banks by depository institutions. For
presentation of the balance sheet and the income statement, clearing balances are
reported in a manner comparable to the way correspondent banks report
compensating balances held with them by respondent institutions. That is,
respondent balances held with a correspondent are subject to a reserve requirement established by the Federal Reserve. This reserve requirement must be
satisfied with either vault cash or with nonearning balances maintained at a
Reserve Bank. Following this model, clearing balances maintained with Reserve
Banks for priced service purposes are subjected to imputed reserve requirements.
Therefore, a portion of the clearing balances held with the Federal Reserve is
classified on the asset side of the balance sheet as required reserves and is
reflected in a manner similar to vault cash and due from bank balances normally
shown on a correspondent bank's balance sheet. The remainder of clearing
balances is assumed to be available for investment. For these purposes, the
Federal Reserve assumes that all such balances are invested in three-month
Treasury bills.
The account "items in the process of collection" (CIPC) represents the gross
amount of Federal Reserve CIPC as of the balance sheet date, stated on a basis
comparable with a commercial bank. Adjustments have been made for intraSystem items that would otherwise be double-counted on a consolidated Federal
Reserve balance sheet; items associated with nonpriced items, such as items
267.2
124.3
5.7
20.8
461.6
Total short-term liabilities
Long-term liabilities
Obligations under capital leases
Long-term debt
5,865.8
5,601.6
Total long-term assets
Total assets
Short-term liabilities
Clearing balances and balances arising from early credit
of uncollected items
Deferred available items
Short-term debt
214.3
1,571.7
54.7
6.1
19.5
3,999.5
217.9
1,598.1
55.1
6.6
18.6
3,243.7
Total short-term assets
Long-term assets3
Premises
Furniture and equipment
Leases and leasehold improvements
Prepaid pension costs
September 30, 1988
September 30, 1989
5,865.8
1.2
125.9
132.2
127.1
5,272.2
5,992.9
329.4
290.9
5,601.6
6,283.7
collected for government agencies; and items associated with providing fixed
availability or credit prior to receipt and processing of items. The cost base for
providing services that must be recovered under the Monetary Control Act
includes the cost of float (the difference between the value of gross CIPC and the
value of deferred availability items) incurred by the Federal Reserve during the
period, valued at the federal funds rate. The amount of float, or net CIPC,
represents the portion of gross CIPC that involves a financing cost.
3. Long-term assets on the balance sheet have been allocated to priced services
with the direct determination method, which uses the Federal Reserve's Planning
and Control System (PACS) to ascertain directly the value of assets used solely in
priced services operations and to apportion the value of jointly used assets
between priced services and nonpriced services. Also, long-term assets include an
estimate of the assets of the Board of Governors directly involved in the
development of priced services.
Long-term assets include amounts for capital leases and leasehold improvements and for prepaid pension costs associated with priced services. Effective
January 1, 1987, the Federal Reserve Banks implemented Financial Accounting
Standards Board Statement No. 87, Employer's Accounting for Pensions.
4. A matched-book capital structure has been used for those assets that are not
"self-financing" in determining liability and equity amounts. Short-term assets
are financed with short-term debt. Long-term assets are financed with long-term
debt and equity in a proportion equal to the ratio of long-term debt to equity for
the bank holding companies used in the model for the private sector adjustment
factor (PSAF).
Bank Reported
4.32
Data
A89
Pro forma income statement for priced services of the Federal Reserve System 1
Millions of dollars
Quarter ending September 30
Item
1989
1988
Income services provided to depository institutions2
178.7
165.9
Production expenses3
138.2
114.2
40.5
51.6
Income from operations
Imputed costs4
Interest on float
Interest on debt
Sales taxes
FDIC insurance
9.6
12.6
1.9
.4
24.5
Income from operations after imputed costs
Other income and expenses5
Investment income
Earnings credits
10.0
12.1
2.0
.4
24.5
16.0
37.4
35.0
_2.4
Income before income taxes
27.1
34.6
32.6
2.0
18.4
Imputed income taxes6
29.1
6.2
9.4
12.2
19.7
8.2
Net income
8.2
MEMO
Targeted return on equity6
Nine months ending June 30
1989
1988
Income services provided to depository institutions2
536.5
493.6
Production expenses3
441.3
376.3
95.1
117.3
Income from operations
Imputed costs4
Interest on float
Interest on debt
Sales taxes
FDIC insurance
33.0
21.1
5.6
J.2
Income from operations after imputed costs
Other income and expenses5
Investment income
Earnings credits
Ji0.9
21.6
28.3
6.3
1.2
34.2
116.3
109.3
J7.0
57.4
59.9
90.1
85.1
5.0
41.2
64.9
Imputed income taxes6
18^3
23.6
Net income
22.9
41.3
24.6
24.6
Income before income taxes
MEMO
Targeted return on equity6
1. The income statement reflects income and expenses for priced services.
Included in these amounts are the imputed costs of float, imputed financing costs,
and the income related to clearing balances.
Details may not add to totals because of rounding.
2. Income represents charges to depository institutions for priced services.
This income is realized through one of two methods: direct charges to an
institution's account or charges against accumulated earnings credits. Income
includes charges for per-item fees, fixed fees, package fees, explicitly priced float,
account maintenance fees, shipping and insurance fees, and surcharges.
3. Production expenses include direct, indirect, and other general administrative expenses of the Federal Reserve Banks for providing priced services. Also
included are the expenses of staff members of the Board of Governors working
directly on the development of priced services, which amounted to $0.4 million in
the third quarter and $1.3 million in the first nine months for both 1989 and 1988.
4. Imputed float costs represent the value of float to be recovered, either
explicitly or through per-item fees, during the period. Float costs include those for
checks, book-entry securities, noncash collection, ACH, and wire transfers.
The following table depicts the daily average recovery of float by the Federal
Reserve Banks for the second quarter of 1989. In the table, unrecovered float
includes that generated by services to government agencies or by other central
bank services.
Float recovered through income on clearing balances represents increased
investable clearing balances as a result of reducing imputed reserve requirements
through the use of a deduction for float for cash items in process of collection
when calculating the reserve requirement. This income then reduces the float
required to be recovered through other means.
As-of adjustments and direct charges refer to midweek closing float and
interterritory check float, which may be recovered from depositing institutions
through adjustments to the institution's reserve or clearing balance or by valuing
the float at the federal funds rate and billing the institution directly.
Float recovered through per-item fees is valued at the federal funds rate and has
been added to the cost base subject to recovery in the second quarter of 1989
Total
float
721.2
Unrecovered float
48.9
Float subject to recovery
672.3
Sources of float recovery
Income on clearing balances
80.7
As of adjustments
279.5
Direct charges
85.8
Per-item fees
226.3
Also included in imputed costs is the interest on debt assumed necessary to
finance priced-service assets and the sales taxes and FDIC insurance assessment
that the Federal Reserve would have paid had it been a private-sector firm.
5. Other income and expenses consist of income on clearing balances and the
cost of earnings credits granted to depository institutions on their clearing
balances. Income on clearing balances represents the average coupon-equivalent
yield on three-month Treasury bills applied to the total clearing balance maintained, adjusted for the effect of reserve requirements on clearing balances.
Expenses for earnings credits are derived by applying the average federal funds
rate to the required portion of the clearing balances, adjusted for the net effect of
reserve requirements on clearing balances.
6. Imputed income taxes are calculated at the effective tax rate derived from a
model consisting of the 25 largest bank holding companies. The targeted return on
equity represents the after-tax rate of return on equity that the Federal Reserve
would have earned had it been a private business firm, based on the bank holding
company model.
A90
Federal Reserve Board of Governors
ALAN GREENSPAN, Chairman
MANUEL H . JOHNSON, Vice Chairman
MARTHA R . SEGER
WAYNE D . ANGELL
OFFICE OF BOARD
DIVISION
MEMBERS
JOSEPH R. COYNE, Assistant to the Board
DONALD J. WINN, Assistant to the Board
BOB STAHLY MOORE, Special Assistant to the
Board
OF INTERNATIONAL
E D W I N M . TRUMAN, Staff Director
LARRY J. PROMISEL, Senior Associate
CHARLES J. SIEGMAN, Senior Associate
D A V I D H . H O W A R D , Deputy Associate
ROBERT F. GEMMILL, Staff
LEGAL
DIVISION
J. VIRGIL MATTINGLY, JR., General
Counsel
RICHARD M. ASHTON, Associate General
Counsel
OLIVER IRELAND, Associate General Counsel
RICKI R. TIGERT, Associate General
Counsel
SCOTT G. ALVAREZ, Assistant General Counsel
MARYELLEN A. BROWN, Assistant to the General
Counsel
OFFICE OF THE
SECRETARY
WILLIAM W . WILES,
Secretary
JENNIFER J. JOHNSON, Associate
BARBARA R. LOWREY, Associate
DIVISION OF CONSUMER
AND COMMUNITY
AFFAIRS
GRIFFITH L . GARWOOD,
Adviser
DIVISION
OF RESEARCH
AND
STATISTICS
MICHAEL J. PRELL, Director
E D W A R D C . ETTIN, Deputy Director
THOMAS D . SIMPSON, Associate Director
Director
D A V I D J. STOCKTON, Associate Director
MARTHA BETHEA, Deputy Associate Director
PETER A . TINSLEY, Deputy Associate Director
MYRON L . KWAST, Assistant Director
PATRICK M . PARKINSON, Assistant Director
MARTHA S . SCANLON, Assistant Director
JOYCE K . ZICKLER, Assistant Director
LEVON H . GARABEDIAN, Assistant Director
(A dministration)
Director
GLENN E . LONEY, Assistant Director
ELLEN M A L A N D , Assistant Director
DOLORES S . SMITH, Assistant Director
DIVISION OF BANKING
SUPERVISION AND
REGULATION
WILLIAM TAYLOR, Staff Director
D O N E . K L I N E , Associate Director
FREDERICK M . STRUBLE, Associate Director
WILLIAM A . RYBACK, Deputy Associate Director
STEPHEN C . SCHEMERING, Deputy Associate Director
RICHARD SPILLENKOTHEN, Deputy Associate Director
HERBERT A . BIERN, Assistant Director
JOE M. CLEAVER, Assistant Director
ROGER T. COLE, Assistant Director
JAMES I. GARNER, Assistant Director
JAMES D . GOETZINGER, Assistant Director
MICHAEL G . MARTINSON, Assistant Director
ROBERT S . PLOTKIN, Assistant Director
SIDNEY M . SUSSAN, Assistant Director
LAURA M . HOMER, Securities Credit Officer
Director
Director
Director
DONALD B . A D A M S , Assistant Director
PETER HOOPER I I I , Assistant Director
KAREN H . JOHNSON, Assistant Director
RALPH W . SMITH, JR., Assistant Director
LAWRENCE SLIFMAN, Associate
Secretary
Secretary
FINANCE
DIVISION
OF MONETARY
AFFAIRS
DONALD L . K O H N , Director
D A V I D E . LINDSEY, Deputy Director
BRIAN F . MADIGAN, Assistant Director
RICHARD D . PORTER, Assistant Director
NORMAND R.V. BERNARD, Special Assistant
OFFICE OF THE INSPECTOR
BRENT L. BOWEN, Inspector
BARRY R. SNYDER, Assistant
to the
GENERAL
General
Inspector
General
Board
A91
and Official Staff
EDWARD W . KELLEY, JR.
JOHN P. LA WARE
OFFICE OF
STAFF DIRECTOR
FOR
OFFICE OF STAFF DIRECTOR FOR
FEDERAL RESERVE BANK
ACTIVITIES
MANAGEMENT
S . D A V I D FROST, Staff Director
E D W A R D T . M U L R E N I N , Assistant Staff Director
WILLIAM SCHNEIDER, Special Assignment: Project
THEODORE E. ALLISON, Staff
Director, National Information Center
Equal Employment Opportunity
Programs Officer
PORTIA W . THOMPSON,
DIVISION OF HUMAN
MANAGEMENT
JOHN H. PARRISH, Assistant
(Programs and
Budgets)
DARRELL R . P A U L E Y ,
DIVISION
Assistant Controller (Finance)
OF SUPPORT
SERVICES
ROBERT E . FRAZIER, Director
GEORGE M . LOPEZ, Assistant Director
D A V I D L . WILLIAMS, Assistant Director
OFFICE OF THE EXECUTIVE
INFORMATION RESOURCES
DIRECTOR FOR
MANAGEMENT
A L L E N E . B E U T E L , Executive Director
STEPHEN R . M A L P H R U S , Deputy Executive
DIVISION
SYSTEMS
OF HARDWARE
AND
Director
SOFTWARE
Director
Assistant Director
Assistant Director
BRUCE M . BEARDSLEY,
DAY W . RADEBAUGH, JR.,
ELIZABETH B . RIGGS,
DIVISION OF APPLICATIONS
STATISTICAL
SERVICES
DEVELOPMENT
WILLIAM R . JONES, Director
RICHARD C . STEVENS, Assistant Director
ROBERT J. Z E M E L , Assistant Director
Director
LOUISE L . R O S E M A N , Assistant
FLORENCE M . Y O U N G , Assistant
CONTROLLER
GEORGE E . LIVINGSTON, Controller
STEPHEN J. CLARK, Assistant Controller
RESERVE
C L Y D E H . FARNSWORTH, J R . , Director
D A V I D L . ROBINSON, Associate Director
C . WILLIAM SCHLEICHER, J R . , Associate Director
BRUCE J. SUMMERS, Associate Director
CHARLES W . B E N N E T T , Assistant Director
JACK D E N N I S , J R . , Assistant Director
EARL G . H A M I L T O N , Assistant Director
RESOURCES
D A V I D L . S H A N N O N , Director
JOHN R . W E I S , Associate Director
A N T H O N Y V . D I G I O I A , Assistant Director
JOSEPH H . H A Y E S , J R . , Assistant Director
F R E D HOROWITZ, Assistant Director
OFFICE OF THE
DIVISION OF FEDERAL
BANK
OPERATIONS
Director
AND
Director
Director
92
Federal Reserve Bulletin • March 1990
Federal Open Market Committee
FEDERAL
OPEN MARKET
COMMITTEE
MEMBERS
A L A N GREENSPAN,
Chairman
W A Y N E D . ANGELL
E D W A R D G . BOEHNE
ROBERT H . BOYKIN
E . GERALD CORRIGAN,
W . LEE HOSKINS
M A N U E L H . JOHNSON
E D W A R D W . KELLEY, JR.
ALTERNATE
ROBERT P . BLACK
ROBERT P . FORRESTAL
Vice Chairman
JOHN P . L A W A R E
MARTHA R . SEGER
GARY H . STERN
MEMBERS
SILAS KEEHN
JAMES H . OLTMAN
ROBERT T . PARRY
STAFF
DONALD L. KOHN, Secretary and
Economist
NORMAND R . V . BERNARD, Assistant
Secretary
GARY P . GILLUM,
Deputy Assistant Secretary
J. VIRGIL MATTINGLY, JR., General
ERNEST T . PATRIKIS,
Counsel
Deputy General Counsel
MICHAEL J. PRELL,
Economist
EDWIN M . TRUMAN,
Economist
JOHN M. DAVIS, Associate
Economist
RICHARD G. DAVIS, Associate
Economist
PETER D . STERNLIGHT, Manager
SAM Y . CROSS, Manager for
FEDERAL
ADVISORY
Economist
Economist
Economist
Economist
Economist
Economist
Economist
Economist
for Domestic Operations, System Open Market Account
Foreign Operations, System Open Market Account
COUNCIL
WALTER J. CONNOLLY, JR., First District
WILLARD C . BUTCHER, Second District
TERRENCE A . LARSEN, Third District
THOMAS H . O ' B R I E N , Fourth District
FREDERICK D E A N E , JR., Fifth District
KENNETH L . ROBERTS, Sixth District
RICHARD W. LANG, Associate
DAVID E. LINDSEY, Associate
LARRY J. PROMISEL, Associate
ARTHUR J. ROLNICK, Associate
HARVEY ROSENBLUM, Associate
CHARLES J. SIEGMAN, Associate
THOMAS D . SIMPSON, Associate
LAWRENCE SLIFMAN, Associate
Seventh District
DAN W. MITCHELL, Eighth District
LLOYD P . JOHNSON, Ninth District
JORDAN L . HAINES, Tenth District
VACANCY, Eleventh District
PAUL H A Z E N , Twelfth District
B . KENNETH WEST,
HERBERT V . PROCHNOW,
Secretary
WILLIAM J. KORSVIK, Associate
Secretary
A93
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
WILLIAM E. ODOM, Dearborn, Michigan, Chairman
JAMES W . H E A D , Berkeley, California, Vice Chairman
GEORGE H . BRAASCH, Oakbrook, Illinois
BETTY TOM C H U , Arcadia, California
KATHLEEN E. KEEST, Boston, Massachusetts,
CLIFF E. COOK, Tacoma, Washington
JERRY D . CRAFT, Atlanta, Georgia
D O N A L D C. D A Y , Boston, Massachusetts
R.B. (JOE) D E A N , JR., Columbia, South Carolina
WILLIAM C. DUNKELBERG, Philadelphia, Pennsylvania
JAMES FLETCHER, Chicago, Illinois
GEORGE C. GALSTER, Wooster, Ohio
E . THOMAS G ARM A N , Blacksburg, Virginia
DEBORAH B . GOLDBERG, Washington, D.C.
MICHAEL M . GREENFIELD, St. Louis, Missouri
ROBERT A . HESS, W a s h i n g t o n , D . C .
BARBARA K A U F M A N , San Francisco, California
THRIFT INSTITUTIONS
ADVISORY
A . J. (JACK) K I N G , Kalispell, Montana
COLLEEN D. MCCARTHY, Kansas City, Missouri
MICHELLE S . MEIER, W a s h i n g t o n , D . C .
L I N D A K. PAGE, Columbus, Ohio
BERNARD F. PARKER, JR., Detroit, Michigan
SANDRA PHILLIPS, Pittsburgh, Pennsylvania
VINCENT P. QUAYLE, Baltimore, Maryland
CLIFFORD N. ROSENTHAL, New York, New York
A L A N M. SILBERSTEIN, New York, New York
RALPH E. SPURGIN, Columbus, Ohio
N A N C Y HARVEY STEORTS, Dallas, Texas
D A V I D P. W A R D , Chester, New Jersey
LAWRENCE WINTHROP, Portland, Oregon
COUNCIL
DONALD B . SHACKELFORD, Columbus, Ohio, President
MARION O. SANDLER, Oakland, California, Vice President
CHARLOTTE CHAMBERLAIN, Los Angeles, California
D A V I D L. HATFIELD, Kalamazoo, Michigan
L Y N N W . HODGE, Greenwood, South Carolina
A D A M A. JAHNS, Chicago, Illinois
ELLIOTT K . K N U T S O N , Seattle, Washington
JOHN W M . LAISLE, Oklahoma City, Oklahoma
PHILIP E . LAMB, Springfield, Massachusetts
JOHN A. PANCETTI, New York, New York
H. C. KLEIN, Jacksonville, Arkansas
CHARLES B. STUZIN, Miami, Florida
A94
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A95
The Right to Financial Privacy Act
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156. INTERNATIONAL T R E N D S FOR U . S . B A N K S A N D B A N K -
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1 5 7 . M 2 PER U N I T OF POTENTIAL G N P AS AN ANCHOR FOR
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158. T H E ADEQUACY A N D CONSISTENCY OF MARGIN R E QUIREMENTS IN THE MARKETS FOR STOCKS A N D DERIVATIVE PRODUCTS, by Mark J. Warshawsky with the
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1 4 6 . T H E ROLE OF THE PRIME RATE IN THE PRICING OF
BUSINESS L O A N S BY COMMERCIAL B A N K S , 1 9 7 7 - 8 4 , b y
Thomas F. Brady. November 1985. 25 pp.
1 4 7 . REVISIONS IN THE MONETARY SERVICES (DIVISIA) I N DEXES OF THE MONETARY AGGREGATES, b y H e l e n T .
Farr and Deborah Johnson. December 1985. 42 pp.
148. T H E MACROECONOMIC A N D SECTORAL EFFECTS OF THE
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1 4 9 . T H E OPERATING PERFORMANCE OF ACQUIRED FIRMS IN
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1 5 0 . STATISTICAL COST ACCOUNTING MODELS IN BANKING:
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155.
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ARTICLES
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Limit of 10 copies
Foreign Experience with Targets for Money Growth. 10/83.
Intervention in Foreign Exchange Markets: A Summary of
Ten Staff Studies. 11/83.
A Financial Perspective on Agriculture. 1/84.
Survey of Consumer Finances, 1983. 9/84.
Bank Lending to Developing Countries. 10/84.
Survey of Consumer Finances, 1983: A Second Report.
12/84.
Union Settlements and Aggregate Wage Behavior in the
1980s. 12/84.
The Thrift Industry in Transition. 3/85.
A Revision of the Index of Industrial Production. 7/85.
Financial Innovation and Deregulation in Foreign Industrial
Countries. 10/85.
Recent Developments in the Bankers Acceptance Market.
1/86.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
Prices, Profit Margins, and Exchange Rates. 6/86.
Agricultural Banks under Stress. 7/86.
Foreign Lending by Banks: A Guide to International and
U.S. Statistics. 10/86.
Recent Developments in Corporate Finance. 11/86.
Measuring the Foreign-Exchange Value of the Dollar. 6/87.
Changes in Consumer Installment Debt: Evidence from the
1983 and 1986 Surveys of Consumer Finances. 10/87.
Home Equity Lines of Credit. 6/88.
U.S. International Transactions in 1988. 5/89.
Mutual Recognition: Integration of the Financial Sector in the
European Community. 9/89.
The Activities of Japanese Banks in the United Kingdom and
in the United States, 1980-88. 2/90.
A96
Index to Statistical Tables
References are to pages A3-A89 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20, 76, 81
Assets and liabilities (See also Foreigners)
Banks, by classes, 18-20
Domestic finance companies, 36
Federal Reserve Banks, 10
Financial institutions, 26
Foreign banks, U.S. branches and agencies, 21, 84-87
Automobiles
Consumer installment credit, 39, 40
Production, 49, 50
BANKERS acceptances, 9, 23, 24
Bankers balances, 18-20. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 24
Branch banks, 21, 57, 84-87
Business activity, nonfinancial, 46
Business expenditures on new plant and equipment, 35
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 48
Capital accounts
Banks, by classes, 18
Federal Reserve Banks, 10
Central banks, discount rates, 69
Certificates of deposit, 24
Commercial and industrial loans
Commercial banks, 16, 19, 73-83, 84-85
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20, 73-83
Commercial and industrial loans, 16, 18, 19, 20, 21,
73-83
Consumer loans held, by type and terms, 39, 40
Loans sold outright, 19
Nondeposit funds, 17
Real estate mortgages held, by holder and property, 38
Terms of lending 73-83
Time and savings deposits, 3
Commercial paper, 23, 24, 36
Condition statements (See Assets and liabilities)
Construction, 46, 51
Consumer installment credit, 39, 40
Consumer prices, 46, 48
Consumption expenditures, 53, 54
Corporations
Nonfinancial, assets and liabilities, 35
Profits and their distribution, 35
Security issues, 34, 67
Cost of living (See Consumer prices)
Credit unions, 26, 39. (See also Thrift institutions)
Currency and coin, 18
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 15
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 18-21
Ownership by individuals, partnerships, and
corporations, 22
Demand deposits—Continued
Turnover, 15
Depository institutions
Reserve requirements, 8
Reserves and related items, 3 , 4 , 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 18-20, 21
Federal Reserve Banks, 4, 10
Turnover, 15
Discount rates at Reserve Banks and at foreign central
banks and foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 35
EMPLOYMENT, 47
Eurodollars, 24
FARM mortgage loans, 38
Federal agency obligations, 4, 9, 10, 11, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and
ownership of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 28, 33
Federal funds, 6, 17, 19, 20, 21, 24, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 37, 38
Federal Housing Administration, 33, 37, 38
Federal Land Banks, 38
Federal National Mortgage Association, 33, 37, 38
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest fates)
U.S. government securities held, 4, 10, 11, 30
Federal Reserve credit, 4, 5, 10, 11
Federal Reserve notes, 10
Federal Reserve System
Balance sheet for priced services, 88
Condition statement for priced services, 89
Federal Savings and Loan Insurance Corporation insured
institutions, 26
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 36
Business credit, 36
Loans, 39, 40
Paper, 23, 24
Financial institutions
Loans to, 19, 20, 21
Selected assets and liabilities, 26
Float, 4, 89
Flow of funds, 41, 43, 44, 45
Foreign banks, assets and liabilities of U.S. branches and
agencies, 21, 84-87
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4, 10, 19, 20
Foreign exchange rates, 70
A97
Foreign trade, 56
Foreigners
Claims on, 57, 59, 62, 63, 64, 66
Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68
GOLD
Certificate account, 10
Stock, 4, 56
Government National Mortgage Association, 33, 37, 38
Gross national product, 53
HOUSING, new and existing units, 51
INCOME and expenses, Federal Reserve System, 88-89
Income, personal and national, 46, 53, 54
Industrial production, 46, 49
Installment loans, 39, 40
Insurance companies, 26, 30, 38
Interest rates
Bonds, 24
Commercial banks, 73-83
Consumer installment credit, 40
Federal Reserve Banks, 7
Foreign central banks and foreign countries, 69
Money and capital markets, 24
Mortgages, 37
Prime rate, 23
International capital transactions of United States, 55-69
International organizations, 59, 60, 62, 65, 66
Inventories, 53
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18, 19, 20, 21, 26
Commercial banks, 3, 16, 18-20, 38
Federal Reserve Banks, 10, 11
Federal Reserve System, 88-89
Financial institutions, 26, 38
LABOR force, 47
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18-20
Commercial banks, 3, 16, 18-20, 73-83
Federal Reserve Banks, 4, 5, 7, 10, 11
Federal Reserve System, 88-89
Financial institutions, 26, 38
Insured or guaranteed by United States, 37, 38
MANUFACTURING
Capacity utilization, 48
Production, 48, 50
Margin requirements, 25
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 6
Reserve requirements, 8
Mining production, 50
Mobile homes shipped, 51
Monetary and credit aggregates, 3, 12
Money and capital market rates, 24
Money stock measures and components, 3, 13
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 29
National income, 53
OPEN market transactions, 9
PERSONAL income, 54
Prices
Consumer and producer, 46, 52
Stock market, 25
Prime rate, 23
Producer prices, 46, 52
Production, 46, 49
Profits, corporate, 35
REAL estate loans
Banks, by classes, 16, 19, 20, 38
Financial institutions, 26
Terms, yields, and activity, 37
Type of holder and property mortgaged, 38
Repurchase agreements, 6, 17, 19, 20, 21
Reserve requirements, 8
Reserves
Commercial banks, 18
Depository institutions, 3, 4, 5, 12
Federal Reserve Banks, 10
U.S. reserve assets, 56
Residential mortgage loans, 37
Retail credit and retail sales, 39, 40, 46
SAVING
Flow of funds, 41, 43, 44, 45
National income accounts, 53
Savings and loan associations, 26, 38, 39, 41. (See also
Thrift institutions)
Savings banks, 26, 38, 39
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 67
New issues, 34
Prices, 25
Special drawing rights, 4, 10, 55, 56
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 19, 20, 26
Rates on securities, 24
Stock market, selected statistics, 25
Stocks (See also Securities)
New issues, 34
Prices, 25
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 3. (See also Credit unions and Savings
and loan associations)
Time and savings deposits, 3, 13, 17, 18, 19, 20, 21
Trade, foreign, 56
Treasury cash, Treasury currency, 4
Treasury deposits, 4, 10, 28
Treasury operating balance, 28
UNEMPLOYMENT, 47
U.S. government balances
Commercial bank holdings, 18, 19, 20
Treasury deposits at Reserve Banks, 4, 10, 28
U.S. government securities
Bank holdings, 18-20, 21, 30
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 4, 10, 11, 30
Foreign and international holdings and transactions, 10,
30, 68
Open market transactions, 9
Outstanding, by type and holder, 26, 30
Rates, 24
U.S. international transactions, 55-69
Utilities, production, 50
VETERANS Administration, 37, 38
WEEKLY reporting banks, 19-21
Wholesale (producer) prices, 46, 52
YIELDS (See Interest rates)
A98
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106 Richard N. Cooper
Richard L. Taylor
Richard F. Syron
Robert W. Eisenmenger
NEW YORK*
10045 Cyrus R. Vance
Ellen V. Futter
14240 Mary Ann Lambertsen
E. Gerald Corrigan
James H. Oltman
PHILADELPHIA
19105 Peter A. Benoliel
Gunnar E. Sarsten
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101 Charles W. Parry
John R. Miller
45201 To be announced
15230 Robert P. Bozzone
W. Lee Hoskins
William H. Hendricks
Vice President
in charge of branch
Buffalo
Cincinnati
Pittsburgh
RICHMOND*
23219 Hanne M. Merriman
Anne Marie Whittemore
Baltimore
21203 John R. Hardesty, Jr.
Charlotte
28230 William E. Masters
Culpeper Communications
and Records Center 22701
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
New Orleans
CHICAGO*
Detroit
ST. LOUIS
Little Rock
Louisville
Memphis
MINNEAPOLIS
Helena
KANSAS CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
SAN FRANCISCO
Los Angeles
Portland
Salt Lake City
Seattle
John T. Keane
Robert P. Black
Jimmie R. Monhollon
30303 Larry L. Prince
Edwin A. Huston
35283 A. G. Trammell
32231 Lana Jane Lewis-Brent
33152 Robert D. Apelgren
37203 Victoria B. Jackson
70161 Caroline G. Theus
Robert P. Forrestal
Jack Guynn
60690 Marcus Alexis
Charles S. McNeer
48231 Phyllis E. Peters
Silas Keehn
Daniel M. Doyle
63166 H. Edwin Trusheim
Robert H. Quenon
72203 L. Dickson Flake
40232 Raymond M. Burse
38101 Katherine H. Smythe
Thomas C. Melzer
James R. Bowen
55480 Michael W. Wright
Delbert W. Johnson
59601 J. Frank Gardner
Roger Guffey
Henry R. Czerwinski
75222 Bobby R. Inman
Hugh G. Robinson
79999 Donald G. Stevens
77252 Andrew L. Jefferson, Jr.
78295 Roger R. Hemmingshaus
Robert H. Boykin
William H.Wallace
94120 Robert F. Erburu
Carolyn S. Chambers
90051 Yvonne B. Burke
97208 William A. Hilliard
84125 Don M. Wheeler
98124 Bruce R. Kennedy
Robert T. Parry
Carl E. Powell
Robert D. McTeer, Jr.1
Albert D. Tinkelenberg1
John G. Stoides 1
Gary H. Stern
Thomas E. Gainor
64198 Fred W. Lyons, Jr.
Burton A. Dole, Jr.
80217 Barbara B. Grogan
73125 John F. Snodgrass
68102 Herman Cain
Charles A. Cerino1
Harold J. Swart1
Donald E. Nelson
Fred R. Herr1
James D. Hawkins 1
James T. Curry III
Melvyn K. Purcell
Robert J. Musso
Roby L. Sloan1
John F. Breen1
Howard Wells
Ray Laurence
John D. Johnson
Kent M. Scott
David J. France
Harold L. Shewmaker
Tony J. Salvaggio1
Sammie C. Clay
Robert Smith, III1
Thomas H. Robertson
Thomas C. Warren2
Angelo S. Carella1
E. Ronald Liggett1
Gerald R. Kelly 1
*Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016;
Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West
Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202.
1. Senior Vice President.
2. Executive Vice President.
A99
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
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Boundaries of Federal Reserve Districts
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Federal Reserve Bank Cities
Boundaries of Federal Reserve Branch
Territories
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Federal Reserve Branch Cities
Federal Reserve Bank Facility
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Board of Governors of the Federal Reserve
System
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ALASKA
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